[Federal Register: February 26, 2004 (Volume 69, Number 38)]
[Proposed Rules]
[Page 8905-8911]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26fe04-35]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[MI84-01; FRL-7627-1]
Approval and Promulgation of Implementation Plans: Michigan:
Oxides of Nitrogen Rules
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: EPA is proposing to conditionally approve a State
Implementation Plan (SIP) revision submitted by the State of Michigan
on April 3, 2003. The submittal made by the Michigan Department of
Environmental Quality (MDEQ) responds to the EPA's regulation entitled,
``Finding of Significant Contribution and Rulemaking for Certain States
in the Ozone Transport Assessment Group Region for Purposes of Reducing
Regional Transport of Ozone,'' otherwise known as the ``NOX
SIP Call.'' The rules submitted by MDEQ establish and require nitrogen
oxides (NOX) emissions reductions through an allowance
trading program for large electric generating and industrial units, and
reductions from cement kilns, beginning in 2004. The intended effect of
the regulations submitted by MDEQ is to reduce emissions of
NOX in order to help attain the national ambient air quality
standard for ozone. We are proposing to conditionally approve
Michigan's Oxides of Nitrogen Budget Trading Program because it
generally meets the requirements of the Phase I NOX SIP Call
that will significantly reduce ozone in Michigan and ozone transport in
the eastern United States. We deemed the submittal as administratively
and technically complete in a letter of completeness sent to MDEQ on
April 24, 2003.
DATES: We must receive written comments on or before March 29, 2004.
ADDRESSES: You should send written comments to: J. Elmer Bortzer,
Acting Chief, Air Programs Branch (AR-18J), U.S. Environmental
Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago,
Illinois 60604.
You may inspect copies of the State submittal and EPA's analysis of
it at:
Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S.
Environmental Protection Agency, Region 5, 77 West Jackson Boulevard,
Chicago, Illinois 60604. (Please contact Douglas Aburano at (312) 353-
6960 or aburano.douglas@epa.gov before visiting the Region 5 Office.
Comments may also be submitted electronically or through hand
delivery/courier; please follow the detailed instructions described in
Part(I)(B)(1)(i) through (iii) of the Supplementary Information
section.
FOR FURTHER INFORMATION CONTACT: Douglas Aburano, Environmental
Engineer, Criteria Pollutant Section (AR-18J), Air Programs Branch, Air
and Radiation Division, United States Environmental Protection Agency,
Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312)
353-6960, aburano.douglas@epa.gov.
SUPPLEMENTARY INFORMATION: Throughout this document, the term ``you''
refers to the reader of this rule and/or to sources subject to the
State rule, and the terms ``we'', ``us'', or ``our'' refer to EPA.
On April 3, 2003, MDEQ submitted a NOX emission control
plan to the EPA for inclusion in Michigan's SIP to meet the
requirements of the Phase I NOX SIP Call. The revisions
generally comply with the requirements of the Phase I NOX
SIP Call. Included in this document are Michigan Rules 802 through 817.
The information in this proposed conditional approval is organized as
follows:
I. General Information
II. Background
A. What is EPA proposing today?
B. What are the NOX SIP Call general requirements?
C. What is EPA's NOX budget and allowance trading
program?
D. EPA's Section 126 Rule in Michigan.
E. What guidance did EPA use to evaluate Michigan's submittal?
F. What is the result of EPA's evaluation of Michigan's program?
G. NOX Allowance Allocations
H. NOX Budget Permits
I. What deficiencies must be addressed by MDEQ?
J. What happens if MDEQ fails to address these deficiencies?
III. Michigan's Control of NOX Emissions
A. When did Michigan submit the SIP revision to EPA in response
to the NOX SIP Call?
B. When did Michigan hold public hearings and what were the
results?
C. What is included in Michigan's NOX SIP Call
Revision?
D. What is the Compliance Supplement Pool?
E. How does Michigan's NOX SIP affect sources subject
to EPA's Section 126 Rule in the SIP Call Area?
