[Federal Register Volume 60, Number 64 (Tuesday, April 4, 1995)]
[Rules and Regulations]
[Pages 17100-17132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7491]
[[Page 17099]]
_______________________________________________________________________
Part II
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 9, et al.
Opting into the Acid Rain Program; Final Rule
Federal Register / Vol. 60, No. 64 / Tuesday, April 4, 1995 / Rules
and Regulations
[[Page 17100]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 9, 72, 73, 74, 75, 77 and 78
[FRL-5178-5]
RIN 2060-AD43
Opting Into the Acid Rain Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: Under title IV of the Clean Air Act, Congress authorized the
U.S. Environmental Protection Agency (EPA) to establish the Acid Rain
Program. The principal goal of the program is to achieve significant
environmental benefits through reductions in sulfur dioxide (SO2)
and nitrogen oxide (NOX) emissions, the primary components of acid
rain. Acid rain causes surface water acidification, damages trees at
high elevations and accelerates the decay of building materials. In
addition, air concentrations of SO2 and NOX degrade
visibility in large parts of the country and acidic aerosols derived
from these emissions may pose a risk to public health.
The Acid Rain Program departs from traditional regulatory methods
by introducing an SO2 allowance trading system that lowers the
cost of reducing emissions by allowing electric utilities as a group to
seek out the least costly methods of control. Utility units affected
under title IV are allocated allowances based on their historic
emissions and these units may trade allowances, provided that at the
end of each year, each unit holds enough allowances to cover its annual
SO2 emissions.
Today's action establishes an additional component to the Acid Rain
Program called the Opt-in Program. The Opt-in Program allows sources
not required to participate in the Acid Rain Program the opportunity to
participate on a voluntary basis. Such sources, known as combustion
sources, would include small utility units and industrial boilers.
These rules detail how combustion sources participate in the allowance
market by ``opting in'' to the Acid Rain Program, as provided under
section 410 of the Act. Congress envisioned the Opt-in Program as a
means of generating additional allowances and through which the
compliance costs of acid rain control in the utility sector could be
reduced, while still meeting overall emissions reductions goals.
EFFECTIVE DATE: These rules become effective on May 4, 1995.
ADDRESSES: Docket. Docket No. A-93-15, containing information
considered during development of the promulgated rule, is available for
public inspection and copying between 8 a.m. and 5:30 p.m., Monday
through Friday, at EPA's Air Docket Section (6102), Waterside Mall,
room M1500, 1st Floor, 401 M Street SW., Washington, DC 20460. A
reasonable fee may be charged for copying.
Background information document. The background information
document containing responses to public comments on the proposed
standards may be obtained from the docket. Please refer to ``Final Opt-
in Rule for Combustion Sources--Comment Response Document.''
FOR FURTHER INFORMATION CONTACT: Acid Rain Hotline (202) 233-9620 or
Adam Klinger (202) 233-9122, Acid Rain Division; mailing address, U.S.
EPA, Acid Rain Division (6204J), 401 M Street, SW., Washington, DC
20460.
SUPPLEMENTARY INFORMATION: The contents of this preamble are as
follows:
A. Background and Summary
1. Background
2. The Opt-in Program
3. Summary of Final Rule
B. Major Changes Made to the Proposed Rule
1. Acceptable Data Sources
2. Allocation of Opt-in Allowances and Transfer Prohibition
3. Offering Opt-in Allowances on the Acid Rain Auction
4. Thermal Energy Exception
a. Definition of Thermal Energy
b. Emission Rate Used To Calculate Transferable Allowances
c. Methodology Revision for Calculating the Fuel Associated with
Thermal Energy
C. Other Significant Changes Made to the Proposed Rule
1. Ineligibility of Non-operating and Retired Units
2. Interpretation of Shutdown, Modification and Reconstruction
3. Incorporation of Efficiency Measures
4. Expiration of a Non-Effective Opt-in Permit
5. Miscellaneous Issues
a. Opt-in Permitting
b. Clarification of Eligible Combustion Sources
c. Modification to Utilization Calculation
d. Efficiency Adjustments for an Opt-in Source Governed by a
Thermal Energy Plan
e. Definitions
f. Other Items
g. Display of OMB Control Numbers
D. Impact Analyses
1. Executive Order 12866 (Regulatory Impact Analysis)
2. Regulatory Flexibility Act
3. Paperwork Reduction Act
A. Background and Summary
1. Background
Acid deposition occurs when emissions of sulfur dioxide and oxides
of nitrogen are chemically transformed in the atmosphere into sulfuric
and nitric acids and return to earth as wet deposition such as rain,
fog, or snow, or dry deposition such as fine particles or gases. Acid
deposition damages lakes and harms forests and buildings. SO2
emissions damage ecosystems and materials, contribute to reduced
visibility and, at current levels, are suspected of posing a threat to
human health.
Title IV of the Clean Air Act, as amended by the Clean Air Act
Amendments of 1990, directs EPA to establish the Acid Rain Program to
reduce the adverse effects of acidic deposition. Title IV targets the
electric utility industry, which accounts for over two-thirds of
SO2 emissions and over one-third of NOX emissions in the
United States. Specifically, the Act mandates a national cap of 8.95
million tons per year on electric utility SO2 emissions by the
year 2010 (just over half of the 1980 electric utility SO2
emissions), to be achieved in two phases. Phase I will begin in 1995
and mainly affects large, high-emitting utility plants; these plants
are specifically listed in the statute. Phase II will begin in 2000 and
affects virtually all existing utility units with output capacity
greater than 25 megawatts and most new utility units.
The centerpiece of the Acid Rain Program is a unique trading system
in which allowances are bought and sold at prices determined in the
marketplace. Each allowance authorizes the emission of up to one ton of
SO2 during or after a designated year. The majority of utility
units--both existing and some new units--are allocated allowances based
on their historic fuel use and the emissions limitations specified in
the Act. Utility units are required to limit SO2 emissions to the
number of allowances they hold, but since allowances are fully
transferrable, utilities may meet their emissions control requirements
in the most cost-effective manner possible. For instance, a utility may
decide to (1) switch to a lower sulfur fuel, (2) install flue gas
desulfurization equipment (scrubbers) and bank unused allowances or
sell them to other utilities/individuals, (3) forego emissions
reductions and buy additional allowances (if necessary), or (4)
implement energy efficiency measures. Other options and combinations of
options are possible, providing an unusually high degree of
[[Page 17101]] flexibility for affected units to comply with the law.
The procedures for transferring and tracking allowances are codified in
40 CFR part 73.
Each affected unit must have a permit in which the affected unit
certifies that it will possess a sufficient number of allowances to
cover its SO2 emissions and specifies the source's compliance
options. The permit regulation is codified in 40 CFR part 72.
To ensure that nationally mandated reductions in SO2 and
NOX emissions are achieved, each affected unit must install a
continuous emissions monitoring system and collect, record, and report
emissions data. The continuous emissions monitoring rule is codified in
40 CFR part 75.
If an affected unit violates the Act by emitting more emissions
than the allowances it holds, the Act requires that the affected unit
pay penalties and submit a plan detailing how and when the excess
SO2 emissions will be offset. These requirements act as a strong
incentive for compliance with the mandated emissions reductions of the
Acid Rain Program. Excess emissions penalty requirements are codified
in 40 CFR part 77.
Finally, 40 CFR part 78 contains administrative appeals procedures
for resolving disputes over decisions by the Administrator regarding
any aspect of the Acid Rain Program.
2. The Opt-in Program
Although the Acid Rain Program is mandated only for utility
sources, section 410 provides opportunities for SO2-emitting
sources not otherwise affected by title IV requirements (e.g.,
industrial sources) to participate in the Acid Rain Program by ``opting
in.''
The Opt-in Program is a voluntary economic incentive provision.
Congress developed the Opt-in Program to reduce further the cost of
complying with the Acid Rain Program. Combustion or process sources not
otherwise required to reduce SO2 emissions can opt in and make
incremental, lower-cost reductions. Congress envisioned section 410 as
a means of generating additional allowances to reduce compliance costs
for affected utilities and to encourage combustion or process sources
to consider cost-effective emission reduction opportunities:
(Section 410) adds flexibility and can enlarge the universe of
sources for which there are cost-effective reductions in emissions
of SO2* * *. This section provides a useful additional source
of reductions that can be made voluntarily by sources choosing to be
affected by the provisions of this title. (Senate Committee Report,
Report No. 101-228, December 20, 1989, p. 335.)
The reductions--in the form of acid rain allowances--can be
transferred to meet mandatory reduction requirements in the utility
sector and, thus, lower the overall cost of the Acid Rain Program.
However, Congress also intended that this shifting of SO2
emissions between opt-in sources and affected utility units not
compromise the overall title IV SO2 emissions reduction goals.
Section 410 ``is intended to further the objective of achieving true
net reductions of SO2* * *.'' (Id. at 336.) The Opt-in Program has
been designed to take advantage of lower cost reduction opportunities
at non-affected sources consistent with the statutory requirements of
section 410 of the Act and emissions reductions goals (i.e., the
required 10 million ton reduction of SO2) of title IV.
3. Summary of Final Rule
The final opt-in regulation for combustion sources details the
process through which combustion sources can enter the Opt-in Program
and the requirements they face while participating. The rule allows any
stationary fossil fuel fired combustion device, i.e., any combustion
source, to become an affected unit and receive allowances. This rule
focuses on combustion sources. The treatment of process sources and
specifically the application and monitoring requirements for process
sources will be addressed in a subsequent rulemaking. The permitting
process finalized in today's rule does pertain to both combustion and
process sources.
Allowance allocations for opt-in sources, as for utility units, are
based on operations during 1985, 1986, and 1987. Like utilities in the
mandatory program, once a combustion source opts in, it must hold
allowances to cover its emissions. Presumably, the opt-in source will
reduce its emissions from its baseline level to generate excess
allowances to sell to other affected units. Because opting in is
voluntary, only combustion sources that would profit by selling excess
allowances are expected to participate in the program. In addition,
since all affected sources must also comply with the other applicable
requirements of the Act, revenue generated by selling excess allowances
could help opt-in sources to offset costs of compliance with other
programs.
Although EPA has attempted to treat opt-in sources comparably to
utility units in the mandatory Acid Rain Program, there are some
situations where restrictions on opt-in sources are needed to protect
the emission goals of the Act. In section 410(f), Congress expressly
prohibits opt-in sources from transferring allowances that result when
they reduce utilization or shut down. Without this prohibition, an
individual opt-in source could increase overall emissions by shifting
some or all of its production from the opt-in source to new or existing
non-affected sources, accumulating the opt-in source's unused
allowances, and then selling them to other affected sources.
In order to ensure the surrender of allowances in cases of reduced
utilization and shutdown, EPA reserves the right to cancel allowances
produced by reduced utilization or shutdown by removing them from any
Allowance Tracking System (ATS) accounts into which they had been
transferred. To facilitate this prospect of cancellation and to protect
buyers of opt-in allowances, EPA is restricting the transfer of future
year allowances. In the final rule, EPA continues to allocate
allowances, in perpetuity, upon application, but is prohibiting the
transfer of future year allowances from opt-in unit accounts in the
ATS; only current year or earlier allowances can be transferred. This
policy will eliminate the need to cancel future year allowances in
cases where a unit shuts down and sells all its future year allowances.
Trades involving future year allowances can still be made; however,
delivery of future year allowances to the buyer must wait until the
year for which those allowances are to be used for compliance.
Title IV contains one exception to the overall restriction on opt-
in allowances generated by reduced utilization and shutdown. When a
``replacement unit'' replaces thermal energy formerly supplied by an
opt-in source, then the opt-in source may transfer allowances to the
replacement unit to the extent of that replacement, despite the
reduction of utilization at the opt-in source. For purposes of this
thermal energy exception, EPA defines thermal energy to be steam used
in an industrial process, as distinct from steam used to generate
electricity, and bases the calculation of transferable allowances on
the fuel associated with the thermal energy and the allowable emissions
rate at the replacement unit.
Eligible combustion sources may submit applications to EPA, as the
permitting authority in the near term, and to a State or local
permitting authority, once that permitting authority has an Opt-in
Program in place under part 70. Upon receipt of the application, its
evaluation proceeds on two parallel paths will commence: (1) The
procedure for processing an opt-in permit; and (2) the procedure for
evaluating the opt-in [[Page 17102]] source's monitoring plan and
certifying its monitoring systems. After both of these procedures have
been successfully completed, the combustion source may enter the Opt-in
Program.
B. Major Changes Made to the Proposed Rule
Although considerable changes have been made to the language and
structure of the proposed opt-in regulation for combustion sources, the
essential elements of the program remain unchanged and the final rule
is consistent with the regulatory goals discussed in the proposed rule,
which the Agency here reaffirms. The bulk of this preamble details the
major changes that have been made:
1. Acceptable Data Sources
EPA continues to believe that there is no single reliable data base
that would provide the Agency with quality information on operations
and emissions of potential opt-in sources. Therefore, the Agency must
rely on information supplied by the combustion source in an application
process. In Sec. 74.20(a)(2) of the proposed rule, EPA established a
screen for ensuring that reliable data is submitted to the Agency, by
requiring all data to have been previously submitted to a government
agency.
Today's rule does not require the previous submission of data to a
government agency as a precondition for combustion sources to apply to
enter the Opt-in Program. Instead, EPA will conduct its own evaluation
of the data submitted for the Opt-in Program using its best judgment,
although the burden of proof regarding the data's accuracy will remain
with the applying combustion source. Regardless of whether a state
permitting program is in place and whether the State or EPA is the
permitting authority, EPA will retain this data review authority
consistent with its responsibility for all allowance-related
activities, as discussed in the preamble to the proposed rule.
EPA will lead an evaluation process that brings in the expertise of
state officials as well as other technical data experts. EPA will
retain the authority, consistent with Sec. 72.4 of part 72, to request
any additional documentation, in addition to the formal opt-in permit
application, that it believes is necessary to evaluate the combustion
source's data. Previous submittals to government agencies that are in
existence will be expected to accompany the application. In addition,
EPA may request data for years outside the baseline period, both before
and after, to verify that submitted baseline data does not represent an
inexplicable spike in the combustion source's operations. EPA may also
request additional supporting documentation (e.g., fuel purchasing
records, production rates, throughputs, sampling protocols, etc.) that
the Agency believes necessary to verify the information contained in
the combustion source's opt-in permit application. EPA may, in
addition, make inspections and examine records at the combustion source
applying to enter the Opt-in Program.
Opt-in permit applications submitted by combustion sources with
entries in the National Allowance Data Base (NADB) will still face
scrutiny, and the data values within the NADB will not be accepted
automatically. Such scrutiny and potential revisions are consistent
with previous Agency assertions that the NADB version 2.11 was the
final version to be used in the development of allocations for Phase II
units (see 57 FR 30034 and 58 FR 15721). Combustion sources, by
definition, cannot be Phase II units and were not automatically
allocated allowances under section 405 of the Act. Therefore, the NADB
data for these sources have not been reviewed by EPA to the same extent
as Phase II unit data, and such review has not been precluded by
previous regulatory actions.
The evaluation of data by EPA for the purposes of calculating
allowances is not unprecedented. In developing Phase II unit data in
the NADB, EPA compiled information from a number of sources that
included the Energy Information Administration (EIA), the North
American Electric Reliability Council (NERC), the affected sources,
and, to a lesser extent, states. EPA expects the states to play a
larger role in evaluating industrial operating and emissions data,
because the states are often the best repository of such information
and are aware of the detailed operations of such sources.
Both the applying combustion source and third parties will have
access to and be able to assess the information EPA ultimately accepts
in its allowance calculation. Both the combustion source and third
parties will be able to scrutinize the baseline data and the number of
allocated allowances during the public comment period associated with
the draft opt-in permit. Furthermore, the combustion source has the
opportunity to decline to opt in at any time prior to the effective
date of the opt-in permit. The combustion source can also appeal its
allowance allocation consistent with the procedures prescribed in part
78.
While the information for industrial opt-in sources will be less
readily available, EPA sees no other workable alternative than to
assume the responsibility of examining submitted data on a case-by-case
basis. The Agency recognizes that some incentives will remain for the
combustion source to overstate its baseline for the purposes of
increasing its allowance allocation, but believes that such risks will
be offset by Agency review of the data and supporting documents, the
rejection of insufficiently supported data, and the threat of
enforcement actions and penalties for falsely submitted data. Toward
these ends, EPA will enhance the certification statements that
designated representatives sign when submitting an opt-in permit
application to assure that such submittals (1) are believed to be true,
accurate, and complete; (2) are accompanied by all available
documentation that the combustion source and its state regulatory
agencies possess that are relevant to the accuracy of such data; and
(3) are not adjusted in any way.
2. Allocation of Opt-in Allowances and Transfer Prohibition
In the proposed rule, EPA planned to allocate allowances on a one-
time, in perpetuity basis and allowed for the transfer of current and
future-year opt-in allowances from opt-in accounts into other accounts
in the Allowance Tracking System (ATS). This policy was proposed to
promote fungibility of opt-in allowances and provide combustion sources
flexibility in their compliance planning. However, in order to uphold
the requirements of section 410(f) of the Act, EPA also proposed in
Sec. 74.50 of the proposed rule to reserve the right to cancel, under
certain circumstances, any allowances that were initially allocated to
an opt-in source by removing allowances from any ATS accounts into
which they had been transferred.
Under section 410(f), the Act restricts opt-in sources from
transferring or banking allowances produced as a result of reduced
utilization or shutdown, except as discussed in the proposed rule (58
FR 50103) and later in this preamble under the thermal energy
exception. To uphold this restriction, EPA is requiring opt-in sources
to surrender allowances generated by reduced utilization or shutdown.
In the proposed rule, EPA maintained that in the case where an opt-in
source has shut down, reduced its utilization or has excess emissions,
and fails to supply the equivalent number of allowances owed to EPA
(presumably because the opt-in source has sold all of its future-year
allowances), EPA must recover and cancel the opt-in source's allowances
in [[Page 17103]] the required number from other ATS accounts into
which they were transferred. Canceling opt-in allowances held in other
accounts in the ATS was considered the only way to ensure that such
allowances did not result in additional emissions and that the SO2
emissions reduction goals of the Acid Rain Program were preserved. EPA
maintained in the proposed rule that the allowance market would account
for the risk of cancellation by asking lower prices for opt-in
allowances and writing protective clauses into sales contracts.
In the final rule, EPA is choosing to allocate allowances, in
perpetuity, at the time the combustion source becomes an affected unit,
but, based on the comments received, is prohibiting the transfer of
future-year opt-in allowances from opt-in source accounts in the
Allowance Tracking System (ATS). Transfers of current-year opt-in
allowances will only be recorded by EPA following the completion of the
end-of-year reconciliation process for the previous compliance year, as
set forth in Sec. 73.34(a) of 40 CFR part 73. If an opt-in source is
found to have excess emissions for a given year, that opt-in source
will be prohibited from transferring the following year's allowances
until an offset plan is approved and allowances have been deducted to
offset its excess emissions.
When an opt-in source permanently shuts down, it may no longer
retain allocated allowances and must surrender to EPA all of its opt-in
allowances starting with the year in which the opt-in source shuts
down. In the case of an opt-in source that has shut down, as opposed to
an opt-in source that is still operating, EPA cannot draw upon future-
year allowances to offset excess emissions because such allowances have
already been surrendered. Therefore, EPA reserves the right to cancel
opt-in allowances (specifically, allowances for the year for which the
opt-in source has excess emissions and the year in which the opt-in
source shuts down) from any ATS account into which such allowances have
been transferred. Previous year opt-in allowances that had subsequently
been transferred to other ATS accounts would not be canceled because
such allowances were in excess of the number of allowances needed for
compliance in previous years.
EPA retains the option of allowance cancellation to ensure that
opt-in sources through their operations cannot increase emissions to
the environment. EPA believes that the Opt-in Program must be self-
enforcing and should not rely on possible future regulation to
implement the 5.6 million ton cap for industrial sources because of the
reasons discussed in the proposed rule: (1) The incomplete coverage of
the Opt-in Program relative to the industrial sector; (2) the
importance of achieving title IV emission reduction goals by
maintaining the emissions neutrality of the Opt-in Program relative to
historic emission levels (rather than future emission inventory
levels); and (3) the aggregate nature of emission inventories and their
lack of specificity to address emissions and allowance allocations of
individual opt-in sources.
Furthermore, EPA agrees with commenters who believe that most
trades of future-year opt-in allowances will take the form of ``option
contracts,'' e.g., the buyer and seller arrange today for the option to
buy allowances at a future time at a quantity, price, and date set
today. Buyers are more likely to enter into options contracts for
future-year opt-in allowances because, if allowances are canceled, the
buyer only loses the option to buy allowances and not the allowances
themselves, as would be the case with other types of contracts. If
these commenters are correct, then EPA's prohibition of the transfer of
future-year opt-in allowances should not significantly alter expected
market behavior and its treatment of opt-in allowances. In fact,
current allowance market behavior in the utility sector suggests that,
in many cases, a portion of the full price is paid now for future-year
allowances, but the actual transfer of such allowances and payment of
the remaining purchase price will not occur until the allowances become
usable for compliance. Buyers are reluctant to pay full price now for
allowances that cannot be used until a future date.
