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RULES AND REGULATIONS

Title 25--ENVIRONMENTAL PROTECTION

ENVIRONMENTAL QUALITY BOARD

[25 PA. CODE CHS. 121, 129 AND 145]

Small Sources of NOx, Cement Kilns and Large Internal Combustion Engines

[34 Pa.B. 6509]

   The Environmental Quality Board (Board) by this order amends Chapters 121, 129 and 145 (relating to general provisions; standards for sources; and interstate pollution transport reduction). The amendments establish ozone season nitrogen oxide (NOx) emission limits for certain boilers, turbines and stationary internal combustion units that are small sources of NOx in the Counties of Bucks, Chester, Delaware, Montgomery and Philadelphia. This final-form rulemaking also establishes ozone season NOx emission limits for large stationary internal combustion engines and Portland cement kilns across this Commonwealth.

   This order was adopted by the Board at its meeting of August 17, 2004.

A.  Effective Date

   This final-form rulemaking will go into effect upon publication in the Pennsylvania Bulletin.

B.  Contact Persons

   For further information contact J. Wick Havens, Chief, Division of Air Resource Management, Bureau of Air Quality, P. O. Box 8468, Rachel Carson State Office Building, Harrisburg, PA 17105-8468, (717) 787-9495; or Kristen M. Campfield, Assistant Counsel, Bureau of Regulatory Counsel, P. O. Box 8464, Rachel Carson State Office Building, Harrisburg, PA 17105-8464, (717) 787-7060. Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (voice users). This final-form rulemaking is available electronically through the Department of Environmental Protection's (Department) website at www.dep.state.pa.us.

C.  Statutory Authority

   This final-form rulemaking is being made under the authority of section 5 of the Air Pollution Control Act (APCA) (35 P. S. § 4005), which grants the Board the authority to adopt regulations for the prevention, control, reduction and abatement of air pollution.

D.  Background of the Amendments

   When ground-level ozone is present in concentrations in excess of the Federal health-based standards, public health is adversely affected. The Environmental Protection Agency (EPA) has concluded that there is an association between ambient ozone concentrations and increased hospital admissions for respiratory ailments, such as asthma. Further, although children, the elderly and those with respiratory problems are most at risk, even healthy individuals may experience increased respiratory ailments and other symptoms when they are exposed to ambient ozone while engaged in activity that involves physical exertion. Though these symptoms are often temporary, repeated exposure could result in permanent lung damage. The implementation of additional measures to address ozone air quality nonattainment in this Commonwealth is necessary to protect the public health.

   The purpose of this final-form rulemaking is to reduce emissions of NOx, so as to reduce levels of ground-level ozone. Ground-level ozone is not directly emitted by pollution sources, but is created as a result of the chemical reaction of NOx and volatile organic compounds (VOC), in the presence of light and heat. The reduction of NOx will also help protect the public health from high levels of fine particulates, of which NOx is a precursor component. Fine particulates, as well as ozone, are health hazards. The reduction of NOx also reduces visibility impairment and acid deposition. This final rulemaking is part of the Commonwealth's specific action plan and is part of a regional effort among the states in the Ozone Transport Region (OTR) to reduce transported ozone. The final-form regulation is necessary to satisfy the Commonwealth's commitments under the EPA-approved state implementation plan for the five-county Southeast Pennsylvania area (Philadelphia State Implementation Plan (SIP)) and establishes emission reductions that are integral to maintaining the EPA's approval of the attainment demonstration contained in the Philadelphia SIP. Full implementation of the reductions is required by May 1, 2005.

   The amendments to Chapters 121 and 129 establish ozone season (May 1 through September 30) emission limits for NOx from certain existing and new boilers, turbines and stationary internal combustion engines located at industrial, utility and commercial sites in the Counties of Bucks, Chester, Delaware, Montgomery and Philadelphia. These counties are in a severe nonattainment area for ozone. The amendments require the emission limits to be implemented by May 1, 2005. The amendments to Chapters 121 and 129 do not affect large sources that are regulated under Chapter 145. This final-form rulemaking is based on model rules developed by the Ozone Transport Commission (OTC), which was created to address ozone problems in the OTR. The Commonwealth is a member of the OTC. The final-form rulemaking is also consistent with the recommendations of the Southeast Pennsylvania Ozone Stakeholders Working Group.

