Revisions to the Permits and Sulfur Dioxide Allowance System Regulations Under Title IV of the Clean Air Act: Allowance Transfer Deadline and Signature Requirements

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 72 and 73

[FRL-6201-3]

RIN 2060-AH60

Revisions to the Permits and Sulfur Dioxide Allowance System

Regulations Under Title IV of the Clean Air Act: Allowance Transfer

Deadline and Signature Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Title IV of the Clean Air Act (the Act), as amended by the

Clean Air Act Amendments of 1990, authorizes the Environmental

Protection Agency (EPA or Agency) to establish the Acid Rain Program.

The program sets emissions limitations to reduce acidic particles and

deposition and their serious, adverse effects on natural resources,

ecosystems, materials, visibility, and public health.

The allowance trading component of the Acid Rain Program allows

utilities to achieve sulfur dioxide emissions reductions in the most

cost-effective way. Allowances are traded among utilities and recorded

in EPA's Allowance Tracking System for use in determining compliance at

the end of each year. The Acid Rain Program's permitting and allowance

trading, and emissions monitoring requirements are set forth in the

``core'' rules initially promulgated on January 11, 1993. This action

amends certain provisions in the permitting and allowance trading rules

for the purpose of improving the operation of the Allowance Tracking

System and the allowance market, while still preserving the Act's

environmental goals. The entities affected by this change fall under

Standard Industrial Code 49 (Electric, Gas and Sanitary Services).

EFFECTIVE DATE: January 11, 1999.

ADDRESSES: Docket. Docket No. A-98-15, containing supporting

information used in developing the proposed rule, is available for

public inspection and copying between 8:30 a.m. and 3:30 p.m., Monday

through Friday, at EPA's Air Docket Section, Waterside Mall, room 1500,

1st Floor, 401 M Street, S.W., Washington, DC 20460. A reasonable fee

may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Donna Deneen, Permits and Allowance

Market Branch, Acid Rain Division (6204J), U.S. Environmental

Protection Agency, 401 M Street S.W., Washington, DC 20460 (202-564-

9089).

SUPPLEMENTARY INFORMATION: This preamble contains all of the responses

to public comments received on the revisions finalized in today's

action. There is no additional background information document.

The information in this preamble is organized as follows:

I. Affected Entities

II. Background

III. Public Participation

IV. Summary of Major Comments and Responses

A. Allowance Transfer Deadline

B. Signature Requirement for Transfer Requests

C. Impacts of Revisions on Acid Rain Permits

V. Administrative Requirements

A. Docket

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B. Executive Order 12866

C. Executive Order 12875: Enhancing Intergovernmental

Partnerships

D. Executive Order 13084: Consultation and Coordination with

Indian Tribal Governments

E. Unfunded Mandates Act

F. Paperwork Reduction Act

G. Regulatory Flexibility

H. Applicability of Executive Order 13045: Children's Health

Protection

I. National Technology Transfer and Advancement Act

J. Congressional Review Act

I. Affected Entities

Entities potentially regulated by this action are fossil-fuel fired

boilers or turbines that serve generators producing electricity,

generate steam, or cogenerate electricity and steam. Regulated

categories and entities include:

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Examples of regulated

Category entities

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Industry SIC 49--Electric, Gas and Electric service providers,

Sanitary Services. boilers from a wide range

of industries.

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This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities likely to be regulated by this

action. This table lists the types of entities that EPA is now aware

could potentially be regulated by this action. Other types of entities

not listed in the table could also be regulated. To determine whether

your facility is regulated by this action, you should carefully examine

the applicability criteria in Sec. 72.6 and Sec. 74.2 and the

exemptions in Secs. 72.7, 72.8, and 72.14 of title 40 of the Code of

Federal Regulations. If you have questions regarding the applicability

of this action to a particular entity, consult the persons listed in

the preceding FOR FURTHER INFORMATION CONTACT section.

