le

and request a public hearing. After

_ all comments are received, the per- -

‘sqm mit is issued or the application is
‘denied. This action constitutes the
permitting decision and is subject
to appeal by the source or the
public.

During Phase I of the program,
EPA’s Regional Offices are respon-
sible for issuing acid rain permits.
For Phase I, states are required to
develop and implement permit
programs for approval by EPA pur-
suant to the general itting re-
quirements speci: ler Title V
of the Clean Air Act. -

EPA will process Phase II permit
applications for sources located in

those states that do not have EPA .

approved permit programs by July

: P1996. In these cases EPA will fol-

low its Phase I

dures. States with approved
programs will process Phase II per-

mit applications and submit

proposed permits to EPA for .

teview. Permits will be issued by
states following the EPA review, as-

permitting proce-_

application prior to submis-
sion of the application to deter-
mine whether they will receive
allowances from the reserve.

. _ During Phase I, the following
deadlines apply:
¢ SO2 permit applications and
proposed compliance plans
must be postmarked by
January 1, 1996.

* NOx permit applications and
proposed compliance plans
must be submitted by January
1,1998,

» Designated Representative

Certificates of Representation |

must be postmarked no later
than with the permit applica-
tion.

« New unit plans must be sub-
mitted by January 1, 1998, or 24
months before unit com-
mences operation (whichever
is later). :

« Compliance option forms can
be submitted with the permit

suming that EPA does not have any application, or can be sub-
. substantive objections. —. mitted as a permit revision.
When Should the Permit How Long Does the
: Materials Be Submitted? = Permit Last?
ach acid rain permit will be ef-

| She has developed a schedule _

that dictates when permit
materials must be submitted in
both Phase I and Phase II of the
Acid Rain m. During Phase
I, the following deadlines apply:
¢ Phase I permit applications
. and proposed compliance
plans must be submitted by
ebruary 15, 1993.

¢ Designated Representative
Certificates of Representation
for Phase I sources must be
postmarked no later than the
date the permit application is
submit

« Compliance option forms can
be submitted with the permit
application, or can be sub-
mitted as proposed permit
revisions. Sources considering
a Phase I extension will be able
to submit an “early ranking”

fective for 5 years. Phase I per-

mits will be issued in 1993, but will.

be effective throughout Phase I,
from January 1, 1995, through
December 31, 1999. This delay in
the Phase] permit effective date has
been Pre josed to minimize the
need for. e I permit reapplica-
tions in 1998 (5 years after the initial
permits will be issued).
~ _ States may also similarly delay
the effective dates of permits they
issue for Phase I, and have them
begin in the year 2000. This may
also be possible under the various
state permit pro; approved
under Title Vv Of the Clean’ Air Act.
States are encouraged to put af-
fected sources ona permitting cycle
that coincides with the acid rain
permitting cycle, when issuing per-
mits for other air program ire-
ments (such as tate
Implementation Plans).

5

How Can Permitting
Decisions Be Appealed?

A® person challenging a. per-
mitting decision must file a
petition for review with the Ad-
ministrator. This petition must
show that the Agency’s factual
findings or legal conclusions are
“clearly erroneous,” or that policy

determinations underlying the

decision are “arbitrary and capri-
cious.” The EPA Administrator will
determine if the review should be
granted.

Appeals of state permitting
decision in Phase II of the program
would be governed by the ad-
ministrative and judicial review
procedures specified in the ap-

* proved permitting program. If the

state has issued the permit, it will
conduct the appeal Process unless
the decision being appealed was
made by EPA. Decisions made by-
EPA include, but are not limited to
(1) denial by the EPA Administrator
of an acid rain permit, (2) approval

- or disapproval of an excess emis-

sions offset plan, and (3) deter-
mination of whether a proposed
technology constitutes a qualifying
repowering technology.

When the state conducts an ap-
peal, it must notify EPA of the ap-
peal as weil as the decision that is
reached. State permit programs
must afford EPA the right to inter-
vene in any acid rain permit ad-
ministrative or judicial appeal
conducted by the state. .

