United States Office of Air and Radiation EPA 430-R-00-008
Environmental Protection Clean Air Markets Division August 2000
Agency (6204-J) http://www.epa.gov/acidrain
SMALL ENTITY COMPLIANCE GUIDE
Federal NOX Budget Trading Program
(40 CFR Part 97)
-------
[This page intentionally left blank.]
-------
August 2000
Disclaimer
This Guide was prepared pursuant to section 212 of the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Public Law 104-121. This Guide is
intended solely to help regulated entities comply with the published national regulation,
"Findings of Significant Contribution and Rulemaking on Section 126 Petitions for
Purposes of Reducing Interstate Ozone Transport" (Federal Register', Vol 65, No. 11,
pages 2674-2767, January 18, 2000).
This Guide is not intended to replace the regulation and may not cover all parts of
the regulation. Final authority rests solely with the regulation. However, in any civil or
administrative action against a small business, small government, or small non-profit
organization for a violation of the Federal NOX Budget Trading Program under 40 CFR
Part 97, the content of this Guide may be considered as evidence of the reasonableness or
appropriateness of proposed fines, penalties or damages.
EPA may decide to revise this guide without public notice to reflect changes in the
Agency's approach to implementing the Federal NOX Budget Trading Program, or to
clarify and update text. To determine whether the Agency has revised this guide and/or to
obtain copies, contact EPA's Small Business Ombudsman Office at (202) 260-0490 or
EPA's Clean Air Markets Division at (202) 564-9180. You can also determine whether
EPA has revised or supplemented the information in this guide by accessing the document
at: http://www.epa.gov/acidrain/modlrule/main.html#126.
Acknowledgments
This document was prepared by the Clean Air Markets Division, Office of
Atmospheric Programs, U.S. Environmental Protection Agency, with assistance from
Perrin Quarles Associates, Inc. (under EPA Contract No. 68D70065), and approved for
publication. This document was provided for review to:
American Public Power Association
American Portland Cement Alliance
Associated Industries of Massachusetts
Council of Industrial Boiler Owners
National Association of Manufacturers
National Business Legislative Council
National Small Business United
Natural Gas Supply Association
Ohio Municipal Electric Association
Smaller Business Association of New England
SMC Business Councils
-------
[This page intentionally left blank.]
11
-------
August 2000
Small Entity Compliance Guide: Federal NOX Budget Trading Program
(40 CFR Part 97)
Table of Contents
Page
Section 1: Introduction 1
1.1 Who should use this guide? 2
1.2 What does the guide cover? 2
1.3 How do I use this guide? 2
Section 2: Requirements of the Regulation 5
2.1 What environmental or human health issues does the trading program
address? 5
2.2 Why is it important to regulate electric generating and industrial sources
that burn fossil fuel? 6
2.3 Summary of the rulemaking 7
2.3.1 Rulemaking history 7
2.3.2 Scope of the rulemaking 8
2.3.3 Nature of the trading program 8
2.4 How do I demonstrate compliance? 9
2.5 Compliance timetable 9
2.6 How does this regulation relate to other Federal, State, and local
requirements? 11
2.6.1 NOX SIP Call 11
2.6.2 OTC NOX Budget Program 11
2.6.3 Acid Rain Program 12
2.6.4 Other requirements 12
Section 3: Applicability 13
3.1 Do I own or operate a large EGU? 15
3.2 Do I own or operate a large non-EGU? 16
3.3 Does my unit meet the fossil fuel-fired test? 17
3.4 What if my determination of applicability is inconsistent with
Appendix A or B to Part 97? 18
3.5 Can I obtain an exemption for a low emitting unit? 18
3.6 Can a retired unit qualify for an exemption? 22
3.7 Can I opt a unit into the trading program? 23
in
-------
August 2000
Small Entity Compliance Guide: Federal NOX Budget Trading Program
(40 CFR Part 97)
Table of Contents (cont.)
Page
Section 4: Operation of the Trading Program 25
4.1 What is the basic structure of the program? 25
4.2 What emission limits must I meet? 25
4.3 What control and other compliance options do I have? 26
4.4 How do I get started? 29
4.4.1 Selecting an AAR 29
4.4.2 Establishing accounts 32
4.5 How do I get my allowances? 33
4.6 How are my trading program allowances tracked and deducted for
compliance? 36
4.7 May I hold surplus allowances? 38
4.8 How do I transfer allowances? 39
4.9 What is the annual compliance certification? 40
4.10 May I get credit for early emission reductions? 40
4.11 Summary of trading program deadlines and data processing 42
Section 5: NOX Budget Permits 45
5.1 Do I need a permit? 45
5.2 How do I apply for my NOX Budget Permit? 46
Section 6: Emissions Monitoring, Reporting and Recordkeeping Requirements .... 49
6.1 Monitoring options 50
6.1.1 Do my monitoring options depend on what type of
unit I have? 50
6.1.2 Based on my fuels, capacity factors, and emissions, what basic
monitoring options apply to my units? 51
6.1.3 What is moisture monitoring and when is it necessary? 53
6.1.4 What if my unit has multiple stacks or shares a stack with other
units? 54
6.1.5 What if my unit is an opt-in unit? 56
6.1.6 May I petition EPA to obtain a variance from a monitoring
requirement? 56
iv
-------
August 2000
Small Entity Compliance Guide: Federal NOX Budget Trading Program
(40 CFR Part 97)
Table of Contents (cont.)
Page
6.2 Monitoring approval process 56
6.2.1 Initial monitoring plan 57
6.2.2 Certification test notice 58
6.2.3 Certification testing 59
6.2.4 Certification application 60
6.2.5 EPA approval 62
6.3 Quality assurance (QA) 62
6.4 Quarterly emissions and QA reporting 68
6.5 Changes to your monitoring 72
Section 7: Other Questions and Answers 75
7.1 How might I conduct a self-audit? 75
7.2 What are the implications of this regulation for my existing operating
permits? 76
7.3 Are there opportunities for flexibility or waivers? 77
Section 8: Compliance Assurance Process 79
8.1 How will EPA determine compliance? 79
8.2 If I discover a violation, how can I work with EPA to correct it? 79
8.3 If EPA discovers a violation, what might EPA's response be? 80
8.4 What is the legal status of this guide? 81
Appendix A: Contacts and Resources A-l
Appendix B: Forms Information B-l
Appendix C: Questionnaire: How Useful was this Guide? C-l
v
-------
August 2000
Small Entity Compliance Guide: Federal NOX Budget Trading Program
(40 CFR Part 97)
List of Tables
Page
Table 2-1: Major Compliance Deadlines 10
Table 3-1: EGU Applicability 15
Table 3-2: Non-EGU Applicability 16
Table 3-3: Fossil Fuel-fired Applicability Test 17
Table 4-1: Typical Combustion/Post-combustion Control Options 27
Table 4-2: AAR Selection Requirements 29
Table 4-3: Account Certificate of Representation Form Requirements 30
Table 4-4: Treatment of New Units When Updating Allocations 34
Table 4-5: Assigning Allowance Accounts 37
Table 4-6: FIFO Allowance Deduction Rules 37
Table 4-7: Allowance Transfer Forms 40
Table 4-8: Section 126 Rule Compliance Supplement Pool 41
Table 4-9: Trading Program Deadlines for a Typical Year 42
Table 6-1: Part 75 Unit Type Definition 50
Table 6-2: Part 75 Subpart H Monitoring Options 53
Table 6-3: Moisture Monitoring Options 54
Table 6-4: Multiple/Common Stack Monitoring Options 54
Table 6-5: Overview of Monitoring System Certification Reporting 57
Table 6-6: Monitoring System or Methodology Certification Tests 59
Table 6-7: Certification Application Reporting 60
Table 6-8: Low Mass Emissions Unit Certification Reporting 61
Table 6-9: QA Requirements for Units Reporting on an Annual Basis 63
Table 6-10: QA Requirements for Units Reporting on an Ozone Season Basis 64
Table 6-11: Periodic Quality Assurance RAT A Notification Requirements 67
Table 6-12: EDR Record Types for NOX Mass Reporting 68
Table 6-13: Recertification Reporting 73
Table 6-14: Recertification Application Reporting 74
Table 7-1: Example Self-audit Checklist 75
List of Figures
Page
Figure 2-1: Areas Affected Under the Section 126 Final Rule 8
Figure 3-1: Applicability Determination Process 14
Figure 3-2: Steps to Set a Permit Limit that Qualifies for the Exemption 20
Figure 4-1: Trading Program Data Flow and Process 43
VI
-------
Section 1: Introduction
After reading this introduction you should know whether you need to use this
Guide, what this Guide covers, and where to obtain the latest information on the
regulation.
The U.S. Environmental Protection Agency (EPA) published the regulation
entitled "Findings of Significant Contribution and Rulemaking on Section 126 Petitions
for Purposes of Reducing Interstate Ozone Transport" (Federal Register, Vol. 65, No. 11,
pages 2674 - 2767) on January 18, 2000 under authority of section 126 of the Clean Air
Act (the Act). This Guide explains how to tell if you — as the owner or operator of a
stationary air pollution source - are subject to the regulation and what to do if you are
required to comply.
Section 126 authorizes a downwind State
to petition EPA for a finding that
stationary source(s) in upwind States
must reduce emissions because they
contribute significantly to NAAQS
nonattainment in the petitioning State.
Eight northeastern States
submitted petitions under section
126 of the Act that sought ozone-
related reductions from certain
sources in upwind States. EPA has
made a technical finding for each of
the petitions. The Agency has
determined that large, fossil fuel-
fired stationary sources in certain upwind States should be required to reduce their ozone
season emissions to mitigate the effect these sources have on ozone nonattainment in
downwind States. The sources that are affected by this rule include large electric
generating units (EGUs) and large industrial/institutional boilers or turbines (non-EGUs)
that emit nitrogen oxides (NOX) from burning fossil fuels. These NOX emissions contribute
to nonattainment of the National Ambient Air Quality Standard (NAAQS) for ozone in the
downwind States.
The final rule implements a Federal NOX Budget Trading Program (40 CFR Part
97) as a cost-effective approach for reducing ozone season NOX emissions from the
affected sources. As described below, this Guide includes information on who is affected
by the rule, the requirements that apply to these sources, and the details of the trading
program.
The information in this
Guide was written and published in
August 2000. You can determine
whether EPA has published further
corrections to the rule, issued a new
rule to address additional section
126 petitions, or revised the
information in this Guide by
TIP! Check these web sites for further
regulatory information and updates:
www.epa.gov/ttnotagl
www.epa.gov/acidrain
www.epa.gov/airmarkets
Section 126 SBREFA Compliance Guide - August 2000
Page 1
-------
Introduction Section 1
checking the EPA Regional Transport of Ozone (RTO) web site and Clean Air Markets
Division's (CAMD — formerly known as the Acid Rain Division) web site.
1.1 Who should use this guide?
If you are an owner and/or operator of a large stationary source that burns fossil
fuel, then you should use this Guide to help you:
! Determine whether the unit(s) at your facility are subject to the section 126
rulemaking, and
! Understand the requirements of the Federal NOX Budget Trading Program.
The Small Business Regulatory Enforcement Fairness Act (SBREFA) requires
EPA to prepare a compliance guide to help small businesses comply with the regulation.
However, since the regulation has generally the same requirements for all affected sources,
this Guide is helpful for both large and small businesses. See Section 2.3 for a summary
of the rulemaking and Section 3 for more specific guidance on determining whether your
facility or unit is subject to the requirements of the rule or is eligible for an exemption
from the requirements of the rule.
1.2 What does the guide cover?
This Guide covers the basic
See Appendix A to this Guide for a list of
contacts and other resources for the
Federal NOX Budget Trading Program.
requirements of the section 126 rule
including the criteria that EPA used
to determine who is affected by the
rule (Section 3), how the trading
program works (Section 4), what
permits are required (Section 5), and what monitoring, reporting and recordkeeping
requirements apply (Section 6). Sections 7 and 8 cover other issues related to compliance
assurance.
1.3 How do I use this guide?
This Guide is organized into eight major sections.
Section 1 introduces you to this Guide and the section 126 regulation. You should
be able to determine whether you could be affected by the rule and therefore,
whether you need to use this Guide.
Section 2 provides an overview of the regulatory requirements. This section first
explains the environmental and health issues that the regulation addresses and then
Page 2 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 1 Introduction
provides an overview of the rulemaking history and the regulatory structure. The
section also summarizes the major compliance timetables you must follow and
explains how this rule relates to other Federal, State and local requirements.
Section 3 provides a detailed description of the applicability provisions of the rule
and includes step-by-step procedures for determining if you are subject to the
regulation.
Section 4 describes how you use the trading program to meet your emission limits.
This section outlines what options you have to meet your reduction obligations and
how the trading program works.
Section 5 provides a brief synopsis of the permit requirements for the Federal NOX
Budget Trading Program.
Section 6 describes in some detail the emissions monitoring, reporting and
recordkeeping requirements you must meet to account for all of your emissions.
Section 7 includes information on other common questions such as conducting a
self-audit to determine compliance, the overlap with existing permits, and the
ability to obtain additional allowances for compliance needs.
Section 8 includes information on the compliance assurance process. This section
describes how EPA determines compliance and how violations may be corrected.
Appendices to the Guide include forms information (including example language
for standard permit requirements), contacts and other resources, and a
questionnaire about the usefulness of this Guide.
Section 126 SBREFA Compliance Guide - August 2000 Page 3
-------
Introduction Section 1
[This page intentionally left blank.]
Page 4 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 2: Requirements of the Regulation
After reading Section 2, you should understand the benefits of the Federal NOX
Budget Trading Program, the general requirements of the program, key
compliance dates, and how the program relates to other Federal and State
requirements.
Ground-level ozone has long been
recognized to have significant adverse
effects on public health and also can
result in agricultural crop loss and
damage to forests and ecosystems.
2.1 What environmental or human health issues does the trading
program address?
The Federal NOX Budget
Trading Program requires affected
sources in 13 States to prohibit
specified amounts of emissions of
nitrogen oxides (NOX). These
reductions will help reduce NOX and
ozone transport across State
boundaries. NOX react with volatile
organic compounds (VOC) in the presence of sunlight to form ground-level ozone (a
primary component of smog). To protect human health and welfare, EPA has established
national ambient air quality standards (NAAQS). The NAAQS are a measure of
acceptable and unacceptable levels of certain pollutants across the country. More than
half of the U.S. population lives or works in areas that exceed the national standards for
ozone. In order to reduce national ground-level ozone levels, emissions of VOC and NOX
must be reduced.
Human exposure to ozone primarily affects the lungs. There are many ozone-
induced health effects including decreased lung function, increased respiratory symptoms
and inflammation of the lung. Increased ozone levels may also cause long term damage to
the lungs. About one out of every three people in the U.S. is at a higher risk of
experiencing ozone-related health effects. Four groups of people are particularly sensitive
to ozone: children, adults who are active outdoors, people with respiratory diseases such
as asthma, and people with unusual susceptibility to ozone.
Ozone's most perceptible effects on human health are acute respiratory symptoms
such as coughing and painful deep breathing. These acute health effects are induced by
short-term exposures to ozone (observed at concentrations as low as 0.12 parts per
million), generally while individuals are engaged in moderate or heavy exertion. During
activity, ozone penetrates deeper into the parts of the lungs that are more vulnerable to
injury. Acute health effects also are induced by prolonged exposures to ozone (observed
at concentrations as low as 0.08 ppm), typically while individuals are engaged in moderate
exertion. Moderate exertion levels are more frequently experienced by individuals than
heavy exertion levels.
Section 126 SBREFA Compliance Guide - August 2000 Page 5
-------
Overview Section 2
Elevated concentrations of ozone are also associated with adverse welfare effects.
Among the welfare impacts from exposure to ozone are damage to selected commercial
timber species and economic losses for commercially valuable crops, such as soybeans
and cotton. The typical concentration level of ozone found in rural areas is thought to
depress crop yields and cause visible damage (such as premature aging and leaf loss) to
other plant life.
2.2 Why is it important to regulate electric generating and industrial
sources that burn fossil fuel?
In most States, large electric
generating and industrial boilers and
turbines that burn a significant
amount of fossil fuel represent the
largest identifiable sources of NOX
emissions. Consequently, EPA and
many States consider the regulation
of these facilities to be a crucial component of the overall approach to reducing those
emissions that contribute to excess levels of ozone.
The sources affected by the trading
program release a significant portion of
overall NOX emissions in the applicable
States.
Currently, certain large utility or electric generating sources are required to control
NOX emissions under EPA's Acid Rain Program. The Program is designed to achieve
significant reductions in emissions of sulfur dioxide (SO2) and NOX to mitigate the effects
these pollutants have on acid rain. Other programs also can require NOX reductions or
emission limitations as described below in Section 2.6. However, in order to achieve a
level of NOX emissions that would reduce ozone levels in the petitioning States, it is
important to regulate sources that burn fossil fuel, have been found to be contributing
significantly to ozone levels in the downwind or petitioning States, and are able to
implement a cost-effective approach to reducing NOX emissions.
In determining which sources
to regulate, EPA considered whether
highly cost-effective NOX control
measures are available for the types
of stationary sources named in the
petitions. EPA has determined that
controlling NOX emissions at large
stationary sources is the most cost-
effective approach to reducing ground-level ozone transport into the petitioning States.
See Section 3.1 for a more detailed description of the sources affected by the rule.
Regulating large sources that burn fossil
fuel is the most cost-effective approach to
reducing both overall NOX levels and the
amount of ground-level ozone transported
to downwind States.
Page 6 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 2 Overview
2.3 Summary of the rulemaking
2.3.1 Rulemaking history
Section 126 of the Act authorizes a downwind State to submit a petition (or
request) that EPA make a determination that existing and new major stationary sources
upwind of the State emit or would emit enough to contribute significantly to elevated
levels of certain regulated pollutants, and thus to nonattainment within the petitioning
State.
In May 1999, EPA published a notice of final rulemaking taking action on ozone-
related petitions submitted individually by eight northeastern States under section 126 of
the Act. The States are Connecticut, Maine, Massachusetts, New Hampshire, New York,
Rhode Island, Pennsylvania, and Vermont. The geographic scope and the sources
identified vary somewhat between each of the petitions, but all petitions were made in the
context of the 1-hour ozone NAAQS. Some of the petitions also requested a
determination based on the recently adopted 8-hour ozone NAAQS, which is a somewhat
more stringent ozone standard as compared to the original 1-hour standard.
In the May 1999 rule, EPA determined that the petitions from six of the eight
States have technical merit and that certain large electric generating units (EGUs) and
industrial boilers and turbines (non-EGUs) are in fact contributing significantly to ozone
nonattainment in certain petitioning States. The May 1999 rule provides that controlling
emissions from the affected sources would depend on the State Implementation Plan (SIP)
submittals in response to the final NOX SIP Call (see 63 FR 57357, October 27, 1998).
Those State submittals of emission control requirements were expected to provide an
approach that would achieve NOX reductions sufficient to reduce downwind ozone levels.
If States made timely submissions and EPA approved them, the controls required by the
section 126 rule would not be necessary.
However, shortly after the May 1999 rule, the U.S. Court of Appeals for the
District of Columbia remanded the 8-hour ozone standard, which was part of the basis for
EPA's determinations under section 126, and granted a motion to stay the deadline for the
SIP revisions under the NOX SIP call. Because of these court decisions, EPA issued a
proposed rule in June 1999 to stay any emission reduction requirements based on the 8-
hour ozone standard. The notice also proposed to remove the connection between the
emission reductions required under section 126 and State actions under the NOX SIP call.
Since it was uncertain when States would be required to reduce emissions, EPA proposed
to go ahead and require reductions under the section 126 rule, without waiting for State
actions.
EPA then finalized the section 126 rulemaking on January 18, 2000, adopting the
provisions it had proposed.
