[Federal Register: July 7, 2008 (Volume 73, Number 130)]
[Rules and Regulations]
[Page 38328-38330]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jy08-6]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R05-OAR-2007-0183; FRL-8575-3]
Approval and Promulgation of Air Quality Implementation Plans;
Illinois; Revisions to Emission Reduction Market System
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: In 1997, Illinois adopted and submitted rules establishing a
cap and trade program regulating emissions of volatile organic
compounds (VOC). The program, known as the Emission Reduction Market
System (ERMS), was designed to address VOC sources in the Chicago area
with potential to emit at least 25 tons per year. Then, in 2004, the
Chicago ozone nonattainment area was in effect reclassified from severe
to moderate, which according to EPA guidance revised the applicable
definition of major sources from 25 tons per year to 100 tons per year.
This ``reclassification'' could have resulted in the program no longer
including sources with potential to emit more than 25 but less than 100
tons per year. Instead, Illinois adopted rule revisions, submitted to
EPA on January 10, 2007, which required that these sources remain part
of the program. Illinois' rule revisions also addressed other potential
ramifications of the ``reclassification.'' EPA is approving these rule
revisions.
DATES: This final rule is effective August 6, 2008.
ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R05-OAR-2007-0183. 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 (CBI) or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, is
not placed on the Internet and will be publicly available only in hard
copy form. Publicly available docket materials are available either
electronically through http://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 Federal holidays. We recommend that you telephone John
Summerhays, Environmental Scientist, at (312) 886-6067 before visiting
the Region 5 office.
FOR FURTHER INFORMATION CONTACT: John Summerhays, Environmental
Scientist, Criteria Pollutant Section, Air Programs Branch (AR-18J),
Environmental Protection Agency, Region 5, 77 West Jackson Boulevard,
Chicago, Illinois 60604, (312) 886-6067, summerhays.john@epa.gov.
SUPPLEMENTARY INFORMATION: This supplementary information section is
arranged as follows:
I. Description and Review of Illinois' Submittal
II. What Action Is EPA Taking?
III. Statutory and Executive Order Reviews
I. Description and Review of Illinois' Submittal
On January 10, 2007, Illinois submitted revisions to Part 205 of
Title 35 of the Illinois Administrative Code, entitled ``Emissions
Reduction Market System'' (ERMS). ERMS is a cap and trade program
addressing VOC emissions in the Chicago area. Under ERMS, Illinois
issues allowances equivalent to 12 percent less than baseline VOC
emission levels, and requires affected sources to hold allowances
equivalent to their VOC emissions during the ozone season. The program
thereby requires overall VOC emission levels to be reduced to 12
percent below baseline levels. Illinois adopted the original rules for
this program on November 20, 1997, and submitted the rules to EPA on
December 16, 1997. EPA approved those rules on October 15, 2001, at 66
FR 52359.
Part 205 requires participation of all major VOC sources in the
Chicago area. More specifically, the version of Section 205.200 that
Illinois adopted in 1997 stated that ``The requirements of this Part
shall apply to any source * * * located in the Chicago ozone
nonattainment area that is required to obtain a [Title V permit], and
[has VOC emissions during the ozone season of at least 10 tons].'' The
requirement for a Title V operating permit applies to major sources.
Since the Chicago area at that time was classified as a severe ozone
nonattainment area, major sources were defined to include sources with
the potential to emit 25 tons per year or more of VOC.
In 2004, EPA classified the Chicago ozone nonattainment area as
moderate for the 8-hour ozone standard, and effective in 2005 rescinded
the severe classification for the 1-hour ozone standard. The definition
of major sources for moderate ozone nonattainment areas includes
sources with the potential to emit 100 tons per year or more of VOC.
According to EPA guidance (see 69 FR 23951, April 30, 2004), the
replacement of the prior classification of severe with a classification
of moderate thus meant that sources with potential to emit at least 25
tons per year but less that 100 tons per year of VOC would no longer be
major sources and would no longer be required to have Title V operating
permits. As a result, the sources in the Chicago area in this size
range would no longer be subject to the ERMS requirements, given the
applicability criteria in section 205.200 as quoted above.
Illinois estimated that the loss of these intermediate sized
sources from ERMS would result in a loss of 330 tons of VOC emission
reduction per ozone season associated with these sources. Illinois
sought to avoid this loss of sources from the program. Consequently,
Illinois revised section 205.200 to redefine applicability to include
sources with potential to emit at least 25 tons of VOC (and sources
otherwise required to have a Title V permit) and at least 10 tons of
VOC emissions during the ozone season. By this means, Illinois revised
its applicability provisions to include the same set of sources as were
included in 1997, notwithstanding the change in the classification of
the Chicago ozone nonattainment area.
Under the 1997 rules, since by definition all the affected sources
had a Title V permit, Illinois used the Title V permits to establish
several elements of the ERMS program. Most notably, Illinois used the
source's Title V permit to specify the number of allowances to be
issued to the source (Cf. section 205.315) and the source-specific VOC
monitoring methods (Cf. section 205.330).
