R97013D.PDF

ILLINOIS POLLUTION CONTROL BOARD

November 20, 1997

IN THE MATTER OF:

EMISSIONS REDUCTION MARKET

SYSTEM ADOPTION OF 35 ILL. ADM.

CODE 205

)

R97-13

(Rulemaking - Air)

Adopted Rule. Final Order.

OPINION AND ORDER OF THE BOARD (by K.M. Hennessey, M. McFawn, and J.

Yi):

On October 7, 1996, the Illinois Environmental Protection Agency (IEPA)

proposed to add 35 Ill. Adm. Code 205 to the Board’s current regulations. The rule

creates an emissions reduction market system (ERMS) to reduce emissions of volatile

organic material (VOM) in the Chicago area. IEPA believes that the ERMS is a cost-

effective way to achieve these reductions, which are required by the federal Clean Air

Act (CAA), 42 U.S.C. §§ 7401 through 7671q (1996), and certain directives of the

United States Environmental Protection Agency (USEPA). The Board agrees and

today adopts this rule.

In this final opinion and order, the Board sets forth the background for the

proposed rule; a summary of the rulemaking proceedings to date; and a summary of the

proposed rule. Readers seeking a more comprehensive overview of issues decided at

first or second notice should consult the first and second notice opinions and orders.

See Emissions Reduction Market System Adoption of 35 Ill. Adm. Code 205 and

Amendments to 35 Ill. Adm. Code 106 (July 10, 1997), R97-13; Emissions Reduction

Market System Adoption of 35 Ill. Adm. Code 205 (October 2, 1997), R97-13.

BACKGROUND

IEPA proposed the ERMS as a result of the CAA and corresponding federal

regulations. Section 109 of the CAA, 42 U.S.C. § 7409 (1996), requires USEPA to

establish national primary and secondary ambient air quality standards (NAAQS).

USEPA promulgated a NAAQS for ozone at 40 C.F.R. § 50.9 (1996) that the Chicago

area does not meet. USEPA therefore designated the Chicago area a severe ozone

nonattainment area pursuant to Section 107 of the CAA, 42 U.S.C. § 7407 (1996).

Pursuant to Section 181 of the CAA, 42 U.S.C. § 7511 (1996), the Chicago severe

The Chicago nonattainment area is comprised of Cook, DuPage, Kane, Lake, McHenry,

and Will Counties, and Aux Sable, Goose Lake, and Oswego Townships. See 56 Fed.

Reg. 56694 (Nov. 1, 1991).

nonattainment area must achieve overall attainment with the NAAQS for ozone by the

year 2007.

As part of achieving the NAAQS for ozone, Section 182 of the CAA, 42

U.S.C. § 7511a (1996), requires states with severe nonattainment areas to make two

separate plan demonstrations by November 1994. The first demonstration was to be a

plan for achieving overall attainment of the ozone NAAQS in the severe nonattainment

area. The second demonstration was to be a plan to reduce emissions from the 1990

baseline emissions established for the severe nonattainment area starting in 1997 by at

least 3% each year. The latter plan, referred to as a reasonable further progress (RFP)

or rate-of-progress (ROP) plan, is required for each consecutive three-year period until

overall attainment is achieved. Therefore, in November 1994, IEPA was required to

provide to USEPA a plan for overall attainment of the ozone NAAQS in the Chicago

nonattainment area and a plan demonstrating the first 3% ROP for the Chicago

nonattainment area.

IEPA was not able to provide either demonstration to USEPA. Instead, IEPA

and the other Great Lakes states presented findings to USEPA concerning nitrogen

oxides (NOx) reduction and VOM transport modeling, and proposed a regional

approach to solve the ozone pollution problem. In response, USEPA issued a

memorandum on March 2, 1995 (Memorandum). The Memorandum acknowledged

the good faith efforts of Illinois and other states to comply with the CAA and

established a two-phase program to ensure that Illinois and other states made the

required CAA attainment demonstrations. In the first phase, USEPA required IEPA to

submit a plan to implement, by May 1999, control measures including at least a 9%

reduction of ozone precursors starting in 1997 to satisfy the ROP; a State

Implementation Plan (SIP) committing to a schedule for the submission of the

remaining ROP measures; and a SIP commitment to submit the overall attainment plan

by mid-1997. The Memorandum established the end of 1995 as the due date for the

first phase submittals. In the second phase, USEPA required IEPA to demonstrate that

it had complied with the ROP and SIP measures for the first phase, the overall NAAQS

attainment plan demonstration, and any other controls necessary to achieve overall

attainment.

In addition to establishing the two-phase program, the Memorandum

acknowledged that ozone may be transported and established procedures for states in

the eastern half of the country to evaluate and address transport of ozone and its

precursors. This led to the formation of the Ozone Transport Assessment Group

(OTAG), comprised of representatives from the regulated community, government, and

environmental groups. USEPA envisioned that OTAG would release its findings by the

end of 1996 so that the affected states could take OTAG's findings into account when

making their attainment demonstrations. OTAG did not release its findings, however,

until the week of June 23, 1997.

In order to allow IEPA to establish an emissions trading system to meet its

requirements under the Memorandum, the Illinois legislature adopted Section 9.8 of the

Illinois Environmental Protection Act (Act), effective on July 19, 1995, and amended

by P.A. 89-465, effective June 13, 1996. 415 ILCS 5/9.8 (1996). Based on certain

findings of the Illinois General Assembly, Section 9.8 of the Act grants IEPA authority

to propose an emissions market system. Section 9.8(c) establishes requirements by

which the Board shall adopt regulations implementing an emissions market system in

Illinois. 415 ILCS 5/9.8(c) (1996). Section 9.8(c) of the Act states that the rules

adopted by the Board shall include provisions that:

(1)

Assure that compliance with the required emissions reductions

under the market system shall be, at a minimum, as cost-effective

as the traditional regulatory control requirements in the State of

Illinois.

(2)

Assure that emissions reductions under the market system will not

be mandated unless it is necessary for the attainment and

maintenance of the National Ambient Air Quality Standard for

ozone in the Chicago nonattainment area, as required of this State

by applicable federal law or regulation.

(3)

Assure that sources subject to the program will not be required to

reduce emissions to an extent that exceeds their proportionate

share of the total emission reductions required of all emission

sources, including mobile and area sources, to attain and maintain

the National Ambient Air Quality Standard for ozone in the

Chicago nonattainment area.

(4)

Assure that credit is given or exclusion is granted for those

emission units which have reduced emissions, either voluntarily

or through the application of maximum available control

technology or national emissions standards for hazardous air

pollutants, such that those reductions would be counted as if they

had occurred after the initiation of the program.

(5)

Assure that unusual or abnormal operational patterns can be

accounted for in the determination of any source’s baseline from

which reductions would be made.

(6)

Assure that relative economic impact and technical feasibility of

emissions reductions under the banking and trading program, as

compared to other alternatives, is considered.

(7)

Assure that the feasibility of measuring and quantifying emissions

is considered in developing and adopting the banking and trading

program. 415 ILCS 5/9.8(c) (1996).

These requirements are in addition to the requirements of Sections 27 and 28 of the

Act, 415 ILCS 5/27, 28 (1996), which the Board also must meet when adopting

regulations.

On July 10, 1996, USEPA adopted a ‘‘Final Rule Making Findings of Failure

to Submit Required State Implementation Plans for Nonattainment Areas for Ozone’’

that applied to Illinois and other states which failed to make the proper submittals

pertaining to the first phase of the program established in the Memorandum. See 61

Fed. Reg. 36294 (July 10, 1996). USEPA stated that to avoid sanctions IEPA must

submit the plans required by the first phase of the Memorandum within 18 months

(

i.e

., by January 1998).

On October 7, 1996, IEPA proposed the ERMS as one component of its plan to

fulfill Illinois’ obligations under the Memorandum and USEPA’s July 10, 1996 final

rule.

SUMMARY OF RULEMAKING PROCEEDINGS

IEPA filed this proposal on October 7, 1996. The Board held nine days of

hearings in this matter and received public comment before issuing a first notice

opinion and order on July 10, 1997. After the first notice opinion and order was

published, the Board held an additional hearing on August 19, 1997. All the hearings

have been held in Chicago because only the Chicago nonattainment area is subject to

the program. A public comment period and a reply public comment period were held

after the August 19, 1997 hearing. A complete list of exhibits entered into the record,

and a list of public comments filed with the Board, are attached to this opinion and

order as Attachment 1 and Attachment 2, respectively. The Board issued a second

notice opinion and order for the ERMS on October 2, 1997.

At first notice, the Board discussed whether the ERMS complied with Sections

9.8(b), 9.8(c)(1), and 9.8(c)(3) of the Act. The Board also outlined each section of the

rule, and discussed public comments, testimony, exhibits, or Board questions on the

following sections within the ERMS: 205.130 (definitions); 205.140 (general system

description); 205.150 (emissions management periods); 205.200 (participating source);

205.205 (exempt sources); 205.210 (new participating source); 205.300 (seasonal

emissions component of the annual emissions report); 205.310 (ERMS applications);

Other components of the 9% ROP demonstration are federal programs involving mobile

sources, such as off-road vehicles, and the cold cleaning degreasing rule, which affects

area sources. Transcript of January 21, 1997, at 71-74, 107-108, 112-114; Exh. 6; Exh.

73 at 2 and Table 3.

205.315 (CAAPP permits for ERMS sources); 205.320 (baseline emissions); 205.330

(emissions determination methods); 205.337 (changes in emissions determination methods

and sampling, testing, monitoring, and recordkeeping practices); 205.400 (seasonal

emissions allotments); 205.405 (exclusions from further reductions); 205.410

(participating source shutdowns); 205.500 (emissions reduction generators); Section

205.510 (inter-sector transactions); 205.600 (ERMS databases); 205.630 (ATU

transaction procedures); 205.710 (alternative compliance market account); and 205.720

(emissions excursion compensation). The Board also discussed IEPA’s proposed

revisions to 35 Ill. Adm. Code 106 of the Board’s procedural rules.

At second notice, the Board again discussed whether the ERMS complied with

Sections 9.8(b), 9.8(c)(1), and 9.8(c)(3) of the Act. The Board also discussed public

comments, testimony, exhibits, or Board questions on the following sections within the

ERMS: 205.130 (definitions); 205.150 (emissions management period); 205.200

(participating source); 205.310 (ERMS applications); 205.315 (CAAPP permits for

ERMS sources); 205.320 (baseline emissions); 205.400 (seasonal emissions allotments);

205.405 (exclusions from further reductions); 205.410 (participating source shutdowns);

205.500 (emissions reduction generator); 205.620 (account officer); 205.700 (compliance

accounting); 205.720 (emissions excursion compensation); and 205.760 (market system

review procedures).

After second notice, the Board submitted the ERMS rule to the Joint Committee

on Administrative Rules (JCAR). JCAR has suggested minor changes to the rule for

clarity and consistency, which the Board has accepted. The Board does not discuss

these changes to the rule in this opinion; however, they are reflected in the order.

At a meeting on November 12, 1997, JCAR considered the ERMS rule. JCAR

issued a certification of no objection on the ERMS rule.

SUMMARY OF PROPOSED RULE

Unlike traditional command and control regulations, the ERMS does not require

sources to use a specific control technology or to meet a specific emission rate.

Instead, the ERMS seeks to reduce VOM emissions in the Chicago nonattainment area

by establishing a “cap and trade” system. Generally, the ERMS places a cap on the

total amount of VOM that may be emitted during the ozone season (May 1 through

September 30) by sources subject to the rules. Subject sources operating prior to May

1, 1999 (“participating sources,” discussed below), will be issued allotment trading

units (ATUs) each year by IEPA, with each ATU representing 200 lbs of VOM

emissions. The allotment of ATUs issued to the source each year will equal its baseline

emissions minus 12%. The baseline emissions level is established by averaging the

source’s highest two ozone season emissions levels from 1994, 1995, or 1996. At the

This summary provides a general overview of the ERMS rule and is not a substitute

for reviewing the rule itself as set forth in the order.

end of each calendar year, the source must hold ATUs in an amount not less than its

VOM emissions during the immediately preceding ozone season.

Generally, to have a sufficient number of ATUs at the end of the year to

account for its ozone season emissions, the source must reduce its emissions, purchase

ATUs from other sources, or employ some combination of the two. For example, the

source may decide that it need not purchase any ATUs because it would be more cost-

effective for it to reduce its emissions. It may decide to reduce its emissions by

installing control equipment or changing raw materials, for example. Alternatively, if

the source finds it too expensive to reduce its emissions, it may decide to purchase

ATUs on the open market from sources that have reduced emissions beyond 12% and

accordingly have surplus ATUs to sell. A source with surplus ATUs also may “bank”

ATUs that it does not need to use. Generally, ATUs are valid for use during the ozone

season after issuance and the next succeeding ozone season.

Sources subject to the rules but not operating prior to May 1, 1999 (“new

participating sources,” discussed below), also must hold ATUs at the end of each

calendar year in an amount not less than their respective VOM emissions during the

immediately preceding ozone season. These sources, however, will not be issued their

own allotments of ATUs by IEPA and thus do not have baseline emissions established.

IEPA may impose penalties through procedures outlined in the rule on sources

that do not hold a sufficient number of ATUs at the end of the year to account for their

respective ozone season emissions. Various aspects of the rule are further discussed

below.

