2

Supp.), and directed the Board to adopt regulations implementing such a program (415 ILCS

5/9.9(b) and (d) (1998) (1998 State Bar Edition, 1999 Supp.)). The Board’s action today is in

response to that directive.

PROCEDURAL HISTORY

The Illinois Environmental Protection Agency (Agency) filed this rulemaking proposal

with the Board on October 16, 2000. The Board adopted the rules as proposed by the Agency

for first notice on October 19, 2000. See Proposed New 35 Ill. Adm. Code 217.Subpart U,

NO

x

Control And Trading Program For Specified NO

x

Generating Units, Subpart X,

Voluntary NO

x

Emissions Reduction Program, and Amendments to 35 Ill. Adm. Code 211

(October 19, 2000), R01-17. The Secretary of State published the first notice rules in the

Illinois Register

on November 13, 2000 (45 Ill. Reg. 16,452, 16,467).

The Board held public hearings in this matter in Chicago, Illinois, on November 29,

2000, and December 20, 2000, before Board Hearing Officer Bobb Beauchamp and Board

Member Marili McFawn.

2 The hearings were scheduled and conducted in accordance with

Section 28.5 of the Act (415 ILCS 5/28.5 (1998)). Section 28.5 provides for “fast-track”

adoption of certain regulations necessary for compliance with the Clean Air Act Amendments

of 1990 (CAAA) (42 U.S.C. § 7401

et seq

. (1990)).

Agency attorneys Robert Sharpe and Alec Messina presented Laurel Kroack, Deputy

Chief of the Bureau of Air, as a witness at hearing (Exhs. 3 and 3A, Tr.1. at 12-41, Tr.2 at

56-63), and introduced the written testimony of two other staff members: Dennis Lawler,

Manager of the Division of Air Pollution Control (Exh. 2); and Richard Forbes, Manager of

the Ozone Regulatory Unit and Air Quality Planning Section (Exh. 1). Also present from the

Agency to answer questions were: Christopher Romaine, Manager of the Utilities Unit,

Permitting; Berkley Moore and Yoginder Mahajan of the Air Quality Planning Unit; and

Robert Hutton of the Source Monitoring Unit. (Tr.1 at 10-41).

Several members of the regulated community also presented testimony at the hearings:

Sidney M. Marder on behalf of the Illinois Environmental Regulatory Group (IERG) (Exh. 4,

Tr.2 at 10-41); Lyle Wachtel on behalf of the University of Illinois (the University) (Exh. 5,

Tr.2 at 41-49); and Richard Zavoda on behalf of LTV Steel (Exh. 6; Tr.2 at 49-56).

Section 27(b) of the Act requires the Board to request that the Department of

Commerce and Community Affairs (DCCA) conduct a study of the economic impact of any

proposed rules, and to conduct at least one public hearing on the economic impact of those

proposed rules (415 ILCS 5/27(b) (1998)). The Board requested DCCA conduct such a study

in an October 26, 2000 letter. At the December 20, 2000 hearing the Board Hearing Officer

stated that the Board would rely on a March 10, 2000 DCCA letter stating that DCCA would

not conduct economic impact studies on rules pending before the Board. Tr.2 at 10. The

2

The transcripts of the hearing will be cited as “Tr.1 at ___” and “Tr.2 at ___.” The exhibits will

be referred to as “Exh. ___ at __.”

---

3

Board Hearing Officer asked for, but did not receive, any comments on the economic impact

of these rules.

Id

.

The record in this matter closed on January 9, 2001, as required by Section 28.5(l) of

the Act (415 ILCS 5/28.5(l) (1998)). The Board received four timely filed public comments:

the Agency (PC 1), LTV Steel Company (PC 2), the University of Illinois (PC 3), and Clean

Air Action (PC 4). On January 10, 2001, the Illinois Environmental Regulatory Group (PC 5)

and Archer Daniels Midland Company (PC 6) filed public comments.

In this second notice opinion and order, the Board incorporates several clarifying

changes requested by the Agency. One significant change is the deletion of proposed Section

217.460(c), which incorrectly stated that the Agency would adjust the Subpart U NO

x Trading

Budget by adding allowances generated in accordance with Subpart X. Er. at 11.

3

This opinion

and order also includes the

conditional addition of LTV Steel’s Boiler No. 4 to Appendix E and

changes made to Subpart X concerning the sources eligible to participate.

FEDERAL AND STATE BACKGROUND

Ozone Transport

The State of Illinois has the primary responsibility under the CAAA for ensuring that

all National Ambient Air Quality Standards (NAAQS) are met in the State. This includes the

NAAQS for ozone (42 U.S.C. § 7407(a) (1990)). USEPA recognized that states affected by

interstate ozone transport have experienced difficulty in developing the necessary technical

information and control measures necessary to achieve the large level of reductions required to

meet the ozone NAAQS. See “Ozone Attainment Demonstrations” (Nichols Memo)

(March 2, 1995). Interstate ozone transport is the process by which ozone precursors such as

NO

x

move from upwind to downwind areas. Exh. 2 at 3, 62 Fed. Reg. 1420 (Jan. 10, 1997).

The Agency actively participated in the Ozone Transport Assessment Group (OTAG).

Exh. 2 at 4, Exh. 3 at 2-3. OTAG conducted supporting modeling analyses to determine the

magnitude and direction of ozone transport in the eastern half of the United States. OTAG

made recommendations to USEPA concerning the regional emissions reductions necessary to

reduce transported ozone in July 1997. Exh. 2 at 4, Exh. 3 at 3. Based in part on OTAG’s

recommendations, on October 27, 1998, the USEPA issued a document titled “Finding of

Significant Contribution and Rulemaking for Certain States in the Ozone Transport Assessment

Group Regions for Purpose of Reducing Regional Transport of Ozone” (NO

x

SIP Call).

63 Fed. Reg. 57,356 (1998).

NO

x

SIP Call

3

 

The Agency’s Errata Sheet and Motion to Amend, filed with the Board on December 19,

2000, will be referred to as “Er. at __.”

---

4

In the NO

x

SIP Call, USEPA determined that sources and emitting activities in 23

jurisdictions emit NO

x

in amounts that “significantly contribute” to the nonattainment or

interfere with the maintenance of the 1-hour ozone NAAQS in one or more downwind areas.

4

63 Fed. Reg. 57,356. USEPA requires the identified upwind jurisdictions to submit revised

SIP revisions that will reduce those amounts of NO

x

emissions. Exh. 3 at 1-3.

The NO

x

SIP Call suggested, but did not require, that states adopt a “cap and trade”

strategy for the control of NO

x

emissions. 63 Fed. Reg. 57,356, 57,456. If a state elects to

adopt such a program, the NO

x

SIP Call provided a model rule that states could adopt by

reference. 63 Fed. Reg. 57,356, 57,458. The model rule set a regional cap on NO

x

emissions, and then divided that cap among each state’s budget. Each state is free to determine

the size of its trading budget, and individual source allocations, so long as the trading budget and

emissions from all other sources do not exceed the budget set by the NOx SIP Call. 63 Fed. Reg.

57,356, 57,467.

Alternatively, states could develop their own regulations in accordance with the model

rule. 63 Fed. Reg. 57,356, 57,458. For states electing to develop a state program, the NO

x

SIP Call warned that such a state rule “should not deviate from the model rule except in the

areas of applicability, NO

x

allowance allocation methodology, and early reduction credit

[ERC] methodology.”

Id

.

The NO

x

SIP Call stated that state modification of the allocation methodologies and

ERC methodologies would not “impact a State’s eligibility for streamlined approval of its SIP

with respect to the NO

x

Budget Trading Program.” 63 Fed. Reg. 57,356, 57,458 (1998).

However, any state program:

must include an applicability section that at least covers the core sources defined

in the model rule, but States may allow additional stationary sources to

participate in the trading program. These sources must be able to monitor and

report emissions in accordance with the model rule . . . .

Id

.

The model trading program proposed by the NO

x

SIP Call suggested that state

programs apply to a core group of large sources. That group includes any fossil fuel-fired

stationary boiler, combustion turbine, and combined cycle system that: 1) serves an electrical

generator of capacity greater than 25 megawatts (MWe); and 2) does not serve a generator but

has a heat input capacity greater than 250 million British thermal units per hour (mmbtu/hr).

63 Fed. Reg. 57,356, 57,460 (1998). Subpart W regulates EGUs that fall into the first and

second categories. Subpart U regulates only those non-EGUs that fall into the second

category, and are excluded from Subpart W.

The NO

x

SIP Call also requires use of the monitoring methodologies found at

4

The U.S. Court of Appeals for the D.C. Circuit has remanded for further consideration those

portions of the NOx SIP Call pertaining to portions of Missouri and Georgia, and reversed the

inclusion of Wisconsin. See Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000).

---

5

40 C.F.R. Part 75 (Part 75). Both Subparts U and W incorporate by reference the

requirements of 40 C.F.R. Part 96, which includes the monitoring requirements of Part 75.

Compliance with these requirements is a prerequisite

to participation in the federal NOx trading

program.

Statewide NO

x

Budget

In the NO

x

SIP Call, USEPA used 1995 data to establish an emission inventory and

then applied a growth factor to arrive at a 2007 base year emission inventory. Exh. 1 at 3.

USEPA then projected the amount of NO

x

reductions that could be achieved using highly cost-

effective control measures applied to specific source categories. Exh. 3 at 3. Subtracting

these projected inventory reductions from the 2007 base year emission inventory yields the

2007 controlled emission inventory. Tr.1 at 97

.

USEPA set a budget of 270,560 tons of NO

x

per ozone control season for all sources in Illinois.

Id

., Exh. 3 at 3, 65 Fed. Reg. 11,222

(2000).

The statewide budget covers emissions from all sources: area (such as household

paints); mobile (such as cars, trucks, planes, and off-road vehicles); and point sources (such as

EGUs and non-EGUs). Tr.1 at 97-99. USEPA separated the budget into trading and non-

trading portions.

Id

. The non-trading portion (234,977 tons of NO

x

) includes mostly area and

mobile sources where reductions are being addressed mainly through federal programs.

Id

.

The trading portion (35,583 tons of NO

x

) includes point sources subject to the requirements of

Subparts U or W.

Id

. The NO

x

SIP Call included specific line items for various emission

source categories in each statewide budget. The control period budget for non-EGUs subject

to the NO

x

Trading Program is 4,882 tons of NO

x

. Exh. 1 at 3. 65 Fed. Reg. 11,222

(March 2, 2000).

The Agency determined that Illinois cannot meet its NO

x

budget unless it controls

emissions from four major stationary source categories: (1) large EGUs (serving a generator

greater than 25 MWe); (2) large non-EGUs (units with a maximum heat input greater than 250

mmbtu/hr); (3) large cement kilns; and (4) large internal stationary combustion engines. Exh.

2 at 5.

Nitrogen Oxides Trading System

The Illinois General Assembly in 1999 adopted new Section 9.9 of the Act titled

“Nitrogen oxides trading system”

5 (415 ILCS 5/9.9 (1998 State Bar Edition, 1999 Supp.)). In

Section 9.9 the General Assembly finds “[t]hat reducing emissions of NO

x

in the State helps

the State to meet the national ambient air quality standard for ozone . . .” (415 ILCS

5/9.9(a)(2) (1998 State Bar Edition, 1999 Supp.)) and “[t]hat emissions trading is a cost

effective means of obtaining reductions of NO

x

emissions” (415 ILCS 5/9.9(a)(3) (1998 State

Bar Edition, 1999 Supp.)). Further, Section 9.9 directs that “the Board shall adopt regulations

to implement an interstate NO

x

trading program . . . as provided for in 40 CFR Part 96 . . . .”

5

On August 19, 1999, Governor Ryan signed Section 9.9 into law as Pub. Act 91-0631.

---

6

415 ILCS 5/9.9(b) (1998 State Bar Edition, 1999 Supp.). Part 96 is the portion of the NO

x

SIP Call that contains the federal NO

x

emissions trading program.

Section 9.9(d) directs the Board to address specific issues in adopting regulations to

implement the NO

x

Trading Program. Section 9.9(d) mandates that the Board:

1. assure that the economic impact and technical feasibility of NO

x

emissions reductions under the NO

x

Trading Program are considered

relative to the traditional regulatory control requirements in the State for

EGUs and non-EGUs;

2. provide that emission units, as defined in Section 39.5(1) of this Act,

may opt into the NO

x

Trading Program;

3. provide for voluntary reductions of NO

x

emissions from emission units,

as defined in Section 39.5(1) of this Act, not otherwise included under

paragraph (c) or (d)(2) of this Section to provide additional allowances to

EGUs and non-EGUs to be allocated by the Agency. The regulations

shall further provide that such voluntary reductions are verifiable,

quantifiable, permanent, and federally enforceable;

4. provide that the Agency allocate to non-EGUs allowances that are

designated in the rule, unless the Agency has been directed to transfer

the allocations to another unit subject to the requirements of the NO

x

Trading Program, and that upon shutdown of a non-EGU, the unit may

transfer or sell the NO

x

allowances that are allocated to such unit; and

5. provide that the Agency shall set aside annually a number of allowances,

not to exceed 5% of the total EGU trading budget, to be made available

to new EGUs.

A. Those EGUs that commence commercial operation, as defined in

40 CFR Section 96.2, at a time that is more than half way

through the control period in 2002 shall return to the Agency any

allowances that were issued to it by the Agency and were not

used for compliance in 2003.

B. The Agency may charge EGUs that commence commercial operation, as

defined in 40 CFR Section 96.2, on or after January 1, 2003, for the

allowances it issues to them. 415 ILCS 5/9.9(d) (1998 State Bar Edition,

1999 Supp.).

The Board has reviewed today’s rules, and finds that they comply with the requirements

of Section 9.9(d). Specifically, Subpart U satisfies the mandates of Sections 9.9(d)(2) and (4),

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7

and incorporates a new source set aside for large non-EGUs similar to the requirements in

Section 9.9(d)(5). Subpart X provides the voluntary reduction program required by Section

9.9(d)(3).

Board Actions

The Board has recently adopted final rules implementing Sections 9.9(b), (d)(2), and

(d)(5) of the Act. Those rules apply to large EGUs, units that primarily generate electricity for

sale. See 35 Ill. Adm. Code 217.Subpart W, The NO

x

Trading Program for Electrical

Generating Units, and Amendments to 35 Ill. Adm. Code 211 And 217 (December 21, 2000),

R01-9. The Board has also adopted for second notice rules that implement Section 9.9(b) of

the Act, which will reduce NO

x

emissions from large cement kilns. See Proposed New 35 Ill.

Adm. Code 217.Subpart T, Cement Kilns, and Amendment to 35 Ill. Adm. Code 211 and 217

(December 21, 2001), R01-11. The Agency will submit proposed rules addressing large

internal combustion engines once USEPA completes its court ordered remand of that portion of

the NO

x

SIP Call. See Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000), Tr.1 at 39-40.

Together, the rules found in Subparts U and W make up Illinois’ NO

x

Trading

Program. Each portion of the NO

x

Trading Program shares several traits with the other. Both

subparts: allow for smaller units to opt-into the NO

x

Trading Program; allow units that emit

less than 25 ton of NO

x

per ozone control season to opt-out of the NO

x

Trading Program; and

have similar procedural requirements and incorporations by reference. Tr.1 at 14. These

similar elements enable sources subject to the requirements of either Subparts U or W to

participate in the federal NO

x trading program. Allowances allocated under either program are

tradable with all other units in the federal NOx trading program, including units from other states.

In submitting the NO

x Trading Program as two separate rulemakings, the Agency

accommodated two different sets of NOx emitting sources. The traditional EGUs, those that

generate electricity for commercial sale, consented to an “updating allocation system.” Tr.1 at

19. Under Subpart W, the allowances available for allocation are gradually reduced, beginning

in the fourth year of the program, and the number of allowances allocated is not fixed.

See 35

Ill. Adm. Code 217.764. The non-EGUs objected to this allocation method. Tr.1 at 19.

Units subject to the requirements of Subpart U “needed to be able to rely on having allowances

because they weren’t going to be in the business of trading in the market [or] revising the

boilers to use low NO

x

burners . . . .”

Id

.

During negotiations with the Agency, the EGUs consented to the non-EGU position, so

long as the non-EGUs would not be permitted to receive allocations from the EGU portion of

the NO

x emission budget. Tr.1 at 19-20. Subpart U incorporates the large non-EGUs into the

NOx Trading Program, but insures that no unit receiving fixed allowances pursuant to Subpart U

will also receive allowances pursuant to Subpart W. Subpart W specifically excluded from the

requirements of Subpart W those units receiving allocations under Subpart U in Appendix D.

See 35 Ill. Adm. Code 217, Appendix D.

SUBPART U

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8

Summary

The Board recognizes that controls on large non-EGUs are necessary for Illinois to

meet the requirements of the NO

x

SIP Call. Non-EGUs are process steam stationary boilers,

combustion turbines, or combined cycle systems that do not primarily generate electricity for

sale, and are thus not subject to the requirements of Subpart W. USEPA established a budget

of 4,882 tons of NO

x

per ozone control period for large non-EGUs in Illinois.

Subparts U and W compose Illinois’ portion of the federal NO

x trading program. Both

programs cap the total number of allowances the Agency may allocate, and describe how the

Agency will allocate those capped allowances. Participation in the federal NOx trading program

allows units subject to the requirements of either Subparts U or W to purchase NO

x

emission

allowances from any program under the federal NO

x

trading program.

The NO

x Trading Program does not cap the emissions of NOx from any particular source

at a fixed level. Rather, the

NO

x Trading Program caps the number of allowances allocated by

the Agency during each ozone control period.

Beginning in the ozone control period for 2004,

all units subject to Subparts U or W must hold NOx emission allowances at least equal to that

unit’s actual NO

x

emissions for that ozone control period. Those allowances can come from

several sources: allowances allocated from the NO

x

budgets established in Subparts U or W;

purchased from those units that receive allocations under either Subparts U or W; transferred

from units not subject to Subparts U or W, under the provisions of Subpart X; or purchased

from any other unit participating in the federal NO

x

trading program. Allowances may be

banked, or held over from control period to control period, for the life of the program.

At first notice, the sections making up Subpart U were in the 217.6xx range. After

adopting the first notice opinion and order, a Joint Committee on Administrative Rules

comment stated that the proposed rules would not conform to the Secretary of State’s

codification scheme, because existing Subpart V, which will be listed after proposed

Subpart U, is already numbered in the 217.5xx range. This second notice order and opinion

re-numbers Subpart U to the 217.4xx range to eliminate this discrepancy.

Scope and Affected Facilities

The NO

x

Trading Program is a statewide program. The NO

x

SIP Call requires

“regional-scale reductions in NO

x

emissions, and, thereby, reduced transported NO

x

and

ozone.” 63 Fed. Reg. 57,356, 57, 359 (1998). Subpart U must apply to all large non-EGUs

throughout the state to satisfy this requirement. Appendix E lists the 42 existing non-EGUs

that meet the definition of a large non-EGU in Illinois. Exh. 1 at 3-4.

Implementation Date

The trading portion of Subpart U will control emissions of NO

x

from large non-EGUs

during the ozone control period beginning in 2004. However, pursuant to Section 217.454(e),

---

9

the requirements of Subpart U will only become effective during the first ozone control period

after the year in which: (1) all other states located in USEPA Region 5, or contiguous to

Illinois, and subject to the NO

x

SIP Call, have adopted regulations to implement the

requirements of the NO

x

SIP Call; and (2) USEPA has approved such regulations as part of

each state’s State Implementation Plan. Should either condition not be met by the 2004 ozone

control period, the implementation date for this program must be deferred accordingly.

Applicability

Section 217.454 describes those units subject to the requirements of Subpart U. The

definition is rather complex. First, the unit must be a fossil fuel-fired stationary boiler,

combustion turbine, or combined cycle system, with a maximum design heat input greater than

250 mmbtu/hr. Second, the unit must be listed on Appendix E. A unit can still be subject to

the requirements of Subpart U if it is not a unit listed on Appendix E, as long as one of the

following is true. One, the unit never serves a generator producing electricity for sale. Or

two: the unit serves a generator producing electricity for sale, but such generator has a

nameplate capacity of 25 MWe or less and has the potential to use no more than 50% of the

potential electrical output capacity of the unit; the unit is part of any source listed on proposed

Appendix E; the unit is subject to Subpart W that elects to permanently become subject to

Subpart U. Units that meet these conditions are “budget units” subject to Subpart U.

Section 217.454(c) allows any unit subject to Subpart U to elect low-emitter status by

obtaining a permit with federally enforceable conditions. At first notice, this section also listed

the regulations applicable to units electing low-emitter status. At the request of the Agency, at

second notice those conditions are relocated to Section 217.472 to clarify the rule. For a

discussion of those requirements, see pages 13-14 of this opinion.

Compliance Requirements

Section 217.456 contains the requirements with which the non-EGUs subject to Subpart

U must comply. Subsection (a) incorporates generally the federal requirements of the model

NO

x

trading program in 40 C.F.R. Part 96. Subsection (c) specifically incorporates the federal

monitoring requirements of 40 C.F.R. Part 96, Subpart H. Subsection (e) provides the

recordkeeping and reporting requirements.

