[Federal Register Volume 62, Number 186 (Thursday, September 25, 1997)]
[Proposed Rules]
[Pages 50456-50460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24414]



[[Page 50455]]

_______________________________________________________________________

Part V





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 74



Acid Rain Program: Revisions to Sulfur Dioxide Opt-Ins; Proposed Rule

  Federal Register / Vol. 62, No. 186 / Thursday, September 25, 1997 / 
Proposed Rules  

[[Page 50456]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 74

[FRL-5892-3]
RIN 2060-AH36


Acid Rain Program: Revisions to Sulfur Dioxide Opt-Ins

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: Title IV of the Clean Air Act, as amended by Clean Air Act 
Amendments of 1990, (``the Act'') authorizes the Environmental 
Protection Agency (``EPA'' or ``Agency'') to establish the Acid Rain 
Program. The purpose of the Acid Rain Program is to significantly 
reduce emissions of sulfur dioxide and nitrogen oxides from electric 
generating plants in order to reduce the adverse health and ecological 
impacts of acidic deposition (or acid rain) resulting from such 
emissions. This proposal is intended to promote participation in the 
opt-in program by clarifying existing regulations, allowing a limited 
exception to the general rule of one designated representative for all 
affected units at a source, revising the conditions under which the 
Agency may cancel current-year allowance allocations, and allowing 
thermal energy plans to be effective on a quarterly basis.

DATES: Comments on the regulations proposed by this action must be 
received on or before October 27, 1997, unless a hearing is requested 
by October 6, 1997. If a hearing is requested, written comments must be 
received by November 10, 1997.
    Public Hearing. Anyone requesting a public hearing must contact the 
EPA no later than October 6, 1997. If a hearing is held it will take 
place October 9, 1997, beginning at 10:00 am.

ADDRESSES: Comments. All written comments must be identified with the 
appropriate docket number (Docket No. A-97-23) and must be submitted in 
duplicate to EPA Air Docket Section (6102), Waterside Mall, Room M1500, 
1st Floor, 401 M Street, SW, Washington DC 20460.
    Docket. Docket No. A-97-23, containing supporting information used 
to develop the proposal is available for public inspection and copying 
from 8:00 a.m. to 5:30 p.m., Monday through Friday, excluding legal 
holidays, at EPA's Air Docket Section at the above address.

FOR FURTHER INFORMATION CONTACT: Kathy Barylski at (202) 233-9074 Acid 
Rain Division (6204J), U.S. Environmental Protection Agency, 401 M St., 
S.W., Washington, DC 20460; or the Acid Rain Hotline at (202) 233-9620. 
Electronic copies of this rulemaking and technical support documents 
can be accessed through the Acid Rain Division website at http://
www.epa.gov/acidrain.

SUPPLEMENTARY INFORMATION:

I. Affected Entities
II. Background
III. Part 74: Opt-Ins
    A. Designated Representatives
    B. Thermal Energy Plans
    C. Deduction of Allowances from ATS Accounts
    D. Miscellaneous
IV. Administrative Requirements
    A. Executive Order 12866
    B. Unfunded Mandates Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility Act
    E. Miscellaneous

I. Affected Entities

    Entities potentially affected by this action are fossil-fuel fired 
boilers or turbines that serve generators producing electricity, 
generate steam, or cogenerate electricity and steam. Regulated 
categories and entities include:

------------------------------------------------------------------------
                Category                  Examples of regulated entities
------------------------------------------------------------------------
Industry...............................  Electric service providers,    
                                          boilers from a wide range of  
                                          industries.                   
------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities potentially affected by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be affected by this action. Other types of entities 
not listed in the table could also be affected. To determine whether 
your facility is affected by this action, you should carefully examine 
the applicability criteria in Sec. 74.2 of title 40 of the Code of 
Federal Regulations and the revised Secs. 72.6, 72.7, 72.8, and 72.14 
proposed on December 27, 1996 (61 FR 68340). If you have questions 
regarding the applicability of this action to a particular entity, 
consult the persons listed in the preceding FOR FURTHER INFORMATION 
CONTACT section.