II. Background

On January 11, 1993, EPA promulgated the ``core'' regulations that

implemented the major provisions of title IV of the Clean Air Act (CAA

or the Act), as amended on November 15, 1990, including the Permits

rule (40 CFR part 72) and the Sulfur Dioxide Allowance System rule (40

CFR part 73). Since promulgation, these rules have applied to three

compliance years, 1995, 1996, and 1997, for which affected units were

required to meet the annual allowance holding requirements established

by the rules. During this time, the Agency gained experience in

implementing the requirements and also discovered ways that the

operation of the Allowance Tracking System and allowance market could

be improved. On August 3, 1998, EPA proposed changes to certain

provisions in 40 CFR parts 72 and 73 to make these improvements. (63 FR

41358 (1998)). These proposed changes were related to the allowance

transfer deadline, compliance determinations, and the signature

requirements for allowance transfer requests.\1\

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\1\ In addition, the proposal revised Sec. 73.34(c)(4) to

eliminate the reference to the direct sales provisions, which were

previously removed from part 73. 61 FR 28761, 28762 (1996).

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The Agency received seven comment letters on the proposed

revisions. All of the commenters strongly supported the revision to the

allowance transfer deadline and the clarification of the signature

requirements for allowance transfer requests. Today's action,

therefore, finalizes these two revisions as proposed. EPA is not taking

action at this time on the third proposed revision, which would allow

deduction of allowances from other unit accounts after the allowance

transfer deadline and on which EPA received adverse comment.

III. Public Participation

Revisions to 40 CFR parts 72 and 73 were proposed on August 3,

1998. (63 FR 41358). The notice invited public comments, and copies of

the proposed rule were made available to interested parties.

EPA offered to hold a public hearing upon request, but no such

request was made and no hearing was held. EPA did, however, receive a

request to extend the comment period 15 days from September 2, 1998 to

September 17, 1998. A notice granting the request was published on

August 24, 1998. 63 FR 45037 (1998).

IV. Summary of Major Comments and Responses

EPA received seven comment letters regarding the proposed changes

to the regulations. All of the commenters were representatives of

utility companies or groups of utility companies. A copy of each

comment letter received is included in the rulemaking docket.

All of the commenters supported the 30 day extension to the

allowance transfer deadline and the clarification of the signature

requirements on transfer forms. A summary of the comments received on

these two revisions and the Agency responses are set forth in the

following two sections.

A. Allowance Transfer Deadline

The ``allowance transfer deadline'' is the last day on which

allowance transfers may be submitted to EPA for recordation in a

compliance subaccount for use in meeting a unit's sulfur dioxide

(SO2) emissions limitation requirements for the year. 40 CFR

72.2 (definition of ``allowance transfer deadline''). EPA proposed to

extend the allowance transfer deadline from the current date of January

30 to March 1 (or February 29 in any leap year) to reflect the Agency's

experience in operating the Allowance Tracking System and the

technological advances that have been made regarding the submission of

continuous emissions monitoring system (CEMS) data.

Comments: All seven commenters strongly supported the proposed

extension of the allowance transfer deadline to March 1 (or February 29

in any leap year). Five of the commenters reiterated the arguments EPA

made in the proposal for extending the date, while the other two

commenters simply acknowledged support of the change.

Response: Because EPA received only supportive comments on its

proposed change to the allowance transfer deadline, EPA is extending

the allowance transfer deadline to the proposed date of March 1 (or

February 29 in any leap year) in today's final rule. The reasons for

extending the deadline are more fully explained in the preamble to the

proposed rule. 63 FR 41358.

B. Signature Requirement for Transfer Requests

Under the core rules, Sec. 73.50(b)(1) required authorized account

representatives seeking recordation of an allowance transfer to submit

a request for the transfer that contains, among other things,

signatures of the authorized account representatives for both the

transferor and the transferee accounts. In its August 3, 1998 proposed

rulemaking, the Agency proposed to add Sec. 73.50(b)(2) to clarify that

the authorized account representative for a transferee account can meet

the signature requirement by submitting, along with or in advance of a

transfer request from the authorized account representative for any

transferor account, a signed statement identifying the accounts into

which any transfer of allowances is authorized, on or after the date of

EPA's receipt of the statement. Receipt by EPA of the signed statement

satisfies the transferee signature requirement for all contemporaneous

or subsequent transfers into accounts identified in the statement. The

specific language for the statement was set forth in proposed

Sec. 73.50(b)(2).

Comments: All seven commenters strongly supported the clarification

of the signature requirements for transfer forms. One commenter noted

that the

[[Page 68402]]

Agency's proposal would simplify and streamline the allowance transfer

process. The same commenter and one other stated that advance approval

of allowance transfers would make more feasible the electronic

submission of electronic transfers. The other five commenters simply

acknowledged support of the revision.

