18462 Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 72

[FRL–5186–3]

RIN 2060–AE59

Acid Rain Program: Permits

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Direct final rule.

SUMMARY: Title IV of the Clean Air Act

(the Act), as amended by the Clean Air

Act Amendments of 1990, authorizes

the Environmental Protection Agency

(EPA or Agency) to establish the Acid

Rain Program. The program sets

emissions limitations to reduce acidic

deposition and its serious, adverse

effects on natural resources, ecosystems,

materials, visibility, and public health.

On January 11, 1993, the Agency

promulgated final rules under title IV.

Several parties filed petitions for review

of the rules. On January 10, 1995, EPA

and the parties signed a settlement

agreement addressing reduced

utilization issues.

Based on a review of the record, the

Agency concludes that the January 11,

1993 regulations concerning reduced

utilization should be revised. The

overall effect of the revisions is to

reduce the reporting and recordkeeping

burden on utilities. The regulations

require that, unless certain requirements

are met, the designated representative of

a unit in Phase I of the program whose

annual utilization of fuel is less than its

average annual utilization in 1985–1987

must submit a reduced utilization plan.

The regulations also require designated

representatives to submit end-of-year

compliance reports that estimate the

sulfur dioxide emissions resulting from

any underutilization of Phase I units

and to surrender allowances for the

estimated emissions. The Agency is

revising the regulations to simplify the

criteria for determining if a reduced

utilization plan must be submitted:

Where the end-of-year reporting and

allowance surrender requirements are

met, such a plan is not required.

Further, the Agency is revising the

formulas for estimating emissions

resulting from underutilization to

correct errors, clarify certain provisions,

and take account of and facilitate

compliance by Phase I units with

multiple owners or whose owners are

required by law to purchase electricity

from non-utility power production

facilities.

The rule revision is being issued as a

direct final rule because it is consistent

with the January 10, 1995 settlement

and no adverse comment is expected.

EFFECTIVE DATE: This direct final rule

will be effective on May 22, 1995 unless

significant, adverse comments are

received by May 11, 1995. If significant,

adverse comments are timely received

on any portion of the direct final rule,

that portion of the direct final rule will

be withdrawn through a notice in the

Federal Register.

ADDRESSES: All written comments must

be identified with the appropriate

docket number and must be submitted

in duplicate to: EPA Air Docket Section

(LE–131), Waterside Mall, Room 1500,

1st floor, 401 M St., S.W., Washington

DC 20460.

Docket No. A–93–40, containing

supporting information used to develop

the proposal, copies of all comments

received, and responses to comments, is

available for public inspection and

copying from 8:30 a.m. to 12:00 p.m.

and 1:00 p.m. to 3:30 p.m., Monday

through Friday, excluding legal

holidays, at EPA’s Air Docket Section,

Waterside Mall, Room 1500, 1st floor,

401 M St., S.W., Washington, DC 20460.

A reasonable fee may be charged for

copying.

FOR FURTHER INFORMATION CONTACT:

Dwight C. Alpern, Attorney-advisor, at

(202) 233–9151, Acid Rain Division

(6204J), U.S. Environmental Protection

Agency, 401 M St., S.W., Washington,

DC 20460, or the Acid Rain Hotline at

(202) 233–9620.

SUPPLEMENTARY INFORMATION: All public

comment received on any portion of this

direct final rule on which significant,

adverse comments are timely received

will be addressed in a subsequent final

rule. That final rule will be based on the

relevant portion of the rule revision that

is noticed as a proposed rule in the

Proposed Rules Section of this Federal

Register and that is identical to this

direct final rule. The contents of the

preamble to the direct final rule are as

follows:

I. Background: Purposes of Reduced

Utilization Plans and Allowance

Surrender for Underutilization of Phase

I Units

II. Reduced Utilization Plan

III. Dispatch System

A. Utility System and Identification of

Dispatch System

B. Apportionment of Phase I Units

IV. Emissions Rate

A. Non-Utility Generators

B. Dispatch System Emissions Rate

C. NERC Emissions Rate

V. Administrative Requirements

A. Executive Order 12866

B. Unfunded Mandates Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Miscellaneous

I. Background: Purposes of Reduced

Utilization Plans and Allowance

Surrender for Underutilization of Phase

I Units

A Phase I unit is underutilized if, in

any year in Phase I, the total annual

utilization of fuel at the unit is less than

its baseline, i.e., its annual average fuel

utilization for 1985–1987. The

provisions of the Act that relate to

reduced utilization or underutilization

of Phase I units are found in sections

403(d) and 408(c)(1)(B).

In dividing the Acid Rain Program

into two phases, i.e., Phase I applicable

only to larger, dirtier units and Phase II

applicable to virtually all utility units,

the Congress recognized the potential

for circumvention of Phase I emission

reduction requirements. A Phase I unit,

which receives allowances for its

baseline, could simply reduce its

utilization below baseline by shifting

generation of electricity to a unit that

was not covered by Phase I and did not

have to use allowances to authorize its

SO2 emissions. The Phase I unit would

retain the unused allowances but the

same amount of SO2 could be emitted

by the second unit, which would not

use up any allowances. See 58 FR 60951

(Nov. 18, 1993). In section 408(c)(1)(B),

Congress adopted the solution of

requiring submission of a reduced

utilization plan by owners and operators

of any Phase I unit that plans to reduce

the unit’s utilization in order to comply

with Phase I emissions limitations. The

plan must designate the units (referred

to as ‘‘compensating units’’) to which

generation was shifted or account for

the reduced utilization through energy

conservation or improved unit

efficiency. 59 FR 60219 (Nov. 22, 1994).

Section 403(d) provides that the Acid

Rain regulations must permit utilities to

continue to operate in an economic and

reliable fashion (e.g., through central

dispatching that may result in shifting

generation from Phase I units to other

units or generators). However, section

403(d) also provides that the Acid Rain

regulations must require utilities to

compensate at the end of the year for

emissions resulting from such

operations and must facilitate orderly

and competitive functioning of the

allowance system. 56 FR 63019 (Dec. 3,

1991).

In order to achieve the objectives of

both section 403(d) and section

408(c)(1)(B), EPA adopted, in the

January 11, 1993 regulations,

requirements concerning the submission

of reduced utilization plans and

allowance surrender for

underutilization. The regulations
Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations 18463

1 In addition, § 72.91(a) of the January 11, 1993

regulations is revised to make it clear that the

reporting requirements in § 72.91 apply only to

calendar years in Phase I. Since § 72.92(a) applies

to calendar years covered by § 72.91, this limitation

applies to reporting under both sections. This

reflects the fact that reduced utilization is a

problem only in Phase I, when a minority of utility

units are subject to Acid Rain SO2 emissions

limitations. See 56 FR 63018 and 58 FR 3605.

2Because the allowance surrender procedures are

found in both § 72.91 and § 72.92, § 72.33(a) is

revised to refer to both sections. The same change

is made, for the same reason, in § 72.33(c)(4) and

(e)(2) and § 72.33(f)(2) (iv) and (v). This conforms

Continued

require that the designated

representative of any Phase I unit with

utilization below baseline apply

formulas in §§ 72.91 and 72.92

estimating the emissions (if any)

resulting from such underutilization

and surrender allowances covering the

estimated emissions. In this way, the

emissions consequences of shifting

generation from Phase I units are

accounted for, and Phase I SO2 emission

reduction goals are preserved, without

the designation of specific

compensating units.

