Acid Rain Program: Revisions to Sulfur Dioxide Opt-Ins

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 74

[FRL-5996-6]

RIN 2060-AH36

Acid Rain Program: Revisions to Sulfur Dioxide Opt-Ins

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Title IV of the Clean Air Act, as amended by Clean Air Act

Amendments of 1990, (``Act'') authorizes the Environmental Protection

Agency (``EPA'' or ``Agency'') to establish the Acid Rain Program. The

purpose of the Acid Rain Program is to significantly reduce emissions

of sulfur dioxide and nitrogen oxides from electric generating plants

in order to reduce the adverse health and ecological impacts of acidic

deposition (or acid rain) resulting from such emissions. This final

rule is intended to promote participation in the title IV opt-in

program by clarifying existing regulations, allowing a limited

exception to the general rule of one designated representative for all

affected units at a source, revising the conditions under which the

Agency may cancel current-year allowance allocations, and allowing

thermal energy plans to be effective on a quarterly basis.

DATES: This rule is effective May 18, 1998.

Judicial Review. Under section 307(b)(1) of the Act, judicial

review of this rule is available only by filing a petition for review

in the U.S. Court of Appeals for the District of Columbia Circuit

within 60 days of today's publication of these final rule revisions.

Under section 307(b)(2) of the Act, the requirements that are the

subject of today's document may not be challenged in civil or criminal

proceedings brought by the EPA to enforce these requirements.

ADDRESSES: Docket. Docket No. A-97-23, containing supporting

information used to develop the rule is available for public inspection

and copying from 8:00 a.m. to 5:30 p.m., Monday through Friday,

excluding legal holidays, at EPA's Air Docket Section (6102), Waterside

Mall, Room M1500, 1st Floor, 401 M Street, SW, Washington D.C. 20460.

FOR FURTHER INFORMATION CONTACT: Kathy Barylski at (202) 564-9074, Acid

Rain Division (6204J), U.S. Environmental Protection Agency, 401 M St.,

SW, Washington, D.C. 20460; or

[[Page 18838]]

the Acid Rain Hotline at (202) 564-9620. Electronic copies of this

rulemaking can be accessed through the Acid Rain Division website at

www.epa.gov/acidrain.

SUPPLEMENTARY INFORMATION:

I. Affected Entities

II. Background

III. Part 74: Opt-Ins

A. Designated Representative

B. Thermal Energy Plans

C. Deduction of Allowances from ATS Accounts

D. Miscellaneous

IV. Administrative Requirements

A. Executive Order 12866

B. Unfunded Mandates Act

C. Paperwork Reduction Act

D. Regulatory Flexibility

E. Submission to Congress and the General Accounting Office

I. Affected Entities

Entities potentially affected by this action are fossil fuel fired

boilers or turbines that serve generators producing electricity,

generate steam, or cogenerate electricity and steam. Regulated

categories and entities include:

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Category Examples of regulated entities

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Industry............................ Electric service providers,

boilers from a wide range of

industries.

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This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities potentially affected by this

action. This table lists the types of entities that EPA is now aware

could potentially be affected by this action. Other types of entities

not listed in the table could also be affected. To determine whether

your facility is affected by this action, you should carefully examine

the applicability criteria in Sec. 74.2 of title 40 of the Code of

Federal Regulations and the revised Secs. 72.6, 72.7, 72.8, and 72.14

(62 FR 55460, 55476-80, October 24, 1997). If you have questions

regarding the applicability of this action to a particular entity,

consult the person listed in the preceding FOR FURTHER INFORMATION

CONTACT section.

II. Background

The overall goal of the Acid Rain Program is to achieve significant

environmental benefits through reductions in emissions of sulfur

dioxide (SO2) and nitrogen oxides (NOX), the

primary precursors of acid rain. To achieve this goal at the lowest

cost to society, the program employs both traditional and innovative,

market-based approaches for controlling air pollution. In addition, the

program encourages energy efficiency and promotes pollution prevention.

The Acid Rain Program departs from traditional regulatory methods

by introducing an SO2 allowance trading system that lowers

the cost of reducing emissions by allowing electric utilities to seek

out the least costly methods of control. Affected utility units under

title IV of the Act are allocated allowances based on formulas in the

Act. These units may trade allowances, provided that at the end of each

year, each unit holds enough allowances to cover its annual

SO2 emissions.

