[Federal Register Volume 63, Number 73 (Thursday, April 16, 1998)]
[Rules and Regulations]
[Pages 18837-18842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10143]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 74

[FRL-5996-6]
RIN 2060-AH36


Acid Rain Program: Revisions to Sulfur Dioxide Opt-Ins

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

DATES: This rule is effective May 18, 1998.
    Judicial Review. Under section 307(b)(1) of the Act, judicial 
review of this rule is available only by filing a petition for review 
in the U.S. Court of Appeals for the District of Columbia Circuit 
within 60 days of today's publication of these final rule revisions. 
Under section 307(b)(2) of the Act, the requirements that are the 
subject of today's document may not be challenged in civil or criminal 
proceedings brought by the EPA to enforce these requirements.

ADDRESSES: Docket. Docket No. A-97-23, containing supporting 
information used to develop the rule is available for public inspection 
and copying from 8:00 a.m. to 5:30 p.m., Monday through Friday, 
excluding legal holidays, at EPA's Air Docket Section (6102), Waterside 
Mall, Room M1500, 1st Floor, 401 M Street, SW, Washington D.C. 20460.

FOR FURTHER INFORMATION CONTACT: Kathy Barylski at (202) 564-9074, Acid 
Rain Division (6204J), U.S. Environmental Protection Agency, 401 M St., 
SW, Washington, D.C. 20460; or

[[Page 18838]]

the Acid Rain Hotline at (202) 564-9620. Electronic copies of this 
rulemaking can be accessed through the Acid Rain Division website at 
www.epa.gov/acidrain.

SUPPLEMENTARY INFORMATION:
I. Affected Entities
II. Background
III. Part 74: Opt-Ins
    A. Designated Representative
    B. Thermal Energy Plans
    C. Deduction of Allowances from ATS Accounts
    D. Miscellaneous
IV. Administrative Requirements
    A. Executive Order 12866
    B. Unfunded Mandates Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility
    E. Submission to Congress and the General Accounting Office

I. Affected Entities

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

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

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities potentially affected by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be affected by this action. Other types of entities 
not listed in the table could also be affected. To determine whether 
your facility is affected by this action, you should carefully examine 
the applicability criteria in Sec. 74.2 of title 40 of the Code of 
Federal Regulations and the revised Secs. 72.6, 72.7, 72.8, and 72.14 
(62 FR 55460, 55476-80, October 24, 1997). If you have questions 
regarding the applicability of this action to a particular entity, 
consult the person listed in the preceding FOR FURTHER INFORMATION 
CONTACT section.

II. Background

    The overall goal of the Acid Rain Program is to achieve significant 
environmental benefits through reductions in emissions of sulfur 
dioxide (SO<INF>2</INF>) and nitrogen oxides (NO<INF>X</INF>), the 
primary precursors of acid rain. To achieve this goal at the lowest 
cost to society, the program employs both traditional and innovative, 
market-based approaches for controlling air pollution. In addition, the 
program encourages energy efficiency and promotes pollution prevention.
    The Acid Rain Program departs from traditional regulatory methods 
by introducing an SO<INF>2</INF> allowance trading system that lowers 
the cost of reducing emissions by allowing electric utilities to seek 
out the least costly methods of control. Affected utility units under 
title IV of the Act are allocated allowances based on formulas in the 
Act. These units may trade allowances, provided that at the end of each 
year, each unit holds enough allowances to cover its annual 
SO<INF>2</INF> emissions.
    Although the Acid Rain Program is mandated only for utility 
sources, section 410 provides opportunities for SO<INF>2</INF>-emitting 
sources not otherwise affected by title IV requirements (e.g., 
industrial sources) to participate through the opt-in program. Entry of 
sources into the opt-in program is voluntary. Opt-in sources are 
allocated allowances and, by making cost-effective emissions reductions 
so that their allowance allocations will exceed their emissions, will 
have allowances that may be sold in the SO<INF>2</INF> allowance 
trading system. These allowances provide greater compliance flexibility 
for affected units.
    In 1995, EPA issued final opt-in regulations implementing section 
410 (60 FR 17100, April 4, 1995). On June 5, 1995, an owner of several 
potential opt-in sources filed a petition for review of the existing 
opt-in regulations. The litigation was settled on January 9, 1997. On 
September 25, 1997, EPA proposed opt-in regulation revisions, several 
of which resulted from that settlement.

