E7-10317. Approval and Promulgation of Air Quality Implementation Plans; Indiana; Oxides of Nitrogen Regulations, Phase II

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

The EPA is proposing to approve Indiana's oxides of nitrogen (NO_X) rules which satisfy the requirements of EPA's NO_X SIP Call Phase II Rule (the Phase II Rule). We are proposing to approve these rules based on Indiana's demonstration that the State will meet the Phase II Rule requirements through rules regulating stationary internal combustion (IC) engines. Limiting NO_X emissions from IC engines will enable the State to meet the Phase II budget of 4,244 tons during the ozone season, thereby improving air quality and protecting the health of Indiana citizens. We are also proposing to approve other changes to Indiana's NO_X rules. These are minor clerical corrections and changes in definitions made by Indiana to conform to EPA's Phase II Rule. Citizens who wish to comment on this proposed approval of the Indiana Phase II NO_X plan are encouraged to do so within the timeframe noted below.

DATES:

Comments must be received on or before June 29, 2007.

ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-R05-OAR-2006-0540, by one of the following methods:

1. www.regulations.gov: Follow the on-line instructions for submitting comments.

2. E-mail: [e-mail].

3. Fax: [phone].

4. Mail: 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: 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 normal hours of operation, and special arrangements should be made for deliveries of boxed information. The Regional Office official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal holidays.

Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-2006-0540. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at 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 information that you consider to be CBI or otherwise protected through www.regulations.gov or e-mail. The www.regulations.gov Web site is an “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 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, any form of encryption, and be free of any defects or viruses. For additional instructions on submitting comments, go to Section I of the SUPPLEMENTARY INFORMATION section of this document.

Docket: All documents in the docket are listed in the www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in 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. This facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. We recommend that you telephone John Paskevicz, Engineer, at [phone] before visiting the Region 5 office.

FOR FURTHER INFORMATION CONTACT:

John Paskevicz, Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J), U. S. Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, [phone], [e-mail].

SUPPLEMENTARY INFORMATION:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This SUPPLEMENTARY INFORMATION section is arranged as follows:

I. What should I consider as I prepare my comments for EPA?

II. Background

III. Who is affected by the new Phase II rule and the amendments to the Phase I rules?

IV. What would approval of this rule accomplish?

V. How are owners and operators expected to comply with the new requirement?

VI. What action is EPA taking today?

VII. Statutory and Executive Order Reviews.

I. What should I consider as I prepare my comments for EPA?

When submitting comments, remember to:

1. Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

2. Follow directions—The EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

4. Describe any assumptions and provide any technical information and/or data that you used.

5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

6. Provide specific examples to illustrate your concerns, and suggest alternatives.

7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

8. Make sure to submit your comments by the comment period deadline identified.

II. Background

On October 27, 1998 (63 FR 57356), EPA issued the NO_X SIP Call in which it required 22 states, including Indiana, to prepare plans to reduce the transport of ozone throughout the eastern part of the United States. This was to be accomplished by reducing emissions of NO_X from selected source categories, primarily major fuel burning sources, using available cost-effective measures. The rule established a cap on emissions of NO_X from each state. States had flexibility in determining which fuel burning sources were to be included in their rules. For the most part, states targeted NO_X reductions from electric utilities and other large industrial boilers, cement kilns, and IC engines as sources which could be controlled in a cost-effective manner. Background information in this regard is available from documents prepared by EPA, and can be found at http://www.epa.gov/​ttn/​rto/​otag/​index.html.

Some states and industry challenged the rule. In Michigan v. EPA, 213 F.3d 663 (D.C.Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001), the Court largely upheld EPA's rulemaking. It did, however, remand a portion of the rule concerning IC engines to EPA for further notice and public comment.

Subsequent to the Court's decision, EPA proceeded initially with rules concerning electric generating units (EGU), industrial boilers (non-EGU) and cement kilns as Phase I sources. The IC engines fell into the Phase II group, to be addressed at a later date. Indiana adopted its Phase I rules and submitted them to EPA. We approved the Phase I rules on November 8, 2001 (66 FR 56465).

On April 21, 2004 (69 FR 21603), EPA issued the Phase II Rule. It required most States with Phase I budget programs to submit a Phase II plan to achieve incremental reductions not addressed by Phase I rules. The Phase II Rule also included amendments to the Phase I rules affecting definitions for EGUs, and identified the additional NO_X budget reductions (incremental reductions) that would be required by regulating large (greater than one ton per day emissions) IC engines. The amount of incremental reductions required resulted from the re-calculation of the overall budget to reflect a control level of 82 percent from natural gas-fired lean-burn IC engines with greater than one ton per day NO_X emissions. IDEM drafted the new rule (326 IAC 10-5, NO_X Reduction Program from IC Engines) based on guidance from EPA dated September 19, 2004, which contained an example model rule. The State also made some clerical changes to 326 IAC 10-3 and 10-4 as fix-ups to IDEM's existing NO_X SIP.

