FR Doc E7-20447

[Federal Register: October 19, 2007 (Volume 72, Number 202)]
[Rules and Regulations]
[Page 59190-59207]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19oc07-9]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 60, 72, 78, 96, and 97

[EPA-HQ-OAR-2007-0012; FRL-8483-7]
RIN 2060-A033

Revisions to Definition of Cogeneration Unit in Clean Air
Interstate Rule (CAIR), CAIR Federal Implementation Plans, Clean Air
Mercury Rule (CAMR); and Technical Corrections to CAIR, CAIR FIPs,
CAMR, and Acid Rain Program Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Clean Air Interstate Rule (CAIR), CAIR Federal
Implementation Plans (FIPs), and Clean Air Mercury Rule (CAMR) each
include an exemption for cogeneration units that meet certain criteria.
In light of information concerning biomass-fired cogeneration units
that may not qualify for the exemption due to their particular
combination of fuel and technical design characteristics, EPA is
changing the cogeneration unit definition in CAIR, the CAIR model cap-
and-trade rules, the CAIR FIPs, CAMR, and the CAMR model cap-and-trade
rule. Specifically, EPA is revising the calculation methodology for the
efficiency standard in the cogeneration unit definition to exclude
energy input from biomass making it more likely that units co-firing
biomass will be able to meet the efficiency standard and qualify for
exemption. Because this change will only affect a small number of
relatively low emitting units, it will have little effect on the
projected emissions reductions and the environmental benefits of these
rules. If EPA finalizes the proposed CAMR Federal Plan, it intends to
make the definitions in that rule conform to the CAMR model cap-and-
trade rule and thus, with today's action. This action also clarifies
the term ``total energy input'' used in the efficiency calculation and
makes minor technical corrections to CAIR, the CAIR FIPs, CAMR, and the
Acid Rain Program rules.

DATES: The final rule is effective on November 19, 2007.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2007-0012. All documents in the docket are
listed on the http://www.regulations.gov Web site. Although listed in the

index, some information is not publicly available, i.e., Confidential
Business Information (CBI) or other information whose

[[Page 59191]]

disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically through
http://www.regulations.gov or in hard copy at the EPA Docket Center, EPA West,

Room 3334, 1301 Constitution Avenue, NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is (202) 566-1744, and the telephone number for the Air
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: For information concerning today's
action, contact Elyse Steiner, Program Development Branch, Clean Air
Markets Division (MC 6204J), EPA, Washington, DC 20460; telephone
number (202) 343-9141; fax number (202) 343-2359; electronic mail
address: Steiner.elyse@epa.gov.

SUPPLEMENTARY INFORMATION: Regulated Entities. Categories and entities
potentially regulated by this action include the following, which were
previously identified by EPA as potentially regulated or affected by
CAIR, the CAIR FIPs, or CAMR:

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Examples of potentially
Category NAICS code \1\ regulated entities
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Industry....................... 221112 Fossil fuel-fired
electric utility steam
generating units.
Federal government............. \2\ 221122 Fossil fuel-fired
electric utility steam
generating units owned
by the Federal
government.
State/local/Tribal government.. \2\ 221122 Fossil fuel-fired
electric utility steam
generating units owned
by municipalities.
921150 Fossil fuel-fired
electric utility steam
generating units in
Indian country.
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\1\ North American Industry Classification System.
\2\ Federal, State, or local government-owned and operated
establishments are classified according to the activity in which they
are engaged.

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 examples of the types of entities EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed could also be affected. To determine whether a
facility is regulated, carefully examine the applicability provisions
and definitions in CAIR, the CAIR FIPs, CAMR, and the proposed CAMR
Federal Plan.\1\ All references related to applicability and
definitions for these rules have been provided in a single list only
once and will not be referenced again in this action to avoid
unnecessary repetition.
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\1\ All applicability provisions and definitions can be found in
the CFR or FR in the following locations: for CAIR and the CAIR
model cap-and-trade rules, 40 CFR 51.123, 51.124, 96.102, 96.104,
96.202, 96.204, 96.302, and 96.304; for the CAIR FIP, 40 CFR 97.102,
97.104, 97.202, 97.204, 97.302, and 97.304; for CAMR and the CAMR
model cap-and-trade rule, 40 CFR 60.24(h)(8), 60.4102, and 60.4104;
and for the proposed CAMR Federal Plan, Proposed Sec. 62.15902 and
Sec. 62.15904.
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As discussed below, EPA believes that the vast majority of biomass
cogeneration units are operated by the pulp and paper industry. The
following table identifies NAICS codes for entities in the pulp and
paper industry. This table is not intended to be exhaustive, but rather
the table may help identify entities potentially affected by today's
action, although today's action may affect entities in other industries
in addition to pulp and paper.

If you have questions regarding the applicability of this action to
a particular entity, consult your EPA Regional Office or EPA's Clean
Air Markets Division.
Worldwide Web. In addition to being available in the docket, an
electronic copy of this action will also be available on the Worldwide
Web through EPA's Office of Air and Radiation. Following signature by
the Administrator, a copy of this action will be posted on the CAIR and
CAMR pages at http://www.epa.gov/cair and http://www.epa.gov/camr.
Outline. The information presented in this preamble is organized as
follows:

I. Background
A. Summary of This Action
B. Background on CAIR, the CAIR FIPs, CAMR, and the Proposed
CAMR Federal Plan
C. Applicability Provisions for Cogeneration Units
D. Reason for Changing Definition for Cogeneration Units
II. EPA's Final Rule and Its Impacts
A. Final Change for Cogeneration Units
B. Emissions Impact of This Action
C. State Emissions Budgets
D. Impact of This Action on CAIR and CAMR Implementation
III. Calculating Thermal Efficiency and Total Energy Input
IV. Minor Corrections to CAIR and the Acid Rain Program Regulations
V. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
K. Congressional Review Act
L. Judicial Review

[[Page 59192]]

I. Background

A. Summary of This Action

In this rule, EPA is revising the definition of the term
``cogeneration unit'' in CAIR, the CAIR model cap-and-trade rules, the
CAIR FIPs, CAMR, and the CAMR Hg model cap-and-trade rule, and
announcing its intention to use this revised definition in the CAMR
Federal Plan if it is finalized. The CAIR model cap-and-trade rules and
the CAIR FIPs apply to large fossil-fuel fired electric generating
units with certain exceptions. The CAMR, CAMR Hg model cap-and-trade
rule, and proposed CAMR Federal Plan address large coal-fired electric
generating units with certain exceptions. The CAIR model cap-and-trade
rules, CAIR FIPs, CAMR and CAMR Hg model cap-and-trade rule, and
proposed CAMR Federal Plan all provide an exemption for cogeneration
units meeting certain requirements. All four rules provide that in
order to qualify for this exemption, a unit must, among other things,
meet the definition of cogeneration unit in the rule. As finalized in
all three rules and as proposed in the CAMR Federal Plan, a unit cannot
meet the definition unless it meets a specified efficiency standard,
i.e., the useful power plus one-half of useful thermal energy output of
the unit must equal no less than a certain percentage of the total
energy input or, in some cases, useful power must be no less than a
certain percentage of total energy input. If a unit meets the
definition of a cogeneration unit including the efficiency standard,
then the unit may qualify for the exemption in these rules depending on
whether it meets additional criteria. The efficiency standard, as
originally written, was applied to all energy input to the unit
regardless of fuel type. The criteria for qualifying as a cogeneration
unit are discussed in more detail below.
On August 4, 2006 EPA published a Notice of Data Availability for
EGU NOX Annual and NOX Ozone Season Allocations
for the Clean Air Interstate Rule Federal Implementation Plans Trading
Programs (CAIR FIPs NODA) and accepted objections to the data through
an electronic docket (71 FR 44283). During the period for submitting
objections concerning the CAIR FIPs NODA, EPA received information
concerning the application of the efficiency standard in the
cogeneration unit definition (as defined in the CAIR FIPs) to biomass-
fired cogeneration units and a request to extend the period for
objections. Subsequently, EPA extended the period for objections--only
for objections related to biomass cogeneration units--to June 1, 2007
(72 FR 7654).
EPA treated the information that the Agency received concerning the
application of the efficiency standard in the cogeneration unit
definition to biomass-fired cogeneration units as a request for
rulemaking to change the efficiency standard in the cogeneration unit
definition and, in light of that information, proposed to revise the
efficiency standard in the cogeneration unit definition in the CAIR
model cap-and-trade rules, the CAIR FIPs, CAMR, and the CAMR model cap-
and-trade rule, and the proposed CAMR Federal Plan, so that, for
boilers, energy input from only fossil fuel would be included in the
efficiency calculation. EPA also took comments on excluding biomass
fuel from the efficiency standard specifically, rather than only
including fossil fuel input (72 FR 20471). The newly revised
cogeneration unit definition is discussed in more detail in section II
of today's preamble, below.
This action also makes technical corrections to CAIR, CAIR Federal
Implementation Plan, CAMR, and the Acid Rain Program rules.

B. Background on CAIR, the CAIR FIPs, CAMR, and the Proposed CAMR
Federal Plan

CAIR and the CAIR FIPs
On May 12, 2005, EPA published CAIR as a final rule entitled,
``Rule to Reduce Interstate Transport of Fine Particulate Matter and
Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program;
Revisions to NOX SIP Call'' (70 FR 25162). CAIR requires
reductions of NOX and/or SO2 emissions that
contribute significantly to nonattainment and maintenance problems in
downwind States with respect to the national ambient air quality
standards for fine particulate matter (PM2.5) and 8-hour
ozone to be made across 28 eastern States and the District of Columbia.
The reductions are required in two phases. The first phase of
NOX reductions starts in 2009 (covering 2009-2014) and the
first phase of SO2 reductions starts in 2010 (covering 2010-
2014); the second phase of reductions for both NOX and
SO2 starts in 2015 (covering 2015 and thereafter).
States must develop State Implementation Plans (SIPs) to achieve
the emission reductions required by CAIR. Each State may determine what
measures to adopt to achieve the necessary reductions and which sources
to control. One option is to control certain electric generating units.
In CAIR, EPA provided model SO2 and NOX cap-and-
trade programs, covering fossil-fuel-fired electric generating units
that States can choose to adopt to meet the emission reduction
requirements in a flexible and highly cost-effective manner.
On April 28, 2006, EPA published the FIPs for CAIR as part of a
final rule entitled, ``Rulemaking on Section 126 Petition From North
Carolina to Reduce Interstate Transport of Fine Particulate Matter and
Ozone; Federal Implementation Plans To Reduce Interstate Transport of
Fine Particulate Matter and Ozone; Revisions to the Clean Air
Interstate Rule; Revisions to the Acid Rain Program'' (71 FR 25328).
The CAIR FIPs were promulgated for all 28 States and the District of
Columbia covered by CAIR and will ensure that the required emission
reductions are achieved on schedule. As the control strategy for the
FIPs, EPA adopted the model SO2 and NOX cap-and-
trade programs for electric generating units that EPA provided in CAIR
as a control option for States, with minor changes to account for
Federal, rather than State, implementation. Following approval of a
full SIP revision that meets with the requirements of CAIR, EPA intends
to withdraw the FIPs for that State.
CAMR and the Proposed CAMR Federal Plan
On May 18, 2005, EPA published the CAMR as a final rule entitled
``Standards of Performance for New and Existing Stationary Sources:
Electric Utility Steam Generating Units; Final Rule'' (70 FR 28606).
CAMR established standards of performance for mercury for new and
existing coal-fired electric generating units and requires mercury
reductions nationwide. The reductions are required in two phases. The
first phase starts in 2010 (covering 2010-2017); the second phase
starts in 2018 (covering 2018 and thereafter).
States must develop State Plans to achieve the mercury emission
reductions required by CAMR and have flexibility to determine what
measures to adopt to achieve the necessary reductions. Unlike CAIR,
under which States may choose which sources to control, CAMR requires
that States control mercury emissions from coal-fired electric
generating units. In CAMR, EPA provided a model Hg cap-and-trade
program covering coal-fired electric generating units that States can
choose to adopt to meet the emission reduction requirements.
On December 22, 2006, EPA published a proposed Federal Plan for
CAMR in a proposed rule entitled, ``Revisions of Standards of
Performance for New and Existing Stationary

