PROPOSED RULEMAKING
[25 PA. CODE CHS. 121 AND 123]
Nitrogen Oxides Allowance Program
[27 Pa.B. 1829] The Environmental Quality Board (Board) proposes to amend Chapters 121 and 123 (relating to general provisions; and standards for contaminants) to read as set forth in Annex A. The proposed amendments establish a program to limit the emission of nitrogen oxides (NOx) from fossil fired combustion units with rated heat input capacity of 250 MMBtu/hour or more and electric generating facilities of 15 megawatts or greater.
The Board approved the proposed amendments at its February 18, 1997 meeting.
A. Effective Date
These proposed amendments will go into effect upon publication in the Pennsylvania Bulletin as final rulemaking.
B. Contact Persons
For further information, contact J. Wick Havens, Chief, Division of Air Resources Management, Bureau of Air Quality, 12th Floor Rachel Carson State Office Building, P. O. Box 8468, Harrisburg, PA 17105-8468 (717) 787-4310, or M. Dukes Pepper, Jr., Assistant Counsel, Bureau of Regulatory Counsel, Office of Chief Counsel, 9th Floor Rachel Carson State Office Building, P. O. Box 8464, Harrisburg, PA 17105-8464 (717) 787-7060. Information regarding submitting comments on this proposal appears in Section J of this Preamble. Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (voice users). This proposal is available electronically through the Department of Environmental Protection's (Department's) Web site (http://www.dep.state.pa.us).
C. Statutory Authority
This action is being taken under the authority of section 5(a)(1) of the Air Pollution Control Act (35 P. S. § 4005(a)(1)), which grants to the Board the authority to adopt regulations for the prevention, control, reduction and abatement of air pollution.
D. Background of the Amendment
In the 1990 amendments to the Federal Clean Air Act, Congress recognized that ground level ozone (smog) is a regional problem not confined to state boundaries. Section 184 of the Clean Air Act, 42 U.S.C.A. § 7511c, establishes the Northeast Ozone Transport Commission (OTC) to assist in developing recommendations for the control of interstate ozone air pollution.
Ozone is not directly emitted by pollution sources but is created as a result of the chemical reaction of NOx and volatile organic compounds (VOC), in the presence of light and heat, to form ozone in the air masses traveling over long distances. Exposure to ozone causes decreased lung capacity, particularly in children and elderly individuals. Decreased lung capacity from ozone exposure can frequently last several hours after the initial exposure. States in the Northeast Ozone Transport Region, except for Vermont, have experienced since 1990 levels of ozone during the months of May through September in excess of the National Ambient Air Quality Standard (NAAQS).
Because NOx from large fossil fired combustion units is a major contributor to regional ozone pollution, the OTC member states, including this Commonwealth, proposed development of a regional approach to address NOx emissions. Beginning in 1993, the Northeast States for Coordinated Air Use Management (NESCAUM), the Mid-Atlantic Regional Air Management Association (MARAMA) and the United States Environmental Protection Agency (EPA) began working with the OTC to study the feasibility of implementing regional NOx emission reductions utilizing an emission budget program in the northeast. Regional airshed modeling was used to identify the appropriate level of emission reductions that would contribute to a significant improvement in air quality.
As a result of these evaluations, the OTC proposed two additional phases of NOx emissions reduction beyond that already achieved by the Reasonably Available Control Technology (RACT) program. This recommendation was formally adopted by the OTC in a Memorandum of Understanding (OTC MOU) in September of 1994. The OTC states, in the MOU of September 27, 1994, agreed to propose regulations for the control of NOx emissions in accordance with the following guidelines:
1. The level of NOx required would be established from a 1990 baseline emissions level.
2. The reduction would vary by location, or zone, and would be implemented in two phases utilizing a regionwide trading program.
3. The reduction would be determined based on the less stringent of the following:
a. By May 1, 1999, the affected facilities in the inner zone shall reduce their rate of NOx emissions by 65%, or emit NOx at a rate no greater than 0.20 pounds per million Btus.
b. By May 1, 1999, the affected facilities in the outer zone shall reduce the rate of NOx emissions by 55% from baseline, or shall emit NOx at a rate no greater than 0.20 pounds per million Btu.
c. By May 1, 2003, the affected facilities in the inner and outer zones shall reduce their rate of NOx emissions by 75% from baseline, or shall emit NOx at a rate no greater than 0.15 pounds per million Btu.
d. By May 1, 2003, the affected facilities in the northern zone shall reduce their rate of NOx emissions by 55% from baseline, or shall emit NOx at a rate no greater than 0.20 pounds per million Btu.
In this Commonwealth, the counties of Berks, Bucks, Chester, Delaware, Montgomery and Philadelphia are in the inner zone; the remaining counties in this Commonwealth are in the outer zone.
Under section 7.4 of the Commonwealth Air Pollution Control Act (35 P. S. § 4007.4) the control strategies approved by the OTC and by the Commonwealth's representatives set forth in the OTC MOU are commitments by the Department to pursue regulatory actions under State law to implement the control strategies. In order to provide for the optimal degree of flexibility and to minimize compliance costs, the Department joined with the member states of the OTC to develop a regionwide market-based cap and trade program. A cap and trade program sets a regulatory limit on mass emissions from a discreet group of sources, allocates allowances to the sources authorizing emissions up to the regulatory limit, and permits trading of allowances in order to effect cost efficient compliance with the cap.
