United States
Environmental Protection
Agency
Air and Radiation
(ANR-445)
400/1-91/035
.October 1991
vvEPA
im
EPA
400/
1-
91/035
rV n
£L 2 (such as in-
dustrial facilities) may elect to par-
ticipate in the Acid Rain SO2
Program by opting in.
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 utility boilers, which will be re-
quired to install low-NOx burner
technologies and meet new emis-
sions requirements.
These requirements will also be
implemented in two phases. For
Phase I, EPA will establish emis-
sions limitations for two types of
.utility boilers (tangentially fired
and dry bottom, wall-fired boilers).
For Phase II, regulations for all
other types of coal-fired boilers will
be issued by 1997, and must be met
beginning in the year 2000 by all
units not subject to the Phase INOX
limits. Regulations for tangentially
fired and dry bottom, wall-fired
boilers not covered in Phase I may
be tightened at this time.
The innovative, market-based
SC*2 allowance trading component
of the Acid Rain Program allows
utilities to adopt the most
cost-effective strategy to reduce
SC*2 emissions at units in their sys-
'tem. The Acid Rain Program
operating permit spells out the
specific program requirements and
compliance options chosen by each
source. Affected utilities also will
be required to install systems that
continuously monitor emissions of
SOz, NOx, and other related pol-
lutants 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 will be
required to submit a plan to EPA
that specifies how the excess SOi
emissions will be offset.
Introduction
Acid Rain Program is being
A implemented through operat-
ing permits. Each operating permit
1
Printed on Recycled Paper.
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will specify the enforceable re-
quirements that will apply to each
affected unit at a source. The acid
rain permitting requirements will
afford flexible planning oppor-
tunities to help minimize the costs
of compliance. All affected sources
must submit operating permit ap-
plications to either EPA or, during
Phase II, the state permitting
authority approved by EPA.
Each permit will also specify the
source's basic allowance allocation
and NOx limitation. These may
vary from the statutory require-
ments if the source elects one or
more optional method of com-
pliance in its operational plan. This
plan, known as the compliance
plan, describes how the source will
meet the acid rain requirements.
Permits must be granted before
each unifs total annual allowance
allocation can be determined (see
the Allowance System Rule).
The proposed Permits Rule also
outlines the requirements for cer-
tifying designated representatives
for affected sources, the informa-
tion needed to complete permit
applications, schedules for submit-
ting permit materials, permit
processing procedures, duration of
permit terms, permit appeal and
revision procedures, and. the
program's periodic compliance cer-
tification reporting requirements.
What Sources Must
Obtain Permits?
Tn general, most electric utility
iplants with one or more units that
emit SOa and NOx must obtain an
acid rain permit in order to operate.
Nonutility sources of emissions are
not required to obtain permits un-
less they voluntarily opt in to the
program.
Phase I permits must be obtained
for each source with one or more
units that
• Are listed in Appendix A of the
rule, entitled "Existing Phase I
Affected Units."
• Are Phase I units that become
designated as affected units
during Phase I under a com-
pliance plan developed by a
unit listed in Appendix A of the
rule.
• Choose to opt in to the
program.
Phase II permits must be ob-
tained for each source with one or
more units that:
• Are listed in Appendix A.
• Are listed in Appendix B of the
rule, entitled "Existing Phase II
Affected Units."
• Are new units (new units are
those that began commercial
operation on or after Novem-
ber 15,1990, or that increased
electrical generation from less
than 25 megawatts to 25
megawatts or more).
• Choose to opt in to the
program.
Who Represents the
Sources in Permitting
Matters?
The owners and operators of
each regulated source must
select one person to represent the
source in permitting matters and
may select a second person to act as
an alternate for the first. These two
persons are known as the desig-
nated representatives. • Both the
designated representative and the
alternate must be identified and ap-
proved by agreement of the owners
and operators of a source up front
in the "certificate of repre-
sentation." The owners and
operators and the designated rep-
resentative are fully responsible for
any actions the alternate takes.
From this point on in this summary,
"designated representative" shall
denote the person representing the
owners and operators of a utility in
matters with EPA, whether it be the
designated representative or the al-
ternate.
No permits will be issued to a
source until its designated repre-
sentative has been chosen and cer-
tified as provided by the rule.
