[Federal Register Volume 60, Number 64 (Tuesday, April 4, 1995)]
[Rules and Regulations]
[Pages 17100-17132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7491]




[[Page 17099]]

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Part II





Environmental Protection Agency





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40 CFR Part 9, et al.



Opting into the Acid Rain Program; Final Rule

  Federal Register / Vol. 60, No. 64 / Tuesday, April 4, 1995 / Rules 
and Regulations   
[[Page 17100]] 

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 72, 73, 74, 75, 77 and 78

[FRL-5178-5]
RIN 2060-AD43


Opting Into the Acid Rain Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Under title IV of the Clean Air Act, Congress authorized the 
U.S. Environmental Protection Agency (EPA) to establish the Acid Rain 
Program. The principal goal of the program is to achieve significant 
environmental benefits through reductions in sulfur dioxide (SO2) 
and nitrogen oxide (NOX) emissions, the primary components of acid 
rain. Acid rain causes surface water acidification, damages trees at 
high elevations and accelerates the decay of building materials. In 
addition, air concentrations of SO2 and NOX degrade 
visibility in large parts of the country and acidic aerosols derived 
from these emissions may pose a risk to public health.
    The Acid Rain Program departs from traditional regulatory methods 
by introducing an SO2 allowance trading system that lowers the 
cost of reducing emissions by allowing electric utilities as a group to 
seek out the least costly methods of control. Utility units affected 
under title IV are allocated allowances based on their historic 
emissions and these units may trade allowances, provided that at the 
end of each year, each unit holds enough allowances to cover its annual 
SO2 emissions.
    Today's action establishes an additional component to the Acid Rain 
Program called the Opt-in Program. The Opt-in Program allows sources 
not required to participate in the Acid Rain Program the opportunity to 
participate on a voluntary basis. Such sources, known as combustion 
sources, would include small utility units and industrial boilers. 
These rules detail how combustion sources participate in the allowance 
market by ``opting in'' to the Acid Rain Program, as provided under 
section 410 of the Act. Congress envisioned the Opt-in Program as a 
means of generating additional allowances and through which the 
compliance costs of acid rain control in the utility sector could be 
reduced, while still meeting overall emissions reductions goals.

EFFECTIVE DATE: These rules become effective on May 4, 1995.

ADDRESSES: Docket. Docket No. A-93-15, containing information 
considered during development of the promulgated rule, is available for 
public inspection and copying between 8 a.m. and 5:30 p.m., Monday 
through Friday, at EPA's Air Docket Section (6102), Waterside Mall, 
room M1500, 1st Floor, 401 M Street SW., Washington, DC 20460. A 
reasonable fee may be charged for copying.
    Background information document. The background information 
document containing responses to public comments on the proposed 
standards may be obtained from the docket. Please refer to ``Final Opt-
in Rule for Combustion Sources--Comment Response Document.''

FOR FURTHER INFORMATION CONTACT: Acid Rain Hotline (202) 233-9620 or 
Adam Klinger (202) 233-9122, Acid Rain Division; mailing address, U.S. 
EPA, Acid Rain Division (6204J), 401 M Street, SW., Washington, DC 
20460.

SUPPLEMENTARY INFORMATION: The contents of this preamble are as 
follows:

A. Background and Summary
    1. Background
    2. The Opt-in Program
    3. Summary of Final Rule
B. Major Changes Made to the Proposed Rule
    1. Acceptable Data Sources
    2. Allocation of Opt-in Allowances and Transfer Prohibition
    3. Offering Opt-in Allowances on the Acid Rain Auction
    4. Thermal Energy Exception
    a. Definition of Thermal Energy
    b. Emission Rate Used To Calculate Transferable Allowances
    c. Methodology Revision for Calculating the Fuel Associated with 
Thermal Energy
C. Other Significant Changes Made to the Proposed Rule
    1. Ineligibility of Non-operating and Retired Units
    2. Interpretation of Shutdown, Modification and Reconstruction
    3. Incorporation of Efficiency Measures
    4. Expiration of a Non-Effective Opt-in Permit
    5. Miscellaneous Issues
    a. Opt-in Permitting
    b. Clarification of Eligible Combustion Sources
    c. Modification to Utilization Calculation
    d. Efficiency Adjustments for an Opt-in Source Governed by a 
Thermal Energy Plan
    e. Definitions
    f. Other Items
    g. Display of OMB Control Numbers
D. Impact Analyses
    1. Executive Order 12866 (Regulatory Impact Analysis)
    2. Regulatory Flexibility Act
    3. Paperwork Reduction Act

A. Background and Summary

1. Background

    Acid deposition occurs when emissions of sulfur dioxide and oxides 
of nitrogen are chemically transformed in the atmosphere into sulfuric 
and nitric acids and return to earth as wet deposition such as rain, 
fog, or snow, or dry deposition such as fine particles or gases. Acid 
deposition damages lakes and harms forests and buildings. SO2 
emissions damage ecosystems and materials, contribute to reduced 
visibility and, at current levels, are suspected of posing a threat to 
human health.
    Title IV of the Clean Air Act, as amended by the Clean Air Act 
Amendments of 1990, directs EPA to establish the Acid Rain Program to 
reduce the adverse effects of acidic deposition. Title IV targets the 
electric utility industry, which accounts for over two-thirds of 
SO2 emissions and over one-third of NOX emissions in the 
United States. Specifically, the Act mandates a national cap of 8.95 
million tons per year on electric utility SO2 emissions by the 
year 2010 (just over half of the 1980 electric utility SO2 
emissions), to be achieved in two phases. Phase I will begin in 1995 
and mainly affects large, high-emitting utility plants; these plants 
are specifically listed in the statute. Phase II will begin in 2000 and 
affects virtually all existing utility units with output capacity 
greater than 25 megawatts and most new utility units.
    The centerpiece of the Acid Rain Program is a unique trading system 
in which allowances are bought and sold at prices determined in the 
marketplace. Each allowance authorizes the emission of up to one ton of 
SO2 during or after a designated year. The majority of utility 
units--both existing and some new units--are allocated allowances based 
on their historic fuel use and the emissions limitations specified in 
the Act. Utility units are required to limit SO2 emissions to the 
number of allowances they hold, but since allowances are fully 
transferrable, utilities may meet their emissions control requirements 
in the most cost-effective manner possible. For instance, a utility may 
decide to (1) switch to a lower sulfur fuel, (2) install flue gas 
desulfurization equipment (scrubbers) and bank unused allowances or 
sell them to other utilities/individuals, (3) forego emissions 
reductions and buy additional allowances (if necessary), or (4) 
implement energy efficiency measures. Other options and combinations of 
options are possible, providing an unusually high degree of 
[[Page 17101]] flexibility for affected units to comply with the law. 
The procedures for transferring and tracking allowances are codified in 
40 CFR part 73.
    Each affected unit must have a permit in which the affected unit 
certifies that it will possess a sufficient number of allowances to 
cover its SO2 emissions and specifies the source's compliance 
options. The permit regulation is codified in 40 CFR part 72.
    To ensure that nationally mandated reductions in SO2 and 
NOX emissions are achieved, each affected unit must install a 
continuous emissions monitoring system and collect, record, and report 
emissions data. The continuous emissions monitoring rule is codified in 
40 CFR part 75.
    If an affected unit violates the Act by emitting more emissions 
than the allowances it holds, the Act requires that the affected unit 
pay penalties and submit a plan detailing how and when the excess 
SO2 emissions will be offset. These requirements act as a strong 
incentive for compliance with the mandated emissions reductions of the 
Acid Rain Program. Excess emissions penalty requirements are codified 
in 40 CFR part 77.
    Finally, 40 CFR part 78 contains administrative appeals procedures 
for resolving disputes over decisions by the Administrator regarding 
any aspect of the Acid Rain Program.

2. The Opt-in Program

    Although the Acid Rain Program is mandated only for utility 
sources, section 410 provides opportunities for SO2-emitting 
sources not otherwise affected by title IV requirements (e.g., 
industrial sources) to participate in the Acid Rain Program by ``opting 
in.''
    The Opt-in Program is a voluntary economic incentive provision. 
Congress developed the Opt-in Program to reduce further the cost of 
complying with the Acid Rain Program. Combustion or process sources not 
otherwise required to reduce SO2 emissions can opt in and make 
incremental, lower-cost reductions. Congress envisioned section 410 as 
a means of generating additional allowances to reduce compliance costs 
for affected utilities and to encourage combustion or process sources 
to consider cost-effective emission reduction opportunities:

    (Section 410) adds flexibility and can enlarge the universe of 
sources for which there are cost-effective reductions in emissions 
of SO2* * *. This section provides a useful additional source 
of reductions that can be made voluntarily by sources choosing to be 
affected by the provisions of this title. (Senate Committee Report, 
Report No. 101-228, December 20, 1989, p. 335.)

    The reductions--in the form of acid rain allowances--can be 
transferred to meet mandatory reduction requirements in the utility 
sector and, thus, lower the overall cost of the Acid Rain Program. 
However, Congress also intended that this shifting of SO2 
emissions between opt-in sources and affected utility units not 
compromise the overall title IV SO2 emissions reduction goals. 
Section 410 ``is intended to further the objective of achieving true 
net reductions of SO2* * *.'' (Id. at 336.) The Opt-in Program has 
been designed to take advantage of lower cost reduction opportunities 
at non-affected sources consistent with the statutory requirements of 
section 410 of the Act and emissions reductions goals (i.e., the 
required 10 million ton reduction of SO2) of title IV.

3. Summary of Final Rule

    The final opt-in regulation for combustion sources details the 
process through which combustion sources can enter the Opt-in Program 
and the requirements they face while participating. The rule allows any 
stationary fossil fuel fired combustion device, i.e., any combustion 
source, to become an affected unit and receive allowances. This rule 
focuses on combustion sources. The treatment of process sources and 
specifically the application and monitoring requirements for process 
sources will be addressed in a subsequent rulemaking. The permitting 
process finalized in today's rule does pertain to both combustion and 
process sources.
    Allowance allocations for opt-in sources, as for utility units, are 
based on operations during 1985, 1986, and 1987. Like utilities in the 
mandatory program, once a combustion source opts in, it must hold 
allowances to cover its emissions. Presumably, the opt-in source will 
reduce its emissions from its baseline level to generate excess 
allowances to sell to other affected units. Because opting in is 
voluntary, only combustion sources that would profit by selling excess 
allowances are expected to participate in the program. In addition, 
since all affected sources must also comply with the other applicable 
requirements of the Act, revenue generated by selling excess allowances 
could help opt-in sources to offset costs of compliance with other 
programs.
    Although EPA has attempted to treat opt-in sources comparably to 
utility units in the mandatory Acid Rain Program, there are some 
situations where restrictions on opt-in sources are needed to protect 
the emission goals of the Act. In section 410(f), Congress expressly 
prohibits opt-in sources from transferring allowances that result when 
they reduce utilization or shut down. Without this prohibition, an 
individual opt-in source could increase overall emissions by shifting 
some or all of its production from the opt-in source to new or existing 
non-affected sources, accumulating the opt-in source's unused 
allowances, and then selling them to other affected sources.
    In order to ensure the surrender of allowances in cases of reduced 
utilization and shutdown, EPA reserves the right to cancel allowances 
produced by reduced utilization or shutdown by removing them from any 
Allowance Tracking System (ATS) accounts into which they had been 
transferred. To facilitate this prospect of cancellation and to protect 
buyers of opt-in allowances, EPA is restricting the transfer of future 
year allowances. In the final rule, EPA continues to allocate 
allowances, in perpetuity, upon application, but is prohibiting the 
transfer of future year allowances from opt-in unit accounts in the 
ATS; only current year or earlier allowances can be transferred. This 
policy will eliminate the need to cancel future year allowances in 
cases where a unit shuts down and sells all its future year allowances. 
Trades involving future year allowances can still be made; however, 
delivery of future year allowances to the buyer must wait until the 
year for which those allowances are to be used for compliance.
    Title IV contains one exception to the overall restriction on opt-
in allowances generated by reduced utilization and shutdown. When a 
``replacement unit'' replaces thermal energy formerly supplied by an 
opt-in source, then the opt-in source may transfer allowances to the 
replacement unit to the extent of that replacement, despite the 
reduction of utilization at the opt-in source. For purposes of this 
thermal energy exception, EPA defines thermal energy to be steam used 
in an industrial process, as distinct from steam used to generate 
electricity, and bases the calculation of transferable allowances on 
the fuel associated with the thermal energy and the allowable emissions 
rate at the replacement unit.
    Eligible combustion sources may submit applications to EPA, as the 
permitting authority in the near term, and to a State or local 
permitting authority, once that permitting authority has an Opt-in 
Program in place under part 70. Upon receipt of the application, its 
evaluation proceeds on two parallel paths will commence: (1) The 
procedure for processing an opt-in permit; and (2) the procedure for 
evaluating the opt-in [[Page 17102]] source's monitoring plan and 
certifying its monitoring systems. After both of these procedures have 
been successfully completed, the combustion source may enter the Opt-in 
Program.

B. Major Changes Made to the Proposed Rule

    Although considerable changes have been made to the language and 
structure of the proposed opt-in regulation for combustion sources, the 
essential elements of the program remain unchanged and the final rule 
is consistent with the regulatory goals discussed in the proposed rule, 
which the Agency here reaffirms. The bulk of this preamble details the 
major changes that have been made:

1. Acceptable Data Sources

    EPA continues to believe that there is no single reliable data base 
that would provide the Agency with quality information on operations 
and emissions of potential opt-in sources. Therefore, the Agency must 
rely on information supplied by the combustion source in an application 
process. In Sec. 74.20(a)(2) of the proposed rule, EPA established a 
screen for ensuring that reliable data is submitted to the Agency, by 
requiring all data to have been previously submitted to a government 
agency.
    Today's rule does not require the previous submission of data to a 
government agency as a precondition for combustion sources to apply to 
enter the Opt-in Program. Instead, EPA will conduct its own evaluation 
of the data submitted for the Opt-in Program using its best judgment, 
although the burden of proof regarding the data's accuracy will remain 
with the applying combustion source. Regardless of whether a state 
permitting program is in place and whether the State or EPA is the 
permitting authority, EPA will retain this data review authority 
consistent with its responsibility for all allowance-related 
activities, as discussed in the preamble to the proposed rule.
    EPA will lead an evaluation process that brings in the expertise of 
state officials as well as other technical data experts. EPA will 
retain the authority, consistent with Sec. 72.4 of part 72, to request 
any additional documentation, in addition to the formal opt-in permit 
application, that it believes is necessary to evaluate the combustion 
source's data. Previous submittals to government agencies that are in 
existence will be expected to accompany the application. In addition, 
EPA may request data for years outside the baseline period, both before 
and after, to verify that submitted baseline data does not represent an 
inexplicable spike in the combustion source's operations. EPA may also 
request additional supporting documentation (e.g., fuel purchasing 
records, production rates, throughputs, sampling protocols, etc.) that 
the Agency believes necessary to verify the information contained in 
the combustion source's opt-in permit application. EPA may, in 
addition, make inspections and examine records at the combustion source 
applying to enter the Opt-in Program.
    Opt-in permit applications submitted by combustion sources with 
entries in the National Allowance Data Base (NADB) will still face 
scrutiny, and the data values within the NADB will not be accepted 
automatically. Such scrutiny and potential revisions are consistent 
with previous Agency assertions that the NADB version 2.11 was the 
final version to be used in the development of allocations for Phase II 
units (see 57 FR 30034 and 58 FR 15721). Combustion sources, by 
definition, cannot be Phase II units and were not automatically 
allocated allowances under section 405 of the Act. Therefore, the NADB 
data for these sources have not been reviewed by EPA to the same extent 
as Phase II unit data, and such review has not been precluded by 
previous regulatory actions.
    The evaluation of data by EPA for the purposes of calculating 
allowances is not unprecedented. In developing Phase II unit data in 
the NADB, EPA compiled information from a number of sources that 
included the Energy Information Administration (EIA), the North 
American Electric Reliability Council (NERC), the affected sources, 
and, to a lesser extent, states. EPA expects the states to play a 
larger role in evaluating industrial operating and emissions data, 
because the states are often the best repository of such information 
and are aware of the detailed operations of such sources.
    Both the applying combustion source and third parties will have 
access to and be able to assess the information EPA ultimately accepts 
in its allowance calculation. Both the combustion source and third 
parties will be able to scrutinize the baseline data and the number of 
allocated allowances during the public comment period associated with 
the draft opt-in permit. Furthermore, the combustion source has the 
opportunity to decline to opt in at any time prior to the effective 
date of the opt-in permit. The combustion source can also appeal its 
allowance allocation consistent with the procedures prescribed in part 
78.
    While the information for industrial opt-in sources will be less 
readily available, EPA sees no other workable alternative than to 
assume the responsibility of examining submitted data on a case-by-case 
basis. The Agency recognizes that some incentives will remain for the 
combustion source to overstate its baseline for the purposes of 
increasing its allowance allocation, but believes that such risks will 
be offset by Agency review of the data and supporting documents, the 
rejection of insufficiently supported data, and the threat of 
enforcement actions and penalties for falsely submitted data. Toward 
these ends, EPA will enhance the certification statements that 
designated representatives sign when submitting an opt-in permit 
application to assure that such submittals (1) are believed to be true, 
accurate, and complete; (2) are accompanied by all available 
documentation that the combustion source and its state regulatory 
agencies possess that are relevant to the accuracy of such data; and 
(3) are not adjusted in any way.

2. Allocation of Opt-in Allowances and Transfer Prohibition

    In the proposed rule, EPA planned to allocate allowances on a one-
time, in perpetuity basis and allowed for the transfer of current and 
future-year opt-in allowances from opt-in accounts into other accounts 
in the Allowance Tracking System (ATS). This policy was proposed to 
promote fungibility of opt-in allowances and provide combustion sources 
flexibility in their compliance planning. However, in order to uphold 
the requirements of section 410(f) of the Act, EPA also proposed in 
Sec. 74.50 of the proposed rule to reserve the right to cancel, under 
certain circumstances, any allowances that were initially allocated to 
an opt-in source by removing allowances from any ATS accounts into 
which they had been transferred.
    Under section 410(f), the Act restricts opt-in sources from 
transferring or banking allowances produced as a result of reduced 
utilization or shutdown, except as discussed in the proposed rule (58 
FR 50103) and later in this preamble under the thermal energy 
exception. To uphold this restriction, EPA is requiring opt-in sources 
to surrender allowances generated by reduced utilization or shutdown. 
In the proposed rule, EPA maintained that in the case where an opt-in 
source has shut down, reduced its utilization or has excess emissions, 
and fails to supply the equivalent number of allowances owed to EPA 
(presumably because the opt-in source has sold all of its future-year 
allowances), EPA must recover and cancel the opt-in source's allowances 
in [[Page 17103]] the required number from other ATS accounts into 
which they were transferred. Canceling opt-in allowances held in other 
accounts in the ATS was considered the only way to ensure that such 
allowances did not result in additional emissions and that the SO2 
emissions reduction goals of the Acid Rain Program were preserved. EPA 
maintained in the proposed rule that the allowance market would account 
for the risk of cancellation by asking lower prices for opt-in 
allowances and writing protective clauses into sales contracts.
    In the final rule, EPA is choosing to allocate allowances, in 
perpetuity, at the time the combustion source becomes an affected unit, 
but, based on the comments received, is prohibiting the transfer of 
future-year opt-in allowances from opt-in source accounts in the 
Allowance Tracking System (ATS). Transfers of current-year opt-in 
allowances will only be recorded by EPA following the completion of the 
end-of-year reconciliation process for the previous compliance year, as 
set forth in Sec. 73.34(a) of 40 CFR part 73. If an opt-in source is 
found to have excess emissions for a given year, that opt-in source 
will be prohibited from transferring the following year's allowances 
until an offset plan is approved and allowances have been deducted to 
offset its excess emissions.
    When an opt-in source permanently shuts down, it may no longer 
retain allocated allowances and must surrender to EPA all of its opt-in 
allowances starting with the year in which the opt-in source shuts 
down. In the case of an opt-in source that has shut down, as opposed to 
an opt-in source that is still operating, EPA cannot draw upon future-
year allowances to offset excess emissions because such allowances have 
already been surrendered. Therefore, EPA reserves the right to cancel 
opt-in allowances (specifically, allowances for the year for which the 
opt-in source has excess emissions and the year in which the opt-in 
source shuts down) from any ATS account into which such allowances have 
been transferred. Previous year opt-in allowances that had subsequently 
been transferred to other ATS accounts would not be canceled because 
such allowances were in excess of the number of allowances needed for 
compliance in previous years.
    EPA retains the option of allowance cancellation to ensure that 
opt-in sources through their operations cannot increase emissions to 
the environment. EPA believes that the Opt-in Program must be self-
enforcing and should not rely on possible future regulation to 
implement the 5.6 million ton cap for industrial sources because of the 
reasons discussed in the proposed rule: (1) The incomplete coverage of 
the Opt-in Program relative to the industrial sector; (2) the 
importance of achieving title IV emission reduction goals by 
maintaining the emissions neutrality of the Opt-in Program relative to 
historic emission levels (rather than future emission inventory 
levels); and (3) the aggregate nature of emission inventories and their 
lack of specificity to address emissions and allowance allocations of 
individual opt-in sources.
    Furthermore, EPA agrees with commenters who believe that most 
trades of future-year opt-in allowances will take the form of ``option 
contracts,'' e.g., the buyer and seller arrange today for the option to 
buy allowances at a future time at a quantity, price, and date set 
today. Buyers are more likely to enter into options contracts for 
future-year opt-in allowances because, if allowances are canceled, the 
buyer only loses the option to buy allowances and not the allowances 
themselves, as would be the case with other types of contracts. If 
these commenters are correct, then EPA's prohibition of the transfer of 
future-year opt-in allowances should not significantly alter expected 
market behavior and its treatment of opt-in allowances. In fact, 
current allowance market behavior in the utility sector suggests that, 
in many cases, a portion of the full price is paid now for future-year 
allowances, but the actual transfer of such allowances and payment of 
the remaining purchase price will not occur until the allowances become 
usable for compliance. Buyers are reluctant to pay full price now for 
allowances that cannot be used until a future date.
    Although EPA is restricting the transfer of future-year opt-in 
allowances, it is allowing the transfer of current-year opt-in 
allowances as soon as the end-of-year reconciliation process for the 
previous year is completed. (EPA will allow, for the first current 
year, the transfer of current-year opt-in allowances upon entry into 
the Opt-in Program). EPA believes that current-year opt-in allowances 
may play a valuable role in assisting with compliance for the utility 
sector and must be available for transfer before the end of the current 
year. However, in order to uphold the requirements of section 410(f) of 
the Act, EPA reserves the right to cancel current-year opt-in 
allowances that have been allocated to the opt-in source in the event 
that an opt-in source has excess emissions and has shut down, been 
reconstructed, or become affected under Sec. 72.6. EPA believes that 
restricting opt-in allowance transfers to current-year allowances will 
reduce the likelihood of having to cancel purchased opt-in allowances. 
Buyers of current-year opt-in allowances have a much better chance of 
accurately assessing the integrity, financial health, and future status 
of an opt-in source in a short time frame (i.e., within the current 
year) than they would in making an accurate assessment over a longer 
time frame (i.e., one extending as long as 31 years into the future). 
EPA considered not canceling current-year allowances, but instead using 
enforcement actions to try to recover excess opt-in allowances. EPA 
rejected this approach because of the concern that if enforcement 
actions were unsuccessful in the recovery of excess opt-in allowances, 
the clear direction of section 410(f) of the Act would be violated, and 
the emission reduction goals of title IV would be compromised.