   In 1998, the EPA published its requirement that 22 eastern states and the District of Columbia submit revised SIPs (NOx SIP Call) prohibiting those amounts of NOx emissions that significantly contribute to ozone attainment problems in downwind states. In 2000, the Commonwealth promulgated Chapter 145, Subchapter A (relating to NOx budget trading program), which contains the NOx cap and trade program for fossil fuel-fired combustion units and electric generating units, to satisfy the first phase of the NOx SIP Call. Subchapter A was published and adopted at 30 Pa.B. 4899 (September 30, 2000) and was approved by the EPA as a SIP revision on August 21, 2001 (66 FR 43795). In this final rulemaking, Chapter 145, Subchapters B and C (relating to emission of NOx from stationary internal combustion engines; and emissions of NOx from cement manufacturing) are needed to satisfy the Commonwealth's remaining obligation under the NOx SIP Call.

   Subchapters B and C in the final-form rulemaking establish ozone season emission requirements for NOx from large stationary internal combustion engines that emitted or emit more than 153 tons of NOx per ozone season in 1995 or any ozone season thereafter, and from Portland cement kilns. Revisions pertaining to large stationary internal combustion engines and cement kilns were originally part of the 2000 proposal, but final action was deferred on them. The final-form rulemaking reflects further revisions made in response to comments received on the previous proposal and the current final rulemaking, and is based on EPA emission limits and control technologies published April 21, 2004 (69 FR 21604), and October 21, 1998 (63 FR 56394) (proposed).

   Subchapter B will impact owners and operators of an estimated 14 large stationary internal combustion engines owned by four companies and institutions. Subchapter C will impact the owners and operators of cement kilns. There are presently 21 kilns in operation across the Commonwealth.

   This final rulemaking also represents the Commonwealth's continuing commitment to do its fair share in reducing ozone transport both within this Commonwealth and throughout the northeast.

   The Department worked with the Air Quality Technical Advisory Committee (AQTAC) in the development of this final rulemaking. The Department presented drafts of the final-form regulation to AQTAC on July 24, 2003, September 25, 2003, November 20, 2003, and February 27, 2004. The Department made numerous amendments to the final-form regulation in response to comments from AQTAC. At its April 27, 2004 meeting, AQTAC members expressed concern about the compliance deadline in the final-form rulemaking. The committee recommended that the Department present the final-form regulation to the Environmental Quality Board for adoption.

E.  Summary of Regulatory Requirements and Major Changes to the Proposed Rulemaking

   This final-form rulemaking adds definitions of ''MWH,'' ''ppmvd,'' ''stationary internal combustion engine,'' ''tradable renewable certificate'' and ''tradable renewable certificate issuing body'' to § 121.1 (relating to definitions).

   The final amendments to Chapter 129 apply during the ozone season (May 1 to September 30) to existing and new small sources of NOx located in Bucks, Chester, Delaware, Montgomery or Philadelphia County (the five-county Philadelphia area). The final amendments establish methods for determining NOx ''allowable emissions'' for certain boilers, stationary combustion turbines and stationary internal combustion engines located at industrial, utility and commercial sites in §§ 129.201--129.203 (relating to boilers; stationary combustion turbines; and stationary internal combustion engines). The owner or operator of a unit covered by these sections must calculate the difference between NOx allowable emissions and NOx actual emissions under § 129.204 (relating to emission accountability). Some boilers and turbines may demonstrate compliance through the opt-in provisions of §§ 145.80--145.88 (relating to opt-in process).

   Section 129.204 establishes methods for calculating NOx ''actual emissions'' for the units covered by §§ 129.201--129.203. Excess allowable emissions at a facility may be used to offset actual emissions at the owner or operator's other subject facilities in the five-county Philadelphia area. Section 129.204 requires surrender of NOx allowances for actual emissions that exceed allowable emissions. Section 129.204 establishes a three-to-one NOx allowance surrender requirement for failure to surrender NOx allowances in accordance with this section.

   Section 129.205 (relating to zero emission renewable energy production credit) authorizes NOx credit in exchange for zero emission renewable energy production. Among other requirements, the zero emission renewable energy production must be certified in a tradable renewable certificate and generated in the five-county Philadelphia area.

   Amended § 145.42 (relating to NOx allowance allocations) provides that for each ton of NOx deducted under § 129.205, the Department will retire one NOx allowance from the new source set-aside governed by § 145.42(d).