To ensure that OTC states included common elements in the rules implementing the OTC MOU, the states worked through the NESCAUM, the MARAMA and the EPA to develop a model rule containing the common program elements. In addition to the state and Federal representatives, the NESCAUM, MARAMA NOx budget task force was joined by an ad hoc committee comprised of representatives from industry, utilities and environmental groups to ensure broad-based participation and consensus in the model rule.
The task force and ad hoc committee recognized that state program consistency is critical to the overall success of the NOx allowance program. State programs that are substantively identical in key areas will ensure that a ton of emissions reduced in one state is equivalent to a ton reduced in another state. Since states desire to promote cost effective compliance through intrastate and interstate emission trading, this level of consistency is essential to an effective trading program. The NESCAUM/MARAMA Model Rule meets these objectives and represents substantial consensus among the state and Federal governmental representatives and the ad hoc committee members on key regulatory elements of a NOx allowance program to implement the OTC MOU. The Model Rule applies to fossil-fired combustion units with rated capacity of 250 MMBtu/hour or more and electric generating facilities of 15 megawatts or greater. Under the program, the OTC MOU emission reductions are applied to a 1990 baseline for NOx emissions in the ozone transport region to create a cap on the emissions budget for each of the two target years: 1999 and 2003. The 1990 baseline was established through extensive work of the OTC, the EPA and industry to refine and quality assure the data available on actual NOx emissions for 1990. The 1990 emissions and budget for the OTC region has been disaggregated to a state level and the states are allocating allowances to the facilities in the program. Beginning in 1999, the sum of NOx emissions from NOx affected sources during the May 1 through September 30 control period cannot exceed the equivalent number of allowances allocated in the region. An allowance is equal to one ton of NOx emissions. NOx affected sources must hold allowances for all NOx emitted during the ozone season months of May through September and NOx affected sources are allowed to buy, sell or trade allowances as needed.
These proposed amendments are part of the Commonwealth's State Implementation Plan (SIP) to meet the reasonable further progress requirements of the Clean Air Act. In addition, the amendments are proposed as being comparable with and in lieu of implementation of Stage II vapor recovery system requirements throughout the State. As a comparable measure, it will satisfy the requirements under Section 184(b)(2) of the Clean Air Act (42 U.S.C.A. § 7511c(b)(2)). Finally, as part of the considerations and current assumptions as outlined in the Operating Agreements for Stakeholder Deliberations, Southwestern and Southeastern Pennsylvania Ozone Stakeholder Groups recognized that the Phase II of the Northeast Ozone Transport Commissions's ''Memorandum of Understanding'' (NOx MOU) would be adopted by the Commonwealth as a NOx reduction strategy. Therefore, the 55% and 65% reductions in NOx from utility, IPP and other large industrial boilers (that are subject to Phase II of the NOx MOU) have been understood to be one of the precursor reduction options in the attainment strategy modeled for the Pittsburgh-Beaver Valley and Philadelphia Ozone Nonattainment Areas.
This proposal is part of the ozone attainment strategy for the OTC states. The Commonwealth plans to finalize this proposal when a consistent program is developed for the states of New York, New Jersey, Connecticut and Maryland.
The AWQTAC has been intimately involved in the allocation of allowances to budgeted sources and the development of both the model rule and this regulatory proposal. On December 11, 1996, AWQTAC concurred in a recommendation from the Air Subcommittee that the Department proceed with the proposed amendments including the allocation methodology for individual sources.
E. Summary of the Proposal
The proposed amendments establish definitions for the following terms: ''account,'' ''account number,'' ''acquiring account,'' ''electric generating facility,'' ''fossil fuel,'' ''fossil fuel fired,'' ''general account,'' ''heat input,'' ''indirect heat exchange combustion unit,'' ''maximum heat input capacity,'' ''NOx affected source,'' ''NOx allocation,'' ''NOx allowance,'' ''NOx allowance deduction,'' NOx Allowance Continuous Emissions Monitoring System (NOx allowance CEMS),'' ''NOx allowance control period,'' ''NOx allowance curtailment,'' ''NOx allowance Tracking System (NATS),'' ''NOx allowance transfer,'' ''NOx allowance transfer deadline,'' ''NOx budget,'' ''NOx Budget Administrator,'' ''NOx Emissions Tracking System (NETS),'' ''OTC MOU NOx budget,'' ''Ozone Transport Commission Memorandum Of Understanding (OTC MOU),'' and ''replacement source.''
These defined terms are used in the substantive provisions contained in Chapter 123.
This regulatory proposal implements the NOx MOU in a manner consistent with the NESCAUM/MARAMA Model Rule. The proposal identifies each known facility and each source within the facility subject to the rule along with the annual allowance allocation for the May 1 through September 30 control period in Appendix A. The rule also describes the process and procedure for transferring allowances between NOx affected sources in §§ 123.106 and 123.107 (relating to NOx allowance transfer protocol; and NOx allowance transfer procedures). The compliance requirements for sources and the remedy in the event the sources fail to comply is described in §§ 123.110 and 123.111 (relating to source compliance requirements; and failure to meet source compliance requirements).
