Open Market Trading Rule for Ozone Smog Precursors

Federal RegisterAug 25, 1995

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Ch. 1

[FRL-5285-3]

Open Market Trading Rule for Ozone Smog Precursors

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed policy statement and model rule; Notice of public

hearing; correction.

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SUMMARY: This notice contains the text of the proposed model open

market trading rule (OMTR) for ozone smog precursors which was

inadvertently omitted in the original Federal Register publication on

August 3, 1995 (60 FR 39668 (August 3, 1995)). The model OMTR is

intended to serve as a template for State development of open market

trading programs. States that adopt the final model OMTR, will receive

automatic EPA approval of the State implementation plan (SIP) revision

containing the model OMTR. SIP

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revisions containing variations on the model OMTR will be expeditiously

reviewed by EPA in accordance with EPA's final policy on open market

trading.

FOR FURTHER INFORMATION CONTACT: Anyone with a computer and a model can

download the full text of the preamble and proposed model rule from the

Clean Air Act Amendments bulletin board (under ``Recently Signed

Rules'') on EPA's Technology Transfer Network (TTN) by calling 919-541-

5742 or Internet access via TELNET ttnbbs.rtpnc.epa.gov. For TTN

assistance call 919-541-5384 between the hours of 1:00 p.m. and 5:00

p.m. EST. For further information about the proposed OMTR, contact

Nancy A. Mayer, U.S. EPA, MD-15, Research Triangle Park, North Carolina

27711, telephone 919-541-5390, fax 919-541-0839; or Scott L. Mathias,

U.S. EPA, MD-15, Research Triangle Park, North Carolina 27711,

telephone 919-541-5310, fax 919-541-0839.

SUPPLEMENTARY INFORMATION: The contents of the proposed model open

market trading rule for ozone smog precursors are listed in the

following outline:

I. Purpose

II. Definitions

III. General Rules for Generation and Use

A. General Rule

B. Government Approvals

C. Market Participation

D. Time of Use

E. Limited Authorization to Emit

IV. DER Generation

A. Computation of DER's

1. General Rule

2. Areas with Approved Attainment Demonstrations or Maintenance

Plans (Optional)

3. Sources Subject to Emissions Caps

4. Sources Subject to Multiple Emissions Limitations

5. Protocols

B. Limitations on Generation

C. Notice and Certification of Generation

1. General Rule

2. Required Information

3. Certification Under Penalty of Law

V. DER Use

A. Time of Acquisition

B. Sufficiency

C. Operating Permits

D. Environmental Contribution

E. Compliance Calculation

F. Notice of Intent to Use DER's

1. General Rule

2. Required Information

G. Notice and Certification of Use

1. General Rule

2. Required Information

3. Certification Under Penalty of Law

H. Use Limitations

VI. Geographic Scope of Trading

A. General Rule

B. Geographic Scope

1. NOX DER's

2. VOC DER's

C. Interstate Trading

VII. Recordkeeping and Public Availability

A. Recordkeeping

B. Public Availability

VIII. Protocol Development and Approval

A. General Rule

B. USEPA-Approved Protocols

C. Protocol Elements

D. Emission Quantification Methods

IX. DER Use for NSR and Conformity Purposes

A. General Rule

B. Specific Requirements for NSR

X. Program Audits

XI. Enforcement

A. Compliance Burden

B. Violation Day Definition for User Source Excess Emissions

I. Purpose

To establish a process whereby sources may generate and use

discrete emission reductions for compliance with VOC and NOX

requirements in the Act while complying with all other applicable

requirements of the Act.

II. Definitions

Terms not defined in this part shall have the meaning given in the

Act and EPA regulations (40 CFR) [or State citations].

Act means the Clean Air Act as amended in 1990.

Activity level means the amount of activity at a source measured in

terms of production, use, raw materials input, vehicle miles traveled,

or other similar units that have a direct correlation with the economic

output of the source and is not affected by changes in the emissions

rate (i.e., mass per unit of activity).

