Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
224.10-100,
224.20-100,
224.20-110,
224.20-120,
40
C.F.R. 51.121,
51.122,
72.2,
75.1,
75.2,
75.4,
75.11-75.13,
75.17,
75.19,
75.20,
75.24,
75.70,
75.72,
75.74,
75.75,
Part 96,
42
U.S.C. 7410
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
224.10-100(5) requires the
Environmental and Public Protection Cabinet to promulgate administrative
regulations for the prevention, abatement, and control of air pollution.
42
U.S.C. 7410 requires each state to promulgate
a plan which provides for implementation, maintenance, and enforcement of the
national primary and secondary ambient air quality standard in each air quality
control region within the state. This administrative regulation establishes
requirements for the control of nitrogen oxides (NOx) emissions from large
boilers and turbines used in power plants and other industrial applications,
pursuant to the federal mandate published under the NOx SIP Call. This
administrative regulation is not more stringent nor otherwise different than
the provisions allowed under the federal mandate.
Section 1. Applicability. This administrative
regulation shall apply to NOx budget units that are electric generating units
or industrial boilers or turbines, except as provided in Section 2 of this
administrative regulation.
Section
2. Exemptions.
(1) Exemptions
based on permit limitations. A NOx budget unit shall be exempt from Sections 3
to 7 of this administrative regulation if the owner or operator complies with
this subsection.
(a) The source shall have a
federally-enforceable permit issued by the cabinet containing conditions for
the unit that:
1. Limit the unit's NOx
emissions during each control period beginning in 2004 to twenty-five (25) tons
or less;
2. Restrict the unit to
burning only natural gas or fuel oil during a control period in 2004 and each
control period thereafter;
3.
Restrict the unit's operation hours during each control period to the number
calculated by dividing twenty-five (25) tons of potential NOx mass emissions by
the unit's maximum potential hourly NOx mass emissions;
4. Require that the unit's potential NOx mass
emissions shall be calculated pursuant to
40
C.F.R.
96.4(b)(1)(iii);
5. Require that the owner or operator of the
unit shall retain at the source that includes the unit, for five (5) years,
records demonstrating that the operating hours restriction, the fuel use
restriction, and the other requirements of the permit related to these
restrictions were met; and
6.
Require that, by November 1 of each year for which the unit is subject to the
federally-enforceable permit, the owner or operator of the unit, through the
authorized account representative, shall:
a.
Secure and transfer to an account established pursuant to
401 KAR
51:190, NOx allowances for each control period in an
amount equal to the NOx emission limitation (in tons of NOx) under
subparagraphs 1 and 3 of this paragraph upon which the unit's exemption is
based; and
b. Report to the cabinet
the unit's hours of operation (treating any partial hour of operation as a
whole hour of operation) and the number of NOx allowances transferred pursuant
to clause a of this subparagraph.
(b) A unit with an exemption based on permit
limitations shall become subject to all the applicable provisions of this
administrative regulation and shall be treated as commencing commercial
operation on September 30 of any control period for which:
1. The fuel use restriction in paragraph (a)2
of this subsection or the operating hours restriction in paragraph (a)3 of this
subsection is removed from the unit's federally-enforceable permit or otherwise
becomes no longer applicable; or
2.
The unit does not comply with the restrictions of this subsection.
(c) Units exempted under this
subsection shall not receive a NOx allowance allocation under Section 4 of this
administrative regulation.
(d) By
November 30 of each year beginning in 2004, the cabinet shall report to the
U.S. EPA:
1. The total NOx emission limitation
(in tons of NOx) for all units exempted under this subsection; and
2. The total NOx allowances reported to the
cabinet pursuant to paragraph (a)6b of this subsection.
(e) For units exempted under this subsection,
the cabinet shall notify the U.S. EPA, in writing:
1. Of permit changes that remove a limit or
render it no longer applicable; and
2. Any violation of a permit limit imposed
pursuant to paragraph (a) of this subsection.
(2) Retired unit exemption.