Since (under EPA's guidance) sources with potential emissions
between 25 and 100 tons per year were no longer subject to a
requirement for a Title V permit, the State needed an alternative means
of specifying source-specific ERMS provisions. Illinois therefore
adopted section 205.316, to provide that sources included in ERMS but
not required to obtain a Title V permit were required either to request
a Title V permit anyway or to apply for a federally enforceable state
operating
[[Page 38329]]
permit (FESOP). The FESOP is to specify the provisions (relating for
example to the number of allowances allocated to the source and the
source-specific monitoring requirements) that would otherwise be
specified in the Title V permit.
Title V of the Clean Air Act provides for defining some operations
with trivial or no emissions as insignificant activities. The 1997
version of section 205.220 of Illinois' rules exempts these activities
from ERMS, based on the exemption under Title V. Illinois intended that
these activities continue to be exempt from ERMS, irrespective of
whether a source is subject to the requirement for a Title V permit.
Therefore, Illinois revised Section 205.220 to provide that any
activity meeting the criteria in Part 201 Subpart F of Title 35 of the
Illinois Administrative Code for insignificant activities may be
exempted from the ERMS program, whether the source is subject to a
Title V permit or a FESOP.
In ozone nonattainment areas classified as severe, major new
sources and existing sources undergoing major modifications must obtain
1.3 tons of offsets for every ton of new emissions. In ozone
nonattainment areas classified as moderate, major new sources and
existing sources undergoing major modifications need only obtain 1.1
tons of offsets for every ton of new emissions. New source review rules
require that any change in offset ratio applies only prospectively, to
sources permitted after the change in ratio, and that a source
permitted before the change in ratio must continue to have offsets in
at least the ratio that applied at the time the source was permitted.
Under section 205.150 of the 1997 ERMS rules, major new sources and
sources undergoing major modifications were required to obtain 1.3
allowances for every ton of new emissions. Illinois' revised rules
provide for modified ratios as the applicable ratios change. Section
205.150(f)(1) of the revised rules states: ``If the nonattainment
classification of the Chicago area for ozone is changed such that the
required offset ratio is no longer 1.3 to 1 and a new offset ratio
applies, as specified in 35 Ill. Adm. Code 203.302, that ratio shall
then apply in lieu of the 1.3 to 1 ratio set forth in subsections
(c)(2), (d)(1), and (e) of this Section. Such new ratio shall not apply
to any part of a source or any modification already subject to the 1.3
to 1 ratio or other previously effective offset ratio established prior
to the effective date of the new ratio.'' Section 205.150(f)(2)
provides that the ratio becomes 1 to 1 if the Chicago area is
redesignated to attainment.
These revisions address the ramifications of a revised
classification according to EPA guidance as cited above. However, while
Illinois was adopting these rule revisions, EPA's ozone implementation
guidance was being challenged in court. On December 22, 2006, with
clarification on June 8, 2007, the Court of Appeals for the District of
Columbia Circuit ruled against elements of EPA's ozone implementation
guidance, including the ``backsliding'' inherent in allowing an area
originally classified as severe and subsequently classified as moderate
to apply the less stringent major source definition for moderate areas.
South Coast Air Quality Management Dist. v. EPA, 472 F.3d 882 (D.C.
Cir. 2006).
This court ruling has no effect on the approvability of Illinois'
ERMS rule revisions. Illinois' revised ERMS rules assure the
incorporation of all sources with potential to emit at least 25 tons of
VOC per year (and at least 10 tons of VOC during the ozone season),
irrespective of whether the major source definition for permitting
purposes is 25 or 100 tons per year. Thus, Illinois' rules assure
inclusion of a fixed set of sources, irrespective of the source size
used in the definition of major sources. Illinois' revised ERMS rules
also assure that any new source or major modification must obtain
allowances such that the ratio of allowances to the quantity of new
emissions matches the offset ratio that applies under the permitting
requirements that are in effect at the time the new source or major
modification is permitted.
Illinois requested that EPA defer rulemaking on section 205.150(e).
This section provides that new sources providing offsets by holding
trading program allowances in the proper ratio need not also provide
offsets in their new source permit. Illinois made a similar request for
deferral of EPA rulemaking on this section in conjunction with its 1997
submittal of ERMS rules. While a new source may use a shutdown for both
purposes, purchasing the necessary allowances from a shutdown source
and simultaneously using the shutdown in the new source permit to
satisfy offset requirements, the deferral of rulemaking provides that
the two requirements must be met independently.
Illinois made a corollary change, changing the term ``Chicago ozone
nonattainment area'' to the term ``Chicago area.'' The term ``Chicago
area'' is defined to mean the same area as the previous term ``Chicago
ozone nonattainment area,'' but the revised term more clearly signifies
that the program will remain in effect even if the Chicago area is
redesignated as an attainment area.