[[Page 59193]]

Sources; Electric Utility Steam Generating Units; Federal Plan
Requirements for Clean Air Mercury Rule; and Revisions of Acid Rain
Program Rules'' (71 FR 77100). The CAMR Federal Plan was proposed to
implement the standards of performance for coal-fired electric
generating units located in all States, the District of Columbia, and
Indian Country covered by CAMR (See 40 CFR 60.24(h)(1) listing the
jurisdictions covered by CAMR) to ensure that the required emission
reductions are achieved on schedule. As the control strategy for the
Federal Plan, EPA proposed to adopt the model Hg cap-and-trade program
for coal-fired electric generating units that EPA provided in CAMR as a
control option for States, with minor changes to account for Federal,
rather than State, implementation. EPA will not adopt the Federal Plan
for any State for which EPA has approved a State Plan that meets the
CAMR requirements before EPA promulgates the final Federal Plan. If EPA
finalizes the Federal Plan, it will withdraw the Federal Plan
promulgated for any State after the Agency approves a State Plan that
meets the CAMR requirements for that State. EPA will similarly withdraw
the Federal Plan upon its approval of a Tribal Plan.

C. Applicability Provisions for Cogeneration Units

Applicability determinations under the CAIR model cap-and-trade
rules, the CAIR FIPs, CAMR, the CAMR Hg model cap-and-trade rule, and
the proposed CAMR Federal Plan all turn, essentially, on whether a unit
is an electric generating unit. The CAIR model cap-and-trade rules and
the CAIR FIPs have applicability provisions that cover certain fossil-
fuel-fired units while CAMR, the CAMR Hg model cap-and-trade rule, and
the proposed CAMR Federal Plan use a similar definition that covers
certain coal-fired units.
The CAIR model cap-and-trade rules and the CAIR FIPs apply to large
fossil-fuel fired electric generating units with certain exceptions.
The CAMR, the CAMR Hg model cap-and-trade rule, and the proposed CAMR
Federal Plan apply to large coal-fired electric generating units with
certain exceptions. The CAIR model cap-and-trade rules, CAIR FIPs,
CAMR, the CAMR Hg model cap-and-trade rule, and proposed CAMR Federal
Plan all provide that certain units meeting the definition of a
``cogeneration unit'' may be excluded from the definition of ``electric
generating unit,'' or from the applicability provisions of the trading
programs, and therefore may be exempt from the requirements of the
rules (These rule provisions are commonly referred to as the
cogeneration unit exemption). The cogeneration unit exemption is
essentially the same under all of these rules. In order to qualify for
the cogeneration unit exemption in these rules, the cogeneration unit
must meet the following electricity sales criteria: A cogeneration unit
qualifies for the exemption if the unit supplies in any calendar year
no more than \1/3\ of its potential electric output capacity or 219,000
MWh, whichever is greater, to any utility power distribution system for
sale. In order to be a cogeneration unit, a unit must have equipment
used to produce electricity and useful thermal energy through
sequential use of energy and must meet a specified efficiency standard,
i.e., the useful power plus one-half of useful thermal energy output of
the unit must equal no less than a certain percentage of the total
energy input or, in some cases, useful power must be no less than a
certain percentage of total energy input. If a unit meets the
definition of cogeneration unit including the efficiency standard, then
it may qualify for the cogeneration unit exemption in these rules
depending on whether it meets additional criteria concerning the amount
of electricity sales from the unit. As originally written in these
rules, the efficiency standard in the cogeneration unit definition
applied to all energy input to the unit regardless of fuel type. That
part of the cogeneration unit definition has been revised by today's
action. If EPA finalizes the proposed CAMR Federal Plan, it intends to
make the same revision in that rule.
CAIR and the CAIR FIPs
As originally issued, CAIR, the CAIR model cap-and-trade rules, and
the CAIR FIPs defined ``cogeneration unit'' as a stationary, fossil-
fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine:
(1) Having equipment used to produce electricity and useful thermal
energy for industrial, commercial, heating, or cooling purposes through
the sequential use of energy; and
(2) Producing during the 12-month period starting on the date the
unit first produces electricity and during any calendar year after the
calendar year in which the unit first produces electricity--
(i) For a topping-cycle cogeneration unit,
(A) Useful thermal energy not less than 5 percent of total energy
output; and
(B) Useful power that, when added to one-half of useful thermal
energy produced, is not less then 42.5 percent of total energy input,
if useful thermal energy produced is 15 percent or more of total energy
output, or not less than 45 percent of total energy input, if useful
thermal energy produced is less than 15 percent of total energy output.
(ii) For a bottoming-cycle cogeneration unit, useful power not less
than 45 percent of total energy input.\2 \
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\2\ Topping-cycle cogeneration unit means a cogeneration unit in
which the energy input to the unit is first used to produce useful
power, including electricity, and at least some of the reject heat
from the electricity production is then used to provide useful
thermal energy.
Bottoming-cycle cogeneration unit means a cogeneration unit in
which the energy input to the unit is first used to produce useful
thermal energy and at least some of the reject heat from the useful
thermal energy application or process is then used for electricity
production.
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Today's action modifies this definition of ``cogeneration unit'' to
exclude energy input from biomass for existing and future boilers and
provides a more specific definition of ``total energy input'' to be
used in calculating thermal efficiency.
CAMR and the Proposed CAMR Federal Plan
With certain exceptions, CAMR defines electric generating unit
(EGU) as a stationary, coal-fired boiler or stationary, coal-fired
combustion turbine in the State serving at any time, since the later of
November 15, 1990 or the start-up of a unit's combustion chamber, a
generator with nameplate capacity of more than 25 MWe producing
electricity for sale.
The definition of ``cogeneration unit'' in CAMR, the CAMR model
cap-and-trade rule, and the proposed CAMR Federal Plan, as originally
issued, was identical to the cogeneration unit definition in CAIR, the
CAIR model cap-and-trade rules, and the CAIR FIPs, except that the
definition in the CAMR and related rules referred to stationary, coal-
fired boilers or stationary, coal-fired combustion turbines where the
definition in the CAIR-related rules refers to stationary, fossil-fuel-
fired boilers or stationary, fossil-fuel-fired combustion turbines.
If a unit meets the criteria concerning service of a generator (and
so would otherwise be an electric generating unit) but qualifies as a
cogeneration unit, then the unit may be excluded from the definition of
electric generating unit, and as a result, excluded from the
applicability provisions of the trading programs, and thus excluded
from the regulatory requirements of the CAIR model cap-and-trade rules,
the CAIR FIPs, CAMR and the CAMR model cap-and-trade rule, and the
proposed CAMR Federal Plan. In order to qualify for this

[[Page 59194]]

exemption under these rules, the cogeneration unit must meet certain
additional criteria. Specifically, as discussed above, a cogeneration
unit qualifies for the exemption if the unit supplies in any calendar
year no more than \1/3\ of its potential electric output capacity or
219,000 MWh, whichever is greater, to any utility power distribution
system for sale.

D. Reason for Changing Definition for Cogeneration Units

As noted above, the definition of ``cogeneration unit'' in CAIR,
the CAIR model rules, the CAIR FIPs, CAMR and the CAMR model rule,
contains an efficiency standard. The purpose of this efficiency
standard in the cogeneration unit definition is to prevent a potential
loophole where a unit might send only a nominal or insignificant amount
of thermal energy to a process and not achieve significant efficiency
gains through cogeneration, but still qualify as a cogeneration unit
and potentially qualify for the cogeneration unit exemption discussed
above.
During the period for submitting objections concerning the CAIR
FIPs NODA, EPA received information from commenters that suggested to
EPA that the efficiency standard in the definition of cogeneration unit
should be revised with regard to units co-firing biomass. The
commenters also submitted information concerning the application of the
efficiency standard to biomass-fired cogeneration units and stated that
the existing rule ``unfairly penalizes co-generation units that burn
significant amounts of biomass.'' The information indicates that many
biomass cogeneration units may be unable to meet the efficiency
standard because ``biomass, when burned as a fuel, has a lower thermal
efficiency for conversion to steam than fossil fuels, such as coal, oil
and natural gas.''
Previously, in developing CAIR, EPA indicated that it expected
``most back pressure units burning * * * biomass to meet the efficiency
standard'' (see Technical Support Document (TSD) for CAIR on
Cogeneration Unit Efficiency Calculations).\3\ The Agency believed at
the time that most biomass cogeneration units would meet the efficiency
standard, and thus would be potentially exempt cogeneration units. EPA
has since re-examined whether the efficiency standard is appropriate
for all biomass-fired cogeneration units.
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\3\ Cogeneration Unit Efficiencies Calculation, March 2005. OAR-
2003-0053-2087 http://epa.gov/cair/pdfs/tsd_cogen.pdf.

