1 IX. Interactions With Other Clean Air Act Requirements B. How Does this Rule Interact with the Acid Rain Program?

As EPA developed this regulatory action, much consideration was given to interactions between the existing title IV Acid Rain Program and today's action designed to achieve significant reductions in SO2 emissions beyond title IV. Requiring sources to reduce emissions beyond what title IV mandates has both environmental and economic implications for the existing title IV SO2 cap and trade program. In the absence of an approach for taking account of the title IV program, a new program ( i. e., the CAIR) that imposes a significantly tighter cap on SO2 emissions for a region encompassing most of the sources and most of the SO2 emissions covered by title IV would likely result in a significant excess in the supply of title IV allowances, a collapse of the price of title IV allowances, disruption of operation of the title IV allowance market and the title IV SO2 cap and trade system, and the potential for increased SO2 emissions. The potential for increased emissions would exist in the entire country for the years before the CAIR implementation deadline and would continue after implementation for States not covered by the CAIR. These negative impacts, particularly those on the operation of the title IV cap and trade system, would undermine the efficacy 2 of the title IV program and could erode confidence in cap and trade programs in general.

Title IV has successfully reduced emissions of SO2 using the cap and trade approach, eliminating millions of tons of SO2 from the environment and encouraging billions of dollars of investments by companies in pollution controls to enable the sale of allowances reflecting excess emissions reductions and in allowance purchases for compliance. In view of these already achieved reductions and existing investments under title IV, the likelihood of disruption of the allowance market and the title IV cap and trade system,

and the potential for SO2 emission increases, it is necessary to consider ways to preserve the environmental benefits achieved under title IV and maintain the integrity of the market for title IV allowances and the title IV cap and trade system. The EPA maintains that it is appropriate to provide States the opportunity to achieve the SO2 emission reductions required under today's action by building on, and avoiding undermining, this existing,

successful program.

The EPA has developed, in the model SO2 cap and trade rule, an approach to build on and coordinate with the title IV SO2 program to ensure that the required reductions under today's action are achieved while preserving the efficacy of 3 the title IV program. The EPA's approach provides States the opportunity to impose more stringent control requirements for EGUs' SO2 emissions than under title IV through an EPA administered cap and trade program that requires the use of title IV allowances for compliance at a ratio of 2 allowances per ton of emissions for allowances allocated for 2010 through 2014 and 2.86 allowances per ton of emissions for allowances allocated for 2015 or thereafter. ( The program also allows the use of banked title IV allowances allocated for years before 2010 to be used at a ratio of 1 allowance per ton of emissions.) Title IV allowances continue to be freely transferable among sources covered by the Acid Rain Program and sources covered by the model SO2 cap and trade program under CAIR. However,

each title IV allowance used to comply with a source's allowance holding requirement in the CAIR model SO2 cap and trade program is removed from the source's allowance tracking system account and cannot be used again for compliance, either in the CAIR model SO2 cap and trade program or the Acid Rain Program.

In addition, as discussed above, if a State wants to achieve the SO2 emissions reductions required by today's action through more stringent EGU emission limitations only but without using the model cap and trade program, then EPA 4 is requiring that the State include in its SIP a mechanism for retiring the excess title IV allowances that will result from imposition of these more stringent EGU requirements.

In this case, the State must retire an amount of title IV allowances equal to the total amount of title IV allowances allocated to the units in the State minus the amount of title IV allowances equivalent to the tonnage cap set by the State on SO2 emissions by EGUs, and the State can choose what retirement mechanism to use.

Further, as discussed above, if a State wants to meet the SO2 emissions reductions requirement in today's action through reductions by both EGUs and non EGUs, then EPA is also requiring the State's SIP to include a mechanism for retiring excess title IV allowances. In that case, the amount of title IV allowances that must be retired equals the total amount of title IV allowances allocated to the units in the State minus the amount of title IV allowances equivalent to the tonnage cap set by the State on EGU SO2 emissions, and the State can choose what retirement mechanism to use.

Finally, as discussed above, if the State wants to achieve the SO2 emissions reductions requirement in today's action through reductions by non EGUs only, then EPA is not imposing any requirement to retire title IV allowances. 5 1. Legal Authority for Using Title IV Allowances in CAIR Model SO2 Cap and Trade Program.

The EPA maintains that it has the authority to approve and administer, if requested by a State in the SIP submitted in response to today's action, the new CAIR model SO2 cap and trade program meeting the SO2 emission reduction requirement in today's action that requires use of title IV allowances to comply with the more stringent allowanceholding requirement of the new program and retirement under the CAIR SO2 cap and trade program and the Acid Rain Program of title IV allowances used for such compliance. Some commenters claim that EPA's establishment of such a cap and trade program using title IV allowances that sources must hold generally at a ratio of greater than one allowance per ton of SO2 emissions is contrary to title IV. Most of these commenters prefer the approach of allowing States to use a new EPA administered cap and trade program to meet lawful emission reduction requirements under title I and of allowing ( but not requiring) sources to use title IV allowances in the new program. However, these commenters argue that title IV prohibits requiring sources to use title IV allowances in such a program, whether at the same tonnage authorization ( i. e., one allowance per ton of emissions)

established in title IV or at a different tonnage 6 authorization. Other commenters state that title IV does not bar EPA from establishing a new cap and trade program that requires the use of title IV allowances.

The EPA maintains that it has the authority under section 110( a)( 2)( D) and title IV to establish a new cap and trade program requiring the use of title IV allowances at a different tonnage authorization than under the Acid Rain Program and the retirement of such allowances for purposes of both programs. First, as discussed in section V above,

EPA has the authority under section 110( a)( 2)( D) to establish a new SO2 cap and trade program, administered by EPA if requested in a State's SIP, to prohibit emissions that contribute significantly to nonattainment, or interfere with maintenance, of the PM 2.5 NAAQS. Further, EPA notes that under section 402( 3), a title IV allowance is:

an authorization, allocated to an affected unit by the Administrator under this title [ IV], to emit, during or after a specified calendar year, one ton of sulfur dioxide. 42 U. S. C. 7651( a)( 3).

However, section 403( f) states that:

An allowance allocated under this title is a limited authorization to emit sulfur dioxide in accordance with the provision of this title [ IV]. Such allowance does not constitute a property right. Nothing in this title [ IV] or in any other provision of law shall be construed to limit the authority of the United States to terminate or limit such authorization. Nothing in this section relating to allowances shall be construed as affecting the application of, or compliance with, any other provision of this Act to an affected 7 1 The EPA's interpretation is based on the language of section 403( f) and the legislative history of the provision. The language in CAA section 403( f) contrasts with language that was in section 503( f) of the House bill  but was excluded from the final version of the Clean Air Act Amendments of 1990  referring to the authority of the " United States" to terminate or limit such authorization " by Act of Congress" and stating that "[ a] llowances under this title may not be extinguished by the Administrator." U. S. Senate Committee on Environment and Public Works, A Legislative History of The Clean Air Act Amendments of 1990 ( Legis. Hist. of CAAA), S. Prt. 38, 103d Cong., 1st Sess., Vol. II at 2224 ( Nov. 1993). Further, unlike CAA section 403( f), the House bill did not state that an allowance did not constitute a property right. Section 403( f) of the Senate bill that was considered, along with the House bill, in conference committee had language different than both CAA section 403( f) and the House bill and stated that " allowances may be limited, revoked or otherwise modified in accordance with the provisions of this title or other authority of the Administrator" and that an allowance " does not constitute a property right." Legis. Hist. of CAAA, Vol. III at 4598. While the scope of the reference to the " United States" in CAA section 403( f) is not clear, EPA maintains that the term is clearly broad enough to include the Administrator. Moreover, even if the term were considered ambiguous with regard to the Administrator, EPA believes that interpreting the term to include the Administrator is reasonable. Specifically, EPA maintains that, by eliminating the explicit House bill language that required Congressional action and including the general reference to the " United States" and the " not a property unit or source, including the provisions related to applicable National Ambient Air Quality Standards and State implementation plans. 42 U. S. C. 7651b( f).