Actual emissions rate means the actual rate of emissions of a

pollutant from a source. Actual emissions as of a particular date shall

equal the average rate, in mass per unit of time or mass per unit of

activity, at which the unit actually emitted the pollutant during a

two-year period which precedes the particular date and which is

representative of normal source operation at a particular time. A

different time period may be used if that is more representative of

normal source operation. Actual emissions shall be calculated using the

unit's actual operating hours, production rates, types of materials

processed, stored, or combusted during the selected time period.

Allowable emission rate means any emission limit applicable to a

particular source including all Federal and State requirements for the

control of tropospheric ozone and the requirements of Title IV of the

Act, including but not limited to, all requirements in a SIP, the

inventories contained in any attainment strategy, maintenance

demonstration or ROP plan for any NAAQS as well as source-specific or

source-category-specific permits.

Alternative emission limitation means any emission limit that

applies to a specific source that is less stringent than the limit

contained in the SIP approved by the [State authority] generally for

similar sources.

Applicable emissions inventory means the emission inventory that

forms the basis for an attainment demonstration or strategy, a ROP

plan, or maintenance plan submitted to or acted on by USEPA.

Applicable implementation plan or applicable SIP means the portion

(or portions) of the SIP or most recent revision thereof, which has

been approved under section 110 of the Act, or promulgated under

section 110(c) of the Act (Federal implementation plan), or promulgated

or approved pursuant to regulations promulgated under section 301(d) of

the Act and which implements the relevant requirements of the Act.

Area source means those small or diverse stationary source that are

not required to be, and are not individually included in a stationary

source emissions inventory. The term area sources include emissions

related to consumer and commercial products.

Attainment area means any area of the country designated or

redesignated by EPA at 40 CFR part 81 in accordance with section 107(d)

of the Act as unclassifiable or better than the national ambient air

quality standards for ozone [or State may cite its regulations, or list

its areas].

Attainment demonstration means the State rules that comply with the

requirement in section 172(c)(1), 182(b)(1), or 182(c)(2) of the Act to

demonstrate that the specific emission reductions included in the SIP

are sufficient to attain the ozone NAAQS by the date applicable to the

area [or State citation of their plan].

Baseline emission rate means a generating source's actual emissions

rate or allowable emissions rate considering all applicable State and

Federal regulations.

Best available control technology (BACT) is as defined in 40 CFR

part 51.166(b)(12) [State may add the cite to its rules if they are

USEPA-approved].

Conformity purposes means any reductions required to comply with

the conformity requirements contained in 40 CFR part 51, subparts T and

W, and part 93, subparts A and B.

Contingency measure means any emission control measure that is

adopted into the SIP which shall be

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implemented whenever there is a failure to meet the ROP requirement in

section 185 of the Act or a failure to attain a NAAQS as projected in

an approved attainment demonstration.

Curtailment means a temporary or partial reduction in activity

level (e.g., hours of operation and process rate). For purposes of this

rule, curtailment shall not include a reduction in activity levels for

a mobile source that occurs as a result of an activity reduction plan

that is the subject of a USEPA emissions quantification protocol.

Discrete emission reduction (DER) means an emission reduction

generated over a discrete period of time, and measured in weight (e.g.,

tons).

Emissions cap means an emissions limit that is measured as mass

emissions per unit of time.

Emissions unit means any part of a source that emits or would have

the potential to emit VOC or NOx.

Fuels and fuel delivery system, for mobile sources, means fuels

intended for use in mobile sources and the distribution systems

associated with those fuels including, but not limited to, pipelines,

tanker trucks, storage tanks, and dispenser pumps.

Generator source means any source that generates a DER.

Generation period means the period of time over which a DER is

generated.

Lowest achievable emissions rate (LAER) means the control

technology defined at 40 CFR 51.165(a)(1)(xiii) [or State may insert

citation to its rules].

Maintenance area means any area with a maintenance plan approved

under section 175 of the Act [or State may insert the list of its

areas].

Maintenance plan means a revision to the applicable SIP, meeting

the requirements of section 175A of the Act.