Sources that consist of more than
one affected unit must still appoint
only one designated repre-
sentative. Use of designated repre-
sentatives ensures that EPA will noi -
receive conflicting submissions,
from the same source.
The designated representati
responsible for submitting to
and state permitting authorities all
acid rain program submissions for
the source, .including allowance
transfers, emissions monitoring
•'reports, compliance certifications,
excess emission offset plans, permit
applications,,.permit revisions, and
any other information necessary
for the implementation of the Acid
Rain Program.
In addition, the designated rep-
resentative: must sign and certify
the truth arid accuracy of each sub-
mission. AU_submissions made by
the designated' representative are
binding .orV'.every owner and
operator of.:the source.
The designated representative
for a source-may be changed at any
time by agreement of its owners
and operators. All actions under-
taken by the previous designated
representative before EPA receives
the certificate of representation for
his or her replacement, however,
are binding.
What Information
Should Be
Included in Permit
Applications?
"p PA has developed standardized
Xj forms that must be completed
when applying for an acid rain per-
mit. The forms request designated
representative information,
general source information, and
specific unit information. The
standardized forms should ensure
national consistency in permit
application requirements and help
facilitate a national allowance
market.
•If, for example, one state re-
quired considerably more informa-
tion about the source or more
detailed compliance plans prior to
issuing an acid rain permit than^S
another, the source might^^-.
counter delays in obtaining permit
approval, thereby adding to the
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source's incremental "cost" of per-
mitting and obtaining allowances.
~tandardized forms should
revent such problems from aris-
ing.
The use of standardized forms
also lends itself to computerization
of the application process. EPA is
currently investigating the pos-
siblity of instituting a nonman-
datory electronic reporting
procedure for sources that would
make the permitting system more
efficient.
How Do Compliance
Plans Work?
Each regulated source must
develop a compliance plan for
each affected unit describing the
steps the unit will take to ensure
compliance with the Acid Rain
Program. The plan can be struc-
tured around one or more of the
following options:
• Standard Compliance Option:
The plan must indicate that the
unit will hold enough allow-
ances to cover its annual SO2 .
emissions and will be operated
in compliance with the ap-
plicable Npx emissions limita-
tions.
> Phase I - Substitution Plan: A
Phase I unit may reassign all or
'some ofits Phase ISO2 emis-
sions reduction requirements
to one or more existing units
(substitution units), which
would otherwise not be regu-
lated until Phase n, that agree
to fulfill the original unit's
Phase I requirements. The
substitution unit consequently
becomes a designated affected
unit for Phase I, and .as such
also must meet the SOz and
NOx limitations of Phase I of
the program. All of the units
involved in a substitution plan
must have the same desig-
nated representative^
Phase I - Extension Plan: A
Phase I affected unit (including
any unit that becomes affected
in Phase I under another com-
pliance plan as a designated
affected unit) may apply for a
2-year extension of Phase ISO2
limitations. Extensions- will
only be granted to units that
use a "qualifying Phase I tech-
nology" (a technology that can
be demonstrated to remove at
least 90 percent of the fuel's
SO2 emissions), or that reas-
sign their emissions reduction
obligations to another unit that
uses such a technology during
Phase!.
Each extension unit will be
given extra SO2 emissions al-
lowances to cover the SOz it
emits beyond its basic Phase I
allocation during 1995 and
1996. As provided by the Act,
EPA will only award a limited
number of allowances to cover
extension plans and will
process extension applications
in the order that they are
received.
The proposed rule specifies
that the "order of receipt" will
be determined by a telephone
queuing procedure, but asks
for comments on alternative
procedures.
Phase I - Reduced Utilization
Plan: An affected Phase I unit
may meet its emissions reduc-
tion requirements by reducing
electricity generation. The unit
can compensate for planned
reduced output by (1)
designating a non-Phase I
SOz-emitting unit or units to
increase generation (compen-
sating unit); (2) adopting
verifiable energy conservation
or improved unit efficiency
measures; or (3) designating
sulfur-free generation to com-
pensate for the reduction. EPA
will grant allowances to com-
pensating units based on their
1985 emissions rates and their
"baselines" (average annual
fuel use from 1985 to 1987).
