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Correspondence


Document
AR-18J
Robert Hodanbosi, Chief
Division of Air Pollution Control
Ohio Environmental Protection Agency
P.O. Box 1049
Columbus, Ohio 43216-1049

Dear Mr. Hodanbosi:

Please find enclosed the U. S. Environmental Protection Agency’s (USEPA) comments on the Ohio Environmental Protection Agency’s draft preliminary rules pertaining to the Oxides of Nitrogen (NOx) State Implementation Plan (SIP) Call. These rules were e-mailed to USEPA on November 16, 2001. You requested comments by December 21, 2001. USEPA reviewed the rules and sent comments via e-mail to your office on the requested date. We also provided additional clarification on our comments in subsequent e-mail, in response to questions from your staff. This letter provides our formal comments and an offer for additional discussion if you so desire regarding our comments.

In preparing our comments we consulted with the Clean Air Markets Division, the Office of Air Quality Planning and Standards, and the Office of General Counsel. A number of the comments address technical aspects of the rules relating to implementation of the trading program. We believe certain aspects of the rules must be consistent with our model rule so that the national nitrogen oxide control program functions properly. Also, there is concern regarding provisions of director’s discretion which must be addressed. USEPA believes director’s discretion in carrying out the requirements of the rule will have a confusing and conflicting effect on the program.

Included in this review, and enclosed here, are comments on the required budget demonstration. We are aware that these draft rules do not include a budget demonstration. However, we want to emphasize the need and importance of this requirement in order for USEPA to be able to approve the State’s NOx Plan.

In a December 26, 2000, Federal Register (65 FR 81366), USEPA made a finding that Ohio failed to make a timely submittal in response to the NOx SIP Call. The finding was made effective on January 25, 2001. Starting with this date, a sanctions clock continues to run until Ohio makes a submittal which USEPA finds complete. In order to stop the sanctions clock, the entire program needs to be submitted sufficiently in advance of the sanctions date so that we can perform and issue a finding of completeness by July 25, 2002. To do this we recommend the State request parallel processing of the rules as soon as it is determined that the rules, in their pre-approval form, are not likely to change substantially as they move through the rule review and approval process. This process can also be used as we rulemake on the entire plan.

We believe many of the enclosed comments will require minor corrections to the rules. If necessary, we would be pleased to set up a conference call with you to discuss these issues. Please do not hesitate to contact Mr. Jay Bortzer, of my staff, at 312-886-1430.

Sincerely yours,


Bharat Mathur, Director
Air and Radiation Division

Enclosure

ENCLOSURE:
Comments on Ohio draft NOx Rules - December 21, 2001

These draft comments were provided to Ohio EPA in response to the State’s circulation of preliminary draft rules to its stakeholders At the end of this list of comments are additional questions posed by Ohio EPA and responded to by USEPA within a short time period following December 21, 2001, the date of our original comments and the date the State asked for comments on the preliminary draft..


Chart: Comparison of 40 CFR Part 97 Rule and Ohio’s Draft Rules
The initial compliance date in Ohio’s draft rule needs to be changed from May 1, 2004 to May 31, 2004.

Budget demonstration covers EGUs and nonEGUs and follows exactly Part 97. Because the state uses the allocations data from Part 97, language in the state rule in the SIP must reflect the allocation determination process under Part 97. Therefore, certain changes have been suggested under Ohio’s allocation section in 14-05.

3745-14-01
(B) Definitions
Ohio includes some terms which CAMD does not define in its rules, such as ASTM; Btu; Director; etc. In most cases CAMD has no comment on these additional definitions. However, CAMD has some questions/suggestions on the following definitions:

Energy efficiency/renewable energy project and innovative technology project: CAMD finds similarities and overlap in these two project categories, especially in the phrases, “reduces end-use demand” and “decrease electrical energy or fuel use.” A project could ostensibly qualify for both of these set-asides and be awarded “double” allowances. Additionally, there are no criteria on how to qualify for these set-asides or on how a project earns allowances, or by which CAMD or the Region can evaluate the state’s awarding of the set-asides. Everything is based on the Director’s “discretion,” which may not be acceptable in a SIP.

Facility: CAMD does not find this word included anywhere in the rule, except as concerns “facility code” and in the definition of “source.” CAMD requests an explanation of why this definition is included in the SIP.

