[Federal Register Volume 71, Number 82 (Friday, April 28, 2006)]
[Rules and Regulations]
[Pages 25328-25469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-2692]



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Part IV





Environmental Protection Agency





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40 CFR Parts 51, 52 et al.



Air Pollution Control--Transport of Emissions of Nitrogen Oxides 
(NOX) and Sulfur Dioxide (SO2); Final Rule

  Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules 
and Regulations  

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 72, 73, 74, 78, 96, and 97

[EPA-HQ-OAR-2004-0076; FRL-8047-5]
RIN 2060-AM99


Rulemaking on Section 126 Petition From North Carolina To Reduce 
Interstate Transport of Fine Particulate Matter and Ozone; Federal 
Implementation Plans To Reduce Interstate Transport of Fine Particulate 
Matter and Ozone; Revisions to the Clean Air Interstate Rule; Revisions 
to the Acid Rain Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of final rulemaking (NFR).

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SUMMARY: Today, EPA is taking actions to address the interstate 
transport of emissions of nitrogen oxides (NOX) and sulfur 
dioxide (SO2) that contribute significantly to nonattainment 
and maintenance problems with respect to the national ambient air 
quality standards (NAAQS) for fine particulate matter 
(PM2.5) and 8-hour ozone. As one part of today's action, EPA 
is providing its final response to a petition submitted to EPA by the 
State of North Carolina under section 126 of the Clean Air Act (CAA). 
The petition requests that EPA find that SO2 and/or 
NOX emissions from electric generating units (EGUs) in 13 
States are significantly contributing to PM2.5 and/or 8-hour 
ozone nonattainment and maintenance problems in North Carolina, and 
requested that EPA establish control requirements to prohibit such 
significant contribution. The EPA is denying the petition because, in 
today's action, EPA is promulgating Federal implementation plans (FIPs) 
for all jurisdictions covered by the Clean Air Interstate Rule (CAIR) 
to address interstate transport.
    The FIPs will regulate EGUs in the affected States and achieve the 
emissions reductions requirements established by the CAIR until States 
have approved State implementation plans (SIPs) to achieve the 
reductions. As the control requirement for the FIPs, EPA is adopting 
the model trading rules that EPA provided in CAIR as a control option 
for States, with minor changes to account for Federal rather than State 
implementation.
    Today's action also revises CAIR SIP model trading rules in order 
to address the interaction between the EPA-administered CAIR FIP 
trading programs being promulgated today and the EPA-administered CAIR 
State trading programs that will be created by any State that elects to 
submit a SIP establishing such a trading program to meet the 
requirements of the CAIR. In addition, EPA is taking final action on 
our reconsideration of the definition of ``EGU'' as it relates to solid 
waste incinerators.
    Today's action also makes revisions to the Acid Rain Program in 
order to make the administrative appeals procedures, which currently 
apply to final determinations by the Administrator under the EPA-
administered CAIR State trading programs, also apply to the EPA-
administered trading programs under the FIP action. In addition, we are 
making certain minor revisions to the Acid Rain Program that will apply 
to all affected units.

DATES: This action is effective on June 27, 2006.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2004-0076. All documents in the docket are 
listed on the http://www.regulations.gov Web site. Although listed in 
the index, some information is not publicly available, e.g., 
confidential business information (CBI) or other information whose 
disclosure is restricted by statute. Certain other material, such as 
copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically through http://www.regulations.gov or in hard copy at the EPA Docket Center (Air 
Docket), EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW., 
Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 
p.m., Monday through Friday, excluding legal holidays. The telephone 
number for the Public Reading Room is (202) 566-1744 and the telephone 
number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: For general questions concerning 
today's section 126 action, please contact Carla Oldham, U.S. EPA, 
Office of Air Quality Planning and Standards, Air Quality Policy 
Division, C504-05, Research Triangle Park, NC 27711, telephone (919) 
541-3347, e-mail at [email protected]. For general questions 
concerning today's FIP action, please contact Tom Coda, U.S. EPA, 
Office of Air Quality Planning and Standards, Air Quality Policy 
Division, C539-01, Research Triangle Park, NC 27711, telephone (919) 
541-3037, e-mail at [email protected]. For legal questions concerning 
the section 126 action, please contact Steven Silverman, U.S. EPA, 
Office of General Counsel, Mail Code 2344A, 1200 Pennsylvania Avenue, 
NW., Washington, DC 20460, telephone (202) 564-5523, e-mail at 
[email protected]. For legal questions concerning the FIP 
action, please contact Sonja Rodman, U.S. EPA, Office of General 
Counsel, Mail Code 2344A, 1200 Pennsylvania Avenue, NW., Washington, DC 
20460, telephone (202) 564-4097, e-mail at [email protected]. For 
questions regarding the cap-and-trade programs and emissions budgets, 
please contact Meg Victor, U.S. EPA, Office of Atmospheric Programs, 
Clean Air Markets Division, Mail Code 6204J, 1200 Pennsylvania Avenue, 
NW., Washington, DC 20460, telephone (202) 343-9193, e-mail at 
[email protected]. For questions regarding the revisions to the CAIR 
and Acid Rain Programs, please contact Dwight Alpern, U.S. EPA, Office 
of Atmospheric Programs, Clean Air Markets Division, Mail Code 6204J, 
1200 Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202) 
343-9151, e-mail at [email protected].

SUPPLEMENTARY INFORMATION:

I. Does This Action Apply to Me?

    Categories and entities potentially regulated by this action 
include the following:

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                                      NAICS     Examples of potentially
             Category                code \1\     regulated  entities
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Industry..........................     221112  Fossil fuel-fired
                                                electric utility steam
                                                generating units.
Federal government................        \2\  Fossil fuel-fired
                                       221122   electric utility steam
                                                generating units owned
                                                by the Federal
                                                government.
State/local/Tribal government.....        \2\  Fossil fuel-fired
                                       221122   electric utility steam
                                                generating units owned
                                                by municipalities.

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                                       921150  Fossil fuel-fired
                                                electric utility steam
                                                generating units in
                                                Indian Country.
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\1\ North American Industry Classification System.
\2\ Federal, State, or local government-owned and operated
  establishments are classified according to the activity in which they
  are engaged.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. To determine whether your facility is affected by this action, 
you should examine the definitions and applicability criteria in 
Sec. Sec.  72.2, 72.6, 72.7, 72.8, and 74.2 for purposes of the Acid 
Rain Program revisions and Sec. Sec.  97.102, 97.104, 97.105, 97.202, 
97.204, 97.205, 97.302, 97.304, and 97.305 for purposes of the FIP 
action. If you have any questions regarding the applicability of this 
action to a particular entity, consult the person listed in the 
preceding section under FOR FURTHER INFORMATION CONTACT.

II. Availability of Related Information

    The EPA has conducted separate rulemakings that contain actions and 
information related to today's action. The final ``Rule to Reduce 
Interstate Transport of Fine Particulate Matter and Ozone (Clean Air 
Interstate Rule)'' was published on May 12, 2005 (70 FR 25162) (see 
also proposal at 69 FR 4566, January 30, 2004; supplemental proposal at 
69 FR 32684, June 10, 2004; and notice of data availability at 69 FR 
47828, August 6, 2004). The EPA subsequently reconsidered several 
aspects of the final CAIR (see 70 FR 72268; December 2, 2005 and 70 FR 
77101; December 29, 2005) and is taking final action on reconsideration 
in a separate action today. In addition, the EPA issued a proposal to 
include Delaware and New Jersey in CAIR for PM2.5 (70 FR 
25408, May 12, 2005) and is finalizing that rulemaking today, also in a 
separate action. Documents related to the CAIR, including the actions 
on reconsideration and to include Delaware and New Jersey in CAIR for 
PM2.5, are available for inspection in docket EPA-HQ-OAR-
2003-0053 at the address and times given above. The EPA has established 
a website for the CAIR at http://www.epa.gov/cleanairinterstaterule or 
more simply http://www.epa.gov/cair/ which also includes information on 
the section 126 rulemaking. The rulemaking docket for the CAIR contains 
information and analyses that are relied upon in today's actions. 
Therefore, EPA is including by reference the entire CAIR record for 
purposes of the section 126 and FIP rulemakings.

III. Judicial Review

    Under CAA section 307(b), judicial review of this final action is 
available only by filing a petition for review in the U.S. Court of 
Appeals for the District of Columbia Circuit on or before June 27, 
2006. Under CAA section 307(d)(7)(B), only those objections to the 
final rule that were raised with specificity during the period for 
public comment may be raised during judicial review. Moreover, under 
CAA section 307(b)(2), the requirements established by today's final 
rule may not be challenged separately in any civil or criminal 
proceedings brought by EPA to enforce these requirements.
    Section 307(d)(7)(B)also provides a mechanism for the EPA to 
convene a proceeding for reconsideration if the petitioner demonstrates 
that it was impracticable to raise an objection during the public 
comment period or if the grounds for such objection arose after the 
comment period (but within the time for judicial review) and if the 
objection is of central relevance to the rule. Any person seeking to 
make such a demonstration to EPA should submit a Petition for 
Reconsideration, clearly labeled as such, to the Office of the 
Administrator, U.S. EPA, Room 3000, Ariel Rios Building, 1200 
Pennsylvania Ave., Washington, DC 20460, with a copy to the Associate 
General Counsel for the Air and Radiation Law Office, Office of General 
Counsel, Mail Code 2344A, U.S. EPA, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460.

Outline

I. Background and Summary of Rule
    A. Summary of Rule
    B. General Background on PM2.5 and Ozone
    1. The PM2.5 Problem
    2. The 8-Hour Ozone Problem
    3. Other Environmental Effects Associated With SO2 
and NOX Emissions
    C. What Is the Statutory and Regulatory Background for Today's 
Action?
    1. What Is the ``Good Neighbor'' Provision?
    2. What Is the CAA Section 126 Provision?
    3. What Is EPA's Previous Section 126 Rulemaking?
    4. What Is the Clean Air Interstate Rule?
    5. What Are the Findings of Failure to Submit for the Section 
110(a)(2)(D) Plans?
    6. What Are the Petitions for Reconsideration of the CAIR?
    D. Summary of North Carolina's Section 126 Petition
    1. What Sources Does the Petition Target?
    2. What Control Remedy Does the Petition Request?
    3. What Is the Technical Support for the Petition?
    E. What Is the Consent Decree on the Section 126 Rulemaking 
Schedule?
II. What Is EPA's Legal and Analytical Approach for the Section 126 
Petition?
III. What Is EPA's Final Action on the Section 126 Petition?
    A. What Is EPA's Final Action With Respect to the 8-Hour Ozone 
NAAQS?
    B. What Is EPA's Final Action With Respect to the 
PM2.5 NAAQS?
IV. What Is the Federal Implementation Plan for the CAIR?
    A. What Is the Legal Framework for the FIPs?
    B. What Is the Timing and Scope of the CAIR FIP Actions?
    C. What Are the FIP Control Measures?
    D. When and How Will EPA Remove the FIP Requirements if EPA 
Approves a SIP to Meet the CAIR?
V. Emission Reduction Requirements for the CAIR FIP
    A. Introduction
    B. Regionwide SO2 and NOX Caps
    C. State SO2 Emission Budgets
    D. State NOX Annual and NOX Ozone Season 
Emission Budgets
    E. State NOX Annual Compliance Supplement Pool
VI. CAIR FIP NOX and SO2 Cap-and-trade 
Programs for EGUs
    A. Purpose of CAIR FIP NOX and SO2 Cap-
and-trade Programs and Relationship to the CAIR
    B. Relationship of Emissions Trading Programs to Section 126 
Relief
    C. Abbreviated SIP Revisions Covering Elements of the CAIR FIP 
Cap-and-trade Programs
    D. Overall Structure of the CAIR FIP Cap-and-trade Programs
    1. SO2 Annual Program
    2. NOX Annual Program
    3. NOX Ozone Season Program
    E. Sources Subject to the CAIR FIP Cap-and-trade Programs
    F. Allocation of NOX Emission Allowances to Sources
    1. Schedule for Determining and Recording NOX 
Allocations
    2. Method for Allocating NOX Allowances
    G. Allocation of SO2 Allowances to Sources
    H. Allowance Banking
    I. Incentives for Early Reductions
    1. SO2 Annual Program
    2. NOX Annual Program
    3. NOX Ozone Season Program
    J. Monitoring and Reporting Requirements
    K. Interactions with Other CAA Programs

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VII. What are the Revisions of the CAIR SIP Rule, Including the CAIR 
Model Cap-and-trade Rules?
VIII. What Are the Revisions of the Acid Rain Program Regulations?
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act

I. Background and Summary of Rule

A. Summary of Rule

    In this rule, EPA is taking two final actions related to the 
interstate transport of emissions of NOX and SO2 
that contribute significantly to nonattainment and maintenance problems 
with respect to the NAAQS for PM2.5 and 8-hour ozone. First, 
EPA is providing its final response to the petition submitted to EPA by 
the State of North Carolina under section 126 of the CAA. Second, EPA 
is promulgating FIPs for all jurisdictions covered by the CAIR. The EPA 
is also making revisions to the final CAIR to clarify certain 
provisions, to correct minor errors, and to take final action on 
reconsideration of the definition of ``EGU'' as it relates to solid 
waste incinerators. Finally, EPA is making minor revisions to the Title 
IV Acid Rain Program.
    The North Carolina petition requests that EPA establish control 
requirements for EGUs in 13 States based on findings that these sources 
are significantly contributing to PM2.5 and/or 8-hour ozone 
nonattainment and maintenance problems in North Carolina. (See 
Petition, Docket No. EPA-HQ-OAR-2004-0076-0002.)
    The EPA's response (as well as the petition itself) is based on 
extensive analyses conducted for the CAIR (70 FR 25162; May 12, 2005). 
The EPA is denying the petition in full. For sources in States not 
shown in the final CAIR to be linked to (that is, to significantly 
contribute to) nonattainment and maintenance problems in North 
Carolina, the lack of significant contribution to North Carolina is the 
basis for this denial. For sources in States that are linked to North 
Carolina under the CAIR for the PM2.5 NAAQS, EPA is denying 
the petition because, concurrently with the section 126 response, EPA 
is promulgating FIPs that require elimination of the significant 
contribution. The FIPs will control the significant transport from 
sources in States named in the petition as well as from sources in the 
other CAIR States, in the event that the States do not have timely, 
approved SIPs meeting the CAIR requirements. The States named in the 
petition with respect to the PM2.5 NAAQS are: Alabama, 
Georgia, Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania, 
South Carolina, Tennessee, Virginia, and West Virginia. Of these, 
Illinois and Michigan are not linked to North Carolina in the final 
CAIR.
    The States named in the petition with respect to the 8-hour ozone 
NAAQS are: Georgia, Maryland, South Carolina, Tennessee, and Virginia. 
There are no States linked to North Carolina under the CAIR for the 8-
hour ozone NAAQS because North Carolina is projected to be in 
attainment in the 2010 baseline for the analyses.
    As mentioned above, in today's action, EPA is also promulgating 
FIPs to address interstate transport of NOX and 
SO2 under section 110(a)(2)(D) for all jurisdictions that 
are covered by the CAIR. In the CAIR, EPA determined that 28 States and 
the District of Columbia contribute significantly to nonattainment of 
the NAAQS for PM2.5 and/or 8-hour ozone in downwind States. 
The CAIR explains EPA's basis for determining significant contribution 
to downwind nonattainment and maintenance problems. In that rule, the 
EPA required the affected upwind States to revise their SIPs to include 
control measures to reduce emissions of SO2 and/or 
NOX. Sulfur dioxide is a precursor to PM2.5 
formation, and NOX is a precursor to both ozone and 
PM2.5 formation.
    In an action published on the same day as the final CAIR, EPA 
proposed to find that Delaware and New Jersey contribute significantly 
to PM2.5 nonattainment and maintenance problems in downwind 
States considering these States as a single entity (70 FR 25408; May 
12, 2005). These States were included in the final CAIR only with 
respect to their impacts on downwind 8-hour ozone nonattainment and 
maintenance problems. Today, in a separate action, EPA is issuing the 
final rule to include Delaware and New Jersey in the CAIR region for 
PM2.5. Therefore, today's FIP rule includes emissions 
reductions requirements for Delaware and New Jersey to address their 
significant contribution to nonattainment or maintenance problems for 
the PM2.5 NAAQS.
    The FIPs will regulate EGUs in the affected States and achieve the 
emissions reductions required by the CAIR until States have approved 
SIPs to achieve the reductions. The CAIR emissions budgets were based 
on control requirements that are highly cost effective for EGUs.
    The EPA intends the CAIR FIPs to address the requirements of 
section 110(a)(2)(D)(i) to prevent interstate transport that 
contributes significantly to nonattainment or interferes with 
maintenance in downwind areas and to provide a Federal backstop for 
CAIR. In no way should the FIPs for CAIR be viewed as a sign of any 
concern about States meeting their SIP responsibilities under CAIR. 
There are no sanctions associated with these FIPs and EPA does not 
intend for CAIR FIPs to have any negative consequences for the affected 
States. The EPA is providing FIP approaches that are flexible and 
intended to provide States options for getting their SIPs in place.
    As the control requirement for the FIPs, EPA is adopting the model 
trading rules that EPA provided in CAIR as a control option for States, 
with minor changes to account for Federal rather than State 
implementation. The CAIR FIP NOX and SO2 trading 
programs provide emissions reductions equal to those required under the 
CAIR in affected States.
    These trading programs provide emissions reductions equal to those 
required under CAIR in the affected States. The CAIR FIP trading 
programs are integrated with the EPA-administered State CAIR trading 
programs that are based on the model rules so that sources can trade 
with one another under the respective emissions caps. The EPA 
emphasizes that the FIPs do not limit the options available to States 
to meet the requirements of the CAIR. We do not intend to record 
NOX allocations in sources' allowance accounts (or take any 
other steps to implement FIP requirements that could impact a State's 
ability to regulate their sources in a different manner) until a year 
after the CAIR SIP submission deadline.\1\ This will allow EPA time to

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take rulemaking action to approve timely SIPs before implementation of 
FIP requirements occurs. In addition, States could replace the FIP 
requirements at a later time.
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    \1\ The CAIR requires affected sources to begin monitoring 1 
year before the initial control periods (i.e., sources begin 
monitoring in 2008 for the NOX programs and begin 
monitoring in 2009 for the SO2 program). Note that EPA 
will take any necessary actions to implement the monitoring 
provisions of the FIP trading rules in time for monitoring to begin 
in 2008. To the extent that a State chooses to control EGUs to meet 
its CAIR obligations, the monitoring requirements will be identical 
whether EPA regulations EGUs through the Federal trading programs or 
the State regulates EGUs through its SIP.
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    In today's action, EPA is also making revisions to the CAIR in 
order to address the interaction of EPA-administered NOX and 
SO2 trading programs under the CAIR and under the FIP 
action. In addition, EPA is making revisions to the CAIR in order to 
clarify certain provisions and to correct certain minor errors and 
taking final action on reconsideration of the definition of ``EGU'' as 
it relates to solid waste incinerators.
    The EPA is also revising the Title IV Acid Rain Program in order to 
make the administrative appeals procedures (in 40 CFR part 78), which 
currently apply to final determinations by the Administrator under the 
EPA-administered State CAIR trading programs, also apply to the EPA-
administered trading programs under the FIPs. In addition, EPA is 
making minor revisions that would apply to all affected units under the 
Acid Rain Program.

B. General Background on PM2.5 and Ozone

1. The PM2.5 Problem
    In an action published on July 18, 1997, we revised the NAAQS for 
particulate matter (PM) to add new standards for fine particles, using 
as the indicator particles with aerodynamic diameters smaller than a 
nominal 2.5 micrometers, termed PM2.5 (62 FR 38652). We 
established health- and welfare-based (primary and secondary) annual 
and 24-hour standards for PM2.5. The annual standard is 15 
micrograms per cubic meter, based on the 3-year average of annual mean 
PM2.5 concentrations. The 24-hour standard is 65 micrograms 
per cubic meter, based on the 3-year average of the annual 98th 
percentile of 24-hour concentrations. The annual standard is generally 
considered the more limiting value.\2\
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    \2\ The EPA recently proposed to amend the NAAQS for 
PM2.5 (71 FR 2620; Jan. 17, 2006). The EPA is scheduled 
to take final action on this proposal by September 27, 2006. These 
actions are not relevant to this rulemaking because all of the 
actions herein concern the existing NAAQS.
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    Fine particles are associated with a number of serious health 
effects including premature mortality, aggravation of respiratory and 
cardiovascular disease (as indicated by increased hospital admissions, 
emergency room visits, absences from school or work, and restricted 
activity days), lung disease, decreased lung function, asthma attacks, 
and certain cardiovascular problems. (See EPA, Air Quality Criteria for 
Particulate Matter (EPA/600/P-99/002bF, October 2004) at 9.2.2.3).) The 
EPA has estimated that attainment of the current PM2.5 
standards would prolong tens of thousands of lives and would prevent, 
each year, tens of thousands of hospital admissions as well as hundreds 
of thousands of doctor visits, absences from work and school, and 
respiratory illnesses in children.
    Individuals particularly sensitive to fine particle exposure 
include older adults, people with heart and lung disease, and children. 
More detailed information on health effects of fine particles can be 
found on EPA's Web site at: http://www.epa.gov/ttn/naaqs/standards/pm/s_pm_index.html.
    The secondary or welfare-based PM2.5 standards are 
designed to protect against major environmental effects caused by PM 
such as visibility impairment, soiling, and materials damage.
    As discussed in other sections of this preamble, SO2 and 
NOX emissions both contribute to fine particle 
concentrations. In addition, NOX emissions contribute to 
ozone concentrations, described in the next section.
    The PM2.5 ambient air quality monitoring for the 2001-
2003 period shows that areas violating the standards are located across 
much of the eastern half of the United States and in parts of 
California and Montana. The EPA published the PM2.5 
attainment and nonattainment designations on January 5, 2005 (70 FR 
944) and issued supplemental amendments on April 14, 2005 (70 FR 
19844).
2. The 8-Hour Ozone Problem
    In an action published on July 18, 1997, we promulgated identical 
revised primary and secondary ozone standards that specified an 8-hour 
ozone standard of 0.08 parts per million (ppm). Specifically, under the 
standards, the 3-year average of the fourth highest daily maximum 8-
hour average ozone concentration may not exceed 0.08 ppm. In general, 
the revised 8-hour standards are more protective of public health and 
the environment and more stringent than the pre-existing 1-hour ozone 
standards.
    Short-term (1- to 3-hour) and prolonged (6-to 8-hour) exposures to 
ambient ozone have been linked to a number of adverse health effects. 
At sufficient concentrations, short-term exposure to ozone can irritate 
the respiratory system, causing coughing, throat irritation, and chest 
pain. Ozone can reduce lung function and make it more difficult to 
breathe deeply. Breathing may become more rapid and shallow than 
normal, thereby limiting a person's normal activity. Ozone also can 
aggravate asthma, leading to more asthma attacks that may require a 
doctor's attention and the use of additional medication. Increased 
hospital admissions and emergency room visits for respiratory problems 
have been associated with ambient ozone exposures. Longer-term ozone 
exposure can inflame and damage the lining of the lungs, which may lead 
to permanent changes in lung tissue and irreversible reductions in lung 
function. A lower quality of life may result if the inflammation occurs 
repeatedly over a long time period (such as months, years, or a 
lifetime). There is also recent epidemiological evidence suggesting 
that there may be a correlation between short-term ozone exposure and 
premature mortality.
    People who are particularly susceptible to the effects of ozone 
include people with respiratory diseases, such as asthma. Those who are 
exposed to higher levels of ozone include adults and children who are 
active outdoors.
    In addition to causing adverse health effects, ozone affects 
vegetation and ecosystems, leading to reductions in agricultural crop 
and commercial forest yields; reduced growth and survivability of tree 
seedlings; and increased plant susceptibility to disease, pests, and 
other environmental stresses (e.g., harsh weather). In long-lived 
species, these effects may become evident only after several years or 
even decades and have the potential for long-term adverse impacts on 
forest ecosystems. Ozone damage to the foliage of trees and other 
plants can also decrease the aesthetic value of ornamental species used 
in residential landscaping, as well as the natural beauty of our 
national parks and recreation areas. More detailed information on 
health effects of ozone can be found at the following EPA Web site: 
http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_index.html.
    Presently, wide geographic areas, including most of the nation's 
major population centers, experience ozone levels that violate the 
NAAQS for 8-hour ozone. These areas include much of the eastern part of 
the United States and large areas of California. The EPA published the 
8-hour ozone attainment and nonattainment designations in the Federal 
Register on April 30, 2004 (69 FR 23858).

[[Page 25332]]

3. Other Environmental Effects Associated With SO2 and 
NOX Emissions
    In addition to the enumerated human health and welfare benefits 
resulting from reductions in ambient levels of PM2.5 and 
ozone, reductions in NOX and SO2 will contribute 
to substantial visibility improvements in many parts of the eastern 
United States. Reductions in these pollutants will also reduce 
acidification and eutrophication of water bodies in the region. In 
addition, reducing emissions of NOX and SO2 from 
EGUs can be expected to reduce emissions of mercury. Reduced mercury 
emissions in turn may reduce mercury loadings in lakes and thereby 
potentially decrease both human and wildlife exposure to fish 
containing mercury.

C. What Is the Statutory and Regulatory Background for Today's Action?

1. What Is the ``Good Neighbor'' Provision?
    Following promulgation of new or revised NAAQS, the CAA requires 
all areas, regardless of their designation as attainment, 
nonattainment, or unclassifiable, to submit SIPs containing provisions 
specified under section 110(a)(2). Among these requirements are those 
specified by the so-called ``good neighbor'' provision section 
110(a)(2)(D) which addresses interstate transport of air pollution.
    Section 110(a)(2)(D) requires that a SIP contain adequate 
provisions--

    (i) Prohibiting, consistent with the provisions of this title, 
any source or other type of emissions activity within the State from 
emitting any air pollutant in amounts which will--
    (I) Contribute significantly to nonattainment in, or interfere 
with maintenance by, any other State with respect to [any] national 
primary or secondary ambient air quality standard, or
    (II) Interfere with measures required to be included in the 
applicable implementation plan for any other State under part C to 
prevent significant deterioration of air quality or to protect 
visibility.
    (ii) Insuring compliance with the applicable requirements of 
sections 126 and 115 (relating to interstate and international 
pollution abatement);

    Section 126 is discussed in the following section and section II of 
this preamble explains the relationship between CAA sections 110 and 
126 with respect to our final response to the section 126 petition and 
the CAIR FIPs.
2. What Is the CAA Section 126 Provision?
    Subsection (a) of section 126 requires, among other things, that 
SIPs require major proposed new (or modified) stationary sources to 
notify nearby States for which the air pollution levels may be affected 
by the fact that such sources have been permitted to commence 
construction. Subsection (b) provides:

    Any State or political subdivision may petition the 
Administrator for a finding that any major source or group of 
stationary sources emits or would emit any air pollutant in 
violation of the prohibition of section 110(a)(2)(D)[(i)] [of] this 
section* * *.
    Subsection (c) of section 126 states that--
    [I]t shall be a violation of this section and the applicable 
implementation plan in such State [in which the source is located or 
intends to locate]--
    (1) For any major proposed new (or modified) source with respect 
to which a finding has been made under subsection (b) to be 
constructed or to operate in violation of this section and the 
prohibition of section 110(a)(2)(D)[(i)] \3\ [of] this section, or
---------------------------------------------------------------------------

    \3\ While the text of section 126 refers to section 
110(a)(2)(D)(ii), this is a scrivener's error. Congress intended to 
refer to section 110(a)(2)(D)(i). (See 64 FR 28267.) The EPA's 
interpretation was upheld in Appalachian Power Co. v. EPA, 249 F. 3d 
1032, 1040-44 (D.C. Cir. 2001).
---------------------------------------------------------------------------

    (2) for any major existing source to operate more than three 
months after such finding has been made with respect to it.

However, subsection (c) further provides that EPA may permit the 
continued operation of such major existing sources beyond the 3-month 
period, if such sources comply with EPA-promulgated emissions limits 
within 3 years of the date of the finding.
3. What Is EPA's Previous Section 126 Rulemaking?
    The EPA has previously taken action under section 126 to address 
interstate ozone transport (64 FR 28250; May 25, 1999 and 65 FR 2674; 
January 18, 2000). Because there are many parallels between that 
earlier action and today's rule, we briefly discuss our earlier action 
here.
    Like the present rulemaking, EPA's previous section 126 rulemaking, 
dealing with interstate transport of NOX, occurred 
essentially in conjunction with an EPA rulemaking dealing with 
interstate transport of the same pollutants, the NOX SIP 
Call (62 FR 60318; November 7, 1997). As in today's rule, EPA concluded 
that section 126 and section 110(a)(2)(D)(i) are integrally connected 
(due to the reference to the section 110(a)(2)(D)(i) prohibition found 
in section 126 (b)). Thus, the interstate transport problem at issue 
could be addressed under either provision, and once the underlying 
section 110(a)(2)(D)(i) SIP deficiency is eliminated, there no longer 
is a basis for EPA to make a positive finding under section 126. (See 
sections II and III below for a more detailed discussion.) In the 
earlier rulemaking, we therefore concluded that emissions reductions 
sufficient to eliminate a section 110(a)(2)(D) SIP deficiency would 
also be sufficient to satisfy section 126.
    The NOX SIP Call required SIP revisions eliminating the 
amount of emissions that contribute significantly to nonattainment in 
downwind States, the amount of emissions reductions corresponding to 
the quantity of emissions that could be eliminated by the application 
of highly cost-effective controls on specified sources in each upwind 
State. The section 126 remedy consequently called for the same set of 
highly cost-effective controls for the section 126 source categories, 
based on the record of the NOX SIP Call. We are adopting 
this same conceptual approach in today's rulemaking.
    There are also parallels between our earlier section 126 action and 
this action with regard to timing of actions in the section 126 
proceeding and in the closely-related interstate transport proceeding 
under section 110(a)(2)(D)(i). Because a section 126 finding turns on 
the existence of a section 110(a)(2)(D)(i) deficiency, in the May 1999 
Section 126 Rule, we determined which petitions had technical merit, 
but we stopped short of granting the findings sought by the petitions. 
Instead, we stated that because we had promulgated the NOX 
SIP Call, as long as an upwind State remained on track to comply with 
that rule, EPA would defer making the section 126 findings (See 64 FR 
28271-28272). Later judicial action staying the NOX SIP Call 
rule resulted in EPA granting the section 126 petitions at issue, but 
the new rule retained the basic linkage between section 126 and section 
110(a)(2)(D)(i) by providing that EPA would withdraw the section 126 
findings upon EPA approval of a SIP satisfying the emission reduction 
requirements of the NOX SIP Call rule or upon EPA's 
promulgation of a FIP that achieved the emissions reductions. [See 65 
FR at 2683 and Appalachian Power v. EPA, 249 F. 3d 1032, 1039 (D.C. 
Cir., 2001).] Similarly, in our proposal on the North Carolina section 
126 petition, we proposed to deny the section 126 petition if we 
approved SIPs which satisfied the emission reduction requirements of 
the CAIR, or if we promulgated a FIP which included the emission 
reduction requirements of the CAIR. (In today's final rule, we are 
denying the petition because we are promulgating FIPs concurrently with 
the final section 126 response, which FIPs eliminate the significant

[[Page 25333]]

contribution from upwind sources to North Carolina.)
    Finally, in the earlier section 126 rule, EPA adopted as a remedy 
for section 126 a Federal NOX cap-and-trade program 
patterned after the model NOX cap-and-trade program that EPA 
developed for States as an option to meet their NOX SIP Call 
requirements. See 65 FR 2686. The EPA proposed the same approach for 
the North Carolina section 126 petition, in the event that EPA granted 
the petition.
4. What Is the Clean Air Interstate Rule?
    The EPA developed the CAIR to address interstate pollution 
transport with respect to the newly adopted PM2.5 and 8-hour 
ozone NAAQS.
    In the CAIR, based on air quality modeling analyses and cost 
analyses, EPA concluded that SO2 and NOX 
emissions in certain States in the eastern part of the country, through 
the phenomenon of air pollution transport,\4\ contribute significantly 
to PM2.5 and/or 8-hour ozone nonattainment and maintenance 
problems in downwind States. The CAIR establishes emission reduction 
requirements for the affected upwind States under CAA section 
110(a)(2)(D)(i). The affected States and the District of Columbia have 
until September 11, 2006 to adopt and submit SIP revisions to achieve 
these required reductions. The SIP revision must contain measures that 
will assure that sources in the State reduce their SO2 and/
or NOX emissions sufficiently to eliminate the amounts of 
SO2 and NOX that contribute significantly to 
nonattainment downwind. Reducing upwind precursor emissions will assist 
the downwind PM2.5 and 8-hour ozone areas in achieving and 
maintaining the NAAQS. Moreover, attainment will be achieved in a more 
equitable, cost-effective manner than if each nonattainment area 
attempted to achieve attainment by implementing local emissions 
reductions alone. The EPA specified that the CAIR emissions reductions 
be implemented in two phases. The first phase of NOX 
reductions starts in 2009 (covering 2009-2014) and the first phase of 
SO2 reductions starts in 2010 (covering 2010-2014); the 
second phase of reductions for both NOX and SO2 
starts in 2015 (covering 2015 and thereafter). The emissions reduction 
requirements are based on controls that are known to be highly cost 
effective for EGUs; however, States have the flexibility to determine 
what measures to adopt to achieve the necessary reductions. In the 
CAIR, EPA provided model SO2 and NOX trading 
programs for EGUs that States can choose to adopt to meet the emissions 
reduction requirements in a flexible and highly cost-effective manner.
---------------------------------------------------------------------------

    \4\ When we use the term ``transport'' we mean to include the 
transport of both fine particles (PM2.5) and their 
precursor emissions and/or transport of both ozone and its precursor 
emissions.
---------------------------------------------------------------------------

    With the inclusion of Delaware and New Jersey in the CAIR 
PM2.5 region, EPA estimates that the CAIR will reduce 
SO2 emissions by 3.6 million tons in 2010 and by 3.9 million 
tons in 2015; and will reduce annual NOX emissions by 1.2 
million tons in 2009 and by 1.5 million tons in 2015. (These numbers 
reflect the annual SO2 and NOX requirements.) If 
all these States choose to achieve these reductions through EGU 
controls, then EGU SO2 emissions in the affected States 
would be capped at 3.7 million tons in 2010 and 2.6 million tons in 
2015; \5\ and EGU annual NOX emissions would be capped at 
1.5 million tons in 2009 and 1.3 million tons in 2015.
---------------------------------------------------------------------------

    \5\ It should be noted that the SO2 trading program 
provides that sources may bank pre-2010 title IV SO2 
allowances to be used for compliance with CAIR. These provisions 
encourage sources to make early emission reductions and ease the 
transition to the CAIR SO2 program, and as a result, 
emissions may not reflect the emission caps in any given year.
---------------------------------------------------------------------------

    Based on the promulgated CAIR (70 FR 25162), EPA estimates that the 
required SO2 and NOX emissions reductions would, 
by themselves, bring into attainment 52 of the 79 counties that are 
otherwise projected to be in nonattainment for PM2.5 in 
2010, and 57 of the 74 counties that are otherwise projected to be in 
nonattainment for PM2.5 in 2015. The EPA further estimates 
that the required NOX emissions reductions would, by 
themselves, bring into attainment 3 of the 40 counties that are 
otherwise projected to be in nonattainment for 8-hour ozone in 2010, 
and 6 of the 22 counties that are projected to be in nonattainment for 
8-hour ozone in 2015. In addition, the CAIR will improve 
PM2.5 and 8-hour ozone air quality in the areas that would 
remain in nonattainment for those two NAAQS after implementation of the 
CAIR. Because of CAIR, the States with those remaining nonattainment 
areas will find it less burdensome and less expensive to reach 
attainment by adopting additional local controls. The CAIR will also 
reduce PM2.5 and 8-hour ozone levels in attainment areas, 
providing significant health and environmental benefits in all areas of 
the eastern United States.
    For a more complete description of the CAIR and its impacts, the 
reader is encouraged to review the preamble to the CAIR.
5. What Are the Findings of Failure To Submit for the Section 
110(a)(2)(D) Plans?
    In a final rule published on April 25, 2005 (70 FR 21147), we made 
national findings that States have failed to submit SIPs required under 
section 110(a)(2)(D) to address interstate transport with respect to 
the 8-hour ozone and PM2.5 NAAQS.
    The April 25, 2005 findings started a 2-year clock for EPA to 
promulgate a FIP to address the requirements of section 110(a)(2)(D). 
Under section 110(c)(1), EPA may issue a FIP any time after such 
findings are made and must do so unless a SIP revision correcting the 
deficiency is approved by EPA before the FIP is promulgated. For States 
affected by CAIR, an approved SIP meeting the CAIR requirements would 
satisfy the requirement and turn off the FIP clock. As discussed below 
in section IV, EPA is today promulgating FIPs for States affected by 
the CAIR. However, EPA intends to withdraw the FIP in a State in 
coordination with approval of a SIP for the State that meets the CAIR 
requirements.
    The findings do not start a sanctions clock pursuant to section 179 
because the findings do not pertain to a part D plan for nonattainment 
areas required under section 110(a)(2)(I) and because the action is not 
a SIP Call pursuant to section 110(k)(5).
6. What Are the Petitions for Reconsideration of the CAIR?
    Following publication of the final CAIR, EPA received twelve 
petitions requesting reconsideration of certain aspects of the final 
rule. The EPA considered all issues raised in the petitions and decided 
to reconsider six issues. In the notice of proposed rulemaking for this 
rule, EPA announced its decision to reconsider one issue: the 
definition of ``EGU'' as it relates to certain solid waste incineration 
units. Subsequently, on December 2, 2005 (70 FR 72268), and December 
29, 2005 (70 FR 77101), EPA published in the Federal Register notices 
announcing its decisions to reconsider five additional aspects of CAIR 
and requesting comment on those issues.
    As part of this rule, EPA is taking final action on reconsideration 
of the definition of ``EGU'' as it relates to certain solid waste 
incineration units. As explained in sections VI.E and VII below, EPA 
has revised the definition of EGU to establish a specific exemption for 
certain solid waste incineration units.
    In a separate notice signed today, EPA is taking final action on 
the five

[[Page 25334]]

additional aspects of CAIR for which EPA granted petitions for 
reconsideration. The EPA also is taking final action today to deny the 
remaining issues raised in the twelve petitions for reconsideration. 
These actions are discussed in greater detail in the preamble for the 
notice of final action on reconsideration, titled ``Rule to Reduce 
Interstate Transport of Fine Particulate Matter and Ozone (Clean Air 
Interstate Rule): Reconsideration'' and all related documents are 
available in the docket for the CAIR (EPA-HQ-OAR-2003-0053).

D. Summary of North Carolina's Section 126 Petition

1. What Sources Does the Petition Target?
    The North Carolina petition requests reductions of certain 
emissions from large EGUs located in 13 States. With respect to the 
PM2.5 NAAQS, the petition requests that EPA find that 
NOX and SO2 emissions from large EGUs in 12 
States (Alabama, Georgia, Illinois, Indiana, Kentucky, Michigan, Ohio, 
Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia) 
are significantly contributing to nonattainment in, or interfering with 
maintenance by, North Carolina. With respect to the 8-hour ozone NAAQS, 
the petition requests that EPA find that NOX emissions from 
large EGUs in 5 States (Georgia, Maryland, South Carolina, Tennessee, 
and Virginia) are significantly contributing to nonattainment in, or 
interfering with maintenance by, North Carolina (Petition, p.1).
    The petition defines the term ``EGUs'' as all facilities meeting 
the criteria described in the proposal for the CAIR. (See 69 FR 4566, 
4610; January 30, 2004.) In the proposal for the CAIR, we defined EGUs 
as ``fossil-fuel fired boilers and turbines serving an electric 
generator with a nameplate capacity of greater than 25 megawatts (MW) 
producing electricity for sale.'' (Id.) (See sections VI.E. and VII of 
today's preamble for clarification of the EGU definition.)
2. What Control Remedy Does the Petition Request?
    In its petition, North Carolina states that compliance with the 
NOX and SO2 emissions budgets in the proposal for 
the CAIR would satisfy the requirements of the petition. These 
emissions budgets were based on controls that are highly cost effective 
for EGUs [the highly cost effective control metric being a component of 
determining which emissions contribute significantly (see State of 
Michigan v. EPA, 213 F.3d 663, 674-80 (D.C. Cir., 2000) (upholding 
consideration of cost as an aspect of significant contribution)]. North 
Carolina also states that it does not oppose the flexibility discussed 
by EPA (69 FR at 4622) to allow equivalent reductions from other source 
categories in given States, so long as those reductions are real and 
enforceable (Petition, p. 24).
    In the CAIR, EPA provided model NOX and SO2 
cap-and-trade programs for EGUs as control options for States to choose 
to meet the CAIR emissions reductions requirements. The trading 
programs allow interstate trading among sources in all States subject 
to the CAIR that adopt the programs. In its petition, North Carolina 
said it recognizes the value of allowing sources flexibility to reduce 
their emissions in the most cost-effective manner consistent with the 
statute. However, North Carolina expressed concerns about a regional 
trading program (Petition, pp. 25-28). We address this issue below in 
sections II and VI.
3. What Is the Technical Support for the Petition?
    To support its claim that EGUs outside North Carolina are 
contributing significantly to nonattainment and maintenance problems in 
the State, North Carolina relies largely on EPA's technical analyses 
for the proposed CAIR. Therefore, as discussed above, the petition 
targets sources in the same States that EPA linked to North Carolina in 
the proposed CAIR. As corroborative support, North Carolina cites 
analyses conducted by the Southern Appalachian Mountains Initiative 
(SAMI) on PM2.5 transport, North Carolina's further 
evaluation of the SAMI's analyses, as well as back trajectory analyses 
performed by the North Carolina Division of Air Quality from 
PM2.5 monitors in two counties. (See Petition, pp. 13-17.)

E. What Is the Consent Decree on the Section 126 Rulemaking Schedule?

    On March 19, 2004, EPA received a petition from the State of North 
Carolina filed under CAA section 126. Section 126(b) requires EPA to 
make the requested finding, or to deny the petition, within 60 days of 
receipt. It also requires EPA to provide a public hearing before acting 
on the petition. In addition, EPA's action under section 126 is subject 
to the procedural requirements of section 307(d) of the CAA. [See 
section 307(d)(2)-(5).] One of these requirements is that EPA conduct 
notice-and-comment rulemaking. Section 307(d)(10) provides for a time 
extension, under certain circumstances, for rulemakings subject to that 
provision. Specifically, it allows statutory deadlines that require 
promulgation in less than 6 months from proposal to be extended to not 
more than 6 months from proposal to afford the public and the Agency 
adequate opportunity to carry out the purposes of section 307(d). In an 
action published on May 26, 2004 (69 FR 30038), EPA extended the 
deadline for EPA to take action on the North Carolina petition by the 
full 6 months, to November 18, 2004.
    On February 17, 2005, the State of North Carolina and the citizen's 
group Environmental Defense filed complaints against EPA seeking to 
compel EPA to take action on the State's section 126 petition: State of 
North Carolina v. Johnson, No. 5:05-CV-112 (E.D. N.C.) and 
Environmental Defense v. Johnson, No. 5:05-CV-113 (E.D. N.C.). The EPA, 
North Carolina, and Environmental Defense filed a proposed consent 
decree that would establish a schedule for EPA to act on the petitions. 
Pursuant to CAA section 113(g), the EPA solicited comments on the 
proposed consent decree, by notice dated March 2, 2005 (70 FR 10089). 
The comment period closed April 1, 2005 without EPA receiving negative 
comment. On May 9, 2005, the court entered a slightly modified version 
of the consent decree.
    The schedule in the consent decree required EPA to sign a proposal 
to grant or deny the petition by August 1, 2005, a date EPA met. (See 
70 FR 49746.) The consent decree also required EPA to hold a public 
hearing on the proposal during the week of September 12 in North 
Carolina, and EPA held hearings in Research Triangle Park, North 
Carolina and Washington, DC during that week. The EPA must also take 
final action to grant or deny the petition by March 15, 2006, and is 
doing so in this rule. With the signature of today's final response to 
the petition, EPA has thus fulfilled all the deadlines and provisions 
of the consent decree.

II. What Is EPA's Legal and Analytical Approach for the Section 126 
Petition?

    For the PM2.5 NAAQS, EPA proposed to deny the petition 
with respect to sources in any State having an approved SIP meeting the 
CAIR emissions reductions requirements, and with respect to sources in 
any State for which EPA promulgated a FIP with those same emission 
reductions requirements. In either case, there would no longer be a 
violation of the prohibition in section 110(a)(2)(D)(i). Since a 
violation of that prohibition is a condition precedent for granting a 
section 126 petition, EPA

[[Page 25335]]

necessarily would deny the petition. (See 70 FR at 49716-49717.)
    A number of commenters disagreed with EPA's approach. In their 
view, section 126 guarantees a particular result: reductions of 
emissions from designated upwind sources linked to North Carolina 
nonattainment or maintenance problems, which reductions are to occur 
within three years.
    In the commenters' view, if an approved SIP or a FIP does not 
provide this result within the three year time frame stated in section 
126(c), then EPA must grant the petition. Thus, the argument goes, EPA 
must find that certain sources significantly contribute to 
nonattainment problems in North Carolina regardless of whether there is 
a current violation of the section 110(a)(2)(D)(i) prohibition. The 
commenters maintain that the statute, case-law, and past EPA practice 
all compel their interpretation.
    EPA disagrees. In our view, section 126 provides a mechanism 
forcing EPA to act, but does not force adoption of controls beyond 
those necessary to remove the underlying SIP deficiency which violates 
the prohibition of section 110(a)(2)(D)(i). In essence, section 126 
provides States a means to force EPA to take action to reduce specific 
emissions when EPA has not taken the actions required by section 
110(a)(2)(D)(i) to address significant contribution to downwind 
receptors, but does not force further action. It follows, therefore, 
that once EPA has taken action to eliminate the SIP deficiencies by 
approving SIPs which implement CAIR (i.e., which eliminate the 
significant contribution), or itself promulgates a CAIR FIP for states 
with SIP deficiencies, there is no longer a cause of action under 
section 126.\6\
---------------------------------------------------------------------------

    \6\ This analysis assumes that the facts underlying CAIR remain 
unchanged. If a Petition were to present new information showing, 
for example, that there is a different level of contribution than 
EPA analyzed in CAIR, compliance with CAIR would not automatically 
be determinative regarding whether upwind sources are emitting in 
violation of the section 110 (a)(2)(D)(i) prohibition. See 64 FR at 
28274 n. 15 and Appalachian Power, 249 F.3d at 1067 (later 
developments can be the basis for another section 126 petition).
---------------------------------------------------------------------------

    This interpretation is consistent with the text of the statute, 
which links action under section 126 inextricably with the existence of 
an underlying section 110(a)(2)(D)(i) SIP deficiency: ``[a]ny State * * 
* may petition the Administrator for a finding that any major source or 
group of stationary sources emits * * * any air pollutant in violation 
of the prohibition of section 110(a)(2)(D)[(i)] 7 o[f] this 
section'' (emphasis added). Case law likewise makes clear that EPA's 
determination of whether or not to grant a section 126 petition turns 
on whether SIPs are in violation of section 110(a)(2)(D)(i). 
Appalachian Power v. EPA, 249 F.3d 1032, 1045-46 (D.C. Cir. 2001). 
Similarly, in the rulemaking dealing with a section 126 petition in 
circumstances most analogous to those here (EPA's response to the 
Northeastern states' petition regarding interstate transport of ozone 
precursors, issued roughly contemporaneously with the NOX 
SIP Call), EPA stated that it ``interprets section 126 to provide that 
a source is emitting in violation of the prohibition of section 
110(a)(2)(D)(i) where the applicable SIP fails to prohibit (and EPA has 
not remedied this failure through a FIP) a quantity of emissions from 
that source that EPA has determined contributes significantly to 
nonattainment or interferes with maintenance in a downwind [S]tate'' 
(64 FR at 28272; May 25, 1999). Thus, ``[a]n upwind State and EPA may 
remedy this excessive interstate transport of air pollutants through 
adoption and approval of a SIP revision barring the emission of such 
pollutants. Alternatively, a downwind State and EPA may remedy this 
excessive interstate transport of air pollutants through the State 
petitioning EPA under section 126 and EPA regulating the sources 
directly'' (65 FR 2680; January 18, 2000).
---------------------------------------------------------------------------

    \7\ As noted earlier, the statutory text refers to subsection 
(ii) of section 110(a)(2)(D), but this is a scrivener's error. 
Appalachian Power, 249 F.3d 1032, 1040-44.
---------------------------------------------------------------------------

    Commenters argued, however, that the reference in section 126(b) 
and (c) to ``the prohibition of section 110(a)(2)(D) [(i)]'' must be to 
the functional prohibition in section 110(a)(2)(D)(i), by which they 
mean a cessation of emissions that contribute significantly to 
nonattainment in a downwind state. Under this reading, a remedy under 
section 126 must entail emission reductions, not merely SIP revisions. 
EPA agrees that the prohibition referred to is the functional 
prohibition on significant contribution to downwind states, and 
therefore, for example, EPA cannot defer granting a section 126 
petition merely because a state is under a legal obligation to revise 
its SIP. Appalachian Power, 249 F.3d at 1044. However, adoption of a 
SIP implementing CAIR (or EPA enacting a CAIR FIP) addresses the 
functional prohibition of section 110(a)(2)(D)(i) by eliminating the 
SIP deficiency triggering the prohibition through requirements on 
sources to eliminate the significant contribution to downwind 
receptors. Moreover, to the extent the commenters are maintaining that 
the `functional prohibition in section 110(a)(2)(D)(i)' refers to some 
specific environmental result, such as North Carolina coming into 
attainment (see Comments of North Carolina Attorney General at 17), we 
disagree. EPA interprets ``significant contribution'' in the CAIR and 
in this proceeding to include both an emission component and a 
feasibility/cost-effectiveness component, so that what is prohibited 
are specific levels of emissions which can feasibly be reduced in a 
highly cost-effective manner. See also 65 FR at 2677 (applying cost 
effectiveness component of the significant contribution standard in 
granting a section 126 petition). Adoption of a CAIR SIP (or EPA 
adopting a CAIR FIP) fully addresses this prohibition.
    In the same vein, other commenters argued that sections 
110(a)(2)(D) and 126 are independent provisions, and that EPA is 
vitiating that independence by substituting a section 110 remedy for 
the section 126 remedy, the implication again being that section 126 
commands an environmental result which must be effectuated once the 
section 110(a)(2)(D) prohibition is violated. EPA disagrees with the 
premise of the comment. Although the two provisions unquestionably may 
be applied independently, they are also closely linked in that a 
violation of the prohibition in section 110(a)(2)(D)(i) is a condition 
precedent for action under section 126 and, critically, that 
significant contribution is construed identically for purposes of both 
provisions (since the identical term naturally is interpreted as 
meaning the same thing in the two linked provisions). See Appalachian 
Power, 249 F. 3d at 1049-50. If EPA or a State has adopted provisions 
that eliminate the significant contribution to downwind states, then 
there simply is no violation of the section 110(a)(2)(D) prohibition. 
Moreover, since we interpret significant contribution to mean the same 
thing under both provisions, relief under section 126 to eliminate 
significant contribution must in any case mean eliminating those 
emissions which can feasibly be controlled in a highly cost-effective 
manner as defined in the CAIR. Put another way, requiring additional 
reductions would result in eliminating emissions which do not 
contribute significantly, an action beyond the scope of section 126.
    Commenters further argued that relief under section 126 must occur 
within 3 years and therefore that the CAIR emission reductions do not 
satisfy

[[Page 25336]]

section 126 because although those reductions commence within 3 years 
they are phased in over a longer time. These comments assume that EPA 
must make the section 126 findings, however, in which case sources 
covered by the petition would indeed have to eliminate significant 
contribution within 3 years. But as just explained, a condition 
precedent to making section 126 findings is the existence of an 
underlying SIP deficiency, which EPA has chosen to address directly 
through action under section 110(a)(2)(D). Moreover, this choice is 
appropriate. As a result of today's action, not only will there be an 
approved SIP or a CAIR FIP in place requiring emission reductions which 
eliminate the significant contribution to North Carolina, but these 
reductions occur within 3 years, commencing in 2009 when NOX 
controls (a PM2.5 precursor) are required (70 FR at 49718). 
This is similar to EPA's decisions in the parallel NOX SIP 
Call/section 126 rulemakings where EPA initially deferred making 
section 126 findings because there would be approved SIPs in place 
requiring elimination of significant contribution to downwind States 
with emission reductions to commence (although not be concluded) within 
the 3-year period (64 FR at 28275).\8\ When the NOX SIP Call 
rule was judicially stayed, it was no longer appropriate to defer 
making the section 126 findings because there were no longer ``explicit 
and expeditious deadlines for compliance with the NOX SIP 
Call'' (65 FR 2680). Here, the certainty of SIP submissions (or action 
under a CAIR FIP) coupled with explicit and certain compliance 
deadlines calling for emissions reductions commencing in the same 
timeframe as the section 126 3-year window make it appropriate for EPA 
to utilize the section 110(a)(2)(D) remedy.
---------------------------------------------------------------------------

    \8\ Commenters asserted that all emissions reductions under the 
SIP Call would have occurred within the three-year period, but this 
is not the case. The date for achieving the budgets provided by the 
SIP Call (i.e., the full panoply of annual emission reductions) was 
2007, six years from the rule's promulgation date. See 63 FR at 
57450.
---------------------------------------------------------------------------

    We note further that in arguing that EPA must order all emissions 
reductions from designated sources which contribute to North Carolina 
PM2.5 nonattainment to occur within 3 years, commenters 
again ignore the feasibility/cost-effectiveness prong of the 
significant contribution test. EPA has found that the CAIR emissions 
reductions are highly cost effective based on the compliance schedule 
established in that rule, and further found that that compliance 
schedule is needed for reasons of technical feasibility (70 FR at 
25195-25229). Requiring those reductions to occur on a more rapid 
timeframe would thus require considerably more than merely eliminating 
significant contribution, and so would exceed the scope of section 126. 
Moreover, commenters presented no independent analysis showing that 
emission reductions from the designated sources could be obtained cost-
effectively (or even feasibly) within 3 years.\9\
---------------------------------------------------------------------------

    \9\ The petitioner (in its comments on the proposal) stated that 
``[c]ontrols for sources contributing to nonattainment in North 
Carolina would be cost effective. EPA concluded as much in the 
Proposed CAIR Rule * * *. There is nothing in the Final CAIR Rule 
that indicates that adding North Carolina to the list of downwind 
states would `break the bank' on cost effectiveness.' '' Comments of 
North Carolina Attorney General at p. 30 n. 16. This statement does 
not address whether controls on upwind souces would be cost 
effective (or feasible) in timeframes more rapid than those found to 
be cost effective and feasible in the CAIR.
---------------------------------------------------------------------------

    Commenters also argued that because a SIP (or the CAIR FIP) could 
(or in the case of the FIP, would) reflect a trading component, such a 
scheme would not satisfy section 126. The legal argument is that 
section 126 requires emission reductions to come from designated 
sources, a result not possible to guarantee under a trading regime. 
More basically, commenters stated that under a trading regime there was 
no certainty that there would be reduction of emissions to North 
Carolina, so that at the least, trading should be limited to sources 
designated in the petition as contributing significantly to 
nonattainment in North Carolina. These arguments again assume that EPA 
must grant the petition, which is not our view so long as the 
underlying SIP deficiencies are rectified, as explained above. The 
arguments also do not address the critical point that availability of 
trading options are part of the basis for EPA's findings that 
reductions are highly cost effective, and hence are an element of the 
finding that emissions contribute significantly to nonattainment.\10\ 
The approach here is also consistent with the one EPA adopted initially 
in the NOX SIP Call/section 126 rulemaking, where EPA 
deferred granting section 126 petitions based on the existence of the 
NOX SIP Call remedy, which included a trading scheme across 
the entire region. 63 FR at 56309-320; see generally 64 FR at 28307-309 
(appropriateness of trading as a section 126 remedy). Indeed, as noted 
earlier, EPA adopted a trading scheme when granting that earlier 
section 126 petition. See 65 FR at 2686; see also Appalachian Power, 
249 F. 3d at 1039 noting that EPA's section 126 rule included a cap-
and-trade program. Further discussion of issues relating to the trading 
regime are found in section VI.B of this preamble.
---------------------------------------------------------------------------

    \10\ Indeed, the Petition relies on EPA's analysis of what 
constitutes significant contribution, which, as just noted, includes 
an assumption that sources participate in a trading scheme to 
achieve highly cost-effective emission reductions. The Petition 
presents no independent analysis of what would constitute a 
significant contribution in the absence of a trading program. It is 
thus illogical for the Petition to argue that sources must eliminate 
all significant contribution (of which trading is a necessary 
element) but must do so without a trading program.
---------------------------------------------------------------------------

    Some commenters also challenged EPA's basis for proposing to deny 
the petition with respect to ozone. EPA did so because no area in North 
Carolina is projected to be in nonattainment with the ozone 8-hour 
NAAQS in the CAIR base case and therefore upwind states would (by 
definition) not be contributing significantly to North Carolina 
nonattainment (70 FR at 25162). Commenters argued that EPA is obligated 
to consider current conditions, and not base findings on future 
conditions, because some areas in North Carolina are presently in 
nonattainment. They base this argument on the use of the present tense 
in section 126(b) (``emits or would emit any air pollutant in violation 
of the prohibition of section 110(a)(2)(D)[(i)]''), plus equitable 
consideration of the need to address existing pollution problems.
    EPA disagrees. With respect to the statutory language, both section 
126(b) and 110(a)(2)(D)(i) do not specify the time by which EPA must 
evaluate significance of contribution. Indeed, section 110(a)(2)(D)(i) 
is written exclusively in the future tense, and the reference to 
``emits or would emit'' in section 126(b) is naturally read as making 
clear that controls can apply to both existing and new sources. See 
Appalachian Power, 249 F. 3d at 1056-57. Moreover, it makes sense for 
significant contribution determinations to be based on conditions at 
the time at which potential controls are contemplated. Suppose, for 
example, that due to future rules (a clutch of effective mobile source 
controls, for example) it can reliably be predicted that an area will 
be in attainment although it is not so presently. We do not believe 
that the statute mandates immediate assessment of interstate 
contribution to address a nonattainment problem that will no longer 
exist at the time controls on the interstate emissions would be 
implemented. EPA thus has consistently adopted this future-looking 
approach when assessing interstate transport, and believes it 
reasonable to continue doing so here. See 63 FR at 57375 (adopting this 
approach in NOX SIP Call).

[[Page 25337]]

    Finally, commenters argued that EPA had ignored the statutory 
requirement in section 110(a)(2)(D)(i) (incorporated within section 
126(b) and (c)) to prohibit interstate transport that ``interefere[s] 
with maintenance'' by North Carolina of the 8-hour ozone NAAQS. They 
further stated that a number of North Carolina counties projected to 
attain the ozone NAAQS are modeled to do so by narrow margins that 
should be deemed to fall within the interfere with maintenance test 
based on modeling uncertainties and historic ozone variability patterns 
in the counties in question.
    EPA stated in the CAIR rule that it would apply the interfere with 
maintenance provision in section 110(a)(2)(D) in conjunction with the 
significant contribution to nonattainment provision and so did not use 
the maintenance prong to separately identify upwind States subject to 
CAIR (70 FR at 25193). EPA did this so as not to give the interfere 
with maintenance requirement greater weight than the significant 
contribution requirement, thus avoiding giving greater weight to the 
potentially lesser environmental effect. (See CAIR Response to Comments 
Response at p. 63.) EPA's reading also promotes a reasonable balance 
between controls on upwind states and in-state controls, an important 
objective in applying the section 110 and 126 interstate transport 
provisions. (See 70 FR at 25193.) Suppose, for example, that a downwind 
area is projected to attain by the effective date of potential section 
110(a)(2)(D) (or section 126(b)) controls, so that those controls are 
unnecessary to prevent significant contribution to nonattainment. 
Applying controls on upwind sources in these circumstances not only 
could be environmentally unnecessary, but could even create a perverse 
incentive for downwind states to increase local emissions.\11\
---------------------------------------------------------------------------

    \11\ In this case, the three North Carolina counties mentioned 
in comments as warranting upwind reductions to maintain attainment 
status, are not only projected to be in attainment in 2010 in both 
the base case and the CAIR case (considering emission reductions 
occurring under CAIR to prevent significant contribution) and the 
2015 base case and CAIR case. In fact, in 2015, these counties 
(Mecklenburg, Rowan, and Wake) are projected to be attaining by 
comfortable margins. CAIR Modeling TSD App. E Table E-1 (projected 
levels of 75.0 ppb, 74.1 ppb, and 70.8 ppb respectively in the 2015 
CAIR case, which are all below the levels (3-5 ppb) EPA considered 
to raise maintenance concerns in the CAIR. These projections do not 
consider the effect of local controls other than those already 
enacted. Projected levels in the 2015 base case, i.e. without CAIR 
and without further local controls, are likewise comfortably below 
the levels which could raise likely possibility of returning to 
nonattainment. (It is reasonable to defer consideration of 
maintenance issues until 2015 in this anlaysis because the CAIR 
remedy is in two parts. There thus will be further emission controls 
of NOX between 2010 and 2015 as a result of CAIR which 
could subsume any controls adopted for maintenance reasons.) EPA 
thus in any case does not beleive that further reductions from 
upwind sources is needed to maintain the 8-hour ozone standard in 
these counties, and that such emission reductions would not 
reasonably balance upwind and local controls. See also Response to 
Comment Document addressing these factual issues.
---------------------------------------------------------------------------

    We note further that even if (against our view) the interference 
with maintenance standard were to be applied in cases where there is no 
evidence of significant contribution to nonattainment, EPA would still 
interpret the standard as requiring consideration of cost and technical 
feasibility since EPA already considers these factors as aspects of 
significant contribution, and it would make little sense to interpret 
the interfere with maintenance language (the lesser environmental 
effect) as allowing reductions without considering those same factors. 
See also 63 FR 57370 (interfere with maintenance must also reflect 
significant contribution to be cognizable under section 110 remedies 
for interstate transport. Moreover, given that maintenance addresses 
the less significant environmental effect, EPA would likely require 
that emission reductions be no less highly cost effective than those 
which significantly contribute to nonattainment, and might require that 
reductions be even more highly cost effective. It is thus difficult to 
see that further emission reductions than those already required under 
CAIR would be warranted.

III. What Is EPA's Final Action on the Section 126 Petition?

    In determining whether emissions from EGUs in the States named in 
the North Carolina section 126 petition contribute significantly to 8-
hour ozone and/or PM2.5 nonattainment and maintenance 
problems in North Carolina, EPA is relying on the conclusions drawn in 
the final CAIR. As discussed in section I above, North Carolina based 
its petition in large part on the analyses for the proposed CAIR--
identifying EGUs in the same upwind States that EPA proposed to link to 
North Carolina. The EPA conducted new modeling analyses using updated 
emissions inventories for the final CAIR. The EPA also applied a 
different value for the threshold contribution level for the air 
quality portion of the significant contribution determination for 
PM2.5 in the final CAIR. Therefore, the upwind State-to-
downwind State linkages differed in the final CAIR from the proposal.

A. What Is EPA's Final Action With Respect to the 8-Hour Ozone NAAQS?

    In its petition, North Carolina requested that EPA make findings 
that large EGUs in Georgia, Maryland, South Carolina, Tennessee, and 
Virginia contribute significantly to nonattainment in, or interfere 
with maintenance by, North Carolina with respect to the 8-hour ozone 
NAAQS. In the proposed CAIR, EPA linked these States to 8-hour ozone 
air quality problems in Mecklenburg County, North Carolina. In the 
final CAIR, EPA's updated analyses project all of North Carolina to be 
in attainment for 8-hour ozone in the CAIR 2010 base case. Therefore, 
EPA did not link any upwind States to North Carolina with respect to 
the 8-hour ozone NAAQS in the final CAIR (See CAIR preamble, Table VI-9 
at 70 FR at 25249). Consequently, EPA is denying the section 126 
petition with respect to the 8-hour ozone NAAQS.

B. What Is EPA's Final Action With Respect to the PM2.5 NAAQS?

    In its petition, North Carolina also requested that EPA make 
findings that large EGUs in Alabama, Georgia, Illinois, Indiana, 
Kentucky, Michigan, Ohio, Pennsylvania, South Carolina, Tennessee, 
Virginia and West Virginia contribute significantly to nonattainment 
in, or interfere with maintenance by, North Carolina with respect to 
the PM2.5 NAAQS. In the proposed CAIR, these 12 States were 
linked to PM2.5 nonattainment problems in North Carolina. In 
the final CAIR, as noted, EPA used different, updated modeling and also 
applied a 0.2 ([mu]/m3 contribution threshold level rather 
than the proposed 0.15 ([mu]/m3 for the air quality portion 
of the significant contribution determination (70 FR 25190-25191). 
Based on the updated modeling and the 0.2 ([mu]/m3 
contribution threshold level, EPA determined in CAIR that only the 
following 10 States are significantly contributing to PM2.5 
air quality problems in North Carolina: Alabama, Georgia, Indiana, 
Kentucky, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and 
West Virginia (see preamble Table VI-8; 70 FR at 25248-25249). This 
means for purposes of section 126(b) that sources within these States 
for which EPA determined highly cost-effective controls are available 
are also contributing significantly to PM2.5 nonattainment 
problems in North Carolina.
    In determining what action to take in response to the 
PM2.5 portion of the section 126 petition, EPA is taking 
into consideration the CAIR FIPs that are being promulgated today in 
conjunction

[[Page 25338]]

with the section 126 action (see section IV below). The FIP action 
establishes control requirements for each of the States affected by the 
CAIR in order to achieve the emissions reductions required to address 
interstate transport.
    In the proposal for the section 126 action, for EGUs in States 
linked to North Carolina in CAIR (and therefore, for which EPA proposed 
a FIP), EPA proposed in the alternative (1) to deny the petition if EPA 
issued the final FIPs to address the interstate transport no later than 
the final section 126 response or (2) to grant the petition and make 
section 126 findings if EPA did not promulgate the FIPs prior to or 
concurrently with the final section 126 response. Because the FIPs 
would fully address the PM2.5-related interstate transport 
problem identified in CAIR and thus eliminate the section 110(a)(2)(D) 
violation, there would no longer be a basis for the section 126 
findings. In today's action, EPA is finalizing the CAIR FIPs. 
Therefore, EPA is denying the section 126 petition for EGUs in States 
linked to North Carolina for PM2.5.
    For EGUs located in Illinois and Michigan, which are not linked to 
North Carolina in the final CAIR with respect to the PM2.5 
NAAQS (70 FR 25247-25248), EPA is also denying the petition.

IV. What Is the Federal Implementation Plan for the CAIR?

A. What Is the Legal Framework for the FIPs?

    Section 110(c)(1) of the CAA requires the Administrator to 
promulgate a FIP within 2 years of: (1) Finding that a State has failed 
to make a required submittal, (2) finding that a submittal received 
does not satisfy the minimum completeness criteria established under 
section 110(k)(1)(A), or (3) disapproving a SIP submittal in whole or 
in part. The EPA may issue a FIP any time after making one of these 
findings or the Agency may issue a SIP disapproval. However, EPA is 
relieved of the obligation to promulgate the FIP if a SIP revision 
correcting the deficiency identified is approved by EPA before such a 
FIP is promulgated.
    As discussed in paragraph I.D.5, in a final rule signed the same 
day as CAIR, EPA found that States have failed to submit SIPs to 
satisfy the interstate transport requirement under section 
110(a)(2)(D)(i) of the CAA for the PM2.5 and 8-hour ozone 
NAAQS (70 FR 21147). These findings started the 2-year clock for the 
promulgation of a FIP. They did not start a ``sanctions clock'' as 
there are no mandatory sanctions associated with the FIP or the finding 
of State failure to submit SIPs to satisfy 110(a)(2)(D)(i).
    The EPA's authority to act when it has identified deficiencies in 
SIPs is derived from multiple sources. First, EPA may promulgate any 
measure which it is permitted to issue pursuant to pre-existing 
independent statutory authority--for example, the provisions of title 
II. That is, EPA may promulgate any measure which it has authority to 
issue in a non-FIP context, without reliance on section 110(c). Second, 
EPA may invoke section 110(c)'s general FIP authority and act in 
accordance with this provision, and the CAA more broadly, to cure a SIP 
deficiency. Third, under section 110(c), the courts have held that EPA 
may exercise all authority that the State may exercise under the CAA.
    The first type of authority, EPA's general authority, is 
independent of section 110(c). It is not dependent on or altered by 
finding a deficiency in a SIP.
    The second type of authority, EPA's general authority under section 
110(c), is essentially remedial. The EPA has broad power under that 
section to cure a defective State plan. Thus, in promulgating a FIP, 
EPA may exercise its own, independent regulatory authority in 
accordance with section 110(c), and the CAA more broadly. When EPA has 
promulgated a FIP, courts have not required explicit authority for 
specific measures: ``We are inclined to construe Congress' broad grant 
of power to the EPA as including all enforcement devices reasonably 
necessary to the achievement and maintenance of the goals established 
by the legislation.'' (South Terminal Corp. v. EPA, 504 F.2d 646, 669. 
(1st Cir., 1974)).
    Third, the same authority that is exercised by the States under the 
CAA in connection with the adoption, implementation, and enforcement of 
a SIP may be assumed to be available to the EPA when the agency issues 
a FIP, after determining that a State has not adopted a satisfactory 
SIP. As the Ninth Circuit has held, when EPA acts in place of the State 
pursuant to a FIP under section 110(c), EPA ``stands in the shoes of 
the defaulting State, and all of the rights and duties that would 
otherwise fall to the State accrue instead to EPA,'' (Central Arizona 
Water Conservation District v. EPA, 990 F.2d 1531, at 1541 9th Cir., 
1993). The First Circuit, in an early FIP case, agreed:

    * * * the Administrator must promulgate promptly regulations 
setting forth an implementation plan for a State should the State 
itself fail to propose a satisfactory one. The statutory scheme 
would be unworkable were it read as giving to EPA when promulgating 
an implementation plan for a State, less than those necessary 
measures allowed by Congress to a State to accomplish Federal clean 
air goals. We do not adopt any such crippling interpretation.
    South Terminal Corporation v. EPA, 504 F.2d 668 (1st Cir., 
1974).

    In the case of Federally-recognized Indian Tribes, as we explained 
in the CAIR, (70 FR 25167-25168) Tribes are subject to section 
110(a)(2)(D), but are not required to submit implementation plans. The 
EPA is required to promulgate FIPs for Indian country as necessary or 
appropriate to protect air quality. See 40 CFR 49.11(a). Presently, 
there are no emissions sources in Indian country within the region 
affected by CAIR which would make a FIP necessary or appropriate. In 
the event of the planned construction of such a source within Indian 
country in the 28-State region subject to CAIR, EPA will work with the 
relevant Tribal government to regulate the source through a Tribal or 
Federal implementation plan. In the case of an EGU, the EPA anticipates 
that the Tribal implementation plan (TIP) or FIP would involve the 
participation of the EGU in the EPA administered cap-and-trade program. 
The EPA will also work with the Tribe and affected States to determine 
how allowances allocated to the Indian country source will affect State 
allowance allocations. Because any FIPs for Indian country will 
necessarily be tailored to the specific circumstances, today's action 
contains no such FIP. The reader is referred to the CAIR for a more 
detailed discussion of the potential impact of the CAIR in Indian 
country (70 FR 25167-25168, 25315).

B. What Is the Timing and Scope of the CAIR FIP Actions?

    As described in the CAIR, EPA views seriously its responsibility to 
address the issue of regional transport. Decreases in NOX 
and SO2 emissions are needed in the States identified in the 
CAIR to enable downwind States to develop and implement plans to 
achieve and maintain the PM2.5 and 8-hour ozone NAAQS. The 
CAIR identified the amount of emissions reductions necessary for each 
State identified in the CAIR to meet their section 110(a)(2)(D) 
interstate transport obligations. Implementation of these reductions is 
necessary to help downwind States to achieve the NAAQS in order to 
provide clean air for their residents.
    Therefore, EPA is promulgating FIPs today in conjunction with the 
action responding to North Carolina's section 126 petition concerning 
transport of

[[Page 25339]]

PM2.5 and 8-hour ozone. The EPA is promulgating these FIPs 
at the same time as its response to North Carolina's section 126 
petition, which is required to be finalized no later than March 15, 
2006 in accordance with a judicially-enforceable consent decree. The 
EPA believes it is appropriate to coordinate these two actions because 
they both address interstate transport, both apply to EGUs, and because 
the States of concern in the section 126 petition are a geographical 
subset of the States covered by CAIR. Promulgating the CAIR FIPs at 
this time provides a backstop of Federal controls for all States 
covered by CAIR for PM2.5 and/or 8-hour ozone, not just 
those States that significantly contribute to North Carolina for 
PM2.5. This provides a level playing field, giving assurance 
to all the affected downwind States that the upwind emissions 
reductions required under CAIR will be achieved on time. Further, EPA 
believes that the CAIR reductions are best implemented as a unified 
program. The EPA believes that States will submit SIP revisions 
implementing the CAIR reductions in their States in a unified manner, 
and that this reduces workload for the States and provides sources with 
more certainty. Finally, promulgating the 8-hour ozone FIP as well as 
the PM2.5 FIP as early as possible gives States more 
flexibility to take advantage of the abbreviated SIP option discussed 
below and in section VI.C. This could further reduce workload for 
States to meet the requirements of CAIR. In today's action, EPA is not 
promulgating FIPs for any States not covered by CAIR.
    The Agency is taking this action to provide a Federal backstop for 
CAIR where all States may not be able to develop and submit timely, 
approvable SIP revisions. In no way should the FIP for CAIR be viewed 
as a sign of any concern about States ultimately making the emission 
reductions required under CAIR. There are no sanctions associated with 
today's rule, and EPA does not intend CAIR FIPs to have any negative 
consequences for the affected States. To the contrary, EPA is 
finalizing FIP approaches that are flexible and allow States a full 
opportunity to get their SIP revisions in place, with minimal 
disruption in transitioning from Federal to State implementation.
    Moving quickly to promulgate a FIP is consistent with Congress' 
intent that attaining the standard occurs in these downwind 
nonattainment areas ``as expeditiously as practicable'' (sections 
181(a) and 172(a)(2)(B)). The FIP will help ensure that all emissions 
reductions required by CAIR, and the associated environmental benefits, 
will be achieved by the CAIR deadlines. In addition, the FIP will 
ensure that sources in all States covered by CAIR, regardless of 
whether they were included in the North Carolina section 126 petition, 
will be required to achieve emissions reductions at the same time.
    By finalizing the FIP well before the deadline for States to submit 
their CAIR SIPs, EPA is providing States an additional option for 
complying with the requirements of CAIR. States planning to adopt the 
model trading programs contained in the CAIR rule, can accept the FIP 
and significantly reduce the State resources needed to establish a 
program to implement the CAIR. Since there are no punitive consequences 
for States associated with the FIP or the finding of failure to submit 
SIPs to satisfy section 110(a)(2)(D)(i), some States could avoid much 
of the time and expense of revising their SIPs to comply with CAIR. 
Some States, particularly those subject to the NOX SIP Call, 
may need to prepare minor SIP revisions regardless of whether they 
accept the FIP implementing the requirements of CAIR; yet the time and 
expense involved would be significantly reduced.
    The EPA is finalizing, with certain changes described in section 
VI.C, the approach that a State can choose to modify the application of 
the CAIR FIP through abbreviated SIP revisions. The abbreviated SIP 
revisions approach covers specific elements of the FIP trading programs 
without submitting full SIP revisions to meet the requirements of CAIR. 
By accepting such abbreviated SIP revisions, EPA is providing 
additional options for States to comply with CAIR. A State can choose 
to retain control of these specific elements of the trading programs, 
without submitting a full SIP revision to meet the requirements of 
CAIR. As there are no sanctions associated with the FIP, EPA 
anticipates that some States will prefer to avoid spending the time and 
money necessary to submit a full SIP revision.
    The Agency will accept abbreviated SIP revisions for any or all of 
the following four specific elements of the FIP trading programs: (1) 
Provisions for otherwise unaffected units to opt-in to the FIP trading 
programs, (2) allocating annual and/or ozone season NOX, (3) 
allocating allowances from the annual NOX Compliance 
Supplement Pool (CSP), and (4) including NOX SIP Call 
trading sources that are not EGUs under CAIR in the Federal CAIR ozone 
season NOX cap-and-trade program. Upon approval of any such 
SIP revisions, EPA anticipates that the corresponding portions of the 
FIP for that State would be replaced or their application to sources 
would be modified.
    In offering a framework for abbreviated SIP revisions, the Agency 
anticipates that many States will wish to retain control over the 
allocation of allowances. Additionally, the Agency recognizes that 
States may wish to meet their NOX SIP Call obligations by 
allowing NOX budget units (that is, units in the 
NOX SIP Call trading program) that are not EGUs under CAIR 
to participate in the CAIR ozone season trading program.
    In its proposal, the EPA invited comment on the option for States 
to submit abbreviated SIPs covering specific elements of the Federal 
trading programs. A more complete discussion of the proposed 
abbreviated SIP provisions and the comments received is found in 
section VI of today's preamble.
    Thus, the FIP will increase the options available for a State to 
comply with CAIR. Through the CAIR rulemaking actions, EPA has provided 
States with a great deal of data and analyses concerning air quality 
and control costs, as well as a determination whether upwind sources 
contribute significantly to downwind nonattainment under section 
110(a)(2)(D). The EPA recognizes that States would face great 
difficulties in developing transport SIPs to meet the requirements of 
section 110(a)(2)(D) without these data and policies. Indeed, EPA 
acknowledged in the CAIR that the Agency's extensive analyses and data, 
including the multi-year operation of a federally-funded monitoring 
system (and the considerable information generated through that system) 
was a necessary element in the Agency's conclusion that it was 
appropriate to impose such requirements on States (70 FR 25267).
    States have 18 months from the signature date of the CAIR, or until 
September 11, 2006, to develop, adopt, and submit revisions to their 
SIPs that meet the requirements of CAIR. The EPA will withdraw the FIP 
once EPA approves a SIP that meets the CAIR requirements in that State.
    Having the FIP in place early provides for a transition to a CAIR 
trading program with the greatest continuity, administrative ease, and 
cost savings for States that would otherwise develop a program 
identical to the model trading programs. The EPA's goal is to have 
approvable programs in place that meet the requirements of the CAIR 
whether they are in the form of a SIP or a FIP. By finalizing a FIP 
today, EPA in no way precludes a State from developing its own SIP to 
either adopt the trading

[[Page 25340]]

rules with any discretionary elements allowed by the CAIR or from 
meeting the State emissions budget through different measures of the 
State's choosing. The EPA has considered the timing of each element of 
the FIP process to make sure to preserve each State's freedom to 
develop and implement SIPs. In this way, EPA has enhanced each State's 
options for complying with the requirements of the CAIR while ensuring 
that all the emissions reductions and environmental benefits of the 
CAIR are realized.

C. What Are the FIP Control Measures?

    In contrast to the SIP process--where selection and implementation 
of control measures is the primary responsibility of the State--in the 
case of a FIP, it is EPA's responsibility to select the control 
measures for sources and assure compliance with those measures. Thus, 
while the FIP is designed by EPA to achieve the same total emissions 
reductions described in the CAIR, the specific control measures 
assigned in the FIP may be different from what a State might choose.
    In selecting the control measures for the FIP, EPA is adopting the 
same measures used in the CAIR for calculating the required emissions 
reductions. In the CAIR, EPA is requiring States to achieve specified 
levels of emissions reductions based on levels that are achievable 
through implementation of highly cost-effective controls on EGUs. See 
the discussion in section IV of the CAIR, ``What Amounts of 
SO2 and NOX Emissions Did EPA Determine Should Be 
Reduced?'' The EPA is including by reference the technical basis and 
supporting rationale for EPA's conclusions as to the highly cost-
effective strategy developed for the CAIR.
    The SO2 and NOX cap-and-trade programs for 
the FIP are discussed below in section VI. The unit NOX 
allocations will be provided in a later action and will meet the State 
EGU budgets that are established in the CAIR for States that choose to 
meet the required emissions reductions by controlling EGUs only.

D. When and How Will EPA Remove the FIP Requirements if EPA Approves a 
SIP To Meet the CAIR?

    As discussed previously, EPA is finalizing the FIP today 
concurrently with EPA's response to the section 126 petition from North 
Carolina. The EPA intends to withdraw the FIP in a State in 
coordination with EPA's approval of a SIP for that State that meets the 
CAIR requirements. It is EPA's preference that States regulate sources 
to control the interstate transport; therefore, EPA will work with 
States to help ensure that the FIP would not need to be implemented.
    The EPA intends to withdraw the FIP requirements as soon as 
practical after receiving approvable CAIR SIP revisions. The EPA will 
work with States to ensure a timely withdrawal of the FIP and recording 
of State NOX allocations in source accounts (for States 
choosing to allocate NOX allowances). A more detailed 
discussion of the timing for recording allocations is found in section 
VI.F.1 of this preamble.

V. Emission Reduction Requirements for the CAIR FIP

A. Introduction

    In the CAIR (70 FR 25162), EPA determined that SO2 and 
NOX emissions from sources in the District of Columbia and 
the following 23 States contribute significantly to downwind 
PM2.5 nonattainment: Alabama, Florida, Georgia, Illinois, 
Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, 
Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania, 
South Carolina, Tennessee, Texas, Virginia, West Virginia, and 
Wisconsin.
    In a separate rulemaking signed the same day as this action, EPA 
finds that SO2 and NOX emissions from sources in 
Delaware and New Jersey also contribute significantly to downwind 
PM2.5 nonattainment.
    In the CAIR, the Agency also determined that the District of 
Columbia and the following 25 States contribute significantly to 
downwind 8-hour ozone nonattainment: Alabama, Arkansas, Connecticut, 
Delaware, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana, 
Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, 
New York, North Carolina, Ohio, Pennsylvania, South Carolina, 
Tennessee, Virginia, West Virginia, and Wisconsin.
    The EPA established CAIR annual SO2 and NOX 
emission reduction requirements for States that contribute 
significantly to downwind PM2.5 nonattainment and 
established NOX ozone season emission-reduction requirements 
for States that contribute significantly to downwind 8-hour ozone 
nonattainment. The CAIR requires upwind States to revise their SIPs to 
include control measures to reduce emissions of SO2 and/or 
NOX to meet the requirements in CAIR (SO2 is a 
precursor to PM2.5 formation, and NOX is a 
precursor to both ozone and PM2.5 formation).
    The CAIR requires that the emission reductions be implemented in 
two phases. The first phase of CAIR NOX reductions starts in 
2009 (covering 2009-2014) and the first phase of CAIR SO2 
reductions starts in 2010 (covering 2010-2014); the second phase of 
CAIR reductions for both NOX and SO2 starts in 
2015, covering 2015 and thereafter.
    In CAIR, EPA determined the extent of reductions required to 
eliminate significant contribution (i.e., to remove the section 
110(a)(2)(D) violation). EPA interprets significant contribution as a 
specific level of emissions that can be feasibly reduced in a highly 
cost-effective manner. The required reductions are expressed as 
statewide budgets of SO2 and NOX emissions. 
Regionwide emissions trading programs for large EGUs (within the 
constraints of the emissions caps based on these statewide emission 
budgets \12\) provide one option for eliminating significant 
contribution and thus also eliminating the section 110(a)(2)(D) 
violation. The violation is eliminated once a State adopts a SIP 
containing the CAIR trading programs (or a SIP containing other 
emission reduction options meeting the requirements specified in CAIR), 
or EPA promulgates a FIP to achieve those same reductions. The CAIR 
includes model rules for regionwide EGU SO2 annual, 
NOX annual, and NOX ozone season emission cap-
and-trade programs. States can choose to adopt these model rules (the 
CAIR SIP model trading rules) to obtain the required reductions in a 
flexible and cost-effective manner.
---------------------------------------------------------------------------

    \12\ It should be noted that the SO2 trading program 
provides that sources may bank pre-2010 title IV SO2 
allowances to be used for compliance with CAIR. These provisions 
encourage sources to make early emission reductions and ease the 
transition to the CAIR SO2 program, and as a result, 
emissions may not reflect the emission caps in any given year.
---------------------------------------------------------------------------

    Today, EPA is finalizing FIPs that implement the emission reduction 
requirements of the CAIR in all States covered by CAIR. The Agency is 
promulgating today's FIPs to provide a federal backstop for CAIR.
    EPA decided to adopt, as the FIP for each State in the CAIR region, 
the SIP model trading programs in the final CAIR, modified slightly to 
allow for federal instead of State implementation.\13\ The specific 
requirements of the FIP trading programs are explained in greater 
detail in section VI below.
---------------------------------------------------------------------------

    \13\ Today's action includes revisions to the CAIR SIP model 
rules as described in section VII in this preamble. For the FIP 
trading programs the Agency adopts the SIP model rules as finalized 
today and modified for federal implementation.
---------------------------------------------------------------------------

    The CAIR FIPs will require SO2 annual and NOX 
annual emission

[[Page 25341]]

reductions from EGUs in States contributing significantly to 
PM2.5 nonattainment and NOX ozone season emission 
reductions from EGUs in States contributing significantly to ozone 
nonattainment through participation in the regionwide cap-and-trade 
programs. The requirements of these trading programs were developed in 
the SIP model trading rules. The SIP model trading rules provide 
flexibility to the implementing organization only in certain specific 
areas. In adopting these model trading programs as FIPs, the Agency 
adopts the requirements of the model trading rules. As the implementing 
organization, therefore, it has only the same flexibility that is 
available to States that choose to implement the model trading 
programs.
    The CAIR FIP trading programs will achieve the emission reductions 
required by CAIR by the deadlines established in that rule, with the 
same highly cost-effective EGU control measures forming the basis for 
the emission budgets. The regionwide emission reduction requirements, 
State emission budgets and trading rules that are the basis for today's 
FIPs were established in the final CAIR rule. They were developed 
through a process that involved significant public participation. In 
the CAIR rulemaking, EPA determined that the CAIR emission reduction 
requirements can be met in a highly cost-effective manner using 
regionwide SO2 and NOX cap-and-trade programs for 
large EGUs (70 FR 25195-25229). The incentives provided by such 
regionwide cap-and-trade programs encourage economically efficient 
compliance over the entire region.
    The applicability provisions of the FIPs promulgated in today's 
final rule, which cover large EGUs, are identical to the applicability 
provisions in the CAIR SIP model rules including the revisions 
finalized today. See sections VI.E and VII in today's preamble for 
detailed discussion of applicability. The FIPs and the CAIR SIP model 
rules apply to large EGUs because EPA determined that their emissions 
can be reduced through the application of highly cost-effective 
controls (70 FR 25195-25229).
    During development of the CAIR, the Agency considered the 
interactions between the existing title IV Acid Rain Program and the 
new CAIR (see the preamble to the final CAIR for discussion, 70 FR 
25290). As explained in CAIR, ``In the absence of an approach for 
taking account of the title IV program, a new program (i.e., the CAIR) 
that imposes a significantly tighter cap on SO2 emissions 
for a region encompassing most of the sources and most of the 
SO2 emissions covered by title IV would likely result in a 
significant excess in the supply of title IV allowances, a collapse of 
the price of title IV allowances, disruption of operation of the title 
IV allowance market and the title IV SO2 cap-and-trade 
system, and the potential for increased SO2 emissions.'' 
These impacts would undermine the efficacy of the title IV program and 
could erode confidence in emissions trading programs in general. For 
these same reasons, today's FIP SO2 trading program is 
integrated with the title IV program (see discussion of FIP 
SO2 trading program in section VI, below). EPA was 
petitioned for and granted reconsideration of CAIR on claims that 
inequities result from applying the SO2 allocation 
methodology (which is based on title IV allocations). In the notice of 
final action on reconsideration, signed the same day as this action, 
EPA decided not to alter the approach taken in the final CAIR (see 
further discussion of reconsideration in section VI.G, below).
    Today's FIPs implement the CAIR emission reduction requirements by 
adopting the CAIR SIP model trading rules; the FIPs do not develop new 
emission reduction requirements or trading programs. For these reasons, 
the Agency did not re-open in the FIP rulemaking any elements of the 
reduction requirements and trading programs (except for the elements 
such as NOX allocations and opt-ins where States had 
flexibility) that were determined in the CAIR NFR and that were not 
modified by today's rule. By adopting as FIPs the CAIR SIP model 
trading programs, the Agency intends to implement the requirements of 
CAIR in a highly cost-effective manner and to ease the transition for 
sources that might initially be covered by the FIP programs and 
subsequently be covered by SIP programs that also adopt the model 
trading rules.
    The Agency is promulgating these FIPs to provide a Federal backstop 
for CAIR. In no way should the FIPs be viewed as a sign of any concern 
about States ultimately making the emission reductions required under 
CAIR. There are no sanctions associated with today's rule, and EPA does 
not intend CAIR FIPs to have any negative consequences for the affected 
States. To the contrary, EPA is finalizing FIP approaches that are 
flexible and allow States a full opportunity to get their SIP revisions 
in place, with minimal disruption in transitioning from Federal to 
State implementation.

B. Regionwide SO2 and NOX Caps

    Today's final rule provides a federal backstop for achieving the 
CAIR emission reduction requirements. Today's rule does not establish 
those reduction requirements, which were established in the CAIR 
rulemaking.
    In the preamble to the CAIR NFR, the Agency explained how it 
determined regionwide SO2 and NOX emissions caps. 
See section IV in the CAIR NFR preamble (70 FR 25195-25229). The EPA 
also summarized the process for determining the regionwide CAIR 
SO2 and NOX emissions caps in the preamble to the 
proposed CAIR FIP (70 FR 49722). The CAIR FIP proposal did not reopen 
for public comment EPA's determination of the CAIR regionwide caps or 
the caps themselves. The EPA received a few comments on the CAIR 
regionwide caps during the public comment process on the proposed FIP. 
Those comments are not within the scope of today's final rule. As 
discussed above, in today's FIP rule the Agency is implementing the 
emission reduction requirements (including regionwide SO2 
and NOX caps) that EPA developed in the CAIR rulemaking 
through a process that included extensive public participation.
    The CAIR regionwide caps (including the States of Delaware and New 
Jersey) are: for SO2, 3.7 million tons and 2.6 million tons 
in 2010 and 2015, respectively; for NOX annual, 1.5 million 
tons and 1.3 million tons in 2009 and 2015, respectively; for 
NOX ozone season, 0.6 million and 0.5 million tons in 2009 
and 2015, respectively.

C. State SO2 Emission Budgets

    In the preamble to the final CAIR, the EPA explained how it 
determined CAIR State annual SO2 emission budgets (see 
section V.A.1.a of the CAIR NFR preamble, 70 FR 25229-25230; see also 
the rulemaking, signed the same day as this action, to include Delaware 
and New Jersey in CAIR for PM2.5). The EPA also summarized 
the process for determining CAIR State SO2 budgets in the 
preamble to the proposed FIP (70 FR 49723). The CAIR FIP proposal did 
not reopen for public comment EPA's determination of the CAIR State 
SO2 budgets or the budgets themselves. As discussed above, 
in today's FIP rule, the Agency is implementing the emission reduction 
requirements (including State SO2 emission budgets) that EPA 
developed in the CAIR rulemaking through a process that included 
extensive public participation.
    Today's final FIP rule will achieve the required SO2 
emission reductions

[[Page 25342]]

through a regionwide SO2 cap-and-trade program for EGUs. As 
discussed further in section VI, below, the CAIR FIP SO2 
cap-and-trade program will rely on title IV allowances, which sources 
will retire at specified ratios generally greater than 1-to-1 for 
compliance with the CAIR FIP SO2 program. Congress has 
already allocated title IV SO2 allowances to sources in 
perpetuity. State SO2 emissions budgets would not affect the 
distribution of SO2 allowances for the CAIR FIP 
SO2 trading program (because SO2 allowances are 
already allocated to sources) and are not directly relevant for today's 
final FIP rule.
    After EPA finalized CAIR, the Agency was petitioned for and granted 
reconsideration on claims that inequities result from applying the CAIR 
SIP model rule SO2 allocation methodology (which is based on 
existing title IV allocations). The Agency announced its decision to 
reconsider this issue in a Federal Register action dated December 2, 
2005 (70 FR 72268) and is taking final action on the reconsideration in 
a separate action signed the same day as this action. EPA decided not 
to alter the approach taken in the final CAIR (see further discussion 
of reconsideration in section VI.G, below).
    A few commenters on the proposed CAIR FIP expressed concern with 
the use of title IV to establish State SO2 emission budgets. 
The FIP State SO2 budgets and the FIP unit SO2 
allocations are both based on existing title IV allocations. The EPA 
responds to comments on the budgets and allocations for the FIP 
together in section VI.G, below.
    The Agency is finalizing its proposed approach regarding 
SO2 budgets for the CAIR FIP SO2 trading 
programs.

D. State NOX Annual and NOX Ozone Season Emission Budgets

    In the preamble to the final CAIR, the EPA explained how it 
determined CAIR State NOX annual and NOX ozone 
season emission budgets (see section V.A.1.a of the CAIR NFR preamble, 
70 FR 25230-25233; see also the rulemaking, signed the same day as this 
action, to include Delaware and New Jersey in CAIR for 
PM2.5).
    The EPA also summarized the process for determining CAIR State 
NOX annual and NOX ozone season budgets in the 
preamble to the proposed FIP (70 FR 49723). The CAIR FIP proposal did 
not reopen for public comment EPA's determination of the CAIR State 
NOX annual and NOX ozone season budgets or the 
budgets themselves. As discussed above, in today's FIP rule the Agency 
is implementing the emission reduction requirements (including State 
NOX annual and NOX ozone season emission budgets) 
that EPA developed in the CAIR rulemaking through a process that 
included extensive public participation.
    After EPA finalized CAIR, the Agency was petitioned for and granted 
reconsideration on the use of fuel adjustment factors in determining 
CAIR State NOX annual and NOX ozone season 
emission budgets. The EPA announced its decision to reconsider this 
issue in a Federal Register notice dated December 2, 2005 (70 FR 72268) 
and is taking final action on the reconsideration in a separate action 
signed the same day as this action. EPA decided not to alter the 
approach taken in the final CAIR.
    A commenter on the proposed CAIR FIP raised concerns regarding the 
use of fuel adjustment factors in determining State NOX 
emission budgets. Concerns raised by the commenter with respect to 
EPA's use of fuel adjustment factors in determining State emission 
budgets are the same issues that the Agency is addressing in the 
context of the CAIR reconsideration process. The Agency's responses to 
this commenter on the use of fuel adjustment factors in setting FIP 
State NOX emission budgets are addressed in the CAIR 
reconsideration notice. See the December 2, 2005 Federal Register 
notice announcing the reconsideration (70 FR 72268) as well the notice 
of final action on reconsideration signed the same day as this action.
    Some commenters addressed the use of fuel adjustment factors in the 
proposed FIP methodology for unit-by-unit NOX allocations. 
The Agency's responses regarding the use of fuel adjustment factors in 
the NOX allocation methodology are discussed in section VI.F 
in this preamble.
    The State annual and ozone season EGU NOX budgets for 
today's final CAIR FIP trading programs are the same as the budgets in 
the final CAIR. For each State affected by the FIP NOX 
trading programs, the State NOX budgets are the total amount 
of allowances \14\ that the Agency will allocate to sources in the 
State or that States will allocate using an abbreviated SIP revision. 
See section VI.F, below, for EPA's methodology and schedule for 
allocating NOX allowances to affected sources.
---------------------------------------------------------------------------

    \14\ As in CAIR, a NOX annual allowance will 
authorize the emission of a ton of NOX during a calendar 
year, and a NOX ozone season allowance will authorize the 
emission of a ton of NOX during an ozone season.
---------------------------------------------------------------------------

    Table V-1 shows the State NOX emission budgets for the 
final FIP NOX cap-and-trade program. These are the same 
State NOX budgets as in the final CAIR (see Table V-2 in the 
CAIR NFR preamble (70 FR 25231); see also the rulemaking, signed the 
same day as this action, to include Delaware and New Jersey in CAIR for 
PM2.5).

    Table V-1.--CAIR FIP NOX Annual Electric Generating Units Budgets
                                 [tons]
------------------------------------------------------------------------
                                                              State NOX
                                                 State NOX      annual
                     State                         annual    budget 2015
                                                budget 2009-     and
                                                    2014      thereafter
------------------------------------------------------------------------
Alabama.......................................       69,020       57,517
Delaware......................................        4,166        3,472
District of Columbia..........................          144          120
Florida.......................................       99,445       82,871
Georgia.......................................       66,321       55,268
Illinois......................................       76,230       63,525
Indiana.......................................      108,935       90,779
Iowa..........................................       32,692       27,243
Kentucky......................................       83,205       69,337
Louisiana.....................................       35,512       29,593
Maryland......................................       27,724       23,104
Michigan......................................       65,304       54,420
Minnesota.....................................       31,443       26,203
Mississippi...................................       17,807       14,839
Missouri......................................       59,871       49,892
New Jersey....................................       12,670       10,558
New York......................................       45,617       38,014
North Carolina................................       62,183       51,819
Ohio..........................................      108,667       90,556
Pennsylvania..................................       99,049       82,541
South Carolina................................       32,662       27,219
Tennessee.....................................       50,973       42,478
Texas.........................................      181,014      150,845
Virginia......................................       36,074       30,062
West Virginia.................................       74,220       61,850
Wisconsin.....................................       40,759       33,966
                                               -------------------------
  CAIR Region Total...........................    1,521,707    1,268,091
------------------------------------------------------------------------

    Table V-2 shows the State NOX ozone season emission 
budgets for the final CAIR FIP NOX ozone season cap-and-
trade program. These are the same State NOX ozone season 
budgets as in the final CAIR (see Table V-4 in the CAIR NFR preamble 
(70 FR 25233).

    Table V-2.--CAIR FIP NOX Ozone Season Electricity Generating Unit
                                 Budgets
                                 [tons]
------------------------------------------------------------------------
                                                              State NOX
                                                 State NOX      ozone
                                                   ozone        season
                    State *                        season    budget 2015
                                                budget 2009-     and
                                                    2014      thereafter
------------------------------------------------------------------------
Alabama.......................................       32,182       26,818
Arkansas......................................       11,515        9,596
Connecticut...................................        2,559        2,559
Delaware......................................        2,226        1,855
District of Columbia..........................          112           94
Florida.......................................       47,912       39,926

[[Page 25343]]

 
Illinois......................................       30,701       28,981
Indiana.......................................       45,952       39,273
Iowa..........................................       14,263       11,886
Kentucky......................................       36,045       30,587
Louisiana.....................................       17,085       14,238
Maryland......................................       12,834       10,695
Massachusetts.................................        7,551        6,293
Michigan......................................       28,971       24,142
Mississippi...................................        8,714        7,262
Missouri......................................       26,678       22,231
New Jersey....................................        6,654        5,545
New York......................................       20,632       17,193
North Carolina................................       28,392       23,660
Ohio..........................................       45,664       39,945
Pennsylvania..................................       42,171       35,143
South Carolina................................       15,249       12,707
Tennessee.....................................       22,842       19,035
Virginia......................................       15,994       13,328
West Virginia.................................       26,859       26,525
Wisconsin.....................................       17,987       14,989
                                               -------------------------
  CAIR Region Total...........................      567,744     484,506
------------------------------------------------------------------------
* For States that have lower EGU budgets under the NOX SIP Call than
  their 2009 CAIR budget, table V-2 includes their SIP Call budget. For
  Connecticut, the NOX SIP Call budget is also used for 2015 and beyond.

E. State NOX Annual Compliance Supplement Pool

    The CAIR established State Compliance Supplement Pools (CSP) of 
NOX annual allowances of vintage 2009. In the FIP NPR, the 
Agency proposed to include in the CAIR FIP NOX trading 
program the same State CSP amounts as were established in CAIR.
    The Agency received several comments on its proposal to include the 
CAIR CSPs in the CAIR FIP NOX trading program. The EPA 
responds to comments on inclusion of the CAIR CSPs in the FIP program, 
as well as comments on EPA's proposed method for distributing CSP 
allowances to sources, in section VI.I in today's preamble, below.
    The Agency is finalizing its proposal to include the CAIR CSPs in 
the FIP trading programs. Table V-3 shows the State CSP amounts for the 
final CAIR FIP NOX trading program. These are the same CSP 
amounts as shown in the CAIR NFR preamble (see Table V-3 in the CAIR 
NFR at 70 FR 25232; see also the rulemaking, signed the same day as 
this action, to include Delaware and New Jersey in CAIR for 
PM2.5).
    The CSPs provide, for each affected State, a pool of CAIR 
NOX annual allowances from which EPA, or a State using an 
abbreviated SIP revision, can distribute allowances for use in 
complying with the CAIR FIP NOX annual trading program (see 
section VI.I in today's preamble for further discussion regarding 
distribution of CSP allowances).

       Table V-3.--CAIR FIP NOX Annual Compliance Supplement Pool
                                 [tons]
------------------------------------------------------------------------
                                                              Compliance
                           State                              supplement
                                                                 pool
------------------------------------------------------------------------
Alabama....................................................       10,166
Delaware...................................................          843
District Of Columbia.......................................            0
Florida....................................................        8,335
Georgia....................................................       12,397
Illinois...................................................       11,299
Indiana....................................................       20,155
Iowa.......................................................        6,978
Kentucky...................................................       14,935
Louisiana..................................................        2,251
Maryland...................................................        4,670
Michigan...................................................        8,347
Minnesota..................................................        6,528
Mississippi................................................        3,066
Missouri...................................................        9,044
New Jersey.................................................          660
New York...................................................            0
North Carolina.............................................            0
Ohio.......................................................       25,037
Pennsylvania...............................................       16,009
South Carolina.............................................        2,600
Tennessee..................................................        8,944
Texas......................................................          772
Virginia...................................................        5,134
West Virginia..............................................       16,929
Wisconsin..................................................        4,898
                                                            ------------
    Total..................................................      199,997
------------------------------------------------------------------------

VI. CAIR FIP NOX and SO2 Cap-and-Trade Programs 
for EGUs

A. Purpose of CAIR FIP NOX and SO2 Cap-and-Trade Programs and 
Relationship to the CAIR

    In today's action, EPA is finalizing CAIR FIP NOX and 
SO2 cap-and-trade programs for EGUs as the Implementation 
Plan remedy for CAIR. The Agency is finalizing 3 separate CAIR FIP cap-
and-trade programs: (1) SO2 annual; (2) NOX 
annual; and (3) NOX ozone season. The EPA decided to adopt, 
as the FIP for each State in the CAIR region, the model cap-and-trade 
programs in the final CAIR, modified slightly to allow for Federal 
instead of State implementation. \15\ Emissions cap-and-trade programs 
are a proven method for achieving highly cost-effective emissions 
reductions while providing regulated sources of emissions with 
flexibility in adopting compliance strategies. The incentives provided 
by regionwide cap-and-trade programs encourage economically efficient 
compliance over the entire region. The specific elements of the 3 
trading programs in the FIP were developed by EPA, with significant 
public participation, during the CAIR development process.
---------------------------------------------------------------------------

    \15\ Today's action includes revisions to the CAIR SIP model 
rules as described in section VII in this preamble. For the FIP 
trading programs the Agency adopts the SIP model rules as finalized 
today and modified for federal implementation.
---------------------------------------------------------------------------

    Participation in the new CAIR FIP NOX and SO2 
cap-and-trade programs is mandatory for all sources covered by the 
final CAIR FIP. See section VI.E in today's preamble for discussion of 
affected sources (applicability). Regulatory text for today's new CAIR 
FIP NOX and SO2 cap-and-trade programs will be 
located in part 97 in title 40 of the CFR.
    The CAIR established State EGU emissions budgets that each State 
will use to determine its required emissions reductions. Today's final 
CAIR FIP cap-and-trade programs set specific rules for EGUs to decrease 
NOX and SO2 emissions sufficiently to achieve 
emission reductions that are required under CAIR. As explained above in 
section IV, EPA will withdraw a State's FIP in coordination with 
approval of a SIP implementing the requirements of CAIR.
    States may choose to meet their emission reduction obligations 
under CAIR by adopting, as part of their SIPs, the model cap-and-trade 
rules set forth in the CAIR and participating in the EPA administered 
trading programs. Any such participation will be fully integrated with 
the CAIR FIP NOX and SO2 cap-and-trade programs 
that are finalized in today's action.
    In order to be eligible to participate in an emissions cap-and-
trade program, the Agency believes that there are two principal 
criteria that sources must meet, as stated in the supplemental proposal 
for the NOX SIP Call (62 FR 25923). The first criterion 
requires that sources be able to account accurately and consistently 
for all of their emissions to ensure the trading program goal of 
maintaining emissions within a cap. Emissions monitoring must be 
accurate and consistent among all sources so that each allowance turned 
in, represents its assigned amount of emissions. The second criterion 
for participation in a trading program is the ability to identify a 
responsible party for each regulated source who would be accountable 
for demonstrating and ensuring compliance with the program's 
provisions. The EPA believes that today's rule meets those criteria. 
The Agency also believes that, because

[[Page 25344]]

today's rule contains the same mandatory program elements as are in the 
part 96 CAIR SIP model trading programs and is designed to meet the 
same environmental goals and caps sources at the same levels as those 
model trading programs, it is appropriate to integrate today's CAIR FIP 
with the CAIR SIP trading programs.
    Sources subject to trading programs under the FIP and sources in 
States choosing to participate in the EPA-administered CAIR SIP trading 
programs will be able to trade allowances with one another under common 
emissions caps across participating States. Integration of the trading 
programs reduces the possibility of inconsistent or conflicting 
deadlines or requirements, increases the potential cost savings for 
sources, and streamlines program administration. Unnecessary 
inconsistency in trading programs could hamper sources' ability to plan 
and achieve the needed reductions as cost effectively as possible. In 
addition, if a State submits and EPA approves a SIP revision including 
the CAIR SIP model trading programs after EPA establishes trading 
programs under today's FIP, disruptions to sources that shift from 
regulation under a FIP to regulation under a SIP will be minimized due 
to the consistency between the respective CAIR SIP and FIP programs.
    The EPA establishes (in part 97) the geographic boundaries of the 
common trading programs as those States that submit SIP revisions in 
response to the CAIR implementing the EPA-administered trading programs 
or that are subject to FIPs. The EPA will administer these common 
trading programs in collaboration with affected States.
    For the final CAIR FIP NOX and SO2 cap-and-
trade programs, EPA adopted the CAIR model trading programs with slight 
revisions to allow for Federal implementation. The FIP trading programs 
are thus virtually identical to the CAIR SIP model trading programs. 
The CAIR FIP cap-and-trade programs include all of the mandatory 
elements that States are required to include in their SIPs in order to 
participate in the EPA-administered cap-and-trade programs for CAIR.
    The Agency is finalizing, with certain changes described in section 
VI.C, the proposal to provide States that are subject to today's CAIR 
FIP requirements with the option to submit abbreviated SIP revisions 
covering specific elements of the FIP trading programs without 
submitting full SIP revisions to meet the requirements of CAIR. See 
section VI.C in this preamble for further discussion of abbreviated SIP 
revisions.

