RECEIVED

CLERK~S

OFF!CE

BEFORE THE ILLiNOIS POLLUTION CONTROL BOARD

JAN

1

0

2001

iN TUE MATTER OF:

)

)

PROPOSED NEW 35 ILL. ADM.

CODE

)

217.SUBPART U, NO~ CONTROL AND

)

TRADING PROGRAM FOR SPECIFIED

)

NO~ GENERATING UNITS, SUBPART X~)

VOLUNTARYNO~ EMISSIONS

)

REDUCTION PROGRAM, AND

)

AMENDMENTS TO

35 ILL. ADM. CODE)

211

)

STATE OF ILLINOIS

Pollution

Control Board

RO 1-17

(Rulemaking

—

Air)

t~.

~6=

NOTICE OF

FiLING

TO:

Ms. Dorothy M. Gunn

Clerk ofthe Board

IllinoisPollution Control Board

James R. Thompson Center

100 West Randolph Street

Suite 11-500

Chicago, Illinois

60601

(VIA

AIRBORNE

EXPRESS)

Bobb A. Beauchamp, Esq.

fleming Officer

Illinois Follution Control floard

James R. Thompson Center

100 WestRandolph

Sweet

Suite

11-500

Chicago, illinois

60601

(VIA AIRBORNE

EXPRESS)

(PERSONS ONATTACHED

SERVICE LIST)

PLEASE TAKENOTICE that I have filed today with the Clerk ofthe illinois

Pollution Control Board an original and nine copies ofthe POST-REARING

COMMENTS OF THE ILLINOIS ENVIRONMENTAL REGULATORY GROUP

and AFFIDAVIT OF SIDNEY M. MARDER~ copies ofwhich are herewith served

upon you.

Respectfi.illy submitted,

Dated:

January 9,

2001

Katherine 1). Hodge

HODGE & DWYER

3150 Roland Avenue

Post Office Box 5776

Springfield, Illinois

62705-5776

(217) 523-4900

ILLiNOIS ENVIRONMENTAL

REGULATORY GROUP,

P~

By:

ne

omeys

THIS FILING SUDMITUED ON RECYCLEDPAPER

---

RECEIVED

CLERK’S OFFIfF

BEFORE THE ILLINOIS POLLUTION CONTROL BOARDJAN

102001

IN THE MATTER OF:

STATE OF

ILLINOIS

)

Pollution

Control Board

)

PROPOSED NEW 35 ILL. ADM. CODE

)

RO1-17

217.SUBPART U, NOx CONTROL AND

)

(Rulemaking

-

Air)

TRADING PROGRAM FOR SPECIFIED

)

NOx GENERATING UNITS, SUBPART X~)

VOLUNTARYNOx EMISSIONS

)

REDUCTION PROGRAM, AND

)

AMENDMENTS TO

35

ILL. ADM. CODE)

211

)

ILLINOIS ENVIRONMENTAL REGULATORY GROUP

NOW COMES the illinois Environmental Regulatory

Group

(“IERG”), by one of

its attorneys, Katherine D. Hodge ofHODGE & DWYER, and provides the following

Post-Hearing Comments in the above-referenced proceeding.

L

INTRODUCTION

IERG is a not-for-profit Illinois corporation comprised ofsixty-eight (68) member

companies engaged

in

industry, commerce, manu±~oturing,

agriculture, trade,

transportation or other related activity, and which persons, entities, or businesses are

regulated by governmental agencies which promulgate, administer, or enforce

environmental laws, regulations, rules or policies.

IERG was organized to promote and

advance the interests ofits members before governmental agencies such as the Illinois

Environmental Protection Agency (“IEPA”) and the IllinoisPollution Control Board

(“Hoard”),

JERO is also an affiliate ofthe illinois State Chamber ofCommerce.

---

As Mr. Marder testified at the December 20,2000, heazing’, IERG and theIEPA

reached agreement as to the provisions ofSubpart U, and as to many ofthe provisions of

Subpart

X

(12/20/00 Tr.

at

11-12).

Mr. Marder’s testimony focused on and offered

alternative language for three provisions ofSubpart X, that LERG and its member

companies believe is extremely important to the overall success and workability ofthe

regulatory scheme to be adopted by the Board in this matter.

For the reasons offered by Mr. Marder at hearing, IERG urges the Board to

modify the IEPA’s proposal.

Specifically. LERG asks that the Board revise the IEPA’s

proposal as follows:

1.

Strike proposed Section 217.805(c), so asto allowpost-1995 units

to be eligible for inclusion in the Subpart X program.

Additionally, modify the first sentence ofproposed Section

217.825(a), as follows:

a)

For shut down units, the gross amount of control

period actual NOx omission reductions shall be

determined pursuant to Section 217.820 (a)-m-(b) of

this Subpart.

2.

Strike the second and third sentences ofproposed Section

217.825(a) and

all ofproposed Section 217.825(b),

so as to

eliminate a 20

reduction in emission credits available from

Subpart X units.

3.

Add a new sentence at the end ofproposed Section 217.835 (a) (5)

to clarify the concept ofproduction shifling, as follows:

‘A liM hearingwas held

in

this matter on November 29.2000.

References to the lmnscript for this

hearingwill be cited as “11/29/00 Tr. at

.“

A secoz~d hearingwas held on December 20,2000.

References to the transcript for this hearing will be cited “12/20A)0 Tr. at__•“

2

---

Production Shifting shall be considered to occur ifNOx emissions

from all

like-kind orsame type units at the source are increased

above their baselines, as determined in accordance with Subsection

217.820. and such increase is due to operation ofthe unit for the

purpose ofreviacing the

energy required to produce a product or

service previously produced orprovided by an emission reduction

unit.

IL

EMISSION UNIT ELIGIBIUTY

AND CALCULATION OF

CRJiDITABLE

NOx EMISSION REDUCTION

Apparently, the LEPA has two concerns regardingthe

first two revisions requested

by IERG.

First, the ~PA

indicates that the

United States Environmental Protection

Agency (“USEPA”) will be niore likelyto approve Subpart X ifthe requested

modifications are notgranted (11/29/00 Tr. at 29;

12120/00 Tr. at

84-85, 97)..

Second, the

IEPA indicates that the lack ofPart 75 Monitoring introduces a potential level oferror

which would require adjustments to the Proposal which would not be otherwise

necessary7 again, because ofpotential USEPA objections (11/29/00

Tr. at 30; 12/20/00

Tr. at

87, 97).

The basis for the Board’s decision should then be clear. We ask

that the Board

review the testimony and

weigh three considerations in

determiningwhether to grant

IERG’s request to revise the IEPA’s proposal, as

follows:

1.

The rationale for

and the benefits to be derived from the

revisions

requested by LEROon behalfofits member companies;

2.

The concerns raised by the

LEPA in objection to IERG’s request

for revisions; and

The effect that the requested revisions will have on the integrity of

the program, as well as on the environment.

3

---

We believe that, when these three considerations are fairly weighed, the Board

will be persuaded to make the revisions requested by IERG.

A.

The Rationale and theBenefits

Subpart X is a State addition to

the Federal model trading program.

This illinois

add-on program was mandated by the General Assembly at

Section

9.9 ofthe illinois

Environmental Protection Act (“Act”) (415 ILCS

5/9.9).

As an active participant in the

drafting and negotiations leading to the adoption of Section 9.9 ofthe Act,

IEROis well

aware ofthe intent ofthis provision.

The basic intent is as directly stated in the Act:

to provide additional allowances to EGUs and non-EGUs to be

allocated by the Agency.

The regulations shall further providethat such

voluntary reductions are verifiable, quantifiable, permanent and federaily

enforceable”

(415 YLCS 5/9.9(d)(3)).

The underlying reason for this program

was a recognition that a perpetual cap on NOx

emissions from a defined, but increasing universe ofNOx emission sources would be

increasingly difficult to meet.

Thus,

any additional pool ofcredits would serve to ease

the burden on

the regulated community.

It is important to understand that a new unit that

is required to participate in the

trading program will have limited options as to how it

can

obtain its allocations.

The bottom line is thatthe

allocations must come from a fixed and

finite pool.

Thus,

the unit must either

avail itself ofa partial allocation from the new

source set-aside (which provides temporary relief-- three years

--

but is still

part ofthe

overall finitepool) and/orpurchase allocations from the existing finite pool.

As time

goes by,

fuel switching and improved control technology will tend to increase the

availability ofallocations.

However, normal

growth will reduce the availability ofsuch

allocations.

Ifthe price and availability ofnatural

gas continues on its current trend, the

need for alternative fuel (coal oroil) will become increasingly real, thus, putting

4

~W1V17¶T”~

---

additional strain on the supply ofavailable allocations.

As the demand for allocations

outstrips the available supply, the utility ofincluding post-1995 units in the mix of

available options, as well as the need to allow full credit for emission reductions, will

become more important tothe regulated community.

In particular, the issue ofpost-1995 unit eligibility will become increasingly

important over time.

It is highly doubtful that any entity would be willing to shut down

or curtail operations ofa post-1995 unit in the next five to ten years.

Such units are

relatively new, and were built,

at considerable expense, for an

intended purpose.

It is

highly unlikelythat a facility owner would curtail Dperations ofihenew unit simplyto

obtain the financial benefits ofselling NOx credits.

However, astime goes by, and

facilities have

to replace units with new (and assumedly cleaner) units, those post-1995

units may well be reaching their life expectancies andwould become candidates for

Subpart X,

It is important to remember that

the facility could optto constnict new units

that are below the threshold for applicability

(in the case ofnon-EGUs), and thus avoid

the program altogether, and become part ofthe so-called growth (or arguably, the

replacement) factor,

which was built into the system.

This scenario, however, would be

counterproductive to the trading program that has a better chance ofsuccess as the total

pool ofallocations expands.

The

oniy

way to expand the total pool is totransfer

emissions from the non-trading budget tothe trading budget, and that is exactlywhat

Subpart X is intended to accomplish.

At hearing, Mr. Romaine raised the issue ofdouble

counting as regards post-1995 units (12/20/00 Tr. at 86).

Quite frankly, LERG is

confused as to why this should be an issue.

Post-1995 units are indeed subsumed in the

so-called growth factorincluded

in the State budget.

By opting into Subpart X, a post-

5

---

1995 unit would not add

additional

emissions to the

overall State NOx budget; rather, it

would transfer those

existing

emissions

from one part ofthe budget (point source non-

trading) to another(trading).

If the rule had no provision to preclude a facility from

simply shutting down and transferring emissions and simultaneously construction a new

“growth unit,” the issue would have merit.

However, as stated at hearing, all parties

agree that the production shiftingprotection in

the proposal was specifically included to

prevent this situation.

In summary, Subpart X provides a mechanism whereby new units subject tothe

provisions ofth&NOx trading program can gain access to much needed allocations.

It

was envisioned by the General Assembly as a viable and necessary add-on to the Federal

program.

The revisions requested by

IBRO, on behalfofits member companies, make

the proposed regulation much more flexible and useful, thereby, meeting the intent ofthe

General Assembly and the needs ofthe regulated community.

B.

The Concerns Raised by the

JEPA

An objective review ofthe record here indicates that the TEPA raises no concern

ofits own as to the revisions requested by

LERG.

Instead, LEPA’s objections center

around the potential objections that may be raised by the USEPA (12/20/00 Tr. at 84,97).

Thus, it

is important to explorethe predictability and cenainty ofthe USEPA’s actions in

reviewing this proposal.

During the negotiations leading up

to proposed Subparts U and

X, all participants were well aware ofthe role ofUSEPA in the process.

Clearly, the

USEPA has

the ultimate vote asto the approvability in whole or in part of

these

regulations.

And, it is in the best interest ofall the participants to gain federal approval

ofthe program.

6

---

Accordingly, when negotiating the regulations, the participants looked to the

model trading program, as well as to the NOx SIP Call notice to determine what was or

was not required.

This is never an

easy or

straightforward process.

In a number ofcases,

it was determined that there were specific imperatives implicit in the model trading

program.

This

led the parties to

agree to the language ofproposed Section

217.656

(a),

that incorporates specified parts ofthe model trading program by reference.

Other

provisions allowed discretion (examples include NOx Allocations and New Source Set-

Asides), that led to detailed discussion and negotiation.

When

theparticipants agreed

that certain flexibility could notbe attained (even within the “discretionary” provisions),

agreement was reached to accept the Federal language.

Examples ofthis include

proposed Section 217.656(c)(3) (monitoring),

which all but mandates the use ofPart 75

Monitoring fir SubpartU units, and provides that sources have separate

accounts for

emission units, even ifthey opt notto trade.

While JERO objects tothese provisions, we

believe

that the provisions included in the model trading

program

leave us little choice

but to concede such points.

When the participants agreed that

the model trading program did, however, allow

for flexibility, certain changes were made

that led tothe allocation system and new

source set-aside differences between SubpartW and Subpart

U

sources.

Such flexibility

allows for some ease ofcompliance, withoutviolating the

integrity ofthe program.

The

modifications sought by

IERO on behalfofits

member companies

tb.ll into a third

category.

That is the category ofnot knowing what the USEPA’s reaction will be tothe

program.

Subpart X 1~lls into this category, in its entirety, in that it is not partofthe

model trading program, but is a separate add-on which will require Federal approval.

7

---

During the negotiations leading to Subpart X, IERG

was aware thatthe

JEPA and the

USEPA had many discussions regarding all ofthe proposed NOx

SIP Call rules,

including Subpart X.

IEROwas not, nor should

it have been, a partyto such discussions.

