PROPOSED RULEMAKING

ENVIRONMENTAL
QUALITY BOARD

[25 PA. CODE CHS. 123 AND 145]

Interstate Ozone Transport Reduction

[29 Pa.B. 1319]

   The Environmental Quality Board (Board) proposes amendments to Chapter 123 (relating to standards for contaminants) and proposes to adopt a new Chapter 145 (relating to interstate ozone transport reduction) to read as set forth in Annex A.

   The proposed amendments establish a program to limit the emission of nitrogen oxides (NO_x) from fossil fired combustion units with rated heat input capacity of 250 MMBtu per hour or more and electric generating facilities of 15 megawatts or greater. This program which is scheduled to begin in 2003 would replace the existing NO_x allowance requirements contained in Chapter 123. The proposed amendments also establish emission limitations for NO_x emissions from stationary reciprocating internal combustion engines and cement manufacturing operations.

   This proposal was adopted by the Board at its meeting of February 16, 1999.

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 Director, Bureau of Regulatory 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). The proposed regulations are available electronically through the Department of Environmental Protection's (Department) website (http://www.dep.state.pa.us).

C.  Statutory Authority

   This proposed action is being taken under the authority of section 5(a)(1) of the Air Pollution Control Act (APCA) (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

   In the 1990 amendments to the Federal Clean Air Act (CAA), 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 air pollution.

   Ozone is not directly emitted by pollution sources, but is created as a result of the chemical reaction of NO_x 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 OTC, 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 (NAAQS).

   To address the ozone problem, section 182 of the Federal Clean Air Act (42 U.S.C.A. § 7511a) requires that, for areas which exceed the NAAQS for ozone, states must develop and implement reasonably available control technologies (RACT) for existing major stationary sources emitting NO_x and VOCs. Because the Commonwealth is included in the OTC, these RACT requirements are applicable throughout the State. The Commonwealth adopted regulations implementing the RACT requirements at 24 Pa.B. 459 (January 15, 1994). Implementation of RACT reductions was not sufficient to allow the Commonwealth and other OTC states to achieve the ozone NAAQS.

   Because NO_x from large fossil fired combustion units is a major contributor to regional ozone pollution, the OTC member states, including the Commonwealth, proposed development of a regional approach to address NO_x emissions. This regional approach resulted in a model rule applicable to ''NO_x affected sources.'' NO_x affected sources are fossil-fired combustion units with a rated capacity of 250 MMBtus per hour or more and electric generating units of 15 megawatts or greater. This regional approach was adopted by the Commonwealth at 27 Pa.B. 5683 (November 1, 1997). These NO_x allowance requirements in §§ 123.101--123.120, establish an OTC region-wide market based ''cap and trade'' program. The ''cap and trade'' program sets a regulatory limit on mass emissions from the NO_x affected sources, allocates allowances (the limited authorization to emit 1 ton of NO_x from May 1 through September 30) to the sources authorizing emissions up to the regulatory limit, and permits trading of allowances to effect cost efficient compliance with the cap. This program is designed to effectuate least cost NO_x emission reductions for the years 1999 through 2002.

   As additional air quality modeling and analysis was developed, it became apparent that reductions of NO_x emissions in the OTC states alone would not result in attainment of the NAAQS along the eastern seaboard (including the Philadelphia Ozone Nonattainment Area). In 1995, the Ozone Transport Assessment Group (OTAG) was formed by the Environmental Council of States and EPA. OTAG's express goal was to ''identify and recommend a strategy to reduce transported ozone and its precursors which, in combination with other measures, will enable attainment and maintenance of the National Ambient Ozone Standard in the OTAG region.'' OTAG was composed of the 37 eastern most states and included participation by the Environmental Protection Agency (EPA), industry and environmental groups. OTAG undertook a comprehensive modeling effort to evaluate the impact on ozone formation and transport resulting from imposition of various emission reduction strategies. The modeling demonstrated that large fossil-fired combustion units in 22 of the 37 states significantly contributed to ozone nonattainment and will prevent attainment and maintenance of the ozone NAAQS.

   As a result of both the OTAG analysis and independent analysis conducted by the Commonwealth and other northeastern states, on August 14, 1997, Governor Ridge filed a Petition with EPA Administrator Browner for abatement of excess emissions under section 126(b) of the Clean Air Act (42 U.S.C.A. § 7426(b)). Pennsylvania's Petition requested a finding that large fossil fired combustion units and electric generating units in midwestern and southern states significantly contributed to nonattainment of the ozone NAAQS in this Commonwealth. The Commonwealth requested that the Administrator of the EPA establish emission limitations for these large NO_x emitters. Specifically, the Commonwealth petitioned the Administrator to establish a cap and trade compliance system to provide for the most cost effective emission reductions. Seven other northeastern states filed similar petitions with the EPA. Final action on the petitions is planned for April of 1999.