IV. EPA's Proposal
V. Statutory and Executive Order Reviews
I. General Information
A. How Can I Get Copies Of This Document and Other Related Information?
1. We have established an official public rulemaking file available
for inspection at the Regional Office. EPA has established an official
public rulemaking file for this action under ``Region 5 Air Docket
MI84''. The official public file consists of the documents specifically
referenced in this action, any public comments received, and other
information related to this action. Although a part of the official
docket, the public rulemaking file does not include Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. The official public
[[Page 8906]]
rulemaking file is the collection of materials that is available for
public viewing at the Air Programs Branch, Air and Radiation Division,
EPA Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604. 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.
2. Electronic Access. You may access this Federal Register document
electronically through the Regulations.gov Web site located at http://www.regulations.gov
where you can find, review, and submit comments on
federal rules that have been published in the Federal Register, the
Government's legal newspaper, and are open for comment.
For public commenters, it is important to note that EPA's policy is
that public comments, whether submitted electronically or in paper,
will be made available for public viewing at the EPA Regional Office,
as EPA receives them and without change, unless the comment contains
copyrighted material, CBI, or other information whose disclosure is
restricted by statute. When EPA identifies a comment containing
copyrighted material, EPA will provide a reference to that material in
the version of the comment that is placed in the official public
rulemaking file. The entire printed comment, including the copyrighted
material, will be available at the Regional Office for public
inspection.
B. How and To Whom Do I Submit Comments?
You may submit comments electronically, by mail, or through hand
delivery/courier. To ensure proper receipt by EPA, identify the
appropriate rulemaking identification number by including the text
``Public comment on proposed rulemaking Region 5 Air Docket MI84'' in
the subject line on the first page of your comment. Please ensure that
your comments are submitted within the specified comment period.
Comments received after the close of the comment period will be marked
``late.'' EPA is not required to consider these late comments.
1. Electronically. If you submit an electronic comment as
prescribed below, EPA recommends that you include your name, mailing
address, and an e-mail address or other contact information in the body
of your comment. Also include this contact information on the outside
of any disk or CD ROM you submit, and in any cover letter accompanying
the disk or CD ROM. This ensures that you can be identified as the
submitter of the comment and allows EPA to contact you in case EPA
cannot read your comment due to technical difficulties or needs further
information on the substance of your comment. EPA's policy is that EPA
will not edit your comment, and any identifying or contact information
provided in the body of a comment will be included as part of the
comment that is placed in the official public docket. 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.
i. E-mail. Comments may be sent by electronic mail (e-mail) to
bortzer.jay@epa.gov. Please include the text ``Public comment on
proposed rulemaking Region 5 Air Docket MI84'' in the subject line.
EPA's e-mail system is not an ``anonymous access'' system. If you send
an e-mail comment directly without going through Regulations.gov, EPA's
e-mail system automatically captures your e-mail address. E-mail
addresses that are automatically captured by EPA's e-mail system are
included as part of the comment that is placed in the official public
docket.
ii. Regulations.gov. Your use of Regulations.gov is an alternative
method of submitting electronic comments to EPA. Go directly to
Regulations.gov at http://www.regulations.gov, then click on the button
``TO SEARCH FOR REGULATIONS CLICK HERE'', and select Environmental
Protection Agency as the Agency name to search on. The list of current
EPA actions available for comment will be listed. Please follow the
online instructions for submitting comments. The system is an
``anonymous access'' system, which means EPA will not know your
identity, e-mail address, or other contact information unless you
provide it in the body of your comment.
iii. Disk or CD ROM. You may submit comments on a disk or CD ROM
that you mail to the mailing address identified in Section 2, directly
below. These electronic submissions will be accepted in WordPerfect,
Word or ASCII file format. Avoid the use of special characters and any
form of encryption.
2. By Mail. Send your comments to: J. Elmer Bortzer, Acting Chief,
Air Programs Branch, (AR-18J), U.S. Environmental Protection Agency,
Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604. Please
include the text ``Public comment on proposed rulemaking Region 5 Air
Docket MI84'' in the subject line on the first page of your comment.
3. By Hand Delivery or Courier. Deliver your comments to: J. Elmer
Bortzer, Acting Chief, Air Programs Branch, (AR-18J), U.S.
Environmental Protection Agency, Region 5, 77 West Jackson Boulevard,
18th floor, 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.
C. How Should I Submit CBI To the Agency?
Do not submit information that you consider to be CBI
electronically to EPA. You may claim information that you submit to EPA
as CBI by marking any part or all of that information as CBI (if you
submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as
CBI and then identify electronically within the disk or CD ROM the
specific information that is CBI). Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2.