(a) A NOx budget unit shall be exempt from
the requirements in Sections 3 to 7 of this administrative regulation on the
date that the unit is permanently retired, if the following conditions are met:
1. Except as provided in paragraph (b) of
this subsection, the retired unit shall not emit NOx on or after the day it is
retired; and
2. Within thirty (30)
days after the unit is retired, the NOx authorized account representative shall
submit:
a. A letter to the cabinet and to the
U.S. EPA describing the unit, the date of retirement, and the reason for
retirement; and
b. An application
for a permit revision that reflects the status of the retired unit pursuant to
401 KAR 52:020 or
401 KAR
52:030, as appropriate; and
3. Unless the unit has been physically
removed, records to demonstrate that the unit has not been operated shall be:
a. Maintained on-site for five (5) years from
the date of retirement; and
b. Made
available to the cabinet or the U.S. EPA upon
request.
(b)
Operation of a retired unit shall not be resumed unless the owner or operator
submits an application and receives a permit revision pursuant to
401 KAR 52:020 or
401 KAR
52:030, as appropriate, prior to commencing
operation.
(c) A retired unit shall
not be allowed to opt into
401 KAR
51:190, Banking and trading NOx allowances and shall
not receive a NOx allowance allocation under Section 4 of this administrative
regulation.
(d) NOx allowances made
to a unit that later retires shall:
1. Remain
with the unit until they are transferred or deducted; and
2. Cease to be allocated to the unit at the
end of the allocation period.
(e) The cabinet shall notify the U.S. EPA, in
writing, of units that are exempted under this subsection.
(3) Category exemption. A carbon monoxide
boiler that is associated with fluidized catalytic cracking units (FCCU) at
petroleum refineries shall be exempt from the requirements in Sections 3 to 7
of this administrative regulation.
Section 3. Compliance Requirements.
(1) NOx budget emissions limitation
requirements. Commencing with the later date of May 31, 2004, or the year the
unit commences operation, the owner or operator of a NOx budget unit shall:
(a) Beginning May 1, 2003, and May 1 of each
year thereafter, monitor the total NOx emissions during each control period as
specified in
40 C.F.R.
96.70 to
96.76;
and
(b) By November 30 of each
year, hold NOx allowances available for compliance deductions in an amount at
least equal to the total NOx emissions during the control period as specified
in
401 KAR
51:190.
(2) NOx allowance provisions. NOx allowances
shall be held in, deducted from, or transferred among the NOx compliance,
overdraft, and general accounts as specified in
401 KAR
51:190 and this subsection.
(a) The NOx budget source shall establish a
general account in the NOx allowance Tracking System (NATS) by submitting "EPA
Form 7620-15, General Account information".
(b) NOx budget units shall transfer NOx
allowances under the NOx Budget Trading Program from one (1) account to another
in the NOx Allowance Tracking System (NATS) by submitting "EPA Form
7620-14".
(c) NOx allowances shall
not be deducted for compliance with subsection (1) of this section for a
control period prior to the year for which the NOx allowances were
allocated.
(d) If the U.S. EPA
records the allocation, transfer, or deduction of NOx allowances from the
compliance or overdraft account of a NOx budget source, this action shall:
1. Automatically amend and become part of the
NOx budget portion of the source's permit; and
2. Require no further review.
(e) The owner or operator of a NOx
budget unit having excess NOx emissions for each control period beginning in
2004, shall comply with
401 KAR
51:190.
(f) Allocated NOx allowances shall not
constitute a property right.
(3) Recordkeeping and reporting requirements.
(a) The owner or operator of a NOx budget
source shall maintain the following records:
1. The "Account Certificate of
Representation" for the source's NOx authorized account
representative;
2. Emissions
monitoring information as specified in
40 C.F.R.
96.70 to
96.76;
3. Copies of all reports, compliance
certifications, and other submissions and records required by
401 KAR
51:190; and
4. Copies of documents used to complete
permit revision applications or to demonstrate compliance with
401 KAR
51:190.
(b) These records shall be:
1. Used to demonstrate compliance with
subsection (1) of this section;
2.
Maintained on site for a period of five (5) years, unless a longer period is
required by
40 C.F.R.
96.70 to
96.76
or the cabinet or the U.S. EPA requires an extended period for cause;
and
3. Made available for
inspection on request by the cabinet or the U.S. EPA.
(4) Computation of time.
(a) A time period scheduled to begin on the
occurrence of an act or event shall begin on the day the act or event
occurs.