   Because the EPA's analysis demonstrates that 22 states and the District of Columbia significantly contributed to nonattainment of the ozone NAAQS in other states, the EPA is requiring those 22 states and the District of Columbia to modify their State Implementation Plans (SIPs) to prevent this significant contribution. This ''SIP call'' establishes a state NO_x budget and requires states to develop mechanisms to ensure that the budget is achieved beginning in 2003. One of the mechanisms proposed by the EPA to meet the budget is the cap and trade program for large fossil fired combustion boilers and electric generating units greater than 25 megawatts. The EPA has developed a model cap and trade rule similar to the OTC model rule. The EPA's proposal would extend the market for developing least cost controls to the 22 states and District of Columbia. States are required, by EPA's final SIP call rule, to establish NO_x emission programs on or before September 30, 1999. If states fail to establish SIP based programs, EPA will impose a Federal Implementation Plan (FIP) under section 110 of the Clean Air Act (42 U.S.C.A. § 7410).

   The Commonwealth's proposed regulations in Chapter 145 are designed to meet the requirements of the NO_x SIP call. The Commonwealth used the EPA's model cap and trade program rule found in 40 CFR Part 96, and their proposed rule for regulating stationary reciprocating internal combustion engines and cement manufacturing proposed in 63 FR 56394, as the basis for proposed Chapter 145.

   The proposed amendments also represent the Commonwealth's continuing commitment to do its fair share in reducing ozone transport both within this Commonwealth and throughout the northeast.

E.  Summary of the Regulatory Revisions

   The proposed new Chapter 145 Interstate Ozone Transport Reduction contains three subchapters. Subchapter A (relating to NO_x budget trading program) establishes the NO_x budget trading program for fossil fired combustion boilers with a maximum design heat input greater than or equal to 250 million MMBtu per hour and electric utility generators with a rated capacity greater than or equal to 15 megawatts. Subchapter B (relating to emissions of NO_x from stationary reciprocating internal combustion engines) establishes requirements for emissions of NO_x from stationary reciprocating internal combustion engines. Subchapter C (relating to emissions of NO_x from cement manufacturing) establishes requirements for emissions of NO_x from cement manufacturing. Finally, the proposal modifies § 123.115 (relating to initial NO_x allowance NO_x allocations) and adds § 123.121 (relating to NO_x allowance program transition) to eliminate the existing NO_x allowance requirements in 2003.

   Subchapter A establishes definitions for the following terms: ''account certificate of representation,'' ''account number,'' ''acid rain emissions limitation,'' ''Administrator,'' ''allocate or allocation,'' ''automated data acquisition and handling system (DAHS),'' ''boiler,'' ''CAA,'' ''combined cycle system,'' ''combustion turbine,'' ''commence commercial operation,'' ''commence operation,'' ''common stack,'' ''compliance certification,'' ''compliance account,'' ''continuous emission monitoring system (CEMS),'' ''control period,'' ''emissions,'' ''Energy Information Administration,'' ''excess emissions,'' ''fossil fuel,'' ''fossil fuel-fired,'' ''general account,'' ''generator,'' ''heat input,'' ''life-of-the-unit, firm power contractual arrangement,'' ''maximum design heat input,'' ''maximum potential hourly heat input,'' ''maximum potential NO_x emission rate,'' ''maximum rated hourly heat input,'' ''monitoring system,'' ''most stringent State or Federal NO_x emissions limitation,'' ''nameplate capacity,'' ''Nontitle V permit,'' ''NO_x allowance,'' ''NO_x allowance deduction or deduct NO_x allowances,'' ''NO_x allowances held or hold NO_x allowances,'' ''NO_x allowance tracking system,'' ''NO_x allowance tracking system account,'' ''NO_x allowance transfer deadline,'' ''NO_x authorized account representative,'' ''NO_x budget administrator,'' ''NO_x Budget emissions limitation,'' ''NO_x budget opt-in permit,'' ''NO_x budget opt-in source,'' ''NO_x budget permit,'' ''NO_x budget source,'' ''NO_x budget trading program,'' ''NO_x budget unit,'' ''operating,'' ''operator,'' ''opt-in,'' ''overdraft account,'' ''owner,'' ''receive or receipt of,'' ''recordation, record or recorded,'' ''reference method,'' ''serial number,'' ''source,'' ''state trading program budget,'' ''submit or serve,'' ''Title V operating permit,'' ''Title V operating permit regulations,'' ''ton or tonnage,'' ''unit,'' ''unit load,'' ''unit operating day,'' ''unit operating hour or hour of unit operation'' and ''utilization.'' These defined terms are used in the substantive provisions of Subchapter A.

   Subchapter A implements the EPA NO_x SIP call using the framework from the EPA's model rule developed and promulgated at 40 CFR Part 96. The Pennsylvania cap and trade rule identifies the facilities subject to regulation in § 145.4 (relating to applicability) and describes the process for NO_x allowance allocation for the May 1 through September 30 control periods in § 145.42 (relating to NO_x allowance allocations). The section also describes the accounting process for deposit, use and transfer of allowances between NO_x budget sources in §§ 145.50--145.62. This includes the compliance requirements in § 145.54 (relating to compliance). The section also establishes a process for sources not otherwise covered to ''opt in'' to the provisions of the rule. The opt-in process is described in §§ 145.80--145.88.

