
[Federal Register: November 29, 2010 (Volume 75, Number 228)]
[Rules and Regulations]               
[Page 72956-72963]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29no10-10]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2009-0515; FRL-9232-3]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Indiana; Clean Air Interstate Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action to approve a request 
submitted by the Indiana Department of Environmental Management (IDEM) 
on June 29, 2009, to revise the Indiana State Implementation Plan (SIP) 
under the Clean Air Act (CAA). The State has submitted amendments to 
the Indiana Administrative Code (IAC), which supplement Indiana's Clean 
Air Interstate Rule (CAIR), for which EPA granted limited approval as 
an abbreviated SIP on October 22, 2007. The abbreviated SIP was to be 
implemented in conjunction with a Federal Implementation Plan (FIP) 
that specified requirements for emissions monitoring, permit 
provisions, and other elements of CAIR programs. The State's June 29, 
2009, submittal includes elements that EPA deems necessary in order for 
EPA to fully approve Indiana's CAIR SIP. This will allow a transition 
from an abbreviated SIP with limited approval to a full SIP with full 
approval under which the various CAIR implementation provisions would 
be governed by State rules rather than FIP

[[Page 72957]]

rules. This action results in the withdrawal of the Indiana CAIR FIP 
concerning sulfur dioxide (SO2), nitrogen oxides 
(NOX) annual, and NOX ozone season emissions.

DATES: This direct final will be effective January 28, 2011, unless EPA 
receives adverse comments by December 29, 2010. 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-2009-0515, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. E-mail: mooney.john@epa.gov.
    3. Fax: (312) 692-2551.
    4. Mail: John M. Mooney, Chief, Attainment Planning and Maintenance 
Section, Air Programs Branch (AR-18J), U.S. Environmental Protection 
Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604.
    5. Hand Delivery: John M. Mooney, Chief, Attainment Planning and 
Maintenance 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 normal 
hours of operation, and special arrangements should be made for 
deliveries of boxed information. The Regional Office official hours of 
business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding 
Federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2009-0515. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI or otherwise protected through http://
www.regulations.gov or e-mail. The http://www.regulations.gov Web site 
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, any form of encryption, and be free of 
any defects or viruses.
    Docket: All documents in the docket are listed in the http://
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
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. This facility is open from 
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal 
holidays. We recommend that you telephone Andy Chang, Environmental 
Engineer, at (312) 886-0258 before visiting the Region 5 office.

FOR FURTHER INFORMATION CONTACT: Andy Chang, Environmental Engineer, 
Attainment Planning and Maintenance Section, Air Programs Branch (AR-
18J), U.S. Environmental Protection Agency, Region 5, 77 West Jackson 
Boulevard, Chicago, Illinois 60604, (312) 886-0258, chang.andy@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,'' 
``us,'' or ``our'' is used, we mean EPA. This supplementary information 
section is arranged as follows:

I. What action is EPA taking?
II. What is the regulatory history of CAIR and CAIR FIPs?
III. What are the general requirements of CAIR and CAIR FIPs?
IV. What are the types of CAIR SIP submittals?
V. Analysis of Indiana's CAIR SIP submittals
    A. What is the history of the State's submittals?
    B. State Budgets for Allowance Allocations
    C. CAIR Cap-and-Trade Programs
    D. Applicability Provisions
    E. Individual Opt-in Units
    F. Deficiencies in the State's February 28, 2007, Submittal and 
the State's Subsequent Responses
    G. Federal Definition of ``Biomass'' in Reference to 
``Cogeneration Unit''
    H. The State's Complete CAIR Regulations
    I. NOX Reduction Program for Specific Source 
Categories--Applicability
    J. Sunset Provision
VI. Final Action
VII. Statutory and Executive Order Reviews

I. What action is EPA taking?

    In this rulemaking EPA is fully approving Indiana's CAIR SIP, 
including the State's June 29, 2009, submittal. This will allow a 
transition from an abbreviated SIP with limited approval to a full SIP 
with full approval under which the various CAIR implementation 
provisions would be governed by State rules rather than FIP rules. This 
action causes the CAIR FIPs concerning SO2, NOX 
annual, and NOX ozone season emissions by Indiana sources to 
be automatically withdrawn.