3. Offering Opt-in Allowances on the Acid Rain Auction

    In the proposed rule, EPA prohibited the trading of opt-in 
allowances in the Acid Rain auction. EPA is allowing, in the final 
rule, the offering of opt-in allowances in the spot auction, provided 
the compliance use date of the allowances offered is for a prior year. 
Prior year allowances are allowances dated a year or more prior to the 
spot auction year. Prior year opt-in allowances will have cleared the 
end-of-year compliance process including any possible allowance 
cancellations for reduced utilization, as discussed above. EPA is still 
prohibiting the submission of offers of current-year opt-in allowances 
in the Acid Rain auctions because these allowances have a possibility 
of being canceled by EPA in the future. Buyers of current-year opt-in 
allowances sold in the auctions have no protection against cancellation 
as they would if purchasing opt-in allowances through a private 
contract. EPA believes that if there is demand for an auction that 
includes current-year opt-in allowances, the private sector will 
develop such an outlet.

4. Thermal Energy Exception

    Section 410(f) limits the transfer of opt-in allowances when opt-in 
sources reduce utilization or shutdown except when the reduced 
utilization or shutdown results from the replacement of thermal energy. 
EPA received numerous comments on implementing this thermal energy 
exception. This section discusses the three main issues associated with 
the thermal energy exception:
    (a) The definition of thermal energy; [[Page 17104]] 
    (b) The calculation of transferrable allowances; and
    (c) The methodology used to calculate the fuel associated with 
thermal energy.
a. Definition of Thermal Energy
    In Sec. 72.2 of the proposed rule, EPA defined thermal energy as 
the thermal output produced by a combustion source used directly as 
part of a manufacturing process but not used to produce electricity. 
EPA received 29 comments on the definition of thermal energy.
    Seventeen commenters disagreed with the proposed definition and 
argued that the thermal energy definition should include electrical 
output in addition to steam output. Several commenters argued that EPA 
has no statutory basis in section 410(f) to define thermal energy to 
include only steam output because the statute does not specifically 
cite the Public Utility Regulatory Policies Act (PURPA) definition of 
thermal energy used by the Agency in the proposed rule. Commenters also 
maintained that the legislative history does not support a limited 
definition. Lastly, commenters pointed out that because section 410(f) 
refers to the term ``unit'' that by definition does not distinguish 
between facilities that produce steam for generating electrical energy 
and those that produce steam for direct sale, the definition of thermal 
energy should not make such a distinction.
    One commenter argued that thermal energy means ``heat'' and that 
the facilities affected by the Act are combustion units that produce 
heat, which sometimes is used to drive a turbine to create electricity 
and sometimes is used to create steam. Several other commenters noted 
that the proposed definition fails to take into account the integrated 
nature of many industrial facilities and does not consider how 
difficult it may be to determine how the thermal energy is allocated 
between steam and electricity.
    In addition, a number of commenters believed that in developing the 
thermal energy definition, EPA ignored the intent of Congress to allow 
small electric generating units the opportunity to opt in, retire their 
older units, and transfer allowances to replacement sources.
    Four commenters stated that EPA's proposed opt-in rule is 
inconsistent with the views stated in the ``Dover Letter,'' sent to 
SFT, Inc. on March 7, 1991. The commenters contended that a 
representative from EPA's Office of Atmospheric and Indoor Air Programs 
stated that the City of Dover would be allowed to opt in its exempt 
boilers used to generate electricity under section 410 of title IV and 
then transfer the allowances received to a new, replacement boiler. The 
commenters argued that EPA should uphold its original views and allow 
electric units to opt in. One commenter, however, recognized that this 
``Dover Letter'' was not a legally enforceable, binding statement of 
law.
    Three commenters supported EPA's definition of thermal energy based 
on the argument that if electricity is included in the definition, the 
total number of permanent allowances and associated emissions would 
increase above what is permitted under title IV. These commenters also 
argue that the Act draws a clear distinction between thermal energy and 
the energy used for the generation of electric power and thus, small 
electricity generators should not be considered beneficiaries of the 
thermal replacement energy exemption.
    Response: As stated in the preamble to the proposed rule (58 FR 
50087), EPA believes defining thermal energy as the steam output used 
directly as part of a manufacturing process but not used to produce 
electricity is consistent with the Congressional intent and goals of 
title IV and section 410. For the reasons set forth in the preamble to 
the proposed rule, the final rule retains the definition of thermal 
energy as proposed and limits thermal energy to the steam output used 
directly in a manufacturing process but not used to produce 
electricity.
    EPA continues to believe that Congress selected the term thermal 
energy precisely to distinguish between electric energy and thermal 
energy used in manufacturing processes. If Congress had intended 
thermal energy to mean total energy, which includes electricity, then 
it would have had no need to use the term ``thermal'' at all. 
Furthermore, EPA disagrees with those commenters who claimed that 
because Congress did not specifically cite the PURPA definition of 
thermal energy in title IV it is inappropriate to use that definition. 
With no definition specifically provided in the statute, limited 
legislative history, and no evidence that Congress intended otherwise, 
EPA believes that using the PURPA definition is appropriate since it 
provides a long standing, accepted meaning of the term within the 
federal regulatory framework governing industrial steam production and 
electrical generation.
    Some commenters argued that because section 410(f) uses the term 
``unit'', Congress did not intend to distinguish between sources that 
produce steam for generating electricity and those that produce steam 
for direct sale. However, EPA believes that the term ``unit'' as used 
in section 410(f) provides no basis for defining ``thermal energy'', 
but rather the term ``unit'' is used in section 410(f) only to limit 
the transfer of allowances under the thermal energy exception to 
affected units (i.e., ``any other unit or units subject to the 
requirements of this title.'')
    EPA stated in the so called ``Dover Letter'' that its response to 
the City of Dover was based on preliminary assessments of the language 
in title IV and was subject to modification in the final EPA 
regulations:

    Below are EPA's comments based on the language in Title IV of 
the Act. You should be aware, however, that the views expressed in 
this letter are based on our preliminary assessments and could be 
modified in the final EPA regulations. (March 7, 1991 letter from 
Eileen Claussen to Tom Fitzpatrick).

    By its own terms, the March 7, 1991 letter did not provide 
guidance, much less a statutory interpretation or an applicability 
determination for the units in question, that could be relied upon. In 
fact, the March 7, 1991 letter indicated that this was a preliminary 
views based only on the statutory language itself and did not indicate 
that any other material relevant to statutory interpretation (such as 
legislative history) had been considered. Several months thereafter, 
EPA sent a retraction letter on January 7, 1992 to the City of Dover 
reiterating that EPA's response in the March 7, 1991 letter was 
preliminary and that the Agency was reconsidering the legal and 
analytic basis of the position it had taken in the March 7, 1991 
letter.
    Lastly, EPA recognizes the integrated nature of some industrial 
cogeneration facilities but maintains, as confirmed by historic 
industrial reporting, that steam and electrical outputs are observable 
and measurable quantities.
b. Emission Rate Used To Calculate Transferable Allowances
    To calculate the number of allowances that can be transferred from 
the opt-in source to a replacement unit under the thermal energy 
exception, EPA proposed, under Sec. 74.47(b)(4), to use the lesser of 
the federally enforceable allowable emission rate at the replacement 
unit or 1.2 lbs/mmBtu. EPA received eighteen comments on this issue 
with no commenters supporting the 1.2 lbs/mmBtu emission rate cap as 
proposed, and six commenters supporting the use of the replacement 
unit's emission rate. Two commenters contended that the proposed 1.2 
lbs/mmBtu emission rate is excessively high given that emission 
[[Page 17105]] rates at replacement units are likely to be much lower.
    Fifteen commenters objected to EPA's proposal of a 1.2 lbs/mmBtu 
emission rate limit as too restrictive. These commenters argued that 
the use of the 1.2 lbs/mmBtu emission rate is arbitrary and not 
supported by the statute where the replacement unit's emission rate is 
higher. They also pointed out that the proposed restriction does not 
recognize all possible replacement units (e.g., existing units) and 
would unjustifiably restrict allowance transfer during Phase I when the 
emission rate could be 2.5 lbs/mmBtu.
    Response: After further consideration, EPA is eliminating the 1.2 
lbs/mmBtu emission rate restriction used to calculate the number of 
allowances that can be transferred to the replacement unit under the 
thermal energy exception. Today's rule uses the federally enforceable 
emission rate at the replacement unit to calculate the number of 
transferable allowances.
    The rule was changed because EPA agrees with the comments that the 
use of the 1.2 lbs/mmBtu does not recognize the different emission 
rates at potential replacement units, some of which may be existing 
units. In the preamble to the proposed rule, EPA argued that applying a 
1.2 lbs/mmBtu rate is consistent with the requirements for Phase II 
units. However, since a replacement unit can be any affected unit, the 
universe of replacement units would include Phase I units with 2.5 lbs/
mmBtu rates and other opt-in sources with emission rates that could be 
even higher. Given that these potential replacement units could have 
higher rates and that the statute does not set a limit for the emission 
rate, EPA believes there is no basis for restricting the emission rate 
to 1.2 lbs/mmBtu.
c. Methodology Revision for Calculating the Fuel Associated with 
Thermal Energy
    In Sec. 74.47(b) of the proposed rule, EPA required that 
replacement units calculate the fuel associated with thermal energy by 
dividing the amount of qualifying thermal energy (that is, the 
replacement thermal energy) by the efficiency associated with the 
production of thermal energy. EPA received several comments related to 
this issue.
    One commenter suggested that all units of fuel used should be 
attributable to a unit's steam output because it is not practical to 
identify a thermal energy fuel increment (used to determine the 
allowance transfer) and because there is no established method for 
doing so.
    Several commenters offered alternative formulas for calculating the 
transferable allowances. One suggested that EPA calculate the number of 
transferable allowances as the product of the ``useful thermal energy 
output'' of the replacement unit, as defined under PURPA, and the 
difference between the opt-in source's emission factor and the 
replacement unit's emission factor. This commenter contended that this 
will encourage more efficient cogeneration applications. Another 
suggested that EPA compute the number of transferable allowances by 
evaluating the portion of an opt-in source's historic thermal energy 
that is replaced by a cogeneration facility, rather than the portion of 
the cogeneration facility's energy output that is thermal energy. Other 
commenters recommended that EPA include provisions that provide an 
incentive to undertake energy efficiency gains at the replacement unit. 
The number of transferable allowances should be based on the 
replacement unit's emission rate taking into consideration any 
efficiency differences in steam production at the opt-in source and at 
the replacement unit.
    Response: Based on the comments received, EPA is changing the 
methodology for calculating the fuel associated with qualifying thermal 
energy as discussed under Sec. 74.47. In today's rule, EPA allows opt-
in sources to use an efficiency constant when calculating fuel input 
from thermal output to give them an incentive to make their production 
processes more efficient.
    EPA has chosen to make the calculation of transferred allowances 
based on a constant value rather than having replacement units 
calculate fuel utilization each year because relying on actual fuel 
utilization would discourage improvements in efficiency. By using a 
constant, a replacement unit that increases its efficiency will use 
less fuel to produce the same amount of thermal output, but will still 
have transferred to it the same number of allowances as before the 
efficiency improvement. In contrast, calculating the fuel utilization 
each year would reduce the incentives for efficiency improvements. This 
will be true for either boilers or cogenerators.
    The efficiency constants selected represent the fuel utilization of 
the boiler or cogenerator supplying the replacement steam. Fuel 
utilization represents the quotient of all energy outputs and the 
energy content of total fuel input. The Agency distinguishes between 
boilers and cogenerators in establishing these constants to recognize 
the greater energy requirements necessary to produce electricity as 
opposed to producing steam. It would be unfair to compare the 
efficiency of cogenerators producing electricity and/or steam with the 
efficiency of boilers producing only steam, because the production of 
electricity inherently requires more fuel. In today's rule, the Agency 
sets the efficiency constant for boilers to be 0.85 and the efficiency 
constant for cogenerators to be 0.80. These constants represent 
industry averages for modern equipment (see memorandum in the docket 
entitled, ``Evaluation of EPA's Revised Methodology for Calculating the 
Transferred Allowances under the Thermal Energy Exception'').
    For boilers serving as replacement units, the attribution of fuel 
associated with thermal energy is straightforward. However, for 
cogenerators, it is very difficult to distinguish between the fuel 
going towards steam or electricity, because the production of the two 
is tightly linked. Using fuel utilization implies that both the fuel 
input and the efficiency losses associated with the production of each 
product is proportional to the amount of each product produced.
    EPA specifically defines thermal energy to consist of only steam 
and this definition does not include electricity (see previous 
discussion of thermal energy definition). In calculating allowances 
transferred under the thermal energy exception, EPA must distinguish 
between the fuel used to produce electricity and the fuel used to 
produce thermal output. The former does not count toward the thermal 
energy exception, while the latter does. Therefore, EPA does not 
believe it is appropriate or consistent with the statutory provisions 
in section 410(f) to attribute all fuel input to steam production, 
where, in fact, both steam and electricity are being produced.
    EPA believes its revised methodology addresses the concerns of 
commenters seeking to instill incentives for cogeneration and 
specifically relying on the amount of thermal energy replaced. The 
alternative suggestion of basing allowance calculations on energy 
output is inconsistent with all other allowance calculations found in 
the Acid Rain Program. Allowances for utility units in the Acid Rain 
Program are generally calculated as a product of a fuel input baseline, 
expressed in mmBtu, and an emission rate, expressed in lbs. per mmBtu 
of fuel input. An allowance calculation where emission rates, 
reflecting energy input, are multiplied by the thermal energy replaced, 
reflecting energy output, would be internally inconsistent. The revised 
methodology, therefore, remains [[Page 17106]] consistent with 
allowance calculations in the core utility program.

C. Other Significant Changes Made to the Proposed Rule

1. Ineligibility of Non-operating and Retired Units

    EPA continues to require that combustion sources seeking to enter 
the Opt-in Program be operating at the time of application. Combustion 
sources opting in under the thermal energy exception are also required 
to be in operation, although they can shut down upon entry into the 
program.
    EPA seeks to restrict the allocation and use of opt-in allowances 
to instances in which real emissions reductions will take place, and 
not to award allowances in situations of reduced utilization and shut 
down. EPA believes that this requirement to be operating at the time of 
application is consistent with this principle. The provision 
establishing such a requirement provides a clear criteria for assessing 
whether a combustion source has reduced its utilization or shut down 
(i.e. is not operating) for the purposes of accepting the combustion 
source into the program and allocating allowances.
    In the final rule, EPA establishes a definition of operating 
strictly for the purposes of the Opt-in Program. Operating is defined 
to mean the documented consumption of fuel input for more than 876 
hours in the 6 months immediately preceding application. This level of 
operating hours was selected because it serves as the upper bound of a 
peaking unit, that is, 20 percent capacity factor in any calendar year 
as defined in Sec. 72.2. The Agency kept the 20 percent operating 
level, but shortened the period of time from one year to six months so 
that a combustion source could be idle at most approximately four and 
one half months, rather than twice that amount of time and still be 
eligible to opt in. EPA expects that combustion sources operating below 
the 20 percent level would have little interest in participating in the 
Opt-in Program because the number of allowances freed up from emission 
reductions would be small and unlikely to cover the costs of opt-in 
participation.
    Whether or not they were operating at the time of application, 
combustion sources that operated in the 1985-1987 time period would 
have the necessary data to determine an allocation of opt-in 
allowances. However, a combustion source that was not operating at the 
time of application would have all or virtually all of its allowances 
deducted under the reduced utilization and shutdown provisions. EPA 
does not believe it is reasonable or administratively practical to 
grant these opt-in sources allowances and then, from the first year on, 
take virtually all of them away.
    If a combustion source is shut down but plans to restart its 
operations, EPA believes that the combustion source should apply to opt 
in upon restart, that is where there is proof that the combustion 
source is now operating consistent with the above definition. 
Furthermore, the allowance allocation for opt-in sources that restart 
would be based on any current allowable SO2 emissions rate in 
effect at the time of application.
    As discussed under the thermal energy exception, non-operating opt-
in sources may transfer allowances to replacement units, to the extent 
that such units can document the replacement of thermal energy. In 
allowing non-operating sources to participate in the thermal energy 
exception, but excluding non-operating sources from applying to opt in, 
the Agency requires that even combustion sources planning to shut down 
upon entry be operating upon application. The Agency believes a valid 
distinction exists between replacement arrangements made in response to 
the Opt-in Program and those that preceded the application to enter the 
program.
    The reason why the combustion source is not operating at the time 
of application is not relevant to the Agency's determination of whether 
a retired or non-operating source should be permitted to opt into the 
Acid Rain Program. Allocating allowances to a retired or non-operating 
combustion source and allowing the source to trade such allowances 
would, in effect, allow another source to emit what the retired or non-
operating combustion source was emitting before it ceased operations. 
These allowances would thus result in more pollution being released 
into the environment. As discussed in the preamble to the proposed 
rule, Congress expected the SO2 emissions from non-utility sources 
to remain at a constant level and to reflect a dynamic balancing of 
emissions caused by fluctuations in economic activity, shutdowns, 
facility modernization, fuel switching, and cleanup. By granting 
sources not operating at the time of application the ability to opt-in 
and receive allowances, EPA would increase emissions above the presumed 
constant level of non-utility emissions.

2. Interpretation of Shutdown, Modification and Reconstruction

    In the proposed rule, EPA sought to distinguish the modification of 
an opt-in source from its outright replacement. EPA recognizes that 
opt-in sources may need to make changes to their facilities in order to 
reduce emissions. Here, EPA attempts to address the extreme case in 
which such changes represent the construction of an essentially ``new'' 
facility. EPA proposed to consider an opt-in source ``shut down'' in 
the circumstance in which the opt-in source had been modified to such a 
large extent that the opt-in source no longer existed and a new one had 
been put in its place (in the extreme, the construction of a new 
facility within the shell of the old one). EPA chose as its test for 
replacement the reconstruction standard established in 40 CFR 60.15, as 
discussed in the preamble to the proposed rule.
    EPA maintains that a new facility constructed in the shell of an 
older one should not retain the allowances allocated to the original 
opt-in source and should be removed from the Opt-in Program. Such 
restrictions are consistent with section 410(f) of the Act in 
implementing both the reduced utilization provisions as well as the 
thermal energy exception. The Agency believes its use of the regulatory 
term ``reconstruction'' and its threshold of 50 percent of what would 
be required to construct a new comparable facility is entirely 
appropriate in this context, and therefore the Agency applies this 
standard for reconstruction from 40 CFR 60.15 to opt-in sources. One 
commenter correctly acknowledged that the 50 percent criterion would 
apply to improvements to the facility as a whole; however, EPA disputes 
the notion that the level of investment would prohibit facility 
improvements to reduce emissions or would restrict alternatives to 
strictly end-of-pipe options. EPA believes that this level of 
expenditure is sufficiently high to allow sources great flexibility in 
their choice of control options.
    EPA modifies in the final rule the regulatory language that would 
exclude reconstructed units from maintaining their status as opt-in 
sources. Instead of considering such units as ``shutdown'', the rule 
explicitly dismisses such units from the program in cases of 
reconstruction. The effect on sources undergoing modifications 
qualifying as reconstruction remains the same.
    To exclude from consideration the reconstruction of any equipment 
with equipment that performs the same or similar function would 
circumvent the [[Page 17107]] need to remove allowances from sources 
that are no longer in operation. As discussed previously, emissions 
from these sources are assumed to disappear, consistent with the 
Congressionally assumed constant level of industrial emissions, and 
opt-in allowances are assumed to be generated from emission reductions 
at the opt-in source. The Opt-in Program should not perpetuate 
emissions from old to new sources, or in this case, from old to 
reconstructed sources.
    The increase in productive capacity at opt-in sources is relevant 
only to the extent that such investments would trigger a determination 
of reconstruction. Finally, the use of the definition of major 
modification to distinguish between reconstructed units and existing 
opt-in sources is also not appropriate. If a modification is a major 
modification because a source achieves a significant increase in a 
regulated pollutant, the source's permitting levels may change, but 
such changes would not affect its opt-in permit or its allowance 
levels, provided that such modifications do not also exceed the 
threshold for reconstruction.
    In the context of the Opt-in Program, a reconstructed opt-in source 
will not be permitted to enter or remain in the Opt-in Program at its 
pre-reconstruction baseline and allowance allocation. Should the 
reconstructed and former opt-in source wish to enter the Opt-in 
Program, after modifications have been completed, it may do so, once it 
establishes a three-year alternative baseline. Other regulatory 
programs, including the non-attainment and Prevention of Significant 
Deterioration (PSD) programs, may or may not consider the reconstructed 
opt-in source as a ``new'' source; nevertheless, units undergoing 
reconstruction will have their allowances deducted and their opt-in 
permits terminated. Units that do not exceed the level of 
reconstruction and remain in the Opt-in Program may or may not be 
subject to New Source Review (NSR) or the New Source Performance 
Standards (NSPS) but applicability under these programs is independent 
from participation in the Opt-in Program.