II. Background

    The overall goal of the Acid Rain Program is to achieve significant 
environmental benefits through reductions in emissions of sulfur 
dioxide (SO2) and nitrogen oxides (NOX), the 
primary precursors of acid rain. To achieve this goal at the lowest 
cost to society, the program employs both traditional and innovative, 
market-based approaches for controlling air pollution. In addition, the 
program encourages energy efficiency and promotes pollution prevention.
    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 to seek 
out the least costly methods of control. Utility units affected under 
title IV are allocated allowances based on the product of their 
historic utilization and emission rates prescribed in the Clean Air 
Act. These units may trade allowances, provided that at the end of each 
year, each unit holds enough allowances to cover its annual 
SO2 emissions.
    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 through the opt-in program. Entry of 
combustion sources into the opt-in program is voluntary. Opt-in sources 
are allocated allowances and, by making cost-effective emissions 
reductions so that their allowance allocations will exceed their 
emissions, will have allowances that may be sold in the SO2 
allowance trading system. These marketable allowances provide greater 
compliance flexibility for affected utility units.

III. Part 74: Opt-Ins

A. Designated Representative

    Under the opt-in rules issued April 4, 1995 (60 FR 17100), 
combustion or process sources located at the same location as affected 
units are required to have the same designated representative as the 
affected units. EPA has received comment that, in some limited 
circumstances, the requirement for the same designated representative 
will inhibit entry or continued participation in the opt-in program of 
opt-in sources that could otherwise make cost-effective emissions 
reductions. The commenter described a situation where combustion 
sources and a process source are owned by an industrial company and 
Phase I units at the same affected source are partly owned by a 
utility. The industrial company uses electricity to operate the process 
sources and, for this purpose, generates electricity at its wholly-
owned combustion sources and supplements the generation with 
electricity obtained from the utility-owned unit. The industrial 
company is concerned that having a single designated representative for 
all these facilities may result in confidential business information--
particularly concerning

[[Page 50457]]

the process source operations and the industrial company's own 
generation costs--being available to the designated representative, who 
is an employee of the utility and would not otherwise have access to 
such information. According to the commenter, the industrial company's 
participation in the opt-in program may be jeopardized because of its 
concern over the potential competitive disadvantage that could result 
from this arrangement. The commenter raised the issue in a petition for 
review filed on June 5, 1995 challenging the existing opt-in 
regulations. On January 9, 1997, EPA and the commenter entered into a 
settlement of the litigation initiated by the June 5, 1995 petition.
    In response to the above comment and consistent with the 
settlement, EPA is establishing a procedure for nonutility combustion 
or process sources located with affected utility units to elect an 
exception to the general requirement that there be only one designated 
representative for all affected units at a source. EPA is establishing 
this procedure for nonutililty opt-in sources because their 
participation, which Congress viewed as beneficial, in the Acid Rain 
Program is voluntary. Nonutility opt-in sources are part of industrial 
operations that are very different businesses from electric utilities. 
Although EPA recognizes the recent trend toward increased competition 
in the electricity market, the concern over confidentiality of business 
information and the potential adverse effect of disclosure of 
information on a company's competitiveness are likely to be greater for 
nonutility businesses. These factors are thus more likely to discourage 
industrial sources from opting in to the Acid Rain Program.
    Under EPA's proposed new approach, the certifying official of an 
electing opt-in source must certify to the Administrator that the 
combustion or process source meets the following criteria: that the 
opt-in source (1) is located at the same source as one or more affected 
utility units and (2) is a nonutility opt-in source, i.e., has no owner 
or operator of which the principal business is the sale, transmission, 
or distribution of electricity to the public or that is a public 
utility under the jurisdiction of a State or local utility regulatory 
authority. In addition, a certificate of representation meeting the 
generally applicable requirements for such certificates must be 
submitted. The Administrator will rely on the submitted certificate, 
unless the Administrator determines that the opt-in source does not 
actually meet the election requirements.
    EPA notes that its general approach has been, and continues to be, 
to make opt-in sources subject to the same requirements as other 
affected units. 60 FR 17101. In fact, EPA has previously explained that 
section 410 requires that combustion sources meet the same monitoring 
requirements as other affected units. 59 FR 50088, 50095 (1993); see 
also 42 U.S.C. 7651i(e) (requiring opt-in sources to meet the 
monitoring requirements of section 412 of the Clean Air Act). In 
deciding whether to impose on opt-in sources the same single-
designated-representative requirement that other affected sources must 
meet, EPA must balance, on one hand, the importance of imposing 
consistent requirements on all affected units and, on the other hand, 
Congress' desire to encourage voluntary entry of opt-in sources into 
the Acid Rain Program. EPA believes that allowing, in a few cases in 
order to encourage voluntary participation, a separate designated 
representative for an opt-in source will not adversely affect the Acid 
Rain Program. EPA anticipates that there will be few opt-in sources 
that will qualify for the proposed election. Balancing these 
considerations, EPA is proposing to revise the regulations to allow for 
such limited exceptions.