Mobile source means any vehicle or engine used for on-highway or

nonroad purposes, the mobile-source related fuels and/or fuel delivery

systems used by those vehicles or engines. For the purpose of this

definition, nonroad vehicles and engines include those used in marine

vessels, locomotives, and airplanes, as well as those described in the

definition of nonroad contained in the Act.

Modeling domain means a geographic area covered by an air quality

model used to support an attainment or maintenance demonstration.

Specifications for existing modeling domains are available through the

USEPA's Technology Transfer Network (TTN).

National ambient air quality standards (NAAQS) means the standards

set by EPA at 40 CFR part 50 under section 109 of the Act.

New Source Review (NSR) means the permitting requirements for major

new and modified sources contained in Parts C and D of Title I of the

Act and in 40 CFR parts 51.165, 51.166 and part 52.21. [State may add

citations to SIP rules if they are USEPA-approved]

Nonattainment area means any area designated at 40 CFR part 81 in

accordance with section 107(d) of the Act as nonattainment for ozone.

Normal source operation means the average actual activity rate of a

source necessary for determining the actual emissions rate for the two

years prior to the date necessary for determining actual emissions,

unless some other time period is more representative of the operation

of the source. A source may use either the simple arithmetic mean (sum

of emissions for 12 months divided by 12) or the mean plus one standard

deviation if sufficient data are available to determine the normal

source operation for the shorter time period.

NOx means oxides of nitrogen, including nitric oxide (NO) and

nitrogen dioxide (NO2) and not including, for purposes of this

rule, nitrous oxide (N2O).

Operator means the individual who is in control of or in charge of

a source while it is in operation. For all requirements of this

section, the operator is considered to be an agent of the owner.

Owner means a person who claims lawful possession of a source by

virtue of legal title or equitable interest therein which entitles him

to such possession.

Ozone season means the portion of year when ozone monitoring is

required to occur in a specific geographic area as defined in 40 CFR

part 58 appendix D.

Person means an individual, corporation, partnership, association,

State, municipality, firm, political subdivision of a State, and any

agency, department, or instrumentality of the United States and any

officer, agent, or employee thereof.

Protocol means a replicable and workable method to estimate the

mass of emissions reductions, or the amount of DER's needed for

compliance, that meets USEPA's approval criteria.

Quantifiable means that the quantity of emission reductions can be

measured or estimated by accurate and replicable techniques. These

techniques shall be at least as accurate and replicable as the

techniques accepted by the USEPA for SIP purposes, where accepted

techniques exist.

Rate of progress (ROP) plan means a SIP providing for the

incremental emission reductions required by section 182(b)(1) and

182(c)(2)(B) of the Act [or State may insert the cite for its plans].

Shutdown means the permanent cessation of the activity that results

in emissions at all or part of a source. For purposes of this rule,

scrappage of mobile sources is not considered a shutdown.

Source means any mobile, area, or stationary source.

State means State, local government, or Indian-governing body.

State implementation plan (SIP) means a plan developed by an

authorized governing body, including a State, local government, and

Indian-governing body, as required under Titles I and II of the Act,

and approved by the USEPA.

Stationary source means any building, structure, facility or

installation which emits or may emit any air pollutant subject to

regulation under the Act. Building, structure, facility or installation

includes all pollutant emitting activities that are located on one or

more contiguous or adjacent properties, and are under the common

control of the same person (or persons under common control).

Surplus emission reduction means, in general, any emission

reduction that is not otherwise required of a source. Any emission

reduction that complies with sections IV(A) and IV(B) is considered

surplus for purposes of this rule.

Use period means the period of time over which the user source

applies the DER's to an applicable emission reduction requirement.

USEPA means the United States Environmental Protection Agency.

User source means any source that seeks to use DER's to comply with

an applicable emission reduction requirement.

Volatile organic compounds (VOC) means all emissions included at 40

CFR part 51.100(s) as measured by a USEPA test method [or State may

insert citation to its definition].

III. General Rules for Generation and Use

(A) General Rule. Except as provided under section IV(B), any

source may generate a DER by reducing emissions, in the amount

determined under section IV(A). DER generators must ensure that DER's,

are real, properly quantified, and surplus.