B. Relationship of Emissions Trading Programs to Section 126 Relief

    In section II of today's preamble, EPA responds to commenters who 
argued that, because a CAIR SIP could or the CAIR FIP would reflect a 
trading component, such an implementation plan would not satisfy 
section 126 as a matter of law. As explained in section II, these 
arguments assume that the Agency must grant the petition, which is not 
EPA's view so long as the underlying SIP deficiencies are rectified.
    Although EPA is denying the section 126 petition as discussed 
elsewhere in today's preamble, based on modeling projections the Agency 
believes that sources in States upwind of North Carolina will reduce 
emissions under the CAIR trading regime.
    As discussed in the FIP NPR (70 FR 49737), EPA believes that upwind 
sources in States that were found to contribute significantly to North 
Carolina nonattainment will in fact reduce emissions of 
PM2.5 precursors under the CAIR trading regime. The Agency 
explained that its Integrated Planning Model (IPM) \16\ analysis 
conducted for the CAIR NFR--which assumes emissions trading--projects 
decreases in annual SO2 and NOX emissions under 
CAIR compared to the Base Case (i.e., compared to projections without 
CAIR) in both 2010 and 2015 for each of the States found in the CAIR 
NFR analysis to contribute significantly to nonattainment of the 
PM2.5 NAAQS in North Carolina.
---------------------------------------------------------------------------

    \16\ The IPM is a multiregional, dynamic, deterministic linear 
programming model of the U.S. electric power sector. The Agency uses 
IPM to examine costs and, more broadly, analyze the projected impact 
of environmental policies on the electric power sector in the 48 
contiguous States and the District of Columbia.
---------------------------------------------------------------------------

    The EPA further explained that the Agency's CAIR modeling--which, 
again, assumes interstate emissions trading--projects that under CAIR 
by 2010, with the projected emission reductions, there will be no 
remaining PM2.5 nonattainment counties in North Carolina. 
Thus, the emission reductions under CAIR are projected to be sufficient 
to eliminate PM2.5 nonattainment in North Carolina and, 
necessarily, no States will contribute to nonattainment.\17\ This 
discussion of the Agency's analysis of CAIR is informational and is not 
intended to reopen or reconsider any issue related to that analysis.
---------------------------------------------------------------------------

    \17\ IPM emissions modeling conducted for the final CAIR is in 
the CAIR docket EPA-HQ-OAR-2003-0053; air quality modeling results 
are in the Air Quality Modeling Technical Support Document for the 
Final Clean Air Interstate Rule, March 2005, Appendix F; see also 
Table VI-10 to the preamble of the CAIR final rule at 70 FR 25251.
---------------------------------------------------------------------------

    As discussed in section II in today's preamble, some commenters 
argued that relief under section 126 must occur within 3 years and 
therefore that the CAIR emission reductions do not satisfy section 126 
because although those reductions commence within 3 years they are 
phased in over a longer time. We respond to legal arguments in section 
II, above.
    In any case, the EPA believes that many emission sources in States 
upwind of North Carolina will install NOX and/or 
SO2 emission control technology before 2009. As explained 
above, EPA modeling projects that North Carolina will come into 
attainment of the PM2.5 standards by 2010 under CAIR, 
including trading programs. Much of the emission reductions that will 
bring North Carolina counties into attainment with the PM2.5 
standards will result from use of selective catalytic reduction (SCR) 
for NOX control and flue gas desulphurization (FGD) for 
SO2 control on units in upwind States. For the following 
reasons, EPA believes that many of these controls will be installed 
before 2009.
    Early emission reductions occur for several reasons. Today's CAIR 
FIP trading rules and the CAIR SIP model trading rules include 
incentives for early emission reductions. For example, sources may bank 
title IV SO2 allowances into the CAIR FIP or CAIR SIP 
SO2 trading programs (see section VI.I, below, for further 
discussion of incentives for early reductions). Another reason why 
sources may reduce emissions early is the need to stagger control 
installations at plants where multiple units will be retrofitted to 
avoid operational disruptions.
    As discussed elsewhere in today's preamble, the 10 States that EPA 
determined in CAIR contribute to North Carolina's nonattainment of the 
PM2.5 standards are Alabama, Georgia, Indiana, Kentucky, 
Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West 
Virginia. Table VI-1, below, summarizes for these 10 States the total 
coal-fired electric generating capacity expected to be on-line by the 
end of 2006 as well as the portion of that capacity expected to be 
controlled with SCR or FGD.\18\ In addition, the table

[[Page 25345]]

summarizes for the 10 States the generating capacity that EPA expects 
to be controlled with SCR or FGD through the end of 2008 based on 
research that the Agency conducted for today's action.\19\ The table 
also summarizes for the 10 States the generating capacity that EPA 
projects will be controlled with SCR or FGD by the end of 2010 based on 
IPM modeling projections.\20\ As Table VI-1 indicates, many of the 
emission controls that EPA's modeling projects will be installed by the 
end of 2010 are actually likely to be installed before 2009.
---------------------------------------------------------------------------

    \18\ Generating capacity through the end of 2006 (with capacity 
greater than 25 MWe) based on EPA's v.2.1.9 NEEDS database (2004). 
Capacity expected to be controlled with SCR or FGD by the end of 
2006 based on research EPA conducted on planned control retrofits on 
coal-fired units.
    \19\ This includes expected capacity (greater than 25 MWe) with 
control retrofits through the end of 2008 based on EPA research of 
planned control retrofits on coal-fired units. Research included 
searching the Internet for company announcements regarding contracts 
for control retrofits. For 2007 and 2008 retrofits EPA focused its 
research on units with capacity greater than 100 MWe; if smaller 
units were included, we might have identified additional planned 
retrofits.
    \20\ These 2010 projections are from IPM modeling conducted for 
the final CAIR and include units with capacity greater than 25 MWe 
(IPM version 2.1.9, 2004).

   Table VI-1.--SCR and FGD Summary for 10 States Contributing to North Carolina's Nonattainment of the PM2.5
                                                    Standards
----------------------------------------------------------------------------------------------------------------
                                        Expected capacity with   Expected capacity with  Projected capacity with
 Total generating capacity by end of     emission controls by     emission controls by     emission controls by
                 2006                        end of 2006              end of 2008         end of 2010 under CAIR
----------------------------------------------------------------------------------------------------------------
132 GW (466 units)...................  SCR: 67 GW (126 units).  SCR: 70 GW (130 units).  SCR: 82 GW (184 units)
                                       FGD: 48 GW (111 units).  FGD: 64 GW (137 units).  FGD: 73 GW (167 units)
----------------------------------------------------------------------------------------------------------------

    EPA believes that even more controls may be installed before 2009 
than were identified in the Agency's research. It is reasonable to 
suppose that, once CAIR SIP revisions are submitted and approved, 
additional plans for control retrofits will be adopted due to SIP 
revisions.
    Some commenters supported the use of trading programs in connection 
with a section 126 remedy and some did not. A commenter, using South 
Carolina as an example, questioned why emissions can be above State 
budget amounts through allowance trading. This commenter points out 
that EPA's IPM modeling for CAIR projects emissions in South Carolina 
above the State's 2015 SO2 emissions budget 5 years after 
2015 and asserts that emissions over the State budget ``will still 
contribute to attainment problems in North Carolina.'' However, as 
explained above, based on modeling for CAIR--which assumes interstate 
emissions trading--by 2010 there will be no remaining PM2.5 
nonattainment counties in North Carolina. In other words, the EGU 
emission reductions projected by IPM to occur under the CAIR trading 
regimes are the amounts that are projected to be sufficient to bring 
North Carolina into attainment in 2010, regardless of whether for some 
States emissions are projected to be above the State EGU emissions 
budgets.

C. Abbreviated SIP Revisions Covering Elements of the CAIR FIP Cap-and-
Trade Programs

    In the FIP NPR (70 FR 49720, 49727-49739), the Agency proposed to 
provide States that are covered by CAIR with the option to submit 
abbreviated SIP revisions covering specific elements of the CAIR FIP 
trading programs without submitting full SIP revisions to meet the 
requirements of CAIR. By proposing to accept such abbreviated SIP 
revisions, the Agency intended to increase the options available for 
States to comply with CAIR. A State could choose to retain control of 
these specific elements of the trading programs without submitting a 
full SIP revision.
    As proposed, a State would submit an abbreviated SIP revision that 
would modify the application of certain elements of the FIP in order to 
better meet the needs of the State. The EPA proposed that a State could 
choose to modify the application of the FIP through abbreviated SIP 
revisions that would do any or all of the following:
     Make applicable, to the State, provisions in the FIP for 
otherwise unaffected units to opt into the FIP trading programs,
     Allow the State, rather than EPA, to allocate 
NOX annual and/or NOX ozone season allowances,
     Allow the State, rather than EPA, to allocate allowances 
from the NOX annual Compliance Supplement Pool (CSP), and
     Include NOX SIP Call trading sources that are 
not EGUs under CAIR in the CAIR FIP NOX ozone season cap-
and-trade program.
    As there are no sanctions or penalties for leaving the CAIR FIP 
trading programs in place, EPA anticipates that some States may prefer 
to avoid spending the time and money necessary to submit a full SIP 
revision and may just modify the application of certain parts of the 
FIP.
    The final CAIR (70 FR 25162) requires States to submit SIP 
revisions complying with the CAIR requirements to the Agency by 
September 11, 2006 and to submit the initial set of NOX 
allocations by October 31, 2006.
    In the CAIR FIP NPR, the Agency proposed that States choosing to 
submit abbreviated SIP revisions addressing the specific elements 
identified in the proposal would be required to submit such revisions 
to EPA by March 31, 2007, and--if choosing to address NOX 
allocations in an abbreviated SIP revision--would be required to submit 
the initial set of NOX allocations by September 30, 2007 (70 
FR 49731).\21\ The EPA proposed allowing States to submit abbreviated 
SIP revisions later than full revisions because the Agency anticipates 
that it will be able to complete the approval process more quickly for 
abbreviated revisions due to their narrower scope.
---------------------------------------------------------------------------

    \21\ The proposed regulatory text at Sec.  51.123 (70 FR 49746) 
would require States using the abbreviated SIP revision approach for 
NOX allocations to notify EPA of such allocations by 
September 30, 2007 for 2009, 2010 and 2011. Through an inadvertent 
error, the preamble listed a different date--the preamble indicated 
that the proposed deadline for such allocations would be October 31, 
2007 (70 FR 49731). The Agency intended the proposed date to be 
September 30, 2007 as indicated in the regulatory text.
---------------------------------------------------------------------------

    The Agency proposed to include appendices in part 97 that will be 
amended in the future to list any States for which the Administrator 
approves abbreviated SIP revisions covering opt-ins, allocation of 
NOX allowances, distribution of CSP allowances, or inclusion 
of non-CAIR NOX SIP Call trading sources in the CAIR FIP 
NOX ozone season trading program.
    The Agency received a number of comments on its proposal to allow 
submission of abbreviated SIP revisions for CAIR. Several commenters 
supported the abbreviated SIP revision approach. A commenter states 
that the approach provides States added flexibility, helps facilitate 
eventual transitions from a FIP-implemented to a State-implemented 
CAIR, and provides

[[Page 25346]]

sources with better certainty regarding key operational elements (such 
as NOX allocations) over the initial years of the program. 
Commenters generally supported the choice of specific elements that EPA 
proposed to allow States to control using abbreviated SIP revisions.
    Several commenters argued against the Agency's proposed submission 
deadline for abbreviated SIP revisions. Commenters who argued against 
the proposed submission deadline generally did so in relation to the 
timing for NOX allocations. The EPA discusses the schedule 
for determining and recording NOX allocations in detail in 
the NOX allocations section in today's preamble (section 
VI.F, below) and responds in that section to commenters' concerns 
regarding submission deadlines for abbreviated SIP revisions in 
relation to NOX allocation timing.
    One commenter that did not support the proposal for abbreviated SIP 
revisions suggested that allowing such revisions to be submitted later 
than the deadline for a full SIP revision sets a poor procedural 
precedent. The Agency disagrees. The proposal to allow abbreviated SIP 
revisions for CAIR is based on the unique circumstances in this case 
and does not set precedent for other different circumstances.
    The EPA is finalizing, with certain changes described below, the 
approach that a State can choose to modify the application of the CAIR 
FIP through abbreviated SIP revisions that do any or all of the 
following:
     Make applicable, to the State, provisions in the FIP for 
otherwise unaffected units to opt into the FIP trading programs,
     Allow the State, rather than EPA, to allocate annual and/
or ozone season NOX allowances,
     Allow the State, rather than EPA, to allocate allowances 
from the annual NOX Compliance Supplement Pool (CSP), and
     Include NOX SIP Call trading sources that are 
not EGUs under CAIR in the CAIR FIP NOX ozone season cap-
and-trade program.
    Thus a State could choose, through its abbreviated SIP revision, to 
bring its NOX SIP Call trading sources that are not EGUs 
under CAIR from the NOX SIP Call trading program into the 
CAIR NOX ozone season trading program.
    With regard to the provision allowing an abbreviated SIP revision 
to provide for State allocation of annual and/or ozone season 
NOX allowances, EPA is revising that provision to give 
States the same flexibility concerning such allocations as States have 
in a full SIP revision. In a full SIP revision, States have the option 
of allocating allowances to CAIR units or to other entities (such as 
renewable energy facilities) or of auctioning allowances. The States 
must submit the CAIR unit allocations to the Administrator by specified 
deadlines so that the allowances can be recorded in the allowance 
tracking system, but the requirements for a full SIP revision do not 
address what happens if the State fails to meet these deadlines. In 
contrast, under the proposed provision for an abbreviated SIP revision 
allowing for State allowance allocations, a State's allocation 
provisions must provide that, if a State does not inform the 
Administrator of the allocations to CAIR units by the specified 
deadlines, the Administrator will assume that the units get the same 
allocations for the year as in the prior year and will record such unit 
allocations. (EPA notes that the deadline for submitting the initial 
set of allocations is changed, as described below, from the proposed 
deadline of September 30, 2007 to April 30, 2007.)
    The difficulty with the proposed approach is that it assumes that 
the State is distributing (not auctioning) allowances and is providing 
them to CAIR units (not to other entities). In order to clarify that 
States have the same flexibility in allocating in abbreviated SIP 
revisions and full SIP revisions, EPA is removing the abbreviated SIP 
revision language concerning the Administrator's actions in the event a 
State fails to inform in a timely manner the Administrator of the 
allocations. However, it should be noted that the provisions for both 
abbreviated SIP revisions and full SIP revisions set deadlines for 
State submission of allocations to the Administrator for recordation 
and that, in reviewing such SIP revisions, EPA intends to ensure that 
the SIP revisions are consistent with those deadlines.
    With regard to the provision allowing an abbreviated SIP revision 
to provide for State allocation of the CSP, EPA is revising that 
provision to give States the same flexibility with regard to CSP 
allocations as States have in a full SIP revision. Under Sec.  
51.123(e)(4)(iii), States may use in a full SIP revision one or both of 
the mechanisms described for CSP allocation, one based on early 
reductions and one based on need. Under the proposed provision for an 
abbreviated SIP revision concerning State CSP allocations, a State must 
use the allocation methods detailed in either Sec.  96.143 or Sec.  
97.143. In order that an abbreviated SIP revision provides States the 
same flexibility as a full SIP revision, EPA is revising the 
abbreviated SIP revision language to give States the options of using 
the Sec.  96.143 or Sec.  97.143 provisions or the provisions under 
Sec.  51.123(e)(4).
    The EPA will include appendices in part 97 that will be amended in 
the future to list any States for which the Administrator approves 
abbreviated SIP revisions covering any of the 4 specific elements 
listed above. The EPA anticipates coordinating such amendments of the 
appendices with the Administrator's final decision to approve such SIP 
revisions.

D. Overall Structure of the CAIR FIP Cap-and-Trade Programs

    In the CAIR NFR, the Agency provided SIP model rules for the CAIR 
NOX annual, CAIR NOX ozone season, and CAIR 
SO2 annual trading programs that States can use to meet the 
emission reduction requirements in the CAIR (in part 96). For the final 
CAIR FIP cap-and-trade programs, EPA decided to adopt the CAIR SIP 
model rules with minor changes to allow for Federal implementation.
    The emission reductions mandated by today's final rule will be 
achieved from EGUs (see sections VI.E and VII, below, for discussion of 
applicability provisions).
    The CAIR FIP cap-and-trade programs rely on the detailed unit-level 
emissions monitoring and reporting procedures of part 75 and consistent 
allowance management practices. All affected sources are required to 
monitor and report their emissions using part 75. Source information 
management, emissions data reporting, and allowance trading will be 
accomplished using on-line systems similar to those currently used for 
the Acid Rain SOX and NOX SIP Call trading 
programs.
    The penalty provisions for excess emissions under today's FIP 
trading programs were also adopted from the CAIR model trading rules. 
As discussed in section VII in today's preamble, the Agency revised the 
excess emission penalties in the CAIR SO2 trading program to 
clarify the penalties for units that have excess emissions under both 
the Acid Rain Program and the CAIR SO2 trading program. The 
penalty provisions adopted for the final FIP thus are the excess 
emissions penalty provisions in the CAIR with the revised CAIR 
SO2 trading program penalties.
1. SO2 Annual Program
    The final CAIR FIP SO2 cap-and-trade program requires 
affected sources to hold SO2 allowances sufficient to cover 
their emissions for each control period. For the FIP SO2 
program, EPA decided to adopt the CAIR model SO2 trading 
rule (with minor changes to allow for Federal implementation) which is 
based

[[Page 25347]]

on the existing Acid Rain Program and relies on title IV SO2 
allowances.
    As in the CAIR SIP SO2 model trading program, the 
SO2 reductions for the CAIR FIP SO2 trading 
program will be achieved by requiring sources to retire, in most cases, 
more than one title IV allowance for each ton of SO2 
emissions.\22\ Sources can use pre-2010 title IV SO2 
allowances for compliance with the CAIR FIP SO2 cap-and-
trade program at a 1-to-1 ratio (i.e., SO2 allowances of 
vintage 2009 and earlier will offset one ton of SO2 
emissions). Allowances of vintages 2010 through 2014 will offset 0.5 
tons of emissions (i.e., such allowances will need to be retired at a 
ratio of 2-to-1 for CAIR compliance, in other words 2 allowances for 
every ton of emissions). Allowances of vintages 2015 and beyond will 
offset 0.35 tons of emissions (i.e., such allowances will need to be 
retired at a ratio of 2.86-to-1, in other words 2.86 allowances for 
every ton of emissions). The emission value of an SO2 
allowance is independent of the year in which it is used, but rather is 
be based on its vintage (i.e., the year for which the allowance is 
issued). These SO2 allowance retirement ratios are the 
retirement ratios in the CAIR NFR, which EPA adopted in the CAIR FIP 
SO2 trading program (see discussion in section VII in the 
CAIR NFR preamble at 70 FR 25255-25273, as well as in section IX at 70 
FR 25290-25291).
---------------------------------------------------------------------------

    \22\ Allowances of pre-2010 vintage will be retired at a ratio 
of one allowance per ton of emissions. For allowances of later 
vintages, more than one allowance will be retired per ton of 
emissions.
---------------------------------------------------------------------------

    The Agency uses the single term, ``CAIR SO2 allowance, 
'' to refer to an SO2 allowance under a CAIR SIP using the 
model trading rule or CAIR FIP.\23\ A CAIR SO2 allowance can 
be used for compliance with the SO2 allowance-holding 
requirement in a CAIR SIP or CAIR FIP SO2 trading program. 
Sources in States governed by either of these SO2 trading 
programs can trade CAIR SO2 allowances with each other.
---------------------------------------------------------------------------

    \23\ A CAIR SO2 allowance is generally a tilte IV 
SO2 allowance; the only exception is where a State adopts 
the provisions allowing units not otherwise covered by the CAIR 
SO2 trading program to opt in and allocates allowances 
(which are not title IV allowances) to such units. For purposes of 
compliance with the EPA-administered CAIR SIP SO2 trading 
program or with the CAIR FIP SO2 trading program in 
today's rule, the value of SO2 allowances are discounted 
based on the allowance vintage year, as explained above.
---------------------------------------------------------------------------

2. NOX Annual Program
    The final CAIR FIP NOX annual cap-and-trade program 
requires affected sources to hold NOX annual allowances 
sufficient to cover their emissions for each control period. For the 
FIP NOX trading program, EPA adopted the CAIR SIP model 
NOX trading program with minor revisions to allow for 
Federal implementation. The FIP NOX program relies on CAIR 
NOX annual allowances that will be allocated to affected 
units by the EPA (see section VI.F in today's preamble for discussion 
of the methodology and schedule for allocating NOX 
allowances) or allocated by States using abbreviated SIP revisions. A 
NOX annual allowance authorizes the emission of one ton of 
NOX.
    The Agency is finalizing the proposed Compliance Supplement Pool 
(CSP) of allowances that will be allocated to sources and can be used 
for compliance with the CAIR FIP NOX annual cap-and-trade 
program. See sections V and VI.I in today's preamble for further 
discussion of the CSP.
    NOX ozone season allowances issued under the 
NOX SIP Call or under the CAIR FIP NOX ozone 
season trading program can't be used for compliance with the CAIR FIP 
NOX annual reduction requirement. (Pre-2009 NOX 
ozone season allowances issued under the NOX SIP Call can be 
banked into the CAIR FIP NOX ozone season program; see 
discussion of FIP NOX ozone season program, below.)
    The Agency uses the single term, ``CAIR NOX allowance,'' 
to refer to a NOX allowance issued under a CAIR SIP using 
the model trading rule or CAIR FIP. A CAIR NOX allowance can 
be used for compliance in a CAIR SIP or CAIR FIP NOX annual 
trading program. Sources in States governed by either of these 
NOX annual trading programs can trade CAIR NOX 
allowances with each other.
3. NOX Ozone Season Program
    The final CAIR FIP NOX ozone season cap-and-trade 
program requires affected sources to hold CAIR NOX ozone 
season allowances sufficient to cover their emissions for each control 
period. For the ozone season program, the control period extends from 
May 1 through September 30 for each year of the program. For this 
trading program also, EPA adopted the trading program from the CAIR SIP 
model NOX ozone season trading rule with minor modifications 
to allow for Federal implementation. Under the FIP program, a 
NOX ozone season allowance authorizes the emission of one 
ton of NOX during the ozone season.
    The FIP program relies on CAIR NOX ozone season 
allowances that will be allocated to affected sources by the EPA (see 
section VI.F in today's preamble for discussion of the methodology and 
schedule for allocating NOX allowances) or allocated by 
States using abbreviated SIP revisions. In addition, pre-2009 
NOX SIP Call allowances can be banked into the CAIR FIP 
NOX ozone season program and used by affected sources for 
compliance with that program. NOX allowances issued under 
the CAIR FIP NOX annual program can't be used for compliance 
with the CAIR FIP NOX ozone season reduction requirement.
    As discussed in the CAIR NFR and the CAIR FIP NPR, certain emission 
sources that do not meet the applicability requirements of CAIR are 
included in the existing EPA-administered NOX Budget Trading 
Program under the NOX SIP Call. (The types of NOX 
Budget Trading Program units that are not EGUs under CAIR include 
industrial boilers and turbines, cement kilns, and small EGUs.) As 
explained in the CAIR NFR and CAIR FIP NPR, EPA will no longer 
administer the NOX SIP Call ozone season cap-and-trade 
program for ozone seasons after 2008; however, NOX SIP Call 
requirements will remain in place. The CAIR NFR provides that States 
that choose to participate in the CAIR EPA-administered NOX 
ozone season cap-and-trade program may choose whether or not to bring 
their non-CAIR NOX SIP Call trading sources into the CAIR 
ozone season trading program, through their SIP revisions. Bringing the 
non-CAIR NOX SIP Call trading sources into the CAIR ozone 
season program is one way to continue to meet NOX SIP Call 
requirements. See section VII in the CAIR NFR (70 FR 25255-25273) and 
section IX.A. (70 FR 25289-25290).
    As discussed above, the Agency is finalizing its proposal that 
States may choose to submit an abbreviated SIP revision to bring their 
non-CAIR NOX SIP Call trading sources into the CAIR FIP 
NOX ozone season cap-and-trade program. The abbreviated SIP 
revision may increase a State's NOX ozone season trading 
budget under the CAIR FIP NOX ozone season cap-and-trade 
program by an amount equal to the portion of the State's NOX 
SIP Call State trading budget that is attributed to such units.
    The Agency uses the single term, ``CAIR NOX Ozone Season 
allowance,'' to refer to a NOX ozone season allowance issued 
under a CAIR SIP using the model trading rule or CAIR FIP. A CAIR 
NOX ozone season allowance could be used for compliance in a 
CAIR SIP or CAIR FIP NOX ozone season trading program. 
Sources in States governed by either of these NOX ozone 
season trading programs can trade CAIR NOX Ozone Season 
allowances with each other.

[[Page 25348]]

E. Sources Subject to the CAIR FIP Cap-and-Trade Programs

    Under the proposed CAIR FIP cap-and-trade programs, only EGUs were 
subject to the proposed rules. The proposed applicability provisions 
are, by design, identical to the provisions for applicability the CAIR 
SIP model trading programs and incorporated the FIP NPR revisions to 
the applicability provisions of the final CAIR SIP model trading rules. 
The revisions to CAIR SIP model rule applicability include exemptions 
for (1) municipal solid waste incinerators and (2) existing units that 
have not served a generator since before November 15, 1990. 
Incorporating these exemptions into the applicability provisions in 
both the CAIR SIP and CAIR FIP trading programs provides clarity and 
aligns the provisions more closely with the provisions in the title IV 
Acid Rain Program. A detailed discussion of the rationales for 
including these exemptions may be found in section VII of the CAIR FIP 
NPR. (See section VIII.C. in the CAIR NFR preamble for applicability 
discussion at 70 FR 25276-25278 and section VII in today's preamble for 
additional discussion of changes to the CAIR EGU definition).
    Public comment on the proposed applicability provisions of the CAIR 
FIP trading programs primarily expressed interest in additional 
exemptions for waste coal-fired units, biomass-fired units, and low 
emissions units. These are discussed in detail below.
    Applicability in the Final CAIR FIP. Today's action finalizes that, 
in any jurisdiction for which a final CAIR FIP is promulgated, units 
will be subject to the CAIR FIP trading programs (i.e., to the CAIR FIP 
SO2, NOX annual, or NOX ozone season 
programs, as appropriate) if they are stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine serving at 
any time, since the later of November 15, 1990 or the start-up of the 
unit's combustion chamber, a generator with nameplate capacity of more 
than 25 MWe producing electricity for sale. Certain cogeneration units 
or solid waste incinerators are exempt from the CAIR FIP and are 
described below.
    Cogeneration Unit Exemption. As in the CAIR NFR, certain 
cogeneration units are exempt from the CAIR FIP trading programs. 
Cogeneration units include units having equipment used to produce 
electricity and useful thermal energy for industrial, commercial, 
heating, or cooling purposes through sequential use of energy and 
meeting certain operating and efficiency standards. The program has 
different applicability provisions for non-cogeneration units and 
cogeneration units. Any cogeneration unit, serving (since the later of 
November 15, 1990 or the start-up of the unit), a generator with a 
nameplate capacity of greater than 25 MW and supplying more than \1/3\ 
potential electric output capacity and more than 219,000 MW-hrs 
annually to any utility power distribution system for sale, will be 
subject to the requirements of the CAIR FIP trading rules. Otherwise, 
the unit will qualify for an exemption under the FIP rules. This 
cogeneration unit exemption is identical to the exemption in the CAIR 
NFR, as revised by today's action. Section VIII.C.3. of the CAIR NFR 
preamble describes the cogeneration unit exemption and discusses the 
specific elements of how units would qualify and remain qualified for 
the exemption (70 FR 25276-25278).
    Solid Waste Incinerator Exemption. Today's action includes an 
exemption for certain solid waste incinerators in both the CAIR and 
CAIR FIP cap-and-trade programs. Specifically, a solid waste 
incineration unit commencing operation before January 1, 1985, for 
which the average annual fuel consumption of non-fossil fuels during 
1985-1987 exceeded 80 percent and during any 3 consecutive calendar 
years after 1990 the average annual fuel consumption of non-fossil 
fuels exceeds 80 percent, is not subject to either the CAIR or CAIR FIP 
cap-and-trade programs. (Section VII of the preamble for today's rule 
provides additional discussion.)
    Individual Unit Opt-ins. Today's action includes provisions for 
individual units to opt-in to the CAIR FIP trading programs. These 
units, when they opt-in, become ``affected'' by the CAIR FIP trading 
program and, as a result, must comply with allowance holding 
requirements, monitor and report emissions, and receive CAIR 
allowances.
    The opt-in provisions of the CAIR FIP trading programs would become 
applicable to sources in a given State only if the State chooses to 
submit an abbreviated SIP revision that would provide for the inclusion 
of opt-ins in the CAIR FIP trading programs. The EPA considered 
requiring all States to have opt-in provisions in the proposed CAIR FIP 
trading programs. By not requiring opt-in provisions in all States 
covered by the proposed FIP trading programs, the Agency seeks to 
preserve the States' flexibility to decide whether to allow opt-in 
units. In addition, the EPA believes that including opt-in provisions 
only in States that have elected to include them in an abbreviated SIP 
revision avoids the possibility of ``stranding'' some opt-in units. 
More specifically, this requirement avoids a situation where a unit 
might make investments based upon assumption that it will opt-in to a 
CAIR FIP trading program only to be stranded if the CAIR FIP program 
was later supplanted by EPA approving a CAIR SIP submitted by the State 
that did not include opt-in provisions.
    If States choose to submit abbreviated SIP revisions to provide for 
the inclusion of opt-ins in the CAIR FIP trading programs, the SIP 
revisions must include the opt-in provisions that are provided in the 
CAIR final rule. See section VIII.G. of the CAIR NFR preamble for 
discussion of opt-in provisions (70 FR 25286-25288).
    Waste Coal-Fired Units Under CAIR FIP. The EPA received comments 
requesting an exemption for waste coal-fired units from both the CAIR 
and CAIR FIP SO2 annual programs. Some commenters claimed 
that their costs to comply with the programs are excessively high. The 
economics of a waste coal-fired unit are different depending upon 
whether the unit has a fixed price power purchase agreement in place or 
whether it is selling electricity on the wholesale market.
    Units that had power purchase agreements with fixed prices in place 
on November 15, 1990, are exempt from title IV and do not receive title 
IV allowances. The commenters state that, while their agreements are in 
effect, these units are not able to pass through cost increases, such 
as the cost of compliance with CAIR, except where specific escalations 
are provided (e.g., compensation for increases in fuel costs or 
inflation).
    While under the agreements and exempt from title IV, the units can 
opt into the title IV program and receive allowances as opt-in units. 
Commenters claim that the title IV opt-in provisions could allocate 
allowances to them at levels below their projected emissions because 
the years on which title IV bases the allocations are early in the 
units operation and might under-represent the unit's typical heat 
input. The commenters add that it is not cost effective for the units 
to reduce SO2 emissions by installing advanced emission 
controls because the units already achieve significant reductions and 
have fixed price contracts that do not allow them to pass through 
control costs.
    The second scenario is the period beginning when the units' power 
purchase agreements expire and the units lose their title IV exemption. 
As title IV affected units, they lose their

[[Page 25349]]

title IV opt-in status and can no longer receive title IV allowances 
under the title IV opt-in provisions. These units are no longer locked 
into their power purchase contracts and are free to participate in the 
wholesale electricity markets. The commenters contend that reducing 
emissions--even when they are free to pass through the cost of 
compliance--is not cost-effective, because most waste coal-fired 
facilities already operate at lower SO2 emission rates than 
many other sources. This, however, belies the real issue, since under a 
trading program, sources have multiple compliance options including 
installing emission controls, switching fuels or purchasing allowances. 
If a source's control costs are above the marginal cost of control in 
the region, the unit is likely to comply by purchasing allowances, 
thereby reducing their cost of control to the market price.
    In general, information regarding the cost of generation, 
electricity markets, and cost of controlling emissions may be found 
through publicly available sources. This information is used, and in 
some cases developed, by EPA in its regulatory efforts (e.g., IPM 
modeling results, technical support documents (TSD) examining the cost 
and feasibility of control options). However, information regarding 
specific terms of the contracts, such as found in the power purchase 
agreements of the waste coal-fired units, is generally proprietary and 
is claimed to vary widely from contract to contract. Although complete 
information on contracts (e.g., the fixed price for electricity, price 
escalators) could have been provided in order to perform a thorough 
analysis, commenters provided EPA with some limited information (much 
of it after the public comment period closed) that did not support the 
commenters' case for the broad closure of waste coal-fired units as a 
category of sources. In addition, commenters presented some limited 
analysis of the ratio of their estimated cost of compliance with CAIR 
to their projected revenue. Again, EPA's evaluation of this limited 
analysis showed that it did not support the commenters claims that they 
would not be economically viable. (The results of EPA's evaluation of 
the commenters' analysis are discussed later in this section.) Because 
the unit-specific information provided by the commenters was limited, 
EPA conducted an analysis using generally available information to 
evaluate the potential impact of the cost of complying with CAIR for a 
typical CFB combusting waste coal. This analysis shows that the typical 
waste coal-fired unit would remain economically viable under CAIR. (The 
results of this analysis are discussed later in this section.)
    EPA understands that waste coal-fired facilities have not received 
a title IV SO2 allowance allocation because they have been 
exempt from title IV under the IPP exemption. Title IV's IPP exemption 
applies to units that had power purchase agreements with fixed prices 
in place on November 15, 1990, and includes units other than waste 
coal-fired facilities. Congress limited this exemption to only those 
units with power purchase commitments in effect, thereby acknowledging 
that once the unit was freed from its power purchase commitment, it was 
free to pass through compliance costs to its customers. The unit may 
lose this exemption even before the full-term of the contract if the 
power purchase commitment changes after November 15, 1990, in a way 
that allows the cost of compliance with the Acid Rain Program to be 
shifted to the purchaser. For example, expiration or termination of the 
power purchase commitment or modification so that the price is 
increased (e.g., changed to a market price) results in loss of the 
exemption. The purpose of the exemption is to protect IPP facilities 
subject to contract prices that were set before passage of the CAA 
Amendments of 1990 (including the Acid Rain Program in title IV) and 
that did not allow pass through of the costs of Acid Rain Program 
compliance. Congress has limited the exemption to apply to the Acid 
Rain Program and did not mandate the Agency with maintaining the 
exemption in future programs. EPA believes that this exemption was 
aimed at easing the transition of such facilities into the Acid Rain 
Program and that there is no basis for maintaining this exemption for 
every subsequent cap-and-trade program.
    Waste coal-fired units are designed and operated for the purpose of 
generating electricity for sale. As a result, they are reasonably 
treated as part of the power generation sector, which comprises the 
category of sources the CAIR and CAIR FIP trading programs aimed at 
regulating. For this reason, EPA modeling for CAIR included waste coal-
fired EGUs as part of the power sector, which was shown to collectively 
be able to make highly cost-effective SO2 and NOX 
emission reductions. The marginal cost of control and the average cost 
of control, shown to be highly cost-effective, reflect a range of power 
sector control costs that include costs from sources such as waste 
coal-fired units. Notably, the model considers where control will be 
least expensive and that some units will purchase allowances in the 
determination of which units are projected to dispatch. EPA modeling 
shows that waste coal-fired units continue to be dispatched even when 
the cost of complying with CAIR is part of the unit's production costs. 
Commenters did not provide any basis for changing EPA's treatment of 
waste coal-fired units in the modeling or for challenging EPA's 
modeling results.
    EPA agrees that these units do not have large SO2 
emissions. These units may emit based on a reduction in SO2 
from sulfur content in the fuel of approximately 90 percent, or in some 
cases greater, reductions in SO2 from sulfur content of the 
fuel.\24\ However, many continue to emit at rates above those recently 
achieved by coal-fired units with advanced SO2 controls 
(i.e., scrubbers). Nevertheless, because these units tend to be 
relatively small and have lower total emissions, they would be required 
to purchase significantly fewer allowances than other, potentially 
higher emitting, sources that also may not have received SO2 
allowances under title IV.
---------------------------------------------------------------------------

    \24\ Reduction in SO2 from CFB units are EPA 
estimates based upon the design of the facilities.
---------------------------------------------------------------------------

    However, EPA does not believe that the CAIR SO2 annual 
requirements would impose an undue or inequitable ``economic burden'' 
on waste coal-fired units that would ``threaten the viability'' of all, 
or even many, of these units. EPA considered the potential impacts for 
both the periods of the concern identified by the commenter: (1) When 
the power purchase agreement is in place and the unit is exempt from 
title IV; and (2) after the power purchase agreement has expired and 
the unit is title IV affected.
    For the period in which the waste coal-fired unit has a power 
purchase contract in place, EPA examined the analysis presented by the 
commenters in support of their argument that CAIR compliance costs 
would threaten their economic viability. EPA believes the commenters' 
analysis substantially overestimated the potential compliance costs of 
CAIR and the CAIR FIP (by inaccurately accounting for the future 
projected cost of emitting one ton of SO2, underestimating 
access to title IV SO2 allowances through the title IV opt-
in provisions, and inaccuracies in other analytical assumptions) and, 
when more realistic assumptions are correctly applied, these units are 
much better off. (Section VI.A of the CAIR FIP Response to Comment 
Document presents the results of this analysis.)

[[Page 25350]]

    As mentioned above, while waste coal-fired units have a valid power 
purchase agreement (and, subsequently, an exemption from title IV), 
they may choose to opt-in to the title IV program and receive 
SO2 allowances. The title IV opt-in provisions provide units 
with SO2 allowances based upon their heat input (i.e., the 
average of their annual heat input for the years 1985 through 1987 or 
their first 3 whole years of operation) and their emission rate (i.e., 
the lesser of their actual emission rate during the first baseline year 
or, their lowest permitted emission limit in year they apply that will 
be effective that year or any time after). As a result, these units 
could receive SO2 allowances sufficient to authorize all of 
their future, annual emissions under the title IV program. Other units, 
that may operate more than they did during the baseline years, may 
receive SO2 allowances from the title IV opt-in provisions 
at levels lower than their future emissions. Assuming the waste coal-
fired units made no additional reduction in SO2 emissions, 
this same opt-in allocation level would authorize half of their 
emissions, and require them to purchase SO2 allowances equal 
to half of their emissions, under the first phase of CAIR or the CAIR 
FIP.\25\ Considering that waste coal-fired CFB units generally achieve 
greater than 90 percent SO2 emission reductions, the unit 
would purchase SO2 allowances equal 5 percent of this total, 
uncontrolled emissions. The retirement ratio for the second phase of 
CAIR or the CAIR FIP would result in the sources purchasing 
SO2 allowances equivalent to 7 percent of this uncontrolled 
emissions level (i.e., two thirds of the remaining 10 percent of the 
uncontrolled emissions). From the evidence that EPA has been provided, 
the commenters have not demonstrated that purchasing allowances equal 
to approximately 5 percent or 7 percent of uncontrolled emissions in 
the phases 1 and 2 of the CAIR FIP (and CAIR), respectively, would 
result in the units not being economically viable.
---------------------------------------------------------------------------

    \25\ Assumes sources receive title IV opt-in allowances equal to 
their current emissions. The 2-to-1 retirement ratio of CAIR's first 
phase requires CAIR sources to hold twice as many allowances.
---------------------------------------------------------------------------

    The commenters concerns about the economic viability of waste coal-
fired units continue for periods of time when the power purchase 
agreements have expired (i.e., the units have lost the exemption from 
title IV) and the units are free to participate in the electricity 
markets. EPA addressed this concern by conducting additional analysis 
using generally available information to evaluate the potential impact 
of the cost of complying with CAIR for a typical CFB combusting waste 
coal. More specifically, EPA examined how the potential cost to operate 
a typical waste coal-fired CFB unit (in $/MWh) compares to the 
potential price it would receive on the electricity market. This 
analysis estimated the potential cost of producing electricity for a 
waste coal-fired CFB (including the cost of complying with CAIR) to be 
significantly less than the EPA projected wholesale price and the 
forecasted price of electricity. In general, waste coal-fired 
facilities will continue to be profitable, even when factoring in the 
cost of complying with CAIR.
    EPA also notes that, upon the expiration of the power purchase 
agreements, waste coal-fired units will participate in the electricity 
markets and be required to comply with all applicable emission control 
programs, including the title IV Acid Rain Program, just as other coal-
fired facilities. Some of these coal-fired units have installed 
emission control equipment, emit SO2 at lower rates than the 
waste coal-fired units, and are complying with title IV while they 
compete in the electricity markets. Additionally, new units continue to 
come online and are economically viable even though they must acquire 
title IV SO2 allowances on the market.
    In addition, commenters mentioned that waste coal-fired facilities 
provide benefits outside of air emissions, such as assisting in the 
mitigation of waste coal impacts on the land. EPA notes that, in case 
of waste coal-fired units, there are a variety of avenues of potential 
relief for States that wish to assist these units as they transition to 
competitive markets. Options for States to encourage certain types of 
generation include, but are not limited to: Revenue from renewable 
portfolio standards (where waste coal-fired units can qualify); and 
providing valuable CAIR NOX annual and ozone season 
allowances, as well as mercury allowances under the Clean Air Mercury 
Rule (which are options in Pennsylvania, where most of the commenters 
waste coal-fired units are located). EPA also notes that, in the case 
of waste coal-fired units that have contended that they provide multi-
media benefits, that they will have the flexibility to develop 
integrated, multi-pollutant compliance strategies under CAIR.
    In summary, EPA does not agree with commenters that believe that 
complying with the CAIR FIP or CAIR SO2 annual program would 
result in this category of units not being economically viable. These 
units are designed to generate electricity for sale on the grid and are 
part of the power generation sector. The CAIR FIP and CAIR trading 
programs are designed to achieve emission reductions from EGUs while 
providing the flexibility for the markets to find the least-cost 
reductions. Once their contracts expire, waste coal-fired units, just 
as other coal-fired generation sources which may or may not receive 
title IV SO2 allowances, will be expected to hold 
SO2 allowances and compete in the electricity markets. In 
addition, the commenter has not provided analysis that demonstrates 
that waste coal-fired units, as a category, would not be economically 
viable as a result of CAIR. For these reasons, EPA has not included an 
exemption for waste coal-fired units or IPPs in the CAIR FIP or CAIR 
trading programs.
    Biomass-Fired Units under CAIR FIP. EPA received comment that 
biomass-fired units should be exempt from the CAIR and CAIR FIP trading 
programs. These commenters claimed that their operations are similar to 
those of solid waste incineration units, which EPA proposed to exempt 
in the CAIR FIP NPR. Commenters added that they could meet fossil fuel 
use criteria used in the solid waste incineration unit exemption (i.e., 
the average annual fuel consumption of non-fossil fuels not exceeding 
80 percent for the years 1985-1987 (or for a unit commencing operation 
after January 1, 1985, the first 3 years of operation) and during any 3 
consecutive calendar years after 1990). In addition, commenters noted 
that this would be consistent with the title IV exemptions for biomass-
fired units as ``qualifying facilities.''
    EPA disagrees with commenters that request that biomass-fired EGUs 
be exempted from the CAIR and CAIR FIP trading programs because they 
are similar to solid waste incinerators. While biomass-fired EGUs may 
be able to meet the criteria for limited combustion of fossil fuel used 
in the solid waste incineration unit exemption in the CAIR and CAIR FIP 
trading programs, they differ from solid waste incineration units in 
that biomass-fired units are designed and operated for the purpose of 
generating electricity for sale. As a result, they are reasonably 
treated as part of the power generation sector, which comprises the 
category of sources the CAIR and CAIR FIP trading programs aimed at 
regulating. For this reason, EPA modeling for CAIR included biomass-
fired EGUs as part of the power sector, which was shown to be able to 
make highly cost-effective SO2 and NOX emission 
reductions. The marginal cost of control and the average

[[Page 25351]]

cost of control, shown to be highly cost-effective, reflect a range of 
power sector control costs that include costs from sources such as 
biomass-fired units. Commenters did not provide any basis for changing 
EPA's treatment of biomass-fired units in the modeling or for 
challenging EPA's modeling results.
    Biomass-fired units included in the CAIR and CAIR FIP trading 
programs are distinguishable from solid waste incineration units exempt 
from the CAIR and CAIR FIP trading programs. First, while the purpose 
of biomass-fired units are to generate electricity (and, in some cases, 
useful thermal energy), solid waste incineration units are designed and 
operated for the purpose of disposing of solid waste, with electricity 
generation incidental to this purpose. In fact, the term ``solid waste 
incineration unit'' excludes sources whose primary purpose is something 
other than waste disposal, such as ``material recovery facilities * * * 
which combust for the primary purpose of recovering materials'' and 
``qualifying small power production facilities * * * or qualifying 
cogeneration facilities * * * which burn homogeneous waste for the 
production of electric energy * * * for the production of electric 
energy and steam or forms of useful energy (such as heat) * * *'' (18 
U.S.C. 7429(g)(1)) Thus, it was reasonable for EPA to treat biomass-
fired units, but not solid waste incineration units, as part of the 
power sector. Second, as explained in the CAIR FIP NPR, emission 
reductions from solid waste incineration units, treated as a separate 
source category, were not considered in EPA's determination of highly 
cost-effective reductions from the power sector. Biomass-fired units 
were treated as part of the power sector, which was shown in EPA's 
modeling to be able to make highly cost-effective reductions.
    EPA does not believe that the title IV exemption for qualifying 
biomass-fired units means that these units should be exempt from all 
cap-and-trade programs developed after the Acid Rain Program. Under the 
Acid Rain Program, an IPP facility (such as a biomass-fired unit) that 
has, as of November 15, 1990, a qualifying power purchase commitment 
(including a sales price) to sell at least 15 percent of planned net 
output capacity and has installed net output capacity not exceeding 130 
percent of planned net output capacity is exempt from the program. 
However, if the power purchase commitment changes after November 15, 
1990 in a way that allows the cost of compliance with the Acid Rain 
Program to be shifted to the purchaser, then the IPP facility loses the 
exemption. For example, expiration or termination of the power purchase 
commitment or modification so that the price is increased (e.g., 
changed to a market price) results in loss of the exemption. The 
purpose of the exemption is to protect IPP facilities subject to 
contract prices that were set before passage of the CAA Amendments of 
1990 (including the Acid Rain Program in title IV) and that did not 
allow pass through of the costs of Acid Rain Program compliance. 
However, EPA maintains that this exemption was aimed at easing the 
transition of such facilities into the Acid Rain Program and that there 
is no basis for maintaining this exemption for every subsequent cap-
and-trade program.
    Under the CAIR trading programs, a biomass-fired unit can be 
allocated NOX allowances, just as any other CAIR unit. 
Further, although biomass-fired units are not generally allocated title 
IV allowances, which are used in the CAIR SO2 annual trading 
program, those units can opt into the Acid Rain Program and receive 
title IV allowances as long as they retain their IPP exemption. If they 
lose the exemption because they are no longer bound by their power 
purchase commitment, then they can pass through compliance costs to the 
same extent any CAIR unit can do so.
    For the reasons discussed above, the EPA is not including an 
exemption from the CAIR and CAIR FIP trading programs for biomass-fired 
units in today's final rule.
    Low Emissions Units Under CAIR FIP. EPA received comment requesting 
that units with low emissions, such as units that emit less than 25-
tons annually, be exempt from the CAIR and CAIR FIP trading programs. 
This includes simple cycle turbines that are operated infrequently, 
primarily during peak demand or when there are operational difficulties 
with baseload units. Commenters claim that the cost of monitoring and 
reporting their emissions is excessively burdensome and that special 
provisions in part 75 monitoring for low mass emitting (LME) units does 
not provide adequate relief.
    Today's final CAIR FIP trading rules do not include an exemption 
for low emitting units. While low emitting, these units are designed 
and operated for the purposes of generating electricity for sale. As a 
result, they are reasonably treated as part of the power generation 
sector, which comprises the category of sources the CAIR and CAIR FIP 
trading programs aimed at regulating. For this reason, low-emitting 
units were included as part of the power sector, which was shown 
through EPA modeling for CAIR to be able to make highly cost-effective 
emission reductions. The marginal cost of control and the average cost 
of control, shown to be highly cost effective, reflect a range of power 
sector control costs that include costs from low-emitting units 
(including simple-cycle turbines).
    Commenters advocating an exemption of these units did not provide 
any basis for changing EPA's treatment of these units in the modeling 
or for challenging EPA's modeling results.
    The NOX SIP Call did include an exemption for units that 
could demonstrate that their permits imposed an operating hour 
limitation under which their potential emissions during the ozone 
season did not exceed 25 tons (the ``25-ton exemption''). Units wishing 
to obtain the 25-ton exemption were required to use conservative 
emission estimates of their potential emissions and State budgets were 
adjusted to remove the equivalent of their potential emissions from 
that State's trading program budget. In general, this exemption was 
undersubscribed and complex. EPA also notes that it received little 
comment on including a 25-ton exemption, with only a single facility 
claiming that this exemption is necessary. EPA does not see compelling 
justification to include this exemption in the CAIR and CAIR FIP 
trading programs.
    EPA does not agree with commenters that contend that the LME 
provisions do not adequately relieve the cost of monitoring and 
reporting for low emitting units. The part 75 LME provisions provide 
qualifying sources with multiple options to allow facilities to choose 
the approach that best fits their circumstances. First, units may 
choose to use EPA-provided, conservative emission factors in lieu of 
installing and operating Continuous Emissions Monitoring Systems 
(CEMS). The LME provisions provide a second option that allows 
facilities to determine unit-specific emission factors for use in 
estimating their annual emissions. Additionally, EPA provides the 
software necessary to generate the quarterly emissions reports for 
these sources to further lessen the burden on these sources. These 
streamlined monitoring and reporting procedures relieve much of the 
administrative burden, and therefore, the compliance costs, for LME 
qualifying units. This allows EPA to accurately and cost-effectively 
account for the emissions, even at low emission levels, and allow these 
units to participate in the CAIR trading programs.

[[Page 25352]]

F. Allocation of NOX Emission Allowances to Sources

    The EPA presented in the NPR (70 FR 49730-49734) its proposed 
schedules and methods for allocating NOX allowances to 
sources, including allowances for the CAIR FIP NOX annual 
trading program and the CAIR FIP NOX ozone season trading 
program. The Agency proposed to use NOX allocation methods 
that are consistent with the NOX allocation methods in the 
CAIR SIP model trading rules.
    As discussed above, the Agency proposed that a State could choose 
to modify the application of the FIP through abbreviated SIP revisions 
that would allow the State, rather than EPA, to allocate NOX 
annual and/or ozone season allowances for the CAIR FIP trading 
programs.
    The EPA proposed formulas for EPA-determined allocations of 
NOX allowances to units (both existing units with sufficient 
baseline data and new units) under the CAIR FIP trading programs. 
Further, the Agency proposed schedules for applying the allocation 
formulas and for determining such NOX allocations for the 
CAIR FIP trading programs. The EPA also proposed schedules for States 
to apply State-determined allocation formulas under abbreviated SIP 
revisions. In addition, EPA proposed a schedule for the Administrator 
to record NOX allocations (whether EPA-or State-determined) 
in source accounts.
    The EPA received a number of comments on each of these elements of 
its proposed schedules and methods for NOX allocations. The 
Agency discusses the comments and presents the final schedules and 
methods for NOX allocations below.
    See section VI.I in today's preamble for a discussion of the 
Agency's method for distributing FIP NOX annual allowances 
from the NOX annual CSP.
1. Schedule for Determining and Recording NOX Allocations
    The Agency's preference is for States to make decisions about 
NOX allocations for their sources. Although EPA will 
determine NOX allocations for the CAIR FIP trading programs, 
we intend to only record EPA-determined allocations in allowance 
accounts for sources located in a State without a timely, approved CAIR 
SIP revision (or timely, approved abbreviated CAIR SIP revision 
providing for State-determined allocations).
    While EPA's proposal included schedules for determining and 
recording NOX allocations for both existing units with 
sufficient baseline data and new units, this section of the preamble--
and the public comments--focus on the allocations for existing 
units.\26\
---------------------------------------------------------------------------

    \26\ The Agency is finalizing the proposed schedules for 
determiing and recording FIP NOX allocations for new 
units; see Sec. Sec.  97.141, 97.341, 97.153 and 97.353.
---------------------------------------------------------------------------

    As discussed further below, EPA intends to determine NOX 
allocations for the CAIR FIP trading programs by October 31, 2006 
(covering 2009-2014). For any State choosing to determine CAIR FIP 
NOX allocations using an abbreviated SIP revision, the 
deadline for States to notify EPA of their first set of NOX 
allocations (covering at least 2009-2011) is April 30, 2007. The Agency 
will record EPA-determined allocations for the CAIR FIP trading 
programs by September 30, 2007 (covering 2009), September 30, 2008 
(covering 2010) and September 30, 2009 (covering 2011-2013). If State-
determined NOX allocations are approved earlier than these 
recordation deadlines (under a full SIP revision or an abbreviated SIP 
revision), the Agency intends to record the State-determined 
allocations in source accounts rather than EPA-determined allocations, 
as soon as possible. Table VI-2, below, summarizes the final deadlines 
for recording CAIR FIP NOX allocations (EPA-determined 
allocations or State-determined allocations using an abbreviated SIP 
revision). Table VI-3 summarizes the final deadlines for recording CAIR 
SIP NOX allocations for States choosing to use the CAIR 
model trading rules (full SIP revisions).
    As discussed in the NPR, the Agency developed proposed schedules 
for recording CAIR FIP NOX allocations for existing units in 
source accounts with the objective of balancing the following two 
goals: (1) Providing both adequate certainty to sources regarding their 
CAIR NOX allocations and adequate time for sources to make 
compliance decisions, and (2) providing States choosing to allocate 
CAIR NOX allowances with time to submit, and EPA to approve, 
abbreviated or full SIP revisions that provide for State-determination 
of allowance allocations.
    The final CAIR (70 FR 25162) requires States to submit SIP 
revisions complying with the CAIR requirements to the Agency by 
September 11, 2006 and to submit the initial set of NOX 
allocations by October 31, 2006.
    In the CAIR FIP NPR, the Agency proposed that States choosing to 
submit abbreviated SIP revisions would be required to submit such 
revisions to EPA by March 31, 2007, and--if choosing to address 
NOX allocations in an abbreviated SIP revision--would be 
required to submit the initial set of NOX allocations by 
September 30, 2007. The EPA proposed allowing States to submit 
abbreviated SIP revisions later than full revisions because the Agency 
anticipates being able to complete the approval process more quickly 
for abbreviated revisions due to their narrower scope.
    The Agency stated in the FIP NPR its intention to determine final 
NOX allocations for 2009 through 2014 for the FIP trading 
programs prior to December 1, 2007 (70 FR 49732). The EPA has further 
considered its plans for determining these final NOX 
allocations and now intends to determine them by October 31, 2006. The 
Agency intends to publish a Notice of Data Availability (NODA) during 
spring 2006 with NOX allocations for 2009 through 2014. The 
public will have an opportunity to make objections to any of the data 
used in these allocations. EPA will publish a NODA with the final 
NOX allocations for 2009 through 2014 (adjusted if necessary 
in light of any objections) by October 31, 2006. In this manner, the 
Agency intends to provide earlier notice to sources of the EPA-
determined NOX allocations.
    The EPA proposed to determine NOX allocations by July 
31, 2011 and July 31 of each year thereafter for the control period in 
the fourth year after the year of the deadline for the determination 
and then to provide opportunity for submission of objections to the 
determination. The EPA would make any necessary adjustments to the 
allocations in light of any objections, before the deadline for EPA to 
record the allocations. The EPA is now finalizing this schedule. For 
example, the Agency will determine allocations by July 31, 2011 for the 
2015 control period and then provide opportunity for submission of 
objections. The Agency intends to make any necessary adjustments to 
these allocations, in light of any objections, as soon as possible 
after the receipt of objections and before the recordation deadline 
\27\ of December 1, 2011. As discussed further below, the Agency 
intends to record EPA-determined NOX allocations in source 
accounts only in the absence of a timely, approved full CAIR SIP 
revision or a timely, approved abbreviated CAIR SIP revision providing 
for State-determined allocations.
---------------------------------------------------------------------------

    \27\ Recordation deadline means the date by which the 
Administrator will record allocations in source accounts in the 
allowance tracking systems.
---------------------------------------------------------------------------

    The EPA presented in the FIP NPR its proposed deadlines for 
recording NOX allocations in source accounts for the CAIR 
FIP trading programs (see Table

[[Page 25353]]

VI-1 in the NPR at 70 FR 49732.) The proposed recordation deadlines for 
FIP NOX allocations were as follows: By December 1, 2007 for 
the 2009 control period; by December 1, 2008 for the 2010 control 
period; by December 1, 2009 for the 2011, 2012 and 2013 control 
periods; by December 1, 2010 and December 1 of each year thereafter for 
the control period in the fourth year after the recordation deadline. 
These proposed recordation deadlines were the latest dates by which EPA 
proposed to record NOX allocations for the CAIR FIP trading 
programs. The EPA proposed to record EPA-determined NOX 
allocations only in the absence of a timely, approved full CAIR SIP 
revision or a timely, approved abbreviated CAIR SIP revision providing 
for State-determined NOX allocations. The Agency intended to 
record any NOX allocations determined by a State using an 
abbreviated SIP revision as soon as feasible after approval of the 
abbreviated SIP revision; EPA did not intend to wait until the proposed 
deadlines to record such State-determined allocations. Likewise, the 
Agency intended to record any NOX allocations determined by 
a State using a full SIP revision as soon as feasible after approval of 
the full revision (and according to the recordation deadlines in the 
CAIR SIP rules at Sec. Sec.  96.153 and 96.353).\28\
---------------------------------------------------------------------------

    \28\ The FIP NPR preamble contained an inaccurate statement 
regarding proposed NOX allocation recordation deadlines. 
The preamble (70 FR 49731) indicated that the recordation deadlines 
would be the same whether the allocations were in a full SIP 
revision or in an abbreviated revision; however the proposed 
recordation deadlines relevant to abbreviated revisions are 
different from deadlines for full SIP revisions.
---------------------------------------------------------------------------

    In the FIP NPR (70 FR 49739), the Agency proposed to remove the 
deadline to record NOX allocations for the first set of 
years submitted in a SIP revision (i.e., in a full SIP revision) that 
used the model allocation method in part 96, but to retain the 
deadlines to record the subsequent allocations. The CAIR NOX 
model trading rules, as finalized at 70 FR 25162, required the 
Administrator to record the initial set of NOX allocations 
submitted by the States by December 1, 2006 (Sec. Sec.  96.153 and 
96.353). However, since the SIP revisions that include such allocations 
are not due until September 11, 2006, it is highly unlikely that all 
the SIP revisions will be approved by EPA in time for the allocations 
to be recorded by December 1, 2006. CAIR NOX allowance 
allocations should not be recorded, and thereby be tradable in the 
allowance market, before the SIP revision on which the allocations are 
based is final; it would be highly disruptive to the allowance market 
if allocations that are recorded and could be traded could subsequently 
be rendered invalid due to disapproval of the SIP revision on which the 
allocations are based.
    The Agency's proposal to remove the deadline to record the first 
set of NOX allocations submitted in a full SIP revision did 
not include an alternative recordation deadline. Some commenters 
suggested that EPA should set an alternative deadline, and one 
commenter suggested that the deadline should be within 30 to 60 days 
following EPA approval of a State's SIP revision. The Agency is 
finalizing a recordation deadline of September 30, 2007 for the first 
set of NOX allocations submitted with a full SIP revision. 
This recordation deadline is based on the Agency's belief that full SIP 
revisions can be approved in about a year from submission, that is by 
about September 2007.
    Some industry commenters who supported the abbreviated SIP revision 
approach did not support the proposed schedule for abbreviated 
revisions, in particular with regard to the schedule for NOX 
allocations. Some suggested that abbreviated SIP revisions should be 
due on the same schedule as full SIP revisions (i.e., that the deadline 
for abbreviated SIP revisions should be September 11, 2006, instead of 
March 31, 2007 as proposed) or, as suggested by one commenter, on an 
even earlier schedule than full SIP revisions. Similarly, some 
suggested that the deadline for the first set of NOX 
allocations submitted with an abbreviated SIP revision should be the 
same as the NOX allocations deadline for a full SIP revision 
(i.e., that the deadline for allocations in an abbreviated revision 
should be October 31, 2006, instead of the proposed deadline).\29\ Some 
commenters suggested that sources should be provided earlier knowledge 
of their allocations in order to plan for compliance.
---------------------------------------------------------------------------

    \29\ The deadline that EPA proposed for submitting 
NOX allocations with an abbreviated SIP revision is 
September 30, 2007 for 2009, 2010 and 2011, as specified in the 
proposed regulatory text at Sec.  51.123 (70 FR 49746). Through an 
inadvertent error the preamble to the NPR listed a different date; 
the preamble indicated that the proposed deadline for such 
allocations would be October 31, 2007 (70 FR 49731).
---------------------------------------------------------------------------

    A State commenter asserts that submitting an abbreviated SIP 
revision under the proposed schedule will be problematic for some 
States that may not be able to complete a State rulemaking prior to the 
deadline for such submission.
    The EPA is finalizing the proposed March 31, 2007 deadline for 
submission of abbreviated SIP revisions to the Agency. Because of the 
narrower scope of abbreviated SIP revisions, EPA anticipates that it 
will be able to complete the approval process more quickly for such 
revisions than for full SIP revisions. The EPA believes that it can 
approve abbreviated SIP revisions in about 6 months from submission. 
With abbreviated SIP revisions due to the Agency about 6 months later 
than the deadline for full SIP revisions, EPA anticipates that approval 
for both types of submissions would be feasible by about the same time, 
that is by about September 2007.
    The Agency is finalizing a deadline of April 30, 2007--instead of 
September 30, 2007 as proposed--for States to submit to EPA their first 
set of NOX allocations associated with an abbreviated SIP 
revision (covering at least 2009, 2010 and 2011). The Agency revised 
this deadline in order to provide sources with an earlier opportunity 
to have notice of the State-determined NOX allocations.
    A few industry commenters argued that the deadlines for recording 
NOX allocations in source accounts for the CAIR FIP trading 
programs should be earlier than proposed, to provide earlier knowledge 
to sources of their allocations. One recommended that NOX 
allocations for the CAIR FIP trading programs--whether determined by 
EPA or determined by a State using an abbreviated SIP revision--be 
recorded in source accounts by December 1, 2006 for 2009 through 2011.
    Another industry commenter suggested that, if a State fails to meet 
the October 31, 2006 deadline for allowance allocations in a full SIP 
revision, EPA should immediately record the FIP allowance allocations. 
The same commenter also suggested that NOX allocations 
should be recorded in source accounts a minimum of 3 years prior to the 
date they can be used for compliance and asserted that, if a source did 
not know until a year before the compliance deadline what its 
allocation will be, the source ``would be completely unable to plan for 
compliance.''
    A State commenter suggests that the requirements for notification 
of allocations under CAIR SIP trading programs and the CAIR FIP trading 
programs should be the same. According to the commenter, if EPA 
finalizes a lead time for recording NOX allocations under 
the CAIR FIP trading programs of less than 3 years for the first 4 
control periods, ``the same flexibility

[[Page 25354]]

should be extended to approved CAIR SIP trading programs.''
    In determining the final NOX allocation recordation 
deadlines, abbreviated SIP submission deadlines, and schedules for 
determining NOX allocations, the Agency is balancing the 
goals of (1) providing information in advance to source owners and 
operators regarding their future CAIR NOX allocations in 
order to facilitate their decision-making concerning compliance with 
the requirements to hold allowances and (2) providing States choosing 
to allocate CAIR NOX allowances sufficient time to prepare 
and submit SIP revisions (full or abbreviated revisions) setting forth 
the State allocation methodology and prepare and submit unit 
allocations for specific years and providing EPA sufficient time to 
review and approve these SIP revisions and record these unit 
allocations. The EPA made adjustments to the proposed NOX 
allocation schedules in response to public comments received on the 
proposal. The Agency believes that the final schedules achieve a 
reasonable balance between these goals within the constraints of the 
available time.
    The Agency is finalizing a deadline of September 30, 2007 (instead 
of December 1, 2007 as proposed) for recording NOX 
allocations for 2009 for the CAIR FIP trading programs, whether EPA-
determined or State-determined using an abbreviated SIP revision. This 
is the same deadline that EPA is finalizing for recording the first set 
of State-determined NOX allocations in a full SIP revision, 
as discussed above. This is the earliest feasible recordation date 
based on EPA's assumption that it will take about a year to approve a 
full revision and about 6 months to approve an abbreviated revision. 
The EPA would like to stress that, if State-determined NOX 
allocations are approved earlier than this deadline (under a full SIP 
revision or an abbreviated SIP revision) the Agency intends to record 
the State-determined allocations in source accounts as soon as 
possible. The Agency does not intend to wait until the recordation 
deadline to record State-determined allocations and will record EPA-
determined allocations for 2009 by this deadline in the absence of an 
approved full SIP revision or an approved abbreviated SIP revision 
providing for State-determined allocations.
    Similarly, the Agency is finalizing a recordation deadline of 
September 30, 2008 (instead of December 1, 2008) for recording CAIR FIP 
NOX allocations for 2010; and September 30, 2009 (instead of 
December 1, 2009) for recording CAIR FIP NOX allocations for 
2011, 2012 and 2013. The Agency does not intend to wait until these 
deadlines to record State-determined allocations and will record EPA-
determined allocations for 2010, 2011, 2012 and 2013 according to these 
deadlines in the absence of an approved full SIP revision or an 
approved abbreviated SIP revision providing for State-determined 
allocations. The Agency will record EPA-determined allocations in 
source accounts one year at a time for 2009 and 2010 in order to 
provide flexibility to States to determine allocations for their 
sources.
    Beginning with allocations for the 2014 compliance year, EPA is 
finalizing the proposed recordation deadlines for CAIR FIP 
NOX allowances. That is, beginning with the 2014 control 
period and for each control period thereafter, EPA intends to record 
NOX allocations for the CAIR FIP trading programs in source 
accounts by December 1 of each year for the control period 4 years 
after the year in which the allocations are recorded. This approach 
will provide sources with their allocations about 3 years in advance. 
For example, EPA will record FIP allocations for the 2014 control 
period by December 1, 2010. The Agency will record EPA-determined 
allocations only in the absence of an approved full SIP revision or an 
approved abbreviated SIP revision providing for State-determined 
allocations.
    Table VI-2, below, summarizes the final NOX allocation 
recordation deadlines for the CAIR FIP trading programs. Deadlines for 
future control periods not shown in the table follow the same pattern 
shown for 2014 through 2016. Note that these are the latest dates by 
which EPA will record CAIR FIP NOX allocations. The EPA 
intends to record State-determined CAIR FIP NOX allocations 
as soon as possible after approval of abbreviated SIP revisions.

    Table VI--2.--Recordation Deadlines for CAIR FIP NOX Allocations
------------------------------------------------------------------------
                                            Deadline by which FIP NOX
                                          allocations are recorded (EPA-
          CAIR control period            determined allocations or state-
                                           determined allocations using
                                            abbreviated SIP revision)
------------------------------------------------------------------------
2009...................................  September 30, 2007.
2010...................................  September 30, 2008.
2011...................................  September 30, 2009.
2012...................................  September 30, 2009.
2013...................................  September 30, 2009.
2014...................................  December 1, 2010.
2015...................................  December 1, 2011.
2016...................................  December 1, 2012.
------------------------------------------------------------------------

    As discussed in the FIP NPR (70 FR 49731), EPA acknowledges that it 
is preferable for source owners and operators to have at least 3 years 
lead time with regard to allowance allocations when feasible. A shorter 
lead time would reduce the period for buying or selling allowances and 
could prevent sources from participating in allowance futures markets, 
a mechanism for hedging risk and lowering costs (CAIR NFR, 70 FR 
25279). Although lead time may impact the selection of trading 
strategies, as discussed further below, EPA believes that the selection 
of compliance methods (e.g., installation of emission control 
technology, fuel switching, or allowance purchases) should not be 
impacted by the amount of allowances a source is allocated for a given 
year.
    The final schedule for recording NOX allocations for the 
CAIR FIP trading programs in today's rulemaking provides that 
allocations will be recorded with at least 3 years lead time in all but 
the initial 4 compliance years. For those initial years, the Agency 
will work with the States to be able to record State-determined 
NOX allocations as soon as feasible and will record EPA-
determined allocations by the recordation deadlines in the absence of 
timely, approved full SIP revisions or timely, approved abbreviated SIP 
revisions providing for State-determined allocations.
    Table VI-3, below, summarizes the final recordation deadlines for 
NOX allocations for the CAIR SIP model trading rules (i.e., 
NOX allocations contained in full SIP revisions). Deadlines 
for future control periods not shown in the table follow the same 
pattern shown for 2015 and 2016. The EPA intends to record State-
determined allocations as soon as possible after approval of full SIP 
revisions.

     Table VI--3.--Recordation Deadlines for CAIR SIP Model Rule NOX
                               Allocations
------------------------------------------------------------------------
                                            Deadline by which SIP NOX
                                          allocations are recorded (for
          CAIR control period            States choosing to use the CAIR
                                                 SIP model rules)
------------------------------------------------------------------------
2009...................................  September 30, 2007.
2010...................................  September 30, 2007.
2011...................................  September 30, 2007.
2012...................................  September 30, 2007.
2013...................................  September 30, 2007.
2014...................................  September 30, 2007.
2015...................................  December 1, 2009.
2016...................................  December 1, 2010.
------------------------------------------------------------------------

    It is likely that source owners and operators will know or at least 
have a reasonable understanding of the likely

[[Page 25355]]

amounts of their NOX allocations substantially earlier than 
the deadlines for recording allocations in source accounts. States 
submitting full CAIR SIP revisions must notify EPA of their initial set 
of unit-by-unit NOX allocations (covering at least 2009, 
2010 and 2011) by October 31, 2006. As indicated in the CAIR, the 
States have broad discretion in making unit-by-unit allocations, and 
EPA's review will center on whether the total allocations in a given 
year exceed the State's trading budget. See Sec. Sec.  
51.123(o)(2)(ii)(A) and (aa)(2)(iii)(A). The Agency intends to 
determine unit-by-unit NOX allocations for the initial 
compliance years of the CAIR FIP trading programs by the same date, 
October 31, 2006 (covering 2009 through 2014). States submitting 
abbreviated SIP revisions must notify EPA of their unit-by-unit 
NOX allocations for the CAIR FIP trading programs by April 
30, 2007 (covering at least 2009, 2010 and 2011). As is the case for 
States submitting full SIP revisions, EPA's review of unit-by-unit 
allocations will center on ensuring that the State budget would not be 
exceeded.
    Moreover, through each State's public rulemaking, adjudicative, 
and/or legislative processes for determining allocations, source owners 
and operators will likely be aware of their State's plans regarding 
NOX allocations even in advance of the deadlines by which 
the States must submit their unit-by-unit allocations to EPA. For 
example, the public is likely to know whether the State is planning to 
allocate using the example NOX allocation method provided in 
the CAIR SIP model rules, or what alternative allocation method the 
State is planning to use. This knowledge would give owners and 
operators a sense for what their allocations will be.
    An industry commenter asserted that, if a source did not know until 
a year before the compliance deadline what its allocation will be the 
source ``would be completely unable to plan for compliance,'' stating 
as a reason ``it takes longer than a year to install the controls that 
might be necessary to meet an unexpectedly low allocation.'' Another 
commenter asserted that ``Sources use the period of time between 
finalization of source-by-source allocations and the control period to 
plan and implement any strategy necessary to achieve compliance.'' The 
Agency disagrees with these arguments. The EPA believes--and general 
economic theory suggests--that for owners and operators of sources 
covered by CAIR trading programs, the determination regarding what will 
be the lowest cost compliance methods (e.g., installation of emission 
control technology, fuel switching, or allowance purchases) should not 
be impacted by the amount of allowances a source is allocated for a 
given year.
    The Agency believes the decision to install NOX control 
technology will be made based on evaluating the cost to that source of 
installing controls compared to the price of NOX allowances 
in the allowance market. For a particular source, if the cost to 
control a ton of NOX emissions is lower than the 
NOX allowance price, then the source will likely choose to 
control emissions. This is the case regardless of the amount of 
allowances allocated to the source since using an allocated allowance 
to cover emissions has an opportunity cost (i.e., the value of that 
allowance if it were sold in the allowance market) just as using a 
purchased allowance to cover emissions has a cost (i.e., the price of 
purchasing that allowance in the allowance market).
    Such a source may choose to over-control and make greater 
reductions than those required on average by the NOX trading 
program cap either to free up allocated allowances that can then be 
sold for more than it cost to free up the allowances or in order to 
avoid purchasing allowances in the allowance market. In contrast, for a 
particular source, if the cost to control a ton of NOX 
emissions is higher than the NOX allowance price, the source 
will likely choose to use allocated allowances or buy allowances to 
cover its NOX emissions since that will cost less than 
installing control technology.
    The Agency strongly urges States to submit CAIR SIP revisions (full 
or abbreviated revisions) to EPA in a timely manner. The EPA will 
endeavor to work with States to ensure that the Agency can timely 
approve SIP revisions and record State NOX allocations in 
source accounts.\30\ However, once EPA-determined NOX 
allocations are recorded for a particular control period (which would 
only occur in the absence of a timely, approved full CAIR SIP revision, 
or a timely, approved abbreviated CAIR SIP revision providing for 
State-determined allocations), EPA intends not to record overlapping 
State-determined allocations for that same control period. Rather, EPA 
will work with the States to approve SIP revisions with State 
allocations for control periods after the last control period for which 
EPA-determined allocations have been recorded in source accounts. It 
would be highly disruptive to the allowance market if EPA-determined 
allocations that had been recorded and could be traded in the market 
could subsequently be rendered invalid due to approval of overlapping 
State allocations for the same control period.\31\
---------------------------------------------------------------------------

    \30\ EPA believes that, if a State submits its CAIR SIP revision 
later than the submission deadline (September 11, 2006 or March 31, 
2007 for a full or abbreviated SIP revision, respectively), it is 
unlikely that there will be adequate time for the Agency to review 
and approve the SIP revision and record State-determined 
NOX allocations by the recordation deadline under the FIP 
for the 2009 compliance year. For a CAIR SIP revision submitted 
after its deadline, EPA intends to withdraw FIP requirements in a 
State as soon as practical after receiving approvable SIP revisions 
and will work with any State to ensure a timely withdrawal of the 
FIP and recording of State NOX allocations in source 
accounts. The deadlines for recording CAIR FIP NOX 
allocations and CAIR SIP NOX allocations are presented 
above in Tables VI-2 and VI-3, respectively.
    \31\ The discussion in this section focuses on the time frame in 
which EPA plans to record EPA-determined allocations in order to 
coordinate with the approval of SIP revisions and the recordation of 
State allocations, assuming States choose to participate in the EPA-
administered CAIR NOX trading programs. The Agency will 
also carefully consider the timing of a transition from federal to 
State-implemented programs for any States choosing to use a method 
other than the EPA-administered CAIR SIP trading programs to meet 
their CAIR obligations.
---------------------------------------------------------------------------

    For States choosing to submit full SIP revisions for CAIR, the 
Agency suggests they consider designating any of the 4 specific 
elements that can be included in abbreviated SIP revisions (e.g., 
NOX allocations) as being submitted for purposes of both a 
full SIP revision and an abbreviated SIP revision. Because the Agency 
anticipates that it will be able to approve abbreviated SIP revisions 
more quickly than full SIP revisions, a State's designation of its 
NOX allocations as an abbreviated SIP revision (as well as 
part of a full SIP revision) may result in EPA being able to approve 
the allocations portion more quickly and being able to record the 
State-determined unit-by-unit allocations sooner.
    The Agency intends to work with any State choosing to allocate 
NOX allocations (whether through a full SIP revision or an 
abbreviated SIP revision) and to ensure that the State's allocations, 
rather than EPA-determined allocations, will be recorded as soon as 
possible.
    The Clean Air Act is designed to give States the first obligation 
(and opportunity) to prevent significant contribution to a downwind 
State's nonattainment problems. The EPA only acts in the case where a 
State does not meet this obligation. The Agency is promulgating CAIR 
FIPs as soon as possible to assure downwind States that emission 
reductions will occur in time to help them meet their nonattainment 
deadlines. Even though EPA is

[[Page 25356]]

promulgating FIPs, the Agency recognizes that the Clean Air Act assigns 
first responsibility to the States, and it is EPA's preference to 
defer, wherever possible, to States the decisions about control 
mechanisms to prevent significant contribution, including States' 
decisions about allocation of NOX allowances.
2. Method for Allocating NOX Allowances
    Proposed NOX Allocation Methodology. In the NPR, EPA proposed a 
NOX allocation approach for both annual and ozone season 
allowances that is consistent with the example methodology presented in 
the CAIR SIP model trading rules. The proposed methodology was the same 
for annual NOX allowances and for ozone season 
NOX allowances, except that the ozone season method uses 
ozone season heat input not annual heat input.
    For existing units, the proposed NOX allocation 
methodology used input-based allocations, adjusting the heat input by 
factors based on fuel type (described later in this section). As in the 
example allocation methodology in the CAIR SIP model trading rules, for 
existing units the Agency proposed to use heat input based on the 
average of the 3 highest amounts of a unit's adjusted heat input for 5 
years (2000 through 2004). The EPA took comment on using heat input 
based on 3 or 4 years of data rather than 5 years.
    For new units that have established baselines, EPA proposed that 
allocations would be based on generation using a modified output 
approach to convert output to heat input (described below), and 
allocations to existing units would be updated to take into account new 
generation, because new units would receive allocations from the pool 
of allowances shared with existing sources. New units that have not yet 
established baseline data would receive allowances from a new unit set-
aside.
    The Agency proposed that EPA would allocate allowances to existing 
units from the State's EGU NOX budget for the first 6 
control periods (2009 through 2014) for existing sources on the basis 
of historic baseline heat input. Consistent with CAIR, EPA proposed 
January 1, 2001 as the proposed cut-off on-line date for considering 
units as existing units. Allowances for 2015 and later would be 
allocated from the State's EGU NOX budget annually, 3 years 
in advance. These allocations would take into account output data from 
new units with established baselines (modified by heat input conversion 
factors to yield heat input numbers, as described below). As new units 
enter into service and establish a baseline, they would be allocated 
allowances in proportion to their share of the total calculated region-
wide heat input. Allowances allocated to existing units would slowly 
decline as their share of total calculated heat input decreases with 
the entry of new units. (Note that once a baseline heat input was 
established for existing units, this baseline heat input would not 
change).
    EPA proposed to allocate allowances from a new unit set aside to 
new units that have entered service but have not yet established a 5-
year baseline. The allowances from the set-aside would be distributed 
based on a unit's reported emissions from the previous control period, 
which would provide allowances for use in meeting the allowance-holding 
requirement during the interim period before the unit would be 
allocated allowances on the same basis as existing units.
    Consistent with the CAIR SIP example allocation methodology, the 
new unit set-aside would be equal to 5 percent of a State's emission 
budget for the years 2009-2013 and 3 percent of a State's emission 
budget for subsequent years. New units would begin receiving allowances 
from the set-aside for the control period immediately following the 
control period in which the new unit commences commercial operation, 
based on the unit's emissions from the preceding control period. EPA 
would allocate allowances from the set-aside to all new units in any 
given year as a group. If there were more allowances requested than 
exist in the set-aside, allowances would be distributed on a pro-rata 
basis.
    EPA received a number of comments on various aspects of the 
proposed NOX allocation methodology. First, while most 
commenters were supportive of allocating allowances to existing units 
using historic heat input, some commenters advocated the use of output 
data for determining allocations, suggesting that such an approach 
would reward cleaner, more efficient generation, particularly with 
updating.
    Second, most commenters supported the use of a 5-year baseline for 
allocating allowances based on heat input, noting that a longer period 
of data collection is more likely to capture a unit's normal operating 
conditions. One commenter suggested that a shorter baseline period 
would allow new sources to enter the existing source pool in a more 
timely manner and thus provide existing sources with more certainty.
    One commenter requested clarification on the treatment of 
replacement units under the allocation provisions, regarding whether 
they would be treated as new units, and have to reestablish a baseline, 
or maintain their allowance allocation similarly to retired units.
    Several industry commenters made suggestions regarding the use of 
new unit set-asides in the FIP NOX allocation methodology. 
Some stated that EPA should provide that unused allowances from the 
set-aside would be returned to existing units. The Agency proposed to 
do so, and is finalizing that any unallocated allowances that remain in 
the new unit set-asides will be allocated on a prorated basis to the 
units that received allocations. See Sec. Sec.  97.142(d) and 
97.342(d). One commenter argued against using a new unit set-aside. 
Another commenter supported the use of a set-aside but argued that new 
units should be provided access to allocations during their initial 
year of operation.
    In today's rule, EPA is finalizing most of the NOX 
allowance allocation provisions as proposed. First, EPA is finalizing 
the use of an input-based approach for allocating allowances. This 
approach uses a baseline heat input comprised of operating data from 
the years 2000-2004, and uses the average of the 3 highest heat input 
years from this time period for allowance allocation calculations for 
existing units. This baseline heat input will not be updated over time.
    EPA believes, as it stated in the final CAIR, that allocating to 
existing units based on a baseline of historic heat input data, rather 
than output data, is desirable because accurate protocols currently 
exist for monitoring this data and reporting it to EPA, and several 
years of certified data are available for most of existing units. EPA 
has chosen not to utilize an updating system for allocating allowances, 
in order to avoid the subsidization of increased fuel use (or increased 
electricity generation) and the associated market distortions. If 
allocations were based on updated heat input (or updated output) data 
then increased fuel use (or increased electricity generation) would 
result in increased future allocations and thus would in effect be 
subsidized.
    For new units, EPA is finalizing the use of the proposed modified 
output approach for calculating baseline heat input, described in 
detail below, as well as the allocation to new units without a baseline 
from a new unit set aside of 5 percent of a State's emission budget for 
the years 2009-2013 and 3 percent of a State's emission budget for 
subsequent years.
    The Agency believes that it is reasonable to provide a set-aside 
for allocations to new units and further

[[Page 25357]]

believes that it is reasonable not to provide access to allocations for 
a new unit during its initial year of operation. The Agency's final 
methodology provides allocations to new units based on the prior year's 
emissions until the new unit establishes a baseline and is allocated as 
an existing unit. The methodology does not provide allowances to a unit 
in its first year of operation; however, it is straightforward, 
reasonable to implement, and predictable (see preamble to final CAIR, 
70 FR 25281).
    As in the CAIR SIP example methodology, after 5 years of operation, 
a new unit will have an adequate operating baseline of output data to 
be incorporated into the calculations for NOX allocations 
for existing units. (However, as discussed below in section VII of this 
preamble, allowances are allocated to existing units several years in 
advance, and a new unit with a baseline may need to continue to get 
allowances from the new unit set-aside for a few years after the unit's 
baseline is established.) The average of the highest 3 years from these 
5 years will be multiplied by a heat-input conversion factor of 7,900 
Btu/KWh to calculate the heat input value used to determine the new 
unit's allocation from the pool of allowances for existing units. New 
units will update the heat input numbers only once--for the initial 5-
year baseline period after they start operating. As in the CAIR SIP 
example methodology, existing units as a group will not update their 
heat input. This eliminates the potential for a generation subsidy 
because current or future operating behavior will not impact the units' 
allocations. Retired units will continue to receive allowances 
indefinitely, thereby avoiding creation of a disincentive to retire 
less efficient units.
    As discussed in section VII in today's preamble, EPA is adopting 
technical changes to the SIP rules that make it clear that a separate 
request for new-unit-set-aside allowances must be submitted for each 
control period for which they are sought and must be submitted by May 1 
(rather than July 1) of that control period; the final FIP rules are 
consistent with these technical changes.
    Regarding replacement units, EPA's allocation approach allows such 
units to retain their NOX allowance allocation, so as not to 
provide a disincentive to replace (e.g., repower) older, less-efficient 
units. As discussed in section VII in today's preamble, a definition of 
``replacement'' has been added and the definition of ``commence 
commercial operation'' has been clarified in the CAIR SIP model trading 
rules in order to clarify the treatment of replacement units. The final 
CAIR FIP rules are consistent with these changes in the SIP rules.
    Adjustments to Heat Input Data by Fuel Factors. In the NPR, EPA 
proposed an allocation methodology based on the example allocation 
methodology in the CAIR SIP model rules, which included adjustments to 
heat input by fuel type, using fuel adjustment factors that are based 
on average historic NOX emissions rates by 3 fuel types 
(coal, natural gas, and oil) for the years 1999--2002. These adjustment 
factors are 1.0 for coal-fired units, 0.6 for oil-fired units, and 0.4 
for units fired with all other fuels (e.g., natural gas). The factors 
reflect the inherently different emissions rates of different fossil 
fuel-fired units.
    A number of commenters supported the use of the proposed fuel 
factors to adjust heat input, arguing that adjusting heat input for 
fuel type results in a more equitable allocation scheme that would 
provide allowances that are in closer proportion to historic emissions. 
Commenters supporting the use of fuel factors also noted that EPA 
should retain these fuel factors in order to maintain consistency with 
the model cap-and-trade rule, which would ease any necessary 
transitions from a CAIR FIP to a CAIR SIP if most States are expected 
to eventually adopt the model rule. One commenter opposing the use of 
fuel factors for individual unit allocations argued that adjusting 
baseline heat input for fuel use is inequitable and penalizes clean 
generation and is irreconcilable with EPA's ``highly cost-effective'' 
determination and EPA's air quality modeling. This same commenter also 
questioned EPA's legal authority to use fuel adjustment factors in the 
allocation of allowances.
    EPA is finalizing the use of the proposed adjustment factors (1.0 
for coal-fired units, 0.6 for oil-fired units, and 0.4 for units fired 
with all other fuels (e.g., natural gas)), to adjust baseline heat 
input. EPA believes that these adjustment factors appropriately 
consider the inherently higher emissions rate of coal-fired units and 
the relatively greater burden on these units to control emissions.
    EPA's determination that CAIR control levels are highly cost 
effective was assessed at the regional, rather than the State, level 
because of the ability of sources to meet control requirements through 
a regional cap-and-trade program for EGUs. While the chosen allocation 
methodology can affect the distribution of compliance costs under the 
cap-and-trade program, it will have little effect on overall compliance 
costs or environmental outcome. This is because the incentives provided 
by cap-and-trade encourage economically efficient compliance over the 
entire region, as discussed above. The economically efficient outcome 
will not depend on the relative levels of individual unit allowance 
allocations.
    For this same reason, air quality modeling is not relevant to the 
determination of allowance allocations, and a given allowance 
allocation approach, particularly one based on historic data, would 
have no affect on air quality modeling.
    Finally, EPA disagrees with the commenter who questioned its legal 
authority to use this allocation scheme. The approach selected by EPA 
is reasonable, is supported by the information available to EPA and is 
well within the scope of EPA's authority to act. For further discussion 
of this issue, see the CAIR notice of final action on reconsideration 
signed the same day as the final FIP notice. While the reconsideration 
notice addresses the use of fuel factors in the context of determining 
the State NOX budgets, the same rationale applies to the use 
of fuel factors for individual unit allocations.
    Cogeneration Units. In the NPR, EPA proposed that for a new 
cogeneration unit that is a boiler, annual heat input values used to 
calculate the unit's baseline heat input for purposes of allowance 
allocations would be determined by converting the available thermal 
output (Btu) of useable steam from the boiler to an equivalent heat 
input by dividing the total thermal output (Btu) by a standard boiler/
heat exchanger efficiency rate of 80 percent. In today's rule, EPA is 
finalizing this approach.
    For new cogeneration combustion turbines, EPA proposed in the NPR 
to calculate annual heat input for such a unit by: Converting the 
available thermal output of useable steam from a heat recovery steam 
generator (HRSG) to an equivalent heat input by dividing the total 
thermal output (Btu) by a standard boiler/heat exchanger efficiency 
rate of 80 percent; and then adding the equivalent heat input for the 
electrical generation from the combustion turbine, which is calculated 
by multiplying the turbine's generation (in KWh) by the conversion 
factor of 3,413 Btu/kWh. EPA is finalizing this approach as proposed.
    One commenter suggested that EPA's approaches for allocating to new 
cogeneration boilers and combustion turbines be modified. This 
commenter argued that EPA's proposed

[[Page 25358]]

methodology improperly rewards new cogeneration units by not matching 
the rate of allocation with the degree of benefits realized by a 
specific cogeneration unit. The commenter further asserts that EPA's 
methodology would give a unit that only slightly improves its 
efficiency the same allowance allocation benefit as a unit that 
achieves a large increase in efficiency.
    The commenter proposes an alternative allocation approach for 
cogeneration units, the primary goal of which is rewarding electricity 
as a higher value product than steam.
    As EPA noted in the final CAIR preamble, steam and heat output, 
like electrical output, are useable forms of energy that can be 
utilized to power other processes. Because it would be nearly 
impossible to adequately define the efficiency in converting steam 
energy into the final product for each of the various processes and 
uses for these outputs, EPA selected an approach that focuses on the 
effectiveness of a cogeneration unit in capturing energy from fuel 
input and converting it into the useable forms of steam and 
electricity. EPA's approach does not attempt to regulate the efficiency 
of the processes that are powered by the steam output from cogeneration 
units.
    Further, EPA disagrees with the commenters suggestion that the 
Agency's approach would not provide an incentive for cogeneration units 
to operate efficiently. The use of modified output, rather than actual 
heat input, as the basis of determining allowance allocations will 
promote the development of cleaner and more efficient generation of 
both electricity and process steam. EPA's approach rewards cogeneration 
combustion turbines that have HRSGs capable of recapturing greater than 
80 percent of the available heat from the combustion turbine exhaust 
and any auxiliary burners. Furthermore, EPA's use of a 3,413 btu/KWh 
factor to convert electrical output from the combustion turbine to an 
equivalent heat input assumes that 100 percent of the combustion 
turbine's heat input that is not converted to electricity is sent to 
the HRSG as heat. This approach neglects energy losses in the 
combustion turbine and generator. EPA believes that any efficiency 
gains made by reducing these losses will be rewarded by the Agency's 
approach, by resulting in greater electricity and/or steam output for a 
given amount of heat input.
    Comments on providing sources owned by small entities with a 
greater share of allowances: In the NPR, EPA took comment on allocating 
NOX allowances in such a way as to provide sources owned by 
small entities with a greater share of allowances. As discussed at 
proposal, this option was based on the recommendation of one of the 
Small Business Advocacy Review Panel members. This option would 
necessitate reducing the number of NOX allowances available 
to other affected sources in order to ensure that the overall reduction 
requirements of CAIR are achieved, but could potentially provide 
economic relief to small entities that demonstrate economic hardship as 
a result of the rulemaking.
    A number of commenters expressed opposition to such an allocation 
approach arguing that it is inappropriate for EPA to subsidize small 
entity sources through additional allocations that result in reduced 
allowance allocations and increased compliance costs for larger 
sources. Additionally, some of these commenters noted that such an 
approach could open the NOX allowance allocation system to 
gaming, such as through a company establishing subsidiaries in order to 
obtain additional allowances made available for small entities. 
Finally, one of these commenters suggested that such an approach would 
deviate from the CAIR model rules, and could restrict a State's freedom 
if the State plans to transition from CAIR FIP allocations to CAIR SIP 
allocations. One commenter expressed support for the approach described 
in the NPR, but noted the need for additional clarification on the 
definition of hardship and how such an approach would fit in with the 
compliance supplement pool. No potentially affected small entities, as 
defined in the NPR, submitted comments in support of this approach.
    EPA is not finalizing a NOX allocation approach that 
gives a greater share of allowances to small entities that demonstrate 
hardship. EPA believes that the flexibilities inherent in the CAIR FIP 
trading program, as well as the existence of the Compliance Supplement 
Pool in the first year of the program, will reasonably address concerns 
about the economic impact of the rule on all sources. Additionally, the 
lack of commenter support for such an approach suggests that such an 
approach may not be warranted.
    Comments on use of an auction to distribute NOX allowances. In the 
NPR, the Agency asked for comment on using a combination of direct 
allocation and auctions for distributing NOX allowances in 
the proposed CAIR FIP trading programs. The proposed approach was 
analogous to the approach in the Administration's proposed Clear Skies 
legislation: For the first CAIR NOX control period (2009) 
the Agency would allocate 100 percent of the allowances using the fuel-
factor adjusted heat input approach described above. For the second 
control period (2010) the Agency would allocate 99 percent of 
allowances to units and auction the remaining 1 percent. The percentage 
of allowances distributed via auction would increase over time, with 
the Agency distributing via auction an additional 1 percent of 
allowances every year for 20 years and then an additional 2.5 percent 
of allowances every year thereafter, until eventually 100 percent of 
allowances would be distributed via auction. The Agency also requested 
comment on appropriate auction procedures for the proposed CAIR FIP 
trading programs.
    The majority of commenters opposed the use of an auction for 
allocating allowances. One commenter expressed support for an auction 
and the specific approach that EPA outlined at proposal. This commenter 
suggested that EPA modeled the auction procedure after that used in the 
Acid Rain Program. EPA does not necessarily agree with the specifics of 
the arguments submitted by commenters opposing the use of an auction. 
However, in light of the comments, EPA is concerned that adoption of 
the auction approach would be premature because the Agency lacks 
sufficient information about the potential impact of such auctions on 
sources and about the appropriate procedures for implementing such 
auctions. Consequently, the allocation provisions for today's final 
rule do not include auctions. Today's final allocation methodology, 
described earlier in this section, provides for the direct distribution 
of allowances to affected units.

G. Allocation of SO2 Allowances to Sources

    The Agency proposed a CAIR FIP SO2 cap-and-trade program 
substantively identical to the CAIR SIP model SO2 trading 
rule, which relies on title IV allowances. Title IV allowances have 
already been allocated in perpetuity to individual units by title IV of 
the CAA (70 FR 25278). Thus, the FIP proposal did not include an 
allocation methodology for SO2 allowances, except with 
regard to opt-in units.
    The Agency received several comments on the use of the title IV 
allowances in the CAIR FIP SO2 program. EPA also received 
several petitions for reconsideration of the CAIR, and granted 
reconsideration concerning claims that inequities result from using 
title IV allowance allocations in the CAIR program. EPA received, 
considered, and responded to numerous

[[Page 25359]]

comments on this issue as part of the reconsideration process. As 
explained in the CAIR Notice of Final Action on Reconsideration signed 
the same day as this action, EPA has decided not to alter the approach 
taken in the final CAIR.
    In today's action, EPA is adopting the CAIR model SO2 
trading rules as the CAIR FIP SO2 trading rules, with minor 
revisions to allow for Federal implementation. Thus, EPA is adopting 
the approach taken in the final CAIR for SO2 allowance 
allocation and State SO2 budgets, which was not changed 
during the reconsideration process. This approach is explained below, 
with a brief explanation of EPA's response to the major comments 
received on this process. A more complete discussion of this issue and 
the comments received appears in the preamble to the CAIR Notice of 
Final Action on Reconsideration.
    Several issues on SO2 allowance allocations and State 
budgets were raised both in comments on the proposed CAIR FIP and in 
the context of the CAIR reconsideration process. EPA has responded to 
such FIP comments in the CAIR Notice of Final Action on 
Reconsideration, a separate action signed the same day as this notice. 
These comments include the following claims:
     Inequities result from EPA's allocation approach, i.e., 
using title IV allowance allocations in the CAIR FIP trading program. A 
few commenters suggested that EPA instead create new CAIR 
SO2 allowances and allocate these allowances using a 
methodology similar to that adopted in the CAIR SIP model trading rule 
for NOX.
     EPA's approach to SO2 allowance allocation and 
State budgets creates inequities between States.
     New units and independent power production (IPP) 
facilities, which did not receive allocations under the Acid Rain 
Program, are unfairly disadvantaged by the CAIR SO2 budget 
and allocation methodology.
    A variety of approaches to SO2 allowance allocation were 
raised and analyzed during the CAIR rulemaking process, including the 
approach EPA adopted in the final CAIR SIP model rule and in today's 
final FIP trading rule. Alternative approaches analyzed for the final 
CAIR included the creation of new CAIR SO2 allowances and 
allocating on the basis of historic tonnage emissions, heat input (with 
alternatives based on heat input from all fossil generation or heat 
input from coal- and oil-fired generation only), and output (with 
alternatives based on all generation and all fossil-fired generation). 
(See CAIR Corrected Response to Comments, section X.A.26, Docket 
: EPA-HQ-OAR-2003-0053-2172).
    Furthermore, as a part of the CAIR reconsideration, EPA reanalyzed 
State differences in allocation approaches using the same methodology 
as for the final CAIR, comparing the title IV approach and seven 
alternative approaches (those discussed above, and those raised by the 
commenters on the reconsideration, discussed below). EPA also performed 
additional analyses to evaluate the use of title IV allowance 
allocations in the final CAIR to see how companies and States fared in 
terms of the amount of allowances allocated relative to their projected 
SO2 emissions. In these analyses, EPA compared 3 alternative 
SO2 allowance allocation methodologies that were either 
referred to by the petitioner in the petition for reconsideration or by 
commenters on the proposed response to the petition, to the use of 
title IV SO2 allowance allocations. EPA considered the 
following approaches, all using 1999-2002 data: (1) Pure heat input; 
(2) heat input adjusted for fuel type (e.g., coal, oil and gas); and 
(3) heat input adjusted for fuel type and coal type (e.g., bituminous, 
sub-bituminous, and lignite).
    Each allocation methodology suggested by the petitioner and 
commenters during the CAIR rulemaking results in both advantages and 
disadvantages for different companies and States. However, as EPA 
explained in the CAIR Response to Comments and again in the CAIR Notice 
of Final Action on Reconsideration, the analyses performed by EPA 
demonstrate that EPA's use of title IV allowance allocations is 
reasonable (see CAIR Notice of Final Action on Reconsideration, signed 
in a separate action the same day as this notice).
    Comments about new units and IPPs, which did not receive 
allocations under the acid rain program, being disadvantaged by the 
CAIR SO2 budget and allocation methodology are also 
addressed in the CAIR Notice of Final Action on Reconsideration, as 
well as in the applicability section (VI.E) of this final FIP action. 
EPA considered the allocation of title IV allowances to CAIR region 
units that are not currently in the Acid Rain Program but that could 
opt into the Acid Rain Program and receive title IV allowances (see 42 
U.S.C. 7651i and 18 CFR part 74). EPA assumes that companies owning 
non-Acid Rain units subject to CAIR will opt into the Acid Rain Program 
to receive title IV allowances to cover a portion of the units' 
emissions under CAIR. EPA believes this assumption is reasonable 
because, as explained in the CAIR Notice of Final Action on 
Reconsideration, each of these units has the option of becoming an Acid 
Rain Program opt-in unit at little cost.
    The fact that non-Acid Rain units may opt into the Acid Rain 
Program and receive allocations addresses the concern that the CAIR 
applicability provisions sweep in units that are not covered under the 
Acid Rain Program and thus do not receive Acid Rain Program 
allocations. EPA maintains that the statutory and regulatory provisions 
governing Acid Rain Program opt-in units allow units that are subject 
to CAIR, but not to the Acid Rain Program, to opt into the Acid Rain 
Program. See CAIR Notice of Final Action on Reconsideration--signed the 
same day as the final FIP rule--for additional discussion of authority 
under section 410(a) of the Clean Air Act.
    Further, it should be noted, that not all units required to 
participate in the Acid Rain Program receive allocations under the Acid 
Rain Program. While, as noted above, the Acid Rain Program provides 
allowances for non-Acid Rain units opting into the program as long as 
they remain non-Acid Rain units, the Acid Rain Program provides no 
allocations for virtually all new Acid Rain units (i.e., Acid Rain 
units commencing commercial operation on or after November 15, 1990) 
and for all existing units that were not Acid Rain units when the 
allowance allocations were completed in 1998 but that become Acid Rain 
units thereafter. By using title IV allowance allocations in the CAIR 
SIP SO2 model trading program (adopted today as the CAIR FIP 
SO2 trading program), EPA is taking the same approach to 
allocations for these units.
    Finally, it is worth noting that not all title IV allowances for 
future years have been allocated. 250,000 allowances will continue to 
be auctioned for the years 2012 and thereafter, and these allowances 
could be used to comply with the requirements of CAIR. The availability 
of these allowances ensures that all sources, including new units and 
non-title IV sources, will have access to a pool of allowances.
    In summary, EPA's use of title IV allowances in the CAIR (and CAIR 
FIP) SO2 trading program is supported by: (1) EPA's 
determination that this approach is necessary to maintain the efficacy 
of the title IV program and prevent erosion of confidence in cap-and-
trade programs in general; and (2) the results of EPA's analysis which 
indicate that the allocations resulting from this approach are 
reasonable.

[[Page 25360]]

    A few comments related to SO2 budgets and allocations 
submitted in response to the proposed CAIR FIP were unique to this 
action and, therefore, are addressed below.
    One FIP commenter states that the CAIR final allocation methodology 
is ``inequitable'' because lower emitting units would buy allowances 
from higher emitting units that install emission controls. However, it 
is unclear why such a result would actually be inequitable. On the 
contrary, the owner of each of the units involved would be choosing to 
adopt the most economic compliance strategy in light of the unit's 
emission control costs and the market value of allowances. The ability 
of the owners to make such choices reflects the flexibility provided by 
a cap-and-trade program.
    Moreover, EPA believes that for purposes of evaluating various 
allocation methodologies, computing allocations on a company-by-company 
basis is more appropriate than comparing allocations on a unit-by-unit 
basis. This is because, while one unit could be allocated fewer 
allowances under one methodology, another unit owned by the same 
company could be allocated more allowances, which may offset the 
smaller allocation of the first unit.
    This same commenter performed its own analysis of differences in 
SO2 State budgets for select States, comparing EPA's 
finalized method to ``a heat input method (similar to the 
NOX allowance allocation method).'' The commenter described 
the 6 of its selected States as ``[l]ow-emitting states that already 
have made substantial investments in SO2 emissions controls 
(e.g., South Carolina, Minnesota, Iowa, Wisconsin, Virginia, and North 
Carolina).'' Another 5 States the commenter analyzed were described as 
``high-emitting states (e.g., Ohio, Georgia, West Virginia, 
Pennsylvania and New York).'' See Docket ID: EPA-HQ-OAR-2004-0076-0204. 
The commenter's characterization of States as ``low-'' or ``high-
emitting'' and as having made ``substantial'' SO2 control 
investments is entirely unsupported. The commenter provided no criteria 
or factual basis for making such characterization, and the analysis 
submitted by the commenter appears to disregard the cost of installing 
controls in order to generate any excess allowances in States that are 
characterized as ``high-emitting.'' Further, only 3 utilities from the 
State's listed as ``low-emitting'' by the commenter, submitted adverse 
comments on EPA's use of title IV.
    Nevertheless, as mentioned above, EPA performed a comprehensive 
State-by-State SO2 budget analysis of all CAIR States and a 
variety of alternative methodologies to evaluate the claim of inequity 
as a part of the CAIR Notice of Final Action on Reconsideration. In 
that analysis, EPA demonstrated that the CAIR (and CAIR FIP) 
SO2 State budget and allocation methodology provides a 
reasonable result. EPA's use of title IV allowances in the CAIR (and 
CAIR FIP) SO2 trading program is supported by: EPA's 
determination that this approach is necessary to maintain the emissions 
reductions from, and effectiveness of, the title IV program; prevent 
erosion of confidence in cap-and-trade programs in general; and EPA's 
analysis showing that the allocations resulting from this approach is 
reasonable.