EPA interprets the reference in section 403( f) to the authority of the " United States" to terminate or limit the authorization otherwise provided by a title IV allowance to mean that EPA ( acting in accordance with its authority under other provisions of the CAA), as well as Congress, has such authority. 1 Therefore, EPA maintains that it has the 8 right" language, CAA section 403( f) essentially adopted the Senate's approach and allows the United States  either through Congressional or administrative ( i. e., EPA) action   to terminate or limit the allowance authorization. See Legis. Hist. of CAAA, Vol. I at 754, 1034, and 1084 ( Oct. 27, 2000 floor statements of Sen. Symms, Sen. Baucus, and Sen. McClure indicating EPA has authority to take such action); but see Cong. Rec. at E 3672 ( Nov. 1, 2000)( extension of remarks of Cong. Oxley indicating that only Congress has such authority). authority to establish a new cap and trade program in accordance with section 110( a)( 2)( D) that requires: the holding of title IV allowances under a more limited authorization ( i. e., 2 or 2.86 allowances per ton of emissions) by sources in States participating in the new program; and the termination of the authorization through retirement under the new program and the Acid Rain Program of those title IV allowances used to meet the allowanceholding requirement of the new program.

Commenters' arguments based on title IV The commenters claiming that EPA is barred by title IV from requiring use of title IV allowances at a reduced tonnage authorization in a new cap and trade program rely on the above noted provision in section 402( 3) stating that an allowance is an authorization to emit one ton of SO2.

However, this provision does not bar EPA from requiring either: use of title IV allowances in a new cap and trade program under a different title of the CAA at a reduced 9 2 As discussed below, today's action revises the Acid Rain Program regulations to provide for source based, instead of unit based, compliance with the allowance holding requirement. These revisions are adopted for reasons independent of the adoption of the CAIR model SO2 cap and trade program, as well as to facilitate the coordination of these two SO2 trading programs. tonnage authorization; or retirement in this new program and the Acid Rain Program of allowances used in this manner.

At the outset, it should be noted that the CAIR model SO2 cap and trade program does not change the tonnage authorization of individual title IV allowances for purposes of the Acid Rain Program until such an allowance is used to meet the allowance holding requirement of the CAIR SO2 program. The authorization provided by each title IV allowance for a source to emit one ton of SO2 emissions, as well as the requirement that each source hold title IV allowances covering annual SO2 emissions, continue to be in effect in the Acid Rain Program whether or not the source is also covered by the CAIR SO2 program. In fact, the Acid Rain Program regulations continue to reflect both this tonnage authorization and this allowance holding requirement. 2 See final revisions to 40 CFR § 73.35 adopted in today's action. Moreover, the CAIR model SO2 cap and trade rule coordinates the determinations  made by EPA for sources subject to both title IV and the CAIR  of compliance with the title IV and CAIR allowance holding 10 3 The commenters' assertion that the sources in a State that does not participate in the CAIR SO2 cap and trade program will be cut off from the Acid Rain cap and trade program is incorrect on its face. Such a source will continue to be subject to the allowance holding requirement and the compliance process in § 73.35 and will not be subject to the allowance holding requirement and the compliance process in the CAIR model SO2 cap and trade rule. requirements so that such determinations are made in a multi step, end of year process of comparing allowances held and emissions. First, EPA determines whether the source holds sufficient title IV allowances to comply with the oneallowance per ton of emissions requirement in the Acid Rain Program as provided in § 73.35; and subsequently EPA determines whether the source holds the additional title IV allowances that, when added to those held for Acid Rain Program compliance, are sufficient to meet the CAIR allowance holding requirement. Violations of the Acid Rain allowance holding requirement will result in imposition of the penalty for excess emissions ( i. e., the one allowance offset plus $ 2,000 ( inflation adjusted) per ton of excess emissions) under CAA section 411 and § § 73.35( d) and 77.4.

See final § 96.254( b)( 1) adopted in today's action. Thus,

the Acid Rain allowance holding requirement continues as a separate requirement and reflects the one allowance per

tonof emissions authorization under section 402( 3). 3 In contrast with the one allowance per ton of emissions requirement under the Acid Rain Program, the CAIR SO2 cap 11 4 The commenters also seem to argue that the allowance definition itself bars EPA from requiring use of Acid Rain allowances in the CAIR SO2 trading program even on a oneallowance per ton of emissions basis. However, as noted above, the definition is silent on whether title IV allowances may or may not be used outside the Acid Rain Program. and trade program requires each source generally to hold 2 or 2.86 Acid Rain allowances for each ton of SO2 emissions.

Contrary to the commenters' claim, this CAIR allowanceholding requirement is not barred by the definition of the term " allowance" in section 402( 3). While section 402( 3)

defines the term " allowance" as an authorization to emit one ton of SO2, this provision expressly applies the definition to the term "[ a] s used in this title [ IV]" and therefore does not apply to the treatment of title IV allowances in a different program under a different title of the CAA.

Moreover, as noted above, section 403( f) allows EPA to limit ( or terminate) the authorization to emit that an allowance otherwise provides under section 402( 3). Consequently, the allowance definition in section 402( 3) does not bar the treatment of a title IV allowance as authorizing less than one ton of SO2 emissions under the CAIR SO2 cap and trade program established under title I. 4 Once a title IV allowance is used to meet the more stringent allowance holding requirement in the CAIR SO2 program, that allowance is deducted from the source's 12 allowance tracking system account and cannot be used again,

either in the CAIR SO2 program or the Acid Rain Program. As noted above, EPA has the authority under section 403( f) to require this termination of such a title IV allowance's tonnage authorization for purposes of the Acid Rain Program.

In addition to referencing section 402( 3) to support claims that EPA is barred from adopting the CAIR model cap and trade program provisions on the use of title IV allowances, the commenters rely on other title IV provisions that they characterize as setting a " title IV cap" on SO2 emissions. Stating that the requirement to use title IV allowances in the CAIR model SO2 cap and trade program has the effect of reducing the " title IV cap," these commenters indicate, with little explanation, that such requirement is unlawful. In mentioning the title IV cap, the commenters are apparently referring to the fact that section 403( a)( 1)

( requiring allowance allocations resulting in emissions not exceeding 8.90 million tons of SO2) and section 405( a)( 3)

( requiring additional allocations of 50,000 allowances)

require EPA to allocate annually, starting in 2010, a total amount of allowances authorizing no more than 8.95 million tons of SO2 emissions. The commenters' argument about how the CAIR model SO2 cap and trade program effectively reduces the " title IV cap" appears to be that elimination of the 13 5 Similarly, to the extent title IV allowances are used in the CAIR SO2 trading program by non Acid Rain sources, the " title IV cap" seems to be effectively reduced because more allowances are used in the CAIR SO2 trading program and effectively removed from use in the Acid Rain Program. ability to use, in the Acid Rain Program, title IV allowances that will be used for compliance in the CAIR model SO2 cap and trade program has the effect of reducing the annual 8.95 million ton cap on SO2 emissions. This effective reduction of the " title IV cap" seems to occur when title IV allowances are used in the CAIR SO2 trading program with a reduced tonnage authorization so that more title IV allowances are deducted per ton of emissions than would be deducted for compliance with the Acid Rain Program. 5 The commenters claim that such a reduction in the 8.95 million ton cap is contrary to title IV.

In asserting an overarching principle that EPA is barred from adopting any requirement that would have the effect of reducing the 8.95 million ton cap under title IV,

the commenters do not point to any specific statutory provision in support. The EPA maintains that not only are there no such supporting provisions, but also certain title IV provisions contradict this purported principle.

Specifically, while sections 403 and 405 require annual allowance allocations authorizing no more than 8.95 million tons of emissions, section 403( f) provides, as noted above, 14 6 In light of this provision, the statement in the NPR ( particularly as it is interpreted by the commenters) that EPA lacks authority to tighten the requirements of title IV ( 69 FR 4618, col. 1) is overly broad and is not repeated or adopted in today's preamble. that EPA may terminate or limit the one allowance per

tonof emissions authorization for a title IV allowance. 6 Because any termination or limitation of the tonnage authorization provided by a title IV allowance for purposes of the Acid Rain Program would have the effect of reducing the total tonnage of emissions allowed by the allowance allocations ( i. e., the 8.95 million ton cap) under sections 403 and 405, the commenters' claim that EPA is barred from adopting any provision that has such an effect is wrong on its face.