(B) Governmental Approvals. No prior Federal, State, or local

governmental approval is necessary for the use of DER's, except for

DER's that are used for NSR offsets, in which case State approval

pursuant to an approved NSR rule is required.

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buy, sell, trade, or otherwise convey DER's to another person in any

manner in accordance with the laws of [State].

(D) Time of Use. DER's may be used any time after the State has

received the Notice and Certification of Generation pursuant to section

IV(C).

(E) Limited Authorization To Emit. A DER created under this rule is

a limited authorization to emit NOX and/or VOC in accordance with

the provisions of this rule and the Act as well as regulations

promulgated thereunder. A DER does not constitute a property right.

Nothing in this rule shall be construed to limit the authority of the

[State authority] or the United States to terminate or limit such

authorization.

IV. DER Generation

(A) Computation of DER's

(1) General Rule. The amount of DER's shall be the difference

between--

(a) The amount of VOC or NOX emissions that would have been

emitted during the generation period based on actual activity levels

during that period and the lower of (i) the lowest applicable allowable

emissions rate, or (ii) the actual emissions rate based on normal

source operation, and

(b) The amount of actual emissions during the generation period

based on actual activity levels during that period.

(2) [States may delete this paragraph at their discretion] Areas

with Approved Attainment Demonstrations or Maintenance Plans. In an

area with a USEPA-approved attainment demonstration or maintenance

plan, the amount of DER's shall be the difference between--

(a) The amount of VOC or NOX emissions that would have been

emitted during the generation period based on actual activity levels

during that period and the lowest applicable allowable emissions rate,

and

(b) The amount of emissions during the generation period based on

actual activity levels during that period.

(3) Sources Subject to Emissions Caps.

(a) For purposes of subsection[s] (1) [and (2)] of this section,

the term ``allowable emissions rate'' includes a source's allowable

amount of total emissions for the generation period, as may be

specified in that source's Federally enforceable operating permit, in

the SIP, or included with respect to that source in the attainment

demonstration or maintenance plan (or the emissions inventory that

forms the basis for such demonstration or plan).

(b) For sources subject to this subsection, if the generation

period differs from the period of the emissions cap, the allowable

emissions rate for the generation period shall be adjusted to reflect

the proportion of the generation period to the period of the emissions

cap.

section, must be adjusted to the extent necessary to exclude emission

reductions resulting from shutdowns or curtailments.

(4) Sources Subject to Multiple Emissions Limitations. If a source

is subject to multiple emissions limitations, the amount of DER's shall

be determined by reference to the emissions limitation that results in

the least amount of DER's.

(5) Protocols. The amount of DER's must be calculated using

quantification protocols that meet the requirements of section VIII.

(B) Limitations on Generation. A DER shall not be formed by

emissions reductions of activities or source categories identified in

this subsection:

(1) Shutdowns;

(2) Curtailments;

(3) Modification or discontinuation of any activity that is

otherwise in violation of any Federal, State or local law;

(4) Emissions reductions required to comply with any provision

under the Act for control of tropospheric ozone and Title IV of the

Act, including but not limited to--

(a) Administrative orders issued pursuant to enforcement actions.

(b) Any provision of a Federal implementation plan.

(5) Emission reductions of hazardous air pollutants, as defined in

section 112 of the Act, from application of a standard promulgated

under section 112 of the Act.

(6) Reductions credited or used under any other emissions trading

program, including any mobile source averaging, banking, and trading

program.

(7) Emission reductions occurring at a source which received an

alternative emission limitation to meet a State RACT requirement,

except to the extent that the emissions are reduced below the level

that would have been required had the alternative emission limitation

not been issued.

(8) Emission reductions generated prior to the start of the ozone

season in 1995.

(9) Any source subject to a RACT limit pursuant to the Act, but

with respect to which the State has not determined the RACT limit,

until the State determines RACT through a permit or SIP approval

action.

(1) General Rule. The owner or operator of a generator source shall

provide a Notice and Certification of Generation to [State authority]:

(a) No later than 90 days after the DER generation activity was

completed,

(b) One year after the first day of the generation period (and at

least annually thereafter), or

The Notice and Certification of Generation shall be publicly

available pursuant to section VII(B).