Although the Acid Rain Program is mandated only for utility

sources, section 410 provides opportunities for SO2-emitting

sources not otherwise affected by title IV requirements (e.g.,

industrial sources) to participate through the opt-in program. Entry of

sources into the opt-in program is voluntary. Opt-in sources are

allocated allowances and, by making cost-effective emissions reductions

so that their allowance allocations will exceed their emissions, will

have allowances that may be sold in the SO2 allowance

trading system. These allowances provide greater compliance flexibility

for affected units.

In 1995, EPA issued final opt-in regulations implementing section

410 (60 FR 17100, April 4, 1995). On June 5, 1995, an owner of several

potential opt-in sources filed a petition for review of the existing

opt-in regulations. The litigation was settled on January 9, 1997. On

September 25, 1997, EPA proposed opt-in regulation revisions, several

of which resulted from that settlement.

III. Part 74: Opt-Ins

A. Designated Representative

Under the existing opt-in rule, combustion or process sources

located at the same source as affected units are required to have the

same designated representative as the affected utility units. See 40

CFR 74.4(b). (Hereinafter, this requirement is referred to as the

``single-designated-representative requirement''.) Based on comments

and settlement of litigation on the issue, EPA proposed to establish a

procedure for nonutility combustion or process sources located with

affected utility units to elect an exception to the single-designated-

representative requirement.

One comment was received on this proposed revision.1 The

commenter, who is a party to the January 9, 1997 opt-in rule

settlement, generally supported allowing a separate designated

representative for opt-in sources at the same source as affected

utility units. However, the commenter objected to certain language in

the proposed rule.

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\1\ One comment received during the comment period for the

proposed opt-in revisions addressed a number of matters, but did not

comment on any of the proposed opt-in revisions. The comment is

therefore outside the scope of this rulemaking.

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The proposed rule required that, in order to use the separate

designated representative provision, a combustion source must have ``no

owner of which the principal business is the sale, transmission, or

distribution of electricity or that is a public utility under the

jurisdiction of a State or local utility regulatory commission.'' The

commenter claimed that the language concerning the principal business

of the combustion source owner would bar a combustion source owned by a

wholly-owned electric generating subsidiary of an industrial company

from using the provision but would allow use of the provision if the

source was instead directly owned by the industrial company. According

to the commenter, the use of ``separate corporate forms'' should not

have this effect on the ability to have a separate designated

representative. The commenter also claimed that, even if a State

utility regulatory authority did not currently regulate the wholly-

owned electric generating subsidiary, the State authority might assert

jurisdiction sometime in the future, thereby preventing use of the

provision.

In light of the commenter's objections and in order to reduce the

complexity of the separate designated representative provision, EPA is

revising, in today's final rule, the proposed provision. On one hand,

as discussed in the proposal, the provision is intended to encourage

nonutility opt-ins by allowing a nonutility opt-in source located at

the same source as utility units to select a different designated

representative than the utility units. 62 FR 50457. Because a

nonutility opt-in source is part of industrial operations (e.g.,

produces electricity for use in the owner's industrial facilities), the

owner is more likely to have heightened concern about competitive

disadvantage and maintaining the confidentiality of information about

the opt-in source and related industrial operations. Having a single

designated representative for a nonutility opt-in source and utility

units may make information (e.g., the industrial company's electricity

generating costs and processes using electricity) available to the

designated representative, who may be an employee of the utility owner.