In addition, the January 11, 1993

regulations require the submission of a

reduced utilization plan for any Phase I

unit that is planned to be utilized below

baseline as a method of complying with

SO2 emissions limitations. However, if

the allowance surrender requirements

are met and the unit meets criteria in

§ 72.43(e), a plan is not required. The

criteria are broadly drawn. For example,

under these criteria, a plan need not be

submitted for underutilization caused

by economic dispatching that reflected

increases in generation costs (e.g.,

allowance costs) at the unit. The Agency

adopted this approach of limiting the

plan submission requirement because of

concern that, inter alia, economic

dispatch and operation of utility

systems or power pools might be

inhibited because utilities might be

unable to designate compensating units.

56 FR 63021.

II. Reduced Utilization Plans

As noted above, § 72.43(e) of the

January 11, 1993 regulations sets forth

criteria for making retrospective

determinations as to whether a Phase I

unit was underutilized for the purpose

of complying with SO2 emissions

limitations. If underutilization was for

the purpose of compliance, then the

unit must have a reduced utilization

plan. If underutilization was incidental

to utility operations, no plan is needed.

In particular, a plan is not required if

the allowance surrender requirements

under §§ 72.91 and 72.92 are met and

one of several demonstrations are made.

The demonstrations involve showing

that the unit’s underutilization was

caused by a dispatch-system-wide sales

decline, a forced outage at the unit, or

economic dispatching. If none of these

demonstrations can be made, the

Agency determines on a case-by-case

basis, considering certain indicators set

forth in § 72.43(e)(2), whether a plan

should have been submitted.

The Agency has concluded that this

approach is unnecessarily complicated

and burdensome. Because of concerns

that Phase I units would be unable to

designate compensating units, the

criteria in § 72.43(e) for avoiding

submission of a reduced utilization plan

were designed to apply broadly. In

particular, a plan is not required to the

extent underutilization is caused by

economic dispatching. Consequently,

under these criteria, plan submission is

largely optional so long as the allowance

surrender requirements are met.

However, despite their broad scope,

the criteria still leave some uncertainty

as to whether the Agency will agree that

a reduced utilization plan is not

required even if allowances are

surrendered. Further, owners and

operators of Phase I units carry the

burden of showing that the criteria are

met. In fact, the January 11, 1993

regulations require Phase I unit owners

and operators to show in their annual

compliance certification reports the

amounts of underutilization caused by

sales decline, forced outage, or

economic dispatching. 40 CFR

72.92(a)(2) (1993). The annual reports

must also include specified information

on forced outages at Phase I units. 40

CFR 72.92(a)(3) (1993). Additional

submissions are required during the

year in the event of a forced outage that

will permanently shut down a Phase I

unit and result in shifting generation to

other units. 40 CFR 72.92(b)(1) (1993).

Yet, this uncertainty and burden serve

no real purpose if the allowance

surrender requirements of §§ 72.91 and

72.92 are met. The allowance surrender

procedures account for the emissions

consequences of underutilization and

consequent shifting of generation and

therefore obviate the need for a reduced

utilization plan under section

408(c)(1)(B) of the Act. Once

underutilization is accounted for under

§§ 72.91 and 72.92, there is no basis for

requiring any further accounting

through the designation of

compensating units or energy

conservation or unit efficiency

measures.

The Agency concludes that § 72.43(e)

should be revised so that the

requirement to submit a reduced

utilization plan for an underutilized

Phase I unit is eliminated if the

allowance surrender and reporting

requirements of §§ 72.91 and 72.92 are

met. This is a reasonable way of

harmonizing sections 408(c)(1)(B) and

403(d) of the Act. The other criteria in

§ 72.43(e) are therefore superfluous and

are removed. Sections 72.92(a)(2) and

(3) and (b)(1) of the January 11, 1993

regulations, requiring submission of

information in annual and other reports

related to the removed criteria in

§ 72.43(e), are also unnecessary and are

removed.1

III. Dispatch System

The dispatch system of a unit plays an

important role in the allowance

surrender calculations under §§ 72.91

and 72.92. For example, if a Phase I unit

has a reduced utilization plan, the

amount of reduced utilization

accounted for under the plan (by a

compensating unit, conservation or

improved unit efficiency measures, or

sulfur-free generators) must be

determined. See 40 CFR 72.91(a)(3)

(1993) (requiring calculation of ‘‘plan

reductions’’). The percentage change in

the total sales of the dispatch system is

a factor in calculating reduced

utilization accounted for by a sulfur-free

generator. 40 CFR 72.91(a)(3)(iii) (1993).

As a further example, the total

generation produced by the units and

generators in a dispatch system during

a Phase I calendar year must be used to

determine the percentage of total

dispatch system sales for the year that

was generated by units and generators

in the dispatch system. That percentage

is used in calculating the emissions rate

that is in turn used to determine how

many allowances must be surrendered

for the year. 40 CFR 72.92(c)(2)(v)(A)

(1993).

The Agency is revising § 72.33(a), (b),

and (c) to clarify certain matters

concerning the determination of a unit’s

dispatch system. In addition, while

§ 72.33(f) allowed owners and operators

of Phase I units to request that a Phase

I unit be apportioned among its owners

and their dispatch systems, certain

revisions of the provision are needed to

make it more workable and to

coordinate it with the allowance

surrender procedures under §§ 72.91

and 72.92.

A. Utility System and Identification of

Dispatch System

Under § 72.33, each Phase I unit must

be treated as part of a dispatch system

for purposes of the allowance surrender

procedures,2 and the unit’s utility
18464 Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations

these provisions with other provisions in the

January 11, 1993 regulations that cite both sections.

3 The units and generators included in a given

dispatch system under § 72.33(b) or (e) may be

changed under § 72.33(d). A complete identification

of dispatch system, reflecting the change, must be

submitted for both the dispatch system from which

the units or generators are removed and the

dispatch system to which the units or generators are

added. If the entire dispatch system from which the

units or generators are removed is included in the

dispatch system to which they are added, then an

identification of dispatch system is necessary only

for the latter dispatch system.

system (as defined in § 72.2) is its

dispatch system unless a complete

identification of dispatch system

including that unit is submitted under

§ 72.33.

In the January 11, 1993 regulations,

utility system is defined as all

interconnected units and generators

controlled by the same utility operating

company, as reported in the National

Allowance Data Base (NADB). The

difficulty with this definition is that the

NADB was published in final form in

March 1993 and necessarily reflects

information on utility systems as of that

time. The Agency recognizes that the

owners and operators of some units

have changed since 1993 and,

particularly in light of increased

competition in the electric utility

industry, that more changes may occur

during Phase I. In order to clarify that

designated representatives may submit

identifications of dispatch system to

correct the utility system in which a

unit or generator is listed in the NADB

and that is used as its dispatch system,

the Agency is revising the utility-system

definition. Section 72.2 now defines

utility system as all interconnected

units and generators operated by the

same utility company and does not refer

to the NADB. Section 72.33(e)(1) is

revised to state that unless otherwise

provided in an identification of dispatch

system, a unit or generator included in

the NADB retains, as its dispatch

system, the utility system reported in

the NADB.

The NADB lists one utility operating

company for each Phase I unit, Phase II

unit, and non-affected unit in the

database. Section 72.33(b)(2) of the

January 11, 1993 regulations states that,

except as provided under § 72.33(f), no

Phase I unit may be listed in more than

one identification of dispatch system.

