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Subpart 238-1: ADR SO2 Budget Trading Program General Provisions

(Statutory authority: Environmental Conservation Law, §§ 1-0101, 3-0301, 19-0103, 19-0105, 19-0107, 19-0301, 19-0302, 19-0303, 19-0305, 19-0311, 19-0319, 70-0109; Energy Law, §§ 3-101, 3-103)

[Filed 4/6/10. Effective 30 days after filing.]

[This is page 1 of 1 of this Subpart. A complete list of Subparts in this regulation appears in the Chapter 3 contents page. A list of sections in this Subpart appears below.]

For administrative information about this posting, contact: Division of Air Resources. The Bureau of Air Quality Planning at (518) 402-8396 is the contact for technical questions pertaining to this rule.

Contents:

Sec.

§238-1.1 Purpose

This Part establishes the ADR SO2 Budget Trading Program which is designed to reduce acid deposition in New York State by limiting emissions of SO2 from stationary sources defined as SO2 budget units. Emissions of SO2 and NOx react with other substances in the atmosphere to create weak acids which fall to the earth in the form of rain, snow, fog, or dry particles. This acid deposition severely damages many of the State's marine and forest ecosystems and causes deterioration of many manmade structures. Implementation of the provisions of this Part and Parts 237 and 204 of this Title (addressing emissions of NOx during the non-ozone season and ozone season, respectively) is intended to reduce acid deposition caused by emissions of SO2 and NOx. Implementation of this Part will also have immediate positive impacts on public health due to the reduction in the formation of the secondary particulate matter including, most importantly, any particulate matter with a mass median diameter of less than 2.5 microns.

§238-1.2 Definitions

(a) To the extent that they are not inconsistent with the specific definitions in subdivision (b) of this section, the general definitions of Part 200 of this Title apply to this Part.

(b) For the purposes of this Part, the following specific definitions apply:

(1) Account number. The identification number given by the administrator to each SO2 allowance tracking system account.

(2) ADR. Acid deposition reduction.

(3) Allocate or allocation. The determination by the department of the number of SO2 allowances to be initially credited to an SO2 budget unit or an allocation set-aside.

(4) Annual average heat rate. A measure of an electricity generating unit's thermal efficiency, expressed in Btu's per net megawatt-hr, computed by dividing the heat input (based on total higher heating value heat content of the fuel burned) for electricity generation by the resulting net generation during a calendar year. For co-generation facilities, the heat input for electricity generation is calculated by the sum of the heat input for combustion turbines, steam boilers (excluding backup boilers) and supplemental firing minus the net heat input of useful thermal energy provided for purposes other than electricity generation.

(5) Backup fuel. A fuel other than the primary fuel.

(6) Boiler. An enclosed fossil or other fuel-fired combustion device used to produce heat and to transfer heat to recirculating water, steam, or other medium.

(7) Combined cycle system. A system comprised of one or more combustion turbines, heat recovery steam generators, and steam turbines configured to improve overall efficiency of electricity generation or steam production.

(8) Combustion turbine. An enclosed fossil or other fuel-fired device that is comprised of a compressor (if applicable), a combustor, and a turbine, and in which the flue gas resulting from the combustion of fuel in the combustor passes through the turbine, rotating the turbine.

(9) Commence operation. To have begun to produce steam, gas, or other heated medium used to generate electricity for sale or use, including test generation.

(10) Common stack. A single flue through which emissions from two or more units are exhausted.

(11) Compliance account. An SO2 allowance tracking system account, established by the department for an SO2 budget unit under Subpart 238-6 of this Part, in which the SO2 allowance allocations for the unit are initially recorded and in which are held SO2 allowances available for use by the unit for a control period for the purpose of meeting the unit's SO2 budget emissions limitation.

(12) Control period. The period beginning January 1st of a year and ending on December 31st of the same year, inclusive. The period ending on December 31, 2010 will be the final control period for the ADR SO2 Budget Trading Program.

(13) Control period potential to emit or CPPTE. The maximum capacity of an SO2 budget unit to emit SO2 under its physical and operational design during a control period. Any physical or operational limitation on the capacity of an SO2 budget unit to emit SO2, including air pollution control equipment and/or a restriction on the hours of operation, or on the type or amount of material combusted shall be treated as part of the design if the limitation is enforceable by the department.

(i) The CPPTE can be no greater than the number to be determined by the following:

CPPTE < [(ABUhr × BUER) + ((8,760 - ABUhr) × PER)] × MRHHI

when PER and BUER are in lb/mmBtu; or,

CPPTE < (ABUhr × BUER) + ((8,760 - ABUhr) × PER)

when PER and BUER are in lb/hr, where:

ABUhr is number of hours it takes annually to combust the quantity of the backup fuel allowed under the unit's permit which, if used as the only fuel for the unit, would be the number of hours in determining the emission rate potential for the unit.