II. What is the regulatory history of CAIR and CAIR FIPs?

    EPA published CAIR on May 12, 2005 (70 FR 25162). In that rule, EPA 
determined that 28 States and the District of Columbia contribute 
significantly to nonattainment and interfere with maintenance of the 
National Ambient Air Quality Standards (NAAQS) for fine particles 
(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 NOX. Similarly, for jurisdictions that 
contribute significantly to 8-hour ozone nonattainment, CAIR sets 
State-wide emission budgets 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 establishes requirements that must be included in SIPs to 
address the requirements of section 110(a)(2)(D) of the CAA with regard 
to interstate transport for ozone and PM2.5. On April 25, 
2005 (70 FR 21147), EPA made national findings 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

[[Page 72958]]

requirements of section 110(a)(2)(D). Under section 110(c)(1) of the 
CAA, EPA may issue a FIP anytime after such findings are made, and must 
do so within two years unless EPA has approved a SIP revision 
correcting the deficiency before the FIP is promulgated.
    On April 28, 2006, EPA promulgated FIPs for all States covered by 
CAIR to ensure that the emissions reductions required by CAIR would be 
achieved on schedule. The CAIR FIPs required electric generating units 
(EGUs) to participate in the EPA-administered CAIR SO2, 
NOX annual, and NOX ozone season trading 
programs, as appropriate. The CAIR FIP 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 was meant to create a single trading program for 
each regulated pollutant (SO2, NOX annual, and 
NOX ozone season) in all States covered by CAIR FIP or SIP 
trading programs for that pollutant. Further, as provided in a rule 
published by EPA on November 2, 2007 (72 FR 62338), a State's CAIR FIP 
is automatically withdrawn when EPA approves a SIP revision as fully 
meeting the requirements of CAIR. Where only portions of the SIP 
revision are approved, the corresponding portions of the FIPs are 
automatically withdrawn and the remaining portions of the FIP stay in 
place. Finally, the CAIR FIPs also allow States to submit abbreviated 
SIP revisions that, if approved by EPA, 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. Therefore, 
because Indiana only had an abbreviated CAIR SIP in place prior to 
today's rulemaking, there were also elements of CAIR FIPs in effect.
    On October 19, 2007 (72 FR 59190), EPA amended CAIR and CAIR FIPs 
to clarify the definition of ``cogeneration unit'' and, thus, the 
applicability of the CAIR trading program to cogeneration units.
    EPA was sued by a number of parties on various aspects of CAIR, and 
on July 11, 2008, the U.S. Court of Appeals for the District of 
Columbia Circuit issued its decision to vacate and remand both CAIR and 
the associated CAIR FIPs in their entirety. North Carolina v. EPA, 531 
F.3d 836 (DC Cir. 2008). However, in response to EPA's petition for 
rehearing, the Court issued an order remanding CAIR to EPA without 
vacating either CAIR or the CAIR FIPs. North Carolina v. EPA, 550 F.3d 
1176 (DC Cir. 2008). The Court thereby left CAIR in place in order to 
``temporarily preserve the environmental values covered by CAIR'' until 
EPA replaces it with a rule consistent with the Court's opinion. Id. at 
1178. The Court directed EPA to ``remedy CAIR's flaws'' consistent with 
its July 11, 2008, opinion, but declined to impose a schedule on EPA 
for completing that action. Id.

III. What are the general requirements of CAIR and CAIR FIPs?

    CAIR, which establishes statewide emission budgets for 
SO2 and NOX, 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 
States' 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 
provides 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 each State to include all non-EGUs from its respective 
NOX Budget Trading Program into its respective CAIR 
NOX Ozone Season Trading Program.

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. As EPA anticipated, 
most States have chosen 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 all NOX Budget 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 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. 
As discussed above, once EPA has approved a CAIR SIP submission in 
full, without any conditions, the CAIR FIP is automatically withdrawn. 
See 72 FR 62338.