Section 126 SBREFA Compliance Guide - August 2000 Page 7
-------
Overview
Section 2
2.3.2 Scope of the rulemaking
The final section 126 rule addresses units in the affected States (or portions of
States) identified in Figure 2-1. In these areas, the final rule requires NOX emission
reductions at all large electric generating and industrial boilers and turbines as described in
Section 3. Sources are required to meet certain NOX emission limitations in the context of
an emissions trading program, obtain permits, and meet the monitoring and reporting
requirements as described in Sections 4 through 6 of this Guide.
Figure 2-1: Areas Affected Under the Section 126 Final Rule
2.3.3 Nature of the trading program
The Federal NOX Budget Trading Program is a "cap-and-trade" program. This type
of emission trading program is a proven method for achieving air quality objectives, while
simultaneously providing compliance flexibility to sources. The freedom to pursue
various compliance strategies (i.e., switching fuels, installing pollution control
technologies, or buying authorizations to emit (allowances) from other firms) reduces the
cost of compliance in a market-based program relative to costs under a command-and-
control approach. Under the Federal NOX Budget Trading Program, initial allowances are
distributed to all affected units based on historical heat input.
Since emitting fewer tons than the allocation results in surplus allowances that may
be sold on the market, pollution prevention becomes increasingly cost-effective and
innovation in control technology is encouraged. EPA will update allowance allocations
every five years and will also recalculate the State budgets and reallocate the allowances to
the sources accordingly. EPA will use more recent heat input data, or may propose to use
recent output data for some units, to update the allowance allocations.
Page 8
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 2
Overview
You demonstrate compliance by holding
enough allowances to cover your NOX
emissions during the ozone season.
2.4 How do I demonstrate compliance?
Within two months after
each ozone season (May 1 through
September 30), the NOX Authorized
Account Representative (NOX AAR
or AAR) for your source will have to
certify that each affected unit was in
compliance with the emissions limitation and the requirements of the trading program. If
you own a source that commenced operation before May 1, 1997, you will receive an
initial allowance allocation based on historical operating information. If you own a source
that commenced operation on or after May 1, 1997, you are eligible to receive allowances
from the new source set-aside. You will use the monitoring data you collect to account for
all your emissions, and then compare your emissions to your allowances.
If the allowance allocation you receive is less than your actual ozone season
emissions, you may take advantage of the flexibility provided by the allowance market to
buy allowances. You have until November 30th of each year, which is two months after
the end of the ozone season, to obtain sufficient allowances to cover your emissions. See
Section 8 for a discussion of the penalties and other potential enforcement consequences
for failing to meet the requirement to hold sufficient allowances to cover your emissions.
2.5 Compliance timetable
The Federal NOX Budget
Trading Program establishes several
major compliance milestones for
permitting, monitoring, establishing
your allowance trading accounts, and
certifying compliance with your
emission reduction obligations. The
following table describes these
major compliance deadlines in chronological order. In addition, there are a number of
specific schedules for when you must submit various reports and other notifications.
These types of timing issues are discussed in Sections 3 through 6, below.
NOTE! You should submit your AAR
account certificate of representation for
each source as soon as possible — you will
not receive a permit or an allowance
account until EPA receives that form.
Section 126 SBREFA Compliance Guide - August 2000
Page 9
-------
Overview
Section 2
Table 2-1: Major Compliance Deadlines
Deadline
May 1, 2000
(only for units
applying for early
reduction credits)
November 1,2001
May 1, 2002
February 1, 2003
May 1, 2003
November 30, 2003
(and each year
thereafter)
November 30, 2004
Requirement
Install all monitoring systems in accordance with §§ 75.72 and 75.76
and
Complete all monitoring certification tests in accordance with § 97.71
Submit a NOX Budget permit application to the permitting authority
Submit an Account Certificate of Representation
[NOTE: You may also submit your application for a general account at
this time. November 1, 2001 is not an absolute deadline for the
submittal of the account certificate or general account application.
However, your NOX Budget permit will not be issued, and general,
compliance, and overdraft accounts will not be established, until these
documents have been submitted.]
Install all monitoring systems in accordance with §§ 75.72 and 75.76
and
Complete all monitoring certification tests in accordance with § 97.71
and
Begin recording, reporting, and quality assuring all monitoring data
[NOTE 1 : If your unit first starts operating on or after January 1, 2002,
your deadline is the later of: May 1, 2002, or 90 days after an EGU first
operates, or 180 days after a non-EGU first operates.]
[NOTE 2: If you add a new stack or flue after the deadline, you will
need to meet the above requirements within 90 days following the date
on which emissions are released from the stack (or by May 1 of the
following year if the unit only reports during the ozone season).]
Submit requests for early reduction credits (issued from compliance
supplement pool for reductions achieved in 200 1 and 2002)
First control period begins
Submit a Compliance Certification Report. You must obtain allowances
to cover any shortfall (e.g., if ozone season NOX emissions were greater
than allocations). This November 30 "true-up" deadline applies in 2003
and every following year
Use (or lose) early reduction credits issued from the compliance
supplement pool for compliance during 2003 and 2004 control periods
Page 10
Section 126 SBREFA Compliance Guide - August 2000
-------
Sources affected by the Federal NOX
Budget Trading Program still must
comply with other applicable Federal,
State, or local NOX requirements.
Section 2 Overview
2.6 How does this regulation relate to other Federal, State, and local
requirements?
There are a number of other
Federal and State programs or
regulations that require the reduction
of NOX emissions. TheNOxSIP
Call, Ozone Transport Commission
(OTC) NOX Budget Program, Acid
Rain Program, New Source
Performance Standards (NSPS), Reasonably Available Control Technology (RACT) SIP
requirements, Prevention of Significant Deterioration (PSD), and other Clean Air Act
regulatory programs may include requirements to reduce NOX emissions. These programs
can vary between States and regions and may apply to different types of sources, but,
except for the OTC NOX Budget Program and NOX SIP Call, none are directly related to
the requirements under the section 126 final rule.
For sources affected under both the OTC NOX Budget Program and the Federal
NOX Budget Trading Program, EPA is working with the affected States to ensure
appropriate integration in 2003. See Section 2.6.2 below.
2.6.1 N(X SIP Call
X
As described above in Section 2.3, under the NOX SIP Call, States with sources
subject to the section 126 rule are under an independent obligation to reduce NOX
emissions. These States may choose to obtain reductions from the same or different
sources. One option for States is to adopt the NOX Budget Trading Program (40 CFR Part
96), which is nearly identical to the Federal NOX Budget Trading Program in the section
126 rulemaking. Both programs assume the same level of control for large EGUs and
non-EGUs and require the same compliance dates.
The two programs can be integrated. Sources trading under the section 126 trading
program may trade allowances freely with sources trading under the NOX SIP Call trading
program, and vice versa. However, under the NOX SIP Call, States have the option of
reducing their NOX emissions through a mechanism other than the EPA-administered NOX
Budget Trading Program. Therefore, only sources in those States that choose to control
their emissions through the NOX Budget Trading Program can trade with sources in the
Federal program.
2.6.2 OTC NOX Budget Program
The Ozone Transport Commission (OTC) comprises the following jurisdictions:
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island, Vermont, Washington D.C., and the northern
counties of Virginia. A subset of these participate in the OTC NOX Budget Program. This
program includes sources located in Connecticut, Delaware, New Hampshire, New Jersey,
Section 126 SBREFA Compliance Guide - August 2000 Page 11
-------
Overview Section 2
New York, Massachusetts, Pennsylvania, and Rhode Island. Sources in these areas began
submitting compliance data under Phase II of the OTC program in 1999. Many are also
affected under the Federal NOX Budget Trading Program. Phase in of the OTC program
assumes similar control levels as the Federal NOX Budget Trading Program and the NOX
Budget Trading Program under the NOX SIP Call, and is scheduled to begin in 2003.
Because of these similarities, EPA is working with the affected States to ensure
appropriate integration of the programs in 2003. EPA expects to propose that sources
currently participating only in the OTC NOX Budget Program will be able to trade freely
with those sources affected by the Federal NOX Budget Trading Program.
2.6.3 Acid Rain Program
To reduce the formation of acid rain, EPA's Acid Rain Program achieves
reductions in NOX and other pollutants emitted from large electric generating units. Under
the Acid Rain Program, these units are required to continuously measure, record and
report NOX and other emissions on a year-round basis. The monitoring requirements for
sources affected by the Acid Rain Program are generally the same as those for sources
affected under the section 126 rulemaking. Therefore, you will be able to satisfy most of
your monitoring obligations under the Federal NOX Budget Trading Program by using your
existing monitoring at Acid Rain units. See Section 6 for further information on
monitoring requirements.
2.6.4 Other requirements
Other programs, such as New Source Performance Standards (NSPS), State
Reasonably Achievable Control Technology (RACT) requirements, or Prevention of
Significant Deterioration (PSD) also can include requirements for NOX reductions or
emission limitations. The requirements under these programs are not affected by the
section 126 rulemaking. Sources remain responsible for meeting all existing NOX
reduction requirements.
Page 12 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 3: Applicability
After reading Section 3, you should be able to determine whether you are subject
to the Federal NOX Budget Trading Program.
The Federal NOX Budget Trading Program applies to stationary, fossil fuel-fired
boilers, combustion turbines, or combined cycle systems ("units") that have been:
! Named by petitioning States, and
! Determined by EPA to be significantly contributing to non-attainment in one or
more of the petitioning States.
The rule covers units in the following States (See Figure 2-1 for an illustration of
the affected areas in all 13 jurisdictions):
! Delaware ! New York (only certain portions)
\ District of Columbia ! North Carolina
! Indiana (only certain portions) \ Ohio
! Kentucky (only certain portions) \ Pennsylvania
! Maryland ! Virginia
! Michigan (only certain portions) \ West Virginia
! New Jersey
To determine whether you are potentially affected as a "NOX Budget unit" under
the Federal NOX Budget Trading Program, use the guidance in this Section 3 as illustrated
in Figure 3-1, below.
If your NOX Budget unit operated during 1995 or 1996, you will receive an initial
allocation (even if the unit qualifies for an exemption). The allocations for EGUs and
non-EGUs are listed in Part 97, Appendices A and B, respectively. If your NOX Budget
unit began operations after May 1, 1997, you are considered a "new" unit. Unless you
obtain an exemption for a new NOX Budget unit as a low-permit-limit unit, EPA will issue
allowances to you for the unit from the new source set-aside. Allowance allocations are
explained in further detail in Section 4.
Section 126 SBREFA Compliance Guide - August 2000 Page 13
-------
Applicability
Section 3
Figure 3-1: Applicability Determination Process
Affected, but
exempt from
control and
monitoring
requirements
Am I a Large
Non-EGU?
Am I a Fossil
Fuel-fired
Unit?
[3.3]
Page 14
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 3
Applicability
3.1 Do I own or operate a large EGU?
The following checklist will
help determine whether your unit
qualifies as a large electric
generating unit (EGU) under the
rulemaking.
NOTE! Your EGU must also be fossil
fuel-fired — see Section 3.3.
Table 3-1: EGU Applicability
If....
And...
Then...
The unit commenced operation
before January 1, 1997
During 1995 or 1996, served a
generator greater than 25 MWe
that produced electricity for sale
under firm contract to the grid
The unit is classified
as a large EGU
The unit commenced operation
between January 1, 1997 and
January 1, 1999
During 1997 or 1998, served a
generator greater than 25 MWe
that produced electricity for sale
under firm contract to the grid
The unit is classified
as a large EGU
The unit commenced operation
on or after January 1, 1999
At any time, served a generator
that has a nameplate capacity
greater than 25 MWe and that
produces electricity for sale
The unit is classified
as a large EGU
There are two key terms you should understand to determine your applicability as a
large EGU (see § 97.2 for the actual definitions):
! Commence operation means that the unit has begun any mechanical, chemical or
electronic process, including start-up of a unit's combustion chamber. That
"commence operation" date generally remains your commence operation date even
if you later modify, reconstruct or repower the unit.
! Electricity for sale under firm contract to the grid is defined as where the
capacity involved is intended to be available at all times during the period covered
by the guaranteed commitment to deliver, even under adverse conditions. See
Glossary of Electric Utility Terms, Edison Electric Institute, Publication No. 70-
40. Generally, capacity under firm contract to the electricity grid is included on
EIA form 860A (called EIA form 860 before 1998), or is reported as capacity
projected for summer or winter peak periods on EJA form 411 (Item 2.1 or 2.2,
line 10).
Section 126 SBREFA Compliance Guide - August 2000
Page 15
-------
Applicability
Section 3
3.2 Do I own or operate a large non-EGU?
The following checklist will
help determine whether your unit is
affected as a large non-EGU under
the rulemaking.
NOTE! Your non-EGU must also be
fossil fuel-fired ~ see Section 3.3.
Table 3-2: Non-EGU Applicability
If....
And...
Then...
The unit commenced
operation before January 1,
1997
Has a maximum design heat input
greater than 250 mmBtu/hr and did
NOT serve during 1995 or 1996 a
generator that produced electricity for
sale under a firm contract to the
electric grid
The unit is classified
as a large non-EGU
The unit commenced
operation between January 1,
1997 and January 1, 1999
Has a maximum design heat input
greater than 250 mmBtu/hr and did
NOT serve during 1997 or 1998 a
generator that produced electricity for
sale under a firm contract to the
electric grid
The unit is classified
as a large non-EGU
The unit commenced
operation on or after January
1, 1999
Has a maximum design heat input
greater than 250 mmBtu/hr and did
NOT at any time serve a generator
producing electricity for sale
The unit is classified
as a large non-EGU
The unit commenced
operation on or after January
1, 1999
Has a maximum design heat input
greater than 250 mmBtu/hr and at any
time, serves a generator that is 25
MWe or less and that has the
potential to use no more than 50% of
the potential electrical output
capacity of the unit
The unit is classified
as a large non-EGU
The "commenced operation" term is the same for non-EGUs as EGUs. The key
term for non-EGU applicability is "potential electrical output capacity," defined as 33%
of a unit's maximum design heat input capacity. See also 40 CFR 52.34(a), 72.2, and Part
72, Appendix D.
Page 16
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 3
Applicability
3.3 Does my unit meet the fossil fuel-fired test?
If your unit meets the large
EGU or large non-EGU criteria
summarized in Sections 3.1 and 3.2,
respectively, it will be an affected,
NOX Budget Unit under the trading
program only if it is also a "fossil
fuel-fired" unit.
NOTE! All existing affected fossil fuel-
fired EGUs and non-EGUs that EPA has
identified to date are listed in Part 97,
Appendices A and B, respectively.
The following checklist will help determine whether your unit is affected as a
fossil fuel-fired unit under the rulemaking.
Table 3-3: Fossil Fuel-fired Applicability Test
If....
And...
Then...
The unit commenced operation
before January 1, 1996
The combustion of fossil fuel
accounts for greater than 50% of
the annual heat input on a Btu basis
during 1995 (or if no heat input in
1995, during the last year of
operation prior to 1995)
The unit is classified
as fossil fuel-fired
The unit commenced operation
between January 1, 1996 and
January 1, 1997
The combustion of fossil fuel
accounts for greater than 50% of
the annual heat input on a Btu basis
during 1996
The unit is classified
as fossil fuel-fired
The unit commenced operation
on or after January 1, 1997
(1) The actual combustion of fossil
fuel accounts for greater than 50%
of the annual heat input on a Btu
basis during any year
or
(2) The projected combustion of
fossil fuel accounts for greater than
50% of the annual heat input on a
Btu basis during any year
The unit is classified
as fossil fuel-fired
(In Case (2), the unit
is not "fossil fuel-
fired" until the date
(during such year)
that the combustion
of fossil fuel begins.)
Section 126 SBREFA Compliance Guide - August 2000
Page 17
-------
Applicability Section 3
3.4 What if my determination of applicability is inconsistent with
Appendix A or B to Part 97?
If you have a unit listed in Appendices A or B to Part 97 that you believe does not
meet the applicability criteria for the program, please contact EPA's Clean Air Markets
Division (CAMD) to discuss removing the unit from the Federal NOX Budget Trading
Program.
Similarly, if you have an existing unit that is not listed in Appendices A or B to
Part 97 and you believe that the unit is affected under the rule, you may contact CAMD to
discuss your situation. Generally, if you have an affected NOX Budget unit that
commenced operation before January 1, 1997, and that unit has not received an allocation
listed in the Appendices, you will have to purchase the necessary amount of allowances to
operate your unit from other sources that are participating in the allowance market.
Although your unit(s) will not receive an allocation during the initial allocation period (i.e.
2003 through 2007), they will receive an allocation as existing unit(s) under all subsequent
allocation periods based on the monitoring data collected under the Federal NOX Budget
Trading Program.
3.5 Can I obtain an exemption for a low emitting unit?
Units with a very low,
federally-enforceable permit
limitation (25 tons or less of NOX per
ozone season) may be exempt from
most of the requirements of this
program, even if they meet the basic
applicability criteria outlined in
Sections 3.1-3.3 of this Guide. To
obtain this exemption, the unit's
permit must restrict the unit's NOX
mass emissions by limiting its operating hours to a level that, when multiplied by a
conservative, default emissions rate set by EPA, results in a total of 25 tons or less of
ozone season NOX. Even if a unit is exempt, you will still be required to comply with the
provisions in Subpart E (NOX Allowance Allocations), Subpart F (NOX Allowance
Tracking System), and Subpart G (NOX Allowance Transfers) of Part 97.
If a unit qualifies for an exemption based
on a permit term limiting NOX emissions
to < 25 tons per season, you do not have
to monitor or report the unit's emissions.
However, you must establish an AAR and
a general account, and report ozone
season operating hours.
If you want to exempt a unit, you must meet all of the following:
Have a federally-enforceable permit restricting control period operating hours to a
level that ensures that when multiplied by a default emissions rate set by EPA,
results in NOX emissions <25 tons of NOX per ozone season.
Page 18 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 3 Applicability
! Keep on-site records to demonstrate compliance with the permit (including
restrictions on operating time). All records must be maintained for at least five
years.
! Report hours of operation during the ozone season to your permitting authority by
November 1 following each ozone season.
! Establish a NOX Authorized Account Representative (AAR) and a general account
from which EPA will deduct any allocated allowances in an amount equal to the
permit limit on the unit's NOX emissions.
! Ensure that any allowance allocations issued for the ozone season for which you
are exempt are sufficient to cover the amount that will be deducted from the
general account by EPA to reflect the units' NOX emission limitation (in tons of
NOX). If you sell or otherwise transfer allowances from the general account for an
exempt unit, you must ensure that the unit's general account ultimately holds
sufficient allowances to account for the deduction that will be made by EPA to
reflect the exemption.
» How do I apply for an exemption?
To apply for an exemption, you should follow the permitting authority's procedures
for applying for a federally-enforceable permit, or for revising an existing federally-
enforceable permit, that meets the requirements for an exemption. Before submitting an
application, make sure that your unit can meet the requirements listed above, especially on
an ongoing basis. You may contact your permitting authority with any further questions or
to ensure that the appropriate paperwork is complete.
» What will my permit limitation look like?
The permitting authority must express the limitation of 25 tons (or less) of NOX per
ozone season in terms of operating hours. The permitting authority will use the steps in
Figure 3-2 to calculate the operating hour limit.
» How are allowances allocated to my exempt unit?
For your initial allocation, you will receive the allocation listed in Appendix A or
B, as applicable, to Part 97. For subsequent allocations, you will not receive any
allowances because your heat input will be treated as zero for purposes of allocations. In
that case, you will no longer be required to deduct allowances from your general account
that equal your emission limitation. Instead, for those years, EPA will reduce the State's
trading budget by the amount of allowances equal to the units' emission limitation. This
trading program budget reduction will also apply for any exempt units that do not qualify
for an initial allocation. Similarly, if you have an exempt unit that qualifies as a new unit,
EPA will deduct from the new source set-aside the amount of allocations equal to the
Section 126 SBREFA Compliance Guide - August 2000 Page 19
-------
Applicability
Section 3
emission limitation for the unit. If the permit conditions are violated, you must hold
sufficient allowances to cover emissions since the exemption would no longer apply and
you may be subject to fines or penalties (see discussion below).