(b) A time period scheduled
to begin before the occurrence of an act or event shall be computed so that the
period ends the day before the act or event occurs.
(c) If the final day of a time period falls
on a weekend or state or federal holiday, the time period shall be extended to
the next business day.
Section 4. Methodology for the Allocation and
Sale of NOx Allowances. The number of NOx allowances to be allocated to each
NOx budget unit by the cabinet and to be sold by the Commonwealth of Kentucky
shall be determined pursuant to this section.
(1) The total number of NOx allowances shall
be the number of NOx allowances assigned to Kentucky by the U.S. EPA and
approved in Kentucky's State Implementation Plan (SIP).
(2) The total number of NOx allowances
assigned to Kentucky shall be divided into separate pools as follows:
(a) The number of NOx allowances specified in
Kentucky's approved SIP for electric generating units with:
1. Ninety-five (95) percent of this amount
allocated for the 2004 to 2006 allocation period to units that commence
commercial operation on or before May 1, 2001;
2. Five (5) percent of this amount for the
2004 to 2006 allocation period sold by the Commonwealth of Kentucky with the
proceeds deposited in Kentucky's general fund;
3. Ninety-eight (98) percent of this amount
allocated for each allocation period beginning with the 2007 to 2009 allocation
period to units that commence commercial operation on or before May 1 of the
year that is three (3) years before the first year of the applicable allocation
period; and
4. Two (2) percent of
this amount for each allocation period beginning with the 2007 to 2009
allocation period and each allocation period thereafter sold by the
Commonwealth of Kentucky with the proceeds deposited in Kentucky's general
fund; and
(b) The number
of NOx allowances specified in Kentucky's approved SIP for industrial boilers
or turbines with:
1. Ninety-eight (98) percent
of this amount allocated for each allocation period to units that commence
commercial operation on or before May 1 of the year that is three (3) years
before the first year of the applicable allocation period; and
2. Two (2) percent of this amount allocated
for each allocation period to NOx budget units that commence commercial
operation after May 1 of the year that is three (3) years before the first year
of the applicable allocation period and on or before May 1 of the applicable
control period.
(3) The cabinet shall notify the U.S. EPA and
NOx budget sources of the NOx allowances to be allocated and sold from the
pools specified in subsection (2) of this section pursuant to Section 5(4) of
this administrative regulation.
(4)
For allocation of the pools specified in subsection (2)(a)1, 3 and (b) of this
section, heat input, in MMBTU, of a NOx budget unit shall be determined from:
(a) The average of the two (2) highest
amounts of the unit's heat input from the three (3) most recent control periods
as determined in accordance with 40 C.F.R. Part 75 or 96.70 to 96.76 if the
unit is subject to 40 C.F.R. Part 75; or
(b) The best available data reported to the
cabinet for the unit if the unit is not otherwise subject to 40 C.F.R. Part
75.
(5) For electric
generating units included in the pools specified in subsection (2)(a)1 and 3 of
this section, the cabinet shall allocate NOx allowances to each NOx budget unit
in an amount equal to the result obtained by:
(a) Multiplying 0.15 lb/MMBTU or the permit
limit, whichever is less, by the heat input determined under Section 4(4) of
this administrative regulation, rounded to the nearest whole NOx allowance as
appropriate.
(b) If the initial
total number of NOx allowances allocated for an allocation period to all NOx
budget units in Kentucky included in the pools specified in subsection (2)(a)1
and 3 of this section does not equal ninety-five (95) percent for the 2004 to
2006 allocation period, or ninety-eight (98) percent for each allocation period
thereafter, of the number of tons of NOx emissions in Kentucky's trading
program budget apportioned to existing electric generating units, the cabinet
shall:
1. Adjust the total number of NOx
allowances allocated to all electric generating units in the applicable pool so
that the total number of NOx allowances allocated equals ninety-five (95)
percent for the 2004 to 2006 allocation period, or ninety-eight (98) percent
for each allocation period thereafter, of the number of tons of NOx emissions
in Kentucky's trading program budget apportioned to electric generating units;
and
2. Make this adjustment by
multiplying each unit's allocation by ninety-five (95) percent for the 2004 to
2006 allocation period, or ninety-eight (98) percent thereafter, of the number
of tons of NOx emissions in Kentucky's trading program budget apportioned to
electric generating units divided by the total number of NOx allowances
allocated under paragraph (a) of this subsection, and rounding to the nearest
whole NOx allowance as appropriate.
