Approval and Promulgation of Implementation Plans; Louisiana; Clean Air Interstate Rule Nitrogen Oxides Trading Programs, 45705-45712 [E7-16044]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 72, Number 157 (Wednesday, August 15, 2007)]
[Proposed Rules]
[Pages 45705-45712]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-16044]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 97

[EPA-R06-OAR-2007-0651; FRL-8455-1]


Approval and Promulgation of Implementation Plans; Louisiana; 
Clean Air Interstate Rule Nitrogen Oxides Trading Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve a revision to the Louisiana State 
Implementation Plan (SIP) submitted by the State of Louisiana on July 
12, 2007, as the Louisiana Clean Air Interstate Rule (CAIR) Nitrogen 
Oxides (NOX) Trading Programs abbreviated SIP. We are 
proposing to approve Louisiana's CAIR NOX Annual and Ozone 
Season Abbreviated SIP revision in parallel with the Louisiana 
Department of Environmental Quality's (LDEQ) rulemaking activities 
(``parallel processing''). The abbreviated SIP revision includes the 
Louisiana methodology for allocation of annual and ozone season 
NOX allowances. EPA is proposing to determine that the 
Louisiana CAIR NOX Trading Programs abbreviated SIP revision 
satisfies the applicable requirements of a CAIR abbreviated SIP 
revision. EPA is also proposing to approve revisions to the Louisiana 
SIP that establish administrative reporting requirements for all 
Louisiana CAIR programs; these revisions were submitted on September 
22, 2006, as part of the Louisiana CAIR Sulfur Dioxide (SO2) 
Trading Program SIP. EPA is also proposing that the Louisiana CAIR 
NOX Annual and Ozone Season Abbreviated SIP will satisfy 
Louisiana's Clean Air Act (CAA) Section 110(a)(2)(D)(i) obligations to 
submit a SIP revision that contains adequate provisions to prohibit air 
emissions from adversely affecting another State's air quality through 
interstate transport.
    The intended effect of this action is to reduce NOX 
emissions from the State of Louisiana that are contributing to 
nonattainment of the 8-hour ozone and PM2.5 National Ambient 
Air Quality Standards (NAAQS or standard) in downwind states. This 
action is being taken under section 110 of the CAA.

DATES: Comments must be received on or before September 14, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-
OAR-2007-0651, by one of the following methods:
    (1) www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    (2) E-mail: Mr. Jeff Robinson at robinson.jeffrey@epa.gov. Please 
also cc the person listed in the FOR FURTHER INFORMATION CONTACT 
paragraph below.
    (3) U.S. EPA Region 6 ``Contact Us'' Web site: https://epa.gov/
region6/r6coment.htm. Please click on ``6PD'' (Multimedia) and select 
``Air'' before submitting comments.
    (4) Fax: Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), at 
fax number 214-665-6762.
    (5) Mail: Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), 
Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, 
Texas 75202-2733.
    (6) Hand or Courier Delivery: Mr. Jeff Robinson, Chief, Air Permits 
Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, 
Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only 
between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal 
holidays. Special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-R06-OAR-
2007-0651. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
https://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information the 
disclosure of which is restricted by statute. Do not submit information 
through https://www.regulations.gov or e-mail, if you believe that it is 
CBI or otherwise protected from disclosure. The https://
www.regulations.gov Web site is an ``anonymous access'' system, which 
means that EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through https://
www.regulations.gov, your e-mail address will be automatically captured 
and included as part of the comment that is placed in the public docket 
and made available on the Internet. If you submit an electronic 
comment, EPA recommends that you include your name and other contact 
information in the body of your comment along with any disk or CD-ROM 
submitted. If EPA cannot read your comment due to technical 
difficulties and cannot contact you for clarification, EPA may not be 
able to consider your comment. Electronic files should avoid the use of 
special characters and any form of encryption and should be free of any 
defects or viruses. For additional information about EPA's public 
docket, visit the EPA Docket Center homepage at https://www.epa.gov/
epahome/dockets.htm.
    Docket: All documents in the docket are listed in the https://
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
the disclosure of which is restricted by statute. Certain other 
material, such as copyrighted material, will be publicly available only 
in hard copy. Publicly available docket materials are available either 
electronically in https://www.regulations.gov or in hard copy at the Air 
Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross 
Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made 
available by appointment for public inspection in the Region 6 FOIA 
Review Room between the hours of 8:30 a.m. and 4:30 p.m. weekdays 
except for legal holidays. Contact the person listed in the FOR FURTHER 
INFORMATION CONTACT paragraph below to make an appointment. If 
possible, please make the appointment at least two working days in 
advance of your visit. A 15 cent per page fee will be charged for 
making photocopies of documents. On the day of the visit, please check 
in at the EPA Region 6 reception area on the seventh

[[Page 45706]]

floor at 1445 Ross Avenue, Suite 700, Dallas, Texas.
    The State submittal related to this SIP revision, and which is part 
of the EPA docket, is also available for public inspection at the State 
Air Agency listed below during official business hours by appointment:
    Louisiana Department of Environmental Quality, Office of 
Environmental Quality Assessment, 602 N. Fifth Street, Baton Rouge, 
Louisiana 70802.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning 
today's proposal, please contact Ms. Adina Wiley (6PD-R), Air Permits 
Section, Environmental Protection Agency, Region 6, 1445 Ross Avenue 
(6PD-R), Suite 1200, Dallas, TX 75202-2733. The telephone number is 
(214) 665-2115. Ms. Wiley can also be reached via electronic mail at 
wiley.adina@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, wherever any 
reference to ``we,'' ``us,'' or ``our'' is used, we mean EPA.