The Scope of the Rule

The ERMS rule applies only to certain stationary point sources located in the

Chicago ozone nonattainment area. As noted above, those sources will fall into two

different defined categories. A “participating source” is a source operating before May

1, 1999, that is required to obtain a Clean Air Act Permit Program (CAAPP) permit

and has baseline emissions of at least 10 tons, or seasonal emissions of at least 10 tons

beginning in 1999. See 35 Ill. Adm. Code 205.130. “Seasonal emissions” are actual

VOM emissions at a source that occur during a “seasonal allotment period,” which

runs from May 1 through September 30 of each year.

Id.

The other category, a “new participating source,” is a source not operating

before May 1, 1999, that is required to obtain a CAAPP permit and has or will have

seasonal emissions of at least 10 tons of VOM.

Persons other than participating or new participating sources also may

participate in the ERMS in two ways. First, a person may become a “general

participant” by obtaining a “Transaction Account” from IEPA, which will then allow

the general participant to buy and sell ATUs. See 35 Ill. Adm. Code 205.130 and

205.610. Finally, “special participants” are those who purchase ATUs to retire for air

quality benefit only. See 35 Ill. Adm. Code 205.130 and 205.610(c).

Exemptions

Generally, sources that otherwise meet the criteria for participating sources are

exempt from the requirements of Part 205 if they meet the criteria in Section

205.205(a) or (b). Subsection (a) generally exempts a source that accepts, in its

CAAPP permit, a 15 ton per seasonal allotment period limit on its VOM emissions.

Subsection (b) generally exempts a source that reduces its seasonal emissions by at least

18% beginning in 1999. This limitation on seasonal emissions must be contained in the

source’s CAAPP permit. In addition, emission units identified as insignificant

activities under a source’s CAAPP permit are exempt from the requirements of Part

205. See 35 Ill. Adm. Code 205.220.

ERMS Applications

Under Section 205.310, a participating source with baseline emissions of at least

10 tons of VOM must submit an ERMS application to IEPA by March 1, 1998. If a

source first becomes a participating source because its VOM emissions increase to 10

tons or more during any seasonal allotment period beginning with 1999, it must submit

an ERMS application on or before December 1 of the year of the first seasonal

allotment period in which its VOM emissions are at least 10 tons, provided that this

emissions increase is not a major modification under the New Source Review rules (35

Ill. Adm. Code 203). A source existing prior to May 1, 1999, that has a major

modification under the New Source Review rules based on VOM emissions or a new

participating source must submit an ERMS application when a construction permit

application is submitted or due for the modification or source, whichever is earlier.

See 35 Ill. Adm. Code 205.310(a).

The information required in the ERMS application is described in subsections

(b), (d), (f), and (g) of Section 205.310. Information already submitted to IEPA under

the CAAPP is to be referenced in the ERMS application. On the basis of information

in the ERMS application, IEPA will determine the source’s “baseline emissions.” As

described above, baseline emissions are a participating source’s VOM emissions for a

seasonal allotment period based on historical operations as determined under Subpart C

of Part 205, and in particular, under Section 205.320. Baseline emissions serve as the

basis of the allotment of ATUs for each participating source. Generally, Section

205.320 provides that a source’s baseline emissions will be the average of its two

seasonal allotment periods with the highest VOM emissions in 1994, 1995, or 1996. A

source may propose to substitute seasonal emissions from a year between 1990 and

1997 because of non-representative conditions in 1994, 1995, or 1996. This section

also addresses how baseline emissions may be increased or decreased in certain

circumstances. For example, a participating source’s baseline will be increased for

voluntary over-compliance that occurred after October 31, 1990, and results in a VOM

emissions level lower than that required by applicable requirements effective in 1996.

The ERMS application must include a description of methods and practices that

the participating source has used to determine its proposed baseline emissions. The

application also must include information on how the source will determine seasonal

emissions in the future. Emissions determination methods and sampling, testing,

monitoring, and recordkeeping practices are addressed in Sections 205.330 and

205.335. Section 205.337 addresses changes in emission determination methods and

sampling, testing, monitoring, and recordkeeping practices.

Section 205.310(e) requires IEPA to provide written notification to the source

of a preliminary baseline emissions determination within 120 days after receipt of an

ERMS application. Under Section 205.315, IEPA will determine each participating

source’s baseline emissions through its final permit action on a new or modified

CAAPP permit. The participating source’s ATU allotment will be set forth in its

CAAPP permit and IEPA’s determination may be appealed in accordance with CAAPP

appeal procedures. If the participating source appeals the permit conditions

establishing its baseline, Section 205.315(a) allows the source to emit VOM during the

pendency of the appeal up to its proposed baseline (minus 12%, as applicable). Such

source may not, however, sell any ATUs during the pendency of the appeal. Section

205.315 contains similar provisions for IEPA’s determination of whether an emission

unit qualifies for exclusion from the 12% reduction requirement by using Best

Available Technology (BAT). This section also addresses the disposition of ATUs

when a participating source’s CAAPP permit is transferred.

In addition, Section 205.318 addresses sources that are located in the Chicago

ozone nonattainment area and are required to obtain a CAAPP permit, but have

seasonal emissions of less than 10 tons of VOM and are therefore exempt from the

ERMS. Such sources must submit a written certification regarding their emissions to

IEPA by March 1, 1998.

Distribution of ATUs

Generally, under Section 205.400, each participating source is allotted ATUs

equivalent to its baseline emissions less 12%. Generally, ATUs issued for any seasonal

allotment period are valid for use during the seasonal allotment period following

issuance and the next succeeding seasonal allotment period. The level of allotments

may be changed only upon IEPA’s demonstration to the Board, pursuant to rulemaking

procedures, that further reductions are needed. This section specifies that an allotment

or baseline does not constitute a property right. This section also addresses transfers of

ATUs between sources for more than one year pursuant to transfer agreements.

Section 205.405 provides several exceptions to the 12% reduction requirement

for specific emission units. For example, emission units that comply with Maximum

Achievable Control Technology (MACT) or National Emission Standards for

Hazardous Air Pollutants (NESHAP) requirements before May 1, 1999, are exempt

from the 12% reduction requirement. Certain other emission units – units that employ

BAT before May 1, 1999, for example – also are excluded from the requirement to

reduce emissions 12%.

Section 205.410 addresses the distribution of ATUs after a participating source

shuts down. This section generally provides that 20% of such ATUs will be issued

each year to the Alternative Compliance Market Account (ACMA) (discussed below)

and 80% of such ATUs will be issued each year to the owner or operator of the source,

or its duly authorized recipient. This section also allows a participating source that is

shutting down to permanently transfer 100% of its future ATUs pursuant to a transfer

agreement entered into before shutting down.

The Reconciliation Period

The “reconciliation period” is from October 1 through December 31 annually.

See 35 Ill. Adm. Code 205.150(b). Section 205.150 has different requirements for

participating sources and new participating sources.

At the end of each reconciliation period, a participating source must hold ATUs

in an amount not less than its VOM emissions during the immediately preceding

seasonal allotment period. See 35 Ill. Adm. Code 205.150(c)(1). However, if a

participating source commences operation of a major modification on or after May 1,

1999, it also must hold, by the end of each reconciliation period, ATUs in an amount

not less than 1.3 times the emissions attributable to that major modification during the

immediately preceding seasonal allotment period. See 35 Ill. Adm. Code

205.150(c)(2).

At the end of each reconciliation period, a new participating source must hold

ATUs in an amount not less than its VOM emissions during the immediately preceding

seasonal allotment period, unless the new participating source is a new major source

under 35 Ill. Adm. Code 203. In that case, the new participating source must hold

ATUs in an amount not less than 1.3 times its VOM emissions during the immediately

preceding seasonal allotment period. See 35 Ill. Adm. Code 205.150(d).

Section 205.150(e) provides that those participating and new participating

sources that hold ATUs at 1.3 times the VOM emissions as described above will be

deemed to have met certain offset requirements of the New Source Review rules in Part

203.

The Board is presently reviewing IEPA’s proposed changes to the New Source Review

rules in the rulemaking proceeding entitled Major Stationary Sources Construction and

Modification (New Source Review Rules): Amendments to 35 Ill. Adm. Code 203, R98-

10.

ERMS sources also must submit information regarding seasonal VOM emissions

on an annual basis. Section 205.300 sets forth the information that ERMS sources

must include in their Annual Emissions Reports.

Alternative ATU Generation

Sources that are not required to participate in the ERMS may generate ATUs

under Subpart E of Part 205. Under Section 205.500, IEPA will issue ATUs to any

participating source, new participating source, or general participant as a result of

certain reductions in VOM emissions by a non-participating source located in the

Chicago ozone nonattainment area that has an operating permit. The entity that makes

the reductions is referred to as an “emissions reduction generator” or ERG. Section

205.500 sets forth the conditions under which IEPA will issue ATUs as a result of an

emissions reduction, which may include shutdowns, curtailed seasonal production, and

the use of new technology or materials. This section also allows an ERG that is

shutting down or curtailing seasonal production to transfer ATUs, reduced by 12%, to

participating or new participating sources when the VOM emissions from the shutdown

activity or curtailment are distributed to those sources. This section specifies the

information that must be provided to IEPA and IEPA’s procedure for handling ERG

proposals.

Section 205.510 allows any person to submit a proposal to IEPA to have ATUs

issued to the Transaction Account of a participating source, new participating source,

or general participant on the basis of a reduction in VOM emissions from mobile or

area sources. This section specifies the information that must be provided to IEPA and

IEPA’s procedure for handling these inter-sector transactions.

Market Transactions

Each participating source, new participating source, or general participant must

have at least one account officer designated for each of its Transaction Accounts.

Section 205.620 sets forth the requirements for account officers, including training.

Account officers may be employees or contractors of participants.

Section 205.630 sets forth ATU transaction procedures. Generally, participants

involved in ATU transfers must notify IEPA or its designee of the transaction and the

purchase price (and must indicate whether consideration other than the purchase price

was involved). Transactions must involve at least one ATU and may not involve

partial ATUs. The Transaction Account database will be the official record of all ATU

transactions and the current status of all ATUs. Section 205.610 provides the

procedures under which Transaction Accounts will be established.

Section 205.600 requires IEPA or its designee to maintain a public bulletin

board that will provide information on the status of ATUs in each account and

information on ATU trades, including average prices paid. In addition, participants

may post ATUs available or wanted for purchase.

Compliance and Enforcement

Subpart G of Part 205 establishes how compliance will be demonstrated and

enforced. Section 205.700 requires participating and new participating sources to

maintain certain documents in a “compliance master file.” This section specifies what

a compliance master file must contain and provides that sources must allow IEPA to

review the file.

Section 205.710 establishes the ACMA, which will be operated by IEPA or its

designee. The purpose of the ACMA is to serve as a secondary source of ATUs that

may be purchased by participating and new participating sources. The primary source

for the purchase of ATUs is to be the open market. The ACMA is supplied with ATUs

in a number of ways. For example, IEPA will issue one percent of each year’s

allotment of ATUs to the ACMA. Sources may purchase ATUs from the ACMA at a

price higher than the market price, depending on certain conditions specified in the

rule. This section also sets forth other limits on access to the ACMA.

Section 205.720 establishes procedures for IEPA to obtain “emissions excursion

compensation.” An “emissions excursion” occurs when a participating or new

participating source does not hold sufficient ATUs at the end of a reconciliation period

to account for its VOM emissions from the preceding seasonal allotment period, in

accordance with Section 205.150(c) or (d). See 35 Ill. Adm. Code 205.130. Sources

that have emissions excursions must provide compensation for the excursions at ratios

specified in Section 205.720. This section also sets forth IEPA procedures for

notifying sources of emissions excursions, as well as procedures for sources to contest

such notices.

Section 205.730 provides for reporting in connection with certain excursions.

Section 205.740 describes the effect of Part 205 on enforcement authority of the state

and federal government and others.

Section 205.750 sets forth the conditions under which VOM emissions will be

considered a consequence of an emergency. The source would not be required to hold

ATUs for the excess VOM emissions attributable to the emergency. This section

provides that owners or operators of participating or new participating sources that

experience emergencies must provide IEPA with certain information. IEPA must

approve, conditionally approve or reject the findings in the source’s final emergency

conditions report within 30 days after receipt of a complete report, subject to certain

conditions specified in subsection (c).

Finally, Section 205.760 requires IEPA to prepare an Annual Performance

Review Report beginning in the year 2000. The report must address the effect of the

VOM emissions reductions on progress toward meeting RFP requirements and

achieving the NAAQS for ozone by 2007, and must contain the information listed in

subsection (a), including an evaluation of trading activities, the availability of ATUs for

purchase, and trends and spatial distributions of hazardous air pollutants.

CONCLUSION

The Board finds the ERMS technologically feasible and economically

reasonable. The ERMS allows sources in the Chicago ozone nonattainment area to

select a cost-effective means of meeting the CAA’s and USEPA’s directive to reduce

VOM emissions. The Board accordingly adopts the ERMS as a final rule.

ORDER

The Board directs that the following revised proposal be submitted to the

Secretary of State for publication as a final rule.