Commenters' argument based on Clean Air Markets Group case The commenters also state that the CAIR model SO2 cap and trade program is unlawful under the court's holding in Clean Air Markets Group v. Pataki, 338 F. 3d 82 ( 2d Cir.

2003). According to the commenters, the required use of title IV allowances in the CAIR SO2 program constitutes an unlawful interference with the operation of the interstate title IV SO2 trading program, presumably similar to the unlawful interference found by the court in Clean Air Markets Group. However, the commenters provide little 15 explanation of how such use of title IV allowances ( with or without a reduced tonnage authorization) purportedly interferes with interstate operation of the Acid Rain Program and how the holding in Clean Air Markets Group applies to the CAIR SO2 program.

In Clean Air Markets Group, the Court reviewed a State law that imposed a monetary assessment on any title IV allowance sold by a New York utility to a utility in any of 14 specified States or subsequently transferred to such a utility, with the assessment equaling the proceeds received in the allowance sale. The law also required that each allowance sold include a covenant barring subsequent transfer of the allowance to a utility in any of those States. The Court held that the State law was pre empted by title IV because the State law impermissibly interfered with the method chosen by Congress in title IV to reduce utilities' SO2 emissions, i. e., the opportunity for nationwide trading of title IV allowances. Id. at 87 88.

In particular, the Court found that the assessment of 100 percent of sale proceeds " effectively bans" sales of any allowance by New York utilities to utilities in the specified States and that the restrictive covenant " indisputedly decreases" the value of the allowances. Id.

at 88. 16 The EPA maintains that today's action is distinguishable from the facts and holding in Clean Air Markets Group. In particular, EPA believes that the exercise of its explicit authority under section 403( f) to limit the tonnage authorization of a title IV allowance in the CAIR SO2 cap and trade program and to terminate the tonnage authorization in the Acid Rain Program once the allowance is used in the CAIR SO2 program is consistent with  and necessary to preserve  the operation of the Acid Rain Program. Therefore, EPA concludes that its approach of limiting and terminating of the tonnage authorization of title IV allowances does not impermissibly interfere with the interstate operation of the Acid Rain Program and is reasonable.

Unlike the circumstances in Clean Air Markets Group,

under EPA's approach in today's action, each title IV allowance is freely transferable nationwide unless and until a source uses the allowance to meet the allowance holding requirements of the CAIR SO2 program, at which time the allowance is deducted from the source's allowance tracking system account and retired for purposes of both the CAIR SO2 program and the Acid Rain Program. Further, EPA expects that the ability to use title IV allowances to meet the more stringent emission limitation under the CAIR SO2 program to 17 7 While section 403( b)( as well as section 403( d)) refer specifically to the allowance system regulations required to be promulgated by the EPA Administrator within 18 months of November 15, 1990 ( the enactment date of the CAA), the EPA Administrator has authority under section 301 to amend such regulations " as necessary to carry out his functions under [ the CAA]." 42 U. S. C. 7601. maintain or increase ( not decrease) the value of each title IV allowance, until the allowance is used to meet the CAIR SO2 program allowance holding requirement and is retired.

Of course, this retirement of title IV allowances once they are used to meet the CAIR allowance holding requirement means that they cannot thereafter be transferred to any person or be used again, e. g., to meet the Acid Rain Program allowance holding requirement. As noted by the Court in Clean Air Markets Group, section 403( b) provides that title IV allowances " may be transferred among designated representatives of owners or operators of affected sources under [ title IV] and any other person who holds such allowances, as provided by the allowance system regulations"

promulgated by EPA. 7 42 U. S. C. 7651b( b). Moreover, section 403( d)( 1) requires that the allowance system regulations " specify all necessary procedures and requirements for an orderly and competitive functioning of the allowance system." 42 U. S. C. 7651b( d). In the context of these statutory requirements, EPA maintains that, on balance, the retirement of title IV allowances used for compliance in the 18 CAIR model SO2 cap and trade program does not constitute impermissible interference with the interstate operation of the Acid Rain Program, but rather is consistent with, and necessary to preserve, the operation of the Acid Rain Program.

As noted above, the imposition of an SO2 emission limitation ( such as in today's action) that is significantly more stringent than the one under title IV and covers most of the sources and emissions covered by title IV    but without addressing the impact on the Acid Rain Program

would likely have several adverse consequences. These adverse consequences would be: a significant excess of title IV allowances; a collapse of the price of title IV allowances; disruption of the title IV allowance market and the title IV SO2 cap and trade system; and potential SO2 emission increases, particularly in States outside the CAIR SO2 region. The EPA modeling indicates that, in 2010, EGU SO2 emissions in States not affected by the CAIR SO2 program would increase by about 260,000 tons ( or about 29 percent of the approximately 0.9 million tons of SO2 emissions projected for the non CAIR SO2 region in 2010) in the absence of an approach for addressing the impact of the CAIR SO2 program on title IV. This is because, with the imposition of the more stringent CAIR SO2 emission 19 limitation in the CAIR SO2 region, this more stringent limitation becomes the binding limitation for sources in that region. These CAIR SO2 sources must comply with, and cannot use title IV allowances to exceed, the CAIR SO2 emission limitation. Consequently, the portion of the title IV allowances that equals the difference between the CAIR and the title IV emission limitations is excess and would be available for use only by Acid Rain sources that are outside the CAIR SO2 region.

This excess amount of title IV allowances is potentially very significant. Today's action requires that the States in the CAIR SO2 region achieve an amount of SO2 emission reductions in 2010 and 2015 equal to 50 percent and 65 percent, respectively, of the amount of title IV allowances ( about 7.3 million allowances out of the total nationwide allocation of 8.95 million allowances) allocated to the units in the CAIR SO2 region. If the States achieve all the required CAIR SO2 reductions through emission reductions by EGUs ( which are largely the same units that are subject to the Acid Rain Program) and if EGUs held only one title IV allowance for each ton of SO2 emissions as required in the Acid Rain Program, the amount of surplus allowances allocated to the States in the CAIR SO2 region would be about 3.65 million allowances and 4.75 million 20 8 The surpluses for 2010 and 2015 respectively are calculated as: 7.3 million allowances minus (( 100 percent minus the percentage reduction requirement for the year) times 7.3 million allowances).

9 The 4.8 million ton figure is the sum of: 3.65 million tons of emissions ( equal to the tonnage equivalent of the allowance allocations in the CAIR SO2 region); plus about 0.9 million tons of emissions in the non CAIR SO2 region with the retirement of surplus title IV allowances; plus 260,000 tons of increased non CAIR SO2 region emissions if the surplus title IV allowances are not retired. allowances, respectively in 2010 and 2015.8 Moreover, the vast majority of EGUs nationwide ( about 90 percent) and of EGU SO2 emissions nationwide ( about 90 percent) are covered by the CAIR SO2 program. The net result would be a large surplus of title IV allowances that would not be usable in the CAIR SO2 region and would be usable only by the small subset of EGUs ( about 10 percent) located in non CAIR SO2 region States. Looking at the nation as a whole ( both CAIR and non CAIR SO2 States) in 2010, there would be total allocations in the Acid Rain Program of 8.95 million title IV allowances but, according to EPA modeling and analysis of the CAIR without a requirement to retire surplus title IV allowances, total projected SO2 emissions for EGUs of only about 4.8 million tons. 9 Based on the principles of supply and demand, EPA concludes that, with the amount of allowances allocated nation wide exceeding SO2 emissions for EGUs nationwide in 2010 by about 86 percent ( i. e., 8.95 million allowances minus 4.8 million tons divided by 4.8 21 million tons), the value of title IV allowances would fall to zero, and all but 260,000 of the surplus allowances would have no market and so, as a practical matter, would not be transferable.