   Monitoring recordkeeping and reporting requirements for sources covered by the rule are contained in §§ 145.70--145.76. In general, the monitoring requirements are consistent with the provisions for the existing NO_x budget rule and the EPA acid rain requirements at 40 CFR Part 75 (relating to continuous emission monitoring). Chapter 145, like the existing NO_x cap and trade program in Chapter 123, will be implemented through the Department's permitting program. The permit requirements are contained in §§ 145.20--145.25. In general, the Department plans to integrate this trading rule into its existing permitting program.

   Emission reduction credit provisions consistent with the existing requirements in Chapters 123 and 127 are proposed in § 145.90 (relating to emission reduction credit provisions).

   These proposed amendments differ from the existing NO_x allowance requirements in Chapter 123 and the EPA model rule in a number of ways. First, this rule requires emission reductions greater than the reductions required by Chapter 123. Second, under the existing program in Chapter 123, individual NO_x affected sources are listed in Appendix E along with the number NO_x allowances available. Chapter 145, on the other hand, establishes a formula for calculation of NO_x allowances in § 145.42. This formula is based on an emission limitation expressed as an emission rate times the heat input or usage of the NO_x budget unit. The heat input number is derived from actual data submitted by the NO_x budget source.

   The proposed Federal rule is also different than the proposed Chapter 145 program and the existing NO_x allowance requirements. The Federal rule is applicable only to generating units of 25 megawatts or greater. Proposed Chapter 145, consistent with the existing program in Chapter 123, includes electric generating units of 15 megawatts or greater. The proposed Chapter 145 does not contain the exemption included in the Federal rule allowing certain facilities to limit emissions to avoid being subject to the cap and trade program. Finally, in § 145.42(b), proposed Chapter 145 establishes an emission rate for allowance calculation at the level contained in the EPA model program. However, Chapter 145 would reduce this emission rate if the source has a low emission rate established in a permit. These provisions provide additional assurance that the Commonwealth will meet the NO_x budget contained in the Section 110 SIP call. These provisions also provide additional protection as the Commonwealth moves toward developing requirements to meet the new 8-hour ozone standard.

   Subchapter B contains definitions for the following terms: ''diesel engine,'' ''dual fuel engine,'' ''emergency standby engine,'' ''engine rating,'' ''higher heating value (HHV),'' ''lean burn engine,'' ''maintenance operation,'' ''output,'' ''peak load,'' ''permitted capacity factor,'' ''rich-burn engine,'' ''stationary internal combustion engine,'' ''stoichiometric air/fuel ratio'' and ''unit.'' These terms are used in the substantive provisions of Subchapter B.

   Section 145.103 (relating to standard requirements) establishes emission rates for four categories of stationery reciprocating internal combustion engines. This subchapter also establishes compliance reporting, monitoring and recordkeeping requirements in §§ 145.104 and 145.105 (relating to compliance determination; and reporting, monitoring and recordkeeping).

   Subchapter C contains definitions of the following terms: ''clinker,'' ''long dry kiln,'' ''long wet kiln,'' ''Portland cement,'' ''Portland cement kiln,'' ''precalciner kiln'' and ''preheater kiln.'' These terms are used in the substantive provisions of this subchapter.

   Section 145.143 (relating to standard requirements) establishes emission limitations for four types of cement kilns. Section 145.144 (relating to reporting, monitoring and recordkeeping) establishes reporting, monitoring and recordkeeping requirements for these units.

F.  Benefits, Cost and Compliance

   Benefits

   Executive Order 1996-1 requires a cost benefit analysis of the amendments. Overall, the citizens of this Commonwealth will benefit from the proposal because the regulations will provide appropriate protection of air quality both in this Commonwealth and the entire eastern United States. In addition to reducing ozone pollution, this program will assist the Commonwealth in meeting its requirements for reasonable further progress and attainment under the Clean Air Act (42 U.S.C.A. §§ 7401--7642).

   Compliance Cost

   Compliance costs for sources covered by the trading program are expected to be less than 1/2 of 1% of revenues for the utility sector. These costs are expected to be in the range of $53 million per year. The analysis of the emission levels of cement plants in this Commonwealth indicates that these facilities should be able to meet the new limitations through fine tuning of existing control devices at little additional costs. For internal combustion engines, it is estimated that these sources will incur control costs between $500 and $2,000 per ton which the EPA has determined to be highly cost effective for this source category. Some of these sources have no controls presently; others have controls which may allow them to meet the proposed emission limitations.

   Compliance Assistance Plan

   The Department plans to educate and assist the regulated community and the public with understanding these new regulatory requirements.

   Paperwork Requirements

   These regulatory changes will have little additional paperwork impact on the regulated entities. This proposed rulemaking simply extends and builds upon the existing NO_x allowance requirements contained in Chapter 123.

G.  Sunset Review

   This proposed rulemaking 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.

H.  Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 17, 1999, the Department submitted a copy of the proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and 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.

   Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed amendments, it will notify the Department within 30 days of the close of the Committees' review 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 the regulation.