TITLE 35: ENVIRONMENTAL PROTECTION

SUBTITLE B: AIR POLLUTION

CHAPTER I: POLLUTION CONTROL BOARD

SUBCHAPTER b: ALTERNATIVE REDUCTION PROGRAM

PART 205

EMISSIONS REDUCTION MARKET SYSTEM

SUBPART A: GENERAL PROVISIONS

Section

205.100

Severability

205.110

Purpose

205.120

Abbreviations and Acronyms

205.130

Definitions

205.150

Emissions Management Periods

SUBPART B: APPLICABILITY

Section

205.200

Participating Source

205.205

Exempt Source

205.210

New Participating Source

205.220

Insignificant Emission Units

205.225

Startup, Malfunction or Breakdown

SUBPART C: OPERATIONAL IMPLEMENTATION

Section

205.300

Seasonal Emissions Component of the Annual Emissions Report

205.310

ERMS Applications

205.315

CAAPP Permits for ERMS Sources

205.318

Certification for Exempt CAAPP Sources

205.320

Baseline Emissions

205.330

Emissions Determination Methods

205.335

Sampling, Testing, Monitoring and Recordkeeping Practices

205.337

Changes in Emissions Determination Methods and Sampling, Testing,

Monitoring and Recordkeeping Practices

SUBPART D: SEASONAL EMISSIONS MANAGEMENT

Section

205.400

Seasonal Emissions Allotment

205.405

Exclusions from Further Reductions

205.410

Participating Source Shutdowns

SUBPART E: ALTERNATIVE ATU GENERATION

Section

205.500

Emissions Reduction Generator

205.510

Inter-Sector Transaction

SUBPART F: MARKET TRANSACTIONS

Section

205.600

ERMS Database

205.610

Application for Transaction Account

205.620

Account Officer

205.630

ATU Transaction Procedures

SUBPART G: PERFORMANCE ACCOUNTABILITY

Section

205.700

Compliance Accounting

205.710

Alternative Compliance Market Account (ACMA)

205.720

Emissions Excursion Compensation

205.730

Excursion Reporting

205.740

Enforcement Authority

205.750

Emergency Conditions

205.760

Market System Review Procedures

AUTHORITY: Implementing Section 9.8 and authorized by Sections 27 and 28 of the

Environmental Protection Act [415 ILCS 5/9.8, 27 and 28].

SOURCE: Adopted at 22 Ill. Reg.

, effective

SUBPART A: GENERAL PROVISIONS

Section 205.100

Severability

If any Section, subsection, sentence or clause of this Part is judged invalid, such

adjudication shall not affect the validity of this Part as a whole or of any Section,

subsection, sentence or clause thereof not judged invalid.

Section 205.110

Purpose

The purpose of this Part is to implement the Emissions Reduction Market System (ERMS)

regulatory program consistent with the assurances that are specified in Section 9.8 of the

Environmental Protection Act [415 ILCS 5/9.8]. The ERMS is designed, as further

specified in this Part, to achieve the following:

Implement innovative and cost-effective strategies to attain the national

ambient air quality standard (NAAQS) for ozone and to meet the

requirements of the Clean Air Act;

Increase flexibility for participating sources and lessen the economic

impacts associated with implementation of the Clean Air Act;

Take into account the findings of the national ozone transport assessment

coordinated by the Environmental Council of States with participation by

the United States Environmental Protection Agency and by the Lake

Michigan Air Directors Consortium; and

Assure that sources subject to the ERMS regulatory program will not be

required to reduce emissions to an extent that exceeds their proportionate

share of the total emissions reductions required of all emission sources,

including mobile and area sources.

Section 205.120

Abbreviations and Acronyms

Unless otherwise specified within this Part, the abbreviations used in this Part shall be the

same as those found in 35 Ill. Adm. Code 211. The following abbreviations and acronyms

are used in this Part:

ACMAAlternative Compliance Market Account

Act

Environmental Protection Act [415 ILCS 5]

ATU

Allotment Trading Unit

BAT

Best Available Technology

CAA

Clean Air Act as amended in 1990 [42 U.S.C. 7401 through 7671q]

CAAPP

Clean Air Act Permit Program

ERMS

Emissions Reduction Market System

LAER

Lowest Achievable Emission Rate

MACT

Maximum Achievable Control Technology

NAAQS

National Ambient Air Quality Standard

NESHAP

National Emission Standards for Hazardous Air Pollutants

RFP

Reasonable Further Progress

ROP

Rate of Progress

USEPA

United States Environmental Protection Agency

VOM

Volatile Organic Material

Section 205.130

Definitions

Unless otherwise specified within this Part, the definitions for the terms used in this Part

shall be the same as those found in Section 39.5 of the Act [415 ILCS 5/39.5] and in 35

Ill. Adm. Code 211.

“Account officer” means a natural person who has been approved by the Agency,

as specified in Section 205.620 of this Part, and is subsequently responsible for one

or more Transaction Accounts to which he or she is designated.

“Allotment” means the number of allotment trading units (ATUs) allotted to a

source by the Agency, as established in the source’s CAAPP permit.

“Allotment Trading Unit (ATU)” means a tradable unit that represents 200 lbs of

VOM emissions and is a limited authorization to emit 200 lbs of VOM emissions

during the seasonal allotment period.

“Annual Emissions Report” means the report submitted to the Agency annually

pursuant to 35 Ill. Adm. Code 254.

“Baseline emissions” means a participating source's VOM emissions for the

seasonal allotment period based on historical operations as determined under

Subpart C of this Part. Baseline emissions shall be the basis of the allotment for

each participating source.

“Best Available Technology (BAT)” means an emission level based on the

maximum degree of reduction of VOM emitted from or which results from any

emission unit, which the Agency, on a case-by-case basis, taking into account

energy, environmental and economic impacts, determines is achievable for such

unit through application of production processes and available methods, systems,

and techniques for control of VOM, considering the features and production

process and control methods, systems and techniques already used for the unit.

BAT for an emission unit shall not be more stringent than Best Available Control

Technology (BACT) as would be determined contemporaneously for such unit

under the federal rules for Prevention of Significant Deterioration of Air Quality

(PSD), 40 CFR 52.21 (1996). In no event shall application of “best available

technology” result in emissions of VOM which exceed the emissions allowed by

any standard established pursuant to Section 111 of the Clean Air Act, if such a

standard is applicable to the category of emission unit.

“CAAPP” means the Clean Air Act Permit Program, pursuant to Section 39.5 of

the Act [415 ILCS 5/39.5].

“Chicago ozone nonattainment area” means the area composed of Cook, DuPage,

Kane, Lake, McHenry, and Will Counties and Aux Sable Township and Goose

Lake Township in Grundy County and Oswego Township in Kendall County.

“Emergency” means any situation arising from sudden and reasonably

unforeseeable events beyond the control of the source, such as an act of God, that

requires immediate corrective action to restore normal operation.

“Emissions excursion” refers to the event that occurs when a participating source

or new participating source does not hold sufficient ATUs at the end of a

reconciliation period to account for its VOM emissions from the preceding

seasonal allotment period, in accordance with Section 205.150(c) or (d) of this

Subpart.

“Excursion Compensation Notice” means an administrative notice issued by the

Agency, pursuant to Section 205.720 of this Part, that notifies the owner or

operator of a participating source or new participating source that the Agency has

determined that the source has had an emissions excursion.

“General participant” means any person, other than a participating source or new

participating source, that obtains a Transaction Account and is allowed to buy and

sell ATUs.

“New participating source” means a source not operating prior to May 1, 1999,

located in the Chicago ozone nonattainment area, that is required to obtain a

CAAPP permit and has or will have seasonal emissions of at least 10 tons of

VOM.

“Participating source” means a source operating prior to May 1, 1999, located in

the Chicago ozone nonattainment area, that is required to obtain a CAAPP permit

and has baseline emissions of at least 10 tons, as specified in Section 205.320(a) of

this Part, or seasonal emissions of at least 10 tons in any seasonal allotment period

beginning in 1999.

“Reconciliation period” means the period from October 1 through December 31 of

each year during which the owner or operator of a participating source or new

participating source must compile actual VOM emissions for the previous seasonal

allotment period and may also buy or sell ATUs so that sufficient ATUs are held

by the source by the conclusion of the reconciliation period.

“Seasonal allotment period” means the period from May 1 through September 30

of each year.

“Seasonal emissions” means actual VOM emissions at a source that occur during a

seasonal allotment period.

“Sell” means to transfer ATUs to another person through sale, lease, trade or other

means of transfer.

“Special participant” means any person that registers with the Agency and may

purchase and retire ATUs but not sell ATUs, as specified in Section 205.610 of

this Part.

“Throughput” means the activity of an emission unit during a particular period

relevant to its generation of VOM emissions, including, but not limited to, the

amount of material transferred for a liquid storage operation, the amount of

material processed through or produced by the emission unit, fuel usage, or the

weight or volume of coatings or inks.

“Transaction Account” means an account authorized by the Agency or its designee

that allows an account officer to buy or sell ATUs.

Section 205.150

Emissions Management Periods

The VOM emissions control period is the seasonal allotment period, which

is from May 1 through September 30, annually.

The reconciliation period is from October 1 to December 31, annually.

During each reconciliation period, participating sources and new

participating sources shall:

Compile data of actual VOM emissions during the immediately

preceding seasonal allotment period; and

Submit its seasonal emissions component of its Annual Emissions

Report, in accordance with Section 205.300 of this Part.

At the end of each reconciliation period, on and after the dates specified in

Section 205.200 of this Part, each participating source shall:

Hold ATUs in an amount not less than its VOM emissions during

the preceding seasonal allotment period, except as provided in

Sections 205.220, 205.225, 205.315, 205.320(e)(3) or (f) and

205.750 of this Part; or

Hold ATUs in an amount not less than 1.3 times its seasonal

emissions attributable to a major modification during the preceding

seasonal allotment period, if a participating source commences

operation of a major modification pursuant to 35 Ill. Adm. Code

203 on or after May 1, 1999. Additionally, such source must hold

ATUs in accordance with subsection (c)(1) of this Section for

VOM emissions not attributable to this major modification during

the preceding seasonal allotment period.

At the end of each reconciliation period, on and after the date on which the

source commences operation, as specified in Section 205.210 of this Part,

each new participating source shall:

If the new participating source is a new major source pursuant to

35 Ill. Adm. Code 203, hold ATUs in an amount not less than 1.3

times its VOM emissions during the preceding seasonal allotment

period; or

If the new participating source is not a new major source pursuant

to 35 Ill. Adm. 203, hold ATUs in an amount not less than its VOM

emissions during the preceding seasonal allotment period, except as

provided in Sections 205.220, 205.225 and 205.750 of this Part.

Any participating source that commences operation of a major modification

on or after May 1, 1999, or any new participating source that is a new

major source, which, at the end of each reconciliation period, holds ATUs

in an amount not less than 1.3 times the VOM emissions during the

preceding seasonal allotment period, in accordance with subsection (c)(2)

or (d)(1) of this Section, as applicable, shall be deemed to have satisfied the

offset requirements of 35 Ill. Adm. Code 203.302(a), 203.602 and

203.701.

SUBPART B: APPLICABILITY

Section 205.200

Participating Source

The requirements of this Part shall apply to any source operating prior to May 1, 1999,

located in the Chicago ozone nonattainment area, that is required to obtain a CAAPP

permit and has baseline emissions of at least 10 tons, as specified in Section 205.320(a) of

this Part, or seasonal emissions of at least 10 tons in any seasonal allotment period

beginning in 1999. Each participating source shall hold ATUs, as specified in Section

205.150(c) of this Part, in accordance with the following schedule:

For any participating source that has baseline emissions of at least 10 tons

of VOM, as determined in accordance with Section 205.320(a) of this Part,

beginning with the 1999 seasonal allotment period;

For any source that first becomes a participating source because its VOM

emissions increase to 10 tons per season or more in any seasonal allotment

period beginning with 1999 and this emissions increase is not a major

modification pursuant to 35 Ill. Adm. Code 203, beginning with the first

seasonal allotment period after such increased emissions occurred; or

For any source that will first be subject to the requirements of this Part

because of a VOM emissions increase at any time on or after May 1, 1999

that constitutes a major modification pursuant to 35 Ill. Adm. Code 203,

upon commencing operation of this modification.

Section 205.205

Exempt Source

Any source that otherwise meets the criteria for participating sources shall

be exempt from the requirements of this Part if the source accepts a 15

tons per seasonal allotment period limit on its VOM emissions in its

CAAPP permit for each seasonal allotment period in which the source

would be required to participate in the ERMS in accordance with the

following:

If the source would be required to participate in the ERMS

beginning with the 1999 seasonal allotment period in accordance

with Section 205.200(a) of this Subpart, such source shall apply for

the applicable permit limitation by March 1, 1998; or

If the source is required to participate in the ERMS in any seasonal

allotment period after 1999 because its VOM emissions increase to

10 tons or more in any seasonal allotment period beginning with

1999 in accordance with Section 205.200(b) of this Subpart, such

source shall apply for the applicable permit limitation by December

1 of the first year in which its seasonal emissions are at least 10

tons.

Any source that otherwise meets the criteria for participating sources shall

be exempt from the requirements of this Part, except that any such source

shall be required to submit the seasonal emissions component of the Annual

Emissions Report and an ERMS application as specified in Sections

205.300 and 205.310(d) of this Part, respectively, if such source reduces its

seasonal emissions by at least 18 percent beginning in 1999. Any such

source shall accept conditions in its CAAPP permit limiting its seasonal

emissions to at least 18 percent less than its baseline emissions, as

determined in accordance with Section 205.320 of this Part. Any such

source shall apply for the applicable permit limitation(s) by March 1, 1998.

ATUs equivalent to any amount of VOM emissions reductions achieved by

the source beyond 12 percent (at least six percent) shall be issued by the

Agency to the ACMA.

Section 205.210

New Participating Source

The requirements of this Part shall apply to any new participating source, a source not

operating prior to May 1, 1999, located in the Chicago ozone nonattainment area, that is

required to obtain a CAAPP permit and has or will have seasonal emissions of at least 10

tons of VOM. Each new participating source shall hold ATUs, as specified in Section

205.150(d) of this Part, upon commencing operation.

Section 205.220

Insignificant Emission Units

Emission units identified as insignificant activities pursuant to the CAAPP permit for each

participating or new participating source are exempt from the requirements of this Part.