Figure 3-2: Steps to Set a Permit Limit that Qualifies for the Exemption
STEP 1: Choose the highest applicable default NOX rate (Ib/mmBtu) from
the following list:
Boiler type
Turbine
Turbine
Boiler
Boiler
Fuel type
Gas
Oil
Gas
Oil
N(X emission rate
0.7
1.2
1.5
2
STEP 2: Use the default NOX rate to determine the maximum potential
hourly NOX mass emissions (Ib/hr) as follows:
Maximum potential hourly NOX mass emissions (Ib/hr) =
[Unit's max. rated heat input (mmBtu/hour)] x [Highest default NOX rate (Ib/mmBtu)]
STEP 3: Use the maximum potential hourly NOX mass emissions to
determine your unit's allowable operating hours:
Allowable seasonal operating hours =
50,000 Ibs. NOX [or less, if applicable]
Maximum potential hourly NOX mass emissions
Page 20
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 3 Applicability
» When does the exemption take effect?
If the permit with the limitation becomes final during an ozone season and after the
unit has operated during the ozone season, the effective date will be either May 1 (if the
limitation applied for that entire time in the control period during which the unit operated)
or October 1 (if the limitation did not apply for that entire time).
» When is the exemption no longer effective?
\ The date on which the operating hours and NOX emissions restriction is either
removed from your federally-enforceable permit or is no longer applicable
! The date on which your unit's operating hours exceed the permit limitation
! The date from which you fail to prove that the unit met this permit limitation
» What happens if an exemption is no longer effective for my unit?
\ You will be subject to all requirements for affected units under the Federal NOX
Budget Trading Program.
! For purposes of allocations and monitoring, your unit will be treated as
commencing operation on the date on which the exemption is no longer effective.
! You will be required to comply with all applicable provisions for monitoring,
allocations, permitting, reporting, and other trading program requirements for units
that have just begun operating. For example, if your unit loses its exemption, you
have until the earlier of either 90 days (or 180 days, depending on the type of unit),
or until May 1 of the following year to certify the required monitoring system.
Until you certify the required monitoring systems, you will have to report your data
based on reference method data or certain maximum default values. See Section
2.5 above, for applicable deadlines.
» What happens if I violate the permit condition?
\ You may be subject to fines or penalties for violating your State permit.
Section 126 SBREFA Compliance Guide - August 2000 Page 21
-------
Applicability Section 3
3.6 Can a retired unit qualify for an exemption?
A unit that permanently
retires from service is exempt from
the requirements of this program,
If a unit qualifies for the retired unit
exemption, you do not have to monitor or
even if the unit meets the basic report the unit,s emissions. However, you
must establish an AAR and a general
account.
applicability criteria in Sections 3.1-
3.3 of this Guide. Within 30 days of
permanent retirement, you must
submit documentation to EPA and
the permitting authority that would otherwise be responsible for administering any NOX
Budget permit for the unit. This document should state that the unit is permanently retired
and will comply with the requirements for an exemption. Even if your unit is retired, you
will still be required to comply with the provisions in Subpart E (NOX Allowance
Allocations), Subpart F (NOX Allowance Tracking System), and Subpart G (NOX
Allowance Transfers). A permanently retired unit is not eligible to be a NOX Budget opt-
in unit.
For your permanently retired unit, you must:
! Designate a NOX AAR.
! Submit a statement to the permitting authority otherwise responsible for
administering the NOX budget permit for the unit within 30 days of retirement
(with a copy to CAMD, Attn: Section 126 Retired Unit Exemption), stating that
the unit is permanently retired and will comply with the requirements for the
exemption. If the unit is located at a non-Title V source and no federally-
enforceable State operating permit program applies, submit the statement only to
EPA within the same timeframes described above.
! Ensure that the unit will not emit any nitrogen oxides starting on the date that the
exemption takes effect.
! Establish a general account to record any allowances that EPA issues to the unit.
The account must exist for each control period for which EPA allocates
allowance(s) to the unit.
! Maintain records for five years demonstrating that the unit is permanently retired.
This period may be extended at the discretion of the permitting authority or EPA.
! Comply with the requirements of the Federal NOX Budget Trading Program for any
period of time during which the exemption is not in effect.
Page 22 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 3 Applicability
» When does the exemption take effect?
\ The exemption for a retired unit is effective the day on which the unit is
permanently retired.
» What if I want to resume operation at an exempt retired unit?
\ Submit a complete NOX Budget permit application under § 97.22 (if the unit is
located at a source with a Title V or non-Title V permit, or would normally be
required to have a Title V or non-Title V permit if the unit were not exempt); and
! Submit the permit application at least 18 months prior to either May 1, 2003 or the
date on which the unit resumes operation, whichever is later.
The unit will no longer be exempt at the date on which the application is submitted
or is required to be submitted. Therefore, you will need to comply with all applicable
provisions.
3.7 Can I opt a unit into the trading program?
You may opt individual units into the trading program. These units will be subject
to all of the same requirements that would apply to the core sources that meet the
applicability criteria described in Sections 3.1, 3.2 and 3.3 of this Guide. You are eligible
to opt one or more units into the trading program if those units are:
! Not already subj ect to the rule;
! Not exempted under the rule;
! Operating stationary sources that are fossil fuel-fired and vent all emissions to one
or more stacks;
! Located in a State or portion of a State where a finding is made under the section
126 petitions; and
! Able to monitor NOX mass emissions according to Part 75 and Subpart H of Part
97. All opt-in units will have the opportunity to use non-CEMS or alternative
monitoring methods as allowed for other smaller or lower emitting units.
Section 126 SBREFA Compliance Guide - August 2000 Page 23
-------
Applicability Section 3
[This page intentionally left blank.]
Page 24 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4: Operation of the Trading Program
After reading Section 4, you should know how the trading program works,
including what compliance options you have, what forms and other reports you
must submit, how you receive and trade allowances, and how your allowances are
used for compliance.
4.1 What is the basic structure of the program?
The Federal NOX Budget Trading Program is a "cap-and-trade" type of program.
The "cap" is in the form of an aggregation of emissions from affected sources in each
State. Each State's budget is based on: (i) historical heat input and/or emissions data, (ii)
a growth factor, and (iii) the desired level of emission reduction for the program. That
budget is then distributed to affected units in the form of "allowances." One allowance is
equal to one ton of NOX emissions and may be used to authorize NOX emissions during the
ozone season for which it was allocated or for a subsequent ozone season.
Under the Federal NOX Budget Program, EPA initially distributes allowances to
existing units on the basis of historical heat input data, with a portion of each State's
budget withheld for a "new unit set-aside." As new units come on line, their owners or
operators can apply for allowances from this set aside. EPA will then update allowance
allocations every five years, and reapportion the state budgets on a heat input or other
basis. Once EPA allocates the allowances, owners or operators of units are free to trade
and transfer allowances between units or with general account holders (brokers, interest
groups, etc.). By the NOX allowance transfer deadline (two months after the end of the
ozone season), you must hold sufficient allowances for each of your units in the
appropriate accounts to cover its total seasonal emissions.
4.2 What emission limits must I meet?
Unlike a traditional
command-and-control regulation in
which emission limits are generally
expressed in terms of a specific limit
or percent reduction, under the
Federal NOX Trading Program the
reduction obligation for your
affected unit is expressed as a general obligation to hold sufficient allowances to cover all
your ozone season emissions. As a starting point, the unit's "assumed" reduction
obligation is equal to the unit's ozone season emissions minus the unit's initial allowance
allocation. You can use the allocated allowances and the ability to obtain additional
allowances from other market participants, together with any emission control strategies
you choose, to meet your general obligation to hold allowances equal to or greater than
your emissions.
No specific numerical emission limit
applies ~ you demonstrate compliance by
holding enough allowances to cover your
NOX emissions during the ozone season.
Section 126 SBREFA Compliance Guide - August 2000 Page 25
-------
Trading Program Section 4
Initial allowance allocations are established as follows:
! Existing units EPA has allocated 95 percent of the statewide budgets to
individual existing units based on their heat input. EPA will update NOX
allowance allocations every five years for five year blocks. The unit-by-unit
allowance allocations for existing units for 2003-2007 are contained in Appendices
A and B to Part 97 (see 65 FR 2751-2767).
! New units. EPA has reserved five percent of each State's budget to allocate to new
units. For the initial allocation cycle (2003-2007), "new units" are units that
commence operation on or after May 1, 1997. Although considered "new" units
for the first allocation cycle, these units will be considered "existing" units for a
future allocation cycle. For example, units commencing operation between May 1,
1997 and April 30, 2003, are "existing" units for the second (2008-2012) allocation
cycle. Units that come online between May 1, 2003 and May 1, 2008 will be
considered "new" units for the second allocation cycle. This same switch from
new to existing unit status will apply to subsequent groups of "new" units for each
subsequent allowance allocation cycle. Section 4.5 of this Guide describes how
the new unit set-aside will be allocated to individual new units.
! Opt-in units If you have chosen to "opt in" to the Federal NOX Budget Trading
Program, you must first receive a NOX Budget opt-in permit. For each control
period that you have an approved NOX Budget opt-in permit, EPA will allocate to
you NOX allowances based on your unit's heat input and NOX emission rate for the
previous year. At that point, you have the same flexibility as a standard NOX
Budget unit for meeting your obligation to hold allowances equal to or greater than
your emissions. Section 4.5 of this Guide describes how EPA calculates these opt-
in unit allowances.
4.3 What control and other compliance options do I have?
The inherent flexibility of a cap-and-trade program provides you with a number of
compliance strategies. It will be up to you to determine which strategy is the least-cost
option for your circumstances. Some compliance options include:
! Fuel switching
! Combustion modifications
! Allowance purchasing/trading
! Post-combustion NOX control
You can pursue any one or a combination of these strategies to ensure that you hold
sufficient allowances to cover your ozone season emissions by November 30th of each
year after the end of an applicable ozone season control period beginning with November
30,2003.
Page 26 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
The following table summarizes some of the common combustion and post-
combustion control options that you may use to meet the emission limits. These control
options are often combined to optimize both NOX reduction and cost-effectiveness.
Table 4-1: Typical Combustion/Post-combustion Control Options
Control Option
Description
Operational Modifications
This control option entails changing certain boiler
operational parameters to create conditions in the furnace
that will lower NOX production. Examples are burners-out-
of-service, low excess air, biased firing, and optimization
software. In burners-out-of-service, selected burners are
removed from service by stopping fuel flow, but air flow is
maintained to create staged combustion in the furnace. Low
excess air involves operating at the lowest possible excess
air level while maintaining good combustion, and biased
firing involves injecting more fuel to some burners (typically
the upper burners) to create staged combustion conditions in
the furnace. Optimization software is installed to optimize
the combustion process on a real time basis.
Low-NOx Burners (LNB)
LNB limits NOX formation by controlling the stoichiometric
and temperature profiles of the combustion process. This
control is achieved by design features that regulate the
aerodynamic distribution and mixing of the fuel and air,
resulting in one or more of the following conditions:
(a) reduced oxygen in the primary flame zone, which limits
fuel NOX formation; (b) reduced flame temperature, which
limits thermal NOX formation; and (c) reduced residence time
at peak temperature, which limits thermal NOX formation.
LNB can typically achieve NOX reductions between 30 and
65 percent from uncontrolled levels.
Dry Low-NOx (DLN)
DLN chambers with variable geometry combustion systems
adjust the flow of air mass to the thermal load to control the
temperature of the flame. As a result of this technique,
flame temperature is lowered and the production of thermal
NOX is decreased without the injection of steam or water and
without any flue gas treatment.
Section 126 SBREFA Compliance Guide - August 2000
Page 27
-------
Trading Program
Section 4
Table 4-1: Typical Combustion/Post-Combustion Control Options (cont.)
Control Option
Description
Overfire Air (OFA)
OF A, also referred to as air staging, is a combustion
control technology in which a fraction, 5 to 20 percent,
of the total combustion air is diverted from the burners
and injected through ports located downstream of the
top burner level. OFA is generally used in conjunction
with operating the burners at a lower-than-normal air-to-
fuel ratio, which reduces NOX formation. The OFA is then
added to achieve complete combustion. OFA can be used in
conjunction with LNBs. The addition of OFA to LNB can
increase the reductions by an additional 10 to 25 percent.
Natural Gas Reburning (NGR)
NGR is a combustion control technology in which part of the
main fuel heat input is diverted to locations above the main
burners, thus creating a secondary combustion zone called
the reburn zone. In NGR, the secondary (or reburn) fuel,
natural gas, is injected to produce a slightly fuel rich reburn
zone. Completion or overfire air is added above the reburn
zone to complete burnout of reburn fuel. As flue gas passes
through the reburn zone, part of NOX formed in the main
combustion zone is reduced by hydrocarbon fragments (free
radicals) and converted to molecular nitrogen (N2). In
general, NGR is capable of providing 50 to 60 percent NOX
reduction on coal-fired boilers.
Selective Non-Catalytic
Reduction (SNCR)
SNCR is a post-combustion technology in which a reagent
(ammonia or urea) is injected into the furnace above the
combustion zone, where it reacts with NOX to reduce it to N2
and water. SNCR reactions occur in the temperature range
of 900 to 1100° C. In general, SNCR is capable of providing
levels of NOX reduction ranging from 30 to 60 percent.
Selective Catalytic Reduction
(SCR)
SCR is a post-combustion NOX reduction technology in
which ammonia is added to the flue gas, which then passes
through layers of a catalyst. The ammonia and NOX react on
the surface of the catalyst, forming N2 and water. SCR
reactions occur in a temperature range of 300 to 400 °C. In
general, SCR is capable of providing high levels of NOX
reduction, ranging from 80 to 90 percent.
Page 28
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
These options vary in cost,
complexity, and effectiveness. For
additional information on these
control technologies and their
relative cost-effectiveness, you may
visit EPA's Acid Rain web page.
You may find it helpful to use the
planning tool created by CAMD to
help utility boilers and other sources
calculate cost and cost-effectiveness ratios for combinations of NOX control technologies.
This tool allows the user to identify specific operational characteristics to help identify the
most cost-effective NOX control strategy.
NOTE! For a free EPA tool to help you
analyze potential costs of different
combinations of combustion and post-
combustion control strategies, see:
www.epa.gov/acidrain/NOx/noxtech.htm
4.4 How do I get started?
4.4.1 Selecting an AAR
You must designate a NOX
Authorized Account Representative
(AAR) if you are participating in the
NOX trading program. The AAR is
the person responsible for
transferring allowances and
otherwise managing your accounts,
and for certifying all reports for the program (including all reports to the NOX Allowance
Tracking System (NATS) and the Emission Tracking System (ETS)).
If you have an Acid Rain source that is also a NOX Budget source, EPA
recommends that you designate the person who is the Acid Rain Designated
Representative (DR) as the NOX AAR. You may also appoint an alternate AAR and
provide a procedure for the alternate AAR to act in place of the AAR.
NOTE! You should submit your AAR
account certificate of representation for
each source as soon as possible — you will
not receive a permit or any allowance
accounts until EPA receives and approves
that form.
Table 4-2: AAR Selection Requirements
If you are...
A source whose unit(s) are affected by the
Acid Rain Program and you have an SO2 DR
A source whose unit(s) are not affected by the
Acid Rain Program
Then you...
Must designate that person as your NOX
or
Must appoint a separate NOX AAR
AAR
Must appoint an AAR
Section 126 SBREFA Compliance Guide - August 2000
Page 29
-------
Trading Program
Section 4
» What is an account certificate of representation?
Whether you choose to
designate your existing Acid Rain
DR as your NOX AAR or you
appoint a new AAR, you must
submit an Account Certificate of ^^^^^^^^^^^_^^^^^^^^^^^_
Representation form. If you choose
to appoint an alternate AAR, you must designate that person on the form. The form is
used only to certify your NOX AAR and should not be used for your DR. You should
submit the form directly to EPA for review and recording in NATS.
Forms and additional information may be
found at http://www.epa.gov/acidrain.
Also see Appendix B to this Guide.
Table 4-3: Account Certificate of Representation Form Requirements
Information Required
Complete source names and unit IDs
State where source is located
ORIS Code of source (or other plant ID if no ORIS code)
Name and following contact information for the Authorized Account
Representative (for alternate AAR as well, if applicable):
—identification number
—address
—phone and fax numbers
—e-mail
Name of every owner and operator of the source and each affected unit at
the source
Certification language and signatures of AAR and any alternate AAR
(see§97.13(a)(4)
» Do I use particular identifiers formy plant and unit(s) in the AAR form?
Yes. An important aspect of your AAR form, and all of your subsequent reporting
and recordkeeping obligations under the Federal NOX Budget Trading Program, is to
maintain consistency throughout the program in how you identify your facility and each
affected unit. There are three primary identifiers you will use:
! Plant name. If you are in the Acid Rain Program or OTC NOX Budget Program,
EPA will use the name used for your facility under those programs. For other
units, EPA will consult with your State agency and attempt to match your plant
name with the name used for a Title V or FESOP permit. Although you should
Page 30
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4 Trading Program
maintain the same name if possible for ease of implementation, you may change
your plant name if necessary (such as in the event of an ownership change) by
submitting a revised Account Certificate of Representation form to EPA (see
below).
! Plant ID Number. For Acid Rain Program plants, EPA uses as the plant ID
number the Office of Regulatory Information Systems (ORIS) code assigned for
reporting to the Energy Information Administration (EIA). You must use this plant
ID number for the Federal NOX Budget Trading Program as well, even if you use a
different number for permit or other purposes. EPA Aerometric Information
Retrieval System (AIRS) or Facility Index Data System (FINDS) ID numbers, for
instance, are not appropriate for this program. If you do not have an ORIS code,
contact EPA's Clean Air Markets Division for guidance.
For OTC NOX Budget Program sources, you will continue to use the plant ID
number assigned under that program. For sources that report to EIA, this number
is the ORIS plant ID. For non-EIA reporting sources, EPA has assigned you a
plant ID for OTC program purposes. In either case, you will continue to use that
plant ID number.
For sources that are not subject to the Acid Rain Program or the OTC program,
you must use your ORIS plant ID if you report to EIA. If you do not have an ORIS
plant ID, EPA will assign you a unique plant ID for the Federal NOX Budget
Trading Program. As appropriate, EPA will consult with your State agency in
order to coordinate this ID assignment with your State's efforts under the NOX SIP
Call. Again, contact EPA's Clean Air Markets Division for guidance.
! Unit ID. It is vital that the unit ID be consistent on all applications, permits, and
certifications. This includes, among others, the Account Certificate of
Representation, the monitoring plan, and the quarterly reports. If you are in the
Acid Rain Program or the OTC NOX Budget Program, you must continue to use the
unit ID number assigned under those programs. If you are not in either program,
consult the EDR Version 2.1 Reporting Instructions (section c(2)(b)). You may
submit a unit ID of your choice in the Account Certificate of Representation form,
subject to the alphanumeric nomenclature constraints specified in the EDR
instructions.
It is important that you never change the unit ID. Furthermore, you must use the
unit ID number exactly as assigned — for instance, if the number is "001," you
cannot report information that identifies the unit as "1," "CT1," or some other
variation of" 1." Finally, never re-use a unit ID. For example, if you retire a unit
with the ID of" 1," do not identify a new unit with the ID of" 1."
Section 126 SBREFA Compliance Guide - August 2000 Page 31
-------
Trading Program Section 4
» May I change my AAR?
You may change your AAR or alternate AAR at any time. However, the change is
not effective until EPA receives a new and complete Account Certificate of
Representation form. Until this superseding form is received by EPA, your previous NOX
AAR still functions as the AAR.
» What special requirements must my AAR meet for submitting reports?