3. Incorporation of Efficiency Measures

    Under Sec. 74.44 of the proposed regulation, the only efficiency 
improvements that would be credited toward utilization were 
improvements that reduced the demand for electricity or that made 
electricity generation more efficient. Improvements in the efficiency 
of steam production, measures to reduce steam load (i.e., steam 
conservation measures), and sulfur-free generation as defined in 
Sec. 72.2 were not included.
    The final rule allows for efficiency improvements to be 
incorporated in an opt-in source's annual utilization. Efficiency 
improvements include any expected reduction in the heat rate at the 
opt-in source, any expected improvement in the efficiency of steam 
production at the opt-in source, and any kilowatt hour savings or steam 
savings from demand side measures.
    EPA agrees that improvements in the efficiency of steam generation 
should be encouraged. EPA believes that some restrictions are 
necessary, however, because cogeneration facilities could shift their 
output to steam while decreasing the efficiency of electricity 
generation. Such shifts from electricity to steam should not result in 
an adjusted increase in utilization and hence in allowances retained.
    In order to prevent such shifts from occurring, today's rule 
requires that the heat rate at an opt-in source not increase in order 
to claim an efficiency improvement in steam production. If the heat 
rate increases, that is, if electricity generation becomes less 
efficient, no credit for gains in the efficiency of steam production 
will be given towards utilization. The methodology for quantifying this 
adjustment to utilization from efficiency increases in steam production 
will be developed by EPA, working with interested opt-in sources.
    EPA also agrees that reductions in steam load created by demand 
side measures that improve the efficiency of steam consumption should 
be encouraged. EPA is concerned about the identification of such 
measures and their verifiable contribution towards using steam more 
efficiently. The burden for documenting such measures is on the opt-in 
source, which must be able to demonstrate that the reduction in 
utilization from a steam conservation measure is different than 
reductions in utilization not related to conservation improvements.
    Finally, EPA also believes that opt-in sources should be encouraged 
to pursue opportunities to increase their use of sulfur-free 
technologies at their facilities. However, EPA maintains that such 
technologies are already included in the provisions providing credit 
for demand-side measures (see Appendix A, Section 1 of part 73 of this 
chapter which includes sulfur-free technologies in a list of examples 
of demand-side measures).
    EPA does not include, however, a separate provision for ``sulfur-
free generation'' in the utilization adjustment, because the term, as 
defined in Sec. 72.2 of this chapter and used in Sec. 72.91, includes 
all sulfur-free generators in the utility's system. For opt-in sources, 
EPA restricts adjustments to utilization for improved efficiency to 
measures performed at the opt-in source itself or by the ``customers'' 
of the opt-in source (i.e., electricity or steam users of the opt-in 
source). The Agency does not include ``sulfur-free generation'', 
because of concerns of replacing the opt-in source's utilization 
without any thermal energy transfer, as required by section 410(f).

4. Expiration of a Non-Effective Opt-in Permit

    The proposed rule created an effective date for an opt-in permit to 
be the later of the issuance of the opt-in permit by the permitting 
authority or the completion of the certification of the combustion 
source's monitoring systems. However, no time period was specified 
regarding the length of time between the issuance of the opt-in permit 
and these certifications. One commenter requested clarification about 
this time period and whether or not the opt-in permit would expire 
before becoming effective.
    Response: EPA establishes, in the final rule, an expiration date 
associated with a non-effective opt-in permit. An opt-in permit will 
expire 180 days after issuance, if it has not yet become effective. The 
length of 180 days was selected because the time period incorporates 
the duration of EPA's review of monitoring certification for the 
combustion source's CEM systems and two months for the combustion 
source to arrange testing, should the combustion source wish to wait to 
certify its monitors until the end of the permitting process.
    EPA believes that an expiration date is important to prevent 
combustion sources from seeking a permit with no immediate intention to 
opt into the Acid Rain program. A combustion source might apply early 
to enter the Opt-in Program, but wait to make its permit effective in 
order to secure an allowance allocation based on its current emissions 
rate at the time of application. If the combustion source faced the 
possibility of an impending emission limit that would lower its 
allowable emissions rate, the combustion source could apply and then 
wait to install its monitors and undertake its emission reductions. In 
effect, the combustion source would be seeking to capitalize on 
emission reductions it would be required to make based on other 
regulatory requirements.
    EPA sees no reason to allow for an extended period of time during 
which a [[Page 17108]] combustion source can secure its allowance 
allocation and keep its application pending. EPA wants its applicants 
to be serious about entering the Opt-in Program and is concerned about 
behavior that would lead combustion sources to seek an opt-in permit 
and secure an allowance allocation because of the prospect of future, 
more stringent emission limitations. In addition, EPA does not want to 
waste administrative resources in reviewing applications and processing 
permits for combustion sources that are not ready to participate in the 
program and may or may not actually opt in. The Agency believes that 
the time period for the entire permit process plus the 180 days added 
here, a total of up to 24 months, is sufficiently long for the 
combustion source to install and certify its monitors considering that 
the combustion source must submit upon application a monitoring plan, 
detailing both the monitors' configuration and equipment. EPA may 
extend this time period of 180 days, if the applying combustion source 
can show that despite good faith effort towards certifying its 
monitors, it was unable to complete such certifications within this 
time frame.

5. Miscellaneous Issues

a. Opt-in Permitting
    As discussed in the preamble to the proposed rule (58 FR 50096), 
the permitting procedures for opt-in sources had been designed to 
follow the approaches set forth at parts 70 and 72. EPA has found it 
necessary, however, to modify the permitting procedures in the proposed 
opt-in regulation to handle inconsistencies between the proposal and 
parts 70 and 72, some of which were noted by commenters or became 
evident in permitting Phase I units and establishing part 70 permitting 
programs. These relatively minor changes in the final rule make the 
permitting process conform better with the process used to permit 
utility units affected under the Acid Rain Program.
    Of the changes made to improve the regulatory language implementing 
the opt-in permitting process, a few are worthy of further explanation. 
First, the roles of the Administrator and the permitting authority have 
been clarified. Although the Administrator retains an important role in 
developing an opt-in source's allowance allocation for the combustion 
source's opt-in permit, the permitting authority has a greater role in 
the final rule in developing the opt-in permit than was suggested in 
the proposed regulatory language. Secondly, the time frame under which 
the State as permitting authority has to process an opt-in permit has 
been made consistent with part 70. In the final rule, the State has 18 
months from the receipt of a complete opt-in permit application or such 
lesser time as approved under part 70. The proposed regulatory language 
could have been interpreted to require a permitting decision within 12 
months.
    There are several other specific changes that relate to opt-in 
permitting. One concerns the submission of a compliance plan as 
provided under Sec. 72.40. The opt-in compliance plan must include an 
explicit commitment on the part of the designated representative to 
hold allowances in the opt-in source's compliance subaccount equal to 
or greater than the amount of sulfur dioxide emissions emitted during 
that year. Another concerns the term of an opt-in permit. Opt-in 
permits issued prior to January 1, 2000 will expire on December 31, 
1999. Opt-in permits issued after January 1, 2000 will have a term of 5 
years. Further, a provision has been added to Sec. 74.40 to facilitate 
the opening of opt-in unit accounts. The designated representative of 
an opt-in source shall request the opening of such an account in the 
Allowance Tracking System once its permit is final and effective. In 
addition, the rule language is clarified concerning the deduction of 
allowances in the circumstances of withdrawal, shutdown, 
reconstruction, or change in source's status as unaffected under the 
mandatory portion of the Acid Rain Program.
    EPA neglected to explicitly discuss the permit revision and renewal 
procedures in the proposed opt-in regulations and includes such 
language in the final rule. Permit revision procedures follow 
procedures set forth in subpart H of part 72. The opt-in regulation, 
part 74, reserves for the permitting authority the preparation of 
permit revisions and the implementation of such revisions.
    Opt-in sources may renew their opt-in permits through the same 
process in which the opt-in permits were initially issued, except that 
the permitting authority shall not alter an opt-in source's allowance 
allocation when issuing a renewal of an opt-in permit. EPA believes 
that assurance of a consistent stream of opt-in allowances is essential 
to a viable Opt-in Program. Without a consistent stream of allowances, 
opt-in sources are unable to plan for future-year compliance, and 
purchasers of opt-in allowances will be hesitant to enter into forward 
or futures contracts because of the risk that the allowances may not be 
available.
    EPA also seeks to clarify the relationship of title V and a 
combustion source's ability to enter the Opt-in Program. Specifically, 
commenters inquired whether a combustion source must hold a title V 
permit to be an opt-in source. Another commenter explored the 
possibility for a mobile source, i.e. a locomotive, to be eligible to 
opt into the Acid Rain Program.
    Consistent with title V of the 1990 Clean Air Act Amendments and 
regulations promulgated in part 70, all affected sources are considered 
part 70 sources and therefore are required to meet the permitting 
requirements under title V. The statute, under section 502(a), makes 
unlawful ``the operation of an affected source (as provided in title 
IV) * * * except in compliance with a permit issued by a permitting 
authority under (title V).'' Opt-in sources are electing to become 
affected units and, therefore, are included as affected sources under 
the Acid Rain Program and in title V (see 42 U.S.C. 7651a(1)). 
Therefore, all opt-in sources must obtain title V permits.
    Particularly in light of the obligation for an affected unit to 
hold a title V permit, nonstationary sources are excluded from entering 
the Opt-in Program. Title V expressly applies only to stationary 
sources (see 42 U.S.C. 7402(a)). Consistent with this statutory 
provision, the Acid Rain regulations define ``source'' in a way that 
refers only to stationary sources: ``Source means any * * * structure, 
installation, plant, building or facility * * *.'' Consequently, 
affected units, which must be located at affected sources, also must be 
stationary. Locomotives, therefore, will not be accepted as potential 
opt-in sources. EPA has modified the definition of the term 
``combustion source'' to include the explicit requirement that 
combustion sources be stationary sources.
b. Clarification of Eligible Combustion Sources
    The EPA will not require an official applicability determination, 
as discussed under Sec. 72.6(c), for a combustion source applying to 
opt into the Acid Rain Program, but the Agency will affirm as part of 
its review of the opt-in permit application that the combustion source 
is indeed unaffected and therefore eligible to opt in. Combustion 
sources should be aware, as detailed in the recently published 
applicability guidance, ``Do the Acid Rain SO2 Regulations Apply 
to You?'' (EPA 430-R-94-002), that units may be required to provide 
documentation supporting their unaffected status. Furthermore, that 
status may, in fact, change over time as certain unaffected units 
become affected under particular [[Page 17109]] operating or 
construction conditions. As stated in the final rule under 
Sec. 74.50(a)(3), should an opt-in source become an affected unit, the 
Administrator will terminate the opt-in source's opt-in permit and 
deduct all of the allowances allocated under the Opt-in Program for 
current and future years.
    It is the duty of the combustion source's owner and operator to 
meet the requirements of the Acid Rain Program if the combustion source 
becomes affected. For purposes of keeping combustion sources aware of 
their regulatory status, EPA will add certification statements both to 
the opt-in permit application and to an opt-in source's annual 
compliance certification report that will state that the opt-in source 
is only considered an affected unit under part 74 and not an affected 
utility unit under Sec. 72.6.
    Finally, commenters requested clarification on the eligibility of 
certain types of sources and sources located outside of the continental 
U.S. Although the proposed rule was ambiguous regarding the eligibility 
of unaffected municipal waste combustors, the final rule allows such 
combustors to be eligible to apply for the Opt-in Program provided that 
they qualify as a ``unit'' and burn some amount of fossil fuel. 
Combustion and process sources that are located outside the continental 
U.S. (e.g., in Alaska or Hawaii) are not eligible to opt in and the 
applicability provisions in Sec. 74.2 have been modified to reflect 
this prohibition.
c. Modification to Utilization Calculation
    As discussed in the proposed rule under Sec. 74.44, EPA selected an 
average utilization to compare against the baseline for making 
determinations of reduced utilization. This average utilization was 
calculated as a rolling average of fuel input over three years.
    Four commenters agreed with EPA's proposal to use a three-year 
rolling average for determining reduced utilization because such an 
approach would smooth out the peaks and valleys that may occur in steam 
generation from year to year. Two commenters disagreed with EPA's 
proposal. One suggests that EPA use a five- to eight-year averaging 
period in order to account for normal economic cycles. The second 
commenter believed that an average over multiple years would bias the 
determination of reduced utilization, awarding unnecessary allowances 
in individual years when emissions could be low or near zero. The 
commenter suggested that EPA should use annual data because annual 
SO2 emissions are proportional to annual fuel use.
    Response: EPA will keep its calculation of average utilization 
overall, but will modify its calculation for the first and second years 
in which the opt-in source participates in the program and for the 
first and second years in which the opt-in source is governed by a 
thermal energy plan. Average utilization for the first year will equal 
the fuel input of that year. Average utilization for the second year 
will equal the average of the first two years. Thereafter, average 
utilization will be as proposed and equal a rolling average of three 
years.
    EPA believes the purpose of using a three-year rolling average to 
determine whether an opt-in source has reduced its utilization remains 
the same and remains valid: namely, as the commenters recognize, to 
smooth out small fluctuations in the operation of opt-in sources. The 
three-year interval is consistent with the baseline period and provides 
for a more accurate comparison with the baseline as a measure of 
utilization than would longer intervals.
    EPA modifies its calculation of average utilization for the first 
two years described above to address possible bias. With regard to the 
calculation of average utilization outside the context of a thermal 
energy plan, the Agency notes that in the proposed rule (58 FR 50124), 
the average for the first two years was based on the baseline level of 
utilization rather than actual utilization of the opt-in source. With 
such a methodology, an opt-in source that consistently operates below 
its baseline level could calculate an artificially high average 
utilization for its first two years as an opt-in source and thereby 
avoid allowance surrender. EPA feels that such a windfall would be 
inappropriate and that the methodology could create the potential for 
abuse. Therefore, EPA bases average utilization in these first two 
years on actual utilization for the opt-in source in the first year and 
then the first two years.
    With regard to the calculation of average utilization once an opt-
in source becomes governed by a thermal energy plan, EPA believes that 
the use of a continuing three-year average for the first two years 
under the plan would distort the number of allowances retained by the 
opt-in source. The reasoning for modifying the average utilization 
calculation is similar. Rather than reflecting normal fluctuations in 
the operation of the opt-in source whose thermal energy has been 
replaced, the three-year average utilization calculated for the first 
two years under the plan would award allowances based on the opt-in 
source's prereplacement levels of utilization and could result in an 
allowance windfall. Therefore, EPA bases average utilization for the 
two years immediately after the thermal energy plan takes effect on the 
actual utilization for the first year and then the average for the 
first two years.
d. Efficiency Adjustments for an Opt-in Source Governed by a Thermal 
Energy Plan
    EPA clarifies an ambiguity in the proposed rule regarding allowance 
holdings among an opt-in source and its replacement units if the opt-in 
source claims efficiency improvements as part of its annual 
utilization. If the opt-in source has estimated efficiency improvements 
in its annual utilization and these estimates prove to be incorrect, 
EPA could be placed in the position of adjusting not only the allowance 
holdings of the opt-in source, but also the holdings of all replacement 
units after the reconciliation process has ended (recall that annual 
compliance reports are submitted in March, while confirmation of energy 
efficiency estimates are not submitted until July). In order to avoid 
reassessing the compliance of perhaps multiple replacement units, EPA 
will consider the number of allowances transferred to replacement units 
fixed after the reconciliation process has ended and rely on the opt-in 
source to surrender any additional allowances needed to make the 
accounting consistent with the confirmed efficiency estimates. EPA 
maintains that it is reasonable for the opt-in source, which made the 
initial efficiency estimates, to bear the allowance consequences of 
correcting those estimates.
e. Definitions
    EPA has found it useful to modify certain definitions and to 
explain certain terms applicable to the Opt-in Program to make its 
provisions clearer. Consistent with the procedures established in part 
72 subpart B and referenced in Sec. 74.4, the owners and operators of a 
combustion or process source seeking to opt into the Acid Rain Program 
must select a designated representative. This designated representative 
is charged with representing the combustion or process source with 
regards to all matters under the Acid Rain Program. However, during the 
opt-in permit application process, the combustion or process source is 
not yet an affected unit nor an affected source, and strictly speaking, 
may not have a designated representative under the existing definition 
in Sec. 72.2. [[Page 17110]] 
    The Agency amends the definition of designated representative in 
Sec. 72.2 to include a responsible person authorized by the owners and 
operators of a combustion or process source as a designated 
representative. This individual has the same role and responsibilities 
as designated representatives for units affected under the other 
provisions of title IV and must complete a Certification of 
Representation as specified in Sec. 72.24. The Certification of 
Representation should be submitted prior to or concurrent with the opt-
in permit application. Further, the definitions of owner and owner or 
operator have been modified to include the appropriate individuals at 
combustion and process sources.
    In addition, the definition of affected unit has been clarified to 
include units covered under Sec. 72.6 and part 74 of this chapter to be 
subject to the Acid Rain emissions reduction requirements or the Acid 
Rain emissions limitations. EPA also has clarified the usage of the 
terms ``combustion source'' and ``opt-in source'' because of confusion 
expressed by individual commenters on the proposed rule. Prior to 
entering the Opt-in Program, the entity wishing to opt-in is referred 
to, in the final rule, as a combustion source or a process source, as 
appropriate. Once in the Opt-in Program, the combustion source becomes 
an opt-in source and is referred to as such throughout the remainder of 
the rule. An opt-in source is an affected unit under the Acid Rain 
Program.
    Finally, in the preamble to the proposed rule, Table 2 was in error 
regarding the definition of the opt-in source in various circumstances. 
The revised Table 2 is as follows:

                                                                        
                   Table 2.--Opt-in Source Definitions                  
------------------------------------------------------------------------
 Type of configuration                              What is the opt-in  
    at a single site     Single discrete entity?          source?       
------------------------------------------------------------------------
Individual boiler        Yes....................  Boiler and stack.     
 emitting to single                                                     
 stack.                                                                 
Individual boiler as     Yes, to the extent that  Boiler, duct to the   
 part of multiple         monitoring is specific   stack.               
 boilers sharing single   to the opt-in source.                         
 stack.                                                                 
Multiple boilers         No.....................  Each boiler and its   
 sharing single stack.                             appropriate duct.*   
Individual boiler        Yes....................  Boiler and all stacks.
 emitting to multiple                                                   
 stacks.                                                                
Multiple boilers         No.....................  Each boiler and its   
 sharing multiple                                  appropriate ducts.*  
 stacks.                                                                
Multiple boilers and     No.....................  Each unaffected boiler
 affected units sharing                            and its appropriate  
 single/multiple stacks.                           ducts.*              
------------------------------------------------------------------------
*--If the combustion sources wish to employ common stack monitoring they
  may do so according to the provisions of part 75 generally and Sec.   
  75.16 in particular of the Acid Rain Program.                         

f. Other Items
    Three other miscellaneous changes warrant mention. First, EPA has 
decided to allow submission of annual data as an alternative to monthly 
data for baseline calculations. The rule has been altered in several 
places accordingly. Second, EPA has modified a provision in part 77 to 
incorporate adjustments to allowance deductions due to differences 
between estimated and verified reductions in heat input due to 
conservation, improved electric efficiency, and improved steam 
production efficiency. Third, Appendix A, containing a draft opt-in 
permit application form, has been removed from the regulation. Forms 
will be issued during program implementation and will reflect, where 
appropriate, comments submitted.
    EPA has also made revisions to parts 74 and 75 to better integrate 
the Opt-in Program with the rest of the Acid Rain Program. The bulk of 
the regulatory language relating to the monitoring of combustion 
sources has been moved from Subpart F in part 74 and integrated into 
part 75 to consolidate all monitoring requirements for all affected 
units in part 75.
    EPA has retained general references to part 76, which is reserved 
for NOx regulation, but removed specific references to sections 
within part 76 in the final rule. This reflects the recent decision of 
the U.S. Court of Appeals for the District of Columbia Circuit vacating 
part 76.
    Finally, the proposed amendments to part 78 involving the 
exhaustion of administrative appeals as a necessary prerequisite to 
judicial review will not be finalized in this rulemaking. Final 
provisions concerning the exhaustion of administrative remedies will be 
addressed in a subsequent rulemaking.
g. Display of OMB Control Numbers
    EPA is also amending the table of currently approved information 
collection request (ICR) control numbers issued by OMB for various 
regulations. This amendment updates the table to accurately display 
those information requirements contained in this final rule. This 
display of the OMB control numbers and their subsequent codification in 
the Code of Federal Regulations satisfies the requirements of the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) and OMB's implementing 
regulations at 5 CFR part 1320.
    The ICR was previously subject to public notice and comment prior 
to OMB approval. As a result, EPA finds that there is ``good cause'' 
under section 553(b)(3)(B) of the Administrative Procedure Act (5 
U.S.C. 553(b)(3)(B)) to amend this table without prior notice and 
comment. Due to the technical nature of the table, further notice and 
comment would be unnecessary. For the same reasons, EPA also finds that 
there is good cause under 5 U.S.C. 553(d)(3) to make the amendments 
effective immediately.