(6) For industrial boilers or turbines
included in the pool specified in subsection (2)(b)1 of this section, the
cabinet shall allocate NOx allowances to each NOx budget unit in an amount
equal to the result obtained by:
(a)
Multiplying 0.17 lb/MMBTU or the permit limit, whichever is less, by the heat
input determined under subsection (4) of this section, rounded to the nearest
whole NOx allowance as appropriate.
(b) If the initial total number of NOx
allowances allocated for an allocation period to all NOx budget units in
Kentucky included in the pool specified in subsection (2)(b)1 of this section
does not equal ninety-eight (98) percent for each allocation period, of the
number of tons of NOx emissions in Kentucky's trading program budget
apportioned to existing industrial boilers or turbines, the cabinet shall:
1. Adjust the total number of NOx allowances
allocated to all industrial boilers or turbines in the applicable pool so that
the total number of NOx allowances allocated equals ninety-eight (98) percent
for each allocation period, of the number of tons of NOx emissions in
Kentucky's trading program budget apportioned to industrial boilers or
turbines; and
2. Make this
adjustment by multiplying each unit's allocation by ninety-eight (98) percent,
of the number of tons of NOx emissions in Kentucky's trading program budget
apportioned to industrial boilers or turbines divided by the total number of
NOx allowances allocated under paragraph (a) of this subsection, and rounding
to the nearest whole NOx allowance as appropriate.
(7)
(a) The Commonwealth of Kentucky shall
establish an account pursuant to
401 KAR
51:190 for the purpose of selling the NOx allowances
in the pools specified in subsection (2)(a)2 and 4 of this section. The
proceeds from the sale of the NOx allowances shall be deposited in the general
fund of the Commonwealth of Kentucky.
(b) For NOx budget units included in the pool
specified in subsection (2)(b)2 of this section, the cabinet shall allocate NOx
allowances to each unit according to the following procedures:
1. The cabinet shall establish one (1)
allocation set-aside for each control period. Each allocation set-aside shall
be allocated NOx allowances equal to two (2) percent for each control period of
the tons of NOx emissions in Kentucky's trading program budget, rounded to the
nearest whole NOx allowance as appropriate.
2. The NOx authorized account representative
may submit to the cabinet a request, in writing, to be allocated NOx allowances
starting with the control period during which the NOx budget unit commences
commercial operation, or is projected to commence commercial operation, and
ending with the control period preceding the control period for which it will
receive an allocation under subsection (2)(b)1 of this section. The request
shall be in accordance with the following requirements:
a. The NOx allowance allocation request shall
be submitted prior to May 1 of the first control period for which the NOx
allowance allocation is requested and after the date on which the cabinet
issues a permit to construct to the NOx budget unit; and
b. For a control period, the NOx authorized
account representative may request NOx allowances in an amount that does not
exceed 0.17 lb/MMBTU or the permitted limit, whichever is less, multiplied by
the NOx budget unit's maximum design heat input in MMBTU/hr multiplied by the
number of hours remaining in the control period starting with the first day in
the control period on which the unit operated or is projected to
operate.
3. The cabinet
shall review, and allocate NOx allowances pursuant to, each NOx allowance
allocation request in the order that the requests are received by the cabinet
as of the close of business each day, with each consecutive day determining the
order:
a. Upon receipt of the NOx allowance
allocation request, the cabinet shall determine whether, and shall make any
necessary adjustments to the request to ensure that the control period and the
number of NOx allowances specified are consistent with the requirements of this
subsection.
b. If the allocation
set-aside for the control period for which NOx allowances are requested:
(i) Has an amount of NOx allowances not less
than the number requested, as adjusted by the cabinet, the cabinet shall
allocate the amount of the NOx allowances requested, as adjusted by the
cabinet, to the NOx budget unit.
(ii) Has a smaller amount of NOx allowances
than the number requested, as adjusted by the cabinet, the cabinet will deny in
part the request and allocate only the remaining number of NOx allowances in
the allocation set-aside to the NOx budget unit.