Pursuant to Section 217.456(b), the owner or operator of a unit subject to the

requirements of Subpart U must apply for a budget permit. Section 217.458 contains the

specific procedure for applying for a budget permit. For example, Section 217.458 fixes the

deadlines by which budget units must be apply for permits. Section 217.458 also explains the

duties of owners or operators to apply and reapply for a budget permit, as well as the

information required in the application.

Section 217.456(d) establishes November 30 of each year as the allowance transfer

deadline. By this date, units subject to Subpart U must hold allowances at least equal to that

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10

unit’s total NO

x

emissions for the ozone control period. Each ton of NO

x

emitted in excess of

that unit’s allowances constitutes a separate violation of Subpart U and the Act.

NO

x

Trading Program

Section 217.460 establishes the actual NO

x

trading budget for units subject to the

requirements of Subpart U. Subsection (a) sets the initial budget at 4,882 tons of NO

x

per

ozone control season. Appendix E describes how the budget will initially be allocated.

Column four of Appendix E lists the maximum number of allowances each unit may receive

from the Agency in any ozone control period. Column five of Appendix E lists the number of

allowances each unit will be allocated by the Agency. The difference between Columns four

and five reflects the 3% set-aside for new sources.

Sections 217.460(b), (c), and (d) require the Agency to adjust the budget by either:

adding allowances for units opting into the program; removing allowances for units opting into

the low-emitter status option; or reflecting independent actions of the USEPA. Pursuant to

Section 217.460(d), if USEPA adjusts the base Subpart U NO

x Trading Budget, the Agency

will adjust the Subpart U NOx trading budget pro-rata. Pursuant to Section 217.460(e), if

USEPA adjusts the Subpart U NOx Trading Budget as to any individual budget unit, the Agency

will only adjust the individual allowance allocation for that unit. A

ny adjustments to Appendix

E by the Agency to match the adjustments of USEPA must comply with the requirements of

the Administrative Procedure Act (5 ILCS 100/1-1 et seq. (1998)).

LTV Steel

During the hearings, LTV Steel testified that a boiler at its Chicago Coke Plant was

inadvertently not included on Appendix E, even though the unit has been a permitted source

since 1975. Tr.2 at 50-53, PC 2. The Agency agreed with LTV Steel, stating that the

“boiler in question was not included in the statewide budget determined by USEPA and was,

therefore, inadvertently omitted from Appendix E.” PC 1 at 6. To correct this, LTV Steel

urged the Board to amend Appendix E to include this boiler, and allocate 131 allowances in

Appendix E.

6 PC 2 at 2. LTV Steel suggested that each of the allocations could include a

footnote, which would read “[p]ursuant to Section 217.660(f), the Budget Allocation for LTV

Steel Company is subject to approval and adjustment by the USEPA.”

Id

.

The Agency agreed that LTV Steel’s boiler should be included in Appendix E, but

disagreed that the number of allowances allocated should be specified. PC 1 at 6. The Agency

stated that “the inclusion of any number prior to approval by USEPA could cause additional

problems with regard to approval of this rule as part of the State’s SIP.”

Id

. The Agency

suggested adding LTV Steel’s boiler to Appendix E, with asterisks in Columns four and five.

PC 1 at Attachment A. Below the listing for LTV Steel would read the following: “Pursuant

6

This allocation reflects the 3% set-aside for new sources, and would be listed in Column five of

Appendix E. LTV Steel suggests listing 135 allowances in Column four of Appendix E. PC 2 at

2.

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11

to Section 217.660(f), Column 4 and Column 5 will be adjusted as such time as USEPA makes

an allocation for LTV Steel’s Boiler No. 4B.”

7

Id

. Sections 217.460, at subsections (d) and

(e), respectively, allows the Agency to adjust the Subpart U NO

x

Trading Budget to match

adjustments made by USEPA, either pro-rata or on an individual basis.

The Board agrees with the Agency that including a number for LTV Steel’s allocations

is premature. The Subpart U NO

x Trading Budget is derived from USEPA’s findings in the

NOx SIP Call.

If the Board unilaterally adjusted the Subpart U NO

x

Trading Budget as LTV

Steel suggests, the Subpart U NO

x Trading Budget would deviate from the federal NOx trading

budget. This deviation

could jeopardize federal approval of these rules.

Furthermore, the Board cannot predict whether this change would amend the base

Subpart U NO

x Trading Budget, or the individual budget unit allowance allocations. This

decision is solely within the purview of USEPA.

The provisions of Section 217.460 allow

USEPA and the Agency to adjust the Subpart U NO

x

Trading Budget to include LTV Steel’s

boiler, if such an addition is appropriate.

This second notice order adds to Appendix E a conditional listing for LTV Steel’s

Boiler No. 4, as proposed by the Agency.

University of Illinois

During the hearings, the University testified that its Abbott Power Plant should not be

listed on Appendix E. Tr.2 at 41-43, PC 3. The University stated that the plant’s boiler #7

has a nameplate capacity of 265 mmbtu/hr. Tr.2 at 43. After the hearing, the University

submitted documents stating that, due to operational and fuel use changes, the boiler’s actual

heat input is lower than 250 mmbtu/hr. PC 3 at 1-2.

In response to the Agency’s questions, the University estimated that the practical heat

input capacity of the boiler was approximately 240 mmbtu/hr. Tr.2 at 43. This statement was

supported with design calculations using the heat content of available coal to show that the

boiler was never designed originally for more than 244 mmbtu/hr. PC 3 at 1. The University

stated that it had not re-rated the nameplate capacity of the boiler to reflect these changes

because it was a “burden that we to this point have never seen reason to do. Now, we have a

reason to do that and I would submit that we would be willing to do in this instance.” Tr.2 at

44. The University estimated that it would require less than a year to re-rate the boiler.

Id

.

The University described the process during the hearings:

we could go through one of our normal maintenance periods where we would

clean the boiler up because of the coal use and get it in our best operating

scenario and then we could go ahead and run it up as high as we could—or at

7

The comments from LTV Steel and the Agency refer to Section 217.660(f). This second notice

changes the Section numbers of Subpart U from 217.6xx, to 217.4xx. For example, Section

217.660 is now Section 217.460.

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12

least if you wanted a number to just get below the 250, we would take that

number and make that our official limit if you wanted to. Tr.2 at 46.

The University also stated that there would be no significant cost if this process occurred

during a normal maintenance period. Tr.2 at 46.

The Board cannot remove the University’s Abbott Power Plant from Appendix E at this

time. The boiler’s current nameplate capacity of 265 mmbtu/hr subjects it to the requirements

of Subpart U. Unless the University re-rates the boiler, by definition it must continue to be

subject to the requirements of Subpart U. The Board cannot act based on events that may

occur in the future. If the University re-rates its boiler below 250 mmbtu/hr, it will no longer

be subject to the requirements of Subpart U.

Just as the Board cannot predict whether USEPA would amend the base Subpart U NO

x

Trading Budget or the individual budget unit allowance allocations in LTV Steel’s case, we

cannot predict what impact removing the University’s boiler from Appendix E would have.

Section 217.460 allows for revisions to the NO

x

budget set by USEPA. After the University

re-rates its boiler, both USEPA and the Agency may remove this source from the list of non-

EGUs subject to Subpart U on Appendix E and adjust the NO

x Trading Budget.

The University also suggested in its public comment that that allowances allocated to

the University’s boiler could accommodate “another entity requesting additions to the

inventory . . . .” PC 3 at 3. This is apparently in reference to LTV Steel’s request to add a

unit to Appendix E. As stated above, the NO

x

emission budget is derived from the federal

NO

x emission budget found in the NOx SIP Call.

The Board can not unilaterally adjust the NO

x

emission budget absent a matching adjustment from USEPA.

Obtaining Allocations

Section 217.462 allows the non-EGUs listed on Appendix E to permanently transfer all

or part of the allocation listed in Column five of Appendix E to a budget unit subject to the

requirements of either Subparts U or W. Column five of Appendix E lists the allowance

allocation for each unit, less the 3% new source set-aside. Budget units may not transfer any

part of the new source set-aside allocation. Section 217.464 provides the methodology to

calculate the allowances available for allocation to a new source from the new source set-aside.

The Agency will allocate all allowances pursuant to Sections 217.466 and 217.468. Once

allocated, allowances exist for the life of the program.

Section 217.468 defines new units as those that commenced commercial operation on or

after January 1, 2000. Only these units may purchase allowances from the new source set-

aside and only for a maximum of three consecutive years. After that the unit becomes an

existing unit. The Agency will charge the average price at which NO

x

allowances were traded

in the interstate NO

x

trading program for the preceding control period. Fees collected by the

Agency for the sale of these allowances will be distributed pro-rata to budget units allocated

allowances pursuant to Appendix E, less the Agency’s administrative costs. Any unused

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13

portion of the new source set-aside will be allocated pro-rata to the owner or operator of the

budget units listed on Appendix E. Column four of Appendix lists the maximum number of

allowances the Agency may allocate to any individual unit.

The Agency proposed 3% for the new source set-aside based on the inventory of

sources showing very few new units coming into the program. Tr.2 at 76-77. The Agency

stated that “we looked at our inventory of sources and agreed that there weren’t a lot of new

non-EGUs coming into the program submitting applications, but again, we wanted to have a

new source set aside in the event it was actually needed and so we picked the lower 3%

number” as the set-aside.

Id

. Further, the Agency stated “there are few units that are

receiving more than those number of allowances, but many fall within that range.” Tr.2 at 77.

Early Reduction Credits

Section 217.470 allows budget units to request ERCs if they reduce their NO

x

emissions 30% or more below the actual NO

x

emissions rate for the ozone control period in

which ERCs are requested. Account representatives may request ERCs for reductions in the

2001 or 2002 ozone control period, and the 2003 ozone control period if approved by USEPA.

ERCs may be used in the 2004 ozone control period, or later periods if approved by USEPA.

While the entire compliance supplement pool available for ERCs is 17,688 allowances,

Section 217.470(f)(1) reserves no more than 2,427 allowances for non-EGUs. No more than

half of these allowances may be allocated for reductions made in each of the 2001 and 2002

ozone control periods, with the remainder allocated for reductions made in the 2003 ozone

control period, if approved by USEPA.

Low-Emitter Status

Units electing low-emitter status are only subject to the requirements of Section

217.472. To elect low-emitter status, the unit must obtain a federally enforceable permit that

restricts the unit’s fuel use and operating hours, limits the unit’s potential NO

x

emissions, and

contains specific monitoring, recordkeeping and reporting requirements.

If a unit listed on Appendix E elects low-emitter status, the Agency will reduce the

Subpart U NO

x

budget by the number of allowances equal to the amount of NO

x

emissions in

the unit’s federally enforceable permit, pursuant to Section 217.460(c). The unit may offset its

permitted emissions by obtaining allowances issued for voluntary NO

x

reductions that meet the

requirements of Subpart X. In that case, the Agency will not reduce the Subpart U NO

x

budget by the allowances obtained in accordance with Subpart X.

Opt-in Units

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14

Section 9.9(d)(2) of the Act requires the Board to provide a means for emission units to

opt into the NO

x

Trading Program (415 ILCS 5/9.9(d)(2) (1998) (1998 State Bar Edition, 1999

Supp.)). Sections 217.474, 217.476, 217.478, 217.480, and 217.482 implement this directive.

Section 217.474 defines which units may opt-in to the NO

x

Trading Program, and

provides the requirements opt-in units must meet. To be eligible, a unit must first be an

operating fossil fuel-fired stationary boiler, combustion turbine, combined cycle system,

cement kiln or stationary internal combustion engine. The unit may then qualify if it: is not a

budget EGU under Subpart W; vents all of its emissions to a stack; has documented heat input

for more than 876 hours in the six months immediately preceding the unit’s submission of a

budget permit application; is not covered by the retired unit exemption of 40 C.F.R. 96.5; and

is not covered by the low-emitter exemption of Sections 217.454(c) and 217.472.

Opt-in units must have an account representative. The account representative must

apply for a budget permit that meets the requirements of Section 217.458, and also contains

provisions for a change in the regulatory status of the unit to an opt-in budget unit under

Section 217.454. The account representative must also submit a monitoring plan for the unit in

accordance with 40 C.F.R. Part 96, Subpart H.

Section 217.476 describes the process by which the Agency will issue or deny a budget

permit to an opt-in unit. In addition to the requirements of Section 217.458, the Agency will

also determine the sufficiency of the unit’s monitoring plan. If the Agency determines that the

unit’s monitoring plan is sufficient, the unit must then monitor and report the NO

x

emission

rate and the heat input of the unit in accordance with 40 C.F.R. Part 96, Subpart H, for one

full ozone control period. The information gathered during this time will be used to determine

the unit’s baseline heat rate and baseline NO

x

emission rate.

Section 217.478 provides the procedures an opt-in budget unit must follow to withdraw

from the NO

x

Trading Program. Opt-in budget units may only withdraw outside of the ozone

control period,

i.e

. between September 30 and May 1, and must submit a withdrawal request

within 90 days of the effective date of the withdrawal. The opt-in budget unit must also submit

an annual compliance certification report in accordance with 40 C.F.R. 96.30, and empty and

close-out the unit’s opt-in budget compliance account. USEPA will then establish and transfer

to a new general account any remaining allowances.

If all of the above requirements are met, the Agency will withdraw the opt-in unit’s

budget permit. Once an opt-in unit withdraws from the NO

x

Trading Program, the account

representative may not submit another application for a budget permit under Section

217.474(d) until four years after the date the opt-in unit’s budget permit was withdrawn.

Section 217.480 requires owners or operators of opt-in units to notify the Agency and

USEPA in writing when the opt-in unit becomes an opt-in budget unit. Sections 217.480(c),

(d), and (e) describe the procedures USEPA will take to deduct allowances from the opt-in

budget unit’s compliance account.

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15

Section 217.482 provides the allocation procedures for opt-in budget units. The

Agency will allocate allowances in an amount equal to the opt-in budget unit’s heat input,

determined in accordance with Section 217.482(b), multiplied by the lessor of the opt-in budget

unit’s baseline NO

x

emission rate or the lowest NO

x

emissions limitation under State or federal

law.

SUBPART X

This new Subpart X provides a voluntary emission reduction program to supplement the

NO

x

allowances available to emission units subject to Subparts U or W. This program is

required under Section 9.9(d) of the Act (415 ILCS 5/9.9(d) (1998) (1998 State Bar Edition,

1999 Supp.)). That Section provides in pertinent part that the Board shall:

(3) provide for voluntary reductions of NO

x

emissions from emission units

. . . to provide additional allowances to EGUs and non-EGUs to be

allocated by the Agency. The regulations shall further provide that such

voluntary reductions are verifiable, quantifiable, permanent, and

federally enforceable. 415 ILCS 5/9.9(d)(3) (1998) (1998 State Bar

Edition, 1999 Supp.)).

In support of this voluntary program, the Agency has stated its belief that the last

provision of Section 9.9(d)(3) of the Act the General Assembly included to insure that this

supplemental program must “comport with the limitations and framework of the SIP Call and

the general requirements for approval of a SIP revision.” Exh. 3 at 16. The Agency

explained that all these elements, “verifiable, quantifiable, and federally enforceable,” are

necessary to meet both these objectives.

Id

. Therefore, the Agency emphasized that the

provisions in Subpart X are intended to satisfy these requirements. Exh. 3 at 16-17.

How to Participate in Subpart X

Subpart X does not directly respond to the NO

x

SIP Call. Subpart X does implement

Section 9.9(d)(3) of the Act (415 ILCS 5/9.9(d)(3) (1998) (1998 State Bar Edition, 1999

Supp.)). The intent behind Subpart X is to “transfer NO

x

reductions from the non-trading

portion of the state budget to the trading portion.” Tr.1 at 24.

The program will be effective upon final adoption by the Board. Because this is a

voluntary program, there is no implementation date requirement. However, Section

217.815(a) states that the first ozone control period in which NO

x

emission reductions may be

credited is 2003. Section 217.840(c)(3) states that allowances shall be issued by the May 1

after the control period in which the NO

x

emission reduction has occurred.

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16

Subpart X creates a voluntary program that allows owners or operators of stationary

sources to generate additional NO

x

allowances for use by units subject to Subparts U or W.

Units must first meet the eligibility requirements of Section 217.805.

8 If the unit: discharges

through a stack; is fossil fuel-fired; is not subject to the requirements of either Subparts T, U,

V, or W; is not a retired unit; and is not a stationary internal combustion engine that emits

more than one ton of NO

x

per day during the ozone control period, the owner or operator of

that unit may submit a proposal to the Agency. Tr.1 at 25-26; Exh. 3 at 17.

Units electing to participate in the Subpart X voluntary NO

x

emissions reduction

program must comply with the requirements of Section 217.810. Exh. 3 at 18. The owner or

operator must submit a proposal that meets the requirement of Section 217.835, submit a

baseline determination in accordance with Section 217.820, and monitor and report emissions

in accordance with Sections 217.850 and 217.855.

Section 217.835 describes the information that must be submitted in a NO

x

emission

reduction proposal. The proposal must identify all emission units at the source, whether each

unit is subject to Subparts T, U, V, W, or X, and the baseline emissions of each unit subject to

the NO

x

emission cap. The proposal must also identify the NO

x

emission reduction unit, how

the reductions will be obtained, the amount of the reductions, all other emission units at the

source that will be subject to a NO

x

emission cap, and the emission units to which the

allowances will be allocated. Tr.1 at 26-27.

In addition, the owner or operator must request an emission cap on other NO

x

emissions at the source. The NO

x

emission cap is intended to prevent production shifting,

where a source could “shut down one [unit] and ratchet up the production of a boiler right next

to it, which really wouldn’t reduce NO

x

emissions in the air shed.” Tr.1 at 27. The NO

x

emissions cap must include all other NO

x

emission units at the source that are not subject to

Subparts U or W and are the same type of emission unit as the emission reduction unit. The

example provided in Section 217.810(a)(2) is that if the emission reduction unit is a boiler,

combined cycle system or turbine, then the NO

x

emission cap must include all boilers,

combined cycle systems or turbines at the source that are not subject to Subparts U or W.

Section 217.835 provides a method by which like-kind emission units may be exempted from

the NO

x

emission cap.

The owner or operator must demonstrate how the NO

x

emission cap included in the

NO

x

emission proposal will be determined. Section 217.815 provides three methods: use of

NO

x

emission reduction technology; a permanent shutdown of the unit after January 1, 1995;

or a reduction in the rate or hours of operation. This demonstration must be performed

pursuant to Section 217.845. Exh. 3 at 20.

8

 

The Board has incorporated a change suggested by members of the regulated community to

remove one of the eligibility requirements included at first notice. The Agency’s proposal

limited eligibility to participate in Subpart X to units that commenced operation prior to

January 1, 1995.

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17

Sections 217.820 and 217.825 describe how a unit’s baseline and creditable NO

x

emissions will be determined. A unit’s NO

x emissions baseline is

determined by multiplying

the unit’s actual 1995 calendar year emissions by 5/12ths. Section 217.820 also provides

alternative methods for determining this emissions baseline if the actual 1995 emissions were

not reported. To the extent that the unit reduces its emissions below this number, Section

217.825 provides that the Agency will allocate 80% of any actual NO

x

emission reductions to

the specified Subpart U or W unit. The Agency will retire the remaining 20% for air quality.

Finally, each emission reduction unit at the source must comply, to the extent

practicable, with the monitoring requirements of Section 217.850. Section 217.850 requires

the use of a continuous emission monitoring systems (CEMS), or an alternative system

approved by the agency and included in the source’s federally enforceable permit. Section

217.855 lists the reporting requirements for the information gathered using CEMS, or other

Agency approved method.

Once the Agency has received the source’s complete NO

x

emission reduction proposal,

and any emissions data required to verify that the reductions have occurred, Section 217.840

provides that the Agency has 90 days to notify the owner or operator in writing of its decision.

The owner or operator of the source may extend this deadline in writing.

The NO

x

emission reduction proposal will only be effective after the owner or operator

of the emission reduction unit has obtained or modified a permit with federally enforceable

conditions. Exh. 3 at 20. The owner or operator must obtain a permit that contains as

federally enforceable conditions the commitments in the NO

x

emission reduction proposal and

the NO

x

emission cap. The permit or permit modifications must be obtained no later than the

date on which the NO

x

emission reductions will commence.

Section 217.865 provides consequences for owners or operators of emission reduction

units for which NO

x

emission reductions have been recognized under Subpart X, but then have

actual NO

x

emissions in excess of the emission reduction limit in any ozone control period for

which NO

x

allowances have been issued. Such sources must purchase and surrender to the

Agency NO

x

allowances equal to two to four times the excess NO

x

emissions, depending on

the number of control periods in which such violations occur. The Agency will retire all

surrendered allowances for air quality.

COMMENTS ON SPECIFIC PROVISIONS

The participants seek changes to four provisions of the proposed rules. Over

the course of the hearings and public comment period, the principle participants asking

questions and testifying on these issues were the Illinois Environmental Regulatory

Group (IERG) and Archer Daniel Midland (ADM). The first contested provision was

the provision at Section 217.805 of Subpart X limiting eligibility to pre-1995 units.