On the other hand, as discussed in the proposal, EPA believes that

generally opt-in sources should face the same requirements as other

affected units. Id.; see also 58 FR 50088, 50090-91,

[[Page 18839]]

September 24, 1993. Balancing the importance of imposing consistent

requirements on opt-in sources and utility units against the desire to

encourage industrial opt-ins, EPA concludes that it should allow only a

limited exception--applicable in a few cases--to the single-designated-

representative requirement. While the proposal carved out a limited

exception using a test focused on the owner (i.e., the nature of, and

regulatory jurisdiction over, the owner's principal business) of the

opt-in sources, EPA maintains that a simpler approach is available,

i.e., one focused on the opt-in source itself. The Acid Rain

regulations specifically address four categories of combustion sources

that are unaffected units and that therefore may qualify as opt-in

sources: (1) combustion devices that have not served, and do not serve,

generators producing electricity for sale; (2) simple combustion

turbines that commenced operation before November 15, 1990; (3)

combustion devices that commenced commercial operation before November

15, 1990 and that have served, and serve, only generators of 25 MWe or

less producing electricity for sale; and (4) cogeneration, qualifying,

independent power production, or solid waste incineration facilities

that meet certain requirements. See 40 CFR 72.6(b) (explaining the

categories of unaffected units) and 74.2 (stating that affected units

under Sec. 72.6 are not eligible to be opt-in sources). The limited

exception to the single-designated-representative requirement is aimed

at the first category of combustion source, i.e., units that are part

of industrial, not utility operations. No commenter has suggested that

the exception should be extended to any other categories of combustion

sources.

EPA notes, in addition, that sources other than those in the first

category would generally not be eligible for the exception as

originally proposed because they would most likely be part of utility

operations and the proposal barred sources whose owners are principally

in the business of selling, transmitting, or distributing electricity

or are subject to State or local utility regulation. Moreover, for the

reasons discussed above, EPA maintains that it should limit the

exception to the clearest cases where the single-designated-

representative requirement may inhibit entry into, or continued

participation in, the opt-in program: i.e., the few cases where an opt-

in source is co-located with utility units and is involved in

industrial, rather than utility (i.e., electricity sales), operations.

Consequently, today's final rule limits the use of the exception to

a combustion source (or process source) that, on the date on which the

source's initial opt-in application is submitted and thereafter, does

not serve a generator producing electricity for sale. Such a combustion

or process source that is located at the same source as affected

utility units may elect to have a different designated representative

than the utility units. For example, a combustion source that is owned

by an industrial company and that is used exclusively to generate

electricity for use in the industrial company's industrial facilities

could qualify for the exception to the single-designated-representative

requirement. Similarly, such a combustion source could qualify even if

it is owned by the wholly-owned subsidiary of the industrial company,

instead of being owned directly by the industrial company. This

approach in today's final rule meets the commenter's concerns that the

corporate form of ownership of the source, or law concerning the

jurisdiction of the State utility regulatory commission, not change the

applicability of the exception to a combustion source that would

otherwise qualify for the exception.

With the approach of basing the exception on the fact that a

combustion source is not, as of the submission of the initial opt-in

permit application and thereafter, serving a generator producing

electricity for sale, it is necessary to include a provision for

termination of the exception if and when that requirement is no longer

met in the future. Today's final rule therefore provides for automatic

termination of the election of the exception when the requirements for

election are no longer met and requires submission of a superseding

certificate of representation consistent with single-designated-

representative requirement for all affected units at a given source.

This is analogous to the automatic termination provisions for other

exceptions under the Acid Rain Program. See 40 CFR 72.7(f)(4) (new

units exemption) 72.8(d)(6), (retired units exemption), and 72.14(d)(4)

(industrial utility-units exemption).

B. Thermal Energy Plans

The existing opt-in rule allows combustion sources to become opt-in

sources at the beginning of any calendar quarter, not only at the

beginning of a calendar year. See 40 CFR 74.28. However, in the

proposed revisions to the rule, EPA noted that the thermal energy

provision at Sec. 74.47 only provided for calendar year plans.

Therefore, EPA proposed revisions to allow (and take account of the

possibility of) the submission of thermal energy plans at the beginning

of any calendar quarter. No comments were received on these proposed

revisions. With one exception, EPA has finalized the proposed revisions

for the reasons stated in the proposal.

The only change, in today's final rule, to the proposed revisions

is that EPA is not adopting the proposed revisions to paragraph

(a)(3)(vii) of Sec. 74.47. The existing rule requires the thermal

energy plan to include the ``allowable SO2 emissions rate''

for the calendar year in which the plan will take effect. In Sec. 72.2,

``allowable SO2 emissions rate'' is defined as the ``most

stringent federally enforceable emissions limitation for sulfur dioxide

* * * for the specified calendar year''. 40 CFR 72.2. The proposal

added references in Sec. 74.47(a)(3)(vii) to the allowable

SO2 emissions rate for the calendar year and month for which

the thermal energy plan will take effect. This change would be

inconsistent with the above-quoted definition in Sec. 72.2 and so is

not being adopted.

