Open Market Trading Rule for Ozone Smog Precursors
[Federal Register: August 25, 1995 (Volume 60, Number 165)]
[Proposed Rules]
[Page 44290-44296]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Ch. 1
[FRL-5285-3]
Open Market Trading Rule for Ozone Smog Precursors
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed policy statement and model rule; Notice of public
hearing; correction.
SUMMARY: This notice contains the text of the proposed model open
market trading rule (OMTR) for ozone smog precursors which was
inadvertently omitted in the original Federal Register publication on
August 3, 1995 (60 FR 39668 (August 3, 1995)). The model OMTR is
intended to serve as a template for State development of open market
trading programs. States that adopt the final model OMTR, will receive
automatic EPA approval of the State implementation plan (SIP) revision
containing the model OMTR. SIP
[[Page 44291]]
revisions containing variations on the model OMTR will be expeditiously
reviewed by EPA in accordance with EPA's final policy on open market
trading.
FOR FURTHER INFORMATION CONTACT: Anyone with a computer and a model can
download the full text of the preamble and proposed model rule from the
Clean Air Act Amendments bulletin board (under ``Recently Signed
Rules'') on EPA's Technology Transfer Network (TTN) by calling 919-541-
5742 or Internet access via TELNET ttnbbs.rtpnc.epa.gov. For TTN
assistance call 919-541-5384 between the hours of 1:00 p.m. and 5:00
p.m. EST. For further information about the proposed OMTR, contact
Nancy A. Mayer, U.S. EPA, MD-15, Research Triangle Park, North Carolina
27711, telephone 919-541-5390, fax 919-541-0839; or Scott L. Mathias,
U.S. EPA, MD-15, Research Triangle Park, North Carolina 27711,
telephone 919-541-5310, fax 919-541-0839.
SUPPLEMENTARY INFORMATION: The contents of the proposed model open
market trading rule for ozone smog precursors are listed in the
following outline:
I. Purpose
II. Definitions
III. General Rules for Generation and Use
A. General Rule
B. Government Approvals
C. Market Participation
D. Time of Use
E. Limited Authorization to Emit
IV. DER Generation
A. Computation of DER's
General Rule
Areas with Approved Attainment Demonstrations or Maintenance
Plans (Optional)
Sources Subject to Emissions Caps
Sources Subject to Multiple Emissions Limitations
Protocols
B. Limitations on Generation
C. Notice and Certification of Generation
General Rule
Required Information
Certification Under Penalty of Law
V. DER Use
A. Time of Acquisition
B. Sufficiency
C. Operating Permits
D. Environmental Contribution
E. Compliance Calculation
F. Notice of Intent to Use DER's
General Rule
Required Information
G. Notice and Certification of Use
General Rule
Required Information
Certification Under Penalty of Law
H. Use Limitations
VI. Geographic Scope of Trading
A. General Rule
B. Geographic Scope
NOXDER's
VOC DER's
C. Interstate Trading
VII. Recordkeeping and Public Availability
A. Recordkeeping
B. Public Availability
VIII. Protocol Development and Approval
A. General Rule
B. USEPA-Approved Protocols
C. Protocol Elements
D. Emission Quantification Methods
IX. DER Use for NSR and Conformity Purposes
A. General Rule
B. Specific Requirements for NSR
X. Program Audits
XI. Enforcement
A. Compliance Burden
B. Violation Day Definition for User Source Excess Emissions
I. Purpose
To establish a process whereby sources may generate and use
discrete emission reductions for compliance with VOC and NOX
requirements in the Act while complying with all other applicable
requirements of the Act.
II. Definitions
Terms not defined in this part shall have the meaning given in the
Act and EPA regulations (40 CFR) [or State citations].
Act means the Clean Air Act as amended in 1990.
Activity level means the amount of activity at a source measured in
terms of production, use, raw materials input, vehicle miles traveled,
or other similar units that have a direct correlation with the economic
output of the source and is not affected by changes in the emissions
rate (i.e., mass per unit of activity).