In addition to one complete version of the comment that includes
any information claimed as CBI, a copy of the comment that does not
contain the information claimed as CBI must be submitted for inclusion
in the official public regional rulemaking file. If you submit the copy
that does not contain CBI on disk or CD ROM, mark the outside of the
disk or CD ROM clearly that it does not contain CBI. Information not
marked as CBI will be included in the public file and available for
public inspection without prior notice. If you have any questions about
CBI or the procedures for claiming CBI, please consult the person
identified in the FOR FURTHER INFORMATION CONTACT section.
II. Background
A. What Is EPA Proposing Today?
EPA is proposing to conditionally approve revisions to Michigan's
SIP concerning the adoption of its NOX Rules, submitted on
April 3, 2003. The rules meet the requirements of the Phase I
NOX SIP Call with certain exceptions. MDEQ is in the process
of adopting rules to correct these deficiencies. Once MDEQ has
submitted the rule changes to address these deficiencies, we can take
action to fully approve the SIP revision.
B. What Are the NOX SIP Call General Requirements?
On October 27, 1998, EPA published a final rule entitled, ``Finding
of Significant Contribution and Rulemaking for Certain States in the
[[Page 8907]]
Ozone Transport Assessment Group Region for Purposes of Reducing
Regional Transport of Ozone,'' otherwise known as the ``NOX
SIP Call.'' See 63 FR 57356. The NOX SIP Call requires 22
states and the District of Columbia to meet NOX emission
budgets during the five month period from May 1 through September 30 in
order to reduce the amount of ground level ozone that is transported
across the eastern United States. As the result of court actions, the
compliance date for the first year has been changed to May 31, 2004 and
the NOX SIP Call has been divided into two phases.
EPA identified NOX emission reductions by source
category that could be achieved by using highly cost-effective
measures. The source categories included were large electric generating
units (EGUs) and non-electric generating units (non-EGUs), internal
combustion (IC) engines and cement kilns. EPA derived state-wide
NOX emission budgets based on the implementation of these
highly cost-effective controls for each affected jurisdiction to be met
by the year 2007. Internal combustion engines are not addressed by
Michigan in this submittal which responds to Phase I, but will be
addressed in a response to EPA's Phase II requirements. The
NOX SIP Call allowed states the flexibility to decide which
source categories to regulate in order to meet the statewide budgets.
In the NOX SIP Call notice, EPA suggested that a cap and
trade program for EGUs (fossil-fuel fired electric generating boilers
and turbines serving a generator greater than 25 MW) and non-EGUs
(large fossil-fuel fired industrial boilers and turbines) would provide
a highly cost-effective means for states to meet their NOX
budgets. In fact, the state-specific budgets were set assuming an
emission rate of 0.15 pounds NOX per million British thermal
units (lb. NOX/mmBtu) at EGUs, multiplied by the projected
heat input (mmBtu) from burning the quantity of fuel needed to meet the
2007 forecast for electricity demand (See 63 FR 57407). The
NOX SIP Call State budgets also assume a 30 percent
NOX reduction from cement kilns, and a 60 percent reduction
from non-EGUs. The non-EGU control assumptions were applied at units
whose maximum design heat input was greater than 250 mmBtu per hour, or
in cases where heat input data were not available or appropriate, at
units with actual emissions greater than one ton per day. Phase I
budgets did not include reductions from IC engines. EPA's Phase II
NOX SIP Call will address reductions from these sources.
To assist the states in their efforts to meet the SIP Call, the
NOX SIP Call final rulemaking notice included a model
NOX cap and trade regulation, called ``NOX Budget
Trading Program for State Implementation Plans,'' (40 CFR part 96),
that could be used by states to develop their regulations. The
NOX SIP Call notice explained that if states developed an
allowance trading regulation consistent with the EPA model rule, they
could participate in a regional allowance trading program that would be
administered by the EPA (See 63 FR 57458-57459).
There were several periods during which EPA received comments on
various aspects of the NOX SIP Call emissions inventories.
