[Federal Register: October 16, 2007 (Volume 72, Number 199)]
[Rules and Regulations]
[Page 58528-58534]
[DOCID:fr16oc07-16]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2007-0376; FRL-8477-4]

Approval of Implementation Plans of Illinois: Clean Air
Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving a revision to the Illinois State
Implementation Plan (SIP) submitted on September 14, 2007. This
revision addresses the requirements of EPA's Clean Air Interstate Rule
(CAIR), promulgated on May 12, 2005, and subsequently revised on April
28, 2006, and December 13, 2006. EPA is determining that the SIP
revision fully meets the CAIR requirements for Illinois. Therefore, as
a consequence of the SIP approval, EPA will also withdraw the CAIR
Federal Implementation Plans (CAIR FIPs) concerning sulfur dioxide
(SO2), nitrogen oxides (NOX) annual, and
NOX ozone season emissions for Illinois. The CAIR FIPs for
all States in the CAIR region were promulgated on April 28, 2006 and
subsequently revised on December 13, 2006.
    CAIR requires States to reduce emissions of SO2 and
NOX that significantly contribute to, and interfere with
maintenance of, the national ambient air quality standards (NAAQS) for
fine particulates (PM2.5) and/or ozone in any downwind
state. CAIR establishes State budgets for SO2 and
NOX and requires States to submit SIP revisions that
implement these budgets in States that EPA concluded did contribute to
nonattainment in downwind states. States have the flexibility to choose
which control measures to adopt to achieve the budgets, including
participating in the EPA-administered cap-and-trade programs. In the
SIP revision that EPA is approving, Illinois meets CAIR requirements by
participating in the EPA-administered cap-and-trade programs addressing
SO2, NOX annual, and NOX ozone season
emissions.

DATES: This direct final rule will be effective December 17, 2007,
unless EPA receives adverse comments by November 15, 2007. If adverse
comments are received, EPA will publish a timely withdrawal of the
direct final rule in the Federal Register informing the public that the
rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-
OAR-2007-0376, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for

submitting comments.
    2. E-mail<EMAIL_ADDRESS>    3. Fax:<PHONE_NUMBER>.
    4. Mail: ``EPA-R05-OAR-2007-0376'', John M. Mooney, Chief, Criteria
Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental
Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604.
    5. Hand Delivery or Courier: John M. Mooney, Chief, Criteria
Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental
Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604.
Such deliveries are only accepted during the Regional Office's normal
hours of operation. The Regional Office's official hours of business
are Monday through Friday, 8:30 to 4:30, excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2007-0376. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit through http://www.regulations.gov
 or e-mail, information that you consider to be CBI

or otherwise protected. The http://www.regulations.gov website is an

``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be

automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters and any form of encryption and should be
free of any defects or viruses. For additional information about EPA's
public docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm
.

    Docket: All documents in the electronic docket are listed in the
http:// www.regulations.gov index. Although listed in the index, some

information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov
 or in hard copy at the Environmental Protection

Agency, Region 5, Air and Radiation Division, 77 West Jackson
Boulevard, Chicago, Illinois 60604. EPA requests that if at all
possible, you contact John Summerhays, Environmental Scientist, at
(312) 886-6067 to schedule your inspection. The Regional Office's
official hours of business are Monday through Friday, 8:30 to 4:30,
excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: John Summerhays, Environmental
Scientist, Criteria Pollutant Section, Air Programs Branch (AR-18J),
Environmental Protection Agency, Region 5, 77 West Jackson Boulevard,
Chicago, Illinois 60604,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. What Actions Is EPA Taking?
II. What Is the Regulatory History of CAIR and the CAIR FIPs?
III. What are the General Requirements of CAIR and the CAIR FIPs?
IV. What are the Types of CAIR SIP Submittals?
V. Description of Illinois' CAIR SIP Submittal
    A. The Background of Illinois' Submittal
    B. Summary of Illinois' Rules
VI. Analysis of Illinois' CAIR SIP Submittal
    A. State Budgets for Allowance Allocations
    B. CAIR Cap-and-Trade Programs
    C. Applicability Provisions for non-EGU NOX SIP Call
Sources
    D. NOX Allowance Allocations
    E. Allocation of NOX Allowances From Compliance
Supplement Pool
    F. Individual Opt-in Units
VII. EPA Actions
VIII. Statutory and Executive Order Reviews