As already provided in the existing rule, if more than one

federally enforceable emissions limitation applies during the year, the

allowable SO2 emission rate in Sec. 74.47(a)(3)(vii) will be

the most stringent of these limits.

C. Deduction of Allowances From ATS Accounts

For any affected unit, including an opt-in source, EPA draws upon

future-year allowances in the affected unit's Allowance Tracking System

(ATS) account to offset excess emissions for a year for which

compliance is being determined. See 40 CFR 77.5. However, under the

existing opt-in rule, when the opt-in source shuts down, is

reconstructed, becomes an affected unit under Sec. 72.6, or fails to

renew its opt-in permit, EPA eliminates future-year allowance

allocations (40 CFR 74.46) and retains the option of canceling current-

year opt-in allowance allocations (including allowances that have been

transferred to other ATS accounts) in order to offset excess emissions

or account for the termination of participation in the opt-in program

(40 CFR 74.50). As proposed, EPA is revising the rule to provide that

an opt-in allowance may not be deducted under Sec. 74.50(a) from any

ATS account, other than the account of the opt-in source allocated such

allowance, (i) after EPA has completed the process of recordation as

set forth in Sec. 73.34(a) following the deduction of allowances from

the opt-in source's compliance subaccount for the year for which such

allowance may first be used or (ii) if the

[[Page 18840]]

opt-in source claims in an annual compliance certification report an

estimated reduction in heat input from improved efficiency, under

Sec. 74.44(a)(1)(B), after EPA has completed action on the confirmation

report concerning such claimed reduction pursuant to

Secs. 74.44(c)(2)(iii)(E)(3)-(E)(5) for the year for which such

allowance may first be used. No comments were received on this

revision, and, for the reasons stated in the proposal, the revision is

adopted as proposed.

D. Miscellaneous

EPA proposed a number of modifications and corrections to the

combustion source opt-in rules to reflect changes in the Acid Rain

Program and operating permits program under title V of the Clean Air

Act since the publication of the final opt-in rule on April 4, 1995. In

particular, the Agency has finalized the operating permits rule in part

71 and the Acid Rain permit rule in part 72. The proposed modifications

and corrections were described in the ``Miscellaneous'' section of the

preamble to the proposal. No comments were received, and the proposed

changes are adopted as final.

IV. Administrative Requirements

A. Executive Order 12866

Under Executive Order 12866, 58 FR 51735, October 4, 1993, the

Administrator must determine whether a regulatory action is

``significant'' and therefore subject to Office of Management and

Budget (OMB) review and the requirements of the Executive Order. The

order defines ``significant regulatory action'' as one that is likely

to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

(2) create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or

(4) raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

Pursuant to the terms of Executive Order 12866, it has been

determined that this rule is not a ``significant regulatory action.''

As such, this action is not subject to the requirements of the order

and was not submitted to OMB for review.

B. Unfunded Mandates Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded

Mandates Act'') requires that the Agency prepare a budgetary impact

statement before promulgating a rule that includes a federal mandate

that may result in expenditure by State, local, and tribal governments,

in aggregate, or by the private sector, of $100 million or more in any

one year. Section 203 requires the Agency to establish a plan for

obtaining input from and informing, educating, and advising any small

governments that may be significantly or uniquely affected by the rule.

Under section 205 of the Unfunded Mandates Act, the Agency must

identify and consider a reasonable number of regulatory alternatives

before promulgating a rule for which a budgetary impact statement must

be prepared. The Agency must select from those alternatives the least

costly, most cost-effective, or least burdensome alternative that

achieves the objectives of the rule, unless the Agency explains why

this alternative is not selected or the selection of this alternative

is inconsistent with law.

Because this rule is estimated to result in the expenditure by

State, local, and tribal governments or the private sector of less than

$100 million in any one year, the Agency has not prepared a budgetary

impact statement or specifically addressed the selection of the least

costly, most cost-effective, or least burdensome alternative. Because

small governments will not be significantly or uniquely affected by

this rule, the Agency is not required to develop a plan with regard to

small governments.