I.  Public Comments and EQB Hearings

   The Board will hold three public hearings for the purpose of accepting comments on the proposed amendments. The hearings will be held at 2 p.m. as follows:

April 6, 1999	Department of Environmental Protection Southwest Regional Office 400 Waterfront Drive Pittsburgh, PA
April 7, 1999	Department of Environmental Protection Southcentral Regional Office Susquehanna River Conference Room 909 Elmerton Avenue Harrisburg, PA
April 8, 1999	Department of Environmental Protection Southeast Regional Office Suite 6010, Lee Park 555 North Lane Conshohocken, PA

   Persons wishing to present testimony at the hearings must contact Kate Coleman 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 is requested to 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 Kate Coleman at (717) 787-4526 or through the Pennsylvania AT&T Relay Service at (800) 654-4984 (TDD Users) or (800) 654-5988 (Voice Users) to discuss how the Department may accommodate their needs.

   Written Comments

   In lieu of 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 EQB, 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 May 10, 1999. In additions to 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 May 10, 1999. This 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.

   The Board is specifically requesting comments in four areas:

   1.  The EPA's emission budget calculation and model trading rule allow NO_x allowances banked under the NO_x Allowance Requirements in § 123.110(a)(3) to be transitioned for use as banked allowances under this proposed rule. This is one of the authorized uses of the supplemental compliance pool established by the EPA rule. The amount of the bank is established in § 145.55(c)(10). Under § 145.55(c)(9), these banked allowances can only be used in 2003--2004. The Board is requesting comment on whether to allow the use of banked allowances from the existing program, as authorized by the EPA rule, or whether to use the supplemental compliance pool for other purposes. In addition, the Board requests comment on how to determine the number of banked allowances, that is, should the bank only include allowances created in this Commonwealth, should the bank authorize the use of allowances created in other states and sold to companies located in this Commonwealth or should some other more appropriate process be used.

   2.  Sections 145.42(b)(1) and (c)(1) use the lower of the EPA model rule emission limitation or any more restrictive allowance emission rate to be used to calculate allowances provided to each NO_x budget unit. This provision is more restrictive than the EPA model rule and results in less allowances being provided to units that meet lower emission limits than provided by the EPA budget calculations. This primarily affects newer units and those recently modified (including repowered sources) that have very low allowance emission levels established. The AQTAC had concerns about this approach. The Board is specifically requesting comments on whether to use the approach contained in the proposed rulemaking, the approach included in the EPA model rule or some other alternative approach.

   3.  The proposed rulemaking includes electric generating units of 15 MW or greater in the NO_x trading program. This is the cutoff established by the NO_x Allowance Requirements in §§ 123.101--123.120. The EPA budget calculations and model rule includes only electric generating units of 25 MW or greater as part of the trading program. The Board is requesting input on what level of electric generation is appropriate for regulation under the Pennsylvania rule.

   4.  Both the EPA model rule and the proposed rulemaking incorporate the trading program into the Department's existing permit program contained in Chapter 127. The Board seeks input on integrating the trading program into the existing plan approval and operating permit program so as to create as few additional administrative requirements as possible.

   Electronic Comments

   Comments may be submitted electronically to the Board at RegComments@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 EQB by May 10, 1999.

JAMES M. SEIF,   
Chairperson

   Fiscal Note:  7-345. 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 123.  STANDARDS FOR CONTAMINANTS

§ 123.115.  Initial NO_x allowance NO_x allocations.

   (a)  The sources contained in Appendix A are subject to the requirements of §§ 123.101--123.114, 123.116--123.120 and this section. These sources are allocated NO_x allowances for the 1999--2002 NO_x allowance control periods as listed in Appendix A. [Except as provided in § 123.120 (relating to audit), if no allocation is specified for NO_x allowance control periods beyond 2002, the current allocations continue indefinitely.]

*      *      *      *      *

§ 123.121.  NO_x allowance program transition.

   (a)  NO_x allocations for the NO_x allowance control periods starting May 1, 2003, will be distributed in accordance with the requirements in Chapter 145 (relating to interstate pollution transport reduction).

   (b)  The emission limitations and monitoring requirements established in §§ 123.101--123.120 (relating to NO_x allowance requirements) expire on December 31, 2002. If a source has failed to demonstrate compliance with § 123.111 (relating to failure to meet source compliance requirements), the provisions in § 145.54(d) (relating to compliance) shall be used to withhold NO_x allowances in calendar year 2003 and beyond, if necessary. If no NO_x allowances are provided to the source under § 145.42 (relating to NO_x allowance allocations), the source will be obligated to acquire and retire a number of NO_x allowances as specified in § 145.54.

   (Editor's Note:  Chapter 145 is new and has been printed in regular type to enhance readability.)

CHAPTER 145.  INTERSTATE POLLUTION TRANSPORT REDUCTION

Subchapter A.  NO_x BUDGET TRADING PROGRAM

GENERAL PROVISIONS

145.1.	Purpose.
145.2.	Definitions.
145.3.	Measurements, abbreviations and acronyms.
145.4.	Applicability.
145.5.	Retired unit exemption.
145.6.	Standard requirements.
145.7.	Computation of time.

NO_x ACCOUNT

145.10.	Authorization and responsibilities of the NOx authorized account representative.
145.11.	Alternate NOx authorized account representative.
145.12.	Changing the NOx authorized account representative and the alternate NOx authorized account representative; changes in the owners and operators.
145.13.	Account certificate of representation.
145.14.	Objectives concerning the NOx authorized account representative.