Response: Because EPA received only supportive comments on its

proposed revision to the signature requirements for allowance transfer

requests, EPA is finalizing this rule revision (with the correction of

a minor citation error in Sec. 73.50(b)(2)(i)). The reasons for this

revision are more fully explained in the preamble to the proposed rule.

63 FR 41363.

C. Impacts of Revisions on Acid Rain Permits

Today's revisions are designed so that the contents of existing

acid rain permits and the State regulations required to issue acid rain

permits do not have to be changed in order for the revisions to become

effective. With the exception of a change in the definition of

``allowance transfer deadline,'' all of today's revisions are made in

40 CFR part 73. As explained in the preamble to the proposed rule (63

FR 41364), it is unnecessary for State permitting authorities to revise

the acid rain permits they have issued or regulations they have adopted

to reflect today's final revisions to 40 CFR part 73.

Similarly, the revisions can go into effect without State

permitting authorities revising acid rain permits or regulations to

reflect the revised definition of ``allowance transfer deadline'' in 40

CFR part 72. Even if a State issued an acid rain permit before today's

revision of the allowance transfer deadline becomes effective, the

Agency will apply the revised deadline to the units covered by the

permit in determining end-of-year compliance for all calendar years

beginning with 1998. See 63 FR 41364.

While EPA will apply the revised allowance transfer deadline in

Sec. 72.2, State permitting authorities should revise their own

regulations to reflect the new deadline after it is finalized. This

will avoid any potential confusion on the part of regulated entities

and the public as to when EPA determines end-of-year compliance.

IV. Administrative Requirements

A. Docket

A docket is an organized and complete file of all the information

considered by EPA in the development of this rulemaking. The docket is

a dynamic file since material is added throughout the rulemaking

development. The docketing system is intended to allow members of the

public and industries involved to identify and locate documents readily

so that they can effectively participate in the rulemaking process.

Along with the preambles of the proposed and final rule (which include

EPA responses to significant comments), the contents of the docket will

serve as the record in case of judicial review to the extent provided

in section 307(d)(7)(A) of the Act.

B. Executive Order 12866

Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the

Agency must determine whether the regulatory action is ``significant''

and therefore subject to Office of Management and Budget (OMB) review

and the requirements of the Executive Order. The Executive Order

defines ``significant regulatory action'' as one that is likely to

result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more

or adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or otherwise interfere with

an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements,

grants, user fees, or loan programs or the rights and obligations of

recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

Pursuant to the terms of Executive Order 12866, EPA has determined

that today's rule is not a ``significant regulatory action.''

C. Executive Order 12875: Enhancing Intergovernmental Partnerships

Under Executive Order 12875, EPA may not issue a regulation that is

not required by statute and that creates a mandate upon a State, local

or tribal government, unless the Federal government provides the funds

necessary to pay the direct compliance costs incurred by those

governments or unless EPA consults with those governments. If EPA

complies by consulting, Executive Order 12875 requires EPA provide to

the Office of Management and Budget a description of the extent of

EPA's prior consultation with representatives of affected State, local

and tribal governments, the nature of their concerns, copies of any

written communications from the governments, and a statement supporting

the need to issue the regulation. In addition, Executive Order 12875

requires EPA to develop an effective process permitting elected

officials and other representatives of State, local and tribal

governments ``to provide meaningful and timely input in the development

of regulatory proposals containing significant unfunded mandates.''

Today's rule does not create a new mandate on State, local or

tribal governments. It modifies an existing mandate in a way that

imposes no additional duties and no additional costs on these entities.

Accordingly, the requirements of section 1(a) of Executive Order 12875

do not apply to this rule.

D. Executive Order 13084: Consultation and Coordination With Indian

Tribal Governments

Under Executive Order 13084, EPA may not issue a regulation that is

not required by statute, that significantly or uniquely affects the

communities of Indian tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the Federal

government provides the funds necessary to pay the direct compliance

costs incurred by the tribal governments or unless EPA consults with

those governments. If EPA complies by consulting, EPA must provide to

the Office of Management and Budget, in a separately identified section

of the preamble to the rule, a description of the extent of EPA's prior

consultation with representatives of affected tribal governments, a

summary of the nature of their concerns, and a statement supporting the

need to issue the regulation. In addition, Executive Order 13084

requires EPA to develop an effective process permitting elected and

other representatives of Indian tribal governments ``to provide

meaningful and timely input in the development of regulatory policies

on matters that significantly or uniquely affect their communities.''

