
1
Technical
Support
Document
for
the
Clean
Air
Interstate
Rule
Notice
of
Final
Rulemaking
Changes
from
the
Proposed
Model
Trading
Rules
to
the
Final
Model
Trading
Rules
March
2005
Prepared
by
Office
of
Air
and
Radiation
U.
S.
Environmental
Protection
Agency
EPA
Docket:
OAR
2003­
0053
2
Changes
from
the
Proposed
Model
Trading
Rules
to
the
Final
Model
Trading
Rules
The
proposed
and
final
CAIR
model
trading
rules
are
modeled
after,
and
are
largely
the
same
as,
the
NO
X
SIP
Call
model
trading
rule.
The
final
model
trading
rules
(
in
subparts
AA
through
II
and
AAA
through
III
of
part
96)
include
some
relatively
minor
changes
to
the
regulatory
text
that
improve
the
implementability
of
the
rules
or
clarify
aspects
of
the
rules
identified
by
the
EPA
or
commenters.
(
Note
that
sections
VIII.
B
through
VIII.
H
of
the
preamble
to
today's
action
highlight
the
more
significant
modifications
included
in
the
final
model
trading
rules.)

For
example,
language
is
revised
in
the
CAIR
SO
2
model
trading
rule
in
order
to
implement
the
retirement
ratio
(
2.00)
used
for
allowances
allocated
for
2010
through
2014
and
the
retirement
ratio
(
2.86)
used
for
allowances
allocated
for
2015
and
later
by
establishing
tonnage
equivalents
for
each
individual
allowance
(
i.
e.,
0.50
tons
for
each
2010­
through­
2014
allowance
and
0.35
tons
for
each
2015­
or­
later
allowance)
and
to
clarify
that
fractional
tons
of
excess
emissions
are
rounded
up
to
the
next
whole
allowance
for
purposes
of
applying
excess
emissions
penalties.
Further,
the
SO
2
model
trading
rule
language
is
also
revised
to
clarify
the
compliance
deduction
process
for
units
also
subject
to
title
IV
of
the
Clean
Air
Act,
as
a
two
stage
process
involving
first
the
deduction
of
allowances
for
compliance
with
the
title
IV
allowance­
holding
requirement
and
then
deduction
of
allowances
for
compliance
with
the
CAIR
allowance­
holding
requirement.

Another
example
of
where
the
final
model
trading
rules
incorporate
relatively
minor
changes
from
the
proposed
model
trading
rules
involves
the
provisions
in
the
standard
requirements
concerning
liability
under
the
trading
programs.
The
proposed
CAIR
model
NO
X
and
SO
2
trading
rules
included,
under
the
standard
requirements
in
§
§
96.106(
f)(
1)
and
(
2)
and
96.206(
f)(
1)
and
(
2),
provisions
stating
that
any
person
who
knowingly
violates
the
CAIR
NO
X
or
SO
2
trading
programs
or
knowingly
makes
a
false
material
statement
under
the
trading
programs
will
be
subject
to
enforcement
action
under
applicable
State
or
Federal
law.
Similar
provisions
are
included
in
§
96.6(
f)(
1)
and
(
2)
of
the
final
NO
X
SIP
Call
model
trading
rule.
The
final
CAIR
model
NO
X
and
SO
2
trading
rules
exclude
these
provisions
for
the
following
reasons.
First,
the
proposed
rule
provisions
are
unnecessary
because,
even
in
their
absence,
applicable
State
or
Federal
law
authorizes
enforcement
actions
and
penalties
in
the
case
of
knowing
violations
or
knowing
submission
of
false
statements.
Moreover,
these
proposed
rule
provisions
are
incomplete.
They
do
not
purport
to
cover,
and
have
no
impact
on,
liability
for
violations
that
are
not
knowingly
committed
or
false
submissions
that
are
not
knowingly
made.
Applicable
State
and
Federal
law
already
authorizes
enforcement
actions
and
penalties,
under
appropriate
circumstances,
for
non­
knowing
violations
or
false
submissions.
Because
the
proposed
rule
provisions
are
unnecessary
and
incomplete,
the
final
CAIR
model
NO
X
and
SO
2
trading
rules
do
not
include
these
provisions.
However,
EPA
emphasizes
that,
on
their
face,
the
provisions
that
were
proposed,
but
eliminated
in
the
final
rules,
in
no
way
limit
liability,
or
the
ability
of
the
State
or
EPA
to
take
enforcement
action,
to
only
knowing
violations
or
knowing
false
submissions.
3
By
further
example
of
a
relatively
minor
change
in
the
final
model
trading
rules,
the
standard
requirements
(
in
§
§
96.106
and
96.206)
concerning
excess
emissions
are
revised
in
the
final
rules
by
moving
provisions
concerning
each
ton
of
excess
emissions
and
each
day
in
the
control
period
when
excess
emissions
occur
from
other
sections
(
e.
g.,
the
compliance
deduction
sections,
§
§
96.154
and
96.254)
of
the
proposed
model
trading
rules
to
the
excess
emissions
standard
requirements
provisions
in
the
final
model
trading
rules.