The revisions to part 74 will not have a significant or unique

effect on any regulated entities or State permitting authorities.

Moreover, the revisions potentially reduce the burden on certain opt-in

sources, by allowing the election of a separate designated

representative and by allowing thermal energy plans to begin on the

calendar quarter. Also, the revisions potentially reduce the burden on

the utility sector by limiting when EPA may deduct allowances from ATS

accounts.

C. Paperwork Reduction Act

These revisions to the opt-in rule would not impose any new

information collection burden. OMB has previously approved the

information collection requirements contained in the opt-in rules, 40

CFR part 74, under the provisions of the Paperwork Reduction Act, 44

U.S.C. 3501, et seq. and has assigned OMB control number 2060-0258. 60

FR 17111.

Burden means the total time, effort, or financial resources

expended by persons to generate, maintain, retain, or disclose or

provide information to or for a Federal agency. This includes the time

needed to: review instructions; develop, acquire, install, and utilize

technology and systems for the purposes of collecting, validating, and

verifying information, processing and maintaining information, and

disclosing and providing information; adjust the existing ways to

comply with any previously applicable instructions and requirements;

train personnel to be able to respond to a collection of information;

search data sources; complete and review the collection of information;

and transmit or otherwise disclose the information.

Copies of the original ICR may be obtained from Sandy Farmer, OPPE

Regulatory Information Division, U.S. Environmental Protection Agency,

401 M St. SW. (2137), Washington, D.C. 20460 or by calling (202) 260-

2740.

D. Regulatory Flexibility

EPA has determined that it is not necessary to prepare a regulatory

flexibility analysis in connection with this final rule. EPA has also

determined that this rule will not have a significant economic impact

on a substantial number of small entities. In the preamble of the April

4, 1995 opt-in rule, the Administrator certified that the rule,

including the provisions revised by today's rule, would not have a

significant economic impact on small entities. 60 FR 17111. Today's

revisions are not significant enough to change the overall economic

impact addressed in the April 4, 1995 preamble. Moreover, as discussed

above, the revisions provide regulated entities with additional

flexibility (e.g., the option to have a separate designated

representative and to have a thermal energy plan that begins in the

second, or later, quarter of the year).

E. Submission to Congress and the General Accounting Office

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the

Small Business Regulatory Enforcement Fairness Act of 1996, generally

provides that before a rule may take effect, the agency promulgating

the rule must submit a rule report, which includes a copy of the rule,

to each House of the Congress and to the Comptroller General of the

United States. EPA will submit a

[[Page 18841]]

report containing this rule and other required information to the U.S.

Senate, the U.S. House of Representatives, and the Comptroller General

of the United States prior to publication of the rule in the Federal

Register. This rule is not a ``major rule'' as defined by 5 U.S.C.

804(2).

List of Subjects in 40 CFR Part 74

Environmental protection, Acid rain, Air pollution control,

Reporting and recordkeeping requirements, Sulfur oxides.

Dated: April 9, 1998.

Carol M. Browner,

Administrator.

For the reasons set forth in the preamble, 40 CFR part 74 is

amended as set forth below.

PART 74--[AMENDED]

1. The authority citation for part 74 continues to read as follows:

Authority: 42 U.S.C. 7601 and 7651, et seq.

Sec. 74.3 [Amended]

2. Section 74.3 is amended by:

i. In paragraph (b), revising the words ``parts 70 and 72'' to read

``parts 70, 71, and 72'';

ii. In paragraph (b), revising the words ``part 70'' to read

``parts 70 and 71''; and

iii. Adding at the end of paragraph (d) the words ``,consistent

with subpart E of this part.''

3. Section 74.4 is amended by adding paragraph (c) to read as

follows:

Sec. 74.4 Designated representative.

* * * * *

(c)(1) Notwithstanding paragraph (b) of this section, a certifying

official of a combustion or process source that is located at the same

source as one or more affected utility units and that, on the date on

which an initial opt-in permit application is submitted for such

combustion or process source and thereafter, does not serve a generator

that produces electricity for sale may elect to designate, for such

combustion or process source, a different designated representative

than the designated representative for the affected utility units.