Most stringent state or federal NOx emissions limitation: remove the phrase “,with regard to a NOx budget opt-in unit,” because the definition applies to more than just opt-in units. EPA is making this change in Part 97.

NOx allowance: The issue with this definition is to make sure that NOx allowances allocated to sources in the state of Ohio, to sources in other states’ NOx SIP Call trading programs, and to sources under Section 126 can be traded and used for compliance by any source. Therefore, the following minor adjustments should be made to the definition. “NOx allowance” means a limited authorization by the Director or the Administrator under the NOx budget trading program to emit up to one ton of NOx during the control period of the specified year or of any year thereafter, except as provided under rule 3745-14-06(E)(6) of this chapter. No provision of the NOx budget trading program, the NOx budget permit application, the NOx budget permit, or an exemption under paragraph (C)(2)(a) or (D) of this rule and no provision of law shall be construed to limit the authority of the United States to terminate or limit such authorization, which does not constitute a property right. For purposes of this chapter, except paragraph (B), (C) or (D) of rule 3745-14-05 of this chapter or paragraph (I) of rule 3745-14-09 of this chapter, “NOx allowance” also includes an authorization to emit up to one ton of NOx during the control period of the specified year or of any year thereafter by the director a State or the Administrator in accordance with a state NOx budget trading program established, and approved and administered by the Administrator, pursuant to 40 C.F.R. 51.121, or in accordance with the NOx Budget Trading Program established by the Administrator in accordance with 40 CFR 52.34.

Per cent monitor availability: The definition in Part 96 is incorrect as it does not take into account units that do not operate full time (3,672 hours) in the ozone season. Therefore, this definition needs to be corrected to read, “...in a control period divided by three thousand six hundred and seventy two hours per the total number of unit operating hours in the control period, and multiplied by one hundred percent.” EPA is making this change in Part 97.

NOx budget trading program: Because the definition must include both the SIP and Section 126 sources, CAMD recommends corrections, as follows: NOx budget trading program means” a multi-state NOx air pollution control and emission reduction program established by this chapter approved and administered by the Administrator pursuant to 40 C.F.R. 51.121, or established by the Administrator pursuant to 40 CFR 52.34, as a means of mitigating the interstate transport of ozone and NOx, an ozone precursor.” This change will allow coordinated implementation of a single NOx trading program (e.g., the provisions in 3745-14-06(E)(6)) for all SIP and Section 126 sources.

NOx budget unit: Remove the strikeout text as follows: “NOx budget unit” means a unit that is subject to the NOx budget trading program emissions limitation under paragraph (C) of this rule or paragraph (A) of rule 3745-14-09 of this chapter.” EPA is making this change in Part 97.

Owner: Add the word “the” before the second mention of the phrase “NOx allowances” in paragraph (iv). EPA has already made this change in Part 97.

State: Adjust definition to read as follows: “State” means one of the forty-eight contiguous states or a portion thereof or the District of Columbia that develops is subject to a NOx budget trading program, under section 110(c) or section 126 of the Clean Air Act,.

CAMD did not review definitions applicable to Cement Kilns.

(C) Applicability
(1)(a)(i) and (ii) Add the words, “served a generator that” before the words, “produced electricity”.

(1)(b) This sentence needs to be corrected to read “...for sale or that serve a generator with a nameplate capacity of 25 MWe or less than 25 MWE:”

(C)(2)(d)(iv) At the end of the paragraph following the words, “unit operating hours”, add the words, “...and fuel use.” EPA is making this change in Part 97.

(C)(2)(d)(vi)(a) Following the words, “unit operating hours” in the first line, add the words, “and fuel use”. EPA is making this change in Part 97.

(D) Retired Unit Exemption
(D)(3)(e)(i) and (ii) Date needs to be changed from May 1, 2004 to May 31, 2004. Also note here that the time frame for submitting an application, should a unit lose its retired unit exemption, is 18 months. However, under the general NOx budget permit application process (see 3745-14-03(B)(2)(a)(ii) and (b)(ii)), a unit must submit an application within 12 months. CAMD does not object to this but wonders if it was the State’s intention to provide a longer lead time for retired units losing their exemption.

