(a) For each affected unit included in an Acid Rain permit application, a complete compliance plan shall:

(1) For sulfur dioxide emissions, certify that, as of the allowance transfer deadline, the designated representative will hold allowances in the compliance account of the source where the unit is located (after deductions under § 73.34(c) of this chapter) not less than the total annual emissions of sulfur dioxide from the affected units at the source. The compliance plan may also specify, in accordance with this subpart, one or more of the Acid Rain compliance options.

(2) For nitrogen oxides emissions, certify that the unit will comply with the applicable emission limitation under § 76.5, § 76.6, or § 76.7 of this chapter or shall specify one or more Acid Rain compliance options, in accordance with part 76 of this chapter.

(b) Multi-unit compliance options. (1) A plan for a compliance option, under § 72.41, § 72.42, § 72.43, or § 72.44 of this part, under § 74.47 of this chapter, or a NOX averaging plan under § 76.11 of this chapter, that includes units at more than one affected source shall be complete only if:

(i) Such plan is signed and certified by the designated representative for each source with an affected unit governed by such plan; and

(ii) A complete permit application is submitted covering each unit governed by such plan.

(2) A permitting authority's approval of a plan under paragraph (b)(1) of this section that includes units in more than one State shall be final only after every permitting authority with jurisdiction over any such unit has approved the plan with the same modifications or conditions, if any.

(c) Conditional Approval. In the compliance plan, the designated representative of an affected unit may propose, in accordance with this subpart, any Acid Rain compliance option for conditional approval, except a Phase I extension plan; provided that an Acid Rain compliance option under section 407 of the Act may be conditionally proposed only to the extent provided in part 76 of this chapter.

(1) To activate a conditionally-approved Acid Rain compliance option, the designated representative shall notify the permitting authority in writing that the conditionally-approved compliance option will actually be pursued beginning January 1 of a specified year. If the conditionally approved compliance option includes a plan described in paragraph (b)(1) of this section, the designated representative of each source governed by the plan shall sign and certify the notification. Such notification shall be subject to the limitations on activation under subpart D of this part and part 76 of this chapter.

(2) The notification under paragraph (c)(1) of this section shall specify the first calendar year and the last calendar year for which the conditionally approved Acid Rain compliance option is to be activated. A conditionally approved compliance option shall be activated, if at all, before the date of any enforceable milestone applicable to the compliance option. The date of activation of the compliance option shall not be a defense against failure to meet the requirements applicable to that compliance option during each calendar year for which the compliance option is activated.

(3) Upon submission of a notification meeting the requirements of paragraphs (c) (1) and (2) of this section, the conditionally-approved Acid Rain compliance option becomes binding on the owners and operators and the designated representative of any unit governed by the conditionally-approved compliance option.

(4) A notification meeting the requirements of paragraphs (c) (1) and (2) of this section will revise the unit's permit in accordance with § 72.83 (administrative permit amendment).

(d) Termination of compliance option. (1) The designated representative for a unit may terminate an Acid Rain compliance option by notifying the permitting authority in writing that an approved compliance option will be terminated beginning January 1 of a specified year. If the compliance option includes a plan described in paragraph (b)(1) of this section, the designated representative for each source governed by the plan shall sign and certify the notification. Such notification shall be subject to the limitations on termination under subpart D of this part and part 76 of this chapter.

(2) The notification under paragraph (d)(1) of this section shall specify the calendar year for which the termination will take effect.

(3) Upon submission of a notification meeting the requirements of paragraphs (d) (1) and (2) of this section, the termination becomes binding on the owners and operators and the designated representative of any unit governed by the Acid Rain compliance option to be terminated.

(4) A notification meeting the requirements of paragraphs (d) (1) and (2) of this section will revise the unit's permit in accordance with § 72.83 (administrative permit amendment).

[58 FR 3650, Jan. 11, 1993, as amended at 60 FR 17113, Apr. 4, 1995; 62 FR 55481, Oct. 24, 1997; 64 FR 25842, May 13, 1999; 70 FR 25334, May 12, 2005]

(a) Applicability. This section shall apply during Phase I to the designated representative of:

(1) Any unit listed in table 1 of § 73.10(a) of this chapter; and

(2) Any other existing utility unit that is an affected unit under this part, provided that this section shall not apply to a unit under section 410 of the Act.

(b)(1) The designated representative may include, in the Acid Rain permit application for a unit under paragraph (a)(1) of this section, a substitution plan under which one or more units under paragraph (a)(2) of this section are designated as substitution units, provided that:

(i) Each unit under paragraph (a)(2) of this section is under the control of the owner or operator of each unit under paragraph (a)(1) of this section that designates the unit under paragraph (a)(2) of this section as a substitution unit; and

(ii) In accordance with paragraph (c)(3) of this section, the emissions reductions achieved under the plan shall be the same or greater than would have been achieved by all units governed by the plan without such plan.

(2) The designated representative of each source with a unit designated as a substitution unit in any plan submitted under paragraph (b)(1) of this section shall incorporate in the permit application each such plan.

(3) The designated representative may submit a substitution plan not later than 6 months (or 90 days if submitted in accordance with § 72.82), or a notification to activate a conditionally approved plan in accordance with § 72.40(c) not later than 60 days, before the allowance transfer deadline applicable to the first year for which the plan is to take effect.

(c) Contents of a substitution plan. A complete substitution plan shall include the following elements in a format prescribed by the Administrator:

(1) Identification of each unit under paragraph (a)(1) of this section and each substitution unit to be governed by the substitution plan. A unit shall not be a substitution unit in more than one substitution plan.

(2) Except where the designated representative requests conditional approval of the plan, the first calendar year and, if known, the last calendar year in which the substitution plan is to be in effect. Unless the designated representative specifies an earlier calendar year, the last calendar year will be deemed to be 1999.

(3) Demonstration that the total emissions reductions achieved under the substitution plan will be equal to or greater than the total emissions reductions that would have been achieved without the plan, as follows:

(i) For each substitution unit:

(A) The unit's baseline.

(B) Each of the following: the unit's 1985 actual SO2 emissions rate; the unit's 1985 allowable SO2 emissions rate; the unit's 1989 actual SO2 emissions rate; the unit's 1990 actual SO2 emissions rate; and, as of November 15, 1990, the most stringent unit-specific federally enforceable or State enforceable SO2 emissions limitation covering the unit for 1995-1999. For purposes of determining the most stringent emissions limitation, applicable emissions limitations shall be converted to lbs/mmBtu in accordance with appendix B of this part. Where the most stringent emissions limitation is not the same for every year in 1995-1999, the most stringent emissions limitation shall be stated separately for each year.

(C) The lesser of: the unit's 1985 actual SO2 emissions rate; the unit's 1985 allowable SO2 emissions rate; the greater of the unit's 1989 or 1990 actual SO2 emissions rate; or, as of November 15, 1990, the most stringent unit-specific federally enforceable or State enforceable SO2 emissions limitation covering the unit for 1995-99. Where the most stringent emissions limitation is not the same for every year during 1995-1999, the lesser of the emissions rates shall be determined separately for each year using the most stringent emissions limitation for that year.

(D) The product of the baseline in paragraph (c)(3)(i)(A) of this section and the emissions rate in paragraph (c)(3)(i)(C) of this section, divided by 2000 lbs/ton. Where the most stringent emissions limitation is not the same for every year during 1995-1999, the product in the prior sentence shall be calculated separately for each year using the emissions rate determined for that year in paragraph (c)(3)(i)(C) of this section.

(ii)(A) The sum of the amounts in paragraph (c)(3)(i)(D) of this section for all substitution units to be governed by the plan. Except as provided in paragraph (c)(3)(ii)(B) of this section, this sum is the total number of allowances available each year under the substitution plan.