What we are

aware ofis that:

a)

at no time did the USEPA issue any formal statements regarding the

rule; b) at no time did the USEPA appear or communicate to the Board any objections to

the proposed rule; and, c)to

our knowledge, at no time did the USEPA provide the JEPA

with definitive answers

on specific issues.

The uncertainty ofUSEPA’s future actions wasbest expressed by Mr. Lawler in

his response to a question by Mr. Marder:

butwe don’t know how far you could push them into

accepting it,

conditionally approving

it orjust saying

they

won’t approve it and we’re

trying to bridge the gap” (12/20/00 Tr. at

91).

Ms. Kroack, in respondingto another question regarding discussions with the USEPA,

stated:

“In our discussions on Subpart

X so far which have been preliminary and

not complete by any means,

..

.“

(12/20/00 Tr. at 89).

Clearly, the USEPA’s final decisions must be made inthe context ofa complete and final

rule.

This is particularly important in the case ofSubpart X in that it is a creature ofthe

Illinois program,

and is notpart ofthe model trading program.

The uncertainty ofUSEPA’s actions regarding State rulemaking can best be

demonstrated by a recent action regardingthe Illinois Emission Reduction Market

System (“ERMS”) program (35 III.

Admin. Code 205

et.

sea.~.

Attached to these

Comments as “Exhibit A”

is a copy ofthe December 27.

2000, Federal Register notice, in

which USEPA proposes to approve the ERMS program, subject to five conditions.

(See

8

---

65 Fed. Reg. 81799(2000); Approval and Promulgation ofImplementation Plans; Illinois

Trading Program~)

IERO was a

very

active

participant inthe negotiations leading up to

the adoption ofthe ERMS regulations.

IERG was aware ofmultiple discussions between

the USEPA and the IEPA on the ERMS program.

As far aswe can

recall,

none ofthe

conditions raised by USEPA in the attached notice were raised as conditions by the

USEPA before theBoard’s adoption oftheERMS rule.

Other concerns

that were raised

as possible approvability issues apparently were resolved, as they do not appear as

conditions.

The lesson here is that USEPA’s preliminary position often changes once a

rule is adopted, and can be reviewed

in context ofthe total program.

Ofparticular note,

is that it took the USEPA

fully threeyears

to come to the point ofissuing a proposed

notice ofapproval.

At this point, itis unknown

ifthe conditions will require simply

comjnitrnents or additional rulemaking.

What we do knowis, the ERMS program was

well into implementation by the time IJSEPA issued

its conditional approval notice.

In

the instant case,

Subparts U and X have future compliance dates.

This would give the

State ample time to

negotiate changes or,

ifnecessary, revise the rules to meet USEPA

objections, ifthey are forthcoming in a reasonable period.

There is, in fact, little risk if

the Boardgrants the modifications requested by TERO on behalfofits member

companies.

The modifications sought do not involve items requiring up front capital

expenses.

Instead, IERG seeks policy changes

that would allow the regulated community

to plan how they can best meet their obligations under Subparts U or X, and to make

informed decisions as to the feasibility ofconstructing new Subparts X or

U units, based

on the amount and availability ofallocations.

9

---

In summary, the onlything that

can be accurately predicted as regards USEPA’s

future action on a ruleniaking are that its actions arc unpredictable, and

that

such actions

will be a long time in coming.

IERG would submit that

it is inappropriate for the Board

to base its regulatory decisions on mere supposition ofwhat action the USEPA will take.

C.

The Effect ofthe Requested Revisions

JERO believes that the need for the requested

revisions is real and important and

that the arguments in opposition are flimsy, at best.

The remaining questions are:

Will

the grant ofthe modifications violate the integrity ofthe program?

And, will the grant of

the modifications harm the environment?

Any fair review ofthe record would leadto a

negative answerto both questions.

The integrity ofthe program is based on the issue of

whether emissionreductions generated by Subpart X units are quantifiable, verifiable,

permanent,

and federally enforceable.

LERO would stand on the testimony and

cross-

examination in the record on this issue.

There is nothing in

the record to demonstrate that

the use of alternative monitoring by Subpart X units would impair the integrityofthe

program

—

only the refrain that USE12A

may object because it requires Part

75

Monitoring

for the model trading program.

Yet, the proposal itself would not require Part

75

Monitoring to establish a baseline for Subpart X (reliance

on

annu~.l emission reports is

allowed).

Nor will, in most cases, Subpart X units ever operate, as they will most likely

be retired and shut down.

The only possible case where a reduction ofemission credits

may be appropriate to compensate for modeling error would be in the event that a

Subpart X unit continues to operate at a reduced

level ofemissions.

Even in that case,

given that the variance

in accuracy between Part 75 Monitoring and

alternative

monitoring is likely to be a slight deviation,

it is possible that the environment

will see a

10

---

net benefit.

For Subpart X units that cease operation and transfer their emissions to a

Subpart U or X unit (which will use Part

75 Monitoring), the issue ismoot.

Ofparticular

note, is that

the USEPA appears to be satisfied with the monitoring

provisions ofthe

ERMS rule

(~

65

Fed. Reg. 81804 (2000)) that do not include Part 75 Monitoring.

As

theBoard is aware, ERMS is a cap and trade system very similar to the model trading

program.

Regarding the question ofthe effect on the environment, there is little doubtthat

the modifications requested will, at worst, be

a status quo situation and, at best, produce a

net benefit by encouraging new and cleaner units to replace older and more polluting

units.

As regards the inclusion ofpost-1995

units, the issue can bestbe summed up by

the following exchange:

MR. MARDER:

“Ijust have one question.

Is thcre..any difference to the

environment for emissions that are

reduced

real verifiable, quantifiable,

federally enforceable emissions that are reduced from a pro- or a post-1995

unit, is there any difference to the environment’?”

MS. KROACK:

“No.’~

(See 12/20/00 Tr.

at 94-95.)

In summary, the modifications requestedwill not have an adverse effect on the

environment,

will not impair the integrity ofthe program, and will provide the regulated

community with much needed flexibility.

ILL

PRODUCTION SHIFTING

Both the IEPA and IBRO concur that

the concept ofpreventing production

shifting should be included in the regulation.

Both parties concur that the decision as to

what constitutes production shifting will, ofnecessity, be a case-by-case determination.

However, the record is replete with discussion as to what constitutes production shifting

11

---

(11/29/00 Tr. at 50-51; 12/20/00 Tr. at

101-102).

IERG’s contention is thatthe proposed

source-wideNOx emission cap for SubpartX facilities should be used to prevent an

operator from “gaming~’ the system by providing non-discrete emissions, yet at the same

time not be usedto prevent a facility from utilizing the legitimate economic benefits from

the property.

The language proposed by LERG is intended, not to limitthejudgment of

the IEPA, but, instead to provide some guidance as to the ground rules ofthegame.

This

language is intended to provide theLBPA~ the regulated community, and the Board (if the

issue comes before it on appeal), with abenchmark as to how a case-by-case

determination is to be made.

JERG believes that a review ofthe record will convince the

Boardthat clarifying language,

as proposed by JERO, is a necessaryand valuable

addition to the program.

lv.

VALUE OF USED PART

75

MONITORING EOUTPMENT

Additionally, at the hearing on December 20, 2000,

in a follow up question

concerning the value ofusedPart 75 monitoring equipment, Board Member Marilee

McFawn asked Mr. Marder to inquire ofIERO members as to installation costs and

salvage value ofsuch used monitoring equipment (12/20/00 Tr. At

35).

So far, IERO has

received two responses to its inquiry, which are includedbelow.

IERG

Member No.

1

JERG Member No.

I

advised that he was attempting to contact manufacturers to

get abetter handle on the salvage value ofthe equipment at issue.

He advised that he had

previously estimated a completePart

75

system at 8160,000.

This would have been more

orless a Cadillac system.

To resell a one-year-old system is a little like selling a used

car, except that you can advertise a used car in the papers and possibly have some

12

---

success.

Monitor users would wish to buy from a vendorthat will provide some sort of

warranty with the system.

Therefore, an industrial user would most likely be forced to

sell a system back to a vendor who could then either attempt to sell it with a warranty or

sell parts from

it,

The vendor would obviously not want to pay top dollar for the used

system; instead he would be more likely to want to pay salvage prices for it.

It is possible

that you could buy a system with some sort ofagreement providing for a buyback aI~er

one year at a set price.

This would most likely also involve a maintenance agreement

with the vendor so that he could ensure the condition ofthe system.

His rough

uneducated guess would be that the used system might fetch $25,000-S30,000, at best.

Thevendor mighr hope to resell it, alter an overhaul, for perhaps $8O~0OO-Sl20,0O0.

IERG Metuber No. 2

IERG Member No. 2 reported

that he could not provide actual information on

installation costs ofPart

75

monitoring equipment.

However, regarding the use ofused

equipment, he statedthat by the time a company pays for the equipment to be dismantled.

refurbished, transported and installed, it is usually

equal to, ifnot more expensive than,

brand new equipment.

For these reasons, LERG Member No.

I would not expect thereto

be any demand for such used monitoring equipment.

13

---

V.

CONCLUSION

IERG appreciates the opportunity to participate in this rulemaking.

The outcome

will have a profound and long-lasting effect on our member companies.

We believe that

the record beforethe Board demonstratesthat the revisions to the lEPA’s proposal

requested by IERG, on behalf ofits member companies, are justified, necessary and

prudent.

We urgethe Board to adopt IERO’s proposed revisions.

WHEREFORE,

LERG respectfully requests that the Board consider these

Comments,

and take further action consistent with the same.

Respectfully submitted,

ILLiNOIS ENV1RON1~4ENTAt

REGULATORY GROUP,

lA14~

By:___________________

One ofIts Attorneys

Dated:

January 9. 2001

Katherine D. Hodge

HODGE & DWYER

3150 Roland Avenue

Post Office Box 5776

Springfield, illinois

62705-5776

(217) 523-4900

IERG:OO1/Fil/RQI-17 Comments ofIERG2

14

“rtrITh~

1fllw~f~wrm~rn

---

COUNTY OF SANGAMON

I

SS

STATE OF ILLINOIS

AFFIDAVIT

OF SIDNEY M. MARDER

I, Sidney

M.

Marder, being first duly sworn, depose and state as follows:

1.

I was

the Executive Director ofthe Illinois Environmental Regulatory

Group (“IERG1~) from

1985

until

1999.

2.

Since

1999,

1 have served as a Consultant to

IERG.

3.

I

have participated in the preparation ofthe Post-Hearing Comments ofthe

Illinois Environmental Regulatory Group, which are being filed todaywith die Illinois

Pollution Control Board.

4.

The statements contained in these Post-Hearing Comments are true and

correct to the best ofmy knowledge and belief.

FURTHER AFFIANT SAYETH NOT.

Sidney M. Marder

Subscribed and sworn to

before

me this

f~§

day ofJanuary, 2001.

/

I

KELLY I EUBA1~JK

I

OF ILLINOIS

I

IERG:OO1IR-Dockets~ Fil/RO

I

-17/Sid Marder At~1davi~

---

Federal

Re~isterI

Vol.

65,

No~ 249/Wednesday,

December

Z7, 2000/Proposed

Rules

81799

attainment of the ozone NAAQS by

November 15, 2007.

The EPAproposes to: approve the

attainment demonstration SIP for the

EPA ozone nonattainnient area: approve

the Stale’s request to extend the ozone

attainment data for the BPA ozone

nonattainment area to November 15,

2007

while retaining the area’s currant

classification as a moderate ozone

nonattainment

area; approve

the on-

road motorvehicle emissions

budgets~

find that the SPA area meets all

remaining outstanding VOC RACT

requirements for major sources;and

approve the State’s enforceable

commitment to conduct a mid-course

review (including evaluation of all

modeling, inventory data, and other

tools and assumptions used to develop

this attainment demonstration) and to

submit a mid-course review SIP

revision, with recowtnerzded mid-course

correctiveactions,ro the EPA by May 1,

2004. lIthe subsequent analyses

conductedby the State as part of the

mid-coursereview indicate additional

reductions are needed

(or EPA to attain

the ozonestandard, EPA will require the

State toImplement additional controls

as soon as possibleuntil attainment is

demonstrated through phocachemical

grid modeling.

EPAcannot

finalize the above

proposed actions

unless and until

the

EPA approves all of the

Following:

I. The NOx.rules for Electric

Generating Facilities in East and Central

Texas

(30 TAC

sections

117.131,

117.133, 117.134,

117.133, 117.138,

117.141, 117,143, 117.145. 117.147.

1 17.149. 117.3121;

2. The State-wide NOxrules for

Water

Heaters, Small. Boilers, and Process

Heaters

(30

TAC sections

117.460,

117.461, 117.463,

117.463, 117.467,

117.480);

3.

The revised emission specifications

in the UPA area for Electric Utility

Boilers, Industrial. Commercial or

Institutional Boilers and certain Process

Heaters 130 TAC sections 117.104.

117.108,L17.108, 117.116,117.206 as

they relate to the BPA

area, and the

repeal of sections 117.109 and

117.601

as they relate to the EPAarea);

4, The administrative revisions to the

exiSting Texas NO~cSlP (30 TAC

sections

117.101—117.121,

117.201.-

117.223,

117.510,

117.520. and

117.570);

8. The two Agreed Orders entered into

by TNRCC and Alcoa, Inc. and TNRCC

and TexasEastznaw

6.

Lower RVP Progra.’i’.

in Last and

Central Texas

(30

TAC sections

114.:.

114.301, 114.302. and

114.304—

114.309);

7. Stage I vapor recovery Program in

East and Central Texas

(30

TAC sections

115.222—114.229); and,

8. VOC rules as

RACT for batch

processing

(30

TAC sections 115,150—

115.169) and westawater(30TAC

sections

115,140—115.149).