On March 2, 2000, EPA published additional technical amendments to the
NOX SIP Call in the Federal Register (65 FR 11222). On March
3, 2000, the DC Circuit issued its decision on the NOX SIP
Call ruling in favor of EPA on all the major issues. Michigan v. EPA,
213 F.3d 663 (D.C. Cir. 2000). The DC Circuit denied petitioners'
requests for rehearing or rehearing en banc on July 22, 2000. However,
the Circuit Court remanded four specific elements to EPA for further
action: The definition of electric generating unit, the level of
control for stationary internal combustion engines, the geographic
extent of the NOX SIP Call for Georgia and Missouri, and the
inclusion of Wisconsin. On March 5, 2001, the U.S. Supreme Court
declined to hear an appeal by various utilities, industry groups and a
number of upwind states from the DC Circuit's ruling on EPA's
NOX SIP Call rule.
On April 11, 2000, in response to the Court's decision, EPA
notified Michigan of the maximum amount of NOX emissions
allowed for the State during the ozone season. This emission budget
reflected adjustments to Michigan's NOX emission budget to
reflect the Court's decision that Georgia and Missouri should not be
included in full. Although the Court did not order EPA to modify
Michigan's budget, the EPA believes these adjustments are consistent
with the Court's decision.
On February 22, 2002 (67 FR 8396), EPA published a proposal that
addresses the remanded portion of the NOX SIP Call Rule. Any
additional emissions reductions required as a result of a final
rulemaking on that proposal will be reflected in the second phase
portion (Phase II) of the State's emission budget.
C. What Is EPA's NOX Budget and Allowance Trading Program?
EPA's model NOX budget and allowance trading rule, 40
CFR part 96, sets forth an NOX emissions trading program for
large EGUs and non-EGUs. A state can voluntarily choose to adopt EPA's
model rule in order to allow sources within its borders to participate
in regional allowance trading. The October 27, 1998, Federal Register
notice contains a full description of the EPA's model NOX
budget trading program (See 63 FR 57514-57538 and 40 CFR part 96).
Air emissions trading, in general, uses market forces to reduce the
overall cost of compliance for pollution sources, such as power plants,
while achieving emission reductions and environmental benefits. One
type of market-based program is an emissions budget and allowance
trading program, commonly referred to as a ``cap and trade'' program.
In an emissions cap and trade program, the state or EPA sets a
regulatory limit, or emissions budget or cap, for total mass emissions
from a specific group of sources. The budget limits the total number of
allowances for all sources covered by the program during a particular
control period. When the budget is set at a level lower than the
current emissions, the effect is to reduce the total amount of
emissions during the control period. After setting the budget, the
state or EPA then assigns, or allocates, allowances up to the level of
the budget. Each allowance authorizes the emission of a quantity of
pollutant, e.g., one ton of airborne NOX.
At the end of the control period, each affected source must
demonstrate that its actual emissions during the control period were
less than or equal to the number of available allowances it holds.
Sources that reduce their emissions below their allocated allowance
level may sell or bank their extra allowances. Sources that emit more
than the amount of their allocated allowance level may buy allowances
from the sources with extra reductions. In this way, the budget is met
and in the most cost-effective manner.
D. EPA's Section 126 Rule in Michigan
In a rulemaking separate from the NOX SIP Call, EPA
placed requirements directly on sources in Michigan, and many other
states in the eastern half of the country, to reduce NOX
emissions that adversely affect downwind areas in other states. This
rule is known as EPA's Section 126 Rule (65 FR 2764). The Section 126
Rule is similar to the NOX SIP Call in that it is designed
to address
[[Page 8908]]
the problem of downwind transport and many of the sources that would be
affected by states' NOX SIPs are also affected by the
Section 126 Rule. The sources that are required to reduce emissions
under the Section 126 Rule are EGUs (units serving a generator with
nameplate capacity greater than 25 MW) and non-EGUs (units with maximum
design heat input greater than 250 mmBtu/hr). These rules are different
in that the NOX SIP Call is a requirement placed upon states
to develop rules that will reduce NOX emissions but it is up
to the state to determine what sources to control.
EPA issued the Section 126 rulemaking based on petitions filed by
eight Northeastern States seeking to mitigate interstate transport of
NOX. These petitions requested EPA to require NOX
reductions from specific upwind NOX sources or source
categories. EPA based its section 126 findings on the same technical
work that was used in the NOX SIP Call.
