[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Proposed Rules]
[Pages 53715-53722]
[FR Doc No: 2020-17231]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2020-0001; FRL-10013-25-Region 4]

Air Plan Approval; NC; Blue Ridge Paper SO2 Emission Limits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
approve, through parallel processing, a draft source-specific State
Implementation Plan (SIP) revision submitted by the State of North
Carolina Department of Environmental Quality, Division of Air Quality
(DAQ) through a letter dated June 24, 2020. North Carolina's June 24,
2020, draft source-specific SIP revision requests that EPA incorporate
into the SIP more stringent sulfur dioxide (SO2) permit
limits than those currently contained in the SIP for the Blue Ridge
Paper Products, LLC (also known as BRPP) facility located in the
Beaverdam Township Area of Haywood County, North Carolina.
Specifically, EPA is proposing to approve, into the SIP, specific
SO2 permit limits and associated operating restrictions,
monitoring, recordkeeping, reporting (MRR) and testing compliance
requirements established in a BRPP title V operating permit as
permanent and enforceable SO2 control measures. North
Carolina submitted these limits to support its recommendation that EPA
designate the Beaverdam Township Area as ``attainment/unclassifiable''
under the 2010 primary SO2 national ambient air quality
standard (NAAQS or standard) (also referred to as the 2010 1-hour
SO2 NAAQS). The purpose of this rulemaking is not to take
action on whether these SO2 emissions limits are adequate
for EPA to designate the Beaverdam Township Area as attainment under
the 2010 1-hour SO2 NAAQS. Instead, EPA will determine the
air quality status and designate remaining undesignated areas for the
2010 1-hour SO2 NAAQS, including the Beaverdam Township
Area, in a separate action. This proposed SIP approval does not
prejudge that future designation action.

DATES: Comments must be received on or before September 30, 2020.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2020-0001 at www.regulations.gov. Follow the online instructions
for submitting comments. Once submitted, comments cannot be edited or
removed from Regulations.gov. EPA may publish any comment received to
its public docket. Do not submit electronically any information you
consider to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Multimedia
submissions (audio, video, etc.) must be accompanied by a written
comment. The written comment is considered the official comment and
should include discussion of all points you wish to make. EPA will
generally not consider comments or comment contents located outside of
the primary submission (i.e., on the web, cloud, or other file sharing
system). For additional submission methods, the full EPA public comment
policy, information about CBI or multimedia submissions, and general
guidance on making effective comments, please visit www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Evan Adams, Air Regulatory Management
Section, Air Planning and Implementation Branch, Air and Radiation
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street SW, Atlanta, Georgia 30303-8960. The telephone number is (404)
562-9009. Mr. Evan Adams can also be reached via electronic mail at
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. What is parallel processing?
II. What action is EPA proposing?
III. What is the background for this proposed action?
IV. Why did North Carolina submit the draft source-specific SIP
revision for BRPP?
V. What criteria are EPA using to review this SIP revision?
VI. What did North Carolina submit in the draft source-specific SIP
revision for BRPP?
VII. Incorporation by Reference
VIII. Proposed Action
IX. Statutory and Executive Order Reviews

I. What is parallel processing?

    Parallel processing refers to a process that utilizes concurrent
state and Federal proposed rulemaking actions. Generally, the state
submits a copy of the proposed regulation or other revisions to EPA
before conducting its public hearing and completing its public comment
process under state law. EPA reviews this proposed state action and
prepares a notice of proposed rulemaking under Federal law. In some
cases, EPA's notice of proposed rulemaking is published in the Federal
Register during the same time frame that the state is holding its
public hearing and conducting its public comment process. The state and
EPA then provide for concurrent public comment periods on both the
state action and Federal action. If, after completing its public
comment process and after EPA's public comment process has run, the
state changes its final submittal from the proposed submittal, EPA
evaluates those changes and decides whether to publish another notice
of proposed rulemaking in light of those changes or to proceed to
taking final action on the changed submittal and describing the state's
changes in its final rulemaking action. Any final rulemaking action by
EPA will occur only after the final submittal has been adopted by the
state and formally provided to EPA.
    In this case, however, EPA's and North Carolina's processes have
not been perfectly concurrent. North Carolina's submittal was noticed
for public comment by the State on June 24, 2020, and submitted to EPA
for parallel processing on June 24, 2020; the submission has not yet
been submitted in final form. The State's public comment period closed
on July 27, 2020. After North Carolina submits the formal SIP revision,
EPA will evaluate the submittal. If the State changes the formal
submittal from the proposed submittal, EPA will evaluate those changes
for significance. If EPA finds any such changes to be significant, then
the Agency intends to determine whether to re-propose the action based
upon the revised submission or to proceed to take final action on the
submittal as changed by the State. Although EPA was unable to have a
concurrent public comment process with the State, North Carolina's
request for parallel processing allows EPA to begin action on the
State's proposed submittal in advance of a formal, final submission.

II. What action is EPA proposing?

    EPA is proposing to approve North Carolina's June 24, 2020, draft
source-specific SIP revision to incorporate, into the North Carolina
SIP, specific SO2 permit limits and associated operating
restrictions, MRR, and testing compliance requirements contained in
title V operating permit number 08961T29 (T29) issued to BRPP by DAQ,
on June 2, 2020. Specifically, EPA is proposing to incorporate into the
North Carolina SIP the maximum permitted SO2 emission limits
and compliance requirements for the seven largest SO2
emission sources at BRPP. Currently, there are no source-specific
SO2 limits in the North Carolina SIP for BRPP. These
permitted SO2 emission limits that EPA proposes to approve
are therefore in addition to and therefore more stringent than
generally applicable SO2 requirements currently in the SIP
for BRPP. Incorporating specific SO2 permit limits and
associated operating restrictions, MRR, and testing compliance
parameters for BRPP into the North Carolina SIP would establish these
specific SO2 permitted limits and associated operating and
compliance parameters as permanently federally enforceable control
measures and strengthen the North Carolina SIP. More detail on these
emission limits and conditions is provided below.
    The purpose of this rulemaking is to act on North Carolina's
request to approve into the SIP specific SO2 permit limits
(listed in Table 1 below), and associated operating, MRR, and testing
requirements established in permit T29 at section 2.2.J thereby making
these limits permanently federally enforceable to strengthen the North
Carolina SIP. This rulemaking does not address whether the specific
SO2 permit limits and compliance permit conditions from
operating permit T29 are adequate for EPA to promulgate an attainment/
unclassifiable designation of the 2010 1-hour SO2 NAAQS for
the Beaverdam Township Area near BRPP, and EPA does not seek and will
not respond to comments on that issue in taking final action on this
SIP. EPA intends to designate the Beaverdam Township Area near BRPP
under a separate national action for all remaining undesignated areas
in the country, and any comments on the adequacy of the new limits to
provide for attainment should be directed to EPA's docket for that
action. See docket number EPA-HQ-OAR-2020-0037.