The second contested rule was the amount of actual NO

x

emission reductions achieved

that should be creditable. Section 217.825 provides that 80% is creditable for

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18

allowances, and the remaining 20% is retired for air quality. Third, ADM argues for

no NO

x

emission cap at Section 217.835, and IERG and the Agency disagree about the

regulatory language necessary to address product shifting under Section 217.835.

Fourth, ADM argues for no penalty under Section 271.865 when actual emissions

exceed the voluntarily reduced emission limit. Finally, CAAC’s request for energy

reduction credits is considered by the Board. Each issue is discussed separately below.

Comments on Pre-1995 Unit Eligibility Requirement

Several participants disagreed with the third eligibility condition proposed at first

notice, that the unit must have been permitted to operate prior to January 1, 1995, to

participate under Subpart X. First notice proposed Section 217.805(c). The Agency support

for this requirement is recited first, to put into context the positions of IERG and ADM. The

Agency’s response to those comments then follows.

Agency

At the first hearing, the Agency explained that the units permitted after January 1,

1995, (hereinafter referred to as “post-1995 units”) were excluded because 1995 was the base

year used by the USEPA to set the statewide budget for the NO

x

SIP Call. Tr.1 at 29. All

sources existing at that time were identified.

Id

. In setting the baseline, some growth was

allowed, as well as accounting for future shut downs.

Id

. The Agency firmly believed that in

tying an emission unit to that inventory, the State would have a better chance that Subpart X

would be approved. Tr.1 at 29-30.

In its prefiled testimony, the Agency explained that the pre-1995 units were included in

the State’s NO

x

budget because the Subpart X program will provide for a budget shift from the

uncontrolled portion of the statewide NO

x

budget to the trading budget for controlled sources.

Exh. 3 at 17. The Agency concluded “ . . to make the case for that budget shifting to

occur, . . . limiting Subpart X to units that commenced operation before January 1, 1995, and

therefore were included in setting the statewide NO

x

budget, is critical.”

Id

.

When questioned, the Agency agreed that its concern was whether the post–1995 unit

emissions were not included in the 1995 baseline and therefore not eligible for shifting into the

trading budget. Tr.1 at 43. After further questioning, the Agency added that since Subpart X

units are not subject to the more stringent monitoring requirements applicable to Subpart U or

W sources under the NO

x

SIP Call, the Agency does not believe that the post-1995 units could

quantify mass NO

x

emissions as well.

Id.

The Agency concluded that this limitation on

eligibility serves as a “sort of safety element or measure of approvability for the proposal.”

Tr.1 at 43-44.

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19

IERG

IERG argues that the post-1995 units should be eligible under Subpart X. Exh. 4 at 4-

7. IERG’s position is that Subpart X should provide as many additional allowances as possible

since the pool of allowances is always shrinking, and as post-1995 units grow older they are

viable candidates for future allowances. Exh. 4 at 5. If excluded, IERG believes that these

older, less efficient units will continue in operation because they would not be available as a

source of allocations for new, more efficient units.

Id

.

During the hearings, IERG stated that the question about whether post-1995 units can

be included should be focused on whether emissions from such units could be verified,

quantified, federally enforced, and constitute real emission reductions. Exh. 4 at 5; Tr.2 at 16.

IERG stated that it believed such emissions could meet these requirements, and that there is no

reason to exclude them. Tr.2 at 16-17. IERG argues that if the emission source can

demonstrate that an actual ton of NO

x

is reduced or removed, it should be transferable.

The Agency disagrees, and firmly believes that the post-1995 units must be required to

use Part 96 monitoring to establish its actual emissions if the program is to be approved. As

proposed, these post-1995 units could opt-in to the Subpart U trading program. However, they

would be required to perform Part 96 monitoring. IERG argues that Part 96 monitoring is too

expensive and complicated for these small sources to undertake. Exh. 4 at 6-7. IERG believes

that the alternative monitoring available to pre-1995 units would be also acceptable to USEPA

for the post-1995 sources since USEPA allows alternatives in other air programs such as Title

V permitting and the ERMS program. Tr.2 at 18. Finally, IERG sees no environmental

consequence if post-1995 sources are eligible to provide allowances under Subpart X. Exh. 4

at 5-7.

In its public comment, IERG addressed the Agency’s concern that including the post-

1995 units would jeopardize federal approval of the rules. PC 5 at 6-10. IERG

acknowledged that this is an important concern, but does not believe that the Agency has

justified it. IERG believes that this is a provision about which the State has flexibility,

especially since Subpart X is a supplemental program to the model trading program under Part

96. Furthermore, IERG argues that federal approval should not be prejudged, and that there

is sufficient time for the State to seek federal approval and revise Subpart X accordingly if

that approval is denied or conditional. PC 5 at 8-10.

ADM

ADM stated that the Agency’s justification for limiting participation in Subpart X to

pre-1995 units is to preserve the growth allowance factored into the budget. PC 6 at 3. ADM

pointed out that the growth projection relied on by the Agency for ADM predicted negative

growth, while in fact ADM’s NO

x

emissions have grown close to 33% since 1995.

Id

. ADM

also expressed concern that the cost of NO

x

allowances would pose a problem. ADM stated

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20

“the price of a NO

x

allowance has reached an all time high of $1,725/ton from a low of

$350/ton.”

Id

.

Agency Responses

In addition to the rationale summarized above, the Agency offered additional testimony

at the second hearing why it opposes including post-1995 units in Subpart X. Tr.2 at 84. The

Agency’s rationale is two-fold. First, the State is asking the USEPA to approve a budget shift

from the non-trading portion of the statewide budget to the trading portion.

Second, the post-1995 unit will not have a baseline in the inventory. Establishing a

baseline for pre-1995 units requires using actual emissions in the annual emissions report or

performing Part 60 monitoring. The Agency stated that establishing a baseline for post-1995

units is much harder without the 1995 inventory number. The Agency adds that even if Part

75 monitoring were allowed for post-1995 units to establish a baseline, it does not believe

USEPA would approve the program. Tr.2 at 83-85. The Agency added that the USEPA’s

“number one” criticism of Subpart X is the lack of Part 75 monitoring. Tr.2 at 88.

The Agency also commented on the growth factor and double counting. The Agency

explained that the budget already has a growth factor built into the inventory. Therefore,

sources permitted after 1995 are already included in the statewide budget, and to include them

by allowing reduced emissions or shutdowns to become allowances would be double counting.

Tr.2 at 86.

Conclusion

The position presented by IERG and ADM expresses a concern with the finite number

of allowances available under the NO

x

Trading Program. Both participants suggest that an

expansion of the eligibility requirements of Subpart X will help alleviate the financial pressure

on units subject to the requirements of Subparts U or W. Yet both acknowledge that such an

expansion may impede USEPA’s final approval of these rules. Nevertheless, IERG

specifically challenges the Agency’s belief that emission reductions sources that commenced

operation after January 1, 1995, could not satisfy the federal standards required for

participation in the federal NO

x

trading program. IERG and ADM urge the Board to eliminate

the requirement that the source commence operations before January 1, 1995 to be eligible

under Subpart X.

The Agency argues that units that commenced operation after January 1, 1995, the time

period used by USEPA to determine the NO

x

emission budgets, lack a baseline determination

equivalent to the determination the pre-1995 units received from USEPA when it established

the baseline. This would make any NO

x

emission reductions from these sources difficult to

verify, quantify, or be federally enforceable. The Agency argues that only Part 96 monitoring

can cure this omission.

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21

The Board has examined the Agency’s position and concludes that it is primarily based

upon the Agency’s belief that USEPA will not approve this supplemental program if post-1995

units are eligible. Whereas, the position advanced by IERG and the record support several

reasons for allowing these sources the same alternative methods provided for pre-1995 units if

their 1995 actual emissions are not available to establish a baseline for determining emission

reduction.

First, the record indicates that this voluntary program applies to a small group of small

sources since most of the large sources are subject to Subparts U or W. Second, the NO

x

SIP

Call allows this type of flexibility in supplemental programs such as this. Third, the major

impediment to the post-1995 units participating in any part of the NO

x

Trading Program, under

either Subpart U as an opt-in unit or under Subpart X, is the requirement to perform Part 96

monitoring to establish actual emissions. Furthermore, IERG has explained that Part 96

monitoring is too expensive for these units to use, especially since most will enter the

voluntary program to generate emission reduction allowances when shutting down. IERG has

pointed out that other USEPA programs have allowed alternatives to Part 96 monitoring.

Ultimately, the Board finds that the real issue is whether the voluntary reductions from

these units are verifiable, quantifiable, permanent, and federally enforceable as required at

Section 9.9(d)(3) of the Act. We believe that these potential emission reductions are verifiable

and quantifiable using the same alternative methods for determining actual emissions as those

available to the pre-1995 units under the proposed rules. We find that these reductions can be

made permanent in the same method as others in this voluntary program.

The Board has weighed the desirability of expanding the universe of sources that can

contribute allowances from the non-trading budget to the trading budget and the possible

problem because these units were not in the 1995 baseline inventory. The distinction between

these units and those accounted for in the 1995 inventory is not sufficient to exclude these units

from Subpart X. Their emissions and their shutdowns were anticipated in the State’s budget as

part of the growth factor applied to that inventory. Therefore, allowing them as emissions

reductions sources does not amount to double counting. Furthermore, including the post-1995

units as well as the pre-1995 units in this voluntary program should have no negative impact on

the State’s environment. Also, the voluntary emission reductions these units afford are

verifiable, quantifiable, permanent and federally enforceable, and the mandate of Section

9.9(d)(3) of the Act is satisfied.

Finally, we find that the USEPA should approve the eligibility of post-1995 units since

the State is to be afforded flexibility in this supplemental program

.

If the USEPA further

conditions or does not approve this program because these units are eligible, as the Agency

believes is likely, the remainder of the NO

x

Trading Program found in Subparts U and W can

still be approved since Subpart X is a supplemental program, not one required under the NO

x

SIP Call. And finally, as IERG points out, should USEPA disapprove or conditionally

approve Subpart X, the Board can consider revising this supplemental program as necessary to

gain the USEPA’s approval.

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22

Accordingly, the Board has deleted the eligibility requirement from Section 217.805(c)

as proposed at First Notice; post-1995 units are now eligible to participate in Subpart X.

Conforming changes are made to clarify the methods available to determine these units’

emissions baselines at Section 217.820. Finally, Section 217.825 is also modified to allow

post-1995 units to receive the same 80% credit for reductions achieved under this program.

Comments on Creditable NO

x

Emissions Reductions

Section 217.825 provides that 80% of the actual NO

x

emissions reductions achieved

under Subpart X are creditable. The remaining 20% will be retired for the benefit of air

quality.

IERG

During the hearings, IERG stated that “it appears that the Agency’s rationale for this

provision hinges on the lack of Part 75 monitoring requirements under Subpart X.” Tr.2 at

17. IERG specifically suggested that the 80%/20% split was “even less credible” in the case

of units which shut down pursuant to Section 217.815(a)(2). Tr.2 at 18. In those cases, IERG

stated that monitoring is not an issue, as the only fact to dispute is what is the unit’s baseline.

Id

.

In response to IERG’s position, the Agency stated that 20% “is not a number that is

either grossly high or overstated.” PC 1 at 4. The Agency further stated that USEPA

“envisioned that the statewide budget would fluctuate . . . The Agency therefore felt that some

percentage had to be retired for air quality to offset the loss of reductions that the statewide

budget anticipates.”

Id

. The Agency also stated that “USEPA in setting the statewide budgets

. . . clearly envisioned that older less efficient units would be replaced with larger, more

efficient units. PC 1 at 5. Finally, the Agency warned that these rules are part of a complex,

federal regional program intending to address ozone transport in 23 jurisdictions. A ton

reduction in Illinois must equal a ton reduction in the other 22 jurisdictions for the program to

be effective.

Id

.

The Board appreciates IERG’s comments, and understands that the burden imposed on

regulated units will be difficult given the finite number of allowances available. However, we

believe that the rules as adopted for second notice today present a balanced approach that

allows the generation of new NO

x

allowances without compromising the compatibility of the

NO

x

Trading Program with the federal NO

x

trading program. Ultimately, Illinois must

demonstrate every three years that it has not exceeded its statewide NO

x emission budget. The

20% retirement factor provides a safety net to account for errors in the growth factor, and ensure

that Illinois will not exceed its statewide NOx emission budget.

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23

ADM

ADM stated that, in order for a unit to achieve actual NO

x

emission reductions, a

source could potentially spend up to $260,000 on new control technology and monitoring

equipment, plus the cost of an emission cap, and that these high costs will make it “difficult to

justify utilizing Subpart X even if 100% reduction credit is awarded.” PC 6 at 3.

Subpart X is a voluntary program. Only those sources that decide that reductions made

pursuant to Subpart X that are technically feasible and economically reasonable will be

implemented. If sources such as ADM feel that the cost of implementing such reductions is

too high, they are under no requirement to take such action.

Comments on Product Shifting

Section 217.835 describes the information that must be submitted in a NO

x

emission

reduction proposal, and also the procedures for withdrawing a NO

x

emission reduction

proposal. Section 217.835(a)(5) provides that an owner or operator seeking to have all like-

kind or same-type units excluded from a NO

x

emission cap must include in its NO

x

emission

reduction proposal an explanation of how the source will assure that production shifting will

not occur.

The Agency stated during the hearings that it suggested this language in its proposal

because “we realized that . . . we could not envision every scenario that might occur in the

future, and we didn’t want to have a blanket prohibition that didn’t allow us to examine unique

factors.” Tr.1 at 48. Essentially, this provision allows the Agency to evaluate “on a case-by-

case basis . . . the circumstances of a particular project to see how broad a cap needs to be to

assure that we are getting real reductions . . . .” Tr.1 at 49.

IERG

IERG initially stated that it could accept the language as written. Tr.2 at 19.

However, its concern was that the language be interpreted “in accordance with what we

believe the negotiations were all about.”

Id

. IERG submitted several case examples, and

proposed language to add to Section 217.835. Exh. 4 at 9-12. During the hearings, IERG

stated:

Production shifting occurs, in our opinion, when NO

x

emissions which resulted

from a unit used to produce a product or service are reduced or terminated and

transferred to a Subpart U or W unit and then the emissions from a new unit or

increased emissions from an existing unit are used to make the same product or

provide the same service, take it away and put it right back in. That has to be

prevented. Tr.2 at 21.

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24

The Agency does not disagree with IERG, but found that IERG’s suggested language

does not provide more certainty to this issue. PC 1 at 5. During the hearings, the Agency

stated “figuring out exactly when the production shifting would occur wouldn’t necessarily be

made any easier if you have [IRGS’s] constraining definition to work with.” Tr.2 at 101.

IERG’s examples certainly shed light on the possible realm of facts that could appear

before the Agency under this section, but are not exhaustive. They emphasize the need for the

Agency to make these decisions on a case-by case basis. The language adopted for second

notice allows the Agency to do so.

ADM

In a corollary public comment, ADM stated that the NO

x

emission cap is “unnecessary

and in most cases . . . prohibitive.” PC 6 at 3. ADM’s comment provides an example of how

a source complying with the NO

x

emission cap provision would in fact lose the equivalent of

“nearly two boilers’ output.”

Id

. The provisions of Subpart X, especially Section 217.835,

allows an owner or operator to demonstrate why a particular unit or units should not be subject

to the NO

x

emissions cap, are flexible enough to overcome ADM’s concerns.

Comments on Enforcement

Section 217.865 provides consequences for owners or operators of emission reduction

units for which NO

x

emission reductions have been recognized under Subpart X, but then have

actual NO

x

emissions in excess of the emission reduction limit in any ozone control period for

which NO

x

allowances have been issued. Such sources must purchase and surrender to the

Agency NO

x

allowances equal to two to four times the excess NO

x

emissions, depending on

the number of control periods in which such violations occur. The Agency will retire all

surrendered allowances for air quality.

ADM stated that these penalties are not required, and will provide a “severe

disincentive to the utilization of undemonstrated or experimental control technology and

discourage sources from utilizing Subpart X . . . .” PC 6 at 3. ADM felt that it is a sufficient

incentive that sources that fail to achieve the NO

x

emissions reductions would “simply be

credited with fewer allowances for the following season.” PC 6 at 4.

The Board recognizes that some sources may be made cautious by the enforcement

provisions of Section 217.865. However, this section is necessary to ensure that a source

opting to participate in Subpart X is reasonably certain that the emission reduction unit will

actually achieve the NO

x

emission reductions it receives credit for.

Clean Air Action Corporation Comments

CAAC suggested that mobile and area source sectors be allowed to participate in the

Subpart X voluntary NO

x

emissions reduction program. PC 4. CAAC stated that programs

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25

such as vehicle inspection and maintenance programs, or a reformulated gasoline program,

could provide significant NO

x

reductions from highway vehicle. PC 4 at 4. CAAC also

proposed that states could require emission decreases from sources that USEPA exempted from

the budget calculations, due to a lack of information to determine potential controls and

emission reductions. PC 4 at 4.

As stated above, the NO

x

SIP Call places strict limitations on the universe of units that

might participate in the federal NO

x

trading program. Before the Board could allow the

additional source sectors CAAC suggests participate in this program, we would need to be

assured that such source sectors were able to monitor and report emissions in accordance with

the model rule.

CAAC also suggested that the rule could allocate a portion of the trading budget to

sources that implement energy efficiency and renewable projects, such as replacing older

turbines with more efficient models, or hydroelectric, solar, wind, or geothermal generation.

PC 4 at 3-4.

A similar suggestion was made during the Subpart W rulemaking. There, the Board

stated:

The Board believes that measures to increase energy efficiency are admirable

and needed. Similarly, the Board believes that reliable, cost-effective renewable

energy needs to be aggressively developed. However, the Board is not

convinced that the set-aside provision is an appropriate or productive method to

achieve these ends, particularly in light of the limited number of emission

allowances available in Illinois. 35 Ill. Adm. Code 217.Subpart W, The NO

x

Trading Program for Electrical Generating Units, and Amendments to 35 Ill.

Adm. Code 211 and 217 (December 21, 2000), R01-9, at 11.

The Board’s position on this subject remains applies in this case. While desirable to

encourage energy efficiency as a means of reducing pollution, allocations are not available

from the NO

x

budget for such projects. Perhaps the limited, fixed nature of that budget

severely limiting the available allowances for new electrical generation will provide incentive

for the electrical generation companies and energy consumers in Illinois to undertake the types

of programs suggested by CAAC.

PART 211

Today’s rules add a definition of the “NO

x

Trading Program” at Section 211.4067.

This definition simply states that the NO

x

Trading Program includes the requirements of

Subparts U and W, and the provisions of the federal NO

x

trading program found at 40 C.F.R.

Part 96.

At first notice, the rules also included an expanded definition of the term “source” at

Section 211.6130. At the request of the Agency, this second notice opinion and order amends

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26

that proposed definition. Today’s changes amend the definition of source so that it is identical

to the definition of “source” found in Section 39.5 of the Act (415 ILCS 5/39.5) (1998)).

TECHNICAL AND ECONOMIC CONSIDERATIONS

Section 27(a) of the Act requires that in promulgating regulations, the Board “shall take

into account . . . the technical feasibility and economic reasonableness of measuring or

reducing the particular type of pollution.” 415 ILCS 5/27(a) (1998). The Board first notes

that the program established by proposed Subpart X is a voluntary program, and thus the

presumption is that NO

x

reductions will only be undertaken to the extent that the source

believes that such reductions are technically feasible and economically reasonable.

In the NO

x

SIP Call and supporting documents, USEPA determined that the control

techniques required for non-EGUs to comply with the NO

x

budgets are technically feasible and

economically reasonable.

9 The Agency also investigated the available control techniques and

their cost. Exh. 1 at 4-8, see “Technical Support Document for Controlling NO

x

Emissions

from Non-Electrical Generating Units,” AQPSTR 00-4, September 2000. Agency technical

staff agrees with USEPA’s assessment.

The Agency based its analysis of the cost impact of complying with the proposed rules

on USEPA’s Alternative Control Techniques document (ACT). Exh. 1 at 6, see footnote 7.

The Agency estimates that the cost effectiveness of controls for units subject to the

requirements of Subpart U will vary from $150--$7,450 per ton of NO

x removed. Exh. 1 at 6.

However, this estimate does not include the impact of emission trading.

Id.

USEPA and the

Agency estimate that the average cost effectiveness of units subject to the requirements of

Subpart U with trading is $1,583 (1999 dollars) per ton of NOx removed. Exh. 1 at 6-8.

CONCLUSION

The NOx SIP Call requires that Illinois submit a SIP revision to control the emission of

the NOx during the ozone control period. Sections 9.9(b), (c), and (d) of the Act (415 ILCS

5/9.9(b), (c), and (d) (1998) (1998 State Bar Edition, 1999 Supp.)), require the Board to adopt

the NO

x

emissions trading program to comply with this federal mandate. With today’s

9

See 63 Fed. Reg. 57,356 (Oct. 27, 1998). See generally Alternative Control Techniques

Document--NOx Emissions from Industrial/Commercial/Institutional Boilers, EPA-453/R-94-

022, March 1994, USEPA, OAQPS, research Triangle Park, NC 27711; Alternative Control

Techniques Document--NOx Emissions from Stationary Gas Turbines, EPA-43/R-91-007,

January 1993, USEPA, OAQPS, Research Triangle park, NC 27711; Regulatory Impact

Analysis for NOx SIP Call, FIP and Section 126 Petitions, Volume 1: Costs and Economic

Impacts, EPA-452/R-98-003, September 1998, USEPA, Office of Air and Radiation,

Washington, D.C. 20460; and “Technical Amendment to the Finding of Significant Contribution

and Rulemaking for Certain States for Purposes of Reducing Regional Transport of Ozone,” 65

Fed. Reg. 11,222 (March 2, 2000).