Because this proposal is dependent upon accurate tracking of NOx emissions, the interstate NOx Allowance Tracking System (NATS) is established along with procedures for tracking emissions in §§ 123.104 and 123.105 (relating to source authorized account representative requirements; and NOx Allowance Tracking Systems Provisions). The source monitoring, recordkeeping and reporting requirements contained in §§ 123.108, 123.109 and 123.113 (relating to source emissions monitoring requirements; source emissions reporting requirements; and source recordkeeping requirements) detail the methodology that NOx affected sources must follow to accurately characterize and report NOx emissions during the control period.
Sections 123.116 and 123.117 (relating to source opt-in provisions; and new NOx affected source provisions) describe the mechanism for including additional sources in the NOx allowance program. Section 123.116 describes the procedure for sources to opt into the program and obtain an allowance allocation. Section 123.117 describes the process for both new sources meeting the thresholds for regulation and newly identified sources.
There were concerns expressed by independent power producers that were not operational in 1990 related to obtaining NOx allowances. Since NOx allowances are based on 1990 emissions, these facilities did not have a baseline to establish NOx allowances. The proposal provides allowances to these sources in Appendix A by allocating a portion of the Pennsylvania budget to the independent power producers. In addition, § 123.121 (relating to additional requirements for independent power producers) establishes additional requirements for independent power producers which describe the methodology for use of allocations by this class of NOx affected sources.
Because the NOx affected sources are all ''major sources'' for purposes of the new source review program contained at Chapter 127, Subchapter E (relating to new source review), modifications of these sources that increase their potential to emit above new source review thresholds or the addition of a new source above the new source review threshold will require both emission reduction credits and NOx allowances. Section 123.118 (relating to emission reduction credit provisions) describes the relationship between the emission reduction credit provisions and the NOx allowance program provisions.
Finally, § 123.120 (relating to audit) establishes an audit program to evaluate the effectiveness of the emission reductions achieved under the NOx allowance program. This evaluation occurs on an ongoing basis with a more complete review at least every 3 years. Section 123.120 authorizes the Department to condition, limit, suspend or terminate any NOx allowances or authorization to emit which such allowances represent under specifically identified circumstances. Subsection (d) describes the procedure the Department will follow in order to make such a modification to the allowance allocation.
Because some sources may be willing to make reductions in emissions prior to the time the rule becomes finalized, § 123.119 (relating to bonus NOx allowance awards) allows those sources to receive bonus NOx allowances. This will encourage early control and increased environmental benefits.
F. Benefits, Cost and Compliance
Executive Order 1996-1 requires a cost/benefit analysis of the proposed amendments. Overall, the citizens of this Commonwealth will benefit from the proposed amendments because they will provide appropriate protection of air quality both in this Commonwealth and the entire Northeastern United States. In addition to reducing ozone pollution, this program will assist the Commonwealth in meeting its requirements for reasonable further progress and Stage II comparability under the Clean Air Act.
These proposed amendments are expected to result in public health cost savings of $35-730 million per year from ozone reductions and $120 million per year resulting from reductions in particulate matter emissions.
Worker health care costs and productivity should yield cost savings, as well as the welfare benefits, and decreased structural deterioration of concrete, paints and metals for instance should also result in benefits.
A control technology cost analysis of the public electric utility industry was conducted by the Department. Over 95% of the affected sources are electric generating utilities. Using the worst case $42 million per year estimate, the cost of generation is expected to increase by approximately 1.2% using 1995 technology cost data. Recent developments in control technology have demonstrated large cost reductions on the order of 50% for this level of emission reduction since this estimate was completed. The total cost without trading based on 1995 data was $60 million per year and trading will reduce this by one third to $42 million per year. Substantiating this estimate, the OTAG completed cost studies in October of 1996 showing that the cost of reducing emissions to a much lower standard, 0.15 lb/mmBTU or by 75% would cost $73 million per year. Overall, these proposed amendments will have negligible impact on costs in comparison to the normal variations in other costs such as fuel and other operating and maintenance items.
By implementing the required emission reductions through a trading program, cost savings are estimated to be over 30% of what would otherwise be incurred. This level of savings has been realized in similar trading programs implemented by the EPA.
Some of the electric generating facilities and some of the remaining 5% of the nonutility sources which cannot cost effectively control emissions to comply with these proposed amendments will be able to comply by acquiring allowances from other sources on the open market, through mechanisms such as trade agreements, contracts and purchases. Allowances will be available both from electric generating companies with which many of these sources are owned or with which they do business and from the interstate market. It is anticipated that the market will provide for the least cost sources to control and minimize costs for all affected sources.
Since most of the affected sources already have the monitoring and reporting systems installed to comply with existing Federal requirements, only small changes will have to be made and reports will be consolidated with those existing requirements. On the whole, costs should be minimal for the majority of affected sources.