III. What is the background for this proposed action?

    The following provides the relevant background related to the 2010
1-hour SO2 NAAQS and this proposed action.

A. 2010 1-Hour SO2 NAAQS

    On June 22, 2010, EPA published notice of a revision of the primary
SO2 NAAQS, establishing a new 1-hour SO2 standard
of 75 parts per billion (ppb). See 75 FR 35520.\1\ Under EPA's
regulations at 40 CFR part 50, the 2010 1-hour SO2 NAAQS is
met at a monitoring site when the 3-year average of the annual 99th
percentile of daily maximum 1-hour average concentrations is less than
or equal to 75 ppb (based on the rounding convention in 40 CFR part 50,
appendix T). See 40 CFR 50.17. The 2010 1-hour SO2 NAAQS is
violated at an ambient air quality monitoring site (or in the case of
dispersion modeling, at an ambient air quality receptor location) when
the 3-year average of the annual 99th percentile of the daily maximum
1-hour average concentrations exceeds 75 ppb, as determined in
accordance with Appendix T of 40 CFR part 50. The existing primary
(health-based) standard provides health protection for at-risk groups
against respiratory effects following short-term (e.g., 5-minute)
exposures to SO2 in ambient air.
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    \1\ On February 25, 2019, based on a review of the full body of
currently available scientific evidence and exposure/risk
information, EPA retained the existing 2010 1-hour SO2
primary NAAQS. See 84 FR 9866.
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B. SO2 NAAQS Implementation

    After EPA promulgates a new or revised NAAQS, EPA is required to
designate all areas of the country as either ``nonattainment,''
``attainment,'' or ``unclassifiable,'' for that NAAQS pursuant to
section 107(d)(1) of the Clean Air Act (CAA or Act). The process for
designating areas following promulgation of a new or revised NAAQS is
contained in section 107(d) of the CAA. The CAA requires EPA to
complete the initial designations process within 2 years of
promulgating a new or revised standard. If the Administrator has
insufficient information to make these designations by that deadline,
EPA has the authority to extend the deadline for completing
designations by up to 1 year.

    Through a Federal Register notice published on August 3, 2012, EPA
announced that the Agency had insufficient information to complete the
designations for the 2010 1-hour SO2 standard within 2 years
anticipated by the CAA and extended the designations deadline to June
3, 2013. See 77 FR 46295. EPA completed the first round of designations
(``Round 1'') \2\ for the 2010 1-hour SO2 NAAQS on July 25,
2013, designating 29 areas in 16 states as nonattainment for the 2010
1-hour SO2 NAAQS based on violating ambient air monitors.
See 78 FR 47191 (August 5, 2013). At that time, EPA was not yet
prepared to issue designations for the remaining areas of the country.
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    \2\ The term ``Round'' in this instance refers to which ``round
of designations.''
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    Subsequently, three lawsuits were filed against EPA in different
United States (U.S.) District Courts alleging that the Agency had
failed to perform a nondiscretionary duty under the CAA by not
designating all portions of the country by the June 3, 2013, deadline.
Under a consent decree entered by the court on March 2, 2015, in one of
those cases, EPA was required to complete the remaining area
designations according to a specific schedule with the following
deadlines: July 2, 2016 (``Round 2''), December 31, 2017 (``Round 3''),
and December 31, 2020 (``Round 4'').3 4
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    \3\ EPA signed Federal Register notices of promulgation for
Round 2 designations on June 30, 2016 (see 81 FR 45039 (July 12,
2016)) and on November 29, 2016 (see 81 FR 89870 (December 13,
2016)). EPA and state documents and public comments related to the
Round 2 final designations are in the docket at regulations.gov with
Docket ID No. EPA-HQ-OAR-2014-0464 and at EPA's website for
SO2 designations at https://www.epa.gov/sulfur-dioxide-designations.
    \4\ EPA signed Federal Register notices of promulgation for
Round 3 designations on December 21, 2017 (see 83 FR 1098) (January
9, 2018) and on March 28, 2018 (see 83 FR 14597 (April 5, 2018)).
EPA and state documents and public comments related to the Round 3
final designations are in the docket at regulations.gov with Docket
ID No. EPA-HQ-OAR-2017-0003 and at EPA's website for SO2
designations at https://www.epa.gov/sulfur-dioxide-designations.
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    On August 21, 2015 (80 FR 51052), EPA separately promulgated air
quality characterization requirements in a final rule entitled ``Data
Requirements Rule for the 2010 1-Hour Sulfur Dioxide (SO2)
Primary National Ambient Air Quality Standards,'' also known as the
DRR. The DRR required state air agencies to characterize air quality,
through air dispersion modeling or monitoring, in areas associated with
sources that emitted 2,000 tons per year (tpy) or more of
SO2, or that have otherwise been listed under the DRR by EPA
or state air agencies \5\ and to provide this information to inform
EPA's future designations. For states that chose to use ambient air
monitoring to characterize air quality in areas with large
SO2 sources and satisfy the DRR, air agencies were required
to deploy and begin operation of the monitors by January 1, 2017. EPA
is required, pursuant to the March 2, 2015, court order, to finalize
designations for the last remaining areas in the country (i.e., for
those areas that deployed SO2 monitors to characterize
SO2 air quality or Round 4) by December 31, 2020.
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    \5\ In lieu of modeling or monitoring, state air agencies, by
specified dates, could elect to impose federally-enforceable
emissions limitations on those sources restricting their annual
SO2 emissions to less than 2,000 tpy, or provide
documentation that the sources have been shut down.
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    On September 5, 2019, EPA issued a guidance memorandum, from Peter
Tsirigotis, Director of the Office of Air Quality Planning and
Standards, entitled ``Area Designations for 2010 Primary Sulfur Dioxide
National Ambient Air Quality Standard--Round 4'' (also known as Round 4
SO2 Designation Guidance) to provide information on the
schedule and process for Round 4 area designations, which will address
areas such as the Beaverdam Township Area that have not yet been
designated under the NAAQS. In EPA's Round 4 SO2 Designation
Guidance, the Agency explained that EPA might consider, on a case-by-
case basis, a designation other than nonattainment for areas with
violating monitors where the source impacting the monitor has recently
become subject to and is complying with permanent and federally
enforceable SO2 emission limits and modeling of those limits
shows attainment of the 2010 SO2 NAAQS, but the monitored
design value does not yet account for these recent emissions
reductions. EPA further explained that such new SO2
emissions limits would need to be permanently federally enforceable and
in effect before EPA finalizes the designation for the area for them to
be considered in determining what available information is
representative of the current air quality conditions in the area. EPA
stated that in such circumstances, modeling of the new allowable
emissions, which should follow the Guideline on Air Quality Models
(Appendix W to 40 CFR part 51), can provide a more accurate
characterization of current conditions at the time of designation than
would monitoring of past conditions.