Although § 72.33(b) of the January 11,

1993 regulations does not state

explicitly that other units or generators

also must be confined to a single

identification of dispatch system, other

provisions of the regulations reflect

such a limitation. For example,

§ 72.33(f) states that, except for the

provisions for apportioning Phase I

units under § 72.33(f), all provisions of

the regulations ‘‘applicable to an

affected source or affected unit * * *

apply to the entire unit.’’ 40 CFR

72.33(f)(6) (1993). By further example,

the provisions requiring calculation of

the ‘‘total’’ generation of the units and

generators in a dispatch system are

based on entire units and generators and

do not provide for division of a unit’s

or generator’s generation among more

than one dispatch system, except for

Phase I units apportioned under

§ 72.33(f). 40 CFR 72.92(c)(2)(v)(A)

(1993). See also 40 CFR

72.91(a)(3)(iii)(A) (1993) (‘‘actual

annual’’ generation of the sulfur-free

generator). In addition, dispatch system

emissions rate, which is calculated

using the actual annual emissions rate

of all Phase II units in the dispatch

system, is based on the utilization of

entire units, and there is no provision

allowing apportionment of Phase II

units. 40 CFR 72.92(c)(2)(v)(C) (1993).

In order to remove any possible

uncertainty concerning the treatment of

Phase II units, non-affected units, and

generators (including sulfur-free

generators and, as discussed below,

non-utility generators), the Agency is

revising § 72.33(b)(2) to state that, with

one exception, a unit or generator can be

included in only one dispatch system.3

The only exception is provided in

§ 72.33(f), under which a petition to

apportion a Phase I unit among two or

more dispatch systems may be

submitted and approved. Section

72.33(f) provides that, if the petition is

approved, the portions of the Phase I

unit will be treated as separate units

under §§ 72.91 and 72.92, the allowance

surrender provisions.

Several other revisions are made here

to the provisions concerning

identification of dispatch system. While

the January 11, 1993 regulations require

a complete identification of dispatch

system to include a list of all units and

sulfur-free generators in the dispatch

system, the revised rule expands that

list to include all generators, including

sulfur-free generators and non-utility

generators. The January 11, 1993

regulations also require that if the

submissions under §§ 72.91 and 72.92

by all designated representatives of the

units in the identified dispatch system

do not conform to the system-wide data

provided for the dispatch system, the

Administrator must reject the

identification of dispatch system and all

the submissions and require

resubmission using the utility system of

each unit as that unit’s dispatch system.

The revised regulations make such

rejection optional so that the Agency

may instead require corrections of the

submissions and allow the

identification of dispatch system to

remain in effect. Sections 72.33(c)(4)

and (e)(2) are revised to implement that

change. Finally, § 72.33(b)(3) is revised

so that the deadline for providing an

identification of dispatch system is the

same as for providing a petition to

apportion a Phase I unit under

§ 72.33(f)(1), i.e., submission to EPA by

January 30 of the year that the dispatch

system is to take effect.

B. Apportionment of Phase I Units

The January 11, 1993 regulations only

allow for the apportionment of Phase I

units, and such apportionment is only

for the purpose of applying the

allowance surrender procedures of

§§ 72.91 and 72.92. Under § 72.33(f) of

the January 11, 1993 regulations, Phase

I units with multiple owners may

petition to divide up the unit, for

allowance surrender, into portions, i.e.,

one or more individual owners’ portions

representing the owners’ respective

percentage ownership interests in the

capacity of the unit and the remaining

portion of the unit. The petition

requests that each individual owner’s

portion be treated as part of a dispatch

system different than the dispatch

system of the remaining portion. If the

petition is approved, the adjusted

utilization (which, if greater than zero,

is underutilization) is calculated for the

entire unit for the Phase I year governed

by the approved petition, and each

portion of the unit takes its percentage

of the adjusted utilization reflecting the

ownership percentage that the portion

of the unit represents. Each portion of

the unit then uses its share of the entire

unit’s adjusted utilization in calculating

how many allowances (if any) must be

surrendered for underutilization of the

Phase I units in its respective dispatch

system.

The Agency received public comment

expressing concern that requiring the

portions of a Phase I unit to divide

among them the adjusted utilization

calculated for the entire unit fails to

reflect differences among the Phase I

unit owners’ respective utilizations of

their shares of the unit. While during

the Phase I year one owner might take

generation representing more than its

percentage share of the baseline of the

entire unit, another owner might take

generation representing less than its

percentage share.

Section 72.33(f) is revised to require

the separate calculation of adjusted

utilization under § 72.91 for each

portion of the unit for which a petition

to apportion is approved and for the

remaining portion of the unit. This
Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations 18465

approach meets the commenters’

concerns. The separate calculation of

adjusted utilization is made a uniform

requirement for all apportioned Phase I

units in order to ensure that overall

there is no net adverse environmental

impact from apportionment and to

avoid the potential confusion and

administrative burden of having two

entirely different approaches for

calculating reduced utilization of

apportioned units.

Public comment has also been

directed at the requirement that

apportionment be based exclusively on

the owners’ percentage ownership

interest in the capacity of the Phase I

unit. According to commenters, unit

owners in some cases have entered into

private agreements to divide up the

allowances allocated to the unit based

on percentage ownership of capacity

during 1985–1987 while owners in

other cases have agreed to divide up

allocated allowances based on each

owner’s percentage share of utilization

of the unit during 1985–1987.

Commenters have requested that the

regulations allow the basis for unit

apportionment for purposes of

allowance surrender to be consistent

with the basis for dividing up the unit’s

allowance allocation.

The Agency is willing to meet these

concerns and accommodate underlying

private agreements among unit owners

so long as the resulting regulatory

provisions are not too complex and do

not appear to cause overall any net

adverse environmental impact. This is

consistent with the Agency’s general

approach of avoiding interfering with

existing relationships among owners

and operators. See 58 FR 3598.

Consequently, the revised § 72.33(f)

allows the designated representative to

elect in the apportionment petition one

of two methods for apportioning the

Phase I unit: the first method is based

on the average of the owner’s percentage

ownership of the capacity of the unit for

each year in 1985–1987; and the second

method is based on the average of the

unit’s annual utilization that is

attributed to the owner for 1985–1987.

In order to avoid gaming by changing

the apportionment method to minimize

allowance surrender each year, the

regulations make the selection of the

apportionment method a one-time

election for each Phase I unit. The same

apportionment method must be used for

all portions of the units for all years in

Phase I for which any petition to

apportion is approved and in effect.

Further, the Agency is concerned that,

whichever apportionment method is

elected, the baselines and actual

utilizations for the portions of the unit

must not double-count or undercount

any of the baseline and actual

utilization for the entire unit.

Consequently, the revised regulations

require that the sum of the baselines of

the portions of the unit (including the

individual owners’ portions and the

remaining portion of the unit) equal

100% of the baseline of the entire unit.

Similarly, for each Phase I year, the sum

of the actual utilizations of the portions

must equal 100% of the entire unit’s

actual utilization. In order to ensure that

the attribution of a unit’s utilization

(whether baseline or actual utilization)

to specific owners is not arbitrary, the

regulations require that the same

accounting procedures used to attribute

the unit’s fuel costs among the owners

be used for attributing utilization. This

is reasonable because fuel costs at a unit

are directly related to the unit’s

utilization (i.e., the mmBtu of fuel

consumed).