Table of Contents

I. What Action Is EPA Proposing?
II. What Is the Regulatory History of CAIR and the CAIR FIP?
III. What Are the General Requirements of CAIR and the CAIR FIP?
IV. What Are the Types of CAIR SIP Submittals?
V. What Is EPA's Analysis of Louisiana's CAIR NOX Annual 
and Ozone Season Abbreviated SIP Revision?
    A. State Budgets for NOX Annual and Ozone Season 
Allowance Allocations
    B. CAIR NOX Annual and Ozone Season Cap-and-Trade 
Programs
    C. Applicability Provisions for Non-EGU NOX SIP Call 
Sources
    D. NOX Annual and Ozone Season Allowance Allocations
    E. Allocation of NOX Allowances From the Compliance 
Supplement Pool
    F. Individual Opt-In Units
VI. What Is EPA's Analysis of the Section 110(a)(2)(D)(i) 
Requirements?
VII. Proposed Action
VIII. Statutory and Executive Order Reviews

I. What Action Is EPA Proposing?

    On July 12, 2007, the State of Louisiana requested that EPA 
parallel process an abbreviated revision to the Louisiana SIP in 
conjunction with the LDEQ's rulemaking activities. The SIP revision 
consists of new regulations that establish the NOX annual 
and ozone season allocation methodologies that are to be used instead 
of the Federal allocations in the Louisiana CAIR NOX Annual 
and Ozone Season Federal Implementation Plans (FIP). The affected state 
regulations that we are proposing to approve today as part of the 
Louisiana CAIR NOX Trading Programs abbreviated SIP are 
enacted at Louisiana Administrative Code, Title 33, Part III, Chapter 
5, Sections 506(A) and (B) (LAC 33:III.506(A) and (B)). EPA is 
proposing to determine that the Louisiana CAIR NOX Trading 
Programs abbreviated SIP revision satisfies the applicable requirements 
of a CAIR abbreviated SIP revision at 40 CFR 51.123(p)(1) and (ee)(2). 
We are also at this time proposing to approve revisions to the 
Louisiana SIP at LAC 33:III.506 (D) and (E), submitted September 22, 
2006, that establish administrative reporting requirements germane to 
all Louisiana CAIR programs. We had deferred action on these 
subsections in the Louisiana CAIR SO2 rulemaking until we 
had the opportunity to review and act upon the Louisiana CAIR 
NOX programs (see 72 FR 39741).
    The provisions of the Louisiana CAIR NOX Annual and 
Ozone Season FIP at 40 CFR 52.984 require owners or operators of 
NOX sources located in Louisiana to meet the Federal 
NOX annual and ozone season trading programs found at 40 CFR 
part 97. These Federal trading programs' rules include provisions at 40 
CFR 97.144(a) and 97.343(a) that if EPA approves the Louisiana 
abbreviated SIP revision for NOX annual and ozone season 
allocation methodologies, then the Federal NOX annual and 
ozone season allocation methodologies no longer apply. If EPA approves 
the Louisiana NOX annual and ozone season allocation 
methodologies into the Louisiana SIP, then EPA under 40 CFR 52.984, 
97.144(a), and 97.343(a) will not make allocations for the CAIR 
NOX sources in Louisiana; the LDEQ will allocate 
NOX annual and ozone season allowances using the Louisiana 
SIP rules.
    Consequently, if EPA approves the Louisiana abbreviated SIP 
revision, EPA is not required to take any rulemaking action to change 
the Federal CAIR NOX Annual and Ozone Season trading 
programs in 40 CFR part 97 or to change the Louisiana CAIR FIP for 
NOX annual and ozone season emissions in 40 CFR 52.984. 
Rather EPA, by ministerial action, will note in Appendix A.1. to 
Subpart EE of 40 CFR Part 97, that Louisiana has an approved SIP 
revision for NOX annual allowances. Similarly, EPA will note 
in Appendix A to Subpart EEEE of 40 CFR Part 97, that Louisiana has an 
approved SIP revision for NOX ozone season allowances. Since 
the Federal CAIR NOX Annual and Ozone Season trading 
programs' rules provide for automatic revision of the Louisiana CAIR 
FIP for NOX annual and ozone season emissions upon approval 
of such an abbreviated SIP revision, the Louisiana rules for 
NOX annual and ozone season allowance allocations would 
apply, rather than the Federal rules governing allocations, upon the 
effective date of approval.
    In addition, EPA is also proposing to approve a revision to 
Louisiana's SIP to address the ``good neighbor'' provisions of section 
110(a)(2)(D)(i) of the CAA. This section of the Act requires each State 
to submit a SIP that prohibits emissions that could adversely affect 
another State. The SIP must prevent sources in the State from emitting 
pollutants in amounts which will: (1) Contribute significantly to 
downwind nonattainment of the national ambient air quality standards 
(NAAQS), (2) interfere with maintenance of the NAAQS, (3) interfere 
with provisions to prevent significant deterioration of air quality, 
and (4) interfere with efforts to protect visibility.

