55460 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

ENVIRONMENTAL PROTECTION

AGENCY

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

78

[FRL–5908–5]

RIN 2060–AF43

Acid Rain Program: Revisions to

Permits, Allowance System, Sulfur

Dioxide Opt-Ins, Continuous Emission

Monitoring, Excess Emissions, and

Appeal Procedures

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Final rule.

SUMMARY: Title IV of the Clean Air Act

(the Act) authorizes the Environmental

Protection Agency (EPA or Agency) to

establish the Acid Rain Program. The

purpose of the Acid Rain Program is to

significantly reduce emissions of sulfur

dioxide and nitrogen oxides from utility

electric generating plants in order to

reduce the adverse health and ecological

impacts of acidic deposition (or acid

rain) resulting from such emissions. On

January 11 and March 23, 1993, the

Agency promulgated final rules

governing permitting, the allowance

system, continuous emissions

monitoring, excess emissions, and

appeal procedures. On December 27,

1996, the Agency published proposed

revisions to those rules, most of which

revisions are addressed in today’s final

rule.

After considering its experience in

applying the Acid Rain Program rules

since 1993, the Agency believes that the

permitting, excess emissions, and

appeal procedures rules (as well as

minor aspects of the monitoring rule)

can be streamlined and improved in

order to reduce the burden on utilities,

State and local permitting authorities,

and EPA. Today’s final rule revisions

streamline the Acid Rain Program while

still ensuring achievement of its

statutory goals of reducing sulfur

dioxide and nitrogen oxides emissions.

In addition, EPA is revising the sulfur

dioxide allowances for one unit. Each

allowance authorizes the emission of

one ton of sulfur dioxide. Under the

Acid Rain Program, utility units (i.e.,

fossil fuel-fired boilers or turbines) are

allocated annual allowances and must

not emit sulfur dioxide in excess of the

amount authorized by the allowances

that they hold. Today’s final rule revises

one unit’s allowances pursuant to a

settlement agreement. In a future final

action, EPA will act on the other

allowance revisions that were set forth

in the December 27, 1996 proposed rule.

EFFECTIVE DATE: November 24, 1997.

ADDRESSES: Docket No. A–95–56,

containing the information used to

develop the final rule, is available for

public inspection and copying from 8:30

a.m. to 12 p.m. and 1 p.m. to 3:30 p.m.,

Monday through Friday, excluding

federal holidays, at EPA’s Air Docket

Section (6102), Waterside Mall, Room

M1500, 1st Floor, 401 M Street, SW,

Washington, DC 20460. Additional

information concerning the original

rules and today’s final revisions is

found in Docket Nos. A–90–38

(permits), A–91–43 and A–92–06

(allowances), A–90–51 (continuous

emissions monitoring), A–91–68 (excess

emissions), A–91–69 (general), and A–

93–15 (appeals). A reasonable fee may

be charged for copying.

FOR FURTHER INFORMATION CONTACT:

Dwight C. Alpern, Attorney-advisor, at

(202) 233–9151 (U.S. Environmental

Protection Agency, 401 M Street, SW,

Acid Rain Division (6204J), Washington,

DC 20460); or the Acid Rain Hotline at

(202) 233–9620.

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially regulated by this

action are fossil-fuel fired boilers or

turbines that serve generators producing

electricity for sale. Regulated categories

and entities include:

Category Examples of regulated entities

Industry ......... Electric service providers.

This table is not intended to be

exhaustive, but rather provides a guide

for readers regarding entities likely to be

regulated by this action. This table lists

the types of entities that EPA is now

aware could potentially be regulated by

this action. Other types of entities not

listed in the table could also be

regulated. To determine whether your

facility is regulated by this action, you

should carefully examine the

applicability criteria in § 72.6 and the

exemptions in §§ 72.7, 72.8, and 72.14

of title 40 of the Code of Federal

Regulations. If you have questions

regarding the applicability of this action

to a particular entity, consult the

persons listed in the preceding FOR

FURTHER INFORMATION CONTACT section.

Organization. The information in this

preamble is organized as follows:

I. General

II. Part 72: Applicability of and Exemptions

From Acid Rain Program

A. Applicability

B. Exemptions

1. New Units Exemption

2. Retired Units Exemption

3. Industrial Utility-Units Exemption

III. Part 72: Interaction of Acid Rain

Permitting and Title V

A. Relationship Between Acid Rain Rules

and Parts 70 and 71

B. State Authority to Administer and

Enforce Acid Rain Permits

C. Required Elements for State Acid Rain

Program

IV. Part 72: Miscellaneous Permitting Matters

A. Definitions

B. Designated Representative

C. Compliance Plans

D. Federal Permit Issuance

E. Permit Revision

F. Reduced Utilization Accounting

V. Part 73: Allowances

A. Allowance Tables

B. Small Diesel Refinery Provisions

VI. Part 75: Monitoring of Units Burning

Digester or Landfill Gas

VII. Part 77: Excess Emissions

VIII. Part 78: Administrative Appeals

IX. Administrative Requirements

A. Executive Order 12866

B. Unfunded Mandates Act

C. Paperwork Reduction Act

D. Regulatory Flexibility

E. Submission to Congress and the General

Accounting Office

F. Miscellaneous

I. General

A significant number of the revisions

in the December 27, 1996 proposal did

not receive any comment. Most of the

proposed revisions, including all on

which comment was received, are

discussed in this preamble. Unless

otherwise stated below, revisions are

adopted in today’s final rule for the

reasons discussed in the proposal.

II. Part 72: Applicability of and

Exemptions From Acid Rain Program

A. Applicability

The proposal included two types of

revisions of the existing rule. First, the

definition of ‘‘power purchase

commitment’’ was revised to extend to

three years the period by which a letter

of intent must have resulted in

execution of a power sales agreement.

Second, minor revisions were made to

the procedure for petitioning for a

determination by the Administrator on

the applicability of the Acid Rain

Program to a unit. Supportive comment

was received on the first revisions, and

no comment was received on the

second. The revisions are therefore

adopted in today’s rule.

B. Exemptions

1. New Units Exemption

Section 72.7 of the existing rule

provides an exemption from most Acid

Rain Program requirements for new

units that serve generators with a total

capacity of 25 MWe or less and that

combust clean fuels. The proposal made
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55461

1 In addition, today’s rule adds language

clarifying that the requirement that a unit serve one

or more generators with total nameplate capacity of

25 MWe or less during the period of the exemption

does not apply to the time before the unit

commenced commercial operation. Today’s rule

also adds language, under ‘‘Special Provisions’’, to

reiterate the fact (reflected in § 72.7(a)) that an

exempt unit must continue to meet the

requirements (e.g., the sulfur content limits for its

fuels) throughout the duration of the exemption.

Another addition in today’s rule is language

clarifying that when the exemption is lost, the unit

must comply with Acid Rain permitting and

monitoring requirements, starting after the loss of

the exemption (e.g., starting on the first date on

which the unit is no longer exempt). Similar

language is added to the retired units and industrial

utility-units exemption provisions.

2Relatively little distillate fuel oil is imported

into the U.S., and most of it has a sulfur content

exceeding 0.05%. Id. at 55, Table 20.

3Report to Docket: Diesel Fuel Use of Units

Required to Use Fuel Sampling Under part 75,

appendix D (September 16, 1997).

several types of revisions in order to

streamline the new units exemption.

With the changes discussed below,1

revisions are adopted in today’s rule for

the reasons discussed here and in the

proposal.

First, the requirement for the

combustion of clean fuels at the unit

was revised in the proposal. While the

existing rule requires that only fuel with

a sulfur content 0.05 percent or less by

weight be combusted, the proposal

stated that the unit must burn gaseous

fuel with an annual average sulfur

content of 0.05 percent or less by weight

and nongaseous fuel with an annual

average sulfur content of 0.05 percent or

less by weight. Commenters supported

the revisions and explained that the

existing rule was unduly restrictive.

These revisions are adopted in today’s

rule.

The proposal also set forth revised

procedures for determining annual

average sulfur content by weight for

gaseous and nongaseous fuel. The

proposal eliminated provisions

mandating the use of listed methods for

measuring sulfur content but included

provisions concerning the required

frequency of sampling. The proposal

provided explicitly that the owners and

operators of the unit bear the burden of

proving compliance with the sulfur

content requirement. Commenters

supported these revisions but suggested

that EPA state that any ‘‘recognized

industry standard such as an ASTM

method would be acceptable.’’

Commenters also urged that the rule

state that a unit that burns only diesel

fuel meeting the requirements of diesel

fuel for motor vehicles be assumed to

meet the limits on sulfur content of fuel.

The proposed revisions are adopted in

today’s rule. Under the final rule, since

methods for measuring sulfur content

are not specified, the Agency will

evaluate on a case-by-case basis the

information provided by the owners and

operators of a unit on sulfur content. In

order to ensure that owners and

operators understand that they must use

a reasonable method to determine sulfur

content, the final rule adopts language

from section 412 concerning emission

monitoring and states that the method of

determining sulfur content must

provide information that is reasonably

precise, reliable, accessible, and timely.

EPA anticipates that owners and

operators will meet their burden of

proof by using a method that is

generally recognized in the industry

(such as the applicable ASTM method

set forth in the existing rule), is

applicable to the unit, and is consistent

with the other provisions (e.g., sampling

frequency requirements) of today’s rule.

Further, EPA recognizes that diesel

fuel for motor vehicles is required under

§ 80.29 to have a sulfur content of

0.05% by weight. Commenters have

suggested that such diesel fuel should

be assumed to meet the sulfur content

limit without any testing. One

commenter stated that the testing by the

unit owner was burdensome and

duplicative of testing by the fuel

supplier.

However, not all diesel fuel is

required to meet the sulfur content

limit; only diesel fuel for use in motor

vehicles must meet the limit under

§ 80.29. 40 CFR 80.29(a)(1)(i). A

significant amount of diesel fuel is

produced for other uses (e.g., as fuel for

electric generation by utilities) has a

higher sulfur content than mandated for

diesel fuel for motor vehicles. Petroleum

Supply Annual 1996, Vol. 1 at 51, Table

17 (Energy Information Administration,

June 1997) (indicating that about 37% of

1996 U.S. distillate production (which

is primarily diesel fuel as defined in

§ 72.2) had a sulfur content above 0.05%

by weight).2 Moreover, the higher-sulfur

diesel fuel is used by many utility units

that combust diesel fuel. For example,

during 1996 and the first half of 1997,

diesel fuel with a sulfur content of

0.05% or less by weight accounted for

only about 13% of the total heat input

for affected units that used diesel fuel

and were required to report the sulfur

content of their fuel to EPA. Most of the

diesel fuel used had a much higher

sulfur content; diesel fuel with more

than twice the sulfur content (i.e., over

0.10% sulfur by weight) accounted for

about 81% of such total heat input.3

In contrast, virtually all commercially

available natural gas in the U.S. has

sulfur content at or below 0.05% by

weight. Because of the toxic effects of

hydrogen sulfide and its corrosive effect

on pipeline and customer equipment,

pipelines generally provide pipeline

transportation or distribution service

only for natural gas with a very low

hydrogen sulfide content (e.g., 0.25 to

0.30 grain per 100 standard cubic feet),

which results in total sulfur content far

below 0.05% by weight. See, e.g., H.

Dale Beggs, Gas Production Operations

at 204–5, 209–11, and 227 (1984); and

49 CFR 192.475(c) (provision, in U.S.

Department of Transportation minimum

safety standards for natural gas

pipelines, limiting the hydrogen sulfide

content of gas ‘‘stored in pipe-type or

bottle-type holders’’ to 0.25 grain per

100 standard cubic feet).

Since diesel fuel is widely available

that does not meet the sulfur content

limit, diesel fuel must be treated like

any other fuel that is combusted at an

exempt new unit and that could

potentially exceed the limit. The owners

and operators of the unit combusting the

fuel must demonstrate that the limit is

being met using the results of reliable

testing methods consistent with the

sampling and other requirements of

today’s rule. Of course, under today’s

rule, the owners and operators are not

required to conduct the testing

themselves. EPA will consider testing

by fuel suppliers in determining

whether the owners and operators have

met their burden of proof.

Second, the proposal streamlined the

procedure for obtaining a new units

exemption and reduced the burden

imposed by the procedure on owners

and operators and permitting

authorities. The existing rule required

owners and operators of a unit to submit

an application and for permitting

authorities to provide notice and

opportunity for comment before issuing

an exemption. The proposal made the

obtaining of an exemption largely

automatic so long as the capacity,

annual fuel use, and recordkeeping

requirements are met. Under the

proposal, owners and operators of a unit

meeting these requirements must submit

a statement to the permitting authority

(and, if EPA is not the permitting

authority, to EPA) that the unit meets,

and will continue to meet, the

requirements for the exemption. The

proposal states that a new units

exemption is effective on January 1 of

the first full calendar year for which the

unit meets the exemption requirements

and that the statement must be

submitted by December 31 of such year.

In short, where the end-of-year

submission deadline and other

requirements for an exemption are met,

the exemption will cover the entire year

in which the submission was made. The
55462 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

4While the proposal referred to allowances

allocated under Table 2 or 3 of subpart B of part

73, today’s rule simply refers to allowances

allocated under that subpart. Under part 73 as

currently organized, all allocations to new units are

included in the tables. Since in the future EPA may

reorganize the allowance allocation information

that is currently presented in two separate tables,

today’s rule adopts a more general reference to newunit allowance allocations.

5The proposal referred to these units as simply

‘‘industrial units’’. In order to minimize confusion

between these units and industrial boilers not used

proposed revisions are adopted in

today’s rule.

The proposal established some

additional procedures for the relatively

few new units that were allocated

allowances.4 The owners and operators

of such units must submit a statement

(similar to the one for units without

allocations) stating that the owners and

operators are surrendering the

allowances, and proceeds from the

auction of allowances, starting with the

first year for which the unit is exempt.

Under the proposal, the exemption for

a unit allocated allowances is effective

on January 1 of the first year for which

the Administrator actually deducts the

full allowance allocation and actually

receives the full amount of auction

proceeds. Commenters contended that

this ‘‘unfairly’’ makes the exemption

contingent on an event (i.e., the

deduction of allowances) beyond the

control of the owners and operators.

Allegedly, the exemption should be

contingent only on submission of the

statement surrendering allowances and

proceeds.

EPA notes that the only issue is the

date on which the exemption becomes

final. Once the Administrator actually

makes the necessary allowance

deductions and receives the proceeds,

the exemption runs starting from

January 1 of the year for which the unit

meets the requirements (e.g., fuel sulfur

limits and allowance and proceeds

surrender) for this exemption. The

difficulty with making the exemption

effective when the surrender statement

is submitted is that there is no guarantee

that the unit’s allowance account

actually has sufficient allowances to

deduct or that the proceeds are actually

available to and received by the

Administrator.

In order to ensure that the actual

deduction of allowances in the unit’s

Allowance Tracking System account is

not unduly delayed, the final rule

requires that, within 5 business days of

receiving the owners’ and operators’

surrender statement, the Administrator

either makes the allowance deductions

or notifies the owners and operators that

there are insufficient allowances for the

deductions. This is the same period of

time in which, under §§ 73.52 and

73.53, the Administrator must act on an

allowance transfer request. The

approach adopted in today’s rule

accommodates both the concern that the

necessary number of allowances

actually be available for deduction

before the exemption is effective and the

concern that the effectiveness of the

exemption not be unnecessarily

delayed.

Finally, the proposal provided that a

unit with a new units exemption is not

an ‘‘affected unit’’ and so does not need

an operating permit under part 70 or 71

unless such a permit is required because

non-title IV, federal requirements

applicable to the unit. See 61 FR 68343.

However, for the case where, because of

non-title IV requirements, the source at

which the unit is located has or must

have an operating permit, the proposal

did not exclude the new units

exemption from the general requirement

to incorporate applicable federal

requirements in the operating permit.

See 42 U.S.C. 7661a(b)(5)(A) and

7661c(a). The final rule adopts the

proposed provision and makes it clear

that if, because of non-title IV

requirements, an operating permit is

issued to the source, the new units

exemption must be reflected in that

operating permit. In particular, after the

actions necessary for the new units

exemption to take effect have been

completed (e.g., the receipt by the

permitting authority of a statement of

exemption by the owners and operators

of the unit and the notification by the

Administrator that he or she has

deducted any allowances, and received

any allowance proceeds, required to be

surrendered), the permitting authority

must add the provisions and ongoing

requirements of the exemption to any

operating permit that covers the source

at which the unit is located. Consistent

with the elimination of the requirement

for notice and comment on a new unit’s

exemption, the addition of the

exemption to the permit is an

administrative amendment. A written

new units exemption issued under the

existing rule prior to revision by today’s

rule must similarly be added to any

operating permit.

Under this approach, the exemption

alone will not result in issuance of an

operating permit, but, if an operating

permit would be issued for the source

in any event, that operating permit will

include the ongoing requirements

imposed on the unit under the

exemption. This approach reasonably

implements the concept that an

operating permit should include the

applicable federal requirements for a

source. For the same reasons, analogous

provisions are included in today’s rule

with regard to the retired units

exemption and the industrial-utility

units exemption.

2. Retired Units Exemption

Section 72.8 of the existing rule

provides an exemption from Acid Rain

Program requirements for retired units.

The proposal made several types of

revisions in order to streamline this

retired units exemption. First, while the

existing rule required owners and

operators of a unit to submit an

application for the exemption and for

permitting authorities to provide public

notice and opportunity for comment

before issuing a final exemption, the

proposal made the obtaining of an

exemption largely automatic so long as

the unit is permanently retired. Second,

the proposal clarified that the

exemption applies to most Acid Rain

Program requirements.

No comments were received on these

proposed revisions. In order to make it

clear that only Phase I or Phase II units,

and not opt-in units under part 74, are

eligible for the retired units exemption,

today’s rule states that the exemption

applies to ‘‘any affected unit (except for

an opt-in source)’’. This exclusion of

opt-in sources is consistent with the

existing provisions of part 74 that

impose separate requirements with

regard to permanent shutdown of opt-in

sources. See, e.g., 40 CFR 74.46. In

addition, to provide flexibility where a

retired unit has no allowance

allocations and has not selected a

designated representative, the final rule

allows a certifying official to submit

notice of the exemption to the

permitting authority. For the reasons

discussed here and in the proposal, the

revisions, as modified, are adopted in

today’s rule.

3. Industrial Utility-Units Exemption

Scope of Exemption. In the proposal

EPA established a new exemption for

certain industrial units that generate

only incidental amounts of electricity

for sale. As explained in detail in the

preamble of the proposal, ‘‘utility units’’

(the entities subject to the Acid Rain

SO2 emission limitation and other

requirements of the Acid Rain Program)

include, with certain exceptions, any

unit serving a generator that produced

electricity for sale any time starting in

1985. With certain exceptions (e.g., for

cogenerators), an industrial unit serving

a generator that produced any amount of

electricity for sale (referred to

hereinafter as simply an ‘‘industrial

utility-unit’’) 5 is an affected unit under
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55463

in generation of electricity for sale, and because

generation of electricity for sale makes industrial

units ‘‘utility units’’ under title IV, the final rule

refers to the units as ‘‘industrial utility-units’’.

6 In order to prevent the requirement from being

circumvented through the position of the owner or

operator in the corporate structure, the proposal

stated that no owner or operator, subsidiary or

affiliate or parent company of the owner or

operator, or combination thereof could have such a

principal business. Consistent with this approach,

the final rule also applies this to any division of the

owner or operator.

7 In the proposal, EPA relied on the Report For

Docket: Industrial Units (October 31, 1996). In the

report, EPA estimated the number of industrial

utility-units in the U.S. that may quality for an

industrial utility-units exemption under § 72.14 and

their total annual SO2 and NOX emissions. One

commenter asserted that the report overestimated

the emissions for two units owned by the

commenter. Assuming the accuracy of the

commenter’s emission estimates, the total annual

SO2 and NOX emissions estimates for industrial

utility-units are reduced by about 10%, i.e., to about

41,000 tons of SO2 and 17,000 tons of NOX. This

is not a significant change and does not affect EPA’s

determinations concerning the industrial utilityunits exemption.

8Section 406(a) also states that ‘‘industrial

sources’’ include units subject to section 405(g)(6),

i.e., certain qualifying facilities and independent

power production facilities that are exempt from

title IV. The reference in section 406(b) to units

‘‘subject to section 405(g)(5)’’ is an inadvertent error

that should be read as citing section 405(g)(6). See

National Annual Industrial Sulfur Dioxide Emission

Trends 1995–2015, EPA–454–R–95–001, at ES–2

(EPA 1995). Industrial utility-units are not exempt

under section 405(g)(6).

the Acid Rain Program regardless of the

amount of the sale relative to the total

generation by the generator and whether

or not the sale is to the general public

or to a public utility for resale to the

public. Moreover, the requirement to

hold allowances to cover SO2 emissions

and to meet any applicable NOX

emission limitation under the Acid Rain

Program applies to all emissions from

the unit, not simply the portion that

might be attributed to generation of the

electricity sold.

Despite the applicability of the

requirement to hold allowances, EPA

has not allocated allowances to

industrial utility-units that might have

qualified for allowance allocations

under section 405 of the Act, including

some units whose owners submitted

timely comments relating to allowance

allocations. On March 23, 1993, EPA

issued notices stating that such

industrial utility-units would not be

included in the National Allowance

Database, on which allowance

allocations are based, because EPA

‘‘believe[d]’’ that the units were not

affected units. 58 FR 15720, 15727

(1993). On the same date, EPA also

issued a final allowance allocation list

that allocated allowances only to units

then ‘‘believed’’ to be affected units. 58

FR 15634, 15641 (1993). EPA stated that

no allowances would be allocated to

units that were subsequently

determined to be, or that subsequently

became, affected units. Id.

In light of these circumstances, EPA

proposed a limited exemption from the

Acid Rain Program for industrial utilityunits that served, any time starting in

1985, a generator that produced

electricity for sale. First, the industrial

utility-unit must have no owner or

operator of which the principal business

is electricity sale, transmission, or

distribution or that is a public utility

subject to State or local utility

regulation.6 Such unit must not be a

cogeneration unit since cogeneration

units already are covered by an express

exemption in the title IV. Further, on or

before March 23, 1993, the owners or

operators of the unit must have entered

into an interconnection agreement (and

any related power purchase agreement)

with a public utility requiring that the

generator served by the unit produce

electricity for sale only for incidental

sales of electricity to that public utility.