Actual emissions rate means the actual rate of emissions of a
pollutant from a source. Actual emissions as of a particular date shall
equal the average rate, in mass per unit of time or mass per unit of
activity, at which the unit actually emitted the pollutant during a
two-year period which precedes the particular date and which is
representative of normal source operation at a particular time. A
different time period may be used if that is more representative of
normal source operation. Actual emissions shall be calculated using the
unit's actual operating hours, production rates, types of materials
processed, stored, or combusted during the selected time period.
Allowable emission rate means any emission limit applicable to a
particular source including all Federal and State requirements for the
control of tropospheric ozone and the requirements of Title IV of the
Act, including but not limited to, all requirements in a SIP, the
inventories contained in any attainment strategy, maintenance
demonstration or ROP plan for any NAAQS as well as source-specific or
source-category-specific permits.
Alternative emission limitation means any emission limit that
applies to a specific source that is less stringent than the limit
contained in the SIP approved by the [State authority] generally for
similar sources.
Applicable emissions inventory means the emission inventory that
forms the basis for an attainment demonstration or strategy, a ROP
plan, or maintenance plan submitted to or acted on by USEPA.
Applicable implementation plan or applicable SIP means the portion
(or portions) of the SIP or most recent revision thereof, which has
been approved under section 110 of the Act, or promulgated under
section 110(c) of the Act (Federal implementation plan), or promulgated
or approved pursuant to regulations promulgated under section 301(d) of
the Act and which implements the relevant requirements of the Act.
Area source means those small or diverse stationary source that are
not required to be, and are not individually included in a stationary
source emissions inventory. The term area sources include emissions
related to consumer and commercial products.
Attainment area means any area of the country designated or
redesignated by EPA at 40 CFR part 81 in accordance with section 107(d)
of the Act as unclassifiable or better than the national ambient air
quality standards for ozone [or State may cite its regulations, or list
its areas].
Attainment demonstration means the State rules that comply with the
requirement in section 172(c)(1), 182(b)(1), or 182(c)(2) of the Act to
demonstrate that the specific emission reductions included in the SIP
are sufficient to attain the ozone NAAQS by the date applicable to the
area [or State citation of their plan].
Baseline emission rate means a generating source's actual emissions
rate or allowable emissions rate considering all applicable State and
Federal regulations.
Best available control technology (BACT) is as defined in 40 CFR
part 51.166(b)(12) [State may add the cite to its rules if they are
USEPA-approved].
Conformity purposes means any reductions required to comply with
the conformity requirements contained in 40 CFR part 51, subparts T and
W, and part 93, subparts A and B.
Contingency measure means any emission control measure that is
adopted into the SIP which shall be
[[Page 44292]]
implemented whenever there is a failure to meet the ROP requirement in
section 185 of the Act or a failure to attain a NAAQS as projected in
an approved attainment demonstration.
Curtailment means a temporary or partial reduction in activity
level (e.g., hours of operation and process rate). For purposes of this
rule, curtailment shall not include a reduction in activity levels for
a mobile source that occurs as a result of an activity reduction plan
that is the subject of a USEPA emissions quantification protocol.
Discrete emission reduction (DER) means an emission reduction
generated over a discrete period of time, and measured in weight (e.g.,
tons).
Emissions cap means an emissions limit that is measured as mass
emissions per unit of time.
Emissions unit means any part of a source that emits or would have
the potential to emit VOC or NO<INF>x.
Fuels and fuel delivery system, for mobile sources, means fuels
intended for use in mobile sources and the distribution systems
associated with those fuels including, but not limited to, pipelines,
tanker trucks, storage tanks, and dispenser pumps.
Generator source means any source that generates a DER.
Generation period means the period of time over which a DER is
generated.
Lowest achievable emissions rate (LAER) means the control
technology defined at 40 CFR 51.165(a)(1)(xiii) [or State may insert
citation to its rules].
Maintenance area means any area with a maintenance plan approved
under section 175 of the Act [or State may insert the list of its
areas].
Maintenance plan means a revision to the applicable SIP, meeting
the requirements of section 175A of the Act.
Mobile source means any vehicle or engine used for on-highway or
nonroad purposes, the mobile-source related fuels and/or fuel delivery
systems used by those vehicles or engines. For the purpose of this
definition, nonroad vehicles and engines include those used in marine
vessels, locomotives, and airplanes, as well as those described in the
definition of nonroad contained in the Act.