Why are we ``parallel processing'' and how does it work?

    The Louisiana CAIR NOX Annual and Ozone Season FIP 
includes a NOX allowance recordation deadline of September 
30, 2007, at 40 CFR 97.153 and 97.353. As explained in the preamble of 
our April 28, 2006, promulgation of the CAIR FIPs, EPA will only record 
State allowance allocations if EPA has approved a full or abbreviated 
SIP for the State which specifies the allocation methodology (see 71 FR 
25354). The State of Louisiana requested parallel processing of the 
Louisiana CAIR NOX Trading Program Abbreviated SIP revision 
to expedite federal approval of the Louisiana NOX annual and 
ozone season allocation methodology.
    In order to expedite review, approval of this revision is being 
proposed under a procedure called ``parallel processing'' whereby EPA 
proposes rulemaking action concurrently with the State's procedures for 
amending its regulations (40 CFR part 51, Appendix V, section 2.3). If 
the State's proposed revision is substantially changed, EPA will 
evaluate those subsequent changes and may publish another notice of 
proposed rulemaking. If no substantial changes are made, EPA will 
publish a final rulemaking on the revisions after responding to any 
submitted comments. Final rulemaking action by EPA will occur only 
after the SIP revision has been fully adopted by Louisiana and 
submitted formally to EPA for incorporation into the SIP. In addition, 
any action by the State resulting in undue delay in the adoption of the 
rules may results in a re-proposal altering the approvability of the 
SIP revision.

[[Page 45707]]

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

    EPA promulgated the CAIR 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 
statewide emission reduction requirements for NOX for the 
ozone season (defined at 40 CFR 97.302 as 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 and submitting for EPA approval any other control measures.
    EPA found that Louisiana significantly contributed to nonattainment 
of the 8-hour ozone standard in Texas and the PM2.5 standard 
in Alabama, resulting in Louisiana being subject to the SO2, 
NOX annual, and NOX ozone season requirements of 
CAIR. Louisiana submitted a SIP revision addressing the SO2 
requirements of CAIR on September 22, 2006. We approved this SIP 
revision through a direct final action on July 20, 2007 (72 FR 
39741).\1\ Today we are proposing to approve the abbreviated SIP 
revision addressing the Louisiana NOX annual and ozone 
season requirements of CAIR with this rulemaking. There are no punitive 
consequences for Louisiana failing to submit SO2, 
NOX Annual, and NOX Ozone Season CAIR SIPs.
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    \1\ Louisiana is subject to the CAIR SO2 Federal 
Implementation Plan at 40 CFR 52.985 until EPA's final action 
becomes effective on the Louisiana CAIR SO2 Trading 
Program SIP revision. If no adverse comments are received on our 
direct final action by August 20, 2007, the Louisiana CAIR 
SO2 Trading Program will be effective on September 18, 
2007. We are not accepting comments on the Louisiana CAIR 
SO2 Trading Program in this action; if you would like to 
comment on the Louisiana CAIR SO2 Trading Program please 
follow the instructions at 72 FR 39741, Docket ID No. EPA-06-OAR-
2006-0849.
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    CAIR sets forth what must be included in SIPs to address the 
requirements of section 110(a)(2)(D) of the Act with regard to 
interstate transport for the 8-hour ozone and PM2.5 NAAQS. 
EPA made national findings (70 FR 21147), effective May 25, 2005, that 
the affected 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 
May 25, 2005, findings started a 2-year clock for EPA to promulgate a 
FIP to address the requirements of section 110(a)(2)(D), including the 
``good neighbor provision'' at section 110(a)(2)(D)(i) which applies to 
interstate transport of certain emissions. 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 August 15, 2006, EPA 
issued guidance for SIP submissions that states should use to address 
the requirements of section 110(a)(2)(D)(i) for the 8-hour ozone and 
PM2.5 NAAQS.
    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. See 40 CFR 52.35 and 52.36. Each CAIR State is 
subject to the FIP 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 
trading programs, as appropriate, found at 40 CFR part 97. The CAIR 
FIPs' 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 the CAIR FIPs' or SIPs' 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 FIPs 
remain in place for all other provisions. See 40 CFR 51.123(p)(1)-(3) 
and (ee)(1)-(3), 71 FR 25328 and 25339 (April 28, 2006).
    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. On December 13, 2006, EPA 
published minor, non-substantive revisions that serve to clarify CAIR 
and the CAIR FIP.