Anything submitted by or on behalf of your source under the Federal NOX Budget
Trading program must be signed and certified by your AAR. Each submission must
include the following certification statement:
"/ am authorized to make this submission on behalf of the owners and operators
of the NOX Budget sources or the NOX Budget units for which the submission is
made. I certify under penalty of law that I have personally examined, and am
familiar with, the statements and information submitted in this document and all
its attachments. Based on my inquiry of those individuals with primary
responsibility for obtaining the information, I certify that the statements and
information are to the best of my knowledge and belief true, accurate, and
complete. I am aware that there are significant penalties for submitting false
statements and information or omitting required statements and information,
including the possibility of fine or imprisonment. "
4.4.2 Establishing accounts
You must have an account where your allowances will be held. To establish an
account, first you must submit the Account Certificate of Representation form for your
AAR. After EPA receives this form, EPA will automatically establish a compliance
account for each NOX Budget unit at
your NOX Budget source (a source with
NOTE! After receipt of the Account
Certificate of Representation form, EPA
will automatically establish a compliance
account for each affected unit.
one or more affected NOX Budget
units). If the source has more than one
NOX Budget unit, then EPA also will
establish an overdraft account for the
source. Opt-in units at a source are
treated as NOX Budget units. The
owners or operators of exempt units (i.e., low-permit-limit units and permanently retired
units) and all other organizations and individuals who wish to purchase and trade NOX
Budget allowances must request that EPA establish a general account.
A twelve-digit number is used to identify accounts. This number incorporates the
plant's ORIS code and the number of the unit with which the compliance account is
affiliated. For general accounts, a "9999" designation will apply at the beginning of the
account number to signify that the account is a general account.
Page 32 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4 Trading Program
4.5 How do I get my allowances?
State trading budgets. Appendix C to Part 97 establishes the trading budgets for
each State affected by the rule. EPA uses the budgets to allocate allowances to the units in
each State.
Initial allowances to existing units. EPA has established in Part 97 a detailed
procedure for allocating allowances to units based on their historical seasonal heat input.
For 2003-2007 allocations for existing units (those that commenced operation prior to
May 1, 1997), EPA has already calculated the allowances using this methodology. The
allocations are set out in Appendix A and B to Part 97. The basic methodology is as
follows:
! For an EGU, multiply the unit's historical heat input by 0.15 Ib/mmBtu and divide
by 2,000 Ib/ton. The historical heat input is the average of the two highest
amounts of the unit's heat input for the ozone seasons in 1995 through 1998.
! For a non-EGU, multiply the unit's historical heat input by 0.17 Ib/mmBtu and
divide by 2,000 Ib/ton. The historical heat input is equal to the 1995 ozone season
heat input or, if EPA believes that reliable data for the 1996-1998 control periods
are available, the average of the two highest amounts of the unit's heat input for
the ozone seasons 1995 through 1998.
After calculating the allowance allocations in this manner, EPA adjusts the
allocations proportionally so that the total allocations in each State equal ninety-five
percent of the NOX trading program budget. The remaining five percent is set aside for
new units. After EPA determines overall compliance at all existing and new units, EPA
will distribute any allowances remaining in the new unit set aside to existing units.
Updating allowance allocations. Under the Federal NOX Budget Trading
Program, EPA will allocate allowances for five year periods. The initial five year period
is 2003-2007. Currently, Part 97 assumes that EPA will use the same methodology for
updating the allowance allocations as for initial allocations, except that:
! Units that commence operations before May 1, 2003 will be treated as existing
units for the first allocation update (and similar future dates apply for future
updates); and
! The historical heat input data will be based on 2002-2004 control periods (for the
2008-2012 period) and on subsequent years for subsequent five year allocation
periods.
! See Table 4-4 for details of how this process will work for the first three allocation
cycles.
Section 126 SBREFA Compliance Guide - August 2000 Page 33
-------
Trading Program
Section 4
Note that EPA is considering modifications to the procedures for updating
allowance allocations that would base the allocations on unit output data (generation)
rather than heat input data. EPA intends to publish a formal proposal in the Federal
Register. The Agency will also post relevant information at the EPA Regional Transport
of Ozone (RTO) website (www.epa.gov/ttn/rto).
Table 4-4: Treatment of New Units When Updating Allocations
If you commence operation
of a new unit (or modify and
trigger applicability for an
existing unit) before . . .
May 1, 2003
May 1, 2008
May 1,2013
EPA will use
heat input data
from the following
periods . . .
2002-04
2005-09
2010-14
To treat the unit as an
existing unit for the purpose
of updating allocations in the
period . . .
2008-12
2013-17
2018-22
Allowances for new units. If you have a new unit that is required to participate in
the NOX trading program, you will be eligible for allowances from the five percent set
aside in each State's budget. If you have a unit that is not currently subject to the NOX
trading program and you become subject to the program, then the unit will be treated as a
new unit and you will be eligible to receive allowances from the new unit set aside. As
noted above, you will be eligible to receive these set aside allowances until EPA conducts
a subsequent allocation updating, at which time (depending on how close to the next
allocation your unit actually commences operation) you will receive an allocation as an
existing source.
To receive allowances from the new unit set aside, your AAR must submit a
request to EPA (each year) to be allocated allowances for that year's control period. The
request can be submitted no earlier than the date on which a permitting authority issued a
permit to construct the unit, and no later than January 1st of the year of the control period
for which allowances are requested. The allocations will be made publicly available prior
to May 1st of that same year.
For a new unit, you may request allowances based on:
! The lesser of a NOX emission rate of 0.15 Ib/mmBtu for an EGU (0.17 Ib/mmBtu
for a non-EGU) or the unit's most stringent permitted limit multiplied by,
! The lesser of 3,672 hours or the number of control period hours remaining from
the day the unit commences (or is projected to commence) operation; and then
divided by,
! 2,000 Ib/ton to obtain the allowance value in tons, rounded to the nearest ton.
Page 34
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
EPA will then review your request in order to allocate your allowances. The
following steps apply to allocate the new unit set-aside allowances and return any
unneeded allowances to the units affected in each State:
Step 1: EPA will check to assure that your request meets the timing requirements in the rule
and that you requested the appropriate amount of allowances.
Step 2: EPA will adjust the amount you requested as appropriate based on the review in
Step 1.
Step 3: EPA sums all requests (as adjusted in Step 2) for new units, by State.
Step 4: EPA sums the NOX emission limits (in tons) for all new units that qualify for the low
emission exemption (< 25 tons NOX per season), by State.
Step 5: For each State, EPA subtracts the amount in Step 4 from the total new unit set-aside
allowances available in that State. If the remaining amount is equal to or greater
than the total amount of allowances requested in that State (Step 3), EPA proceeds to
Step 7. Otherwise, EPA first conducts Step 6.
Step 6: EPA uses the following equation to determine your unit's pro-rata share of the
oversubscribed set-aside:
Requested Allocation *
[ Total Allowances in Set-Aside - Total Allowances Deducted for Exempt Units (Step 4 total)
V Total Approved Requested Allowances from Step 3 for your State
Step 7: EPA allocates allowances to you consistent with your request (subject to an
adjustment in Step 2 and Step 6).
Step 8: After the control period, EPA deducts and transfers from your account allowances
equal to: your unit's allowance allocation (Step 7) minus the NOX tons represented
by [your actual control period heat input * lesser of 0.15 Ib/mmBtu (for an EGU) or
0.17 Ib/mmBtu (for a non-EGU) or the units' most stringent State or Federal
emissions limit]. If this calculation represents a zero or negative value, then no
allowances are deducted from your account under this Step 8.
Step 9: All of the allowances remaining in the new unit set-aside (including allowances
transferred from new units in a State under Step 8) are then reallocated to the
existing NOX Budget units in a State on a pro rata basis, using the following formula:
Each Unit's share =
Total allowances from Step 8 in the Unit's State * (the Unit's allocation ^
State trading budget excluding the new unit set-aside)
Section 126 SBREFA Compliance Guide - August 2000
Page 35
-------
Trading Program Section 4
Allowances for opt-in units. To calculate an allowance allocation for an opt-in
unit for the control period in a given year, EPA follows these steps:
Step 1: EPA requires the unit to monitor emissions and heat input for a "baseline"
control period in the ozone season prior to the unit obtaining opt-in status.
Step 2: EPA uses the lesser of the baseline heat input data or the heat input from the
immediately preceding control period.
Step 3: EPA uses the NOX emission rate that is the lesser of the baseline NOX rate or
the unit's most stringent State or Federal emission limit.
Step 4: EPA multiplies the heat input value in Step 2 by the NOX emission rate in Step
3 to determine your opt-in unit's allocation.
Allowances for retired units. Should you retire a unit that has been allocated
allowances, you will continue to receive your allocation until a subsequent allocation
update. If you bring the unit back on line after the allocation update, the permit will not be
considered a new unit and will not receive an allocation until a future allocation update.
Crediting your allowances to your accounts. EPA credits allocated allowances to
an account designated by EPA for the use of your source or organization. The type of
account depends upon the nature of your participation in the NOX trading program.
Compliance and overdraft accounts are established by EPA for all affected and opt-in
sources except low-permit-limit units and permanently retired units. Owners and
operators of the latter two categories of units, and other organizations and individuals who
wish to purchase and trade NOX Budget allowances, must apply for a general account.
4.6 How are my trading program allowances tracked and deducted
for compliance?
Your accounts. Once EPA
receives and records your AAR
Certificate of Representation, EPA
will automatically establish a
compliance account in the NOX
Allowance Tracking System (NATS)
for your source if you have a unit that is affected by the section 126 rule. If your source
has more than one affected unit, EPA will also establish an overdraft account. If you are a
source that is eligible to opt-in to the trading program, EPA will establish these accounts
for you. Starting with the 2003 control period, your allowances will be recorded in your
compliance account. However, there are some exceptions. If your unit has a federally-
enforceable permit that meets the requirements for the exemption for low-permit-limit
units or if it is a permanently retired unit, your allowances will be recorded in a general
Access NATS information on the web at:
www.epa.gov/ardpublc/acidrain/otc/nats
Page 36 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
account that you establish. This is because your allowance holdings will no longer be
reconciled with your emissions.
Table 4-5: Assigning Allowance Accounts
If you are...
An affected or opt-in source with one unit
An affected or opt-in source with more than one
unit
An exempt unit (either because of low-permit-
limit or retired unit status)
An organization or individual that wishes to
participate
Then you...
Will automatically be assigned a compliance
account
Will automatically be assigned a compliance
account and an overdraft account
Must request a general account
Must request a general account
Compliance deductions from your accounts. After a control period, EPA will
deduct a number of allowances equal to the unit's NOX emissions (in tons) in the control
period. EPA may deduct any NOX allowances that were allocated for that control period or
a prior control period and that either are held in a compliance or overdraft account, or are
transferred to your compliance or overdraft account by the transfer deadline for a given
control period (November 30th after each ozone season). EPA will deduct first from your
compliance account and then, should additional allowances be required, from your
overdraft account.
If you do not indicate - by serial number — the order in which to deduct your
allowances, EPA will use a first-in-first-out (FIFO) method of deduction. EPA first
deducts the allowances allocated to your unit for the control period. Then, the Agency
deducts transfer allowances allocated to other units for the control period. Then it deducts
allowances allocated to your unit for previous control periods. Finally, it deducts transfer
allowances allocated to other units for previous control periods (see Section 4.7 below).
Table 4-6: FIFO Allowance Deduction Rules
First-In-First-Out (FIFO) Procedure for Deducting Allowances
Deduct in this order from
current control period:
Then deduct in this order
from prior control period:
! Allowances allocated to the unit
! Transfers in order of date recorded
! Banked allowances
! Transfers in order of date recorded
Section 126 SBREFA Compliance Guide - August 2000
Page 37
-------
Trading Program Section 4
Excess emission penalty deductions from your accounts. If, after EPA deducts
from both your current and prior control period allowances, you have not met your
emissions limitation, you will owe an automatic allowance penalty for each ton of excess
emissions. EPA will deduct three allowances from the unit's compliance account for each
ton of excess emissions. These allowances will be deducted from the allocation for the
control period after the control period in which the unit had excess emissions. You may
also be subject to additional enforcement, including monetary penalties, for your failure to
hold allowances sufficient to cover your emissions (see Section 8).
Differences and coordination between NATS and ATS. The NOX Budget
Allowance Tracking System (NATS) and the SO2 Allowance Tracking System (ATS) are
separate systems. However, some of the information entered into the NATS, such as plant
and representative information, lookup and error tables, and transaction types, will be
similar to information entered into the ATS. Along with information on accounts,
allowances, and transactions, it will be kept separate from the ATS. With regard to shared
or similar information, ATS software will be modified to automatically record changes in
the NATS when new information is entered into the ATS. As with the ATS, the NATS
will use a twelve-digit number (consisting of the year first usable followed by eight digits)
as the serial number for allowances. Reports or file extracts should differentiate between
allowances in the ATS and the NATS by using identifiers such as "S" for SO2 allowances
and "N" for MX allowances.
4.7 May I hold surplus allowances?
Yes. One of the major benefits of the NOX trading program is that you may hold in
your account allowances in excess of the number required to comply with your emission
limitation under Part 97. You may "bank" any allowances received, including credits for
early reductions, transferred allowances, and allowances allocated annually by EPA.
These banked allowances may be used to achieve compliance or for transfer to other
sources participating in the NOX trading program. EPA will designate as "banked" any
allowances that remain in your compliance, overdraft, and general accounts at the end of
the reconciliation period, after the Agency has made all deductions for a given control
period from these accounts.
You may begin banking
allowances in the 2003 control
period, and these banked allowances
never expire. However, beginning in
2005 (after the 2004 control period)
EPA will implement "flow control,"
a mechanism for controlling the
overuse of banked allowances for
any control period in the entire region. For each control period, EPA will determine
whether the total number of banked allowances exceeds ten percent of the overall NOX
Formula for Determining Flow Control
Ratio:
(.10) x Regional NO^ Tradins Budset
Total # of Banked Allowances in Region
Page 38 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
Budget for the following control period. If the number exceeds ten percent, EPA will
apply an equal discount ratio to a certain percentage of the banked allowances of all
sources. This means that you will be able to use a certain percentage of your banked
allowances at the rate of 1 allowance per 1 ton of NOX emissions. The remaining balance
of banked allowances will be discounted at the rate of 2 allowances per 1 ton of NOX
emissions. See the following example for calculating the effect of flow control on the use
of allowances.
Flow Control Example
Step 1: EPA uses the flow control formula to calculate the ratio of banked
allowances to the total Regional NOX budget. For example:
! Regional NOX budget = 290,000
! Total banked allowances = 36,500
! Ratio (0.10x290,000)736,500 = 0.8
Step 2: EPA applies the ratio to the banked allowances of all sources.
For a hypothetical budget source:
! Banked allowances in
compliance account = 5,000
! 5,000 x 0.8 = 4,000 available at 1:1 (equivalent to 4,000 tons)
\ 5,000 - 4,000 = 1,000 available at 2:1 (equivalent to 500 tons)
Note that only those allowances which EPA has designated as banked and which
you use for compliance purposes are subject to discounting.
4.8 How do I transfer allowances?
You may buy, sell, or trade allowances with other sources in the Federal NOX
Budget Trading Program. In order for allowances to be properly transferred, they must be
recorded in NATS. Your AAR or alternate AAR must submit to EPA a NOX Allowance
Transfer form providing the following information:
Section 126 SBREFA Compliance Guide - August 2000
Page 39
-------
Trading Program Section 4
Table 4-7: Allowance Transfer Forms
Information Required on Allowance Transfer Form
! Numbers of both transferor and transferee accounts
! Specification by serial number of each NOX allowance
to be transferred
! Name and signature of transferor's NOX AAR
EPA will record transfers within five business days of receipt of the NOX
Allowance Transfer form. However, if the form is received after the allowance transfer
deadline to transfer allowances usable for compliance in the prior ozone season, EPA will
not record the transfer until after EPA has completed compliance determinations for that
ozone season. EPA will notify you within five business days after it has recorded the
allowance transfer. It will notify you within ten business days if it does not record the
transfer.
4.9 What is the annual compliance certification?
A compliance certification report must be submitted annually, by November 30.
The report will need to contain unit identification information, and may include serial
numbers of allowances that are to be used for compliance for each unit and, for units
sharing a stack, the percentage of allowances to be deducted from each unit's compliance
account. Your AAR must also certify that each NOX Budget unit was operated in
compliance with the Federal NOX Budget Trading Program, including the following:
! Whether the unit had sufficient allowances in its compliance account to equal or
exceed its NOX emissions
Whether the monitoring plan is accurate and complete
Whether all of the emissions were monitored or accounted for through missing
data procedures, including whether conditional data were used and whether the
status of all conditional data has been resolved
! Whether the facts underlying the basis for certification for any monitor or excepted
methodology have changed, and if a change has occurred, a description of the
change and information describing how emissions were determined when a change
created the need to recertify a monitor
4.10 May I get credit for early emission reductions?
You may get credit for emission reductions in the 2001 and 2002 control periods if
you follow certain procedures. During the initial two years of the NOX trading program,
EPA is making additional allowances available to sources through a compliance
Page 40 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
supplement pool. Your source will be eligible for allowances from the compliance
supplement pool if you make early reductions during the 2001 and 2002 ozone seasons.
Table 4-8: Section 126 Rule Compliance Supplement Pool
State
DC
DE
IN
KY
MD
MI
NC
Size of Pool
(Tons)
0
168
2,454
7,314
3,882
9,398
10,737
State
NJ
NY
OH
PA
VA
wv
Total
Size of Pool
(Tons)
1,550
1,379
22,301
15,763
5,504
16,709
97,159
For any unit, your AAR must submit a
request for early reduction credits to
CAMD by February 1, 2003.
» How do I apply for early reduction credits?
You may apply for early reduction credits by submitting a request (from the AAR)
to EPA's Clean Air Markets Division. This request must be submitted in accordance with
certain requirements for OTC and non-OTC sources as described below, and must be
submitted using EPA's Early Reduction Credit Request form (see Appendix B of this
Guide).
Non-OTC Units. You must
monitor and report your NOX
emissions in accordance with Part
97, including Part 75, Subpart H,
starting in the 2000 control period
and for each control period for
which you request early reduction credits. In addition, your unit must be in full
compliance with any applicable State and Federal NOX emission control requirements
during 2000 through 2002. For each control period for which you request early reduction
credits, you must reduce the NOX emission rate of your unit to less than both 0.25
Ib/mmBtu and 80% of the unit's NOX emission rate in the 2000 control period.
OTC Units. Sources participating in the OTC NOX Budget Program may carry
their 2001 and 2002 banked allowances over to the Federal NOX Budget Trading Program
as early reduction credits, within the size constraints of the State's compliance supplement
pool. You must have monitored in accordance with Part 75 (other than Subpart H) and the
OTC Guidance for Implementation of Emission Monitoring Requirements for the NOX
Budget Program (January 28, 1997).
Section 126 SBREFA Compliance Guide - August 2000
Page 41
-------
Trading Program
Section 4
» Are there restrictions on my use of early reduction credits?
You may use early reduction credits as you would any other allowance for the
purpose of compliance during the 2003 and 2004 control periods. However, EPA will
retire all remaining compliance supplement pool allowances from the NATS after it
completes the 2004 ozone season compliance determination process.
4.11 Summary of trading program deadlines and data processing
The following table provides a brief overview of the various processing deadlines
critical to the operation of the trading program. Figure 4-1 provides an overview of where
the data come from and how the data are processed.
Table 4-9: Trading Program Deadlines for a Typical Year
Date
May 1
July 30
September 30
October 30
November 30
March 30
(approximate
date)
May 1
Event
Beginning of emissions reporting period
Second quarter emissions report due to EPA
End of 3rd quarter for emissions reporting
3rd quarter emissions report due to EPA with cumulative seasonal total
emissions
! Annual compliance certification report due to EPA, and deadline for
allowance transfers to a compliance or overdraft account for current
compliance purposes (deadline is midnight of next business day if
November 30th is not a business day)
! Beginning of freeze on transfers of current and past year allowances
and out of compliance accounts
year
into
! EPA deducts penalty allowances from source's new allocation, if
necessary
! EPA provides compliance results, allocations and flow control ratio to
AARs
! EPA lifts transfer freeze
Beginning of new emissions reporting period
Page 42
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 4
Trading Program
Figure 4-1: Trading Program Data Flow and Process
Section 126 SBREFA Compliance Guide - August 2000
Page 43
-------
Trading Program Section 4
[This page intentionally left blank.]