(E) Standard Requirements
(E)(2)(b) Capitalize “t” that begins sentence

(E)(3)(c) Date needs to be changed from May 1, 2004 to May 31, 2004

3745-14-03
(B)(2)(a)(i) and (B)(2)(b)(i) Dates must be changed from May 1, 2003 to May 31, 2004

(B)(2)(a)(ii) and (B)(2)(b)(ii) Dates must be changed from May 1, 2004 to May 31, 2004

(C)(1)(d)(i) Certification statement needs to reflect language used in 97.22(d)(1) regarding the 25-ton exemption. Please correct as follows: ‘‘I certify that each unit for which this permit application is submitted under rule 3745-14-09 of this chapter is not a NOx budget unit under paragraph (C)(1) of rule 3745-14-01 of this chapter and is not covered by an retired unit exemption under paragraph (C)(2) or (D) of rule 3745-14-01 of this chapter that is in effect.’’

3745-14-04
(A)(3)(d) Second to last word should be “have” not “has”

3745-14-05
(A) Because “state” is defined to include several states in the Definitions section of the SIP, in this paragraph “Ohio” should be used instead of “the state”. The following changes must also be made to this paragraph: “The state trading program budget allocated by the director under paragraph (C) of this rule for a control period shall equal the total number of tons of NOx emissions apportioned to the NOx budget units in the state Ohio for the control period, as determined by the applicable, approved state implementation plan, less the sum of the NOx emission limitations (in tons) for each unit exempt under 3745-14-01(C)(2) that is not allocated any NOx allowances under paragraph (C)(2) or (3) for the control period and whose NOx emission limitation is not included in the current calculation under paragraph (C)(4)(e)(ii)(b) for the control period..”

(B)(3) Need to add language comparable to that in 96.41(b), as follows: “If the permitting authority fails to submit to the Administrator the NOx allowance allocations in accordance with this paragraph, the Administrator will allocate, for the applicable control period, the same number of NOx allowances as were allocated for the preceding control period.”

(B)(5) This language from Part 97 is optional and reflects EPA’s responsibilities under the Federal Administrative Procedures Act. Ohio may choose to adopt such language, however, the word “Administrator” would need to be replaced by the word “Director”.

(C) NOx allowance allocations: CAMD found this section confusing. Our understanding is that Ohio has incorporated the allocations in Appendices A and B in Part 97 for EGU and nonEGU units, respectively. In Part 97, EPA based the heat input data for the EGU units on the historic data from the years 1995-1998, and picked the two highest years. New units were units that came on line after May 1, 1997. For nonEGUs, the heat input data was based on the year 1995 or 1995-1998. Why does the state want to use May 1, 1999 for the cutoff for existing units? CAMD thinks you need to use May 1, 1997. If Ohio uses allocations in Appendices A and B from Part 97, the rule needs to reflect the methodology used to determine those allocations. In addition, the EGU and nonEGU processes, as described in (C)(2) and (C)(3), should be essentially identical. Therefore, CAMD recommends the following changes:

“(C)(2) For each group of control periods under paragraphs (B)(1) through (B)(3) of this rule, the director shall allocate to all NOx budget units under paragraph (C)(1)(a) of rule 3745-14-01 of this chapter that commenced operation before May 1, 1997 for allocations under paragraph (B)(1) of this rule, May 1, 2003 for allocations under paragraph (B)(2) of this rule, and May 1 of the year five years before the first year for which the allocation under paragraph (B)(3) of this rule is being calculated of the latest control period used to calculate heat input under paragraph (C)(1)(a) of this rule, a total number of NOx allowances, for control periods in 2004 and 2005, equal to ninety-five per cent, and for all other control periods, equal to ninety-three per cent of the NOx emissions in the state trading program budget apportioned to electric generating units under paragraph (A) of this rule, in accordance with the following procedures:...”

“(C)(3) For each group of control periods under paragraphs (B)(1) through (B)(3) of this rule, the director shall allocate to all NOx budget units under paragraph (C)(1)(b) of rule 3745-14-01 of this chapter that commenced operation before May 1, 1995 1997 for allocations under paragraph (B)(1) of this rule, May 1, 2003 for allocations under paragraph (B)(2) of this rule, and May 1 of the year five years before the first year for which the allocation under paragraph (B)(3) of this rule is being calculated, a total number of NOx allowances equal to ninety-five per cent of the tons of NOx emissions in the state trading program budget apportioned to non-electric generating units under paragraph (A) of this rule, in accordance with the following procedures:...”