Other,
relatively
minor
changes
reflected
in
the
regulatory
text
of
the
final
model
trading
rules
include:

1.
Units
and
sources
are
identified
separately
for
the
NO
X
and
SO
2
trading
programs
(
e.
g.,
CAIR
NO
X
units,
CAIR
NO
X
Ozone
Season
units,
and
CAIR
SO
2
units)
since
States
can
participate
in
one,
two,
or
three
trading
programs.

2.
The
definitions
of
"
commence
commercial
operation",
"
commence
operation",
"
maximum
design
heat
input",
and
"
nameplate
capacity"
are
clarified
in
order
to
address
circumstances
when
there
are
physical
changes
to
a
unit.
The
basis
approach
­
B
that
once
a
unit
meets
at
any
time
the
basic
criteria
for
inclusion
in
the
trading
programs,
the
unit
remains
subject
to
the
trading
program
regardless
of
any
subsequent
changes
to
the
unit
or
its
operation
­­
to
applicability
in
the
proposed
model
trading
rules
is
maintained.

3.
The
definitions
of
most
stringent
State
or
Federal
emissions
limitations
and
of
"
repowering"
are
added
for
clarification.
The
former
definition
is
based
on
the
definition
in
the
NO
X
SIP
Call
model
rule,
and
the
latter
definition
is
based
on
the
definition
in
title
IV
of
the
Clean
Air
Act.
The
definition
of
"
gross
electrical
output"
is
also
added
for
clarification.

4.
The
definitions
of
"
CAIR
designated
representative"
are
expanded
to
make
it
clear
that
the
same
individual
must
be
the
designated
representative
for
the
Acid
Rain,
CAIR
NO
X
Annual,
CAIR
NO
X
Ozone
Season,
and
CAIR
SO
2
programs.
The
same
is
true
for
the
alternate
CAIR
designated
representative.

5.
The
purpose
sections
of
the
rules
(
§
§
96.101
and
96.201)
are
expanded
to
clarify
that
owners
or
operators
of
units
or
sources
are
subject
to
the
rules
only
if
the
State
with
jurisdiction
over
the
units
or
sources
adopts,
and
the
Administrator
approves
the
State's
adoption
of,
the
requirements
of
the
rules.
The
purpose
sections
also
clarify
that,
in
adopting
the
rules,
a
State
is
authorizing
the
Administrator
to
assist
the
State
by
carrying
out
the
Administrator
functions
set
forth
in
the
rules.
The
revised
language
is
similar
to
language
in
the
purpose
section
of
the
NO
X
SIP
Call
model
trading
rule.

6.
The
applicability
provisions
for
cogeneration
units
are
revised
to
make
it
clear
that
once
a
unit
fails
at
any
time
to
qualify
for
a
cogeneration
unit
exemption
and
becomes
subject
to
the
trading
programs,
the
unit
cannot
subsequently
become
exempt
from
the
trading
programs.
4
7.
Provisions
allowing
opt­
in
units
in
the
trading
programs
are
added,
based
on
similar
provisions
in
the
NO
X
SIP
Call
model
trading
rule,
and
other
provisions
of
the
model
trading
rules
are
revised
to
take
account
of
opt­
in
units.
For
example,
the
retired
unit
exemption
provisions
are
clarified
to
indicate
that
an
opt­
in
unit
cannot
qualify
for
a
retired
unit
exemption.