Modeling domain means a geographic area covered by an air quality
model used to support an attainment or maintenance demonstration.
Specifications for existing modeling domains are available through the
USEPA's Technology Transfer Network (TTN).
National ambient air quality standards (NAAQS) means the standards
set by EPA at 40 CFR part 50 under section 109 of the Act.
New Source Review (NSR) means the permitting requirements for major
new and modified sources contained in Parts C and D of Title I of the
Act and in 40 CFR parts 51.165, 51.166 and part 52.21. [State may add
citations to SIP rules if they are USEPA-approved]
Nonattainment area means any area designated at 40 CFR part 81 in
accordance with section 107(d) of the Act as nonattainment for ozone.
Normal source operation means the average actual activity rate of a
source necessary for determining the actual emissions rate for the two
years prior to the date necessary for determining actual emissions,
unless some other time period is more representative of the operation
of the source. A source may use either the simple arithmetic mean (sum
of emissions for 12 months divided by 12) or the mean plus one standard
deviation if sufficient data are available to determine the normal
source operation for the shorter time period.
NOXmeans oxides of nitrogen, including nitric oxide (NO) and
nitrogen dioxide (NO<INF>2) and not including, for purposes of this
rule, nitrous oxide (N<INF>2O).
Operator means the individual who is in control of or in charge of
a source while it is in operation. For all requirements of this
section, the operator is considered to be an agent of the owner.
Owner means a person who claims lawful possession of a source by
virtue of legal title or equitable interest therein which entitles him
to such possession.
Ozone season means the portion of year when ozone monitoring is
required to occur in a specific geographic area as defined in 40 CFR
part 58 appendix D.
Person means an individual, corporation, partnership, association,
State, municipality, firm, political subdivision of a State, and any
agency, department, or instrumentality of the United States and any
officer, agent, or employee thereof.
Protocol means a replicable and workable method to estimate the
mass of emissions reductions, or the amount of DER's needed for
compliance, that meets USEPA's approval criteria.
Quantifiable means that the quantity of emission reductions can be
measured or estimated by accurate and replicable techniques. These
techniques shall be at least as accurate and replicable as the
techniques accepted by the USEPA for SIP purposes, where accepted
techniques exist.
Rate of progress (ROP) plan means a SIP providing for the
incremental emission reductions required by section 182(b)(1) and
182(c)(2)(B) of the Act [or State may insert the cite for its plans].
Shutdown means the permanent cessation of the activity that results
in emissions at all or part of a source. For purposes of this rule,
scrappage of mobile sources is not considered a shutdown.
Source means any mobile, area, or stationary source.
State means State, local government, or Indian-governing body.
State implementation plan (SIP) means a plan developed by an
authorized governing body, including a State, local government, and
Indian-governing body, as required under Titles I and II of the Act,
and approved by the USEPA.
Stationary source means any building, structure, facility or
installation which emits or may emit any air pollutant subject to
regulation under the Act. Building, structure, facility or installation
includes all pollutant emitting activities that are located on one or
more contiguous or adjacent properties, and are under the common
control of the same person (or persons under common control).
Surplus emission reduction means, in general, any emission
reduction that is not otherwise required of a source. Any emission
reduction that complies with sections IV(A) and IV(B) is considered
surplus for purposes of this rule.
Use period means the period of time over which the user source
applies the DER's to an applicable emission reduction requirement.
USEPA means the United States Environmental Protection Agency.
User source means any source that seeks to use DER's to comply with
an applicable emission reduction requirement.
Volatile organic compounds (VOC) means all emissions included at 40
CFR part 51.100(s) as measured by a USEPA test method [or State may
insert citation to its definition].
III. General Rules for Generation and Use
(A) General Rule. Except as provided under section IV(B), any
source may generate a DER by reducing emissions, in the amount
determined under section IV(A). DER generators must ensure that DER's,
are real, properly quantified, and surplus.
(B) Governmental Approvals. No prior Federal, State, or local
governmental approval is necessary for the use of DER's, except for
DER's that are used for NSR offsets, in which case State approval
pursuant to an approved NSR rule is required.
[[Page 44293]]
(C) Market Participation. Any person may, at any time, transfer,
buy, sell, trade, or otherwise convey DER's to another person in any
manner in accordance with the laws of [State].