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EPA believes that the vast majority of existing biomass
cogeneration units are operated by the pulp and paper industry.\4\ The
biomass fuels typically fired by pulp and paper units are wood-based
biomass and black liquor.\5\ Both biomass fuels have relatively high
moisture content that prevents them from burning as efficiently as coal
and other fossil fuels. The moisture content of these biomass fuels can
range from approximately 40 to over 60 percent. In comparison, the
moisture content of bituminous coal is relatively low, less than 10
percent. Higher moisture content requires that more of the heating
value of the fuel goes into evaporating that moisture during
combustion. The evaporated moisture (and the heat used to evaporate it)
escapes up the stack--subtracting from the efficiency of the unit.
Therefore, the higher the moisture content in the biomass and the
higher the proportion of biomass fuel used, the more difficult it will
be for a unit to meet the efficiency standard in the cogeneration unit
definition. Conversely, the greater the amount of heat input from
fossil fuels, the easier it is for a unit to meet the efficiency
standard because of the reduced need for energy to heat and vaporize
the moisture in the fuel.
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\4\ The pulp and paper industry raised concerns regarding
biomass cogeneration units during the period for objections to the
CAIR FIPs NODA.
\5\ Black liquor is spent pulping liquor, a byproduct of a
pulping process used to separate the wood fibers used in papermaking
from lignin and other wood solids.
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Certain additional factors may also contribute to lower
efficiencies for existing biomass cogeneration units in the pulp and
paper industry. EPA believes that, as compared to large electric power
plants that are optimized for power generation, many of the existing
process-optimized units in the pulp and paper industry use
significantly lower design steam pressure and temperature conditions at
the steam turbine inlet. For example, a large power plant turbine might
be designed to use steam at 2,400 psig and 1,000 [deg]F, whereas a
steam turbine generator in a pulp and paper plant might be using steam
at conditions below 900 psig and 800 [deg]F. These lower steam
conditions reduce the efficiency of the overall cogeneration cycle,
which was optimized for process needs, not for electric power
generation. Moreover, some steam turbine generators in the pulp and
paper industry have been installed by retrofit--a circumstance that may
have exacerbated the problem because the boiler was designed before
cogeneration by the unit was contemplated and thus before the impact of
the design on thermal efficiency became a consideration.
In addition, existing biomass cogeneration units (boilers and steam
turbines) in the pulp and paper industry generally are relatively
small, and smaller units are typically less efficient than larger
units. The existing smaller units generally do not incorporate high-
efficiency design practices and their energy losses (such as radiation
loss for a boiler and mechanical loss for a steam turbine-generator
set) per unit of energy input are inherently higher. The combination of
relatively high fuel moisture content and small boiler size results in
efficiencies as low as 60 percent for the biomass boiler itself,
compared to typical large fossil fuel-fired boiler efficiencies ranging
to above 85 percent.
In summary, EPA believes that biomass cogeneration units as a group
have a particular set of characteristics that together may make it
difficult for many units to meet the efficiency standard in the
cogeneration unit definition unless the units co-fire significant
amounts of fossil fuel, such as coal. These characteristics are: fuels
with relatively high moisture content, units designed for relatively
low pressure and temperature conditions for industrial processes, and
relatively small boilers and steam turbines that are inherently less
efficient due to their size. EPA recognizes that there are some
existing biomass cogeneration units (e.g., those that co-fire coal,
natural gas, or oil for a large portion of their heat input) that might
be able to meet the efficiency standard, as discussed in the following
section.
The cogeneration unit definition finalized in the CAIR model cap-
and-trade rules, the CAIR FIPs, CAMR, the CAMR Hg model cap-and-trade
rule and in the proposed CAMR Federal Plan includes all energy input in
the efficiency calculation. EPA believes that the inclusion of energy
input from all fuels--rather than from all fuels except biomass--has
the unanticipated and unintended consequence of making it very
difficult for existing biomass cogeneration units to qualify as
cogeneration units unless they co-fire significant amounts of fossil
fuel, such as coal. Preventing these existing units from qualifying as
cogeneration units is not consistent with the purposes of the
efficiency standard. These units were originally designed to, and still
do, produce significant amounts of useful thermal energy (relative to
their total energy output) and to achieve efficiency gains over non-
cogeneration units. Under these circumstances, application of the
original efficiency standard to existing biomass cogeneration units
does not seem to promote the purposes

[[Page 59195]]

of the standard. In addition, application of this standard as
originally written had the paradoxical result that existing biomass
cogeneration units burning greater amounts of fossil fuels (therefore
likely having greater emissions) were much more likely to meet the
efficiency requirement and thus qualify as cogeneration units exempt
from emission limits under the CAIR model cap-and-trade programs and
CAMR model cap-and-trade rule, while existing biomass cogeneration
units burning less coal (therefore likely having lower emissions) were
less likely to meet the requirement and qualify for the exemption.
For these reasons, EPA is revising the efficiency standard in the
cogeneration unit definition such that energy input from biomass fuels
only may be excluded from the total energy input used to calculate
efficiency for cogeneration units. The final change is discussed in
more detail below.

II. EPA's Final Action and Its Impacts

A. Final Change for Cogeneration Units

EPA is revising the efficiency standard in the cogeneration unit
definition in CAIR, the CAIR model cap-and-trade rules, the CAIR FIPs,
CAMR and the CAMR model cap-and-trade rule to permit boilers to exclude
energy input from biomass fuels in the efficiency calculation rather
than include energy input from all fuels. EPA also intends to use this
revised definition if it finalizes the CAMR Federal Plan. This revised
definition will make it more likely that units burning biomass and
cogenerating electricity and useful thermal energy will meet the
efficiency standard and qualify as exempt cogeneration units under
these rules.
EPA has decided to revise the efficiency standard in the
cogeneration unit definition to specifically exclude heat input from
biomass fuel, rather than exclude all non-fossil fuel input. This
approach was offered as an alternative from the main approach EPA
proposed, which would have excluded heat input from any non-fossil fuel
in the efficiency calculation. EPA explicitly requested comment on this
alternative and, after considering the comments, decided that it was
preferable to exclude only heat input from biomass fuels. This
preferred approach more narrowly limits the exclusion of heat input
from the non-fossil fuel (i.e., biomass) whose relatively high moisture
content, combined with the other factors of biomass cogeneration
discussed above (e.g., relatively low pressure and temperature unit
design conditions and relatively small boilers and steam turbines) are
the basis for EPA's revisions. Although EPA specifically requested
comment concerning cogeneration units burning other identifiable types
of non-fossil fuels and their characteristics, little additional
information was received. The comments that were received provided
neither adequate information about the composition and moisture content
of other non-fossil fuels nor data on what type or how many units
combust these other fuels. Information in the record provides no basis
for determining that combustion of any non-fossil fuel other than
biomass involves the particular combination of characteristics upon
which the exclusion of biomass heat input in boilers is based or any
other characteristics on which an expansion of the exclusion of heat
input to other non-fossil fuels could be based. For these reasons, EPA
is limiting the exclusion for boilers to heat input from biomass fuel
only. This approach avoids expanding the change to the cogeneration
unit exemption to units that cogenerate but combust other non-fossil
fuels for which there is no basis in the record for excluding the heat
input of such fuels from the efficiency calculation.
With today's rule change, the efficiency calculation will be based
on total energy input excluding input from biomass fuel. EPA requested
comment on the definition of the term ``biomass'' that would be used
solely for the purpose of identifying fuels excluded from heat input
calculations covered by this rulemaking. Commenters provided a number
of alternative suggestions to define the term ``biomass'' in response
to EPA's request for input. EPA considered the various definitions and
has determined that the following definition of ``biomass'' derived
largely from the ``biomass'' definition in Section 932 of the Energy
Policy Act of 2005 is appropriate for this action. The definition of
``biomass'' adapted in today's action depicts biomass as an energy
source and an important renewable fuel supply. EPA notes that it is
adopting this biomass definition only for purposes of the cogeneration
definition in CAIR, CAMR and other related rules addressed in this
rulemaking. It may not be the appropriate definition in other contexts
or other rules. For the purposes of the cogeneration unit definition
addressed in this rulemaking, the term ``biomass'' means--
(1) Any organic material grown for the purpose of being converted
to energy;
(2) Any organic byproduct of agriculture that can be converted into
energy;
(3) Any material that can be converted into energy and is
nonmerchantable for other purposes, that is segregated from
nonmerchantable material, and that is:
(i) A forest-related organic resource, including mill residues,
precommercial thinnings, slash, brush, or byproduct from conversion of
trees to merchantable material; or
(ii) A wood material, including pallets, crates, dunnage,
manufacturing and construction materials (other than pressure-treated,
chemically-treated, or painted wood products), and landscape or right-
of-way tree trimmings.
EPA received a few comments expressing the view that EPA should not
change the existing cogeneration unit definition for any units in order
to more effectively protect the environment and human health. These
comments asserted that the revision of the definition would have
adverse impacts on the environment or human health. However, the
commenters did not provide any support for these assertions. Commenters
did not dispute EPA's reasons for making the change based on technical
differences, fuel characteristics, and equipment design decisions. EPA
examined the potential impacts of the revision and, as discussed below,
determined that the estimated change in SO2, NOX,
and Hg emissions due to this rule change is very small compared to the
overall emission cap levels. For these reasons, EPA believes that the
change in the cogeneration unit definition adopted in this rule is
reasonable.
The change to the efficiency standard made in today's rule will
apply both to existing units and to new units that are constructed in
the future. In the Notice of Proposed Rulemaking, EPA proposed to apply
the revised standard only to existing units, but it also solicited
comments on whether the efficiency standard should be applied to all
units regardless of when construction on the unit commenced. After
considering comments received, EPA has determined that it is
appropriate to apply the revised efficiency standard to both existing
and new units.
EPA received several comments in support of revising the
cogeneration unit definition for all units that co-fire biomass
regardless of the date that they commenced construction based on the
assertion that new units will face the same difficulties meeting the
original efficiency standard as existing units. EPA notes that existing
biomass-fired boilers do not generally operate as stand-alone units,
but rather are