A few unmonitored sources may require additional reporting; however, the costs should also be small since the monitoring guidance allows for minimized and streamlined procedures which do not require new equipment. Common desktop personal computer based spreadsheet software and data entry would be required. Since most sources already maintain this data, reformatting and submission is likely to be the most that is required for these sources.
Compliance Costs
It is expected that a number of Commonwealth facilities will be required to install emission controls to meet the emissions cap established by these proposed amendments. The open market approach which allows trading of emission reductions between sources will encourage the installation of the most cost-effective controls and trading of emission reductions between sources. This open market approach will significantly reduce compliance costs in comparison to a command and control approach. In addition to the control costs imposed, some of the sources covered by the program will be required to install additional monitoring equipment to accurately characterize NOx emissions from the facility.
Compliance Assistance Plan
The Department plans to educate and assist the regulated community and the public with understanding the NOx budget program.
Paperwork Requirements
This regulatory program will have paperwork impact on the Commonwealth and the regulated entities. In addition to monitoring, recordkeeping and reporting at the source level, the NOx allowance tracking system and NOx emissions tracking system require extensive multistate management.
G. Pollution Prevention
While this regulatory proposal does not directly include pollution prevention provisions, it may encourage some affected parties to switch from more polluting to less polluting fossil fuel sources.
H. Sunset Review
These proposed amendments will be reviewed in accordance with the sunset review schedule published by the Department to determine whether the regulations effectively fulfill the goals for which they were intended.
I. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 1, 1997, the Department submitted a copy of the proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the Senate and House Environmental Resources and Energy Committees. In addition to submitting the proposed amendments, the Department has provided IRRC and the Committees with a copy of a detailed regulatory analysis form prepared by the Department. A copy of this material is available to the public upon request.
If IRRC has objections to any portion of the proposed amendments, it will notify the Department within 30 days of the close of the public comment period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for the Department, the Governor and the General Assembly to review these objections before final publication of this proposal.
J. Public Comment and Board Public Hearings
The Department is specifically requesting comments on two sections of the proposal. First, § 123.121 establishes additional requirements for independent power producers. Subsection (a) would take 90% of the unused allowances from each control period and place them into an account administered by the Department for economic growth and prosperity in the Commonwealth. The Department specifically seeks comment on:
1) How this fund should be managed including the mechanism to prioritize projects, whether to limit the amount of allowances allocated to any single source or project and what happens to the account in the event that additional reductions are necessary to achieve air quality goals.
2) Should the fund be used to both support growth and to assist in providing allowances to entities where the cost of control is disproportionate to the emissions from that facility.
3) If revenues are received from the operation of the fund, how should those revenues be managed by the Department.
The Department is also seeking comment on § 123.117 related to new NOx affected source provisions. Specifically, the Department is proposing that sources not identified in this section as an initial allocation source must acquire NOx allowances from those available in the NOx allowance tracking system. The only exception to this requirement would be for affected sources which emitted NOx in 1990 and notify the Department within 6 months following the date of final promulgation of this proposal that they are subject to the provisions. In that case, the Department will petition the OTC to include emissions from those sources in the NOx MOU budget and will provide NOx allowances to the sources in the event that the budget is modified. The Department specifically requests comments on this approach.
Public Hearings
The Board will hold three public hearings for the purpose of accepting comments on the proposed amendments. The hearings will be held at 1 p.m. on the following dates and at the following locations:
May 13, 1996, DEP Southwest Regional Office, 400 Waterfront Drive, Pittsburgh, PA
May 15, 1997, DEP, 1st Floor Conference Room, Rachel Carson State Office Building, 400 Market Street, Harrisburg, PA
May 19, 1997, Upper Merion Township Building, 175 West Valley Forge Road, King of Prussia, PA
Persons wishing to present testimony at the hearings must contact Sharon Freeman at the Environmental Quality Board, P. O. Box 8477, Harrisburg, PA 17105-8477 (717) 787-4526, at least 1 week in advance of the hearing to reserve a time to present testimony. Oral testimony will be limited to 10 minutes for each witness and three written copies of the oral testimony must be submitted at the hearing. Each organization is requested to designate one witness to present testimony on its behalf.
Persons with a disability who wish to attend the hearings and require an auxiliary aid, service or other accommodations in order to participate, should contact Sharon Freeman at (717) 787-4526 or through the Pennsylvania AT&T relay service at (800) 654-5984 (TDD) to discuss how the Department may accommodate their needs.
Written Comments
In lieu or in addition to presenting oral testimony at the hearings, interested persons may submit written comments, suggestions or objections regarding the proposed amendments to the Board, 15th Floor Rachel Carson State Office Building, P. O. Box 8477, Harrisburg, PA 17105-8477. Comments received by facsimile will not be accepted. Comments must be received by June 18, 1997. In addition to the written comments, interested persons may also submit a summary of their comments to the Board. This summary may not exceed one page in length and must be received by June 18, 1997. The summary will be provided to each member of the Board in the agenda packet distributed prior to the meeting at which the final-form regulations will be considered.
Electronic Comments
Comments may be submitted electronically to the Board at Regcomments@a1.dep.state.pa.us. A subject heading of the proposal and return name and address must be included in each transmission. Comments submitted electronically must also be received by the Board by June 18, 1997.
