[Code of Federal Regulations]
[Title 40, Volume 14]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR72.41]
[Page 48-54]
TITLE 40--PROTECTION OF ENVIRONMENT
CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)
PART 72--PERMITS REGULATION--Table of Contents
Subpart D--Acid Rain Compliance Plan and Compliance Options
Sec. 72.41 Phase I substitution plans.
(a) Applicability. This section shall apply during Phase I to the
designated representative of:
(1) Any unit listed in table 1 of Sec. 73.10(a) of this chapter; and
(2) Any other existing utility unit that is an affected unit under
this part, provided that this section shall not apply to a unit under
section 410 of the Act.
(b)(1) The designated representative may include, in the Acid Rain
permit application for a unit under paragraph (a)(1) of this section, a
substitution plan under which one or more units under paragraph (a)(2)
of this section are designated as substitution units, provided that:
(i) Each unit under paragraph (a)(2) of this section is under the
control of the owner or operator of each unit under paragraph (a)(1) of
this section that designates the unit under paragraph (a)(2) of this
section as a substitution unit; and
(ii) In accordance with paragraph (c)(3) of this section, the
emissions reductions achieved under the plan shall be the same or
greater than would have been achieved by all units governed by the plan
without such plan.
(2) The designated representative of each source with a unit
designated as a substitution unit in any plan submitted under paragraph
(b)(1) of this section shall incorporate in the permit application each
such plan.
(3) The designated representative may submit a substitution plan not
later than 6 months (or 90 days if submitted in accordance with
Sec. 72.82), or a notification to activate a conditionally approved plan
in accordance with Sec. 72.40(c) not later than 60 days, before
[[Page 49]]
the allowance transfer deadline applicable to the first year for which
the plan is to take effect.
(c) Contents of a substitution plan. A complete substitution plan
shall include the following elements in a format prescribed by the
Administrator:
(1) Identification of each unit under paragraph (a)(1) of this
section and each substitution unit to be governed by the substitution
plan. A unit shall not be a substitution unit in more than one
substitution plan.
(2) Except where the designated representative requests conditional
approval of the plan, the first calendar year and, if known, the last
calendar year in which the substitution plan is to be in effect. Unless
the designated representative specifies an earlier calendar year, the
last calendar year will be deemed to be 1999.
(3) Demonstration that the total emissions reductions achieved under
the substitution plan will be equal to or greater than the total
emissions reductions that would have been achieved without the plan, as
follows:
(i) For each substitution unit:
(A) The unit's baseline.
(B) Each of the following: the unit's 1985 actual SO2
emissions rate; the unit's 1985 allowable SO2 emissions rate;
the unit's 1989 actual SO2 emissions rate; the unit's 1990
actual SO2 emissions rate; and, as of November 15, 1990, the
most stringent unit-specific federally enforceable or State enforceable
SO2 emissions limitation covering the unit for 1995-1999. 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. Where the most stringent
emissions limitation is not the same for every year in 1995-1999, the
most stringent emissions limitation shall be stated separately for each
year.
(C) The lesser of: the unit's 1985 actual SO2 emissions
rate; the unit's 1985 allowable SO2 emissions rate; the
greater of the unit's 1989 or 1990 actual SO2 emissions rate;
or, as of November 15, 1990, the most stringent unit-specific federally
enforceable or State enforceable SO2 emissions limitation
covering the unit for 1995-99. Where the most stringent emissions
limitation is not the same for every year during 1995-1999, the lesser
of the emissions rates shall be determined separately for each year
using the most stringent emissions limitation for that year.
(D) The product of the baseline in paragraph (c)(3)(i)(A) of this
section and the emissions rate in paragraph (c)(3)(i)(C) of this
section, divided by 2000 lbs/ton. Where the most stringent emissions
limitation is not the same for every year during 1995-1999, the product
in the prior sentence shall be calculated separately for each year using
the emissions rate determined for that year in paragraph (c)(3)(i)(C) of
this section.
(ii)(A) The sum of the amounts in paragraph (c)(3)(i)(D) of this
section for all substitution units to be governed by the plan. Except as
provided in paragraph (c)(3)(ii)(B) of this section, this sum is the
total number of allowances available each year under the substitution
plan.