V. Analysis of Indiana's CAIR SIP submittals

A. What is the history of the State's submittals?

    IDEM submitted the State's rules to address CAIR requirements on 
February 28, 2007, for incorporation into the SIP. On September 20, 
2007, Indiana submitted a letter to EPA requesting that EPA act only on 
a portion of the February 28, 2007 submittal. Consequently, on October 
22, 2007 (72 FR 59480) EPA gave a limited approval to portions of the 
February 28, 2007 submittal as an abbreviated SIP revision

[[Page 72959]]

which addressed the applicability provisions for the NOX 
ozone season trading program and supporting definitions and terms, the 
methodology to be used to allocate annual and ozone season 
NOX allowances and supporting definitions and terms, the CSP 
provisions for the NOX annual trading program, and 
provisions for SO2 and NOX opt-in units, all 
under the CAIR FIP. EPA found several minor deficiencies in the 
February 28, 2007, submittal, as indentified in a technical support 
document that accompanied the October 22, 2007, limited approval. The 
State's June 29, 2009, submittal sufficiently addresses these 
deficiencies.
    On October 19, 2007, EPA revised the definition of ``cogeneration 
unit'' (72 FR 59190). Particularly of note, the term ``biomass'' was 
added so that cogeneration units could exclude biomass energy input in 
efficiency calculations. IDEM has made corresponding and appropriate 
changes that adopt the Federal definition of ``cogeneration unit'' and 
``biomass'' in its June 29, 2009, submittal. Indiana's budget and 
allowance allocation methodologies for CAIR trading programs were also 
included in the June 29, 2009, submittal. The amended rules became 
effective State-wide on June 11, 2009, and an in-depth analysis of the 
June 29, 2009, submittal follows below.

B. State Budgets for Allowance Allocations

    In today's action, EPA is reaffirming its approval of Indiana's SIP 
revision adopting the budgets established for the State (by EPA) in 
CAIR in its October 22, 2007 limited approval.
    In North Carolina, the Court determined, among other things, that 
the State SO2 and NOX budgets established in CAIR 
were arbitrary and capricious.\1\ However, as discussed above, the 
Court also decided to remand CAIR but to leave the rule in place in 
order to ``temporarily preserve the environmental values covered by 
CAIR'' pending EPA's development and promulgation of a replacement rule 
that ``remedies CAIR's flaws.'' North Carolina, at 1178. EPA had 
indicated to the Court that development and promulgation of a 
replacement rule would take about two years. Reply in Support of 
Petition for Rehearing or Rehearing en Banc at 5 (filed Nov. 17, 2008 
in North Carolina v. EPA, Case No. 05-1224, DC Cir.). On August 2, 2010 
(75 FR 45210), EPA proposed FIPs to Reduce Interstate Transport of Fine 
Particulate Matter and Ozone to replace CAIR; however, that rule is not 
yet final. In the meantime, consistent with the Court's orders, EPA is 
implementing CAIR by approving State SIP revisions that are consistent 
with CAIR (such as the provisions setting State SO2 and 
NOX budgets for the CAIR trading programs) in order to 
``temporarily preserve'' the environmental benefits achievable under 
the CAIR trading programs.
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    \1\ The Court also determined that the CAIR trading programs 
were unlawful (id. at 906-8) and that the treatment of title IV 
allowances in CAIR was unlawful (id. at 921-23). For the same reason 
that EPA is approving the provisions of Indiana's SIP revision that 
use the SO2 and NOX budgets set in CAIR, EPA 
is also approving, as discussed below, Indiana's SIP revision to the 
extend the SIP revision adopts the CAIR trading programs, including 
the provisions addressing applicability, allowance allocations, and 
the use of title IV allowances.
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C. CAIR Cap-and-Trade Programs

    The CAIR NOX annual and ozone season model trading rules 
both largely mirror the structure of the NOX Budget 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 
Budget 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 Budget Trading Program 
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 requirements by 
participating in the CAIR NOX Ozone Season Trading Program 
and including all their NOX Budget 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, since CAA title IV establishes an ongoing Acid 
Rain cap-and-trade program for SO2 and not for NOx, the 
model rule for SO2 must additionally be coordinated with the 
Acid Rain Program. 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 one 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 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 EPA is approving, Indiana has chosen 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. Indiana has adopted 
State rules for 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. Finally, Indiana's rules provide that non-EGUs that were 
required to participate in the NOX Budget Trading Program 
must participate in the CAIR NOX Ozone Season Trading 
Program.