(D) Time of Use. DER's may be used any time after the State has
received the Notice and Certification of Generation pursuant to section
IV(C).
(E) Limited Authorization To Emit. A DER created under this rule is
a limited authorization to emit NOXand/or VOC in accordance with
the provisions of this rule and the Act as well as regulations
promulgated thereunder. A DER does not constitute a property right.
Nothing in this rule shall be construed to limit the authority of the
[State authority] or the United States to terminate or limit such
authorization.
IV. DER Generation
(A) Computation of DER's
(1) General Rule. The amount of DER's shall be the difference
between--
(a) The amount of VOC or NOXemissions that would have been
emitted during the generation period based on actual activity levels
during that period and the lower of (i) the lowest applicable allowable
emissions rate, or (ii) the actual emissions rate based on normal
source operation, and
(b) The amount of actual emissions during the generation period
based on actual activity levels during that period.
(2) [States may delete this paragraph at their discretion] Areas
with Approved Attainment Demonstrations or Maintenance Plans. In an
area with a USEPA-approved attainment demonstration or maintenance
plan, the amount of DER's shall be the difference between--
(a) The amount of VOC or NOXemissions that would have been
emitted during the generation period based on actual activity levels
during that period and the lowest applicable allowable emissions rate,
and
(b) The amount of emissions during the generation period based on
actual activity levels during that period.
(3) Sources Subject to Emissions Caps.
(a) For purposes of subsection[s] (1) [and (2)] of this section,
the term ``allowable emissions rate'' includes a source's allowable
amount of total emissions for the generation period, as may be
specified in that source's Federally enforceable operating permit, in
the SIP, or included with respect to that source in the attainment
demonstration or maintenance plan (or the emissions inventory that
forms the basis for such demonstration or plan).
(b) For sources subject to this subsection, if the generation
period differs from the period of the emissions cap, the allowable
emissions rate for the generation period shall be adjusted to reflect
the proportion of the generation period to the period of the emissions
cap.
(c) Amounts determined under subsection[s] (1) [and (2)] of this
section, must be adjusted to the extent necessary to exclude emission
reductions resulting from shutdowns or curtailments.
(4) Sources Subject to Multiple Emissions Limitations. If a source
is subject to multiple emissions limitations, the amount of DER's shall
be determined by reference to the emissions limitation that results in
the least amount of DER's.
(5) Protocols. The amount of DER's must be calculated using
quantification protocols that meet the requirements of section VIII.
(B) Limitations on Generation. A DER shall not be formed by
emissions reductions of activities or source categories identified in
this subsection:
(1) Shutdowns;
(2) Curtailments;
(3) Modification or discontinuation of any activity that is
otherwise in violation of any Federal, State or local law;
(4) Emissions reductions required to comply with any provision
under the Act for control of tropospheric ozone and Title IV of the
Act, including but not limited to--
(a) Administrative orders issued pursuant to enforcement actions.
(b) Any provision of a Federal implementation plan.
(c) Requirements for ROP or attainment of the ozone NAAQS.
(5) Emission reductions of hazardous air pollutants, as defined in
section 112 of the Act, from application of a standard promulgated
under section 112 of the Act.
(6) Reductions credited or used under any other emissions trading
program, including any mobile source averaging, banking, and trading
program.
(7) Emission reductions occurring at a source which received an
alternative emission limitation to meet a State RACT requirement,
except to the extent that the emissions are reduced below the level
that would have been required had the alternative emission limitation
not been issued.
(8) Emission reductions generated prior to the start of the ozone
season in 1995.
(9) Any source subject to a RACT limit pursuant to the Act, but
with respect to which the State has not determined the RACT limit,
until the State determines RACT through a permit or SIP approval
action.
(C) Notice and Certification of Generation.
(1) General Rule. The owner or operator of a generator source shall
provide a Notice and Certification of Generation to [State authority]:
(a) No later than 90 days after the DER generation activity was
completed,
(b) One year after the first day of the generation period (and at
least annually thereafter), or
(c) Prior to the first day of the use period, whichever is sooner.
The Notice and Certification of Generation shall be publicly
available pursuant to section VII(B).