Although EPA is restricting the transfer of future-year opt-in
allowances, it is allowing the transfer of current-year opt-in
allowances as soon as the end-of-year reconciliation process for the
previous year is completed. (EPA will allow, for the first current
year, the transfer of current-year opt-in allowances upon entry into
the Opt-in Program). EPA believes that current-year opt-in allowances
may play a valuable role in assisting with compliance for the utility
sector and must be available for transfer before the end of the current
year. However, in order to uphold the requirements of section 410(f) of
the Act, EPA reserves the right to cancel current-year opt-in
allowances that have been allocated to the opt-in source in the event
that an opt-in source has excess emissions and has shut down, been
reconstructed, or become affected under Sec. 72.6. EPA believes that
restricting opt-in allowance transfers to current-year allowances will
reduce the likelihood of having to cancel purchased opt-in allowances.
Buyers of current-year opt-in allowances have a much better chance of
accurately assessing the integrity, financial health, and future status
of an opt-in source in a short time frame (i.e., within the current
year) than they would in making an accurate assessment over a longer
time frame (i.e., one extending as long as 31 years into the future).
EPA considered not canceling current-year allowances, but instead using
enforcement actions to try to recover excess opt-in allowances. EPA
rejected this approach because of the concern that if enforcement
actions were unsuccessful in the recovery of excess opt-in allowances,
the clear direction of section 410(f) of the Act would be violated, and
the emission reduction goals of title IV would be compromised.
3. Offering Opt-in Allowances on the Acid Rain Auction
In the proposed rule, EPA prohibited the trading of opt-in
allowances in the Acid Rain auction. EPA is allowing, in the final
rule, the offering of opt-in allowances in the spot auction, provided
the compliance use date of the allowances offered is for a prior year.
Prior year allowances are allowances dated a year or more prior to the
spot auction year. Prior year opt-in allowances will have cleared the
end-of-year compliance process including any possible allowance
cancellations for reduced utilization, as discussed above. EPA is still
prohibiting the submission of offers of current-year opt-in allowances
in the Acid Rain auctions because these allowances have a possibility
of being canceled by EPA in the future. Buyers of current-year opt-in
allowances sold in the auctions have no protection against cancellation
as they would if purchasing opt-in allowances through a private
contract. EPA believes that if there is demand for an auction that
includes current-year opt-in allowances, the private sector will
develop such an outlet.
4. Thermal Energy Exception
Section 410(f) limits the transfer of opt-in allowances when opt-in
sources reduce utilization or shutdown except when the reduced
utilization or shutdown results from the replacement of thermal energy.
EPA received numerous comments on implementing this thermal energy
exception. This section discusses the three main issues associated with
the thermal energy exception:
(a) The definition of thermal energy; [[Page 17104]]
(b) The calculation of transferrable allowances; and
(c) The methodology used to calculate the fuel associated with
thermal energy.
a. Definition of Thermal Energy
In Sec. 72.2 of the proposed rule, EPA defined thermal energy as
the thermal output produced by a combustion source used directly as
part of a manufacturing process but not used to produce electricity.
EPA received 29 comments on the definition of thermal energy.
Seventeen commenters disagreed with the proposed definition and
argued that the thermal energy definition should include electrical
output in addition to steam output. Several commenters argued that EPA
has no statutory basis in section 410(f) to define thermal energy to
include only steam output because the statute does not specifically
cite the Public Utility Regulatory Policies Act (PURPA) definition of
thermal energy used by the Agency in the proposed rule. Commenters also
maintained that the legislative history does not support a limited
definition. Lastly, commenters pointed out that because section 410(f)
refers to the term ``unit'' that by definition does not distinguish
between facilities that produce steam for generating electrical energy
and those that produce steam for direct sale, the definition of thermal
energy should not make such a distinction.
One commenter argued that thermal energy means ``heat'' and that
the facilities affected by the Act are combustion units that produce
heat, which sometimes is used to drive a turbine to create electricity
and sometimes is used to create steam. Several other commenters noted
that the proposed definition fails to take into account the integrated
nature of many industrial facilities and does not consider how
difficult it may be to determine how the thermal energy is allocated
between steam and electricity.
In addition, a number of commenters believed that in developing the
thermal energy definition, EPA ignored the intent of Congress to allow
small electric generating units the opportunity to opt in, retire their
older units, and transfer allowances to replacement sources.
Four commenters stated that EPA's proposed opt-in rule is
inconsistent with the views stated in the ``Dover Letter,'' sent to
SFT, Inc. on March 7, 1991. The commenters contended that a
representative from EPA's Office of Atmospheric and Indoor Air Programs
stated that the City of Dover would be allowed to opt in its exempt
boilers used to generate electricity under section 410 of title IV and
then transfer the allowances received to a new, replacement boiler. The
commenters argued that EPA should uphold its original views and allow
electric units to opt in. One commenter, however, recognized that this
``Dover Letter'' was not a legally enforceable, binding statement of
law.
Three commenters supported EPA's definition of thermal energy based
on the argument that if electricity is included in the definition, the
total number of permanent allowances and associated emissions would
increase above what is permitted under title IV. These commenters also
argue that the Act draws a clear distinction between thermal energy and
the energy used for the generation of electric power and thus, small
electricity generators should not be considered beneficiaries of the
thermal replacement energy exemption.
Response: As stated in the preamble to the proposed rule (58 FR
50087), EPA believes defining thermal energy as the steam output used
directly as part of a manufacturing process but not used to produce
electricity is consistent with the Congressional intent and goals of
title IV and section 410. For the reasons set forth in the preamble to
the proposed rule, the final rule retains the definition of thermal
energy as proposed and limits thermal energy to the steam output used
directly in a manufacturing process but not used to produce
electricity.
EPA continues to believe that Congress selected the term thermal
energy precisely to distinguish between electric energy and thermal
energy used in manufacturing processes. If Congress had intended
thermal energy to mean total energy, which includes electricity, then
it would have had no need to use the term ``thermal'' at all.
Furthermore, EPA disagrees with those commenters who claimed that
because Congress did not specifically cite the PURPA definition of
thermal energy in title IV it is inappropriate to use that definition.
With no definition specifically provided in the statute, limited
legislative history, and no evidence that Congress intended otherwise,
EPA believes that using the PURPA definition is appropriate since it
provides a long standing, accepted meaning of the term within the
federal regulatory framework governing industrial steam production and
electrical generation.
Some commenters argued that because section 410(f) uses the term
``unit'', Congress did not intend to distinguish between sources that
produce steam for generating electricity and those that produce steam
for direct sale. However, EPA believes that the term ``unit'' as used
in section 410(f) provides no basis for defining ``thermal energy'',
but rather the term ``unit'' is used in section 410(f) only to limit
the transfer of allowances under the thermal energy exception to
affected units (i.e., ``any other unit or units subject to the
requirements of this title.'')
EPA stated in the so called ``Dover Letter'' that its response to
the City of Dover was based on preliminary assessments of the language
in title IV and was subject to modification in the final EPA
regulations:
Below are EPA's comments based on the language in Title IV of
the Act. You should be aware, however, that the views expressed in
this letter are based on our preliminary assessments and could be
modified in the final EPA regulations. (March 7, 1991 letter from
Eileen Claussen to Tom Fitzpatrick).
By its own terms, the March 7, 1991 letter did not provide
guidance, much less a statutory interpretation or an applicability
determination for the units in question, that could be relied upon. In
fact, the March 7, 1991 letter indicated that this was a preliminary
views based only on the statutory language itself and did not indicate
that any other material relevant to statutory interpretation (such as
legislative history) had been considered. Several months thereafter,
EPA sent a retraction letter on January 7, 1992 to the City of Dover
reiterating that EPA's response in the March 7, 1991 letter was
preliminary and that the Agency was reconsidering the legal and
analytic basis of the position it had taken in the March 7, 1991
letter.
Lastly, EPA recognizes the integrated nature of some industrial
cogeneration facilities but maintains, as confirmed by historic
industrial reporting, that steam and electrical outputs are observable
and measurable quantities.
b. Emission Rate Used To Calculate Transferable Allowances
To calculate the number of allowances that can be transferred from
the opt-in source to a replacement unit under the thermal energy
exception, EPA proposed, under Sec. 74.47(b)(4), to use the lesser of
the federally enforceable allowable emission rate at the replacement
unit or 1.2 lbs/mmBtu. EPA received eighteen comments on this issue
with no commenters supporting the 1.2 lbs/mmBtu emission rate cap as
proposed, and six commenters supporting the use of the replacement
unit's emission rate. Two commenters contended that the proposed 1.2
lbs/mmBtu emission rate is excessively high given that emission
[[Page 17105]] rates at replacement units are likely to be much lower.
Fifteen commenters objected to EPA's proposal of a 1.2 lbs/mmBtu
emission rate limit as too restrictive. These commenters argued that
the use of the 1.2 lbs/mmBtu emission rate is arbitrary and not
supported by the statute where the replacement unit's emission rate is
higher. They also pointed out that the proposed restriction does not
recognize all possible replacement units (e.g., existing units) and
would unjustifiably restrict allowance transfer during Phase I when the
emission rate could be 2.5 lbs/mmBtu.
Response: After further consideration, EPA is eliminating the 1.2
lbs/mmBtu emission rate restriction used to calculate the number of
allowances that can be transferred to the replacement unit under the
thermal energy exception. Today's rule uses the federally enforceable
emission rate at the replacement unit to calculate the number of
transferable allowances.
The rule was changed because EPA agrees with the comments that the
use of the 1.2 lbs/mmBtu does not recognize the different emission
rates at potential replacement units, some of which may be existing
units. In the preamble to the proposed rule, EPA argued that applying a
1.2 lbs/mmBtu rate is consistent with the requirements for Phase II
units. However, since a replacement unit can be any affected unit, the
universe of replacement units would include Phase I units with 2.5 lbs/
mmBtu rates and other opt-in sources with emission rates that could be
even higher. Given that these potential replacement units could have
higher rates and that the statute does not set a limit for the emission
rate, EPA believes there is no basis for restricting the emission rate
to 1.2 lbs/mmBtu.
c. Methodology Revision for Calculating the Fuel Associated with
Thermal Energy
In Sec. 74.47(b) of the proposed rule, EPA required that
replacement units calculate the fuel associated with thermal energy by
dividing the amount of qualifying thermal energy (that is, the
replacement thermal energy) by the efficiency associated with the
production of thermal energy. EPA received several comments related to
this issue.
One commenter suggested that all units of fuel used should be
attributable to a unit's steam output because it is not practical to
identify a thermal energy fuel increment (used to determine the
allowance transfer) and because there is no established method for
doing so.
Several commenters offered alternative formulas for calculating the
transferable allowances. One suggested that EPA calculate the number of
transferable allowances as the product of the ``useful thermal energy
output'' of the replacement unit, as defined under PURPA, and the
difference between the opt-in source's emission factor and the
replacement unit's emission factor. This commenter contended that this
will encourage more efficient cogeneration applications. Another
suggested that EPA compute the number of transferable allowances by
evaluating the portion of an opt-in source's historic thermal energy
that is replaced by a cogeneration facility, rather than the portion of
the cogeneration facility's energy output that is thermal energy. Other
commenters recommended that EPA include provisions that provide an
incentive to undertake energy efficiency gains at the replacement unit.
The number of transferable allowances should be based on the
replacement unit's emission rate taking into consideration any
efficiency differences in steam production at the opt-in source and at
the replacement unit.
Response: Based on the comments received, EPA is changing the
methodology for calculating the fuel associated with qualifying thermal
energy as discussed under Sec. 74.47. In today's rule, EPA allows opt-
in sources to use an efficiency constant when calculating fuel input
from thermal output to give them an incentive to make their production
processes more efficient.
EPA has chosen to make the calculation of transferred allowances
based on a constant value rather than having replacement units
calculate fuel utilization each year because relying on actual fuel
utilization would discourage improvements in efficiency. By using a
constant, a replacement unit that increases its efficiency will use
less fuel to produce the same amount of thermal output, but will still
have transferred to it the same number of allowances as before the
efficiency improvement. In contrast, calculating the fuel utilization
each year would reduce the incentives for efficiency improvements. This
will be true for either boilers or cogenerators.
The efficiency constants selected represent the fuel utilization of
the boiler or cogenerator supplying the replacement steam. Fuel
utilization represents the quotient of all energy outputs and the
energy content of total fuel input. The Agency distinguishes between
boilers and cogenerators in establishing these constants to recognize
the greater energy requirements necessary to produce electricity as
opposed to producing steam. It would be unfair to compare the
efficiency of cogenerators producing electricity and/or steam with the
efficiency of boilers producing only steam, because the production of
electricity inherently requires more fuel. In today's rule, the Agency
sets the efficiency constant for boilers to be 0.85 and the efficiency
constant for cogenerators to be 0.80. These constants represent
industry averages for modern equipment (see memorandum in the docket
entitled, ``Evaluation of EPA's Revised Methodology for Calculating the
Transferred Allowances under the Thermal Energy Exception'').
For boilers serving as replacement units, the attribution of fuel
associated with thermal energy is straightforward. However, for
cogenerators, it is very difficult to distinguish between the fuel
going towards steam or electricity, because the production of the two
is tightly linked. Using fuel utilization implies that both the fuel
input and the efficiency losses associated with the production of each
product is proportional to the amount of each product produced.
EPA specifically defines thermal energy to consist of only steam
and this definition does not include electricity (see previous
discussion of thermal energy definition). In calculating allowances
transferred under the thermal energy exception, EPA must distinguish
between the fuel used to produce electricity and the fuel used to
produce thermal output. The former does not count toward the thermal
energy exception, while the latter does. Therefore, EPA does not
believe it is appropriate or consistent with the statutory provisions
in section 410(f) to attribute all fuel input to steam production,
where, in fact, both steam and electricity are being produced.
EPA believes its revised methodology addresses the concerns of
commenters seeking to instill incentives for cogeneration and
specifically relying on the amount of thermal energy replaced. The
alternative suggestion of basing allowance calculations on energy
output is inconsistent with all other allowance calculations found in
the Acid Rain Program. Allowances for utility units in the Acid Rain
Program are generally calculated as a product of a fuel input baseline,
expressed in mmBtu, and an emission rate, expressed in lbs. per mmBtu
of fuel input. An allowance calculation where emission rates,
reflecting energy input, are multiplied by the thermal energy replaced,
reflecting energy output, would be internally inconsistent. The revised
methodology, therefore, remains [[Page 17106]] consistent with
allowance calculations in the core utility program.
C. Other Significant Changes Made to the Proposed Rule
1. Ineligibility of Non-operating and Retired Units
EPA continues to require that combustion sources seeking to enter
the Opt-in Program be operating at the time of application. Combustion
sources opting in under the thermal energy exception are also required
to be in operation, although they can shut down upon entry into the
program.
EPA seeks to restrict the allocation and use of opt-in allowances
to instances in which real emissions reductions will take place, and
not to award allowances in situations of reduced utilization and shut
down. EPA believes that this requirement to be operating at the time of
application is consistent with this principle. The provision
establishing such a requirement provides a clear criteria for assessing
whether a combustion source has reduced its utilization or shut down
(i.e. is not operating) for the purposes of accepting the combustion
source into the program and allocating allowances.
In the final rule, EPA establishes a definition of operating
strictly for the purposes of the Opt-in Program. Operating is defined
to mean the documented consumption of fuel input for more than 876
hours in the 6 months immediately preceding application. This level of
operating hours was selected because it serves as the upper bound of a
peaking unit, that is, 20 percent capacity factor in any calendar year
as defined in Sec. 72.2. The Agency kept the 20 percent operating
level, but shortened the period of time from one year to six months so
that a combustion source could be idle at most approximately four and
one half months, rather than twice that amount of time and still be
eligible to opt in. EPA expects that combustion sources operating below
the 20 percent level would have little interest in participating in the
Opt-in Program because the number of allowances freed up from emission
reductions would be small and unlikely to cover the costs of opt-in
participation.
Whether or not they were operating at the time of application,
combustion sources that operated in the 1985-1987 time period would
have the necessary data to determine an allocation of opt-in
allowances. However, a combustion source that was not operating at the
time of application would have all or virtually all of its allowances
deducted under the reduced utilization and shutdown provisions. EPA
does not believe it is reasonable or administratively practical to
grant these opt-in sources allowances and then, from the first year on,
take virtually all of them away.
If a combustion source is shut down but plans to restart its
operations, EPA believes that the combustion source should apply to opt
in upon restart, that is where there is proof that the combustion
source is now operating consistent with the above definition.
Furthermore, the allowance allocation for opt-in sources that restart
would be based on any current allowable SO2 emissions rate in
effect at the time of application.
As discussed under the thermal energy exception, non-operating opt-
in sources may transfer allowances to replacement units, to the extent
that such units can document the replacement of thermal energy. In
allowing non-operating sources to participate in the thermal energy
exception, but excluding non-operating sources from applying to opt in,
the Agency requires that even combustion sources planning to shut down
upon entry be operating upon application. The Agency believes a valid
distinction exists between replacement arrangements made in response to
the Opt-in Program and those that preceded the application to enter the
program.
The reason why the combustion source is not operating at the time
of application is not relevant to the Agency's determination of whether
a retired or non-operating source should be permitted to opt into the
Acid Rain Program. Allocating allowances to a retired or non-operating
combustion source and allowing the source to trade such allowances
would, in effect, allow another source to emit what the retired or non-
operating combustion source was emitting before it ceased operations.
These allowances would thus result in more pollution being released
into the environment. As discussed in the preamble to the proposed
rule, Congress expected the SO2 emissions from non-utility sources
to remain at a constant level and to reflect a dynamic balancing of
emissions caused by fluctuations in economic activity, shutdowns,
facility modernization, fuel switching, and cleanup. By granting
sources not operating at the time of application the ability to opt-in
and receive allowances, EPA would increase emissions above the presumed
constant level of non-utility emissions.
2. Interpretation of Shutdown, Modification and Reconstruction
In the proposed rule, EPA sought to distinguish the modification of
an opt-in source from its outright replacement. EPA recognizes that
opt-in sources may need to make changes to their facilities in order to
reduce emissions. Here, EPA attempts to address the extreme case in
which such changes represent the construction of an essentially ``new''
facility. EPA proposed to consider an opt-in source ``shut down'' in
the circumstance in which the opt-in source had been modified to such a
large extent that the opt-in source no longer existed and a new one had
been put in its place (in the extreme, the construction of a new
facility within the shell of the old one). EPA chose as its test for
replacement the reconstruction standard established in 40 CFR 60.15, as
discussed in the preamble to the proposed rule.
EPA maintains that a new facility constructed in the shell of an
older one should not retain the allowances allocated to the original
opt-in source and should be removed from the Opt-in Program. Such
restrictions are consistent with section 410(f) of the Act in
implementing both the reduced utilization provisions as well as the
thermal energy exception. The Agency believes its use of the regulatory
term ``reconstruction'' and its threshold of 50 percent of what would
be required to construct a new comparable facility is entirely
appropriate in this context, and therefore the Agency applies this
standard for reconstruction from 40 CFR 60.15 to opt-in sources. One
commenter correctly acknowledged that the 50 percent criterion would
apply to improvements to the facility as a whole; however, EPA disputes
the notion that the level of investment would prohibit facility
improvements to reduce emissions or would restrict alternatives to
strictly end-of-pipe options. EPA believes that this level of
expenditure is sufficiently high to allow sources great flexibility in
their choice of control options.
EPA modifies in the final rule the regulatory language that would
exclude reconstructed units from maintaining their status as opt-in
sources. Instead of considering such units as ``shutdown'', the rule
explicitly dismisses such units from the program in cases of
reconstruction. The effect on sources undergoing modifications
qualifying as reconstruction remains the same.
To exclude from consideration the reconstruction of any equipment
with equipment that performs the same or similar function would
circumvent the [[Page 17107]] need to remove allowances from sources
that are no longer in operation. As discussed previously, emissions
from these sources are assumed to disappear, consistent with the
Congressionally assumed constant level of industrial emissions, and
opt-in allowances are assumed to be generated from emission reductions
at the opt-in source. The Opt-in Program should not perpetuate
emissions from old to new sources, or in this case, from old to
reconstructed sources.
The increase in productive capacity at opt-in sources is relevant
only to the extent that such investments would trigger a determination
of reconstruction. Finally, the use of the definition of major
modification to distinguish between reconstructed units and existing
opt-in sources is also not appropriate. If a modification is a major
modification because a source achieves a significant increase in a
regulated pollutant, the source's permitting levels may change, but
such changes would not affect its opt-in permit or its allowance
levels, provided that such modifications do not also exceed the
threshold for reconstruction.