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27

proposal, the Board seeks to find an equitable and economic method of satisfying these

obligations.

The Board acknowledges and appreciates the extensive effort undertaken by both the

Agency and members of the regulated community during this rulemaking. The Board believes

that these rules find an appropriate balance among the various interests, and for this reason we

today adopt the Agency’s proposal, with minor modification, for second notice. In addition to

clarification changes, two substantive changes are made. First, LTV Steel’s Boiler No. 4 is

added to Appendix E, with the allocation of its allowances and unit designation reserved until

determined by USEPA and the Agency. Second, under Subpart X, units permitted after

January 1, 1995 are eligible to participate in that voluntary reduction program.

ORDER

The Board hereby proposes for second notice the following amendments to 35 Ill. Adm.

Code 217. The Clerk of the Board is directed to file these proposed rules with the Joint

Committee on Administrative Rules.

TITLE 35: ENVIRONMENTAL PROTECTION

SUBTITLE B: AIR POLLUTION

CHAPTER I: POLLUTION CONTROL BOARD

SUBCHAPTER c: EMISSION STANDARDS AND LIMITATIONS FOR STATIONARY

SOURCES

PART 211

DEFINITIONS AND GENERAL PROVISIONS

SUBPART A: GENERAL PROVISIONS

Section

211.101 Incorporations by Reference

211.102 Abbreviations and Conversion Factors

SUBPART B: DEFINITIONS

Section

211.121 Other Definitions

211.122 Definitions (Repealed)

211.130 Accelacota

211.150 Accumulator

211.170 Acid Gases

211.210 Actual Heat Input

211.230 Adhesive

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28

211.240 Adhesion Promoter

211.250 Aeration

211.270 Aerosol Can Filling Line

211.290 Afterburner

211.310 Air Contaminant

211.330 Air Dried Coatings

211.350 Air Oxidation Process

211.370 Air Pollutant

211.390 Air Pollution

211.410 Air Pollution Control Equipment

211.430 Air Suspension Coater/Dryer

211.450 Airless Spray

211.470 Air Assisted Airless Spray

211.474 Alcohol

211.484 Animal

211.485 Animal Pathological Waste

211.490 Annual Grain Through-Put

211.495 Anti-Glare/Safety Coating

211.510 Application Area

211.530 Architectural Coating

211.550 As Applied

211.560 As-Applied Fountain Solution

211.570 Asphalt

211.590 Asphalt Prime Coat

211.610 Automobile

211.630 Automobile or Light-Duty Truck Assembly Source or Automobile or

Light-Duty Truck Manufacturing Plant

211.650 Automobile or Light-Duty Truck Refinishing

211.660 Automotive/Transportation Plastic Parts

211.670 Baked Coatings

211.680 Bakery Oven

211.685 Basecoat/Clearcoat System

211.690 Batch Loading

211.695 Batch Operation

211.696 Batch Process Train

211.710 Bead-Dipping

211.730 Binders

211.750 British Thermal Unit

211.770 Brush or Wipe Coating

211.790 Bulk Gasoline Plant

211.810 Bulk Gasoline Terminal

211.820 Business Machine Plastic Parts

211.830 Can

211.850 Can Coating

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29

211.870 Can Coating Line

211.890 Capture

211.910 Capture Device

211.930 Capture Efficiency

211.950 Capture System

211.970 Certified Investigation

211.980 Chemical Manufacturing Process Unit

211.990 Choke Loading

211.1010 Clean Air Act

211.1050 Cleaning and Separating Operation

211.1070 Cleaning Materials

211.1090 Clear Coating

211.1110 Clear Topcoat

211.1130 Closed Purge System

211.1150 Closed Vent System

211.1170 Coal Refuse

211.1190 Coating

211.1210 Coating Applicator

211.1230 Coating Line

211.1250 Coating Plant

211.1270 Coil Coating

211.1290 Coil Coating Line

211.1310 Cold Cleaning

211.1330 Complete Combustion

211.1350 Component

211.1370 Concrete Curing Compounds

211.1390 Concentrated Nitric Acid Manufacturing Process

211.1410 Condensate

211.1430 Condensible PM-10

211.1465 Continuous Automatic Stoking

211.1467 Continuous Coater

211.1470 Continuous Process

211.1490 Control Device

211.1510 Control Device Efficiency

211.1520 Conventional Air Spray

211.1530 Conventional Soybean Crushing Source

211.1550 Conveyorized Degreasing

211.1570 Crude Oil

211.1590 Crude Oil Gathering

211.1610 Crushing

211.1630 Custody Transfer

211.1650 Cutback Asphalt

211.1670 Daily-Weighted Average VOM Content

211.1690 Day

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30

211.1710 Degreaser

211.1730 Delivery Vessel

211.1750 Dip Coating

211.1770 Distillate Fuel Oil

211.1780 Distillation Unit

211.1790 Drum

211.1810 Dry Cleaning Operation or Dry Cleaning Facility

211.1830 Dump-Pit Area

211.1850 Effective Grate Area

211.1870 Effluent Water Separator

211.1875 Elastomeric Materials

211.1880 Electromagnetic Interference/Radio Frequency (EMI/RFI) Shielding

Coatings

211.1885 Electronic Component

211.1890 Electrostatic Bell or Disc Spray

211.1900 Electrostatic Prep Coat

211.1910 Electrostatic Spray

211.1920 Emergency or Standby Unit

211.1930 Emission Rate

211.1950 Emission Unit

211.1970 Enamel

211.1990 Enclose

211.2010 End Sealing Compound Coat

211.2030 Enhanced Under-the-Cup Fill

211.2050 Ethanol Blend Gasoline

211.2070 Excess Air

211.2090 Excessive Release

211.2110 Existing Grain-Drying Operation (Repealed)

211.2130 Existing Grain-Handling Operation (Repealed)

211.2150 Exterior Base Coat

211.2170 Exterior End Coat

211.2190 External Floating Roof

211.2210 Extreme Performance Coating

211.2230 Fabric Coating

211.2250 Fabric Coating Line

211.2270 Federally Enforceable Limitations and Conditions

211.2285 Feed Mill

211.2290 Fermentation Time

211.2300 Fill

211.2310 Final Repair Coat

211.2330 Firebox

211.2350 Fixed-Roof Tank

211.2360 Flexible Coating

211.2365 Flexible Operating Unit

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31

211.2370 Flexographic Printing

211.2390 Flexographic Printing Line

211.2410 Floating Roof

211.2430 Fountain Solution

211.2450 Freeboard Height

211.2470 Fuel Combustion Emission Unit or Fuel Combustion Emission Source

211.2490 Fugitive Particulate Matter

211.2510 Full Operating Flowrate

211.2530 Gas Service

211.2550 Gas/Gas Method

211.2570 Gasoline

211.2590 Gasoline Dispensing Operation or Gasoline Dispensing Facility

211.2610 Gel Coat

211.2630 Gloss Reducers

211.2650 Grain

211.2670 Grain-Drying Operation

211.2690 Grain-Handling and Conditioning Operation

211.2710 Grain-Handling Operation

211.2730 Green-Tire Spraying

211.2750 Green Tires

211.2770 Gross Heating Value

211.2790 Gross Vehicle Weight Rating

211.2810 Heated Airless Spray

211.2830 Heatset

211.2850 Heatset Web Offset Lithographic Printing Line

211.2870 Heavy Liquid

211.2890 Heavy Metals

211.2910 Heavy Off-Highway Vehicle Products

211.2930 Heavy Off-Highway Vehicle Products Coating

211.2950 Heavy Off-Highway Vehicle Products Coating Line

211.2970 High Temperature Aluminum Coating

211.2990 High Volume Low Pressure (HVLP) Spray

211.3010 Hood

211.3030 Hot Well

211.3050 Housekeeping Practices

211.3070 Incinerator

211.3090 Indirect Heat Transfer

211.3110 Ink

211.3130 In-Process Tank

211.3150 In-Situ Sampling Systems

211.3170 Interior Body Spray Coat

211.3190 Internal-Floating Roof

211.3210 Internal Transferring Area

211.3230 Lacquers

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32

211.3250 Large Appliance

211.3270 Large Appliance Coating

211.3290 Large Appliance Coating Line

211.3310 Light Liquid

211.3330 Light-Duty Truck

211.3350 Light Oil

211.3370 Liquid/Gas Method

211.3390 Liquid-Mounted Seal

211.3410 Liquid Service

211.3430 Liquids Dripping

211.3450 Lithographic Printing Line

211.3470 Load-Out Area

211.3480 Loading Event

211.3490 Low Solvent Coating

211.3500 Lubricating Oil

211.3510 Magnet Wire

211.3530 Magnet Wire Coating

211.3550 Magnet Wire Coating Line

211.3570 Major Dump Pit

211.3590 Major Metropolitan Area (MMA)

211.3610 Major Population Area (MPA)

211.3620 Manually Operated Equipment

211.3630 Manufacturing Process

211.3650 Marine Terminal

211.3660 Marine Vessel

211.3670 Material Recovery Section

211.3690 Maximum Theoretical Emissions

211.3695 Maximum True Vapor Pressure

211.3710 Metal Furniture

211.3730 Metal Furniture Coating

211.3750 Metal Furniture Coating Line

211.3770 Metallic Shoe-Type Seal

211.3790 Miscellaneous Fabricated Product Manufacturing Process

211.3810 Miscellaneous Formulation Manufacturing Process

211.3830 Miscellaneous Metal Parts and Products

211.3850 Miscellaneous Metal Parts and Products Coating

211.3870 Miscellaneous Metal Parts or Products Coating Line

211.3890 Miscellaneous Organic Chemical Manufacturing Process

211.3910 Mixing Operation

211.3915 Mobile Equipment

211.3930 Monitor

211.3950 Monomer

211.3960 Motor Vehicles

211.3965 Motor Vehicle Refinishing

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33

211.3970 Multiple Package Coating

211.3990 New Grain-Drying Operation (Repealed)

211.4010 New Grain-Handling Operation (Repealed)

211.4030 No Detectable Volatile Organic Material Emissions

211.4050 Non-Contact Process Water Cooling Tower

211.4055 Non-Flexible Coating

211.4065 Non-Heatset

211.4067 NOx Trading Program

211.4070 Offset

211.4090 One Hundred Percent Acid

211.4110 One-Turn Storage Space

211.4130 Opacity

211.4150 Opaque Stains

211.4170 Open Top Vapor Degreasing

211.4190 Open-Ended Valve

211.4210 Operator of a Gasoline Dispensing Operation or Operator of a Gasoline

Dispensing Facility

211.4230 Organic Compound

211.4250 Organic Material and Organic Materials

211.4260 Organic Solvent

211.4270 Organic Vapor

211.4290 Oven

211.4310 Overall Control

211.4330 Overvarnish

211.4350 Owner of a Gasoline Dispensing Operation or Owner of a Gasoline

Dispensing Facility

211.4370 Owner or Operator

211.4390 Packaging Rotogravure Printing

211.4410 Packaging Rotogravure Printing Line

211.4430 Pail

211.4450 Paint Manufacturing Source or Paint Manufacturing Plant

211.4470 Paper Coating

211.4490 Paper Coating Line

211.4510 Particulate Matter

211.4530 Parts Per Million (Volume) or PPM (Vol)

211.4550 Person

211.4590 Petroleum

211.4610 Petroleum Liquid

211.4630 Petroleum Refinery

211.4650 Pharmaceutical

211.4670 Pharmaceutical Coating Operation

211.4690 Photochemically Reactive Material

211.4710 Pigmented Coatings

211.4730 Plant

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34

211.4740 Plastic Part

211.4750 Plasticizers

211.4770 PM-10

211.4790 Pneumatic Rubber Tire Manufacture

211.4810 Polybasic Organic Acid Partial Oxidation Manufacturing Process

211.4830 Polyester Resin Material(s)

211.4850 Polyester Resin Products Manufacturing Process

211.4870 Polystyrene Plant

211.4890 Polystyrene Resin

211.4910 Portable Grain-Handling Equipment

211.4930 Portland Cement Manufacturing Process Emission Source

211.4950 Portland Cement Process or Portland Cement Manufacturing Plant

211.4970 Potential to Emit

211.4990 Power Driven Fastener Coating

211.5010 Precoat

211.5030 Pressure Release

211.5050 Pressure Tank

211.5060 Pressure/Vacuum Relief Valve

211.5061 Pretreatment Wash Primer

211.5065 Primary Product

211.5070 Prime Coat

211.5080 Primer Sealer

211.5090 Primer Surfacer Coat

211.5110 Primer Surfacer Operation

211.5130 Primers

211.5150 Printing

211.5170 Printing Line

211.5185 Process Emission Source

211.5190 Process Emission Unit

211.5210 Process Unit

211.5230 Process Unit Shutdown

211.5245 Process Vent

211.5250 Process Weight Rate

211.5270 Production Equipment Exhaust System

211.5310 Publication Rotogravure Printing Line

211.5330 Purged Process Fluid

211.5340 Rated Heat Input Capacity

211.5350 Reactor

211.5370 Reasonably Available Control Technology (RACT)

211.5390 Reclamation System

211.5410 Refiner

211.5430 Refinery Fuel Gas

211.5450 Refinery Fuel Gas System

211.5470 Refinery Unit or Refinery Process Unit

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35

211.5480 Reflective Argent Coating

211.5490 Refrigerated Condenser

211.5500 Regulated Air Pollutant

211.5510 Reid Vapor Pressure

211.5530 Repair

211.5550 Repair Coat

211.5570 Repaired

211.5590 Residual Fuel Oil

211.5600 Resist Coat

211.5610 Restricted Area

211.5630 Retail Outlet

211.5650 Ringelmann Chart

211.5670 Roadway

211.5690 Roll Coater

211.5710 Roll Coating

211.5730 Roll Printer

211.5750 Roll Printing

211.5770 Rotogravure Printing

211.5790 Rotogravure Printing Line

211.5810 Safety Relief Valve

211.5830 Sandblasting

211.5850 Sanding Sealers

211.5870 Screening

211.5890 Sealer

211.5910 Semi-Transparent Stains

211.5930 Sensor

211.5950 Set of Safety Relief Valves

211.5970 Sheet Basecoat

211.5980 Sheet-Fed

211.5990 Shotblasting

211.6010 Side-Seam Spray Coat

211.6025 Single Unit Operation

211.6030 Smoke

211.6050 Smokeless Flare

211.6060 Soft Coat

211.6070 Solvent

211.6090 Solvent Cleaning

211.6110 Solvent Recovery System

211.6130 Source

211.6140 Specialty Coatings

211.6145 Specialty Coatings for Motor Vehicles

211.6150 Specialty High Gloss Catalyzed Coating

211.6170 Specialty Leather

211.6190 Specialty Soybean Crushing Source

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36

211.6210 Splash Loading

211.6230 Stack

211.6250 Stain Coating

211.6270 Standard Conditions

211.6290 Standard Cubic Foot (scf)

211.6310 Start-Up

211.6330 Stationary Emission Source

211.6350 Stationary Emission Unit

211.6355 Stationary Gas Turbine

211.6360 Stationary Reciprocating Internal Combustion Engine

211.6370 Stationary Source

211.6390 Stationary Storage Tank

211.6400 Stencil Coat

211.6410 Storage Tank or Storage Vessel

211.6420 Strippable Spray Booth Coating

211.6430 Styrene Devolatilizer Unit

211.6450 Styrene Recovery Unit

211.6470 Submerged Loading Pipe

211.6490 Substrate

211.6510 Sulfuric Acid Mist

211.6530 Surface Condenser

211.6540 Surface Preparation Materials

211.6550 Synthetic Organic Chemical or Polymer Manufacturing Plant

211.6570 Tablet Coating Operation

211.6580 Texture Coat

211.6590 Thirty-Day Rolling Average

211.6610 Three-Piece Can

211.6620 Three or Four Stage Coating System

211.6630 Through-the-Valve Fill

211.6650 Tooling Resin

211.6670 Topcoat

211.6690 Topcoat Operation

211.6695 Topcoat System

211.6710 Touch-Up

211.6720 Touch-Up Coating

211.6730 Transfer Efficiency

211.6750 Tread End Cementing

211.6770 True Vapor Pressure

211.6790 Turnaround

211.6810 Two-Piece Can

211.6830 Under-the-Cup Fill

211.6850 Undertread Cementing

211.6860 Uniform Finish Blender

211.6870 Unregulated Safety Relief Valve

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37

211.6880 Vacuum Metallizing

211.6890 Vacuum Producing System

211.6910 Vacuum Service

211.6930 Valves Not Externally Regulated

211.6950 Vapor Balance System

211.6970 Vapor Collection System

211.6990 Vapor Control System

211.7010 Vapor-Mounted Primary Seal

211.7030 Vapor Recovery System

211.7050 Vapor-Suppressed Polyester Resin

211.7070 Vinyl Coating

211.7090 Vinyl Coating Line

211.7110 Volatile Organic Liquid (VOL)

211.7130 Volatile Organic Material Content (VOMC)

211.7150 Volatile Organic Material (VOM) or Volatile Organic Compound (VOC)

211.7170 Volatile Petroleum Liquid

211.7190 Wash Coat

211.7200 Washoff Operations

211.7210 Wastewater (Oil/Water) Separator

211.7230 Weak Nitric Acid Manufacturing Process

211.7250 Web

211.7270 Wholesale Purchase – Consumer

211.7290 Wood Furniture

211.7310 Wood Furniture Coating

211.7330 Wood Furniture Coating Line

211.7350 Woodworking

211.7400 Yeast Percentage

Appendix A Rule into Section Table

Appendix B Section into Rule Table

AUTHORITY: Implementing Sections 9, 9.1, 9.9 and 10 and authorized by Sections 27 and

28.5 of the Environmental Protection Act [415 ILCS 5/9, 9.1, 9.9, 10, 27 and 28.5].

SOURCE: Adopted as Chapter 2: Air Pollution, Rule 201: Definitions, R71-23, 4 PCB 191,

filed and effective April 14, 1972; amended in R74-2 and R75-5, 32 PCB 295, at 3 Ill. Reg. 5,

p. 777, effective February 3, 1979; amended in R78-3 and 4, 35 PCB 75 and 243, at 3 Ill.

Reg. 30, p. 124, effective July 28, 1979; amended in R80-5, at 7 Ill. Reg. 1244, effective

January 21, 1983; codified at 7 Ill. Reg. 13590; amended in R82-1 (Docket A) at 10 Ill. Reg.

12624, effective July 7, 1986; amended in R85-21(A) at 11 Ill. Reg. 11747, effective June 29,

1987; amended in R86-34 at 11 Ill. Reg. 12267, effective July 10, 1987; amended in R86-39 at

11 Ill. Reg. 20804, effective December 14, 1987; amended in R82-14 and R86-37 at 12 Ill.

Reg. 787, effective December 24, 1987; amended in R86-18 at 12 Ill. Reg. 7284, effective

April 8, 1988; amended in R86-10 at 12 Ill. Reg. 7621, effective April 11, 1988; amended in

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38

R88-23 at 13 Ill. Reg. 10862, effective June 27, 1989; amended in R89-8 at 13 Ill. Reg.

17457, effective January 1, 1990; amended in R89-16(A) at 14 Ill. Reg. 9141, effective May

23, 1990; amended in R88-30(B) at 15 Ill. Reg. 5223, effective March 28, 1991; amended in

R88-14 at 15 Ill. Reg. 7901, effective May 14, 1991; amended in R91-10 at 15 Ill. Reg.

15564, effective October 11, 1991; amended in R91-6 at 15 Ill. Reg. 15673, effective October

14, 1991; amended in R91-22 at 16 Ill. Reg. 7656, effective May 1, 1992; amended in R91-24

at 16 Ill. Reg. 13526, effective August 24, 1992; amended in R93-9 at 17 Ill. Reg. 16504,

effective September 27, 1993; amended in R93-11 at 17 Ill. Reg. 21471, effective December

7, 1993; amended in R93-14 at 18 Ill. Reg. 1253, effective January 18, 1994; amended in

R94-12 at 18 Ill. Reg. 14962, effective September 21, 1994; amended in R94-14 at 18 Ill.

Reg. 15744, effective October 17, 1994; amended in R94-15 at 18 Ill. Reg. 16379, effective

October 25, 1994; amended in R94-16 at 18 Ill. Reg. 16929, effective November 15, 1994;

amended in R94-21, R94-31 and R94-32 at 19 Ill. Reg. 6823, effective May 9, 1995; amended

in R94-33 at 19 Ill. Reg. 7344, effective May 22, 1995; amended in R95-2 at 19 Ill. Reg.