BUER is the lowest emission rate applicable to the use of the backup fuel (in lb/mmBtu or lb/hr based on inlet temperature of 47.5° F) allowed under the unit's permit which, if used as the only fuel for the unit, would be the emission rate in determining the emission rate potential for the unit.

MRHHI is the maximum rated hourly heat input for the unit based upon an inlet air temperature of 47.5° F for those units without temperature control.

PER is the lowest emission rate applicable to the use of the primary fuel (in lb/mmBtu or lb/hr based on inlet temperature of 47.5° F) allowed under the unit's permit.

(14) Department Federal SO2 allowance retirement account. A general account opened by the department pursuant to 40 CFR 73.31(c) into which the department will receive Federal SO2 allowances for immediate transfer to and retirement by the administrator.

(15) End-use energy efficiency project. A project implemented at the customer level that uses a reduced amount of electricity, measured in megawatt-hrs to maintain or increase the level of energy service, including product output and comfort level. Examples of such a project include, without limitation, installing new equipment or systems, modifying existing equipment or systems, or improving operation and maintenance procedures.

(16) Excess emissions. Any tonnage of sulfur dioxide emitted by an SO2 budget unit during a control period that exceeds the SO2 budget emissions limitation for the unit.

(17) Federal SO2 allowance. An allowance as defined at 42 U.S.C. section 7651a(3).

(18) Fossil fuel. Natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such material.

(19) Fossil fuel-fired. With regard to a unit: the combustion of fossil fuel, alone or in combination with any other fuel, where the fossil fuel combusted comprises, or is projected to comprise, more than 50 percent of the annual heat input on a Btu basis during any year; provided that the unit shall be fossil fuel-fired as of the date, during such year, on which the unit begins combusting fossil fuel.

(20) General account. An SO2 allowance tracking system account, established under Subpart 238-6 of this Part, that is not a compliance account or an overdraft account.

(21) Generator. A device that produces electricity.

(22) Gross generation. The electrical output (in MWe) at the terminals of the generator.

(23) Heat input. The product (in mmBtu/time) of the gross calorific value of the fuel (in Btu/lb) and the fuel feed rate into a combustion device (in mass of fuel/time), as measured, recorded, and reported to the department by the SO2 authorized account representative and as determined by the department in accordance with Subpart 238-8 of this Part, and does not include the heat derived from preheated combustion air, recirculated flue gases, or exhaust from other sources.

(24) Higher heating value heat content. Total gross calorific value of the fuel, or the total heat (in Btu/specified unit of fuel) produced when the fuel is completely combusted under standardized conditions, including the heat lost in the vaporization of water contained in the fuel.

(25) In-plant energy efficiency project. A project undertaken at an SO2 budget source that increases the overall energy efficiency of the facility. Examples of such a project include, without limitation, improvements in thermal efficiency and more efficient production of electricity.

(26) Life-of-the-unit, firm power contractual arrangement. A unit participation power sales agreement under which a utility or industrial customer reserves, or is entitled to receive, a specified amount or percentage of nameplate capacity and associated energy from any specified unit and pays its proportional amount of such unit's total costs, pursuant to a contract:

(i) for the life of the unit;

(ii) for a cumulative term of no less than 30 years, including contracts that permit an election for early termination; or

(iii) for a period equal to or greater than 25 years or 70 percent of the economic useful life of the unit determined as of the time the unit is built, with option rights to purchase or release some portion of the nameplate capacity and associated energy generated by the unit at the end of the period.

(27) Nameplate capacity. The maximum electrical output (in MWe) that a generator can sustain over a specified period of time when not restricted by seasonal or other deratings as measured in accordance with the United States Department of Energy standards.

(28) Net generation. All electrical output supplied to the electric power grid or gross generation minus the electrical output used on-site by the facility (in MWe). For co-generation facilities, all electrical output supplied to the electric power grid, the host site and other industrial and commercial customers, but excluding electrical output used by the co-generation facility and fuel handling and processing equipment.

(29) Operator. Any person who operates, controls, or supervises an SO2 budget unit or an SO2 budget source, and shall include, but not be limited to, any holding company, utility system, or plant manager of such a unit or source.

(30) Overdraft account. The SO2 allowance tracking system account, established by the department under Subpart 238-6 of this Part, for each SO2 budget source where there are two or more SO2 budget units.