D. Impact Analyses

1. Executive Order 12866 (Regulatory Impact Analysis)

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993)) the 
Agency must determine whether a regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
executive order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has notified 
EPA that it considers this a ``significant [[Page 17111]] regulatory 
action'' within the meaning of the Executive Order. EPA has submitted 
this action to OMB for review. Any changes made in response to OMB 
suggestions or recommendations are be documented in the public record.
    EPA estimated the total cost savings of the opt-in regulations for 
the time period from 1994 through 2010. Cost savings are expected to 
accrue to both affected utilities and opt-in sources. The cost savings 
depend on the number of allowances sold by opt-in sources and the price 
of allowances. The estimates assume the use of 1985-87 baseline data, 
the use of the lesser of 1985 actual or allowable rate, or the current 
rate at the time the combustion source applies to opt in, reduced 
allowance allocations for reduced utilization, the transfer of 
allowances as a result of the replacement of thermal energy at the 
allowable emission rate at the replacement source, the installation and 
operation of continuous emissions monitoring systems, and opt-in 
sources are allowed to withdraw from the program. Given these 
assumptions, an estimated 408 combustion sources would opt in resulting 
in annual net cost savings of approximately $10 million. The analysis 
is contained in the Economic Impact Analysis (EIA) of the Opt-in 
Regulations, September, 1994, EPA, Office of Atmospheric Programs.

2. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 requires each Federal agency 
to perform a Regulatory Flexibility Analysis for all rules that are 
likely to have a ``significant impact on a substantial number of small 
entities.'' Because the Opt-in Program is a voluntary cost reducing 
component of the Acid Rain Program, it will not affect small entities 
adversely. Sources that will not benefit from their participation will 
choose not to participate. Based on this analysis and pursuant to the 
provisions of 5 U.S.C. 605(b), EPA hereby certifies that this attached 
rule, if promulgated, will not have a significant economic impact on a 
substantial number of small entities.

3. Paperwork Reduction Act

    The information collection requirements in this rule have been 
approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq and have been assigned 
control number 2060-0258.
    This collection of information has an estimated reporting burden 
averaging 80 hours per response and an estimated annual recordkeeping 
burden averaging 2 hours per respondent. These estimates include time 
for reviewing instructions, searching existing data sources, gathering 
and maintaining the data needed, and completing and reviewing the 
collection of information.
    Send comments regarding the burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden to Chief, Information Policy Branch; EPA; 401 M St., SW. (Mail 
Code 2136); Washington, DC 20460; and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Washington, DC 
20503, marked ``Attention: Desk Officer for EPA.''

List of Subjects

40 CFR Part 9

    Reporting and recordkeeping requirements.

40 CFR Part 72

    Environmental protection, Acid rain, Administrative practice and 
procedure, Air pollution control, Electric utilities, Intergovernmental 
relations, Nitrogen oxides, Reporting and recordkeeping requirements, 
Sulfur oxides.

40 CFR Part 73

    Environmental protection, Acid rain, Air pollution control, 
Electric utilities, Reporting and recordkeeping requirements, Sulfur 
oxides.

40 CFR Part 74

    Environmental protection, Acid rain, Air pollution control, 
Reporting and recordkeeping requirements, Sulfur oxides.

40 CFR Part 75

    Environmental protection, Acid rain, Air pollution control, Carbon 
dioxide, Electric utilities, Nitrogen oxides, Reporting and 
recordkeeping requirements, Sulfur oxides.

40 CFR Part 77

    Environmental protection, Acid rain, Administrative practice and 
procedure, Air pollution control, Electric utilities, Nitrogen oxides, 
Penalties, Reporting and recordkeeping requirements, Sulfur oxides.

40 CFR Part 78

    Environmental protection, Acid rain, Administrative practice and 
procedure, Air pollution control, Electric utilities, Nitrogen oxides, 
Reporting and recordkeeping requirements, Sulfur oxides.

    Dated: March 20, 1995.
Carol M. Browner,
Administrator, U.S. Environmental Protection Agency.
    For the reasons set out in the preamble, chapter I of title 40 of 
the Code of Federal Regulations is amended as follows:

PART 9--[AMENDED]

    1. In part 9:
    a. The authority citation for part 9 continues to read as follows:

    Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003, 
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1321, 1326, 1330, 1344, 1345 
(d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp. 
p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 300g-1, 300g-2, 
300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 300j-3, 300j-4, 
300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542, 9601-9657, 
11023, 11048.

    b. Section 9.1 is amended by adding a new heading and entries in 
numerical order to the table to read as follows:


Sec. 9.1  OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                             OMB control
                      40 CFR citation                            No.    
------------------------------------------------------------------------
                  *        *        *        *        *                 
Sulfur Dioxide Opt-ins:                                                 
  74.12....................................................    2060-0258
  74.14....................................................    2060-0258
  74.16....................................................    2060-0258
  74.18....................................................    2060-0258
  74.20....................................................    2060-0258
  74.22....................................................    2060-0258
  74.24-74.25..............................................    2060-0258
  74.41....................................................    2060-0258
  74.43-74.44..............................................    2060-0258
  74.46-74.47..............................................    2060-0258
  74.60-74.64..............................................    2060-0258
                                                                        
                  *        *        *        *        *                 
------------------------------------------------------------------------

PART 72--PERMITS REGULATION

    2. The authority citation for part 72 is revised to read as 
follows:

    Authority: 42 U.S.C. 7601, 7651, et seq.

    3. Section 72.2 is amended as follows:
    a. By revising the introductory text;
    b. By revising the term for ``Acid Rain compliance option'';
    c. By revising paragraph (1)(i) of the term ``Acid Rain emissions 
limitation'';
    d. By revising the terms ``Acid Rain Program'', ``Affected unit'', 
``Allowable SO2 emissions rate'', ``Allowance deduction'', 
``Compensating unit'', ``Compliance certification'', ``Compliance plan; 
Designated Representative'', ``Owner'', ``Owner or Operator'', ``Phase 
I unit'', ``Phase II unit; and Reduced utilization''; and 
[[Page 17112]] 
    e. By adding the following terms in alphabetical order, 
``Combustion source'', ``Operating'', ``Opt-in'', ``Opt-in permit'', 
``Opt-in source'', ``Replacement unit'', and ``Thermal energy''.


Sec. 72.2  Definitions.

    The terms used in this part, in parts 73, 74, 75, 76, 77 and 78 of 
this chapter shall have the meanings set forth in the Act, including 
sections 302 and 402 of the Act, and in this section as follows:
* * * * *
    Acid Rain compliance option means one of the methods of compliance 
used by an affected unit under the Acid Rain Program as described in a 
compliance plan submitted and approved in accordance with subpart D of 
this part, part 74 of this chapter or part 76 of this chapter.
    Acid Rain emissions limitation means:
    (1) For the purposes of sulfur dioxide emissions:
    (i) The tonnage equivalent of the allowances authorized to be 
allocated to an affected unit for use in a calendar year under section 
404(a)(1) and (a)(3) of the Act, the basic Phase II allowance 
allocations authorized to be allocated to an affected unit for use in a 
calendar year, or the allowances authorized to be allocated to an opt-
in source under section 410 of the Act for use in a calendar year;
* * * * *
    Acid Rain Program means the national sulfur dioxide and nitrogen 
oxides air pollution control and emissions reduction program 
established in accordance with title IV of the Act, this part, and 
parts 73, 74, 75, 76, 77, and 78 of this chapter.
* * * * *
    Affected unit means a unit that is subject to any Acid Rain 
emissions reduction requirement or Acid Rain emissions limitation under 
Sec. 72.6 or part 74 of this chapter.
* * * * *
    Allowable SO2 emissions rate means the most stringent 
federally enforceable emissions limitation for sulfur dioxide (in lb/
mmBtu) applicable to the unit or combustion source for the specified 
calendar year, or for such subsequent year as determined by the 
Administrator where such a limitation does not exist for the specified 
year; provided that, if a Phase I or Phase II unit is listed in the 
NADB, the ``1985 allowable SO2 emissions rate'' for the Phase I or 
Phase II unit shall be the rate specified by the Administrator in the 
NADB under the data field ``1985 annualized boiler SO2 emission 
limit.''
* * * * *
    Allowance deduction, or deduct when referring to allowances, means 
the permanent withdrawal of allowances by the Administrator from an 
Allowance Tracking System compliance subaccount, or future year 
subaccount, to account for the number of tons of SO2 emissions 
from an affected unit for the calendar year, for tonnage emissions 
estimates calculated for periods of missing data as provided in part 75 
of this chapter, or for any other allowance surrender obligations of 
the Acid Rain Program.
* * * * *
    Combustion source means a stationary fossil fuel fired boiler, 
turbine, or internal combustion engine that has submitted or intends to 
submit an opt-in permit application under Sec. 74.14 of this chapter to 
enter the Opt-in Program.
* * * * *
    Compensating unit means an affected unit that is not otherwise 
subject to Acid Rain emissions limitation or Acid Rain emissions 
reduction requirements during Phase I and that is designated as a Phase 
I unit in a reduced utilization plan under Sec. 72.43; provided that an 
opt-in source shall not be a compensating unit.
* * * * *
    Compliance certification means a submission to the Administrator or 
permitting authority, as appropriate, that is required by this part, by 
part 73, 74, 75, 76, 77, or 78 of this chapter, to report an affected 
source or an affected unit's compliance or non-compliance with a 
provision of the Acid Rain Program and that is signed and verified by 
the designated representative in accordance with subparts B and I of 
this part and the Acid Rain Program regulations generally.
* * * * *
    Compliance plan, for the purposes of the Acid Rain Program, means 
the document submitted for an affected source in accordance with 
subpart C of this part or subpart E of part 74 of this chapter, or part 
76 of this chapter, specifying the method(s) (including one or more 
Acid Rain compliance options as provided under subpart D of this part 
or subpart E of part 74 of this chapter, or part 76 of this chapter by 
which each affected unit at the source will meet the applicable Acid 
Rain emissions limitation and Acid Rain emissions reduction 
requirements.
* * * * *
    Designated representative means a responsible natural person 
authorized by the owners and operators of an affected source and of all 
affected units at the source or by the owners and operators of a 
combustion source or process source, as evidenced by a certificate of 
representation submitted in accordance with subpart B of this part, to 
represent and legally bind each owner and operator, as a matter of 
federal law, in matters pertaining to the Acid Rain Program. Whenever 
the term ``responsible official'' is used in part 70 of this chapter, 
in any other regulations implementing title V of the Act, or in a State 
operating permit program, it shall be deemed to refer to the 
``designated representative'' with regard to all matters under the Acid 
Rain Program.
* * * * *
    Operating when referring to a combustion or process source seeking 
entry into the Opt-in Program, means that the source had documented 
consumption of fuel input for more than 876 hours in the 6 months 
immediately preceding the submission of a combustion source's opt-in 
application under Sec. 74.16(a) of this chapter.
* * * * *
    Opt in or opt into means to elect to become an affected unit under 
the Acid Rain Program through the issuance of the final effective opt-
in permit under Sec. 74.14 of this chapter.
    Opt-in permit means the legally binding written document that is 
contained within the Acid Rain permit and sets forth the requirements 
under part 74 of this chapter for a combustion source or a process 
source that opts into the Acid Rain Program.
    Opt-in source means a combustion source or process source that has 
elected to become an affected unit under the Acid Rain Program and 
whose opt-in permit has been issued and is in effect.
* * * * *
    Owner means any of the following persons:
    (1) Any holder of any portion of the legal or equitable title in an 
affected unit or in a combustion source or process source; or
    (2) Any holder of a leasehold interest in an affected unit or in a 
combustion source or process source; or
    (3) Any purchaser of power from an affected unit or from a 
combustion source or process source under a life-of-the-unit, firm 
power contractual arrangement as the term is defined herein and used in 
section 408(i) of the Act. However, unless expressly provided for in a 
leasehold agreement, owner shall not include a passive lessor, or a 
person who has an equitable interest through such lessor, whose rental 
payments are not based, either directly or indirectly, upon the 
revenues or income from the affected unit; or
    (4) With respect to any Allowance Tracking System general account, 
any [[Page 17113]] person identified in the submission required by 
Sec. 73.31(c) of this chapter that is subject to the binding agreement 
for the authorized account representative to represent that person's 
ownership interest with respect to allowances.
* * * * *
    Owner or operator means any person who is an owner or who operates, 
controls, or supervises an affected unit, affected source, combustion 
source, or process source and shall include, but not be limited to, any 
holding company, utility system, or plant manager of an affected unit, 
affected source, combustion source, or process source.
* * * * *
    Phase I unit means any affected unit, except an affected unit under 
part 74 of this chapter, that is subject to an Acid Rain emissions 
reduction requirement or Acid Rain emissions limitations beginning in 
Phase I.
* * * * *
    Phase II unit means any affected unit, except an affected unit 
under part 74 of this chapter, that is subject to an Acid Rain 
emissions reduction requirement or Acid Rain emissions limitation 
during Phase II only.
* * * * *
    Reduced utilization means a reduction, during any calendar year in 
Phase I, in the heat input (expressed in mmBtu for the calendar year) 
at a Phase I unit below the unit's baseline, where such reduction 
subjects the unit to the requirement to submit a reduced utilization 
plan under Sec. 72.43; or, in the case of an opt-in source, means a 
reduction in the average utilization, as specified in Sec. 74.44 of 
this chapter, of an opt-in source below the opt-in source's baseline.
* * * * *
    Replacement unit means an affected unit replacing the thermal 
energy provided by an opt-in source, where both the affected unit and 
the opt-in source are governed by a thermal energy plan.
* * * * *
    Thermal energy means the thermal output produced by a combustion 
source used directly as part of a manufacturing process but not used to 
produce electricity.
* * * * *
    4. Section 72.4 is amended by revising paragraphs (a)(1) and (a)(2) 
to read as follows:


Sec. 72.4  Federal authority.

    (a) * * *
    (1) Secure information needed for the purpose of developing, 
revising, or implementing, or of determining whether any person is in 
violation of, any standard, method, requirement, or prohibition of the 
Act, this part, parts 73, 74, 75, 76, 77, and 78 of this chapter;
    (2) Make inspections, conduct tests, examine records, and require 
an owner or operator of an affected unit to submit information 
reasonably required for the purpose of developing, revising, or 
implementing, or of determining whether any person is in violation of, 
any standard, method, requirement, or prohibition of the Act, this 
part, parts 73, 74, 75, 76, 77, and 78 of this chapter.
* * * * *
    5. Section 72.9 is amended by revising paragraphs (g)(6) and (g)(7) 
to read as follows:


Sec. 72.9  Standard requirements.

* * * * *
    (g) * * *
    (6) Any provision of the Acid Rain Program that applies to an 
affected unit (including a provision applicable to the designated 
representative of an affected unit) shall also apply to the owners and 
operators of such unit. Except as provided under Sec. 72.41 
(substitution plans), Sec. 72.42 (Phase I extension plans), Sec. 72.43 
(reduced utilization plans), Sec. 72.44 (Phase II repowering extension 
plans), Sec. 74.47 of this chapter (thermal energy plans), and part 76 
of this chapter (NOX averaging plans), and except with regard to 
the requirements applicable to units with a common stack under part 75 
of this chapter (including Secs. 75.16, 75.17 and 75.18 of this 
chapter), the owners and operators and the designated representative of 
one affected unit shall not be liable for any violation by any other 
affected unit of which they are not owners or operators or the 
designated representative and that is located at a source of which they 
are not owners or operators or the designated representative.
    (7) Each violation of a provision of this part, parts 73, 74, 75, 
76, 77, and 78 of this chapter, by an affected source or affected unit, 
or by an owner or operator or designated representative of such source 
or unit, shall be a separate violation of the Act.
* * * * *
    6. Section 72.21 is amended by revising paragraph (e) to read as 
follows:


Sec. 72.21  Submissions.

* * * * *
    (e) The provisions of this section shall apply to a submission made 
under parts 73, 74, 75, 76, 77, and 78 of this chapter only if it is 
made or signed or required to be made or signed, in accordance with 
parts 73, 74, 75, 76, 77, and 78 of this chapter, by:
    (1) The designated representative; or
    (2) The authorized account representative or alternate authorized 
account representative of a unit account.
    7. Section 72.30 is amended by revising paragraph (c) to read as 
follows:


Sec. 72.30  Requirement to apply.

* * * * *
    (c) Duty to reapply. The designated representative shall submit a 
complete Acid Rain permit application for each source with an affected 
unit at least 6 months prior to the expiration of an existing Acid Rain 
permit governing the unit during Phase II or an opt-in permit governing 
an opt-in source or such longer time as may be approved under part 70 
of this chapter that ensures that the term of the existing permit will 
not expire before the effective date of the permit for which the 
application is submitted.
    8. Section 72.40 is amended by revising paragraph (b)(1) 
introductory text to read as follows:


Sec. 72.40  General.

* * * * *
    (b) Multi-unit compliance options. (1) A plan for a compliance 
option, under Sec. 72.41, 72.42, 72.43, or 72.44 of this part, under 
Sec. 74.47 of this chapter, or an NOX averaging plan contained in 
part 76 of this chapter, that includes units at more than one affected 
source shall be complete only if:
* * * * *
    9. Section 72.72 is amended by revising paragraph (b)(1) 
introductory text; and paragraphs (b)(1)(i) (A) and (B); (b)(1)(ii) (A) 
and (C), (b)(1)(v), (b)(1)(xiv); the first sentence of (b)(5)(i), and 
paragraph (b)(5)(vi) to read as follows:


Sec. 72.72  State permit program approval criteria.

* * * * *
    (b) * * *
    (1) Acid Rain Permit Issuance. Issuance or denial of Acid Rain 
permits shall follow the procedures under this part, part 70 of this 
chapter, and, for combustion or process sources, part 74, including:
    (i) Permit application--
    (A) Requirement to comply.
    (1) The owners and operators and the designated representative for 
each affected source, except for combustion or process sources, under 
jurisdiction of the State permitting authority shall be required to 
comply with subparts B, C, and D of this part.
    (2) The owners and operators and the designated representative for 
each combustion or process source under jurisdiction of the State 
permitting [[Page 17114]] authority shall be required to comply with 
subpart B of this part and subparts B, C, D, and E of part 74 of this 
chapter.
    (B) Effect of an Acid Rain Permit Application. A complete Acid Rain 
permit application, except for a permit application for a combustion or 
process source, shall be binding on the owners and operators and the 
designated representative of the affected source, all affected units at 
the source, and any other unit governed by the permit application and 
shall be enforceable as an Acid Rain permit, from the date of 
submission of the permit application until the issuance or denial of 
the Acid Rain permit under paragraph (b)(1)(vii) of this section.
* * * * *
    (ii) Draft permit.
    (A) The State permitting authority shall prepare the draft Acid 
Rain permit in accordance with subpart E of this part or, for a 
combustion or process source, subpart B of part 74 of this chapter, or 
deny a draft Acid Rain permit.
* * * * *
    (C) Prior to issuance of a draft permit for a combustion or process 
source, the State permitting authority shall provide the designated 
representative of a combustion or process source an opportunity to 
confirm its intention to opt-in, in accordance with Sec. 74.14 of this 
chapter.
* * * * *
    (v) Proposed Permit. Following the public notice and comment period 
on a draft Acid Rain permit, the permitting authority shall incorporate 
all changes necessary and issue a proposed Acid Rain permit in 
accordance with subpart E of this part or, for combustion or process 
sources, in accordance with subpart B of part 74 of this chapter or 
deny a proposed Acid Rain permit.
* * * * *
    (xiv) Except as provided in Sec. 72.73(b) and, with regard to 
combustion or process sources, in Sec. 74.14(c)(6) of this chapter, the 
State permitting authority shall issue or deny an Acid Rain permit 
within 18 months of receiving a complete Acid Rain permit application 
submitted in accordance with Sec. 72.21 or such lesser time approved 
under part 70 of this chapter.
* * * * *
    (5) Acid Rain appeal procedures.
    (i) Appeals of the Acid Rain portion of an operating permit issued 
by the State permitting authority that do not challenge or involve 
decisions or actions of the Administrator under this part, parts 73, 
74, 75, 76, 77 and 78 of this chapter, shall be conducted according to 
procedures established by the State under Sec. 70.4(b)(3)(x) of this 
chapter. * * *
* * * * *
    (vi) A failure of the State permitting authority to issue an Acid 
Rain permit in accordance with Sec. 72.73(b)(1)(i) or, with regard to 
combustion or process sources, Sec. 74.14(c)(6) of this chapter shall 
be ground for filing an appeal.
* * * * *
    10. Section 72.81 is amended by removing the word ``and'' from the 
end of paragraph (b)(3); by replacing the period with ``; and'' at the 
end of paragraph (b)(4) and by adding paragraph (b)(5) to read as 
follows:


Sec. 72.81  Permit modifications.

* * * * *
    (b) * * *
    (5) Changes in a thermal energy plan that result in any addition or 
subtraction of a replacement unit or any change affecting the number of 
allowances transferred for the replacement of thermal energy.
* * * * *
    11. Section 72.83 is amended by revising paragraph (a)(6), (a)(11), 
and by adding paragraph (a)(12) to read as follows:


Sec. 72.83  Administrative permit amendment.

    (a) * * *
    (6)(i) Termination of a compliance option in the permit; provided 
that all requirements for termination under subpart D of this part are 
met and this procedure shall not be used to terminate a repowering plan 
after December 31, 1999 or a Phase I extension plan;
    (ii) For opt-in sources, termination of a compliance option in the 
permit; provided that all requirements for termination under Sec. 74.47 
of this chapter are met.
* * * * *
    (11) Changes in a thermal energy plan that do not result in the 
addition or subtraction of a replacement unit or any change affecting 
the number of allowances transferred for the replacement of thermal 
energy.
    (12) Incorporation of changes that the Administrator has determined 
to be similar to those in paragraphs (a)(1) through (11) of this 
section.
* * * * *

PART 73--SULFUR DIOXIDE ALLOWANCE SYSTEM

    12. The authority citation for part 73 is revised to read as 
follows:

    Authority: 42 U.S.C. 7601 and 7651 et seq.

    13. Section 73.34 is amended by revising paragraphs (c)(2) and 
(c)(6) to read as follows:


Sec. 73.34  Recordation in accounts.