(B) Where the most stringent unit-specific federally enforceable or State enforceable SO2 emissions limitation is not the same for every year during 1995-1999, the sum in paragraph (c)(3)(ii)(A) of this section shall be calculated separately for each year using the amounts calculated for that year in paragraph (c)(3)(i)(D) of this section. Each separate sum is the total number of allowances available for the respective year under the substitution plan.

(iii) Where, as of November 15, 1990, a non-unit-specific federally enforceable or State enforceable SO2 emissions limitation covers the unit for any year during 1995-1999, the designated representative shall state each such limitation and propose a method for applying the unit-specific and non-unit-specific emissions limitations under paragraph (d) of this section.

(4) Distribution of substitution allowances. (i) A statement that the allowances in paragraph (c)(3)(ii) of this section are not to be distributed to any units under paragraph (a)(1) of this section that are to be governed by the plan; or

(ii) A list showing any annual distribution of the allowances in paragraph (c)(3)(ii) of this section from a substitution unit to a unit under paragraph (a)(1) of this section that, under the plan, designates the substitution unit.

(5) A demonstration that the substitution plan meets the requirement that each unit under paragraph (a)(2) of this section is under the control of the owner or operator of each unit under paragraph (a)(1) of this section that designates the unit under paragraph (a)(2) of this section as a substitution unit. The demonstration shall be one of the following:

(i) If the unit under paragraph (a)(1) of this section has one or more owners or operators that have an aggregate percentage ownership interest of 50 percent or more in the capacity of the unit under paragraph (a)(2) of this section or the units have a common operator, a statement identifying such owners or operators and their aggregate percentage ownership interest in the capacity of the unit under paragraph (a)(2) of this section or identifying the units' common operator. The designated representative shall submit supporting documentation upon request by the Administrator.

(ii) If the unit under paragraph (a)(1) of this section has one or more owners or operators that have an aggregate percentage ownership interest of at least 10 percent and less than 50 percent in the capacity of the unit under paragraph (a)(2) of this section and the units do not have a common operator, a statement identifying such owners or operators and their aggregate percentage ownership interest in the capacity of the unit under paragraph (a)(2) of this section and stating that each such owner or operator has the contractual right to direct the dispatch of the electricity that, because of its ownership interest, it has the right to receive from the unit under paragraph (a)(2) of this section. The fact that the electricity that such owner or operator has the right to receive is centrally dispatched through a power pool will not be the basis for determining that the owner or operator does not have the contractual right to direct the dispatch of such electricity. The designated representative shall submit supporting documentation upon request by the Administrator.

(iii) A copy of an agreement that is binding on the owners and operators of the unit under paragraph (a)(2) of this section and the owners and operators of the unit under paragraph (a)(1) of this section, provides each of the following elements, and is supported by documentation meeting the requirements of paragraph (c)(6) of this section:

(A) The owners and operators of the unit under paragraph (a)(2) of this section must not allow the unit to emit sulfur dioxide in excess of a maximum annual average SO2 emissions rate (in lbs/mmBtu), specified in the agreement, for each year during the period that the substitution plan is in effect.

(B) The maximum annual average SO2 emissions rate for the unit under paragraph (a)(2) of this section shall not exceed 70 percent of the lesser of: the unit's 1985 actual SO2 emissions rate; the unit's 1985 allowable SO2 emissions rate; the greater of the unit's 1989 or 1990 actual SO2 emissions rate; the most stringent federally enforceable or State enforceable SO2 emissions limitation, as of November 15, 1990, applicable to the unit in Phase I; or the lesser of the average actual SO2 emissions rate or the most stringent federally enforceable or State enforceable SO2 emissions limitation for the unit for four consecutive quarters that immediately precede the 30-day period ending on the date the substitution plan is submitted to the Administrator. If the unit is covered by a non-unit-specific federally enforceable or State enforceable SO2 emissions limitation in the four consecutive quarters or, as of November 15, 1990, in Phase I, the Administrator will determine, on a case-by-case basis, how to apply the non-unit-specific emissions limitation for purposes of determining whether the maximum annual average SO2 emissions rate meets the requirement of the prior sentence. If a non-unit-specific federally enforceable SO2 emissions limitation is not different from a non-unit-specific federally enforceable SO2 emissions limitation that was effective and applicable to the unit in 1985, the Administrator will apply the non-unit-specific SO2 emissions limitation by using the 1985 allowable SO2 emissions rate.

(C) For each year that the actual SO2 emissions rate of the unit under paragraph (a)(2) of this section exceeds the maximum annual average SO2 emissions rate, the designated representative of the unit under paragraph (a)(1) of this section must surrender allowances for deduction from the Allowance Tracking System account of the unit under paragraph (a)(1) of this section. The designated representative shall surrender allowances authorizing emissions equal to the baseline of the unit under paragraph (a)(2) of this section multiplied by the difference between the actual SO2 emissions rate of the unit under paragraph (a)(2) of this section and the maximum annual average SO2 emissions rate and divided by 2000 lbs/ton. The surrender shall be made by the allowance transfer deadline of the year of the exceedance, and the surrendered allowances shall have the same or an earlier compliance use date as the allowances allocated to the unit under paragraph (a)(2) of this section for that year. The designated representative may identify the serial numbers of the allowances to be deducted. In the absence of such identification, allowances will be deducted on a first-in, first-out basis under § 73.35(c)(2) of this chapter.

(D) The unit under paragraph (a)(2) of this section and the unit under paragraph (a)(1) of this section shall designate a common designated representative during the period that the substitution plan is in effect. Having a common alternate designated representative shall not satisfy the requirement in the prior sentence.

(E) Except as provided in paragraph (c)(6)(i) of this section, the actual SO2 emissions rate for any year and the average actual SO2 emissions rate for any period shall be determined in accordance with part 75 of this chapter.

(6) A demonstration under paragraph (c)(5)(iii) of this section shall include the following supporting documentation:

(i) The calculation of the average actual SO2 emissions rate and the most stringent federally enforceable or State enforceable SO2 emissions limitation for the unit for the four consecutive quarters that immediately preceded the 30-day period ending on the date the substitution plan is submitted to the Administrator. To the extent that the four consecutive quarters include a quarter prior to January 1, 1995, the SO2 emissions rate for the quarter shall be determined applying the methodology for calculating SO2 emissions set forth in appendix C of this part. This methodology shall be applied using data submitted for the quarter to the Secretary of Energy on United States Department of Energy Form 767 or, if such data has not been submitted for the quarter, using the data prepared for such submission for the quarter.

(ii) A description of the actions that will be taken in order for the unit under paragraph (a)(2) of this section to comply with the maximum annual average SO2 emissions rate under paragraph (c)(5)(iii) of this section.

(iii) A description of any contract for implementing the actions described in paragraph (c)(6)(ii) of this section that was executed before the date on which the agreement under paragraph (c)(5)(iii) of this section is executed. The designated representative shall state the execution date of each such contract and state whether the contract is expressly contingent on the agreement under paragraph (c)(5)(iii) of this section.

(iv) A showing that the actions described under paragraph (c)(6)(ii) of this section will not be implemented during Phase I unless the unit is approved as a substitution unit.

(7) The special provisions in paragraph (e) of this section.

(d) Administrator's action. (1) If the Administrator approves a substitution plan, he or she will allocate allowances to the Allowance Tracking System accounts of the units under paragraph (a)(1) of this section and substitution units, as provided in the approved plan, upon issuance of an Acid Rain permit containing the plan, except that if the substitution plan is conditionally approved, the allowances will be allocated upon revision of the permit to activate the plan.