The public process for the State's IC engine rule started on May 4, 2005, and ended on October 5, 2005. The Indiana Air Pollution Control Board (IAPCB) adopted the rules and they became effective on February 26, 2006. New rule 326 IAC 10-5 applies to any person who owns or operates a large reciprocating stationary IC engine that emits more than one ton of NO_X per day during the ozone season. At the time of the State rulemaking, the only two subject Indiana companies were ANR Pipeline and Panhandle Eastern Company, which operate most of the gas-fired engines in the State. These companies own a total of 17 large lean-burn engines and many smaller engines throughout the State serving compressor stations located on pipelines that transport natural gas to customers.

The IAPCB also adopted minor changes to its Phase I rules in 326 IAC 10-3 and 10-4, to conform to changes EPA had made to its rule.

On March 8, 2006, the Indiana Department of Environmental Management (IDEM) submitted its Phase II rules to EPA. IDEM sent additional follow-up information addressing the budget demonstration for this source category in a June 22, 2006, letter requesting EPA approval. IDEM also asked in this submittal for EPA to approve the minor changes to the Phase I NO_X rules. The State's budget demonstration, which contains enforceable emission limits for Indiana IC engines, uses the information in the source compliance plans to conclude that these sources will meet the incremental reduction called for in the Phase II Rule.

The overall NO_X budget for Indiana was originally calculated using emissions data from base year 1995. This number was based on the assumption that IC engines would be controlled at a highly cost-effective (90 percent) control level. However, the Court ruled in Michigan v. EPA that EPA had failed to provide adequate notice of the 90 percent control level assumed for IC engines. In the original proposed rule, EPA had proposed a range of control levels from 82 to 91 percent for the IC engine portion of the budget. As a result of the Court's decision, EPA set the control level at 82 percent for gas-fired lean-burn engines and recalculated the budget. The recalculation resulted in an overall budget number which for most states is smaller than the budget published by EPA on March 2, 2000. The incremental difference is the target reduction which Indiana is required to (and expects) to achieve with the Phase II Rule.

In the Phase II Rule, EPA calculated the 2007 base year emissions inventory from which Indiana needed additional reductions of 4,244 tons per ozone season, based upon achieving an 82 percent reduction at all IC engines in Indiana with greater than one ton per day of NO_X emissions. EPA allows states flexibility to use company-wide emissions averaging to achieve the needed emissions reductions. (See August 22, 2002 memorandum from Lydia Wegman, Director, Air Quality Strategies and Standards Division, Office of Air Quality Planning and Standards, to EPA Air Division Directors). EPA's example model rule is sufficiently flexible to allow companies with multiple affected engines to comply using a specific emission rate limit for each engine listed in the source compliance plan. (see http://epa.gov/​ttncaaa1/​t1/​reports/​23814qnaasfin.pdf;​; undated memorandum, Phase II of the NO_X SIP Call: Q&As and Example Rule). Emission rate limits must be reflected in a Federally enforceable permit, the enforcement mechanism for the compliance plan, which shows that the control measures are adequate to meet the State's Phase II budget incremental difference.

The Indiana rule requires sources to show that the emission reductions associated with a source will meet the facility seasonal NO_X tonnage reduction assigned to the source. Sources are required to project 2007 base emissions and then show the emissions reductions associated with the control technology or other reduction methodology (engine replacement, for example). The Indiana budget demonstration shows that sources will meet the required seasonal tonnage reductions by reducing emissions from various other engines in the inventory, so that the overall reductions are equivalent to achieving 82 percent reductions on IC engines with greater than one ton per day NO_X emissions. Some of the engines use combustion modification and some engines have been replaced with newer engines. Demonstrated reductions resulting from the replacement of older engines with newer engines in some cases exceeds 82 percent. More importantly, the compliance plans for the two companies, as noted in the Indiana budget demonstration, show that the sources meet the NO_X SIP Call emission reductions specified for Indiana.

III. Who is affected by the new Phase II rule and the amendments to the Phase I rules?

New rule 326 IAC 10-5 applies to any person who owns or operates a large stationary reciprocating IC engine and other smaller stationary IC engines that are included in a compliance plan. A large IC engine is defined as an engine that emits more than one ton of NO_X per ozone season day, based on operation during the 1995 ozone season. Pipeline energy companies are the major users of large IC engines and the State developed its budget demonstration based on control of engines used in this energy transport industry.

The minor amendments to 326 IAC 10-3 and 326 IAC 10-4 clarify regulatory language and correct various clerical errors. They also incorporate changes applicable to EGUs and non-EGUs, made in accordance with EPA's Phase II Rule, including the definitions of “EGU” and “non-EGU” as applied to co-generation units.

IV. What would approval of this rule accomplish?

Approval of rule 326 IAC 10-05 will provide a means by which the State of Indiana will meet the required reductions of NO_X emissions from IC engines during the ozone season. The State rule affects NO_X SIP Call IC engines as well as any other stationary IC engine subject to NO_X control in the State's rule. The emission reductions for some large engines will be permanent and year-round resulting from low emission combustion measures retrofitted to existing engines. Low emission combustion measures cannot be cycled off once the changes are made to the engine. The combustion control technology is a permanent, physical change to the design and operation of the engine which, when implemented, is expected to reduce emissions of NO_X year-round. A source subject to these rules may achieve the required reductions through a facility-wide or State-wide averaging program approved by Indiana. The State's rules include provisions which the sources must follow to demonstrate compliance with the rules. The environmental benefits and health implications are expected to be permanent.