(31) Owner. Any of the following persons:

(i) any holder of any portion of the legal or equitable title in an SO2 budget unit;

(ii) any holder of a leasehold interest in an SO2 budget unit;

(iii) any purchaser of power from an SO2 budget unit under a life-of-the-unit, firm power contractual arrangement. However, unless expressly provided for in a leasehold agreement, the owner shall not include a passive lessor, or a person who has an equitable interest through such lessor, whose rental payments are not based, either directly or indirectly, upon the revenues or income from the SO2 budget unit; or

(iv) with respect to any general account, any person who has an ownership interest with respect to the SO2 allowances held in the general account and who is subject to the binding agreement for the SO2 authorized account representative to represent that person's ownership interest with respect to the SO2 allowances.

(32) Primary fuel. Of the different fuels used, or projected to be used, the fuel to which the highest proportion of the control period heat input is attributable.

(33) Receive or receipt of. When referring to the department or its agent, to come into possession of a document, information, or correspondence (whether sent in writing or by authorized electronic transmission), as indicated in an official correspondence log, or by a notation made on the document, information, or correspondence, by the department or its agent in the regular course of business.

(34) Recordation, record, or recorded. With regard to SO2 allowances, the movement of SO2 allowances by the department or its agent from one SO2 allowance tracking system account to another, for purposes of allocation, transfer, or deduction.

(35) Renewable energy project. Implementation of a power generation technology that produces electricity from wind energy, solar thermal energy, photovoltaics, methane waste, or sustainably managed biomass; but not the combustion or pyrolysis of solid waste.

(36) Serial number. When referring to SO2 allowances, the unique identification number assigned to each SO2 allowance by the department or its agent under section 238-6.4(c) of this Part.

(37) Shutdown. The permanent removal from service of a SO2 budget unit as evidenced by either a permit condition or provision prohibiting the SO2 budget unit from further operation, the surrender of the unit's permit, or the complete deletion of mention of the unit from the permit of a source of which it had formerly been a part with no authorization for operation of the unit appearing in any other permit.

(38) SO2 allowance. A limited authorization by the department under the ADR SO2 Budget Trading Program to emit up to one ton of sulfur dioxide during the control period of the specified year or of any year thereafter. No provision of this regulation shall be construed to limit the authority of the department to terminate or limit such authorization. This limited authorization does not constitute a property right.

(39) SO2 allowance deduction or deduct SO2 allowances. The permanent withdrawal of SO2 allowances by the department or its agent from an SO2 allowance tracking system compliance account or overdraft account to account for the number of tons of SO2 emissions from an SO2 budget unit for a control period, determined in accordance with Subpart 238-8 of this Part, or for the forfeit of SO2 allowances as provided by this Part.

(40) SO2 allowances held or hold SO2 allowances. The SO2 allowances recorded by the department or its agent, or submitted to the department or its agent for recordation, in accordance with Subparts 238-6 and 238-7 of this Part, in an SO2 allowance tracking system account.

(41) SO2 allowance tracking system. The system by which the department or its agent records allocations, deductions, and transfers of SO2 allowances under the ADR SO2 Budget Trading Program.

(42) SO2 allowance tracking system account. An account in the SO2 allowance tracking system established by the department or its agent for purposes of recording the allocation, holding, transferring, or deducting of SO2 allowances.

(43) SO2 allowance transfer deadline. Midnight of March 1st or, if March 1st is not a business day, midnight of the first business day thereafter and is the deadline by which SO2 allowances must be submitted for recordation in an SO2 budget unit's compliance account, or the overdraft account of the source where the unit is located, in order to meet the unit's SO2 budget emissions limitation for the control period immediately preceding such deadline.

(44) SO2 authorized account representative. For an SO2 budget source or SO2 budget unit at the source, the natural person who is authorized by the owners and operators of the source and all SO2 budget units at the source, in accordance with Subpart 238-2 of this Part, to represent and legally bind each owner and operator in matters pertaining to the ADR SO2 Budget Trading Program or, for a general account, the natural person who is authorized, in accordance with Subpart 238-6 of this Part, to transfer or otherwise dispose of SO2 allowances held in the general account.

(45) SO2 budget emissions limitation. For an SO2 budget unit, the tonnage equivalent of the SO2 allowances available for compliance deduction for the unit for a control period.

(46) SO2 budget permit. The portion of the legally binding and federally enforceable written permit issued by the department pursuant to Part 201 of this Title to an SO2 budget source or SO2 budget unit which specifies the ADR SO2 Budget Trading Program requirements applicable to the SO2 budget source, to each SO2 budget unit at the SO2 budget source, and to the owners and operators and the SO2 authorized account representative of the SO2 budget source and each SO2 budget unit.