JAMES M. SEIF,
ChairpersonFiscal Note: 7-314. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 25. ENVIRONMENTAL PROTECTION
PART I. DEPARTMENT OF ENVIRONMENTAL PROTECTION
Subpart C. PROTECTION OF NATURAL RESOURCES
ARTICLE III. AIR RESOURCES
CHAPTER 121. GENERAL PROVISIONS § 121.1. DEFINITIONS.
The definitions in section 3 of the act (35 P. S. § 4003) apply to this article. In addition, the following words and terms, when used in this article, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Account--The place in the NOx allowance tracking system where allowances are recorded including allowances held by a NOx affected source.
Account number--The identification number given by the NOx budget administrator to an account in which NOx allowances are held in the NOx allowance tracking system.
Acquiring account--The party in a NOx allowance transfer who obtains NOx allowances through purchase, trade, auction, gift or any other lawful means.
* * * * * Electric generating facility--For the purposes of NOx allowance requirements, any fossil fuel fired combustion facility of 15 MW or greater electrical generating capacity.
* * * * * Fossil fuel--Natural gas, petroleum, coal or any form of solid, liquid or gaseous fuel derived from this material.
* * * * * Fossil fuel fired--The combustion of fossil fuel or, if in combination with any other fuel, fossil fuel comprises 51% or greater of the annual heat input on a BTU basis.
* * * * * General account--An account in the NATS that is not a compliance account.
* * * * * Heat input--Heat derived from the combustion of fuel in a NOx affected source. The term does not include the heat derived from preheated combustion air, recirculated flue gas or exhaust from any other source or combination of sources.
* * * * * Indirect heat exchange combustion unit--Combustion equipment in which the flame or products of combustion, or both, are separated from any contact with the principal material in the process by metallic or refractory walls, including, but not limited to, steam boilers, vaporizers, melting pots, heat exchangers, column reboilers, fractioning column feed preheaters, reactor feed preheaters, fuel-fired reactors such as steam hydrocarbon reformer heaters and pyrolisis heaters.
* * * * * Maximum heat input capacity--The maximum steady state heat input under which a source may be operated as determined by its physical design and characteristics. Maximum heat input capacity is expressed in millions of British Thermal Units (MMBtu) per unit of time.
* * * * * NATS--NOx allowance tracking system --The computerized system used to track the number of NOx allowances held and used by any person.
NETS--NOx emissions tracking system --The computerized system used to track NOx emissions from NOx affected sources.
NOx affected source--Fossil fuel fired indirect heat exchange combustion units with a maximum rated heat input capacity of 250 MMBtu/hour or more and all fossil fuel fired electric generating facilities rated at 15 megawatts or greater or any other source that voluntarily opts to become a NOx affected source.
NOx allocation--Assignment by the Department of NOx allowances to a NOx affected source and recorded by the NOx budget administrator to a NOx allowance tracking system account.
NOx allowance--The limited authorization to emit 1 ton of NOx during a specified NOx allowance control period.
NOx allowance CEMS--NOx allowance continuous emissions monitoring system--For the purposes of the NOx allowance requirements, an emission monitoring system which continuously measures and records NOx emissions.
NOx allowance control period--The period beginning May 1 of each year and ending on September 30 of the same year, inclusive.
NOx allowance curtailment--For the purposes of NOx allowance requirements, a reduction in the hours of operation or in the rate of production.
NOx allowance deduction--The withdrawal of NOx allowances for permanent retirement by the NOx budget administrator from a NATS account.
NOx allowance transfer--The conveyance to another NATS account of one or more NOx allowances from one person to another by whatever means, including, but not limited to, purchase, trade, auction or gift.
NOx allowance transfer deadline--The deadline by which NOx allowances may be submitted for recording in a NOx affected source's compliance account for purposes of meeting NOx allowance requirements.
NOx budget--The total tons of NOx emissions which may be released from NOx affected sources.
NOx budget administrator--The person or agency designated by the Department as the NOx budget administrator of the NATS and the NETS.
OTC MOU NOx budget--The NOx budget is 93,392 tons during the 5-month period of May through September.
* * * * * Ozone Transport Commission Memorandum of Understanding (OTC MOU)--The memorandum of understanding (MOU) signed by representatives of ten states and the District of Columbia as members of the Ozone Transport Commission (OTC) on September 27, 1994.
* * * * * Replacement source--A new source which is replacing a NOx affected source where both sources are under common ownership located within this Commonwealth. The NOx affected source shall be deactivated or permitted only as an emergency standby unit to the replacement source with operation limited to a maximum of 500 hours per year following commencement of operation of the replacement source.
* * * * *
CHAPTER 123. STANDARDS FOR CONTAMINANTS (Editor's Note: The following §§ 123.101--123.121 are new and are printed in regular type to enhance readability.)
NOx ALLOWANCE REQUIREMENTS § 123.101. Purpose.
These §§ 123.102--123.121 and this section establish a NOx budget and an NOx allowance trading program for NOx affected sources for the purpose of achieving the health based ozone ambient air quality standard.
§ 123.102. Source NOx allowance requirements and NOx allowance control period.