(iii) Once an allocation set-aside for a
control period has been depleted of all NOx allowances, the cabinet shall deny,
and shall not allocate any NOx allowances pursuant to a NOx allowance
allocation request under which NOx allowances have not already been allocated
for the control period.
4. Within sixty (60) days of receipt of a NOx
allowance allocation request, the cabinet shall take appropriate action under
this subsection and shall notify the U.S. EPA of the number of NOx allowances
allocated for the control period to the NOx budget unit.
5. For a NOx budget unit that is allocated
NOx allowances under this subparagraph, the U.S. EPA shall deduct NOx
allowances to account for the actual utilization of the unit during the control
period, and for any NOx allowances returned to Kentucky, the cabinet shall
allocate to the NOx budget units in Kentucky using the following formula and
rounding to the nearest whole NOx allowance as appropriate:
a. Unit's share of NOx allowances remaining
in allocation set-aside equals total NOx allowances remaining in allocation
set-aside multiplied by the quantity generated by dividing the unit's NOx
allowance allocation by Kentucky's trading program budget excluding allocation
set-aside;
b. If:
(i) Total NOx allowances remaining in
allocation set-aside is the total number of NOx allowances remaining in the
allocation set-aside for the control period to which the allocation set-aside
applies;
(ii) Unit's NOx allowance
allocation is the number of NOx allowances allocated under subsection (2)(b)2
of this section to the unit for the control period to which the allocation
set-aside applies; and
(iii) State
trading program budget excluding allocation set-aside is Kentucky's trading
program budget for the control period to which the allocation set-aside applies
multiplied by ninety-five (95) percent if the control period is in 2004, 2005,
or 2006 or ninety-eight (98) percent if the control period is in any year
thereafter, rounded to the nearest whole NOx allowance as
appropriate.
(8) NOx allowances created pursuant to
401 KAR
51:180 for early reduction credits or emergency
compliance shall not be included in the allocation or sale of the pools
specified in this section.
Section
5. Allocation of NOx Allowances.
(1) The cabinet shall determine the number of
NOx allowances to be allocated to eligible NOx budget units for the allocation
period beginning in 2004 and in each subsequent allocation period using the
method described in Section 4 of this administrative regulation.
(2) A NOx budget unit that commences
commercial operation on or before May 1 of the year that is three (3) years
before the first year of the applicable allocation period shall be included in
the applicable allocation pool as specified in Section 4(2)(a)1, 3, or (b)1 of
this administrative regulation.
(3)
If the U.S. EPA changes the number of NOx allowances assigned to Kentucky
before the end of an allocation period, the cabinet shall reallocate the NOx
allowances prior to the beginning of the next control period in the same ratio
as the original allocation for that period.
(4) The cabinet shall notify the U.S. EPA and
NOx budget sources of the NOx allowances to be allocated and sold by the
Commonwealth of Kentucky pursuant to this section and Section 4 of this
administrative regulation:
(a) For units that
commence commercial operation on or before May 1 of the year that is three (3)
years before the first year of the applicable allocation period:
1. Not later than sixty (60) days after the
effective date of this administrative regulation for the allocation period
beginning in 2004; and
2. By April
1 of the year that is three (3) years prior to the next allocation period;
and
(b) By April 1 of
each year, beginning in 2004, for units in the pool specified in Section
4(2)(b)2 of this administrative regulation that commence commercial operation
after May 1 of the year that is three (3) years before the first year of the
applicable allocation period and on or before May 1 of the applicable control
period.
(5) Excess NOx
allowances may be banked and traded according to
401 KAR
51:190.
Section 6. Application for NOx Budget Permit
or Permit Revision.
(1) The NOx authorized
account representative of a NOx budget source shall submit an application to
revise the source's permit pursuant to
401 KAR 52:020 or
401 KAR
52:030, as appropriate, and this section. For this
purpose, the source shall use:
(a) "Forms
DEP7007A1 to DD, Permit Application to Construct or Operate an Air Contaminant
Source," as applicable. Forms DEP7007A1 to DD are incorporated by reference in
401
KAR 52:050; and
(b) "Form DEP7007EE, NOx Budget Permit
Application".