[[Page 59196]]

generally part of an integrated facility that may include several
boilers, common headers, and several steam turbine generators.
Similarly, new biomass boilers are likely to be constructed to fit into
an existing configuration of boilers and stream turbine generators.
Consequently, even if new, stand-alone biomass boilers might
theoretically be able to meet the original efficient standard, they are
likely to be integrated with existing equipment, rather than operate as
stand-alone equipment that can be designed without the limitations on
efficiency that apply to existing boilers.
EPA's previous analysis did not take this into account. Moreover,
the combustion technology used in existing and new boilers is
essentially the same. Therefore, many of the same factors (i.e., high
moisture fuel, low pressure and temperature conditions, and small
boilers and steam turbines) that make it difficult for existing biomass
boilers to meet the original efficiency standard may well apply to new
biomass boilers, whose design is limited by the need to be integrated
into an existing facility. Because of the absence of information in the
record about the design attributes of new biomass units that would
support distinguishing between existing and new biomass boilers, EPA
has decided to adopt the revised cogeneration unit definition for all
boilers, regardless of their construction date. Further, this approach
eliminates the need for a clear-cut distinction between new and
existing units, which commenters noted could be complex and
problematic, and may avoid discouraging the construction of new biomass
cogeneration units and the increased use of biomass fuel for
cogeneration. However, today's revision to the definition for all
cogeneration units in CAIR and CAMR does not in any way change the
meaning of the term ``cogeneration'' or any other provisions in the
NSPS (See 40 CFR 60.41Da).
Under the revised cogeneration unit definition, ``cogeneration
unit'' is defined, with regard to boilers, as a stationary, fossil-
fuel-fired boiler (for the CAIR model rules and the CAIR FIPs) or
stationary, coal-fired boiler (for CAMR, the CAMR Hg model cap-and-
trade rule, and the proposed CAMR Federal Plan if it is finalized):
(1) Having equipment used to produce electricity and useful thermal
energy for industrial, commercial, heating, or cooling purposes through
the sequential use of energy; and
(2) Producing during the 12-month period starting on the date the
unit first produces electricity and during any calendar year after the
calendar year in which the unit first produces electricity--
(i) For a topping-cycle cogeneration unit,
(A) Useful thermal energy not less than 5 percent of total energy
output; and
(B) Useful power that, when added to one-half of useful thermal
energy produced, is not less then 42.5 percent of total energy input
from all fuel other than biomass, if useful thermal energy produced is
15 percent or more of total energy output, or not less than 45 percent
of total energy input from all fuel other than biomass, if useful
thermal energy produced is less than 15 percent of total energy output.
(ii) For a bottoming-cycle cogeneration unit, useful power not less
than 45 percent of total energy input from all fuel other than biomass.
The revised definition does not apply to combustion turbines which
combust gaseous fuel. For combustion turbines, the cogeneration unit
definition--and the efficiency standard in particular--would remain as
finalized in the CAIR model rules, the CAIR FIPs, CAMR, and the CAMR Hg
model cap-and-trade rule and will not be revised in the CAMR Federal
Plan, if finalized. Although EPA received some comments suggesting that
the revised cogeneration unit definition should be extended to
combustion turbines, EPA maintains that these comments are beyond the
scope of this rulemaking. In the Notice of Proposed Rulemaking, EPA
stated that it was proposing to apply the revised definition only to
boilers, not to combustion turbines (See 72 FR 20471). Moreover,
consistent with this, the record for the proposal did not include any
information about combustion turbines burning biomass. EPA notes that,
in order to be burned in a combustion turbine, the biomass first must
be gasified, and the integration of biomass gasification with electric
and steam generation by combustion turbines involves significantly
different technology than that used in biomass-fired boilers.
Consequently, the information concerning biomass boilers is not
necessarily relevant to biomass combustion turbines. Under these
circumstances, the comments supporting extension of the revised
definition to combustion turbines are beyond the scope of the
rulemaking.
In addition, the commenters provided little or no information
indicating whether biomass combustion turbines would have problems in
meeting the efficiency standard and, if so, what would be the nature
and extent of the problems and whether the problems would be the same
as those for biomass boilers. In fact, EPA believes that there are
currently no combustion turbines of this type in commercial use to
serve as a basis for analysis of the likely characteristics and thermal
efficiency of this type of unit. EPA, therefore, is not extending the
revised cogeneration unit definition to turbines both because the
comments are beyond the scope of the rulemaking and because there is
essentially no record evidence concerning whether this type of unit
would have difficulty meeting the original efficiency standard.
Consistent with the proposal, EPA is finalizing this rule with the
revised cogeneration unit definition applying only to boilers, not
combustion turbines. The issue of revising the definition with regard
to combustion turbines may be raised in the future if biomass
combustion turbines are developed and built in the future and are shown
to have difficulty meeting the efficiency standard.

B. Emissions Impact of This Action

During development of the proposal, EPA analyzed the emissions
impact of the proposed action using the methodology explained below.
For this analysis, EPA used Energy Information Administration (EIA)
data because detailed EPA data was not available. For the CAIR model
rules and the CAIR FIPs, EPA generated an inventory of biomass
cogeneration units that serve generators with nameplate capacity
greater than 25 MW in CAIR states and then looked for units that would
potentially be affected by a change in the efficiency standard and
estimated the SO2 and NOX emissions. For CAMR and
the proposed CAMR Federal Plan, using EIA data EPA generated an
inventory of cogeneration units burning both coal and biomass that
serve a generator with nameplate capacity greater than 25 MW in CAMR
states nationwide, and tried to identify units that might be affected
and estimated the Hg emissions.\6\
---------------------------------------------------------------------------

\6\ Technical Support Document: Methodology for Thermal
Efficiency and Energy Input Calculations and Analysis of Biomass
Cogeneration Unit Characteristics. EPA-HQ-OAR-2007-0012-0004.1
---------------------------------------------------------------------------

After publishing its biomass cogeneration unit inventories which
identified units potentially affected by the proposed rule change, EPA
received additional information from commenters about some of the units
already on the list and about four additional units that have since
been included in the list. EPA updated its inventory based on the input
from American Forest and Paper Association's (AF&PA) member survey, and
the results are summarized below in

[[Page 59197]]

Table II-1.\7\ For more information about how EPA identified biomass
cogeneration units for the initial proposal analysis, refer to the
proposal and its Technical Support Document (TSD), ``Methodology for
Thermal Efficiency and Energy Input Calculations and Analysis of
Biomass Cogeneration Unit Characteristics'' (April 2007).
---------------------------------------------------------------------------

\7\ Comment attachment submitted by Timothy G. Hunt, Senior
Director, Air Quality Programs, American Forest and Paper
Association (AF&PA). EPA-HQ-OAR-2007-0012-0014.1
---------------------------------------------------------------------------

As shown in Table II-1, emissions from units whose status under the
CAIR model rules or the CAIR FIPs may be affected by the rule change
are estimated to be on the order of 15,000 and 20,000 tons per year for
SO2 and NOX, respectively. These emissions are
quite small compared to the size of the region-wide emission caps under
CAIR, which are 1.5 and 1.3 million tons of NOX for the
first and second phases of the annual NOX program,
respectively, and 3.7 and 2.6 million tons of SO2 for the
first and second phases of the SO2 program, respectively
(i.e., for NOX, about 1.3 percent of the phase I cap and 1.5
percent of the phase II cap, and for SO2 about 0.4 percent
of the phase I cap and 0.6 percent of the phase II cap).\8\
---------------------------------------------------------------------------

\8\ Arkansas is included in CAIR for the ozone-season
NOX program only, not for the annual NOX and
SO2 programs. Because these NOX emission
estimates include annual NOX emissions for units in
Arkansas, the estimates slightly overstate the potential impact of
the final rule change for units in Arkansas.
---------------------------------------------------------------------------

Emissions from units whose status under CAMR, the CAMR Hg model
cap-and-trade rule, or the proposed CAMR Federal Plan may be affected
by the rule change are estimated to be on the order of 0.02 tons of Hg
per year. These emissions are very small compared to the size of the
nationwide emission caps under CAMR which are 38 and 15 tons of Hg for
the first and second phases, respectively (i.e., less than 0.1 percent
of the phase I cap and about 0.1 percent of the phase II cap).
Another way to look at the magnitude of emissions represented by
units that may be affected by today's rule change is to compare
emissions from this group of units to emissions from biomass
cogeneration units that we assumed were already exempt because they
could meet the efficiency standard as previously written. Table II-2
shows estimated annual NOX, SO2, and Hg emissions
for this group of units. (Note that this group excludes units that
reported to EIA that they do not have the ability to sell power to the
grid and units that reported the ability to sell power and whose
historic sales exceed the electricity sales threshold for the
exemption.) As shown in the table, the emissions from the group of
units whose regulatory status we believe may change under today's rule
change are considerably less than emissions from the group of biomass
cogeneration units which we believe were already exempt from these
rules because they meet the efficiency standard as previously written.
EPA's analysis also suggests that, on average, the estimated
emissions per unit are lower from the group whose regulatory status we
believe may change compared to the group of units we believe were
already exempt from these rules because they can meet the efficiency
standard as previously written. It is expected that emission rates at
units burning proportionally more biomass--which is the group whose
regulatory status we believe will change--will generally be lower than
emission rates at units burning less biomass.
It is important to note that EPA emissions estimates in Tables II-1
and II-2 are based on a combination of EPA estimates and AF&PA member
survey data concerning units that EPA anticipates may be affected by
the rule change.

Table II-1.--Estimate of Biomass Cogeneration Units Potentially Excluded
From CAIR and CAMR by the Rule Change and Estimate of Their Emissions
------------------------------------------------------------------------
CAIR NOX CAIR SO2 CAMR Hg
------------------------------------------------------------------------
Estimated number of units 39 39 5
potentially affected by the
rule change.
Estimated annual emissions 19,800 14,900 0.02
from units potentially (40 lbs)
affected by the rule change
(tons).
------------------------------------------------------------------------

Table II-2.--Estimate of Biomass Cogeneration Units Assumed Excluded From Original CAIR and CAMR and Estimate of
Their Emissions
----------------------------------------------------------------------------------------------------------------
CAIR NOX CAIR SO2 CAMR Hg
----------------------------------------------------------------------------------------
Estimated number of units assumed to 54 42 30
meet efficiency standard as written.
Estimated annual emissions from units 29,700 59,800 0.24
assumed to meet the efficiency (480 lbs)
standard as written (tons).
----------------------------------------------------------------------------------------------------------------

Finally, units that might become exempt cogeneration units as a
result of today's rule changes may be required to make emission
reductions under programs other than CAIR or CAMR. These units will
need to work with permitting authorities to determine whether they must
comply with other regulatory rules.

C. State Emissions Budgets

EPA did not propose to change the NOX, SO2,
or Hg State emission budgets under CAIR and CAMR, and is not changing
those budgets in this final action. As discussed above, the estimated
amount of emissions from units potentially affected by today's action
is minimal compared to the size of the applicable region-wide (CAIR)
and nationwide (CAMR) caps. Further, none of the units that EPA has
identified as potentially affected by the rule change were included in
the state budget calculations, as explained below.
In addition, States have made significant progress toward the
implementation of CAIR and CAMR based on the emission budgets that were
established in those rules. Proposing and finalizing revised State
emission budgets would take substantial effort by many States and EPA
and considerably delay CAIR and CAMR implementation. The CAIR emission
budgets are in 40 CFR 51.123(e)(2) and (q)(2) and 51.124(e)(2) and CAMR
emission budgets are in 40 CFR 60.24(h)(3).