In the context of the Opt-in Program, a reconstructed opt-in source
will not be permitted to enter or remain in the Opt-in Program at its
pre-reconstruction baseline and allowance allocation. Should the
reconstructed and former opt-in source wish to enter the Opt-in
Program, after modifications have been completed, it may do so, once it
establishes a three-year alternative baseline. Other regulatory
programs, including the non-attainment and Prevention of Significant
Deterioration (PSD) programs, may or may not consider the reconstructed
opt-in source as a ``new'' source; nevertheless, units undergoing
reconstruction will have their allowances deducted and their opt-in
permits terminated. Units that do not exceed the level of
reconstruction and remain in the Opt-in Program may or may not be
subject to New Source Review (NSR) or the New Source Performance
Standards (NSPS) but applicability under these programs is independent
from participation in the Opt-in Program.
3. Incorporation of Efficiency Measures
Under Sec. 74.44 of the proposed regulation, the only efficiency
improvements that would be credited toward utilization were
improvements that reduced the demand for electricity or that made
electricity generation more efficient. Improvements in the efficiency
of steam production, measures to reduce steam load (i.e., steam
conservation measures), and sulfur-free generation as defined in
Sec. 72.2 were not included.
The final rule allows for efficiency improvements to be
incorporated in an opt-in source's annual utilization. Efficiency
improvements include any expected reduction in the heat rate at the
opt-in source, any expected improvement in the efficiency of steam
production at the opt-in source, and any kilowatt hour savings or steam
savings from demand side measures.
EPA agrees that improvements in the efficiency of steam generation
should be encouraged. EPA believes that some restrictions are
necessary, however, because cogeneration facilities could shift their
output to steam while decreasing the efficiency of electricity
generation. Such shifts from electricity to steam should not result in
an adjusted increase in utilization and hence in allowances retained.
In order to prevent such shifts from occurring, today's rule
requires that the heat rate at an opt-in source not increase in order
to claim an efficiency improvement in steam production. If the heat
rate increases, that is, if electricity generation becomes less
efficient, no credit for gains in the efficiency of steam production
will be given towards utilization. The methodology for quantifying this
adjustment to utilization from efficiency increases in steam production
will be developed by EPA, working with interested opt-in sources.
EPA also agrees that reductions in steam load created by demand
side measures that improve the efficiency of steam consumption should
be encouraged. EPA is concerned about the identification of such
measures and their verifiable contribution towards using steam more
efficiently. The burden for documenting such measures is on the opt-in
source, which must be able to demonstrate that the reduction in
utilization from a steam conservation measure is different than
reductions in utilization not related to conservation improvements.
Finally, EPA also believes that opt-in sources should be encouraged
to pursue opportunities to increase their use of sulfur-free
technologies at their facilities. However, EPA maintains that such
technologies are already included in the provisions providing credit
for demand-side measures (see Appendix A, Section 1 of part 73 of this
chapter which includes sulfur-free technologies in a list of examples
of demand-side measures).
EPA does not include, however, a separate provision for ``sulfur-
free generation'' in the utilization adjustment, because the term, as
defined in Sec. 72.2 of this chapter and used in Sec. 72.91, includes
all sulfur-free generators in the utility's system. For opt-in sources,
EPA restricts adjustments to utilization for improved efficiency to
measures performed at the opt-in source itself or by the ``customers''
of the opt-in source (i.e., electricity or steam users of the opt-in
source). The Agency does not include ``sulfur-free generation'',
because of concerns of replacing the opt-in source's utilization
without any thermal energy transfer, as required by section 410(f).
4. Expiration of a Non-Effective Opt-in Permit
The proposed rule created an effective date for an opt-in permit to
be the later of the issuance of the opt-in permit by the permitting
authority or the completion of the certification of the combustion
source's monitoring systems. However, no time period was specified
regarding the length of time between the issuance of the opt-in permit
and these certifications. One commenter requested clarification about
this time period and whether or not the opt-in permit would expire
before becoming effective.
Response: EPA establishes, in the final rule, an expiration date
associated with a non-effective opt-in permit. An opt-in permit will
expire 180 days after issuance, if it has not yet become effective. The
length of 180 days was selected because the time period incorporates
the duration of EPA's review of monitoring certification for the
combustion source's CEM systems and two months for the combustion
source to arrange testing, should the combustion source wish to wait to
certify its monitors until the end of the permitting process.
EPA believes that an expiration date is important to prevent
combustion sources from seeking a permit with no immediate intention to
opt into the Acid Rain program. A combustion source might apply early
to enter the Opt-in Program, but wait to make its permit effective in
order to secure an allowance allocation based on its current emissions
rate at the time of application. If the combustion source faced the
possibility of an impending emission limit that would lower its
allowable emissions rate, the combustion source could apply and then
wait to install its monitors and undertake its emission reductions. In
effect, the combustion source would be seeking to capitalize on
emission reductions it would be required to make based on other
regulatory requirements.
EPA sees no reason to allow for an extended period of time during
which a [[Page 17108]] combustion source can secure its allowance
allocation and keep its application pending. EPA wants its applicants
to be serious about entering the Opt-in Program and is concerned about
behavior that would lead combustion sources to seek an opt-in permit
and secure an allowance allocation because of the prospect of future,
more stringent emission limitations. In addition, EPA does not want to
waste administrative resources in reviewing applications and processing
permits for combustion sources that are not ready to participate in the
program and may or may not actually opt in. The Agency believes that
the time period for the entire permit process plus the 180 days added
here, a total of up to 24 months, is sufficiently long for the
combustion source to install and certify its monitors considering that
the combustion source must submit upon application a monitoring plan,
detailing both the monitors' configuration and equipment. EPA may
extend this time period of 180 days, if the applying combustion source
can show that despite good faith effort towards certifying its
monitors, it was unable to complete such certifications within this
time frame.
5. Miscellaneous Issues
a. Opt-in Permitting
As discussed in the preamble to the proposed rule (58 FR 50096),
the permitting procedures for opt-in sources had been designed to
follow the approaches set forth at parts 70 and 72. EPA has found it
necessary, however, to modify the permitting procedures in the proposed
opt-in regulation to handle inconsistencies between the proposal and
parts 70 and 72, some of which were noted by commenters or became
evident in permitting Phase I units and establishing part 70 permitting
programs. These relatively minor changes in the final rule make the
permitting process conform better with the process used to permit
utility units affected under the Acid Rain Program.
Of the changes made to improve the regulatory language implementing
the opt-in permitting process, a few are worthy of further explanation.
First, the roles of the Administrator and the permitting authority have
been clarified. Although the Administrator retains an important role in
developing an opt-in source's allowance allocation for the combustion
source's opt-in permit, the permitting authority has a greater role in
the final rule in developing the opt-in permit than was suggested in
the proposed regulatory language. Secondly, the time frame under which
the State as permitting authority has to process an opt-in permit has
been made consistent with part 70. In the final rule, the State has 18
months from the receipt of a complete opt-in permit application or such
lesser time as approved under part 70. The proposed regulatory language
could have been interpreted to require a permitting decision within 12
months.
There are several other specific changes that relate to opt-in
permitting. One concerns the submission of a compliance plan as
provided under Sec. 72.40. The opt-in compliance plan must include an
explicit commitment on the part of the designated representative to
hold allowances in the opt-in source's compliance subaccount equal to
or greater than the amount of sulfur dioxide emissions emitted during
that year. Another concerns the term of an opt-in permit. Opt-in
permits issued prior to January 1, 2000 will expire on December 31,
1999. Opt-in permits issued after January 1, 2000 will have a term of 5
years. Further, a provision has been added to Sec. 74.40 to facilitate
the opening of opt-in unit accounts. The designated representative of
an opt-in source shall request the opening of such an account in the
Allowance Tracking System once its permit is final and effective. In
addition, the rule language is clarified concerning the deduction of
allowances in the circumstances of withdrawal, shutdown,
reconstruction, or change in source's status as unaffected under the
mandatory portion of the Acid Rain Program.
EPA neglected to explicitly discuss the permit revision and renewal
procedures in the proposed opt-in regulations and includes such
language in the final rule. Permit revision procedures follow
procedures set forth in subpart H of part 72. The opt-in regulation,
part 74, reserves for the permitting authority the preparation of
permit revisions and the implementation of such revisions.
Opt-in sources may renew their opt-in permits through the same
process in which the opt-in permits were initially issued, except that
the permitting authority shall not alter an opt-in source's allowance
allocation when issuing a renewal of an opt-in permit. EPA believes
that assurance of a consistent stream of opt-in allowances is essential
to a viable Opt-in Program. Without a consistent stream of allowances,
opt-in sources are unable to plan for future-year compliance, and
purchasers of opt-in allowances will be hesitant to enter into forward
or futures contracts because of the risk that the allowances may not be
available.
EPA also seeks to clarify the relationship of title V and a
combustion source's ability to enter the Opt-in Program. Specifically,
commenters inquired whether a combustion source must hold a title V
permit to be an opt-in source. Another commenter explored the
possibility for a mobile source, i.e. a locomotive, to be eligible to
opt into the Acid Rain Program.
Consistent with title V of the 1990 Clean Air Act Amendments and
regulations promulgated in part 70, all affected sources are considered
part 70 sources and therefore are required to meet the permitting
requirements under title V. The statute, under section 502(a), makes
unlawful ``the operation of an affected source (as provided in title
IV) * * * except in compliance with a permit issued by a permitting
authority under (title V).'' Opt-in sources are electing to become
affected units and, therefore, are included as affected sources under
the Acid Rain Program and in title V (see 42 U.S.C. 7651a(1)).
Therefore, all opt-in sources must obtain title V permits.
Particularly in light of the obligation for an affected unit to
hold a title V permit, nonstationary sources are excluded from entering
the Opt-in Program. Title V expressly applies only to stationary
sources (see 42 U.S.C. 7402(a)). Consistent with this statutory
provision, the Acid Rain regulations define ``source'' in a way that
refers only to stationary sources: ``Source means any * * * structure,
installation, plant, building or facility * * *.'' Consequently,
affected units, which must be located at affected sources, also must be
stationary. Locomotives, therefore, will not be accepted as potential
opt-in sources. EPA has modified the definition of the term
``combustion source'' to include the explicit requirement that
combustion sources be stationary sources.
b. Clarification of Eligible Combustion Sources
The EPA will not require an official applicability determination,
as discussed under Sec. 72.6(c), for a combustion source applying to
opt into the Acid Rain Program, but the Agency will affirm as part of
its review of the opt-in permit application that the combustion source
is indeed unaffected and therefore eligible to opt in. Combustion
sources should be aware, as detailed in the recently published
applicability guidance, ``Do the Acid Rain SO2 Regulations Apply
to You?'' (EPA 430-R-94-002), that units may be required to provide
documentation supporting their unaffected status. Furthermore, that
status may, in fact, change over time as certain unaffected units
become affected under particular [[Page 17109]] operating or
construction conditions. As stated in the final rule under
Sec. 74.50(a)(3), should an opt-in source become an affected unit, the
Administrator will terminate the opt-in source's opt-in permit and
deduct all of the allowances allocated under the Opt-in Program for
current and future years.
It is the duty of the combustion source's owner and operator to
meet the requirements of the Acid Rain Program if the combustion source
becomes affected. For purposes of keeping combustion sources aware of
their regulatory status, EPA will add certification statements both to
the opt-in permit application and to an opt-in source's annual
compliance certification report that will state that the opt-in source
is only considered an affected unit under part 74 and not an affected
utility unit under Sec. 72.6.
Finally, commenters requested clarification on the eligibility of
certain types of sources and sources located outside of the continental
U.S. Although the proposed rule was ambiguous regarding the eligibility
of unaffected municipal waste combustors, the final rule allows such
combustors to be eligible to apply for the Opt-in Program provided that
they qualify as a ``unit'' and burn some amount of fossil fuel.
Combustion and process sources that are located outside the continental
U.S. (e.g., in Alaska or Hawaii) are not eligible to opt in and the
applicability provisions in Sec. 74.2 have been modified to reflect
this prohibition.
c. Modification to Utilization Calculation
As discussed in the proposed rule under Sec. 74.44, EPA selected an
average utilization to compare against the baseline for making
determinations of reduced utilization. This average utilization was
calculated as a rolling average of fuel input over three years.
Four commenters agreed with EPA's proposal to use a three-year
rolling average for determining reduced utilization because such an
approach would smooth out the peaks and valleys that may occur in steam
generation from year to year. Two commenters disagreed with EPA's
proposal. One suggests that EPA use a five- to eight-year averaging
period in order to account for normal economic cycles. The second
commenter believed that an average over multiple years would bias the
determination of reduced utilization, awarding unnecessary allowances
in individual years when emissions could be low or near zero. The
commenter suggested that EPA should use annual data because annual
SO2 emissions are proportional to annual fuel use.
Response: EPA will keep its calculation of average utilization
overall, but will modify its calculation for the first and second years
in which the opt-in source participates in the program and for the
first and second years in which the opt-in source is governed by a
thermal energy plan. Average utilization for the first year will equal
the fuel input of that year. Average utilization for the second year
will equal the average of the first two years. Thereafter, average
utilization will be as proposed and equal a rolling average of three
years.
EPA believes the purpose of using a three-year rolling average to
determine whether an opt-in source has reduced its utilization remains
the same and remains valid: namely, as the commenters recognize, to
smooth out small fluctuations in the operation of opt-in sources. The
three-year interval is consistent with the baseline period and provides
for a more accurate comparison with the baseline as a measure of
utilization than would longer intervals.
EPA modifies its calculation of average utilization for the first
two years described above to address possible bias. With regard to the
calculation of average utilization outside the context of a thermal
energy plan, the Agency notes that in the proposed rule (58 FR 50124),
the average for the first two years was based on the baseline level of
utilization rather than actual utilization of the opt-in source. With
such a methodology, an opt-in source that consistently operates below
its baseline level could calculate an artificially high average
utilization for its first two years as an opt-in source and thereby
avoid allowance surrender. EPA feels that such a windfall would be
inappropriate and that the methodology could create the potential for
abuse. Therefore, EPA bases average utilization in these first two
years on actual utilization for the opt-in source in the first year and
then the first two years.
With regard to the calculation of average utilization once an opt-
in source becomes governed by a thermal energy plan, EPA believes that
the use of a continuing three-year average for the first two years
under the plan would distort the number of allowances retained by the
opt-in source. The reasoning for modifying the average utilization
calculation is similar. Rather than reflecting normal fluctuations in
the operation of the opt-in source whose thermal energy has been
replaced, the three-year average utilization calculated for the first
two years under the plan would award allowances based on the opt-in
source's prereplacement levels of utilization and could result in an
allowance windfall. Therefore, EPA bases average utilization for the
two years immediately after the thermal energy plan takes effect on the
actual utilization for the first year and then the average for the
first two years.
d. Efficiency Adjustments for an Opt-in Source Governed by a Thermal
Energy Plan
EPA clarifies an ambiguity in the proposed rule regarding allowance
holdings among an opt-in source and its replacement units if the opt-in
source claims efficiency improvements as part of its annual
utilization. If the opt-in source has estimated efficiency improvements
in its annual utilization and these estimates prove to be incorrect,
EPA could be placed in the position of adjusting not only the allowance
holdings of the opt-in source, but also the holdings of all replacement
units after the reconciliation process has ended (recall that annual
compliance reports are submitted in March, while confirmation of energy
efficiency estimates are not submitted until July). In order to avoid
reassessing the compliance of perhaps multiple replacement units, EPA
will consider the number of allowances transferred to replacement units
fixed after the reconciliation process has ended and rely on the opt-in
source to surrender any additional allowances needed to make the
accounting consistent with the confirmed efficiency estimates. EPA
maintains that it is reasonable for the opt-in source, which made the
initial efficiency estimates, to bear the allowance consequences of
correcting those estimates.
e. Definitions
EPA has found it useful to modify certain definitions and to
explain certain terms applicable to the Opt-in Program to make its
provisions clearer. Consistent with the procedures established in part
72 subpart B and referenced in Sec. 74.4, the owners and operators of a
combustion or process source seeking to opt into the Acid Rain Program
must select a designated representative. This designated representative
is charged with representing the combustion or process source with
regards to all matters under the Acid Rain Program. However, during the
opt-in permit application process, the combustion or process source is
not yet an affected unit nor an affected source, and strictly speaking,
may not have a designated representative under the existing definition
in Sec. 72.2. [[Page 17110]]
The Agency amends the definition of designated representative in
Sec. 72.2 to include a responsible person authorized by the owners and
operators of a combustion or process source as a designated
representative. This individual has the same role and responsibilities
as designated representatives for units affected under the other
provisions of title IV and must complete a Certification of
Representation as specified in Sec. 72.24. The Certification of
Representation should be submitted prior to or concurrent with the opt-
in permit application. Further, the definitions of owner and owner or
operator have been modified to include the appropriate individuals at
combustion and process sources.
In addition, the definition of affected unit has been clarified to
include units covered under Sec. 72.6 and part 74 of this chapter to be
subject to the Acid Rain emissions reduction requirements or the Acid
Rain emissions limitations. EPA also has clarified the usage of the
terms ``combustion source'' and ``opt-in source'' because of confusion
expressed by individual commenters on the proposed rule. Prior to
entering the Opt-in Program, the entity wishing to opt-in is referred
to, in the final rule, as a combustion source or a process source, as
appropriate. Once in the Opt-in Program, the combustion source becomes
an opt-in source and is referred to as such throughout the remainder of
the rule. An opt-in source is an affected unit under the Acid Rain
Program.
Finally, in the preamble to the proposed rule, Table 2 was in error
regarding the definition of the opt-in source in various circumstances.
The revised Table 2 is as follows:
Table 2.--Opt-in Source Definitions
------------------------------------------------------------------------
Type of configuration What is the opt-in
at a single site Single discrete entity? source?
------------------------------------------------------------------------
Individual boiler Yes.................... Boiler and stack.
emitting to single
stack.
Individual boiler as Yes, to the extent that Boiler, duct to the
part of multiple monitoring is specific stack.
boilers sharing single to the opt-in source.
stack.
Multiple boilers No..................... Each boiler and its
sharing single stack. appropriate duct.*
Individual boiler Yes.................... Boiler and all stacks.
emitting to multiple
stacks.
Multiple boilers No..................... Each boiler and its
sharing multiple appropriate ducts.*
stacks.
Multiple boilers and No..................... Each unaffected boiler
affected units sharing and its appropriate
single/multiple stacks. ducts.*
------------------------------------------------------------------------
*--If the combustion sources wish to employ common stack monitoring they
may do so according to the provisions of part 75 generally and Sec.
75.16 in particular of the Acid Rain Program.
f. Other Items
Three other miscellaneous changes warrant mention. First, EPA has
decided to allow submission of annual data as an alternative to monthly
data for baseline calculations. The rule has been altered in several
places accordingly. Second, EPA has modified a provision in part 77 to
incorporate adjustments to allowance deductions due to differences
between estimated and verified reductions in heat input due to
conservation, improved electric efficiency, and improved steam
production efficiency. Third, Appendix A, containing a draft opt-in
permit application form, has been removed from the regulation. Forms
will be issued during program implementation and will reflect, where
appropriate, comments submitted.
EPA has also made revisions to parts 74 and 75 to better integrate
the Opt-in Program with the rest of the Acid Rain Program. The bulk of
the regulatory language relating to the monitoring of combustion
sources has been moved from Subpart F in part 74 and integrated into
part 75 to consolidate all monitoring requirements for all affected
units in part 75.
EPA has retained general references to part 76, which is reserved
for NOx regulation, but removed specific references to sections
within part 76 in the final rule. This reflects the recent decision of
the U.S. Court of Appeals for the District of Columbia Circuit vacating
part 76.
Finally, the proposed amendments to part 78 involving the
exhaustion of administrative appeals as a necessary prerequisite to
judicial review will not be finalized in this rulemaking. Final
provisions concerning the exhaustion of administrative remedies will be
addressed in a subsequent rulemaking.
g. Display of OMB Control Numbers
EPA is also amending the table of currently approved information
collection request (ICR) control numbers issued by OMB for various
regulations. This amendment updates the table to accurately display
those information requirements contained in this final rule. This
display of the OMB control numbers and their subsequent codification in
the Code of Federal Regulations satisfies the requirements of the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) and OMB's implementing
regulations at 5 CFR part 1320.
The ICR was previously subject to public notice and comment prior
to OMB approval. As a result, EPA finds that there is ``good cause''
under section 553(b)(3)(B) of the Administrative Procedure Act (5
U.S.C. 553(b)(3)(B)) to amend this table without prior notice and
comment. Due to the technical nature of the table, further notice and
comment would be unnecessary. For the same reasons, EPA also finds that
there is good cause under 5 U.S.C. 553(d)(3) to make the amendments
effective immediately.
D. Impact Analyses
1. Executive Order 12866 (Regulatory Impact Analysis)
Under Executive Order 12866 (58 FR 51735 (October 4, 1993)) the
Agency must determine whether a regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
executive order. The Order defines ``significant regulatory action'' as
one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, OMB has notified
EPA that it considers this a ``significant [[Page 17111]] regulatory
action'' within the meaning of the Executive Order. EPA has submitted
this action to OMB for review. Any changes made in response to OMB
suggestions or recommendations are be documented in the public record.
