Approval of Implementation Plans of Illinois: Clean Air Interstate Rule, 58528-58534 [E7-20142]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 72, Number 199 (Tuesday, October 16, 2007)]
[Rules and Regulations]
[Pages 58528-58534]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20142]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2007-0376; FRL-8477-4]


Approval of Implementation Plans of Illinois: Clean Air 
Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving a revision to the Illinois State 
Implementation Plan (SIP) submitted on September 14, 2007. This 
revision addresses the requirements of EPA's Clean Air Interstate Rule 
(CAIR), promulgated on May 12, 2005, and subsequently revised on April 
28, 2006, and December 13, 2006. EPA is determining that the SIP 
revision fully meets the CAIR requirements for Illinois. Therefore, as 
a consequence of the SIP approval, EPA will also withdraw the CAIR 
Federal Implementation Plans (CAIR FIPs) concerning sulfur dioxide 
(SO2), nitrogen oxides (NOX) annual, and 
NOX ozone season emissions for Illinois. The CAIR FIPs for 
all States in the CAIR region were promulgated on April 28, 2006 and 
subsequently revised on December 13, 2006.
    CAIR requires States to reduce emissions of SO2 and 
NOX that significantly contribute to, and interfere with 
maintenance of, the national ambient air quality standards (NAAQS) for 
fine particulates (PM2.5) and/or ozone in any downwind 
state. CAIR establishes State budgets for SO2 and 
NOX and requires States to submit SIP revisions that 
implement these budgets in States that EPA concluded did contribute to 
nonattainment in downwind states. States have the flexibility to choose 
which control measures to adopt to achieve the budgets, including 
participating in the EPA-administered cap-and-trade programs. In the 
SIP revision that EPA is approving, Illinois meets CAIR requirements by 
participating in the EPA-administered cap-and-trade programs addressing 
SO2, NOX annual, and NOX ozone season 
emissions.

DATES: This direct final rule will be effective December 17, 2007, 
unless EPA receives adverse comments by November 15, 2007. If adverse 
comments are received, EPA will publish a timely withdrawal of the 
direct final rule in the Federal Register informing the public that the 
rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-
OAR-2007-0376, by one of the following methods:
    1. https://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: mooney.john@epa.gov.
    3. Fax: (312) 886-5824.
    4. Mail: ``EPA-R05-OAR-2007-0376'', John M. Mooney, Chief, Criteria 
Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental 
Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604.
    5. Hand Delivery or Courier: John M. Mooney, Chief, Criteria 
Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental 
Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 
Such deliveries are only accepted during the Regional Office's normal 
hours of operation. The Regional Office's official hours of business 
are Monday through Friday, 8:30 to 4:30, excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2007-0376. 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 whose 
disclosure is restricted by statute. Do not submit through https://
www.regulations.gov or e-mail, information that you consider to be CBI 
or otherwise protected. The https://www.regulations.gov website is an

[[Page 58529]]

``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an e-mail comment directly to EPA without 
going through 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 and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters and any form of encryption and should be 
free of any defects or viruses. For additional information about EPA's 
public docket visit the EPA Docket Center homepage at https://
www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the 
https://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in https://
www.regulations.gov or in hard copy at the Environmental Protection 
Agency, Region 5, Air and Radiation Division, 77 West Jackson 
Boulevard, Chicago, Illinois 60604. EPA requests that if at all 
possible, you contact John Summerhays, Environmental Scientist, at 
(312) 886-6067 to schedule your inspection. The Regional Office's 
official hours of business are Monday through Friday, 8:30 to 4:30, 
excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: John Summerhays, Environmental 
Scientist, Criteria Pollutant Section, Air Programs Branch (AR-18J), 
Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, 
Chicago, Illinois 60604, (312) 886-6067, summerhays.john@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What Actions Is EPA Taking?
II. What Is the Regulatory History of CAIR and the CAIR FIPs?
III. What are the General Requirements of CAIR and the CAIR FIPs?
IV. What are the Types of CAIR SIP Submittals?
V. Description of Illinois' CAIR SIP Submittal
    A. The Background of Illinois' Submittal
    B. Summary of Illinois' Rules
VI. Analysis of Illinois' CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for non-EGU NOX SIP Call 
Sources
    D. NOX Allowance Allocations
    E. Allocation of NOX Allowances From Compliance 
Supplement Pool
    F. Individual Opt-in Units
VII. EPA Actions
VIII. Statutory and Executive Order Reviews