I. What Actions Is EPA Taking?

    EPA is approving a revision to the Illinois SIP, submitted in final
form on September 14, 2007, reflecting rules adopted by Illinois on
August 23, 2007. In its SIP revision, Illinois meets CAIR requirements
by requiring certain electric generating units (EGUs) to participate in
the EPA-administered State CAIR cap-and-trade programs addressing
SO2, NOX annual, and NOX ozone season
emissions. EPA has determined that the SIP meets the applicable
requirements of CAIR. As a consequence of the SIP approval, the
Administrator of EPA will also issue a final rule to withdraw the FIPs
concerning SO2, NOX annual, and NOX
ozone season emissions for Illinois. That action will remove and
reserve 40 CFR 52.745 and 52.746. The withdrawal of the CAIR FIPs for
Illinois is a conforming amendment that must be made once the SIP
approval is effective because EPA's authority to issue the FIPs was
premised on a deficiency in the SIP for Illinois. Once the SIP approval
becomes effective, EPA no longer has authority for the FIPs. Thus, EPA
will not have the option of maintaining the FIPs following the full SIP
approval. Accordingly, EPA does not intend to offer an opportunity for
a public hearing or an additional opportunity for written public
comment on the withdrawal of the FIPs.

II. What is the Regulatory History of CAIR and the CAIR FIPs?

    CAIR was published by EPA on May 12, 2005 (70 FR 25162). In this
rule, EPA determined that 28 States and the District of Columbia
contribute significantly to nonattainment and interfere with
maintenance of the NAAQS for PM2.5 and/or 8-hour ozone in
downwind States in the eastern part of the country. As a result, EPA
required those upwind States to revise their SIPs to include control
measures that reduce emissions of SO2, which is a precursor
to PM2.5 formation, and/or NOX, which is a
precursor to both ozone and PM2.5 formation. For
jurisdictions that contribute significantly to downwind PM2.5
nonattainment, CAIR sets annual State-wide emission reduction
requirements (i.e., budgets) for SO2 and annual State-wide
emission reduction requirements for NOX. Similarly, for
jurisdictions that contribute significantly to 8-hour ozone
nonattainment, CAIR sets State-wide emission reduction requirements for
NOX for the ozone season (May 1st to September 30th). Under
CAIR, States may implement these reduction requirements by
participating in the EPA-administered cap-and-trade programs or by
adopting any other control measures.
    CAIR explains to subject States what must be included in SIPs to
address the requirements of section 110(a)(2)(D) of the Clean Air Act
(CAA) with regard to interstate transport with respect to the 8-hour
ozone and PM2.5 NAAQS. EPA made national findings, effective
on May 25, 2005, that the States had failed to submit SIPs meeting the
requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3
years after the promulgation of the 8-hour ozone and PM2.5
NAAQS. These findings started a 2-year clock for EPA to promulgate a
FIP to address the requirements of section 110(a)(2)(D). Under CAA
section 110(c)(1), EPA may issue a FIP anytime after such findings are
made and must do so within two years unless a SIP revision correcting
the deficiency is approved by EPA before the FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all States covered by
CAIR in order to ensure the emissions reductions required by CAIR are
achieved on schedule. Each CAIR State is subject to the FIPs until the
State fully adopts, and EPA approves, a SIP revision meeting the
requirements of CAIR. The CAIR FIPs require EGUs to participate in the
EPA-administered CAIR SO2, NOX annual, and
NOX ozone season trading programs, as appropriate. The CAIR
FIP SO2, NOX annual, and NOX ozone
season trading programs impose essentially the same requirements as,
and are integrated with, the respective CAIR SIP trading programs. The
integration of the FIP and SIP trading programs means that these
trading programs will work together to create effectively a single
trading program for each regulated pollutant (SO2, NOX
annual, and NOX ozone season) in all States covered by the
CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also
allow States to submit abbreviated SIP revisions that, if approved by
EPA, will automatically replace or supplement certain CAIR FIP

provisions (e.g., the methodology for allocating NOX
allowances to sources in the State), while the CAIR FIP remains in
place for all other provisions.
    On April 28, 2006, EPA published two additional CAIR-related final
rules that added the States of Delaware and New Jersey to the list of
States subject to CAIR for PM2.5 and announced EPA's final
decisions on reconsideration of five issues, without making any
substantive changes to the CAIR requirements.