III. Part 74: Opt-Ins

A. Designated Representative

    Under the existing opt-in rule, combustion or process sources 
located at the same source as affected units are required to have the 
same designated representative as the affected utility units. See 40 
CFR 74.4(b). (Hereinafter, this requirement is referred to as the 
``single-designated-representative requirement''.) Based on comments 
and settlement of litigation on the issue, EPA proposed to establish a 
procedure for nonutility combustion or process sources located with 
affected utility units to elect an exception to the single-designated-
representative requirement.
    One comment was received on this proposed revision.<SUP>1</SUP> The 
commenter, who is a party to the January 9, 1997 opt-in rule 
settlement, generally supported allowing a separate designated 
representative for opt-in sources at the same source as affected 
utility units. However, the commenter objected to certain language in 
the proposed rule.
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    \1\ One comment received during the comment period for the 
proposed opt-in revisions addressed a number of matters, but did not 
comment on any of the proposed opt-in revisions. The comment is 
therefore outside the scope of this rulemaking.
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    The proposed rule required that, in order to use the separate 
designated representative provision, a combustion source must have ``no 
owner of which the principal business is the sale, transmission, or 
distribution of electricity or that is a public utility under the 
jurisdiction of a State or local utility regulatory commission.'' The 
commenter claimed that the language concerning the principal business 
of the combustion source owner would bar a combustion source owned by a 
wholly-owned electric generating subsidiary of an industrial company 
from using the provision but would allow use of the provision if the 
source was instead directly owned by the industrial company. According 
to the commenter, the use of ``separate corporate forms'' should not 
have this effect on the ability to have a separate designated 
representative. The commenter also claimed that, even if a State 
utility regulatory authority did not currently regulate the wholly-
owned electric generating subsidiary, the State authority might assert 
jurisdiction sometime in the future, thereby preventing use of the 
provision.
    In light of the commenter's objections and in order to reduce the 
complexity of the separate designated representative provision, EPA is 
revising, in today's final rule, the proposed provision. On one hand, 
as discussed in the proposal, the provision is intended to encourage 
nonutility opt-ins by allowing a nonutility opt-in source located at 
the same source as utility units to select a different designated 
representative than the utility units. 62 FR 50457. Because a 
nonutility opt-in source is part of industrial operations (e.g., 
produces electricity for use in the owner's industrial facilities), the 
owner is more likely to have heightened concern about competitive 
disadvantage and maintaining the confidentiality of information about 
the opt-in source and related industrial operations. Having a single 
designated representative for a nonutility opt-in source and utility 
units may make information (e.g., the industrial company's electricity 
generating costs and processes using electricity) available to the 
designated representative, who may be an employee of the utility owner. 
On the other hand, as discussed in the proposal, EPA believes that 
generally opt-in sources should face the same requirements as other 
affected units. Id.; see also 58 FR 50088, 50090-91,

[[Page 18839]]