I. What Actions Is EPA Taking?

    EPA is approving a revision to the Illinois SIP, submitted in final 
form on September 14, 2007, reflecting rules adopted by Illinois on 
August 23, 2007. In its SIP revision, Illinois meets CAIR requirements 
by requiring certain electric generating units (EGUs) to participate in 
the EPA-administered State CAIR cap-and-trade programs addressing 
SO2, NOX annual, and NOX ozone season 
emissions. EPA has determined that the SIP meets the applicable 
requirements of CAIR. As a consequence of the SIP approval, the 
Administrator of EPA will also issue a final rule to withdraw the FIPs 
concerning SO2, NOX annual, and NOX 
ozone season emissions for Illinois. That action will remove and 
reserve 40 CFR 52.745 and 52.746. The withdrawal of the CAIR FIPs for 
Illinois is a conforming amendment that must be made once the SIP 
approval is effective because EPA's authority to issue the FIPs was 
premised on a deficiency in the SIP for Illinois. Once the SIP approval 
becomes effective, EPA no longer has authority for the FIPs. Thus, EPA 
will not have the option of maintaining the FIPs following the full SIP 
approval. Accordingly, EPA does not intend to offer an opportunity for 
a public hearing or an additional opportunity for written public 
comment on the withdrawal of the FIPs.

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

    CAIR was published by EPA on May 12, 2005 (70 FR 25162). In this 
rule, EPA determined that 28 States and the District of Columbia 
contribute significantly to nonattainment and interfere with 
maintenance of the NAAQS for PM2.5 and/or 8-hour ozone in 
downwind States in the eastern part of the country. As a result, EPA 
required those upwind States to revise their SIPs to include control 
measures that reduce emissions of SO2, which is a precursor 
to PM2.5 formation, and/or NOX, which is a 
precursor to both ozone and PM2.5 formation. For 
jurisdictions that contribute significantly to downwind PM2.5 
nonattainment, CAIR sets annual State-wide emission reduction 
requirements (i.e., budgets) for SO2 and annual State-wide 
emission reduction requirements for NOX. Similarly, for 
jurisdictions that contribute significantly to 8-hour ozone 
nonattainment, CAIR sets State-wide emission reduction requirements for 
NOX for the ozone season (May 1st to September 30th). Under 
CAIR, States may implement these reduction requirements by 
participating in the EPA-administered cap-and-trade programs or by 
adopting any other control measures.
    CAIR explains to subject States what must be included in SIPs to 
address the requirements of section 110(a)(2)(D) of the Clean Air Act 
(CAA) with regard to interstate transport with respect to the 8-hour 
ozone and PM2.5 NAAQS. EPA made national findings, effective 
on May 25, 2005, that the States had failed to submit SIPs meeting the 
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 
years after the promulgation of the 8-hour ozone and PM2.5 
NAAQS. These findings started a 2-year clock for EPA to promulgate a 
FIP to address the requirements of section 110(a)(2)(D). Under CAA 
section 110(c)(1), EPA may issue a FIP anytime after such findings are 
made and must do so within two years unless a SIP revision correcting 
the deficiency is approved by EPA before the FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all States covered by 
CAIR in order to ensure the emissions reductions required by CAIR are 
achieved on schedule. Each CAIR State is subject to the FIPs until the 
State fully adopts, and EPA approves, a SIP revision meeting the 
requirements of CAIR. The CAIR FIPs require EGUs to participate in the 
EPA-administered CAIR SO2, NOX annual, and 
NOX ozone season trading programs, as appropriate. The CAIR 
FIP SO2, NOX annual, and NOX ozone 
season trading programs impose essentially the same requirements as, 
and are integrated with, the respective CAIR SIP trading programs. The 
integration of the FIP and SIP trading programs means that these 
trading programs will work together to create effectively a single 
trading program for each regulated pollutant (SO2, NOX 
annual, and NOX ozone season) in all States covered by the 
CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also 
allow States to submit abbreviated SIP revisions that, if approved by 
EPA, will automatically replace or supplement certain CAIR FIP

[[Page 58530]]

provisions (e.g., the methodology for allocating NOX 
allowances to sources in the State), while the CAIR FIP remains in 
place for all other provisions.
    On April 28, 2006, EPA published two additional CAIR-related final 
rules that added the States of Delaware and New Jersey to the list of 
States subject to CAIR for PM2.5 and announced EPA's final 
decisions on reconsideration of five issues, without making any 
substantive changes to the CAIR requirements.