The EPA notes that this effect on allowances would occur no matter how the State implements the more stringent SO2 emission limitation required under the CAIR, e. g.,

whether implementation is through a new cap and trade program ( like in the model rule) or through a fixed ( command and control) tonnage emission limit imposed on each individual source. Consequently, the alternatives faced by EPA are either: ( 1) to establish a CAIR model cap and trade program ( or allow States to use another means of achieving CAIR SO2 emissions reductions) that does not retire the 3.65 million surplus allowances and that results in the devaluation of all title IV allowances to zero and the effective non transferability of all but 260,000 of the 3.65 million surplus allowances in 2010; or, as provided in today's action, ( 2) to adopt a CAIR SO2 model cap and trade program ( or another means of achieving reductions) that retires the 3.65 million surplus allowances and that results in the non transferability of the entire 3.65 million surplus of title IV allowances and ensures the remaining,

unused title IV allowances have market value. Thus, with 22 regard to the impact on the transferability of title IV allowances, EPA's decision to adopt the second alternative of retiring the surplus allowances adversely affects the transferability of only a relatively small amount ( 260,000 out of 8.95 million per year) of allowances, as compared to the amount of allowances whose transferability would be adversely affected under the first alternative.

Moreover, with the total collapse of the title IV allowance price in the Acid Rain Program, the nationwide cap and trade system under title IV  which would be the binding cap and trade system only for sources in the States outside the CAIR SO2 region  would lose all efficacy. The title IV cap and trade system operates by: making owners of sources pay for the authorization to emit SO2 by surrendering, to EPA, allowances that have a market value;

and by allowing owners ( e. g., those who choose to reduce emissions) to sell unused allowances. Whether the sources'

allowances were originally allocated to the sources or were purchased, the owners must decide the extent to which it is more efficient to give up the market value of such allowances or to reduce emissions. If title IV allowances were to have no market value, the title IV cap and trade 23 10 See Sen. Rep. No. 101 228, 101st Cong., 1st Sess. at 324 ( Dec. 20, 1989)( stating that "[ a] llowances are intended to function like a currency that is sufficiently valuable to stimulate efforts to acquire it through innovative and aggressive efforts to reduce emissions more than required" and that, in the event of " inflation in the currency," the incentives to " reduce pollution... will be seriously weakened." In the instant case, without a requirement to retire excess title IV allowances, the currency would be inflated to a value of zero. See also Legis. Hist. of CAAA, Vol. I at 1033 ( Oct. 27, 1990 floor statement of Sen. Baucus explaining that "[ s] ince units can gain cash revenues from the sale of allowances they do not use, they will have a financial incentive both to make greater than required reductions and/ or reductions earlier than required" and that " incentives created by the allowance market should stimulate innovations in the technologies and strategies used to reduce emissions" including energy efficiency). system would no longer affect the choice of whether to emit or to reduce emissions. 10 The EPA maintains that such a result is contrary to Congressional intent. The purposes of title IV include not only reductions of annual SO2 emissions from 1980 levels,

but also the encouragement of " energy conservation, use of renewable and clean alternative technologies, and pollution prevention as a long range strategy, consistent with the provisions of this title, for reducing air pollution and other adverse impacts of energy production and use." 42 U. S. C. 7651( b). Reflecting these purposes, Congress required EPA to promulgate allowance system regulations for the Acid Rain Program that would promote " an orderly and competitive functioning of the allowance system." 42 U. S. C.

7651b( d)( 1). See Sen. Rep. No. 101 228, 101st Cong., 1st 24 11 While the title IV cap and trade system could be replaced by a new CAIR SO2 cap and trade system that did not address the problems caused by surplus title IV allowance, that new cap and trade system would not be nationwide like the title IV cap and trade system and so would not cover sources outside the CAIR SO2 region. Sess. at 320 ( explaining that " the allowance system is intended to maximize the economic efficiency of the program both to minimize costs and to create incentives for aggressive and innovative efforts to control pollution").

As discussed above, if title IV allowances were to have no market value, the cap and trade system under title IV would no longer affect owners' decisions on whether to emit or to control emissions and so would no longer provide encouragement ( e. g., incentives for innovation) for avoidance or reduction of SO2 emissions. 11 In addition, EPA is concerned that such disruption of the title IV allowance market and the title IV SO2 cap and trade system would significantly erode confidence in cap and trade programs in general and the CAIR model cap and trade programs in particular. As noted above, under the Acid Rain Program, companies have made billions of dollars of investments in emission controls in order to be able to sell excess title IV allowances and in purchasing title IV allowances for future compliance ( e. g., under annual, 1 day allowance auctions held by EPA, one as recently as March 22,

2004 when title IV allowances were purchased for about $ 50 25 12 The EPA notes that the potential for increased emissions within the CAIR SO2 region would occur before the implementation of the CAIR SO2 program and is addressed by allowing pre 2010 banked title IV allowances to be used to million). While in a market based program like the Acid Rain Program, investments are necessarily subject to the vagaries of the market, EPA believes that it should try, to the extent possible consistent with statutory requirements,

to avoid taking administrative actions that would cause such extensive disruption of the Acid Rain Program. Allowing such disruption to occur could significantly reduce the willingness of owners of sources in new cap and trade programs to invest in measures that would result in excess allowances for sale or to purchase allowances for compliance. To the extent owners would ignore the allowance trading option and simply control emissions to the level equal to their source's allocations, this would obviate the incentives for innovation, and hamper realization of the potential for cost savings, that would otherwise be provided by new cap and trade programs ( such as the CAIR model cap and trade programs).

Finally, as noted above, such disruption of the Acid Rain Program would potentially result in significantly increased SO2 emissions ( about 29 percent in 2010) in States covered by the Acid Rain Program but outside the CAIR SO2 region. 12 This would have the effect of reversing, at least 26 meet the CAIR allowance holding requirement beginning in 2010. 13 While the potential for increased emissions outside the CAIR SO2 region supports EPA's conclusion, EPA maintains that, even in the absence of any such increase, the other considerations discussed above are sufficient to justify the conclusion that the retirement of title IV allowances does not impermissibly interfere with the Acid Rain Program and is reasonable. in part, the beneficial effect that the Acid Rain Program has had on SO2 emissions in those States, even though the overall goal of nationwide SO2 emissions reductions would still be met. See 42 U. S. C.( a)( 1) ( Congressional finding that " the presence of acidic compounds and their precursors in the atmosphere and in deposition from the atmosphere represents a threat to natural resources, ecosystems,

materials, visibility, and public health").

In light of these considerations, 13 EPA concludes, on balance, that structuring the CAIR model SO2 cap and trade program in a way that avoids such extensive disruption of the Acid Rain Program ( i. e., by requiring retirement from the Acid Rain Program of title IV allowances used for compliance in the CAIR SO2 program) does not constitute impermissible interference with the interstate operation of the Acid Rain Program. Rather, this approach in the model SO2 cap and trade rule is consistent with, and preserves,

such operation  while providing States a tool for imposing the more stringent SO2 emission limitations required under 27 title I  and is a reasonable exercise of EPA's authority under section 403( f) to terminate or limit the tonnage authorization of title IV allowances.

2. Legal Authority for Requiring Retirement of Excess Title IV Allowances if State Does Not Use CAIR Model SO2 cap and trade Program.

As discussed above, a State has the additional options of achieving the SO2 emissions reductions required by today's actions through: EGU emission reductions only but without using the model SO2 cap and trade rule; some EGU and some non EGU emissions reductions; or non EGU reductions only. The requirement to retire excess title IV allowances applies only in the first and second of these three additional options. The State must retire an amount of title IV allowances equal to the total amount of title IV allowances allocated to units in the State minus the amount of allowances equivalent to the tonnage cap set by the State on EGUs' SO2 emissions and can choose what mechanism to use to achieve such retirement. The EPA has the authority to require that the State include in its SIP a mechanism for retiring the excess title IV allowances that will result under these two options.