H. Allowance Banking

    Allowance banking is the retention of unused emissions allowances 
from one calendar year for use in a later calendar year (or from one 
ozone season for use in a later ozone season). Banking allows sources 
to make reductions beyond required levels and ``bank'' the unused 
allowances for use later. Generally speaking, banking has several 
advantages. Allowance banking can encourage earlier or greater 
reductions than are required from sources, stimulate the market and 
encourage efficiency, and provide flexibility in achieving emissions 
reduction goals. The CAIR FIP NPR proposed a trading program with 
unrestricted banking.
Comments on the Banking of Allowances
    Several commenters supported EPA's proposal to allow unrestricted 
banking of allowances. In general, they agreed with EPA that this 
approach: provides incentives for sources to make emission reductions 
beyond required levels, in some cases earlier emission reductions; is 
consistent with the CAIR SIP model trading rules; and provides 
flexibility in compliance strategies. Supporters of unrestricted 
banking also agreed with the EPA assessment that the use of banking 
restrictions, such as the ``flow control'' in the Ozone Transport 
Commission (OTC) cap-and-trade program, is complicated to understand 
and implement and caused market complexity.
    Other commenters supported the use of banking restrictions claiming 
that allowing unrestricted banking delays emission reductions. These 
commenters did not provide additional details regarding an alternative 
to banking or, if banking were to be restricted, what restrictions 
should be used.
Final CAIR FIP Cap-and-Trade Program
    Today's final CAIR FIP cap-and-trade programs allow unrestricted 
banking. EPA disagrees with commenters who claimed that unrestricted 
banking simply delays emission reductions. The ability of sources to 
sell allowances, without restriction, provides incentives for sources 
to over-control their emissions prior to emission reduction deadlines. 
As discussed in the CAIR NFR (section VIII.E), this creates a ``glide 
path'' towards the final emission cap levels. Emission levels along the 
glide path, which may not equate to the emissions caps for any given 
year, are the levels of emission reductions that are shown to address 
the pollution transport issue.
    EPA also agrees with supporting commenters that banking 
restrictions, such as ``flow control,'' introduce uncertainty into 
source planning by introducing the potential for devaluing allowances 
on short notice. EPA also agrees that allowing unrestricted banking in 
the CAIR FIP cap-and-trade programs provides consistency with the CAIR 
cap-and-trade programs.

I. Incentives for Early Reductions

    When sources reduce their SO2 and NOX 
emissions prior to the first phase of a multi-phase cap-and-trade 
program, it creates a slope of emissions that gradually declines over 
time, an emission reduction ``glide path'' that provides early 
environmental benefit and lowers the costs of compliance. Each of the 
cap-and-trade programs proposed in the CAIR FIP NPR incorporated the 
incentives for early reductions provided in the respective CAIR model 
trading programs: i.e., the banking of title IV allowances allocated of 
vintage years pre-2010 into the CAIR SO2 trading program, 
the compliance supplement pool (CSP) in the CAIR NOX annual 
program, and the banking of NOX SIP Call allowances of pre-
2009 vintage into the CAIR NOX ozone season program. While 
EPA believes that modeling has shown that the CAIR and CAIR FIP 
timelines are as early as feasible, early reductions incentives provide 
a mechanism for those facilities that can reduce their emissions prior 
to the implementation deadline to receive some credit. By shifting some 
emission reductions earlier, some environmental benefit is realized 
earlier. In addition, the CAIR FIP trading programs' early reduction 
mechanisms provide a way for companies that may have some difficulty 
meeting the implementation timeline to start early and achieve the 
mandated reductions on a more gradual pace. These mechanisms, along 
with

[[Page 25361]]

public comment on each, are discussed below.
1. SO2 Annual Program
    The proposed CAIR FIP SO2 annual cap-and-trade program 
would provide incentives for sources to reduce their SO2 
emissions prior to the 2010 implementation date by allowing affected 
sources to use title IV SO2 allowances of vintage 2009 and 
earlier for compliance with the CAIR FIP program at a 1-to-1 ratio. The 
CAIR FIP trading program adopts the early reductions incentive 
mechanism in the CAIR model trading rules. The modeling for the CAIR 
assumed the existence of such incentive mechanisms and showed that the 
SO2 cap-and-trade program, with this early incentive 
mechanism, will achieve the level of SO2 reductions needed 
to meet the CAIR goals.
    Comments on Early Emission Reduction Incentives in the CAIR FIP SO2 
Cap-and-trade Program. In general, commenters supported EPA's approach 
of allowing sources to bank title IV SO2 allowances into the 
CAIR FIP SO2 trading program at a 1-to-1 ratio. One 
commenter opposed this mechanism because ``EPA does not explain how 
carrying these allowances over to the CAIR bank creates an incentive 
for reductions if the allowances already exist.'' The commenter 
continues by highlighting that EPA modeling projects emissions to be 
approximately 37 percent above the annual CAIR emission caps for the 
first 5 years after the compliance deadline.
    Final CAIR FIP SO2 Annual Cap-and-trade Program. Today's 
action allows sources to bank title IV SO2 allowances into 
the Federal CAIR SO2 annual cap-and-trade program at a 1-to-
1 ratio. EPA disagrees with the comment that allowing banked allowances 
does not promote early reductions because allowances were banked before 
CAIR was proposed or finalized. Allowing sources to bank title IV 
allowances in the CAIR FIP SO2 annual program provides 
incentive for sources to: (1) Preserve reductions already made (whether 
before or after CAIR was proposed) rather than negating these 
reductions by increasing their emissions before 2010 and ``spending 
down'' their bank; and (2) to reduce further emissions before 2010 and 
increase their bank. This incentive is created by allowing sources to 
benefit financially from allowances banked before 2010 that retain 
their value in the CAIR FIP and CAIR SO2 trading programs. 
All pre-2010 vintage allowances will retain their value in the CAIR and 
CAIR FIP trading programs because they can be used (on a one-allowance-
per-ton basis) to meet the requirement to hold allowance to cover 
emissions under the CAIR FIP (and CAIR) trading programs. In summary, a 
source has an incentive to continue banking allowances before 2010, 
which results in the preservation of existing emission reductions and 
the creation of further reductions.
    The commenter noted that allowing banking into the CAIR FIP 
SO2 annual program results in the emissions being greater 
than the cap levels. However, the gradually declining emissions ``glide 
slope'' is one of the keys to cap-and-trade programs achieving cost-
effective reductions. As discussed above, EPA's modeling for CAIR 
showed that, with the pre-2010 title IV SO2 allowance 
banking and subsequent use of the bank, the environmental goals of 
reducing the interstate transport of pollution will be achieved.
2. NOX Annual Program
    The FIP NPR proposed a CAIR FIP NOX annual cap-and-trade 
program that included a Compliance Supplement Pool (CSP) to provide an 
incentive for early, annual NOX annual emission reductions. 
The CSP would provide, for each affected State, a pool of CAIR 
NOX annual allowances from which EPA could distribute 
allowances for early, surplus NOX emissions reductions 
occurring in the years 2007 and 2008. The CSP would provide a total of 
200,000 annual NOX allowances of vintage 2009 for the CAIR 
region (including Delaware and New Jersey's share of the pool), 
apportioned to each State, which would be in addition to each State's 
annual NOX budgets. Table V-3 in this preamble sets forth 
the CSP amounts by State. The CAIR FIP trading program adopts the CSP 
established in the CAIR model trading program. However, where the CAIR 
model trading program provides States with flexibility to determine 
what constitutes an early reduction qualifying for an allocation of 
allowances from the CSP, the Administrator allocates the CSP in the 
CAIR FIP trading program. As a result, the CAIR FIP, provides a 
specific methodology for determining early reductions than is in the 
CAIR model rules. This methodology is explained below.
    As proposed, Federal CSP allowances could be distributed to sources 
based upon: (1) Implementing NOX control measures that 
result in early emission reductions in 2007 or 2008, i.e., reductions 
beyond what is required by any applicable State or Federal emissions 
limitation; or, (2) a demonstration of need for an extension of the 
2009 deadline for implementing emission controls. See section VII.A. in 
the CAIR NFR preamble (70 FR 25256-25263). The Agency proposed that, in 
order for early emission reductions to qualify for allowances from the 
CAIR FIP CSP, sources would have to demonstrate that--for each year for 
which they apply for CAIR FIP CSP allowances--they had an annual 
NOX emission rate below 0.25 lb/mmBtu. In addition, sources 
who also participate in a title IV NOX averaging plan would 
have to demonstrate that the plan-wide weighted-average annual 
NOX emission rate for each such year was equal to or lower 
than the plan-wide rate for the preceding year. Sources meeting this 
criterion could request early reduction credit equal to the difference 
between 0.25 lb/mmBtu and the unit's actual emission rate multiplied by 
the unit's actual heat input for the applicable control period.
    Comments on Federal CSP. Several commenters supported the use of a 
CAIR FIP CSP to encourage early emission reductions and provide sources 
access to some additional allowances for demonstrated reliability 
needs. Some commenters supported including a CAIR FIP CSP but were 
concerned about the use of additional criteria (i.e., a 0.25 lb/mmBtu 
threshold and the limitation on emissions under a title IV 
NOX averaging plan). Other commenters believed that 
providing additional allowances would delay emission reductions and 
that EPA's analysis already demonstrated that the mandated emission 
reduction levels and timelines are feasible.
    EPA disagrees with commenters that believe the CAIR FIP CSP should 
not include the criterion that units can only request early reduction 
credit equal to the difference between 0.25 lb/mmBtu and the unit's 
actual emission rate multiplied by the unit's actual heat input for the 
applicable control period. EPA believes that the 0.25 lb/mmBtu 
threshold (coupled with the limitation on emissions under a title IV 
NOX averaging plan) provides a reasonable proxy for the more 
general standard that emission reductions exceed what is required under 
State or Federal law.\32\ Applying these criteria will provide 
reasonable assurance that only early reductions (i.e., reductions 
exceeding existing requirements) will be awarded CAIR FIP CSP 
allowances. Further, because these criteria are clearer and more 
precise than the general standard that reductions exceed existing

[[Page 25362]]

requirements, the criteria will give owners and operators greater 
certainty when making reasonable projections about how many allowances 
they may receive for their early reductions and will, thereby, 
encourage early emission reductions.
---------------------------------------------------------------------------

    \32\ The 0.25 lbs/mmBtu criterion is based upon EPA analysis 
described in the CAIR FIP CSP Technical Support Document and is 
similar to the criterion used for the CSP established under the 
NOX SIP Call section 126 action. (65 FR 2674, January 18, 
2000).
---------------------------------------------------------------------------

    Additionally, EPA disagrees with commenters that believe the CAIR 
FIP CSP should not include the distribution criterion that units in a 
title IV NOX averaging plan would have to demonstrate that 
the current plan-wide average NOX emission rate be less than 
the plan-wide average for the previous year. The averaging plan 
criterion acknowledges the unique circumstances for units that are in 
title IV NOX averaging plans, where emission reductions by 
one unit in the plan may be offset by emission increases by another 
unit in the plan, thereby, making it difficult to determine whether 
early reductions are taking place. As discussed above, EPA believes 
that this criterion, coupled with the 0.25 lb/mmBtu criterion, provides 
a reasonable proxy for the general standard that reductions exceed 
existing requirements and that the criteria provide greater certainty 
about the rewarding of CAIR FIP CSP allowances. EPA believes it is 
appropriate to base the averaging plan criterion on a single, prior 
year's plan-wide average emission rate because the averaging of 
emissions across a plan tends to mitigate year-to-year fluctuations.
    EPA disagrees with commenters that believe a CAIR FIP CSP will 
significantly delay emission reductions. For the CAIR NFR, EPA 
conducted IPM modeling of the CAIR trading programs to evaluate the 
effect of the 200,000 CAIR annual CSP NOX allowances. The 
modeling shows that these CSP allowances do not have a significant 
impact on regionwide NOX emissions.
    CAIR FIP CSP Finalized in Today's Action. Today's rule finalizes 
the CAIR FIP CSP mechanism proposed in the FIP NPR. EPA believes that 
including a CAIR FIP CSP will encourage early emission reductions and 
alleviate concerns of some sources that they have unique issues 
concerning compliance with the 2009 implementation deadline of the CAIR 
FIP trading program. (See 70 FR 25286 for additional discussion of the 
CAIR CSP.) EPA also believes that the CSP will not significantly impact 
the achievement of emission reduction goals.
    The CAIR FIP CSP includes specific criteria for distributing 
allowances based upon early emission reductions that do not appear in 
the CAIR SIP trading programs. (Note that, as discussed in section IV.E 
of today's action, States choosing the abbreviated SIP revision option 
may choose to use the CAIR FIP CSP or the CAIR CSP mechanism or may 
choose another mechanism consistent with Sec.  51.123(e)(4).) EPA 
believes that the criteria will reasonably ensure that the award of CSP 
allowances will be aimed at early reductions and give owners and 
operators greater certainty to make reasonable projections about how 
many allowances they may receive for their early reductions.
3. NOX Ozone Season Program
    The final CAIR FIP NOX ozone season cap-and-trade 
program allows the banking of NOX SIP Call allowances of 
vintage years 2008 and earlier and their use in the CAIR FIP 
NOX ozone season program to meet the requirement to hold 
allowances covering their emissions. This provides incentive for 
sources in the NOX SIP Call to reduce their ozone season 
NOX emissions before 2009 and bank additional allowances 
into the CAIR FIP NOX ozone season program. This early-
reduction incentive mechanism is in the CAIR NOX ozone 
season model rule and is adopted as part of the CAIR FIP NOX 
ozone season cap-and-trade programs. EPA did not receive any comments 
specifically addressing the early-reduction incentive mechanism in the 
CAIR FIP NOX ozone season program. However, several 
commenters generally supported mechanisms to provide incentives for 
early emission reductions. The Agency is finalizing this mechanism.

J. Monitoring and Reporting Requirements

    Under the CAIR SIP model cap-and-trade rules, sources are required 
to monitor and report NOX and SO2 mass emissions 
in accordance with 40 CFR part 75. (See Section VIII.H. of the CAIR NFR 
preamble, 70 FR 25288.) Many CAIR sources are measuring and reporting 
SO2 mass emissions and NOX emission rate year 
round under the Acid Rain Program. Many additional sources are also 
reporting NOX mass emissions at least during the ozone 
season and often year round under the NOX SIP Call. The CAIR 
SIP model rules require continuous monitoring of NOX mass 
emissions by all existing, affected units by January 1, 2008 using part 
75 certified monitoring systems for the NOX annual program 
and May 1, 2008 for the NOX ozone season program. 
SO2 emissions must be monitored by those same units 
beginning January 1, 2009.
    Today's rulemaking requires part 75 monitoring, reporting, and 
recordkeeping for all units subject to the CAIR FIP cap-and-trade 
programs. This is consistent with the CAIR model cap-and-trade 
programs. For additional discussion on monitoring and reporting 
requirements, see Section VIII.H. in the CAIR NFR preamble (70 FR 
25288).

K. Interactions With Other CAA Programs

    In the CAIR NFR preamble, section IX discusses interactions between 
the NOX SIP Call and CAIR. Section IX also discusses 
interactions between the title IV Acid Rain Program and CAIR. Today's 
final rule covers the same States as the CAIR and adopts as FIP trading 
programs the CAIR SIP model trading rules, thus the interactions would 
be as described in CAIR (70 FR 25289-25299).

VII. What Are the Revisions of the CAIR SIP Rule, Including the CAIR 
Model Cap-and-Trade Rules?

    The EPA is adopting several revisions of the CAIR SIP rule. One 
such revision is part of EPA's final action on reconsideration 
concerning the applicability provisions as they relate to solid waste 
incineration units. In particular, for the reasons stated in the 
preamble of the August 24, 2005 proposed rule, EPA is finalizing the 
EGU definition in Sec. Sec.  51.123(cc) and 51.124(q). The EGU 
definition, as adopted, excludes certain solid waste incineration units 
from being EGUs; limits EGUs to units that, as of November 15, 1990 or 
any time later, serve a generator with a greater than 25 MWe nameplate 
capacity producing electricity for sale; and clarifies language 
concerning cogeneration units. The final EGU definition is the same as 
the definition proposed on reconsideration except for a few minor 
changes, e.g., to clarify the circumstances under which a unit that is 
not an EGU, but that begins to combust fossil fuel or to serve a 
generator with a 25 MWe nameplate, becomes an EGU. (For the reasons in 
the preamble of the August 24, 2005 proposed rule, the language in the 
final EGU definition is also reflected in final applicability 
provisions of the CAIR model trading rules and the CAIR FIP trading 
programs.) EPA is also finalizing, as discussed in detail above, 
provisions allowing States to submit abbreviated SIP revisions.
    EPA is also adopting a number of revisions of the CAIR SIP model 
cap-and-trade rules. The revisions are generally necessary to integrate 
each of the CAIR SIP model cap-and-trade programs with its 
corresponding CAIR FIP cap-and-trade program, and some of the final 
revisions reflect needed technical and clarifying changes. The 
revisions are consistent with the

[[Page 25363]]

analogous provisions of the final CAIR FIP trading programs. One such 
revision is part of EPA's final action on reconsideration concerning 
the applicability provisions as they relate to solid waste incineration 
units.
    In particular, several definitions of terms are revised, and a few 
new definitions are added. For example, the definitions of ``CAIR 
designated representative'' and ``alternate CAIR designated 
representative'' are modified to require that the respective 
individuals designated for these positions be the same individuals as 
designated, for a given source, as the designated representative and 
alternate designated representative under any applicable trading 
program under the Clean Air Mercury Rule (CAMR). (CAMR was promulgated 
in May 2005 to achieve reduction of national mercury (Hg) emissions. 
See 70 FR 28606, May 18, 2005.) This will greatly simplify the 
administration of the allowance tracking systems for the trading 
programs, including the Hg trading programs, for which EPA intends to 
propose analogous changes. (In order to implement this change, a new 
definition for ``Hg Budget Trading Program'' is added to the CAIR SIP 
model trading rules.)
    As a further example, a new definition is added (``solid waste 
incineration unit''), and certain definitions are modified (``commence 
commercial operation'' and ``commence operation''), to reflect final 
changes in the applicability provisions for the CAIR model trading rule 
and to clarify and streamline the language in the definitions. In 
particular, the modified definitions are consistent with the above-
noted revisions of the applicability provisions that: exempt certain 
solid waste incineration units from the CAIR trading programs; limit 
applicability to units that, as of November 15, 1990 or any time later, 
serve a generator with a greater than 25 MWe nameplate capacity 
producing electricity for sale; and clarify the language concerning 
cogeneration units. In addition, the ``commence commercial operation'' 
and ``commence operation'' definitions are simplified by removing 
unnecessary language, such as the language referring to CAIR opt-in 
units, which is unnecessary because these terms are not used in the 
CAIR opt-in rule provisions. Also, the simplified definition of 
``commence operation'' means that all units will use the same 
``commence operation'' definition in determining, for purposes of 
allocations under Sec.  96.142 and 96.342, their baseline periods for 
calculating adjusted or converted heat input. (The provisions for opt-
in units that subsequently become subject to the allocation provisions 
of Sec.  96.142 and 96.342 and lose their opt-in status are also 
revised to reflect this approach.)
    Further, a definition of ``replacement,'' a term used in the 
``commence commercial operation'' and ``commence operation'' 
definitions, is added in order to clarify the application of the latter 
two terms to cases when a unit is replaced by another unit, rather than 
simply being modified. The revised applicability provisions and related 
definitions in the CAIR SIP model trading rules are consistent with the 
applicability provisions and related definitions in the final CAIR FIP 
trading rules and with the above-discussed EGU definition in Sec. Sec.  
51.123(cc) and 51.124(q).
    In addition, the definitions of ``CAIR NOX allowance,'' 
``CAIR NOX Annual Trading Program,'' ``CAIR SO2 
allowance,'' ``CAIR SO2 Annual Trading Program,'' ``CAIR 
NOX Ozone Season allowance,'' and ``CAIR NOX 
Ozone Season Trading Program'' are modified to provide for integrated 
operation of each CAIR SIP trading program administered by EPA for any 
State with its corresponding CAIR FIP trading program for any State. 
Under these revised definitions, CAIR NOX, SO2, 
or NOX Ozone Season allowances issued under either type of 
program for any State would be a ``CAIR NOX allowance,'' 
``CAIR SO2 allowance,'' or ``CAIR NOX Ozone 
Season allowance,'' respectively, usable by owners and operators for 
meeting the allowance-holding requirement under the corresponding CAIR 
SIP model trading program or CAIR FIP trading program for any State.
    EPA is also simplifying and clarifying other definitions. For 
example, the term ``allocate'' is simplified to cover allocation of 
allowances for either the CAIR SIP or FIP trading programs. The 
definition of ``maximum design heat input'' is simplified, and the 
definition of ``nameplate capacity'' is clarified.
    Further, the retired unit exemption provisions are revised. The 
revisions clarify that the provisions concerning CAIR designated 
representatives and the appeal procedures generally applicable to final 
actions of the Administrator are applicable to retired units and to 
final actions of the Administrator with regard to retired units.
    In addition, the provisions listing the content of a certificate of 
representation are revised to clarify that the identification of each 
unit covered by the certificate of representation includes 
identification and nameplate capacity of each generator served by the 
unit. EPA believes that the current rule language requiring 
``identification'' of each unit subject to the trading program is 
already broad enough to encompass such information concerning each 
generator served by the unit, particularly since only a unit serving a 
generator with a nameplate capacity greater than 25 MWe can be subject 
to the CAIR trading programs. However, EPA is revising the language to 
make it clear that generator information is required in the certificate 
of representation.
    EPA is also making technical revisions to the provisions concerning 
the reflection in certificates of representation of the owners and 
operators of the source and units involved. The changes make it clear 
that all owners and operators must be listed and that those that should 
be, but are not, listed are still bound by the certificate of 
representation and the CAIR designated representative.
    Further, new provisions concerning designated representatives and 
authorized account representatives are added to clarify that such 
individuals may use agents in order to make electronic submissions. The 
existing CAIR SIP model trading rules provide for certain submissions 
(i.e., certificates of representation, applications for general 
account, allowance transfers, and quarterly emissions reports) required 
to be ``in a format prescribed'' or ``in a format specified'' by the 
Administrator. (The terms ``prescribed'' and ``specified'' have the 
identical meaning in these contexts.) These submissions may be made, 
and in the case of quarterly emissions reports must be made, 
electronically. Although the formats for the CAIR trading programs have 
not yet been developed, other EPA-administered trading programs (i.e., 
the Acid Rain Program and the NOX Budget Trading Program) 
have analogous language concerning submission formats and have 
existing, prescribed formats for submissions. The electronic formats 
prescribed by the Administrator for the Acid Rain Program and the 
NOX Budget Trading Program allow the designated 
representative or authorized account representative, as appropriate, to 
designate other individuals (``agents'') who may make the electronic 
submissions for the designated representative or authorized account 
representative, who is fully bound by the agent's actions. EPA 
maintains that the references in the Acid Rain Program and 
NOX Budget Trading Program regulations to ``prescribed'' (or 
``specified'') formats, coupled with the existing electronic formats, 
provide the legal authority necessary for designated representatives 
and authorized account

[[Page 25364]]

representatives to use agents to make electronic submissions in the 
applicable trading programs. EPA plans to adopt electronic formats for 
the CAIR trading programs that, similarly, allow for the use of agents. 
EPA believes that the existing references in the CAIR SIP model trading 
rules to ``format[s] prescribed '' or ``specified'' by the 
Administrator, when coupled with the appropriate electronic formats, 
will similarly provide the legal authority necessary for the use of 
agents. However, in order to remove any uncertainty about such legal 
authority, EPA is adding provisions to the CAIR SIP model trading rules 
(and to the CAIR FIP trading rules) that explicitly authorize the use 
of agents for electronic submissions.
    In addition, in the permitting provisions, EPA is revising the 
deadline for submission of CAIR permit applications to run from the 
later of January 1, 2009 (for the NOX programs) or 2010 (for 
the SO2 program) or the date on which the unit commences commercial 
operation, rather than the date on which the unit simply commences 
operation. A unit's date of commencement of commercial operation is not 
likely to range from more than a few days to a few months later than 
the unit's date of commencement of operation since owners and operators 
of EGUs generally prefer to minimize using fuel without producing 
electricity. Moreover, running the permit application deadline from the 
commencement of commercial operation avoids the need for complex 
provisions in the definition of ``commence operation'' to address, 
solely for permitting purposes, units that are not subject to the CAIR 
trading programs when they first combust fuel and that subsequently 
become CAIR units. (The simplified definition of ``commence operation'' 
reflects this revision.)
    Further, EPA is adopting certain technical corrections in the 
NOX allowance allocation provisions. In particular, the 
current provisions concerning timing of submission of unit allocations 
by the permitting authority to the Administrator provide that if the 
unit allocations are not submitted on time, the Administrator will 
assume that the allocations are the same as in the prior year. If the 
year for which allocations are submitted late is 2015 (the beginning of 
phase II of the CAIR trading programs, the Administrator will assume 
that the allocations are 83% of the 2014 allocations. EPA is removing 
these provisions both for existing and new units because they seem 
unlikely to be used, are unduly complicated, and may result in 2015 in 
total allocations that do not equal the respective State trading 
budget. Moreover, there are no comparable provisions in the CAIR FIP 
trading rules.
    EPA is also revising the current provisions for new unit 
allocations that provide that a new unit is eligible for allocations 
from the new unit set-aside until that unit has operated long enough to 
develop a baseline heat input using the 3 highest figures for converted 
control period heat input out of such figures for the first 5 years of 
operation. At that point, the unit is supposed to be allocated 
allowances from the pool of allowances allocated to all units that have 
a baseline heat input. However, allowances for units with baselines are 
allocated a number of years in advance of the first year for which such 
allowances may be used to meet the allowance-holding requirement. 
Consequently, it is possible for a new unit to have a baseline as of a 
given year but find that no more allowances are available for that year 
for units with baselines because the allowances for that year were 
allocated before the time when the new unit's baseline was developed. A 
new unit could find that, for some years, it was both ineligible for 
the new unit set-aside and unable to obtain an allocation from the pool 
for units with baselines. EPA intended that new units move seamlessly 
from new-unit-set-aside eligibility to units-with-baselines allocations 
and not to fall in between the two types of allocation procedures. EPA 
is revising the allocation provisions to clarify that a new unit 
continues to be eligible for the new unit set-aside so long as the unit 
is not allocated allowances from the pool for units with baselines 
allocations either because the new unit does not yet have a baseline or 
because all the allowances for units with baselines have already been 
allocated for the year involved.
    EPA also is adopting technical changes that make it clear that a 
separate request for new-unit-set-aside allowances must be submitted 
for each control period for which they are sought and must be submitted 
by May 1 (for the NOX annual program) or February 1 (for the 
NOX ozone season program) of that control period. This 
approach will reasonably put the burden on owners and operators to 
inform the State permitting authority each year. This will ensure that 
the State permitting authority can keep track, for each control period 
in the future, of which units are seeking new-unit-set-aside allowances 
for that control period. These submission deadlines will give the State 
permitting authorities more time to process (which may include, when 
appropriate, opportunity for public comment) the requests in time to 
submit the allocations to the Administrator for recordation by December 
1 (for the NOX annual program) or September 1 (for the 
NOX ozone season program). Similarly, EPA is revising the 
deadline for submission of requests for allowances from the compliance 
supplement pool to be May 1, 2009 (rather than July 1, 2009). Just as 
emissions data for 2008 will be available in time for new-unit-set-
aside requests due on May 1, emissions data for 2008 (and 2007) will be 
available in time for compliance-supplement-pool requests due on May 1. 
The July 1, 2009 deadline did not provide sufficient time for State 
permitting authorities to process the requests.
    In addition, EPA is adopting technical changes to the provisions 
for recordation of allowance allocations, for the reasons discussed 
below and elsewhere in this preamble. For example, the current 
provisions require the Administrator to record the initial allocations 
for 2010-2014 by December 1, 2006. Because State plans are not due 
until September 11, 2006, EPA cannot review and approve all State plans 
in time to record allowance allocations in those plans by December 1, 
2006, which date is changed to September 30, 2007. Further, the current 
provisions also require the recordation of allocations for subsequent 
years to occur only after completion of the end-of-year compliance 
determination process for a previous year. Because of the need to 
finalize emissions data for a year before the compliance determination 
process for that year can be completed, the current provisions may 
delay recordation for a number of months. However, as a matter of 
logic, there is no necessary connection between one year's compliance 
determination and the future year's allocation recordation. 
Consequently, EPA is removing the connection made in the current 
provisions and is setting an independent deadline (December 1) for 
allocation recordation, which will result in recordation several months 
earlier than under the current provisions.
    Further, EPA is adopting technical changes to the provisions 
referring to when an allowance transfer by the owner of an allowance to 
another allowance tracking system account is ``correctly submitted.'' 
The changes clarify that a ``correctly submitted'' allowance transfer 
is one that references allowances that both: Were in the owner's 
allowance tracking system account when the allowance transfer form was 
submitted to the

[[Page 25365]]

Administrator; and continue to be in such account when the allowance 
transfer form is processed by the Administrator.
    In addition, EPA is revising the provisions for deducting 
allowances to determine compliance with the allowance-holding 
requirement under the trading programs. The revisions do not change the 
requirements that an allowance usable for compliance: be allocated for 
the year, or a year before the year, for which compliance is being 
determined; and be in or covered by a proper request for transfer into 
the source's compliance account by the allowance transfer deadline. 
However, the statement indicating that the allowance must also not be 
necessary to account for excess emissions for a prior year is removed 
because it is confusing and inconsistent with the compliance procedures 
that EPA has been using in its ongoing cap-and-trade programs, i.e., 
the Acid Rain Program and the NOX Budget Trading Program.
    Further, as explained in the preamble of the August 24, 2005 
proposed rule, EPA is adopting revisions clarifying the application of 
excess emissions penalties for a source that is subject to, and has 
excess emissions under, both the Acid Rain Program and the CAIR 
SO2 model trading rule. Under these revisions, a given ton 
of SO2 excess emissions at a source, the owners and 
operators of the source will be liable, if that ton is an excess 
emission under both the Acid Rain Program and the CAIR trading program, 
for the offset (the deduction of one allowance) and the dollar penalty 
($2,000 inflation adjusted) under the Acid Rain Program and liable, if 
that ton is only an excess emission under the CAIR trading program, for 
the 3-for-1 allowance deduction under the CAIR trading program.
    In addition, EPA is revising certain provisions concerning the use 
of substitute data when the owner or operator of a unit adds a new 
stack or flue and fails to meet the deadline for monitoring 
certification. EPA proposed, but is not finalizing, procedures that 
would allow for substitute data other than data reflecting maximum 
potential emissions. Because EPA believes that the proposed provisions 
would in fact still result in the use of data reflecting maximum 
potential emissions, EPA is not adopting the proposed provisions.
    Further, EPA is removing a provision that separately requires units 
to monitor heat input. The provision is unnecessary because heat input 
monitoring is already explicitly required in the monitoring provisions 
in Sec.  96.170, 96.270, and 96.370.
    In addition, EPA is revising the requirements for CAIR opt-in 
permits for owners and operators planning to repower an opt-in unit and 
seeking special allowance allocations for such unit. The revisions 
require that the owners and operators state, in the permit application, 
that they intend to repower the opt-in unit before January 1, 2015. EPA 
believes that this is a reasonable requirement to prevent frivolous 
requests for the special allocations for opt-in units to be repowered. 
The permit application, like any submission for owners and operators, 
must of course include a certification as to the truth, accuracy, and 
completeness of the submission.
    A few changes are adopted for some other provisions (concerning, 
e.g., the submission deadlines for quarterly emissions reports for CAIR 
opt-in units and units applying to be CAIR opt-in units and inclusion 
of the CAIR opt-in permit in the CAIR permit and the title V permit for 
the source that includes the CAIR opt-in unit) of the CAIR SIP model 
trading rules. These other changes are similarly technical or 
clarifying in nature. All of these changes are consistent with the 
analogous provisions in the final CAIR FIP trading rules.

VIII. What Are the Revisions of Acid Rain Program Regulations?

    A few changes are adopted for the Acid Rain Program regulations. As 
explained in the preamble of the August 24, 2005 preamble, EPA is 
adopting revisions aimed at facilitating interaction among the CAIR FIP 
trading programs, any EPA-administered CAIR SIP trading programs, and 
the Acid Rain SO2 trading program and revisions related to 
the change, finalized in the CAIR rulemaking, from unit-level to 
source-level compliance with the Acid Rain SO2 trading 
program.
    In addition, EPA is revising the provisions listing the content of 
a certificate of representation to clarify that the identification of 
each unit covered by the certificate of representation includes 
identification and nameplate capacity of each generator served by the 
unit. EPA believes that the current rule language requiring 
``identification'' of each unit subject to the trading program is 
already broad enough to encompass such information concerning each 
generator served by the unit, particularly since only a unit serving a 
generator with a nameplate capacity greater than 25 MWe can be subject 
to the Acid Rain Program. However, EPA is adopting revised language to 
make it clear that generator information is required in the certificate 
of representation.
    EPA is also making technical revisions to the provisions concerning 
the reflection in certificates of representation of the owners and 
operators of the source and units involved. The changes make these 
provisions consistent with those in the CAIR trading programs. The 
changes make it clear that all owners and operators must be listed and 
that those that should be, but are not, listed are still bound by the 
certificate of representation and the CAIR designated representative.
    Further, EPA is adding a new Sec.  72.26 and a new Sec.  73.33(g) 
that are analogous to provisions adopted in the CAIR SIP model trading 
rules and the CAIR FIP trading rules and concern the use of agents by a 
designated representative and authorized account representative. As 
discussed above in Section VII of this preamble, EPA maintains that the 
existing Acid Rain Program regulations already authorize a designated 
representative or authorized account representative to use agents to 
make certain electronic submissions. However, in order to remove any 
uncertainty about such legal authority, EPA is adding provisions to the 
Acid Rain Program regulations that explicitly authorize such use of 
agents.
    In addition, EPA is revising the appeal provisions of part 78 to 
apply to the appeals procedures to final actions of the Administrator 
under the CAIR FIP trading rule, just as these provisions already apply 
to final Administrator actions under the CAIR SIP model trading rules. 
Part 78 is revised to refer specifically, where appropriate, to the 
CAIR FIP trading rules in a similar way to how part 78 currently refers 
specifically, where appropriate, to the CAIR SIP model trading rules.

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether a 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

[[Page 25366]]

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.
    Today's action both provides a response to the Section 126 Petition 
filed by North Carolina and promulgates FIPs to implement the 
requirements of the recently published CAIR (May 2005) in all affected 
States. It also makes minor changes to the CAIR and the Acid Rain 
Program. The FIPs require the same set of air pollution emissions 
reductions required by the CAIR. For this reason, EPA is relying on the 
economic analysis conducted for CAIR entitled ``Regulatory Impact 
Analysis of the Final Clean Air Interstate Rule'' (March 2005) to serve 
as the analysis for these rulemakings.
    This economic analysis shows that substantial net economic benefits 
to society are likely to be achieved due to reduction in emissions 
resulting from the CAIR program. The results show that the CAIR program 
would be highly beneficial to society, with annual net benefits 
(benefits less costs) of approximately $71.4 or $60.4 billion in 2010 
and $98.5 or $83.2 billion in 2015. These alternative net benefits 
estimates occur due to differing assumptions concerning the social 
discount rate used to estimate the annual value of the benefits of the 
rule with the lower estimates relating to a discount rate of 7 percent 
and the higher estimates a discount rate of 3 percent. All amounts are 
reflected in 1999 dollars. The costs and benefits presented in the CAIR 
economic analysis are an accurate representation of the benefits and 
costs anticipated for the FIPs. For more information, see the NFR for 
the CAIR published in the Federal Register (70 FR 25162; May 12, 2005) 
and the ``Regulatory Impact Analysis for the Final Clean Air Interstate 
Rule'' (March 2005).
    In view of its important policy implications and potential effect 
on the economy of over $100 million, this action has been judged to be 
an economically ``significant regulatory action'' within the meaning of 
the Executive Order. As a result, today's action was submitted to OMB 
for review. Changes made in response to OMB suggestions or 
recommendations are documented in the public record.

B. Paperwork Reduction Act

    The EPA believes that the Paperwork Reduction Act (44 U.S.C. 3501 
et seq.) requirements of this rule are satisfied through the 
Information Collection Request (ICR) (EPA ICR number 2152.02; OMB 
control number 2060-0570) submitted to the OMB for review and approval 
on May 12, 2005 as part of the CAIR (70 FR 25162-25405) and approved by 
the OMB in September 2005. The ICR describes the nature of the 
information collection and its estimated burden and cost associated 
with that final rule. In cases where information is already collected 
by a related program, the ICR takes into account only the additional 
burden. [This situation arises in States that are also subject to 
requirements of the Consolidated Emissions Reporting Rule (EPA ICR 
number 0916.10; OMB control number 2060-0088) or for sources that are 
subject to the Acid Rain Program (EPA ICR number 1633.13; OMB control 
number 2060-0258) or NOX SIP Call (EPA ICR number 1857.03; 
OMB number 2060-0445) requirements.]
    The burden of today's rule is essentially the same as the burden 
estimated for the CAIR. There is a modest transfer of burden from the 
States to EPA if the Federal plan is implemented rather than the CAIR 
State plan. The overall total burden is essentially unchanged. Thus, 
the ICR prepared for CAIR satisfies the requirements of the Paperwork 
Reduction Act for this rule.
    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 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.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR, after appearing in the preamble of the final 
rule, are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute 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 organizations, and small governmental jurisdictions.
    For the purposes of this rulemaking, EPA defined small entities 
according to the following three criteria:
    (1) A small business according to the Small Business Administration 
size standards by the North American Industry Classification System 
(NAICS) category of the owning entity. The range of small business size 
standards for electric utilities is 4 billion kilowatt-hours of 
production or less;
    (2) A small government jurisdiction that is a government of a city, 
county, town, district, or special district with a population of less 
than 50,000; and
    (3) A small organization that is any not-for-profit enterprise that 
is independently owned and operated and is not dominant in its field.
    Table IX-1 lists entities potentially affected by this rule with 
applicable NAICS code.

      Table IX-1.--Potentially Regulated Categories and Entities a
------------------------------------------------------------------------
                                      NAICS     Examples of potentially
             Category                 code b       regulated entities
------------------------------------------------------------------------
Industry..........................     221112  Fossil fuel-fired
                                                electric utility steam
                                                generating units.
Federal Government................   c 221112  Fossil fuel-fired
                                                electric utility steam
                                                generating units owned
                                                by the Federal
                                                government.

[[Page 25367]]

 
State/Local/......................   c 221112  Fossil fuel-fired
                                                electric utility steam
                                                generating units owned
                                                by municipalities.
Tribal Government.................     921150  Fossil fuel-fired
                                                electric utility steam
                                                generating units in
                                                Indian Country.
------------------------------------------------------------------------
a Include NAICS categories for source categories that own and operate
  electric generating units only.
b North American Industry Classification System.
c Federal, State, or local government-owned and operated establishments
  are classified according to the activity in which they are engaged.

    After considering the economic impacts of today's final rule on 
small entities, EPA is certifying that this action will not have a 
significant economic impact on a substantial number of small entities.
    EPA has assessed the potential impact of today's action on small 
entities. Pursuant to section 603 of the RFA, EPA prepared an initial 
regulatory flexibility analysis (IRFA) for the proposed rule (70 FR 
49708, 49743). Approximately 140 of the estimated 3,000 EGUs 
potentially affected by today's action are owned by the 58 potentially 
affected small entities identified by EPA. Of the 140, 49 units are 
owned by small entities that also share ownership with large entities. 
Of these units, 34 are believed to be more than 50 percent owned by a 
large entity.
    Beyond the 140, an additional 185 units owned by small entities in 
these states could be exempted because they have a nameplate capacity 
less than 25 MW. The above estimates include a number of units that are 
owned jointly by small and non-small entities. In addition, these 
estimates represent the maximum number of units potentially affected by 
the CAIR FIP. Only units in States that fail to submit an approved SIP 
would be directly regulated under the CAIR FIP. The actual number of 
affected units will depend on the number of States that do not submit a 
SIP or do not get their SIP submittal approved.
    This analysis is based in large part on EPA's prior analysis of the 
potential impact of regulations implementing the CAIR model trading 
programs in the CAIR region. The analysis of the model trading programs 
was based on the best information available at that time and assumed 
that 75 small entities could be affected by any eventual implementation 
of the trading programs. However, EPA subsequently determined that some 
of these 75 entities either did not meet the definition of a small 
entity, or had units that were no longer generating. EPA's final 
analysis thus concluded that only 58 entities would be affected by 
today's action. Because the Agency's analysis of small entity impacts 
was based on the earlier estimate of affected small entities (i.e., the 
impacts were analyzed based on 75 affected entities, not 58 entities), 
the impact analysis overstates the maximum potential impact of today's 
action on small entities.
    Overall, EPA analysis suggested that about 445 MW of total small 
entity capacity, or 1.0 percent of total small entity capacity in the 
CAIR region, is projected to be uneconomic to maintain under 
regulations implementing the CAIR trading programs relative to the Base 
Case. In practice, units projected to be uneconomic to maintain may be 
``mothballed'', retired, or kept in service to ensure transmission 
reliability in certain parts of the grid. Our IPM modeling is unable to 
distinguish between these potential outcomes.
    Of the 75 initially identified as potentially impacted by 
regulations implementing the model trading programs, EPA determined 
that 29 might experience compliance costs in excess of one percent of 
revenues in 2010 and 46 might in 2015. Potentially affected small 
entities experiencing compliance costs in excess of 1 percent of 
revenues have some potential for significant impact resulting from 
implementation of CAIR.
    Pursuant to section 609(b) of the RFA, EPA convened a Small 
Business Advocacy Review Panel to obtain advice and recommendations 
from representatives of small entities that would potentially be 
regulated by the rule. A detailed discussion of the Panel's advice and 
recommendations is found in the Panel Report (EPA-HQ-OAR-2004-0076-
0074). A summary of the Panel's recommendations is presented at 70 FR 
49708, 49741.
    A detailed discussion of the panel process is provided in the 
proposed rule. In the proposed rule, EPA took comment on all aspects of 
the proposed FIP and its impact on small entities. EPA did not receive 
significant comments in this regard. In addition, in section VI.D of 
the proposed rule preamble, EPA specifically took comment on one of the 
panel recommendations, which was to consider providing a greater share 
of NOX allowances to small entities. A number of utilities 
submitted comments opposing such a provision, and one State expressed 
support for such a provision. These comments are discussed in more 
detail in section VI.F of this preamble.
    The decision to certify that this rule will not have a significant 
economic impact on a substantial number of small entities is largely a 
result of two factors. First, because the rule only affects sources 
with a capacity greater than 25 MW, the majority of potentially 
affected small entities are exempted. The decision to include only 
units greater than 25 MW in size exempts 185 small entities that would 
otherwise be potentially affected by today's actions. In the final 
CAIR, EPA stated its belief that it is reasonable to assume no further 
control of air emissions from these smaller EGUs. Second, as EPA's 
analysis of potential impacts of this rulemaking on small entities 
progressed, we determined that our initial estimates were too high, 
because some of the entities that EPA had projected to be affected 
either did not meet the definition of a small entity, or had units that 
were no longer generating. Finally, as was discussed in the NPR, the 
use of cap-and-trade in general will limit impacts on small entities 
relative to a less flexible command-and-control program.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, 2 
U.S.C. 1532, EPA generally must prepare a written statement, including 
a cost-benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures by State, local, and tribal 
governments, in the aggregate, or by the private sector, of

[[Page 25368]]

$100,000,000 or more in any 1 year. Before promulgating an EPA rule for 
which a written statement is needed, section 205 of the UMRA generally 
requires EPA to identify and consider a reasonable number of regulatory 
alternatives and to adopt the least costly, most cost-effective or 
least burdensome alternative that achieves the objectives of the rule. 
The provisions of section 205 do not apply when they are inconsistent 
with applicable law. Moreover, section 205 allows EPA to adopt an 
alternative other than the least costly, most cost-effective or least 
burdensome alternative if the Administrator publishes with the final 
rule an explanation why that alternative was not adopted.
    In addition, before EPA establishes any regulatory requirements 
that may significantly or uniquely affect small governments, including 
Tribal governments, it must have developed under section 203 of the 
UMRA, a small government agency plan. The plan must provide for 
notifying potentially affected small governments, enabling officials of 
affected small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    The EPA has determined that this rule contains a Federal mandate 
that may result in expenditures of $100 million or more in 1 year. The 
costs of compliance will be borne predominately by sources in the 
private sector although a small number of sources owned by State and 
local governments may also be impacted. EPA prepared a written 
statement meeting the requirements of section 202 of the UMRA during 
the CAIR rulemaking process. The Federal mandates in today's action 
relate to its implementation of the CAIR and thus the analyses prepared 
for CAIR are applicable to today's action.
    In accordance with section 202(c) of UMRA, EPA prepared the 
statement required by section 202 in conjunction with the Regulatory 
Impact Analysis prepared for the CAIR. This document is available at 
http://www.epa.gov/cair/pdfs/finaltech08.pdf and contains analyses that 
meet the requirements of section 202(a) of UMRA. That is, it contains a 
qualitative and quantitative assessment of the anticipated costs and 
benefits of the Federal mandate; estimates of future compliance costs 
and any disproportionate budgetary effects upon any particular regions 
of the nation; and estimates of the effect on the national economy.
    Consultation with State, local and Tribal governments potentially 
affected by the CAIR emission reduction requirements was conducted 
during the CAIR rulemaking process. Such consultation was conducted in 
a manner consistent with the intergovernmental consultation provisions 
of section 204 of the UMRA, and Executive Order 12875, ``Enhancing the 
Intergovernmental Partnership.''
    EPA has determined that this rule contains no regulatory 
requirements that might significantly or uniquely affect small 
governments. Therefore, development of a small government plan under 
section 203 of the Act is not required. The requirements in this action 
do not distinguish EGUs based on ownership, either for those units that 
are included within the scope of the rule or for those units that are 
exempted by the generating capacity cut-off. Consequently, the rule has 
no requirements that uniquely affect small governments that own or 
operate EGUs within the region. Further, with respect to the 
significance of the rule's provisions, EPA's UMRA analysis demonstrates 
that the economic impact of the rule will not significantly affect 
State or municipal EGUs or non-EGUs, either in terms of total cost 
incurred and the impact of the costs on revenue, or increased cost of 
electricity to consumers.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This rule does not have federalism implications. It does not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. These effects do not occur from the 
final rule itself because it is the provisions of the CAA that require 
EPA, after a State has failed to submit a SIP or a complete SIP, to 
make a finding to that effect and then to promulgate a FIP within 2 
years of the finding. Although EPA is exercising discretion to 
promulgate the FIP within the early part of the 2-year period, EPA 
intends to rescind the FIP for each State that submits a SIP that EPA 
approves, and, if the FIP remains, sources are not required to 
implement controls until after the close of the 2-year period. 
Moreover, as emphasized throughout the preamble, States are not 
required to adopt the FIP provisions, or any particular portion 
thereof, in order for EPA to approve their SIPs. Thus, Executive Order 
13132 does not apply to this rule.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by Tribal officials in the development of regulatory 
policies that have Tribal implications.'' This rule does not have 
``Tribal implications'' as specified in Executive Order 13175.
    This rule addresses transport of pollution for precursors of ozone 
and PM2.5. The CAA provides for States and Tribes to develop 
plans to regulate emissions of air pollutants within their 
jurisdictions. The regulations clarify the statutory obligations of 
States and Tribes that develop plans to implement these rules. The 
Tribal Authority Rule (TAR) gives Tribes the opportunity to develop and 
implement CAA programs, but it leaves to the discretion of the Tribe 
whether to develop these programs and which programs, or appropriate 
elements of a program, the Tribe will adopt.
    This rule does not have Tribal implications as defined by Executive 
Order 13175. It does not have a substantial direct effect on one or 
more Indian Tribes because no Tribe has implemented a federally-
enforceable air quality management program under the CAA at this time. 
Furthermore, this rule does not affect the relationship or distribution 
of power and responsibilities between the Federal Government and Indian 
Tribes. The CAA and the TAR establish the relationship of the Federal 
Government and Tribes in developing plans to attain the NAAQS, and this 
rule does nothing to modify that relationship. Because this rule does 
not have Tribal implications, Executive Order 13175 does not apply.
    If one assumes a Tribe is implementing a Tribal Implementation 
Plan, today' rule could have implications for that Tribe, but would

[[Page 25369]]

not impose substantial direct costs upon the Tribe, nor preempt Tribal 
law. The EPA has estimated the total annual private costs for the FIP 
for the CAIR region as implemented by State, local, and Tribal 
governments to be approximately $2.4 billion in 2010 and $3.6 billion 
in 2015 (1999$). There are currently very few emissions sources in 
Indian country that could be affected by these rules and the percentage 
of Tribal land that will be impacted is very small. For Tribes that 
choose to regulate sources in Indian country, the costs would primarily 
be attributed to inspecting regulated facilities and enforcing adopted 
regulations.
    EPA consulted with Tribal officials in developing the final CAIR, 
which provides the basis for the FIPs in today's rule. The EPA 
encouraged Tribal input at an early stage. Also, EPA held periodic 
meetings with the States and the Tribes during the technical 
development of CAIR. Three meetings were held with the Crow Tribe, 
where the Tribe expressed concerns about potential impacts of the rule 
on their coal mine operations. In addition, EPA held three calls with 
Tribal environmental professionals to address concerns specific to the 
Tribes. These discussions have given EPA valuable information about 
Tribal concerns regarding the development of CAIR. During the CAIR 
rulemaking process, the EPA provided briefings for Tribal 
representatives and the newly formed National Tribal Air Association 
(NTAA), and other national Tribal forums. Input from Tribal 
representatives was taken into consideration in development of CAIR.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health and Safety Risks'' (62 FR 19885, April 23, 1997) applies to any 
rule that (1) is determined to be ``economically significant'' as 
defined under Executive Order 12866, and (2) concerns an environmental 
health or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, Section 5-501 of the Order directs the Agency to 
evaluate the environmental health or safety effects of the planned rule 
on children, and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by the Agency.
    This rule is not subject to the Executive Order, because it does 
not involve decisions on environmental health or safety risks that may 
disproportionately affect children. The EPA believes that the emissions 
reductions from the strategy in this rule would further improve air 
quality and would further improve children's health.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    Executive Order 13211 (66 FR 28355, May 22, 2001) provides that 
agencies shall prepare and submit to the Administrator of the Office of 
Regulatory Affairs, OMB, a Statement of Energy Effects for certain 
actions identified as ``significant energy actions.'' Section 4(b) of 
Executive Order 13211 defines ``significant energy actions'' as ``any 
action by an agency (normally published in the Federal Register) that 
promulgates or is expected to lead to the promulgation of a final rule 
or regulation, including notices of inquiry, advance notices of 
proposed rulemaking, and notices of proposed rulemaking: (1)(i) That is 
a significant regulatory action under Executive Order 12866 or any 
successor order, and (ii) is likely to have a significant adverse 
effect on the supply, distribution, or use of energy; or (2) that is 
designated by the Administrator of the Office of Information and 
Regulatory Affairs as a significant energy action.''
    This final rule is a significant regulatory action under Executive 
Order 12866 and this rule may have a significant adverse effect on the 
supply, distribution, or use of energy. The energy impacts of this rule 
come from its implementation of the emission reduction requirements in 
the CAIR. The impacts for this rule will therefore not differ from 
those for the CAIR. These impacts are detailed in the final CAIR (70 FR 
25315). As discussed in the CAIR NFR, EPA's analysis shows that the EGU 
emission reductions required under the trading programs are projected 
to result in a 1.6 percent or less increase in natural gas prices 
projected from 2010 to 2020. If base case natural gas prices are higher 
than EPA has assumed in its primary analysis, the impact on natural gas 
price will be even less.

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer Advancement Act 
(NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA to 
use voluntary consensus standards in its regulatory and procurement 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, business practices) developed or adopted by one or more 
voluntary consensus bodies. The NTTAA directs EPA to provide Congress, 
through annual reports to OMB, with explanations when an agency does 
not use available and applicable voluntary consensus standards.
    Today's rule implements requirements largely identical to the 
requirements in the CAIR. This rule requires all sources that 
participate in the trading programs under part 97 (analogous to the 
CAIR SIP trading programs under part 96) to meet the applicable 
monitoring requirements of part 75. Part 75 already incorporates a 
number of voluntary consensus standards. Consistent with the Agency's 
Performance Based Measurement System (PBMS), part 75 sets forth 
performance criteria that allow the use of alternative methods to the 
ones set forth in part 75. The PBMS approach is intended to be more 
flexible and cost effective for the regulated community; it is also 
intended to encourage innovation in analytical technology and improved 
data quality. At this time, EPA is not recommending any revisions to 
part 75; however, EPA periodically revises the test procedures set 
forth in part 75. When EPA revises the test procedures set forth in 
part 75 in the future, EPA will address the use of any new voluntary 
consensus standards that are equivalent. Currently, even if a test 
procedure is not set forth in part 75, EPA is not precluding the use of 
any method, whether it constitutes a voluntary consensus standard or 
not, as long as it meets the performance criteria specified; however, 
any alternative methods must be approved through the petition process 
under Sec.  75.66 before they are used under part 75.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898, Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations, requires 
Federal agencies to consider the impact of programs, policies, and 
activities on minority populations and low-income populations. 
According to EPA guidance, U.S. Environmental Protection Agency, 1998. 
Guidance for Incorporating Environmental Justice Concerns in EPAs NEPA 
Compliance Analyses. Office of Federal Activities, Washington, D.C., 
April, 1998. Agencies

[[Page 25370]]

are to assess whether minority or low-income populations face risks or 
a rate of exposure to hazards that are significant and that appreciably 
exceed or is likely to appreciably exceed the risk or rate to the 
general population or to the appropriate comparison group (EPA, 1998).
    In accordance with Executive Order 12898, the Agency has considered 
whether this rule may have disproportionate negative impacts on 
minority or low income populations. The Agency expects this rule will 
lead to reductions in air pollution and exposures generally. In 
addition, EPA has conducted an air quality modeling analysis to 
estimate the changes in exposure of minority and low-income populations 
to ambient concentrations of PM2.5 as a result of 
implementation of a cap-and-trade program similar to CAIR: the Acid 
Rain Program. The analysis shows that each racial, ethnic, and income-
level group studied is projected to experience similar average 
improvement in ambient concentrations of PM2.5 in the 
eastern U.S. (where the vast majority of the emission reductions took 
place) as a result of the Acid Rain Program in 2010. No 
disproportionately high and adverse human health or environmental 
effects of the Acid Rain Program were found for any minority, low-
income, or other population. For these reasons, negative impacts to 
these sub-populations that appreciably exceed similar impacts to the 
general population are not expected.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. Therefore, EPA will submit a report containing this rule 
and other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective June 27, 2006.

List of Subjects

40 CFR Parts 51 and 52

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations, Nitrogen dioxide, 
Ozone, Particulate matter, Reporting and recordkeeping requirements, 
Sulfur oxides.

40 CFR Parts 72, 73, 74, and 78

    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 Parts 96 and 97

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations, Nitrogen oxides, 
Reporting and recordkeeping requirements.

    Dated: March 15, 2006.
Stephen L. Johnson,
Administrator.

0
For the reasons set forth in the preamble, parts 51, 52, 72, 73, 74, 
78, 96, and 97 of chapter I of title 40 of the Code of Federal 
Regulations are amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for Part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.


0
2. Section 51.123 is amended as follows:
0
a. In paragraph (o)(2)(ii)(B), by revising the words ``for the year 
after the year of'' to read ``for the 4th year after the year of'' and 
by removing the word ``and'' at the end;
0
b. In paragraph (o)(2)(ii)(C), by revising the words ``allocated.'' to 
read allocated; and'';
0
c. By adding a new paragraph (o)(2)(ii)(D);
0
d. By adding a new paragraph (p);
0
e. In paragraph (cc), by amending the definition of ``Electric 
generating unit'' or ``EGU'' by:
0
i. In paragraph (1) of the definition, by redesignating the paragraph 
as paragraph ``(1)(i)'', by revising the words ``since the start-up'' 
to read ``since the later of November 15, 1990 or the start-up'', and 
by adding a new paragraph (1)(ii); and
0
ii. By revising paragraph (2) of the definition; and
0
f. In paragraph (cc), by adding a new definition for ``Solid waste 
incineration unit''; and
0
g. By adding a new paragraph (ee).


Sec.  51.123  Findings and requirements for submission of State 
implementation plan revisions relating to emissions of oxides of 
nitrogen pursuant to the Clean Air Interstate Rule.

* * * * *
    (o) * * *
    (ii) * * *
    (D) The State's methodology for allocating the compliance 
supplement pool must be substantively identical to Sec.  97.143 (except 
that the permitting authority makes the allocations and the 
Administrator records the allocations made by the permitting authority) 
or otherwise in accordance with paragraph (e)(4) of this section.
* * * * *
    (p) Notwithstanding any other provision of this section, a State 
may adopt, and include in a SIP revision submitted by March 31, 2007, 
regulations relating to the Federal CAIR NOX Annual Trading 
Program under subparts AA through HH of part 97 of this chapter as 
follows:
    (1) The State may adopt, as CAIR NOX allowance 
allocation provisions replacing the provisions in subpart EE of part 97 
of this chapter:
    (i) Allocation provisions substantively identical to subpart EE of 
part 96 of this chapter, under which the permitting authority makes the 
allocations; or
    (ii) Any methodology for allocating CAIR NOX allowances 
to individual sources under which the permitting authority makes the 
allocations, provided that:
    (A) The State's methodology must not allow the permitting authority 
to allocate CAIR NOX allowances for a year in excess of the 
amount in the State's Annual EGU NOX budget for such year.
    (B) The State's methodology must require that, for EGUs commencing 
operation before January 1, 2001, the permitting authority will 
determine, and notify the Administrator of, each unit's allocation of 
CAIR NOX allowances by April 30, 2007 for 2009, 2010, and 
2011 and by October 31, 2008 and October 31 of each year thereafter for 
the 4th year after the year of the notification deadline.
    (C) The State's methodology must require that, for EGUs commencing 
operation on or after January 1, 2001, the permitting authority will 
determine, and notify the Administrator of, each unit's allocation of 
CAIR NOX allowances by October 31 of the year for which the 
CAIR NOX allowances are allocated.
    (2) The State may adopt, as compliance supplement pool provisions 
replacing the provisions in ( 97.143 of this chapter:

[[Page 25371]]

    (i) Provisions for allocating the State's compliance supplement 
pool that are substantively identical to Sec.  97.143 of this chapter, 
except that the permitting authority makes the allocations and the 
Administrator records the allocations made by the permitting authority;
    (ii) Provisions for allocating the State's compliance supplement 
pool that are substantively identical to Sec.  96.143 of this chapter; 
or
    (iii) Other provisions for allocating the State's compliance 
supplement pool that are in accordance with paragraph (e)(4) of this 
section.
    (3) The State may adopt CAIR opt-in unit provisions as follows:
    (i) Provisions for CAIR opt-in units, including provisions for 
applications for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR NOX allowances for CAIR opt-in units, that are 
substantively identical to subpart II of part 96 of this chapter and 
the provisions of subparts AA through HH that are applicable to CAIR 
opt-in units or units for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied;
    (ii) Provisions for CAIR opt-in units, including provisions for 
applications for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR NOX allowances for CAIR opt-in units, that are 
substantively identical to subpart II of part 96 of this chapter and 
the provisions of subparts AA through HH that are applicable to CAIR 
opt-in units or units for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied, except that the provisions exclude Sec.  96.188(b) of this 
chapter and the provisions of subpart II of part 96 of this chapter 
that apply only to units covered by Sec.  96.188(b) of this chapter; or
    (iii) Provisions for applications for CAIR opt-in units, including 
provisions for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR NOX allowances for CAIR opt-in units, that are 
substantively identical to subpart II of part 96 of this chapter and 
the provisions of subparts AA through HH that are applicable to CAIR 
opt-in units or units for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied, except that the provisions exclude Sec.  96.188(c) of this 
chapter and the provisions of subpart II of part 96 of this chapter 
that apply only to units covered by Sec.  96.188(c) of this chapter.
    (cc) * * *
    Electric generating unit or EGU means:
    (1)(i) * * *
    (ii) If a stationary boiler or stationary combustion turbine that, 
under paragraph (1)(i) of this section, is not an electric generating 
unit begins to combust fossil fuel or to serve a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale, 
the unit shall become an electric generating unit as provided in 
paragraph (1)(i) of this section on the first date on which it both 
combusts fossil fuel and serves such generator.
    (2) A unit that meets the requirements set forth in paragraphs 
(2)(i)(A), (2)(ii)(A), or (2)(ii)(B) of this definition paragraph shall 
not be an electric generating unit:
    (i)(A) Any unit that is an electric generating unit under paragraph 
(1)(i) or (ii) of this definition:
    (1) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (2) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (B) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (2)(i)(A) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become an electric generating unit 
starting on the earlier of January 1 after the first calendar year 
during which the unit first no longer qualifies as a cogeneration unit 
or January 1 after the first calendar year during which the unit no 
longer meets the requirements of paragraph (2)(i)(A)(2) of this 
section.
    (ii)(A) Any unit that is an electric generating unit under 
paragraph (1)(i) or (ii) of this definition commencing operation before 
January 1, 1985:
    (1) Qualifying as a solid waste incineration unit; and
    (2) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (B) Any unit that is an electric generating unit under paragraph 
(1)(i) or (ii) of this definition commencing operation on or after 
January 1, 1985:
    (1) Qualifying as a solid waste incineration unit; and
    (2) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (C) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (2)(ii)(A) or (B) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become an electric 
generating unit starting on the earlier of January 1 after the first 
calendar year during which the unit first no longer qualifies as a 
solid waste incineration unit or January 1 after the first 3 
consecutive calendar years after 1990 for which the unit has an average 
annual fuel consumption of fossil fuel of 20 percent or more.
* * * * *
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
* * * * *
    (ee) Notwithstanding any other provision of this section, a State 
may adopt, and include in a SIP revision submitted by March 31, 2007, 
regulations relating to the Federal CAIR NOX Ozone Season 
Trading Program under subparts AAAA through HHHH of part 97 of this 
chapter as follows:
    (1) The State adopt, as applicability provisions replacing the 
provisions in Sec.  97.304 of this chapter, provisions for 
applicability that are substantively identical to the provisions in 
Sec.  96.304 of this chapter expanded to include all non-EGUs subject 
to the State's emissions trading program approved under Sec.  
51.121(p).
    (2) The State may adopt, as CAIR NOX Ozone Season 
allowance allocation provisions replacing the provisions in subpart 
EEEE of part 97 of this chapter:
    (i) Allocation provisions substantively identical to subpart EEEE 
of part 96 of this chapter, under which the permitting authority makes 
the allocations; or
    (ii) Any methodology for allocating CAIR NOX Ozone 
Season allowances to

[[Page 25372]]

individual sources under which the permitting authority makes the 
allocations, provided that:
    (A) The State may provide for issuance of an amount of CAIR Ozone 
Season NOX allowances for an ozone season, in addition to 
the amount in the State's Ozone Season EGU NOX Budget for 
such ozone season, not exceeding the portion of the State's trading 
program budget, under the State's emissions trading program approved 
under Sec.  51.121(p), attributed to the non-EGUs that the 
applicability provisions in Sec.  96.304 of this chapter are expanded 
to include under paragraph (ee)(1) of this section.
    (B) The State's methodology must not allow the State to allocate 
CAIR Ozone Season NOX allowances for an ozone season in 
excess of the amount in the State's Ozone Season EGU NOX 
Budget for such ozone season plus any additional amount of CAIR Ozone 
Season NOX allowances issued under paragraph (ee)(2)(ii)(A) 
of this section for such ozone season.
    (C) The State's methodology must require that, for EGUs commencing 
operation before January 1, 2001, the permitting authority will 
determine, and notify the Administrator of, each unit's allocation of 
CAIR NOX Ozone Season allowances by April 30, 2007 for 2009, 
2010, and 2011 and by October 31, 2008 and October 31 of each year 
thereafter for the 4th year after the year of the notification 
deadline.
    (D) The State's methodology must require that, for EGUs commencing 
operation on or after January 1, 2001, the permitting authority will 
determine, and notify the Administrator of, each unit's allocation of 
CAIR NOX Ozone Season allowances by July 31 of the year for 
which the CAIR NOX Ozone Season allowances are allocated.
    (3) The State may adopt CAIR opt-in unit provisions as follows:
    (i) Provisions for CAIR opt-in units, including provisions for 
applications for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR NOX Ozone Season allowances for CAIR opt-in units, 
that are substantively identical to subpart IIII of part 96 of this 
chapter and the provisions of subparts AAAA through HHHH that are 
applicable to CAIR opt-in units or units for which a CAIR opt-in permit 
application is submitted and not withdrawn and a CAIR opt-in permit is 
not yet issued or denied;
    (ii) Provisions for CAIR opt-in units, including provisions for 
applications for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR NOX Ozone Season allowances for CAIR opt-in units, 
that are substantively identical to subpart IIII of part 96 of this 
chapter and the provisions of subparts AAAA through HHHH that are 
applicable to CAIR opt-in units or units for which a CAIR opt-in permit 
application is submitted and not withdrawn and a CAIR opt-in permit is 
not yet issued or denied, except that the provisions exclude Sec.  
96.388(b) of this chapter and the provisions of subpart IIII of part 96 
of this chapter that apply only to units covered by Sec.  96.388(b) of 
this chapter; or
    (iii) Provisions for applications for CAIR opt-in units, including 
provisions for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR NOX allowances for CAIR opt-in units, that are 
substantively identical to subpart IIII of part 96 of this chapter and 
the provisions of subparts AAAA through HHHH that are applicable to 
CAIR opt-in units or units for which a CAIR opt-in permit application 
is submitted and not withdrawn and a CAIR opt-in permit is not yet 
issued or denied, except that the provisions exclude Sec.  96.388(c) of 
this chapter and the provisions of subpart IIII of part 96 of this 
chapter that apply only to units covered by Sec.  96.388(c) of this 
chapter.

0
3. Section 51.124 is amended as follows:
0
a. In paragraph (q), by amending the definition of ``Electric 
generating unit'' or ``EGU'' by:
0
i. In paragraph (1) of the definition, redesignating the paragraph as 
paragraph ``(1)(i)'', revising the words ``since the start-up'' to read 
``since the later of November 15, 1990 or the start-up'', and adding a 
new paragraph (1)(ii); and
0
ii. Revising paragraph (2) of the definition; and
0
b. In paragraph (q), add a new definition for ``Solid waste 
incineration unit''; and
0
c. Add a new paragraph (r).


Sec.  51.124  Findings and requirements for submission of State 
implementation plan revisions relating to emissions of sulfur dioxide 
pursuant to the Clean Air Interstate Rule.

* * * * *
    (q) * * *
    Electric generating unit or EGU means:
    (1)(i) * * *
    (ii) If a stationary boiler or stationary combustion turbine that, 
under paragraph (1)(i) of this section, is not an electric generating 
unit begins to combust fossil fuel or to serve a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale, 
the unit shall become an electric generating unit as provided in 
paragraph (1)(i) of this section on the first date on which it both 
combusts fossil fuel and serves such generator.
    (2) A unit that meets the requirements set forth in paragraphs 
(2)(i)(A), (2)(ii)(A), or (2)(ii)(B) of this definition paragraph shall 
not be an electric generating unit:
    (i)(A) Any unit that is an electric generating unit under paragraph 
(1)(i) or (ii) of this definition:
    (1) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (2) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (B) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (2)(i)(A) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become an electric generating unit 
starting on the earlier of January 1 after the first calendar year 
during which the unit first no longer qualifies as a cogeneration unit 
or January 1 after the first calendar year during which the unit no 
longer meets the requirements of paragraph (2)(i)(A)(2) of this 
section.
    (ii)(A) Any unit that is an electric generating unit under 
paragraph (1)(i) or (ii) of this definition commencing operation before 
January 1, 1985:
    (1) Qualifying as a solid waste incineration unit; and
    (2) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (B) Any unit that is an electric generating unit under paragraph 
(1)(i) or (ii) of this definition commencing operation on or after 
January 1, 1985:
    (1) Qualifying as a solid waste incineration unit; and
    (2) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis)

[[Page 25373]]

and an average annual fuel consumption of non-fossil fuel for any 3 
consecutive calendar years after 1990 exceeding 80 percent (on a Btu 
basis).
    (C) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (2)(ii)(A) or (B) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become an electric 
generating unit starting on the earlier of January 1 after the first 
calendar year during which the unit first no longer qualifies as a 
solid waste incineration unit or January 1 after the first 3 
consecutive calendar years after 1990 for which the unit has an average 
annual fuel consumption of fossil fuel of 20 percent or more.
* * * * *
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
* * * * *
    (r) Notwithstanding any other provision of this section, a State 
may adopt, and include in a SIP revision submitted by March 31, 2007, 
regulations relating to the Federal CAIR SO2 Trading Program 
under subparts AAA through HHH of part 97 of this chapter as follows. 
The State may adopt the following CAIR opt-in unit provisions:
    (1) Provisions for CAIR opt-in units, including provisions for 
applications for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR SO2 allowances for CAIR opt-in units, that are 
substantively identical to subpart III of part 96 of this chapter and 
the provisions of subparts AAA through HHH that are applicable to CAIR 
opt-in units or units for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied;
    (2) Provisions for CAIR opt-in units, including provisions for 
applications for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR SO2 allowances for CAIR opt-in units, that are 
substantively identical to subpart III of part 96 of this chapter and 
the provisions of subparts AAA through HHH that are applicable to CAIR 
opt-in units or units for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied, except that the provisions exclude Sec.  96.288(b) of this 
chapter and the provisions of subpart III of part 96 of this chapter 
that apply only to units covered by Sec.  96.288(b) of this chapter; or
    (3) Provisions for applications for CAIR opt-in units, including 
provisions for CAIR opt-in permits, approval of CAIR opt-in permits, 
treatment of units as CAIR opt-in units, and allocation and recordation 
of CAIR SO2 allowances for CAIR opt-in units, that are 
substantively identical to subpart III of part 96 of this chapter and 
the provisions of subparts AAA through HHH that are applicable to CAIR 
opt-in units or units for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied, except that the provisions exclude Sec.  96.288(c) of this 
chapter and the provisions of subpart III of part 96 of this chapter 
that apply only to units covered by Sec.  96.288(c) of this chapter.

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart A--General Provisions

0
2. Subpart A is amended by adding Sec. Sec.  52.35 and 52.36 to read as 
follows:


Sec.  52.35  What are the requirements of the Federal Implementation 
Plans (FIPs) for the Clean Air Interstate Rule relating to emissions of 
nitrogen oxides?

    The Federal CAIR NOX Annual Trading Program provisions 
of part 97 of this chapter constitute the Clean Air Interstate Rule 
Federal Implementation Plan provisions that relate to annual emissions 
of nitrogen oxides (NOX). These provisions apply to sources 
in each State that is described in Sec.  51.123(c)(1) and (2) of this 
chapter, Delaware, and New Jersey, each of which States is subject to a 
finding by the Administrator that the State failed to submit a State 
Implementation Plan (SIP) to satisfy the requirements of section 
110(a)(2)(D)(I) of the Clean Air Act for the PM2.5 NAAQS. 
The Federal CAIR NOX Ozone Season Trading Program provisions 
of part 97 of this chapter constitute the Clean Air Interstate Rule 
Federal Implementation Plan provisions for emissions of nitrogen oxides 
(NOX) during the ozone season, as defined in Sec.  97.302 of 
this chapter. These provisions apply to sources in each State that is 
described in Sec.  51.123(c)(1) and (3) of this chapter, each of which 
States is subject to a finding by the Administrator that the State 
failed to submit a State Implementation Plan (SIP) to satisfy the 
requirements of section 110(a)(2)(D)(I) of the Clean Air Act for the 8-
hour ozone NAAQS. These provisions do not invalidate or otherwise 
affect the obligations of States, emissions sources, or other 
responsible entities with respect to all portions of plans approved or 
promulgated under this part, nor the obligations of States under the 
requirements of Sec.  51.123 and 51.125 of this chapter.


Sec.  52.36  What are the requirements of the Clean Air Interstate Rule 
Federal Implementation Plans relating to emissions of sulfur dioxide?

    The Federal CAIR SO2 Trading Program provisions of part 
97 of this chapter constitute the Clean Air Interstate Rule Federal 
Implementation Plan provisions for emissions of sulfur dioxide 
(SO2). These provisions apply to sources in each State that 
is described in Sec.  51.124(c) of this chapter, Delaware, and New 
Jersey, each of which States is subject to an EPA finding that the 
State failed to submit a State Implementation Plan (SIP) to satisfy the 
requirements of section 110(a)(2)(D)(I) of the Clean Air Act for the 
PM2.5 NAAQS. These provisions do not invalidate or otherwise 
affect the obligations of States, emissions sources, or other 
responsible entities with respect to all portions of plans approved or 
promulgated under this part, nor the obligations of States under the 
requirements of Sec. Sec.  51.124 and 51.125 of this chapter.

Subpart B--Alabama

0
3. Subpart B is amended by adding Sec. Sec.  52.54 and 52.55 to read as 
follows:


Sec.  52.54  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Alabama and for which requirements are set forth under the 
Federal CAIR NOX Annual and Ozone Season Trading Programs in 
part 97 of this chapter must comply with such applicable requirements.


Sec.  52.55  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Alabama and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

[[Page 25374]]

Subpart E--Arkansas

0
4. Subpart E is amended by adding Sec. Sec.  52.184 to read as follows:


Sec.  52.184  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Arkansas and for which requirements are set forth under 
the Federal CAIR NOX Ozone Season Trading Program in part 97 
of this chapter must comply with such applicable requirements.

Subpart H--Connecticut

0
5. Subpart H is amended by adding Sec. Sec.  52.386 to read as follows:


Sec.  52.386  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Connecticut and for which requirements are set forth under 
the Federal CAIR NOX Ozone Season Trading Program in part 97 
of this chapter must comply with such applicable requirements.

Subpart I--Delaware

0
6. Subpart I is amended by adding Sec. Sec.  52.440 and 52.441 to read 
as follows:


Sec.  52.440  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Delaware and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.441  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Delaware and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart J--District of Columbia

0
7. Subpart J is amended by adding Sec. Sec.  52.484 and 52.485 to read 
as follows:


Sec.  52.484  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the District of Columbia and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.485  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the District of Columbia and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart K--Florida

0
8. Subpart K is amended by adding Sec. Sec.  52.540 and 52.541 to read 
as follows:


Sec.  52.540  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Florida and for which requirements are set forth under the 
Federal CAIR NOX Annual and Ozone Season Trading Programs in 
part 97 of this chapter must comply with such applicable requirements.


Sec.  52.541  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Florida and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

Subpart L--Georgia

0
9. Subpart L is amended by adding Sec. Sec.  52.584 and 52.585 to read 
as follows:


Sec.  52.584  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Georgia and for which requirements are set forth under 
Federal CAIR NOX Annual Trading Programs in part 97 of this 
chapter must comply with such applicable requirements.


Sec.  52.585  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Georgia and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

Subpart O--Illinois

0
10. Subpart O is amended by adding Sec. Sec.  52.745 and 52.746 to read 
as follows:


Sec.  52.745  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Illinois and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.746  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Illinois and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart P--Indiana

0
11. Subpart P is amended by adding Sec. Sec.  52.789 and 52.790 to read 
as follows:


Sec.  52.789  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Indiana and for which requirements are set forth under the 
Federal CAIR NOX Annual and Ozone Season Trading Programs in 
part 97 of this chapter must comply with such applicable requirements.


Sec.  52.790  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Indiana and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

[[Page 25375]]

Subpart Q--Iowa

0
12. Subpart Q is amended by adding Sec. Sec.  52.840 and 52.841 to read 
as follows:


Sec.  52.840  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Iowa and for which requirements are set forth under the 
Federal CAIR NOX Annual and Ozone Season Trading Programs in 
part 97 of this chapter must comply with such applicable requirements.


Sec.  52.841  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Iowa and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

Subpart S--Kentucky

0
13. Subpart S is amended by adding Sec. Sec.  52.940 and 52.941 to read 
as follows:


Sec.  52.940  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Kentucky and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.941  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Kentucky and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart T--Louisiana

0
14. Subpart T is amended by adding Sec. Sec.  52.984 and 52.985 to read 
as follows:


Sec.  52.984  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Louisiana and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.985  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Louisiana and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart V--Maryland

0
15. Subpart V is amended by adding Sec. Sec.  52.1084 and 52.1085 to 
read as follows:


Sec.  52.1084  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Maryland and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.1085  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Maryland and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart W--Massachusetts

0
16. Subpart W is amended by adding Sec.  52.1140 to read as follows:


Sec.  52.1140  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Massachusetts and for which requirements are set forth 
under the Federal CAIR NOX Ozone Season Trading Program in 
part 97 of this chapter must comply with such applicable requirements.

Subpart X--Michigan

0
17. Subpart X is amended by adding Sec. Sec.  52.1186 and 52.1187 to 
read as follows:


Sec.  52.1186  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Michigan and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.1187  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Michigan and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart Y--Minnesota

0
18. Subpart Y is amended by adding Sec. Sec.  52.1240 and 52.1241 to 
read as follows:


Sec.  52.1240  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Minnesota and for which requirements are set forth under 
the Federal CAIR NOX Annual Trading Programs in part 97 of 
this chapter must comply with such applicable requirements.


Sec.  52.1241  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Minnesota and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart Z--Mississippi

0
19. Subpart Z is amended by adding Sec. Sec.  52.1284 and 52.1285 to 
read as follows:


Sec.  52.1284  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Mississippi and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must

[[Page 25376]]

comply with such applicable requirements.


Sec.  52.1285  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Mississippi and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart AA--Missouri

0
20. Subpart AA is amended by adding Sec. Sec.  52.1341 and 52.1342 to 
read as follows:


Sec.  52.1341  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Missouri and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.1342  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Missouri and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart FF--New Jersey

0
21. Subpart FF is amended by adding Sec. Sec.  52.1584 and 52.1585 to 
read as follows:


Sec.  52.1584  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of New Jersey and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading Program 
in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.1585  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of New Jersey and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart HH--New York

0
22. Subpart HH is amended by adding Sec. Sec.  52.1684 and 52.1685 to 
read as follows:


Sec.  52.1684  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of New York and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.1685  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of New York and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart II--North Carolina

0
23. Subpart II is amended by adding Sec. Sec.  52.1784 and 52.1785 to 
read as follows:


Sec.  52.1784  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of North Carolina and for which requirements are set forth 
under the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.1785  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of North Carolina and for which requirements are set forth 
under the Federal CAIR SO2 Trading Program in part 97 of 
this chapter must comply with such applicable requirements.

Subpart KK--Ohio

0
24. Subpart KK is amended by adding Sec. Sec.  52.1891 and 52.1892 to 
read as follows:


Sec.  52.1891  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Ohio and for which requirements are set forth under the 
Federal CAIR NOX Annual and Ozone Season Trading Programs in 
part 97 of this chapter must comply with such applicable requirements.


Sec.  52.1892  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Ohio and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

Subpart NN--Pennsylvania

0
25. Subpart NN is amended by adding Sec. Sec.  52.2040 and 52.2041 to 
read as follows:


Sec.  52.2040  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Pennsylvania and for which requirements are set forth 
under the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.2041  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Pennsylvania and for which requirements are set forth 
under the Federal CAIR SO2 Trading Program in part 97 of 
this chapter must comply with such applicable requirements.

Subpart PP--South Carolina

0
26. Subpart PP is amended by adding Sec. Sec.  52.2140 and 52.2141 to 
read as follows:


Sec.  52.2140  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of South Carolina and for which requirements are set forth 
under the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must

[[Page 25377]]

comply with such applicable requirements.


Sec.  52.2141  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of South Carolina and for which requirements are set forth 
under the Federal CAIR SO2 Trading Program in part 97 of 
this chapter must comply with such applicable requirements.

Subpart RR--Tennessee

0
27. Subpart RR is amended by adding Sec. Sec.  52.2240 and 52.2241 to 
read as follows:


Sec.  52.2240  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Tennessee and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.2241  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Tennessee and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart SS--Texas

0
28. Subpart SS is amended by adding Sec. Sec.  52.2283 and 52.2284 to 
read as follows:


Sec.  52.2283  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Texas and for which requirements are set forth under the 
Federal CAIR NOX Annual Trading Program in part 97 of this 
chapter must comply with such applicable requirements.


Sec.  52.2284  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Texas and for which requirements are set forth under the 
Federal CAIR SO2 Trading Program in part 97 of this chapter 
must comply with such applicable requirements.

Subpart VV--Virginia

0
29. Subpart VV is amended by adding Sec. Sec.  52.2440 and 52.2441 to 
read as follows:


Sec.  52.2440  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Virginia and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.2441  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Virginia and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

Subpart XX--West Virginia

0
30. Subpart XX is amended by adding Sec. Sec.  52.2540 and 52.2541 to 
read as follows:


Sec.  52.2540  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of West Virginia and for which requirements are set forth 
under the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.2541  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of West Virginia and for which requirements are set forth 
under the Federal CAIR SO2 Trading Program in part 97 of 
this chapter must comply with such applicable requirements.

Subpart YY--Wisconsin

0
31. Subpart YY is amended by adding Sec. Sec.  52.2587 and 52.2588 to 
read as follows:


Sec.  52.2587  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of nitrogen oxides?

    The owner or operator of each NOX source located within 
the State of Wisconsin and for which requirements are set forth under 
the Federal CAIR NOX Annual and Ozone Season Trading 
Programs in part 97 of this chapter must comply with such applicable 
requirements.


Sec.  52.2588  Interstate pollutant transport provisions; What are the 
FIP requirements for decreases in emissions of sulfur dioxide?

    The owner or operator of each SO2 source located within 
the State of Wisconsin and for which requirements are set forth under 
the Federal CAIR SO2 Trading Program in part 97 of this 
chapter must comply with such applicable requirements.

PART 72--[AMENDED]

0
1. The authority citation for Part 72 continues to read as follows:

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


0
2. Section 72.2 is amended, in the definition of ``Receive or 
receipt'', by revising the words ``official correspondence log'' to 
read ``official log''.
0
3. Section 72.7 is amended as follows:
0
a. By revising paragraph (f)(2); and
0
b. In paragraph (f)(4)(i), by revising the words ``become an affected 
unit under the Acid Rain Program and parts 70 and 71 of this chapter'' 
to read, for purposes of applying parts 70 and 71 of this chapter, 
shall be treated as an affected unit under the Acid Rain Program''. The 
revision reads as follows:


Sec.  72.7  New units exemption.

* * * * *
    (f) * * *
    (2) For any period for which a unit is exempt under this section:
    (i) For purposes of applying parts 70 and 71 of this chapter, the 
unit shall not be treated as an affected unit under the Acid Rain 
Program and shall continue to be subject to any other applicable 
requirements under parts 70 and 71 of this chapter.
    (ii) The unit shall not be eligible to be an opt-in source under 
part 74 of chapter.
* * * * *

0
4. Section 72.8 is amended as follows:
0
a. By revising paragraph (d)(4); and
0
b. In paragraph (d)(6)(i) introductory text, by revising the words 
``become an affected unit under the Acid Rain Program and parts 70 and 
71 of this chapter'' to read ,`` for purposes of

[[Page 25378]]

applying parts 70 and 71 of this chapter, shall be treated as an 
affected unit under the Acid Rain Program''.
    The revision reads as follows:


Sec.  72.8  Retired units exemption.

* * * * *
    (d) * * *
    (4) For any period for which a unit is exempt under this section:
    (i) For purposes of applying parts 70 and 71 of this chapter, the 
unit shall not be treated as an affected unit under the Acid Rain 
Program and shall continue to be subject to any other applicable 
requirements under parts 70 and 71 of this chapter.
    (ii) The unit shall not be eligible to be an opt-in source under 
part 74 of chapter.
* * * * *


Sec.  72.20  [Amended]

0
5. Section 72.20 is amended, in paragraph (b), by revising the words 
``his or her actions'' to read ``his or her representations, actions''.


Sec.  72.22  [Amended]

0
6. Section 72.22 is amended, in paragraph (b), by revising the words 
``any action, representation, or failure to act'' to read ``any 
representation, action, inaction, or submission'' whenever they appear.


Sec.  72.23  [Amended]

0
7. Section 72.23 is amended as follows:
0
a. In paragraphs (a) and (b), by revising the words ``submissions, 
actions, and inactions'' to read ``representations, actions, inactions, 
and submissions''; and
0
b. In paragraph (c)(1), by revising the words ``a new owner'' to read 
``an owner'', by revising the words ``such new owner'' to read ``such 
owner'', by revising the words ``submissions, actions, and inactions'' 
to read ``representations, actions, inactions, and submissions'', and 
by revising the words ``the new owner'' to read ``the owner.''


Sec.  72.24  [Amended]

0
8. Section 72.24 is amended as follows:
0
a. In paragraph (a)(1) by revising the words ``is submitted.'' to read 
``is submitted, including identification and nameplate capacity of each 
generator served by each such unit'';
0
b. In paragraph (a)(6), by revising the words ``actions, inactions, or 
submissions'' to read ``representations, actions, inactions, or 
submissions''; and
0
c. In paragraph (a)(9)(ii), by revising the words ``or ,if such 
multiple'' to read ``, except that, if such multiple''.


Sec.  72.25  [Amended]

0
9. Section 72.25 is amended, in paragraph (b), by revising the words 
``submission, action or inaction'' to read ``representation, action, 
inaction, or submission'' and revise the words ``submission, action, or 
inaction'' to read ``representation, action, inaction, or submission''.

0
10. Add a new 72.26 to read as follows:


Sec.  72.26  Delegation by designated representative and alternate 
designated representative.

    (a) A designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
(in a format prescribed by the Administrator) to the Administrator 
provided for or required under this part and parts 73 through 77 of 
this chapter.
    (b) An alternate designated representative may delegate, to one or 
more natural persons, his or her authority to make an electronic 
submission (in a format prescribed by the Administrator) to the 
Administrator provided for or required under this part and parts 73 
through 77 of this chapter.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the designated representative or alternate designated 
representative, as appropriate, must submit to the Administrator a 
notice of delegation, in a format prescribed by the Administrator, that 
includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such designated 
representative or alternate designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such designated 
representative or alternate designated representative, as appropriate:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a designated representative or alternate designated 
representative, as appropriate, and before this notice of delegation is 
superseded by another notice of delegation under 40 CFR 72.26(d) shall 
be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 72.26(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 72.26 is terminated.''
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall be effective, with regard to the designated 
representative or alternate designated representative identified in 
such notice, upon receipt of such notice by the Administrator and until 
receipt by the Administrator of a superseding notice of delegation 
submitted by such designated representative or alternate designated 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the designated 
representative or alternate designated representative submitting such 
notice of delegation.

PART 73--[AMENDED]

0
1. The authority citation for part 73 continues to read as follows:

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


Sec.  73.31  [Amended]

0
2. Section 73.31 is amended, in paragraph (c)(1)(v), by revising the 
words ``actions, inactions, or submissions'' to read ``representations, 
actions, inactions, or submissions''.

0
3. Section 73.33 is amended as follows:
0
a. In paragraph (d)(4), by revising the words ``action, representation, 
or failure to act'' to read ``representation, action, inaction, or 
submission'' and by revising the word ``an action'' to read ``a 
representation, action, inaction, or submission'';
0
b. In paragraph (e), by revising the word ``actions'' to read 
``representations, actions, inactions, or submissions'';
0
c. In paragraph (f), by revising the words ``any submission to'' to 
read ``any representation, action, inaction, or submission to'' and 
revise the words ``the recordation of transfers submitted

[[Page 25379]]

by'' to read ``any representation, action, inaction, or submission 
of''; and
0
d. By adding a new paragraph (g) to read as follows:


Sec.  73.33  Authorized account representative.

* * * * *
    (g) Delegation by authorized account representative and alternate 
authorized account representative. (1) An authorized account 
representative may delegate, to one or more natural persons, his or her 
authority to make an electronic submission (in a format prescribed by 
the Administrator) to the Administrator provided for or required under 
this part.
    (2) An alternate authorized account representative may delegate, to 
one or more natural persons, his or her authority to make an electronic 
submission (in a format prescribed by the Administrator) to the 
Administrator provided for or required under this part.
    (3) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (g)(1) or (2) of this 
section, the authorized account representative or alternate authorized 
account representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator, that includes the following elements:
    (i) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such authorized account 
representative or alternate authorized account representative;
    (ii) The name, address, e-mail address, telephone number, and, 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (iii) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (g)(1) or (2) of this section 
for which authority is delegated to him or her;
    (iv) The following certification statements by such authorized 
account representative or alternate authorized account representative:
    (A) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a authorized account representative or alternate 
authorized representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
73.33(g)(4) shall be deemed to be an electronic submission by me.''
    (B) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 73.33(g)(4), I agree to maintain an 
e-mail account and to notify the Administrator immediately of any 
change in my e-mail address unless all delegation of authority by me 
under 40 CFR 73.33(g) is eliminated.''
    (4) A notice of delegation submitted under paragraph (g)(3) of this 
section shall be effective, with regard to the authorized account 
representative or alternate authorized account representative 
identified in such notice, upon receipt of such notice by the 
Administrator and until receipt by the Administrator of a superseding 
notice of delegation submitted by such authorized account 
representative or alternate authorized account representative, as 
appropriate. The superseding notice of delegation may replace any 
previously identified agent, add a new agent, or eliminate entirely any 
delegation of authority.
    (5) Any electronic submission covered by the certification in 
paragraph (g)(3)(iv)(A) of this section and made in accordance with a 
notice of delegation effective under paragraph (g)(4) of this section 
shall be deemed to be an electronic submission by the designated 
representative or alternate designated representative submitting such 
notice of delegation.

PART 74--[AMENDED]

0
1. The authority citation for Part 74 continues to read as follows:

    Authority: 7601 and 7651 et seq.


Sec.  74.4  [Amended]

0
2. In Sec.  74.4, paragraph (c) is removed.

PART 78--[AMENDED]

0
1. The authority citation for part 78 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et 
seq.


0
2. Section 78.1 is amended as follows:
0
a. In paragraph (b)(8)(ii), by revising ``Sec.  97.256'' to read 
``Sec.  96.256''.
0
b. By adding new paragraphs (b)(10), (b)(11), and (b)(12) to read as 
follows:


Sec.  78.1  Purpose and scope.

* * * * *
    (b) * * *
    (10) Under subparts AA through II of part 97 of this chapter,
    (i) The decision on the allocation of CAIR NOX 
allowances under subpart EE of part 97 of this chapter.
    (ii) The decision on the deduction of CAIR NOX 
allowances, and the adjustment of the information in a submission and 
the decision on the deduction or transfer of CAIR NOX 
allowances based on the information as adjusted, under Sec.  97.154 of 
this chapter;
    (iii) The correction of an error in a CAIR NOX Allowance 
Tracking System account under Sec.  97.156 of this chapter;
    (iv) The decision on the transfer of CAIR NOX allowances 
under Sec.  97.161 of this chapter;
    (v) The finalization of control period emissions data, including 
retroactive adjustment based on audit;
    (vi) The approval or disapproval of a petition under Sec.  97.175 
of this chapter.
    (11) Under subparts AAA through III of part 97 of this chapter,
    (i) The decision on the deduction of CAIR SO2 
allowances, and the adjustment of the information in a submission and 
the decision on the deduction or transfer of CAIR SO2 
allowances based on the information as adjusted, under Sec.  97.254 of 
this chapter;
    (ii) The correction of an error in a CAIR SO2 Allowance 
Tracking System account under Sec.  97.256 of this chapter;
    (iii) The decision on the transfer of CAIR SO2 
allowances under Sec.  97.261 of this chapter;
    (iv) The finalization of control period emissions data, including 
retroactive adjustment based on audit;
    (v) The approval or disapproval of a petition under Sec.  97.275 of 
this chapter.
    (12) Under subparts AAAA through IIII of part 97 of this chapter,
    (i) The decision on the allocation of CAIR NOX Ozone 
Season allowances under subpart EEEE of part 97 of this chapter.
    (ii) The decision on the deduction of CAIR NOX Ozone 
Season allowances, and the adjustment of the information in a 
submission and the decision on the deduction or transfer of CAIR 
NOX Ozone Season allowances based on the information as 
adjusted, under Sec.  97.354 of this chapter;
    (iii) The correction of an error in a CAIR NOX Ozone 
Season Allowance Tracking System account under Sec.  97.356 of this 
chapter;
    (iv) The decision on the transfer of CAIR NOX Ozone 
Season allowances under Sec.  97.361;
    (v) The finalization of control period emissions data, including 
retroactive adjustment based on audit;
    (vi) The approval or disapproval of a petition under Sec.  97.375 
of this chapter.
* * * * *

0
3. Section 78.3 is amended as follows:
0
a. In paragraph (b)(3)(i), by revising the words ``under paragraph 
(a)(4), (5), or (6) of this section'' to read ``under paragraph (a)(4), 
(5), (6), (7), (8), or (9) of this section'';
0
b. In paragraph (d)(3), by revising the words ``account certificate of

[[Page 25380]]

representation submitted by a CAIR designated representative'' to read 
``certificate of representation submitted by a CAIR designated 
representative'' and by revising the words ``or subparts AAAA through 
IIII of part 96 of this chapter'', the words ``subparts AAAA through 
IIII of part 96 of this chapter, or under part 97 of this chapter''; 
and
0
c. By adding new paragraphs (a)(7), (a)(8), (a)(9), (d)(8), (d)(9), and 
(d)(10) to read as follows:


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

    (a) * * *
    (7) The following persons may petition for administrative review of 
a decision of the Administrator that is made under subparts AA through 
II of part 97 of this chapter and that is appealable under Sec.  
78.1(a):
    (i) The CAIR designated representative for a unit or source, or the 
CAIR authorized account representative for any CAIR NOX 
Allowance Tracking System account, covered by the decision; or
    (ii) Any interested person.
    (8) The following persons may petition for administrative review of 
a decision of the Administrator that is made under subparts AAA through 
III of part 97 and that is appealable under Sec.  78.1(a):
    (i) The CAIR designated representative for a unit or source, or the 
CAIR authorized account representative for any CAIR SO2 
Allowance Tracking System account, covered by the decision; or
    (ii) Any interested person.
    (9) The following persons may petition for administrative review of 
a decision of the Administrator that is made under subparts AAAA 
through III of part 97 and that is appealable under Sec.  78.1(a):
    (i) The CAIR designated representative for a unit or source, or the 
CAIR authorized account representative for any CAIR Ozone Season 
NOX Allowance Tracking System account, covered by the 
decision; or
    (ii) Any interested person.
* * * * *
    (d) * * *
    (8) Any provision or requirement of subparts AA through II of part 
97 of this chapter, including the standard requirements under Sec.  
97.106 of this chapter and any emission monitoring or reporting 
requirements.
    (9) Any provision or requirement of subparts AAA through III of 
part 97 of this chapter, including the standard requirements under 
Sec.  97.206 of this chapter and any emission monitoring or reporting 
requirements.
    (10) Any provision or requirement of subparts AAAA through IIII of 
part 97 of this chapter, including the standard requirements under 
Sec.  97.306 of this chapter and any emission monitoring or reporting 
requirements.

PART 96--NOX BUDGET TRADING PROGRAM AND CAIR 
NOX AND SO2 TRADING PROGRAMS FOR STATE 
IMPLEMENTATION PLANS

0
1. The heading of part 96 is revised to read as set forth above.
0
2. The authority citation for part 96 continues to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7601, and 7651, et seq.

0
3. Section 96.102 is amended as follows:
0
a. By revising the definition of ``Allocate or allocation'';
0
b. In the definition of ``Allowance transfer deadline'', by revising 
the words ``midnight of March 1, if it is a business day, or, if March 
1 is not a business day, midnight of the first business day 
thereafter'' to read ``midnight of March 1 (if it is a business day), 
or midnight of the first business day thereafter (if March 1 is not a 
business day),'';
0
c. In the definition of ``Alternate CAIR designated representative'', 
by revising the words ``in accordance with'' to read ``, in accordance 
with'' and by adding at the end the words ``If the CAIR NOX 
source is also subject to the Hg Budget Trading Program, then this 
natural person shall be the same person as the alternate Hg designated 
representative under the Hg Budget Trading Program.'';
0
d. In the definition of ``CAIR authorized account representative'', by 
revising the words ``subparts BB and II'' to read ``subparts BB, FF, 
and II'';
0
e. In the definition of ``CAIR designated representative'', by adding 
at the end the words ``If the CAIR NOX source is also 
subject to the Hg Budget Trading Program, then this natural person 
shall be the same person as the Hg designated representative under the 
Hg Budget Trading Program.'';
0
f. By revising the definition of ``CAIR NOX allowance'';
0
g. In the definition of ``CAIR NOX allowance deduction or 
deduct CAIR NOX allowances'', by adding, after the words 
``compliance account'', the words ``, e.g.,'';
0
h. In the definition of ``CAIR NOX Annual Trading Program'', 
by revising the words ``Sec.  51.123 of this chapter,'' to read ``Sec.  
51.123 of this chapter or established by the Administrator in 
accordance with subparts AA through II of part 97 of this chapter and 
Sec. Sec.  51.123(p) and 52.35 of this chapter,'';
0
i. In the definition of ``CAIR NOX emissions limitation'', 
by revising the words ``tonnage equivalent of'' to read ``tonnage 
equivalent, in NOX emissions in a control period, of'' and 
by revising the words ``for a control period'' to read ``for the 
control period'';
0
j. In the definition of ``CAIR NOX Ozone Season source'', by 
revising the words ``includes one or more CAIR NOX Ozone 
Season units'' to read ``is subject to the CAIR NOX Ozone 
Season Trading Program'';
0
k. In the definition of ``CAIR NOX Ozone Season Trading 
Program'', by revising the words ``Sec.  51.123 of this chapter,'' to 
read ``Sec.  51.123 of this chapter or established by the Administrator 
in accordance with subparts AAAA through IIII of part 97 of this 
chapter and Sec. Sec.  51.123(ee) and 52.35 of this chapter,'';
0
l. By removing the definition of ``CAIR NOX Ozone Season 
unit'';
0
m. In the definition of ``CAIR SO2 source'', by revising the 
words ``includes one or more CAIR SO2 units'' to read ``is 
subject to the CAIR SO2 Trading Program'';
0
n. In the definition of ``CAIR SO2 Trading Program'', by 
revising the words ``Sec.  51.124 of this chapter,'' to read ``Sec.  
51.124 of this chapter or established by the Administrator in 
accordance with subparts AAA through III of part 97 of this chapter and 
Sec. Sec.  51.124(r) and 52.36 of this chapter,'';
0
o. By removing the definition of ``CAIR SO2 unit'';
0
p. In paragraph (2) of the definition of ``Cogeneration unit'', by 
revising the words ``calendar year after which'' to read ``calendar 
year after the calendar year in which'';
0
q. In paragraph (2) of the definition of ``Combustion turbine'', by 
revising the words ``any associated heat recovery steam generator''to 
read ``any associated duct burner, heat recovery steam generator,'';
0
r. By revising the definition of ``Commence commercial operation'';
0
s. By revising the definition of ``Commence operation'';
0
t. In the definition of ``Control period'', by revising the words 
``January 1 of a calendar year and'' to read ``January 1 of a calendar 
year, except as provided in Sec.  96.106(c)(2), and'';
0
u. By revising the definition of ``Maximum design heat input'';
0
v. In the definition of ``Nameplate capacity'', by revising the words 
``other deratings) as specified'' to read ``other deratings) as of such 
installation as specified'' and by revising the words ``maximum amount 
as specified'' to read

[[Page 25381]]

``maximum amount as of such completion as specified'';
0
w. In the definition of ``Oil-fired'', by revising the words ``in a 
specified year.'' to read ``in a specified year and not qualifying as 
coal-fired.'';
0
x. In the definition of ``Receive or receipt'', by revising the words 
``official correspondence log'' to read ``official log''; and
0
y. By adding new definitions of ``Hg Budget Trading Program'', 
``Replacement, replace, or replaced'', and ``Solid waste incineration 
unit'' to read as follows:


Sec.  96.102  Definitions.

* * * * *
    Allocate or allocation means, with regard to CAIR NOX 
allowances, the determination by a permitting authority or the 
Administrator of the amount of such CAIR NOX allowances to 
be initially credited to a CAIR NOX unit, a new unit set-
aside, or other entity.
* * * * *
    CAIR NOX allowance means a limited authorization issued by a 
permitting authority or the Administrator under provisions of a State 
implementation plan that are approved under Sec.  51.123(o)(1) or (2) 
or (p) of this chapter, or under subpart EE of part 97 or Sec.  97.188 
of this chapter, to emit one ton of nitrogen oxides during a control 
period of the specified calendar year for which the authorization is 
allocated or of any calendar year thereafter under the CAIR 
NOX Program. An authorization to emit nitrogen oxides that 
is not issued under provisions of a State implementation plan that are 
approved under Sec.  51.123(o)(1) or (2) or (p) of this chapter or 
subpart EE of part 97 or Sec.  97.188 of this chapter shall not be a 
CAIR NOX allowance.
* * * * *
    Commence commercial operation means, with regard to a unit:
    (1) To have begun to produce steam, gas, or other heated medium 
used to generate electricity for sale or use, including test 
generation, except as provided in Sec.  96.105 and Sec.  96.184(h).
    (i) For a unit that is a CAIR NOX unit under Sec.  
96.104 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that subsequently undergoes a physical change (other than replacement 
of the unit by a unit at the same source), such date shall remain the 
date of commencement of commercial operation of the unit, which shall 
continue to be treated as the same unit.
    (ii) For a unit that is a CAIR NOX unit under Sec.  
96.104 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that is subsequently replaced by a unit at the same source (e.g., 
repowered), such date shall remain the replaced unit's date of 
commencement of commercial operation, and the replacement unit shall be 
treated as a separate unit with a separate date for commencement of 
commercial operation as defined in paragraph (1) or (2) of this 
definition as appropriate.
    (2) Notwithstanding paragraph (1) of this definition and except as 
provided in Sec.  96.105, for a unit that is not a CAIR NOX 
unit under Sec.  96.104 on the later of November 15, 1990 or the date 
the unit commences commercial operation as defined in paragraph (1) of 
this definition, the unit's date for commencement of commercial 
operation shall be the date on which the unit becomes a CAIR 
NOX unit under Sec.  96.104.
    (i) For a unit with a date for commencement of commercial operation 
as defined in paragraph (2) of this definition and that subsequently 
undergoes a physical change (other than replacement of the unit by a 
unit at the same source), such date shall remain the date of 
commencement of commercial operation of the unit, which shall continue 
to be treated as the same unit.
    (ii) For a unit with a date for commencement of commercial 
operation as defined in paragraph (2) of this definition and that is 
subsequently replaced by a unit at the same source (e.g., repowered), 
such date shall remain the replaced unit's date of commencement of 
commercial operation, and the replacement unit shall be treated as a 
separate unit with a separate date for commencement of commercial 
operation as defined in paragraph (1) or (2) of this definition as 
appropriate.
    Commence operation means:
    (1) To have begun any mechanical, chemical, or electronic process, 
including, with regard to a unit, start-up of a unit's combustion 
chamber, except as provided in Sec.  96.184(h).
    (2) For a unit that undergoes a physical change (other than 
replacement of the unit by a unit at the same source) after the date 
the unit commences operation as defined in paragraph (1) of this 
definition, such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (3) For a unit that is replaced by a unit at the same source (e.g., 
repowered) after the date the unit commences operation as defined in 
paragraph (1) of this definition, such date shall remain the replaced 
unit's date of commencement of operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of operation as defined in paragraph (1), (2), or (3) of 
this definition as appropriate, except as provided in Sec.  96.184(h).
* * * * *
    Hg Budget Trading Program means a multi-state Hg air pollution 
control and emission reduction program approved and administered by the 
Administrator in accordance subpart HHHH of part 60 of this chapter and 
Sec.  60.24(h)(6), or established by the Administrator under section 
111 of the Clean Air Act, as a means of reducing national Hg emissions.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
* * * * *
    Replacement, replace, or replaced means, with regard to a unit, the 
demolishing of a unit, or the permanent shutdown and permanent 
disabling of a unit, and the construction of another unit (the 
replacement unit) to be used instead of the demolished or shutdown unit 
(the replaced unit).
* * * * *
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
* * * * *

0
4. Section 96.103 is revised to read as follows:


Sec.  96.103  Measurements, abbreviations, and acroynyms.

    Measurements, abbreviations, and acronyms used in this subpart and 
subparts BB through II are defined as follows:
Btu--British thermal unit.
CO2--carbon dioxide
H2O--water
Hg--mercury
hr--hour
kW--kilowatt electrical
kWh--kilowatt hour
lb--pound
mmBtu--million Btu
MWe--megawatt electrical
MWh--megawatt hour
NOX--nitrogen oxides
O2--oxygen
ppm--parts per million
scfh--standard cubic feet per hour
SO2--sulfur dioxide
yr--year

[[Page 25382]]


0
5. Section 96.104 is revised to read as follows:


Sec.  96.104  Applicability.

    (a) Except as provided in paragraph (b) of this section:
    (1) The following units in a State shall be CAIR NOX 
units, and any source that includes one or more such units shall be a 
CAIR NOX source, subject to the requirements of this subpart 
and subparts BB through HH of this part: any stationary, fossil-fuel-
fired boiler or stationary, fossil-fuel-fired combustion turbine 
serving at any time, since the later of November 15, 1990 or the start-
up of the unit's combustion chamber, a generator with nameplate 
capacity of more than 25 MWe producing electricity for sale.
    (2) If a stationary boiler or stationary combustion turbine that, 
under paragraph (a)(1) of this section, is not a CAIR NOX 
unit begins to combust fossil fuel or to serve a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale, 
the unit shall become a CAIR NOX unit as provided in 
paragraph (a)(1) of this section on the first date on which it both 
combusts fossil fuel and serves such generator.
    (b) The units in a State that meet the requirements set forth in 
paragraph (b)(1)(i), (b)(2)(i), or (b)(2)(ii) of this section shall not 
be CAIR NOX units:
    (1)(i) Any unit that is a CAIR NOX unit under paragraph 
(a)(1) or (2) of this section:
    (A) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (B) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (ii) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (b)(1)(i) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become a CAIR NOX unit starting 
on the earlier of January 1 after the first calendar year during which 
the unit first no longer qualifies as a cogeneration unit or January 1 
after the first calendar year during which the unit no longer meets the 
requirements of paragraph (b)(1)(i)(B) of this section.
    (2)(i) Any unit that is a CAIR NOX unit under paragraph 
(a)(1) or (2) of this section commencing operation before January 1, 
1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (ii) Any unit that is a CAIR NOX unit under paragraph 
(a)(1) or (2) of this section commencing operation on or after January 
1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (iii) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (b)(2)(i) or (ii) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become a CAIR 
NOX unit starting on the earlier of January 1 after the 
first calendar year during which the unit first no longer qualifies as 
a solid waste incineration unit or January 1 after the first 3 
consecutive calendar years after 1990 for which the unit has an average 
annual fuel consumption of fossil fuel of 20 percent or more.