PERMIT REQUIREMENTS

145.20.	General NOx budget trading program permit requirements.
145.21.	NOx budget permit applications.
145.22.	Information requirements for NOx budget permit applications.
145.23.	NOx budget permit contents.
145.24.	Effective date of initial NOx budget permit.
145.25.	NOx budget permit revisions.

COMPLIANCE CERTIFICATION

145.30.	Compliance certification report.
145.31.	The Department's action on compliance certifications.

NO_x ALLOWANCE ALLOCATIONS

145.40.	State trading program budget.
145.41.	Timing requirements for NOx allowance allocations.
145.42.	NOx allowance allocations.

ACCOUNTING PROCESS FOR DEPOSIT USE AND TRANSFER OF ALLOWANCES

145.50.	NOx Allowance Tracking System accounts.
145.51.	Establishment of accounts.
145.52.	NOx Allowance Tracking System responsibilities of NOx authorized account representative.
143.53.	Recordation of NOx allowance allocations.
145.54.	Compliance.
145.55.	Banking.
145.56.	Account error.
145.57.	Closing of general accounts.

NO_x ALLOWANCE TRANSFERS

145.60.	Submission of NOx allowance transfers.
145.61.	NOx transfer recordation.
145.62.	Notification.

RECORDKEEPING AND REPORTING REQUIREMENTS

145.70.	General monitoring requirements.
145.71.	Initial certification and recertification procedures.
145.72.	Out of control periods.
145.73.	Notifications.
145.74.	Recordkeeping and reporting.
145.75.	Petitions.
145.76.	Additional requirements to provide heat input data.

OPT-IN PROCESS

145.80.	Applicability for opt-in sources.
145.81.	Opt-in source general provisions.
145.82.	NOx authorized account representative for opt-in sources.
145.83.	Applying for an NOx budget opt-in permit.
145.84.	Opt-in process.
145.85.	NOx budget opt-in permit contents.
145.86.	Opt-in source withdrawal from NOx budget trading program.
145.87.	Opt-in source change in regulatory status.
145.88.	NOx allowance allocations to opt-in units.

EMISSION REDUCTION CREDIT PROVISIONS

145.90.

Emission reduction credit provisions.

GENERAL PROVISIONS

§ 145.1.  Purpose.

   This subchapter establishes general provisions and the applicability, permitting, allowance, excess emissions, monitoring and opt-in provisions for the NO_x Budget Trading Program as a means of mitigating the interstate transport of ozone and nitrogen oxides, an ozone precursor.

§ 145.2.  Definitions.

   The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

   Account certificate of representation--The completed and signed submission certifying the designation of an NO_x authorized account representative for an NO_x Budget source or a group of identified NO_x budget sources who is authorized to represent the owners and operators of the sources and of the NO_x budget units at the sources with regard to matters under the NO_x Budget Trading Program.

   Account number--The identification number given by the Administrator to each NO_x Allowance Tracking System account.

   Acid rain emissions limitation--A limitation on emissions of sulfur dioxide or NO_x under the Acid Rain Program under Title IV of the Clean Air Act (42 U.S.C.A. §§ 7651--7651o).

   Administrator--The Administrator of the EPA or the Administrator's authorized representative.

   Allocate or allocation--The determination by the Department of the number of NO_x allowances to be initially credited to a NO_x budget unit or an allocation set-aside.

   Boiler--An enclosed fossil or other fuel-fired combustion device including process heaters used to produce heat and to transfer heat to recirculating water, steam or other medium.

   CEMS--Continuous emission monitoring system (CEMS)--The equipment required under this subchapter and Chapter 139 (relating to sampling and testing) to sample, analyze, measure and provide, by readings taken at least once every 15 minutes of the measured parameters, a permanent record of NO_x emissions, expressed in tons per hour for NO_x. The following systems are component parts included, consistent with 40 CFR Part 75 (relating to continuous emission monitoring), in a continuous emission monitoring system:

   (i)  Flow monitor.

   (ii)  NO_x pollutant concentration monitors.

   (iii)  Diluent gas monitor (O₂ or CO₂) when the monitoring is required by this subchapter.

   (iv)  A continuous moisture monitor when the monitoring is required by this subchapter.

   (v)  A DAHS.

   Combined cycle system--A system comprised of one or more combustion turbines, heat recovery steam generators and steam turbines configured to improve overall efficiency of electricity generation or steam production.

   Combustion turbine--An enclosed fossil or other fuel-fired device that is comprised of a compressor, a combustor and a turbine, and in which the flue gas resulting from the combustion of fuel in the combustor passes through the turbine, rotating the turbine.

   Commence commercial operation--With regard to a unit that serves a generator, to have begun to produce steam, gas or other heated medium used to generate electricity for sale or use, including test generation.

   (i)  Except as provided in § 145.5 (relating to retired unit exemption), for a unit that is a NO_x budget unit under § 145.4 (relating to applicability) on the date the unit commences commercial operation, the date shall remain the unit's date of commencement of commercial operation even if the unit is subsequently modified, reconstructed or repowered.