B. Thermal Energy Plans

    The opt-in rule allows combustion sources to become opt-in sources 
at the beginning of any calendar quarter, not only at the beginning of 
a calendar year. See 40 CFR 74.28. However, EPA notes that the thermal 
energy provision at Sec. 74.47 only provides for calendar year plans. 
This may create a problem in cases where the replacement of thermal 
energy is supposed to begin some time after January 1 of the calendar 
year. The opt-in source would have to delay replacement of thermal 
energy for a period of up to almost 12 months after the replacement 
would otherwise begin to coordinate the replacement with the 
commencement of the thermal energy plan. EPA believes that allowing 
thermal energy plans to begin after the first calendar quarter provides 
additional flexibility to opt-in sources without unduly burdening the 
Agency because EPA anticipates that there will be few opt-in sources 
requesting such plans.
    Therefore, EPA is proposing revisions to allow (and take account of 
the possibility of) the submission of thermal energy plans at the 
beginning of any calendar quarter. For example, certain revisions 
require that, where a thermal energy plan is to begin during a quarter 
after the first quarter, the plan must include information related to 
the amount of the replacement thermal energy to be provided for the 
first partial year of the plan. Information on the replacement thermal 
energy in subsequent full years of the plan must also be provided. The 
allowances transferred to the replacement unit are based on the amount 
of replacement thermal energy; for the first calendar year allowances 
will reflect the replacement energy provided during the partial year, 
and for any subsequent years, allowances will reflect the replacement 
energy during the full year.

C. Deduction of Allowances From ATS Accounts

    The opt-in rule not only restricts transfer of future year opt-in 
allowances, it also allows EPA to cancel current-year opt-in allowances 
in the event that an opt-in source has excess emissions and has shut 
down. For operating opt-in sources, EPA draws upon future-year 
allowances in the opt-in's Allowance Tracking System (ATS) account to 
offset excess emissions. However, when the opt-in source shuts down, 
future-year allowances are eliminated and EPA retains the option of 
canceling opt-in allowances, even when those allowances have been 
transferred to other ATS accounts.
    EPA has received comment that retaining such option may unduly 
restrict transfer of opt-in allowances and that the option is 
unnecessarily broad, considering EPA's other processes. This issue was 
raised in the June 5, 1995 petition for review of the existing opt-in 
regulations and is addressed in the January 9, 1997 settlement, which 
petition and settlement are discussed above. EPA agrees that EPA's 
recordation process and EPA's process regarding confirmation reports 
appear to generally offer sufficient protection to prevent transfer of 
opt-in allowances before the Agency is assured that those allowances 
are not needed to cover excess emissions.
    Thus, in response to the comment and consistent with the 
settlement, EPA is proposing to provide that an opt-in allowance may 
not be deducted under Sec. 74.50(a) from any ATS account, other than 
the account of the opt-in source allocated such allowance, (i) after 
EPA has completed the process of recordation as set forth in 
Sec. 73.34(a) following the deduction of allowances from the opt-in 
source's compliance subaccount for the year for which such allowance 
may first be used or (ii) if the opt-in source claims under in an 
annual compliance certification report an estimated reduction in heat 
input from

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improved efficiency, under Sec. 74.44(a)(1)(B), after EPA has completed 
action on the confirmation report concerning such claimed reduction 
pursuant to Secs. 74.44(c)(2)(iii)(E)(3)-(E)(5) for the year for which 
such allowance may first be used.
    For any given compliance year and, for opt-in sources claiming 
reductions from improved efficiency, the recordation process and action 
on confirmation reports will probably be completed before the end of 
the year following the compliance year. For 1995, EPA actually 
completed the recordation process on July 2, 1996. For 1996, EPA 
completed the process on June 12, 1997. However, because confirmation 
reports are not due to EPA until July 1, EPA expects to complete action 
on such reports by September of the same year.