Sec.  96.105  [Amended]

0
6. Section 96.105 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``Sec.  96.106(c)(4) 
through (8), Sec.  96.107, and subparts EE through GG of this part'' to 
read ``Sec.  96.106(c)(4) through (7), Sec.  96.107, Sec.  96.108, and 
(subparts BB and EE through GG'';
0
b. In paragraph (b)(3), by revising the words ``shall retain at the 
source'' to read ``shall retain, at the source''; and
0
c. In paragraph (b)(7), by revising the words ``commences operation and 
commercial operation'' to read ``commences commercial operation''.


Sec.  96.106  [Amended]

0
7. Section 96.106 is amended as follows:
0
a. In paragraph (a)(1)(i), by revising the words ``in Sec.  96.121(a) 
and (b)'' to read ``in Sec.  96.121'';
0
b. In paragraph (c)(2), by revising the words ``under paragraph (c)(1) 
of this section'' to read ``under paragraph (c)(1) of this section for 
the control period'' and by revising the words ``under Sec.  
96.170(b)(1), (2), or (5)'' to read ``under Sec.  96.170(b)(1), (2), or 
(5) and for each control period thereafter'';
0
c. In paragraph (c)(4), by revising the words ``subpart EE'' to read 
``subparts FF, GG, and II'';
0
d. In paragraph (c)(7), by revising the words ``under subpart FF, GG, 
or II'' to read ``under subpart EE, FF, GG, or II'', by revising the 
words ``from a CAIR NOX unit's compliance account'' to read 
``from a CAIR NOX source's compliance account'', and by 
removing the words ``that includes the CAIR NOX unit'';
0
e. In paragraph (d)(1), by removing the paragraph designation ``(1)'' 
and by redesignating paragraph (i) as paragraph (d)(1); and
0
f. By removing paragraph (d)(2) and by redesignating paragraph (ii) as 
paragraph (d)(2).


Sec.  96.111  [Amended]

0
8. Section 96.111 is amended, in paragraph (c), by revising the words 
``Sec.  96.151 and 96.182'' to read ``96.115, 96.151, and 96.182''.


Sec.  96.112  [Amended]

0
9. Section 96.112 is amended, in paragraph (c)(1), by revising the 
words ``a new owner'' to read ``an owner'', by revising the words 
``such new owner'' to read ``such owner'', and by revising the words 
``the new owner'' to read ``the owner''.


Sec.  96.113  [Amended]

0
10. Section 96.113 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``is submitted'' to read 
``is submitted, including identification and nameplate capacity of each 
generator served by each such unit''; and
0
b. In paragraph (a)(4)(iv), by revising the words ``where a customer'' 
to read ``where a utility or industrial customer''.
0
11. Add a new Sec.  96.115 to read as follows:


Sec.  96.115  Delegation by CAIR designated representative and 
alternate CAIR designated representative.

    (a) A CAIR designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
to the Administrator provided for or required under this part.
    (b) An alternate CAIR designated representative may delegate, to 
one or more natural persons, his or her authority to make an electronic

[[Page 25383]]

submission to the Administrator provided for or required under this 
part.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the CAIR designated representative or alternate CAIR 
designated representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator that includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR designated 
representative or alternate CAIR designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such CAIR designated 
representative or alternate CAIR designated representative:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a CAIR designated representative or alternate CAIR 
designated representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
96.115(d) shall be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 96.115(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 96.115 is terminated.''
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall be effective, with regard to the CAIR designated 
representative or alternate CAIR designated representative identified 
in such notice, upon receipt of such notice by the Administrator and 
until receipt by the Administrator of a superseding notice of 
delegation submitted by such CAIR designated representative or 
alternate CAIR designated representative, as appropriate. The 
superseding notice of delegation may replace any previously identified 
agent, add a new agent, or eliminate entirely any delegation of 
authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the CAIR designated 
representative or alternate CAIR designated representative submitting 
such notice of delegation.


Sec.  96.120  [Amended]

0
12. Section 96.120 is amended, in paragraph (a), by revising the words 
``otherwise by this subpart and'' to read ``otherwise by Sec.  96.105, 
this subpart, and''.


Sec.  96.121  [Amended]

0
13. Section 96.121 is amended as follows:
0
a. In paragraph (a), by revising the words ``commences operation'' to 
read ``commences commercial operation, except as provided in Sec.  
96.183(a)''; and
0
b. In paragraph (b), by revising the words ``permit renewal'' to read 
``permit renewal, except as provided in Sec.  96.183(b)''.


Sec.  96.123  [Amended]

0
14. Section 96.123 is amended, in paragraph (b), by revising the words 
``subpart FF, GG, or II'' to read ``subpart EE, FF, GG, or II''.


Sec.  96.141  [Amended]

0
15. Section 96.141 is amended as follows:
0
a. In paragraph (b)(1), removing the paragraph designation ``(1)'';
0
b. By removing paragraph (b)(2);
0
c. In paragraph (c)(1), removing the paragraph designation ``(1)''; and
0
d. By removing paragraph (c)(2).

0
16. Section 96.142 is amended as follows:
0
a. In paragraph (a)(2)(ii)(C), by revising the words ``3,414 Btu/kWh'' 
to read ``3,413 Btu/kWh'';
0
b. By revising paragraph (c) introductory text;
0
c. In paragraph (c)(1), by revising the words ``2009 through 2013'' to 
read ``2009 through 2014'' and by revising the words ``in 2014'' to 
read ``in 2015'';
0
d. In paragraph (c)(2), by revising the words ``The CAIR NOX 
allowance allocation request must be submitted on or before July 1 of 
the first control period for which CAIR NOX allowances are 
requested'' to read ``A separate CAIR NOX allowance 
allocation request for each control period for which CAIR 
NOX allowances are sought must be submitted on or before May 
1 of such control period''; and
0
e. In paragraph (c)(4)(ii), by revising the words ``On or after July 
1'' to read ``On or after May 1''; and revising to read as follows:


Sec.  96.142  CAIR NOX allowance allocations.

* * * * *
    (c) For each control period in 2009 and thereafter, the permitting 
authority will allocate CAIR NOX allowances to CAIR 
NOX units in a State that are not allocated CAIR 
NOX allowances under paragraph (b) of this section because 
the units do not yet have a baseline heat input under paragraph (a) of 
this section or because the units have a baseline heat input but all 
CAIR NOX allowances available under paragraph (b) of this 
section for the control period are already allocated, in accordance 
with the following procedures:
* * * * *


Sec.  96.143  [Amended]

0
17. Section 96.143 is amended as follows:
0
a. In paragraphs (b)(2), (c)(1), and (d), by revising the words ``July 
1'' to read ``May 1'';
0
b. In paragraph (d)(3), by revising the words `` `Unit's allocation' is 
the number of CAIR NOX allowances'' to read `` `Unit's 
allocation' is the amount of CAIR NOX allowances'';
0
c. In paragraph (d)(4), by revising the words ``paragraph (d)(3) or 
(4)'' to read ``paragraph (d)(2) or (3)''; and
0
d. In paragraph (d)(5), by revising the words ``paragraph (d)(5)'' to 
read ``paragraph (d)(4)''.

0
18. Section 96.151 is amended as follows:
0
a. In paragraph (b)(2) introductory text, by revising the word 
``representative'' to read ``representative or alternate CAIR 
authorized account representative'';
0
b. In paragraph (b)(3)(iii)(A), by revising the words ``a new person'' 
to read ``a person'', by revising the words ``such new person'' to read 
``such person'', and by revising the words ``the new person'' to read 
``the person'';
0
c. In paragraph (b)(3)(iii)(B), by revising the words ``addition of 
persons'' to read ``addition of a new person'';
0
d. In paragraph (b)(4) introductory text, by revising the word 
``representative'' to read ``representative or alternate CAIR 
authorized account representative'';
0
e. In paragraphs (b)(4)(ii) and (iii), by revising the words 
``alternative CAIR'' to read ``alternate CAIR'' whenever they appear; 
and
0
f. By adding a new paragraph (b)(5) to read as follows:

[[Page 25384]]

Sec.  96.151  Establishment of accounts.

* * * * *
    (b) * * *
    (5) Delegation by CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) A CAIR authorized 
account representative may delegate, to one or more natural persons, 
his or her authority to make an electronic submission to the 
Administrator provided for or required under subparts FF and GG of this 
part.
    (ii) An alternate CAIR authorized account representative may 
delegate, to one or more natural persons, his or her authority to make 
an electronic submission to the Administrator provided for or required 
under subparts FF and GG of this part.
    (iii) In order to delegate authority to make an electronic 
submission to the Administrator in accordance with paragraph (b)(5)(i) 
or (ii) of this section, the CAIR authorized account representative or 
alternate CAIR authorized account representative, as appropriate, must 
submit to the Administrator a notice of delegation, in a format 
prescribed by the Administrator, that includes the following elements:
    (A) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR authorized account 
representative or alternate CAIR authorized account representative;
    (B) The name, address, e-mail address, telephone number, and, 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (C) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (b)(5)(i) or (ii) of this 
section for which authority is delegated to him or her;
    (D) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``I agree that any electronic submission to the 
Administrator that is by an agent identified in this notice of 
delegation and of a type listed for such agent in this notice of 
delegation and that is made when I am a CAIR authorized account 
representative or alternate CAIR authorized representative, as 
appropriate, and before this notice of delegation is superseded by 
another notice of delegation under 40 CFR 96.151(b)(5)(iv) shall be 
deemed to be an electronic submission by me.''; and
    (E) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``Until this notice of delegation is superseded by 
another notice of delegation under 40 CFR 96.151 (b)(5)(iv), I agree to 
maintain an e-mail account and to notify the Administrator immediately 
of any change in my e-mail address unless all delegation of authority 
by me under 40 CFR 96.151 (b)(5) is terminated.''
    (iv) A notice of delegation submitted under paragraph (b)(5)(iii) 
of this section shall be effective, with regard to the CAIR authorized 
account representative or alternate CAIR authorized account 
representative identified in such notice, upon receipt of such notice 
by the Administrator and until receipt by the Administrator of a 
superseding notice of delegation submitted by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (v) Any electronic submission covered by the certification in 
paragraph (b)(5)(iii)(D) of this section and made in accordance with a 
notice of delegation effective under paragraph (b)(5)(iv) of this 
section shall be deemed to be an electronic submission by the CAIR 
designated representative or alternate CAIR designated representative 
submitting such notice of delegation.
* * * * *

0
19. Section 96.153 is amended as follows:
0
a. In paragraph (a), by revising the words ``By December 1, 2006,'' to 
read ``By September 30, 2007,'' and revising the words ``at a source'' 
to read ``at the source'';
0
b. In paragraphs (b) and (d), by removing the words ``or as determined 
by the Administrator''; and
0
c. By revising paragraph (c) to read as follows:


Sec.  96.153  Recordation of CAIR NOX allowance allocations.

* * * * *
    (c) By December 1, 2009 and December 1 of each year thereafter, the 
Administrator will record in the CAIR NOX source's 
compliance account the CAIR NOX allowances allocated for the 
CAIR NOX units at the source, as submitted by the permitting 
authority in accordance with Sec.  96.141(b), for the control period in 
the sixth year after the year of the applicable deadline for 
recordation under this paragraph.
* * * * *


Sec.  96.154  [Amended]

0
20. Section 96.154 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``prior year;'' to read 
``prior year; and'';
0
b. In paragraph (a)(2), revising the words ``Sec.  96.160 by the 
allowance transfer deadline for the control period; and'' to read 
``Sec. Sec.  96.160 and 96.161 by the allowance transfer deadline for 
the control period.'';
0
c. By removing paragraph (a)(3);
0
d. In paragraph (c)(2)(ii), by revising the words ``to any unit'' to 
read ``to any entity'';
0
e. In paragraph (e), by revising the words ``under paragraph (b) or (d) 
of this section'' to read ``under paragraphs (b) and (d) of this 
section and subpart II'';
0
f. In paragraph (f)(2), by revising the words ``of this section.'' to 
read ``of this section, and record such deductions and transfers.''


Sec.  96.155  [Amended]

0
21. Section 96.155 is amended, in paragraph (b), by revising the words 
``Sec.  96.156, or subpart GG'' to read ``Sec.  96.156, or subpart GG 
or II''.


Sec.  96.157  [Amended]

0
22. Section 96.157 is amended, in paragraphs (a) and (b), by revising 
the words ``Sec.  96.160'' to read ``Sec. Sec.  96.160 and 96.161''.

0
23. Section 96.170 is amended as follows:
0
a. In paragraph (b) introductory text, by revising the words ``The 
owner'' to read ``Except as provided in paragraph (e) of this section, 
the owner'';
0
b. In paragraph (b)(5), by revising the words ``paragraphs (b)(1), (2), 
and (4) of this section and solely for purposes of Sec.  96.106(c)(2), 
for the owner'' to read ``paragraphs (b)(1) and (2) of this section, 
for the owner'';
0
c. In paragraph (c)(1), by removing the paragraph designation ``(1)'' 
and by revising the words ``Except as provided in paragraph (c)(2) of 
this section, the owner'' to read ``The owner'';
0
d. By removing paragraph (c)(2);
0
e. In paragraph (d)(3), by revising the words ``the atmosphere'' to 
read ``the atmosphere or heat input''; and
0
f. By adding a new paragraph (e) to read as follows:


Sec.  96.170  General Requirements.

* * * * *
    (e) Long-term cold storage. The owner or operator of a CAIR 
NOX unit is subject to the applicable provisions of part 75 
of this chapter concerning units in long-term cold storage.

[[Page 25385]]

Sec.  96.171  [Amended]

0
24. Section 96.171 is amended, in paragraph (c), by revising the words 
``Sec.  75.12, Sec.  75.17, or subpart H of part 75'' to read ``Sec.  
75.12 or Sec.  75.17''.


Sec.  96.173  [Amended]

0
25. Section 96.173 is amended by removing the words ``, except that if 
the unit is not subject to an Acid Rain emissions limitation, the 
notification is only required to be sent to the permitting authority''.

0
26. Section 96.174 is amended as follows:
0
a. In paragraph (d)(1)(i), by revising the words ``2008; or'' to read 
``2008;'';
0
b. In paragraph (d)(1)(ii), by revising the words ``2008.'' to read 
``2008;'';
0
c. By adding new paragraphs (d)(1)(iii) and (iv); and
0
d. In paragraph (d)(3), by revising the words ``or CAIR SO2 
Trading Program,'' to read ``, CAIR SO2 Trading Program, or 
Hg Budget Trading Program,'' and by revising the words ``subparts F 
through H'' to read ``subparts F through I'' and revising to read as 
follows:


Sec.  96.174  Recordkeeping and reporting.

* * * * *
    (d) * * *
    (1) * * *
    (iii) Notwithstanding paragraphs (d)(1)(i) and (ii) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart II of this part, the calendar quarter 
corresponding to the date specified in Sec.  96.184(b); and
    (iv) Notwithstanding paragraphs (d)(1)(i) and (ii) of this section, 
for a CAIR NOX opt-in unit under subpart II of this part, 
the calendar quarter corresponding to the date on which the CAIR 
NOX opt-in unit enters the CAIR NOX Annual 
Trading Program as provided in Sec.  96.184(g).
* * * * *


Sec.  96.176  [Removed]

0
27. Section 96.176 is removed.

0
28. Section 96.183 is amended as follows:
0
a. By revising paragraph (a)(5); and
0
b. In paragraph (b)(2), by revising the words ``CAIR opt-in unit``to 
read ''CAIR NOX opt-in unit'' and revising to read as 
follows:


Sec.  96.183  Applying for CAIR opt-in permit.

    (a)* * *
    (5) A statement, in a format specified by the permitting authority, 
whether the CAIR designated representative requests that the unit be 
allocated CAIR NOX allowances under Sec.  96.188(b) or Sec.  
96.188(c) (subject to the conditions in Sec. Sec.  96.184(h) and 
96.186(g)). If allocation under Sec.  96.188(c) is requested, this 
statement shall include a statement that the owners and operators of 
the unit intend to repower the unit before January 1, 2015 and that 
they will provide, upon request, documentation demonstrating such 
intent.
* * * * *


Sec.  96.184  [Amended]

0
29. Section 96.184 is amended as follows:
0
a. In paragraph (c)(2), by revising the words ``for the control period 
under paragraph (b)(1)(ii) of this section and for the control periods 
under paragraph (b)(2) of this section``to read''for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section'';
0
b. In paragraph (d)(2), by revising the words ``for the control period 
under paragraph (b)(1)(ii) of this section and the control periods 
under paragraph (b)(2) of this section``to read''for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section'';
0
c. In paragraph (d)(3), by revising the words ``for such control 
period'' with words''for such control periods'';
0
d. In paragraph (f), by revising the words ``CAIR NOX opt-in 
permit'' to read ``CAIR opt-in permit''; and
0
e. In paragraph (h)(2), by revising the words ``a CAIR opt-in unit'' to 
read ``a CAIR NOX opt-in unit''.

0
30. Section 96.185 is amended as follows:
0
a. In paragraph (a)(5), by revising the words ``under Sec.  
96.188(c)``to read''Sec.  96.188(b) or Sec.  96.188(c)''; and
0
b. By adding a new paragraph (c) to read as follows:


Sec.  96.185  CAIR opt-in permit contents.

* * * * *
    (c) The CAIR opt-in permit shall be included, in a format specified 
by the permitting authority, in the CAIR permit for the source where 
the CAIR NOX opt-in unit is located and in a title V 
operating permit or other federally enforceable permit for the source.


Sec.  96.186  [Amended]

0
31. Section 96.186 is amended as follows:
0
a. In paragraph (a), by revising the words ``CAIR opt-in unit'' to read 
``CAIR NOX opt-in unit''; and
0
b. In paragraph (b)(2), by revising the words ``equal in number to'' to 
read ``equal in amount to''.

0
32. Section 96.187 is amended as follows:
0
a. In paragraph (b)(1), by revising the words ``under Sec.  96.123'' to 
read ``under Sec.  96.123, and remove the CAIR opt-in permit 
provisions,'';
0
b. In paragraph (b)(2)(i), by revising the words ``equal in number to'' 
to read ``equal in amount to'';
0
c. By revising paragraph (b)(3)(i);
0
d. In paragraph (b)(3)(ii), by revising the words ``Notwithstanding 
paragraph (b)(3)(i) of this section, if'' to read ``If'', by revising 
the words ``January 1'' to read ``December 31,'' and by revising the 
words ``number of CAIR NOX allowances'' to read ``amount of 
CAIR NOX allowances''; and
0
e. In paragraph (b)(3)(ii)(A), by revising the words ``number of CAIR 
NOX allowances'' to read ``amount of CAIR NOX 
allowances'' and revising to read as follows:


Sec.  96.187  Change in regulatory status.

* * * * *
    (b) * * *
    (3)(i) For every control period after the date on which the CAIR 
NOX opt-in unit becomes a CAIR NOX unit under 
Sec.  96.104, the CAIR NOX opt-in unit will be allocated 
CAIR NOX allowances under Sec.  96.142.
* * * * *


Sec.  96.188  CAIR NOX allowance allocations to CAIR 
NOX opt-in units.

0
33. Section 96.188 is amended as follows:
0
a. By revising the heading of the section as set forth above;
0
b. In paragraph (a)(2), by revising the words ``of the control period 
in which a CAIR opt-in unit'' to read ``of the control period after the 
control period in which a CAIR NOX opt-in unit'';
0
c. In paragraph (c), by revising the words ``issues a CAIR opt-in 
permit'' to read ``issues a CAIR opt-in permit (based on a 
demonstration of the intent to repower stated under Sec.  
96.183(a)(5))''; and
0
d. In paragraph (d)(2), by revising the words ``CAIR opt-in unit'' to 
read ``CAIR NOX opt-in unit'' and revising the words ``CAIR 
opt-in unit''.

0
34. Section 96.202 is amended as follows:
0
a. By revising the definition of ``Allocate or allocation'';
0
b. In the definition of ``Allowance transfer deadline'', by revising 
the words ``midnight of March 1, if it is a business day, or, if March 
1 is not a business day, midnight of the first business day 
thereafter'' to read ``midnight of March 1 (if it is a business day), 
or midnight of the first business day thereafter (if March 1 is not a 
business day),'';
0
c. In the definition of ``Alternate CAIR designated representative'', 
by adding at the end the words ``If the CAIR SO2

[[Page 25386]]

source is also subject to the Hg Budget Trading Program, then this 
natural person shall be the same person as the alternate Hg designated 
representative under the Hg Budget Trading Program.'';
0
d. In the definition of ``CAIR authorized account representative'', by 
revising the words ``subparts BBB and III'' to read ``subparts BBB, 
FFF, and III'';
0
e. In the definition of ``CAIR designated representative'', by adding 
at the end the words ``If the CAIR SO2 source is also 
subject to the Hg Budget Trading Program, then this natural person 
shall be the same person as the Hg designated representative under the 
Hg Budget Trading Program.'';
0
f. In the definition of ``CAIR NOX Annual Trading Program'', 
by revising the words ``Sec.  51.123 of this chapter,'' to read ``Sec.  
51.123 of this chapter or established by the Administrator in 
accordance with subparts AA through II of part 97 of this chapter and 
Sec. Sec.  51.123(p) and 52.35 of this chapter,'';
0
g. In the definition of ``CAIR NOX Ozone Season source'', by 
revising the words ``includes one or more CAIR NOX Ozone 
Season unit'' to read ``is subject to the CAIR NOX Ozone 
Season Trading Program'';
0
h. In the definition of ``CAIR NOX Ozone Season Trading 
Program'', by revising the words ``Sec.  51.123 of this chapter,'' to 
read ``Sec.  51.123 of this chapter or established by the Administrator 
in accordance with subparts AAAA through IIII of part 97 of this 
chapter and Sec. Sec.  51.123(ee) and 52.35 of this chapter,'';
0
i. By removing the definition of ``CAIR NOX Ozone Season 
unit'';
0
j. In the definition of ``CAIR NOX source'', by revising the 
words ``includes one or more CAIR NOX units'' to read ``is 
subject to the CAIR NOX Annual Trading Program'';
0
k. By removing the definition of ``CAIR NOX unit'';
0
l. In the definition of ``CAIR SO2 allowance'', by revising 
in the introductory text the words ``under Sec.  96.288,'' to read 
``under provisions of a State implementation plan that are approved 
under Sec.  51.124(o)(1) or (2) or (r) of this chapter or Sec.  97.288 
of this chapter,'', by designating the last sentence of the definition 
as paragraph (4), and by revising in paragraph (4) the words ``(Program 
or under the provisions of a State implementation plan that is approved 
under Sec.  51.124(o)(1) or (2) of this chapter'' to read ``(Program, 
provisions of a State implementation plan that are approved under Sec.  
51.124(o)(1) or (2) or (r) of this chapter, or Sec.  97.288 of this 
chapter'';
0
m. In the definition of ``CAIR SO2 allowance deduction or 
deduct CAIR SO2 allowances'', by adding, after the words 
``compliance account'', the words ``, e.g.,'';
0
n. In the definition of ``CAIR SO2 emissions limitation'', 
by revising the words ``tonnage equivalent of'' to read ``tonnage 
equivalent, in SO2 emissions in a control period, of'' and 
by revising the words ``for a control period'' to read ``for the 
control period''
0
o. In the definition of ``CAIR SO2 Trading Program'', by 
revising the words ``Sec.  51.124 of this chapter,'' to read ``Sec.  
51.124 of this chapter or established by the Administrator in 
accordance with subparts AAA through III of part 97 of this chapter and 
Sec. Sec.  51.124(r) and 52.36 of this chapter,'';
0
p. In paragraph (2) of the definition of ``Cogeneration unit'', by 
revising the words ``calendar year after which'' to read ``calendar 
year after the calendar year in which'';
0
q. In the definition of ``Combustion turbine'', by revising the words 
``any associated heat recovery steam generator'' to read ``any 
associated duct burner, heat recovery steam generator,'';
0
r. By revising the definition of ``Commence commercial operation'';
0
s. By revising the definition of ``Commence operation'';
0
t. In the definition of ``Control period'', by revising the words 
``January 1 of a calendar year and'' to read ``January 1 of a calendar 
year, except as provided in Sec.  96.206(c)(2), and'';
0
u. By revising the definition of ``Maximum design heat input'';
0
v. In the definition of ``Nameplate capacity'', by revising the words 
``other deratings) as specified'' to read ``other deratings) as of such 
installation as specified'' and by revising the words ``maximum amount 
as specified'' to read ``maximum amount as of such completion as 
specified'';
0
w. In the definition of ``Receive or receipt'', by revising the words 
``official correspondence log'' to read ``official log'';
0
x. In the definition of ``Useful thermal energy'', by revising in 
paragraph (2) the word ``heat'' with the word ``heating''; and
0
y. By adding new definitions of ``Hg Budget Trading Program'', 
``Replacement, replace, or replaced'', and ``Solid waste incineration 
unit'' to read as follows:


Sec.  96.202  Definitions.

* * * * *
    Allocate or allocation means, with regard to CAIR SO2 
allowances issued under the Acid Rain Program, the determination by the 
Administrator of the amount of such CAIR SO2 allowances to 
be initially credited to a CAIR SO2 unit or other entity 
and, with regard to CAIR SO2 allowances issued under 
provisions of a State implementation plan that are approved under Sec.  
51.124(o)(1) or (2) or (r) of this chapter or Sec.  97.288 of this 
chapter, the determination by a permitting authority of the amount of 
such CAIR SO2 allowances to be initially credited to a CAIR 
SO2 unit or other entity.
* * * * *
    Commence commercial operation means, with regard to a unit:
    (1) To have begun to produce steam, gas, or other heated medium 
used to generate electricity for sale or use, including test 
generation, except as provided in Sec.  96.205 and Sec.  96.284(h).
    (i) For a unit that is a CAIR SO2 unit under Sec.  
96.204 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that subsequently undergoes a physical change (other than replacement 
of the unit by a unit at the same source), such date shall remain the 
date of commencement of commercial operation of the unit, which shall 
continue to be treated as the same unit.
    (ii) For a unit that is a CAIR SO2 unit under Sec.  
96.204 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that is subsequently replaced by a unit at the same source (e.g., 
repowered), such date shall remain the replaced unit's date of 
commencement of commercial operation, and the replacement unit shall be 
treated as a separate unit with a separate date for commencement of 
commercial operation as defined in paragraph (1) or (2) of this 
definition as appropriate.
    (2) Notwithstanding paragraph (1) of this definition and except as 
provided in Sec.  96.205, for a unit that is not a CAIR SO2 
unit under Sec.  96.204 on the later of November 15, 1990 or the date 
the unit commences commercial operation as defined in paragraph (1) of 
this definition, the unit's date for commencement of commercial 
operation shall be the date on which the unit becomes a CAIR 
SO2 unit under Sec.  96.204.
    (i) For a unit with a date for commencement of commercial operation 
as defined in paragraph (2) of this definition and that subsequently 
undergoes a physical change (other than replacement of the unit by a 
unit at the same source), such date shall remain the date of 
commencement of commercial operation of the unit, which shall continue 
to be treated as the same unit.

[[Page 25387]]

    (ii) For a unit with a date for commencement of commercial 
operation as defined in paragraph (2) of this definition and that is 
subsequently replaced by a unit at the same source (e.g., repowered), 
such date shall remain the replaced unit's date of commencement of 
commercial operation, and the replacement unit shall be treated as a 
separate unit with a separate date for commencement of commercial 
operation as defined in paragraph (1) or (2) of this definition as 
appropriate.
    Commence operation means:
    (1) To have begun any mechanical, chemical, or electronic process, 
including, with regard to a unit, start-up of a unit's combustion 
chamber, except as provided in Sec.  96.284(h).
    (2) For a unit that undergoes a physical change (other than 
replacement of the unit by a unit at the same source) after the date 
the unit commences operation as defined in paragraph (1) of this 
definition, such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (3) For a unit that is replaced by a unit at the same source (e.g., 
repowered) after the date the unit commences operation as defined in 
paragraph (1) of this definition, such date shall remain the replaced 
unit's date of commencement of operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of operation as defined in paragraph (1), (2), or (3) of 
this definition as appropriate, except as provided in (96.284(h).
* * * * *
    Hg Budget Trading Program means a multi-state Hg air pollution 
control and emission reduction program approved and administered by the 
Administrator in accordance subpart HHHH of part 60 of this chapter and 
Sec.  60.24(h)(6), or established by the Administrator under section 
111 of the Clean Air Act, as a means of reducing national Hg emissions.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
* * * * *
    Replacement, replace, or replaced means, with regard to a unit, the 
demolishing of a unit, or the permanent shutdown and permanent 
disabling of a unit, and the construction of another unit (the 
replacement unit) to be used instead of the demolished or shutdown unit 
(the replaced unit).
* * * * *
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
* * * * *

0
35. Section 96.203 is revised to read as follows:


Sec.  96.203  Measurements, abbreviations, and acronyms.

    Measurements, abbreviations, and acronyms used in this subpart and 
subparts BBB through III are defined as follows:

Btu--British thermal unit
CO2--carbon dioxide
H2O--water
Hg--mercury
 hr--hour
kW--kilowatt electrical
kWh--kilowatt hour
lb--pound
mmBtu--million Btu
MWe--megawatt electrical
MWh--megawatt hour
NOX--nitrogen oxides
O2--oxygen
ppm--parts per million
scfh--standard cubic feet per hour
SO2--sulfur dioxide
 yr--year

0
36. Section 96.204 is revised to read as follows:


Sec.  96.204  Applicability.

    (a) Except as provided in paragraph (b) of this section:
    (1) The following units in a State shall be CAIR SO2 
units, and any source that includes one or more such units shall be a 
CAIR SO2 source, subject to the requirements of this subpart 
and subparts BBB through HHH of this part: any stationary, fossil-fuel-
fired boiler or stationary, fossil-fuel-fired combustion turbine 
serving at any time, since the later of November 15, 1990 or the start-
up of the unit's combustion chamber, a generator with nameplate 
capacity of more than 25 MWe producing electricity for sale.
    (2) If a stationary boiler or stationary combustion turbine that, 
under paragraph (a)(1) of this section, is not a CAIR SO2 
unit begins to combust fossil fuel or to serve a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale, 
the unit shall become a CAIR SO2 unit as provided in 
paragraph (a)(1) of this section on the first date on which it both 
combusts fossil fuel and serves such generator.
    (b) The units in a State that meet the requirements set forth in 
paragraph (b)(1)(i), (b)(2)(i), or (b)(2)(ii) of this section shall not 
be CAIR SO2 units:
    (1)(i) Any unit that is a CAIR SO2 unit under paragraph 
(a)(1) or (2) of this section:
    (A) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (B) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (ii) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (b)(1)(i) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become a CAIR SO2 unit starting 
on the earlier of January 1 after the first calendar year during which 
the unit first no longer qualifies as a cogeneration unit or January 1 
after the first calendar year during which the unit no longer meets the 
requirements of paragraph (b)(1)(i)(B) of this section.
    (2)(i) Any unit that is a CAIR SO2 unit under paragraph 
(a)(1) or (2) of this section commencing operation before January 1, 
1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (ii) Any unit that is a CAIR SO2 unit under paragraph 
(a)(1) or (2) of this section commencing operation on or after January 
1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (iii) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (b)(2)(i) or (ii) of this section 
for at least 3 consecutive

[[Page 25388]]

calendar years, but subsequently no longer meets all such requirements, 
the unit shall become a CAIR SO2 unit starting on the 
earlier of January 1 after the first calendar year during which the 
unit first no longer qualifies as a solid waste incineration unit or 
January 1 after the first 3 consecutive calendar years after 1990 for 
which the unit has an average annual fuel consumption of fossil fuel of 
20 percent or more.


Sec.  96.205  [Amended]

0
37. Section 96.205 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``Sec.  96.206(c)(4) 
through (8), Sec.  96.207, and subparts FFF and GGG'' to read ``Sec.  
96.206(c)(4) through (7), Sec.  96.207, Sec.  96.208, and subparts BBB, 
FFF, and GGG'';
0
b. In paragraph (b)(2), by revising the words ``shall retain at the 
source'' to read ``shall retain, at the source''; and
0
c. In paragraph (b)(6), by revising the words ``commences operation and 
commercial operation'' to read ``commences commercial operation''.


Sec.  96.206  [Amended]

0
38. Section 96.206 is amended as follows:
0
a. In paragraph (a)(1)(i), by revising the words ``in Sec.  96.221(a) 
and (b)'' to read ``in Sec.  96.221'';
0
b. In paragraph (c)(2), by revising the words ``under paragraph (c)(1) 
of this section'' with ``under paragraph (c)(1) of this section for the 
control period'' and by revising the words ``under Sec.  96.270(b)(1), 
(2), or (5)'' to read ``under Sec.  96.270(b)(1), (2), or (5) and for 
each control period thereafter'';
0
c. In paragraph (c)(7), by revising the words ``from a CAIR 
SO2 unit's compliance account'' to read ``from a CAIR 
SO2 source's compliance account'' and by removing the words 
``that includes the CAIR SO2 unit''; and
0
d. In paragraph (d)(1), by removing the paragraph designation ``(1)'' 
and by redesignating paragraph (i) as paragraph (d)(1); and
0
e. By removing paragraph (d)(2) and by redesignating paragraph (ii) as 
paragraph (d)(2).


Sec.  96.211  [Amended]

0
39. In paragraph (c), by revising the words ``96.251 and 96.282'' to 
read ``96.215, 96.251, and 96.282''.


Sec.  96.212  [Amended]

0
40. Section 96.212 is amended, in paragraph (c)(1), by revising the 
words ``a new owner'' to read ``an owner'', by revising the words 
``such new owner'' to read ``such owner'', and by revising the words 
``the new owner'' to read ``the owner''.


Sec.  96.213  [Amended]

0
41. Section 96.213 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``is submitted'' to read 
``is submitted, including identification and nameplate capacity of each 
generator served by each such unit''; and
0
b. In paragraph (a)(4)(iv), by revising the words ``where a customer'' 
to read ``where a utility or industrial customer''.
0
42. Add a new section 96.215 to read as follows:


Sec.  96.215  Delegation by CAIR designated representative and 
alternate CAIR designated representative.

    (a) A CAIR designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
to the Administrator provided for or required under this part.
    (b) An alternate CAIR designated representative may delegate, to 
one or more natural persons, his or her authority to make an electronic 
submission to the Administrator provided for or required under this 
part.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the CAIR designated representative or alternate CAIR 
designated representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator that includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR designated 
representative or alternate CAIR designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
``referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such CAIR designated 
representative or alternate CAIR designated representative:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a CAIR designated representative or alternate CAIR 
designated representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
96.215(d) shall be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 96.215(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 96.215 is terminated.''.
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall be effective, with regard to the CAIR designated 
representative or alternate CAIR designated representative identified 
in such notice, upon receipt of such notice by the Administrator and 
until receipt by the Administrator of a superseding notice of 
delegation submitted by such CAIR designated representative or 
alternate CAIR designated representative, as appropriate. The 
superseding notice of delegation may replace any previously identified 
agent, add a new agent, or eliminate entirely any delegation of 
authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the CAIR designated 
representative or alternate CAIR designated representative submitting 
such notice of delegation.


Sec.  96.220  [Amended]

0
43. Section 96.220 is amended as follows:
0
a. In paragraph (a), by revising the words ``otherwise by this subpart 
and'' to read ``otherwise by Sec.  96.205, this subpart, and''; and
0
b. In paragraph (b), by replacing the words ``CAIR SO2 units 
at the source'' to read ``CAIR SO2 units at the source 
covered by the CAIR permit''.


Sec.  96.221  [Amended]

0
44. Section 96.221 is amended as follows:
0
a. In paragraph (a), by revising the words ``commences operation'' to 
read ``commences commercial operation, except as provided in Sec.  
96.283(a)'' and
0
b. In paragraph (b), by revising the words ``permit renewal'' to read 
``permit renewal, except as provided in Sec.  96.283(b)''.

0
45. Section 96.251 is amended as follows:
0
a. In paragraph (b)(2) introductory text, by revising the word 
``representative'' to read ``representative

[[Page 25389]]

or alternate CAIR authorized account representative'';
0
b. In paragraph (b)(3)(iii)(A), by revising the words ``a new person'' 
to read ``a person'', revise the words ``such new person'' to read 
``such person'', and revise the words ``the new person'' to read ``the 
person'';
0
c. In paragraph (b)(3)(iii)(B), by revising the words ``addition of 
persons'' to read ``addition of a new person'';
0
d. In paragraph (b)(4) introductory text, by revising the word 
``representative'' to read ``representative or alternate CAIR 
authorized account representative'';
0
e. In paragraphs (b)(4)(ii) and (iii), by revising the words 
``alternative CAIR'' to read ``alternate CAIR'' whenever they appear; 
and
0
f. By adding a new paragraph (b)(5) to read as follows:


Sec.  96.251  Establishment of accounts.

* * * * *
    (b) * * *
    (5) Delegation by CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) A CAIR authorized 
account representative may delegate, to one or more natural persons, 
his or her authority to make an electronic submission to the 
Administrator provided for or required under subparts FFF and GGG of 
this part.
    (ii) An alternate CAIR authorized account representative may 
delegate, to one or more natural persons, his or her authority to make 
an electronic submission to the Administrator provided for or required 
under subparts FFF and GGG of this part.
    (iii) In order to delegate authority to make an electronic 
submission to the Administrator in accordance with paragraph (b)(5)(i) 
or (ii) of this section, the CAIR authorized account representative or 
alternate CAIR authorized account representative, as appropriate, must 
submit to the Administrator a notice of delegation, in a format 
prescribed by the Administrator, that includes the following elements:
    (A) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR authorized account 
representative or alternate CAIR authorized account representative;
    (B) The name, address, e-mail address, telephone number, and, 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (C) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (b)(5)(i) or (ii) of this 
section for which authority is delegated to him or her;
    (D) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``I agree that any electronic submission to the 
Administrator that is by an agent identified in this notice of 
delegation and of a type listed for such agent in this notice of 
delegation and that is made when I am a CAIR authorized account 
representative or alternate CAIR authorized representative, as 
appropriate, and before this notice of delegation is superseded by 
another notice of delegation under 40 CFR 96.251(b)(5)(iv) shall be 
deemed to be an electronic submission by me.''; and
    (E) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``Until this notice of delegation is superseded by 
another notice of delegation under 40 CFR 96.251 (b)(5)(iv), I agree to 
maintain an e-mail account and to notify the Administrator immediately 
of any change in my e-mail address unless all delegation of authority 
by me under 40 CFR 96.251 (b)(5) is terminated.''
    (iv) A notice of delegation submitted under paragraph (b)(5)(iii) 
of this section shall be effective, with regard to the CAIR authorized 
account representative or alternate CAIR authorized account 
representative identified in such notice, upon receipt of such notice 
by the Administrator and until receipt by the Administrator of a 
superseding notice of delegation submitted by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (v) Any electronic submission covered by the certification in 
paragraph (b)(5)(iii)(D) of this section and made in accordance with a 
notice of delegation effective under paragraph (b)(5)(iv) of this 
section shall be deemed to be an electronic submission by the CAIR 
designated representative or alternate CAIR designated representative 
submitting such notice of delegation.
* * * * *


Sec.  96.254  [Amended]

0
46. Section 96.254 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``prior year;'' to read 
``prior year; and'';
0
b. In paragraph (a)(2), revising the words ``Sec.  96.260 by the 
allowance transfer deadline for the control period; and'' to read 
``Sec. Sec.  96.260 and 96.261 by the allowance transfer deadline for 
the control period.'';
0
c. Removing paragraph (a)(3);
0
d. In paragraph (b)(1)(ii), by removing the words ``available under 
paragraph (a) of this section and'';
0
d. In paragraphs (c)(2)(ii), (c)(2)(iv), and (c)(2)(vi), by revising 
the words ``to any unit'' to read ``to any entity'';
0
e. In paragraph (d)(1), by revising the words ``3 times the number of 
tons of the source's excess emissions'' to read ``3 times the following 
amount: the number of tons of the source's excess emissions minus, if 
the source is subject to an Acid Rain emissions limitation, the amount 
of the CAIR SO2 allowances required to be deducted under 
paragraph (b)(1)(ii) of this section'';
0
f. In paragraph (e), by revising the words ``under paragraph (b) or (d) 
of this section'' to read ``under paragraphs (b) and (d) of this 
section) and subpart III''; and
0
g. In paragraph (f)(2), by revising the words ``of this section'' to 
read ``of this section, and record such deductions and transfers''.


Sec.  96.255  [Amended]

0
47. Section 96.255 is amended, in paragraph (b), by revising the words 
``Sec.  96.256, or subpart GGG'' to read ``Sec.  96.256, or subpart GGG 
or III''.


Sec.  96.257  [Amended]

0
48. Section 96.257 is amended, in paragraphs (a) and (b), by revising 
the words ``96.260''; to read ``Sec. Sec.  96.260 and 96.261''.

0
49. Section 96.261 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``Sec.  96.260; and'' to 
read ``Sec.  96.260;'';
0
b. In paragraph (a)(2), by revising the words ``transfer.'' to read 
``transfer; and''; and
0
c. By adding a new paragraph (a)(3) to read as follows:


Sec.  96.261  EPA recordation.

    (a) * * *
    (3) The transfer is in accordance with the limitation on transfer 
under Sec.  74.42 of this chapter and Sec.  74.47(c) of this chapter, 
as applicable.
* * * * *

0
50. Section 96.270 is amended as follows:
0
a. In paragraph (b) introductory text, by revising the words ``The 
owner'' to read ``Except as provided in paragraph (e) of this section, 
the owner'';

[[Page 25390]]

0
b. In paragraph (b)(5), by revising the words ``paragraphs (b)(1) and 
(2) of this section and solely for purposes of Sec.  96.206(c)(2), for 
the owner'' to read ``paragraphs (b)(1) and (2) of this section, for 
the owner'';
0
c. In paragraph (c)(1), by removing the paragraph designation ``(1)'' 
and by revising the words ``Except as provided in paragraph (c)(2) of 
this section, the owner'' to read ``The owner'' and the words 
``SO2 concentration, SO2 emission rate,'' to read 
``SO2 concentration,'';
0
d. By removing paragraph (c)(2);
0
e. In paragraph (d)(3), by revising the words ``the atmosphere'' to 
read ``the atmosphere or heat input''; and
0
f. By adding a new paragraph (e) to read as follows:


Sec.  96.270  General requirements.

* * * * *
    (e) Long-term cold storage. The owner or operator of a CAIR 
SO2 unit is subject to the applicable provisions of part 75 
of this chapter concerning units in long-term cold storage.


Sec.  96.271  [Amended]

0
51. Section 96.271 is amended by removing and reserving paragraph (c).


Sec.  96.273  [Amended]

0
52. Section 96.273 is amended by removing the words ``, except that if 
the unit is not subject to an Acid Rain emissions limitation, the 
notification is only required to be sent to the permitting authority''.

0
53. Section 96.274 is amended as follows:
0
a. In paragraph (d)(1)(i), by revising the words ``2009; or'' to read 
``2009;'';
0
b. In paragraph (d)(1)(ii), by revising the words ``2009.'' to read 
``2009;'';
0
c. By adding new paragraphs (d)(1)(iii) and (iv); and
0
d. In paragraph (d)(3), by revising the words ``or CAIR NOX 
Ozone Season Trading Program,'' to read ``, CAIR NOX Ozone 
Season Trading Program, or Hg Budget Trading Program,'' and by revising 
the words ``subparts F through H'' to read ``subparts F through I'' and 
revising to read as follows:


Sec.  96.274  Recordkeeping and reporting.

* * * * *
    (d) * * *
    (1) * * *
    (iii) Notwithstanding paragraphs (d)(1)(i) and (ii) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart III of this part, the calendar quarter 
corresponding to the date specified in Sec.  96.284(b); and
    (iv) Notwithstanding paragraphs (d)(1)(i) and (ii) of this section, 
for a CAIR SO2 opt-in unit under subpart III of this part, 
the calendar quarter corresponding to the date on which the CAIR 
SO2 opt-in unit enters the CAIR SO2 Trading 
Program as provided in Sec.  96.284(g).
* * * * *


Sec.  96.276  [Removed]

0
54. Section 96.276 is removed.

0
55. Section 96.283 is amended as follows:
0
a. In paragraph (a)(2)(iii), by revising the words ``CAIR opt-in unit'' 
to read ``CAIR SO2 opt-in unit'';
0
b. By revising paragraph (a)(5);
0
c. In paragraph (b)(1), by revising the words ``or permitting 
authority's'' to read ``or the permitting authority's'';
0
d. In paragraph (b)(2), by revising the words ``withdrawal of the CAIR 
opt-in unit'' to read ``withdrawal of the CAIR SO2 opt-in 
unit'' and revising to read as follows:


Sec.  96.283  Applying for CAIR opt-in permit.

    (a) * * *
    (5) A statement, in a format specified by the permitting authority, 
whether the CAIR designated representative requests that the unit be 
allocated CAIR SO2 allowances under Sec.  96.288(b) or Sec.  
96.288(c) (subject to the conditions in Sec. Sec.  96.284(h) and 
96.286(g)). If allocation under Sec.  96.288(c) is requested, this 
statement shall include a statement that the owners and operators of 
the unit intend to repower the unit before January 1, 2015 and that 
they will provide, upon request, documentation demonstrating such 
intent.
* * * * *


Sec.  96.284  [Amended]

0
56. Section 96.284 is amended as follows:
0
a. In paragraph (a), by revising the words ``heat input of the unit'' 
to read ``heat input of the unit and all other applicable parameters'';
0
b. In paragraph (c)(2), by revising the words ``for the control period 
under paragraph (b)(1)(ii) of this section and the control periods 
under paragraph (b)(2) of this section'' to read ``for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section'';
0
c. In paragraph (d)(2), by revising the words ``for the control period 
under paragraph (b)(1)(ii) of this section and the control periods 
under paragraph (b)(2) of this section'' to read ``for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section'';
0
d. In paragraph (d)(3), by revising the words ``for such control 
period'' with words ``for such control periods'';
0
d. In paragraph (f), by revising the words ``CAIR SO2 opt-in 
permit'' to read ``CAIR opt-in permit''; and
0
e. In paragraph (h)(2), by revising the words ``a CAIR opt-in unit'' to 
read ``a CAIR SO2 opt-in unit''.

0
57. Section 96.285 is amended as follows:
0
a. In paragraph (a)(5), by revising the words ``under Sec.  96.288(c)'' 
to read ``Sec.  96.288(b) or Sec.  96.288(c)''; and
0
b. By adding a new paragraph (c) to read as follows:


Sec.  96.285  CAIR opt-in permit contents.

* * * * *
    (c) The CAIR opt-in permit shall be included, in a format specified 
by the permitting authority, in the CAIR permit for the source where 
the CAIR SO2 opt-in unit is located and in a title V 
operating permit or other federally enforceable permit for the source.


Sec.  96.286  [Amended]

0
58. Section 96.286 is amended as follows:
0
a. In paragraph (a), by revising the words ``CAIR opt-in unit'' to read 
``CAIR SO2 opt-in unit''; and
0
b. In paragraph (b)(2), by revising the words ``equal in number to'' to 
read ``equal in amount to'' and by revising the words ``Sec.  96.188'' 
to read ``Sec.  96.288''.


Sec.  96.287  [Amended]

0
59. Section 96.287 is amended as follows:
0
a. In paragraph (b)(1), by revising the words ``under Sec.  96.223'' to 
read ``under Sec.  96.223, and remove the CAIR opt-in permit 
provisions,'';
0
b. In paragraph (b)(2)(i), by revising the words ``equal in number to'' 
to read ``equal in amount to''; and
0
c. By removing paragraph (b)(3).


Sec.  96.288  CAIR SO2 allowance allocations to CAIR 
SO2 opt-in units.

0
60. Section 96.288 is amended as follows:
0
a. By revising the heading of the section as set forth above;
0
b. In paragraph (a)(2), by revising the words ``of the control period 
in which a CAIR opt-in unit'' to read ``of the control period after the 
control period in which a CAIR SO2 opt-in unit'';
0
c. In paragraph (c), by revising the words ``issues a CAIR opt-in 
permit'' to read ``issues a CAIR opt-in permit (based on a 
demonstration of the intent to repower stated under Sec.  
96.283(a)(5))''; and
0
d. In paragraph (d)(2), by revising the words ``CAIR opt-in unit'' to 
read ``CAIR SO2 opt-in unit''.

0
61. Section 96.302 is amended as follows:

[[Page 25391]]

0
a. By revising the definition of ``Allocate or allocation'';
0
b. In the definition of ``Allowance transfer deadline'', by revising 
the words ``midnight of November 30, if it is a business day, or, if 
November 30 is not a business day, midnight of the first business day 
thereafter'' to read ``midnight of November 30 (if it is a business 
day), or midnight of the first business day thereafter (if November 30 
is not a business day),'';
0
c. In the definition of ``Alternate CAIR designated representative'', 
by adding at the end the words ``If the CAIR NOX Ozone 
Season source is also subject to the Hg Budget Trading Program, then 
this natural person shall be the same person as the alternate Hg 
designated representative under the Hg Budget Trading Program.''
0
d. In the definition of ``CAIR authorized account representative'', by 
revising the words ``subparts BBBB and IIII'' to read ''subparts BBBB, 
FFFF, and IIII'';
0
e. In the definition of ``CAIR designated representative'', by adding 
at the end the words ``If the CAIR NOX Ozone Season source 
is also subject to the Hg Budget Trading Program, then this natural 
person shall be the same person as the Hg designated representative 
under the Hg Budget Trading Program.''
0
f. In the definition of ``CAIR NOX Annual Trading Program'', 
by revising the words ``Sec.  51.123 of this chapter,'' to read ``Sec.  
51.123 of this chapter or established by the Administrator in 
accordance with subparts AA through II of part 97 of this chapter and 
Sec. Sec.  51.123(p) and 52.35 of this chapter,'';
0
g. Revising the definition of ``CAIR NOX Ozone Season 
allowance'';
0
h. In the definition of ``CAIR NOX Ozone Season allowance 
deduction or deduct CAIR NOX Ozone Season allowances'', by 
adding, after the words ``compliance account'', the words ``, e.g.,'';
0
i. In the definition of ``CAIR NOX Ozone Season emissions 
limitation'', by revising the words ``tonnage equivalent of'' to read 
``tonnage equivalent, in NOX emissions in a control period, 
of'' and by revising the words ``for a control period'' to read ``for 
the control period'';
0
j. In the definition of ``CAIR NOX Ozone Season Trading 
Program'', by revising the words ``Sec.  51.123 of this chapter,'' to 
read ``Sec.  51.123 of this chapter or established by the Administrator 
in accordance with subparts AAAA through IIII of part 97 of this 
chapter and Sec. Sec.  51.123(ee) and 52.35 of this chapter,'';
0
k. In the definition of ``CAIR NOX source'', by revising the 
words ``includes one or more CAIR NOX units'' to read ``is 
subject to the CAIR NOX Annual Trading Program'';
0
l. By removing the definition of ``CAIR NOX unit'';
0
m. In the definition of ``CAIR SO2 source'', by revising the 
words ``includes one or more CAIR SO2 units'' to read ``is 
subject to the CAIR SO2 Trading Program'';
0
n. In the definition of ``CAIR SO2 Trading Program'', by 
revising the words ``Sec.  51.124 of this chapter,'' to read ``Sec.  
51.124 of this chapter or established by the Administrator in 
accordance with subparts AAA through III of part 97 of this chapter and 
Sec. Sec.  51.124(r) and 52.36 of this chapter,'';
0
o. By removing the definition of ``CAIR SO2 unit'';
0
p. In paragraph (2) of the definition of ``Cogeneration unit'', by 
revising the words ``calendar year after which'' to read ``calendar 
year after the calendar year in which'';
0
q. In the definition of ``Combustion turbine'', by revising the words 
``any associated heat recovery steam generator'' to read ``any 
associated duct burner, heat recovery steam generator,'';
0
r. By revising the definition of ``Commence commercial operation'';
0
s. By revising the definition of ``Commence operation'';
0
t. In the definition of ``Control period'', by revising the words ``May 
1 of a calendar year and'' to read ``May 1 of a calendar year, except 
as provided in Sec.  96.306(c)(2), and'';
0
u. By revising the definition of ``Maximum design heat input'';
0
v. In the definition of ``Nameplate capacity'', by revising the words 
``other deratings) as specified''to read ``other deratings) as of such 
installation as specified'' and by revising the words ``maximum amount 
as specified'' to read ``maximum amount as of such completion as 
specified'';
0
w. In the definition of ``Oil-fired'', by revising the words ``in a 
specified year.'' to read ``in a specified year and not qualifying as 
coal-fired.'';
0
x. In the definition of ``Receive or receipt'', by revising the words 
``official correspondence log'' to read ``official log'';
0
y. In the definition of ``Useful thermal energy'', by revising in 
paragraph (2) the word ``heat'' with the word ``heating''; and
0
z. By adding new definitions of ``Hg Budget Trading Program'', 
``Replacement, replace, or replaced'', and ``Solid waste incineration 
unit'' and revising to read as follows:


Sec.  96.302  Definitions.

* * * * *
    Allocate or allocation means, with regard to CAIR NOX 
Ozone Season allowances, the determination by a permitting authority or 
the Administrator of the amount of such CAIR NOX Ozone 
Season allowances to be initially credited to a CAIR NOX 
Ozone Season unit, a new unit set-aside, or other entity.
* * * * *
    CAIR NOX Ozone Season allowance means a limited authorization 
issued by a permitting authority or the Administrator under provisions 
of a State implementation plan that are approved under Sec.  
51.123(aa)(1) or (2) (and (bb)(1)), (bb)(2), (dd), or (ee) of this 
chapter, or under subpart EEEE of part 97 or Sec.  97.388 of this 
chapter, to emit one ton of nitrogen oxides during a control period of 
the specified calendar year for which the authorization is allocated or 
of any calendar year thereafter under the CAIR NOX Ozone 
Season Trading Program or a limited authorization issued by a 
permitting authority for a control period during 2003 through 2008 
under the NOX Budget Trading Program in accordance with 
Sec.  51.121(p) of this chapter to emit one ton of nitrogen oxides 
during a control period, provided that the provision in Sec.  
51.121(b)(2)(ii)(E) of this chapter shall not be used in applying this 
definition and the limited authorization shall not have been used to 
meet the allowance-holding requirement under the NOX Budget 
Trading Program. An authorization to emit nitrogen oxides that is not 
issued under provisions of a State implementation plan approved under 
Sec.  51.123(aa)(1) or (2) (and (bb)(1)), (bb)(2), (dd), or (ee) of 
this chapter or subpart EEEE of part 97 or Sec.  97.388 of this chapter 
or under the NOX Budget Trading Program as described in the 
prior sentence shall not be a CAIR NOX Ozone Season 
allowance.
* * * * *
    Commence commercial operation means, with regard to a unit:
    (1) To have begun to produce steam, gas, or other heated medium 
used to generate electricity for sale or use, including test 
generation, except as provided in Sec.  96.305 and Sec.  96.384(h).
    (i) For a unit that is a CAIR NOX Ozone Season unit 
under Sec.  97.304 on the later of November 15, 1990 or the date the 
unit commences commercial operation as defined in paragraph (1) of this 
definition and that subsequently undergoes a physical change (other 
than replacement of the unit by a unit at the same source), such date 
shall remain the date of commencement of commercial

[[Page 25392]]

operation of the unit, which shall continue to be treated as the same 
unit.
    (ii) For a unit that is a CAIR NOX Ozone Season unit 
under Sec.  96.304 on the later of November 15, 1990 or the date the 
unit commences commercial operation as defined in paragraph (1) of this 
definition and that is subsequently replaced by a unit at the same 
source (e.g., repowered), such date shall remain the replaced unit's 
date of commencement of commercial operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of commercial operation as defined in paragraph (1) or (2) 
of this definition as appropriate.
    (2) Notwithstanding paragraph (1) of this definition and except as 
provided in Sec.  96.305, for a unit that is not a CAIR NOX 
Ozone Season unit under Sec.  96.304 on the later of November 15, 1990 
or the date the unit commences commercial operation as defined in 
paragraph (1) of this definition, the unit's date for commencement of 
commercial operation shall be the date on which the unit becomes a CAIR 
NOX Ozone Season unit under Sec.  96.304.
    (i) For a unit with a date for commencement of commercial operation 
as defined in paragraph (2) of this definition and that subsequently 
undergoes a physical change (other than replacement of the unit by a 
unit at the same source), such date shall remain the date of 
commencement of commercial operation of the unit, which shall continue 
to be treated as the same unit.
    (ii) For a unit with a date for commencement of commercial 
operation as defined in paragraph (2) of this definition and that is 
subsequently replaced by a unit at the same source (e.g., repowered), 
such date shall remain the replaced unit's date of commencement of 
commercial operation, and the replacement unit shall be treated as a 
separate unit with a separate date for commencement of commercial 
operation as defined in paragraph (1) or (2) of this definition as 
appropriate.
    Commence operation means:
    (1) To have begun any mechanical, chemical, or electronic process, 
including, with regard to a unit, start-up of a unit's combustion 
chamber, except as provided in Sec.  96.384(h).
    (2) For a unit that undergoes a physical change (other than 
replacement of the unit by a unit at the same source) after the date 
the unit commences operation as defined in paragraph (1) of this 
definition, such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (3) For a unit that is replaced by a unit at the same source (e.g., 
repowered) after the date the unit commences operation as defined in 
paragraph (1) of this definition, such date shall remain the replaced 
unit's date of commencement of operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of operation as defined in paragraph (1), (2), or (3) of 
this definition as appropriate, except as provided in Sec.  96.384(h).
* * * * *
    Hg Budget Trading Program means a multi-state Hg air pollution 
control and emission reduction program approved and administered by the 
Administrator in accordance subpart HHHH of part 60 of this chapter and 
Sec.  60.24(h)(6), or established by the Administrator under section 
111 of the Clean Air Act, as a means of reducing national Hg emissions.
* * * * *
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
* * * * *
    Replacement, replace, or replaced means, with regard to a unit, the 
demolishing of a unit, or the permanent shutdown and permanent 
disabling of a unit, and the construction of another unit (the 
replacement unit) to be used instead of the demolished or shutdown unit 
(the replaced unit).
* * * * *
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
* * * * *

0
62. Section 96.303 is revised to read as follows:


Sec.  96.303  Measurements, abbreviations, and acronyms.

    Measurements, abbreviations, and acronyms used in this subpart and 
subparts BBBB through IIII are defined as follows:

Btu--British thermal unit
CO2--carbon dioxide
H2O--water
Hg--mercury
hr--hour
kW--kilowatt electrical
kWh--kilowatt hour
lb--pound
mmBtu--million Btu
MWe--megawatt electrical
MWh--megawatt hour
NOX--nitrogen oxides
O2--oxygen
ppm--parts per million
scfh--standard cubic feet per hour
SO2--sulfur dioxide
yr--year


0
63. Section 96.304 is revised to read as follows:


Sec.  96.304  Applicability.

    (a) Except as provided in paragraph (b) of this section:
    (1) The following units in a State shall be CAIR NOX 
Ozone Season units, and any source that includes one or more such units 
shall be a CAIR NOX Ozone Season source, subject to the 
requirements of this subpart and subparts BBBB through HHHH of this 
part: Any stationary, fossil-fuel-fired boiler or stationary, fossil-
fuel-fired combustion turbine serving at any time, since the later of 
November 15, 1990 or the start-up of the unit's combustion chamber, a 
generator with nameplate capacity of more than 25 MWe producing 
electricity for sale.
    (2) If a stationary boiler or stationary combustion turbine that, 
under paragraph (a)(1) of this section, is not a CAIR NOX 
Ozone Season unit begins to combust fossil fuel or to serve a generator 
with nameplate capacity of more than 25 MWe producing electricity for 
sale, the unit shall become a CAIR NOX Ozone Season unit as 
provided in paragraph (a)(1) of this section on the first date on which 
it both combusts fossil fuel and serves such generator.
    (b) The units in a State that meet the requirements set forth in 
paragraph (b)(1)(i), (b)(2)(i), or (b)(2)(ii) of this section shall not 
be CAIR NOX Ozone Season units:
    (1)(i) Any unit that is a CAIR NOX Ozone Season unit 
under paragraph (a)(1) or (2) of this section:
    (A) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (B) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (ii) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (b)(1)(i) of this section for

[[Page 25393]]

at least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become a CAIR NOX Ozone Season 
unit starting on the earlier of January 1 after the first calendar year 
during which the unit first no longer qualifies as a cogeneration unit 
or January 1 after the first calendar year during which the unit no 
longer meets the requirements of paragraph (b)(1)(i)(B) of this 
section.
    (2)(i) Any unit that is a CAIR NOX Ozone Season unit 
under paragraph (a)(1) or (2) of this section commencing operation 
before January 1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (ii) Any unit that is a CAIR NOX Ozone Season unit under 
paragraph (a)(1) or (2) of this section commencing operation on or 
after January 1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (iii) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (b)(2)(i) or (ii) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become a CAIR 
NOX Ozone Season unit starting on the earlier of January 1 
after the first calendar year during which the unit first no longer 
qualifies as a solid waste incineration unit or January 1 after the 
first 3 consecutive calendar years after 1990 for which the unit has an 
average annual fuel consumption of fossil fuel of 20 percent or more.


Sec.  96.305  [Amended]

0
64. Section 96.305 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``CAIR NOX 
Ozone Season opt-in unit'' to read ``CAIR NOX Ozone Season 
opt-in unit under subpart IIII of this part'' and by revising the words 
``Sec.  96.306(c)(4) through (8), Sec.  96.307, and subparts EEEE 
through GGGG'' to read ``Sec.  96.306(c)(4) through (7), Sec.  96.307, 
Sec.  96.308, and subparts BBBB and EEEE through GGGG'';
0
b. In paragraph (b)(3), by revising the words ``shall retain at the 
source'' to read ``shall retain, at the source''; and
0
c. In paragraph (b)(7), by revising the words ``commences operation and 
commercial operation'' to read ``commences commercial operation''.


Sec.  96.306  [Amended]

0
65. Section 96.306 is amended as follows:
0
a. In paragraph (a)(1)(i), by revising the words ``in Sec.  96.321(a) 
and (b)'' to read ``in Sec.  96.321'';
0
b. In paragraph (c)(2), by revising the words ``under paragraph (c)(1) 
of this section'' with ``under paragraph (c)(1) of this section for the 
control period'' and by revising the words ``under Sec.  96.370(b)(1), 
(2), (3), or (7)'' to read ``under Sec.  96.370(b)(1), (2), (3), or (7) 
and for each control period thereafter'';
0
c. In paragraph (c)(4), by revising the words ``subpart EEEE'' to read 
``subparts FFFF, GGGG, and IIII'';
0
d. In paragraph (c)(7), by revising the words ``from a CAIR 
NOX Ozone Season unit's compliance account'' to read ``from 
a CAIR NOX Ozone Season source's compliance account'', and 
by removing the words ``that includes the CAIR NOX Ozone 
Season unit''; and
0
e. In paragraph (d)(1), by removing the paragraph designation ``(1)'' 
and by redesignating paragraph (i) as paragraph (d)(1); and
0
f. By removing paragraph (d)(2) and by redesignating paragraph (ii) as 
paragraph (d)(2).


Sec.  96.311  [Amended]

0
66. In paragraph (c), by revising the words ``96.351 and 96.382'' to 
read ``96.315, 96.351, and 96.382''.


Sec.  96.312  [Amended]

0
67. Section 96.312 is amended, in paragraph (c)(1), by revising the 
words ``a new owner'' to read ``an owner'', by revising the words 
``such new owner'' to read ``such owner'', and by revising the words 
``the new owner'' to read ``the owner''.


Sec.  96.313  Amended]

0
68. Section 96.313 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``is submitted'' to read 
``is submitted, including identification and nameplate capacity of each 
generator served by each such unit''; and
0
b. In paragraph (a)(4)(iv), by revising the words ``where a customer'' 
to read ``where a utility or industrial customer''.

0
69. A new section 96.315 is added to read as follows:


Sec.  96.315  Delegation by CAIR designated representative and 
alternate CAIR designated representative.

    (a) A CAIR designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
to the Administrator provided for or required under this part.
    (b) An alternate CAIR designated representative may delegate, to 
one or more natural persons, his or her authority to make an electronic 
submission to the Administrator provided for or required under this 
part.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the CAIR designated representative or alternate CAIR 
designated representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator, that includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR designated 
representative or alternate CAIR designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such CAIR designated 
representative or alternate CAIR designated representative:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a CAIR designated representative or alternate CAIR 
designated representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
96.315(d) shall be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 96.315(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 96.315 is terminated.''.
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall

[[Page 25394]]

be effective, with regard to the CAIR designated representative or 
alternate CAIR designated representative identified in such notice, 
upon receipt of such notice by the Administrator and until receipt by 
the Administrator of a superseding notice of delegation submitted by 
such CAIR designated representative or alternate CAIR designated 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the CAIR designated 
representative or alternate CAIR designated representative submitting 
such notice of delegation.


Sec.  96.320  [Amended]

0
70. Section 96.320 is amended, in paragraph (a), by revising the words 
``otherwise by this subpart and'' to read ``otherwise by Sec.  96.305, 
this subpart, and''.


Sec.  96.321  [Amended]

0
71. Section 96.321 is amended as follows:
0
a. In paragraph (a), by revising the words ``commences operation'' to 
read ``commences commercial operation, except as provided in Sec.  
96.383(a)''; and
0
b. In paragraph (b), by revising the words to read ``permit renewal'', 
to read ``permit renewal, except as provided in Sec.  96.383(b)''.


Sec.  96.341  [Amended]

0
72. Section 96.341 is amended as follows:
0
a. In paragraph (b)(1), removing the paragraph designation ``(1)'';
0
b. By removing paragraph (b)(2);
0
c. In paragraph (c)(1), removing the paragraph designation ((1)(; and
0
d.. By removing paragraph (c)(2).

0
73. Section 96.342 is amended as follows:
0
a. In paragraph (a)(2)(i), by revising the words ``during a calendar 
year'' to read ``during a control period in a calendar year'';
0
b. In paragraph (a)(2)(ii)(C), by revising the words ``3,414 Btu/kWh'' 
to read ``3,413 Btu/kWh'';
0
c. By revising paragraph (c) introductory text;
0
d. In paragraph (c)(1), by revising the words ``2009 through 2013'' to 
read ``2009 through 2014'' and revise the words ``in 2014'' to read 
``in 2015'';
0
e. In paragraph (c)(2), by revising the words ``The CAIR NOX 
Ozone Season allowance allocation request must be submitted on or 
before April 1 of the first control period for which CAIR 
NOX Ozone Season allowances are requested'' to read ``A 
separate CAIR NOX Ozone Season allowance allocation request 
for each control period for which CAIR NOX allowances are 
sought must be submitted on or before February 1 of such control 
period''; and
0
f. In paragraph (c)(4)(ii), by revising the words ``On or after April 
1'' to read ``On or after February 1'' and revising to read as follows:


Sec.  96.342  CAIR NOX Ozone Season allowance allocations.

* * * * *
    (c) For each control period in 2009 and thereafter, the permitting 
authority will allocate CAIR NOX Ozone Season allowances to 
CAIR NOX Ozone Season units in a State that are not 
allocated CAIR NOX Ozone Season allowances under paragraph 
(b) of this section because the units do not yet have a baseline heat 
input under paragraph (a) of this section or because the units have a 
baseline heat input but all CAIR NOX Ozone Season allowances 
available under paragraph (b) of this section for the control period 
are already allocated, in accordance with the following procedures:
* * * * *

0
74. Section 96.351 is amended as follows:
0
a. In paragraph (b)(2) introductory text, by revising the word 
``representative'' to read ``representative or alternate CAIR 
authorized account representative'';
0
b. In paragraph (b)(3)(iii)(A), by revising the words ``a new person'' 
to read ``a person'', by revising the words ``such new person'' to read 
``such person'', and by revising the words ``the new person'' to read 
``the person'';
0
c. In paragraph (b)(3)(iii)(B), by revising the words ``addition of 
persons'' to read ``addition of a new person'';
0
d. In paragraph (b)(4) introductory text, by revising the word 
``representative'' to read ``representative or alternate CAIR 
authorized account representative'';
0
e. In paragraphs (b)(4)(ii) and (iii), by revising the words 
``alternative CAIR'' to read ``alternate CAIR'' whenever they appear; 
and
0
f. By adding a new paragraph (b)(5) to read as follows:


Sec.  96.351  Establishment of accounts.

* * * * *
    (b) * * *
    (5) Delegation by CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) A CAIR authorized 
account representative may delegate, to one or more natural persons, 
his or her authority to make an electronic submission to the 
Administrator provided for or required under subparts FFFF and GGGG of 
this part.
    (ii) An alternate CAIR authorized account representative may 
delegate, to one or more natural persons, his or her authority to make 
an electronic submission to the Administrator provided for or required 
under subparts FFFF and GGGG of this part.
    (iii) In order to delegate authority to make an electronic 
submission to the Administrator in accordance with paragraph (b)(5)(i) 
or (ii) of this section, the CAIR authorized account representative or 
alternate CAIR authorized account representative, as appropriate, must 
submit to the Administrator a notice of delegation, in a format 
prescribed by the Administrator, that includes the following elements:
    (A) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR authorized account 
representative or alternate CAIR authorized account representative;
    (B) The name, address, e-mail address, telephone number, and, 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (C) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (b)(5)(i) or (ii) of this 
section for which authority is delegated to him or her;
    (D) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``I agree that any electronic submission to the 
Administrator that is by an agent identified in this notice of 
delegation and of a type listed for such agent in this notice of 
delegation and that is made when I am a CAIR authorized account 
representative or alternate CAIR authorized representative, as 
appropriate, and before this notice of delegation is superseded by 
another notice of delegation under 40 CFR 96.351(b)(5)(iv) shall be 
deemed to be an electronic submission by me.''; and
    (E) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``Until this notice of delegation is superseded by 
another notice of delegation under 40 CFR

[[Page 25395]]

96.351(b)(5)(iv), I agree to maintain an e-mail account and to notify 
the Administrator immediately of any change in my e-mail address unless 
all delegation of authority by me under 40 CFR 96.351(b)(5) is 
terminated.''.
    (iv) A notice of delegation submitted under paragraph (b)(5)(iii) 
of this section shall be effective, with regard to the CAIR authorized 
account representative or alternate CAIR authorized account 
representative identified in such notice, upon receipt of such notice 
by the Administrator and until receipt by the Administrator of a 
superseding notice of delegation submitted by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (v) Any electronic submission covered by the certification in 
paragraph (b)(5)(iii)(D) of this section and made in accordance with a 
notice of delegation effective under paragraph (b)(5)(iv) of this 
section shall be deemed to be an electronic submission by the CAIR 
designated representative or alternate CAIR designated representative 
submitting such notice of delegation.
* * * * *

0
75. Section 96.353 is amended as follows:
0
a. In paragraph (a), by revising the words ``By December 1, 2006,'' to 
read ``By September 30, 2007,'' and revising the words ``at a source'' 
to read ``at the source'';
0
b. In paragraphs (b) and (d), by removing the words ``or as determined 
by the Administrator''; and
0
c. By revising paragraph (c) to read as follows:


Sec.  96.353  Recordation of CAIR NOX Ozone Season allowance 
allocations.

* * * * *
    (c) By December 1, 2010 and December 1 of each year thereafter, the 
Administrator will record in the CAIR NOX Ozone Season 
source's compliance account the CAIR NOX Ozone Season 
allowances allocated for the CAIR NOX Ozone Season units at 
the source, as submitted by the permitting authority in accordance with 
Sec.  96.341(b), for the control period in the sixth year after the 
year of the applicable deadline for recordation under this paragraph.
* * * * *


Sec.  96.354  [Amended]

0
76. Section 96.354 is amended as follows:
0
a. In paragraph (a)(1), by revising the words ``prior year;'' to read 
``prior year; and'';
0
b. In paragraph (a)(2), revising the words ``Sec.  96.360 by the 
allowance transfer deadline for the control period; and'' to read 
``Sec. Sec.  96.360 and 96.361 by the allowance transfer deadline for 
the control period.'';
0
c. Removing paragraph (a)(3);
0
d. In paragraph (c)(2)(ii), by revising the words ``to any unit ''to 
read ``to any entity'';
0
e. In paragraph (e), by revising the words ``under paragraph (b) or (d) 
of this section'' to read ``under paragraphs (b) and (d) of this 
section and subpart IIII''; and
0
f. In paragraph (f)(2), by revising the words ``of this section'' to 
read ``of this section, and record such deductions and transfers''.


Sec.  96.355  [Amended]

0
77. Section 96.355 is amended, in paragraph (b), by revising the words 
``Sec.  96.356, or subpart GGGG'' to read ``Sec.  96.356, or subpart 
GGGG or IIII''.


Sec.  96.357  [Amended]

0
78. Section 96.357 is amended, in paragraphs (a) and (b), by revising 
the words ``Sec.  96.360'' to read ``Sec. Sec.  96.360 and 96.361''.
0
79. Section 96.370 is amended as follows:
0
a. In paragraph (b) introductory text, by revising the words ``The 
owner'' to read ``Except as provided in paragraph (e) of this section, 
the owner'';
0
b. In paragraph (b)(2)(ii), by removing the words ``, if the compliance 
date under paragraph (b)(2)(i) is before May 1, 2008'';
0
c. In paragraph (b)(3) introductory text, by revising the words 
``commences operation'' to read ``commences commercial operation'';
0
d. In paragraph (b)(7), by revising the words ``paragraphs (b)(1), (2), 
and (3) of this section and solely for purposes of Sec.  96.206(c)(2), 
for the owner'' to read ``paragraphs (b)(1), (2), and (3) of this 
section, for the owner'' and by revising the words ``CAIR 
NOX Ozone Season opt-in unit'' to read ``CAIR NOX 
Ozone Season opt-in unit under subpart IIII of this part'';
0
e. In paragraph (c)(1), by removing the paragraph designation ``(1)'' 
and by revising the words ``Except as provided in paragraph (c)(2) of 
this section, the owner'' to read ``The owner'';
0
f. By removing paragraph (c)(2);
0
g. In paragraph (d)(3), by revising the words ``the atmosphere'' to 
read ``the atmosphere or heat input''; and
0
h. By adding a new paragraph (e) to read as follows:


Sec.  96.370  General Requirements.

* * * * *
    (e) Long-term cold storage. The owner or operator of a CAIR 
NOX Ozone Season unit is subject to the applicable 
provisions of part 75 of this chapter concerning units in long-term 
cold storage.


Sec.  96.371   [Amended]

0
80. Section 96.371 is amended, in paragraph (c), by revising the words 
``Sec.  75.12, Sec.  75.17, or subpart H of part 75'' to read ``Sec.  
75.12 or Sec.  75.17''.


 Sec.  96.373  [Amended]

0
81. Section 96.373 is amended by removing the words ``, except that if 
the unit is not subject to an Acid Rain emissions limitation, the 
notification is only required to be sent to the permitting authority''.

0
82. Section 96.374 is amended as follows:
0
a. In paragraph (d)(1)(i), by revising the words ``2008; or'' to read 
``2008;'';
0
b. In paragraph (d)(1)(ii), by revising the words ``2008.'' to read 
``2008;'' and by revising the words ``fourth quarter of 2007'' to read 
``fourth quarter of 2007 or the first quarter of 2008'';
0
c. In paragraph (d)(2)(ii)(B), by revising the words ``such date.'' to 
read ``such date;''; and
0
d. By adding new paragraphs (d)(1)(iii) and (iv) and (d)(2)(ii)(C) and 
(D);
0
e. By renumbering the second paragraph (d)(2) and the second paragraph 
(d)(3) as paragraphs (d)(3) and (d)(4) respectively and, in paragraph 
(d)(4), by revising the words ``or CAIR SO2 Trading 
Program,'' to read ``, CAIR SO2 Trading Program, or Hg 
Budget Trading Program,'' and by revising the words ``subparts F 
through H'' to read ``subparts F through I'' and revising to read as 
follows:


 Sec.  96.374  Recordkeeping and reporting.

* * * * *
    (d) * * *
    (1) * * *
    (iii) Notwithstanding paragraphs (d)(1)(i) and (ii) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart IIII of this part, the calendar quarter 
corresponding to the date specified in Sec.  96.384(b); and
    (iv) Notwithstanding paragraphs (d)(1)(i) and (ii) of this section, 
for a CAIR NOX Ozone Season opt-in unit under subpart IIII 
of this part, the calendar quarter corresponding to the date on which 
the CAIR NOX Ozone Season opt-in unit enters the CAIR 
NOX

[[Page 25396]]

Ozone Season Trading Program as provided in Sec.  96.384(g).
    (2) * * *
    (ii) * * *
    (C) Notwithstanding paragraphs (d)(2)(ii)(A) and (2)(ii)(B) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart IIII of this part, the calendar quarter 
corresponding to the date specified in Sec.  96.384(b); and
    (D) Notwithstanding paragraphs (d)(2)(ii)(A) and (2)(ii)(B) of this 
section, for a CAIR NOX Ozone Season opt-in unit under 
subpart IIII of this part, the calendar quarter corresponding to the 
date on which the CAIR NOX Ozone Season opt-in unit enters 
the CAIR NOX Ozone Season Trading Program as provided in 
Sec.  96.384(g).
* * * * *


 Sec.  96.376   [Removed]

0
83. Section 96.376 is removed.

0
84. Section 96.383 is amended as follows:

0
a. By revising paragraph (a)(5); and
0
b. In paragraph (b)(2), by revising the words ``CAIR opt-in unit'' to 
read ``CAIR NOX Ozone Season opt-in unit'', by revising the 
words ``Annual Trading Program'' to read ``Ozone Season Trading 
Program'', by revising the words ``CAIR NOX unit'' to read 
``CAIR NOX Ozone Season unit'', and by revising the words 
``CAIR NOX opt-in unit'' to read ``CAIR NOX Ozone 
Season opt-in unit'' whenever they appear and revising to read as 
follows:


Sec.  96.383   Applying for CAIR opt-in permit.

    (a) * * *
    (5) A statement, in a format specified by the permitting authority, 
whether the CAIR designated representative requests that the unit be 
allocated CAIR NOX Ozone Season allowances under Sec.  
96.388(b) or Sec.  96.388(c) (subject to the conditions in Sec. Sec.  
96.384(h) and 96.386(g)). If allocation under Sec.  96.388(c) is 
requested, this statement shall include a statement that the owners and 
operators of the unit intend to repower the unit before January 1, 2015 
and that they will provide, upon request, documentation demonstrating 
such intent.
* * * * *


Sec.  96.384  [Amended]

0
85. Section 96.384 is amended as follows:
0
a. In paragraph (b), by revising the words ``heat input of the unit 
emissions rate and the heat input of the unit'' to read ``heat input of 
the unit'';
0
b. In paragraph (c)(2), by revising the words ``for the control period 
under paragraph (b)(1)(ii) of this section and for the control periods 
under paragraph (b)(2) of this section'' to read ``for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section'';
0
c. In paragraph (d)(2), by revising the words ``for the control period 
under paragraph (b)(1)(ii) of this section and the control periods 
under paragraph (b)(2) of this section'' to read ``for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section'';
0
d. In paragraph (d)(3), by revising the words ``for such control 
period'' to read ``for such control periods'';
0
e. In paragraph (h)(2), revising the words ``a CAIR opt-in unit'' to 
read ``a CAIR NOX Ozone Season opt-in unit.''

0
86. Section 96.385 is amended as follows:
0
a. In paragraph (a)(5), by revising the words ``under Sec.  96.388(c)'' 
to read ``Sec.  96.388(b) or Sec.  96.388(c)''; and
0
b. By adding a new paragraph (c) to read as follows:


Sec.  96.385  CAIR opt-in permit contents.

* * * * *
    (c) The CAIR opt-in permit shall be included, in a format specified 
by the permitting authority, in the CAIR permit for the source where 
the CAIR NOX Ozone Season opt-in unit is located and in a 
title V operating permit or other federally enforceable permit for the 
source.


Sec.  96.386  [Amended]

0
87. Section 96.386 is amended as follows:
0
a. In paragraph (a), by revising the words ``CAIR opt-in unit'' to read 
``CAIR NOX Ozone Season opt-on unit'';
0
b. In paragraph (b)(2), by replacing the words ``equal in number to'' 
to read ``equal in amount to''; and
0
c. In paragraphs (c)(2) and (g), by revising the words ``CAIR 
NOX opt-in unit'' to read ``CAIR NOX Ozone Season 
opt-in unit''.
0
88. Section 96.387 is amended as follows:
0
a. In paragraph (b)(1), by revising the words ``under Sec.  96.323'' to 
read ``under Sec.  96.323, and remove the CAIR opt-in permit 
provisions,'';
0
b. In paragraph (b)(2)(i), by revising the words ``equal in number to'' 
to read ``equal in amount to'';
0
c. By revising paragraph (b)(3)(i);
0
d. In paragraph (b)(3)(ii), by revising the words ``Notwithstanding 
paragraph (b)(3)(i) of this section if,'' to read ``If'', by revising 
the words ``May 1'' to read ``September 30'', and by revising the words 
``number of CAIR NOX Ozone Season allowances'' to read 
``amount of CAIR NOX Ozone Season allowances''; and
0
e. In paragraph (b)(3)(ii)(A), by revising the words ``number of CAIR 
NOX Ozone Season allowances'' to read ``amount of CAIR 
NOX Ozone Season allowances'' and revising to read as 
follows:


Sec.  96.387   Change in regulatory status.

* * * * *
    (b) * * *
    (3)(i) For every control period after the date on which the CAIR 
NOX Ozone Season opt-in unit becomes a CAIR NOX 
Ozone Season unit under Sec.  96.304, the CAIR NOX Ozone 
Season opt-in unit will be allocated CAIR NOX Ozone Season 
allowances under Sec.  96.342.
* * * * *


Sec.  96.388   CAIR NOX Ozone Season allowance allocations 
to CAIR NOX Ozone Season opt-in units.

0
89. Section 96.388 is amended as follows:
0
a. By revising the heading of the section as set forth above;
0
b. In paragraph (a)(2), by revising the words ``of the control period 
in which'' to read ``of the control period after the control period in 
which'', by revising the words ``CAIR opt-in unit'' to read ``CAIR 
NOX Ozone Season opt-in unit'', and by revising the words 
``CAIR NOX opt-in unit'' to read ``CAIR NOX Ozone 
Season opt-in unit'';
0
c. In paragraph (c), by revising the words ``issues a CAIR opt-in 
permit'' to read ``issues a CAIR opt-in permit'' (based on a 
demonstration of the intent to repower stated under Sec.  
96.383(a)(5)); and
0
d. In paragraph (d)(2), by revising the words ``CAIR opt-in unit'' to 
read ``CAIR NOX Ozone Season opt-in unit.''

PART 97--FEDERAL NOX BUDGET TRADING PROGRAM AND CAIR 
NOX AND SO2 TRADING PROGRAMS

0
1. The heading of part 97 is revised to read as set forth above.

0
2. The authority citation for part 97 is revised to read as follows:

    Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, et 
seq.

0
3. Part 97 is amended by adding subparts AA through II, to read as 
follows:
Subpart AA--CAIR NOX Annual Trading Program General 
Provisions
Sec.
97.101 Purpose.
97.102 Definitions.
97.103 Measurements, abbreviations, and acronyms.
97.104 Applicability.
97.105 Retired unit exemption.

[[Page 25397]]

97.106 Standard requirements.
97.107 Computation of time.
97.108 Appeal procedures.
Subpart BB--CAIR Designated Representative for CAIR NOX 
Sources
97.110 Authorization and responsibilities of CAIR designated 
representative.
97.111 Alternate CAIR designated representative.
97.112 Changing CAIR designated representative and alternate CAIR 
designated representative; changes in owners and operators.
97.113 Certificate of representation.
97.114 Objections concerning CAIR designated representative.
97.115 Delegation by CAIR designated representative and alternate 
CAIR designated representative.
Subpart CC--Permits
97.120 General CAIR NOX Annual Trading Program permit 
requirements.
97.121 Submission of CAIR permit applications.
97.122 Information requirements for CAIR permit applications.
97.123 CAIR permit contents and term.
97.124 CAIR permit revisions.
Subpart DD--[Reserved]
Subpart EE--CAIR NOX Allowance Allocations
97.140 State trading budgets.
97.141 Timing requirements for CAIR NOX allowance 
allocations.
97.142 CAIR NOX allowance allocations.
97.143 Compliance supplement pool.
97.144 Alternative of allocation of CAIR NOX allowances 
and compliance supplement pool by permitting authority.

Appendix A to Subpart EE of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Allocations

Subpart FF-- CAIR NOX Allowance Tracking System
97.150 [Reserved]
97.151 Establishment of accounts.
97.152 Responsibilities of CAIR authorized account representative.
97.153 Recordation of CAIR NOX allowance allocations.
97.154 Compliance with CAIR NOX emissions limitation.
97.155 Banking.
97.156 Account error.
97.157 Closing of general accounts.
Subpart GG--CAIR NOX Allowance Transfers
97.160 Submission of CAIR NOX allowance transfers.
97.161 EPA recordation.
97.162 Notification.
Subpart HH--Monitoring and Reporting
97.170 General requirements.
97.171 Initial certification and recertification procedures.
97.172 Out of control periods.
97.173 Notifications.
97.174 Recordkeeping and reporting.
97.175 Petitions.
Subpart II--CAIR NOX Opt-in Units
97.180 Applicability.
97.181 General.
97.182 CAIR designated representative.
97.183 Applying for CAIR opt-in permit.
97.184 Opt-in process.
97.185 CAIR opt-in permit contents.
97.186 Withdrawal from CAIR NOX Annual Trading Program.
97.187 Change in regulatory status.
97.188 CAIR NOX allowance allocations to CAIR 
NOX opt-in units.

Appendix A to Subpart II of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR NOX Opt-in 
Units

Subpart AA--CAIR NOX Annual Trading Program General 
Provisions


Sec.  97.101  Purpose.

    This subpart and subparts BB through II set forth the general 
provisions and the designated representative, permitting, allowance, 
monitoring, and opt-in provisions for the Federal Clean Air Interstate 
Rule (CAIR) NOX Annual Trading Program, under section 110 of 
the Clean Air Act and Sec.  52.35 of this chapter, as a means of 
mitigating interstate transport of fine particulates and nitrogen 
oxides.


Sec.  97.102  Definitions.

    The terms used in this subpart and subparts BB through II shall 
have the meanings set forth in this section as follows:
    Account number means the identification number given by the 
Administrator to each CAIR NOX Allowance Tracking System 
account.
    Acid Rain emissions limitation means a limitation on emissions of 
sulfur dioxide or nitrogen oxides under the Acid Rain Program.
    Acid Rain Program means a multi-state sulfur dioxide and nitrogen 
oxides air pollution control and emission reduction program established 
by the Administrator under title IV of the CAA and parts 72 through 78 
of this chapter.
    Actual weighted average NOX emission rate means, for a 
NOX averaging plan under Sec.  76.11 of this chapter and for 
a year:
    (1) The sum of the products of the actual annual average 
NOX emission rate and actual annual heat input (as 
determined in accordance with part 75 of this chapter) for all units in 
the NOX averaging plan for the year; divided by
    (2) The sum of the actual annual heat input (as determined in 
accordance with part 75 of this chapter) for all units in the 
NOX averaging plan for the year.
    Administrator means the Administrator of the United States 
Environmental Protection Agency or the Administrator's duly authorized 
representative.
    Allocate or allocation means, with regard to CAIR NOX 
allowances, the determination by a permitting authority or the 
Administrator of the amount of such CAIR NOX allowances to 
be initially credited to a CAIR NOX unit, a new unit set-
aside, or other entity.
    Allowance transfer deadline means, for a control period, midnight 
of March 1 (if it is a business day), or midnight of the first business 
day thereafter (if March 1 is not a business day), immediately 
following the control period and is the deadline by which a CAIR 
NOX allowance transfer must be submitted for recordation in 
a CAIR NOX source's compliance account in order to be used 
to meet the source's CAIR NOX emissions limitation for such 
control period in accordance with Sec.  97.154.
    Alternate CAIR designated representative means, for a CAIR 
NOX source and each CAIR NOX unit at the source, 
the natural person who is authorized by the owners and operators of the 
source and all such units at the source in accordance with subparts BB 
and II of this part, to act on behalf of the CAIR designated 
representative in matters pertaining to the CAIR NOX Annual 
Trading Program. If the CAIR NOX source is also a CAIR 
SO2 source, then this natural person shall be the same 
person as the alternate CAIR designated representative under the CAIR 
SO2 Trading Program. If the CAIR NOX source is 
also a CAIR NOX Ozone Season source, then this natural 
person shall be the same person as the alternate CAIR designated 
representative under the CAIR NOX Ozone Season Trading 
Program. If the CAIR NOX source is also subject to the Acid 
Rain Program, then this natural person shall be the same person as the 
alternate designated representative under the Acid Rain Program. If the 
CAIR NOX source is also subject to the Hg Budget Trading 
Program, then this natural person shall be the same person as the 
alternate Hg designated representative under the Hg Budget Trading 
Program.
    Automated data acquisition and handling system or DAHS means that 
component of the continuous emission monitoring system, or other 
emissions monitoring system approved for use under subpart HH of this 
part, designed to interpret and convert individual output signals from 
pollutant concentration monitors, flow monitors, diluent gas monitors, 
and other component parts of the monitoring system to produce a 
continuous record of the measured parameters in the measurement units 
required by subpart HH of this part.

[[Page 25398]]

    Boiler means an enclosed fossil- or other-fuel-fired combustion 
device used to produce heat and to transfer heat to recirculating 
water, steam, or other medium.
    Bottoming-cycle cogeneration unit means a cogeneration unit in 
which the energy input to the unit is first used to produce useful 
thermal energy and at least some of the reject heat from the useful 
thermal energy application or process is then used for electricity 
production.
    CAIR authorized account representative means, with regard to a 
general account, a responsible natural person who is authorized, in 
accordance with subparts BB, FF, and II of this part, to transfer and 
otherwise dispose of CAIR NOX allowances held in the general 
account and, with regard to a compliance account, the CAIR designated 
representative of the source.
    CAIR designated representative means, for a CAIR NOX 
source and each CAIR NOX unit at the source, the natural 
person who is authorized by the owners and operators of the source and 
all such units at the source, in accordance with subparts BB and II of 
this part, to represent and legally bind each owner and operator in 
matters pertaining to the CAIR NOX Annual Trading Program. 
If the CAIR NOX source is also a CAIR SO2 source, 
then this natural person shall be the same person as the CAIR 
designated representative under the CAIR SO2 Trading 
Program. If the CAIR NOX source is also a CAIR 
NOX Ozone Season source, then this natural person shall be 
the same person as the CAIR designated representative under the CAIR 
NOX Ozone Season Trading Program. If the CAIR NOX 
source is also subject to the Acid Rain Program, then this natural 
person shall be the same person as the designated representative under 
the Acid Rain Program. If the CAIR NOX source is also 
subject to the Hg Budget Trading Program, then this natural person 
shall be the same person as the Hg designated representative under the 
Hg Budget Trading Program.
    CAIR NOX allowance means a limited authorization issued by a 
permitting authority or the Administrator under subpart EE of this part 
or Sec.  97.188, or under provisions of a State implementation plan 
that are approved under Sec.  51.123(o)(1) or (2) or (p) of this 
chapter, to emit one ton of nitrogen oxides during a control period of 
the specified calendar year for which the authorization is allocated or 
of any calendar year thereafter under the CAIR NOX Program. 
An authorization to emit nitrogen oxides that is not issued under 
subpart EE of this part, Sec.  97.188, or provisions of a State 
implementation plan that are approved under Sec.  51.123(o)(1) or (2) 
or (p) of this chapter shall not be a CAIR NOX allowance.
    CAIR NOX allowance deduction or deduct CAIR NOX allowances means 
the permanent withdrawal of CAIR NOX allowances by the 
Administrator from a compliance account, e.g., in order to account for 
a specified number of tons of total nitrogen oxides emissions from all 
CAIR NOX units at a CAIR NOX source for a control 
period, determined in accordance with subpart HH of this part, or to 
account for excess emissions.
    CAIR NOX Allowance Tracking System means the system by which the 
Administrator records allocations, deductions, and transfers of CAIR 
NOX allowances under the CAIR NOX Annual Trading 
Program. Such allowances will be allocated, held, deducted, or 
transferred only as whole allowances.
    CAIR NOX Allowance Tracking System account means an account in the 
CAIR NOX Allowance Tracking System established by the 
Administrator for purposes of recording the allocation, holding, 
transferring, or deducting of CAIR NOX allowances.
    CAIR NOX allowances held or hold CAIR NOX allowances means the CAIR 
NOX allowances recorded by the Administrator, or submitted 
to the Administrator for recordation, in accordance with subparts FF, 
GG, and II of this part, in a CAIR NOX Allowance Tracking 
System account.
    CAIR NOX Annual Trading Program means a multi-state nitrogen oxides 
air pollution control and emission reduction program established by the 
Administrator in accordance with subparts AA through II of this part 
and Sec. Sec.  51.123(p) and 52.35 of this chapter or approved and 
administered by the Administrator in accordance with subparts AA 
through II of part 96 of this chapter and Sec.  51.123(o)(1) or (2) of 
this chapter, as a means of mitigating interstate transport of fine 
particulates and nitrogen oxides.
    CAIR NOX emissions limitation means, for a CAIR NOX 
source, the tonnage equivalent, in NOX emissions in a 
control period, of the CAIR NOX allowances available for 
deduction for the source under Sec.  97.154(a) and (b) for the control 
period.
    CAIR NOX Ozone Season source means a source that is subject to the 
CAIR NOX Ozone Season Trading Program.
    CAIR NOX Ozone Season Trading Program means a multi-state nitrogen 
oxides air pollution control and emission reduction program established 
by the Administrator in accordance with subparts AAAA through IIII of 
this part and Sec. Sec.  51.123(ee) and 52.35 of this chapter or 
approved and administered by the Administrator in accordance with under 
subparts AAAA through IIII and Sec.  51.123(aa)(1) or (2) (and 
(bb)(1)), (bb)(2), or (dd) of this chapter, as a means of mitigating 
interstate transport of ozone and nitrogen oxides.
    CAIR NOX source means a source that includes one or more CAIR 
NOX units.
    CAIR NOX unit means a unit that is subject to the CAIR 
NOX Annual Trading Program under Sec.  97.104 and, except 
for purposes of Sec.  97.105 and subpart EE of this part, a CAIR 
NOX opt-in unit under subpart II of this part.
    CAIR permit means the legally binding and federally enforceable 
written document, or portion of such document, issued by the permitting 
authority under subpart CC of this part, including any permit 
revisions, specifying the CAIR NOX Annual Trading Program 
requirements applicable to a CAIR NOX source, to each CAIR 
NOX unit at the source, and to the owners and operators and 
the CAIR designated representative of the source and each such unit.
    CAIR SO2 source means a source that is subject to the CAIR 
SO2 Trading Program.
    CAIR SO2 Trading Program means a multi-state sulfur dioxide air 
pollution control and emission reduction program established by the 
Administrator in accordance with subparts AAA through III of this part 
and Sec. Sec.  51.124(r) and 52.36 of this chapter or approved and 
administered by the Administrator in accordance with subparts AAA 
through III of part 96 of this chapter and Sec.  51.124(o)(1) or (2) of 
this chapter, as a means of mitigating interstate transport of fine 
particulates and sulfur dioxide.
    Certifying official means:
    (1) For a corporation, a president, secretary, treasurer, or vice-
president or the corporation in charge of a principal business function 
or any other person who performs similar policy or decision-making 
functions for the corporation;
    (2) For a partnership or sole proprietorship, a general partner or 
the proprietor respectively; or
    (3) For a local government entity or State, Federal, or other 
public agency, a principal executive officer or ranking elected 
official.
    Clean Air Act or CAA means the Clean Air Act, 42 U.S.C. 7401, et 
seq.
    Coal means any solid fuel classified as anthracite, bituminous, 
subbituminous, or lignite.
    Coal-derived fuel means any fuel (whether in a solid, liquid, or 
gaseous state) produced by the mechanical, thermal, or chemical 
processing of coal.
    Coal-fired means:

[[Page 25399]]

    (1) Except for purposes of subpart EE of this part, combusting any 
amount of coal or coal-derived fuel, alone or in combination with any 
amount of any other fuel, during any year; or
    (2) For purposes of subpart EE of this part, combusting any amount 
of coal or coal-derived fuel, alone or in combination with any amount 
of any other fuel, during a specified year.
    Cogeneration unit means a stationary, fossil-fuel-fired boiler or 
stationary, fossil-fuel-fired combustion turbine:
    (1) Having equipment used to produce electricity and useful thermal 
energy for industrial, commercial, heating, or cooling purposes through 
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the 
unit first produces electricity and during any calendar year after the 
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit, (A) Useful thermal 
energy not less than 5 percent of total energy output; and
    (B) Useful power that, when added to one-half of useful thermal 
energy produced, is not less then 42.5 percent of total energy input, 
if useful thermal energy produced is 15 percent or more of total energy 
output, or not less than 45 percent of total energy input, if useful 
thermal energy produced is less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit, useful power not less 
than 45 percent of total energy input.
    Combustion turbine means:
    (1) An enclosed device comprising a compressor, a combustor, and a 
turbine and in which the flue gas resulting from the combustion of fuel 
in the combustor passes through the turbine, rotating the turbine; and
    (2) If the enclosed device under paragraph (1) of this definition 
is combined cycle, any associated duct burner, heat recovery steam 
generator, and steam turbine.
    Commence commercial operation means, with regard to a unit:
    (1) To have begun to produce steam, gas, or other heated medium 
used to generate electricity for sale or use, including test 
generation, except as provided in Sec.  97.105 and Sec.  97.184(h).
    (i) For a unit that is a CAIR NOX unit under Sec.  
97.104 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that subsequently undergoes a physical change (other than replacement 
of the unit by a unit at the same source), such date shall remain the 
date of commencement of commercial operation of the unit, which shall 
continue to be treated as the same unit.
    (ii) For a unit that is a CAIR NOX unit under Sec.  
97.104 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that is subsequently replaced by a unit at the same source (e.g., 
repowered), such date shall remain the replaced unit's date of 
commencement of commercial operation, and the replacement unit shall be 
treated as a separate unit with a separate date for commencement of 
commercial operation as defined in paragraph (1) or (2) of this 
definition as appropriate.
    (2) Notwithstanding paragraph (1) of this definition and except as 
provided in Sec.  97.105, for a unit that is not a CAIR NOX 
unit under Sec.  97.104 on the later of November 15, 1990 or the date 
the unit commences commercial operation as defined in paragraph (1) of 
this definition, the unit's date for commencement of commercial 
operation shall be the date on which the unit becomes a CAIR 
NOX unit under Sec.  97.104.
    (i) For a unit with a date for commencement of commercial operation 
as defined in paragraph (2) of this definition and that subsequently 
undergoes a physical change (other than replacement of the unit by a 
unit at the same source), such date shall remain the date of 
commencement of commercial operation of the unit, which shall continue 
to be treated as the same unit.
    (ii) For a unit with a date for commencement of commercial 
operation as defined in paragraph (2) of this definition and that is 
subsequently replaced by a unit at the same source (e.g., repowered), 
such date shall remain the replaced unit's date of commencement of 
commercial operation, and the replacement unit shall be treated as a 
separate unit with a separate date for commencement of commercial 
operation as defined in paragraph (1) or (2) of this definition as 
appropriate.
    Commence operation means:
    (1) To have begun any mechanical, chemical, or electronic process, 
including, with regard to a unit, start-up of a unit's combustion 
chamber, except as provided in Sec.  97.184(h).
    (2) For a unit that undergoes a physical change (other than 
replacement of the unit by a unit at the same source) after the date 
the unit commences operation as defined in paragraph (1) of this 
definition, such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (3) For a unit that is replaced by a unit at the same source (e.g., 
repowered) after the date the unit commences operation as defined in 
paragraph (1) of this definition, such date shall remain the replaced 
unit's date of commencement of operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of operation as defined in paragraph (1), (2), or (3) of 
this definition as appropriate, except as provided in Sec.  97.184(h).
    Common stack means a single flue through which emissions from 2 or 
more units are exhausted.
    Compliance account means a CAIR NOX Allowance Tracking 
System account, established by the Administrator for a CAIR 
NOX source under subpart FF or II of this part, in which any 
CAIR NOX allowance allocations for the CAIR NOX 
units at the source are initially recorded and in which are held any 
CAIR NOX allowances available for use for a control period 
in order to meet the source's CAIR NOX emissions limitation 
in accordance with Sec.  97.154.
    Continuous emission monitoring system or CEMS means the equipment 
required under subpart HH of this part to sample, analyze, measure, and 
provide, by means of readings recorded at least once every 15 minutes 
(using an automated data acquisition and handling system (DAHS)), a 
permanent record of nitrogen oxides emissions, stack gas volumetric 
flow rate, stack gas moisture content, and oxygen or carbon dioxide 
concentration (as applicable), in a manner consistent with part 75 of 
this chapter. The following systems are the principal types of 
continuous emission monitoring systems required under subpart HH of 
this part:
    (1) A flow monitoring system, consisting of a stack flow rate 
monitor and an automated data acquisition and handling system and 
providing a permanent, continuous record of stack gas volumetric flow 
rate, in standard cubic feet per hour (scfh);
    (2) A nitrogen oxides concentration monitoring system, consisting 
of a NOX pollutant concentration monitor and an automated 
data acquisition and handling system and providing a permanent, 
continuous record of NOX emissions, in parts per million 
(ppm);
    (3) A nitrogen oxides emission rate (or NOX-diluent) 
monitoring system, consisting of a NOX pollutant 
concentration monitor, a diluent gas (CO2 or O2) 
monitor, and an automated data acquisition and handling system and 
providing a permanent, continuous record of NOX 
concentration, in parts per million (ppm), diluent gas

[[Page 25400]]

concentration, in percent CO2 or O2, and 
NOX emission rate, in pounds per million British thermal 
units (lb/mmBtu);
    (4) A moisture monitoring system, as defined in Sec.  75.11(b)(2) 
of this chapter and providing a permanent, continuous record of the 
stack gas moisture content, in percent H2O;
    (5) A carbon dioxide monitoring system, consisting of a 
CO2 pollutant concentration monitor (or an oxygen monitor 
plus suitable mathematical equations from which the CO2 
concentration is derived) and an automated data acquisition and 
handling system and providing a permanent, continuous record of 
CO2 emissions, in percent CO2; and
    (6) An oxygen monitoring system, consisting of an O2 
concentration monitor and an automated data acquisition and handling 
system and providing a permanent, continuous record of O2, 
in percent O2.
    Control period means the period beginning January 1 of a calendar 
year, except as provided in Sec.  97.106(c)(2), and ending on December 
31 of the same year, inclusive.
    Emissions means air pollutants exhausted from a unit or source into 
the atmosphere, as measured, recorded, and reported to the 
Administrator by the CAIR designated representative and as determined 
by the Administrator in accordance with subpart HH of this part.
    Excess emissions means any ton of nitrogen oxides emitted by the 
CAIR NOX units at a CAIR NOX source during a 
control period that exceeds the CAIR NOX emissions 
limitation for the source.
    Fossil fuel means natural gas, petroleum, coal, or any form of 
solid, liquid, or gaseous fuel derived from such material.
    Fossil-fuel-fired means, with regard to a unit, combusting any 
amount of fossil fuel in any calendar year.
    Fuel oil means any petroleum-based fuel (including diesel fuel or 
petroleum derivatives such as oil tar) and any recycled or blended 
petroleum products or petroleum by-products used as a fuel whether in a 
liquid, solid, or gaseous state.
    General account means a CAIR NOX Allowance Tracking 
System account, established under subpart FF of this part, that is not 
a compliance account.
    Generator means a device that produces electricity.
    Gross electrical output means, with regard to a cogeneration unit, 
electricity made available for use, including any such electricity used 
in the power production process (which process includes, but is not 
limited to, any on-site processing or treatment of fuel combusted at 
the unit and any on-site emission controls).
    Heat input means, with regard to a specified period of time, the 
product (in mmBtu/time) of the gross calorific value of the fuel (in 
Btu/lb) divided by 1,000,000 Btu/mmBtu and multiplied by the fuel feed 
rate into a combustion device (in lb of fuel/time), as measured, 
recorded, and reported to the Administrator by the CAIR designated 
representative and determined by the Administrator in accordance with 
subpart HH of this part and excluding the heat derived from preheated 
combustion air, recirculated flue gases, or exhaust from other sources.
    Heat input rate means the amount of heat input (in mmBtu) divided 
by unit operating time (in hr) or, with regard to a specific fuel, the 
amount of heat input attributed to the fuel (in mmBtu) divided by the 
unit operating time (in hr) during which the unit combusts the fuel.
    Hg Budget Trading Program means a multi-state Hg air pollution 
control and emission reduction program approved and administered by the 
Administrator in accordance subpart HHHH of part 60 of this chapter and 
Sec.  60.24(h)(6), or established by the Administrator under section 
111 of the Clean Air Act, as a means of reducing national Hg emissions.
    Life-of-the-unit, firm power contractual arrangement means a unit 
participation power sales agreement under which a utility or industrial 
customer reserves, or is entitled to receive, a specified amount or 
percentage of nameplate capacity and associated energy generated by any 
specified unit and pays its proportional amount of such unit's total 
costs, pursuant to a contract:
    (1) For the life of the unit;
    (2) For a cumulative term of no less than 30 years, including 
contracts that permit an election for early termination; or
    (3) For a period no less than 25 years or 70 percent of the 
economic useful life of the unit determined as of the time the unit is 
built, with option rights to purchase or release some portion of the 
nameplate capacity and associated energy generated by the unit at the 
end of the period.
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
    Monitoring system means any monitoring system that meets the 
requirements of subpart HH of this part, including a continuous 
emissions monitoring system, an alternative monitoring system, or an 
excepted monitoring system under part 75 of this chapter.
    Most stringent State or Federal NOX emissions limitation 
means, with regard to a unit, the lowest NOX emissions 
limitation (in terms of lb/mmBtu) that is applicable to the unit under 
State or Federal law, regardless of the averaging period to which the 
emissions limitation applies.
    Nameplate capacity means, starting from the initial installation of 
a generator, the maximum electrical generating output (in MWe) that the 
generator is capable of producing on a steady state basis and during 
continuous operation (when not restricted by seasonal or other 
deratings) as of such installation as specified by the manufacturer of 
the generator or, starting from the completion of any subsequent 
physical change in the generator resulting in an increase in the 
maximum electrical generating output (in MWe) that the generator is 
capable of producing on a steady state basis and during continuous 
operation (when not restricted by seasonal or other deratings), such 
increased maximum amount as of such completion as specified by the 
person conducting the physical change.
    Oil-fired means, for purposes of subpart EE of this part, 
combusting fuel oil for more than 15.0 percent of the annual heat input 
in a specified year and not qualifying as coal-fired.
    Operator means any person who operates, controls, or supervises a 
CAIR NOX unit or a CAIR NOX source and shall 
include, but not be limited to, any holding company, utility system, or 
plant manager of such a unit or source.
    Owner means any of the following persons:
    (1) With regard to a CAIR NOX source or a CAIR 
NOX unit at a source, respectively:
    (i) Any holder of any portion of the legal or equitable title in a 
CAIR NOX unit at the source or the CAIR NOX unit;
    (ii) Any holder of a leasehold interest in a CAIR NOX 
unit at the source or the CAIR NOX unit; or
    (iii) Any purchaser of power from a CAIR NOX unit at the 
source or the CAIR NOX unit under a life-of-the-unit, firm 
power contractual arrangement; provided that, 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) on the 
revenues or income from such CAIR NOX unit; or

[[Page 25401]]

    (2) With regard to any general account, any person who has an 
ownership interest with respect to the CAIR NOX allowances 
held in the general account and who is subject to the binding agreement 
for the CAIR authorized account representative to represent the 
person's ownership interest with respect to CAIR NOX 
allowances.
    Permitting authority means the State air pollution control agency, 
local agency, other State agency, or other agency authorized by the 
Administrator to issue or revise permits to meet the requirements of 
the CAIR NOX Annual Trading Program in accordance with 
subpart CC of this part or, if no such agency has been so authorized, 
the Administrator.
    Potential electrical output capacity means 33 percent of a unit's 
maximum design heat input, divided by 3,413 Btu/kWh, divided by 1,000 
kWh/MWh, and multiplied by 8,760 hr/yr.
    Receive or receipt of means, when referring to the permitting 
authority or the Administrator, to come into possession of a document, 
information, or correspondence (whether sent in hard copy or by 
authorized electronic transmission), as indicated in an official log, 
or by a notation made on the document, information, or correspondence, 
by the permitting authority or the Administrator in the regular course 
of business.
    Recordation, record, or recorded means, with regard to CAIR 
NOX allowances, the movement of CAIR NOX 
allowances by the Administrator into or between CAIR NOX 
Allowance Tracking System accounts, for purposes of allocation, 
transfer, or deduction.
    Reference method means any direct test method of sampling and 
analyzing for an air pollutant as specified in Sec.  75.22 of this 
chapter.
    Replacement, replace, or replaced means, with regard to a unit, the 
demolishing of a unit, or the permanent shutdown and permanent 
disabling of a unit, and the construction of another unit (the 
replacement unit) to be used instead of the demolished or shutdown unit 
(the replaced unit).
    Repowered means, with regard to a unit, replacement of a coal-fired 
boiler with one of the following coal-fired technologies at the same 
source as the coal-fired boiler:
    (1) Atmospheric or pressurized fluidized bed combustion;
    (2) Integrated gasification combined cycle;
    (3) Magnetohydrodynamics;
    (4) Direct and indirect coal-fired turbines;
    (5) Integrated gasification fuel cells; or
    (6) As determined by the Administrator in consultation with the 
Secretary of Energy, a derivative of one or more of the technologies 
under paragraphs (1) through (5) of this definition and any other coal-
fired technology capable of controlling multiple combustion emissions 
simultaneously with improved boiler or generation efficiency and with 
significantly greater waste reduction relative to the performance of 
technology in widespread commercial use as of January 1, 2005.
    Sequential use of energy means:
    (1) For a topping-cycle cogeneration unit, the use of reject heat 
from electricity production in a useful thermal energy application or 
process; or
    (2) For a bottoming-cycle cogeneration unit, the use of reject heat 
from useful thermal energy application or process in electricity 
production.
    Serial number means, for a CAIR NOX allowance, the 
unique identification number assigned to each CAIR NOX 
allowance by the Administrator.
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
    Source means all buildings, structures, or installations located in 
one or more contiguous or adjacent properties under common control of 
the same person or persons. For purposes of section 502(c) of the Clean 
Air Act, a ``source,'' including a ``source'' with multiple units, 
shall be considered a single ``facility.''
    State means one of the States or the District of Columbia that is 
subject to the CAIR NOX Annual Trading Program pursuant to 
Sec.  52.35 of this chapter.
    Submit or serve means to send or transmit a document, information, 
or correspondence to the person specified in accordance with the 
applicable regulation:
    (1) In person;
    (2) By United States Postal Service; or
    (3) By other means of dispatch or transmission and delivery. 
Compliance with any ``submission'' or ``service'' deadline shall be 
determined by the date of dispatch, transmission, or mailing and not 
the date of receipt.
    Title V operating permit means a permit issued under title V of the 
Clean Air Act and part 70 or part 71 of this chapter.
    Title V operating permit regulations means the regulations that the 
Administrator has approved or issued as meeting the requirements of 
title V of the Clean Air Act and part 70 or 71 of this chapter.
    Ton means 2,000 pounds. For the purpose of determining compliance 
with the CAIR NOX emissions limitation, total tons of 
nitrogen oxides emissions for a control period shall be calculated as 
the sum of all recorded hourly emissions (or the mass equivalent of the 
recorded hourly emission rates) in accordance with subpart HH of this 
part, but with any remaining fraction of a ton equal to or greater than 
0.50 tons deemed to equal one ton and any remaining fraction of a ton 
less than 0.50 tons deemed to equal zero tons.
    Topping-cycle cogeneration unit means a cogeneration unit in which 
the energy input to the unit is first used to produce useful power, 
including electricity, and at least some of the reject heat from the 
electricity production is then used to provide useful thermal energy.
    Total energy input means, with regard to a cogeneration unit, total 
energy of all forms supplied to the cogeneration unit, excluding energy 
produced by the cogeneration unit itself.
    Total energy output means, with regard to a cogeneration unit, the 
sum of useful power and useful thermal energy produced by the 
cogeneration unit.
    Unit means a stationary, fossil-fuel-fired boiler or combustion 
turbine or other stationary, fossil-fuel-fired combustion device.
    Unit operating day means a calendar day in which a unit combusts 
any fuel.
    Unit operating hour or hour of unit operation means an hour in 
which a unit combusts any fuel.
    Useful power means, with regard to a cogeneration unit, electricity 
or mechanical energy made available for use, excluding any such energy 
used in the power production process (which process includes, but is 
not limited to, any on-site processing or treatment of fuel combusted 
at the unit and any on-site emission controls).
    Useful thermal energy means, with regard to a cogeneration unit, 
thermal energy that is:
    (1) Made available to an industrial or commercial process (not a 
power production process), excluding any heat contained in condensate 
return or makeup water;
    (2) Used in a heating application (e.g., space heating or domestic 
hot water heating); or
    (3) Used in a space cooling application (i.e., thermal energy used 
by an absorption chiller).
    Utility power distribution system means the portion of an 
electricity grid

[[Page 25402]]

owned or operated by a utility and dedicated to delivering electricity 
to customers.