Moreover, in 1985 and any year

thereafter, the generator served by the

unit must have actually produced only

incidental electricity sales for the

utility, as required under the

interconnection agreement and any

related power purchase agreement.

Incidental sales were defined as sales

not exceeding the lesser of 10 percent of

the generating output capacity of the

generator or 10 percent of the actual

annual electric output of the generator.

The proposal established a petition

and notice-and-comment procedure for

owners or operators to apply for the

exemption and for the Agency to review

and approve or disapprove the

exemption. If, after approval of the

exemption, any of the conditions for

obtaining the exemption are no longer

met, the exemption terminates

automatically. The proposal, as changed

below, is adopted for the reasons

discussed here and in the proposal.7

All parties commenting on the new

industrial utility-units exemption

supported the concept of such an

exemption. However, these commenters

objected to various, specific provisions.

First, commenters claimed that EPA

should ‘‘totally’’ exempt industrial

utility-units without regard to the

amount of electricity sold by an

industrial utility-unit and/or without

regard to whether the unit was

contractually obligated to sell electricity

on or before March 23, 1993. Allegedly,

industrial utility-units not qualifying for

the exemption will incur significant

costs ‘‘not related’’ to the objectives of

title IV. It was argued that if industrial

utility-units that cannot meet the

criteria of the rule are not exempt,

‘‘agreements’’ providing for sales by

industrial utility-units to utilities may

be ‘‘discontinued’’, forcing utilities to

‘‘look elsewhere for their emergency and

backup power needs.’’ It was also

argued that the costs of complying with

the Acid Rain Program ‘‘will exceed the

benefits of the limited reductions to be

achieved by the regulations’’ since the

estimated amount of SO2 emissions is

small relative to the annual 8.95 million

ton cap for utility units. Since industrial

utility-units are allegedly subject to the

nationwide cap of 5.60 million tons on

total annual SO2 emissions by

‘‘industrial sources’’, regulation of

industrial utility-units under the

existing Acid Rain regulations was

claimed to be unnecessary.

However, EPA begins with the fact,

undisputed by any commenter, that

Congress included non-cogeneration

industrial utility-units in the Acid Rain

Program and thus under the annual 8.95

million ton cap for SO2 emissions and

under applicable NOX emission

limitations. See 61 FR 68344. Further,

although the preamble of the proposal

stated that industrial utility-units are

also under the 5.60 million ton cap for

‘‘industrial sources’’ under section

406(b) of the Clean Air Act

Amendments of 1990, EPA now

believes, on further consideration, that

industrial utility-units (which served,

any time starting in 1985, a generator

that produced electricity for sale) are

not covered by the latter cap.

Section 406(b) of the Clean Air Act

Amendments of 1990 states that if SO2

emissions from ‘‘industrial sources

* * * may reasonably be expected to

reach levels greater than 5.60 million

tons per year,’’ the Administrator may

take actions ‘‘to ensure that such

emission do not exceed’’ the cap. 42

U.S.C. 7651 note. From section 406(a),

it is clear that the definition of

‘‘industrial source’’ in section 402 of the

Clean Air Act applies. Under section

402, an ‘‘industrial source’’ is:

a unit that does not serve a generator that

produces electricity, a ‘‘nonutility unit’’ as

defined in this section, or a process source

as defined in section 410(e). 42 U.S.C.

7651a(24)

As discussed above, an industrial

utility-unit is a unit that is not owned

or operated by a utility but that served,

anytime starting in 1985, a generator

that produced electricity for sale and

therefore is a utility unit under section

402(17). Such a unit does not fall within

any of the three groups of units that are

defined as ‘‘industrial sources’’.8

Consequently, the units that are under

consideration in this rulemaking for
55464 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

9EPA rejects as speculative and irrelevant the

commenter’s suggestion that title IV may be

amended in a way that would require non-exempt

industrial utility-units to make additional,

‘‘prohibitively expensive’’ reductions.

10Even if the ‘‘total’’ exemption were limited to

the specific possible industrial utility-units

identified thus far by EPA (see Report to Docket:

Industrial Units (October 31, 1996)), the amount of

generation and emissions covered by a ‘‘total’’

exemption could increase in the future. Moreover,

the commenters suggested no basis for limiting a

‘‘total’’ exemption to those tentatively identified

industrial utility-units if other units are

subsequently found to meet the ‘‘total’’-exemption

criteria.

inclusion in the industrial utility-units

exemption are not covered by the 5.60

million ton cap. Contrary to

commenters, the Clean Air Act

Amendments of 1990 do not give EPA

the ‘‘option’’ of regulating industrial

utility-units under section 406. In

contrast, Congress exempted certain

cogeneration facilities from the Acid

Rain Program (e.g., the 8.95-million-ton

cap) and included them in the 5.60-

million-ton cap. Under section

402(17)(C) and (25), exempt

cogeneration facilities are excluded

from the definition of ‘‘utility unit’’ and

so are ‘‘nonutility’’ units covered by the

‘‘industrial source’’ cap.

This reinforces the conclusion that

industrial utility-units are intended to

be covered by the Acid Rain Program

and leads to the conclusion that a

blanket exemption for all industrial

utility-units is inconsistent with the

overall regulatory scheme under title

IV.9 Exempting all industrial utilityunits, without regard to the amount of

their electricity sales or to when the

sales became contractually obligated,

would result in a potentially increasing

group of existing and future units that

would generate electricity for sale but

would be outside both the utility unit

and the ‘‘industrial source’’ caps.

Particularly since the ongoing changes

in the structure of the electric industry

make it difficult to predict how many

industrial utility-units there may be in

the future and how they may be used,

EPA rejects such an open-ended

exemption from both caps.10 Moreover,

commenters supporting a blanket

exemption ignore the fact that the Acid

Rain Program is aimed at reducing both

SO2 emissions and NOX emissions. To

the extent that existing coal-fired

industrial utility-units are Group 1 (i.e.,

dry bottom wall-fired or tangentially

fired) or Group 2 (i.e., cell burner,

cyclone, wet bottom, or vertically fired)

boilers, exempting them removes the

applicability of the Group 1 or Group 2

NOX emission limits, which in some

cases may be the only NOX limits for

these boilers under the Act.

EPA also rejects, as unsupported and

speculative, the claim that subjecting

industrial utility-units to Acid Rain

Program requirements will make

interconnection agreements and related

power sales agreements between such

units and utilities economically

prohibitive. EPA agrees that industrial

companies may have more difficulty

than utilities (at least under the current

scheme of utility rate regulation) in

passing through the costs of the Acid

Rain Program. However, that is a far cry

from concluding that electricity sales by

existing industrial utility-units would

cease or that no new industrial utilityunits would contract to make such sales.

EPA therefore maintains that, if there

is to be any exemption for industrial

utility-units, the exemption must be

strictly limited in order to resolve the

specific problem set forth in the

preamble of the proposal. That problem

is that some industrial utility-units have

only incidental activities (i.e., electricity

sales) bringing the entire operation of

the unit under the Acid Rain Program

and that these units likely qualified for,

but were not allocated, allowances.

Strictly limiting the exemption to

address this problem will minimize the

potential environmental impact of this

resolution on SO2 and NOX emissions

and will better harmonize the

exemption with the basic regulatory

scheme under title IV. In fact, without

the specific limits on the exemption set

forth in today’s rule based on the

magnitude of electricity sales and the

time period when electricity sales first

became contractually required, EPA

would reconsider whether any

exemption for industrial utility-units

should be established.

As an alternative to a blanket

exemption for industrial utility-units,

one commenter suggested modifying the

definition of ‘‘incidental sales of

electricity’’ so that units selling up to

one-third (rather than up to 10 percent,

as under the proposal) of their electric

generation to utilities could qualify as

exempt industrial utility-units.

Allegedly, limiting sales to up to onethird of annual electric generation

would be consistent with the statutory

exemption for cogeneration facilities.

Under section 402(17)(C) and

§ 72.6(b)(4), a cogeneration facility that

supplies to a utility, on an annual basis,

an amount of electricity not exceeding

one-third of its potential electrical

output capacity or 219,000 MWe-hrs is

an unaffected unit and is not subject to

the Acid Rain Program. The commenter

supported limiting industrial utilityunits to annual electricity sales equal to

the lesser of one-third of capacity or

one-third of actual generation.

Reflecting that the rationales for the

industrial utility-units exemption and

the statutory cogeneration facility

exemption are not identical, today’s rule

does not make the requirements for the

two types of exemptions identical. On

one hand, the cogeneration facility

exemption reflects Congressional intent,

manifest in section 402(17)(C) of the

Act, that certain cogeneration facilities

be entirely exempt from the Acid Rain

Program whether or not they had

contracted before enactment of title IV

to provide electricity at a fixed price.

Presumably, this is because, by using

the same steam both for electric

generation and industrial purposes,

cogeneration facilities are inherently

more efficient than other units that

generate electricity. See 40 CFR 72.2

(defining ‘‘cogeneration unit’’ as unit

producing electricity and useful thermal

energy ‘‘through sequential use of

energy’’). On the other hand, the

industrial utility-units exemption

addresses the category of industrial

utility-units, which were intended by

Congress to be subject to the Acid Rain

Program but, with regard to certain

individual units, were not allocated

allowances for which they likely

qualified. They lack the sequential use

of energy that makes cogeneration

facilities inherently more efficient. As

discussed above, EPA maintains that the

industrial utility-units exemption

should, under these circumstances, be

more narrowly drawn than the

provisions for exempting cogeneration

facilities. Consequently, EPA disagrees

with the approach of using the limit on

electricity sales by exempt cogeneration

facilities in setting the limit on

electricity sales by exempt industrial

utility-units.

In the proposal, the industrial utilityunits exemption is limited to units that

were contractually obligated as of March

23, 1993 to make only incidental sales

of electricity to utilities. The proposal

defines ‘‘incidental sales’’ as sales not

exceeding 10 percent of either

nameplate capacity or total actual

generation because that level seemed to

be consistent with the general level of

historical electricity sales by the type of

unit intended to be covered by the

exemption. This approach limits the

exemption by restricting both the

number of units covered by the

exemption and the amount of electricity

sales to historical levels and does not

allow expansion beyond those levels.

None of the commenting owners of

units potentially qualifying for the

industrial utility-units exemption

claimed that they had actually made, in

any past year, electricity sales in excess
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55465

of the 10 percent limit or that the 10

percent limit is unrepresentative of

historical levels. EPA maintains that it

is appropriate to impose on the

industrial utility-units exemption a

limit reflecting historical levels and

that, on their face, electricity sales as

high as one-third of total generation

cannot be regarded as simply incidental

to the operation of the unit involved.

For these reasons, while choosing a 10-

percent level as the cutoff point for

‘‘incidental sales’’—like choosing any

specific cutoff point—is to some extent

arbitrary, EPA maintains that the chosen

level is reasonable. Today’s rule, like

the proposal, defines ‘‘incidental

electricity sales’’ as an amount of

electricity sales that does not exceed the

smaller of 10 percent of the nameplate

capacity of the generator served by the

unit times 8,760 hours per year or 10

percent of the actual annual electric

output of that generator.

Today’s rule also continues to impose

the incidental-electricity-sales limit on

sales starting in 1985 and continues to

require that the contractual obligation to

make such sales must have been in

place on March 23, 1993. One

commenter objected to having ‘‘two

different deadlines’’ and argued that

only sales starting in 1993 should have

to meet the incidental-electricity-sales

limit. EPA rejects this approach.

Under the industrial utility-units

exemption, EPA considers the

electricity sales of the unit starting in

1985 because that is analogous to the

approach taken by Congress in section

402(17) in determining what units are

utility units that are subject to the Acid

Rain Program. With certain exceptions,

any unit that at any time starting in

1985 or thereafter serves a generator that

produces electricity for sale is a ‘‘utility

unit’’ subject to the Acid Rain Program.

42 U.S.C. 7651a(17)(A). In crafting the

industrial utility-units exemption, EPA

reasonably takes a parallel approach of

considering actual sales starting in 1985.

Actual sales before 1985 will not be

considered. EPA sees no basis for the

commenter’s suggestion of ignoring any

non-incidental electricity sales from

1985 to 1993. In essence, EPA is

requiring that, in order to be exempt, a

unit must have maintained its character

as an industrial utility-unit making only

incidental sales throughout the period

generally used to determine

applicability of the Acid Rain Program.

The rationale for the ‘‘second

deadline’’ in the industrial utility-units

exemption—i.e., the requirement that

there be, as of March 23, 1993, a

contractual obligation to make

incidental electricity sales—is set forth

in detail in the proposal and is adopted

here. 61 FR 68346. This requirement

also makes it likely that the unit was

either (i) in commercial operation as of

November 15, 1990 or (ii) was under

construction by December 31, 1990 and

therefore qualified for, but was not

allocated, allowances in Phase II. See 42

U.S.C. 7651d(a)–(f) and (h)–(i)

(allowances for existing units) and (g)

(allowances for units under construction

and operating by specified deadlines).

Termination of exemption. Under the

proposal, a unit’s industrial utility-units

exemption terminates automatically

once any of the original requirements

for granting the exemption are no longer

met. Commenters raised concern that

the proposal terminates the exemption if

the contractual agreement that requires

incidental electricity sales by the unit,

and on which the granting of the

exemption was originally based, expires

or is amended. A particular agreement

may have a termination date even

though the parties intend for the

relationship to continue. Further, an

agreement may be modified directly or

through replacement by a new

agreement, e.g., in order to change the

names of the parties or the electricity

prices. According to commenters, the

exemption should not be terminated so

long as there is not an obligation to sell

more than an incidental amount of

electricity.

EPA understands the concern that

replacement of the interconnection

agreement on which an exemption is

based (or of the power purchase

agreement related to the interconnection

agreement) by a follow-on agreement

that continues to require the same

amount of electricity sales should not

result in termination of the exemption.

EPA also recognizes a similar concern

with regard to amendment of the

interconnection agreement or power

purchase agreement. On one hand, the

rule should provide for some flexibility

allowing agreements to be modified or

replaced so long as the underlying

electricity sales obligation of the

industrial utility-unit is not altered in a

way that undermines the original basis

for the unit’s exemption. On the other

hand, EPA is concerned that this

flexibility should not have the effect of

allowing expansion of the unit’s

exemption beyond its original scope.

For example, just as a unit that as of

March 23, 1993 did not serve a

generator required to produce electricity

for sale and that begins after that date

to be involved in electricity sales is not

exempt, an exempt unit should not be

able to expand its involvement in

electricity sales after March 23, 1993

and retain the exemption. Finally, EPA

believes it must consider that future

modifications or replacements of

agreements will be taking place in the

context of restructuring of the electric

industry, where utilities may be

restructured and renamed.

In order to meet all of these concerns,

today’s rule provides that, in applying

the automatic-termination provisions of

the exemption, the interconnection

agreement (and related power purchase

agreement) and any successor agreement

will be considered. For example, the

proposal stated that if the

interconnection agreement on which the

exemption is based expires or

terminates and the generator served by

the unit continues to produce electricity

for sale, the exemption for the unit

terminates. Under today’s rule, if that

interconnection agreement is replaced

or supplemented by a ‘‘successor

agreement’’, the expiration or

termination of the original agreement

will not cause termination of the

exemption. Today’s rule defines

‘‘successor agreement’’ in a way that is

aimed, on one hand, at requiring the

unit to continue to meet the basic

requirements for the exemption and

taking account of future electric

industry restructuring and, on the other

hand, at preventing this flexibility from

being used to expand beyond the

original scope of the exemption when it

was approved.

A ‘‘successor agreement’’ is defined as

an agreement that modifies, replaces, or

supersedes the interconnection

agreement or related power purchase

agreement on which the exemption was

originally based. Further, a ‘‘successor

agreement’’ must be between owners

and operators of the unit and another

party (which may be the same party as

in the original agreement) that (i) is

principally in the electric utility

business or is a public utility subject to

State or local jurisdiction and (ii) is

obligated to sell electricity to the owners

and operators of the unit. In addition,

the ‘‘successor agreement’’ must require

the generator served by the unit to

produce electricity for sale only for

incidental electricity sales to that party.

Finally, the total amount of electricity

that the generator served by the unit is

required to produce for sale under all

such contracts that are in effect (i.e., the

interconnection agreement, related

power purchase agreement, and any

successor agreement) must not exceed

the amount that such generator was

required to produce for sale under the

original interconnection agreement and

related power purchase agreement on

which the exemption was initially

based.

Procedural and other issues. Under

the proposal, a unit seeking an
55466 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

11EPA stresses that it has made no determination

at this time on the qualification of these companies’

units for the industrial utility-units exemption and

will await submission of the necessary applications

before making any determination. None of the

companies that commented stated that it could not

meet the proposed exemption requirements.

12For similar reasons, the same general approach

is used in § 72.80, which states that subpart H,

rather than part 70 or 71, governs revisions of Acid

Rain permit provisions.

industrial utility-units exemption must

submit a petition to the local permitting

authority. The processing of the petition

is similar to that for an Acid Rain

permit. However, once an exemption is

approved, it has no uniform, fixed term

and continues in effect unless and until

it is automatically terminated.

Commenters claimed that the process of

petitioning for the exemption would be

burdensome. They noted that the

proposal removed the requirements to

apply for the new units or retired units

exemption and argued that the

industrial utility-units exemption

should similarly be made ‘‘selfexecuting’’.

When the new units and retired units

exemptions were first adopted by rule,

the regulations required submission of

petitions for the exemptions, processing

by the permitting authority using the

permit notice-and-comment procedures,

and renewal every five years. The

December 27, 1996 proposal and today’s

rule make those exemptions selfexecuting for the most part. With some

exceptions, owners and operators of

units meeting the fairly straightforward

requirements of the new units or retired

units exemptions need only notify the

permitting authority and EPA of their

qualification for the exemption.

In the case of the industrial utilityunits exemption, EPA has decided that

it is necessary to require the submission

of a petition and processing by the

permitting authority. This is a newly

established exemption, with which the

Agency has had no experience.

Moreover, in determining whether to

establish the exemption, EPA has found

it difficult to obtain information on

which units might qualify. See Report to

Docket: Industrial Units (October 31,

1996). In addition, determination of

whether a unit qualifies for the

exemption is not as straightforward as

the determination of qualification for

the new units or retired units

exemption. Qualification for an

industrial utility-units exemption

depends, in part, on interpretation of

interconnection and power purchase

agreements. Further, particularly in

light of other provisions of today’s rule

that streamline the permit processing

procedures and thus also apply to

processing of a petition for industrial

utility-units exemption, EPA maintains

that the petition and review

requirements for the exemption are not

unduly burdensome on either the unit

owners and operators or the permitting

authorities. Today’s rule requires a onetime review process in that once

approved, the exemption continues in

effect without the need for renewal.

One final issue raised by a commenter

(Zinc Corporation of America) is

whether industrial utility-units that do

not qualify for an industrial utility-units

exemption should be allocated

allowances. Allegedly, such units

qualify for allowances but were not

allocated any due to EPA’s ‘‘oversight in

allowance allocation’’.

The difficulty with this argument is

that it ignores the fact that EPA has

previously specified deadlines by which

parties claiming that an erroneous

failure to allocate allowances to a unit

were required to submit such claims

and necessary supporting information to

EPA. As explained in the proposal (61

FR 68345), EPA issued in July 1992 the

Adjunct Data File listing units of

‘‘nontraditional utilities’’. 57 FR 30034,

30040 (July 7, 1992). EPA indicated that

the units might or might not be affected

units and that, in any event, it lacked

sufficient information on which to base

any allowance allocation. Id. Further,

EPA gave notice that if the data

necessary for allowance allocation was

not provided by September 8, 1992 for

‘‘a unit that may be affected now or in

the future’’, the unit would not be

allocated allowances. Id. Moreover,

believing that it had corrected all timely

identified errors in the data and

resulting allocations, EPA stated in the

March 23, 1993 notice on final

allowance allocations that no

allowances will be allocated to any

affected unit that was not allocated

allowances in that notice. 58 FR 15634,

15641 (March 23, 1993).

Neither Zinc Corporation of America

nor the predecessor-owner (St. Joe

Minerals Corporation) of the units now

owned by Zinc Corporation of America

submitted any data or any objection to

the lack of allowance allocations for the

units. The only companies that have

units identified by EPA as potentially

industrial utility-units and that

submitted any comments concerning

allowance allocations were LTV Steel

Mining Company and Ford Motor

Company. Both companies claimed that

their units were not affected units, and

neither has ever objected to the lack of

allowance allocations.

Thus, there is no basis for allocating

allowances now or in the future to

industrial utility-units, as suggested by

the commenter, if EPA ultimately

determines that any such units do not

qualify for the industrial utility-units

exemption.11 Such units are treated like

any other unit that has not been

allocated allowances and becomes an

affected unit after that date: No

allowances will be allocated. EPA’s

approach of declining to allocate

allowances when the deadline for

submission of information for allowance

allocation is missed has been upheld by

the courts. Texas Municipal Power

Agency v. EPA, 89 F.3d 858. 872–73

(1996).

III. Part 72: Interaction of Acid Rain

Permitting and Title V

A. Relationship Between Acid Rain

Rules and Parts 70 and 71

The proposal attempted to clarify the

extent to which the Acid Rain rules

apply in lieu of provisions of parts 70

and 71, which address permitting by

State permitting authorities and by the

Administrator under title V of the Act.

No comments were received on these

revisions. The revisions are adopted in

today’s rule with some changes. The

language in several sections of the

proposal stating that the Acid Rain rules

‘‘supersede’’ provisions of parts 70 or 71

is removed from the final rule because

of concern that such language might

cause confusion as to whether parts 70

and 71 remain in effect at all.

Instead, today’s § 72.60 clarifies that

part 72 governs, notwithstanding the

requirements of part 71, and the list of

specific procedural matters that part 72

governs is clarified and augmented so

that the list includes all matters covered

by subparts C, D, E, F, and H of part

72.12 The list of specific matters to

which part 71 still applies is also

clarified. Further, today’s § 72.70 retains

the language in the existing rule stating

that subpart G governs to the extent that

the subpart is ‘‘inconsistent’’ with part

70. Upon reconsideration of the

language, EPA concludes that this

existing language is reasonably clear,

particularly with the revisions in § 72.72

reducing the number of differences

between subpart G and part 70. EPA

also notes that the existing language

avoids any potential confusion about

the overall effectiveness of part 70.