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

    CAIR establishes State-wide emission budgets for SO2 and 
NOX and is to be implemented in two phases. The first phase 
of NOX reductions starts in 2009 and continues through 2014, 
while the first phase of SO2 reductions starts in 2010 and 
continues through 2014. The second phase of reductions for both 
NOX and SO2 starts in 2015 and continues 
thereafter. CAIR requires States to implement the budgets by either: 
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade 
programs: or, (2) adopting other control measures of the State's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable State SO2 and NOX 
budgets.
    The May 12, 2005, and April 28, 2006, CAIR rules provide model 
rules that States must adopt (with certain limited changes, if desired) 
if they want to participate in the EPA-administered trading programs. 
The December 13, 2006, revisions to CAIR and the CAIR FIPs were non-
substantive and, therefore, do not affect EPA's evaluation of a State's 
SIP revision.
    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. Louisiana was not 
subject to the NOX SIP Call; therefore, the second exception 
is not applicable.

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

[[Page 45708]]

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. The provisions in the abbreviated SIP 
revision, if approved into a State's SIP, will not replace that State's 
CAIR FIP; however, the requirements for the CAIR FIPs at 40 CFR part 52 
incorporate the provisions of the Federal CAIR trading programs in 40 
CFR part 97. The Federal CAIR trading programs in 40 CFR part 97 
provide that whenever EPA approves an abbreviated SIP revision, the 
provisions in the abbreviated SIP revision will be used in place of or 
in conjunction with, as appropriate, the corresponding provisions in 40 
CFR part 97 of the State's CAIR FIP (e.g., the NOX allowance 
allocation methodology).
    A State submitting an abbreviated SIP revision, may submit limited 
SIP revisions to tailor the CAIR FIP's cap-and-trade programs to the 
state submitting the revision. An abbreviated SIP revision may 
establish certain applicability and allowance allocation provisions 
instead of or in conjunction with the corresponding provisions in the 
CAIR FIP's rules in that State. Specifically, an abbreviated SIP 
revision may:
    (1) Include NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR FIP's 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; or
    (4) Allow units that are not otherwise CAIR units to opt 
individually into the CAIR FIP's cap-and-trade programs under the opt-
in provisions in the CAIR FIP's rules.
    With approval of an abbreviated SIP revision, the State's CAIR FIP 
remains in place, as tailored to sources in that State by the 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, 
Louisiana submitted an abbreviated SIP revision that addresses the 
allocation methodology for the NOX Annual and Ozone Season 
programs. Louisiana previously submitted a full SIP revision to address 
the SO2 requirements of CAIR.

V. What Is EPA's Analysis of Louisiana's CAIR NOX Annual and 
Ozone Season Abbreviated SIP Revision?

A. State Budgets for NOX Annual and Ozone Season Allowance Allocations

    The CAIR NOX annual and ozone season budgets for 
Louisiana 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 Louisiana NOX annual and ozone season budgets from the 
regional budgets using Louisiana heat input data adjusted by fuel 
factors.
    The CAIR SIP requirements and the Louisiana CAIR NOX 
Annual FIP establish the NOX annual budgets for Louisiana as 
35,512 tons of NOX annual emissions for 2009-2014 and 29,593 
tons of NOX annual emissions in 2015 and thereafter. 
Louisiana's submitted rules at LAC 33:III.506(A)(2) establish that the 
total amount of NOX annual allowances allocated per control 
period shall not exceed the CAIR NOX annual budget at 40 CFR 
97.140. Therefore, the annual budgets as listed in 40 CFR 51.123 and 
97.140 (35,512 tons in 2009-2014 and 29,593 tons in 2015 and 
thereafter) continue to apply.
    The CAIR SIP requirements and the Louisiana CAIR NOX 
Ozone Season FIP establish the NOX ozone season budgets for 
Louisiana as 17,085 tons of NOX ozone season emissions for 
2009-2014 and 14,238 tons of NOX ozone season emissions in 
2015 and thereafter. Louisiana's rules at LAC 33:III.506(B)(2) 
establish that the total amount of NOX ozone season 
allowances allocated per control period shall not exceed the CAIR 
NOX ozone season budget at 40 CFR 97.340. Therefore the 
ozone season budgets as listed in 40 CFR 51.123 and 97.340 (17,085 tons 
in 2009-2014 and 14,238 tons in 2015 and thereafter) continue to apply.
    The Louisiana abbreviated SIP revision, being proposed today, does 
not affect the budgets for the NOX annual and ozone season 
programs. These budgets are total amounts of allowances available for 
allocation for each year under the EPA-administered cap-and-trade 
programs under the Louisiana CAIR NOX Annual and Ozone 
Season FIPs. In short, the Louisiana abbreviated SIP revision only 
affects allocations of NOX annual and ozone season 
allowances under the established budgets.