If

the

EPA

cannot fully approve all of

the above actions (one through eight),

EPAwill take final action on the

proposed reclassification as described in

the April

16, 1000 FederalRegister. To

the extent that comments received on

the

April

1999 proposed action are

applicable to this proposed rulemaking,

EPA will

respond to those comments

in

its final rulemaking action.

lv. Administrative ~equlrements

UnderExecutive Order lzaso

(SB FR

51733, October 4,

10931, this proposed

action is not a “significant regulatory

action” and therefore is not subject to

review by the Office of Management and

Eudget.’This proposed action merely

approves state law as meeting foderal

requirements and imposes no additional

requirements beyond those imposedby

slate law. Accordingly, the

Administrator c6rti lies that this

proposed nde will nothave a

5iBflifiC~~t

economic impact on a substantial

number of small entitiesunder the

Regulatory Flaxibility-Act (5 US.C. 801

el.

seq.).

Because this rule proposes to

approve pre-existingrequirements

under state law and does notimpose

any additional

enforceableduty beyond

that required by state law,it does nor

contain any unfunded mandateor

significantly or uniquely affect small

governments, as described in the

Unfunded Mandates Reform

Act of

1995

(Public Law 104—4). For the same

reason, this proposed rule also does not

significantly

or uniquely affect the

communities of tribal governments, as

specified by Executive Order 13084 (63

FR 27655, May

10, ings). Thisproposed

rule will net have substantial direct

effects on the States, on the relationship

between the national governmentand

the States, or on the distribution of

power and responsibilities among the

various

levels ofgovernment. as

specified in Executive Order 13132

(64

FR 43255, August

10,

19991, because it

merely approves a state rule

implementing a federal standard, and

does not alter the relationship or the

distribution of powerend

rP.!tpansibilities established

In the Clean

Air Act. This proposed rule also

is not

subject to Executive Order

13048

(03 F~

19585.

April

23, 1997),

because

it iS

not

economicaLly si~niflcnnt.

r~.

~

:~

~

~

—

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 volunraty consensus

standards

(~VCS), EPA has no authority

to disapprove a SEP submission for

failure to use VCS. It would thus be

Inconsistent withapplicable law for

EPA. when it reviews a SIP submission,

to use

VCS in place of a SIP submission

that otherwisesatisfies the provisions of

the Clean Air Act.Thus, the

requirements of section 12(d) ofthe

National TechnologyTransfer and

Advancement Act of

1005 (18 U.S.C.

272 note) do not apply. The proposed

rule does not involve special

consideration of environmental justice

related issues as required by Executive

Order 12698 (59

FR

71329, February lB.

1994). As

required by section

3 of

Executive Order

12985

181

FR 4739,

February

7,

19961, in issuing this

proposed rule, EPA has taken

die

necessarysteps ioeliminate ~rafring

errors and ambiguity, minimize

potential

litigation, and provide a clear

legal standard

for

affected conduct. The

EPA has complie4 with ExecutiveOrder

12650 (53 FR 8859, March 15,1958)by

examining

the takings implications of

the rule in accordance withthe

“AttorneyGeneral’s Supplemental

Guidelines for

theEvaluation of Risk

and Avoidance

of Unanticipated

Takings’ issued under the executive

order. This proposed rule does not

impose an informationcollection

burden under theprovisions ofthe

PaperworkReduction Act of 1995 (44

U.S.C. 3501

et

seq.).

List ofSubjects in 40 CFR Part 52

Environmental

protection, Air

pollution

conL~ol, Hydrocarbons,

Intergovernmental relations, Nitrogen

oxides, Ozone. Reporting and

recordkeeping requirements.

&uthortty:

il

U.S.C.iaoi

at

seq.

Dated:

December

aS. 2000.

Gregg A.

Cooke.

RegionelAdniinistretor. Regions.

Wk tjoc.

00—32848 Filad

12—26—00; 8;i~ em

aiwNo

cone usee-u-p

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

ILl

55—I; FRL-8923—3

Approval and Proinulga~lon

Implemenlatlen Plans;

lItln.

..~

Prugruin

P~i’.

~

.:r~ea~ral Protection

~fla.a

Proposed

rule.

~ThF~ThP’

¶1’

I

---

Federal Register

I

Vol.

65,

No.

249

/ Wednesday,

December

27,

2000/

Proposed

Ruins

ajijPw~

On December 16, 1997,

Illinois submitted rules establishinga

“cap and trade” program for volatile

organic compound (VOC) emissions in

the Chicago area.

Illinois issues each

major

source an allotmentof

allowances, which it calls allotment

trading units or ATUs. For most sources,

this allotment corresponds to 12 percent

below baseline emissions, Eachsource

must emit no

more than the

level at

which It

holds allotmenttrading units.

Trading of allotment trading units is

allowed, so that sources that reduce

emissions more than

u

percent may

sell allotment trading units,and sources

that radu~e emissions loss than 12

percent must

buy

allotmenttrading

units.

Itt

effect, trading increases the

allowable emissiort.~ of the allowance

buying source, equally decreases the

allowable emissions ofthe allowance

selling source, and yields no change in

total allowable emissions. The net effect

is to set a cap reflecting approximately

a

iz

percent reductionin VOC

emissions in the Chicago area.

USEPA proposes to grant final

approval of these rules if

Illinois

resolves certaInissues.

Specifically,

USEPA proposes that Illinois

must:

Clarify the timoline and penalties for

violating sources, satisfy USEPA’s

trading program policy on

environmental justice, provide for Full-

year offsets for new sources, commit to

discount credits where emission

reductions are potentiallyaccompanied

by emission increases elsewhere, and

•

commit to remedy any problems

identified in its periodic program

review.

~

Written comments on tbis

•

proposed rule must arrive on or before

January

36,

300l.

ACm

Send comments to:

1.

Elmer Bortzer, Acting Chief, Air

Programs Branch (AR—lSfl, United

States Environmental Protection

Agency, 77 West Jackson Boulevard,

Chicago, Illinois 601304.

Copies of the State’s

submittal are

available

for inspection at the following

addrass~

(We recommend that

you

telephoneJohnSummerhays at

(313)

188-5087,

before visiting the Region

5

Office.)

u.S. Snvironniental Protection

Agency, Region 5, Air and Radiation

Division (AR—16J).

77 West Jackson

Boulevard, Chicago. illinois

60604.

___R~fl~lrf~?a~1na’d

~4rACt’:

John

Surarnerhays, Regulation Development

Section, Air Programs Branch (AR—laJ),

t3,S. Environmental Protection

Agency.

Region

5, Chicago, Illinois

00004.

summerhays.john@epa.gov, 1312)

886—

6057.

In this

proposed rulemaking, the terms “we,”

us.” and ‘~ew” mean USEPA. This

document is organized according to the

following table of contents:

1. Introduction

U.

The Features

of the lilinoLi Trading

Program

Whet is tbu purpose of the program?

l’Iow does the program work?

What sources are lathe program?

What must sources in

ibis program do?

How

does

flhnois set baseline

emission

andellouneetlevels’

What elements of this program are

implemented through Title V permit.?

What penalties apply to noncomplying

sources?

Does this new program relax

any old

requirements?

III.

TheCrIteria USEPA Na Using to

Review

IllInoIs’ Pragrem

What types ofreview criteria is

USEPA

using?

What guidance applies to this type

or

emission tradiog program?

What criteria address sadafactionofother

CleanAirActraquiremonlsT

How does USEPA judge theprogram’s

emissions reductions?

IV.

USDA

Review

ofthe FeaturesefIllinois’

Program

Does the program’

1.

Assure

that credite are surplus,

quantifiable. aeforceabla, and permanent?

2.

ASsure Ihat appropriatemethods will be

used to measure emissions?

3. Authorizeadequate penalties for sources

that violate these rules?

4.

Adequately addressenvironmental

justic, issues1

5. Assure satisfactionof newsource

requirements?

B.

Providefor Illinois to identify

and

resolve program problems that arise?

V.

USIIPA Review of Expected Emission

Reductlou

How much emission reduction will be

achieved?

Can false credits

arise from “demand

shilling”?

Coo “spiking” be

aproblem?

Vi. l’tepoued

Actiou

What aclien

is LISEPA proposing to

take On

the

Illinois trading program?

What further commilmeab end program

revisions is USEPA proposing to require

from

illinois?

VII. Administrative Requirements

Executive Order12860

Executive Orderp045

Executive Ordor13084

Executive Order

Regulatory Flexibility

Unfunded Mandat&.s

Submission

to Congress andtheCompiroilor

National Technology Transfetand

Advancement

Act

I. introduction

On December16, 199?, Illinois

submitted rules for a “cap

and

trade”

program for emissions ofveIn

a

organiccompounds (VOC

~)

in the

Chicago area. Iii this program, seurces

receive allotments generally equivalent

to

12

percent less than their baseline

omissions, issued as the appropriate

number of allotment trading units or

ATUs. Sources must have emissions no

higher than the number of ATUs they

hold, so a source’s ATU holdings are a

“cap” on its emissions.Sources may

buy or sell AT!.ls and therebyincrease

or decrease their own

cap. This“trade”

of ATUs gives sourcesmore flexibility

in meeting program requirements.

Trading is expected toshiftemission

reductions toward sources that can

reduce emissions more cheaply. Trading

does not affect the net total emissions

allowed under the

program, which is

approximately 12 percent belownet

total baseline levels,

USEPAproposes to approve these

rules, provided that Illinois addresses

certain issues. Specifically. USEPA

proposes to approve

the rules onlyIf

Illinois:

(~)

Clarifies theapplicability of

penaltIes as given in CleanAir Act

section

113

for

violating sources,

(2)

satisfies UgEPA’s trading program

policy on environmental justice,

(3)

provides

for full-year offsets for new

sources.

(4)

commits to discountcredits

where emission reductions are

accompaniedby emission increases

elsewhere, and (5)

commits to remedy

any problems identified in its periodic

progra~n review.

II. The Features of the illineis Trudurg

Program

!Vh~t

Is

the Purpose ofihe Program?

The Illinois

trading program is

designed to reduce

VOC emissions and

thereby help attain the

ozonestandard

in the Chicago area- The Chicago area is

a Severe ozonenonattainment area.

How Dear

the

Illinois

Trodin~

Program

Worlc?

The Illinois

trading program is a cap

and trade program. Eachpartidpating

source is subject to a cap on its

total

omissions, butsources may redistribute

the allowed emissions by trading

allotment trading units. The Illinois

Environmental Protection Agency

(TEPA) establishes a cap For each

lIllian,.. ~ises

tb.~

j:m

‘Volatile

Organic

Macerial’

VCMI

rc~’q:

tiia~

VOC.

The

Siuts’s

deftnuhun

of VOM

ii

squlvaleat

to USEPA’s

cefietUon atVOC. The ~va ternl.5

are

wh~a

z~c’~ssin;

volatile

oigani~

,iauloas.

I’or cooe,,:~cv with the Aetand U5EPA

rolivv, :~s

:ulecrnkinr

uiss

the,

term VOC.

81800

---

Federal

RegisIer/ Vol.

65,

No.

249/Wednesday,

December 27,

2000

/

Proposed

Rules

81801

participating source as a function of

ozone season emissions during a

baselineperiod (generally 1994 to 1996).

n

most cases, this cap is sat at 12

percent below baseline emisslong.

Eachyear, the State issuesallotment

trading units or ATUs to each source,

reflecting the source’s cap level of

emissions. Sources are required to hold

a number of ATUs that is at least

equivalent to their actualozone season

emissions that year. Ifa source emits

more or less emissions than corresponds

to its State issuance of ATrJs, it must

purchase or may sell ATUs,

respectively, until the source at a

minimum h7oldsthe number of ATUs

that correspond to the source’s

emissions for that ozone season.

It is Immaterial whether changes In

emissions are due to emission controls

or production level changes. Per

example, a source

that emits

is

percent

lessper widget butproduces lopercent

more widgets is still required to

purchase ATUs.

If no trading were to occur, then each

source would have to limit

its emissions

to its allotment level1 which again in

most cases is 12 percent below baseline

emission levels. Trading of ATUs allows

redistribution of emissions from the

seller to the buyer of ATUs. For

ex.~rnpIe. if a source

was issued ATtl~

for 50 tons of emissions but emitted

75

tons, the source would haveto buy

25

tons worth ofATUs, generally from

anothersource that reduced its

emissions to 25 tons below its allotment

level. Presumably, sources that can

reduce emissions more cheaply will be

selling ATUs to sources for wham

controls are m’ore expensive. However,

this trading does not increase the total

emissions that are allowed from the

universeof sourcesin the

program,

Consequently, totalemissions from

the

sources in the program are subject to a

net cap equal to approximately

lz

percent below the total baseline

emissions.

The rules for the Illinois trading

program provide various tools for

implementing the program. The rules

provide for an electronic data base for

tracking ATUs. Thisdata base will

include information ott the tradesof

ATUs. the current holdings of each

source, and additional information such

as recent ATU prices. Thus, after a

source reports Its ozone season

emissions each year, it is then easy to

identify whether a source has adequate

ATUs toaccommodate its emissions for

that year’s oaone season.

What

Sot~vs Are

in the Program?

Participation in the trading progre.izt is

mandatory for essentially all major

sources of VOC in the Chicago area. In

this area, “majorsource” of VOC is

defined as a source with the potential

to

emit 25 tons of VOC per year. The only

significant exclusion

ofmajor sources

from

the trading programis for sources

that emit disproportionately little

during the summer, specifically for

sourcesthat emit less than 10 tons

during the ozoneseason.