Because both the original and
the compensating unit or units
must hold enough allowances
to cover their SOz emissions,
allowances may be transferred
from the original unit to the
compensating unit or units to
cover emissions beyond their
granted allowances. The units
named in a Reduced Utiliza-
tion Plan do not have to have
the same designated repre-
' sentative as the original Phase
I unit.
• Phase II - Repowering Extension:
Phase n affected units may ob-
tain a 4-year extension of the
Phase n emissions reduction
deadline if they repower with
a qualified clean coal technol-
ogy. Repowering requires re-
placement of an existing
coal-fired boiler with (1) one of
seven technologies listed in the
Act; (2) a derivative of one of
those technologies; or (3) a
technology determined by the
EPA Administrator and the
Secretary of Energy to be
capable of controlling multiple
combustion emissions simul-
taneously -with improved
boiler or generation efficiency
and with significantly greater
waste reduction than technol-
ogy commonly used in 1990.
Qualified repowering tech-
nologies include atmospheric
or pressurized fluidized bed
combustion, integrated
gasification combined cycles,
magnetohydrodynamics,
direct and indirect coal-fired
turbines, and integrated
gasification fuel cells. Units
that want to obtain a repower-
ing extension must submit a
petition to EPA for conditional
approval of their repowering
technology. Moreover, a com-
pliance plan outlining when
repowering activities will
occur and other information
must be submitted to the per-
mitting authority. If the unit
proceeds with repowering and
later determines that the
prospect is infeasible, it will
not be held liable for violation
of the Act for failing to repower
as long as it acted "in good faith."
'• NOx Emissions Averaging Plan:
Units that are subject to NOX
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regulations during Phase! and
all Phase n affected units may
enter into an averaging plan if
they have the same owner or
operator and designated rep-
resentative. The emissions
averaging plan must identify
all of the units involved, their
combined annual NOx emis-
sions limitation, and the in-
dividual levels of NOx each
unit proposes to emit annually.
With this option, emissions
generated by individual units
above the required rates can be
compensated for by other units
in the utility system as long as
the combined emissions do not
exceed the limitations.
The use of standardized
forms should ensure
national consistency In
permit application
requirements.
* NOx Alternative Emissions
Limitations Plan: A unit can re-
quest an alternative, less strin-
gent NOx emissions limitation
if it can demonstrate that the
otherwise applicable NOX
limitation cannot be met at the
unit using the technology
upon which the regulatory
limitation was based.
limit, the unit must confirm
that the control equipment
upon which the unit was based
was properly designed, in-
stalled, and operated.
• Phase 1 - NOx Compliance Dead-
line Extension Plan: Units
regulated under Phase I for
NOx emissions can apply for a
15-month Phase I compliance
/deadline extension if equip-
ment needed to meet the NOx
requirement cannot be
obtained and installed by
January 1,1995, because it is in
inadequate supply.
• Opt-in Plan: Units that are not
regulated under the Act may
wish to become affected units
for SO2 in order to participate
in the allowance trading
program. These units must
submit applications under re-
quirements that will be
promulgated in the Opt-in
Rule.
In addition, special plans are re-
quired for .the following situations:
• New Unit Plan: New units are
regulated under Phase II of the
Program. Permit applica-
tions for new units must in-
clude a plan, which
indicates when the unit
will commence operation.
Accounting for emissions
. at new units begins on
January 1, 2000, or upon
commencement of opera-
tion, whichever is later.
• Common-Stack Plans: In situa-
tions where a source does not
independently monitor the
emissions of units that share a
common emissions stack,
these separate units will be
regulated as a single unit.
(This requirement does not
apply where each unit has a
separate certified emissions
monitor). These units must in-
dicate that they share a com-
mon stack in their emissions
and compliance plans.
If emissions from common
stack units exceed the com-
bined total of the allowances
held for those units, then the
units will be held liable for fail-
ing to comply with the Act. If
one of the units is regulated
under Phase I of the program,
the other units not otherwise
regulated in Phase I must be
designated as Phase I affected
units under either a substitution
plan or as opt-in units and are
assigned emissions allowances.