B. CAIR NOX Annual and Ozone Season Cap-and-Trade Programs

    The CAIR NOX Annual and Ozone Season FIPs for the States 
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 FIPs provide for a compliance supplement pool (CSP), which is 
discussed below and under which allowances may be awarded for early 
reductions of NOX annual emissions.
    EPA used the CAIR model trading rules as the basis for the 
SO2, NOX annual, and NOX ozone season 
trading programs incorporated by reference into the States' CAIR FIPs. 
The CAIR FIPs' trading programs' 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 trading, and NOX ozone season trading 
rules and the respective CAIR FIPs' trading programs are designed to 
work together as integrated SO2, NOX annual, and 
NOX ozone season trading programs.
    Louisiana is subject to the CAIR FIPs for 8-hour ozone and 
PM2.5. These CAIR FIPs for Louisiana, at 40 CFR 52.984 and 
52.985, require owners or operators of each NOX and 
SO2 CAIR source located in Louisiana to meet the 
requirements of the Federal CAIR NOX Annual, NOX 
Ozone Season, and SO2 trading programs in 40 CFR part 97. 
Consistent with the flexibility given to States, States may submit 
abbreviated SIP revisions that will replace or supplement, as 
appropriate, certain provisions of its CAIR FIPs' trading programs. The 
July 12, 2007, submission from Louisiana is such an abbreviated SIP 
revision and is for the NOX annual and ozone season trading 
programs. Louisiana submitted a full SIP revision

[[Page 45709]]

for the SO2 trading program on September 22, 2006.

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

    In general, the CAIR FIPs' 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. 
Because Louisiana was not included in the NOX SIP Call 
trading program, Louisiana does not have or need the option of 
expanding the applicability provisions of the CAIR NOX Ozone 
Season Trading Program to include non-EGU NOX SIP Call 
sources.

D. NOX Annual and Ozone Season Allowance Allocations

    Under the NOX allowance allocation methodology in the 
CAIR model trading rules and in the CAIR FIPs' trading programs, 
NOX annual and ozone season allowances are allocated to 
units that have operated for five years, based on heat input data from 
a three-year period that are adjusted for fuel type by using fuel 
factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR 
model trading rules and the CAIR FIPs' NOX Annual and Ozone 
Season trading programs 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 FIPs' provisions provide States with the flexibility to 
establish a different NOX allowance allocation methodology 
that will be used to allocate allowances to sources in a State if 
certain requirements are met concerning the timing of submission of 
units' allocations to the Administrator for recordation and the total 
amount of allowances allocated for each control period. In adopting 
alternative NOX allowance allocation methodologies, States 
have flexibility with regard to:
    (1) The cost to recipients of the allowances, which may be 
distributed for free or auctioned;
    (2) The frequency of allocations;
    (3) The basis for allocating allowances, which may be distributed, 
for example, based on historical heat input or electric and thermal 
output; and
    (4) The use of allowance set-asides and, if used, their size.
    Consistent with the flexibility given to States in their CAIR FIPs' 
provisions, Louisiana has chosen to replace the provisions of the 
Louisiana CAIR NOX Annual and Ozone Season FIPs concerning 
the allocation of NOX annual and ozone season allowances 
with its own methodology. The LDEQ requested assistance from the 
Louisiana Public Service Commission (LPSC) to determine the impact of 
CAIR implementation on Louisiana electricity ratepayers. Through this 
study and extensive stakeholder involvement, LDEQ developed and 
approved regulations that will allocate NOX allowances at no 
cost to the CAIR subject units in Louisiana. Accordingly, the LDEQ has 
approved provisions establishing the NOX annual and ozone 
season allocation methodologies at LAC Title 33, Part III, Chapter 5, 
Sections 506 (A) and (B), respectively.
    Section 506(A) establishes the allocation methodology for the 
NOX annual allowances. This section replaces 40 CFR 97.141 
and 97.142 as promulgated by EPA on April 28, 2006. All remaining 
provisions of the Federal NOX Annual Trading Program at 40 
CFR Part 97, Subparts AA-HH continue to apply to Louisiana CAIR 
sources. Similarly, Section 506(B) establishes the allocation 
methodology for the NOX ozone season allowances. Section 
506(b) replaces 40 CFR 97.341 and 97.342 as promulgated by EPA on April 
28, 2006. All remaining provisions of the Federal NOX Ozone 
Season Trading Program at 40 CFR Part 97, Subparts AAAA-HHHH continue 
to apply to CAIR-subject sources in Louisiana.
    The Louisiana NOX annual and ozone season allocation 
methodologies are structured identically. The CAIR units in Louisiana 
are first divided into non-utility or utility unit categories. Non-
utility units are those electric generating units that have not been 
certified by the LPSC or approved by a municipal authority, a process 
under which the unit is certified as being in the public convenience 
and necessity. Utility units are those units identified by the LPSC or 
a municipal authority as electric generating units that produce power 
for the public convenience and necessity. The utility unit category is 
further subdivided based on number of years of operating data before 
the allocation submittal deadline to EPA. The utility units without 
three years of operating data prior to the allocation submittal 
deadline to EPA are allocated allowances as certified units. All other 
utility units with three or more years of operating data are allocated 
allowances as utility units.
    After determining the non-utility or utility status of a unit, the 
LDEQ proceeds with the calculation of allowances; the non-utility unit 
allocations are made first under both the annual and ozone season 
trading programs. The allocation methodology for non-utility units is 
found at sections 506(A)(2)(a) and 506(B)(2)(a). For the NOX 
annual trading program, the non-utility unit NOX allowances 
will equal the average of the actual NOX annual emissions of 
the three calendar years immediately preceding the year in which the 
allocations are submitted to EPA. For the NOX ozone season 
trading program, the non-utility unit NOX allowances equal 
the average of the actual NOX ozone season emissions of the 
three calendar years immediately preceding the year that allocations 
are submitted to EPA. The actual NOX emissions data used in 
both the annual and ozone season trading programs is the emissions 
inventory data reported pursuant to LAC 33:III.919; if emissions 
inventory data is not available then data from the Acid Rain Program 
will be substituted. The exception is that the allowances submitted to 
EPA in 2007 will be based on emissions inventory data from 2002, 2003, 
and 2004.
    Once the non-utility unit allowances have been subtracted from the 
total state budget identified in sections 506(A)(2) and (B)(2), the 
utility units are allocated allowances proportionally based on heat 
input data. Certified units (utility units with less than three years 
of operating data before the allocation submittal deadline) are 
allocated based on converted heat input as specified in section 
506(A)(2)(b) and 506(B)(2)(b). A certified unit will be allocated 
allowances for the control period in which the unit will begin 
operation and for each successive control period for which no 
NOX allowances have been previously allocated until three 
years of operating data are available before the allocation submittal 
deadline. The converted heat input for the certified unit is calculated 
from the gross electrical output as stated in the documentation for the 
LPSC or municipal authority certification process. Utility units (those 
units with three or more years of operating data before the allocation 
submittal deadline) are allocated allowances based on the adjusted heat 
input according to sections 506(A)(2)(c) and 506(B)(2)(c). The 
exception is that the allowances submitted to EPA in 2007 will use the 
average of the control period adjusted heat input data from 2002, 2003, 
and 2004. The unit's adjusted heat input is calculated by multiplying 
the control period heat input for the unit by 100 percent if the unit 
is coal-fired, by 60 percent if the unit is oil-fired, and by 40 
percent if the unit is not coal- or oil-fired. A unit's control period 
heat input,