(2) Required Information. The Notice and Certification of

Generation shall include the following information, submitted on [State

form ------]:

(a) For stationary source reductions, identifying information,

including--

(i) The name and address of the generator, and

(ii) The name of the owner and/or operator of the generator source.

(b) For mobile sources related reductions, identifying information

as required in the applicable USEPA approved protocol or described in

USEPA guidance on protocols.

the [State authority] to each ton of DER's.

(d) A brief description of the generation activity.

(e) The amount of DER's generated during the ozone season and the

amount of DER's generated during other parts of the year.

(f) The protocols that were used to calculate and document the

DER's.

(g) Information on all the generator source's applicable allowable

emission rates.

(h) A statement that the reductions were calculated in accordance

with section IV(A).

(i) A statement that the DER's were not generated in whole or in

part from actions prohibited pursuant to section IV(B).

(j) For each source subject to reporting toxic chemical releases

for the Community Right-to-Know provisions under 40 CFR part 372, the

estimated amount of hazardous air pollutants, as defined below, emitted

to the air as the result of the generation of the DER.

(i) A pollutant shall be reported under this paragraph, only if it

is listed both in 40 CFR 372.65 and section 112(b) of the Act, and a

chemical which the source is reporting or expects to report under 40

CFR part 372 for the calendar year in which the DER was generated.

(ii) The requirements in 40 CFR 373.30(b) shall be followed for the

notice.

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(iii) The exemptions listed in 40 CFR 372.38 for determining the

amount of release to be reported under 40 CFR 372.30 shall also be

exemptions for determining the amount emitted under this section.

(iv) The notice shall include:

((A)) The name and CAS number (if applicable) of the chemical

reported;

((B)) If the chemical identity is claimed trade secret under 40 CFR

372, a generic name for the chemical as reported under 40 CFR

372.85(b)(11);

((C)) A mixture component identity if the chemical identity is not

known; and

((D)) An estimate of total air emissions, in pounds, for the

relevant time period of DER generation. Releases of less than 1,000

pounds may be indicated in ranges.

(3) Certification Under Penalty of Law. Any Notice and

Certification of Generation submitted pursuant to this subsection shall

contain certification under penalty of law by a responsible official of

the generator source of truth, accuracy and completeness. This

certification shall state that based on information and belief formed

after reasonable inquiry, the statements and information in the

document are true, accurate and complete.

V. DER Use

(A) Time of Acquisition. DER's may not be used unless they are

acquired by the user source before the compliance period for which the

specific DER's are to be used.

(B) Sufficiency. The user source must hold sufficient DER's to

cover its compliance obligation at all times.

(1) For sources subject to the requirement to obtain a permit under

a Federally approved operating permit program, the permit, when issued

or revised, shall authorize the use of DER's for compliance purposes.

(2) The Notices of Intent to Use DER's and Notice and Certification

of Use shall be stored with the user source's operating permit, if

applicable.

(D) Environmental Contribution. At the time of use, DER users shall

permanently retire ten percent of all DER's dedicated to that

particular use. That is, the amount of DER's required to demonstrate

compliance equals the source's calculated need divided by 0.9.

(E) Compliance Calculation. The amount of DER's needed to

demonstrate compliance shall be the difference between--

(1) The actual emissions expressed in units of mass or the

alternative limit under which the source will operate, and

(2) The allowable emissions based on actual activity levels

expressed in units of mass.

(F) Notice of Intent to Use DER's.

(1) General Rule. DER's may be used only if the owner or operator

of the user source submits to [State authority] a Notice of Intent to

Use DER's. The Notice of Intent to Use DER's shall be submitted at

least 30 days before the intended use period begins, and at least

annually if the use period is greater than one year. The Notice of

Intent to Use DER's shall be made publicly available pursuant to

section VII(B).

(2) Required Information. The Notice of Intent to Use DER's shall

include the following information submitted on [State form ________]:

(a) The name and location of the user.

(b) The emissions unit or application name, the permit or

identification number (if applicable), and the applicable pollutant.

will be used to comply with and the intended use period.