E. What Guidance Did EPA Use To Evaluate Michigan's Submittal?
The final NOX SIP Call rule included a model
NOX budget trading program regulation (See 40 CFR part 96).
EPA used the model rule and 40 CFR 51.121-51.122 to evaluate Michigan's
Oxides of Nitrogen Budget Trading Program for EGUs and non-EGUs. A
cement kiln rule was included as part of a Federal Implementation Plan
(FIP) that EPA proposed on October 28, 1998 (See 63 FR 56393). We used
this proposed FIP cement kiln rule to evaluate Michigan's cement kiln
rule.
F. What Is the Result of EPA's Evaluation of Michigan's Program?
EPA has evaluated Michigan's April 3, 2003, SIP submittal and finds
the majority of it approvable. The Michigan Oxides of Nitrogen Budget
Trading Program is basically consistent with EPA's guidance and almost
meets all of the requirements of the Phase I NOX SIP Call.
EPA finds the NOX control measures in the Michigan's Oxides
of Nitrogen Budget Trading Program generally approvable. If it becomes
fully approved, the April 3, 2003, submittal will strengthen Michigan's
SIP for reducing ground level ozone by providing NOX
reductions beginning in 2004. EPA finds that the submittal contained
the information necessary to demonstrate that Michigan has the legal
authority to implement and enforce the control measures, and to
demonstrate their appropriate distribution of the compliance supplement
pool. Furthermore, EPA finds that the submittal demonstrates that the
compliance dates and schedules, and the monitoring, recordkeeping and
emission reporting requirements will be met.
We identified certain deficiencies during our review but because
MDEQ has been made aware of these problems and is currently in the
process of addressing them, we are proposing to conditionally approve
the submittal made by MDEQ on April 3, 2003. MDEQ requested this
conditional approval of its April 2003 submittal in a letter dated
January 9, 2004. In this letter, MDEQ has committed to submit fully
adopted rules addressing the identified deficiencies by May 31, 2004.
Upon receipt of these newly adopted rules eliminating all deficiencies,
we can take action to fully approve Michigan's NOX SIP.
G. NOX Allowance Allocations
Because the vast majority of the SIP submitted by MDEQ has been
found approvable by EPA and because MDEQ has committed to address the
deficiencies identified by EPA, by no later than May 31, 2004, EPA will
allocate NOX allowances to the affected sources in Michigan
per the allocation methodology found in the Michigan SIP after
finalization of this conditional approval.
H. NOX Budget Permits
State rules currently require the MDEQ to issue NOX
Budget permits. Following EPA's final conditional approval of the
Michigan NOX Rules into the Michigan SIP, the terms of any
NOX Budget permit issued under the SIP-approved program are
federally enforceable pursuant to the SIP.
I. What Deficiencies Must Be Addressed by MDEQ?
In the review of Michigan's NOX SIP, EPA identified six
deficiencies that need to be corrected before these rules can be fully
approved. These deficiencies have been communicated to MDEQ and now,
MDEQ is in the process of changing its rules to address these problems.
Following is a list of the identified deficiencies:
1. Rule 802(5) states, ``An oxides of nitrogen budget unit that is
subject to a rule promulgated under section 126 of the Clean Air Act
shall not be subject to this rule until the section 126 requirements no
longer apply.'' Under this language, those oxides of nitrogen budget
units that are subject to the Section 126 Rule and that would be
subject to controls under the Michigan SIP are not covered by the SIP.
The Section 126 Rule remains in place and will remain effective until
EPA approves the Michigan SIP. The EPA cannot approve the Michigan SIP,
and move forward to remove the Section 126 requirements, unless the SIP
has in place regulations to achieve the necessary emissions reductions
to meet the Phase I budget. In evaluating the SIP, EPA cannot take into
consideration the emissions reductions required by the Section 126
Rule. Because the Section 126 Rule would still be in place at the time
EPA takes action on the Michigan SIP, oxides of nitrogen budget units
that would otherwise be subject to controls under the Michigan SIP
would not be covered at that time. Therefore, the SIP would not be
providing sufficient emissions reductions to meet the Phase I budget
and would not be approvable. This language must be removed from the
State's rules. EPA will then take action to ensure that no unit is
subject to both trading programs.