How Can the Permit Be
Revised?

Lt many cases, permit revisions
may be necessary. Three types of
permit revision procedures are
specified in the proposed rule: (1)
permit modifications including fast
track permit modifications; (2) ad-

“ministrative permit amendments; -

and (3) automatic permit amend-
ments:. .

The permit modification proce-
dure would apply to, among other
things, any proposed relaxation of
a monitoring requirement; a relaxa-


tions during Phase I and wish to become affected units |) >ropriate compliance option at a
all Phase II affected units may for SO2 in order to participate ter date, when more information® +
enter into an averaging plan if in the allowance trading _ is available. The unit's designated :

they have the same owner or
operator and designated rep-
tesentative. The st entity
averaging plan must ident

all of the sahits involved, their
combined annual NOx emis-
sions limitation, and the in-
dividual levels of NOx each
unit proposes to emit annually.
With this option, emissions

program. These units must
submit applications under re-
quirements that will be
promulgated in the Opt-in
Rule.

In addition, special plans are re-

quired for the following situations:

« New Unit Plan: New units are
regulated under Phase II of the

Tepresentative simply informs EPA
of its choice, and the permit is 7
ministratively amended to inch

this change.

Units may specify
more than one of the
compliance options in
their compliance

generated by individual units Program. Permit applica- jans.
above the rates canbe ~ tions for new units must in- p' a
compensated for by other units clude a plan, which
in the utility system as long as indicates when the unit woos . .
the combined emissions do not will commence operation. Multiunit plans involving
exceed the limitations. Accounting for emissions S€Parate sources or separately
: at new units begins on Owned and operated units (such as
January 1, 2000, or upon Phase J extension control unit plans
- The f standardized commencement of opera- 2nd reduced utilization plans
feria old oneuve tion, whichever is later. generally may have different desig
national consistancy In + Common-Stack Plans: in situa~ noted earlier). The compliance
permit application tions where a source doesnot plans must be properly
requirements. independently monitor the cross-referenced ‘in the Bernt for

¢ NOx Alternative Emissions
Limitations Plan: A unit can re-

emissions of units that share a
common emissions stack,
these separate units will be
regulated as a single unit.
(This requirement does not

each source and signed by each
designated representative in-
volved. s

went NOx ternative, less strin- ‘apply where each unit has a What Does the © .
if it can demonstrate that.the separate certified emissions Permitting AuthorityDo,
otherwise applicable NOx monitor). These units must in- with the Application? .

limitation cannot be met at the
unit using the technology
upon which the regulatory
limitation was based.

To be granted the less stringent
limit, the unit. must con:
that the control equipment

dicate that they share a com-
mon stack in their emissions
and compliance plans.

If emissions from common
stack units exceed the com-
bined total of the allowances
held for those units, then the
units will be held liable for fail-

we the permitting authority
receives a source’s permit ap-
plication, the permit writer deter-
mines if the application and
compliance plans are complete. If
they are incomplete, the permit
writer will request additional infor-

was properly designed, ing to comply with the Act. If mation. (Delays in submitting in-
stalled, and operated. . one of the units is regulated formation can result in a denial of
* under Phase I of the program, the application and a violation of

Phase 1 - NOx Compliance Dead-
line Extension Plan: Units

the other units not otherwise
regulated in Phase I must be

the permit requirements.)
Once all of the necessary infor-

regulated under Phase I for designated as Phase | affected mation has been obtained, the per-
NOx emissions can apply for a unitsundereitherasubstitution mit writer prepares a proposed
15-month Phase I compliance plan or as opt-in units and are permit and a statement describing

/ Geadline extension if equi

assigned emissions allowances.

the legal and factual basis of the

ment needed to meet the NO : permit requirements. These
requirement cannot be specify materials are provided to the
obtained and installed by o¢ the complience Yenone in thet source, and are made available to
January 1, 1995, becauseitisin — comptiance plans and may seek the public. .

