[Federal Register: April 25, 2007 (Volume 72, Number 79)]
[Proposed Rules]
[Page 20465-20480]
[DOCID:fr25ap07-17]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 60, 62, 63, 72, 78, 96, and 97

[EPA-HQ-OAR-2007-0012; FRL-8302-4]
RIN 2060-A033

Revisions to Definition of Cogeneration Unit in Clean Air
Interstate Rule (CAIR), CAIR Federal Implementation Plan, Clean Air
Mercury Rule (CAMR), and CAMR Proposed Federal Plan; Revision to
National Emission Standards for Hazardous Air Pollutants for
Industrial, Commercial, and Institutional Boilers and Process Heaters;
and Technical Corrections to CAIR and Acid Rain Program Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: In 2005, EPA finalized the Clean Air Interstate Rule (CAIR) to
address emissions of nitrogen oxides (NOX) and sulfur
dioxide (SO2) and the Clean Air Mercury Rule (CAMR) to
establish standards of performance for mercury (Hg) for coal-fired
electric utility steam generating units. Both CAIR and CAMR include
model cap-and-trade rules that states may adopt to meet the applicable
requirements. In 2006, EPA finalized the Federal Implementation Plan
(FIP) for CAIR and also proposed a Federal Plan for CAMR. All four
rules include an exemption for certain cogeneration units. To qualify
for this exemption, a unit must, among other things, meet an efficiency
standard included in the cogeneration unit definition. Today, in light
of information concerning existing biomass-fired cogeneration units
that may not qualify for the exemption, EPA is proposing a change in
the cogeneration unit definition in CAIR, the CAIR model cap-and-trade
rules, the CAIR FIP, CAMR, and the CAMR model cap-and-trade rule, and
the proposed CAMR Federal Plan. Specifically, EPA is proposing to
revise the efficiency standard in the cogeneration unit definition so
that the standard would apply, with regard to certain units, only to
the fossil fuel portion of a unit's energy input. This change to the
CAIR model cap-and-trade rules, CAIR FIP, CAMR, and proposed CAMR
Federal Plan would likely make it possible for some additional units to
qualify for the cogeneration unit exemption in these rules. Because it
would only affect a small number of relatively low emitting units, this
would have little effect on the projected emissions reductions and the
environmental benefits of these rules. EPA is also considering
revisions to the definition of ``total energy input,'' a term used in
the efficiency standard. This action also proposes minor technical
corrections to CAIR and the Acid Rain Program rules. Finally, this
action proposes minor revisions to National Emission Standards for
Hazardous Air Pollutants for Industrial, Commercial, and Institutional
Boilers and Process Heaters (``boiler MACT'').

DATES: Comments. Comments must be received on or before June 11, 2007.
If requested by May 7, 2007, a public hearing will be held on May 10,
2007 in Washington, DC. For additional information on a public hearing,
see the SUPPLEMENTARY INFORMATION section of this preamble.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-HQ-
OAR-2007-0012, by one of the following methods:
    A. Federal Rulemaking Portal: http://www.regulations.gov. Follow

the on-line instructions for submitting comments.
    B. E-mail<EMAIL_ADDRESS>    C. Mail: Air Docket, ATTN: Docket Number EPA-HQ-OAR-2007-0012,
Environmental Protection Agency, Mail Code: 6102T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460.
    D. Hand Delivery: EPA Docket Center, 1301 Constitution Avenue, NW.,
Room 3334, Washington, DC. Such deliveries are only accepted during the
Docket's normal hours of operation, and special arrangements should be
made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2007-0012. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://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 http://www.regulations.gov or e-mail. The http://www.regulations.gov website

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 http://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, and any form of encryption, and should
be free of any defects or viruses.
    Docket: All documents in the docket are listed in the http://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, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov
 or in hard copy at the EPA Docket Center, EPA West,

Room 3334, 1301 Constitution Avenue, NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the Air
Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: For information concerning the
proposed changes, contact Elyse Steiner, Program Development Branch,
Clean Air Markets Division (MC 6204J), EPA, Washington, DC 20460;
telephone number<PHONE_NUMBER>; fax number<PHONE_NUMBER>; electronic
mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Regulated Entities. Categories and entities
potentially regulated by this action include the following:

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                                 NAICS        Examples of potentially
           Category             code \1\        regulated entities
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Industry.....................     221112  Fossil fuel-fired electric
                                           utility steam generating
                                           units.
Federal government...........        \2\  Fossil fuel-fired electric
                                  221122   utility steam generating
                                           units owned by the Federal
                                           government.
State/local/Tribal government        \2\  Fossil fuel-fired electric
                                  221122   utility steam generating
                                           units owned by
                                           municipalities.
                                  921150  Fossil fuel-fired electric
                                           utility steam generating
                                           units in Indian country.
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\1\ North American Industry Classification System.
\2\ Federal, State, or local government-owned and operated
  establishments are classified according to the activity in which they
  are engaged.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists examples of the types of entities EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed could also be affected. To determine whether a
facility is regulated, carefully examine the applicability provisions
and definitions in CAIR, the CAIR FIP, CAMR, and the proposed CAMR
Federal Plan.\1\ All references related to applicability and
definitions for these rules have been provided in a single list only
once and will not be referenced again in this proposal to avoid
unnecessary repetition.
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    \1\ All applicability provisions and definitions can be found in
the CFR or FR in the following locations: for CAIR and the CAIR
model cap-and-trade rules, 40 CFR 51.123, 51.124, 96.102, 96.104,
96.202, 96.204, 96.302, and 96.304; for the CAIR FIP, 40 CFR 97.102,
97.104, 97.202, 97.204, 97.302, and 97.304; for CAMR and the CAMR
model cap-and-trade rule, 40 CFR 60.24(h)(8), 60.4102, and 60.4104;
and for the proposed CAMR Federal Plan, Proposed Sec.  62.15902 and
Sec.  62.15904.
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    As discussed below, the pulp and paper industry raised concerns
regarding whether biomass-fired cogeneration units could meet the
definition of ``cogeneration unit''. The following table identifies
NAICS codes for entities in the pulp and paper industry. This table is
not intended to be exhaustive, but rather the table may help identify
entities potentially affected by today's action, although today's
action may affect entities in other industries in addition to pulp and
paper.

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                   Category                     NAICS code \1\     Examples of potentially regulated entities
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Industry......................................              22  Utilities.
                                                           322  Paper Manufacturing Facilities.
                                                         32213  Paperboard Mills.
                                                        322122  Newsprint Mills.
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\1\ North American Industry Classification System.

    If you have questions regarding the applicability of this action to
a particular entity, consult your EPA Regional Office or EPA's Clean
Air Markets Division.
    Worldwide Web. In addition to being available in the docket, an
electronic copy of this action will also be available on the Worldwide
Web through EPA's Office of Air and Radiation. Following signature by
the Administrator, a copy of this action will be posted on the CAIR and
CAMR pages at http://www.epa.gov/cair or http://www.epa.gov/camr.
    Public Hearing. If requested, EPA will hold a public hearing on
today's proposed rule. EPA will hold a hearing only if a party notifies
EPA by May 7, 2007, expressing its interest in presenting oral
testimony on issues addressed in today's proposed rule. Any person may
request a hearing by calling Elyse Steiner at<PHONE_NUMBER> before 5
p.m. on May 7, 2007. If a public hearing is held on today's notice, it
will be held on May 10, 2007. Any person who plans to attend the
hearing should visit the EPA's Web site at http://www.epa.gov/cair or

http://www.epa.gov/camr or contact Elyse Steiner at<PHONE_NUMBER> to

learn if a hearing will be held, the location, and time that the
hearing is scheduled to take place. Because the hearing will be held at
a U.S. Government facility, everyone planning to attend should be
prepared to show valid picture identification to the security staff in
order to gain access to the meeting room.
    The hearing, if held, will be limited to the subject matter of this
document. Each commenter's oral testimony will be limited to 5 minutes.
EPA encourages commenters to provide written versions of their oral
testimonies either electronically (on computer disk or CD ROM) or in
paper copy. The public hearing schedule, including the list of
speakers, will be posted on EPA's Web site at http://www.epa.gov/cair or http://www.epa.gov/camr. Verbatim transcripts and written statements

will be included in the rulemaking docket.
    A public hearing would provide interested parties the opportunity
to present data, views, or arguments concerning issues addressed in
today's notice. EPA may ask clarifying questions during the oral
presentations, but would not respond to the presentations or comments
at that time.
    Written statements and supporting information submitted during the
comment period will be considered with the same weight as any oral
comments and supporting information presented at a public hearing.
    Outline. The information presented in this preamble is organized as
follows:

I. Background
    A. Summary of This Proposed Action
    B. Background on CAIR, the CAIR FIP, CAMR, and the Proposed CAMR
Federal Plan
    C. Applicability to Cogeneration Units
    D. Reason for Proposing a Change for Cogeneration Units
II. EPA's Proposed Action and Its Impacts
    A. Proposed Change for Cogeneration Units
    B. Emissions Impact of Proposed Action
    C. State Emissions Budgets
    D. Impact of Proposed Action on CAIR and CAMR Implementation
III. Minor Corrections to CAIR and the Acid Rain Program Regulations
and Minor Revisions to the Boiler MACT
    A. CAIR and the Acid Rain Program Regulations
    B. Boiler MACT
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments

    G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations

I. Background

A. Summary of This Proposed Action

    In this rule, EPA is proposing to revise the definition of the term
``cogeneration unit'' in CAIR, the CAIR model cap-and-trade rules, the
CAIR FIP, CAMR and CAMR Hg model cap-and-trade rule, and the proposed
CAMR Federal Plan. The CAIR model cap-and-trade rules and the CAIR FIP
apply to large fossil-fuel fired electric generating units with certain
exceptions.\2\ The CAMR, CAMR Hg model cap-and-trade rule, and proposed
CAMR Federal Plan address large coal-fired electric generating units
with certain exceptions.\3\ The CAIR model cap-and-trade rules, CAIR
FIP, CAMR and CAMR Hg model cap-and-trade rule, and proposed CAMR
Federal Plan all provide an exemption for cogeneration units meeting
certain requirements concerning their level of electricity sales. All
four rules provide that in order to qualify for this exemption, a unit
must, among other things, meet the definition of cogeneration unit in
the rule. In all four rules, a unit cannot meet the definition unless
it meets a specified efficiency standard, i.e., the useful power plus
one-half of useful thermal energy output of the unit must equal no less
than a certain percentage of the total energy input or, in some cases,
useful power must be no less than a certain percentage of total energy
input. If a unit meets the definition of cogeneration unit including
the efficiency standard, then the unit may qualify for the exemption in
these rules depending on whether it meets additional criteria
concerning the amount of electricity sales from the unit. The
efficiency standard is applied to all energy input to the unit
regardless of fuel type. The criteria for qualifying as a cogeneration
unit are discussed in more detail below.
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    \2\ CAIR provides States flexibility in choosing a mechanism for
achieving the required NOX and SO2 emission
reductions, including flexibility to choose which sources to
control. CAIR includes model trading rules for regionwide, EPA-
administered NOX and SO2 emissions cap-and-
trade programs, covering certain fossil-fuel-fired electric
generating units, which States may choose to adopt in order to
achieve the required reductions. If a State chooses to adopt the
EPA-administered trading programs then it must control electric
generating units, as defined in CAIR, and use the same applicability
criteria as provided in the model cap-and-trade rules. The
applicability criteria in the CAIR FIP are the same as in the model
cap-and-trade rules.
    \3\ CAMR provides States flexibility in choosing a mechanism for
ensuring that mercury emissions do not exceed the State's allocated
mercury emissions budget. All necessary reductions must, however, be
from coal-fired electric generating units as defined in CAMR. CAMR
includes a nationwide, EPA-administered Hg emissions cap-and-trade
program, covering coal-fired electric generating units, which States
may choose to adopt in order to achieve the required reductions.
States may also choose an alternative approach so long as it ensures
that the State mercury emissions budget is not exceeded. EPA
proposes the same applicability requirements for the CAMR Federal
Plan as set forth in CAMR.
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    On August 4, 2006 EPA published a Notice of Data Availability for
EGU NOX Annual and NOX Ozone Season Allocations
for the Clean Air Interstate Rule Federal Implementation Plan Trading
Programs (CAIR FIP NODA) (71 FR 44283). During the period for
submitting objections concerning the CAIR FIP NODA, EPA received
information concerning the application of the efficiency standard in
the cogeneration unit definition (as defined in the CAIR FIP) to
biomass-fired cogeneration units and a request to extend the period for
objections. Subsequently, EPA extended the period for objections--only
for objections related to biomass cogeneration units--to February 20,
2007 (72 FR 965). The period had previously been extended to October 5,
2006 for all objections and further extended to January 3, 2007 for
objections concerning biomass cogeneration units. Certain biomass
cogeneration unit owners and operators requested additional time to
submit objections because of difficulties collecting information
relating to the application of efficiency standards for cogeneration
units (as defined in the CAIR FIP) to biomass cogeneration units.
    EPA is treating the information that the Agency received concerning
the application of the efficiency standard in the cogeneration unit
definition to biomass-fired cogeneration units as a request for
rulemaking to change the efficiency standard in the cogeneration unit
definition and, in light of that information, is proposing today to
revise the efficiency standard in the cogeneration unit definition in
the CAIR model cap-and-trade rules, the CAIR FIP, CAMR, and the CAMR
model cap-and-trade rule, and the proposed CAMR Federal Plan, so that,
in some cases, energy input from only fossil fuel would be included in
the efficiency calculation. The proposed revised cogeneration unit
definition is discussed in more detail in section II of today's
preamble, below.
    The category of units addressed by today's proposal (existing
biomass cogeneration units, as discussed further below) was brought to
our attention by the pulp and paper industry. EPA requests comment on
whether existing biomass cogeneration units in other identifiable
industries, or cogeneration units burning other identifiable types of
non-fossil fuels besides biomass, may have characteristics similar to
those of existing biomass cogeneration units in the pulp and paper
industry and would also be impacted by the proposed rule change.
    As discussed below, in today's action, EPA is requesting comment
only on the efficiency standard in the cogeneration unit definition as
applied to biomass cogeneration units and related definitions, on the
definition of ``total energy input'' related to the efficiency standard
as applied to all cogeneration units, on the minor technical
corrections to CAIR and the Acid Rain Program Regulations, and on the
minor revisions to the boiler MACT. We are not requesting or accepting
comments on other parts of CAIR, the CAIR model trading rules, the CAIR
FIP, CAMR, the CAMR model trading rule, or the CAMR Federal Plan
proposal or reopening any issues decided in those actions for
reconsideration or comment.
    As discussed further in section II of today's preamble, EPA
estimated the total amount of NOX, SO2, and Hg
emitted from units that might be affected by the proposed change to the
cogeneration unit definition (i.e., units that may not be able to meet
the efficiency standard as written and that are likely to be able to
meet the standard if changed as proposed) and found the estimated
emissions for this group of units to be very small compared to the size
of the overall emission caps in CAIR and CAMR.
    This action also proposes minor technical corrections to CAIR and
the Acid Rain Program rules. Finally, this action proposes minor
revisions to National Emission Standards for Hazardous Air Pollutants
for Industrial, Commercial, and Institutional Boilers and Process
Heaters (``boiler MACT'').

B. Background on CAIR, the CAIR FIP, CAMR, and the Proposed CAMR
Federal Plan

CAIR and the CAIR FIP
    On May 12, 2005, EPA published CAIR as a final rule entitled,
``Rule to Reduce Interstate Transport of Fine Particulate Matter and
Ozone (Clean Air Interstate Rule); Revisions to Acid Rain

Program; Revisions to NOX SIP Call'' (70 FR 25162). CAIR
requires reductions of NOX and/or SO2 emissions
that contribute significantly to nonattainment and maintenance problems
in downwind States with respect to the national ambient air quality
standards for fine particulate matter (PM2.5) and 8-hour
ozone to be made across 28 eastern States and the District of Columbia.
The reductions are required in two phases. The first phase of
NOX reductions starts in 2009 (covering 2009-2014) and the
first phase of SO2 reductions starts in 2010 (covering 2010-
2014); the second phase of reductions for both NOX and
SO2 starts in 2015 (covering 2015 and thereafter).
    States must develop State Implementation Plans (SIPs) to achieve
the emission reductions required by CAIR and have flexibility to
determine what measures to adopt to achieve the necessary reductions
and which sources to control. One option is to control certain electric
generating units. In CAIR, EPA provided model SO2 and
NOX cap-and-trade programs, covering fossil-fuel-fired
electric generating units that States can choose to adopt to meet the
emission reduction requirements in a flexible and highly cost-effective
manner.
    On April 28, 2006, EPA published the FIP for CAIR as part of a
final rule entitled, ``Rulemaking on Section 126 Petition From North
Carolina to Reduce Interstate Transport of Fine Particulate Matter and
Ozone; Federal Implementation Plans To Reduce Interstate Transport of
Fine Particulate Matter and Ozone; Revisions to the Clean Air
Interstate Rule; Revisions to the Acid Rain Program'' (71 FR 25328).
The CAIR FIP was promulgated for all 28 States and the District of
Columbia covered by CAIR and will ensure that the required emission
reductions are achieved on schedule. As the control strategy for the
FIP, EPA adopted the model SO2 and NOX cap-and-
trade programs for electric generating units that EPA provided in CAIR
as a control option for States, with minor changes to account for
Federal, rather than State, implementation. EPA intends to withdraw the
FIP for any State in coordination with approval of that State's SIP
that meets the CAIR requirements.
CAMR and the Proposed CAMR Federal Plan
    On May 18, 2005, EPA published the CAMR as a final rule entitled
``Standards of Performance for New and Existing Stationary Sources:
Electric Utility Steam Generating Units; Final Rule'' (70 FR 28606).
CAMR established standards of performance for mercury for new and
existing coal-fired electric generating units and requires mercury
reductions nationwide. The reductions are required in two phases. The
first phase starts in 2010 (covering 2010-2017); the second phase
starts in 2018 (covering 2018 and thereafter).
    States must develop State Plans to achieve the mercury emission
reductions required by CAMR and have flexibility to determine what
measures to adopt to achieve the necessary reductions. Unlike CAIR,
under which States may choose which sources to control, CAMR requires
that States control mercury emissions from coal-fired electric
generating units. In CAMR, EPA provided a model Hg cap-and-trade
program covering coal-fired electric generating units that States can
choose to adopt to meet the emission reduction requirements.
    On December 22, 2006, EPA published a proposed Federal Plan for
CAMR in a proposed rule entitled, ``Revisions of Standards of
Performance for New and Existing Stationary Sources; Electric Utility
Steam Generating Units; Federal Plan Requirements for Clean Air Mercury
Rule; and Revisions of Acid Rain Program Rules'' (71 FR 77100). The
CAMR Federal Plan was proposed to implement the standards of
performance for coal-fired electric generating units located in all
States, the District of Columbia, and Indian Country covered by CAMR
(see 40 CFR 60.24(h)(1) listing the jurisdictions covered by CAMR) to
ensure that the required emission reductions are achieved on schedule.
As the control strategy for the Federal Plan, EPA proposed to adopt the
model Hg cap-and-trade program for coal-fired electric generating units
that EPA provided in CAMR as a control option for States, with minor
changes to account for Federal, rather than State, implementation. EPA
will not adopt the Federal Plan for any State with a timely submitted
and approved State Plan that meets the CAMR requirements. EPA will
withdraw the Federal Plan for any State after the Agency approves a
State Plan that meets the CAMR requirements for that State. EPA will
similarly withdraw the Federal Plan upon its approval of a Tribal Plan.