D. Applicability Provisions

    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 megawatts producing electricity for 
sale.
    States have the option of bringing in, for the CAIR NOX 
Ozone Season Trading Program only, those units in the State's 
NOX Budget Trading Program that are not EGUs as defined 
under CAIR. EPA advises States exercising this option to add the 
applicability provisions in the State's NOX Budget trading 
rule for non-EGUs to the applicability provisions in 40 CFR 96.304 in 
order to include in the CAIR NOX Ozone Season Trading 
Program all units required to be in the State's NOX Budget 
Trading Program that are not already included under 40 CFR 96.304. 
Under this option, the CAIR NOX Ozone Season Trading Program 
must cover all large industrial boilers and combustion turbines, as 
well as any small EGUs (i.e.,

[[Page 72960]]

units serving a generator with a nameplate capacity of 25 megawatts or 
less) that the State previously required to be in the NOX 
Budget Trading Program. Indiana has chosen to expand the applicability 
provisions of the CAIR NOX Ozone Season Trading Program to 
include all non-EGUs that were subject to the State's NOX 
Budget Trading Program. Indiana's February 28, 2007, abbreviated SIP 
submittal did not include (or modify) certain definitions that are 
necessary in order to expand the CAIR NOX Ozone 
applicability to all NOX Budget Trading units. Indiana's 
June 29, 2009, submittal includes these definitions and modifications. 
These definitions are part of today's approval and are discussed in 
more detail under Section H. (Deficiencies in the State's submittal and 
the State's subsequent responses).

E. 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. 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 include such a unit in 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.
    Consistent with this flexibility, Indiana has chosen to allow non-
EGUs meeting certain requirements to participate in the CAIR 
NOX Annual Trading Program, the CAIR NOX Ozone 
Season Trading Program, and the CAIR SO2 Trading Program. 
EPA approved Indiana's earlier version of rules authorizing these opt-
ins (72 FR 59480). The complete set of rules governing CAIR 
NOX annual, CAIR SO2, and CAIR NOX 
ozone season opt-in units in Indiana are contained in 326 IAC 24-1-12, 
326 IAC 24-2-11, and 326 IAC 24-3-12, respectively. Indiana's June 29, 
2009, submittal includes some modifications to these parts. These 
modifications are part of today's approval.

F. Deficiencies in the State's February 28, 2007, Submittal and the 
State's Subsequent Responses

    EPA found several deficiencies in Indiana's February 28, 2007, 
submittal and communicated these deficiencies to IDEM staff in August 
and September of 2007. The deficiencies and the State's subsequent 
responses to correct them are discussed in detail below. All responses 
to the deficiencies were provided in the State's June 29, 2009, 
submittal.
    EPA found that Indiana needed to revise 326 IAC 24-3-1 in the 
following manner:

    ``Indiana needs to revise, in subsection (b), `CAIR 
NOX ozone season units as follows:' to read `CAIR 
NOX ozone season units under subsection 1(a)(1) or (3)' 
and revise, in subsections (b)(1), (2), and (3), `under subsection 
(a)' to read `under subsection (a)(1) or (3).' '';

    Indiana has made these changes verbatim; therefore, these 
deficiencies have been addressed and EPA concludes that the revisions 
to 326 IAC 24-3-1 are approvable.
    EPA also found that Indiana needed to amend 326 IAC 24-3-2 by 
revising the definitions of ``commence operation,'' ``fossil-fuel-
fired,'' and ``unit.''
    IDEM addressed all of the deficiencies that EPA identified 
regarding the terms ``commence operation,'' ``fossil-fuel-fired,'' and 
``unit'' at 326 IAC 24-3-2 (33), (44), and (80). EPA finds these 
revisions approvable.
    EPA found that Indiana needed to add the definition of 
``electricity for firm sale to the electric grid,'' to read as follows:

    ``Electricity for firm sale to the electric grid means 
electricity for sale where the capacity involved is intended to be 
available at all times during the period covered by a guaranteed 
commitment to deliver, even under adverse conditions.''