B. State Authority to Administer and

Enforce Acid Rain Permits

Under the proposal, a State becomes

responsible for administering and

enforcing Acid Rain permits for affected

sources if the State has an operating

permits program approved under part
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55467

13Today’s rule also removes language in

§ 72.72(b)(1)(iv) stating that after the comment

period on a draft permit, the State permitting

authority will issue or deny a proposed permit.

Some State permitting authorities have provided,

with EPA’s concurrence, that the comment period

on the draft permit and EPA’s review of the permit

run concurrently so long as no adverse comment is

received and no change is made in the draft permit.

The language in § 72.72 is removed in order to

allow State permitting authorities to take this

approach, which reduces the length of the

permitting process, for Acid Rain permits.

70 and to the extent the State Acid Rain

regulations are accepted by the

Administrator. The proposal also

established a procedure for withdrawal

of the Acid Rain Program from a State

where the Administrator determines

that the State is not adequately

administering or enforcing the program.

Today’s rule adopts the revisions,

with several changes. Under the

proposal, the Administrator accepts all

or a portion of State Acid Rain

regulations through issuance of a notice

in the Federal Register. Particularly

since the State regulations will then

become part of the State title V

operating permits program, EPA

believes that notice and opportunity for

public comment should be provided

before the Administrator issues a final

acceptance or rejection of all or a

portion of the State regulations. This

approach is consistent with the

requirement in part 70 that notice and

opportunity for public comment be

provided on the Administrator’s

approval or disapproval of a State

operating permits program under title V.

See 40 CFR 70.4(e). Today’s rule

includes language that imposes a noticeand-comment requirement but is

flexible enough to allow use of a direct

final procedure under which, for

example, the proposed and final

acceptance of State regulations are

issued in simultaneous notices and the

acceptance becomes automatically final

if no significant, adverse comments are

timely submitted.

Further, the proposal revised the

provision concerning the date by which

a State permitting authority must reopen

Phase II Acid rain permits to add Acid

Rain NOX requirements. The existing

provision requires the permits to be

reopened by January 1, 1999 but is

unclear as to whether this is the

deadline for completion, or simply

commencement, of the reopening

procedure. In order to clarify the

provision and ensure that State

permitting authorities have sufficient

time to process the permits, the

proposal stated that the reopening must

be completed by July 1, 1999.

Commenters objected to the July 1,

1999 completion deadline on the

ground that utilities need more than 6

months to plan for compliance with the

NOX terms of their Acid Rain permits.

No comment was received supporting

the Agency’s concern that State

permitting authorities might need

additional time beyond January 1, 1999

to complete the reopening of the permit.

Further, as discussed elsewhere in this

preamble, today’s rule includes

provisions that enable State permitting

authorities to expedite permit

processing, e.g., the provisions for

elimination of newspaper notice and for

use of direct proposed procedures. By

further example, today’s rule provides

that any EPA-approved early election

plan that has not been terminated must

be added to the Phase II permit through

an administrative amendment, rather

than through a notice-and-comment

procedure. This reflects the fact that

§ 76.8, governing early election plans,

requires a State permitting authority to

approve, as part of the Phase II permit,

any ongoing early election plans

previously approved by EPA. These

streamlining provisions will reduce the

administrative burden on the State

permitting authorities.

Consequently, today’s rule retains the

January 1, 1999 deadline and makes it

clear that the reopening of the permit to

add NOX requirements must be

completed by that deadline. By its

terms, the January 1, 1999 deadline for

adding the NOX provisions only applies

to the extent that the provisions were

included in a timely, complete permit

application concerning NOX emissions.

EPA notes that, under § 76.9(b)(2), such

permit application must be submitted

by January 1, 1998 and that, where the

State permitting authority with

jurisdiction over the unit has

responsibility for issuing Acid Rain

permits covering NOX, the submission

should be made to that State permitting

authority.

Finally, language is added (e.g., to

§ 72.73(b)(1) and § 72.74(a)) to make it

clear that the State permitting authority

issues Acid Rain permits to the extent

that it has State Acid Rain regulations,

accepted by EPA, that apply to the

sources involved and to the Acid Rain

requirements involved. For example, if

accepted State Acid Rain regulations

include the Acid Rain emissions

limitation for SO2 but not the emissions

limitations for NOX by the applicable

deadline under § 72.73, EPA has the

flexibility to determine whether the

State permitting authority will be

responsible for issuing Acid Rain

permits covering both SO2 requirements

under part 72 and NOX requirements

under part 76.

C. Required Elements for State Acid

Rain Program

The existing rule set forth the criteria

for approval of a State operating permit

program under title V and acceptance of

the State Acid Rain regulations. The

proposal eliminated or modified several

of the criteria in the existing rule

because EPA believed that they were

unnecessary or redundant. Comments

were received on only three of these

revisions. With the changes discussed

below, all the revisions are adopted in

today’s rule for the reasons discussed

here and in the proposal.

First, the existing rule required State

permitting authorities to give written

notice of draft permits to specified

persons and also to provide notice in a

newspaper or State publication. The

proposal gave State permitting

authorities the option of foregoing

newspaper or State publication notice of

draft permits that require only that a

unit meet the standard SO2 or NOX

emission limitations, a NOX averaging

plan, or a NOX early election plan.

Commenters supported this revision,

which is adopted in today’s rule.

Second, the proposal gave State

permitting authorities the option of

using what was referred to as a ‘‘direct

final’’ procedure for issuing Acid Rain

permits. Under the procedure, a State

permitting authority issues

simultaneously a draft permit and a

proposed permit. If no significant,

adverse comments are received, the

proposed permit is deemed to be issued

and, after the period for review by the

Administrator, the State permitting

authority issues the final permit.

Commenters supported this option and

urged that EPA clarify that it applies to

permit revisions as well as permit

issuance. EPA notes that the procedure

is misnamed in the proposal in that the

permit that is issued in the absence of

significant, adverse comment is a

‘‘proposed permit’’ that is still subject to

the Administrator’s review.

Consequently, today’s rule refers to this

option as the ‘‘direct proposed’’

procedure and adopts the provision. 13

With regard to the use of the direct

proposed procedure for permit

revisions, EPA notes that § 72.81(c)(2) in

the proposal and in today’s rule states

that, with certain exceptions not

relevant here, permit modifications

must be treated as permit applications.

Consistent with § 72.81(c)(2), the

procedures for permit issuance

(including, e.g., the direct proposed

procedure) apply to permit

modifications. Similarly, permit

issuance procedures apply to permit

reopenings. Because the other types of

permit revisions, i.e., fast-track
55468 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

14One of the proposed definitions, ‘‘State’’, is

modified in today’s rule. The proposed definition

removed language, stating that ‘‘State’’ has its

conventional meaning where it is clear ‘‘from the

context’’, and listed one specific instance where the

conventional meeting would apply. Because there

are several contexts in which the conventional

meaning applies, today’s rule retains the

formulation in the existing rule. Thus, for example,

in § 72.40(b)(2) the term ‘‘State’’ has its broader

meaning (which includes the jurisdiction of any

non-federal permitting authority) while in

§ 72.22(e)(1)(i) ‘‘State’’ has its conventional

meaning.

15One commenter suggested that there is no basis

for the requirement in § 76.11 that units in a NOX

averaging plan have the same designated

representative. This suggestion is outside the scope

of the rulemaking. While it is unclear whether the

commenter intended to raise that issue here, EPA

modifications and administrative permit

amendments, have their own

procedures set forth in the proposal and

today’s rule, the direct proposed

procedure does not apply to such

revisions.

Third, the proposal eliminated a

provision in the existing rule limiting

the filing of State administrative or

judicial appeals of an Acid Rain permit

to no more than 90 days from the

issuance of the permit. As a result, part

70, which imposes no limit on State

administrative appeals and limits

judicial appeals to no more than 90 days

from permit issuance, would govern

appeals of Acid Rain permits. 40 CFR

70.4(b)(3)(xii); see also 59 FR 44460,

44516 (August 29, 1994) (proposing to

allow States to provide up to 125 days

for judicial appeals).

Commenters objected to the removal

of any limit on the periods for State

administrative appeals, and for judicial

appeals, under part 72. The commenters

contended that, in the absence of a limit

in part 72 (or in part 70) on

administrative appeals, owners and

operators ‘‘would never be able to know

whether their permits would be subject

to challenge’’. However, the commenters

ignored the fact that, in imposing no

federally mandated limit on State

administrative appeals, part 72 leaves

the matter to the States, which are

highly likely to impose such limits in

the interests of finality and

administrative efficiency. EPA is not

aware of any State operating permit

programs that, to the extent they

provided for administrative appeal,

failed to set a time limit on the filing of

administrative appeals. In short, the

question here is not whether to have any

limit but rather whether to leave the

matter for the States or impose a

federally mandated limit. EPA

maintains that it is preferable to allow

each State flexibility to craft time limits

for Acid Rain appeals. Under this

approach, each State can set a single

time limit appropriate for and

applicable to all administrative

appeals—and also one for all judicial

appeals—of the entire title V operating

permit, rather than having one set of

time limits for an Acid Rain permit and

another set of time limits for the

remaining portions of the operating

permit.

The commenters contended that the

Acid Rain permits are a ‘‘stand-alone

portion’’ of the operating permit and so

it would not be confusing to have a

different deadline for appealing the

Acid Rain portion and appealing the

rest of the operating permit. EPA

disagrees. Although the Acid Rain

permit is a separate portion of the

operating permit, State permitting

authorities are likely, as a matter of

efficiency, to conduct notice and

comment and other permitting

procedures for the rest of the operating

permit at one time and to issue a single,

all inclusive operating permit,

particularly since the Acid Rain permit

is likely to comprise a relatively small

part of the entire title V operating

permit. In fact, in response to State

concern over how to coordinate the

processing of the Acid Rain permit and

the operating permit, EPA has issued

guidance on alternative approaches for

achieving coordination. See Guidance

on Coordinating Title IV/Title V

Permitting Schedules (March 15, 1994).

EPA believes that having a single

administrative appeal deadline and a

single judicial appeal deadline for the

entire operating permit is simpler and

less likely to result in inadvertent

failure to meet the applicable filing

deadline.

The commenters also alleged that the

Acid Rain portion incorporates new

compliance obligations while the

remainder of the operating permit

merely restates existing obligations.

This, of course, depends on the timing

of the issuance of the operating permit.

State permitting authorities are allowed

to phase in the issuance of operating

permits and new obligations may arise

before issuance of, and therefore may be

included in, a given operating permit.

Moreover, to the extent this distinction

applies, it is likely to apply only for the

initial Phase II Acid Rain permit; in

most cases, a subsequent Acid Rain

permit will restate the obligations (e.g.,

the requirement to hold sufficient

allowances to cover SO2 emissions)

already in the initial Acid Rain permit.

EPA concludes that, with regard to

the question of limiting State

administrative and judicial appeals, the

Acid Rain portions of operating permits

should not be treated any differently

than the remaining portions of operating

permits. The provision in the proposal

is adopted in today’s rule.

In the proposal EPA noted that many

States have already adopted Acid Rain

rules based on the existing rule. EPA

stated that it expected that, if rule

revisions are adopted in final, States

will incorporate the revisions within 2

years after the promulgation of the final

rule. No comment was received on this

approach, and EPA continues to believe

that this is a reasonable time frame. To

the extent a State permitting authority

fails to incorporate the revisions in a

timely manner, EPA will consider

whether the State is adequately

administering and enforcing the Acid

Rain Program and may take action

under § 72.74 of today’s rule to

administer all or a part of the Acid Rain

Program for sources located in the State.

IV. Part 72: Miscellaneous Permitting

Matters

A. Definitions

The proposal modified or eliminated

several definitions. Only one of the

changes (i.e., the revised definition of

‘‘submit or serve’’ to eliminate the

requirement for use of certified mail)

received comment and that comment

was supportive. The definition

revisions, as modified below, are

adopted in today’s rule.14

B. Designated Representative

The proposal included two types of

revisions concerning designated

representatives. First, the procedures for

selecting or changing the designated

representative or an alternate were

simplified and made less burdensome.

Commenters supported the revisions,

which are adopted in today’s final rule.

Second, the proposal provided the

option of selecting two alternate

designated representatives for an

affected source in certain limited

circumstances. The proposal was aimed

at providing flexibility for sources with

units located in more than one State that

are in a NOX averaging plan under

§ 76.11 and that are subject to two levels

of management, one at the subsidiary

operating company and one at the

parent company. In particular, as

requested by a commenter, the proposal

allowed a multi-state utility holding

company with a NOX averaging plan

covering units in two or more States to

designate for sources with units in the

plan a single designated representative

at the holding company level and two

alternates, one at the management level

and one at the operations level of the

operating company. Commenters

supported the additional flexibility but

suggested certain changes to the

proposal.15
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55469

did not propose, and is not considering here, such

a change in § 76.11.

The commenter that originally

requested this type of provision in the

proposal expressed concern that the

references in the proposal to a holding

company with multiple subsidiaries

may become obsolete in light of future

restructuring of the electric industry.

For example, a holding company with

subsidiaries operating generation

facilities may be restructured to include

all generation facilities in a single

subsidiary. This commenter also was

concerned that the proposal limited the

option of having two alternates to cases

where the NOX averaging plan covered

all units operated by the subsidiaries. If

any units are covered by early election

plans or have alternative emission

limitations and so are outside the NOX

averaging plan, the proposal would not

apply. Other commenters echoed these

concerns but suggested that EPA allow

any source to have two alternates,

regardless of whether the source has

units that are in a NOX averaging plan

or are subject to management at both the

subsidiary and parent company levels.

While retaining the general rule that

a source must have one designated

representative and may have one

alternate, EPA proposed allowing two

alternates in limited circumstances

where it was shown that such flexibility

might be needed. The proposed

provision, as modified in today’s rule,

covers the only specific circumstance

for which a need for multiple alternates

has been explained by commenters, i.e.,

where units are in different States but in

the same NOX averaging plan and are

subject to both subsidiary and parent

company management. While

commenters make a general suggestion

that having two alternates gives greater

assurance that a ‘‘point of contact’’ for

a source will be available ‘‘at all times’’,

the commenters do not claim that

having one alternate has generally been

insufficient or point to any other

specific circumstances where two

alternates are needed. EPA therefore

declines to expand the provision any

further.

For the reasons discussed here and in

the proposal, today’s rule adopts the

proposed provision, with changes to

meet other concerns stated by

commenters. First, the provision

expressly covers a unit whose utility

system is the subsidiary of a company

(not necessarily a ‘‘holding company’’).

Second, the provision will cover cases

where the units in the NOX averaging

plan are operated by a single subsidiary

or by two or more subsidiaries. Each

unit must be in a utility-system

subsidiary of a company, but they may

be in the same such subsidiary. Third,

the NOX averaging plan need not

include all units operated by

subsidiaries of the company; instead the

plan must simply cover two or more

units in more than one State.

C. Compliance Plans

The proposal revised the provisions

concerning the submission of

substitution plans and reduced

utilization plans in order to clarify the

deadlines and the procedures to be

used. No comments were received, and

the revisions are adopted in today’s

rule.

The proposal also revised the

procedures for review of failed

repowering projects. No comments were

received on the revisions, which are

adopted in today’s rule.

Finally, the proposal revised the

deadline for activating conditional

repowering extension plans from

December 31, 1997 to July 1, 1997. No

comments were received. However,

today’s rule is being published after July

1, 1997, and EPA has decided not to

revise the activation deadline

retroactively.

D. Federal Permit Issuance

The proposal made several revisions

to the federal permit issuance

procedures. For example, the period

after which an Acid Rain permit

application received by EPA is deemed

to be complete was lengthened from 30

days to 60 days. This was done in order

to be consistent with part 71, under

which the period applicable to

operating permit applications is 60

days. Commenters objected that this

prolongs the ‘‘period of uncertainty’’

over the completeness of the Acid Rain

application and stated that Acid Rain

permitting ‘‘generally proceeds along a

separate track’’ from other title V

permitting. However, the commenters’

assumption that the Acid Rain portion

of the operating permit is processed

separately from the rest of the operating

permit is not necessarily correct. If the

State permitting authority is generally

responsible for issuing title V operating

permits but, because its Acid Rain rules

are not fully approved, EPA issues the

Acid Rain permits, then the Acid Rain

permits may be processed separately. In

cases where EPA is responsible for

issuing entire title V operating permits

(including the title IV portion), the title

IV and title V procedures may be

coordinated as a matter of efficiency,

particularly if EPA delegates the title IV

and title V permitting to the State. See

40 CFR 71.10 (delegation of permitting

under title I); and 72.74(a)(2) of today’s

rule (delegation of permitting under title

IV). A single completeness review (as

well as a single notice and comment

procedure) may be conducted for the

entire operating permit. EPA maintains

that the ability to coordinate Acid Rain

permitting and title V permitting and to

realize potential efficiencies is

enhanced by minimizing the differences

between Acid Rain permitting and title

V permitting.

Moreover, the Acid Rain portion of

the operating permit is generally

relatively small compared to the entire

title V permit application. It is therefore

logical to make the completeness review

period for the title IV permit conform to

the 60-day period for title V permits,

rather than to shorten the title V

completeness review period to 30 days.

While the period during which owners

and operators are uncertain about the

completeness of Acid Rain permit

applications will be lengthened for 30

days, EPA maintains that the advantage

of a consistent completeness review

period outweighs the relatively minor,

additional uncertainty.

Further, the proposed rule altered the

provision concerning the time period

within which a designated

representative must respond to a request

for supplemental information by the

Administrator. While the existing rule

set an automatic 30-day period for

responding and allowed the

Administrator to lengthen the response

period, the proposal stated that a

reasonable period would be set on a

case-by-case basis by the Administrator.

A commenter objected on the ground

that it is unlikely that a period less than

30 days would be reasonable and that it

would generally be in the interest of a

designated representative to respond

expeditiously. However, the commenter

ignores the fact that there can be

significant, but readily remedied gaps or

errors in the information submitted to

EPA in a permit application. Setting a

minimum response period of 30 days is

likely to lengthen unnecessarily the

permitting process. In addition, while

the Agency could treat applications

with such errors as incomplete and

avoid the minimum 30-day response

period, EPA maintains that it is

preferable to have the flexibility to set

a reasonable, short response period.

This flexible approach both promotes

orderly and expeditious processing of

permits and protects the designated

representative from unreasonable

requests. This is also preferable to the

commenter’s approach of assuming that

designated representatives will

necessarily respond expeditiously and

in a time frame that meets the Agency’s

schedule for permit processing.
55470 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

E. Permit Revision

The proposal made several changes to

the permit revision procedures. Changes

concerning permit reopenings received

no comment and are adopted in the

final rule; changes concerning fast-track

amendments and administrative

amendments are adopted as discussed

below.

With regard to fast-track

modifications, the proposal lengthened

the period within which a State

permitting authority must act on a fasttrack modification of a permit from 30

to 60 days after the end of the public

comment period. Commenters objected

claiming that there is no evidence that

State permitting authorities need more

time and that the revisions entitled to

fast-track modification required little

exercise of administrative discretion

and are unlikely to receive public

comment.

EPA notes that, while a NOX

averaging plan or plan change may

require little administrative discretion

and elicit little comment, the processing

of other types of revisions (e.g., changes

to repowering plans or thermal energy

plans) is more likely to involve

discretion or public comment. Further,

the processing of Acid Rain permits and

permit revisions represents a very small

portion of the operating permit

processing required of State permitting

authorities under title V. Reflecting the

significant burden of operating permit

processing, part 70 allows State

permitting authorities to take up to 18

months from receipt of a complete

permit application to issue an operating

permit and a similar period to make

significant modifications to an existing

operating permit. 40 CFR 70.7(a)(2) and

(e)(4)(ii). By comparison, a 90-day

period (i.e., the 30-day comment period

and 60 days after the end of the period)

for completing a fast-track modification

is certainly expedited. EPA maintains

that, in light of the permitting burden

faced by State permitting authorities, it

is preferable to set a more realistic, and

yet still expedited, deadline for action

by State permitting authorities.

With regard to administrative

amendments, the proposal set forth the

amendment procedures in detail, rather

than citing the procedures in part 70.

Further, the period for action on one

administrative amendment, an

alternative emission limitation (AEL)

demonstration period, was lengthened

from 30 days to 60 days after receipt of

an AEL demonstration period petition

determined by the permitting authority

to meet all the requirements of § 76.10.

No comments were made on these

revisions, which are adopted in today’s

rule.

In addition, the administrative

amendment procedures were changed to

allow a permitting authority to correct

minor errors in a permit on its own

motion. Noting that the proposed

provision was not explicitly limited to

‘‘minor’’ errors, commenters argued that

notice should be given to the designated

representative before even minor

changes are made to the permit. In

response to these concerns, today’s rule

explicitly limits administrative permit

amendments on the motion of the

permitting authority to corrections of

typographical errors or similarly

noncontroversial changes (e.g., adding a

new units or retired units exemption for

which the requirements were previously

met). Moreover, the rule requires that a

permitting authority provide at least 30

days’ notice to the designated

representative of the source involved

before making, on its own motion, any

administrative permit amendments.

This approach will enable the

permitting authority to correct minor

errors with minimal delay while

providing the designated representative

the opportunity to commment.

In order to make the reopening

provision consistent with the provision

allowing a permitting authority to make

administrative amendments on its own

motion, language is added to § 72.85.

This language makes it clear that

administrative amendment procedures,

rather than reopening procedures, may

be used for typographical or similar

errors.

F. Reduced Utilization Accounting

The proposal made several changes in

the reduced utilization accounting

provisions. Most of the changes received

no comment or only favorable comment

and are adopted in today’s rule.