As discussed above, EPA has the authority under section 403( f) to terminate or limit the authorization to emit 28 otherwise provided by a title IV allowance. Specifically,

EPA has the authority to: require that any EGU SO2 emission reduction program, chosen by a State to meet ( in full or in part) the requirements of section 110( a)( 2)( D), include provisions for retiring excess title IV allowances resulting from the implementation of the more stringent emission reduction requirement under the State program; and to require that such retired title IV allowances cannot be used in the Acid Rain Program. As discussed above, the commenters' claims that such a retirement requirement is barred by title IV ( relying on, e. g., the section 402( 3)

definition of " allowance" and on the " title IV cap") lack merit. Also, for the reasons discussed above, the retirement requirement is not unlawful under Clean Air Markets Group and is a reasonable exercise of EPA's authority under section 403( f) to terminate or limit the tonnage authorization of title IV allowances.

Some commenters also claim that the retirement requirement unlawfully constrains the States' authority to determine in the first instance the control measures to use in meeting emission reduction requirements necessary to comply with section 110( a)( 2)( D). According to the commenters, since only EGUs are subject to title IV, the 29 requirement to retire title IV allowances is in effect a mandate that the State control EGU emissions.

However, EPA is imposing the requirement for a State mechanism to retire title IV allowances only if the State decides in the first instance to require any EGU SO2 emissions reductions to meet the emission reduction requirements under today's action. A State that decides not to require any EGU SO2 emissions reductions for this purpose is not required to retire title IV allowances. Further, the amount of the required allowance retirement is limited to the amount of EGU SO2 emissions reductions that the State decides in the first instance to require from EGUs ( i. e.,

the total title IV allowance allocations in the State minus the tonnage amount of the cap set by the State for EGUs' SO2 emissions). In short, the allowance retirement requirement echoes the State's decision in the first instance concerning the amount of SO2 emissions reductions to require from EGUs in the State. The EPA simply requires the State to implement the State's EGU SO2 emission reduction requirement decision in a manner that avoids the otherwise likely,

extreme disruption of the title IV SO2 cap and trade system that is described above. Further, the State may choose what mechanism to include in its SIP revision for achieving the required allowance retirement, and EPA will review the 30 effectiveness of the mechanism in achieving such retirement,

and approve and adopt the mechanism if appropriate, in an EPA rulemaking concerning the SIP revision. Therefore, EPA concludes that the allowance retirement requirement is lawful and is a reasonable condition for EPA approval of those State SIPs that require EGU SO2 emission reductions without using the CAIR model SO2 trading program.

The EPA notes that the requirement to retire excess title IV allowances  where a State adopts the CAIR model SO2 trading program or where a State SIP obtains EGU emissions reductions through some other means  is reflected in provisions in both the proposed rules in the SNPR ( i. e., in proposed § § 51.124( p) and 96.254( b)) and in the final rules adopted by today's action ( i. e., in final § § 51.124( p) and 96.254( b)). In reviewing the proposed rules in light of the comments received, EPA has concluded that,

for consistency and clarity, the Acid Rain Program regulations should also reference this same retirement requirement. Consequently, today's action adds a new paragraph ( a)( 3) to § 73.35 of the Acid Rain Program regulations that reiterates the requirement  addressed in the preamble and regulations in both the SNPR and today's action  that title IV allowances previously used to meet the allowance holding requirement in the CAIR model trading 31 program in § 96.254( b) or otherwise retired in accordance with § 51.124( p) cannot be used to meet the allowance holding requirement in the Acid Rain Program. Additional revisions of the Acid Rain Program regulations are discussed below.

3. Revisions to Acid Rain Regulations.

In the SNPR, EPA proposed to revise the Acid Rain Program regulations, effective July 1, 2005, to implement the allowance holding requirement on a source by source,

rather than on a unit by unit, basis. Instead of requiring each unit to hold an amount of allowances in its Allowance Tracking System account ( as of the allowance transfer deadline) at least equal to the tonnage of SO2 emissions for the unit in the preceding calendar year, the proposal required each source to hold an amount of allowances in its Allowance Tracking System account at least equal to the tonnage of SO2 emissions for all affected units at the source for such calendar year. Because language reflecting or referencing the unit by unit compliance approach is included in many provisions of the Acid Rain Program regulations, a significant number of proposed rule revisions were necessary to implement source by source allowance holding.

In today's final rule, EPA is adopting, with minor modifications, the proposed rule revisions implementing 32 source by source compliance with the allowance holding requirement. As explained in detail in the SNPR ( 69 FR 32698 32701), EPA finds that: title IV is ambiguous with regard to whether unit by unit compliance is required and so EPA has discretion in this matter; it is important to provide additional compliance flexibility by allowing a unit at a source to use allowances from any other unit at the same source; and many other, non allowance holding provisions of title IV evidence a unit by unit orientation.

Further, as discussed in the SNPR, EPA concludes that the adoption of source level compliance reasonably balances these considerations. In balancing these considerations,

EPA also concludes that company level compliance is not appropriate because it represents too much of a deviation from the unit by unit orientation in the non

allowanceholding provisions of title IV and is likely to require much more dramatic changes in the operation of the Acid Rain Program. See 69 FR 32699 700. It is important to note that the final rule revisions, like the proposed revisions,

change only the allowance holding requirement and not the emissions monitoring and reporting requirements, which continue to be applied unit by unit.

In today's action, EPA is making the source

levelcompliance rule revisions effective July 1, 2006, which is 1 33 year later than proposed. The shift from unit level to source level compliance will require software changes and testing to ensure that the Allowance Tracking System operates properly. Currently, EPA is in the process of conducting a general review and re engineering of the Allowance Tracking System and Emissions Tracking System and anticipates completing the process in 2006. The process of shifting the Allowance Tracking System to source level compliance will be much more efficient and less likely to have adverse results on the system if the shift is coordinated with the general review and re engineering and therefore implemented starting July 1, 2006. Further, as discussed below, this delay of implementation for 1 additional year will give owners additional time to make changes that they determine are necessary in order to adapt to source level compliance.

Some commenters support the shift to source by source allowance holding, and some oppose the change. One commenter opposing the change claims that a source by source allowance holding requirement is " contrary to market based principles." According to the commenter, market based systems give operators the tools for achieving compliance through allowance transfers, but with source level compliance the operators do not have to take any action to 34 maintain sufficient allowances because EPA will move the allowances around for them.

The commenter's argument is based on an incorrect premise. Whether compliance is unit by unit or source

bysource the owner or owners of the affected units at each source must take the same types of actions in order to comply with the applicable allowance holding requirement.

In particular, under source level compliance, such owner or owners must reduce emissions, retain allowances allocated to such units, obtain additional allowances, or take a combination of these actions to ensure that the Allowance Tracking System account for the source holds enough allowances to cover the total emissions of the affected units at the source. The owner or owners also have the option of reducing emissions below allocations so that there are extra allowances available to hold for future use or sale. If the owner or owners do not have enough allowances to cover the emissions from the source, EPA will not move,

on its own initiative, allowances into the source's compliance account from other sources' accounts or from general accounts, even if there are extra allowances in the other accounts. The only difference between the types of actions owners must take under the unit level and sourcelevel approaches is that, under unit level compliance, the 35 owners must transfer allowances from one unit at a source to a second unit at that source in order to use the first unit's allowances for compliance by the second unit while,

under source level compliance, any allowance held for compliance for the first unit can be used  without a transfer  for compliance by the second unit. This difference is reflected in the Allowance Tracking System,

which, under the unit level approach, includes a separate account for each unit and, under the source level approach,

includes a single account for all the affected units at a single source.

In summary, the mechanism, and the owners'

responsibilities, for achieving compliance with the allowance holding requirements are analogous under unit

byunit and source by source compliance, except that, under source by source compliance, allowances need not be transferred among units at the same source. The EPA does not believe that the source by source approach is any less market based than the unit by unit approach. Owners will still have the ability to reduce emissions or purchase or sell allowances and the responsibility to take actions ( including the holding of extra allowances) to ensure they have enough allowances to cover emissions. Moreover, the market price of allowances will still play a crucial role in 36 owners' decisions on what actions to take. The EPA's adoption of source by source compliance preserves marketbased principles, while reasonably balancing of the ambiguity of title IV, the need for additional compliance flexibility, and the unit by unit orientation of many provisions in title IV. See 69 FR 32699 700.

