[Federal Register Volume 64, Number 198 (Thursday, October 14, 1999)]
[Proposed Rules]
[Pages 55667-55671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26856]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[Region II Docket No. NY33-1-197, FRL-6457-3]
Approval and Promulgation of Implementation Plans; New York;
Nitrogen Oxides Budget and Allowance Trading Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The Environmental Protection Agency proposes approval of New
York's State Implementation Plan (SIP) revision for ozone. This SIP
revision relates to New York's portion of the Ozone Transport
Commission's September 27, 1994 Memorandum of Understanding, which
includes a regional nitrogen oxides budget and allowance
(NOX Budget) trading program that will significantly reduce
NOX emissions generated within the Ozone Transport Region.
Today's action proposes approval of New York's regulations which
implement Phase II of the NOX Budget Trading Program to
reduce NOX, and intends to help meet the national ambient
air quality standard for ozone.
DATES: EPA must receive written comments on or before November 15,
1999.
ADDRESSES: Address all comments to: Raymond Werner, Acting Chief, Air
Programs Branch, Environmental Protection Agency, Region II Office, 290
Broadway, 25th Floor, New York, New York 10007-1866.
Copies of the state submittal and supporting documents are
available for inspection during normal business hours, at the following
addresses:
Environmental Protection Agency, Region II Office, Air Programs Branch,
290 Broadway, 25th Floor, New York, New York 10007-1866.
New York State Department of Environmental Conservation, Division of
Air Resources, 50 Wolf Road, Albany, New York 12233.
FOR FURTHER INFORMATION CONTACT: Richard Ruvo, Air Programs Branch,
Environmental Protection Agency Region II, 290 Broadway, 25th Floor,
New York, New York 10007-1866, (212) 637-4014.
SUPPLEMENTARY INFORMATION:
Overview
The Environmental Protection Agency (EPA) proposes approval of the
New York State Department of Environmental Conservation's (New York's)
Nitrogen Oxides Budget and Allowance (NOX Budget) Trading
Program.
The following table of contents describes the format for this
SUPPLEMENTARY INFORMATION section:
EPA's Action
What Action Is EPA Proposing Today?
Why is EPA Proposing this Action?
What is a Budget and Allowance Trading Program?
What Guidance did EPA Use to Evaluate New York's Program?
What is EPA's Evaluation of New York's Program?
New York's NOX Budget Trading Program
What is the Ozone Transport Commission's Memorandum of
Understanding (OTC MOU)?
Which States Signed the OTC MOU?
What Does the OTC MOU Require?
How Did States Meet the OTC MOU?
How Did New York Meet the OTC MOU?
How Does New York's Program Protect the Environment?
How Will New York and EPA Enforce the Program?
When Did New York Propose and Adopt the Program?
When Did New York Submit the Program to EPA and What Did it
Include?
What Other Significant Items Relate to New York's Program?
Conclusion
Administrative Requirements
EPA's Action
What Action Is EPA Proposing Today?
EPA proposes approval of a revision to New York's ozone State
Implementation Plan (SIP) which New York submitted on April 29, 1999.
This SIP revision relates to New York's new Subpart 227-3, ``Pre-2003
Nitrogen Oxides Emissions Budget and Allowance Program'' regulation for
New York's NOX Budget Trading Program.
Why Is EPA Proposing This Action?
EPA is proposing this action to:
Give you the opportunity to submit written comments on
EPA's proposed action, as discussed in the DATES and ADDRESSES sections
Fulfill New York's and EPA's requirements under the Clean
Air Act (the Act)
Make New York's NOX Budget Trading Program
federally-enforceable and available for credit toward the attainment
SIP.
What Is a Budget and Allowance Trading Program?
Air emissions trading uses market forces to reduce the overall cost
of compliance for sources, such as a power plant, while maintaining
emission reductions and environmental benefits. One type of market-
based program is an
[[Page 55668]]
emissions budget and allowance trading program, also commonly referred
to as a cap and trade program.
In a budget and allowance trading program, the state or EPA set a
regulatory limit, or budget, on mass emissions from a specific group of
sources. The state or EPA assigns or allocates allowances to the
sources, authorizing emissions up to the level of the budget. Sources
may sell or trade allowances with other sources, cost-effectively
complying with the budget. The budget limits the total number of
allocated allowances. The total effect is to reduce emissions. An
example of a budget and allowance trading program is EPA's Acid Rain
Program for reducing sulfur dioxide emissions.