Units may specify more than one
of the compliance options in their
compliance plans and may seek
conditional preappproval of the
options. In.this manner, the unit is
given flexibility to select the ap-
propriate compliance option at a
later date, when more informatione
is available. The unit's designated :
representative simply informs EPA -.
of its choice, and the permit is
ministratively amended to i
this change.
Units may specify
more than one of the
compliance options in
their compliance
plans.
Multiunit plans involving
separate sources or separately
owned and operated units (such as
Phase I extension control unit plans
and reduced utilization plans)
generally may have different desig-
nated representatives (except as
noted earlier). The compliance
plans must be properly
cross-referenced in the permit for
each source and signed by each
designated representative in-
volved. '
What Does the
Permitting Authority Do
with the Application?
When the permitting authority
receives a source's permit ap-
plication, the permit writer deter-
mines if the application and
compliance plans are complete. If
they are incomplete, the permit
writer will request additional infor-
mation. (Delays in submitting in-
formation can result in a denial of
the application and a violation of
the permit requirements.)
Once all of the necessary infor-
mation has been obtained, the per-
mit writer prepares a proposed
permit and a statement describing
the legal and factual basis of the
permit requirements. These
materials are provided to the
source, and are made available to
the public.
.A comment period is then hdfe
during which time the public WP
comment on the proposed permit
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and request a public hearing. After
all comments are received, the per-
Imit is issued or the application is
denied. This action constitutes the
permitting decision and is subject
to appeal by the source or the
public.
During Phase I of the program,
EPA's Regional Offices are respon-
sible for issuing acid rain permits.
For Phase n, states are required to
develop and implement permit
programs for approval by EPA pur-
suant to the general permitting re-
quirements specified under Tide V
of the Clean Air Act.
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 fol-
low its Phase I permitting proce-
dures. States with approved
programs will process Phase n per-
mit applications and submit
proposed permits to EPA for
review. Permits will be issued by
states following the EPA review, as-
suming that EPA does not have any
substantive objections.
When Should the Permit
Materials Be Submitted?
EPA has developed a schedule
that dictates when permit
materials must be submitted in
both Phase I and Phase n of the
Acid Rain Program. During Phase
I, the following deadlines apply:
* Phase I permit applications
and proposed compliance
plans must be submitted by
February 15,1993.
• Designated Representative
Certificates of Representation
for Phase I sources must be
postmarked no later than the
date the permit application is
submitted.
• Compliance option forms can
be submitted with the permit
application, or can be sub-
mitted as. proposed permit
revisions. Sources considering
a Phase I extension will be able
to submit an "early ranking"
application prior to submis-
sion of the application to deter-
mine whether they will receive
allowances from the reserve.
During Phase n, the following
v deadlines apply:
• SOz permit applications and
proposed compliance plans
must be postmarked by
January 1,1996.
• NOx permit applications and
proposed compliance plans
must be submitted by January
1,1998.
• Designated Representative
Certificates of Representation
must be postmarked no later
than with the permit applica-
tion.
• New unit plans must be sub-
mitted by January 1,1998, or 24
months before the unit com-
mences operation (whichever
is later).
• Compliance option forms can
be submitted with the permit
application, or can be sub-
mitted as a permit revision.
How Long Does the
Permit Last?
Each acid rain permit will be ef-
fective for 5 years. Phase I per-
mits will be issued in 1993, but will
be effective throughout Phase I,
from January 1, 1995, through
December 31, 1999. This delay in
the Phase I permit effective date has
been proposed to minimize the
need for Phase I permit reapplica-
tions in 1998 (5 years after the initial
permits will be issued).
States may also similarly delay
the effective dates of permits they
issue for Phase n, and have them
begin in the year 2000. This may
also be possible under the various
state permit programs approved
under Title V of the Dean Air Act.
States are encouraged to put af-
fected sources on a permitting cycle
that coincides with the add rain
permitting cycle, when issuing per-
mits for other air program require-
ments (such as State
Implementation Plans).
How Can Permitting
Decisions Be Appealed?
Any person challenging a. per-
mitting decision must file a
petition for review with the Ad-
ministrator. This petition must
show that the Agency's factual
findings or legal conclusions are
"clearly erroneous," or that policy
determinations underlying the
decision are "arbitrary and capri-
cious." The EPA Administrator will
determine if the review should be
granted.