* * * * *
    (c) * * *
    (2) All allowances allocated or deducted pursuant to Secs. 72.41, 
72.42, 72.43, and 72.44 and part 74 of this chapter;
* * * * *
    (6) All allowances deducted or returned pursuant to Secs. 73.35(d), 
72.91 and 72.92, part 74, and part 77 of this chapter.
* * * * *
    14. Section 73.35 is amended by revising paragraphs (b)(1) and 
(b)(2) to read as follows:


Sec. 73.35  Compliance.

* * * * *
    (b) Deductions for compliance. (1) Except as provided in paragraph 
(d) of this section, following the recordation of transfers submitted 
correctly for recordation in the compliance subaccount pursuant to 
paragraph (a) of this section and subpart D of this part, the 
Administrator will deduct allowances from each affected unit's 
compliance subaccount in accordance with the allowance deduction 
formula in Sec. 72.95 of this chapter, or, for opt-in sources, the 
allowance deduction formula in Sec. 74.49 of this chapter, and any 
correction made under Sec. 72.96 of this chapter. (2) The Administrator 
will make deductions until either the number of allowances deducted is 
equal to the amount calculated in accordance with Sec. 72.95 of this 
chapter, or, for opt-in sources, in accordance with Sec. 74.49 of this 
chapter, as modified under Sec. 72.96 of this chapter or until no more 
allowances remain in the compliance subaccount.
* * * * *
    15. Section 73.52 is amended by revising paragraphs (a)(3) to read 
as follows:


Sec. 73.52  EPA recordation.

* * * * *
    (a) * * *
    (3) If the allowances identified by serial number specified 
pursuant to Sec. 73.50(b)(1)(ii) are subject to the limitation on 
transfer imposed pursuant to Sec. 72.44(h)(1)(i) of this chapter, 
Sec. 74.42 of this chapter, or Sec. 74.47(c) of this chapter, the 
transfer is in accordance with such limitation; and
* * * * *
    16. Title 40 is amended by adding part 74 to read as follows: 
[[Page 17115]] 

PART 74--SULFUR DIOXIDE OPT-INS

Subpart A--Background and Summary

Sec.
74.1  Purpose and scope.
74.2  Applicability.
74.3  Relationship to the Acid Rain program requirements.
74.4  Designated representative.

Subpart B--Permitting Procedures

74.10  Roles--EPA and permitting authority.
74.12  Opt-in permit contents.
74.14  Opt-in permit process.
74.16  Application requirements for combustion sources.
74.17  Application requirements for process sources [Reserved]
74.18  Withdrawal.
74.19  Revision and renewal of opt-in permit.

Subpart C--Allowance Calculation for Combustion Sources

74.20  Data for baseline and alternative baseline.
74.22  Actual SO2 emissions rate.
74.23  1985 Allowable SO2 emissions rate.
74.24  Current allowable SO2 emissions rate.
74.25  Current promulgated SO2 emissions limit.
74.26  Allocation formula.
74.28  Allowance Allocation for combustion sources becoming opt-in 
sources on a date other than January 1.

Subpart D--Allowance Calculation for Process Sources [Reserved]

Subpart E--Allowance Tracking and Transfer and End of Year Compliance

74.40  Establishment of opt-in source allowance accounts.
74.41  Identifying allowances.
74.42  Prohibition of future year transfers.
74.43  Annual compliance certification report.
74.44  Reduced utilization for combustion sources.
74.45  Reduced utilization for process sources [Reserved].
74.46  Opt-in source shutdown, reconstruction or change in affected 
status.
74.47  Transfer of allowances from the replacement of thermal 
energy--combustion sources.
74.48  Transfer of allowances from the replacement of thermal 
energy--process sources [Reserved].
74.49  Calculation of deducting allowances.
74.50  Deducting opt-in source allowances from ATS accounts.

Subpart F--Monitoring Emissions: Combustion Sources

74.60  Monitoring requirements.
74.61  Monitoring plan.

Subpart G--Monitoring Emissions: Process Sources [Reserved]

    Authority: 42 U.S.C. 7601 and 7651 et seq.

Subpart A--Background and Summary


Sec. 74.1  Purpose and scope.

    The purpose of this part is to establish the requirements and 
procedures for:
    (a) The election of a combustion or process source that emits 
sulfur dioxide to become an affected unit under the Acid Rain Program, 
pursuant to section 410 of title IV of the Clean Air Act, 42 U.S.C. 
7401, et seq., as amended by Public Law 101-549 (November 15, 1990); 
and
    (b) Issuing and modifying operating permits; certifying monitors; 
and allocating, tracking, transferring, surrendering and deducting 
allowances for combustion or process sources electing to become 
affected units.


Sec. 74.2  Applicability.

    Combustion or process sources that are not affected units under 
Sec. 72.6 of this chapter and that are operating and are located in the 
48 contiguous States or the District of Columbia may submit an opt-in 
permit application to become opt-in sources upon issuance of an opt-in 
permit. Units for which a written exemption under Sec. 72.7 or 
Sec. 72.8 of this chapter is in effect and combustion or process 
sources that are not operating are not eligible to submit an opt-in 
permit application to become opt-in sources.


Sec. 74.3  Relationship to the Acid Rain program requirements.

    (a) General. (1) For purposes of applying parts 72, 73, 75, 77 and 
78, each opt-in source shall be treated as an affected unit.
    (2) Subpart A, B, G, and H of part 72 of this chapter, including 
Secs. 72.2 (definitions), 72.3 (measurements, abbreviations, and 
acronyms), 72.4 (federal authority), 72.5 (State authority), 72.6 
(applicability), 72.7 (New units exemption), 72.8 (Retired units 
exemption), 72.9 (Standard Requirements), 72.10 (availability of 
information), and 72.11 (computation of time), shall apply to this 
part.
    (b) Permits. The permitting authority shall act in accordance with 
this part and parts 70 and 72 of this chapter in issuing or denying an 
opt-in permit and incorporating it into a combustion or process 
source's operating permit. To the extent that any requirements of this 
part, part 72, and part 78 of this chapter are inconsistent with the 
requirements of part 70 of this chapter, the requirements of this part, 
part 72, and part 78 of this chapter shall take precedence and shall 
govern the issuance, denials, revision, reopening, renewal, and appeal 
of the opt-in permit.
    (c) Appeals. The procedures for appeals of decisions of the 
Administrator under this part are contained in part 78 of this chapter.
    (d) Allowances. A combustion or process source that becomes an 
affected unit under this part shall be subject to all the requirements 
of subparts C and D of part 73 of this chapter.
    (e) Excess emissions. A combustion or process source that becomes 
an affected unit under this part shall be subject to the requirements 
of part 77 of this chapter applicable to excess emissions of sulfur 
dioxide and shall not be subject to the requirements of part 77 of this 
chapter applicable to excess emissions of nitrogen oxides.
    (f) Monitoring. A combustion or process source that becomes an 
affected unit under this part shall be subject to all the requirements 
of part 75, consistent with subparts F and G of this part.


Sec. 74.4  Designated representative.

    (a) The provisions of subpart B of part 72 of this chapter shall 
apply to the designated representative of an opt-in source.
    (b) If a combustion or process source is located at the same source 
as one or more affected units, the combustion or process source shall 
have the same designated representative as the other affected units at 
the source.

Subpart B--Permitting Procedures


Sec. 74.10  Roles--EPA and permitting authority.

    (a) Administrator responsibilities. The Administrator shall be 
responsible for the following activities under the opt-in provisions of 
the Acid Rain Program:
    (1) Calculating the baseline or alternative baseline and allowance 
allocation, and allocating allowances for combustion or process sources 
that become affected units under this part;
    (2) Certifying or recertifying monitoring systems for combustion or 
process sources as provided under Sec. 74.62;
    (3) Establishing allowance accounts, tracking allowances, assessing 
end-of-year compliance, determining reduced utilization, approving 
thermal energy transfer and accounting for the replacement of thermal 
energy, closing accounts for opt-in sources that shut down, are 
reconstructed, become affected under Sec. 72.6 of this chapter, or fail 
to renew their opt-in permit, and deducting allowances as provided 
under subpart E of this part; and
    (4) Ensuring that the opt-in source meets all withdrawal conditions 
prior to withdrawal from the Acid Rain Program as provided under 
Sec. 74.18; and [[Page 17116]] 
    (5) Approving and disapproving the request to withdraw from the 
Acid Rain Program.
    (b) Permitting authority responsibilities. The permitting authority 
shall be responsible for the following activities:
    (1) Issuing the draft and final opt-in permit;
    (2) Revising and renewing the opt-in permit; and
    (3) Terminating the opt-in permit for an opt-in source as provided 
in Sec. 74.18 (withdrawal), Sec. 74.46 (shutdown, reconstruction or 
change in affected status) and Sec. 74.50 (deducting allowances).


Sec. 74.12  Opt-in permit contents.

    (a) The opt-in permit shall be included in the Acid Rain permit.
    (b) Scope. The opt-in permit provisions shall apply only to the 
opt-in source and not to any other affected units.
    (c) Contents. Each opt-in permit, including any draft or proposed 
opt-in permit, shall contain the following elements in a format 
specified by the Administrator:
    (1) All elements required for a complete opt-in permit application 
as provided under Sec. 74.16 for combustion sources or under Sec. 74.17 
for process sources or, if applicable, all elements required for a 
complete opt-in permit renewal application as provided in Sec. 74.19 
for combustion sources or under Sec. 74.17 for process sources;
    (2) The allowance allocation for the opt-in source as determined by 
the Administrator under subpart C of this part for combustion sources 
or subpart D of this part for process sources;
    (3) The standard permit requirements as provided under Sec. 72.9 of 
this chapter, except that the provisions in Sec. 72.9(d) of this 
chapter shall not be included in the opt-in permit; and
    (4) Termination. The provision that participation of a combustion 
or process source in the Acid Rain Program may be terminated only in 
accordance with Sec. 74.18 (withdrawal), Sec. 74.46 (shutdown, 
reconstruction, or change in affected status), and Sec. 74.50 
(deducting allowances).
    (d) Each opt-in permit is deemed to incorporate the definitions of 
terms under Sec. 72.2 of this chapter.
    (e) Permit shield. Each opt-in source operated in accordance with 
the opt-in permit that governs the opt-in source and that was issued in 
compliance with title IV of the Act, as provided in this part and parts 
72, 73, 75, 77, and 78 of this chapter, shall be deemed to be operating 
in compliance with the Acid Rain Program, except as provided in 
Sec. 72.9(g)(6) of this chapter.
    (f) Term of opt-in permit. An opt-in permit shall be issued for a 
period of 5 years and may be renewed in accordance with Sec. 74.19; 
provided
    (1) If an opt-in permit is issued prior to January 1, 2000, then 
the opt-in permit may, at the option of the permitting authority, 
expire on December 31, 1999; and
    (2) If an affected unit with an Acid Rain permit is located at the 
same source as the combustion source, the combustion source's opt-in 
permit may, at the option of the permitting authority, expire on the 
same date as the affected unit's Acid Rain permit expires.


Sec. 74.14  Opt-in permit process.

    (a) Submission. The designated representative of a combustion or 
process source may submit an opt-in permit application and a monitoring 
plan to the Administrator at any time for any combustion or process 
source that is operating.
    (b) Issuance or denial of opt-in permits. The permitting authority 
shall issue or deny opt-in permits or revisions of opt-in permits in 
accordance with the procedures in part 70 of this chapter and subparts 
F and G of part 72 of this chapter, except as provided in this section.
    (1) Supplemental information. Regardless of whether the opt-in 
permit application is complete, the Administrator or the permitting 
authority may request submission of any additional information that the 
Administrator or the permitting authority determines to be necessary in 
order to review the opt-in permit application or to issue an opt-in 
permit.
    (2) Interim review of monitoring plan. The Administrator will 
determine, on an interim basis, the sufficiency of the monitoring plan, 
accompanying the opt-in permit application. A monitoring plan is 
sufficient, for purposes of interim review, if the plan appears to 
contain information demonstrating that all SO2 emissions, NOx 
emissions, CO2 emissions, and opacity of the combustion or process 
source are monitored and reported in accordance with part 75 of this 
chapter. This interim review of sufficiency shall not be construed as 
the approval or disapproval of the combustion or process source's 
monitoring system.
    (3) Issuance of draft opt-in permit. After the Administrator 
determines whether the combustion or process source's monitoring plan 
is sufficient under paragraph (b)(2) of this section, the permitting 
authority shall serve the draft opt-in permit or the denial of a draft 
permit or the draft opt-in permit revisions or the denial of draft opt-
in permit revisions on the designated representative of the combustion 
or process source submitting an opt-in permit application. A draft 
permit or draft opt-in permit revision shall not be served or issued if 
the monitoring plan is determined not to be sufficient.
    (4) Confirmation by source of intention to opt-in. Within 21 
calendar days from the date of service of the draft opt-in permit or 
the denial of the draft opt-in permit, the designated representative of 
a combustion or process source submitting an opt-in permit application 
must submit to the Administrator, in writing, a confirmation or 
recision of the source's intention to become an opt-in source under 
this part. The Administrator shall treat the failure to make a timely 
submission as a recision of the source's intention to become an opt-in 
source and as a withdrawal of the opt-in permit application.
    (5) Issuance of draft opt-in permit. If the designated 
representative confirms the combustion or process source's intention to 
opt in under paragraph (b)(4) of this section, the permitting authority 
will give notice of the draft opt-in permit or denial of the draft opt-
in permit and an opportunity for public comment, as provided under 
Sec. 72.65 of this chapter with regard to a draft permit or denial of a 
draft permit if the Administrator is the permitting authority or as 
provided in accordance with part 70 of this chapter with regard to a 
draft permit or the denial of a draft permit if the State is the 
permitting authority.
    (6) Permit decision deadlines. (i) If the Administrator is the 
permitting authority, an opt-in permit will be issued or denied within 
12 months of receipt of a complete opt-in permit application.
    (ii) If the State is the permitting authority, an opt-in permit 
will be issued or denied within 18 months of receipt of a complete opt-
in permit application or such lesser time approved under part 70 of 
this chapter.
    (7) Withdrawal of opt-in permit application. A combustion or 
process source may withdraw its opt-in permit application at any time 
prior to the issuance of the final opt-in permit. Once a combustion or 
process source withdraws its application, in order to re-apply, it must 
submit a new opt-in permit application in accordance with Sec. 74.16 
for combustion sources or Sec. 74.17 for process sources.
    (d) Entry into Acid Rain Program.--(1) Effective date. The 
effective date of the opt-in permit shall be the January 1, April 1, 
July 1, or October 1 for a combustion or process source providing 
[[Page 17117]] monthly data under Sec. 74.20, or January 1 for a 
combustion or process source providing annual data under Sec. 74.20, 
following the later of the issuance of the opt-in permit by the 
permitting authority or the completion of monitoring system 
certification, as provided in subpart F of this part for combustion 
sources or subpart G of this part for process sources. The combustion 
or process source shall become an opt-in source and an affected unit as 
of the effective date of the opt-in permit.
    (2) Allowance allocation. After the opt-in permit becomes 
effective, the Administrator will allocate allowances to the opt-in 
source as provided in Sec. 74.40. If the effective date of the opt-in 
permit is not January 1, allowances for the first year shall be pro-
rated as provided in Sec. 74.28.
    (e) Expiration of opt-in permit. An opt-in permit that is issued 
before the completion of monitoring system certification under subpart 
F of this part for combustion sources or under subpart G of this part 
for process sources shall expire 180 days after the permitting 
authority serves the opt-in permit on the designated representative of 
the combustion or process source governed by the opt-in permit, unless 
such monitoring system certification is complete. The designated 
representative may petition the Administrator to extend this time 
period in which an opt-in permit expires and must explain in the 
petition why such an extension should be granted. The designated 
representative of a combustion source governed by an expired opt-in 
permit and that seeks to become an opt-in source must submit a new opt-
in permit application.


Sec. 74.16  Application requirements for combustion sources.

    (a) Opt-in permit application. Each complete opt-in permit 
application for a combustion source shall contain the following 
elements in a format prescribed by the Administrator:
    (1) Identification of the combustion source, including company 
name, plant name, plant site address, mailing address, description of 
the combustion source, and information and diagrams on the combustion 
source's configuration;
    (2) Identification of the designated representative, including 
name, address, telephone number, and facsimile number;
    (3) The year and month the combustion source commenced operation;
    (4) The number of hours the combustion source operated in the six 
months preceding the opt-in permit application and supporting 
documentation;
    (5) The baseline or alternative baseline data under Sec. 74.20;
    (6) The actual SO2 emissions rate under Sec. 74.22;
    (7) The allowable 1985 SO2 emissions rate under Sec. 74.23;
    (8) The current allowable SO2 emissions rate under Sec. 74.24;
    (9) The current promulgated SO2 emissions rate under 
Sec. 74.25;
    (10) If the combustion source seeks to qualify for a transfer of 
allowances from the replacement of thermal energy, a thermal energy 
plan as provided in Sec. 74.47 for combustion sources; and
    (11) A statement whether the combustion source was previously an 
affected unit under this part;
    (12) A statement that the combustion source is not an affected unit 
under Sec. 72.6 of this chapter;
    (13) A complete compliance plan for SO2 under Sec. 72.40 of 
this chapter; and
    (14) The following statement signed by the designated 
representative of the combustion source: ``I certify that the data 
submitted under subpart C of part 74 reflects actual operations of the 
combustion source and has not been adjusted in any way.''
    (b) Accompanying documents. The designated representative of the 
combustion source shall submit a monitoring plan in accordance with 
Sec. 74.61.


Sec. 74.17  Application requirements for process sources [Reserved].


Sec. 74.18  Withdrawal.

    (a) Withdrawal through administrative amendment. An opt-in source 
may request to withdraw from the Acid Rain Program by submitting an 
administrative amendment under Sec. 72.83 of this chapter; provided 
that the amendment will be treated as received by the permitting 
authority upon issuance of the notification of the acceptance of the 
request to withdraw under paragraph (f)(1) of this section.
    (b) Requesting withdrawal. To withdraw from the Acid Rain Program, 
the designated representative of an opt-in source shall submit to the 
Administrator and the permitting authority a request to withdraw 
effective January 1 of the year after the year in which the submission 
is made. The submission shall be made no later than December 1 of the 
calendar year preceding the effective date of withdrawal.
    (c) Conditions for withdrawal. In order for an opt-in source to 
withdraw, the following conditions must be met:
    (1) By no later than January 30 of the first calendar year in which 
the withdrawal is to be effective, the designated representative must 
submit to the Administrator an annual compliance certification report 
pursuant to Sec. 74.43.
    (2) If the opt-in source has excess emissions in the calendar year 
before the year for which the withdrawal is to be in effect, the 
designated representative must submit an offset plan for excess 
emissions, pursuant to part 77 of this chapter, that provides for 
immediate deduction of allowances.
    (d) Administrator's action on withdrawal. After the opt-in source 
meets the requirements for withdrawal under paragraphs (b) and (c) of 
this section, the Administrator will deduct allowances required to be 
deducted under Sec. 73.35 of this chapter and part 77 of this chapter 
and allowances equal in number to and with the same or earlier 
compliance use date as those allocated under Sec. 74.40 for the first 
year for which the withdrawal is to be effective and all subsequent 
years. The Administrator will close the opt-in source's unit account 
and transfer any remaining allowances to a new general account as 
specified under Sec. 74.46(c).
    (e) Opt-in source's prior violations. An opt-in source that 
withdraws from the Acid Rain Program shall comply with all requirements 
under the Acid Rain Program concerning all years for which the opt-in 
source was an affected unit, even if such requirements arise, or must 
be complied with after the withdrawal takes effect. The withdrawal 
shall not be a defense against any violation of such requirements of 
the Acid Rain Program whether the violation occurs before or after the 
withdrawal takes effect.
    (f) Notification. (1) After the requirements for withdrawal under 
paragraphs (b) and (c) of this section are met and after the 
Administrator's action on withdrawal under paragraph (d) of this 
section is complete, the Administrator will issue a notification to the 
permitting authority and the designated representative of the opt-in 
source of the acceptance of the opt-in source's request to withdraw.
    (2) If the requirements for withdrawal under paragraphs (b) and (c) 
of this section are not met or the Administrator's action under 
paragraph (d) of this section cannot be completed, the Administrator 
will issue a notification to the permitting authority and the 
designated representative of the opt-in source that the opt-in source's 
request to withdraw is denied. If the opt-in source's request to 
withdraw is denied, the opt-in source shall remain [[Page 17118]] in 
the Opt-in Program and shall remain subject to the requirements for 
opt-in sources contained in this part.
    (g) Permit amendment. (1) After the Administrator issues a 
notification under paragraph (f)(1) of this section that the 
requirements for withdrawal have been met (including the deduction of 
the full amount of allowances as required under paragraph (d) of this 
section), the permitting authority shall amend, in accordance with 
Secs. 72.80 and 72.83 (administrative amendment) of this chapter, the 
opt-in source's Acid Rain permit to terminate the opt-in permit, not 
later than 60 days from the issuance of the notification under 
paragraph (f) of this section.
    (2) The termination of the opt-in permit under paragraph (g)(1) of 
this section will be effective on January 1 of the year for which the 
withdrawal is requested. An opt-in source shall continue to be an 
affected unit until the effective date of the termination.
    (h) Reapplication upon failure to meet conditions of withdrawal. If 
the Administrator denies the opt-in source's request to withdraw, the 
designated representative may submit another request to withdraw in 
accordance with paragraphs (b) and (c) of this section.
    (i) Ability to return to the Acid Rain Program. Once a combustion 
or process source withdraws from the Acid Rain Program and its opt-in 
permit is terminated, a new opt-in permit application for the 
combustion or process source may not be submitted prior to the date 
that is four years after the date on which the opt-in permit became 
effective.


Sec. 74.19   Revision and renewal of opt-in permit.