EPA estimated the total cost savings of the opt-in regulations for
the time period from 1994 through 2010. Cost savings are expected to
accrue to both affected utilities and opt-in sources. The cost savings
depend on the number of allowances sold by opt-in sources and the price
of allowances. The estimates assume the use of 1985-87 baseline data,
the use of the lesser of 1985 actual or allowable rate, or the current
rate at the time the combustion source applies to opt in, reduced
allowance allocations for reduced utilization, the transfer of
allowances as a result of the replacement of thermal energy at the
allowable emission rate at the replacement source, the installation and
operation of continuous emissions monitoring systems, and opt-in
sources are allowed to withdraw from the program. Given these
assumptions, an estimated 408 combustion sources would opt in resulting
in annual net cost savings of approximately $10 million. The analysis
is contained in the Economic Impact Analysis (EIA) of the Opt-in
Regulations, September, 1994, EPA, Office of Atmospheric Programs.
2. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 requires each Federal agency
to perform a Regulatory Flexibility Analysis for all rules that are
likely to have a ``significant impact on a substantial number of small
entities.'' Because the Opt-in Program is a voluntary cost reducing
component of the Acid Rain Program, it will not affect small entities
adversely. Sources that will not benefit from their participation will
choose not to participate. Based on this analysis and pursuant to the
provisions of 5 U.S.C. 605(b), EPA hereby certifies that this attached
rule, if promulgated, will not have a significant economic impact on a
substantial number of small entities.
3. Paperwork Reduction Act
The information collection requirements in this rule have been
approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq and have been assigned
control number 2060-0258.
This collection of information has an estimated reporting burden
averaging 80 hours per response and an estimated annual recordkeeping
burden averaging 2 hours per respondent. These estimates include time
for reviewing instructions, searching existing data sources, gathering
and maintaining the data needed, and completing and reviewing the
collection of information.
Send comments regarding the burden estimate or any other aspect of
this collection of information, including suggestions for reducing this
burden to Chief, Information Policy Branch; EPA; 401 M St., SW. (Mail
Code 2136); Washington, DC 20460; and to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, DC
20503, marked ``Attention: Desk Officer for EPA.''
List of Subjects
40 CFR Part 9
Reporting and recordkeeping requirements.
40 CFR Part 72
Environmental protection, Acid rain, Administrative practice and
procedure, Air pollution control, Electric utilities, Intergovernmental
relations, Nitrogen oxides, Reporting and recordkeeping requirements,
Sulfur oxides.
40 CFR Part 73
Environmental protection, Acid rain, Air pollution control,
Electric utilities, Reporting and recordkeeping requirements, Sulfur
oxides.
40 CFR Part 74
Environmental protection, Acid rain, Air pollution control,
Reporting and recordkeeping requirements, Sulfur oxides.
40 CFR Part 75
Environmental protection, Acid rain, Air pollution control, Carbon
dioxide, Electric utilities, Nitrogen oxides, Reporting and
recordkeeping requirements, Sulfur oxides.
40 CFR Part 77
Environmental protection, Acid rain, Administrative practice and
procedure, Air pollution control, Electric utilities, Nitrogen oxides,
Penalties, Reporting and recordkeeping requirements, Sulfur oxides.
40 CFR Part 78
Environmental protection, Acid rain, Administrative practice and
procedure, Air pollution control, Electric utilities, Nitrogen oxides,
Reporting and recordkeeping requirements, Sulfur oxides.
Dated: March 20, 1995.
Carol M. Browner,
Administrator, U.S. Environmental Protection Agency.
For the reasons set out in the preamble, chapter I of title 40 of
the Code of Federal Regulations is amended as follows:
PART 9--[AMENDED]
1. In part 9:
a. The authority citation for part 9 continues to read as follows:
Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003,
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1321, 1326, 1330, 1344, 1345
(d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp.
p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 300g-1, 300g-2,
300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 300j-3, 300j-4,
300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542, 9601-9657,
11023, 11048.
b. Section 9.1 is amended by adding a new heading and entries in
numerical order to the table to read as follows:
Sec. 9.1 OMB approvals under the Paperwork Reduction Act.
* * * * *
------------------------------------------------------------------------
OMB control
40 CFR citation No.
------------------------------------------------------------------------
* * * * *
Sulfur Dioxide Opt-ins:
74.12.................................................... 2060-0258
74.14.................................................... 2060-0258
74.16.................................................... 2060-0258
74.18.................................................... 2060-0258
74.20.................................................... 2060-0258
74.22.................................................... 2060-0258
74.24-74.25.............................................. 2060-0258
74.41.................................................... 2060-0258
74.43-74.44.............................................. 2060-0258
74.46-74.47.............................................. 2060-0258
74.60-74.64.............................................. 2060-0258
* * * * *
------------------------------------------------------------------------
PART 72--PERMITS REGULATION
2. The authority citation for part 72 is revised to read as
follows:
Authority: 42 U.S.C. 7601, 7651, et seq.
3. Section 72.2 is amended as follows:
a. By revising the introductory text;
b. By revising the term for ``Acid Rain compliance option'';
c. By revising paragraph (1)(i) of the term ``Acid Rain emissions
limitation'';
d. By revising the terms ``Acid Rain Program'', ``Affected unit'',
``Allowable SO2 emissions rate'', ``Allowance deduction'',
``Compensating unit'', ``Compliance certification'', ``Compliance plan;
Designated Representative'', ``Owner'', ``Owner or Operator'', ``Phase
I unit'', ``Phase II unit; and Reduced utilization''; and
[[Page 17112]]
e. By adding the following terms in alphabetical order,
``Combustion source'', ``Operating'', ``Opt-in'', ``Opt-in permit'',
``Opt-in source'', ``Replacement unit'', and ``Thermal energy''.
Sec. 72.2 Definitions.
The terms used in this part, in parts 73, 74, 75, 76, 77 and 78 of
this chapter shall have the meanings set forth in the Act, including
sections 302 and 402 of the Act, and in this section as follows:
* * * * *
Acid Rain compliance option means one of the methods of compliance
used by an affected unit under the Acid Rain Program as described in a
compliance plan submitted and approved in accordance with subpart D of
this part, part 74 of this chapter or part 76 of this chapter.
Acid Rain emissions limitation means:
(1) For the purposes of sulfur dioxide emissions:
(i) The tonnage equivalent of the allowances authorized to be
allocated to an affected unit for use in a calendar year under section
404(a)(1) and (a)(3) of the Act, the basic Phase II allowance
allocations authorized to be allocated to an affected unit for use in a
calendar year, or the allowances authorized to be allocated to an opt-
in source under section 410 of the Act for use in a calendar year;
* * * * *
Acid Rain Program means the national sulfur dioxide and nitrogen
oxides air pollution control and emissions reduction program
established in accordance with title IV of the Act, this part, and
parts 73, 74, 75, 76, 77, and 78 of this chapter.
* * * * *
Affected unit means a unit that is subject to any Acid Rain
emissions reduction requirement or Acid Rain emissions limitation under
Sec. 72.6 or part 74 of this chapter.
* * * * *
Allowable SO2 emissions rate means the most stringent
federally enforceable emissions limitation for sulfur dioxide (in lb/
mmBtu) applicable to the unit or combustion source for the specified
calendar year, or for such subsequent year as determined by the
Administrator where such a limitation does not exist for the specified
year; provided that, if a Phase I or Phase II unit is listed in the
NADB, the ``1985 allowable SO2 emissions rate'' for the Phase I or
Phase II unit shall be the rate specified by the Administrator in the
NADB under the data field ``1985 annualized boiler SO2 emission
limit.''
* * * * *
Allowance deduction, or deduct when referring to allowances, means
the permanent withdrawal of allowances by the Administrator from an
Allowance Tracking System compliance subaccount, or future year
subaccount, to account for the number of tons of SO2 emissions
from an affected unit for the calendar year, for tonnage emissions
estimates calculated for periods of missing data as provided in part 75
of this chapter, or for any other allowance surrender obligations of
the Acid Rain Program.
* * * * *
Combustion source means a stationary fossil fuel fired boiler,
turbine, or internal combustion engine that has submitted or intends to
submit an opt-in permit application under Sec. 74.14 of this chapter to
enter the Opt-in Program.
* * * * *
Compensating unit means an affected unit that is not otherwise
subject to Acid Rain emissions limitation or Acid Rain emissions
reduction requirements during Phase I and that is designated as a Phase
I unit in a reduced utilization plan under Sec. 72.43; provided that an
opt-in source shall not be a compensating unit.
* * * * *
Compliance certification means a submission to the Administrator or
permitting authority, as appropriate, that is required by this part, by
part 73, 74, 75, 76, 77, or 78 of this chapter, to report an affected
source or an affected unit's compliance or non-compliance with a
provision of the Acid Rain Program and that is signed and verified by
the designated representative in accordance with subparts B and I of
this part and the Acid Rain Program regulations generally.
* * * * *
Compliance plan, for the purposes of the Acid Rain Program, means
the document submitted for an affected source in accordance with
subpart C of this part or subpart E of part 74 of this chapter, or part
76 of this chapter, specifying the method(s) (including one or more
Acid Rain compliance options as provided under subpart D of this part
or subpart E of part 74 of this chapter, or part 76 of this chapter by
which each affected unit at the source will meet the applicable Acid
Rain emissions limitation and Acid Rain emissions reduction
requirements.
* * * * *
Designated representative means a responsible natural person
authorized by the owners and operators of an affected source and of all
affected units at the source or by the owners and operators of a
combustion source or process source, as evidenced by a certificate of
representation submitted in accordance with subpart B of this part, to
represent and legally bind each owner and operator, as a matter of
federal law, in matters pertaining to the Acid Rain Program. Whenever
the term ``responsible official'' is used in part 70 of this chapter,
in any other regulations implementing title V of the Act, or in a State
operating permit program, it shall be deemed to refer to the
``designated representative'' with regard to all matters under the Acid
Rain Program.
* * * * *
Operating when referring to a combustion or process source seeking
entry into the Opt-in Program, means that the source had documented
consumption of fuel input for more than 876 hours in the 6 months
immediately preceding the submission of a combustion source's opt-in
application under Sec. 74.16(a) of this chapter.
* * * * *
Opt in or opt into means to elect to become an affected unit under
the Acid Rain Program through the issuance of the final effective opt-
in permit under Sec. 74.14 of this chapter.
Opt-in permit means the legally binding written document that is
contained within the Acid Rain permit and sets forth the requirements
under part 74 of this chapter for a combustion source or a process
source that opts into the Acid Rain Program.
Opt-in source means a combustion source or process source that has
elected to become an affected unit under the Acid Rain Program and
whose opt-in permit has been issued and is in effect.
* * * * *
Owner means any of the following persons:
(1) Any holder of any portion of the legal or equitable title in an
affected unit or in a combustion source or process source; or
(2) Any holder of a leasehold interest in an affected unit or in a
combustion source or process source; or
(3) Any purchaser of power from an affected unit or from a
combustion source or process source under a life-of-the-unit, firm
power contractual arrangement as the term is defined herein and used in
section 408(i) of the Act. However, unless expressly provided for in a
leasehold agreement, owner shall not include a passive lessor, or a
person who has an equitable interest through such lessor, whose rental
payments are not based, either directly or indirectly, upon the
revenues or income from the affected unit; or
(4) With respect to any Allowance Tracking System general account,
any [[Page 17113]] person identified in the submission required by
Sec. 73.31(c) of this chapter that is subject to the binding agreement
for the authorized account representative to represent that person's
ownership interest with respect to allowances.
* * * * *
Owner or operator means any person who is an owner or who operates,
controls, or supervises an affected unit, affected source, combustion
source, or process source and shall include, but not be limited to, any
holding company, utility system, or plant manager of an affected unit,
affected source, combustion source, or process source.
* * * * *
Phase I unit means any affected unit, except an affected unit under
part 74 of this chapter, that is subject to an Acid Rain emissions
reduction requirement or Acid Rain emissions limitations beginning in
Phase I.
* * * * *
Phase II unit means any affected unit, except an affected unit
under part 74 of this chapter, that is subject to an Acid Rain
emissions reduction requirement or Acid Rain emissions limitation
during Phase II only.
* * * * *
Reduced utilization means a reduction, during any calendar year in
Phase I, in the heat input (expressed in mmBtu for the calendar year)
at a Phase I unit below the unit's baseline, where such reduction
subjects the unit to the requirement to submit a reduced utilization
plan under Sec. 72.43; or, in the case of an opt-in source, means a
reduction in the average utilization, as specified in Sec. 74.44 of
this chapter, of an opt-in source below the opt-in source's baseline.
* * * * *
Replacement unit means an affected unit replacing the thermal
energy provided by an opt-in source, where both the affected unit and
the opt-in source are governed by a thermal energy plan.
* * * * *
Thermal energy means the thermal output produced by a combustion
source used directly as part of a manufacturing process but not used to
produce electricity.
* * * * *
4. Section 72.4 is amended by revising paragraphs (a)(1) and (a)(2)
to read as follows:
Sec. 72.4 Federal authority.
(a) * * *
(1) Secure information needed for the purpose of developing,
revising, or implementing, or of determining whether any person is in
violation of, any standard, method, requirement, or prohibition of the
Act, this part, parts 73, 74, 75, 76, 77, and 78 of this chapter;
(2) Make inspections, conduct tests, examine records, and require
an owner or operator of an affected unit to submit information
reasonably required for the purpose of developing, revising, or
implementing, or of determining whether any person is in violation of,
any standard, method, requirement, or prohibition of the Act, this
part, parts 73, 74, 75, 76, 77, and 78 of this chapter.
* * * * *
5. Section 72.9 is amended by revising paragraphs (g)(6) and (g)(7)
to read as follows:
Sec. 72.9 Standard requirements.
* * * * *
(g) * * *
(6) Any provision of the Acid Rain Program that applies to an
affected unit (including a provision applicable to the designated
representative of an affected unit) shall also apply to the owners and
operators of such unit. Except as provided under Sec. 72.41
(substitution plans), Sec. 72.42 (Phase I extension plans), Sec. 72.43
(reduced utilization plans), Sec. 72.44 (Phase II repowering extension
plans), Sec. 74.47 of this chapter (thermal energy plans), and part 76
of this chapter (NOX averaging plans), and except with regard to
the requirements applicable to units with a common stack under part 75
of this chapter (including Secs. 75.16, 75.17 and 75.18 of this
chapter), the owners and operators and the designated representative of
one affected unit shall not be liable for any violation by any other
affected unit of which they are not owners or operators or the
designated representative and that is located at a source of which they
are not owners or operators or the designated representative.
(7) Each violation of a provision of this part, parts 73, 74, 75,
76, 77, and 78 of this chapter, by an affected source or affected unit,
or by an owner or operator or designated representative of such source
or unit, shall be a separate violation of the Act.
* * * * *
6. Section 72.21 is amended by revising paragraph (e) to read as
follows:
Sec. 72.21 Submissions.
* * * * *
(e) The provisions of this section shall apply to a submission made
under parts 73, 74, 75, 76, 77, and 78 of this chapter only if it is
made or signed or required to be made or signed, in accordance with
parts 73, 74, 75, 76, 77, and 78 of this chapter, by:
(1) The designated representative; or
(2) The authorized account representative or alternate authorized
account representative of a unit account.
7. Section 72.30 is amended by revising paragraph (c) to read as
follows:
Sec. 72.30 Requirement to apply.
* * * * *
(c) Duty to reapply. The designated representative shall submit a
complete Acid Rain permit application for each source with an affected
unit at least 6 months prior to the expiration of an existing Acid Rain
permit governing the unit during Phase II or an opt-in permit governing
an opt-in source or such longer time as may be approved under part 70
of this chapter that ensures that the term of the existing permit will
not expire before the effective date of the permit for which the
application is submitted.
8. Section 72.40 is amended by revising paragraph (b)(1)
introductory text to read as follows:
Sec. 72.40 General.
* * * * *
(b) Multi-unit compliance options. (1) A plan for a compliance
option, under Sec. 72.41, 72.42, 72.43, or 72.44 of this part, under
Sec. 74.47 of this chapter, or an NOX averaging plan contained in
part 76 of this chapter, that includes units at more than one affected
source shall be complete only if:
* * * * *
9. Section 72.72 is amended by revising paragraph (b)(1)
introductory text; and paragraphs (b)(1)(i) (A) and (B); (b)(1)(ii) (A)
and (C), (b)(1)(v), (b)(1)(xiv); the first sentence of (b)(5)(i), and
paragraph (b)(5)(vi) to read as follows:
Sec. 72.72 State permit program approval criteria.
* * * * *
(b) * * *
(1) Acid Rain Permit Issuance. Issuance or denial of Acid Rain
permits shall follow the procedures under this part, part 70 of this
chapter, and, for combustion or process sources, part 74, including:
(i) Permit application--
(A) Requirement to comply.
(1) The owners and operators and the designated representative for
each affected source, except for combustion or process sources, under
jurisdiction of the State permitting authority shall be required to
comply with subparts B, C, and D of this part.
(2) The owners and operators and the designated representative for
each combustion or process source under jurisdiction of the State
permitting [[Page 17114]] authority shall be required to comply with
subpart B of this part and subparts B, C, D, and E of part 74 of this
chapter.
(B) Effect of an Acid Rain Permit Application. A complete Acid Rain
permit application, except for a permit application for a combustion or
process source, shall be binding on the owners and operators and the
designated representative of the affected source, all affected units at
the source, and any other unit governed by the permit application and
shall be enforceable as an Acid Rain permit, from the date of
submission of the permit application until the issuance or denial of
the Acid Rain permit under paragraph (b)(1)(vii) of this section.
* * * * *
(ii) Draft permit.
(A) The State permitting authority shall prepare the draft Acid
Rain permit in accordance with subpart E of this part or, for a
combustion or process source, subpart B of part 74 of this chapter, or
deny a draft Acid Rain permit.
* * * * *
(C) Prior to issuance of a draft permit for a combustion or process
source, the State permitting authority shall provide the designated
representative of a combustion or process source an opportunity to
confirm its intention to opt-in, in accordance with Sec. 74.14 of this
chapter.
* * * * *
(v) Proposed Permit. Following the public notice and comment period
on a draft Acid Rain permit, the permitting authority shall incorporate
all changes necessary and issue a proposed Acid Rain permit in
accordance with subpart E of this part or, for combustion or process
sources, in accordance with subpart B of part 74 of this chapter or
deny a proposed Acid Rain permit.
* * * * *
(xiv) Except as provided in Sec. 72.73(b) and, with regard to
combustion or process sources, in Sec. 74.14(c)(6) of this chapter, the
State permitting authority shall issue or deny an Acid Rain permit
within 18 months of receiving a complete Acid Rain permit application
submitted in accordance with Sec. 72.21 or such lesser time approved
under part 70 of this chapter.
* * * * *
(5) Acid Rain appeal procedures.
(i) Appeals of the Acid Rain portion of an operating permit issued
by the State permitting authority that do not challenge or involve
decisions or actions of the Administrator under this part, parts 73,
74, 75, 76, 77 and 78 of this chapter, shall be conducted according to
procedures established by the State under Sec. 70.4(b)(3)(x) of this
chapter. * * *
* * * * *
(vi) A failure of the State permitting authority to issue an Acid
Rain permit in accordance with Sec. 72.73(b)(1)(i) or, with regard to
combustion or process sources, Sec. 74.14(c)(6) of this chapter shall
be ground for filing an appeal.
* * * * *
10. Section 72.81 is amended by removing the word ``and'' from the
end of paragraph (b)(3); by replacing the period with ``; and'' at the
end of paragraph (b)(4) and by adding paragraph (b)(5) to read as
follows:
Sec. 72.81 Permit modifications.
* * * * *
(b) * * *
(5) Changes in a thermal energy plan that result in any addition or
subtraction of a replacement unit or any change affecting the number of
allowances transferred for the replacement of thermal energy.
* * * * *
11. Section 72.83 is amended by revising paragraph (a)(6), (a)(11),
and by adding paragraph (a)(12) to read as follows:
Sec. 72.83 Administrative permit amendment.
(a) * * *
(6)(i) Termination of a compliance option in the permit; provided
that all requirements for termination under subpart D of this part are
met and this procedure shall not be used to terminate a repowering plan
after December 31, 1999 or a Phase I extension plan;
(ii) For opt-in sources, termination of a compliance option in the
permit; provided that all requirements for termination under Sec. 74.47
of this chapter are met.
* * * * *
(11) Changes in a thermal energy plan that do not result in the
addition or subtraction of a replacement unit or any change affecting
the number of allowances transferred for the replacement of thermal
energy.
(12) Incorporation of changes that the Administrator has determined
to be similar to those in paragraphs (a)(1) through (11) of this
section.
* * * * *
PART 73--SULFUR DIOXIDE ALLOWANCE SYSTEM
12. The authority citation for part 73 is revised to read as
follows:
Authority: 42 U.S.C. 7601 and 7651 et seq.
13. Section 73.34 is amended by revising paragraphs (c)(2) and
(c)(6) to read as follows:
Sec. 73.34 Recordation in accounts.