    The State has added the following definition at 326 IAC 24-3-2 
(38):

    `` `Electricity for sale under a firm contract to the electric 
grid' means electricity for sale where the capacity involved is 
intended to be available at all times during the period covered by 
the guaranteed commitment to deliver, even under adverse 
conditions.''

    EPA asked IDEM for clarification concerning the phrase ``for sale 
under a firm contract'' as opposed to the model language ``for firm 
sale.'' On September 25, 2009, IDEM responded that the language 
originated in Indiana's NOX SIP Call; therefore, all sources 
subject to the applicability of the NOX Budget Trading 
Program would also be subject to the applicability of the CAIR 
NOX Ozone Season Trading Program. Because there is no 
applicability gap for affected sources, IDEM has addressed this 
deficiency. EPA therefore finds that the addition of the term 
``electricity for sale under a firm contract to the electric grid'' to 
326 IAC 24-3-2 is approvable.
    EPA found that Indiana needed to revise the definition of ``large 
affected unit'' to add, after clause (B):

    ``(C) For units other than cogeneration units commencing 
operation: (i) Before January 1, 1997, a unit serving a generator 
during 1995 or 1996 that had a nameplate capacity greater than 
twenty-five (25) megawatts and produced electricity for sale under a 
firm contract to the electric grid; (ii) on or after January 1, 
1997, and before January 1, 1999, a unit serving a generator during 
1997 or 1998 that had a nameplate capacity greater than twenty-five 
(25) megawatts and producing electricity for sale under a firm 
contract to the electric grid; or (iii) on or after January 1, 1999, 
a unit serving a generator at any time that has a nameplate capacity 
greater than twenty-five (25) megawatts and produces electricity for 
sale. (D) For cogeneration units commencing operation: (i) Before 
January 1, 1997, a unit serving a generator during 1995 or 1996 that 
had a nameplate capacity greater than twenty-five (25) megawatts and 
failing to qualify as an unaffected unit for 1995 or 1996 under the 
acid rain program; (ii) in 1997 or 1998, a unit serving a generator 
during 1997 or 1998 with a nameplate capacity greater than twenty-
five (25) megawatts and failing to qualify as an unaffected unit for 
1997 or 1998 under the acid rain program; or (iii) on or after 
January 1, 1999, a unit serving at any time as a generator with a 
nameplate capacity greater than twenty-five (25) megawatts and 
failing to qualify as an unaffected unit under the acid rain program 
for any year.''

    IDEM has made all the appropriate changes at 326 IAC 24-3-2 (51) 
with minor wording changes, which include the clarification of the 
phrase, ``(C) For units other than cogeneration units that are not 
already subject to this rule under section 1(a)(1) or 1(a)(3) of this 
rule commencing operation * * *.'' and a phrase at the end of the rule 
that reads, ``The term does not include a unit subject to 326 IAC 10-
3.'' At 326 IAC 24-3-2 (51)(C)(iii), Indiana's rule ends with, ``for 
sale under a firm contract to the electric grid,'' which differs from 
the

[[Page 72961]]

model rule which ends with, ``for sale.'' EPA asked for clarification 
of the phrase, ``for sale under a firm contract to the electric grid.'' 
On September 25, 2009, IDEM stated that, although the language differs 
slightly, all sources subject to the NOX Budget Trading 
Program would also be subject to the CAIR NOX Ozone season 
Trading Program. Because there is no applicability gap for affected 
sources, and because other revisions Indiana has made serve to clarify 
the existing rule, EPA finds that the revision of the term, ``large 
affected unit'' in 326 IAC 24-3-2 is approvable.