(d) A copy of the Notice and Certification of Generation submitted

by the generator source to the State.

(e) The emission quantification protocols that will be used to

document the amount of DER's needed to demonstrate compliance.

(f) For each source subject to reporting toxic chemical releases

for the Community Right-to-Know provisions under 40 CFR part 372, the

estimated amount of hazardous air pollutants expected to be emitted to

the air as the result of the use of the DER's to meet the otherwise

applicable requirements. The estimated amount shall include expected

emissions increases and any expected forgone emission reductions due to

use of the DER's instead of non-DER compliance with otherwise

applicable requirements. The same procedures shall be followed as for

the similar requirements under the Notice and Certification of

Generation (see section IV(C)(2)(j)).

(G) Notice and Certification of Use.

(1) General Rule. The owner or operator of a user source shall

submit to [State authority] a Notice and Certification of Use that

contains the information described in paragraph (2) of this subsection

within 90 days after the end of the use period or one year after the

beginning of the use period, whichever is sooner. The owner or operator

of a user source shall provide the required information for each

increment of DER's used over a time period not to exceed one year. The

Notice and Certification of Use shall be made publicly available

pursuant to section VII(B).

(2) Required Information. The Notice and Certification of Use shall

include the following information submitted on [State form ________]:

(a) The name and location of the owner or operator of the user

source.

(b) The date(s) on which the DER's were acquired.

assigned by the [State authority].

(d) The use period.

(e) The applicable State and Federal requirements that the DER's

were used to comply with.

(f) The emissions quantification protocols that were used to

calculate the amount of DER's required to demonstrate compliance and

documentation for the compliance calculation under subsection (E) of

this section.

(g) A statement that due diligence was made to verify that the

DER's were not previously used, not generated as a result of actions

prohibited under this regulation or other provisions of law.

(h) A statement that the DER's were not used in a manner prohibited

under this regulation or other provisions of law.

(i) A copy of the relevant Notice and Certification of Generation.

(j) For each source subject to reporting toxic chemical releases

for the Community Right-to-Know provisions under 40 CFR part 372, the

estimated amount of hazardous air pollutants emitted to the air as the

result of the use of the DER to meet otherwise applicable requirements.

The estimated amount shall include emissions increases and any forgone

emission reductions due to use of DER's instead of non-DER compliance

with otherwise applicable requirements. The same procedures shall be

followed as the similar requirement under the Notice and Certification

of Generation (see section IV(C)(2)(j)).

(3) Certification Under Penalty of Law. Any Notice and

Certification of Use submitted pursuant to this regulation shall

contain certification under penalty of law by a responsible official of

truth, accuracy and completeness. This certification shall state that

based on information and belief formed after reasonable inquiry, the

statements and information in the document and in referenced documents

attached are true, accurate and complete.

(H) Use Limitations. DER's may not be used--

(1) Before acquisition by the user of the DER's;

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(2) For netting or other means to avoid the applicability of NSR

requirements;

(3) For NSR offsets or conformity purposes unless the requirements

of section IX are met;

(4) To meet Act requirements for new source performance standards

(NSPS) under section 111; lowest achievable emission rate (LAER)

standards under section 173(a)(2); best available control technology

(BACT) standards under section 165(a)(4); hazardous air pollutant (HAP)

standards under section 112; standards for solid waste combustion under

section 129; requirements for a vehicle inspection and maintenance

program under sections 182(b)(4) or (c)(3); requirements for an

employer trip reduction program under section 182(d)(1)(B); ozone

control standards set under section 183; clean fueled fleet

requirements under section 246; motor vehicle emissions standards under

section 202; standards for nonroad vehicles under section 213;

requirements for reformulated gasoline under section 211(k); or

requirements for Reid vapor pressure standards under section 211(h) and

(i);

(5) State motor vehicle emission standards;

(6) To meet requirements for one class of tropospheric ozone

precursor by using DER's generated in a different class of tropospheric

ozone precursors (e.g., NOX reductions may not be exchanged for

VOC increases, or vice-versa);

(7) To meet requirements during an ozone season unless the DER was

generated during an ozone season; or

(8) To meet requirements contained in Title IV of the Act.