    (a) The designated representative of an opt-in source may submit 
revisions to its opt-in permit in accordance with subpart H of part 72 
of this chapter.
    (b) The designated representative of an opt-in source may renew its 
opt-in permit by meeting the following requirements:
    (1)(i) In order to renew an opt-in permit if the Administrator is 
the permitting authority for the renewed permit, the designated 
representative of an opt-in source must submit to the Administrator an 
opt-in permit application at least 6 months prior to the expiration of 
an existing opt-in permit.
    (ii) In order to renew an opt-in permit if the State is the 
permitting authority for the renewed permit, the designated 
representative of an opt-in source must submit to the permitting 
authority an opt-in permit application at least 18 months prior to the 
expiration of an existing opt-in permit or such shorter time as may be 
approved for operating permits under part 70 of this chapter.
    (2) Each complete opt-in permit application submitted to renew an 
opt-in permit shall contain the following elements in a format 
prescribed by the Administrator:
    (i) Elements contained in the opt-in source's initial opt-in permit 
application as specified under Sec. 74.16(a)(1), (2), (10), (11), (12), 
and (13).
    (ii) An updated monitoring plan, if applicable under Sec. 75.53(b) 
of this chapter.
    (c)(1) Upon receipt of an opt-in permit application submitted to 
renew an opt-in permit, the permitting authority shall issue or deny an 
opt-in permit in accordance with the requirements under subpart B of 
this part, except as provided in paragraph (c)(2) of this section.
    (2) When issuing a renewed opt-in permit, the permitting authority 
shall not alter an opt-in source's allowance allocation as established, 
under subpart B and subpart C of this part for combustion sources and 
under subpart B and subpart D of this part for process sources, in the 
opt-in permit that is being renewed.

Subpart C--Allowance Calculations for Combustion Sources


Sec. 74.20   Data for baseline and alternative baseline.

    (a) Acceptable data. (1) The designated representative of a 
combustion source shall submit either the data specified in this 
paragraph or alternative data under paragraph (c) of this section. The 
designated representative shall also submit the calculations under this 
section based on such data.
    (2) The following data shall be submitted for the combustion source 
for the calendar year(s) under paragraph (a)(3) of this section:
    (i) Monthly or annual quantity of each type of fuel consumed, 
expressed in thousands of tons for coal, thousands of barrels for oil, 
and million standard cubic feet (scf) for natural gas. If other fuels 
are used, the combustion source must specify units of measure.
    (ii) Monthly or annual heat content of fuel consumed for each type 
of fuel consumed, expressed in British thermal units (Btu) per pound 
for coal, Btu per barrel for oil, and Btu per standard cubic foot (scf) 
for natural gas. If other fuels are used, the combustion source must 
specify units of measure.
    (iii) Monthly or annual sulfur content of fuel consumed for each 
type of fuel consumed, expressed as a percentage by weight.
    (3) Calendar Years. (i) For combustion sources that commenced 
operating prior to January 1, 1985, data under this section shall be 
submitted for 1985, 1986, and 1987.
    (ii) For combustion sources that commenced operation after January 
1, 1985, the data under this section shall be submitted for the first 
three consecutive calendar years during which the combustion source 
operated after December 31, 1985.
    (b) Calculation of baseline and alternative baseline.
    (1) For combustion sources that commenced operation prior to 
January 1, 1985, the baseline is the average annual quantity of fuel 
consumed during 1985, 1986, and 1987, expressed in mmBtu. The baseline 
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.000


where,

                   (i) for a combustion source submitting monthly data,
    [[Page 17119]]
    
[GRAPHIC][TIFF OMITTED]TR04AP95.001


and unit conversion
    = 2 for coal
    = 0.001 for oil
    = 1 for gas

For other fuels, the combustion source must specify unit conversion; or
    (ii) for a combustion source submitting annual data,
[GRAPHIC][TIFF OMITTED]TR04AP95.002


and unit conversion
    = 2 for coal
    = 0.001 for oil
    = 1 for gas

For other fuels, the combustion source must specify unit conversion.
    (2) For combustion sources that commenced operation after January 
1, 1985, the alternative baseline is the average annual quantity of 
fuel consumed in the first three consecutive calendar years during 
which the combustion source operated after December 31, 1985, expressed 
in mmBtu. The alternative baseline shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.003


where,

``annual fuel consumption'' is as defined under paragraph (b)(1)(i) or 
(ii) of this section.
    (c) Alternative data.
    (1) For combustion sources for which any of the data under 
paragraph (b) of this section is not available due solely to a natural 
catastrophe, data as set forth in paragraph (a)(2) of this section for 
the first three consecutive calendar years for which data is available 
after December 31, 1985, may be submitted. The alternative baseline for 
these combustion sources shall be calculated using the equation for 
alternative baseline in paragraph (b)(2) of this section and the 
definition of annual fuel consumption in paragraphs (b)(1)(i) or (ii) 
of this section.
    (2) Except as provided in paragraph (c)(1) of this section, no 
alternative data may be submitted. A combustion source that cannot 
submit all required data, in accordance with this section, shall not be 
eligible to submit an opt-in permit application.
    (d) Administrator's action. The Administrator may accept in whole 
or in part or with changes as appropriate, request additional 
information, or reject data or alternative data submitted for a 
combustion source's baseline or alternative baseline.


Sec. 74.22  Actual SO2 emissions rate.

    (a) Data requirements. The designated representative of a 
combustion source shall submit the calculations under this section 
based on data submitted under Sec. 74.20 for the following calendar 
year:
    (1) For combustion sources that commenced operation prior to 
January 1, 1985, the calendar year for calculating the actual SO2 
emissions rate shall be 1985.
    (2) For combustion sources that commenced operation after January 
1, 1985, the calendar year for calculating the actual SO2 
emissions rate shall be the first year of the three consecutive 
calendar years of the alternative baseline under Sec. 74.20(b)(2).
    (3) For combustion sources meeting the requirements of 
Sec. 74.20(c), the calendar year for calculating the actual SO2 
emissions rate shall be the first year of the three consecutive 
calendar years to be used as alternative data under Sec. 74.20(c).
    (b) SO2 emissions factor calculation. The SO2 emissions 
factor for each type of fuel consumed during the specified year, 
expressed in pounds per thousand tons for coal, pounds per thousand 
barrels for oil and pounds per million cubic feet (scf) for gas, shall 
be calculated as follows:

SO2 Emissions Factor
    = (average percent of sulfur by weight) x (k),
where,
    average percent of sulfur by weight
    = annual average, for a combustion source submitting annual data
    = monthly average, for a combustion source submitting monthly data
    k = 39,000 for bituminous coal or anthracite
    = 35,000 for subbituminous coal
    = 30,000 for lignite
    = 5,964 for distillate (light) oil
    = 6,594 for residual (heavy) oil
    = 0.6 for natural gas

For other fuels, the combustion source must specify the SO2 
emissions factor.

    (c) Annual SO2 emissions calculation. Annual SO2 
Emissions for the specified calendar year, expressed in pounds, shall 
be calculated as follows:
    (1) For a combustion source submitting monthly data,
[GRAPHIC][TIFF OMITTED]TR04AP95.004


[[Page 17120]]

    (2) For a combustion source submitting annual data:

[GRAPHIC][TIFF OMITTED]TR04AP95.005


where,
    ``quantity of fuel consumed'' is as defined under 
Sec. 74.20(a)(2)(A);
    ``SO2 emissions factor'' is as defined under paragraph (b) of 
this section;
    ``control system efficiency'' is as defined under Sec. 60.48(a) and 
part 60, Appendix A, Method 19 of this chapter, if applicable; and
    ``fuel pre-treatment efficiency'' is as defined under Sec. 60.48(a) 
and part 60, Appendix A, Method 19 of this chapter, if applicable.

    (d) Annual fuel consumption calculation. Annual fuel consumption 
for the specified calendar year, expressed in mmBtu, shall be 
calculated as defined under Sec. 74.20(b)(1) (i) or (ii).
    (e) Actual SO2 emissions rate calculation. The actual SO2 
emissions rate for the specified calendar year, expressed in lbs/mmBtu, 
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.006




Sec. 74.23  1985 Allowable SO2 emissions rate.

    (a) Data requirements. (1) The designated representative of the 
combustion source shall submit the following data and the calculations 
under paragraph (b) of this section based on the submitted data:
    (i) Allowable SO2 emissions rate of the combustion source 
expressed in lbs/mmBtu as defined under Sec. 72.2 of this chapter for 
the calendar year specified in paragraph (a)(2) of this section. If the 
allowable SO2 emissions rate is not expressed in lbs/mmBtu, the 
allowable emissions rate shall be converted to lbs/mmBtu by multiplying 
the emissions rate by the appropriate factor as specified in Table 1 of 
this section.

                       Table 1.--Factors to Convert Emission Limits to Pounds of SO2/mmBtu                      
----------------------------------------------------------------------------------------------------------------
                                                             Bituminous   Subbituminous   Lignite               
                     Unit measurement                           coal           coal         coal         Oil    
----------------------------------------------------------------------------------------------------------------
lbs Sulfur/mmBtu..........................................       2.0            2.0           2.0        2.0    
% Sulfur in fuel..........................................       1.66           2.22          2.86       1.07   
ppm SO2...................................................       0.00287        0.00384  .........       0.00167
ppm Sulfur in fuel........................................  ............  .............  .........       0.00334
tons SO2/hour.............................................                                                      
(3) 2 x 8760/(annual fuel consumption for specified year1                                                       
 x 103)                                                                                                         
lbs SO2/hour..............................................                                                      
(3) 8760/(annual fuel consumption for specified year1 x                                                         
 106)                                                                                                           
----------------------------------------------------------------------------------------------------------------
1Annual fuel consumption as defined under Sec. 74.20(b)(1) (i) or (ii); specified calendar year as defined under
  Sec. 74.23(a)(2).                                                                                             

    (ii) Citation of statute, regulations, and any other authority 
under which the allowable emissions rate under paragraph (a)(1) of this 
section is established as applicable to the combustion source;
    (iii) Averaging time associated with the allowable emissions rate 
under paragraph (a)(1) of this section.
    (iv) The annualization factor for the combustion source, based on 
the type of combustion source and the associated averaging time of the 
allowable emissions rate of the combustion source, as set forth in the 
Table 2 of this section:

         Table 2.--Annualization Factors for SO2 Emission Rates         
------------------------------------------------------------------------
                                                           Annualization
                                            Annualization    factor for 
         Type of combustion source            factor for     unscrubbed 
                                            scrubbed unit       unit    
------------------------------------------------------------------------
Unit Combusting Oil, Gas, or some                                       
 combination..............................          1.00           1.00 
Coal Unit with Averaging Time <= 1 day....          0.93           0.89 
Coal Unit with Averaging Time = 1 week....          0.97           0.92 
Coal Unit with Averaging Time = 30 days...          1.00           0.96 
Coal Unit with Averaging Time = 90 days...          1.00           1.00 
Coal Unit with Averaging Time = 1 year....          1.00           1.00 
Coal Unit with Federal Limit, but                                       
 Averaging Time Not Specified.............          0.93           0.89 
------------------------------------------------------------------------

    [[Page 17121]] (2) Calendar Year.
    (i) For combustion sources that commenced operation prior to 
January 1, 1985, the calendar year for the allowable SO2 emissions 
rate shall be 1985.
    (ii) For combustion sources that commenced operation after January 
1, 1985, the calendar year for the allowable SO2 emissions rate 
shall be the first year of the three consecutive calendar years of the 
alternative baseline under Sec. 74.20(b)(2).
    (iii) For combustion sources meeting the requirements of 
Sec. 74.20(c), the calendar year for calculating the allowable SO2 
emissions rate shall be the first year of the three consecutive 
calendar years to be used as alternative data under Sec. 74.20(c).
    (b) 1985 Allowable SO2 emissions rate calculation. The 
allowable SO2 emissions rate for the specified calendar year shall 
be calculated as follows:

1985 Allowable SO2 Emissions Rate = (Allowable SO2 Emissions 
Rate)  x  (Annualization Factor)


Sec. 74.24  Current allowable SO2 emissions rate.

    The designated representative shall submit the following data:
    (a) Current allowable SO2 emissions rate of the combustion 
source, expressed in lbs/mmBtu, which shall be the most stringent 
federally enforceable emissions limit in effect as of the date of 
submission of the opt-in application. If the allowable SO2 
emissions rate is not expressed in lbs/mmBtu, the allowable emissions 
rate shall be converted to lbs/mmBtu by multiplying the allowable rate 
by the appropriate factor as specified in Table 1 in 
Sec. 74.23(a)(1)(i).
    (b) Citations of statute, regulation, and any other authority under 
which the allowable emissions rate under paragraph (a) of this section 
is established as applicable to the combustion source;
    (c) Averaging time associated with the allowable emissions rate 
under paragraph (a) of this section.


Sec. 74.25  Current promulgated SO2 emissions limit.

    The designated representative shall submit the following data:
    (a) Current promulgated SO2 emissions limit of the combustion 
source, expressed in lbs/mmBtu, which shall be the most stringent 
federally enforceable emissions limit that has been promulgated as of 
the date of submission of the opt-in permit application and that either 
is in effect on that date or will take effect after that date. If the 
promulgated SO2 emissions limit is not expressed in lbs/mmBtu, the 
limit shall be converted to lbs/mmBtu by multiplying the limit by the 
appropriate factor as specified in Table 1 of Sec. 74.23(a)(1)(i).
    (b) Citations of statute, regulation and any other authority under 
which the emissions limit under paragraph (a) of this section is 
established as applicable to the combustion source;
    (c) Averaging time associated with the emissions limit under 
paragraph (a) of this section.
    (d) Effective date of the emissions limit under paragraph (a) of 
this section.


Sec. 74.26  Allocation formula.

    (a) The Administrator will calculate the annual allowance 
allocation for a combustion source based on the data, corrected as 
necessary, under Sec. 74.20 through Sec. 74.25 as follows:
    (1) For combustion sources for which the current promulgated 
SO2 emissions limit under Sec. 74.25 is greater than or equal to 
the current allowable SO2 emissions rate under Sec. 74.24, the 
number of allowances allocated for each year equals:
[GRAPHIC][TIFF OMITTED]TR04AP95.007


    (2) For combustion sources in which the current promulgated 
SO2 emissions limit under Sec. 74.25 is less than the current 
allowable SO2 emissions rate under Sec. 74.24.
    (i) The number of allowances for each year ending prior to the 
effective date of the promulgated SO2 emissions limit equals:
[GRAPHIC][TIFF OMITTED]TR04AP95.008


    (ii) The number of allowances for the year that includes the 
effective date of the promulgated SO2 emissions limit and for each 
year thereafter equals:
[[Page 17122]]

[GRAPHIC][TIFF OMITTED]TR04AP95.009




Sec. 74.28  Allowance allocation for combustion sources becoming opt-in 
sources on a date other than January 1.

    (a) Dates of entry. (1) If an opt-in source provided monthly data 
under Sec. 74.20, the opt-in source's opt-in permit may become 
effective at the beginning of a calendar quarter as of January 1, April 
1, July 1, or October 1.
    (2) If an opt-in source provided annual data under Sec. 74.20, the 
opt-in source's opt-in permit must become effective on January 1.
    (b) Prorating by Calendar Quarter. Where a combustion source's opt-
in permit becomes effective on April 1, July 1, or October 1 of a given 
year, the Administrator will prorate the allowance allocation for that 
first year by the calendar quarters remaining in the year as follows:

Allowances for the first year
[GRAPHIC][TIFF OMITTED]TR04AP95.010


    (1) For combustion sources that commenced operations before January 
1, 1985,
[GRAPHIC][TIFF OMITTED]TR04AP95.011


    (2) For combustion sources that commenced operations after January 
1, 1985,
[GRAPHIC][TIFF OMITTED]TR04AP95.012


    (3) Under paragraphs (b) (1) and (2) of this section,
    (i) ``Remaining calendar quarters'' shall be the calendar quarters 
in the first year for which the opt-in permit will be effective.
    (ii) Fuel consumption for remaining calendar quarters =
[GRAPHIC][TIFF OMITTED]TR04AP95.013


where unit conversion
    = 2 for coal
    = 0.001 for oil
    = 1 for gas

For other fuels, the combustion source must specify unit conversion;

and where starting month
    = April, if effective date is April 1;
    = July, if effective date is July 1; and
    = October, if effective date is October 1.

Subpart D--Allowance Calculations for Process Sources--[Reserved]

Subpart E--Allowance Tracking and Transfer and End of Year 
Compliance


Sec. 74.40  Establishment of opt-in source allowance accounts.

    (a) Establishing accounts. Not earlier than the date on which a 
combustion or process source becomes an affected unit under this part 
and upon receipt of a request for an opt-in account under paragraph (b) 
of this section, the Administrator will establish an account and 
allocate allowances in accordance with subpart C of this part for 
combustion sources or subpart D of this part for process sources. A 
separate unit account will be established for each opt-in source.
    (b) Request for opt-in account. The designated representative of 
the opt-in source shall, on or after the effective date of the opt-in 
permit as specified in Sec. 74.14(d), submit a letter requesting the 
opening of an allowance account in the [[Page 17123]] Allowance 
Tracking System to the Administrator.


Sec. 74.41  Identifying allowances.

    (a) Identifying allowances. Allowances allocated to an opt-in 
source will be assigned a serial number that identifies them as being 
allocated under an opt-in permit.
    (b) Submittal of opt-in allowances for auction. (1) An authorized 
account representative may offer for sale in the spot auction under 
Sec. 73.70 of this chapter allowances that are allocated to opt-in 
sources, if the allowances have a compliance use date earlier than the 
year in which the spot auction is to be held and if the Administrator 
has completed the deductions for compliance under Sec. 73.35(b) for the 
compliance year corresponding to the compliance use date of the offered 
allowances.
    (2) Authorized account representatives may not offer for sale in 
the advance auctions under Sec. 73.70 of this chapter allowances 
allocated to opt-in sources.


Sec. 74.42  Prohibition on future year transfers.

    (a) The Administrator will not record a transfer of opt-in 
allowances allocated to opt-in sources from a future year subaccount 
into any other future year subaccount in the Allowance Tracking System.


Sec. 74.43  Annual compliance certification report.

    (a) Applicability and deadline. For each calendar year in which an 
opt-in source is subject to the Acid Rain emissions limitations, the 
designated representative of the opt-in source shall submit to the 
Administrator, no later than 60 days after the end of the calendar 
year, an annual compliance certification report for the opt-in source 
in lieu of any annual compliance certification report required under 
subpart I of part 72 of this chapter.
    (b) Contents of report. The designated representative shall include 
in the annual compliance certification report the following elements, 
in a format prescribed by the Administrator, concerning the opt-in 
source and the calendar year covered by the report:
    (1) Identification of the opt-in source;
    (2) An opt-in utilization report in accordance with Sec. 74.44 for 
combustion sources and Sec. 74.45 for process sources;
    (3) A thermal energy compliance report in accordance with 
Sec. 74.47 for combustion sources and Sec. 74.48 for process sources, 
if applicable;
    (4) Shutdown or reconstruction information in accordance with 
Sec. 74.46, if applicable;
    (5) A statement that the opt-in source has not become an affected 
unit under Sec. 72.6 of this chapter;
    (6) At the designated representative's option, the total number of 
allowances to be deducted for the year, using the formula in 
Sec. 74.49, and the serial numbers of the allowances that are to be 
deducted; and
    (7) At the designated representative's option, for opt-in sources 
that share a common stack and whose emissions of sulfur dioxide are not 
monitored separately or apportioned in accordance with part 75 of this 
chapter, the percentage of the total number of allowances under 
paragraph (b)(6) of this section for all such affected units that is to 
be deducted from each affected unit's compliance subaccount; and
    (8) The compliance certification under paragraph (c) of this 
section.
    (c) Annual compliance certification. In the annual compliance 
certification report under paragraph (a) of this section, the 
designated representative shall certify, based on reasonable inquiry of 
those persons with primary responsibility for operating the opt-in 
source in compliance with the Acid Rain Program, whether the opt-in 
source was operated during the calendar year covered by the report in 
compliance with the requirements of the Acid Rain Program applicable to 
the opt-in source, including:
    (1) Whether the opt-in source was operated in compliance with 
applicable Acid Rain emissions limitations, including whether the opt-
in source held allowances, as of the allowance transfer deadline, in 
its compliance subaccount (after accounting for any allowance 
deductions or other adjustments under Sec. 73.34(c) of this chapter) 
not less than the opt-in source's total sulfur dioxide emissions during 
the calendar year covered by the annual report;
    (2) Whether the monitoring plan that governs the opt-in source has 
been maintained to reflect the actual operation and monitoring of the 
opt-in source and contains all information necessary to attribute 
monitored emissions to the opt-in source;
    (3) Whether all the emissions from the opt-in source or group of 
affected units (including the opt-in source) using a common stack were 
monitored or accounted for through the missing data procedures and 
reported in the quarterly monitoring reports in accordance with part 75 
of this chapter;
    (4) Whether the facts that form the basis for certification of each 
monitor at the opt-in source or group of affected units (including the 
opt-in source) using a common stack or of an opt-in source's 
qualifications for using an Acid Rain Program excepted monitoring 
method or approved alternative monitoring method, if any, have changed;
    (5) If a change is required to be reported under paragraph (c)(4) 
of this section, specify the nature of the change, the reason for the 
change, when the change occurred, and how the unit's compliance status 
was determined subsequent to the change, including what method was used 
to determine emissions when a change mandated the need for monitoring 
recertification; and
    (6) When applicable, whether the opt-in source was operating in 
compliance with its thermal energy plan as provided in Sec. 74.47 for 
combustion sources and Sec. 74.48 for process sources.


Sec. 74.44  Reduced utilization for combustion sources.