Sec.  97.103  Measurements, abbreviations, and acronyms.

    Measurements, abbreviations, and acronyms used in this subpart and 
subparts BB through II are defined as follows:

Btu--British thermal unit
CO2--carbon dioxide
H2O--water
Hg--mercury
hr--hour
kW--kilowatt electrical
kWh--kilowatt hour
 lb--pound
mmBtu--million Btu
MWe--megawatt electrical
MWh--megawatt hour
NOX--nitrogen oxides
O2--oxygen
ppm--parts per million
scfh--standard cubic feet per hour
SO2--sulfur dioxide
yr--year


Sec.  97.104  Applicability

    (a) Except as provided in paragraph (b) of this section:
    (1) The following units in a State shall be CAIR NOX 
units, and any source that includes one or more such units shall be a 
CAIR NOX source, subject to the requirements of this subpart 
and subparts BB through HH of this part: any stationary, fossil-fuel-
fired boiler or stationary, fossil-fuel-fired combustion turbine 
serving at any time, since the later of November 15, 1990 or the start-
up of the unit's combustion chamber, a generator with nameplate 
capacity of more than 25 MWe producing electricity for sale.
    (2) If a stationary boiler or stationary combustion turbine that, 
under paragraph (a)(1) of this section, is not a CAIR NOX 
unit begins to combust fossil fuel or to serve a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale, 
the unit shall become a CAIR NOX unit as provided in 
paragraph (a)(1) of this section on the first date on which it both 
combusts fossil fuel and serves such generator.
    (b) The units in a State that meet the requirements set forth in 
paragraph (b)(1)(i), (b)(2)(i), or (b)(2)(ii) of this section shall not 
be CAIR NOX units:
    (1)(i) Any unit that is a CAIR NOX unit under paragraph 
(a)(1) or (2) of this section:
    (A) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (B) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (ii) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (b)(1)(i) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become a CAIR NOX unit starting 
on the earlier of January 1 after the first calendar year during which 
the unit first no longer qualifies as a cogeneration unit or January 1 
after the first calendar year during which the unit no longer meets the 
requirements of paragraph (b)(1)(i)(B) of this section.
    (2)(i) Any unit that is a CAIR NOX unit under paragraph 
(a)(1) or (2) of this section commencing operation before January 1, 
1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (ii) Any unit that is a CAIR NOX unit under paragraph 
(a)(1) or (2) of this section commencing operation on or after January 
1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (iii) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (b)(2)(i) or (ii) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become a CAIR 
NOX unit starting on the earlier of January 1 after the 
first calendar year during which the unit first no longer qualifies as 
a solid waste incineration unit or January 1 after the first 3 
consecutive calendar years after 1990 for which the unit has an average 
annual fuel consumption of fossil fuel of 20 percent or more.
    (c) A certifying official of an owner or operator of any unit may 
petition the Administrator at any time for a determination concerning 
the applicability, under paragraphs (a) and (b) of this section, of the 
CAIR NOX Annual Trading Program to the unit.
    (1) Petition content. The petition shall be in writing and include 
the identification of the unit and the relevant facts about the unit. 
The petition and any other documents provided to the Administrator in 
connection with the petition shall include the following certification 
statement, signed by the certifying official: ``I am authorized to make 
this submission on behalf of the owners and operators of the unit for 
which the submission is made. I certify under penalty of law that I 
have personally examined, and am familiar with, the statements and 
information submitted in this document and all its attachments. Based 
on my inquiry of those individuals with primary responsibility for 
obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statements and information, including the possibility of fine or 
imprisonment.''
    (2) Submission. The petition and any other documents provided in 
connection with the petition shall be submitted to the Director of the 
Clean Air Markets Division (or its successor), U.S. Environmental 
Protection Agency, who will act on the petition as the Administrator's 
duly authorized representative.
    (3) Response. The Administrator will issue a written response to 
the petition and may request supplemental information relevant to such 
petition. The Administrator's determination concerning the 
applicability, under paragraphs (a) and (b) of this section, of the 
CAIR NOX Annual Trading Program to the unit shall be binding 
on the permitting authority unless the petition or other information or 
documents provided in connection with the petition are found to have 
contained significant, relevant errors or omissions.


Sec.  97.105  Retired unit exemption.

    (a)(1) Any CAIR NOX unit that is permanently retired and 
is not a CAIR NOX opt-in unit under subpart II of this part 
shall be exempt from the CAIR NOX Annual Trading Program, 
except for the provisions of this section, Sec. Sec.  97.102, 97.103, 
97.104, 97.106(c)(4) through (7),

[[Page 25403]]

97.107, 97.108, and subparts BB and EE through GG of this part.
    (2) The exemption under paragraph (a)(1) of this section shall 
become effective the day on which the CAIR NOX unit is 
permanently retired. Within 30 days of the unit's permanent retirement, 
the CAIR designated representative shall submit a statement to the 
permitting authority otherwise responsible for administering any CAIR 
permit for the unit and shall submit a copy of the statement to the 
Administrator. The statement shall state, in a format prescribed by the 
permitting authority, that the unit was permanently retired on a 
specific date and will comply with the requirements of paragraph (b) of 
this section.
    (3) After receipt of the statement under paragraph (a)(2) of this 
section, the permitting authority will amend any permit under subpart 
CC of this part covering the source at which the unit is located to add 
the provisions and requirements of the exemption under paragraphs 
(a)(1) and (b) of this section.
    (b) Special provisions. (1) A unit exempt under paragraph (a) of 
this section shall not emit any nitrogen oxides, starting on the date 
that the exemption takes effect.
    (2) The Administrator or the permitting authority will allocate 
CAIR NOX allowances under subpart EE of this part to a unit 
exempt under paragraph (a) of this section.
    (3) For a period of 5 years from the date the records are created, 
the owners and operators of a unit exempt under paragraph (a) of this 
section shall retain, at the source that includes the unit, records 
demonstrating that the unit is permanently retired. The 5-year period 
for keeping records may be extended for cause, at any time before the 
end of the period, in writing by the permitting authority or the 
Administrator. The owners and operators bear the burden of proof that 
the unit is permanently retired.
    (4) The owners and operators and, to the extent applicable, the 
CAIR designated representative of a unit exempt under paragraph (a) of 
this section shall comply with the requirements of the CAIR 
NOX Annual Trading Program concerning all periods for which 
the exemption is not in effect, even if such requirements arise, or 
must be complied with, after the exemption takes effect.
    (5) A unit exempt under paragraph (a) of this section and located 
at a source that is required, or but for this exemption would be 
required, to have a title V operating permit shall not resume operation 
unless the CAIR designated representative of the source submits a 
complete CAIR permit application under Sec.  97.122 for the unit not 
less than 18 months (or such lesser time provided by the permitting 
authority) before the later of January 1, 2009 or the date on which the 
unit resumes operation.
    (6) On the earlier of the following dates, a unit exempt under 
paragraph (a) of this section shall lose its exemption:
    (i) The date on which the CAIR designated representative submits a 
CAIR permit application for the unit under paragraph (b)(5) of this 
section;
    (ii) The date on which the CAIR designated representative is 
required under paragraph (b)(5) of this section to submit a CAIR permit 
application for the unit; or
    (iii) The date on which the unit resumes operation, if the CAIR 
designated representative is not required to submit a CAIR permit 
application for the unit.
    (7) For the purpose of applying monitoring, reporting, and 
recordkeeping requirements under subpart HH of this part, a unit that 
loses its exemption under paragraph (a) of this section shall be 
treated as a unit that commences commercial operation on the first date 
on which the unit resumes operation.


Sec.  97.106  Standard requirements.

    (a) Permit requirements. (1) The CAIR designated representative of 
each CAIR NOX source required to have a title V operating 
permit and each CAIR NOX unit required to have a title V 
operating permit at the source shall:
    (i) Submit to the permitting authority a complete CAIR permit 
application under Sec.  97.122 in accordance with the deadlines 
specified in Sec.  97.121; and
    (ii) Submit in a timely manner any supplemental information that 
the permitting authority determines is necessary in order to review a 
CAIR permit application and issue or deny a CAIR permit.
    (2) The owners and operators of each CAIR NOX source 
required to have a title V operating permit and each CAIR 
NOX unit required to have a title V operating permit at the 
source shall have a CAIR permit issued by the permitting authority 
under subpart CC of this part for the source and operate the source and 
the unit in compliance with such CAIR permit.
    (3) Except as provided in subpart II of this part, the owners and 
operators of a CAIR NOX source that is not otherwise 
required to have a title V operating permit and each CAIR 
NOX unit that is not otherwise required to have a title V 
operating permit are not required to submit a CAIR permit application, 
and to have a CAIR permit, under subpart CC of this part for such CAIR 
NOX source and such CAIR NOX unit.
    (b) Monitoring, reporting, and recordkeeping requirements. (1) The 
owners and operators, and the CAIR designated representative, of each 
CAIR NOX source and each CAIR NOX unit at the 
source shall comply with the monitoring, reporting, and recordkeeping 
requirements of subpart HH of this part.
    (2) The emissions measurements recorded and reported in accordance 
with subpart HH of this part shall be used to determine compliance by 
each CAIR NOX source with the CAIR NOX emissions 
limitation under paragraph (c) of this section.
    (c) Nitrogen oxides emission requirements. (1) As of the allowance 
transfer deadline for a control period, the owners and operators of 
each CAIR NOX source and each CAIR NOX unit at 
the source shall hold, in the source's compliance account, CAIR 
NOX allowances available for compliance deductions for the 
control period under Sec.  97.154(a) in an amount not less than the 
tons of total nitrogen oxides emissions for the control period from all 
CAIR NOX units at the source, as determined in accordance 
with subpart HH of this part.
    (2) A CAIR NOX unit shall be subject to the requirements 
under paragraph (c)(1) of this section for the control period starting 
on the later of January 1, 2009 or the deadline for meeting the unit's 
monitor certification requirements under Sec.  97.170(b)(1), (2), or 
(5) and for each control period thereafter.
    (3) A CAIR NOX allowance shall not be deducted, for 
compliance with the requirements under paragraph (c)(1) of this 
section, for a control period in a calendar year before the year for 
which the CAIR NOX allowance was allocated.
    (4) CAIR NOX allowances shall be held in, deducted from, 
or transferred into or among CAIR NOX Allowance Tracking 
System accounts in accordance with subparts EE, FF, GG, and II of this 
part.
    (5) A CAIR NOX allowance is a limited authorization to 
emit one ton of nitrogen oxides in accordance with the CAIR 
NOX Annual Trading Program. No provision of the CAIR 
NOX Annual Trading Program, the CAIR permit application, the 
CAIR permit, or an exemption under Sec.  97.105 and no provision of law 
shall be construed to limit the authority of the United States to 
terminate or limit such authorization.
    (6) A CAIR NOX allowance does not constitute a property 
right.
    (7) Upon recordation by the Administrator under subpart EE, FF,

[[Page 25404]]

GG, or II of this part, every allocation, transfer, or deduction of a 
CAIR NOX allowance to or from a CAIR NOX source's 
compliance account is incorporated automatically in any CAIR permit of 
the source.
    (d) Excess emissions requirements. If a CAIR NOX source 
emits nitrogen oxides during any control period in excess of the CAIR 
NOX emissions limitation, then:
    (1) The owners and operators of the source and each CAIR 
NOX unit at the source shall surrender the CAIR 
NOX allowances required for deduction under Sec.  
97.154(d)(1) and pay any fine, penalty, or assessment or comply with 
any other remedy imposed, for the same violations, under the Clean Air 
Act or applicable State law; and
    (2) Each ton of such excess emissions and each day of such control 
period shall constitute a separate violation of this subpart, the Clean 
Air Act, and applicable State law.
    (e) Recordkeeping and reporting requirements. (1) Unless otherwise 
provided, the owners and operators of the CAIR NOX source 
and each CAIR NOX unit at the source shall keep on site at 
the source each of the following documents for a period of 5 years from 
the date the document is created. This period may be extended for 
cause, at any time before the end of 5 years, in writing by the 
permitting authority or the Administrator.
    (i) The certificate of representation under Sec.  97.113 for the 
CAIR designated representative for the source and each CAIR 
NOX unit at the source and all documents that demonstrate 
the truth of the statements in the certificate of representation; 
provided that the certificate and documents shall be retained on site 
at the source beyond such 5-year period until such documents are 
superseded because of the submission of a new certificate of 
representation under Sec.  97.113 changing the CAIR designated 
representative.
    (ii) All emissions monitoring information, in accordance with 
subpart HH of this part, provided that to the extent that subpart HH of 
this part provides for a 3-year period for recordkeeping, the 3-year 
period shall apply.
    (iii) Copies of all reports, compliance certifications, and other 
submissions and all records made or required under the CAIR 
NOX Annual Trading Program.
    (iv) Copies of all documents used to complete a CAIR permit 
application and any other submission under the CAIR NOX 
Annual Trading Program or to demonstrate compliance with the 
requirements of the CAIR NOX Annual Trading Program.
    (2) The CAIR designated representative of a CAIR NOX 
source and each CAIR NOX unit at the source shall submit the 
reports required under the CAIR NOX Annual Trading Program, 
including those under subpart HH of this part.
    (f) Liability. (1) Each CAIR NOX source and each CAIR 
NOX unit shall meet the requirements of the CAIR 
NOX Annual Trading Program.
    (2) Any provision of the CAIR NOX Annual Trading Program 
that applies to a CAIR NOX source or the CAIR designated 
representative of a CAIR NOX source shall also apply to the 
owners and operators of such source and of the CAIR NOX 
units at the source.
    (3) Any provision of the CAIR NOX Annual Trading Program 
that applies to a CAIR NOX unit or the CAIR designated 
representative of a CAIR NOX unit shall also apply to the 
owners and operators of such unit.
    (g) Effect on other authorities. No provision of the CAIR 
NOX Annual Trading Program, a CAIR permit application, a 
CAIR permit, or an exemption under Sec.  97.105 shall be construed as 
exempting or excluding the owners and operators, and the CAIR 
designated representative, of a CAIR NOX source or CAIR 
NOX unit from compliance with any other provision of the 
applicable, approved State implementation plan, a federally enforceable 
permit, or the Clean Air Act.


Sec.  97.107  Computation of time.

    (a) Unless otherwise stated, any time period scheduled, under the 
CAIR NOX Annual Trading Program, to begin on the occurrence 
of an act or event shall begin on the day the act or event occurs.
    (b) Unless otherwise stated, any time period scheduled, under the 
CAIR NOX Annual Trading Program, to begin before the 
occurrence of an act or event shall be computed so that the period ends 
the day before the act or event occurs.
    (c) Unless otherwise stated, if the final day of any time period, 
under the CAIR NOX Annual Trading Program, falls on a 
weekend or a State or Federal holiday, the time period shall be 
extended to the next business day.


Sec.  97.108  Appeal procedures.

    The appeal procedures for decisions of the Administrator under the 
CAIR NOX Annual Trading Program are set forth in part 78 of 
this chapter.

Subpart BB--CAIR Designated Representative for CAIR NOX 
Sources


Sec.  97.110  Authorization and responsibilities of CAIR designated 
representative.

    (a) Except as provided under Sec.  97.111, each CAIR NOX 
source, including all CAIR NOX units at the source, shall 
have one and only one CAIR designated representative, with regard to 
all matters under the CAIR NOX Annual Trading Program 
concerning the source or any CAIR NOX unit at the source.
    (b) The CAIR designated representative of the CAIR NOX 
source shall be selected by an agreement binding on the owners and 
operators of the source and all CAIR NOX units at the source 
and shall act in accordance with the certification statement in Sec.  
97.113(a)(4)(iv).
    (c) Upon receipt by the Administrator of a complete certificate of 
representation under Sec.  97.113, the CAIR designated representative 
of the source shall represent and, by his or her representations, 
actions, inactions, or submissions, legally bind each owner and 
operator of the CAIR NOX source represented and each CAIR 
NOX unit at the source in all matters pertaining to the CAIR 
NOX Annual Trading Program, notwithstanding any agreement 
between the CAIR designated representative and such owners and 
operators. The owners and operators shall be bound by any decision or 
order issued to the CAIR designated representative by the permitting 
authority, the Administrator, or a court regarding the source or unit.
    (d) No CAIR permit will be issued, no emissions data reports will 
be accepted, and no CAIR NOX Allowance Tracking System 
account will be established for a CAIR NOX unit at a source, 
until the Administrator has received a complete certificate of 
representation under Sec.  97.113 for a CAIR designated representative 
of the source and the CAIR NOX units at the source.
    (e)(1) Each submission under the CAIR NOX Annual Trading 
Program shall be submitted, signed, and certified by the CAIR 
designated representative for each CAIR NOX source on behalf 
of which the submission is made. Each such submission shall include the 
following certification statement by the CAIR designated 
representative: ``I am authorized to make this submission on behalf of 
the owners and operators of the source or units for which the 
submission is made. I certify under penalty of law that I have 
personally examined, and am familiar with, the statements and 
information submitted in this document and all its attachments. Based 
on my inquiry of those individuals with primary

[[Page 25405]]

responsibility for obtaining the information, I certify that the 
statements and information are to the best of my knowledge and belief 
true, accurate, and complete. I am aware that there are significant 
penalties for submitting false statements and information or omitting 
required statements and information, including the possibility of fine 
or imprisonment.''
    (2) The permitting authority and the Administrator will accept or 
act on a submission made on behalf of owner or operators of a CAIR 
NOX source or a CAIR NOX unit only if the 
submission has been made, signed, and certified in accordance with 
paragraph (e)(1) of this section.


Sec.  97.111  Alternate CAIR designated representative.

    (a) A certificate of representation under Sec.  97.113 may 
designate one and only one alternate CAIR designated representative, 
who may act on behalf of the CAIR designated representative. The 
agreement by which the alternate CAIR designated representative is 
selected shall include a procedure for authorizing the alternate CAIR 
designated representative to act in lieu of the CAIR designated 
representative.
    (b) Upon receipt by the Administrator of a complete certificate of 
representation under Sec.  97.113, any representation, action, 
inaction, or submission by the alternate CAIR designated representative 
shall be deemed to be a representation, action, inaction, or submission 
by the CAIR designated representative.
    (c) Except in this section and Sec. Sec.  97.102, 97.110(a) and 
(d), 97.112, 97.113, 97.115, 97.151 and 97.182, whenever the term 
``CAIR designated representative'' is used in subparts AA through II of 
this part, the term shall be construed to include the CAIR designated 
representative or any alternate CAIR designated representative.


Sec.  97.112  Changing CAIR designated representative and alternate 
CAIR designated representative; changes in owners and operators.

    (a) Changing CAIR designated representative. The CAIR designated 
representative may be changed at any time upon receipt by the 
Administrator of a superseding complete certificate of representation 
under Sec.  97.113. Notwithstanding any such change, all 
representations, actions, inactions, and submissions by the previous 
CAIR designated representative before the time and date when the 
Administrator receives the superseding certificate of representation 
shall be binding on the new CAIR designated representative and the 
owners and operators of the CAIR NOX source and the CAIR 
NOX units at the source.
    (b) Changing alternate CAIR designated representative. The 
alternate CAIR designated representative may be changed at any time 
upon receipt by the Administrator of a superseding complete certificate 
of representation under Sec.  97.113. Notwithstanding any such change, 
all representations, actions, inactions, and submissions by the 
previous alternate CAIR designated representative before the time and 
date when the Administrator receives the superseding certificate of 
representation shall be binding on the new alternate CAIR designated 
representative and the owners and operators of the CAIR NOX 
source and the CAIR NOX units at the source.
    (c) Changes in owners and operators. (1) In the event an owner or 
operator of a CAIR NOX source or a CAIR NOX unit 
is not included in the list of owners and operators in the certificate 
of representation under Sec.  97.113, such owner or operator shall be 
deemed to be subject to and bound by the certificate of representation, 
the representations, actions, inactions, and submissions of the CAIR 
designated representative and any alternate CAIR designated 
representative of the source or unit, and the decisions and orders of 
the permitting authority, the Administrator, or a court, as if the 
owner or operator were included in such list.
    (2) Within 30 days following any change in the owners and operators 
of a CAIR NOX source or a CAIR NOX unit, 
including the addition of a new owner or operator, the CAIR designated 
representative or any alternate CAIR designated representative shall 
submit a revision to the certificate of representation under Sec.  
97.113 amending the list of owners and operators to include the change.


Sec.  97.113  Certificate of representation.

    (a) A complete certificate of representation for a CAIR designated 
representative or an alternate CAIR designated representative shall 
include the following elements in a format prescribed by the 
Administrator:
    (1) Identification of the CAIR NOX source, and each CAIR 
NOX unit at the source, for which the certificate of 
representation is submitted, including identification and nameplate 
capacity of each generator served by each such unit.
    (2) The name, address, e-mail address (if any), telephone number, 
and facsimile transmission number (if any) of the CAIR designated 
representative and any alternate CAIR designated representative.
    (3) A list of the owners and operators of the CAIR NOX 
source and of each CAIR NOX unit at the source.
    (4) The following certification statements by the CAIR designated 
representative and any alternate CAIR designated representative--
    (i) ``I certify that I was selected as the CAIR designated 
representative or alternate CAIR designated representative, as 
applicable, by an agreement binding on the owners and operators of the 
source and each CAIR NOX unit at the source.''
    (ii) ``I certify that I have all the necessary authority to carry 
out my duties and responsibilities under the CAIR NOX Annual 
Trading Program on behalf of the owners and operators of the source and 
of each CAIR NOX unit at the source and that each such owner 
and operator shall be fully bound by my representations, actions, 
inactions, or submissions.''
    (iii) ``I certify that the owners and operators of the source and 
of each CAIR NOX unit at the source shall be bound by any 
order issued to me by the Administrator, the permitting authority, or a 
court regarding the source or unit.''
    (iv) (Where there are multiple holders of a legal or equitable 
title to, or a leasehold interest in, a CAIR NOX unit, or 
where a utility or industrial customer purchases power from a CAIR 
NOX unit under a life-of-the-unit, firm power contractual 
arrangement, I certify that: I have given a written notice of my 
selection as the `CAIR designated representative' or `alternate CAIR 
designated representative', as applicable, and of the agreement by 
which I was selected to each owner and operator of the source and of 
each CAIR NOX unit at the source; and CAIR NOX 
allowances and proceeds of transactions involving CAIR NOX 
allowances will be deemed to be held or distributed in proportion to 
each holder's legal, equitable, leasehold, or contractual reservation 
or entitlement, except that, if such multiple holders have expressly 
provided for a different distribution of CAIR NOX allowances 
by contract, CAIR NOX allowances and proceeds of 
transactions involving CAIR NOX allowances will be deemed to 
be held or distributed in accordance with the contract.''
    (5) The signature of the CAIR designated representative and any 
alternate CAIR designated representative and the dates signed.
    (b) Unless otherwise required by the permitting authority or the 
Administrator, documents of agreement referred to in the certificate of

[[Page 25406]]

representation shall not be submitted to the permitting authority or 
the Administrator. Neither the permitting authority nor the 
Administrator shall be under any obligation to review or evaluate the 
sufficiency of such documents, if submitted.


Sec.  97.114  Objections concerning CAIR designated representative.

    (a) Once a complete certificate of representation under Sec.  
97.113 has been submitted and received, the permitting authority and 
the Administrator will rely on the certificate of representation unless 
and until a superseding complete certificate of representation under 
Sec.  97.113 is received by the Administrator.
    (b) Except as provided in Sec.  97.112(a) or (b), no objection or 
other communication submitted to the permitting authority or the 
Administrator concerning the authorization, or any representation, 
action, inaction, or submission, of the CAIR designated representative 
shall affect any representation, action, inaction, or submission of the 
CAIR designated representative or the finality of any decision or order 
by the permitting authority or the Administrator under the CAIR 
NOX Annual Trading Program.
    (c) Neither the permitting authority nor the Administrator will 
adjudicate any private legal dispute concerning the authorization or 
any representation, action, inaction, or submission of any CAIR 
designated representative, including private legal disputes concerning 
the proceeds of CAIR NOX allowance transfers.


Sec.  97.115  Delegation by CAIR designated representative and 
alternate CAIR designated representative.

    (a) A CAIR designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
to the Administrator provided for or required under this part.
    (b) An alternate CAIR designated representative may delegate, to 
one or more natural persons, his or her authority to make an electronic 
submission to the Administrator provided for or required under this 
part.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the CAIR designated representative or alternate CAIR 
designated representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator, that includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR designated 
representative or alternate CAIR designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such CAIR designated 
representative or alternate CAIR designated representative:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a CAIR designated representative or alternate CAIR 
designated representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
97.115(d) shall be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 97.115(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 97.115 is terminated.''.
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall be effective, with regard to the CAIR designated 
representative or alternate CAIR designated representative identified 
in such notice, upon receipt of such notice by the Administrator and 
until receipt by the Administrator of a superseding notice of 
delegation submitted by such CAIR designated representative or 
alternate CAIR designated representative, as appropriate. The 
superseding notice of delegation may replace any previously identified 
agent, add a new agent, or eliminate entirely any delegation of 
authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the CAIR designated 
representative or alternate CAIR designated representative submitting 
such notice of delegation.

Subpart CC--Permits


Sec.  97.120  General CAIR NOX Annual Trading Program permit 
requirements.

    (a) For each CAIR NOX source required to have a title V 
operating permit or required, under subpart II of this part, to have a 
title V operating permit or other federally enforceable permit, such 
permit shall include a CAIR permit administered by the permitting 
authority for the title V operating permit or the federally enforceable 
permit as applicable. The CAIR portion of the title V permit or other 
federally enforceable permit as applicable shall be administered in 
accordance with the permitting authority's title V operating permits 
regulations promulgated under part 70 or 71 of this chapter or the 
permitting authority's regulations for other federally enforceable 
permits as applicable, except as provided otherwise by Sec.  97.105, 
this subpart, and subpart II of this part.
    (b) Each CAIR permit shall contain, with regard to the CAIR 
NOX source and the CAIR NOX units at the source 
covered by the CAIR permit, all applicable CAIR NOX Annual 
Trading Program, CAIR NOX Ozone Season Trading Program, and 
CAIR SO2 Trading Program requirements and shall be a 
complete and separable portion of the title V operating permit or other 
federally enforceable permit under paragraph (a) of this section.


Sec.  97.121  Submission of CAIR permit applications.

    (a) Duty to apply. The CAIR designated representative of any CAIR 
NOX source required to have a title V operating permit shall 
submit to the permitting authority a complete CAIR permit application 
under Sec.  97.122 for the source covering each CAIR NOX 
unit at the source at least 18 months (or such lesser time provided by 
the permitting authority) before the later of January 1, 2009 or the 
date on which the CAIR NOX unit commences commercial 
operation, except as provided in Sec.  97.183(a).
    (b) Duty to reapply. For a CAIR NOX source required to 
have a title V operating permit, the CAIR designated representative 
shall submit a complete CAIR permit application under Sec.  97.122 for 
the source covering each CAIR NOX unit at the source to 
renew the CAIR permit in accordance with the permitting authority's 
title V operating permits regulations addressing permit renewal, except 
as provided in Sec.  97.183(b).

[[Page 25407]]

Sec.  97.122  Information requirements for CAIR permit applications.

    A complete CAIR permit application shall include the following 
elements concerning the CAIR NOX source for which the 
application is submitted, in a format prescribed by the permitting 
authority:
    (a) Identification of the CAIR NOX source;
    (b) Identification of each CAIR NOX unit at the CAIR 
NOX source; and
    (c) The standard requirements under Sec.  97.106.


Sec.  97.123  CAIR permit contents and term.

    (a) Each CAIR permit will contain, in a format prescribed by the 
permitting authority, all elements required for a complete CAIR permit 
application under Sec.  97.122.
    (b) Each CAIR permit is deemed to incorporate automatically the 
definitions of terms under Sec.  97.102 and, upon recordation by the 
Administrator under subpart EE, FF, GG, or II of this part, every 
allocation, transfer, or deduction of a CAIR NOX allowance 
to or from the compliance account of the CAIR NOX source 
covered by the permit.
    (c) The term of the CAIR permit will be set by the permitting 
authority, as necessary to facilitate coordination of the renewal of 
the CAIR permit with issuance, revision, or renewal of the CAIR 
NOX source's title V operating permit or other federally 
enforceable permit as applicable.


Sec.  97.124  CAIR permit revisions.

    Except as provided in Sec.  97.123(b), the permitting authority 
will revise the CAIR permit, as necessary, in accordance with the 
permitting authority's title V operating permits regulations or the 
permitting authority's regulations for other federally enforceable 
permits as applicable addressing permit revisions.

Subpart DD--[Reserved]

Subpart EE--CAIR NOX Allowance Allocations


Sec.  97.140  State trading budgets.

    The State trading budgets for annual allocations of CAIR 
NOX allowances for the control periods in 2009 through 2014 
and in 2015 and thereafter are respectively as follows:

------------------------------------------------------------------------
                                                           State trading
                                           State trading    budget for
                  State                     budget for       2015 and
                                             2009-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------
Alabama.................................          69,020          57,517
Delaware................................           4,166           3,472
District of Columbia....................             144             120
Florida.................................          99,445          82,871
Georgia.................................          66,321          55,268
Illinois................................          76,230          63,525
Indiana.................................         108,935          90,779
Iowa....................................          32,692          27,243
Kentucky................................          83,205          69,337
Louisiana...............................          35,512          29,593
Maryland................................          27,724          23,104
Michigan................................          65,304          54,420
Minnesota...............................          31,443          26,203
Mississippi.............................          17,807          14,839
Missouri................................          59,871          49,892
New Jersey..............................          12,670          10,558
New York................................          45,617          38,014
North Carolina..........................          62,183          51,819
Ohio....................................         108,667          90,556
Pennsylvania............................          99,049          82,541
South Carolina..........................          32,662          27,219
Tennessee...............................          50,973          42,478
Texas...................................         181,014         150,845
Virginia................................          36,074          30,062
West Virginia...........................          74,220          61,850
Wisconsin...............................          40,759          33,966
                                         -------------------------------
    Total...............................       1,521,707       1,268,091
------------------------------------------------------------------------

Sec.  97.141  Timing requirements for CAIR NOX allowance 
allocations.

    (a) The Administrator will determine by order the CAIR 
NOX allowance allocations, in accordance with Sec.  
97.142(a) and (b), for the control periods in 2009, 2010, 2011, 2012, 
2013, and 2014.
    (b) By July 31, 2011 and July 31 of each year thereafter, the 
Administrator will determine by order the CAIR NOX allowance 
allocations, in accordance with Sec.  97.142(a) and (b), for the 
control period in the fourth year after the year of the applicable 
deadline for determination under this paragraph.
    (c) By July 31, 2009 and July 31 of each year thereafter, the 
Administrator will determine by order the CAIR NOX allowance 
allocations, in accordance with Sec.  97.142(a),(c), and (d), for the 
control period in the year of the applicable deadline for determination 
under this paragraph.
    (d) The Administrator will make available to the public each 
determination of CAIR NOX allowances under paragraph (a), 
(b), or (c) of this section and will provide an opportunity for 
submission of objections to the determination. Objections shall be 
limited to addressing whether the determination is in accordance with 
Sec.  97.142. Based on any such objections, the Administrator will 
adjust each determination to the extent necessary to ensure that it is 
in accordance with Sec.  97.142.

[[Page 25408]]

Sec.  97.142  CAIR NOX allowance allocations.

    (a)(1) The baseline heat input (in mmBtu) used with respect to CAIR 
NOX allowance allocations under paragraph (b) of this 
section for each CAIR NOX unit will be:
    (i) For units commencing operation before January 1, 2001 the 
average of the 3 highest amounts of the unit's adjusted control period 
heat input for 2000 through 2004, with the adjusted control period heat 
input for each year calculated as follows:
    (A) If the unit is coal-fired during the year, the unit's control 
period heat input for such year is multiplied by 100 percent;
    (B) If the unit is oil-fired during the year, the unit's control 
period heat input for such year is multiplied by 60 percent; and
    (C) If the unit is not subject to paragraph (a)(1)(i)(A) or (B) of 
this section, the unit's control period heat input for such year is 
multiplied by 40 percent.
    (ii) For units commencing operation on or after January 1, 2001 and 
operating each calendar year during a period of 5 or more consecutive 
calendar years, the average of the 3 highest amounts of the unit's 
total converted control period heat input over the first such 5 years.
    (2)(i) A unit's control period heat input, and a unit's status as 
coal-fired or oil-fired, for a calendar year under paragraph (a)(1)(i) 
of this section, and a unit's total tons of NOX emissions 
during a calendar year under paragraph (c)(3) of this section, will be 
determined in accordance with part 75 of this chapter, to the extent 
the unit was otherwise subject to the requirements of part 75 of this 
chapter for the year, or will be based on the best available data 
reported to the Administrator for the unit (in a format prescribed by 
the Administrator), to the extent the unit was not otherwise subject to 
the requirements of part 75 of this chapter for the year.
    (ii) A unit's converted control period heat input for a calendar 
year specified under paragraph (a)(1)(ii) of this section equals:
    (A) Except as provided in paragraph (a)(2)(ii)(B) or (C) of this 
section, the control period gross electrical output of the generator or 
generators served by the unit multiplied by 7,900 Btu/kWh, if the unit 
is coal-fired for the year, or 6,675 Btu/kWh, if the unit is not coal-
fired for the year, and divided by 1,000,000 Btu/mmBtu, provided that 
if a generator is served by 2 or more units, then the gross electrical 
output of the generator will be attributed to each unit in proportion 
to the unit's share of the total control period heat input of such 
units for the year;
    (B) For a unit that is a boiler and has equipment used to produce 
electricity and useful thermal energy for industrial, commercial, 
heating, or cooling purposes through the sequential use of energy, the 
total heat energy (in Btu) of the steam produced by the boiler during 
the control period, divided by 0.8 and by 1,000,000 Btu/mmBtu; or
    (C) For a unit that is a combustion turbine and has equipment used 
to produce electricity and useful thermal energy for industrial, 
commercial, heating, or cooling purposes through the sequential use of 
energy, the control period gross electrical output of the enclosed 
device comprising the compressor, combustor, and turbine multiplied by 
3,413 Btu/kWh, plus the total heat energy (in Btu) of the steam 
produced by any associated heat recovery steam generator during the 
control period divided by 0.8, and with the sum divided by 1,000,000 
Btu/mmBtu.
    (iii) Gross electrical output and total heat energy under paragraph 
(a)(2)(ii) of this section will be determined based on the best 
available data reported to the Administrator for the unit (in a format 
prescribed by the Administrator).
    (3) The Administrator will determine what data are the best 
available data under paragraph (a)(2) of this section by weighing the 
likelihood that data are accurate and reliable and giving greater 
weight to data submitted to a governmental entity in compliance with 
legal requirements or substantiated by an independent entity.
    (b)(1) For each control period in 2009 and thereafter, the 
Administrator will allocate to all CAIR NOX units in a State 
that have a baseline heat input (as determined under paragraph (a) of 
this section) a total amount of CAIR NOX allowances equal to 
95 percent for a control period during 2009 through 2014, and 97 
percent for a control period during 2015 and thereafter, of the tons of 
NOX emissions in the applicable State trading budget under 
Sec.  97.140 (except as provided in paragraphs (d) and (e) of this 
section).
    (2) The Administrator will allocate CAIR NOX allowances 
to each CAIR NOX unit under paragraph (b)(1) of this section 
in an amount determined by multiplying the total amount of CAIR 
NOX allowances allocated under paragraph (b)(1) of this 
section by the ratio of the baseline heat input of such CAIR 
NOX unit to the total amount of baseline heat input of all 
such CAIR NOX units in the State and rounding to the nearest 
whole allowance as appropriate.
    (c) For each control period in 2009 and thereafter, the 
Administrator will allocate CAIR NOX allowances to CAIR 
NOX units in a State that are not allocated CAIR 
NOX allowances under paragraph (b) of this section because 
the units do not yet have a baseline heat input under paragraph (a) of 
this section or because the units have a baseline heat input but all 
CAIR NOX allowances available under paragraph (b) of this 
section for the control period are already allocated, in accordance 
with the following procedures:
    (1) The Administrator will establish a separate new unit set-aside 
for each control period. Each new unit set-aside will be allocated CAIR 
NOX allowances equal to 5 percent for a control period in 
2009 through 2014, and 3 percent for a control period in 2015 and 
thereafter, of the amount of tons of NOX emissions in the 
applicable State trading budget under Sec.  97.140.
    (2) The CAIR designated representative of such a CAIR 
NOX unit may submit to the Administrator a request, in a 
format specified by the Administrator, to be allocated CAIR 
NOX allowances, starting with the later of the control 
period in 2009 or the first control period after the control period in 
which the CAIR NOX unit commences commercial operation and 
until the first control period for which the unit is allocated CAIR 
NOX allowances under paragraph (b) of this section. A 
separate CAIR NOX allowance allocation request for each 
control period for which CAIR NOX allowances are sought must 
be submitted on or before May 1 of such control period and after the 
date on which the CAIR NOX unit commences commercial 
operation.
    (3) In a CAIR NOX allowance allocation request under 
paragraph (c)(2) of this section, the CAIR designated representative 
may request for a control period CAIR NOX allowances in an 
amount not exceeding the CAIR NOX unit's total tons of 
NOX emissions during the calendar year immediately before 
such control period.
    (4) The Administrator will review each CAIR NOX 
allowance allocation request under paragraph (c)(2) of this section and 
will allocate CAIR NOX allowances for each control period 
pursuant to such request as follows:
    (i) The Administrator will accept an allowance allocation request 
only if the request meets, or is adjusted by the Administrator as 
necessary to meet, the requirements of paragraphs (c)(2) and (3) of 
this section.
    (ii) On or after May 1 of the control period, the Administrator 
will determine the sum of the CAIR NOX allowances requested 
(as adjusted under

[[Page 25409]]

paragraph (c)(4)(i) of this section) in all allowance allocation 
requests accepted under paragraph (c)(4)(i) of this section for the 
control period.
    (iii) If the amount of CAIR NOX allowances in the new 
unit set-aside for the control period is greater than or equal to the 
sum under paragraph (c)(4)(ii) of this section, then the Administrator 
will allocate the amount of CAIR NOX allowances requested 
(as adjusted under paragraph (c)(4)(i) of this section) to each CAIR 
NOX unit covered by an allowance allocation request accepted 
under paragraph (c)(4)(i) of this section.
    (iv) If the amount of CAIR NOX allowances in the new 
unit set-aside for the control period is less than the sum under 
paragraph (c)(4)(ii) of this section, then the Administrator will 
allocate to each CAIR NOX unit covered by an allowance 
allocation request accepted under paragraph (c)(4)(i) of this section 
the amount of the CAIR NOX allowances requested (as adjusted 
under paragraph (c)(4)(i) of this section), multiplied by the amount of 
CAIR NOX allowances in the new unit set-aside for the 
control period, divided by the sum determined under paragraph 
(c)(4)(ii) of this section, and rounded to the nearest whole allowance 
as appropriate.
    (v) The Administrator will notify each CAIR designated 
representative that submitted an allowance allocation request of the 
amount of CAIR NOX allowances (if any) allocated for the 
control period to the CAIR NOX unit covered by the request.
    (d) If, after completion of the procedures under paragraph (c)(4) 
of this section for a control period, any unallocated CAIR 
NOX allowances remain in the new unit set-aside under 
paragraph (c) of this section for a State for the control period, the 
Administrator will allocate to each CAIR NOX unit that was 
allocated CAIR NOX allowances under paragraph (b) of this 
section in the State an amount of CAIR NOX allowances equal 
to the total amount of such remaining unallocated CAIR NOX 
allowances, multiplied by the unit's allocation under paragraph (b) of 
this section, divided by 95 percent for a control period during 2009 
through 2014, and 97 percent for a control period during 2015 and 
thereafter, of the amount of tons of NOX emissions in the 
applicable State trading budget under Sec.  97.140, and rounded to the 
nearest whole allowance as appropriate.
    (e) If the Administrator determines that CAIR NOX 
allowances were allocated under paragraphs (a) and (b) of this section, 
paragraphs (a) and (c) of this section, or paragraph (d) of this 
section for a control period and that the recipient of the allocation 
is not actually a CAIR NOX unit under Sec.  97.104 in such 
control period, then the Administrator will notify the CAIR designated 
representative and will act in accordance with the following 
procedures:
    (1) Except as provided in paragraph (e)(2) or (3) of this section, 
the Administrator will not record such CAIR NOX allowances 
under Sec.  97.153.
    (2) If the Administrator already recorded such CAIR NOX 
allowances under Sec.  97.153 and if the Administrator makes such 
determination before making deductions for the source that includes 
such recipient under Sec.  97.154(b) for the control period, then the 
Administrator will deduct from the account in which such CAIR 
NOX allowances were recorded under Sec.  97.153 an amount of 
CAIR NOX allowances allocated for the same or a prior 
control period equal to the amount of such already recorded CAIR 
NOX allowances. The CAIR designated representative shall 
ensure that there are sufficient CAIR NOX allowances in such 
account for completion of the deduction.
    (3) If the Administrator already recorded such CAIR NOX 
allowances under Sec.  97.153 and if the Administrator makes such 
determination after making deductions for the source that includes such 
recipient under Sec.  97.154(b) for the control period, then the 
Administrator will apply paragraph (e)(1) or (2) of this section, as 
appropriate, to any subsequent control period for which CAIR 
NOX allowances were allocated to such recipient.
    (4) The Administrator will transfer the CAIR NOX 
allowances that are not recorded, or that are deducted, in accordance 
with paragraphs (e)(1), (2), and (3) of this section to a new unit set-
aside for the State in which such recipient is located.


Sec.  97.143  Compliance supplement pool.

    (a) In addition to the CAIR NOX allowances allocated 
under Sec.  97.142, the Administrator may allocate for the control 
period in 2009 up to the following amount of CAIR NOX 
allowances to CAIR NOX units in the respective State:

------------------------------------------------------------------------
                                                           Compliance
                         State                          supplement  pool
------------------------------------------------------------------------
Alabama...............................................            10,166
Delaware..............................................               843
District of Columbia..................................                 0
Florida...............................................             8,335
Georgia...............................................            12,397
Illinois..............................................            11,299
Indiana...............................................            20,155
Iowa..................................................             6,978
Kentucky..............................................            14,935
Louisiana.............................................             2,251
Maryland..............................................             4,670
Michigan..............................................             8,347
Minnesota.............................................             6,528
Mississippi...........................................             3,066
Missouri..............................................             9,044
New Jersey............................................               660
New York..............................................                 0
North Carolina........................................                 0
Ohio..................................................            25,037
Pennsylvania..........................................            16,009
South Carolina........................................             2,600
Tennessee.............................................             8,944
Texas.................................................               772
Virginia..............................................             5,134
West Virginia.........................................            16,929
Wisconsin.............................................             4,898
                                                       -----------------
    Total.............................................           199,997
------------------------------------------------------------------------

    (b) For any CAIR NOX unit in a State, if the unit's 
average annual NOX emission rate for 2007 or 2008 is less 
than 0.25 lb/mmBtu and, where such unit is included in a NOX 
averaging plan under Sec.  76.11 of this chapter under the Acid Rain 
Program for such year, the unit's NOX averaging plan has an 
actual weighted average NOX emission rate for such year 
equal to or less than the actual weighted average NOX 
emission rate for the year before such year and if the unit achieves 
NOX emission reductions in 2007 and 2008, the CAIR 
designated representative of the unit may request early reduction 
credits, and allocation of CAIR NOX allowances from the 
compliance supplement pool under paragraph (a) of this section for such 
early reduction credits, in accordance with the following:
    (1) The owners and operators of such CAIR NOX unit shall 
monitor and report the NOX emissions rate and the heat input 
of the unit in accordance with subpart HH of this part in each control 
period for which early reduction credit is requested.
    (2) The CAIR designated representative of such CAIR NOX 
unit shall submit to the Administrator by May 1, 2009 a request, in a 
format specified by the Administrator, for allocation of an amount of 
CAIR NOX allowances from the compliance supplement pool not 
exceeding the sum of the unit's heat input for the control period in 
2007 multiplied by the difference (if any greater than zero) between 
0.25 lb/mmBtu and the unit's NOX emission rate for the 
control period in 2007 plus the unit's heat input for the control 
period in 2008 multiplied by the difference (if any greater than zero) 
between 0.25 lb/mmBtu and the unit's

[[Page 25410]]

NOX emission rate for the control period in 2008, determined 
in accordance with subpart HH of this part and with the sum divided by 
2,000 lb/ton and rounded to the nearest whole number of tons as 
appropriate.
    (c) For any CAIR NOX unit in a State whose compliance 
with CAIR NOX emissions limitation for the control period in 
2009 would create an undue risk to the reliability of electricity 
supply during such control period, the CAIR designated representative 
of the unit may request the allocation of CAIR NOX 
allowances from the compliance supplement pool under paragraph (a) of 
this section, in accordance with the following:
    (1) The CAIR designated representative of such CAIR NOX 
unit shall submit to the Administrator by May 1, 2009 a request, in a 
format specified by the Administrator, for allocation of an amount of 
CAIR NOX allowances from the compliance supplement pool not 
exceeding the minimum amount of CAIR NOX allowances 
necessary to remove such undue risk to the reliability of electricity 
supply.
    (2) In the request under paragraph (c)(1) of this section, the CAIR 
designated representative of such CAIR NOX unit shall 
demonstrate that, in the absence of allocation to the unit of the 
amount of CAIR NOX allowances requested, the unit's 
compliance with CAIR NOX emissions limitation for the 
control period in 2009 would create an undue risk to the reliability of 
electricity supply during such control period. This demonstration must 
include a showing that it would not be feasible for the owners and 
operators of the unit to:
    (i) Obtain a sufficient amount of electricity from other 
electricity generation facilities, during the installation of control 
technology at the unit for compliance with the CAIR NOX 
emissions limitation, to prevent such undue risk; or
    (ii) Obtain under paragraphs (b) and (d) of this section, or 
otherwise obtain, a sufficient amount of CAIR NOX allowances 
to prevent such undue risk.
    (d) The Administrator will review each request under paragraph (b) 
or (c) of this section submitted by May 1, 2009 and will allocate CAIR 
NOX allowances for the control period in 2009 to CAIR 
NOX units in a State and covered by such request as follows:
    (1) Upon receipt of each such request, the Administrator will make 
any necessary adjustments to the request to ensure that the amount of 
the CAIR NOX allowances requested meets the requirements of 
paragraph (b) or (c) of this section.
    (2) If the State's compliance supplement pool under paragraph (a) 
of this section has an amount of CAIR NOX allowances not 
less than the total amount of CAIR NOX allowances in all 
such requests (as adjusted under paragraph (d)(1) of this section), the 
Administrator will allocate to each CAIR NOX unit covered by 
such requests the amount of CAIR NOX allowances requested 
(as adjusted under paragraph (d)(1) of this section).
    (3) If the State's compliance supplement pool under paragraph (a) 
of this section has a smaller amount of CAIR NOX allowances 
than the total amount of CAIR NOX allowances in all such 
requests (as adjusted under paragraph (d)(1) of this section), the 
Administrator will allocate CAIR NOX allowances to each CAIR 
NOX unit covered by such requests according to the following 
formula and rounding to the nearest whole allowance as appropriate:

Unit's allocation = Unit's adjusted allocation x (State's compliance 
supplement pool / Total adjusted allocations for all units)

Where:

``Unit's allocation'' is the amount of CAIR NOX 
allowances allocated to the unit from the State's compliance 
supplement pool.
``Unit's adjusted allocation'' is the amount of CAIR NOX 
allowances requested for the unit under paragraph (b) or (c) of this 
section, as adjusted under paragraph (d)(1) of this section.
``State's compliance supplement pool'' is the amount of CAIR 
NOX allowances in the State's compliance supplement pool.
``Total adjusted allocations for all units'' is the sum of the 
amounts of allocations requested for all units under paragraph (b) 
or (c) of this section, as adjusted under paragraph (d)(1) of this 
section.

    (4) By July 31, 2009, the Administrator will determine by order the 
allocations under paragraph (d)(2) or (3) of this section. The 
Administrator will make available to the public each determination of 
CAIR NOX allowances under such paragraph and will provide an 
opportunity for submission of objections to the determination. 
Objections shall be limited to addressing whether the determination is 
in accordance with paragraph (b) or (c) of this section and paragraph 
(d)(2) or (3) of this section, as appropriate. Based on any such 
objections, the Administrator will adjust each determination to the 
extent necessary to ensure that it is in accordance with such 
paragraphs.
    (5) By January 1, 2010, the Administrator will record the 
allocations under paragraph (d)(4) of this section.


Sec.  97.144  Alternative of allocation of CAIR NOX 
allowances and compliance supplement pool by permitting authority.

    (a) Notwithstanding Sec. Sec.  97.141, 97.142, and 97.153 if a 
State submits, and the Administrator approves, a State implementation 
plan revision in accordance with Sec.  51.123(p)(1) of this chapter 
providing for allocation of CAIR NOX allowances by the 
permitting authority, then the permitting authority shall make such 
allocations in accordance with such approved State implementation plan 
revision, the Administrator will not make allocations under Sec. Sec.  
97.141 and 97.142 for the CAIR NOX units in the State, and 
under Sec.  97.153, the Administrator will record the allocations made 
under such approved State implementation plan revision instead of 
allocations made under Sec. Sec.  97.141 and 97.142.
    (b) Notwithstanding Sec.  97.143, if a State submits, and the 
Administrator approves, a State implementation plan revision in 
accordance with Sec.  51.123(p)(2) of this chapter providing for 
allocation of the State's compliance supplement pool by the permitting 
authority, then the permitting authority shall make such allocations in 
accordance with such approved State implementation plan revision, the 
Administrator will not make allocations under Sec.  97.143(d)(4) for 
the CAIR NOX units in the State, and under Sec.  
97.143(d)(5), the Administrator will record the allocations of the 
State's compliance supplement pool made under such approved State 
implementation plan revision instead of allocations made under Sec.  
97.143(d)(4).
    (c)(1) In implementing paragraph (a) of this section and Sec. Sec.  
97.141, 97.142, and 97.153, the Administrator will ensure that the 
total amount of CAIR NOX allowances allocated, under such 
provisions and under a State's State implementation plan revision 
approved in accordance with Sec.  51.123(p)(1) of this chapter, for a 
control period for CAIR NOX sources in the State or for 
other entities specified by the permitting authority will not exceed 
the State's State trading budget for the year of the control period.
    (2) In implementing paragraph (b) of this section and Sec.  97.143, 
the Administrator will ensure that the total amount of CAIR 
NOX allowances allocated, under such provisions and under a 
State's State implementation plan revision approved in accordance with 
Sec.  51.123(p)(2), for CAIR NOX sources in the State will 
not exceed the State(s compliance supplement pool.

[[Page 25411]]

Appendix A to Subpart EE of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Allocations

    1. The following States have State Implementation Plan revisions 
under Sec.  51.123(p)(1) of this chapter approved by the 
Administrator and providing for allocation of CAIR NOX 
allowances by the permitting authority under Sec.  97.144(a):
    [Reserved]
    2. The following States have State Implementation Plan revisions 
under Sec.  51.123(p)(2) of this chapter approved by the 
Administrator and providing for allocation of the Compliance 
Supplement Pool by the permitting authority under Sec.  97.144(b):
    [Reserved]

Subpart FF--CAIR NOX Allowance Tracking System


Sec.  97.150  [Reserved]


Sec.  97.151  Establishment of accounts.

    (a) Compliance accounts. Except as provided in Sec.  97.184(e), 
upon receipt of a complete certificate of representation under Sec.  
97.113, the Administrator will establish a compliance account for the 
CAIR NOX source for which the certificate of representation 
was submitted, unless the source already has a compliance account.
    (b) General accounts--(1) Application for general account. (i) Any 
person may apply to open a general account for the purpose of holding 
and transferring CAIR NOX allowances. An application for a 
general account may designate one and only one CAIR authorized account 
representative and one and only one alternate CAIR authorized account 
representative who may act on behalf of the CAIR authorized account 
representative. The agreement by which the alternate CAIR authorized 
account representative is selected shall include a procedure for 
authorizing the alternate CAIR authorized account representative to act 
in lieu of the CAIR authorized account representative.
    (ii) A complete application for a general account shall be 
submitted to the Administrator and shall include the following elements 
in a format prescribed by the Administrator:
    (A) Name, mailing address, e-mail address (if any), telephone 
number, and facsimile transmission number (if any) of the CAIR 
authorized account representative and any alternate CAIR authorized 
account representative;
    (B) Organization name and type of organization, if applicable;
    (C) A list of all persons subject to a binding agreement for the 
CAIR authorized account representative and any alternate CAIR 
authorized account representative to represent their ownership interest 
with respect to the CAIR NOX allowances held in the general 
account;
    (D) The following certification statement by the CAIR authorized 
account representative and any alternate CAIR authorized account 
representative: ``I certify that I was selected as the CAIR authorized 
account representative or the alternate CAIR authorized account 
representative, as applicable, by an agreement that is binding on all 
persons who have an ownership interest with respect to CAIR 
NOX allowances held in the general account. I certify that I 
have all the necessary authority to carry out my duties and 
responsibilities under the CAIR NOX Annual Trading Program 
on behalf of such persons and that each such person shall be fully 
bound by my representations, actions, inactions, or submissions and by 
any order or decision issued to me by the Administrator or a court 
regarding the general account.''
    (E) The signature of the CAIR authorized account representative and 
any alternate CAIR authorized account representative and the dates 
signed.
    (iii) Unless otherwise required by the permitting authority or the 
Administrator, documents of agreement referred to in the application 
for a general account shall not be submitted to the permitting 
authority or the Administrator. Neither the permitting authority nor 
the Administrator shall be under any obligation to review or evaluate 
the sufficiency of such documents, if submitted.
    (2) Authorization of CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) Upon receipt by 
the Administrator of a complete application for a general account under 
paragraph (b)(1) of this section:
    (A) The Administrator will establish a general account for the 
person or persons for whom the application is submitted.
    (B) The CAIR authorized account representative and any alternate 
CAIR authorized account representative for the general account shall 
represent and, by his or her representations, actions, inactions, or 
submissions, legally bind each person who has an ownership interest 
with respect to CAIR NOX allowances held in the general 
account in all matters pertaining to the CAIR NOX Annual 
Trading Program, notwithstanding any agreement between the CAIR 
authorized account representative or any alternate CAIR authorized 
account representative and such person. Any such person shall be bound 
by any order or decision issued to the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
by the Administrator or a court regarding the general account.
    (C) Any representation, action, inaction, or submission by any 
alternate CAIR authorized account representative shall be deemed to be 
a representation, action, inaction, or submission by the CAIR 
authorized account representative.
    (ii) Each submission concerning the general account shall be 
submitted, signed, and certified by the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
for the persons having an ownership interest with respect to CAIR 
NOX allowances held in the general account. Each such 
submission shall include the following certification statement by the 
CAIR authorized account representative or any alternate CAIR authorized 
account representative: ``I am authorized to make this submission on 
behalf of the persons having an ownership interest with respect to the 
CAIR NOX allowances held in the general account. I certify 
under penalty of law that I have personally examined, and am familiar 
with, the statements and information submitted in this document and all 
its attachments. Based on my inquiry of those individuals with primary 
responsibility for obtaining the information, I certify that the 
statements and information are to the best of my knowledge and belief 
true, accurate, and complete. I am aware that there are significant 
penalties for submitting false statements and information or omitting 
required statements and information, including the possibility of fine 
or imprisonment.''
    (iii) The Administrator will accept or act on a submission 
concerning the general account only if the submission has been made, 
signed, and certified in accordance with paragraph (b)(2)(ii) of this 
section.
    (3) Changing CAIR authorized account representative and alternate 
CAIR authorized account representative; changes in persons with 
ownership interest. (i) The CAIR authorized account representative for 
a general account may be changed at any time upon receipt by the 
Administrator of a superseding complete application for a general 
account under paragraph (b)(1) of this section. Notwithstanding any 
such change, all representations, actions, inactions, and submissions 
by the previous CAIR authorized account representative before the time 
and date when the Administrator receives the superseding application 
for a general account shall be binding on the new CAIR authorized 
account representative

[[Page 25412]]

and the persons with an ownership interest with respect to the CAIR 
NOX allowances in the general account.
    (ii) The alternate CAIR authorized account representative for a 
general account may be changed at any time upon receipt by the 
Administrator of a superseding complete application for a general 
account under paragraph (b)(1) of this section. Notwithstanding any 
such change, all representations, actions, inactions, and submissions 
by the previous alternate CAIR authorized account representative before 
the time and date when the Administrator receives the superseding 
application for a general account shall be binding on the new alternate 
CAIR authorized account representative and the persons with an 
ownership interest with respect to the CAIR NOX allowances 
in the general account.
    (iii)(A) In the event a person having an ownership interest with 
respect to CAIR NOX allowances in the general account is not 
included in the list of such persons in the application for a general 
account, such person shall be deemed to be subject to and bound by the 
application for a general account, the representation, actions, 
inactions, and submissions of the CAIR authorized account 
representative and any alternate CAIR authorized account representative 
of the account, and the decisions and orders of the Administrator or a 
court, as if the person were included in such list.
    (B) Within 30 days following any change in the persons having an 
ownership interest with respect to CAIR NOX allowances in 
the general account, including the addition of a new person, the CAIR 
authorized account representative or any alternate CAIR authorized 
account representative shall submit a revision to the application for a 
general account amending the list of persons having an ownership 
interest with respect to the CAIR NOX allowances in the 
general account to include the change.
    (4) Objections concerning CAIR authorized account representative 
and alternate CAIR authorized account representative. (i) Once a 
complete application for a general account under paragraph (b)(1) of 
this section has been submitted and received, the Administrator will 
rely on the application unless and until a superseding complete 
application for a general account under paragraph (b)(1) of this 
section is received by the Administrator.
    (ii) Except as provided in paragraph (b)(3)(i) or (ii) of this 
section, no objection or other communication submitted to the 
Administrator concerning the authorization, or any representation, 
action, inaction, or submission of the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
for a general account shall affect any representation, action, 
inaction, or submission of the CAIR authorized account representative 
or any alternate CAIR authorized account representative or the finality 
of any decision or order by the Administrator under the CAIR 
NOX Annual Trading Program.
    (iii) The Administrator will not adjudicate any private legal 
dispute concerning the authorization or any representation, action, 
inaction, or submission of the CAIR authorized account representative 
or any alternate CAIR authorized account representative for a general 
account, including private legal disputes concerning the proceeds of 
CAIR NOX allowance transfers.
    (5) Delegation by CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) A CAIR authorized 
account representative may delegate, to one or more natural persons, 
his or her authority to make an electronic submission to the 
Administrator provided for or required under subparts FF and GG of this 
part.
    (ii) An alternate CAIR authorized account representative may 
delegate, to one or more natural persons, his or her authority to make 
an electronic submission to the Administrator provided for or required 
under subparts FF and GG of this part.
    (iii) In order to delegate authority to make an electronic 
submission to the Administrator in accordance with paragraph (b)(5)(i) 
or (ii) of this section, the CAIR authorized account representative or 
alternate CAIR authorized account representative, as appropriate, must 
submit to the Administrator a notice of delegation, in a format 
prescribed by the Administrator, that includes the following elements:
    (A) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR authorized account 
representative or alternate CAIR authorized account representative;
    (B) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (C) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (b)(5)(i) or (ii) of this 
section for which authority is delegated to him or her;
    (D) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``I agree that any electronic submission to the 
Administrator that is by an agent identified in this notice of 
delegation and of a type listed for such agent in this notice of 
delegation and that is made when I am a CAIR authorized account 
representative or alternate CAIR authorized representative, as 
appropriate, and before this notice of delegation is superseded by 
another notice of delegation under 40 CFR 97.151(b)(5)(iv) shall be 
deemed to be an electronic submission by me.''; and
    (E) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``Until this notice of delegation is superseded by 
another notice of delegation under 40 CFR 97.151(b)(5)(iv), I agree to 
maintain an e-mail account and to notify the Administrator immediately 
of any change in my e-mail address unless all delegation of authority 
by me under 40 CFR 97.151(b)(5) is terminated.''.
    (iv) A notice of delegation submitted under paragraph (b)(5)(iii) 
of this section shall be effective, with regard to the CAIR authorized 
account representative or alternate CAIR authorized account 
representative identified in such notice, upon receipt of such notice 
by the Administrator and until receipt by the Administrator of a 
superseding notice of delegation submitted by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (v) Any electronic submission covered by the certification in 
paragraph (b)(5)(iii)(D) of this section and made in accordance with a 
notice of delegation effective under paragraph (b)(5)(iv) of this 
section shall be deemed to be an electronic submission by the CAIR 
designated representative or alternate CAIR designated representative 
submitting such notice of delegation.
    (c) Account identification. The Administrator will assign a unique 
identifying number to each account established under paragraph (a) or 
(b) of this section.


Sec.  97.152  Responsibilities of CAIR authorized account 
representative.

    Following the establishment of a CAIR NOX Allowance 
Tracking System account, all submissions to the

[[Page 25413]]

Administrator pertaining to the account, including, but not limited to, 
submissions concerning the deduction or transfer of CAIR NOX 
allowances in the account, shall be made only by the CAIR authorized 
account representative for the account.


Sec.  97.153  Recordation of CAIR NOX allowance allocations.

    (a) By September 30, 2007, the Administrator will record in the 
CAIR NOX source's compliance account the CAIR NOX 
allowances allocated for the CAIR NOX units at the source in 
accordance with Sec.  97.142(a) and (b) for the control period in 2009.
    (b) By September 30, 2008, the Administrator will record in the 
CAIR NOX source's compliance account the CAIR NOX 
allowances allocated for the CAIR NOX units at the source in 
accordance with Sec.  97.142(a) and (b) for the control period in 2010.
    (c) By September 30, 2009, the Administrator will record in the 
CAIR NOX source's compliance account the CAIR NOX 
allowances allocated for the CAIR NOX units at the source in 
accordance with Sec.  97.142(a) and (b) for the control periods in 
2011, 2012, and 2013.
    (d) By December 1, 2010 and December 1 of each year thereafter, the 
Administrator will record in the CAIR NOX source's 
compliance account the CAIR NOX allowances allocated for the 
CAIR NOX units at the source in accordance with Sec.  
97.142(a) and (b) for the control period in the fourth year after the 
year of the applicable deadline for recordation under this paragraph.
    (e) By December 1, 2009 and December 1 of each year thereafter, the 
Administrator will record in the CAIR NOX source's 
compliance account the CAIR NOX allowances allocated for the 
CAIR NOX units at the source in accordance with Sec.  
97.142(a) and (c) for the control period in the year of the applicable 
deadline for recordation under this paragraph.
    (f) Serial numbers for allocated CAIR NOX allowances. When 
recording the allocation of CAIR NOX allowances for a CAIR 
NOX unit in a compliance account, the Administrator will 
assign each CAIR NOX allowance a unique identification 
number that will include digits identifying the year of the control 
period for which the CAIR NOX allowance is allocated.


Sec.  97.154  Compliance with CAIR NOX emissions limitation.

    (a) Allowance transfer deadline. The CAIR NOX allowances 
are available to be deducted for compliance with a source's CAIR 
NOX emissions limitation for a control period in a given 
calendar year only if the CAIR NOX allowances:
    (1) Were allocated for the control period in the year or a prior 
year; and
    (2) Are held in the compliance account as of the allowance transfer 
deadline for the control period or are transferred into the compliance 
account by a CAIR NOX allowance transfer correctly submitted 
for recordation under Sec. Sec.  97.160 and 97.161 by the allowance 
transfer deadline for the control period.
    (b) Deductions for compliance. Following the recordation, in 
accordance with Sec.  97.161, of CAIR NOX allowance 
transfers submitted for recordation in a source's compliance account by 
the allowance transfer deadline for a control period, the Administrator 
will deduct from the compliance account CAIR NOX allowances 
available under paragraph (a) of this section in order to determine 
whether the source meets the CAIR NOX emissions limitation 
for the control period, as follows:
    (1) Until the amount of CAIR NOX allowances deducted 
equals the number of tons of total nitrogen oxides emissions, 
determined in accordance with subpart HH of this part, from all CAIR 
NOX units at the source for the control period; or
    (2) If there are insufficient CAIR NOX allowances to 
complete the deductions in paragraph (b)(1) of this section, until no 
more CAIR NOX allowances available under paragraph (a) of 
this section remain in the compliance account.
    (c)(1) Identification of CAIR NOX allowances by serial number. The 
CAIR authorized account representative for a source's compliance 
account may request that specific CAIR NOX allowances, 
identified by serial number, in the compliance account be deducted for 
emissions or excess emissions for a control period in accordance with 
paragraph (b) or (d) of this section. Such request shall be submitted 
to the Administrator by the allowance transfer deadline for the control 
period and include, in a format prescribed by the Administrator, the 
identification of the CAIR NOX source and the appropriate 
serial numbers.
    (2) First-in, first-out. The Administrator will deduct CAIR 
NOX allowances under paragraph (b) or (d) of this section 
from the source's compliance account, in the absence of an 
identification or in the case of a partial identification of CAIR 
NOX allowances by serial number under paragraph (c)(1) of 
this section, on a first-in, first-out (FIFO) accounting basis in the 
following order:
    (i) Any CAIR NOX allowances that were allocated to the 
units at the source, in the order of recordation; and then
    (ii) Any CAIR NOX allowances that were allocated to any 
entity and transferred and recorded in the compliance account pursuant 
to subpart GG of this part, in the order of recordation.
    (d) Deductions for excess emissions. (1) After making the 
deductions for compliance under paragraph (b) of this section for a 
control period in a calendar year in which the CAIR NOX 
source has excess emissions, the Administrator will deduct from the 
source's compliance account an amount of CAIR NOX 
allowances, allocated for the control period in the immediately 
following calendar year, equal to 3 times the number of tons of the 
source's excess emissions.
    (2) Any allowance deduction required under paragraph (d)(1) of this 
section shall not affect the liability of the owners and operators of 
the CAIR NOX source or the CAIR NOX units at the 
source for any fine, penalty, or assessment, or their obligation to 
comply with any other remedy, for the same violations, as ordered under 
the Clean Air Act or applicable State law.
    (e) Recordation of deductions. The Administrator will record in the 
appropriate compliance account all deductions from such an account 
under paragraphs (b) and (d) of this section and subpart II.
    (f) Administrator's action on submissions. (1) The Administrator 
may review and conduct independent audits concerning any submission 
under the CAIR NOX Annual Trading Program and make 
appropriate adjustments of the information in the submissions.
    (2) The Administrator may deduct CAIR NOX allowances 
from or transfer CAIR NOX allowances to a source's 
compliance account based on the information in the submissions, as 
adjusted under paragraph (f)(1) of this section, and record such 
deductions and transfers.


Sec.  97.155  Banking.

    (a) CAIR NOX allowances may be banked for future use or 
transfer in a compliance account or a general account in accordance 
with paragraph (b) of this section.
    (b) Any CAIR NOX allowance that is held in a compliance 
account or a general account will remain in such account unless and 
until the CAIR NOX allowance is deducted or transferred 
under Sec.  97.142, Sec.  97.154, Sec.  97.156, or subpart GG or II of 
this part.

[[Page 25414]]

Sec.  97.156  Account error.

    The Administrator may, at his or her sole discretion and on his or 
her own motion, correct any error in any CAIR NOX Allowance 
Tracking System account. Within 10 business days of making such 
correction, the Administrator will notify the CAIR authorized account 
representative for the account.


Sec.  97.157  Closing of general accounts.

    (a) The CAIR authorized account representative of a general account 
may submit to the Administrator a request to close the account, which 
shall include a correctly submitted allowance transfer under Sec. Sec.  
97.160 and 97.161 for any CAIR NOX allowances in the account 
to one or more other CAIR NOX Allowance Tracking System 
accounts.
    (b) If a general account has no allowance transfers in or out of 
the account for a 12-month period or longer and does not contain any 
CAIR NOX allowances, the Administrator may notify the CAIR 
authorized account representative for the account that the account will 
be closed following 20 business days after the notice is sent. The 
account will be closed after the 20-day period unless, before the end 
of the 20-day period, the Administrator receives a correctly submitted 
transfer of CAIR NOX allowances into the account under 
Sec. Sec.  97.160 and 97.161 or a statement submitted by the CAIR 
authorized account representative demonstrating to the satisfaction of 
the Administrator good cause as to why the account should not be 
closed.

Subpart GG--CAIR NOX Allowance Transfers


Sec.  97.160  Submission of CAIR NOX allowance transfers.

    A CAIR authorized account representative seeking recordation of a 
CAIR NOX allowance transfer shall submit the transfer to the 
Administrator. To be considered correctly submitted, the CAIR 
NOX allowance transfer shall include the following elements, 
in a format specified by the Administrator:
    (a) The account numbers for both the transferor and transferee 
accounts;
    (b) The serial number of each CAIR NOX allowance that is 
in the transferor account and is to be transferred; and
    (c) The name and signature of the CAIR authorized account 
representative of the transferor account and the date signed.


Sec.  97.161  EPA recordation.

    (a) Within 5 business days (except as provided in paragraph (b) of 
this section) of receiving a CAIR NOX allowance transfer, 
the Administrator will record a CAIR NOX allowance transfer 
by moving each CAIR NOX allowance from the transferor 
account to the transferee account as specified by the request, provided 
that:
    (1) The transfer is correctly submitted under Sec.  97.160; and
    (2) The transferor account includes each CAIR NOX 
allowance identified by serial number in the transfer.
    (b) A CAIR NOX allowance transfer that is submitted for 
recordation after the allowance transfer deadline for a control period 
and that includes any CAIR NOX allowances allocated for any 
control period before such allowance transfer deadline will not be 
recorded until after the Administrator completes the deductions under 
Sec.  97.154 for the control period immediately before such allowance 
transfer deadline.
    (c) Where a CAIR NOX allowance transfer submitted for 
recordation fails to meet the requirements of paragraph (a) of this 
section, the Administrator will not record such transfer.


Sec.  97.162  Notification.

    (a) Notification of recordation. Within 5 business days of 
recordation of a CAIR NOX allowance transfer under Sec.  
97.161, the Administrator will notify the CAIR authorized account 
representatives of both the transferor and transferee accounts.
    (b) Notification of non-recordation. Within 10 business days of 
receipt of a CAIR NOX allowance transfer that fails to meet 
the requirements of Sec.  97.161(a), the Administrator will notify the 
CAIR authorized account representatives of both accounts subject to the 
transfer of:
    (1) A decision not to record the transfer, and
    (2) The reasons for such non-recordation.
    (c) Nothing in this section shall preclude the submission of a CAIR 
NOX allowance transfer for recordation following 
notification of non-recordation.

Subpart HH--Monitoring and Reporting


Sec.  97.170  General requirements.

    The owners and operators, and to the extent applicable, the CAIR 
designated representative, of a CAIR NOX unit, shall comply 
with the monitoring, recordkeeping, and reporting requirements as 
provided in this subpart and in subpart H of part 75 of this chapter. 
For purposes of complying with such requirements, the definitions in 
Sec.  97.102 and in Sec.  72.2 of this chapter shall apply, and the 
terms ``affected unit,'' ``designated representative,'' and 
``continuous emission monitoring system'' or ``CEMS'') in part 75 of 
this chapter shall be deemed to refer to the terms ``CAIR 
NOX unit,`` ``CAIR designated representative,'' and 
``continuous emission monitoring system'' (or ``CEMS'') respectively, 
as defined in Sec.  97.102. The owner or operator of a unit that is not 
a CAIR NOX unit but that is monitored under Sec.  
75.72(b)(2)(ii) of this chapter shall comply with the same monitoring, 
recordkeeping, and reporting requirements as a CAIR NOX 
unit.
    (a) Requirements for installation, certification, and data 
accounting. The owner or operator of each CAIR NOX unit 
shall:
    (1) Install all monitoring systems required under this subpart for 
monitoring NOX mass emissions and individual unit heat input 
(including all systems required to monitor NOX emission 
rate, NOX concentration, stack gas moisture content, stack 
gas flow rate, CO2 or O2 concentration, and fuel 
flow rate, as applicable, in accordance with (Sec. Sec.  75.71 and 
75.72 of this chapter);
    (2) Successfully complete all certification tests required under 
Sec.  97.171 and meet all other requirements of this subpart and part 
75 of this chapter applicable to the monitoring systems under paragraph 
(a)(1) of this section; and
    (3) Record, report, and quality-assure the data from the monitoring 
systems under paragraph (a)(1) of this section.
    (b) Compliance deadlines. Except as provided in paragraph (e) of 
this section, the owner or operator shall meet the monitoring system 
certification and other requirements of paragraphs (a)(1) and (2) of 
this section on or before the following dates. The owner or operator 
shall record, report, and quality-assure the data from the monitoring 
systems under paragraph (a)(1) of this section on and after the 
following dates.
    (1) For the owner or operator of a CAIR NOX unit that 
commences commercial operation before July 1, 2007, by January 1, 2008.
    (2) For the owner or operator of a CAIR NOX unit that 
commences commercial operation on or after July 1, 2007, by the later 
of the following dates:
    (i) January 1, 2008; or
    (ii) 90 unit operating days or 180 calendar days, whichever occurs 
first, after the date on which the unit commences commercial operation.
    (3) For the owner or operator of a CAIR NOX unit for 
which construction of a new stack or flue or installation of add-on 
NOX emission controls is completed after the applicable 
deadline

[[Page 25415]]

under paragraph (b)(1), (2), (4), or (5) of this section, by 90 unit 
operating days or 180 calendar days, whichever occurs first, after the 
date on which emissions first exit to the atmosphere through the new 
stack or flue or add-on NOX emissions controls.
    (4) Notwithstanding the dates in paragraphs (b)(1) and (2) of this 
section, for the owner or operator of a unit for which a CAIR opt-in 
permit application is submitted and not withdrawn and a CAIR opt-in 
permit is not yet issued or denied under subpart II of this part, by 
the date specified in Sec.  97.184(b).
    (5) Notwithstanding the dates in paragraphs (b)(1) and (2) of this 
section, for the owner or operator of a CAIR NOX opt-in unit 
under subpart II of this part, by the date on which the CAIR 
NOX opt-in unit enters the CAIR NOX Annual 
Trading Program as provided in Sec.  97.184(g).
    (c) Reporting data. The owner or operator of a CAIR NOX 
unit that does not meet the applicable compliance date set forth in 
paragraph (b) of this section for any monitoring system under paragraph 
(a)(1) of this section shall, for each such monitoring system, 
determine, record, and report maximum potential (or, as appropriate, 
minimum potential) values for NOX concentration, 
NOX emission rate, stack gas flow rate, stack gas moisture 
content, fuel flow rate, and any other parameters required to determine 
NOX mass emissions and heat input in accordance with Sec.  
75.31(b)(2) or (c)(3) of this chapter, section 2.4 of appendix D to 
part 75 of this chapter, or section 2.5 of appendix E to part 75 of 
this chapter, as applicable.
    (d) Prohibitions. (1) No owner or operator of a CAIR NOX 
unit shall use any alternative monitoring system, alternative reference 
method, or any other alternative to any requirement of this subpart 
without having obtained prior written approval in accordance with Sec.  
97.175.
    (2) No owner or operator of a CAIR NOX unit shall 
operate the unit so as to discharge, or allow to be discharged, 
NOX emissions to the atmosphere without accounting for all 
such emissions in accordance with the applicable provisions of this 
subpart and part 75 of this chapter.
    (3) No owner or operator of a CAIR NOX unit shall 
disrupt the continuous emission monitoring system, any portion thereof, 
or any other approved emission monitoring method, and thereby avoid 
monitoring and recording NOX mass emissions discharged into 
the atmosphere or heat input, except for periods of recertification or 
periods when calibration, quality assurance testing, or maintenance is 
performed in accordance with the applicable provisions of this subpart 
and part 75 of this chapter.
    (4) No owner or operator of a CAIR NOX unit shall retire 
or permanently discontinue use of the continuous emission monitoring 
system, any component thereof, or any other approved monitoring system 
under this subpart, except under any one of the following 
circumstances:
    (i) During the period that the unit is covered by an exemption 
under Sec.  97.105 that is in effect;
    (ii) The owner or operator is monitoring emissions from the unit 
with another certified monitoring system approved, in accordance with 
the applicable provisions of this subpart and part 75 of this chapter, 
by the Administrator for use at that unit that provides emission data 
for the same pollutant or parameter as the retired or discontinued 
monitoring system; or
    (iii) The CAIR designated representative submits notification of 
the date of certification testing of a replacement monitoring system 
for the retired or discontinued monitoring system in accordance with 
Sec.  97.171(d)(3)(i).
    (e) Long-term cold storage. The owner or operator of a CAIR 
NOX unit is subject to the applicable provisions of part 75 
of this chapter concerning units in long-term cold storage.


Sec.  97.171  Initial certification and recertification procedures.

    (a) The owner or operator of a CAIR NOX unit shall be 
exempt from the initial certification requirements of this section for 
a monitoring system under Sec.  97.170(a)(1) if the following 
conditions are met:
    (1) The monitoring system has been previously certified in 
accordance with part 75 of this chapter; and
    (2) The applicable quality-assurance and quality-control 
requirements of Sec.  75.21 of this chapter and appendix B, appendix D, 
and appendix E to part 75 of this chapter are fully met for the 
certified monitoring system described in paragraph (a)(1) of this 
section.
    (b) The recertification provisions of this section shall apply to a 
monitoring system under Sec.  97.170(a)(1) exempt from initial 
certification requirements under paragraph (a) of this section.
    (c) If the Administrator has previously approved a petition under 
Sec.  75.17(a) or (b) of this chapter for apportioning the 
NOX emission rate measured in a common stack or a petition 
under Sec.  75.66 of this chapter for an alternative to a requirement 
in Sec.  75.12 or Sec.  75.17 of this chapter, the CAIR designated 
representative shall resubmit the petition to the Administrator under 
Sec.  97.175 to determine whether the approval applies under the CAIR 
NOX Annual Trading Program.
    (d) Except as provided in paragraph (a) of this section, the owner 
or operator of a CAIR NOX unit shall comply with the 
following initial certification and recertification procedures for a 
continuous monitoring system (i.e., a continuous emission monitoring 
system and an excepted monitoring system under appendices D and E to 
part 75 of this chapter) under Sec.  97.170(a)(1). The owner or 
operator of a unit that qualifies to use the low mass emissions 
excepted monitoring methodology under Sec.  75.19 of this chapter or 
that qualifies to use an alternative monitoring system under subpart E 
of part 75 of this chapter shall comply with the procedures in 
paragraph (e) or (f) of this section respectively.
    (1) Requirements for initial certification. The owner or operator 
shall ensure that each continuous monitoring system under Sec.  
97.170(a)(1) (including the automated data acquisition and handling 
system) successfully completes all of the initial certification testing 
required under Sec.  75.20 of this chapter by the applicable deadline 
in Sec.  97.170(b). In addition, whenever the owner or operator 
installs a monitoring system to meet the requirements of this subpart 
in a location where no such monitoring system was previously installed, 
initial certification in accordance with Sec.  75.20 of this chapter is 
required.
    (2) Requirements for recertification. Whenever the owner or 
operator makes a replacement, modification, or change in any certified 
continuous emission monitoring system under Sec.  97.170(a)(1) that may 
significantly affect the ability of the system to accurately measure or 
record NOX mass emissions or heat input rate or to meet the 
quality-assurance and quality-control requirements of Sec.  75.21 of 
this chapter or appendix B to part 75 of this chapter, the owner or 
operator shall recertify the monitoring system in accordance with Sec.  
75.20(b) of this chapter. Furthermore, whenever the owner or operator 
makes a replacement, modification, or change to the flue gas handling 
system or the unit's operation that may significantly change the stack 
flow or concentration profile, the owner or operator shall recertify 
each continuous emission monitoring system whose accuracy is 
potentially affected by the change, in accordance with Sec.  75.20(b) 
of this chapter. Examples of changes to a continuous emission 
monitoring system that require recertification include

[[Page 25416]]

replacement of the analyzer, complete replacement of an existing 
continuous emission monitoring system, or change in location or 
orientation of the sampling probe or site. Any fuel flowmeter system, 
and any excepted NOX monitoring system under appendix E to 
part 75 of this chapter, under Sec.  97.170(a)(1) are subject to the 
recertification requirements in Sec.  75.20(g)(6) of this chapter.
    (3) Approval process for initial certification and recertification. 
Paragraphs (d)(3)(i) through (iv) of this section apply to both initial 
certification and recertification of a continuous monitoring system 
under Sec.  97.170(a)(1). For recertifications, replace the words 
``certification'' and ``initial certification'' with the word 
``recertification'', replace the word ``certified'' with the word 
``recertified'', and follow the procedures in Sec. Sec.  75.20(b)(5) 
and (g)(7) of this chapter in lieu of the procedures in paragraph 
(d)(3)(v) of this section.
    (i) Notification of certification. The CAIR designated 
representative shall submit to the appropriate EPA Regional Office and 
the Administrator written notice of the dates of certification testing, 
in accordance with Sec.  97.173.
    (ii) Certification application. The CAIR designated representative 
shall submit to the Administrator a certification application for each 
monitoring system. A complete certification application shall include 
the information specified in Sec.  75.63 of this chapter.
    (iii) Provisional certification date. The provisional certification 
date for a monitoring system shall be determined in accordance with 
Sec.  75.20(a)(3) of this chapter. A provisionally certified monitoring 
system may be used under the CAIR NOX Annual Trading Program 
for a period not to exceed 120 days after receipt by the Administrator 
of the complete certification application for the monitoring system 
under paragraph (d)(3)(ii) of this section. Data measured and recorded 
by the provisionally certified monitoring system, in accordance with 
the requirements of part 75 of this chapter, will be considered valid 
quality-assured data (retroactive to the date and time of provisional 
certification), provided that the Administrator does not invalidate the 
provisional certification by issuing a notice of disapproval within 120 
days of the date of receipt of the complete certification application 
by the Administrator.
    (iv) Certification application approval process. The Administrator 
will issue a written notice of approval or disapproval of the 
certification application to the owner or operator within 120 days of 
receipt of the complete certification application under paragraph 
(d)(3)(ii) of this section. In the event the Administrator does not 
issue such a notice within such 120-day period, each monitoring system 
that meets the applicable performance requirements of part 75 of this 
chapter and is included in the certification application will be deemed 
certified for use under the CAIR NOX Annual Trading Program.
    (A) Approval notice. If the certification application is complete 
and shows that each monitoring system meets the applicable performance 
requirements of part 75 of this chapter, then the Administrator will 
issue a written notice of approval of the certification application 
within 120 days of receipt.
    (B) Incomplete application notice. If the certification application 
is not complete, then the Administrator will issue a written notice of 
incompleteness that sets a reasonable date by which the CAIR designated 
representative must submit the additional information required to 
complete the certification application. If the CAIR designated 
representative does not comply with the notice of incompleteness by the 
specified date, then the Administrator may issue a notice of 
disapproval under paragraph (d)(3)(iv)(C) of this section. The 120-day 
review period shall not begin before receipt of a complete 
certification application.
    (C) Disapproval notice. If the certification application shows that 
any monitoring system does not meet the performance requirements of 
part 75 of this chapter or if the certification application is 
incomplete and the requirement for disapproval under paragraph 
(d)(3)(iv)(B) of this section is met, then the Administrator will issue 
a written notice of disapproval of the certification application. Upon 
issuance of such notice of disapproval, the provisional certification 
is invalidated by the Administrator and the data measured and recorded 
by each uncertified monitoring system shall not be considered valid 
quality-assured data beginning with the date and hour of provisional 
certification (as defined under Sec.  75.20(a)(3) of this chapter). The 
owner or operator shall follow the procedures for loss of certification 
in paragraph (d)(3)(v) of this section for each monitoring system that 
is disapproved for initial certification.
    (D) Audit decertification. The Administrator may issue a notice of 
disapproval of the certification status of a monitor in accordance with 
Sec.  97.172(b).
    (v) Procedures for loss of certification. If the Administrator 
issues a notice of disapproval of a certification application under 
paragraph (d)(3)(iv)(C) of this section or a notice of disapproval of 
certification status under paragraph (d)(3)(iv)(D) of this section, 
then:
    (A) The owner or operator shall substitute the following values, 
for each disapproved monitoring system, for each hour of unit operation 
during the period of invalid data specified under Sec.  
75.20(a)(4)(iii), Sec.  75.20(g)(7), or Sec.  75.21(e) of this chapter 
and continuing until the applicable date and hour specified under Sec.  
75.20(a)(5)(i) or (g)(7) of this chapter:
    (1) For a disapproved NOX emission rate (i.e.,, 
NOX-diluent) system, the maximum potential NOX 
emission rate, as defined in Sec.  72.2 of this chapter.
    (2) For a disapproved NOX pollutant concentration 
monitor and disapproved flow monitor, respectively, the maximum 
potential concentration of NOX and the maximum potential 
flow rate, as defined in sections 2.1.2.1 and 2.1.4.1 of appendix A to 
part 75 of this chapter.
    (3) For a disapproved moisture monitoring system and disapproved 
diluent gas monitoring system, respectively, the minimum potential 
moisture percentage and either the maximum potential CO2 
concentration or the minimum potential O2 concentration (as 
applicable), as defined in sections 2.1.5, 2.1.3.1, and 2.1.3.2 of 
appendix A to part 75 of this chapter.
    (4) For a disapproved fuel flowmeter system, the maximum potential 
fuel flow rate, as defined in section 2.4.2.1 of appendix D to part 75 
of this chapter.
    (5) For a disapproved excepted NOX monitoring system 
under appendix E to part 75 of this chapter, the fuel-specific maximum 
potential NOX emission rate, as defined in Sec.  72.2 of 
this chapter.
    (B) The CAIR designated representative shall submit a notification 
of certification retest dates and a new certification application in 
accordance with paragraphs (d)(3)(i) and (ii) of this section.
    (C) The owner or operator shall repeat all certification tests or 
other requirements that were failed by the monitoring system, as 
indicated in the Administrator's notice of disapproval, no later than 
30 unit operating days after the date of issuance of the notice of 
disapproval.
    (e) Initial certification and recertification procedures for units 
using the low mass emission excepted methodology under Sec.  75.19 of 
this chapter. The owner or operator of a unit qualified to use the low 
mass emissions

[[Page 25417]]

(LME) excepted methodology under Sec.  75.19 of this chapter shall meet 
the applicable certification and recertification requirements in 
Sec. Sec.  75.19(a)(2) and 75.20(h) of this chapter. If the owner or 
operator of such a unit elects to certify a fuel flowmeter system for 
heat input determination, the owner or operator shall also meet the 
certification and recertification requirements in Sec.  75.20(g) of 
this chapter.
    (f) Certification/recertification procedures for alternative 
monitoring systems. The CAIR designated representative of each unit for 
which the owner or operator intends to use an alternative monitoring 
system approved by the Administrator under subpart E of part 75 of this 
chapter shall comply with the applicable notification and application 
procedures of Sec.  75.20(f) of this chapter.


Sec.  97.172  Out of control periods.

    (a) Whenever any monitoring system fails to meet the quality-
assurance and quality-control requirements or data validation 
requirements of part 75 of this chapter, data shall be substituted 
using the applicable missing data procedures in subpart D or subpart H 
of, or appendix D or appendix E to, part 75 of this chapter.
    (b) Audit decertification. Whenever both an audit of a monitoring 
system and a review of the initial certification or recertification 
application reveal that any monitoring system should not have been 
certified or recertified because it did not meet a particular 
performance specification or other requirement under Sec.  97.171 or 
the applicable provisions of part 75 of this chapter, both at the time 
of the initial certification or recertification application submission 
and at the time of the audit, the Administrator will issue a notice of 
disapproval of the certification status of such monitoring system. For 
the purposes of this paragraph, an audit shall be either a field audit 
or an audit of any information submitted to the permitting authority or 
the Administrator. By issuing the notice of disapproval, the 
Administrator revokes prospectively the certification status of the 
monitoring system. The data measured and recorded by the monitoring 
system shall not be considered valid quality-assured data from the date 
of issuance of the notification of the revoked certification status 
until the date and time that the owner or operator completes 
subsequently approved initial certification or recertification tests 
for the monitoring system. The owner or operator shall follow the 
applicable initial certification or recertification procedures in Sec.  
97.171 for each disapproved monitoring system.


Sec.  97.173  Notifications.

    The CAIR designated representative for a CAIR NOX unit 
shall submit written notice to the Administrator in accordance with 
Sec.  75.61 of this chapter.


Sec.  97.174  Recordkeeping and reporting.

    (a) General provisions. The CAIR designated representative shall 
comply with all recordkeeping and reporting requirements in this 
section, the applicable recordkeeping and reporting requirements under 
Sec.  75.73 of this chapter, and the requirements of Sec.  
97.110(e)(1).
    (b) Monitoring plans. The owner or operator of a CAIR 
NOX unit shall comply with requirements of Sec.  75.73(c) 
and (e) of this chapter and, for a unit for which a CAIR opt-in permit 
application is submitted and not withdrawn and a CAIR opt-in permit is 
not yet issued or denied under subpart II of this part, Sec. Sec.  
97.183 and 97.184(a).
    (c) Certification applications. The CAIR designated representative 
shall submit an application to the Administrator within 45 days after 
completing all initial certification or recertification tests required 
under Sec.  97.171, including the information required under Sec.  
75.63 of this chapter.
    (d) Quarterly reports. The CAIR designated representative shall 
submit quarterly reports, as follows:
    (1) The CAIR designated representative shall report the 
NOX mass emissions data and heat input data for the CAIR 
NOX unit, in an electronic quarterly report in a format 
prescribed by the Administrator, for each calendar quarter beginning 
with:
    (i) For a unit that commences commercial operation before July 1, 
2007, the calendar quarter covering January 1, 2008 through March 31, 
2008;
    (ii) For a unit that commences commercial operation on or after 
July 1, 2007, the calendar quarter corresponding to the earlier of the 
date of provisional certification or the applicable deadline for 
initial certification under Sec.  97.170(b), unless that quarter is the 
third or fourth quarter of 2007, in which case reporting shall commence 
in the quarter covering January 1, 2008 through March 31, 2008;
    (iii) Notwithstanding paragraphs (d)(1)(i) and (ii) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart II of this part, the calendar quarter 
corresponding to the date specified in Sec.  97.184(b); and
    (iv) Notwithstanding paragraphs (d)(1)(i) and (ii) of this section, 
for a CAIR NOX opt-in unit under subpart II of this part, 
the calendar quarter corresponding to the date on which the CAIR 
NOX opt-in unit enters the CAIR NOX Annual 
Trading Program as provided in Sec.  97.184(g).
    (2) The CAIR designated representative shall submit each quarterly 
report to the Administrator within 30 days following the end of the 
calendar quarter covered by the report. Quarterly reports shall be 
submitted in the manner specified in Sec.  75.73(f) of this chapter.
    (3) For CAIR NOX units that are also subject to an Acid 
Rain emissions limitation or the CAIR NOX Ozone Season 
Trading Program, CAIR SO2 Trading Program, or Hg Budget 
Trading Program, quarterly reports shall include the applicable data 
and information required by subparts F through I of part 75 of this 
chapter as applicable, in addition to the NOX mass emission 
data, heat input data, and other information required by this subpart.
    (e) Compliance certification. The CAIR designated representative 
shall submit to the Administrator a compliance certification (in a 
format prescribed by the Administrator) in support of each quarterly 
report based on reasonable inquiry of those persons with primary 
responsibility for ensuring that all of the unit's emissions are 
correctly and fully monitored. The certification shall state that:
    (1) The monitoring data submitted were recorded in accordance with 
the applicable requirements of this subpart and part 75 of this 
chapter, including the quality assurance procedures and specifications; 
and
    (2) For a unit with add-on NOX emission controls and for 
all hours where NOX data are substituted in accordance with 
Sec.  75.34(a)(1) of this chapter, the add-on emission controls were 
operating within the range of parameters listed in the quality 
assurance/quality control program under appendix B to part 75 of this 
chapter and the substitute data values do not systematically 
underestimate NOX emissions.


Sec.  97.175  Petitions.

    The CAIR designated representative of a CAIR NOX unit 
may submit a petition under Sec.  75.66 of this chapter to the 
Administrator requesting approval to apply an alternative to any 
requirement of this subpart. Application of an alternative to any 
requirement of this subpart is in accordance with this

[[Page 25418]]

subpart only to the extent that the petition is approved in writing by 
the Administrator, in consultation with the permitting authority.

Subpart II--CAIR NOX Opt-In Units


Sec.  97.180  Applicability.

    A CAIR NOX opt-in unit must be a unit that:
    (a) Is located in a State that submits, and for which the 
Administrator approves, a State implementation plan revision in 
accordance with Sec.  51.123(p)(3)(i), (ii), or (iii) of this chapter 
establishing procedures concerning CAIR opt-in units;
    (b) Is not a CAIR NOX unit under Sec.  97.104 and is not 
covered by a retired unit exemption under Sec.  97.105 that is in 
effect;
    (c) Is not covered by a retired unit exemption under Sec.  72.8 of 
this chapter that is in effect;
    (d) Has or is required or qualified to have a title V operating 
permit or other federally enforceable permit; and
    (e) Vents all of its emissions to a stack and can meet the 
monitoring, recordkeeping, and reporting requirements of subpart HH of 
this part.


Sec.  97.181  General.

    (a) Except as otherwise provided in Sec. Sec.  97.101 through 
97.104, Sec. Sec.  97.106 through 97.108, and subparts BB and CC and 
subparts FF through HH of this part, a CAIR NOX opt-in unit 
shall be treated as a CAIR NOX unit for purposes of applying 
such sections and subparts of this part.
    (b) Solely for purposes of applying, as provided in this subpart, 
the requirements of subpart HH of this part to a unit for which a CAIR 
opt-in permit application is submitted and not withdrawn and a CAIR 
opt-in permit is not yet issued or denied under this subpart, such unit 
shall be treated as a CAIR NOX unit before issuance of a 
CAIR opt-in permit for such unit.


Sec.  97.182  CAIR designated representative.

    Any CAIR NOX opt-in unit, and any unit for which a CAIR 
opt-in permit application is submitted and not withdrawn and a CAIR 
opt-in permit is not yet issued or denied under this subpart, located 
at the same source as one or more CAIR NOX units shall have 
the same CAIR designated representative and alternate CAIR designated 
representative as such CAIR NOX units.


Sec.  97.183  Applying for CAIR opt-in permit.

    (a) Applying for initial CAIR opt-in permit. The CAIR designated 
representative of a unit meeting the requirements for a CAIR 
NOX opt-in unit in Sec.  97.180 may apply for an initial 
CAIR opt-in permit at any time, except as provided under Sec.  
97.186(f) and (g), and, in order to apply, must submit the following:
    (1) A complete CAIR permit application under Sec.  97.122;
    (2) A certification, in a format specified by the permitting 
authority, that the unit:
    (i) Is not a CAIR NOX unit under Sec.  97.104 and is not 
covered by a retired unit exemption under Sec.  97.105 that is in 
effect;
    (ii) Is not covered by a retired unit exemption under Sec.  72.8 of 
this chapter that is in effect;
    (iii) Vents all of its emissions to a stack; and
    (iv) Has documented heat input for more than 876 hours during the 6 
months immediately preceding submission of the CAIR permit application 
under Sec.  97.122;
    (3) A monitoring plan in accordance with subpart HH of this part;
    (4) A complete certificate of representation under Sec.  97.113 
consistent with Sec.  97.182, if no CAIR designated representative has 
been previously designated for the source that includes the unit; and
    (5) A statement, in a format specified by the permitting authority, 
whether the CAIR designated representative requests that the unit be 
allocated CAIR NOX allowances under Sec.  97.188(b) or Sec.  
97.188(c) (subject to the conditions in Sec. Sec.  97.184(h) and 
97.186(g)), to the extent such allocation is provided in a State 
implementation plan revision submitted in accordance with Sec.  
51.123(p)(3)(i), (ii), or (iii) of this chapter and approved by the 
Administrator. If allocation under Sec.  97.188(c) is requested, this 
statement shall include a statement that the owners and operators of 
the unit intend to repower the unit before January 1, 2015 and that 
they will provide, upon request, documentation demonstrating such 
intent.
    (b) Duty to reapply. (1) The CAIR designated representative of a 
CAIR NOX opt-in unit shall submit a complete CAIR permit 
application under Sec.  97.122 to renew the CAIR opt-in unit permit in 
accordance with the permitting authority's regulations for title V 
operating permits, or the permitting authority's regulations for other 
federally enforceable permits if applicable, addressing permit renewal.
    (2) Unless the permitting authority issues a notification of 
acceptance of withdrawal of the CAIR NOX opt-in unit from 
the CAIR NOX Annual Trading Program in accordance with Sec.  
97.186 or the unit becomes a CAIR NOX unit under Sec.  
97.104, the CAIR NOX opt-in unit shall remain subject to the 
requirements for a CAIR NOX opt-in unit, even if the CAIR 
designated representative for the CAIR NOX opt-in unit fails 
to submit a CAIR permit application that is required for renewal of the 
CAIR opt-in permit under paragraph (b)(1) of this section.