The commenter also argues that having a source level allowance holding requirement in the Acid Rain Program ( and the CAIR model cap and trade program) is inconsistent with unit level compliance in the NOx SIP Call cap and trade program. However, other than pointing out this difference,

the commenter fails to explain why the programs must be identical in this regard. Based on experience with the Acid Rain Program ( as well as the NOx SIP Call trading program),

EPA concludes that a source level allowance holding requirement will result in a somewhat less complicated program and a reduced likelihood of inadvertent, minor errors, while achieving the program's environmental goals.

See 69 FR 32699 700.

The commenter suggests that, instead of adopting source level compliance, EPA revise the Acid Rain Program regulations to allow for source over draft accounts, like those allowed in the NOx SIP Call cap and trade program.

Under the NOx SIP Call program, each source may have a 37 source over draft account, in which may be held extra allowances that may be used for compliance by any affected unit at the source. However, EPA believes that source level compliance is a better approach than unit level compliance with over draft accounts. Relatively few owners in the NOx SIP Call cap and trade program actually put allowances in over draft accounts, and achievement of compliance is made more complicated by the ability of all units at a source to draw on the over draft account ( if any allowances are put in it) but the inability of any unit to use extra allowances held instead by another unit at the source. Consequently,

rather than adopting in the Acid Rain Program the unit level approach with over draft accounts, EPA is today adopting the source level approach in the Acid Rain Program and may consider in the future, as appropriate, adopting the sourcelevel approach in other programs using unit level compliance.

One commenter states that EPA should revise the Acid Rain Program regulations to allow owners, each year, the option of choosing whether to use unit level or source level compliance. According to the commenter, significant investments have been made to monitor and report emissions and surrender allowances under the existing Acid Rain Program regulations, and shifting to source level compliance 38 will require substantial resources and time. The commenter also states that unit based compliance should be retained as an option " to accommodate joint ownership and other special arrangements that may not affect an entire facility."

The EPA rejects the suggestion of allowing each owner the option, for each year and for each source, of choosing between unit level and source level compliance. Such an approach would significantly complicate the achievement by sources, and the determination by EPA, of compliance. The potential for error ( e. g., due to erroneous assumptions about whether unit or source level compliance would be applicable to a particular source for a particular year) on the part of owners or EPA would be significantly increased.

Moreover, this complicated approach would result in inconsistent treatment from source to source and year to year. Further, the commenter provided only vague assertions about the benefits of unit based compliance in certain circumstances and did not assert  much less show  that source level compliance cannot be accommodated under those circumstances. The EPA maintains that the only reasonable options for the allowance holding requirement in the Acid Rain Program are either generally requiring compliance by all sources each year on a unit level basis ( as in the existing regulations) or requiring compliance by all sources 39 each year on a source level basis ( as in the proposed revisions to the regulations). For the reasons discussed above, EPA believes that source level compliance for the allowance holding requirement is preferable. By postponing until July 1, 2006 the effective date of the rule revisions shifting to source level compliance ( with the result that 2006 is the first year of source level compliance), EPA is providing owners a reasonable amount of time to make any necessary adjustments, such as those claimed by the commenter. Further, as noted above, the rule revisions change only the allowance holding requirement and not the emissions monitoring and reporting requirements. This should limit the scope of adjustments necessary for owners to implement source level compliance and will preserve the availability of reliable, unit level emissions data.

Because unit level compliance is reflected throughout the Acid Rain Program regulations, numerous revisions of the regulations are necessary to implement source level compliance. ( None of these changes are to the emissions monitoring and reporting provisions in part 75 since monitoring and reporting continue to be on a unit basis.)

One commenter requested that EPA provide " more in depth detail" on the proposed revisions. However, in the SNPR,

EPA described the types of, and reasons for, revisions that 40 14 This approach is consistent with the SNPR, where EPA proposed to convert all references, including any initially missed in the SNPR, from unit to source level compliance ( 69 FR 32700). are necessary for source level compliance ( 69 FR 32700 01)

and set forth all of the specific, proposed changes ( 69 FR 3273 41). Moreover, no commenters stated that they did not understand any specific, proposed revision or the reason for any specific revision. The EPA notes that in reviewing the proposed Acid Rain rule revisions in light of the comments,

EPA found some additional references in the Acid Rain rule to unit level compliance that should be revised to reflect source level compliance. In today's action, EPA is adopting revisions of these additional references ( e. g., changing references to a " unit's account" or a " unit account" to a source's " compliance account") that are analogous to the revisions specifically identified in the SNPR. 14 Another commenter opposed the rule revisions implementing source level compliance on several other grounds. The commenter claims, without citing any statutory support, that the Acid Rain Program is based on " control of emissions at the unit level" so that, in the event of excess emissions, the " source as a whole would not be punished" and " corrective action could take place" at the particular unit.

According to the commenter, source level compliance will:

make it harder to determine which unit caused excess 41 emissions; make the existing Acid Rain permits meaningless;

make the individual unit allowance allocations meaningless;

and cause confusion over which units at a source are affected units.

While there are many non allowance holding provisions in title IV that have a unit by unit orientation, EPA disagrees with the commenter's basic assertion that the purpose of the Acid Rain Program is to control emissions on a unit by unit basis and that there is a need to " distinguish" the compliance of each individual unit. The provisions concerning application of the allowance holding requirement are ambiguous as to whether EPA must implement the requirement on a unit level or a source level, and the environmental benefits of the Acid Rain Program will still be realized with source level compliance. See 69 FR 32699

700. Further, while EPA will determine compliance on a source by source basis, nothing in the regulations prevents owners ( e. g., owners of units at sources with multiple units and multiple owners or owners of units with multiple owners and exhausting through a common stack) from determining by agreement which owners will bear any excess emissions penalties that occur at the plant and have to take correction actions. Indeed, owners are likely to already have these types of agreements in cases of units or sources 42 with multiple owners. This is because the Acid Rain Program regulations already allow a unit at a multi unit source to use some allowances from other units at the source ( albeit to cover most but not all of the potential excess emissions)

and already allow one unit exhausting from a common stack to use allowances from another unit at that stack ( without any limitation on such use). See 40 CFR 73.35( b)( 3) and ( e).

In addition, while the Acid Rain permits will have to be revised in the future to reflect source level compliance,

today's rule does not make source level compliance effective until 2006. Permits will not have to be revised until around the end of 2006, which should provide States a reasonable opportunity to amend the permits. Contrary to the claims of the commenter, source level compliance does not make the unit by unit allocations meaningless; the unitby unit allocations ( set forth in Table 2 of § 72.10) will determine the amount of allocations reflected in each Allowance Tracking System source account, which amount will equal the sum of the allocations for all affected units at the source. Finally, the commenter failed to explain how the source level allowance holding requirement could cause " confusion" over which units are affected units. This source level requirement does not change the applicability provisions, which are still applied unit by unit. 43 As discussed in the SNPR, EPA proposed  in addition to the rule revisions to implement source level compliance

 other revisions of the Acid Rain Program regulations in order to facilitate coordination of the Acid Rain Program and the CAIR SO2 cap and trade program. These additional revisions were described and explained in the SNPR ( 69 FR 32701). The EPA is adopting these revisions for the reasons in the SNPR, as amplified below. Most of these revisions are supported, or not opposed, by commenters, but some commenters objected to certain revisions.

For example, EPA noted that it had recently changed the " cogeneration unit" definition in § 72.2 in June 2002 ( 67 FR 40394, 40420; June 12, 2002). The original definition in § 72.2 had been used since the commencement of the Acid Rain Program. The only significant difference between the original and revised definitions is that the former refers to a unit " having the equipment used to produce" electricity and useful thermal energy through sequential use of energy,

while the latter simply refers to a unit " that produces"

electricity and useful thermal energy in that manner. The reason that EPA gave for revising the definition in June 2002 was to conform with the definition in the Section 126 rule. However, the Section 126 rule ( and the NOx SIP Call)

did not actually specify a " cogeneration unit" definition. 44 Consequently, there is no reason to use the June 2002 revised definition. Moreover, EPA is concerned that the change in the definition of " cogeneration unit" as of June 2002 may cause confusion or raise question about what units qualify for exemptions for " cogeneration units" from the Acid Rain Program. Under these circumstances, EPA concludes that the definition should be changed back to the original definition in § 72.2 and, in any event, intends to interpret the June 2002 revised definition as having the same meaning as the original definition. One commenter raised concerns that EPA did not provide any " detailed analysis" of the implications of changing the " cogeneration unit" definition.