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

    CAIR establishes State-wide emission budgets for SO2 and 
NOX and is to be implemented in two phases. The first phase 
of NOX reductions starts in 2009 and continues through 2014, 
while the first phase of SO2 reductions starts in 2010 and 
continues through 2014. The second phase of reductions for both 
NOX and SO2 starts in 2015 and continues 
thereafter. CAIR requires States to implement the budgets by either: 
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade 
programs; or (2) adopting other control measures of the State's 
choosing and demonstrating that such control measures will result in 
compliance with the applicable State SO2 and NOX 
budgets.
    The May 12, 2005, and April 28, 2006, CAIR rules provide model 
rules that States must adopt (with certain limited changes, if desired) 
if they want to participate in the EPA-administered trading programs.
    With two exceptions, only States that choose to meet the 
requirements of CAIR through methods that exclusively regulate EGUs are 
allowed to participate in the EPA-administered trading programs. One 
exception is for States that adopt the opt-in provisions of the model 
rules to allow non-EGUs individually to opt into the EPA-administered 
trading programs. The other exception is for States that include all 
non-EGUs from their NOX SIP Call trading programs in their 
CAIR NOX ozone season trading programs.

IV. What Are the Types of CAIR SIP Submittals?

    States have the flexibility to choose the type of control measures 
they will use to meet the requirements of CAIR. EPA anticipates that 
most States will choose to meet the CAIR requirements by selecting an 
option that requires EGUs to participate in the EPA-administered CAIR 
cap-and-trade programs. For such States, EPA has provided two 
approaches for submitting and obtaining approval for CAIR SIP 
revisions. States may submit full SIP revisions that adopt the model 
CAIR cap-and-trade rules. If approved, these SIP revisions will fully 
replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP 
revisions. These SIP revisions will not replace the CAIR FIPs; however, 
the CAIR FIPs provide that, when approved, the provisions in these 
abbreviated SIP revisions will be used instead of or in conjunction 
with, as appropriate, the corresponding provisions of the CAIR FIPs 
(e.g., the NOX allowance allocation methodology).
    A State submitting a full SIP revision may either adopt regulations 
that are substantively identical to the model rules or incorporate by 
reference the model rules. CAIR provides that States may only make 
limited changes to the model rules if the States want to participate in 
the EPA-administered trading programs. A full SIP revision may change 
the model rules only by altering their applicability and allowance 
allocation provisions to:
    1. Include NOX SIP Call trading sources that are not 
EGUs under CAIR in the CAIR NOX ozone season trading 
program;
    2. Provide for State allocation of NOX annual or ozone 
season allowances using a methodology chosen by the State;
    3. Provide for State allocation of NOX annual allowances 
from the compliance supplement pool (CSP) using the State's choice of 
allowed, alternative methodologies; or
    4. Allow units that are not otherwise CAIR units to opt 
individually into the CAIR SO2, NOX annual, or 
NOX ozone season trading programs under the opt-in 
provisions in the model rules.
    An approved CAIR full SIP revision addressing EGUs' SO2, 
NOX annual, or NOX ozone season emissions will 
replace the CAIR FIP for that State for the respective EGU emissions.

V. Description of Illinois' CAIR SIP Submittal

A. The Background of Illinois' Submittal

    On March 29, 2007, Illinois submitted draft rules and voluminous 
supporting material for addressing CAIR requirements. These rules had 
been proposed by the Illinois Environmental Protection Agency (Illinois 
EPA) to the Illinois Pollution Control Board (IPCB) on May 30, 2006. 
(IPCB is the board responsible for adopting environmental regulations 
in Illinois.) The IPCB held hearings on these proposed rules on October 
10 through October 12, 2006, and again on November 28 and November 29, 
2006. Following these hearings and following discussions with 
interested parties, the Illinois EPA recommended a revised set of rules 
to the IPCB on January 5, 2007. These rules constitute the regulatory 
portion of the submittal by Illinois on March 29, 2007. In addition to 
the rules, Illinois' March 2007 submittal included voluminous 
supporting material used in the state rulemaking process to support the 
rules. This material included such documents as transcripts of hearings 
and Alternative Control Techniques documents describing NOX 
control options. IPCB then solicited further comment on refined 
versions of the rules. On June 29, 2007, Illinois EPA submitted 
comments on the ``first notice'' rules to EPA, including recommended 
rule language.
    IPCB adopted final rules on August 23, 2007, effective August 31, 
2007. IPCB makes the full set of relevant documents, including the 
final rules, available on its Web site, either by accessing https://
www.ipcb.state.il.us/ and selecting docket R2006-026 or by directly 
accessing https://www.ipcb.state.il.us/cool/external/
CaseView2.asp?referer=coolsearch&case=R2006-026.
    Illinois EPA submitted the final rules by a submittal postmarked 
September 14, 2007. Although the submittal letter was undated, EPA 
considers this package to have been submitted on the postmark date, 
i.e., September 14, 2007. This submittal also included interim draft 
rules and other materials developed during the IPCB rulemaking process 
after March 2007. The focus of EPA's rulemaking is on whether the final 
rules that Illinois adopted would satisfy EPA's requirements under 
CAIR.