September 24, 1993. Balancing the importance of imposing consistent 
requirements on opt-in sources and utility units against the desire to 
encourage industrial opt-ins, EPA concludes that it should allow only a 
limited exception--applicable in a few cases--to the single-designated-
representative requirement. While the proposal carved out a limited 
exception using a test focused on the owner (i.e., the nature of, and 
regulatory jurisdiction over, the owner's principal business) of the 
opt-in sources, EPA maintains that a simpler approach is available, 
i.e., one focused on the opt-in source itself. The Acid Rain 
regulations specifically address four categories of combustion sources 
that are unaffected units and that therefore may qualify as opt-in 
sources: (1) combustion devices that have not served, and do not serve, 
generators producing electricity for sale; (2) simple combustion 
turbines that commenced operation before November 15, 1990; (3) 
combustion devices that commenced commercial operation before November 
15, 1990 and that have served, and serve, only generators of 25 MWe or 
less producing electricity for sale; and (4) cogeneration, qualifying, 
independent power production, or solid waste incineration facilities 
that meet certain requirements. See 40 CFR 72.6(b) (explaining the 
categories of unaffected units) and 74.2 (stating that affected units 
under Sec. 72.6 are not eligible to be opt-in sources). The limited 
exception to the single-designated-representative requirement is aimed 
at the first category of combustion source, i.e., units that are part 
of industrial, not utility operations. No commenter has suggested that 
the exception should be extended to any other categories of combustion 
sources.
    EPA notes, in addition, that sources other than those in the first 
category would generally not be eligible for the exception as 
originally proposed because they would most likely be part of utility 
operations and the proposal barred sources whose owners are principally 
in the business of selling, transmitting, or distributing electricity 
or are subject to State or local utility regulation. Moreover, for the 
reasons discussed above, EPA maintains that it should limit the 
exception to the clearest cases where the single-designated-
representative requirement may inhibit entry into, or continued 
participation in, the opt-in program: i.e., the few cases where an opt-
in source is co-located with utility units and is involved in 
industrial, rather than utility (i.e., electricity sales), operations.
    Consequently, today's final rule limits the use of the exception to 
a combustion source (or process source) that, on the date on which the 
source's initial opt-in application is submitted and thereafter, does 
not serve a generator producing electricity for sale. Such a combustion 
or process source that is located at the same source as affected 
utility units may elect to have a different designated representative 
than the utility units. For example, a combustion source that is owned 
by an industrial company and that is used exclusively to generate 
electricity for use in the industrial company's industrial facilities 
could qualify for the exception to the single-designated-representative 
requirement. Similarly, such a combustion source could qualify even if 
it is owned by the wholly-owned subsidiary of the industrial company, 
instead of being owned directly by the industrial company. This 
approach in today's final rule meets the commenter's concerns that the 
corporate form of ownership of the source, or law concerning the 
jurisdiction of the State utility regulatory commission, not change the 
applicability of the exception to a combustion source that would 
otherwise qualify for the exception.
    With the approach of basing the exception on the fact that a 
combustion source is not, as of the submission of the initial opt-in 
permit application and thereafter, serving a generator producing 
electricity for sale, it is necessary to include a provision for 
termination of the exception if and when that requirement is no longer 
met in the future. Today's final rule therefore provides for automatic 
termination of the election of the exception when the requirements for 
election are no longer met and requires submission of a superseding 
certificate of representation consistent with single-designated-
representative requirement for all affected units at a given source. 
This is analogous to the automatic termination provisions for other 
exceptions under the Acid Rain Program. See 40 CFR 72.7(f)(4) (new 
units exemption) 72.8(d)(6), (retired units exemption), and 72.14(d)(4) 
(industrial utility-units exemption).

B. Thermal Energy Plans

    The existing opt-in rule allows combustion sources to become opt-in 
sources at the beginning of any calendar quarter, not only at the 
beginning of a calendar year. See 40 CFR 74.28. However, in the 
proposed revisions to the rule, EPA noted that the thermal energy 
provision at Sec. 74.47 only provided for calendar year plans. 
Therefore, EPA proposed revisions to allow (and take account of the 
possibility of) the submission of thermal energy plans at the beginning 
of any calendar quarter. No comments were received on these proposed 
revisions. With one exception, EPA has finalized the proposed revisions 
for the reasons stated in the proposal.
    The only change, in today's final rule, to the proposed revisions 
is that EPA is not adopting the proposed revisions to paragraph 
(a)(3)(vii) of Sec. 74.47. The existing rule requires the thermal 
energy plan to include the ``allowable SO<INF>2</INF> emissions rate'' 
for the calendar year in which the plan will take effect. In Sec. 72.2, 
``allowable SO<INF>2</INF> emissions rate'' is defined as the ``most 
stringent federally enforceable emissions limitation for sulfur dioxide 
* * * for the specified calendar year''. 40 CFR 72.2. The proposal 
added references in Sec. 74.47(a)(3)(vii) to the allowable 
SO<INF>2</INF> emissions rate for the calendar year and month for which 
the thermal energy plan will take effect. This change would be 
inconsistent with the above-quoted definition in Sec. 72.2 and so is 
not being adopted.
     As already provided in the existing rule, if more than one 
federally enforceable emissions limitation applies during the year, the 
allowable SO<INF>2</INF> emission rate in Sec. 74.47(a)(3)(vii) will be 
the most stringent of these limits.