inadequate supply. conditional preappproval of the -A comment period is then hj

during which time the public
comment on the proposed permit

* Opt-in Plan: Units that are not
regulated under the Act may

options. In this manner, the unit is
given flexibility to select the ap-



(national Consistency

Principles of Acid Rain Permits

Flexibility

The acid rain permitting

furnishes utilities with the flexibility to select from

process
a number of compilance options and devise the most cost-effective compliance pian
possible. The standardized permitting forma ensure consistency on a nationwide
basis. Finally, the appointment of a designated representative provides the program
with the requisite accountability to perform well.

tion of an approved emission offset

plan; the proposed use of a new
method of compliance, a change in
the compliance option that resuits
in a previously unaffected unit be-
coming affected; changes to a Phase
Textension plan; or a decision by a
state permitting authority inter-
preting, modifying, or voiding any
permit provision. Permit
modifications would involve prior
public notice and comment.

EPA has proposed two fast track
options. Under the first option, the
designated tative for the
unit involved would submit the
proposed permit modification to
EPA. EPA would have 30 days to
rule on the revision. If EPA decides
to approve the revision, it would
notify members of the public that

were interested in the initial per- .
mitting action (e.g., commenters on ©

the original permit) of the
proposed change. These interested
: persons would have 15 days to
“comment on the proposed
modification.

If no objections were raised
during this comment period, the
permit modification would be-
come effective. If objections occur,
“the revision wou! ve
to tty Perough the full permit
modification procedure. :

With the second fast track
modification option, the permittee
would publicize the proposed per-
mit modification in a journal or
newspaper of national and general
circulation, as well as give notice to
the interested parties. The public
would have 30 days to comment to
EPA. The permittee would submit
its Proposed modification to EPA,
and the Agency would have 30
days after the close of the comment

* period to rule on the proposed

modification. EPA may choose one

or both approaches in its final ©

3
The administrative permit
amendments procedure would
apply to simple alterations to a per-
mit, such as corrections of typo-
graphical errors, address or name
changes.

In addition, other specific

changes, such as incorporating an

proved excess emissions offset
pon activation of a compliance op-
tion that was already conditionally
approved in the original permitting
action, and changes to the desig-
nated representative if a new cer-
tificate of tation has been
filed, will be handled as ad-
ministrative permit amendments
for the Acid Rain Program. Ad-
ministrative amendments will be

6

b

made by the permitting authority
with subsequent public notice.

As provided in the Act, automatic ‘
permit amendments will occur..;
whenever an emissions allowa
transaction is properly register@a~”
with EPA on the Allowance Track:
ing System. Once the transaction
has been recorded by EPA, the,per-
mit fora unit selling the allowances
will be deemed to be automatically
amended to reflect that its al-

By

“lowance pool and consequent SQ2

emissions limitation, has been
diminished by the quantity of al-

~ lowances sold.

Similarly, the permit for the unit
buying the allowances will. auto-
matically be deemed ‘to be
amended to reflect the correspond-
ing increase in allowances and SO2
emissions limitation. The permit

"will not actually be rewritten to ef-

fect these:automatic amendments,
however. Rather the applicable SO2
emissions limitation will have to be
determined at the end of each
calendar year by looking at the
unit’s Allowance Tracking System
account. 5

For More Information
FE more information, write @

"US. EPA Office of Air and:
Radiation .
Acid Rain Division -
(ANR-445) ‘
Washington, DC 20460

If you.would like to receive other
fact sheets in this series, call the
Acid Rain Hotline at (617) 641-5377
or the EPA Public Information
Center (PIC) at 202-260-2080.

q

Fact sheets are available on the
following subjects:
Allowance System

¢ Continuous Emission
Monitoring

¢ Environmental Benefits :
« Excess Emissions om
« Proposed Acid Rain Rules

5



Y United States Air and Radiation
es, . Environmental Protection (ANR-445)
> . Agency