C. BRPP--Haywood County (Beaverdam Township)

    BRPP, a subsidiary of Evergreen Packaging, is located in the City
of Canton in Beaverdam Township, Haywood County, North Carolina, 25
kilometers (km) west of Asheville, North Carolina. The facility is
located on a 200-acre site in downtown Canton on the Pigeon River. BRPP
is a vertically integrated pulp and paper mill that produces specialty
paperboard packaging products, and its primary operations are
classified under North American Industry Classification System 322121
(Paper Except Newsprint Mills). The facility utilizes multiple boilers
to produce steam for energy generation and provide heat for the pulping
and paper making processes. The power boilers include two natural gas-
fired package boilers: No. 1 and No. 2 Natural Gas Package Boilers
(Unit ID G11050 and G11051); two coal-fired boilers: Riley Coal
(G11039) and Riley Bark Boiler (G11042); and one coal/biomass fired
boiler: No. 4 Power Boiler (G11040). The facility also operates two
recovery boilers. Through cogeneration, by utilization of steam-driven
turbines, the facility produces most of the electricity and steam
required to run internal operations. Product paper is produced from the
pulp on four paper machines. For additional facility process
description, please see North Carolina's June 24, 2020, draft source-
specific SIP revision.
    BRPP was determined to be a source subject to further
characterization pursuant to EPA's SO2 DRR because the
source emitted more than 2,000 tpy of SO2 in 2014.\6\ In
accordance with the DRR, through a letter dated June 30, 2016,\7\ DAQ
chose the monitoring pathway to characterize SO2 air quality
in the vicinity of BRPP. In the Round 3 designation recommendation to
EPA,\8\ North Carolina requested EPA designate the Beaverdam Township
Area for the 2010 1-hour SO2 NAAQS by the court-ordered
December 31, 2020 (Round 4) deadline based on 3 years (2017-2019) of
ambient air quality monitoring data at

the Canton DRR site monitor (AQS ID: 37-087-0013).
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    \6\ Pursuant to the DRR, on January 15, 2016, North Carolina
submitted to EPA a final list identifying DRR sources in the State
(i.e., sources that emitted greater than 2,000 tpy of SO2
emissions) including the BRPP facility in the Beaverdam Township
Area.
    \7\ Letter entitled ``Characterization of Air Quality Near
Facilities Subject to SO2 Data Requirements Rule'' from
Pat McCroy, Governor of North Carolina, to Heather McTeer Toney,
Regional Administrator for EPA Region 4. This letter is included in
the docket for this proposed rulemaking and can be found at https://www.epa.gov/sites/production/files/2016-07/documents/north_carolina_source_characterization.pdf.
    \8\ January 13, 2017, letter entitled ``North Carolina's
Recommendation on Boundaries for the 2010 1-hour Sulfur Dioxide
(SO2) National Ambient Air Quality Standard''. This
letter can be found at https://www.epa.gov/sites/production/files/2017-08/documents/nc-rec-3.pdf.
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    Pursuant to the DRR, DAQ sited the Canton DRR site monitor near the
area of maximum concentration (i.e., approximately 150 feet west of
BRPP's fence line) in accordance with EPA's draft monitoring technical
assistant documents (TADs) \9\ and regulatory monitoring requirements
at 40 CFR part 58. The Canton DRR site monitor began operation on
November 15, 2016, but did not begin reporting data until January 1,
2017.
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    \9\ See Draft SO2 NAAQS Designations Source-Oriented
Monitoring Technical Assistance Document,- February 2016 (https://www.epa.gov/sites/production/files/2016-04/documents/so2monitoringtad.pdf). North Carolina's 2016-2017 Monitoring Network
Plan at https://www.epa.gov/sites/production/files/2017-10/documents/ncplan2016.pdf.
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IV. Why did North Carolina submit the draft source-specific SIP
revision for BRPP?