Section 205.225

Startup, Malfunction or Breakdown

Participating or new participating sources permitted to operate during startup, malfunction

or breakdown pursuant to 35 Ill. Adm. Code 201.262, 270.407 and 270.408 are not

required to hold ATUs for excess VOM emission during startup, malfunction and

breakdown as authorized in the source’s permit.

SUBPART C: OPERATIONAL IMPLEMENTATION

Section 205.300

Seasonal Emissions Component of the Annual Emissions Report

For each year in which the source is operational, the owner or operator of

each participating source and new participating source shall submit, as a

component of its Annual Emissions Report, seasonal emissions information

to the Agency for each seasonal allotment period after the effective date of

this Part in accordance with the following schedule:

For each participating source or new participating source that

generates VOM emissions from less than 10 emission units, by

October 31 of each year; and

For each participating source or new participating source that

generates VOM emissions from 10 or more emission units, by

November 30 of each year.

In addition to any information required pursuant to 35 Ill. Adm. Code 254,

the seasonal emissions component of the Annual Emissions Report shall

contain the following information for the preceding seasonal allotment

period for each emission unit emitting or capable of emitting VOM, except

that such information is not required for emission units excluded pursuant

to Section 205.220 of this Part or for VOM emissions attributable to

startup, malfunction or breakdown, as specified in Section 205.225 of this

Part:

Actual seasonal emissions of VOM from the source;

A description of the methods and practices used to determine VOM

emissions, as required by the source’s CAAPP permit, including any

supporting documentation and calculations;

A detailed description of any monitoring methods that differ from

the methods specified in the CAAPP permit for the source, as

provided in Section 205.337 of this Subpart;

If a source has experienced an emergency, as provided in Section

205.750 of this Part, it shall reference the associated emergency

conditions report that has been approved by the Agency;

If a source's baseline emissions have been adjusted because of a

variance, consent order or CAAPP permit compliance schedule, as

provided for in Section 205.320(e)(3) of this Subpart, it shall

provide documentation quantifying the adjusted VOM emissions

amount; and

If a source is operating a new or modified emission unit for which

three years of operational data is not yet available, as specified in

Section 205.320(f) of this Subpart, it shall specify seasonal

emissions attributable to the new emission unit or the modification

of the emission unit.

Section 205.310

ERMS Applications

The owner or operator of each participating source or new participating

source shall submit to the Agency an ERMS application in accordance with

the following schedule:

For a participating source with baseline emissions of at least 10 tons

of VOM, as determined in accordance with Section 205.320(a) of

this Subpart, by March 1, 1998;

For any source that first becomes a participating source because its

VOM emissions increase to 10 tons or greater during any seasonal

allotment period beginning with 1999, on or before December 1 of

the year of the first seasonal allotment period in which its VOM

emissions are at least 10 tons, provided that this emissions increase

is not a major modification pursuant to 35 Ill. Adm. Code 203; or

For a new participating source or for a major modification of any

source existing prior to May 1, 1999, that is subject to 35 Ill. Adm.

Code 203 based on VOM emissions, at the time a construction

permit application is submitted or due for the source or

modification, whichever occurs first.

Except as provided in subsection (d) of this Section, each ERMS

application for participating sources shall contain all information required

by the Agency pursuant to Section 39.5 of the Act [415 ILCS 5/39.5] or

reference such information if previously submitted to the Agency, including

the following information:

Data sufficient to establish the appropriate baseline emissions for

the source in accordance with Section 205.320 of this Subpart,

including but not limited to the following:

VOM emissions data and production types and levels from

the baseline emissions year(s), as specified in Section

205.320(a)(1), (b) or (c) of this Subpart, as appropriate;

If the source is proposing a substitute baseline emissions

year(s), as provided in Section 205.320(a)(2) of this

Subpart, a justification that the year is more representative

than 1994, 1995 or 1996, including data on production

types and levels from the proposed substitute year(s) and

historical production data, as needed to justify that the

proposed substitute year(s) is representative; and

If the source is proposing a baseline emissions adjustment

based on voluntary over-compliance, as provided in Section

205.320(d) of this Subpart, sufficient information for the

Agency to determine the appropriate adjustment;

A description of methods and practices used to determine baseline

emissions and that will be used to determine seasonal emissions for

purposes of demonstrating compliance with this Part, in accordance

with Sections 205.330 and 205.335 of this Subpart;

Identification of any emission unit for which exclusion from further

reductions is sought pursuant to Section 205.405(b) of this Part and

including all of the information required pursuant to Section

205.405(b) of this Part;

Identification of any emission unit excluded from further reductions

pursuant to Section 205.405(a) of this Part; and

Identification of any new or modified emission unit for which a

construction permit was issued prior to January 1, 1998, but for

which three years of operational data is not available, and the

permitted VOM emissions or the permitted increase in VOM

emissions from such emission unit(s), adjusted for the seasonal

allotment period.

Except as provided in subsection (h) of this Section, the ERMS application

submitted by each participating source shall also be an application for a

significant modification of its CAAPP permit or a revision to its CAAPP

application if a CAAPP permit has not yet been issued for the source.

The ERMS application for any source that elects to reduce its seasonal

emissions by at least 18 percent from its baseline emissions, as provided in

Section 205.205(b) of this Part, shall include:

VOM emissions data sufficient to establish the appropriate baseline

emissions for the source in accordance with Section 205.320 of this

Subpart; and

A description of methods and practices used to determine baseline

emissions and that will be used to demonstrate that its seasonal

emissions will be at least 18 percent less than its baseline emissions,

in accordance with Sections 205.330 and 205.335 of this Subpart.

Within 120 days after receipt of an ERMS application, the Agency shall

provide written notification to the source of a preliminary baseline

emissions determination. Public notice of a draft CAAPP permit in

accordance with Section 39.5(8) of the Act [415 ILCS 5/39.5(8)] shall

fulfill this requirement for a preliminary baseline emissions determination if

issued within 120 days.

The ERMS application for each source applying for a major modification,

as provided in subsection (a)(3) of this Section, shall include the

information specified in subsection (b) of this Section and a certification by

the owner or operator recognizing that the source will be required to hold

ATUs by the end of each reconciliation period in accordance with Section

205.150(c)(2) of this Part, and provide a plan explaining the means by

which it will obtain ATUs for the VOM emissions attributable to the major

modification for the first three seasonal allotment periods in which this

major modification is operational.

The ERMS application for each new participating source shall include:

A description of methods and practices that will be used to

determine seasonal emissions for purposes of demonstrating

compliance with this Part, in accordance with Sections 205.330 and

205.335 of this Subpart;

A certification by the owner or operator recognizing that the source

will be required to hold ATUs by the end of each reconciliation

period in accordance with Section 205.150(d) of this Part for each

seasonal allotment period in which it is operational; and

If the source is a new major source subject to 35 Ill. Adm. Code

203, a plan explaining means by which it will obtain such ATUs for

the first three seasonal allotment periods in which it is operational.

The owner or operator of any participating source that has identified a new

or modified emission unit, as specified in subsection (b)(5) of this Section,

shall submit a written request for, or an application for, a revised emissions

baseline and allotment. Such written request or application shall be

submitted by December 1 of the year of the third complete seasonal

allotment period in which such newly constructed emission unit is

operational, which submittal shall include information on the seasonal

emissions for these first three seasonal allotment periods.

Section 205.315

CAAPP Permits for ERMS Sources

The Agency shall determine the baseline emissions for each participating

source in accordance with Section 205.320 of this Subpart, through its final

permit action on a new or modified CAAPP permit for each such source.

The Agency’s baseline emissions determination may be appealed in

accordance with the CAAPP appeal procedures specified in Section 40.2 of

the Act [415 ILCS 5/40.2]. If the permit conditions establishing a source’s

baseline emissions are appealed, the baseline emissions for the source shall

be as proposed in the source’s ERMS application during the pendency of

the appeal. During the pendency of the appeal, ATUs shall be allotted to

the source pursuant to the part of the source’s proposed baseline emissions

that is not disputed in the appeal. If such source’s seasonal VOM

emissions exceed the ATUs it holds at the end of reconciliation periods

during the pendency of the appeal, the source will not be deemed to have

had an emissions excursion to the extent that such seasonal VOM

emissions do not exceed the amount it proposed as its baseline in its ERMS

application, less reductions required pursuant to Section 205.400(c) or (e)

of this Part, if applicable. Such source shall not be allowed to sell ATUs

during the pendency of the appeal.

The Agency shall determine, in accordance with Sections 205.330 and

205.335 of this Subpart, the methods and practices applicable to each

participating source and new participating source to determine seasonal

emissions through its final permit action on a new or modified CAAPP

permit for each such source. The Agency's determination of the methods

and practices applicable may be appealed in accordance with the CAAPP

appeal procedures specified in Section 40.2 of the Act [415 ILCS 5/40.2].

The Agency shall determine, in accordance with Section 205.405(b) of this

Part, if an emission unit qualifies for exclusion from further reductions in its

final permit action on a new or modified CAAPP permit for each such

source. The Agency’s determination may be appealed in accordance with

the CAAPP appeal procedures specified in Section 40.2 of the Act [415

ILCS 5/40.2 ]. If the permit conditions establishing the Agency’s BAT

determination are appealed, ATUs shall be allotted to the source for any

emission unit for which the Agency’s BAT determination is being appealed

with the emissions reduction required by Section 205.400(c) or (e) of this

Part during the pendency of the appeal. If the seasonal VOM emissions for

the subject emission unit(s) exceed the ATUs that are attributed to the

unit(s) during the pendency of the appeal, the source will not be deemed to

have an emissions excursion to the extent that such seasonal VOM

emissions do not exceed the amount of ATUs that would be attributed to

this unit if the BAT exclusion was accepted. Such source shall not be

allowed to sell ATUs during the pendency of the appeal.

The allotment for each participating source for each seasonal allotment

period shall be specified in its CAAPP permit.

To the extent possible, the Agency shall initiate the procedures of 35 Ill.

Adm. Code 252, as required by Section 39.5 of the Act [415 ILCS 5/39.5],

by grouping the draft CAAPP permits and supporting documents for

participating sources. Specifically, to the extent possible, the Agency shall

issue a joint public notice and hold a joint hearing, as appropriate,

addressing participating sources for which a hearing is requested.

When a CAAPP permit for a participating source is transferred from the

current permittee to another person:

In the case of a name change of the participating source where

ownership is not altered, appropriate documentation shall be

submitted to revise the Transaction Account to reflect the name

change; or

In the case of an ownership change of the participating source, the

allotment shall also be transferred by the owner or operator of the

permitted source to the new owner or operator, or the new owner

or operator shall submit a statement to the Agency certifying that

such transfer is not occurring and demonstrating that necessary

ATUs are or will be available by other means for the intended

operation of the source.

Upon reopening or renewal of the CAAPP permit for any participating

source or new participating source, any multiple season transfer agreement,

as provided in Section 205.630(a)(2)(B) of this Part, that has three or more

years of transfers remaining shall be identified in the renewed or reissued

CAAPP permit for each such source.

Upon reopening or renewal of the CAAPP permit for any participating

source or new participating source, any ATUs that will be issued by the

Agency for three years or more to any such source pursuant to Section

205.410, 205.500 or 205.510 of this Part shall be identified in the renewed

or reissued CAAPP permit for each such source.

Section 205.318

Certification for Exempt CAAPP Sources

The owner or operator of any source that is located in the Chicago ozone nonattainment

area that is required to obtain a CAAPP permit, and has seasonal emissions, as determined

in accordance with Section 205.320(a) of this Subpart, of less than 10 tons shall submit a

written certification to the Agency by March 1, 1998, certifying that its VOM emissions

are below 10 tons per season as specified in Section 205.320(a) of this Subpart. Such

certification shall include the amount of VOM emissions at the source during the 1994,

1995, 1996 and 1997 seasonal allotment periods, and supporting calculations.

Section 205.320

Baseline Emissions

Except as provided in subsection (b) or (c) of this Section, baseline

emissions shall be determined by the Agency in accordance with the

following, adjusted as specified in subsections (d), (e) and (f) of this

Section:

Baseline emissions shall be calculated using the average of the two

seasonal allotment periods with the highest VOM emissions during

1994, 1995 or 1996.

Any source may propose to substitute seasonal emissions on a year-for-

year basis due to non-representative conditions in 1994, 1995 or 1996,

but must stay within the period from 1990 through 1997, and must

have accurate seasonal emissions data for the substitute year(s).

When considering whether to substitute a seasonal baseline emission

year(s), the Agency must consider the information submitted by the

source pursuant to Section 205.310(b)(1)(B) of this Subpart, as well as

the accuracy of that data. For the purposes of this subsection (a)(2),

“non-representative conditions” include, but are not limited to, events

such as strikes, fires, floods and market conditions.

For any source that has seasonal emissions of less than 10 tons, as

determined in accordance with subsection (a) of this Section, but becomes

a participating source because its seasonal emissions increase to 10 tons or

more in any seasonal allotment period beginning with 1999, baseline

emissions shall be determined by the Agency based on actual VOM

emissions from the first seasonal allotment period in which the sources

emissions equaled or exceeded 10 tons, adjusted as specified in subsections

(d), (e) and (f) of this Section, provided such emissions increase is not a

major modification pursuant to 35 Ill. Adm. Code 203.

For any source that has seasonal emissions of less than 10 tons, as

determined in accordance with subsection (a) of this Section, but becomes

a participating source because its seasonal emissions increase to 10 tons or

more in any seasonal allotment period beginning with 1999 and this

emissions increase constitutes a major modification pursuant to 35 Ill.