Participation is

mandatory for sources throughoutthe

Chicago ozonenonattainment area,

including Cook, l2uPage, Kane, Lake,

Mclionry, and Will Counties, as

well as

townships within Grundy County (Aux

Sable and Cease LakeTownships) and

Kendall County (Oswego Township).

Additional sourceshave the option

for voluntary participation. Illinois’

rules include separate “opt-in”

provisions for small industrial sources

and for mobile and area sources. Any

person who

arrangesemission

reductionsfrom such sources may

petition IEPA to receive allotments

corresponding to the quantity of the

omissions reduction. The direct or

indirect sale of these

ATUs to a major

source will then shift the burden of

emission reductions from major to

minor sourcesbut will not alter the total

emission reductions thai must occur.

What Must Sources in This Program

Do?

Sources in the

Illinois

trading

program have several obligations. First,

the source must evaluate its baseline

emissions and submit this information

as

part of an application for

an

allotmentof ATIJin. The application also

must identify the

emission

quantification techniquesused to

determinebaseline and futureyear

emissions and must justify any requests

for exemption from the

12 percent

reduction that is normally reflected in

allotment levels. EPA uses this

information to determinethe allotment

it will

issue

tothe source and to

e*tahlish the methodsthat

the ‘Clara,

shall use todetermine future emissions

levels.

Illinois beganissuing ATUs in early

2000.

(The rules provide for first

issuanceIn

iggg,

but Illinois has

deferred this one year.)

Each source is

required toapply the identified methods

for determining emissions during the

o2one season,

definedfur the trading

program as May through September.

Now, the most importantsource

obligation has begun, namely toassure

that emissions are

no higher than the

quantity of ATUs held.

How Does Illinois Set

Baseline Emission

...4 Aliorznenr Levels?

Baseline emissions generally reflect

VOC

emissions during the ozone

seasons in

1994,

iggs,

and 1995. Illinois

adjusts these emissions velues

downward If the emissions exceeded

1996 allowable emissions levels,

whether due tononcompliance or

because 1996 limitations were notyet in

effect. Illinois adjusts these emission

values upward if the source reduced

emissions after 1990 below the level

required as of 1996. In most eases,

baseline emissions reflect the average of

the higher two of these three ozone

season emissions values. However,

the

option exists for sourcesto demonstrate

that their production levels were

unrepresentative for one or more of

thoseyears end to substitute a value(s)

from a more representslIve year chosen

from

1990 to 1993 or from 1997.

Once illinoisestablishes baseline

emissions,it can determinethe quantity

oi’ATTJs tobe issued tothe source. In

most cases, allotments are set at 88

porcentof baseline emissions, targeting

a

12 percent emission reduction.

An exceptionapplies if the source can

demonstrate that

an emissions unit Is

well controlled end shouldnotbe

targeted for further reductions. This

exceptionis possible If the source is

meeting a recently established Lowest

Achievable Emission Rate limitation, is

meeting a MLCmunl Achievable Control

Technology limitation, or has Dust

AvailableTechnology. In such eases.

allotments for such a unit are set at the

well controlled level.

What Elements

ofThis

Program Are

Implemented Through Title VPermits?

The State uses source operating

permits

toimplement several features of

the trading program. As mandatedby

Title

V

of the Clean Air Act, Illinois

requires operating permits for all major

sources, which it calls Clean Air Act

Permit Program (CAAPP) permits. These

permits must identify all requirements

applicable toa source and canbe issued

onlyafter input from USEPA and the

public has been solicited. Illinois’

trading rules require participation only

from sourcesthat must obtain a CAAPP

permit. Thispermit is used to formally

establish the source’s baseline

emissions, identify any maximally

controlled emission units that are

exempt from the 22

percentreduction

requirement, set the quantity ofATUs to

be issued to the source. and specifythe

methods to be used to measure

emissions. To

incorporate these items

into the CAAPP carmit, the State must

fellow procedural requirements that

~ici’~

am~l’i ~p

~‘,rtunitvfor USL’PA

md the public to have input into any

relevant

issues.

IT

---

Federal

Register/ Vol.

65,

No,

249/Wednesday,

December

27,

2000/Proposed

Rules

What Penalties Apply to Noncomplying

Sources?

Sources violating the

requirements of

the Illinois trading rules are liable for

the

fullpenalties authorized in Section

113

ofthe Clean Air Act. One type

of

noncompliance Is violating

requirements for measuring and

reporting emissions. A second typo of

noncompliance is failing to hold ATUs

equivalent to the year’s ozone season

emissions.

Sources mustgenerally secure

adequate ATUs by December 31

of each

year, that Is, within

3 months of the end

of each ozone season. A source Lhat

holds insufficient ATUs at

the end of

the year then has a “second chance’ to

secure ATUs equaling

120 percent Lor in

some cases 150 percent) of the shortfall.

This“second chance” appears to last for

3 additional months, thoughUSEPA Is

requesting clarification from IEPA en

thispoint. Asource that holds

lnsu~icient ATUs after this “second

chance” isa violating source. This

source could be subject to various

enforcement~~tionsand would be liable

for penalties currently authorized at up

to 527,500 perday for each of the 153

days of the ozone season.

Does This NewProgram RelaxAny Old

Requirements!

In general, no. Most importantly, no

emission limitations are relaxed by this

program. The limitations requiring

reasonably available control

technology

(RACT),for example, remainfullyand

independently enforceable. That is, a

source that exceeded its RACT limits

would be liable for enforcement action

regardless of thenumber of ATUs it

held.

~

The one pre.existing requirenient thot

the illinois trading rules modify is the

requirement for offsets for major new

sources and major modifications of

existing sources, In these cases, the

source obtains offsets by obtaining the

appropriate number of ATUs rather than

by traditional moans as part of a

construction permit. Since the Chicago

area is a severe ozone nonattainment

area, sourcesmust obtain 1.3 tons worth

of ATUs (or each ton of new source

emissions.The State issues no ATUs for

new sources or for modifications. The

ATUs that

thesource must purchase to

accommodate these new emissions are

available If and only if some other

source has made a corresponding

reduction in itS emissions. Therefore,

the trading program provides oFfsets that

to

principle

are equivalent

to offsets

nrovided by traditional

means.

kowever, the use of the trading

rules to

provide offsets has several ramifications

for the quantityof offsets required and

obtained. Theseramifications are

discussed below in the

review of

Illinois’ program.

III. The Criteria for Reviewing Illinois’

Program

Whet Types of Review Criteria Is USEPA

Using?

USEPA must use several types of

criteria for evaluating Illinois’ trading

program. First, USEPA has established

numerous criteria as part of published

and promulgated guidance on economic

Incentive programs, including guidance

enemission trading programs. Second,

USEPA must apply guidance on any

other Clean Air Act programthat is

affected byIllinois’ program. Third.

insofar as the purpose ofIllinois’

programis to achieve speciSed emission

reductions, USEPA must evaluate the

Stata’s estimate of anticipated

reductions.

The guidance most relevant to

Illinois’ trading programis the guidance

on economic incentive programs

published on April 7, 1994,

promulgated as subpart Uof part 51

of

titie 40 of the Code of Federal

Regulations (40 CFRSI). including

sections 51.490 to 81.494,

Although a

portion of that guidance speaks to

economic incentive programs that are

required in certain circumstances under

the Clean Air Act, that portionof the

guidance is not relevant here. instead,

the

relevant portionof that guidance

addresses voluntary programs, with the

general purpose ofassuring that the net

effect ofany emissions trading (or

actions under any other economic

incentive program)

does not cause

violations of any ofvarious

requirements of the Clean Air Act.

More recently, on September 15,

~1999,

at 54 FR 50086, USEFA published

notice of availability of proposed

revised guidance on economic incentive

programs. This guidance proposes more

detailed recommendations for many of

the

issuesaddressed in the 1994

guidance and also provides guidance on

several types of programs notaddressed

in the

1994 guidance.

One issue not addressed in the

proposed guidance Is whether this

guidance applies to programs developed

before the proposed guidance

became

available. WhenUSEPA publishesnew

guidance,

USEPA often allows an

exemption from that guidance for

submittals that the State adopted and

submitted prior to the proposal of that

guidance. This exemption is known as

~grandfathering.”This practice allows

us to approve programs that the State

adopted in good

faith according to

guidance available at the time. Since

Illinois submitted

its

programott

December 18,

1997, today’s rule

grandfathersthis program from most of

the 1999 proposed guidance and instead

reviews most aspects of this program

against the criteria published in 1994,

Today’srule nevertheless uses one

element of the

newer proposed guidance

in our review ofillinois’ program,

namely the element that addresses

environmental justice and related “toxic

horspot” issues. Environmental justice

refersto efforts to assure that areas with

highpopulations of minorities or

low-

income persons are not unfairly exposed

toenvironmental hazards such as toxic

air pollutants. The proposednew

guidance identifies specific issues tobe

addressed toassure that

trading

programs do nothavean Inequitable

impact on environmentaljustice areas

or othercommunities ofconcern. We

are applying

this portionof the

proposed guidance due to the

importanceof this issue and because

relevant guidance

was notpreviously

available.

For etherIssues, USEPA intends to

examine Illinois’ program in light of the

new guidance oncethe new guidance

Is

Finalized. IJSEPA has discussed these

plans withIllinois. Illinois and USEPA

share an iuiderstanding that we will

review the programaccordingly and

Illinois will reconcile the

program

to the

new guidance

within threeyears after

guidance issuance.

A second set of criteria is that the

program not result in contravention of

any Clean Air Act requirement.

As

will

be discussed below, the Illinois trading

programhas little effect on other

programs, and so only limited guidance

on other programs must be considered.

A third set of review criteria is for the

quantityof emission reductions that the

program is likelyto achieve, These

criteria reflect standard judgments of

emission inventory estimates. This

review is expected tobe relevant in a

future review of whether Illinois has

provided sufficient emission reductions

to attain the ozone standard.

What Published Guidance Applies to

This Type a! Trading Program?

Guidance publishedon April 7, 1994,

promulgated at 40

CFR 51

subpart U,

gives guidance on numerous features of

trading programs. Thisguidance helps

assess whether State programs:

.

—Assure that credits are quantifiable,

surplus, enforceable. e.nd permanent.

Quantifiablemeans that the quantity of

emission reductions can be estimated.

Surplus for this

type

of program means

that reductions creditable to this

program are not already required under

81802

---

Federal

Register/Vol.

65.

No.

249

/ Wednesday,

December

27,

1000/ Proposed

Rules

81803

other programs. Enforceable means that

the State and

IJSEPA can take action to

require compliance with the program

requirements and dater noncompliance.

Permanent here means that reductions

are required

as longas the trading rules

are part of the State Implementation

Plan

SZP~

~‘—Assurethat appropriate methods

will be used to determineemission

quantities. The

1994 guidance requires

that the submittal “speci1~ the approach

or the combination or range of

approaches” that will be used for each

source category to quantify emissions,

and provides guidance for judging

whether these approaches are

acceptable.

~—Authorizeadequate penalties for

sources that violate these rules. State

programs must authorize enforcement

actions and penalties as permissible

under section 113

of the Clean Air Act

(currently,penalties

up to 327.500 per

day perviolation) or equivalent

penalties based on the size of the

violation measured In tons.

IUSEPA is also

evaluatingIllinois’

programagainst criteria in the 1999

proposed guidance for addressing

environmental justice issues. USEPA

sharesthe commonlyexpressed concern

about the possibility of trading programs

creating localized

increases in

-

hazardous air pollutants,bothin

minority and low-income areas

(“environmental justice areas”) and

elsewhere. This is a concern with

programs that address VOC or

particulate matter emissions,insofar as

these emissions may havehazardous

constituents. Therefore,USEPA’s

1999

proposed guidance

identifiesfour

elements of well designed trading

programs, including(1) prevention or

mitigation of unacceptable impacts,

(2)

provision of sufficient information for

public review, (3) suitable opportunities

for public input, and 4) periodic

programreview to Identify and remedy

problems.

Does the Program Affect SaLisJ~ction of

Other

Clean Air

Act

RequIrements?

An importentgeneral criterion in

reviewing any trading program is

whether the program affects other State

regulatory provisions such that

the State

no longer satisfies Clean Air Act

requirements. The specific criteria tobe

used in programreview

are a function

of the particular provisions that

the

programaffects. Forexample, many

trading programs allow relaxations from

RAC’T (counterbalanced by

other

reductions) or allow alternative

reductions toachieve RACT.

Such

programs must be reviewed based on

criteria that address whether the

alternative set of limitscontinue to

satisfy RACT requirements.

As noted in the prior section

describing the Illinois trading program.

Illinois’ program has

no effect on

emission limitations that satisfy RACT

or other assored Clean Air Act

requirements. As a result, no detailed

review of the Illinois program is needed

to conclude that these requirements

remain satisfied.

• The only existing provisionin Illinois

rules that the trading programaffects is

the requirement for offsets of emissions

from major new sources and major

modifications. Sources conventionally

—obtain offsets as part of a construction

permit. Therefore9 sources

conventionally obtain offsets in advance

of construction,based on shutdown or

reductions at a specified other source.

Under the Illinois trading program,

sourcesobtain offsets in the form of

ATUs, which represent emission

reductions at the source or sources that

no longer hold(s)

these ATUs, In effect,

the source obtains offsets on an ongoing

basis, perhaps from different sourcesat

different times.

aTheoffset requirement Is established

in Section 173

of the Clean Air Act.