C. Applicability to Cogeneration Units

    Applicability determinations under the CAIR model cap-and-trade
rules, the CAIR FIP, CAMR and the proposed CAMR Federal Plan all turn,
in part, on whether a unit meets the definition of ``electric
generating unit'' in the rule. The CAIR model cap-and-trade rules and
the CAIR FIP use a definition of ``electric generating unit'' that
covers certain fossil-fuel-fired units while CAMR and the proposed CAMR
Federal Plan use a similar definition that covers certain coal-fired
units.
    The CAIR model cap-and-trade rules and the CAIR FIP apply to large
fossil-fuel fired electric generating units with certain exceptions.
The CAMR and the proposed CAMR Federal Plan apply to large coal-fired
electric generating units with certain exceptions. The CAIR model cap-
and-trade rules, CAIR FIP, CAMR and proposed CAMR Federal Plan all
provide that certain units meeting the definition of a ``cogeneration
unit'' may be excluded from the definition of ``electric generating
unit'' and therefore exempt from the requirements of the rule (These
rule provisions are commonly referred to as the cogeneration unit
exemption). The cogeneration unit exemption is effectively the same
under all of these rules. In order to fall within the definition of
cogeneration unit under these rules, a unit must meet a specified
efficiency standard, i.e., the useful power plus one-half of useful
thermal energy output of the unit must equal no less than a certain
percentage of the total energy input or, in some cases, useful power
must be no less than a certain percentage of total energy input. If a
unit meets the definition of cogeneration unit including the efficiency
standard, then it may qualify for the cogeneration unit exemption in
these rules depending on whether it meets additional criteria
concerning the amount of electricity sales from the unit. The
efficiency standard in the cogeneration unit definition is applied to
all energy input to the unit regardless of fuel type.
    In order to qualify for the cogeneration unit exemption in these
rules, the cogeneration unit must meet the following electricity sales
criteria: A cogeneration unit qualifies for the exemption if the unit
supplies in any calendar year no more than \1/3\ of its potential
electric output capacity or 219,000 MWh, whichever is greater, to any
utility power distribution system for sale.
CAIR and the CAIR FIP
    With certain exceptions, the CAIR model cap-and-trade rules and the
CAIR FIP cover any stationary, fossil-fuel-fired boiler or stationary,
fossil-fuel-fired combustion turbine serving at any time, since the
later of November 15, 1990 or the start-up of the unit's combustion
chamber, a generator with nameplate capacity of more than 25 MWe
producing electricity for sale.

Similarly, CAIR refers to such units as electric generating units.
    CAIR, the CAIR model cap-and-trade rules, and the CAIR FIP define
``cogeneration unit'' as a stationary, fossil-fuel-fired boiler or
stationary, fossil-fuel-fired combustion turbine:
    (1) Having equipment used to produce electricity and useful thermal
energy for industrial, commercial, heating, or cooling purposes through
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the
unit first produces electricity and during any calendar year after the
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit,\4\
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    \4\ Topping-cycle cogeneration unit means a cogeneration unit in
which the energy input to the unit is first used to produce useful
power, including electricity, and at least some of the reject heat
from the electricity production is then used to provide useful
thermal energy.
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    (A) Useful thermal energy not less than 5 percent of total energy
output; and
    (B) Useful power that, when added to one-half of useful thermal
energy produced, is not less then 42.5 percent of total energy input,
if useful thermal energy produced is 15 percent or more of total energy
output, or not less than 45 percent of total energy input, if useful
thermal energy produced is less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit,\5\ useful power not
less than 45 percent of total energy input.
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    \5\ Bottoming-cycle cogeneration unit means a cogeneration unit
in which the energy input to the unit is first used to produce
useful thermal energy and at least some of the reject heat from the
useful thermal energy application or process is then used for
electricity production.
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CAMR and the Proposed CAMR Federal Plan
    With certain exceptions, CAMR defines electric generating unit
(EGU) as a stationary, coal-fired boiler or stationary, coal-fired
combustion turbine in the State serving at any time, since the later of
November 15, 1990 or the start-up of a unit's combustion chamber, a
generator with nameplate capacity of more than 25 MWe producing
electricity for sale. An Hg Budget unit is an EGU that is subject to
the requirements of the CAMR Hg Budget Trading Program under a State
Plan approved by the Administrator as consistent with EPA's model Hg
trading rule or under the proposed CAMR Federal Plan.
    The definition of ``cogeneration unit'' in CAMR, the CAMR model
cap-and-trade rule, and the proposed CAMR Federal Plan is identical to
the cogeneration unit definition in CAIR, the CAIR model cap-and-trade
rules, and the CAIR FIP, except that the definition in the CAMR and
related rules refers to stationary, coal-fired boilers or stationary,
coal-fired combustion turbines where the definition in the CAIR-related
rules refers to stationary, fossil-fuel-fired boilers or stationary,
fossil-fuel-fired combustion turbines.
    If a unit meets the criteria concerning service of a generator (and
so would otherwise be an electric generating unit) but qualifies as a
cogeneration unit, then the unit may be excluded from the definition of
electric generating unit in CAIR, or excluded from that definition and
the regulatory requirements of the CAIR model cap-and-trade rules, the
CAIR FIP, CAMR and the CAMR model cap-and-trade rule, and the proposed
CAMR Federal Plan. In order to qualify for this exemption under these
rules, the cogeneration unit must meet certain criteria concerning
electricity sales from the unit. Specifically, as discussed above, a
cogeneration unit qualifies for the exemption if the unit supplies in
any calendar year no more than \1/3\ of its potential electric output
capacity or 219,000 MWh, whichever is greater, to any utility power
distribution system for sale.

D. Reason for Proposing a Change for Cogeneration Units

    The purpose of the efficiency standard in the cogeneration unit
definition is to prevent a potential loophole where a unit might send
only a nominal or insignificant amount of thermal energy to a process
and not achieve significant efficiency gains through cogeneration, but
still qualify as a cogeneration unit and potentially be excluded from
the EGU definition, or from the applicability provisions, under the
CAIR and CAMR and related rules.
    During the period for submitting objections concerning the CAIR FIP
NODA, EPA received information that suggested to EPA that the
efficiency standard in the definition of cogeneration unit should be
revised. The information concerns the application of the efficiency
standard to biomass-fired cogeneration units and says that the existing
rule ``unfairly penalizes co-generation units that burn significant
amounts of biomass.'' The information indicates that many biomass
cogeneration units may be unable to meet the efficiency standard
because ``biomass, when burned as a fuel, has a lower thermal
efficiency for conversion to steam than fossil fuels, such as coal, oil
and natural gas.''
    Previously, in developing CAIR, EPA indicated that it expected
``most back pressure units burning * * * biomass to meet the efficiency
standard'' (see Technical Support Document (TSD) for CAIR on
Cogeneration Unit Efficiency Calculations). The Agency believed at the
time that most existing biomass cogeneration units would meet the
efficiency standard, and thus would be potentially exempt cogeneration
units. EPA now is re-examining whether the efficiency standard is
appropriate for all biomass-fired cogeneration units.
    EPA believes that the vast majority of existing biomass
cogeneration units are operated by the pulp and paper industry.\6\ The
biomass fuels typically fired by pulp and paper units are wood-based
biomass and black liquor.\7\ Both biomass fuels have relatively high
moisture content that prevents them from burning as efficiently as coal
and other fossil fuels. The moisture content of these biomass fuels can
range from approximately 40 to over 60 percent. In comparison, the
moisture content of bituminous coal is relatively low, less than 10
percent. Higher moisture content requires that more of the heating
value of the fuel goes into evaporating that moisture during
combustion. The evaporated moisture (and the heat used to evaporate it)
escapes up the stack--subtracting from the efficiency of the unit.
Therefore, the higher the moisture content in the biomass and the
higher the proportion of biomass fuel used, the more difficult it will
be for a unit to meet the efficiency standard in the cogeneration unit
definition. Conversely, the greater the amount of heat input from
fossil fuels, the easier it is for a unit to meet the efficiency
standard because of the reduced need for energy to heat and vaporize
the moisture in the fuel.
---------------------------------------------------------------------------

    \6\ The pulp and paper industry raised concerns regarding
biomass cogeneration units during the period for objections to the
CAIR FIP NODA.
    \7\ Black liquor is spent pulping liquor, a byproduct of a
pulping process used to separate the wood fibers used in papermaking
from lignin and other wood solids.
---------------------------------------------------------------------------