* * * * *
(c) * * *
(2) All allowances allocated or deducted pursuant to Secs. 72.41,
72.42, 72.43, and 72.44 and part 74 of this chapter;
* * * * *
(6) All allowances deducted or returned pursuant to Secs. 73.35(d),
72.91 and 72.92, part 74, and part 77 of this chapter.
* * * * *
14. Section 73.35 is amended by revising paragraphs (b)(1) and
(b)(2) to read as follows:
Sec. 73.35 Compliance.
* * * * *
(b) Deductions for compliance. (1) Except as provided in paragraph
(d) of this section, following the recordation of transfers submitted
correctly for recordation in the compliance subaccount pursuant to
paragraph (a) of this section and subpart D of this part, the
Administrator will deduct allowances from each affected unit's
compliance subaccount in accordance with the allowance deduction
formula in Sec. 72.95 of this chapter, or, for opt-in sources, the
allowance deduction formula in Sec. 74.49 of this chapter, and any
correction made under Sec. 72.96 of this chapter. (2) The Administrator
will make deductions until either the number of allowances deducted is
equal to the amount calculated in accordance with Sec. 72.95 of this
chapter, or, for opt-in sources, in accordance with Sec. 74.49 of this
chapter, as modified under Sec. 72.96 of this chapter or until no more
allowances remain in the compliance subaccount.
* * * * *
15. Section 73.52 is amended by revising paragraphs (a)(3) to read
as follows:
Sec. 73.52 EPA recordation.
* * * * *
(a) * * *
(3) If the allowances identified by serial number specified
pursuant to Sec. 73.50(b)(1)(ii) are subject to the limitation on
transfer imposed pursuant to Sec. 72.44(h)(1)(i) of this chapter,
Sec. 74.42 of this chapter, or Sec. 74.47(c) of this chapter, the
transfer is in accordance with such limitation; and
* * * * *
16. Title 40 is amended by adding part 74 to read as follows:
[[Page 17115]]
PART 74--SULFUR DIOXIDE OPT-INS
Subpart A--Background and Summary
Sec.
74.1 Purpose and scope.
74.2 Applicability.
74.3 Relationship to the Acid Rain program requirements.
74.4 Designated representative.
Subpart B--Permitting Procedures
74.10 Roles--EPA and permitting authority.
74.12 Opt-in permit contents.
74.14 Opt-in permit process.
74.16 Application requirements for combustion sources.
74.17 Application requirements for process sources [Reserved]
74.18 Withdrawal.
74.19 Revision and renewal of opt-in permit.
Subpart C--Allowance Calculation for Combustion Sources
74.20 Data for baseline and alternative baseline.
74.22 Actual SO2 emissions rate.
74.23 1985 Allowable SO2 emissions rate.
74.24 Current allowable SO2 emissions rate.
74.25 Current promulgated SO2 emissions limit.
74.26 Allocation formula.
74.28 Allowance Allocation for combustion sources becoming opt-in
sources on a date other than January 1.
Subpart D--Allowance Calculation for Process Sources [Reserved]
Subpart E--Allowance Tracking and Transfer and End of Year Compliance
74.40 Establishment of opt-in source allowance accounts.
74.41 Identifying allowances.
74.42 Prohibition of future year transfers.
74.43 Annual compliance certification report.
74.44 Reduced utilization for combustion sources.
74.45 Reduced utilization for process sources [Reserved].
74.46 Opt-in source shutdown, reconstruction or change in affected
status.
74.47 Transfer of allowances from the replacement of thermal
energy--combustion sources.
74.48 Transfer of allowances from the replacement of thermal
energy--process sources [Reserved].
74.49 Calculation of deducting allowances.
74.50 Deducting opt-in source allowances from ATS accounts.
Subpart F--Monitoring Emissions: Combustion Sources
74.60 Monitoring requirements.
74.61 Monitoring plan.
Subpart G--Monitoring Emissions: Process Sources [Reserved]
Authority: 42 U.S.C. 7601 and 7651 et seq.
Subpart A--Background and Summary
Sec. 74.1 Purpose and scope.
The purpose of this part is to establish the requirements and
procedures for:
(a) The election of a combustion or process source that emits
sulfur dioxide to become an affected unit under the Acid Rain Program,
pursuant to section 410 of title IV of the Clean Air Act, 42 U.S.C.
7401, et seq., as amended by Public Law 101-549 (November 15, 1990);
and
(b) Issuing and modifying operating permits; certifying monitors;
and allocating, tracking, transferring, surrendering and deducting
allowances for combustion or process sources electing to become
affected units.
Sec. 74.2 Applicability.
Combustion or process sources that are not affected units under
Sec. 72.6 of this chapter and that are operating and are located in the
48 contiguous States or the District of Columbia may submit an opt-in
permit application to become opt-in sources upon issuance of an opt-in
permit. Units for which a written exemption under Sec. 72.7 or
Sec. 72.8 of this chapter is in effect and combustion or process
sources that are not operating are not eligible to submit an opt-in
permit application to become opt-in sources.
Sec. 74.3 Relationship to the Acid Rain program requirements.
(a) General. (1) For purposes of applying parts 72, 73, 75, 77 and
78, each opt-in source shall be treated as an affected unit.
(2) Subpart A, B, G, and H of part 72 of this chapter, including
Secs. 72.2 (definitions), 72.3 (measurements, abbreviations, and
acronyms), 72.4 (federal authority), 72.5 (State authority), 72.6
(applicability), 72.7 (New units exemption), 72.8 (Retired units
exemption), 72.9 (Standard Requirements), 72.10 (availability of
information), and 72.11 (computation of time), shall apply to this
part.
(b) Permits. The permitting authority shall act in accordance with
this part and parts 70 and 72 of this chapter in issuing or denying an
opt-in permit and incorporating it into a combustion or process
source's operating permit. To the extent that any requirements of this
part, part 72, and part 78 of this chapter are inconsistent with the
requirements of part 70 of this chapter, the requirements of this part,
part 72, and part 78 of this chapter shall take precedence and shall
govern the issuance, denials, revision, reopening, renewal, and appeal
of the opt-in permit.
(c) Appeals. The procedures for appeals of decisions of the
Administrator under this part are contained in part 78 of this chapter.
(d) Allowances. A combustion or process source that becomes an
affected unit under this part shall be subject to all the requirements
of subparts C and D of part 73 of this chapter.
(e) Excess emissions. A combustion or process source that becomes
an affected unit under this part shall be subject to the requirements
of part 77 of this chapter applicable to excess emissions of sulfur
dioxide and shall not be subject to the requirements of part 77 of this
chapter applicable to excess emissions of nitrogen oxides.
(f) Monitoring. A combustion or process source that becomes an
affected unit under this part shall be subject to all the requirements
of part 75, consistent with subparts F and G of this part.
Sec. 74.4 Designated representative.
(a) The provisions of subpart B of part 72 of this chapter shall
apply to the designated representative of an opt-in source.
(b) If a combustion or process source is located at the same source
as one or more affected units, the combustion or process source shall
have the same designated representative as the other affected units at
the source.
Subpart B--Permitting Procedures
Sec. 74.10 Roles--EPA and permitting authority.
(a) Administrator responsibilities. The Administrator shall be
responsible for the following activities under the opt-in provisions of
the Acid Rain Program:
(1) Calculating the baseline or alternative baseline and allowance
allocation, and allocating allowances for combustion or process sources
that become affected units under this part;
(2) Certifying or recertifying monitoring systems for combustion or
process sources as provided under Sec. 74.62;
(3) Establishing allowance accounts, tracking allowances, assessing
end-of-year compliance, determining reduced utilization, approving
thermal energy transfer and accounting for the replacement of thermal
energy, closing accounts for opt-in sources that shut down, are
reconstructed, become affected under Sec. 72.6 of this chapter, or fail
to renew their opt-in permit, and deducting allowances as provided
under subpart E of this part; and
(4) Ensuring that the opt-in source meets all withdrawal conditions
prior to withdrawal from the Acid Rain Program as provided under
Sec. 74.18; and [[Page 17116]]
(5) Approving and disapproving the request to withdraw from the
Acid Rain Program.
(b) Permitting authority responsibilities. The permitting authority
shall be responsible for the following activities:
(1) Issuing the draft and final opt-in permit;
(2) Revising and renewing the opt-in permit; and
(3) Terminating the opt-in permit for an opt-in source as provided
in Sec. 74.18 (withdrawal), Sec. 74.46 (shutdown, reconstruction or
change in affected status) and Sec. 74.50 (deducting allowances).
Sec. 74.12 Opt-in permit contents.
(a) The opt-in permit shall be included in the Acid Rain permit.
(b) Scope. The opt-in permit provisions shall apply only to the
opt-in source and not to any other affected units.
(c) Contents. Each opt-in permit, including any draft or proposed
opt-in permit, shall contain the following elements in a format
specified by the Administrator:
(1) All elements required for a complete opt-in permit application
as provided under Sec. 74.16 for combustion sources or under Sec. 74.17
for process sources or, if applicable, all elements required for a
complete opt-in permit renewal application as provided in Sec. 74.19
for combustion sources or under Sec. 74.17 for process sources;
(2) The allowance allocation for the opt-in source as determined by
the Administrator under subpart C of this part for combustion sources
or subpart D of this part for process sources;
(3) The standard permit requirements as provided under Sec. 72.9 of
this chapter, except that the provisions in Sec. 72.9(d) of this
chapter shall not be included in the opt-in permit; and
(4) Termination. The provision that participation of a combustion
or process source in the Acid Rain Program may be terminated only in
accordance with Sec. 74.18 (withdrawal), Sec. 74.46 (shutdown,
reconstruction, or change in affected status), and Sec. 74.50
(deducting allowances).
(d) Each opt-in permit is deemed to incorporate the definitions of
terms under Sec. 72.2 of this chapter.
(e) Permit shield. Each opt-in source operated in accordance with
the opt-in permit that governs the opt-in source and that was issued in
compliance with title IV of the Act, as provided in this part and parts
72, 73, 75, 77, and 78 of this chapter, shall be deemed to be operating
in compliance with the Acid Rain Program, except as provided in
Sec. 72.9(g)(6) of this chapter.
(f) Term of opt-in permit. An opt-in permit shall be issued for a
period of 5 years and may be renewed in accordance with Sec. 74.19;
provided
(1) If an opt-in permit is issued prior to January 1, 2000, then
the opt-in permit may, at the option of the permitting authority,
expire on December 31, 1999; and
(2) If an affected unit with an Acid Rain permit is located at the
same source as the combustion source, the combustion source's opt-in
permit may, at the option of the permitting authority, expire on the
same date as the affected unit's Acid Rain permit expires.
Sec. 74.14 Opt-in permit process.
(a) Submission. The designated representative of a combustion or
process source may submit an opt-in permit application and a monitoring
plan to the Administrator at any time for any combustion or process
source that is operating.
(b) Issuance or denial of opt-in permits. The permitting authority
shall issue or deny opt-in permits or revisions of opt-in permits in
accordance with the procedures in part 70 of this chapter and subparts
F and G of part 72 of this chapter, except as provided in this section.
(1) Supplemental information. Regardless of whether the opt-in
permit application is complete, the Administrator or the permitting
authority may request submission of any additional information that the
Administrator or the permitting authority determines to be necessary in
order to review the opt-in permit application or to issue an opt-in
permit.
(2) Interim review of monitoring plan. The Administrator will
determine, on an interim basis, the sufficiency of the monitoring plan,
accompanying the opt-in permit application. A monitoring plan is
sufficient, for purposes of interim review, if the plan appears to
contain information demonstrating that all SO2 emissions, NOx
emissions, CO2 emissions, and opacity of the combustion or process
source are monitored and reported in accordance with part 75 of this
chapter. This interim review of sufficiency shall not be construed as
the approval or disapproval of the combustion or process source's
monitoring system.
(3) Issuance of draft opt-in permit. After the Administrator
determines whether the combustion or process source's monitoring plan
is sufficient under paragraph (b)(2) of this section, the permitting
authority shall serve the draft opt-in permit or the denial of a draft
permit or the draft opt-in permit revisions or the denial of draft opt-
in permit revisions on the designated representative of the combustion
or process source submitting an opt-in permit application. A draft
permit or draft opt-in permit revision shall not be served or issued if
the monitoring plan is determined not to be sufficient.
(4) Confirmation by source of intention to opt-in. Within 21
calendar days from the date of service of the draft opt-in permit or
the denial of the draft opt-in permit, the designated representative of
a combustion or process source submitting an opt-in permit application
must submit to the Administrator, in writing, a confirmation or
recision of the source's intention to become an opt-in source under
this part. The Administrator shall treat the failure to make a timely
submission as a recision of the source's intention to become an opt-in
source and as a withdrawal of the opt-in permit application.
(5) Issuance of draft opt-in permit. If the designated
representative confirms the combustion or process source's intention to
opt in under paragraph (b)(4) of this section, the permitting authority
will give notice of the draft opt-in permit or denial of the draft opt-
in permit and an opportunity for public comment, as provided under
Sec. 72.65 of this chapter with regard to a draft permit or denial of a
draft permit if the Administrator is the permitting authority or as
provided in accordance with part 70 of this chapter with regard to a
draft permit or the denial of a draft permit if the State is the
permitting authority.
(6) Permit decision deadlines. (i) If the Administrator is the
permitting authority, an opt-in permit will be issued or denied within
12 months of receipt of a complete opt-in permit application.
(ii) If the State is the permitting authority, an opt-in permit
will be issued or denied within 18 months of receipt of a complete opt-
in permit application or such lesser time approved under part 70 of
this chapter.
(7) Withdrawal of opt-in permit application. A combustion or
process source may withdraw its opt-in permit application at any time
prior to the issuance of the final opt-in permit. Once a combustion or
process source withdraws its application, in order to re-apply, it must
submit a new opt-in permit application in accordance with Sec. 74.16
for combustion sources or Sec. 74.17 for process sources.
(d) Entry into Acid Rain Program.--(1) Effective date. The
effective date of the opt-in permit shall be the January 1, April 1,
July 1, or October 1 for a combustion or process source providing
[[Page 17117]] monthly data under Sec. 74.20, or January 1 for a
combustion or process source providing annual data under Sec. 74.20,
following the later of the issuance of the opt-in permit by the
permitting authority or the completion of monitoring system
certification, as provided in subpart F of this part for combustion
sources or subpart G of this part for process sources. The combustion
or process source shall become an opt-in source and an affected unit as
of the effective date of the opt-in permit.
(2) Allowance allocation. After the opt-in permit becomes
effective, the Administrator will allocate allowances to the opt-in
source as provided in Sec. 74.40. If the effective date of the opt-in
permit is not January 1, allowances for the first year shall be pro-
rated as provided in Sec. 74.28.
(e) Expiration of opt-in permit. An opt-in permit that is issued
before the completion of monitoring system certification under subpart
F of this part for combustion sources or under subpart G of this part
for process sources shall expire 180 days after the permitting
authority serves the opt-in permit on the designated representative of
the combustion or process source governed by the opt-in permit, unless
such monitoring system certification is complete. The designated
representative may petition the Administrator to extend this time
period in which an opt-in permit expires and must explain in the
petition why such an extension should be granted. The designated
representative of a combustion source governed by an expired opt-in
permit and that seeks to become an opt-in source must submit a new opt-
in permit application.
Sec. 74.16 Application requirements for combustion sources.
(a) Opt-in permit application. Each complete opt-in permit
application for a combustion source shall contain the following
elements in a format prescribed by the Administrator:
(1) Identification of the combustion source, including company
name, plant name, plant site address, mailing address, description of
the combustion source, and information and diagrams on the combustion
source's configuration;
(2) Identification of the designated representative, including
name, address, telephone number, and facsimile number;
(3) The year and month the combustion source commenced operation;
(4) The number of hours the combustion source operated in the six
months preceding the opt-in permit application and supporting
documentation;
(5) The baseline or alternative baseline data under Sec. 74.20;
(6) The actual SO2 emissions rate under Sec. 74.22;
(7) The allowable 1985 SO2 emissions rate under Sec. 74.23;
(8) The current allowable SO2 emissions rate under Sec. 74.24;
(9) The current promulgated SO2 emissions rate under
Sec. 74.25;
(10) If the combustion source seeks to qualify for a transfer of
allowances from the replacement of thermal energy, a thermal energy
plan as provided in Sec. 74.47 for combustion sources; and
(11) A statement whether the combustion source was previously an
affected unit under this part;
(12) A statement that the combustion source is not an affected unit
under Sec. 72.6 of this chapter;
(13) A complete compliance plan for SO2 under Sec. 72.40 of
this chapter; and
(14) The following statement signed by the designated
representative of the combustion source: ``I certify that the data
submitted under subpart C of part 74 reflects actual operations of the
combustion source and has not been adjusted in any way.''
(b) Accompanying documents. The designated representative of the
combustion source shall submit a monitoring plan in accordance with
Sec. 74.61.
Sec. 74.17 Application requirements for process sources [Reserved].
Sec. 74.18 Withdrawal.
(a) Withdrawal through administrative amendment. An opt-in source
may request to withdraw from the Acid Rain Program by submitting an
administrative amendment under Sec. 72.83 of this chapter; provided
that the amendment will be treated as received by the permitting
authority upon issuance of the notification of the acceptance of the
request to withdraw under paragraph (f)(1) of this section.
(b) Requesting withdrawal. To withdraw from the Acid Rain Program,
the designated representative of an opt-in source shall submit to the
Administrator and the permitting authority a request to withdraw
effective January 1 of the year after the year in which the submission
is made. The submission shall be made no later than December 1 of the
calendar year preceding the effective date of withdrawal.
(c) Conditions for withdrawal. In order for an opt-in source to
withdraw, the following conditions must be met:
(1) By no later than January 30 of the first calendar year in which
the withdrawal is to be effective, the designated representative must
submit to the Administrator an annual compliance certification report
pursuant to Sec. 74.43.
(2) If the opt-in source has excess emissions in the calendar year
before the year for which the withdrawal is to be in effect, the
designated representative must submit an offset plan for excess
emissions, pursuant to part 77 of this chapter, that provides for
immediate deduction of allowances.
(d) Administrator's action on withdrawal. After the opt-in source
meets the requirements for withdrawal under paragraphs (b) and (c) of
this section, the Administrator will deduct allowances required to be
deducted under Sec. 73.35 of this chapter and part 77 of this chapter
and allowances equal in number to and with the same or earlier
compliance use date as those allocated under Sec. 74.40 for the first
year for which the withdrawal is to be effective and all subsequent
years. The Administrator will close the opt-in source's unit account
and transfer any remaining allowances to a new general account as
specified under Sec. 74.46(c).
(e) Opt-in source's prior violations. An opt-in source that
withdraws from the Acid Rain Program shall comply with all requirements
under the Acid Rain Program concerning all years for which the opt-in
source was an affected unit, even if such requirements arise, or must
be complied with after the withdrawal takes effect. The withdrawal
shall not be a defense against any violation of such requirements of
the Acid Rain Program whether the violation occurs before or after the
withdrawal takes effect.
(f) Notification. (1) After the requirements for withdrawal under
paragraphs (b) and (c) of this section are met and after the
Administrator's action on withdrawal under paragraph (d) of this
section is complete, the Administrator will issue a notification to the
permitting authority and the designated representative of the opt-in
source of the acceptance of the opt-in source's request to withdraw.
(2) If the requirements for withdrawal under paragraphs (b) and (c)
of this section are not met or the Administrator's action under
paragraph (d) of this section cannot be completed, the Administrator
will issue a notification to the permitting authority and the
designated representative of the opt-in source that the opt-in source's
request to withdraw is denied. If the opt-in source's request to
withdraw is denied, the opt-in source shall remain [[Page 17118]] in
the Opt-in Program and shall remain subject to the requirements for
opt-in sources contained in this part.
(g) Permit amendment. (1) After the Administrator issues a
notification under paragraph (f)(1) of this section that the
requirements for withdrawal have been met (including the deduction of
the full amount of allowances as required under paragraph (d) of this
section), the permitting authority shall amend, in accordance with
Secs. 72.80 and 72.83 (administrative amendment) of this chapter, the
opt-in source's Acid Rain permit to terminate the opt-in permit, not
later than 60 days from the issuance of the notification under
paragraph (f) of this section.
(2) The termination of the opt-in permit under paragraph (g)(1) of
this section will be effective on January 1 of the year for which the
withdrawal is requested. An opt-in source shall continue to be an
affected unit until the effective date of the termination.
(h) Reapplication upon failure to meet conditions of withdrawal. If
the Administrator denies the opt-in source's request to withdraw, the
designated representative may submit another request to withdraw in
accordance with paragraphs (b) and (c) of this section.
(i) Ability to return to the Acid Rain Program. Once a combustion
or process source withdraws from the Acid Rain Program and its opt-in
permit is terminated, a new opt-in permit application for the
combustion or process source may not be submitted prior to the date
that is four years after the date on which the opt-in permit became
effective.
Sec. 74.19 Revision and renewal of opt-in permit.
(a) The designated representative of an opt-in source may submit
revisions to its opt-in permit in accordance with subpart H of part 72
of this chapter.