(a) The owner or operator of each NOx affected source shall, not later than December 31 of each calendar year, hold a quantity of NOx allowances in the source's current year NATS account that is equal to or greater than the total NOx emitted from that source during that year's NOx allowance control period.
(b) The initial NOx allowance control period begins on May 1, 1999.
§ 123.103. General NOx allowance provisions.
(a) All NOx allowances shall be allocated, transferred or used as whole NOx allowances. To determine the number of whole NOx allowances, the number of NOx allowances shall be rounded down for decimals less than 0.50 and rounded up for decimals of 0.50 or greater.
(b) A NOx allowance does not constitute a security or other form of property.
(c) Allowances may not be used to meet the requirements of this subchapter prior to the year for which they are allocated.
(d) For the purposes of account reconciliation, NOx allowances allocated for the NOx allowance control period shall be deducted first, and remaining allowances if not otherwise designated by the source shall be deducted on a first-in, first-out basis.
§ 123.104. Source authorized account representative requirements.
(a) The owner or operator of an NOx affected source shall designate for each source account, one authorized account representative and one alternate. Initial designations shall be completed 30 days after _____(Editor's Note: The blank refers to the effective date 30 days after adoption of this proposal.) An authorized account representative may be replaced or, for a new NOx affected source, designated with the submittal of a new ''Account Certificate of Representation.''
(b) The ''Account Certificate of Representation'' shall be signed by the authorized account representative for the NOx affected source and contain, at a minimum, the following:
(1) Identification of the NOx affected source by plant name, state and fossil fired indirect heat transfer combustion unit number for which the certification of representation is submitted.
(2) The name, address, telephone and facsimile number of the authorized account representative and any alternate.
(3) A list of owners and operators of the NOx affected source.
(4) The verbatim statement, ''I certify that I, ______, (name) was selected as the Authorized Account Representative by an agreement binding on the owners and operators of the NOx affected source legally designated as ______.'' (name of facility)
(c) The alternate authorized account representative shall have the same authority as the authorized account representative. Correspondence from the NATS NOx budget administrator shall be directed to the authorized account representative.
(d) Only an authorized account representative or the designated alternate may request transfers of NOx allowances in a NATS account. The authorized account representative shall be responsible for all transactions and reports submitted to the NATS.
(e) Authorized account representative designation or changes become effective upon the logged date of receipt of a complete application by the NOx budget administrator from the Department. The NATS NOx budget administrator will acknowledge receipt and the effective date of the changes by written correspondence to the authorized account representative.
§ 123.105. NATS provisions.
(a) The NATS account records shall constitute an NOx affected source's NOx allowance holdings.
(b) Transfer, use and NOx allowance deduction of NOx allowances become effective only after entry in the tracking system account records.
§ 123.106. NOx allowance transfer protocol.
(a) NOx allowances may be transferred at any time between January 31 and December 31 in accordance with § 123.107 (relating to NOx allowance transfer procedures).
(b) NOx allowances shall be held by the originating account at the time of the transfer request.
(c) A transfer request shall be filed by the person named as the authorized account representative for the originating account.
(d) The transfer is effective as of the date the NOx budget administrator completes certification of the transfer.
§ 123.107. NOx allowance transfer procedures.
NOx allowances may be transferred under the following conditions:
(1) The transfer request shall be documented on a form, or electronic media, approved by the Department. The following information, at a minimum, shall be provided:
(i) The account number identifying both the originating account and the acquiring account.
(ii) The name and address associated with the owners of the originating account and the acquiring account.
(iii) The identification of the serial numbers for each NOx allowance being transferred.
(2) The transfer request shall be authorized and certified by the authorized account representative for the originating account. To be considered correctly submitted, the request for transfer shall include the following statement of certification:
''I am authorized to make this submission on behalf of the owners and operators of the NOx affected source and I hereby certify under the penalty provisions contained in the Air Pollution Control Act, that I have personally examined the foregoing and am familiar with the information contained in this document, and all attachments, and that based on my inquiry of those individuals immediately responsible for obtaining the information, I believe the information is true, accurate and complete. I am aware that there are significant penalties for submitting false information, including possible fines and imprisonment.''The authorized account representative for the originating account shall provide a copy of the transfer request to each owner or operator of the NOx affected source.
§ 123.108. Source emissions monitoring requirements.
The owner and operator of each NOx affected source shall comply with the following requirements:
(1) NOx emissions from each NOx affected source shall be monitored as specified by this section and in accordance with the procedures contained in the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(2) The owner or operator of each NOx affected source shall submit to the Department and the NOx Budget Administrator a monitoring plan in accordance with the procedures outlined in the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(3) New and existing unit emission monitoring systems, as required and specified by this section, shall be installed and be operational and shall have met all of the certification testing requirements in accordance with the procedures and deadlines specified in the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(4) Monitoring systems are subject to initial performance testing and periodic calibration, accuracy testing and quality assurance/quality control testing as specified in the document titled ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.'' Notwithstanding this provision, Non-Part 75 Sources which have Department approved NOx CEMS reporting in accordance with § 139.101 (relating to general requirements) in units of pounds of NOx per hour shall complete the periodic self-audits listed in the quality assurance section of § 139.102(3) (relating to references) at least annually and no sooner than 6 months following the previous periodic self-audit. If practicable, the audit shall be conducted between April 1 and May 31.