Sec.  97.184  Opt-in process.

    The permitting authority will issue or deny a CAIR opt-in permit 
for a unit for which an initial application for a CAIR opt-in permit 
under Sec.  97.183 is submitted in accordance with the following, to 
the extent provided in a State implementation plan revision submitted 
in accordance with Sec.  51.123(p)(3)(i), (ii), or (iii) of this 
chapter and approved by the Administrator:
    (a) Interim review of monitoring plan. The permitting authority and 
the Administrator will determine, on an interim basis, the sufficiency 
of the monitoring plan accompanying the initial application for a CAIR 
opt-in permit under Sec.  97.183. A monitoring plan is sufficient, for 
purposes of interim review, if the plan appears to contain information 
demonstrating that the NOX emissions rate and heat input of 
the unit and all other applicable parameters are monitored and reported 
in accordance with subpart HH of this part. A determination of 
sufficiency shall not be construed as acceptance or approval of the 
monitoring plan.
    (b) Monitoring and reporting. (1)(i) If the permitting authority 
and the Administrator determine that the monitoring plan is sufficient 
under paragraph (a) of this section, the owner or operator shall 
monitor and report the NOX emissions rate and the heat input 
of the unit and all other applicable parameters, in accordance with 
subpart HH of this part, starting on the date of certification of the 
appropriate monitoring systems under subpart HH of this part and 
continuing until a CAIR opt-in permit is denied under Sec.  97.184(f) 
or, if a CAIR opt-in permit is issued, the date and time when the unit 
is withdrawn from the CAIR NOX Annual Trading Program in 
accordance with Sec.  97.186.
    (ii) The monitoring and reporting under paragraph (b)(1)(i) of this 
section shall include the entire control period immediately before the 
date on which the unit enters the CAIR NOX Annual Trading 
Program under Sec.  97.184(g), during which period monitoring system 
availability must not be less than 90 percent under subpart HH of this 
part and the unit must be in full compliance with any applicable State 
or Federal

[[Page 25419]]

emissions or emissions-related requirements.
    (2) To the extent the NOX emissions rate and the heat 
input of the unit are monitored and reported in accordance with subpart 
HH of this part for one or more control periods, in addition to the 
control period under paragraph (b)(1)(ii) of this section, during which 
control periods monitoring system availability is not less than 90 
percent under subpart HH of this part and the unit is in full 
compliance with any applicable State or Federal emissions or emissions-
related requirements and which control periods begin not more than 3 
years before the unit enters the CAIR NOX Annual Trading 
Program under Sec.  97.184(g), such information shall be used as 
provided in paragraphs (c) and (d) of this section.
    (c) Baseline heat input. The unit's baseline heat rate shall equal:
    (1) If the unit's NOX emissions rate and heat input are 
monitored and reported for only one control period, in accordance with 
paragraph (b)(1) of this section, the unit's total heat input (in 
mmBtu) for the control period; or
    (2) If the unit's NOX emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, the average of the 
amounts of the unit's total heat input (in mmBtu) for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section.
    (d) Baseline NOX emission rate. The unit's baseline NOX 
emission rate shall equal:
    (1) If the unit's NOX emissions rate and heat input are 
monitored and reported for only one control period, in accordance with 
paragraph (b)(1) of this section, the unit's NOX emissions 
rate (in lb/mmBtu) for the control period;
    (2) If the unit's NOX emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, and the unit does not 
have add-on NOX emission controls during any such control 
periods, the average of the amounts of the unit's NOX 
emissions rate (in lb/mmBtu) for the control periods under paragraphs 
(b)(1)(ii) and (2) of this section; or
    (3) If the unit's NOX emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, and the unit has add-on 
NOX emission controls during any such control periods, the 
average of the amounts of the unit's NOX emissions rate (in 
lb/mmBtu) for such control periods during which the unit has add-on 
NOX emission controls.
    (e) Issuance of CAIR opt-in permit. After calculating the baseline 
heat input and the baseline NOX emissions rate for the unit 
under paragraphs (c) and (d) of this section and if the permitting 
authority determines that the CAIR designated representative shows that 
the unit meets the requirements for a CAIR NOX opt-in unit 
in Sec.  97.180 and meets the elements certified in Sec.  97.183(a)(2), 
the permitting authority will issue a CAIR opt-in permit. The 
permitting authority will provide a copy of the CAIR opt-in permit to 
the Administrator, who will then establish a compliance account for the 
source that includes the CAIR NOX opt-in unit unless the 
source already has a compliance account.
    (f) Issuance of denial of CAIR opt-in permit. Notwithstanding 
paragraphs (a) through (e) of this section, if at any time before 
issuance of a CAIR opt-in permit for the unit, the permitting authority 
determines that the CAIR designated representative fails to show that 
the unit meets the requirements for a CAIR NOX opt-in unit 
in Sec.  97.180 or meets the elements certified in Sec.  97.183(a)(2), 
the permitting authority will issue a denial of a CAIR opt-in permit 
for the unit.
    (g) Date of entry into CAIR NOX Annual Trading Program. 
A unit for which an initial CAIR opt-in permit is issued by the 
permitting authority shall become a CAIR NOX opt-in unit, 
and a CAIR NOX unit, as of the later of January 1, 2009 or 
January 1 of the first control period during which such CAIR opt-in 
permit is issued.
    (h) Repowered CAIR NOX opt-in unit. (1) If CAIR 
designated representative requests, and the permitting authority issues 
a CAIR opt-in permit providing for, allocation to a CAIR NOX 
opt-in unit of CAIR NOX allowances under Sec.  97.188(c) and 
such unit is repowered after its date of entry into the CAIR 
NOX Annual Trading Program under paragraph (g) of this 
section, the repowered unit shall be treated as a CAIR NOX 
opt-in unit replacing the original CAIR NOX opt-in unit, as 
of the date of start-up of the repowered unit's combustion chamber.
    (2) Notwithstanding paragraphs (c) and (d) of this section, as of 
the date of start-up under paragraph (h)(1) of this section, the 
repowered unit shall be deemed to have the same date of commencement of 
operation, date of commencement of commercial operation, baseline heat 
input, and baseline NOX emission rate as the original CAIR 
NOX opt-in unit, and the original CAIR NOX opt-in 
unit shall no longer be treated as a CAIR NOX opt-in unit or 
a CAIR NOX unit.


Sec.  97.185  CAIR opt-in permit contents.

    (a) Each CAIR opt-in permit will contain:
    (1) All elements required for a complete CAIR permit application 
under Sec.  97.122;
    (2) The certification in Sec.  97.183(a)(2);
    (3) The unit's baseline heat input under Sec.  97.184(c);
    (4) The unit's baseline NOX emission rate under Sec.  
97.184(d);
    (5) A statement whether the unit is to be allocated CAIR 
NOX allowances under Sec.  97.188(b) or Sec.  97.188(c) 
(subject to the conditions in Sec. Sec.  97.184(h) and 97.186(g));
    (6) A statement that the unit may withdraw from the CAIR 
NOX Annual Trading Program only in accordance with Sec.  
97.186; and
    (7) A statement that the unit is subject to, and the owners and 
operators of the unit must comply with, the requirements of Sec.  
97.187.
    (b) Each CAIR opt-in permit is deemed to incorporate automatically 
the definitions of terms under Sec.  97.102 and, upon recordation by 
the Administrator under subpart FF or GG of this part or this subpart, 
every allocation, transfer, or deduction of CAIR NOX 
allowances to or from the compliance account of the source that 
includes a CAIR NOX opt-in unit covered by the CAIR opt-in 
permit.
    (c) The CAIR opt-in permit shall be included, in a format specified 
by the permitting authority, in the CAIR permit for the source where 
the CAIR NOX opt-in unit is located and in a title V 
operating permit or other federally enforceable permit for the source.


Sec.  97.186  Withdrawal from CAIR NOX Annual Trading 
Program.

    Except as provided under paragraph (g) of this section, a CAIR 
NOX opt-in unit may withdraw from the CAIR NOX 
Annual Trading Program, but only if the permitting authority issues a 
notification to the CAIR designated representative of the CAIR 
NOX opt-in unit of the acceptance of the withdrawal of the 
CAIR NOX opt-in unit in accordance with paragraph (d) of 
this section.
    (a) Requesting withdrawal. In order to withdraw a CAIR 
NOX opt-in unit from the CAIR NOX Annual Trading 
Program, the CAIR designated representative of the CAIR NOX 
opt-in unit shall submit to the permitting authority a request to 
withdraw effective as of midnight of December 31 of a specified 
calendar year, which date must be at least 4 years after December 31 of 
the year of entry into the CAIR NOX Annual Trading

[[Page 25420]]

Program under Sec.  97.184(g). The request must be submitted no later 
than 90 days before the requested effective date of withdrawal.
    (b) Conditions for withdrawal. Before a CAIR NOX opt-in 
unit covered by a request under paragraph (a) of this section may 
withdraw from the CAIR NOX Annual Trading Program and the 
CAIR opt-in permit may be terminated under paragraph (e) of this 
section, the following conditions must be met:
    (1) For the control period ending on the date on which the 
withdrawal is to be effective, the source that includes the CAIR 
NOX opt-in unit must meet the requirement to hold CAIR 
NOX allowances under Sec.  97.106(c) and cannot have any 
excess emissions.
    (2) After the requirement for withdrawal under paragraph (b)(1) of 
this section is met, the Administrator will deduct from the compliance 
account of the source that includes the CAIR NOX opt-in unit 
CAIR NOX allowances equal in amount to and allocated for the 
same or a prior control period as any CAIR NOX allowances 
allocated to the CAIR NOX opt-in unit under Sec.  97.188 for 
any control period for which the withdrawal is to be effective. If 
there are no remaining CAIR NOX units at the source, the 
Administrator will close the compliance account, and the owners and 
operators of the CAIR NOX opt-in unit may submit a CAIR 
NOX allowance transfer for any remaining CAIR NOX 
allowances to another CAIR NOX Allowance Tracking System in 
accordance with subpart GG of this part.
    (c) Notification. (1) After the requirements for withdrawal under 
paragraphs (a) and (b) of this section are met (including deduction of 
the full amount of CAIR NOX allowances required), the 
permitting authority will issue a notification to the CAIR designated 
representative of the CAIR NOX opt-in unit of the acceptance 
of the withdrawal of the CAIR NOX opt-in unit as of midnight 
on December 31 of the calendar year for which the withdrawal was 
requested.
    (2) If the requirements for withdrawal under paragraphs (a) and (b) 
of this section are not met, the permitting authority will issue a 
notification to the CAIR designated representative of the CAIR 
NOX opt-in unit that the CAIR NOX opt-in unit's 
request to withdraw is denied. Such CAIR NOX opt-in unit 
shall continue to be a CAIR NOX opt-in unit.
    (d) Permit amendment. After the permitting authority issues a 
notification under paragraph (c)(1) of this section that the 
requirements for withdrawal have been met, the permitting authority 
will revise the CAIR permit covering the CAIR NOX opt-in 
unit to terminate the CAIR opt-in permit for such unit as of the 
effective date specified under paragraph (c)(1) of this section. The 
unit shall continue to be a CAIR NOX opt-in unit until the 
effective date of the termination and shall comply with all 
requirements under the CAIR NOX Annual Trading Program 
concerning any control periods for which the unit is a CAIR 
NOX opt-in unit, even if such requirements arise or must be 
complied with after the withdrawal takes effect.
    (e) Reapplication upon failure to meet conditions of withdrawal. If 
the permitting authority denies the CAIR NOX opt-in unit's 
request to withdraw, the CAIR designated representative may submit 
another request to withdraw in accordance with paragraphs (a) and (b) 
of this section.
    (f) Ability to reapply to the CAIR NOX Annual Trading 
Program. Once a CAIR NOX opt-in unit withdraws from the CAIR 
NOX Annual Trading Program and its CAIR opt-in permit is 
terminated under this section, the CAIR designated representative may 
not submit another application for a CAIR opt-in permit under Sec.  
97.183 for such CAIR NOX opt-in unit before the date that is 
4 years after the date on which the withdrawal became effective. Such 
new application for a CAIR opt-in permit will be treated as an initial 
application for a CAIR opt-in permit under Sec.  97.184.
    (g) Inability to withdraw. Notwithstanding paragraphs (a) through 
(f) of this section, a CAIR NOX opt-in unit shall not be 
eligible to withdraw from the CAIR NOX Annual Trading 
Program if the CAIR designated representative of the CAIR 
NOX opt-in unit requests, and the permitting authority 
issues a CAIR NOX opt-in permit providing for, allocation to 
the CAIR NOX opt-in unit of CAIR NOX allowances 
under Sec.  97.188(c).


Sec.  97.187  Change in regulatory status.

    (a) Notification. If a CAIR NOX opt-in unit becomes a 
CAIR NOX unit under Sec.  97.104, then the CAIR designated 
representative shall notify in writing the permitting authority and the 
Administrator of such change in the CAIR NOX opt-in unit's 
regulatory status, within 30 days of such change.
    (b) Permitting authority's and Administrator's actions. (1) If a 
CAIR NOX opt-in unit becomes a CAIR NOX unit 
under Sec.  97.104, the permitting authority will revise the CAIR 
NOX opt-in unit's CAIR opt-in permit to meet the 
requirements of a CAIR permit under Sec.  97.123, and remove the CAIR 
opt-in permit provisions, as of the date on which the CAIR 
NOX opt-in unit becomes a CAIR NOX unit under 
Sec.  97.104.
    (2)(i) The Administrator will deduct from the compliance account of 
the source that includes the CAIR NOX opt-in unit that 
becomes a CAIR NOX unit under Sec.  97.104, CAIR 
NOX allowances equal in amount to and allocated for the same 
or a prior control period as:
    (A) Any CAIR NOX allowances allocated to the CAIR 
NOX opt-in unit under Sec.  97.188 for any control period 
after the date on which the CAIR NOX opt-in unit becomes a 
CAIR NOX unit under Sec.  97.104; and
    (B) If the date on which the CAIR NOX opt-in unit 
becomes a CAIR NOX unit under Sec.  97.104 is not December 
31, the CAIR NOX allowances allocated to the CAIR 
NOX opt-in unit under Sec.  97.188 for the control period 
that includes the date on which the CAIR NOX opt-in unit 
becomes a CAIR NOX unit under Sec.  97.104, multiplied by 
the ratio of the number of days, in the control period, starting with 
the date on which the CAIR NOX opt-in unit becomes a CAIR 
NOX unit under Sec.  97.104 divided by the total number of 
days in the control period and rounded to the nearest whole allowance 
as appropriate.
    (ii) The CAIR designated representative shall ensure that the 
compliance account of the source that includes the CAIR NOX 
unit that becomes a CAIR NOX unit under Sec.  97.104 
contains the CAIR NOX allowances necessary for completion of 
the deduction under paragraph (b)(2)(i) of this section.
    (3)(i) For every control period after the date on which the CAIR 
NOX opt-in unit becomes a CAIR NOX unit under 
Sec.  97.104, the CAIR NOX opt-in unit will be allocated 
CAIR NOX allowances under Sec.  97.142.
    (ii) If the date on which the CAIR NOX opt-in unit 
becomes a CAIR NOX unit under Sec.  97.104 is not December 
31, the following amount of CAIR NOX allowances will be 
allocated to the CAIR NOX opt-in unit (as a CAIR 
NOX unit) under ( 97.142 for the control period that 
includes the date on which the CAIR NOX opt-in unit becomes 
a CAIR NOX unit under Sec.  97.104:
    (A) The amount of CAIR NOX allowances otherwise 
allocated to the CAIR NOX opt-in unit (as a CAIR 
NOX unit) under Sec.  97.142 for the control period 
multiplied by;
    (B) The ratio of the number of days, in the control period, 
starting with the date on which the CAIR NOX opt-in unit 
becomes a CAIR NOX unit under Sec.  97.104, divided by the 
total number of days in the control period; and

[[Page 25421]]

    (C) Rounded to the nearest whole allowance as appropriate.


Sec.  97.188  CAIR NOX allowance allocations to CAIR 
NOX opt-in units.

    (a) Timing requirements. (1) When the CAIR opt-in permit is issued 
under Sec.  97.184(e), the permitting authority will allocate CAIR 
NOX allowances to the CAIR NOX opt-in unit, and 
submit to the Administrator the allocation for the control period in 
which a CAIR NOX opt-in unit enters the CAIR NOX 
Annual Trading Program under Sec.  97.184(g), in accordance with 
paragraph (b) or (c) of this section.
    (2) By no later than October 31 of the control period after the 
control period in which a CAIR NOX opt-in unit enters the 
CAIR NOX Annual Trading Program under Sec.  97.184(g) and 
October 31 of each year thereafter, the permitting authority will 
allocate CAIR NOX allowances to the CAIR NOX opt-
in unit, and submit to the Administrator the allocation for the control 
period that includes such submission deadline and in which the unit is 
a CAIR NOX opt-in unit, in accordance with paragraph (b) or 
(c) of this section.
    (b) Calculation of allocation. For each control period for which a 
CAIR NOX opt-in unit is to be allocated CAIR NOX 
allowances, the permitting authority will allocate in accordance with 
the following procedures, if provided in a State implementation plan 
revision submitted in accordance with Sec.  51.123(p)(3)(i), (ii), or 
(iii) of this chapter and approved by the Administrator:
    (1) The heat input (in mmBtu) used for calculating the CAIR 
NOX allowance allocation will be the lesser of:
    (i) The CAIR NOX opt-in unit's baseline heat input 
determined under Sec.  97.184(c); or
    (ii) The CAIR NOX opt-in unit's heat input, as 
determined in accordance with subpart HH of this part, for the 
immediately prior control period, except when the allocation is being 
calculated for the control period in which the CAIR NOX opt-
in unit enters the CAIR NOX Annual Trading Program under 
Sec.  97.184(g).
    (2) The NOX emission rate (in lb/mmBtu) used for 
calculating CAIR NOX allowance allocations will be the 
lesser of:
    (i) The CAIR NOX opt-in unit's baseline NOX 
emissions rate (in lb/mmBtu) determined under Sec.  97.184(d) and 
multiplied by 70 percent; or
    (ii) The most stringent State or Federal NOX emissions 
limitation applicable to the CAIR NOX opt-in unit at any 
time during the control period for which CAIR NOX allowances 
are to be allocated.
    (3) The permitting authority will allocate CAIR NOX 
allowances to the CAIR NOX opt-in unit in an amount equaling 
the heat input under paragraph (b)(1) of this section, multiplied by 
the NOX emission rate under paragraph (b)(2) of this 
section, divided by 2,000 lb/ton, and rounded to the nearest whole 
allowance as appropriate.
    (c) Notwithstanding paragraph (b) of this section and if the CAIR 
designated representative requests, and the permitting authority issues 
a CAIR opt-in permit (based on a demonstration of the intent to repower 
stated under Sec.  97.183(a)(5)) providing for, allocation to a CAIR 
NOX opt-in unit of CAIR NOX allowances under this 
paragraph (subject to the conditions in Sec. Sec.  97.184(h) and 
97.186(g)), the permitting authority will allocate to the CAIR 
NOX opt-in unit as follows, if provided in a State 
implementation plan revision submitted in accordance with ( 
51.123(p)(3)(i), (ii), or (iii) of this chapter and approved by the 
Administrator:
    (1) For each control period in 2009 through 2014 for which the CAIR 
NOX opt-in unit is to be allocated CAIR NOX 
allowances,
    (i) The heat input (in mmBtu) used for calculating CAIR 
NOX allowance allocations will be determined as described in 
paragraph (b)(1) of this section.
    (ii) The NOX emission rate (in lb/mmBtu) used for 
calculating CAIR NOX allowance allocations will be the 
lesser of:
    (A) The CAIR NOX opt-in unit's baseline NOX 
emissions rate (in lb/mmBtu) determined under Sec.  97.184(d); or
    (B) The most stringent State or Federal NOX emissions 
limitation applicable to the CAIR NOX opt-in unit at any 
time during the control period in which the CAIR NOX opt-in 
unit enters the CAIR NOX Annual Trading Program under Sec.  
97.184(g).
    (iii) The permitting authority will allocate CAIR NOX 
allowances to the CAIR NOX opt-in unit in an amount equaling 
the heat input under paragraph (c)(1)(i) of this section, multiplied by 
the NOX emission rate under paragraph (c)(1)(ii) of this 
section, divided by 2,000 lb/ton, and rounded to the nearest whole 
allowance as appropriate.
    (2) For each control period in 2015 and thereafter for which the 
CAIR NOX opt-in unit is to be allocated CAIR NOX 
allowances,
    (i) The heat input (in mmBtu) used for calculating the CAIR 
NOX allowance allocations will be determined as described in 
paragraph (b)(1) of this section.
    (ii) The NOX emission rate (in lb/mmBtu) used for 
calculating the CAIR NOX allowance allocation will be the 
lesser of:
    (A) 0.15 lb/mmBtu;
    (B) The CAIR NOX opt-in unit's baseline NOX 
emissions rate (in lb/mmBtu) determined under Sec.  97.184(d); or
    (C) The most stringent State or Federal NOX emissions 
limitation applicable to the CAIR NOX opt-in unit at any 
time during the control period for which CAIR NOX allowances 
are to be allocated.
    (iii) The permitting authority will allocate CAIR NOX 
allowances to the CAIR NOX opt-in unit in an amount equaling 
the heat input under paragraph (c)(2)(i) of this section, multiplied by 
the NOX emission rate under paragraph (c)(2)(ii) of this 
section, divided by 2,000 lb/ton, and rounded to the nearest whole 
allowance as appropriate.
    (d) Recordation. If provided in a State implementation plan 
revision submitted in accordance with Sec.  51.123(p)(3)(i), (ii), or 
(iii) of this chapter and approved by the Administrator:
    (1) The Administrator will record, in the compliance account of the 
source that includes the CAIR NOX opt-in unit, the CAIR 
NOX allowances allocated by the permitting authority to the 
CAIR NOX opt-in unit under paragraph (a)(1) of this section.
    (2) By December 1 of the control period in which a CAIR 
NOX opt-in unit enters the CAIR NOX Annual 
Trading Program under Sec.  97.184(g) and December 1 of each year 
thereafter, the Administrator will record, in the compliance account of 
the source that includes the CAIR NOX opt-in unit, the CAIR 
NOX allowances allocated by the permitting authority to the 
CAIR NOX opt-in unit under paragraph (a)(2) of this section.

Appendix A to Subpart II of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR NOX Opt-In 
Units

    1. The following States have State Implementation Plan revisions 
under Sec.  51.123(p)(3) of this chapter approved by the 
Administrator and establishing procedures providing for CAIR 
NOX opt-in units under subpart II of this part and 
allocation of CAIR NOX allowances to such units under 
Sec.  97.188(b):
    [Reserved]
    2. The following States have State Implementation Plan revisions 
under Sec.  51.123(p)(3) of this chapter approved by the 
Administrator and establishing procedures providing for CAIR 
NOX opt-in units under subpart II of this part and 
allocation of CAIR

[[Page 25422]]

NOX allowances to such units under Sec.  97.188(c):
    [Reserved]

0
4. Part 97 is amended by adding subparts AAA through CCC, adding and 
reserving subparts DDD and EEE and adding subparts FFF through III to 
read as follows:
Subpart AAA--CAIR SO2 Trading Program General Provisions
Sec.
97.201 Purpose.
97.202 Definitions.
97.203 Measurements, abbreviations, and acronyms.
97.204 Applicability.
97.205 Retired unit exemption.
97.206 Standard requirements.
97.207 Computation of time.
97.208 Appeal procedures.
Subpart BBB--CAIR Designated Representative for CAIR SO2 Sources
97.210 Authorization and responsibilities of CAIR designated 
representative.
97.211 Alternate CAIR designated representative.
97.212 Changing CAIR designated representative and alternate CAIR 
designated representative; changes in owners and operators.
97.213 Certificate of representation.
97.214 Objections concerning CAIR designated representative.
97.215 Delegation by CAIR designated representative and alternate 
CAIR designated representative.
Subpart CCC--Permits
97.220 General CAIR SO2 Trading Program permit 
requirements.
97.221 Submission of CAIR permit applications.
97.222 Information requirements for CAIR permit applications.
97.223 CAIR permit contents and term.
97.224 CAIR permit revisions.
Subpart DDD--[Reserved]
Subpart EEE--[Reserved]
Subpart FFF--CAIR SO2 Allowance Tracking System
97.250 [Reserved]
97.251 Establishment of accounts.
97.252 Responsibilities of CAIR authorized account representative.
97.253 Recordation of CAIR SO2 allowances.
97.254 Compliance with CAIR SO2 emissions limitation.
97.255 Banking.
97.256 Account error.
97.257 Closing of general accounts.
Subpart GGG--CAIR SO2 Allowance Transfers
97.260 Submission of CAIR SO2 allowance transfers.
97.261 EPA recordation.
97.262 Notification.
Subpart HHH--Monitoring and Reporting
97.270 General requirements.
97.271 Initial certification and recertification procedures.
97.272 Out of control periods.
97.273 Notifications.
97.274 Recordkeeping and reporting.
97.275 Petitions.
Subpart III--CAIR SO2 Opt-in Units
97.280 Applicability.
97.281 General.
97.282 CAIR designated representative.
97.283 Applying for CAIR opt-in permit.
97.284 Opt-in process.
97.285 CAIR opt-in permit contents.
97.286 Withdrawal from CAIR SO2 Trading Program.
97.287 Change in regulatory status.
97.288 CAIR SO2 allowance allocations to CAIR 
SO2 opt-in units.

Appendix A to Subpart III of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR SO2 Opt-In 
Units

Subpart AAA--CAIR SO2 Trading Program General Provisions


Sec.  97.201  Purpose.

    This subpart and subparts BBB through III set forth the general 
provisions and the designated representative, permitting, allowance, 
monitoring, and opt-in provisions for the Federal Clean Air Interstate 
Rule (CAIR) SO2 Trading Program, under section 110 of the 
Clean Air Act and Sec.  52.36 of this chapter, as a means of mitigating 
interstate transport of fine particulates and sulfur dioxide.


Sec.  97.202  Definitions.

    The terms used in this subpart and subparts BBB through III shall 
have the meanings set forth in this section as follows:
    Account number means the identification number given by the 
Administrator to each CAIR SO2 Allowance Tracking System 
account.
    Acid Rain emissions limitation means a limitation on emissions of 
sulfur dioxide or nitrogen oxides under the Acid Rain Program.
    Acid Rain Program means a multi-state sulfur dioxide and nitrogen 
oxides air pollution control and emission reduction program established 
by the Administrator under title IV of the CAA and parts 72 through 78 
of this chapter.
    Administrator means the Administrator of the United States 
Environmental Protection Agency or the Administrator's duly authorized 
representative.
    Allocate or allocation means, with regard to CAIR SO2 
allowances issued under the Acid Rain Program, the determination by the 
Administrator of the amount of such CAIR SO2 allowances to 
be initially credited to a CAIR SO2 unit or other entity 
and, with regard to CAIR SO2 allowances issued under Sec.  
97.288 or provisions of a State implementation plan that are approved 
under Sec.  51.124(o)(1) or (2) or (r) of this chapter, the 
determination by a permitting authority of the amount of such CAIR 
SO2 allowances to be initially credited to a CAIR 
SO2 unit or other entity.
    Allowance transfer deadline means, for a control period, midnight 
of March 1 (if it is a business day), or midnight of the first business 
day thereafter (if March 1 is not a business day), immediately 
following the control period and is the deadline by which a CAIR 
SO2 allowance transfer must be submitted for recordation in 
a CAIR SO2 source's compliance account in order to be used 
to meet the source's CAIR SO2 emissions limitation for such 
control period in accordance with Sec.  97.254.
    Alternate CAIR designated representative means, for a CAIR 
SO2 source and each CAIR SO2 unit at the source, 
the natural person who is authorized by the owners and operators of the 
source and all such units at the source in accordance with subparts BBB 
and III of this part, to act on behalf of the CAIR designated 
representative in matters pertaining to the CAIR SO2 Trading 
Program. If the CAIR SO2 source is also a CAIR 
NOX source, then this natural person shall be the same 
person as the alternate CAIR designated representative under the CAIR 
NOX Annual Trading Program. If the CAIR SO2 
source is also a CAIR NOX Ozone Season source, then this 
natural person shall be the same person as the alternate CAIR 
designated representative under the CAIR NOX Ozone Season 
Trading Program. If the CAIR SO2 source is also subject to 
the Acid Rain Program, then this natural person shall be the same 
person as the alternate designated representative under the Acid Rain 
Program. If the CAIR SO2 source is also subject to the Hg 
Budget Trading Program, then this natural person shall be the same 
person as the alternate Hg designated representative under the Hg 
Budget Trading Program.
    Automated data acquisition and handling system or DAHS means that 
component of the continuous emission monitoring system, or other 
emissions monitoring system approved for use under subpart HHH of this 
part, designed to interpret and convert individual output signals from 
pollutant concentration monitors, flow monitors, diluent gas monitors, 
and other component parts of the monitoring system to produce a 
continuous record of the measured parameters in the measurement units 
required by subpart HHH of this part.
    Boiler means an enclosed fossil- or other-fuel-fired combustion 
device used

[[Page 25423]]

to produce heat and to transfer heat to recirculating water, steam, or 
other medium.
    Bottoming-cycle cogeneration unit means a cogeneration unit in 
which the energy input to the unit is first used to produce useful 
thermal energy and at least some of the reject heat from the useful 
thermal energy application or process is then used for electricity 
production.
    CAIR authorized account representative means, with regard to a 
general account, a responsible natural person who is authorized, in 
accordance with subparts BBB, FFF, and III of this part, to transfer 
and otherwise dispose of CAIR SO2 allowances held in the 
general account and, with regard to a compliance account, the CAIR 
designated representative of the source.
    CAIR designated representative means, for a CAIR SO2 
source and each CAIR SO2 unit at the source, the natural 
person who is authorized by the owners and operators of the source and 
all such units at the source, in accordance with subparts BBB and III 
of this part, to represent and legally bind each owner and operator in 
matters pertaining to the CAIR SO2 Trading Program. If the 
CAIR SO2 source is also a CAIR NOX source, then 
this natural person shall be the same person as the CAIR designated 
representative under the CAIR NOX Annual Trading Program. If 
the CAIR SO2 source is also a CAIR NOX Ozone 
Season source, then this natural person shall be the same person as the 
CAIR designated representative under the CAIR NOX Ozone 
Season Trading Program. If the CAIR SO2 source is also 
subject to the Acid Rain Program, then this natural person shall be the 
same person as the designated representative under the Acid Rain 
Program. If the CAIR SO2 source is also subject to the Hg 
Budget Trading Program, then this natural person shall be the same 
person as the Hg designated representative under the Hg Budget Trading 
Program.
    CAIR NOX Annual Trading Program means a multi-state nitrogen oxides 
air pollution control and emission reduction program established by the 
Administrator in accordance with subparts AA through II of this part 
and (Sec.  51.123(p) and 52.35 of this chapter or approved and 
administered by the Administrator in accordance with subparts AA 
through II of part 96 of this chapter and Sec.  51.123(o)(1) or (2) of 
this chapter, as a means of mitigating interstate transport of fine 
particulates and nitrogen oxides.
    CAIR NOX Ozone Season source means a source that is subject to the 
CAIR NOX Ozone Season Trading Program.
    CAIR NOX Ozone Season Trading Program means a multi-state nitrogen 
oxides air pollution control and emission reduction program established 
by the Administrator in accordance with subparts AAAA through IIII of 
this part and (Sec.  51.123(ee) and 52.35 of this chapter or approved 
and administered by the Administrator in accordance with under subparts 
AAAA through IIII and Sec.  51.123(aa)(1) or (2) (and (bb)(1)), 
(bb)(2), or (dd) of this chapter, as a means of mitigating interstate 
transport of ozone and nitrogen oxides.
    CAIR NOX source means a source that is subject to the 
CAIR NOX Annual Trading Program.
    CAIR permit means the legally binding and federally enforceable 
written document, or portion of such document, issued by the permitting 
authority under subpart CCC of this part, including any permit 
revisions, specifying the CAIR SO2 Trading Program 
requirements applicable to a CAIR SO2 source, to each CAIR 
SO2 unit at the source, and to the owners and operators and 
the CAIR designated representative of the source and each such unit.
    CAIR SO2 allowance means a limited authorization issued by the 
Administrator under the Acid Rain Program, by a permitting authority 
under Sec.  97.288, or by a permitting authority under provisions of a 
State implementation plan that are approved under Sec.  51.124(o)(1) or 
(2) or (r) of this chapter, to emit sulfur dioxide during the control 
period of the specified calendar year for which the authorization is 
allocated or of any calendar year thereafter under the CAIR 
SO2 Trading Program as follows:
    (1) For one CAIR SO2 allowance allocated for a control 
period in a year before 2010, one ton of sulfur dioxide, except as 
provided in Sec.  97.254(b);
    (2) For one CAIR SO2 allowance allocated for a control 
period in 2010 through 2014, 0.50 ton of sulfur dioxide, except as 
provided in Sec.  97.254(b); and
    (3) For one CAIR SO2 allowance allocated for a control 
period in 2015 or later, 0.35 ton of sulfur dioxide, except as provided 
in Sec.  97.254(b).
    (4) An authorization to emit sulfur dioxide that is not issued 
under the Acid Rain Program, Sec.  97.288, or provisions of a State 
implementation plan that are approved under Sec.  51.124(o)(1) or (2) 
or (r) of this chapter shall not be a CAIR SO2 allowance.
    CAIR SO2 allowance deduction or deduct CAIR SO2 allowances means 
the permanent withdrawal of CAIR SO2 allowances by the 
Administrator from a compliance account, e.g., in order to account for 
a specified number of tons of total sulfur dioxide emissions from all 
CAIR SO2 units at a CAIR SO2 source for a control 
period, determined in accordance with subpart HHH of this part, or to 
account for excess emissions.
    CAIR SO2 Allowance Tracking System means the system by which the 
Administrator records allocations, deductions, and transfers of CAIR 
SO2 allowances under the CAIR SO2 Trading 
Program. This is the same system as the Allowance Tracking System under 
Sec.  72.2 of this chapter by which the Administrator records 
allocations, deduction, and transfers of Acid Rain SO2 
allowances under the Acid Rain Program.
    CAIR SO2 Allowance Tracking System account means an account in the 
CAIR SO2 Allowance Tracking System established by the Administrator for 
purposes of recording the allocation, holding, transferring, or 
deducting of CAIR SO2 allowances. Such allowances will be 
allocated, held, deducted, or transferred only as whole allowances.
    CAIR SO2 allowances held or hold CAIR SO2 allowances means the CAIR 
SO2 allowances recorded by the Administrator, or submitted 
to the Administrator for recordation, in accordance with subparts FFF, 
GGG, and III of this part or part 73 of this chapter, in a CAIR 
SO2 Allowance Tracking System account.
    CAIR SO2 emissions limitation means, for a CAIR SO2 
source, the tonnage equivalent, in SO2 emissions in a 
control period, of the CAIR SO2 allowances available for 
deduction for the source under Sec.  97.254(a) and (b) for the control 
period.
    CAIR SO2 source means a source that includes one or more CAIR 
SO2 units.
    CAIR SO2 Trading Program means a multi-state sulfur dioxide air 
pollution control and emission reduction program established by the 
Administrator in accordance with subparts AAA through III of this part 
and Sec. Sec.  51.124(r) and 52.36 of this chapter or approved and 
administered by the Administrator in accordance with subparts AAA 
through III of part 96 of this chapter and Sec.  51.124(o) (1) or (2) 
of this chapter, as a means of mitigating interstate transport of fine 
particulates and sulfur dioxide.
    CAIR SO2 unit means a unit that is subject to the CAIR 
SO2 Trading Program under Sec.  97.204 and, except for 
purposes of Sec.  97.205, a CAIR SO2 opt-in unit under 
subpart III of this part.
    Certifying official means:
    (1) For a corporation, a president, secretary, treasurer, or vice-
president or the corporation in charge of a principal business function 
or any other person who performs similar policy or

[[Page 25424]]

decision-making functions for the corporation;
    (2) For a partnership or sole proprietorship, a general partner or 
the proprietor respectively; or
    (3) For a local government entity or State, Federal, or other 
public agency, a principal executive officer or ranking elected 
official.
    Clean Air Act or CAA means the Clean Air Act, 42 U.S.C. 7401, et 
seq.
    Coal means any solid fuel classified as anthracite, bituminous, 
subbituminous, or lignite.
    Coal-derived fuel means any fuel (whether in a solid, liquid, or 
gaseous state) produced by the mechanical, thermal, or chemical 
processing of coal.
    Coal-fired means combusting any amount of coal or coal-derived 
fuel, alone, or in combination with any amount of any other fuel.
    Cogeneration unit means a stationary, fossil-fuel-fired boiler or 
stationary, fossil-fuel-fired combustion turbine:
    (1) Having equipment used to produce electricity and useful thermal 
energy for industrial, commercial, heating, or cooling purposes through 
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the 
unit first produces electricity and during any calendar year after the 
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit,
    (A) Useful thermal energy not less than 5 percent of total energy 
output; and
    (B) Useful power that, when added to one-half of useful thermal 
energy produced, is not less then 42.5 percent of total energy input, 
if useful thermal energy produced is 15 percent or more of total energy 
output, or not less than 45 percent of total energy input, if useful 
thermal energy produced is less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit, useful power not less 
than 45 percent of total energy input.
    Combustion turbine means:
    (1) An enclosed device comprising a compressor, a combustor, and a 
turbine and in which the flue gas resulting from the combustion of fuel 
in the combustor passes through the turbine, rotating the turbine; and
    (2) If the enclosed device under paragraph (1) of this definition 
is combined cycle, any associated duct burner, heat recovery steam 
generator, and steam turbine.
    Commence commercial operation means, with regard to a unit:
    (1) To have begun to produce steam, gas, or other heated medium 
used to generate electricity for sale or use, including test 
generation, except as provided in Sec.  97.205 and Sec.  97.284(h).
    (i) For a unit that is a CAIR SO2 unit under Sec.  
97.204 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that subsequently undergoes a physical change (other than replacement 
of the unit by a unit at the same source), such date shall remain the 
date of commencement of commercial operation of the unit, which shall 
continue to be treated as the same unit.
    (ii) For a unit that is a CAIR SO2 unit under Sec.  
97.204 on the later of November 15, 1990 or the date the unit commences 
commercial operation as defined in paragraph (1) of this definition and 
that is subsequently replaced by a unit at the same source (e.g., 
repowered), such date shall remain the replaced unit's date of 
commencement of commercial operation, and the replacement unit shall be 
treated as a separate unit with a separate date for commencement of 
commercial operation as defined in paragraph (1) or (2) of this 
definition as appropriate.
    (2) Notwithstanding paragraph (1) of this definition and except as 
provided in Sec.  97.205, for a unit that is not a CAIR SO2 
unit under Sec.  97.204 on the later of November 15, 1990 or the date 
the unit commences commercial operation as defined in paragraph (1) of 
this definition, the unit's date for commencement of commercial 
operation shall be the date on which the unit becomes a CAIR 
SO2 unit under Sec.  97.204.
    (i) For a unit with a date for commencement of commercial operation 
as defined in paragraph (2) of this definition and that subsequently 
undergoes a physical change (other than replacement of the unit by a 
unit at the same source), such date shall remain the date of 
commencement of commercial operation of the unit, which shall continue 
to be treated as the same unit.
    (ii) For a unit with a date for commencement of commercial 
operation as defined in paragraph (2) of this definition and that is 
subsequently replaced by a unit at the same source (e.g., repowered), 
such date shall remain the replaced unit's date of commencement of 
commercial operation, and the replacement unit shall be treated as a 
separate unit with a separate date for commencement of commercial 
operation as defined in paragraph (1) or (2) of this definition as 
appropriate.
    Commence operation means:
    (1) To have begun any mechanical, chemical, or electronic process, 
including, with regard to a unit, start-up of a unit's combustion 
chamber, except as provided in Sec.  97.284(h).
    (2) For a unit that undergoes a physical change (other than 
replacement of the unit by a unit at the same source) after the date 
the unit commences operation as defined in paragraph (1) of this 
definition, such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (3) For a unit that is replaced by a unit at the same source (e.g., 
repowered) after the date the unit commences operation as defined in 
paragraph (1) of this definition, such date shall remain the replaced 
unit's date of commencement of operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of operation as defined in paragraph (1), (2), or (3) of 
this definition as appropriate, except as provided in Sec.  97.284(h).
    Common stack means a single flue through which emissions from 2 or 
more units are exhausted.
    Compliance account means a CAIR SO2 Allowance Tracking 
System account, established by the Administrator for a CAIR 
SO2 source subject to an Acid Rain emissions limitations 
under Sec.  73.31(a) or (b) of this chapter or for any other CAIR 
SO2 source under subpart FFF or III of this part, in which 
any CAIR SO2 allowance allocations for the CAIR 
SO2 units at the source are initially recorded and in which 
are held any CAIR SO2 allowances available for use for a 
control period in order to meet the source's CAIR SO2 
emissions limitation in accordance with Sec.  97.254.
    Continuous emission monitoring system or CEMS means the equipment 
required under subpart HHH of this part to sample, analyze, measure, 
and provide, by means of readings recorded at least once every 15 
minutes (using an automated data acquisition and handling system 
(DAHS)), a permanent record of sulfur dioxide emissions, stack gas 
volumetric flow rate, stack gas moisture content, and oxygen or carbon 
dioxide concentration (as applicable), in a manner consistent with part 
75 of this chapter. The following systems are the principal types of 
continuous emission monitoring systems required under subpart HHH of 
this part:
    (1) A flow monitoring system, consisting of a stack flow rate 
monitor and an automated data acquisition and handling system and 
providing a permanent, continuous record of stack gas volumetric flow 
rate, in standard cubic feet per hour (scfh);

[[Page 25425]]

    (2) A sulfur dioxide monitoring system, consisting of a 
SO2 pollutant concentration monitor and an automated data 
acquisition and handling system and providing a permanent, continuous 
record of SO2 emissions, in parts per million (ppm);
    (3) A moisture monitoring system, as defined in Sec.  75.11(b)(2) 
of this chapter and providing a permanent, continuous record of the 
stack gas moisture content, in percent H2O;
    (4) A carbon dioxide monitoring system, consisting of a 
CO2 pollutant concentration monitor (or an oxygen monitor 
plus suitable mathematical equations from which the CO2 
concentration is derived) and an automated data acquisition and 
handling system and providing a permanent, continuous record of 
CO2 emissions, in percent CO2; and
    (5) An oxygen monitoring system, consisting of an O2 
concentration monitor and an automated data acquisition and handling 
system and providing a permanent, continuous record of O2 in 
percent O2.
    Control period means the period beginning January 1 of a calendar 
year, except as provided in Sec.  97.206(c)(2), and ending on December 
31 of the same year, inclusive.
    Emissions means air pollutants exhausted from a unit or source into 
the atmosphere, as measured, recorded, and reported to the 
Administrator by the CAIR designated representative and as determined 
by the Administrator in accordance with subpart HHH of this part.
    Excess emissions means any ton, or portion of a ton, of sulfur 
dioxide emitted by the CAIR SO2 units at a CAIR 
SO2 source during a control period that exceeds the CAIR 
SO2 emissions limitation for the source, provided that any 
portion of a ton of excess emissions shall be treated as one ton of 
excess emissions.
    Fossil fuel means natural gas, petroleum, coal, or any form of 
solid, liquid, or gaseous fuel derived from such material.
    Fossil-fuel-fired means, with regard to a unit, combusting any 
amount of fossil fuel in any calendar year.
    General account means a CAIR SO2 Allowance Tracking 
System account, established under subpart FFF of this part, that is not 
a compliance account.
    Generator means a device that produces electricity.
    Heat input means, with regard to a specified period of time, the 
product (in mmBtu/time) of the gross calorific value of the fuel (in 
Btu/lb) divided by 1,000,000 Btu/mmBtu and multiplied by the fuel feed 
rate into a combustion device (in lb of fuel/time), as measured, 
recorded, and reported to the Administrator by the CAIR designated 
representative and determined by the Administrator in accordance with 
subpart HHH of this part and excluding the heat derived from preheated 
combustion air, recirculated flue gases, or exhaust from other sources.
    Heat input rate means the amount of heat input (in mmBtu) divided 
by unit operating time (in hr) or, with regard to a specific fuel, the 
amount of heat input attributed to the fuel (in mmBtu) divided by the 
unit operating time (in hr) during which the unit combusts the fuel.
    Hg Budget Trading Program means a multi-state Hg air pollution 
control and emission reduction program approved and administered by the 
Administrator in accordance subpart HHHH of part 60 of this chapter and 
Sec.  60.24(h)(6), or established by the Administrator under section 
111 of the Clean Air Act, as a means of reducing national Hg emissions.
    Life-of-the-unit, firm power contractual arrangement means a unit 
participation power sales agreement under which a utility or industrial 
customer reserves, or is entitled to receive, a specified amount or 
percentage of nameplate capacity and associated energy generated by any 
specified unit and pays its proportional amount of such unit's total 
costs, pursuant to a contract:
    (1) For the life of the unit;
    (2) For a cumulative term of no less than 30 years, including 
contracts that permit an election for early termination; or
    (3) For a period no less than 25 years or 70 percent of the 
economic useful life of the unit determined as of the time the unit is 
built, with option rights to purchase or release some portion of the 
nameplate capacity and associated energy generated by the unit at the 
end of the period.
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
    Monitoring system means any monitoring system that meets the 
requirements of subpart HHH of this part, including a continuous 
emissions monitoring system, an alternative monitoring system, or an 
excepted monitoring system under part 75 of this chapter.
    Most stringent State or Federal SO2 emissions limitation means, 
with regard to a unit, the lowest SO2 emissions limitation 
(in terms of lb/mmBtu) that is applicable to the unit under State or 
Federal law, regardless of the averaging period to which the emissions 
limitation applies.
    Nameplate capacity means, starting from the initial installation of 
a generator, the maximum electrical generating output (in MWe) that the 
generator is capable of producing on a steady state basis and during 
continuous operation (when not restricted by seasonal or other 
deratings) as of such installation as specified by the manufacturer of 
the generator or, starting from the completion of any subsequent 
physical change in the generator resulting in an increase in the 
maximum electrical generating output (in MWe) that the generator is 
capable of producing on a steady state basis and during continuous 
operation (when not restricted by seasonal or other deratings), such 
increased maximum amount as of such completion as specified by the 
person conducting the physical change.
    Operator means any person who operates, controls, or supervises a 
CAIR SO2 unit or a CAIR SO2 source and shall 
include, but not be limited to, any holding company, utility system, or 
plant manager of such a unit or source.
    Owner means any of the following persons:
    (1) With regard to a CAIR SO2 source or a CAIR 
SO2 unit at a source, respectively:
    (i) Any holder of any portion of the legal or equitable title in a 
CAIR SO2 unit at the source or the CAIR SO2 unit;
    (ii) Any holder of a leasehold interest in a CAIR SO2 
unit at the source or the CAIR SO2 unit; or
    (iii) Any purchaser of power from a CAIR SO2 unit at the 
source or the CAIR SO2 unit under a life-of-the-unit, firm 
power contractual arrangement; provided that, 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) on the 
revenues or income from such CAIR SO2 unit; or
    (2) With regard to any general account, any person who has an 
ownership interest with respect to the CAIR SO2 allowances 
held in the general account and who is subject to the binding agreement 
for the CAIR authorized account representative to represent the 
person's ownership interest with respect to CAIR SO2 
allowances.
    Permitting authority means the State air pollution control agency, 
local agency, other State agency, or other

[[Page 25426]]

agency authorized by the Administrator to issue or revise permits to 
meet the requirements of the CAIR SO2 Trading Program in 
accordance with subpart CCC of this part or, if no such agency has been 
so authorized, the Administrator.
    Potential electrical output capacity means 33 percent of a unit's 
maximum design heat input, divided by 3,413 Btu/kWh, divided by 1,000 
kWh/MWh, and multiplied by 8,760 hr/yr.
    Receive or receipt of means, when referring to the permitting 
authority or the Administrator, to come into possession of a document, 
information, or correspondence (whether sent in hard copy or by 
authorized electronic transmission), as indicated in an official log, 
or by a notation made on the document, information, or correspondence, 
by the permitting authority or the Administrator in the regular course 
of business.
    Recordation, record, or recorded means, with regard to CAIR 
SO2 allowances, the movement of CAIR SO2 
allowances by the Administrator into or between CAIR SO2 
Allowance Tracking System accounts, for purposes of allocation, 
transfer, or deduction.
    Reference method means any direct test method of sampling and 
analyzing for an air pollutant as specified in Sec.  75.22 of this 
chapter.
    Replacement, replace, or replaced means, with regard to a unit, the 
demolishing of a unit, or the permanent shutdown and permanent 
disabling of a unit, and the construction of another unit (the 
replacement unit) to be used instead of the demolished or shutdown unit 
(the replaced unit).
    Repowered means, with regard to a unit, replacement of a coal-fired 
boiler with one of the following coal-fired technologies at the same 
source as the coal-fired boiler:
    (1) Atmospheric or pressurized fluidized bed combustion;
    (2) Integrated gasification combined cycle;
    (3) Magnetohydrodynamics;
    (4) Direct and indirect coal-fired turbines;
    (5) Integrated gasification fuel cells; or
    (6) As determined by the Administrator in consultation with the 
Secretary of Energy, a derivative of one or more of the technologies 
under paragraphs (1) through (5) of this definition and any other coal-
fired technology capable of controlling multiple combustion emissions 
simultaneously with improved boiler or generation efficiency and with 
significantly greater waste reduction relative to the performance of 
technology in widespread commercial use as of January 1, 2005.
    Sequential use of energy means:
    (1) For a topping-cycle cogeneration unit, the use of reject heat 
from electricity production in a useful thermal energy application or 
process; or
    (2) For a bottoming-cycle cogeneration unit, the use of reject heat 
from useful thermal energy application or process in electricity 
production.
    Serial number means, for a CAIR SO2 allowance, the 
unique identification number assigned to each CAIR SO2 
allowance by the Administrator.
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
    Source means all buildings, structures, or installations located in 
one or more contiguous or adjacent properties under common control of 
the same person or persons. For purposes of section 502(c) of the Clean 
Air Act, a ``source,'' including a ``source'' with multiple units, 
shall be considered a single ``facility.''
    State means one of the States or the District of Columbia that is 
subject to the CAIR SO2 Trading Program pursuant to Sec.  
52.35 of this chapter.
    Submit or serve means to send or transmit a document, information, 
or correspondence to the person specified in accordance with the 
applicable regulation:
    (1) In person;
    (2) By United States Postal Service; or
    (3) By other means of dispatch or transmission and delivery. 
Compliance with any ``submission'' or ``service'' deadline shall be 
determined by the date of dispatch, transmission, or mailing and not 
the date of receipt.
    Title V operating permit means a permit issued under title V of the 
Clean Air Act and part 70 or part 71 of this chapter.
    Title V operating permit regulations means the regulations that the 
Administrator has approved or issued as meeting the requirements of 
title V of the Clean Air Act and part 70 or 71 of this chapter.
    Ton means 2,000 pounds. For the purpose of determining compliance 
with the CAIR SO2 emissions limitation, total tons of sulfur 
dioxide emissions for a control period shall be calculated as the sum 
of all recorded hourly emissions (or the mass equivalent of the 
recorded hourly emission rates) in accordance with subpart HHH of this 
part, but with any remaining fraction of a ton equal to or greater than 
0.50 tons deemed to equal one ton and any remaining fraction of a ton 
less than 0.50 tons deemed to equal zero tons.
    Topping-cycle cogeneration unit means a cogeneration unit in which 
the energy input to the unit is first used to produce useful power, 
including electricity, and at least some of the reject heat from the 
electricity production is then used to provide useful thermal energy.
    Total energy input means, with regard to a cogeneration unit, total 
energy of all forms supplied to the cogeneration unit, excluding energy 
produced by the cogeneration unit itself.
    Total energy output means, with regard to a cogeneration unit, the 
sum of useful power and useful thermal energy produced by the 
cogeneration unit.
    Unit means a stationary, fossil-fuel-fired boiler or combustion 
turbine or other stationary, fossil-fuel-fired combustion device. Unit 
operating day means a calendar day in which a unit combusts any fuel.
    Unit operating hour or hour of unit operation means an hour in 
which a unit combusts any fuel.
    Useful power means, with regard to a cogeneration unit, electricity 
or mechanical energy made available for use, excluding any such energy 
used in the power production process (which process includes, but is 
not limited to, any on-site processing or treatment of fuel combusted 
at the unit and any on-site emission controls).
    Useful thermal energy means, with regard to a cogeneration unit, 
thermal energy that is:
    (1) Made available to an industrial or commercial process (not a 
power production process), excluding any heat contained in condensate 
return or makeup water;
    (2) Used in a heating application (e.g., space heating or domestic 
hot water heating); or
    (3) Used in a space cooling application (i.e., thermal energy used 
by an absorption chiller).
    Utility power distribution system means the portion of an 
electricity grid owned or operated by a utility and dedicated to 
delivering electricity to customers.


Sec.  97.203  Measurements, abbreviations, and acronyms.

    Measurements, abbreviations, and acronyms used in this subpart and 
subparts BBB through III are defined as follows:

Btu--British thermal unit.
CO2--carbon dioxide.
H2O--water.
Hg--mercury.

[[Page 25427]]

hr--hour.
kW--kilowatt electrical.
kWh--kilowatt hour.
lb--pound.
mmBtu--million Btu.
MWe--megawatt electrical.
MWh--megawatt hour.
NOX--nitrogen oxides.
O2--oxygen.
ppm--parts per million.
scfh--standard cubic feet per hour.
SO2--sulfur dioxide.
yr--year.


Sec.  97.204  Applicability.

    (a) Except as provided in paragraph (b) of this section:
    (1) The following units in a State shall be CAIR SO2 
units, and any source that includes one or more such units shall be a 
CAIR SO2 source, subject to the requirements of this subpart 
and subparts BBB through HHH of this part: any stationary, fossil-fuel-
fired boiler or stationary, fossil-fuel-fired combustion turbine 
serving at any time, since the later of November 15, 1990 or the start-
up of the unit's combustion chamber, a generator with nameplate 
capacity of more than 25 MWe producing electricity for sale.
    (2) If a stationary boiler or stationary combustion turbine that, 
under paragraph (a)(1) of this section, is not a CAIR SO2 
unit begins to combust fossil fuel or to serve a generator with 
nameplate capacity of more than 25 MWe producing electricity for sale, 
the unit shall become a CAIR SO2 unit as provided in 
paragraph (a)(1) of this section on the first date on which it both 
combusts fossil fuel and serves such generator.
    (b) The units in a State that meet the requirements set forth in 
paragraph (b)(1)(i), (b)(2)(i), or (b)(2)(ii) of this section shall not 
be CAIR SO2 units:
    (1)(i) Any unit that is a CAIR SO2 unit under paragraph 
(a)(1) or (2) of this section:
    (A) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (B) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit's potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (ii) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (b)(1)(i) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become a CAIR SO2 unit starting 
on the earlier of January 1 after the first calendar year during which 
the unit first no longer qualifies as a cogeneration unit or January 1 
after the first calendar year during which the unit no longer meets the 
requirements of paragraph (b)(1)(i)(B) of this section.
    (2)(i) Any unit that is a CAIR SO2 unit under paragraph 
(a)(1) or (2) of this section commencing operation before January 1, 
1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (ii) Any unit that is a CAIR SO2 unit under paragraph 
(a)(1) or (2) of this section commencing operation on or after January 
1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (iii) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (b)(2)(i) or (ii) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become a CAIR 
SO2 unit starting on the earlier of January 1 after the 
first calendar year during which the unit first no longer qualifies as 
a solid waste incineration unit or January 1 after the first 3 
consecutive calendar years after 1990 for which the unit has an average 
annual fuel consumption of fossil fuel of 20 percent or more.
    (c) A certifying official of an owner or operator of any unit may 
petition the Administrator at any time for a determination concerning 
the applicability, under paragraphs (a) and (b) of this section, of the 
CAIR SO2 Trading Program to the unit.
    (1) Petition content. The petition shall be in writing and include 
the identification of the unit and the relevant facts about the unit. 
The petition and any other documents provided to the Administrator in 
connection with the petition shall include the following certification 
statement, signed by the certifying official: ``I am authorized to make 
this submission on behalf of the owners and operators of the unit for 
which the submission is made. I certify under penalty of law that I 
have personally examined, and am familiar with, the statements and 
information submitted in this document and all its attachments. Based 
on my inquiry of those individuals with primary responsibility for 
obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statements and information, including the possibility of fine or 
imprisonment.''
    (2) Submission. The petition and any other documents provided in 
connection with the petition shall be submitted to the Director of the 
Clean Air Markets Division (or its successor), U.S. Environmental 
Protection Agency, who will act on the petition as the Administrator's 
duly authorized representative.
    (3) Response. The Administrator will issue a written response to 
the petition and may request supplemental information relevant to such 
petition. The Administrator's determination concerning the 
applicability, under paragraphs (a) and (b) of this section, of the 
CAIR SO2 Trading Program to the unit shall be binding on the 
permitting authority unless the petition or other information or 
documents provided in connection with the petition are found to have 
contained significant, relevant errors or omissions.


Sec.  97.205  Retired unit exemption.

    (a)(1) Any CAIR SO2 unit that is permanently retired and 
is not a CAIR SO2 opt-in unit under subpart III of this part 
shall be exempt from the CAIR SO2 Trading Program, except 
for the provisions of this section, Sec. Sec.  97.202, 97.203, 97.204, 
97.206(c)(4) through (7), 97.207, 97.208, and subparts BBB, FFF, and 
GGG of this part.
    (2) The exemption under paragraph (a)(1) of this section shall 
become effective the day on which the CAIR SO2 unit is 
permanently retired. Within 30 days of the unit's permanent retirement, 
the CAIR designated representative shall submit a statement to the 
permitting authority otherwise responsible for administering any CAIR 
permit for the unit and shall submit a copy of the statement to the 
Administrator. The statement shall state, in a format prescribed by the 
permitting authority, that the unit was permanently retired on

[[Page 25428]]

a specific date and will comply with the requirements of paragraph (b) 
of this section.
    (3) After receipt of the statement under paragraph (a)(2) of this 
section, the permitting authority will amend any permit under subpart 
CCC of this part covering the source at which the unit is located to 
add the provisions and requirements of the exemption under paragraphs 
(a)(1) and (b) of this section.
    (b) Special provisions. (1) A unit exempt under paragraph (a) of 
this section shall not emit any sulfur dioxide, starting on the date 
that the exemption takes effect.
    (2) For a period of 5 years from the date the records are created, 
the owners and operators of a unit exempt under paragraph (a) of this 
section shall retain, at the source that includes the unit, records 
demonstrating that the unit is permanently retired. The 5-year period 
for keeping records may be extended for cause, at any time before the 
end of the period, in writing by the permitting authority or the 
Administrator. The owners and operators bear the burden of proof that 
the unit is permanently retired.
    (3) The owners and operators and, to the extent applicable, the 
CAIR designated representative of a unit exempt under paragraph (a) of 
this section shall comply with the requirements of the CAIR 
SO2 Trading Program concerning all periods for which the 
exemption is not in effect, even if such requirements arise, or must be 
complied with, after the exemption takes effect.
    (4) A unit exempt under paragraph (a) of this section and located 
at a source that is required, or but for this exemption would be 
required, to have a title V operating permit shall not resume operation 
unless the CAIR designated representative of the source submits a 
complete CAIR permit application under Sec.  97.222 for the unit not 
less than 18 months (or such lesser time provided by the permitting 
authority) before the later of January 1, 2010 or the date on which the 
unit resumes operation.
    (5) On the earlier of the following dates, a unit exempt under 
paragraph (a) of this section shall lose its exemption:
    (i) The date on which the CAIR designated representative submits a 
CAIR permit application for the unit under paragraph (b)(4) of this 
section;
    (ii) The date on which the CAIR designated representative is 
required under paragraph (b)(4) of this section to submit a CAIR permit 
application for the unit; or
    (iii) The date on which the unit resumes operation, if the CAIR 
designated representative is not required to submit a CAIR permit 
application for the unit.
    (6) For the purpose of applying monitoring, reporting, and 
recordkeeping requirements under subpart HHH of this part, a unit that 
loses its exemption under paragraph (a) of this section shall be 
treated as a unit that commences commercial operation on the first date 
on which the unit resumes operation.


Sec.  97.206  Standard requirements.

    (a) Permit requirements. (1) The CAIR designated representative of 
each CAIR SO2 source required to have a title V operating 
permit and each CAIR SO2 unit required to have a title V 
operating permit at the source shall:
    (i) Submit to the permitting authority a complete CAIR permit 
application under Sec.  97.222 in accordance with the deadlines 
specified in Sec.  97.221; and
    (ii) Submit in a timely manner any supplemental information that 
the permitting authority determines is necessary in order to review a 
CAIR permit application and issue or deny a CAIR permit.
    (2) The owners and operators of each CAIR SO2 source 
required to have a title V operating permit and each CAIR 
SO2 unit required to have a title V operating permit at the 
source shall have a CAIR permit issued by the permitting authority 
under subpart CCC of this part for the source and operate the source 
and the unit in compliance with such CAIR permit.
    (3) Except as provided in subpart III of this part, the owners and 
operators of a CAIR SO2 source that is not otherwise 
required to have a title V operating permit and each CAIR 
SO2 unit that is not otherwise required to have a title V 
operating permit are not required to submit a CAIR permit application, 
and to have a CAIR permit, under subpart CCC of this part for such CAIR 
SO2 source and such CAIR SO2 unit.
    (b) Monitoring, reporting, and recordkeeping requirements. (1) The 
owners and operators, and the CAIR designated representative, of each 
CAIR SO2 source and each CAIR SO2 unit at the 
source shall comply with the monitoring, reporting, and recordkeeping 
requirements of subpart HHH of this part.
    (2) The emissions measurements recorded and reported in accordance 
with subpart HHH of this part shall be used to determine compliance by 
each CAIR SO2 source with the CAIR SO2 emissions 
limitation under paragraph (c) of this section.
    (c) Sulfur dioxide emission requirements. (1) As of the allowance 
transfer deadline for a control period, the owners and operators of 
each CAIR SO2 source and each CAIR SO2 unit at 
the source shall hold, in the source's compliance account, a tonnage 
equivalent in CAIR SO2 allowances available for compliance 
deductions for the control period, as determined in accordance with 
Sec.  97.254(a) and (b), not less than the tons of total sulfur dioxide 
emissions for the control period from all CAIR SO2 units at 
the source, as determined in accordance with subpart HHH of this part.
    (2) A CAIR SO2 unit shall be subject to the requirements 
under paragraph (c)(1) of this section for the control period starting 
on the later of January 1, 2010 or the deadline for meeting the unit(s 
monitor certification requirements under Sec.  97.270(b)(1),(2), or (5) 
and for each control period thereafter.
    (3) A CAIR SO2 allowance shall not be deducted, for 
compliance with the requirements under paragraph (c)(1) of this 
section, for a control period in a calendar year before the year for 
which the CAIR SO2 allowance was allocated.
    (4) CAIR SO2 allowances shall be held in, deducted from, 
or transferred into or among CAIR SO2 Allowance Tracking 
System accounts in accordance with subparts FFF, GGG, and III of this 
part.
    (5) A CAIR SO2 allowance is a limited authorization to 
emit sulfur dioxide in accordance with the CAIR SO2 Trading 
Program. No provision of the CAIR SO2 Trading Program, the 
CAIR permit application, the CAIR permit, or an exemption under Sec.  
97.205 and no provision of law shall be construed to limit the 
authority of the United States to terminate or limit such 
authorization.
    (6) A CAIR SO2 allowance does not constitute a property 
right.
    (7) Upon recordation by the Administrator under subpart FFF, GGG, 
or III of this part, every allocation, transfer, or deduction of a CAIR 
SO2 allowance to or from a CAIR SO2 source's 
compliance account is incorporated automatically in any CAIR permit of 
the source.
    (d) Excess emissions requirements. If a CAIR SO2 source 
emits sulfur dioxide during any control period in excess of the CAIR 
SO2 emissions limitation, then:
    (1) The owners and operators of the source and each CAIR 
SO2 unit at the source shall surrender the CAIR 
SO2 allowances required for deduction under Sec.  
97.254(d)(1) and pay any fine, penalty, or assessment or comply with 
any other remedy imposed, for the same violations, under the Clean Air 
Act or applicable State law; and
    (2) Each ton of such excess emissions and each day of such control 
period

[[Page 25429]]

shall constitute a separate violation of this subpart, the Clean Air 
Act, and applicable State law.
    (e) Recordkeeping and reporting requirements. (1) Unless otherwise 
provided, the owners and operators of the CAIR SO2 source 
and each CAIR SO2 unit at the source shall keep on site at 
the source each of the following documents for a period of 5 years from 
the date the document is created. This period may be extended for 
cause, at any time before the end of 5 years, in writing by the 
permitting authority or the Administrator.
    (i) The certificate of representation under Sec.  97.213 for the 
CAIR designated representative for the source and each CAIR 
SO2 unit at the source and all documents that demonstrate 
the truth of the statements in the certificate of representation; 
provided that the certificate and documents shall be retained on site 
at the source beyond such 5-year period until such documents are 
superseded because of the submission of a new certificate of 
representation under Sec.  97.213 changing the CAIR designated 
representative.
    (ii) All emissions monitoring information, in accordance with 
subpart HHH of this part, provided that to the extent that subpart HHH 
of this part provides for a 3-year period for recordkeeping, the 3-year 
period shall apply.
    (iii) Copies of all reports, compliance certifications, and other 
submissions and all records made or required under the CAIR 
SO2 Trading Program.
    (iv) Copies of all documents used to complete a CAIR permit 
application and any other submission under the CAIR SO2 
Trading Program or to demonstrate compliance with the requirements of 
the CAIR SO2 Trading Program.
    (2) The CAIR designated representative of a CAIR SO2 
source and each CAIR SO2 unit at the source shall submit the 
reports required under the CAIR SO2 Trading Program, 
including those under subpart HHH of this part.
    (f) Liability. (1) Each CAIR SO2 source and each CAIR 
SO2 unit shall meet the requirements of the CAIR 
SO2 Trading Program.
    (2) Any provision of the CAIR SO2 Trading Program that 
applies to a CAIR SO2 source or the CAIR designated 
representative of a CAIR SO2 source shall also apply to the 
owners and operators of such source and of the CAIR SO2 
units at the source.
    (3) Any provision of the CAIR SO2 Trading Program that 
applies to a CAIR SO2 unit or the CAIR designated 
representative of a CAIR SO2 unit shall also apply to the 
owners and operators of such unit.
    (g) Effect on other authorities. No provision of the CAIR 
SO2 Trading Program, a CAIR permit application, a CAIR 
permit, or an exemption under Sec.  97.205 shall be construed as 
exempting or excluding the owners and operators, and the CAIR 
designated representative, of a CAIR SO2 source or CAIR 
SO2 unit from compliance with any other provision of the 
applicable, approved State implementation plan, a federally enforceable 
permit, or the Clean Air Act.


Sec.  97.207  Computation of time.

    (a) Unless otherwise stated, any time period scheduled, under the 
CAIR SO2 Trading Program, to begin on the occurrence of an 
act or event shall begin on the day the act or event occurs.
    (b) Unless otherwise stated, any time period scheduled, under the 
CAIR SO2 Trading Program, to begin before the occurrence of 
an act or event shall be computed so that the period ends the day 
before the act or event occurs.
    (c) Unless otherwise stated, if the final day of any time period, 
under the CAIR SO2 Trading Program, falls on a weekend or a 
State or Federal holiday, the time period shall be extended to the next 
business day.


Sec.  97.208  Appeal procedures.

    The appeal procedures for decisions of the Administrator under the 
CAIR SO2 Trading Program are set forth in part 78 of this 
chapter.

Subpart BBB--CAIR Designated Representative for CAIR SO2 
Sources


Sec.  97.210  Authorization and responsibilities of CAIR designated 
representative.

    (a) Except as provided under Sec.  97.211, each CAIR SO2 
source, including all CAIR SO2 units at the source, shall 
have one and only one CAIR designated representative, with regard to 
all matters under the CAIR SO2 Trading Program concerning 
the source or any CAIR SO2 unit at the source.
    (b) The CAIR designated representative of the CAIR SO2 
source shall be selected by an agreement binding on the owners and 
operators of the source and all CAIR SO2 units at the source 
and shall act in accordance with the certification statement in Sec.  
97.213(a)(4)(iv).
    (c) Upon receipt by the Administrator of a complete certificate of 
representation under Sec.  97.213, the CAIR designated representative 
of the source shall represent and, by his or her representations, 
actions, inactions, or submissions, legally bind each owner and 
operator of the CAIR SO2 source represented and each CAIR 
SO2 unit at the source in all matters pertaining to the CAIR 
SO2 Trading Program, notwithstanding any agreement between 
the CAIR designated representative and such owners and operators. The 
owners and operators shall be bound by any decision or order issued to 
the CAIR designated representative by the permitting authority, the 
Administrator, or a court regarding the source or unit.
    (d) No CAIR permit will be issued, no emissions data reports will 
be accepted, and no CAIR SO2 Allowance Tracking System 
account will be established for a CAIR SO2 unit at a source, 
until the Administrator has received a complete certificate of 
representation under Sec.  97.213 for a CAIR designated representative 
of the source and the CAIR SO2 units at the source.
    (e)(1) Each submission under the CAIR SO2 Trading 
Program shall be submitted, signed, and certified by the CAIR 
designated representative for each CAIR SO2 source on behalf 
of which the submission is made. Each such submission shall include the 
following certification statement by the CAIR designated 
representative: ``I am authorized to make this submission on behalf of 
the owners and operators of the source or units for which the 
submission is made. I certify under penalty of law that I have 
personally examined, and am familiar with, the statements and 
information submitted in this document and all its attachments. Based 
on my inquiry of those individuals with primary responsibility for 
obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statements and information, including the possibility of fine or 
imprisonment.''
    (2) The permitting authority and the Administrator will accept or 
act on a submission made on behalf of owner or operators of a CAIR 
SO2 source or a CAIR SO2 unit only if the 
submission has been made, signed, and certified in accordance with 
paragraph (e)(1) of this section.


Sec.  97.211  Alternate CAIR designated representative.

    (a) A certificate of representation under Sec.  97.213 may 
designate one and only one alternate CAIR designated representative, 
who may act on behalf of the CAIR designated representative. The 
agreement by which the alternate CAIR designated representative is 
selected shall include a procedure for authorizing the alternate CAIR

[[Page 25430]]

designated representative to act in lieu of the CAIR designated 
representative.
    (b) Upon receipt by the Administrator of a complete certificate of 
representation under Sec.  97.213, any representation, action, 
inaction, or submission by the alternate CAIR designated representative 
shall be deemed to be a representation, action, inaction, or submission 
by the CAIR designated representative.
    (c) Except in this section and Sec. Sec.  97.202, 97.210(a) and 
(d), 97.212, 97.213, 97.215, 97.251 and 97.282, whenever the term 
``CAIR designated representative'' is used in subparts AAA through III 
of this part, the term shall be construed to include the CAIR 
designated representative or any alternate CAIR designated 
representative.


Sec.  97.212  Changing CAIR designated representative and alternate 
CAIR designated representative; changes in owners and operators.

    (a) Changing CAIR designated representative. The CAIR designated 
representative may be changed at any time upon receipt by the 
Administrator of a superseding complete certificate of representation 
under Sec.  97.213. Notwithstanding any such change, all 
representations, actions, inactions, and submissions by the previous 
CAIR designated representative before the time and date when the 
Administrator receives the superseding certificate of representation 
shall be binding on the new CAIR designated representative and the 
owners and operators of the CAIR SO2 source and the CAIR 
SO2 units at the source.
    (b) Changing alternate CAIR designated representative. The 
alternate CAIR designated representative may be changed at any time 
upon receipt by the Administrator of a superseding complete certificate 
of representation under Sec.  97.213. Notwithstanding any such change, 
all representations, actions, inactions, and submissions by the 
previous alternate CAIR designated representative before the time and 
date when the Administrator receives the superseding certificate of 
representation shall be binding on the new alternate CAIR designated 
representative and the owners and operators of the CAIR SO2 
source and the CAIR SO2 units at the source.
    (c) Changes in owners and operators. (1) In the event an owner or 
operator of a CAIR SO2 source or a CAIR SO2 unit 
is not included in the list of owners and operators in the certificate 
of representation under Sec.  97.213, such owner or operator shall be 
deemed to be subject to and bound by the certificate of representation, 
the representations, actions, inactions, and submissions of the CAIR 
designated representative and any alternate CAIR designated 
representative of the source or unit, and the decisions and orders of 
the permitting authority, the Administrator, or a court, as if the 
owner or operator were included in such list.
    (2) Within 30 days following any change in the owners and operators 
of a CAIR SO2 source or a CAIR SO2 unit, 
including the addition of a new owner or operator, the CAIR designated 
representative or any alternate CAIR designated representative shall 
submit a revision to the certificate of representation under Sec.  
97.213 amending the list of owners and operators to include the change.


Sec.  97.213  Certificate of representation.

    (a) A complete certificate of representation for a CAIR designated 
representative or an alternate CAIR designated representative shall 
include the following elements in a format prescribed by the 
Administrator:
    (1) Identification of the CAIR SO2 source, and each CAIR 
SO2 unit at the source, for which the certificate of 
representation is submitted, including identification and nameplate 
capacity of each generator served by each such unit.
    (2) The name, address, e-mail address (if any), telephone number, 
and facsimile transmission number (if any) of the CAIR designated 
representative and any alternate CAIR designated representative.
    (3) A list of the owners and operators of the CAIR SO2 
source and of each CAIR SO2 unit at the source.
    (4) The following certification statements by the CAIR designated 
representative and any alternate CAIR designated representative--
    (i) ``I certify that I was selected as the CAIR designated 
representative or alternate CAIR designated representative, as 
applicable, by an agreement binding on the owners and operators of the 
source and each CAIR SO2 unit at the source.''
    (ii) ``I certify that I have all the necessary authority to carry 
out my duties and responsibilities under the CAIR SO2 
Trading Program on behalf of the owners and operators of the source and 
of each CAIR SO2 unit at the source and that each such owner 
and operator shall be fully bound by my representations, actions, 
inactions, or submissions.''
    (iii) ``I certify that the owners and operators of the source and 
of each CAIR SO2 unit at the source shall be bound by any 
order issued to me by the Administrator, the permitting authority, or a 
court regarding the source or unit.''
    (iv) ``Where there are multiple holders of a legal or equitable 
title to, or a leasehold interest in, a CAIR SO2 unit, or 
where a utility or industrial customer purchases power from a CAIR 
SO2 unit under a life-of-the-unit, firm power contractual 
arrangement, I certify that: I have given a written notice of my 
selection as the `CAIR designated representative' or `alternate CAIR 
designated representative', as applicable, and of the agreement by 
which I was selected to each owner and operator of the source and of 
each CAIR SO2 unit at the source; and CAIR SO2 
allowances and proceeds of transactions involving CAIR SO2 
allowances will be deemed to be held or distributed in proportion to 
each holder's legal, equitable, leasehold, or contractual reservation 
or entitlement, except that, if such multiple holders have expressly 
provided for a different distribution of CAIR SO2 allowances 
by contract, CAIR SO2 allowances and proceeds of 
transactions involving CAIR SO2 allowances will be deemed to 
be held or distributed in accordance with the contract.''
    (5) The signature of the CAIR designated representative and any 
alternate CAIR designated representative and the dates signed.
    (b) Unless otherwise required by the permitting authority or the 
Administrator, documents of agreement referred to in the certificate of 
representation shall not be submitted to the permitting authority or 
the Administrator. Neither the permitting authority nor the 
Administrator shall be under any obligation to review or evaluate the 
sufficiency of such documents, if submitted.


Sec.  97.214  Objections concerning CAIR designated representative.

    (a) Once a complete certificate of representation under Sec.  
97.213 has been submitted and received, the permitting authority and 
the Administrator will rely on the certificate of representation unless 
and until a superseding complete certificate of representation under 
Sec.  97.213 is received by the Administrator.
    (b) Except as provided in Sec.  97.212(a) or (b), no objection or 
other communication submitted to the permitting authority or the 
Administrator concerning the authorization, or any representation, 
action, inaction, or submission, of the CAIR designated representative 
shall affect any representation, action, inaction, or submission of the 
CAIR designated representative or the finality

[[Page 25431]]

of any decision or order by the permitting authority or the 
Administrator under the CAIR SO2 Trading Program.
    (c) Neither the permitting authority nor the Administrator will 
adjudicate any private legal dispute concerning the authorization or 
any representation, action, inaction, or submission of any CAIR 
designated representative, including private legal disputes concerning 
the proceeds of CAIR SO2 allowance transfers.


Sec.  97.215  Delegation by CAIR designated representative and 
alternate CAIR designated representative.

    (a) A CAIR designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
to the Administrator provided for or required under this part.
    (b) An alternate CAIR designated representative may delegate, to 
one or more natural persons, his or her authority to make an electronic 
submission to the Administrator provided for or required under this 
part.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the CAIR designated representative or alternate CAIR 
designated representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator, that includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR designated 
representative or alternate CAIR designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such CAIR designated 
representative or alternate CAIR designated representative:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a CAIR designated representative or alternate CAIR 
designated representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
97.215(d) shall be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 97.215(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 97.215 is terminated.''.
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall be effective, with regard to the CAIR designated 
representative or alternate CAIR designated representative identified 
in such notice, upon receipt of such notice by the Administrator and 
until receipt by the Administrator of a superseding notice of 
delegation submitted by such CAIR designated representative or 
alternate CAIR designated representative, as appropriate. The 
superseding notice of delegation may replace any previously identified 
agent, add a new agent, or eliminate entirely any delegation of 
authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the CAIR designated 
representative or alternate CAIR designated representative submitting 
such notice of delegation.

Subpart CCC--Permits


Sec.  97.220  General CAIR SO2 Trading Program permit 
requirements.

    (a) For each CAIR SO2 source required to have a title V 
operating permit or required, under subpart III of this part, to have a 
title V operating permit or other federally enforceable permit, such 
permit shall include a CAIR permit administered by the permitting 
authority for the title V operating permit or the federally enforceable 
permit as applicable. The CAIR portion of the title V permit or other 
federally enforceable permit as applicable shall be administered in 
accordance with the permitting authority's title V operating permits 
regulations promulgated under part 70 or 71 of this chapter or the 
permitting authority's regulations for other federally enforceable 
permits as applicable, except as provided otherwise by Sec.  97.205, 
this subpart, and subpart III of this part.
    (b) Each CAIR permit shall contain, with regard to the CAIR 
SO2 source and the CAIR SO2 units at the source 
covered by the CAIR permit, all applicable CAIR SO2 Trading 
Program, CAIR NOX Annual Trading Program, and CAIR 
NOX Ozone Season Trading Program requirements and shall be a 
complete and separable portion of the title V operating permit or other 
federally enforceable permit under paragraph (a) of this section.


Sec.  97.221  Submission of CAIR permit applications.

    (a) Duty to apply. The CAIR designated representative of any CAIR 
SO2 source required to have a title V operating permit shall 
submit to the permitting authority a complete CAIR permit application 
under Sec.  97.222 for the source covering each CAIR SO2 
unit at the source at least 18 months (or such lesser time provided by 
the permitting authority) before the later of January 1, 2010 or the 
date on which the CAIR SO2 unit commences commercial 
operation, except as provided in Sec.  97.283(a).
    (b) Duty to reapply. For a CAIR SO2 source required to 
have a title V operating permit, the CAIR designated representative 
shall submit a complete CAIR permit application under Sec.  97.222 for 
the source covering each CAIR SO2 unit at the source to 
renew the CAIR permit in accordance with the permitting authority's 
title V operating permits regulations addressing permit renewal, except 
as provided in Sec.  97.283(b).


Sec.  97.222  Information requirements for CAIR permit applications.

    A complete CAIR permit application shall include the following 
elements concerning the CAIR SO2 source for which the 
application is submitted, in a format prescribed by the permitting 
authority:
    (a) Identification of the CAIR SO2 source;
    (b) Identification of each CAIR SO2 unit at the CAIR 
SO2 source; and
    (c) The standard requirements under Sec.  97.206.


Sec.  97.223  CAIR permit contents and term.

    (a) Each CAIR permit will contain, in a format prescribed by the 
permitting authority, all lements required for a complete CAIR permit 
application under Sec.  97.222.
    (b) Each CAIR permit is deemed to incorporate automatically the 
definitions of terms under Sec.  97.202 and, upon recordation by the 
Administrator under subpart FFF, GGG, or III of this part, every 
allocation, transfer, or deduction of a CAIR SO2 allowance 
to or from the compliance account of the CAIR SO2 source 
covered by the permit.
    (c) The term of the CAIR permit will be set by the permitting 
authority, as

[[Page 25432]]

necessary to facilitate coordination of the renewal of the CAIR permit 
with issuance, revision, or renewal of the CAIR SO2 source's 
title V operating permit or other federally enforceable permit as 
applicable.


Sec.  97.224  CAIR permit revisions.

    Except as provided in Sec.  97.223(b), the permitting authority 
will revise the CAIR permit, as necessary, in accordance with the 
permitting authority's title V operating permits regulations or the 
permitting authority's regulations for other federally enforceable 
permits as applicable addressing permit revisions.

Subpart DDD--[Reserved]

Subpart EEE--[Reserved]

Subpart FFF--CAIR SO2 Allowance Tracking System


Sec.  97.250  [Reserved]


Sec.  97.251  Establishment of accounts.

    (a) Compliance accounts. Except as provided in Sec.  97.284(e), 
upon receipt of a complete certificate of representation under Sec.  
97.213, the Administrator will establish a compliance account for the 
CAIR SO2 source for which the certificate of representation 
was submitted, unless the source already has a compliance account.
    (b) General accounts--(1) Application for general account. (i) Any 
person may apply to open a general account for the purpose of holding 
and transferring CAIR SO2 allowances. An application for a 
general account may designate one and only one CAIR authorized account 
representative and one and only one alternate CAIR authorized account 
representative who may act on behalf of the CAIR authorized account 
representative. The agreement by which the alternate CAIR authorized 
account representative is selected shall include a procedure for 
authorizing the alternate CAIR authorized account representative to act 
in lieu of the CAIR authorized account representative.
    (ii) A complete application for a general account shall be 
submitted to the Administrator and shall include the following elements 
in a format prescribed by the Administrator:
    (A) Name, mailing address, e-mail address (if any), telephone 
number, and facsimile transmission number (if any) of the CAIR 
authorized account representative and any alternate CAIR authorized 
account representative;
    (B) Organization name and type of organization, if applicable;
    (C) A list of all persons subject to a binding agreement for the 
CAIR authorized account representative and any alternate CAIR 
authorized account representative to represent their ownership interest 
with respect to the CAIR SO2 allowances held in the general 
account;
    (D) The following certification statement by the CAIR authorized 
account representative and any alternate CAIR authorized account 
representative: ``I certify that I was selected as the CAIR authorized 
account representative or the alternate CAIR authorized account 
representative, as applicable, by an agreement that is binding on all 
persons who have an ownership interest with respect to CAIR 
SO2 allowances held in the general account. I certify that I 
have all the necessary authority to carry out my duties and 
responsibilities under the CAIR SO2 Trading Program on 
behalf of such persons and that each such person shall be fully bound 
by my representations, actions, inactions, or submissions and by any 
order or decision issued to me by the Administrator or a court 
regarding the general account.''
    (E) The signature of the CAIR authorized account representative and 
any alternate CAIR authorized account representative and the dates 
signed.
    (iii) Unless otherwise required by the permitting authority or the 
Administrator, documents of agreement referred to in the application 
for a general account shall not be submitted to the permitting 
authority or the Administrator. Neither the permitting authority nor 
the Administrator shall be under any obligation to review or evaluate 
the sufficiency of such documents, if submitted.
    (2) Authorization of CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) Upon receipt by 
the Administrator of a complete application for a general account under 
paragraph (b)(1) of this section:
    (A) The Administrator will establish a general account for the 
person or persons for whom the application is submitted.
    (B) The CAIR authorized account representative and any alternate 
CAIR authorized account representative for the general account shall 
represent and, by his or her representations, actions, inactions, or 
submissions, legally bind each person who has an ownership interest 
with respect to CAIR SO2 allowances held in the general 
account in all matters pertaining to the CAIR SO2 Trading 
Program, notwithstanding any agreement between the CAIR authorized 
account representative or any alternate CAIR authorized account 
representative and such person. Any such person shall be bound by any 
order or decision issued to the CAIR authorized account representative 
or any alternate CAIR authorized account representative by the 
Administrator or a court regarding the general account.
    (C) Any representation, action, inaction, or submission by any 
alternate CAIR authorized account representative shall be deemed to be 
a representation, action, inaction, or submission by the CAIR 
authorized account representative.
    (ii) Each submission concerning the general account shall be 
submitted, signed, and certified by the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
for the persons having an ownership interest with respect to CAIR 
SO2 allowances held in the general account. Each such 
submission shall include the following certification statement by the 
CAIR authorized account representative or any alternate CAIR authorized 
account representative: ``I am authorized to make this submission on 
behalf of the persons having an ownership interest with respect to the 
CAIR SO2 allowances held in the general account. I certify 
under penalty of law that I have personally examined, and am familiar 
with, the statements and information submitted in this document and all 
its attachments. Based on my inquiry of those individuals with primary 
responsibility for obtaining the information, I certify that the 
statements and information are to the best of my knowledge and belief 
true, accurate, and complete. I am aware that there are significant 
penalties for submitting false statements and information or omitting 
required statements and information, including the possibility of fine 
or imprisonment.''
    (iii) The Administrator will accept or act on a submission 
concerning the general account only if the submission has been made, 
signed, and certified in accordance with paragraph (b)(2)(ii) of this 
section.
    (3) Changing CAIR authorized account representative and alternate 
CAIR authorized account representative; changes in persons with 
ownership interest. (i) The CAIR authorized account representative for 
a general account may be changed at any time upon receipt by the 
Administrator of a superseding complete application for a general 
account under paragraph (b)(1) of this section. Notwithstanding any 
such change, all representations, actions, inactions, and submissions 
by the previous CAIR authorized account representative before the time 
and date when the Administrator receives the superseding application 
for a general

[[Page 25433]]

account shall be binding on the new CAIR authorized account 
representative and the persons with an ownership interest with respect 
to the CAIR SO2 allowances in the general account.
    (ii) The alternate CAIR authorized account representative for a 
general account may be changed at any time upon receipt by the 
Administrator of a superseding complete application for a general 
account under paragraph (b)(1) of this section. Notwithstanding any 
such change, all representations, actions, inactions, and submissions 
by the previous alternate CAIR authorized account representative before 
the time and date when the Administrator receives the superseding 
application for a general account shall be binding on the new alternate 
CAIR authorized account representative and the persons with an 
ownership interest with respect to the CAIR SO2 allowances 
in the general account.
    (iii)(A) In the event a person having an ownership interest with 
respect to CAIR SO2 allowances in the general account is not 
included in the list of such persons in the application for a general 
account, such person shall be deemed to be subject to and bound by the 
application for a general account, the representation, actions, 
inactions, and submissions of the CAIR authorized account 
representative and any alternate CAIR authorized account representative 
of the account, and the decisions and orders of the Administrator or a 
court, as if the person were included in such list.
    (B) Within 30 days following any change in the persons having an 
ownership interest with respect to CAIR SO2 allowances in 
the general account, including the addition of a new person, the CAIR 
authorized account representative or any alternate CAIR authorized 
account representative shall submit a revision to the application for a 
general account amending the list of persons having an ownership 
interest with respect to the CAIR SO2 allowances in the 
general account to include the change.
    (4) Objections concerning CAIR authorized account representative 
and alternate CAIR authorized account representative. (i) Once a 
complete application for a general account under paragraph (b)(1) of 
this section has been submitted and received, the Administrator will 
rely on the application unless and until a superseding complete 
application for a general account under paragraph (b)(1) of this 
section is received by the Administrator.
    (ii) Except as provided in paragraph (b)(3)(i) or (ii) of this 
section, no objection or other communication submitted to the 
Administrator concerning the authorization, or any representation, 
action, inaction, or submission of the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
for a general account shall affect any representation, action, 
inaction, or submission of the CAIR authorized account representative 
or any alternate CAIR authorized account representative or the finality 
of any decision or order by the Administrator under the CAIR 
SO2 Trading Program.
    (iii) The Administrator will not adjudicate any private legal 
dispute concerning the authorization or any representation, action, 
inaction, or submission of the CAIR authorized account representative 
or any alternate CAIR authorized account representative for a general 
account, including private legal disputes concerning the proceeds of 
CAIR SO2 allowance transfers.
    (5) Delegation by CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) A CAIR authorized 
account representative may delegate, to one or more natural persons, 
his or her authority to make an electronic submission to the 
Administrator provided for or required under subparts FFF and GGG of 
this part.
    (ii) An alternate CAIR authorized account representative may 
delegate, to one or more natural persons, his or her authority to make 
an electronic submission to the Administrator provided for or required 
under subparts FFF and GGG of this part.
    (iii) In order to delegate authority to make an electronic 
submission to the Administrator in accordance with paragraph (b)(5)(i) 
or (ii) of this section, the CAIR authorized account representative or 
alternate CAIR authorized account representative, as appropriate, must 
submit to the Administrator a notice of delegation, in a format 
prescribed by the Administrator, that includes the following elements:
    (A) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR authorized account 
representative or alternate CAIR authorized account representative;
    (B) The name, address, e-mail address, telephone number, and, 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (C) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (b)(5)(i) or (ii) of this 
section for which authority is delegated to him or her;
    (D) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``I agree that any electronic submission to the 
Administrator that is by an agent identified in this notice of 
delegation and of a type listed for such agent in this notice of 
delegation and that is made when I am a CAIR authorized account 
representative or alternate CAIR authorized representative, as 
appropriate, and before this notice of delegation is superseded by 
another notice of delegation under 40 CFR 97.251(b)(5)(iv) shall be 
deemed to be an electronic submission by me.''; and
    (E) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``Until this notice of delegation is superseded by 
another notice of delegation under 40 CFR 97.251 (b)(5)(iv), I agree to 
maintain an e-mail account and to notify the Administrator immediately 
of any change in my e-mail address, unless all delegation of authority 
by me under 40 CFR 97.251 (b)(5) is terminated.''.
    (iv) A notice of delegation submitted under paragraph (b)(5)(iii) 
of this section shall be effective, with regard to the CAIR authorized 
account representative or alternate CAIR authorized account 
representative identified in such notice, upon receipt of such notice 
by the Administrator and until receipt by the Administrator of a 
superseding notice of delegation submitted by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (v) Any electronic submission covered by the certification in 
paragraph (b)(5)(iii)(D) of this section and made in accordance with a 
notice of delegation effective under paragraph (b)(5)(iv) of this 
section shall be deemed to be an electronic submission by the CAIR 
designated representative or alternate CAIR designated representative 
submitting such notice of delegation.
    (c) Account identification. The Administrator will assign a unique 
identifying number to each account established under paragraph (a) or 
(b) of this section.

[[Page 25434]]

Sec.  97.252   Responsibilities of CAIR authorized account 
representative.

    Following the establishment of a CAIR SO2 Allowance 
Tracking System account, all submissions to the Administrator 
pertaining to the account, including, but not limited to, submissions 
concerning the deduction or transfer of CAIR SO2 allowances 
in the account, shall be made only by the CAIR authorized account 
representative for the account.


Sec.  97.253  Recordation of CAIR SO2 allowances.

    (a)(1) After a compliance account is established under Sec.  
97.251(a) or Sec.  73.31(a) or (b) of this chapter, the Administrator 
will record in the compliance account any CAIR SO2 allowance 
allocated to any CAIR SO2 unit at the source for each of the 
30 years starting the later of 2010 or the year in which the compliance 
account is established and any CAIR SO2 allowance allocated 
for each of the 30 years starting the later of 2010 or the year in 
which the compliance account is established and transferred to the 
source in accordance with subpart GGG of this part or subpart D of part 
73 of this chapter.
    (2) In 2011 and each year thereafter, after Administrator has 
completed all deductions under Sec.  97.254(b), the Administrator will 
record in the compliance account any CAIR SO2 allowance 
allocated to any CAIR SO2 unit at the source for the new 
30th year (i.e., the year that is 30 years after the calendar year for 
which such deductions are or could be made) and any CAIR SO2 
allowance allocated for the new 30th year and transferred to the source 
in accordance with subpart GGG of this part or subpart D of part 73 of 
this chapter.
    (b)(1) After a general account is established under Sec.  97.251(b) 
or Sec.  73.31(c) of this chapter, the Administrator will record in the 
general account any CAIR SO2 allowance allocated for each of 
the 30 years starting the later of 2010 or the year in which the 
general account is established and transferred to the general account 
in accordance with subpart GGG of this part or subpart D of part 73 of 
this chapter.
    (2) In 2011 and each year thereafter, after Administrator has 
completed all deductions under Sec.  97.254(b), the Administrator will 
record in the general account any CAIR SO2 allowance 
allocated for the new 30th year (i.e., the year that is 30 years after 
the calendar year for which such deductions are or could be made) and 
transferred to the general account in accordance with subpart GGG of 
this part or subpart D of part 73 of this chapter.
    (c) Serial numbers for allocated CAIR SO2 allowances. When 
recording the allocation of CAIR SO2 allowances issued by a 
permitting authority under Sec.  97.288, the Administrator will assign 
each such CAIR SO2 allowance a unique identification number 
that will include digits identifying the year of the control period for 
which the CAIR SO2 allowance is allocated.


Sec.  97.254  Compliance with CAIR SO2 emissions limitation.

    (a) Allowance transfer deadline. The CAIR SO2 allowances 
are available to be deducted for compliance with a source's CAIR 
SO2 emissions limitation for a control period in a given 
calendar year only if the CAIR SO2 allowances:
    (1) Were allocated for the control period in the year or a prior 
year; and
    (2) Are held in the compliance account as of the allowance transfer 
deadline for the control period or are transferred into the compliance 
account by a CAIR SO2 allowance transfer correctly submitted 
for recordation under Sec. Sec.  97.260 and 97.261 by the allowance 
transfer deadline for the control period.
    (b) Deductions for compliance. Following the recordation, in 
accordance with Sec.  97.261, of CAIR SO2 allowance 
transfers submitted for recordation in a source's compliance account by 
the allowance transfer deadline for a control period, the Administrator 
will deduct from the compliance account CAIR SO2 allowances 
available under paragraph (a) of this section in order to determine 
whether the source meets the CAIR SO2 emissions limitation 
for the control period as follows:
    (1) For a CAIR SO2 source subject to an Acid Rain 
emissions limitation, the Administrator will, in the following order:
    (i) Deduct the amount of CAIR SO2 allowances, available 
under paragraph (a) of this section and not issued by a permitting 
authority under Sec.  97.288, that is required under Sec. Sec.  
73.35(b) and (c) of this part. If there are sufficient CAIR 
SO2 allowances to complete this deduction, the deduction 
will be treated as satisfying the requirements of Sec. Sec.  73.35(b) 
and (c) of this chapter.
    (ii) Deduct the amount of CAIR SO2 allowances, not 
issued by a permitting authority under Sec.  97.288, that is required 
under Sec. Sec.  73.35(d) and 77.5 of this part. If there are 
sufficient CAIR SO2 allowances to complete this deduction, 
the deduction will be treated as satisfying the requirements of 
Sec. Sec.  73.35(d) and 77.5 of this chapter.
    (iii) Treating the CAIR SO2 allowances deducted under 
paragraph (b)(1)(i) of this section as also being deducted under this 
paragraph (b)(1)(iii), deduct CAIR SO2 allowances available 
under paragraph (a) of this section (including any issued by a 
permitting authority under Sec.  97.288) in order to determine whether 
the source meets the CAIR SO2 emissions limitation for the 
control period, as follows:
    (A) Until the tonnage equivalent of the CAIR SO2 
allowances deducted equals, or exceeds in accordance with paragraphs 
(c)(1) and (2) of this section, the number of tons of total sulfur 
dioxide emissions, determined in accordance with subpart HHH of this 
part, from all CAIR SO2 units at the source for the control 
period; or
    (B) If there are insufficient CAIR SO2 allowances to 
complete the deductions in paragraph (b)(1)(iii)(A) of this section, 
until no more CAIR SO2 allowances available under paragraph 
(a) of this section (including any issued by a permitting authority 
under Sec.  97.288) remain in the compliance account.
    (2) For a CAIR SO2 source not subject to an Acid Rain 
emissions limitation, the Administrator will deduct CAIR SO2 
allowances available under paragraph (a) of this section (including any 
issued by a permitting authority under Sec.  97.288) in order to 
determine whether the source meets the CAIR SO2 emissions 
limitation for the control period, as follows:
    (i) Until the tonnage equivalent of the CAIR SO2 
allowances deducted equals, or exceeds in accordance with paragraphs 
(c)(1) and (2) of this section, the number of tons of total sulfur 
dioxide emissions, determined in accordance with subpart HHH of this 
part, from all CAIR SO2 units at the source for the control 
period; or
    (ii) If there are insufficient CAIR SO2 allowances to 
complete the deductions in paragraph (b)(2)(i) of this section, until 
no more CAIR SO2 allowances available under paragraph (a) of 
this section (including any issued by a permitting authority under 
Sec.  97.288) remain in the compliance account.
    (c)(1) Identification of CAIR SO2 allowances by serial 
number. The CAIR authorized account representative for a source's 
compliance account may request that specific CAIR SO2 
allowances, identified by serial number, in the compliance account be 
deducted for emissions or excess emissions for a control period in 
accordance with paragraph (b) or (d) of this section. Such request 
shall be submitted to the Administrator by the allowance transfer 
deadline for the control period and include, in a format prescribed by 
the

[[Page 25435]]

Administrator, the identification of the CAIR SO2 source and 
the appropriate serial numbers.
    (2) First-in, first-out. The Administrator will deduct CAIR 
SO2 allowances under paragraph (b) or (d) of this section 
from the source's compliance account, in the absence of an 
identification or in the case of a partial identification of CAIR 
SO2 allowances by serial number under paragraph (c)(1) of 
this section, on a first-in, first-out (FIFO) accounting basis in the 
following order:
    (i) Any CAIR SO2 allowances that were allocated to the 
units at the source for a control period before 2010, in the order of 
recordation;
    (ii) Any CAIR SO2 allowances that were allocated to any 
entity for a control period before 2010 and transferred and recorded in 
the compliance account pursuant to subpart GGG of this part or subpart 
D of part 73 of this chapter, in the order of recordation;
    (iii) Any CAIR SO2 allowances that were allocated to the 
units at the source for a control period during 2010 through 2014, in 
the order of recordation;
    (iv) Any CAIR SO2 allowances that were allocated to any 
entity for a control period during 2010 through 2014 and transferred 
and recorded in the compliance account pursuant to subpart GGG of this 
part or subpart D of part 73 of this chapter, in the order of 
recordation;
    (v) Any CAIR SO2 allowances that were allocated to the 
units at the source for a control period in 2015 or later, in the order 
of recordation; and
    (vi) Any CAIR SO2 allowances that were allocated to any 
entity for a control period in 2015 or later and transferred and 
recorded in the compliance account pursuant to subpart GGG of this part 
or subpart D of part 73 of this chapter, in the order of recordation.
    (d) Deductions for excess emissions. (1) After making the 
deductions for compliance under paragraph (b) of this section for a 
control period in a calendar year in which the CAIR SO2 
source has excess emissions, the Administrator will deduct from the 
source's compliance account the tonnage equivalent in CAIR 
SO2 allowances, allocated for the control period in the 
immediately following calendar year (including any issued by a 
permitting authority under Sec.  97.288), equal to, or exceeding in 
accordance with paragraphs (c)(1) and (2) of this section 3 times the 
following amount: the number of tons of the source's excess emissions 
minus, if the source is subject to an Acid Rain emissions limitation, 
the amount of the CAIR SO2 allowances required to be 
deducted under paragraph (b)(1)(ii) of this section.
    (2) Any allowance deduction required under paragraph (d)(1) of this 
section shall not affect the liability of the owners and operators of 
the CAIR SO2 source or the CAIR SO2 units at the 
source for any fine, penalty, or assessment, or their obligation to 
comply with any other remedy, for the same violations, as ordered under 
the Clean Air Act or applicable State law.
    (e) Recordation of deductions. The Administrator will record in the 
appropriate compliance account all deductions from such an account 
under paragraphs (b) and (d) of this section and subpart III.
    (f) Administrator's action on submissions. (1) The Administrator 
may review and conduct independent audits concerning any submission 
under the CAIR SO2 Trading Program and make appropriate 
adjustments of the information in the submissions.
    (2) The Administrator may deduct CAIR SO2 allowances 
from or transfer CAIR SO2 allowances to a source's 
compliance account based on the information in the submissions, as 
adjusted under paragraph (f)(1) of this section, and record such 
deductions and transfers.


Sec.  97.255  Banking.

    (a) CAIR SO2 allowances may be banked for future use or 
transfer in a compliance account or a general account in accordance 
with paragraph (b) of this section.
    (b) Any CAIR SO2 allowance that is held in a compliance 
account or a general account will remain in such account unless and 
until the CAIR SO2 allowance is deducted or transferred 
under Sec.  97.254, Sec.  97.256, or subpart GGG or III of this part.


Sec.  97.256  Account error.

    The Administrator may, at his or her sole discretion and on his or 
her own motion, correct any error in any CAIR SO2 Allowance 
Tracking System account. Within 10 business days of making such 
correction, the Administrator will notify the CAIR authorized account 
representative for the account.


Sec.  97.257  Closing of general accounts.

    (a) The CAIR authorized account representative of a general account 
may submit to the Administrator a request to close the account, which 
shall include a correctly submitted allowance transfer under Sec. Sec.  
97.260 and 97.261 for any CAIR SO2 allowances in the account 
to one or more other CAIR SO2 Allowance Tracking System 
accounts.
    (b) If a general account has no allowance transfers in or out of 
the account for a 12-month period or longer and does not contain any 
CAIR SO2 allowances, the Administrator may notify the CAIR 
authorized account representative for the account that the account will 
be closed following 20 business days after the notice is sent. The 
account will be closed after the 20-day period unless, before the end 
of the 20-day period, the Administrator receives a correctly submitted 
transfer of CAIR SO2 allowances into the account under 
Sec. Sec.  97.260 and 97.261 or a statement submitted by the CAIR 
authorized account representative demonstrating to the satisfaction of 
the Administrator good cause as to why the account should not be 
closed.

Subpart GGG--CAIR SO2 Allowance Transfers


Sec.  97.260  Submission of CAIR SO2 allowance transfers.

    (a) A CAIR authorized account representative seeking recordation of 
a CAIR SO2 allowance transfer shall submit the transfer to 
the Administrator. To be considered correctly submitted, the CAIR 
SO2 allowance transfer shall include the following elements, 
in a format specified by the Administrator:
    (1) The account numbers of both the transferor and transferee 
accounts;
    (2) The serial number of each CAIR SO2 allowance that is 
in the transferor account and is to be transferred; and
    (3) The name and signature of the CAIR authorized account 
representatives of the transferor and transferee accounts and the dates 
signed.
    (b)(1) The CAIR authorized account representative for the 
transferee account can meet the requirements in paragraph (a)(3) of 
this section by submitting, in a format prescribed by the 
Administrator, a statement signed by the CAIR authorized account 
representative and identifying each account into which any transfer of 
allowances, submitted on or after the date on which the Administrator 
receives such statement, is authorized. Such authorization shall be 
binding on any CAIR authorized account representative for such account 
and shall apply to all transfers into the account that are submitted on 
or after such date of receipt, unless and until the Administrator 
receives a statement signed by the CAIR authorized account 
representative retracting the authorization for the account.
    (2) The statement under paragraph (b)(1) of this section shall 
include the following: ``By this signature I authorize any transfer of 
allowances into each

[[Page 25436]]

account listed herein, except that I do not waive any remedies under 
State or Federal law to obtain correction of any erroneous transfers 
into such accounts. This authorization shall be binding on any CAIR 
authorized account representative for such account unless and until a 
statement signed by the CAIR authorized account representative 
retracting this authorization for the account is received by the 
Administrator.''


Sec.  97.261  EPA recordation.

    (a) Within 5 business days (except as necessary to perform a 
transfer in perpetuity of CAIR SO2 allowances allocated to a 
CAIR SO2 unit or as provided in paragraph (b) of this 
section) of receiving a CAIR SO2 allowance transfer, the 
Administrator will record a CAIR SO2 allowance transfer by 
moving each CAIR SO2 allowance from the transferor account 
to the transferee account as specified by the request, provided that:
    (1) The transfer is correctly submitted under Sec.  97.260;
    (2) The transferor account includes each CAIR SO2 
allowance identified by serial number in the transfer; and
    (3) The transfer is in accordance with the limitation on transfer 
under Sec.  74.42 of this chapter and Sec.  74.47(c) of this chapter, 
as applicable.
    (b) A CAIR SO2 allowance transfer that is submitted for 
recordation after the allowance transfer deadline for a control period 
and that includes any CAIR SO2 allowances allocated for any 
control period before such allowance transfer deadline will not be 
recorded until after the Administrator completes the deductions under 
Sec.  97.254 for the control period immediately before such allowance 
transfer deadline.
    (c) Where a CAIR SO2 allowance transfer submitted for 
recordation fails to meet the requirements of paragraph (a) of this 
section, the Administrator will not record such transfer.


Sec.  97.262  Notification.

