[Federal Register: June 8, 2010 (Volume 75, Number 109)]
[Notices]
[Page 32523-32525]
[DOCID:fr08jn10-156]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62204; File No. SR-CBOE-2010-049]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to Eligible Order Types

June 2, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 25, 2010, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of

the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing to amend its rules to clarify the
applicability of various order types on the Exchange. The text of the
proposed rule change is available on the Exchange's Web site (http://
www.cboe.org/Legal), at the Exchange's Office of the Secretary and at
the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify Rule 6.53, Certain Types of Orders
Defined, to clarify that one or more of the various order types may be
made available on a class-by-class basis.\5\ The proposed text would
also clarify that certain order types may not be made available for all
Exchange systems. The classes and/or systems for which the order types
shall be available will be as provided in the Rules, as the context may
indicate, or as otherwise specified via Regulatory Circular generally
at least one day in advance.
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    \5\ Rule 6.53 sets out definitions for the following order
types: market order; limit order; contingency order (market-if-
touched order, market-on-close order, stop (stop-loss) order, stop-
limit order); spread order; combination order; straddle order; not
held order; one-cancels-the-other order; all-or-none order; fill-or-
kill order; immediate-or-cancel order; opening rotation order;
facilitation order; ratio order; attributable order; intermarket
sweep order; AIM sweep order; sweep and AIM order; CBOE-only order;
and reserve order.
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    The proposed rule change provides additional clarity and
consistency in our rules, which already provide in various places that
the Exchange may designate the eligible order types on a class-by-class
basis for various systems/processes. For example, the proposed change
is consistent with Rules 6.13A, Simple Auction Liaison (SAL), 6.14A,
Hybrid Agency Liaison 2 (HAL2), and 6.53C(d), Process for Complex Order
RFR Auction (``COA''), which provide that the Exchange, among other
things, shall designate the eligible order types and classes in which
SAL, HAL2 or COA will be activated. As another example, Rule 6.53(o),
Attributable Order, provides that attributable orders may not be
available for all Exchange systems and the Exchange will issue a
Regulatory Circular specifying the systems for which the attributable
order type shall be available.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \6\ that an exchange have rules that
are designed to promote just and equitable principles of trade, and to
remove impediments to and perfect the mechanism for a free and open
market and a national market system, and, in general, to protect
investors and the public interest. In particular, the Exchange believes
the proposed change would provide more clarity on the applicability of
eligible order types in a manner that is consistent with other
provisions in the existing CBOE rules.
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    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the
proposal.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing rule does not (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change at least five business days prior to the date of
filing of the proposed rule change or such shorter time as designated
by the Commission,\7\ the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6)
thereunder.\9\ At any time within 60 days of the filing of such
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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    \7\ The Exchange has fulfilled the five day prefiling
requirement.
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2010-049 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2010-049. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the

provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 pm. Copies of such filing also will be available for
inspection and copying at the principal office of the CBOE. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-CBOE-2010-049 and
should be submitted on or before June 29, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13663 Filed 6-7-10; 8:45 am]
BILLING CODE 8010-01-P


AGENDA

FIFRA SCIENTIFIC ADVISORY PANEL (SAP)

OPEN MEETING

August 25-27, 2009

FIFRA SAP WEB SITE http://www.epa.gov/scipoly/sap/

OPP Docket Telephone:<PHONE_NUMBER>

Docket Number: EPA-HQ-OPP-2009-0322

U.S. Environmental Protection Agency

Conference Center - Lobby Level

One Potomac Yard (South Bldg.)

2777 S. Crystal Drive, Arlington, VA 22202

Scientific Issues Associated with The Use of Structure Activity
Relationships of Estrogen Binding Affinity to Support Prioritization of
Pesticide Inert Ingredients and Antimicrobial Pesticides for Screening
and Testing

Please note that all times are approximate (see note at end of Agenda).

Tuesday, August 25, 2009

  9:00 A.M.	Opening of Meeting and Administrative Procedures

Sharlene Matten, Ph.D., Designated Federal Official, Office of Science
Coordination and Policy, EPA

  9:10 A.M. 	Introduction and Identification of Panel Members

	Janice Chambers, Ph.D., FIFRA Scientific Advisory Panel Session Chair

  9:20 A.M.	Welcome and Opening Remarks

	Stephen Owens, Assistant Administrator, Office of Prevention,
Pesticides, and Toxic Substances, EPA

  9:30 A.M.	Welcome and Opening Remarks

	Laura Bailey, Executive Secretary, FIFRA Scientific Advisory Panel,
Office of Science Coordination and Policy (OSCP), EPA

  9:35 A.M.	Opening Remarks, Goals and Objective of Meeting

	Steven Bradbury, Ph.D., Deputy Director, Office of Pesticide Programs
(OPP), EPA

  9:40 A.M.	Status of the U.S. Endocrine Disruptor Screening Program

	Gary Timm, Exposure Assessment Coordination and Policy Division, OSCP,
EPA

10:00 A.M.	BREAK

10:15 A.M.	Prioritizing Chemicals for Screening and Assessment:

	An Application for the Endocrine Disruptor Screening Program

	Steven Bradbury, Ph.D., Deputy Director, OPP

10:45 A.M.	(Q)SAR/Expert System to Estrogen Binding Affinity

	Patricia Schmieder, Ph.D. and Richard Kolanczyk, Ph.D., Mid-Continent
Ecology Division, National Health and Environmental Effects Research
Laboratory-Duluth, Office of Research and Development

12:30 P.M.  	LUNCH

 1:30 P.M.	Public Comments

 3:00 P.M.	BREAK

 3:15 P.M.  	Charge to the Panel:  Question 1

Evaluation of the Expert System in the Context of the Organization for
Economic Cooperation and Development (OECD) Validation Principles

As discussed in the Preface and Introduction of the white paper, EPA’s
development of the Quantitative Structure Activity Relationship
(QSAR)-based expert system was guided by the OECD principles for (Q)SAR
validation.  The five principles include demonstration of:

a well defined endpoint,

mechanistic interpretation of the model,

defined domain of model applicability,

an unambiguous algorithm, and

appropriate measures of goodness of fit, robustness, and predictivity.

A prototype of the expert system was the subject of an OECD convened
peer-consultation in February 2009, at which time the system was
evaluated using the (Q)SAR validation principles.  Based on input from
this peer consultation, the Agency further refined the expert system,
particularly as it related to the OECD validation principles.  The
components to Charge Question 1 address specific issues concerning the
(Q)SAR validation principles and the subject expert system in the
context of its use to determine the order in which chemicals (i.e.,
food use inert ingredients and antimicrobial pesticides) will be subject
to Tier 1 screening under EPA’s Endocrine Disrupter Screening Program
(EDSP)  (i.e., for prioritization).

1) A.		Biological Endpoint

The biological endpoint that is predicted by the expert system is
relative binding affinity to the cytosolic rainbow trout estrogen
receptor (ER).  Based on preliminary studies it was anticipated that
food use inert ingredients and antimicrobial pesticides would have low
relative binding affinities.  In addition, an evaluation of the two
respective inventories indicated a wide range of structures and
associated physical-chemical properties (e.g., solubility, Kow, etc).
Consequently, assay methods used to measure binding affinity to
establish the training set were designed to detect low levels of binding
affinity (e.g., testing to solubility in binding assays and cytotoxicity
or solubility, as appropriate, in slice assays). Confirmatory binding
studies (Ki experiments) and transactivation assays were employed to
systematically verify that apparent low affinity binding levels
represented competitive displacement and translated to ER-mediated
transactivation.

Question A1. Please comment on the methods employed and their adequacy
for detecting and measuring ER binding affinity for the compounds in the
two chemical inventories of immediate interest.

Question A2. In the context chemical prioritization for Tier 1
screening, please comment on the decision to measure binding affinity up
to the maximum concentration based on the solution properties of the
chemical, rather than using ligand concentration ‘cut-off’ values of
-4 Log Molar to -3 Log Molar, which have typically been used to conclude
a compound does not bind to the ER.

Question A3. Please also comment on how any in vivo studies that are
available for compounds with low receptor binding affinity could be used
to provide a relative binding affinity ‘cut-off’ value either alone
or in combination with cut-off values based on the maximum solubility of
a ligand in the buffer solution.