C. Deduction of Allowances From ATS Accounts

    For any affected unit, including an opt-in source, EPA draws upon 
future-year allowances in the affected unit's Allowance Tracking System 
(ATS) account to offset excess emissions for a year for which 
compliance is being determined. See 40 CFR 77.5. However, under the 
existing opt-in rule, when the opt-in source shuts down, is 
reconstructed, becomes an affected unit under Sec. 72.6, or fails to 
renew its opt-in permit, EPA eliminates future-year allowance 
allocations (40 CFR 74.46) and retains the option of canceling current-
year opt-in allowance allocations (including allowances that have been 
transferred to other ATS accounts) in order to offset excess emissions 
or account for the termination of participation in the opt-in program 
(40 CFR 74.50). As proposed, EPA is revising the rule to provide that 
an opt-in allowance may not be deducted under Sec. 74.50(a) from any 
ATS account, other than the account of the opt-in source allocated such 
allowance, (i) after EPA has completed the process of recordation as 
set forth in Sec. 73.34(a) following the deduction of allowances from 
the opt-in source's compliance subaccount for the year for which such 
allowance may first be used or (ii) if the

[[Page 18840]]

opt-in source claims in an annual compliance certification report an 
estimated reduction in heat input from improved efficiency, under 
Sec. 74.44(a)(1)(B), after EPA has completed action on the confirmation 
report concerning such claimed reduction pursuant to 
Secs. 74.44(c)(2)(iii)(E)(3)-(E)(5) for the year for which such 
allowance may first be used. No comments were received on this 
revision, and, for the reasons stated in the proposal, the revision is 
adopted as proposed.

D. Miscellaneous

    EPA proposed a number of modifications and corrections to the 
combustion source opt-in rules to reflect changes in the Acid Rain 
Program and operating permits program under title V of the Clean Air 
Act since the publication of the final opt-in rule on April 4, 1995. In 
particular, the Agency has finalized the operating permits rule in part 
71 and the Acid Rain permit rule in part 72. The proposed modifications 
and corrections were described in the ``Miscellaneous'' section of the 
preamble to the proposal. No comments were received, and the proposed 
changes are adopted as final.

IV. Administrative Requirements

A. Executive Order 12866

    Under Executive Order 12866, 58 FR 51735, October 4, 1993, the 
Administrator must determine whether a regulatory action is 
``significant'' and therefore subject to Office of Management and 
Budget (OMB) review and the requirements of the Executive Order. The 
order defines ``significant regulatory action'' as one that is likely 
to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the 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 rule is not a ``significant regulatory action.'' 
As such, this action is not subject to the requirements of the order 
and was not submitted to OMB for review.

B. Unfunded Mandates Act

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

C. Paperwork Reduction Act

    These revisions to the opt-in rule would not impose any new 
information collection burden. OMB has previously approved the 
information collection requirements contained in the opt-in rules, 40 
CFR part 74, under the provisions of the Paperwork Reduction Act, 44 
U.S.C. 3501, et seq. and has assigned OMB control number 2060-0258. 60 
FR 17111.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to: review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    Copies of the original ICR may be obtained from Sandy Farmer, OPPE 
Regulatory Information Division, U.S. Environmental Protection Agency, 
401 M St. SW. (2137), Washington, D.C. 20460 or by calling (202) 260-
2740.

D. Regulatory Flexibility

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant economic impact 
on a substantial number of small entities. In the preamble of the April 
4, 1995 opt-in rule, the Administrator certified that the rule, 
including the provisions revised by today's rule, would not have a 
significant economic impact on small entities. 60 FR 17111. Today's 
revisions are not significant enough to change the overall economic 
impact addressed in the April 4, 1995 preamble. Moreover, as discussed 
above, the revisions provide regulated entities with additional 
flexibility (e.g., the option to have a separate designated 
representative and to have a thermal energy plan that begins in the 
second, or later, quarter of the year).

E. Submission to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a

[[Page 18841]]

report containing this rule and other required information to the U.S. 
Senate, the U.S. House of Representatives, and the Comptroller General 
of the United States prior to publication of the rule in the Federal 
Register. This rule is not a ``major rule'' as defined by 5 U.S.C. 
804(2).

List of Subjects in 40 CFR Part 74

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

    Dated: April 9, 1998.
Carol M. Browner,
Administrator.
    For the reasons set forth in the preamble, 40 CFR part 74 is 
amended as set forth below.

PART 74--[AMENDED]

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

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

Sec. 74.3  [Amended]

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


Sec. 74.4  Designated representative.