* 400/1-91/035
October 1991

i

The

Th

# VIF SO BSS

nder Title IV of the Clean Air

Act Amendments of 1990,

Congress authorized the U.S. En-

vironmental: Protection Agency

a» (EPA) to establish the Acid Rain

@ Program. The overall goal of this

: pro; is to significantly reduce

ir dioxide ( and nitrogen

oxide (NOx) emissions, the

~’. precursors of acid rain. To achieve

:_ this goal at the lowest cost, the

~” program will employ both tradi-

’ tional and innovative, market-

*..%="based approaches for controlling

. air pollution. In addition, the

Pro; will encourage energy

_ conservation and promote pollu-
tion prevention. ,

The legislation sets as its

, Primary goal the reduction of an-

nual emissions by 10 million

tons below 1980 levels. To achieve

these SO reductions, the law re-

uires a two-phase tightening of

e restrictions placed on fossil

, fuel-fired power plants. :

, Phase I begins in 1995 and affects

110 mostly coal-burning electric

utility plants located in 21 eastern .

and midwestern states. Phase I,

which begins in the year 2000,

tightens the annual emissions

proposed
ments: tl

(40 CFR P.

to OF
the nitre
This ft
proposed |

: Permits. > |
- "Proposed Acid Rain Rule

L Environmental Protection Agency (E
core acid rain
), the Allowances
s Monitoring Rule

mits Rule (40 ¢
), the Contin
RK Part 73), and the Ex

EPA will also pr

e rules will includ
in to the Acid Rain Pro

Dy

limits imposed on these large
higher emitting plants and also sets

restrictions on smaller and cleaner -

plants fired by coal, oil, and gas. .

All existing
output ca; of 25 megawatts or
gresierandallnew utility units will

affected in Phase II. In addition,
other sources of SOz2 (such as in-
dusirial facilities) may elect to par.
ticipate in the Acid Rain SO2
Program by opting in. _

The Act also calls for a 2-million
ton reduction in NOx emissions by
the 2000. A significant portion
of reduction will be achieved
by utility boilers, which will be re-
quired to install low-NOx burner

_ technologies and meet-new emis-

sions requirements.

These requi: will also be
implemented in two phases. . For
Phase I, EPA will establish emis-
sions limitations for two of

J na dry bone (tangentially fired

ul

and dry bottom, wall-fired boilers).
For. Phase Il, regulations for all
other types of coal-fired boilers will
be issued by 1997, and must be met
beginning in the year 2000 by all
units not subject to the Phase I NOx

_ limits. Regulations for tangentially

1

sur rules containing th

En ons Rule (40 CFR Part
se additional rules at a future
requirem

utility units with an ©

‘tem. The Acid Rain Program

‘ensure compliance, and provide

. Introduction

~ ing permits. Each operating permit

da
for facilities that cle

t 7-4) and| for
a “FR Part 76)
/ components of ithe

fired and dry bottom, wall-fired -
boilers not covered in Phase I may
be tightened at this time.

The innovative, market-based
SO allowance trading component
of the Acid Rain Program allows
utilities to adopt the most
cost-effective strategy to reduce
SO2 emissions at units in their sys-

operating permit spells out the —
specific program requirements and
compliance options chosen by each
source. Affected utilities also will
be required to install systems that
continuously monitor emissions of
SOx, NOx, and other related pol-
lutants in order to track progress,

credibility to the trading program.
In any year that compliance is not
achieved, excess emissions penal-
ties will apply, and sources will be
required to submit a plan to EPA
that specifies how the excess SO2
emissions will be offset.

T= Acid Rain Program is being
implemented through operat-

& Printed on Recycled Paper. .


will specify the enforceable re-
quirements that will apply to each
affected unit at a source. The acid
rain permitting requirements will
afford flexible planning oppor-
tunities to help minimize the costs
of compliance. All affected sources
must submit operating permit ap-

lications to either EPA or, during

hase II, the state Permitting
authority approved by EP:

Each permit will also specify the

source's basic allowance allocation’

and NOx limitation. These may

vary from the statutory require- -

ments if the source elects one or
more optional method of com-
pliance in its operational plan. This
plan, known as the compliance
’ plan, describés how the source will
meet the acid rain requirements.
Permits must be granted before
each unit's total annual allowance
allocation can be determined (see

-the Allowance System Rule).
The proj Permits Rule also
outlines the ts for cer-

tifyin designated representatives
ed eources, the informa-
tion needed to complete permit
applications, schedules for submit-
ting permit materials, permit
processing procedures, duration of
Permit terms, permit appeal and
revision procedures, and. the
programs periodic compliance cer-
tification reporting requirements.