    (a) Calculation of Utilization.
    (1) Annual utilization. (i) Except as provided in paragraph 
(a)(1)(ii) of this section, annual utilization for the calendar year 
shall be calculated as follows:

Annual Utilization = Actual heat input + Reduction from improved 
efficiency
where,

    (A) ``Actual heat input'' shall be the actual annual heat input (in 
mmBtu) of the opt-in source for the calendar year determined in 
accordance with Appendix F of part 75 of this chapter.
    (B) ``Reduction from improved efficiency'' shall be the sum of the 
following four elements: Reduction from demand side measures that 
improve the efficiency of electricity consumption; reduction from 
demand side measures that improve the efficiency of steam consumption; 
reduction from improvements in the heat rate at the opt-in source; and 
reduction from improvement in the efficiency of steam production at the 
opt-in source. Qualified demand side measures applicable to the 
calculation of utilization for opt-in sources are listed in Appendix A, 
Section 1 of part 73 of this chapter.
    (C) ``Reduction from demand side measures that improve the 
efficiency of electricity consumption'' shall be a good faith estimate 
of the expected kilowatt hour savings during the calendar year for such 
measures and the corresponding reduction in heat input (in mmBtu) 
resulting from those measures. The demand side measures shall be 
implemented at the opt-in source, in the residence or facility to which 
the opt-in source delivers electricity for consumption or in the 
residence or facility of a customer to whom the opt-in source's utility 
system [[Page 17124]] sells electricity. The verified amount of such 
reduction shall be submitted in accordance with paragraph (c)(2) of 
this section.
    (D) ``Reduction from demand side measures that improve the 
efficiency of steam consumption'' shall be a good faith estimate of the 
expected steam savings (in mmBtu) from such measures during the 
calendar year and the corresponding reduction in heat input (in mmBtu) 
at the opt-in source as a result of those measures. The demand side 
measures shall be implemented at the opt-in source or in the facility 
to which the opt-in source delivers steam for consumption. The verified 
amount of such reduction shall be submitted in accordance with 
paragraph (c)(2) of this section.
    (E) ``Reduction from improvements in heat rate'' shall be a good 
faith estimate of the expected reduction in heat rate during the 
calendar year and the corresponding reduction in heat input (in mmBtu) 
at the opt-in source as a result of all improved unit efficiency 
measures at the opt-in source and may include supply-side measures 
listed in Appendix A, section 2.1 of part 73 of this chapter. The 
verified amount of such reduction shall be submitted in accordance with 
paragraph (c)(2) of this section.
    (F) ``Reduction from improvement in the efficiency of steam 
production at the opt-in source'' shall be a good faith estimate of the 
expected improvement in the efficiency of steam production at the opt-
in source during the calendar year and the corresponding reduction in 
heat input (in mmBtu) at the opt-in source as a result of all improved 
steam production efficiency measures. In order to claim improvements in 
the efficiency of steam production, the designated representative of 
the opt-in source must demonstrate to the satisfaction of the 
Administrator that the heat rate of the opt-in source has not 
increased. The verified amount of such reduction shall be submitted in 
accordance with paragraph (c)(2) of this section.
    (G) Notwithstanding paragraph (a)(1)(i)(B) of this section, where 
two or more opt-in sources, or two or more opt-in sources and Phase I 
units, include in their annual compliance certification reports their 
good faith estimate of kilowatt hour savings or steam savings from the 
same demand side measures that improve the efficiency of electricity or 
steam consumption:
    (1) The designated representatives of all such opt-in sources and 
Phase I units shall submit with their annual compliance certification 
reports a certification signed by all such designated representatives. 
The certification shall apportion the total kilowatt hour savings or 
steam savings among such opt-in sources and Phase I units.
    (2) Each designated representative shall include in its annual 
compliance certification report only its share of kilowatt hour savings 
or steam savings.
    (ii) For an opt-in source whose opt-in permit becomes effective on 
a date other than January 1, annual utilization for the first year 
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.014


where ``actual heat input'' and ``reduction from improved efficiency'' 
are defined as set forth in paragraph (a)(1)(i) of this section but are 
restricted to data or estimates for the ``remaining calendar 
quarters'', which are the calendar quarters that begin on or after the 
date the opt-in permit becomes effective.
    (2) Average utilization. Average utilization for the calendar year 
shall be defined as the average of the annual utilization calculated as 
follows:
    (i) For the first two calendar years after the effective date of an 
opt-in permit taking effect on January 1 or for the first two calendar 
years after the effective date of a thermal energy plan governing an 
opt-in source in accordance with Sec. 74.47 of this chapter, average 
utilization will be calculated as follows:

(A) Average utilization for the first year = annual 
utilizationyear1

where ``annual utilizationyear 1'' is as calculated under 
paragraph (a)(1)(i) of this section.

(B) Average utilization for the second year
[GRAPHIC][TIFF OMITTED]TR04AP95.015


where,

``revised annual utilizationyear 1'' is as submitted for the year 
under paragraph (c)(2)(i)(B) of this section and adjusted under 
paragraph (c)(2)(iii) of this section;

``annual utilizationyear 2'' is as calculated under paragraph 
(a)(1)(i) of this section.
    (ii) For the first three calendar years after the effective date of 
the opt-in permit taking effect on a date other than January 1, average 
utilization will be calculated as follows:

(A) Average utilization for the first year after opt-in = annual 
utilizationyear 1

where ``annual utilizationyear 1'' is as calculated under 
paragraph (a)(1)(ii) of this section.

(B) Average utilization for the second year after opt-in
                                                                 where,
[[Page 17125]]

[GRAPHIC][TIFF OMITTED]TR04AP95.016


``revised annual utilizationyear 1'' is as submitted for the year 
under paragraph (c)(2)(i)(B) of this section and adjusted under 
paragraph (c)(2)(iii) of this section; and

``annual utilizationyear 2'' is as calculated under paragraph 
(a)(1)(ii) of this section.

(C) Average utilization for the third year after opt-in
[GRAPHIC][TIFF OMITTED]TR04AP95.017


where,

``revised annual utilizationyear 1'' is as submitted for the year 
under paragraph (c)(2)(i)(B) of this section and adjusted under 
paragraph (c)(2)(iii) of this section; and

``revised annual utilizationyear 2'' is as submitted for the year 
under paragraph (c)(2)(i)(B) of this section and adjusted under 
paragraph (c)(2)(iii) of this section; and

``annual utilizationyear 3'' is as calculated under paragraph 
(a)(1)(ii) of this section.
    (iii) Except as provided in paragraphs (a)(2)(i) and (a)(2)(ii), 
average utilization shall be the sum of annual utilization for the 
calendar year and the revised annual utilization, submitted under 
paragraph (c)(2)(i)(B) of this section and adjusted by the 
Administrator under paragraph (c)(2)(iii) of this section, for the two 
immediately preceding calendar years divided by 3.
    (b) Determination of reduced utilization and calculation of 
allowances.--
    (1) Determination of reduced utilization. For a year during which 
its opt-in permit is effective, an opt-in source has reduced 
utilization if the opt-in source's average utilization for the calendar 
year, as calculated under paragraph (a) of this section, is less than 
its baseline.
    (2) Calculation of allowances deducted for reduced utilization. If 
the Administrator determines that an opt-in source has reduced 
utilization for a calendar year during which the opt-in source's opt-in 
permit is in effect, the Administrator will deduct allowances, as 
calculated under paragraph (b)(2)(i) of this section, from the 
compliance subaccount of the opt-in source's Allowance Tracking System 
account.
    (i) Allowances deducted for reduced utilization =
[GRAPHIC][TIFF OMITTED]TR04AP95.018


    (ii) The allowances deducted shall have the same or an earlier 
compliance use date as those allocated under subpart C of this part for 
the calendar year for which the opt-in source has reduced utilization.
    (c) Compliance.--(1) Opt-in Utilization Report. The designated 
representative for each opt-in source shall submit an opt-in 
utilization report for the calendar year, as part of its annual 
compliance certification report under Sec. 74.43, that shall include 
the following elements in a format prescribed by the Administrator:
    (i) The name, authorized account representative identification 
number, and telephone number of the designated representative of the 
opt-in source;
    (ii) The opt-in source's account identification number in the 
Allowance Tracking System;
    (iii) The opt-in source's annual utilization for the calendar year, 
as defined under paragraph (a)(1) of this section, and the revised 
annual utilization, submitted under paragraph (c)(2)(i)(B) of this 
section and adjusted under paragraph (c)(2)(iii) of this section, for 
the two immediately preceding calendar years;
    (iv) The opt-in source's average utilization for the calendar year, 
as defined under paragraph (a)(2) of this section;
    (v) The difference between the opt-in source's average utilization 
and its baseline;
    (vi) The number of allowances that shall be deducted, if any, using 
the formula in paragraph (b)(2)(i) of this section and the supporting 
calculations;
    (2) Confirmation report. (i) If the annual compliance certification 
report for an opt-in source includes estimates of any reduction in heat 
input resulting from improved efficiency as defined under paragraph 
(a)(1)(i) of this section, the designated representative shall submit, 
by July 1 of the year in which the annual compliance certification 
report was submitted, a confirmation report, concerning the calendar 
year covered by the annual compliance certification report. The 
Administrator may grant, for good cause shown, an extension of the time 
to file the confirmation report. The confirmation [[Page 17126]] report 
shall include the following elements in a format prescribed by the 
Administrator:
    (A) Verified reduction in heat input. Any verified kwh savings or 
any verified steam savings from demand side measures that improve the 
efficiency of electricity or steam consumption, any verified reduction 
in the heat rate at the opt-in source, or any verified improvement in 
the efficiency of steam production at the opt-in source achieved and 
the verified corresponding reduction in heat input for the calendar 
year that resulted.
    (B) Revised annual utilization. The opt-in source's annual 
utilization for the calendar year as provided under paragraph 
(c)(1)(iii) of this section, recalculated using the verified reduction 
in heat input for the calendar year under paragraph (c)(2)(i)(A) of 
this section.
    (C) Revised average utilization. The opt-in source's average 
utilization as provided under paragraph (c)(1)(iv) of this section, 
recalculated using the verified reduction in heat input for the 
calendar year under paragraph (c)(2)(i)(A) of this section.
    (D) Recalculation of reduced utilization. The difference between 
the opt-in source's recalculated average utilization and its baseline.
    (E) Allowance adjustment. The number of allowances that should be 
credited or deducted using the formulas in paragraphs (c)(2)(iii)(C) 
and (D) of this section and the supporting calculations; and the number 
of adjusted allowances remaining using the formula in paragraph 
(c)(2)(iii)(E) of this section and the supporting calculations.
    (ii) Documentation. (A) For all figures under paragraphs 
(c)(2)(i)(A) of this section, the opt-in source must provide as part of 
the confirmation report, documentation (which may follow the EPA 
Conservation Verification Protocol) verifying the figures to the 
satisfaction of the Administrator.
    (B) Notwithstanding paragraph (c)(2)(i)(A) of this section, where 
two or more opt-in sources, or two or more opt-in sources and Phase I 
units include in the confirmation report under paragraph (c)(2) of this 
section or Sec. 72.91(b) of this chapter the verified kilowatt hour 
savings or steam savings defined under paragraph (c)(2)(i)(A) of this 
section, for the calendar year, from the same specific measures:
    (1) The designated representatives of all such opt-in sources and 
Phase I units shall submit with their confirmation reports a 
certification signed by all such designated representatives. The 
certification shall apportion the total kilowatt hour savings or steam 
savings as defined under paragraph (c)(2)(i)(A) of this section for the 
calendar year among such opt-in sources.
    (2) Each designated representative shall include in the opt-in 
source's confirmation report only its share of the verified reduction 
in heat input as defined under paragraph (c)(2)(i)(A) of this section 
for the calendar year under the certification under paragraph 
(c)(2)(ii)(B)(1) of this section.
    (iii) Determination of reduced utilization based on confirmation 
report. (A) If an opt-in source must submit a confirmation report as 
specified under paragraph (c)(2) of this section, the Administrator, 
upon such submittal, will adjust his or her determination of reduced 
utilization for the calendar year for the opt-in source. Such 
adjustment will include the recalculation of both annual utilization 
and average utilization, using verified reduction in heat input as 
defined under paragraph (c)(2)(i)(A) of this section for the calendar 
year instead of the previously estimated values.
    (B) Estimates confirmed. If the total, included in the confirmation 
report, of the amounts of verified reduction in the opt-in source's 
heat input equals the total estimated in the opt-in source's annual 
compliance certification report for the calendar year, then the 
designated representative shall include in the confirmation report a 
statement indicating that is true.
    (C) Underestimate. If the total, included in the confirmation 
report, of the amounts of verified reduction in the opt-in source's 
heat input is greater than the total estimated in the opt-in source's 
annual compliance certification report for the calendar year, then the 
designated representative shall include in the confirmation report the 
number of allowances to be credited to the opt-in source's compliance 
subaccount calculated using the following formula:
    Allowances credited for the calendar year in which the reduced 
utilization occurred=
[GRAPHIC][TIFF OMITTED]TR04AP95.019


where,

Average Utilizationestimate=

the average utilization of the opt-in source as defined under paragraph 
(a)(2) of this section, calculated using the estimated reduction in the 
opt-in source's heat input under (a)(1) of this section, and submitted 
in the annual compliance certification report for the calendar year.

Average Utilizationverified=

the average utilization of the opt-in source as defined under paragraph 
(a)(2) of this section, calculated using the verified reduction in the 
opt-in source's heat input as submitted under paragraph (c)(2)(i)(A) of 
this section by the designated representative in the confirmation 
report.
    (D) Overestimate. If the total of the amounts of verified reduction 
in the opt-in source's heat input included in the confirmation report 
is less than the total estimated in the opt-in source's annual 
compliance certification report for the calendar year, then the 
designated representative shall include in the confirmation report the 
number of allowances to be deducted from the opt-in source's compliance 
subaccount, which equals the absolute value of the result of the 
formula for allowances credited under paragraph (c)(2)(iii)(C) of this 
section.
    (E) Adjusted allowances remaining. Unless paragraph (c)(2)(iii)(B) 
of this section applies, the designated representative shall include in 
the confirmation report the adjusted amount of allowances that would 
have been held in the opt-in source's compliance subaccount if the 
deductions made under Sec. 73.35(b) of this chapter had been based on 
the verified, rather than the estimated, reduction in the opt-in 
source's heat input, calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.020


[[Page 17127]]

where:

    ``Allowances held after deduction'' shall be the amount of 
allowances held in the opt-in source's compliance subaccount after 
deduction of allowances was made under Sec. 73.35(b) of this chapter 
based on the annual compliance certification report.
    ``Excess emissions'' shall be the amount (if any) of excess 
emissions determined under Sec. 73.35(d) for the calendar year based on 
the annual compliance certification report. ``Allowances credited'' 
shall be the amount of allowances calculated under paragraph 
(c)(2)(iii)(C) of this section.
    ``Allowances deducted'' shall be the amount of allowances 
calculated under paragraph (c)(2)(iii)(D) of this section.
    (1) If the result of the formula for ``adjusted amount of 
allowances'' is negative, the absolute value of the result constitutes 
excess emissions of sulfur dioxide. If the result is positive, there 
are no excess emissions of sulfur dioxide.
    (2) If the amount of excess emissions of sulfur dioxide calculated 
under ``adjusted amount of allowances'' differs from the amount of 
excess emissions of sulfur dioxide determined under Sec. 73.35 of this 
chapter based on the annual compliance certification report, then the 
designated representative shall include in the confirmation report a 
demonstration of:
    (i) The number of allowances that should be deducted to offset any 
increase in excess emissions or returned to the account for any 
decrease in excess emissions; and
    (ii) The amount of the excess emissions penalty (excluding 
interest) that should be paid or returned to the account for the change 
in excess emissions.
    (3) The Administrator will deduct immediately from the opt-in 
source's compliance subaccount the amount of allowances necessary to 
offset any increase in excess emissions or will return immediately to 
the opt-in source's compliance subaccount the amount of allowances that 
he or she determines is necessary to account for any decrease in excess 
emissions.
    (4) The designated representative may identify the serial numbers 
of the allowances to be deducted or returned. In the absence of such 
identification, the deduction will be on a first-in, first-out basis 
under Sec. 73.35(c)(2) of this chapter and the identification of 
allowances returned will be at the Administrator's discretion.
    (5) If the designated representative of an opt-in source fails to 
submit on a timely basis a confirmation report, in accordance with 
paragraph (c)(2) of this section, with regard to the estimate of 
reductions in heat input as defined under paragraph (c)(2)(i)(A) of 
this section, then the Administrator will reject such estimate and 
correct it to equal zero in the opt-in source's annual compliance 
certification report that includes that estimate. The Administrator 
will deduct immediately, on a first-in, first-out basis under 
Sec. 73.35(c)(2) of this chapter, the amount of allowances that he or 
she determines is necessary to offset any increase in excess emissions 
of sulfur dioxide that results from the correction and will require the 
owners and operators of the opt-in source to pay an excess emission 
penalty in accordance with part 77 of this chapter.
    (F) If the opt-in source is governed by an approved thermal energy 
plan under Sec. 74.47 and if the opt-in source must submit a 
confirmation report as specified under paragraph (c)(2) of this 
section, the adjusted amount of allowances that should remain in the 
opt-in source's compliance subaccount shall be calculated as follows:

Adjusted amount of allowances =
[GRAPHIC][TIFF OMITTED]TR04AP95.021


where,

    ``Allowances allocated'' shall be the original number of allowances 
allocated under section Sec. 74.40 for the calendar year.
    ``Tons emitted'' shall be the total tons of sulfur dioxide emitted 
by the opt-in source during the calendar year, as reported in 
accordance with subpart F of this part for combustion sources.
    ``Allowances transferred to all replacement units'' shall be the 
sum of allowances transferred to all replacement units under an 
approved thermal energy plan in accordance with Sec. 74.47 and adjusted 
by the Administrator in accordance with Sec. 74.47(d)(2).
    ``Allowances deducted for reduced utilization'' shall be the total 
number of allowances deducted for reduced utilization as calculated in 
accordance with this section including any adjustments required under 
paragraph (c)(iii)(E) of this section.


Sec. 74.45  Reduced utilization for process sources. [Reserved]


Sec. 74.46  Opt-in source permanent shutdown, reconstruction, or change 
in affected status.

    (a) Notification. (1) When an opt-in source has permanently 
shutdown during the calendar year, the designated representative shall 
notify the Administrator of the date of shutdown, within 30 days of 
such shutdown.
    (2) When an opt-in source has undergone a modification that 
qualifies as a reconstruction as defined in Sec. 60.15 of this chapter, 
the designated representative shall notify the Administrator of the 
date of completion of the reconstruction, within 30 days of such 
completion.
    (3) When an opt-in source becomes an affected unit under Sec. 72.6 
of this chapter, the designated representative shall notify the 
Administrator of such change in the opt-in source's affected status 
within 30 days of such change.
    (b) Administrator's action. (1) The Administrator will terminate 
the opt-in source's opt-in permit and deduct allowances as provided 
below in the following circumstances:
    (i) When an opt-in source has permanently shutdown. The 
Administrator shall deduct allowances equal in number to and with the 
same or earlier compliance use date as those allocated to the opt-in 
source under Sec. 74.40 for the calendar year in which the shut down 
occurs and for all future years following the year in which the shut 
down occurs; or
    (ii) When an opt-in source has undergone a modification that 
qualifies as a reconstruction as defined in Sec. 60.15 of this chapter. 
The Administrator shall deduct allowances equal in number to and with 
the same or earlier compliance use date as those allocated to the opt-
in source under Sec. 74.40 for the calendar year in which the 
reconstruction is completed and all future years following 
[[Page 17128]] the year in which the reconstruction is completed; or
    (iii) When an opt-in source becomes an affected unit under 
Sec. 72.6 of this chapter. The Administrator shall deduct allowances 
equal in number to and with the same or earlier compliance use date as 
those allocated to the opt-in source under Sec. 74.40 for the calendar 
year in which the opt-in source becomes affected under Sec. 72.6 of 
this chapter and all future years following the calendar year in which 
the opt-in source becomes affected under Sec. 72.6; or
    (iv) When an opt-in source does not renew its opt-in permit. The 
Administrator shall deduct allowances equal in number to and with the 
same or earlier compliance use date as those allocated to the opt-in 
source under Sec. 74.40 for the calendar year in which the opt-in 
source's opt-in permit expires and all future years following the year 
in which the opt-in source's opt-in permit expires.
    (2) After the allowance deductions under paragraph (b)(1) of this 
section are made, the Administrator will close the opt-in source's unit 
account in the Allowance Tracking System. If any allowances remain in 
the opt-in source's unit account after allowance deductions are made 
under paragraph (b)(1) of this section, and any deductions made under 
part 77 of this chapter, the Administrator will establish a general 
account for the opt-in source, and transfer any remaining allowances 
into this general account. The designated representative for the opt-in 
source shall become the authorized account representative for the 
general account.


Sec. 74.47  Transfer of allowances from the replacement of thermal 
energy--combustion sources.