    Subsequent to the Canton DRR site monitor commencing operation, the
monitor measured a number of exceedances of the 2010 1-hour
SO2 standard in 2017. In an effort to address the
SO2 exceedances, North Carolina and BRPP entered into a
Special Order by Consent 2017-002 (SOC) \10\ on October 9, 2017, to
implement facility process modifications, upgrade existing control
equipment, as well as to install new control equipment to comply with
the Boiler Maximum Achievable Control Technology (MACT) standard \11\
by May 20, 2019, that cumulatively resulted in control and reduction of
facility-wide SO2 emissions. The MACT standards control
hazardous air pollutants (HAPs), and BRPP's planned facility
improvements for HAPs also reduced SO2 emissions. Specific
to SO2, the SOC required BRPP to submit to DAQ a permit
application and modeling analysis by March 1, 2018, to characterize the
facility's emission sources and develop allowable SO2
emission limitations based on modeled predictions of ambient
SO2 concentrations.
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    \10\ See Attachment 1 in DAQ's June 24, 2020, source-specific
SIP revision found in the docket for this proposed action. SOC 2017-
002 was entered into pursuant to North Carolina General Statute 143-
215.110 by and between BRPP and the Environmental Management
Commission.
    \11\ 40 CFR part 63 subpart DDDDD, National Emission Standards
for Hazardous Air Pollutants for Major Sources: Industrial,
Commercial, and Institutional Boilers and Process Heaters (40 CFR
63.7480-63.7575).
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    On September 12, 2019, DAQ issued a modification to BRPP's title V
permit (Permit No. 08961T26 or T26) reflecting the requirements of the
SOC with DAQ regarding development of SO2 allowable emission
limits supported by DAQ's modeled prediction of those limits resulting
in attainment of the SO2 standard.\12\ Subsequent title V
permit modifications resulted in the current title V permit--08961T29
or T29.\13\ North Carolina is requesting EPA incorporate specific
SO2 emission limits and compliance parameters from permit
T29 into the source-specific portion of the North Carolina SIP. DAQ
established these specific SO2 emission limits and
compliance parameters pursuant to North Carolina's SIP-approved Rule
15A.NCAC.02D. 0501(c), Compliance with the National Ambient Air Quality
Standards. As stated in Section 2.2.J of permit T29, pursuant to 15A
NCAC 02D .0501(c), when controls more stringent than named in the
applicable emission standards in Section .0500 are required to prevent
violation of the ambient air quality standards or are required to
create an offset, the permit shall contain a condition requiring these
controls.
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    \12\ On February 28, 2018, BRPP submitted to DAQ a permit
application for the significant modification of its title V
operating permit in accordance with the SOC. See DAQ's June 24,
2020, source-specific SIP revision Attachment 2 entitled ``Air
Permit Application for Incorporation of SO2 Emission
Limits into the Canton Mill's Permit February 2018, Updated March
2019.''
    \13\ Permit T29 and other versions issued after T26 permit did
not modify any SO2 emissions limitations or significantly
change the monitoring, recordkeeping, reporting, or testing
requirements established in T26. See Footnote #1 above. For a
description of permit modifications, see Table 2 in North Carolina's
June 24, 2020 draft SIP submission (pages 13 through 16).
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V. What criteria are EPA using to review this SIP revision?

    EPA is evaluating North Carolina's June 24, 2020, draft source-
specific SIP revision on the basis of whether it strengthens North
Carolina's SIP. As mentioned above, there are no source-specific
SO2 requirements for BRPP in North Carolina's SIP. The new
SO2 permit limits and associated operating restrictions,
MRR, and testing compliance parameters in BRPP's title V operating
permit number T29 are authorized under 15A NCAC 02D .0501(c), which
expressly requires more stringent controls to prevent violations of
ambient air standards. EPA preliminarily concurs that these
requirements are in addition to and more stringent than generally
applicable SO2 control requirements in the SIP for BRPP and
will therefore strengthen North Carolina's SIP. The adequacy of these
SO2 permit limits and compliance parameters for providing
for attainment is not a prerequisite for approval of these requirements
into the SIP. However, EPA is working with North Carolina in the
context of the separate area designations action to analyze whether
modeling of these new permitted emission limits, once made permanently
federally enforceable, would demonstrate attainment of the NAAQS and
provide a more accurate characterization of current air quality
conditions in the Beaverdam Township Area at the time of final
designation than would the 3-year design value of the air quality
monitor for the period of 2017-2019. If EPA approves these
SO2 permit limits and associated compliance parameters into
the SIP in a timely fashion, EPA could evaluate a modeling
demonstration that these limits provide for attainment as part of the
rulemaking on the 2010 1-hour SO2 NAAQS designation for the
Beaverdam Township Area in Haywood County, North Carolina. However, if
EPA approves this SIP under CAA section 110, such approval would not
prejudge the outcome of EPA's forthcoming designation of the Beaverdam
Township Area, as that future determination is occurring as part of a
separate national notice and comment rulemaking under CAA section
107.\14\
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    \14\ In the SIP submission, NC DAQ also references supplemental
air quality modeling information NC DAQ previously provided to EPA
to support approval of North Carolina's CAA section
110(a)(2)(D)(i)(I) ``Good Neighbor'' SIP for the SO2
NAAQS. EPA is not taking any action regarding CAA section
110(a)(2)(D)(i)(I), nor is it prejudging any such submission or
action.
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VI. What did North Carolina submit in the draft source-specific SIP
revision for BRPP?

    North Carolina's June 24, 2020, draft source-specific SIP revision
specifically requests that EPA incorporate into the SIP the maximum
allowable SO2 emissions limits for seven emissions sources,
including operational and compliance requirements, from permit T29
because these units are the highest SO2 emitting sources at
the facility. These SO2 emissions limits are listed in Table
1 below. Specifically, North Carolina's June 24, 2020, draft SIP
revision requests that EPA incorporate specific permit conditions from
section 2.2.J of permit T29 including portions of Table 2.2.J.1 and
section 2.2.J.1.(c) through (i) which also include specific cross-
reference permit conditions at section 2.2.D.1. These seven emission
units are the No. 10 and 11 Recovery Furnaces (G08020 and G08021); No.
4 and 5 Lime Kilns (G09028 and G09029); and Riley Coal (G11039), Riley
Bark (G11042) and No. 4 (G11040) Power Boilers.

 Table 1--Permit T29 SO2 Emission Limits Proposed for Incorporation Into
                         the North Carolina SIP
------------------------------------------------------------------------
                                                          SO2 permitted
                                                         emission limit
                                     Emission unit       Title V  Permit
       Emission Unit ID               description       No. 08961T29 (lb/
                                                               hr)

------------------------------------------------------------------------
G08020........................  No. 10 Recovery                     28.0
                                 Furnace-BLS--normal                0.54
                                 Operation.
                                No. 10 Recovery
                                 Furnace-ULSD--startup
                                 and shutdown.
G08021........................  No. 11 Recovery                     28.0
                                 Furnace-BLS--normal                0.54
                                 operation.
                                No. 11 Recovery
                                 Furnace-ULSD--startup
                                 and shutdown.
G09028........................  No. 4 Lime Kiln.......              6.28
G09029........................  No. 5 Lime Kiln.......             10.47
G11039........................  Riley Coal Boiler.....             61.32
G11040........................  No. 4 Power Boiler....             82.22
G11042........................  Riley Bark Boiler.....             68.00
------------------------------------------------------------------------