III. What are the General Requirements of CAIR and the CAIR FIPs?

    CAIR establishes State-wide emission budgets for SO2 and
NOX and is to be implemented in two phases. The first phase
of NOX reductions starts in 2009 and continues through 2014,
while the first phase of SO2 reductions starts in 2010 and
continues through 2014. The second phase of reductions for both
NOX and SO2 starts in 2015 and continues
thereafter. CAIR requires States to implement the budgets by either:
(1) Requiring EGUs to participate in the EPA-administered cap-and-trade
programs; or (2) adopting other control measures of the State's
choosing and demonstrating that such control measures will result in
compliance with the applicable State SO2 and NOX
budgets.
    The May 12, 2005, and April 28, 2006, CAIR rules provide model
rules that States must adopt (with certain limited changes, if desired)
if they want to participate in the EPA-administered trading programs.
    With two exceptions, only States that choose to meet the
requirements of CAIR through methods that exclusively regulate EGUs are
allowed to participate in the EPA-administered trading programs. One
exception is for States that adopt the opt-in provisions of the model
rules to allow non-EGUs individually to opt into the EPA-administered
trading programs. The other exception is for States that include all
non-EGUs from their NOX SIP Call trading programs in their
CAIR NOX ozone season trading programs.

IV. What Are the Types of CAIR SIP Submittals?

    States have the flexibility to choose the type of control measures
they will use to meet the requirements of CAIR. EPA anticipates that
most States will choose to meet the CAIR requirements by selecting an
option that requires EGUs to participate in the EPA-administered CAIR
cap-and-trade programs. For such States, EPA has provided two
approaches for submitting and obtaining approval for CAIR SIP
revisions. States may submit full SIP revisions that adopt the model
CAIR cap-and-trade rules. If approved, these SIP revisions will fully
replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP
revisions. These SIP revisions will not replace the CAIR FIPs; however,
the CAIR FIPs provide that, when approved, the provisions in these
abbreviated SIP revisions will be used instead of or in conjunction
with, as appropriate, the corresponding provisions of the CAIR FIPs
(e.g., the NOX allowance allocation methodology).
    A State submitting a full SIP revision may either adopt regulations
that are substantively identical to the model rules or incorporate by
reference the model rules. CAIR provides that States may only make
limited changes to the model rules if the States want to participate in
the EPA-administered trading programs. A full SIP revision may change
the model rules only by altering their applicability and allowance
allocation provisions to:
    1. Include NOX SIP Call trading sources that are not
EGUs under CAIR in the CAIR NOX ozone season trading
program;
    2. Provide for State allocation of NOX annual or ozone
season allowances using a methodology chosen by the State;
    3. Provide for State allocation of NOX annual allowances
from the compliance supplement pool (CSP) using the State's choice of
allowed, alternative methodologies; or
    4. Allow units that are not otherwise CAIR units to opt
individually into the CAIR SO2, NOX annual, or
NOX ozone season trading programs under the opt-in
provisions in the model rules.
    An approved CAIR full SIP revision addressing EGUs' SO2,
NOX annual, or NOX ozone season emissions will
replace the CAIR FIP for that State for the respective EGU emissions.

V. Description of Illinois' CAIR SIP Submittal

A. The Background of Illinois' Submittal

    On March 29, 2007, Illinois submitted draft rules and voluminous
supporting material for addressing CAIR requirements. These rules had
been proposed by the Illinois Environmental Protection Agency (Illinois
EPA) to the Illinois Pollution Control Board (IPCB) on May 30, 2006.
(IPCB is the board responsible for adopting environmental regulations
in Illinois.) The IPCB held hearings on these proposed rules on October
10 through October 12, 2006, and again on November 28 and November 29,
2006. Following these hearings and following discussions with
interested parties, the Illinois EPA recommended a revised set of rules
to the IPCB on January 5, 2007. These rules constitute the regulatory
portion of the submittal by Illinois on March 29, 2007. In addition to
the rules, Illinois' March 2007 submittal included voluminous
supporting material used in the state rulemaking process to support the
rules. This material included such documents as transcripts of hearings
and Alternative Control Techniques documents describing NOX
control options. IPCB then solicited further comment on refined
versions of the rules. On June 29, 2007, Illinois EPA submitted
comments on the ``first notice'' rules to EPA, including recommended
rule language.
    IPCB adopted final rules on August 23, 2007, effective August 31,
2007. IPCB makes the full set of relevant documents, including the
final rules, available on its Web site, either by accessing http://www.ipcb.state.il.us/
 and selecting docket R2006-026 or by directly

accessing http://www.ipcb.state.il.us/cool/external/CaseView2.asp?referer=coolsearch&case=R2006-026
.

    Illinois EPA submitted the final rules by a submittal postmarked
September 14, 2007. Although the submittal letter was undated, EPA
considers this package to have been submitted on the postmark date,
i.e., September 14, 2007. This submittal also included interim draft
rules and other materials developed during the IPCB rulemaking process
after March 2007. The focus of EPA's rulemaking is on whether the final
rules that Illinois adopted would satisfy EPA's requirements under
CAIR.