11066, effective July 12, 1995; amended in R95-16 at 19 Ill. Reg. 15176, effective October

19, 1995; amended in R96-5 at 20 Ill. Reg. 7590, effective May 22, 1996; amended in R96-16

at 21 Ill. Reg. 2641, effective February 7, 1997; amended in R97-17 at 21 Ill. Reg. 6489,

effective May 16, 1997; amended in R97-24 at 21 Ill. Reg. 7695, effective June 9, 1997;

amended in R96-17 at 21 Ill. Reg. 7856, effective June 17, 1997; amended in R97-31 at 22 Ill.

Reg. 3497, effective February 2, 1998; amended in R98-17 at 22 Ill. Reg.11405, effective

June 22, 1998; amended in R01-9 at 25 Ill. Reg. 128, effective December 26, 2000; and

amended in R01-17 at 25 Ill. Reg. , effective .

BOARD NOTE: This Part implements the Illinois Environmental Protection Act as of July 1,

1994.

SUBPART B: DEFINITIONS

Section 211.4067 NOx Trading Program

For the purposes of 35 Ill. Adm. Code 217, Subparts U and W, the NOx Trading Program

shall mean the requirements of 35 Ill. Adm. Code 217, Subparts U and W, and those

provisions of the federal NOx Trading Program, 40 CFR 96, incorporated by reference therein.

(Source: Added at 25 Ill. Reg.________________, effective_________________)

Section 211.6130 Source

"Source" means any stationary source (or any group of stationary sources) that are located on

one or more contiguous or adjacent properties, and that are under common control of the same

person (or persons under common control) belonging and that belongs to a single major

industrial grouping. For the purposes of defining "source," a stationary source or group of

stationary sources shall be considered part of a single industrial grouping if all of the pollutant

emitting activities at such source or group of sources located on contiguous or adjacent

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39

property properties and under common control belong to the same Major Group (i.e., all have

the same two-digit code) as described in the Standard Industrial Classification Manual, 1987

(incorporated by reference in 35 Ill. Adm. Code 218.112 and 219.112),or such pollutant

emitting activities at a stationary source (or group of sources) located on contiguous or adjacent

properties and under common control constitute a support facility as defined in Section 39.5 of

the Environmental Protection Act, 415 ILCS 5/39.5. The determination as to whether any

group of stationary sources are located on adjacent or contiguous properties, and/or under

common control, and/or whether the pollutant emitting activities at such group of stationary

sources constitute a support facility shall be made on a case by case basis.

(Source: Added at 25 Ill. Reg._______________, effective_________________)

TITLE 35: ENVIRONMENTAL PROTECTION

SUBTITLE B: AIR POLLUTION

CHAPTER I: POLLUTION CONTROL BOARD

SUBCHAPTER C: EMISSION STANDARDS AND LIMITATIONS FOR

STATIONARY SOURCES

PART 217

NITROGEN OXIDES EMISSIONS

SUBPART A: GENERAL PROVISIONS

Section

217.100 Scope and Organization

217.101 Measurement Methods

217.102 Abbreviations and Units

217.103 Definitions

217.104 Incorporations by Reference

SUBPART B: NEW FUEL COMBUSTION EMISSION SOURCES

Section

217.121 New Emission Sources

SUBPART C: EXISTING FUEL COMBUSTION EMISSION SOURCES

Section

217.141 Existing Emission Sources in Major Metropolitan Areas

SUBPART K: PROCESS EMISSION SOURCES

Section

217.301 Industrial Processes

SUBPART O: CHEMICAL MANUFACTURE

Section

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217.381 Nitric Acid Manufacturing Processes

SUBPART U: NOx CONTROL AND TRADING PROGRAM FOR

SPECIFIED NOx GENERATING UNITS

Section

217.450 Purpose

217.452 Severability

217.454 Applicability

217.456 Compliance Requirements

217.458 Permitting Requirements

217.460 Subpart U NOx Trading Budget

217.462 Methodology for Obtaining NOx Allocations

217.464 Methodology for Determining Required NOx Allocations

217.466 NOx Allocations for Subpart U Units

217.468 New Source Set-Aside for "New" Budget Units

217.470 Early Reduction Credits for Budget Units

217.472 Low-Emitter Requirements

217.474 Opt-in Units

217.476 Opt-in Process

217.478 Opt-in Budget Units: Withdrawal from the NOx Trading Program

217.480 Opt-in Budget Units: Change in Regulatory Status

217.482 Allowance Allocations to Opt-in Budget Units

SUBPART V: ELECTRIC POWER GENERATION

Section

217.521 Lake of Egypt Power Plant

SUBPART W: NOx TRADING PROGRAM FOR ELECTRICAL

GENERATING UNITS

Section

217.750 Purpose

217.752 Severability

217.754 Applicability

217.756 Compliance Requirements

217.758 Permitting Requirements

217.760 NOx Trading Budget

217.762 Methodology for Calculating NOx Allocations for Budget Electrical Generating

Units (EGUs)

217.764 NOx Allocations for Budget EGUs

217.768 New Source Set-Asides for “New” Budget EGUs

217.770 Early Reduction Credits for Budget EGUs

217.774 Opt-In Units

217.776 Opt-In Process

217.778 Budget Opt-In Units: Withdrawal from NOx Trading Program

217.780 Opt-In Units: Change in Regulatory Status

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217.782 Allowance Allocations to Budget Opt-In Units

SUBPART X: VOLUNTARY NOx EMISSIONS REDUCTION PROGRAM

Section

217.800 Purpose

217.805 Emission Unit Eligibility

217.810 Participation Requirements

217.815 Methods to Obtain NOx Emission Reductions

217.820 Baseline Emissions Determination

217 825 Calculation of Creditable NOx Emission Reductions

217.830 Limitations on NOx Emission Reductions

217.835 NOx Emission Reductions Proposal

217.840 Agency Action

217.845 Emissions Determination Methods

217.850 Emissions Monitoring

217.855 Reporting

217.860 Recordkeeping

217.865 Enforcement

APPENDIX A Rule into Section Table

APPENDIX B Section into Rule Table

APPENDIX C Compliance Dates

APPENDIX D Non-Electrical Generating Units

APPENDIX E Large Non-Electrical Generating Units

APPENDIX F Allowances for Electrical Generating Units

AUTHORITY: Implementing Sections 9.9 and 10 and authorized by Section 27 of the

Environmental Protection Act [415 ILCS 5/9.9, 10 and 27.]

SOURCE: Adopted as Chapter 2: Air Pollution, Rule 207: Nitrogen Oxides Emissions, R71-

23, 4 PCB 191, April 13, 1972, filed and effective April 14, 1972; amended at 2 Ill. Reg. 17,

p. 101, effective April 13, 1978; codified at 7 Ill. Reg. 13609; amended in R01-9, at

Ill. Reg. 128, effective December 26, 2000; and amended at R 01-17, at 25 Ill. Reg.

, effective____________.

SUBPART U: NOx CONTROL AND TRADING PROGRAM FOR

SPECIFIED NOx GENERATING UNITS

Section 217.450 Purpose

The purpose of this Subpart is to cap the emissions of nitrogen oxides (NOx) during the ozone

control period from units subject to the provisions of this Subpart (budget units) by

determining source allocations and by implementing the federal NOx Trading Program, 40

CFR 96, consistent with the provisions of this Subpart.

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(Source: Added at ________ Ill. Reg._____________, effective________________)

Section 217.452 Severability

If any Section, subsection or clause of this Subpart is found invalid, such finding shall not

affect the validity of this Subpart as a whole or any Section, sentence or clause not found

invalid.

(Source: Added at _______ Ill. Reg._______________, effective________________)

Section 217.454 Applicability

a) This Subpart applies to any fossil fuel-fired stationary boiler, combustion

turbine, or combined cycle system, with a maximum design heat input greater

than 250 mmbtu/hr and that is:

1) A unit listed on Appendix E of this Subpart, irrespective of any

subsequent changes in ownership, unit designation, or name of the unit,

or

2) A unit not listed on Appendix E of this Subpart that:

A) At no time serves a generator producing electricity for sale;

B) At any time serves a generator producing electricity for sale, if

such generator has a nameplate capacity of 25 MWe or less and

has the potential to use no more than 50% of the potential

electrical output capacity of the unit. Fifty percent (50%) of a

unit’s potential electrical output capacity shall be determined by

multiplying the unit’s maximum design heat input by 0.0488

MWe/mmbtu. If the size of the generator is smaller than this

calculated number, the unit is subject to the provisions of this

Subpart, but if the size of the generator is greater than this

calculated number, the unit is subject to the provisions of Subpart

W of this Part;

C) Is part of any source, as that term is defined in 35 Ill. Adm. Code

Section 211.6130, listed on Appendix E of this Part; or

D) Is a unit subject to Subpart W of this Part (excluding any unit

listed on Appendix F to this Part, regardless of any change in

ownership or any change of operator), and the owner or operator

makes a permanent election, at the time of applying for a budget

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43

permit pursuant to this Part, to subject the unit to the

requirements of this Subpart rather than Subpart W of this Part.

Any unit for which such an election is made will not receive an

allocation from either of the Subpart W or Subpart U NOx

Trading Budget.

b) Those units that meet the above criteria and are subject to the NOx Trading

Program emissions limitations contained in this Subpart are budget units.

c) Low-emitter status: Notwithstanding subsection (a) of this Section, the owner

or operator of a budget unit subject to the requirements of subsection (a) of this

Section may elect low-emitter status by obtaining a permit with federally

enforceable conditions that meet the requirements of Section 217.472(a).

Starting with the effective date of such permit, the unit shall be subject only to

the requirements of Section 217.472.

d) The owner or operator of any budget unit not listed in Appendix E of this Part

but subject to this Subpart shall not receive an allocation of NOx allowances

from the Subpart W NOx Trading Budget or from the Subpart U NOx Trading

Budget, except for any allowance from the new source set aside in accordance

with Section 217.468 of this Subpart. Such unit must acquire NOx allowances in

an amount not less than the NOx emissions from such budget unit during the

control period (rounded to the nearest whole ton) in accordance with the federal

NOx Trading Program, Subpart X of this Part or pursuant to a permanent

transfer of NOx allocations pursuant to Section 217.462(b) of this Subpart.

e) Notwithstanding any other provisions of this Subpart, a source and units at the

source subject to the provisions of subsection (a) of this Section will become

subject to this Subpart on THE FIRST DAY OF THE CONTROL SEASON

SUBSEQUENT TO THE CALENDAR YEAR IN WHICH ALL OF THE

OTHER STATES SUBJECT TO THE PROVISIONS OF THE NOx SIP CALL

(63 Fed. Reg. 57355 (October 27, 1998)) THAT ARE LOCATED IN USEPA

REGION V OR ARE THAT CONTIGUOUS TO ILLINOIS HAVE ADOPTED

REGULATIONS TO IMPLEMENT NOx TRADING PROGRAMS AND

OTHER REQUIRED REDUCTIONS OF NOx EMISSIONS PURSUANT TO

THE NOx SIP CALL, AND SUCH REGULATIONS HAVE RECEIVED

FINAL APPROVAL BY USEPA AS PART OF THE RESPECTIVE STATES’

SIPS FOR OZONE, OR A FINAL FIP FOR OZONE PROMULGATED BY

USEPA IS EFFECTIVE.

(Source: Added at _______ Ill. Reg._____________, effective__________________)

Section 217.456 Compliance Requirements

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All budget units subject to the requirements of this Subpart must comply with the following:

a) The requirements of this Subpart and 40 CFR 96, excluding 40 CFR 96.4(b),

96.55(c), and excluding 40 CFR 96, subparts C, E, and I, as incorporated by

reference in Section 217.104 of this Part. To the extent that this Subpart

contains provisions which are inconsistent with any provisions of 40 CFR 96,

the owner or operator of budget units subject to this Subpart shall comply with

the provisions of this Subpart in lieu of those provisions which were

incorporated by reference.

b) Budget permit requirements:

1) The owner or operator of each source with one or more budget units at

the source subject to this Subpart must submit a complete permit

application for a budget permit in accordance with the provisions of

Section 217.458(a)(4), (a)(5) or (a)(6), as applicable, to be issued by the

Agency with federally enforceable conditions covering the NOx Trading

Program (“budget permit”), and that complies with the requirements of

Section 217.458 of this Subpart.

2) The owner or operator of one or more budget units subject to this

Subpart must operate each such budget unit in compliance with such

budget permit or complete budget permit application, as applicable.

3) The owner or operator of one or more budget units subject to this

Subpart, at the time of filing an application for a permit under this

Section, must submit a complete application for either a permit

incorporating a source-wide overdraft account (as such term is defined in

40 CFR 96.2), or a permit incorporating unit specific compliance

accounts for each budget unit at the source subject to this Subpart. Such

election shall be at the sole discretion of the owner or operator of the

source and the Agency shall incorporate such election into a permit

issued to the source pursuant to this Subpart.

c) Monitoring requirements:

1) For budget units subject to the requirements of this Subpart, and which

commence operation on and after January 1, 2000, the owner or operator

of each such budget unit at the source must comply with the monitoring

requirements of 40 CFR 96, subpart H. The account representative of

each such budget unit at the source shall comply with those sections of

the monitoring requirements of 40 CFR 96, subpart H, applicable to an

account representative.

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45

2) The compliance of each budget unit subject to the requirements of

subsection (c)(1) or subsection (c)(3)(A) of this Section with the control

period NOx emissions limitation under subsection (d) of this Section shall

be determined by the emissions measurements recorded and reported in

accordance with 40 CFR 96, subpart H.

3) For budget units which commenced operation prior to January 1, 2000:

A) The owner or operator of each such budget unit at the source

must comply with the requirements of 40 CFR 96, subpart H; or

B) If the monitoring requirements of 40 CFR 96, subpart H, are

demonstrated by the source to be technically infeasible as applied

to a budget unit subject to the requirements of this Subpart, the

owner or operator of such budget unit may monitor by an

alternative monitoring procedure for the budget unit approved by

the Agency and the Administrator of USEPA pursuant to the

provisions of 40 CFR 75, subpart E. Such alternative monitoring

procedures must be contained as federally enforceable conditions

in the unit’s permit.

4) The compliance of each budget unit subject to the requirements of

subsection (c)(3)(B) of this Section shall be determined by the emissions

measurements recorded and reported in accordance with the federally

enforceable conditions in the budget unit’s permit addressing monitoring

as required by subsection (c)(3)(B) of this Section.

d) Allowance requirements:

1) As of November 30 of each year, the allowance transfer deadline, the

account representative of each source subject to the requirements of this

Subpart must hold allowances available for compliance deductions under

40 CFR 96.54 for each budget unit at the source subject to this Subpart

in the budget unit’s compliance accounts, or the source's overdraft

account. The number of allowances held in these accounts shall not be

less than the total NOx emissions for the control period (rounded to the

nearest whole ton), as determined in accordance with Section 217.456(c)

of this Subpart, plus any number of allowances necessary to account for

actual utilization (e.g., for testing, start-up, malfunction, and shut down)

under 40 CFR 96.42(e) for all budget units at the source subject to this

Subpart. Compliance with this provision shall be demonstrated if, as of

the allowance transfer deadline, the sum of the allowances available for

compliance deductions for all budget units at the source subject to this

Subpart is equal to or greater than the total NOx emissions (rounded to

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46

the nearest whole ton) from all budget units at the source subject to this

Subpart.

2) Allowances shall be held in, deducted from, or transferred among

allowance accounts in accordance with this Subpart and 40 CFR 96,

subparts F and G.

3) Each ton of NOx emitted by a source with one or more budget units

subject to this Subpart in any control period in excess of the NOx

allowances held by the owner or operator for each budget unit at the

source subject to this Subpart for each control period shall constitute a

separate violation of this Subpart and the Act.

4) In order to comply with the requirements of subsection (d)(1) of this

Section, an allowance may not be utilized for a control period in a year

prior to the year for which the allowance was allocated.

5) An allowance allocated by the Agency or USEPA under the NOx Trading

Program is a limited authorization to emit one ton of NOx. No provision

of the NOx Trading Program, any permit issued or permit application

submitted pursuant to this Subpart, or an exemption under 40 CFR 96.5

and no provision of law shall be construed to limit the authority of the

United States or the State to terminate or limit this authorization.

6) An allowance allocated by the Agency or USEPA under the NOx Trading

Program or pursuant to this Subpart does not constitute a property right.

7) Upon recordation by USEPA under 40 CFR 96, subpart F or G, every

allocation, transfer, or deduction of an allowance to or from a budget

unit's compliance account or to or from the source's general or overdraft

account where the budget unit is located is deemed to amend

automatically and become a part of any budget permit of the budget unit.

This automatic amendment of the budget permit shall occur by operation

of law and will not require any further review.

e) Recordkeeping and reporting requirements:

1) Unless otherwise provided, the owner or operator of a source subject to

the requirements of this Subpart must keep at the source each of the

documents listed in subsections (e)(1)(A) through (e)(1)(D) of this

Section for a period of five years from the date the document is created.

This period may be extended for cause at any time prior to the end of

five years in writing by the Agency or USEPA.

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A) The account certificate of representation for the account

representative for the source and each budget unit at the source

subject to the requirements of this Subpart and all documents that

demonstrate the truth of the statements in the account certificate

of representation, in accordance with 40 CFR 96.13, provided

that the certificate and such supporting documents must be

retained on site at the source beyond such five year period until

such documents are superseded because of the submission of a

new account certificate of representation changing the account

representative.

B) All emissions monitoring information, in accordance with Section

217.456(c), provided that to the extent that 40 CFR 96, subpart

H, provides for a three-year period for recordkeeping, the three-

year period shall apply.

C) Copies of all reports, compliance certifications, and other

submissions and all records made or required under this Subpart

or the NOx Trading Program or documents necessary to

demonstrate compliance with the requirements of this Subpart or

the NOx Trading Program.

D) Copies of all documents used to complete a budget permit

application and any other submission under this Subpart or under

the NOx Trading Program.

2) The account representative of a source and each budget unit at the source

subject to the requirements of this Subpart must submit to the Agency

and USEPA the reports and compliance certifications required under this

Subpart and the NOx Trading Program, including those under 40 CFR

96, subparts D and H.

f) Liability:

1) No revision of a budget permit shall excuse any violation of the

requirements of the NOx Trading Program or this Subpart that occurs

prior to the date that the revision under such budget permit takes effect.

2) Each budget source and each budget unit at the source shall meet the

requirements of the NOx Trading Program.

3) Any provision of this Subpart or the NOx Trading Program that applies

to a source subject to the requirements of this Subpart (including a

provision applicable to the account representative of the source) shall

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48

also apply to the owner and operator of such source and to the owner and

operator of the budget units subject to the requirements of this Subpart at

the source.

4) Any provision of this Subpart or the NOx Trading Program that applies

to a budget unit subject to the requirements of this Subpart (including a

provision applicable to the account representative of such budget unit)

shall also apply to the owner and operator of such budget unit. Except

with regard to the requirements applicable to budget units with a

common stack under 40 CFR 96, subpart H, the owner and operator and

the account representative of one budget unit shall not be liable for any

violation by any other budget unit of which they are not an owner or

operator or the account representative and that is located at a source of

which they are not an owner or operator or the account representative.

5) Excess emissions requirements: The account representative of a source

that has excess emissions in any control period shall surrender the

allowances as required for deduction under 40 CFR 96.54(d)(1).

6) The owner or operator of a budget EGU that has excess emissions in any

control period shall pay any fine, penalty, or assessment or comply with

any other remedy imposed under 40 CFR 96.54(d)(3) and the Act.

g) Effect on other authorities: No provision of this Subpart, the NOx Trading

Program, a budget permit application, a budget permit, or a retired budget unit

exemption under 40 CFR 96.5 shall be construed as exempting or excluding the

owner or operator and, to the extent applicable, the account representative of a

source or budget unit from compliance with any other regulations promulgated

under the CAA, the Act, an approved State implementation plan, or a federally

enforceable permit.

(Source: Added at _______ Ill. Reg.____________, effective___________________)

Section 217.458 Permitting Requirements

a) Budget permit requirements:

1) The owner or operator of each source with one or more budget units

subject to this Subpart is required to timely submit, in accordance with

subsection (a)(4), (a)(5), or (a)(6) of this Section, as applicable, a

complete permit application addressing all requirements of this Subpart

applicable to such budget units.

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49

2) Each budget permit (including a draft or proposed budget permit, if

applicable) shall contain federally enforceable conditions addressing all

applicable requirements of the NOx Trading Program and requirements

of this Subpart and shall be a complete and segregable portion of the

source’s entire permit.

3) No budget permit will be issued, and no NOx allowance account will be

established for any budget unit subject to this Subpart, until the Agency

and USEPA have received a complete account certificate of

representation under 40 CFR 96, subpart B, for an account

representative of the source and each budget unit at the source subject to

this Subpart.

4) For any budget unit subject to this Subpart that commenced operation

before November 1, 2003, and for which a CAAPP permit is not

required pursuant to Section 39.5 of the Act, the owner or operator of

such budget unit must submit a budget permit application meeting the

requirements of this Subpart on or before November 1, 2003.