The revised § 72.33(f) establishes the

requirements for the contents of a

complete petition to apportion and

provides that the Administrator may

prescribe a format. In addition to the

requirements in the January 11, 1993

regulations, the petition must include

the election of apportionment method

and a list of the units and generators

and apportioned units to be included in

the dispatch system proposed for each

portion of the unit covered by the

petition. The designated representative

is not required to submit with the

petition the documentation supporting

the baselines for the portions of the unit

or the dispatch systems proposed for

each portion of the unit. The Agency

maintains that this is a sound approach

in light of: the certifications by the

designated representatives that the

information in the petition is true,

accurate, and complete; the Agency’s

ability to require submission of

additional information before acting on

the petition or at any other time; and the

potential for after-the-fact spot audits.

The January 11, 1993 regulations

require that, with regard to the dispatch

system proposed for each owner’s

portion of the unit, the dispatch system

must be a group of all units and

generators that are interconnected and

centrally dispatched and that are

included in the same utility system,

holding company, or power pool. The

difficulty with this requirement is that

a Phase I unit to be apportioned has

multiple owners and only one owner

may be the operator. A non-operating

owner’s portion of the unit cannot be in

the ‘‘utility system’’ of the nonoperating owner’s other units and

generators because, as defined in § 72.2,

only units and generators with the same

operator comprise a ‘‘utility system’’. In

order to avoid this problem, the revised

regulations require that the proposed

dispatch system for each owner’s

portion of the unit include all units and

generators that are interconnected and

centrally dispatched by a single utility

system, the service company of a single

holding company, or a single power

pool.

Upon approval of an apportionment

petition and the proposed dispatch

systems, the allowance surrender

formulas are applied to each portion of

the Phase I unit and its respective

dispatch system. The designated

representative of the apportioned unit

must surrender all allowances required

for surrender by each portion of the

unit.

There is no provision in the January

11, 1993 regulations for termination of

an approved apportionment of a Phase

I unit. The Agency is concerned that

after approval of an apportioned Phase

I unit, circumstances may change so that

the apportionment is no longer

appropriate. For example, the owner of

one portion of the apportioned unit

could sell its entire interest in the unit

and stop dispatching that portion of the

unit. The dispatch system that, because

of the approved apportionment,

includes that portion of the unit would

now include a portion of the unit that

was no longer centrally dispatched

along with the other units and

generators in the dispatch system. That

aspect of the approved apportionment

(and the designated representative’s

certification concerning the continued

central dispatching of the dispatch

system) would no longer be accurate

and the apportionment should be

terminated. Of course, a new

apportionment reflecting the new

composition of ownership interests in

the Phase I unit could be submitted for

approval. Even without any change in

ownership or dispatching, the owners of

the Phase I unit might determine that an

apportionment is no longer desirable.

To accommodate changes in

circumstance and to provide owners

more flexibility, the revised regulations

include a procedure for terminating

apportionments. If a notice of

termination is signed by the designated

representatives of all units that could be

affected by the termination (i.e., of all

units included in all dispatch systems

that include any portion of the unit) and

submitted by January 30, the

apportionment is terminated for that

year and all remaining Phase I years.

IV. Emissions Rate

The January 11, 1993 regulations

require that the emissions consequences
18466 Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations

4 If emissions limitations vary depending on the

fuel used, the most stringent emissions limitation

must be calculated for each fuel used. The resulting

limitation with the highest lbs/mmBtu must be used

as the estimate for the actual emissions rate of the

non-utility generator.

5This default emissions rate is the average SO2

emissions rate for natural gas and was used for

purposes of allocating allowances to utility units

under section 405 of the Act. See Compilation of

Air Pollutant Emission Factors (AP–42), Vol. 1 at

1.4–1 through 1.4–3, US EPA (4th ed. 1985).

6The dispatch-system-wide data related to nonutility generators must be included in the dispatch

system data report under § 72.92(b).

of underutilization for a dispatch system

be estimated for each Phase I year by

multiplying that underutilization

(referred to as ‘‘dispatch system

adjusted utilization’’) by an emissions

rate for generation used by the dispatch

system to compensate for the

underutilization. The emissions rate is

composed of an emissions rate for

compensating generation produced by

non-Phase I units and generators within

the dispatch system and another

emissions rate for compensating

generation produced outside the

dispatch system by non-Phase I, nonforeign units and generators and

acquired by the dispatch system. To

calculate the composite emissions rate,

the emissions rate for generation within

the dispatch system is weighted by a

fraction equal to total generation by the

units and generators in the dispatch

system divided by total dispatch system

sales (i.e., total sales for direct use or

resale) of the named utility system,

holding company, or power pool that is

the dispatch system) for the year. The

actual annual emissions rates of the

Phase II units in the dispatch system are

used as a proxy for the actual emissions

rates of all non-Phase I units and

generators in the dispatch system.

Similarly, the emissions rate for

generation outside the dispatch system

is weighted by the fraction of total

dispatch system sales that is accounted

for by generation outside the dispatch

system. NERC region emissions rates for

non-Phase I, non-foreign units for 1985

are used as a proxy for the current

emissions rates of non-Phase I, nonforeign units and generators.

In light of public comment concerning

compensating generation from nonutility generators, the calculation of the

emissions rate of non-Phase I units in

the dispatch system, and 1985 NERC

emissions rates, the Agency is revising

these aspects of the January 11, 1993

regulations.

A. Non-Utility Generators

The Agency received public comment

that some utilities are required by

Federal or State law or by order of their

State public utility commission to

purchase electricity from non-utility

generators. This required purchase of

electricity may result in reduced

utilization of the utility’s own Phase I

units. Since non-utility generators may

have a different—apparently often

lower—emissions rate than that of the

utility’s Phase II units or the NERC

region emissions rate, the commenters

urged that the formulas in § 72.92 be

revised to take account of this third

possible source of compensating

generation.

The allowance surrender procedures

in §§ 72.91 and 72.92 are not intended

to result in a precise calculation of the

emissions consequences of

underutilization of Phase I units. The

procedures were adopted to provide an

administratively feasible method of

developing reasonable estimates of the

emissions resulting from generation

compensating for underutilization. In

light of this goal, the January 11, 1993

regulations establish a composite

emissions rate based on two general

categories of compensating generation.

Because some utilities are obligated by

law to purchase non-utility generation

that may force them to reduce

generation at their own units and

because non-utility generators tend to

have relatively low SO2 emissions, the

Agency is revising the regulations to

take account of non-utility generation.

This change increases somewhat the

complexity of the allowance surrender

formulas but, as a practical matter, only

utilities that must buy from non-utility

generators are affected by the change.

While the Agency maintains that, on

balance, the change is reasonable, the

Agency stresses that the allowance

surrender formulas are only intended to

estimate emissions and that any more

refinements that would further

complicate the formulas would seem to

be counterproductive.

The provisions incorporating nonutility generators into the allowance

surrender procedures are premised on

the fact that utilities acquiring nonutility generation have very limited

information about the non-utility

generators. Utilities contract to purchase

non-utility generation but, as a result of

not owning or operating these

generators, have little or no knowledge

about the fuels used by, and the heat

rates and emission rates of, the

generators. The Agency similarly has

limited information about non-utility

generators because they are not affected

units. Consequently, the revised

regulations use the available

information on these generators (i.e.,

their emissions limitations and Kwh

sales to utilities) to estimate emissions

from compensating generation acquired

from them.