   (ii)  Except as provided in § 145.5 or §§ 145.80--145.88 (relating to opt-in process), for a unit that is not a NO_x budget unit under § 145.4 on the date the unit commences commercial operation, the date the unit becomes a NO_x budget unit under § 145.4 is the unit's date of commencement of commercial operation.

   Commence operation--To have begun any mechanical, chemical or electronic process, including, with regard to a unit, start-up of a unit's combustion chamber.

   (i)  Except as provided in § 145.5, for a unit that is a NO_x budget unit under § 145.4 on the date of commencement of operation, the date shall remain the unit's date of commencement of operation even if the unit is subsequently modified, reconstructed or repowered.

   (ii)  Except as provided in § 145.5 or §§ 145.80-- 145.88, for a unit that is not a NO_x budget unit under § 145.4 on the date of commencement of operation, the date the unit becomes a NO_x budget unit under § 145.4 shall be the unit's date of commencement of operation.

   Common stack--A single flue through which emissions from two or more units are exhausted.

   Compliance account--A NO_x Allowance Tracking System account for an NO_x budget unit under this subchapter, in which the NO_x allowance allocations for the unit are initially recorded and in which are held NO_x allowances available for use by the unit for a control period for the purpose of meeting the unit's NO_x budget emissions limitation.

   Compliance certification--A submission to the Department and the Administrator that is required under this subchapter to report a NO_x budget source's or a NO_x budget unit's compliance or noncompliance with this subchapter and that is signed by the NO_x authorized account representative in accordance with this subchapter.

   Control period--The period beginning May 1 of a year and ending on September 30 of the same year, inclusive.

   DAHS--Automated data acquisition and handling system--The component of the CEMS, or other emissions monitoring system approved for use under this subchapter and Chapter 139, designed to interpret and convert individual output signals from pollutant concentration monitors, flow monitors, diluent gas monitors and other component parts of the monitoring system to produce a continuous record of the measured parameters in the measurement units required by this subchapter.

   Emissions--Air contaminants exhausted from a unit or source into the atmosphere in accordance with this subchapter.

   Energy Information Administration--The Energy Information Administration of the United States Department of Energy.

   Excess emissions--Any tonnage of NO_x emitted by a NO_x budget unit during a control period that exceeds the NO_x budget emissions limitation for the unit.

   Fossil fuel-fired--With regard to a unit, one of the following:

   (i)  The combustion of fossil fuel, alone or in combination with any other fuel, where fossil fuel actually combusted comprises more than 50% of the annual heat input on a Btu basis during any year starting in 1995 or, if a unit had no heat input starting in 1995, during the last year of operation of the unit prior to 1995.

   (ii)  The combustion of fossil fuel, alone or in combination with any other fuel, where fossil fuel is projected to comprise more than 50% of the annual heat input on a Btu basis during any year; provided that the unit shall be ''fossil fuel-fired'' as of the date, during the year, on which the unit begins combusting fossil fuel.

   General account--A NO_x Allowance Tracking System account, established under this subchapter, that is not a compliance account or an overdraft account.

   Generator--A device that produces electricity.

   Heat input--The product (in mmBtu/time) of the gross calorific value of the fuel (in Btu/lb) and the fuel feed rate into a combustion device (in mass of fuel/time) as determined in accordance with this subchapter, and does not include the heat derived from preheated combustion air, recirculated flue gases or exhaust from other sources.

   Life-of-the-unit, firm power contractual arrangement--A unit participation power sales agreement under which a utility or industrial customer reserves, or is entitled to receive, a specified amount or percentage of nameplate capacity and associated energy from any specified unit and pays its proportional amount of the unit's total costs, pursuant to a contract for one of the following:

   (i)  The life of the unit.

   (ii)  A cumulative term of at least 30 years, including contracts that permit an election for early termination.

   (iii)  A period equal to or greater than 25 years or 70% of the economic useful life of the unit determined as of the time the unit is built, with option rights to purchase or release some portion of the nameplate capacity and associated energy generated by the unit at the end of the period.

   Maximum design heat input--The ability of a unit to combust a stated maximum amount of fuel per hour on a steady state basis, as determined by the physical design and physical characteristics of the unit.

   Maximum potential hourly heat input--An hourly heat input used for reporting purposes when a unit lacks certified monitors to report heat input. If the unit intends to use 40 CFR Part 75 Appendix D (relating to optional SO₂ emissions data protocal for gas) to report heat input, this value shall be calculated, in accordance with 40 CFR Part 75, using the maximum fuel flow rate and the maximum gross calorific value. If the unit intends to use a flow monitor and a diluent gas monitor, this value shall be reported, in accordance with 40 CFR Part 75, using the maximum potential flow rate and either the maximum carbon dioxide concentration (in % CO₂) or the minimum oxygen concentration (in % O₂).

   Maximum potential NO_x emission rate--The emission rate of NO_x (in lb/mmBtu) calculated in accordance with 40 CFR Part 75 Appendix F, Section 3 (relating to procedure for NO_x emission rate), using the maximum potential NO_x concentration as defined in 40 CFR Part 75 Appendix A, Section 2 (relating to equipment specifications), and either the maximum O₂ concentration (in % O₂) or the minimum concentration (in % CO₂).