(2) In order to make such an election, the certifying official

shall submit to the Administrator, in a format prescribed by the

Administrator: a certification that the combustion or process source

for which the election is made meets each of the requirements for

election in paragraph (c)(1) of this section; and a certificate of

representation for the designated representative of the combustion or

process source in accordance with Sec. 72.24 of this chapter. The

Administrator will rely on such certificate of representation in

accordance with Sec. 72.25 of this chapter, unless the Administrator

determines that the requirements for election in paragraph (c)(1) of

this section are not met. If, after the election is made, the

requirements for election in paragraph (c)(1) of this section are no

longer met, the election shall automatically terminate on the first

date on which the requirements are no longer met and, within 30 days of

that date, a certificate of representation for the designated

representative of the combustion or process source shall be submitted

consistent with paragraph (b) of this section.

Sec. 74.10 [Amended]

4. Section 74.10 is amended by, in paragraph (a)(2), revising the

word ``Sec. 74.62'' to read ``Sec. 75.20 of this chapter''.

Sec. 74.14 [Amended]

5. Section 74.14 is amended by:

i. In paragraph (b) introductory text, revising the words ``part

70'' to read ``parts 70 and 71''; and

ii. In paragraph (b)(6)(ii), revising the word ``approved'' to read

``approved for operating permits''.

Sec. 74.16 [Amended]

6. Section 74.16 is amended by, in paragraph (a)(12), adding the

words ``and does not have an exemption under Sec. 72.7, Sec. 72.8, or

Sec. 72.14 of this chapter'' before the semicolon.

Sec. 74.18 [Amended]

7. Section 74.18 is amended by:

i. In paragraph (d), revising the words ``Sec. 74.46(c)'' to read

``Sec. 74.46(b)(2)''; and

ii. Removing the last sentence from paragraph (e).

Sec. 74.22 [Amended]

8. Section 74.22 is amended by, in paragraph (c)(2), revising the

words ``Sec. 74.20(a)(2)(A)'' to read ``Sec. 74.20(a)(2)(i)''.

Sec. 74.26 [Amended]

9. Section 74.26 is amended by, in paragraph (a)(2), revising the

words ``in which'' to read ``for which''.

Sec. 74.42 [Amended]

10. Section 74.42 is amended by removing from paragraph (a) the

word ``(a)''.

Sec. 74.44 [Amended]

11. Section 74.44 is amended by:

i. In paragraph (a)(1)(i)(G), revising the words ``demand side

measures that improve the efficiency of electricity or steam

consumption'' to read ``specific measures'';

ii. In paragraph (a)(2)(i), removing the words ``or for the first

two calendar years after the effective date of a thermal energy plan

governing an opt-in source in accordance with Sec. 74.47 of this

chapter'';

iii. In paragraph (a)(2)(iii), adding the words ``of this section''

after the word ``(a)(2)(ii)'';

iv. In paragraph (c)(2)(ii)(B)(1), revising the words ``opt-in

sources.'' to read ``opt-in sources and Phase I units.'';

v. In paragraph (c)(2)(iii)(F), revising the formula to read as

follows:

[GRAPHIC] [TIFF OMITTED] TR16AP98.027

vi. In paragraph (c)(2)(iii)(F), revising the words `` `Allowances

allocated' shall be the original number of allowances allocated under

section Sec. 74.40 for the calendar year.'' to read `` `Allowances

allocated or acquired' shall be the number of allowances held in the

source's compliance subaccount at the allowance transfer deadline plus

the number of allowances transferred for the previous calendar year to

all replacement units under an approved thermal energy plan in

accordance with Sec. 74.47(a)(6).''; and

vii. In paragraph (c)(2)(iii)(E)(3), revising the words

``allowances necessary'' to read ``allowances that he or she determines

is necessary''.

12. Section 74.47 is amended by:

i. Adding in paragraph (a)(3)(i), after the word ``year'' in each

place it appears, the word ``and quarter''; and

[[Page 18842]]

ii. Revising paragraphs (a)(1), (a)(3)(viii), (a)(3)(ix),

(a)(3)(x), (a)(3)(xi), (a)(3)(xii), and (a)(4) to read as follows:

Sec. 74.47 Transfer of allowances from the replacement of thermal

energy--combustion sources.