G. Federal Definition of ``Biomass'' in Reference to ``Cogeneration 
Unit''

    EPA changed the definition of ``cogeneration unit'' as it applies 
to CAIR, CAIR FIPs, and the CAIR model cap-and-trade rules in 72 FR 
59190. Specifically, EPA revised the calculation methodology for the 
efficiency standard in the cogeneration unit definition to exclude 
energy input from biomass. At 326 IAC 24-1-2 (8), 326 IAC 24-2-2 (8), 
and 326 IAC 24-3-2 (8), Indiana has made this change verbatim. EPA 
finds the addition of the term ``biomass'' to the SIP approvable.

H. The State's Complete CAIR Regulations

    As discussed previously, EPA granted a limited approval to 
Indiana's abbreviated SIP on October 22, 2007. This action was a result 
of the State's request on September 20, 2007, that EPA act on a portion 
of its February 28, 2007, submittal. Consequently, EPA approved an 
abbreviated SIP revision for Indiana which addressed the applicability 
provisions for the NOX ozone season trading programs and 
supporting definitions of terms, the methodology to be used to allocate 
NOX annual and ozone season NOX allowances and 
supporting definitions of terms, the CSP provisions for the 
NOX annual trading program, and provisions for 
SO2 and NOX opt-in units, all under the CAIR FIP.
    The State's June 29, 2009, submittal was intended to satisfy 
requirements that would allow us to approve Indiana's CAIR regulations 
so as to transition from an abbreviated SIP with limited approval to a 
full SIP with full approval. Indiana addressed the deficiencies that 
EPA found with its existing CAIR regulations and also adopted the 
Federal definition of ``biomass'' as it pertains to ``cogeneration 
unit.''
    However, it was not clear in the June 29, 2009, submittal that IDEM 
was requesting full approval of the CAIR rules contained in 326 IAC 24-
1, 326 IAC 24-2, and 326 IAC 24-3. On December 9, 2009, IDEM sent a 
letter to EPA clarifying that such was its intent. Therefore, inasmuch 
as the State has cured the identified deficiencies and as such is the 
State's intent, we are approving Indiana's CAIR regulations in their 
entirety for incorporation into the SIP.

I. NOX Reduction Program for Specific Source Categories--
Applicability

    On February 28, 2007, Indiana also submitted minor revisions to 326 
IAC 10-3, ``NOX Reduction Program for Specific Source 
Categories.'' Namely, the revisions pertain to the ``Applicability'' 
portion of this rule. The revisions refer to 326 IAC 24 and 326 IAC 24-
3. The reference to 326 IAC 24-3 clarifies that 326 IAC 10-3-1 applies 
to any other blast furnace gas fired boilers with a heat input greater 
than 250,000,000 Btu per hour that is not subject to 326 IAC 10-4 or 
326 IAC 24-3. As this revision ensures that all applicable sources are 
covered, EPA finds it approvable. The reference to 326 IAC 24 clarifies 
that the monitoring, recordkeeping, and reporting requirements under 
section 4 and 5 of 326 IAC 10-3-1 does not apply to a unit that opts 
into the NOX Budget Trading Program under 326 IAC 10-4 or 
326 IAC 24. As the State's CAIR has its own set of monitoring, 
recordkeeping, and reporting requirements, EPA finds this revision to 
be approvable.

J. Sunset Provision

    EPA did not act on 326 IAC 10-4-16, ``Sunset,'' when Indiana 
submitted the rule as part of its original CAIR package on February 28, 
2007. We are approving this rule into the Indiana SIP today, and it 
reads:

    ``Sec. 16. (a) Sections 1 through 15 of this rule shall not 
apply to any control period in 2009 or thereafter. The 2009 
NOX allowances allocated under section 9 of this rule 
remain in effect for purposes of the Clean Air Interstate Rule 
(CAIR) NOX ozone season trading program in 326 IAC 24-3.
    (b) By December 31, 2008, the department shall allocate any 
remaining allowances for the years 2004 through 2008 in the EGU or 
large affected unit new unit set-aside or the energy efficiency and 
renewable energy set-aside to the relevant existing NOX 
budget units on a pro rata basis. The allowances from the energy 
efficiency and renewable energy set-aside shall be allocated to 
existing large affected units.''