Section 173(c) requires that “the total

tonnage ofIncreased

emissions of the air

pollutant from the new or modified

source shall be offset by an equal or

greater reduction, as applicable, in the

actual emissions

0

from the same or

other sourcesin the area.” Section

173(a) requires that these offsets be

sufficient to assure“that total allowable

emissions From existing sources (plus

any new source emissions) will be

sufficiently less than (existing

emissions) so as torepresent

reasonablefurther progress.”Section

182(d) generally requires

1.3

tons of

offsets per ton of new emissions. These

requirements set

the principal criteria

for reviewing this aspectof the Illinois

program. The program review below

discusses these criteria in more detail.

Maw Does (JSEPA Judge the Program’s

Emissions Reductions?

illinois’ trading program submittal

includes an

estimate ofthe

emission

reductions that it expectsthe program to

achieve. US EPAmust review baseline

emissions estimates from Illinois and

differences between baseline emissions

as definedby the programand average

actual emissions, tSEPA must also

evaluate the

impact ofassorted program

features such as exemptions from the 12

percent

reduction,

potential use of

a

special ATL

fund, the distribution of

ATUs

upor. soc

shutdown,

and

the

possibilityof ATC creation from

reductions by small sources. This

review will also address the possibility

of false credits from

‘demand shifting”

(e.g.

shutdown ofa gasoline station

leading to increased gasoline sales

elsewhere) and the possibility of

“spiking”

(i.e.

hoarding of ATUs now

followed by high emIssions inafuture

year).

IV.

USEPA Reviewef the Feature. ef

Illinois’ Program

Does the Program Assure that Emission

Reductions or. Quantifiable, Surplus,

Enforceable, and Permanent?

USEPA’s guidance on trading

programs includes four key principles.

that emission reductionsin these

programs be quantifiable, surplus,

enforceable, and permanent. This

section will review whether the

emission reductions inIllinois’ program

are surplus and permanent. Subsequent

sections will review whether the

emIssion reductions are quantifiable

and enforceable.

“Surplus” here means that the

emission reductions are beyond the

requirements which are alreadypart of

the SIP. illinois’ trading rules use the

existing SIP as the baseline from which

further reductions are calculated. This

approach is used bothIn setting

baseline emissions levels for major

sources, from which a 12-percent

reduction is calculated, and in assessing

the number ofATL’s tobe issued for

emission reductions by minorsources

and mobile sources. Thus, the

reductions from the Illinois trading

program qualify as surplus.

A questionabout whether

the trading

program reductions are surplus may

arisein the future. if Illinois adopts

further reg’&latiens,

LYSEPA must

evaluate whether the reductions

pursued by these regulations would also

help meet trading rule requirements. If

so. then USEPA would View the trading

rule as continuing to achieve the

reductions accorded toit in this

rulemaking but would view the further

regulations as achieving no further

reductions. For example, if Illinois

adopts a car scrappage programthat

allows generation of ATOm basedon the

emission reductions, then USEPA

would view this programas

redistributing the emission reductions

of the trading program without

producing further reductions.

“Permanent” is defined in USEPA’s

economic incentive program guidance

88

aSsuring

that the emission reductions

will endure

as long as the ruleapplies

and as long as the StP relies on these

reductions, This ezinci pIc is satisfied

because thi~ Illin&s trading rules and

~T1fl~fl~

---

Jo

£~iq~usod oq~

u~dseo

‘suone~wri

t’w~

eo~sgyuie

30~i5~V*

~M

a~oei~cIuzoe

O~!nbs~

U

5esP~bOj ~eq~

dr; suo;ss~we

tie

CsodusT

£TI53JdI~I

5w~5oJd ApvI~.pue-duJ

:sO~e~5

B~n.~~pJn~

01~J, .~~jQ~fi~ufl 5dVR SuJseamtr;

sapux~

alum £pnezequ~ uel3o si.ues~osd epsz~

pUU

duo i’qi seziugo~a±

pus ‘szgej~o.zd

apes; pun de~ puc swus~o.zd 5t~pvi

iopusunode nee~~aq seorza.rej~p

iuoidL;

nip se~ou ezuep~n2 pasodoid atp

suopRn~e.4e unu8wd ~!p015Sd

(I) ptw ‘uo~iunIuAa PU, ‘uope~uewe;duri

‘uS~sep inus~osd u~ uotidtgiijud o~~qnd

(c)

‘uop,d~a~issd puS

MOIASJ

jnj8u~ireew

.zoj e~quflDAe epum oq o; uoT~uln.Io3l1;

;tte!OWns zoj suep;Ao.td

i~

jo uojnq!.rlsjp uo!ss!mG io suell~slwe

u~ meSuwip

es.taApv is.uuoiod a~e~plw

30

VIOAQd ~ut~I

SUOl5lAOZd (t)

~

s;tiainaje asati

~SdYH

Jo suopu.nueauo~

P~~l’~0l

tIJ

5CSUOZDUJ 3~WtZX5~qOid

PleAD

O~ ptru 0D1I5n~

U5tfl’.OsjAUe

esnsse

0;

sures~osd 3sz~pe.1;

tri poptipt!; eq

Oi

suatneja £a~ mo;

sasodord eu’v~So.id oApuQatl;

O!LbOt!e~e

no enuep nsrsodozd

ses~

~tr;pui

sip

lSt

itropanpes UOts5lWe

)QA

p~5OUO8

sip 2u~puuisipj~niou ‘Buo~;es~tze:~uoo

dVH

I.!!

OSIOJOtIl

~mo~

U

a

3~j5t?5J1

;q!pn

;!i~

ino~o ;t~8;tn suo~ss~we

~DAjo esuOmoill ieooi a wsp £;;pq~ssod

eip woJJ

551.IC

Senssl

etp

‘;~nsas

uIV

(3dVH)

sluDln;Tod

spi

snopiezut~

0.19

P52~l~i~8~ SIZ!oq DOA etpjo ;esqns

I

esfiuoeq 85130 3aflss~ aseip

pwa;mu~

‘auollnqiIlslp

U0155Ut0

01

eA~115T30sU1

s; ;uip tue~qozd jutzoi0s.t

i a;

ije

enozo son;osu; ‘anozo .toj

sense;

lOU S30 SSOUJ,, ‘UOPUOOT

Lut ~; il~~;unb

z~u

poueeso~

a;

peel ;i~Snn mus~asd SIOUIIII

eq; seipeij&~ a; nojiserib pa;ujaz y ~

Peleindod £;poupn PhD eweae;

Mel

UT

£~yenb

5~

00

OAUtf

1~l2!’ZZ

i±iuzSojd

sioix~~p sip boe3;e

)I~M

s;asst

uopsenb

eq~

5hZo~e Uop9~j;!WLioleinSessue;

put Svop1puoa

~~UOImIOi~AVe

tiBJOM

o;wefqnsezu soars po;njndod£;sou;iu

PU, OtIioDu;

AWl

hip

A;;;1q!~SOd

alp sumeatsoa ,,eopsn~ ;u1uewuoz~u~,,

650fl551

B~fl2flf~O7LWU1UOJ7Ati~

SS8JppViClelDflbSpVwo~ffo,rj eq; seo~

~

;uewe~so~uoe;uudosdde

so

e(qe;~ p’tni

IJOI;IIOIA ti

eq Jo

Lrasseoeu etp ~u~tzu~qo

Jo; eu~;puop

e eAtt

seamer ;etp

O~UZ1SdOW0P imp

suopuog;sep si~wqns ~WhS

5tfl ~ A;uo

se;ns eseip enosdde 01

5~U5hUJ

Vd~Sfl

‘omze;ldwoa zoj eulmeapseep e BurAet

jo eotti;~odur

oq; ueAi~

~u~sdozdde

at

uopowsdse;u;

51p seiprqM

£~rep ls~’w eio;s

sip

;eq;

eAe~leq

SM

‘DOUI!ldWOO

.103

euppeap, Su;~(;duz;

SW

SOjUI

0t~ SMS;A

Yd~SI) ellqM

‘~3~p~5

;uouiseao;u•

O~U8intnoap;TtO~ olu;~ sip pita se;ns

oqi ~upIle~A

ec

~peop

P~I10M

earnee

~q;

‘sru.y

~~sseaau e4~ peiti~pxnd sou

pn~ssnbat

ZOiplan

seq a~c~~’ ~

‘~

l’OY

£q;; ‘i~flDJeua3 esop~ •woip o; penesi,

sn.LV;o soqwnu

nip

U! t10~fl~OJ

e

4tienbej a; searnos .zoJ

SU!1)t1Stp

0

eq snip

PifloM

OhUP

Bjt~3, ‘t

lpdv

ineqo £q

~JJN

slimsJ Isnut

B1U~ sip ~t

Aepq sn;~aq

nosees snob

;xsu sip s~u~

ernjpIop

opi~ ep o £;dw; snot

sapsuoa.;w~oesd

‘JSASMoH

‘Univ

~upesradwoa tx;e;qo

hStflhl saosnos

iPIIIM

£q

euqpesp

Pil~C

UD LiRtlepi

IOU

op

moms ,5l.0UflU

~

u~’~g~

U~ psz;setpns

ee

seuteusd a; ~s~qnsa; poe swesasminbom

WUJ~OJd Sip ~UpUI01A

~1

JUJhiO1~S

L~

ieqwooo~ s!

503 ahusuedukoa

0i

s~Ju;

wq;

eosnos y

‘zooiV ;xsu eq;

303

SThLV

31M83

Luew ;utp pens.; eq o; ;ssnbos so

•

£sueseisa

Dip

osuipand

zoip;e ;snm

eamnos

~

•J55j~

sno!AO:d

am

ll’J1~~4’

V

peq

OslO

90,1005

eqi 1! il~W~l~ eq p

iue~ssd 0& si e~rnqosnseq; ~nq‘115J30ii5

sipjo macsod Of ~ll0i5U*B

s~ eimoipans

eu~. ‘eS.rrnpsns

u sn;d sSta~p;oq

n,Lv

zeo~C.;o-pua s;

ii; ;~u~soqs

a; ~enbomn±y

u;e;qo

~snwe,mnos

eqs ,.‘smrarp

puoces,, 593

U

-muoissr~ns

511 5iO~O1DWO0Ot 0

,,BrlUmp

puo~se,,

a

sm

suo;sBtwo uosusS suozo

S~!

omupommocow o; usqi

snj.v

muo;ownsu!

~p;~q;mp sosnos ~

iuq;p

.1eqweoe~£q muo!ss!ws s,uos’aes cuoze

us a; lusluAlube

1505150

5fl,LY

p;oq

a; peioadxa

~puupJO

sin s~omno~

~55JJ5503(113

hUOWOJlflbSJ ~PP

Lqe;npetps Otfl~Up05~J5L

‘p~~~jdteo~

.3*W

s

;ueinsnnboz 2nip;oq ~jy

eqs

uopujo;a Jo; Ass

j;qeo;;ddy

s;uatnesznbes

Supsodei put ‘~udesipzoaez ‘Supasuate

30

5UO~1lo!A

JOJ pZUMJOJSIZs

5;

seppmsd essq;jo

£;~~;quo;~ddv

sitieutei;nbas

wesSosd~ Strtpes

;ou~m Jo.

5505910!A 503

epniiu~stu sup

jo Saplitied

eqs jo Lop

ipee 103 UORU;oA 1!

53 pall

jua

sq;smn isone; 5’JOZO

US

.103 U0j500)iiI

snip

ss~peds .zetpmnj eouep;nS ~

insjoAluba rsip so;o~ .s~ useD eqs p

£11,

UcISOOS

ii;

pozIJoiIIUD is;;joued

5’4l

io; eiq~;i Lptpua;od eq swsmesnbsz

wni~ozd Sn;po.Is elulolA i’~q;

usamnos i,t~; sem;nbos

ODUSpIOS

VdaSfl

~se,n~g

ssaq~

el~O.~A

wip saOJflO5’

aol

SGIiOUSd

ewnbopy

5Z,LJOtfwv

ww~osj

sql

SGOfJ

‘;os~qns sip uo soirep~n~ ¶‘BBt aMSs’

IISM

51

SpoiflOlD

uo;;uog;~uvnb uo;sspuo

30

hUSIUqS3jCjul5B

opedsei

45M

aouep~i2jterodo.id ;uecat sip

se;JsImos

‘0.103539143, ~iS0Xfl05

o~r~sdsso; spoipatocgpads ss;nbsz

o~ ~;pnsedA

OIILI. sesn ;nq mains Si!

III

spoipein eAJ3dUmflsesd seu;suap; s;eUlfly

‘a;os~sip Lq pesodord poipein sq;jo

uo!5os(es 01 Supue; udess

51ju1

01

Vd~Sfl

.rc,;

~5lLm3Joddo

d9p-~

e

poe iizotou.ton

~1l~V~d

zoj

£slulmoddo

Aup-O~

S

sseje

I

as ~u!pzo~u

pL~::I~nAe

eq

Os

spoipeum 10

5

1101rep0g pesodord

5141

11!

uo;ldo

uv

iwodosd

sup

sujrpes

;~JuJ U;

mus~omd eq~ imp

ipIOM

5521

0~UDPTIiS pssodosd itisail

msus2u

tnes8osd

.e:om;r;

Su;MCIAOJ

i.Bzioip;v

,‘pua.1snc Ion 5

~

‘esepdosdd.

