Daily Rules, Proposed Rules, and Notices of the Federal Government
In addition to the publicly available docket materials available for inspection electronically in the Federal Docket Management System at
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.
On August 18, 2000, December 12, 2002, July 1, 2004, and January 13, 2006, the State of Connecticut submitted formal revisions to its State Implementation Plan (SIP). These SIP revisions consist of 149 source-specific trading orders that allow 50 sources to trade emission credits in order to comply with state regulations for reducing nitrogen oxide (NO
Today, EPA is proposing to approve 149 NO
EPA is proposing to approve NO
Most of the trading orders being approved today allow the same facilities in Connecticut to continue to create or use emission credits that were approved into the SIP on September 28, 1999 (64 FR 52233) and March 23, 2001 (66 FR 16135). Facilities that are having their trading orders approved for the first time are: Hamilton Sundstrand in Windsor Locks, Borough of Naugatuck in Naugatuck, Bristol Meyers Squibb in Wallingford, Capital District Energy Center in Hartford, Combustion Engineering in Windsor, Stone Container in Uncasville, and Sprague Paperboard in Versailles.
EPA issued a guidance document “Improving Air Quality With Economic Incentive Programs” (EIP Guidance). (See EPA-452/R-01-001, January 2001). This guidance applies to discretionary
Fundamental principles that apply to all EIPs are integrity (meaning that credits are based on emission reductions that are surplus, enforceable, quantifiable, and permanent), equity, and environmental benefit. These fundamental principles can apply to an EIP in its entirety (the programmatic level) or to individual sources (the source-specific level). In addition, EIPs that allow sources to purchase credits to demonstrate compliance with reasonable available control technology (RACT) need to meet additional requirements specified in section 16.13 of the EIP Guidance. EPA evaluated the Connecticut trading orders against these three fundamental principles, additional requirements for sources subject to RACT, and applicable Clean Air Act requirements. Connecticut's trading orders are fully consistent with these fundamental principles and the requirements for sources subject to RACT, and EPA is approving these trading orders as part of Connecticut's SIP.
The fundamental principle of integrity consists of the qualities of being surplus, enforceable, quantifiable, and permanent.
Emission reductions are surplus if the reductions are not presently relied upon in any other air quality-related programs such as the SIP, SIP-related requirements such as transportation conformity, other adopted state measures not in the SIP, Federal rules that focus on reducing precursors of criteria pollutants such as new source performance standards, or a consent decree. Emission reductions measured by sources on a retrospective basis are surplus if the source's actual emissions are below its baseline allowable or historical actual emissions, whichever is lower, and the retrospective inventories reflect actual emission information as appropriate.
Each source-specific trading order Connecticut submitted creates emission reduction credits (ERCs), establishes a baseline of 1990, and sets emission limits based on the most stringent applicable emission rate. Credits are only generated when a permitted facility's emissions are below the emission rate and the baseline. Therefore the credits produced are in addition to reductions from other requirements of the Clean Air Act.
Emission reductions use, generation, and other required actions in the EIP are enforceable on a programmatic basis if they are independently verifiable, define program violations, and identify those liable for violations. For enforceability, both the State and EPA should have the ability to apply penalties and secure appropriate corrective actions where applicable. Citizens should also have access to all the emissions-related information obtained from the source so that citizens can file suits against sources for violations. Required actions must be practicably enforceable in accordance with other EPA guidance on practicable enforceability. At the source- specific level, the source must be liable for violations, the liable party must be identifiable, and the State, the public, and EPA must be able to independently verify a source's compliance. The EIP Guidance outlines enforcement elements common to all trading EIPs in Chapter 6.0.