Page 44 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 5: NOX Budget Permits
NOTE! Due to inconsistencies with the permitting requirements of Title V, a
NOX Budget permit is currently not required for sources covered by the Federal
NOX Budget Trading Program. For administrative purposes, sources required to
have a Federally-enforceable State operating permit (FESOP) are also currently
not required to meet the permitting requirements of the rule.
To resolve this inconsistency, the current definition of "applicable requirement"
in 40 CFR part 70 must be revised to include requirements under the Federal
NOX Budget Trading Program. Until EPA revises this definition, States will not
have the authority to include Federal NOX Budget Trading Program
requirements in their Title V permits.
The delay in permitting will not affect implementation of any other requirement
of the Federal NOX Budget Trading Program.
After reading Section 5, you should know if you need a NOX Budget permit and, if
so, how to obtain the appropriate permit (or permit revision).
5.1 Do I need a permit?
As the owner or operator of an affected source, you must apply for a NOX Budget
permit if you are independently required to have a Title V permit or a federally-enforceable
State operating permit (FESOP). Title V of the Act requires that all major stationary
sources obtain operating permits. Therefore, most affected sources will have an existing
Title V permit. However, being subject to the section 126 regulation does not by itself
create the obligation to apply for a Title V operating permit. If you have a NOX Budget
Unit located at a non-Title V source and that source does not have a FESOP, then you do
not have to have any permit for this program. If you do have a FESOP, then the permitting
requirements under the trading program will apply.
Your NOX Budget permit will
include all of the applicable standard
requirements of the Federal NOX
Budget Trading Program (see
§97.6). The NOX Budget permit is
considered to be a complete and
independent portion of your federally-enforceable permit. The Title V or FESOP
permitting authority, as applicable, will administer the NOX Budget permit.
NOTE! See Appendix B to this Guide for
an example set of standard permit
conditions based on § 97.6.
Section 126 SBREFA Compliance Guide - August 2000 Page 45
-------
Permits Section 5
5.2 How do I apply for my NOX Budget Permit?
Generally, you must submit the NOX Budget Permit application to the appropriate
permitting authority. If the NOX Budget Unit is located at a Title V source, your permitting
authority will be the applicable permitting authority under Part 70 or EPA under Part 71. If
the source is a non-Title V source, then you will apply to the State or local agency that
administers an applicable federally-enforceable State operating permit (FESOP) program.
If neither Title V or a FESOP program applies to your source, then you do not have to
submit any permit application for this program.
Include the following elements in your application for a NOX Budget Permit:
! Identification of your source, including the ORIS code assigned by EIA. If you do
not have an ORIS code for reporting to EIA, use the plant ID you use for the Acid
Rain Program or the OTC NOX Budget Program (if applicable), or contact the
Clean Air Markets Division to obtain an appropriate plant ID to use for this trading
program
! Identification of each NOX Budget unit at your source and whether the unit is
affected as a core source or an individual opt-in unit
! The standard requirements regarding permitting, monitoring, NOX
emissions/allowances, excess emissions, recordkeeping, reporting, liability, and
effect on other authorities (see § 97.6)
I
For opt-in units, the certification statements specified in § 97.22(d)
! Note that the permit automatically incorporates the definitions in § 97.2 and every
allocation, transfer, or deduction of allowances (see § 97.23)
If you already have an
Be sure to check EPA's website for
updates on the permit procedures for this
program — see:
http://www.epa.gov/acidrain/modlrule/
main.html#126
operating permit issued under 40
CFR part 70 (i.e., a Title V permit
issued by a State, local government,
or Indian Tribe) or an operating
permit issued under 40 CFR part 71
(issued by EPA), you do not have to
submit a separate request for a permit
revision to your existing permit to
incorporate the requirements of this regulation. You need only submit the NOX Budget
permit application in a timely manner.
It will then be up to your permitting authority to reflect the NOX Budget permit
requirements in your Title V permit. If you have three years or less remaining in your
current permit term, then the NOX Budget permit requirements can be added at permit
Page 46 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 5 Permits
renewal. If there are more than three years remaining, then the permitting authority should
reopen the permit to add these requirements.
If you have an existing non-Title V FESOP, you should follow the applicable
procedures under that permit program to revise or reopen a permit (or wait for renewal) to
incorporate the NOX Budget permit requirements.
Once your permit incorporates the NOX Budget permit requirements, you may
revise your NOX Budget Permit as necessary. Follow the appropriate permit revision
procedures under your Title V permit or FESOP program for these types of revisions.
Section 126 SBREFA Compliance Guide - August 2000 Page 47
-------
Permits Section 5
[This page intentionally left blank.]
Page 48 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6: Emissions Monitoring, Reporting
and Recordkeeping Requirements
After reading Section 6, you should know what monitoring options you have, how
to certify and then quality assure your monitors, and how to report your
monitoring data.
Because you need to account for all of a unit's NOX emissions to reconcile your
emissions with your allowances, you must monitor NOX mass emissions for all unit
operating time (including periods such as startup or shutdown). If your monitors are not
working properly, you will have to use substitute emissions data based on specific missing
data routines.
In addition, you must monitor for heat input to determine allowance allocations.
You should note that EPA is considering changing to output-based allocations in future
allocation periods. If this allocation approach applies, you will have to monitor output
(that is, electrical generation or thermal generation such as steam or hot water). Before
implementing any output-based monitoring requirements, EPA will have to propose
regulations, receive public comments, and then issue final regulations.
Although Part 97 contains
some basic explanation of what and
how you must monitor and then
report your emissions, most of the
substantive monitoring and reporting
requirements for the Federal NOX
Budget Trading Program are found in
40 CFR Part 75. Part 75 contains all of the monitoring requirements for the Acid Rain
Program, and also contains a specific subpart (Subpart H) to address NOX mass monitoring
for NOX trading programs.
To ensure that all participants in the trading program account for their emissions in
the same manner, the Part 75 monitoring and reporting requirements are extremely
detailed. In addition, EPA has developed a number of policies to retain consistent
implementation; these policies are found in the Acid Rain Program Policy Manual that is
available on the Clean Air Market Division's (CAMD's) web site. The following section
provides a general overview of what monitoring and reporting requirements apply, but you
will need to review carefully the Part 75 requirements and existing guidance materials to
successfully implement your monitoring and reporting for the trading program, especially
if your units are not affected under the Acid Rain Program.
NOTE! EPA has developed a number of
compliance aids to implement Part 75
monitoring requirements ~ see Appendix
A to this Guide for a list of resources.
Section 126 SBREFA Compliance Guide - August 2000 Page 49
-------
Monitoring and Reporting
Section 6
This section addresses the following steps in the monitoring and reporting process:
! Section 6.1: Monitoring Options
! Section 6.2: Monitoring Approval Process
! Section 6.3: Quality Assurance (QA)
! Section 6.4: Reporting Your Emissions and QA Data
! Section 6.5: Changes to Your Monitoring
6.1 Monitoring options
6.1.1 Do my monitoring options depend on what type of unit I have?
Yes. You first must
determine what type of unit you have
based on the fuel(s) combusted in the
unit. Use the following table to
classify your unit for purposes of
determining the appropriate
monitoring under Part 75. For further
clarification, see the definitions of ^^^^^^^^^^^^^^^^^^^^^^^^^
coal-fired, gas-fired and oil-fired in
40 CFR 72.2, and the provisions for units that combust other solid fuels in § 75.71(f).
Table 6-1: Part 75 Unit Type Definition
NOTE! Do not use the following factors or
the Part 72 definitions to determine
whether you are a fossil fuel-fired unit for
trading program applicability purposes.
The Part 97 applicability criteria differ
from Part 72 on how you account for non-
fossil fuel consumption.
If your unit combusts...
Any coal, any coal -derived fuel (other than coal -derived gaseous
fuel that meets a "very low sulfur fuel" definition in Part 72), or
any other solid fuel
Oil only
Natural gas/other gaseous fuel for: (i) at least 90% of average
annual heat input based on a 3-year period, and (ii) at least 85%
in each of the 3 years
A combination of oil and gas with sufficient heat input from oil
so that the gas-fired unit status does not apply
Then your
classified
unit is
as a...
Coal-fired/Other Solid
Fuel-fired Unit
Oil-fired Unit
Gas-fired Unit
Oil-fired Unit
Page 50
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6 Monitoring and Reporting
Next, you need to consider how much you operate a unit and how much you emit
from a unit. The following two special situations affect which monitoring method you
may use:
! Peaking Units An oil or gas-fired unit with an average capacity factor < 10 percent
for the previous three years and no more than 20 percent in any of those three years
may qualify as a peaking unit. There are special provisions for qualifying initially
based on projected capacity factors in future years. See the § 72.2 definition for a
further discussion of which units qualify as peaking units.
! Low Mass Emissions (LME) Units. For an oil or gas-fired unit affected under the
Acid Rain Program, an LME unit is one with annual SO2 emissions <25 tons and
annual NOX emissions <50 tons. If your oil or gas-fired unit is not subject to the
Acid Rain Program, the unit may qualify so long as the annual NOX emissions are
<50 tons (or if the unit is reporting only on an ozone season basis, if NOX emissions
are <25 tons for the ozone season). See §§ 75.19, 75.71(e), and 75.74(c)(10) for a
further discussion of how to qualify and what is required to demonstrate that a unit
continues to qualify as an LME unit. Note that the criteria for LME units are not
the same as (and are less stringent than) the criteria for qualifying as a low-permit-
limit unit. Further, LME units are subject to the Federal NOX Budget Trading
Program requirements, while low-permit limit units are exempt from most of the
requirements.
6.1.2 Based on my fuels, capacity factors, and emissions, what basic
monitoring options apply to my units?
For any unit, the basic monitoring approach for the Federal NOX Budget Trading
Program is to use continuous emission monitoring systems (CEMS) to record and report
your NOX emissions and heat input rate data. There are two basic CEMS options:
! Use NOx-diluent CEMS, which consists of a NOX pollutant concentration monitor
and a diluent (O2 or CO2) monitor, to calculate a NOX emissions rate in Ib/mmBtu.
Then use a flow monitor and diluent monitor to calculate heat input rate in
mmBtu/hr. You determine NOX mass emissions in Ib/hr by multiplying these two
calculated values.
! A NOX concentration/flow methodology. For this option, you use a NOX pollutant
concentration monitor to obtain NOX in parts per million (ppm), convert the ppm
value to a Ib/standard cubic foot (scf) equivalent using a known constant, and then
use a flow monitor to obtain flow rate volume in scf/hr. You then multiply the
converted ppm value times the flow rate to obtain NOX mass emissions in Ib/hr.
Part 75 also allows you to petition EPA for approval of an alternative monitoring
system that meets certain performance-based criteria (see Subpart E of Part 75). You
should note, however, that since promulgating Part 75 in 1993, EPA has not approved any
alternative monitoring systems under Subpart E.
Section 126 SBREFA Compliance Guide - August 2000 Page 51
-------
Monitoring and Reporting Section 6
One reason for the inactivity under the Subpart E alternative monitoring provisions
is that Part 75 already includes other cost-effective alternatives to CEMS for particular
types of units. You may be able to use one of the following additional monitoring methods
depending on the characteristics of your unit:
! An "excepted method" for heat input used in lieu of a stack flow monitor and
diluent monitor under Appendix D to Part 75 for oil and gas-fired units. This
method allows you to monitor heat input rate based on fuel flow rates measured
with fuel flowmeter(s) and fuel gross calorific value (GCV) sampling data. Note
that in many cases, you can rely on GCV sampling data from your fuel supplier if
you receive pipeline natural gas or other oil/gaseous fuels in discrete shipments.
! A second "excepted method" under Appendix E to Part 75 for oil and gas-fired
peaking units. This method allows you to calculate NOX emission rate from curves
correlating NOX emission rates and heat input rates.
! Simplified, conservative heat input and NOX emission rate estimates (see § 75.19)
that certain oil and gas-fired units with low mass emissions can use to calculate
NOX mass emissions.
For each monitoring option, a key component of your overall monitoring system
will be a data acquisition and handling system (DAHS). The DAHS electronically records
(as applicable) your measured NOX concentrations, diluent gas concentrations and flow
rates, and automatically calculates and records your NOX emission rates, heat input rates,
and NOX mass emissions. While the DAHS for most options will require customized
software, EPA has developed the Monitoring Data Checking (MDC) software, which is
available free of charge. You can use one function of MDC to satisfy the DAHS
requirements for the LME estimate-based methodology.
The following table summarizes the Subpart H monitoring options. Remember,
you must monitor to determine NOX mass emissions (in Ib/hr) for compliance purposes and
to determine heat input rate (in mmBtu/hr) for allowance allocation purposes. In most
cases, you will use heat input rate monitoring as part of determining both of these values;
but for the NOX concentration/flow CEMS methodology, the NOX mass and heat input rate
monitoring will be separate.
Page 52 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
Table 6-2: Part 75 Subpart H Monitoring Options
For this type
of unit...
You may determine NOX mass (Ib/hr)
using...
And determine heat input
rate (mmBtu/hr) using...
Any Unit
(Note: These
are required
methods for
Coal-fired Units
or any units
combusting
other solid
fuels)
NOX emission rate (in Ib/mmBtu from a
NOX pollutant concentration monitor and
an O2 or CO2 diluent monitor), multiplied
by
Heat input rate (in mmBtu/hr from a flow
monitor and an O2 or CO2 diluent monitor)
! Flow monitor and an O2 or
CO2 diluent monitor for
heat input rate
NOX emission concentration (in ppm from
a NOX pollutant concentration monitor),
converted to Ib/scf with a conversion
factor, multiplied by
Flow rate (in scf/hr from a flow monitor)
Same as above, or, if
applicable (i.e., for oil and
gas units), Appendix D
fuel flowmeter(s) and fuel
GCV sampling
Oil-fired or Gas-
fired Unit
NOX emission rate (from a NOX pollutant
concentration monitor and an O2 or CO2
diluent monitor), multiplied by
Heat input rate (from Appendix D fuel
flowmeter(s) and fuel GCV sampling)
Appendix D fuel
flowmeter(s) and fuel
GCV sampling
Oil-fired or Gas-
fired Peaking
Unit
! NOX emission rate (from Appendix E
correlation curves), multiplied by
! Heat input rate (from Appendix D fuel
flowmeter(s) and fuel GCV sampling)
! Appendix D fuel
flowmeter(s) and fuel
GCV sampling
Oil-fired or Gas-
fired LME Unit
! NOX emission rate (from either a generic or
a fuel/unit-specific default value),
multiplied by
! Either maximum rated hourly heat input (in
mmBtu) or hourly heat input calculated
from a long term fuel flow method
(including data on volume, specific gravity,
and GCV of fuel(s) combusted)
Maximum rated hourly
heat input, or
Heat input calculated from
a long term fuel flow
method (including data on
volume, specific gravity,
andGCVoffuel(s)
combusted)
6.1.3 What is moisture monitoring and when is it necessary?
You will need to monitor for moisture if a correction is needed for the stack gas
moisture content. If moisture monitoring is necessary, Part 75 provides several options for
conducting the monitoring. The following table identifies when moisture monitoring is
necessary and what options are allowed.
Section 126 SBREFA Compliance Guide - August 2000
Page 53
-------
Monitoring and Reporting
Section 6
Table 6-3: Moisture Monitoring Options
If you are measuring any of the following...
Then use one of the following
moisture monitoring options...
NOX emission rate (Ib/mmBtu) using a NOX
diluent CEMS and your NOX pollutant
concentration monitor and your diluent monitor
measure on a different moisture basis (i.e., wet
O2 or CO2 diluent and dry NOX concentration, or
vice versa)
NOX mass emissions using the concentration
flow methodology and the NOX concentration is
measured on a dry basis (note: flow is always
measured wet)
Heat input using a flow monitor and O2 or CO2
diluent monitor and using Equation F-16, F-17,
or F-18 in Appendix F of Part 75 (note that in
F-17, the diluent monitor measures on a wet
basis but moisture correction is still required)
! Continuous moisture sensor
! O2 analyzer(s) capable of measuring
on both a wet and dry basis
! Stack temperature sensor and a
moisture look-up table ~ saturated
gas streams only (psychrometric
chart)
! Fuel-specific default values for coal
and wood fuels
Note: For each option (except for the
default values), you must define a
moisture monitoring system in the
monitoring plan.
6.1.4 What if my unit has multiple stacks or shares a stack with other
units?
If your unit emits through multiple stacks or shares one or more stacks with other
units (a "common stack"), you will have to meet fairly complex monitoring options. The
following table outlines the various options you have in these circumstances. Note that
your available alternatives for a common stack will depend on whether your unit shares a
stack with units that are subject to the Federal NOX Budget Trading Program.
Table 6-4: Multiple/Common Stack Monitoring Options
If you have this unit
configuration...
Then your monitoring options are...1
Multiple stacks (i.e., a
single unit that
exhausts through two
or more stacks)
Install a NOx-diluent and flow CEMS in each duct feeding into
the stacks
Install a NOx-diluent and flow CEMS in each stack (if another
unit exhausts to the stack, follow common stack procedures)
For an Appendix D unit, install a NOx-diluent CEMS in one duct
or stack (note: you must demonstrate that the monitored NO'x rate
is representative for the entire unit) and use Appendix D for the
unit's heat input rate
Page 54
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
Table 6-4: Multiple/Common Stack Monitoring Options (cont.)
If you have this unit
configuration...
Then your monitoring options are...1
Common stack with all
units in the Federal
NOX Budget Trading
Program (i.e., one stack
serving more than one
unit)
Install a NOx-diluent and flow CEMS in the stack and, for heat
input rate, either apportion the common stack value to the
individual units or use flow and diluent monitors at each unit
Install NOx-diluent and flow CEMS in the stack and, for heat
input rate, use Appendix D (if you elect to for eligible units) and
flow and diluent monitors in all ducts feeding into the stack for
any remaining units
Install NOx-diluent and flow CEMS in each duct feeding into the
common stack
Install NOx-diluent CEMS in each duct feeding into the common
stack and, for heat input rate, use Appendix D (if you elect to for
eligible units) and flow CEMS in the ducts feeding into the
common stack for any remaining units
Common stack with
some units not in the
Federal NOX Budget
Trading Program
Install a NOx-diluent and flow CEMS in the stack, a NOx-diluent
and flow CEMS in the duct from each nonaffected unit, and
petition EPA to use a subtractive methodology [for eligible units,
you may substitute Appendix D procedures for the flow CEMS in
an unaffected unit's duct]
Install NOx-diluent CEMS in each duct feeding from an affected
unit, and, for heat input rate, use Appendix D (if you elect to for
eligible, affected units) and flow CEMS in the ducts feeding from
any remaining affected units
Install a NOx-diluent CEMS in the common stack, designate all
units as affected and use one of the first two options described
above for a common stack with only affected units
Install a NOx-diluent and flow CEMS in the common stack and
use the combined emissions from all units as the emissions from
the affected units
Petition EPA for a method to apportion NOX mass emissions to
each unit
A NOX concentration monitoring system and flow monitoring system may be used in place of a
diluent CEMS and flow monitor to determine NOX mass emissions. However, if you choose that option, you
also will have to meet the special provisions in § 75.72(e) to determine heat input.
For situations or
configurations that are more complex
than the above examples, you may
contact EPA staff for additional
guidance.
NOTE! See Appendix A to this Guide for
how to find a list of CAMD and EPA
Regional Office staff that you can contact
with your monitoring questions.
Section 126 SBREFA Compliance Guide - August 2000
Page 55
-------
Monitoring and Reporting
Section 6
6.1.5 What if my unit is an opt-in unit?
If you opt a unit into the program, you must follow the same monitoring method
requirements that apply to other units. Also, in order to develop a baseline for determining
allowance allocations for an opt-in unit, you must commence monitoring by the beginning
of the control period (i.e., May 1st) of the year before your unit obtains opt-in status.