In addition to the rules identified above, Illinois made conforming
revisions to multiple other rules. These revisions generally replace
the term ``Chicago nonattainment area'' with the term ``Chicago area''
or mention FESOPs as a possible vehicle for specifying source-specific
provisions to implement the ERMS rules.
EPA finds these changes approvable. The change in the applicability
provisions merely assures that the original program applicability
criteria continue to apply, notwithstanding any change in the
classification or designation of the area. The requirement for sources
with potential emissions between 25 and 100 tons per year to obtain a
permit (either a Title V permit or a FESOP) is a reasonable means of
implementing the ERMS requirements at any time when these sources are
not required to obtain a Title V permit. Illinois' provision for offset
ratios, wherein new source emissions are offset at the ratio that
reflects the offset ratio that is mandated at the time the permit
authorizing the new source emissions is issued, properly matches offset
requirements. The use of the term ``Chicago area'' also properly
clarifies that the program continues even if the area is redesignated
to attainment.
EPA proposed to approve these rule revisions on January 30, 2008,
at 73 FR 5471. On the same day, at 73 FR 5435, EPA also published a
direct final rule approving these rule revisions. However, EPA then
realized that the notice of direct final rulemaking, in comments on an
EPA memorandum discussing the above court ruling, unintentionally
commented on a national issue regarding ramifications of the court
ruling. Therefore, EPA withdrew its direct final rule on February 29,
2008, at 73 FR 11042. Since the comments did not affect the underlying
rationale for the proposed rule, i.e. because EPA proposed to find
Illinois' revised ERMS rules to retain the same benefits without regard
for what size is used to define major sources, EPA retained its
proposed rule. EPA received no comments on this proposed rule. EPA
continues to believe that Illinois' revised rules should be approved.
II. What Action Is EPA Taking?
EPA is approving Illinois' revisions to the ERMS program, except
that EPA is deferring action on section 205.150(e).
Illinois did not change every rule in Part 205. The State submitted
only those rules that it changed. Thus, the revised rules being
approved here must be
[[Page 38330]]
viewed in conjunction with the unrevised rules approved at 40 CFR
52.720(c)(158).
III. Statutory and Executive Order Reviews
Under the Clean Air Act, the Administrator is required to approve a
SIP submission that complies with the provisions of the Act and
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this action merely approves state law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this action:
Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
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);
Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act; and
Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule does not have tribal implications as
specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because the SIP is not approved to apply in Indian country located in
the state, and EPA notes that it will not impose substantial direct
costs on tribal governments or preempt tribal law.
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 action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by September 5, 2008. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this action 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, Ozone, Reporting and
recordkeeping requirements, Volatile organic compounds.
Dated: May 23, 2008.
Bharat Mathur,
Acting Regional Administrator, Region 5.
0
For the reasons stated in the preamble, part 52, chapter I, of title 40
of the Code of Federal Regulations is amended as follows:
PART 52--[AMENDED]
0
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401 et seq.
Subpart O--Illinois
0
2. Section 52.720 is amended by adding paragraph (c)(180) to read as
follows:
Sec. 52.720 Identification of plan.
* * * * *
(c) * * *
(180) On January 10, 2007, Illinois submitted revisions to its
rules for the Emission Reduction Market System. These revisions assure
that sources in the Chicago area with potential emissions of VOC
between 25 and 100 tons per year will remain subject to the program,
irrespective of changes in the area's ozone nonattainment
classification or designation and any associated changes in whether
such sources are defined to be major sources. EPA is again deferring
action on section 205.150(e).
(i) Incorporation by reference.
(A) Illinois Administrative Code, Title 35: Environmental
Protection, Subtitle B: Air Pollution, Chapter I: Pollution Control
Board, Subchapter b: Alternative Reduction Program, Part 205 Emissions
Reduction Market System, Sections:
205.120 Abbreviations and Acronyms
205.130 Definitions
205.150 Emissions Management Periods (except for 205.150(e))
205.200 Participating Source
205.205 Exempt Source
205.210 New Participating Source
205.220 Insignificant Emission Units
205.300 Seasonal Emissions Component of the Annual Emissions Report
205.310 ERMS Applications
205.315 CAAPP Permits for ERMS Sources
205.316 Federally Enforceable State Operating Permits for ERMS
Sources
205.318 Certification for Exempt CAAPP Sources
205.320 Baseline Emissions
205.330 Emissions Determination Methods
205.335 Sampling, Testing, Monitoring and Recordkeeping Practices
205.337 Changes in Emissions Determination Methods and Sampling,
Testing, Monitoring and Recordkeeping Practices
205.400 Seasonal Emissions Allotment
205.405 Exclusions From Further Reductions
205.410 Participating Source Shutdowns
205.500 Emissions Reduction Generator
205.510 Inter-Sector Transaction
205.610 Application for Transaction Account
205.700 Compliance Accounting
205.730 Excursion Reporting
205.750 Emergency Conditions
205.760 Market System Review Procedures
[FR Doc. E8-15153 Filed 7-3-08; 8:45 am]
BILLING CODE 6560-50-P