VI. Geographic Scope of Trading

(A) General Rule. (1) In using DER's, user sources must comply with

the requirements of this subsection (A) and the geographic limitations

described in subsection (B).

(2) DER use must be consistent with modeling analyses contained in

an approved SIP; however, each DER use is not required to be supported

by a modeling analysis specific to such use.

(3) No provision of this section shall be construed to authorize

use of DER's in a manner that interferes with any applicable

requirement of the Act.

(B) Geographic Scope. (1) NOX DER's. (a) NOX DER's may be

used in the same SIP modeling domain in which they were generated.

(b) NOX DER's generated inside a nonattainment or maintenance

area may be used outside a nonattainment area, maintenance area, or

modeling domain.

(2) VOC DER's.

(a) VOC DER's may be used in a nonattainment or maintenance area

only if they were generated in the same nonattainment or maintenance

area.

(b) VOC DER's may be used in an attainment area that is not a

maintenance area.

may be used outside a nonattainment area, maintenance area, or modeling

domain.

State in which they were generated if authorized representatives of the

two States approve a binding interstate agreement that is approved by

USEPA as a SIP revision for each State, and that contains at least the

following provisions that apply to each DER use:

(1) The authority of the State where the generator source is

located agrees to provide the authority of the State where the user

source is located with all relevant information concerning the

generator source and the DER generation including, but not limited to,

emission limitations and permits issued to the generator source, if

any, as well as the Notice and Certification of Generation and

supporting documentation, in a timely manner;

(2) The authority of the State where the user source is located

agrees to provide the state where the generator source is located with

all relevant information, including the Notice of Intent to Use DER's

and the Notice and Certification of Use and supporting documentation,

in a timely manner;

(3) The authority of the State where the generator source is

located agrees to notify the authority of the State where the user

source is located as to whether the DER has been used previously; and

(4) The authorities of the States where the user and generator

sources are located agree to enforce their individual State emission

requirements as modified by any valid emissions trades.

VII. Recordkeeping and Public Availability

(A) Recordkeeping. The generator source shall adequately document

the protocol and specific data by which a DER is quantified. Generator

sources shall transfer all such documentation to any transferee at the

time that ownership of a DER is transferred. The user source shall

document the protocol and specific data by which the amount of DER's

needed for compliance was determined. The user source shall maintain

all relevant documentation for a minimum of five years after a DER is

used for compliance. Records shall be kept with at least the same

frequency as required for the underlying requirement.

(B) Public Availability. All information submitted to the State for

compliance with this rule shall be available to the public under

[insert relevant State law pertaining to public availability of data].

This information shall not be considered confidential business

information.

(1) The [State official] will make all notices submitted by sources

pursuant to this rule available for public review. For sources with

operating permits, the [State official] will attach copies of these

notices to the copy of the operating permit retained in the State

offices. For sources that do not have operating permits, the [State

official] will make these notices available in a similar manner [Cite

of State rule.]

(2) The sources shall make all documentation that supports the

notices submitted to the State as part of this rule available to the

public (``pursuant to [applicable State regulation'', if applicable]).

VIII. Protocol Development and Approval

(A) General Rule. To quantify the amount of DER's generated and the

amount needed for compliance, sources shall use quantification

protocols in accordance with the requirements of this section.

(B) USEPA-Approved Protocols (Option 1). [Option 1 or Option 2 will

be selected for the final model rule.]

(1) If a USEPA-approved protocol exists for a given application, it

may be used.

(2) If a credit generator wishes to deviate to some extent from an

approved protocol, or develop a new protocol, the generator must do so

in accordance with guidance set forth by USEPA. The USEPA approval need

not be obtained in advance, however, USEPA reserves the right to reject

the protocol and any resulting credits whether or not the protocol was

followed.

be selected for the final model rule.]

(1) If an EPA-approved quantification protocol exists for a given

application, it must be used.

(2) If a credit generator wishes to deviate to some extent from an

approved protocol, the credit generator must obtain advance approval

from USEPA.