5) For any budget unit subject to this Subpart that commenced operation

before August 1, 2003, and for which a CAAPP permit is required

pursuant to Section 39.5 of the Act, the owner or operator of such

budget unit must submit a budget permit application meeting the

requirements of this Subpart on or before August 1, 2003.

6) For any budget unit subject to this Subpart that is subject to Section 39.5

of the Act and that commences operation on or after August 1, 2003, and

for any budget unit subject to this Subpart and not subject to Section 39.5

of the Act that commences operation on or after November 1, 2003, the

owner or operator of such budget units must submit applications for

construction and operating permits pursuant to the requirements of

Sections 39 and 39.5 of the Act and 35 Ill. Adm. Code 201 and such

applications must specify that they are applying for budget permits, and

must address the budget permit application requirements of this Subpart.

b) Budget permit applications:

1) Duty to apply: The owner or operator of any source with one or more

budget units subject to this Subpart must submit to the Agency one or

more complete budget permit applications under subsection (c) of this

Section for such budget units by the applicable deadline in subsection

(a)(4), (a)(5), or (a)(6) of this Section. The owner or operator of any

source with such budget units must reapply for a budget permit as

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50

required by this Subpart, and 35 Ill. Adm. Code 201 and Sections 39 and

39.5 of the Act.

2) Information requirements for budget permit applications: A complete

budget permit application must include the following elements

concerning the budget units for which the application is submitted:

A) Identification of the source, including plant name. The ORIS

(Office of Regulatory Information Systems) or facility code

assigned to the source by the Energy Information Administration

must also be included, if applicable;

B) Identification of each fossil fuel-fired combustion turbine,

stationary boiler or combined cycle system budget unit at the

source. An explanation why each budget unit is subject to the

requirements of Section 217.454 of this Subpart; and

C) The compliance requirements of Section 217.456 of this Subpart.

3) Federally Enforceable Status of Budget Permit. An application for a

budget permit shall be treated as a modification of the source's existing

federally enforceable permit, if such permit has been issued for the

source, and shall be subject to the same procedural requirements as the

original application. When the Agency issues a budget permit, it shall be

incorporated into and become a segreagable part of the source's existing

federally enforceable permit.

(Source: Added at _______ Ill. Reg.____________, effective___________________)

Section 217.460 Subpart U NOx Trading Budget

a) The initial NOx allowances available for allocation for each control period (the

Subpart U NOx Trading Budget) for budget units subject to the provisions of this

Subpart shall be 4,882 tons per control period, subject to adjustment in

accordance with subsections (b), (c) and (d) of this Section, and subject to the

new source set aside for budget units subject to this Subpart, as set forth in

Sections 217.462 and 217.464 of this Subpart. The Subpart U NOx Trading

Budget shall be initially allocated as set forth in Appendix E of this Part.

b) The Agency may adjust the Subpart U NOx Trading Budget available for

allocations in subsection (a) of this Section by adding allowances for budget

units subject to this Subpart opting to become subject to this Subpart pursuant to

the requirements for opt-in units in Sections 217.474 and 217.476 of this

Subpart.

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51

c) The Agency shall adjust the Subpart U NOx Trading Budget available for

allocations in subsection (a) of this Section to remove allowances from units

opting to become exempt pursuant to the requirements for low-emitters in

Sections 217.454(c) and 217.472 of this Subpart.

d) Except as set forth in subsection (e) of this Section, if USEPA adjusts the base

Subpart U NOx Trading Budget of 4,882 allowances, the Agency will adjust the

Subpart U NOx Trading Budget pro-rata.

e) If USEPA adjusts the Subpart U NOx Trading Budget as to any individual

budget unit, the Subpart U NOx Trading Budget shall not be adjusted pro-rata,

and only the allowance allocation for that budget unit will be adjusted.

(Source: Added at _______ Ill. Reg._______________, effective_________________)

Section 217.462 Methodology for Obtaining NOx Allocations

a) Appendix E of this Part identifies the sources with existing budget units subject

to this subpart and the number of NOx allowance allocations that each such

budget unit is eligible to receive each control period, subject to adjustment in

accordance with Section 217.460 of this subpart and for transfers made in

accordance with subsection (b) of this section. Each named budget unit’s

allocation will be adjusted proportionally based on the adjusted Subpart U NOx

Trading Budget as provided by Section 217.460 of this Subpart.

b) The owner or operator of budget units subject to this Subpart may permanently

transfer all or part of their allocation of allowances pursuant to column 5 of

Appendix E of this part, subject to adjustment in accordance with this Subpart,

to another budget unit subject to this Subpart, or to a budget unit subject to

Subpart W of this Part. Such transfer will be effective by submitting a written

request to the Agency that is signed by the account representative for the

transferring budget unit and containing the account number for the recipient

budget unit. The owner or operator of budget units subject to this Subpart may

not permanently transfer all or part of the new source set aside indicated as the

difference between column 4 and column 5 of Appendix E of this Part.

c) Subject to adjustment in accordance with this Subpart, or revocation or revision

of the federal NOx Trading Program or this Subpart, allocations pursuant to

Appendix E of this Part exist for the life of the program, including all or a

portion of any allocation transferred to another budget unit pursuant to the

provisions of this Subpart.

(Source: Added at _______ Ill. Reg.______________, effective_________________)

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52

Section 217.464 Methodology for Determining NOx Allowances From the New Source

Set Aside

a) The methodology for calculating the allowances available to be allocated to new

budget units subject to this Subpart from the new source set aside is based on

the more stringent emission rate of 0.15 lbs/mmbtu or the permitted NOx

emission rate, but not less than 0.055 lbs/mmbtu.

b) The general equation for determining allowances is:

A

=

HI x ER

2000

Where HI = heat input (in mmbtu/control period) as determined in

accordance with subsection (c) of this Section.

Where ER = The NOx emission rate in lbs/mmbtu as determined in

accordance with subsection (a) of this Section.

Where A = allowances of NOx/control period.

c) The projected heat input shall be determined as set forth below, divided by 2000

lbs/ton:

1) For “new” budget units subject to this Subpart that have seasonal heat

input from at least three control periods prior to the allocation year, the

average of the budget unit's two highest seasonal heat inputs from the

control periods one to three years prior to the allocation year;

2) For “new” budget units subject to this Subpart that have seasonal heat

input from only two control periods prior to the allocation year, the

average of the budget unit's seasonal heat inputs from the control periods

one and two years prior to the allocation year;

3) For “new” budget units subject to this Subpart that have seasonal heat

input from only the control period prior to the allocation year, the heat

input from that control period; or

4) For “new” budget units subject to this Subpart that have not operated for

at least 77 days of the control period prior to the allocation year, the

budget unit's maximum design heat input for the control period as

designated in the construction permit.

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(Source: Added at _______ Ill. Reg.______________, effective_________________)

Section 217.466 NOx Allocations Procedure for Subpart U Budget Units

For each control period, the Agency will allocate the total number of NOx allowances in the

Subpart U NOx Trading Budget apportioned to budget units under Section 217.460 of this

Subpart, subject to adjustment as provided in this Subpart. These allocations will be issued as

provided in subsections (a) through (b) of this Section, as follows:

a) The Agency will allocate to each budget unit that is listed in Appendix E of this

Part the number of allowances listed in Column 5 of Appendix E of this Part for

that budget unit for each three year period of the program. The Agency will

report these allocations to USEPA by March 1 of 2004, and triennially

thereafter.

b) The Agency will allocate allowances from the new source set-aside to "new"

budget units as set forth in Section 217.468 of this Subpart.

c) The Agency will report allocations from the new source set-aside to USEPA by

April 1 of each year for the following year.

d) To the extent that allowances remain in the new source set-aside after any

allocation pursuant to subsection (b) of this Section, the Agency shall allocate

any such remaining allowances pro-rata to the owner or operator of the budget

units listed on Appendix E of this Part to the extent a whole allowance may be

allocated to any such owner or operator. The Agency will make such allocation

by April 15 of each year. If there are insufficient allowances to allocate a whole

allowance to any such owner or operator of a budget unit listed on Appendix E

of this Part, such allowances shall be retained by the Agency in the new source

set-aside. Any such allowances retained in the new source set-aside shall be

accumulated in the new source set-aside and may either:

1) Be available for allocation to new budget units for future control periods,

subject to the provisions of Section 217.468 of this Subpart; or

2) If, after any annual allocation to new budget units, there are sufficient

allowances accumulated in the new source set-aside to allocate one or

more whole allowances to the owner or operator of existing budget units

listed on Appendix E of this Part on a pro-rata basis, such accumulated

whole allowances shall be allocated pro-rata to such owner or operators.

(Source: Added at _______ Ill. Reg._____________, effective__________________)

Section 217.468 New Source Set-Aside for “New” Budget Units

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54

a) For the 2004, 2005 and 2006 control periods, a "new" budget unit is one that

commenced commercial operation on or after January 1, 2000. For the 2007

and later control periods, a "new" budget unit is one that commenced

commercial operation no more than three (3) control periods prior to the year

the allocation is requested pursuant to this Section. Those units that commenced

commercial operation on or after January 1, 2000, but before May 31, 2004,

become "existing" budget units on October 1, 2004. Those units that

commenced commercial operation on or after May 31, 2004, become "existing"

budget units the end of the third control period after they commenced

commercial operation.

b) “New” budget units must have an allowance for every ton of NOx emitted

during the control period as provided in Section 217.456(d) of this Subpart.

c) The Agency will establish a new source set-aside for each control period from

which "new" budget units may purchase NOx allowances. Each new source set-

aside will be allocated allowances equal to three percent (3%) of each source's

initial total Subpart U NOx Trading Budget allocation as reflected in Column 5

of Appendix E of this Part, which is 146 allowances, for each control period.

The allocation for the new source set aside from each source shall be based on

three percent of the source's initial allocation, without regard to subsequent

adjustment to any such source's current allocation, including permanent transfer

of allowances to another source or revision of the Subpart U NOx Trading

Budget by USEPA.

d) A “new” budget unit may request to purchase from the Agency a number of

allowances that is not more than the number of allowances for which it is

eligible, as determined in Section 217.464 of this Subpart, and subject to the

provisions of this Section.

e) The account representative of a “new” budget unit under subsection (a) of this

Section may purchase allowances from the new source set-aside by submitting to

the Agency a request, in writing or in a format specified by the Agency, to be

allocated allowances for the current control period from the new source set-

aside. The allocation request for each applicable control period must be

submitted after the date on which the Agency issues a construction permit to the

"new" budget unit and before February 1 of the control period for which the

allocation is requested.

f) The Agency will notify the account representative by March 1 of the applicable

year of the number of allowances that are eligible for purchase for the “new”

budget unit pursuant to the requirements of this Section. If the Agency does not

receive payment by March 15 of the applicable year, the account representative

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55

will forfeit his/her eligibility to purchase the allowances offered. The Agency

will make available for purchase those forfeited allowances on a pro-rata basis

to “new” budget units requesting allocations pursuant to this Section, up to the

number of allowances requested by each account representative. Such

additional allocations are subject to the purchase requirements of subsection (g)

of this Section.

g) The price of allowances from the new source set-aside shall be:

1) For 2004 only, the price shall be the average price at which NOx

allowances were traded in 2003 in the Ozone Transport Region; and

2) For all years other than 2004, the average price at which NOx allowances

were traded in the interstate NOx Trading Program for the preceding

control period.

h) The fees collected by the Agency from the sale of allowances will be distributed

pro-rata to budget units receiving allowances pursuant to Appendix E of this

Part on the basis of allocated allowances, subject to Agency administrative costs

assessed pursuant to Section 9.9 of the Act.

(Source: Added at _______ Ill. Reg._______________, effective_________________)

Section 217.470 Early Reduction Credits (ERCs) for Budget Units

If a budget unit reduces its NOx emission rate as required by the applicable provisions of

subsection (c) of this Section in the 2001 or 2002, control period, or if approved by USEPA,

the 2003 control period, for use in 2004 control period, or later control periods authorized by

USEPA, the account representative may request early reduction credits (ERCs) for such

reductions, and the Agency will allocate ERCs to the budget unit in accordance with the

following:

a) Each budget unit for which the account representative requests any ERCs under

subsection (d) of this Section must monitor NOx emissions in accordance with 40

CFR 96, subpart H, as incorporated by reference in Section 217.104 of this

Part, starting with the control period prior to the control period for which ERCs

will first be requested and for each control period for which ERCs will be

requested. For example, if ERCs are requested for reduction made in the 2001

control period, the budget unit must have implemented the applicable monitoring

for the 2000 control period. The budget unit’s monitoring system availability

must be at least 90 percent during the control period prior to the control period

in which the NOx emissions reduction is made and the budget unit must be in

compliance with any applicable State or federal emissions or emissions-related

requirements.

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56

b) The NOx emission rate and heat input under subsections (c) through (e) of this

Section shall be determined in accordance with 40 CFR 96, subpart H.

c) Each budget unit for which ERCs are requested under subsection (d) of this

Section must have reduced its NOx emission rate for each control period for

which ERCs are requested by 30% or more below the actual NOx emissions rate

(lbs/mmbtu) for the first control period in which ERC’s are requested.

d) The account representative of a budget unit that meets the requirements of

subsections (a) through (c) of this Section may submit to the Agency a request

for ERCs for the budget unit based on NOx emission rate reductions made by

the budget unit in control periods 2001, 2002 and 2003.

1) The number of ERCs that may be requested for any applicable control

period shall be an amount equal to the budget unit’s heat input for such

control period multiplied by the difference between the budget unit's

NOx emission rate (meeting the requirements of subsection (c) of this

Section for such the applicable control period) and the budget unit's

actual NOx emission rate for the applicable control period, divided by

2000 lbs/ton, and rounded to the nearest ton;

2) Upon request of the account representative, the ERC allowance

allocation for a particular budget unit may be deposited in the source’s

overdraft account rather than in the budget unit’s compliance account;

and

3) The early reduction request must be submitted by November 1 for

reductions made in the previous control period, in a format specified by

the Agency.

e) In the event that the May 31, 2004 date for implementing the NOx SIP Call is

delayed, the early reduction request must be submitted in accordance with any

rulemaking or guidance by USEPA on the distribution of the Compliance

Supplement Pool under the NOx SIP Call, 63 Fed. Reg.57356 (October 27,

1998).

f) The Agency will allocate ERCs to the budget units meeting the requirements of

subsections (a) through (c) of this Section and covered by ERC requests meeting

the requirements of subsection (d) of this Section in accordance with the

following procedures:

1) The Agency shall allocate no more than 2,427 ERCs over three years, as

follows:

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57

A) Not more than one-half of the total ERC allowances for

reductions made in the control period in 2001;

B) Not less than one-half of the total ERC allowances for reductions

made in the control period in 2002; and

C) If approved by USEPA, any ERC allowances not allocated

pursuant to subsections (f)(1)(A) or (B) of this Section, for

reductions made in the control period in 2003.

2) If the number of ERC allowances requested for a reduction achieved in

any control period is less than or equal to the number of ERC allowances

designated for that control period in subsection (f)(1) of this Section, the

Agency will allocate one allowance for each accepted ERC request; and

3) If the number of ERC allowances requested for a reduction achieved in

any control period is greater than the number of ERC allowances

designated for that control period in subsection (f)(1) of this Section, the

Agency will allocate allowances for accepted requests on a pro-rata

basis.

g) By April 1, the Agency will notify the account representative submitting an

ERC request for the subsequent control period of the number of ERC

allowances that will be allocated to each budget unit for that control period.

h) By May 1, 2004, the Agency will submit to USEPA the ERC allocations made

by the Agency under this Section. USEPA will record such allocations to the

extent that they are consistent with the requirements of this Section.

i) ERC allowances recorded under subsection (h) of this Section may be deducted

under 40 CFR 96.54, as incorporated by reference in Section 217.104 of this

Part, for the control period in 2004 or such control periods as may be specified

by USEPA. Notwithstanding 40 CFR 96.55(a), USEPA will deduct as retired

any ERC allowances that are not deducted for compliance in accordance with 40

CFR 96.54 for the control period in 2004 or such control periods as may be

specified by USEPA.

j) ERC allowances are treated as banked allowances in 2004 for the purposes of 40

CFR 96.55(a) and (b).

(Source: Added at _______ Ill. Reg._____________, effective_________________)

Section 217.472 Low-emitter Requirements

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58

Starting with the effective date of the permit referred to in Section 217.454(c), the budget unit

electing low-emitter status shall be subject only to the requirements of this Section.

a) For each control period the owner or operator elects low emitter status, the

federally enforceable permit conditions must:

1) Restrict the unit to burning only natural gas, fuel oil, or natural gas and

fuel oil;

2) Limit the unit's potential NOx mass emissions for the control period to 25

tons or less;

3) Restrict the unit's operating hours to the number calculated by dividing 25

tons of potential NOx mass emissions by the unit's maximum potential

hourly NOx mass emissions;

4) Require that the unit's potential NOx mass emissions shall be calculated by

using the monitoring provisions of 40 CFR part 75, or if the unit does not

rely on these monitoring provisions, as follows:

A) Select the applicable default NOx emission rate:

0.7 lbs/mmbtu for combustion turbines burning natural gas

exclusively during the control period; 1.2 lbs/mmbtu for

combustion turbines burning any fuel oil during the control period;

1.5 lbs/mmbtu for boilers burning natural gas exclusively during

the control period; or 2 lbs/mmbtu for boilers burning any fuel oil

during the control period.

B) Multiply the default NOx emission rate under subsection (a)(4)(A)

of this Section by the unit's maximum rated hourly heat input

which is the higher of the manufacturer’s maximum rated hourly

heat input or the highest observed hourly heat input. The owner or

operator of the unit may request in the permit application required

by this subsection that the Agency use a lower value for the unit's

maximum rated hourly heat input. The Agency may approve such

lower value if the owner or operator demonstrates that the

maximum hourly heat input specified by the manufacturer or the

highest observed hourly heat input, or both, are not representative.

The owner or operator must demonstrate that such lower value is

representative of the unit's current capabilities because

modifications have been made to the unit that permanently limit

the unit’s capacity.

5) Require that for five years at the source that includes the unit, records

demonstrating that the operating hours restriction, the fuel use restriction

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59

and the other requirements of the permit related to these restrictions were

met; and

6) Require that the owner or operator of the unit report to the Agency for

each control period the unit's hours of operation (treating any partial hour

of operation as a whole hour of operation), heat input and fuel use by type.

This report shall be submitted by November 1 of each year the unit elects

low-emitter status.

b) The Agency will notify the USEPA in writing of each unit electing low-emitter

status pursuant to the requirements of subsection (a) of this Section and when any

of the following occurs:

1) The permit with federally enforceable conditions that includes the

restrictions in subsection (a) of this Section is issued by the Agency;

2) Such permit is revised to remove any such restriction;

3) Such permit includes any such restriction that is no longer applicable; or

4) The unit does not comply with any such restriction.

c) The unit shall become subject to the requirements of this Subpart if, for any

control period under this Section, the fuel use restriction or the operating hours

restriction under subsection (a) of this Section is removed from the unit's permit

or otherwise is no longer applicable, or the unit does not comply with the fuel use

restriction or the operating hours restriction under subsection (a) of this Section.

Such unit shall be treated as commencing operation on September 30 of the

control period for which the fuel use restriction or the operating hours restriction

is no longer applicable or during which the unit does not comply with the fuel use

restriction or the operating hours restriction.

d) The owner or operator of a unit to which the Agency has ever allocated

allowances under Appendix E of this Part may elect low-emitter status. In that

case, the Agency will reduce the Subpart U NOx budget by the number of

allowances equal to the amount of NOx emissions the unit is permitted to emit

during the control period, pursuant to a federally enforceable condition in the

unit’s permit. The owner or operator of a unit electing low-emitter status may

demonstrate that it holds sufficient allowances to cover the unit’s NOx emissions

by offsetting the emissions from such unit, not to exceed its permitted emission

limit as included in its federally enforceable permit, with allowances issued for

voluntary NOx reductions meeting the requirements of Subpart X of this Part.

The Agency will not reduce the Subpart U NOx budget by the allowances issued

for NOx reductions obtained in accordance with Subpart X of this Part.

(Source: Added at _______ Ill. Reg._____________, effective_________________)

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Section 217.474 Opt-in Units

a) Any operating fossil fuel-fired stationary boiler, combustion turbine, combined

cycle system, cement kiln or stationary internal combustion engine in the State

may qualify under this Subpart to become a opt-in budget unit if it:

1) Is not a budget EGU under Subpart W of this Part;

2) Vents all of its emissions to a stack;

3) Has documented heat input for more than 876 hours in the six months

immediately preceding the submission of an application for an initial

budget permit under subsection (d) of this Section;

4) Is not covered by a retired unit exemption under 40 CFR 96.5; and

5) Is not covered by the low-emitter exemption under Section 217.454(c) of

this Subpart.

b) Except as otherwise provided in this Subpart, an opt-in budget unit shall be

treated as a budget unit for purposes of applying this Subpart and 40 CFR 96.

c) Authorized Account Representative:

1) If an opt-in unit is located at the same source as one or more budget

units, it shall have the same account representative as those budget units.