Commenters objected to one change:

The provision that, in accounting for the

effect of heat rate improvements on a

Phase I unit’s utilization, credit for such

improvements must be limited to the

net effect of the improvements on the

unit’s heat rate. According to the

commenters, if a unit’s heat rate (i.e.,

Btu/Kwh) since the 1985–1987 base

period deteriorates (i.e., increases) and

measures are taken that offset that

deterioration, the entire effect of the

heat rate improvements should be

included in accounting for reduced

utilization. The commenters alleged that

the statutory reduced utilization

provision in section 408(c)(1)(B) of the

Act establishes a ‘‘baseline’’ heat input,

not a ‘‘baseline’’ heat rate.

In asserting that there is no

connection between utilization in the

base period and heat input in the base

period, the commenters ignore the basic

purpose of accounting for reduced

utilization and heat rate improvements.

The purpose of the reduced utilization

provisions is to ensure that any

increased emissions resulting from

reducing utilization of, and shifting

generation from, Phase I units to units

compensating for the reduced

utilization ‘‘are accounted for in the

allowance system.’’ 56 FR 63002, 63019

(December 3, 1991). Reduced utilization

‘‘as a result of * * * improved unit

efficiency programs’’ need not be

accounted for through allowance

surrender because these programs

‘‘cause decreases in utilization without

any shifts of generation to unaffected

units.’’ 56 FR 63021. To the extent

utilization (i.e., total annual heat input

in mmBtus) at a Phase I unit is reduced

below the baseline level because that

unit has improved its heat rate after

1987 over the level reflected in the

baseline utilization, there is no increase

in SO2 emissions and allowances need

not be surrendered. In this case, the

Phase I unit is using less fuel because

it can produce a kilowatthour of

electricity with less fuel and thus less

SO2 emissions.

However, if the Phase I unit’s heat

rate deteriorates from the level reflected

in the unit’s baseline utilization and

heat rate improvement measures are

instituted after 1987 that bring heat rate

back to the level reflected in the

baseline utilization, then the unit is

using the same amount of fuel to

produce a kilowatthour of electricity. In

the latter case, the heat rate

improvements made after 1987 do not

account for the use of less fuel at the

Phase I unit. Just as heat rate

improvements made before 1987 and

reflected in baseline utilization cannot

account for utilization below baseline,

heat rate improvements made after 1987

that simply restore the heat rate to the

level reflected in the baseline cannot

account for reduced utilization. See 61

FR 68354. The same logic applies if a

Phase I unit is attempting to account for

its reduced utilization through heat rate

improvements at another unit that

simply restore the latter unit’s heat rate

to the 1987 level.

Thus, contrary to the commenters’

assertions, EPA did not simply

‘‘assume’’ that limiting heat rate

improvement to net improvement since

1987 is warranted. On the contrary, EPA

explained, albeit in less detail than in

today’s rule, the basis for the limitation.

Id. Moreover, the limitation is

consistent with long-standing

explanations of the purpose of reduced

utilization accounting, as discussed
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55471

16While EPA uses 1985–1987 average sulfur-free

generation as the bench mark for limiting the use

of sulfur-free generation in reduced utilization

accounting, the proposal and today’s rule use 1987

heat rate as the bench mark for limiting the use of

unit efficiency improvements. This is because

annual generation was more likely to vary during

1985–1987 than was a unit’s annual heat rate and

the use of the 1987 heat rate, which captures any

efficiency improvement measures instituted before

1988, is less burdensome for utilities and EPA to

determine than the average 1985–1987 heat rate.

17EPA maintains that, contrary to commenters’

assertion, the provision in section 307(b)(1) of the

Clean Air Act on motions for reconsideration is

irrelevant to the question of administrative appeals

and is not properly interpreted as evidencing

‘‘hostility’’ to the exhaustion requirement involved

here. Section 307(b)(1) involves judicial appeals

and the effect of agency reconsideration of a final

action on such appeals. To the extent section

307(b)(1) addresses reconsideration of a final rule,

the section is irrelevant to this case, which concerns

administrative appeals of individual, adjudicative

decisions. To the extent the section addresses

reconsideration of an adjudicative decision, the

section is still irrelevant here. Reconsideration

Continued

above, and with other, regulatory

provisions governing such accounting.

In particular, limiting heat rate

improvement to net improvement since

1987 is analogous to the approach taken

in the existing rule concerning sulfurfree generation, which is not at issue

here. Only the net increase in current

generation at a sulfur-free generator (i.e.,

the increase in current generation over

the sulfur-free generator’s average 1985–

1987 annual generation), not the

increase from one year to the next, is

used to account for reduced utilization.

See 40 CFR 72.91(a)(3)(iii); and 58 FR

3590, 3606–7 (January 11, 1993).16 The

commenters’ approach is therefore

rejected as inconsistent with the entire

thrust of reduced utilization accounting,

and the proposed provision is adopted

in today’s rule.

V. Part 73: Allowances

A. Allowance Tables

In the proposal, EPA proposed a

number of changes in unadjusted

allowances and in the units and

allowance figures listed in Tables 2 and

3 of § 73.10, reflecting those allowance

changes. For purposes of the proposal,

EPA was able to list the changes in the

rule without reprinting Tables 2 and 3.

However, consistent with the

requirements of the Federal Register

concerning finalization of multiple

changes to regulatory tables and in the

interest of facilitating public

understanding of the final changes, EPA

concludes that the changes should be

finalized through republication of

information in the tables. Further,

section 403(a) of the Act requires the

Administrator to issue prior to June 1,

1998 a revision of the final allowance

allocations primarily to account for

allocations for repowered units under

section 409. That revision will

necessitate recalculation of all units’

allowance allocations and so must also

be implemented through republication

of information in Tables 2 and 3. In

order to avoid the confusion likely to

result from, and the large expense

associated with, multiple republications

of information in the tables, EPA has

decided not to finalize at this time the

allowance revisions in the December 27,

1996 rule. Instead, EPA intends to

propose in the near future the revisions

associated with the June 1, 1998

allocations and to coordinate

finalization of both the allowance

revisions in the December 27, 1996

proposal and that future proposal.

The only exception to this approach

is the allowance changes for Central

Louisiana Electric Company’s

Rodemacher unit 2. In the December 27,

1996 proposal, the allowances for

Rodemacher unit 2 were changed to

20,774 unadjusted allowances. Under a

settlement of litigation concerning

Rodemacher unit 2’s allowance

allocation, the Administrator agreed to

sign a final rule adopting the revision to

the unit’s allowances by October 1997.

Consistent with that settlement, the

proposed unadjusted allowances for

Rodemacher unit 2 are adopted in

today’s rule. This single change can be

made without republishing the

allowance tables.

B. Small Diesel Refinery Provisions

The proposal made certain revisions

to the provisions to small refinery

allowance allocations. No comment was

received, and the revisions are adopted

in today’s rule.

VI. Part 75: Monitoring of Units

Burning Digester or Landfill Gas

In the proposal, EPA requested

comment on monitoring requirements

for units burning digester or landfill gas.

No comments were received. EPA

intends to consider this matter in future

proceedings.

VII. Part 77: Excess Emissions

The proposal made changes to part 77

concerning immediate deduction of

allowances to offset excess emissions,

the deadline for paying excess

emissions penalties, and excess NOX

emissions under a NOX averaging plan.

The changes received no comment or

only favorable comment and are

adopted in the final rule.

VIII. Part 78: Administrative Appeals

The proposal made changes to part 78

to clarify that an administrative appeal

is a prerequisite for judicial review of

decisions of the Administrator under

the Acid Rain Program and to ensure

that the requirement for exhaustion of

administrative remedies is consistent

with the Supreme Court’s decision in

Darby v. Cisneros, 509 U.S. 137 (1993).

On September 24, 1993, the Agency

originally proposed to add language

stating explicitly that administrative

appeal is a prerequisite for judicial

review. 58 FR 50088, 50104 (1993).

Certain commenters stated, in response

to the September 24, 1993 proposal,

that, in light of the alleged potential for

‘‘disruptive effects’’ resulting from an

administrative exhaustion requirement,

the Agency should solicit additional

comment on the effect of Darby on part

78. EPA therefore did not finalize the

September 24, 1993 proposal. Instead,

EPA provided further opportunity for

comment by publishing the December

27, 1996 proposal, which included both

the changes explicitly requiring

exhaustion of administrative remedies

and some additional changes to conform

with Darby. In its comments on the

December 27, 1996 proposed rule, the

same commenters submitted further

comments. In their second set of

comments, the commenters failed to go

beyond their generalized claim of

‘‘disruptive effects’’. Rather than

providing any specific claims or

examples of when administrative appeal

of a particular type of Administrator’s

decision would be ‘‘disruptive’’ to the

Acid Rain Program or to affected

sources’ compliance efforts, the

commenters simply expressed general

concern that EPA ‘‘failed to consider’’

unspecified ‘‘disruptive’’ effects.

In the September 24, 1993 and

December 27, 1996 proposals, EPA set

forth both the basis for requiring

exhaustion of administrative remedies

and provisions addressing concerns

over delay pending completion of

administrative review. Requiring

exhaustion of administrative remedies

promotes efficient use of administrative

and judicial resources in that it ‘‘allows

the Agency to review * * * decisions

for correctness before having to defend

(them) * * * in Federal court.’’ 58 FR

50104 (quoting the original proposed

appeals procedures at 56 FR 63002,

63033 (December 3, 1991)). Decisions

that a petitioner shows are erroneous

can be reversed or corrected without

resource-intensive litigation before the

federal courts and decisions that a

petitioner shows are insufficiently

explained can be reexamined and either

reversed or better explained. The overall

effect is to increase the likelihood of

sound decision-making and reduce the

need for recourse to the courts.17
55472 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

provides a second opportunity for agency review of

an adjudicative decision, for which an opportunity

for administrative review was already provided. In

contrast, the issue here is whether there should be

an initial opportunity for EPA to review its

decisions on Acid Rain matters before the decisions

may be appealed to the courts.

18EPA did not ‘‘acknowledge’’ that there would

be cases of ‘‘significant, adverse consequences’’ due

to delay pending appeal or that any such cases

would be likely to occur. Instead, EPA provided

procedures that could address such cases

(regardless of their likelihood) if they arose.

19A minor exception under today’s rule is the

period for curing defects in filings, which remains

as 7 days subject to shortening or lengthening at the

discretion of the Environmental Appeals Board or

the Presiding Officer. This will minimize the

likelihood of a filing being permanently excluded

for purely technical reasons. The Agency is

confident that flexibility concerning this limited

type of procedural deadline can be implemented in

a way that will not result in unnecessary delay of

proceedings.

20For similar reasons, the period for appealing a

proposed decision of a Presiding Officer to the

Environmental Appeals Board is fixed at 30 days

under § 78.20(a).

Further, while nothing in the record

indicates that delay pending

administrative appeal of Acid Rain

Program decisions (during which appeal

the decisions will not be operative) will

likely have ‘‘significant, adverse

consequences’’, the December 27, 1993

proposal took reasonable account of the

general possibility of such consequences

pending appeal.18 61 FR 68365. Despite

two opportunities to provide

information on the alleged, potential,

adverse effect of the exhaustion

requirement, the commenters originally

objecting to the requirement were

apparently unable to identify any

specific circumstances in the Acid Rain

Program under which significant,

adverse consequences would result from

the requirement, much less provide any

information on the likelihood of such

circumstances arising. No such

circumstances have been identified to

EPA, and EPA is not aware of any,

particularly in light of the ability of the

Agency, under the proposal and today’s

rule, to expedite administrative appeals.

EPA therefore rejects the commenters’

claim concerning ‘‘disruptive effects’’ of

the exhaustion requirement as

speculative and unsupported.

Moreover, the Agency’s general

approach under the regulatory statutes

that it administers is to require

exhaustion of administrative remedies

prior to judicial review. See, e.g., 40

CFR 71.11(l)(4) (administrative appeal

of final permit decision under title V of

Clean Air Act); 40 CFR 124.19(f)(1)

(administrative appeal of final permit

decision under the Solid Waste Disposal

Act as amended by the Resource

Conservation and Recovery Act (RCRA),

Prevention of Significant Deterioration

(PSD) program in the Clean Air Act, or

Underground Injection Control (UCI)

program in the Safe Drinking Water

Act); and 40 CFR 124.60(g)

(administrative appeal of final permit

decision under National Pollutant

Discharge Elimination System

(NPDES)). Today’s rule is consistent

with that general approach.

Nevertheless, the Agency crafted the

proposed rule for Acid Rain Program

appeals to provide for flexibility to

minimize delay, particularly if future

cases arise where delay will have a

significant, adverse effect. Specifically,

the proposal revised the existing rule to

allow the Administrator, the

Environmental Appeals Board, or the

Presiding Officer (as appropriate) to set

different, reasonable time periods

(which could be shorter or longer than

in the existing rule) for administrativeappeal-related filing by parties. For

example, the 30-day period within

which motions to intervene in part 78

appeals may be filed was changed to

allow a different period to be set. As

explained in the proposal, this approach

gives the Agency ‘‘the ability to

accelerate the appeals proceeding where

delay due to the pending appeal will

have significant, adverse

consequences.’’ 61 FR 68365. The

commenters argued that the Agency

might not always ‘‘share an affected

source’s interest in avoiding’’ such

adverse consequences. However, the

Agency’s approach of allowing

adjustment of the time periods gives the

Agency the authority to accommodate

the need for expeditious administrative

appeal and gives the affected source the

opportunity to show that expedition is

necessary. Particularly in cases where

such a showing is made, the Agency

intends to make reasonable efforts to

minimize the delay caused by the

appeal. The Agency maintains that this

approach reasonably balances, on one

hand, the important role of the

exhaustion requirement and, on the

other, the commenter’s generalized

concern that appeals not cause undue

delay.

The commenters failed to recommend

any other approach but merely stated

that the Agency had not considered

limiting the applicability of the

exhaustion requirement, foregoing the

exhaustion requirement, or setting

tighter time limits on procedural steps.

However, in explaining the need for the

exhaustion requirement (see 56 FR

63033, 58 FR 50104, and 61 FR 68365),

the Agency rejected the notion of

limiting or foregoing the requirement.

Further, recognizing that the major

purpose of providing flexibility in the

time periods for filings is to expedite

administrative appeals, EPA is

modifying the proposal to provide that,

with a few exceptions discussed below,

the time periods involved may be

shortened, but not lengthened.

One of the more important exceptions

to that approach is the period for filing

of administrative appeals.19

Commenters raised concern that an

Administrator’s decision under the Acid

Rain Program would remain ‘‘in limbo’’

during a period of uncertain duration

for the filing of an administrative

appeal. Today’s rule reduces the

standard period for appeal to 30 days

from issuance of the Administrator’s

decision and establishes that as a fixed

period that cannot be changed on a caseby-case basis. The Agency is concerned

that a period shorter than 30 days would

not provide enough time for preparation

of a petition that fully addresses the

issues on appeal, as required under

§ 78.3(c). See, e.g., 40 CFR 78.3(c)(1) and

(3) (requiring a list of material issues

and a clear and concise brief supporting

the petition). This standard appeal

period is consistent with the 30-day

time period for administrative appeal of

other actions of the Administrator under

the Clean Air Act and other statutes

administered by EPA. See, e.g., 40 CFR

71.11(l)(1) (administrative appeal of

final permit decision under title V); 40

CFR 124.19(a) (administrative appeal of

final permit decision under RCRA, PSD

program, or UIC program); and 40 CFR

124.91(a)(1) (administrative appeal of

final permit decision under NPDES).

The reduced time period for filing

appeals reduces the period of

uncertainty on the status of the decision

while still providing a reasonable

opportunity for administrative appeal.20

From the time a decision is issued

until the expiration of the appeal

period, there is necessarily some

uncertainty about the status of the

decision: the parties will not know for

certain whether the decision will be

final until the expiration of the appeal

period. However, this uncertainty is

tempered by the fact, admitted by the

commenters, that the vast majority of

decisions under the Acid Rain Program

have not been, and probably will not be,

appealed. Further, the limitations on the

presenting of new evidence and on the

raising of new issues during an

administrative appeal of a decision for

which there was an opportunity to

comment will encourage parties

interested in a decision to submit

comments. As a result, parties’ positions

will probably be known when the

decision is issued and the likelihood of

appeal can then be evaluated.
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55473

The commenters also suggested that a

decision should be considered operative

during the period between the date the

decision is issued and the expiration of

the appeal period (i.e., 30 days under

today’s rule) unless and until a petition

for administrative appeal is filed with

the Environmental Appeals Board. Prior

to today’s rule revisions, part 78

provided that a decision was operative

from the date of issuance and

throughout the administrative appeal

period, except to the extent the decision

was stayed by the Environmental

Appeals Board or the Presiding Officer

designated by the Board. 40 CFR 78.7(a).

While today’s rule makes a decision

inoperative once a timely petition for

administrative appeal is filed, the status

of the decision prior to appeal or the

running of the period for filing an

appeal is unchanged. The decision itself

(e.g., the approval or denial of an Acid

Rain permit or permit revision or of a

petition under part 75) may specify the

date on which the decision is effective.

Unless the decision itself specifies an

effective date that is different than the

date on which the decision is actually

issued, the decision is operative on the

issuance date unless and until the filing

of a timely petition for administrative

appeal in accordance with part 78. For

example, with regard to a decision

concerning the transfer of allowances to

or from an Allowance Tracking System

Account, the requirement in the existing

rule that the Administrator implement,

within 5 business days of receipt, an

allowance transfer request that he or she

determines to be properly submitted (40

CFR 73.52 and 73.53) is unchanged in

the December 27, 1996 proposal and

today’s rule. In principle, if the transfer

were appealed under part 78, the

Administrator could take action to

render the transfer inoperative pending

appeal. However, appeal in such

circumstances is highly unlikely since

an allowance transfer must be

authorized by the designated

representative of the party transferring

the allowances. See 42 U.S.C. 7651b(b).

For the reasons discussed here and in

the September 24, 1993 and December

27, 1996 proposals, the December 27,

1996 revisions are adopted as modified

above.

IX. Administrative Requirements

A. Executive Order 12866

Under Executive Order 12866, 58 FR

51735 (October 4, 1993), the

Administrator must determine whether

the regulatory action is ‘‘significant’’

and therefore subject to Office of

Management and Budget (OMB) review

and the requirements of the Executive

Order. The Order defines ‘‘significant

regulatory action’’ as one that is likely

to result in a rule that may:

(1) Have an annual effect on the

economy of $100 million or more or

adversely affect in a material way the

economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency;

(3) Materially alter the budgetary

impact of entitlements, grants, user fees,

or loan programs or the rights and

obligations of recipients thereof; or

(4) Raise novel legal or policy issues

arising out of legal mandates, the

President’s priorities, or the principles

set forth in the Executive Order.

Pursuant to the terms of Executive

Order 12866, it has been determined

that this final rule is a ‘‘significant

regulatory action’’ because the rule

seems to raise novel legal or policy

issues. As such, this action was

submitted to OMB for review. Any

written comments from OMB to EPA,

any written EPA response to those

comments, and any changes made in

response to OMB suggestions or

recommendations are included in the

docket. The docket is available for

public inspection at the EPA’s Air

Docket Section, which is listed in the

ADDRESSES section of this preamble.

B. Unfunded Mandates Act

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), Pub. L.

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,

EPA generally must prepare a written

statement, including a cost-benefit

analysis, before promulgating a

proposed or final rule that includes a

federal mandate that may result in

expenditure by State, local, and tribal

governments, in aggregate, or by the

private sector, of $100 million or more

in any one year. Section 205 generally

requires that, before promulgating a rule

for which a written statement must be

prepared, EPA identify and consider a

reasonable number of regulatory

alternatives and 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 explains why that

alternative was not adopted. Finally,

section 203 requires that, before

establishing any regulatory

requirements that may significantly or

uniquely affect small governments, EPA

must have developed a small

government agency plan. The plan must

provide for notifying any potentially

affected small govenments, 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.

Because this final rule is estimated to

result in the expenditure by State, local,

and tribal governments or the private

sector of less than $100 million in any

one year, the Agency has not prepared

a budgetary impact statement or

specifically addressed the selection of

the least costly, most cost-effective, or

least burdensome alternative. Because

small governments will not be

significantly or uniquely affected by this

rule, the Agency is not required to

develop a plan with regard to small

governments.

For the reasons discussed in detail

here and in the proposal (61 FR 68340),

the final rule has the net effect of

reducing the burden of parts 72, 77, and

78 of the Acid Rain regulations on

regulated entities (including both

investor-owned and municipal utilities)

and on State permitting authorities

(which may include State, local, and

tribal governments). For example, the

final rule reduces the burden of

obtaining or providing new units and

retired units exemptions from the Acid

Rain Program and of issuing Acid Rain

permits.

The final revisions to part 73 also do

not have a significant, adverse effect on

regulated entities (including small

entities) and have no effect on State

permitting authorities. The final rule

increases the annual unadjusted basic

allowances for one unit by 2,312

allowances. In a future action, the

Agency will act on the other allowance

revisions in the proposal. Sections

403(a) and 405(a)(3) of the Act set a

nationwide cap on annual allowance

allocations. Because of the requirement

to adhere to the cap, the increase of

allowances under this final rule (if not

offset by the other allowance revisions

when they are finalized) would

eventually necessitate an equal decrease

in the total annual allocations of all

other units. The small decrease (i.e.,

2,312 allowances out of an annual
55474 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

21Because the information collection burden on

industrial utility-units in the absence of this new

exemption was not included in the ICR for the

existing rule, the effect of removing such burden

through the new exemption is not included in the

ICR for today’s rule. Consequently, the ICR for

today’s rule shows an increase in burden even

though exempt industrial utility-units will actually

experience a significant net reduction in the burden

imposed on them by the Acid Rain Program. In

addition, as discussed in this preamble, today’s rule

includes other revisions that will reduce somewhat

the burden of the program on units that are not

exempt. Because the burden reduction for nonexempt units is small relative to the total burden

of the program, the reduction is not reflected in the

ICR for today’s rule.

nationwide cap of about 8.95 million

allowances or about 0.026 percent)

would be spread among all other units,

and so the effect on any one unit would

be insignificant. Moreover, EPA is not,

in today’s rule, adjusting the allocations

of the other units to account for this

small allowance increase.

C. Paperwork Reduction Act

OMB has approved the information

collection requirements contained in

this final rule under the provisions of

the Paperwork Reduction Act, 44 U.S.C.