1) B.	Mechanistic Interpretation

Numerous studies have established the alignment of estrogen and other
high affinity ligands within the ER binding domain and indicate that a
distance of 10.2 to 11A between the two H-bonding sites and stable
(non-flexible) ring structure is optimal for binding. These and other
studies lead to the assumption that acyclic compounds would not bind to
the ER, although a systematic analysis across a diversity of structures
was not available in the literature.  In the current study 25 acyclic
compounds across 10 classes present in the inventories were evaluated in
the training set and none were found to bind at a Relative Binding
Affinity (RBA) detection limit of 0.00001%.

Question B1. Please comment on the adequacy of this training set for
supporting the expert system’s rule that acyclic compounds do not bind
to the ER.

Based on studies by Katzenellenbogen et al. (2003 and references
therein) a working hypothesis in developing the training set was that
compounds in the inventories of interest could bind at one site; i.e.,
the A site or the B site, based on the presence of a hydrogen bond donor
or acceptor substituent.  The development of the training sets and the
resultant ER expert system use a chemical hierarchy based on different
binding mechanisms (i.e., A-B binding sites, A binding site only, B
binding site only).

Question B2. Please comment on strengths and limitations of this
mechanistic interpretation for selecting chemicals in the training sets
and for interpreting the observed binding data.

While ER binding can be an initial step in a toxicity pathway leading to
adverse reproductive outcomes (see Figure 1 in the white paper), the ER
binding data in the training set, and the associated expert system, were
not designed to predict in vivo responses.  Rather the expert system was
designed to predict relative ER binding affinity from a chemical’s
structure to support the prioritization of food use inert ingredients
and antimicrobial pesticides for in vitro and in vivo Tier 1 screening,
which is designed to ascertain if a compound has the potential to
interact with the estrogen system.

	Question B3. Please comment on the clarity of the white paper in
describing the differences in (Q)SAR development when the goal is to
predict in vitro ER receptor binding from chemical structure vs. when
the goal is to predict in vivo reproductive/developmental responses from
chemical structure.  Please indicate if additional discussion in the
white paper is needed to establish the relevance of ER binding affinity
(either measured or predicted) to interpret the potential for in vivo
outcomes.

 5:30 P.M.     ADJOURN

AGENDA

FIFRA SCIENTIFIC ADVISORY PANEL (SAP)

OPEN MEETING

August 25-27, 2009

FIFRA SAP WEB SITE http://www.epa.gov/scipoly/sap/

OPP Docket Telephone:<PHONE_NUMBER>

Docket Number: EPA-HQ-OPP-2009-0322

U.S. Environmental Protection Agency

Conference Center - Lobby Level

One Potomac Yard (South Bldg.)

2777 S. Crystal Drive, Arlington, VA 22202

Scientific Issues Associated with The Use of Structure Activity
Relationships of Estrogen Binding Affinity to Support Prioritization of
Pesticide Inert Ingredients and Antimicrobial Pesticides for Screening
and Testing

Please note that all times are approximate (see note at end of Agenda).

Wednesday, August 26, 2009

9:00 A.M.	Opening of Meeting and Administrative Procedures

Sharlene Matten, Ph.D., Designated Federal Official, Office of Science
Coordination and Policy, EPA

9:05 A.M. 	Introduction and Identification of Panel Members

	Janice Chambers, Ph.D., FIFRA Scientific Advisory Panel Session Chair

9:15 A.M.    Follow-up from Previous Day’s Discussion

		Steven Bradbury, Ph.D., Deputy Director, OPP, EPA

9:30 A.M.	Charge to the Panel:  Question 1 (continued)

1) C.	Model Domain

The domain of the current ER expert system includes rules to support
predictions of ER binding affinity for chemicals in the food use inert
ingredient and antimicrobial pesticide inventories.

Question. Please comment on the adequacy of the approach that was used
to select chemicals for the training sets in terms of these two
inventories.

1) D.	Algorithm

The ER expert system provides predictions for each chemical, with each
individual prediction traceable to chemical subgroups, binding mechanism
and endpoint databases.  In developing the expert system several
chemical subgroups were identified as chemicals that contain multiple
functional groups.

Question D1. Please make suggestions for improvements in presenting the
expert rules and their underlying rationale, especially with regard to
groups with multiple functional groups.

Question D2. Please also comment on the ability of the expert rules to
identify chemicals outside the model domain.

 10:15 A.M.	BREAK

 10:30 P.M.	Charge to the Panel:  Question 1 (continued)

1) E.	Goodness of Fit, Robustness, and Predictivity

Consistent with suggestions by the EDSTAC (1998), and typical processes
for (Q)SAR development, the expert system rules were established through
an iterative process of defining subgroups, gathering empirical data to
refine subgroups rules, followed by collection of additional empirical
data to cover the structural domain and/or until a consistent pattern of
structural rules and activity emerged.  The expert rules permit each
chemical to be assigned to subgroups and an associated estimated binding
affinity value, accompanied by an explanation of the basis for the
estimate as well as of how the estimate compares to measured data for
other members of the same subgroup. The 2009 OECD expert consultation
report on the expert system recognized that standard statistical methods
such as those used to assess regression model QSARs are not necessarily
applicable to expert systems whereas transparency and usefulness as
described in the white paper are more appropriate parameters for
assessing the validity of an expert system. The peer consultation report
found the current approach, with individual predictions traceable to
chemical subgroups, binding mechanism and endpoint databases, to be
appropriate although the report noted that if additional information
could be made available it would facilitate future peer-review on this
issue.

Question E1. Please comment on the adequacy of information presented in
the white paper to evaluate the scientific rationale of how a chemical
is processed through the decision logic; i.e., how a chemical is
assigned to a subgroup with an associated binding affinity value; the
mechanistic rationale for estimates of binding affinity data, including
data for related chemicals; and how it is determined that a chemical is
outside of the domain of the expert system.

Question E2. While to date the Agency is not aware of statistical
approaches that would provide the means to assess goodness-of-fit or
predictivity of expert systems such as the one described here, is the
SAP aware of any statistical approaches or data presentations that could
be amenable for such evaluations?

1)F.	Transparency and Clarity of the Expert System

In its validation principles, OECD recognized the importance of a
transparent validation process for the development of (Q)SAR models in
order to further enhance their regulatory acceptance of (Q)SAR models.

Question F1. Please provide any additional comment on how well the white
paper’s summary of the expert system conforms to the OECD validation
principles and provide suggestions, as appropriate, to enhance the
clarity or transparency of the expert system’s development and
intended use with regard to the validation principles.

The white paper and associated presentations at the SAP meeting form the
basis of the documentation of the expert system.

Question F2. Please provide any suggestions for preparing the system
documentation that will enhance clarity and understanding for users.

 12:00 P.M.	LUNCH

1:00 P.M. 	Charge to the Panel: Question 2

Acyclic Compounds

Acyclic compounds comprise ~58% of the food use inert and antimicrobial
inventories.  As discussed in Question 1c, acyclic compounds were found
to not bind to the ER.  Generally, the absence of hydrogen bonding
groups, or inappropriate geometry can explain the failure of these
chemicals to bind to ER (e.g., see Katzenellenbogen et al., 2003).
Prior to the EPA research described in the SAP review, a diverse set of
acyclic structures had not been evaluated for ER binding affinity.

Question 2A. Please comment on the extent to which the finding with
acyclic compounds in the FI and AM inventories may be broadly applicable
to other acyclic compounds. Suggestions on an approach to empirically
and efficiently assess a hypothesis that acyclic compounds will not bind
to the ER in other chemical inventories would be welcomed.

Question 2B.  Please comment on the extent to which the finding with
acyclic compounds in the FI and AM inventories can be applied to other
nuclear steroid receptors in general. Suggestions on an approach to
empirically and efficiently assess a hypothesis that acyclic compounds
will not bind to the androgen receptor would be welcomed.

2:00 P.M.	Charge to the Panel: Question 3

Prioritization for EDSP Tier 1 Screening

OECD member countries have long recognized the potential of (Q)SAR for
initial assessments for thousands of untested chemicals and to
establish priorities for follow up actions.  The OECD "Integrated
Approaches to Testing and Assessment" framework has encourage the use of
existing knowledge including (Q)SAR to effectively assess and manage
large chemical inventories
(http://www.oecd.org/dataoecd/45/52/40705314.pdf).  In its final
report, the EDSTAC (US EPA 1998a) recommended a tiered approach for
detecting chemicals with endocrine disrupting potential using a
resource-efficient manner that is similar to  OECD's Endocrine
Disruptor Testing and Assessment Framework
(http://www.oecd.org/document/58/0,3343,en_2649_34377_2348794_1_1_1_1,00
.html).  Like the OECD approach, the framework proposed by the EDSTAC
includes use of (Q)SARs and high through put screening assays.