D. Miscellaneous

    EPA is proposing a number of modifications and corrections to the 
combustion source opt-in rules to reflect changes in the Acid Rain 
Program and operating permits program under title V of the Clean Air 
Act since the publication of the final opt-in rule on April 4, 1995. In 
particular the Agency has finalized operating permit rules in part 71 
and proposed changes to part 72.
    The following types of miscellaneous changes are proposed:
    1. References to part 71 are added to part 74 where appropriate.
    2. References to exemptions under Secs. 72.7, 72.8 and 72.14 are 
added where appropriate in order to reflect the proposed revisions to 
part 72 that provide that exempt units are not affected units. Units 
exempted under these sections may not become opt-in units.
    3. Repetitive language concerning the effect of withdrawal of an 
opt-in source from the Acid Rain Program on prior violations of opt-in 
requirements is removed. A similar change was proposed to language in 
part 72 concerning the effect of exemptions under Secs. 72.7, 72.8 and 
72.14 on prior violations. See 61 FR 68369-68371 (similar language in 
``Special Provisions'' for each exemption).
    4. Corrections are made so that language concerning the use of 
improved efficiency of an opt-in source to account for reduced 
utilization is consistent with similar provisions in part 72 concerning 
reduced utilization of affected utility units. See 40 CFR 72.91(a)(5) 
and (b)(2).
    5. The formula for determining how many allowances should be 
retained in the allowance account of an opt-in source with a thermal 
energy plan is revised. The revision takes into account the fact that 
the opt-in source's allowance account may include allowances acquired 
by the opt-in source as well as allowances allocated to it by EPA.
    6. Incorrect references to sections in parts 74 and 75 are 
corrected.

IV. Administrative Requirements

A. Executive Order 12866

    Under Executive Order 12866, 58 FR 51735 (October 4, 1993), the 
Administrator must determine whether the regulatory action is 
``significant'' and therefore subject to Office of Management and 
Budget (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, it has been 
determined that this proposed rule is a ``significant regulatory 
action'' because the rule seems to raise novel legal or policy issues. 
As such, this action was submitted to OMB for review. Any written 
comments from OMB to EPA, any written EPA response to those comments, 
and any changes made in response to OMB suggestions or recommendations 
are included in the docket. The docket is available for public 
inspection at the EPA's Air Docket Section, which is listed in the 
ADDRESSES section of this preamble.

B. Unfunded Mandates Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act'') requires that the Agency prepare a budgetary impact 
statement before promulgating a rule that includes a federal mandate 
that may result in expenditure by State, local, and tribal governments, 
in aggregate, or by the private sector, of $100 million or more in any 
one year. Section 203 requires the Agency to establish a plan for 
obtaining input from and informing, educating, and advising any small 
governments that may be significantly or uniquely affected by the rule.
    Under section 205 of the Unfunded Mandates Act, the Agency must 
identify and consider a reasonable number of regulatory alternatives 
before promulgating a rule for which a budgetary impact statement must 
be prepared. The Agency must select from those alternatives the least 
costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule, unless the Agency explains why 
this alternative is not selected or the selection of this alternative 
is inconsistent with law.
    Because this proposed rule is estimated to result in the 
expenditure by State, local, and tribal governments or the private 
sector of less than $100 million in any one year, the Agency has not 
prepared a budgetary impact statement or specifically addressed the 
selection of the least costly, most cost-effective, or least burdensome 
alternative. Because small governments will not be significantly or 
uniquely affected by this rule, the Agency is not required to develop a 
plan with regard to small governments.
    The proposed revisions to part 74 will not have a significant 
effect on regulated entities or State permitting authorities. The 
revisions potentially reduce the burden certain opt-in sources, by 
allowing the election of a separate designated representative and by 
allowing thermal energy plans to begin on the calendar quarter. Also, 
the revisions potentially reduce the burden on the utility sector by 
revising when EPA may deduct allowances from ATS accounts.

C. Paperwork Reduction Act

    This action proposing revisions to the opt-in rule would not impose 
any new information collection burden. OMB has previously approved the 
information collection requirements contained in the opt-in rules, 40 
CFR part 74, under the provisions of the Paperwork Reduction Act, 44 
U.S.C. 3501, et seq. and has assigned OMB control number 2060-0258. 60 
FR 17111.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying

[[Page 50459]]

information, processing and maintaining information, and disclosing and 
providing information; adjust the existing ways to comply with any 
previously applicable instructions and requirements; train personnel to 
be able to respond to a collection of information; search data sources; 
complete and review the collection of information; and transmit or 
otherwise disclose the information.
    Copies of the ICR may be obtained from Sandy Farmer, Information 
Policy Branch; EPA; 401 M. St. SW (mail code 2136); Washington, DC 
20460 or by calling (202) 260-2740. Include the ICR and/or OMB number 
in any correspondence.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small government 
jurisdictions. This proposed rule would not have a significant impact 
on a substantial number of small entities.
    In the preamble of the April 4, 1995 opt-in rule, the Administrator 
certified that the rule, including the provisions revised by today's 
rule, would not have a significant economic impact on small entities. 
60 FR 17111. Today's revisions are not significant enough to change the 
overall economic impact addressed in the April 4, 1995 preamble. 
Moreover, as discussed above, the revisions provide regulated entities 
with additional flexibility (e.g., the option to have a separate 
designated representative and to have a thermal energy plan that begins 
in the second, or later, quarter of the year). Therefore, I certify 
that this action will not have a significant economic impact on a 
substantial number of small entities.