955

spotp~to u,eaznou ipos

muip

OJTISSS 01

o;;qnd .14; put Yd3Sfl soj As;uns.zoddo

;suop~ppu

55p1&oid pue ‘pssn

eq e

ssqaeozddu p

aSuu.t so ipesidde

eqs £flaeds a; smusgord Zo; (P)C6Irln

IAD

Ot

30

eouep;nS eqs souspus

ww2ozds;ouflfl

9141

‘snm.p

-a;qeUopos!qo

;pnsad sip spu~ 1151 isuired eqs

OlGA ACm

Vd3Sfl

q~;q~

ic;

poised Rep

o pun ;;unod

ijeip

ejo Ma!Aei ~;;qnd

Asp.Oc

13

2U1pUpu

‘sse~wd A ep;,j,

8145 05 1uoss’4S~ ore ;utj;

M51~.~53

spotpsw

so

sap

uU.1oddo

eqs eaeq e;~qnd

eq; pun Vd3S.1 ‘X;;uenbesua~ i;uised

A 5P1. a,a~snos sip

LIJ

peupads sq os

5513 COSTIOS t~U5

.103 pes~t sq oi spoipeum

sip ;uq; a;ep;p sapu

sloUllil “41

‘oosnos qotajo ;un qote

aoj

pesn eq a;

P014151I eqs

jo

tiO!iooUpeds sip

MOTABS

em

A;;uu~soddo WUOfl5ppS

‘11

O!~qfld

sip pus

v~~gsn

sap;AO:d

iirei

Old

sousjii eqs

55BISip55A5!4 ‘30100ju5

sip

MS

ASS

0

£~nrns.ioddo eli;

UOATg

sq o; s;

Vd~SI1

se~fl5qM sospoqisin

~0

5&1IU

U Wom; iresoqa eq 010311 55051105

mujilopiud

.101

spoipain uopweijpuonb

UOIsSTWo a;nopsed

MO’4 SSSJppO

;oirseep souup;nR I’86t ~,Vd~5fl

~.~s0;Asp

jO.ilUoO Mrs

JO

(eoAop jo.rsuoa adA;-AzsAoSeS) Wessis

uopdso;po

uoqsua u q~

pedd;nbe seu~j

gtl;;UISd ~UU‘55Ul~ ~trpeoc ‘azssuss2ap

103

POSTS

Allt0dJ~5

55

SD ‘51D150511fl

~atOAO~1

IIlfl Sju555WW MtJO

5U55tlO0

WOA eqs~uo.pssoq’Uefle;naja0 eou~juq

o!JehetU,,

55

P01159W

15~53 sip ‘a;dunmce

IDA ‘,,sisossuuus ~ouosuas

eupesesep

a

spoipeto e;qesdeoos OJI

‘esep Supesedo pun ;ndqSnosq;

ogpsds

-Beiiuas

IhOASIOS 141M Uep0Ufl(t?ea

ill,, ‘tp;qM

spoqseesp

w~uszs se~nuep;

0~c’go?

hiopoeg

~s~im

uo;sspno

jo

siLls qous s03 pests eq os upoipew

segl;uep;

tow9o.id slouslis

sqj.

13505802d

Oip

U

4CsoSe~ei

50*50,14038.103

perusq Rem;eq; seipsoidde 30

so tpeosdde sip 4;oods

em em swus2ozd

;sip 555555

(p)cstz.9

~

at

is eouup;n~

•suolsspnS jUWP5

003eJ

AI81lJfl~1l

siiopms;s~s ocuex;duaoo

put uspa.li

1U141 JOplO

U

‘SUOlSUPUS JO

4(1l1Uuiib

~m

~ii;u;tuzeiep

303 5~0t155W

eselsdosddu

sp~osd isnum siuei~ozd ~UuPDJ1

iSUO

155!

1fl~ 5Jfl5593~

o; pesa

eg gp,~j spoqp~ sw~udo.rddv

SDt

e.snssy

UWJSOJd

PIP

sao~

~uo;;eilpnza5011

5AD14

e.z;nbss Leip

5iL0~2flP5l

Uo;55pU5 eqs

sa1Tl~I

peSodOz~

,oooz

‘tz

~equzeeiea‘L~pmoupsM, 814

‘ON

‘~9

‘mon /iS15T~1

IWJOPq

loSte

~l3Ar’lc1

3EIQOH

61?

91

~08~—68—NIzlf

---

217

523

4948

P.25/28

Federal

Registerl

Vol.

55,

No.

249/Wednesday,

December

27,

2000/Proposed

Rules

emission lecreases at sources

ibet locroese

producLion and

do

not

add emIssion controls,

these programeatoreshelp assure that a

partlclpatlog source would be

unlikely to

increase its HAP ernissiozis to uOacceptable

levels. As a result, czap.and.trade programs in

general are less likely toueed additional

measures to prevent ~adssthat would

increase HAP emissions. In most cap-and-

tradeprograms, a retrospective program

evaluation is more

important farensuring

that the programdtd

not, in fact. create

unacceptable localized emission increases.

The Illinois

programis in facta cap

and tradeprogram that requires a

reductionin overallemissions and

requires

Ball compliance with HAPs

emissions limits ~notably,maximum

achievable control

technology (MACTI

limlisi and RACT limits, irrespective of

the number ofATtic held. Emissions

increases canoccur at sources that

increase production. but the program

allows rio emission increases that

are

notallowed in the absence of the

program, and the program does not

allow any source

to forgo emission

reductions that

would otherwisebe

required. Furthermore, Illinois’ program

reduces the likelihood of emission

increases, because a source that

increases emissionshere faces s-cost not

Imposed elsewhere of purchasing ATUs

for the emission increase inaddition to

the ATUs needed to avoid the normal

12.percent emission reduction.

Consequently. the Illinois program is

expected 10 reduce

the likelihood of

localized Increases in HAPs emissions.

The second arid third elements of

US~PA’s proposed policy on MAPs and

trading concerns whether sufficient

information is available

and whether the

public has suitable opportunities to

provide informed input into the

development and implementation of the

program. The rules establishing the

procedures and criteria of the program

were adopted on the basis ofa lengthy

stakeholder consultation process as well

as the

normal process for public input

For rulemaking. The Title V permit

process employed in Illinois’ program

provides for public input in the

establishment of the source-specific

elements of the program. FinaUy, the

ATU tracking data baseand the annual

report provide the public sufficient

information and opportunity to offer

input en ongoing implementation

issues.

,The fourth element to be addre5sed is

toprovide for periodicprogram

evaluation and opportunity to remedy

any problems that are identified

following startup of the program.

The

rules for Illinois’ program require an

-~

-‘-‘~

-‘w

snd

?OpC:~

~‘:

Illinois. Illinois has convened a

workgroup to determine what type of

information to provide In

this annual

roporL The workgroup includes

business and environmental group

representatives, and USEPA attends Its

meetings. The workgroup has focused

en defining the information that

companies must report tosu

port an

assessment of the

effects

of

t~e program

on MAPs emissions. The workgroup has

achieved general consensus on a draft

rule to require companiesto report

emissions of individual HAP species

that are emitted in significant quantities

in

the Chicego

area.

.&.Thn State

has not

discussed how its

annual reportwill be distributed or

what it will do

with the results of the

report. En particular,

the State has made

no

commitment

toremedyany program

deficiencies

that

are

identifIed. USEPA

needs

this information before

it can

reach final judgment on whether

Illinois’ programsatisfies this portionof

USEPAS guidance.”

As discussed in (ISEPA’~a proposed

policy, USEPA must evaluate programs

as a whele

by

considering thefour

above program elements

jointly. In

formulating this proposed policy,

USEPA

envisioned

that cap and trade

programs in many cases would

inherently be unlikelyto yield localized

HAP increases, and that in such cases

the mid-course program review would

play an enhanced role as a backstop for

assuring that. the expected protection

against

localized HAP increasesis

realized~Therefore, USEPA proposes

that ifillinois commits toa wide

distribution of its annual review and

commits to remedyany problems

identified in its annual program review,

then

the Illinois program would be

found to provide adequate assurances

against localized HAP increases.

~

Public commentors on the State

rulemaking for these rules noted

these

issuesconcerning

localized increases in

I-lAP concentrations and

focused on an

analogous issue, namely

that trading

might lead to overall increasesin

emissions of has’.ardous air pollutants.

In

essence,

these commenters were

concerned that

trading might yield

emission increases for the

subset of the

VOC

components that arehazardous,

notwithstanding

the mandated

reduction of

VOC

as a whole.

~lncreases

In area-wide emissions of

hazardous air pollutants are just as

unlikely as increases of

VOC or

hazardous air pollutant emissions

in

localized areas, again because most

sources’ emissions will be decreasing

and because an increase in

HAl’s

at any

particular source would presumptively

proportion of emissions that are

hazardous. Navertheless, in response to

these concerns

the trading rules

provide for EPA to evaluate the impacts

of tradeson

lAP

emissions

and report

its findings in aperiodic

program

review.

This program review

Is also

required

to identifyanygeographic

redistributions

of emissions occurring

under

the program, such as

redistributions

that would cause

environmental justice concerns. Given

this

safeguard,

if indeed Illinois

commits

to remedy any

problems

identified in its review, and given the

minimal likelihood that such problems

would arise,

the

Illinois trading

program

should have a favorable impact on HAP

concentrations area.wide as well as in

localized

areas.

~

aDoes the Program Assure Satisfaction of

New

Source

Requirements?

As noted previously, Illinois’

trading

rules explicitly provide in general

that

other State and Federal rules, which

iissplement various CleanAirAct

requirements such as RACT, MACT, and

lowest achievable emission rate, must

be satisfied and are unaffected by the

trading rules.The only requirement

under other rules that is significantly

affected by the rules for the Illinois

trading program is the requirement for

offsets for new sources. Therefore, the

review for consistency with the Clean

Air Act needs onlytoaddress whether

the alternative approach to offsets under

these rules satisfies applicable

requirements.

As

discussed in the program

description

above, the trading rules

provide that new sourcesand sources

undergoing major modifications must

purchase ATUs (representing emission

reductions elsewhere) equivalent toat

least 13 times the new emissions.This

approach p?o~des

offsets that are

generally equivalent to the traditional

approach. However, a detailed

comparison reveals important

differences in the two approaches.

• Offsets under the trading rule differ

from conventional offsets inthreekey

respects: (II Trading rule offsets need

onlyoffsetactual emissions,whereas

conventional offsets must offset

potential emissIons;

(2) trading rule

offsets may be arranged essentially

contemporaneously, whereas

conventional offsets are arranged prior

toissuance of the new source’s permit

to construct; and

(3

trading rule offsets

focus on ozone season emissions,

~vhereasconventional offsets address

the

full vear~s emissions.

The ffrst issue is whether offsetting of

actual rather than

potential emissions

Section

173.

as quoted above, toassure

that the sui

o? the emissions allowed

81805

---

81806

Federal

Register/Vol.

65,

No.

240/Wednesday, December

27,

2000/

Proposed

Rules

from existing sourcesplus the now

source is suitably reduced. Ordinarily.

this assurance Is provided by requiring

reductionsin existing source emissions

that more than compensate for the full

allowable quantityof new emissions

from the new source. The trading

program uses a different approach. The

trading program directly regulates the

sum of actual emissions from all major

existing and new sources. The number

of ATUs issued is effectively a cap on

overallactual emissions

from major

sources in the Chicago area. No

additional ATUs are

issued to new or

modified sources. Consequently. when a

new source obtainsthe required 1.3 tons

worth of ATTIc per

ton of

new

emissions, then the source

or sources

selling the ATUs have necessarily

achieved 1.3 tons of emission

reductions to offset each tonof the new

source’s emissions. That is, the minois

program requires a net reduction of 0.3

ionsper tonofnew emissionsinthe

total allowable emissions from existing

plus new sources in the Chicago area.

Thus, despite

the focus on actual rather

than potential emissions, the Illinois

trading program nevertheless satisfies

the relevant net reduction requirement.

Another perspective on this issue is to

view the use of actual versus potential

emissions as a reflection of how the

offsets are administered. For

conventional offsets, there is one

opportunity to establish offsetting

emission reductions,

during issuance ot

the construction permit before the

source is constructed. In those

circumstances, the permit must provide

sufficient offsets to offset as much now

emissionsas the new source will ever

emit,

i.e..

the new soUrce’s potential

omissions. In contrast, the trading

rule

provides opportunities recurring on an

annual basis to reassess the quantityof

emissions tobe offset. The trading rule

relies on this annual reassessment to

assure that the new source obtains

enough offsets each year to offset its

emissions adequately.

A second difference between offsets

under the trading

programand

conventional offsets is the timing by

which the offsets are arranged. Section

173

requires that “sufficient

offsetting

emission reductions havebeen

obtained” ‘~bv the

time

the source

is to

commence construction.” (Theclauses

in Section

173 are

reversedhere.)

Ordinarily, the

construction permit

identifies the offsets.

In illinois’ trading

prograni. the construction permit

restates the requirement tohold ATLs

sufficient

ii,

offset (at a 1,3 to I

ratio) the

~:~5S:C~i

~:E~u~ible

~othe niaJe’

“..v

source or maiormodification.

USEPA

views this as

satisfying the requirement

to provide assurancesprior to

construction that the new emissions

will be suitably offset. Illinois further

requires new sources to identify how

they plan to obtain offsets

for the first

threeyeers ofoperation, which

increases

the likelihood in practice that

new sources will

make

permanent

arrangements for offsets similar to the

unavoidably permanent arrangements

for conventional othets.

~The third difference from

conventional offsets Is the seasonality of

offsets underthe Illinois trading

program. Offsets under the trading rule

are achieved by obtaining ATUs.These

ATUs represent ozone season emissions,

and must be obtained inproportion to

ozone season emissions of the new

source or major modification. This

differs from the conventional focus on

increases end decreases of annual

emissions. In most cases the two

approaches will haveabout the same

tifect, because theoff-seasonnew

emissions will typically have about the

same ratio to on-season new emissions

as the off.soason to on.soason ratio of

offsetting emission reductions. For

example, if the new source emits 10

tons permonth and the offsetting source

reduces emissions by

13 tons per

month, then there

i5

no practical

difference between tallying 50 new tons

against 65

cons of reductions for a 5-

month ozone season versus tallyIng

¶20

new tons versus 156 tons of reductions

for the full year. However, seasonal

distributions of emissions can vary, so

USEPAmust assess whether an

approach that focuseson ozoneseason

emissions satisfies applicable

requirements.