(2) In no event shall allowances be allocated to a substitution unit, under an approved substitution plan, for any year in excess of the sum calculated and applicable to that year under paragraph (c)(3)(ii) of this section, as adjusted by the Administrator in approving the plan.

(3) Where, as of November 15, 1990, a non-unit-specific federally enforceable or State enforceable SO2 emissions limitation covers the unit for any year during 1995-1999, the Administrator will specify on a case-by-case basis a method for using unit-specific and non-unit-specific emissions limitations in allocating allowances to the substitution unit. The specified method will not treat a non-unit-specific emissions limitation as a unit-specific emissions limitation and will not result in substitution units retaining allowances allocated under paragraph (d)(1) of this section for emissions reductions necessary to meet a non-unit- specific emissions limitation. Such method may require an end-of-year review and the adjustment of the allowances allocated to the substitution unit and may require the designated representative of the substitution unit to surrender allowances by the allowance transfer deadline of the year that is subject to the review. Any surrendered allowances shall have the same or an earlier compliance use date as the allowances originally allocated for the year, and the designated representative may identify the serial numbers of the allowances to be deducted. In the absence of such identification, such allowances will be deducted on a first-in, first-out basis under § 73.35(c)(2) of this chapter.

(e) Special provisions—(1) Emissions Limitations. (i) Each substitution unit governed by an approved substitution plan shall become a Phase I unit from January 1 of the year for which the plan takes effect until January 1 of the year for which the plan is no longer in effect or is terminated. The designated representative of a substitution unit shall surrender allowances, and the Administrator will deduct allowances, in accordance with paragraph (d)(3) of this section.

(ii) Each unit under paragraph (a)(1) of this section, and each substitution unit, governed by an approved substitution plan shall be subject to the Acid Rain emissions limitations for nitrogen oxides in accordance with part 76 of this chapter.

(iii) Where an approved substitution plan includes a demonstration under paragraphs (c)(5)(iii) and (c)(6) of this section.

(A) The owners and operators of the substitution unit covered by the demonstration shall implement the actions described under paragraph (c)(6)(ii) of this section, as adjusted by the Administrator in approving the plan or in revising the permit. The designated representative may submit proposed permit revisions changing the description of the actions to be taken in order for the substitution unit to achieve the maximum annual average SO2 emissions rate under the approved plan and shall include in any such submission a showing that the actions in the changed description will not be implemented during Phase I unless the unit remains a substitution unit. The permit revision will be treated as an administrative amendment, except where the Administrator determines that the change in the description alters the fundamental nature of the actions to be taken and that public notice and comment will contribute to the decision-making process, in which case the permit revision will be treated as a permit modification or, at the option of the designated representative, a fast-track modification.

(B) The designated representative of the unit under paragraph (a)(1) of this section shall surrender allowances, and theAdministrator will deduct allowances, in accordance with paragraph (c)(5)(iii)(C) of this section. The surrender and deduction of allowances as required under the prior sentence shall be the only remedy under the Act for a failure to meet the maximum annual average SO2 emissions rate, provided that, if such deduction of allowance results in excess emissions, the remedies for excess emissions shall be fully applicable.

(2) Liability. The owners and operators of a unit governed by an approved substitution plan shall be liable for any violation of the plan or this section at that unit or any other unit that is the first unit's substitution unit or for which the first unit is a substitution unit under the plan, including liability for fulfilling the obligations specified in part 77 of this chapter and section 411 of the Act.

(3) Termination. (i) A substitution plan shall be in effect only in Phase I for the calendar years specified in the plan or until the calendar year for which a termination of the plan takes effect, provided that no substitution plan shall be terminated, and no unit shall be de-designated as a substitution unit, before the end of Phase I if the substitution unit serves as a control unit under a Phase I extension plan.

(ii) To terminate a substitution plan for a given calendar year prior to the last year for which the plan was approved:

(A) A notification to terminate in accordance with § 72.40(d) shall be submitted no later than 60 days before the allowance transfer deadline applicable to the given year; and

(B) In the notification to terminate, the designated representative of each unit governed by the plan shall state that he or she surrenders for deduction from the unit's Allowance Tracking System account allowances equal in number to, and with the same or an earlier compliance use date as, those allocated under paragraph (d)(1) of this section for all calendar years for which the plan is to be terminated. The designated representative may identify the serial numbers of the allowances to be deducted. In the absence of such identification, allowances will be deducted on a first-in, first-out basis under § 73.35(c)(2) of this chapter.

(iii) If the requirements of paragraph (e)(3)(ii) of this section are met and upon revision of the permit to terminate the substitution plan, the Administrator will deduct the allowances specified in paragraph (e)(3)(ii)(B) of this section. No substitution plan shall be terminated, and no unit shall be de-designated as a Phase I unit, unless such deduction is made.

(iv)(A) If there is a change in the ownership interest of the owners or operators of any unit under a substitution plan approved as meeting the requirements of paragraph (c)(5)(i) or (ii) of this section or a change in such owners' or operators' right to direct dispatch of electricity from a substitution unit under such a plan and the demonstration under paragraph (c)(5)(i) or (ii) of this section cannot be made, then the designated representatives of the units governed by this plan shall submit a notification to terminate the plan so that the plan will terminate as of January 1 of the calendar year during which the change is made.

(B) Where a substitution plan is approved as meeting the requirements of paragraph (c)(5)(iii) of this section, if there is a change in the agreement under paragraph (c)(5)(iii) of this section and a demonstration that the agreement, as changed, meets the requirements of paragraph (c)(5)(iii) cannot be made, then the designated representative of the units governed by the plan shall submit a notification to terminate the plan so that the plan will terminate as of January 1 of the calendar year during which the change is made. Where a substitution plan is approved as meeting the requirements of paragraph (c)(5)(iii) of this section, if the requirements of the first sentence of paragraph (e)(1)(iii)(A) of this section are not met during a calendar year, then the designated representative of the units governed by the plan shall submit a notification to terminate the plan so that the plan will terminate as of January 1 of such calendar year.

(C) If the plan is not terminated in accordance with paragraphs (e)(3)(iv)(A) or (B) of this section, the Administrator, on his or her own motion, will terminate the plan and deduct the allowances required to be surrendered under paragraph (e)(3)(ii) of this section.

(D) Where a substitution unit and the Phase I unit designating the substitution unit in an approved substitution plan have a common owner, operator, or designated representative during a year, the plan shall not be terminated under paragraphs (e)(3)(iv)(A), (B), or (C) of this section with regard to the substitution unit if the year is as specified in paragraph (e)(3)(iv)(D)(1) or (2) of this section and the unit received from the Administrator for the year, under the Partial Settlement in Environmental Defense Fund v. Carol M. Browner, No. 93-1203 (D.C. Cir. 1993) (signed May 4, 1993), a total number of allowances equal to the unit's baseline multiplied by the lesser of the unit's 1985 actual SO2 emissions rate or 1985 allowable SO2 emissions rate.

(1) Except as provided in paragraph (e)(3)(iv)(D)(2) of this section, paragraph (e)(3)(iv)(D) of this section shall apply to the first year in Phase I for which the unit is and remains an active substitution unit.

(2) If the unit has a Group 1 boiler under part 76 of this chapter and is and remains an active substitution unit during 1995, paragraph (e)(3)(iv)(D) of this section shall apply to 1995 and to the second year in Phase I for which the unit is and remains an active substitution unit.