(b) The designated representative of an opt-in source may renew its
opt-in permit by meeting the following requirements:
(1)(i) In order to renew an opt-in permit if the Administrator is
the permitting authority for the renewed permit, the designated
representative of an opt-in source must submit to the Administrator an
opt-in permit application at least 6 months prior to the expiration of
an existing opt-in permit.
(ii) In order to renew an opt-in permit if the State is the
permitting authority for the renewed permit, the designated
representative of an opt-in source must submit to the permitting
authority an opt-in permit application at least 18 months prior to the
expiration of an existing opt-in permit or such shorter time as may be
approved for operating permits under part 70 of this chapter.
(2) Each complete opt-in permit application submitted to renew an
opt-in permit shall contain the following elements in a format
prescribed by the Administrator:
(i) Elements contained in the opt-in source's initial opt-in permit
application as specified under Sec. 74.16(a)(1), (2), (10), (11), (12),
and (13).
(ii) An updated monitoring plan, if applicable under Sec. 75.53(b)
of this chapter.
(c)(1) Upon receipt of an opt-in permit application submitted to
renew an opt-in permit, the permitting authority shall issue or deny an
opt-in permit in accordance with the requirements under subpart B of
this part, except as provided in paragraph (c)(2) of this section.
(2) When issuing a renewed opt-in permit, the permitting authority
shall not alter an opt-in source's allowance allocation as established,
under subpart B and subpart C of this part for combustion sources and
under subpart B and subpart D of this part for process sources, in the
opt-in permit that is being renewed.
Subpart C--Allowance Calculations for Combustion Sources
Sec. 74.20 Data for baseline and alternative baseline.
(a) Acceptable data. (1) The designated representative of a
combustion source shall submit either the data specified in this
paragraph or alternative data under paragraph (c) of this section. The
designated representative shall also submit the calculations under this
section based on such data.
(2) The following data shall be submitted for the combustion source
for the calendar year(s) under paragraph (a)(3) of this section:
(i) Monthly or annual quantity of each type of fuel consumed,
expressed in thousands of tons for coal, thousands of barrels for oil,
and million standard cubic feet (scf) for natural gas. If other fuels
are used, the combustion source must specify units of measure.
(ii) Monthly or annual heat content of fuel consumed for each type
of fuel consumed, expressed in British thermal units (Btu) per pound
for coal, Btu per barrel for oil, and Btu per standard cubic foot (scf)
for natural gas. If other fuels are used, the combustion source must
specify units of measure.
(iii) Monthly or annual sulfur content of fuel consumed for each
type of fuel consumed, expressed as a percentage by weight.
(3) Calendar Years. (i) For combustion sources that commenced
operating prior to January 1, 1985, data under this section shall be
submitted for 1985, 1986, and 1987.
(ii) For combustion sources that commenced operation after January
1, 1985, the data under this section shall be submitted for the first
three consecutive calendar years during which the combustion source
operated after December 31, 1985.
(b) Calculation of baseline and alternative baseline.
(1) For combustion sources that commenced operation prior to
January 1, 1985, the baseline is the average annual quantity of fuel
consumed during 1985, 1986, and 1987, expressed in mmBtu. The baseline
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.000
where,
(i) for a combustion source submitting monthly data,
[[Page 17119]]
[GRAPHIC][TIFF OMITTED]TR04AP95.001
and unit conversion
= 2 for coal
= 0.001 for oil
= 1 for gas
For other fuels, the combustion source must specify unit conversion; or
(ii) for a combustion source submitting annual data,
[GRAPHIC][TIFF OMITTED]TR04AP95.002
and unit conversion
= 2 for coal
= 0.001 for oil
= 1 for gas
For other fuels, the combustion source must specify unit conversion.
(2) For combustion sources that commenced operation after January
1, 1985, the alternative baseline is the average annual quantity of
fuel consumed in the first three consecutive calendar years during
which the combustion source operated after December 31, 1985, expressed
in mmBtu. The alternative baseline shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.003
where,
``annual fuel consumption'' is as defined under paragraph (b)(1)(i) or
(ii) of this section.
(c) Alternative data.
(1) For combustion sources for which any of the data under
paragraph (b) of this section is not available due solely to a natural
catastrophe, data as set forth in paragraph (a)(2) of this section for
the first three consecutive calendar years for which data is available
after December 31, 1985, may be submitted. The alternative baseline for
these combustion sources shall be calculated using the equation for
alternative baseline in paragraph (b)(2) of this section and the
definition of annual fuel consumption in paragraphs (b)(1)(i) or (ii)
of this section.
(2) Except as provided in paragraph (c)(1) of this section, no
alternative data may be submitted. A combustion source that cannot
submit all required data, in accordance with this section, shall not be
eligible to submit an opt-in permit application.
(d) Administrator's action. The Administrator may accept in whole
or in part or with changes as appropriate, request additional
information, or reject data or alternative data submitted for a
combustion source's baseline or alternative baseline.
Sec. 74.22 Actual SO2 emissions rate.
(a) Data requirements. The designated representative of a
combustion source shall submit the calculations under this section
based on data submitted under Sec. 74.20 for the following calendar
year:
(1) For combustion sources that commenced operation prior to
January 1, 1985, the calendar year for calculating the actual SO2
emissions rate shall be 1985.
(2) For combustion sources that commenced operation after January
1, 1985, the calendar year for calculating the actual SO2
emissions rate shall be the first year of the three consecutive
calendar years of the alternative baseline under Sec. 74.20(b)(2).
(3) For combustion sources meeting the requirements of
Sec. 74.20(c), the calendar year for calculating the actual SO2
emissions rate shall be the first year of the three consecutive
calendar years to be used as alternative data under Sec. 74.20(c).
(b) SO2 emissions factor calculation. The SO2 emissions
factor for each type of fuel consumed during the specified year,
expressed in pounds per thousand tons for coal, pounds per thousand
barrels for oil and pounds per million cubic feet (scf) for gas, shall
be calculated as follows:
SO2 Emissions Factor
= (average percent of sulfur by weight) x (k),
where,
average percent of sulfur by weight
= annual average, for a combustion source submitting annual data
= monthly average, for a combustion source submitting monthly data
k = 39,000 for bituminous coal or anthracite
= 35,000 for subbituminous coal
= 30,000 for lignite
= 5,964 for distillate (light) oil
= 6,594 for residual (heavy) oil
= 0.6 for natural gas
For other fuels, the combustion source must specify the SO2
emissions factor.
(c) Annual SO2 emissions calculation. Annual SO2
Emissions for the specified calendar year, expressed in pounds, shall
be calculated as follows:
(1) For a combustion source submitting monthly data,
[GRAPHIC][TIFF OMITTED]TR04AP95.004
[[Page 17120]]
(2) For a combustion source submitting annual data:
[GRAPHIC][TIFF OMITTED]TR04AP95.005
where,
``quantity of fuel consumed'' is as defined under
Sec. 74.20(a)(2)(A);
``SO2 emissions factor'' is as defined under paragraph (b) of
this section;
``control system efficiency'' is as defined under Sec. 60.48(a) and
part 60, Appendix A, Method 19 of this chapter, if applicable; and
``fuel pre-treatment efficiency'' is as defined under Sec. 60.48(a)
and part 60, Appendix A, Method 19 of this chapter, if applicable.
(d) Annual fuel consumption calculation. Annual fuel consumption
for the specified calendar year, expressed in mmBtu, shall be
calculated as defined under Sec. 74.20(b)(1) (i) or (ii).
(e) Actual SO2 emissions rate calculation. The actual SO2
emissions rate for the specified calendar year, expressed in lbs/mmBtu,
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.006
Sec. 74.23 1985 Allowable SO2 emissions rate.
(a) Data requirements. (1) The designated representative of the
combustion source shall submit the following data and the calculations
under paragraph (b) of this section based on the submitted data:
(i) Allowable SO2 emissions rate of the combustion source
expressed in lbs/mmBtu as defined under Sec. 72.2 of this chapter for
the calendar year specified in paragraph (a)(2) of this section. If the
allowable SO2 emissions rate is not expressed in lbs/mmBtu, the
allowable emissions rate shall be converted to lbs/mmBtu by multiplying
the emissions rate by the appropriate factor as specified in Table 1 of
this section.
Table 1.--Factors to Convert Emission Limits to Pounds of SO2/mmBtu
----------------------------------------------------------------------------------------------------------------
Bituminous Subbituminous Lignite
Unit measurement coal coal coal Oil
----------------------------------------------------------------------------------------------------------------
lbs Sulfur/mmBtu.......................................... 2.0 2.0 2.0 2.0
% Sulfur in fuel.......................................... 1.66 2.22 2.86 1.07
ppm SO2................................................... 0.00287 0.00384 ......... 0.00167
ppm Sulfur in fuel........................................ ............ ............. ......... 0.00334
tons SO2/hour.............................................
(3) 2 x 8760/(annual fuel consumption for specified year1
x 103)
lbs SO2/hour..............................................
(3) 8760/(annual fuel consumption for specified year1 x
106)
----------------------------------------------------------------------------------------------------------------
1Annual fuel consumption as defined under Sec. 74.20(b)(1) (i) or (ii); specified calendar year as defined under
Sec. 74.23(a)(2).
(ii) Citation of statute, regulations, and any other authority
under which the allowable emissions rate under paragraph (a)(1) of this
section is established as applicable to the combustion source;
(iii) Averaging time associated with the allowable emissions rate
under paragraph (a)(1) of this section.
(iv) The annualization factor for the combustion source, based on
the type of combustion source and the associated averaging time of the
allowable emissions rate of the combustion source, as set forth in the
Table 2 of this section:
Table 2.--Annualization Factors for SO2 Emission Rates
------------------------------------------------------------------------
Annualization
Annualization factor for
Type of combustion source factor for unscrubbed
scrubbed unit unit
------------------------------------------------------------------------
Unit Combusting Oil, Gas, or some
combination.............................. 1.00 1.00
Coal Unit with Averaging Time <= 1="" day....="" 0.93="" 0.89="" coal="" unit="" with="" averaging="" time="1" week....="" 0.97="" 0.92="" coal="" unit="" with="" averaging="" time="30" days...="" 1.00="" 0.96="" coal="" unit="" with="" averaging="" time="90" days...="" 1.00="" 1.00="" coal="" unit="" with="" averaging="" time="1" year....="" 1.00="" 1.00="" coal="" unit="" with="" federal="" limit,="" but="" averaging="" time="" not="" specified.............="" 0.93="" 0.89="" ------------------------------------------------------------------------="" [[page="" 17121]]="" (2)="" calendar="" year.="" (i)="" for="" combustion="" sources="" that="" commenced="" operation="" prior="" to="" january="" 1,="" 1985,="" the="" calendar="" year="" for="" the="" allowable="">2 emissions
rate shall be 1985.
(ii) For combustion sources that commenced operation after January
1, 1985, the calendar year for the allowable SO2 emissions rate
shall be the first year of the three consecutive calendar years of the
alternative baseline under Sec. 74.20(b)(2).
(iii) For combustion sources meeting the requirements of
Sec. 74.20(c), the calendar year for calculating the allowable SO2
emissions rate shall be the first year of the three consecutive
calendar years to be used as alternative data under Sec. 74.20(c).
(b) 1985 Allowable SO2 emissions rate calculation. The
allowable SO2 emissions rate for the specified calendar year shall
be calculated as follows:
1985 Allowable SO2 Emissions Rate = (Allowable SO2 Emissions
Rate) x (Annualization Factor)
Sec. 74.24 Current allowable SO2 emissions rate.
The designated representative shall submit the following data:
(a) Current allowable SO2 emissions rate of the combustion
source, expressed in lbs/mmBtu, which shall be the most stringent
federally enforceable emissions limit in effect as of the date of
submission of the opt-in application. If the allowable SO2
emissions rate is not expressed in lbs/mmBtu, the allowable emissions
rate shall be converted to lbs/mmBtu by multiplying the allowable rate
by the appropriate factor as specified in Table 1 in
Sec. 74.23(a)(1)(i).
(b) Citations of statute, regulation, and any other authority under
which the allowable emissions rate under paragraph (a) of this section
is established as applicable to the combustion source;
(c) Averaging time associated with the allowable emissions rate
under paragraph (a) of this section.
Sec. 74.25 Current promulgated SO2 emissions limit.
The designated representative shall submit the following data:
(a) Current promulgated SO2 emissions limit of the combustion
source, expressed in lbs/mmBtu, which shall be the most stringent
federally enforceable emissions limit that has been promulgated as of
the date of submission of the opt-in permit application and that either
is in effect on that date or will take effect after that date. If the
promulgated SO2 emissions limit is not expressed in lbs/mmBtu, the
limit shall be converted to lbs/mmBtu by multiplying the limit by the
appropriate factor as specified in Table 1 of Sec. 74.23(a)(1)(i).
(b) Citations of statute, regulation and any other authority under
which the emissions limit under paragraph (a) of this section is
established as applicable to the combustion source;
(c) Averaging time associated with the emissions limit under
paragraph (a) of this section.
(d) Effective date of the emissions limit under paragraph (a) of
this section.
Sec. 74.26 Allocation formula.
(a) The Administrator will calculate the annual allowance
allocation for a combustion source based on the data, corrected as
necessary, under Sec. 74.20 through Sec. 74.25 as follows:
(1) For combustion sources for which the current promulgated
SO2 emissions limit under Sec. 74.25 is greater than or equal to
the current allowable SO2 emissions rate under Sec. 74.24, the
number of allowances allocated for each year equals:
[GRAPHIC][TIFF OMITTED]TR04AP95.007
(2) For combustion sources in which the current promulgated
SO2 emissions limit under Sec. 74.25 is less than the current
allowable SO2 emissions rate under Sec. 74.24.
(i) The number of allowances for each year ending prior to the
effective date of the promulgated SO2 emissions limit equals:
[GRAPHIC][TIFF OMITTED]TR04AP95.008
(ii) The number of allowances for the year that includes the
effective date of the promulgated SO2 emissions limit and for each
year thereafter equals:
[[Page 17122]]
[GRAPHIC][TIFF OMITTED]TR04AP95.009
Sec. 74.28 Allowance allocation for combustion sources becoming opt-in
sources on a date other than January 1.
(a) Dates of entry. (1) If an opt-in source provided monthly data
under Sec. 74.20, the opt-in source's opt-in permit may become
effective at the beginning of a calendar quarter as of January 1, April
1, July 1, or October 1.
(2) If an opt-in source provided annual data under Sec. 74.20, the
opt-in source's opt-in permit must become effective on January 1.
(b) Prorating by Calendar Quarter. Where a combustion source's opt-
in permit becomes effective on April 1, July 1, or October 1 of a given
year, the Administrator will prorate the allowance allocation for that
first year by the calendar quarters remaining in the year as follows:
Allowances for the first year
[GRAPHIC][TIFF OMITTED]TR04AP95.010
(1) For combustion sources that commenced operations before January
1, 1985,
[GRAPHIC][TIFF OMITTED]TR04AP95.011
(2) For combustion sources that commenced operations after January
1, 1985,
[GRAPHIC][TIFF OMITTED]TR04AP95.012
(3) Under paragraphs (b) (1) and (2) of this section,
(i) ``Remaining calendar quarters'' shall be the calendar quarters
in the first year for which the opt-in permit will be effective.
(ii) Fuel consumption for remaining calendar quarters =
[GRAPHIC][TIFF OMITTED]TR04AP95.013
where unit conversion
= 2 for coal
= 0.001 for oil
= 1 for gas
For other fuels, the combustion source must specify unit conversion;
and where starting month
= April, if effective date is April 1;
= July, if effective date is July 1; and
= October, if effective date is October 1.
Subpart D--Allowance Calculations for Process Sources--[Reserved]
Subpart E--Allowance Tracking and Transfer and End of Year
Compliance
Sec. 74.40 Establishment of opt-in source allowance accounts.
(a) Establishing accounts. Not earlier than the date on which a
combustion or process source becomes an affected unit under this part
and upon receipt of a request for an opt-in account under paragraph (b)
of this section, the Administrator will establish an account and
allocate allowances in accordance with subpart C of this part for
combustion sources or subpart D of this part for process sources. A
separate unit account will be established for each opt-in source.
(b) Request for opt-in account. The designated representative of
the opt-in source shall, on or after the effective date of the opt-in
permit as specified in Sec. 74.14(d), submit a letter requesting the
opening of an allowance account in the [[Page 17123]] Allowance
Tracking System to the Administrator.
Sec. 74.41 Identifying allowances.
(a) Identifying allowances. Allowances allocated to an opt-in
source will be assigned a serial number that identifies them as being
allocated under an opt-in permit.
(b) Submittal of opt-in allowances for auction. (1) An authorized
account representative may offer for sale in the spot auction under
Sec. 73.70 of this chapter allowances that are allocated to opt-in
sources, if the allowances have a compliance use date earlier than the
year in which the spot auction is to be held and if the Administrator
has completed the deductions for compliance under Sec. 73.35(b) for the
compliance year corresponding to the compliance use date of the offered
allowances.
(2) Authorized account representatives may not offer for sale in
the advance auctions under Sec. 73.70 of this chapter allowances
allocated to opt-in sources.
Sec. 74.42 Prohibition on future year transfers.
(a) The Administrator will not record a transfer of opt-in
allowances allocated to opt-in sources from a future year subaccount
into any other future year subaccount in the Allowance Tracking System.
Sec. 74.43 Annual compliance certification report.
(a) Applicability and deadline. For each calendar year in which an
opt-in source is subject to the Acid Rain emissions limitations, the
designated representative of the opt-in source shall submit to the
Administrator, no later than 60 days after the end of the calendar
year, an annual compliance certification report for the opt-in source
in lieu of any annual compliance certification report required under
subpart I of part 72 of this chapter.
(b) Contents of report. The designated representative shall include
in the annual compliance certification report the following elements,
in a format prescribed by the Administrator, concerning the opt-in
source and the calendar year covered by the report:
(1) Identification of the opt-in source;
(2) An opt-in utilization report in accordance with Sec. 74.44 for
combustion sources and Sec. 74.45 for process sources;
(3) A thermal energy compliance report in accordance with
Sec. 74.47 for combustion sources and Sec. 74.48 for process sources,
if applicable;
(4) Shutdown or reconstruction information in accordance with
Sec. 74.46, if applicable;
(5) A statement that the opt-in source has not become an affected
unit under Sec. 72.6 of this chapter;
(6) At the designated representative's option, the total number of
allowances to be deducted for the year, using the formula in
Sec. 74.49, and the serial numbers of the allowances that are to be
deducted; and
(7) At the designated representative's option, for opt-in sources
that share a common stack and whose emissions of sulfur dioxide are not
monitored separately or apportioned in accordance with part 75 of this
chapter, the percentage of the total number of allowances under
paragraph (b)(6) of this section for all such affected units that is to
be deducted from each affected unit's compliance subaccount; and
(8) The compliance certification under paragraph (c) of this
section.
(c) Annual compliance certification. In the annual compliance
certification report under paragraph (a) of this section, the
designated representative shall certify, based on reasonable inquiry of
those persons with primary responsibility for operating the opt-in
source in compliance with the Acid Rain Program, whether the opt-in
source was operated during the calendar year covered by the report in
compliance with the requirements of the Acid Rain Program applicable to
the opt-in source, including:
(1) Whether the opt-in source was operated in compliance with
applicable Acid Rain emissions limitations, including whether the opt-
in source held allowances, as of the allowance transfer deadline, in
its compliance subaccount (after accounting for any allowance
deductions or other adjustments under Sec. 73.34(c) of this chapter)
not less than the opt-in source's total sulfur dioxide emissions during
the calendar year covered by the annual report;
(2) Whether the monitoring plan that governs the opt-in source has
been maintained to reflect the actual operation and monitoring of the
opt-in source and contains all information necessary to attribute
monitored emissions to the opt-in source;
(3) Whether all the emissions from the opt-in source or group of
affected units (including the opt-in source) using a common stack were
monitored or accounted for through the missing data procedures and
reported in the quarterly monitoring reports in accordance with part 75
of this chapter;
(4) Whether the facts that form the basis for certification of each
monitor at the opt-in source or group of affected units (including the
opt-in source) using a common stack or of an opt-in source's
qualifications for using an Acid Rain Program excepted monitoring
method or approved alternative monitoring method, if any, have changed;
(5) If a change is required to be reported under paragraph (c)(4)
of this section, specify the nature of the change, the reason for the
change, when the change occurred, and how the unit's compliance status
was determined subsequent to the change, including what method was used
to determine emissions when a change mandated the need for monitoring
recertification; and
(6) When applicable, whether the opt-in source was operating in
compliance with its thermal energy plan as provided in Sec. 74.47 for
combustion sources and Sec. 74.48 for process sources.
Sec. 74.44 Reduced utilization for combustion sources.
(a) Calculation of Utilization.
(1) Annual utilization. (i) Except as provided in paragraph
(a)(1)(ii) of this section, annual utilization for the calendar year
shall be calculated as follows:
Annual Utilization = Actual heat input + Reduction from improved
efficiency
where,
(A) ``Actual heat input'' shall be the actual annual heat input (in
mmBtu) of the opt-in source for the calendar year determined in
accordance with Appendix F of part 75 of this chapter.