3501, et seq., and has assigned OMB

control number 2060–0258.

The only additional information

required by this collection of

information is data concerning

industrial utility-units that exercise the

option of applying for the industrial

utility-units exemption established by

today’s rule. If granted, the industrial

utility-units exemption exempts the unit

from most requirements of the Acid

Rain Program, e.g., allowance,

monitoring, and annual compliance

requirements. The requirements from

which qualified industrial utility-units

will be exempt are significantly more

burdensome than the information

collection requirements for obtaining

the exemption.21 An industrial utilityunit seeking the exemption must meet

the information collection requirements,

which involve submission of

information that is necessary, and will

be used, for determining whether the

unit qualifies and will continue to

qualify for the exemption.

The additional information collection

increases the estimated burden, as

compared to the burden under the

existing rule, by an average of 24 hours

per response for an estimated 15 onetime responses. 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 are listed

in 40 CFR part 9. EPA is amending the

table in 40 CFR part 9 of currently

approved ICR control numbers issued

by OMB for various regulations to list

the information requirements contained

in this final rule.

D. Regulatory Flexibility

The Regulatory Flexibility Act, 5

U.S.C. 601, et seq., requires federal

agencies to consider potential impacts

of its regulations on small entities.

Under 5 U.S.C. 604(a), an agency issuing

a notice of final rulemaking under

section 553 of the Administrative

Procedure Act, must prepare and make

available for public comment a final

regulatory flexibility analysis. Such an

analysis is not required if the head of an

agency determines, under 5 U.S.C.

605(b), that the final rule will not have

a significant economic impact on a

substantial number of small entities.

In the preamble of the January 11,

1993 rule, the Administrator certified

that the rule, including the provisions

revised by today’s rule, would not have

a significant, adverse impact on small

entities. 58 FR 3649. Today’s final

revisions are not significant enough to

change the overall economic impact

addressed in the January 11, 1993

preamble. Moreover, as discussed in

this preamble, today’s rule has the net

effect of reducing the burden of the Acid

Rain regulations on regulated entities,

including small entities. For example,

the rule makes it less burdensome to

obtain new units and retired units

exemptions from the Acid Rain

Program. Further, the rule increases the

allowances for one unit, which increase

will have an insignificant effect on other

units’ allowance allocations.

For the reasons discussed above, EPA

has determined that it is not necessary

to prepare a regulatory flexibility

analysis in connection with this final

rule. EPA has determined that this rule

will not have a significant, economic

impact on a substantial number of small

entities.

E. Submission to Congress and the

General Accounting Office

Under 5 U.S.C. 801(a)(1)(A) as added

by the Small Business Regulatory

Enforcement Fairness Act of 1996, EPA

submitted 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 General Accounting

Office prior to publication of the rule in

today’s Federal Register. This rule is

not a ‘‘major rule’’ as defined by 5

U.S.C. 804(2).

F. Miscellaneous

In accordance with section 117 of the

Act, issuance of this final rule was

preceded by consultation with any

appropriate advisory committees,

independent experts, and federal

departments and agencies.

List of Subjects in 40 CFR Parts 9, 72,

73, 74, 75, 77, and 78

Environmental protection, Acid rain,

Administrative practice and procedure,

Air pollution control, Compliance

plans, Continuous emissions monitors,

Electric utilities, Intergovernmental

relations, Nitrogen oxides, Penalties,

Permits, Reporting and recordkeeping

requirements, Sulfur dioxide.

Dated: October 6, 1997.

Carol M. Browner,

Administrator.

For the reasons set out in the

preamble, title 40, chapter I of the Code

of Federal Regulations is amended as

follows:

PART 9—[AMENDED]

1. The authority citation for part 9

continues to read as follows:

Authority: 7 U.S.C. 135, et seq., 136–136y;

15 U.S.C. 2001, 2003, 2005, 2006, 2601–2671;

21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33

U.S.C. 1251, et seq., 1311, 1313d, 1314, 1321,

1326, 1330, 1342, 1344, 1345(d) and (e),

1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971–

1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243,

246, 300f, 300g, 300g–1, 300g–2, 300g–3,

300g–4, 300g–5, 300g–6, 300j–1, 300j–2,

300j–3, 300j–4, 300j–9, 1857, et seq., 6901–

6992k, 7401–7671q, 7542, 9601–9657, 11023,

11048.

§ 9.1 [Amended]

2. Section 9.1 is amended by adding

to the table under Permits Regulation in

the column ‘‘40 CFR Citation’’, after the

entry for ‘‘72.7–72.10’’, the entry

‘‘72.14’’ and adding to the table, as the

corresponding entry in the column

‘‘OMB Control No.’’, the entry ‘‘2060–

0258’’.
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55475

PART 72—[AMENDED]

3. The authority citation for part 72 is

revised to read as follows:

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

§ 72.1 [Amended]

4. Section 72.1 is amended by

removing from paragraph (b) the words

‘‘part 70’’ and adding, in their place, the

words ‘‘parts 70 and 71’’.

5. Section 72.2 is amended by:

removing the definition for ‘‘Dispatch

system’’; adding in alphabetical order

the definitions for ‘‘Affected States’’ and

‘‘Eligible Indian tribe’’; and revising

paragraphs (1)(i) and (2) of the

definition for ‘‘Acid Rain emissions

limitation’’, the definition for ‘‘Acid

Rain permit or permit’’, paragraph (2) of

the definition of ‘‘Coal-fired’’, the

definitions for ‘‘Customer’’ and

‘‘Permitting authority’’ and ‘‘Phase I

unit’’, paragraph (3) of the definition of

‘‘Power purchase commitment’’, and the

definitions for ‘‘Submit or serve’’ and

‘‘State’’ and ‘‘State operating permits

program’’ to read as follows:

§ 72.2 Definitions.

* * * * *

Acid Rain emissions limitation

means:

(1) * * *

(i) The tonnage equivalent of the

allowances authorized to be allocated to

an affected unit for use in a calendar

year under section 404(a)(1), (a)(3), and

(h) of the Act, or the basic Phase II

allowance allocations authorized to be

allocated to an affected unit for use in

a calendar year, or the allowances

authorized to be allocated to an opt-in

source under section 410 of the Act for

use in a calendar year;

* * * * *

(2) For purposes of nitrogen oxides

emissions, the applicable limitation

under part 76 of this chapter.

* * * * *

Acid Rain permit or permit means the

legally binding written document or

portion of such document, including

any permit revisions, that is issued by

a permitting authority under this part

and specifies the Acid Rain Program

requirements applicable to an affected

source and to the owners and operators

and the designated representative of the

affected source or the affected unit.

* * * * *

Affected States means any affected

States as defined in part 71 of this

chapter.

* * * * *

Coal-fired means * * *

(2) For all other purposes under the

Acid Rain Program, except for purposes

of applying part 76 of this chapter, a

unit is ‘‘coal-fired’’ if it uses coal or

coal-derived fuel as its primary fuel

(expressed in mmBtu); provided that, if

the unit is listed in the NADB, the

primary fuel is the fuel listed in the

NADB under the data field

‘‘PRIMEFUEL’’.

* * * * *

Customer means a purchaser of

electricity not for the purposes of

retransmission or resale. For generating

rural electrical cooperatives, the

customers of the distribution

cooperatives served by the generating

cooperative will be considered

customers of the generating cooperative.

* * * * *

Eligible Indian tribe means any

eligible Indian tribe as defined in part

71 of this chapter.

* * * * *

Permitting authority means either:

(1) When the Administrator is

responsible for administering Acid Rain

permits under subpart G of this part, the

Administrator or a delegatee agency

authorized by the Administrator; or

(2) The State air pollution control

agency, local agency, other State agency,

or other agency authorized by the

Administrator to administer Acid Rain

permits under subpart G of this part and

part 70 of this chapter.

* * * * *

Phase I unit means any affected unit,

except an affected unit under part 74 of

this chapter, that is subject to an Acid

Rain emissions reduction requirement

or Acid Rain emissions limitation

beginning in Phase I; or any unit exempt

under § 72.8 that, but for such

exemption, would be subject to an Acid

Rain emissions reduction requirement

or Acid Rain emissions limitation

beginning in Phase I.

* * * * *

Power purchase commitment means a

commitment or obligation of a utility to

purchase electric power from a facility

pursuant to:

* * * * *

(3) A letter of intent or similar

instrument committing to purchase

power (actual electrical output or

generator output capacity) from the

source at a previously offered or lower

price and a power sales agreement

applicable to the source is executed

within the time frame established by the

terms of the letter of intent but no later

than November 15, 1993 or, where the

letter of intent does not specify a time

frame, a power sale agreement

applicable to the source is executed on

or before November 15, 1993; or

* * * * *

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 equivalent means of

dispatch, or transmission, and delivery.

Compliance with any ‘‘submission’’,

‘‘service’’, or ‘‘mailing’’ deadline shall

be determined by the date of dispatch,

transmission, or mailing and not the

date of receipt.

* * * * *

State means one of the 48 contiguous

States and the District of Columbia, any

non-federal authorities in or including

such States or the District of Columbia

(including local agencies, interstate

associations, and State-wide agencies),

and any eligible Indian tribe in an area

in such State or the District of

Columbia. The term ‘‘State’’ shall have

its conventional meaning where such

meaning is clear from the context.

State operating permit program means

an operating permit program that the

Administrator has approved under part

70 of this chapter.

* * * * *

6. Section 72.6 is amended by adding

paragraph (b)(9) and revising paragraphs

(c)(1) and (2) to read as follows:

§ 72.6 Applicability.

* * * * *

(b) * * *

(9) A unit for which an exemption

under § 72.7, § 72.8, or § 72.14 is in

effect. Although such a unit is not an

affected unit, the unit shall be subject to

the requirements of § 72.7, § 72.8, or

§ 72.14, as applicable to the exemption.

(c) A certifying official of an owner or

operator of any unit may petition the

Administrator for a determination of

applicability under this section.

(1) Petition Content. The petition shall

be in writing and include identification

of the unit and relevant facts about the

unit. In the petition, the certifying

official shall certify, by his or her

signature, the statement set forth at

§ 72.21(b)(2). Within 10 business days of

receipt of any written determination by

the Administrator covering the unit, the

certifying official shall provide each

owner or operator of the unit, facility, or

source with a copy of the petition and

a copy of the Administrator’s response.

(2) Timing. The petition may be

submitted to the Administrator at any

time but, if possible, should be

submitted prior to the issuance

(including renewal) of a Phase II Acid

Rain permit for the unit.

* * * * *
55476 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

7. Section 72.7 is revised to read as

follows:

§ 72.7 New units exemption.

(a) Applicability. This section applies

to any new utility unit that has not

previously lost an exemption under

paragraph (f)(4) of this section and that,

in each year starting with the first year

for which the unit is to be exempt under

this section:

(1) Serves during the entire year

(except for any period before the unit

commenced commercial operation) one

or more generators with total nameplate

capacity of 25 MWe or less;

(2) Burns fuel that does not include

any coal or coal-derived fuel (except

coal-derived gaseous fuel with a total

sulfur content no greater than natural

gas); and

(3) Burns gaseous fuel with an annual

average sulfur content of 0.05 percent or

less by weight (as determined under

paragraph (d) of this section) and

nongaseous fuel with an annual average

sulfur content of 0.05 percent or less by

weight (as determined under paragraph

(d) of this section).

(b)(1) Any new utility unit that meets

the requirements of paragraph (a) of this

section and that is not allocated any

allowances under subpart B of part 73

of this chapter shall be exempt from the

Acid Rain Program, except for the

provisions of this section, §§ 72.2

through 72.6, and §§ 72.10 through

72.13.

(2) The exemption under paragraph

(b)(1) of this section shall be effective on

January 1 of the first full calendar year

for which the unit meets the

requirements of paragraph (a) of this

section. By December 31 of the first year

for which the unit is to be exempt under

this section, a statement signed by the

designated representative (authorized in

accordance with subpart B of this part)

or, if no designated representative has

been authorized, a certifying official of

each owner of the unit shall be

submitted to permitting authority

otherwise responsible for administering

a Phase II Acid Rain permit for the unit.

If the Administrator is not the

permitting authority, a copy of the

statement shall be submitted to the

Administrator. The statement, which

shall be in a format prescribed by the

Administrator, shall identify the unit,

state the nameplate capacity of each

generator served by the unit and the

fuels currently burned or expected to be

burned by the unit and their sulfur

content by weight, and state that the

owners and operators of the unit will

comply with paragraph (f) of this

section.

(3) After receipt of the statement

under paragraph (b)(2) of this section,

the permitting authority shall amend

under § 72.83 the operating permit

covering the source at which the unit is

located, if the source has such a permit,

to add the provisions and requirements

of the exemption under paragraphs (a),

(b)(1), (d), and (f) of this section.

(c)(1) Any new utility unit that meets

the requirements of paragraph (a) of this

section and that is allocated one or more

allowances under subpart B of part 73

of this chapter shall be exempt from the

Acid Rain Program, except for the

provisions of this section, §§ 72.2

through 72.6, and §§ 72.10 through

72.13, if each of the following

requirements are met:

(i) The designated representative

(authorized in accordance with subpart

B of this part) or, if no designated

representative has been authorized, a

certifying official of each owner of the

unit submits to the permitting authority

otherwise responsible for administering

a Phase II Acid Rain permit for the unit

a statement (in a format prescribed by

the Administrator) that:

(A) Identifies the unit and states the

nameplate capacity of each generator

served by the unit and the fuels

currently burned or expected to be

burned by the unit and their sulfur

content by weight;

(B) States that the owners and

operators of the unit will comply with

paragraph (f) of this section;

(C) Surrenders allowances equal in

number to, and with the same or earlier

compliance use date as, all of those

allocated to the unit under subpart B of

part 73 of this chapter for the first year

that the unit is to be exempt under this

section and for each subsequent year;

and

(D) Surrenders any proceeds for

allowances under paragraph (c)(1)(i)(C)

or this section withheld from the unit

under § 73.10 of this chapter. If the

Administrator is not the permitting

authority, a copy of the statement shall

be submitted to the Administrator.

(ii) The Administrator deducts from

the unit’s Allowance Tracking System

account allowances under paragraph

(c)(1)(i)(C) of this section and receives

proceeds under paragraph (c)(1)(i)(D) of

this section. Within 5 business days of

receiving a statement in accordance

with paragraph (c)(1)(i) of this section,

the Administrator shall either deduct

the allowances under paragraph

(c)(1)(i)(C) of this section or notify the

owners and operators that there are

insufficient allowances to make such

deductions. Upon completion of such

deductions and receipt of such

proceeds, the Administrator will close

the unit’s Allowance Tracking System

account and notify the designated

representative (or certifying official)

and, if the Administrator is not the

permitting authority otherwise

responsible for administering a Phase II

Acid Rain permit for the unit, the

permitting authority.

(2) The exemption under paragraph

(c)(1) of this section shall be effective on

January 1 of the first full calendar year

for which the requirements of

paragraphs (a) and (c)(1) of this section

are met. After notification by the

Administrator under the third sentence

of paragraph (c)(1)(ii) of this section, the

permitting authority shall amend under

§ 72.83 the operating permit covering

the source at which the unit is located,

if the source has such a permit, to add

the provisions and requirements of the

exemption under paragraphs (a), (c)(1),

(d), and (f) of this section.

(d) Compliance with the requirement

that fuel burned during the year have an

annual average sulfur content of 0.05

percent by weight or less shall be

determined as follows using a method of

determining sulfur content that provides

information with reasonable precision,

reliability, accessibility, and timeliness:

(1) For gaseous fuel burned during the

year, if natural gas is the only gaseous

fuel burned, the requirement is assumed

to be met;

(2) For gaseous fuel burned during the

year where other gas in addition to or

besides natural gas is burned, the

requirement is met if the annual average

sulfur content is equal to or less than

0.05 percent by weight. The annual

average sulfur content, as a percentage

by weight, for the gaseous fuel burned

shall be calculated as follows:

%

%

S

S V d

V d

annual

n n n

n

last

n n

n

last = =

=

∑

∑

1

1

Where:

%Sannual=annual average sulfur content

of the fuel burned during the year

by the unit, as a percentage by

weight;

%Sn=sulfur content of the nth sample of

the fuel delivered during the year to

the unit, as a percentage by weight;

Vn=volume of the fuel in a delivery

during the year to the unit of which

the nth sample is taken, in standard

cubic feet; or, for fuel delivered

during the year to the unit

continuously by pipeline, volume

of the fuel delivered starting from

when the nth sample of such fuel is

taken until the next sample of such

fuel is taken, in standard cubic feet;

dn=density of the nth sample of the fuel

delivered during the year to the
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55477

unit, in lb per standard cubic foot; and

n=each sample taken of the fuel

delivered during the year to the

unit, taken at least once for each

delivery; or, for fuel that is

delivered during the year to the unit

continuously by pipeline, at least

once each quarter during which the

fuel is delivered.

(3) For nongaseous fuel burned during

the year, the requirement is met if the

annual average sulfur content is equal to

or less than 0.05 percent by weight. The

annual average sulfur content, as a

percentage by weight, shall be

calculated using the equation in

paragraph (d)(2) of this section. In lieu

of the factor, volume times density (Vn

dn), in the equation, the factor, mass

(Mn), may be used, where Mn is: mass of

the nongaseous fuel in a delivery during

the year to the unit of which the nth

sample is taken, in lb; or, for fuel

delivered during the year to the unit

continuously by pipeline, mass of the

nongaseous fuel delivered starting from

when the nth sample of such fuel is

taken until the next sample of such fuel

is taken, in lb.

(e)(1) A utility unit that was issued a

written exemption under this section

and that meets the requirements of

paragraph (a) of this section shall be

exempt from the Acid Rain Program,

except for the provisions of this section,

§§ 72.2 through 72.6, and §§ 72.10

through 72.13 and shall be subject to the

requirements of paragraphs (a), (d),

(e)(2), and (f) of this section in lieu of

the requirements set forth in the written

exemption. The permitting authority

shall amend under § 72.83 the operating

permit covering the source at which the

unit is located, if the source has such a

permit, to add the provisions and

requirements of the exemption under

this paragraph (e)(1) and paragraphs (a),

(d), (e)(2), and (f) of this section.

(2) If a utility unit under paragraph

(e)(1) of this section is allocated one or

more allowances under subpart B of part

73 of this chapter, the designated

representative (authorized in

accordance with subpart B of this part)

or, if no designated representative has

been authorized, a certifying official of

each owner of the unit shall submit to

the permitting authority that issued the

written exemption a statement (in a

format prescribed by the Administrator)

meeting the requirements of paragraph

(c)(1)(i)(C) and (D) of this section. The

statement shall be submitted by June 31,

1998 and, if the Administrator is not the

permitting authority, a copy shall be

submitted to the Administrator.

(f) Special Provisions. (1) The owners

and operators and, to the extent

applicable, the designated

representative of a unit exempt under

this section shall:

(i) Comply with the requirements of

paragraph (a) of this section for all

periods for which the unit is exempt

under this section; and

(ii) Comply with the requirements of

the Acid Rain 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.

(2) For any period for which a unit is

exempt under this section, the unit is

not an affected unit under the Acid Rain

Program and parts 70 and 71 of this

chapter and is not eligible to be an optin source under part 74 of this chapter.

As an unaffected unit, the unit shall

continue to be subject to any other

applicable requirements under parts 70

and 71 of this chapter.

(3) For a period of 5 years from the

date the records are created, the owners

and operators of a unit exempt under

this section shall retain at the source

that includes the unit records

demonstrating that the requirements of

paragraph (a) of this section are met.

The 5-year period for keeping records

may be extended for cause, at any time

prior to the end of the period, in writing

by the Administrator or the permitting

authority.

(i) Such records shall include, for

each delivery of fuel to the unit or for

fuel delivered to the unit continuously

by pipeline, the type of fuel, the sulfur

content, and the sulfur content of each

sample taken.

(ii) The owners and operators bear the

burden of proof that the requirements of

paragraph (a) of this section are met.

(4) Loss of exemption. (i) On the

earliest of the following dates, a unit

exempt under paragraphs (b), (c), or (e)

of this section shall lose its exemption

and become an affected unit under the

Acid Rain Program and parts 70 and 71

of this chapter:

(A) The date on which the unit first

serves one or more generators with total

nameplate capacity in excess of 25

MWe;

(B) The date on which the unit burns

any coal or coal-derived fuel except for

coal-derived gaseous fuel with a total

sulfur content no greater than natural

gas; or

(C) January 1 of the year following the

year in which the annual average sulfur

content for gaseous fuel burned at the

unit exceeds 0.05 percent by weight (as

determined under paragraph (d) of this

section) or for nongaseous fuel burned

at the unit exceeds 0.05 percent by

weight (as determined under paragraph

(d) of this section).

(ii) Notwithstanding § 72.30(b) and

(c), the designated representative for a

unit that loses its exemption under this

section shall submit a complete Acid

Rain permit application on the later of

January 1, 1998 or 60 days after the first

date on which the unit is no longer

exempt.

(iii) For the purpose of applying

monitoring requirements under part 75

of this chapter, a unit that loses its

exemption under this section shall be

treated as a new unit that commenced

commercial operation on the first date

on which the unit is no longer exempt.

8. Section 72.8 is revised to read as

follows:

§ 72.8 Retired units exemption.

(a) This section applies to any affected

unit (except for an opt-in source) that is

permanently retired.

(b)(1) Any affected unit (except for an

opt-in source) that is permanently

retired shall be exempt from the Acid

Rain Program, except for the provisions

of this section, §§ 72.2 through 72.6,

§§ 72.10 through 72.13, and subpart B of

part 73 of this chapter.

(2) The exemption under paragraph

(b)(1) of this section shall become

effective on January 1 of the first full

calendar year during which that the unit

is permanently retired. By December 31

of the first year that the unit is to be

exempt under this section, the

designated representative (authorized in

accordance with subpart B of this part),

or, if no designated representative has

been authorized, a certifying official of

each owner of the unit shall submit a

statement to the permitting authority

otherwise responsible for administering

a Phase II Acid Rain permit for the unit.

If the Administrator is not the

permitting authority, a copy of the

statement shall be submitted to the

Administrator. The statement shall state

(in a format prescribed by the

Administrator) that the unit is

permanently retired and will comply

with the requirements of paragraph (d)

of this section.