    Approval of the termination of the NOX Budget Trading 
Program provision ensures that there are no conflicts between 
allocations made under the NOX Budget Trading Program and 
allocations made under the CAIR NOX Ozone Season Trading 
Program. The NOX SIP Call requirements will now be met 
through the implementation of CAIR.

VI. Final Action

    EPA is approving revisions to Indiana's CAIR, which the State 
submitted on June 29, 2009. The rules supplement the State's original 
CAIR, for which EPA promulgated limited approval on October 22, 2007 
(72 FR 59480). The State has corrected deficiencies in its original 
CAIR submittal, and has made appropriate revisions that align State and 
Federal definitions for ``cogeneration unit'' and ``biomass,'' as 
contained in 72 FR 59190. In addition, EPA is approving into the 
Indiana SIP the remainder of Indiana's CAIR regulations upon which we 
did not previously act. EPA is also approving the applicability 
provisions of Indiana's NOX Reduction Program for Specific 
Source Categories, as well as the sunset provision from Indiana's 
NOX Budget Trading Program. Lastly, EPA is approving minor 
wording, formatting, and typographical changes contained in the State's 
submittal; since these changes serve to clarify the existing rules or 
to correct minor errors, EPA finds them approvable. With this approval, 
Indiana has transitioned from an abbreviated CAIR SIP with limited 
approval to a full SIP with full approval. After the effective date of 
this direct final rule, Indiana will no longer be subject to elements 
of CAIR FIPs. This action causes the CAIR FIPs with regard to sulfur 
dioxide (SO2), NOX annual, and NOX 
ozone season emissions by Indiana sources to be automatically 
withdrawn.
    Specifically, EPA is approving the following rules, which were 
submitted on June 29, 2009: 326 IAC 24-1-2, 326 IAC 24-1-7, 326 IAC 24-
1-8, 326 IAC 24-1-9, 326 IAC 24-1-12, 326 IAC 24-2-2, 326 IAC 24-2-7, 
IAC 24-2-8, IAC 24-2-11, IAC 24-3-1, IAC 24-3-2, IAC 24-3-7, IAC 24-3-
8, IAC 24-3-9, IAC 24-3-12. The rules became effective State-wide on 
June 11, 2009.
    EPA is also approving the remainder of the State's CAIR 
regulations, which were submitted on February 28, 2007. These rules 
include: 326 IAC 24-1-1, 326 IAC 24-1-3, 326 IAC 24-1-4, 326 IAC 24-1-
5, 326 IAC 24-1-6, 326 IAC 24-1-10, 326 IAC 24-1-11, 326 IAC 24-2-1, 
326 IAC 24-2-3, 326 IAC 24-2-4, 326 IAC 24-2-5, 326 IAC 24-2-6, 326 IAC 
24-2-9, 326 IAC 24-2-10, 326 IAC 24-3-3, 326 IAC 24-3-4, 326 IAC 24-3-
5, 326 IAC 24-3-6, 326 IAC 24-3-10, and 326 IAC 24-3-11. These rules 
became effective State-wide on February 25, 2007.

[[Page 72962]]

    As previously mentioned, EPA is further approving revisions 
submitted on February 28, 2007, pertaining to the State's Nitrogen 
Oxide Reduction Program for Specific Source Categories, Applicability 
provisions as contained in 326 IAC 10-3-1. This revision was effective 
State-wide on February 25, 2007. Lastly, EPA is approving the sunset 
provision in their NOX Budget Trading Program; this specific 
provision is contained in 326 IAC 10-4-16. This rule was submitted on 
February 28, 2007, and became effective State-wide on February 25, 
2007.
    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 January 28, 
2011 without further notice unless we receive relevant adverse written 
comments by December 29, 2010. 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; therefore, 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 January 28, 2011.