What Sources Must
Obtain Permits?

i general, most electric utility
plants with one or more units that
emit SO2 and NOx must obtain an

acid rain permit in order to operate. ©

Nonutility sources of emissions are
not required to obtain permits un-
less they voluntarily opt in to the
program.

Phase I permits must be obtained
for each source with one or more
units that:

* Are listed in Aj

rule, entitled

ix A ofthe
xisting Phase I

Affected Units.”

« Are Phase I units that become
designated as affected units
during Phase I under a com-

pliance plan developed by a
unitlisted in Appendix A ofthe
rule.

¢ Choose to opt in to the
program.
Phase II permits must be ob-
tained for each source with one or
more units that:

« Are listed in Appendix A.
e Are listed in Appendix B of the

Tule, entitled “Existing Phase II
Affected Units.”

« Are new units (new units are
those that began commercial
operation on or after Novem-
ber 15, 1990, or that increased
electrical tion from less
than 25 megawatts to 25
megawatts or more).

«Choose to opt in to the
program.

Who Represents the. -

. Sources in Permitting

Matters?

Tt: owners and operators of
each regulated source must
select one person to represent the
source in permitting matters and
may select a second person to act as
an alternate for the first. These two
persons are known as the desig-
nated representatives. - Both the
designated representative and the
alternate must be identified and ap-
proved by agreement of the owners
and operators of a source up front
in the “certificate of repre-
sentation.” The owners and
operators and the designated rep-
resentative are fully responsible for
any actions the alternate takes.
From this point on in this summary,

. “designated representative” shall

denote the person tepresenting the
owners and operators of a utility in
matters with EPA, whether it be the

designated representative ortheal-

ternate.
No permits will be issued to a
source until its designated repre-

sentative has been chosen and cer- -

tified as provided: by the rule.
Sources that consist of more than
one affected unit must still appoint
only one designated repre-

2

‘sentative. Use of designated repre-
sentatives ensures that EPA willnol ,
receive conflicting submissions.
from the same source. :
The designated representativggg”
responsible for submitting to sd
1

" and state permitting authorities a

acid rain program submissions for
the source, including allowance
transfers, emissions monitoring

“reports, compliance certifications,

excess emission offset plans, permit
applications, permit revisions, and ~
any other ififormation necessary
for the implementation of the Acid
Rain Program.

In addition, the designated rep-
resentative: must sign and certify
the truth arid accuracy of each sub-
mission. All submissions made by
the designated: representative are
binding on:every owner and
he source.

The designated representative
for a source-may’be changed at any
time by agreement of its owners
and operators. All actions under-
taken by the previous designated
representative before EPA receives
the certificate of representation for
his or her replacement, however,

are binding.
@

What Information
Should Be
Included in Permit |
Applications? .

PA has developed standardized

forms that must be completed
when applying for anacid rain per-
mit. The forms request designated
Tepresentative information,
general source information, and
specific unit information. The
standardized forms should ensure
national consistency in permit
application requirements and help
facilitate a national allowance
market.

‘If, for example, one state re-
quired considerably more informa-
tion about the source or more
detailed compliance plans rior to
issuing an acid rain permit tha
another, the source might
counter delays in obtaining permit
approval, thereby adding to the



? source's incremental “cost” of per-

~__ Initting and obtaining allowances.

@Standardized forms should

revent such problems from aris-
ing. :

The use of standardized forms
also lends itself to computerization
of the application process. EPA is
currently investigating the pos-
siblity of instituting a nonman-

datory electronic reportin
P’ lure for sources that would
make the permitting system more
efficient.