Question. Based on the characteristics of the (Q)SAR-based expert system
presented in the white paper, please comment on the Agency’s view that
the expert system could be employed to support  "sorting and
prioritizing"  food use inert ingredients and antimicrobial pesticides
for EDSP Tier 1 screening

3:00 P.M.	BREAK

3:15 P.M.	Charge to the Panel: Question 4

Cross Species Applicability

As discussed in the white paper, when comparable assay systems are used
(e.g., comparing recombinant receptors to recombinant receptors;
comparing cytosolic receptors to cytosolic receptors; comparing assays
with similar total protein concentrations and thus chemical
availability) there is general agreement in measurements of binding
affinity across species (fish, rat, human). Thus, the type of assay used
appears to explain differences more than species origin of the
receptors.  To evaluate the applicability of the current expert system
based on a trout ER training set for predicting relative binding
affinity to human   SEQ CHAPTER \h \r 1 ERα, binding assays using
full-length recombinant human   SEQ CHAPTER \h \r 1 ERα and
transactivation assays in human T47D cells are in progress with food use
inert ingredients and antimicrobial active ingredients. Chemicals
selected for human ER testing are based on predictions from the current
expert system and designed to cover each chemical group and bracket the
Log Kow ranges within the group.  To date results show good species
concordance with  chemical groups that have members that bind trout ER
also having chemicals that bind human   SEQ CHAPTER \h \r 1 ER, although
the trend is toward fewer members of a chemical group binding to human
ER than to rainbow trout ER (e.g., a more restrictive Log Kow range for
binding within a chemical group for human ER). Therefore rainbow trout
ER appears to bind more low affinity chemicals within a group but bind
the same type of chemicals as does human ER.

Question. Given what is reported in the literature and similarities
between human and rainbow trout ER binding affinity observed thus far in
the research described in the white paper, please comment on the extent
to which use of an expert system based primarily on trout ER binding
affinity data is a reasonable effects component for prioritizing food
use inert ingredients and antimicrobial pesticides for EDSP Tier I
screening.

4:15 P.M.	Panel Discussion

5:30 P.M.	ADJOURN

AGENDA

FIFRA SCIENTIFIC ADVISORY PANEL (SAP)

OPEN MEETING

August 25-27, 2009

FIFRA SAP WEB SITE http://www.epa.gov/scipoly/sap/

OPP Docket Telephone:<PHONE_NUMBER>

Docket Number: EPA-HQ-OPP-2009-0322

U.S. Environmental Protection Agency

Conference Center - Lobby Level

One Potomac Yard (South Bldg.)

2777 S. Crystal Drive, Arlington, VA 22202

Scientific Issues Associated with The Use of Structure Activity
Relationships of Estrogen Binding Affinity to Support Prioritization of
Pesticide Inert Ingredients and Antimicrobial Pesticides for Screening
and Testing

Please note that all times are approximate (see note at end of Agenda).

Thursday, August 27, 2009

  9:00 A.M.	Opening of Meeting and Administrative Procedures

Sharlene Matten, Ph.D., Designated Federal Official, Office of Science
Coordination and Policy, EPA

  9:05 A.M. 	Introduction and Identification of Panel Members

	Janice Chambers, Ph.D., FIFRA Scientific Advisory Panel Session Chair

  9:10 A.M. 	Follow-up from Previous Day’s Discussion

	Steven Bradbury, Deputy Director, OPP, EPA

  9:30 A.M.	Panel Discussion (continued as needed)

10:30 A.M.	BREAK

10:45 A.M.	Panel Discussion (continued as needed)

12:00 P.M.	ADJOURN

Note:	Please be advised that agenda times are approximate; when the
discussion for one topic is completed, discussions for the next topic
will begin. For further information, please contact the Designated
Federal Official for this meeting, Sharlene Matten, via telephone: (202)
564-0130; fax:<PHONE_NUMBER>; or email<EMAIL_ADDRESS>
DRAFT AGENDA

 PAGE

 PAGE   1


[Federal Register: December 1, 2006 (Volume 71, Number 231)]
[Proposed Rules]
[Page 69519-69527]
[DOCID:fr01de06-39]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2005-AR-0001; FRL-8250-1]

Approval and Promulgation of Air Quality Implementation Plans;
Arkansas; Prevention of Significant Deterioration and New Source
Review; Economic Development Zone for Crittenden County, Arkansas; and
Stage I Vapor Recovery

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve revisions to the Arkansas State
Implementation Plan (SIP) that include changes made to Arkansas
regulations entitled, ``Regulations of the Arkansas Plan of
Implementation for Air Pollution Control'' and ``Nonattainment New
Source Review Requirements.'' The proposed revisions amend the State's
permitting rules in order to address revisions to the Federal New
Source Review (NSR) regulations, which were promulgated by EPA on
December 31, 2002 (67 FR 80186) and reconsidered with minor changes on
November 7, 2003 (68 FR 63021)

(collectively, these two final actions are called the ``2002 NSR Reform
Rules''). Prevention of Significant Deterioration (PSD) and
Nonattainment NSR (NNSR) programs, together with the minor
preconstruction permit program required by section 110 of the Federal
Clean Air Act (``Act''), are commonly referred to as the ``NSR
programs.'' The Arkansas revised preconstruction permitting rules
proposed for inclusion in the Arkansas SIP, affecting major sources and
modifications to include provisions for baseline emissions
calculations, an actual-to-projected-actual methodology for calculating
emissions changes, options for plantwide applicability limits, and
recordkeeping and reporting requirements. The proposed revisions also
include non-substantive revisions to previously SIP-approved
regulations and regulations for implementing the permitting provisions
for the 8-Hour Ozone National Ambient Air Quality Standard-Phase 2,
Economic Development Zone in Crittenden County, and Stage I Vapor
Recovery Rules. Finally, EPA is taking no action on provisions that
relate to designated facilities. We are proposing approval of the
revisions because we find the changes consistent with EPA's
implementing regulations, guidance and policy and with Section 110(l)
of the Act.

DATES: Comments must be received on or before January 2, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-
OAR-2005-AR-0001, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.

Follow the online instructions for submitting comments.
     U.S. EPA Region 6 ``Contact Us'' web site: http://epa.gov/region6/r6coment.htm.
 Please click on ``6PD'' (Multimedia) and select

``Air'' before submitting comments.
     E-mail: Mr. Stanley M. Spruiell at
<EMAIL_ADDRESS>

     Fax: Mr. Stanley M. Spruiell, Air Permit Section (6PD-R),
at fax number<PHONE_NUMBER>.
     Mail: Mr. Stanley M. Spruiell, Air Permits Section (6PD-
R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200,
Dallas, Texas 75202-2733.
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 index. Although listed in the index, some

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Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross
Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made
available by appointment for public inspection in the Region 6 FOIA
Review Room between the hours of 8:30 am and 4:30 pm weekdays except
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    The state submittal is also available for public inspection at the
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    Arkansas Department of Environmental Quality, Air Division, 8001
National Drive, P.O. Box 8913, Little Rock, Arkansas 72219-8913.

FOR FURTHER INFORMATION CONTACT: Mr. Stanley M. Spruiell, Air Permits
Section (6PD-R), Environmental Protection Agency, Region 6, 1445 Ross
Avenue, Suite 700, Dallas, Texas 75202-2733, telephone<PHONE_NUMBER>;
fax number<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document any reference to
``we,'' ``us,'' or ``our'' shall mean the EPA.