(3) If there is a change in the owners, operators, or designated representative of the substitution unit or the Phase I unit during a year under paragraph (e)(3)(iv)(D)(1) or (2) of this section and, with the change, the units do not have a common owner, operator, or designated representative, then the designated representatives for such units shall submit a notification to terminate the plan so that the plan will terminate as of January 1 of the calendar year during which the change is made. If the plan is not terminated in accordance with the prior sentence, the Administrator, on his or her own motion, will terminate the plan and deduct the allowances required to be surrendered under paragraph (e)(3)(ii) of this section.

[58 FR 3650, Jan. 11, 1993, as amended at 58 FR 40747, July 30, 1993; 59 FR 60230, 60238, Nov. 22, 1994; 62 FR 55481, Oct. 24, 1997]

(a) Applicability. (1) This section shall apply to any designated representative seeking a 2-year extension of the deadline for meeting Phase I sulfur dioxide emissions reduction requirements at any of the following types of units by applying for allowances from the Phase I extension reserve:

(i) A unit listed in table 1 of § 73.10(a) of this chapter;

(ii) A unit designated as a substitution unit in accordance with § 72.41; or

(iii) A unit designated as a compensating unit in accordance with § 72.43, except a compensating unit that is a new unit.

(2) A unit for which a Phase I extension is sought shall be either:

(i) A control unit, which shall be a unit under paragraph (a)(1) of this section and at which qualifying Phase I technology shall commence operation on or after November 15, 1990 but not later than December 31, 1996; or

(ii) A transfer unit, which shall be a unit under paragraph (a)(1)(i) of this section and whose Phase I emissions reduction obligation shall be transferred in whole or in part to one or more control units.

(3) A Phase I extension does not exempt the owner or operator for any unit governed by the Phase I extension plan from the requirement to comply with such unit's Acid Rain emissions limitations for sulfur dioxide.

(b) To apply for a Phase I extension:

(1) The designated representative for each source with a control unit may submit an early ranking application for a Phase I extension plan in person, beginning on the 40th day after publication of this subpart in the Federal Register, between the hours of 9 a.m. and 5 p.m. Eastern Standard Time at Acid Rain Division, Attn: Early Ranking, U.S. Environmental Protection Agency, 501 3rd Street NW., 4th floor, Washington, DC; or send the application by regular mail, certified mail, or overnight delivery service to Acid Rain Division, Attn: Early Ranking, U.S. Environmental Protection Agency, 6204 J, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

(2) By February 15, 1993:

(i) The designated representative for each source with a control unit shall submit a Phase I extension plan as a part of the Acid Rain permit application for the source, and

(ii) The designated representative for each source with a unit designated as a transfer unit in any plan submitted under paragraph (b)(2)(i) of this section shall incorporate in the Acid Rain permit application each such plan.

(c) Contents of early ranking application. A complete early ranking application shall include the following elements in a format prescribed by the Administrator:

(1) Identification of each control unit. All control units in an application must be located at the same source. If the control unit is not a unit under paragraph (a)(1)(i) of this section, a substitution plan or a reduced utilization plan governing the unit shall be submitted by the deadline for submitting a Phase I permit application.

(2) Identification of each transfer unit. A unit shall not be a transfer unit in more than one early ranking application.

(3) For each control and transfer unit, the total tonnage of sulfur dioxide emitted in 1988 plus the total tonnage of sulfur dioxide emitted in 1989, divided by 2. The 1988 and 1989 tonnage figures shall be consistent with the data filed on EIA form 767 for those years and the conversion methodology specified in appendix B of this part.

(4) For each control and transfer unit:

(i) The projected annual utilization (in mmBtu) for 1995 multiplied by the projected uncontrolled emissions rate (i.e., the emissions rate in the absence of title IV of the Act) for 1995 (in lbs/mmBtu), divided by 2000 lbs/ton.

(ii) The projected annual utilization (in mmBtu) for 1996 multiplied by the projected uncontrolled emissions rate (i.e., the emissions rate in the absence of title IV of the Act) for 1996 (in lbs/mmBtu), divided by 2000 lbs/ton.

(5) For each control and transfer unit, the number of Phase I extension reserve allowances requested for 1995 and for 1996, not to exceed the difference between:

(i) The lesser of the value for the unit under paragraph (c)(3) of this section and the value for the unit for that year under paragraph (c)(4) of this section, and

(ii) Each unit's baseline multiplied by 2.5 lb/mmBtu, divided by 2000 lbs/ton.

(6) Documentation that the annual emissions reduction obligations transferred from all transfer units to all control units do not exceed those authorized under this section, as follows:

(i) For each control unit, the difference, calculated separately for 1995 and 1996, between:

(A) The control unit's allowance allocation in table 1 of § 73.10(2) of this chapter, the allocation under § 72.41 if the control unit is a substitution unit, or the allocation under § 72.43 if the control unit is a compensating unit; and

(B) The projected emissions resulting from 90% control after installing the qualifying Phase I technology, i.e., 10% of the projected uncontrolled emissions for the control unit for the year in accordance with paragraph (c)(4) of this section.

(ii) The sum, by year, of the results under paragraph (c)(6)(i) of this section for all control units.

(iii) The sum, by year, of Phase I extension reserve allowances requested for all transfer units.

(iv) A showing that, for each year, the sum under paragraph (c)(6)(ii) of this section is greater than or equal to the sum under paragraph (c)(6)(iii) of this section.

(7) For each control and transfer unit, the projected controlled emissions for 1997, for 1998, and for 1999 calculated as follows:

Projected annual utilization (in mmBtu) multiplied by the projected controlled emission rate (in lbs/mmBtu), divided by 2000 lbs/ton. 1

1 In the case of a transfer unit that shares a common stack with a unit not listed in table 1 of § 73.10(a) of this chapter and whose emissions of sulfur dioxide are not monitored separately or apportioned in accordance with part 75 of this chapter, the projected figures for the transfer unit under paragraph (c)(7) of this section must be for the units combined.

(8) For each control unit, the number of Phase I extension reserve allowances requested for 1997, for 1998, and for 1999, calculated as follows:

The unit's baseline multiplied by 1.2 lbs/mmBtu and divided by 2000 lbs/ton, minus the projected controlled emissions (in tons/yr) under paragraph (c)(7) of this section for the given year.

(9) The total of Phase I extension reserve allowances requested for all units in the plan for 1995 through 1999.

(10) With regard to each executed contract for the design engineering and construction of qualifying Phase I technology at each control unit governed by the early ranking application, either a copy of the contract or a certification that the contract is on site at the source and will be submitted to the Administrator upon written request. The contract or contracts may be contingent on the Administrator approving the Phase I extension plan.

(11) For each contract for which a certification is submitted under paragraph (c)(10) of this section, a binding letter agreement, signed and dated by each party and specifying:

(i) The type of qualifying Phase I technology to which the contract applies;

(ii) The parties to the contract;

(iii) The date each party executed the contracts;

(iv) The unit to which the contract applies;

(v) A brief list identifying each provision of the contract;

(vi) Any dates to which the parties agree, including construction completion date; and

(vii) The total dollar amount of the contract.

(12) A vendor certification of the sulfur dioxide removal efficiency guaranteed to be achievable by the qualifying Phase I technology for the type and range of fossil fuels (before any treatment prior to combustion) that will be used at the control unit; provided that a vendor certification shall not be a defense against a control unit's failure to achieve 90% control of sulfur dioxide.

(13) The date (not later than December 31, 1996) on which the owners and operators plan to commence operation of the qualifying Phase I technology.

(14) The special provisions of paragraph (f) of this section.

(d) Contents of Phase I extension plan. A complete Phase I extension plan shall include the following elements in a format prescribed by the Administrator:

(1) Identification of each unit in the plan.

