&EPA
United States
Environmental Protection
Agency
Air and Radiation
(6204J)
December 1992
Acid Rain Program
Permits
In order to reduce acid rain in the United States and Canada, Title IV of
the Clean Air Act Amendments of 1990 established I the Acid Rain
Program. The program will cut sulfur dioxide emissions in half and
substantially reduce nitrogen oxides emissions from: electric utility
plants. This fact sheet discusses the key components! of the permit
provisions of the Acid Rain Program and is one of a series containing
information about the program. i
HPhe overall goal of the Acid Rain
JL Program is to achieve signifi-
cant environmental benefits
through reductions in emissions of
sulfur dioxide (SO2) and nitrogen
oxides (NOX), the primary causes
of acid rain. To achieve this goal at
the lowest cost to society, the pro-
gram employs both traditional and
innovative, market-based ap-
proaches for controlling air pollu-
tion. In addition, the program
encourages energy efficiency and
promotes pollution prevention.
Title IV of the Clean Air Act sets
as its primary goal the reduction of
annual SOz emissions by 10 million
tons below 1980 levels. To achieve
these SO2 reductions, the law re-
quires a two-phase tightening of
the restrictions placed on fossil
fuel-fired power plants.
Phase I begins in 1995 and af-
fects 110 mostly coal-burning
electric utility plants located in 21
eastern and midwestern states.
Phase II, which begins in the year
2000, tightens the annual emis-
sions limits imposed on these
large, higher emitting plants and
also sets restrictions on smaller,
cleaner plants fired by coal, oil,
and gas. The program affects ex-
isting utility units with an output
capacity of greater than 25 mega-
watts and all new utility units.
The Act also calls for a 2 million-
ton reduction in NOX emissions by
the year 2000. A significant portion
of this reduction will be achieved
by coal-fired utility boilers that will
be required to install low NOX
burner technologies and to meet
new emissions standards.
The innovative, market-based
SO2 allowance trading component
of the Acid Rain Program allows
utilities to adopt the most cost-
effective strategy to reduce SO2
emissions at units in their systems.
The Acid Rain Program operating
permit outlines the specific pro-
gram requirements and compli-
ance options chosen by each
source. Affected utilities also will
be required to install systems that
continuously monitor emissions of
SO2, NOX, and other related pollut-
ants in order to track progress,
ensure compliance, and provide
credibility to the trading program.
In any year that compliance is not
achieved, excess emissions penal-
ties will apply, and sources either
will have allowances deducted im-
mediately from their account or
may submit a plan to EPA that
specifies how the excess SOz emis-
sions will be offset.
Introduction
The Acid Rain Program is imple-
mented through operating permits.
Each permit specifies the enforce-
able requirements that apply to each
affected unit at a plant (or source).
The permitting requirements
afford flexible planning opportuni-
ties to help minimize the costs of
compliance. All affected sources
must submit operating permit ap-
plications to EPA in Phase I, and to
an EPA-approved state or local per-
mitting authority in Phase II.
The permit specifies each unif s
basic allowance allocation and NOX
limitation, which may vary from
the statutory requirements if the
source elects one or more optional
methods of compliance. The permit
must contain a compliance plan,
which describes how the source
will meet the program require-
ments, if it elects one of these
optional methods.
Other requirements pertain to
certifying Designated Repre-
sentatives for affected sources,
schedules for submitting materials,
permit processing procedures, du-
ration of terms, revision proce-
dures, and the periodic compliance
certification reporting.
Which Sources Must
Obtain Permits?
Most electric utility plants in the
country must obtain an Acid Rain
Permit.
Phase I addresses the 110 largest
SO2-emitting plants, as listed in
Table 1 of the Allowance Rule.
Other facilities may be permitted
in Phase I if they are part of a
)Printed on paper that contains at least 50% recycled fiber.
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compliance plan for a unit listed in
Table 1.