    (a) Notification of recordation. Within 5 business days of 
recordation of a CAIR SO2 allowance transfer under Sec.  
97.261, the Administrator will notify the CAIR authorized account 
representatives of both the transferor and transferee accounts.
    (b) Notification of non-recordation. Within 10 business days of 
receipt of a CAIR SO2 allowance transfer that fails to meet 
the requirements of Sec.  97.261(a), the Administrator will notify the 
CAIR authorized account representatives of both accounts subject to the 
transfer of:
    (1) A decision not to record the transfer, and
    (2) The reasons for such non-recordation.
    (c) Nothing in this section shall preclude the submission of a CAIR 
SO2 allowance transfer for recordation following 
notification of non-recordation.

Subpart HHH--Monitoring and Reporting


Sec.  97.270  General requirements.

    The owners and operators, and to the extent applicable, the CAIR 
designated representative, of a CAIR SO2 unit, shall comply 
with the monitoring, recordkeeping, and reporting requirements as 
provided in this subpart and in subparts F and G of part 75 of this 
chapter. For purposes of complying with such requirements, the 
definitions in Sec.  97.202 and in Sec.  72.2 of this chapter shall 
apply, and the terms ``affected unit,'' ``designated representative,'' 
and ``continuous emission monitoring system'' (or ``CEMS'') in part 75 
of this chapter shall be deemed to refer to the terms ``CAIR 
SO2 unit,'' ``CAIR designated representative,'' and 
``continuous emission monitoring system'' or (``CEMS'') respectively, 
as defined in Sec.  97.202. The owner or operator of a unit that is not 
a CAIR SO2 unit but that is monitored under Sec.  
75.16(b)(2) of this chapter shall comply with the same monitoring, 
recordkeeping, and reporting requirements as a CAIR SO2 
unit.
    (a) Requirements for installation, certification, and data 
accounting. The owner or operator of each CAIR SO2 unit 
shall:
    (1) Install all monitoring systems required under this subpart for 
monitoring SO2 mass emissions and individual unit heat input 
(including all systems required to monitor SO2 
concentration, stack gas moisture content, stack gas flow rate, 
CO2 or O2 concentration, and fuel flow rate, as 
applicable, in accordance with Sec. Sec.  75.11 and 75.16 of this 
chapter);
    (2) Successfully complete all certification tests required under 
Sec.  97.271 and meet all other requirements of this subpart and part 
75 of this chapter applicable to the monitoring systems under paragraph 
(a)(1) of this section; and
    (3) Record, report, and quality-assure the data from the monitoring 
systems under paragraph (a)(1) of this section.
    (b) Compliance deadlines. Except as provided in paragraph (e) of 
this section, the owner or operator shall meet the monitoring system 
certification and other requirements of paragraphs (a)(1) and (2) of 
this section on or before the following dates. The owner or operator 
shall record, report, and quality-assure the data from the monitoring 
systems under paragraph (a)(1) of this section on and after the 
following dates.
    (1) For the owner or operator of a CAIR SO2 unit that 
commences commercial operation before July 1, 2008, by January 1, 2009.
    (2) For the owner or operator of a CAIR SO2 unit that 
commences commercial operation on or after July 1, 2008, by the later 
of the following dates:
    (i) January 1, 2009; or
    (ii) 90 unit operating days or 180 calendar days, whichever occurs 
first, after the date on which the unit commences commercial operation.
    (3) For the owner or operator of a CAIR SO2 unit for 
which construction of a new stack or flue or installation of add-on 
SO2 emission controls is completed after the applicable 
deadline under paragraph (b)(1), (2), (4), or (5) of this section, by 
90 unit operating days or 180 calendar days, whichever occurs first, 
after the date on which emissions first exit to the atmosphere through 
the new stack or flue or add-on SO2 emissions controls.
    (4) Notwithstanding the dates in paragraphs (b)(1) and (2) of this 
section, for the owner or operator of a unit for which a CAIR opt-in 
permit application is submitted and not withdrawn and a CAIR opt-in 
permit is not yet issued or denied under subpart III of this part, by 
the date specified in Sec.  97.284(b).
    (5) Notwithstanding the dates in paragraphs (b)(1) and (2) of this 
section, for the owner or operator of a CAIR SO2 opt-in unit 
under subpart III of this part, by the date on which the CAIR 
SO2 opt-in unit enters the CAIR SO2 Trading 
Program as provided in Sec.  97.284(g).
    (c) Reporting data. The owner or operator of a CAIR SO2 
unit that does not meet the applicable compliance date set forth in 
paragraph (b) of this section for any monitoring system under paragraph 
(a)(1) of this section shall, for each such monitoring system, 
determine, record, and report maximum potential (or, as appropriate, 
minimum potential) values for SO2 concentration, stack gas 
flow rate, stack gas moisture content, fuel flow rate, and any other 
parameters required to determine SO2 mass emissions and heat 
input in accordance with Sec.  75.31(b)(2) or (c)(3) of this chapter or 
section 2.4 of appendix D to part 75 of this chapter, as applicable.
    (d) Prohibitions. (1) No owner or operator of a CAIR SO2 
unit shall use any alternative monitoring system, alternative reference 
method, or any other alternative to any requirement of this subpart 
without having obtained

[[Page 25437]]

prior written approval in accordance with Sec.  97.275.
    (2) No owner or operator of a CAIR SO2 unit shall 
operate the unit so as to discharge, or allow to be discharged, 
SO2 emissions to the atmosphere without accounting for all 
such emissions in accordance with the applicable provisions of this 
subpart and part 75 of this chapter.
    (3) No owner or operator of a CAIR SO2 unit shall 
disrupt the continuous emission monitoring system, any portion thereof, 
or any other approved emission monitoring method, and thereby avoid 
monitoring and recording SO2 mass emissions discharged into 
the atmosphere or heat input, except for periods of recertification or 
periods when calibration, quality assurance testing, or maintenance is 
performed in accordance with the applicable provisions of this subpart 
and part 75 of this chapter.
    (4) No owner or operator of a CAIR SO2 unit shall retire 
or permanently discontinue use of the continuous emission monitoring 
system, any component thereof, or any other approved monitoring system 
under this subpart, except under any one of the following 
circumstances:
    (i) During the period that the unit is covered by an exemption 
under Sec.  97.205 that is in effect;
    (ii) The owner or operator is monitoring emissions from the unit 
with another certified monitoring system approved, in accordance with 
the applicable provisions of this subpart and part 75 of this chapter, 
by the Administrator for use at that unit that provides emission data 
for the same pollutant or parameter as the retired or discontinued 
monitoring system; or
    (iii) The CAIR designated representative submits notification of 
the date of certification testing of a replacement monitoring system 
for the retired or discontinued monitoring system in accordance with 
Sec.  97.271(d)(3)(i).
    (e) Long-term cold storage. The owner or operator of a CAIR 
SO2 unit is subject to the applicable provisions of part 75 
of this chapter concerning units in long-term cold storage.


Sec.  97.271  Initial certification and recertification procedures.

    (a) The owner or operator of a CAIR SO2 unit shall be 
exempt from the initial certification requirements of this section for 
a monitoring system under Sec.  97.270(a)(1) if the following 
conditions are met:
    (1) The monitoring system has been previously certified in 
accordance with part 75 of this chapter; and
    (2) The applicable quality-assurance and quality-control 
requirements of Sec.  75.21 of this chapter and appendix B and appendix 
D to part 75 of this chapter are fully met for the certified monitoring 
system described in paragraph (a)(1) of this section.
    (b) The recertification provisions of this section shall apply to a 
monitoring system under Sec.  97.270(a)(1) exempt from initial 
certification requirements under paragraph (a) of this section.
    (c) [Reserved]
    (d) Except as provided in paragraph (a) of this section, the owner 
or operator of a CAIR SO2 unit shall comply with the 
following initial certification and recertification procedures, for a 
continuous monitoring system (i.e., a continuous emission monitoring 
system and an excepted monitoring system under appendix D to part 75 of 
this chapter) under Sec.  97.270(a)(1). The owner or operator of a unit 
that qualifies to use the low mass emissions excepted monitoring 
methodology under Sec.  75.19 of this chapter or that qualifies to use 
an alternative monitoring system under subpart E of part 75 of this 
chapter shall comply with the procedures in paragraph (e) or (f) of 
this section respectively.
    (1) Requirements for initial certification. The owner or operator 
shall ensure that each continuous monitoring system under Sec.  
97.270(a)(1) (including the automated data acquisition and handling 
system) successfully completes all of the initial certification testing 
required under Sec.  75.20 of this chapter by the applicable deadline 
in Sec.  97.270(b). In addition, whenever the owner or operator 
installs a monitoring system to meet the requirements of this subpart 
in a location where no such monitoring system was previously installed, 
initial certification in accordance with Sec.  75.20 of this chapter is 
required.
    (2) Requirements for recertification. Whenever the owner or 
operator makes a replacement, modification, or change in any certified 
continuous emission monitoring system under Sec.  97.270(a)(1) that may 
significantly affect the ability of the system to accurately measure or 
record SO2 mass emissions or heat input rate or to meet the 
quality-assurance and quality-control requirements of Sec.  75.21 of 
this chapter or appendix B to part 75 of this chapter, the owner or 
operator shall recertify the monitoring system in accordance with Sec.  
75.20(b) of this chapter. Furthermore, whenever the owner or operator 
makes a replacement, modification, or change to the flue gas handling 
system or the unit's operation that may significantly change the stack 
flow or concentration profile, the owner or operator shall recertify 
each continuous emission monitoring system whose accuracy is 
potentially affected by the change, in accordance with Sec.  75.20(b) 
of this chapter. Examples of changes to a continuous emission 
monitoring system that require recertification include: replacement of 
the analyzer, complete replacement of an existing continuous emission 
monitoring system, or change in location or orientation of the sampling 
probe or site. Any fuel flowmeter system under Sec.  97.270(a)(1) is 
subject to the recertification requirements in Sec.  75.20(g)(6) of 
this chapter.
    (3) Approval process for initial certification and recertification. 
Paragraphs (d)(3)(i) through (iv) of this section apply to both initial 
certification and recertification of a continuous monitoring system 
under Sec.  97.270(a)(1). For recertifications, replace the words 
``certification'' and ``initial certification'' with the word 
``recertification'', replace the word ``certified'' with the word 
``recertified,'' and follow the procedures in Sec. Sec.  75.20(b)(5) 
and (g)(7) of this chapter in lieu of the procedures in paragraph 
(d)(3)(v) of this section.
    (i) Notification of certification. The CAIR designated 
representative shall submit to the appropriate EPA Regional Office and 
the Administrator written notice of the dates of certification testing, 
in accordance with Sec.  97.273.
    (ii) Certification application. The CAIR designated representative 
shall submit to the Administrator a certification application for each 
monitoring system. A complete certification application shall include 
the information specified in Sec.  75.63 of this chapter.
    (iii) Provisional certification date. The provisional certification 
date for a monitoring system shall be determined in accordance with 
Sec.  75.20(a)(3) of this chapter. A provisionally certified monitoring 
system may be used under the CAIR SO2 Trading Program for a 
period not to exceed 120 days after receipt by the Administrator of the 
complete certification application for the monitoring system under 
paragraph (d)(3)(ii) of this section. Data measured and recorded by the 
provisionally certified monitoring system, in accordance with the 
requirements of part 75 of this chapter, will be considered valid 
quality-assured data (retroactive to the date and time of provisional 
certification), provided that the Administrator does not invalidate the 
provisional certification by issuing a notice of disapproval within 120 
days of the date of receipt of the complete certification application 
by the Administrator.

[[Page 25438]]

    (iv) Certification application approval process. The Administrator 
will issue a written notice of approval or disapproval of the 
certification application to the owner or operator within 120 days of 
receipt of the complete certification application under paragraph 
(d)(3)(ii) of this section. In the event the Administrator does not 
issue such a notice within such 120-day period, each monitoring system 
that meets the applicable performance requirements of part 75 of this 
chapter and is included in the certification application will be deemed 
certified for use under the CAIR SO2 Trading Program.
    (A) Approval notice. If the certification application is complete 
and shows that each monitoring system meets the applicable performance 
requirements of part 75 of this chapter, then the Administrator will 
issue a written notice of approval of the certification application 
within 120 days of receipt.
    (B) Incomplete application notice. If the certification application 
is not complete, then the Administrator will issue a written notice of 
incompleteness that sets a reasonable date by which the CAIR designated 
representative must submit the additional information required to 
complete the certification application. If the CAIR designated 
representative does not comply with the notice of incompleteness by the 
specified date, then the Administrator may issue a notice of 
disapproval under paragraph (d)(3)(iv)(C) of this section. The 120-day 
review period shall not begin before receipt of a complete 
certification application.
    (C) Disapproval notice. If the certification application shows that 
any monitoring system does not meet the performance requirements of 
part 75 of this chapter or if the certification application is 
incomplete and the requirement for disapproval under paragraph 
(d)(3)(iv)(B) of this section is met, then the Administrator will issue 
a written notice of disapproval of the certification application. Upon 
issuance of such notice of disapproval, the provisional certification 
is invalidated by the Administrator and the data measured and recorded 
by each uncertified monitoring system shall not be considered valid 
quality-assured data beginning with the date and hour of provisional 
certification (as defined under Sec.  75.20(a)(3) of this chapter). The 
owner or operator shall follow the procedures for loss of certification 
in paragraph (d)(3)(v) of this section for each monitoring system that 
is disapproved for initial certification.
    (D) Audit decertification. The Administrator may issue a notice of 
disapproval of the certification status of a monitor in accordance with 
Sec.  97.272(b).
    (v) Procedures for loss of certification. If the Administrator 
issues a notice of disapproval of a certification application under 
paragraph (d)(3)(iv)(C) of this section or a notice of disapproval of 
certification status under paragraph (d)(3)(iv)(D) of this section, 
then:
    (A) The owner or operator shall substitute the following values, 
for each disapproved monitoring system, for each hour of unit operation 
during the period of invalid data specified under Sec.  
75.20(a)(4)(iii), Sec.  75.20(g)(7), or Sec.  75.21(e) of this chapter 
and continuing until the applicable date and hour specified under Sec.  
75.20(a)(5)(i) or (g)(7) of this chapter:
    (1) For a disapproved SO2 pollutant concentration 
monitor and disapproved flow monitor, respectively, the maximum 
potential concentration of SO2 and the maximum potential 
flow rate, as defined in sections 2.1.1.1 and 2.1.4.1 of appendix A to 
part 75 of this chapter.
    (2) For a disapproved moisture monitoring system and disapproved 
diluent gas monitoring system, respectively, the minimum potential 
moisture percentage and either the maximum potential CO2 
concentration or the minimum potential O2 concentration (as 
applicable), as defined in sections 2.1.5, 2.1.3.1, and 2.1.3.2 of 
appendix A to part 75 of this chapter.
    (3) For a disapproved fuel flowmeter system, the maximum potential 
fuel flow rate, as defined in section 2.4.2.1 of appendix D to part 75 
of this chapter.
    (B) The CAIR designated representative shall submit a notification 
of certification retest dates and a new certification application in 
accordance with paragraphs (d)(3)(i) and (ii) of this section.
    (C) The owner or operator shall repeat all certification tests or 
other requirements that were failed by the monitoring system, as 
indicated in the Administrator's notice of disapproval, no later than 
30 unit operating days after the date of issuance of the notice of 
disapproval.
    (e) Initial certification and recertification procedures for units 
using the low mass emission excepted methodology under Sec.  75.19 of 
this chapter. The owner or operator of a unit qualified to use the low 
mass emissions (LME) excepted methodology under Sec.  75.19 of this 
chapter shall meet the applicable certification and recertification 
requirements in Sec. Sec.  75.19(a)(2) and 75.20(h) of this chapter. If 
the owner or operator of such a unit elects to certify a fuel flowmeter 
system for heat input determination, the owner or operator shall also 
meet the certification and recertification requirements in Sec.  
75.20(g) of this chapter.
    (f) Certification/recertification procedures for alternative 
monitoring systems. The CAIR designated representative of each unit for 
which the owner or operator intends to use an alternative monitoring 
system approved by the Administrator under subpart E of part 75 of this 
chapter shall comply with the applicable notification and application 
procedures of Sec.  75.20(f) of this chapter.


Sec.  97.272  Out of control periods.

    (a) Whenever any monitoring system fails to meet the quality-
assurance and quality-control requirements or data validation 
requirements of part 75 of this chapter, data shall be substituted 
using the applicable missing data procedures in subpart D of appendix D 
to part 75 of this chapter.
    (b) Audit decertification. Whenever both an audit of a monitoring 
system and a review of the initial certification or recertification 
application reveal that any monitoring system should not have been 
certified or recertified because it did not meet a particular 
performance specification or other requirement under Sec.  97.271 or 
the applicable provisions of part 75 of this chapter, both at the time 
of the initial certification or recertification application submission 
and at the time of the audit, the Administrator will issue a notice of 
disapproval of the certification status of such monitoring system. For 
the purposes of this paragraph, an audit shall be either a field audit 
or an audit of any information submitted to the permitting authority or 
the Administrator. By issuing the notice of disapproval, the 
Administrator revokes prospectively the certification status of the 
monitoring system. The data measured and recorded by the monitoring 
system shall not be considered valid quality-assured data from the date 
of issuance of the notification of the revoked certification status 
until the date and time that the owner or operator completes 
subsequently approved initial certification or recertification tests 
for the monitoring system. The owner or operator shall follow the 
applicable initial certification or recertification procedures in Sec.  
97.271 for each disapproved monitoring system.

[[Page 25439]]

Sec.  97.273  Notifications.

    The CAIR designated representative for a CAIR SO2 unit 
shall submit written notice to the Administrator in accordance with 
Sec.  75.61 of this chapter. Sec.  97.274 Recordkeeping and reporting.
    (a) General provisions. The CAIR designated representative shall 
comply with all recordkeeping and reporting requirements in this 
section, the applicable recordkeeping and reporting requirements in 
subparts F and G of part 75 of this chapter, and the requirements of 
Sec.  97.210(e)(1).
    (b) Monitoring Plans. The owner or operator of a CAIR 
SO2 unit shall comply with requirements of Sec.  75.62 of 
this chapter and, for a unit for which a CAIR opt-in permit application 
is submitted and not withdrawn and a CAIR opt-in permit is not yet 
issued or denied under subpart III of this part, Sec. Sec.  97.283 and 
97.284(a).
    (c) Certification Applications. The CAIR designated representative 
shall submit an application to the Administrator within 45 days after 
completing all initial certification or recertification tests required 
under Sec.  97.271, including the information required under Sec.  
75.63 of this chapter.
    (d) Quarterly reports. The CAIR designated representative shall 
submit quarterly reports, as follows:
    (1) The CAIR designated representative shall report the 
SO2 mass emissions data and heat input data for the CAIR 
SO2 unit, in an electronic quarterly report in a format 
prescribed by the Administrator, for each calendar quarter beginning 
with:
    (i) For a unit that commences commercial operation before July 1, 
2008, the calendar quarter covering January 1, 2009 through March 31, 
2009;
    (ii) For a unit that commences commercial operation on or after 
July 1, 2008, the calendar quarter corresponding to the earlier of the 
date of provisional certification or the applicable deadline for 
initial certification under Sec.  97.270(b), unless that quarter is the 
third or fourth quarter of 2008, in which case reporting shall commence 
in the quarter covering January 1, 2009 through March 31, 2009;
    (iii) Notwithstanding paragraphs (d)(1)(i) and (ii) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart III of this part, the calendar quarter 
corresponding to the date specified in Sec.  97.284(b); and
    (iv) Notwithstanding paragraphs (d)(1)(i) and (ii) of this section, 
for a CAIR SO2 opt-in unit under subpart III of this part, 
the calendar quarter corresponding to the date on which the CAIR 
SO2 opt-in unit enters the CAIR SO2 Trading 
Program as provided in Sec.  97.284(g).
    (2) The CAIR designated representative shall submit each quarterly 
report to the Administrator within 30 days following the end of the 
calendar quarter covered by the report. Quarterly reports shall be 
submitted in the manner specified in Sec.  75.64 of this chapter.
    (3) For CAIR SO2 units that are also subject to an Acid 
Rain emissions limitation or the CAIR NOX Annual Trading 
Program, CAIR NOX Ozone Season Trading Program, or Hg Budget 
Trading Program, quarterly reports shall include the applicable data 
and information required by subparts F through I of part 75 of this 
chapter as applicable, in addition to the SO2 mass emission 
data, heat input data, and other information required by this subpart.
    (e) Compliance certification. The CAIR designated representative 
shall submit to the Administrator a compliance certification (in a 
format prescribed by the Administrator) in support of each quarterly 
report based on reasonable inquiry of those persons with primary 
responsibility for ensuring that all of the unit's emissions are 
correctly and fully monitored. The certification shall state that:
    (1) The monitoring data submitted were recorded in accordance with 
the applicable requirements of this subpart and part 75 of this 
chapter, including the quality assurance procedures and specifications; 
and
    (2) For a unit with add-on SO2 emission controls and for 
all hours where SO2 data are substituted in accordance with 
Sec.  75.34(a)(1) of this chapter, the add-on emission controls were 
operating within the range of parameters listed in the quality 
assurance/quality control program under appendix B to part 75 of this 
chapter and the substitute data values do not systematically 
underestimate SO2 emissions.


Sec.  97.275  Petitions.

    The CAIR designated representative of a CAIR SO2 unit 
may submit a petition under Sec.  75.66 of this chapter to the 
Administrator requesting approval to apply an alternative to any 
requirement of this subpart. Application of an alternative to any 
requirement of this subpart is in accordance with this subpart only to 
the extent that the petition is approved in writing by the 
Administrator, in consultation with the permitting authority.

Subpart III--CAIR SO2 Opt-in Units


Sec.  97.280  Applicability.

    A CAIR SO2 opt-in unit must be a unit that:
    (a) Is located in a State that submits, and for which the 
Administrator approves, a State implementation plan revision in 
accordance with Sec.  51.124(r)(1), (2), or (3) of this chapter 
establishing procedures concerning CAIR opt-in units;
    (b) Is not a CAIR SO2 unit under Sec.  97.204 and is not 
covered by a retired unit exemption under Sec.  97.205 that is in 
effect;
    (c) Is not covered by a retired unit exemption under Sec.  72.8 of 
this chapter that is in effect and is not an opt-in source under part 
74 of this chapter;
    (d) Has or is required or qualified to have a title V operating 
permit or other federally enforceable permit; and
    (e) Vents all of its emissions to a stack and can meet the 
monitoring, recordkeeping, and reporting requirements of subpart HH of 
this part.


Sec.  97.281   General.

    (a) Except as otherwise provided in Sec. Sec.  97.201 through 
97.204, Sec. Sec.  97.206 through 97.208, and subparts BBB and CCC and 
subparts FFF through HHH of this part, a CAIR SO2 opt-in 
unit shall be treated as a CAIR SO2 unit for purposes of 
applying such sections and subparts of this part.
    (b) Solely for purposes of applying, as provided in this subpart, 
the requirements of subpart HHH of this part to a unit for which a CAIR 
opt-in permit application is submitted and not withdrawn and a CAIR 
opt-in permit is not yet issued or denied under this subpart, such unit 
shall be treated as a CAIR SO2 unit before issuance of a 
CAIR opt-in permit for such unit.


Sec.  97.282  CAIR designated representative.

    Any CAIR SO2 opt-in unit, and any unit for which a CAIR 
opt-in permit application is submitted and not withdrawn and a CAIR 
opt-in permit is not yet issued or denied under this subpart, located 
at the same source as one or more CAIR SO2 units shall have 
the same CAIR designated representative and alternate CAIR designated 
representative as such CAIR SO2 units.


Sec.  97.283  Applying for CAIR opt-in permit.

    (a) Applying for initial CAIR opt-in permit. The CAIR designated 
representative of a unit meeting the requirements for a CAIR 
SO2 opt-in unit in Sec.  97.280 may apply for an initial 
CAIR opt-in permit at any time, except as provided under Sec.  
97.286(f) and (g),

[[Page 25440]]

and, in order to apply, must submit the following:
    (1) A complete CAIR permit application under Sec.  97.222;
    (2) A certification, in a format specified by the permitting 
authority, that the unit:
    (i) Is not a CAIR SO2 unit under Sec.  97.204 and is not 
covered by a retired unit exemption under Sec.  97.205 that is in 
effect;
    (ii) Is not covered by a retired unit exemption under Sec.  72.8 of 
this chapter that is in effect;
    (iii) Is not, and so long as the unit is a CAIR SO2 opt-
in unit, will not become, an opt-in source under part 74 of this 
chapter;
    (iv) Vents all of its emissions to a stack, and
    (v) Has documented heat input for more than 876 hours during the 6 
months immediately preceding submission of the CAIR permit application 
under Sec.  97.222;
    (3) A monitoring plan in accordance with subpart HHH of this part;
    (4) A complete certificate of representation under Sec.  97.213 
consistent with Sec.  97.282, if no CAIR designated representative has 
been previously designated for the source that includes the unit; and
    (5) A statement, in a format specified by the permitting authority, 
whether the CAIR designated representative requests that the unit be 
allocated CAIR SO2 allowances under Sec.  97.288(b) or Sec.  
97.288(c) (subject to the conditions in Sec. Sec.  97.284(h) and 
97.286(g)), to the extent such allocation is provided in a State 
implementation plan revision submitted in accordance with Sec.  
51.124(r)(1), (2), or (3) of this chapter and approved by the 
Administrator. If allocation under Sec.  97.288(c) is requested, this 
statement shall include a statement that the owners and operators of 
the unit intend to repower the unit before January 1, 2015 and that 
they will provide, upon request, documentation demonstrating such 
intent.
    (b) Duty to reapply. (1) The CAIR designated representative of a 
CAIR SO2 opt-in unit shall submit a complete CAIR permit 
application under Sec.  97.222 to renew the CAIR opt-in unit permit in 
accordance with the permitting authority's regulations for title V 
operating permits, or the permitting authority's regulations for other 
federally enforceable permits if applicable, addressing permit renewal.
    (2) Unless the permitting authority issues a notification of 
acceptance of withdrawal of the CAIR SO2 opt-in unit from 
the CAIR SO2 Trading Program in accordance with Sec.  97.286 
or the unit becomes a CAIR SO2 unit under Sec.  97.204, the 
CAIR SO2 opt-in unit shall remain subject to the 
requirements for a CAIR SO2 opt-in unit, even if the CAIR 
designated representative for the CAIR SO2 opt-in unit fails 
to submit a CAIR permit application that is required for renewal of the 
CAIR opt-in permit under paragraph (b)(1) of this section.


Sec.  97.284  Opt-in process.

    The permitting authority will issue or deny a CAIR opt-in permit 
for a unit for which an initial application for a CAIR opt-in permit 
under Sec.  97.183 is submitted in accordance with the following, to 
the extent provided in a State implementation plan revision submitted 
in accordance with Sec.  51.124(r)(1), (2), or (3) of this chapter and 
approved by the Administrator:
    (a) Interim review of monitoring plan. The permitting authority and 
the Administrator will determine, on an interim basis, the sufficiency 
of the monitoring plan accompanying the initial application for a CAIR 
opt-in permit under Sec.  97.283. A monitoring plan is sufficient, for 
purposes of interim review, if the plan appears to contain information 
demonstrating that the SO2 emissions rate and heat input of 
the unit and all other applicable parameters are monitored and reported 
in accordance with subpart HHH of this part. A determination of 
sufficiency shall not be construed as acceptance or approval of the 
monitoring plan.
    (b) Monitoring and reporting. (1)(i) If the permitting authority 
and the Administrator determine that the monitoring plan is sufficient 
under paragraph (a) of this section, the owner or operator shall 
monitor and report the SO2 emissions rate and the heat input 
of the unit and all other applicable parameters, in accordance with 
subpart HHH of this part, starting on the date of certification of the 
appropriate monitoring systems under subpart HHH of this part and 
continuing until a CAIR opt-in permit is denied under Sec.  97.284(f) 
or, if a CAIR opt-in permit is issued, the date and time when the unit 
is withdrawn from the CAIR SO2 Trading Program in accordance 
with Sec.  97.286.
    (ii) The monitoring and reporting under paragraph (b)(1)(i) of this 
section shall include the entire control period immediately before the 
date on which the unit enters the CAIR SO2 Trading Program 
under Sec.  97.284(g), during which period monitoring system 
availability must not be less than 90 percent under subpart HHH of this 
part and the unit must be in full compliance with any applicable State 
or Federal emissions or emissions-related requirements.
    (2) To the extent the SO2 emissions rate and the heat 
input of the unit are monitored and reported in accordance with subpart 
HHH of this part for one or more control periods, in addition to the 
control period under paragraph (b)(1)(ii) of this section, during which 
control periods monitoring system availability is not less than 90 
percent under subpart HHH of this part and the unit is in full 
compliance with any applicable State or Federal emissions or emissions-
related requirements and which control periods begin not more than 3 
years before the unit enters the CAIR SO2 Trading Program 
under Sec.  97.284(g), such information shall be used as provided in 
paragraphs (c) and (d) of this section.
    (c) Baseline heat input. The unit's baseline heat rate shall equal:
    (1) If the unit's SO2 emissions rate and heat input are 
monitored and reported for only one control period, in accordance with 
paragraph (b)(1) of this section, the unit's total heat input (in 
mmBtu) for the control period; or
    (2) If the unit's SO2 emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, the average of the 
amounts of the unit(s total heat input (in mmBtu) for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section.
    (d) Baseline SO2 emission rate. The unit's baseline SO2 
emission rate shall equal:
    (1) If the unit's SO2 emissions rate and heat input are 
monitored and reported for only one control period, in accordance with 
paragraph (b)(1) of this section, the unit's SO2 emissions 
rate (in lb/mmBtu) for the control period;
    (2) If the unit's SO2 emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, and the unit does not 
have add-on SO2 emission controls during any such control 
periods, the average of the amounts of the unit's SO2 
emissions rate (in lb/mmBtu) for the control periods under paragraphs 
(b)(1)(ii) and (b)(2) of this section; or
    (3) If the unit's SO2 emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, and the unit has add-on 
SO2 emission controls during any such control periods, the 
average of the amounts of the unit's SO2 emissions rate (in 
lb/mmBtu) for such control periods during which the unit has add-on 
SO2 emission controls.
    (e) Issuance of CAIR opt-in permit. After calculating the baseline 
heat input

[[Page 25441]]

and the baseline SO2 emissions rate for the unit under 
paragraphs (c) and (d) of this section and if the permitting authority 
determines that the CAIR designated representative shows that the unit 
meets the requirements for a CAIR SO2 opt-in unit in Sec.  
97.280 and meets the elements certified in Sec.  97.283(a)(2), the 
permitting authority will issue a CAIR opt-in permit. The permitting 
authority will provide a copy of the CAIR opt-in permit to the 
Administrator, who will then establish a compliance account for the 
source that includes the CAIR SO2 opt-in unit unless the 
source already has a compliance account.
    (f) Issuance of denial of CAIR opt-in permit. Notwithstanding 
paragraphs (a) through (e) of this section, if at any time before 
issuance of a CAIR opt-in permit for the unit, the permitting authority 
determines that the CAIR designated representative fails to show that 
the unit meets the requirements for a CAIR SO2 opt-in unit 
in Sec.  97.280 or meets the elements certified in Sec.  97.283(a)(2), 
the permitting authority will issue a denial of a CAIR opt-in permit 
for the unit.
    (g) Date of entry into CAIR SO2 Trading Program. A unit for which 
an initial CAIR opt-in permit is issued by the permitting authority 
shall become a CAIR SO2 opt-in unit, and a CAIR 
SO2 unit, as of the later of January 1, 2010 or January 1 of 
the first control period during which such CAIR opt-in permit is 
issued.
    (h) Repowered CAIR SO2 opt-in unit. (1) If CAIR designated 
representative requests, and the permitting authority issues a CAIR 
opt-in permit providing for, allocation to a CAIR SO2 opt-in 
unit of CAIR SO2 allowances under Sec.  97.288(c) and such 
unit is repowered after its date of entry into the CAIR SO2 
Trading Program under paragraph (g) of this section, the repowered unit 
shall be treated as a CAIR SO2 opt-in unit replacing the 
original CAIR SO2 opt-in unit, as of the date of start-up of 
the repowered unit's combustion chamber.
    (2) Notwithstanding paragraphs (c) and (d) of this section, as of 
the date of start-up under paragraph (h)(1) of this section, the 
repowered unit shall be deemed to have the same date of commencement of 
operation, date of commencement of commercial operation, baseline heat 
input, and baseline SO2 emission rate as the original CAIR 
SO2 opt-in unit, and the original CAIR SO2 opt-in 
unit shall no longer be treated as a CAIR SO2 opt-in unit or 
a CAIR SO2 unit.


Sec.  97.285  CAIR opt-in permit contents.

    (a) Each CAIR opt-in permit will contain:
    (1) All elements required for a complete CAIR permit application 
under Sec.  97.222;
    (2) The certification in Sec.  97.283(a)(2);
    (3) The unit's baseline heat input under Sec.  97.284(c);
    (4) The unit's baseline SO2 emission rate under Sec.  
97.284(d);
    (5) A statement whether the unit is to be allocated CAIR 
SO2 allowances under Sec.  97.288(b) or Sec.  97.288(c) 
(subject to the conditions in Sec. Sec.  97.284(h) and 97.286(g));
    (6) A statement that the unit may withdraw from the CAIR 
SO2 Trading Program only in accordance with Sec.  97.286; 
and
    (7) A statement that the unit is subject to, and the owners and 
operators of the unit must comply with, the requirements of Sec.  
97.287.
    (b) Each CAIR opt-in permit is deemed to incorporate automatically 
the definitions of terms under Sec.  97.202 and, upon recordation by 
the Administrator under subpart FFF or GGG of this part or this 
subpart, every allocation, transfer, or deduction of CAIR 
SO2 allowances to or from the compliance account of the 
source that includes a CAIR SO2 opt-in unit covered by the 
CAIR opt-in permit.
    (c) The CAIR opt-in permit shall be included, in a format specified 
by the permitting authority, in the CAIR permit for the source where 
the CAIR SO2 opt-in unit is located and in a title V 
operating permit or other federally enforceable permit for the source.


Sec.  97.286  Withdrawal from CAIR SO2 Trading Program.

    Except as provided under paragraph (g) of this section, a CAIR 
SO2 opt-in unit may withdraw from the CAIR SO2 
Trading Program, but only if the permitting authority issues a 
notification to the CAIR designated representative of the CAIR 
SO2 opt-in unit of the acceptance of the withdrawal of the 
CAIR SO2 opt-in unit in accordance with paragraph (d) of 
this section.
    (a) Requesting withdrawal. In order to withdraw a CAIR 
SO2 opt-in unit from the CAIR SO2 Trading 
Program, the CAIR designated representative of the CAIR SO2 
opt-in unit shall submit to the permitting authority a request to 
withdraw effective as of midnight of December 31 of a specified 
calendar year, which date must be at least 4 years after December 31 of 
the year of entry into the CAIR SO2 Trading Program under 
Sec.  97.284(g). The request must be submitted no later than 90 days 
before the requested effective date of withdrawal.
    (b) Conditions for withdrawal. Before a CAIR SO2 opt-in 
unit covered by a request under paragraph (a) of this section may 
withdraw from the CAIR SO2 Trading Program and the CAIR opt-
in permit may be terminated under paragraph (e) of this section, the 
following conditions must be met:
    (1) For the control period ending on the date on which the 
withdrawal is to be effective, the source that includes the CAIR 
SO2 opt-in unit must meet the requirement to hold CAIR 
SO2 allowances under Sec.  97.206(c) and cannot have any 
excess emissions.
    (2) After the requirement for withdrawal under paragraph (b)(1) of 
this section is met, the Administrator will deduct from the compliance 
account of the source that includes the CAIR SO2 opt-in unit 
CAIR SO2 allowances equal in amount to and allocated for the 
same or a prior control period as any CAIR SO2 allowances 
allocated to the CAIR SO2 opt-in unit under Sec.  97.288 for 
any control period for which the withdrawal is to be effective. If 
there are no remaining CAIR SO2 units at the source, the 
Administrator will close the compliance account, and the owners and 
operators of the CAIR SO2 opt-in unit may submit a CAIR 
SO2 allowance transfer for any remaining CAIR SO2 
allowances to another CAIR SO2 Allowance Tracking System in 
accordance with subpart GGG of this part.
    (c) Notification. (1) After the requirements for withdrawal under 
paragraphs (a) and (b) of this section are met (including deduction of 
the full amount of CAIR SO2 allowances required), the 
permitting authority will issue a notification to the CAIR designated 
representative of the CAIR SO2 opt-in unit of the acceptance 
of the withdrawal of the CAIR SO2 opt-in unit as of midnight 
on December 31 of the calendar year for which the withdrawal was 
requested.
    (2) If the requirements for withdrawal under paragraphs (a) and (b) 
of this section are not met, the permitting authority will issue a 
notification to the CAIR designated representative of the CAIR 
SO2 opt-in unit that the CAIR SO2 opt-in unit's 
request to withdraw is denied. Such CAIR SO2 opt-in unit 
shall continue to be a CAIR SO2 opt-in unit.
    (d) Permit amendment. After the permitting authority issues a 
notification under paragraph (c)(1) of this section that the 
requirements for withdrawal have been met, the permitting authority 
will revise the CAIR permit covering the CAIR SO2 opt-in 
unit to terminate the CAIR opt-in permit for such unit as of the 
effective date specified under paragraph (c)(1) of

[[Page 25442]]

this section. The unit shall continue to be a CAIR SO2 opt-
in unit until the effective date of the termination and shall comply 
with all requirements under the CAIR SO2 Trading Program 
concerning any control periods for which the unit is a CAIR 
SO2 opt-in unit, even if such requirements arise or must be 
complied with after the withdrawal takes effect.
    (e) Reapplication upon failure to meet conditions of withdrawal. If 
the permitting authority denies the CAIR SO2 opt-in unit's 
request to withdraw, the CAIR designated representative may submit 
another request to withdraw in accordance with paragraphs (a) and (b) 
of this section.
    (f) Ability to reapply to the CAIR SO2 Trading Program. Once a CAIR 
SO2 opt-in unit withdraws from the CAIR SO2 
Trading Program and its CAIR opt-in permit is terminated under this 
section, the CAIR designated representative may not submit another 
application for a CAIR opt-in permit under Sec.  97.283 for such CAIR 
SO2 opt-in unit before the date that is 4 years after the 
date on which the withdrawal became effective. Such new application for 
a CAIR opt-in permit will be treated as an initial application for a 
CAIR opt-in permit under Sec.  97.284.
    (g) Inability to withdraw. Notwithstanding paragraphs (a) through 
(f) of this section, a CAIR SO2 opt-in unit shall not be 
eligible to withdraw from the CAIR SO2 Trading Program if 
the CAIR designated representative of the CAIR SO2 opt-in 
unit requests, and the permitting authority issues a CAIR opt-in permit 
providing for, allocation to the CAIR SO2 opt-in unit of 
CAIR SO2 allowances under Sec.  97.288(c).


Sec.  97.287  Change in regulatory status.

    (a) Notification. If a CAIR SO2 opt-in unit becomes a 
CAIR SO2 unit under Sec.  97.204, then the CAIR designated 
representative shall notify in writing the permitting authority and the 
Administrator of such change in the CAIR SO2 opt-in unit's 
regulatory status, within 30 days of such change.
    (b) Permitting authority's and Administrator's actions. (1) If a 
CAIR SO2 opt-in unit becomes a CAIR SO2 unit 
under Sec.  97.204, the permitting authority will revise the CAIR 
SO2 opt-in unit's CAIR opt-in permit to meet the 
requirements of a CAIR permit under Sec.  97.223, and remove the CAIR 
opt-in permit provisions, as of the date on which the CAIR 
SO2 opt-in unit becomes a CAIR SO2 unit under 
Sec.  97.204.
    (2)(i) The Administrator will deduct from the compliance account of 
the source that includes the CAIR SO2 opt-in unit that 
becomes a CAIR SO2 unit under Sec.  97.204, CAIR 
SO2 allowances equal in amount to and allocated for the same 
or a prior control period as:
    (A) Any CAIR SO2 allowances allocated to the CAIR 
SO2 opt-in unit under Sec.  97.288 for any control period 
after the date on which the CAIR SO2 opt-in unit becomes a 
CAIR SO2 unit under Sec.  97.204; and
    (B) If the date on which the CAIR SO2 opt-in unit 
becomes a CAIR SO2 unit under Sec.  97.204 is not December 
31, the CAIR SO2 allowances allocated to the CAIR 
SO2 opt-in unit under Sec.  97.288 for the control period 
that includes the date on which the CAIR SO2 opt-in unit 
becomes a CAIR SO2 unit under Sec.  97.204, multiplied by 
the ratio of the number of days, in the control period, starting with 
the date on which the CAIR SO2 opt-in unit becomes a CAIR 
SO2 unit under Sec.  97.204 divided by the total number of 
days in the control period and rounded to the nearest whole allowance 
as appropriate.
    (ii) The CAIR designated representative shall ensure that the 
compliance account of the source that includes the CAIR SO2 
unit that becomes a CAIR SO2 unit under Sec.  97.204 
contains the CAIR SO2 allowances necessary for completion of 
the deduction under paragraph (b)(2)(i) of this section.


Sec.  97.288  CAIR SO2 allowance allocations to CAIR 
SO2 opt-in units.

    (a) Timing requirements. (1) When the CAIR opt-in permit is issued 
under Sec.  97.284(e), the permitting authority will allocate CAIR 
SO2 allowances to the CAIR SO2 opt-in unit, and 
submit to the Administrator the allocation for the control period in 
which a CAIR SO2 opt-in unit enters the CAIR SO2 
Trading Program under Sec.  97.284(g), in accordance with paragraph (b) 
or (c) of this section.
    (2) By no later than October 31 of the control period after the 
control period in which a CAIR SO2 opt-in unit enters the 
CAIR SO2 Trading Program under Sec.  97.284(g) and October 
31 of each year thereafter, the permitting authority will allocate CAIR 
SO2 allowances to the CAIR SO2 opt-in unit, and 
submit to the Administrator the allocation for the control period that 
includes such submission deadline and in which the unit is a CAIR 
SO2 opt-in unit, in accordance with paragraph (b) or (c) of 
this section.
    (b) Calculation of allocation. For each control period for which a 
CAIR SO2 opt-in unit is to be allocated CAIR SO2 
allowances, the permitting authority will allocate in accordance with 
the following procedures, if provided in a State implementation plan 
revision submitted in accordance with Sec.  51.124(r)(1), (2), or (3) 
of this chapter and approved by the Administrator:
    (1) The heat input (in mmBtu) used for calculating the CAIR 
SO2 allowance allocation will be the lesser of:
    (i) The CAIR SO2 opt-in unit's baseline heat input 
determined under Sec.  97.284(c); or
    (ii) The CAIR SO2 opt-in unit's heat input, as 
determined in accordance with subpart HHH of this part, for the 
immediately prior control period, except when the allocation is being 
calculated for the control period in which the CAIR SO2 opt-
in unit enters the CAIR SO2 Trading Program under Sec.  
97.284(g).
    (2) The SO2 emission rate (in lb/mmBtu) used for 
calculating CAIR SO2 allowance allocations will be the 
lesser of:
    (i) The CAIR SO2 opt-in unit's baseline SO2 
emissions rate (in lb/mmBtu) determined under Sec.  97.284(d) and 
multiplied by 70 percent; or
    (ii) The most stringent State or Federal SO2 emissions 
limitation applicable to the CAIR SO2 opt-in unit at any 
time during the control period for which CAIR SO2 allowances 
are to be allocated.
    (3) The permitting authority will allocate CAIR SO2 
allowances to the CAIR SO2 opt-in unit with a tonnage 
equivalent equal to, or less than by the smallest possible amount, the 
heat input under paragraph (b)(1) of this section, multiplied by the 
SO2 emission rate under paragraph (b)(2) of this section, 
and divided by 2,000 lb/ton.
    (c) Notwithstanding paragraph (b) of this section and if the CAIR 
designated representative requests, and the permitting authority issues 
a CAIR opt-in permit (based on a demonstration of the intent to repower 
stated under Sec.  97.283(a)(5)) providing for, allocation to a CAIR 
SO2 opt-in unit of CAIR SO2 allowances under this 
paragraph (subject to the conditions in Sec. Sec.  97.284(h) and 
97.286(g)), the permitting authority will allocate to the CAIR 
SO2 opt-in unit as follows, if provided in a State 
implementation plan revision submitted in accordance with Sec.  
51.124(r)(1), (2), or (3) of this chapter and approved by the 
Administrator:
    (1) For each control period in 2010 through 2014 for which the CAIR 
SO2 opt-in unit is to be allocated CAIR SO2 
allowances,
    (i) The heat input (in mmBtu) used for calculating CAIR 
SO2 allowance allocations will be determined as described in 
paragraph (b)(1) of this section.

[[Page 25443]]

    (ii) The SO2 emission rate (in lb/mmBtu) used for 
calculating CAIR SO2 allowance allocations will be the 
lesser of:
    (A) The CAIR SO2 opt-in unit's baseline SO2 
emissions rate (in lb/mmBtu) determined under Sec.  97.284(d); or
    (B) The most stringent State or Federal SO2 emissions 
limitation applicable to the CAIR SO2 opt-in unit at any 
time during the control period in which the CAIR SO2 opt-in 
unit enters the CAIR SO2 Trading Program under Sec.  
97.284(g).
    (iii) The permitting authority will allocate CAIR SO2 
allowances to the CAIR SO2 opt-in unit with a tonnage 
equivalent equal to, or less than by the smallest possible amount, the 
heat input under paragraph (c)(1)(i) of this section, multiplied by the 
SO2 emission rate under paragraph (c)(1)(ii) of this 
section, and divided by 2,000 lb/ton.
    (2) For each control period in 2015 and thereafter for which the 
CAIR SO2 opt-in unit is to be allocated CAIR SO2 
allowances,
    (i) The heat input (in mmBtu) used for calculating the CAIR 
SO2 allowance allocations will be determined as described in 
paragraph (b)(1) of this section.
    (ii) The SO2 emission rate (in lb/mmBtu) used for 
calculating the CAIR SO2 allowance allocation will be the 
lesser of:
    (A) The CAIR SO2 opt-in unit's baseline SO2 
emissions rate (in lb/mmBtu) determined under Sec.  97.284(d) 
multiplied by 10 percent; or
    (B) The most stringent State or Federal SO2 emissions 
limitation applicable to the CAIR SO2 opt-in unit at any 
time during the control period for which CAIR SO2 allowances 
are to be allocated.
    (iii) The permitting authority will allocate CAIR SO2 
allowances to the CAIR SO2 opt-in unit with a tonnage 
equivalent equal to, or less than by the smallest possible amount, the 
heat input under paragraph (c)(2)(i) of this section, multiplied by the 
SO2 emission rate under paragraph (c)(2)(ii) of this 
section, and divided by 2,000 lb/ton.
    (d) Recordation. If provided in a State implementation plan 
revision submitted in accordance with Sec.  51.124(r)(1), (2), or (3) 
of this chapter and approved by the Administrator:
    (1) The Administrator will record, in the compliance account of the 
source that includes the CAIR SO2 opt-in unit, the CAIR 
SO2 allowances allocated by the permitting authority to the 
CAIR SO2 opt-in unit under paragraph (a)(1) of this section.
    (2) By December 1 of the control period in which a CAIR 
SO2 opt-in unit enters the CAIR SO2 Trading 
Program under Sec.  97.284(g) and December 1 of each year thereafter, 
the Administrator will record, in the compliance account of the source 
that includes the CAIR SO2 opt-in unit, the CAIR 
SO2 allowances allocated by the permitting authority to the 
CAIR SO2 opt-in unit under paragraph (a)(2) of this section.

Appendix A to Subpart III of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR SO2 Opt-In 
Units

    1. The following States have State Implementation Plan revisions 
under Sec.  51.124(r) of this chapter approved by the Administrator 
and establishing procedures providing for CAIR SO2 opt-in 
units under subpart III of this part and allocation of CAIR 
SO2 allowances to such units under Sec.  97.288(b):
    [Reserved]
    2. The following States have State Implementation Plan revisions 
under Sec.  51.124(r) of this chapter approved by the Administrator 
and establishing procedures providing for CAIR SO2 opt-in 
units under subpart III of this part and allocation of CAIR 
SO2 allowances to such units under Sec.  97.288(c):
    [Reserved]


0
5. Part 97 is amended by adding subparts AAAA through IIII to read as 
follows:
Subpart AAAA--CAIR NOX Ozone Season Trading Program General 
Provisions
Sec.
97.301 Purpose.
97.302 Definitions.
97.303 Measurements, abbreviations, and acronyms.
97.304 Applicability.
97.305 Retired unit exemption.
97.306 Standard requirements.
97.307 Computation of time.
97.308 Appeal procedures.

Appendix A to Subpart AAAA of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Applicability

Subpart BBBB--CAIR Designated Representative for CAIR NOX 
Ozone Season Sources
97.310 Authorization and responsibilities of CAIR designated 
representative.
97.311 Alternate CAIR designated representative.
97.312 Changing CAIR designated representative and alternate CAIR 
designated representative; changes in owners and operators.
97.313 Certificate of representation.
97.314 Objections concerning CAIR designated representative.
97.315 Delegation by CAIR designated representative and alternate 
CAIR designated representative.
Subpart CCCC--Permits
97.320 General CAIR NOX Ozone Season Trading Program 
permit requirements.
97.321 Submission of CAIR permit applications.
97.322 Information requirements for CAIR permit applications.
97.323 CAIR permit contents and term.
97.324 CAIR permit revisions.
Subpart DDDD--[Reserved]
Subpart EEEE--CAIR NOX Ozone Season Allowance Allocations
97.340 State trading budgets.
97.341 Timing requirements for CAIR NOX Ozone Season 
allowance allocations.
97.342 CAIR NOX Ozone Season allowance allocations.
97.343 Alternative of allocation of CAIR NOX Ozone Season 
allowances by permitting authority.

Appendix A to Subpart EEEE of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Allocations

Subpart FFFF--CAIR NOX Ozone Season Allowance Tracking 
System
97.350 [Reserved]
97.351 Establishment of accounts.
97.352 Responsibilities of CAIR authorized account representative.
97.353 Recordation of CAIR NOX Ozone Season allowance 
allocations.
97.354 Compliance with CAIR NOX emissions limitation.
97.355 Banking.
97.356 Account error.
97.357 Closing of general accounts.
Subpart GGGG--CAIR NOX Ozone Season Allowance Transfers
97.360 Submission of CAIR NOX Ozone Season allowance 
transfers.
97.361 EPA recordation.
97.362 Notification.
Subpart HHHH--Monitoring and Reporting
97.370 General requirements.
97.371 Initial certification and recertification procedures.
97.372 Out of control periods.
97.373 Notifications.
97.374 Recordkeeping and reporting.
97.375 Petitions.
Subpart IIII--CAIR NOX Ozone Season Opt-in Units
97.380 Applicability.
97.381 General.
97.382 CAIR designated representative.
97.383 Applying for CAIR opt-in permit.
97.384 Opt-in process.
97.385 CAIR opt-in permit contents.
97.386 Withdrawal from CAIR NOX Ozone Season Trading 
Program.
97.387 Change in regulatory status.
97.388 CAIR NOX Ozone Season allowance allocations to 
CAIR NOX Ozone Season opt-in units.

[[Page 25444]]

Appendix A to Subpart IIII of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR NOX Ozone 
Season Opt-In Units

Subpart AAAA--CAIR NOX Ozone Season Trading Program 
General Provisions


Sec.  97.301  Purpose.

    This subpart and subparts BBBB through IIII set forth the general 
provisions and the designated representative, permitting, allowance, 
monitoring, and opt-in provisions for the Federal Clean Air Interstate 
Rule (CAIR) NOX Ozone Season Trading Program, under section 
110 of the Clean Air Act and Sec.  52.35 of this chapter, as a means of 
mitigating interstate transport of ozone and nitrogen oxides.


Sec.  97.302  Definitions.

    The terms used in this subpart and subparts BBBB through IIII shall 
have the meanings set forth in this section as follows:
    Account number means the identification number given by the 
Administrator to each CAIR NOX Ozone Season Allowance 
Tracking System account.
    Acid Rain emissions limitation means a limitation on emissions of 
sulfur dioxide or nitrogen oxides under the Acid Rain Program.
    Acid Rain Program means a multi-state sulfur dioxide and nitrogen 
oxides air pollution control and emission reduction program established 
by the Administrator under title IV of the CAA and parts 72 through 78 
of this chapter.
    Administrator means the Administrator of the United States 
Environmental Protection Agency or the Administrator's duly authorized 
representative.
    Allocate or allocation means, with regard to CAIR NOX 
Ozone Season allowances, the determination by a permitting authority or 
the Administrator of the amount of such CAIR NOX Ozone 
Season allowances to be initially credited to a CAIR NOX 
Ozone Season unit, a new unit set-aside, or other entity.
    Allowance transfer deadline means, for a control period, midnight 
of November 30 (if it is a business day), or midnight of the first 
business day thereafter (if November 30 is not a business day), 
immediately following the control period and is the deadline by which a 
CAIR NOX Ozone Season allowance transfer must be submitted 
for recordation in a CAIR NOX Ozone Season source's 
compliance account in order to be used to meet the source's CAIR 
NOX Ozone Season emissions limitation for such control 
period in accordance with Sec.  97.354.
    Alternate CAIR designated representative means, for a CAIR 
NOX Ozone Season source and each CAIR NOX Ozone 
Season unit at the source, the natural person who is authorized by the 
owners and operators of the source and all such units at the source in 
accordance with subparts BBBB and IIII of this part, to act on behalf 
of the CAIR designated representative in matters pertaining to the CAIR 
NOX Ozone Season Trading Program. If the CAIR NOX 
Ozone Season source is also a CAIR NOX source, then this 
natural person shall be the same person as the alternate CAIR 
designated representative under the CAIR NOX Annual Trading 
Program. If the CAIR NOX Ozone Season source is also a CAIR 
SO2 source, then this natural person shall be the same 
person as the alternate CAIR designated representative under the CAIR 
SO2 Trading Program. If the CAIR NOX Ozone Season 
source is also subject to the Acid Rain Program, then this natural 
person shall be the same person as the alternate designated 
representative under the Acid Rain Program. If the CAIR NOX 
Ozone Season source is also subject to the Hg Budget Trading Program, 
then this natural person shall be the same person as the alternate Hg 
designated representative under the Hg Budget Trading Program.
    Automated data acquisition and handling system or DAHS means that 
component of the continuous emission monitoring system, or other 
emissions monitoring system approved for use under subpart HHHH of this 
part, designed to interpret and convert individual output signals from 
pollutant concentration monitors, flow monitors, diluent gas monitors, 
and other component parts of the monitoring system to produce a 
continuous record of the measured parameters in the measurement units 
required by subpart HHHH of this part.
    Boiler means an enclosed fossil-or other-fuel-fired combustion 
device used to produce heat and to transfer heat to recirculating 
water, steam, or other medium.
    Bottoming-cycle cogeneration unit means a cogeneration unit in 
which the energy input to the unit is first used to produce useful 
thermal energy and at least some of the reject heat from the useful 
thermal energy application or process is then used for electricity 
production.
    CAIR authorized account representative means, with regard to a 
general account, a responsible natural person who is authorized, in 
accordance with subparts BBBB, FFFF, and IIII of this part, to transfer 
and otherwise dispose of CAIR NOX Ozone Season allowances 
held in the general account and, with regard to a compliance account, 
the CAIR designated representative of the source.
    CAIR designated representative means, for a CAIR NOX 
Ozone Season source and each CAIR NOX Ozone Season unit at 
the source, the natural person who is authorized by the owners and 
operators of the source and all such units at the source, in accordance 
with subparts BBBB and IIII of this part, to represent and legally bind 
each owner and operator in matters pertaining to the CAIR 
NOX Ozone Season Trading Program. If the CAIR NOX 
Ozone Season source is also a CAIR NOX source, then this 
natural person shall be the same person as the CAIR designated 
representative under the CAIR NOX Annual Trading Program. If 
the CAIR NOX Ozone Season source is also a CAIR 
SO2 source, then this natural person shall be the same 
person as the CAIR designated representative under the CAIR 
SO2 Trading Program. If the CAIR NOX Ozone Season 
source is also subject to the Acid Rain Program, then this natural 
person shall be the same person as the designated representative under 
the Acid Rain Program. If the CAIR NOX Ozone Season source 
is also subject to the Hg Budget Trading Program, then this natural 
person shall be the same person as the Hg designated representative 
under the Hg Budget Trading Program.
    CAIR NOX Annual Trading Program means a multi-state nitrogen oxides 
air pollution control and emission reduction program established by the 
Administrator in accordance with subparts AA through II of this part 
and Sec. Sec.  51.123(p) and 52.35 of this chapter or approved and 
administered by the Administrator in accordance with subparts AA 
through II of part 96 of this chapter and Sec.  51.123(o)(1) or (2) of 
this chapter, as a means of mitigating interstate transport of fine 
particulates and nitrogen oxides.
    CAIR NOX Ozone Season allowance means a limited authorization 
issued by a permitting authority or the Administrator under subpart 
EEEE of this part, Sec.  97.388, or provisions of a State 
implementation plan that are approved under Sec.  51.123(aa)(1) or (2) 
(and (bb)(1)), (bb)(2), (dd), or (ee) of this chapter, to emit one ton 
of nitrogen oxides during a control period of the specified calendar 
year for which the authorization is allocated or of any calendar year 
thereafter under the CAIR NOX Ozone Season Trading Program 
or a limited authorization issued by a

[[Page 25445]]

permitting authority for a control period during 2003 through 2008 
under the NOX Budget Trading Program in accordance with 
Sec.  51.121(p) of this chapter to emit one ton of nitrogen oxides 
during a control period, provided that the provision in Sec.  
51.121(b)(2)(ii)(E) of this chapter shall not be used in applying this 
definition and the limited authorization shall not have been used to 
meet the allowance-holding requirement under the NOX Budget 
Trading Program. An authorization to emit nitrogen oxides that is not 
issued under subpart EEEE of this part, Sec.  97.388, or provisions of 
a State implementation plan that are approved under Sec.  51.123(aa)(1) 
or (2) (and (bb)(1)), (bb)(2), (dd), or (ee) of this chapter or under 
the NOX Budget Trading Program as described in the prior 
sentence shall not be a CAIR NOX Ozone Season allowance.
    CAIR NOX Ozone Season allowance deduction or deduct CAIR NOX Ozone 
Season allowances means the permanent withdrawal of CAIR NOX 
Ozone Season allowances by the Administrator from a compliance account, 
e.g., in order to account for a specified number of tons of total 
nitrogen oxides emissions from all CAIR NOX Ozone Season 
units at a CAIR NOX Ozone Season source for a control 
period, determined in accordance with subpart HHHH of this part, or to 
account for excess emissions.
    CAIR NOX Ozone Season Allowance Tracking System means the system by 
which the Administrator records allocations, deductions, and transfers 
of CAIR NOX Ozone Season allowances under the CAIR 
NOX Ozone Season Trading Program. Such allowances will be 
allocated, held, deducted, or transferred only as whole allowances.
    CAIR NOX Ozone Season Allowance Tracking System account means an 
account in the CAIR NOX Ozone Season Allowance Tracking 
System established by the Administrator for purposes of recording the 
allocation, holding, transferring, or deducting of CAIR NOX 
Ozone Season allowances.
    CAIR NOX Ozone Season allowances held or hold CAIR NOX 
Ozone Season allowances means the CAIR NOX Ozone Season 
allowances recorded by the Administrator, or submitted to the 
Administrator for recordation, in accordance with subparts FFFF, GGGG, 
and IIII of this part, in a CAIR NOX Ozone Season Allowance 
Tracking System account.
    CAIR NOX Ozone Season emissions limitation means, for a CAIR 
NOX Ozone Season source, the tonnage equivalent, in 
NOX emissions in a control period, of the CAIR 
NOX Ozone Season allowances available for deduction for the 
source under Sec.  97.354(a) and (b) for the control period.
    CAIR NOX Ozone Season source means a source that includes one or 
more CAIR NOX Ozone Season units.
    CAIR NOX Ozone Season Trading Program means a multi-state nitrogen 
oxides air pollution control and emission reduction program established 
by the Administrator in accordance with subparts AAAA through IIII of 
this part and Sec. Sec.  51.123(ee) and 52.35 of this chapter or 
approved and administered by the Administrator in accordance with under 
subparts AAAA through IIII and Sec.  51.123(aa)(1) or (2) (and 
(bb)(1)), (bb)(2), or (dd) of this chapter, as a means of mitigating 
interstate transport of ozone and nitrogen oxides.
    CAIR NOX Ozone Season unit means a unit that is subject to the CAIR 
NOX Ozone Season Trading Program under Sec.  97.304 and, 
except for purposes of Sec.  97.305 and subpart EEEE of this part, a 
CAIR NOX Ozone Season opt-in unit under subpart IIII of this 
part.
    CAIR NOX source means a source that is subject to the CAIR 
NOX Annual Trading Program.
    CAIR permit means the legally binding and federally enforceable 
written document, or portion of such document, issued by the permitting 
authority under subpart CCCC of this part, including any permit 
revisions, specifying the CAIR NOX Ozone Season Trading 
Program requirements applicable to a CAIR NOX Ozone Season 
source, to each CAIR NOX Ozone Season unit at the source, 
and to the owners and operators and the CAIR designated representative 
of the source and each such unit.
    CAIR SO2 source means a source that is subject to the CAIR 
SO2 Trading Program.
    CAIR SO2 Trading Program means a multi-state sulfur dioxide air 
pollution control and emission reduction program established by the 
Administrator in accordance with subparts AAA through III of this part 
and Sec. Sec.  51.124(r) and 52.36 of this chapter or approved and 
administered by the Administrator in accordance with subparts AAA 
through III of part 96 of this chapter and Sec.  51.124(o)(1) or (2) of 
this chapter, as a means of mitigating interstate transport of fine 
particulates and sulfur dioxide.
    Certifying official means:
    (1) For a corporation, a president, secretary, treasurer, or vice-
president or the corporation in charge of a principal business function 
or any other person who performs similar policy or decision-making 
functions for the corporation;
    (2) For a partnership or sole proprietorship, a general partner or 
the proprietor respectively; or
    (3) For a local government entity or State, Federal, or other 
public agency, a principal executive officer or ranking elected 
official.
    Clean Air Act or CAA means the Clean Air Act, 42 U.S.C. 7401, et 
seq.
    Coal means any solid fuel classified as anthracite, bituminous, 
subbituminous, or lignite.
    Coal-derived fuel means any fuel (whether in a solid, liquid, or 
gaseous state) produced by the mechanical, thermal, or chemical 
processing of coal.
    Coal-fired means:
    (1) Except for purposes of subpart EEEE of this part, combusting 
any amount of coal or coal-derived fuel, alone or in combination with 
any amount of any other fuel, during any year; or
    (2) For purposes of subpart EEEE of this part, combusting any 
amount of coal or coal-derived fuel, alone or in combination with any 
amount of any other fuel, during a specified year.
    Cogeneration unit means a stationary, fossil-fuel-fired boiler or 
stationary, fossil-fuel-fired combustion turbine:
    (1) Having equipment used to produce electricity and useful thermal 
energy for industrial, commercial, heating, or cooling purposes through 
the sequential use of energy; and
    (2) Producing during the 12-month period starting on the date the 
unit first produces electricity and during any calendar year after the 
calendar year in which the unit first produces electricity--
    (i) For a topping-cycle cogeneration unit,
    (A) Useful thermal energy not less than 5 percent of total energy 
output; and
    (B) Useful power that, when added to one-half of useful thermal 
energy produced, is not less then 42.5 percent of total energy input, 
if useful thermal energy produced is 15 percent or more of total energy 
output, or not less than 45 percent of total energy input, if useful 
thermal energy produced is less than 15 percent of total energy output.
    (ii) For a bottoming-cycle cogeneration unit, useful power not less 
than 45 percent of total energy input.
    Combustion turbine means:
    (1) An enclosed device comprising a compressor, a combustor, and a 
turbine and in which the flue gas resulting from the combustion of fuel 
in the combustor passes through the turbine, rotating the turbine; and
    (2) If the enclosed device under paragraph (1) of this definition 
is combined cycle, any associated duct

[[Page 25446]]

burner, heat recovery steam generator, and steam turbine.
    Commence commercial operation means, with regard to a unit:
    (1) To have begun to produce steam, gas, or other heated medium 
used to generate electricity for sale or use, including test 
generation, except as provided in Sec.  97.305 and Sec.  97.384(h).
    (i) For a unit that is a CAIR NOX Ozone Season unit 
under Sec.  97.304 on the later of November 15, 1990 or the date the 
unit commences commercial operation as defined in paragraph (1) of this 
definition and that subsequently undergoes a physical change (other 
than replacement of the unit by a unit at the same source), such date 
shall remain the date of commencement of commercial operation of the 
unit, which shall continue to be treated as the same unit.
    (ii) For a unit that is a CAIR NOX Ozone Season unit 
under Sec.  97.304 on the later of November 15, 1990 or the date the 
unit commences commercial operation as defined in paragraph (1) of this 
definition and that is subsequently replaced by a unit at the same 
source (e.g., repowered), such date shall remain the replaced unit's 
date of commencement of commercial operation, and the replacement unit 
shall be treated as a separate unit with a separate date for 
commencement of commercial operation as defined in paragraph (1), (2), 
or (3) of this definition as appropriate.
    (2) Notwithstanding paragraph (1) of this definition and except as 
provided in Sec.  97.305, for a unit that is not a CAIR NOX 
Ozone Season unit under Sec.  97.304 on the later of November 15, 1990 
or the date the unit commences commercial operation as defined in 
paragraph (1) of this definition, the unit's date for commencement of 
commercial operation shall be the date on which the unit becomes a CAIR 
NOX Ozone Season unit under Sec.  97.304.
    (i) For a unit with a date for commencement of commercial operation 
as defined in paragraph (2) of this definition and that subsequently 
undergoes a physical change (other than replacement of the unit by a 
unit at the same source), such date shall remain the date of 
commencement of commercial operation of the unit, which shall continue 
to be treated as the same unit.
    (ii) For a unit with a date for commencement of commercial 
operation as defined in paragraph (2) of this definition and that is 
subsequently replaced by a unit at the same source (e.g., repowered), 
such date shall remain the replaced unit's date of commencement of 
commercial operation, and the replacement unit shall be treated as a 
separate unit with a separate date for commencement of commercial 
operation as defined in paragraph (1), (2), or (3) of this definition 
as appropriate.
    (3) Notwithstanding paragraphs (1) and (2) of this definition, for 
a unit not serving a generator producing electricity for sale, the 
unit's date of commencement of operation shall also be the unit's date 
of commencement of commercial operation.
    Commence operation means:
    (1) To have begun any mechanical, chemical, or electronic process, 
including, with regard to a unit, start-up of a unit's combustion 
chamber, except as provided in Sec.  97.384(h).
    (i) For a unit that undergoes a physical change (other than 
replacement of the unit by a unit at the same source) after the date 
the unit commences operation as defined in paragraph (1) of this 
definition, such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (ii) For a unit that is replaced by a unit at the same source 
(e.g., repowered) after the date the unit commences operation as 
defined in paragraph (1) of this definition, such date shall remain the 
replaced unit's date of commencement of operation, and the replacement 
unit shall be treated as a separate unit with a separate date for 
commencement of operation as defined in paragraph (1) or (2) of this 
definition as appropriate, except as provided in Sec.  97.384(h).
    (2) Notwithstanding paragraph (1) of this definition and solely for 
purposes of subpart HHHH of this part, for a unit that is not a CAIR 
NOX Ozone Season unit under Sec.  97.304(d) on the later of 
November 15, 1990 or the date the unit commences operation as defined 
in paragraph (1) of this definition and subsequently becomes such a 
CAIR NOX Ozone Season unit, the unit's date for commencement 
of operation shall be the date on which the unit becomes a CAIR 
NOX Ozone Season unit under Sec.  97.304(d).
    (i) For a unit with a date for commencement of operation as defined 
in paragraph (2) of this definition and that subsequently undergoes a 
physical change (other than replacement of the unit by a unit at the 
same source), such date shall remain the date of commencement of 
operation of the unit, which shall continue to be treated as the same 
unit.
    (ii) For a unit with a date for commencement of operation as 
defined in paragraph (2) of this definition and that is subsequently 
replaced by a unit at the same source (e.g., repowered), such date 
shall remain the replaced unit's date of commencement of operation, and 
the replacement unit shall be treated as a separate unit with a 
separate date for commencement of operation as defined in paragraph (1) 
or (2) of this definition as appropriate.
    Common stack means a single flue through which emissions from 2 or 
more units are exhausted.
    Compliance account means a CAIR NOX Ozone Season 
Allowance Tracking System account, established by the Administrator for 
a CAIR NOX Ozone Season source under subpart FFFF or IIII of 
this part, in which any CAIR NOX Ozone Season allowance 
allocations for the CAIR NOX Ozone Season units at the 
source are initially recorded and in which are held any CAIR 
NOX Ozone Season allowances available for use for a control 
period in order to meet the source's CAIR NOX Ozone Season 
emissions limitation in accordance with Sec.  97.354.
    Continuous emission monitoring system or CEMS means the equipment 
required under subpart HHHH of this part to sample, analyze, measure, 
and provide, by means of readings recorded at least once every 15 
minutes (using an automated data acquisition and handling system 
(DAHS)), a permanent record of nitrogen oxides emissions, stack gas 
volumetric flow rate, stack gas moisture content, and oxygen or carbon 
dioxide concentration (as applicable), in a manner consistent with part 
75 of this chapter. The following systems are the principal types of 
continuous emission monitoring systems required under subpart HHHH of 
this part:
    (1) A flow monitoring system, consisting of a stack flow rate 
monitor and an automated data acquisition and handling system and 
providing a permanent, continuous record of stack gas volumetric flow 
rate, in standard cubic feet per hour (scfh);
    (2) A nitrogen oxides concentration monitoring system, consisting 
of a NOX pollutant concentration monitor and an automated 
data acquisition and handling system and providing a permanent, 
continuous record of NOX emissions, in parts per million 
(ppm);
    (3) A nitrogen oxides emission rate (or NOX-diluent) 
monitoring system, consisting of a NOX pollutant 
concentration monitor, a diluent gas (CO2 or O2) 
monitor, and an automated data acquisition and handling system and 
providing a permanent, continuous record of NOX 
concentration, in parts per million (ppm), diluent gas concentration, 
in percent CO2 or O2, and NOX emission 
rate, in pounds per million British thermal units (lb/mmBtu);

[[Page 25447]]

    (4) A moisture monitoring system, as defined in Sec.  75.11(b)(2) 
of this chapter and providing a permanent, continuous record of the 
stack gas moisture content, in percent H2O;
    (5) A carbon dioxide monitoring system, consisting of a 
CO2 pollutant concentration monitor (or an oxygen monitor 
plus suitable mathematical equations from which the CO2 
concentration is derived) and an automated data acquisition and 
handling system and providing a permanent, continuous record of 
CO2 emissions, in percent CO2; and
    (6) An oxygen monitoring system, consisting of an O2 
concentration monitor and an automated data acquisition and handling 
system and providing a permanent, continuous record of O2, 
in percent O2.
    Control period or ozone season means the period beginning May 1 of 
a calendar year, except as provided in Sec.  97.306(c)(2) and ending on 
September 30 of the same year, inclusive.
    Emissions means air pollutants exhausted from a unit or source into 
the atmosphere, as measured, recorded, and reported to the 
Administrator by the CAIR designated representative and as determined 
by the Administrator in accordance with subpart HHHH of this part.
    Excess emissions means any ton of nitrogen oxides emitted by the 
CAIR NOX Ozone Season units at a CAIR NOX Ozone 
Season source during a control period that exceeds the CAIR 
NOX Ozone Season emissions limitation for the source.
    Fossil fuel means natural gas, petroleum, coal, or any form of 
solid, liquid, or gaseous fuel derived from such material.
    Fossil-fuel-fired means, with regard to a unit, combusting any 
amount of fossil fuel in any calendar year.
    Fuel oil means any petroleum-based fuel (including diesel fuel or 
petroleum derivatives such as oil tar) and any recycled or blended 
petroleum products or petroleum by-products used as a fuel whether in a 
liquid, solid, or gaseous state.
    General account means a CAIR NOX Ozone Season Allowance 
Tracking System account, established under subpart FFFF of this part, 
that is not a compliance account.
    Generator means a device that produces electricity.
    Gross electrical output means, with regard to a cogeneration unit, 
electricity made available for use, including any such electricity used 
in the power production process (which process includes, but is not 
limited to, any on-site processing or treatment of fuel combusted at 
the unit and any on-site emission controls).
    Heat input means, with regard to a specified period of time, the 
product (in mmBtu/time) of the gross calorific value of the fuel (in 
Btu/lb) divided by 1,000,000 Btu/mmBtu and multiplied by the fuel feed 
rate into a combustion device (in lb of fuel/time), as measured, 
recorded, and reported to the Administrator by the CAIR designated 
representative and determined by the Administrator in accordance with 
subpart HHHH of this part and excluding the heat derived from preheated 
combustion air, recirculated flue gases, or exhaust from other sources.
    Heat input rate means the amount of heat input (in mmBtu) divided 
by unit operating time (in hr) or, with regard to a specific fuel, the 
amount of heat input attributed to the fuel (in mmBtu) divided by the 
unit operating time (in hr) during which the unit combusts the fuel.
    Hg Budget Trading Program means a multi-state Hg air pollution 
control and emission reduction program approved and administered by the 
Administrator in accordance subpart HHHH of part 60 of this chapter and 
Sec.  60.24(h)(6), or established by the Administrator under section 
111 of the Clean Air Act, as a means of reducing national Hg emissions.
    Life-of-the-unit, firm power contractual arrangement means a unit 
participation power sales agreement under which a utility or industrial 
customer reserves, or is entitled to receive, a specified amount or 
percentage of nameplate capacity and associated energy generated by any 
specified unit and pays its proportional amount of such unit's total 
costs, pursuant to a contract:
    (1) For the life of the unit;
    (2) For a cumulative term of no less than 30 years, including 
contracts that permit an election for early termination; or
    (3) For a period no less than 25 years or 70 percent of the 
economic useful life of the unit determined as of the time the unit is 
built, with option rights to purchase or release some portion of the 
nameplate capacity and associated energy generated by the unit at the 
end of the period.
    Maximum design heat input means the maximum amount of fuel per hour 
(in Btu/hr) that a unit is capable of combusting on a steady state 
basis as of the initial installation of the unit as specified by the 
manufacturer of the unit.
    Monitoring system means any monitoring system that meets the 
requirements of subpart HHHH of this part, including a continuous 
emissions monitoring system, an alternative monitoring system, or an 
excepted monitoring system under part 75 of this chapter.
    Most stringent State or Federal NOX emissions limitation means, 
with regard to a unit, the lowest NOX emissions limitation 
(in terms of lb/mmBtu) that is applicable to the unit under State or 
Federal law, regardless of the averaging period to which the emissions 
limitation applies.
    Nameplate capacity means, starting from the initial installation of 
a generator, the maximum electrical generating output (in MWe) that the 
generator is capable of producing on a steady state basis and during 
continuous operation (when not restricted by seasonal or other 
deratings) as of such installation as specified by the manufacturer of 
the generator or, starting from the completion of any subsequent 
physical change in the generator resulting in an increase in the 
maximum electrical generating output (in MWe) that the generator is 
capable of producing on a steady state basis and during continuous 
operation (when not restricted by seasonal or other deratings), such 
increased maximum amount as of such completion as specified by the 
person conducting the physical change.
    Oil-fired means, for purposes of subpart EEEE of this part, 
combusting fuel oil for more than 15.0 percent of the annual heat input 
in a specified year and not qualifying as coal-fired.
    Operator means any person who operates, controls, or supervises a 
CAIR NOX Ozone Season unit or a CAIR NOX Ozone 
Season source and shall include, but not be limited to, any holding 
company, utility system, or plant manager of such a unit or source.
    Owner means any of the following persons:
    (1) With regard to a CAIR NOX Ozone Season source or a 
CAIR NOX Ozone Season unit at a source, respectively:
    (i) Any holder of any portion of the legal or equitable title in a 
CAIR NOX Ozone Season unit at the source or the CAIR 
NOX Ozone Season unit;
    (ii) Any holder of a leasehold interest in a CAIR NOX 
Ozone Season unit at the source or the CAIR NOX Ozone Season 
unit; or
    (iii) Any purchaser of power from a CAIR NOX Ozone 
Season unit at the source or the CAIR NOX Ozone Season unit 
under a life-of-the-unit, firm power contractual arrangement; provided 
that, unless expressly provided for in a leasehold agreement, owner 
shall not include a passive lessor, or a person

[[Page 25448]]

who has an equitable interest through such lessor, whose rental 
payments are not based (either directly or indirectly) on the revenues 
or income from such CAIR NOX Ozone Season unit; or
    (2) With regard to any general account, any person who has an 
ownership interest with respect to the CAIR NOX Ozone Season 
allowances held in the general account and who is subject to the 
binding agreement for the CAIR authorized account representative to 
represent the person's ownership interest with respect to CAIR 
NOX Ozone Season allowances.
    Permitting authority means the State air pollution control agency, 
local agency, other State agency, or other agency authorized by the 
Administrator to issue or revise permits to meet the requirements of 
the CAIR NOX Ozone Season Trading Program in accordance with 
subpart CCCC of this part or, if no such agency has been so authorized, 
the Administrator.
    Potential electrical output capacity means 33 percent of a unit(s 
maximum design heat input, divided by 3,413 Btu/kWh, divided by 1,000 
kWh/MWh, and multiplied by 8,760 hr/yr.
    Receive or receipt of means, when referring to the permitting 
authority or the Administrator, to come into possession of a document, 
information, or correspondence (whether sent in hard copy or by 
authorized electronic transmission), as indicated in an official log, 
or by a notation made on the document, information, or correspondence, 
by the permitting authority or the Administrator in the regular course 
of business.
    Recordation, record, or recorded means, with regard to CAIR 
NOX Ozone Season allowances, the movement of CAIR 
NOX Ozone Season allowances by the Administrator into or 
between CAIR NOX Ozone Season Allowance Tracking System 
accounts, for purposes of allocation, transfer, or deduction.
    Reference method means any direct test method of sampling and 
analyzing for an air pollutant as specified in ( 75.22 of this chapter.
    Replacement, replace, or replaced means, with regard to a unit, the 
demolishing of a unit, or the permanent shutdown and permanent 
disabling of a unit, and the construction of another unit (the 
replacement unit) to be used instead of the demolished or shutdown unit 
(the replaced unit).
    Repowered means, with regard to a unit, replacement of a coal-fired 
boiler with one of the following coal-fired technologies at the same 
source as the coal-fired boiler:
    (1) Atmospheric or pressurized fluidized bed combustion;
    (2) Integrated gasification combined cycle;
    (3) Magnetohydrodynamics;
    (4) Direct and indirect coal-fired turbines;
    (5) Integrated gasification fuel cells; or
    (6) As determined by the Administrator in consultation with the 
Secretary of Energy, a derivative of one or more of the technologies 
under paragraphs (1) through (5) of this definition and any other coal-
fired technology capable of controlling multiple combustion emissions 
simultaneously with improved boiler or generation efficiency and with 
significantly greater waste reduction relative to the performance of 
technology in widespread commercial use as of January 1, 2005.
    Sequential use of energy means:
    (1) For a topping-cycle cogeneration unit, the use of reject heat 
from electricity production in a useful thermal energy application or 
process; or
    (2) For a bottoming-cycle cogeneration unit, the use of reject heat 
from useful thermal energy application or process in electricity 
production.
    Serial number means, for a CAIR NOX Ozone Season 
allowance, the unique identification number assigned to each CAIR 
NOX Ozone Season allowance by the Administrator.
    Solid waste incineration unit means a stationary, fossil-fuel-fired 
boiler or stationary, fossil-fuel-fired combustion turbine that is a 
``solid waste incineration unit'' as defined in section 129(g)(1) of 
the Clean Air Act.
    Source means all buildings, structures, or installations located in 
one or more contiguous or adjacent properties under common control of 
the same person or persons. For purposes of section 502(c) of the Clean 
Air Act, a ``source,'' including a ``source'' with multiple units, 
shall be considered a single ``facility.''
    State means one of the States or the District of Columbia that is 
subject to the CAIR NOX Ozone Season Trading Program 
pursuant to ( 52.35 of this chapter.
    Submit or serve means to send or transmit a document, information, 
or correspondence to the person specified in accordance with the 
applicable regulation:
    (1) In person;
    (2) By United States Postal Service; or
    (3) By other means of dispatch or transmission and delivery. 
Compliance with any ``submission'' or ``service'' deadline shall be 
determined by the date of dispatch, transmission, or mailing and not 
the date of receipt.
    Title V operating permit means a permit issued under title V of the 
Clean Air Act and part 70 or part 71 of this chapter.
    Title V operating permit regulations means the regulations that the 
Administrator has approved or issued as meeting the requirements of 
title V of the Clean Air Act and part 70 or 71 of this chapter.
    Ton means 2,000 pounds. For the purpose of determining compliance 
with the CAIR NOX Ozone Season emissions limitation, total 
tons of nitrogen oxides emissions for a control period shall be 
calculated as the sum of all recorded hourly emissions (or the mass 
equivalent of the recorded hourly emission rates) in accordance with 
subpart HHHH of this part, but with any remaining fraction of a ton 
equal to or greater than 0.50 tons deemed to equal one ton and any 
remaining fraction of a ton less than 0.50 tons deemed to equal zero 
tons.
    Topping-cycle cogeneration unit means a cogeneration unit in which 
the energy input to the unit is first used to produce useful power, 
including electricity, and at least some of the reject heat from the 
electricity production is then used to provide useful thermal energy.
    Total energy input means, with regard to a cogeneration unit, total 
energy of all forms supplied to the cogeneration unit, excluding energy 
produced by the cogeneration unit itself.
    Total energy output means, with regard to a cogeneration unit, the 
sum of useful power and useful thermal energy produced by the 
cogeneration unit.
    Unit means a stationary, fossil-fuel-fired boiler or combustion 
turbine or other stationary, fossil-fuel-fired combustion device.
    Unit operating day means a calendar day in which a unit combusts 
any fuel.
    Unit operating hour or hour of unit operation means an hour in 
which a unit combusts any fuel.
    Useful power means, with regard to a cogeneration unit, electricity 
or mechanical energy made available for use, excluding any such energy 
used in the power production process (which process includes, but is 
not limited to, any on-site processing or treatment of fuel combusted 
at the unit and any on-site emission controls).
    Useful thermal energy means, with regard to a cogeneration unit, 
thermal energy that is:
    (1) Made available to an industrial or commercial process (not a 
power production process), excluding any heat contained in condensate 
return or makeup water;

[[Page 25449]]

    (2) Used in a heating application (e.g., space heating or domestic 
hot water heating); or
    (3) Used in a space cooling application (i.e., thermal energy used 
by an absorption chiller).
    Utility power distribution system means the portion of an 
electricity grid owned or operated by a utility and dedicated to 
delivering electricity to customers.


Sec.  97.303  Measurements, abbreviations, and acronyms.

    Measurements, abbreviations, and acronyms used in this subpart and 
subparts BBBB through IIII are defined as follows:

Btu--British thermal unit.
CO2--carbon dioxide.
H2O--water.
Hg--mercury.
hr--hour.
kW--kilowatt electrical.
kWh--kilowatt hour.
lb--pound.
mmBtu--million Btu.
MWe--megawatt electrical.
MWh--megawatt hour.
NOX--nitrogen oxides.
O2--oxygen.
ppm--parts per million.
scfh--standard cubic feet per hour.
SO2--sulfur dioxide.
yr--year.


Sec.  97.304  Applicability.

    (a) Except as provided in paragraph (b) of this section:
    (1) The following units in a State shall be CAIR NOX 
Ozone Season units, and any source that includes one or more such units 
shall be a CAIR NOX Ozone Season source, subject to the 
requirements of this subpart and subparts BBBB through HHHH of this 
part: any stationary, fossil-fuel-fired boiler or stationary, fossil-
fuel-fired combustion turbine serving at any time, since the later of 
November 15, 1990 or the start-up of the unit(s combustion chamber, a 
generator with nameplate capacity of more than 25 MWe producing 
electricity for sale.
    (2) If a stationary boiler or stationary combustion turbine that, 
under paragraph (a)(1) of this section, is not a CAIR NOX 
Ozone Season unit begins to combust fossil fuel or to serve a generator 
with nameplate capacity of more than 25 MWe producing electricity for 
sale, the unit shall become a CAIR NOX Ozone Season unit as 
provided in paragraph (a)(1) of this section on the first date on which 
it both combusts fossil fuel and serves such generator.
    (b) The units in a State that meet the requirements set forth in 
paragraph (b)(1)(i), (b)(2)(i), or (b)(2)(ii) of this section shall not 
be CAIR NOX Ozone Season units:
    (1)(i) Any unit that is a CAIR NOX Ozone Season unit 
under paragraph (a)(1) or (2) of this section:
    (A) Qualifying as a cogeneration unit during the 12-month period 
starting on the date the unit first produces electricity and continuing 
to qualify as a cogeneration unit; and
    (B) Not serving at any time, since the later of November 15, 1990 
or the start-up of the unit's combustion chamber, a generator with 
nameplate capacity of more than 25 MWe supplying in any calendar year 
more than one-third of the unit(s potential electric output capacity or 
219,000 MWh, whichever is greater, to any utility power distribution 
system for sale.
    (ii) If a unit qualifies as a cogeneration unit during the 12-month 
period starting on the date the unit first produces electricity and 
meets the requirements of paragraphs (b)(1)(i) of this section for at 
least one calendar year, but subsequently no longer meets all such 
requirements, the unit shall become a CAIR NOX Ozone Season 
unit starting on the earlier of January 1 after the first calendar year 
during which the unit first no longer qualifies as a cogeneration unit 
or January 1 after the first calendar year during which the unit no 
longer meets the requirements of paragraph (b)(1)(i)(B) of this 
section.
    (2)(i) Any unit that is a CAIR NOX Ozone Season unit 
under paragraph (a)(1) or (2) of this section commencing operation 
before January 1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
1985-1987 exceeding 80 percent (on a Btu basis) and an average annual 
fuel consumption of non-fossil fuel for any 3 consecutive calendar 
years after 1990 exceeding 80 percent (on a Btu basis).
    (ii) Any unit that is a CAIR NOX Ozone Season unit under 
paragraph (a)(1) or (2) of this section commencing operation on or 
after January 1, 1985:
    (A) Qualifying as a solid waste incineration unit; and
    (B) With an average annual fuel consumption of non-fossil fuel for 
the first 3 calendar years of operation exceeding 80 percent (on a Btu 
basis) and an average annual fuel consumption of non-fossil fuel for 
any 3 consecutive calendar years after 1990 exceeding 80 percent (on a 
Btu basis).
    (iii) If a unit qualifies as a solid waste incineration unit and 
meets the requirements of paragraph (b)(2)(i) or (ii) of this section 
for at least 3 consecutive calendar years, but subsequently no longer 
meets all such requirements, the unit shall become a CAIR 
NOX Ozone Season unit starting on the earlier of January 1 
after the first calendar year during which the unit first no longer 
qualifies as a solid waste incineration unit or January 1 after the 
first 3 consecutive calendar years after 1990 for which the unit has an 
average annual fuel consumption of fossil fuel of 20 percent or more.
    (c) A certifying official of an owner or operator of any unit may 
petition the Administrator at any time for a determination concerning 
the applicability, under paragraphs (a) and (b) of this section, of the 
CAIR NOX Ozone Season Trading Program to the unit.
    (1) Petition content. The petition shall be in writing and include 
the identification of the unit and the relevant facts about the unit. 
The petition and any other documents provided to the Administrator in 
connection with the petition shall include the following certification 
statement, signed by the certifying official: ``I am authorized to make 
this submission on behalf of the owners and operators of the unit for 
which the submission is made. I certify under penalty of law that I 
have personally examined, and am familiar with, the statements and 
information submitted in this document and all its attachments. Based 
on my inquiry of those individuals with primary responsibility for 
obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statements and information, including the possibility of fine or 
imprisonment.''
    (2) Submission. The petition and any other documents provided in 
connection with the petition shall be submitted to the Director of the 
Clean Air Markets Division (or its successor), U.S. Environmental 
Protection Agency, who will act on the petition as the Administrator's 
duly authorized representative.
    (3) Response. The Administrator will issue a written response to 
the petition and may request supplemental information relevant to such 
petition. The Administrator's determination concerning the 
applicability, under paragraphs (a) and (b) of this section, of the 
CAIR NOX Ozone Season Trading Program to the unit shall be 
binding on the permitting authority unless the petition or other 
information or documents provided in connection with

[[Page 25450]]

the petition are found to have contained significant, relevant errors 
or omissions.
    (d) Notwithstanding paragraphs (a) and (b) of this section, if a 
State submits, and the Administrator approves, a State implementation 
plan revision in accordance with Sec.  51.123(ee)(1) of this chapter 
providing for the inclusion in the CAIR NOX Ozone Season 
Trading Program of all units that are not otherwise CAIR NOX 
Ozone Season units under paragraphs (a) and (b) of this section and 
that are NOX Budget units covered by the State's emissions 
trading program approved under Sec.  51.121(p) of this chapter, such 
units shall be CAIR NOX Ozone Season units as of the first 
date that they are NOX Budget units under the NOX 
Budget Trading Program under Sec.  51.121(p) of this chapter.


Sec.  97.305  Retired unit exemption.

    (a)(1) Any CAIR NOX Ozone Season unit that is 
permanently retired and is not a CAIR NOX Ozone Season opt-
in unit under subpart IIII of this part shall be exempt from the CAIR 
NOX Ozone Season Trading Program, except for the provisions 
of this section, Sec. Sec.  97.302, 97.303, 97.304, 97.306(c)(4) 
through (7), 97.307, 97.308, and subparts BBBB and EEEE through GGGG of 
this part.
    (2) The exemption under paragraph (a)(1) of this section shall 
become effective the day on which the CAIR NOX Ozone Season 
unit is permanently retired. Within 30 days of the unit's permanent 
retirement, the CAIR designated representative shall submit a statement 
to the permitting authority otherwise responsible for administering any 
CAIR permit for the unit and shall submit a copy of the statement to 
the Administrator. The statement shall state, in a format prescribed by 
the permitting authority, that the unit was permanently retired on a 
specific date and will comply with the requirements of paragraph (b) of 
this section.
    (3) After receipt of the statement under paragraph (a)(2) of this 
section, the permitting authority will amend any permit under subpart 
CCCC of this part covering the source at which the unit is located to 
add the provisions and requirements of the exemption under paragraphs 
(a)(1) and (b) of this section.
    (b) Special provisions. (1) A unit exempt under paragraph (a) of 
this section shall not emit any nitrogen oxides, starting on the date 
that the exemption takes effect.
    (2) The Administrator or the permitting authority will allocate 
CAIR NOX Ozone Season allowances under subpart EEEE of this 
part to a unit exempt under paragraph (a) of this section.
    (3) For a period of 5 years from the date the records are created, 
the owners and operators of a unit exempt under paragraph (a) of this 
section shall retain at the source that includes the unit, records 
demonstrating that the unit is permanently retired. The 5-year period 
for keeping records may be extended for cause, at any time before the 
end of the period, in writing by the permitting authority or the 
Administrator. The owners and operators bear the burden of proof that 
the unit is permanently retired.
    (4) The owners and operators and, to the extent applicable, the 
CAIR designated representative of a unit exempt under paragraph (a) of 
this section shall comply with the requirements of the CAIR 
NOX Ozone Season Trading Program concerning all periods for 
which the exemption is not in effect, even if such requirements arise, 
or must be complied with, after the exemption takes effect.
    (5) A unit exempt under paragraph (a) of this section and located 
at a source that is required, or but for this exemption would be 
required, to have a title V operating permit shall not resume operation 
unless the CAIR designated representative of the source submits a 
complete CAIR permit application under Sec.  97.322 for the unit not 
less than 18 months (or such lesser time provided by the permitting 
authority) before the later of January 1, 2009 or the date on which the 
unit resumes operation.
    (6) On the earlier of the following dates, a unit exempt under 
paragraph (a) of this section shall lose its exemption:
    (i) The date on which the CAIR designated representative submits a 
CAIR permit application for the unit under paragraph (b)(5) of this 
section;
    (ii) The date on which the CAIR designated representative is 
required under paragraph (b)(5) of this section to submit a CAIR permit 
application for the unit; or
    (iii) The date on which the unit resumes operation, if the CAIR 
designated representative is not required to submit a CAIR permit 
application for the unit.
    (7) For the purpose of applying monitoring, reporting, and 
recordkeeping requirements under subpart HHHH of this part, a unit that 
loses its exemption under paragraph (a) of this section shall be 
treated as a unit that commences commercial operation on the first date 
on which the unit resumes operation.


Sec.  97.306  Standard requirements.

    (a) Permit requirements. (1) The CAIR designated representative of 
each CAIR NOX Ozone Season source required to have a title V 
operating permit and each CAIR NOX Ozone Season unit 
required to have a title V operating permit at the source shall:
    (i) Submit to the permitting authority a complete CAIR permit 
application under Sec.  97.322 in accordance with the deadlines 
specified in Sec.  97.321; and
    (ii) Submit in a timely manner any supplemental information that 
the permitting authority determines is necessary in order to review a 
CAIR permit application and issue or deny a CAIR permit.
    (2) The owners and operators of each CAIR NOX Ozone 
Season source required to have a title V operating permit and each CAIR 
NOX Ozone Season unit required to have a title V operating 
permit at the source shall have a CAIR permit issued by the permitting 
authority under subpart CCCC of this part for the source and operate 
the source and the unit in compliance with such CAIR permit.
    (3) Except as provided in subpart IIII of this part, the owners and 
operators of a CAIR NOX Ozone Season source that is not 
otherwise required to have a title V operating permit and each CAIR 
NOX Ozone Season unit that is not otherwise required to have 
a title V operating permit are not required to submit a CAIR permit 
application, and to have a CAIR permit, under subpart CCCC of this part 
for such CAIR NOX Ozone Season source and such CAIR 
NOX Ozone Season unit.
    (b) Monitoring, reporting, and recordkeeping requirements. (1) The 
owners and operators, and the CAIR designated representative, of each 
CAIR NOX Ozone Season source and each CAIR NOX 
Ozone Season unit at the source shall comply with the monitoring, 
reporting, and recordkeeping requirements of subpart HHHH of this part.
    (2) The emissions measurements recorded and reported in accordance 
with subpart HHHH of this part shall be used to determine compliance by 
each CAIR NOX Ozone Season source with the CAIR 
NOX Ozone Season emissions limitation under paragraph (c) of 
this section.
    (c) Nitrogen oxides ozone season emission requirements. (1) As of 
the allowance transfer deadline for a control period, the owners and 
operators of each CAIR NOX Ozone Season source and each CAIR 
NOX Ozone Season unit at the source shall hold, in the 
source's compliance account, CAIR NOX Ozone Season 
allowances available for compliance deductions for the control period 
under Sec.  97.354(a) in an amount not less than the tons of total 
nitrogen oxides emissions for the control period

[[Page 25451]]

from all CAIR NOX Ozone Season units at the source, as 
determined in accordance with subpart HHHH of this part.
    (2) A CAIR NOX Ozone Season unit shall be subject to the 
requirements under paragraph (c)(1) of this section for the control 
period starting on the later of May 1, 2009 or the deadline for meeting 
the unit's monitor certification requirements under Sec.  97.370(b)(1), 
(2), (3), or (7) and for each control period thereafter.
    (3) A CAIR NOX Ozone Season allowance shall not be 
deducted, for compliance with the requirements under paragraph (c)(1) 
of this section, for a control period in a calendar year before the 
year for which the CAIR NOX Ozone Season allowance was 
allocated.
    (4) CAIR NOX Ozone Season allowances shall be held in, 
deducted from, or transferred into or among CAIR NOX Ozone 
Season Allowance Tracking System accounts in accordance with subparts 
EEEE, FFFF, GGGG, and IIII of this part.
    (5) A CAIR NOX Ozone Season allowance is a limited 
authorization to emit one ton of nitrogen oxides in accordance with the 
CAIR NOX Ozone Season Trading Program. No provision of the 
CAIR NOX Ozone Season Trading Program, the CAIR permit 
application, the CAIR permit, or an exemption under Sec.  97.305 and no 
provision of law shall be construed to limit the authority of the 
United States to terminate or limit such authorization.
    (6) A CAIR NOX Ozone Season allowance does not 
constitute a property right.
    (7) Upon recordation by the Administrator under subpart EEEE, FFFF, 
GGGG, or IIII of this part, every allocation, transfer, or deduction of 
a CAIR NOX Ozone Season allowance to or from a CAIR 
NOX Ozone Season source's compliance account is incorporated 
automatically in any CAIR permit of the source.
    (d) Excess emissions requirements. If a CAIR NOX Ozone 
Season source emits nitrogen oxides during any control period in excess 
of the CAIR NOX Ozone Season emissions limitation, then:
    (1) The owners and operators of the source and each CAIR 
NOX Ozone Season unit at the source shall surrender the CAIR 
NOX Ozone Season allowances required for deduction under 
Sec.  97.354(d)(1) and pay any fine, penalty, or assessment or comply 
with any other remedy imposed, for the same violations, under the Clean 
Air Act or applicable State law; and
    (2) Each ton of such excess emissions and each day of such control 
period shall constitute a separate violation of this subpart, the Clean 
Air Act, and applicable State law.
    (e) Recordkeeping and reporting requirements. (1) Unless otherwise 
provided, the owners and operators of the CAIR NOX Ozone 
Season source and each CAIR NOX Ozone Season unit at the 
source shall keep on site at the source each of the following documents 
for a period of 5 years from the date the document is created. This 
period may be extended for cause, at any time before the end of 5 
years, in writing by the permitting authority or the Administrator.
    (i) The certificate of representation under Sec.  97.313 for the 
CAIR designated representative for the source and each CAIR 
NOX Ozone Season unit at the source and all documents that 
demonstrate the truth of the statements in the certificate of 
representation; provided that the certificate and documents shall be 
retained on site at the source beyond such 5-year period until such 
documents are superseded because of the submission of a new certificate 
of representation under Sec.  97.313 changing the CAIR designated 
representative.
    (ii) All emissions monitoring information, in accordance with 
subpart HHHH of this part, provided that to the extent that subpart 
HHHH of this part provides for a 3-year period for recordkeeping, the 
3-year period shall apply.
    (iii) Copies of all reports, compliance certifications, and other 
submissions and all records made or required under the CAIR 
NOX Ozone Season Trading Program.
    (iv) Copies of all documents used to complete a CAIR permit 
application and any other submission under the CAIR NOX 
Ozone Season Trading Program or to demonstrate compliance with the 
requirements of the CAIR NOX Ozone Season Trading Program.
    (2) The CAIR designated representative of a CAIR NOX 
Ozone Season source and each CAIR NOX Ozone Season unit at 
the source shall submit the reports required under the CAIR 
NOX Ozone Season Trading Program, including those under 
subpart HHHH of this part.
    (f) Liability. (1) Each CAIR NOX Ozone Season source and 
each CAIR NOX Ozone Season unit shall meet the requirements 
of the CAIR NOX Ozone Season Trading Program.
    (2) Any provision of the CAIR NOX Ozone Season Trading 
Program that applies to a CAIR NOX Ozone Season source or 
the CAIR designated representative of a CAIR NOX Ozone 
Season source shall also apply to the owners and operators of such 
source and of the CAIR NOX Ozone Season units at the source.
    (3) Any provision of the CAIR NOX Ozone Season Trading 
Program that applies to a CAIR NOX Ozone Season unit or the 
CAIR designated representative of a CAIR NOX Ozone Season 
unit shall also apply to the owners and operators of such unit.
    (g) Effect on other authorities. No provision of the CAIR 
NOX Ozone Season Trading Program, a CAIR permit application, 
a CAIR permit, or an exemption under Sec.  97.305 shall be construed as 
exempting or excluding the owners and operators, and the CAIR 
designated representative, of a CAIR NOX Ozone Season source 
or CAIR NOX Ozone Season unit from compliance with any other 
provision of the applicable, approved State implementation plan, a 
federally enforceable permit, or the Clean Air Act.


Sec.  97.307  Computation of time.

    (a) Unless otherwise stated, any time period scheduled, under the 
CAIR NOX Ozone Season Trading Program, to begin on the 
occurrence of an act or event shall begin on the day the act or event 
occurs.
    (b) Unless otherwise stated, any time period scheduled, under the 
CAIR NOX Ozone Season Trading Program, to begin before the 
occurrence of an act or event shall be computed so that the period ends 
the day before the act or event occurs.
    (c) Unless otherwise stated, if the final day of any time period, 
under the CAIR NOX Ozone Season Trading Program, falls on a 
weekend or a State or Federal holiday, the time period shall be 
extended to the next business day.


Sec.  97.308  Appeal procedures.

    The appeal procedures for decisions of the Administrator under the 
CAIR NOX Ozone Season Trading Program are set forth in part 
78 of this chapter.

Appendix A to Subpart AAAA of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Applicability

    The following States have State Implementation Plan revisions 
under Sec.  51.123(ee)(1) of this chapter approved by the 
Administrator and providing for expansion of the applicability 
provisions to include all non-EGUs subject to the respective State's 
emission trading program approved under Sec.  51.121(p) of this 
chapter:
    [Reserved]

[[Page 25452]]

Subpart BBBB--CAIR Designated Representative for CAIR 
NOX Ozone Season Sources


Sec.  97.310  Authorization and responsibilities of CAIR designated 
representative.

    (a) Except as provided under Sec.  97.311, each CAIR NOX 
Ozone Season source, including all CAIR NOX Ozone Season 
units at the source, shall have one and only one CAIR designated 
representative, with regard to all matters under the CAIR 
NOX Ozone Season Trading Program concerning the source or 
any CAIR NOX Ozone Season unit at the source.
    (b) The CAIR designated representative of the CAIR NOX 
Ozone Season source shall be selected by an agreement binding on the 
owners and operators of the source and all CAIR NOX Ozone 
Season units at the source and shall act in accordance with the 
certification statement in Sec.  97.313(a)(4)(iv).
    (c) Upon receipt by the Administrator of a complete certificate of 
representation under Sec.  97.313, the CAIR designated representative 
of the source shall represent and, by his or her representations, 
actions, inactions, or submissions, legally bind each owner and 
operator of the CAIR NOX Ozone Season source represented and 
each CAIR NOX Ozone Season unit at the source in all matters 
pertaining to the CAIR NOX Ozone Season Trading Program, 
notwithstanding any agreement between the CAIR designated 
representative and such owners and operators. The owners and operators 
shall be bound by any decision or order issued to the CAIR designated 
representative by the permitting authority, the Administrator, or a 
court regarding the source or unit.
    (d) No CAIR permit will be issued, no emissions data reports will 
be accepted, and no CAIR NOX Ozone Season Allowance Tracking 
System account will be established for a CAIR NOX Ozone 
Season unit at a source, until the Administrator has received a 
complete certificate of representation under Sec.  97.313 for a CAIR 
designated representative of the source and the CAIR NOX 
Ozone Season units at the source.
    (e)(1) Each submission under the CAIR NOX Ozone Season 
Trading Program shall be submitted, signed, and certified by the CAIR 
designated representative for each CAIR NOX Ozone Season 
source on behalf of which the submission is made. Each such submission 
shall include the following certification statement by the CAIR 
designated representative: ``I am authorized to make this submission on 
behalf of the owners and operators of the source or units for which the 
submission is made. I certify under penalty of law that I have 
personally examined, and am familiar with, the statements and 
information submitted in this document and all its attachments. Based 
on my inquiry of those individuals with primary responsibility for 
obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statements and information, including the possibility of fine or 
imprisonment.''
    (2) The permitting authority and the Administrator will accept or 
act on a submission made on behalf of owner or operators of a CAIR 
NOX Ozone Season source or a CAIR NOX Ozone 
Season unit only if the submission has been made, signed, and certified 
in accordance with paragraph (e)(1) of this section.


Sec.  97.311  Alternate CAIR designated representative.

    (a) A certificate of representation under Sec.  97.313 may 
designate one and only one alternate CAIR designated representative, 
who may act on behalf of the CAIR designated representative. The 
agreement by which the alternate CAIR designated representative is 
selected shall include a procedure for authorizing the alternate CAIR 
designated representative to act in lieu of the CAIR designated 
representative.
    (b) Upon receipt by the Administrator of a complete certificate of 
representation under Sec.  97.313, any representation, action, 
inaction, or submission by the alternate CAIR designated representative 
shall be deemed to be a representation, action, inaction, or submission 
by the CAIR designated representative.
    (c) Except in this section and Sec. Sec.  97.302, 97.310(a) and 
(d), 97.312, 97.313, 97.315, 97.351, and 97.382, whenever the term 
``CAIR designated representative'' is used in subparts AAAA through 
IIII of this part, the term shall be construed to include the CAIR 
designated representative or any alternate CAIR designated 
representative.


Sec.  97.312  Changing CAIR designated representative and alternate 
CAIR designated representative; changes in owners and operators.