2) If the opt-in unit is not located at the same source as one or more budget

units, the owner or operator of the opt-in unit shall submit a complete

account certificate of representation under 40 CFR 96.13.

d) To apply for a budget permit, the account representative of a unit meeting the

qualifications of subsection (a) of this Section must, except as provided under

Section 217.478(f) of this Subpart, submit to the Agency:

1) A budget permit application for the unit that:

A) Meets the requirements under Section 217.458 of this Subpart;

and

B) Contains provisions for a change in the regulatory status of the

unit to an opt-in budget unit under Section 217.454 of this

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61

Subpart pursuant to the provisions of Section 217.480(b) of this

Subpart.

2) A monitoring plan for the unit in accordance with 40 CFR 96, subpart

H.

(Source: Added at _______ Ill. Reg.______________, effective________________)

Section 217.476 Opt-In Process

The Agency will issue or deny a budget permit for an opt-in unit in accordance with Section

217.458 of this Subpart and the following:

a) The Agency will determine, on an interim basis, the sufficiency of the

monitoring plan accompanying the initial application for a budget permit for an

opt-in unit. A monitoring plan is sufficient, for purposes of interim review, if

the plan contains information demonstrating that the NOx emission rate and heat

input of the unit are monitored and reported in accordance with 40 CFR 96,

subpart H. A determination of sufficiency shall not be construed as acceptance

or approval of that unit's monitoring plan.

b) If the Agency determines that the unit's monitoring plan is sufficient under

subsection (a) of this Section and after completion of the monitoring system

certification under 40 CFR 96, subpart H, the NOx emission rate and the heat

input of the unit shall be monitored and reported in accordance with 40 CFR 96,

subpart H, for one full control period during which the monitoring system

availability is not less than 90 percent and during which the unit is in full

compliance with any applicable State or federal emissions or emissions-related

requirements.

c) Based on the information monitored and reported under subsection (b) of this

Section, the unit's baseline heat rate shall be calculated as the unit's total heat

input (in mmbtu) for the control period, and the unit's baseline NOx emission

rate shall be calculated as the unit's total NOx emissions (in lbs) for the control

period divided by the unit's baseline heat rate.

(Source: Added at _______ Ill. Reg.______________, effective______________)

Section 217.478 Opt-in Budget Units: Withdrawal from NOx Trading Program

a) Requesting withdrawal: To withdraw from the NOx Trading Program, the

account representative of an opt-in budget unit shall submit to the Agency a

request to withdraw from the NOx Trading Program and to withdraw the budget

permit effective as of a specified date between (and not including) September 30

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62

and before May 1. The submission shall be made no later than 90 days prior to

the requested effective date of withdrawal.

b) Conditions for withdrawal: Before an opt-in budget unit may withdraw from the

NOx Trading Program and the budget permit may be withdrawn under this

Section, the following conditions must be met:

1) For the control period immediately before the withdrawal is to be

effective, the account representative must submit to the Agency an

annual compliance certification report in accordance with 40 CFR 96.30.

2) If the opt-in budget unit has excess emissions for the control period

immediately before the withdrawal is to be effective, USEPA has

deducted from the opt-in budget unit's compliance account, or the

overdraft account of the NOx budget source where the opt-in budget unit

is located, the number of allowances required in accordance with 40

CFR 96.54(d) for the control period.

3) After the requirements for withdrawal under subsections (b)(1) and (2) of

this Section are met, USEPA will deduct from the opt-in unit's

compliance account, or the overdraft account of the budget source where

the opt-in budget unit is located, allowances equal in number to any

allowances allocated to that unit under Section 217.782 of this Subpart

for the control period for which the withdrawal is to be effective and

earlier control periods. USEPA will close the opt-in budget unit's

compliance account and will establish, and transfer any remaining

allowances to, a new general account for the owners and operators of the

opt-in unit. The account representative for the opt-in budget unit shall

become the account representative for the general account.

c) An opt-in budget unit that withdraws from the Subpart U NOx Trading Program

shall comply with all requirements under the NOx Trading Program concerning

all years for which such opt-in budget unit was an opt-in budget unit, even if

such requirements arise or must be complied with after the withdrawal takes

effect.

d) Notification:

1) After the requirements for withdrawal under subsections (a) and (b) of

this Section are met (including deduction of the full amount of

allowances required), the Agency will revise the budget permit indicating

a specified effective date for the withdrawal that is after the requirements

in subsections (a) and (b) of this Section have been met and that is prior

to May 1 or after September 30.

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63

2) If the requirements for withdrawal under subsections (a) and (b) of this

Section are not met, the Agency will issue a notification to the owner or

operator and the account representative of the opt-in budget unit that the

opt-in unit's request to withdraw its budget permit is denied. If the opt-

in budget unit's request to withdraw is denied, the opt-in budget unit

shall remain subject to the requirements for a opt-in budget unit.

e) Reapplication upon failure to meet conditions of withdrawal: If the Agency

denies the opt-in budget unit's request to withdraw, the account representative of

the opt-in budget unit may submit another request to withdraw in accordance

with subsections (a) and (b) of this Section.

f) Ability to return to the NOx Trading Program: Once an opt-in unit withdraws

from the NOx Trading Program and its budget permit is withdraw under this

Section, the account representative may not submit another application for a

budget permit under Section 217.474(d) of this Subpart for the unit prior to the

date that is four years after the date on which the budget permit with opt-in

conditions is withdrawn.

(Source: Added at _______ Ill. Reg.____________, effective__________________)

Section 217.480 Opt-in Units: Change in Regulatory Status

a) Notification: When an opt-in unit becomes an opt-in budget unit under Section

217.454(d) of this Subpart, the owner or operator shall notify the Agency and

USEPA in writing of such change in the opt-in unit's regulatory status within 30

days of such change.

b) Any permit application that provides for a change in the regulatory status of a

unit to an opt-in budget unit pursuant to Section 217.474(d)(1)(B) of this Subpart

and included in a budget permit, is effective on the date on which such opt-in

unit becomes an opt-in budget unit under Section 217.454 of this Subpart.

c) USEPA's action:

1) USEPA will deduct from the compliance account for the opt-in budget

unit under this Section, or the overdraft account of the budget source

where the opt-in budget unit is located, allowances equal in number to

and allocated for the same or a prior control period as:

A) Any allowances allocated to the budget unit (as an opt-in unit)

under Section 217.482 of this Subpart for any control period after

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64

the last control period during which the unit's budget permit was

effective; and

B) If the effective date of any budget permit under subsection (b) of

this Section is during a control period, the allowances allocated to

the opt-in budget unit (as an opt-in unit) under Section 217.482 of

this Subpart for the control period multiplied by the ratio of the

number of days in the control period, starting with the effective

date of the budget permit under subsection (b) of this Section,

divided by the total number of days in the control period.

2) The account representative shall ensure that the compliance account of

the opt-in budget unit under subsection (b) of this Section, or the

overdraft account of the budget source where the opt-in budget unit is

located, contains the allowances necessary for completion of the

deduction under subsection (c)(1) of this Section. If the compliance

account or overdraft account does not contain sufficient allowances,

USEPA will deduct the required number of allowances, regardless of the

control period for which they were allocated, whenever allowances are

recorded in either account.

3) For every control period during which any budget permit under

subsection (b) of this Section is effective, the opt-in budget unit under

subsection (b) of this Section will be treated, solely for purposes of

allowance allocations under Section 217.466 or 217.468 of this Subpart,

as a unit that commenced operation on the effective date of the budget

permit under subsection (b) of this Section and will be allocated

allowances in accordance with Section 217.466 or 217.468 of this

Subpart.

4) Notwithstanding subsection (c)(2) of this Section, if the effective date of

any budget permit under subsection (b) of this Section is during a control

period, the following number of allowances will be allocated to the opt-

in budget unit for the control period: the number of allowances

otherwise allocated to the opt-in budget unit under Section 217.466 or

217.468 of this Subpart for the control period multiplied by the ratio of

the number of days in the control period, starting with the effective date

of the budget permit under subsection (b) of this Section, divided by the

total number of days in the control period.

d) When the owner or operator of an opt-in unit does not renew the budget permit

for the opt-in budget unit issued pursuant to Section 217.474(d), USEPA will

deduct from the opt-in budget unit's compliance account, or the overdraft

account of the budget source where the opt-in budget unit is located, allowances

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65

equal in number to and allocated for the same or a prior control period as any

allowances allocated to the opt-in budget unit under Section 217.482 of this

Subpart for any control period after the last control period for which the budget

permit is effective. The account representative shall ensure that the opt-in

budget unit's compliance account or the overdraft account of the budget source

where the opt-in budget unit is located contains the allowances necessary for

completion of such deduction. If the compliance account or overdraft account

does not contain sufficient allowances, USEPA will deduct the required number

of allowances, regardless of the control period for which they were allocated,

whenever allowances are recorded in either account.

e) After the deduction under subsection (d) of this Section is completed, USEPA

will close the opt-in unit's compliance account. If any allowances remain in the

compliance account after completion of such deduction and any deduction under

40 CFR 96.54, USEPA will close the opt-in unit's compliance account and will

establish, and transfer any remaining allowances to, a new general account for

the owner or operator of the opt-in unit. The account representative for the opt-

in unit shall become the account representative for the general account.

(Source: Added at _______ Ill. Reg._____________, effective_________________)

Section 217.482 Allowance Allocations to Opt-in Budget Units

a) Allowance allocations:

1) By the December 31 immediately before the first control period for

which the budget permit is effective, the Agency will allocate allowances

to the opt-in budget unit and submit to USEPA the allocation for the

control period in accordance with subsection (b) of this Section.

2) By no later than the December 31 after the first control period for which

the budget permit is in effect and December 31 of each year thereafter,

the Agency will allocate allowances to the opt-in budget unit and submit

to USEPA allocations for the next control period, in accordance with

subsection (b) of this Section.

b) For the first control period, and for each subsequent control period for which

the opt-in budget unit has a budget permit, the opt-in budget unit will be

allocated allowances in accordance with the following procedures:

1) The heat input (in mmbtu) used for calculating allowance allocations will

be the lesser of:

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66

A) The opt-in unit's baseline heat input determined pursuant to

Section 217.476(c) of this Subpart; or

B) The opt-in unit's heat input, for the control period in the year

prior to the year of the first control period for which the

allocations are being calculated, as determined in accordance with

40 CFR 96, subpart H.

2) The Agency will allocate allowances to the opt-in budget unit in an

amount equaling the heat input (in mmbtu) determined under subsection

(b)(1) of this Section multiplied by the lesser of:

A) The unit's baseline NOx emission rate (in lbs/mmbtu) determined

pursuant to Section 217.476(c) of this Subpart; or

B) The lowest NOx emissions limitation (calculated in lbs/mmbtu)

under State or federal law that is applicable to the budget opt-in

unit for the year of the control period for which the allocations

are being calculated, regardless of the averaging period to which

the emissions limitation applies.

(Source: Added at _______ Ill. Reg.______________, effective________________)

SUBPART X: VOLUNTARY NOx EMISSIONS REDUCTION PROGRAM

Section 217.800 Purpose

The purpose of this Subpart is to implement Section 9.9(d)(3) of the Act by providing a method

by which additional NOx allowances may be generated for use by emission units subject to the

requirements of Subparts U or W of this Part. [415 ILCS 5/9.9(d)(3)]

(Source: Added at _______ Ill. Reg.______________, effective________________)

Section 217.805 Emission Unit Eligibility

Any owner or operator of a stationary source may submit a proposal, as provided in Section

217.835 of this Subpart, for voluntarily reducing NOx emissions during the control period, if

each emission unit from which NOx reductions at the source will be obtained meets the

following criteria:

a) Discharges through a stack;

b) Is fossil fuel-fired;

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67

c) Is not subject to the requirements of either Subparts T, U, V or W of this Part;

d) Is not a retired unit pursuant to 40 CFR 96.5;

e) Has not elected to become an opt-in unit pursuant to Section 217.754 or Section

217.774 of this Part; and

f) Is not a stationary internal combustion engine that emits more than one tone of

NOx per day during the ozone control period.

(Source: Added at _______ Ill. Reg.____________, effective_________________)

Section 217.810 Participation Requirements

a) Any owner or operator of a source ("emission reduction source") with one or

more emission units meeting the requirements of Section 217.805 of this

Subpart and seeking to make quantifiable, verifiable and federally enforceable

voluntary reductions of NOx emissions during the control period from one or

more emission units ("emission reduction units") must comply with the

following requirements:

1) Submit a NOx emission reduction proposal that meets the requirements of

Section 217.835 of this Subpart;

2) Request an emission cap on NOx emissions from all NOx emission units

at the emission reduction source that are not otherwise subject to

Subparts U or W of this Part, and that are the same type of emission unit

as the emission reduction unit (e.g., if the emission reduction unit is a

boiler, combined cycle system or turbine, then the emission cap must

include all boilers, combined cycle systems or turbines that are not

otherwise subject to Subparts U or W of this Part, or if the emission unit

is a cement kiln, then the emission cap must include all cement kilns),

provided, however, the owner or operator of the source may submit a

demonstration in accordance with Section 217.835 of this Subpart that

any like-kind emission unit or units should not be included in the NOx

emission cap;

3) Demonstrate how the NOx emission cap required by subsection (a)(2) of

this Section is to be determined, in accordance with Sections 217.820

and 217.845 of this Subpart, which cap reflects the NOx emission

reduction specified in the proposal;

4) Permit requirements:

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68

A) Obtain a permit, or an amendment to an existing permit, for the

source, with federally enforceable conditions containing the

commitments in the NOx emission reduction proposal and the

emissions cap by the later of May 1, 2003, or the date on which

the reduction in NOx emissions will commence and operate the

source in compliance with such permit; or

B) For each emission unit that will be generating voluntary NOx

emissions by ceasing operation, withdrawing the applicable

permit, or requesting a revision to the permit to reflect the shut

down of the emission reduction unit, by the later of May 1, 2003,

or the date specified in the NOx reduction proposal.

5) Submit an emissions baseline determination for each unit subject to the

NOx emission cap in accordance with the requirements of Section

217.820 of this Subpart.

6) Monitoring requirements:

A) To the extent applicable, each emission reduction unit at the

source shall comply with the monitoring requirements of Section

217.850 of this Subpart.

B) The emissions measurements recorded and reported in accordance

with Sections 217.850 and 217.855 of this Subpart shall be used

to determine compliance by the emission reduction unit with the

emissions limitation set forth in the NOx emission reduction

proposal and the federally enforceable permit conditions required

pursuant to subsection (a)(3) of this Section.

C) The emissions measurements recorded and reported in accordance

with Sections 217.850 and 217.855 of this Subpart shall be used

to determine compliance by the emission reduction source with

the emissions cap set forth in the NOx emission reduction

proposal and the federally enforceable permit condition required

pursuant to Section 217.850(a)(3) of this Subpart.

b) The owner or operator of the emission reduction source is required to submit an

annual certification to the Agency that the source has complied with the cap on

NOx emissions for the source and that the NOx emission reductions specified in

the approved proposal were made pursuant to the requirements of Section

217.850 of this Subpart.

(Source: Added at _______ Ill. Reg._____________, effective_________________)

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69

Section 217.815 NOx Emission Reductions and the Subpart X NOx Trading Budget

a) NOx emission reductions may be recognized under this Subpart if they are

quantifiable, verifiable, and federally enforceable, and meet one or more of the

following criteria:

1) Due to the use of any NOx emission reduction technology (e.g.,

combustion or post combustion control technology or fuel switching) at

the emission reduction unit pursuant to federally enforceable conditions

in the permit for the unit addressing such control technology or fuel

switching, NOx emissions from the emission reduction unit for any

control period beginning in 2003 are or will be lower than such unit's

emissions baseline. The amount of actual NOx emission reductions shall

be determined in accordance with Section 217.820 of this Subpart, and

the amount of creditable NOx emission reductions shall be determined in

accordance with Section 217.825 of this Subpart;

2) The emission reduction unit is permanently shut down after January 1,

1995, and the owner or operator requests a revision to the relevant

operating permit to reflect the shut down of the emission reduction unit.

The amount of actual NOx emission reductions shall be determined in

accordance with Section 217.820 of this Subpart, and the amount of

creditable NOx emission reductions shall be determined in accordance

with Section 217.825 of this Subpart;

3) During any control period beginning in 2003, the emission reduction

unit's control period NOx emission rate or hours of operation is reduced

pursuant to federally enforceable conditions in a permit for such unit,

resulting in an actual reduction in NOx emissions from such unit’s

emissions baseline. The amount of actual NOx emission reductions shall

be determined in accordance with Section 217.820 of this Subpart, and

the amount of creditable NOx emission reductions shall be determined in

accordance with Section 217.825 of this Subpart.

b) USEPA shall adjust the State’s trading portion of the statewide NOx budget, as

established in the so-called NOx SIP Call, 63 Fed. Re. 57356 (October 27,

1998), and create allowances for the creditable portion, as set forth in Section

217.825 of this Subpart, of verifiable, quantifiable and federally enforceable

NOx emission reductions meeting the requirements of this Subpart (the Subpart

X NOx Trading Budget), and allowances from the Subpart X NOx Trading

Budget shall be allocated to recipient emission units in accordance with this

Subpart.

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70

c) The Agency shall submit an allocation to USEPA for the creditable portion of

verifiable, quantifiable, and federally enforceable NOx emission reductions

meeting the requirements of this Subpart, which allocation may be used for the

purposes of demonstrating compliance with the requirements of Subparts U and

W of this Part.

d) If USEPA adjusts or fails to adjust the Subpart X NOx Trading Budget as to any

individual emission reduction unit, the Subpart X NOx Trading Budget shall not

be adjusted pro-rata, and only the allowance allocation for that emission

reduction unit will be adjusted.

(Source: Added at _______ Ill. Reg._____________, effective_______________)

Section 217.820 Baseline Emissions Determination

a) An emission unit's emissions baseline shall be determined as follows:

1) By multiplying the unit's actual emissions during the 1995 calendar year,

as reported in the annual emission report submitted in accordance with

35 Ill. Adm. Code 254, by 5/12ths; or

2) If the NOx emissions from the unit were not included in the emission

reduction source's 1995 annual emissions report submitted to the Agency

pursuant to 35 Ill. Adm. Code 254, by determining the base case amount

included for such unit in the NOx SIP Call inventory, as specified in the

"Technical Support Document for Illinois' Statewide NOx Budget, " (63

Fed. Reg. 17349 (Nov. 7, 1997)); or

b) If the NOx baseline emissions for the 1995 control period cannot be determined

by the either of the methods listed in subsection (a)(1) or (2) of this Section,

such actual NOx baseline emissions shall be determined based on the average

emission rate multiplied by the average number of hours of operation from two

of the three control periods, as selected by the emission reduction source, prior

to the year the emission reduction proposal is effective. The unit's emission rate

and hours of operation will be determined based on the unit's reported NOx

emission rate and hours of operation in the most recent annual emission reports

for such unit submitted in accordance with 35 Ill. Adm. Code 254.

(Source: Added at _______ Ill. Reg.____________, effective_________________)

Section 217.825 Calculation of Creditable NOx Emission Reductions

For actual NO

x

emission reductions achieved pursuant to Section 217.815(a) of this Subpart,

the gross amount of control period actual NOx emission reductions shall be determined

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71

pursuant to Section 217.820 of this Subpart. Eighty percent (80%) of the actual NOx

emission reductions achieved pursuant to Section 217.815(a) shall be creditable. Twenty

percent (20%) of the actual NOx emission reductions shall be retired for the benefit of air

quality.

(Source: Added at _______ Ill. Reg.____________, effective_________________)

Section 217.830 Limitations of NOx Emissions Reductions

a) Each NOx allowance issued for NOx emission reductions meeting the

requirements of this Subpart is a limited authorization to emit one ton of NOx in

accordance with the federal NOx Trading Program as set forth in Subparts U or

W of this Part, as applicable. No provision of the federal NOx Trading

Program, the emission reduction proposal, the permit application, the permit, or

of law shall be construed to limit the authority of the United States or the State

to terminate or limit such authorization.

b) Any NOx allowance issued in accordance with this Subpart does not constitute a

property right.