[[Page 45710]]

status as coal-fired or oil-fired, and total tons of NOX 
emissions during a control period are determined in accordance with 40 
CFR Part 97 and reported pursuant to LAC 33:III.919.
    Sections 506(A)(3) and (B)(3) establish the dates by which the LDEQ 
must submit NOX annual and ozone season allocations to EPA 
for recordation in CAIR compliance accounts. No later than April 30, 
2007, the LDEQ submits to EPA the CAIR NOX annual and ozone 
season allowance allocations for the control periods 2009, 2010, and 
2011. By October 31, 2008, for the year 2012, and by October 31 of each 
year thereafter, the LDEQ will submit to EPA the NOX annual 
and ozone season allowance allocations for the control period in the 
fourth year after the year of the applicable deadline for allocation 
submission. LDEQ submitted NOX annual and ozone season 
allowances for control periods 2009, 2010, and 2011 on April 27, 2007.
    The Louisiana abbreviated SIP revision, being proposed today, 
satisfies the requirements for abbreviated SIP allocation flexibility 
at 51.123(p)(1) and (ee)(2). The provisions discussed above ensure that 
the LDEQ will not allocate more than the state budget in any given 
control period and that the allocations are submitted to EPA by the 
allocation submittal deadline.

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; Louisiana's share of 
the CSP is 2,251 NOX allowances. 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 ademonstration of need 
for an extension of the 2009 deadline for implementing emission 
controls.
    The CAIR and the Louisiana CAIR NOX Annual FIP's 
provisions allocate 2,251 NOX allowances to the Louisiana 
CSP (under 40 CFR 51.123 and 97.143) and establish 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 CAIR FIPs, 
Louisiana has chosen not to modify the CSP allocation methodology in 
the CAIR NOX annual federal trading program. Therefore, EPA 
will continue to administer the CSP allocations pursuant to the 
methodology at 40 CFR 97.143.

F. Individual Opt-In Units

    The opt-in provisions of CAIR and the States CAIR FIPs' 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 programs. 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 reporting 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 that CAIR trading program. The 
opt-in provisions provide for two methodologies for allocating 
allowances for opt-in units, one methodology that applies to opt-in 
units in general and a second methodology that allocates allowances 
only to opt-in units that the owners and operators intend to repower 
before January 1, 2015.
    States have several options concerning the opt-in provisions. The 
rules for each of the States' CAIR FIPs' trading programs include opt-
in provisions that are essentially the same as those in the respective 
CAIR SIP model rules, except that the States' CAIR FIPs' 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 its CAIR FIP's trading programs to be implemented 
in the State without the ability for units to opt into the programs.
    Consistent with the flexibility given to States in the FIPs' 
provisions, Louisiana has chosen not to allow non-EGUs to participate 
in the Louisiana CAIR FIP NOX Annual and Ozone Season 
trading programs.