Phase n addresses an additional
800 SOz-emitting utility plants.
Other facilities that may be permit-
ted are certain new units that began
commercial operation on or after
November 15, 1990, and existing
units that increase electrical gen-
eration from less than 25 mega-
watts to 25 megawatts or more.
Who Represents Sources
in Permitting Matters?
The owners and operators of
each source must select one person
to represent them in matters per-
taining to the Acid Rain Program
and may select a second person to
act as an alternate for the first.
These two persons are known as
the Designated Representative
and Alternate Designated Repre-
sentative. Both persons must be
identified and approved by agree-
ment of the owners and operators
of a source in the Certificate of
Representation.
The Designated Representative
is responsible for submitting to EPA
and state permitting authorities all
Acid Rain Program submissions
for the source and all units at that
source, including allowance trans-
fers, emission monitoring reports,
compliance certifications, Excess
Emissions Offset Plans, permit ap-
plications, and permit revisions.
The Designated Representative
must sign and certify the truth and
accuracy of each submission. Per-
mits are only issued to a source if its
Designated Representative has
been chosen and certified. The Des-
ignated Representative may be
changed at any time by agreement
of the source's owners and
operators.
What Information Must Be
Included in Permit
Applications?
The source must complete stand-
ard forms when applying for an
Acid Rain Permit. The forms
request information about the
Designated Representative, gen-
eral plant information, and specific
unit information and a compliance
plan for each affected unit. The
standard forms ensure national
consistency in applications and
help facilitate a national allowance
market.
How Do Compliance Plans
Work?
Each source must develop a
compliance plan for each affected
unit that describes the actions taken
to ensure compliance with the Acid
Rain Program. The plan must indi-
cate that the unit will hold enough
allowances to cover its annual S&2
emissions and will be operated in
compliance with the applicable
NOX emissions limitations. The
plan may comprise one or more of
the following options:
% Phase I—Substitution Plan: A
Phase I unit may reassign all or
some of its Phase I SOz emis-
sions reduction requirements
to one or more existing units
(called substitution units) that
would otherwise not be regu-
lated until Phase II, if these
units meet the Phase I unit's
requirements. A substitution
unit consequently becomes a
Phase I unit and, as such, must
meet the SO2 limitations of
Phase I. All units involved in a
Substitution Plan must have a
common owner or operator
(including a common Desig-
nated Representative).
• Phase I—Extension Plan: A
Phase I unit, and any unit that
becomes affected in Phase I
under another compliance
option, may apply for a 2-year
extension of' Phase I SO2 limi-
tations. Extensions are granted
to units that (1) use a qualify-
ing technology that can be
shown to remove at least 90
percent of a unit's SO2 emis-
sions, or (2) reassign emissions
reduction obligations to an-
other unit that uses such a tech-
nology during Phase I.
A Phase I extension unit is
given extra SO2 emissions al-
lowances to cover the SO2 it
emits beyond its basic Phase I
allocation during 1995 and
1996. A limit of 3.5 million
allowances is available to
these units. Applications are
processed in the order that
they are received. The order of
receipt for applications re-
ceived on the same day is de-
termined by lottery.
• Phase I—Reduced Utilization
Plan: A Phase I unit may meet
its emissions reduction re-
quirements by reducing elec-
tricity generation. The unit can
compensate for planned
reduced output by (1) desig-
nating one or more non-Phase I
SO2-emitting unit or units
(called compensating units) to
increase generation, (2) adopt-
ing verifiable energy conser-
vation or improved unit
efficiency measures, or (3) des-
ignating sulfur-free generators
to provide generation. EPA
grants allowances to compen-
sating units based on 1985
SO2 emissions rates and base-
lines (i.e., average annual fuel
use from 1985 to 1987).
Because both the original
and compensating units must
hold enough allowances to
cover SO2 emissions, allow-
ances may be transferred from
the original unit to the com-
pensating units to cover emis-
sions beyond their granted
allowances. The units in a
Reduced Utilization Plan do
not have to have the same
Designated Representative as
the original unit. If reduced
utilization is not accounted for
by a compensating unit,
conservation, improved unit
efficiency, or sulfur-free genera-
tion, the unit reducing utiliza-
tion may have to surrender
allowances.