What Guidance Did EPA Use To Evaluate New York's Program?
In 1994, EPA issued Economic Incentive Program (EIP) rules and
guidance (40 CFR part 51, subpart U), that outlines requirements for
establishing EIPs in cases where the Act requires States adopt EIPs to
meet the ozone and carbon monoxide standards in designated
nonattainment areas. There is no requirement for New York to submit an
EIP. However, since subpart U also contains guidance on the development
of voluntary EIPs, New York followed the EIP guidance in the
development and submittal of its NOX Budget Trading Program.
EPA evaluated New York's NOX Budget Trading Program to
determine whether the Program meets the SIP requirements described in
section 110 of the Act. EPA also evaluated the Program using the EIP of
1994 as guidance for voluntary EIPs, in coordination with other
guidance documents.
What Is EPA's Evaluation of New York's Program?
EPA determined New York's new Subpart 227-3 regulation for New
York's NOX Budget Trading Program is consistent with EPA's
guidance. Specifically, New York's NOX Budget Trading
Program is consistent with EPA's EIP guidance of 1994.
New York's Subpart 227-3 contains provisions for definitions,
program applicability, opt-ins, annual allowance allocation,
permitting, allowance transfer, allowance banking, early reduction
credits, the NOX Allowance Tracking System, monitoring,
recordkeeping, reporting, end-of-season reconciliation, compliance
certification, excess emissions deduction, the program audit, and
penalties.
Given the documentation in the SIP submittal and the provisions of
New York's NOX Budget Trading Program, and New York's
commitment for a periodic program audit, EPA determined New York will
continue to meet the reasonable further progress and SIP attainment
requirements.
Also, EPA has determined that the amendments and administrative
changes made to Part 200, Subpart 227-1, and Subpart 227-2 are
consistent with Subpart 227-3, and EPA's guidance.
A Technical Support Document (TSD), prepared in support of this
proposed action, contains the full description of New York's submittal
and EPA's evaluation. A copy of the TSD is available upon request from
the EPA Regional Office listed in the ADDRESSES section.
New York's NOX Budget Trading Program
What Is the Ozone Transport Commission's Memorandum of Understanding?
The Ozone Transport Commission (OTC) adopted a Memorandum of
Understanding (MOU) on September 27, 1994, which committed the
signatory states to the development and proposal of a region-wide
reduction in NOX emissions, with one phase of reductions by
1999 and another phase of reductions by 2003. Since the Act required
reasonably available control technology (RACT) to reduce NOX
emissions by May of 1995, the OTC MOU refers to the reduction in
NOX emissions by 1999 as Phase II and the reduction in
NOX emissions by 2003 as Phase III.
Which States Signed the OTC MOU?
The OTC states include Maine, New Hampshire, Vermont,
Massachusetts, Connecticut, Rhode Island, New York, New Jersey,
Pennsylvania, Maryland, Delaware, the northern counties of Virginia and
the District of Columbia. All of the OTC jurisdictions, with the
exception of the Commonwealth of Virginia, signed the September 27,
1994 MOU.
What Does the OTC MOU Require?
The OTC MOU requires a reduction in ozone season (May 1 to
September 30) NOX emissions from utility and large
industrial combustion facilities within the Ozone Transport Region.
This reduction furthers the effort to achieve the health-based national
ambient air quality standard for ozone. In the MOU, the OTC states
agreed to propose regulations for the control of NOX
emissions according to the following guidelines:
The level of required NOX reductions is from a
1990 baseline emissions level
The reduction would vary by location, or zone, and use a
two-phase region-wide trading program
The reduction required by May 1, 1999 is the less
stringent of the following:
a. The affected facilities in the inner zone will reduce their
NOX emission rate by 65% from the 1990 baseline, or emit
NOX at a rate no greater than 0.20 pounds per million Btu
b. The affected facilities in the outer zone will reduce their
NOX emission rate by 55% from the 1990 baseline, or emit
NOX at a rate no greater than 0.20 pounds per million Btu
The reduction required by May 1, 2003 is the less
stringent of the following:
c. The affected facilities in the inner and outer zones will reduce
their NOX emission rate by 75% from the 1990 baseline, or
emit NOX at a rate no greater than 0.15 pounds per million
Btu
d. The affected facilities in the northern zone will reduce their
NOX emission rate by 55% from the 1990 baseline, or emit
NOX at a rate no greater than 0.20 pounds per million Btu.