The amendments to the plan also make clarifying clerical and formatting corrections to previously approved rules 326 IAC 10-3 and 326 IAC 10-4. They incorporate changes contained in EPA's Phase II Rule applicable to EGUs and non-EGUs, including the definitions of “EGU” and “non-EGU” as applied to co-generation units. These amendments will bring the originally approved Phase I NO_X State rules into conformance with the Clean Air Act (CAA) and current EPA requirements.

V. How are owners and operators expected to comply with the new requirement?

Owners of large IC engines were required to submit to IDEM, by May 1, 2006, compliance plans showing how the companies will meet the emission reductions in their respective systems. The State's budget demonstration shows that the owners of the large NO_X SIP Call engines will reach the required reductions by reducing emissions from all of the engines in their respective systems and not just from the large, one-ton-per-day, engines. These reductions shown in the budget demonstration are taken from the compliance plans submitted to IDEM by the two companies currently subject to the rule, and must be achieved by May 1, 2007. The applicable emission rate, along with monitoring, record keeping and reporting requirements, must be incorporated into Federally enforceable State permits to be issued to the companies. As public documents, these permits and compliance reports can be viewed by the public to verify compliance with the State's plan.

Known subject sources have met the first increment of compliance by submitting to the State of Indiana compliance plans as required by rule. The next major increment is completion of the requirements listed in the source plans which bring the sources into compliance. This step, which includes the application of low emission technology (or other controls) or source averaging or both, must be completed by May 2007.

EPA published the incremental budget for affected States, including Indiana, in the April 21, 2004, Federal Register (69 FR 21604). The State's budget demonstration shows that, through the use of low emission combustion technology, installation of new units to replace old engines, and the use of averaging NO_X emissions system-wide by the two companies identified above, the State will be able to reduce emissions of NO_X to meet the Phase II incremental difference of 4244 tons of NO_X for the ozone season.

The State rule 326 IAC 10-5-3 includes a requirement that an owner or operator of a large IC engine shall not operate an affected engine during the ozone period unless there is a compliance plan which meets the requirements of the rule. The compliance plan was required to be submitted to the State by May 1, 2006, and the rules prohibit operation of affected engines after May 1, 2007, if they are not in compliance with the requirements. Included in the compliance plan is a requirement that the projected NO_X emissions from the engine, in grams per break horsepower-hour, be included in a Federally enforceable permit. This information will enable the State to determine if reductions from the covered sources should meet the Phase II budget increment. The failure of a source to meet the required NO_X reductions is a violation of the provisions of the permit. The State of Indiana is expected to determine non-compliance with its rules by reviewing monitoring and testing information submitted by the owners and operators of the affected engines. In addition, because the compliance plan will be included in Federally enforceable permits, EPA has the authority to enforce the applicable provisions.

VI. What action is EPA taking today?

EPA is proposing to approve the Phase II NO_X rules submitted by the State. We are taking this action because we have determined that the rules satisfy the requirements of the CAA and the Phase II Rule. The State has shown, through its budget demonstration, that it can achieve the Phase II budget increment through source compliance with the State's rules affecting IC engines and the State's permitting program. Meeting the Phase II budget increment and the Phase I increment means the State will meet its total overall ozone season NO_X budget and bring about reductions in ozone concentrations in the State and downwind from Indiana. EPA is also proposing to approve other changes to Indiana's NO_X SIP. These other changes are minor clerical corrections and changes in definitions to conform to the changes made by EPA in the NO_X Phase II Rule. Citizens who wish to comment on this proposed approval of the Indiana plan are encouraged to do so within the timeframe noted in the front of this action.

VI. Statutory and Executive Order Reviews

Executive Order 12866: Regulatory Planning and Review

Under Executive Order 12866 (58 FR 51735, September 30, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget.

Paperwork Reduction Act

This proposed 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.).

Regulatory Flexibility Act

This proposed action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed 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 proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

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 proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA.

Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

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

This proposed 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 proposes approval of a State rule implementing a Federal standard.

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 regulatory action,” 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).

National Technology Transfer Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), 15 U.S.C. 272, requires Federal agencies to use technical standards that are developed or adopted by voluntary consensus to carry out policy objectives, so long as such standards are not inconsistent with applicable law or otherwise impractical. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Absent a prior existing requirement for the state to use voluntary consensus standards, EPA has no authority to disapprove a SIP submission for failure to use such standards, and it would thus be inconsistent with applicable law for EPA to use voluntary consensus standards in place of a program submission that otherwise satisfies the provisions of the CAA. Therefore, the requirements of section 12(d) of the NTTAA do not apply.

List of Subjects in 40 CFR Part 52

• Environmental protection
• Air pollution control
• Incorporation by reference
• Intergovernmental relations
• Nitrogen dioxide
• Ozone
• Particulate matter
• Reporting and recordkeeping requirements

Dated: May 18, 2007.

Gary Gulezian,

Acting Regional Administrator, Region 5.