(2) Required Information. The Notice and Certification of
Generation shall include the following information, submitted on [State
form ------]:
(a) For stationary source reductions, identifying information,
including--
(i) The name and address of the generator, and
(ii) The name of the owner and/or operator of the generator source.
(b) For mobile sources related reductions, identifying information
as required in the applicable USEPA approved protocol or described in
USEPA guidance on protocols.
(c) The generation period and the unique serial numbers assigned by
the [State authority] to each ton of DER's.
(d) A brief description of the generation activity.
(e) The amount of DER's generated during the ozone season and the
amount of DER's generated during other parts of the year.
(f) The protocols that were used to calculate and document the
DER's.
(g) Information on all the generator source's applicable allowable
emission rates.
(h) A statement that the reductions were calculated in accordance
with section IV(A).
(i) A statement that the DER's were not generated in whole or in
part from actions prohibited pursuant to section IV(B).
(j) For each source subject to reporting toxic chemical releases
for the Community Right-to-Know provisions under 40 CFR part 372, the
estimated amount of hazardous air pollutants, as defined below, emitted
to the air as the result of the generation of the DER.
(i) A pollutant shall be reported under this paragraph, only if it
is listed both in 40 CFR 372.65 and section 112(b) of the Act, and a
chemical which the source is reporting or expects to report under 40
CFR part 372 for the calendar year in which the DER was generated.
(ii) The requirements in 40 CFR 373.30(b) shall be followed for the
notice.
[[Page 44294]]
(iii) The exemptions listed in 40 CFR 372.38 for determining the
amount of release to be reported under 40 CFR 372.30 shall also be
exemptions for determining the amount emitted under this section.
(iv) The notice shall include:
((A)) The name and CAS number (if applicable) of the chemical
reported;
((B)) If the chemical identity is claimed trade secret under 40 CFR
372, a generic name for the chemical as reported under 40 CFR
372.85(b)(11);
((C)) A mixture component identity if the chemical identity is not
known; and
((D)) An estimate of total air emissions, in pounds, for the
relevant time period of DER generation. Releases of less than 1,000
pounds may be indicated in ranges.
(3) Certification Under Penalty of Law. Any Notice and
Certification of Generation submitted pursuant to this subsection shall
contain certification under penalty of law by a responsible official of
the generator source of truth, accuracy and completeness. This
certification shall state that based on information and belief formed
after reasonable inquiry, the statements and information in the
document are true, accurate and complete.
V. DER Use
(A) Time of Acquisition. DER's may not be used unless they are
acquired by the user source before the compliance period for which the
specific DER's are to be used.
(B) Sufficiency. The user source must hold sufficient DER's to
cover its compliance obligation at all times.
(C) Operating Permits.
(1) For sources subject to the requirement to obtain a permit under
a Federally approved operating permit program, the permit, when issued
or revised, shall authorize the use of DER's for compliance purposes.
(2) The Notices of Intent to Use DER's and Notice and Certification
of Use shall be stored with the user source's operating permit, if
applicable.
(D) Environmental Contribution. At the time of use, DER users shall
permanently retire ten percent of all DER's dedicated to that
particular use. That is, the amount of DER's required to demonstrate
compliance equals the source's calculated need divided by 0.9.
(E) Compliance Calculation. The amount of DER's needed to
demonstrate compliance shall be the difference between--
(1) The actual emissions expressed in units of mass or the
alternative limit under which the source will operate, and
(2) The allowable emissions based on actual activity levels
expressed in units of mass.
(F) Notice of Intent to Use DER's.
(1) General Rule. DER's may be used only if the owner or operator
of the user source submits to [State authority] a Notice of Intent to
Use DER's. The Notice of Intent to Use DER's shall be submitted at
least 30 days before the intended use period begins, and at least
annually if the use period is greater than one year. The Notice of
Intent to Use DER's shall be made publicly available pursuant to
section VII(B).
(2) Required Information. The Notice of Intent to Use DER's shall
include the following information submitted on [State form ________]:
(a) The name and location of the user.
(b) The emissions unit or application name, the permit or
identification number (if applicable), and the applicable pollutant.
(c) The applicable State and Federal requirements that the DER's
will be used to comply with and the intended use period.
(d) A copy of the Notice and Certification of Generation submitted
by the generator source to the State.