E. Miscellaneous

    In accordance with section 117 of the Act, issuance of this rule 
was preceded by consultation with any appropriate advisory committees, 
independent experts, and federal departments and agencies.

List of Subjects in 40 CFR Part 74

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

    Dated: September 9, 1997.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, 40 CFR part 74 is 
proposed to be amended as set forth below.

PART 74--[AMENDED]

    1. The authority citation for part 74 continues to read as follows:

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

    2. Section 74.3 is amended by:
    i. In paragraph (b), revising the phrase ``parts 70 and 72'' to 
read ``parts 70, 71, and 72'';
    ii. In paragraph (b), revising the phrase ``part 70'' to read 
``parts 70 and 71''; and
    iii. Adding at the end of paragraph (d) the words ``, consistent 
with subpart E of this part.''
    3. Section 74.4 is amended by adding paragraph (c) to read as 
follows:


Sec. 74.4  Designated Representative.

* * * * *
    (c)(1) Notwithstanding paragraph (b) of this section, a certifying 
official of a combustion or process source that is located at the same 
source as one or more affected utility units and that has no owner of 
which the principal business is the sale, transmission, or distribution 
of electricity or that is a public utility under the jurisdiction of a 
State or local utility regulatory commission may elect to designate, 
for such combustion or process sources, a different designated 
representative than the designated representative for the affected 
utility units.
    (2) In order to make such an election, the certifying official 
shall submit to the Administrator, in a format prescribed by the 
Administrator: a certification that the combustion or process source 
for which the election is made meets each of the requirements for 
election in paragraph (c)(1) of this section; and a certificate of 
representation for the designated representative of the combustion or 
process source in accordance with Sec. 72.24 of this chapter. The 
Administrator will rely on such certificate of representation in 
accordance with Sec. 72.25 of this chapter, unless the Administrator 
determines that the requirements for election in the paragraph (c)(1) 
are not met.


Sec. 74.14  [Corrected]

    4. Section 74.10 is amended by removing from paragraph (a)(2) the 
word ``Sec. 74.62'' and adding in its place the words ``Sec. 75.20 of 
this chapter''.


Sec. 74.10  [Corrected]

    5. Section 74.14 is amended by removing from paragraph (b) 
introductory text the words ``part 70'' and adding in their place the 
words ``parts 70 and 71'' and by removing from paragraph (b)(6)(ii) the 
word ``approved'' and adding in its place the words ``approved for 
operating permits''.


Sec. 74.16  [Corrected]

    6. Section 74.16 is amended by removing from paragraph (a)(12) the 
word ``;'' and adding in its place the words ``and does not have an 
exemption under Sec. 72.7, 72.8, or 72.14 of this chapter;''.


Sec. 74.18  [Corrected]

    7. Section 74.18 is amended by removing from paragraph (d) the 
words ``Sec. 74.46(c)'' and adding in their place ``Sec. 74.46(b)(2)'' 
and by removing the last sentence from paragraph (e).


Sec. 74.22  [Corrected]

    8. Section 74.22 is amended by removing from paragraph (c)(2) the 
words ``Sec. 74.20(a)(2)(A)'' and adding in their place the words 
``Sec. 74.20(a)(2)(i)''.


Sec. 74.26  [Corrected]

    9. Section 74.26 is amended by removing from paragraph (a)(2) the 
words ``in which'' and adding in their place the words ``for which''.