    BRPP implemented facility improvements and control measures to
reduce SO2 emissions and corresponding ambient
SO2 concentrations to comply with the 2010 1-hour
SO2 NAAQS. Specifically, in response to the SOC, BRPP
implemented the construction, installation, and operation of multiple
process improvements from March 28, 2015 to May 20, 2019. These
improvements are discussed in Table 2 of North Carolina's June 24,
2020, draft SIP revision and summarized below.
    On March 29, 2016, DAQ issued an air construction permit
authorizing BRPP to proceed with facility-wide modifications for
purposes of compliance with the Boiler MACT standards. On May 23, 2017,
BRPP began operating two new natural gas-fired boilers, No.1 and No. 2
natural gas package boilers (G11050 and G11051). BRPP permanently shut
down coal-fired boiler, Big Bill (G11037) on July 12, 2017, and Peter G
(G11038) on November 30, 2017, to reduce SO2 emissions. The
two new natural gas package boilers replace these two coal-fired units.
On November 17, 2017, BRPP installed natural gas burners on the No. 4
Power Boiler (G11040). BRPP commenced operation of new wet scrubbers on
the Riley Coal (G11039) and the No. 4 Power Boilers on June 29, 2018,
and August 1, 2018, respectively. On November 7, 2018, BRPP completed
the conversion of auxiliary fuel for the recovery furnaces No. 10 and
No. 11 (G08020 and G08021) from No. 6 fuel oil to ultra-low sulfur
diesel (ULSD) fuel.
    On November 12, 2019, DAQ issued permit T26, which established
facility-wide enforceable SO2 emission limits for 19
emission units at BRPP that emit SO2 and associated
operating restrictions, MRR and testing compliance parameters. Table
2.2.J.1 of permit T29 lists the maximum permitted SO2
emission limits established at BRPP. These control measures implemented
at BRPP between 2017 and 2019 resulted in the reduction of actual
SO2 emissions from 5,875 tons in 2017 to 405 tons in 2019, a
93 percent reduction (reduction of 5,470 tons). Between 2018-2019 the
facility reduced emissions from 2,901 tons to 405 tons, respectively)
or 86 percent (2,496 tons).
    Below is a description of the seven major SO2-emitting
units at BRPP with emissions limits that DAQ has requested EPA
incorporate into the North Carolina SIP to ensure the modeled emission
limits are permanently federally enforceable for each emission unit:
     No. 10 and No. 11 Recovery Furnace (G08020 and G08021)--
These two emission units recover pulping chemicals from spent pulping
liquor (black liquor). Each recovery furnace is subject to a pair of
SO2 permitted limits based on ULSD and black liquor solids
(BLS) fuel usage. The ULSD is used specifically during startup and
shutdown, and the BLS is used during normal operation. During start-up,
fuel oil is burned for a period of time to warm up the furnace. The
exhaust parameters during startup differ from that of normal operation
(i.e., the exhaust flow and temperature are lower when only startup
fuel is being fired). Each recovery furnace is subject to two
enforceable SO2 emission limits for start-up and shutdown
(0.54 pounds per hour (lb/hr)) firing only ULSD fuel oil (with a
maximum sulfur content of 15 parts per million (ppm))(section
2.2.J.1.c.i.) and a separate enforceable emission limit of 28.0 lb/hr
when firing black liquor solids. These units are not equipped with
control devices and are required to conduct source testing annually
under condition 2.2.J.1.d to determine compliance with the emission
limits listed in Table 2.2.J.1. of title V permit T29 and are required
to maintain records for start-up and shutdown operations and fuel oil
supply.
     No. 4 Power, Riley Coal, and Riley Bark--These coal-fired
boilers are subject to enforceable SO2 emission limits of
82.22 lb/hr, 61.32 lb/hr and 68.00 lb/hr, respectively. These coal-
fired boilers are operated to produce steam for energy generation and
provide heat for the pulping and paper making processes. The Riley Coal
and No. 4 Power Boilers are each equipped with a caustic wet scrubber,
and the Riley Barker has a venturi-type wet scrubber with caustic
addition. For the three boilers, the wet scrubber on each boiler is
required to be operated continuously and is considered a part of the
physical and operational design of the boilers. Each scrubber is
subject to MRR, testing, and compliance certification requirements
specified in T29 permit conditions 2.2.J.1.c.i.vii and 2.2.J.1.(d)
through (i) which include Boiler MACT parametric monitoring
requirements.\15\ These three coal-fired units are not equipped with
continuous emission monitoring system (CEMS) to continuously collect,
record, and report emission data for compliance with an array of
enforceable emission standards and other regulatory requirements. In
lieu of CEMS, the permit requires BRPP to install, operate, and
maintain a

continuous monitoring system (CMS) \16\ for the wet scrubbers
parametric monitoring pursuant to the Boiler MACT monitoring
requirements at 40 CFR 63.7525 (d) through (g) and Sec.  63.7535.\17\
BRPP is required to continuously monitor the minimum scrubbing liquid
pH and recirculation liquid flowrate to verify compliance with the
applicable SO2 emissions for these three boilers. Minimum
parametric values for the scrubbing liquid pH and recirculation liquid
flowrate are established through performance testing and shown in Table
2.2 J.2 of permit T29 for the wet scrubbers (permit conditions
2.2.J.1.c.vii.A through E). The facility is required to determine the
source-specific scrubber liquid pH and flow rate calculated as 3-hour
block averages based on three 1-hour source test runs to determine
continuous compliance with the SO2 permit limit in Table 2.2
J.1 as required at condition 2.2.J.1.c.vii. Condition 2.2.J.1.c.vii.E.
requires BRPP to maintain the parametric scrubbing flow rate and pH
levels at or above the minimum levels confirmed or re-established by
the most recent performance test performed pursuant to condition
2.2.J.1.d and approved by DAQ that demonstrates compliance with the
corresponding emission limits. Maintaining the 3-hour block averages
for the pH and scrubber liquid flow at or above the minimum values is
expected to result in maintaining compliance with emission rate. For
the Riley Coal, Riley Bark, and No. 4 Power Boiler scrubbers, Table 2.2
J.2 identifies the parameters that BRPP is required to monitor--the
minimum pH and recirculation flow rate (gpm) and provides the values
for pH and recirculation flow rate (gpm) from the most recent
SO2 performance testing, and the date of the latest testing
for the three coal-fired boilers. Table 2.2 J.2 simply shows the values
confirmed or re-established by the most recent performance testing that
demonstrated compliance at the time of permit issuance as explained in
condition 2.2.J.vii.E. For purposes of the source-specific SIP
revision, condition 2.2.J.vii.E provides the enforceable provision for
parametric monitoring--BRPP is required to meet the minimum values
confirmed or re-established in the most recent performance testing.
BRPP is required to conduct periodic performance testing of the wet and
venturi scrubbers. If the currently applicable parametric values are
revised in subsequent performance testing,\18\ the newly established
values are enforceable upon approval by DAQ.\19\ Deviations from the
applicable parameters must be reported to the DAQ. For the Riley Coal
and No. 4 Power Boilers, testing is required on an annual basis or,
once a test is conducted such that the results of the test are less
than 80 percent of the SO2 emission limit, BRPP will be
required to stack test only once every five years as required at
condition 2.2.J.1.d Table 2.2 .J.3 in T29 identifies which units are
subject to performance testing as required at condition 2.2.J.1.d.
---------------------------------------------------------------------------