[[Page 59198]]

Discussion of development of the CAIR and CAMR State emission budgets
are in 70 FR 25162 and 70 FR 28606, respectively.
Although EPA did not propose to change any state budgets in this
action, the Agency did request comment on changing the budgets to
reflect the proposed changes in the definition of cogeneration unit.
EPA received some comments arguing that the state budgets should be
reduced because more units may qualify for the cogeneration unit
exemption. These comments did not provide specific suggestions
regarding how the budgets should be reduced. Presumably, they would
advocate eliminating any units from the budgets that were covered under
the original rules but that qualify for exemption under this revision
to those rules. However, upon closer inspection, none of the units
expected to be affected by this change to the efficiency standard are
among the CAIR and CAMR units included in the heat input inventories
that were used to develop state budgets.\9\ All of the biomass
cogeneration units in the heat input inventories either (1) meet the
original efficiency standard already based on EPA's analysis, (2) do
not sell power to the grid based on available data, or (3) do not
qualify for the cogeneration unit exemption because they exceed the
limitation on electricity sales. In other words, since none of the
units that EPA has identified as potentially affected by the rule
change were even included in the state budget calculations to begin
with, EPA has determined that it is not appropriate or necessary to
recalculate the budgets. Therefore, and for the reasons discussed above
in this section, EPA concludes that state budgets should not be
recalculated. Finally, EPA will not be decreasing or increasing overall
emissions cap levels or state budgets in response to any units (biomass
or otherwise) that qualify or do not qualify for the cogeneration unit
exemption at this late stage in the implementation of CAIR and CAMR.
---------------------------------------------------------------------------

\9\ Data for EGU NOX Annual and NOX Ozone
Season Allocations for the Clean Air Interstate Rule Federal
Implementation Plan Trading Programs. EPA-HQ-OAR-2004-0076-0230 CAMR
Unit Hg Allocations (http://www.epa.gov/ttn/atw/utility/final_camr_unithgallo_oar-2002-0056-6155.xls
)

---------------------------------------------------------------------------

D. Impact of This Action on CAIR and CAMR Implementation

In the proposal, the Agency recognized that finalizing this change
in the cogeneration unit definition and in the applicability provisions
of the CAIR model rules and CAMR and the CAMR Hg model cap-and-trade
rule would require States to change CAIR SIPs and CAMR State Plans and
that States have already made significant progress in developing these
plans. In that context, the Agency has carefully considered the timing
of the regulatory action in relation to the implementation timeline.
The Agency understands that there may be implementation concerns
regarding this action and requested comments on implementation concerns
from the States.
After considering comments received, EPA is finalizing a change to
the cogeneration unit definition in the model trading rules and is
setting a time frame within which States wanting to participate in the
EPA-administered trading programs must revise their existing
cogeneration unit definition to be the same as in the revised EPA
rules. EPA will change the cogeneration unit definition in the CAIR
model cap-and-trade rule, CAIR FIPs, and CAMR model cap-and-trade rule
to reflect today's changes, and intends to change it if the Agency
finalizes the CAMR Federal Plan.
In the proposal, EPA requested comments on an alternative option
whereby the Agency would modify CAIR to allow States intending to join
the EPA-administered CAIR trading programs to choose which cogeneration
unit definition to use. After considering the comments received, EPA
has decided to require all CAIR states to change their rules so that
definitions remain consistent across the CAIR region and consistent
with CAMR regardless of whether they have existing biomass cogeneration
units affected by this action. Whether or not a State has existing
units affected by the revised definition, new units may be constructed
in the future that may be affected. Therefore, EPA concludes that
having uniform applicability provisions (including the definition of
cogeneration unit) makes the CAIR trading program easier to administer
and has the equitable result that the same types of facilities are
covered in all States in the trading programs.
In addition, EPA does not believe this will impose an undue burden
on States because under this final action, all States will already have
to go through the rulemaking process to incorporate other technical
revisions related to the thermal efficiency standard (i.e., revisions
to the definition of ``total energy input'') for all cogeneration units
(discussed below in Section III) and to make the necessary efficiency
standard changes to CAMR for biomass cogeneration units. With regard to
CAMR, EPA does not permit States to decide which definition of
cogeneration unit to use for State Plans under CAMR. Because CAMR
specifies the category of units from which States must obtain emission
reductions (i.e., coal-fired electric generating units as defined in
the rule), CAMR, all State Plans, and the CAMR Federal Plan, if
finalized, must have the same cogeneration unit definition.
EPA realizes that some States may have allocated allowances to
cogeneration units that might not be required to hold allowances as a
result of today's final action. The Agency believes that this could be
addressed by the State's SIP revision or State Plan. For example, the
SIP revision or State Plan adopting revisions making some units exempt
from the allowance-holding requirement could require these units to
surrender their allocations for inclusion in the State's new unit set-
aside. If the State requires the unit to surrender their allocations,
the SIP revision or State Plan should indicate how allowances would be
handled. Note that a State could also choose to adopt this rule change
but not to require the units to surrender allowances even though the
units are no longer covered by the rule.
EPA will continue to review SIPs and State Plans submitted with the
original cogeneration unit definition and efficiency standard and, at
this time, will not disapprove any plan based solely on the absence of
the changes in today's rule. As explained above, States are still
required to complete the rulemaking process to revise their SIPs and
State Plans to incorporate the clarifying change to the thermal
efficiency standard and total energy input calculations for all
cogeneration units in addition to making the necessary cogeneration
unit definition changes as they apply to units that co-fire biomass.
Specifically, with regard to CAIR SIPs, EPA is taking the approach of
setting a deadline for States to adopt the revisions to the
cogeneration unit definition and the efficiency standard finalized in
today's rule. In order to give States time to adopt these revisions,
EPA is not requiring that CAIR SIPs providing for participation in the
appropriate EPA-administered trading programs to include the revisions
until January 1, 2009. This means that, for purposes of reviewing and
approving such a CAIR SIP before January 1, 2009, EPA will not
disapprove any plan based solely on the absence of the changes in
today's rule. However, any CAIR SIP providing for participation in an
EPA-administered trading program that is not approved before January 1,
2009 must include the revisions in order to be subsequently approved
and any such CAIR SIP that is approved before

[[Page 59199]]

January 1, 2009 without the revisions must be revised by January 1,
2009 to include the revisions.
With regard to CAMR State Plans, EPA is taking the approach set
forth in 40 CFR 60.23(a), which includes general procedures for
incorporation in State Plans of revisions of EPA requirements for such
plans. Under 40 CFR 60.23(a), when the requirements for State Plans are
revised, a State must adopt and submit a revised State Plan consistent
with the revised requirements within nine months after the revised
requirements are published or within such other period specified by the
Administrator. In order to give States time to adopt the revisions to
the cogeneration unit definition and the efficiency standard finalized
in today's rule, EPA is setting a deadline under 40 CFR 60.23(a) of
January 1, 2010 for adoption and submission of revised CAMR State Plans
(whether or not they involve participation in the EPA-administered Hg
trading program) that include these revisions.

III. Calculating Thermal Efficiency and Total Energy Input

Today's action also adopts revisions to the definition of ``total
energy input,'' a term which is used in calculating thermal efficiency
of a unit. These minor technical revisions will help regulatory
authorities, owners, and operators determine whether the unit qualifies
for the cogeneration unit exemption in CAIR, the CAIR model cap-and-
trade rules, the CAIR FIPs, CAMR, the CAMR Hg model cap-and-trade rule,
and the proposed CAMR Federal Plan.
In the proposal, EPA requested comments on revising the efficiency
standard, or the definition of ``total energy input,'' to specify the
formula for calculating a unit's total energy input (i.e., fuel heat
input). The approach that EPA is adopting in today's rule applies to
all efficiency calculations made to determine if a unit satisfies the
efficiency standard in the cogeneration unit definition regardless of
whether or not the unit excludes from its calculation the heat input
from biomass fuels. However, consistent with this final action, the
thermal efficiency calculation shall include in ``total energy input''
the energy input from all fuels combusted by the boiler, other than
biomass.
A critical value used in calculating a unit's efficiency under the
thermal efficiency standard in the cogeneration unit definition is
``total energy input.'' As discussed above under the efficiency
standard, a units' useful power plus one-half of useful thermal energy
output must equal no less than a certain percentage of the total energy
input or, in some cases, useful power must be no less than a certain
percentage of total energy input. One of the first steps in determining
a unit's total energy input is identifying the unit's fuel mix and the
heat content or heating value of the fuel or fuels combusted by the
unit. Heating value, commonly expressed in Btu, can be measured in
several ways, but the most common are to use gross heat content
(referred to as ``higher heating value'' or ``HHV'') or to use net heat
content (referred to as ``lower heating value'' or ``LHV''). According
to the Energy Information Administration (EIA) of U.S. Department of
Energy, higher heating value includes, while low heating value
excludes, ``the energy used to vaporize water (contained in the
original energy form or created during the combustion process'').\10\
---------------------------------------------------------------------------

\10\ http://www.eia.doe.gov/glossary/glossary_h.htm.

---------------------------------------------------------------------------

The thermal efficiency standard originally adopted by EPA was based
on the thermal efficiency standard adopted by the Federal Energy
Regulatory Commission (FERC) in determining whether a unit is a
qualifying cogeneration unit under section (3)(18)(B) of the Federal
Power Act (as amended by the Public Utility Regulatory Policy Act
(PURPA)). However, EPA originally decided to make the thermal
efficiency standard cover all fuels combusted by a unit, while the FERC
limited application of the standard to natural gas and oil (See 70 FR
25277 and 18 CFR 292.205(a)(2) and (b)(1)). In today's action, of
course, the thermal efficiency standard is being revised to exclude,
for boilers, heat input from biomass.
FERC's regulations that included the thermal efficiency standard
stated that ``energy input'' in the form of natural gas and oil ``is to
be measured by the lower heating value of the natural gas or oil.'' 18
CFR 292.202(m). As explained by FERC when it adopted these regulations
in 1980 (45 FR 17959, 17962 (1980)):
Lower heating values were specified in the proposed rules in
recognition of the act that practical cogeneration systems cannot
recover and use the latent heat of water vapor formed in the combustion
of hydrocarbon fuels. By specifying that energy input to a facility
excludes energy that could not be recovered, the Commission hoped that
the proposed energy efficiency standards would be easier to understand
and apply.
Because the thermal efficiency standard on which EPA's thermal
efficiency standard was based is premised on using lower heating value
to determine total energy input, EPA interprets the thermal efficiency
standard in the existing CAIR, CAIR model cap-and-trade rules, CAIR
FIPs, CAMR, CAMR Hg model cap-and-trade rule, and the CAMR Federal
Plan, if finalized, as similarly requiring the use of lower heating
value of all fuels combusted at the unit in calculating a unit's total
energy input.
Further, although FERC regulations use lower heating value to
measure a unit's energy input from natural gas and oil, the regulations
do not specify a formula for calculating lower heating value. EPA
proposed, and is adopting as final in today's action, a revision to the
total energy input definition to add a specific formula for calculating
lower heating value. Under this formula, the relationship between the
lower heating value of a fuel and the higher heating value of that fuel
is:

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb
HHV = higher heating value of fuel in Btu/lb
W = Weight % of moisture in fuel
H = Weight % of hydrogen in fuel

EPA maintains that, while FERC regulations do not include a formula
for lower heating value, the above-described formula is consistent with
the FERC's approach of calculating lower heating value of fuels by
excluding from the higher heating value of such fuels ``the latent heat
of water vapor formed in the combustion of hydrocarbon fuels.'' (See 45
FR 17962). As discussed above, EPA's efficiency standard is based on
the efficiency standard in FERC regulations.
Consequently, EPA interprets the existing CAIR, CAIR model cap-and-
trade rules, CAIR FIPs, CAMR, CAMR Hg model cap-and-trade rule, and the
CAMR Federal Plan, if finalized, to require use of this formula for
calculating lower heating value for purposes of determining total
energy input. EPA notes that this formula is consistent not only with
the description of ``lower heating value'' by FERC, but also with EIA's
above-discussed description of the term. EPA also notes that the
formula reflects a standard approach to calculating lower heating value
(See IFRF Combustion Handbook, http://www.handbook.ifrf.net (IFRF 1999-

2000)).
In order to clarify that total energy input must be based on the
lower heating value and that lower heating value must be calculated
using the above-described formula EPA proposed

[[Page 59200]]

and is today finalizing, a revision to the total energy heat input
definition to make explicit the requirement to use lower heating value
calculated using this formula. The revised total energy heat input
definition applies to the CAIR, CAIR model cap-and-trade rules, CAIR
FIPs, CAMR (including the CAMR Hg model cap-and-trade rule), and, if
finalized, the CAMR Federal Plan. These minor technical revisions to
the definition clarify for regulatory authorities and unit owners and
operators, the application of the cogeneration unit exemption
EPA maintains that this formula, along with the change to the
efficiency standard for units burning biomass, should be more than
sufficient to address the concern that the original efficiency standard
unfairly penalized units firing biomass.