(2)(i) A statement that the elements in the Phase I extension plan are identical to those in the previously submitted early ranking application for the plan and that such early ranking application is incorporated by reference; or

(ii) All elements that are different from those in the previously submitted early ranking application for the plan and a statement that the early ranking application is incorporated by reference as modified by the newly submitted elements; provided that the Phase I extension plan shall not add any new control units or increase the total Phase I extension allowances requested; or

(iii) All elements required for an early ranking application and a statement that no early ranking application for the plan was submitted.

(e) Administrator's action—(1) Early ranking applications. (i) The Administrator may approve in whole or in part or with changes or conditions, as appropriate, or disapprove an early ranking application.

(ii) The Administrator will act on each early ranking application in the order of receipt.

(iii) The Administrator will determine the order of receipt by the following procedures:

(A) Hand-delivered submissions and mailed submissions will be deemed to have been received on the date they are received by the Administrator; provided that all submissions received by the Administrator prior to the 40th day after publication of this subpart in the Federal Register will be deemed received on the 40th day.

(B) All submissions received by the Administrator on the same day will be deemed to have been received simultaneously.

(C) The order of receipt of all submissions received simultaneously will be determined by a public lottery if allocation of Phase I extension reserve allowances to each of the simultaneous submissions would result in oversubscription of the Phase I extension reserve.

(iv) Based on the allowances requested under paragraph (c)(9) of this section, as adjusted by the Administrator in approving the early ranking application, the Administrator will award Phase I extension reserve allowances for each complete early ranking application to the extent that allowances that have not been awarded remain in the Phase I extension reserve at the time the Administrator acts on the application. The allowances will be awarded in accordance with the procedures set forth the allocation of reserve allowances in paragraph (e)(3) of this section.

(v) The Administrator's action on an early ranking application shall be conditional on the Administrator's action on a timely and complete Acid Rain permit application that includes a complete Phase I extension plan and, where the plan includes a unit under paragraph (a)(1) (ii) and (iii) of this section, a complete substitution plan or reduced utilization plan, as appropriate.

(vi) Not later than 15 days after receipt of each early ranking application, the Administrator will notify, in writing, the designated representative of each application of the date that the early ranking application was received and one of the following:

(A) The award of allowances if the application was complete and the Phase I extension reserve as not oversubscribed;

(B) A determination that the application was incomplete and is disapproved; or

(C) If the Phase I extension reserve was oversubscribed, a list of the applications received on that date, the number of Phase I extension allowances requested in each application, and the date, time, and location of a lottery to determine the order of receipt for all applications received on that date.

(vii) The date of a lottery for all applications received on a given day will not be earlier than 15 days after the Administrator notifies each designated representative whose applications were received on that date.

(viii) Any early ranking application may be withdrawn from the lottery if a letter signed by the designated representative of each unit governed by the application and requesting withdrawal is received by the Administrator before the lottery takes place.

(2) Phase I extension plans. (i) The Administrator will act on each Phase I extension plan in the order that the early ranking application for that plan was received or, if no early ranking application was received, in the order that the Phase I extension plan was received, as determined under paragraph (e)(1)(iii) of this section.

(ii) Based on the allowances requested under paragraph (c)(9) of this section, as adjusted under paragraph (d) of this section and by the Administrator in approving the Phase I extension plan, the Administrator will allocate Phase I extension reserve allowances to the Allowance Tracking System account of each control and transfer unit upon issuance of an Acid Rain permit containing the approved Phase I extension plan. The allowances will be allocated using the procedures set forth in paragraph (e)(3) of this section.

(iii) The Administrator will not approve a Phase I extension plan, even if it meets the requirements of this section, unless unallocated allowances remain in the Phase I extension reserve at the time the Administrator acts on the plan.

(3) Allowance allocations. In addition to any allowances allocated in accordance with table 1 of § 73.10(a) of this chapter and other approved compliance options, the Administrator will allocate Phase I extension reserve allowances to each eligible unit in a Phase I extension plan in the following order.

(i) For 1995, to each control unit in the order in which it is listed in the plan and then to each transfer unit in the order in which it is listed.

(ii) For 1996, to each control unit in the order in which it is listed in the plan and then to each transfer unit in the order in which it is listed.

(iii) For 1997, to each control unit in the order in which it is listed in the plan, then likewise for 1998, and then likewise for 1999.

(iv) The Administrator will allocate any Phase I extension reserve allowances returned to the Administrator to the next Phase I extension plan, in the rank order established under paragraph (e)(1)(iii) of this section, that continues to meet the requirements of this section and this part.

(f) Special provisions—(1) Emissions Limitations—(i) Sulfur Dioxide. (A) If a control or transfer unit governed by an approved Phase I extension plan emits in 1997, 1998, or 1999 sulfur dioxide in excess of the projected controlled emissions for the unit specified for the year under paragraph (c)(7) of this section as adjusted under paragraph (d) of this section and by the Administrator in approving the Phase I extension plan, the Administrator will deduct allowances equal to such exceedence from the unit's annual allowance allocation in the following calendar year. 2

2 In the case of a transfer unit that shares a common stack with a unit not listed in table 1 of § 73.10(a) of this chapter where the units are not monitored separately or apportioned in accordance with part 75 of this chapter, the combined emissions of both units will be deemed to be the transfer unit's emissions for purposes of applying paragraph (f)(1)(i) of this section.

(B) Failure to demonstrate at least a 90% reduction of sulfur dioxide in 1997, 1998, or 1999 in accordance with part 75 of this chapter at a control unit governed by an approved Phase I extension plan shall be a violation of this section. In the event of any such violation, in addition to any other liability under the Act, the Administrator will deduct allowances from the control unit's compliance subaccount for the year of the violation. The deduction will be calculated as follows:

Allowances deducted = (1 − (percent reduction achieved · 90%)) × Phase I extension reserve allowances received where: “Percent reduction achieved” is the percent reduction determined in accordance with part 75 of this chapter. “Phase I extension reserve allowances received” is the number of Phase I extension reserve allowances allocated for the year under paragraph (e)(2)(ii) of this section.

(ii) Nitrogen Oxides. (A) Beginning on January 1, 1997, each control and transfer unit shall be subject to the Acid Rain emissions limitations for nitrogen oxides.

(B) Notwithstanding paragraph (f)(1)(ii)(A) of this section, a transfer unit shall be subject to the Acid Rain emissions limitations for nitrogen oxides, under section 407 of the Act and regulations implementing section 407 of the Act, beginning on January 1 of any year for which a transfer unit is allocated fewer Phase I extension reserve allowances than the maximum amount that the designated representative could have requested in accordance with paragraph (c)(5) of this section (as adjusted under paragraph (d) of this section and by the Administrator in approving the Phase I extension plan) unless the transfer unit is the last unit allocated Phase I extension reserve allowances under the plan.

(2) Monitoring requirements. Each control unit shall comply with the special monitoring requirements for Phase I extension plans in accordance with part 75 of this chapter.

(3) Reporting requirements. Each control and transfer unit shall comply with the special reporting requirements for Phase I extension plans in accordance with § 72.93.

(4) Liability. The owners and operators of a control or transfer unit governed by an approved Phase I extension plan shall be liable for any violation of the plan or this section at that or any other unit governed by the plan, including liability for fulfilling the obligations specified in part 77 of this chapter and section 411 of the Act.

(5) Termination. A Phase I extension plan shall be in effect only in Phase I, and no Phase I extension plan shall be terminated before the end of Phase I. The designated representative may, however, withdraw a Phase I extension plan at any time prior to issuance of the Phase I Acid Rain permit that includes the Phase I extension plan, as adjusted.