(Source: Added at _______ Ill. Reg.____________, effective________________)

Section 217.835 NOx Emission Reduction Proposal

a) A NOx emission reduction proposal shall include the following:

1) Information identifying each emission unit at the source that emits NOx,

whether the unit is subject to Subpart T, U, V ,W or X of this Part, and

the baseline emissions for each emission unit subject to the NOx emission

cap as determined in accordance with Section 217.820 of this Subpart;

2) Information identifying each emission reduction unit from which the NOx

emission reductions have been or will be achieved;

3) An explanation of the method used to achieve the NOx emission

reductions;

4) The amount of the NOx emission reductions, including supporting

calculations and documentation, such as fuel usage information;

5) The emission units subject to the NOx emission cap in accordance with

Section 217.810(a) of this Subpart, and if all like-kind or same-type

emission units are not proposed to be included within the NOx emission

cap, an explanation of how the owner or operator of the emission

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72

reduction source will ensure that production shifting will not occur, such

that the emission reduction source will achieve real, verifiable, and

quantifiable NOx emission reductions;

6) The control period NOx emission cap to be achieved by the emission

reduction source, including both the baseline emissions for each recipient

unit subject to the NOx emission cap and the NOx emission reductions

from the emission reduction unit(s) included in the proposal;

7) The name and address of the owner or operator of each emission unit to

which the NOx allowances will be allocated, the Subpart of this Part (i.e,

Subpart U or W) to which each unit is subject, including the name,

telephone number, and account number of the account representative for

each such unit; and

8) Certification by the owner or operator of each unit that is the subject of

each proposed emission reduction proposal of his/her acceptance of the

terms of the proposal and certification that the emission reductions

specified in the proposal have been or will be achieved.

b) The owner or operator of a source submitting an emission reduction proposal

must notify the Agency in writing within 30 days of any event or circumstance

that makes NOx emission reduction proposal incorrect or incomplete.

c) The owner or operator of a source with an approved emission reduction

proposal may request to withdraw its emission reduction proposal, and cease to

create NOx allowances under this Subpart, as follows:

1) Requesting withdrawal: To withdraw from participation under this

Subpart, the owner or operator of an emission reduction unit shall submit

to the Agency a written request to withdraw from participation and to

withdraw or revise the applicable permit effective as of a specified date

between (and not including) September 30 and before May 1. The

submission shall be made no later than 90 days prior to the requested

effective date of withdrawal.

2) Conditions for withdrawal: Before an emission reduction source may

withdraw its approved emission reduction proposal, and the federally

enforceable permit may be withdrawn under this Section, the owner or

operator must submit to the Agency an annual compliance certification

report in accordance with Section 217.855 of this Subpart for the control

period immediately before the withdrawal is to be effective.

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73

3) An emission reduction source that withdraws from the this Subpart shall

comply with all requirements under its approved emission reduction

proposal and federally enforceable permit conditions addressing such

proposal concerning all years for which the emission reduction source

was in the program, even if such requirements arise or must be complied

with after the withdrawal takes effect.

4) Notification:

A) After the requirements for withdrawal under subsections (a) and

(b) of this Section are met, the Agency will revise the permit

indicating a specified effective date for the withdrawal that is

after the requirements in subsections (a) and (b) of this Section

have been met and that is prior to May 1 or after September 30.

B) If the requirements for withdrawal under subsections (a) and (b)

of this Section are not met, the Agency will issue a notification to

the owner or operator of the emission reduction source that the

request to withdraw its permit is denied. If the request to

withdraw is denied, the source shall remain subject to the

requirements of its approved emission reduction proposal and

federally enforceable permit conditions addressing the proposal

and the requirements of this Subpart.

5) Reapplication upon failure to meet conditions of withdrawal: If the

Agency denies the request of the owner or operator of the emission

reduction source's request to withdraw, the owner or operator of the

source may submit another request to withdraw in accordance with

subsections (a) and (b) of this Section.

6) Upon successful withdrawal from the program, the emission reduction

source shall no longer be subject to the provisions of this Subpart.

(Source: Added at _______ Ill. Reg.______________, effective________________)

Section 217.840 Agency Action

a) The Agency shall notify the owner or operator submitting a NOx emission

reduction proposal in writing of its decision with respect to the proposal within

90 days after receipt of such proposal and, if applicable, of NOx emissions data

to verify that the specified reductions have occurred. The owner or operator of

the emission reduction source may extend the deadline for Agency action in

writing. If the Agency disapproves or conditionally approves a proposal, this

written notice shall include a statement of the specific reasons for the

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74

disapproval or conditional approval of the proposal. The following shall be

considered a final Agency action for the purposes of appeal: if the Agency fails

to take action within such 90 day period, subject to any extension, or if the

Agency disapproves a proposal. If the Agency conditionally approves a

proposal, the owner or operator of the emission reduction source has 30 days to

submit a modified proposal addressing the specific items listed by the Agency.

If the owner and operator of the emission reduction source does not submit a

modified emission reduction proposal within such 30 day period, the conditional

approval shall be deemed to be a disapproval, and shall be deemed to be a final

action for purposes of appeal.

b) The NOx emissions reduction proposal will not be effective until:

1) After the owner or operator of the emission reduction source has

obtained or modified a permit with federally enforceable conditions

addressing the requirements of this Subpart; or

2) If NOx emission reductions are being obtained by the shut down of an

emission reduction unit, the owner or operator of the emission reduction

unit has either:

A) Obtained or modified a permit with federally enforceable

conditions addressing the requirements of this Subpart; or

B) Withdrawn the applicable permit and the Agency has:

i) Provided USEPA with a copy of the proposal and notice

of the Agency’s proposed approval of the emission

reduction proposal, and USEPA has not disapproved such

proposal;

ii) Published notice and offered an opportunity to comment,

pursuant to 35 Ill. Adm. Code 252, on such permit

withdrawal, its proposed approval of the emission

reduction proposal for the shut down of the emission

reduction unit and the creditable NOx emission reductions

that will be created by the shut down.

c) If the Agency approves the proposal, and subject to the provisions of subsection

(b) of this Section, the Agency shall submit an allocation to USEPA for the

creditable reductions created pursuant to the requirements of this Subpart subject

to the following:

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75

1) Any allowances generated pursuant to this Subpart shall be issued to the

recipient emission unit identified in the proposal, for each control period

in which the NOx emissions reductions are verified, and the requirements

of this Subpart continue to be met;

2) The owner or operator of the emission reduction source has, by

November 1st following the control period that the emission reduction

unit has reduced NOx emissions, verified the NOx emission reductions in

accordance with Section 217.845 of this Subpart, and obtained a permit

containing federally enforceable conditions addressing the requirements

of this Subpart;

3) The allowances shall be issued by May 1 after the control period in

which the reduction has occurred, for use in any future control period.

(Source: Added at _______ Ill. Reg.___________, effective__________________)

Section 217.845 Emissions Determination Methods

The owner or operator of an emission reduction source must demonstrate that it has obtained

the NOx emission reductions, and has not exceeded its NOx emission cap, as specified in its

approved NOx emission reduction proposal, as follows:

a) If the NOx emission reductions are generated pursuant to Section 217. 815(a)(1)

of this Subpart, the NOx emission rate for each emission reduction unit shall be

determined as follows:

1) Through the use of continuous emissions monitoring in accordance with

Section 217.850 of this Subpart; or

2) Through the use of any test methods and procedures provided in 40 CFR

60 and approved by the Agency, or any other method approved by the

Agency when included as federally enforceable conditions in a permit

issued or revised pursuant to this Subpart.

b) If the NOx emission reductions are generated pursuant to Section 217.815(a)(3)

of this Subpart, submit an initial compliance demonstration plan to the Agency

120 days prior to the control period date that the emission reduction unit will

commence NOx emission reductions in compliance with an approved emissions

reduction proposal. Such demonstration shall be based on the actual NOx

emission rate measured in accordance with Section 217.850 of this Subpart.

c) If the emission reduction unit's compliance with the NOx emission reduction

proposal is determined in accordance with subsection (a)(2) of this Section,

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76

conducting an initial test 90 days prior to the date the specified emission

reductions will be obtained, or within 45 days of the Agency's request for NOx

emission reductions already obtained, and notifying the Agency in writing of

any test performed to comply with the requirements of this Subpart at least 30

days prior to the test. The Agency may at any time require annual control

period testing of any emission unit at the NOx emission reduction source, and

may require such testing as part of its approval of a NOx emission reduction

proposal.

d) By November 1

st following each control period in which NOx emission

reductions are generated, the owner or operator of an emission reduction source

must:

1) Submit a compliance certification, including supporting data, that the

NOx emission cap, as specified in its approved NOx emission reduction

proposal, has not been exceeded; and

2) Monitor and report the NOx emissions during each control period from

all NOx emission units at the source subject to the NOx emission cap in

accordance with Sections 217.850 and 217.855 of this Subpart.

e) The owner or operator of an emission reduction source shall, 120 days prior to

the date that the emission reduction source will commence NOx emission

reductions in compliance with an approved emissions reduction proposal, submit

to the Agency a performance evaluation for each CEMS using the applicable

performance specifications in 40 CFR 60, Appendix B, as incorporated by

reference in Section 217.104 of this Part.

(Source: Added at _______ Ill. Reg._____________, effective_________________)

Section 217.850 Emissions Monitoring

a) The owner or operator of an emission reduction source shall install, calibrate,

maintain, and operate during the control period on each NOx emission unit at the

source subject to the NOx emission cap a continuous emission monitoring system

(CEMS), or an alternative approved by the Agency and included in a federally

enforceable permit condition, for measuring NOx emissions to the atmosphere.

b) The CEMS shall be operated and data recorded during all periods of operation

of the emission unit at the source during the control period, except for periods

of CEMS breakdowns and repairs as provided in subsection (e) of this Section.

c) CEMS quality assurance data must be recorded during calibration checks and

zero and span adjustments.

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77

d) The 1-hour average NOx emissions measured by the CEMS shall be:

1) Expressed in lbs/hr or in lbs/mmbtu and heat input;

2) Calculated using the data points required under 40 CFR 60.13, as

incorporated by reference in Section 217.104 of this Subpart; and

3) Calculated using at least two data points separated by a minimum of 15

minutes (where the unit operates for more than one quadrant of an hour)

if data are unavailable as a result of the performance of calibration,

quality assurance, or preventive maintenance activities.

e) The procedures under 40 CFR 60.13, as incorporated by reference in Section

217.104 of this Subpart, shall be followed for installation, evaluation, and

operation of each CEMS.

f) For monitoring systems measuring NOx in lbs/hr, if NOx emission data are not

obtained because of CEMS breakdown, repairs, calibration checks, or zero and

span adjustments, NOx emission data shall be obtained by using the data

substitution procedures contained in 40 CFR 75, subpart D, incorporated by

reference in Section 217.104 of this Part.

g) For monitoring systems measuring NOx in lbs/mmbtu, if NOx emission data are

not obtained because of CEMS breakdown, repairs, calibration checks, or zero

and span adjustments, NOx emission data shall be obtained by using the rolling

hourly average of emission data recorded for the previous 30 day period of

operation if the data capture for such period is 95% or greater and the period of

missing data is equal to or less than 24 consecutive hours. If the data capture

for such previous 30 day period is less than 95% or the period of missing data is

greater than 24 consecutive hours, the data shall be obtained by using the

highest hourly average recorded during the previous 30 days of operation.

h) The CEMS shall be subject to the quality assurance procedures and

requirements of 40 CFR 60, Appendix F, incorporated by reference in Section

217.104 of this Part.

(Source: Added at _______ Ill. Reg._____________, effective_______________)

Section 217.855 Reporting

a) By November 1

st of each year beginning in 2003, or the year of the first control

period for which NOx emission reductions were generated in accordance with

this Subpart, an owner or operator of an emission reduction source must, as a

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78

seasonal component of the annual emission report for the source pursuant to 35

Ill. Adm. Code 254, report to the Agency the total control period NOx emissions

of each NOx emission unit at the source subject to the NOx emission.

b) Within 30 days of receipt of such data or evaluation, the owner or operator of

each emission reduction source shall submit to the Agency the performance test

data from the initial performance test for each emission reduction unit and the

performance evaluation for each CEMS using the applicable performance

specifications in 40 CFR 60, Appendix B, as incorporated by reference in

Section 217.104 of this Part.

(Source: Added at _______ Ill. Reg._____________, effective________________)

Section 217.860 Recordkeeping

a) The owner or operator of an emission reduction source shall keep and maintain

the following records for each NOx emission unit at the source subject to the

NOx emission cap:

1) Daily, monthly, and control period operating hours;

2) Type and quantity of each fuel used daily during the control period;

3) Control period capacity factor of individual fuels fired and all fuels fired;

4) Monitoring records; and

5) To the extent applicable, the performance test data from the initial

performance test for each emission reduction unit and the performance

evaluation for each CEMS using the applicable performance

specifications in 40 CFR 60, Appendix B, as incorporated by reference

in Section 217.104 of this Part.

b) The owner or operator of an emission reduction source shall maintain records of

the following information for each operating day for each NOx emission unit

subject to the NOx emission cap:

1) Calendar date;

2) The average hourly NOx mass emission rate expressed as

lbs/hr;

3) The control period total NOx mass emissions to date;

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79

4) Identification of times when emission data have been

excluded from the calculation of NOx mass emissions, the

reasons for excluding the data, and any corrective actions

taken;

5) Identification of the times when the pollutant

concentration exceeded full span of the CEMS;

6) Description of any modifications to the CEMS that could

affect the ability of the CEMS to comply with the

Performance Specifications in 40 CFR 60, Appendix B;

and

7) Results of daily CEMS drift tests and quarterly accuracy

assessments as required under 40 CFR 60, Appendix F.

c) The owner or operator of any NOx emission reduction source subject to the

continuous monitoring requirements for NOx under this Subpart, shall submit a

compliance certification containing the information recorded under subsection

(b) of this Section. All compliance certification reports shall be postmarked by

November 1

st or the next business day if November 1

st falls on a Saturday or

Sunday, of each control period in which NOx emission reductions are generated.

d) Maintenance of records: Unless otherwise provided, the owner or operator of a

NOx emission reduction source shall keep on site at the source, each of the

following documents for a period of five (5) years from the date the document is

created. This period may be extended for cause, at any time prior to the end of

five (5) years, in writing by the Agency.

1) The emission reduction proposal and all documents that demonstrate the

accuracy of the statements in the proposal for each year the emission

reduction source generates NOx reductions under this Subpart and for

five (5) years thereafter.

2) All emissions monitoring information required pursuant to this Subpart;

provided that to the extent that 40 CFR 60 provides for a 3-year period

for recordkeeping, the 3-year period shall apply.

3) Copies of all reports, compliance certifications, and other submissions

and all records made or required under this Subpart.

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80

4) Copies of all documents used to complete any permit application and

supporting documents and any other submission to demonstrate

compliance with the requirements of this Subpart.

(Source: Added at ______ Ill. Reg._____________, effective________________)

Section 217.865 Enforcement

a) Excess Emissions Requirements: The owner or operator of an emission

reduction source for which NOx reductions have been recognized pursuant to

this Section and that has excess NOx emissions in any control period for which

NOx allowances have been issued must:

1) For the first control period during which the emission reduction source

has excess NOx emissions, purchase NOx allowances in an amount equal

to two (2) times the excess NOx emissions in accordance with the federal

NOx Trading Program and surrender the allowances to the Agency by

December 31 following the control period in which the emission

reduction source had excess emissions;

2) For the second control period during which the emission reduction

source has excess NOx emissions, purchase allowances in an amount

equal to three (3) times the excess NOx emissions in accordance with the

federal NOx Trading Program and surrender the allowances to the

Agency by December 31 following the control period in which the

emission reduction source had excess emissions;

3) If the emission reduction source has excess NOx emissions for three

control periods, purchase allowances in an amount equal to four (4)

times the excess NOx emissions pursuant to the federal NOx Trading

Program and surrender the allowances to the Agency by December 31

following the control period in which the emission reduction source had

excess emissions, and the NOx emission reduction proposal shall be

automatically revoked. The emission reduction source will thereafter not

be able to generate NOx emission reductions for which NOx allowances

may be issued under this Subpart.

b) All allowances surrendered to the Agency pursuant to subsections (a)(1) through

(a)(3) of this Section shall be retired to benefit air quality.

c) Nothing in this Subpart limits the authority of the state or the federal

government to seek penalties and injunctive relief for any violation of this

Subpart or any permit condition. Nothing in this Subpart limits the right of the

state or the federal government or any person to directly enforce against actions

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81

or omissions which constitute violations of permits required by the Act or

regulations promulgated thereunder or the CAA or applicable federal

environmental laws and regulations.

(Source: Added at _______ Ill. Reg._____________, effective________________)

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Section 217.Appendix E Large Non-Electrical Generating Units

COMPANY

ID # /

NAME

UNIT

DESIGNATION

UNIT

DESCRIPTION

BUDGET

ALLOCAT

ION

BUDGET

ALLOCATION

LESS 3% NSSA

1

2 3 4 5

A. E. STALEY MANUFACTURING CO

115015ABX 85070061299 COAL-FIRED

BOILER 1

176 171

115015ABX 85070061299 COAL-FIRED

BOILER 2

175 170

115015ABX 73020084129 BOILER #25 125 121

A. E. STALEY MANUFACTURING CO (Total

Allocation)

476 462

ARCHER DANIELS MIDLAND CO EAST PLANT

115015AAE 85060030081 COAL-FIRED

BOILER 1

238 231

115015AAE 85060030081 COAL-FIRED

BOILER 2

261 253

115015AAE 85060030081 COAL-FIRED

BOILER 3

267 259

115015AAE 85060030082 COAL-FIRED

BOILER 4

276 268

115015AAE 85060030082 COAL-FIRED

BOILER 5

275 267

115015AAE 85060030082 COAL-FIRED

BOILER 6

311 302

115015AAE 85060030083 GAS-FIRED

BOILER 7

19 18

115015AAE 85060030083 GAS-FIRED

BOILER 8

19 18

ARCHER DANIELS MIDLAND CO EAST

PLANT (Total Allocation)

1,666 1,616

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83

CORN PRODUCTS INTERNATIONAL INC

031012ABI 91020069160 GAS-FIRED

BOILER 6

55 53

031012ABI 73020146041 BOILER # 1

COAL-FIRED

210 204

031012ABI 73020146042 BOILER # 2

COAL-FIRED

210 203

031012ABI 73020146043 GAS FIRED

BOILER NO 4

WEST STACK

BLRS

81 79

031012ABI 73020147045 BOILER # 3

COAL-FIRED

211 205

031012ABI 73020147046 GAS FIRED

BOILER NO 5-

EAST STACK

BOILER

81 79

CORN PRODUCTS INTERNATIONAL INC

(Total Allocation)

848 823

GREAT LAKES NTC

097811AAC 78080071011 BOILER # 5 26 25

097811AAC 78080071011 BOILER # 6 26 25

GREAT LAKES NTC (Total Allocation) 52 50

JEFFERSON SMURFIT CORPORATION

119010AAL 72120426001 BLR 7-COAL

FIRED

39 38

JEFFERSON SMURFIT CORPORATION (Total

Allocation)

39 38

MARATHON OIL CO ILLINOIS REFINING DIV

033808AAB 72111291055 BOILER #3

OIL,REF GAS

FIRED

53 51

033808AAB 72111291056 BOILER #4 REF

GAS,OIL FIRED

53 52

MARATHON OIL CO ILLINOIS REFINING DIV

(Total Allocation)

106 103

---

84

EXXON MOBIL

197800AAA 72110567002 AUX BOILER-

REFINERY GAS

101 98

197800AAA 86010009043 STATIONARY

GAS TURBINE

85 82

EXXON MOBIL (Total Allocation) 186 180

WILLIAMS

179060ACR 73020087019 BOILER C -

PULVERIZED

DRY BOTTOM

377 366

WILLIAMS (Total Allocation) 377 366

EQUISTAR

063800AAC 72100016013 BOILER # 1 40 39

063800AAC 72100016013 BOILER # 2 40 39

063800AAC 72100016014 #3 GAS FIRED

BOILER

40 39

063800AAC 72100016016 #5 GAS FIRED

BOILER

40 39

063800AAC 72100016017 #6 BOILER 40 38

EQUISTAR (Total Allocation) 200 194

EQUISTAR

041804AAB 72121207108 BOILER NO 1 121 118

041804AAB 72121207109 BOILER NO 2 121 118

041804AAB 72121207110 BOILER NO 3 121 117

041804AAB 72121207111 BOILER NO 4 120 116

041804AAB 72121207112 BOILER NO 5 0 0

EQUISTAR (Total Allocation) 483 469

TOSCO

119090AAA 72110633080 BOILER NO 15 40 38

119090AAA 72110633081 BOILER NO 16 40 39

119090AAA 72110633082 BOILER NO 17 80 78

TOSCO (Total Allocation) 160 155

---

85

U S STEEL - SOUTH WORKS

031600ALZ 82010044013 NO. 6 BOILER,#5

POWER

STATION (FUEL-

NAT.GAS)

90 88

031600ALZ 82010044014 NO 1 BLR NG 90 87

U S STEEL - SOUTH WORKS (Total Allocation) 180 175

UNIV OF ILL - ABBOTT POWER PLANT

019010ADA 82090027006 BOILER #7 86 83

UNIV OF ILL - ABBOTT POWER PLANT (Total

Allocation)

86 83

CITGO PETROLEUM CORPORATION

197090AAI 72110253037 BOILER 43-B-1 23 22

CITGO PETROLEUM CORPORATION (Total

Allocation)

23 22

LTV STEEL COMPANY

301600AMC [UNIT

DESIGNATION]

BOILER NO 4B * *

LTV STEEL COMPANY (Total Allocation) * *

* Pursuant to Section 217.460(f), Column 2, Column 4 and Column 5 will be adjusted at

such time as USEPA makes an allocation for LTV Steel’s Boiler No. 4B.

GRAND TOTAL 4,882 4,736

(Source: Added at ______ Ill. Reg._____________, effective________________)

IT IS SO ORDERED.

I, Dorothy M. Gunn, Clerk of the Illinois Pollution Control Board, hereby certify that

the above opinion and order was adopted on the 15th day of February 2001 by a vote of 7-0.

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board