“(C)(4) For each control period under paragraph (B) of this rule, the director shall allocate NOx allowances for control periods under paragraph (B)(1) of this rule to NOx budget units under paragraph (C)(1)(a) of rule 3745-14-01 of this chapter that commenced operation on or after May 1, 19991997 for control periods under paragraph (B)(1) of this rule, and to NOx budget units under paragraph (C)(1)(b) of rule 3745-14-01 of this chapter that commenced operation on or after May 1, 19961997. The director shall allocate NOx allowances to all NOx budget units under paragraph (C)(1) of rule 3745-14-01 of this chapter that commenced operation, or are projected to commence operation, by on or after May 1, 2003 (for control periods under paragraph (B)(2) of this rule), and by on or after May 1 of the year five years before the beginning of the group of years that includes the control period (for control periods under paragraph (B)(3)of this rule). The director shall make the allocations under this paragraph in accordance with the following procedure:...”

(C)(4)(e)(ii)(b) The date, May 1, 1996, needs to be changed to May 1, 1997.

(C)(4)(f) Question: Why July1, in the middle of the ozone season? Part 96 requires submission of the allocations to the Administrator by April 1, before the ozone season.

(C)(5)(a) This section should read as follows: “ NOx allowances deducted for actual utilization for units under paragraph (C)(1)(a) of rule 3745-14-01 of this chapter equals unit’s NOx allowances allocated for control period minus unit’s actual control period utilization multiplied by the lesser of 0.15 lb/mmBtu or the unit’s most stringent State or Federal NOx emission limitation, divided by 2000 lb/ton, rounded to the nearest whole NOx allowance as appropriate.” EPA is making this change in Part 97.

(C)(6) “state trading program budget excluding new unit allocation set-aside” needs to reflect that the 95% mentioned applies for EGUs only in 2004-2005, that it will be different (93%) for EGUs after 2005, and that it is 95% for all years for nonEGUs.

(C)(7) Establish allocations for energy efficiency/renewable energy and reduced electric demand projects. Projects submit a “proposal” to the director who approves it based on “criteria determined by the director.” This may be unapprovable as is; see comments on definitions in 3745-14-01(B).

(C)(8) Set aside for innovative technology projects. Same issues as (C)(7), above.

(D)(4)(a) It would be clearer to state that early reduction credit equals the difference between (ii) and (i). A provision must also be added that “early reduction credit shall not be earned for any reductions required under the state implementation plan or otherwise required under any provision of the Clean Air Act.”

3745-14-06
(B)(2)(a)(iv) Add the word “NOx” in front of the word, “allowances”

(B)(2)(e) and (e)(i) Delete “Director’s” from title and “director” from paragraph (i)

(E)(6)(b) and (c) This section of the rule addresses “flow control,” which should be implemented and coordinated to cover all sources under the NOx SIP Call trading programs and the Section 126 program. See definitions of “NOx budget trading program” and “state trading program budget.” This section needs to be adjusted to read as follows:
“(b) If the total number of banked NOx allowances determined, under paragraph (E)(6)(a) of this rule, to be held in compliance accounts, overdraft accounts, or general accounts is less than or equal to ten per cent of the sum of the state trading program budgets under paragraph (A) of rule 3745-14-05 of this chapter for the control period, any banked NOx allowance may be deducted for compliance in accordance with paragraphs (E)(1) to (E)(5) of this rule.

(c) If the total number of banked NOx allowances determined, under paragraph (E)(6)(a) of this rule, to be held in compliance accounts, overdraft accounts, or general accounts exceeds ten per cent of the sum of the state trading program budgets under paragraph (A) of rule 3745-14-05 of this chapter for the control period, any banked allowance may be deducted for compliance in accordance with paragraphs (E)(1) to (E)(5) of this rule, except as follows:

(F)(1)(b) Language needs to be replaced with language from 97.55(b) as follows: “The Administrator shall designate, as a ‘‘banked’’ NOx allowance, any NOx allowance that remains in a compliance account, an overdraft account, or a general account after the Administrator has made all deductions for a given control period from the compliance account or overdraft account pursuant to paragraph (E) of this rule (except deductions pursuant to (E)(4)(b)) and that were allocated for that control period or a control period in a prior year.”