    Certain additional factors may also contribute to lower
efficiencies for existing biomass cogeneration units in the pulp and
paper industry. EPA believes that, as compared to large electric power
plants that are optimized for power generation, many of the existing
process-optimized units in the pulp and paper industry use
significantly lower design steam pressure and temperature conditions at
the steam turbine inlet. For example, a large power plant turbine might
be

designed to use steam at 2,400 psig and 1,000 [deg]F, whereas a
turbine-generator in a pulp and paper plant might be using steam at
conditions below 900 psig and 800 [deg]F. These lower steam conditions
reduce the efficiency of the overall cogeneration cycle, which was
optimized for process needs, not for electric power generation.
Moreover, many steam-turbine generators in the pulp and paper industry
may have been installed by retrofit--a circumstance that may have
exacerbated the problem because the boiler was designed before
cogeneration by the unit was contemplated and thus before the impact of
the design on thermal efficiency became a consideration.
    In addition, existing biomass cogeneration units (boilers and steam
turbines) in the pulp and paper industry generally are relatively
small, and smaller units are typically less efficient than larger
units. The existing smaller units generally do not incorporate high-
efficiency design practices and their energy losses (such as radiation
loss for a boiler and mechanical loss for a turbine-generator set) per
unit of energy input are inherently higher. The combination of
relatively high fuel moisture content and small boiler size results in
efficiencies as low as 60 percent for the biomass boiler itself,
compared to typical large fossil fuel-fired boiler efficiencies ranging
to above 85 percent.
    In summary, EPA believes that existing biomass cogeneration units
as a group have a particular set of characteristics that together may
make it difficult for many units to meet the efficiency standard in the
cogeneration unit definition unless the units co-fire significant
amounts of fossil fuel, such as coal. These characteristics are: Fuels
with relatively high moisture content, units designed for relatively
low pressure and temperature conditions for industrial processes, and
relatively small boilers and steam turbines that are inherently less
efficient due to their size. EPA recognizes that there are some
existing biomass cogeneration units (e.g., those that co-fire coal,
natural gas, or oil for a large portion of their heat input) that might
be able to meet the efficiency standard, as discussed in the following
section.
    The cogeneration unit definition finalized in the CAIR model cap-
and-trade rules, the CAIR FIP, CAMR, and in the proposed CAMR Federal
Plan, includes all energy input in the efficiency calculation. EPA
believes that the inclusion of energy input from all fuels--rather than
from fossil fuels only--has the unanticipated and unintended
consequence of making it very difficult for existing biomass
cogeneration units to qualify as cogeneration units unless they co-fire
significant amounts of fossil fuel, such as coal. Preventing these
existing units from qualifying as cogeneration units is not consistent
with the purposes of the efficiency standard. These units were
originally designed to and still do produce significant amounts of
useful thermal energy (relative to their total energy output) and
achieve efficiency gains over non-cogeneration units. Under these
circumstances, application of the currently written efficiency standard
to existing biomass cogeneration units does not seem to promote the
purposes of the standard. In addition, application of this standard as
written has the paradoxical result that existing biomass cogeneration
units burning greater amounts of coal (therefore likely having greater
emissions) are much more likely to meet the efficiency requirement and
thus qualify as cogeneration units exempt from emission limits under
the CAIR model cap-and-trade programs and CAMR model cap-and-trade
rule, while existing biomass cogeneration units burning less coal
(therefore likely having lower emissions) are less likely to meet the
requirement and qualify for the exemption.
    For these reasons, EPA is proposing to revise the efficiency
standard in the cogeneration unit definition such that energy input
from only the fossil fuel portion of the input would be included in the
efficiency calculation for existing units. The proposed change is
discussed in more detail below.

II. EPA's Proposed Action and Its Impacts

A. Proposed Change for Cogeneration Units

    EPA is proposing today to revise the efficiency standard in the
cogeneration unit definition in CAIR, the CAIR model cap-and-trade
rules, the CAIR FIP, CAMR and the CAMR model cap-and-trade rule, and
the proposed CAMR Federal Plan, to permit existing boilers to include
only energy input from fossil fuel in the efficiency calculation rather
than energy input from all fuels. This change would make it more likely
that existing units burning biomass and cogenerating electricity and
useful thermal energy could meet the efficiency standard and qualify as
exempt cogeneration units under these rules. EPA proposes to change the
cogeneration unit efficiency standard for boilers but not for
combustion turbines because combustion turbines generally do not fire
biomass. The proposed methodology for determining thermal efficiency of
a cogeneration unit under a revised efficiency standard is set forth in
detail in the Technical Support Document (TSD) that accompanies this
notice.
    Further, EPA requests comment on whether the efficiency standard in
the cogeneration unit definition should be revised to include language
explaining how to calculate a unit's ``total energy input'' or
alternatively, whether the definition of ``total energy input'' itself
should be revised. As discussed in the TSD, EPA recognizes that there
may be alternative formulas for calculating a unit's total energy
input, which is a critical value in determining its efficiency under
either the existing or any revised efficiency standard. EPA requests
comment on the TSD, including the methodology for determining
efficiency and the formula for calculating total energy input. EPA also
asks for comments on whether to revise the efficiency standard or
revise the definition of ``total energy input'' currently in CAIR, the
CAIR model cap-and-trade rules, the CAIR FIP, CAMR and CAMR Hg model
cap-and-trade rule, and the proposed CAMR Federal Plan in order to
specify the formula that should be used to calculate a unit's total
energy input.
    EPA proposes to change the efficiency standard only for existing
units because the Agency believes that units built in the future to
cogenerate electricity and useful thermal energy (regardless of the
percentage of heat input from biomass) can be designed to meet the
efficiency standard as currently written. EPA proposes to change the
efficiency standard only for units whose construction commenced on or
before April 25, 2007 and units with equipment used in cogenerating
where construction of such equipment commenced on or before April 25,
2007. If a unit that commenced construction on or before April 25, 2007
was not designed for cogeneration but is retrofitted for and commences
cogeneration after that date, EPA proposes that such a unit be treated
the same as a new cogeneration unit and so would be covered by the
existing efficiency standard. EPA believes that with the proper
planning and design decisions, these units are capable of operating
more efficiently than those built before the efficiency standard became
a consideration (i.e., on or before April 25, 2007). Retrofits can make
use of available technology such as back pressure turbines that allow
the unit to operate at higher efficiency, install equipment upgrades,
and select adequate steam and temperature

conditions. Further, these units are likely to have higher utilization
after they commence cogeneration because they will get higher returns
on investments by running the units more to make electricity for use on
site, purchasing less electricity and/or selling some electricity to
the grid. The increased utilization likely will result in greater
emissions. Therefore, they should either be covered by the requirements
of the cap-and-trade programs or operate efficiently enough to qualify
for the cogeneration unit exemption.
    The Agency proposes a new definition for the term ``construction
commenced'' (see proposed regulatory text at end of preamble). The
proposed definition is based on, and essentially combines, the
definitions of ``commenced'' and ``construction'' in 40 CFR 60.2
(Standards of Performance for New Stationary Sources). As an
alternative, EPA requests comment on using, as a basis for the new
definition, the definition of ``commence'' in 40 CFR 52.21(b)(9)
(Prevention of Significant Deterioration of Air Quality) and the
definition of ``construction'' in 40 CFR 60.2. While the definition of
``commenced'' in 40 CFR 60.2 requires that the owner or operator start
or be contractually obligated to start and complete within a reasonable
time a continuous program of construction, the definition of
``commence'' in 40 CFR 52.21 is narrower and, for example, requires
either the start of on-site (e.g., not just off-site construction of
equipment) or a contractual obligation that cannot be cancelled or
modified without substantial loss to the owner or operator.
    The proposed revision to the cogeneration unit definition would
apply only to boilers where construction of the unit and of its
cogeneration equipment commenced on or before the above-referenced cut-
off date and would have the effect of applying the following definition
to such boilers (see also proposed regulatory text):
    Cogeneration unit means a stationary, fossil-fuel-fired boiler (for
the CAIR model rules and the CAIR FIP) or stationary, coal-fired boiler
(for CAMR and the proposed CAMR Federal Plan):
    (1) Having equipment used to produce electricity and useful thermal
energy for industrial, commercial, heating, or cooling purposes through
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the
unit first produces electricity and during any calendar year after the
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit,
    (A) Useful thermal energy not less than 5 percent of total energy
output; and
    (B) Useful power that, when added to one-half of useful thermal
energy produced, is not less then 42.5 percent of total energy input
from fossil fuel, if useful thermal energy produced is 15 percent or
more of total energy output, or not less than 45 percent of total
energy input from fossil fuel, if useful thermal energy produced is
less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit, useful power not less
than 45 percent of total energy input from fossil fuel.
    This revised definition would not apply to boilers failing to meet
the commence construction requirements. For such units the cogeneration
unit definition--and the efficiency standard in particular--would
remain as finalized in the CAIR model rules, the CAIR FIP and CAMR, and
in the proposed CAMR Federal Plan.
    Nor would the revised definition apply to combustion turbines. For
combustion turbines (regardless of their commence construction dates)
the cogeneration unit definition--and the efficiency standard in
particular--would remain as finalized in the CAIR model rules, the CAIR
FIP and CAMR, and in the proposed CAMR Federal Plan.
    However, as discussed above, EPA is also requesting comment on
revising the efficiency standard, or the definition of ``total energy
input,'' to specify the formula for calculating a unit's total energy
input. Any such revision would be applicable in determining the
efficiency of all units under the cogeneration unit definition whether
or not the units are biomass cogeneration units that would be covered
by a limitation on the categories of fuel included in determining
energy input.
    Although EPA proposes to revise the cogeneration unit definition
only for boilers where construction of the units and their cogeneration
equipment commenced on or before April 25, 2007, the Agency requests
comment on the choice of the cut-off date for the revised cogeneration
unit definition, whether any specific, different cut-off date should be
used, and whether the cogeneration unit definition should be revised
for all units regardless of their commence construction dates.
Additionally, EPA requests comment on not changing the cogeneration
unit definition at all.
    EPA also requests comment on an alternative proposal that would
revise the efficiency standard in the cogeneration unit definition to
specifically exclude heat input from biomass fuel, rather than revising
the standard to include heat input from fossil fuel only. This
alternative proposal would narrowly limit the exclusion of heat input
to the non-fossil fuel (i.e., biomass) whose high moisture content,
combined with the other factors discussed above (e.g., relatively low
pressure and temperature unit design conditions and relatively small
boilers and steam turbines), would be the basis for EPA's proposed
exemption. The heat input from other non-fossil fuels (e.g., non-
fossil-fuel process gases) that lack the same level of moisture and
that may not be predominantly used in these types of units would not be
excluded from the efficiency calculation. This would avoid expanding
the cogeneration unit exemption to units that cogenerate but lack the
unique combination of characteristics on which EPA proposes to base the
exemption.
    The efficiency calculation would be based on total energy input
excluding input from biomass fuel. EPA requests comment on using the
following definition of the term ``biomass'' in 26 U.S.C. 48B(c)(4),
which was added to the Internal Revenue Code by Section 1307 of the
Energy Policy Act of 2005 (Pub. L. 109-58), for purposes of the
alternative proposed revision to the efficiency standard:
    Biomass means:
    (1) Any agricultural or plant waste;
    (2) Any byproduct of wood or paper mill operations, including
lignin in spent pulping liquors; and
    (3) Any other products of forestry maintenance;
    (4) Provided that the term `Biomass' does not include paper that is
commonly recycled.
    The Agency also requests comment on whether a different definition
of biomass should be used for this alternative proposal.