Adm. Code 203, baseline emissions shall be determined by the Agency

based on the average of the actual seasonal emissions from the two

seasonal periods prior to a timely submittal of its application for the major

modification, adjusted as specified in subsections (d) and (e) of this

Section. Any such source may substitute seasonal emissions on a year-for-

year basis due to non-representative conditions in either of the two

seasonal allotment periods prior to submittal of its application for the major

modification but must stay within the five year period prior to submittal of

such application. For the purposes of this subsection, “non-representative

conditions” include, but are not limited to, conditions such as strikes, fires,

floods and market conditions.

The baseline emissions of any participating source shall be increased for

voluntary over-compliance that occurred after October 31, 1990 and

results in a VOM emissions level that is lower than the level required by

applicable requirements effective in 1996, including limitations in the

source’s permit(s) based on such applicable requirements. Voluntary over-

compliance shall be determined in accordance with the following:

Determine the actual activity or production types and levels from

the seasonal allotment period(s) selected for baseline emissions

pursuant to subsection (a), (b) or (c) of this Section;

Determine seasonal emissions for each emission unit as the product

of the amount of activity or production, as determined in

accordance with subsection (d)(1) of this Section, and the actual

emissions level;

Determine seasonal emissions for each emission unit as the product

of the amount of activity or production, as determined in

accordance with subsection (d)(1) of this Section, and the allowable

emissions level pursuant to all applicable requirements effective

through 1996, including limitations in the source’s permit(s) based

on such applicable requirements; and

Determine the appropriate adjustment to baseline emissions by

subtracting the seasonal emissions determined pursuant to

subsection (d)(2) of this Section from the seasonal emissions

determined pursuant to subsection (d)(3) of this Section.

The baseline emissions of any participating source shall be decreased if any

of the following circumstances exist:

If a source is out of compliance with any applicable requirements,

including limitations in the source’s permit(s) based on such

applicable requirements, in any of the seasonal allotment periods

used for baseline emissions, its baseline emissions shall be lowered

to reflect the amount of VOM emissions that would be achieved if

in compliance with such requirements.

If any of the seasonal allotment periods selected for baseline

emissions do not reflect compliance with requirements effective

through 1996 that became applicable after any of the years selected

as baseline years, the source’s baseline emissions shall be lowered

to reflect the amount of VOM emissions that would be achieved if

in compliance with such requirements.

If, in any of the years selected for baseline emissions, a source’s

VOM emissions are in excess of the amount of VOM emissions

allowed by applicable rules because it has been granted a variance,

has entered into a consent order, or is operating pursuant to a

CAAPP permit compliance schedule, the baseline emissions for

such source shall be lowered to reflect the VOM emissions amount

that would be achieved if in compliance with such requirements,

subject to the following:

Each such source shall be allowed to emit VOM emissions

in excess of the ATUs it holds at the end of the

reconciliation period each year until compliance with the

applicable regulation is achieved, or upon expiration of the

relief allowed for in the variance, consent order or CAAPP

permit compliance schedule, whichever occurs first;

Such excess VOM emissions shall be allowed to the extent

allowed in the variance, consent order or CAAPP permit

compliance schedule; and

The seasonal component of the Annual Emissions Report

for each such source shall be adjusted each year until

compliance with the applicable requirement(s) is achieved,

or upon expiration of the relief allowed for in the variance,

consent order or CAAPP permit compliance schedule,

whichever occurs first, as specified in subsection (e)(3)(B)

of this Section.

For any participating source that operated with excess emissions

during startup, malfunction or breakdown during any year used to

determine its baseline emissions, whether or not such operation was

authorized pursuant to the source’s permit, excess VOM emissions

attributable to startup, malfunction or breakdown shall be excluded

from the baseline emissions.

For new or modified emission units at a source for which a construction

permit was issued prior to January 1, 1998, but for which three years of

operational data is not available, the baseline emissions determination for

the source shall include VOM emissions from such new emission unit or

the increase in emissions from the modification of such emission unit based

on the two seasonal allotment periods with the highest VOM emissions

from the first three complete seasonal allotment periods in which any such

new or modified emission unit is operational. ATUs shall only be issued in

accordance with this subsection after the baseline emissions has been

determined. Any such source shall not be required to hold ATUs for VOM

emissions attributable to the new emission unit or the modification of the

existing emission unit for the first three complete seasonal allotment

periods in which it is operational.

For any source which acquired emission reduction credits pursuant to a

written agreement, entered into prior to January 1, 1998, and such emission

reduction credits were acquired for use as emissions offsets, in accordance

with 35 Ill. Adm. Code 203, such emission reduction credits, adjusted for

the seasonal allotment period, and reduced by 24 percent, shall be included

in the baseline emissions determination for the source, only to the extent

that:

The Agency has issued a federally enforceable permit, prior to

January 1, 1998, to the source from which the emission reduction

credits were acquired, and such federally enforceable permit

recognized the creation of the VOM emission reduction credits by

the cessation of all VOM-emitting activities and the withdrawal of

the operating permits for VOM-emitting activities at such other

sources; and

The Agency has not relied upon the emission reduction credits to

demonstrate attainment or reasonable further progress.

Section 205.330

Emissions Determination Methods

The owner or operator of a participating source or new participating source shall

determine VOM emissions from the source during the seasonal allotment period using

methods as necessary to demonstrate compliance with this Part. Such methods shall be, at

a minimum, as stringent as those required by any applicable requirement and any permit

condition. The Agency shall establish the emissions determination methods applicable to

each such source in the source’s CAAPP permit. The following methods, in conjunction

with relevant source-specific throughput and operating data, are acceptable methods a

source may use to determine seasonal emissions, depending on the type of emission unit:

Material balance calculation, based on the VOM content of raw materials

and recovered materials, as is typically used for degreasers, coating lines,

and printing lines equipped with a carbon adsorption system (recovery-type

control device) or without any control device;

A standard engineering formula for estimation of emissions, as is typically

used for storage and transfer of volatile organic liquids;

A source-specific emission factor(s), based on representative testing and

sampling data and appropriate analysis, as typically used for petroleum

refining processes;

A published USEPA emission factor(s), as is typically used for component

leaks;

A source-specific emission rate or VOM control efficiency, based on

representative testing, as is typically used for chemical processes and

afterburners (destruction-type control device), respectively;

A method not listed above that is sufficient to demonstrate compliance with

this Section; or

An appropriate combination of the above methods, as typically used for a

coating or printing line equipped with a control device, where the available

emissions are determined by material balance and the control efficiency is

determined by representative testing.

Section 205.335

Sampling, Testing, Monitoring and Recordkeeping Practices

The owner or operator of a participating source or new participating source shall conduct

sampling, perform testing, conduct monitoring and maintain records as needed to support

its method for determining seasonal emissions in accordance with Section 205.330 of this

Subpart and to demonstrate compliance with this Part. Such sampling, testing, monitoring

and recordkeeping shall be, at a minimum, as stringent as that required by any applicable

requirement and any permit condition. The Agency shall establish the practices applicable

to each such source in the source’s CAAPP permit.

Section 205.337

Changes in Emission Determination Methods and Sampling,

Testing, Monitoring and Recordkeeping Practices

The methods used for determining seasonal emissions from a source shall

generally be consistent with the methods used to determine its baseline

emissions unless the source's permit accommodates the use of alternate

methods to determine VOM emissions.

Modification of Methods and Practices

If a source proposes new or revised methods to determine VOM

emissions or new or revised supporting practices for sampling,

testing, monitoring or recordkeeping that differ significantly from

the methods and practices specified by its current permit, the source

shall obtain a revised permit in accordance with the procedures

specified in Section 39.5 of the Act [415 ILCS 5/39.5], prior to

relying on such methods and practices.

The Agency shall issue a revised permit if it finds, based upon

submission of an appropriate permit application, that the proposed

methods or practices are needed or appropriate to address changes

in the operation of the source or emission units that were not

considered when the current permit was issued, that the proposed

methods and procedures will not significantly affect the

determination of actual seasonal emissions, or that the proposed

methods and procedures incorporate new or improved analytical

techniques or estimation methods that will increase the accuracy

with which actual seasonal emissions are determined, and other

applicable requirements for issuance of a revised permit are met.

If the Agency approves the use of a modified method or practice,

the Agency is authorized to determine a corrected baseline and

thereafter issue ATUs in accordance with Section 205.400(c) of

this Part pursuant to this corrected baseline.

SUBPART D: SEASONAL EMISSIONS MANAGEMENT

Section 205.400

Seasonal Emissions Allotment

Each participating source shall receive an allotment which shall be issued

by the Agency and distributed in ATUs.

Except for ATUs issued pursuant to Sections 205.500 and 205.510 of this

Part, ATUs issued for any seasonal allotment period are valid for use

during the seasonal allotment period following issuance and the next

succeeding seasonal allotment period. All ATUs shall be valid until such

ATUs expire or are retired.

The initial allotment for each participating source shall be based on the

baseline emissions for such source, as determined in accordance with

Section 205.320 of this Part, and shall be reduced by 12 percent in 1999 or

in such other year that a source is issued its initial allotment, except as

provided in Section 205.405 of this Subpart.

Except as provided in Section 205.337(b)(3) of this Part and subsections

unless the Agency makes a demonstration to the Board, in accordance with

the rulemaking provisions of Sections 9.8, 27 and 28 of the Act [415 ILCS

5/9.8, 27 and 28], that further reductions are needed. An allotment or a

baseline under this Part does not constitute a property right. Nothing in

this Part shall be construed to limit the authority of the Board to terminate

or limit such allotment or baseline pursuant to its rulemaking authority

under Sections 9.8, 27 and 28 of the Act [415 ILCS 5/9.8, 27 and 28].

If the baseline emissions for any participating source are increased in

accordance with Section 205.320(f) of this Part, the allotment shall be

increased by the modified portion of the baseline emissions amount,

reduced by 12 percent, except as provided in Section 205.405 of this

Subpart.

Except as provided in subsection (h) of this Section, any new participating

source shall not be issued ATUs by the Agency, but shall be required to

hold ATUs at the end of the reconciliation period as specified in Section

205.150(d) of this Part for each seasonal allotment period in which it is

operational.

Any source existing as of May 1, 1999, which first becomes subject to the

requirements of this Part because its seasonal emissions increase to 10 tons

or more as a result of a major modification pursuant to 35 Ill. Adm. Code

203, in any seasonal allotment period beginning with 1999, shall not be

allotted ATUs by the Agency for the VOM emissions attributable to this

modification, except as provided in subsection (h) of this Section, but shall

be allotted ATUs by the Agency based on its baseline emissions, as

determined in accordance with Section 205.320 of this Part. Any such

participating source shall be required to hold ATUs at the end of the

reconciliation period as specified in Section 205.150(c) of this Part, for

each seasonal allotment period in which it is subject to this Part.

If a participating source or new participating source submits an ATU

transfer agreement authorizing the transfer of ATUs for more than one

year, as provided in Section 205.630(a)(2)(B) of this Part, the ATUs shall

be automatically transferred by the Agency from the transferor’s

Transaction Account to the transferee’s Transaction Account. Upon

reopening or renewal of the CAAPP permit for any such source, any

multiple season transfer agreement that has three or more years of transfers

remaining shall be identified in the renewed or reissued CAAPP permit for

each such source.

Section 205.405

Exclusions from Further Reductions

VOM emissions from the following emission units, if satisfying subsection

(a)(1), (a)(2) or (a)(3) of this Section prior to May 1, 1999, shall be

excluded from the VOM emissions reductions requirements specified in

Section 205.400(c) and (e) of this Subpart as long as such emission units

continue to satisfy subsection (a)(1), (a)(2) or (a)(3) of this Section:

Emission units that comply with any NESHAP or MACT standard

promulgated pursuant to the CAA;

Direct combustion emission units designed and used for comfort

heating purposes, fuel combustion emission units and internal

combustion engines; and

An emission unit for which a LAER demonstration has been

approved by the Agency on or after November 15, 1990.

When it is determined that an emission unit is using, prior to May 1, 1999,

BAT for controlling VOM emissions, VOM emissions from such emission

unit shall not be subject to the VOM emissions reductions requirement

specified in Section 205.400(c) or (e) of this Subpart as long as such

emission unit continues to use such BAT. The owner or operator of a

source may request such exclusion from further reductions by providing the

following information, in addition to the information required in Section

205.310 of this Part, in its ERMS application:

Identification of each emission unit for which exclusion is

requested, including the year of initial operation of such emission

unit;

Identification of all requirements applicable to the emission unit;

A demonstration that the emission unit is using BAT for controlling

VOM emissions;

Identification of the permitted VOM emissions from the emission

unit;

VOM emissions from the emission unit for each seasonal allotment

period used in the baseline emissions determination for the source;

and

A description and quantification of any reductions in VOM

emissions that were achieved at the emission unit or source based

on its use of BAT.

As part of its review of an ERMS application or application for a modified

allotment, the Agency may determine that any such emission unit qualifies

for exclusion from further reductions under subsection (a) or (b) of this

Section. The Agency shall make its proposed determination in a draft

CAAPP permit subject to public notice and participation, accompanied by

an explanation of its proposed action.

Section 205.410

Participating Source Shutdowns

If a participating source shuts down all operations at the source, and

withdraws its permit or its permit is revoked or terminates, allotments

issued to such a source for each seasonal allotment period after the

shutdown occurred shall be subject to the following:

80 percent of all such ATUs shall continue to be allotted to the

owner or operator of such source or its duly authorized recipient;

and

20 percent of all such ATUs shall be issued to the ACMA.