IV. Minor Corrections to CAIR and the Acid Rain Program Regulations

In addition to the above-described rule revisions, EPA is
finalizing certain minor corrections to CAIR, the CAIR model cap-and-
trade rules, and the Acid Rain Program regulations. On April 28, 2006,
EPA promulgated a final rule revising several definitions used in both
the CAIR and in the CAIR model cap-and-trade rules. While the rule text
in the April 28, 2006 final rule incorporated the revisions to the
definitions in the CAIR model cap-and-trade rules, the final rule
mistakenly did not also include rule text reflecting conforming changes
to the definitions of the same terms in the CAIR, i.e., to the
definitions for ``Allocation or allocation'', ``Combustion turbine'',
``Nameplate capacity'', and ``Maximum design heat input''. In today's
action, EPA is implementing these conforming changes in the definitions
for these terms in Sec. 51.123(cc) and (q) and Sec. 51.124(q) for the
reasons explained in the April 28, 2006 final action (See 71 FR 25328).
With regard to the CAIR model cap-and-trade rules, EPA finalizing a
minor correction of the definition of ``Permitting authority.'' For all
States subject to CAIR, this term is intended to include the agencies
authorized to issue CAIR permits under the regulations approved by the
Administrator for the EPA-administered CAIR cap-and-trade programs.
Some States have incorporated by reference, or intend to incorporate by
reference, the permitting provisions of the CAIR model cap-and-trade
rules. However, many other States have promulgated, or intend to
promulgate, their own permitting provisions concerning the processing
and issuing of CAIR permits under the EPA-administered cap-and-trade
programs. The existing definition refers only to permitting authorities
issuing CAIR permits under the permitting provisions of the CAIR model
cap-and-trade rules and not to permitting authorities governed by
States' own permitting provisions that may be approved into SIPs by the
Administrator under CAIR. Today's correction--i.e., the elimination of
the references, in the current ``Permitting authority'' definition, to
subparts CC, CCC, and CCCC of the CAIR model cap-and-trade rules--
corrects this technical problem.
With regard to the Acid Rain Program regulations, EPA is today
making final minor corrections to two parts of the regulations. In Part
72, EPA is making a non-substantive correction in wording in the
Certificate of Representation requirements so that the provision will
have the same wording as comparable provisions in the CAIR model cap-
and-trade rules. This will facilitate using a single Certificate of
Representation form for all of these trading programs. In Part 78, EPA
is instituting corrections that will make it clear that the
administrative appeals procedures apply to all final actions of the
Administrator under the EPA-administered cap-and-trade programs whether
the programs are governed by the CAIR model cap-and-trade rule
provisions that many States are incorporating by reference or whether
the programs are governed by the State's own cap-and-trade rules
approved by the Administrator.
At this time, EPA is not finalizing the change to the boiler MACT
that explicitly excludes from that rule ``mercury budget units covered
by 40 CFR part 60, subpart HHHH'' (40 CFR 63.7491(c)) that was included
in the proposal. Since the proposal was published, the boiler MACT has
been vacated by the court (See Natural Resources Defense Counsel v.
EPA, June 8, 2007), and EPA is in the process of re-developing a new
regulation in response to the court decision.

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is not a ``significant regulatory action'' and is therefore
not subject to review under the EO.
This action makes relatively minor revisions to the definition of
``cogeneration unit'' in the CAIR model cap-and-trade rules, CAIR FIPs,
CAMR, including the CAMR Hg model cap-and-trade rule. If EPA finalizes
the proposed CAMR Federal Plan, it intends to make the same revisions
in the final rule. It also makes some other minor, technical rule
revisions to the CAIR, CAIR FIPs, CAMR, and the Acid Rain Program. For
today's action, EPA is relying on the economic analysis conducted for
CAIR and CAMR that are presented in the Regulatory Impact Analyses for
those actions.

B. Paperwork Reduction Act

This action does not impose any new information collection burden.
This action makes relatively minor revisions to the definition of
``cogeneration unit'' in the CAIR model cap-and-trade rules, CAIR FIPs,
CAMR, including the model cap-and-trade rule, and announces its intent
to make the same revisions if it finalizes the proposed CAMR Federal
Plan. It also makes some other minor, technical rule revisions to the
CAIR, CAIR FIPs, CAMR, and the Acid Rain Program. The paperwork
reduction requirements for this action are satisfied through the
Information Collection Requests (ICRs) submitted to OMB for review and
approval as part of CAIR and CAMR.
The OMB has previously approved the information collection
requirements contained in the existing CAIR, and CAMR regulations (70
FR 25313, May 12, 2005, 70 FR 28643, May 18, 2005 respectively) under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
For the CAIR and CAMR ICRs, OMB has assigned control numbers 2060-0570
and 2060-0567, respectively (EPA No. 2152.02 and 2137.02). A copy of
the OMB approved ICRs may be obtained from Susan Auby, Collection
Strategies Division, U.S. Environmental Protection Agency (2822T), 1200
Pennsylvania Ave., NW., Washington, DC 20460 or by calling (202) 566-
1672.
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.

[[Page 59201]]

An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR Part 9.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute 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 organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of
a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
After considering the economic impacts of today's final rule on
small entities, EPA has determined that this action will not have a
significant economic impact on a substantial number of small entities.
In determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the
primary purpose of the regulatory flexibility analyses is to identify
and address regulatory alternatives ``which minimize any significant
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604.
Thus, an agency may certify that a rule will not have a significant
economic impact on a substantial number of small entities if, among
other possibilities, the rule relieves regulatory burden, or otherwise
has a positive economic effect on all of the small entities subject to
the rule.
EPA is revising the thermal efficiency standard in the cogeneration
unit definition, which exists in the CAIR model trading rules, CAIR
FIPs, CAMR, including the CAMR Hg model trading rule, and proposed CAMR
Federal Plan. As a result, some additional cogeneration units will
likely be exempt from the CAIR FIPs, CAMR and the proposed CAMR Federal
Plan. We have therefore concluded that the changes to the CAIR FIPs,
CAMR, including the CAMR model trading rule, and the proposed CAMR
Federal Plan in today's rule will not have any significant adverse
impact on small entities and may relieve regulatory burden on some
small entities that would have been subject to these programs in the
absence of today's rule change.
CAIR and the CAIR model trading rules do not establish requirements
applicable to small entities and thus a regulatory flexibility analysis
is not required for the revisions to the CAIR model trading rules. CAIR
requires States to submit SIP revisions to achieve the necessary
emission reductions and provides model trading rules that the States
may adopt to achieve these reductions. However, because States have the
discretion under CAIR to choose the sources to regulate and the
emissions reductions to be achieved by the regulated sources, EPA
cannot predict the effect of the change to the definition in the CAIR
model rules on small entities. In States that choose to adopt the model
rules with the modified definition of cogeneration unit, the likely
result would be the exemption of some additional cogeneration units
from the EPA-administered CAIR cap-and-trade programs.
With regard to CAMR, the change to the cogeneration definition is
likely to result in some additional cogeneration units becoming exempt
from CAMR, as well as from the EPA-administered CAMR cap-and-trade
program, including potentially some small entities. Because the change
is likely to relieve regulatory burden, the change will not have a
significant economic impact on a substantial number of small entities.
The other rule revisions would not make any substantive changes in
the requirements of the existing rules and, therefore, would not have
any potential significant impacts on small entities.
For these reasons, the Administrator certifies that the rule will
not have a significant economic impact on a substantial number of small
entities.

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under UMRA section 202, 2 U.S.C.
1532, EPA generally must prepare a written statement, including a cost-
benefit analysis, for any proposed or final rule that ``includes any
Federal mandate that may result in the expenditure by State, local, and
Tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is
defined under UMRA section 421(6), 2 U.S.C. 658(6), to include a
``Federal intergovernmental mandate'' and a ``Federal private sector
mandate.'' A ``Federal intergovernmental mandate,'' in turn, is defined
to include a regulation that ``would impose an enforceable duty upon
State, local, or Tribal governments,'' except for, among other things,
a duty that is ``a condition of Federal assistance'' (UMRA section
421(5)(A)(i)(I), 2 U.S.C. 658(5)(A)(i)). A ``Federal private sector
mandate'' includes a regulation that ``would impose an enforceable duty
upon the private sector,'' with certain exceptions (UMRA section
421(7)(A), 2 U.S.C. 658(7)(A)).
Before promulgating an EPA rule for which a written statement is
needed under UMRA section 202, UMRA section 205, 2 U.S.C. 1535,
generally requires EPA to 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.
EPA prepared a written statement meeting the requirements of
section 202 of UMRA for the final CAIR and CAMR rulemaking processes.
Most of the changes in today's action relate to the definition of
cogeneration unit, which results in a minor change in the applicability
criteria for the CAIR model trading rules, CAIR FIPs, CAMR, including
the CAMR model trading rule, and the proposed CAMR Federal Plan that
will not significantly alter the impacts of these rules. The other rule
changes would make no significant, substantive changes in the
requirements of the existing rules. Thus, the analyses already prepared
for CAIR and CAMR are applicable to today's action.
In summary, today's rule contains no Federal mandates for State,
local, or tribal governments or the private sector because this action
is likely to actually relieve regulatory burden by making more units
eligible for the cogeneration unit exemption. Furthermore, as EPA
stated in the final CAIR and CAMR, EPA is not directly establishing any
regulatory requirements that may significantly or uniquely affect small
governments, including Tribal governments. Thus, EPA is not obligated
to develop under UMRA section 203 a small government agency plan.
Furthermore, in a manner consistent

[[Page 59202]]

with the intergovernmental consultation provisions of UMRA section 204,
EPA carried out consultations with the governmental entities affected
by this rule.