3745-14-08
(A)(5)(a) The words, “paragraph (f)” should read “paragraph (F)”

(B)(3)(a) In the phrase, “...equipment initially certified or recertified on the NOx budget trading programs...”, replace “of” with “for”.

(D)(1) and (2) Replace with the language in 96.73.

(E)(4)(a)(ii) Add the word “or” between “rule” and the comma “,” in the phrase “...(B)(3) of this rule,” and add a period “.” following the date “June 30, 2003".

(E)(4)(b)(ii)(b) Add a period “.” after the date “...June 30, 2003".

(F)(1) and (2) Replace with the language in 96.75.
3745-14-09

(C) Add a comma following “NOx budget opt-in unit” as follows: “A unit for which an application for a NOx budget opt-in permit is submitted and not denied or withdrawn, or a NOx budget opt-in unit, located at the same source as one or more NOx budget units, shall have the same NOx authorized account representative as such NOx budget units.”

(E)(7) Following the word “director” at the end of the first sentence, replace the period (.) with a comma (,) and add “unless the year is 2004 in which case the effective date is May 31.”

(I)(1)(a) CAMD recommends that the date, December 31, for allocations be changed until April 1 (see 97.88(a)(1)). Opt-in units receive allocations annually, and the data necessary for the allocations (i.e., heat input data) may not be finalized by December 31.

3745-14-10
Alternative compliance plans: This provision should be deleted. It deals with speculation about future statutes and rules that do not currently exist concerning multi-pollutant reductions. The interaction of the NOx SIP Call and these future statutes and rules should be left to future resolution.


3745-14-11

Comments on the Ohio Cement Kiln Rule (3745-14-11)

1. B - The approval of alternate control techniques by only the Director leads to "Director discretion" problems.

2. B - need to add that the May 1 through September 30 period is for each subsequent year after 2004.

3. C2 should to refer to 40CFRpart 60 test methods to include Methods 1- 4 to help determine NOx mass emission rate.

4. C2 Also one monitoring option could be the continuous monitoring of a process parameter that has been shown to be related to NOx emissions.

5. D2 Even though this is in the proposed FIP, Regular maintenance activities periods should not be exempt from the rule.


Follow-up Questions from State...and responses

These comments are in response to follow-up questions posed by Ohio EPA on the USEPA comments listed above.

Ohio summarized the USEPA comments on their November 19, 2001 draft NOx rules and asked for a response to these 2 questions in advance of the date it expects to brief the OEPA Director. The State's schedule is to start the formal public process at the end of January 2002.

1. CAMD requests that Ohio change the dates in 3745-14-03 (B)(2)(a)(i) and (B)(2)(b)(i) from May 1, 2003 to May 31, 2004. Ohio's intent for this rule is to require the owner or operator of a regulated unit to submit a NOx budget permit application for the unit at least one year before the unit's first compliance period. A May 31, 2004 deadline for submitting this permit application makes no sense. The same issue occurs for the change of dates requested by CAMD in 3745-14-03(B)(2)(a)(ii) and 3745-14-03(B)(2)(b)(ii). As the permitting authority, the State believes the May 1, 2003, date is reasonable and, USEPA's suggestion will only serve to hamstring the permitting efforts of the State.

2. CAMD did not comment on this issue but several others did. The applicability section in 3745-14-01(C)(1) was modeled after 40 CFR 97.4(a). Several commentors suggest modeling this section in Ohio's rule after the simpler version in 40 CFR 96.4(a). Would Ohio's rule be approvable if 3745-14-01(C)(1) mirrored 40 CFR 96.4(a) rather than 40 CFR 97.4(a)? What implications would this change have on other parts of the rule?