Sec. 74.42  [Corrected]

    10. Section 74.42 is amended by removing from paragraph (a) the 
word ``(a).''


Sec. 74.44  [Corrected]

    11. Section 74.44 is amended by:
    i. Removing from paragraph (a)(1)(i)(G) the words ``demand side 
measures that improve the efficiency of electricity or steam 
consumption'' and adding in their place the words ``specific 
measures'';
    ii. Removing from paragraph (a)(2)(i) the words ``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'';
    iii. Adding in paragraph (a)(2)(iii) the words ``of this section'' 
after the word ``(a)(2)(ii)'';
    iv. Removing from paragraph (c)(2)(ii)(B)(1) the words ``opt-in 
sources.'' and adding in their place the words ``opt-in sources and 
Phase I units.'';
    v. Removing from the formula in paragraph (c)(2)(iii)(F) the words 
``= allowances allocated'' and adding in their place the words 
``allowances allocated or acquired'';
    vi. Removing from paragraph (c)(2)(iii)(F) the words `` `Allowances 
allocated' shall be the number of

[[Page 50460]]

allowances allocated under section Sec. 74.40 for the calendar year.'' 
and adding in their place the words `` 'Allowances allocated or 
acquired' shall be the number of allowances held in the source's 
compliance subaccount at the allowance transfer deadline plus the 
number of allowances transferred for the previous calendar year to all 
replacement units under an approved thermal energy plan in accordance 
with Sec. 74.47(a)(6).'';
    vii. Removing from paragraph (c)(2)(iii)(E)(3) the words 
``allowances necessary'' and adding in their place the words 
``allowances that he or she determines is necessary''.
    12. Section 74.47 is amended by:
    i. By adding in paragraph (a)(3)(i), after the word ``year'' in 
each place it appears, the word ``and quarter'';
    ii. Adding in the first sentence of paragraph (a)(3)(vii), after 
the word ``year'', the words ``and quarter''; and
    iii. Revising paragraphs (a)(1), (a)(3)(viii), (a)(3)(ix), 
(a)(3)(x), (a)(3)(xi), (a)(3)(xii), and (a)(4) to read as follows:


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 at the start of the calendar quarter (January 1, April 
1, July 1, or October 1) 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.
* * * * *
    (3) * * *
    (viii) The estimated annual 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, and, for a plan starting April 1, July 1, or October 1, 
such estimated amount of total thermal energy to be reduced starting 
April 1, July 1, or October 1 respectively and ending on December 31;
    (ix) The estimated amount of total thermal energy at each 
replacement unit for the calendar 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, 
and, for a plan starting April 1, July 1, or October 1, such estimated 
amount of total thermal energy for the portion of such calendar year 
starting April 1, July 1, or October 1 respectively;
    (x) The estimated annual 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, and, for a plan 
starting April 1, July 1, or October 1, such estimated amount of total 
thermal energy at each replacement unit after replacing thermal energy 
at the opt-in source starting April 1, July 1, or October 1 
respectively and ending December 31;
    (xi) The estimated annual 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 thermal energy at the opt-in source, and, for a plan starting 
April 1, July 1, or October 1, such estimated amount of thermal energy 
replacing thermal energy at the opt-in source starting April 1, July 1, 
or October 1 respectively and ending December 31;
    (xii) The estimated annual total fuel input at each replacement 
unit after replacing thermal energy at the opt-in source and, for a 
plan starting April 1, July 1, or October 1, such estimated total fuel 
input after replacing thermal energy at the opt-in source starting 
April 1, July 1, or October 1 respectively and ending December 31;
* * * * *
    (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 six months prior to the first 
calendar quarter 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.
* * * * *
    13. Section 74.50 is amended by redesignating the introductory text 
paragraph (a) as paragraph (a)(1), redesignating paragraphs (a)(1) 
through (a)(4) as paragraphs (a)(1)(i) through (a)(1)(iv), and adding 
paragraph (a)(2) to read as follows:


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

    (a) * * *
    (2) An opt-in allowance may not be deducted under paragraph (a)(1) 
of this section from any Allowance Tracking System Account other than 
the account of the opt-in source allocated such allowance:
    (i) After the Administrator has completed the process of 
recordation as set forth in Sec. 73.34(a) of this chapter following the 
deduction of allowances from the opt-in source's compliance subaccount 
for the year for which such allowance may first be used; or
    (ii) If the opt-in source includes in the annual compliance 
certification report estimates of any reduction in heat input resulting 
from improved efficiency under Sec. 74.44(a)(1)(i), after the 
Administrator has completed action on the confirmation report 
concerning such estimated reduction pursuant to 
Secs. 74.44(c)(2)(iii)(E)(3), (4), and (5) for the year for which such 
allowance may first be used.
* * * * *
[FR Doc. 97-24414 Filed 9-24-97; 8:45 am]
BILLING CODE 6560-50-P