E7-19637. Approval and Promulgation of Implementation Plans; Georgia; Clean Air Interstate Rule

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

EPA is taking final action to approve a revision to the Georgia State Implementation Plan (SIP) submitted on March 28, 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 has determined that the SIP revision fully implements the CAIR requirements for Georgia. As a result of this action, EPA will also withdraw, through a separate rulemaking, the CAIR Federal Implementation Plans (FIPs) concerning sulfur dioxide (SO₂), and nitrogen oxides (NO_X annual) season emissions for Georgia. 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 NO_X that significantly contribute to, and interfere with maintenance of, the National Ambient Air Quality Standards (NAAQS) for fine particulates (PM_2.5) and/or ozone in any downwind state. CAIR establishes State budgets for SO₂ and NO_X 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 today, Georgia has met the CAIR requirements by electing to participate in the EPA-administered cap-and-trade programs addressing SO₂ and NO_X annual emissions.

DATES:

This rule is effective on November 8, 2007.

ADDRESSES:

EPA has established a docket for this action under Docket ID No. EPA-R04-OAR-2007-0251. All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some information is not publicly available, i.e., Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you contact the person listed in the FOR FURTHER INFORMATION CONTACT section 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:

Stacy Harder, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, Region 4, U.S. Environmental Protection Agency, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. The telephone number is [phone]. Ms. Harder can also be reached via electronic mail at [e-mail].

SUPPLEMENTARY INFORMATION:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Table of Contents

I. What Action Is EPA Taking?

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

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

IV. Analysis of Georgia's CAIR SIP Submittal

A. State Budgets for Allowance Allocations

B. CAIR Cap-and-Trade Programs

C. NO_X Allowance Allocations

D. Allocation of NO_X Allowances From the Compliance Supplement Pool

E. Individual Opt-in Units

V. What Comments Did We Receive and What Are Our Responses?

VI. Final Action

VII. Statutory and Executive Order Reviews

I. What Action Is EPA Taking?

EPA is taking final action to approve a revision to Georgia's SIP submitted on March 28, 2007. In its SIP revision, Georgia has met the CAIR requirements by requiring certain electric generating units (EGUs) to participate in the EPA-administered State CAIR cap-and-trade programs addressing SO₂, and NO_X annual emissions. Georgia's regulations adopt by reference most of the provisions of EPA's SO₂, and NO_X annual model trading rules, with certain changes discussed below. EPA has determined that the SIP as revised will meet the applicable requirements of CAIR. As a result of this action, the Administrator of EPA will also issue a final rule to withdraw the FIPs concerning SO₂, and NO_X annual emissions for Georgia. The Administrator's action will delete and reserve 40 CFR 52.584 and 40 CFR 52.585, relating to the CAIR FIP obligations for Georgia. The withdrawal of the CAIR FIPs for Georgia is a conforming amendment that must be made once the SIP is approved because EPA's authority to issue the FIPs was premised on a deficiency in the SIP for Georgia. Once a SIP is fully approved, EPA no longer has authority for the FIPs. Thus, EPA does not have the option of maintaining the FIPs following 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.

EPA proposed to approve Georgia's request to amend the SIP on August 2, 2007 (72 FR 42349). In that proposal, EPA also stated its intent to withdraw the FIP, as described above. The comment period closed on September 4, 2007. One comment was received and is addressed in Section V below. EPA is finalizing the approval as proposed based on the rationale stated in the proposal and in this final action.

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 PM_2.5 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 PM_2.5 formation, and/or NO_X, which is a precursor to both ozone and PM_2.5 formation. For jurisdictions that contribute significantly to downwind PM_2.5 nonattainment, CAIR sets annual State-wide emission reduction requirements (i.e., budgets) for SO₂ and annual State-wide emission reduction requirements for NO_X. Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets State-wide emission reduction requirements for NO_X for the ozone season (May 1 to September 30). 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 PM_2.5 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 PM_2.5 NAAQS.

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

CAIR establishes State-wide emission budgets for SO₂ and NO_X and is to be implemented in two phases. The first phase of NO_X 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 NO_X 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 NO_X 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 NO_X SIP Call trading programs in their CAIR NO_X ozone season trading programs.

IV. Analysis of Georgia's CAIR SIP Submittal

A. State Budgets for Allowance Allocations

In this action, EPA is taking final action to approve Georgia's SIP revision that adopts the budgets established for the State in CAIR, i.e., 66,321 (2009-2014) and 55,268 (2015-thereafter) tons for NO_X annual emissions, and 213,057 (2010-2014) and 149,140 (2015-thereafter) tons for SO₂ emissions. Georgia's SIP revision sets these budgets as the total amounts of allowances available for allocation for each year under the EPA-administered cap-and-trade programs.