B. Summary of Illinois' Rules

    Part 225 of Title 35 of the Illinois Administrative Code, entitled
``Control Of Emissions From Large Combustion Sources,'' includes
numerous provisions addressing utility emissions of SO2,
NOX, and mercury. These rules are designed to address the
requirements of both the CAIR and the Clean Air Mercury Rule (CAMR).
Today's action addresses the CAIR portions of the Part 225 rules.
    Part 225 includes six subparts: Subpart A, entitled ``General
Provisions,'' Subpart B, entitled ``Control Of Mercury Emissions From
Coal-Fired Electric Generating Units,'' Subpart C, entitled ``CAIR
SO2 Trading Program,'' Subpart D, entitled ``CAIR
NOX Annual Trading Program,'' Subpart E, entitled ``CAIR
NOX Ozone Season Trading Program, and Subpart F, entitled
``Combined Pollutant Standards.'' The CAIR provisions are

addressed in subparts A, C, D, and E. Subpart B, which addresses
mercury, was not included in Illinois' submittal and was submitted
separately. Subpart F was included in Illinois' September 2007
submittal but may be considered a part of Illinois' mercury plan; EPA
will address Subpart F as part of EPA's separate rulemaking addressing
Illinois' mercury rules.
    Subpart A contains general provisions, most notably including
definitions and incorporation by reference. The definitions reflect the
definitions given in the CAIR model rules and are included for terms
that are used in Illinois' rules. (Although some definitions are
pertinent to the regulation of mercury, today's action only addresses
the adequacy of these definitions for CAIR purposes. Separate
rulemaking will address the adequacy of these definitions for mercury
regulation purposes.) The incorporation by reference incorporates
almost the entirety of the CAIR model rules. With respect to the
SO2 program in 40 CFR part 96, Illinois' rules incorporate
subpart AAA (CAIR SO2 Trading Program General Provisions);
40 CFR part 96, subpart BBB (CAIR Designated Representative for CAIR
SO2 Sources); 40 CFR part 96, subpart FFF (CAIR
SO2 Allowance Tracking System); 40 CFR part 96, subpart GGG
(CAIR SO2 Allowance Transfers); and 40 CFR part 96, subpart
HHH (Monitoring and Reporting), with two exceptions. Illinois does not
incorporate 40 CFR 96.204 (entitled ``Applicability''), and 96.206
(entitled ``Standard requirements''). For these two sections, Illinois
instead has adopted language that is effectively identical to the
language in EPA's model rule. Illinois also has adopted language
addressing permitting requirements instead of incorporating subpart CCC
by reference, and Illinois does not provide for opt-ins and therefore
neither incorporates subpart III by reference nor adopts any similar
state language. Illinois' incorporation by reference for the ozone
season NOX program and for the annual NOX program
closely parallels the incorporation by reference for the SO2
program. EPA's model rules for NOX, unlike the model rules
for SO2, have allowance allocation provisions (in 40 CFR
part 96, subparts E and EE, respectively, and in related provisions in
40 CFR 96.105(b)(2) and 96.305(b)(2)). However, Illinois did not
incorporate these allocation provisions by reference and instead
adopted its own provisions.
    Subpart C of Illinois' rule addresses the SO2
requirements of CAIR. This subpart includes six sections, entitled,
``Purpose,'' ``Applicability,'' ``Compliance Requirements,'' ``Appeal
Procedures,'' ``Permit Requirements,'' and ``Trading Program''
respectively. The purpose is to regulate SO2 emissions in
accordance with EPA's CAIR requirements. The requirements apply in
general to boilers and combustion turbines that serve generators with
capacity to produce greater than 25 megawatts, with an exemption for
some cogeneration units and solid waste incineration units. Units
subject to these rules must comply with allowance holding requirements
and emissions monitoring requirements incorporated by reference from 40
CFR part 96. Procedures for appealing EPA decisions in the
SO2 trading program are the procedures given in 40 CFR part
78. Owners or operators of units subject to the program must apply for
a permit that will specify the requirements under the program that will
apply to the source. Allowance allocations are the allocations
determined in the Acid Rain Program under title IV of the CAA. After
the end of each year starting with 2010, allowances held by a source
are deducted to cover the source's emissions, according to retirement
ratios that EPA has mandated.
    Subpart D of Illinois' rules addresses the NOX annual
trading program of the CAIR. The sections described above in Subpart C
(Illinois' SO2 program rules) are also present in Subpart D,
using nearly identical language. In addition, Subpart D includes
extensive sections addressing allowance allocations. Unlike the
SO2 program, which relies on allowances issued under the
Acid Rain Program, the annual NOX program relies on newly
issued allowances. EPA gives states substantial flexibility in the
allocation of NOX allowances so long as the total number of
allowances allocated is within the state's budget that EPA has
established and so long as certain timing requirements concerning the
determination and submission to the Administrator of allocations are
met. Section VI.D below describes Illinois' NOX allowance
allocation systems in more detail.
    Subpart E of Illinois' rules address the NOX ozone
season trading program. These rules are again quite similar to the
rules in Subparts C and D (for the SO2 and the annual
NOX trading programs, respectively), including rules
providing for allowance allocations that are quite similar to the
provisions in Subpart D. Again, this allocation system is described in
more detail in section VI.D below.
    The CAIR NOX ozone season program is designed to replace
the program known as the NOX SIP Call trading program.
Therefore, a state like Illinois that is subject to both sets of
requirements must adopt CAIR rules that suitably replace the state's
NOX SIP Call trading program rules. Most notably, the state
must adopt control measures that will achieve the amount of
NOX emission reductions that were projected to be achieved
by sources that were covered by the NOX SIP Call trading
program but that are not covered by the CAIR NOX ozone
season trading program. In addition, such states must address several
transition issues such as the status of allowances issued under the
NOX SIP Call that remain in circulation after the
NOX SIP Call ends.
    Illinois' CAIR submittal does not fully address the replacement of
the NOX SIP Call. Illinois' CAIR NOX ozone season
trading program addresses the emissions from EGUs and do not address
emissions from non-EGUs that are covered by the NOX SIP Call
trading program. Non-EGUs in Illinois will thus not be part of the CAIR
NOX ozone season trading program. Illinois is instead
pursuing ``reasonably available control technology (RACT) rules'' that
would subject the non-EGUs to specific emission limits. Illinois' rules
also do not fully address the issues relating to transition from the
NOX SIP Call program to the CAIR program.