Outline

I. What Action Is EPA Proposing?
II. What is the Background for Major NSR Reform?
III. What is EPA's Analysis of Arkansas' SIP Revisions?
    A. Major NSR Reform Requirements.
    B. Permits Provisions for the 8-Hour Ozone NAAQS--Phase 2.
    C. Zones Targeted for Economic Development.
    D. Stage I Vapor Recovery
    E. Editorial Revisions to the Regulations for the Control of
VOCs in Pulaski County
    F. Revisions to Chapter 8--111(d) Designated Facilities
IV. What Action is EPA Taking Today?
V. Statutory and Executive Order Reviews

I. What Action Is EPA Proposing?

    On February 3, 2005, and July 3, 2006, the Governor of Arkansas
submitted revisions to the Arkansas SIP. The 2005 submittal consists of
revisions to ``Regulation No. 19--Regulations of the Arkansas Plan of
Implementation for Air Pollution Control.'' The 2006 submittal consists
of further revisions to ``Regulation No. 19--Regulations of the
Arkansas Plan of Implementation for Air Pollution Control'' and a new
``Regulation No. 31--Nonattainment New Source Review Requirements.''
The revisions were made to update the Arkansas NSR programs to make
them consistent with changes to the Federal NSR regulations published
on December 31, 2002 (67 FR 80186) and November 7, 2003 (68 FR 63021).
These two EPA rulemakings are commonly referred to as the ``2002 NSR
Reform Rules.''
    These SIP revisions also add provisions for implementing the air

permitting requirements for the 8-hour ozone national ambient air
quality standard-phase 2 (promulgated November 29, 2005 (70 FR 71611)),
an Economic Development Zone that implement section 173(a)(1)(B) of the
Act, and provisions for Stage I Vapor Recovery. In addition, Arkansas
revised Regulation No. 19 to make the following non-substantive changes
(which do not change the regulatory requirements): redesignated the
subdivisions from ``Section'' to ``Reg.''; changed references to
``Arkansas Department of Pollution Control and Ecology'' to ``Arkansas
Department of Environmental Quality''; corrected typographical errors
and grammar; and improved readability and clarity. Finally, EPA is
taking no action on Chapter 8 of Regulation No. 19 ``111(d) Designated
Facilities.''

II. What is the Background for Major NSR Reform?

    On December 31, 2002, EPA published final rule changes to 40 Code
of Federal Regulations (CFR) parts 51 and 52, regarding the Act's PSD
and Nonattainment New Source Review (NNSR) programs. See 67 FR 80186.
On November 7, 2003, EPA published a notice of final action on the
reconsideration of the December 31, 2002 final rule changes. See 68 FR
63021. In that November 7th final action, EPA added the definition of
``replacement unit,'' and clarified an issue regarding plantwide
applicability limitations (PALs). The December 31, 2002 and the
November 7, 2003, final actions, are collectively referred to as the
``2002 NSR Reform Rules.'' The purpose of today's action is to propose
approval of the SIP submittals from the State of Arkansas, which adopts
EPA's 2002 NSR Reform Rules.
    The 2002 NSR Reform Rules are part of EPA's implementation of Parts
C and D of Title I of the Act, 42 U.S.C. 7470-7515 addressing major
sources and major modifications. Part C of Title I of the Act, 42
U.S.C. 7470-7492, is the PSD program, which applies in areas that meet
the National Ambient Air Quality Standards (NAAQS)-``attainment''
areas--as well as in areas for which there is insufficient information
to determine whether the area meets the NAAQS ``unclassifiable'' areas.
Part D of Title I of the Act, 42 U.S.C. 7501-7515, is the NNSR program,
which applies in areas that are not in attainment of one or more of the
NAAQS--``nonattainment areas.'' Collectively, the PSD and NNSR programs
are referred to as the ``New Source Review'' or NSR programs. EPA
regulations implementing these programs are contained in 40 CFR 51.165,
51.166, 52.21, 52.24, and appendix S of part 51.
    The Act's NSR programs are preconstruction review and permitting
programs applicable to new and modified stationary sources of air
pollutants regulated under the Act. These programs include a
combination of air quality planning and air pollution control
technology program requirements. Briefly, section 109 of the Act, 42
U.S.C. 7409, requires EPA to promulgate primary NAAQS to protect public
health and secondary NAAQS to protect public welfare. Once EPA sets
those standards, states must develop, adopt, and submit to EPA for
approval, a SIP that contains emissions limitations and other control
measures to attain and maintain the NAAQS. Each SIP is required to
contain a preconstruction review program for the construction and
modification of any stationary source of air pollution to assure that
the NAAQS are achieved and maintained; to protect areas of clean air;
to protect air quality related values (such as visibility) in national
parks and other areas; to assure that appropriate emissions controls
are applied; to maximize opportunities for economic development
consistent with the preservation of clean air resources; and to ensure
that any decision to increase air pollution is made only after full
public consideration of the consequences of the decision.
    The 2002 NSR Reform Rules made changes to five areas of the NSR
programs. In summary, these rules: (1) Provide a new method for
determining baseline actual emissions in the NNSR and PSD programs; (2)
adopt for the NNSR and PSD programs an actual-to-projected-actual
methodology for determining whether a major modification has occurred;
(3) allow major stationary sources to comply with plant-wide
applicability limits to avoid having a significant emissions increase
that triggers the requirements of the major NSR program; (4) provide a
new applicability provision for emissions units that are designated
clean units; and (5) exclude pollution control projects (PCPs) from the
NNSR and PSD program definitions of ``physical change or change in the
method of operation.'' On November 7, 2003, EPA published a notice of
final action on its reconsideration of the 2002 NSR Reform Rules (68 FR
63021), which added a definition for ``replacement unit'' and clarified
an issue regarding PALs. For additional information on the 2002 NSR
Reform Rules, see 67 FR 80186 (December 31, 2002), and http://www.epa.gov/nsr
.

    After the 2002 NSR Reform Rules were finalized and effective (March
3, 2003), various petitioners challenged numerous aspects of the 2002
NSR Reform Rules, along with portions of EPA's 1980 NSR Rules (45 FR
5276, August 7, 1980). On June 24, 2005, the D.C. Circuit Court of
Appeals issued a decision on the challenges to the 2002 NSR Reform
Rules. See New York v. United States, 413 F.3d 3 (D.C. Cir. June 24,
2005), rehearing en banc denied (Dec 09, 2005). In summary, the Court
vacated portions of the rules pertaining to clean units and PCPs,
remanded a portion of the rules regarding recordkeeping, e.g., 40 CFR
51.165(a)(6) and 40 CFR 51.166(r)(6), and either upheld or did not
comment on the other provisions included as part of the 2002 NSR Reform
Rules. The EPA has not yet responded to the Court's remand regarding
the recordkeeping provisions. Today's action is consistent with the
decision of the D.C. Circuit Court of Appeals because Arkansas'
submittal does not include any portions of the 2002 NSR Reform Rules
that were vacated as part of the June 2005, decision.
    The 2002 NSR Reform Rules require that state agencies adopt and
submit revisions to their SIP permitting programs implementing the
minimum program elements of the 2002 NSR Reform Rules no later than
January 2, 2006. See 40 CFR 51.166(a)(6)(i) (requiring state agencies
to adopt and submit PSD SIP revisions within three years after new
amendments are published in the Federal Register). State agencies may
meet the requirements of 40 CFR part 51 and the 2002 NSR Reform Rules,
with regulations that are different than, but equivalent to, Federal
regulations. If, however, a state decides not to implement any of the
new applicability provisions, that state must demonstrate that its
existing program is at least as stringent as the Federal program. In
adopting changes to Federal law, a state may write the Federal
requirements into the state SIP or the state may incorporate the
Federal rule into the SIP by referencing the citation of the Federal
rule. As discussed in further detail below, EPA believes the revisions
contained in the Arkansas submittal are approvable for inclusion into
the Arkansas SIP.

III. What Is EPA's Analysis of Arkansas' SIP Revisions?

    Arkansas currently has an approved PSD program for new and modified
sources. Today, EPA is proposing to approve revisions to Arkansas'
existing NSR program in the SIP. These proposed revisions were
submitted to EPA on February 3, 2005, and July 3, 2006. Copies of the
revised rules, as