(B) Where the most stringent unit-specific federally enforceable or
State enforceable SO2 emissions limitation is not the same
for every year during 1995-1999, the sum in paragraph (c)(3)(ii)(A) of
this section shall be calculated separately for each year using the
amounts calculated for that year in paragraph (c)(3)(i)(D) of this
section. Each separate sum is the total number of allowances available
for the respective year under the substitution plan.
(iii) Where, as of November 15, 1990, a non-unit-specific federally
enforceable or State enforceable SO2 emissions limitation
covers the unit for any year during 1995-1999, the designated
representative shall state each such limitation and propose a method for
applying the unit-specific and non-unit-specific emissions limitations
under paragraph (d) of this section.
(4) Distribution of substitution allowances. (i) A statement that
the allowances in paragraph (c)(3)(ii) of this section are not to be
distributed to any units under paragraph (a)(1) of this section that are
to be governed by the plan; or
(ii) A list showing any annual distribution of the allowances in
paragraph (c)(3)(ii) of this section from a substitution unit to a unit
under paragraph (a)(1) of this section that, under
[[Page 50]]
the plan, designates the substitution unit.
(5) A demonstration that the substitution plan meets the requirement
that each unit under paragraph (a)(2) of this section is under the
control of the owner or operator of each unit under paragraph (a)(1) of
this section that designates the unit under paragraph (a)(2) of this
section as a substitution unit. The demonstration shall be one of the
following:
(i) If the unit under paragraph (a)(1) of this section has one or
more owners or operators that have an aggregate percentage ownership
interest of 50 percent or more in the capacity of the unit under
paragraph (a)(2) of this section or the units have a common operator, a
statement identifying such owners or operators and their aggregate
percentage ownership interest in the capacity of the unit under
paragraph (a)(2) of this section or identifying the units' common
operator. The designated representative shall submit supporting
documentation upon request by the Administrator.
(ii) If the unit under paragraph (a)(1) of this section has one or
more owners or operators that have an aggregate percentage ownership
interest of at least 10 percent and less than 50 percent in the capacity
of the unit under paragraph (a)(2) of this section and the units do not
have a common operator, a statement identifying such owners or operators
and their aggregate percentage ownership interest in the capacity of the
unit under paragraph (a)(2) of this seciton and stating that each such
owner or operator has the contractual right to direct the dispatch of
the electricity that, because of its ownership interest, it has the
right to receive from the unit under paragraph (a)(2) of this section.
The fact that the electricity that such owner or operator has the right
to receive is centrally dispatched through a power pool will not be the
basis for determining that the owner or operator does not have the
contractual right to direct the dispatch of such electricity. The
designated representative shall submit supporting documentation upon
request by the Administrator.
(iii) A copy of an agreement that is binding on the owners and
operators of the unit under paragraph (a)(2) of this section and the
owners and operators of the unit under paragraph (a)(1) of this section,
provides each of the following elements, and is supported by
documentation meeting the requirements of paragraph (c)(6) of this
section:
(A) The owners and operators of the unit under paragraph (a)(2) of
this section must not allow the unit to emit sulfur dioxide in excess of
a maximum annual average SO2 emissions rate (in lbs/mmBtu),
specified in the agreement, for each year during the period that the
substitution plan is in effect.
(B) The maximum annual average SO2 emissions rate for the
unit under paragraph (a)(2) of this section shall not exceed 70 percent
of the lesser of: the unit's 1985 actual SO2 emissions rate;
the unit's 1985 allowable SO2 emissions rate; the greater of
the unit's 1989 or 1990 actual SO2 emissions rate; the most
stringent federally enforceable or State enforceable SO2
emissions limitation, as of November 15, 1990, applicable to the unit in
Phase I; or the lesser of the average actual SO2 emissions
rate or the most stringent federally enforceable or State enforceable
SO2 emissions limitation for the unit for four consecutive
quarters that immediately precede the 30-day period ending on the date
the substitution plan is submitted to the Administrator. If the unit is
covered by a non-unit-specific federally enforceable or State
enforceable SO2 emissions limitation in the four consecutive
quarters or, as of November 15, 1990, in Phase I, the Administrator will
determine, on a case-by-case basis, how to apply the non-unit-specific
emissions limitation for purposes of determining whether the maximum
annual average SO2 emissions rate meets the requirement of
the prior sentence. If a non-unit-specific federally enforceable
SO2 emissions limitation is not different from a non-unit-
specific federally enforceable SO2 emissions limitation that
was effective and applicable to the unit in 1985, the Administrator will
apply the non-unit-specific SO2 emissions limitation by using
the 1985 allowable SO2 emissions rate.