    \15\ Parametric monitoring is a common method to ensure
continuous compliance with an emissions limit in lieu of continuous
direct sampling/monitoring of the subject pollutant, in this case
SO2. This is a common regulatory approach used in various
Federal regulations such as the MACT and New Source Performance
Standards (NSPS). In parametric monitoring, certain performance
parameters that are critical to the proper operation of the emission
control device are continuously monitored. These parameters can
include scrubber recirculation flow, pH, and pressure drop. The
compliance parameter minimum levels are typically established during
emission source testing to ensure operating at those parameter
levels meets the underlying emission control requirement.
    \16\ 40 CFR 63.1 defines CMS as a comprehensive term that may
include, but is not limited to, continuous emission monitoring
systems, continuous opacity monitoring systems, continuous parameter
monitoring systems, or other manual or automatic monitoring that is
used for demonstrating compliance with an applicable regulation on a
continuous basis as defined by the regulation.
    \17\ Pursuant to 63.7525 (d) through (g), BRPP must operate the
CMS in accordance with the criteria on the collection of data and
recordkeeping, inspection, and validation requirements at 63.7525(d)
(except (d)(4)) and 63.7535; and must meet the criteria for the
operation of flow and pH sensors of 63.7525(e) and (g). In lieu of
the 30-day rolling average per 62.7525(d)(4), BRPP is required to
maintain the 3-hour block average for the parameters in Table
2.2.J.2 at or above the levels required in the permit.
    \18\ The initial parametric monitoring ranges identified in
Table 2.2.J.2 have already been established by performance tests;
any tests conducted subsequent to that time are used to either
confirm that the monitoring ranges are still valid or to re-
establish new ranges if the tests indicate that is necessary.
    \19\ If revised parametric values are approved based on
subsequent performance testing, the permit may be revised to change
the values shown in Table 2.2 J.2, pursuant to condition 2.2.J.e.
---------------------------------------------------------------------------

     No. 4 and No. 5 Lime Kilns--The No. 4 Lime Kiln (G09028)
is subject to an enforceable SO2 emissions limit of 6.28 lb/
hr and is equipped with a wet scrubber. The No. 5 Lime Kiln (G09029) is
subject to an enforceable SO2 emissions limit of 10.47 lb/hr
and equipped with a venturi-type wet scrubber.\20\ These two emission
units are part of the Kraft pulp mill chemical recovery cycle and,
following startup, they calcine lime mud (CaCO3) to produce
lime product (CaO). During normal operation, the kilns emit very little
SO2 because the calcium in the lime mud acts as a natural
scrubbant by absorbing sulfur. The wet scrubbers are primarily in place
to control emissions of particulate matter (PM) and total reduced
sulfur (TRS), as required at condition 2.1.O.1, but also control
emissions of SO2 during startup and can provide some control
of SO2 during normal operation. The lime kilns burn a
combination of No. 6 fuel oil and natural gas during both startup and
normal operation, with the majority of the heat input coming from
natural gas. The kilns go through startup approximately once per month
for Kiln No. 4 and every other month for Kiln No. 5. To ensure
compliance with the hourly SO2 emissions limit, BRPP is
required to continuously operate the scrubbers and comply with the
operating restrictions, testing, recordkeeping, and reporting
requirements set forth in conditions 2.2.J.1.d through (i) including
Table 2.2 J.3. In the case of the lime kilns, the parametric monitoring
requirements for SO2 in permit T29 refer to pre-existing air
permit and regulatory requirements for proper scrubber operation and
air emissions control in condition 2.2.D.1, which establish conditions
for the Federal MACT Standard 40 CFR part 63 Subpart MM ``National
Emission Standards for Hazardous Air Pollutants (NESHAP) for Chemical
Recovery Combustion Sources.'' As such, the facility is required to
operate the scrubbers for PM control (which also results in
SO2 control) by regulations that are in addition to the
SO2 control requirements specified in condition 2.2.J of
permit T29. These requirements, namely conditions 2.2.D.1(f) through
(r) as they apply to lime kilns #4 and 5, are cross referenced in
condition 2.2.J.1 of the permit as the basis to ensure compliance with
the SO2 emission limits in Table 2.2 J.1. Thus, BRPP must
install, calibrate, maintain, and operate a continuous parameter
monitoring system that can be used to determine and record the pressure
drop across each scrubber and the scrubbing liquid flow rates. These
parameters are continuously monitored, recorded, and reduced to 3-hour
averages for comparison to the minimum operating limits established in
accordance with condition 2.2.D.1.h and those in Table 2.2 D.2.
Parameters must be maintained above the minimum established values.
Deviations from the established parameters must be reported to DAQ. To
verify compliance with the emission limitations in permit T29, BRPP is
required to perform annual testing or, once a test is conducted such
that the results of the test are less than 50 percent of the emission
limit, the facility is required to stack test only once every five
years pursuant to condition 2.2.J.1.d. This reduction in testing
frequency for sources with control devices, monitored operating
parameter limits, and margins of

