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PA Bulletin, Doc. No. 99-346


[25 PA. CODE CHS. 121 AND 123]

Nitrogen Oxides Allowance

   The Environmental Quality Board (Board) proposes to amend Chapters 121 and 123 (relating to general provisions; and standards for contaminants) to read as set forth in Annex A.

   The change to Chapter 121 amends the definition of ''NOx affected unit'' to clarify that the definition is applicable to 15 megawatt (MW) sources rather than facilities. A number of minor technical amendments are made to Appendix E. The first amendment provides allowance allocations for newly discovered sources as provided under § 123.117(b) (relating to new NOx affected source provisions). In addition, the allocations in Appendix E are proposed for revision to correct an accounting error contained in the original allocation. The listing of ''baseline MMBtu'' in Appendix E is also being deleted. The listing of ''baseline NOx lb/MMBtu'' is being modified. A number of sources mistakenly included in Appendix E are being deleted from Appendix E. Finally, the contingent allocation for Washington Power Company is being eliminated from § 123.115(b) (relating to initial NOx allowance NOx allocations).

   This notice is given under Board order at its meeting of December 15, 1998.

A.  Effective Date

   These amendments will be effective 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, 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 proposed amendments are available electronically through the Department of Environmental Protection's (Department) web site (

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

   On November 1, 1997, the Board published final-form regulations establishing the Nitrogen Oxides (NOx) Allowance Requirements. As the Department began to implement the regulations, there was some confusion about the definition of a ''NOx affected source.'' This definition is intended to require only those individual fossil-fired operating units which generate greater than 15 MW of electricity be included in the definition. Because there is some ambiguity in the existing definition, this proposal clarifies the language to meet the original intention.

   Subsequent to publication of the regulations, a number of NOx affected sources that had not been listed in the regulation were identified under the process established in § 123.117. In addition, the Washington Power Company, listed in § 123.115(b), no longer has a plan approval authorizing its construction. Furthermore, as the Department began the process of establishing NOx Allowance Tracking System accounts for the NOx Affected Sources listed in the regulations, the Department recognized that an accounting error had occurred in the original allocation of allowances listed in Appendix E. Appendix E had allocated approximately 500 more NOx allowances than were available in the OTC budget that Pennsylvania agreed to meet. Finally, Appendix E of the existing regulation contains two columns (''Baseline NOx lb/MMBtu'' and ''Baseline MMBtu'') that are somewhat confusing. This proposal modifies the regulation to include the newly discovered sources, remove the Washington Power Company, correct the accounting error and modify the columns contained in Appendix E.

   As described during the initial rulemaking action, the Department worked with the Ozone Transport Commission (OTC) to determine the 1990 NOx baseline which was used to calculate the emission reductions, NOx affected source allocations and emission caps established by the program. The OTC published the ''Procedures for Development of the OTC NOx Baseline Emission Inventory.'' Following those procedures a ''1990 OTC NOx Baseline Emission Inventory'' was developed by Environmental Protection Agency (EPA) Office of Air Quality Planning and Standards (EPA-454/R-95-013). The Commonwealth used that inventory as the basis for development of the emission reduction requirements contained in the final NOx Allowance Requirements regulations. The following discussion details the process that was used in this Commowealth to establish the 1990 baseline, emission reductions, NOx affected source allocations and emission caps.

   The first step in establishing the 1990 baseline was to identify the ''NOx affected sources'' that were operating in 1990. NOx emissions reported from these sources were used to develop a 5-month (May 1 through September 30) NOx emissions baseline for each source. This information was then provided to the owners and operators of the source to ensure that it was an accurate representation of actual 1990 emissions. Appropriate adjustments were made to the baseline to assure its accuracy.

   The second step allowed the owners and operators of each NOx affected source to make a demonstration to the OTC that the 1990 emissions were not representative of normal operations. These requests for ''exceptional circumstances'' were reviewed by the OTC and, where appropriate, the 1990 5-month baseline for the NOx affected source was modified. In this Commonwealth, three sources had their baselines adjusted based on exceptional circumstances (1990 OTC NOx Baseline Emission Inventory Appendix G).

   There was an additional baseline modification addressed by the OTC. The OTC established a ''10,000 ton reserve'' baseline to be divided between the states. The Commonwealth used this reserve to adjust the 1990 baseline of the NOx affected sources at Duquesne Light's Cheswick and Elrama power stations. The amount of this adjustment was equal to the exceptional circumstances request received by Duquesne Light (that request was not granted because there was insufficient documentation provided (1990 OTC NOx Baseline Emission Inventory Appendix G and p. 20)).

   Following these adjustments, in July of 1995, the 1990 OTC NOx Baseline Emission Inventory was published with baseline information for each NOx affected source in each OTC state (EPA document EPA-454/R-95-013). After publication of this baseline inventory, each state went through an additional quality assurance/quality control process. This process identified sources that, although listed in the inventory, did not meet the definition of NOx affected unit as well as additional sources that were not included in the inventory but met the definition. This resulted in a final 1990 baseline, which was used to determine the amount of emission reductions and number of NOx allowances that would be available in each state beginning in 1999.