VI. What Is EPA's Analysis of the Section 110(a)(2)(D)(i) Requirements?

    The Louisiana CAIR NOX Trading Program abbreviated SIP 
revision submitted on July 12, 2007, also addressed the requirements of 
section 110(a)(2)(D)(i) of the CAA with respect to 8-hour ozone and 
PM2.5. This SIP revision contains provisions that address 
significant contribution, interference with maintenance, prevention of 
significant deterioration, and protection of visibility by following 
approaches described and explained in EPA's August 15, 2006 memorandum, 
``Guidance for State Implementation Plan (SIP) Submissions to Meet 
Current Outstanding Obligations Under Section 110(a)(2)(D)(i) for the 
8-Hour Ozone and PM2.5 National Ambient Air Quality 
Standards.''
    Louisiana addresses the ``significant contribution'' and 
``interference with maintenance'' requirements by complying with the 
requirements of CAIR. EPA promulgated CAIR on May 12, 2005, and 
concluded that the States will meet their section 110(a)(2)(D)(i) 
obligations to address the ``significant contribution'' and 
``interference with maintenance'' requirements by complying with the 
CAIR requirements. Louisiana has addressed these first two elements by 
requiring Louisiana CAIR sources to participate in the EPA-administered 
NOX annual, NOX ozone season, and SO2 
cap-and-trade programs; Louisiana incorporated by reference the CAIR 
model rules for the SO2 Trading program and has submitted an 
abbreviated SIP revision that establishes the NOX annual and 
ozone season allocation methodologies for use in the Louisiana CAIR 
NOX annual and ozone season FIP. Participation in the 
NOX annual, NOX ozone season, and SO2 
trading programs will reduce emissions from the state that would 
contribute significantly to nonattainment or interfere with the 
maintenance of the ozone and particulate matter NAAQS in any downwind 
state.
    Louisiana addresses the ``prevention of significant deterioration'' 
requirement through their Prevention of Significant Deterioration (PSD) 
and New Source Review (NSR) programs. Section 110(a)(2)(D)(i)(II) 
requires States to submit SIPs that contain adequate provisions 
prohibiting ``any source or other type of emission activity within the 
State from emitting any air pollutant in amounts which will * * * 
interfere with measures required to be included in the applicable 
implementation plan

[[Page 45711]]

for any other State * * * to prevent significant deterioration of air 
quality.''
    For ozone, Louisiana has confirmed that major sources in Louisiana 
are subject to the approved PSD and NSR programs that implement the 
ozone standard. Additionally, Louisiana has promulgated rule revisions 
to address requirements of the Phase II Ozone Rule, and this rule is 
included in the State's 2006 General SIP revisions proposed on April 
20, 2007. For PM2.5 standards, Louisiana has confirmed that 
major sources in Louisiana are subject to the approved PSD and NSR 
programs implemented in accordance with EPA's interim guidance which 
allows the use of PM10 as a surrogate for PM2.5 
in the PSD and NSR programs.
    Louisiana addresses the ``protection of visibility'' requirement 
through the regional haze program. Section 110(a)(2)(D)(i)(II) contains 
a requirement for all States to submit SIPs that contain adequate 
provisions prohibiting ``any source or other type of emission activity 
within the State from emitting any air pollutant in amounts which will 
* * * interfere with measures required to be included in the applicable 
implementation plan for any other State * * * to protect visibility.''
    EPA has previously found that all States contain sources whose 
emissions are reasonably anticipated to impact visibility adversely in 
one or more Class I areas. Pursuant to this finding, States are 
currently under an obligation to submit SIPs that contain measures to 
address regional haze, including a long-term strategy to address 
visibility impairment for each Class I area which may be affected by 
emissions from a State. The States and Regional Planning Organizations 
are currently engaged in the task of identifying those Class I areas 
impacted by each State's emissions and developing strategies for 
addressing regional haze to be included in the States' regional haze 
SIPs. These SIP submissions are due no later than December 17, 2007. 
Louisiana intends to submit a regional haze SIP by the submittal 
deadline to satisfy its obligation to ``protect visibility'' under 
section 110(a)(2)(D)(i).
    As a result, EPA believes that it is currently premature to 
determine whether State SIPs for 8-hour ozone or PM2.5 
contain adequate provisions to prohibit emissions that interfere with 
SIP measures in other States designed to protect visibility. 
Accordingly, EPA believes that Louisiana does not need to make a 
substantive SIP submission to address the ``protect visibility'' 
requirement of section 110(a)(2)(D)(i)(II) for the 8-hour ozone and 
PM2.5 NAAQS at this point in time.

