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PA Bulletin, Doc. No. 07-1446

NOTICES

INDEPENDENT REGULATORY REVIEW COMMISSION

Notice of Comments Issued

[37 Pa.B. 4493]
[Saturday, August 11, 2007]

   Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the Independent Regulatory Review Commission (Commission) may issue comments within 30 days of the close of the public comment period. The Commission comments are based upon the criteria contained in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b).

   The Commission has issued comments on the following proposed regulation. The agency must consider these comments in preparing the final-form regulation. The final-form regulation must be submitted within 2 years of the close of the public comment period or it will be deemed withdrawn.

Reg. No.Agency/Title Close of
the Public Comment Period 		IRRC Comments Issued
7-411 Environmental
Quality Board
Clean Air
Interstate Rule
37 Pa.B. 2063
(April 28, 2007)		7/2/078/1/07

____

Environmental Quality Board
Regulation #7-411 (IRRC #2607)

Clean Air Interstate Rule

August 1, 2007

   We submit for your consideration the following comments on the proposed rulemaking published in the April 28, 2007 Pennsylvania Bulletin. Our comments are based on criteria in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Environmental Quality Board (Board) to respond to all comments received from us or any other source.

1.  Variation from EPA regulations.--Consistency with existing federal regulations; Fiscal impact; Need; Reasonableness; Clarity.

   The Environmental Protection Agency, Region III (EPA) cited several concerns in its comments on this proposed regulation. It noted that although certain flexibilities are afforded to states that participate in the EPA-administered Clean Air Interstate Rule (CAIR) trading program, this regulation contains requirements that go beyond those flexibilities. Specifically, EPA stated '' . . . the proposed rule must be revised to be consistent with the requirements for States participating in the EPA-administered CAIR trading program'' in order for the corresponding State Implementation Plan amendments to be approved. We share EPA's comments, concerns and questions and incorporate them into the Commission's comments on this proposed regulation. The Board should carefully review EPA's comments and work closely with it to make the necessary amendments that will bring this regulation into compliance with the federal program.

   Other commentators urged the Board to ''minimize the number and extent of variations'' from the federal Nitrogen Oxide (NOx) and Sulfur Dioxide (SO2) trading programs. They also cited concerns that deviations from the federal model trading programs could place Pennsylvania businesses at a competitive disadvantage. Further, these commentators noted that having consistent programs from state to state would simplify compliance and minimize costs for affected businesses. The Board should explain the need for variations and how the proposed variations from the federal programs will not put Pennsylvania businesses at a competitive disadvantage with businesses operating in other states which more closely follow the federal model rules.

2.  Section 145.101. Transition requirements for nonelectric generating units.--Reasonableness.

   This section provides options for nonelectric generating units (non-EGUs) to transition from the NOx Budget Trading Program to the CAIR NOx Ozone Season Trading Program. The option provided in Subsection (b)(2) would allocate NOx emission allowances to new non-EGUs. However, commentators note that the Board is not proposing to increase the emission budgets to account for the inclusion of these new sources. They are concerned that without an increase, the effect of this provision would be an inappropriate reduction in the emission budgets for EGUs. We request the Board further explain the basis for this option and its impact on the EGU's ability to meet their emission limitations.

3.  Section 145.202. Definitions.--Consistency with Federal regulations.

   The definition of ''Ozone Season'' is inconsistent with 40 CFR Part 58, Appendix D. The federal regulation defines the ozone monitoring season for Pennsylvania as April through October. This definition should be amended to be consistent with the federal ozone monitoring season for Pennsylvania.

4.  Section 145.205. Emission reduction credit provisions.--Need; Fiscal impact.

   The Electric Power Generation Association and Reliant Energy comment that the intent of this section is to prevent double emissions. However, they also assert that the provision requiring the surrender of NOx allowances will result in emission reduction credits (ERCs) that are too expensive for non-affected sources to procure. We request that the Board explain the need for this section and its impact on the cost of ERCs.

5.  Section 145.212. CAIR NOx allowance allocations.--Need; Fiscal impact; Clarity.

Subsection (f)(1)

   This subsection would allocate annual CAIR NOx allowances to renewable energy qualifying resources and demand-side management qualifying resources. The Board has asked for comment on this provision.

   Allocation of NOx allowances as proposed in this regulation could encourage the development of these resources. However, commentators have questioned the proposed allocation, noting that renewable energy sources do not emit NOx and thus have no need for the allowances; tax incentives already exist to subsidize their operations; and unlimited allocation to these sources will increase the cost of compliance to CAIR-affected sources which must surrender the allowances. If the Board proceeds with the provisions in this subsection, commentators suggest that a limit be imposed on the number of allowances issued to these qualifying resources. Similar concerns apply to Section 145.222(f)(1).

   We request that the Board explain the impact of Subsection (f)(1) and Section 145.222(f)(1) on the compliance costs of NOx emitting sources. We also recommend that the Board consider imposing a cap on the number of allowances allocated to non-emitting qualifying resources. If the Board declines to impose such a cap, we request the Board explain why a cap is unnecessary.

   Additionally, under this subsection, certified quantities of electric energy production, useful thermal energy and energy equivalent value of the measures approved under the Alternative Energy Portfolio Standard will be converted to ''equivalent thermal energy.'' The number of allowances allocated to the qualifying resource will be based on this ''equivalent thermal energy.'' However, the method of this conversion is not included. The methods for conversion should be set forth in the final-form regulation. A similar concern applies to Section 145.222(f)(1).

Subsection (f)(2)(i)

   This subsection authorizes the owner or operator to apply for ''a cost equivalent additional amount of CAIR NOx allowances . . . .'' The final-form regulation should specify when applications must be received and how cost equivalency will be determined.

ARTHUR COCCODRILLI,   
Chairperson

[Pa.B. Doc. No. 07-1446. Filed for public inspection August 10, 2007, 9:00 a.m.]


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