6.1.6 May I petition EPA to obtain a variance from a monitoring
requirement?
You may petition EPA to
apply for a variance from the
monitoring requirements under the
program. The requirements for such
a petition are provided in § 75.66 and
vary, depending on the type of
variance you are seeking. For most
petitions, you will need to provide
identification information for the
unit, an explanation of why you are
seeking the variance, a detailed
description of your proposed
alternative, and a discussion of how
your alternative will serve the
purposes of the requirement.
In general, a monitoring petition must
contain:
! Identification of the plant and unit
! A detailed explanation of why you are
suggesting the alternative
! Descriptions and diagrams of your
suggested alternative
! A demonstration that your alternative is
consistent with the purposes of the
requirement
! Any other relevant information required
6.2 Monitoring approval process
Once you determine the methodologies you will use to measure emissions (see
Tables 6-2 through 6-4), you will need to install and obtain approval for your monitoring.
Part 75, Appendix A, Section 1, contains information on where to install each type of
monitor, and installation issues are not discussed further in this document. The monitoring
certification process consists of the following steps:
! Submit an initial monitoring plan
! Submit a certification test notice
! Conduct certification tests
! Submit a certification application
! Receive an incomplete application notice from EPA, if applicable
! Receive EPA approval/disapproval notice
If your unit is in the Acid Rain Program, you should continue to follow the
certification process requirements of Part 75. Most Acid Rain units will not be required to
implement and certify any additional monitoring in the context of this rule. However, if
Page 56
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
you have previously filed any petitions on the subject of NOX apportionment at a common
stack, you must resubmit these petitions to EPA to ensure that the approval applies in the
context of the Federal NOX Trading Program. In addition, you must ensure that your
DAHS has NOX mass capability and if necessary, add and verify the appropriate formulas
in your monitoring plan. Also, if you install additional monitors to meet the requirements
of this program, you should follow the specific Part 97 certification and recertification
procedures discussed in this section.
If your unit is not subject to the Acid Rain Program, you must certify each
monitoring system you use to comply with the Federal NOX Budget Trading Program.
Based on the certification information you submit, EPA will determine whether to approve
your monitoring system.
Table 6-5: Overview of Monitoring System Certification Reporting
Submit this document/notice...
Initial monitoring plan
Certification test notice
Certification application
By this date...
> 45 days prior to beginning of testing
>45 days prior to beginning of testing
<45 days after testing is complete
6.2.1 Initial monitoring plan
You must submit your initial monitoring plan at least 45 days before you begin
certification testing. Your monitoring plan will contain sufficient information about your
monitoring systems or alternatives to demonstrate that all the emissions from the unit are
reported correctly. The plan includes basic unit and fuel identifying information and then
explains what monitoring components you use within each monitoring system, where they
are located, and what emissions formulas you use to calculate emissions. The plan also
includes operating information about the unit and each monitor or monitoring system (such
as normal range of unit load and details about a monitor's span and range). See § 75.53 for
a complete list of monitoring plan elements.
You must submit the following monitoring plan information electronically:
! ORIS code and other identification for the unit
! Unit information (e.g., type of unit, type of controls)
! Description of exhaust configuration (e.g., single stack, common stack)
! Monitoring methodology details
! Program identification and information
! Identification/description of monitoring, hardware, and software components
! Formulas for each emissions parameter
! Physical data on the stack height and cross-sectional area of the flue exit
Section 126 SBREFA Compliance Guide - August 2000
Page 57
-------
Monitoring and Reporting Section 6
! Methods of calculation and values for each parameter monitored (for example,
maximum potential concentration of a pollutant and monitor span values)
! Default values and parameters
! Load level and range of operation information
You must submit the following monitoring plan information in hardcopy or
electronically:
! Test strategy, test protocols, and calculations for parameter values and
apportionment
! Site location descriptions, including schematics or engineering drawings, for all
monitoring components, gas handing systems, and stacks and ducts
! Data flow diagram
! Span and range calculations
! Required technical justifications
The detailed requirements for
how to report each electronic data
item in the monitoring plan are found
in the Electronic Data Reporting
Version 2.1 format document (EDR
v2.1). You should also consult the
latest version of the EDR Version 2.1
Reporting Instructions. In addition, CAMD has developed the Monitoring Data Checking
(MDC) software to assist you in preparing your electronic monitoring plan information.
The software is available from the CAMD web site, free of charge. The EPA strongly
recommends that you use the software because it will help you find many potential errors
before you submit your monitoring plan and will streamline receipt and review of your
monitoring plan by EPA.
EPA will review your monitoring plan and notify you of any errors that are
discovered. If there are any errors, EPA will require you to resubmit the plan.
6.2.2 Certification test notice
At least 45 days before you begin certification tests, submit a written notice of the
dates you will be conducting initial certification testing. You must submit the notification
to CAMD, the appropriate EPA Regional Office, and your State or local agency. If you
need to reschedule the test, you may do so by providing written or telephone notice at least
seven days before the earlier of the original or the rescheduled beginning test date. For any
non-Acid Rain unit, your State or local agency can waive the requirement that you provide
them notice of your certification tests (see § 97.73(b)).
NOTE! See Appendix A for information
on how to obtain the EDR v2.1, EDR v2.1
Instructions, and MDC software to assist
you in preparing your monitoring plan.
Page 58 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
6.2.3 Certification testing
The next step to obtain approval of your monitoring methodologies is to conduct
the required certification tests for your selected approach. The test procedures that you
must follow are set out in Appendix A to Part 75 for continuous emission monitoring
systems, Appendix D for fuel flowmeters, Appendix E for NOx-heat input correlation
testing, and § 75.19 for unit-specific default testing for low mass emissions units. In
addition, § 75.20(c)(9) requires you to conduct tests of your data acquisition and handling
system (DAHS) to verify proper computation of hourly emission and heat input rates and
proper application of missing data substitution and bias adjustment factors. You should
refer to those provisions and EPA guidance materials to determine the appropriate
technical procedures for conducting the applicable tests.
The required certification tests will depend on the types of monitors and are shown
in the table below.
Table 6-6: Monitoring System or Methodology Certification Tests
To certify this system or
methodology...
You will need to perform these tests...
NOx-diluent (i.e., NOX emission
rate in Ib/mmBtu)
7-day calibration error test (both component monitors)
Linearity check (both component monitors)
Relative Accuracy Test Audit (RATA) (Ib/mmBtu
basis)
Bias test
Cycle time test (both component monitors)
DAHS verification
NOX concentration (i.e., NOX in
ppm)
7-day calibration error test
Linearity check
RATA (ppm basis)
Bias test
Cycle time test
DAHS verification
Flow
7-day calibration error test
RATA
Bias test
DAHS verification
Diluent monitor used only for heat
input determination
7-day calibration error test
Linearity check
RATA
Cycle time test
DAHS verification
Section 126 SBREFA Compliance Guide - August 2000
Page 59
-------
Monitoring and Reporting
Section 6
Table 6-6: Monitoring System or Methodology Certification Tests (cont.)
To certify this system or
methodology...
Moisture system with wet and dry
basis O2 analyzers(s)
Continuous moisture sensor
Continuous moisture system
consisting of a temperature sensor
and a DAHS with a lookup table
Appendix D fuel flowmeter
methods for heat input
Appendix E method for NOX
emission rate
Fuel-and-unit-specific default NOX
emission rate for LME units
You will need to perform these tests...
! 7-day calibration error test (each analyzer)
! Linearity check (each analyzer)
! RATA (% H2O basis)
! Cycle time test (each analyzer)
! DAHS verification
! RATA
! Demonstration that the DAHS applies the correct
moisture value from the lookup table for each hour
! Fuel flowmeter accuracy tests (some exceptions apply)
! DAHS verification
! Appendix E correlation testing
! DAHS verification
! Appendix E correlation testing, as modified by
§75.19(c)(l)(iv)(A)
6.2.4 Certification application
Your certification application should contain a hardcopy application form (EPA
7610-14), an updated electronic monitoring plan, any hardcopy monitoring plan changes,
and the hardcopy and electronic results of your certification testing. Submit these
documents to CAMD, the EPA Regional Office, and your State agency, as follows:
Table 6-7: Certification Application Reporting
Send this document...
Hardcopy EPA Form 7610-14
Hardcopy test results
Electronic test results
Updated electronic monitoring plan
Hardcopy monitoring plan changes
To...
CAMD, EPA Regional Office, State/local agency
EPA Regional Office, State/local agency
CAMD
CAMD
EPA Regional Office, State/local agency
Page 60
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
» How do I submit certification reports for a low mass emissions unit?
Because you are not installing CEMS at a low mass emission (LME) unit, the
certification process is fairly simple. Your certification application will consist primarily
of an up-to-date monitoring plan. The monitoring plan for an LME unit will include
historical or projected emissions data and calculations demonstrating that the unit meets
the LME unit qualifications. Also, if you wish to use a fuel and unit-specific NOX emission
rate instead of the generic default rate for a unit with NOX controls, the monitoring plan
must include the parameters you will monitor (with acceptable operating ranges) to
document that the controls continue to operate properly. Your certification application
also should include the testing you have performed (or will perform) to determine the
default NOX emission rate.
The following table summarizes the materials you should submit to the EPA and
State and local agencies:
Table 6-8: Low Mass Emissions Unit Certification Reporting
Send this document...
Hardcopy form 7610-14 (with AAR signature)
Electronic monitoring plan
Hardcopy monitoring plan changes
Hardcopy test results
Calculations to show that the unit qualifies as an
LME unit
To...
CAMD, EPA Regional Office,
State/local agency
CAMD
CAMD, EPA Regional Office,
State/local agency
CAMD
CAMD
The application to use the LME methodology may be submitted at any time. If you
do not have certified monitoring equipment already installed, such as when you first certify
for the program, you may use the method when you submit your certification application.
If you are replacing existing monitoring equipment, you may only begin using the
methodology on the first operating hour following the start of the next calendar year (or
ozone season).
» How are my data treated while my certification (or recertlfication) application
Is pending?
EPA provides a period of provisional certification while your certification (or
recertification — see Section 6.5, below) application is pending so that you may rely on the
data from your monitoring systems during this period. Your data will be considered valid
quality-assured data:
Section 126 SBREFA Compliance Guide - August 2000
Page 61
-------
Monitoring and Reporting Section 6
! Beginning at the time at which you complete your certification (or recertification)
tests, and then continuing. . .
\ For a period not to exceed 120 days after EPA receives a complete certification (or
recertification) application; provided that. . .
\ You operate the monitoring system in accordance with all applicable Part 75
requirements (including QA requirements — see Section 6.3, below); and provided
further that. . .
l
EPA does not issue a notice of disapproval of your application.
Especially for recertification, you will want to begin collecting valid data as quickly
as possible to limit the use of conservative estimates to calculate emissions during the
period you do not have a certified monitoring system in place. In recognition of this
concern, EPA has established conditional data validation procedures so that you can start
the provisional recertification period even before completing all of the necessary
recertification tests. You can also use these data validation procedures during the initial
certification process if necessary. You should review the specific requirements in
§ 75.20(b)(3) to understand these conditional data validation procedures.
6.2.5 EPA approval
Within 120 days of receiving a complete application, EPA will let you know if your
certification application has been approved or disapproved. If EPA finds that your
application is incomplete, EPA will notify you of the missing items and you will have a
reasonable amount of time to submit the missing information.
6.3 Quality assurance (QA)
You must perform ongoing quality assurance testing on your monitors to verify that
the data you report are accurate. If your unit is in the Acid Rain Program, or if you choose
to report on an annual basis for a non-Acid Rain unit, you must follow all applicable Acid
Rain Program (Part 75) quality assurance procedures. These are found in Appendix B of
Part 75 and are summarized in the following table.
Page 62 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
Table 6-9: QA Requirements for Units Reporting on an Annual Basis
On this
equipment...
Perform these QA tests.
With these
qualifications and
exceptions....
Each required CEMS
Daily calibration tests
N/A
Flow monitor
Daily interference checks
N/A
Each required gas
monitor
Quarterly linearity checks
! Required only in "QA
operating quarters"
(> 168 unit operating
hours), but no less than
once a year
! 168 operating hour grace
period available
! Not required if NOX span
< 30 ppm
Flow monitor
Quarterly flow-to-load ratio tests
Complex configurations
may be exempted by
petition under § 75.66
Differential pressure-
type flow monitor
Quarterly leak checks
! Required only in QA
operating quarters
! 168 operating hour grace
period available
Fuel flowmeter
Fuel flowmeter accuracy test every
four "fuel flowmeter QA operating
quarters" (fuel measured by
flowmeter is combusted > 168 unit
operating hours)
Visual inspections (if applicable)
every 3 years
Quarterly fuel flow-to-load ratio test
Fuel flow-to-load test is
optional - may be used to
extend interval between
flowmeter accuracy tests to
up to 20 quarters
NOx-diluent CEMS
NOX concentration
CEMS
Flow monitor
Moisture monitor
Diluent monitor
used only for heat
input rate
! Semiannual or annual relative
accuracy test audit (RATA)
! Bias test (NOX and flow systems,
only)
Depending on % relative
accuracy obtained in
previous test, a RATA is
required either semiannually
(every two "QA operating
quarters") or annually
(every four "QA operating
quarters"), not to exceed 8
calendar quarters
Section 126 SBREFA Compliance Guide - August 2000
Page 63
-------
Monitoring and Reporting
Section 6
If your unit is not an Acid Rain unit and you choose not to report on an annual
basis, then you must meet the specific quality assurance procedures of Part 75 Subpart H.
You will have to conduct some Subpart H quality assurance testing prior to the beginning
of the ozone season (before May 1) and other testing during the ozone season (May 1
through September 30). These separate requirements are summarized in the following
table.
Table 6-10: QA Requirements for Units Reporting on an Ozone Season Basis
For this
equipment...
Each required
CEMS
Flow monitor
Perform this
QA test...
Daily
calibrations
(outside ozone
season)
Daily
calibrations
(inside ozone
season)
Daily
interference
checks
(outside ozone
season)
Daily
interference
checks
(inside ozone
season)
At these
times...
From the date
and hour of any
RATAor
linearity check
passed in the
"pre-ozone
season period"
(i.e., from 10/1
of previous year
through 4/30 of
current year)
Throughout the
ozone season
(5/1 - 9/30)
From the date
and hour of any
flow RATA
passed in the pre-
ozone season
period
Throughout the
ozone season
With these qualifications and
exceptions...
N/A
N/A
N/A
N/A
Page 64
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
Table 6-10: QA Requirements for Units Reporting on an Ozone Season Basis (cont.)
For this
equipment...
Each required
gas monitor
! NOx-diluent
CEMS
! NOX
concentration
CEMS
! Flow monitor
! Moisture
monitor
! Diluent
monitor used
only for heat
input rate
Perform this
QA test...
Linearity check
(outside ozone
season)
Linearity check
(inside ozone
season)
! RATA
(outside
ozone season)
! Bias test
(forNOxand
flow systems,
only)
(outside
ozone season)
! RATA
(inside ozone
season)
! Bias test
(forNOxand
flow systems,
only)
(inside ozone
season)
At these
times...
During the pre-
ozone season
period
In 2nd and 3rd
quarters
Pre-ozone season
period
In 2nd and 3rd
quarters
With these qualifications and
exceptions...
If the test is not completed by 4/30,
a 168 operating hour grace period is
allowed if a linearity check was
passed in the previous year and if
unit operated for < 336 hours in last
ozone season
! The linearity check is required
only in QA operating quarters
! No grace periods allowed for
these checks
! If you qualify for annual RATA
frequency, you can use this
RATA to QA data for entire
current ozone season
! If you qualify for semiannual
RATA, you can use this RATA
to QA data either for entire
current ozone season (if
performed in the current year) or
through 6/30 of current year (if
performed in prior year)
! If RATA is not completed by
4/30, a 720 operating hour grace
period applies if a RATA was
passed in the previous year and if
unit operated for < 336 hours in
previous ozone season
! Required only as necessary,
based on the pre-ozone season
RATA status described
immediately above
! You can use this ozone season
RATA to QA data in the next
ozone season, if you qualify for
annual RATA frequency and you
perform daily calibrations (and
interference checks if applicable)
from 10/1 of current year through
4/30 of the next year
Section 126 SBREFA Compliance Guide - August 2000
Page 65
-------
Monitoring and Reporting
Section 6
Table 6-10: QA Requirements for Units Reporting on an Ozone Season Basis (cont.)
For this
equipment...
Flow monitor
DP-type flow
monitor
Fuel flowmeter
Fuel flowmeter
Perform this
QA test...
Flow-to-load
ratio test
Leak check
Fuel flowmeter
accuracy tests
Fuel flow-to-load
ratio test
At these
times...
In 2nd and 3rd
quarters
In 2nd and 3rd
quarters
Every four "fuel
flowmeter QA
operating
quarters" (fuel
measured by
flowmeter is
combusted >168
unit operating
hours)
In 2nd and 3rd
quarters
With these qualifications and
exceptions...
Complex configurations may be
exempted by petition under § 75.66
Required only in "QA operating
quarters" (> 168 unit operating
hours)
For orifice, nozzle and venturi-type
flowmeters, visual inspections are
also required every 3 years
Optional test you can use to extend
deadline for next flowmeter
accuracy test
NOTE! CAMD has waived the
requirement to notify the Division of QA
RATA testing (see Question 14.84 in the
Acid Rain Program Policy Manual)
» Do I have to submit notice ofQA testing?
In some cases, you will need
to inform CAMD, your EPA
Regional Office, and your State that
you will be conducting quality
assurance testing. This notification is
required prior to a semiannual or
annual RATA (and prior to retesting
under Appendix E section 2.2). Include in your notice the test dates for the routine RATAs
required under Appendix B to Part 75. CAMD, your EPA Regional Office, and/or your
State can issue a waiver from these notice requirements — so you should confirm which
office(s) actually require notice prior to submitting a notice for your unit(s).
In addition, upon request, you must submit the hardcopy results of these tests to
your EPA Regional Office and your State.
Page 66
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
Finally, when retesting is required for exceeding certain operating parameters under
Section 2.3 of Appendix E, this is not considered to be routine QA testing. Follow the
recertification procedures (discussed under Section 6.5 of this Guide) for that type of
retesting.
Table 6-11: Periodic Quality Assurance RATA Notification Requirements
If you are
submitting...
Notice of semiannual
or annual RATA, or
Appendix E periodic
retesting
Periodic QA RATA
results
Then it is due...
> 21 days prior to
beginning of test,
or
> 24 hours prior to
beginning of
rescheduled test
Later of < 45 days
after completing
tests or < 15 days
after receiving
request from
Regional Office or
State/local agency
In this form...
Written (mail or fax) (or e-
mail with agency's consent)
Same as above, plus by
telephone or any other
means acceptable to
applicable agency
Written hardcopy report
To this office...
CAMD, EPA
Regional Office,
State/local agency
EPA Regional
Office, State/local
agency
» What if my monitors aren't working properly?
If your monitors are not working properly and the readings are unreliable (i.e.,
when the monitors fail to pass quality assurance tests), you will need to use missing data
substitution procedures so that you will have values to report in your quarterly emissions
report for the hours in which your monitors are providing bad data (see Section 6.4, below,
for information on how to comply with the quarterly emissions reporting requirements).
The missing data substitution procedures you use will depend on your monitoring data
availability and how many hours for which you have data since initial certification.
Complete tables on applicable missing data procedures are located in § 75.33 (see Tables 1
and 2).
Section 126 SBREFA Compliance Guide - August 2000
Page 67
-------
Monitoring and Reporting
Section 6
6.4 Quarterly emissions and QA reporting
You must report the emissions for Federal NOX Budget Trading Program units
using a standard electronic data reporting (EDR) format. EDR version 2.1 contains all of
the data items that must be reported electronically in your quarterly reports. In addition,
the EDR Version 2.1 Reporting Instructions provide guidance for reporting in the EDR
format.