B. Summary of Illinois' Rules

    Part 225 of Title 35 of the Illinois Administrative Code, entitled 
``Control Of Emissions From Large Combustion Sources,'' includes 
numerous provisions addressing utility emissions of SO2, 
NOX, and mercury. These rules are designed to address the 
requirements of both the CAIR and the Clean Air Mercury Rule (CAMR). 
Today's action addresses the CAIR portions of the Part 225 rules.
    Part 225 includes six subparts: Subpart A, entitled ``General 
Provisions,'' Subpart B, entitled ``Control Of Mercury Emissions From 
Coal-Fired Electric Generating Units,'' Subpart C, entitled ``CAIR 
SO2 Trading Program,'' Subpart D, entitled ``CAIR 
NOX Annual Trading Program,'' Subpart E, entitled ``CAIR 
NOX Ozone Season Trading Program, and Subpart F, entitled 
``Combined Pollutant Standards.'' The CAIR provisions are

[[Page 58531]]

addressed in subparts A, C, D, and E. Subpart B, which addresses 
mercury, was not included in Illinois' submittal and was submitted 
separately. Subpart F was included in Illinois' September 2007 
submittal but may be considered a part of Illinois' mercury plan; EPA 
will address Subpart F as part of EPA's separate rulemaking addressing 
Illinois' mercury rules.
    Subpart A contains general provisions, most notably including 
definitions and incorporation by reference. The definitions reflect the 
definitions given in the CAIR model rules and are included for terms 
that are used in Illinois' rules. (Although some definitions are 
pertinent to the regulation of mercury, today's action only addresses 
the adequacy of these definitions for CAIR purposes. Separate 
rulemaking will address the adequacy of these definitions for mercury 
regulation purposes.) The incorporation by reference incorporates 
almost the entirety of the CAIR model rules. With respect to the 
SO2 program in 40 CFR part 96, Illinois' rules incorporate 
subpart AAA (CAIR SO2 Trading Program General Provisions); 
40 CFR part 96, subpart BBB (CAIR Designated Representative for CAIR 
SO2 Sources); 40 CFR part 96, subpart FFF (CAIR 
SO2 Allowance Tracking System); 40 CFR part 96, subpart GGG 
(CAIR SO2 Allowance Transfers); and 40 CFR part 96, subpart 
HHH (Monitoring and Reporting), with two exceptions. Illinois does not 
incorporate 40 CFR 96.204 (entitled ``Applicability''), and 96.206 
(entitled ``Standard requirements''). For these two sections, Illinois 
instead has adopted language that is effectively identical to the 
language in EPA's model rule. Illinois also has adopted language 
addressing permitting requirements instead of incorporating subpart CCC 
by reference, and Illinois does not provide for opt-ins and therefore 
neither incorporates subpart III by reference nor adopts any similar 
state language. Illinois' incorporation by reference for the ozone 
season NOX program and for the annual NOX program 
closely parallels the incorporation by reference for the SO2 
program. EPA's model rules for NOX, unlike the model rules 
for SO2, have allowance allocation provisions (in 40 CFR 
part 96, subparts E and EE, respectively, and in related provisions in 
40 CFR 96.105(b)(2) and 96.305(b)(2)). However, Illinois did not 
incorporate these allocation provisions by reference and instead 
adopted its own provisions.
    Subpart C of Illinois' rule addresses the SO2 
requirements of CAIR. This subpart includes six sections, entitled, 
``Purpose,'' ``Applicability,'' ``Compliance Requirements,'' ``Appeal 
Procedures,'' ``Permit Requirements,'' and ``Trading Program'' 
respectively. The purpose is to regulate SO2 emissions in 
accordance with EPA's CAIR requirements. The requirements apply in 
general to boilers and combustion turbines that serve generators with 
capacity to produce greater than 25 megawatts, with an exemption for 
some cogeneration units and solid waste incineration units. Units 
subject to these rules must comply with allowance holding requirements 
and emissions monitoring requirements incorporated by reference from 40 
CFR part 96. Procedures for appealing EPA decisions in the 
SO2 trading program are the procedures given in 40 CFR part 
78. Owners or operators of units subject to the program must apply for 
a permit that will specify the requirements under the program that will 
apply to the source. Allowance allocations are the allocations 
determined in the Acid Rain Program under title IV of the CAA. After 
the end of each year starting with 2010, allowances held by a source 
are deducted to cover the source's emissions, according to retirement 
ratios that EPA has mandated.
    Subpart D of Illinois' rules addresses the NOX annual 
trading program of the CAIR. The sections described above in Subpart C 
(Illinois' SO2 program rules) are also present in Subpart D, 
using nearly identical language. In addition, Subpart D includes 
extensive sections addressing allowance allocations. Unlike the 
SO2 program, which relies on allowances issued under the 
Acid Rain Program, the annual NOX program relies on newly 
issued allowances. EPA gives states substantial flexibility in the 
allocation of NOX allowances so long as the total number of 
allowances allocated is within the state's budget that EPA has 
established and so long as certain timing requirements concerning the 
determination and submission to the Administrator of allocations are 
met. Section VI.D below describes Illinois' NOX allowance 
allocation systems in more detail.
    Subpart E of Illinois' rules address the NOX ozone 
season trading program. These rules are again quite similar to the 
rules in Subparts C and D (for the SO2 and the annual 
NOX trading programs, respectively), including rules 
providing for allowance allocations that are quite similar to the 
provisions in Subpart D. Again, this allocation system is described in 
more detail in section VI.D below.
    The CAIR NOX ozone season program is designed to replace 
the program known as the NOX SIP Call trading program. 
Therefore, a state like Illinois that is subject to both sets of 
requirements must adopt CAIR rules that suitably replace the state's 
NOX SIP Call trading program rules. Most notably, the state 
must adopt control measures that will achieve the amount of 
NOX emission reductions that were projected to be achieved 
by sources that were covered by the NOX SIP Call trading 
program but that are not covered by the CAIR NOX ozone 
season trading program. In addition, such states must address several 
transition issues such as the status of allowances issued under the 
NOX SIP Call that remain in circulation after the 
NOX SIP Call ends.
    Illinois' CAIR submittal does not fully address the replacement of 
the NOX SIP Call. Illinois' CAIR NOX ozone season 
trading program addresses the emissions from EGUs and do not address 
emissions from non-EGUs that are covered by the NOX SIP Call 
trading program. Non-EGUs in Illinois will thus not be part of the CAIR 
NOX ozone season trading program. Illinois is instead 
pursuing ``reasonably available control technology (RACT) rules'' that 
would subject the non-EGUs to specific emission limits. Illinois' rules 
also do not fully address the issues relating to transition from the 
NOX SIP Call program to the CAIR program.