E. Executive Order 13132: Federalism

Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' are defined in the EO to
include regulations that have ``substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government.''
This rule does not have Federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. Thus, EO 13132 does not apply to
this final rule.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by Tribal officials in the development of regulatory
policies that have Tribal implications.'' This final action does not
have tribal implications as specified in EO 13175. Thus, Executive
Order 13175 does not apply to this rule.

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

Executive Order 13045, entitled ``Protection of Children from
Environmental Health and Safety Risks'' (62 FR 19885, April 23, 1997),
applies to any rule that (1) is determined to be ``economically
significant'' as defined under EO 12866 and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, the Agency 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 the Agency.
This final rule is not subject to the Executive Order because it is
not economically significant as defined in Executive Order 12866, and
because the Agency does not have reason to believe the environmental
health or safety risks addressed by this action present a
disproportionate risk to children. This final rule would result in
little change in emissions levels and the environmental benefits
projected in the final CAIR and CAMR because the likely effect of the
rule would be to exempt a small number of units with a very small
amount of emissions compared to the overall emissions caps. The health
and safety risks are essentially unchanged from those analyzed in CAIR,
the CAIR FIPs, CAMR, and the proposed CAMR Federal Plan.

H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

This rule is not subject to Executive Order 13211, ``Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use'' (66 FR 28355, May 22, 2001), because it is not a
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA
to use voluntary consensus standards in their regulatory and
procurement activities unless to do so would be inconsistent with
applicable law or otherwise impracticable. Voluntary consensus
standards are technical standards (e.g., material specifications, test
methods, sampling procedures, business practices) developed or adopted
by one or more voluntary consensus bodies. The NTTAA requires EPA to
provide Congress, through OMB, with explanations when EPA decides not
to use available and applicable voluntary consensus standards.
This final action does not use any additional technical standards
beyond those cited in the final CAIR and CAMR. Therefore, EPA is not
considering the use of any additional voluntary consensus standards for
this action.

J. Executive Order 12898: Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
federal executive policy on environmental justice. Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
In accordance with Executive Order 12898, EPA expects this rule to
have no disproportionate negative impacts on minority or low income
populations because the emissions reduced by CAIR and CAMR remain
essentially the same.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective November 19, 2007.

L. Judicial Review

Section 307(b)(1) of the CAA indicates which Federal Courts of
Appeal have venue for petitions of review of final actions by EPA. This
Section provides, in part, that petitions for review must be filed in
the Court of Appeals for the District of Columbia Circuit if (i) the
agency action consists of ``nationally applicable regulations
promulgated, or final action taken, by the Administrator,'' or (ii)
such action is locally or regionally applicable, if ``such action is
based on a determination of nationwide scope or effect and if in taking
such action the Administrator finds and publishes that such action is
based on such a determination.''
Any final action related to CAIR and/or CAMR is ``nationally
applicable'' within the meaning of section 307(b)(1). As an initial
matter, through this rule, EPA interprets section 110 of the CAA, a
provision which has nationwide applicability. In additions, CAIR
applies to 28 States and the District of Columbia; and CAMR applies to
all 50

[[Page 59203]]

States and the District of Columbia. CAIR and CAMR are also based on a
common core of factual findings and analyses concerning the transport
of pollutants between different States subject to CAIR and CAMR.
Finally, EPA has established uniform approvability criteria that would
be applied to all States subject to CAIR and CAMR. For these reasons,
the Administrator also is determining that any final action regarding
CAIR and/or CAMR is of nationwide scope and effect for purposes of
section 307(b)(1). Thus, any petitions for review of final actions
regarding this action must be filed in the Court of Appeals for the
District of Columbia Circuit within 60 days from the date final actions
is published in the Federal Register.

List of Subjects

40 CFR Part 51

Administrative practice and procedure, Air pollution control,
Intergovernmental relations, Nitrogen oxides, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 60

Environmental protection, Administrative practice and procedure,
Air pollution control, Coal, Electric power plants, Intergovernmental
relations, Metals, Natural gas, Nitrogen oxides, Particulate matter,
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 72

Acid rain, Air pollution control, Carbon dioxide, Electric
utilities, Incorporation by reference, Nitrogen oxides, Reporting and
recordkeeping requirements, Sulfur dioxide.

40 CFR Part 78

Environmental protection, Acid rain, Administrative practice and
procedure, Air pollution control, Electric utilities, Nitrogen oxides,
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 96

Environmental protection, Administrative practice and procedure,
Intergovernmental relations, Air pollution, control, Nitrogen oxides,
Reporting and recordkeeping requirements, Sulfur dioxide.

40 CFR Part 97

Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Nitrogen oxides,
Sulfur dioxide, Reporting and recordkeeping requirements.

Dated: October 11, 2007.
Stephen L. Johnson,
Administrator.

0
For the reasons set forth in the preamble, parts 51, 60, 72, 78, 96,
and 97 of chapter 1 of title 40 of the Code of Federal Regulations are
amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for Part 51 continues to read as follows:

Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

0
2. Section 51.123 is amended as follows:
0
a. By adding a sentence at the end of paragraph (o)(1);
0
b. By adding a sentence at the end of paragraph (aa)(1);
0
c. In paragraph (cc):
i. In the definition of ``Allocate or allocation'', by removing the
word ``source'' and adding in its place the words ``source or other
entity'';
ii. By adding in alphabetical order a new definition of
``Biomass'';
iii. In the definition of ``Cogeneration unit'', by removing, in
paragraph (2) introductory text, the words ``year after which'' and
adding in their place the words ``year after the calendar year in
which'', by removing the period at the end of paragraph (2)(ii) and
adding a semicolon in its place, and by adding a new paragraph (3);
iv. In paragraph (2) of the definition of ``Combustion turbine'',
by removing the words ``any associated heat recovery steam generator''
and adding in their place the words ``any associated duct burner, heat
recovery steam generator,'';
v. By revising the definition of ``Maximum design heat input'';
vi. In the definition of ``Nameplate capacity'', by removing the
words ``other deratings) as specified'' and adding in their place the
words ``other deratings) as of such installation as specified'' and by
removing the words ``maximum amount as specified'' and adding in their
place the words ``maximum amount as of such completion as specified'';
and
vii. By adding a sentence at the end of the definition of ``Total
energy input''; and

0
d. In paragraph (ee)(1), by removing the words ``State adopt'' and
adding in their place the words ``State may adopt'' and by adding a
sentence at the end of paragraph to read as follows:

Sec. 51.123 Findings and requirements for submission of State
implementation plan revisions relating to emissions of oxides of
nitrogen pursuant to the Clean Air Interstate Rule.

* * * * *
(o)(1) * * * Before January 1, 2009, a State's regulations shall be
considered to be substantively identical to subparts AA through II of
part 96 of this chapter, or differing substantively only as set forth
in paragraph (o)(2) of this section, regardless of whether the State's
regulations include the definition of ``Biomass'', paragraph (3) of the
definition of ``Cogeneration unit'', and the second sentence of the
definition of ``Total energy input'' in Sec. 96.102 of this chapter
promulgated on October 19, 2007, provided that the State timely submits
to the Administrator a SIP revision that revises the State's
regulations to include such provisions. Submission to the Administrator
of a SIP revision that revises the State's regulations to include such
provisions shall be considered timely if the submission is made by
January 1, 2009.
* * * * *
(aa)(1) * * * Before January 1, 2009, a State's regulations shall
be considered to be substantively identical to subparts AAAA through
IIII of part 96 of the chapter, or differing substantively only as set
forth in paragraph (o)(2) of this section, regardless of whether the
State's regulations include the definition of ``Biomass'', paragraph
(3) of the definition of ``Cogeneration unit'', and the second sentence
of the definition of ``Total energy input'' in Sec. 96.302 of this
chapter promulgated on October 19, 2007, provided that the State timely
submits to the Administrator a SIP revision that revises the State's
regulations to include such provisions. Submission to the Administrator
of a SIP revision that revises the State's regulations to include such
provisions shall be considered timely if the submission is made by
January 1, 2009.
* * * * *
(cc) * * *
Biomass means--
(1) Any organic material grown for the purpose of being converted
to energy;
(2) Any organic byproduct of agriculture that can be converted into
energy; or
(3) Any material that can be converted into energy and is
nonmerchantable for other purposes, that is segregated from other
nonmerchantable material, and that is;
(i) A forest-related organic resource, including mill residues,
precommercial thinnings, slash, brush, or byproduct from conversion of
trees to merchantable material; or

[[Page 59204]]

(ii) A wood material, including pallets, crates, dunnage,
manufacturing and construction materials (other than pressure-treated,
chemically-treated, or painted wood products), and landscape or right-
of-way tree trimmings.
* * * * *
Cogeneration unit means * * *
(3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input from all fuel except biomass if the unit is a boiler.
* * * * *
Maximum design heat input means the maximum amount of fuel per hour
(in Btu/hr) that a unit is capable of combusting on a steady state
basis as of the initial installation of the unit as specified by the
manufacturer of the unit.
* * * * *
Total energy input means * * * Each form of energy supplied shall
be measured by the lower heating value of that form of energy
calculated as follows:

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *
(ee) * * *
(1) * * * Before January 1, 2009, a State's applicability
provisions shall be considered to be substantively identical to Sec.
96.304 of this chapter (with the expansion allowed under this
paragraph) regardless of whether the State's regulations include the
definition of ``Biomass'', paragraph (3) of the definition of
``Cogeneration unit'', and the second sentence of the definition of
``Total energy input'' in Sec. 97.102 of this chapter promulgated on
October 19, 2007, provided that the State timely submits to the
Administrator a SIP revision that revises the State's regulations to
include such provisions. Submission to the Administrator of a SIP
revision that revises the State's regulations to include such
provisions shall be considered timely if the submission is made by
January 1, 2009.
* * * * *

0
3. Section 51.124 is amended as follows:
0
a. By adding a sentence at the end of paragraph (o)(1); and
0
b. In paragraph (q):
i. In the definition of ``Allocate or allocation'', by removing the
word ``source'' and adding in its place the words ``source or other
entity'';
ii. By adding in alphabetical order a new definition of
``Biomass'';
iii. In the definition of ``Cogeneration unit'', by removing, in
paragraph (2) introductory text, the words ``year after which'' and
adding in their place the words ``year after the calendar year in
which'', by removing the period at the end of paragraph (2)(ii) and
adding a semicolon in its place, and by adding a new paragraph (3);
iv. In paragraph (2) of the definition of ``Combustion turbine'',
by removing the words ``any associated heat recovery steam generator''
and adding in their place the words ``any associated duct burner, heat
recovery steam generator,'';
v. By revising the definition of ``Maximum design heat input'';
vi. In the definition of ``Nameplate capacity'', by removing the
words ``other deratings) as specified'' and adding in their place the
words ``other deratings as of such installation as specified'' and by
removing the words ``maximum amount as specified'' and adding in their
place the words ``maximum amount as of such completion as specified'';
and
vii. By adding a sentence at the end of the definition of ``Total
energy input'' to read as follows:

Sec. 51.124 Findings and requirements for submission of State
implementation plan revisions relating to emissions of sulfur dioxide
pursuant to the Clean Air Interstate Rule.