However, as discussed above, the change simply reinstates the definition that had been used in the Acid Rain Program from the initial promulgation of implementing regulations in 1993 until 2002. No commenter asserted that reverting to the longstanding, original definition would be disruptive.

Another Acid Rain Program rule revision proposed in the SNPR is the elimination of the requirement for owners and operators to submit an annual compliance certification report for each source. One commenter expressed concern,

because the purpose of the annual certification is to ensure that the designated representative is " aware and has assured the quality of the data" being submitted to EPA. However, 45 as noted in the SNPR, designated representatives must evidence such awareness and compliance by submitting, with each quarterly emissions report, a certification that the monitoring and reporting requirements under part 75 of the Acid Rain Program regulations have been met. See 40 CFR 75.64( c). Quarterly emissions reports are available on line to the public and the States. In addition, owners and operators of sources subject to the Acid Rain Program must submit, under title V of the CAA, annual compliance certification reports concerning all CAA requirements ( including Acid Rain Program requirements). Under these circumstances, EPA maintains that the separate Acid Rain Program annual compliance certification reports are duplicative and unnecessary. The EPA notes that it appears that few, if any, requests for copies of these Acid Rain Program reports have been made by States or any other persons since the commencement of the Acid Rain Program.

Apparently, other certifications and submissions required of owners and operators have been sufficient for the purposes cited by the commenter.

The SNPR also included proposed revisions eliminating the requirement under the Acid Rain Program for a 1 day newspaper notice for designation of designated representatives and authorized account representatives. One 46 commenter suggests that this notice should be replaced by a requirement to notify the State permitting authority. The EPA notes that information on designated representatives and authorized account representatives is already available to State permitting authorities through on line access to the Allowance Tracking System. Moreover, EPA is in the process of developing, and anticipates establishing in the near future, the ability to send State permitting authorities ( at their request) on line notices of changes in designated representatives ( who are also the authorized account representatives for affected sources' accounts).

Other proposed Acid Rain Program rule revisions on which EPA received adverse comment are the removal of § 73.32 ( prescribing the contents of an allowance account) and § 73.51 ( prohibiting the transfer of allowances from a future year subaccount to a subaccount for an earlier year).

Section 73.32 sets forth a rather self evident list of information that must be recorded in an allowance account in the Allowance Tracking System, such as the name of the authorized account representative, the persons represented by the authorized account representative, and the transfers of allowances in and out of the account. This section also references information on compliance or current year subaccounts and future year subaccounts, as well as 47 15 In reviewing the proposed Acid Rain Program rule revisions, EPA found some additional references to " subaccounts" that were not specifically noted in the SNPR. For consistency and clarity in the Acid Rain Program rules, EPA is adopting in today's action revisions ( e. g., changing the term " subaccount" to " compliance account") of these additional references, which revisions are analogous to those specifically set forth in the SNPR. This approach is consistent with the SNPR, where EPA proposed to convert all references, including any initially missed in the SNPR, from subaccount to compliance account, ( 69 FR 32700). emissions information. As discussed in the SNPR, several items on the list of informational contents for allowance accounts are out of date in that they do not reflect how the electronic Allowance Tracking System operates or will operate in the near future. For example, the electronic Allowance Tracking System does not currently use or refer to subaccounts, which will continue to be unnecessary in the context of source level compliance. 15 See 69 FR 32700 01.

In addition, while § 73.32 states that emissions data are reflected in the Allowance Tracking System account, such data are currently available instead through the electronic Emissions Tracking System. Because the information list in § 73.32 contains either self evident items or items that are out of date and because the NOx Allowance Tracking System has been operating successfully even though the model NOx Budget cap and trade rule and State cap and trade rules under the NOx SIP Call lack a provision analogous to § 73.32,

EPA is removing § 73.32. EPA notes that the removal of the 48 section will not mean that the information contained in allowance accounts " can be changed at will." The format for allowance accounts is set forth in the electronic Allowance Tracking System and implements the requirements in the Acid Rain Program regulations concerning the holding,

transferring, recording, and deducting of allowances.

Section 73.51 prohibits the transfer of allowances from a future year subaccount to a subaccount for an earlier year. The removal of this section is consistent with the elimination throughout the rest of the Acid Rain Program regulations, as discussed in the SNPR ( id.), of any references to such subaccounts. Further, the prohibition on using allowances allocated for a year to meet the allowanceholding requirement for a prior year is retained in other provisions of the Acid Rain Program regulations.

Consequently, EPA is removing § 73.51.


[Federal Register Volume 79, Number 105 (Monday, June 2, 2014)]
[Notices]
[Page 31402]
[FR Doc No: 2014-12622]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2013-0057]

Petition for Modification to Waiver of Compliance

    In accordance with Part 211 of Title 49 Code of Federal Regulations
(CFR), this document provides the public notice that by two letters
dated April 2, 2014, Steam Into History (Steam) has petitioned the
Federal Railroad Administration (FRA) for a modification to its
existing waiver of compliance from certain provisions of the Federal
railroad safety regulations contained at 49 CFR Part 215, Railroad
Freight Car Safety Standards. FRA assigned the petition Docket Number
FRA-2013-0057.
    Specifically, Steam seeks additional relief from 49 CFR 215.303,
Stenciling of restricted cars, which requires that restricted railroad
freight cars be stenciled or marked in clearly legible letters with the
letter ``R'' and a series of designated terms to indicate the basis for
the restricted operation of the car.
    The petition requests the addition of two freight cars, numbered
NCR 630 and 127, to relief already granted for similar equipment. NCR
127 is a railroad flatcar being converted to a passenger car for
tourist and excursion railroad service by the addition of seating,
superstructures, and steps. NCR 630 is a caboose. Each of the Steam
freight cars in the petition is more than 50 years of age, measured
from the date of original construction, and these freight cars are also
the subject of a parallel petition for Special Approval for continued
operation under 49 CFR 215.203(c). Therefore, Steam seeks a waiver of
the requirement for stenciling contained in 49 CFR 215.303, as the
railroad states that the stenciling would detract from both the
aesthetic and historical nature of the reproduction vintage railcar
equipment. As Steam's passenger equipment will operate in a limited
area, Steam requests permission to keep documentation related to the
restricted status of the equipment at its business office, similar to
the conditions granted to other tourist and excursion railroads.
Additionally, Steam petitions for relief from all of the requirements
of 49 CFR Part 224, Reflectorization of Rail Freight Rolling Stock, as
the railroad states that reflectorization would detract from both the
aesthetic and historical nature of its reproduction vintage equipment.
    A copy of the petition, as well as any written communications
concerning the petition, is available for review online at
www.regulations.gov and in person at the U.S. Department of
Transportation's (DOT) Docket Operations Facility, 1200 New Jersey
Avenue SE., W12-140, Washington, DC 20590. The Docket Operations
Facility is open from 9 a.m. to 5 p.m., Monday through Friday, except
Federal Holidays.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested party
desires an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Web site: http://www.regulations.gov/ Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
    Communications received by July 17, 2014 will be considered by FRA
before final action is taken. Comments received after that date will be
considered as far as practicable.
    Anyone is able to search the electronic form of any written
communications and comments received into any of our dockets by the
name of the individual submitting the comment (or signing the document,
if submitted on behalf of an association, business, labor union, etc.).
See http://www.regulations.gov/#!privacyNotice for the privacy notice
of regulations.gov or interested parties may review DOT's complete
Privacy Act Statement in the Federal Register published on April 11,
2000 (65 FR 19477).