2. The applicability of these rules is based on named counties in
the southern portion of Michigan. While this applicability is
sufficient to meet the requirements found in the SIP Call, it is not
enough to remove all of the Section 126 requirements from the State.
This is because there is one source, Detroit Edison's Harbor Beach
unit, that is affected by Section 126 requirements, but is not in one
of the counties affected by Michigan's NOX SIP call rule.
Michigan has indicated a desire to include the Harbor Beach unit in the
trading program in order to satisfy the Section 126 requirements for
this source. To address this situation and enable EPA to remove all of
the Section 126 requirements from Michigan after the Michigan
NOX SIP has been approved, MDEQ must extend the
applicability of the Michigan NOX SIP to that one source.
3. Twenty-five ton exemption--States may develop alternative 25-ton
NOX exemptions to the one included in the model rule
provided they are based on permit restrictions that limit a unit's
potential to emit during an ozone season to 25 tons or less and are not
inconsistent with 40 CFR part 75 monitoring requirements. Michigan's
regulation, Part 8. Emissions Limitations and Prohibitions--Oxides of
Nitrogen, includes in Rule 802(2) the 25-ton exemption. The rule
language is based on the model rule but provides additional options for
qualifying for the exemption that involve emission monitoring or
testing that is inconsistent with part 75.
In addition, when a unit receives a 25-ton exemption, the unit's
potential emissions (reflected as an equivalent number of allowances)
must be removed
[[Page 8909]]
from the trading budget to avoid double counting. An exempt unit's
emissions are included in the state's large EGU or large non-EGU
emissions budget and therefore as allowances in the state's trading
budget. EPA is concerned that Michigan's rule does not account for
potential emissions from the exempt units. Neither the rule nor the SIP
submittal specifies a procedure for removing from the trading budget
the allowances reflecting the exempt unit's potential emissions. To
address the deficiencies related to the 25-ton exemption provisions
including the related budget adjustments, Michigan must modify its
regulations to ensure an exempt source's emissions are less than 25
tons in each ozone season and provide a process for adjusting the
trading budget accordingly. EPA provided MDEQ suggested language
modifying the regulations.
4. New source set-aside--The new source set-aside provisions of
Sec. 811(1)(a) specify the set-aside pool allocation. The rule
contains a typographical error regarding the number of allowances to be
set-aside after 2006. A footnote in the Michigan SIP submittal
highlights this error and indicates the correct number. This error
should be corrected since the official regulations are the basis for
all allocations. Also, Section 811(2) appears to address the issue of
adjusting a new source's allowances to account for reduced utilization,
but is incomplete and, for example, lacks the adjustment formula. This
section also appears to specify how remaining set-aside allowances are
determined, but that matter is also addressed in Section 811(3).
Michigan must clarify these provisions. EPA provided MDEQ suggested
language to clarify these provisions.
5. Language in Sec. 802(1)(a) appears to allow the State to exempt
an EGU for which applicability has not been determined. EPA cannot
approve any exemption that is solely at the discretion of the State and
does include EPA approval as well. The language relating to exemptions
based solely on the State's discretion must be removed as a condition
of final approval.
6. Language in Sec. 804 relating to retired unit exemptions must
be modified to include the requirement that a unit that qualifies for
this exemption, is not required to have a permit, and subsequently
resumes operation will lose the exemption at the time of resumption of
operation. EPA provided MDEQ suggested language modifying this section
of the regulations.
J. What Happens if MDEQ Fails To Address These Deficiencies?
In a letter dated, January 9, 2004, MDEQ committed to submit fully
adopted rules addressing the deficiencies by May 31, 2004. If a
submittal is not made by this date, this conditional approval will
automatically revert to a disapproval of the Michigan NOX
SIP.
III. Michigan's Control of NOX Emissions
A. When Did Michigan Submit the SIP Revision to EPA in Response to the
NOX SIP Call?
On April 3, 2003, MDEQ submitted a final revision to its SIP to
meet the requirements of the Phase I NOX SIP Call.
B. When Did Michigan Hold Public Hearings and What Were the Results?
Public hearings were held on December 3, 2001 and January 22, 2003.
MDEQ holds public hearings on rules at the end of a 30-day public
comment period. MDEQ either modified its rules to accommodate the
comments received or explained why the rules were not changed in light
of the comments.