   New Subchapter B of Chapter 145 establishes allowable emissions for three categories of large existing and new stationary internal combustion engines listed in § 145.111 (relating to applicability). Section 145.112 (relating to definitions) defines terms that are used in Subchapter B: ''CEMS--Continuous Emission Monitoring System,'' ''diesel stationary internal combustion engine,'' ''dual-fuel stationary internal combustion engine,'' ''engine rating,'' ''lean-burn stationary internal combustion engine,'' ''rich-burn stationary internal combustion engine,'' ''stationary internal combustion engine,'' ''stoichiometric air/fuel ratio'' and ''unit.'' Section 145.113 (relating to standard requirements) establishes methods for calculating NOx allowable and actual emissions. Section 145.113 requires surrender of NOx allowances for actual emissions that exceed allowable emissions. Excess allowable emissions at a facility may be used to offset actual emissions at the owner or operator's other subject facilities in this Commonwealth. Section 145.113 establishes a three-to-one NOx allowance surrender requirement for failure to surrender NOx allowances in accordance with this section.

   New Subchapter C of Chapter 145 applies to existing and new Portland cement kilns. See § 145.141 (relating to applicability). Section 145.142 (relating to definitions) defines the following terms for the purposes of this subchapter: ''CEMS--Continuous Emission Monitoring System,'' ''clinker,'' ''Portland cement'' and ''Portland cement kiln.'' Section 145.143 (relating to standard requirements) establishes methods for calculating allowable and actual emissions. It requires surrender of NOx allowances for actual emissions that exceed allowable emissions. Excess allowable emissions at a facility may be used to offset actual emissions at the owner or operator's other subject facilities in this Commmonwealth. Section 145.143 establishes a three-to-one NOx allowance surrender requirement for failure to surrender NOx allowances in accordance with this section.

   The major changes that were made to the proposed rulemaking include the following: the proposed definitions of ''emergency stationary internal combustion engine'' and ''fire-fighting stationary internal combustion engine'' in § 121.1 are not included in the final-form regulation; the emission limits have been standardized in §§ 129.201--129.203, 145.113 and 145.143; the allowable emission rate of 1.5 grams per brake horsepower-hour in § 129.203 was changed to 3.0 grams to align it with the allowable rate for the same class of engines affected by the final-form regulation under § 145.113; the need to submit written requests for averaging has been eliminated from §§ 129.201--129.203 and 145.114; §§ 129.201--129.203 do not apply to Naval marine combustion units operated by the United States Navy for the purpose of testing and operational training; § 129.201 clarifies that it does not apply to units that combust municipal waste at a facility that is permitted as a resource recovery facility under Article VIII (relating to municipal waste) of the Department's regulations; NOx emissions from stationary internal combustion engines that are or were replaced by an electric motor may be counted as allowable emissions under §§ 129.203 and 129.204; § 129.204 has been added; §§ 129.204, 145.113 and 145.143 authorize compliance with NOx emission limits in this final-form rulemaking through emission averaging or NOx allowance surrender; emissions from fire-fighting turbines, fire-fighting stationary internal combustion engines, emergency gas turbines and emergency stationary internal combustion engines are not exempt from calculation of actual emissions under § 129.204; NOx emission monitoring options are included in § 129.204; a zero emission renewable energy production credit provision has been added in § 129.205 and a corresponding reduction of NOx allowances from the new source set-aside is included in amended § 145.42; § 145.113 allows for maintenance of records offsite and requires the owner or operator of a facility to provide records to the Department upon request; proposed §§ 145.114 and 145.115 (relating to compliance determination; reporting, monitoring and recordkeeping) have been deleted; additional NOx emission monitoring options have been added to § 145.113; the proposed definitions of ''low NOx burner'' and ''mid-kiln firing'' in § 145.142 have been deleted; the proposed control technologies in § 145.143 have been deleted; and proposed § 145.144 (relating to reporting, monitoring and recordkeeping) has been deleted.

   The final-form rulemaking will be submitted to the EPA as an amendment to the SIP.

F.  Summary of Comments and Responses on the Proposed Rulemaking and Draft Final-Form Rulemaking

   The Board held three public hearings in Harrisburg, Pittsburgh and Conshohocken on November 18, 20 and 25, 2002, respectively during the 69-day comment period on the proposed rulemaking. (32 Pa.B. 5178 (October 19, 2002)). Comments were received from 31 commentators. As a result of those comments and input from AQTAC, the Department published an advance notice of final rulemaking (ANFR) in the Pennsylvania Bulletin for additional comment. (33 Pa.B. 6226 (December 20, 2003)). The Department had a 30-day public comment period on that draft final-form rulemaking which closed on January 19, 2004. Comments were received from 24 commentators.