• Phase II—Repowering Exten-
sion: Phase II units may obtain
a 4-year extension of the
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Phase n emissions reduction
deadline if they repower with
a qualified repowering tech-
nology. Repowering requires
replacement of an existing
coal-fired boiler with (1) one of
seven technologies listed in the
Clean Air Act Amendments,
(2) a derivative of one of those
technologies, or (3) a technol-
ogy determined by EPA and
the Department of Energy to
control multiple combustion
emissions and improve boiler
or generation efficiency while
significantly reducing waste as
compared to technology com-
monly used in 1990.
Qualified technologies are
atmospheric or pressurized
fluidized bed combustion,
integrated gasification com-
bined cycles, magnetohydro-
dynamics, direct and indirect
coal-fired turbines, and inte-
grated gasification fuel cells.
To obtain a Repowering Exten-
sion a Designated Repre-
sentative must petition EPA for
conditional approval of the
technology. If a unit proceeds
with repowering that later
proves infeasible, it will not be
held liable for failing to repower
as long as it acted in good faith.
The Designated Represen-
tative may seek conditional,
pre-approval of compliance op-
tions, except for Phase I extensions.
In this way, the unit can select
the appropriate compliance
option at a later date. The Des-
ignated Representative simply
informs EPA of its choice, and the
permit is administratively
amended to include the change.
Multi-unit compliance options
involving separate sources may
have different Designated Repre-
sentatives. Compliance plans
must be properly cross-referenced
in the permit for each source and
signed by each Designated
Representative.
What Does the Permitting
Authority Do with the
Application?
When the permitting authority
receives a source's permit applica-
tion, the permit writer determines
if the application is complete. If it
is incomplete, the permit writer
will request additional informa-
tion. Delays in submitting infor-
mation can result in a denial of the
permit.
Once all of the necessary infor-
mation has been obtained, the
permit writer prepares a proposed
permit and a statement describing
the legal and factual basis of the
permit requirements. These
National
Consistency
The acid rain permitting process gives utilities flexibility to select from a number of
compliance options and devise the most cost-effective compliance plan possible.
The standard permit forms ensure consistency on a nationwide basis. Finally, the
appointment of a Designated Representative secures the accountability that is the
key to achieving true reductions.
materials are provided to the
source and are made available to
the public.
A comment period is then held
during which time the public can
comment on the proposed permit
and request a public hearing. After
all comments are received, and a
public hearing (if granted) is held,
the permit is issued or denied, in
whole or in part. Each Acid Rain
Permit will be effective for 5 years.
This action is subject to appeal by
the source or the public.
In Phase I, EPA's Regional Of-
fices are responsible for issuing
Acid Rain Permits. In Phase II,
EPA-approved state or local agen-
cies will implement permit pro-
grams under both Titles IV and V
of the Clean Air Act. States will
process Phase H permit applica-
tions and submit proposed permits
to EPA for review. Permits will be
issued by states, assuming that EPA
does not have any substantive
objections.
EPA will process Phase n permit
applications for sources located in
those states that do not have
EPA-approved permit programs
by July 1,1996. In these cases, EPA
will follow its Phase I, permitting
procedures.
When Should the Permit
Materials Be Submitted?
During Phase I, the following
deadlines apply:
• Permit applications and pro-
posed compliance plans—by
February 15,1993.
• Certificates of Representation
for Designated Representative
for Phase I sources—no later
than the permit application.
• Compliance option forms—
with the permit application
or as proposed permit
revisions .
• Phase I Extension Early Rank-
ing applications—40 days af-
ter the final rule.
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During Phase II, the following
deadlines apply:
• SOz permit applications and
proposed compliance plans—
by January 1,1996.
• NOX permit applications and
proposed compliance plans—
by January 1,1998.