Except as provided in subsection (c) of this Section, the owner or operator

of any participating source that shuts down all operations, in accordance

with subsection (a) of this Section, shall submit a written request to have

its status changed to a general participant, upon withdrawal, revocation or

termination of its permit.

The owner or operator of any participating source that shuts down all

operations, in accordance with subsection (a) of this Section, may

authorize the issuance of future ATUs to the Transaction Account of

another participating source, new participating source or general

participant by submitting a transfer agreement authorizing a permanent

transfer of all future ATUs. The CAAPP permit of any participating source

or new participating source designated to receive future allotments of

ATUs pursuant to such a transfer agreement shall be modified to reflect

this transfer upon reopening or renewal. Any ATUs issued pursuant to a

transfer agreement entered into under this subsection before shut down of

all operations of the participating source shall not be subject to subsection

(a) of this Section.

SUBPART E: ALTERNATIVE ATU GENERATION

Section 205.500

Emissions Reduction Generator

Any participating source, new participating source or general participant may submit a

proposal for issuance of ATUs to it based on VOM emissions reductions, as specified in

subsection (a) of this Section, achieved by any source or group of sources located in the

Chicago ozone nonattainment area with an operating permit(s) other than a participating

source or new participating source. The owner or operator of each source from which the

VOM emissions reductions have been or will be achieved shall certify its acceptance of the

terms of the proposal and that it has achieved or will achieve the emissions reductions

specified in the proposal. An emissions reduction generator may apply for a modification

to its operating permit to incorporate limitations that make the VOM emissions reductions

specified in the relevant proposal enforceable.

ATUs will only be issued pursuant to this Section if based on actual VOM

emissions reductions that meet one or more of the following:

If, based on the same actual production rate, VOM emissions at the

source for any seasonal allotment period beginning in 1999 are or

will be lower due to the use of technology or materials at the source

than if operating at the same production rate at the emissions level

allowed by applicable requirements effective in 1996 or any

requirements included in the State Implementation Plan, provided

such reductions occurred after 1990;

The source shuts down a portion or all of its operation(s) after

1996 and withdraws the relevant operating permit(s), provided the

VOM emissions from the shut down activity or activities will not be

distributed elsewhere within the Chicago ozone nonattainment area;

The source(s) curtails its seasonal production activity resulting in an

actual reduction in VOM emissions during any seasonal allotment

period beginning in 1999, provided the VOM emissions from the

curtailment will not be distributed elsewhere within the Chicago

nonattainment area. Such emissions reduction shall be based on the

difference between the average production level for the two

seasonal allotment periods prior to the year of curtailment and the

curtailed production level, calculated at the VOM emission rate

allowed by applicable requirements effective in 1996; or

The source shuts down operations or curtails seasonal production

activity as described in subsections (a)(2) and (a)(3) of this Section,

respectively, and the VOM emissions from the shut down activity

or activities or curtailment will be distributed to a participating or

new participating source or sources within the Chicago ozone

nonattainment area, and the proposal provides that all ATUs issued

pursuant to this Section on account of such shut down or

curtailment are to be issued to the corresponding participating or

new participating source or sources.

If any proposal is based on a shut down of operations, as specified in

subsection (a)(2) of this Section, that results in seasonal emissions

reductions of 10 tons or more, 20 percent of ATUs issued based on such

an emissions reduction generator proposal shall be allocated to the ACMA.

Any proposal based on seasonal emissions reductions of 10 tons or more

and the Agency’s approval thereof shall be subject to the public notice

requirements of Section 39.5 of the Act [415 ILCS 5/39.5].

Any proposal submitted shall include the following:

Information identifying the source(s) from which the VOM

emissions reductions has been or will be achieved and its owner or

operator;

An explanation of the method used to achieve the VOM emissions

reductions;

Relevant information describing the nature of the underlying

activity that generated the VOM emissions and the relationship of

the units at which the VOM emissions reduction occurred to other

units or sources performing the same or related activity in the

Chicago ozone nonattainment area, if the VOM emissions reduction

is attributable to a partial or complete source shutdown or a

production curtailment, as specified in subsection (a)(2), (a)(3) or

(a)(4) of this Section;

The amount of VOM emissions for the two seasonal allotment

periods prior to the year(s) of curtailment, including supporting

calculations, if the VOM emissions reduction is attributable to a

production curtailment as specified in subsection (a)(3) or (a)(4) of

this Section;

The amount of the VOM emissions reduction, including supporting

calculations and documentation, such as material usage information;

The name and address of the participating source(s), new

participating source(s) or general participant(s) to which ATUs will

be issued, including the name and telephone number of the account

officer for such source or participant; and

The owner or operator of each proposed emission reduction

generator shall certify its acceptance of the terms of the proposal

and certify that it has achieved or will achieve the emissions

reductions specified in the proposal.

The owner or operator of any emissions reduction generator may modify

its operating permit to incorporate limitations that make the VOM

emissions reductions specified in the relevant proposal enforceable.

If the emissions reduction generator does not modify its permit, as

specified in subsection (e) of this Section, or experiences a shutdown, as

specified in subsection (a)(2) or (a)(4) of this Section, and the proposal is

submitted prior to the availability of actual VOM emissions data from the

relevant seasonal allotment period, the Agency shall determine if the

proposal is acceptable on a preliminary basis and provide notification of

this determination. The Agency shall not issue final approval, in

accordance with subsection (g) of this Section, of any such proposal until

the actual VOM emissions data is submitted.

The Agency shall notify the participating source, new participating source

or general participant in writing of its final decision with respect to the

proposal within 45 days after receipt of such proposal or receipt of VOM

emissions data to verify that the specified reductions occurred, whichever

occurs later. If the Agency denies or conditionally approves a proposal,

this written notice shall include a statement of the specific reasons for

denying or modifying the proposal. The Agency’s determination as to the

approvability of any proposal submitted pursuant to this Section is subject

to review by the Board as provided at 35 Ill. Adm. Code 105.102, provided

the proposed emissions reduction generator is not requesting a permit

revision. If such a permit revision is requested, the applicable permit

review and appeal procedures shall apply.

If the Agency deems that the proposal is sufficient to receive final approval,

the Agency shall issue ATUs in accordance with the following:

Any ATUs issued pursuant to this subsection shall be issued to the

participating source(s), new participating source(s) or general

participant identified in the proposal;

If the emissions reduction generator modifies its operating permit as

specified in subsection (e) of this Section, to incorporate limitations

that make the VOM emissions reductions specified in the relevant

proposal enforceable, ATUs shall be issued on the date such source

is required to comply with the limitations in the permit and for each

seasonal allotment period thereafter in which the VOM emissions

reductions are required by the source’s permit;

If the proposal is based on a partial or complete shut down, as

specified in subsection (a)(2) or (a)(4) of this Section, ATUs shall

be issued before the seasonal allotment period for each year

specified in the proposal;

If the emissions reduction generator does not modify its permit and

the proposal is submitted prior to the availability of actual VOM

emissions data from the relevant seasonal allotment period(s), the

Agency shall issue ATUs upon final approval which shall occur

after actual VOM emissions data is evaluated for the relevant

seasonal allotment period;

If the emissions reduction generator includes information on actual

VOM emissions reductions during the seasonal allotment period for

which ATUs are sought, ATUs will be issued by the Agency upon

final approval of the proposal;

Except as provided in subsection (h)(7) of this Section, ATUs

issued pursuant to this subsection shall only be valid for the

seasonal allotment period in which the emissions reductions were

achieved;

If the VOM emissions reductions specified in a proposal are

incorporated into the emissions reduction generator’s permit or, if

the emissions reduction generator shuts down all or a portion of its

operations and withdraws all relevant operating permits, ATUs

issued pursuant to this subsection shall be valid for the seasonal

allotment period following issuance and for the next seasonal

allotment period; and

The number of ATUs issued pursuant to subsection (h)(2) or (h)(3)

of this Section based on a proposal under subsection (a)(4) of this

Section shall be equal to the number of ATUs otherwise issuable

under this Section reduced by 12 percent.

Section 205.510

Inter-Sector Transaction

Any person may submit a proposal to the Agency to have ATUs issued to the Transaction

Account of a participating source, new participating source or general participant

equivalent to VOM emissions reductions from mobile sources or area sources. Any such

proposal for the VOM emissions reduction project is subject to Agency review and

approval, shall be consistent with laws and regulations and shall include all supporting

documentation. The Agency shall review all such proposals in accordance with the

following:

Regulatory Based Proposal

If the VOM emission reductions that have been generated or will be

generated are pursuant to a regulation that provides the procedure to

determine VOM emissions reductions and allows for such reductions to be

converted to ATUs, the Agency shall approve the proposal if based on the

provisions of the applicable regulation. The Agency shall approve,

conditionally approve or deny any complete and adequately supported

proposal within 45 days after the Agency's receipt thereof by sending

written notification of its decision. If the Agency denies or conditionally

approves a proposal, this written notice shall include a statement of the

specific reasons for denying or modifying the proposal.

Other Proposals

If the proposal is based on VOM emissions reductions that have been

generated or will be generated which are beyond VOM emissions

reductions required by any mandatory applicable rules, the proposal shall

include an explanation of the method(s) used to achieve the VOM

emissions reductions and the method(s) used to quantify the VOM

emissions reductions, including supporting documentation and calculations.

The Agency shall evaluate the validity of VOM emission reductions that

allegedly were generated or will be generated and approve, conditionally

approve or deny any complete proposal within 90 days after the Agency's

receipt by sending written notification of its decision to the source. If the

Agency denies or conditionally approves a proposal, this written notice

shall include a statement of the specific reasons for denying or modifying

the proposal.

No ATUs shall be issued based on mobile or area source VOM emissions

reductions unless a proposal, in accordance with this Section, has been

approved by the Agency.

All ATUs issued pursuant to a proposal approved pursuant to this Section

shall be issued to the Transaction Account identified in the proposal. Such

ATUs shall only be valid for the seasonal allotment period in which the

emissions reductions were achieved, unless the Agency specifies in its

approval that such ATUs shall be valid for the seasonal allotment period

following issuance and for the next seasonal allotment period.

The Agency’s determination that a proposal submitted pursuant to this

Section is denied or conditionally approved is subject to review by the

Board as provided at 35 Ill. Adm. Code 105.102.

SUBPART F: MARKET TRANSACTIONS

Section 205.600

ERMS Database

The Agency or its designee shall maintain a bulletin board that shall be

available for public access on which a listing of the status of ATUs will be

posted. Other public information and notices will also be posted and

participating sources, new participating sources and general participants

may post ATUs available for purchase or wanted for purchase. The

bulletin board shall include the following information on ATUs:

Date issued and source issued to;

Where applicable, date transferred and source or person transferred

to;

Status of ATUs in each account, i.e., available for use, or date

retired or date expired; and

Posted each week during the reconciliation period and no less than

monthly at all other times, the average price paid for ATUs

transferred the previous week or the previous month, as

appropriate.

The Agency or its designee shall maintain a Transaction Account database.

Information contained on this database shall be considered the official

record of the ERMS. Account officer(s) may request status updates for

accounts for which they are designated. The database shall include

information on all ATUs held in each account.

The Agency or its designee shall separately maintain a listing of all ATUs

expired or retired within the most recent five years, including the date of

expiration or retirement.

Section 205.610

Application for Transaction Account

Each participating source, new participating source and general participant

shall apply for and obtain authorization for a Transaction Account from the

Agency prior to conducting any market transactions. Each participating

source shall submit to the Agency its completed application for a

Transaction Account no later than 30 days prior to the beginning of the

first seasonal allotment period in which the source is required to

participate. Each new participating source shall submit to the Agency its

completed application for a Transaction Account no later than 30 days

prior to the beginning of the first seasonal allotment period in which it is

operational.

Each Transaction Account application shall include the following

information:

The name and address of the participating source, new participating

source or general participant, and the name and address of its

owner or operator;

The names and addresses of all designated account officers;

The certification specified in Section 205.620(a)(5) of this Subpart

signed by each account officer; and

For a participating source or new participating source, identification

of the CAAPP permit number for the source.

Special Participants

Any person may purchase ATUs to retire for air quality benefit only. Such

person shall be a special participant and shall register with the Agency prior

to its first ATU purchase. Special participants will not have Transaction

Accounts in the Transaction Account database. All ATUs purchased by

special participants will be retired effective on the date of purchase and will

be listed as retired in the appropriate database.

Special participants will be given a registration number by the Agency so

that their purchases of ATUs can be recorded.

Section 205.620

Account Officer

Each participating source, new participating source or general participant

must have at least one account officer designated for each of its

Transaction Accounts. The account officer(s) shall be the only person(s)

authorized to make ATU transactions involving such designated

Transaction Account. At least one account officer must certify each

official document that pertains to a designated Transaction Account or

associated market transactions. Account officers may be employees or

contractors of participating sources, new participating sources or general

participants. No participating source, new participating source or general

participant may engage in ATU transactions if it does not have an account

officer approved by the Agency. Each account officer shall satisfy all of

the following:

Be at least 18 years of age;

Be an American citizen or a legal alien;

Have not been convicted of or had a final judgment entered against

him or her in any State or federal court for a violation of State or

federal air pollution laws or regulations, or for fraud;

Be scheduled to attend the next scheduled training program or has

already completed the program; and

Certify to the following statement as a part of the relevant

Transaction Account application:

I certify that I satisfy all of the requirements for an account officer.

I am aware that I may be disqualified from acting as an account

officer in the State of Illinois, pursuant to 35 Ill. Adm. Code 205, if

any information submitted in this application is determined to be

false or misleading.