(3) After receipt of the notice under

paragraph (b)(2) of this section, the

permitting authority shall amend under

§ 72.83 the operating permit covering

the source at which the unit is located,

if the source has such a permit, to add

the provisions and requirements of the

exemption under paragraphs (b)(1) and

(d) of this section.

(c) A unit that was issued a written

exemption under this section and that is

permanently retired shall be exempt

from the Acid Rain Program, except for

the provisions of this section, §§ 72.2

through 72.6, §§ 72.10 through 72.13,

and subpart B of part 73 of this chapter,
55478 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

and shall be subject to the requirements

of paragraph (d) of this section in lieu

of the requirements set forth in the

written exemption. The permitting

authority shall amend under § 72.83 the

operating permit covering the source at

which the unit is located, if the source

has such a permit, to add the provisions

and requirements of the exemption

under this paragraph (c) and paragraph

(d) of this section.

(d) Special Provisions. (1) A unit

exempt under this section shall not emit

any sulfur dioxide and nitrogen oxides

starting on the date that the exemption

takes effect. The owners and operators

of the unit will be allocated allowances

in accordance with subpart B of part 73

of this chapter. If the unit is a Phase I

unit, for each calendar year in Phase I,

the designated representative of the unit

shall submit a Phase I permit

application in accordance with subparts

C and D of this part 72 and an annual

certification report in accordance with

§§ 72.90 through 72.92 and is subject to

§§ 72.95 and 72.96.

(2) A unit exempt under this section

shall not resume operation unless the

designated representative of the source

that includes the unit submits a

complete Acid Rain permit application

under § 72.31 for the unit not less than

24 months prior to the later of January

1, 2000 or the date on which the unit

is first to resume operation.

(3) The owners and operators and, to

the extent applicable, the designated

representative of a unit exempt under

this section shall comply with the

requirements of the Acid Rain 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) For any period for which a unit is

exempt under this section, the unit is

not an affected unit under the Acid Rain

Program and parts 70 and 71 of this

chapter and is not eligible to be an optin source under part 74 of this chapter.

As an unaffected unit, the unit shall

continue to be subject to any other

applicable requirements under parts 70

and 71 of this chapter.

(5) For a period of 5 years from the

date the records are created, the owners

and operators of a unit exempt under

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 prior to the end of the

period, in writing by the Administrator

or the permitting authority. The owners

and operators bear the burden of proof

that the unit is permanently retired.

(6) Loss of exemption. (i) On the

earlier of the following dates, a unit

exempt under paragraph (b) or (c) of this

section shall lose its exemption and

become an affected unit under the Acid

Rain Program and parts 70 and 71 of

this chapter:

(A) The date on which the designated

representative submits an Acid Rain

permit application under paragraph

(d)(2) of this section; or

(B) The date on which the designated

representative is required under

paragraph (d)(2) of this section to

submit an Acid Rain permit application.

(ii) For the purpose of applying

monitoring requirements under part 75

of this chapter, a unit that loses its

exemption under this section shall be

treated as a new unit that commenced

commercial operation on the first date

on which the unit resumes operation.

§ 72.9 [Amended]

9. Section 72.9 is amended by:

a. Removing from paragraphs (b)(1)

and (2) the words ‘‘and section 407 of

the Act and regulations implementing

section 407 of the Act’’;

b. Removing from paragraph (b)(3) the

words ‘‘and regulations implementing

section 407 of the Act’’;

c. Removing from paragraph (c)(6) the

words ‘‘the written exemption under

§§ 72.7 and 72.8’’ and adding in their

place, the words ‘‘an exemption under

§§ 72.7, 72.8, or 72.14’’;

d. Removing from paragraph (f)(1)(ii)

the punctuation ‘‘.’’ and adding in its

place the words ‘‘; provided that to the

extent that part 75 provides for a 3-year

period for recordkeeping, the 3-year

period shall apply.’’;

e. Removing from paragraph (g)(1) the

words ‘‘a written exemption under

§ 72.7 or § 72.8’’ and adding, in their

place, the words ‘‘an exemption under

§§ 72.7, 72.8, or 72.14’’;

f. Removing from paragraph (g)(6) the

words ‘‘part 76 of this chapter’’ and

adding, in their place, the words

‘‘§ 76.11 of this chapter; and

g. Removing from paragraph (h)

introductory text the words ‘‘a written

exemption under §§ 72.7 or 72.8’’ and

adding, in their place, the words ‘‘an

exemption under §§ 72.7, 72.8, or

72.14’’.

§ 72.13 [Amended]

10. Section 72.13 is amended by:

a. Removing paragraphs (a)(1), (a)(5),

(a)(6), (a)(7), (a)(9), and (a)(10);

b. Redesignating paragraph (a)(2) as

paragraph (a)(1);

c. Redesignating paragraph (a)(3) as

paragraph (a)(2);

d. Redesignating paragraph (a)(4) as

paragraph (a)(3), and

e. Redesignating paragraph (a)(8) as

paragraph (a)(4).

11. Section 72.14 is added to read as

follows:

§ 72.14 Industrial utility-units exemption.

(a) Applicability. This section applies

to any non-cogeneration, utility unit

that has not previously lost an

exemption under paragraph (d)(4) of

this section and that meets the following

criteria:

(1) Starting on the date of the signing

of the interconnection agreement under

paragraph (a)(2) of this section and

thereafter, there has been no owner or

operator of the unit, division or

subsidiary or affiliate or parent

company of an owner or operator of the

unit, or combination thereof whose

principal business is the sale,

transmission, or distribution of

electricity or that is a public utility

under the jurisdiction of a State or local

utility regulatory authority;

(2) On or before March 23, 1993, the

owners or operators of the unit entered

into an interconnection agreement and

any related power purchase agreement

with a person whose principal business

is the sale, transmission, or distribution

of electricity or that is a public utility

under the jurisdiction of a State or local

utility regulatory authority, requiring

the generator or generators served by the

unit to produce electricity for sale only

for incidental electricity sales to such

person;

(3) The unit served or serves one or

more generators that, in 1985 or any

year thereafter, actually produced

electricity for sale only for incidental

electricity sales required under the

interconnection agreement and any

related power purchase agreement

under paragraph (a)(2) of this section or

a successor agreement under paragraph

(d)(4)(ii) of this section; and

(4) Incidental electricity sales, under

this section, are total annual sales of

electricity produced by a generator that

do not exceed 10 percent of the

nameplate capacity of that generator

times 8,760 hours per year and do not

exceed 10 percent of the actual annual

electric output of that generator.

(b) Petition for exemption. The

designated representative (authorized in

accordance with subpart B of this part)

of a unit under paragraph (a) of this

section may submit to the permitting

authority otherwise responsible for

administering a Phase II Acid Rain

permit for the unit a complete petition

for an exemption for the unit from the

requirements of the Acid Rain Program,

except for the provisions of this section,

§§ 72.2 through 72.6, and §§ 72.10

through 72.13. If the Administrator is
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55479

not the permitting authority, a copy of

the petition shall be submitted to the

Administrator. A complete petition

shall include the following elements in

a format prescribed by the

Administrator:

(1) Identification of the unit;

(2) A statement that the unit is not a

cogeneration unit;

(3) A list of the current owners and

operators of the unit and any other

owners and operators of the unit,

starting on the date of the signing of the

interconnection agreement under

paragraph (a)(2) of this section, and a

statement that, starting on that date,

there has been no owner or operator of

the unit, division or subsidiary or

affiliate or parent company of an owner

or operator of the unit, or combination

thereof whose principal business is the

sale, transmission, or distribution of

electricity or that is a public utility

under the jurisdiction of a State or local

utility regulatory authority;

(4) A summary of the terms of the

interconnection agreement and any

related power purchase agreement

under paragraph (a)(2) of this section

and any successor agreement under

paragraph (d)(4)(ii) of this section,

including the date on which the

agreement was signed, the amount of

electricity that may be required to be

produced for sale by each generator

served by the unit, and the provisions

for expiration or termination of the

agreement;

(5) A copy of the interconnection

agreement and any related power

purchase agreement under paragraph

(a)(2) of this section and any successor

agreement under paragraph (d)(4)(ii) of

this section;

(6) The nameplate capacity of each

generator served by the unit;

(7) For each year starting in 1985, the

actual annual electrical output of each

generator served by the unit, the total

amount of electricity produced for sales

to any customer by each generator, and

the total amount of electricity produced

and sold as required by the

interconnection agreement and any

related power purchase agreement

under paragraph (a)(2) of this section or

any successor agreement under

paragraph (d)(4)(ii) of this section;

(8) A statement that each generator

served by the unit actually produced

electricity for sale only for incidental

electricity sales (in accordance with

paragraph (a)(4) of this section) required

under the interconnection agreement

and any related power purchase

agreement under paragraph (a)(2) of this

section or any successor agreement

under paragraph (d)(4)(ii) of this

section; and

(9) The special provisions of

paragraph (d) of this section.

(c) Permitting Authority’s Action. (1)

(i) For any unit meeting the

requirements of paragraphs (a) and (b) of

this section, the permitting authority

shall issue an exemption from the

requirements of the Acid Rain Program,

except for the provisions of this section,

§§ 72.2 through 72.6 and §§ 72.10

through 72.13.

(ii) If a petition for exemption is

submitted for a unit but the designated

representative fails to demonstrate that

the requirements of paragraph (a) of this

section are met, the permitting authority

shall deny an exemption under this

section.

(2) In issuing or denying an

exemption under paragraph (c)(1) of this

section, the permitting authority shall

treat the petition for exemption as a

permit application and apply the

procedures used for issuing or denying

draft, proposed (if the Administrator is

not the permitting authority otherwise

responsible for administering a Phase II

Acid Rain permit for the unit), and final

Acid Rain permits.

(3) An exemption issued under

paragraph (c)(1)(i) of this section shall

become effective on January 1 of the

first full year the unit meets the

requirements of paragraph (a) of this

section.

(4) An exemption issued under

paragraph (c)(1)(i) of this section shall

be effective until the date on which the

unit loses the exemption under

paragraph (d)(4) of this section.

(5) After issuance of the exemption

under paragraphs (c)(1) and (2) of this

section, the permitting authority shall

amend under § 72.83 the operating

permit covering the source at which the

unit is located, if the source has such a

permit, to add the provisions and

requirements of the exemption under

paragraphs (c)(1)(i) and (d) of this

section.

(d) Special Provisions. (1) The owners

and operators and, to the extent

applicable, the designated

representative of a unit exempt under

this section shall comply with the

requirements of the Acid Rain 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.

(2) For any period for which a unit is

exempt under this section, the unit is

not an affected unit under the Acid Rain

Program and parts 70 and 71 of this

chapter and is not eligible to be an optin source under part 74 of this chapter.

As an unaffected unit, the unit shall

continue to be subject to any other

applicable requirements under parts 70

and 71 of this chapter.

(3) For a period of 5 years from the

date the records are created, the owners

and operators of a unit exempt under

this section shall retain at the source

that includes the unit records

demonstrating that the requirements of

paragraph (a) of this section are met.

The owners and operators bear the

burden of proof that the requirements of

this section are met. The 5-year period

for keeping records may be extended for

cause, at any time prior to the end of the

period, in writing by the Administrator

or the permitting authority. Such

records shall include the following

information:

(i) A copy of the interconnection

agreement and any related power

purchase agreement under paragraph

(a)(2) of this section and any successor

agreement under paragraph (d)(4)(ii) of

this section;

(ii) The nameplate capacity of each

generator served by the unit; and

(iii) For each year starting in 1985, the

actual annual electrical output of each

generator served by the unit, the total

amount of electricity produced for sales

to any customer by each generator, and

the total amount of electricity produced

and sold as required by the

interconnection agreement and any

related power purchase agreement

under paragraph (a)(2) of this section or

any successor agreement under

paragraph (d)(4)(ii) of this section.

(4) Loss of exemption. (i) On the

earliest of the following dates, a unit

exempt under this section shall lose its

exemption and become an affected unit

under the Acid Rain Program and parts

70 and 71 of this chapter:

(A) The first date on which there is an

owner or operator of the unit, division

or subsidiary or affiliate or parent

company of an owner or operator of the

unit, or combination thereof, whose

principal business is the sale,

transmission, or distribution of

electricity or that is a public utility

under the jurisdiction of a State or local

utility regulatory authority.

(B) If any generator served by the unit

actually produces any electricity for sale

other than for sale to the person

specified as the purchaser in the

interconnection agreement or any

related power purchase agreement

under paragraph (a)(2) of this section or

a successor agreement under paragraph

(d)(4)(ii) of this section, then the day

after the date on which such electricity

is sold.

(C) If any generator served by the unit

actually produces any electricity for sale

to the person specified as the purchaser

in the interconnection agreement or any
55480 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

related power purchase agreement

under paragraph (a)(2) of this section or

a successor agreement under paragraph

(d)(4)(ii) of this section where such sale

is not required under that

interconnection agreement or related

power purchase agreement or successor

agreement or where such sale will result

in total sales for a calendar year

exceeding 10 percent of the nameplate

capacity of that generator times 8,769

hours per year, then the day after the

date on which such sale is made.

(D) If any generator served by the unit

actually produces any electricity for sale

to the person specified as the purchaser

in the interconnection agreement or

related power purchase agreement

under paragraph (a)(2) of this section or

a successor agreement under paragraph

(d)(4)(ii) of this section where such sale

results in total sales for a calendar year

exceeding 10 percent of the actual

electric output of the generator for that

year, then January 1 of the year after

such year.

(E) If the interconnection agreement

or related power purchase agreement

under paragraph (a)(2) of this section

expires or is terminated, no successor

agreement under paragraph (d)(4)(ii) of

this section is in effect, and any

generator served by the unit actually

produces any electricity for sale, then

the day after the date on which such

electricity is sold.

(ii) A ‘‘successor agreement’’ is an

agreement that:

(A) Modifies, replaces or supersedes

the interconnection agreement or related

power purchase agreement under

paragraph (a)(2) of this section;

(B) Is between the owners and

operators of the unit and a person that

is contractually obligated to sell

electricity to the owners and operators

of the unit and either whose principal

business is the sale, transmission, or

distribution of electricity or that is a

public utility under the jurisdiction of a

State or local utility regulatory

authority; and

(C) Requires the generator served by

the unit to produce electricity for sale to

the person under paragraph (d)(4)(ii)(B)

of this section and only for incidental

electricity sales, such that the total

amount of electricity that such generator

is required to produce for sale under the

interconnection agreement or related

power purchase agreement (to the extent

they are still in effect) and the successor

agreement shall not exceed the total

amount of electricity that such generator

was required to produce for sale under

the interconnection agreement or related

power purchase agreement under

paragraph (a)(2) of this section.

(iii) Notwithstanding § 72.30(b) and

(c), the designated representative for a

unit that loses its exemption under this

section shall submit a complete Acid

Rain permit application on the later of

January 1, 1998 or 60 days after the first

date on which the unit is no longer

exempt.

(iv) For the purpose of applying

monitoring requirements under part 75

of this chapter, a unit that loses its

exemption under this section shall be

treated as a new unit that commenced

commercial operation on the first date

on which the unit is no longer exempt.

12. Section 72.22 is amended by

adding paragraph (e) to read as follows:

§ 72.22 Alternate designated

representative.

* * * * *

(e)(1) Notwithstanding paragraph (a)

of this section, the certification of

representation may designate two

alternate designated representatives for

a unit if:

(i) The unit and at least one other

unit, which are located in two or more

of the contiguous 48 States or the

District of Columbia, each have a utility

system that is a subsidiary of the same

company; and

(ii) The designated representative for

the units under paragraph (e)(1)(i) of

this section submits a NOX averaging

plan under § 76.11 of this chapter that

covers such units and is approved by

the permitting authority, provided that

the approved plan remains in effect.

(2) Except in this paragraph (e),

whenever the term ‘‘alternate designated

representative’’ is used under the Acid

Rain Program, the term shall be

construed to include either of the

alternate designated representatives

authorized under this paragraph (e).

Except in this section, § 72.23, and

§ 72.24, whenever the term ‘‘designated

representative’’ is used under the Acid

Rain Program, the term shall be

construed to include either of the

alternate designated representatives

authorized under this paragraph (e).

13. Section 72.24 is amended by

revising paragraphs (a)(3), (5), (10), and

(11) to read as follows:

§ 72.24 Certificate of representation.

(a) * * *

(3) A list of the owners and operators

of the affected source and of each

affected unit at the source.

* * * * *

(5) The following statement: ‘‘I certify

that I have given notice of the

agreement, selecting me as the

‘designated representative’ for the

affected source and each affected unit at

the source identified in this certificate

of representation, in a newspaper of

general circulation in the area where the

source is located or in a State

publication designed to give general

public notice.’’

* * * * *

(10) If an alternate designated

representative is authorized in the

certificate of representation, the

following statement: ‘‘The agreement by

which I was selected as the alternate

designated representative includes a

procedure for the owners and operators

of the source and affected units at the

source to authorize the alternate

designated representative to act in lieu

of the designated representative.’’

(11) The signature of the designated

representative and any alternate

designated representative who is

authorized in the certificate of

representation and the date signed.

* * * * *

§ 72.25 [Amended]

14. Section 72.25 is amended by

removing from paragraph (a) the words

‘‘submitted to’’ and adding, in their

place, the words ‘‘received by’’.

15. Section 72.30 is amended by

removing paragraph (b)(3) and adding

paragraph (e) to read as follows:

§ 72.30 Requirement to apply.

* * * * *

(e) Where two or more affected units

are located at a source, the permitting

authority may, in its sole discretion,

allow the designated representative of

the source to submit, under paragraph

(a) or (c) of this section, two or more

Acid Rain permit applications covering

the units at the source, provided that

each affected unit is covered by one and

only one such application.

§ 72.31 [Amended]

16. Section 72.31 is amended by

removing from paragraph (b) the words

‘‘Phase II unit’’ and adding in their

place the words ‘‘affected unit (except

for an opt-in source)’’.

17. Section 72.32 is amended by

revising paragraphs (b) and (c) and

adding paragraph (d) to read as follows:

§ 72.32 Permit application shield and

binding effect of permit application.

* * * * *

(b) Prior to the date on which an Acid

Rain permit is issued or denied, an

affected unit governed by and operated

in accordance with the terms and

requirements of a timely and complete

Acid Rain permit application shall be

deemed to be operating in compliance

with the Acid Rain Program.

(c) A complete Acid Rain permit

application shall be binding on the
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55481

owners and operators and the

designated representative of the affected

source and the affected units covered by

the permit application and shall be

enforceable as an Acid Rain permit from

the date of submission of the permit

application until the issuance or denial

of an Acid Rain permit covering the

units.

(d) If agency action concerning a

permit is appealed under part 78 of this

chapter, issuance or denial of the permit

shall occur when the Administrator

takes final agency action subject to

judicial review.

18. Section 72.33 is amended by

adding a sentence to the end of

paragraph (b)(3) to read as follows:

§ 72.33 Identification of dispatch system.

* * * * *

(b) * * *

(3) * * * A designated representative

may request, and the Administrator may

grant at his or her discretion, an

exemption allowing the submission of

an identification of dispatch system

after the otherwise applicable deadline

for such submission.

* * * * *

§ 72.40 [Amended]

19. Section 72.40 is amended by:

a. Removing from paragraph (a)(2) the

words ‘‘applicable limitation

established by regulations implementing

section 407 of the Act’’ and adding, in

their place, the words ‘‘applicable

emission limitation under §§ 76.5, 76.6,

or 76.7 of this chapter’’;

b. Removing from paragraph (a)(2) the

words ‘‘section 407 of the Act and the

regulations implementing section 407’’

and adding, in their place, the words

‘‘part 76 of this chapter’’;

c. removing from paragraph (b)(1) the

words ‘‘an NOX averaging plan

contained in part 76 of this chapter’’

and adding, in their place, the words ‘‘a

NOX averaging plan under § 76.11 of

this chapter’’; and

d. Removing from paragraphs (c)

introductory text, (c)(1), and (d)(1) the

words ‘‘regulations implementing

section 407 of the Act’’ and adding, in

their place, the words ‘‘part 76 of this

chapter’’.

§ 72.41 [Amended]

20. Section 72.41 is amended by:

removing from paragraph (b)(3) the

words ‘‘90 days’’ and adding, in their

place, the words ‘‘6 months (or 90 days

if submitted in accordance with

§ 72.82)’’; and removing from paragraph

(e)(1)(ii) the words ‘‘section 407 of the

Act and regulations implementing

section 407 of the Act’’ and adding, in

their place, the words ‘‘part 76 of this

chapter’’.

§ 72.43 [Amended]

21. Section 72.43 is amended by:

removing from paragraph (b)(2)(iii)(B)

the words ‘‘under § 72.92’’ and adding,

in their place, the words ‘‘under

§ 72.91(b)’’; removing from paragraph

(b)(4) the words ‘‘90 days’’ and adding,

in their place, the words ‘‘6 months (or

90 days if submitted in accordance with

§ 72.82 or § 72.83)’’; and removing from

paragraph (f)(1)(i) the words ‘‘section

407 of the Act and regulations

implementing section 407 of the Act’’

and adding, in their place, the words

‘‘part 76 of this chapter’’.

§ 72.44 [Amended]

22. Section 72.44 is amended by:

a. Removing from paragraphs (g)(1)(i)

and (2) the words ‘‘proposed permit

revision’’ and adding, in their place, the

words ‘‘requested permit modification’’;

b. Adding between the first and

second sentences of paragraphs (g)(1)(i)

and (2) the words ‘‘If the Administrator

is not the permitting authority, a copy

of the requested permit modification

shall be submitted to the

Administrator.’’;

c. Removing from paragraph (g)(2)(iii)

the words ‘‘December 21’’ and adding,

in their place, the words ‘‘December

31’’; and

d. Removing from paragraph (h)(1)(ii)

the words ‘‘section 407 of the Act and

regulations implementing section 407 of

the Act’’ and adding, in their place, the

words ‘‘part 76 of this chapter’’.

§ 72.51 [Amended]

23. Section 72.51 is amended by:

removing the words ‘‘parts 73, 75, 77,

and 78 of this chapter, and regulations

implementing section 407 of the Act’’

and adding, in their place, the words

‘‘parts 73, 74, 75, 76, 77, and 78 of this

chapter’’; and removing the words ‘‘of

this part’’.