The inner zone consists of all contiguous moderate and above
nonattainment areas in the OTC, except those located in Maine. The
outer zone consists of the remainder of the OTC, except the northern
zone. The northern zone consists of Maine, Vermont and New Hampshire
(except for its moderate and above nonattainment areas) and the
northeastern attainment portion of New York.
New York must meet the requirements for the inner, outer and
northern zones.
How Did States Meet the OTC MOU?
First, after consideration of the reductions required in the OTC
MOU, the OTC States developed a 1990 baseline emission level and the
emission budgets for 1999 and 2003. The NOX Budget Trading
Program caps NOX emissions in the Ozone Transport Region at
219,000 tons in 1999 and 143,000 tons in 2003, less than half of the
1990 baseline emission level of 490,000 tons.
Then, the OTC charged a Task Force of representatives from the OTC
States, organized through the Northeast States for Coordinated Air Use
Management (NESCAUM) and the Mid-Atlantic Regional Air Management
Association (MARAMA), with the task of developing a model rule to
implement the program defined by the OTC MOU. During 1995 and 1996, the
NESCAUM/MARAMA NOX Budget Task Force worked with
[[Page 55669]]
EPA, as well as representatives from industry, utilities, and
environmental groups, and developed a model rule as a template for OTC
states to adopt their own rules to implement the OTC MOU. EPA's EIP
rules formed the general regulatory framework for the model rule. The
OTC issued the model rule on May 1, 1996. The model rule was intended
to be used by the OTC states to implement the Phase II reductions
called for in the MOU. The model rule does not specifically include the
implementation of Phase III.
How Did New York Meet the OTC MOU?
In accordance and consistent with the NESCAUM/MARAMA NOX
Budget model rule issued in May 1996, New York developed their
regulation, new Subpart 227-3 ``Pre-2003 Nitrogen Oxides Emissions
Budget and Allowance Program.''
Subpart 227-3 includes reduction requirements to implement Phase II
of the OTC's MOU. The regulation includes provisions for a regional
NOX Budget Trading Program, and establishes NOX
emission allowances for each NOX control period beginning
May 1, 1999 through the NOX control period ending September
30, 2002 (Phase II). New York's SIP submittal identifies the budget
sources and their initial NOX allowance allocations.
How Does New York's Program Protect the Environment?
Specific to New York, the NOX Budget Program will result
in NOX emissions reductions during the ozone season of 46%
between 1990 and 2002 from applicable sources. In 1990, NOX
emissions from NOX Budget sources totaled more than 82,000
tons during the ozone season. In 1995, following New York's
NOX RACT rules, emissions of NOX were reduced to
about 52,300 tons during the ozone season. The adopted NOX
Budget Program rules will further reduce NOX emissions to
46,959 tons during the ozone seasons from 1999 through 2002. The
NOX Budget Program accounts for an additional 64 tons per
day of NOX reductions beyond NOX RACT in 1999 and
76 tons per day in 2002.
In addition to contributing to attainment of the ozone standard,
decreases of NOX emissions will also likely help improve the
environment in several important ways. On a national scale, decreases
in NOX emissions will also decrease acid deposition,
nitrates in drinking water, excessive nitrogen loadings to aquatic and
terrestrial ecosystems, and ambient concentrations of nitrogen dioxide,
particulate matter and toxics. On a global scale, decreases in
NOX emissions will, to some degree, reduce greenhouse gases
and stratospheric ozone depletion.
How Will New York and EPA Enforce the Program?
Under New York's NOX Budget Trading Program, New York
allocates allowances to budget sources. Each allowance permits a source
to emit one ton of NOX during the seasonal control period.
For each ton of NOX discharged in a given control period,
EPA will remove one allowance from the source's allowance account. The
source, or any other source will never use this allowance again for
compliance. This is known as a retirement of the allowance.
