RULES AND REGULATIONS
Title 25--ENVIRONMENTAL PROTECTION
ENVIRONMENTAL QUALITY BOARD
[25 PA. CODE CHS. 121 AND 123]
Nitrogen Oxides Allowance Requirements
[27 Pa.B. 5683] The Environmental Quality Board (Board) by this order amends Chapters 121 and 123 (relating to general provisions; and standards for contaminants) as set forth in Annex A. The final-form regulations 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 order was adopted by the Board at its meeting of September 16, 1997.
A. Effective Date
These 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. Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (voice users). These regulations are available electronically through the Department of Environmental Protection (Department) 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 and Summary
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 (VOCs), 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. All states in the Northeast Ozone Transport Region, except for Vermont, have, since 1990, experienced levels of ozone during the months of May through September in excess of the National ambient air quality standard.
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 combined 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 combined 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 combined 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 combined 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 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. 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 to effect cost efficient compliance with the cap.
To ensure that the OTC states included common elements in the rules implementing the OTC MOU, the states worked through NESCAUM, 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 a 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, 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 desegregated 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 1 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 final-form regulations are part of the Commonwealth's SIP to meet the reasonable further progress and attainment requirements of the Clean Air Act. In addition, the final-form regulations 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)). A SIP amendment implementing the Stage II comparability provisions will be submitted to the EPA at a later date.
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 Phase II of the Northeast Ozone Transport Commission's 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.
The AQTAC has been intimately involved in the allocation of allowances to budgeted sources and the development of both the model rule and these final-form regulations. On July 22, 1997, the AQTAC recommended that the Department proceed with the final-form regulations including the allocation methodology for individual sources.
The amendments establish definitions for the following terms: ''account,'' ''account number,'' ''acquiring account,'' ''compliance 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),'' ''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 rulemaking 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 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 procedure). The compliance requirements for sources and the remedy in the event the sources fail to comply are 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 NATS 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.
Because the NOx affected sources are all ''major sources'' for purposes of the new source review program contained in 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. If the audit identifies problems with the program, the program regulations will be amended to address those problems.
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.
E. Summary of Comments and Responses on the Proposed Rulemaking
The Department received 39 sets of comments on the regulatory proposal. The following discussion summarizes the major issues and the Department's response.
Many commentators raised questions and concerns about both the allocations of allowances to independent power producers in Appendix A and the special provisions for independent power producers contained in § 123.121 (relating to additional requirements for independent power procedures). The Department has incorporated the recommendation of the AQTAC for allocating allowances to independent power producers. In addition, based on the comments received, the Department has deleted the provisions of § 123.121 related to independent power producers. This group of sources are the best controlled NOx affected units subject to this program and provide additional environmental benefits based on the fuel used to fire these units. The Department does not believe that restricting these units' ability to use allowances is appropriate. The AQTAC recommended that the Department retain § 123.21.
In addition, the Department strongly disagrees with the assertion by a number of commentators that the allocations made to the independent power producers were taken from other sources. No one has a right to emit air pollutants into the outdoor atmosphere. The Department, through these final-form regulations, is establishing emission limitations for NOx affected sources using a cap and trade program. Allowances made to the sources are a limited authorization to emit NOx and do not represent a property right.
A number of commentators expressed concerned about the monitoring requirements and particularly the differences between the monitoring required under this program and the monitoring required by Chapter 139 (relating to sampling and testing). The Department does not intend to require separate data handling systems or other monitoring duplications for NOx affected sources in order to meet monitoring provisions. To make this clear, the Department has modified § 123.108 to require compliance with the monitoring provisions of this rule in a manner consistent with Chapter 139. The Department will work with NOx affected sources to address any data reporting and handling issues that arise.
A number of commentators provided specific information about either the 1990 inventory data or the allowance calculations applicable to the sources. The Department has modified the inventory and allocations as appropriate in Appendix A. In addition, the Department added additional provisions in § 123.115 (relating to initial NOx allowance NOx allocations) to address comments made by Duquesne Light Company related to two of their facilities.