B. CAIR Cap-and-Trade Programs

The CAIR NO_X annual and ozone season model trading rules both largely mirror the structure of the NO_X SIP Call model trading rule in 40 CFR part 96, subparts A through I. While the provisions of the NO_X annual and ozone season model rules are similar, there are some differences. For example, the NO_X annual model rule (but not the NO_X ozone season model rule) provides for a compliance supplement pool (CSP), which is discussed below and under which allowances may be awarded for early reductions of NO_X annual emissions. As a further example, the NO_X ozone season model rule reflects the fact that the CAIR NO_X ozone season trading program replaces the NO_X SIP Call trading program after the 2008 ozone season and is coordinated with the NO_X SIP Call program. The NO_X ozone season model rule provides incentives for early emissions reductions by allowing banked, pre-2009 NO_X SIP Call allowances to be used for compliance in the CAIR NO_X ozone season trading program. In addition, States have the option of continuing to meet their NO_X SIP Call requirement by participating in the CAIR NO_X ozone season trading program and including all their NO_X SIP Call trading sources in that program.

The provisions of the CAIR SO₂ model rule are also similar to the provisions of the NO_X 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 one 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, NO_X annual, and NO_X ozone season trading rules and the respective CAIR FIP trading rules are designed to work together as integrated SO₂, NO_X annual, and NO_X ozone season trading programs.

In the SIP revision, Georgia has chosen to implement its CAIR budgets by requiring EGUs to participate in EPA-administered cap-and-trade programs for SO₂ and NO_X annual emissions. Georgia has adopted a full SIP revision that adopts, with certain allowed changes discussed below, the CAIR model cap-and-trade rules for SO₂ and NO_X annual emissions.

C. NO_X Allowance Allocations

Under the NO_X allowance allocation methodology in the CAIR model trading rules and in the CAIR FIPs, NO_X 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 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 NO_X 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 NO_X 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.

Georgia has chosen to replace the provisions of the CAIR NO_X annual model trading rule concerning the allocation of NO_X annual allowances with its own methodology. Georgia has chosen to distribute NO_X annual allowances based upon allocation methods for both existing and new units. Georgia defines an existing unit as one that commences operation prior to January 1, 2006, rather than 2001 as in EPA's model rule. Georgia defines new sources as those that have commenced operation on or after January 1, 2006, and do not yet have a baseline heat input. Under Georgia's cap and trade program, allowances will be allocated to EGUs in an amount no greater than the NO_X budget established in EPA's model rule. Allocations are based on the highest annual amount of heat input during a baseline period, using heat input figures that are fuel-adjusted as set forth in EPA's model rule. Allowances are initially allocated for 2010 through 2011 and are allocated on a year-by-year basis, about three years in advance, for 2012 and each subsequent year. The baseline period for initial allocations is 2001-2005, and will be updated annually for subsequent allocations. For years 2010 and thereafter, 97 percent of the budget will be allocated to existing sources, with the remaining three percent allocated to new sources. A new-unit set aside will be established for each control period, and will be allocated CAIR NO_X allowances equal to 1,990 for control period 2009-2014. For control period 2015 and thereafter, the new-unit set aside will be allocated 1,658 CAIR NO_X allowances. EPA is taking final action to approve these variations from the model rule provisions because the changes are consistent with the flexibility that CAIR provides States with regard to allocation methodologies.

D. Allocation of NO_X Allowances From the Compliance Supplement Pool

CAIR establishes a compliance supplement pool to provide an incentive for early reductions in NO_X annual emissions. The CSP consists of 200,000 CAIR NO_X 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 NO_X reductions during 2007 or 2008 beyond what is required by any applicable State or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls.

The CAIR annual NO_X model trading rule establishes specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in the States.

Georgia has not chosen to modify the provisions from the CAIR NO_X annual model trading rule concerning the allocation of allowances from the CSP. Georgia has chosen to distribute CSP allowances using the allocation methodology provided in 40 CFR 96.143 and has adopted this section by reference.

E. 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. 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.

Georgia has chosen not to allow non-EGUs meeting certain requirements to opt into the CAIR SO₂ and CAIR NO_X annual trading programs.

V. What Comments Did We Receive and What Are Our Responses?

EPA received one comment letter from Summit Energy Partners, LLC (SEP-LLC). The following is a summary of the adverse comment received on the proposed rule published August 2, 2007, (72 FR 42349), and EPA's response to the comment.