(B) ``Reduction from improved efficiency'' shall be the sum of the
following four elements: Reduction from demand side measures that
improve the efficiency of electricity consumption; reduction from
demand side measures that improve the efficiency of steam consumption;
reduction from improvements in the heat rate at the opt-in source; and
reduction from improvement in the efficiency of steam production at the
opt-in source. Qualified demand side measures applicable to the
calculation of utilization for opt-in sources are listed in Appendix A,
Section 1 of part 73 of this chapter.
(C) ``Reduction from demand side measures that improve the
efficiency of electricity consumption'' shall be a good faith estimate
of the expected kilowatt hour savings during the calendar year for such
measures and the corresponding reduction in heat input (in mmBtu)
resulting from those measures. The demand side measures shall be
implemented at the opt-in source, in the residence or facility to which
the opt-in source delivers electricity for consumption or in the
residence or facility of a customer to whom the opt-in source's utility
system [[Page 17124]] sells electricity. The verified amount of such
reduction shall be submitted in accordance with paragraph (c)(2) of
this section.
(D) ``Reduction from demand side measures that improve the
efficiency of steam consumption'' shall be a good faith estimate of the
expected steam savings (in mmBtu) from such measures during the
calendar year and the corresponding reduction in heat input (in mmBtu)
at the opt-in source as a result of those measures. The demand side
measures shall be implemented at the opt-in source or in the facility
to which the opt-in source delivers steam for consumption. The verified
amount of such reduction shall be submitted in accordance with
paragraph (c)(2) of this section.
(E) ``Reduction from improvements in heat rate'' shall be a good
faith estimate of the expected reduction in heat rate during the
calendar year and the corresponding reduction in heat input (in mmBtu)
at the opt-in source as a result of all improved unit efficiency
measures at the opt-in source and may include supply-side measures
listed in Appendix A, section 2.1 of part 73 of this chapter. The
verified amount of such reduction shall be submitted in accordance with
paragraph (c)(2) of this section.
(F) ``Reduction from improvement in the efficiency of steam
production at the opt-in source'' shall be a good faith estimate of the
expected improvement in the efficiency of steam production at the opt-
in source during the calendar year and the corresponding reduction in
heat input (in mmBtu) at the opt-in source as a result of all improved
steam production efficiency measures. In order to claim improvements in
the efficiency of steam production, the designated representative of
the opt-in source must demonstrate to the satisfaction of the
Administrator that the heat rate of the opt-in source has not
increased. The verified amount of such reduction shall be submitted in
accordance with paragraph (c)(2) of this section.
(G) Notwithstanding paragraph (a)(1)(i)(B) of this section, where
two or more opt-in sources, or two or more opt-in sources and Phase I
units, include in their annual compliance certification reports their
good faith estimate of kilowatt hour savings or steam savings from the
same demand side measures that improve the efficiency of electricity or
steam consumption:
(1) The designated representatives of all such opt-in sources and
Phase I units shall submit with their annual compliance certification
reports a certification signed by all such designated representatives.
The certification shall apportion the total kilowatt hour savings or
steam savings among such opt-in sources and Phase I units.
(2) Each designated representative shall include in its annual
compliance certification report only its share of kilowatt hour savings
or steam savings.
(ii) For an opt-in source whose opt-in permit becomes effective on
a date other than January 1, annual utilization for the first year
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.014
where ``actual heat input'' and ``reduction from improved efficiency''
are defined as set forth in paragraph (a)(1)(i) of this section but are
restricted to data or estimates for the ``remaining calendar
quarters'', which are the calendar quarters that begin on or after the
date the opt-in permit becomes effective.
(2) Average utilization. Average utilization for the calendar year
shall be defined as the average of the annual utilization calculated as
follows:
(i) For the first two calendar years after the effective date of an
opt-in permit taking effect on January 1 or for the first two calendar
years after the effective date of a thermal energy plan governing an
opt-in source in accordance with Sec. 74.47 of this chapter, average
utilization will be calculated as follows:
(A) Average utilization for the first year = annual
utilizationyear1
where ``annual utilizationyear 1'' is as calculated under
paragraph (a)(1)(i) of this section.
(B) Average utilization for the second year
[GRAPHIC][TIFF OMITTED]TR04AP95.015
where,
``revised annual utilizationyear 1'' is as submitted for the year
under paragraph (c)(2)(i)(B) of this section and adjusted under
paragraph (c)(2)(iii) of this section;
``annual utilizationyear 2'' is as calculated under paragraph
(a)(1)(i) of this section.
(ii) For the first three calendar years after the effective date of
the opt-in permit taking effect on a date other than January 1, average
utilization will be calculated as follows:
(A) Average utilization for the first year after opt-in = annual
utilizationyear 1
where ``annual utilizationyear 1'' is as calculated under
paragraph (a)(1)(ii) of this section.
(B) Average utilization for the second year after opt-in
where,
[[Page 17125]]
[GRAPHIC][TIFF OMITTED]TR04AP95.016
``revised annual utilizationyear 1'' is as submitted for the year
under paragraph (c)(2)(i)(B) of this section and adjusted under
paragraph (c)(2)(iii) of this section; and
``annual utilizationyear 2'' is as calculated under paragraph
(a)(1)(ii) of this section.
(C) Average utilization for the third year after opt-in
[GRAPHIC][TIFF OMITTED]TR04AP95.017
where,
``revised annual utilizationyear 1'' is as submitted for the year
under paragraph (c)(2)(i)(B) of this section and adjusted under
paragraph (c)(2)(iii) of this section; and
``revised annual utilizationyear 2'' is as submitted for the year
under paragraph (c)(2)(i)(B) of this section and adjusted under
paragraph (c)(2)(iii) of this section; and
``annual utilizationyear 3'' is as calculated under paragraph
(a)(1)(ii) of this section.
(iii) Except as provided in paragraphs (a)(2)(i) and (a)(2)(ii),
average utilization shall be the sum of annual utilization for the
calendar year and the revised annual utilization, submitted under
paragraph (c)(2)(i)(B) of this section and adjusted by the
Administrator under paragraph (c)(2)(iii) of this section, for the two
immediately preceding calendar years divided by 3.
(b) Determination of reduced utilization and calculation of
allowances.--
(1) Determination of reduced utilization. For a year during which
its opt-in permit is effective, an opt-in source has reduced
utilization if the opt-in source's average utilization for the calendar
year, as calculated under paragraph (a) of this section, is less than
its baseline.
(2) Calculation of allowances deducted for reduced utilization. If
the Administrator determines that an opt-in source has reduced
utilization for a calendar year during which the opt-in source's opt-in
permit is in effect, the Administrator will deduct allowances, as
calculated under paragraph (b)(2)(i) of this section, from the
compliance subaccount of the opt-in source's Allowance Tracking System
account.
(i) Allowances deducted for reduced utilization =
[GRAPHIC][TIFF OMITTED]TR04AP95.018
(ii) The allowances deducted shall have the same or an earlier
compliance use date as those allocated under subpart C of this part for
the calendar year for which the opt-in source has reduced utilization.
(c) Compliance.--(1) Opt-in Utilization Report. The designated
representative for each opt-in source shall submit an opt-in
utilization report for the calendar year, as part of its annual
compliance certification report under Sec. 74.43, that shall include
the following elements in a format prescribed by the Administrator:
(i) The name, authorized account representative identification
number, and telephone number of the designated representative of the
opt-in source;
(ii) The opt-in source's account identification number in the
Allowance Tracking System;
(iii) The opt-in source's annual utilization for the calendar year,
as defined under paragraph (a)(1) of this section, and the revised
annual utilization, submitted under paragraph (c)(2)(i)(B) of this
section and adjusted under paragraph (c)(2)(iii) of this section, for
the two immediately preceding calendar years;
(iv) The opt-in source's average utilization for the calendar year,
as defined under paragraph (a)(2) of this section;
(v) The difference between the opt-in source's average utilization
and its baseline;
(vi) The number of allowances that shall be deducted, if any, using
the formula in paragraph (b)(2)(i) of this section and the supporting
calculations;
(2) Confirmation report. (i) If the annual compliance certification
report for an opt-in source includes estimates of any reduction in heat
input resulting from improved efficiency as defined under paragraph
(a)(1)(i) of this section, the designated representative shall submit,
by July 1 of the year in which the annual compliance certification
report was submitted, a confirmation report, concerning the calendar
year covered by the annual compliance certification report. The
Administrator may grant, for good cause shown, an extension of the time
to file the confirmation report. The confirmation [[Page 17126]] report
shall include the following elements in a format prescribed by the
Administrator:
(A) Verified reduction in heat input. Any verified kwh savings or
any verified steam savings from demand side measures that improve the
efficiency of electricity or steam consumption, any verified reduction
in the heat rate at the opt-in source, or any verified improvement in
the efficiency of steam production at the opt-in source achieved and
the verified corresponding reduction in heat input for the calendar
year that resulted.
(B) Revised annual utilization. The opt-in source's annual
utilization for the calendar year as provided under paragraph
(c)(1)(iii) of this section, recalculated using the verified reduction
in heat input for the calendar year under paragraph (c)(2)(i)(A) of
this section.
(C) Revised average utilization. The opt-in source's average
utilization as provided under paragraph (c)(1)(iv) of this section,
recalculated using the verified reduction in heat input for the
calendar year under paragraph (c)(2)(i)(A) of this section.
(D) Recalculation of reduced utilization. The difference between
the opt-in source's recalculated average utilization and its baseline.
(E) Allowance adjustment. The number of allowances that should be
credited or deducted using the formulas in paragraphs (c)(2)(iii)(C)
and (D) of this section and the supporting calculations; and the number
of adjusted allowances remaining using the formula in paragraph
(c)(2)(iii)(E) of this section and the supporting calculations.
(ii) Documentation. (A) For all figures under paragraphs
(c)(2)(i)(A) of this section, the opt-in source must provide as part of
the confirmation report, documentation (which may follow the EPA
Conservation Verification Protocol) verifying the figures to the
satisfaction of the Administrator.
(B) Notwithstanding paragraph (c)(2)(i)(A) of this section, where
two or more opt-in sources, or two or more opt-in sources and Phase I
units include in the confirmation report under paragraph (c)(2) of this
section or Sec. 72.91(b) of this chapter the verified kilowatt hour
savings or steam savings defined under paragraph (c)(2)(i)(A) of this
section, for the calendar year, from the same specific measures:
(1) The designated representatives of all such opt-in sources and
Phase I units shall submit with their confirmation reports a
certification signed by all such designated representatives. The
certification shall apportion the total kilowatt hour savings or steam
savings as defined under paragraph (c)(2)(i)(A) of this section for the
calendar year among such opt-in sources.
(2) Each designated representative shall include in the opt-in
source's confirmation report only its share of the verified reduction
in heat input as defined under paragraph (c)(2)(i)(A) of this section
for the calendar year under the certification under paragraph
(c)(2)(ii)(B)(1) of this section.
(iii) Determination of reduced utilization based on confirmation
report. (A) If an opt-in source must submit a confirmation report as
specified under paragraph (c)(2) of this section, the Administrator,
upon such submittal, will adjust his or her determination of reduced
utilization for the calendar year for the opt-in source. Such
adjustment will include the recalculation of both annual utilization
and average utilization, using verified reduction in heat input as
defined under paragraph (c)(2)(i)(A) of this section for the calendar
year instead of the previously estimated values.
(B) Estimates confirmed. If the total, included in the confirmation
report, of the amounts of verified reduction in the opt-in source's
heat input equals the total estimated in the opt-in source's annual
compliance certification report for the calendar year, then the
designated representative shall include in the confirmation report a
statement indicating that is true.
(C) Underestimate. If the total, included in the confirmation
report, of the amounts of verified reduction in the opt-in source's
heat input is greater than the total estimated in the opt-in source's
annual compliance certification report for the calendar year, then the
designated representative shall include in the confirmation report the
number of allowances to be credited to the opt-in source's compliance
subaccount calculated using the following formula:
Allowances credited for the calendar year in which the reduced
utilization occurred=
[GRAPHIC][TIFF OMITTED]TR04AP95.019
where,
Average Utilizationestimate=
the average utilization of the opt-in source as defined under paragraph
(a)(2) of this section, calculated using the estimated reduction in the
opt-in source's heat input under (a)(1) of this section, and submitted
in the annual compliance certification report for the calendar year.
Average Utilizationverified=
the average utilization of the opt-in source as defined under paragraph
(a)(2) of this section, calculated using the verified reduction in the
opt-in source's heat input as submitted under paragraph (c)(2)(i)(A) of
this section by the designated representative in the confirmation
report.
(D) Overestimate. If the total of the amounts of verified reduction
in the opt-in source's heat input included in the confirmation report
is less than the total estimated in the opt-in source's annual
compliance certification report for the calendar year, then the
designated representative shall include in the confirmation report the
number of allowances to be deducted from the opt-in source's compliance
subaccount, which equals the absolute value of the result of the
formula for allowances credited under paragraph (c)(2)(iii)(C) of this
section.
(E) Adjusted allowances remaining. Unless paragraph (c)(2)(iii)(B)
of this section applies, the designated representative shall include in
the confirmation report the adjusted amount of allowances that would
have been held in the opt-in source's compliance subaccount if the
deductions made under Sec. 73.35(b) of this chapter had been based on
the verified, rather than the estimated, reduction in the opt-in
source's heat input, calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.020
[[Page 17127]]
where:
``Allowances held after deduction'' shall be the amount of
allowances held in the opt-in source's compliance subaccount after
deduction of allowances was made under Sec. 73.35(b) of this chapter
based on the annual compliance certification report.
``Excess emissions'' shall be the amount (if any) of excess
emissions determined under Sec. 73.35(d) for the calendar year based on
the annual compliance certification report. ``Allowances credited''
shall be the amount of allowances calculated under paragraph
(c)(2)(iii)(C) of this section.
``Allowances deducted'' shall be the amount of allowances
calculated under paragraph (c)(2)(iii)(D) of this section.
(1) If the result of the formula for ``adjusted amount of
allowances'' is negative, the absolute value of the result constitutes
excess emissions of sulfur dioxide. If the result is positive, there
are no excess emissions of sulfur dioxide.
(2) If the amount of excess emissions of sulfur dioxide calculated
under ``adjusted amount of allowances'' differs from the amount of
excess emissions of sulfur dioxide determined under Sec. 73.35 of this
chapter based on the annual compliance certification report, then the
designated representative shall include in the confirmation report a
demonstration of:
(i) The number of allowances that should be deducted to offset any
increase in excess emissions or returned to the account for any
decrease in excess emissions; and
(ii) The amount of the excess emissions penalty (excluding
interest) that should be paid or returned to the account for the change
in excess emissions.
(3) The Administrator will deduct immediately from the opt-in
source's compliance subaccount the amount of allowances necessary to
offset any increase in excess emissions or will return immediately to
the opt-in source's compliance subaccount the amount of allowances that
he or she determines is necessary to account for any decrease in excess
emissions.
(4) The designated representative may identify the serial numbers
of the allowances to be deducted or returned. In the absence of such
identification, the deduction will be on a first-in, first-out basis
under Sec. 73.35(c)(2) of this chapter and the identification of
allowances returned will be at the Administrator's discretion.
(5) If the designated representative of an opt-in source fails to
submit on a timely basis a confirmation report, in accordance with
paragraph (c)(2) of this section, with regard to the estimate of
reductions in heat input as defined under paragraph (c)(2)(i)(A) of
this section, then the Administrator will reject such estimate and
correct it to equal zero in the opt-in source's annual compliance
certification report that includes that estimate. The Administrator
will deduct immediately, on a first-in, first-out basis under
Sec. 73.35(c)(2) of this chapter, the amount of allowances that he or
she determines is necessary to offset any increase in excess emissions
of sulfur dioxide that results from the correction and will require the
owners and operators of the opt-in source to pay an excess emission
penalty in accordance with part 77 of this chapter.
(F) If the opt-in source is governed by an approved thermal energy
plan under Sec. 74.47 and if the opt-in source must submit a
confirmation report as specified under paragraph (c)(2) of this
section, the adjusted amount of allowances that should remain in the
opt-in source's compliance subaccount shall be calculated as follows:
Adjusted amount of allowances =
[GRAPHIC][TIFF OMITTED]TR04AP95.021
where,
``Allowances allocated'' shall be the original number of allowances
allocated under section Sec. 74.40 for the calendar year.
``Tons emitted'' shall be the total tons of sulfur dioxide emitted
by the opt-in source during the calendar year, as reported in
accordance with subpart F of this part for combustion sources.
``Allowances transferred to all replacement units'' shall be the
sum of allowances transferred to all replacement units under an
approved thermal energy plan in accordance with Sec. 74.47 and adjusted
by the Administrator in accordance with Sec. 74.47(d)(2).
``Allowances deducted for reduced utilization'' shall be the total
number of allowances deducted for reduced utilization as calculated in
accordance with this section including any adjustments required under
paragraph (c)(iii)(E) of this section.
Sec. 74.45 Reduced utilization for process sources. [Reserved]
Sec. 74.46 Opt-in source permanent shutdown, reconstruction, or change
in affected status.
(a) Notification. (1) When an opt-in source has permanently
shutdown during the calendar year, the designated representative shall
notify the Administrator of the date of shutdown, within 30 days of
such shutdown.
(2) When an opt-in source has undergone a modification that
qualifies as a reconstruction as defined in Sec. 60.15 of this chapter,
the designated representative shall notify the Administrator of the
date of completion of the reconstruction, within 30 days of such
completion.
(3) When an opt-in source becomes an affected unit under Sec. 72.6
of this chapter, the designated representative shall notify the
Administrator of such change in the opt-in source's affected status
within 30 days of such change.
(b) Administrator's action. (1) The Administrator will terminate
the opt-in source's opt-in permit and deduct allowances as provided
below in the following circumstances:
(i) When an opt-in source has permanently shutdown. The
Administrator shall deduct allowances equal in number to and with the
same or earlier compliance use date as those allocated to the opt-in
source under Sec. 74.40 for the calendar year in which the shut down
occurs and for all future years following the year in which the shut
down occurs; or
(ii) When an opt-in source has undergone a modification that
qualifies as a reconstruction as defined in Sec. 60.15 of this chapter.
The Administrator shall deduct allowances equal in number to and with
the same or earlier compliance use date as those allocated to the opt-
in source under Sec. 74.40 for the calendar year in which the
reconstruction is completed and all future years following
[[Page 17128]] the year in which the reconstruction is completed; or
(iii) When an opt-in source becomes an affected unit under
Sec. 72.6 of this chapter. The Administrator shall deduct allowances
equal in number to and with the same or earlier compliance use date as
those allocated to the opt-in source under Sec. 74.40 for the calendar
year in which the opt-in source becomes affected under Sec. 72.6 of
this chapter and all future years following the calendar year in which
the opt-in source becomes affected under Sec. 72.6; or
(iv) When an opt-in source does not renew its opt-in permit. The
Administrator shall deduct allowances equal in number to and with the
same or earlier compliance use date as those allocated to the opt-in
source under Sec. 74.40 for the calendar year in which the opt-in
source's opt-in permit expires and all future years following the year
in which the opt-in source's opt-in permit expires.
(2) After the allowance deductions under paragraph (b)(1) of this
section are made, the Administrator will close the opt-in source's unit
account in the Allowance Tracking System. If any allowances remain in
the opt-in source's unit account after allowance deductions are made
under paragraph (b)(1) of this section, and any deductions made under
part 77 of this chapter, the Administrator will establish a general
account for the opt-in source, and transfer any remaining allowances
into this general account. The designated representative for the opt-in
source shall become the authorized account representative for the
general account.
Sec. 74.47 Transfer of allowances from the replacement of thermal
energy--combustion sources.
(a) Thermal energy plan.--(1) General provisions. The designated
representative of an opt-in source that seeks to qualify for the
transfer of allowances based on the replacement of thermal energy by a
replacement unit shall submit a thermal energy plan subject to the
requirements of Sec. 72.40(b) of this chapter for multi-unit compliance
options and this section. The effective period of the thermal energy
plan shall begin from January 1 of the first full calendar year for
which the plan is approved and end December 31 of the last full
calendar year for which the opt-in permit containing the plan is in
effect.
(2) Applicability. This section shall apply to any designated
representative of an opt-in source and any designated representative of
each replacement unit seeking to transfer allowances based on the
replacement of thermal energy.