(5) During a period when valid data is not being recorded by devices approved for use to demonstrate compliance with this subchapter, missing or invalid data shall be replaced with representative default data in accordance with 40 CFR Part 75 (relating to continuous emission monitoring) and the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.'' Notwithstanding this provision, Non-Part 75 Sources which have Department approved NOx CEMS reporting in accordance with § 139.101 in units of pounds of NOx per hour shall report this data to the NETS and shall continue report submissions as required under Chapter 139 (relating to sampling and testing) to the Department.
(6) Sources subject to 40 CFR Part 75 shall demonstrate compliance with this section with a certified Part 75 monitoring system.
(i) If the source has a flow monitor certified under Part 75, NOx in pounds per hour shall be determined using the Part 75 NOx CEMS and the flow monitor. The NOx emission rate in pounds per million Btu shall be determined using the procedure in 40 CFR Part 75 Appendix F, Section 3 (relating to procedures for NOx emission rate). The hourly heat input shall be determined by using the procedures in 40 CFR Part 75 Appendix F, Section 5 (relating to procedures for heat input). NOx in pounds per hour shall be determined by multiplying the NOx per million Btu by the Btus per hour.
(ii) If a Part 75 source does not have a certified flow monitor, but does have a certified NOx CEMS, NOx emissions in pounds per hour emissions shall be determined by using the NOx CEMS to determine the NOx emission rate in pounds per million BTU and the heat input shall be determined by using the procedures in 40 CFR Part 75 Appendix D (relating to optional SO2 emissions data protocol for gas-fired and oil-fired units). NOx in pounds per hour shall be determined by multiplying the NOx per million Btu and Btus per hour.
(iii) If the owner or operator of a source uses the procedures in 40 CFR Part 75, Appendix E (relating to option NOx emissions estimation protocol for gas-fired peaking units and oil-fired peaking units) to determine the NOx emission rate, NOx emissions in pounds per hour shall be determined by multiplying the NOx emission rate determined by using the Appendix E procedures times the heat input determined using the procedures in 40 CFR Part 75, Appendix D.
(iv) If the owner or operator of a source uses the procedures in 40 CFR Part 75, Appendix E to determine NOx emission rate, NOx emissions in pounds per hour shall be determined using the alternative monitoring method approved under 40 CFR Part 75 Subpart E (relating to alternative monitoring systems) and the procedures contained in the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(v) If the source emits to common or multiple stacks, or both, the source shall monitor emissions according to the procedures contained in the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(7) Sources not subject to 40 CFR Part 75 and not meeting the requirements of paragraph (11) shall meet the monitoring requirements of this section by:
(i) Preparing and obtaining approval of a monitoring plan as specified in the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(ii) Determining NOx emission rate and heat input using a methodology specified in paragraphs (8) and (9) respectively or determining NOx concentration and flow using a methodology specified in paragraphs (8) and (9) respectively.
(iii) Calculate NOx emissions in pounds per hour using the procedure described in paragraph (11).
(8) The owner or operator of any NOx affected source which is not subject to 40 CFR Part 75, may implement an alternative emission rate monitoring method. The NOx emission rate in pounds per million Btu or NOx concentration in ppm shall be determined using one of the following methods:
(i) The owner or operator of any NOx affected source that has a maximum rated heat input capacity of 250 MMBtu/hr or greater which is not a peaking unit as defined in 40 CFR 72.2 (relating to definitions), which combusts any solid fuel or is required to or has installed a NOx CEMS for the purposes of meeting either the requirements of 40 CFR Part 60 (relating to standards of performance for new stationary sources) or any other Department or Federal requirement, shall use that NOx CEMS to meet the requirements of this section. If the owner or operator of the unit monitors flow according to the provisions of paragraph (9) the owner or operator may use the NOx CEMS to measure NOx in ppm, otherwise the NOx CEMS shall be used to measure the emission rate in lb/MMBtu. The owner or operator shall install, certify, operate and maintain this monitor in accordance with the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.'' Any time an NOx CEMS cannot be used to report data for this program because it does not meet the requirements of the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program,'' missing data shall be substituted using the procedures in that document. In addition, the NOx CEMS shall meet the initial certification requirements contained in the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(ii) The owner or operator of a source that is not required to have a NOx CEMS, may request approval from the Department to use any of the following appropriate methodologies to determine the NOx emission rate:
(A) Boilers or turbines may use the procedures contained in 40 CFR Part 75 Appendix E to measure NOx emission rate in pounds/MMBtu, consistent with the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(B) Owners and operators of combustion turbines that are subject to this section and §§ 123.101--123.107 and 123.109--123.121 may also meet the monitoring requirements of this section and §§ 123.101--123.107 and 123.109--123.121 by using default emission factors to determine NOx emissions in pounds per hour as follows:
(I) For gas-fired turbines, the default emission factor is 0.7 pounds NOx per MMBtu.
(II) For oil-fired turbines, the default factor is 1.2 pounds NOx per MMBtu.