How Do Compliance
Plans Work?

j ha regulated source must
develop a compliance plan for
each affected unit describing the
steps the unit will take to ensure
- compliance with the Acid Rain
Program. The plan can be struc-

following options: :

° Standard Compliance Option:
The plan must indicate that the
unit will hold enough allow-

emissions and will be operated
in compliance with the ap-

_ tions. :

“© Phase I - Substitution Plan: A
Phase Iunit may reassign all or
“some oftits Phase I SOz emis-
~ sions reduction requirements
“to one or more existing units

(substitution units), which
would otherwise not be regu-
lated until Phase II, that agree
to fulfill the original unit’s

substitution unit consequent:

_ becomes a designated atfectedt
unit for Phase I, and.as such
also must meet the SO2 and
NOx limitations of Phase I of
the pro; All of the units
involved in a substitution plan
must have the same. desig-

; @ nated representative.

© Phase I - Extension Plan: A
Phase I affected unit (including
any unit that becomes affected
in Phase I under another com-

tured around one or more of the _

ances to cover its annual SO2 .

. . Plicable NOx emissions limita-

Phase I requirements. The _

. Satin

pliance plan as a designated
affected unit) may. apply fora
2-year extension of 1SO2
limitations. Extensions. will
only be granted to units that
use a “qualifying Phase I tech-
nology” (a technology that can
be demonstrated to remove at
least 90 percent of the fuel’s
SO2 emissions), or that reas-

’ sign their emissions reduction

obligations to another unit that
uses such a technology during
Phase I. :

Each extension unit will be
given extra SO2 emissions al-
Towances to cover the SOz it
emits beyond its basic Phase I
allocation during 1995 and
1996. As ided by the Act,
EPA will only award a limited
number of allowances to cover

_extension plans and will

process extension applications
in the order that they are
received.
The proposed. rule specifies
that the Torder of receipt” will
be determined by a telephone
queuing procedure, but asks
Yr comments on alternative
procedures.

Phase I - Reduced Utilization

Plan: An affected Phase I unit
may meet its emissions reduc-
tion requirements by reducing
electricity ion. The unit
can compensate for planned
reduced output qi)

designating a non-Phase I |

SO2-emitting unit or units to
increase generation (compen-
unit); (2) adopting
verifiable energy conservation
or improved unit efficiency
measures; or (3) designating
sulfur-free generation to com-
pensate for the reduction. EPA

will grant allowances to com- *

pensating units based on their
1985 emissions rates and their
“baselines” (average annual
fuel use from 1985 to 1987).

Because both the original and
the compensating unit or units
must hold enougy allowances
to cover their emissions,
allowances may be transferred

-3

from the original unit to the
compensating unit or units to
cover emissions beyond their
granted allowances. The units
named in a Reduced Utiliza-
tion Plan do not have to have
the same designated repre-
“sentative as the original Phase
Tunit. .

Phase II - Repowering Extension:
Phase Il affected units may ob-
tain a 4-year extension of the
Phase II emissions reduction
deadline if they repower with
‘a qualified clean coal technol-
ogy. Repowering requires re-
jacement of an existing
coal-fired boiler with (1) one of
- seven technologies listed in the
Act; (2) a derivative of one of
those technologies; or (3) a
technology determined by the
EPA Administrator and the
Secretary of Energy to be
capable of controlling multiple
combustion emissions simul-
taneously -with improved
boiler or generation éfficiency
and with significantly greater
waste reduction than technol-
ogy commonly used in 1990.
Qualified repowering tech-
nologies include atmospheric
or pressurized fluidized bed
combustion, integrated
gasification combined cycles,
magnetohydrodynamics,
direct and indirect coal-fired
turbines, and integrated
gasification fuel cells. Units
it want to obtain a repower-
ing extension must submit a
petition to EPA for conditional
approval of their repowering
technology. Moreover, a com-
pliance pian outlining when
repowering activities’ will
occur and other information
must be submitted to the per-
mitting authority. If the unit
proceeds with repowering and
later determines that the
spect is infeasible, it will
not be held liable for violation
of the Act for failing to repower
.aS long as itacted “in good faith.”

= NOx Emissions Averaging Plan:
Units that are subject to NOx