[[Page 51]]
(C) For each year that the actual SO2 emissions rate of
the unit under paragraph (a)(2) of this section exceeds the maximum
annual average SO2 emissions rate, the designated
representative of the unit under paragraph (a)(1) of this section must
surrender allowances for deduction from the Allowance Tracking System
account of the unit under paragraph (a)(1) of this section. The
designated representative shall surrender allowances authorizing
emissions equal to the baseline of the unit under paragraph (a)(2) of
this section multiplied by the difference between the actual
SO2 emissions rate of the unit under paragraph (a)(2) of this
section and the maximum annual average SO2 emissions rate and
divided by 2000 lbs/ton. The surrender shall be made by the allowance
transfer deadline of the year of the exceedance, and the surrendered
allowances shall have the same or an earlier compliance use date as the
allowances allocated to the unit under paragraph (a)(2) of this section
for that year. The designated representative may identify the serial
numbers of the allowances to be deducted. In the absence of such
identification, allowances will be deducted on a first-in, first-out
basis under Sec. 73.35(c)(2) of this chapter.
(D) The unit under paragraph (a)(2) of this section and the unit
under paragraph (a)(1) of this section shall designate a common
designated representative during the period that the substitution plan
is in effect. Having a common alternate designated representative shall
not satisfy the requirement in the prior sentence.
(E) Except as provided in paragraph (c)(6)(i) of this section, the
actual SO2 emissions rate for any year and the average actual
SO2 emissions rate for any period shall be determined in
accordance with part 75 of this chapter.
(6) A demonstration under paragraph (c)(5)(iii) of this section
shall include the following supporting documentation:
(i) The calculation of the average actual SO2 emissions
rate and the most stringent federally enforceable or State enforceable
SO2 emissions limitation for the unit for the four
consecutive quarters that immediately preceded the 30-day period ending
on the date the substitution plan is submitted to the Administrator. To
the extent that the four consecutive quarters include a quarter prior to
January 1, 1995, the SO2 emissions rate for the quarter shall
be determined applying the methodology for calculating SO2
emissions set forth in appendix C of this part. This methodology shall
be applied using data submitted for the quarter to the Secretary of
Energy on United States Department of Energy Form 767 or, if such data
has not been submitted for the quarter, using the data prepared for such
submission for the quarter.
(ii) A description of the actions that will be taken in order for
the unit under paragraph (a)(2) of this section to comply with the
maximum annual average SO2 emissions rate under paragraph
(c)(5)(iii) of this section.
(iii) A description of any contract for implementing the actions
described in paragraph (c)(6)(ii) of this section that was executed
before the date on which the agreement under paragraph (c)(5)(iii) of
this section is executed. The designated representative shall state the
execution date of each such contract and state whether the contract is
expressly contingent on the agreement under paragraph (c)(5)(iii) of
this section.
(iv) A showing that the actions described under paragraph (c)(6)(ii)
of this section will not be implemented during Phase I unless the unit
is approved as a substitution unit.
(7) The special provisions in paragraph (e) of this section.
(d) Administrator's action. (1) If the Administrator approves a
substitution plan, he or she will allocate allowances to the Allowance
Tracking System accounts of the units under paragraph (a)(1) of this
section and substitution units, as provided in the approved plan, upon
issuance of an Acid Rain permit containing the plan, except that if the
substitution plan is conditionally approved, the allowances will be
allocated upon revision of the permit to activate the plan.
(2) In no event shall allowances be allocated to a substitution
unit, under an approved substitution plan, for any year in excess of the
sum calculated
[[Page 52]]
and applicable to that year under paragraph (c)(3)(ii) of this section,
as adjusted by the Administrator in approving the plan.