(3) If an approved protocol does not exist, a new protocol shall be

designed with the participation of affected parties according to a

guidance set forth by USEPA. The USEPA approval need not be obtained in

advance, however, USEPA reserves the right to reject the

[[Page 44296]]

protocol and any resulting credits whether or not the protocol was

followed.

credible, workable, enforceable, and replicable and must include each

of the following elements:

(1) A description of the calculation methods used for determining

the reductions achieved by the emissions controls as implemented;

(2) Estimates of the accuracy of the appropriate USEPA test method,

if available, not to exceed some given value;

(3) A description of the recordkeeping program that permits

verification of production, materials used, and use of control

equipment;

(4) The USEPA test methods where available; and

(5) A requirement for complete, verifiable records on production,

materials used and use of control equipment.

(D) Emission Quantification Methods. A protocol may contain the

following:

(1) Emission quantification methods contained in an applicable

Federally approved operating permit; or

(2) Emission quantification methods approved in the applicable SIP.

IX. DER Use for NSR and Conformity Purposes

(A) General Rule. All DER's used to meet--

(1) NSR offset requirements shall comply with the requirements of

section 173 of the Act and 40 CFR 51.165(a) including the requirements

of subsection (B) of this section.

(2) Conformity requirements shall comply with 40 CFR part 51,

subparts T and W and part 93 subparts A and B.

(B) Specific Requirements for NSR.

(1) The State must approve the use of specific DER's that cover at

a minimum 1 year of operation of the new or modified source in the NSR

permit.

(2) The NSR permit must contain an enforceable requirement that the

source obtain at least one additional year of offsets before continuing

operation in each subsequent year.

(3) The NSR permit must contain an enforceable commitment that

before receiving any operating permit or permit renewal, the operating

permit must contain an enforceable condition that the source must

obtain offsets for each subsequent year before continuing to operate in

each subsequent year.

X. Program Audits

(A) Beginning no later than [insert the next ROP milestone year or

date 3 years after State adoption of this rule] and at least every 3

years thereafter (coinciding with the periodic inventory submittals

required under section 182 of the Act), the [State authority] shall

audit this program to evaluate at a minimum, the following program

elements:

(1) Amount and timing of emission reductions (e.g., DER's used

compared to DER's generated in a given year or ozone season);

(2) Compliance by generators and users;

(3) The effect of the program on temporal and spatial assumptions

in the attainment demonstration, and ROP plans;

(4) The effects of remedial measures, if applicable, implemented as

a result of previous audit findings.

(5) The effects on toxic emissions from operation of this rule.

(B) As determined by the [State authority], the [State authority]

shall institute remedial measures to the extent necessary.

USEPA, and available for public inspection within one year after the

audit begins.

XI. Enforcement

(A) Compliance Burden.

(1) The DER user source is responsible for assuring that the

generation and use of DER's comply with this rule.

(2) The DER user source (not the enforcing authority) bears the

burden of proving that DER's used are valid and sufficient and that the

DER use meets all applicable requirements of this rule. The DER user

source is responsible for compliance with its underlying obligations.

In the event of enforcement against the user source for non-compliance,

it shall not be a defense for the purpose of determining civil

liability that the user source relied in good faith upon the generator

source's representations.

(B) Violation Day Definition for User Source Excess Emissions.

Section 113(b) of the Act authorizes a maximum civil penalty of $25,000

per day for each violation. For purposes of this regulation, the number

of days of violation associated with improper DER use or insufficient

DER quantity shall be the number of consecutive days with insufficient

DER quantity after taking into account DER's used to offset excess

emissions (converted to units of mass) on a consecutive day basis. If a

user is unable to document actual emissions rate on a daily basis, the

number of days of violation shall include every day since the beginning

of the use period during which there was insufficient DER's. Failure to

keep adequate records is equivalent to a lack of creditable DER's.

Dated: August 16, 1995.

Mary D. Nichols,

Assistant Administrator for Air and Radiation.

[FR Doc. 95-21168 Filed 8-24-95; 8:45 am]

BILLING CODE 6560-50-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.