well as the Technical Support Document (TSD), can be obtained from the
Docket, as discussed in the ``Docket'' section above. A discussion of
the specific changes to Arkansas' rule, proposed for inclusion in the
SIP, follows.
    Arkansas' ``Regulation No. 19--Regulations of the Arkansas Plan of
Implementation for Air Pollution Control'' contains the preconstruction
review program as required under part C of Title I of the Act. The
program applies to major stationary sources or modifications
constructing in areas that are designated as attainment or
unclassifiable with respect to the NAAQS. Arkansas' current PSD program
was approved into the SIP by EPA on October 16, 2000 (65 FR 61108). The
revisions submitted February 3, 2005, revise the PSD provisions to
incorporate by reference the requirements of 40 CFR 52.21(a)(2) through
(bb), as in effect on July 23, 2004, with the exception of 40 CFR
52.21(b)(55) through (58), (i)(9), and (cc). The February 3, 2005,
submittal also revises Regulation No. 19, to add a new ``Chapter 12--
Nonattainment Areas,'' and a new ``Chapter 13--Stage I Vapor
Recovery.'' Arkansas also made several non-substantive changes to
Regulation No. 19. On July 3, 2006, Arkansas submitted revisions to
Regulation No. 19 that removed ``Chapter 12--Nonattainment Areas'' and
revised the PSD provisions to withdraw its submittal of the provisions
of 40 CFR 52.21 that the D.C. Circuit vacated and remanded.
    EPA designated the Memphis, Tennessee area, which includes
Crittenden County in Arkansas, as nonattainment for the eight-hour
national ambient air quality standard for ozone in April 2004 (69 FR
23858). EPA subsequently reclassified the area from moderate to
marginal in September 2004 (69 FR 56697). The Arkansas SIP does not
currently include a NNSR program because there were no nonattainment
areas in the State of Arkansas at the time of the April 2004
designation. Arkansas' permitting requirements for major sources in or
impacting upon non-attainment areas are set forth in ``Regulation No.
31--Nonattainment New Source Review Requirements.'' On July 3, 2006,
Arkansas submitted Regulation No. 31 to address the nonattainment
permitting requirements in Crittenden County. This regulation applies
to the construction and modification of any major stationary source of
air pollution in a nonattainment area, as required by part D of Title I
of the Act. To receive approval to construct, a source that is subject
to this regulation must show that it will not cause a net increase in
pollution, will not create a delay in meeting the NAAQS, and that the
source will install and use control technology that achieves the lowest
achievable emissions rate. Regulation No. 31 also includes provisions
that implement EPA's designation of Crittenden County as an Economic
Development Zone subject to the requirements of Section 173(a)(1)(B) of
the Act. Finally, Regulation No. 31 includes the NSR provisions
promulgated by EPA on November 29, 2005 (70 FR 71611).

A. Major NSR Reform Requirements

    On February 3, 2005, Arkansas submitted revisions that update the
existing provisions of Chapter 9 of Regulation No. 19--``Prevention of
Significant Deterioration'' to be consistent with the current Federal
PSD rules, including the 2002 NSR Reform Rules. These revisions address
baseline actual emissions, actual-to-projected-actual applicability
tests, and PALs. Arkansas incorporated by reference the requirements of
40 CFR 52.21(a)(2) through (bb), as in effect on July 3, 2004, which
include the major NSR Reform provisions. Arkansas did not include the
requirements of 40 CFR 52.21(b)(55) through (58), and (cc) which
include the Equipment Replacement Provision (ERP) promulgated October
27, 2003 (68 FR 61248).\1\ Arkansas also did not incorporate 40 CFR
52.21(i)(9), a provision that is excluded in the current PSD SIP. In
the July 3, 2006 submittal, Arkansas withdrew its submittal of
provisions of 40 CFR 52.21 that the D.C. Circuit Court of Appeals
vacated and remanded. Specifically, Arkansas withdrew the following
requirements of 40 CFR 52.21:
---------------------------------------------------------------------------

    \1\ EPA promulgated the ERP on October 27, 2003 (68 FR 61248).
The ERP was challenged after promulgation and the D.C. Circuit Court
of Appeals stayed the ERP on December 24, 2003. On March 17, 2006,
the Court vacated the ERP. See New York v. EPA, 443 F.3d 880 (D.C.
Cir March 17, 2006), rehearing en banc denied (June 30, 2006).
---------------------------------------------------------------------------

     Everything in paragraphs (x) ``Clean Unit Test for
emissions units that are subject to BACT or LAER,'' (y) ``Clean Unit
provisions for emissions units that achieve an emission limitation
comparable to BACT,'' and (z) ``PCP exclusion procedural
requirements.''
     Paragraph (a)(2)(iv)(e): clean unit applicability.
     Paragraph (a)(2)(iv)(f): second sentence (``for example *
* *'').
     Paragraph (a)(2)(vi): comply with PCP requirements.
     Paragraph (b)(2)(iii)(h): Refers to PCPs.
     Paragraph (b)(3)(iii)(b): emissions increase/decrease at
clean unit.
     Paragraph (b)(3)(vi)(d): decrease in actual emissions did
not rely on clean unit or PCP.
     Paragraph (b)(32): PCP definition.
     Paragraph (b)(42): clean unit definition.
     Paragraph (r)(6): The first sentence ``Clean Units or at
a'' and ``there is a reasonable possibility that * * * .''
    The revisions included in Arkansas' PSD program submittal are
substantively the same as the 2002 major NSR Reform Rules. The PSD
rules do not incorporate the portions of the Federal rules that were
recently vacated by the D.C. Circuit Court of Appeals, including the
clean unit provisions, the pollution control projects exclusion, and
the equipment replacement provision, which was promulgated shortly
after the applicable 2002 NSR Reform Rules.
    Arkansas included provisions for nonattainment NSR in Chapter 12 of
Regulation No. 19 submitted February 3, 2005. On July 3, 2006, Arkansas
submitted revisions to Regulation No. 19, which removed the
nonattainment NSR provisions in Chapter 12 and included the
nonattainment NSR requirements in a new Regulation No. 31. The New
Regulation No. 31 includes provisions consistent with the current
Federal nonattainment NSR rule, including the 2002 NSR Reform Rules.
These revisions address baseline actual emissions, actual-to-projected-
actual applicability tests, and PALs. The revisions included in
Arkansas' NNSR program are substantively the same as the 2002 NSR
Reform Rules. As part of our review of Arkansas' submittals, we
performed a line-by-line review of the proposed revisions and have
determined that they are consistent with the program requirements for
the preparation, adoption and submittal of implementation plans for New
Source Review, set forth at 40 CFR 51.165. We also determined that
these rules do not incorporate the portions of the Federal rules that
were recently vacated by the D.C. Circuit Court of Appeals, including
the clean unit provisions, the PCP exclusion, and the equipment
replacement provision, which was promulgated shortly after the 2002 NSR
Reform Rules.
    Regulation No. 31 as submitted July 3, 2006, also incorporates the
nonattainment NSR changes that EPA promulgated November 29, 2005 (70 FR
71611) which is the final rule to implement the 8-hour ozone national
ambient air quality standard. As part of our review of Arkansas'
submittal, we performed a line-by-line review of the

proposed revisions and have determined that they are consistent with
the program requirements for the preparation, adoption and submittal of
implementation plans for New Source Review, set forth at 40 CFR 51.165.
    Regulation No. 31 includes provisions for determining applicability
for nonattainment NSR. Reg. 31.401 contains the applicability test
requirements for projects involving existing emissions units. Reg.
31.402 contains the applicability test requirements for projects
involving new emissions units. Reg. 31.401 and Reg. 31.402 respectively
meet the requirements in 40 CFR 51.165(a)(2)(ii)(C) and (D). To address
the applicability test requirements for projects that involve both
existing and new emissions units, the ADEQ forwarded a letter dated
June 22, 2006, from Marcus C. Devine, Director, Arkansas Department or
Environmental Quality to Richard E. Greene, Region Administrator,
Environmental Protection Agency, Region 6. The letter stated that for
projects that involve both new and existing units, ADEQ would use Reg.
31.401 for the existing units and Reg. 31.402 for the new units. This
statement assures that projects that involve both existing and new
emissions units will satisfy the requirement of 40 CFR
51.165(a)(2)(ii)(F)--Hybrid test for projects that involve multiple
types of emissions units. The June 22, 2006, letter is included in the
docket for this action.
    The Act provides in section 110(l) that:

    Each revision to an implementation plan submitted by a State
under this Act shall be adopted by such State after reasonable
notice and public hearing. The Administrator shall not approve a
revision of a plan if the revisions would interfere with any
applicable requirement concerning attainment and reasonable further
progress (as defined in section 171), or any other applicable
requirement of the Act.

    We are proposing approval of the Arkansas NSR Reform revisions
because we have determined that they are consistent with EPA's
implementing regulations, guidance and policy and with Section 110(l)
of the Act. Arkansas has adopted rules that are essentially the same as
the applicable Federal NSR Reform requirements at 40 CFR 51.165 and
51.166. The NSR Reform revisions will not interfere with attainment,
reasonable further progress, or any other applicable requirement of the
Act.
    We have prepared a Technical Support Document which is included in
the docket for this action. The Technical Support Document includes a
detailed evaluation of the NSR revisions to Regulation No. 19 and
Regulation No. 31 and documents how these regulations meet the
applicable Federal requirements in 40 CFR 51.165 and 51.166.