Appeals of state permitting
decision in Phase II of the program
would be governed by the ad-
ministrative arid judicial review
procedures specified in the ap-
proved permitting program. If the
state has issued the permit, it will
conduct the appeal process unless
the decision being appealed was
made by EPA. Decisions made by
EPA include, but are .hot limited to
(1) denial by the EPA Administrator
of an acid rain permit, (2) approval
or disapproval of an excess emis-
sions offset plan, and (3) deter-
mination of whether a proposed
technology constitutes a qualifying
repowering technology. .
When the state conducts an ap-
peal, it must notify EPA of the ap-
peal as well as the decision that is
reached. State permit programs
must afford EPA the right to inter-
vene in any acid rain permit ad-
ministrative or judicial appeal
conducted by the state.
How Can the Permit Be
Revised?
In many cases, permit revisions
may be necessary. Three types of
permit revision procedures are
specified in the proposed rule: (1)
permit modifications including fast
track permit modifications; (2) ad-
ministrative permit amendments;
and (3) automatic permit amend-
ments.--
The permit modification proce-
dure would apply to, among other
things, any proposed relaxation of
a monitoring requirement; a relaxa-
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Principles of Acid Rain Permits
National Consistency
The acid rain permitting procass furnishes militias with tha flexibility to select from
a number of compliance options and devise the most cost-effective compliance plan
possible. The standardized permitting forma ensure consistency on a nationwide
basis. Finally, the appointment of a designated representative provides the program
with the requisite accountability to perform well.
tion of an approved emission offset
plan; the proposed use of a new
method of compliance, a change in
the compliance option that results
in a previously unaffected unit be-
coming affected; changes to a Phase
I extension plan; or a decision by a
state permitting authority inter-
preting, modifying, or voiding any
permit provision. Permit
modifications would involve prior
public notice and comment.
EPA has proposed two fast track
options. Under the first option, the
designated representative for the
unit involved would submit the
proposed permit modification to
EPA. EPA would have 30 days to
rule on the revision. If EPA decides
to approve the revision, it would
notify members of the public that
were interested in the initial per-
mitting action (e.g., commenters on
the original permit) of the
proposed change. These interested
persons would have 15 days to
comment on the proposed
modification.
If no objections were raised
during this comment period, the
permit modification would be-
come effective. If objections occur,
the proposed revision would have
to go through the full permit
modification procedure.
With the second fast track
modification option, the permittee
would publicize the proposed per-
mit modification in a journal or
newspaper of national and general
circulation, as well as give notice to
the interested parties. The public
would have 30 days to comment to
EPA. The permittee would submit
its proposed modification to EPA,
and the Agency would have 30
days after the close of the comment
• period to rule on the proposed
modification. EPA may choose one
or both approaches in its final
rulemaking.
The administrative permit
amendments procedure would
apply to simple alterations to a per-
mit, such as corrections of typo-
graphical errors, address or name
changes.
In addition, other specific
changes, such as incorporating an
approved excess emissions offset
plan, activation of a compliance op-
tion that was already conditionally
approved in the original permitting
action, and changes to the desig-
nated representative if a new cer-
tificate of representation has been
filed, will be handled as ad-
ministrative permit amendments
for the Acid Rain Program. Ad-
ministrative amendments will be
made by the permitting authority
with subsequent public notice. * •«.
As provided in the Act, automatic :
permit amendments will occur,;
whenever an emissions allowa^fc-
transaction is properly registe^F
with EPA on the Allowance Track-
ing System. Once the transaction
has been recorded by EPA, the,per-
mit for a unit selling the allowances
will be deemed to be automatically
amended to reflect that its al-
lowance pool and consequent SG>2
emissions limitation, has" been
diminished by the quantity of al-
lowances sold.
Similarly, the permit for trie unit
buying the allowances will auto-
matically be deemed to be
amended to reflect the correspond-
ing increase in allowances and SO2
emissions limitation. The permit
will not actually be rewritten to ef-
fect these automatic amendments,
however. Rather the applicable SOz
emissions limitation will have to be
determined at the end of each
calendar year by looking at the
unit's Allowance Tracking System
account. '.''
For More Information
For more information, write t
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