24. Section 72.60 is revised to read as

follows:

§ 72.60 General.

(a) Scope. This subpart and parts 74,

76, and 78 of this chapter contain the

procedures for federal issuance of Acid

Rain permits for Phase I of the Acid

Rain Program and Phase II for sources

for which the Administrator is the

permitting authority under § 72.74.

(1) Notwithstanding the provisions of

part 71 of this chapter, the provisions of

subparts C, D, E, F, and H of this part

and of parts 74, 76, and 78 of this

chapter shall govern the following

requirements for Acid Rain permit

applications and permits: submission,

content, and effect of permit

applications; content and requirements

of compliance plans and compliance

options; content of permits and permit

shield; procedures for determining

completeness of permit applications;

issuance of draft permits; administrative

record; public notice and comment and

public hearings on draft permits;

response to comments on draft permits;

issuance and effectiveness of permits;

permit revisions; and administrative

appeal procedures. The provisions of

part 71 of this chapter concerning

Indian tribes, delegation of a part 71

program, affected State review of draft

permits, and public petitions to reopen

a permit for cause shall apply to Acid

Rain permit applications and permits.

(2) The procedures in this subpart do

not apply to the issuance of Acid Rain

permits by State permitting authorities

with operating permit programs

approved under part 70 of this chapter,

except as expressly provided in subpart

G of this part.

(b) Permit Decision Deadlines. Except

as provided in § 72.74(c)(1)(i), the

Administrator will issue or deny an

Acid Rain permit under § 72.69(a)

within 6 months of receipt of a complete

Acid Rain permit application submitted

for a unit, in accordance with § 72.21, at

the U.S. EPA Regional Office for the

Region in which the source is located.

(c) Use of Direct Final Procedures.

The Administrator may, in his or her

discretion, issue, as single document, a

draft Acid Rain permit in accordance

with § 72.62 and an Acid Rain permit in

final form and may provide public

notice of the opportunity for public

comment on the draft Acid Rain permit

in accordance with § 72.65. The

Administrator may provide that, if no

significant, adverse comment on the

draft Acid Rain permit is timely

submitted, the Acid Rain permit will be

deemed to be issued on a specified date

without further notice and, if such

significant, adverse comment is timely

submitted, an Acid Rain permit or

denial of an Acid Rain permit will be

issued in accordance with § 72.69. Any

notice provided under this paragraph (c)

will include a description of the

procedure in the prior sentence.

25. Section 72.61 is amended by

revising paragraphs (a) and (b)(2)(i) and

adding paragraph (b)(3) to read as

follows:

§ 72.61 Completeness.

(a) Determination of Completeness.

The Administrator will determine

whether the Acid Rain permit

application is complete within 60 days

of receipt by the U.S. EPA Regional

Office for the Region in which the

source is located. The permit

application shall be deemed to be

complete if the Administrator fails to
55482 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

notify the designated representative to

the contrary within 60 days of receipt.

(b) * * *

(2)(i) Within a reasonable period

determined by the Administrator, the

designated representative shall submit

the information required under

paragraph (b)(1) of this section.

* * * * *

(3) Any designated representative

who fails to submit any relevant

information or who has submitted

incorrect information in a permit

application shall, upon becoming aware

of such failure or incorrect submittal,

promptly submit such supplementary

information or corrected information to

the Administrator.

26. Section 72.65 is amended by

revising paragraphs (b)(1)(ii), (b)(1)(iii),

and (b)(2) and by removing paragraph

(b)(1)(iv) to read as follows:

§ 72.65 Public notice of opportunities of

public comment.

* * * * *

(b) * * *

(1) * * *

(ii) The air pollution control agencies

of affected States; and

(iii) Any interested person.

(2) Giving notice by publication in the

Federal Register and in a newspaper of

general circulation in the area where the

source covered by the Acid Rain permit

application is located or in a State

publication designed to give general

public notice. Notwithstanding the prior

sentence, if a draft permit requires the

affected units at a source to comply with

§ 72.9(c)(1) and to meet any applicable

emission limitation for NOX under

§§ 76.5, 76.6, 76.7, 76.8, or 76.11 of this

chapter and does not include for any

unit a compliance option under § 72.44,

part 74 of this chapter, or § 76.10 of this

chapter, the Administrator may, in his

or her discretion, provide notice of the

draft permit by Federal Register

publication and may omit notice by

newspaper or State publication.

* * * * *

27. Section 72.69 is amending by

revising paragraph (a) to read as follows:

§ 72.69 Issuance and effective date of Acid

Rain permits.

(a) After the close of the public

comment period, the Administrator will

issue or deny an Acid Rain permit. The

Administrator will serve a copy of any

Acid Rain permit and the response to

comments on the designated

representative for the source covered by

the issuance or denial and serve written

notice of the issuance or denial on the

air pollution control agencies of affected

States and any interested person. The

Administrator will also give notice in

the Federal Register.

* * * * *

28. Section 72.70 is revised to read as

follows:

§ 72.70 Relationship to title V operating

permit program.

(a) Scope. This subpart sets forth

criteria for approval of State operating

permit programs and acceptance of State

Acid Rain programs, the procedure for

including State Acid Rain programs in

a title V operating permit program, and

the requirements with which State

permitting authorities with accepted

programs shall comply, and with which

the Administrator will comply in the

absence of an accepted State program, to

issue Phase II Acid Rain permits.

(b) Relationship to operating permit

program. Each State permitting

authority with an affected source shall

act in accordance with this part and

parts 70, 74, 76, and 78 of this chapter

for the purpose of incorporating Acid

Rain Program requirements into each

affected source’s operating permit or for

issuing exemptions under § 72.14. To

the extent that this part or part 74, 76,

or 78 of this chapter is inconsistent with

the requirements of part 70 of this

chapter, this part and parts 74, 76, and

78 of this chapter shall take precedence

and shall govern the issuance, denial,

revision, reopening, renewal, and

appeal of the Acid Rain portion of an

operating permit.

29. Section 72.71 is revised to read as

follows:

§ 72.71 Acceptance of State Acid Rain

programs—general.

(a) Each State shall submit, to the

Administrator for review and

acceptance, a State Acid Rain program

meeting the requirements of §§ 72.72

and 72.73.

(b) The Administrator will review

each State Acid Rain program or portion

of a State Acid Rain program and

accept, by notice in the Federal

Register, all or a portion of such

program to the extent that it meets the

requirements of §§ 72.72 and 72.73. At

his or her discretion, the Administrator

may accept, with conditions and by

notice in the Federal Register, all or a

portion of such program despite the

failure to meet requirements of §§ 72.72

and 72.73. On the later of the date of

publication of such notice in the

Federal Register or the date on which

the State operating permit program is

approved under part 70 of this chapter,

the State Acid Rain program accepted

by the Administrator will become a

portion of the approved State operating

permit program. Before accepting or

rejecting all or a portion of a State Acid

Rain Program, the Administrator will

provide notice and opportunity for

public comment on such acceptance or

rejection.

(c)(1) Except as provided in paragraph

(c)(2) of this section, the Administrator

will issue all Acid Rain permits for

Phase I. The Administrator reserves the

right to delegate the remaining

administration and enforcement of Acid

Rain permits for Phase I to approved

State operating permit programs.

(2) The State permitting authority will

issue an opt-in permit for a combustion

or process source subject to its

jurisdiction if, on the date on which the

combustion or process source submits

an opt-in permit application, the State

permitting authority has opt-in

regulations accepted under paragraph

(b) of this section and an approved

operating permits program under part

70 of this chapter.

30. Section 72.72 is amended by:

a. Removing paragraphs (b)(1)(i)(C),

(b)(1)(vii), (b)(1)(viii), (b)(1)(xi),

(b)(1)(xiii), (b)(5)(vii), (b)(7), and (b)(8);

b. Removing the last sentence of

paragraph (b)(5)(v);

c. Redesignating paragraphs (b)(1)(ix)

and (x) as paragraphs (b)(1)(vii) and

(viii) respectively;

d. Redesignating paragraph (b)(1)(xii)

as paragraph (b)(1)(ix);

e. Redesignating paragraph (b)(1)(xiv)

as paragraph (b)(1)(x);

f. Removing and reserving paragraph

(b)(5)(ii); and

g. Revising the heading, the

introductory text, and paragraphs (b)

introductory text, (b)(1)(ii), (b)(1)(iii),

(b)(1)(iv), (b)(1)(v), (b)(1)(vi), the first

sentence of (b)(5)(i), (b)(5)(vi), and (b)(6)

to read as follows:

§ 72.72 Criteria for State operating permit

program.

A State operating permit program

(including a State Acid Rain program)

shall meet the following criteria. Any

aspect of a State operating permits

program or any implementation of a

State operating permit program that fails

to meet these criteria shall be grounds

for nonacceptance or withdrawal of all

or part of the Acid Rain portion of an

approved State operating permit

program by the Administrator or for

disapproval or withdrawal of approval

of the State operating permit program by

the Administrator.

* * * * *

(b) The State operating permit

program shall require the following

provisions, which are adopted to the

extent that this paragraph (b) is

incorporated by reference or is
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55483

otherwise included in the State

operating permit program.

(1) * * *

(ii) Draft Permit. (A) The State

permitting authority shall prepare the

draft Acid Rain permit in accordance

with subpart E of this part and part 76

of this chapter or, for a combustion or

process source, with subpart B of part

74 of this chapter, or deny a draft Acid

Rain permit.

(B) Prior to issuance of a draft permit

for a combustion or process source, the

State permitting authority shall provide

the designated representative of a

combustion or process source an

opportunity to confirm its intention to

opt-in, in accordance with § 74.14 of

this chapter.

(iii) Public Notice and Comment

Period. Public notice of the issuance or

denial of the draft Acid Rain permit and

the opportunity to comment and request

a public hearing shall be given by

publication in a newspaper of general

circulation in the area where the source

is located or in a State publication

designed to give general public notice.

Notwithstanding the prior sentence, if a

draft permit requires the affected units

at a source to comply with § 72.9(c)(1)

and to meet any applicable emission

limitation for NOX under §§ 76.5, 76.6,

76.7, 76.8, or 76.11 of this chapter and

does not include for any unit a

compliance option under § 72.44, part

74 of this chapter, or § 76.10 of this

chapter, the State permitting authority

may, in its discretion, provide notice by

serving notice on persons entitled to

receive a written notice and may omit

notice by newspaper or State

publication.

(iv) Proposed permit. The State

permitting authority shall incorporate

all changes necessary and issue a

proposed Acid Rain permit in

accordance with subpart E of this part

and part 76 of this chapter or, for a

combustion or process source, with

subpart B of part 74 of this chapter, or

deny a proposed Acid Rain permit.

(v) Direct proposed procedures. The

State permitting authority may, in its

discretion, issue, as a single document,

a draft Acid Rain permit in accordance

with paragraph (b)(1)(ii) of this section

and a proposed Acid Rain permit and

may provide public notice of the

opportunity for public comment on the

draft Acid Rain permit in accordance

with paragraph (b)(1)(iii) of this section.

The State permitting authority may

provide that, if no significant, adverse

comment on the draft Acid Rain permit

is timely submitted, the proposed Acid

Rain permit will be deemed to be issued

on a specified date without further

notice and, if such significant, adverse

comment is timely submitted, a

proposed Acid Rain permit or denial of

a proposed Acid Rain permit will be

issued in accordance with paragraph

(b)(1)(iv) of this section. Any notice

provided under this paragraph (b)(1)(v)

shall include a description of the

procedure in the prior sentence.

(vi) Acid Rain Permit Issuance.

Following the Administrator’s review of

the proposed Acid Rain permit, the

State permitting authority shall or,

under part 70 of this chapter, the

Administrator will, incorporate any

required changes and issue or deny the

Acid Rain permit in accordance with

subpart E of this part and part 76 of this

chapter or, for a combustion or process

source, with subpart B of part 74 of this

chapter.

* * * * *

(5) * * * (i) Appeals of the Acid Rain

portion of an operating permit issued by

the State permitting authority that do

not challenge or involve decisions or

actions of the Administrator under this

part or part 73, 74, 75, 76, 77, or 78 of

this chapter shall be conducted

according to procedures established by

the State in accordance with part 70 of

this chapter. * * *

* * * * *

(vi) A failure of the State permitting

authority to issue an Acid Rain permit

in accordance with § 72.73(b)(1) or, with

regard to combustion or process sources,

§ 74.14(b)(6) of this chapter shall be

ground for filing an appeal.

(6) Industrial Utility-Units Exemption.

The State permitting authority shall act

in accordance with § 72.14 on any

petition for exemption from

requirements of the Acid Rain Program.

31. Section 72.73 is revised to read as

follows:

§ 72.73 State issuance of Phase II permits.

(a) State Permit Issuance. (1) A State

that is authorized to administer and

enforce an operating permit program

under part 70 of this chapter and that

has a State Acid Rain program accepted

by the Administrator under § 72.71 shall

be responsible for administering and

enforcing Acid Rain permits effective in

Phase II for all affected sources:

(i) That are located in the geographic

area covered by the operating permits

program; and

(ii) To the extent that the accepted

State Acid Rain program is applicable.

(2) In administering and enforcing

Acid Rain permits, the State permitting

authority shall comply with the

procedures for issuance, revision,

renewal, and appeal of Acid Rain

permits under this subpart.

(b) Permit Issuance Deadline. (1) A

State, to the extent that it is responsible

under paragraph (a) of this section as of

December 31, 1997 (or such later date as

the Administrator may establish) for

administering and enforcing Acid Rain

permits, shall:

(i) On or before December 31, 1997,

issue an Acid Rain permit for Phase II

covering the affected units (other than

opt-in sources) at each source in the

geographic area for which the program

is approved; provided that the

designated representative of the source

submitted a timely and complete Acid

Rain permit application in accordance

with § 72.21.

(ii) On or before January 1, 1999, for

each unit subject to an Acid Rain NOX

emissions limitation, amend the Acid

Rain permit under § 72.83 and add any

NOX early election plan that was

approved by the Administrator under

§ 76.8 of this chapter and has not been

terminated and reopen the Acid Rain

permit and add any other Acid Rain

Program nitrogen oxides requirements;

provided that the designated

representative of the affected source

submitted a timely and complete Acid

Rain permit application for nitrogen

oxides in accordance with § 72.21.

(2) Each Acid Rain permit issued in

accordance with this section shall have

a term of 5 years commencing on its

effective date; provided that, at the

discretion of the permitting authority,

the first Acid Rain permit for Phase II

issued to a source may have a term of

less than 5 years where necessary to

coordinate the term of such permit with

the term of an operating permit to be

issued to the source under a State

operating permit program. Each Acid

Rain permit issued in accordance with

paragraph (b)(1) of this section shall

take effect by the later of January 1,

2000, or, where the permit governs a

unit under § 72.6(a)(3) of this part, the

deadline for monitor certification under

part 75 of this chapter.

32. Section 72.74 is revised to read as

follows:

§ 72.74 Federal issuance of Phase II

permits.

(a)(1) The Administrator will be

responsible for administering and

enforcing Acid Rain permits for Phase II

for any affected sources to the extent

that a State permitting authority is not

responsible, as of January 1, 1997 or

such later date as the Administrator may

establish, for administering and

enforcing Acid Rain permits for such

sources under § 72.73(a).

(2) After and to the extent the State

permitting authority becomes

responsible for administering and

enforcing Acid Rain permits under

§ 72.73(a), the Administrator will
55484 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

suspend federal administration of Acid

Rain permits for Phase II for sources and

units to the extent that they are subject

to the accepted State Acid Rain

program, except as provided in

paragraph (b)(4) of this section.

(b)(1) The Administrator will

administer and enforce Acid Rain

permits effective in Phase II for sources

and units during any period that the

Administrator is administering and

enforcing an operating permit program

under part 71 of this chapter for the

geographic area in which the sources

and units are located.

(2) The Administrator will administer

and enforce Acid Rain permits effective

in Phase II for sources and units

otherwise subject to a State Acid Rain

program under § 72.73(a) if:

(i) The Administrator determines that

the State permitting authority is not

adequately administering or enforcing

all or a portion of the State Acid Rain

program, notifies the State permitting

authority of such determination and the

reasons therefore, and publishes such

notice in the Federal Register;

(ii) The State permitting authority

fails either to correct the deficiencies

within a reasonable period (established

by the Administrator in the notice under

paragraph (b)(2)(i) of this section) after

issuance of the notice or to take

significant action to assure adequate

administration and enforcement of the

program within a reasonable period

(established by the Administrator in the

notice) after issuance of the notice; and

(iii) The Administrator publishes in

the Federal Register a notice that he or

she will administer and enforce Acid

Rain permits effective in Phase II for

sources and units subject to the State

Acid Rain program or a portion of the

program. The effective date of such

notice shall be a reasonable period

(established by the Administrator in the

notice) after the issuance of the notice.

(3) When the Administrator

administers and enforces Acid Rain

permits under paragraph (b)(1) or (b)(2)

of this section, the Administrator will

administer and enforce each Acid Rain

permit issued under the State Acid Rain

program or portion of the program until,

and except to the extent that, the permit

is replaced by a permit issued under

this section. After the later of the date

for publication of a notice in the Federal

Register that the State operating permit

program is currently approved by the

Administrator or that the State Acid

Rain program or portion of the program

is currently accepted by the

Administrator, the Administrator will

suspend federal administration of Acid

Rain permits effective in Phase II for

sources and units to the extent that they

are subject to the State Acid Rain

program or portion of the program,

except as provided in paragraph (b)(4) of

this section.

(4) After the State permitting

authority becomes responsible for

administering and enforcing Acid Rain

permits effective in Phase II under

§ 72.73(a), the Administrator will

continue to administer and enforce each

Acid Rain permit issued under

paragraph (a)(1), (b)(1), or (b)(2) of this

section until, and except to the extent

that, the permit is replaced by a permit

issued under the State Acid Rain

program. The State permitting authority

may replace an Acid Rain permit issued

under paragraph (a)(1), (b)(1), or (b)(2) of

this section by issuing a permit under

the State Acid Rain program by the

expiration of the permit under

paragraph (a)(1), (b)(1), or (b)(2) of this

section. The Administrator may retain

jurisdiction over the Acid Rain permits

issued under paragraph (a)(1), (b)(1), or

(b)(2) of this section for which the

administrative or judicial review

process is not complete and will address

such retention of jurisdiction in a notice

in the Federal Register.

(c) Permit Issuance Deadline. (1)(i) On

or before January 1, 1998, the

Administrator will issue an Acid Rain

permit for Phase II setting forth the Acid

Rain Program sulfur dioxide

requirements for each affected unit

(other than opt-in sources) at a source

not under the jurisdiction of a State

permitting authority that is responsible,

as of January 1, 1997 (or such later date

as the Administrator may establish),

under § 72.73(a) of this section for

administering and enforcing Acid Rain

permits with such requirements;

provided that the designated

representative for the source submitted

a timely and complete Acid Rain permit

application in accordance with § 72.21.

The failure by the Administrator to

issue a permit in accordance with this

paragraph shall be grounds for the filing

of an appeal under part 78 of this

chapter.

(ii) Each Acid Rain permit issued in

accordance with this section shall have

a term of 5 years commencing on its

effective date. Each Acid Rain permit

issued in accordance with paragraph

(c)(1)(i) of this section shall take effect

by the later of January 1, 2000 or, where

a permit governs a unit under

§ 72.6(a)(3), the deadline for monitor

certification under part 75 of this

chapter.

(2) Nitrogen Oxides. Not later than 6

months following submission by the

designated representative of an Acid

Rain permit application for nitrogen

oxides, the Administrator will amend

under § 72.83 the Acid Rain permit and

add any NOX early election plan that

was approved under § 76.8 of this

chapter and has not been terminated

and reopen the Acid Rain permit for

Phase II and add any other Acid Rain

Program nitrogen oxides requirements

for each affected source not under the

jurisdiction of a State permitting

authority that is responsible, as of

January 1, 1997 (or such later date as the

Administrator may establish), under

§ 72.73(a) for issuing Acid Rain permits

with such requirements; provided that

the designated representative for the

source submitted a timely and complete

Acid Rain permit application for

nitrogen oxides in accordance with

§ 72.21.

(d) Permit Issuance. (1) The

Administrator may utilize any or all of

the provisions of subparts E and F of

this part to administer Acid Rain

permits as authorized under this section

or may adopt by rulemaking portions of

a State Acid Rain program in

substitution of or in addition to

provisions of subparts E and F of this

part to administer such permits. The

provisions of Acid Rain permits for

Phase I or Phase II issued by the

Administrator shall not be applicable

requirements under part 70 of this

chapter.

(2) The Administrator may delegate

all or part of his or her responsibility,

under this section, for administering

and enforcing Phase II Acid Rain

permits or opt-in permits to a State.

Such delegation will be made consistent

with the requirements of this part and

the provisions governing delegation of a

part 71 program under part 71 of this

chapter.

33. Section 72.80 is amended by

revising paragraphs (a), (b), (d), (e), (f),

and (g) to read as follows:

§ 72.80 General.

(a) This subpart shall govern revisions

to any Acid Rain permit issued by the

Administrator and to the Acid Rain

portion of any operating permit issued

by a State permitting authority.

(b) Notwithstanding the operating

permit revision procedures specified in

parts 70 and 71 of this chapter, the

provisions of this subpart shall govern

revision of any Acid Rain Program

permit provision.

* * * * *

(d) The terms of the Acid Rain permit

shall apply while the permit revision is

pending, except as provided in § 72.83

for administrative permit amendments.

(e) The standard requirements of

§ 72.9 shall not be modified or voided

by a permit revision.
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55485

(f) Any permit revision involving

incorporation of a compliance option

that was not submitted for approval and

comment during the permit issuance

process or involving a change in a

compliance option that was previously

submitted, shall meet the requirements

for applying for such compliance option

under subpart D of this part and parts

74 and 76 of this chapter.

(g) Any designated representative who

fails to submit any relevant information

or who has submitted incorrect

information in a permit revision shall,

upon becoming aware of such failure or

incorrect submittal, promptly submit

such supplementary information or

corrected information to the permitting

authority.