In order to be treated as a non-utility

generator, a power production facility

cannot be an affected unit or a sulfurfree generator. The facility must use its

most stringent federally enforceable or

State enforceable SO2 emissions

limitation for the Phase I year as the

estimate of its actual emissions rate.4

With one exception, if no unit-specific

limitation that can be expressed in lbs/

mmBtu is applicable to the facility for

the year, then the facility cannot be

treated as a non-utility generator for that

year. The only exception is where a

facility without an emissions limitation

is authorized by law to use only natural

gas as fuel; in that case the most

stringent emissions limitation for the

facility is deemed to be 0.0006 lbs/

mmBtu.5

As discussed above, the January 11,

1993 regulations calculate a composite

emissions rate for a dispatch system

reflecting compensating generation from

within or from outside the dispatch

system. The revised regulations

introduce a third category, non-utility

generation from non-utility generators,

which equals the total generation

acquired from non-utility generators

that the dispatch system is required to

purchase by Federal or State law or

order of a utility regulatory commission

or under a contract awarded as the

result of a power purchase solicitation

required by Federal or State law or

utility regulatory commission order. To

prevent double-counting, such

generation is excluded in calculating the

fractions of dispatch system sales

accounted for by generation within or

outside the dispatch system. Total nonutility generation from non-utility

generators is used to calculate the

fraction of dispatch system sales

accounted for by such generators.

The non-utility generator average

emissions rate is calculated using the

most stringent emissions limitation (or

for natural-gas-only facilities, the

default emissions rate) for each nonutility generator from which the

dispatch system was required to

purchase electricity, weighted by the

amount (kwh) of required electricity

purchases during the year. The fraction

of generation from non-utility generators

and the non-utility generator average

emissions rate are used, along with the

comparable data for generation within

and outside the dispatch system, to

derive the composite emissions rate

multiplied by the underutilization for

the dispatch system for the year.6 This

yields the total number of allowances
Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations 18467

7The definition of ‘‘sulfur-free generation’’ is

revised to make it clear that only facilities in the

48 contiguous states in the United States or the

District of Columbia may qualify as sulfur-free

generators under reduced utilization plans. All

foreign generation (including foreign generation

that involves no SO2 emissions) that offset

underutilization is already excluded from

allowance surrender in the revised Table 1.

Allowing foreign facilities to be designated as

sulfur-free generators and the generation acquired

from them to be used to offset underutilization

would double-count such generation.

that must be surrendered by Phase I

units in the dispatch system.

B. Dispatch System Emissions Rate

The January 11, 1993 regulations use

the actual annual emissions rate for a

dispatch system’s Phase II units to

estimate the emissions rate for the

dispatch system’s non-Phase I units. In

the December 3, 1991 proposed

regulations, the Agency proposed to

weight the actual annual emissions rate

for each Phase II unit by the amount of

the Phase II unit’s increase in utilization

for the year over baseline. 56 FR 63147–

48 (Dec. 3, 1991). The January 11, 1993

regulations adopted a simpler approach

of weighting actual annual emissions

rates by each Phase II unit’s total

utilization for the year. 58 FR 3685.

However, the Agency has received

public comments suggesting that

weighting by the increase over baseline

provides a more realistic estimate. It

seems reasonable to treat a utilization

reduction since 1985–1987 of one unit

in a dispatch system as being

compensated for by a utilization

increase since 1985–1987 of another

unit in that dispatch system. Further,

this approach is similar to that taken

with regard to sulfur-free generators.

Compensating generation claimed to be

acquired from sulfur-free generators

under a reduced utilization plan cannot

exceed the amount of electricity

produced by the sulfur-free generator in

excess of the average annual amount

produced by the generator in 1985–

1987. See 58 FR 3682. For these reasons,

the Agency is revising the provisions for

calculating dispatch system emissions

rate to weight Phase II units’ actual

emissions rates by each unit’s increased

utilization over baseline. However, the

Agency recognizes that it is possible

that no Phase II unit in a dispatch

system has increased utilization over

baseline. In that case, non-affected units

are providing the compensating

generation but, because of the lack of

emissions data from such units, the

Phase II unit emissions rate must still be

used as a proxy for non-affected units’

emissions rates. The revised regulations

therefore provide that if no Phase II unit

is used above baseline, an average rate

must be calculated using the Phase II

units’ annual actual emissions rates

weighted by each unit’s total utilization.

Moreover, if a dispatch system has no

Phase II unit emissions rate for the year,

the NERC region emissions data will be

used instead.

C. NERC Region Emissions Rate

The January 11, 1993 regulations use

1985 NERC data to establish the nonPhase I, non-foreign emissions rate for

each NERC region. The 1985 emissions

rate for units in the NERC region is

multiplied by the fraction of non-Phase

I, nonforeign units in the NERC region

in order to exclude generation and

resulting emissions from Phase I units

and all foreign units and generators.

The Agency has learned through

public comment that the figures in the

regulations for the fraction of non-Phase

I, non-foreign generation contained

inadvertent errors and failed to actually

exclude foreign generation. The Agency

has recalculated the fractions of nonPhase I, non-foreign generation for each

NERC region. Table 1 of the revised

regulations includes the corrected

figures so that foreign generation is

excluded as intended.7

VI. Administrative Requirements

A. Executive Order 12866

Under Executive Order 12866, 58 FR

51735 (Oct. 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 rule is a ‘‘significant regulatory

action’’ because the rule seems to raise

novel legal or policy issues. As such,

this action was submitted to OMB for

review. Any written comments from

OMB to EPA, any written EPA response

to those comments, and any changes

made in response to OMB suggestions or

recommendations are included in the

docket. The docket is available for

public inspection at the EPA’s Air

Docket Section, which is listed in the

ADDRESSES section of this preamble.

B. Unfunded Mandates Act

Section 202 of the Unfunded

Mandates Reform Act of 1995

(‘‘Unfunded Mandates Act’’) (signed

into law on March 22, 1995) 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 direct 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 costeffective, 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. However, as

discussed in this preamble, the rule has

the net effect of reducing the burden of

part 72 of the Acid Rain regulations on

regulated entities, including both

investor-owned and municipal utilities.

C. Paperwork Reduction Act

The information collection

requirements in this rule have been

approved by OMB under the Paperwork

Reduction Act, 44 U.S.C. 3501, et seq.,

and have been assigned control number

2060–0258.
18468 Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations

This collection of information reduces

the estimated burden, as compared to

the burden under the January 11, 1993

regulations, by an average of 35 hours

per response for about 110 responses.

These estimates include time for

reviewing instructions, searching

existing data sources, gathering and

maintaining the data needed, and

completing and reviewing the collection

of information. An Information

Collection Request document and

estimates of the public reporting burden

were prepared in connection with the

January 11, 1993 regulations. 56 FR

63098; 58 FR 3650.

Send comments regarding this burden

analysis or any other aspect of this

collection of information, including

suggestions for reducing the burden, to

Chief, Information Policy Branch, EPA,

401 M Street, SW. (Mail Code 2136),

Washington, DC 20460; and to the

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Washington, DC 20503, marked

‘‘Attention: Desk Officer for EPA.’’

D. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5

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

agency to consider potential impacts of

its regulations on small business

‘‘entities.’’ Under 5 U.S.C. 604(a), an

agency issuing a notice of proposed

rulemaking must prepare and make

available for public comment a

regulatory flexibility analysis. Such an

analysis is not required if the head of an

agency certifies that a rule will not have

a significant economic impact on a

substantial number of small entities,

pursuant to 5 U.S.C. 605(b).