Account Officer Training Program

Except as provided in subsection (d) of this Section, each candidate must

satisfactorily complete the training program for account officers conducted

by the Agency or its designee prior to acting as an account officer.

To attend the account officer training program, a person must

enroll with the Agency prior to the date for the next scheduled

training program.

The training program shall cover, at a minimum, the following

topics: an overview of the ERMS, forms for the ERMS, market

transaction procedures, and operation of the ERMS databases.

The account officer training program will be offered at least once

annually, and may be offered more frequently, depending upon

demand. The Agency or its designee shall publish advance notice

of the time, date and location for each training program.

Disclaimer

The Agency and the State of Illinois do not endorse or guarantee the

conduct or quality of work by account officers who have been approved by

the Agency, nor does it endorse or guarantee the validity of any

representations or ERMS market transactions offered or made by account

officers who have been approved by the Agency.

Expedited Approval of Account Officer

In the event that an account officer unexpectedly leaves that position, the

participating source, new participating source or general participant may

request permission from the Agency to allow for a new account officer for

up to one year, provided the participating source, new participating source

or general participant submits a written certification in accordance with

subsection (a)(5) of this Section and affirms that the candidate for

expedited approval by the Agency shall complete the training program, in

accordance with subsection (b) of this Section, no later than one year from

the date the expedited approval is requested.

Section 205.630

ATU Transaction Procedures

Recognized sales and purchases of ATUs may be made between any two Transaction

Accounts or from a Transaction Account to the ACMA. A sale of ATUs may also be

made from a Transaction Account to a special participant. No sale of ATUs shall be

recognized from a special participant to any other person.

Transfer of ATUs shall be subject to the following requirements:

Transfers between Transaction Accounts may only be made by the

account officers for both accounts;

All ATU transfers shall be duly authorized by the account officers

for both Transaction Accounts, or, if the ATUs are being

transferred to a special participant, the account officer of the

Transaction Account of the transferor and a representative of the

special participant;

Duly authorized ATU transfers shall identify the ATU(s)

involved in the transaction;

Written ATU transfer agreements signed by the account

officers for both Transaction Accounts may authorize the

transfer of ATUs for more than one season. If a transfer

agreement authorizes the future transfer of ATUs for any

season for which ATUs have not yet been issued for use,

the ATUs shall be automatically transferred to the buyer’s

Transaction Account for each year such transfer is

authorized pursuant to the transfer agreement, in which case

the account officers for each Transaction Account will be

notified of this transfer;

No transfer shall be considered official for purposes of the ERMS

until entered into the Transaction Account database;

The Agency or its designee shall enter ATU transfers into the

Transaction Account database within one week of the Agency

receiving notification of a duly authorized ATU transfer; and

Any ATU transfer agreements entered into after December 31 of a

given year may not be used by the buyer to cover emissions from

the preceding seasonal allotment period, but may only be used

prospectively.

The account officers involved in ATU transfers shall report the purchase

price for all ATU transfers to the Agency or its designee and shall indicate

whether consideration other than the purchase price reported was involved

in the transfer.

Transaction Requirements

Expired or retired ATUs may not be bought or sold;

The Transaction Account database must show ATUs proposed for

transfer as being held by the selling entity. After such transfer is

official as specified in subsection (a)(3) of this Section, the

transferee’s Transaction Account will show the ATUs subject to

such transfer as being held in this Transaction Account;

The minimum sale allowed under the ERMS shall be one ATU; and

No sale may include partial ATUs.

Official Record of Transactions

The official record of all ATU transactions and the current status of

all ATUs shall be the Transaction Account database.

Account officers shall be allowed to inspect their Transaction

Account(s) in the Transaction Account database. Any

discrepancies found by the account officer shall be reported to the

Agency or its designee along with a request for correction. All data

supporting such request shall be sent along with the request for

correction. A request for correction may not be used to alter an

allotment.

After the end of each reconciliation period, the Agency shall retire

ATUs in the Transaction Account of each participating source or

new participating source in the amount specified in Section

205.150(c) or (d) of this Part. If the source does not have sufficient

ATUs in its Transaction Account to account for its VOM emissions

from the preceding seasonal allotment period, the source shall be

subject to emissions excursion compensation in accordance with

Section 205.720 of this Part. ATUs shall be retired in order of

issuance, unless the account officer for the Transaction Account

notifies the Agency in writing to specify which ATUs in the

Transaction Account should be retired.

SUBPART G: PERFORMANCE ACCOUNTABILITY

Section 205.700

Compliance Accounting

The owner or operator of each participating source or new participating

source shall maintain and retain for five years at the source or at another

location agreed to by the Agency, in conjunction with the records it

maintains to demonstrate compliance with its CAAPP permit, all of the

following documents as its compliance master file:

A copy of its seasonal component of its Annual Emissions Report;

Information on actual VOM emissions, as recorded in accordance

with Section 205.335 of this Part, and as required by the CAAPP

permit for the source; and

Copies of any transfer agreements for the purchase or sale of ATUs

and other documentation associated with the transfer of ATUs.

Compliance Master File Review

The owner or operator of each participating source or new

participating source shall allow the Agency or an authorized

representative to enter and inspect the premises in accordance with

Section 39.5(7)(ii) of the Act [415 ILCS 5/39.5(7)(ii)] and to

review its compliance master file.

After the conclusion of each compliance master file review, a report

shall be prepared by the Agency and issued to the inspected source

that includes the following information:

An identification of any noncompliance with the

requirements of this Part; and

An evaluation of increases and decreases in emissions of

VOMs that are also hazardous air pollutants, as related to

ATU transactions.

Nothing in this Part shall affect any other obligations of a source to

allow inspection(s) under State or federal laws or regulations.

Section 205.710 Alternative Compliance Market Account (ACMA)

The Agency or its designee shall operate the ACMA. The purpose of the

ACMA is to serve as a secondary source of ATUs that may be purchased

by participating sources and new participating sources, as specified in this

Section.

The ATUs in the ACMA will have an indefinite life so long as they remain

in the ACMA, but, once purchased, must be used either for the preceding

or next seasonal allotment period. If these ATUs are not used for

compliance in that seasonal allotment period, they will expire.

ATUs in an amount equal to one percent of each year’s allotment shall be

issued to the ACMA, beginning in 1999. In addition, ATUs shall be

deposited into the ACMA due to source shutdowns, as specified in

Sections 205.410(a) and 205.500(b) of this Part. ATUs for the ACMA

may also be obtained by the Agency in the following ways:

The Agency or its designee is authorized to accept voluntary

contributions of ATUs from participating sources or other persons

for deposit into the ACMA.

The Agency is authorized to deposit ATUs from its purchase of

ATUs or to deposit ATUs created from emissions reductions it

generates beyond reductions otherwise required by statute or

regulation for attainment of the NAAQS for ozone.

Regular Access to ACMA

Regular access to the ACMA shall be available when there is

sufficient positive balance of ATUs to supply the requesting source.

Any participating source or new participating source may apply to

the Agency during the reconciliation period for regular access to

the ACMA to purchase ATUs for the preceding seasonal allotment

period.

Within 15 days after receipt of any request for regular access to the

ACMA, the Agency shall notify the source if regular access to the

ACMA is available or if there are insufficient ATUs in the ACMA

for regular access. The Agency shall also advise any participating

source that special access is available when regular access is

unavailable.

After being granted regular access to the ACMA by the Agency, a

participating source or new participating source may purchase

ATUs from the ACMA at the rate of $1,000 per ATU or 1.5 times

the average market price, as determined by the Agency, whichever

is less. ATUs shall only be available at 1.5 times the market price if

sufficient single season ATUs transfers have occurred with a

purchase price that fully reflects the consideration involved in the

transfer to establish an average market price. All payments for

ATUs from the ACMA shall be made to the Agency or the

Agency's designee for deposit into the Alternative Compliance

Market Account Fund.

Special Access to ACMA

Special access to the ACMA shall be available to participating sources, in

accordance with this subsection, when the ACMA balance is not sufficient

to meet the needs of requesting participating sources.

The Agency shall credit the ACMA with up to one percent of

ATUs from the seasonal allotment for the next seasonal allotment

period as an advance to provide assistance for special access to be

granted, as provided in subsection (e)(2) of this Section. Special

access to the ACMA shall only be allowed to the extent that such

access does not exceed this one percent of the next seasonal

allotment.

To the extent allowed pursuant to subsection (e)(1) of this Section,

the Agency shall grant special access to the ACMA to any

participating source if the source submits a written request

demonstrating that the following exist:

During the reconciliation period the source has not been

able to obtain regular access to the ACMA and has not been

able to obtain ATUs in the market; and

Actual seasonal emissions have exceeded ATUs held by the

source for the applicable seasonal allotment period.

After being granted special access to the ACMA, a participating

source may purchase ATUs at the rate of $1100 per ATU or 2

times the average market price, as determined by the Agency,

whichever is less. ATUs shall only be available at 2 times the

market price if sufficient single season ATUs transfers have

occurred with a purchase price that fully reflects the consideration

involved in the transfer to establish an average market price. All

payments for ATUs from the ACMA shall be made payable to the

Agency or the Agency’s designee for deposit into the Alternative

Compliance Market Account Fund.

The Agency shall provide written notification, within 15 days after

receipt of any request for special access to the ACMA, allowing or

denying special access to the ACMA to any participating source

requesting such access. If the Agency denies such access, this

written notification shall include its reasons for denying access.

Special access to the ACMA will create a need to generate sufficient VOM

emissions reductions during the subsequent calendar year to offset the

ATUs distributed; in this instance, the Agency shall:

Offset these ATUs by crediting any expired ATUs from the

Transaction Accounts of all ERMS participants to the ACMA after

the end of the reconciliation period;

Seek to achieve an equivalent amount of VOM emissions

reductions by the end of the subsequent year to offset these ATUs;

Credit the ACMA with the one percent of ATUs, as needed, from

the next seasonal allotment, as provided in subsection (e)(1) of this

Section.

The Agency is authorized to use moneys derived from the sale of ATUs

from the ACMA to develop and implement additional VOM emissions

reductions. If the ACMA is operating without a positive balance, the

Agency shall endeavor to generate new emissions reductions whenever

possible.

Limitations on Operation of ACMA

The ability of new participating sources to obtain ATUs from the ACMA

shall be limited through the seasonal allotment period of 2002, in the

aggregate, to no more than 30 percent of the available ACMA balance at

the start of each seasonal allotment period unless ATUs are available after

access by all participating sources. In such case, new participating sources

may obtain ATUs from the ACMA up to 50 percent of the available

ACMA balance at the start of each seasonal allotment period.

If the Agency denies special access to the ACMA to any participating

source, such source may petition the Board for review of the Agency’s

denial in accordance with the procedures specified at 35 Ill. Adm. Code

105.102.

Section 205.720

Emissions Excursion Compensation

The Agency shall obtain emissions excursion compensation from any participating source

or new participating source that does not hold ATUs in accordance with Section

205.150(c) or (d) of this Part by the conclusion of the reconciliation period. For any

emissions excursion during 1999 by a participating or new participating source that was

not issued a CAAPP permit before May 1, 1998, all references in subsections (b)(1) and

(b)(3), (c) and (e) of this Section to 1.2 times the emissions excursion shall be 1.0 times

the emissions excursion. The Agency shall obtain emissions excursion compensation

pursuant to the following procedures.

The Agency shall issue an Excursion Compensation Notice to any such

source when an apparent emissions excursion is identified by the Agency.

Except as provided in subsection (c) of this Section, the Excursion

Compensation Notice shall require the source to provide compensation in

the following manner:

The participating source or new participating source shall purchase

ATUs from the ACMA in an amount equivalent to 1.2 times the

emissions excursion;

For the second consecutive seasonal allotment period in which an

emissions excursion occurred, the participating source or new

participating source shall purchase ATUs from the ACMA in an

amount equivalent to 1.5 times the emissions excursion; or

If the ACMA balance is not adequate to cover 1.2 times or, when

required, 1.5 times the total emissions excursion amount, the

Agency shall deduct ATUs equivalent to 1.2 times or, when

required, 1.5 times the total emissions excursion or any remaining

portion thereof from the source's next allotment of ATUs.

Within 15 days after receipt of an Excursion Compensation Notice, the

owner or operator of the subject source may apply to the Agency to

request that ATUs in an amount equivalent to 1.2 times or, when required,

1.5 times the emissions excursion be deducted from the source's next

seasonal allotment, rather than acquired from the ACMA.

Any source issued an Excursion Compensation Notice may contest the

Agency's findings by filing a petition with the Board requesting review of

the Emissions Excursion Compensation Notice in accordance with the

procedures specified in 35 Ill. Adm. Code 105.102.

If any source contests the Agency's findings in the Excursion

Compensation Notice, the Agency shall withhold ATUs in an amount

equivalent to 1.2 times or, when required, 1.5 times the amount of the

alleged emissions excursion from the source's next seasonal allotment.

These ATUs shall be withheld until the Board issues a final order resolving

the source's petition contesting the Agency's Excursion Compensation

Notice. If the source prevails before the Board, the ATUs withheld shall

be transferred to the source's Transaction Account. If the Agency prevails

before the Board, the ATUs withheld shall be retired to offset the emissions

excursion.

Sources that provide emissions excursion compensation pursuant to this

Section shall not be subject to enforcement authority granted to the State

or any person under applicable State or federal laws or regulations or any

permit conditions. The enforcement authority of the State or any person is

only limited by this subsection as it applies to an emissions excursion.

Section 205.730

Excursion Reporting

Upon issuance of each Excursion Compensation Notice to any source that has already had

one previous admitted or adjudicated emissions excursion, the source shall submit to the

Agency any additional reports required by the source’s permit pursuant to Section

39.5(7)(f) of the Act [415 ILCS 5/39.5(7)(f)].