• Certificates of Representation for
Designated Representative—
no later than the permit
application.
• New Unit Plans—by January
1,1998, or 24 months before the
unit commences operation,
whichever is later.
• Compliance option forms—
with the permit application or
as a permit revision.
How Can Permitting
Decisions Be Appealed?
Any person challenging a per-
mitting decision of EPA in Phase
I or Phase II must file a petition
for review with the Environ-
mental Appeals Board. Provi-
sions of the Permit Rule and
other acid rain rules may not be
appealed to the Board. The peti-
tion for review must show that
EPA's factual findings or legal
conclusions are clearly errone-
ous or that policy determina-
tions underlying the decision
are arbitrary and capricious or
otherwise warrant review. The
Environmental Appeals Board
will determine whether to hold
an evidentiary hearing and will
issue a decision affirming, re-
versing, modifying, or remand-
ing EPA's decision. Final actions
may be appealed to the federal
courts.
Appeals or decisions of state or
local permitting authorities in
Phase II will be governed by the
administrative and judicial re-
view procedures specified in the
approved permit program. If the
state made the decision at issue,
the state will conduct the appeal
process unless the appeal
challenges or involves decisions or
actions of EPA. Decisions or actions
by EPA include, but are not limited
to, allowance allocations, determi-
nations on alternative monitoring
systems, and determinations of
whether a proposed technology
constitutes a qualified repowering
technology. When the state con-
ducts an appeal, the state permit-
ting authority must notify EPA of
the appeal and the decision that is
reached.
How Can the Permit Be
Revised?
In many cases, permit revisions
may be necessary. Three types of
permit revision procedures are
specified in the rule: permit
modifications (including fast-
track permit modifications), ad-
ministrative permit amendments,
and automatic permit amendments.
The permit modification proce-
dure applies to, among other
things, relaxation of an approved
Emissions Offset Plan; determina-
tions concerning failed repower-
ing projects; and determinations
by a state interpreting, modifying,
or voiding any Acid Rain Permit
provisions. Permit modifications
involve the same public notice
and comment procedures as those
involved in the issuance of a per-
mit. The fast-track modification is
used for, among other things, in-
corporation of a new compliance
option; changes in Substitution or
Reduced Utilization Plans that re-
sult in a Phase II unit becoming a
Phase I unit; and changes in a
Phase I Extension Plan or Repow-
ering Plan. With the fast-track
modification, the permittee will
publicize the proposed permit
modification in a newspaper of
general circulation in the area
where the source is located or in a
state publication, as well as give
notice to the interested parties.
The public will have 30 days to
comment to EPA. The permittee
will submit its proposed modifi-
cation to EPA, and the Agency will
have 30 days after the close of the
comment period to rule on the pro-
posed modification.
The administrative permit
amendments procedure applies
to simple alterations to a per-
mit, such as corrections of typo-
graphical errors, and name and
address changes. Other changes
(such as activating certain compli-
ance options that were condition-
ally approved, changing the
Designated Representative if a
new Certificate of Representation
is submitted, and terminating
certain compliance options), are
also handled as administrative
permit amendments. Administra-
tive amendments are made by the
permitting authority without
prior public notice.
An automatic permit amend-
ment occurs whenever an emis-
sions allowance transaction is
recorded by EPA on the Allow-
ance Tracking System. A permit
will not be rewritten to include
these automatic amendments.
Rather, the applicable SO2 emis-
sions limitation will be deter-
mined at the end of each calendar
year according to each unit's
Allowance Tracking System
account.
The incorporation of an Ex-
cess Emissions Offset Plan ap-
proved by the Administrator
also will be an automatic permit
amendment.
For More Information
Write to:
U.S. EPA
Acid Rain Division (6204J)
401 M Street, SW.
Washington, DC 20460
If you would like to receive other
fact sheets on the Acid Rain
Program, call the Acid Rain Hotline
at 617-674-7377 or the EPA Public
Information Center (PIC) at
202-260-2080.
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