Summary of Public Comments on the Proposed Rulemaking

Program Design--Averaging and Allowance Trading

   Two commentators opposed allowing the use of both allowance trading and averaging to meet the emission limitations because of their concern that local adverse health effects may result. The Department disagrees that averaging and allowance trading will result in localized adverse health impacts because most of the averaging from multiple units is expected to occur at individual facilities. The expanded averaging program will achieve acceptable levels of emission reductions while minimizing compliance costs. This final-form rulemaking allows the use of allowances to demonstrate compliance and allows averaging within a facility and across facilities under common control.

   One commentator opposed allowing source operators to achieve compliance through the use of allowances. The commentator was concerned that the surrender of allowances as a compliance option could allow emission increases to occur in the nonattainment area and said they should not be an option. The Department does not believe that the use of allowances will result in increased emissions in the area. Although owners or operators of some facilities may use allowances to avoid the installation of controls or implementation of other emission reduction measures, the Department anticipates that the program will result in the level of emission reductions necessary to satisfy the Commonwealth's obligations. These obligations are to achieve the emission reductions and budgets established by the NOx SIP Call that are also integral to maintaining the EPA's approval of the 1-hour ozone attainment demonstration contained in the Philadelphia SIP. The final-form rulemaking allows the use of allowances to demonstrate compliance and allows averaging across facilities under common control.

   One commentator strongly supported the opportunity for the use of averaging as a compliance option. The commentator suggested that the provisions should specify that averaging can extend over the entire ozone season, across facilities within the five-county Southeast Pennsylvania ozone nonattainment area, and at most be limited to a 30-day rolling average. The final-form rulemaking provides for the use of averaging throughout the ozone season and across facilities under common control. The final-form rulemaking does not contain provisions limiting averaging to a 30-day rolling average.

   One commentator suggested that the final-form rulemaking should allow averaging between all classes of small affected sources--boilers, turbines, and engines in the nonattainment area. The final-form rulemaking does allow averaging between all classes of affected sources and among facilities under common control.

   One commentator suggested that, inasmuch as decisions regarding what constitutes an acceptable averaging proposal affect industry and competitiveness, definitive standards need to be established in the final-form rulemaking. The commentator asked about the averaging time period, calculation methodologies, types of sources that may average together, ownership of sources allowed to average, and the geographical extent of the averaging area. The commentator stated that the proposed rulemaking concerning averaging lacked clarity and could have been applied inconsistently. In this regard, the commentator stated that the final-form rulemaking should specify the particular conditions and calculations for averaging emissions from multiple sources, define the review process, including appeal provisions and the opportunity for the applicant to make changes, and include time frames and deadlines related to Department determinations on averaging plans.

   The final-form rulemaking addresses the commentator's issues regarding averaging. The requirement for source owners or operators to submit an averaging plan for approval prior to averaging has been deleted. The final-form rulemaking includes requirements related to the conditions and calculations required to demonstrate compliance based on an emissions average. Sections 129.201(b), 129.202(b), 129.203(b) and 145.143(d) of the final-form rulemaking specify the averaging period. Section 129.204(d) allows owners or operators of units subject to §§ 129.201--129.203 to average among the units at a facility throughout the ozone season and to average with other facilities subject to these provisions under their common ownership or operation within the five-county Southeast Pennsylvania ozone nonattainment area. Sections 145.113(e) and 145.143(e) contain similar provisions for large internal combustion engines and cement kilns, respectively, with a statewide geographic area. Ownership and the disposition of averaging credit is determined by the legal agreements and decisions made between owners. A similar type of issue has been successfully resolved by owners of units subject to acid rain requirements, and the same principles apply here. As long as the credit is not double-counted, the owners or operators may distribute and utilize it as provided for in the final-form rulemaking. Since the requirement for an owner or operator to submit an averaging plan has been deleted from the final-form rulemaking, there is no need to define time frames for action and appeal procedures.

   The same commentator questioned why the Board did not include an option for sources to comply by purchasing allowances. The final-form rulemaking contains this option.