(a) Applicability. This section shall apply to the designated representative of:

(1) Any Phase I unit, including:

(i) Any unit listed in table 1 of § 73.10(a) of this chapter; and

(ii) Any other unit that becomes a Phase I unit (including any unit designated as a compensating unit under this section or a substitution unit under § 72.41).

(2) Any affected unit that:

(i) Is not otherwise subject to any Acid Rain emissions limitation or emissions reduction requirements during Phase I; and

(ii) Meets the requirement, as set forth in paragraphs (c)(4)(ii) and (d) of this section, that for each year for which the unit is to be covered by the reduced utilization plan, the unit's baseline divided by 2,000 lbs/ton and multiplied by the lesser of the unit's 1985 actual SO2 emissions rate or 1985 allowable SO2 emissions rate does not exceed the sum of

(A) The lesser of 10 percent of the amount under paragraph (a)(2)(ii) of this section or 200 tons, plus

(B) The unit's baseline divided by 2,000 lbs/ton and multiplied by the lesser of: The greater of the unit's 1989 or 1990 actual SO2 emissions rate; or, as of November 15, 1990, the most stringent federally enforceable or State enforceable SO2 emissions limitation covering the unit for 1995-1999.

(b)(1) The designated representative of any unit under paragraph (a)(1) of this section shall include in the Acid Rain permit application for the unit a reduced utilization plan, meeting the requirements of this section, when the owners and operators of the unit plan to:

(i) Reduce utilization of the unit below the unit's baseline to achieve compliance, in whole or in part, with the unit's Phase I Acid Rain emissions limitations for sulfur dioxide; and

(ii) Accomplish such reduced utilization through one or more of the following:

(A) Shifting generation of the unit to a unit under paragraph (a)(2) of this section or to a sulfur-free generator; or

(B) Using one or more energy conservation measures or improved unit efficiency measures.

(2)(i) Energy conservation measures shall be either demand-side measures implemented after December 31, 1987 in the residence or facility of a customer to whom the unit's utility system sells electricity or supply-side measures implemented after December 31, 1987 in facilities of the unit's utility system.

(ii) The utility system shall pay in whole or in part for the energy conservation measures either directly or, in the case of demand-side measures, through payment to another person who purchases the measure.

(iii) Energy conservation measures shall not include:

(A) Conservation programs that are exclusively informational or educational in nature;

(B) Load management measures that lead to reduction of electric energy demands during a utility's peak generating period, unless kilowatt hour savings can be verified under § 72.91(b); or

(C) Utilization of industrial waste gases, unless the designated representative certifies that there is no net increase in sulfur dioxide emissions from such utilization.

(iv) For calendar years when the unit's utility system is a subsidiary of a holding company and the unit's dispatch system is or includes all units that are interconnected and centrally dispatched and included in that holding company, then:

(A) Energy conservation measures shall be either demand-side measures implemented in the residence or facility of a customer to whom any utility system in the holding company sells electricity or supply-side measures implemented in facilities of any utility system in the holding company. Such utility system shall pay in whole or in part for the measures either directly or, in the case of demand-side measures, through payment to another person who purchases the measures.

(B) The limitations in paragraph (b)(2)(iii) of this section shall apply.

(3)(i) Improved unit efficiency measures shall be implemented in the unit after December 31, 1987. Such measures include supply-side measures listed in appendix A, section 2.1 of part 73 of this chapter.

(ii) The utility system shall pay in whole or in part for the improved unit efficiency measures.

(4) The requirement to submit a reduced utilization plan shall apply in the event that the owners and operators of a Phase I unit decide, at any time during any Phase I calendar year, to rely on the method of compliance in paragraph (b)(1) of this section. In that case, the designated representative shall submit a reduced utilization plan not later than 6 months (or 90 days if sumitted in accordance with § 72.82 or § 72.83), or a notification to activate a conditionally approved plan in accordance with § 72.40(c) not later than 60 days, before the allowance transfer deadline applicable to the first year for which the plan is to take effect.

(5) The designated representative of each source with a unit designated as a compensating unit in any plan submitted under paragraphs (b) (1) or (4) of this section shall incorporate by reference in the permit application each such plan.

(c) Contents of reduced utilization plan. A complete reduced utilization plan shall include the following elements in a format prescribed by the Administrator:

(1) Identification of each Phase I unit for which the owners and operators plan reduced utilization.

(2) Except where the designated representative requests conditional approval of the plan, the first calendar year and, if known, the last calendar year in which the reduced utilization plan is to be in effect. Unless the designated representative specifies an earlier calendar year, the last calendar year shall be deemed to be 1999.

(3) A statement whether the plan designates a compensating unit or relies on sulfur-free generation, any energy conservation measure, or any improved unit efficiency measure to account for any amount of reduced utilization.

(4) If the plan designates a compensating unit, or relies on sulfur-free generation, to account for any amount of reduced utilization:

(i) Identification of each compensating unit or sulfur-free generator.

(ii) For each compensating unit. (A) Each of the following: The unit's 1985 actual SO2 emissions rate; the unit's 1985 allowable emissions rate; the unit's 1989 actual SO2 emissions rate; the unit's 1990 actual SO2 emissions rate; and, as of November 15, 1990, the most stringent unit-specific federally enforceable or State enforceable SO2 emissions limitation covering the unit for 1995-1999. For purposes of determining the most stringent emissions limitation, applicable emissions limitations shall be converted to lbs/mmBtu in accordance with appendix B of this part. Where the most stringent emissions limitation is not the same for every year in 1995-1999, the most stringent emissions limitation shall be stated separately for each year.

(B) The unit's baseline divided by 2,000 lbs/ton and multiplied by the lesser of the unit's 1985 actual SO2 emissions rate or 1985 allowable SO2 emissions rate.

(C) The unit's baseline divided by 2000 lbs/ton and multiplied by the lesser of: The greater of the unit's 1989 or 1990 actual SO2 emissions rate; or, as of November 15, 1990, the most stringent unit-specific federally enforceable or State enforceable SO2 emissions limitation covering the unit for 1995-1999. Where the most stringent emissions limitation is not the same for every year in 1995-1999, the calculation in the prior sentence shall be made separately for each year.

(D) The difference between the amount under paragraph (c)(4)(ii)(B) of this section and the amount under paragraph (c)(4)(ii)(C) of this section. If the difference calculated in the prior sentence for any year exceeds the lesser of 10 percent of the amount under paragraph (c)(4)(ii)(B) of this section or 200 tons, the unit shall not be designated as a compensating unit for the year. Where the most stringent unit-specific federally enforceable or State enforceable SO2 emissions limitation is not the same for every year in 1995-1999, the difference shall be calculated separately for each year.

(E) The allowance allocation calculated as the amount under paragraph (c)(4)(ii)(B) of this section. If the compensating unit is a new unit, it shall be deemed to have a baseline of zero and shall be allocated no allowances.

(F) Where, as of November 15, 1990, a non-unit-specific federally enforceable or State enforceable SO2 emissions limitation covers the unit for any year in 1995-1999, the designated representative shall state each such limitation and propose a method for applying unit-specific and non-unit-specific emissions limitations under paragraph (d) of this section.

(iii) For each sulfur-free generator, identification of any other Phase I units that designate the same sulfur-free generator in another plan submitted under paragraph (b) (1) or (4) of this section.

(iv) For each compensating unit or sulfur-free generator not in the dispatch system of the unit reducing utilization under the plan, the system directives or power purchase agreements or other contractual agreements governing the acquisition, by the dispatch system, of the electrical energy that is generated by the compensating unit or sulfur-free generator and on which the plan relies to accomplish reduced utilization. Such contractual agreements shall identify the specific compensating unit or sulfur-free generator from which the dispatch system acquires such electrical energy.