B. Permits Provisions for the 8-Hour Ozone NAAQS--Phase 2

    On November 29, 2005 (70 FR 71612), EPA promulgated provisions for
the 8-Hour Ozone NAAQS--Phase 2. These included major source thresholds
for sources in certain classes of nonattainment areas, offset ratios
for marginal, moderate, serious, severe, and extreme ozone
nonattainment areas, provisions addressing offset requirements for
facilities that shut down or curtail operation, and a requirement that
emissions of nitrogen oxide (NOX) emissions are ozone
precursors. Arkansas incorporated the 8-hour ozone NAAQS phase 2
permitting requirements in Regulation No. 31 as follows.
    The definition of ``major stationary source'' in Chapter 2 of
Regulation No. 31 defines a major stationary source be a source that
emits or has the potential to emit 100 tons per year (tpy) of any
regulated NSR pollutant; and provides that lower major source
thresholds apply as follows:
     50 tpy of volatile organic compounds (VOC) in any serious
ozone nonattainment area;
     50 tpy of VOC in an area within an ozone transport region,
except for any severe or extreme ozone nonattainment area;
     25 tpy of VOC in any severe ozone nonattainment area;
     10 tpy of VOC in any extreme ozone nonattainment area;
     50 tpy of carbon monoxide (CO) in any serious
nonattainment area for CO, where stationary sources contribute
significantly to CO levels in the area (as determined under rules
issued by the EPA Administrator); and
     70 tpy of PM-10 in any serious nonattainment area for PM-
10.
    These major source thresholds meet the requirements of 40 CFR
51.165(a)(1)(iv)(A)(1)(i) through (vi).
    The definition of ``major stationary source'' in Chapter 2 of
Regulation No. 31 further provides that ``major stationary sources''
include the following sources in ozone nonattainment area that emit or
have the potential to emit NOX as follows:
     100 tpy of more of NOX in any ozone
nonattainment area classified as marginal or moderate;
     100 tpy of more of NOX in any ozone
nonattainment area that is classified as transitional, submarginal, or
incomplete or no data area, when such area is located in an ozone
transport region;
     100 tpy of more of NOX in any area designated
under Section 107(d) of the Act as attainment or unclassifiable for
ozone the is located in an ozone transport region;
     50 tpy of more of NOX in any serious
nonattainment area for ozone;
     25 tpy of more of NOX in any severe
nonattainment area for ozone; and
     10 tpy of more of NOX in any extreme
nonattainment area for ozone.
    These major source thresholds meet the requirements of 40 CFR
51.165(a)(1)(iv)(A)(2)(i) through (vi).
    Arkansas' Reg. 31.409 provides that the provisions of Regulation
No. 31 that are applicable to major stationary sources and major
modification of VOC apply to NOX emissions from major
stationary sources and major modifications of NOX in ozone
transport regions and any ozone nonattainment area, except where the
EPA Administrator has granted a NOX waiver under Section
182(f) of the Act and waiver continues to apply. This provision meets
the requirements of 40 CFR 51.165(a)(8).
    Reg. 31.410(A) provides that for meeting the offset requirements
for major NSR for nonattainment areas that are subject to Subpart 2,
Part D, Title I of the Act, the ratio of total actual emissions of VOC
to the emissions increase of VOC are as follows:
     At least 1.1 to 1 in any marginal nonattainment area for
ozone;
     At least 1.15 to 1 in any moderate nonattainment area for
ozone;
     At least 1.2 to 1 in any serious nonattainment area for
ozone;
     At least 1.3 to 1 in any severe nonattainment area for
ozone (except that the ratio may be at least 1.2 to 1 if the approved
plan also requires all existing major sources in such nonattainment
area to use best available control technology (BACT) for the control of
VOC); and
     At least 1.5 to 1 in any extreme nonattainment area for
ozone (except that the ratio may be at least 1.2 to 1 if the approved
plan also requires all existing major sources in such nonattainment
area to use best available control technology (BACT) for the control of
VOC).
    These offset ratios meet the requirements of 40 CFR
51.165(a)(9)(i)(A) through (E).
    Reg. 31.410(B) provides that the offset ratio shall be at least
1.15 to 1 for all areas within an ozone transport region that is
subject to Subpart 2, Part D, Title I of the Act, except for serious,
severe, and extreme ozone nonattainment areas

that are subject to Subpart 2, Part D, Title I of the Act. These offset
ratios meet the requirements of 40 CFR 51.165(a)(9)(ii).
    Reg. 31.410(C) provides that the offset ratio shall be at least 1
to 1 for all areas within an ozone transport region that is subject to
subpart 1, Part D, Title I of the Act (but are not subject to subpart
2, Part D, Title I of the Act), including 8-hour ozone nonattainment
subject to 40 CFR 51.902(b). These offset ratios meet the requirements
of 40 CFR 51.165(a)(9)(iii).
    Reg. 31.410(C) provides that the requirements of Regulation No. 31
that are applicable to major stationary sources and major modifications
of PM-10 shall also apply to major stationary sources and major
modifications of PM-10 precursors, except where the EPA Administrator
determines that such sources do not contribute significantly to PM-10
levels that exceed the PM-10 ambient standards in the area. This
provision meets the requirements of 40 CFR 51.165(a)(10).
    Reg. 31.405(D) provides that emission reductions achieved by
shutting down an existing source or curtailing production or operating
hours may generally be credited for offsets if: such reductions are
surplus, permanent, quantifiable, and Federally enforceable; and either
(1) the shutdown or curtailment occurred after the last day of the base
year for SIP planning purposes; or (2) the shutdown or curtailment
occurred on or after the date the construction permit application is
filed or the applicant establishes that the proposed new emissions unit
is a replacement for the shutdown or curtailed emissions unit. These
provisions meet the requirements of 40 CFR 51.165(a)(3)(ii)(C)(2).
    We are proposing approval of the Arkansas revisions to implement
permits requirements for the 8-Hour Ozone NAAQS because we have
determined that they are consistent with EPA's implementing
regulations, guidance and policy and with Section 110(l) of the Act.
The revisions will not interfere with attainment, reasonable further
progress, or any other applicable requirement of the Act.

C. Zones Targeted for Economic Development

    Arkansas also requested that EPA approve its rules at Reg. 31.305
for implementing a zone targeted for economic development in Crittenden
County, AR, located in the Memphis 8-Hour Ozone Nonattainment Area. In
a separate action, EPA previously announced that it had approved
identifying Crittenden County as a zone targeted for economic
development (EDZ) on February 21, 2006 under section 173(a)(1)(B) of
the Act. (71 FR 8857).\2\ The notice also stated that Arkansas would be
responsible for developing NSR regulations for the zone, and that EPA
would review and consider the regulations for approval as a revision of
Arkansas' SIP. We also stated that the state rulemaking and EPA's SIP
review process would provide the public opportunities to participate in
the process to consider the implementing regulations for the zone. In
this action, we are requesting comments on Arkansas' NSR regulations to
begin implementation of the EDZ. The requirement to obtain offsets for
new and modified sources subject to NNSR permitting requirements
remains in effect until EPA takes final action to approve the EDZ
implementation rules into the Arkansas SIP.
---------------------------------------------------------------------------

