Approval and Promulgation of Implementation Plans; Illinois Trading Program

USEPA is approving the Illinois trading program, submitted on December 16, 1997. This program is a cap and trade program, designed to reduce emissions of volatile organic compounds (VOC) in the Chicago ozone nonattainment area below the levels required by reasonably available control technology (RACT) and other regulations. Illinois requires participation by major industrial VOC sources. Each participating source must hold allowances equivalent to its emissions, and Illinois issues allowances to each source equivalent to 12 percent less than baseline actual emissions. Sources may buy and sell allowances, thereby redistributing allowable emissions, but the sum of emissions from the sources involved must in any case reflect a 12 percent reduction from total baseline levels. USEPA reviewed Illinois' estimates of program benefits and concluded that the program would reduce VOC emissions by 10.9 tons per day. On December 27, 2000, at 65 FR 81799, USEPA proposed to approve this program provided Illinois satisfactorily resolved five issues. Illinois' response to the proposed rulemaking resolved four of these issues, by clarifying the timetable for suitable enforcement authority, satisfying USEPA's environmental justice policy, prohibiting credit issuance to minor sources in the absence of an area-wide net emissions decrease ("demand shifting"), and committing to remedy any problems identified in its annual program review. Illinois addressed the fifth issue by a letter to USEPA dated August 23, 2001. In this letter, Illinois requested that USEPA defer rulemaking on section 205.150(e), which exempts new sources that satisfy the trading program's seasonal offset requirements from the requirement for full year offsets. Because USEPA is deferring rulemaking on this section, the State Implementation Plan (SIP) continues to require full year offsets, satisfying the fifth prerequisite for program approval. USEPA received multiple comments on its proposed rulemaking, regarding envi