USEPA’s response:

1. We don't have any objection to whatever date they choose. The actual requirement is for a permit to be submitted prior to the compliance deadline, which is May 31, 2004, not May 1, 2003. But the state can choose whatever date they wish. We also wanted to point out that there were two different years in 3745-14-03(B)(2)(a)(i) and (a)(ii) and (b)(i) and (b)(ii): 2003 ((a)(i) and (b)(i)) and 2004 ((a)(ii) and (b)(ii)). We weren't certain if the state intended this discrepancy.
2. Regarding applicability: Yes, certainly, Ohio's rule would be approvable if they changed the language to mirror 40 CFR 96.4(a). In fact, we think this is a good idea. There would be no implications for other parts of the rule.


Regarding an issue addressing Cement Kilns, Ohio EPA asked the following follow-up question:

OAQPS commented that the exemption in 3745-14-11(D)(2),which exempts cement kilns from the rules during periods of "regularly scheduled maintenance activities," should be removed from Ohio's rule. Ohio modeled 3745-14-11 directly after 40 CFR Part 98 as published in the Federal Register on October 21, 1998 and this proposed federal rule included this exemption at 40 CFR 98.6(a)(2). What is the basis for OAQPS's request to remove this exemption from Ohio's rule? Is this an approvability issue?
USEPA’s response:

USEPA has a longstanding general policy that SIP rules should not provide automatic exemptions for periods of excess emissions due to startup, shutdown, maintenance or malfunctions (memo from Kathleen Bennett of September 28, 1982 and reaffirming memo from Steven Herman of September 20, 1999). The 1982 memo states that "excess emissions during periods of scheduled maintenance should be treated as a violation unless a source can demonstrate that such emissions could not have been avoided through better scheduling for maintenance or through better operation and maintenance practices."

Most sources will probably meet the cement rule requirements by installing low NOx burners or implementing a system of mid-kiln firing. With these technology standard approaches, there is more flexibility in determining compliance, compared to an emission rate requirement. Further, the concept of excess emissions may be a non-issue under a technology standard. Therefore, this might not be an "approvability" issue.

On the other hand, if an inspector observes the kiln in operation, but not operating its mid-kiln firing system as it should, the source should not be able to argue that some maintenance activity protects them from a violation. Or, if a source chooses to comply by an emission rate requirement, the source should not be able to argue that some maintenance activity protects them from a violation. Thus, it would be better to remove the exemption from the rule.


The following comment addresses the allocation tables listed as Appendix A and Appendix B in the State rule:

USEPA looked at the Ohio budget numbers in the draft preliminary rules. We need more information to verify that what they are doing is okay. For instance, when in the rule the State refers to its EGU budget, it didn't mentioned that it was or wasn't 48,990 tons. There is a list of the affected units and their allocations in the Appendicies at the end of the document but that doesn't explain the big picture. A budget demonstration document is needed to show the base, budget, trading budget, new source set aside etc., for the two different sets of allocations (2004-2005 and 2006-2007). We recommend the State discuss the number of tons in the budget, trading budget, etc. We expect Ohio will do this in their budget demonstration when it is submitted with the final pplan. The State has the same number of units in their EGU inventory as in the USEPA and the numbers will work out okay but it must become part of the formal submittal of the budget demonstration.
Looking at the numbers that we have in the original USEPA inventory for Ohio, here are some general observations. It is important to verify this in the State’s budget demonstration.

2004 and 2005
EGU allocations 43160 tons - they allocated 95% of the EGU budget for years 2004 and 2005
New Source Set Aside 2272 tons - assuming that the remaining 5% of the budget is for new source set aside?
EGU trading budget 45,432 tons - this is the total available for allocations and new source set asides
EGU small units (< 25 MW) 3558 tons - these tons are not allocated but are part of the overall EGU budget
EGU budget 48,990 tons - this is the total EGU budget including large and small units

2006 and 2007 (and beyond?)
EGU allocations 42251 tons - they allocated 93% of the EGU budget for years 2006 and beyond
New Source Set Aside 3181 tons - assuming that the remaining 7% of the budget is for new source set aside?
EGU trading budget 45,432 tons - this is the total available for allocations and new source set asides
EGU small units (< 25 MW) 3558 tons - these tons are not allocated but are part of the overall EGU budget
EGU budget 48,990 tons - this is the total EGU budget including large and small units



For further information, contact: flowers.debra@epa.gov
This Information Last Modified On: 09/18/2008 04:09 PM