    \2\ Section 173(a)(1)(B) of the Act allows the Administrator to
identify, in consultation with the Secretary of Housing and Urban
Development, zones within non-attainment areas that should be
targeted for economic development. Under Section 173(a)(1)(B), new
or modified major stationary sources that locate in such a zone are
relieved of the NSR requirement to obtain emission offsets if (1)
the relevant SIP includes an NSR nonattainment program that has
established emission levels for new and modified major sources in
the zone (``growth allowance''), and (2) the emissions from new or
modified stationary sources in the zone will not cause or contribute
to emission levels that exceed such growth allowance. Section
172(c)(4) of the Act requires that the growth allowance be
consistent with the achievement of reasonable further progress, and
will not interfere with attainment of the applicable National
Ambient Air Quality Standard (NAAQS) by the applicable attainment
date for the nonattainment area.
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    The regulations developed by Arkansas provide for management of a
zone identified by EPA as an EDZ pursuant to section 173(a)(1)(B) of
the Act. Arkansas' final NSR permitting regulations for an EDZ contain
an emissions allowance (``growth allowance'') based on air quality
modeling that limits emissions in Crittenden County from new and
modified major stationary sources. Arkansas has specifically
established Targeted Economic Development Zone (TEDZ) Emissions in
Crittenden County in the amount of 1,900 tons per year of VOC and 300
tons per year of nitrogen oxides beginning January 1, 2007, and 3,700
tons per year of VOC and 800 tons per year of nitrogen oxides beginning
January 1, 2009. In lieu of obtaining offsets as required in Reg.
31.303(B) and Reg. 31.304, a source locating in Crittenden County may
petition the ADEQ Director to allocate TEDZ emissions. A source must
either obtain offsets as required in Reg. 31.303(B) and Reg. 31.304, or
obtain growth allowances for the applicable TEDZ pursuant to Reg.
31.305.
    Arkansas has established specific and replicable petition
requirements for an allocation of the TEDZ emissions, i.e., the growth
allowance, including: (1) Be made on such forms and contain such
information as the ADEQ Director may reasonably require, (2) Contain
detailed information about the projected socio-economic impact of the
proposed project including, but not limited to: impact of the project
on low to moderate income individuals, number of jobs to be created,
median salary of employees, (3) Contain a project schedule, (4) Be
separate and distinct from the permit application required under Reg.
31.302, and 3-3, and (5) Be submitted concurrently with the application
required under Reg. 31.302.
    Before taking final action on a petition for an allocation of TEDZ
emissions from a permit applicant for a NNSR source the ADEQ Director
will solicit input from the appropriate local governing body. The ADEQ
Director will not allocate any TEDZ emissions unless he has determined
that: (1) The project will achieve the economic impact described in the
petition, (2) The projected economic impact justifies the allocation of
TEDZ emissions, and (3) No other projects which do more to further the
region's economic development goals will be pre-empted. See Reg.
31.305(F).
    If, while processing a petition, the ADEQ Director determines that
additional information is necessary to evaluate or take final action on
that petition, the ADEQ may request such information in writing and set
a reasonable deadline for a response. Any petitioner who fails to
submit any relevant facts or who has submitted incorrect information in
a petition shall, upon becoming aware of such failure or incorrect
submittal, promptly submit such supplementary facts or corrected
information.
    If the ADEQ Director determines the requirements of Reg. 31.305(F)
are met, the ADEQ will prepare a document announcing the intent to
grant the allocation of TEDZ emissions. This document may contain such
conditions as are necessary to ensure compliance with regulation and
that the project is completed as described in the petition. No petition
may be granted unless the public has first had an opportunity to
comment. The opportunity to comment shall include: (1) The publication
of a notice of the ADEQ Director's decision in a newspaper of general
circulation in the county in which the proposed facility will be
located. In the event the local newspaper is unable or unwilling

to publish notice, notice may be published in a newspaper of statewide
circulation, and (2) A 30-day period for submittal of public comment,
beginning on the date of the newspaper notice, ending on the date 30
days later.
    The ADEQ Director will take final action on a petition after review
of public comment. The Director shall notify in writing the owner/
operator and any person that submitted a written comment of the
Director's final action and the ADEQ Director's reasons for final
action. A final decision on a petition by the ADEQ Director constitutes
a final permitting decision under Arkansas Pollution Control and
Ecology Commission Regulation 8, Administrative 3-4 Procedures for
appeal purposes.
    Any petition issued under this section is subject to revocation,
suspension, or modification in whole or in part, for cause, including
without limitation:
    (1) Violation of any condition established by the ADEQ Director;
    (2) Obtaining the allocations by misrepresentation or failure to
disclose fully all relevant facts;
    (3) Failure to complete the project within the time periods
specified by the project schedule; or
    (4) Failure to achieve the projected socio-economic impacts.
    Petitions for allocations may be granted in whole, in part, or
denied by the ADEQ. If a petition for allocation is granted in part or
denied, the applicant must obtain offsets in the required ratios under
the Act pursuant to Reg. 31.303(B) and Reg. 31.304. If a petition is
granted, either in part or in whole, the applicant will be notified of
the decision, and the allocations granted will be subtracted from the
overall TEDZ allocation pool. A 10% reserve of allocations will be
maintained in the pool, unless the ADEQ Director approves the
disbursement of these ``safety factor'' allocations. Except as provided
in ADEQ's rules, TEDZ emissions allocations shall be good for the life
of the project.
    In Arkansas' request to EPA that Crittenden County be identified as
a zone Targeted for economic development, Arkansas provided ozone air
quality modeling for the entire Memphis 8-Hour Ozone Nonattainment
Area. The air quality modeling, using the variable-grid Urban Airshed
Model, Version 1.5 (UAM-V5), a regional- and urban-scale, nested-grid
photochemical air quality model, was used to demonstrate compliance
with the 8-hour ozone National Ambient Air Quality Standards (NAAQS) in
future years. The EDZ air quality modeling was developed using previous
Early Action Compact modeling developed for the Memphis area that was
consistent with the EPA draft modeling guidance that was available when
the modeling was conducted.
    The modeling simulated and assessed future-year (2007 and 2009)
ozone air quality for the Memphis Nonattainment area and surrounding
counties. Attainment of the 8-hour ozone NAAQS is demonstrated at each
monitor in the Memphis nonattainment area and in unmonitored areas of
the local monitoring domain. Attainment of the 8-hour ozone NAAQS is
predicted by the modeling to be achieved in 2007. Additionally,
Arkansas analyzed the impacts from hypothetical new industrial source
emissions in the Crittenden County EDZ. When additional emissions from
hypothetical EDZ sources are added into the modeling for the 2007 and
2009 periods, the future year design values indicate that the Memphis
Nonattainment Area and surrounding counties will continue to attain the
ozone NAAQS. The emission estimates used in the modeling exceeded the
EDZ allowances adopted by ADEQ's implementing rules for EDZ. This
assures protection of the NAAQS by planning for greater emissions than
will occur.
    Arkansas also included a 2009 modeling scenario with ancillary
growth emissions associated with the hypothetical new industrial
sources to estimate the effects of additional emissions growth. The
ancillary growth estimate was to simulate the effects of growth in
other sectors (e.g., population, minor sources, and transportation)
that may result from the development of the hypothetical industrial
facilities. This modeling scenario also indicated the area would
continue to attain the NAAQS in 2009.
    Arkansas also included some analyses estimating the greatest
increase in simulated maximum 8-hour ozone concentration (for each
county or the multi-county area) resulting due to the increase in
emissions at the Port Site in 2007 and both the Supersite and the Port
Site emission increase in 2009. At this time EPA has not revised its
modeling regulations or issued policy or guidance concerning permit
requirements for single source ozone modeling impacts for a significant
impact level analysis. Several issues need to be addressed with this
type of permit modeling, which include but are not limited to, ozone
impacts and what level of impact by a single source is significant or
insignificant. EPA has conducted this review based on whether the
Future Design Values and the out-of-network test for the remaining
nonattainment area and immediately surrounding counties indicate
attainment or nonattainment.
    In summary, the Arkansas modeling indicates that the emissions
quantified as growth allowances in 2007 and 2009 (including ancillary
growth in 2009) for the EDZ will be consistent with the achievement of
reasonable further progress and will not interfere with attainment of
the applicable NAAQS. A more detailed discussion of the Crittenden
County EDZ modeling was included in the ADEQ's application to identify
Crittenden County as an EDZ. See also our Technical Support Document
(TSD).
    The Act provides in section 110(l) that ``The Administrator shall
not approve a revision of a plan if the revisions would interfere with
any applicable requirement concerning attainment and reasonable further
progress * * *, or any other applicable requirement of the Act.'' The
regulations that Arkansas has developed demonstrate that the emissions
quantified for the EDZ are consistent with the achievement of
reasonable further progress and do not interfere with attainment of the
NAAQS within the Memphis 8-Hour Ozone Nonattainment Area. If the
Memphis nonattainment area does not attain the 8-hour ozone NAAQS by
June 15, 2007, emissions from the growth allowance established for the
EDZ must be included in any subsequent SIP revision and modeling
demonstration. If the Memphis nonattainment area does attain the ozone
NAAQS and is re-designated to attainment, the NNSR requirements,
including the EDZ designation, will no longer apply in Crittenden
County. In that event, the NAAQS are protected by PSD in Regulation No.
19.
    ADEQ will provide EPA an annual report that lists and describes
local and state actions taken in accordance with the Crittenden County
EDZ strategic plan submitted to EPA. The report will include both
quantitative and qualitative analysis regarding the economic and air
quality accomplishments in Crittenden County. See the Arkansas EDZ
Petition for further details.