,

(Section 173, as quoted above, requires

offsets to reduce “total emissions”

sufficiently to achieve reasonable

further progress toward attaining the

relevant standard. One possible

interpretation of this requirement is that

one evaluates the total of all emissions

that are germane to assessing whether

reasonable further progressis occurring,

in which case one would take the

Illinois approach offocusing on ozone

season emissions. However, IJSEPA

views the

term “total” In Section 173

to

include all emissions from all times of

the year, so that one must assess

whether emission reductions (occurring

in any part of thu year) sufficiently

offset the

fullyear’s now emissions,

irrespective of the seasonal definition

o~

reasonable further progress used in

other contwcts.

,-In short, the Illinois trading program

~,rovidesoffsets on the basis of ozone

Section

¶73

Ia

require ottsets on

a full

year basis. USEPA views this feature of

the illinois trading prograntas a

significant deficiency that Illinois must

correctbefore USEPA canfullyapproce

the progranl)

The Illinois trading program clearly

provides for satisfaction of other new

source review requirements. New

emissions must be offset permanently.

Because the Illinois trading program and

its ATU holding requirement are

permanent, USEPA views the trading

program as mandating permanent

offsetting of new emissions. Sources

must obtain offsets from the same

nonattainment area or from other areas

meeting certain criteria.The Illinois

trading program operates only wlthln~

the Chicago nonattaininent area, so

offsets for new Chicago area sources

would derive entirely from other

sourcesin the Chicago area. Other new

source requirements, Including lowest

achievable emission rates, compliance

by other sources having the same owner,

and criteria

for determining the

applicability of these requirements, are

all unaffected by the Illinois trading

program. Therefore, USEPA proposes to

Find that Illinois will continue to satisfy

previously satisfied Clean Air Act

requirements if offsets are provided on

a full year basis.

Will Illinois Identify and Resolve

Program Pr~,b1e,na That Arise?

Because trading programs havea

varietyof designs

and because we have

little experience with these programs,

USEPA guidance calls for trading

programsto undertake periodicprogram

evaluations and to remedyany problems

that are identified.

Illinois’ trading rules require an

annual program review. Thisprogram

review is available to the public.

However, JEPA has not described how

it will distribute this review and has not

committed to pursue remedies if

problems are identified. The pursuit of

remedies is implicit in the requirement

for annual program review.

Nevertheless, in accordance with

USEPA guidance, Illinois must provide

an explicit commitment that it will

provide the public suitable opportunity

to comment on programimplementation

and that it will pursue remedies for any

problems that

the annual program

revIew identifies.

V. USEPA Review of Expected Emission

Reduction

Hcw Much Emission Reduction Will Be

Achieved?

The Illinois trading rules are clearly

~,~ei~id

tc~

~

iz

overall

reductier.

approaching :2 percent of the emissions

of the major sources itt the Chicago area.

---

Federal

RegisterfVol.

68,

No.

249

/ Wednesday,

December

Z7,

2000/Proposed

Rules

Most sources are issued ATUs equal to

12 percent less than their baseline

emissions.Trades

of these ATUs would

shiftwhich source achieves the

emission reductionwithout changing

the net total emission reduction

achieved.

Featuresthat affectthe quantityof

reduction to be achieved are: fi)

Exemptions from the 12

percent

reductionfor specified classes ofwell

controlled sources,

(2) exemptIons from

the program for sources that submit to

alimitation of 18

tons of emissions per

osone season and

for

sources that

reduce emissions by

lB percent, (3)

differences between baseline emissions

and average emissions, (4) availability of

a reserve account of ATUs equal to one

r

ercent of totalbaseline emissions. and

Sisurcharges of ATUs that sources that

emitin excess of their ATU holdings

must purchase or notbe Issued. Many

of the quantitative influences on the

emission reductions tobe achieved by

this program are difftoult to assess.The

numberedparagraphsbelow address the

impact of each of these features.

1. USEPA asked Illinois for

clarification of the number of ATUs that

would be issued tosourcesthat

are

exempted from the 12 percent reduction

in ATUs issued based on being well

controlled. By letter of June 18,

1998,

Illinois clarified that emission units that

are found to be controlled withbest

available

technology

by May 1.

1999, for

example, are to be Issued ATUs

reflecting emissions achieved

by the

best available technology, without

adjustments that would otherwise

apply. This means that the number of

ATUs issued could be mere or less

than

¶2 percent below baseline emissions.

depending on whether the extra controls

achieve less or more than

12 percent

emission reductions. As a result, the net

effect of this exemption

will likely be

small.

2. Only a slight loss of emission

reduction wilililcely result from sources

opting outof the program via a 15

ton

per season limit, and only a slight gain

ofemission reduction will likely result

from sourcesopting outvia an 18

percent reduction. USEPA has no

precise estimate of these affects but

expectsthe net effectto be small.

3. USEPA also has no precise

estimates of differences between

baseline emissions and average

emissions. To investigate

this

issue, we

obtained values of an index of midwest

industrialproduction data prepared

monthlyby the Chicago Federal Reserve

Board. We used this index

because

Chic~~o a~oa industriai

~

should fluctuate in the same manner as

midwest industrial production. We

focused

on values for the five months in

VOC emissions in the Chicago area by

Illinois’ program. “Average” production

12.0 tons per year.

reflected

1994 to 1898 values for these

,‘a Illinois has developed a reasonable

five months,and “baseline” production

~inventory

of sources tobe subject to the

reflected the average for the higher two

trading

rogram. However, Illinois

of these 3 years 11995 and 19e6~.

overlooked two factors which could

The index value for “baseline”

significantly effect emission reductions

production was 0.7 percent higher than

to be expected from ~p~g~am.

~izat.

the index value for “average”

the

i~U

Ysre’nfATuseqiisl to 1

percent

production. Consequently,

USEPA

of baseline emissions to the Alternative

estimates that baseline emissions under

Compliance MarketAccount means that

Illinois’ programare 0.7 percentabe~

the program may reduce emissions only

average emissions,and so USEPA is

K

to ii percent instead of 12 percent

subtracting 0.7 percent in its estimate oA

below baseline emissions. SeconA, as

emission reductions reqttiredby

Illinois~ \

discussed above, baseline emissions are

program.

estimated to be about 0.7 percent higher

USEPA recognizes-that the Chicago

‘than average emissions. Thus. 11

Federal Reserve Board index, as a

percent below baseline emissions would

composite statistic, does notdirectly

be about 10.4 percent below average

address the difference between average

omissions.

versus higher two of three that would be

Consequently, USEFA estimates thaf’

found by examining data on a source-

Illinois’ trading program will reduce

by-source basis. Nevertheless, USEPA

emissions by 10:4 percent of the 105

believes that the production index

tons per day enurted by sources in the

ihows qualitatively that the difference is

progians. or 10.9 tens perday.The

relatively small. Since source-specific

actual reduction may be higher, to the

data are unavailable, USEFA proposes

extent that the Alternative Compliance

to use the production index to adjustthe

MarketAccount goes unused and tothe

estimate of the reductions that Illinois’

extent that surcharges are imposed on

program will achieve,

sources holding insufficient ATUs on

4. Illinois issues ATUs equal to 1

December 31. The reduction will likely

percent ofbaseline amissions to an

A~~~be higher in the first fewyears. while

Alternative Compliance Market

sourcesbuild

up

a reserve of ATUs.

Account.” T-hese ATUs are expensive,

thei~;h

this c~i~ ~s~ikolyto be minimal

afler a fewyears. The actual reduction

generally priced at the lesser of 510.000

may be lower, to the extent that the

per ton or 1.5 times the normal

market

priceof ATUs. The emission reduction

above analysis ~±nderstates

the

required by the Illinois

trading program

difference between baselineand average

emissions and to the extent that sources

will be reduced to the extent that

under ‘15 tons per ozone season obtain

sources purchase ATUs froe~ this

account rather than from other sources.

exemptions from the

program. The

this feature will subtract betwee

reduction could be either slightly lilghei~

Thus.

or slightly lowu~, depending oil

0 and

1 percent of the reductionthat the

differences between well

controlled

Illinois trading program requires,

emission

levels and 12 percent below

5. Whena source has a shortfall inits

baseline levels. Nevertheless, despite

December31

ATU holdings relative to

the

uncertainties inany estimate of

its emissions that ozone season. it must

program beneflis, USEPA believes that

provide.-ATUs equal to 120 percent of its

Illinois’ trading ~rogramwill reduce

shortfall. Thisprovides a net 20 percent

VO~emissions iii the Chicago area by

benefit to the environment. However,

about 10.9 tons car day.

few sourcesare expected tohave

The generatioi~ of ATUs is

shortfalls, so this effect Is likely to be

complicated in some cases by the

small.

difficulty of estimating

the quantity

of

Illinois

forecasted the emission

emission roduc!ons. This is especially

reduction from its trading program by

the case for programs toreduce highway

examining data in its emissions data

vehicle emissior~s. (or which the

base for major sources. This

reductions are generally a function of a

examination identified which sources

complicated a.-ray of variables. For

would

likely be subject tothe program,

example, the e~ecz of programs for

preliminarily assessed which emission

gettingold cas ~the

road is

units at these sourceswould likely

be

influenced

by

:~u

rae mix of the cars

exempted from the 12-percent reduction

being scrapp~d

an&the agemix of the

requirement (particularly because of

cars being driver instead as well as

implementationof MACTI, and

collateral effects on miles driven, and

is

evaluated the total emissions which

variable withtiue as the foregone

would

be ~ub~ct

~ 12-percent

‘~‘

~--=—r~cots

declines.

reduction. Illinois thereby estimated

-~‘tSEPA anticipareibeing fullyconsulted

that ~lstrading programwould reduce

on

the quantifiz~don of emission

81807

~rrrI’~

---

81505

Federal Register/~/a1.

85,

No.

249

/

Wednesday,

December

27,

~000IProposed

Rules

reductions from programs that reduce

highway vehicle emissions as a means

of generating ATLTs.In any case, the

uncertainty Inthese emission estimates

is no more likely to yield eithergreater

or lesser reductions, and the net effect

is

expected to be small.

..~

(Can False Credits Arise Frani “Demand

Shifting’?

“Demand shifting” involves

redistributionof production from one

source to another. Demand shifting is a

problem ifcredits are generated by the

reductionin production at the first

source and no credits are consumed by

the production increase at the second

source, since credits for emission

reductions would be created where no

net emission seduction has occurred.

Illinois’ programauthoriues generation

of ATLIs via emission reductions at

small Industrial sources and at other

sources includingmobile sources and

commercial operations.

Forsmall induattial sources, the

Illinois trading rules explicitly prohibit

issuanceof ATUs for small source

production declines when that source’s

production might shift to anothersmall

source in the Chicago area. (Production

shifts to largesources raise no problems.

because largesources are required to

hold ATUs toaccommodate any

increased production.~ Therefore, the

Illinois rules preventthe “demand

shifting” problem for small industrial

Sources.

For commercial and mobile sources,

Illinois’ rules do not explicitlyaddress

the demand shifting issue. The ~EPAis

responsible for judging the quantity of

emission reductions that a proposed

control programwill achieve (or has

achieved). However, the rule does not

require adjusting the emission reduction

quantity toaccount for shifting of the

relevant activity to ethersimilar

sources, nor has IEPA committed to

make such an adjustment.

US~PAbelieves that Illinois’ trading

program should be approved only if

Illinois commits to adjust any amounts

of ATUs issued for commercial or

mobile source emission reductions to

reflect potential “demand

shifting” or

otherwise satisfactorily addresses this

issue. The need for such a commitment

or other resolution of this issue reflecis

the significant impact that could result

front failure to account for the full

consequences of proposed control

programs for these types of sources.

can

‘~SpikJng”

boo Problem?

“Spiking” refersto the possibility that

several

~

of low emissions woui~

bu

‘followedby a year of exceptionallyhigh

emissions.This is possible in programs

like

Illinois’

that allow

“banking” of

credits, wherein credits not used in the

low emission years can be reserved for

use in a later year to allow high

emissions. Illinois’ ATUs havea two

year life, so a source that for several

years emit; below its allotmentlevel

would increasingly be

using year’old

ATUs and reserving same-year ATUs,

until ultimately in theory the source

could held two years ofallotments that

it could use in one year. Note that this

scenario necessarily involves below

average emissions In the year or years

preceding the exceptionallyhigh

emission year.

Spiking is most problematicwhen

high emissions are more likelyto occur

during criticalair pollution episodes

than low emissions.This was possible

with USliPA’s “NOxSIP Call”, for

example, where LISEFAwas concerned

that aboveaverage electrical generation

and nitrogen oxides (NOAemissions

might be more likelytooccur during

high temperature ozoneepisodes than

during supposedly compensating

periods of below averageactivity and

emissions.This is not the case for the

Illinois program, which addresses

principally manufacturing operations

that are not Influegcedby meteorology

or other factors affectingair quality. An

a result, in lUinois, just as a

hypothetical year with much higher

than average emissions is preceded by a

year or years withcorrespondingly

lowerthan average emissions, the

relative worseningof air quality for the

high emissions year compared to

average conditions is likely to ho the

same as the relative improvementof air

qualityfor the preceding low emissions

years.