VII. Proposed Action

    EPA is proposing to approve a revision to the Louisiana SIP, the 
Louisiana CAIR NOX Trading Programs Abbreviated SIP 
revision, submitted on July 12, 2007, by the State of Louisiana (LAC 
33:III.506(A) and (B)). We are also proposing to approve revisions to 
the Louisiana SIP establishing administrative reporting requirements 
for all Louisiana CAIR programs; these revisions were submitted with 
the Louisiana CAIR SO2 Trading Program on September 22, 2006 
(LAC 33:III.506(D) and (E)). Louisiana is covered by the CAIR 
NOX Annual and Ozone Season FIPs, which require 
participation in the EPA-administered CAIR FIP cap-and-trade programs 
for NOX annual and ozone emissions. Under this abbreviated 
SIP revision and consistent with the flexibility given to Louisiana in 
its CAIR NOX Annual and Ozone Season FIPs' provisions, the 
Louisiana provisions for allocating allowances under the Louisiana CAIR 
FIPs' NOX annual and ozone season trading program are 
proposed as part of the Louisiana SIP. EPA has determined that the 
abbreviated SIP revision meets the applicable requirements in 40 CFR 
51.123(p)(1) and (ee)(2) with regard to NOX annual and ozone 
season allowance allocations. EPA is not proposing any changes to the 
Louisiana CAIR NOX Annual and Ozone Season FIPs' provisions, 
except to the extent that if we finalize the proposed Louisiana CAIR 
NOX Trading Programs abbreviated SIP, then EPA, by 
ministerial action, will note in Appendix A.1. to Subpart EE of 40 CFR 
Part 97, that Louisiana has an approved SIP revision providing for 
NOX annual allowance allocations. Similarly, EPA will note 
in Appendix A to Subpart EEEE of 40 CFR Part 97, that Louisiana has an 
approved SIP revision providing for NOX ozone season 
allowance allocations. Since 40 CFR part 97 provides for automatic 
revision of the Louisiana CAIR FIP for NOX annual and ozone 
season emissions (under 40 CFR 52.984) upon approval of such an 
abbreviated SIP revision, the Louisiana rules for NOX annual 
and ozone season allowance allocations would apply, rather than the 
Federal rules governing allocations, upon the effective date of 
approval.
    EPA is also proposing that this revision adequately addresses the 
required elements of 110(a)(2)(D)(i), with the exception of the protect 
visibility requirement. This requirement will be re-evaluated after the 
regional haze SIP revision is completed and submitted to EPA.

VIII. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
proposed action is not a ``significant regulatory action'' and 
therefore is not subject to review by the Office of Management and 
Budget. For this reason and because this action will not have a 
significant, adverse effect on the supply, distribution, or use of 
energy, this action is also not subject to Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action 
merely proposes to approve state law as meeting Federal requirements 
and imposes no additional requirements beyond those imposed by state 
law. Accordingly, the Administrator certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
Because this rule proposes to approve pre-existing requirements under 
state law and does not impose any additional enforceable duty beyond 
that required by state law, it does not contain any unfunded mandate or 
significantly or uniquely affect small governments, as described in the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
    This proposed rule also does not have tribal implications because 
it will not have a substantial direct effect on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes, as specified by Executive 
Order 13175 (65 FR 67249, November 9, 2000). This proposed action also 
does not have Federalism implications because it does not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This 
action merely proposes to approve a state rule implementing a Federal 
standard and indicates that approval will result in ministerial changes 
to the appropriate appendices of the CAIR FIP's trading rules, and does 
not alter the relationship or the distribution of power and 
responsibilities established in the Act. The EPA interprets Executive 
Order 13045, ``Protection of Children from Environmental Health Risks 
and Safety Risks'' (62 FR 19885, April 23, 1997), as applying only to 
those regulatory actions that concern health or safety

[[Page 45712]]

risks such that the analysis required under section 5-501 of the 
Executive Order has the potential to influence the regulation. This 
proposed rule is not subject to Executive Order 13045 because it would 
approve a state rule implementing a Federal standard. Executive Order 
12898 (59 FR 7629, February 16, 1994) establishes federal executive 
policy on environmental justice. Because this proposed rule merely 
approves a state rule implementing a Federal standard, EPA lacks the 
discretionary authority to modify today's regulatory decision on the 
basis of environmental justice considerations.
    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Act. In this 
context, in the absence of a prior existing requirement for the State 
to use voluntary consensus standards (VCS), EPA has no authority to 
disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Act. Thus, the requirements of section 
12(d) of the National Technology Transfer and Advancement Act of 1995 
(1 5 U.S.C. 272 note) do not apply. This rule does not impose an 
information collection burden under the provisions of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects

40 CFR Part 52

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

40 CFR Part 97

    Environmental protection, Air pollution control, Administrative 
practice and procedure, Intergovernmental relations, Nitrogen oxides, 
Ozone, Reporting and recordkeeping requirements.

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

    Dated: August 7, 2007.
Richard E. Greene,
Regional Administrator, EPA Region 6.
[FR Doc. E7-16044 Filed 8-14-07; 8:45 am]
BILLING CODE 6560-50-P