   Maximum rated hourly heat input--A unit-specific maximum hourly heat input (mmBtu) which is the higher of the manufacturer's maximum rated hourly heat input or the highest observed hourly heat input.

   Monitoring system--A monitoring system that meets the requirements of this subchapter, including a CEMS, an excepted monitoring system or an alternative monitoring system.

   Most stringent State or Federal NO_x emissions limitation--With regard to a NO_x budget opt-in source, the lowest NO_x emissions limitation (in terms of lb/mmBtu) that is applicable to the unit under State or Federal law, regardless of the averaging period to which the emissions limitation applies.

   Nameplate capacity--The maximum electrical generating output (in MWe) that a generator can sustain over a specified period of time when not restricted by seasonal or other deratings as measured in accordance with the United States Department of Energy standards.

   Nontitle V permit--A Federally enforceable permit issued by the Department under Chapter 127, Subchapters A, B and F (relating to general; plan approval requirements; and operating permit requirements).

   NO_x allowance--An authorization by the Department under the NO_x Budget Trading Program to emit up to 1 ton of NO_x during the control period of the specified year or of any year thereafter.

   NO_x allowance deduction or deduct NO_x allowances--The permanent withdrawal of NO_x allowances from a NO_x Allowance Tracking System compliance account or overdraft account to account for the number of tons of NO_x emissions from a NO_x budget unit for a control period, determined in accordance with this subchapter, or for any other allowance surrender obligation under this subchapter.

   NO_x allowances held or hold NO_x allowances--The NO_x allowances recorded in accordance with or submitted for recordation this subchapter, in a NO_x Allowance Tracking System account.

   NO_x Allowance Tracking System--The system for recording allocations, deductions and transfers of NO_x allowances under the NO_x Budget Trading Program.

   NO_x Allowance Tracking System account--An account in the NO_x Allowance Tracking System for purposes of recording the allocation, holding, transferring or deducting of NO_x allowances.

   NO_x allowance transfer deadline--Midnight of November 30 or, if November 30 is not a business day, midnight of the first business day thereafter and is the deadline by which NO_x allowances may be submitted for recordation in a NO_x budget unit's compliance account, or the overdraft account of the source where the unit is located, in order to meet the unit's NO_x budget emissions limitation for the control period immediately preceding the deadline.

   NO_x authorized account representative--For an NO_x budget source or NO_x budget unit at the source, the natural person who is authorized by the owners and operators of the source and all NO_x budget units at the source, in accordance with, to represent and legally bind each owner and operator in matters pertaining to the NO_x Budget Trading Program or, for a general account, the natural person who is authorized, in accordance with this subchapter, to transfer or otherwise dispose of NO_x allowances held in the general account.

   NO_x budget emissions limitation--For an NO_x budget unit, the tonnage equivalent of the NO_x allowances available for compliance deduction for the unit and for a control period under § 145.54(a) and (b) (relating to compliance), adjusted by any deductions of the NO_x allowances to account for actual utilization under § 145.42(e) (relating to NO_x allowance allocations) for the control period or to account for excess emissions for a prior control period under § 145.54(d) or to account for withdrawal from the NO_x Budget Program, or for a change in regulatory status, for a NO_x budget opt-in source under § 145.86 or § 145.87 (relating to opt-in source withdrawal from NO_x budget training program; and opt-in source change in regulatory status).

   NO_x budget opt-in permit--An NO_x budget permit covering an NO_x budget opt-in source.

   NO_x budget opt-in source--A unit that has been elected to become a NO_x budget unit under the NO_x Budget Trading Program and whose NO_x budget opt-in permit has been issued and is in effect under this subchapter and Chapter 127 (relating to construction, modification, reactivation and operation of sources).

   NO_x budget permit--The legally binding and Federally enforceable written document, or portion of the document, issued by the Department, including any permit revisions, specifying the NO_x Budget Trading Program requirements applicable to a NO_x budget source, to each NO_x budget unit at the NO_x budget source, and to the owners and operators and the NO_x authorized account representative of the NO_x budget source and each NO_x budget unit.

   NO_x budget source--A source that includes one or more NO_x budget units.

   NO_x Budget Trading Program--A multi-state NO_x air pollution control and emission reduction program established in accordance with this subchapter, as a means of mitigating the interstate transport of ozone and NO_x, an ozone precursor.

   NO_x budget unit--A unit that is subject to the NO_x Budget Trading Program emissions limitation under § 145.4 or § 145.80.

   Operating--With regard to a unit under §§ 145.22(4)(ii) and 145.80 (relating to information requirements for NO_x budget permit applications; and application for opt-in sources), having documented heat input for more than 876 hours in the 6 months immediately preceding the submission of an application for an initial NO_x budget permit under § 145.83 (relating to applying for NO_x budget opt-in permit).

   Operator--A person who operates, controls or supervises an NO_x budget unit, an NO_x budget source or unit for which an application for an NO_x budget opt-in permit under § 145.84 is submitted and not denied or withdrawn and shall include, but not be limited to, a holding company, utility system or plant manager of such a unit or source.