* * * * *
    (c)(1) Notwithstanding paragraph (b) of this section, a certifying 
official of a combustion or process source that is located at the same 
source as one or more affected utility units and that, on the date on 
which an initial opt-in permit application is submitted for such 
combustion or process source and thereafter, does not serve a generator 
that produces electricity for sale may elect to designate, for such 
combustion or process source, a different designated representative 
than the designated representative for the affected utility units.
    (2) In order to make such an election, the certifying official 
shall submit to the Administrator, in a format prescribed by the 
Administrator: a certification that the combustion or process source 
for which the election is made meets each of the requirements for 
election in paragraph (c)(1) of this section; and a certificate of 
representation for the designated representative of the combustion or 
process source in accordance with Sec. 72.24 of this chapter. The 
Administrator will rely on such certificate of representation in 
accordance with Sec. 72.25 of this chapter, unless the Administrator 
determines that the requirements for election in paragraph (c)(1) of 
this section are not met. If, after the election is made, the 
requirements for election in paragraph (c)(1) of this section are no 
longer met, the election shall automatically terminate on the first 
date on which the requirements are no longer met and, within 30 days of 
that date, a certificate of representation for the designated 
representative of the combustion or process source shall be submitted 
consistent with paragraph (b) of this section.


Sec. 74.10  [Amended]

    4. Section 74.10 is amended by, in paragraph (a)(2), revising the 
word ``Sec. 74.62'' to read ``Sec. 75.20 of this chapter''.


Sec. 74.14  [Amended]

    5. Section 74.14 is amended by:
    i. In paragraph (b) introductory text, revising the words ``part 
70'' to read ``parts 70 and 71''; and
    ii. In paragraph (b)(6)(ii), revising the word ``approved'' to read 
``approved for operating permits''.


Sec. 74.16  [Amended]

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


Sec. 74.18  [Amended]

    7. Section 74.18 is amended by:
    i. In paragraph (d), revising the words ``Sec. 74.46(c)'' to read 
``Sec. 74.46(b)(2)''; and
    ii. Removing the last sentence from paragraph (e).


Sec. 74.22  [Amended]

    8. Section 74.22 is amended by, in paragraph (c)(2), revising the 
words ``Sec. 74.20(a)(2)(A)'' to read ``Sec. 74.20(a)(2)(i)''.


Sec. 74.26  [Amended]

    9. Section 74.26 is amended by, in paragraph (a)(2), revising the 
words ``in which'' to read ``for which''.


Sec. 74.42  [Amended]

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


Sec. 74.44  [Amended]

    11. Section 74.44 is amended by:
    i. In paragraph (a)(1)(i)(G), revising the words ``demand side 
measures that improve the efficiency of electricity or steam 
consumption'' to read ``specific measures'';
    ii. In paragraph (a)(2)(i), removing the words ``or for the first 
two calendar years after the effective date of a thermal energy plan 
governing an opt-in source in accordance with Sec. 74.47 of this 
chapter'';
    iii. In paragraph (a)(2)(iii), adding the words ``of this section'' 
after the word ``(a)(2)(ii)'';
    iv. In paragraph (c)(2)(ii)(B)(1), revising the words ``opt-in 
sources.'' to read ``opt-in sources and Phase I units.'';
    v. In paragraph (c)(2)(iii)(F), revising the formula to read as 
follows:
[GRAPHIC] [TIFF OMITTED] TR16AP98.027

    vi. In paragraph (c)(2)(iii)(F), revising the words `` `Allowances 
allocated' shall be the original number of allowances allocated under 
section Sec. 74.40 for the calendar year.'' to read `` `Allowances 
allocated or acquired' shall be the number of allowances held in the 
source's compliance subaccount at the allowance transfer deadline plus 
the number of allowances transferred for the previous calendar year to 
all replacement units under an approved thermal energy plan in 
accordance with Sec. 74.47(a)(6).''; and
    vii. In paragraph (c)(2)(iii)(E)(3), revising the words 
``allowances necessary'' to read ``allowances that he or she determines 
is necessary''.
    12. Section 74.47 is amended by:
    i. Adding in paragraph (a)(3)(i), after the word ``year'' in each 
place it appears, the word ``and quarter''; and