(III) Owners and operators of gas turbines or oil-fired turbines may perform testing, consistent with the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program,'' to determine unit specific maximum potential NOx emission rates.
(C) Owners and operators of boilers that are subject to this section and §§ 123.101--123.107 and 123.109--123.121 may meet the monitoring requirements of this section and §§ 123.101--123.107 and 123.109--123.121 by using a default emission factor of 2.0 pounds per MMBtu if they burn oil and 1.5 lb/MMBtu if they burn natural gas to determine NOx emissions in pounds per hour, or may perform testing consistent with the provisions in the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program,'' to determine a unit specific maximum potential emission rate.
(9) The owner or operator of a source which is not subject to 40 CFR Part 75, and not meeting the requirements of paragraph (11), shall determine heat input in MMBtu or flow in standard cubic feet per hour using one of the following methods:
(i) The owner or operator of a source may install and operate a flow monitor according to the provisions of 40 CFR Part 75.
(A) The owner or operator may either use the flow CEMS to monitor stack flow in standard cubic feet per hour and a NOx CEMS to monitor NOx in ppm.
(B) In the alternative, the owner or operator may use the flow CEMS and a diluent CEMS to determine heat input in MMBtu and a NOx CEMS to monitor NOx in lbs/MMBtu.
(ii) The owner or operator of a source that does not have a flow CEMS may request approval from the Department to use any of the following methodologies to determine their heat input rate:
(A) The owner or operator of a source may determine heat input using a flow monitor and a diluent monitor meeting the requirements of 40 CFR Part 75 and the procedures in 40 CFR Part 75, Appendix F Section 5.
(B) The owner or operator of a source that combusts only oil or natural gas may determine heat input using a fuel flow monitor meeting the requirements of 40 CFR Part 75 Appendix D and the procedures of 40 CFR Part 75, Appendix F Section 5.
(C) The owner or operator of a source that combusts only oil or natural gas which uses a unit specific or generic default NOx emission rate, may determine heat input by measuring the fuel usage for a specified frequency of longer than an hour. This fuel usage shall then be reported on an hourly basis by apportioning the fuel based on electrical load in accordance with the following formula:
(D) The owner or operator of a source that combusts any fuel other than oil or natural gas, may request permission from the Department to use an alternative method of determining heat input. Alternative methods include:
(I) Conducting fuel sampling and analysis and monitoring fuel usage.
(II) Using boiler efficiency curves and other monitored information such as boiler steam output.
(III) Any other methods approved by the Department and which meet the requirements contained in the ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(E) Alternative methods for determining heat input are subject to both initial and periodic relative accuracy, and quality assurance testing as prescribed by ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(10) If the owner or operator determines NOx emission rate in pounds per million Btu in accordance with paragraph (6)(iii) and heat input rate in MMBtu per hour in accordance with paragraph (7), the two values shall be multiplied to result in NOx emissions in pounds per hour. If the owner or operator determines NOx emissions in ppm and flow in standard cubic feet per hour, they may use the procedures in ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program'' to determine NOx emissions of this rule in pounds per hour. This value shall be reported to the NETS.
(11) Non-Part 75 sources which have Department approved NOx CEMS reporting in accordance with § 139.101 (relating to general requirements) in units of pounds of NOx per hour may meet the monitoring requirements of paragraph (7); or shall comply with the following:
(i) Calibration standards used shall be in accordance with both 40 CFR Part 75, Appendix A, Section 5.2 (relating to concentrations) and with § 139.102(3) (relating to references).
(ii) Testing listed in 40 CFR Part 75, Appendix A, Section 6.4 (relating to cycle time/response time test) not already conducted as part of the response time testing listed in § 139.102(3) shall be conducted.
(iii) Bias testing of the relative accuracy test data in accordance with the procedures in 40 CFR Part 75, Appendix A, Section 6.5 (relating to relative accuracy and bias tests) shall be conducted. Data from previously conducted relative accuracy testing may be used to meet this requirement.
(iv) Adjustment of data due to failure of bias test (in accordance with the procedures in 40 CFR Part 75, Appendix A, Section 7.6.5 (relating to bias adjustment) and Appendix B, Section 2.3.3 (relating to bias adjustment factor)) or relative accuracy greater than 10% but less than or equal to 20% (by multiplying the NOx emissions rate by 1.1), or both, is to be conducted only for reporting to the NETS NOx budget administrator for purposes of this section.
(v) A Data Acquisition Handling System (DAHS) verification demonstrating that both the missing data procedures and formulas as applicable to this section shall be conducted.
§ 123.109. Source emissions reporting requirements.
(a) The authorized account representative for each NOx affected source shall submit to the NETS NOx Budget NOx budget administrator, electronically in a format which meets the requirements of the EPA's Electronic Data Reporting (EDR) convention, emissions and operations information for the second and third calendar quarters of each year in accordance with the document titled, ''Guidance for Implementation of Emission Monitoring Requirements for the NOx Budget Program.''
(b) Upon permanent shutdown, NOx affected sources may be exempted from the requirements of this section after receiving written Department approval of a request filed by the authorized account representative for the NOx affected source which identifies the source and date of shutdown.
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