* * * * *
(o)(1) * * * Before January 1, 2009, a State's regulations shall be
considered to be substantively identical to subparts AAA through III of
part 96 of the chapter, or differing substantively only as set forth in
paragraph (o)(2) of this section, regardless of whether the State's
regulations include the definition of ``Biomass'', paragraph (3) of the
definition of ``Cogeneration unit'', and the second sentence of the
definition of ``Total energy input'' in Sec. 96.202 of this chapter
promulgated on October 19, 2007, provided that the State timely submits
to the Administrator a SIP revision that revises the State's
regulations to include such provisions. Submission to the Administrator
of a SIP revision that revises the State's regulations to include such
provisions shall be considered timely if the submission is made by
January 1, 2009.
* * * * *
(q) * * *
Biomass means--
(1) Any organic material grown for the purpose of being converted
to energy;
(2) Any organic byproduct of agriculture that can be converted into
energy; or
(3) Any material that can be converted into energy and is
nonmerchantable for other purposes, that is segregated from other
nonmerchantable material, and that is;
(i) A forest-related organic resource, including mill residues,
precommercial thinnings, slash, brush, or byproduct from conversion of
trees to merchantable material; or
(ii) A wood material, including pallets, crates, dunnage,
manufacturing and construction materials (other than pressure-treated,
chemically-treated, or painted wood products), and landscape or right-
of-way tree trimmings.
* * * * *
Cogeneration unit means * * *
(3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input from all fuel except biomass if the unit is a boiler.
* * * * *
Maximum design heat input means the maximum amount of fuel per hour
(in Btu/hr) that a unit is capable of combusting on a steady state
basis as of the initial installation of the unit as specified by the
manufacturer of the unit.
* * * * *
Total energy input means * * * Each form of energy supplied shall
be measured by the lower heating value of that form of energy
calculated as follows:

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

PART 60--[AMENDED]

0
4. The authority citation for Part 60 is revised to read as follows:

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

0
5. Section 60.24(h) is amended as follows:
0
a. By adding a sentence at the end of paragraph (6)(1); and
0
b. In paragraph (8):
i. By adding in alphabetical order a new definition of ``Biomass'';
ii. In the definition of ``Cogeneration unit'', by removing the
period at the end of paragraph (2)(ii) and replacing it with a
semicolon and by adding a new paragraph (3); and
iii. By adding a sentence at the end of the definition of ``Total
energy input'' to read as follows:

[[Page 59205]]

Sec. 60.24 Emission standards and compliance schedules.

* * * * *
(h) * * *
(6)(i) * * * Before January 1, 2009, a State's regulations shall be
considered to be substantively identical to subpart HHHH of this part,
or differing substantively only as set forth in paragraph (h)(6)(ii) of
this section, regardless of whether the State's regulations include the
definition of ``Biomass'', paragraph (3) of the definition of
``Cogeneration unit'', and the second sentence of the definition of
``Total energy input'' in Sec. 60.4102 of this chapter promulgated on
October 19, 2007, provided that the State timely submits to the
Administrator a State plan that revises the State's regulations to
include such provisions. Submission to the Administrator of a State
plan that revises the State's regulations to include such provisions
shall be considered timely if the submission is made by January 1,
2010.
* * * * *
(8) * * * * *
Biomass means--
(1) Any organic material grown for the purpose of being converted
to energy;
(2) Any organic byproduct of agriculture that can be converted into
energy; or
(3) Any material that can be converted into energy and is
nonmerchantable for other purposes, that is segregated from other
nonmerchantable material, and that is;
(i) A forest-related organic resource, including mill residues,
precommercial thinnings, slash, brush, or byproduct from conversion of
trees to merchantable material; or
(ii) A wood material, including pallets, crates, dunnage,
manufacturing and construction materials (other than pressure-treated,
chemically-treated, or painted wood products), and landscape or right-
of-way tree trimmings.
* * * * *
Cogeneration unit means * * *
(3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input from all fuel except biomass if the unit is a boiler.
* * * * *
Total energy input means * * * Each form of energy supplied shall
be measured by the lower heating value of that form of energy
calculated as follows:

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

0
6. Section 60.4102 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';
0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding in its place a semicolon and
by adding a new paragraph (3); and
0
c. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

Sec. 60.4102 Definitions.

* * * * *
Biomass means--
(1) Any organic material grown for the purpose of being converted
to energy;
(2) Any organic byproduct of agriculture that can be converted into
energy; or
(3) Any material that can be converted into energy and is
nonmerchantable for other purposes, that is segregated from other
nonmerchantable material, and that is;
(i) A forest-related organic resource, including mill residues,
precommercial thinnings, slash, brush, or byproduct from conversion of
trees to merchantable material; or
(ii) A wood material, including pallets, crates, dunnage,
manufacturing and construction materials (other than pressure-treated,
chemically-treated, or painted wood products), and landscape or right-
of-way tree trimmings.
* * * * *
Cogeneration unit means * * *
(3) Provided that the total energy input under paragraphs (2)(i)(B)
and (2)(ii) of this definition shall equal the unit's total energy
input from all fuel except biomass if the unit is a boiler.
* * * * *
Total energy input means * * * Each form of energy supplied shall
be measured by the lower heating value of that form of energy
calculated as follows:

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

PART 72--PERMITS REGULATION

0
7. The authority citation for Part 72 is revised to read as follows:

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

Sec. 72.24 [Amended]

0
8. Section 72.24 is amended, in paragraph (a)(9) introductory text, by
removing the words ``life-of-the-unit, firm power contractual
arrangements'' and adding in their place the words ``a life-of-the-
unit, firm power contractual arrangement''.

PART 78--APPEAL PROCEDURES

0
9. The authority citation for Part 78 is revised to read as follows:

Authority: 42 U.S.C. 7401, 7403, 7410, 7411, 7426, 7601, and
7651, et seq.

0
10. Section 78.1 is amended by revising paragraph (a)(1) to read as
follows:

Sec. 78.1 Purpose and scope.

(a)(1) This part shall govern appeals of any final decision of the
Administrator under subpart HHHH of part 60 of this chapter or State
regulations approved under Sec. 60.24(h)(6)(i) or (ii) of this
chapter, part 72, 73, 74, 75, 76, or 77 of this chapter, subparts AA
through II of part 96 of this chapter or State regulations approved
under Sec. 51.123(o)(1) or (2) of this chapter, subparts AAA through
III of part 96 of this chapter or State regulations approved under
Sec. 51.124(o)(1) or (2) of this chapter, subparts AAAA through IIII
of part 96 of this chapter or State regulations approved under Sec.
51.123(aa)(1) or (2) of this chapter, or part 97 of this chapter;
provided that matters listed in Sec. 78.3(d) and preliminary,
procedural, or intermediate decisions, such as draft Acid Rain permits,
may not be appealed. All references in paragraph (b) of this section
and in Sec. 78.3 to subpart HHHH of part 60 of this chapter, subparts
AA through II of part 96 of this chapter, subparts AAA through III of
part 96 of this chapter, and subparts AAAA through IIII of part 96 of
this chapter shall be read to include the comparable provisions in
State regulations approved under Sec. 60.24(h)(6)(i) or (ii) of this
chapter, Sec. 51.123(o)(1) or (2) of this chapter, Sec. 51.124(o)(1)
or (2) of this chapter, and Sec. 51.123(aa)(1) or (2) of this chapter,
respectively.
* * * * *

PART 96--[AMENDED]

0
11. The authority citation for Part 96 continues to read as follows:

Authority: 42 U.S.C. 7401, 7403, 7410, 7601, and 7651, et seq.

0
12. Section 96.102 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';

[[Page 59206]]

0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding a semicolon in its place and
by adding a new paragraph (3);
0
c. In the definition of ``Permitting authority'', by removing the words
``in accordance with subpart CC of this part''; and
0
d. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

Sec. 96.102 Definitions.

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

0
13. Section 96.202 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';
0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding a semicolon in its place and
by adding a new paragraph (3);
0
c. In the definition of ``Permitting authority'', by removing the words
``in accordance with subpart CCC of this part''; and
0
d. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

Sec. 96.202 Definitions.

LHV = HHV-10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

0
14. Section 96.302 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';
0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding a semicolon its place and by
adding a new paragraph (3);
0
c. In the definition of ``Permitting authority'', by removing the words
``in accordance with subpart CCCC of this part''; and
0
d. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

Sec. 96.302 Definitions.

LHV = HHV-10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

PART 97--[AMENDED]

0
15. The authority citation for Part 97 continues to read as follows:

Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et
seq.

0
16. Section 97.102 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';
0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding a semicolon in its place and
by adding a new paragraph (3);
0
c. In the definition of ``Permitting authority'', by removing the words
``in accordance with subpart CC of this part''; and
0
d. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

[[Page 59207]]

Sec. 97.102 Definitions.

LHV = HHV - 10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

0
17. Section 97.202 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';
0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding a semicolon in its place and
by adding a new paragraph (3);
0
c. In the definition of ``Permitting authority'', by removing the words
``in accordance with subpart CCC of this part''; and
0
d. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

Sec. 97.202 Definitions.

LHV = HHV-10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *

0
18. Section 97.302 is amended as follows:
0
a. By adding in alphabetical order a new definition of ``Biomass'';
0
b. In the definition of ``Cogeneration unit'', by removing the period
at the end of paragraph (2)(ii) and adding a semicolon in its place and
by adding a new paragraph (3);
0
c. In the definition of ``Permitting authority'', by removing the words
``in accordance with subpart CCCC of this part''; and
0
d. By adding a sentence at the end of the definition of ``Total energy
input'' to read as follows:

Sec. 97.302 Definitions.

LHV = HHV-10.55(W + 9H)

Where:

LHV = lower heating value of fuel in Btu/lb,
HHV = higher heating value of fuel in Btu/lb,
W = Weight % of moisture in fuel, and
H = Weight % of hydrogen in fuel.
* * * * *
[FR Doc. E7-20447 Filed 10-18-07; 8:45 am]

BILLING CODE 6560-50-P