   One commentator stated that averaging and trading provide more flexibility and thereby enhance economic development without harming air quality. The commentator stated that they should be extended to Chapter 145 sources as well. The Chapter 145 provisions in the final-form rulemaking allow the use of averaging and the use of allowances to achieve compliance.

   One commentator stated that the averaging provisions in §§ 129.201--129.203 imply that the Department will approve all proposals. The commentator suggested that if discretion is intended, the language should be changed to clarify that that is the case. The Department has deleted from the final-form rulemaking the provisions that require prior approval of averaging plans.

   One commentator supported the provisions that allow a source owner or operator to use averaging to achieve compliance. The commentator said that the provisions allowing averaging should be retained and the Department should provide specific averaging guidance and acceptable means of demonstrating compliance. The Department responds that the final-form rulemaking specifies that a source owner or operator is to aggregate all of the allowable and all of the actual emissions from the affected units. The owner or operator then determines whether there are greater actual or allowable emissions. If the calculated allowable emissions exceed the actual emissions, the source is in compliance. If the actual emissions exceed the allowable emissions by greater than 0.50 ton, the owner or operator must obtain and surrender to the Department allowances equal to the excess actual emissions.

   Two commentators suggested that all ''alternative procedures'' should be approved by the Department in writing and be transparent to the public. The commentators said that all records must be accessible and NOx reductions claimed must be measurable, verifiable, permanent and enforceable. The Department deleted the ''alternative procedures'' provisions from the final-form rulemaking. Affected unit owners and operators, the Department, and the public can easily and readily determine compliance.

   One commentator supported the Board's flexible ''cap and trade'' approach to achieving NOx reductions in the Philadelphia area. The commentator said that it would provide effective, targeted reductions at the least possible cost. The requirements in the final-form rulemaking provide flexibility for owners and operators of affected sources by allowing limited averaging and the simultaneous use of allowances to demonstrate compliance. The final-form rulemaking is not a ''cap and trade'' regulation.

Program Design--Cost and Form of Emission Limits

   One commentator stated that the Board should provide a detailed compliance cost analysis for each class of unit the rule affects and justify why control of these sources is the most cost effective alternative to achieve the National Ambient Air Quality Standards (NAAQS). The Department responds that the regulatory analysis form provides the Board's cost-benefit analysis and identifies the source of the cost data. Both the EPA and the Southeast Pennsylvania Ozone Stakeholder Working Group estimates were used. The Southeast Pennsylvania Ozone Stakeholder Working Group recommended these classes of sources for consideration for additional emission reductions. The classes of units covered by this final-form rulemaking are those which have high potential emission rates and which are generally controllable in a cost effective manner. Because the final-form rulemaking offers flexibility for sources to demonstrate compliance through the surrender of allowances and averaging and because of the diversity of sources covered by the this final-form rulemaking, precise estimation of the compliance costs is difficult. The flexibility for demonstrating compliance allows source owners and operators to implement the most cost effective compliance program for their operations.

   One commentator stated that, historically, sources have frequently overstated the costs and technical difficulty of implementing new requirements. The commentator felt that, upon implementation, it is often found that more easily applied and less expensive solutions are identified. In the final-form rulemaking, the Department has included the compliance options of emissions averaging and allowance purchase to assure that the compliance costs and technical difficulty are minimized. These options allow owners and operators to implement cost-effective compliance programs.

   Two commentators stated that the alternative compliance option that allows percentage reductions from 1990 levels creates the possibility that the rule will not achieve the target level of reductions. They suggested that this would occur as a result of age related deterioration bringing unit emission rates significantly higher than they were in 1990. In addition, they suggested that the measurement techniques used in 1990 were not necessarily very accurate. The commentators felt that well-controlled units would essentially be penalized by this option since they would have to make more reductions than dirtier units. For these reasons, the commentators said that more recent data should be used as the basis for making the reductions. The Department has removed this option from the final-form rulemaking.

   One commentator said that the 1990 base year emission rate for determining the alternative reduction should also include the 1995 base year used to establish the NOx Budget Program since 1990 may not be representative of normal operations and controlling to these levels will be more costly. The Department responds that the final-form rulemaking specifies straightforward emission limits for affected classes of sources. Requirements related to specification of base year emission are not necessary.

   One commentator stated that given that large sources control on an ozone season basis, it is appropriate that small sources have the flexibility to do so as well. The commentator stated that this would still provide ozone season improvements. The Department agrees. The final-form rulemaking requires that sources affected by these regulations demonstrate compliance on an ozone season basis.