VI. Analysis of Illinois' CAIR SIP Submittal

A. State Budgets for Allowance Allocations

    The CAIR NOX annual and ozone season budgets were 
developed from historical heat input data for EGUs. Using these data, 
EPA calculated annual and ozone season regional heat input values, 
which were multiplied by 0.15 lb/mmBtu, for phase 1, and 0.125 lb/
mmBtu, for phase 2, to obtain regional NOX budgets for 2009-
2014 and for 2015 and thereafter, respectively. EPA derived the State 
NOX annual and ozone season budgets from the regional 
budgets using State heat input data adjusted by fuel factors.
    The CAIR State SO2 budgets were derived by discounting 
the tonnage of emissions authorized by annual allowance allocations 
under the Acid Rain Program. Under CAIR, each allowance allocated in 
the Acid Rain Program for the years in phase 1 of CAIR (2010 through 
2014) authorizes 0.50 ton of SO2 emissions in the CAIR 
trading program, and each Acid Rain Program allowance allocated for the 
years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of 
SO2 emissions in the CAIR trading program.
    In today's action, EPA is approving Illinois' SIP revision that 
adopts the

[[Page 58532]]

NOX budgets and conforms with the SO2 budgets 
established for the State in CAIR. For NOX annual emissions, 
these budgets are 76,230 tons for each year from 2009 to 2014 and 
63,525 tons for each year thereafter. For NOX ozone season 
emissions these budgets are 30,701 for each year from 2009 to 2014 and 
28,981 tons for each year thereafter. For SO2, Illinois' 
rules provide for retirement ratios that, in concert with the number of 
allowances that EPA will issue under the Acid Rain Program, will 
reflect the budgets of 192,671 tons for each year from 2010 to 2014 and 
134,869 tons for each year thereafter.

B. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone-season model trading rules 
both largely mirror the structure of the NOX SIP Call model 
trading rule in 40 CFR part 96, subparts A through I. While the 
provisions of the NOX annual and ozone-season model rules 
are similar, there are some differences. For example, the 
NOX annual model rule (but not the NOX ozone 
season model rule) provides for a CSP, which is discussed below and 
under which allowances may be awarded for early reductions of 
NOX annual emissions. As a further example, the 
NOX ozone season model rule reflects the fact that the CAIR 
NOX ozone season trading program replaces the NOX 
SIP Call trading program after the 2008 ozone season and is coordinated 
with the NOX SIP Call program. The NOX ozone 
season model rule provides incentives for early emissions reductions by 
allowing banked, pre-2009 NOX SIP Call allowances to be used 
for compliance in the CAIR NOX ozone-season trading program. 
In addition, States have the option of continuing to meet their 
NOX SIP Call requirement by participating in the CAIR 
NOX ozone season trading program and including all their 
NOX SIP Call trading sources in that program.
    The provisions of the CAIR SO2 model rule are also 
similar to the provisions of the NOX annual and ozone season 
model rules. However, the SO2 model rule is coordinated with 
the ongoing Acid Rain SO2 cap-and-trade program under CAA 
title IV. The SO2 model rule uses the title IV allowances 
for compliance, with each allowance allocated for 2010-2014 authorizing 
only 0.50 ton of emissions and each allowance allocated for 2015 and 
thereafter authorizing only 0.35 ton of emissions. Banked title IV 
allowances allocated for years before 2010 can be used at any time in 
the CAIR SO2 cap-and-trade program, with each such allowance 
authorizing 1 ton of emissions. Title IV allowances are to be freely 
transferable among sources covered by the Acid Rain Program and sources 
covered by the CAIR SO2 cap-and-trade program.
    EPA also used the CAIR model trading rules as the basis for the 
trading programs in the CAIR FIPs. The CAIR FIP trading rules are 
virtually identical to the CAIR model trading rules, with changes made 
to account for federal rather than state implementation. The CAIR model 
SO2, NOX annual, and NOX ozone season 
trading rules and the respective CAIR FIP trading rules are designed to 
work together as integrated SO2, NOX annual, and 
NOX ozone season trading programs.
    In the SIP revision, Illinois chose to implement its CAIR budgets 
by requiring EGUs to participate in EPA-administered cap-and-trade 
programs for SO2, NOX annual, and NOX 
ozone season emissions. Illinois has adopted a full SIP revision that 
adopts, with certain allowed changes discussed below, the CAIR model 
cap-and-trade rules for SO2, NOX annual, and 
NOX ozone season emissions.

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

    In general, the CAIR model trading rules apply to any stationary, 
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion 
turbine serving at any time, since the later of November 15, 1990, or 
the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale.
    States have the option of bringing in, for the CAIR NOX 
ozone season program only, those units in the State's NOX 
SIP Call trading program that are not EGUs as defined under CAIR. 
However, Illinois has chosen not to expand the applicability provisions 
of the CAIR NOX ozone season trading program to include all 
non-EGUs in the State's NOX SIP Call trading program.

D. NOX Allowance Allocations

    Under the NOX allowance allocation methodology in the 
CAIR model trading rules and in the CAIR FIP, NOX annual and 
ozone season allowances are allocated to units that have operated for 
five years, based on heat input data from a three-year period that are 
adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for 
oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR 
FIP also provide a new unit set-aside from which units without five 
years of operation are allocated allowances based on the units' prior 
year emissions.
    States may establish in their SIP submissions a different 
NOX allowance allocation methodology that will be used to 
allocate allowances to sources in the States if certain requirements 
are met concerning the timing of submission of units' allocations to 
the Administrator for recordation and the total amount of allowances 
allocated for each control period. In adopting alternative 
NOX allowance allocation methodologies, States have 
flexibility with regard to:
    1. The cost to recipients of the allowances, which may be 
distributed for free or auctioned;
    2. The frequency of allocations;
    3. The basis for allocating allowances, which may be distributed, 
for example, based on historical heat input or electric and thermal 
output; and
    4. The use of allowance set-asides and, if used, their size.
    Illinois applied this flexibility to adopt systems for allocating 
allowances for the CAIR NOX annual trading program and for 
the CAIR NOX ozone season trading program that differ in 
several respects from the allocation systems in EPA's model rule. For 
both trading programs, Illinois sets aside 5 percent of the allowances 
for new sources and 25 percent for a ``clean air set aside.'' Under the 
clean air set aside, Illinois distributes allowances to three types of 
projects: (1) Projects that use renewable energy or that improve energy 
efficiency, (2) clean coal technology projects, including clean coal 
burning equipment (mainly integrated gasification combined cycle 
units), and (3) upgrades to pollution control equipment. While EPA 
expects Illinois' utilities to install several emission control systems 
even without this provision, this provision provides further incentive 
for Illinois utilities to install controls. Illinois also dedicates 
some of the set aside allowances for distribution for projects that are 
done relatively early. The rules require project sponsors to apply for 
allowances from this set aside, and the rules identify the criteria by 
which Illinois is to determine the number of allowances to be issued 
for a given project. The rules specify an initial subdivision of the 
clean air set aside according to project type, but the rules also 
provide for redistributing allocations among subdivisions if Illinois 
receives more or fewer requests for particular types of projects. The 
rules also specify how the new source set aside is to be allocated.
    Illinois' rules provide that the allowances that are not set aside 
are allocated according to electrical output, with the caveat that the 
utilities are initially given the option of determining output either 
directly or as a fixed efficiency factor times heat input. In