VI. Analysis of Illinois' CAIR SIP Submittal

A. State Budgets for Allowance Allocations

    The CAIR NOX annual and ozone season budgets were
developed from historical heat input data for EGUs. Using these data,
EPA calculated annual and ozone season regional heat input values,
which were multiplied by 0.15 lb/mmBtu, for phase 1, and 0.125 lb/
mmBtu, for phase 2, to obtain regional NOX budgets for 2009-
2014 and for 2015 and thereafter, respectively. EPA derived the State
NOX annual and ozone season budgets from the regional
budgets using State heat input data adjusted by fuel factors.
    The CAIR State SO2 budgets were derived by discounting
the tonnage of emissions authorized by annual allowance allocations
under the Acid Rain Program. Under CAIR, each allowance allocated in
the Acid Rain Program for the years in phase 1 of CAIR (2010 through
2014) authorizes 0.50 ton of SO2 emissions in the CAIR
trading program, and each Acid Rain Program allowance allocated for the
years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of
SO2 emissions in the CAIR trading program.
    In today's action, EPA is approving Illinois' SIP revision that
adopts the

NOX budgets and conforms with the SO2 budgets
established for the State in CAIR. For NOX annual emissions,
these budgets are 76,230 tons for each year from 2009 to 2014 and
63,525 tons for each year thereafter. For NOX ozone season
emissions these budgets are 30,701 for each year from 2009 to 2014 and
28,981 tons for each year thereafter. For SO2, Illinois'
rules provide for retirement ratios that, in concert with the number of
allowances that EPA will issue under the Acid Rain Program, will
reflect the budgets of 192,671 tons for each year from 2010 to 2014 and
134,869 tons for each year thereafter.

B. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone-season model trading rules
both largely mirror the structure of the NOX SIP Call model
trading rule in 40 CFR part 96, subparts A through I. While the
provisions of the NOX annual and ozone-season model rules
are similar, there are some differences. For example, the
NOX annual model rule (but not the NOX ozone
season model rule) provides for a CSP, which is discussed below and
under which allowances may be awarded for early reductions of
NOX annual emissions. As a further example, the
NOX ozone season model rule reflects the fact that the CAIR
NOX ozone season trading program replaces the NOX
SIP Call trading program after the 2008 ozone season and is coordinated
with the NOX SIP Call program. The NOX ozone
season model rule provides incentives for early emissions reductions by
allowing banked, pre-2009 NOX SIP Call allowances to be used
for compliance in the CAIR NOX ozone-season trading program.
In addition, States have the option of continuing to meet their
NOX SIP Call requirement by participating in the CAIR
NOX ozone season trading program and including all their
NOX SIP Call trading sources in that program.
    The provisions of the CAIR SO2 model rule are also
similar to the provisions of the NOX annual and ozone season
model rules. However, the SO2 model rule is coordinated with
the ongoing Acid Rain SO2 cap-and-trade program under CAA
title IV. The SO2 model rule uses the title IV allowances
for compliance, with each allowance allocated for 2010-2014 authorizing
only 0.50 ton of emissions and each allowance allocated for 2015 and
thereafter authorizing only 0.35 ton of emissions. Banked title IV
allowances allocated for years before 2010 can be used at any time in
the CAIR SO2 cap-and-trade program, with each such allowance
authorizing 1 ton of emissions. Title IV allowances are to be freely
transferable among sources covered by the Acid Rain Program and sources
covered by the CAIR SO2 cap-and-trade program.
    EPA also used the CAIR model trading rules as the basis for the
trading programs in the CAIR FIPs. The CAIR FIP trading rules are
virtually identical to the CAIR model trading rules, with changes made
to account for federal rather than state implementation. The CAIR model
SO2, NOX annual, and NOX ozone season
trading rules and the respective CAIR FIP trading rules are designed to
work together as integrated SO2, NOX annual, and
NOX ozone season trading programs.
    In the SIP revision, Illinois chose to implement its CAIR budgets
by requiring EGUs to participate in EPA-administered cap-and-trade
programs for SO2, NOX annual, and NOX
ozone season emissions. Illinois has adopted a full SIP revision that
adopts, with certain allowed changes discussed below, the CAIR model
cap-and-trade rules for SO2, NOX annual, and
NOX ozone season emissions.

C. Applicability Provisions for non-EGU NOX SIP Call Sources

    In general, the CAIR model trading rules apply to any stationary,
fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion
turbine serving at any time, since the later of November 15, 1990, or
the start-up of the unit's combustion chamber, a generator with
nameplate capacity of more than 25 MWe producing electricity for sale.
    States have the option of bringing in, for the CAIR NOX
ozone season program only, those units in the State's NOX
SIP Call trading program that are not EGUs as defined under CAIR.
However, Illinois has chosen not to expand the applicability provisions
of the CAIR NOX ozone season trading program to include all
non-EGUs in the State's NOX SIP Call trading program.

D. NOX Allowance Allocations

    Under the NOX allowance allocation methodology in the
CAIR model trading rules and in the CAIR FIP, NOX annual and
ozone season allowances are allocated to units that have operated for
five years, based on heat input data from a three-year period that are
adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for
oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR
FIP also provide a new unit set-aside from which units without five
years of operation are allocated allowances based on the units' prior
year emissions.
    States may establish in their SIP submissions a different
NOX allowance allocation methodology that will be used to
allocate allowances to sources in the States if certain requirements
are met concerning the timing of submission of units' allocations to
the Administrator for recordation and the total amount of allowances
allocated for each control period. In adopting alternative
NOX allowance allocation methodologies, States have
flexibility with regard to:
    1. The cost to recipients of the allowances, which may be
distributed for free or auctioned;
    2. The frequency of allocations;
    3. The basis for allocating allowances, which may be distributed,
for example, based on historical heat input or electric and thermal
output; and
    4. The use of allowance set-asides and, if used, their size.
    Illinois applied this flexibility to adopt systems for allocating
allowances for the CAIR NOX annual trading program and for
the CAIR NOX ozone season trading program that differ in
several respects from the allocation systems in EPA's model rule. For
both trading programs, Illinois sets aside 5 percent of the allowances
for new sources and 25 percent for a ``clean air set aside.'' Under the
clean air set aside, Illinois distributes allowances to three types of
projects: (1) Projects that use renewable energy or that improve energy
efficiency, (2) clean coal technology projects, including clean coal
burning equipment (mainly integrated gasification combined cycle
units), and (3) upgrades to pollution control equipment. While EPA
expects Illinois' utilities to install several emission control systems
even without this provision, this provision provides further incentive
for Illinois utilities to install controls. Illinois also dedicates
some of the set aside allowances for distribution for projects that are
done relatively early. The rules require project sponsors to apply for
allowances from this set aside, and the rules identify the criteria by
which Illinois is to determine the number of allowances to be issued
for a given project. The rules specify an initial subdivision of the
clean air set aside according to project type, but the rules also
provide for redistributing allocations among subdivisions if Illinois
receives more or fewer requests for particular types of projects. The
rules also specify how the new source set aside is to be allocated.
    Illinois' rules provide that the allowances that are not set aside
are allocated according to electrical output, with the caveat that the
utilities are initially given the option of determining output either
directly or as a fixed efficiency factor times heat input. In