C. What Is Included in Michigan's NOX SIP Call Revision?
Michigan allows, as in the model rule, EGUs and non-EGUs to
participate in the multi-state cap and trade program. Cement kilns are
not included in the trading program, but will be required to install
low NOX burners, mid-kiln firing system or technology that
achieves the same emission decreases (a 30% reduction). Michigan's SIP
revision to meet the requirements of the NOX SIP Call
consists of the revision of Michigan Rules 802 through 817. The
regulations 802 through 816 affect EGUs and non-EGUs. Rule 817 applies
requirements to cement manufacturing facilities.
Michigan's SIP revision to meet the requirements of the
NOX SIP Call consists of the following Michigan Rules:
802 Applicability under oxides of nitrogen
budget trading program
803 Definitions for oxides of nitrogen budget
trading program
804 Retired unit exemption from oxides of
nitrogen budget trading program
805 Standard requirements of oxides of nitrogen
budget trading program
806 Computation of time under oxides of nitrogen
budget trading program
807 Authorized account representative under
oxides of nitrogen budget trading program
808 Permit requirements under oxides of nitrogen
budget trading program
809 Compliance certification under oxides of
nitrogen budget trading program
810 Allowance allocations under oxides of
nitrogen budget trading program
811 New source set-aside under oxides of
nitrogen budget trading program
812 Allowance tracking system and transfers
under oxides of nitrogen budget trading program
813 Monitoring and reporting requirements under
oxides of nitrogen budget trading
814 Individual opt-ins under oxides of nitrogen
budget trading program
815 Allowance banking under oxides of nitrogen
budget trading program
816 Compliance supplement pool under oxides of
nitrogen budget trading program
817 Emission limitations and restrictions for
Portland cement kilns
Michigan's Oxides of Nitrogen Budget Trading Program (Rules 802
through 816) establishes and requires a NOX allowance
trading program for large EGUs and non-EGUs. These rules establish a
NOX cap and allowance trading program for the ozone control
seasons beginning May 31, 2004. Michigan Rule 817, not part of the
trading program, applies to cement kilns and also requires control
during the ozone season starting on May 31, 2004. Beginning in 2005,
the ozone control period is May 1 through September 30.
The State of Michigan voluntarily chose to follow EPA's model
NOX budget and allowance trading rule, 40 CFR part 96, that
sets forth a NOX emissions trading program for EGUs and non-
EGUs. Michigan's Oxides of Nitrogen Budget Trading Program is based
upon EPA's model rule, therefore, Michigan sources are allowed to
participate in the interstate NOX allowance trading program
that EPA is administering for the participating states. The State of
Michigan has adopted regulations that, revised consistent with the
conditions noted above, are substantively identical to 40 CFR part 96.
Therefore, with the conditions noted, pursuant to 40 CFR 51.121(p)(1),
Michigan's SIP revision is being proposed for a conditional approval as
satisfying the State's NOX emission reduction obligations.
Under Rule 810, Michigan allocates NOX allowances to the EGU
and non-EGU units that are affected by these requirements. The
NOX trading program applies to EGUs (fossil fuel fired
boilers
[[Page 8910]]
and turbines serving a generator with a nameplate capacity greater than
25 MW or more that sell any amount of electricity) as well as non-EGUs
(industrial boilers and turbines that have a maximum design heat input
greater than 250 mmBtu per hour). Each NOX allowance permits
a source to emit one ton of NOX during the seasonal control
period. NOX allowances may be bought or sold. Unused
NOX allowances may also be banked for future use, with
certain limitations.
Source owners will monitor and report their NOX
emissions by using methodologies that meet the requirements of 40 CFR
part 75, subpart H, and report resulting data to EPA electronically.
Each budget source complies 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, reasonably
available control technology (RACT), new source performance standards,
or Title IV (the Federal Acid Rain program).
Michigan's Oxides of Nitrogen Budget Trading Program establishes
requirements for cement manufacturing facilities, however, these
sources are subject to NOX reduction requirements but do not
participate in the NOX trading program. Michigan's submittal
does not rely on any additional reductions beyond the anticipated
federal measures in the mobile and area source categories.