The EDR format contains various "record types" that contain fields for reporting
individual data elements. You must place each data field in the data file location specified
in EDR v2.1. Table 6-12, below, contains a list of the record types a non-Acid Rain unit
subject to the Federal NOX Budget Trading Program might be required to submit. Not all
of the record types in Table 6-12 will apply to every unit in the program.
If your unit is in the Acid Rain Program, your quarterly emissions reports would
need to contain the information required above, plus any other information required under
the Acid Rain Program.
Table 6-12: EDR Record Types for NOX Mass Reporting
Record Type Numbers
100, 101, 102
201, 210, 211, 212, 220, 230, 231,
260,261,262
300, 302, 303, 305, 307, 320, 323,
324, 325, 328, 360
503, 504, 505, 506, 507, 508, 510,
520, 530, 531, 535, 536, 540, 550,
556,560,585,586,587
Information Contained in the Record
Type
Facility Information
Monitoring Data, including:
! Pollutant and diluent gas concentrations
! Moisture data
! Volumetric flow
! Daily quality assurance data and results and
method backup quality assurance data
reference
Unit Data, including:
! Unit operating and cumulative emissions data
! NOX emissions data
! Low mass emissions unit data
Monitoring Plan Information
Page 68
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
Table 6-12: EDR Record Types for NOX Mass Reporting (cont.)
Record Type Numbers
600, 601, 602, 603, 605, 606, 610,
611, 614, 615, 616, 621, 623, 624,
627, 628, 629, 630, 640, 641, 645,
650, 651, 652, 653, 660, 695, 696,
697, 698, 699
910, 920, 940, 941, 999
Information Contained in the Record Type
Certification (and Ongoing Periodic QA) Test Data and
Results, including (as applicable):
! 7-day calibration error, linearity, leak, flow-to-load,
RATA/bias, and cycle time tests
! RATA support information (if you use Reference
Methods 2F,2G or 2H)
! On-line/off-line calibration demonstration
! Miscellaneous quality assurance activities
! Fuel flowmeter accuracy checks and quarterly fuel
flow-to-load analyses
! Alternative monitoring petition data
! Low mass emissions certification data
! Appendix E/unit-specific default emission rate test
data
! Quality assurance extensions/exemptions claims
Compliance Certification Data
You will note that the quarterly report includes compliance certification elements.
These elements are different than the annual compliance certification report that you
submit to reconcile emissions and allowances in your allowance accounts (see Section
4.10, above). At a minimum, the quarterly report submission will include a compliance
certification that states that:
! The unit's emissions were correctly and fully monitored in accordance with
applicable requirements, including quality assurance of the data
! For a unit with add-on NOX emission controls, the controls were operated within
the appropriate parameters and that for any hours in which data substitution
procedures were used, the data substitutions do not systematically underestimate
NOX emissions
! For units reporting only on a control period basis, missing data substituted NOX
values are calculated using only values from the control period and do not
systematically underestimate NOX emissions
Finally, you should note that you do not have to include in your quarterly report all
of the items that you must record during an applicable quarter. Items that you will
continue to record every quarter but do not have to submit in your quarterly report to EPA
include (see § 75.73(f)(l)(ii)):
! Descriptions of adjustments, corrective action, and maintenance
! Information incompatible with electronic reporting (such as lab analyses)
Section 126 SBREFA Compliance Guide - August 2000
Page 69
-------
Monitoring and Reporting Section 6
! For units with NOX add-on emission controls that do not elect to use the approved
site-specific parametric monitoring procedures for calculation of substitute data, the
information in § 75.58(b)(3)
! Causes of any missing data periods and the actions taken to cure such causes (EDR
v2.1 does have a record type for this information if you want to report it)
! Records of polynomial coefficients, K-factors and mathematical algorithms for
flow and moisture monitors
! Daily fuel sampling information for units using Appendix D
! Transmitter or transducer accuracy test information
! Stratification test results
! Data and results of relative accuracy test audits (RATAs) that are aborted or
invalidated and data and results of linearity checks that are aborted or invalidated
due to operational problems with the unit
! Supplementary RATA information for gas RAT As (and for flow RAT As if you use
the standard Reference Method 2)
» Am I required to submit a quarterly report for data outside of the ozone
season?
For a unit that is subject to
the Acid Rain Program, you must
continue to report for each quarter of
the year, and you must report the
particular data elements required
under Subpart H in each quarterly
report. For a unit that is not in the
Acid Rain Program, you can elect to
report either on a year-round or ozone season-only basis. If you elect to report on an ozone
season basis for this type of unit, you will submit only the second and third quarter reports,
and the second quarter report will include data only from May and June (not April).
NOTE! Evaluate carefully the different
QA requirements for annual versus
seasonal reporting before deciding on a
reporting approach ~ see Section 6.3 of
this Guide.
» How do I submit quarterly reports for my monitoring data?
You must submit your
emissions reports to the Emission
Tracking System (ETS) on EPA's
mainframe computer. You will have
to submit these reports by computer
modem. EPA has developed
software that you can use to facilitate
this submission process. Once you
begin to report under this trading program, EPA will assign you an ETS analyst that will be
your point of contact for ETS submission questions.
You will have to use EPA-developed
software to submit your quarterly reports.
You will be able to download the software
from CAMD's web site; also see App. A to
this Guide for further information.
Page 70 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6 Monitoring and Reporting
The EDR v2.1 specifies the required format for your quarterly electronic reports,
and it is important for you to ensure that all data are properly formatted in each of the
applicable fields within each EDR record type. You should refer to the reporting
instructions that EPA has developed for EDR v2.1 to answer specific questions you may
have about formatting and preparing your electronic reports. See especially Appendix C to
the instructions which provides more detailed overview guidelines for preparing EDR v2.1
submittals.
You will submit your reports during the 30-day period following each calendar
quarter (e.g.. you must submit January through March data by April 30th). If you are a
non-Acid Rain unit and have chosen to report only for the ozone season, you will submit
reports only for the second and third quarters by July 30th and October 30th, respectively.
» Does EPA provide any verification that the Agency has received my report?
EPA will process your quarterly report through a series of rigorous quality
assurance checks. These checks verify that your submitted data are both accurate and in
the correct EDR v2.1 format. EPA will return a report card that contains a summary of the
reported emissions values and any problems identified in the report. Sources using
ETS-PC to electronically submit reports to the EPA receive "instant feedback" containing
the results from EPA's automated review.
» Canlresubmit my file?
For EPA review and resubmissions of
reports, EPA has developed the Quarterly
Report Review Process guidance for the
OTC NOX Budget Program and will
develop comparable guidance for this
trading program in the future. See:
www. epa.gov/acidrain/otc/qtrrev. htm
During the 30-day quarterly
report submission period following
the end of each quarterly reporting
period, you can revise and resubmit
your report as necessary prior to the
quarterly report deadline. EPA will
provide you with an immediate
response in the form of a feedback
report indicating whether your
submission contains any errors. Most
errors can be corrected within the
submission period, provided EPA receives your report prior to the end of this 30-day
window. However, even if your submission is received or rejected toward the end of this
period, EPA will indicate that you have 30 days from the date of the feedback report to
correct and resubmit your report.
Jf you discover a problem after the 30-day period following a calendar quarter, you
must contact your EPA assigned analyst before you attempt to resubmit a report.
Section 126 SBREFA Compliance Guide - August 2000 Page 71
-------
Monitoring and Reporting Section 6
6.5 Changes to your monitoring
Changes to your monitoring may require an update to your monitoring plan,
recertification, or both.
» How do I update my monitoring plan?
You will have to update your monitoring plan if you make any replacement,
modification or other change in your approved monitoring systems or to your flue gas
handling system if the change affects information reported in your monitoring plan. For
instance, because you report monitoring component serial numbers, a change to the serial
numbers will require a monitoring plan update.
For electronic portions of your monitoring plan, the update will occur in your
quarterly report, or, if applicable, as part of the recertification application associated with
the change(s) to your monitoring or flue gas handling system. Send electronic monitoring
plan updates to CAMD. If the changes also affect the hardcopy portions of your
monitoring plan, then you will need to submit the revised hardcopy portions of your plan to
the applicable EPA Regional Office and to your State or local agency. Submit the
hardcopy update with any required recertification application, or, if no recertification
application is required, within 30 days of the event that triggered the monitoring plan
change.
» How do I know if I need to recertify my monitors?
You must recertify affected
If you are uncertain about whether a
particular change requires recertification,
ask your EPA Regional Office contact
listed in Appendix A to this Guide.
monitoring systems whenever you
make a replacement, modification, or
other change to a monitoring system
that could significantly affect the
ability of the system to accurately
measure or record the monitored
parameters. Also, you must recertify affected monitoring systems if you change the flue
gas handling system or unit operation so that there is a significant change in the unit's flow
or emission concentration profile. Examples of situations that would require recertification
are:
! Replacement of an analyzer
! Replacement of a CEMS
! Change in location or orientation of a sampling probe or site
! Fuel flowmeter replacement
! Changes in unit configuration
! Exceedance of Appendix E operating parameters
Page 72 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 6
Monitoring and Reporting
» How do I submit recertification reports?
If you need to recertify any of your systems, you must submit a recertification test
notice and subsequently a recertification application. The recertification test notification
consists of notification of the dates of the recertification testing. After you have completed
the recertification testing, you will need to submit a recertification application, which
consists of a hardcopy application form (EPA 7610-14), an updated monitoring plan, and
the recertification test results.
Within 120 days of receipt, EPA will let you know if your recertification
application has been approved or disapproved. If EPA finds that your application is
incomplete, you will be given notice of the missing items and you will have a reasonable
amount of time to submit the missing information.
Table 6-13: Recertification Reporting
Send this document/notice...
Recertification test notification
Recertification application
By this date...
> 45 days prior to beginning testing (if all
tests required), or
> 7 days prior to beginning of testing (if only
some tests required), or
< 2 business days after testing is scheduled, in
an emergency situation
< 45 days after testing is complete
Recertification test notification: If you need to conduct all of the same
certification tests for recertification as you did for initial certification, then you
must provide written notice at least 45 days in advance. If you need to reschedule
the test, you may do so by providing written or telephone notice at least seven days
before the earlier of the original or rescheduled beginning test date.
If only some certification tests are required for recertification, you need only
provide at least seven days prior notice, in writing or by telephone. If you need to
reschedule the tests, provide at least two business days notice before the earlier of
the original or rescheduled beginning test date.
Finally, if you need to recertify a monitoring system because of an uncontrollable
equipment failure that results in lost data, submit an "emergency" notice within two
business days from when you schedule the tests.
In any case, submit the notice to CAMD, your EPA Regional Office, and your State
or local agency. CAMD, your EPA Regional Office, and/or your State or local
Section 126 SBREFA Compliance Guide - August 2000
Page 73
-------
Monitoring and Reporting
Section 6
agency can issue a waiver from this notification requirement — so you should
confirm which office(s) actually require notice prior to submitting a notice for your
unit(s).
! Recertification application: The recertification application should contain a
hardcopy application form (EPA 7610-14), an updated monitoring plan (including
any hardcopy monitoring plan changes), and the results of your recertification
testing. You will need to submit these documents to CAMD, your EPA Regional
Office, and your State or local agency, as follows:
Table 6-14: Recertification Application Reporting
Send this document...
Hardcopy form 7610-14
Hardcopy test results
Electronic test results
Updated electronic monitoring plan
Hardcopy monitoring plan changes
To...
CAMD,
EPA Re
EPA Regional Office, State/local agency
gional Office, State/local agency
CAMD
CAMD
EPA Re
gional Office, State/local agency
» How do I obtain approval to conduct only certain tests for recertification?
Section 75.66(h) contains the specific elements for a petition to conduct only
certain tests for recertification of a monitoring system. The petition must include all of the
following:
! Identification of the applicable monitoring system(s)
! A description of the changes to the system
! An explanation of why you are making the changes
! A description of the potential effects of the changes on the system's ability to
measure, record and report emissions
Page 74
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 7: Other Questions and Answers
After reading Section 7, you should know how to determine self-compliance and
how the regulation affects your existing air permits.
7.1 How might I conduct a self-audit?
You may want to conduct a self-audit to determine your compliance status for this
regulation. You will want to ensure that you have met all the reporting, recordkeeping, and
permitting requirements. For sources that are subject to either the 25-ton or retired unit
exemption, you will want to ensure that you are complying with the criteria for these
exemptions. To assist you with this self-audit, Table 7-1 provides a checklist you may find
helpful.
Table 7-1: Example Self-audit Checklist
Requirement
YES
NO
N/A
Applicability: Am I subject to this regulation? (see Section 3)
1. Do I own or operate a large EGU? (i.e. serves generator > 25 MWe)
2. Do I own or operate a large non-EGU? (i.e. > 250 mmBtu)
3. Is my unit a fossil-fuel fired unit? (i.e., burns > 50% fossil fuel)
4. If I own or operate a large fossil-fuel fired EGU or non-EGU, am I
considered to be an "existing" unit (i.e., began operation before
May 1, 1997)?
5 . If I own or operate a large fossil -fuel fired EGU or non-EGU am I
considered to be a "new" unit (i.e., began operation between May 1, 1997
and May 1,2003)?
Emission Limits/ Allowance Allocations:
1. Have I submitted my general account application, if needed?
(see §97.51)
2. Have I submitted an account certificate of representation?
(i.e. designation of AAR, see § 97.13)
3. Is my control technology sufficient to reduce my ozone season NOX
emissions to my allocation level?
4. If my control technology is not sufficient to reduce my ozone season NOX
emissions to my allocation level, do I have (or can I obtain) enough
additional NOX allowances to ensure compliance for the control period?
Section 126 SBREFA Compliance Guide - August 2000
Page 75
-------
Questions and Answers
Section 7
Table 7-1: Example Self-audit Checklist (cont.)
Requirement
YES
NO
N/A
Monitoring: Do I have an adequate method of monitoring my NOX
emissions? (see Section 6)
1. Did I use one of the following monitoring options?
a. Part 75 CEMS
b. Appendix D (procedures for measuring heat input)
c. Appendix E (procedures for measuring NOX emissions)
d. Low Mass Emissions (LME) method
e. Other approved alternative
Reporting/Recordkeeping: Did I submit the required reports to EPA?
(see Sections 4 and 6)
1. Account Certificate of Representation form (for AAR)
2. Allowance Transfer Forms (as applicable)
3. Compliance Certification Report (by Nov. 30th after each control period)
4. Monitoring Plan
5 . Monitoring Certification/Recertification Test
6. Notices and Applications Petitions for monitoring alternatives/special
exception (if applicable)
7. Monitoring Q A Test Notices
8. Quarterly emission reports (for all four quarters if annual reporter or
2nd/3rd quarters if seasonal reporter)
Permitting: Did I update the appropriate permits? (see Section 5)
(i.e. Title V, FESOP, or Other)
1 . Was my NOX Budget Permit application submitted in accordance with
Title V or non-Title V regulations, if applicable?
7.2 What are the implications of this regulation for my existing
operating permits?
Title V of the Act requires that certain sources obtain operating permits.
However, being subject to the section 126 regulation does not by itself create the
obligation to apply for a Title V operating permit. Nevertheless, since this regulation
covers only large EGUs and non-EGUs, most affected sources will have an existing Title
V permit.
The permit requirements for this program are intended to be stand-alone, generic
requirements that can easily be incorporated into existing operating permits. You will have
Page 76
Section 126 SBREFA Compliance Guide - August 2000
-------
Section 7 Questions and Answers
to submit a NOX Budget Permit application (see Section 5, above). The permitting
authority can then act on that application using the appropriate procedures in the
underlying permit program. For Title V sources, in some cases, this may mean reopening a
Title V permit to incorporate the standard requirements for this program, while in other
Title V cases, the permitting authority may simply wait to incorporate those requirements
at permit renewal.
7.3 Are there opportunities for flexibility or waivers?
The cap-and-trade program by its nature is inherently flexible and encourages
sources on a regionwide basis to pursue least cost compliance planning. Because of this
inherent flexibility, there are no other true "hardship" type of provisions based on
economic or technical flexibility concerns. However, EPA has provided exemptions for
retired units and units with low permit emission limits. These exemptions will avoid
unnecessary impacts upon low (or zero) emitters. In addition, the compliance supplement
pool (see Section 4.10) has been incorporated into the regulation to provide some
flexibility for those sources that are able to reduce their emissions before the May 1, 2003
deadline, which will generate additional allowances that could be purchased by other
facilities that need extra time to comply.
Section 126 SBREFA Compliance Guide - August 2000 Page 77
-------
Questions and Answers Section 7
[This page intentionally left blank.]
Page 78 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 8: Compliance Assurance Process
After reading Section 8, you should know how EPA will determine compliance,
what happens if you or the EPA discovers noncompliance, and what is the legal
status of this Guide.
8.1 How will EPA determine compliance?
The EPA employs several approaches to monitor compliance with its
environmental regulations, including both methods initiated by EPA and by facilities.
! Inspections. The EPA may conduct periodic inspections at facilities subject to this
regulation. Inspections may be initiated by disclosures to EPA, random selection,
or by a variety of targeting methods. Inspections may be used to evaluate
operations, records, or other information at a facility. For the Federal NOX Budget
Trading Program, monitoring system inspection audits are an important component
of assuring that all sources monitor and account for emissions in a consistent
manner.
! Reporting. The EPA will monitor reports submitted by the facility including
quarterly emission reports and compliance certification reports. EPA will also
monitor the NOX allowances held by all facilities in the general, compliance, and
overdraft accounts within the NATS. Because you will document compliance with
the Federal NOX Budget Trading Program primarily by accounting for allowances
and emissions, the self-reporting process is the key means by which EPA will
evaluate your compliance.
! Self Disclosure. You have the primary responsibility for ensuring that your unit(s)
remain in continuous compliance. The EPA encourages you to take advantage of
EPA's self disclosure policies or small business policy. As one tool to help you
determine whether a unit is in compliance, Section 7.1 of this Guide includes a self-
audit checklist.
8.2 If I discover a violation, how can I work with EPA to correct it?
The EPA encourages self-
disclosure of violations and has
implemented two policies to meet
this goal. These policies meet the
objectives of Section 223 of the
Small Business Regulatory
Enforcement Fairness Act of 1996
(SBREFA), which provides for the
Check the web for further information on
the Small Business and Audit Policies:
http://es.epa.gov/oeca/smbusi.html
http://es.epa.gov/oeca/auditpol.html
Section 126 SBREFA Compliance Guide - August 2000
Page 79
-------
Compliance Assurance Process Section 8
reduction, and, under some appropriate circumstances, the complete waiver of civil
penalties for certain environmental violations. The policies are:
! Small Business Policy. The "Policy on Compliance Incentives for Small
Businesses" applies to companies with 100 or fewer employees and provides
penalty waivers or penalty reductions as incentives to participate in an on-site
compliance assistance program and to conduct self-audits to discover and correct
violations.
! Audit Policy. The "Incentives for Self-Policing: Disclosure, Correction and
Prevention of Violations" policy applies to businesses of all sizes that meet the
applicability criteria and promptly disclose and correct violations.
8.3 If EPA discovers a violation, what might EPA's response be?
To maximize compliance, EPA implements a balanced program of compliance
assistance, compliance incentives, and traditional law enforcement. The EPA knows that
small businesses that must comply with complicated new statutes or regulations often want
to do the right thing, but may lack the requisite knowledge, resources, or skills.
Compliance assistance information and technical advice helps small businesses to
understand and meet their environmental obligations. Compliance incentives, such as our
Small Business Policy, encourage persons to voluntarily discover, disclose, and correct
violations before they are identified by the government. The EPA's strong law
enforcement program protects all of us by targeting persons who neither comply nor
cooperate to address their problems.