either case, the output value is further adjusted, depending on the
type of fuel burned, to reflect the emission rates expected from
burning different fuels. In particular, the output from coal-fired
units is unadjusted, the output from oil-fired units is multiplied by
0.6, and the output from units combusting other fuels is multiplied by
0.4.
    EPA notes that, in sections 225.450(e) and 225.550(e), Illinois
requires that, for purposes of monitoring output, the owner or
operation of a CAIR unit must maintain a monitoring plan meeting
certain requirements of ``40 CFR part 60 or 75, as applicable.''
Sections 225.450 and 225.550 address ``Monitoring, Recordkeeping, and
Reporting Requirements for Gross Electrical Output and Useful Thermal
Energy'', and paragraph (e) of each of these sections specifically
mention ``gross electrical output.'' Consequently, EPA interprets
sections 225.450(e) and 225.550(e) as limited to plans for monitoring
output and as consistent with, and in addition to, the monitoring plan
requirements under 40 CFR part 96, subparts HH and HHHH, which
requirements are referenced in sections 225.410(c)(1) and
225.510(c)(1).

E. Allocation of NOX Allowances From Compliance Supplement
Pool

    The CAIR establishes a CSP to provide an incentive for early
reductions in NOX annual emissions. The CSP consists of
200,000 CAIR NOX annual allowances of vintage 2009 for the
entire CAIR region, and a State's share of the CSP is based upon the
projected magnitude of the emission reductions required by CAIR in that
State. States may distribute CSP allowances, one allowance for each ton
of early reduction, to sources that make NOX reductions
during 2007 or 2008 beyond what is required by any applicable State or
Federal emission limitation. States also may distribute CSP allowances
based upon a demonstration of need for an extension of the 2009
deadline for implementing emission controls. However, Illinois has
chosen not to distribute the allowances of a CSP.

F. Individual Opt-in Units

    The opt-in provisions of the CAIR SIP model trading rules allow
certain non-EGUs (i.e., boilers, combustion turbines, and other
stationary fossil-fuel-fired devices) that do not meet the
applicability criteria for a CAIR trading program to participate
voluntarily in (i.e., opt into) the CAIR trading program. In the model
rule, a non-EGU may opt into one or more of the CAIR trading programs.
In order to qualify to opt into a CAIR trading program, a unit must
vent all emissions through a stack and be able to meet monitoring,
recordkeeping, and recording requirements of 40 CFR part 75. The owners
and operators seeking to opt a unit into a CAIR trading program must
apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in
permit, the unit becomes a CAIR unit, is allocated allowances, and must
meet the same allowance-holding and emissions monitoring and reporting
requirements as other units subject to the CAIR trading program. The
opt-in provisions provide for two methodologies for allocating
allowances for opt-in units, one methodology that applies to opt-in
units in general and a second methodology that allocates allowances
only to opt-in units that the owners and operators intend to repower
before January 1, 2015.
    States have several options concerning the opt-in provisions.
States may adopt the CAIR opt-in provisions entirely or may adopt them
but exclude one of the methodologies for allocating allowances. States
may also decline to adopt the opt-in provisions at all.
    Illinois has chosen not to allow non-EGUs to opt into the CAIR
NOX annual trading program, the CAIR NOX ozone
season trading program, or the CAIR SO2 trading program.