(e) The emission quantification protocols that will be used to
document the amount of DER's needed to demonstrate compliance.
(f) For each source subject to reporting toxic chemical releases
for the Community Right-to-Know provisions under 40 CFR part 372, the
estimated amount of hazardous air pollutants expected to be emitted to
the air as the result of the use of the DER's to meet the otherwise
applicable requirements. The estimated amount shall include expected
emissions increases and any expected forgone emission reductions due to
use of the DER's instead of non-DER compliance with otherwise
applicable requirements. The same procedures shall be followed as for
the similar requirements under the Notice and Certification of
Generation (see section IV(C)(2)(j)).
(G) Notice and Certification of Use.
(1) General Rule. The owner or operator of a user source shall
submit to [State authority] a Notice and Certification of Use that
contains the information described in paragraph (2) of this subsection
within 90 days after the end of the use period or one year after the
beginning of the use period, whichever is sooner. The owner or operator
of a user source shall provide the required information for each
increment of DER's used over a time period not to exceed one year. The
Notice and Certification of Use shall be made publicly available
pursuant to section VII(B).
(2) Required Information. The Notice and Certification of Use shall
include the following information submitted on [State form ________]:
(a) The name and location of the owner or operator of the user
source.
(b) The date(s) on which the DER's were acquired.
(c) The amount of DER's used and the associated serial numbers
assigned by the [State authority].
(d) The use period.
(e) The applicable State and Federal requirements that the DER's
were used to comply with.
(f) The emissions quantification protocols that were used to
calculate the amount of DER's required to demonstrate compliance and
documentation for the compliance calculation under subsection (E) of
this section.
(g) A statement that due diligence was made to verify that the
DER's were not previously used, not generated as a result of actions
prohibited under this regulation or other provisions of law.
(h) A statement that the DER's were not used in a manner prohibited
under this regulation or other provisions of law.
(i) A copy of the relevant Notice and Certification of Generation.
(j) For each source subject to reporting toxic chemical releases
for the Community Right-to-Know provisions under 40 CFR part 372, the
estimated amount of hazardous air pollutants emitted to the air as the
result of the use of the DER to meet otherwise applicable requirements.
The estimated amount shall include emissions increases and any forgone
emission reductions due to use of DER's instead of non-DER compliance
with otherwise applicable requirements. The same procedures shall be
followed as the similar requirement under the Notice and Certification
of Generation (see section IV(C)(2)(j)).
(3) Certification Under Penalty of Law. Any Notice and
Certification of Use submitted pursuant to this regulation shall
contain certification under penalty of law by a responsible official of
truth, accuracy and completeness. This certification shall state that
based on information and belief formed after reasonable inquiry, the
statements and information in the document and in referenced documents
attached are true, accurate and complete.
(H) Use Limitations. DER's may not be used--
(1) Before acquisition by the user of the DER's;
[[Page 44295]]
(2) For netting or other means to avoid the applicability of NSR
requirements;
(3) For NSR offsets or conformity purposes unless the requirements
of section IX are met;
(4) To meet Act requirements for new source performance standards
(NSPS) under section 111; lowest achievable emission rate (LAER)
standards under section 173(a)(2); best available control technology
(BACT) standards under section 165(a)(4); hazardous air pollutant (HAP)
standards under section 112; standards for solid waste combustion under
section 129; requirements for a vehicle inspection and maintenance
program under sections 182(b)(4) or (c)(3); requirements for an
employer trip reduction program under section 182(d)(1)(B); ozone
control standards set under section 183; clean fueled fleet
requirements under section 246; motor vehicle emissions standards under
section 202; standards for nonroad vehicles under section 213;
requirements for reformulated gasoline under section 211(k); or
requirements for Reid vapor pressure standards under section 211(h) and
(i);
(5) State motor vehicle emission standards;
(6) To meet requirements for one class of tropospheric ozone
precursor by using DER's generated in a different class of tropospheric
ozone precursors (e.g., NOXreductions may not be exchanged for
VOC increases, or vice-versa);
(7) To meet requirements during an ozone season unless the DER was
generated during an ozone season; or
(8) To meet requirements contained in Title IV of the Act.
VI. Geographic Scope of Trading
(A) General Rule. (1) In using DER's, user sources must comply with
the requirements of this subsection (A) and the geographic limitations
described in subsection (B).