(3) Contents. Each thermal energy plan shall contain the following
elements in a format prescribed by the Administrator:
(i) The calendar year that the thermal energy plan takes effect,
which shall be the first year the replacement unit(s) will replace
thermal energy of the opt-in source;
(ii) The name, authorized account representative identification
number, and telephone number of the designated representative of the
opt-in source;
(iii) The name, authorized account representative identification
number, and telephone number of the designated representative of each
replacement unit;
(iv) The opt-in source's account identification number in the
Allowance Tracking System;
(v) Each replacement unit's account identification number in the
Allowance Tracking System (ATS);
(vi) The type of fuel used by each replacement unit;
(vii) The allowable SO2 emissions rate, expressed in lbs/
mmBtu, of each replacement unit for the calendar year for which the
plan will take effect. When a thermal energy plan is renewed in
accordance with paragraph (a)(9) of this section, the allowable
SO2 emission rate at each replacement unit will be the most
stringent federally enforceable allowable SO2 emissions rate
applicable at the time of renewal for the calendar year for which the
renewal will take effect. This rate will not be annualized;
(viii) The estimated amount of total thermal energy to be reduced
at the opt-in source, including all energy flows (steam, gas, or hot
water) used for any process or in any heating or cooling application;
(ix) The estimated total thermal energy at each replacement unit
for the year prior to the year for which the plan is to take effect,
including all energy flows (steam, gas, or hot water) used for any
process or in any heating or cooling application;
(x) The estimated amount of total thermal energy at each
replacement unit after replacing thermal energy at the opt-in source,
including all energy flows (steam, gas, or hot water) used for any
process or in any heating or cooling application;
(xi) The estimated amount of thermal energy at each replacement
unit, including all energy flows (steam, gas, or hot water) used for
any process or in any heating or cooling application, replacing the
thermal energy at the opt-in source;
(xii) Estimated total annual fuel input at each replacement unit
after replacing thermal energy at the opt-in source;
(xiii) The number of allowances calculated under paragraph (b) of
this section that the opt-in source will transfer to each replacement
unit represented in the thermal energy plan.
(xiv) The estimated number of allowances to be deducted for reduced
utilization under Sec. 74.44;
(xv) Certification that each replacement unit has entered into a
legally binding steam sales agreement to provide the thermal energy, as
calculated under paragraph (a)(3)(xi) of this section, that it is
replacing for the opt-in source. The designated representative of each
replacement unit shall maintain and make available to the
Administrator, at the Administrator's request, copies of documents
demonstrating that the replacement unit is replacing the thermal energy
at the opt-in source.
(4) Submission. The designated representative of the opt-in source
seeking to qualify for the transfer of allowances based on the
replacement of thermal energy shall submit a thermal energy plan to the
permitting authority by no later than July 1 of the calendar year prior
to the first calendar year for which the plan is to be in effect. The
thermal energy plan shall be signed and certified by the designated
representative of the opt-in source and each replacement unit covered
by the plan.
(5) Retirement of opt-in source upon enactment of plan. (i) If the
opt-in source will be permanently retired as of the effective date of
the thermal energy plan, the opt-in source shall not be required to
monitor its emissions upon retirement, consistent with Sec. 75.67 of
this chapter, provided that the following requirements are met:
(A) The designated representative of the opt-in source shall
include in the plan a request for an exemption from the requirements of
part 75 in accordance with Sec. 75.67 of this chapter and shall submit
the following statement: ``I certify that the opt-in source (``is'' or
``will be'', as applicable) permanently retired on the date specified
in this plan and will not emit any sulfur dioxide or nitrogen oxides
after such date.''
(B) The opt-in source shall not emit any sulfur dioxide or nitrogen
oxides after the date specified in the plan.
(ii) Notwithstanding the monitoring exemption discussed in
paragraph (a)(5)(i) of this section, the designated representative for
the opt-in source shall submit the annual compliance certification
report provided under paragraph (d) of this section.
(6) Administrator's action. If the permitting authority approves a
thermal [[Page 17129]] energy plan, the Administrator will annually
transfer allowances to the Allowance Tracking System account of each
replacement unit, as provided in the approved plan.
(7) Incorporation, modification and renewal of a thermal energy
plan. (i) An approved thermal energy plan, including any revised or
renewed plan that is approved, shall be incorporated into both the opt-
in permit for the opt-in source and the Acid Rain permit for each
replacement unit governed by the plan. Upon approval, the thermal
energy plan shall be incorporated into the Acid Rain permit for each
replacement unit pursuant to the requirements for administrative permit
amendments under Sec. 72.83 of this chapter.
(ii) In order to revise an opt-in permit to add an approved thermal
energy plan or to change an approved thermal energy plan, the
designated representative of the opt-in source shall submit a plan or a
revised plan under paragraph (a)(4) of this section and meet the
requirements for permit revisions under Sec. 72.80 and either
Sec. 72.81 or Sec. 72.82 of this chapter.
(8) Termination of plan. (i) A thermal energy plan shall be in
effect until the earlier of the expiration of the opt-in permit for the
opt-in source or the year for which a termination of the plan takes
effect under paragraph (a)(8)(ii) of this section.
(ii) Termination of plan by opt-in source and replacement units. A
notification to terminate a thermal energy plan in accordance with
Sec. 72.40(d) of this chapter shall be submitted no later than December
1 of the calendar year for which the termination is to take effect.
(iii) If the requirements of paragraph (a)(8)(ii) of this section
are met and upon revision of the opt-in permit of the opt-in source and
the Acid Rain permit of each replacement unit governed by the thermal
energy plan to terminate the plan pursuant to Sec. 72.83 of this
chapter, the Administrator will adjust the allowances for the opt-in
source and the replacement units to reflect the transfer back to the
opt-in source of the allowances transferred from the opt-in source
under the plan for the year for which the termination of the plan takes
effect.
(9) Renewal of thermal energy plan. The designated representative
of an opt-in source may renew the thermal energy plan as part of its
opt-in permit renewal in accordance with Sec. 74.19.
(b) Calculation of transferable allowances--(1) Qualifying thermal
energy. The amount of thermal energy credited towards the transfer of
allowances based on the replacement of thermal energy shall equal the
qualifying thermal energy and shall be calculated for each replacement
unit as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.022
(2) Fuel associated with qualifying thermal energy. The fuel
associated with the qualifying thermal energy at each replacement unit
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.023
where,
``Qualifying thermal energy'' for the replacement unit is as
defined in paragraph (b)(1) of this section;
``Efficiency constant'' for the replacement unit
= 0.85, where the replacement unit is a boiler
= 0.80, where the replacement unit is a cogenerator
(3) Allowances transferable from the opt-in source to each
replacement unit. The number of allowances transferable from the opt-in
source to each replacement unit for the replacement of thermal energy
is calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.024
where,
``Allowable SO2 emission rate'' for the replacement unit is as
defined in paragraph (a)(3)(vii) of this section;
``Fuel associated with qualifying thermal energy'' is as defined in
paragraph (b)(2) of this section;
(c) Transfer prohibition. The allowances transferred from the opt-
in source to each replacement unit shall not be transferred from the
unit account of the replacement unit to any other account in the
Allowance Tracking System.
(d) Compliance--(1) Annual compliance certification report. (i) As
required for all opt-in sources, the designated representative of the
opt-in source covered by a thermal energy plan must submit an opt-in
utilization report for the calendar year as part of its annual
compliance certification report under Sec. 74.44(c)(1).
(ii) The designated representative of an opt-in source must submit
a thermal energy compliance report for the calendar year as part of the
annual compliance certification report, which must include the
following elements in a format prescribed by the Administrator:
(A) The name, authorized account representative identification
number, and telephone number of the designated representative of the
opt-in source;
(B) The name, authorized account representative identification
number, [[Page 17130]] and telephone number of the designated
representative of each replacement unit;
(C) The opt-in source's account identification number in the
Allowance Tracking System (ATS);
(D) The account identification number in the Allowance Tracking
System (ATS) for each replacement unit;
(E) The actual amount of total thermal energy reduced at the opt-in
source during the calendar year, including all energy flows (steam,
gas, or hot water) used for any process or in any heating or cooling
application;
(F) The actual amount of thermal energy at each replacement unit,
including all energy flows (steam, gas, or hot water) used for any
process or in any heating or cooling application, replacing the thermal
energy at the opt-in source;
(G) The actual amount of total thermal energy at each replacement
unit after replacing thermal energy at the opt-in source, including all
energy flows (steam, gas, or hot water) used for any process or in any
heating or cooling application;
(H) Actual total fuel input at each replacement unit as determined
in accordance with part 75 of this chapter;
(I) Calculations of allowance adjustments to be performed by the
Administrator in accordance with paragraph (d)(2) of this section.
(2) Allowance adjustments by Administrator. (i) The Administrator
will adjust the number of allowances in the Allowance Tracking System
accounts for the opt-in source and for each replacement unit to reflect
any changes between the estimated values submitted in the thermal
energy plan pursuant to paragraph (a) of this section and the actual
values submitted in the thermal energy compliance report pursuant to
paragraph (d) of this section. The values to be considered for this
adjustment include:
(A) The number of allowances transferable by the opt-in source to
each replacement unit, calculated in paragraph (b) of this section
using the actual, rather than estimated, thermal energy at the
replacement unit replacing thermal energy at the opt-in source.
(B) The number of allowances deducted from the Allowance Tracking
System account of the opt-in source, calculated under Sec. 74.44(b)(2).
(ii) If the opt-in source includes in the opt-in utilization report
under Sec. 74.44 estimates for reductions in heat input, then the
Administrator will adjust the number of allowances in the Allowance
Tracking System accounts for the opt-in source and for each replacement
unit to reflect any differences between the estimated values submitted
in the opt-in utilization report and the actual values submitted in the
confirmation report pursuant to Sec. 74.44(c)(2).
(3) Liability. The owners and operators of an opt-in source or a
replacement unit governed by an approved thermal energy plan shall be
liable for any violation of the plan or this section at that opt-in
source or replacement unit that is governed by the thermal energy plan,
including liability for fulfilling the obligations specified in part 77
of this chapter and section 411 of the Act.
Sec. 74.48 Transfer of allowances from the replacement of thermal
energy--process sources [Reserved]
Sec. 74.49 Calculation for deducting allowances.
(a) Allowance deduction formula. The following formula shall be
used to determine the total number of allowances to be deducted for the
calendar year from the allowances held in an opt-in source's compliance
subaccount as of the allowance transfer deadline applicable to that
year:
Total allowances deducted = Tons emitted + Allowances deducted for
reduced utilization where:
(1)(i) Except as provided in paragraph (a)(1)(ii) of this section,
``Tons emitted'' shall be the total tons of sulfur dioxide emitted by
the opt-in source during the calendar year, as reported in accordance
with subpart F of this part for combustion sources or subpart G of this
part for process sources.
(ii) If the effective date of the opt-in source's permit took
effect on a date other than January 1, ``Tons emitted'' for the first
calendar year shall be the total tons of sulfur dioxide emitted by the
opt-in source during the calendar quarters for which the opt-in
source's opt-in permit is effective, as reported in accordance with
subpart F of this part for combustion sources or subpart G of this part
for process sources.
(2) ``Allowances deducted for reduced utilization'' shall be the
total number of allowances deducted for reduced utilization as
calculated in accordance with Sec. 74.44 for combustion sources or
Sec. 74.45 for process sources.
Sec. 74.50 Deducting opt-in source allowances from ATS accounts.
(a) Deduction of allowances. The Administrator may deduct any
allowances that were allocated to an opt-in source under Sec. 74.40 by
removing, from any Allowance Tracking System accounts in which they are
held, the allowances in an amount specified in paragraph (d) of this
section, under the following circumstances:
(1) When the opt-in source has permanently shut down; or
(2) When the opt-in source has been reconstructed; or
(3) When the opt-in source becomes an affected unit under Sec. 72.6
of this chapter; or
(4) When the opt-in source fails to renew its opt-in permit.
(b) Method of deduction. The Administrator will deduct allowances
beginning with those allowances with the latest recorded date of
transfer out of the opt-in source's unit account.
(c) Notification of deduction. When allowances are deducted, the
Administrator will send a written notification to the authorized
account representative of each Allowance Tracking System account from
which allowances were deducted. The notification will state:
(1) The serial numbers of all allowances deducted from the account,
(2) The reason for deducting the allowances, and
(3) The date of deduction of the allowances.
(d) Amount of deduction. The Administrator may deduct allowances in
accordance with paragraph (a) of this section in an amount required to
offset any excess emissions in accordance with part 77 of this chapter
and when an opt-in source does not hold allowances equal in number to
and with the same or earlier compliance use date for the calendar years
specified under Sec. 74.46(b)(1) (i) through (iv) in an amount required
to be deducted under Sec. 74.46(b)(1) (i) through (iv).
Subpart F--Monitoring Emissions: Combustion Sources
Sec. 74.60 Monitoring requirements.
(a) Monitoring requirements for combustion sources. The owner or
operator of each combustion source shall meet all of the requirements
specified in part 75 of this chapter for the owners and operators of an
affected unit to install, certify, operate, and maintain a continuous
emission monitoring system, an excepted monitoring system, or an
approved alternative monitoring system in accordance with part 75 of
this chapter.
(b) Monitoring requirements for opt-in sources. The owner or
operator of each opt-in source shall install, certify, operate, and
maintain a continuous emission monitoring system, an excepted
monitoring system, an approved alternative monitoring system in
accordance with part 75 of this chapter. [[Page 17131]]
Sec. 74.61 Monitoring plan.
(a) Monitoring plan. The designated representative of a combustion
source shall meet all of the requirements specified under part 75 of
this chapter for a designated representative of an affected unit to
submit to the Administrator a monitoring plan that includes the
information required in a monitoring plan under Sec. 75.53 of this
chapter. This monitoring plan shall be submitted as part of the
combustion source's opt-in permit application under Sec. 74.14 of this
part.
(b) [Reserved].
Subpart G--Monitoring Emissions: Process Sources--[Reserved]
PART 75--CONTINUOUS EMISSION MONITORING
17. The authority citation for part 75 continues to read as
follows:
Authority: 42 U.S.C. 7651, et seq.
18. Section 75.4 is amended by revising paragraph (a) introductory
text, and by adding paragraph (a)(5) to read as follows:
Sec. 75.4 Compliance dates.
(a) The provisions of this part apply to each existing Phase I and
Phase II unit on February 10, 1993. For substitution or compensating
units that are so designated under the acid rain permit which governs
the unit and contains the approved substitution or reduced utilization
plan, pursuant to Sec. 72.41 or Sec. 72.43 of this chapter, the
provisions of this part become applicable upon the issuance date of the
acid rain permit. For combustion sources seeking to enter the Opt-in
Program in accordance with part 74 of this chapter, the provisions of
this part become applicable upon the submission of an opt-in permit
application in accordance with Sec. 74.14 of this chapter. In
accordance with Sec. 75.20, the owner or operator of each existing
affected unit shall ensure that all certification tests for the
required continuous emission monitoring systems and continuous opacity
monitoring systems are completed not later than the following dates
(except as provided in paragraphs (d) and (e) of this section):
* * * * *
(5) For combustion sources seeking to enter the Opt-in Program in
accordance with part 74 of this chapter, the expiration date of a
combustion source's opt-in permit under Sec. 74.14(e) of this chapter.
* * * * *
19. Section 75.16 is amended by revising paragraph (a)(2)(ii)(A)
and (b)(2)(ii)(A) to read as follows:
Sec. 75.16 Special provisions for monitoring emissions from common by-
pass, and multiple stacks for SO2 emissions and heat input
determinations.
(a) * * *
(2) * * *
(ii) * * *
(A) Designate the Phase II units as substitution units according to
the procedure in part 72 of this chapter and the non-affected units as
opt-in sources in accordance with part 74 of this chapter and combine
emissions for compliance purposes; or
* * * * *
(b) * * *
(2) * * *
(ii) * * *
(A) Designate the non-affected units as opt-in sources in
accordance with part 74 of this chapter and combine emissions for
compliance purposes; or
* * * * *
20. Section 75.20 is amended by revising the first sentence after
the heading in paragraph (a)(3) to read as follows:
Sec. 75.20 Certification and recertification procedures.
(a) * * *
(3) Provisional approval of certification applications. Upon the
successful completion of the required certification procedures for each
continuous emission or opacity monitoring system or component thereof
and subsequent submittal of a complete certification application in
accordance with Sec. 75.63, each continuous emission or opacity
monitoring system or component thereof shall be deemed provisionally
certified for use under the Acid Rain Program for a period not to
exceed 120 days following receipt by the Administrator of the complete
certification application; provided that no continuous emission or
opacity monitoring systems for a combustion source seeking to enter the
Opt-in Program in accordance with part 74 of this chapter shall be
deemed provisionally certified for use under the Acid Rain Program. * *
*
* * * * *
21. Section 75.63 is amended by revising paragraph (a) and (b)(1)
to read as follows:
Sec. 75.63 Certification or recertification application.
(a) Submission. The designated representative for an affected unit
or a combustion source seeking to enter the Opt-in Program in
accordance with part 74 of this chapter shall submit the request to the
Administrator within 30 days after completing the certification test.
(b) * * *
(1) A copy of the monitoring plan (or any modifications to the
monitoring plan) for the unit, or units, or combustion source seeking
to enter the Opt-in Program in accordance with part 74 of this chapter,
if not previously submitted.
* * * * *
22. Section 75.67 is revised to read as follows:
Sec. 75.67 Retired units petitions.
(a) For units that will be permanently retired prior to January 1,
1995, an exemption from the requirements of this part, including the
requirement to install and certify a continuous emissions monitoring
system, may be obtained from the Administrator if the designated
representative submits a complete petition, as required in Sec. 72.8 of
this chapter, to the Administrator prior to the deadline in Sec. 75.4
by which the continuous emission or opacity monitoring systems must
complete the required certification tests.
(b) For combustion sources seeking to enter the Opt-in Program in
accordance with part 74 of this chapter that will be permanently
retired and governed upon entry into the Opt-in Program by a thermal
energy plan in accordance with Sec. 74.47 of this chapter, an exemption
from the requirements of this part, including the requirement to
install and certify a continuous emissions monitoring system, may be
obtained from the Administrator if the designated representative
submits to the Administrator a petition for such an exemption prior to
the deadline in Sec. 75.4 by which the continuous emission or opacity
monitoring systems must complete the required certification tests.
PART 77--EXCESS EMISSIONS
23. The authority citation for part 77 revised to read as follows:
Authority: 42 U.S.C. 7601 and 7651, et seq.
24. Section 77.6 is amended by revising paragraph (a) to read as
follows:
Sec. 77.6 Penalties for excess emissions of sulfur dioxide and
nitrogen oxides.
(a) If excess emissions of sulfur dioxide or nitrogen oxides occur
at an affected unit during any year, the owners and operators of the
affected unit shall pay, without demand, an excess emissions penalty,
as calculated under paragraph (b) of this section. [[Page 17132]] Such
payment shall be submitted to the Administrator no later than 60 days
after the end of any year during which excess emissions occurred at an
affected unit or, for any increase in excess emissions of sulfur
dioxide determined after adjustments made under Sec. 72.91(b) of this
chapter, or Sec. 74.44(c)(2) of this chapter, by July 31 of the year in
which the adjustments are made.
* * * * *
PART 78--APPEALS PROCEDURES FOR ACID RAIN PROGRAM
25. The authority citation for part 78 continues to read as
follows:
Authority: 42 U.S.C. 7601 and 7651, et seq.
26. Section 78.1 is amended by revising paragraphs (b)(3) and
(b)(4) and by adding paragraph (b)(5) to read as follows:
Sec. 78.1 Purpose and scope.
(b) * * *
(3) Under part 74 of this chapter,
(i) The determination of incompleteness of an opt-in permit
application;
(ii) The issuance or denial of an opt-in permit and approval or
disapproval of the transfer of allowances for the replacement of
thermal energy;
(iii) The approval or disapproval of a permit revision to an opt-in
permit;
(iv) The decision on the deduction or return of allowances under
subpart E of part 74 of this chapter;
(4) Under part 75 of this chapter,
(i) The decision on a petition for approval of an alternative
monitoring system;
(ii) The approval or disapproval of a monitoring system
certification or recertification;
(iii) The finalization of annual emissions data, including
retroactive adjustment based on audit;
(iv) The determination of the percentage of emissions reduction
achieved by qualifying Phase I technology; and
(v) The determination on the acceptability of parametric missing
data procedures for a unit equipped with add-on controls for sulfur
dioxide and nitrogen oxides in accordance with part 75 of this chapter.
(5) Under part 77 of this chapter, the determination of
incompleteness of an offset plan and the approval or disapproval of an
offset plan under Sec. 77.4 of this chapter and the deduction of
allowances under Sec. 77.5(c) of this chapter.
* * * * *
27. Section 78.3 is amended by revising paragraph (a)(1)
introductory text, and paragraph (d)(2) to read as follows:
Sec. 78.3 Petition for administrative review and request for
evidentiary hearing.
(a) * * *
(1) The following persons may petition for administrative review of
a decision of the Administrator that is made under parts 72, 74, 75,
76, and 77 of this chapter and that is appealable under Sec. 78.1(a) of
this part:
* * * * *
(d) * * *
(2) Any provision or requirement of parts 72, 73, 74, 75, 76, or 77
of this chapter, including any standard requirement under Sec. 72.9 of
this chapter and any emissions monitoring or reporting requirements
under part 75 of this chapter;
* * * * *
[FR Doc. 95-7491 Filed 4-3-95; 8:45 am]
BILLING CODE 6560-50-P