Each facility participating in trading NO
The generation or use of emission reductions by a source is quantifiable on a source-specific basis if the source can reliably calculate the amount of emissions and/or emission reductions occurring during the implementation of the program, and replicate the calculations. The EIP Guidance further states that when quantifying results, sources must use the same methodology used to measure baseline emissions, unless there are good technical reasons that this approach is not appropriate. Common elements for quantifying results of an EIP are included in Chapter 5.0 of the EIP Guidance. All EIPs should incorporate provisions for predicting results, addressing uncertainty, approving quantification protocols, and emission quantification methods. For a reduction to be certified as an ERC, the reduction must be real, quantifiable, and surplus at the time the ERC is generated.
Each source-specific trading order contains a protocol for quantifying emissions. Continuous Emission Monitors (CEMs) are used to quantify emissions at electric generating units that are creating ERCs. CEMs at these facilities are also used to determine if the source needs to use ERCs to comply with NO
To satisfy the EIP Guidance expectations for permanence, Connecticut's trading program must ensure that no emission increases (compared to emissions if there was no EIP) occur over the time defined in the SIP. On a source-specific basis, the permanence expectations are met if the sources participating in the EIP commit to actions or achieve reductions for a future period of time as defined in the EIP.
Each source-specific trading order expires five years from the issuance date. This allows Connecticut to determine every five years if emission trading is still the best mechanism for reducing NO
On an annual basis, sources must report to Connecticut all ERCs generated and used. The State reviews each credit generated and assigns an identification number to each credit. The annual reports allow the State to determine both the generator and user of each credit. Because each credit generated receives an individual identification number, the State can reliably track their use.
The equity principle is composed of two elements—general equity and environmental justice.
General equity means that an EIP ensures all segments of the population are protected from public health problems and no segment of the population receives a disproportionate share of a program's disbenefits. EIPs should specifically protect communities from disproportionate impacts from emission shifts and foregone emission reductions.
Connecticut has determined the majority of emission credits are generated at a few electric generating units and some other large industrial boilers that have continuous emission monitors. These sources are large emitters that can economically decrease emissions on a large scale. However, sources using emission credits are much smaller emitters of NO
The environmental justice (EJ) element applies if the EIP covers VOCs and could disproportionately impact communities populated by racial minorities, people with low incomes, and/or Tribes. The Connecticut trading program does not allow emission trading of VOC credits. Therefore, today's actions allowing the trading of NO
All EIPs must be environmentally beneficial and can demonstrate this principle through more rapid emission reductions or faster attainment than would have occurred without the EIP.
The discrete emission reduction credit (DERC) EIP meets the expectations for the environmental benefit principle. The ability to generate DERCs provides an incentive for early compliance and more rapid emission reductions. Connecticut sources that create emission credits through their respective trading orders must discount the actual credits generated by 10%. In addition, Connecticut discounts the credits generated or used at some sources depending on certain conditions, such as an additional 10% discount rate for sources using stack tests in lieu of continuous emission monitors. These various discount rates result in greater emission reductions then would otherwise be achieved without trading, resulting in an environmental benefit.
Sources must use the presumptive RACT limit in the baseline calculation. Sources are not allowed to use an alternative RACT limit in determining the baseline emission rate.
Connecticut's trading orders use the lower of actual emissions in 1990 or the RACT emission limit established for the specific source category, whichever is less. The source-specific trading orders do not use an alternative RACT emission rate.
The EIP Guidance also contains guidance for RACT emission limits with long averaging times and prohibits emission credits generated outside of the ozone season from being used during the ozone season.
Connecticut's trading orders limit sources requiring credits for excess emissions during ozone season to only use credits generated during ozone season.
EPA reviewed the source-specific trading orders with respect to the expectations of the EIP Guidance and the requirements of the Clean Air Act. EPA has concluded after review and analysis of the source-specific trading orders that they are approvable.
EPA is proposing to approve the Connecticut SIP revision for the NO
The Agency has reviewed this request for revision of the Federally-approved State implementation plan for conformance with the provisions of the 1990 amendments enacted on November 15, 1990. The Agency has made the determination that the SIP revision is approvable because it is in accordance with the CAA and EPA regulations.
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this proposed action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Reporting and recordkeeping requirements.