[[Page 58533]]

either case, the output value is further adjusted, depending on the 
type of fuel burned, to reflect the emission rates expected from 
burning different fuels. In particular, the output from coal-fired 
units is unadjusted, the output from oil-fired units is multiplied by 
0.6, and the output from units combusting other fuels is multiplied by 
0.4.
    EPA notes that, in sections 225.450(e) and 225.550(e), Illinois 
requires that, for purposes of monitoring output, the owner or 
operation of a CAIR unit must maintain a monitoring plan meeting 
certain requirements of ``40 CFR part 60 or 75, as applicable.'' 
Sections 225.450 and 225.550 address ``Monitoring, Recordkeeping, and 
Reporting Requirements for Gross Electrical Output and Useful Thermal 
Energy'', and paragraph (e) of each of these sections specifically 
mention ``gross electrical output.'' Consequently, EPA interprets 
sections 225.450(e) and 225.550(e) as limited to plans for monitoring 
output and as consistent with, and in addition to, the monitoring plan 
requirements under 40 CFR part 96, subparts HH and HHHH, which 
requirements are referenced in sections 225.410(c)(1) and 
225.510(c)(1).

E. Allocation of NOX Allowances From Compliance Supplement 
Pool

    The CAIR establishes a CSP to provide an incentive for early 
reductions in NOX annual emissions. The CSP consists of 
200,000 CAIR NOX annual allowances of vintage 2009 for the 
entire CAIR region, and a State's share of the CSP is based upon the 
projected magnitude of the emission reductions required by CAIR in that 
State. States may distribute CSP allowances, one allowance for each ton 
of early reduction, to sources that make NOX reductions 
during 2007 or 2008 beyond what is required by any applicable State or 
Federal emission limitation. States also may distribute CSP allowances 
based upon a demonstration of need for an extension of the 2009 
deadline for implementing emission controls. However, Illinois has 
chosen not to distribute the allowances of a CSP.

F. Individual Opt-in Units

    The opt-in provisions of the CAIR SIP model trading rules allow 
certain non-EGUs (i.e., boilers, combustion turbines, and other 
stationary fossil-fuel-fired devices) that do not meet the 
applicability criteria for a CAIR trading program to participate 
voluntarily in (i.e., opt into) the CAIR trading program. In the model 
rule, a non-EGU may opt into one or more of the CAIR trading programs. 
In order to qualify to opt into a CAIR trading program, a unit must 
vent all emissions through a stack and be able to meet monitoring, 
recordkeeping, and recording requirements of 40 CFR part 75. The owners 
and operators seeking to opt a unit into a CAIR trading program must 
apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in 
permit, the unit becomes a CAIR unit, is allocated allowances, and must 
meet the same allowance-holding and emissions monitoring and reporting 
requirements as other units subject to the CAIR trading program. The 
opt-in provisions provide for two methodologies for allocating 
allowances for opt-in units, one methodology that applies to opt-in 
units in general and a second methodology that allocates allowances 
only to opt-in units that the owners and operators intend to repower 
before January 1, 2015.
    States have several options concerning the opt-in provisions. 
States may adopt the CAIR opt-in provisions entirely or may adopt them 
but exclude one of the methodologies for allocating allowances. States 
may also decline to adopt the opt-in provisions at all.
    Illinois has chosen not to allow non-EGUs to opt into the CAIR 
NOX annual trading program, the CAIR NOX ozone 
season trading program, or the CAIR SO2 trading program.

VII. EPA Actions

    EPA is issuing direct final approval of Illinois' CAIR submittal. 
Under this SIP revision, Illinois is choosing to participate in the 
EPA-administered cap-and-trade programs for SO2, NOX 
annual, and NOX ozone season emissions. The SIP revision 
meets the applicable requirements in 40 CFR 51.123(o) and (aa), with 
regard to NOX annual and NOX ozone season 
emissions, and 40 CFR 51.124(o), with regard to SO2 
emissions. EPA is determining that the SIP meets the requirements of 
CAIR. As a consequence of the SIP approval, the Administrator of EPA 
will also issue, without providing an opportunity for a public hearing 
or an additional opportunity for written public comment, a final rule 
to withdraw the CAIR FIPs concerning SO2, NOX 
annual, and NOX ozone season emissions for Illinois. That 
action will remove and reserve 40 CFR 52.745 and 52.746.
    More specifically, EPA is approving Subparts A, C, D, and E of Part 
225 of Title 35 of the Illinois Administrative Code as submitted on 
September 14, 2007. The specific rules being approved include: In 
Subpart A, Sections 225.120, 225.130, 225.140, and 225.150; in Subpart 
C, Sections 225.300, 225.305, 225.310, 225.315, 225.320, and 225.325; 
in Subpart D, Sections 225.400, 225.405, 225.410, 225.415, 225.420, 
225.425, 225.430, 225.435, 225.440, 225.445, 225.450, 225.455, 225.460, 
225.465, 225.470, 225.475, and 225.480; and in Subpart E, Sections 
225.500, 225.505, 225.510, 225.515, 225.520, 225.525, 225.530, 225.535, 
225.540, 225.545, 225.550, 225.555, 225.560, 225.565, 225.570, and 
225.575. Section 225.100 (entitled ``Severability'') was not included 
in Illinois' September 2007 submittal but was included in Illinois' 
mercury rule submittal; EPA plans to address this section as part of 
its rulemaking on that mercury rule submittal. EPA is also deferring 
action on Subpart F, which EPA also plans to address in its rulemaking 
on Illinois' rules regarding mercury control.
    We are publishing this action without prior proposal because we 
view this as a noncontroversial amendment and anticipate no adverse 
comments. However, in the proposed rules section of this Federal 
Register publication, we are publishing a separate document that will 
serve as the proposal to approve the state plan if relevant adverse 
written comments are filed. This rule will be effective December 17, 
2007 without further notice unless we receive relevant adverse written 
comments by November 15, 2007. If we receive such comments, we will 
withdraw this action before the effective date by publishing a 
subsequent document that will withdraw the final action. All public 
comments received will then be addressed in a subsequent final rule 
based on the proposed action. The EPA will not institute a second 
comment period. Any parties interested in commenting on this action 
should do so at this time. If we do not receive any comments, this 
action will be effective December 17, 2007.