(5) The special provisions in paragraph (f) of this section.

(d) Administrator's action. (1) If the Administrator approves the reduced utilization plan, he or she will allocate allowances, as provided in the approved plan, to the Allowance Tracking System account for any designated compensating unit upon issuance of an Acid Rain permit containing the plan, except that, if the plan is conditionally approved, the allowances will be allocated upon revision of the permit to activate the plan.

(2) Where, as of November 15, 1990, a non-unit-specific federally enforceable or State enforceable emissions limitation covers the unit for any year during 1995-1999, the Administrator will specify on a case-by-case basis a method for using unit-specific and non-unit specific emissions limitations in approving or disapproving the compensating unit. The specified method will not treat a non-unit-specific emissions limitation as a unit-specific emissions limitation and will not result in compensating units retaining allowances allocated under paragraph (d)(1) of this section for emissions reductions necessary to meet a non-unit-specific emissions limitation. Such method may require an end-of-year review and the disapproval and de-designation, and adjustment of the allowances allocated to, the compensating unit and may require the designated representative of the compensating unit to surrender allowances by the allowance transfer deadline of the year that is subject to the review. Any surrendered allowances shall have the same or an earlier compliance use date as the allowances originally allocated for the year, and the designated representative may identify the serial numbers of the allowances to be deducted. In the absence of such identification, such allowances will be deducted on a first-in, first-out basis under § 73.35(c)(2) of this chapter.

(e) Failure to submit a plan. The designated representative of a Phase I unit will be deemed not to violate, during a Phase I calendar year, the requirement to submit a reduced utilization plan under paragraph (b)(1) or (4) of this section if the designated representative complies with the allowance surrender and other requirements of §§ 72.33, 72.91, and 72.92 of this chapter.

(f) Special provisions—(1) Emissions limitations. (i) Any compensating unit designated under an approved reduced utilization plan shall become a Phase I unit from January 1 of the calendar year in which the plan takes effect until January 1 of the year for which the plan is no longer in effect or is terminated, except that such unit shall not become subject to the Acid Rain emissions limitations for nitrogen oxides in Phase I under part 76 of this chapter.

(ii) The designated representative of any Phase I unit (including a unit governed by a reduced utilization plan relying on energy conservation, improved unit efficiency, sulfur-free generation, or a compensating unit) shall surrender allowances, and the Administrator will deduct or return allowances, in accordance with paragraph (d)(2) of this section and subpart I of this part.

(2) Reporting requirements. The designated representative of any Phase I unit (including a unit governed by a reduced utilization plan relying on energy conservation, improved unit efficiency, sulfur-free generation, or a compensating unit) shall comply with the special reporting requirements under §§ 72.91 and 72.92.

(3) Liability. The owners and operators of a unit governed by an approved reduced utilization plan shall be liable for any violation of the plan or this section at that or any other unit governed by the plan, including liability for fulfilling the obligations specified in part 77 of this chapter and section 411 of the Act.

(4) Termination. (i) A reduced utilization plan shall be in effect only in Phase I for the calendar years specified in the plan or until the calendar year for which a termination of the plan takes effect; provided that no reduced utilization plan that designates a compensating unit that serves as a control unit under a Phase I extension plan shall be terminated, and no such unit shall be de-designated as a compensating unit, before the end of Phase I.

(ii) To terminate a reduced utilization plan for a given calendar year prior to its last year for which the plan was approved:

(A) A notification to terminate in accordance with § 72.40(d) shall be submitted no later than 60 days before the allowance transfer deadline applicable to the given year; and

(B) In the notification to terminate, the designated representative of any compensating unit governed by the plan shall state that he or she surrenders for deduction from the unit's Allowance Tracking System account allowances equal in number to, and with the same or an earlier compliance use date as, those allocated under paragraph (d) of this section to each compensating unit for the calendar years for which the plan is to be terminated. The designated representative may identify the serial numbers of the allowances to be deducted. In the absence of such identification, allowances will be deducted on a first-in, first-out basis under § 73.35(c)(2) of this chapter.

(iii) If the requirements of paragraph (f)(3)(ii) are met and upon revision of the permit to terminate the reduced utilization plan, the Administrator will deduct the allowances specified in paragraph (f)(3)(ii)(B) of this section. No reduced utilization plan shall be terminated, and no unit shall be de-designated as a Phase I unit, unless such deduction is made.

[58 FR 3650, Jan. 11, 1993, as amended at 59 FR 60230, Nov. 22, 1994; 60 FR 18470, Apr. 11, 1995; 62 FR 55481, Oct. 24, 1997]

(a) Applicability. (1) This section shall apply to the designated representative of:

(i) Any existing affected unit that is a coal-fired unit and has a 1985 actual SO2 emissions rate equal to or greater than 1.2 lbs/mmBtu.

(ii) Any new unit that will be a replacement unit, as provided in paragraph (b)(2) of this section, for a unit meeting the requirements of paragraph (a)(1)(i) of this section.

(iii) Any oil and/or gas-fired unit that has been awarded clean coal technology demonstration funding as of January 1, 1991 by the Secretary of Energy.

(2) A repowering extension does not exempt the owner or operator for any unit governed by the repowering plan from the requirement to comply with such unit's Acid Rain emissions limitations for sulfur dioxide.

(b) The designated representative of any unit meeting the requirements of paragraph (a)(1)(i) of this section may include in the unit's Phase II Acid Rain permit application a repowering extension plan that includes a demonstration that:

(1) The unit will be repowered with a qualifying repowering technology in order to comply with the Phase II emissions limitations for sulfur dioxide; or

(2) The unit will be replaced by a new utility unit that has the same designated representative and that is located at a different site using a qualified repowering technology and the existing unit will be permanently retired from service on or before the date on which the new utility unit commences commercial operation.

(c) In order to apply for a repowering extension, the designated representative of a unit under paragraph (a) of this section shall:

(1) Submit to the permitting authority, by January 1, 1996, a complete repowering extension plan;

(2) Submit to the Administrator, before June 1, 1997, a complete petition for approval of repowering technology; and

(3) If the repowering extension plan is submitted for conditional approval, submit by December 31, 1997, a notification to activate the plan in accordance with § 72.40(c).

(d) Contents and Review of Petition for Approval of Repowering Technology. (1) A complete petition for approval of repowering technology shall include the following elements, in a format prescribed by the Administrator, concerning the technology to be used in a plan under paragraph (b) of this section and may follow the repowering technology demonstration protocol issued by the Administrator:

(i) Identification and description of the technology.

(ii) Vendor certification of the guaranteed performance characteristics of the technology, including:

(A) Percent removal and emission rate of each pollutant being controlled;

(B) Overall generation efficiency; and

(C) Information on the state, chemical constituents, and quantities of solid waste generated (including information on land-use requirements for disposal) and on the availability of a market to which any by-products may be sold.

(iii) If the repowering technology is not listed in the definition of a qualified repowering technology in § 72.2, a vendor certification of the guaranteed performance characteristics that demonstrate that the technology meets the criteria specified for non-listed technologies in § 72.2; provided that the existence of such guarantee shall not be a defense against the failure to meet the criteria for non-listed technologies.

(2) The Administrator may request any supplemental information that is deemed necessary to review the petition for approval of repowering technology.

(3) The Administrator shall review the petition for approval of repowering technology and, in consultation with the Secretary of Energy, shall make a conditional determination of whether the technology described in the petition is a qualifying repowering technology.

(4) Based on the petition for approval of repowering technology and the information provided under paragraph (d)(2) of this section and § 72.94(a), the Administrator will make a final determination of whether the technology described in the petition is a qualifying repowering technology.