Allowances may be bought, sold, or banked. Unused allowances may be
banked for future use, with limitation. Each budget source must comply
with the program by demonstrating at the end of each control period
that actual emissions do not exceed the amount of allowances held for
that period. However, regardless of the number of allowances a source
holds, it cannot emit at levels that would violate other federal or
state limits, for example, RACT, new source performance standards, or
Title IV.
The State and EPA will determine compliance by ensuring that
allowances held by a source at the end of each control period meet or
exceed the emissions for that source for the given control period.
Source owners will monitor emissions by certified monitoring systems
and must report resulting data to EPA. Violations are also possible for
not adhering to monitoring, reporting and record keeping requirements.
Lastly, the federally-enforceable operating permits for budget sources
contain the applicable requirements of the NOX Budget
Program.
When Did New York Propose and Adopt the Program?
New York proposed their NOX Budget Trading Program on
September 16, 1998 and held public hearings on November 2 and 4, 1998.
New York requested public comments by November 9, 1998. New York
adopted the NOX Budget Trading Program on January 12, 1999
with an effective date of March 5, 1999.
When Did New York Submit the Program to EPA and What Did It Include?
New York submitted its NOX Budget Trading Program SIP
revision to EPA on April 29, 1999. EPA determined the submittal
administratively and technically complete on June 18, 1999.
New York's NOX Budget Trading Program SIP revision
included the following elements:
New Subpart 227-3
Amended Part 200, Subpart 227-1 and 227-2
Source List and Allowance Allocation File, as supporting
information
Opt-in application and early reduction credit
applications, as supporting information.
What Other Significant Items Relate to New York's Program?
New York's NOX Budget Trading Program SIP
revision also fulfills the State's commitments to adopt the
NOX Budget Program with respect to the Alternative Ozone
Attainment Demonstration submittals sent to EPA on September 4, 1997
and November 27, 1998.
New York's Subpart 227-3 currently contains the
NOX emissions budget and allocation only for 1999 through
the ozone season of 2002, referred to as ``Phase II'' of the
NOX Budget Trading Program.
However, the OTC MOU obligates New York to require its allowance
program sources to make specific additional NOX reductions
by May 1, 2003 and continue to make reductions thereafter, i.e.,
``Phase III.'' Additionally, New York's attainment demonstrations will
rely on the NOX reductions associated with the OTC program
in 2003 and beyond to achieve attainment with the one hour ozone
standard.
In the response to comments, January 27, 1999 adoption documents,
New York said it remains committed to the OTC MOU Phase III emissions
reductions beginning in 2003. New York committed to implementing Phase
III in its ``April 1998 SIP submittal'' to EPA. New York commits to
implementing NOX control measures at least as stringent as
those called for in Phase III.
In its current form, Subpart 227-3 is approvable for 1999, 2000,
2001, and 2002. However, in order to meet the interstate MOU and for
New York to meet its attainment demonstration commitments, New York
will need to amend their regulations to establish the NOX
caps in the State during 2003 and beyond.
In September 1998, EPA issued the final Regional Transport of Ozone
Rule (``NOX SIP Call'') requiring 22 eastern States and the
District of Columbia to submit SIP's to address the regional transport
of ground-level ozone through reductions in NOX. New York
did not submit the April 29, 1999 SIP revision for Subpart 227-3 to
satisfy the requirements of the NOX SIP Call.
[[Page 55670]]
Therefore, in order to meet EPA's NOX SIP Call, New York
will need to submit an additional SIP revision that establishes the
NOX caps for the State during 2003 and beyond.
Conclusion
EPA proposes approval of the New York SIP revision for Subpart 227-
3, which implements Phase II of the OTC's MOU to reduce NOX.
This SIP revision implements New York's NOX Budget Trading
Program.
EPA requests public comment on the issues discussed in today's
action. EPA will consider all public comments before taking final
action. Interested parties may participate in the Federal rulemaking
procedure by submitting written comments to the EPA Regional office
listed in the ADDRESSES section.
Administrative Requirements
Executive Order 12866
The Office of Management and Budget (OMB) has exempted this
regulatory action from review under Executive Order (E.O.) 12866,
entitled ``Regulatory Planning and Review.''