(47) SO2 budget source. A source that includes one or more SO2 budget units.

(48) SO2 budget unit. A unit that is determined by the administrator to be an affected unit as defined at 42 U.S.C. section 7651a(2).

(49) Source. Any governmental, institutional, commercial, or industrial structure, installation, plant, building, or facility that emits or has the potential to emit any regulated air pollutant under the act. A source, including a source with multiple units, shall be considered a single facility.

(50) Submit or serve. To send or transmit a document, information, or correspondence to the person specified in accordance with the applicable regulation:

(i) in person;

(ii) by United States Postal Service; or

(iii) by other means of dispatch or transmission and delivery.

Compliance with any submission, service, or mailing deadline shall be determined by the date of dispatch, transmission, or mailing and not the date of receipt.

(51) Thermal efficiency. The ratio of energy output (in Btu) to energy input (in Btu) based on the higher heating value heat content of the fuel.

(52) Ton or tonnage. Any short ton (i.e., 2,000 pounds). For the purpose of determining compliance with the SO2 budget emissions limitation, total tons for a control period shall be calculated as the sum of all recorded hourly emissions (or the tonnage equivalent of the recorded hourly emissions rates) in accordance with Subpart 238-8 of this Part, with any remaining fraction of a ton equal to or greater than 0.50 ton deemed to equal one ton and any fraction of a ton less than 0.50 ton deemed to equal zero tons.

(53) Upwind unit. A unit that is an affected unit as defined at 42 U.S.C. section 7651a(2) and is located in the District of Columbia or any of the following states: Delaware, Indiana, Kentucky, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia.

§238-1.3 Measurements, abbreviations, and acronyms

Measurements, abbreviations, and acronyms used in this Part are defined as follows:

(a) Btu-British thermal unit;

(b) hr-hour;

(c) lb-pounds;

(d) mmBtu-million Btu;

(e) SO2-sulfur dioxide;

(f) NOx-nitrogen oxides;

§238-1.4 Applicability

With the exception of any SO2 budget unit which has shutdown in accordance with section 238-1.5 of this Subpart and which no longer has any outstanding compliance obligations stemming from its prior operation, this Part applies to every SO2 budget unit. Any source that includes one or more SO2 budget units shall be an SO2 budget source, subject to the requirements of this Part.

§238-1.5 Shutdown

Any SO2 budget unit that is shutdown is not eligible for an allocation or distribution of SO2 allowances pursuant to Subpart 238-5 of this Part following the submission by the unit's SO2 authorized account representative of a statement to the department (in a format prescribed by the department) attesting to the fact that the unit is shutdown.

§238-1.6 Standard requirements

(a) Permit Requirements.

(1) The SO2 authorized account representative of each SO2 budget unit shall:

(i) submit to the department a complete SO2 budget permit application under section 238-3.3 of this Part in accordance with the deadlines specified in section 238-3.2 of this Part;

(ii) submit in a timely manner any supplemental information that the department determines is necessary in order to review an SO2 budget permit application and issue or deny an SO2 budget permit.

(2) The owners and operators of each SO2 budget unit shall have an SO2 budget permit and operate the unit in compliance with such SO2 budget permit.

(b) Monitoring requirements.

(1) The owners and operators and, to the extent applicable, the SO2 authorized account representative of each SO2 budget source and each SO2 budget unit at the source shall comply with the monitoring requirements of Subpart 238-8 of this Part.

(2) The emissions measurements recorded and reported in accordance with Subpart 238-8 of this Part shall be used to determine compliance by the unit with the SO2 budget emissions limitation under subdivision (c) of this section.

(c) Sulfur Dioxide requirements.

(1) The owners and operators of each SO2 budget source and each SO2 budget unit at the source shall hold SO2 allowances available for compliance deductions under section 238-6.5 of this Part, as of the SO2 allowance transfer deadline, in the unit's compliance account and the source's overdraft account in an amount not less than the total SO2 emissions for the control period from the unit, as determined in accordance with Subpart 238-8 of this Part.

(2) Each ton of sulfur dioxide emitted in excess of the SO2 budget emissions limitation shall constitute a separate violation of this Part, the act, and applicable State law.

(3) An SO2 budget unit shall be subject to the requirements under paragraph (1) of this subdivision starting on the later of January 1, 2005 or the date on which the unit commences operation.

(4) SO2 allowances shall be held in, deducted from, or transferred among SO2 allowance tracking system accounts in accordance with Subparts 238-5, 238-6, and 238-7 of this Part.