Section 205.740

Enforcement Authority

Except as provided in Section 205.720(f) of this Subpart, nothing in this Part limits the

State's authority to seek penalties and injunctive relief for any violation of any applicable

State law or regulation or any permit condition, as otherwise provided in the Act.

Nothing in this Part limits the right of the federal government or any person to directly

enforce against actions or omissions which constitute violations of permits required by the

Clean Air Act or applicable federal environmental laws and regulations.

Section 205.750

Emergency Conditions

VOM emissions that are a consequence of an emergency, and are in excess of the

technology-based emission rates which are achieved during normal operating conditions,

to the extent that such excess emissions are not caused by improperly designed equipment,

lack of preventative maintenance, careless or improper operation, or operation error, shall

be deducted from the calculation of actual VOM emissions during the seasonal allotment

period in which the emergency occurred, subject to the following:

The owner or operator of the participating source or new participating

source shall submit an initial emergency conditions report to the Agency

within two days after the time when such excess emissions occurred due to

the emergency. The submittal of this initial emergency conditions report

shall be sufficient to fulfill the notice requirements of Section 39.5(7)(k) of

the Act [415 ILCS 5/39.5(7)(k)] as it relates to VOM emissions at the

source if the report provides a detailed description of the emergency, any

steps taken to mitigate emissions and corrective actions taken, to the extent

practicable. The final report shall contain the following information:

A description of the cause(s) of the emergency and the duration of

the episode;

Verification that the source was being operated properly at the time

of the emergency;

A demonstration that the source took all reasonable steps to

minimize excess VOM emissions during the emergency period,

including but not limited to the following actions, if technically and

economically feasible:

The level of operation of the affected emission unit(s) was

minimized;

The level of emissions from the affected emission units(s)

was minimized by use of alternative raw materials or

alternative control measures;

The duration of the excess emissions was minimized; and

The amount of VOM emissions from other emission units at

the source or other sources located in the Chicago ozone

nonattainment area owned or operated by the person or

entity were reduced;

A demonstration that appropriate corrective action(s) were taken

promptly;

A demonstration that the affected emission units were:

Being carefully and properly operated at the time of the

emergency, including copies of appropriate records and

other relevant evidence;

Properly designed; and

Properly maintained with appropriate preventative

maintenance; and

An estimate of the amount of VOM emissions that occurred during

the emergency in excess of the technology-based emission factor

achieved during normal operating conditions, including supporting

data, the relevant emissions factor, and calculations.

The owner or operator of any such source may supplement its initial

emergency conditions report within 10 days after the conclusion of the

emergency situation.

The Agency must approve, conditionally approve or reject the findings in

the final emergency conditions report submitted by the source in writing

within 30 days after receipt of a complete report, subject to the following:

If the Agency concurs with the emergency conditions report, the

source is not required to hold ATUs for the excess VOM emissions

attributable to the emergency;

If the Agency approves with conditions or rejects the emergency

conditions report, the source shall be required to hold ATUs by the

end of the reconciliation period in an amount not less than the

emissions identified as excess in the emergency conditions report or

provide emissions excursion compensation in accordance with

Section 205.720 of this Subpart, if an emissions excursion

occurred;

If the Agency approves with conditions an emergency conditions

report, the Agency must identify in its written notice the amount of

VOM emissions that are not attributable to an emergency; and

If the Agency approves with conditions or rejects a source’s

emergency conditions report, the source may raise the emergency

as an affirmative defense pursuant to Section 39.5(7)(k) of the Act

[415 ILCS 5/39.5(7)(k)] in any action brought for noncompliance

with this Part or an action brought to review the Agency’s issuance

of an Excursion Compensation Notice, as provided in Section

205.720(d) of this Subpart.

Nothing in this Section relieves any source of any obligation to comply

with other applicable requirements, permit conditions, or other provisions

addressing emergency situations.

Section 205.760

Market System Review Procedures

Beginning in 2000, the Agency shall prepare an Annual Performance Review Report that

addresses the effect of VOM emissions reductions in the Chicago ozone nonattainment

area on progress toward meeting the RFP requirements and achieving attainment of the

NAAQS for ozone by 2007.

The Annual Performance Review Report will review trends and patterns

which may have emerged in the operation of the ERMS, and shall include,

but not be limited to, the following:

Total aggregate VOM emissions during the previous seasonal

allotment period;

The number of ATUs retired for compliance purposes or for air

quality benefit, currently being banked, or used by new participating

sources for the previous seasonal allotment period;

An evaluation of trading activities, including sources with no

trading activity, sources that are net purchasers of ATUs and

sources that are net sellers of ATUs;

ACMA transactions since the preparation of the previous report

and the account balance;

A summary of emissions reduction generator and inter-sector

proposals;

Distribution of transactions by geographic area or character of

source;

Availability of ATUs for purchase;

The average market price for ATU transactions from the previous

seasonal allotment period; and

Trends and spatial distributions of hazardous air pollutants.

The Agency shall prepare the Report by May 15 of the year following the

seasonal allotment period addressed by the Report. The Agency will make

copies of its Report available to interested parties upon request.

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 20th day of November 1997, by a

vote of 7-0.

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board

ATTACHMENT 1

Exhibits

Figure 2

& VOC Disbenefit Effects

Figure 3

Ozone Concentrations Measured at Southern LMOS Boundary

Figure 4

VOC Reduction at Different Background Levels

Table 1

1970-2007 Chicago VOM Emissions Summary Tons

Per Ozone Season Weekday (TPD)

Figure 5

OTAG Map Regional Oxidant Model (ROM) - Super Domain

Table 2

Summary of Attainment/ROP Scenario with ERMS Program @

4% ’97 - ’99

Figure 1

1990 Chicago SIP Inventory Summary VOM Emissions

Figure 2

1990 Chicago ROP Inventory Summary VOM Emissions

Table 1

15% ROP Plan Breakdown

10.

Figure 3

Chicago VOM Emissions: 1970-1996

11.

Figure 4

Projected Chicago VOM Emissions: 1996-2007

12.

Table 2

Chicago Area Source Category Summary

13.

Table 3

Chicago Off-Road Mobile Category Summary

14.

Table 4

Illinois VOM Reduction Program

15.

Figure 5

1996-2007 VOM Emissions for Chicago

16.

Table 5

Ozone Exceedences: 1988-1994

17.

Table 6

VOM Sources in Chicago

18.

Table 7

Analysis of ERMS Participating Sources

19.

Key Events in Development of SO2 Trading Program

20.

Clean Air Act Amendments of 1990 Effect on Acid Deposition in North

America

21.

Cost of SO2 Emission Control is Much Lower than Expected

22.

IEPA 1993 Pre-Feasibility Study for Ozone Precursor Trading

23.

Key Principles Shared by SO2 and ERMS Trading

24.

Reserved for Pg. 13 SO2 Emission from the Largest Sources but was not

entered into the record.

25.

Reserved for Pg. 14 Regional Emission Trades but was not entered into the

record.

26.

Pg. 15 Macroeconomic Impacts

27.

Pg. 16 Cost Changes if Trading is Restricted

28.

Pg. 18 Savings Through Trading

29.

Pg. 26 1994 Auction Results

30.

Pg. 27 SO2 Allowance Values

31.

Agency’s Errata #1 dated 2/3/97

32(a) Chris Romaine Testimony 1/2/97

32(b) Chris Romaine Testimony 1/9/97

33.

Donald Sutton Testimony dated 1/2/97

34.

David Kolaz Testimony dated 1/2/97

35.

Gale Newton Testimony dated 1/2/97

36.

Roger Kanerva Testimony dated 1/2/97

37.

Gary Beckstead dated 1/2/97

38.

Pg. 12 Acid Emissions

39.

Pg. 19 Utility Investments Decisions

40.

Pg. 20 Over Allowance System

41.

Pg. 17 IV CAA

42.

Pg. 21 Key Components of System

43.

Pg. 22 Allowance System Compliance

44.

Pg. 23 Emission Monitoring

45.

Pg. 25 Allowance Auctions

46.

Testimony of Bill Compton dated 1/13/97

47.

Example for ACMA Access prepared by Roger Kanerva for ERMS Hearing

dated February 3, 1997

48.

Testimony of Sarah Dunham dated January 2, 1997

49.

Overhead entitled “Application of California Standards” introduced 03/10/97

50.

Overhead entitled “Alternative Control Approaches” introduced 03/10/97

51.

Overhead entitled “Regional Economic Impacts of Alternative Control

Approaches” introduced 03/10/97

52.

Overhead entitled “Two Ways in Which a Facility may Gain from Trading”

introduced 03/10/97

53.

Overhead entitled “Example Rubber and Plastics Facility” introduced 03/10/97

54.

Overhead entitled “Example Organic Chemical Manufacturer” introduced

03/10/97

55.

Overhead entitled “Group 1: Facilities with high control costs” introduced

03/10/97

56.

Overhead entitled “Group 2: Facilities with low control costs” introduced

03/10/97

57.

Overhead entitled “Regional Economic Impact of Trading Simulation”

introduced 03/10/97

58.

Testimony of Dr. Case pre-filed on February 3, 1997

59.

Testimony of Mr. Marder of Illinois Environmental Regulatory Group (IERG)

(dated April 2, 1997) and Attachment A (dated April 9, 1995) pre-filed on April

3, 1997

60.

IERG’s Proposed Language for Section 205.320(g) dated April 21, 1997

61.

Testimony of Mr. Starkey on behalf of IERG (dated April 2, 1997) pre-filed on

April 3, 1997

62.

Testimony of Mr. Cobb on behalf of Jefferson Smurfit (dated April 4, 1997)

pre-filed on April 4, 1997

63.

Testimony of Mr. Skalon for Allied Tube & Conduit Corporation on behalf of

the Emission Reduction Market System (ERMS) Coalition and pre-filed on

April 4, 1997

64.

Testimony of Mr. Fasano for White Cap, Inc. on behalf of ERMS Coalition

pre-filed on April 4, 1997

65.

Testimony of Mr. Burke on behalf of the American Lung Association of

Metropolitan Chicago pre-filed on April 4, 1997

66.

An additional page to the testimony of Mr. Burke on behalf of the American

Lung Association of Metropolitan Chicago dated April 8, 1997

67.

Testimony of Mr. Svendsen for Chase Products Company on behalf of ERMS

Coalition pre-filed on April 4, 1997

68.

Testimony of Mr. Raymond Sr. for Rayvac Plastics Decorators, Inc. on behalf

of ERMS Coalition pre-filed on April 4, 1997

69.

Testimony of Mr. Deveikis for TC Industries, Inc. on behalf of ERMS

Coalition pre-filed on April 4, 1997

70.

Testimony of Mr. Hultquist for Treasure Chest Advertising Company on behalf

of ERMS Coalition pre-filed on April 4, 1997

71.

Testimony of Ms. Smith for TC Industries and Chase Products Company on

behalf of ERMS Coalition pre-filed on April 4, 1997

72.

Testimony of Mr. Bharat Mathur dated August 8, 1997

73.

Testimony of Mr. Richard Forbes dated August 8, 1997

74.

Testimony of Mr. Christopher Romaine dated August 8, 1997

75.

Testimony of Mr. Roger Kanerva dated August 8, 1997

76.

Testimony of Mr. Sidney Marder dated August 7, 1997

77.

Testimony of Mr. James Wakeman dated August 8, 1997

78.

Memorandum regarding “Future Nonroad Emission Reduction Credits for

Court Ordered Nonroad Standards”

ATTACHMENT 2

Public Comments Received

PC 1

Comments of the City of Chicago (City)

PC 2

Comments of Commonwealth Edison (CommEd)

PC 3

Testimony of Mr. Lionel Trepanier

PC 4

Comments of Dart Container Corporation (Dart)

PC 5

Comments of Waste Management of Illinois, Inc. (WMI)

PC 6

Comments of the Chemical Industry Council of Illinois

(CICI)

PC 7

Comments of Tenneco Plastics Company (Tenneco)

PC 8

Comments of National Solid Waste Management

Association (NSWMA)

PC 9

Comments of the Illinois Environmental Regulatory Group

(IERG)

PC 10

Comments of the ERMS Coalition (Coalition)

PC 11

Comments of Sun Chemical Company (Sun Chemical)

PC 12

Comments of Minnesota Mining and Manufacturing

Company (3M)

PC 13

Comments of the United States Environmental Protection

Agency (USEPA)

PC 14

Comments of the Illinois Environmental Protection Agency

(IEPA)

PC 15

Comments of the Illinois Steel Group (Steel Group)

PC 16

Comments of Mr. Lionel Trepanier

PC 17

Comments of IEPA

PC 18

Comments of WMI

PC 19

Comments of USEPA

PC 20

Post-Hearing Comments of IERG

PC 21

Supplemental Comments of Sun Chemical

PC 22

Comments of the ERMS Coalition

PC 23

Comments of Jefferson Smurfit Company (JSC)

PC 24

Comments of Zenith Electronics Company and Henri

Studio, Inc.

PC 25

Comments of Tenneco Plastics Company

PC 26

Comments of the City of Chicago

PC 27

Comments of IEPA

PC 28

Comments of Amoco Oil Company

PC 29

Comments of USEPA

PC 30

Comments of the American Lung Association of

Metropolitan Chicago

PC 31

Comments of the American Bakers Association

PC 32

Reply Comments of Dart Container Corporation

PC 33

Reply Comments of Sun Chemical

PC 34

Reply Comments of JSC

PC 35

Reply Comments of IEPA