D. Stage I Vapor Recovery

    Stage I Vapor Recovery is used during the filling of gasoline
storage tanks to reduce hydrocarbon emissions and has been incorporated
into numerous SIPs as an effective VOC emission control technology.
    As a strategy to assist in the attainment of the 8-hour ozone
standard, the ADEQ, on September 23,

2004, proposed regulations to establish a Stage I Vapor Recovery
program for areas classified as nonattainment in the State. The
requirements of this program are contained within Regulation No. 19,
Chapter 13, entitled ``Stage I Vapor Recovery.'' The State of Arkansas
adopted these Stage I Vapor Recovery rules on December 3, 2004, and
submitted them to EPA for approval into the Arkansas Ozone SIP on
February 3, 2005. The Stage I Vapor Recovery program requires the
installation and use of Stage I Vapor Recovery in all nonattainment
areas of the State.
    As discussed in Section III, Crittenden County, Arkansas, is
currently the only designated nonattainment area within Arkansas and is
also part of the Memphis Ozone Nonattainment Area (MONA), which was
designated moderate for 8-hour ozone nonattainment by EPA on April 30,
2004. However, the States of Arkansas and Tennessee submitted to EPA a
successful petition for downward reclassification of the MONA, pursuant
to section 181(a)(4) of the Act, and EPA reclassified the MONA as a
marginal 8-hour ozone nonattainment area on June 15, 2004. See 69 FR
56697. As part of the request for ``bump down'' reclassification,
Arkansas proposed the implementation of VOC emission reduction
measures, such as Stage I Vapor Recovery, in Crittenden County to aid
the MONA in reaching ozone attainment by June 2007, the deadline for
marginal ozone nonattainment areas to reach attainment. Therefore, with
adoption of these Stage I Vapor Recovery rules, Arkansas is going
forward with the implementation of VOC emission reduction measures in
Crittenden County and, in fact, has gone further by requiring Stage I
Vapor Recovery in all nonattainment areas in Arkansas (should any other
area in Arkansas be designated ozone nonattainment).
    Arkansas Regulation No. 19, Chapter 13, establishes a Stage I Vapor
Recovery program where one did not previously exist and EPA anticipates
that the establishment of this program will result in substantial
reductions of VOC emissions from the filling of gasoline storage tanks.
For example, Arkansas has estimated the implementation of Stage I Vapor
Recovery in Crittenden County (currently the only area in Arkansas
classified as nonattainment for the 8-hour ozone standard) to result in
VOC emission reductions of 179 tons per year. Further, by requiring
Stage I Vapor Recovery in all nonattainment areas, ADEQ is both
controlling VOC emissions in Crittenden County, as well as establishing
a control strategy should other areas be designated/redesignated ozone
nonattainment.
    Because the Stage I Vapor Recovery rules that we are proposing to
approve today do not implement a mandatory requirement of the Act or
other Federal requirement, but rather were submitted as an emission
reduction strategy to aid Crittenden County (and any future areas in
Arkansas designated as ozone nonattainment) in reaching ozone
attainment, we are reviewing these rules as a voluntarily adopted VOC
emission reduction strategy and as a strengthening of the SIP. Based on
our evaluation, ADEQ has submitted Stage I Vapor Recovery rules that
are consistent with both the OAQPS Model VOC Rules \3\ and with EPA
enforceability criteria.
---------------------------------------------------------------------------

    \3\ United States Environmental Protection Agency, Office of Air
Quality Planning and Standards, Model Volatile Organic Compound
Rules for Reasonably Available Control Technology, Planning for
Ozone Nonattainment Pursuant to Title I of the Clean Air Act (June
1992), sections 3024 and 3025 (Stage I Vapor Recovery).
---------------------------------------------------------------------------

    Before EPA may approve SIP revisions, section 110(l) of the Act
requires a demonstration of noninterference with any applicable
requirement concerning nonattainment, reasonable further progress
toward attainment of NAAQS, or any other applicable requirement of the
Act. Arkansas' Stage I Vapor Recovery rules supplement and strengthen
the existing Ozone SIP by requiring the installation of Stage I Vapor
Recovery in all nonattainment areas in the State, thereby facilitating
attainment of the ozone NAAQS in ozone nonattainment areas. These
revisions to the Arkansas SIP--specifically, the addition of Regulation
No. 19, Chapter 13--include a voluntarily adopted VOC emission
reduction strategy and, therefore, are more stringent than CAA
requirements for ozone nonattainment areas classified as marginal, such
as Crittenden County. Because Arkansas' implementation of a Stage I
Vapor Recovery program is a VOC emission reduction measure that would
improve the existing SIP, these revisions to the Arkansas SIP would not
interfere with Arkansas' compliance with the requirements of the Act
relating to nonattainment, reasonable further progress, or any other
applicable requirements under the Act or EPA regulations.
    EPA is proposing to approve Arkansas' Stage I Vapor Recovery
program into the Ozone SIP because the regulations are consistent with
EPA guidance and would strengthen the SIP.

E. Editorial Revisions to the Regulations for the Control of VOCs in
Pulaski County

    Revisions to Regulation No. 19, Chapter 10, were also included in
the February 3, 2005, Arkansas SIP revision submittal. These revisions
are administrative non-substantive/editorial changes to that chapter,
which consists of regulations for the control of VOC emissions in
Pulaski County and of provisions for determination of Reasonably
Available Control Technology (RACT) applicable statewide (Reg.
19.1004(D)(1)). Regulation No. 19, Chapter 10, was originally adopted
by the APCE on January 22, 1999, and became effective February 15,
1999. Federal approval was given by EPA on October 16, 2000 (65 FR
61103), effective November 15, 2000. EPA is proposing approval of these
changes as administrative non-substantive/editorial revisions to the
Arkansas SIP.

 F. Revisions to Chapter 8--111(d) Designated Facilities

    Under section 111(d) of the Act, emission standards are to be
developed by the States and submitted to the EPA for approval. These
standards limit the emissions of designated pollutants from existing
facilities which, if new, would be subject to the New Source
Performance Standard promulgated under section 111 of the Act. The
procedures under which States submit these plans to control existing
sources are defined in 40 CFR part 60, subpart B. The submittal and
review process of these state plans is carried out separately from
other SIP activities. We are thus taking no action on Chapter 8 of
Regulation No. 19 (which includes Arkansas' standards for designated
facilities) in today's proposal. We will review process Chapter 8 of
Regulation No. 19 in a separate action.

IV. What Action Is EPA Taking Today?

    EPA is proposing to approve revisions to the Arkansas SIP
(revisions to Regulation No. 19 and new Regulation No. 31) submitted by
the State of Arkansas on February 3, 2005 and July 3, 2006.

V. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
proposed action is not a ``significant regulatory action'' and
therefore is not subject to review by the Office of Management and
Budget. For this reason, this action is also not subject to Executive
Order 13211, ``Actions Concerning Regulations That Significantly Affect
Energy Supply,

Distribution, or Use'' (66 FR 28355, May 22, 2001). This proposed
action merely proposes to approve state law as meeting Federal
requirements and imposes no additional requirements beyond those
imposed by state law. Accordingly, the Administrator certifies that
this proposed rule will not have a significant economic impact on a
substantial number of small entities under the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.). Because this rule proposes to approve pre-
existing requirements under state law and does not impose any
additional enforceable duty beyond that required by state law, it does
not contain any unfunded mandate or significantly or uniquely affect
small governments, as described in the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4).
    This proposed rule also does not have tribal implications because
it will not have a substantial direct effect on one or more Indian
tribes, on the relationship between the Federal Government and Indian
tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian tribes, as specified by Executive
Order 13175 (65 FR 67249, November 9, 2000). This action also does not
have Federalism implications because it does not have substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government, as specified
in Executive Order 13132 (64 FR 43255, August 10, 1999). This action
merely proposes to approve a state rule implementing a Federal
standard, and does not alter the relationship or the distribution of
power and responsibilities established in the Clean Air Act. This
proposed rule also is not subject to Executive Order 13045 ``Protection
of Children from Environmental Health Risks and Safety Risks'' (62 FR
19885, April 23, 1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act. In
this context, in the absence of a prior existing requirement for the
State to use voluntary consensus standards (VCS), EPA has no authority
to disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the Clean Air Act. Thus, the requirements
of section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (15 U.S.C. 272 note) do not apply. This proposed rule does
not impose an information collection burden under the provisions of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur oxides,
Volatile organic compounds.

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

    Dated: November 17, 2006.
Lawrence E. Starfield,
Acting Regional Administrator, Region 6.
 [FR Doc. E6-20295 Filed 11-30-06; 8:45 am]

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