B. Emissions Impact of Proposed Action

    EPA analyzed the emissions impact of this proposed action using the
methodology explained below. For this analysis, EPA used Energy
Information Administration (EIA) data because detailed EPA data was not
available. Most units potentially affected by today's proposed rule
change have not been required to report to EPA in the past under
existing programs such as the Acid Rain Program or the NOX
SIP Call. While EPA has data about many of these sources as part of the
National Emission Inventory (NEI), the NEI does not provide information
at the unit level necessary to determine if units are

cogenerating or selling electricity to the grid. Therefore, NEI data is
not sufficient to make estimates regarding which units might be
affected by today's proposed rule change. We used EIA data to determine
which units would potentially be affected and to estimate the potential
impacts of the proposed change.
    For the CAIR model rules and the CAIR FIP, we generated a list of
biomass cogeneration units that serve generators with nameplate
capacity greater than 25 MW in CAIR states. We assumed that all of
these units could potentially be included in the CAIR and CAIR FIP
trading programs because any biomass unit might use fossil fuel for
start-up, combustion stabilization, or enhancement of electricity and
steam production. From this list we removed units that reported to EIA
that they do not have the ability to sell power to the grid; we assumed
that these units would not be affected by the proposed revision to the
cogeneration unit definition because they are not producing electricity
for sale and would not be potentially included in the CAIR and CAIR FIP
trading programs. We also removed from the list some units that
reported having the ability to sell power to the grid; because their
historical electricity sales data reported to EIA indicated sales above
the threshold in the cogeneration unit definition \8\ (i.e., more than
\1/3\ potential electric output capacity or 219,000 MWh supplied to a
utility power generation system for sale), we assumed these units would
not qualify for the cogeneration unit exemption even with the proposed
revision of the cogeneration unit definition. For the remaining units
on the list, based on fuel use data from EIA and assumed performance of
the units with various fuels, we analyzed whether these units are
likely to meet the efficiency standard in the cogeneration unit
definition as currently written. We removed from the list any units
that our analysis indicated are likely to meet the efficiency standard
as written because their status under the CAIR model cap-and-trade
rules or the CAIR FIP would not be affected by the proposed change.
---------------------------------------------------------------------------

    \8\ Analysis of electricity sales data was based on two years of
data, 1999 and 2000.
---------------------------------------------------------------------------

    After taking the above steps, the remaining units on the list are
ones that may be affected by the proposed rule change, i.e., units that
we assumed would not be exempt from state rules incorporating the CAIR
model trading rules or the CAIR FIP trading programs as written, but
that could become exempt if the proposed rule change is finalized as
proposed. We estimated annual NOX and SO2
emissions from this remaining group of units. See Table II-1.
    For CAMR and the proposed CAMR Federal Plan, using EIA data we
generated a list of cogeneration units burning both coal and biomass
that serve a generator with nameplate capacity greater than 25 MW in
CAMR states, i.e., nationwide. Then we took the same steps as described
above for the CAIR analysis, with the remaining units being ones that
may be affected by the proposed rule change, i.e., units that we
assumed would not be exempt from CAMR or the CAMR Federal Plan as
written but may become exempt with the proposed rule change. We
estimated annual Hg emissions from this remaining group of units. See
Table II-1.
    As shown in the table, emissions from units whose status under the
CAIR model rules or the CAIR FIP may be affected by the proposed rule
change are estimated to be on the order of 25,000 tons per year for
both NOX and SO2. These emissions are quite small
compared to the size of the regionwide emission caps under CAIR, which
are 1.5 and 1.3 million tons of NOX for the first and second
phases of the annual NOX program, respectively, and 3.7 and
2.6 million tons of SO2 for the first and second phases of
the SO2, program, respectively (i.e., for NOX,
about 1.6 percent of the phase I cap and 1.9 percent of the phase II
cap, and for SO2 about 0.6 percent of the phase I cap and
0.9 percent of the phase II cap).\9\
---------------------------------------------------------------------------

    \9\ Arkansas is included in CAIR for the ozone-season
NOX program only, not for the annual NOX and
SO2 programs. Because these NOX emission
estimates include annual NOX emissions for units in
Arkansas, the estimates slightly overstate the potential impact of
the proposed rule change for units in Arkansas.
---------------------------------------------------------------------------

    Emissions from units whose status under CAMR or the proposed CAMR
Federal Plan may be affected by the proposed rule change are estimated
to be on the order of 0.02 tons of Hg per year. These emissions are
very small compared to the size of the nationwide emission caps under
CAMR which are 38 and 15 tons of Hg for the first and second phases,
respectively (i.e., less than 0.1 percent of the phase I cap and about
0.1 percent of the phase II cap).
    Another way to look at the magnitude of emissions represented by
units that may be affected by the proposed rule change is to compare
emissions from this group of units to emissions from biomass
cogeneration units that we assumed are already exempt because they can
meet the efficiency standard as currently written. Table II-2 shows
estimated annual NOX, SO2, and Hg emissions for
this group of units. (Note that this group excludes units that reported
to EIA that they do not have the ability to sell power to the grid and
units that reported the ability to sell power and whose historic sales
exceed the electricity sales threshold for the exemption.) As shown in
the table, the emissions from the group of units whose regulatory
status we assumed would change under this proposed rule change are less
than emissions from the group of biomass cogeneration units who we
assumed are already exempt from these rules because they can meet the
efficiency standard as currently written.
    EPA's analysis also suggests that, on average, the estimated
emissions per unit are lower from the group whose regulatory status we
assumed would change compared to the group we assumed are already
exempt from these rules because they can meet the efficiency standard.
It is expected that emission rates at units burning proportionally more
biomass--which is the group whose regulatory status we assumed would
change--will generally be lower than emission rates at units burning
less biomass.
    It is important to note that EPA emissions estimates in Tables II-1
and II-2 are based on a rough estimate of the universe of units that
might be affected by the proposed rule change. More detailed
information for each unit is necessary in order to make a definitive
determination as to whether the particular unit would be able to meet
the efficiency standard as written or as proposed to be modified.

Table II-1.--Estimate of Biomass Cogeneration Units Potentially Excluded
    From CAIR and CAMR by Proposed Rule Change and Estimate of Their
                                Emissions
------------------------------------------------------------------------
                                  CAIR NOX   CAIR SO2       CAMR Hg
------------------------------------------------------------------------
Estimated number of units               55         46                  6
 potentially affected by
 proposed rule change..........
Estimated annual emissions from     24,200     23,800      0.02 (40 lbs)
 units potentially affected by
 proposed rule change (tons)...
------------------------------------------------------------------------

  Table II-2.--Estimate of Biomass Cogeneration Units Assumed Excluded
           From CAIR and CAMR and Estimate of Their Emissions
------------------------------------------------------------------------
                                  CAIR NOX   CAIR SO2       CAMR Hg
------------------------------------------------------------------------
Estimated number of units               31         28                 30
 assumed to meet efficiency
 standard as written...........
Estimated annual emissions from     22,000     59,200     0.24 (480 lbs)
 units assumed to meet the
 efficiency standard as written
 (tons)........................
------------------------------------------------------------------------

    Finally, units that might become exempt cogeneration units if
today's proposed rule changes are finalized may be required to make
emission reductions under programs other than CAIR or CAMR. Federal
requirements exist to protect areas of most concern, including Best
Available Retrofit Technology (BART) requirements for sources in
proximity to specially protected Class 1 areas. A review of available
information indicates that the majority (about two-thirds) of the
cogeneration units that may be affected by the proposed rule change may
be required to install NOX and SO2 controls in
response to BART requirements. It is also likely that biomass
cogeneration units that co-fire coal that may become exempt units under
today's proposed rule change will be required to comply with the boiler
MACT requirements, which include mercury emission limits.