   The same commentator stated that the rule as proposed will impose a relatively larger compliance cost on smaller NOx sources than larger ones. The commentator stated that small sources cannot affordably ''opt-in'' to the NOx Budget Program and that, therefore, the Department should allow them to purchase allowances from sources located in the nonattainment area as a compliance alternative. The final-form rulemaking authorizes the purchase of allowances as a compliance alternative.

Program Design--Area of Applicability

   One commentator suggested that different control requirements are appropriate in attainment and nonattainment areas. The commentator stated that stricter controls are needed to attain the ozone standards in nonattainment areas but that the stricter standards would be an unnecessary burden if imposed in the attainment areas. The final-form rulemaking applies only to sources in the five-county Philadelphia ozone nonattainment area for small sources of NOx.

   Two commentators stated that the Chapter 129 requirements for the five-county Philadelphia area are reasonable and should apply Statewide. They said that Statewide application recognizes that NOx transports over hundreds of miles. They said that the requirements should apply over the entire Ozone Transport Region (OTR). These commentators also pointed out that NOx contributes year round to other air pollution problems in addition to ozone, including fine particulate, acid deposition, and visibility impairment. They suggested that the requirements should be enacted for no other reason than that the benefits outweigh the costs. The Department responds that the Chapter 129 provisions of the final-form rulemaking apply only to the five-county Southeast Pennsylvania ozone nonattainment area. The Department recognizes the adverse impacts of NOx. In addition to being an ozone precursor, NOx contributes to fine particulate, acid deposition and visibility impairment. However, the focus of the Chapter 129 portion of this rulemaking is to satisfy the Commonwealth's commitments under the EPA-approved state implementation plan for the five-county Southeast Pennsylvania area (Philadelphia SIP) and to establish emission reductions that are integral to maintaining the EPA's approval of the attainment demonstration contained in the Philadelphia SIP. Full implementation of the reductions is required by May 1, 2005.

   Additional NOx reductions may be necessary as part of the Commonwealth's initiatives to address the 8-hour ozone and PM 2.5 standards. This final-form rulemaking is based on an OTC model rule that serves as the basis for NOx reductions, as needed, throughout the OTR.

   One commentator asked how application of these standards Statewide and for the entire year would bring the Commonwealth into compliance for the ozone months. The Department responds that the final-form Chapter 129 regulations are limited to the five-county Philadelphia nonattainment area. The Chapter 145 final-form regulations are required Statewide to complete the Department's obligations under the NOx SIP Call and to maintain the EPA's approval of the 1-hour ozone attainment demonstration contained in the Philadelphia SIP. Both chapters address ozone season emissions.

   One commentator stated that the Chapter 129 rules are necessary to target local ozone attainment issues. The commentator said that Statewide, sizable reductions have been achieved: larger sources have existing controls under Chapter 145, and smaller sources are controlled under RACT. The Department responds that the Chapter 129 final-form rulemaking is designed to achieve NOx emission reductions to address ozone nonattainment in the five-county Southeast Pennsylvania ozone nonattainment area. The Chapter 145 final-form regulations are required to complete the Department's obligations under the NOx SIP Call and to maintain the EPA's approval of the 1-hour ozone attainment demonstration contained in the Philadelphia SIP.

   Two commentators thought that extending the Chapter 129 requirements Statewide would exceed the Department's authority under the APCA because the reductions would not be useful toward attainment of the ozone air quality standard. The commentators said that the Department studied only the effects of reductions in the five-county Southeast Pennsylvania ozone nonattainment area in formulating this regulatory initiative. The commentators added that the small amount of reductions that this would achieve would not be beneficial. The final-form Chapter 129 regulations apply only to the five-county Southeast Pennsylvania ozone nonattainment area.

   One commentator suggested that the SIP Call or Chapter 145 requirements should not be promulgated until upwind states impose similar regulations; otherwise, new sources will locate upwind and adversely impact Southwest Pennsylvania's air quality and economy. The Department responds that upwind states are also under the legal obligation to implement the NOx SIP Call. The final-form rulemaking is necessary to satisfy the Commonwealth's commitments under the EPA-approved state implementation plan for the five-county Southeast Pennsylvania area (Philadelphia SIP) and establishes emission reductions that are integral to maintaining the EPA's approval of the attainment demonstration contained in the Philadelphia SIP. Full implementation of the reductions is required by May 1, 2005.