In the preamble of the January 11,

1993 regulations, the Administrator

certified that those regulations,

including the provisions revised by

today’s final rule, would not have a

significant impact. 58 FR 3649. The

final rule revisions adopted today are

not significant enough to change the

economic impact addressed in the

January 11, 1993 preamble. Pursuant to

the provisions of 5 U.S.C. 605(b), I

hereby certify that the revised rule will

not have a significant, adverse impact

on a substantial number of small

entities.

E. Miscellaneous

In accordance with section 117 of the

Act, issuance of this rule was preceded

by consultation with any appropriate

advisory committees, independent

experts, and federal departments and

agencies.

List of Subjects in 40 CFR Part 72

Environmental protection, Acid rain

program, Air pollution control,

Compliance plans, Electric utilities,

Permits, Reporting and recordkeeping

requirements, Sulfur dioxide.

Dated: March 31, 1995.

Carol M. Browner,

Administrator, U.S. Environmental Protection

Agency.

For the reasons set forth in the

preamble, chapter I of title 40 of the

Code of Federal Regulations is amended

as follows.

PART 72—[AMENDED]

1. The authority citation for part 72

continues to read as follows:

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

2. Section 72.2 is amended by revising

the definitions for ‘‘sulfur-free

generation’’ and ‘‘utility system’’ to read

as follows:

§ 72.2 Definitions.

* * * * *

Sulfur-free generation means the

generation of electricity by a process

that does not have any emissions of

sulfur dioxide, including hydroelectric,

nuclear, solar, or wind generation. A

‘‘sulfur-free generator’’ is a generator

that is located in one of the 48

contiguous States or the District of

Columbia and produces ‘‘sulfur-free

generation.’’

* * * * *

Utility system means all

interconnected units and generators

operated by the same utility operating

company.

* * * * *

3. Section 72.33 is amended by

revising paragraphs (a), (b)(2), (b)(3),

(c)(2), (c)(4), (e), and (f) to read as

follows:

§ 72.33 Identification of dispatch system.

(a) Every Phase I unit shall be treated

as part of a dispatch system for purposes

of §§ 72.91 and 72.92 in accordance

with this section.

(b) * * *

(2) Except as provided in paragraph (f)

of this section, each unit or generator

may be included in only one dispatch

system.

(3) Any identification of dispatch

system must be submitted by January 30

of the first year for which the

identification is to be in effect.

(c) * * *

(2) The list of all units and generators

(including sulfur-free generators) in the

dispatch system.

* * * * *

(4) The following statement: ‘‘I certify

that, except as otherwise required under

a petition as approved under 40 CFR

72.33(f), the units and generators listed

herein are and will continue to be

interconnected and centrally

dispatched, and will be treated as a

dispatch system under 40 CFR 72.91

and 72.92, during the period that this

identification of dispatch system is in

effect. During such period, all

information concerning these units and

generators and contained in any

submissions under 40 CFR 72.91 and

72.92 by me and the other designated

representatives of these units shall be

consistent and shall conform with the

data in the dispatch system data reports

under 40 CFR 72.92(b). I am aware of,

and will comply with, the requirements

imposed under 40 CFR 72.33(e)(2).’’

* * * * *

(e) (1) Any unit or generator not listed

in a complete identification of dispatch

system that is in effect shall treat its

utility system as its dispatch system

and, if such unit or generator is listed

in the NADB, shall treat the utility

system reported under the data field

‘‘UTILNAME’’ of the NADB as its utility

system.

(2) During the period that the

identification of dispatch system is in

effect all information that concerns the

units and generators in a given dispatch

system and that is contained in any

submissions under §§ 72.91 and 72.92

by designated representative of these

units shall be consistent and shall

conform with the data in the dispatch

system data reports under § 72.92(b). If

this requirement is not met, the

Administrator may reject all such

submissions and require the designated

representatives to make the submissions

under §§ 72.91 and 72.92 (including the

dispatch system data report) treating the

utility system of each unit or generator

as its respective dispatch system and

treating the identification of dispatch

system as no longer in effect.

(f)(1) Notwithstanding paragraph

(e)(1) of this section or any submission

of an identification of dispatch system

under paragraphs (b) or (d) of this

section, the designated representative of

a Phase I unit with two or more owners

may petition the Administrator to treat,

as the dispatch system for an owner’s

portion of the unit, the dispatch system

of another unit.

(i) The owner’s portion of the unit

shall be based on one of the following

apportionment methods:

(A) Owner’s share of the unit’s

capacity in 1985–1987. Under this

method, the baseline of the owner’s

portion of the unit shall equal the
Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations 18469

baseline of the unit multiplied by the

average of the owner’s percentage

ownership of the capacity of the unit for

each year during 1985–1987. The actual

utilization of the owner’s portion of the

unit for a year in Phase I shall equal the

actual utilization of the unit for the year

that is attributed to the owner.

(B) Owner’s share of the unit’s

baseline. Under this method, the

baseline of the owner’s portion of the

unit shall equal the average of the unit’s

annual utilization in 1985–1987 that is

attributed to the owner. The actual

utilization of the owner’s portion of the

unit for a year in Phase I shall equal the

actual utilization of the unit for the year

that is attributed to the owner.

(ii) The annual or actual utilization of

a unit shall be attributed, under

paragraph (f)(1)(i) of this section, to an

owner of the unit using accounting

procedures consistent with those used

to determine the owner’s share of the

fuel costs in the operation of the unit

during the period for which the annual

or actual utilization is being attributed.

(iii) Upon submission of the petition,

the designated representative may not

change the election of the

apportionment method or the baseline

of the owner’s portion of the unit.

The same apportionment method

must be used for all portions of the unit

for all years in Phase I for which any

petition under paragraph (f)(1) of this

section is approved and in effect.

(2) The petition under paragraph (f)(1)

of this section shall be submitted by

January 30 of the first year for which the

dispatch system proposed in the

petition will take effect, if approved. A

complete petition shall include the

following elements in a format

prescribed by the Administrator:

(i) The election of the apportionment

method under paragraph (f)(1)(i) of this

section.

(ii) The baseline of the owner’s

portion of the unit and the baseline of

any other owner’s portion of the unit for

which a petition under paragraph (f)(1)

of this section has been approved or has

been submitted (and not disapproved)

and a demonstration that the sum of

such baselines and the baseline of any

remaining portion of the unit equals 100

percent of the baseline of the unit. The

designated representative shall also

submit, upon request, either:

(A) Where the unit is to be

apportioned under paragraph (f)(1)(i)(A)

of this section, documentation of the

average of the owner’s percentage

ownership of the capacity of the unit for

each year during 1985–1987; or

(B) Where the unit is to be

apportioned under paragraph (f)(1)(i)(B)

of this section, documentation showing

the attribution of the unit’s utilization in

1985, 1986, and 1987 among the

portions of the unit and the calculation

of the annual average utilization for

1985–1987 for the portions of the unit.

(iii) The name of the proposed

dispatch system and a list of all units

(including portions of units) and

generators in that proposed dispatch

system and, upon request,

documentation demonstrating that the

owner’s portion of the unit, along with

the other units in the proposed dispatch

system, are a group of all units and

generators that are interconnected and

centrally dispatched by a single utility

company, the service company of a

single holding company, or a single

power pool.

(iv) The following statement, signed

by the designated representatives of all

units in the proposed dispatch system:

‘‘I certify that the units and generators

in the dispatch system proposed in this

petition are and will continue to be

interconnected and centrally

dispatched, and will be treated as a

dispatch system under 40 CFR 72.91

and 72.92, during the period that this

petition, as approved, is in effect.’’