Comment: SEP-LLC objected to Georgia's CAIR NO_X annual trading program new unit allocation provisions. SEP-LLC commented that Georgia's rule is inadequate and unfairly biases against new renewable resources in the State. It objects to a new source NO_X allocation methodology based on emission levels—a methodology it argues will not give renewable new sources a meaningful NO_X allocation. SEP-LLC asks EPA to remand Georgia's rule back to the Georgia Environmental Protection Division and seek new unit allocation provisions which do not favor large coal-fired units over the smaller-scale renewable sources.

Response: Under CAIR, EPA allows States participating in the CAIR NO_X trading programs to determine the methodology for allocating allowances to individual sources in that State, provided that certain specified requirements concerning the State NO_X budgets and allocation timing are met. See 70 FR 25160, 25279 (May 12, 2005.) When reviewing CAIR SIP submissions, therefore, EPA does not review issues relating to the equity of, or other general public policy concerns (e.g., environmental impacts other than the effect on NO_X emissions) that might be raised concerning, the State NO_X allocation methodology. Instead, EPA reviews the State allocation methodology for compliance with the requirements of CAIR.

Under CAIR, EPA establishes emission budgets for each State, and States have the option of participating in trading programs to satisfy their NO_X emission reduction requirements. Section 51.123(o) of CAIR provides that a State will be found to have demonstrated compliance with the State's annual NO_X budget if it adopts regulations substantively identical to the CAIR NO_X annual trading program model rule, or adopting regulations that differ substantively from that model rule in only a few specifically defined ways. One of the ways in which a State's annual NO_X trading program rule may differ from the CAIR model rule relates to the methodology used to allocate CAIR NO_X allowances. States participating in the CAIR annual NO_X trading program are given the flexibility to select the methodology for allocating allowances to units in their State, including the flexibility to decide whether any allowances should be reserved for new units and, if they are reserved, how they should be allocated. There are some limitations on the flexibility to select an allocation methodology. In particular, the allocation methodology cannot result in total allocations for a year exceeding the applicable State budget. In addition, each State must include in its rules provisions requiring it to meet certain deadlines for determining the allocations for units and submitting the allocation determinations to the EPA Administrator, who will record the allocations in the allowance tracking system. See 40 CFR 51.123(o)(2)(ii).

In this case, EPA has determined that the NO_X allocation methodology Georgia used to distribute its NO_X allowances meets the above-described requirements of CAIR. The commenter does not assert that Georgia's methodology fails to meet these requirements. Because Georgia's revised SIP meet these, and the other, requirements of CAIR, EPA is approving Georgia's revised SIP.

VI. Final Action

EPA is taking final action to approve Georgia's full CAIR SIP revision submitted on March 28, 2007. Under this SIP revision, Georgia is choosing to participate in the EPA-administered cap-and-trade programs for SO₂ and NO_X annual emissions. EPA has determined that the SIP revision meets the applicable requirements in 40 CFR 51.123(o) and (aa), with regard to NO_X annual emissions, and 40 CFR 51.124(o), with regard to SO₂ emissions. EPA has determined that the SIP as revised will meet the requirements of CAIR. 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, NO_X annual, and NO_X ozone season emissions for CFR 52.584 and 40 CFR 52.585. EPA will take final action to withdraw the CAIR FIPs for Georgia in a separate rulemaking.

VII. Statutory and Executive Order Reviews

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves State law as meeting Federal requirements and would impose no additional requirements beyond those imposed by State law. Accordingly, the Administrator certifies that this rule 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 action 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).

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 (65 FR 67249, November 9, 2000). 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 CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a State rule implementing a Federal standard.

In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit December 10, 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
• Incorporation by reference
• Intergovernmental relations
• Nitrogen oxides
• Ozone
• Particulate matter
• Reporting and recordkeeping requirements
• Sulfur oxides
• Volatile organic compounds

Dated: September 26, 2007.

J.I. Palmer, Jr.,

Regional Administrator, Region 4.

40 CFR part 52 is amended as follows:

PART 52—[AMENDED]

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

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

Subpart L—Georgia

2. Section 52.570(c) is amended by adding in numerical order new entries “391-3-1-.02(12)” and “391-3-1-.02(13)” to read as follows:

§ 52.570

Identification of plan.

* * * * *

(c) * * *

EPA-Approved Georgia Regulations

State citation	Title/subject	State effective date	EPA approval date	Explanation
391-3-1-.02 Provisions
*         *         *         *         *         *         *
391-3-1-.02(12)	Clean Air Interstate Rule NOX Annual Trading Program	02/28/07	10/09/07 [Insert citation of publication]
391-3-1-.02(13)	Clean Air Interstate Rule SO2 Annual Trading Program	02/28/07	10/09/07 [Insert citation of publication]

* * * * *