(e) Contents of repowering extension plan. A complete repowering extension plan shall include the following elements in a format prescribed by the Administrator:

(1) Identification of the existing unit governed by the plan.

(2) The unit's federally-approved State Implementation Plan sulfur dioxide emissions limitation.

(3) The unit's 1995 actual SO2 emissions rate.

(4) A schedule for construction, installation, and commencement of operation of the repowering technology approved or submitted for approval under paragraph (d) of this section, with dates for the following milestones:

(i) Completion of design engineering;

(ii) For a plan under paragraph (b)(1) of this section, removal of the existing unit from operation to install the qualified repowering technology;

(iii) Commencement of construction;

(iv) Completion of construction;

(v) Start-up testing;

(vi) For a plan under paragraph (b)(2) of this section, shutdown of the existing unit; and

(vii) Commencement of commercial operation of the repowering technology.

(5) For a plan under paragraph (b)(2) of this section:

(i) Identification of the new unit. A new unit shall not be included in more than one repowering extension plan.

(ii) Certification that the new unit will replace the existing unit.

(iii) Certification that the new unit has the same designated representative as the existing unit.

(iv) Certification that the existing unit will be permanently retired from service on or before the date the new unit commences commercial operation.

(6) The special provisions of paragraph (h) of this section.

(f) Permitting authority's action on repowering extension plan. (1) The permitting authority shall not approve a repowering extension plan until the Administrator makes a conditional determination that the technology is a qualified repowering technology, unless the permitting authority conditionally approves such plan subject to the conditional determination of the Administrator.

(2) Permit issuance. (i) Upon a conditional determination by the Administrator that the technology to be used in the repowering extension plan is a qualified repowering technology and a determination by the permitting authority that such plan meets the requirements of this section, the permitting authority shall issue the Acid Rain portion of the operating permit including:

(A) The approved repowering extension plan; and

(B) A schedule of compliance with enforceable milestones for construction, installation, and commencement of operation of the repowering technology and other requirements necessary to ensure that Phase II emission reduction requirements under this section will be met.

(ii) Except as otherwise provided in paragraph (g) of this section, the repowering extension shall be in effect starting January 1, 2000 and ending on the day before the date (specified in the Acid Rain permit) on which the existing unit will be removed from operation to install the qualifying repowering technology or will be permanently removed from service for replacement by a new unit with such technology; provided that the repowering extension shall end no later than December 31, 2003.

(iii) The portion of the operating permit specifying the repowering extension and other requirements under paragraph (f)(2)(i) of this section shall be subject to the Administrator's final determination, under paragraph (d)(4) of this section, that the technology to be used in the repowering extension plan is a qualifying repowering technology.

(3) Allowance allocation. The Administrator will allocate allowances after issuance of an operating permit containing the repowering extension plan (or, if the plan is conditionally approved, after the revision of the Acid Rain permit under § 72.40(c)) and of the Administrator's final determination, under paragraph (d)(4) of this section, that the technology to be used in such plan is a qualifying repowering technology. Allowances will be allocated (including a pro rata allocation for any fraction of a year), as follows:

(i) To the existing unit under the approved plan, in accordance with § 73.21 of this chapter during the repowering extension under paragraph (f)(2)(ii) of this section; and

(ii) To the existing unit under the approved plan under paragraph (b)(1) of this section or, in lieu of any further allocations to the existing unit, to the new unit under the approved plan under paragraph (b)(2) of this section, in accordance with § 73.21 of this chapter, after the repowering extension under paragraph (f)(2)(ii) of this section ends.

(g) Failed repowering projects. (1)(i) If, at any time before the end of the repowering extension under paragraph (f)(2)(ii) of this section, the designated representative of a unit governed by an approved repowering extension plan notifies the Administrator in writing that the owners and operators have decided to terminate efforts to properly design, construct, and test the repowering technology specified in the plan before completion of construction or start-up testing and demonstrates, in a requested permit modification, to the Administrator's satisfaction that such efforts were in good faith, the unit shall not be deemed in violation of the Act because of such a termination. If the Administrator is not the permitting authority, a copy of the requested permit modification shall be sumitted to the Administrator. Where the preceding requirements of this paragraph are met, the permitting authority shall revise the operating permit in accordance with this paragraph and paragraph (g)(1)(ii) of this section and § 72.81 (permit modification).

(ii) Regardless of whether notification under paragraph (g)(1)(i) of this section is given, the repowering extension will end beginning on the earlier of the date of such notification or the date by which the designated representative was required to give such notification under § 72.94(d). The Administrator will deduct allowances (including a pro rata deduction for any fraction of a year) from the Allowance Tracking System account of the existing unit to the extent necessary to ensure that, beginning the day after the extension ends, allowances are allocated in accordance with § 73.21(c)(1) of this chapter.

(2) If the designated representative of a unit governed by an approved repowering extension plan demonstrates to the satisfaction of the Administrator, in a requested permit modification, that the repowering technology specified in the plan was properly constructed and tested on such unit but was unable to achieve the emissions reduction limitations specified in the plan and that it is economically or technologically infeasible to modify the technology to achieve such limits, the unit shall not be deemed in violation of the Act because of such failure to achieve the emissions reduction limitations. If the Administrator is not the permitting authority, a copy of the requested permit modification shall be sumitted to the Administrator. In order to be properly constructed and tested, the repowering technology shall be constructed at least to the extent necessary for direct testing of the multiple combustion emissions (including sulfur dioxide and nitrogen oxides) from such unit while operating the technology at nameplate capacity. Where the preceding requirements of this paragraph are met:

(i) The permitting authority shall revise the Acid Rain portion of the operating permit in accordance with paragraphs (g)(2) (ii) and (iii) and § 72.81 (permit modification).

(ii) The existing unit may be retrofitted or repowered with another clean coal or other available control technology.

(iii) The repowering extension will continue in effect until the earlier of the date the existing unit commences commercial operation with such control technology or December 31, 2003. The Administrator will allocate or deduct allowances as necessary to ensure that allowances are allocated in accordance with paragraph (f)(3) of this section applying the repowering extension under this paragraph.

(h) Special provisions—(1) Emissions Limitations. (i) Sulfur Dioxide. Allowances allocated during the repowering extension under paragraphs (f)(3) and (g)(2)(iii) of this section to a unit governed by an approved repowering extension plan shall not be transferred to any Allowance Tracking System account other than the unit accounts of other units at the same source as that unit.

(ii) Nitrogen oxides. Any existing unit governed by an approved repowering extension plan shall be subject to the Acid Rain emissions limitations for nitrogen oxides in accordance with part 76 of this chapter beginning on the date that the unit is removed from operation to install the repowering technology or is permanently removed from service.

(iii) No existing unit governed by an approved repowering extension plan shall be eligible for a waiver under section 111(j) of the Act.

(iv) No new unit governed by an approved repowering extension plan shall receive an exemption from the requirements imposed under section 111 of the Act.

(2) Reporting requirements. Each unit governed by an approved repowering extension plan shall comply with the special reporting requirements of § 72.94.

(3) Liability. (i) The owners and operators of a unit governed by an approved repowering plan shall be liable for any violation of the plan or this section at that or any other unit governed by the plan, including liability for fulfilling the obligations specified in part 77 of this chapter and section 411 of the Act.

(ii) The units governed by the plan under paragraph (b)(2) of this section shall continue to have a common designated representative until the existing unit is permanently retired under the plan.

(4) Terminations. Except as provided in paragraph (g) of this section, a repowering extension plan shall not be terminated after December 31, 1999.

[58 FR 3650, Jan. 11, 1993, as amended at 58 FR 15649, Mar. 23, 1993; 62 FR 55481, Oct. 24, 1997]