(2) DER use must be consistent with modeling analyses contained in
an approved SIP; however, each DER use is not required to be supported
by a modeling analysis specific to such use.
(3) No provision of this section shall be construed to authorize
use of DER's in a manner that interferes with any applicable
requirement of the Act.
(B) Geographic Scope. (1) NOXDER's. (a) NOXDER's may be
used in the same SIP modeling domain in which they were generated.
(b) NOXDER's generated inside a nonattainment or maintenance
area may be used outside a nonattainment area, maintenance area, or
modeling domain.
(2) VOC DER's.
(a) VOC DER's may be used in a nonattainment or maintenance area
only if they were generated in the same nonattainment or maintenance
area.
(b) VOC DER's may be used in an attainment area that is not a
maintenance area.
(c) VOC DER's generated inside a nonattainment or maintenance area
may be used outside a nonattainment area, maintenance area, or modeling
domain.
(C) Interstate Trading. DER's may be used in a State other than the
State in which they were generated if authorized representatives of the
two States approve a binding interstate agreement that is approved by
USEPA as a SIP revision for each State, and that contains at least the
following provisions that apply to each DER use:
(1) The authority of the State where the generator source is
located agrees to provide the authority of the State where the user
source is located with all relevant information concerning the
generator source and the DER generation including, but not limited to,
emission limitations and permits issued to the generator source, if
any, as well as the Notice and Certification of Generation and
supporting documentation, in a timely manner;
(2) The authority of the State where the user source is located
agrees to provide the state where the generator source is located with
all relevant information, including the Notice of Intent to Use DER's
and the Notice and Certification of Use and supporting documentation,
in a timely manner;
(3) The authority of the State where the generator source is
located agrees to notify the authority of the State where the user
source is located as to whether the DER has been used previously; and
(4) The authorities of the States where the user and generator
sources are located agree to enforce their individual State emission
requirements as modified by any valid emissions trades.
VII. Recordkeeping and Public Availability
(A) Recordkeeping. The generator source shall adequately document
the protocol and specific data by which a DER is quantified. Generator
sources shall transfer all such documentation to any transferee at the
time that ownership of a DER is transferred. The user source shall
document the protocol and specific data by which the amount of DER's
needed for compliance was determined. The user source shall maintain
all relevant documentation for a minimum of five years after a DER is
used for compliance. Records shall be kept with at least the same
frequency as required for the underlying requirement.
(B) Public Availability. All information submitted to the State for
compliance with this rule shall be available to the public under
[insert relevant State law pertaining to public availability of data].
This information shall not be considered confidential business
information.
(1) The [State official] will make all notices submitted by sources
pursuant to this rule available for public review. For sources with
operating permits, the [State official] will attach copies of these
notices to the copy of the operating permit retained in the State
offices. For sources that do not have operating permits, the [State
official] will make these notices available in a similar manner [Cite
of State rule.]
(2) The sources shall make all documentation that supports the
notices submitted to the State as part of this rule available to the
public (``pursuant to [applicable State regulation'', if applicable]).
VIII. Protocol Development and Approval
(A) General Rule. To quantify the amount of DER's generated and the
amount needed for compliance, sources shall use quantification
protocols in accordance with the requirements of this section.
(B) USEPA-Approved Protocols (Option 1). [Option 1 or Option 2 will
be selected for the final model rule.]
(1) If a USEPA-approved protocol exists for a given application, it
may be used.
(2) If a credit generator wishes to deviate to some extent from an
approved protocol, or develop a new protocol, the generator must do so
in accordance with guidance set forth by USEPA. The USEPA approval need
not be obtained in advance, however, USEPA reserves the right to reject
the protocol and any resulting credits whether or not the protocol was
followed.
(C) USEPA-Approved Protocols (Option 2). [Option 1 or Option 2 will
be selected for the final model rule.]
(1) If an EPA-approved quantification protocol exists for a given
application, it must be used.
(2) If a credit generator wishes to deviate to some extent from an
approved protocol, the credit generator must obtain advance approval
from USEPA.