Today's rule does not significantly or uniquely effect, or impose

any substantial direct compliance costs on, the communities of Indian

tribal governments. The rule does not impose any enforceable duties on

these entities. Accordingly, the requirements of section 3(b) of

Executive Order 13084 do not apply to this rule.

E. Unfunded Mandates Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for federal agencies to assess the

effects of their regulatory actions on State, local,

[[Page 68403]]

and tribal governments and the private sector. Under section 202 of

UMRA, EPA generally must prepare a written statement, including a cost-

benefit analysis, before promulgating a proposed or final rule that

includes a federal mandate that may result in expenditure by State,

local, and tribal governments, in aggregate, or by the private sector,

of $100 million or more in any one year. Section 205 generally requires

that, before promulgating a rule for which a written statement must be

prepared, EPA must identify and consider a reasonable number of

regulatory alternatives and adopt the least costly, most cost-

effective, or least burdensome alternative that achieves the objectives

of the rule. The provisions of section 205 do not apply when they are

inconsistent with applicable law. Moreover, section 205 allows EPA to

adopt an alternative other than the least costly, most cost-effective,

or least burdensome alternative if the Administrator explains why that

alternative was not adopted. Finally, section 203 requires that, before

establishing any regulatory requirements that may significantly or

uniquely affect small governments, EPA must have developed a small

government agency plan. The plan must provide for notifying any

potentially affected small governments to have meaningful and timely

input in the development of EPA regulatory proposals with significant

federal intergovernmental mandates, and informing, educating, and

advising small governments on compliance with the regulatory

requirements.

Because today's rule is estimated to result in the expenditure by

State, local, and tribal governments or the private sector of less than

$100 million in any one year, the Agency has not prepared a budgetary

impact statement or specifically addressed the selection of the least

costly, most cost-effective, or least burdensome alternative. Because

small governments will not be significantly or uniquely affected by

this rule, the Agency is not required to develop a plan with regard to

small governments.

Today's final revisions to parts 72 and 73 will potentially reduce

the burden on regulated entities by streamlining the allowance transfer

process and extending the allowance transfer deadline. The revisions

will not otherwise have any significant impact on State, local, and

tribal governments.

F. Paperwork Reduction Act

Today's final revisions to parts 72 and 73 will not impose any new

information collection burden subject to the Paperwork Reduction Act

(44 U.S.C. 3501, et seq.). The extension of the allowance transfer

deadline does not result in any new information requirements and the

revisions made to the signature requirement simply clarify EPA's

existing practice of accepting the signature of the authorized account

representative for a transferee account in advance of an allowance

transfer form. OMB has previously approved the relevant information

collection requirements contained in parts 72 and 73 under the

provisions of the Paperwork Reduction Act and has assigned OMB control

number 2060-0258. 58 FR 3590, 3650 (1993).

Burden means the total time, effort, or financial resources

expended by persons to generate, maintain, retain, or disclose or

provide information to or for a Federal agency. This includes the time

needed to review instructions; develop, acquire, install, and utilize

technology and systems for the purposes of collecting, validating, and

verifying information, processing and maintaining information, and

disclosing and providing information; adjust the existing ways to

comply with any previously applicable instructions and requirements;

train personnel to be able to respond to a collection of information;

search data sources; complete and review the collection of information;

and transmit or otherwise disclose the information.

Copies of the previously approved ICR may be obtained from the

Director, Regulatory Information Division; EPA; 401 M St. SW (mail code

2137); Washington, DC 20460 or by calling (202) 564-2740. Include the

ICR and/or OMB number in any correspondence.

G. Regulatory Flexibility

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq.,

generally requires an agency to conduct a regulatory flexibility

analysis of any rule subject to notice and comment rulemaking

requirements unless the agency certifies that the rule will not have a

significant economic impact on a substantial number of small entities.

Small entities include small businesses, small not-for-profit

enterprises, and small government jurisdictions.

As discussed above, today's final revisions will reduce the burden

on regulated entities by streamlining and adding flexibility to the

regulations. For these reasons, EPA has determined that this rule will

not have a significant economic impact on a substantial number of small

entities.