Executive Order on Federalism
Under E.O. 12875, EPA may not issue a regulation that is not
required by statute and that creates a mandate upon a state, local, or
tribal government, unless the Federal government provides the funds
necessary to pay the direct compliance costs incurred by those
governments. If the mandate is unfunded, EPA must provide to the Office
of Management and Budget a description of the extent of EPA's prior
consultation with representatives of affected state, local, and tribal
governments, the nature of their concerns, copies of written
communications from the governments, and a statement supporting the
need to issue the regulation. In addition, E.O. 12875 requires EPA to
develop an effective process permitting elected officials and other
representatives of state, local, and tribal governments ``to provide
meaningful and timely input in the development of regulatory proposals
containing significant unfunded mandates.''
Today's rule does not create a mandate on state, local or tribal
governments. The rule does not impose any enforceable duties on these
entities. Accordingly, the requirements of section 1(a) of E.O. 12875
do not apply to this rule.
On August 4, 1999, President Clinton issued a new executive order
on federalism, Executive Order 13132, [64 FR 43255 (August 10, 1999),]
which will take effect on November 2, 1999. In the interim, the current
Executive Order 12612, [52 FR 41685 (October 30, 1987),] on federalism
still applies. This rule will not have a substantial direct effect on
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 12612.
The rule affects only one State, 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 Risks and Safety
Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is
determined to be ``economically significant'' as defined under E.O.
12866, and (2) concerns an environmental health or safety risk that EPA
has reason to believe may have a disproportionate effect on children.
If the regulatory action meets both criteria, the Agency must evaluate
the environmental health or safety effects of the planned rule on
children, and explain why the planned regulation is preferable to other
potentially effective and reasonably feasible alternatives considered
by the Agency.
This rule is not subject to E.O. 13045 because it is not an
economically significant regulatory action as defined by E.O. 12866,
and it does not address environmental health or safety risk that would
have a disproportionate effect on children.
Executive Order 13084
Under E.O. 13084, EPA may not issue a regulation that is not
required by statute, that significantly or uniquely affects the
communities of Indian tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the Federal
government provides the funds necessary to pay the direct compliance
costs incurred by the tribal governments. If the mandate is unfunded,
EPA must provide to the Office of Management and Budget, in a
separately identified section of the preamble to the rule, a
description of the extent of EPA's prior consultation with
representatives of affected tribal governments, a summary of the nature
of their concerns, and a statement supporting the need to issue the
regulation. In addition, E.O. 13084 requires EPA to develop an
effective process permitting elected officials and other
representatives of Indian tribal governments ``to provide meaningful
and timely input in the development of regulatory policies on matters
that significantly or uniquely affect their communities.''
Today's rule does not significantly or uniquely affect the
communities of Indian tribal governments. Accordingly, the requirements
of section 3(b) of E.O. 13084 do not apply to this rule.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small not-for-profit enterprises, and small governmental
jurisdictions. This proposed rule will not have a significant impact on
a substantial number of small entities because SIP approvals under
section 110 and subchapter I, part D of the Clean Air Act do not create
any new requirements but simply approve requirements that the State is
already imposing. Therefore, because the Federal SIP approval does not
create any new requirements, I certify that this action will not have a
significant economic impact on a substantial number of small entities.
Moreover, due to the nature of the Federal-State relationship under the
Clean Air Act, preparation of flexibility analysis would constitute
Federal inquiry into the economic reasonableness of state action. The
Clean Air Act forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976);
42 U.S.C. 7410(a)(2).
Unfunded Mandates
Under section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a federal mandate that may result in estimated
annual costs to State, local, or tribal governments in the aggregate;
or to private sector, of $100 million or more. Under section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the proposed approval action does not
[[Page 55671]]
include a federal mandate that may result in estimated annual costs of
$100 million or more to either State, local, or tribal governments in
the aggregate, or to the private sector. This federal action approves
pre-existing requirements under State or local law, and imposes no new
requirements. Accordingly, no additional costs to State, local, or
tribal governments, or to the private sector, result from this action.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and
recordkeeping requirements, Volatile organic compounds.
Authority: 42 U.S.C. 7401 et seq.
Dated: September 30, 1999.
William J. Muszynski,
Acting Regional Administrator, Region 2.
[FR Doc. 99-26856 Filed 10-13-99; 8:45 am]
BILLING CODE 6560-50-U