compliance are consistent with the federal rules applicable to the
facility (i.e., NSPS, MACT, compliance assurance monitoring, and title
V) and EPA guidance. BRPP is in the process of upgrading its scrubbers
for lime kilns 4 and 5. Thus, in the permit T29, Table 2.2 D-2
establishes operating parameter limits for operations prior to and
after the upgrades. For lime kiln #4, recirculation liquid flow and
differential pressure must meet the minimum operating limits
established in Table 2.2 D-2 identified as applicable prior to the
upgrade. Following the upgrade, BRPP will be required to meet the
minimum values for these parameters recommended by the manufacturer as
an interim measure and will be required to conduct testing to establish
site-specific limits. Similarly, for lime kiln #5, the permit requires
BRPP to meet minimum operating limits in Table 2.2 D-2 prior to the
upgrade. Lime kiln #5 uses a venturi-type scrubber and is required to
meet minimum limits for venturi liquid flow, quench liquid flow, and
differential pressure. Again, following the upgrade, this scrubber is
required to meet manufacturer's recommended minimums for these
parameters as an interim measure and conduct testing to establish site-
specific limits. NC DAQ interprets condition 2.2.J.1.c.iii to require
BRPP to meet the operating limits in Table 2.2 D-2, including any
operating limits established through testing under 2.2.D.1.h, in
accordance with the monitoring exceedance provision 2.2.D.1.j., to
ensure the SO2 emission limitations in Table 2.2 J.1 will
not be exceeded for these lime kilns. The scrubber-specific minimum
monitoring parameters from performance tests approved by the DAQ will
supersede the manufacturer's recommended limits without requiring a
permit or SIP revision.
---------------------------------------------------------------------------

    \20\ Source testing was conducted on each lime kiln during
normal operation, and the source test results showed that the
emission rate for each kiln was much lower than the emission rate,
calculated using the emission factor that was used to establish the
SO2 limit. The permitted emission rate is therefore
conservative, and normal emission rates are expected to be quite
low, based on stack test results, and contribute little to the
facility's ambient SO2 impact.
---------------------------------------------------------------------------

VII. Incorporation by Reference

    In this document, EPA is proposing to include, in a final EPA rule,
regulatory text that includes incorporation by reference. In accordance
with requirements of 1 CFR 51.5, EPA is proposing the incorporation by
reference into North Carolina's SIP the conditions identified below
from title V operating Permit No. 08961T29 issued by DAQ to BRPP with
an effective date of June 2, 2020. These permit conditions relate to
enforcement of and compliance with SO2 emission limitations
at BRPP for seven SO2 emitting units. Specifically, DAQ has
requested EPA incorporate into the North Carolina SIP condition 2.2.J.b
and the lb/hr SO2 emission limitations in Table 2.2 J.1 for
the No. 10 and No. 11 Recovery Furnaces (G08020 and G08021), No. 4 and
No. 5 Lime Kilns (G09028 and G09029) and Riley Bark, Riley Coal, and
No. 4 Power Boilers (G11042, G11039 and G11040). North Carolina has
also requested EPA incorporate into the SIP the following operating,
MRR, and testing conditions to ensure compliance with SO2
emission limitations identified in Table 2.2 J.1 of condition
2.2.J.1.b: (1) For the No. 10 and No. 11 Recovery Furnaces (G08020 and
G08021)--condition 2.2.J.1.c.i; (2) for No. 4 and No. 5 Lime Kilns
(G09028 and G09029)--condition 2.2.J.1.c.iii; condition 2.2 D.1.f.ii;
Table 2.2.D-2; condition 2.2 D.1.h; condition 2.2 D.1.i.ii; condition
2.2 D.1.j.ii; conditions 2.2 D.1.l.ii, 2.2 D.1.l.iii, 2.2 D.1.l.iv, 2.2
D.1.l.v, 2.2 D.1.l.vii, and 2.2 D.1.l.viii; condition 2.2 D.1.m;
condition 2.2 D.1.n; condition 2.2 D.1.o, and condition 2.2 D.1.p.iii;
(3) for the Riley Bark, Riley Coal and No. 4 Power Boilers (G11042,
G11039 and G11040)--condition 2.2.J.1.c.vii, including Table 2.2 J.2;
(4) Testing--condition 2.2.J.1.d and Table.2.2 J.3, (5) condition
2.2.J.1.e; (6) Recordkeeping--conditions 2.2 J.1.g.i, 2.2 J.1.g.ii, and
2.2 J.1.g.iii; (7) Reporting--conditions 2.2.J.1.h and 2.2.J.1.i. EPA
has made, and will continue to make, these materials generally
available through www.regulations.gov and at the EPA Region 4 Office
(please contact the person identified in the FOR FURTHER INFORMATION
CONTACT section of this preamble for more information).

VIII. Proposed Action

    EPA is proposing to approve SO2 emissions limits and
associated operating restrictions, MRR, and testing compliance
parameters from BRPP's title V operating permit T29 into the North
Carolina SIP. EPA confirms that the SO2 emissions limits and
associated operating restrictions, MRR, and testing compliance
parameters for BRPP are more stringent than requirements that are
currently approved into the North Carolina SIP for BRPP. By
incorporating these SO2 permit limits and associated
operating restrictions, MRR, and testing compliance parameters into the
North Carolina SIP, these requirements will become permanently
federally enforceable and strengthen the North Carolina SIP.

IX. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. This action merely
proposes to approve state law as meeting Federal requirements and does
not impose additional requirements beyond those imposed by state law.
For that reason, this proposed action:
     Is not a significant regulatory action subject to review
by the Office of Management and Budget under Executive Orders 12866 (58
FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    The SIP is not approved to apply on any Indian reservation land or
in any other area where EPA or an Indian tribe has demonstrated that a
tribe has jurisdiction. In those areas of Indian country, the rule does
not have tribal implications as specified by Executive Order 13175 (65
FR 67249, November 9, 2000), nor will it impose substantial direct
costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Reporting and recordkeeping
requirements, Sulfur oxides.

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

    Dated: July 31, 2020.
Mary Walker,
Regional Administrator, Region 4.
[FR Doc. 2020-17231 Filed 8-28-20; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: July 18, 2006 (Volume 71, Number 137)]
[Notices]
[Page 40760-40762]
[DOCID:fr18jy06-89]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54131; File No. SR-Amex-2006-66]

Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Short Term Option Series Pilot Program

July 12, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 10, 2006, the American Stock Exchange LLC (``Exchange'' or
``Amex'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. Amex has
designated this proposal as noncontroversial under

Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.

 I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    The Exchange proposes to amend Amex Rules 903(h) and 903C(a)(v) to
extend until July 12, 2007, its pilot program for listing and trading
Short Term Option Series (``Pilot Program''). The text of the proposed
rule change is available on the Exchange's Web site (http://www.amex.com
), at the Exchange's principal office, and at the

Commission's Public Reference Room.