   To calculate the emissions reductions and number of allowances available in this Commonwealth, the 1990 baseline emissions were divided according to whether they came from the area of this Commonwealth subject to 55% or 65% reduction. Following that division, a calculation was performed for each source that evaluated whether the percentage reduction or emission rate (either the Reasonably Available Control Technology (RACT) rate or 0.2 lb/MMBtu) was the controlling reduction. The total of these emission reductions for sources in the 1990 baseline established the emission reductions and total allowances that are available for all sources in this Commonwealth in 1999 (1999 budget).

   There were a number of sources that met the definition of a NOx affected source that began operation after 1990 but prior to the time when the final regulation was promulgated. The Department worked with the Air Quality Technical Advisory Committee (AQTAC) to establish a process for including these new sources in the program. In general, these sources were independent power producers (IPPs) that had installed modern and efficient emission controls. In addition the IPPs, in many cases, were eliminating environmental problems by burning fuels that, if left in place, generally cause significant water pollution. The Department and AQTAC established a process that included these facilities in the program, resulting in the need to distribute the 1999 budget among a larger number of sources than were operating in 1990. To do so, the total allocation available for the IPPs was established using a methodology developed with the input and approval of the AQTAC. To ensure an equitable distribution of the 1999 budget, the budget for each source operating in 1990 was reduced by a pro rata amount to provide an allocation for all NOx affected sources in operation at the time the regulation became final. This resulted in increasing the percent reduction requirements to approximately 57% and 67% and slightly tightening the emission rates where they were the controlling factor to calculate the allowances.

   In other words, between 1990 and 1997 there was an increase in the number of NOx affected sources. To treat all sources equally, the Commonwealth's 1999 budget was divided between all of these sources following a uniform approach. In the aggregate, this resulted in the Commonwealth meeting the NOx MOU reduction targets of 55% or 0.2 lb/MMBtu in the outer zone and 65% or 0.2 lb/MMBtu in the inner zone from the 1990 emissions baseline.

E.  Summary of the Proposal

   The definition of ''NOx affected source'' in § 121.1 is being proposed for modification to clarify that only individual emission units of 15 megawatts or greater are included in the definition. In addition, the definition is further clarified to exclude emergency electrical generating units used to power safety equipment at nuclear power plants.

   Section 123.115 is being modified to remove the Washington Power Company allocation.

   Appendix E is being modified in four ways. First, the NOx affected sources identified through the process described in § 123.117 are being added to Appendix E. Second, the accounting error that resulted in over-allocating the 1999 budget is being corrected with a pro rata reduction in all NOx affected sources emissions (the reduction is rounded to whole numbers of allowances). Third, several sources mistakenly included in Appendix E are being deleted from Appendix E. Finally, the last column of the table in Appendix E is being deleted and the ''Baseline NOx lb/MMBtu'' column is being renamed to add the term ''Bonus Allowance.''

   The changes to the columns clarify their use. The Bonus Allowance column is used as the emission rate from which bonus allowances established by § 123.119 are calculated. The column ''Baseline MMBtu'' is not used in the regulation and, consequently, it is being deleted. The Baseline MMBtu was part of the derivation of the original 1990 emissions baseline development and is no longer relevant to the program.

F.  Benefits, Costs 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 attainment under the Clean Air Act (42 U.S.C.A. §§ 7401--7642).

   Compliance Costs

   These proposed amendments may slightly increase compliance costs by reducing the total NOx allowances available in this Commonwealth.

   Compliance Assistance Plan

   The Department plans to educate and assist the regulated community and the public with understanding the NOx budget program.

   Paperwork Requirements

   These proposed regulatory changes will have no additional paperwork impact on the Commonwealth and the regulated entities.

G.  Sunset Review

   These regulations will be reviewed in accordance with the sunset review scheduled 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 10 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 regulations.

I.  Public Comment and EQB Hearings

   Public Hearings

   The Board will hold three public hearings for the purpose of accepting comments on the proposed amendments. The hearings will be held at 1 p.m. as follows:

April 6, 1999Department of Environmental Protection
Southwest Regional Office
400 Waterfront Drive
Pittsburgh, Pa.
April 7, 1999Department of Environmental Protection
Southcentral Regional Office
Susquehanna River Conference Room
909 Elmerton Avenue
Harrisburg, Pa.
April 8, 1999Department 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 are 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 accommodation in order to participate should contact Kate Coleman at (717) 787-4526 or through the Pennsylvania AT&T relay service at (800) 654-5984 (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 (65 days from the date of publication). In addition to the written comments, interested persons may also submit a summary of their comments to the Board. This summary may not exceed one page in length and must be received by May 10, 1999 (65 days from the date of publication). This summary will be provided to each member of the Board in the agenda packet distributed prior to the meeting at which the final regulations will be considered.

   Electronic Comments

   Comments may be submitted electronically to the Board at A subject heading of the proposal and return name and mailing address must be included in each transmission. Comments submitted electronically must also be received by the EQB May 10, 1999.


   Fiscal Note:  7-343. No fiscal impact; (8) recommends adoption.

Annex A






§ 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:

*      *      *      *      *

   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] sources rated at 15 megawatts or greater or any other source that voluntarily opts to become a NOx affected source.

*      *      *      *      *



§ 123.115.  Initial NOx allowance NOx allocations.

*      *      *      *      *

   (b) The [Washington Power Company and] Colver Power Project [sources] source identified in Appendix [A] E shall receive the allocation identified in Appendix E upon operation of the source.

*      *      *      *      *


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