    Issued in Washington, DC, on May 27, 2014.
Robert C. Lauby,
Associate Administrator for Railroad Safety, Chief Safety Officer.
[FR Doc. 2014-12622 Filed 5-30-14; 8:45 am]
BILLING CODE 4910-06-P


[Federal Register Volume 81, Number 182 (Tuesday, September 20, 2016)]
[Notices]
[Pages 64451-64452]
[FR Doc No: 2016-22599]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CD16-21-000]

Mary Ann Gaston; Notice of Preliminary Determination of a
Qualifying Conduit Hydropower Facility and Soliciting Comments and
Motions To Intervene

    On September 1, 2016, as supplemented on September 13, 2016, Mary
Ann Gaston filed a notice of intent to construct a qualifying conduit
hydropower facility, pursuant to section 30 of the Federal Power Act
(FPA), as amended by section 4 of the Hydropower Regulatory Efficiency
Act of 2013 (HREA). The proposed Gaston Hydro Facility would have an
installed capacity of 4 kilowatts (kW), and would be located near the
end of an existing irrigation pipeline on the applicant's land. The
project would be located near the Town of Norwood in San Miguel County,
Colorado.
    Applicant Contact: Mary Ann Gaston, 1280 CR44ZN, Norwood, CO 81423
Phone No.<PHONE_NUMBER>.
    FERC Contact: Christopher Chaney, Phone No.<PHONE_NUMBER>, email:
<EMAIL_ADDRESS>    Qualifying Conduit Hydropower Facility Description: The proposed
project would consist of: (1) A barrel housing containing one 4-jet
Turgo turbine/generating unit with an installed capacity of 4 kW; (2) 4
short, 2-inch-diameter intake manifold pipes; (3) one 8-inch-diameter
tailrace pipe discharging water to an existing irrigation pond; and (4)
appurtenant facilities. The proposed project would have an estimated
annual generating capacity of 6,382 kilowatt-hours.
    A qualifying conduit hydropower facility is one that is determined
or deemed to meet all of the criteria shown in the table below.

      Table 1--Criteria for Qualifying Conduit Hydropower Facility
------------------------------------------------------------------------
      Statutory provision              Description       Satisfies (Y/N)
------------------------------------------------------------------------
FPA 30(a)(3)(A), as amended by   The conduit the                      Y
 HREA.                            facility uses is a
                                  tunnel, canal,
                                  pipeline, aqueduct,
                                  flume, ditch, or
                                  similar manmade water
                                  conveyance that is
                                  operated for the
                                  distribution of water
                                  for agricultural,
                                  municipal, or
                                  industrial
                                  consumption and not
                                  primarily for the
                                  generation of
                                  electricity.

FPA 30(a)(3)(C)(i), as amended   The facility is                      Y
 by HREA.                         constructed,
                                  operated, or
                                  maintained for the
                                  generation of
                                  electric power and
                                  uses for such
                                  generation only the
                                  hydroelectric
                                  potential of a non-
                                  federally owned
                                  conduit.
FPA 30(a)(3)(C)(ii), as amended  The facility has an                  Y
 by HREA.                         installed capacity
                                  that does not exceed
                                  5 megawatts..
FPA 30(a)(3)(C)(iii), as         On or before August 9,               Y
 amended by HREA.                 2013, the facility is
                                  not licensed, or
                                  exempted from the
                                  licensing
                                  requirements of Part
                                  I of the FPA.
------------------------------------------------------------------------

    Preliminary Determination: The proposed addition of the
hydroelectric project along the existing irrigation pipeline will not
alter its primary purpose. Therefore, based upon the above criteria,
Commission staff preliminarily determines that the proposal satisfies
the requirements for a qualifying conduit hydropower facility, which is
not required to be licensed or exempted from licensing.
    Comments and Motions to Intervene: Deadline for filing comments
contesting whether the facility meets the qualifying criteria is 45
days from the issuance date of this notice.
    Deadline for filing motions to intervene is 30 days from the
issuance date of this notice.
    Anyone may submit comments or a motion to intervene in accordance
with the requirements of Rules of Practice and Procedure, 18 CFR
385.210 and 385.214. Any motions to intervene must be received on or
before the specified deadline date for the particular proceeding.
    Filing and Service of Responsive Documents: All filings must (1)
bear in all capital letters the ``COMMENTS CONTESTING QUALIFICATION FOR
A CONDUIT HYDROPOWER FACILITY'' or ``MOTION TO INTERVENE,'' as
applicable; (2) state in the heading the name of the applicant and the
project number of the application to which the filing responds; (3)
state the name, address, and telephone number of the person filing; and
(4) otherwise comply with the requirements of sections 385.2001 through
385.2005 of the Commission's regulations.\1\ All comments contesting
Commission staff's preliminary determination that the facility meets
the qualifying criteria must set forth their evidentiary basis.
---------------------------------------------------------------------------

    \1\ 18 CFR 385.2001-2005 (2016).
---------------------------------------------------------------------------

    The Commission strongly encourages electronic filing. Please file
motions to intervene and comments using the Commission's eFiling system
at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit
brief comments up to 6,000 characters, without prior registration,
using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the
end of your comments. For assistance, please contact FERC Online
Support at<EMAIL_ADDRESS>(866) 208-3676 (toll free), or
(202) 502-8659 (TTY). In lieu of electronic filing, please send a paper
copy to: Secretary, Federal Energy Regulatory Commission, 888 First
Street NE., Washington, DC 20426. A copy of all other filings in
reference to this application must be accompanied by proof of service
on all persons listed in the service list prepared by the Commission in
this proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.
    Locations of Notice of Intent: Copies of the notice of intent can
be obtained directly from the applicant or such copies can be viewed
and reproduced at the Commission in its Public Reference Room, Room 2A,
888 First Street NE., Washington, DC 20426. The filing may also be
viewed on the web at http://www.ferc.gov/docs-filing/elibrary.asp using
the ``eLibrary'' link. Enter the docket number (i.e., CD16-21) in the
docket number field to access the document. For assistance, call toll-
free 1-866-208-3676 or email<EMAIL_ADDRESS>For TTY, call
(202) 502-8659.

    Dated: September 14, 2016.
Kimberly D. Bose,
Secretary.
[FR Doc. 2016-22599 Filed 9-19-16; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 82, Number 226 (Monday, November 27, 2017)]
[Notices]
[Page 56031]
[FR Doc No: 2017-25452]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket Nos. FDA-2010-N-0601, FDA-2010-N-0598, FDA-2010-N-0600, FDA-
2007-N-0037, FDA-2010-N-0597, FDA-2011-N-0017, and FDA-2016-N-2496]

Agency Information Collection Activities; Announcement of Office
of Management and Budget Approvals

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is publishing a list of
information collections that have been approved by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1995.

FOR FURTHER INFORMATION CONTACT: Ila S. Mizrachi, Office of Operations,
Food and Drug Administration, Three White Flint North, 10A-12M, 11601
Landsdown St., North Bethesda, MD 20852,<PHONE_NUMBER>,
[email protected].

SUPPLEMENTARY INFORMATION: The following is a list of FDA information
collections recently approved by OMB under section 3507 of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3507). The OMB control
number and expiration date of OMB approval for each information
collection are shown in Table 1. Copies of the supporting statements
for the information collections are available on the internet at
https://www.reginfo.gov/public/do/PRAMain. 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.

        Table 1--List of Information Collections Approved by OMB
------------------------------------------------------------------------
                                                         Date  approval
        Title of collection          OMB  control No.       expires
------------------------------------------------------------------------
Current Good Manufacturing                  0910-0152          8/31/2020
 Practice for Medicated Feeds.....
Current Good Manufacturing                  0910-0154          8/31/2020
 Practice for Type A Medicated
 Articles.........................
Animal Drug User Fee Cover Sheet,           0910-0539          8/31/2020
 Form FDA 3546....................
Animal Drug User Fee Waivers and            0910-0540          8/31/2020
 Reductions.......................
Index of Legally Marketed                   0910-0620          8/31/2020
 Unappropriated New Animal Drugs
 for Minor Species................
Voluntary National Retail Food              0910-0621          8/31/2020
 Regulatory Program Standards.....
Impact Trade Auxiliary                      0910-0842          8/31/2020
 Communication System.............
------------------------------------------------------------------------

    Dated: November 20, 2017.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2017-25452 Filed 11-24-17; 8:45 am]
 BILLING CODE 4164-01-P