    (a) Thermal energy plan.--(1) General provisions. The designated 
representative of an opt-in source that seeks to qualify for the 
transfer of allowances based on the replacement of thermal energy by a 
replacement unit shall submit a thermal energy plan subject to the 
requirements of Sec. 72.40(b) of this chapter for multi-unit compliance 
options and this section. The effective period of the thermal energy 
plan shall begin from January 1 of the first full calendar year for 
which the plan is approved and end December 31 of the last full 
calendar year for which the opt-in permit containing the plan is in 
effect.
    (2) Applicability. This section shall apply to any designated 
representative of an opt-in source and any designated representative of 
each replacement unit seeking to transfer allowances based on the 
replacement of thermal energy.
    (3) Contents. Each thermal energy plan shall contain the following 
elements in a format prescribed by the Administrator:
    (i) The calendar year that the thermal energy plan takes effect, 
which shall be the first year the replacement unit(s) will replace 
thermal energy of the opt-in source;
    (ii) The name, authorized account representative identification 
number, and telephone number of the designated representative of the 
opt-in source;
    (iii) The name, authorized account representative identification 
number, and telephone number of the designated representative of each 
replacement unit;
    (iv) The opt-in source's account identification number in the 
Allowance Tracking System;
    (v) Each replacement unit's account identification number in the 
Allowance Tracking System (ATS);
    (vi) The type of fuel used by each replacement unit;
    (vii) The allowable SO2 emissions rate, expressed in lbs/
mmBtu, of each replacement unit for the calendar year for which the 
plan will take effect. When a thermal energy plan is renewed in 
accordance with paragraph (a)(9) of this section, the allowable 
SO2 emission rate at each replacement unit will be the most 
stringent federally enforceable allowable SO2 emissions rate 
applicable at the time of renewal for the calendar year for which the 
renewal will take effect. This rate will not be annualized;
    (viii) The estimated amount of total thermal energy to be reduced 
at the opt-in source, including all energy flows (steam, gas, or hot 
water) used for any process or in any heating or cooling application;
    (ix) The estimated total thermal energy at each replacement unit 
for the year prior to the year for which the plan is to take effect, 
including all energy flows (steam, gas, or hot water) used for any 
process or in any heating or cooling application;
    (x) The estimated amount of total thermal energy at each 
replacement unit after replacing thermal energy at the opt-in source, 
including all energy flows (steam, gas, or hot water) used for any 
process or in any heating or cooling application;
    (xi) The estimated amount of thermal energy at each replacement 
unit, including all energy flows (steam, gas, or hot water) used for 
any process or in any heating or cooling application, replacing the 
thermal energy at the opt-in source;
    (xii) Estimated total annual fuel input at each replacement unit 
after replacing thermal energy at the opt-in source;
    (xiii) The number of allowances calculated under paragraph (b) of 
this section that the opt-in source will transfer to each replacement 
unit represented in the thermal energy plan.
    (xiv) The estimated number of allowances to be deducted for reduced 
utilization under Sec. 74.44;
    (xv) Certification that each replacement unit has entered into a 
legally binding steam sales agreement to provide the thermal energy, as 
calculated under paragraph (a)(3)(xi) of this section, that it is 
replacing for the opt-in source. The designated representative of each 
replacement unit shall maintain and make available to the 
Administrator, at the Administrator's request, copies of documents 
demonstrating that the replacement unit is replacing the thermal energy 
at the opt-in source.
    (4) Submission. The designated representative of the opt-in source 
seeking to qualify for the transfer of allowances based on the 
replacement of thermal energy shall submit a thermal energy plan to the 
permitting authority by no later than July 1 of the calendar year prior 
to the first calendar year for which the plan is to be in effect. The 
thermal energy plan shall be signed and certified by the designated 
representative of the opt-in source and each replacement unit covered 
by the plan.
    (5) Retirement of opt-in source upon enactment of plan. (i) If the 
opt-in source will be permanently retired as of the effective date of 
the thermal energy plan, the opt-in source shall not be required to 
monitor its emissions upon retirement, consistent with Sec. 75.67 of 
this chapter, provided that the following requirements are met:
    (A) The designated representative of the opt-in source shall 
include in the plan a request for an exemption from the requirements of 
part 75 in accordance with Sec. 75.67 of this chapter and shall submit 
the following statement: ``I certify that the opt-in source (``is'' or 
``will be'', as applicable) permanently retired on the date specified 
in this plan and will not emit any sulfur dioxide or nitrogen oxides 
after such date.''
    (B) The opt-in source shall not emit any sulfur dioxide or nitrogen 
oxides after the date specified in the plan.
    (ii) Notwithstanding the monitoring exemption discussed in 
paragraph (a)(5)(i) of this section, the designated representative for 
the opt-in source shall submit the annual compliance certification 
report provided under paragraph (d) of this section.
    (6) Administrator's action. If the permitting authority approves a 
thermal [[Page 17129]] energy plan, the Administrator will annually 
transfer allowances to the Allowance Tracking System account of each 
replacement unit, as provided in the approved plan.
    (7) Incorporation, modification and renewal of a thermal energy 
plan. (i) An approved thermal energy plan, including any revised or 
renewed plan that is approved, shall be incorporated into both the opt-
in permit for the opt-in source and the Acid Rain permit for each 
replacement unit governed by the plan. Upon approval, the thermal 
energy plan shall be incorporated into the Acid Rain permit for each 
replacement unit pursuant to the requirements for administrative permit 
amendments under Sec. 72.83 of this chapter.
    (ii) In order to revise an opt-in permit to add an approved thermal 
energy plan or to change an approved thermal energy plan, the 
designated representative of the opt-in source shall submit a plan or a 
revised plan under paragraph (a)(4) of this section and meet the 
requirements for permit revisions under Sec. 72.80 and either 
Sec. 72.81 or Sec. 72.82 of this chapter.
    (8) Termination of plan. (i) A thermal energy plan shall be in 
effect until the earlier of the expiration of the opt-in permit for the 
opt-in source or the year for which a termination of the plan takes 
effect under paragraph (a)(8)(ii) of this section.
    (ii) Termination of plan by opt-in source and replacement units. A 
notification to terminate a thermal energy plan in accordance with 
Sec. 72.40(d) of this chapter shall be submitted no later than December 
1 of the calendar year for which the termination is to take effect.
    (iii) If the requirements of paragraph (a)(8)(ii) of this section 
are met and upon revision of the opt-in permit of the opt-in source and 
the Acid Rain permit of each replacement unit governed by the thermal 
energy plan to terminate the plan pursuant to Sec. 72.83 of this 
chapter, the Administrator will adjust the allowances for the opt-in 
source and the replacement units to reflect the transfer back to the 
opt-in source of the allowances transferred from the opt-in source 
under the plan for the year for which the termination of the plan takes 
effect.
    (9) Renewal of thermal energy plan. The designated representative 
of an opt-in source may renew the thermal energy plan as part of its 
opt-in permit renewal in accordance with Sec. 74.19.
    (b) Calculation of transferable allowances--(1) Qualifying thermal 
energy. The amount of thermal energy credited towards the transfer of 
allowances based on the replacement of thermal energy shall equal the 
qualifying thermal energy and shall be calculated for each replacement 
unit as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.022


    (2) Fuel associated with qualifying thermal energy. The fuel 
associated with the qualifying thermal energy at each replacement unit 
shall be calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.023


where,

    ``Qualifying thermal energy'' for the replacement unit is as 
defined in paragraph (b)(1) of this section;
    ``Efficiency constant'' for the replacement unit

= 0.85, where the replacement unit is a boiler
= 0.80, where the replacement unit is a cogenerator

    (3) Allowances transferable from the opt-in source to each 
replacement unit. The number of allowances transferable from the opt-in 
source to each replacement unit for the replacement of thermal energy 
is calculated as follows:
[GRAPHIC][TIFF OMITTED]TR04AP95.024


where,

    ``Allowable SO2 emission rate'' for the replacement unit is as 
defined in paragraph (a)(3)(vii) of this section;
    ``Fuel associated with qualifying thermal energy'' is as defined in 
paragraph (b)(2) of this section;
    (c) Transfer prohibition. The allowances transferred from the opt-
in source to each replacement unit shall not be transferred from the 
unit account of the replacement unit to any other account in the 
Allowance Tracking System.
    (d) Compliance--(1) Annual compliance certification report. (i) As 
required for all opt-in sources, the designated representative of the 
opt-in source covered by a thermal energy plan must submit an opt-in 
utilization report for the calendar year as part of its annual 
compliance certification report under Sec. 74.44(c)(1).
    (ii) The designated representative of an opt-in source must submit 
a thermal energy compliance report for the calendar year as part of the 
annual compliance certification report, which must include the 
following elements in a format prescribed by the Administrator:
    (A) The name, authorized account representative identification 
number, and telephone number of the designated representative of the 
opt-in source;
    (B) The name, authorized account representative identification 
number, [[Page 17130]] and telephone number of the designated 
representative of each replacement unit;
    (C) The opt-in source's account identification number in the 
Allowance Tracking System (ATS);
    (D) The account identification number in the Allowance Tracking 
System (ATS) for each replacement unit;
    (E) The actual amount of total thermal energy reduced at the opt-in 
source during the calendar year, including all energy flows (steam, 
gas, or hot water) used for any process or in any heating or cooling 
application;
    (F) The actual amount of thermal energy at each replacement unit, 
including all energy flows (steam, gas, or hot water) used for any 
process or in any heating or cooling application, replacing the thermal 
energy at the opt-in source;
    (G) The actual amount of total thermal energy at each replacement 
unit after replacing thermal energy at the opt-in source, including all 
energy flows (steam, gas, or hot water) used for any process or in any 
heating or cooling application;
    (H) Actual total fuel input at each replacement unit as determined 
in accordance with part 75 of this chapter;
    (I) Calculations of allowance adjustments to be performed by the 
Administrator in accordance with paragraph (d)(2) of this section.
    (2) Allowance adjustments by Administrator. (i) The Administrator 
will adjust the number of allowances in the Allowance Tracking System 
accounts for the opt-in source and for each replacement unit to reflect 
any changes between the estimated values submitted in the thermal 
energy plan pursuant to paragraph (a) of this section and the actual 
values submitted in the thermal energy compliance report pursuant to 
paragraph (d) of this section. The values to be considered for this 
adjustment include:
    (A) The number of allowances transferable by the opt-in source to 
each replacement unit, calculated in paragraph (b) of this section 
using the actual, rather than estimated, thermal energy at the 
replacement unit replacing thermal energy at the opt-in source.
    (B) The number of allowances deducted from the Allowance Tracking 
System account of the opt-in source, calculated under Sec. 74.44(b)(2).
    (ii) If the opt-in source includes in the opt-in utilization report 
under Sec. 74.44 estimates for reductions in heat input, then the 
Administrator will adjust the number of allowances in the Allowance 
Tracking System accounts for the opt-in source and for each replacement 
unit to reflect any differences between the estimated values submitted 
in the opt-in utilization report and the actual values submitted in the 
confirmation report pursuant to Sec. 74.44(c)(2).
    (3) Liability. The owners and operators of an opt-in source or a 
replacement unit governed by an approved thermal energy plan shall be 
liable for any violation of the plan or this section at that opt-in 
source or replacement unit that is governed by the thermal energy plan, 
including liability for fulfilling the obligations specified in part 77 
of this chapter and section 411 of the Act.


Sec. 74.48  Transfer of allowances from the replacement of thermal 
energy--process sources [Reserved]


Sec. 74.49  Calculation for deducting allowances.

    (a) Allowance deduction formula. The following formula shall be 
used to determine the total number of allowances to be deducted for the 
calendar year from the allowances held in an opt-in source's compliance 
subaccount as of the allowance transfer deadline applicable to that 
year:

Total allowances deducted = Tons emitted + Allowances deducted for 
reduced utilization where:

    (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, 
``Tons emitted'' shall be the total tons of sulfur dioxide emitted by 
the opt-in source during the calendar year, as reported in accordance 
with subpart F of this part for combustion sources or subpart G of this 
part for process sources.
    (ii) If the effective date of the opt-in source's permit took 
effect on a date other than January 1, ``Tons emitted'' for the first 
calendar year shall be the total tons of sulfur dioxide emitted by the 
opt-in source during the calendar quarters for which the opt-in 
source's opt-in permit is effective, as reported in accordance with 
subpart F of this part for combustion sources or subpart G of this part 
for process sources.
    (2) ``Allowances deducted for reduced utilization'' shall be the 
total number of allowances deducted for reduced utilization as 
calculated in accordance with Sec. 74.44 for combustion sources or 
Sec. 74.45 for process sources.


Sec. 74.50  Deducting opt-in source allowances from ATS accounts.

    (a) Deduction of allowances. The Administrator may deduct any 
allowances that were allocated to an opt-in source under Sec. 74.40 by 
removing, from any Allowance Tracking System accounts in which they are 
held, the allowances in an amount specified in paragraph (d) of this 
section, under the following circumstances:
    (1) When the opt-in source has permanently shut down; or
    (2) When the opt-in source has been reconstructed; or
    (3) When the opt-in source becomes an affected unit under Sec. 72.6 
of this chapter; or
    (4) When the opt-in source fails to renew its opt-in permit.
    (b) Method of deduction. The Administrator will deduct allowances 
beginning with those allowances with the latest recorded date of 
transfer out of the opt-in source's unit account.
    (c) Notification of deduction. When allowances are deducted, the 
Administrator will send a written notification to the authorized 
account representative of each Allowance Tracking System account from 
which allowances were deducted. The notification will state:
    (1) The serial numbers of all allowances deducted from the account,
    (2) The reason for deducting the allowances, and
    (3) The date of deduction of the allowances.
    (d) Amount of deduction. The Administrator may deduct allowances in 
accordance with paragraph (a) of this section in an amount required to 
offset any excess emissions in accordance with part 77 of this chapter 
and when an opt-in source does not hold allowances equal in number to 
and with the same or earlier compliance use date for the calendar years 
specified under Sec. 74.46(b)(1) (i) through (iv) in an amount required 
to be deducted under Sec. 74.46(b)(1) (i) through (iv).

Subpart F--Monitoring Emissions: Combustion Sources


Sec. 74.60  Monitoring requirements.

    (a) Monitoring requirements for combustion sources. The owner or 
operator of each combustion source shall meet all of the requirements 
specified in part 75 of this chapter for the owners and operators of an 
affected unit to install, certify, operate, and maintain a continuous 
emission monitoring system, an excepted monitoring system, or an 
approved alternative monitoring system in accordance with part 75 of 
this chapter.
    (b) Monitoring requirements for opt-in sources. The owner or 
operator of each opt-in source shall install, certify, operate, and 
maintain a continuous emission monitoring system, an excepted 
monitoring system, an approved alternative monitoring system in 
accordance with part 75 of this chapter. [[Page 17131]] 


Sec. 74.61  Monitoring plan.

    (a) Monitoring plan. The designated representative of a combustion 
source shall meet all of the requirements specified under part 75 of 
this chapter for a designated representative of an affected unit to 
submit to the Administrator a monitoring plan that includes the 
information required in a monitoring plan under Sec. 75.53 of this 
chapter. This monitoring plan shall be submitted as part of the 
combustion source's opt-in permit application under Sec. 74.14 of this 
part.
    (b) [Reserved].

Subpart G--Monitoring Emissions: Process Sources--[Reserved]

PART 75--CONTINUOUS EMISSION MONITORING

    17. The authority citation for part 75 continues to read as 
follows:

    Authority: 42 U.S.C. 7651, et seq.

    18. Section 75.4 is amended by revising paragraph (a) introductory 
text, and by adding paragraph (a)(5) to read as follows:


Sec. 75.4  Compliance dates.

    (a) The provisions of this part apply to each existing Phase I and 
Phase II unit on February 10, 1993. For substitution or compensating 
units that are so designated under the acid rain permit which governs 
the unit and contains the approved substitution or reduced utilization 
plan, pursuant to Sec. 72.41 or Sec. 72.43 of this chapter, the 
provisions of this part become applicable upon the issuance date of the 
acid rain permit. For combustion sources seeking to enter the Opt-in 
Program in accordance with part 74 of this chapter, the provisions of 
this part become applicable upon the submission of an opt-in permit 
application in accordance with Sec. 74.14 of this chapter. In 
accordance with Sec. 75.20, the owner or operator of each existing 
affected unit shall ensure that all certification tests for the 
required continuous emission monitoring systems and continuous opacity 
monitoring systems are completed not later than the following dates 
(except as provided in paragraphs (d) and (e) of this section):
* * * * *
    (5) For combustion sources seeking to enter the Opt-in Program in 
accordance with part 74 of this chapter, the expiration date of a 
combustion source's opt-in permit under Sec. 74.14(e) of this chapter.
* * * * *
    19. Section 75.16 is amended by revising paragraph (a)(2)(ii)(A) 
and (b)(2)(ii)(A) to read as follows:


Sec. 75.16  Special provisions for monitoring emissions from common by-
pass, and multiple stacks for SO2 emissions and heat input 
determinations.

    (a) * * *
    (2) * * *
    (ii) * * *
    (A) Designate the Phase II units as substitution units according to 
the procedure in part 72 of this chapter and the non-affected units as 
opt-in sources in accordance with part 74 of this chapter and combine 
emissions for compliance purposes; or
* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (A) Designate the non-affected units as opt-in sources in 
accordance with part 74 of this chapter and combine emissions for 
compliance purposes; or
* * * * *
    20. Section 75.20 is amended by revising the first sentence after 
the heading in paragraph (a)(3) to read as follows:


Sec. 75.20  Certification and recertification procedures.

    (a) * * *
    (3) Provisional approval of certification applications. Upon the 
successful completion of the required certification procedures for each 
continuous emission or opacity monitoring system or component thereof 
and subsequent submittal of a complete certification application in 
accordance with Sec. 75.63, each continuous emission or opacity 
monitoring system or component thereof shall be deemed provisionally 
certified for use under the Acid Rain Program for a period not to 
exceed 120 days following receipt by the Administrator of the complete 
certification application; provided that no continuous emission or 
opacity monitoring systems for a combustion source seeking to enter the 
Opt-in Program in accordance with part 74 of this chapter shall be 
deemed provisionally certified for use under the Acid Rain Program. * * 
*
* * * * *
    21. Section 75.63 is amended by revising paragraph (a) and (b)(1) 
to read as follows:


Sec. 75.63  Certification or recertification application.

    (a) Submission. The designated representative for an affected unit 
or a combustion source seeking to enter the Opt-in Program in 
accordance with part 74 of this chapter shall submit the request to the 
Administrator within 30 days after completing the certification test.
    (b) * * *
    (1) A copy of the monitoring plan (or any modifications to the 
monitoring plan) for the unit, or units, or combustion source seeking 
to enter the Opt-in Program in accordance with part 74 of this chapter, 
if not previously submitted.
* * * * *
    22. Section 75.67 is revised to read as follows:


Sec. 75.67  Retired units petitions.

    (a) For units that will be permanently retired prior to January 1, 
1995, an exemption from the requirements of this part, including the 
requirement to install and certify a continuous emissions monitoring 
system, may be obtained from the Administrator if the designated 
representative submits a complete petition, as required in Sec. 72.8 of 
this chapter, to the Administrator prior to the deadline in Sec. 75.4 
by which the continuous emission or opacity monitoring systems must 
complete the required certification tests.
    (b) For combustion sources seeking to enter the Opt-in Program in 
accordance with part 74 of this chapter that will be permanently 
retired and governed upon entry into the Opt-in Program by a thermal 
energy plan in accordance with Sec. 74.47 of this chapter, an exemption 
from the requirements of this part, including the requirement to 
install and certify a continuous emissions monitoring system, may be 
obtained from the Administrator if the designated representative 
submits to the Administrator a petition for such an exemption prior to 
the deadline in Sec. 75.4 by which the continuous emission or opacity 
monitoring systems must complete the required certification tests.

PART 77--EXCESS EMISSIONS

    23. The authority citation for part 77 revised to read as follows:

    Authority: 42 U.S.C. 7601 and 7651, et seq.

    24. Section 77.6 is amended by revising paragraph (a) to read as 
follows:


Sec. 77.6  Penalties for excess emissions of sulfur dioxide and 
nitrogen oxides.

    (a) If excess emissions of sulfur dioxide or nitrogen oxides occur 
at an affected unit during any year, the owners and operators of the 
affected unit shall pay, without demand, an excess emissions penalty, 
as calculated under paragraph (b) of this section. [[Page 17132]] Such 
payment shall be submitted to the Administrator no later than 60 days 
after the end of any year during which excess emissions occurred at an 
affected unit or, for any increase in excess emissions of sulfur 
dioxide determined after adjustments made under Sec. 72.91(b) of this 
chapter, or Sec. 74.44(c)(2) of this chapter, by July 31 of the year in 
which the adjustments are made.
* * * * *

PART 78--APPEALS PROCEDURES FOR ACID RAIN PROGRAM

    25. The authority citation for part 78 continues to read as 
follows:

    Authority: 42 U.S.C. 7601 and 7651, et seq.

    26. Section 78.1 is amended by revising paragraphs (b)(3) and 
(b)(4) and by adding paragraph (b)(5) to read as follows:


Sec. 78.1  Purpose and scope.

    (b) * * *
    (3) Under part 74 of this chapter,
    (i) The determination of incompleteness of an opt-in permit 
application;
    (ii) The issuance or denial of an opt-in permit and approval or 
disapproval of the transfer of allowances for the replacement of 
thermal energy;
    (iii) The approval or disapproval of a permit revision to an opt-in 
permit;
    (iv) The decision on the deduction or return of allowances under 
subpart E of part 74 of this chapter;
    (4) Under part 75 of this chapter,
    (i) The decision on a petition for approval of an alternative 
monitoring system;
    (ii) The approval or disapproval of a monitoring system 
certification or recertification;
    (iii) The finalization of annual emissions data, including 
retroactive adjustment based on audit;
    (iv) The determination of the percentage of emissions reduction 
achieved by qualifying Phase I technology; and
    (v) The determination on the acceptability of parametric missing 
data procedures for a unit equipped with add-on controls for sulfur 
dioxide and nitrogen oxides in accordance with part 75 of this chapter.
    (5) Under part 77 of this chapter, the determination of 
incompleteness of an offset plan and the approval or disapproval of an 
offset plan under Sec. 77.4 of this chapter and the deduction of 
allowances under Sec. 77.5(c) of this chapter.
* * * * *
    27. Section 78.3 is amended by revising paragraph (a)(1) 
introductory text, and paragraph (d)(2) to read as follows:


Sec. 78.3  Petition for administrative review and request for 
evidentiary hearing.

    (a) * * *
    (1) The following persons may petition for administrative review of 
a decision of the Administrator that is made under parts 72, 74, 75, 
76, and 77 of this chapter and that is appealable under Sec. 78.1(a) of 
this part:
* * * * *
    (d) * * *
    (2) Any provision or requirement of parts 72, 73, 74, 75, 76, or 77 
of this chapter, including any standard requirement under Sec. 72.9 of 
this chapter and any emissions monitoring or reporting requirements 
under part 75 of this chapter;
* * * * *
[FR Doc. 95-7491 Filed 4-3-95; 8:45 am]
BILLING CODE 6560-50-P