A number of commentators expressed concern about the audit program. Specifically, they were concerned that the Department could modify the allocation and other components of the program without a regulatory amendment. In response to these comments, the Department has revised the audit provisions in § 123.120 to delete the authority to modify the allocations and program requirements without a regulatory change.
Most commentators supported the opt-in provisions in § 123.116. However, some object to the provision concerning the shutdown or curtailment of operations. The Department has retained the opt-in provisions contained in the proposed rule.
A number of commentators suggested that allowances from shutdown NOx affected sources be made available to new NOx affected sources. The Department has not implemented that recommendation. The recommendation would be inconsistent with the OTC model rule and would have a negative impact on the market based trading approach. The Department treats shutdown sources for NOx allowances in the same way as under the new source review program for emission reduction credits.
A number of commentators suggested that the Department follow the OTC model rule procedures for approving bonus allowances. The Department has modified the language in § 123.119 to incorporate the model rule provisions and to make it clear that bonus allowances can only be generated for reductions that go beyond otherwise applicable requirements.
The Department received a number of comments concerning the banking provisions in § 123.110. Many in the utility industry opposed the flow control requirements in the regulation and proposed an alternative mechanism. Comments from environmental groups suggested that the Department establish daily emission caps and limit multi-year banking. They assert that unused allowances created in cool summers could be used to allow emissions in hot summers when ozone exceedances are more likely. They were concerned that the banking provisions and lack of a daily cap seriously undermined the environmental benefits of this rule. The Department has retained the banking provisions and has made a clarifying amendment to § 123.110.
Several commentators objected to the enforcement provisions of the regulations. These final-form regulations provide a great detail of flexibility for sources to comply with the requirements. Consequently, sources operating in a conscientious fashion should not have compliance problems. The enforcement provisions provide a significant deterrent to sources and will enhance the integrity of the program. These enforcement provisions which are consistent with the model rule, have been retained. The AQTAC recommended relaxation of these provisions.
A number of commentators raised questions or concerns about the relationship between NOx allowances and emission reduction credits. In addition, some commentators asserted that the Department's proposal was too restrictive while others believe that it allowed double counting. The Department has modified § 123.118 to clarify the intent of this section and to make it clear that double counting cannot occur.
The EPA asserted that the economic incentive policy guidelines are applicable to this program. They requested a demonstration that the regulations met these program guidelines. The Department plans to continue working with the EPA to address this issue.
The EPA asked that a formal SIP for Stage II comparability be developed. The Department plans to develop a Stage II comparability SIP submission in the near future.
The Department received a number of comments concerning the discussion in the Preamble to the proposal related to implementation of the program. Some commentators believe the program should not be implemented until similar programs are required in other states; other commentators believe the program should be implemented independent of other state requirements. Implementation of this program is necessary to meet the Department's commitments to ozone attainment in both Philadelphia and Pittsburgh. This regulatory program was one of the core programs recognized by both the Southwest and Southeast Ozone Stakeholder Working Groups as necessary for Pennsylvania to attain the NAAQS for ozone. Consequently, the Department is proposing that these amendments become final upon publication in the Pennsylvania Bulletin.
In addition to these major substantive changes, the Department has made a number of clarifying amendments to §§ 121.1, 123.102--123.106 and 123.108--123.119.
F. Benefits, Cost and Compliance
Executive Order 1996-1 requires a cost/benefit analysis of the amendments. Overall, the citizens of this Commonwealth will benefit from the 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 final-form regulations are expected to result in public health cost savings of $35--730 million dollars per year from ozone reductions and $120 million dollars 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 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, 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, the rule 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 the rule 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, increased monitoring 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 final-form regulations. 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 final-form regulations 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 amendments to IRRC and the Chairpersons of the Senate and House Environmental Resources and Energy Committees. In compliance with section 5(b.1) of the Regulatory Review Act, the Department also provided IRRC and the Committees with copies of the comments, as well as other documentation.
In preparing these final-form regulations, the Department has considered the comments received from IRRC and the public. These comments are addressed in the comment and response document and Section E of this Preamble. The Committees did not provide comments on the proposed rulemaking.