(5) Except for future control period SO2 allowances which may be deducted pursuant to section 238-6.5(f) of this Part, an SO2 allowance shall not be deducted, in order to comply with the requirements under paragraph (1) of this subdivision, for a control period in a year prior to the year for which the SO2 allowance was allocated.

(6) An SO2 allowance allocated by the department under the ADR SO2 Budget Trading Program is a limited authorization to emit one ton of sulfur dioxide in accordance with the ADR SO2 Budget Trading Program. No provision of the ADR SO2 Budget Trading Program, the SO2 budget permit application, or the SO2 budget permit or any provision of law shall be construed to limit the authority of the United States or the State to terminate or limit such authorization.

(7) An SO2 allowance allocated by the department under the ADR SO2 Budget Trading Program does not constitute a property right.

(d) Excess emissions requirements. The owners and operators of an SO2 budget unit that has excess emissions in any control period shall:

(1) forfeit the SO2 allowances required for deduction under section 238-6.5(d)(1) of this Part; and

(2) pay any fine, penalty, or assessment or comply with any other remedy imposed under section 238-6.5(d)(3) of this Part.

(e) Recordkeeping and reporting requirements.

(1) Unless otherwise provided, the owners and operators of the SO2 budget source and each SO2 budget unit at the source shall keep on site at the source each of the following documents for a period of five years from the date the document is created. This period may be extended for cause, at any time prior to the end of five years, in writing by the department.

(i) The account certificate of representation for the SO2 authorized account representative for the source and each SO2 budget unit at the source and all documents that demonstrate the truth of the statements in the account certificate of representation, in accordance with section 238-2.4 of this Part; provided that the certificate and documents shall be retained on site at the source beyond such five-year period until such documents are superseded because of the submission of a new account certificate of representation changing the SO2 authorized account representative.

(ii) All emissions monitoring information, in accordance with Subpart 238-8 of this Part.

(iii) Copies of all reports, compliance certifications, and other submissions and all records made or required under the ADR SO2 Budget Trading Program.

(iv) Copies of all documents used to complete an SO2 budget permit application and any other submission under the ADR SO2 Budget Trading Program or to demonstrate compliance with the requirements of the ADR SO2 Budget Trading Program.

(2) The SO2 authorized account representative of an SO2 budget source and each SO2 budget unit at the source shall submit the reports and compliance certifications required under the ADR SO2 Budget Trading Program, including those under Subpart 238-4 or 238-8 of this Part.

(f) Liability.

(1) No permit revision shall excuse any violation of the requirements of the ADR SO2 Budget Trading Program that occurs prior to the date that the revision takes effect.

(2) Any provision of the ADR SO2 Budget Trading Program that applies to an SO2 budget source (including a provision applicable to the SO2 authorized account representative of an SO2 budget source) shall also apply to the owners and operators of such source and of the SO2 budget units at the source.

(3) Any provision of the ADR SO2 Budget Trading Program that applies to an SO2 budget unit (including a provision applicable to the SO2 authorized account representative of an SO2 budget unit) shall also apply to the owners and operators of such unit. Except with regard to the requirements applicable to units with a common stack under Subpart 238-8 of this Part, the owners and operators and the SO2 authorized account representative of one SO2 budget unit shall not be liable for any violation by any other SO2 budget unit of which they are not owners or operators or the SO2 authorized account representative and that is located at a source of which they are not owners or operators or the SO2 authorized account representative.

(g) Effect on other authorities. No provision of the ADR SO2 Budget Trading Program, an SO2 budget permit application, or an SO2 budget permit, shall be construed as exempting or excluding the owners and operators and, to the extent applicable, the SO2 authorized account representative of an SO2 budget source or SO2 budget unit from compliance with any other provisions of applicable State and Federal law and regulations. The department retains authority to impose specific permit conditions on any SO2 budget source that limit permissible emissions and the number of allowances that may be used for compliance. Any such permit condition may be based on the adverse environmental impact that the source is shown to have on any sensitive receptor area due to the source's proximity to the receptor area.

§238-1.7 Computation of time

(a) Unless otherwise stated, any time period scheduled, under the ADR SO2 Budget Trading Program, to begin on the occurrence of an act or event shall begin on the day the act or event occurs.

(b) Unless otherwise stated, any time period scheduled, under the ADR SO2 Budget Trading Program, 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) Unless otherwise stated, if the final day of any time period, under the ADR SO2 Budget Trading Program, falls on a weekend or a State or Federal holiday, the time period shall be extended to the next business day.