(a) Thermal energy plan. (i) General provisions. The designated

representative of an opt-in source that seeks to qualify for the

transfer of allowances based on the replacement of thermal energy by a

replacement unit shall submit a thermal energy plan subject to the

requirements of Sec. 72.40(b) of this chapter for multi-unit compliance

options and this section. The effective period of the thermal energy

plan shall begin at the start of the calendar quarter (January 1, April

1, July 1, or October 1) for which the plan is approved and end

December 31 of the last full calendar year for which the opt-in permit

containing the plan is in effect.

* * * * *

(3) * * *

(viii) The estimated annual amount of total thermal energy to be

reduced at the opt-in source, including all energy flows (steam, gas,

or hot water) used for any process or in any heating or cooling

application, and, for a plan starting April 1, July 1, or October 1,

such estimated amount of total thermal energy to be reduced starting

April 1, July 1, or October 1 respectively and ending on December 31;

(ix) The estimated amount of total thermal energy at each

replacement unit for the calendar year prior to the year for which the

plan is to take effect, including all energy flows (steam, gas, or hot

water) used for any process or in any heating or cooling application,

and, for a plan starting April 1, July 1, or October 1, such estimated

amount of total thermal energy for the portion of such calendar year

starting April 1, July 1, or October 1 respectively;

(x) The estimated annual amount of total thermal energy at each

replacement unit after replacing thermal energy at the opt-in source,

including all energy flows (steam, gas, or hot water) used for any

process or in any heating or cooling application, and, for a plan

starting April 1, July 1, or October 1, such estimated amount of total

thermal energy at each replacement unit after replacing thermal energy

at the opt-in source starting April 1, July 1, or October 1

respectively and ending December 31;

(xi) The estimated annual amount of thermal energy at each

replacement unit, including all energy flows (steam, gas, or hot water)

used for any process or in any heating or cooling application,

replacing thermal energy at the opt-in source, and, for a plan starting

April 1, July 1, or October 1, such estimated amount of thermal energy

replacing thermal energy at the opt-in source starting April 1, July 1,

or October 1 respectively and ending December 31;

(xii) The estimated annual total fuel input at each replacement

unit after replacing thermal energy at the opt-in source and, for a

plan starting April 1, July 1, or October 1, such estimated total fuel

input after replacing thermal energy at the opt-in source starting

April 1, July 1, or October 1 respectively and ending December 31;

* * * * *

(4) Submission. The designated representative of the opt-in source

seeking to qualify for the transfer of allowances based on the

replacement of thermal energy shall submit a thermal energy plan to the

permitting authority by no later than six months prior to the first

calendar quarter for which the plan is to be in effect. The thermal

energy plan shall be signed and certified by the designated

representative of the opt-in source and each replacement unit covered

by the plan.

* * * * *

13. Section 74.50 is amended by redesignating the introductory text

of paragraph (a) as paragraph (a)(1), redesignating paragraphs (a)(1)

through (a)(4) as paragraphs (a)(1)(i) through (a)(1)(iv), and adding

paragraph (a)(2) to read as follows:

Sec. 74.50 Deducting opt-in source allowances from ATS accounts.

(a) * * *

(2) An opt-in allowance may not be deducted under paragraph (a)(1)

of this section from any Allowance Tracking System Account other than

the account of the opt-in source allocated such allowance:

(i) After the Administrator has completed the process of

recordation as set forth in Sec. 73.34(a) of this chapter following the

deduction of allowances from the opt-in source's compliance subaccount

for the year for which such allowance may first be used; or

(ii) If the opt-in source includes in the annual compliance

certification report estimates of any reduction in heat input resulting

from improved efficiency under Sec. 74.44(a)(1)(i), after the

Administrator has completed action on the confirmation report

concerning such estimated reduction pursuant to

Sec. 74.44(c)(2)(iii)(E)(3), (4), and (5) for the year for which such

allowance may first be used.

* * * * *

[FR Doc. 98-10143 Filed 4-15-98; 8:45 am]

BILLING CODE 6560-50-P