(3) Where, as of November 15, 1990, a non-unit-specific federally
enforceable or State enforceable SO2 emissions limitation
covers the unit for any year during 1995-1999, the Administrator will
specify on a case-by-case basis a method for using unit-specific and
non-unit-specific emissions limitations in allocating allowances to the
substitution unit. The specified method will not treat a non-unit-
specific emissions limitation as a unit-specific emissions limitation
and will not result in substitution units retaining allowances allocated
under paragraph (d)(1) of this section for emissions reductions
necessary to meet a non-unit- specific emissions limitation. Such method
may require an end-of-year review and the adjustment of the allowances
allocated to the substitution unit and may require the designated
representative of the substitution unit to surrender allowances by the
allowance transfer deadline of the year that is subject to the review.
Any surrendered allowances shall have the same or an earlier compliance
use date as the allowances originally allocated for the year, and the
designated representative may identify the serial numbers of the
allowances to be deducted. In the absence of such identification, such
allowances will be deducted on a first-in, first-out basis under
Sec. 73.35(c)(2) of this chapter.
(e) Special provisions--(1) Emissions Limitations. (i) Each
substitution unit governed by an approved substitution plan shall become
a Phase I unit from January 1 of the year for which the plan takes
effect until January 1 of the year for which the plan is no longer in
effect or is terminated. The designated representative of a substitution
unit shall surrender allowances, and the Administrator will deduct
allowances, in accordance with paragraph (d)(3) of this section.
(ii) Each unit under paragraph (a)(1) of this section, and each
substitution unit, governed by an approved substitution plan shall be
subject to the Acid Rain emissions limitations for nitrogen oxides in
accordance with part 76 of this chapter.
(iii) Where an approved substitution plan includes a demonstration
under paragraphs (c)(5)(iii) and (c)(6) of this section.
(A) The owners and operators of the substitution unit covered by the
demonstration shall implement the actions described under paragraph
(c)(6)(ii) of this section, as adjusted by the Administrator in
approving the plan or in revising the permit. The designated
representative may submit proposed permit revisions changing the
description of the actions to be taken in order for the substitution
unit to achieve the maximum annual average SO2 emissions rate
under the approved plan and shall include in any such submission a
showing that the actions in the changed description will not be
implemented during Phase I unless the unit remains a substitution unit.
The permit revision will be treated as an administrative amendment,
except where the Administrator determines that the change in the
description alters the fundamental nature of the actions to be taken and
that public notice and comment will contribute to the decision-making
process, in which case the permit revision will be treated as a permit
modification or, at the option of the designated representative, a fast-
track modification.
(B) The designated representative of the unit under paragraph (a)(1)
of this section shall surrender allowances, and theAdministrator will
deduct allowances, in accordance with paragraph (c)(5)(iii)(C) of this
section. The surrender and deduction of allowances as required under the
prior sentence shall be the only remedy under the Act for a failure to
meet the maximum annual average SO2 emissions rate, provided
that, if such deduction of allowance results in excess emissions, the
remedies for excess emissions shall be fully applicable.
(2) Liability. The owners and operators of a unit governed by an
approved substitution plan shall be liable for any violation of the plan
or this section at that unit or any other unit that is the first unit's
substitution unit or for which the first unit is a substitution unit
under the plan, including liability for fulfilling the obligations
specified
[[Page 53]]
in part 77 of this chapter and section 411 of the Act.
(3) Termination. (i) A substitution plan shall be in effect only in
Phase I for the calendar years specified in the plan or until the
calendar year for which a termination of the plan takes effect, provided
that no substitution plan shall be terminated, and no unit shall be de-
designated as a substitution unit, before the end of Phase I if the
substitution unit serves as a control unit under a Phase I extension
plan.
(ii) To terminate a substitution plan for a given calendar year
prior to the last year for which the plan was approved:
(A) A notification to terminate in accordance with Sec. 72.40(d)
shall be submitted no later than 60 days before the allowance transfer
deadline applicable to the given year; and
(B) In the notification to terminate, the designated representative
of each unit governed by the plan shall state that he or she surrenders
for deduction from the unit's Allowance Tracking System account
allowances equal in number to, and with the same or an earlier
compliance use date as, those allocated under paragraph (d)(1) of this
section for all calendar years for which the plan is to be terminated.