VII. EPA Actions

    EPA is issuing direct final approval of Illinois' CAIR submittal.
Under this SIP revision, Illinois is choosing to participate in the
EPA-administered cap-and-trade programs for SO2, NOX
annual, and NOX ozone season emissions. The SIP revision
meets the applicable requirements in 40 CFR 51.123(o) and (aa), with
regard to NOX annual and NOX ozone season
emissions, and 40 CFR 51.124(o), with regard to SO2
emissions. EPA is determining that the SIP meets the requirements of
CAIR. As a consequence of the SIP approval, the Administrator of EPA
will also issue, without providing an opportunity for a public hearing
or an additional opportunity for written public comment, a final rule
to withdraw the CAIR FIPs concerning SO2, NOX
annual, and NOX ozone season emissions for Illinois. That
action will remove and reserve 40 CFR 52.745 and 52.746.
    More specifically, EPA is approving Subparts A, C, D, and E of Part
225 of Title 35 of the Illinois Administrative Code as submitted on
September 14, 2007. The specific rules being approved include: In
Subpart A, Sections 225.120, 225.130, 225.140, and 225.150; in Subpart
C, Sections 225.300, 225.305, 225.310, 225.315, 225.320, and 225.325;
in Subpart D, Sections 225.400, 225.405, 225.410, 225.415, 225.420,
225.425, 225.430, 225.435, 225.440, 225.445, 225.450, 225.455, 225.460,
225.465, 225.470, 225.475, and 225.480; and in Subpart E, Sections
225.500, 225.505, 225.510, 225.515, 225.520, 225.525, 225.530, 225.535,
225.540, 225.545, 225.550, 225.555, 225.560, 225.565, 225.570, and
225.575. Section 225.100 (entitled ``Severability'') was not included
in Illinois' September 2007 submittal but was included in Illinois'
mercury rule submittal; EPA plans to address this section as part of
its rulemaking on that mercury rule submittal. EPA is also deferring
action on Subpart F, which EPA also plans to address in its rulemaking
on Illinois' rules regarding mercury control.
    We are publishing this action without prior proposal because we
view this as a noncontroversial amendment and anticipate no adverse
comments. However, in the proposed rules section of this Federal
Register publication, we are publishing a separate document that will
serve as the proposal to approve the state plan if relevant adverse
written comments are filed. This rule will be effective December 17,
2007 without further notice unless we receive relevant adverse written
comments by November 15, 2007. If we receive such comments, we will
withdraw this action before the effective date by publishing a
subsequent document that will withdraw the final action. All public
comments received will then be addressed in a subsequent final rule
based on the proposed action. The EPA will not institute a second
comment period. Any parties interested in commenting on this action
should do so at this time. If we do not receive any comments, this
action will be effective December 17, 2007.

VIII. Statutory and Executive Order Reviews

Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget.

Executive Order 13211: Actions That Significantly Affect Energy Supply,
Distribution, or Use

    Because it is not a ``significant regulatory action'' under
Executive Order 12866 or a ``significant energy action,'' 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).

Regulatory Flexibility Act

    This action merely approves state law as meeting Federal
requirements and imposes no additional requirements beyond those
imposed by state law. Accordingly, the Administrator certifies that
this 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.).

Unfunded Mandates Reform Act

    Because this rule approves 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).

Executive Order 13175: Consultation and Coordination With Indian Tribal
Governments

    This 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 (59
FR 22951, November 9, 2000).

Executive Order 13132: Federalism

    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 approves 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.

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

    This 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 approves a state rule implementing a
Federal Standard.

National Technology Transfer Advancement Act

    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.

Paperwork Reduction Act

    This 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.).

Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by December 17, 2007. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Electric
utilities, Incorporation by reference, Intergovernmental relations,
Nitrogen oxides, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur dioxide.

    Dated: September 21, 2007.
Bharat Mathur,
Acting Regional Administrator, Region 5.

0
For the reasons stated in the preamble, part 52, chapter I, title 40 of
the Code of Federal Regulations is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart O--Illinois

0
2. Section 52.720 is amended by adding paragraph (c)(178) to read as
follows:

Sec.  52.720  Identification of plan.

* * * * *
    (c)* * *
    (178) On September 14, 2007, the Illinois Environmental Protection
Agency submitted rules and related material to address requirements
under the Clean Air Interstate Rule. These rules mandate participation
of electric generating units in EPA-run trading programs for annual
emissions of sulfur dioxide, annual emissions of nitrogen oxides, and
ozone season emissions of nitrogen oxides. These rules provide a
methodology for allocating allowances to subject sources and require
these sources to hold sufficient allowances to accommodate their
emissions and to meet various monitoring, recordkeeping, and reporting
requirements. EPA is approving the submitted provisions of Subparts A,
C, D, and E of Part 225 of Title 35 of Illinois Administrative Code;
EPA is deferring action on Subpart F.
    (i) Incorporation by reference.
    (A) Title 35 of the Illinois Administrative Code: Environmental
Protection, Subtitle B: Air Pollution, Chapter I: Pollution Control
Board, Part 225: Control of Emissions from Large Combustion Sources,
effective August 31, 2007, including Subpart A: General Provisions,
Subpart C: Clean Air Act Interstate Rule (CAIR) SO2 Trading
Program, Subpart D: CAIR NOX Annual Trading Program, and
Subpart E: CAIR NOX Ozone Season Trading Program.
 [FR Doc. E7-20142 Filed 10-15-07; 8:45 am]

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