    (a) Changing CAIR designated representative. The CAIR designated 
representative may be changed at any time upon receipt by the 
Administrator of a superseding complete certificate of representation 
under Sec.  97.313. Notwithstanding any such change, all 
representations, actions, inactions, and submissions by the previous 
CAIR designated representative before the time and date when the 
Administrator receives the superseding certificate of representation 
shall be binding on the new CAIR designated representative and the 
owners and operators of the CAIR NOX Ozone Season source and 
the CAIR NOX Ozone Season units at the source.
    (b) Changing alternate CAIR designated representative. The 
alternate CAIR designated representative may be changed at any time 
upon receipt by the Administrator of a superseding complete certificate 
of representation under Sec.  97.313. Notwithstanding any such change, 
all representations, actions, inactions, and submissions by the 
previous alternate CAIR designated representative before the time and 
date when the Administrator receives the superseding certificate of 
representation shall be binding on the new alternate CAIR designated 
representative and the owners and operators of the CAIR NOX 
Ozone Season source and the CAIR NOX Ozone Season units at 
the source.
    (c) Changes in owners and operators. (1) In the event an owner or 
operator of a CAIR NOX Ozone Season source or a CAIR 
NOX Ozone Season unit is not included in the list of owners 
and operators in the certificate of representation under Sec.  97.313, 
such owner or operator shall be deemed to be subject to and bound by 
the certificate of representation, the representations, actions, 
inactions, and submissions of the CAIR designated representative and 
any alternate CAIR designated representative of the source or unit, and 
the decisions and orders of the permitting authority, the 
Administrator, or a court, as if the owner or operator were included in 
such list.
    (2) Within 30 days following any change in the owners and operators 
of a CAIR NOX Ozone Season source or a CAIR NOX 
Ozone Season unit, including the addition of a new owner or operator, 
the CAIR designated representative or any alternate CAIR designated 
representative shall submit a revision to the certificate of 
representation under Sec.  97.313 amending the list of owners and 
operators to include the change.


Sec.  97.313  Certificate of representation.

    (a) A complete certificate of representation for a CAIR designated 
representative or an alternate CAIR designated representative shall 
include

[[Page 25453]]

the following elements in a format prescribed by the Administrator:
    (1) Identification of the CAIR NOX Ozone Season source, 
and each CAIR NOX Ozone Season unit at the source, for which 
the certificate of representation is submitted, including 
identification and nameplate capacity of each generator served by each 
such unit.
    (2) The name, address, e-mail address (if any), telephone number, 
and facsimile transmission number (if any) of the CAIR designated 
representative and any alternate CAIR designated representative.
    (3) A list of the owners and operators of the CAIR NOX 
Ozone Season source and of each CAIR NOX Ozone Season unit 
at the source.
    (4) The following certification statements by the CAIR designated 
representative and any alternate CAIR designated representative--
    (i) ``I certify that I was selected as the CAIR designated 
representative or alternate CAIR designated representative, as 
applicable, by an agreement binding on the owners and operators of the 
source and each CAIR NOX Ozone Season unit at the source.''
    (ii) ``I certify that I have all the necessary authority to carry 
out my duties and responsibilities under the CAIR NOX Ozone 
Season Trading Program on behalf of the owners and operators of the 
source and of each CAIR NOX Ozone Season unit at the source 
and that each such owner and operator shall be fully bound by my 
representations, actions, inactions, or submissions.''
    (iii) ``I certify that the owners and operators of the source and 
of each CAIR NOX Ozone Season unit at the source shall be 
bound by any order issued to me by the Administrator, the permitting 
authority, or a court regarding the source or unit.''
    (iv) ``Where there are multiple holders of a legal or equitable 
title to, or a leasehold interest in, a CAIR NOX Ozone 
Season unit, or where a utility or industrial customer purchases power 
from a CAIR NOX Ozone Season unit under a life-of-the-unit, 
firm power contractual arrangement, I certify that: I have given a 
written notice of my selection as the `CAIR designated representative' 
or `alternate CAIR designated representative', as applicable, and of 
the agreement by which I was selected to each owner and operator of the 
source and of each CAIR NOX Ozone Season unit at the source; 
and CAIR NOX Ozone Season allowances and proceeds of 
transactions involving CAIR NOX Ozone Season allowances will 
be deemed to be held or distributed in proportion to each holder's 
legal, equitable, leasehold, or contractual reservation or entitlement, 
except that, if such multiple holders have expressly provided for a 
different distribution of CAIR NOX Ozone Season allowances 
by contract, CAIR NOX Ozone Season allowances and proceeds 
of transactions involving CAIR NOX Ozone Season allowances 
will be deemed to be held or distributed in accordance with the 
contract.''
    (5) The signature of the CAIR designated representative and any 
alternate CAIR designated representative and the dates signed.
    (b) Unless otherwise required by the permitting authority or the 
Administrator, documents of agreement referred to in the certificate of 
representation shall not be submitted to the permitting authority or 
the Administrator. Neither the permitting authority nor the 
Administrator shall be under any obligation to review or evaluate the 
sufficiency of such documents, if submitted.


Sec.  97.314  Objections concerning CAIR designated representative.

    (a) Once a complete certificate of representation under Sec.  
97.313 has been submitted and received, the permitting authority and 
the Administrator will rely on the certificate of representation unless 
and until a superseding complete certificate of representation under 
Sec.  97.313 is received by the Administrator.
    (b) Except as provided in Sec.  97.312(a) or (b), no objection or 
other communication submitted to the permitting authority or the 
Administrator concerning the authorization, or any representation, 
action, inaction, or submission, of the CAIR designated representative 
shall affect any representation, action, inaction, or submission of the 
CAIR designated representative or the finality of any decision or order 
by the permitting authority or the Administrator under the CAIR 
NOX Ozone Season Trading Program.
    (c) Neither the permitting authority nor the Administrator will 
adjudicate any private legal dispute concerning the authorization or 
any representation, action, inaction, or submission of any CAIR 
designated representative, including private legal disputes concerning 
the proceeds of CAIR NOX Ozone Season allowance transfers.


Sec.  97.315  Delegation by CAIR designated representative and 
alternate CAIR designated representative.

    (a) A CAIR designated representative may delegate, to one or more 
natural persons, his or her authority to make an electronic submission 
to the Administrator provided for or required under this part.
    (b) An alternate CAIR designated representative may delegate, to 
one or more natural persons, his or her authority to make an electronic 
submission to the Administrator provided for or required under this 
part.
    (c) In order to delegate authority to make an electronic submission 
to the Administrator in accordance with paragraph (a) or (b) of this 
section, the CAIR designated representative or alternate CAIR 
designated representative, as appropriate, must submit to the 
Administrator a notice of delegation, in a format prescribed by the 
Administrator, that includes the following elements:
    (1) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR designated 
representative or alternate CAIR designated representative;
    (2) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (3) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (a) or (b) of this section for 
which authority is delegated to him or her; and
    (4) The following certification statements by such CAIR designated 
representative or alternate CAIR designated representative:
    (i) ``I agree that any electronic submission to the Administrator 
that is by an agent identified in this notice of delegation and of a 
type listed for such agent in this notice of delegation and that is 
made when I am a CAIR designated representative or alternate CAIR 
designated representative, as appropriate, and before this notice of 
delegation is superseded by another notice of delegation under 40 CFR 
97.315(d) shall be deemed to be an electronic submission by me.''
    (ii) ``Until this notice of delegation is superseded by another 
notice of delegation under 40 CFR 97.315(d), I agree to maintain an e-
mail account and to notify the Administrator immediately of any change 
in my e-mail address unless all delegation of authority by me under 40 
CFR 97.315 is terminated.''.
    (d) A notice of delegation submitted under paragraph (c) of this 
section shall be effective, with regard to the CAIR designated 
representative or alternate CAIR designated representative identified 
in such notice, upon receipt of such notice by the Administrator and 
until receipt by the Administrator of a

[[Page 25454]]

superseding notice of delegation submitted by such CAIR designated 
representative or alternate CAIR designated representative, as 
appropriate. The superseding notice of delegation may replace any 
previously identified agent, add a new agent, or eliminate entirely any 
delegation of authority.
    (e) Any electronic submission covered by the certification in 
paragraph (c)(4)(i) of this section and made in accordance with a 
notice of delegation effective under paragraph (d) of this section 
shall be deemed to be an electronic submission by the CAIR designated 
representative or alternate CAIR designated representative submitting 
such notice of delegation.

Subpart CCCC--Permits


Sec.  97.320  General CAIR NOX Ozone Season Trading Program 
permit requirements.

    (a) For each CAIR NOX Ozone Season source required to 
have a title V operating permit or required, under subpart IIII of this 
part, to have a title V operating permit or other federally enforceable 
permit, such permit shall include a CAIR permit administered by the 
permitting authority for the title V operating permit or the federally 
enforceable permit as applicable. The CAIR portion of the title V 
permit or other federally enforceable permit as applicable shall be 
administered in accordance with the permitting authority's title V 
operating permits regulations promulgated under part 70 or 71 of this 
chapter or the permitting authority's regulations for other federally 
enforceable permits as applicable, except as provided otherwise by 
Sec.  97.305, this subpart, and subpart IIII of this part.
    (b) Each CAIR permit shall contain, with regard to the CAIR 
NOX Ozone Season source and the CAIR NOX Ozone 
Season units at the source covered by the CAIR permit, all applicable 
CAIR NOX Ozone Season Trading Program, CAIR NOX 
Annual Trading Program, and CAIR SO2 Trading Program 
requirements and shall be a complete and separable portion of the title 
V operating permit or other federally enforceable permit under 
paragraph (a) of this section.


Sec.  97.321  Submission of CAIR permit applications.

    (a) Duty to apply. The CAIR designated representative of any CAIR 
NOX Ozone Season source required to have a title V operating 
permit shall submit to the permitting authority a complete CAIR permit 
application under Sec.  97.322 for the source covering each CAIR 
NOX Ozone Season unit at the source at least 18 months (or 
such lesser time provided by the permitting authority) before the later 
of January 1, 2009 or the date on which the CAIR NOX Ozone 
Season unit commences commercial operation, except as provided in Sec.  
97.383(a).
    (b) Duty to reapply. For a CAIR NOX Ozone Season source 
required to have a title V operating permit, the CAIR designated 
representative shall submit a complete CAIR permit application under 
Sec.  97.322 for the source covering each CAIR NOX Ozone 
Season unit at the source to renew the CAIR permit in accordance with 
the permitting authority's title V operating permits regulations 
addressing permit renewal, except as provided in Sec.  97.383(b).


Sec.  97.322  Information requirements for CAIR permit applications.

    A complete CAIR permit application shall include the following 
elements concerning the CAIR NOX Ozone Season source for 
which the application is submitted, in a format prescribed by the 
permitting authority:
    (a) Identification of the CAIR NOX Ozone Season source;
    (b) Identification of each CAIR NOX Ozone Season unit at 
the CAIR NOX Ozone Season source; and
    (c) The standard requirements under Sec.  97.306.


Sec.  97.323  CAIR permit contents and term.

    (a) Each CAIR permit will contain, in a format prescribed by the 
permitting authority, all elements required for a complete CAIR permit 
application under Sec.  97.322.
    (b) Each CAIR permit is deemed to incorporate automatically the 
definitions of terms under Sec.  97.302 and, upon recordation by the 
Administrator under subpart EEEE, FFFF, GGGG, or IIII of this part, 
every allocation, transfer, or deduction of a CAIR NOX Ozone 
Season allowance to or from the compliance account of the CAIR 
NOX Ozone Season source covered by the permit.
    (c) The term of the CAIR permit will be set by the permitting 
authority, as necessary to facilitate coordination of the renewal of 
the CAIR permit with issuance, revision, or renewal of the CAIR 
NOX Ozone Season source's title V operating permit or other 
federally enforceable permit as applicable.


Sec.  97.324  CAIR permit revisions.

    Except as provided in Sec.  97.323(b), the permitting authority 
will revise the CAIR permit, as necessary, in accordance with the 
permitting authority's title V operating permits regulations or the 
permitting authority's regulations for other federally enforceable 
permits as applicable addressing permit revisions.

Subpart DDDD--[Reserved]

Subpart EEEE--CAIR NOX Ozone Season Allowance 
Allocations


Sec.  97.340  State trading budgets.

    (a) Except as provided in paragraph (b) of this section, the State 
trading budgets for annual allocations of CAIR NOX Ozone 
Season allowances for the control periods in 2009 through 2014 and in 
2015 and thereafter are respectively as follows:

------------------------------------------------------------------------
                                                           State trading
                                           State trading    budget for
                  State                     budget for       2015 and
                                             2009-2014      thereafter
                                              (tons)          (tons)
------------------------------------------------------------------------
Alabama.................................          32,182          26,818
Arkansas................................          11,515           9,597
Connecticut.............................           2,559           2,559
Delaware................................           2,226           1,855
District of Columbia....................             112              94
Florida.................................          47,912          39,926
Illinois................................          30,701          28,981
Indiana.................................          45,952          39,273
Iowa....................................          14,263          11,886
Kentucky................................          36,045          30,587
Louisiana...............................          17,085          14,238
Maryland................................          12,834          10,695

[[Page 25455]]

 
Massachusetts...........................           7,551           6,293
Michigan................................          28,971          24,142
Mississippi.............................           8,714           7,262
Missouri................................          26,678          22,231
New Jersey..............................           6,654           5,545
New York................................          20,632          17,193
North Carolina..........................          28,392          23,660
Ohio....................................          45,664          39,945
Pennsylvania............................          42,171          35,143
South Carolina..........................          15,249          12,707
Tennessee...............................          22,842          19,035
Virginia................................          15,994          13,328
West Virginia...........................          26,859          26,525
Wisconsin...............................          17,987          14,989
------------------------------------------------------------------------

    (b) Upon approval by the Administrator of a State's State 
implementation plan revision under Sec.  51.123(ee)(1) of this chapter 
providing for the inclusion in the CAIR NOX Ozone Season 
Trading Program of all units that are not otherwise CAIR NOX 
Ozone Season units under Sec.  97.304(a) and (b) and that are 
NOX Budget units covered by the State's emissions trading 
program approved under Sec.  51.121(p), the amount in the State trading 
budget for a control period in a calendar year will be the sum of the 
amount set forth for the State and for the year in paragraph (a) of 
this section and the amount of additional CAIR NOX Ozone 
Season allowance allocations issued under Sec.  51.123(ee)(1)(ii)(A) of 
this chapter for the year.


Sec.  97.341  Timing requirements for CAIR NOX Ozone Season 
allowance allocations.

    (a) The Administrator will determine by order the CAIR 
NOX Ozone Season allowance allocations, in accordance with 
Sec.  97.342(a) and (b), for the control periods in 2009, 2010, 2011, 
2012, 2013, and 2014.
    (b) By July 31, 2011 and July 31 of each year thereafter, the 
Administrator will determine by order the CAIR NOX Ozone 
Season allowance allocations, in accordance with Sec.  97.342(a) and 
(b), for the control period in the fourth year after the year of the 
applicable deadline for determination under this paragraph.
    (c) By April 30, 2009 and April 30 of each year thereafter, the 
Administrator will determine by order the CAIR NOX Ozone 
Season allowance allocations, in accordance with Sec.  97.342(a), (c), 
and (d), for the control period in the year of the applicable deadline 
for determination under this paragraph.
    (d) The Administrator will make available to the public each 
determination of CAIR NOX Ozone Season allowances under 
paragraph (a), (b), or (c) of this section and will provide an 
opportunity for submission of objections to the determination. 
Objections shall be limited to addressing whether the determination is 
in accordance with Sec.  97.342. Based on any such objections, the 
Administrator will adjust each determination to the extent necessary to 
ensure that it is in accordance with Sec.  97.342.


Sec.  97.342  CAIR NOX Ozone Season allowance allocations.

    (a)(1) The baseline heat input (in mmBtu) used with respect to CAIR 
NOX Ozone Season allowance allocations under paragraph (b) 
of this section for each CAIR NOX Ozone Season unit will be:
    (i) For units commencing operation before January 1, 2001 the 
average of the 3 highest amounts of the unit's adjusted control period 
heat input for 2000 through 2004, with the adjusted control period heat 
input for each year calculated as follows:
    (A) If the unit is coal-fired during the year, the unit's control 
period heat input for such year is multiplied by 100 percent;
    (B) If the unit is oil-fired during the year, the unit's control 
period heat input for such year is multiplied by 60 percent; and
    (C) If the unit is not subject to paragraph (a)(1)(i)(A) or (B) of 
this section, the unit's control period heat input for such year is 
multiplied by 40 percent.
    (ii) For units commencing operation on or after January 1, 2001 and 
operating each calendar year during a period of 5 or more consecutive 
calendar years, the average of the 3 highest amounts of the unit's 
total converted control period heat input over the first such 5 years.
    (2)(i) A unit's control period heat input, and a unit's status as 
coal-fired or oil-fired, for a calendar year under paragraph (a)(1)(i) 
of this section, and a unit's total tons of NOX emissions 
during a control period in a calendar year under paragraph (c)(3) of 
this section, will be determined in accordance with part 75 of this 
chapter, to the extent the unit was otherwise subject to the 
requirements of part 75 of this chapter for the year, or will be based 
on the best available data reported to the Administrator for the unit 
(in a format prescribed by the Administrator), to the extent the unit 
was not otherwise subject to the requirements of part 75 of this 
chapter for the year.
    (ii) A unit's converted control period heat input for a calendar 
year specified under paragraph (a)(1)(ii) of this section equals:
    (A) Except as provided in paragraph (a)(2)(ii)(B) or (C) of this 
section, the control period gross electrical output of the generator or 
generators served by the unit multiplied by 7,900 Btu/kWh, if the unit 
is coal-fired for the year, or 6,675 Btu/kWh, if the unit is not coal-
fired for the year, and divided by 1,000,000 Btu/mmBtu, provided that 
if a generator is served by 2 or more units, then the gross electrical 
output of the generator will be attributed to each unit in proportion 
to the unit's share of the total control period heat input of such 
units for the year;
    (B) For a unit that is a boiler and has equipment used to produce 
electricity and useful thermal energy for industrial, commercial, 
heating, or cooling purposes through the sequential use of energy, the 
total heat energy (in Btu) of the steam produced by the boiler during 
the control period, divided by 0.8 and by 1,000,000 Btu/mmBtu; or
    (C) For a unit that is a combustion turbine and has equipment used 
to produce electricity and useful thermal energy for industrial, 
commercial,

[[Page 25456]]

heating, or cooling purposes through the sequential use of energy, the 
control period gross electrical output of the enclosed device 
comprising the compressor, combustor, and turbine multiplied by 3,413 
Btu/kWh, plus the total heat energy (in Btu) of the steam produced by 
any associated heat recovery steam generator during the control period 
divided by 0.8, and with the sum divided by 1,000,000 Btu/mmBtu.
    (iii) Gross electrical output and total heat energy under paragraph 
(a)(2)(ii) of this section will be determined based on the best 
available data reported to the Administrator for the unit (in a format 
prescribed by the Administrator).
    (3) The Administrator will determine what data are the best 
available data under paragraph (a)(2) of this section by weighing the 
likelihood that data are accurate and reliable and giving greater 
weight to data submitted to a governmental entity in compliance with 
legal requirements or substantiated by an independent entity.
    (b)(1) For each control period in 2009 and thereafter, the 
Administrator will allocate to all CAIR NOX Ozone Season 
units in a State that have a baseline heat input (as determined under 
paragraph (a) of this section) a total amount of CAIR NOX 
Ozone Season allowances equal to 95 percent for a control period during 
2009 through 2014, and 97 percent for a control period during 2015 and 
thereafter, of the tons of NOX emissions in the applicable 
State trading budget under Sec.  97.340 (except as provided in 
paragraphs (d) and (e) of this section).
    (2) The Administrator will allocate CAIR NOX Ozone 
Season allowances to each CAIR NOX Ozone Season unit under 
paragraph (b)(1) of this section in an amount determined by multiplying 
the total amount of CAIR NOX Ozone Season allowances 
allocated under paragraph (b)(1) of this section by the ratio of the 
baseline heat input of such CAIR NOX Ozone Season unit to 
the total amount of baseline heat input of all such CAIR NOX 
Ozone Season units in the State and rounding to the nearest whole 
allowance as appropriate.
    (c) For each control period in 2009 and thereafter, the 
Administrator will allocate CAIR NOX Ozone Season allowances 
to CAIR NOX Ozone Season units in a State that are not 
allocated CAIR NOX Ozone Season allowances under paragraph 
(b) of this section because the units do not yet have a baseline heat 
input under paragraph (a) of this section or because the units have a 
baseline heat input but all CAIR NOX Ozone Season allowances 
available under paragraph (b) of this section for the control period 
are already allocated, in accordance with the following procedures:
    (1) The Administrator will establish a separate new unit set-aside 
for each control period. Each new unit set-aside will be allocated CAIR 
NOX Ozone Season allowances equal to 5 percent for a control 
period in 2009 through 2014, and 3 percent for a control period in 2015 
and thereafter, of the amount of tons of NOX emissions in 
the applicable State trading budget under Sec.  97.340.
    (2) The CAIR designated representative of such a CAIR 
NOX Ozone Season unit may submit to the Administrator a 
request, in a format specified by the Administrator, to be allocated 
CAIR NOX Ozone Season allowances, starting with the later of 
the control period in 2009 or the first control period after the 
control period in which the CAIR NOX Ozone Season unit 
commences commercial operation and until the first control period for 
which the unit is allocated CAIR NOX Ozone Season allowances 
under paragraph (b) of this section. A separate CAIR NOX 
Ozone Season allowance allocation request for each control period for 
which CAIR NOX Ozone Season allowances are sought must be 
submitted on or before February 1 before such control period and after 
the date on which the CAIR NOX Ozone Season unit commences 
commercial operation.
    (3) In a CAIR NOX Ozone Season allowance allocation 
request under paragraph (c)(2) of this section, the CAIR designated 
representative may request for a control period CAIR NOX 
Ozone Season allowances in an amount not exceeding the CAIR 
NOX Ozone Season unit(s total tons of NOX 
emissions during the control period immediately before such control 
period.
    (4) The Administrator will review each CAIR NOX Ozone 
Season allowance allocation request under paragraph (c)(2) of this 
section and will allocate CAIR NOX Ozone Season allowances 
for each control period pursuant to such request as follows:
    (i) The Administrator will accept an allowance allocation request 
only if the request meets, or is adjusted by the Administrator as 
necessary to meet, the requirements of paragraphs (c)(2) and (3) of 
this section.
    (ii) On or after February 1 before the control period, the 
Administrator will determine the sum of the CAIR NOX Ozone 
Season allowances requested (as adjusted under paragraph (c)(4)(i) of 
this section) in all allowance allocation requests accepted under 
paragraph (c)(4)(i) of this section for the control period.
    (iii) If the amount of CAIR NOX Ozone Season allowances 
in the new unit set-aside for the control period is greater than or 
equal to the sum under paragraph (c)(4)(ii) of this section, then the 
Administrator will allocate the amount of CAIR NOX Ozone 
Season allowances requested (as adjusted under paragraph (c)(4)(i) of 
this section) to each CAIR NOX Ozone Season unit covered by 
an allowance allocation request accepted under paragraph (c)(4)(i) of 
this section.
    (iv) If the amount of CAIR NOX Ozone Season allowances 
in the new unit set-aside for the control period is less than the sum 
under paragraph (c)(4)(ii) of this section, then the Administrator will 
allocate to each CAIR NOX Ozone Season unit covered by an 
allowance allocation request accepted under paragraph (c)(4)(i) of this 
section the amount of the CAIR NOX Ozone Season allowances 
requested (as adjusted under paragraph (c)(4)(i) of this section), 
multiplied by the amount of CAIR NOX Ozone Season allowances 
in the new unit set-aside for the control period, divided by the sum 
determined under paragraph (c)(4)(ii) of this section, and rounded to 
the nearest whole allowance as appropriate.
    (v) The Administrator will notify each CAIR designated 
representative that submitted an allowance allocation request of the 
amount of CAIR NOX Ozone Season allowances (if any) 
allocated for the control period to the CAIR NOX Ozone 
Season unit covered by the request.
    (d) If, after completion of the procedures under paragraph (c)(4) 
of this section for a control period, any unallocated CAIR 
NOX Ozone Season allowances remain in the new unit set-aside 
under paragraph (c) of this section for a State for the control period, 
the Administrator will allocate to each CAIR NOX Ozone 
Season unit that was allocated CAIR NOX Ozone Season 
allowances under paragraph (b) of this section in the State an amount 
of CAIR NOX Ozone Season allowances equal to the total 
amount of such remaining unallocated CAIR NOX Ozone Season 
allowances, multiplied by the unit's allocation under paragraph (b) of 
this section, divided by 95 percent for a control period during 2009 
through 2014, and 97 percent for a control period during 2015 and 
thereafter, of the amount of tons of NOX emissions in the 
applicable State trading budget under Sec.  97.340, and rounded to the 
nearest whole allowance as appropriate.
    (e) If the Administrator determines that CAIR NOX Ozone 
Season allowances were allocated under paragraphs (a) and (b) of this 
section,

[[Page 25457]]

paragraphs (a) and (c) of this section, or paragraph (d) of this 
section for a control period and that the recipient of the allocation 
is not actually a CAIR NOX Ozone Season unit under Sec.  
97.304 in such control period, then the Administrator will notify the 
CAIR designated representative and will act in accordance with the 
following procedures:
    (1) Except as provided in paragraph (e)(2) or (3) of this section, 
the Administrator will not record such CAIR NOX Ozone Season 
allowances under Sec.  97.353.
    (2) If the Administrator already recorded such CAIR NOX 
Ozone Season allowances under Sec.  97.353 and if the Administrator 
makes such determinations before making deductions for the source that 
includes such recipient under Sec.  97.354(b) for the control period, 
then the Administrator will deduct from the account in which such CAIR 
NOX Ozone Season allowances were recorded under Sec.  97.353 
an amount of CAIR NOX Ozone Season allowances allocated for 
the same or a prior control period equal to the amount of such already 
recorded CAIR NOX Ozone Season allowances. The CAIR 
designated representative shall ensure that there are sufficient CAIR 
NOX Ozone Season allowances in such account for completion 
of the deduction.
    (3) If the Administrator already recorded such CAIR NOX 
Ozone Season allowances under Sec.  97.353 and if the Administrator 
makes such determinations after making deductions for the source that 
includes such recipient under Sec.  97.354(b) for the control period, 
then the Administrator will apply paragraph (e)(1) or (2) of this 
section, as appropriate, to any subsequent control period for which 
CAIR NOX Ozone Season allowances were allocated to such 
recipient.
    (4) The Administrator will transfer the CAIR NOX Ozone 
Season allowances that are not recorded, or that are deducted, in 
accordance with paragraphs (e)(1), (2), and (3) of this section to a 
new unit set-aside for the State in which such recipient is located.


Sec.  97.343   Alternative of allocation of CAIR NOX Ozone 
Season allowances by permitting authority.

    (a) Notwithstanding Sec. Sec.  97.341, 97.342, and 97.353 if a 
State submits, and the Administrator approves, a State implementation 
plan revision in accordance with Sec.  51.123(ee)(2) of this chapter 
providing for allocation of CAIR NOX Ozone Season allowances 
by the permitting authority, then the permitting authority shall make 
such allocations in accordance with such approved State implementation 
plan revision, the Administrator will not make allocations under 
Sec. Sec.  97.341 and 97.342 for the CAIR NOX Ozone Season 
units in the State, and under Sec.  97.353, the Administrator will 
record allocations made under such approved State implementation plan 
revision instead of allocations under Sec. Sec.  97.341 and 97.342.
    (b) In implementing paragraph(a) of this section and Sec. Sec.  
97.341, 97.342, and 97.353, the Administrator will ensure that the 
total amount of CAIR NOX Ozone Season allowances allocated, 
under such provisions and under a State's State implementation plan 
revision approved in accordance with Sec.  51.123(ee)(2) of this 
chapter, for a control period for CAIR NOX Ozone Season 
sources in the State or for other entities specified by the permitting 
authority will not exceed the State's State trading budget for the year 
of the control period.

Appendix A to Subpart EEEE of Part 97--States With Approved State 
Implementation Plan Revisions Concerning Allocations

    The following States have State Implementation Plan revisions 
under Sec.  51.123(ee)(2) of this chapter approved by the 
Administrator and providing for allocation of CAIR NOX 
Ozone Season allowances by the permitting authority under Sec.  
97.344(a):
    [Reserved]

Subpart FFFF--CAIR NOX Ozone Season Allowance Tracking 
System


Sec.  97.350   [Reserved]


Sec.  97.351   Establishment of accounts.

    (a) Compliance accounts. Except as provided in Sec.  97.384(e), 
upon receipt of a complete certificate of representation under Sec.  
97.313, the Administrator will establish a compliance account for the 
CAIR NOX Ozone Season source for which the certificate of 
representation was submitted, unless the source already has a 
compliance account.
    (b) General accounts--(1) Application for general account. (i) Any 
person may apply to open a general account for the purpose of holding 
and transferring CAIR NOX Ozone Season allowances. An 
application for a general account may designate one and only one CAIR 
authorized account representative and one and only one alternate CAIR 
authorized account representative who may act on behalf of the CAIR 
authorized account representative. The agreement by which the alternate 
CAIR authorized account representative is selected shall include a 
procedure for authorizing the alternate CAIR authorized account 
representative to act in lieu of the CAIR authorized account 
representative.
    (ii) A complete application for a general account shall be 
submitted to the Administrator and shall include the following elements 
in a format prescribed by the Administrator:
    (A) Name, mailing address, e-mail address (if any), telephone 
number, and facsimile transmission number (if any) of the CAIR 
authorized account representative and any alternate CAIR authorized 
account representative;
    (B) Organization name and type of organization, if applicable;
    (C) A list of all persons subject to a binding agreement for the 
CAIR authorized account representative and any alternate CAIR 
authorized account representative to represent their ownership interest 
with respect to the CAIR NOX Ozone Season allowances held in 
the general account;
    (D) The following certification statement by the CAIR authorized 
account representative and any alternate CAIR authorized account 
representative: ``I certify that I was selected as the CAIR authorized 
account representative or the alternate CAIR authorized account 
representative, as applicable, by an agreement that is binding on all 
persons who have an ownership interest with respect to CAIR 
NOX Ozone Season allowances held in the general account. I 
certify that I have all the necessary authority to carry out my duties 
and responsibilities under the CAIR NOX Ozone Season Trading 
Program on behalf of such persons and that each such person shall be 
fully bound by my representations, actions, inactions, or submissions 
and by any order or decision issued to me by the Administrator or a 
court regarding the general account.''
    (E) The signature of the CAIR authorized account representative and 
any alternate CAIR authorized account representative and the dates 
signed.
    (iii) Unless otherwise required by the permitting authority or the 
Administrator, documents of agreement referred to in the application 
for a general account shall not be submitted to the permitting 
authority or the Administrator. Neither the permitting authority nor 
the Administrator shall be under any obligation to review or evaluate 
the sufficiency of such documents, if submitted.
    (2) Authorization of CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) Upon receipt by 
the Administrator of a complete application

[[Page 25458]]

for a general account under paragraph (b)(1) of this section:
    (A) The Administrator will establish a general account for the 
person or persons for whom the application is submitted.
    (B) The CAIR authorized account representative and any alternate 
CAIR authorized account representative for the general account shall 
represent and, by his or her representations, actions, inactions, or 
submissions, legally bind each person who has an ownership interest 
with respect to CAIR NOX Ozone Season allowances held in the 
general account in all matters pertaining to the CAIR NOX 
Ozone Season Trading Program, notwithstanding any agreement between the 
CAIR authorized account representative or any alternate CAIR authorized 
account representative and such person. Any such person shall be bound 
by any order or decision issued to the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
by the Administrator or a court regarding the general account.
    (C) Any representation, action, inaction, or submission by any 
alternate CAIR authorized account representative shall be deemed to be 
a representation, action, inaction, or submission by the CAIR 
authorized account representative.
    (ii) Each submission concerning the general account shall be 
submitted, signed, and certified by the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
for the persons having an ownership interest with respect to CAIR 
NOX Ozone Season allowances held in the general account. 
Each such submission shall include the following certification 
statement by the CAIR authorized account representative or any 
alternate CAIR authorized account representative: ``I am authorized to 
make this submission on behalf of the persons having an ownership 
interest with respect to the CAIR NOX Ozone Season 
allowances held in the general account. I certify under penalty of law 
that I have personally examined, and am familiar with, the statements 
and information submitted in this document and all its attachments. 
Based on my inquiry of those individuals with primary responsibility 
for obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statements and information, including the possibility of fine or 
imprisonment.''
    (iii) The Administrator will accept or act on a submission 
concerning the general account only if the submission has been made, 
signed, and certified in accordance with paragraph (b)(2)(ii) of this 
section.
    (3) Changing CAIR authorized account representative and alternate 
CAIR authorized account representative; changes in persons with 
ownership interest. (i) The CAIR authorized account representative for 
a general account may be changed at any time upon receipt by the 
Administrator of a superseding complete application for a general 
account under paragraph (b)(1) of this section. Notwithstanding any 
such change, all representations, actions, inactions, and submissions 
by the previous CAIR authorized account representative before the time 
and date when the Administrator receives the superseding application 
for a general account shall be binding on the new CAIR authorized 
account representative and the persons with an ownership interest with 
respect to the CAIR NOX Ozone Season allowances in the 
general account.
    (ii) The alternate CAIR authorized account representative for a 
general account may be changed at any time upon receipt by the 
Administrator of a superseding complete application for a general 
account under paragraph (b)(1) of this section. Notwithstanding any 
such change, all representations, actions, inactions, and submissions 
by the previous alternate CAIR authorized account representative before 
the time and date when the Administrator receives the superseding 
application for a general account shall be binding on the new alternate 
CAIR authorized account representative and the persons with an 
ownership interest with respect to the CAIR NOX Ozone Season 
allowances in the general account.
    (iii)(A) In the event a person having an ownership interest with 
respect to CAIR NOX Ozone Season allowances in the general 
account is not included in the list of such persons in the application 
for a general account, such person shall be deemed to be subject to and 
bound by the application for a general account, the representation, 
actions, inactions, and submissions of the CAIR authorized account 
representative and any alternate CAIR authorized account representative 
of the account, and the decisions and orders of the Administrator or a 
court, as if the person were included in such list.
    (B) Within 30 days following any change in the persons having an 
ownership interest with respect to CAIR NOX Ozone Season 
allowances in the general account, including the addition of a new 
person, the CAIR authorized account representative or any alternate 
CAIR authorized account representative shall submit a revision to the 
application for a general account amending the list of persons having 
an ownership interest with respect to the CAIR NOX Ozone 
Season allowances in the general account to include the change.
    (4) Objections concerning CAIR authorized account representative 
and alternate CAIR authorized account representative. (i) Once a 
complete application for a general account under paragraph (b)(1) of 
this section has been submitted and received, the Administrator will 
rely on the application unless and until a superseding complete 
application for a general account under paragraph (b)(1) of this 
section is received by the Administrator.
    (ii) Except as provided in paragraph (b)(3)(i) or (ii) of this 
section, no objection or other communication submitted to the 
Administrator concerning the authorization, or any representation, 
action, inaction, or submission of the CAIR authorized account 
representative or any alternate CAIR authorized account representative 
for a general account shall affect any representation, action, 
inaction, or submission of the CAIR authorized account representative 
or any alternate CAIR authorized account representative or the finality 
of any decision or order by the Administrator under the CAIR 
NOX Ozone Season Trading Program.
    (iii) The Administrator will not adjudicate any private legal 
dispute concerning the authorization or any representation, action, 
inaction, or submission of the CAIR authorized account representative 
or any alternate CAIR authorized account representative for a general 
account, including private legal disputes concerning the proceeds of 
CAIR NOX Ozone Season allowance transfers.
    (5) Delegation by CAIR authorized account representative and 
alternate CAIR authorized account representative. (i) A CAIR authorized 
account representative may delegate, to one or more natural persons, 
his or her authority to make an electronic submission to the 
Administrator provided for or required under subparts FFFF and GGGG of 
this part.
    (ii) An alternate CAIR authorized account representative may 
delegate, to one or more natural persons, his or her authority to make 
an electronic submission to the Administrator provided for or required 
under subparts FFFF and GGGG of this part.

[[Page 25459]]

    (iii) In order to delegate authority to make an electronic 
submission to the Administrator in accordance with paragraph (b)(5)(i) 
or (ii) of this section, the CAIR authorized account representative or 
alternate CAIR authorized account representative, as appropriate, must 
submit to the Administrator a notice of delegation, in a format 
prescribed by the Administrator, that includes the following elements:
    (A) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of such CAIR authorized account 
representative or alternate CAIR authorized account representative;
    (B) The name, address, e-mail address, telephone number, and 
facsimile transmission number (if any) of each such natural person 
(referred to as an ``agent'');
    (C) For each such natural person, a list of the type or types of 
electronic submissions under paragraph (b)(5)(i) or (ii) of this 
section for which authority is delegated to him or her;
    (D) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: ``I agree that any electronic submission to the 
Administrator that is by an agent identified in this notice of 
delegation and of a type listed for such agent in this notice of 
delegation and that is made when I am a CAIR authorized account 
representative or alternate CAIR authorized representative, as 
appropriate, and before this notice of delegation is superseded by 
another notice of delegation under 40 CFR 97.351(b)(5)(iv) shall be 
deemed to be an electronic submission by me.''; and
    (E) The following certification statement by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative: Until this notice of delegation is superseded by 
another notice of delegation under 40 CFR 97.351(b)(5)(iv), I agree to 
maintain an e-mail account and to notify the Administrator immediately 
of any change in my e-mail address unless all delegation of authority 
by me under 40 CFR 97.351(b)(5) is terminated.''.
    (iv) A notice of delegation submitted under paragraph (b)(5)(iii) 
of this section shall be effective, with regard to the CAIR authorized 
account representative or alternate CAIR authorized account 
representative identified in such notice, upon receipt of such notice 
by the Administrator and until receipt by the Administrator of a 
superseding notice of delegation submitted by such CAIR authorized 
account representative or alternate CAIR authorized account 
representative, as appropriate. The superseding notice of delegation 
may replace any previously identified agent, add a new agent, or 
eliminate entirely any delegation of authority.
    (v) Any electronic submission covered by the certification in 
paragraph (b)(5)(iii)(D) of this section and made in accordance with a 
notice of delegation effective under paragraph (b)(5)(iv) of this 
section shall be deemed to be an electronic submission by the CAIR 
designated representative or alternate CAIR designated representative 
submitting such notice of delegation.
    (c) Account identification. The Administrator will assign a unique 
identifying number to each account established under paragraph (a) or 
(b) of this section.


Sec.  97.352  Responsibilities of CAIR authorized account 
representative.

    Following the establishment of a CAIR NOX Ozone Season 
Allowance Tracking System account, all submissions to the Administrator 
pertaining to the account, including, but not limited to, submissions 
concerning the deduction or transfer of CAIR NOX Ozone 
Season allowances in the account, shall be made only by the CAIR 
authorized account representative for the account.


Sec.  97.353  Recordation of CAIR NOX Ozone Season allowance 
allocations.

    (a) By September 30, 2007, the Administrator will record in the 
CAIR NOX Ozone Season sources compliance account the CAIR 
NOX Ozone Season allowances allocated for the CAIR 
NOX Ozone Season units at the source in accordance with 
Sec.  97.342(a) and (b) for the control period in 2009.
    (b) By September 30, 2008, the Administrator will record in the 
CAIR NOX Ozone Season source's compliance account the CAIR 
NOX Ozone Season allowances allocated for the CAIR 
NOX Ozone Season units at the source in accordance with 
Sec.  97.342(a) and (b) for the control period in 2010.
    (c) By September 30, 2009, the Administrator will record in the 
CAIR NOX Ozone Season source's compliance account the CAIR 
Ozone Season NOX allowances allocated for the CAIR 
NOX Ozone Season units at the source in accordance with 
Sec.  97.342(a) and (b) for the control periods in 2011, 2012, and 
2013.
    (d) By December 1, 2010 and December 1 of each year thereafter, the 
Administrator will record in the CAIR NOX Ozone Season 
source's compliance account the CAIR NOX Ozone Season 
allowances allocated for the CAIR NOX Ozone Season units at 
the source in accordance with Sec.  97.342(a) and (b) for the control 
period in the fourth year after the year of the applicable deadline for 
recordation under this paragraph.
    (e) By September 1, 2009 and September 1 of each year thereafter, 
the Administrator will record in the CAIR NOX Ozone Season 
source's compliance account the CAIR NOX Ozone Season 
allowances allocated for the CAIR NOX Ozone Season units at 
the source in accordance with Sec.  97.342(a) and (c) for the control 
period in the year of the applicable deadline for recordation under 
this paragraph.
    (f) Serial numbers for allocated CAIR NOX Ozone Season allowances. 
When recording the allocation of CAIR NOX Ozone Season 
allowances for a CAIR NOX Ozone Season unit in a compliance 
account, the Administrator will assign each CAIR NOX Ozone 
Season allowance a unique identification number that will include 
digits identifying the year of the control period for which the CAIR 
NOX Ozone Season allowance is allocated.


Sec.  97.354  Compliance with CAIR NOX emissions limitation.

    (a) Allowance transfer deadline. The CAIR NOX Ozone 
Season allowances are available to be deducted for compliance with a 
source's CAIR NOX Ozone Season emissions limitation for a 
control period in a given calendar year only if the CAIR NOX 
Ozone Season allowances:
    (1) Were allocated for the control period in the year or a prior 
year; and
    (2) Are held in the compliance account as of the allowance transfer 
deadline for the control period or are transferred into the compliance 
account by a CAIR NOX Ozone Season allowance transfer 
correctly submitted for recordation under 97.360 and 97.361 by the 
allowance transfer deadline for the control period.
    (b) Deductions for compliance. Following the recordation, in 
accordance with Sec.  97.361, of CAIR NOX Ozone Season 
allowance transfers submitted for recordation in a source's compliance 
account by the allowance transfer deadline for a control period, the 
Administrator will deduct from the compliance account CAIR 
NOX Ozone Season allowances available under paragraph (a) of 
this section in order to determine whether the source meets the CAIR 
NOX Ozone Season emissions limitation for the control 
period, as follows:
    (1) Until the amount of CAIR NOX Ozone Season allowances 
deducted equals the number of tons of total nitrogen oxides emissions, 
determined

[[Page 25460]]

in accordance with subpart HHHH of this part, from all CAIR 
NOX Ozone Season units at the source for the control period; 
or
    (2) If there are insufficient CAIR NOX Ozone Season 
allowances to complete the deductions in paragraph (b)(1) of this 
section, until no more CAIR NOX Ozone Season allowances 
available under paragraph (a) of this section remain in the compliance 
account.
    (c)(1) Identification of CAIR NOX Ozone Season allowances by serial 
number. The CAIR authorized account representative for a source's 
compliance account may request that specific CAIR NOX Ozone 
Season allowances, identified by serial number, in the compliance 
account be deducted for emissions or excess emissions for a control 
period in accordance with paragraph (b) or (d) of this section. Such 
request shall be submitted to the Administrator by the allowance 
transfer deadline for the control period and include, in a format 
prescribed by the Administrator, the identification of the CAIR 
NOX Ozone Season source and the appropriate serial numbers.
    (2) First-in, first-out. The Administrator will deduct CAIR 
NOX Ozone Season allowances under paragraph (b) or (d) of 
this section from the source's compliance account, in the absence of an 
identification or in the case of a partial identification of CAIR 
NOX Ozone Season allowances by serial number under paragraph 
(c)(1) of this section, on a first-in, first-out (FIFO) accounting 
basis in the following order:
    (i) Any CAIR NOX Ozone Season allowances that were 
allocated to the units at the source, in the order of recordation; and 
then
    (ii) Any CAIR NOX Ozone Season allowances that were 
allocated to any entity and transferred and recorded in the compliance 
account pursuant to subpart GGGG of this part, in the order of 
recordation.
    (d) Deductions for excess emissions. (1) After making the 
deductions for compliance under paragraph (b) of this section for a 
control period in a calendar year in which the CAIR NOX 
Ozone Season source has excess emissions, the Administrator will deduct 
from the source's compliance account an amount of CAIR NOX 
Ozone Season allowances, allocated for the control period in the 
immediately following calendar year, equal to 3 times the number of 
tons of the source's excess emissions.
    (2) Any allowance deduction required under paragraph (d)(1) of this 
section shall not affect the liability of the owners and operators of 
the CAIR NOX Ozone Season source or the CAIR NOX 
Ozone Season units at the source for any fine, penalty, or assessment, 
or their obligation to comply with any other remedy, for the same 
violations, as ordered under the Clean Air Act or applicable State law.
    (e) Recordation of deductions. The Administrator will record in the 
appropriate compliance account all deductions from such an account 
under paragraphs (b) and (d) of this section and subpart IIII.
    (f) Administrator(s action on submissions. (1) The Administrator 
may review and conduct independent audits concerning any submission 
under the CAIR NOX Ozone Season Trading Program and make 
appropriate adjustments of the information in the submissions.
    (2) The Administrator may deduct CAIR NOX Ozone Season 
allowances from or transfer CAIR NOX Ozone Season allowances 
to a source's compliance account based on the information in the 
submissions, as adjusted under paragraph (f)(1) of this section, and 
record such deductions and transfers.


Sec.  97.355  Banking.

    (a) CAIR NOX Ozone Season allowances may be banked for 
future use or transfer in a compliance account or a general account in 
accordance with paragraph (b) of this section.
    (b) Any CAIR NOX Ozone Season allowance that is held in 
a compliance account or a general account will remain in such account 
unless and until the CAIR NOX Ozone Season allowance is 
deducted or transferred under Sec.  97.342, Sec.  97.354, Sec.  97.356, 
or subpart GGGG or IIII of this part.


Sec.  97.356  Account error.

    The Administrator may, at his or her sole discretion and on his or 
her own motion, correct any error in any CAIR NOX Ozone 
Season Allowance Tracking System account. Within 10 business days of 
making such correction, the Administrator will notify the CAIR 
authorized account representative for the account.


Sec.  97.357  Closing of general accounts.

    (a) The CAIR authorized account representative of a general account 
may submit to the Administrator a request to close the account, which 
shall include a correctly submitted allowance transfer under Sec.  
Sec.  97.360 and 97.361 for any CAIR NOX Ozone Season 
allowances in the account to one or more other CAIR NOX 
Ozone Season Allowance Tracking System accounts.
    (b) If a general account has no allowance transfers in or out of 
the account for a 12-month period or longer and does not contain any 
CAIR NOX Ozone Season allowances, the Administrator may 
notify the CAIR authorized account representative for the account that 
the account will be closed following 20 business days after the notice 
is sent. The account will be closed after the 20-day period unless, 
before the end of the 20-day period, the Administrator receives a 
correctly submitted transfer of CAIR NOX Ozone Season 
allowances into the account under Sec.  Sec.  97.360 and 97.361 or a 
statement submitted by the CAIR authorized account representative 
demonstrating to the satisfaction of the Administrator good cause as to 
why the account should not be closed.

Subpart GGGG--CAIR NOX Ozone Season Allowance Transfers


Sec.  97.360  Submission of CAIR NOX Ozone Season allowance 
transfers.

    A CAIR authorized account representative seeking recordation of a 
CAIR NOX Ozone Season allowance transfer shall submit the 
transfer to the Administrator. To be considered correctly submitted, 
the CAIR NOX Ozone Season allowance transfer shall include 
the following elements, in a format specified by the Administrator:
    (a) The account numbers for both the transferor and transferee 
accounts;
    (b) The serial number of each CAIR NOX Ozone Season 
allowance that is in the transferor account and is to be transferred; 
and
    (c) The name and signature of the CAIR authorized account 
representative of the transferor account and the date signed.


Sec.  97.361  EPA recordation.

    (a) Within 5 business days (except as provided in paragraph (b) of 
this section) of receiving a CAIR NOX Ozone Season allowance 
transfer, the Administrator will record a CAIR NOX Ozone 
Season allowance transfer by moving each CAIR NOX Ozone 
Season allowance from the transferor account to the transferee account 
as specified by the request, provided that:
    (1) The transfer is correctly submitted under Sec.  97.360; and
    (2) The transferor account includes each CAIR NOX Ozone 
Season allowance identified by serial number in the transfer.
    (b) A CAIR NOX Ozone Season allowance transfer that is 
submitted for recordation after the allowance transfer deadline for a 
control period and that includes any CAIR NOX Ozone Season 
allowances allocated for any control period before such allowance 
transfer deadline will not be recorded until after

[[Page 25461]]

the Administrator completes the deductions under Sec.  97.354 for the 
control period immediately before such allowance transfer deadline.
    (c) Where a CAIR NOX Ozone Season allowance transfer 
submitted for recordation fails to meet the requirements of paragraph 
(a) of this section, the Administrator will not record such transfer.


Sec.  97.362  Notification.

    (a) Notification of recordation. Within 5 business days of 
recordation of a CAIR NOX Ozone Season allowance transfer 
under Sec.  97.361, the Administrator will notify the CAIR authorized 
account representatives of both the transferor and transferee accounts.
    (b) Notification of non-recordation. Within 10 business days of 
receipt of a CAIR NOX Ozone Season allowance transfer that 
fails to meet the requirements of Sec.  97.361(a), the Administrator 
will notify the CAIR authorized account representatives of both 
accounts subject to the transfer of:
    (1) A decision not to record the transfer, and
    (2) The reasons for such non-recordation.
    (c) Nothing in this section shall preclude the submission of a CAIR 
NOX Ozone Season allowance transfer for recordation 
following notification of non-recordation.

Subpart HHHH--Monitoring and Reporting


Sec.  97.370  General requirements.

    The owners and operators, and to the extent applicable, the CAIR 
designated representative, of a CAIR NOX Ozone Season unit, 
shall comply with the monitoring, recordkeeping, and reporting 
requirements as provided in this subpart and in subpart H of part 75 of 
this chapter. For purposes of complying with such requirements, the 
definitions in Sec.  97.302 and in Sec.  72.2 of this chapter shall 
apply, and the terms ``affected unit,'' ``designated representative,'' 
and ``continuous emission monitoring system'' (or ``CEMS'') in part 75 
of this chapter shall be deemed to refer to the terms ``CAIR 
NOX Ozone Season unit,'' ``CAIR designated representative,'' 
and ``continuous emission monitoring system'' (or ``CEMS'') 
respectively, as defined in Sec.  97.302. The owner or operator of a 
unit that is not a CAIR NOX Ozone Season unit but that is 
monitored under Sec.  75.72(b)(2)(ii) of this chapter shall comply with 
the same monitoring, recordkeeping, and reporting requirements as a 
CAIR NOX Ozone Season unit.
    (a) Requirements for installation, certification, and data 
accounting. The owner or operator of each CAIR NOX Ozone 
Season unit shall:
    (1) Install all monitoring systems required under this subpart for 
monitoring NOX mass emissions and individual unit heat input 
(including all systems required to monitor NOX emission 
rate, NOX concentration, stack gas moisture content, stack 
gas flow rate, CO2 or O2 concentration, and fuel 
flow rate, as applicable, in accordance with Sec. Sec.  75.71 and 75.72 
of this chapter);
    (2) Successfully complete all certification tests required under 
Sec.  97.371 and meet all other requirements of this subpart and part 
75 of this chapter applicable to the monitoring systems under paragraph 
(a)(1) of this section; and
    (3) Record, report, and quality-assure the data from the monitoring 
systems under paragraph (a)(1) of this section.
    (b) Compliance deadlines. Except as provided in paragraph (e) of 
this section, the owner or operator shall meet the monitoring system 
certification and other requirements of paragraphs (a)(1) and (2) of 
this section on or before the following dates. The owner or operator 
shall record, report, and quality-assure the data from the monitoring 
systems under paragraph (a)(1) of this section on and after the 
following dates.
    (1) For the owner or operator of a CAIR NOX Ozone Season 
unit that commences commercial operation before July 1, 2007, by May 1, 
2008.
    (2) For the owner or operator of a CAIR NOX Ozone Season 
unit that commences commercial operation on or after July 1, 2007 and 
that reports on an annual basis under Sec.  97.374(d), by the later of 
the following dates:
    (i) 90 unit operating days or 180 calendar days, whichever occurs 
first, after the date on which the unit commences commercial operation; 
or
    (ii) May 1, 2008.
    (3) For the owner or operator of a CAIR NOX Ozone Season 
unit that commences commercial operation on or after July 1, 2007 and 
that reports on a control period basis under Sec.  97.374(d)(2)(ii), by 
the later of the following dates:
    (i) 90 unit operating days or 180 calendar days, whichever occurs 
first, after the date on which the unit commences commercial operation; 
or
    (ii) If the compliance date under paragraph (b)(3)(i) of this 
section is not during a control period, May 1 immediately following the 
compliance date under paragraph (b)(3)(i) of this section.
    (4) For the owner or operator of a CAIR NOX Ozone Season 
unit for which construction of a new stack or flue or installation of 
add-on NOX emission controls is completed after the 
applicable deadline under paragraph (b)(1), (2), (6), or (7) of this 
section and that reports on an annual basis under Sec.  97.374(d), by 
90 unit operating days or 180 calendar days, whichever occurs first, 
after the date on which emissions first exit to the atmosphere through 
the new stack or flue or add-on NOX emissions controls.
    (5) For the owner or operator of a CAIR NOX Ozone Season 
unit for which construction of a new stack or flue or installation of 
add-on NOX emission controls is completed after the 
applicable deadline under paragraph (b)(1), (3), (6), or (7) of this 
section and that reports on a control period basis under Sec.  
97.374(d)(2)(ii), by the later of the following dates:
    (i) 90 unit operating days or 180 calendar days, whichever occurs 
first, after the date on which emissions first exit to the atmosphere 
through the new stack or flue or add-on NOX emissions 
controls; or
    (ii) If the compliance date under paragraph (b)(5)(i) of this 
section is not during a control period, May 1 immediately following the 
compliance date under paragraph (b)(5)(i) of this section.
    (6) Notwithstanding the dates in paragraphs (b)(1), (2), and (3) of 
this section, for the owner or operator of a unit for which a CAIR 
NOX Ozone Season opt-in permit application is submitted and 
not withdrawn and a CAIR opt-in permit is not yet issued or denied 
under subpart IIII of this part, by the date specified in Sec.  
97.384(b).
    (7) Notwithstanding the dates in paragraphs (b)(1), (2), and (3) of 
this section, for the owner or operator of a CAIR NOX Ozone 
Season opt-in unit under subpart IIII of this part, by the date on 
which the CAIR NOX Ozone Season opt-in unit enters the CAIR 
NOX Ozone Season Trading Program as provided in Sec.  
97.384(g).
    (c) Reporting data. The owner or operator of a CAIR NOX 
Ozone Season unit that does not meet the applicable compliance date set 
forth in paragraph (b) of this section for any monitoring system under 
paragraph (a)(1) of this section shall, for each such monitoring 
system, determine, record, and report maximum potential (or, as 
appropriate, minimum potential) values for NOX 
concentration, NOX emission rate, stack gas flow rate, stack 
gas moisture content, fuel flow rate, and any other parameters required 
to determine NOX mass emissions and heat input in

[[Page 25462]]

accordance with Sec.  75.31(b)(2) or (c)(3) of this chapter, section 
2.4 of appendix D to part 75 of this chapter, or section 2.5 of 
appendix E to part 75 of this chapter, as applicable.
    (d) Prohibitions. (1) No owner or operator of a CAIR NOX 
Ozone Season unit shall use any alternative monitoring system, 
alternative reference method, or any other alternative to any 
requirement of this subpart without having obtained prior written 
approval in accordance with Sec.  97.375.
    (2) No owner or operator of a CAIR NOX Ozone Season unit 
shall operate the unit so as to discharge, or allow to be discharged, 
NOX emissions to the atmosphere without accounting for all 
such emissions in accordance with the applicable provisions of this 
subpart and part 75 of this chapter.
    (3) No owner or operator of a CAIR NOX Ozone Season unit 
shall disrupt the continuous emission monitoring system, any portion 
thereof, or any other approved emission monitoring method, and thereby 
avoid monitoring and recording NOX mass emissions discharged 
into the atmosphere or heat input, except for periods of 
recertification or periods when calibration, quality assurance testing, 
or maintenance is performed in accordance with the applicable 
provisions of this subpart and part 75 of this chapter.
    (4) No owner or operator of a CAIR NOX Ozone Season unit 
shall retire or permanently discontinue use of the continuous emission 
monitoring system, any component thereof, or any other approved 
monitoring system under this subpart, except under any one of the 
following circumstances:
    (i) During the period that the unit is covered by an exemption 
under Sec.  97.305 that is in effect;
    (ii) The owner or operator is monitoring emissions from the unit 
with another certified monitoring system approved, in accordance with 
the applicable provisions of this subpart and part 75 of this chapter, 
by the Administrator for use at that unit that provides emission data 
for the same pollutant or parameter as the retired or discontinued 
monitoring system; or
    (iii) The CAIR designated representative submits notification of 
the date of certification testing of a replacement monitoring system 
for the retired or discontinued monitoring system in accordance with 
Sec.  97.371(d)(3)(i).
    (e) Long-term cold storage. The owner or operator of a CAIR 
NOX Ozone Season unit is subject to the applicable 
provisions of part 75 of this chapter concerning units in long-term 
cold storage.


Sec.  97.371  Initial certification and recertification procedures.

    (a) The owner or operator of a CAIR NOX Ozone Season 
unit shall be exempt from the initial certification requirements of 
this section for a monitoring system under Sec.  97.370(a)(1) if the 
following conditions are met:
    (1) The monitoring system has been previously certified in 
accordance with part 75 of this chapter; and
    (2) The applicable quality-assurance and quality-control 
requirements of Sec.  75.21 of this chapter and appendix B, appendix D, 
and appendix E to part 75 of this chapter are fully met for the 
certified monitoring system described in paragraph (a)(1) of this 
section.
    (b) The recertification provisions of this section shall apply to a 
monitoring system under Sec.  97.370(a)(1) exempt from initial 
certification requirements under paragraph (a) of this section.
    (c) If the Administrator has previously approved a petition under 
Sec.  75.17(a) or (b) of this chapter for apportioning the 
NOX emission rate measured in a common stack or a petition 
under Sec.  75.66 of this chapter for an alternative to a requirement 
in Sec.  75.12 or Sec.  75.17 of this chapter, the CAIR designated 
representative shall resubmit the petition to the Administrator under 
Sec.  97.375 to determine whether the approval applies under the CAIR 
NOX Ozone Season Trading Program.
    (d) Except as provided in paragraph (a) of this section, the owner 
or operator of a CAIR NOX Ozone Season unit shall comply 
with the following initial certification and recertification procedures 
for a continuous monitoring system (i.e., a continuous emission 
monitoring system and an excepted monitoring system under appendices D 
and E to part 75 of this chapter) under Sec.  97.370(a)(1). The owner 
or operator of a unit that qualifies to use the low mass emissions 
excepted monitoring methodology under Sec.  75.19 of this chapter or 
that qualifies to use an alternative monitoring system under subpart E 
of part 75 of this chapter shall comply with the procedures in 
paragraph (e) or (f) of this section respectively.
    (1) Requirements for initial certification. The owner or operator 
shall ensure that each continuous monitoring system under Sec.  
97.370(a)(1) (including the automated data acquisition and handling 
system) successfully completes all of the initial certification testing 
required under Sec.  75.20 of this chapter by the applicable deadline 
in Sec.  97.370(b). In addition, whenever the owner or operator 
installs a monitoring system to meet the requirements of this subpart 
in a location where no such monitoring system was previously installed, 
initial certification in accordance with Sec.  75.20 of this chapter is 
required.
    (2) Requirements for recertification. Whenever the owner or 
operator makes a replacement, modification, or change in any certified 
continuous emission monitoring system under Sec.  97.370(a)(1) that may 
significantly affect the ability of the system to accurately measure or 
record NOX mass emissions or heat input rate or to meet the 
quality-assurance and quality-control requirements of Sec.  75.21 of 
this chapter or appendix B to part 75 of this chapter, the owner or 
operator shall recertify the monitoring system in accordance with Sec.  
75.20(b) of this chapter. Furthermore, whenever the owner or operator 
makes a replacement, modification, or change to the flue gas handling 
system or the unit's operation that may significantly change the stack 
flow or concentration profile, the owner or operator shall recertify 
each continuous emission monitoring system whose accuracy is 
potentially affected by the change, in accordance with Sec.  75.20(b) 
of this chapter. Examples of changes to a continuous emission 
monitoring system that require recertification include: Replacement of 
the analyzer, complete replacement of an existing continuous emission 
monitoring system, or change in location or orientation of the sampling 
probe or site. Any fuel flowmeter systems, and any excepted 
NOX monitoring system under appendix E to part 75 of this 
chapter, under Sec.  97.370(a)(1) are subject to the recertification 
requirements in Sec.  75.20(g)(6) of this chapter.
    (3) Approval process for initial certification and recertification. 
Paragraphs (d)(3)(i) through (iv) of this section apply to both initial 
certification and recertification of a continuous monitoring system 
under Sec.  97.370(a)(1). For recertifications, replace the words 
``certification'' and ``initial certification'' with the word 
``recertification'', replace the word ``certified'' with the word 
``recertified,'' and follow the procedures in Sec. Sec.  75.20(b)(5) 
and (g)(7) of this chapter in lieu of the procedures in paragraph 
(d)(3)(v) of this section.
    (i) Notification of certification. The CAIR designated 
representative shall submit to the appropriate EPA Regional Office and 
the Administrator written notice of the dates of certification testing, 
in accordance with Sec.  97.373.
    (ii) Certification application. The CAIR designated representative 
shall submit to the Administrator a certification application for each 
monitoring system. A complete certification application shall include

[[Page 25463]]

the information specified in Sec.  75.63 of this chapter.
    (iii) Provisional certification date. The provisional certification 
date for a monitoring system shall be determined in accordance with 
Sec.  75.20(a)(3) of this chapter. A provisionally certified monitoring 
system may be used under the CAIR NOX Ozone Season Trading 
Program for a period not to exceed 120 days after receipt by the 
Administrator of the complete certification application for the 
monitoring system under paragraph (d)(3)(ii) of this section. Data 
measured and recorded by the provisionally certified monitoring system, 
in accordance with the requirements of part 75 of this chapter, will be 
considered valid quality-assured data (retroactive to the date and time 
of provisional certification), provided that the Administrator does not 
invalidate the provisional certification by issuing a notice of 
disapproval within 120 days of the date of receipt of the complete 
certification application by the Administrator.
    (iv) Certification application approval process. The Administrator 
will issue a written notice of approval or disapproval of the 
certification application to the owner or operator within 120 days of 
receipt of the complete certification application under paragraph 
(d)(3)(ii) of this section. In the event the Administrator does not 
issue such a notice within such 120-day period, each monitoring system 
that meets the applicable performance requirements of part 75 of this 
chapter and is included in the certification application will be deemed 
certified for use under the CAIR NOX Ozone Season Trading 
Program.
    (A) Approval notice. If the certification application is complete 
and shows that each monitoring system meets the applicable performance 
requirements of part 75 of this chapter, then the Administrator will 
issue a written notice of approval of the certification application 
within 120 days of receipt.
    (B) Incomplete application notice. If the certification application 
is not complete, then the Administrator will issue a written notice of 
incompleteness that sets a reasonable date by which the CAIR designated 
representative must submit the additional information required to 
complete the certification application. If the CAIR designated 
representative does not comply with the notice of incompleteness by the 
specified date, then the Administrator may issue a notice of 
disapproval under paragraph (d)(3)(iv)(C) of this section. The 120-day 
review period shall not begin before receipt of a complete 
certification application.
    (C) Disapproval notice. If the certification application shows that 
any monitoring system does not meet the performance requirements of 
part 75 of this chapter or if the certification application is 
incomplete and the requirement for disapproval under paragraph 
(d)(3)(iv)(B) of this section is met, then the Administrator will issue 
a written notice of disapproval of the certification application. Upon 
issuance of such notice of disapproval, the provisional certification 
is invalidated by the Administrator and the data measured and recorded 
by each uncertified monitoring system shall not be considered valid 
quality-assured data beginning with the date and hour of provisional 
certification (as defined under Sec.  75.20(a)(3) of this chapter). The 
owner or operator shall follow the procedures for loss of certification 
in paragraph (d)(3)(v) of this section for each monitoring system that 
is disapproved for initial certification.
    (D) Audit decertification. The Administrator may issue a notice of 
disapproval of the certification status of a monitor in accordance with 
Sec.  97.372(b).
    (v) Procedures for loss of certification. If the Administrator 
issues a notice of disapproval of a certification application under 
paragraph (d)(3)(iv)(C) of this section or a notice of disapproval of 
certification status under paragraph (d)(3)(iv)(D) of this section, 
then:
    (A) The owner or operator shall substitute the following values, 
for each disapproved monitoring system, for each hour of unit operation 
during the period of invalid data specified under Sec.  
75.20(a)(4)(iii), Sec.  75.20(g)(7), or Sec.  75.21(e) of this chapter 
and continuing until the applicable date and hour specified under Sec.  
75.20(a)(5)(i) or (g)(7) of this chapter:
    (1) For a disapproved NOX emission rate (i.e., 
NOX-diluent) system, the maximum potential NOX 
emission rate, as defined in ( 72.2 of this chapter.
    (2) For a disapproved NOX pollutant concentration 
monitor and disapproved flow monitor, respectively, the maximum 
potential concentration of NOX and the maximum potential 
flow rate, as defined in sections 2.1.2.1 and 2.1.4.1 of appendix A to 
part 75 of this chapter.
    (3) For a disapproved moisture monitoring system and disapproved 
diluent gas monitoring system, respectively, the minimum potential 
moisture percentage and either the maximum potential CO2 
concentration or the minimum potential O2 concentration (as 
applicable), as defined in sections 2.1.5, 2.1.3.1, and 2.1.3.2 of 
appendix A to part 75 of this chapter.
    (4) For a disapproved fuel flowmeter system, the maximum potential 
fuel flow rate, as defined in section 2.4.2.1 of appendix D to part 75 
of this chapter.
    (5) For a disapproved excepted NOX monitoring system 
under appendix E to part 75 of this chapter, the fuel-specific maximum 
potential NOX emission rate, as defined in ( 72.2 of this 
chapter.
    (B) The CAIR designated representative shall submit a notification 
of certification retest dates and a new certification application in 
accordance with paragraphs (d)(3)(i) and (ii) of this section.
    (C) The owner or operator shall repeat all certification tests or 
other requirements that were failed by the monitoring system, as 
indicated in the Administrator's notice of disapproval, no later than 
30 unit operating days after the date of issuance of the notice of 
disapproval.
    (e) Initial certification and recertification procedures for units 
using the low mass emission excepted methodology under Sec.  75.19 of 
this chapter. The owner or operator of a unit qualified to use the low 
mass emissions (LME) excepted methodology under Sec.  75.19 of this 
chapter shall meet the applicable certification and recertification 
requirements in Sec. Sec.  75.19(a)(2) and 75.20(h) of this chapter. If 
the owner or operator of such a unit elects to certify a fuel flowmeter 
system for heat input determination, the owner or operator shall also 
meet the certification and recertification requirements in Sec.  
75.20(g) of this chapter.
    (f) Certification/recertification procedures for alternative 
monitoring systems. The CAIR designated representative of each unit for 
which the owner or operator intends to use an alternative monitoring 
system approved by the Administrator under subpart E of part 75 of this 
chapter shall comply with the applicable notification and application 
procedures of Sec.  75.20(f) of this chapter.


Sec.  97.372  Out of control periods.

    (a) Whenever any monitoring system fails to meet the quality-
assurance and quality-control requirements or data validation 
requirements of part 75 of this chapter, data shall be substituted 
using the applicable missing data procedures in subpart D or subpart H 
of, or appendix D or appendix E to, part 75 of this chapter.
    (b) Audit decertification. Whenever both an audit of a monitoring 
system and a review of the initial certification

[[Page 25464]]

or recertification application reveal that any monitoring system should 
not have been certified or recertified because it did not meet a 
particular performance specification or other requirement under Sec.  
97.371 or the applicable provisions of part 75 of this chapter, both at 
the time of the initial certification or recertification application 
submission and at the time of the audit, the Administrator will issue a 
notice of disapproval of the certification status of such monitoring 
system. For the purposes of this paragraph, an audit shall be either a 
field audit or an audit of any information submitted to the permitting 
authority or the Administrator. By issuing the notice of disapproval, 
the Administrator revokes prospectively the certification status of the 
monitoring system. The data measured and recorded by the monitoring 
system shall not be considered valid quality-assured data from the date 
of issuance of the notification of the revoked certification status 
until the date and time that the owner or operator completes 
subsequently approved initial certification or recertification tests 
for the monitoring system. The owner or operator shall follow the 
applicable initial certification or recertification procedures in Sec.  
97.371 for each disapproved monitoring system.


Sec.  97.373  Notifications.

    The CAIR designated representative for a CAIR NOX Ozone 
Season unit shall submit written notice to the Administrator in 
accordance with Sec.  75.61 of this chapter.


Sec.  97.374  Recordkeeping and reporting.

    (a) General provisions. The CAIR designated representative shall 
comply with all recordkeeping and reporting requirements in this 
section, the applicable recordkeeping and reporting requirements under 
Sec.  75.73 of this chapter, and the requirements of Sec.  
97.310(e)(1).
    (b) Monitoring Plans. The owner or operator of a CAIR 
NOX Ozone Season unit shall comply with requirements of 
Sec.  75.73 (c) and (e) of this chapter and, for a unit for which a 
CAIR opt-in permit application is submitted and not withdrawn and a 
CAIR opt-in permit is not yet issued or denied under subpart IIII of 
this part, Sec. Sec.  97.383 and 97.384(a).
    (c) Certification Applications. The CAIR designated representative 
shall submit an application to the Administrator within 45 days after 
completing all initial certification or recertification tests required 
under Sec.  97.371, including the information required under Sec.  
75.63 of this chapter.
    (d) Quarterly reports. The CAIR designated representative shall 
submit quarterly reports, as follows:
    (1) If the CAIR NOX Ozone Season unit is subject to an 
Acid Rain emissions limitation or a CAIR NOX emissions 
limitation or if the owner or operator of such unit chooses to report 
on an annual basis under this subpart, the CAIR designated 
representative shall meet the requirements of subpart H of part 75 of 
this chapter (concerning monitoring of NOX mass emissions) 
for such unit for the entire year and shall report the NOX 
mass emissions data and heat input data for such unit, in an electronic 
quarterly report in a format prescribed by the Administrator, for each 
calendar quarter beginning with:
    (i) For a unit that commences commercial operation before July 1, 
2007, the calendar quarter covering May 1, 2008 through June 30, 2008;
    (ii) For a unit that commences commercial operation on or after 
July 1, 2007, the calendar quarter corresponding to the earlier of the 
date of provisional certification or the applicable deadline for 
initial certification under Sec.  97.370(b), unless that quarter is the 
third or fourth quarter of 2007 or the first quarter of 2008, in which 
case reporting shall commence in the quarter covering May 1, 2008 
through June 30, 2008;
    (iii) Notwithstanding paragraphs (d)(1) (i) and (ii) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart IIII of this part, the calendar quarter 
corresponding to the date specified in Sec.  97.384(b); and
    (iv) Notwithstanding paragraphs (d)(1) (i) and (ii) of this 
section, for a CAIR NOX Ozone Season opt-in unit under 
subpart IIII of this part, the calendar quarter corresponding to the 
date on which the CAIR NOX Ozone Season opt-in unit enters 
the CAIR NOX Ozone Season Trading Program as provided in 
Sec.  97.384(g).
    (2) If the CAIR NOX Ozone Season unit is not subject to 
an Acid Rain emissions limitation or a CAIR NOX emissions 
limitation, then the CAIR designated representative shall either:
    (i) Meet the requirements of subpart H of part 75 (concerning 
monitoring of NOX mass emissions) for such unit for the 
entire year and report the NOX mass emissions data and heat 
input data for such unit in accordance with paragraph (d)(1) of this 
section; or
    (ii) Meet the requirements of subpart H of part 75 for the control 
period (including the requirements in Sec.  75.74(c) of this chapter) 
and report NOX mass emissions data and heat input data 
(including the data described in Sec.  75.74(c)(6) of this chapter) for 
such unit only for the control period of each year and report, in an 
electronic quarterly report in a format prescribed by the 
Administrator, for each calendar quarter beginning with:
    (A) For a unit that commences commercial operation before July 1, 
2007, the calendar quarter covering May 1, 2008 through June 30, 2008;
    (B) For a unit that commences commercial operation on or after July 
1, 2007, the calendar quarter corresponding to the earlier of the date 
of provisional certification or the applicable deadline for initial 
certification under Sec.  97.370(b), unless that date is not during a 
control period, in which case reporting shall commence in the quarter 
that includes May 1 through June 30 of the first control period after 
such date;
    (C) Notwithstanding paragraphs (d)(2)(ii)(A) and (2)(ii)(B) of this 
section, for a unit for which a CAIR opt-in permit application is 
submitted and not withdrawn and a CAIR opt-in permit is not yet issued 
or denied under subpart IIII of this part, the calendar quarter 
corresponding to the date specified in Sec.  97.384(b); and
    (D) Notwithstanding paragraphs (d)(2)(ii)(A) and (2)(ii)(B) of this 
section, for a CAIR NOX Ozone Season opt-in unit under 
subpart IIII of this part, the calendar quarter corresponding to the 
date on which the CAIR NOX Ozone Season opt-in unit enters 
the CAIR NOX Ozone Season Trading Program as provided in 
Sec.  97.384(g).
    (3) The CAIR designated representative shall submit each quarterly 
report to the Administrator within 30 days following the end of the 
calendar quarter covered by the report. Quarterly reports shall be 
submitted in the manner specified in Sec.  75.73(f) of this chapter.
    (4) For CAIR NOX Ozone Season units that are also 
subject to an Acid Rain emissions limitation or the CAIR NOX 
Annual Trading Program, CAIR SO2 Trading Program, or Hg 
Budget Trading Program, quarterly reports shall include the applicable 
data and information required by subparts F through I of part 75 of 
this chapter as applicable, in addition to the NOX mass 
emission data, heat input data, and other information required by this 
subpart.
    (e) Compliance certification. The CAIR designated representative 
shall submit to the Administrator a compliance certification (in a 
format prescribed by the Administrator) in support of each quarterly 
report based on reasonable inquiry of those persons

[[Page 25465]]

with primary responsibility for ensuring that all of the unit's 
emissions are correctly and fully monitored. The certification shall 
state that:
    (1) The monitoring data submitted were recorded in accordance with 
the applicable requirements of this subpart and part 75 of this 
chapter, including the quality assurance procedures and specifications;
    (2) For a unit with add-on NOX emission controls and for 
all hours where NOX data are substituted in accordance with 
Sec.  75.34(a)(1) of this chapter, the add-on emission controls were 
operating within the range of parameters listed in the quality 
assurance/quality control program under appendix B to part 75 of this 
chapter and the substitute data values do not systematically 
underestimate NOX emissions; and
    (3) For a unit that is reporting on a control period basis under 
paragraph (d)(2)(ii) of this section, the NOX emission rate 
and NOX concentration values substituted for missing data 
under subpart D of part 75 of this chapter are calculated using only 
values from a control period and do not systematically underestimate 
NOX emissions.


Sec.  97.375  Petitions.

    The CAIR designated representative of a CAIR NOX Ozone 
Season unit may submit a petition under Sec.  75.66 of this chapter to 
the Administrator requesting approval to apply an alternative to any 
requirement of this subpart. Application of an alternative to any 
requirement of this subpart is in accordance with this subpart only to 
the extent that the petition is approved in writing by the 
Administrator, in consultation with the permitting authority.

Subpart IIII--CAIR NOX Ozone Season Opt-in Units


Sec.  97.380  Applicability.

    A CAIR NOX Ozone Season opt-in unit must be a unit that:
    (a) Is located in a State that submits, and for which the 
Administrator approves, a State implementation plan revision in 
accordance with Sec.  51.123(ee)(3) (i), (ii), or (iii) of this chapter 
establishing procedures concerning CAIR Ozone Season opt-in units;
    (b) Is not a CAIR NOX Ozone Season unit under Sec.  
97.304 and is not covered by a retired unit exemption under Sec.  
97.305 that is in effect;
    (c) Is not covered by a retired unit exemption under Sec.  72.8 of 
this chapter that is in effect;
    (d) Has or is required or qualified to have a title V operating 
permit or other federally enforceable permit; and
    (e) Vents all of its emissions to a stack and can meet the 
monitoring, recordkeeping, and reporting requirements of subpart HHHH 
of this part.


Sec.  97.381  General.

    (a) Except as otherwise provided in Sec. Sec.  97.301 through 
97.304, Sec. Sec.  97.306 through 97.308, and subparts BBBB and CCCC 
and subparts FFFF through HHHH of this part, a CAIR NOX 
Ozone Season opt-in unit shall be treated as a CAIR NOX 
Ozone Season unit for purposes of applying such sections and subparts 
of this part.
    (b) Solely for purposes of applying, as provided in this subpart, 
the requirements of subpart HHHH of this part to a unit for which a 
CAIR opt-in permit application is submitted and not withdrawn and a 
CAIR opt-in permit is not yet issued or denied under this subpart, such 
unit shall be treated as a CAIR NOX Ozone Season unit before 
issuance of a CAIR opt-in permit for such unit.


Sec.  97.382  CAIR designated representative.

    Any CAIR NOX Ozone Season opt-in unit, and any unit for 
which a CAIR opt-in permit application is submitted and not withdrawn 
and a CAIR opt-in permit is not yet issued or denied under this 
subpart, located at the same source as one or more CAIR NOX 
Ozone Season units shall have the same CAIR designated representative 
and alternate CAIR designated representative as such CAIR 
NOX Ozone Season units.


Sec.  97.383  Applying for CAIR opt-in permit.

    (a) Applying for initial CAIR opt-in permit. The CAIR designated 
representative of a unit meeting the requirements for a CAIR 
NOX Ozone Season opt-in unit in Sec.  97.380 may apply for 
an initial CAIR opt-in permit at any time, except as provided under 
Sec.  97.386 (f) and (g), and, in order to apply, must submit the 
following:
    (1) A complete CAIR permit application under Sec.  97.322;
    (2) A certification, in a format specified by the permitting 
authority, that the unit:
    (i) Is not a CAIR NOX Ozone Season unit under Sec.  
97.304 and is not covered by a retired unit exemption under Sec.  
97.305 that is in effect;
    (ii) Is not covered by a retired unit exemption under Sec.  72.8 of 
this chapter that is in effect;
    (iii) Vents all of its emissions to a stack; and
    (iv) Has documented heat input for more than 876 hours during the 6 
months immediately preceding submission of the CAIR permit application 
under Sec.  97.322;
    (3) A monitoring plan in accordance with subpart HHHH of this part;
    (4) A complete certificate of representation under Sec.  97.313 
consistent with Sec.  97.382, if no CAIR designated representative has 
been previously designated for the source that includes the unit; and
    (5) A statement, in a format specified by the permitting authority, 
whether the CAIR designated representative requests that the unit be 
allocated CAIR NOX Ozone Season allowances under Sec.  
97.380(b) or Sec.  97.388(c) (subject to the conditions in Sec. Sec.  
97.384(h) and 97.386(g)), to the extent such allocation is provided in 
a State implementation plan revision submitted in accordance with Sec.  
51.123(ee)(3)(i), (ii), or (iii) of this chapter and approved by the 
Administrator. If allocation under Sec.  97.388(c) is requested, this 
statement shall include a statement that the owners and operators 
intend to repower the unit before January 1, 2015 and that they will 
provide, upon request, documentation demonstrating such intent.
    (b) Duty to reapply. (1) The CAIR designated representative of a 
CAIR NOX Ozone Season opt-in unit shall submit a complete 
CAIR permit application under Sec.  97.322 to renew the CAIR opt-in 
unit permit in accordance with the permitting authority's regulations 
for title V operating permits, or the permitting authority's 
regulations for other federally enforceable permits if applicable, 
addressing permit renewal.
    (2) Unless the permitting authority issues a notification of 
acceptance of withdrawal of the CAIR NOX Ozone Season opt-in 
unit from the CAIR NOX Ozone Season Trading Program in 
accordance with Sec.  97.386 or the unit becomes a CAIR NOX 
Ozone Season unit under Sec.  97.304, the CAIR NOX Ozone 
Season opt-in unit shall remain subject to the requirements for a CAIR 
NOX Ozone Season opt-in unit, even if the CAIR designated 
representative for the CAIR NOX Ozone Season opt-in unit 
fails to submit a CAIR permit application that is required for renewal 
of the CAIR opt-in permit under paragraph (b)(1) of this section.


Sec.  97.384  Opt-in process.

    The permitting authority will issue or deny a CAIR opt-in permit 
for a unit for which an initial application for a CAIR opt-in permit 
under Sec.  97.383 is submitted in accordance with the following, to 
the extent provided in a State implementation plan revision submitted 
in accordance with

[[Page 25466]]

Sec.  51.123(ee)(3)(i), (ii), or (iii) of this chapter and approved by 
the Administrator:
    (a) Interim review of monitoring plan. The permitting authority and 
the Administrator will determine, on an interim basis, the sufficiency 
of the monitoring plan accompanying the initial application for a CAIR 
opt-in permit under Sec.  97.383. A monitoring plan is sufficient, for 
purposes of interim review, if the plan appears to contain information 
demonstrating that the NOX emissions rate and heat input of 
the unit and all other applicable parameters are monitored and reported 
in accordance with subpart HHHH of this part. A determination of 
sufficiency shall not be construed as acceptance or approval of the 
monitoring plan.
    (b) Monitoring and reporting. (1)(i) If the permitting authority 
and the Administrator determine that the monitoring plan is sufficient 
under paragraph (a) of this section, the owner or operator shall 
monitor and report the NOX emissions rate and the heat input 
of the unit and all other applicable parameters, in accordance with 
subpart HHHH of this part, starting on the date of certification of the 
appropriate monitoring systems under subpart HHHH of this part and 
continuing until a CAIR opt-in permit is denied under Sec.  97.384(f) 
or, if a CAIR opt-in permit is issued, the date and time when the unit 
is withdrawn from the CAIR NOX Ozone Season Trading Program 
in accordance with Sec.  97.386.
    (ii) The monitoring and reporting under paragraph (b)(1)(i) of this 
section shall include the entire control period immediately before the 
date on which the unit enters the CAIR NOX Ozone Season 
Trading Program under Sec.  97.384(g), during which period monitoring 
system availability must not be less than 90 percent under subpart HHHH 
of this part and the unit must be in full compliance with any 
applicable State or Federal emissions or emissions-related 
requirements.
    (2) To the extent the NOX emissions rate and the heat 
input of the unit are monitored and reported in accordance with subpart 
HHHH of this part for one or more control periods, in addition to the 
control period under paragraph (b)(1)(ii) of this section, during which 
control periods monitoring system availability is not less than 90 
percent under subpart HHHH of this part and the unit is in full 
compliance with any applicable State or Federal emissions or emissions-
related requirements and which control periods begin not more than 3 
years before the unit enters the CAIR NOX Ozone Season 
Trading Program under Sec.  97.384(g), such information shall be used 
as provided in paragraphs (c) and (d) of this section.
    (c) Baseline heat input. The unit's baseline heat rate shall equal:
    (1) If the unit's NOX emissions rate and heat input are 
monitored and reported for only one control period, in accordance with 
paragraph (b)(1) of this section, the unit's total heat input (in 
mmBtu) for the control period; or
    (2) If the unit's NOX emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, the average of the 
amounts of the unit's total heat input (in mmBtu) for the control 
periods under paragraphs (b)(1)(ii) and (2) of this section.
    (d) Baseline NOX emission rate. The unit's baseline NOX 
emission rate shall equal:
    (1) If the unit's NOX emissions rate and heat input are 
monitored and reported for only one control period, in accordance with 
paragraph (b)(1) of this section, the unit's NOX emissions 
rate (in lb/mmBtu) for the control period;
    (2) If the unit's NOX emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, and the unit does not 
have add-on NOX emission controls during any such control 
periods, the average of the amounts of the unit's NOX 
emissions rate (in lb/mmBtu) for the control periods under paragraphs 
(b)(1)(ii) and (2) of this section; or
    (3) If the unit's NOX emissions rate and heat input are 
monitored and reported for more than one control period, in accordance 
with paragraphs (b)(1) and (2) of this section, and the unit has add-on 
NOX emission controls during any such control periods, the 
average of the amounts of the unit's NOX emissions rate (in 
lb/mmBtu) for such control periods during which the unit has add-on 
NOX emission controls.
    (e) Issuance of CAIR opt-in permit. After calculating the baseline 
heat input and the baseline NOX emissions rate for the unit 
under paragraphs (c) and (d) of this section and if the permitting 
authority determines that the CAIR designated representative shows that 
the unit meets the requirements for a CAIR NOX Ozone Season 
opt-in unit in Sec.  97.380 and meets the elements certified in Sec.  
97.383(a)(2), the permitting authority will issue a CAIR opt-in permit. 
The permitting authority will provide a copy of the CAIR opt-in permit 
to the Administrator, who will then establish a compliance account for 
the source that includes the CAIR NOX Ozone Season opt-in 
unit unless the source already has a compliance account.
    (f) Issuance of denial of CAIR opt-in permit. Notwithstanding 
paragraphs (a) through (e) of this section, if at any time before 
issuance of a CAIR opt-in permit for the unit, the permitting authority 
determines that the CAIR designated representative fails to show that 
the unit meets the requirements for a CAIR NOX Ozone Season 
opt-in unit in Sec.  97.380 or meets the elements certified in Sec.  
97.383(a)(2), the permitting authority will issue a denial of a CAIR 
opt-in permit for the unit.
    (g) Date of entry into CAIR NOX Ozone Season Trading 
Program. A unit for which an initial CAIR opt-in permit is issued by 
the permitting authority shall become a CAIR NOX Ozone 
Season opt-in unit, and a CAIR NOX Ozone Season unit, as of 
the later of May 1, 2009 or May 1 of the first control period during 
which such CAIR opt-in permit is issued.
    (h) Repowered CAIR NOX Ozone Season opt-in unit. (1) If 
CAIR designated representative requests, and the permitting authority 
issues a CAIR opt-in permit providing for, allocation to a CAIR 
NOX Ozone Season opt-in unit of CAIR NOX Ozone 
Season allowances under Sec.  97.388(c) and such unit is repowered 
after its date of entry into the CAIR NOX Ozone Season 
Trading Program under paragraph (g) of this section, the repowered unit 
shall be treated as a CAIR NOX Ozone Season opt-in unit 
replacing the original CAIR NOX Ozone Season opt-in unit, as 
of the date of start-up of the repowered unit's combustion chamber.
    (2) Notwithstanding paragraphs (c) and (d) of this section, as of 
the date of start-up under paragraph (h)(1) of this section, the 
repowered unit shall be deemed to have the same date of commencement of 
operation, date of commencement of commercial operation, baseline heat 
input, and baseline NOX emission rate as the original CAIR 
NOX Ozone Season opt-in unit, and the original CAIR 
NOX Ozone Season opt-in unit shall no longer be treated as a 
CAIR NOX Ozone Season opt-in unit or a CAIR NOX 
Ozone Season unit.


Sec.  97.385  CAIR opt-in permit contents.

    (a) Each CAIR opt-in permit will contain:
    (1) All elements required for a complete CAIR permit application 
under Sec.  97.322;
    (2) The certification in Sec.  97.383(a)(2);
    (3) The unit's baseline heat input under Sec.  97.384(c);
    (4) The unit's baseline NOX emission rate under Sec.  
97.384(d);

[[Page 25467]]

    (5) A statement whether the unit is to be allocated CAIR 
NOX Ozone Season allowances under Sec.  97.388(b) or Sec.  
97.388(c) (subject to the conditions in Sec. Sec.  97.384(h) and 
97.386(g));
    (6) A statement that the unit may withdraw from the CAIR 
NOX Ozone Season Trading Program only in accordance with 
Sec.  97.386; and
    (7) A statement that the unit is subject to, and the owners and 
operators of the unit must comply with, the requirements of Sec.  
97.387.
    (b) Each CAIR opt-in permit is deemed to incorporate automatically 
the definitions of terms under Sec.  97.302 and, upon recordation by 
the Administrator under subpart FFFF or GGGG of this part or this 
subpart, every allocation, transfer, or deduction of CAIR 
NOX Ozone Season allowances to or from the compliance 
account of the source that includes a CAIR NOX Ozone Season 
opt-in unit covered by the CAIR opt-in permit.
    (c) The CAIR opt-in permit shall be included, in a format specified 
by the permitting authority, in the CAIR permit for the source where 
the CAIR NOX Ozone Season opt-in unit is located and in a 
title V operating permit or other federally enforceable permit for the 
source.


Sec.  97.386  Withdrawal from CAIR NOX Ozone Season Trading 
Program.

    Except as provided under paragraph (g) of this section, a CAIR 
NOX Ozone Season opt-in unit may withdraw from the CAIR 
NOX Ozone Season Trading Program, but only if the permitting 
authority issues a notification to the CAIR designated representative 
of the CAIR NOX Ozone Season opt-in unit of the acceptance 
of the withdrawal of the CAIR NOX Ozone Season opt-in unit 
in accordance with paragraph (d) of this section.
    (a) Requesting withdrawal. In order to withdraw a CAIR 
NOX Ozone Season opt-in unit from the CAIR NOX 
Ozone Season Trading Program, the CAIR designated representative of the 
CAIR NOX Ozone Season opt-in unit shall submit to the 
permitting authority a request to withdraw effective as of midnight of 
September 30 of a specified calendar year, which date must be at least 
4 years after September 30 of the year of entry into the CAIR 
NOX Ozone Season Trading Program under Sec.  97.384(g). The 
request must be submitted no later than 90 days before the requested 
effective date of withdrawal.
    (b) Conditions for withdrawal. Before a CAIR NOX Ozone 
Season opt-in unit covered by a request under paragraph (a) of this 
section may withdraw from the CAIR NOX Ozone Season Trading 
Program and the CAIR opt-in permit may be terminated under paragraph 
(e) of this section, the following conditions must be met:
    (1) For the control period ending on the date on which the 
withdrawal is to be effective, the source that includes the CAIR 
NOX Ozone Season opt-in unit must meet the requirement to 
hold CAIR NOX Ozone Season allowances under Sec.  97.306(c) 
and cannot have any excess emissions.
    (2) After the requirement for withdrawal under paragraph (b)(1) of 
this section is met, the Administrator will deduct from the compliance 
account of the source that includes the CAIR NOX Ozone 
Season opt-in unit CAIR NOX Ozone Season allowances equal in 
amount to and allocated for the same or a prior control period as any 
CAIR NOX Ozone Season allowances allocated to the CAIR 
NOX Ozone Season opt-in unit under Sec.  97.388 for any 
control period for which the withdrawal is to be effective. If there 
are no remaining CAIR NOX Ozone Season units at the source, 
the Administrator will close the compliance account, and the owners and 
operators of the CAIR NOX Ozone Season opt-in unit may 
submit a CAIR NOX Ozone Season allowance transfer for any 
remaining CAIR NOX Ozone Season allowances to another CAIR 
NOX Ozone Season Allowance Tracking System in accordance 
with subpart GGGG of this part.
    (c) Notification. (1) After the requirements for withdrawal under 
paragraphs (a) and (b) of this section are met (including deduction of 
the full amount of CAIR NOX Ozone Season allowances 
required), the permitting authority will issue a notification to the 
CAIR designated representative of the CAIR NOX Ozone Season 
opt-in unit of the acceptance of the withdrawal of the CAIR 
NOX Ozone Season opt-in unit as of midnight on September 30 
of the calendar year for which the withdrawal was requested.
    (2) If the requirements for withdrawal under paragraphs (a) and (b) 
of this section are not met, the permitting authority will issue a 
notification to the CAIR designated representative of the CAIR 
NOX Ozone Season opt-in unit that the CAIR NOX 
Ozone Season opt-in unit's request to withdraw is denied. Such CAIR 
NOX Ozone Season opt-in unit shall continue to be a CAIR 
NOX Ozone Season opt-in unit.
    (d) Permit amendment. After the permitting authority issues a 
notification under paragraph (c)(1) of this section that the 
requirements for withdrawal have been met, the permitting authority 
will revise the CAIR permit covering the CAIR NOX Ozone 
Season opt-in unit to terminate the CAIR opt-in permit for such unit as 
of the effective date specified under paragraph (c)(1) of this section. 
The unit shall continue to be a CAIR NOX Ozone Season opt-in 
unit until the effective date of the termination and shall comply with 
all requirements under the CAIR NOX Ozone Season Trading 
Program concerning any control periods for which the unit is a CAIR 
NOX Ozone Season opt-in unit, even if such requirements 
arise or must be complied with after the withdrawal takes effect.
    (e) Reapplication upon failure to meet conditions of withdrawal. If 
the permitting authority denies the CAIR NOX Ozone Season 
opt-in unit's request to withdraw, the CAIR designated representative 
may submit another request to withdraw in accordance with paragraphs 
(a) and (b) of this section.
    (f) Ability to reapply to the CAIR NOX Ozone Season Trading 
Program. Once a CAIR NOX Ozone Season opt-in unit withdraws 
from the CAIR NOX Ozone Season Trading Program and its CAIR 
opt-in permit is terminated under this section, the CAIR designated 
representative may not submit another application for a CAIR opt-in 
permit under Sec.  97.383 for such CAIR NOX Ozone Season 
opt-in unit before the date that is 4 years after the date on which the 
withdrawal became effective. Such new application for a CAIR opt-in 
permit will be treated as an initial application for a CAIR opt-in 
permit under Sec.  97.384.
    (g) Inability to withdraw. Notwithstanding paragraphs (a) through 
(f) of this section, a CAIR NOX Ozone Season opt-in unit 
shall not be eligible to withdraw from the CAIR NOX Ozone 
Season Trading Program if the CAIR designated representative of the 
CAIR NOX Ozone Season opt-in unit requests, and the 
permitting authority issues a CAIR opt-in permit providing for, 
allocation to the CAIR NOX Ozone Season opt-in unit of CAIR 
NOX Ozone Season allowances under Sec.  97.388(c).


Sec.  97.387  Change in regulatory status.

    (a) Notification. If a CAIR NOX Ozone Season opt-in unit 
becomes a CAIR NOX Ozone Season unit under Sec.  97.304, 
then the CAIR designated representative shall notify in writing the 
permitting authority and the Administrator of such change in the CAIR 
NOX Ozone Season opt-in unit's regulatory status, within 30 
days of such change.
    (b) Permitting authority's and Administrator's actions. (1) If a 
CAIR NOX Ozone Season opt-in unit becomes a CAIR 
NOX Ozone Season unit under

[[Page 25468]]

Sec.  97.304, the permitting authority will revise the CAIR 
NOX Ozone Season opt-in unit's CAIR opt-in permit to meet 
the requirements of a CAIR permit under Sec.  97.323, and remove the 
CAIR opt-in permit provisions, as of the date on which the CAIR 
NOX Ozone Season opt-in unit becomes a CAIR NOX 
Ozone Season unit under Sec.  97.304.
    (2)(i) The Administrator will deduct from the compliance account of 
the source that includes the CAIR NOX Ozone Season opt-in 
unit that becomes a CAIR NOX Ozone Season unit under Sec.  
97.304, CAIR NOX Ozone Season allowances equal in amount to 
and allocated for the same or a prior control period as:
    (A) Any CAIR NOX Ozone Season allowances allocated to 
the CAIR NOX Ozone Season opt-in unit under Sec.  97.388 for 
any control period after the date on which the CAIR NOX 
Ozone Season opt-in unit becomes a CAIR NOX Ozone Season 
unit under Sec.  97.304; and
    (B) If the date on which the CAIR NOX Ozone Season opt-
in unit becomes a CAIR NOX Ozone Season unit under Sec.  
97.304 is not September 30, the CAIR NOX Ozone Season 
allowances allocated to the CAIR NOX Ozone Season opt-in 
unit under Sec.  97.388 for the control period that includes the date 
on which the CAIR NOX Ozone Season opt-in unit becomes a 
CAIR NOX Ozone Season unit under Sec.  97.304, multiplied by 
the ratio of the number of days, in the control period, starting with 
the date on which the CAIR NOX Ozone Season opt-in unit 
becomes a CAIR NOX Ozone Season unit under Sec.  97.304 
divided by the total number of days in the control period and rounded 
to the nearest whole allowance as appropriate.
    (ii) The CAIR designated representative shall ensure that the 
compliance account of the source that includes the CAIR NOX 
Ozone Season unit that becomes a CAIR NOX Ozone Season unit 
under ( 97.304 contains the CAIR NOX Ozone Season allowances 
necessary for completion of the deduction under paragraph (b)(2)(i) of 
this section.
    (3)(i) For every control period after the date on which the CAIR 
NOX Ozone Season opt-in unit becomes a CAIR NOX 
Ozone Season unit under Sec.  97.304, the CAIR NOX Ozone 
Season opt-in unit will be allocated CAIR NOX Ozone Season 
allowances under Sec.  97.342.
    (ii) If the date on which the CAIR NOX Ozone Season opt-
in unit becomes a CAIR NOX Ozone Season unit under Sec.  
97.304 is not September 30, the following amount of CAIR NOX 
Ozone Season allowances will be allocated to the CAIR NOX 
Ozone Season opt-in unit (as a CAIR NOX Ozone Season unit) 
under Sec.  97.342 for the control period that includes the date on 
which the CAIR NOX Ozone Season opt-in unit becomes a CAIR 
NOX Ozone Season unit under Sec.  97.304:
    (A) The amount of CAIR NOX Ozone Season allowances 
otherwise allocated to the CAIR NOX Ozone Season opt-in unit 
(as a CAIR NOX Ozone Season unit) under Sec.  97.342 for the 
control period multiplied by;
    (B) The ratio of the number of days, in the control period, 
starting with the date on which the CAIR NOX Ozone Season 
opt-in unit becomes a CAIR NOX Ozone Season unit under Sec.  
97.304, divided by the total number of days in the control period; and
    (C) Rounded to the nearest whole allowance as appropriate.


Sec.  97.388  CAIR NOX Ozone Season allowance allocations to 
CAIR NOX Ozone Season opt-in units.

    (a) Timing requirements. (1) When the CAIR opt-in permit is issued 
under Sec.  97.384(e), the permitting authority will allocate CAIR 
NOX Ozone Season allowances to the CAIR NOX Ozone 
Season opt-in unit, and submit to the Administrator the allocation for 
the control period in which a CAIR NOX Ozone Season opt-in 
unit enters the CAIR NOX Ozone Season Trading Program under 
Sec.  97.384(g), in accordance with paragraph (b) or (c) of this 
section.
    (2) By no later than July 31 of the control period after the 
control period in which a CAIR NOX Ozone Season opt-in unit 
enters the CAIR NOX Ozone Season Trading Program under Sec.  
97.384(g) and July 31 of each year thereafter, the permitting authority 
will allocate CAIR NOX Ozone Season allowances to the CAIR 
NOX Ozone Season opt-in unit, and submit to the 
Administrator the allocation for the control period that includes such 
submission deadline and in which the unit is a CAIR NOX 
Ozone Season opt-in unit, in accordance with paragraph (b) or (c) of 
this section.
    (b) Calculation of allocation. For each control period for which a 
CAIR NOX Ozone Season opt-in unit is to be allocated CAIR 
NOX Ozone Season allowances, the permitting authority will 
allocate in accordance with the following procedures, if provided in a 
State implementation plan revision submitted in accordance with Sec.  
51.123(ee)(3)(i), (ii), or (iii) of this chapter and approved by the 
Administrator:
    (1) The heat input (in mmBtu) used for calculating the CAIR 
NOX Ozone Season allowance allocation will be the lesser of:
    (i) The CAIR NOX Ozone Season opt-in unit's baseline 
heat input determined under Sec.  97.384(c); or
    (ii) The CAIR NOX Ozone Season opt-in unit's heat input, 
as determined in accordance with subpart HHHH of this part, for the 
immediately prior control period, except when the allocation is being 
calculated for the control period in which the CAIR NOX 
Ozone Season opt-in unit enters the CAIR NOX Ozone Season 
Trading Program under Sec.  97.384(g).
    (2) The NOX emission rate (in lb/mmBtu) used for 
calculating CAIR NOX Ozone Season allowance allocations will 
be the lesser of:
    (i) The CAIR NOX Ozone Season opt-in unit's baseline 
NOX emissions rate (in lb/mmBtu) determined under Sec.  
97.384(d) and multiplied by 70 percent; or
    (ii) The most stringent State or Federal NOX emissions 
limitation applicable to the CAIR NOX Ozone Season opt-in 
unit at any time during the control period for which CAIR 
NOX Ozone Season allowances are to be allocated.
    (3) The permitting authority will allocate CAIR NOX 
Ozone Season allowances to the CAIR NOX Ozone Season opt-in 
unit in an amount equaling the heat input under paragraph (b)(1) of 
this section, multiplied by the NOX emission rate under 
paragraph (b)(2) of this section, divided by 2,000 lb/ton, and rounded 
to the nearest whole allowance as appropriate.
    (c) Notwithstanding paragraph (b) of this section and if the CAIR 
designated representative requests, and the permitting authority issues 
a CAIR opt-in permit (based on a demonstration of the intent to repower 
stated under Sec.  97.383 (a)(5)) providing for, allocation to a CAIR 
NOX Ozone Season opt-in unit of CAIR NOX Ozone 
Season allowances under this paragraph (subject to the conditions in 
Sec. Sec.  97.384(h) and 97.386(g)), the permitting authority will 
allocate to the CAIR NOX Ozone Season opt-in unit as 
follows, if provided in a State implementation plan revision submitted 
in accordance with Sec.  51.123(ee)(3)(i), (ii), or (iii) of this 
chapter and approved by the Administrator:
    (1) For each control period in 2009 through 2014 for which the CAIR 
NOX Ozone Season opt-in unit is to be allocated CAIR 
NOX Ozone Season allowances,
    (i) The heat input (in mmBtu) used for calculating CAIR 
NOX Ozone Season allowance allocations will be determined as 
described in paragraph (b)(1) of this section.

[[Page 25469]]

    (ii) The NOX emission rate (in lb/mmBtu) used for 
calculating CAIR NOX Ozone Season allowance allocations will 
be the lesser of:
    (A) The CAIR NOX Ozone Season opt-in unit's baseline 
NOX emissions rate (in lb/mmBtu) determined under Sec.  
97.384(d); or
    (B) The most stringent State or Federal NOX emissions 
limitation applicable to the CAIR NOX Ozone Season opt-in 
unit at any time during the control period in which the CAIR 
NOX Ozone Season opt-in unit enters the CAIR NOX 
Ozone Season Trading Program under Sec.  97.384(g).
    (iii) The permitting authority will allocate CAIR NOX 
Ozone Season allowances to the CAIR NOX Ozone Season opt-in 
unit in an amount equaling the heat input under paragraph (c)(1)(i) of 
this section, multiplied by the NOX emission rate under 
paragraph (c)(1)(ii) of this section, divided by 2,000 lb/ton, and 
rounded to the nearest whole allowance as appropriate.
    (2) For each control period in 2015 and thereafter for which the 
CAIR NOX Ozone Season opt-in unit is to be allocated CAIR 
NOX Ozone Season allowances,
    (i) The heat input (in mmBtu) used for calculating the CAIR 
NOX Ozone Season allowance allocations will be determined as 
described in paragraph (b)(1) of this section.
    (ii) The NOX emission rate (in lb/mmBtu) used for 
calculating the CAIR NOX Ozone Season allowance allocation 
will be the lesser of:
    (A) 0.15 lb/mmBtu;
    (B) The CAIR NOX Ozone Season opt-in unit's baseline 
NOX emissions rate (in lb/mmBtu) determined under Sec.  
97.384(d); or
    (C) The most stringent State or Federal NOX emissions 
limitation applicable to the CAIR NOX Ozone Season opt-in 
unit at any time during the control period for which CAIR 
NOX Ozone Season allowances are to be allocated.
    (iii) The permitting authority will allocate CAIR NOX 
Ozone Season allowances to the CAIR NOX Ozone Season opt-in 
unit in an amount equaling the heat input under paragraph (c)(2)(i) of 
this section, multiplied by the NOX emission rate under 
paragraph (c)(2)(ii) of this section, divided by 2,000 lb/ton, and 
rounded to the nearest whole allowance as appropriate.
    (d) Recordation. If provided in a State implementation plan 
revision submitted in accordance with Sec.  51.123(ee)(3)(i), (ii), or 
(iii) of this chapter and approved by the Administrator:
    (1) The Administrator will record, in the compliance account of the 
source that includes the CAIR NOX Ozone Season opt-in unit, 
the CAIR NOX Ozone Season allowances allocated by the 
permitting authority to the CAIR NOX Ozone Season opt-in 
unit under paragraph (a)(1) of this section.
    (2) By September 1 of the control period in which a CAIR 
NOX Ozone Season opt-in unit enters the CAIR NOX 
Ozone Season Trading Program under Sec.  97.384(g) and September 1 of 
each year thereafter, the Administrator will record, in the compliance 
account of the source that includes the CAIR NOX Ozone 
Season opt-in unit, the CAIR NOX Ozone Season allowances 
allocated by the permitting authority to the CAIR NOX Ozone 
Season opt-in unit under paragraph (a)(2) of this section.


Appendix A to Subpart IIII of Part 97--States With Approved State 
Implementation Plan Revisions Concerning CAIR NOX Ozone 
Season Opt-in Units

    1. The following States have State Implementation Plan revisions 
under Sec.  51.123(ee)(3) of this chapter approved by the 
Administrator and establishing procedures providing for CAIR 
NOX Ozone Season opt-in units under subpart IIII of this 
part and allocation of CAIR NOX Ozone Season allowances 
to such units under Sec.  97.388(b):
    [Reserved]
    2. The following States have State Implementation Plan revisions 
under Sec.  51.123(ee)(3) of this chapter approved by the 
Administrator and establishing procedures providing for CAIR 
NOX Ozone Season opt-in units under subpart IIII of this 
part and allocation of CAIR NOX Ozone Season allowances 
to such units under Sec.  97.388(c):
    [Reserved]

[FR Doc. 06-2692 Filed 4-27-06; 8:45 am]
BILLING CODE 6560-50-P