USEPA has proposed guidance for

States to“include safeguards’

~

to

preventemission spiking commensurate

with the probability that spiking will

occur.” USEPA investigated the

probabilityof spiking occurring in the

Illinois program.

•

Because the Illinois programrequires

continued achievement of RACTI

sources havelittle latitude to cause

spiking by varying control efficiencies,

Instead, spiking is only plausible if

“spiking” in production levels occurs.

USEPA investigated the

likelihood of

significant variations in production by

analyzing the Chicago Federal Reserve

Board’s Midwest prod uctio~ index

referenced above. The Chicago area has

a diverse manufacturing base, so the

variability of Midwest production is

indicative of the variability of the

production of major VOC sources in the

~

v~’~

.:~

i~dox is available

ic:

197~ to 1998. Again

USEPA examined

the average index

value for the five

ozone season

months.

Ofthe 25

comparisons ofconsecutive yeai index

averages, the index never changed by as

much as 20 percent. dropped between

12 end about 18 percent in

3

years,

increased by about 16

percent in

1

year.

and stayed within about 10 percent for

the remaining 21

years.

USEPA concludes that spiking is

unlikely to occur in the Illinois

program. Nevertheless, USEPA expects

Illinois to roport in its annual program

review whether a significant stockpile of

ATUs is being banked and if so to take

correctiveaction as appropriate.

VI. Today’s Action

Wl~utAction Is USEPA Proposing

To

Take?

USEPA proposes to approve the

Illinois

trading program if Illinois

provides five commitments or program

revisions identified in this notice.

Today’s notice solicits comments on

these proposed prerequisites for

programapproval as well as on other

issuesraised by Illinois’ submittal and

USEPA’s review. USEPA believesthat

submittal

of these materials will not

raise any new issues not addressed in

today’s notice. Therefore, LISEPA

anticipates that submittal of these

materials will riot n’~~ssiuIte farther

proposed rulemaking.

Whet Further Commftmenra and

PrngrarnRevisionssUSliPA Proposing

USEPA proposes to approve Illinois’

trading programonly U Illinois submits

five items:

1. Illinois ntust describe the timeline

for sources to obtain the necessary

number of ATUs.This description must

identify a deadlineafter which Section

113 enforcement actions may be

pursued.

2.

IllinoIsmust

satisl~r USEPA’s

policy on environmental justice as

described in die proposed trading

program guidance announced on

September 15, 1999, at 64 FR 50085.

This requires Illinois to commit to

review

effects ofthe trading

program

on

the distribution of hazardous air

pollutant emissions in its annual

program review, distributethat review

for public comment, and commit to

address any identified problems.

3. Illinois must modify its new source

requirements

~ ~::~2c

offsets (at a’1.3

tol

ratio, optionah’ from

off-season

emission reductions) for potential off-

season

VOC emissions of any major new

source or major modification, to

~pi-3Zte;~;~:-~

~

~i~at

the trading

program provices ~oron-season

emissions.

---

Federal

Register/ Vol.

65,

No.

249/Wednesday,

December

27,

2000

I

Proposed

Rules

proposes to approve pre-existing

requirements under State or local laws

and imposesno new requirements.

Accordingly,no additional costs to

State, local, or tribal governments, or to

the private sector, result from this

action.

National Technology

Tronefrr

and

AdvancementAct

Section 12

of the National Technology

Transferand Advancement Act

(NTTAAI of 1995 requires Federal

agencies to evaluate existing technical

standards when developing a new

regulation. To comply withNTTAA,

USEPA must considerand use

“voluntary consensus standards”

IVCS)

ifavailable and applicable when

developing programsend policies

unless doingso would be inconsistent

with ap?licable law or otherwise

impracliceL

The US~PA believesthat VCS are

inapplicable tothis action. Today’s

action does notrequire the public to

perform activities conducive to the use

of VCS.

List ofSubjectsin 40

CFI1. Part

52

Environmental protection,

Air

pollution control, Reporting

recordkeeping requirements, Volatile

organic compounds.

Dated~ December

15. 2000.

Francis

X.

Lyons,

Rrgiono1Admij~isrrciea-,

RegionS.

LFR Dec.

00—32245 Filed

u—zo—oo:

5:45 aml

stwaa eeoc ems-Ia-u

CHEMICALSAFElY AND HAZARD

INVESTlGATlQN BOARD

40

CFR

Part 1002

PrivacyMt of 1974; implementation

~

ChemicatSafetyand Hazard

investigation Board.

#CflG~ Proposed rule.

S1a~PRV

The Chemical Safety and

Hazard Investigation Board proposes to

adopt regulations for handling requests

made under the Privacy Act. The

Privacy Act requires Federalagencies to

createregulations establishing

procedures f~r its implementation.

These regulations will ensure

the proper

handling and preservation of agency

records subject to the Privacy Act.

t1~iruS

Submitcomments on or before

January 26,

2001.

AD~~

Address all

comments

concerning this proposed rule to

Christopher Kirkpatrick, Chemical

Safety and Hazard Investigation Board.

2175 K Street, NW.. Suite

400,

Washington, DC20037—1509.

F~R

F~fl~R WI~W~1K14

O0NTACT~

Christopher Kirkpatrick,

302—251--751~9.

g1pLDJinrARyiw~11at

These

proposed regulations implement the

Privacy Act of 1974, 5 U.S.C. 552a.The

Board proposes the followingset of

regulations to discharge its

responsibilities underthe Privacy Act.

The Privacy Act establishes: basic

procedures for individuals’ access to all

records in systems of records

maintained by the Chemical Safety and

Hazard Investigation Board (“CSB”

or

“Board”)

that are retrievud by an

Individual’s name or personal identifier.

These proposed rules describe the

procedures by which individuals may

requestaccess to records about

themselves, requestamendment or

correction of those records, and request

an accountingoldisciosures of those

records by the CSB. The Board invites

comments,frgm interestedgroups and

members of the public on these

proposed regulations.

Regulatory Flexibility Act

The Board, in accordance with the

Regulatory Flexibility Act, 5 U.S.C.

605(b). has reviewed this pro?osed

regulation and by approving at certifies

that this regulation will not havea

significant oconomic-impacton a

substantial number of small entities.

Unfunded Mandates Reform Act of

1995

Thisrule will not result in the

expenditure by State, local, and tribal

~intha~regate,

or by the

or more

in any one year. and it will not

significantly

or uniquely affect small

governlnents. Therefore, the Board did

no

deem any action necessary under

the provisions of the Unfunded

Mandates Reform Act of 1995, Pub. L

104—4,

109 Stat. 48.

List ofSubjectsin

40

CFRPart

ieoz

Administrative practice and

procedure, Privacy.

For the reasons set

forth in the

preamble, the Chemical

Safety and

~Ia2ardInvestigation Board proposes to

add a new 40 CFR Part 1602 to read as

follows:

PART

1502—PROTECTION

OF

PRIVACY

AND

ACCESSTO

INDiVIDUAL RECORDS UNDER THE

PRIVACY

ACT OP

1974

Sec.

~so~,i

c;dZ1L-r.~i provisions.

:.‘:z±.z

~d~,:~I’

.1Cc.~s5

to

recoiL,.

I6O2.3

Responsibility forresponding to

recuests (or access to records.

1502.4

Kespooses to requests for access to

records.

~60Z.5

Appeals from denials ot’requests for

access ho recbrds.

1602.5

Requests for ameodmeet or

correction of records.

1602.7

Requests(or accountings ofrecord

disclosures.

160Z.8

Preservationofrecords.

1802.9

Fees,

1502.10

Notice el’court-orderedmod

emergency disclosures.

Authority: S

U.S.C. SSZa, 563; 42 U.S.C.

7411.5

seq.

91502.1

General prevls(ons.

(a)

Purpose and

scope. Thispart

contains the rules that the Chemical

Safety axad Hazard Investigation Board

(“CSB” or “Board”) follows under the

Privacy

Act

of 1974. 5 U.S.C. 352a.

These nile. should be read together

with the Privacy Act,which provides

additional information about records

maintained on individuals,The rules in

this part apply to all records in systems

of records.maintalned by the CSB that

are retrieved by an individual’sname or

personal identifier. They describe the.

procedures by which individuals may

request access torecords about

themselves, request amendment or

correction of those records,and request

an accountingof disclosures of those

records by the CSB. In addition, the CSB

processes

all Privacy Act requests f~r

access to records under the Freedom of

Information Act IFOCA). S

U.S.C. 552,

following the rules contained in part

1501

of this chapter, which gives

requeststhe benefit ofboth statutes.

(b) Defin Woos.

As used in this part;

Requester

means an individual who

makes a request for access, a request for

amendment

or correction, or a request

for an accounting under the Privacy Act.

Requestfoi-.ccess to

a

record

means

a request made as

described in

subsection (dJ(Ij of the Privacy Act, 5

U.S.C. 552a.

Request

for amendment orcorrection

ofa record

means a requestmade as

described in subsection (dU2) of the

Privacy Act, 5 L~’.S.C. 552a.

Requestfor an

accountingmeans a

request made as described in subsection

fc)(3) of the Privacy Act, 5

U.S.C.Sila.

11602.2

Requests for access to records.

(a)

I-law ~raade

and addressed.

You

may make a requestfor access to a CSI3

record about yourself by appearing in

person or by wicing

tothe CSB. Your

requestshould be sent or delivered to

the CSB’s Cane:al Counsel, at 2175

K

Street. NW. 4th Floor, Washington. DC

20037. Forthe cuickest possible

ha..dli~

vn’

~h~uld

mark both your

requestletter a~d the envelope ‘Privacy

Act Reouest,”

81810

~T’~TV

---

CERTIFICATE OF SERVICE

I, Katherine D. Hodge, the undersigned, certif~, that I have served a copy ofthe

attached POST-HEARING COMMENTS OF ThE ILLINOIS ENVIRONMENTAL

REGULATORY GROUP and AFFIDAVIT OF SIDNEYM. MARDER upon:

Ms. Dorothy M. Gunn

Clerk ofthe Board

illinois Pollution Control Board

JamesR. Thompson Center

100 West Randolph Street

Suite 11-500

Chicago, illinois

60601

Bobb A.

Beauchamp, Esq.

Hearing Officer

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph Street

Suite 11.500

Chicago, illinois

60601

Matthew I. Dunn,

Esq.

Office ofthe Attorney General

James R. Thompson Center

188 West Randolph Street

Chicago, illinois

60601

Mr.

Joe Griffiths

ENSR

27755 Diehl Road

Warrenville, illinois

60555

Ms. Karen L. Bernoteit

it Environmental Regulatory Group

215 East Adams Street

Springfield, Illinios

62701

Alec Messina, Esq.

it

Environmental Protection Agency

1021 North Grand AvenueEast

Post Office Box

19276

Springfield, illinois

62794-9276

Mr. Leonard R. Dupuis

Dominion Generation

5000 Dominion Boulevard

Glen Allen. Virginia

23060

Bryan Keyt, Esq.

Bell, Boyd & Lloyd

70 West Madison Street

Suite3300

Chicago. illinois

60602

Mr. William A. Murray

Office ofPublic Utilities

800 East Monroe Street

Springfield. Illinois

62757

Mr.

Alan L. Jirik, CHMM

Corn Products International, Inc.

Moffitt Technical Center

6500 Archer Road

Box 345

Summit-Argo, illinois

60501-0345

Ms. Amy Clyde

Dynegy Midwest Generation, Inc.

2828 North Monroe Street

Decatur, illinois

62526

Ms. Shannon Loveless-Bilbruck

it Environmental Protection Agency

1021 North Grand Avenue East

Post Office Box 19276

Springfield, Illinois

62794-9276

Ms. Emily Flesoher

Clean Air Action Corporation

2 Adams Street, Suite 2

Charlestown,, Massachusetts

02129

---

Mr. Brooke Peterson

IL Environmental Regulatory Group

215 East Adams Street

Springfield, illinois

62701

Ms. Shannon Fulton

University ofillinois

101

South Gregory

Urbana, illinois

61801

Scott Hanson

Cinergy

139 East Fourth Street

Room 2603 AT

Cincinnati, Ohio

45202

Gabriel M. Rodriguez, Esq.

Kevin B. Hynes, Esq.

SchiffHardin & Waite

6600 Sears Tower

Chicago, illinois

60606

Lee K Cunningham, Esq.

Archer Daniels Midland Company

4666 Faxies Parkway

Post Office Box 1470

Decatur, illinois

62526

David L. Rieser, Esq.

Ross & Hardies

150 North Michigan Avenue

Suite2500

Chicago, Illinois

60601

Mr.

Scott Miller

Mr. Kent Wanninger

Midwest Generation EME LLC

One Financial Place, Suite 3500

440 South LaSalle Street

Chicago, illinois

60605

Ms. Mary Schoen

Enron Corp.

Post OfficeBox 1188

Houston, Texas

77251

Robert C. Sharpe, Esq.

IL Environmental Protection Agency

1021 North Grand Avenue East

Post Office Box 19276

Springfield, Illinois

62794-9276

Mr. Steven C. Wbitworth

Ameren Services

1901 Chouteau Avenue

Post Office Box 66149

MC 602

St. Louis, Missouri

63166-6149

James T. Harrington, Esq.

Ross & Hardies

150 North Michigan Avenue

Suite 2500

Chicago. Illinois

60601

by depositing said documents in the United States Mail in Springfield, Illinois on

January 9,2001.

Katherine D. Hodge

EUG:OOI/Fil/RDI-17

MASTER COS

2

•F~y~p~’fj

~F

rn~mT¶~m~

~HTh

---