 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 Exchange 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 these 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 aspects of such
statements.

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

 1. Purpose
    The purpose of the proposed rule change is to extend the Pilot
Program for an additional year, through July 12, 2007.\5\ The Pilot
Program allows Amex to list and trade Short Term Option Series, which
expire one week after the date on which a series is opened. Under the
Pilot Program, Amex may select up to five approved options classes on
which Short Term Option Series could be opened.\6\ A series could be
opened on any Friday that is a business day and would expire on the
next Friday that is a business day. If a Friday were not a business
day, the series could be opened (or would expire) on the first business
day immediately prior to that Friday. Short Term Option Series would be
P.M.-settled, except for Short Term Option Series on indexes, which
would be A.M.-settled.
---------------------------------------------------------------------------

    \5\ The Commission approved the Pilot Program on July 12, 2005.
See Securities Exchange Act Release No. 52014 (July 12, 2005), 70 FR
41244 (July 18, 2005) (SR-Amex-2005-035). Under Amex Rules 903(h)
and 903C(a)(v), the Pilot Program is scheduled to expire on July 12,
2006.
    \6\ A Short Term Option Series could be opened in any options
class that satisfied the applicable listing criteria under Amex
rules (i.e., stock options, options on exchange traded funds as
defined under Commentary .06 of Amex Rule 915, or options on
indexes). The Exchange could also list and trade Short Term Option
Series on any options class that is selected by another exchange
that employs a similar pilot program.
---------------------------------------------------------------------------

    For each class selected for the Pilot Program, the Exchange usually
would open five Short Term Option Series in that class for each
expiration date. The strike price of each Short Term Option Series
would be fixed at a price per share, with at least two strike prices
above and two strike prices below the value of the underlying security
or calculated index value at about the time that the Short Term Option
Series is opened. Amex would not open a Short Term Option Series in the
same week that the corresponding monthly options series is expiring,
because the monthly options series in its last week before expiration
is functionally equivalent to the Short Term Option Series. The
intervals between strike prices on a Short Term Option Series would be
the same as the intervals between strike prices on the corresponding
monthly options series.
    The Exchange believes that Short Term Option Series can provide
investors with a flexible and valuable tool to manage risk exposure,
minimize capital outlays, and be more responsive to the timing of
events affecting the securities that underlie option contracts. At the
same time, the Exchange is cognizant of the need to be cautious in
introducing a product that can increase the number of outstanding
strike prices. While the Exchange has not listed any Short Term Option
Series during the first year of the Pilot Program, there has been
significant investor interest in trading short-term options at the
Chicago Board Options Exchange (``CBOE'').\7\ To have the ability to
respond to potential customer interest, and to remain competitive, the
Exchange proposes the continuation of the Pilot Program.
---------------------------------------------------------------------------

    \7\ CBOE filed a report with the Commission on June 13, 2006,
stating that CBOE has listed Short Term Options Series in four
different options classes. See Securities Exchange Act Release No.
53984 (June 14, 2006), 71 FR 35718 (June 21, 2006) (extending CBOE's
Short Term Option Series pilot program).
---------------------------------------------------------------------------

    In the original proposal to establish the Pilot Program, the
Exchange stated that if it were to propose an extension, expansion, or
permanent approval of the program, the Exchange would submit, along
with any filing proposing such amendments to the program, a report
providing an analysis of the Pilot Program covering the entire period
during which the Pilot Program was in effect.\8\ Since the Exchange did
not list any One Week Options Series during the first year of the Pilot
Program, there is no data available to compile such a report at this
time. Therefore the Exchange did not submit a report with its proposal
to extend the Pilot Program.
---------------------------------------------------------------------------

    \8\ See Form 19b-4 for File No. SR-Amex-2005-035, filed March
23, 2005.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that Short Term Option Series could stimulate
customer interest in options and provide a flexible and valuable tool
to manage risk exposure, minimize capital outlays, and be more
responsive to the timing of events affecting the securities that
underlie option contracts. For these reasons, the Exchange believes
that the proposed rule change is consistent with Section 6(b) of the
Act \9\ in general and furthers the objectives of Section 6(b)(5) of
the Act \10\ in particular in that it is designed to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is 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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \11\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\12\ Because the foregoing

proposed rule change (i) does not significantly affect the protection
of investors or the public interest; (ii) does not impose any
significant burden on competition; and (iii) does not 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, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ Rule 19b-4(f)(6)(iii) requires the Exchange to give written
notice to the Commission of its intent to file the proposed rule
change five business days prior to filing. The Commission has
determined to waive the five-day pre-filing requirement for this
proposal.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative
delay if such action is consistent with the protection of investors and
the public interest. The Exchange has asked the Commission to waive the
operative delay to permit the Pilot Program extension to become
effective prior to the 30th day after filing.
    The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because doing so will allow the benefits of the Pilot Program to
continue without interruption.\14\ Therefore, the Commission designates
that the proposal will become operative on July 12, 2006.\15\
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    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \15\ As set forth in the Exchange's original filing proposing
the Pilot Program, if the Exchange were to propose an extension,
expansion, or permanent approval of the Pilot Program, the Exchange
would submit, along with any filing proposing such amendments to the
program, a report that would provide an analysis of the Pilot
Program covering the entire period during which the Pilot Program
was in effect. The report would include, at a minimum: (1) Data and
written analysis on the open interest and trading volume in the
classes for which Short Term Option Series were opened; (2) an
assessment of the appropriateness of the options classes selected
for the Pilot Program; (3) an assessment of the impact of the Pilot
Program on the capacity of Amex, OPRA, and market data vendors (to
the extent data from market data vendors is available); (4) any
capacity problems or other problems that arose during the operation
of the Pilot Program and how Amex addressed such problems; (5) any
complaints that Amex received during the operation of the Pilot
Program and how Amex addressed them; and (6) any additional
information that would assist in assessing the operation of the
Pilot Program. The report must be submitted to the Commission at
least 60 days prior to the expiration date of the Pilot Program. See
Form 19b-4 for File No. SR-Amex-2005-035, filed March 23, 2005.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the 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.

 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 No. SR-Amex-2006-66 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Amex-2006-66. 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 inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the Exchange. 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-Amex-2006-66 and should be submitted on or before August
8, 2006.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-11326 Filed 7-17-06; 8:45 am]

BILLING CODE 8010-01-P