Michigan's submittal demonstrates that the Phase I NOX
emission budgets established by EPA will be met because MDEQ agrees
with all of the assumptions, projections, etc. used by EPA to determine
the 2007 budgets. Because Michigan has adopted all of the same controls
assumed by EPA in developing the State's NOX budget, the
actual emissions in 2007 should be the same as those EPA has projected
to be the State's 2007 budget.
D. What Is the Compliance Supplement Pool?
To provide additional flexibility for complying with emission
control requirements associated with the NOX SIP Call, the
final NOX SIP Call rule provided each affected state with a
``compliance supplement pool.'' The compliance supplement pool is a
quantity of NOX allowances that may be used to cover excess
emissions from sources that are unable otherwise to meet control
requirements during the 2004 and 2005 ozone season. Allowances from the
compliance supplement pool will not be valid for compliance past the
2005 ozone season. The NOX SIP Call included these voluntary
provisions in order to address commenters' concerns about the possible
adverse effect that the control requirements might have on the
reliability of the electricity supply or on other industries required
to install controls as the result of a state's response to the
NOX SIP Call.
A state may issue some or all of the compliance supplement pool via
two mechanisms. First, a state may issue some or all of the pool to
sources with credits from implementing NOX reductions beyond
all applicable requirements after September 30, 1999, but before May
31, 2004 (i.e., early reductions). This allows sources that cannot
install controls prior to May 31, 2004, to purchase other sources'
early reduction credits in order to comply. Second, a state may issue
some or all of the pool to sources that demonstrate a need for an
extension of the May 31, 2004, compliance deadline due to undue risk to
the electricity supply or other industrial sectors, and where early
reductions are not available (See 40 CFR 51.121(e)(3)). Michigan has
opted to issue the State's compliance supplement pool through the Early
Reduction Credit program only.
E. How Does Michigan's NOX SIP Affect Sources Subject to
EPA's Section 126 Rule in the SIP Call Area?
All of the existing sources in the SIP Call area that are subject
to EPA's Section 126 Rule are also subject to Michigan's NOX
rules. There is, however, one Section 126 affected source that falls
outside of the SIP Call affected area. This source is Detroit Edison's
Harbor Beach unit and it is located in Huron County. While Huron County
falls outside of the area covered by the Michigan's NOX SIP
rules, MDEQ is in the process of modifying the applicability of the
NOX Rules to include this one source. Detroit Edison
requested inclusion of the Harbor Beach unit in the State trading
program because it would then be able to take advantage of the trading
provisions that are not otherwise available. Since Michigan adopted the
same applicability thresholds for EGU and non-EGU sources as those
found in EPA's Section 126 Rule, all of the same sources will be
covered once MDEQ has adopted rules to include the Harbor Beach unit.
The Michigan trading budget was not increased as a result of adding the
Harbor Beach unit.
IV. EPA Proposal
EPA is proposing to conditionally approve the Michigan's SIP
revision consisting of its Oxides of Nitrogen Budget Trading Program
and its rule that affects cement kilns, which was submitted on April 3,
2003. EPA finds that Michigan's submittal is conditionally approvable
because it meets the requirements of the Phase I NOX SIP
Call with some exceptions.
V. 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
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).
Regulatory Flexibility Act
This action merely approves state regulations as meeting Federal
requirements and imposes no additional requirements beyond those
imposed by state regulations. 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 (65
FR 67249, November 9, 2000).
[[Page 8911]]
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 is not economically significant.
National Technology Transfer Advancement Act
In reviewing plan 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 plan submission for failure to use VCS. It would thus
be inconsistent with applicable law for EPA, when it reviews a plan
submission, to use VCS in place of a plan 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. Section 804 exempts from section 801 the following types
of rules: (1) Rules of particular applicability; (2) rules relating to
agency management or personnel; and (3) rules of agency organization,
procedure, or practice that do not substantially affect the rights or
obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required
to submit a rule report regarding this action under section 801 because
this is a rule of particular applicability.
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 April 26, 2004. 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, Oxides of
nitrogen, Ozone, Reporting and recordkeeping requirements.
Authority: 42 U.S.C. 7401 et seq.
Dated: February 17, 2004.
Bharat Mathur,
Acting Regional Administrator, Region 5.
[FR Doc. 04-4253 Filed 2-25-04; 8:45 am]
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