C. State Emissions Budgets

    EPA does not propose to change the NOX, SO2,
or Hg State emission budgets under CAIR and CAMR. As discussed above,
the estimated amount of emissions from units potentially affected by
today's proposed action is minimal compared to the size of the
applicable regionwide (CAIR) and nationwide (CAMR) caps.
    In addition, States have made significant progress toward the
implementation of CAIR and CAMR based on the emission budgets that were
established in those rules. Proposing and finalizing revised State
emission budgets would take substantial effort by many States and EPA
and considerably delay CAIR and CAMR implementation in order to make
slight reductions in emissions caps. The CAIR emission budgets are in
40 CFR 51.123(e)(2) and (q)(2) and 51.124(e)(2) and CAMR emission
budgets are in 40 CFR 60.24(h)(3). Discussion of development of the
CAIR and CAMR State emission budgets are in 70 FR 25162 and 70 FR
28606, respectively.
    The Agency also seeks comment on changing the budgets to reflect
this change in the definition of cogeneration unit.

D. Impact of Proposed Action on CAIR and CAMR Implementation

    The Agency recognizes that States have made significant progress
toward the implementation of CAIR and CAMR and that finalizing this
proposed change in the cogeneration unit definition and in the
applicability provisions of the CAIR model rules and CAMR would require
States to change CAIR SIPs and CAMR State Plans. If EPA finalizes
today's proposed rule change, we will carefully consider the timing of
the regulatory action in relation to the implementation timeline. The
Agency understands that there may be implementation concerns regarding
today's proposal and seeks comments on what those implementation
concerns are. The Agency is particularly interested in comments
regarding timing of this action in relation to implementation
activities.
    EPA realizes that some States may allocate allowances to
cogeneration units that might be affected by today's proposal before
the proposal is finalized. If the proposal is finalized, some such
units may no longer be required to hold allowances. The Agency believes
that this could be addressed by the State's SIP revision or State Plan.
For example, the SIP revision or State Plan adopting revisions making
some units exempt from the allowance-holding requirement could require
the affected units to surrender their allocations for inclusion in the
State's new unit set-aside. If the State would require the unit to
surrender their allocations, the SIP revision or State Plan should
indicate how allowances would be handled. Note that a State could also
choose not to require the units to surrender allowances even though the
units were no longer covered by the rule. A State has flexibility to
choose how it allocates allowances, although the allocations must be
consistent with the State's approved allocation methodology. EPA seeks
comment on the potential impact of the revision of the cogeneration
unit definition and the applicability provisions on the allowance
allocation process.
    EPA is also seeking comment on an alternative proposal whereby the
Agency would modify the CAIR to allow States intending to join the EPA-
administered CAIR trading programs to choose which cogeneration unit
definition to use. The CAIR currently allows States to join the EPA-
administered trading programs only if they adopt the model rules with
limited modifications. Under this alternative proposal, EPA would
change the cogeneration unit definition in the model trading rules, but
allow States to join the EPA-administered trading programs even if they
continued to use the existing cogeneration unit definition in the model
trading rules. Thus, States could participate in the EPA-administered
trading programs regardless of whether they choose to use the
definition as currently written or any revised definition that may be
finalized in this rulemaking. In the CAIR FIP, EPA would change the
cogeneration unit definition as proposed today.
    Under this alternative, a State that chose to use the cogeneration
unit definition as currently written would not need to revise the
definition in the State's CAIR SIP. This could lead to slightly
different applicability provisions among the States. EPA recognizes
that some States may have laws that prohibit the State from having

more stringent requirements than the requirements mandated by EPA (as
discussed above, EPA believes that the proposed change would have only
a slight impact on emissions). EPA seeks comment on whether this
alternative would ease any implementation concerns. Although this
alternative would provide an additional area of flexibility for States
in the CAIR model cap-and-trade rules, EPA does not contemplate adding
this flexibility to the abbreviated SIP revision option that was
finalized in the CAIR FIP. If EPA changes the cogeneration unit
definition in the CAIR FIP as proposed, States that chose to use an
abbreviated SIP revision to allocate allowances under a FIP could
modify their allocation method to accommodate the revised FIP
cogeneration unit definition if they chose to do so.
    EPA does not propose under this alternative that States could
decide which definition of cogeneration unit to use for State Plans
under CAMR, however, because CAMR specifies the category of units from
which States must obtain emission reductions (coal-fired electric
generating units as defined in the rule) in contrast to CAIR where
States have flexibility in the choice of sources to control. The Agency
seeks comment on whether this flexibility could or should be an
alternative for CAMR State Plans. (In any case, EPA does not
contemplate this alternative as an added flexibility for States to
implement under the proposed CAMR Federal Plan.) Similar to States
under the CAIR FIP, States may choose their allocation method for
allowances under the CAMR proposed Federal Plan using a State
allocation methodology.

III. Minor Corrections to CAIR and the Acid Rain Program Regulations
and Minor Revisions to the Boiler MACT

A. CAIR and the Acid Rain Program Regulations

    In addition to the above-described rule revisions, EPA is proposing
certain minor corrections to CAIR, the CAIR model cap-and-trade rules,
and the Acid Rain Program regulations. On April 28, 2006, EPA
promulgated a final rule revising several definitions used in both the
CAIR and in the CAIR model cap-and-trade rules. While the rule text in
the April 28, 2006 final rule incorporated the revisions to the
definitions in the CAIR model cap-and-trade rules, the final rule
mistakenly did not also include rule text reflecting conforming changes
to the definitions of the same terms in the CAIR, i.e., to the
definitions for ``Allocation or allocation'', ``Combustion turbine'',
``Nameplate capacity'', and ``Maximum design heat input''. EPA proposes
in today's action to implement these conforming changes in the
definitions for these terms in Sec.  51.123(cc) and (q) and Sec.
51.124(q) for the reasons explained in that final action.
    With regard to the CAIR model cap-and-trade rules, EPA is proposing
a minor correction of the definition of ``Permitting authority''. For
all States subject to CAIR, this term is intended to include the
agencies authorized to issue CAIR permits under the regulations
approved by the Administrator for the EPA-administered CAIR cap-and-
trade programs. Some States have incorporated by reference, or intend
to incorporate by reference, the permitting provisions of the CAIR
model cap-and-trade rules. However, many other States have promulgated,
or intend to promulgate, their own permitting provisions concerning the
processing and issuing of CAIR permits under the EPA-administered cap-
and-trade programs. The existing definition refers only to permitting
authorities issuing CAIR permits under the permitting provisions of the
CAIR model cap-and-trade rules and not to permitting authorities
governed by States' own permitting provisions that may be approved into
SIPs by the Administrator under CAIR. Today's proposed correction--
i.e., the elimination of the references, in the current ``Permitting
authority'' definition, to subparts CC, CCC, and CCCC of the CAIR model
cap-and-trade rules--would correct this technical problem.
    With regard to the Acid Rain Program regulations, EPA is today
proposing minor corrections to two parts of the regulations. In Part
72, EPA is proposing a non-substantive correction in wording in the
Certificate of Representation requirements so that the provision would
have the same wording as comparable provisions in the CAIR model cap-
and-trade rules. This would facilitate using a single Certificate of
Representation form for all of these trading programs. In Part 78, EPA
is proposing corrections that would make it clear that the
administrative appeals procedures apply to all final actions of the
Administrator under the EPA-administered cap-and-trade programs whether
the programs are governed by the CAIR model cap-and-trade rule
provisions that many States are incorporating by reference or whether
the programs are governed by the State's own cap-and-trade rules
approved by the Administrator.