   Opt-in--To elect to become an NO_x budget unit under the NO_x Budget Trading Program through a final, effective NO_x budget permit under this subchapter.

   Overdraft account--The NO_x Allowance Tracking System account established under this Subchapter for each NO_x Budget source where there are two or more NO_x budget units.

   Owner--Any of the following persons:

   (i)  A holder of any portion of the legal or equitable title in a NO_x budget unit or in a unit for which an application for a NO_x budget opt-in permit under § 145.83 is submitted and not denied or withdrawn.

   (ii)  A holder of a leasehold interest in an NO_x budget unit or in a unit for which an application for a NO_x budget opt-in permit under § 145.83 is submitted and not denied or withdrawn.

   (iii)  A purchaser of power from an NO_x budget unit or from a unit for which an application for a NO_x budget opt-in permit under § 145.83 is submitted and not denied or withdrawn under a life-of-the-unit, firm power contractual arrangement. However, unless expressly provided for in a leasehold agreement, an owner may not include a passive lessor, or a person who has an equitable interest through the lessor, whose rental payments are not based, either directly or indirectly, upon the revenues or income from the NO_x budget unit or the unit for which an application for a NO_x budget opt-in permit under § 145.83 is submitted and not denied or withdrawn.

   (iv)  With respect to any general account, a person who has an ownership interest with respect to the NO_x allowances held in the general account and who is subject to the binding agreement for the NO_x authorized account representative to represent that person's ownership interest with respect to NO_x allowances.

   Receive or receipt of--When referring to the Department, the Administrator or the NO_x budget administrator to come into possession of a document, information or correspondence (whether sent in writing or by authorized electronic transmission), as indicated in an official correspondence log, or by a notation made on the document, information or correspondence, by the Department or Administrator in the regular course of business.

   Recordation, record or recorded--With regard to NO_x allowances, the movement of NO_x allowances from one NO_x Allowance Tracking System account to another, for purposes of allocation, transfer or deduction.

   Reference method--A direct test method of sampling and analyzing for an air pollutant as specified in 40 CFR Part 60, Appendix A (relating to specifications and test).

   Serial number--When referring to NO_x allowances, the unique identification number assigned to each NO_x allowance, under § 145.53(c).

   Source--Any governmental, institutional, commercial or industrial structure, installation, plant, building or facility that emits or has the potential to emit any regulated air pollutant under the Clean Air Act. For purposes of section 502(c) of the Clean Air Act (42 U.S.C.A. § 7661a(c)), a source, including a source with multiple units, shall be considered a single facility.

   State--One of the 48 contiguous states and the District of Columbia that adopts an NO_x Budget Trading Program under this subchapter. The term shall have its conventional meaning where the meaning is clear from the context.

   State trading program budget--The total number of NO_x tons apportioned to all NO_x budget units in a given state, in accordance with the NO_x Budget Trading Program, for use in a given control period.

   Submit or serve--To send or transmit a document, information, or correspondence to the person by one of the following methods:

   (i)  In person.

   (ii)  By United States Postal Service.

   (iii)  By other means of dispatch or transmission and delivery. Compliance with any submission, service or mailing deadline shall be determined by the date of dispatch, transmission or mailing and not the date of receipt.

   Title V operating permit--A permit issued under Chapter 127, Subchapter G (relating to Title V operating permits).

   Title V operating permit regulations--The regulations that the Administrator has approved or issued as meeting the requirements of Title V of the Clean Air Act (42 U.S.C.A. §§ 7661--7661f) and 40 CFR Part 70 or 71 (relating to state operating permit programs; and federal operating permit programs).

   Ton or tonnage--Any ''short ton'' (that is, 2,000 pounds). For the purpose of determining compliance with the NO_x budget emissions limitation, total tons for a control period shall be calculated as the sum of all recorded hourly emissions (or the tonnage equivalent of the recorded hourly emissions rates) in accordance with this subchapter, with any remaining fraction of a ton equal to or greater than 0.50 ton deemed to equal 1 ton and any fraction of a ton less than 0.50 ton deemed to equal zero tons.

   Unit--A fossil fuel-fired stationary boiler, combustion turbine or combined cycle system.

   Unit load--The total (that is, gross) output of a unit in any control period (or other specified time period) produced by combusting a given heat input of fuel, expressed in terms of one of the following:

   (i)  The total electrical generation (MWe) produced by the unit, including generation for use within the plant.

   (ii)  In the case of a unit that uses heat input for purposes other than electrical generation, the total steam pressure (psia) produced by the unit, including steam for use by the unit.

   Unit operating day--A calendar day in which a unit combusts any fuel.

   Unit operating hour or hour of unit operation--Any hour (or fraction of an hour) during which a unit combusts any fuel.

   Utilization--The heat input (expressed in mmBtu/time) for a unit. The unit's total heat input for the control period in each year will be determined in accordance with 40 CFR Part 75 if the NO_x Budget unit was otherwise subject to 40 CFR Part 75 for the year, or will be based on the best available data reported to the Department for the unit if the unit was not otherwise subject to the requirements of 40 CFR Part 75 for the year.

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