VII. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the CAA and applicable 
Federal regulations. 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. Accordingly, this 
action merely approves State law as meeting Federal requirements and 
does not impose additional requirements beyond those imposed by State 
law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     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).
    In addition, this rule does not have Tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on Tribal governments or preempt Tribal law.
    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 action 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 CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by January 28, 2011. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this action 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. Parties with objections to this direct final rule are 
encouraged to file a comment in response to the parallel notice of 
proposed rulemaking for this action published in the Proposed Rules 
section of today's Federal Register, rather than file an immediate 
petition for judicial review of this direct final rule, so that EPA can 
withdraw this direct final rule and address the comment in the proposed 
rulemaking. 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, Incorporation by 
reference, Intergovernmental relations, Nitrogen dioxide, Ozone, 
Particulate matter, Reporting and recordkeeping requirements, Sulfur 
oxides.

    Dated: November 15, 2010.
Susan Hedman,
Regional Administrator, Region 5.

0
40 CFR part 52 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 P--Indiana


Sec.  52.35  [Amended]

0
2. Section 52.35 is amended by:
0
a. In paragraph (d)(1), by adding, after the word ``are:'', the words 
``Indiana, and''; and
0
b. In paragraph (d)(2), by adding, after the words ``chapter, are:'', 
the words ``Indiana, and''.


Sec.  52.36  [Amended]

0
3. Section 52.36 is amended in paragraph (c) by adding, after the word 
``are:'', the words ``Indiana, and''.
0
4. In Sec.  52.770, the table in paragraph (c) is amended by:


0
a. Revising the entries for Article 10, sections 10-3 and 10-4.
0
b. Revising the entries for Article 24, sections 24-1, 24-2 and 24-3.
0
The revisions read as follows:


Sec.  52.770  Identification of plan.

* * * * *
    (c) * * *

[[Page 72963]]



                                        EPA-Approved Indiana Regulations
----------------------------------------------------------------------------------------------------------------
                                                    Indiana
  Indiana  citation             Title           effective date     EPA approval date              Notes
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                        Article 10. Nitrogen Oxides Rules
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
10-3.................  Nitrogen Oxide               02/25/2007  11/29/2010, [Insert      Sec. 1.
                        Reduction Program for                    page number where the
                        Specific Source                          document begins].
                        Categories.
10-4.................  Nitrogen Oxides Budget       02/25/2007  11/29/2010, [Insert      Sec. 16.
                        Trading Program.                         page number where the
                                                                 document begins].
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                  Article 24. Trading Programs: Nitrogen Oxides (NOX) and Sulfur Dioxide (SO2)
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
24-1.................  Clean Air Interstate         02/25/2007  11/29/2010, [Insert      Sec. 1, 3, 4, 5, 6, 10,
                        Rule Nitrogen Oxides                     page number where the    11.
                        Annual Trading Program.                  document begins].
                                                    06/11/2009  11/29/2010, [Insert      Sec. 2, 7, 8, 9, 12.
                                                                 page number where the
                                                                 document begins].
24-2.................  Clean Air Interstate         02/25/2007  11/29/2010, [Insert      Sec. 1, 3, 4, 5, 6, 9,
                        Rule (CAIR) Sulfur                       page number where the    10.
                        Dioxide Trading                          document begins].
                        Program.
                                                    06/11/2009  11/29/2010, [Insert      Sec. 2, 7, 8, 11.
                                                                 page number where the
                                                                 document begins].
24-3.................  Clean Air Interstate         02/25/2007  11/29/2010, [Insert      Sec. 3, 4, 5, 6, 10,
                        Rule (CAIR) NOX Ozone                    page number where the    11.
                        Season Trading Program.                  document begins].
                                                    06/11/2009  11/29/2010, [Insert      Sec. 1, 2, 7, 8, 9, 12.
                                                                 page number where the
                                                                 document begins].
----------------------------------------------------------------------------------------------------------------

* * * * *


Sec.  52.789  [Removed]

0
5. Section 52.789 is removed.

Sec.  52.790  [Removed]

0
6. Section 52.790 is removed.

[FR Doc. 2010-29788 Filed 11-26-10; 8:45 am]
BILLING CODE 6560-50-P