B. Boiler MACT

    EPA is also proposing in today's action a change to clarify the
provision in the boiler MACT that explicitly excludes from that rule
``mercury budget units covered by 40 CFR part 60, subpart HHHH'' (40
CFR 63.7491(c)). EPA intended to exclude from the boiler MACT all units
subject to CAMR (i.e., all electric generating units (EGU's) as defined
in CAMR) and not just those units (i.e., Hg Budget units) that become
subject to the EPA-administered Hg Budget Trading Program under 40 CFR
part 60, subpart HHHH (see 71 FR 77109 explaining that EPA had amended
the boiler MACT to exclude ``units subject to CAMR''). All EGUs under
CAMR, whether covered by a State Plan that adopts the Hg Budget Trading
Program or that adopts other controls that meet CAMR requirements, are
subject to the State EGU Hg budgets established by CAMR. In excluding
EGUs from the boiler MACT, EPA did not intend to distinguish among EGUs
based on whether the State in which an EGU is located is participating
in the Hg Budget Trading Program.
    Under today's proposal, EGUs (i.e., Hg Budget units) in States
participating in that program would continue to be excluded from the
boiler MACT, and the regulatory language would be revised to include,
in the exclusion, all EGUs covered by CAMR. In order to properly
characterize all of the units that EPA originally intended to exclude,
EPA proposes essentially to replace, in 40 CFR 63.7491(c), the term
``Mercury Budget Unit'' by the broader term ``Electric Generating
Unit''.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is not a ``significant regulatory action'' and is therefore
not subject to review under the EO.
    This action proposes relatively minor revisions to the definition
of ``cogeneration unit'' in the CAIR model cap-and-trade rules, CAIR
FIP, CAMR, including the CAMR model cap-and-trade rule, and the
proposed CAMR Federal Plan. It also proposes some other minor,
technical rule revisions to the CAIR, the Acid Rain Program, and the
boiler MACT. For today's action, EPA is relying on the economic
analysis conducted for CAIR, CAMR, and the boiler MACT that are
presented in the Regulatory Impact Analyses for those actions.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden.
This action proposes relatively minor revisions to the definition of
``cogeneration unit'' in the CAIR model cap-and-trade rules, CAIR FIP,
CAMR, including the model cap-and-trade rule, and the proposed CAMR
Federal Plan. It also proposes some other minor, technical rule
revisions to the CAIR, the Acid Rain Program, and the boiler MACT. The
paperwork reduction requirements for this action are satisfied through
the Information Collection Requests (ICRs) submitted to OMB for review
and approval as part of CAIR, CAMR and the boiler MACT.
    The OMB has previously approved the information collection
requirements contained in the existing CAIR, CAMR, and boiler MACT
regulations (70 FR 25313, May 12, 2005, 70 FR 28643, May 18, 2005, and
70 FR 55248 September 13, 2004, respectively) under the provisions of
the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. For the CAIR and
CAMR ICRs, OMB has assigned control numbers 2060-0570 and 2060-0567,
respectively (EPA No. 2152.02 and 2137.02). OMB also has previously
approved the information collection requirements contained in the
existing boiler MACT regulations and has assigned OMB control number
2060-0551 (EPA No. 2028.02). A copy of the OMB approved ICRs may be
obtained from Susan Auby, Collection Strategies Division, U.S.
Environmental Protection Agency (2822T), 1200 Pennsylvania Ave., NW.,
Washington, DC 20460 or by calling<PHONE_NUMBER>.
    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, disclose or provide
information to or for a Federal agency. This includes the time needed
to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR Part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of
a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on
small entities, EPA has determined that this action will not have a
significant economic impact on a substantial number of small entities.
In determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the
primary purpose of the regulatory flexibility analyses is to identify
and address regulatory alternatives ``which minimize any significant
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604.
Thus, an agency may certify that a rule will not have a significant
economic impact on a substantial number of small entities if, among
other possibilities, the rule relieves regulatory burden, or otherwise
has a positive economic effect on all of the small entities subject to
the rule.
    EPA is proposing to revise the thermal efficiency standard in the
cogeneration unit definition, which exists in the CAIR model trading
rules, CAIR FIP, CAMR, including the CAMR model trading rule, and
proposed CAMR Federal Plan. As a result, some additional cogeneration
units will likely be exempt from the CAIR FIP, CAMR and the proposed
CAMR Federal Plan. We have therefore concluded that the changes to the
CAIR FIP, CAMR, including the CAMR model trading rule, and the proposed
CAMR Federal Plan in today's proposed rule will not have any
significant adverse impact on small entities and may relieve regulatory
burden on some small entities that would have been subject to these
programs in the absence of today's proposed rule change.
    CAIR and the CAIR model trading rules do not establish requirements
applicable to small entities and thus a regulatory flexibility analysis
is not required for the revisions to the CAIR model trading rules. CAIR
requires States to submit SIP revisions to achieve the necessary
emission reductions and provides model trading rules that the States
may adopt to achieve these reductions. However, because States have the
discretion under CAIR to choose the sources to regulate and the
emissions reductions to be achieved by the regulated sources, EPA
cannot predict the effect of the change to the definition in the CAIR
model rules on small entities. In States that choose to adopt the model
rules with the modified definition of cogeneration unit, the likely
result would be the exemption of some additional cogeneration units
from the EPA-administered CAIR cap-and-trade programs.
    With regard to CAMR, the change to the cogeneration definition is
likely to result in some additional cogeneration units becoming exempt
from CAMR, as well as from the EPA-administered CAMR cap-and-trade
program, including potentially some small entities. Because the change
is likely to relieve regulatory burden, the change will not have a
significant economic impact on a substantial number of small entities.
    The proposed technical changes to the boiler MACT clarify that any
EGU subject to CAMR (whether or not the EGU is in a State that is
participating in the EPA-administered Hg cap-and-trade program) is
excluded from the boiler MACT. This change will not have any
significant adverse impact on small entities and may relieve regulatory
burden on some small entities that would have been subject to the
boiler MACT in the absence of today's proposed rule change.
    The other proposed rule revisions would not make any substantive
changes in the requirements of the existing rules and, therefore, would
not have any potential impacts on small entities. We continue to be
interested in the potential impacts of the proposed rule on small
entities and welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under UMRA section 202, 2 U.S.C.
1532, EPA generally must prepare a written statement, including a cost-
benefit analysis, for any proposed or final rule that ``includes any
Federal mandate that may result in the expenditure by State, local, and
Tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is
defined under UMRA section 421(6), 2 U.S.C. 658(6), to include a
``Federal intergovernmental mandate'' and a ``Federal private sector
mandate.'' A ``Federal intergovernmental mandate,'' in turn, is defined
to include a regulation that ``would impose an enforceable duty upon
State, local, or Tribal governments,'' except for, among other things,
a duty that is ``a condition of Federal assistance'' (UMRA section
421(5)(A)(i)(I), 2 U.S.C. 658(5)(A)(i)). A ``Federal private sector
mandate'' includes a regulation that ``would impose an enforceable duty
upon the private sector,'' with certain exceptions (UMRA section
421(7)(A), 2 U.S.C. 658(7)(A)).
    Before promulgating an EPA rule for which a written statement is
needed under UMRA section 202, UMRA section 205, 2 U.S.C. 1535,
generally requires EPA to identify and consider a reasonable number of
regulatory alternatives and adopt the least costly, most cost-
effective, or least burdensome alternative that achieves the objectives
of the rule.
    EPA prepared a written statement meeting the requirements of
section 202 of UMRA for the final CAIR and CAMR and boiler MACT
rulemaking processes. Most of the changes proposed in today's action
relate to the definition of cogeneration unit, which results in a minor
change in the applicability criteria for the CAIR model trading rules,
CAIR FIP, CAMR, including the CAMR model trading rule, and the proposed
CAMR Federal Plan that will not significantly alter the impacts of
these rules. The technical change proposed for the boiler MACT in
today's action relates to the exclusion of EGUs and makes that
exclusion consistent with the intended scope of the boiler MACT. The
other proposed rule changes would make no substantive changes in the
requirements of the existing rules. Thus, the analyses already prepared
for CAIR, CAMR, and the boiler MACT are applicable to today's action.
    In summary, today's rule contains no Federal mandates for State,
local, or tribal governments or the private sector because this action
is likely to actually relieve regulatory burden by making more units
eligible for the cogeneration unit exemption. Furthermore, as EPA
stated in the final CAIR and CAMR, EPA is not directly establishing any
regulatory requirements that may significantly or uniquely affect small
governments, including Tribal governments. Thus, EPA is not obligated
to develop under UMRA section 203 a small government agency plan.
Furthermore, in a manner consistent with the intergovernmental
consultation provisions of UMRA section 204, EPA carried out
consultations with the governmental entities affected by this rule.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' are defined in the EO to
include regulations that 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.''
    This proposed rule does not have Federalism implications. It will
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. Thus, EO 13132 does not apply to
this proposed rule. In the spirit of Executive Order 13132, and
consistent with EPA policy to promote communications between EPA and
State and local governments, EPA specifically solicits comment on this
proposed rule from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by Tribal officials in the development of regulatory
policies that have Tribal implications.'' This proposal does not have
``Tribal implications'' as specified in EO 13175. Thus, Executive Order
13175 does not apply to this rule.

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

    Executive Order 13045, entitled ``Protection of Children from
Environmental Health and Safety Risks'' (62 FR 19885, April 23, 1997),
applies to any rule that (1) is determined to be ``economically
significant'' as defined under EO 12866 and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, Section 5-501 of the EO directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
    This proposed rule is not subject to the Executive Order because it
is not economically significant as defined in Executive Order 12866,
and because the Agency does not have reason to believe the
environmental health or safety risks addressed by this action present a
disproportionate risk to children. This proposed rule would result in
little change in emissions levels and the environmental benefits
projected in the final CAIR and CAMR because the likely effect of the
proposed rule would be to exempt a small number of units with a very
small amount of emissions compared to the overall emissions caps.
Similarly, the proposed change to the boiler MACT would result in
little change in emissions levels and projected environmental benefits.
The health and safety risks are essentially unchanged from those
analyzed in CAIR, the CAIR FIP, CAMR, the proposed CAMR Federal Plan,
and the boiler MACT.
    The public is invited to submit or identify peer-reviewed studies
and data, of which EPA may not be aware, that assessed results of early
life exposure to SO2, NOX or Hg.

H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use'' (66 FR 28355, May 22, 2001), because it is not a
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA
to use voluntary consensus standards in their regulatory and
procurement activities unless to do so would be inconsistent with
applicable law or otherwise impracticable. Voluntary consensus
standards are technical standards (e.g., material specifications, test
methods, sampling procedures, business practices) developed or adopted
by one or more voluntary consensus bodies. The NTTAA requires EPA to
provide Congress, through OMB, with explanations when EPA decides not
to use available and applicable voluntary consensus standards.
    This proposed action does not propose the use of any additional
technical standards beyond those cited in the final CAIR, CAMR and
boiler MACT. Therefore, EPA is not considering the use of any
additional voluntary consensus standards for this action.

J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898, entitled ``Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations,'' requires Federal agencies to consider the impact of
programs, policies, and activities on minority populations and low-
income populations. According to EPA guidance,\10\ agencies are to
assess whether minority or low-income populations face risks or a rate
of exposure to hazards that are significant and that ``appreciably
exceed or is likely to appreciably exceed the risk or rate to the
general population or to the appropriate comparison group.'' (EPA,
1998)
---------------------------------------------------------------------------

    \10\ U.S. Environmental Protection Agency, 1998. Guidance for
Incorporating Environmental Justice Concerns in EPA's NEPA
Compliance Analyses. Office of Federal Activities, Washington, DC,
April, 1998.
---------------------------------------------------------------------------

    In accordance with Executive Order 12898, EPA expects this proposal
to have no disproportionate negative impacts on minority or low income
populations because the emissions reduced by CAIR and CAMR remain
essentially the same.