[[Page 18842]]

    ii. Revising paragraphs (a)(1), (a)(3)(viii), (a)(3)(ix), 
(a)(3)(x), (a)(3)(xi), (a)(3)(xii), and (a)(4) to read as follows:


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

    (a) Thermal energy plan. (i) General provisions. The designated 
representative of an opt-in source that seeks to qualify for the 
transfer of allowances based on the replacement of thermal energy by a 
replacement unit shall submit a thermal energy plan subject to the 
requirements of Sec. 72.40(b) of this chapter for multi-unit compliance 
options and this section. The effective period of the thermal energy 
plan shall begin at the start of the calendar quarter (January 1, April 
1, July 1, or October 1) for which the plan is approved and end 
December 31 of the last full calendar year for which the opt-in permit 
containing the plan is in effect.
* * * * *
    (3) * * *
    (viii) The estimated annual amount of total thermal energy to be 
reduced at the opt-in source, including all energy flows (steam, gas, 
or hot water) used for any process or in any heating or cooling 
application, and, for a plan starting April 1, July 1, or October 1, 
such estimated amount of total thermal energy to be reduced starting 
April 1, July 1, or October 1 respectively and ending on December 31;
    (ix) The estimated amount of total thermal energy at each 
replacement unit for the calendar year prior to the year for which the 
plan is to take effect, including all energy flows (steam, gas, or hot 
water) used for any process or in any heating or cooling application, 
and, for a plan starting April 1, July 1, or October 1, such estimated 
amount of total thermal energy for the portion of such calendar year 
starting April 1, July 1, or October 1 respectively;
    (x) The estimated annual amount of total thermal energy at each 
replacement unit after replacing thermal energy at the opt-in source, 
including all energy flows (steam, gas, or hot water) used for any 
process or in any heating or cooling application, and, for a plan 
starting April 1, July 1, or October 1, such estimated amount of total 
thermal energy at each replacement unit after replacing thermal energy 
at the opt-in source starting April 1, July 1, or October 1 
respectively and ending December 31;
    (xi) The estimated annual amount of thermal energy at each 
replacement unit, including all energy flows (steam, gas, or hot water) 
used for any process or in any heating or cooling application, 
replacing thermal energy at the opt-in source, and, for a plan starting 
April 1, July 1, or October 1, such estimated amount of thermal energy 
replacing thermal energy at the opt-in source starting April 1, July 1, 
or October 1 respectively and ending December 31;
    (xii) The estimated annual total fuel input at each replacement 
unit after replacing thermal energy at the opt-in source and, for a 
plan starting April 1, July 1, or October 1, such estimated total fuel 
input after replacing thermal energy at the opt-in source starting 
April 1, July 1, or October 1 respectively and ending December 31;
* * * * *
    (4) Submission. The designated representative of the opt-in source 
seeking to qualify for the transfer of allowances based on the 
replacement of thermal energy shall submit a thermal energy plan to the 
permitting authority by no later than six months prior to the first 
calendar quarter for which the plan is to be in effect. The thermal 
energy plan shall be signed and certified by the designated 
representative of the opt-in source and each replacement unit covered 
by the plan.
* * * * *
    13. Section 74.50 is amended by redesignating the introductory text 
of paragraph (a) as paragraph (a)(1), redesignating paragraphs (a)(1) 
through (a)(4) as paragraphs (a)(1)(i) through (a)(1)(iv), and adding 
paragraph (a)(2) to read as follows:


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

    (a) * * *
    (2) An opt-in allowance may not be deducted under paragraph (a)(1) 
of this section from any Allowance Tracking System Account other than 
the account of the opt-in source allocated such allowance:
    (i) After the Administrator has completed the process of 
recordation as set forth in Sec. 73.34(a) of this chapter following the 
deduction of allowances from the opt-in source's compliance subaccount 
for the year for which such allowance may first be used; or
    (ii) If the opt-in source includes in the annual compliance 
certification report estimates of any reduction in heat input resulting 
from improved efficiency under Sec. 74.44(a)(1)(i), after the 
Administrator has completed action on the confirmation report 
concerning such estimated reduction pursuant to 
Sec. 74.44(c)(2)(iii)(E)(3), (4), and (5) for the year for which such 
allowance may first be used.
* * * * *
[FR Doc. 98-10143 Filed 4-15-98; 8:45 am]
BILLING CODE 6560-50-P