(3) If an approved protocol does not exist, a new protocol shall be
designed with the participation of affected parties according to a
guidance set forth by USEPA. The USEPA approval need not be obtained in
advance, however, USEPA reserves the right to reject the
[[Page 44296]]
protocol and any resulting credits whether or not the protocol was
followed.
(C) Protocol Elements. Protocols must contain methods that are
credible, workable, enforceable, and replicable and must include each
of the following elements:
(1) A description of the calculation methods used for determining
the reductions achieved by the emissions controls as implemented;
(2) Estimates of the accuracy of the appropriate USEPA test method,
if available, not to exceed some given value;
(3) A description of the recordkeeping program that permits
verification of production, materials used, and use of control
equipment;
(4) The USEPA test methods where available; and
(5) A requirement for complete, verifiable records on production,
materials used and use of control equipment.
(D) Emission Quantification Methods. A protocol may contain the
following:
(1) Emission quantification methods contained in an applicable
Federally approved operating permit; or
(2) Emission quantification methods approved in the applicable SIP.
IX. DER Use for NSR and Conformity Purposes
(A) General Rule. All DER's used to meet--
(1) NSR offset requirements shall comply with the requirements of
section 173 of the Act and 40 CFR 51.165(a) including the requirements
of subsection (B) of this section.
(2) Conformity requirements shall comply with 40 CFR part 51,
subparts T and W and part 93 subparts A and B.
(B) Specific Requirements for NSR.
(1) The State must approve the use of specific DER's that cover at
a minimum 1 year of operation of the new or modified source in the NSR
permit.
(2) The NSR permit must contain an enforceable requirement that the
source obtain at least one additional year of offsets before continuing
operation in each subsequent year.
(3) The NSR permit must contain an enforceable commitment that
before receiving any operating permit or permit renewal, the operating
permit must contain an enforceable condition that the source must
obtain offsets for each subsequent year before continuing to operate in
each subsequent year.
X. Program Audits
(A) Beginning no later than [insert the next ROP milestone year or
date 3 years after State adoption of this rule] and at least every 3
years thereafter (coinciding with the periodic inventory submittals
required under section 182 of the Act), the [State authority] shall
audit this program to evaluate at a minimum, the following program
elements:
(1) Amount and timing of emission reductions (e.g., DER's used
compared to DER's generated in a given year or ozone season);
(2) Compliance by generators and users;
(3) The effect of the program on temporal and spatial assumptions
in the attainment demonstration, and ROP plans;
(4) The effects of remedial measures, if applicable, implemented as
a result of previous audit findings.
(5) The effects on toxic emissions from operation of this rule.
(B) As determined by the [State authority], the [State authority]
shall institute remedial measures to the extent necessary.
(C) The audit data and results shall be completed, submitted to
USEPA, and available for public inspection within one year after the
audit begins.
XI. Enforcement
(A) Compliance Burden.
(1) The DER user source is responsible for assuring that the
generation and use of DER's comply with this rule.
(2) The DER user source (not the enforcing authority) bears the
burden of proving that DER's used are valid and sufficient and that the
DER use meets all applicable requirements of this rule. The DER user
source is responsible for compliance with its underlying obligations.
In the event of enforcement against the user source for non-compliance,
it shall not be a defense for the purpose of determining civil
liability that the user source relied in good faith upon the generator
source's representations.
(B) Violation Day Definition for User Source Excess Emissions.
Section 113(b) of the Act authorizes a maximum civil penalty of $25,000
per day for each violation. For purposes of this regulation, the number
of days of violation associated with improper DER use or insufficient
DER quantity shall be the number of consecutive days with insufficient
DER quantity after taking into account DER's used to offset excess
emissions (converted to units of mass) on a consecutive day basis. If a
user is unable to document actual emissions rate on a daily basis, the
number of days of violation shall include every day since the beginning
of the use period during which there was insufficient DER's. Failure to
keep adequate records is equivalent to a lack of creditable DER's.
Dated: August 16, 1995.
Mary D. Nichols,
Assistant Administrator for Air and Radiation.
[FR Doc. 95-21168 Filed 8-24-95; 8:45 am]
BILLING CODE 6560-50-P
![[logo] US EPA](https://webarchive.library.unt.edu/eot2008/20090510212116im_/http://www.epa.gov/epafiles/images/logo_epaseal.gif){kind=logo}