VIII. Statutory and Executive Order Reviews

Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is not a ``significant regulatory action'' and therefore is not 
subject to review by the Office of Management and Budget.

Executive Order 13211: Actions That Significantly Affect Energy Supply, 
Distribution, or Use

    Because it is not a ``significant regulatory action'' under 
Executive Order 12866 or a ``significant energy action,'' this action 
is also not subject to Executive Order 13211, ``Actions Concerning 
Regulations That

[[Page 58534]]

Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001).

Regulatory Flexibility Act

    This action merely approves 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.).

Unfunded Mandates Reform Act

    Because this rule approves 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).

Executive Order 13175: Consultation and Coordination With Indian Tribal 
Governments

    This 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 (59 
FR 22951, November 9, 2000).

Executive Order 13132: Federalism

    This 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 approves a state rule implementing a 
federal standard, and does not alter the relationship or the 
distribution of power and responsibilities established in the Clean Air 
Act.

Executive Order 13045: Protection of Children From Environmental Health 
and Safety Risks

    This rule also is not subject to Executive Order 13045 ``Protection 
of Children from Environmental Health Risks and Safety Risks'' (62 FR 
19885, April 23, 1997), because it approves a state rule implementing a 
Federal Standard.

National Technology Transfer Advancement Act

    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. In 
this context, in the absence of a prior existing requirement for the 
state to use voluntary consensus standards (VCS), EPA has no authority 
to disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Clean Air Act. Thus, the requirements 
of section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (15 U.S.C. 272 note) do not apply.

Paperwork Reduction Act

    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.).

Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).
    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by December 17, 2007. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

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

    Dated: September 21, 2007.
Bharat Mathur,
Acting Regional Administrator, Region 5.

0
For the reasons stated in the preamble, part 52, chapter I, title 40 of 
the Code of Federal Regulations is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart O--Illinois

0
2. Section 52.720 is amended by adding paragraph (c)(178) to read as 
follows:


Sec.  52.720  Identification of plan.

* * * * *
    (c)* * *
    (178) On September 14, 2007, the Illinois Environmental Protection 
Agency submitted rules and related material to address requirements 
under the Clean Air Interstate Rule. These rules mandate participation 
of electric generating units in EPA-run trading programs for annual 
emissions of sulfur dioxide, annual emissions of nitrogen oxides, and 
ozone season emissions of nitrogen oxides. These rules provide a 
methodology for allocating allowances to subject sources and require 
these sources to hold sufficient allowances to accommodate their 
emissions and to meet various monitoring, recordkeeping, and reporting 
requirements. EPA is approving the submitted provisions of Subparts A, 
C, D, and E of Part 225 of Title 35 of Illinois Administrative Code; 
EPA is deferring action on Subpart F.
    (i) Incorporation by reference.
    (A) Title 35 of the Illinois Administrative Code: Environmental 
Protection, Subtitle B: Air Pollution, Chapter I: Pollution Control 
Board, Part 225: Control of Emissions from Large Combustion Sources, 
effective August 31, 2007, including Subpart A: General Provisions, 
Subpart C: Clean Air Act Interstate Rule (CAIR) SO2 Trading 
Program, Subpart D: CAIR NOX Annual Trading Program, and 
Subpart E: CAIR NOX Ozone Season Trading Program.
 [FR Doc. E7-20142 Filed 10-15-07; 8:45 am]
BILLING CODE 6560-50-P