List of Subjects

40 CFR Part 51

    Administrative practice and procedure, Air pollution control,
Intergovernmental relations, Nitrogen oxides, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 60

    Environmental protection, Administrative practice and procedure,
Air pollution control, Coal, Electric power plants, Intergovernmental
relations, Metals, Natural gas, Nitrogen oxides, Particulate matter,
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 62

    Environmental protection, Air pollution control, Hazardous
Substances, Reporting and recordkeeping requirements.

40 CFR Part 63

    Administrative practice and procedure, Air pollution control,
Hazardous substances, Intergovernmental relations, Reporting and
recordkeeping requirements.

40 CFR Part 72

    Acid rain, Air pollution control, Carbon dioxide, Electric
utilities, Incorporation by reference, Nitrogen oxides, Reporting and
recordkeeping requirements, Sulfur dioxide.

40 CFR Part 78

    Environmental protection, Acid rain, Administrative practice and
procedure, Air pollution control, Electric utilities, Nitrogen oxides,
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 96

    Environmental protection, Administrative practice and procedure,
Intergovernmental relations, Air pollution, control, Nitrogen oxides,
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 97

    Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Nitrogen oxides,
Sulfur dioxide, Reporting and recordkeeping requirements.

    Dated: April 16, 2007.
Stephen L. Johnson,
Administrator.

    For the reasons set forth in the preamble, parts 51, 60, 62, 63,
72, 78, 96, and 97 of chapter 1 of title 40 of the Code of Federal
Regulations are proposed to be amended as follows:

PART 51--[AMENDED]

    1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

    2. Section 51.123(cc) is amended as follows:
    a. In the definition of ``Allocate or allocation'', by revising the
word ``source'' to read ``source or other entity'';
    b. In the definition of ``Cogeneration unit'', by revising, in
paragraph (2), the words ``calendar year after which'' to read
``calendar year after the calendar year in which'' and by adding a new
paragraph (3);
    c. In paragraph (2) of the definition of ``Combustion turbine'', by
revising the words ``any associated heat recovery steam generator'' to
read ``any associated duct burner, heat recovery steam generator,'';
    d. By revising the definition of ``Maximum design heat input'';
    e. In the definition of ``Nameplate capacity'', by revising the
words ``other deratings) as specified'' to read ``other deratings as of
such installation as specified'' and by revising the words ``maximum
amount as specified'' to read ``maximum amount as of such completion as
specified''; and
    f. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  51.123  Findings and requirements for submission of State
implementation plan revisions relating to emissions of oxides of
nitrogen pursuant to the Clean Air Interstate Rule.

* * * * *
    (cc) * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
paragraph, that the owner or operator has undertaken, or entered into a
contractual obligation

to undertake and complete within a reasonable time, a continuous
program of fabrication, erection, or installation of the boiler or
equipment.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour
(in Btu/hr) that a unit is capable of combusting on a steady state
basis as of the initial installation of the unit as specified by the
manufacturer of the unit.
* * * * *
    3. Section 51.124(q) is amended as follows:
    a. In the definition of ``Allocate or allocation'', by revising the
word ``source'' to read ``source or other entity'';
    b. In the definition of ``Cogeneration unit'', by revising, in
paragraph (2), the words ``calendar year after which'' to read
``calendar year after the calendar year in which'' and by adding a new
paragraph (3);
    c. In paragraph (2) of the definition of ``Combustion turbine'', by
revising the words ``any associated heat recovery steam generator'' to
read ``any associated duct burner, heat recovery steam generator,'';
    d. By revising the definition of ``Maximum design heat input'';
    e. In the definition of ``Nameplate capacity'', by revising the
words ``other deratings) as specified'' to read ``other deratings as of
such installation as specified'' and by revising the words ``maximum
amount as specified'' to read ``maximum amount as of such completion as
specified''; and
    f. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  51.124  Findings and requirements for submission of State
implementation plan revisions relating to emissions of sulfur dioxide
pursuant to the Clean Air Interstate Rule.

* * * * *
    (q) * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
paragraph, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour
(in Btu/hr) that a unit is capable of combusting on a steady state
basis as of the initial installation of the unit as specified by the
manufacturer of the unit.
* * * * *

PART 60--[AMENDED]

    4. The authority citation for part 60 is revised to read as
follows:

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

    5. Section 60.24(h)(8) is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3); and
    b. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  60.24  Emission standards and compliance schedules.

* * * * *
    (h) * * *
    (8) * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
paragraph, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    6. Section 60.4102 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3); and
    b. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  60.4102  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *

PART 62--[AMENDED]

    7. The authority citation for Part 62 continues to read as follows:

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

    8. Section 62.15902 as proposed on December 22, 2006 (71 FR 77110)
is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3); and
    b. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  62.15902  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of

Cogeneration unit in this section, that the owner or operator has
undertaken, or entered into a contractual obligation to undertake and
complete within a reasonable time, a continuous program of fabrication,
erection, or installation of the boiler or equipment.
* * * * *

PART 63--NATIONAL EMISSION STANDARDS FOR HAZARDOUS AIR POLLUTANTS
FOR SOURCE CATEGORIES

    9. The authority citation for part 63 continues to read as follows:

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

    10. Section 63.7491 is amended by revising paragraph (c) to read as
follows:

Sec.  63.7491  Are any boilers or process heaters not subject to this
subpart?

* * * * *
    (c) An electric utility steam generating unit (including a unit
covered by 40 CFR part 60, subpart Da) or an electric generating unit
as defined in 40 CFR 60.24(h)(8) (including a Hg Budget unit covered by
the provisions of a State Plan approved under 40 CFR 60.24(h)(6)).
* * * * *

PART 72--PERMITS REGULATION

    11. The authority citation for part 72 is revised to read as
follows:

    Authority: 42 U.S.C. 7601 and 7651 et seq.

    12. Section 72.24 is amended, in paragraph (a)(9) introductory
text, by revising the words ``life-of-the-unit, firm power contractual
arrangements'' to read ``a life-of-the-unit, firm power contractual
arrangement''.

PART 78--APPEAL PROCEDURES

    13. The authority citation for part 78 is revised to read as
follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7411, 7426, 7601, and
7651, et seq.

    14. Section 78.1 is amended by revising paragraph (a)(1) to read as
follows:

Sec.  78.1  Purpose and scope.

    (a)(1) This part shall govern appeals of any final decision of the
Administrator under subpart HHHH of part 60 of this chapter or State
regulations approved under Sec.  60.24(h)(6)(i) or (ii) of this
chapter, subpart LLL of part 62 of this chapter, part 72, 73, 74, 75,
76, or 77 of this chapter, subparts AA through II of part 96 of this
chapter or State regulations approved under Sec.  51.123(o)(1) or (2)
of this chapter, subparts AAA through III of part 96 of this chapter or
State regulations approved under Sec.  51.124(o)(1) or (2) of this
chapter, subparts AAAA through IIII of part 96 of this chapter or State
regulations approved under Sec.  51.123(aa)(1) or (2) of this chapter,
or part 97 of this chapter; provided that matters listed in Sec.
78.3(d) and preliminary, procedural, or intermediate decisions, such as
draft Acid Rain permits, may not be appealed. All references in
paragraph (b) of this section and in Sec.  78.3 subpart HHHH of part 60
of this chapter, to subparts AA through II of part 96 of this chapter,
subparts AAA through III of part 96 of this chapter, and subparts AAAA
through IIII of part 96 of this chapter shall be read to include the
comparable provisions in State regulations approved under Sec.
60.24(h)(6)(i) or (ii) of this chapter, Sec.  51.123(o)(1) or (2) of
this chapter, Sec.  51.124(o)(1) or (2) of this chapter, and Sec.
51.123(aa)(1) or (2) of this chapter, respectively.
* * * * *

PART 96--[AMENDED]

    15. The authority citation for part 96 continues to read as
follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7601, and 7651, et seq.

    16. Section 96.102 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the
words ``in accordance with subpart CC of this part''; and
    c. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  96.102  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    17. Section 96.202 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the
words ``in accordance with subpart CCC of this part''; and
    c. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  96.202  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    18. Section 96.302 is amended as follows:
    a. In the definition of ``Cogeneration unit'', a new paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the
words ``in accordance with subpart CCCC of this part''; and
    c. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  96.302  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal

energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    19. The authority citation for part 97 continues to read as
follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et
seq.

    20. Section 97.102 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the
words ``in accordance with subpart CC of this part''; and
    c. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  97.102  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Commencing construction means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    21. Section 97.202 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the
words ``in accordance with subpart CCC of this part''; and
    c. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  97.202  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
    22. Section 97.302 is amended as follows:
    a. In the definition of ``Cogeneration unit'', by adding a new
paragraph (3);
    b. In the definition of ``Permitting authority'', by removing the
words ``in accordance with subpart CCCC of this part''; and
    c. By adding in alphabetical order a new definition of
``Construction commenced'' to read as follows:

Sec.  97.302  Definitions.

* * * * *
    Cogeneration unit means * * *
    (3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input only from fossil fuel if the unit is a boiler--
    (i) For which construction commenced on or before April 25, 2007;
and
    (ii) Having equipment used to produce electricity and useful
thermal energy through sequential use of energy, for which construction
commenced on or before April 25, 2007.
* * * * *
    Construction commenced means, with regard to a boiler or equipment
under paragraph (3) of the definition of Cogeneration unit in this
section, that the owner or operator has undertaken, or entered into a
contractual obligation to undertake and complete within a reasonable
time, a continuous program of fabrication, erection, or installation of
the boiler or equipment.
* * * * *
 [FR Doc. E7-7536 Filed 4-24-07; 8:45 am]

BILLING CODE 6560-50-P