H. Applicability of Executive Order 13045: Children's Health Protection

Executive Order 13045 (62 FR 19885, April 29, 1997) applies to any

rule if EPA determines (1) that the rule is economically significant as

defined under Executive Order 12866, and (2) that the environmental

health or safety risk addressed by the rule has a disproportionate

effect on children. If the regulatory action meets both criteria, EPA

must evaluate the environmental health or safety effects of the planned

rule on children and explain why the planned regulation is preferable

to other potentially effective and reasonably feasible alternatives

considered by EPA.

This final action is not subject to Executive Order 13045, because

the action is not economically significant as defined by Executive

Order 12866 and does not address an environmental health or safety risk

having a disproportionate effect on children.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement

Act of 1995 (NTTAA), Public Law 104-113, section 12(d)(15 U.S.C. 272

note), directs EPA to use voluntary consensus standards in its

regulatory activities unless to do so would be inconsistent with

applicable law or otherwise impractical. Voluntary consensus standards

are technical standards (e.g., materials specifications, test methods,

sampling procedures, or business practices) that are developed or

adopted by voluntary consensus standards bodies. The NTTAA requires EPA

to provide Congress, through OMB, explanations when the Agency decides

not to use available and applicable voluntary consensus standards.

Today's final rule does not involve any technical standards that

would require Agency consideration of voluntary consensus standards

pursuant to section 12(d) of the NTTAA.

J. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the

Small Business Regulatory Enforcement Fairness Act of 1996, generally

provides that before a rule may take effect, the agency promulgating

the rule must submit a rule report, which includes a copy of the rule,

to each House of the Congress and to the Comptroller General of the

United States. EPA will submit a report containing this rule and other

required information to the U.S. Senate, the U.S. House of

Representatives, and the Comptroller General of the United States prior

to publication of the rule in

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the Federal Register. A major rule cannot take effect until 60 days

after it is published in the Federal Register. This rule is not a

``major rule'' as defined by 5 U.S.C. 804(2). This rule will be

effective 30 days after publication in the Federal Register.

List of Subjects in 40 CFR Parts 72 and 73

Environmental protection, Acid rain, Administrative practice and

procedure, Air pollution control, Compliance plans, Electric utilities,

Penalties, Reporting and recordkeeping requirements, Sulfur dioxide.

Dated: December 4, 1998.

Carol M. Browner,

Administrator.

For the reasons set out in the preamble, title 40, chapter I of the

Code of Federal Regulations is amended as follows:

PART 72--[AMENDED]

1. The authority citation for part 72 continues to read as follows:

Authority: 42 U.S.C. 7601 and 7651, et seq.

2. Section 72.2 is amended by removing from the definition of

``Allowance transfer deadline'' the words ``January 30 or, if January

30'' and adding, in their place, the words ``March 1 (or February 29 in

any leap year) or, if such day.''

PART 73--[AMENDED]

3. The authority citation for part 73 continues to read as follows:

Authority: 42 U.S.C. 7601 and 7651, et seq.

4. Section 73.34 is amended by removing from paragraph (c)(4) the

words ``or direct sale pursuant to subpart E of this part''.

5. Section 73.50 is amended by redesignating paragraph (b)(2) as

(b)(3) and adding new paragraph (b)(2) as follows:

Sec. 73.50 Scope and submission of transfers.

* * * * *

(b) * * *

(2)(i) The authorized account representative for the transferee

account can meet the requirements in paragraphs (b)(1)(iii) and (iv) of

this section by submitting, in a format prescribed by the

Administrator, a statement signed by the authorized account

representative and identifying each account into which any transfer of

allowances, submitted on or after the date on which the Administrator

receives such statement, is authorized. Such authorization shall be

binding on any authorized account representative for such account and

shall apply to all transfers into the account that are submitted on or

after such date of receipt, unless and until the Administrator receives

a statement in a format prescribed by the Administrator and signed by

the authorized account representative retracting the authorization for

the account.

(ii) The statement under paragraph (b)(2)(i) of this section shall

include the following: ``By this signature, I authorize any transfer of

allowances into each Allowance Tracking System account listed herein,

except that I do not waive any remedies under 40 CFR part 73, or any

other remedies under State or federal law, to obtain correction of any

erroneous transfers into such accounts. This authorization shall be

binding on any authorized account representative for such account

unless and until a statement signed by the authorized account

representative retracting this authorization for the account is

received by the Administrator.''

* * * * *

[FR Doc. 98-32990 Filed 12-10-98; 8:45 am]

BILLING CODE 6560-50-P