* * * * *

34. Section 72.81 is amended by:

removing from paragraph (c)(1)(ii) the

words ‘‘and § 70.7(e)(4)(ii) of this

chapter’’; and revising paragraph (c)(2)

to read as follows:

§ 72.81 Permit modifications.

* * * * *

(c) * * *

(2) For purposes of applying

paragraph (c)(1) of this section, a

requested permit modification shall be

treated as a permit application, to the

extent consistent with § 72.80(c) and (d).

35. Section 72.82 is amended by

revising paragraphs (a) and (d) to read

as follows:

§ 72.82 Fast-track modifications.

* * * * *

(a) If the Administrator is the

permitting authority, the designated

representative shall serve a copy of the

fast-track modification on the

Administrator and any person entitled

to a written notice under § 72.65(b)(1)(ii)

and (iii). If a State is the permitting

authority, the designated representative

shall serve such a copy on the

Administrator, the permitting authority,

and any person entitled to receive a

written notice of a draft permit under

the approved State operating permit

program. Within 5 business days of

serving such copies, the designated

representative shall also give public

notice by publication in a newspaper of

general circulation in the area where the

sources are located or in a State

publication designed to give general

public notice.

* * * * *

(d) Within 30 days of the close of the

public comment period if the

Administrator is the permitting

authority or within 90 days of the close

of the public comment period if a State

is the permitting authority, the

permitting authority shall consider the

fast-track modification and the

comments received and approve, in

whole or in part or with changes or

conditions as appropriate, or disapprove

the modification. A fast-track

modification shall be subject to the

same provisions for review by the

Administrator and affected States as are

applicable to a permit modification

under § 72.81.

36. Section 72.83 is amended by:

removing from paragraph (a)(10) the

words ‘‘regulations implementing

section 407 of the Act’’ and adding, in

their place, the words ‘‘part 76 of this

chapter’’; and revising paragraphs

(a)(12) and (b) and adding paragraphs

(a)(13), (a)(14), (c), and (d) to read as

follows:

§ 72.83 Administrative permit amendment.

(a) * * *

(12) The addition of a NOX early

election plan that was approved by the

Administrator under § 76.8 of this

chapter;

(13) The addition of an exemption for

which the requirements have been met

under § 72.7 or § 72.8 or which was

approved by the permitting authority

under § 72.14; and

(14) Incorporation of changes that the

Administrator has determined to be

similar to those in paragraphs (a)(1)

through (13) of this section.

(b)(1) The permitting authority will

take final action on an administrative

permit amendment within 60 days, or,

for the addition of an alternative

emissions limitation demonstration

period, within 90 days, of receipt of the

requested amendment and may take

such action without providing prior

public notice. The source may

implement any changes in the

administrative permit amendment

immediately upon submission of the

requested amendment, provided that the

requirements of paragraph (a) of this

section are met.

(2) The permitting authority may, on

its own motion, make an administrative

permit amendment under paragraph

(a)(3), (a)(4), (a)(12), or (a)(13) of this

section at least 30 days after providing

notice to the designated representative

of the amendment and without

providing any other prior public notice.

(c) The permitting authority will

designate the permit revision under

paragraph (b) of this section as having

been made as an administrative permit

amendment. Where a State is the

permitting authority, the permitting

authority shall submit the revised

portion of the permit to the

Administrator.

(d) An administrative amendment

shall not be subject to the provisions for

review by the Administrator and

affected States applicable to a permit

modification under § 72.81.

37. Section 72.85 is amended by

revising paragraphs (a) and (c) to read as

follows:

§ 72.85 Permit reopenings.

(a) The permitting authority shall

reopen an Acid Rain permit for cause

whenever:

(1) Any additional requirement under

the Acid Rain Program becomes

applicable to any affected unit governed

by the permit;

(2) The permitting authority

determines that the permit contains a

material mistake or that an inaccurate

statement was made in establishing the

emissions standards or other terms or

conditions of the permit, unless the

mistake or statement is corrected in

accordance with § 72.83; or

(3) The permitting authority

determines that the permit must be

revised or revoked to assure compliance

with Acid Rain Program requirements.

* * * * *

(c) As provided in §§ 72.73(b)(1) and

72.74(c)(2), the permitting authority

shall reopen an Acid Rain permit to

incorporate nitrogen oxides

requirements, consistent with part 76 of

this chapter.

* * * * *

38. Section 72.91 is amended by:

a. Removing from paragraph (b)(1)(i)

the words ‘‘improved unit measures’’

and adding, in their place, the words

‘‘improved unit efficiency measures’’;

b. Removing from paragraph (b)(1)(iii)

introductory text, the words ‘‘all

figures’’ and adding, in their place, the

words ‘‘each figure’’;

c. Removing from paragraph

(b)(1)(iii)(B) the words ‘‘measures, and’’

and adding, in their place, the words

‘‘measures, or’’;

d. Removing from paragraph

(b)(1)(iii)(C) the words ‘‘measures.’’ and

adding, in their place, the words

‘‘measures, except measures relating to

generation efficiency.’’;

e. Removing from paragraph (b)(3) the

words ‘‘unit efficiency measures’’ and

adding, in their place, the words

‘‘improved unit efficiency measures’’;

f. Removing from paragraph (b)(4)

introductory text, the word ‘‘units’s’’

and adding, in its place, the word

‘‘unit’s’’;

g. Removing from the formula in

paragraph (b)(4) introductory text, the

word ‘‘hear’’ and adding, in its place,

the word ‘‘heat’’;

h. Removing from paragraph (b)(4)(i)

the word ‘‘units’ ’’ and adding, in its

place, the word ‘‘unit’s’’; revising

paragraphs (b)(5), (b)(6), and (b)(7); and
55486 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

i. Adding paragraphs (b)(1)(iv) and

(b)(4)(iv) to read as follows:

§ 72.91 Phase I unit adjusted utilization.

* * * * *

(b) * * *

(1) * * *

(iv) The sum of the verified

reductions in a unit’s heat input from all

measures implemented at the unit to

reduce the unit’s heat rate (whether the

measures are treated as supply-side

measures or improved unit efficiency

measures) shall not exceed the

generation (in kwh) attributed to the

unit for the calendar year times the

difference between the unit’s heat rate

for 1987 and the unit’s heat rate for the

calendar year.

* * * * *

(4) * * *

(iv) The allowances credited shall not

exceed the total number of allowances

deducted from the unit’s compliance

subaccount for the calendar year in

accordance with §§ 72.92(a) and (c) and

73.35(b) of this chapter.

(5) If the total, included in the

confirmation report, of the amount of

verified reduction in the unit’s heat

input for energy conservation and

improved unit efficiency measures is

less than the total estimated in the unit’s

annual compliance certification report

for such measures for the calendar year,

then the designated representative shall

include in the confirmation report the

number of allowances to be deducted

from the unit’s compliance subaccount

calculated in accordance with this

paragraph (b)(5).

(i) If any allowances were deducted

from the unit’s compliance subaccount

for the calendar year in accordance with

§§ 72.92(a) and (c) and 73.35(b) of this

chapter, then the number of allowances

to be deducted under paragraph (b)(5) of

this section equals the absolute value of

the result of the formula for allowances

credited under paragraph (b)(4) of this

section (excluding paragraph (b)(4)(iv)

of this section).

(ii) If no allowances were deducted

from the unit’s compliance subaccount

for the calendar year in accordance with

§§ 72.92(a) and (c) and 73.35(b) of this

chapter:

(A) The designated representative

shall recalculate the unit’s adjusted

utilization in accordance with

paragraph (a) of this section, replacing

the amounts for reduction from energy

conservation and reduction from

improved unit efficiency by the amount

for verified heat input reduction.

‘‘Verified heat input reduction’’ is the

total of the amounts of verified

reduction in the unit’s heat input (in

mmBtu) from energy conservation and

improved unit efficiency measures

included in the confirmation report.

(B) After recalculating the adjusted

utilization under paragraph (b)(5)(ii)(A)

of this section for all Phase I units that

are in the unit’s dispatch system and to

which paragraph (b)(5) of this section is

applicable, the designated

representative shall calculate the

number of allowances to be surrendered

in accordance with § 72.92(c)(2) using

the recalculated adjusted utilizations of

such Phase I units.

(C) The allowances to be deducted

under paragraph (b)(5) of this section

shall equal the amount under paragraph

(b)(5)(ii)(B) of this section, provided that

if the amount calculated under this

paragraph (b)(5)(ii)(C) is equal to or less

than zero, then the amount of

allowances to be deducted is zero.

(6) The Administrator will determine

the amount of allowances that would

have been included in the unit’s

compliance subaccount and the amount

of excess emissions of sulfur dioxide

that would have resulted if the

deductions made under § 73.35(b) of

this chapter had been based on the

verified, rather than the estimated,

reduction in the unit’s heat input from

energy conservation and improved unit

efficiency measures.

(7) The Administrator will determine

whether the amount of excess emissions

of sulfur dioxide under paragraph (b)(6)

of this section differs from the amount

of excess emissions determined under

§ 73.35(b) of this chapter based on the

annual compliance certification report.

If the amounts differ, the Administrator

will determine: The number of

allowances that should be deducted to

offset any increase in excess emissions

or returned to account for any decrease

in excess emissions; and the amount of

excess emissions penalty (excluding

interest) that should be paid or returned

to account for the change in excess

emissions. The Administrator will

deduct immediately from the unit’s

compliance subaccount the amount of

allowances that he or she determines is

necessary to offset any increase in

excess emissions or will return

immediately to the unit’s compliance

subaccount the amount of allowances

that he or she determines is necessary

to account for any decrease in excess

emissions. The designated

representative may identify the serial

numbers of the allowances to be

deducted or returned. In the absence of

such identification, the deduction will

be on a first-in, first-out basis under

§ 73.35(b)(2) of this chapter and the

return will be at the Administrator’s

discretion.

* * * * *

39. Section 72.95 is amended by

revising the formula in the introductory

text and adding paragraph (d) to read as

follows:

§ 72.95 Allowance deduction formula.

* * * * *

Total allowances deducted = Tons

emitted + Allowances surrendered for

underutilization + Allowances deducted

for Phase I extensions + Allowances

deducted for substitution or

compensating units

Where:

* * * * *

(d) ‘‘Allowances deducted for

substitution or compensating units’’ is

the total number of allowances

calculated in accordance with the

surrender requirements specified under

§ 72.41(d)(3) or (e)(1)(iii)(B) or

§ 72.43(d)(2).

Part 73—[AMENDED]

40. The authority citation for part 73

continues to read as follows:

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

41. Section 73.10 is amended by

revising the section heading and adding

paragraph (b)(3) to read as follows:

§ 73.10 Initial allocations for phase I and

phase II.

* * * * *

(b) * * *

(3) Notwithstanding the amounts in

Table 2 of this section, the unadjusted

basic allowances for years 2000–2009

and for years 2010 and thereafter for

Louisiana, Rodemacher 2 are 20,774.

* * * * *

42. Section 73.90 is amended by:

removing from the formula in paragraph

(c)(3) the words ‘‘Total Allowances

Requested’’ and adding, in their place,

the words ‘‘35,000’’; removing from the

formula in paragraph (c)(3) the words

‘‘35,000’’ and adding, in their place, the

words ‘‘Total Allowances Requested’’;

and revising paragraphs (a)(1), (a)(2),

and (a)(3) to read as follows:

§ 73.90 Allowance allocations for small

diesel refineries.

(a) * * *

(1) Photocopies of Form EIA–810 for

each month of calendar years 1988

through 1990 for the refinery;

(2) Photocopies of Form EIA–810 for

each month of calendar years 1988

through 1990 for each refinery owned or

controlled by the refiner that owns or

controls the refinery seeking

certification; and
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations 55487

(3) A letter certified by the certifying

official that the submitted photocopies

are exact duplicates of those forms filed

with the Department of Energy for 1988

through 1990.

BILLING CODE 6560–50–P

BILLING CODE 6560–50–C

* * * * *

PART 74—[AMENDED]

43. The authority citation for part 74

continues to read as follows:

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

§ 74.2 [Amended]

44. Section 74.2 is amended by

removing the words ‘‘a written

exemption under § 72.7 or § 72.8 of this

chapter’’ and adding, in their place, the

words ‘‘an exemption under § 72.7,

§ 72.8 or § 72.14 of this chapter’’.

PART 75—[AMENDED]

45. The authority citation for part 75

is revised to read as follows:

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

§ 75.67 [Amended]

46. Section 75.67 is amended by

removing and reserving paragraph (a).

PART 77—[AMENDED]

47. The authority citation continues to

read as follows:

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

48. Section 77.3 is amended by

revising paragraphs (d)(3),(5), and (6) to

read as follows:

§ 77.3 Offset plans for excess emissions

of sulfur dioxide.

* * * * *

(d) * * *

(3) At the designated representative’s

option, the number of allowances to be

deducted from the unit’s Allowance

Tracking System account to offset the

excess emissions for the year for which

the plan is submitted.

* * * * *

(5) A statement either that allowances

to offset the excess emissions are to be

deducted immediately from the unit’s

compliance subaccount or that they are

to be deducted on a specified date in a

subsequent year.

(6) If the proposed offset plan does

not propose an immediate deduction of

allowances under paragraph (d)(5) of

this section, a demonstration that such

a deduction will interfere with electric

reliability.

49. Section 77.4 is amended by

revising paragraphs (b)(1), (c)(2)(i),

(f)(2)(i), (g)(2)(i)(B), (g)(2)(i)(C), the last

two sentences of (k)(1), and (k)(2) to

read as follows:

§ 77.4 Administrator’s action on proposed

offset plans.

* * * * *

(b) Review of proposed offset plans.

(1) If the designated representative

submits a complete proposed offset plan

for immediate deduction, from the

unit’s compliance subaccount, of

allowances required to offset excess

emissions of sulfur dioxide, the

Administrator will approve the

proposed offset plan without further

review and will serve written notice of

any approval on the designated

representative. The Administrator will

also give notice of any approval in the

Federal Register. The plans will be

incorporated in the unit’s Acid Rain

permit in accordance with § 72.84 of

this chapter (automatic permit

amendment) and will not be subject to

the requirements of paragraphs (d)

through (k) of this section.

* * * * *

(c) * * *

(2)(i) The designated representative

shall submit the information required

under paragraph (c)(1) of this section

within a reasonable period determined

by the Administrator.

* * * * *

(f) * * *

(2) * * *

(i) The reasons, and supporting

authority, for approval or disapproval of

any proposed offset plan that does not

require immediate deduction of

allowances, including references to

applicable statutory or regulatory

provisions and to the administrative

record; and

* * * * *

(g) * * *

(2) * * *

(i) * * *

(B) The air pollution control agencies

of affected States; and

(C) Any interested person.

* * * * *

(k) * * *

(1) * * * The Administrator will

serve a copy of any approved offset plan

and the response to comments on the

designated representative for the

affected unit involved and serve written

notice of the approval or disapproval of

the offset plan on any persons who are

entitled to written notice under

paragraphs (g)(2)(i) (B) and (C) of this

section or who submitted written or oral

comments on the approval or

disapproval of the draft offset plan. The

Administrator will also give notice in

the Federal Register.

(2) The Administrator will approve an

offset plan requiring immediate

deduction from the unit’s compliance

subaccount of all allowances necessary

to offset the excess emissions except to

the extent the designated representative

of the unit demonstrates that such a

deduction will interfere with electric

reliability.

* * * * *

50. Section 77.6 is amended by

revising paragraph (a) to read as follows:

§ 77.6 Penalties for excess emissions of

sulfur dioxide and nitrogen oxides.

(a)(1) If excess emissions of sulfur

dioxide or nitrogen oxide occur at an

affected unit during any year, the

owners and operators of the affected

unit shall pay, without demand, an

excess emissions penalty, as calculated

under paragraph (b) of this section.

(2) If one or more affected units

governed by an approved NOX averaging

plan under § 76.11 of this chapter fail

(after applying § 76.11(d)(1)(ii)(C) of this

chapter) to meet their respective

alternative contemporaneous emission

limitations or annual heat input limits,

then excess emissions of nitrogen oxides

occur during the year at each such unit.

The sum of the excess emissions of

nitrogen oxides of such units shall equal

the amount determined under § 76.13(b)
55488 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Rules and Regulations

of this chapter. The owners and

operators of such units shall pay an

excess emissions penalty, as calculated

under paragraph (b) of this section using

the sum of the excess emissions of

nitrogen oxides of such units.

(3) Except as otherwise provided in

this paragraph (a)(3), payment under

paragraphs (a) (1) or (2) of this section

shall be submitted to the Administrator

by 30 days after the date on which the

Administrator serves the designated

representative a notice that the process

of recordation set forth in § 73.34(a) of

this chapter is completed or by July 1 of

the year after the year in which the

excess emissions occurred, whichever

date is earlier. Payment under paragraph

(a)(1) of this section for any increase in

excess emissions of sulfur dioxide

determined after adjustments made

under § 72.91(b) of this chapter shall be

submitted to the Administrator by 30

days after the date on which the

Administrator serves the designated

representative a notice that process set

forth in § 72.91(b) of this chapter is

completed.

* * * * *

PART 78—[AMENDED]

51. The authority citation for part 78

continues to read as follows:

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

52. Section 78.1 is amended by

revising paragraphs (a) and (b)(1)(v) to

read as follows:

§ 78.1 Purpose and scope.

(a)(1) This part shall govern appeals of

any final decision of the Administrator

under parts 72, 73, 74, 75, 76, and 77

of this chapter; provided that matters

listed § 78.3(d) and preliminary,

procedural, or intermediate decisions,

such as draft Acid Rain permits, may

not be appealed.

(2) Filing an appeal, and exhausting

administrative remedies, under this part

shall be a prerequisite to seeking

judicial review. For purposes of judicial

review, final agency action occurs only

when a decision appealable under this

part is issued and the procedures under

this part for appealing the decision are

exhausted.

(b) * * *

(1) * * *

(v) The issuance or denial of an

exemption under § 72.14 of this chapter;

* * * * *

§ 78.3 [Amended]

53. Section 78.3 is amended by:

a. Removing from paragraph (b)(1) the

words ‘‘60 days’’ and adding, in their

place, the words ‘‘30 days’’;

b. Removing from paragraph (b)(1) the

words ‘‘action.’’ and adding, in their

place, the words ‘‘action and shall not

meet the prerequisite for judicial review

under § 78.1(a)(2).’’;

c. Removing from paragraph (b)(3)(ii)

the words ‘‘the persons entitled to

written notice under § 72.65(b)(1) (ii),

(iii), and (iv) of this chapter.’’ and

adding, in their place, the words ‘‘the

air pollution control agencies of affected

States and any interested person.’’;

d. Adding at the end of paragraph

(c)(6) the word ‘‘and’’; removing from

paragraph (c)(7) the words ‘‘; and’’ and

adding, in their place, the word ‘‘.’’;

e. Removing paragraph (c)(8);

f. Removing paragraph (d)(1); and

g. Redesignating paragraphs (d)(2),

(d)(3), and (d)(4) as paragraphs (d)(1),

(d)(2), and (d)(3) respectively.

§ 78.4 [Amended]

54. Section 78.4 is amended by:

removing from paragraph (c)(1) the

words ‘‘7 days’’ and adding, in its place,

the words ‘‘7 days (or other reasonable

period established by the Environmental

Appeals Board or Presiding Officer),’’;

and removing from paragraph (c)(1) the

words ‘‘it, unless the Environmental

Appeals Board or Presiding Officer

authorizes a longer time based on good

cause.’’ and adding, in their place, the

words ‘‘it.’’.

55. Section 78.5 is amended by

removing from paragraph (a) the words

‘‘to submit a claim of error notification’’

and adding, in their place, the words ‘‘a

claim of error notification was

submitted’’.

§ 78.5 [Amended]

§ 78.7 [Removed and reserved]

8056. Section 78.7 is removed and

reserved.

§ 78.11 [Amended]

57. Section 78.11 is amended by:

removing from paragraph (a) the words

‘‘30 days’’ and adding, in their place,

the words ‘‘30 days (or other shorter,

reasonable period established by the

Administrator when giving notice)’’.

§ 78.12 [Amended]

58. Section 78.12 is amended by:

removing from paragraph (a)(2) the

words ‘‘a written exemption under

§§ 72.7 or 72.8’’ and adding, in their

place, the words ‘‘an exemption under

§ 72.14’’.

§ 78.14 [Amended]

59. Section 78.14 is amended by:

removing from paragraph (a),

introductory text, the word ‘‘theses’’ and

adding, in its place, the word ‘‘these’’;

removing from paragraph (a)(10) the

words ‘‘15 days’’ and adding, in their

place, the words ‘‘15 days (or other

shorter, reasonable period established

by the Presiding Officer)’’; and removing

from paragraph (c)(1) the words ‘‘Rule

408 of’’.

§ 78.15 [Amended]

60. Section 78.15 is amended by:

removing from paragraph (c) the words

‘‘10 days’’ and adding, in their place,

the words ‘‘10 days (or other shorter,

reasonable period established by the

Presiding Officer)’’; and removing the

last sentence from paragraph (c).

§ 78.16 [Amended]

61. Section 78.16 is amended by:

removing from paragraphs (d)(1) and

(d)(2) the words ‘‘7 days’’ and adding,

in their place, the words ‘‘7 days (or

other shorter, reasonable period

established by the Presiding Officer)’’.

§ 78.17 [Amended]

62. Section 78.17 is amended by:

removing the words ‘‘45 days’’ and

adding, in their place, the words ‘‘45

days (or other shorter, reasonable period

established by the Presiding Officer)’’;

and removing the words ‘‘, for good

cause shown, may shorten or extend the

time for filing and’’.

§ 78.18 [Amended]

63. Section 78.18 is amended by:

removing from paragraph (b),

introductory text, the words ‘‘30 days

after service unless within that time:’’

and adding, in their place, the words

‘‘unless:’’.

§ 78.20 [Amended]

64. Section 78.20 is amended by:

removing from paragraph (b) the words

‘‘30 days’’ and adding, in their place,

the words ‘‘45 days (or other shorter,

reasonable period established by the

Environmental Appeals Board)’’.

[FR Doc. 97–27495 Filed 10–23–97; 8:45 am]

BILLING CODE 6560–50–P