The EPA uses a variety of methods to determine whether businesses are complying,
including inspecting facilities, review records and reports, and responding to citizen
complaints. However, the primary method of determining compliance for those sources
subject to the section 126 rule will be reviewing the compliance certification reports and
monitoring the number of allowances in the general, overdraft and compliance accounts as
established in the National Allowance Tracking System.
If EPA learns a person is
EPA has publicly-available policies in
place to ensure penalties are calculated
fairly. Any company charged with a
violation has the right to contest EPA's
allegations and proposed penalty before
an impartial judge or jury.
violating the law, EPA may file an
enforcement action seeking penalties
of up to $27,500 per violation, per
day. The proposed penalty in a given
case will depend on many factors,
including the number, length, and
severity of the violations, the
economic benefit obtained by the
violator, and its ability to pay. Under the Federal NOX Budget Trading Program,
owners/operators of a unit that has more emissions than allowances after the "true-up"
Page 80 Section 126 SBREFA Compliance Guide - August 2000
-------
Section 8 Compliance Assurance Process
period following each ozone season will, at a minimum, be subject to the 3:1 allowance
surrender for each ton of excess emissions at that unit. These specific allowance penalties
are in addition to any penalties that may apply under EPA's general enforcement authority.
In summary, EPA recognizes that it can achieve the greatest possible environmental
protection by encouraging small businesses to work with us to discover, disclose, and
correct violations. That is why EPA has issued self-disclosure, small business, and small
community policies to eliminate or reduce penalties for small and large entities which
cooperate with EPA to address compliance problems. In addition, we've established
compliance assistance centers to serve over a million small businesses. For more
information on these and other EPA programs for small businesses, please contact EPA's
Small Business Ombudsman, Karen Brown, at (202) 260-1390.
8.4 What is the legal status of this guide?
In this Guide, we have tried to make clear what you must do to comply with the
applicable law and regulation, as required by SBREFA. We hope you find this
presentation of regulatory requirements useful and the additional information helpful in
reaching and maintaining compliance.
Following the steps set forth in this Guide generally should result in compliance
with those aspects of the regulation that it covers. The EPA does not make any guarantee
or assume any liability with respect to the use of any information or recommendations
contained in this document. The final word with which you must comply is in EPA's
regulations. Regulated entities requiring additional information or advice should consult a
qualified professional.
The guidance in this document does not constitute rulemaking by the EPA, and
may not be relied on to create a substantive or procedural right or benefit enforceable, at
law or in equity, by any person. The EPA may take action at variance with this guidance
and its internal procedures.
Section 126 SBREFA Compliance Guide - August 2000 Page 81
-------
Compliance Assurance Process Section 8
[This page intentionally left blank.]
Page 82 Section 126 SBREFA Compliance Guide - August 2000
-------
Appendix A: Contacts and Resources
General Information
There are a number of web site resources for obtaining general information about the
Federal NOX Budget Trading Program, related trading programs, and general EPA policies.
The following table identifies some of the main resources you may find helpful.
Table A-l: General Resource Information
Resource
Web Address
Description
CAMD Web Site
http://www.epa.gov/acidrain
(will change to
www. epa.gov/airmarkets
in the future)
Variety of information on the
programs for which the Clean Air
Markets Division is responsible,
including SO2 and NOX trading
programs. Includes data,
publications, and links to related
sites.
Federal NOX Budget
Trading Program
http: //www. epa.gov/acidrain
/modlrule/main .html# 126
General information on EPA's NOX
Budget Trading Program in the
context of both the SIP Call and the
section 126 rule. Includes links to
the proposed and final rules
including information on allocations,
fact sheets, guidance documents,
response to comment documents and
other analyses and information.
Regional Transport of
Ozone Web Site
http ://www .epa.gov/ttn/rto/
126/index.html
This is the main site for accessing
the section 126 proposed and final
rules, fact sheets, and links to other
related documents and data.
Federal Register
Online via GPO
Access
http://www.access.gpo.gov/
su docs/aces/aces 140.html
Official Federal Register documents,
including the published section 126
regulation (January 18, 2000).
CFR, List of Sections
Affected Online via
GPO Access
http://www.access.gpo.gov/
nara/lsa/browslsa.html
This site lists CFR sections that have
been affected by rules promulgated
in the Federal Register since the last
official CFR release
EPA Clean Air
Technology Center
(919)541-0800
Resources on emerging and existing
air pollution prevention and control
technologies
Section 126 SBREFA Compliance Guide - August 2000
Page A-l
-------
Contacts and Resources
Appendix A
Table A-l: General Resource Information (cont.)
Resource
Web Address
Description
EPA Small Business
Assistance Program
(SBAP)
http://www.epa.gov/ttn/sbap
State and local SBAP contacts,
SBAP materials, related web sites,
meetings and conferences.
EPA Office of
Enforcement and
Compliance
Assurance: Policy on
Compliance Incentives
for Small Businesses
http://es.epa.gov/oeca/
smbusi.html
Applicability of EPA's policy to
promote environmental compliance
among small businesses. Criteria for
civil penalty mitigation.
EPA Office of
Enforcement and
Compliance
Assurance: Audit
Policy: Incentives for
Self-Policing
http://es.epa.gov/oeca/
auditpol.html
Applicability of EPA's policy to
enhance protection of human health
and the environment by encouraging
regulated entities to voluntarily
discover, and disclose and correct,
violations of environmental
requirements.
EPA Office of
Enforcement and
Compliance
Assurance: Audit
Policy Interpretive
Guidance
http://es.epa.gov/oeca/
apolguid.html
Questions and answers on self-
disclosure
EPA Air Enforcement
Division General Clean
Air Act Stationary
Source Policies and
Guidance
http://es.epa.gov/oeca/ore/
aed/comp/bcomp
Clean Air Act Stationary Source
Policies and Guidance
You may also contact EPA regional or headquarters staff directly regarding specific
issues. Use the following list of phone numbers to contact the office that may be able to
help you answer specific questions regarding the trading program, monitoring, or other
general issues that apply within the EPA Region in which your source is located. You may
reach Region I at (888) 372-7341, Region H at (212) 637-3000, Region HI at
(215) 814-2100, Region IV at (404) 562-9077, and Region V at (312) 353-2212. You may
also contact EPA's CAMD staff at (202) 564-9180.
Page A-2
Section 126 SBREFA Compliance Guide - August 2000
-------
Appendix A
Contacts and Resources
Monitoring/Emissions Reporting Information
EPA has developed a number of implementation assistance resources for the
monitoring and emissions reporting requirements you will have to meet. The following
table identifies some specific resources that are available on the CAMD web site. For
additional resources, see the main web site page for Part 75 monitoring and reporting at:
http://www. epa.gov/acidrain/so2emis. html.
Table A-2: Monitoring and Emissions Reporting Resources
Resource
Web Address
Description
Acid Rain Program
Policy Manual
http: //www. epa.gov/acidrain
/cems/polman/polman.html
Includes answers to hundreds of
questions on a range of Part 75
topics. EPA updates the manual on a
periodic basis.
EDR Version 2.1
Formats and
Instructions
http: //www. epa.gov/acidrain
/so2emis.html
Access the formats for reporting all
electronic data, and detailed
instructions on how to format your
data correctly. As a starting point,
see especially Appendix C to the
EDR instructions, which provides
additional summary-level
information on how to submit your
electronic reports.
Monitoring Data
Checking (MDC)
Software
http: //www. epa.gov/acidrain
/cems/mdc/mdc.htm
MDC allows regulated sources and
regulatory agencies to enter, analyze,
print, and export electronic
monitoring plan, certification, and
quality assurance data. MDC is an
important tool for checking these
data elements for errors and
inconsistencies.
Emission Tracking
System (ETS)
http: //www. epa.gov/acidrain
/so2emis.html
EPA posts all ETS-related
information at this site, including
ETS user bulletins, EPA-developed
report submission software, and
procedures for reviewing and
processing quarterly reports.
Acid Rain CEM
Contact List
http: //www. epa.gov/acidrain
/cems/contact.html
This list is arranged by State within
each EPA Region, and includes the
EPA Headquarters, EPA Regional
Office, State agency and, if
applicable, local agency contact for
any Part 75 monitoring questions
you have.
Section 126 SBREFA Compliance Guide - August 2000
Page A-3
-------
Contacts and Resources Appendix A
[This page intentionally left blank.]
Page A-4 Section 126 SBREFA Compliance Guide - August 2000
-------
Appendix B: Forms Information
There are a variety of forms that will be used by affected sources to comply with
the section 126 regulation and to participate in the trading program. At the time this
guidance document was published, most of the necessary forms for this program were not
available for distribution. However, prior to program implementation, the necessary forms
will be posted on EPA's web page at http://www.epa.gov/acidrain/forms.html. The forms
fall into the following major program areas:
! Allowance trading
! Monitoring and emissions reporting
! Permitting
Allowance Trading
The trading forms that you will be using for the section 126 program will be similar
to those currently on the web page for the OTC NOX Budget Trading Program. These
include the Annual Reconciliation Form (for compliance certification), the Account
Certificate of Representation Form (to designate an AAR), the General Account Form, the
Allowance Transfer Form, and the ERC Request Form. You can download these forms in
a WordPerfect or Adobe Acrobat (.pdf) file format from:
http://www. epa.gov/acidrain/forms. html.
Monitoring and Emissions Reporting Forms
You will use the same monitoring and emission reporting forms already established
under Part 75 and used for the Acid Rain Program and the OTC NOX Budget Program.
Use the EDR v2.1 reporting format for most of your monitoring/emissions reports,
including most (or all) of your monitoring plan, much of your certification/recertification
application, and your quarterly reports. You can download the EDR v2.1 reporting formats
and accompanying instructions from: http://www.epa.gov/acidrain/so2emis.html.
In addition to the EDR formats, EPA has developed forms for certain other
monitoring-related reports:
! Certification/recertification applications. The required hardcopy form (7610-14)
for these applications is available on the CAMD web site. In addition, remember
that much of this information will be included in your EDR submittal.
! Test notices. Although there is no required form for a test notice, EPA has
developed an optional form that is available as part of the existing Monitoring Plan
file.
Section 126 SBREFA Compliance Guide - August 2000 Page B-l
-------
Forms Information Appendix B
Permitting Forms
You will use the permit application and other permit forms of your underlying Title
V or federally-enforceable, State operating permit (FESOP) program, so generally there are
no permit forms specific to this trading program.
Also, as stated in Section 5 of this Guide, your NOX Budget permit should include
all the applicable standard requirements in § 97.6 of the Federal NOX Budget Trading
Program. To incorporate the standard requirements, you can use the language on the
following pages as an addendum to your permit application.
Page B-2 Section 126 SBREFA Compliance Guide - August 2000
-------
Appendix B Forms Information
Standard Requirements/Certification for a NOX Budget Permit Application
Permit Requirements
(1) The NOX authorized account representative of each NOX Budget source required to have a
federally enforceable permit and each NOX Budget unit required to have a federally enforceable
permit at the source shall:
(i) Submit to the permitting authority a complete NOX Budget permit application under 40
CFR 97.22 in accordance with the deadlines specified in 40 CFR 97.21(b) and (c); and
(ii) Submit in a timely manner any supplemental information that the permitting authority
determines is necessary in order to review a NOX Budget permit application and issue or deny a NOX
Budget permit.
(2) The owners and operators of each NOX Budget source required to have a federally enforceable
permit and each NOX Budget unit required to have a federally enforceable permit at the source shall
have a NOX Budget permit issued by the permitting authority and operate the unit in compliance
with such NOX Budget permit.
Monitoring Requirements
(1) The owners and operators and, to the extent applicable, the NOX authorized account
representative of each NOX Budget source and each NOX Budget unit at the source shall comply
with the monitoring requirements of subpart H of 40 CFR Part 97.
(2) The emissions measurements recorded and reported in accordance with subpart H of 40 CFR
Part 97 shall be used to determine compliance by the unit with the NOX Budget emissions limitation
under the Nitrogen Oxides Requirements section.
Nitrogen Oxides Requirements
(1) The owners and operators of each NOX Budget source and each NOX Budget unit at the source
shall hold NOX allowances available for compliance deductions under 40 CFR 97.54(a), (b), (e), or
(f), as of the NOX allowance transfer deadline, in the unit's compliance account and the source's
overdraft account in an amount not less than the total NOX emissions for the control period from the
unit, as determined in accordance with subpart H of 40 CFR Part 97, plus any amount necessary to
account for actual heat input under 40 CFR 97.42(e) for the control period or to account for excess
emissions for a prior control period under 40 CFR 97.54(d) or to account for withdrawal from the
NOX Budget Trading Program, or a change in regulatory status, of a NOX Budget opt-in unit under
40 CFR 97.86 or 40 CFR 97.87.
(2) Each ton of nitrogen oxides emitted in excess of the NOX Budget emissions limitation shall
constitute a separate violation of 40 CFR Part 97, the Clean Air Act, and applicable State law.
(3) A NOX Budget unit shall be subject to the requirements under paragraph (1) of this Nitrogen
Oxides Requirements section starting on the later of May 1, 2003 or the date on which the unit
commences operation
(4) NOX allowances shall be held in, deducted from, or transferred among NOX Allowance Tracking
System accounts in accordance with subparts E, F, G, and I of 40 CFR Part 97.
(5) A NOX allowance shall not be deducted, in order to comply with the requirements under
paragraph (1) of this Nitrogen Oxides Requirements section, for a control period in a year prior to
the year for which the NOV allowance was allocated.
Section 126 SBREFA Compliance Guide - August 2000 Page B-3
-------
Forms Information Appendix B
Standard Requirements/Certification for a NOX Budget Permit Application (cont.)
(6) A NOX allowance allocated by the Administrator under the NOX Budget Trading Program is a
limited authorization to emit one ton of nitrogen oxides in accordance with the NOX Budget Trading
Program. No provision of the NOX Budget Trading Program, the NOX Budget permit application,
the NOX Budget permit, or an exemption under 40 CFR 97.4(b) or 40 CFR 97.5 and no provision of
law shall be construed to limit the authority of the United States or the State to terminate or limit
such authorization.
(7) A NOX allowance allocated by the Administrator under the NOX Budget Trading Program does
not constitute a property right.
(8) Upon recordation by the Administrator under subpart F or G of 40 CFR part 97, every
allocation, transfer, or deduction of a NOX allowance to or from a NOX Budget unit's compliance
account or the overdraft account of the source where the unit is located is incorporated
automatically in any NOX Budget permit of the NOX Budget unit.
Excess Emissions Requirements
(1) The owners and operators of a NOX Budget unit that has excess emissions in any control period
shall:
(i) Surrender the NOX allowances required for deduction under 40 CFR 97.54(d)(l); and
(ii) Pay any fine, penalty, or assessment or comply with any other remedy imposed under
40 CFR 97.54(d)(3).
Recordkeeping and Reporting Requirements
(1) Unless otherwise provided, the owners and operators of the NOX Budget source and each NOX
Budget unit at the source shall keep on site at the source each of the following documents for a
period of 5 years from the date the document is created. This period may be extended for cause, at
any time prior to the end of 5 years, in writing by the permitting authority or the Administrator.
(i) The account certificate of representation for the NOX authorized account representative
for the source and each NOX Budget unit at the source and all documents that demonstrate the truth
of the statements in the account certificate of representation, provided that the certificate and
documents shall be retained on site at the source beyond such 5-year period until such documents
are superseded because of the submission of a new account certificate of representation under 40
CFR 97.13 changing the NOX authorized account representative.
(ii) All emissions monitoring information, in accordance with subpart H of 40 CFR part
97; provided that to the extent that subpart H of 40 CFR part 97 provides for a 3-year period for
recordkeeping, the 3-year period shall apply.
(iii) Copies of all reports, compliance certifications, and other submissions and all records
made or required under the NOX Budget Trading Program.
(iv) Copies of all documents used to complete a NOX Budget permit application and any
other submission under the NOX Budget Trading Program or to demonstrate compliance with the
requirements of the NOX Budget Trading Program.
(2) The NOX authorized account representative of a NOX Budget source and each NOX Budget unit
at the source shall submit the reports and compliance certifications required under the NOX Budget
Trading Program, including those under subparts D, H, or I of 40 CFR part 97.
Page B-4 Section 126 SBREFA Compliance Guide - August 2000
-------
Appendix B Forms Information
Standard Requirements/Certification for a NOX Budget Permit Application (cont.)
Liability
(1) Any person who knowingly violates any requirement or prohibition of the NOX Budget Trading
Program, a NOX Budget permit, or an exemption under 40 CFR 97.4(b) or 40 CFR 97.5 shall be
subject to enforcement pursuant to applicable State or Federal law.
(2) Any person who knowingly makes a false material statement in any record, submission, or
report under the NOX Budget Trading Program shall be subject to criminal enforcement pursuant to
the applicable State or Federal law.
(3) No permit revision shall excuse any violation of the requirements of the NOX Budget Trading
Program that occurs prior to the date that the revision takes effect.
(4) Each NOX Budget source and each NOX Budget unit shall meet the requirements of the NOX
Budget Trading Program.
(5) Any provision of the NOX Budget Trading Program that applies to a NOX Budget source or the
NOX authorized account representative of a NOX Budget source shall also apply to the owners and
operators of such source and of the NOX Budget units at the source.
(6) Any provision of the NOX Budget Trading Program that applies to a NOX Budget unit or the
NOX authorized account representative of a NOX Budget unit shall also apply to the owners and
operators of such unit. Except with regard to the requirements applicable to units with a common
stack under subpart H of 40 CFR part 97, the owners and operators and the NOX authorized account
representative of one NOX Budget unit shall not be liable for any violation by any other NOX Budget
unit of which they are not owners or operators or the NOX authorized account representative and
that is located at a source of which they are not owners or operators or the NOX authorized account
representative.
Effect on Other Authorities
No provision of the NOX Budget Trading Program, a NOX Budget permit application, a NOX Budget
permit, or an exemption under 40 CFR 97.4(b) or 40 CFR 97.5 shall be construed as exempting or
excluding the owners and operators and, to the extent applicable, the NOX authorized account
representative of a NOX Budget source or NOX Budget unit from compliance with any other
provision of the applicable, approved State implementation plan, a federally enforceable permit, or
the Clean Air Act.
Certification
I am authorized to make this submission on behalf of the owners and operators of the NOX Budget
sources or the NOX Budget units for which the submission is made. I certify under penalty of law
that I have personally examined, and am familiar with, the statements and information submitted in
this document and all its attachments. Based on my inquiry of those individuals with primary
responsibility for obtaining the information, I certify that the statements and information are to the
best of my knowledge and belief true, accurate, and complete. I am aware that there are significant
penalties for submitting false statements and information or omitting required statements and
information, including the possibility of fine or imprisonment.
Name: Signature:
Date:
Section 126 SBREFA Compliance Guide - August 2000 Page B-5
-------
Forms Information Appendix B
[This page intentionally left blank.]
Page B-6 Section 126 SBREFA Compliance Guide - August 2000
-------
APPENDIX C: Questionnaire: How Useful Was this Guide?
The EPA is including this brief questionnaire to solicit feedback from users as to
the usefulness, readability, and improvements needed for this Guide. Please complete this
information and return it to the EPA at the following address:
U.S. EPA
Office of Policy, Economics, and Innovation
Regulatory Management Staff
MailCode2136A
1200 Pennsylvania Ave., NW
Washington, DC 20460
Date:
Title of Regulation or Program: Small Entity Compliance Guide:
Federal NOX Budget Trading Program
(40CFRPart97)
EPA 430/R-00-008
Name ofCommenter (optional):
Please take a moment to let us know if you found this Guide useful by answering the
following questions. Thank you! Your feedback is important to us.
1. Could you easily understand what requirements you must
meet?
2. Is the guide written in understandable language?
3. Did the guide help you understand the steps you must take to comply with the
regulation ?
4. If you have suggestions to improve the guide, please indicate below:
Section 126 SBREFA Compliance Guide - August 2000 Page C-l
-------
Questionnaire Appendix C
[This page intentionally left blank.]
Page C-2 Section 126 SBREFA Compliance Guide - August 2000
------- |