The designated representative may identify the serial numbers of the
allowances to be deducted. In the absence of such identification,
allowances will be deducted on a first-in, first-out basis under
Sec. 73.35(c)(2) of this chapter.
(iii) If the requirements of paragraph (e)(3)(ii) of this section
are met and upon revision of the permit to terminate the substitution
plan, the Administrator will deduct the allowances specified in
paragraph (e)(3)(ii)(B) of this section. No substitution plan shall be
terminated, and no unit shall be de-designated as a Phase I unit, unless
such deduction is made.
(iv)(A) If there is a change in the ownership interest of the owners
or operators of any unit under a substitution plan approved as meeting
the requirements of paragraph (c)(5)(i) or (ii) of this section or a
change in such owners' or operators' right to direct dispatch of
electricity from a substitution unit under such a plan and the
demonstration under paragraph (c)(5)(i) or (ii) of this section cannot
be made, then the designated representatives of the units governed by
this plan shall submit a notification to terminate the plan so that the
plan will terminate as of January 1 of the calendar year during which
the change is made.
(B) Where a substitution plan is approved as meeting the
requirements of paragraph (c)(5)(iii) of this section, if there is a
change in the agreement under paragraph (c)(5)(iii) of this section and
a demonstration that the agreement, as changed, meets the requirements
of paragraph (c)(5)(iii) cannot be made, then the designated
representative of the units governed by the plan shall submit a
notification to terminate the plan so that the plan will terminate as of
January 1 of the calendar year during which the change is made. Where a
substitution plan is approved as meeting the requirements of paragraph
(c)(5)(iii) of this section, if the requirements of the first sentence
of paragraph (e)(1)(iii)(A) of this section are not met during a
calendar year, then the designated representative of the units governed
by the plan shall submit a notification to terminate the plan so that
the plan will terminate as of January 1 of such calendar year.
(C) If the plan is not terminated in accordance with paragraphs
(e)(3)(iv)(A) or (B) of this section, the Administrator, on his or her
own motion, will terminate the plan and deduct the allowances required
to be surrendered under paragraph (e)(3)(ii) of this section.
(D) Where a substitution unit and the Phase I unit designating the
substitution unit in an approved substitution plan have a common owner,
operator, or designated representative during a year, the plan shall not
be terminated under paragraphs (e)(3)(iv)(A), (B), or (C) of this
section with regard to the substitution unit if the year is as specified
in paragraph (e)(3)(iv)(D)(1) or (2) of this section and the unit
received from the Administrator for the year, under the Partial
Settlement in Environmental Defense Fund v. Carol M. Browner, No. 93-
1203 (D.C. Cir. 1993) (signed May 4, 1993), a total number of allowances
equal to the unit's baseline multiplied by the lesser of the unit's
[[Page 54]]
1985 actual SO2 emissions rate or 1985 allowable
SO2 emissions rate.
(1) Except as provided in paragraph (e)(3)(iv)(D)(2) of this
section, paragraph (e)(3)(iv)(D) of this section shall apply to the
first year in Phase I for which the unit is and remains an active
substitution unit.
(2) If the unit has a Group 1 boiler under part 76 of this chapter
and is and remains an active substitution unit during 1995, paragraph
(e)(3)(iv)(D) of this section shall apply to 1995 and to the second year
in Phase I for which the unit is and remains an active substitution
unit.
(3) If there is a change in the owners, operators, or designated
representative of the substitution unit or the Phase I unit during a
year under paragraph (e)(3)(iv)(D)(1) or (2) of this section and, with
the change, the units do not have a common owner, operator, or
designated representative, then the designated representatives for such
units shall submit a notification to terminate the plan so that the plan
will terminate as of January 1 of the calendar year during which the
change is made. If the plan is not terminated in accordance with the
prior sentence, the Administrator, on his or her own motion, will
terminate the plan and deduct the allowances required to be surrendered
under paragraph (e)(3)(ii) of this section.
[58 FR 3650, Jan. 11, 1993, as amended at 58 FR 40747, July 30, 1993; 59
FR 60230, 60238, Nov. 22, 1994; 62 FR 55481, Oct. 24, 1997]