These final-form regulations were deemed approved by the House and Senate Environmental Resources and Energy Committee on October 7, 1997. IRRC met on October 9, 1997, and approved the final-form regulations in accordance with section 5(c) of the Regulatory Review Act.
J. Findings of the Board
The Board finds that:
(1) Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P.S. §§ 1201 and 1202) and regulations promulgated thereunder in 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law and all comments were considered.
(3) These final-form regulations do not enlarge the purpose of the proposal published at 27 Pa.B. 1829 (April 12, 1997).
(4) These final-form regulations are necessary and appropriate for administration and enforcement of the authorizing acts identified in Section C of this Preamble and are reasonably necessary to achieve and maintain the NAAQS for ozone.
K. Order of the Board
The Board, acting under the authorizing statutes, orders that:
(a) The regulations of the Department, 25 Pa. Code Chapters 121 and 123, are amended by amending § 121.1 and by adding §§ 123.101--123.120 and Appendix A to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(b) The Chairperson of the Board shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General for review and approval as to legality and form, as required by law.
(c) The Chairperson shall submit this order and Annex A to IRRC and the Senate and House Environmental Resources and Energy Committees as required by the Regulatory Review Act.
(d) The Chairperson of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(e) This order shall take effect immediately upon publication.
(Editor's Note: For a document amending § 121.1, amended in this document, see 27 Pa. B. 5601 (November 1, 1997.) Proposals to amend § 121.1, amended in this document remain outstanding at 27 Pa.B. 1822 (April 12, 1997), 27 Pa.B. 4325 (August 23, 1997) and 27 Pa.B. 4340 (August 23, 1997. The addition of § 123.121, included in the proposal at 27 Pa.B. 1829.)
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 27 Pa.B. 5561 (October 25, 1997).)
Fiscal Note: Fiscal Note 7-314 remains valid for the final adoption of the subject regulations.
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 another lawful means.
* * * * * Compliance account--The place in the NOx allowance tracking system where allowances are recorded and held by a NOx affected source.
* * * * * 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 another 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--A fossil fuel fired indirect heat exchange combustion unit 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 NATS 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 as listed in Appendix A.
NOx budget administrator--The person or agency designated by the Department as the NOx budget administrator of the NATS and the NETS.
* * * * * OTC MOU--Ozone Transport Commission Memorandum of Understanding--The memorandum of understanding signed by representatives of ten states and the District of Columbia as members of the Ozone Transport Commission 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
NOx ALLOWANCE REQUIREMENTS § 123.101. Purpose.
Sections 123.102--123.120 and this section establish a NOx budget and a 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 or each NOx affected source shall, by December 31 of each calendar year, hold a quantity of NOx allowances meeting the requirements of § 123.110(a) (relating to source compliance requirements) in the source's current year NATS account that is equal to or greater than the total NOx emitted from the 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) 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.
(e) NOx allowances may only be used to comply with §§ 123.101, 123.102, 123.104--123.120 and this section (relating to NOx allowance requirements).
§ 123.104. Source authorized account representative requirements.
(a) The owner or operator of a NOx affected source shall designate for each source account, one authorized account representative and one alternate. Initial designations shall be submitted to the Department by December 1, 1997. 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 the alternate.
(3) A list of owners and operators of the NOx affected source.
(4) The verbatim statement, ''I certify that I, _____ , was selected as the Authorized Account Representative (name) 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 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 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 a NOx affected source's NOx allowance holdings.
(b) The transfer, use and deduction of NOx allowances become effective only after entry in the tracking system account records.
(c) Any person may hold an account in the NATS.
§ 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 jointly with the NOx budget administrator and the Department 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 posts the transfer of the allowances on the NATS.
§ 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'' in a manner consistent with Chapter 139 (relating to sampling and testing).
(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 gen-eral 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 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 optional 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, Subpart E (relating to alternative monitoring systems) 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 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) Calculating NOx emissions in pounds per hour using the procedure described in paragraph (10).
(8) The owner or operator of a 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 a 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 continuous emissions monitoring system (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 another 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 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.'' When a 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--123.120 (relating to NOx allowance requirements) may also meet the monitoring requirements of this section and §§ 123.101--123.107 and 123.109--123.120 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.
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