(v) The following statement, signed by

the designated representatives of all

units in all dispatch systems that will

include any portion of the unit if the

petition is approved: ‘‘During the period

that this petition, if approved, is in

effect, all information that concerns the

units and generators in any dispatch

system including any portion of the unit

apportioned under the petition and that

is contained in any submissions under

40 CFR 72.91 and 72.92 by me and the

other designated representatives of these

units shall be consistent and shall

conform to the data in the dispatch

system data reports under 40 CFR

72.92(b). I am aware of, and will comply

with, the requirements imposed under

40 CFR 72.33(f) (4) and (5).’’

(3) (i) The Administrator will approve

in whole, in part, or with changes or

conditions, or deny the petition under

paragraph (f)(1) of this section within 90

days of receipt of the petition. The

Administrator will treat the petition, as

changed or conditioned upon approval,

as amending any identification of

dispatch system that is submitted prior

to the approval and includes any

portion of the unit for which the

petition is approved. Where any portion

of a unit is not covered by an approved

petition, that remaining portion of the

unit shall continue to be part of the

unit’s dispatch system.

(ii) In approving the petition, the

Administrator will determine, on a caseby-case basis, the proper calculation and

treatment, for purposes of the reports

required under §§ 72.91 and 72.92, of

plan reductions and compensating

generation provided to other units.

(4) The designated representative for

the unit for which a petition is approved

under paragraph (f)(3) of this section

and the designated representatives of all

other units included in all dispatch

systems that include any portion of the

unit shall submit all annual compliance

certification reports, dispatch system

data reports, and other reports required

under §§ 72.91 and 72.92 treating, as a

separate Phase I unit, each portion of

the unit for which a petition is approved

under paragraph (f)(3) of this section

and the remaining portion of the unit.

The reports shall include all required

calculations and demonstrations,

treating each such portion of the unit as

a separate Phase I unit. Upon request,

the designated representatives shall

demonstrate that the data in all the

reports under §§ 72.91 and 72.92 has

been properly attributed or apportioned

among the portions of the unit and the

dispatch systems and that there is no

undercounting or double-counting with

regard to such data.

(i) The baseline of each portion of the

unit for which a petition is approved

shall be determined under paragraphs

(f)(1) (i) and (ii) of this section. The

baseline of the remaining portion of

such unit shall equal the baseline of the

unit less the sum of the baselines of any

portions of the unit for which a petition

is approved.

(ii) The actual utilization of each

portion of the unit for which a petition

is approved shall be determined under

paragraphs (f)(l) (i) and (ii) of this

section. The actual utilization of the

remaining portion of such unit shall

equal the actual utilization of the unit

less the sum of the actual utilizations of

any portions of the unit for which a

petition is approved. Upon request, the

designated representative of the unit

shall demonstrate in the annual

compliance certification report that the

requirements concerning calculation of

actual utilization under paragraph

(f)(1)(ii) and any requirements

established under paragraph (f)(3) of

this section are met.

(iii) Except as provided in paragraph

(f)(5) of this section, the designated

representative shall surrender for

deduction the number of allowances

calculated using the formula in

§ 72.92(c) and treating, as a separate

Phase I unit, each portion of unit for

which a petition is approved under

paragraph (f)(3) of this section and the

remaining portion of the unit.

(5) In the event that the designated

representatives fail to make all the

proper attributions, apportionments,
18470 Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations

calculations, and demonstrations under

paragraph (f)(4) of this section and

§§ 72.91 and 72.92, the Administrator

may require that:

(i) All portions of the unit be treated

as part of the dispatch system of the unit

in accordance with paragraph (e)(1) of

this paragraph and any identification of

dispatch system submitted under

paragraph (b) or (d) of this section;

(ii) The designated representatives

make all submissions under §§ 72.91

and 72.92 (including the dispatch

system data report), treating the entire

unit as a single Phase I unit, in

accordance with paragraph (e)(1) of this

paragraph and any identification of

dispatch system submitted under

paragraph (b) or (d) of this section; and

(iii) The designated representative

surrender for deduction the number of

allowances calculated, consistent with

the reports under paragraph (f)(5)(ii) of

this section and §§ 72.91 and 72.92,

using the formula in § 72.92(c) and

treating the entire unit as a single Phase

I unit.

(6) The designated representative may

submit a notification to terminate an

approved petition by January 30 of the

first year for which the termination is to

take effect. The notification must be

signed and certified by the designated

representatives of all units included in

all dispatch systems that include any

portion of the unit apportioned under

the petition. Upon receipt of the

notification meeting the requirements of

the prior two sentences by the

Administrator, the approved petition is

no longer in effect for that year and the

remaining years in Phase I and the

designated representatives shall make

all submissions under §§ 72.91 and

72.92 treating the petition as no longer

in effect for all such years.

(7) Except as expressly provided in

paragraphs (f)(1) through (6) of this

section or the Administrator’s approval

of the petition, all provisions of the

Acid Rain Program applicable to an

affected source or an affected unit shall

apply to the entire unit regardless of

whether a petition has been submitted

or approved, or reports have been

submitted, under such paragraphs.

Approval of a petition under such

paragraphs shall not constitute a

determination of the percentage

ownership in a unit under any other

provision of the Acid Rain Program and

shall not change the liability of the

owners and operators of an affected unit

that has excess emissions under

§ 72.9(e).

4. Section 72.43 is amended by

revising paragraph (e) to read as follows:

§ 72.43 Phase I reduced utilization plans.

* * * * *

(e) Failure to Submit a Plan. The

designated representative of a Phase I

unit will be deemed not to violate,

during a Phase I calendar year, the

requirement to submit a reduced

utilization plan under paragraph (b)(1)

or (4) of this section if the designated

representative complies with the

allowance surrender and other

requirements of §§ 72.33, 72.91, and

72.92 of this chapter.

* * * * *

5. Section 72.91 is amended by

revising the introductory language of

paragraph (a) (the formula is

unchanged) to read as follows:

§ 72.91 Phase I unit adjusted utilization.

(a) Annual Compliance Certification

Report. The designated representative

for each Phase I unit shall include in the

annual compliance certification report

the unit’s adjusted utilization for the

calendar year in Phase I covered by the

report, calculated as follows:

* * * * *

6. Section 72.92 is amended by

revising paragraphs (a), (b)(2)(ii)(F),

(b)(2)(ii)(G), (b)(2)(ii)(H), (c)(2)(v) and

Table 1, removing and reserving

paragraph (b)(1), and adding paragraphs

(b)(2)(ii)(I) and (b)(2)(ii)(J) to read as

follows:

§ 72.92 Phase I unit allowance surrender.

(a) Annual Compliance Certification

Report. If a Phase I unit’s adjusted

utilization for the calendar year in Phase

I under § 72.91(a) is greater than zero,

then the designated representative shall

include in the annual compliance

certification report the number of

allowances that shall be surrendered for

adjusted utilization using the formula in

paragraph (c) of this section and the

calculations that were performed to

obtain that number.

(b) Other Submissions.