8.
The
permit
provisions
are
expanded
to
incorporate
requirements
for
opt­
in
units.
An
optin
unit
generally
needs
to
have
a
federally
enforceable
permit
­
B
under
title
V
of
the
Clean
Air
Act
or
under
some
other
provision
of
the
Clean
Air
Act
if
the
unit
is
not
subject
to
title
V
B­
in
which
to
include
the
opt­
in
requirements
that
become
applicable
only
after
approval
of
the
request
to
opt­
in.
This
is
similar
to
the
approach
under
the
NO
X
SIP
Call
model
trading
rule
for
opt­
in
units.

9.
The
descriptions
of
compliance
and
general
accounts
in
the
allowance
tracking
systems
under
§
§
96.150
and
96.250
are
removed
as
duplicative
of
other
provisions
in
the
model
trading
rules.

10.
The
first­
in,
first­
out
default
allowance
deduction
provisions
for
SO
2
compliance
in
§
96.254
are
clarified
to
address
the
different
vintages,
and
associated
tonnage
equivalents,
of
CAIR
SO
2
allowances.

11.
The
language
on
closing
of
general
accounts
is
clarified.

12.
Process
of
recording
CAIR
SO
2
allowance
allocations
and
transfers
on
rolling
30­
year
periods
is
added
to
make
it
consistent
with
Acid
Rain
regulations.
A
related
provision
concerning
EPA
recordation
of
CAIR
SO
2
allowance
transfer
is
clarified
to
provide
for
a
period
longer
than
5
days
for
the
Administrator
to
record
a
transfer
of
allowances
in
perpetuity.

13.
The
monitoring
and
reporting
provisions
under
subparts
HH
and
HHH
are
clarified
regarding
opt­
in
units
and
units
for
which
a
CAIR
opt­
in
permit
application
has
been
submitted
and
is
still
being
processed.
Monitoring
compliance
deadlines
are
set
for
such
units.
Further,
because
units
other
than
boilers
and
turbines
(
i.
e.,
other
stationary,
fossilfuel
fired
combustion
devices),
for
which
part
75
monitoring
was
developed,
can
opt
in,
the
monitoring
of
these
units
may
raise
new
or
difficult
issues.
Consequently,
the
final
rules
provide
that
review
of
monitoring
plans
for
opt­
in
units
or
units
requesting
to
opt
in,
and
audit
decertification
of
monitoring
systems
for
such
units,
can
be
conducted
by
either
the
permitting
authority
or
the
Administrator.

14.
The
exemption
from
the
initial
monitoring
system
certification
procedures
are
clarified.

15.
The
timing
requirements
for
CAIR
NO
X
allowance
allocations
are
clarified
to
apply
to
allocations
from
the
new
unit
set­
aside
(
as
well
as
allocation
for
units
with
baseline
heat
input
values)
and
to
provide
that
if
a
permitting
authority
fails
to
submit
the
allocations
to
5
the
Administrator,
the
Administrator
will
generally
assume
that
each
unit's
allocation
is
the
same
as
in
the
immediately
preceding
control
period,
taking
into
account
the
greater
emission
reductions
required
starting
in
2015
and
the
need
to
avoid
double
allocations
to
a
unit
(
i.
e.,
from
both
the
allowance
pools
for
units
with
baseline
heat
input
values
and
for
new
units).
The
timing
for
the
recordation
of
such
allocations
are
clarified.

16.
Compliance
supplement
pool
provisions
are
added
for
the
CAIR
NO
X
Annual
Trading
Program
based
on
similar
provisions
in
§
51.121(
e)(
4)
for
the
NO
X
SIP
Call.

17.
The
provision
under
§
96.175
regarding
review
and
approval
of
petitions
for
CAIR
NO
X
units
for
alternatives
to
monitoring
requirements
is
clarified
to
be
consistent
with
the
approach
in
the
NO
X
SIP
Call
model
trading
rule.

The
CAIR
NO
X
Ozone
Season
Trading
Program
is
added
and
is
analogous
to
the
CAIR
NO
X
Annual
Trading
Program.
The
various
deadlines
in
the
ozone
season
program
for
owners
and
operators,
for
permitting
authorities,
and
for
the
Administrator
reflect
the
fact
that
the
program
applies
to
the
ozone
season
and
not
to
the
entire
year.
As
in
the
NO
X
SIP
Call
model
trading
rule,
emissions
may
be
monitored
and
reported
on
an
annual
or
a
control
period
basis.