(2) The
application shall include the following information:
(a) The Office of Regulatory Information
Systems (ORIS) or facility code assigned to the source by the Energy
Information Administration;
(b)
Identification of:
1. Each NOx budget unit at
the source;
2. Each retired unit;
and
3. Each unit exempted pursuant
to Section 2(1) of this administrative regulation;
(c) A statement that explains if the unit is:
1. A unit described in Section 1 of this
administrative regulation; or
2. An
opt-in unit pursuant to
401 KAR
51:195;
(d) The applicable requirements of Section 3
of this administrative regulation; and
(e) For opt-in units, the following
certification statement signed by the NOx authorized account representative: "I
certify that each unit for which this permit application is submitted, pursuant
to the opt-in provisions of
401 KAR
51:195, is operating; is not a NOx budget unit
pursuant to 401 KAR 51:160, Section 1; and is not covered by a retired
exemption unit that is in effect pursuant to 401 KAR 51:160, Section
2(2)."
Section
7. Compliance.
(1) Compliance
certification. On or before November 30 each year, beginning in 2004, the NOx
authorized account representative shall submit a compliance certification
report to the cabinet and to the U.S. EPA pursuant to
401 KAR
51:190.
(2) Reporting to the cabinet. Reports that
are required to be submitted to the cabinet shall be mailed to:
(a) Manager, Permit Review Branch, Kentucky
Division for Air Quality, 300 Sower Boulevard, Frankfort Kentucky 40601;
and
(b) To the appropriate Regional
Office of the Division for Air Quality listed in Section 8(2) of this
administrative regulation.
Section 8. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) "Form DEP7007EE, NOx Budget
Permit Application", May 2002;
(b)
"EPA Form 7620-14, Allowance Transfer", United States Environmental Protection
Agency, OMB No. 2060-0445;
(c) "EPA
Form 7620-15, General Account Information", United States Environmental
Protection Agency, OMB No. 2060-0445; and
(d) "EPA Form 7620-16, Account Certificate of
Representation", United States Environmental Protection Agency, OMB No.
2060-0445.
(2) This
material may be inspected, copied, or obtained, subject to applicable copyright
law, at the following offices of the Division for Air Quality, Monday through
Friday, 8 a.m. to 4:30 p.m.:
(a) The Division
for Air Quality, 300 Sower Boulevard, Frankfort Kentucky 40601, (502) 564-3999;
and
(b) The appropriate regional
office of the Division for Air Quality as follows:
1. Ashland Regional Office, 1550 Wolohan
Drive, Suite 1,, Ashland, Kentucky 41102, (606) 929-5285;
2. Bowling Green Regional Office, 2642
Russellville Road, Bowling Green, Kentucky 42101, (270) 746-7475;
3. Florence Regional Office, 8020 Veterans
Memorial Drive, Suite 110, Florence, Kentucky 41042, (859) 525-4923;
4. Frankfort Regional Office, 300 Sower
Boulevard, Frankfort Kentucky 40601, (502) 564-3358;
5. Hazard Regional Office, 233 Birch Street,
Suite 2, Hazard, Kentucky 41701, (606) 435-6022;
6. London Regional Office, 875 S. Main
Street, London, Kentucky 40741, (606) 330-2080;
7. Owensboro Regional Office, 3032 Alvey Park
Drive, W., Suite 700, Owensboro, Kentucky 42303, (270) 687-7304; or
8. Paducah Regional Office, 130 Eagle Nest
Drive, Paducah, Kentucky 42003, (270) 898-8468.
(3)
(a)
Copies of the Code of Federal Regulations (C.F.R.) and Federal Register (Fed.
Reg.) are available for sale from the Superintendent of Documents, U.S.
Government Printing Office, Washington, D.C. 20402.
(b) Copies of Forms DEP7007EE-1 to EE-3 are
available on the Internet at
http://air.ky.gov.
STATUTORY AUTHORITY:
KRS
224.10-100(5),
224.20-110,
40
C.F.R. 51.121,
51.122,
72.2,
75.1,
75.2,
75.4,
75.11-75.13,
75.17,
75.19,
75.20,
75.24,
75.70,
75.72,
75.74,
75.75,
Part 96,
42
U.S.C. 7410