(1) [Reserved]

(2) * * *

(ii) * * *

(F) The calculation of ‘‘dispatch

system emissions rate’’ under paragraph

(c)(2)(v)(B) of this section;

(G) The calculation of ‘‘fraction of

generation from non-utility generators’’

under paragraph (c)(2)(v)(C) of this

section;

(H) The calculation of ‘‘non-utility

generator average emissions rate ‘‘ under

paragraph (c)(2)(v)(F) of this section;

(I) A certification that each designated

representative will use these figures, as

appropriate, in its annual compliance

certification report and will submit

upon request the data supporting these

calculations; and

(J) The signatures of all the designated

representatives.

(c) * * *

(2) * * *

(v) Calculating Emissions Rate.

‘‘Emissions rate’’ (in lbs/mmBtu) is the

weighted average emissions rate for

sulfur dioxide of all units and

generators, within and outside the

dispatch system, that contributed to the

dispatch system’s electrical output for

the year, calculated as follows:

Emissions rate = [fraction of generation

within dispatch system × dispatch

system emissions rate] + [fraction of

generation from non-utility generators ×

non-utility generator average emissions

rate] + [fraction of generation outside

dispatch system × fraction of non-Phase

1 and non-foreign generation in NERC

region × NERC region emissions rate]

Where:

(A) ‘‘Fraction of generation within

dispatch system’’ is the fraction of the

dispatch system’s total sales accounted

for by generation from units and

generators within the dispatch system,

other than generation from non-utility

generators. This term equals the total

generation (in Kwh) by all units and

generators within the dispatch system

for the calendar year minus the total

non-utility generation from non-utility

generators within the dispatch system

for the calendar year and divided by the

total sales (in Kwh) by the dispatch

system for the calendar year.

(B) Dispatch system emissions rate’’ is

the weighted average rate (in lbs/

mmBtu) for the dispatch system

calculated as follows:

Dispatch system emissions rate =

g r g i

i

k

i i

i

k

= =

∑ ∑÷

1 1
Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Rules and Regulations 18471

Where:

gi = the difference between a Phase II unit’s

actual utilization for the calendar year

and that Phase II unit’s baseline. If that

difference is less than or equal to zero,

then the difference shall be treated as

zero only for purposes of paragraph

(c)(2)(v) of this section and that unit will

be excluded from the calculation of

dispatch system emissions rate.

Notwithstanding the prior sentence, if

the actual utilization of each Phase II

unit for the year is equal to or less than

the baseline, then gi shall equal a Phase

II unit’s actual utilization for the year.

Notwithstanding any provision in this

paragraph (c)(2)(v)(B) to the contrary, if

the actual utilization of each Phase II

unit in the dispatch system is zero or

there are no Phase II units in the

dispatch system, then the dispatch

system emissions rate shall equal the

fraction of non-Phase I and non-foreign

generation in the NERC region

multiplied by the NERC region emissions

rate.

ri = a Phase II unit’s emissions rate (in lbs/

mmBtu), determined in accordance with

part 75 of this chapter, for the calendar

year.

k = number of Phase II units in the dispatch

system.

(C) ‘‘Fraction of generation from nonutility generators’’ is the fraction of the

dispatch system’s total sales accounted

for by generation acquired from nonutility generators within or outside the

dispatch system. This term equals the

total non-utility generation from nonutility generators (within or outside the

dispatch system) for the calendar year

divided by the total sales (in Kwh) by

the dispatch system for the calendar

year.

(D) ‘‘Non-utility generator’’ is a power

production facility (within or outside

the dispatch system) that is not an

affected unit or a sulfur-free generator

and that has a ‘‘non-utility generator

emissions rate’’ for the calendar year

under paragraph (c)(2)(v)(F) of this

section.

(E) ‘‘Non-utility generation’’ is the

generation (in Kwh) that the dispatch

system acquired from a non-utility

generator during the calendar year as

required by federal or State law or an

order of a utility regulatory authority or

under a contract awarded as the result

of a power purchase solicitation

required by federal or State law or an

order of a utility regulatory authority.

(F) ‘‘Non-utility generator average

emissions rate’’ is the weighted average

rate (in lbs/mmBtu) for the non-utility

generators calculated as follows:

Non-utility generator average

emissions rate =

N R N i

i

n

i i

i

n

= =

∑ ∑÷

1 1

Where:

Ni = non-utility generation from a non-utility

generator;

Ri = non-utility generator emissions rate for

the calendar year for a non-utility

generator, which shall equal the most

stringent federally enforceable or State

enforceable SO2 emissions limitation

applicable for the calendar year to such

power production facility, as determined

in accordance with paragraphs

(c)(2)(v)(F) (1), (2), and (3) of this section;

and

n = number of non-utility generators from

which the dispatch system acquired nonutility generation. If n equals zero, then

the non-utility generator average

emissions rate shall be treated as zero

only for purposes of paragraph (c)(2)(v)

of this section.

(1) For purposes of determining the

most stringent emissions limitation,

applicable emissions limitations shall

be converted to lbs/mmBtu in

accordance with Appendix B of this

part. If an applicable emissions

limitation cannot be converted to a unitspecific limitation in lbs/mmBtu under

appendix B of this part, then the

limitation shall not be used in

determining the most stringent

emissions limitation. Where the power

production facility is subject to different

emissions limitations depending on the

type of fuel it uses during the calendar

year, the most stringent emissions

limitation shall be determined

separately with regard to each type of

fuel and the resulting limitation with

the highest amount of lbs/mmBtu shall

be treated as the facility’s most stringent

federally enforceable or State

enforceable emissions limitation.

(2) If there is no applicable emissions

limitation that can be used in

determining the most stringent

emissions limitation under paragraph

(c)(2)(v)(F)(1) of this section, then the

power production facility has no nonutility generator emissions rate for

purposes of paragraphs (c)(2)(v) (D) and

(F) of this section and the generation

from the facility shall be treated, for

purposes of this paragraph (c)(2)(v) as

generation from units and generators

within the dispatch system if the facility

is within the dispatch system or as

generation from units and generators

outside the dispatch system if the

facility is outside the dispatch system.

(3) Notwithstanding paragraphs

(c)(2)(v)(F) (1) and (2) of this section, if

the power production facility is

authorized under federal or State law to

use only natural gas as fuel, then the

most stringent emissions limitation for

the facility for the calendar year shall be

deemed to be 0.0006 lbs/mmBtu.

(G) ‘‘Fraction of generation outside

dispatch system’’ = 1¥fraction of

generation within dispatch

system¥fraction of generation from

non-utility generators.

(H) ‘‘Fraction of non-Phase I and nonforeign generation in NERC region’’ is

the portion of the NERC region’s total

sales generated by units and generators

other than Phase I units or foreign

sources in the unit’s NERC region in

1985, as set forth in Table 1 of this

section.

(I) ‘‘NERC region emissions rate’’ is

the weighted average emission rate (in

lbs/mmBtu) for the unit’s NERC region

in 1985, as set forth in Table 1 of this

section.

TABLE 1.—NERC REGION GENERATION AND EMISSIONS RATE IN 1985

NERC region

Fraction

of nonphase I

and nonforeign

generation in

NERC

region

NERC

weighted

average

emissions

rate (lbs/

mmBtu)

WSCC ....................... 0.847 0.466

SPP ........................... 0.948 0.647

SERC ........................ 0.749 1.315

NPCC ........................ 0.423 1.058

MAPP ........................ 0.725 1.171

MAIN ......................... 0.682 1.495

MAAC ........................ 0.750 1.599

ERCOT ..................... 1.000 0.491

ECAR ........................ 0.549 1.564

[FR Doc. 95–8601 Filed 4–10–95; 8:45 am]

BILLING CODE 6560–50–P