Program Design--Seasonal vs. Year-Round Limits

   Several commentators suggested that year-round controls would not be necessary to achieve the stated purpose of the final-form rulemaking. Two commentators thought that year-round control would violate the APCA and would not provide ozone season benefits. Another commentator suggested that expanding this rulemaking to apply for the entire year is outside the stated purpose for this rulemaking. Another commentator thought that the final-form rulemaking should apply only during the ozone season because sources upwind of the five-county Southeast Pennsylvania ozone nonattainment area may impact the area and the additional emissions restrictions may represent a competitive disadvantage. Another commentator thought that annual requirements should not apply until it is shown that this is required to meet the 8-hour ozone standard. The final-form rulemaking addresses ozone season emissions.

Program Design--Timing and General Issues

   One commentator said that 3 years are needed to plan and implement control strategies and suggested that the compliance date should be extended to provide this amount of time to comply with the control requirements. The final-form rulemaking provides a number of compliance options in addition to the option of implementing control programs. Because owners and operators of affected sources have the flexibility to average and use NOx allowances, there is no need to extend the compliance deadline.

   One commentator asked the Board to explain why the May 1, 2005 deadline is reasonable, feasible and necessary. The deadline is necessary to assure that the reductions occur to help ensure that the five-county Southeast Pennsylvania ozone nonattainment area achieves and maintains the 1-hour ozone standard by November 15, 2005, the attainment deadline in the Clean Air Act. The final-form rulemaking includes provisions that allow the use of averaging and allowances to demonstrate compliance. Implementation of these alternatives does not require long lead-time.

   One commentator stated that the proposed NOx reductions are vital remaining strategies for ozone attainment and public health. The Department agrees. The final-form rulemaking is necessary to satisfy the Commonwealth's commitments under the EPA-approved state implementation plan for the five-county Southeast Pennsylvania area (Philadelphia SIP) and establishes emission reductions that are integral to maintaining the EPA's approval of the attainment demonstration contained in the Philadelphia SIP. Full implementation of the reductions is required by May 1, 2005.

   The commentator stated that emission reductions from municipal waste combustors (MWCs) are not needed for attainment since these reductions were not included in implementation plans. The final-form rulemaking clarifies that it does not apply to municipal waste combustors.

   One commentator stated that the Board should consider either using a separate proposed rulemaking or publishing an Advance Notice of Final Rulemaking if it added any language to the final-form rulemaking in response to any comments. The Department published an Advance Notice of Final Rulemaking in the Pennsylvania Bulletin on December 20, 2003.

   The same commentator noted that many commentators stated that controls have already been installed under other requirements or that the units typically operate only a few hours. These commentators argued that further requirements would yield minimal additional reductions. The final-form rulemaking requires units to be accountable for actual emissions and does not require control installation, ensuring that owners and operators have a cost effective compliance option under any operating scenario.

   Two commentators suggested that the proposed rulemaking be amended to allow participation in the NOx Budget Program on an individual basis in lieu of complying with the proposed rules. One commentator questioned, ''Why didn't the Board include amendments in this rulemaking that would allow these other sources to 'opt-in'?'' The Department responds that the NOx Budget Program is specifically designed to support an emission control program for large boilers. Considerable technical and administrative issues would need to be resolved in order to support other types of units in the budget program that are beyond the scope of this rulemaking.

Boilers

   One commentator said that the definition of boiler, which references the existing § 145.2 provision, should be amended to ensure it does not include process heaters. The interpretation of this definition generally follows the Federal applicability that does not include direct-fired process heaters.

   Several commentators provided a technology and cost assessment, as requested by the Board. The commentators concluded that the rule should not require lower emission limits for Municipal Waste Combustors (MWCs) because Selective Catalytic Reduction (SCR) technology is not reliable enough or is too expensive. In addition, the commentators indicated that the EPA has set the limits for MACT higher, and SNCR, the only generally feasible MWC control technology, is not able to meet the 0.17 pound per million Btu limit in the proposed regulation. The final-form rulemaking clarifies that it does not apply to municipal waste combustors.

   Another commentator asked the Board to explain why MWCs were chosen for further reductions and what equipment would work at MWCs to achieve compliance. The commentator asked the Board to provide the associated costs of installation and operation of the equipment and to demonstrate that technically feasible solutions are not cost prohibitive. The commentator made reference to some commentators' claims that the Board's requirements for MWCs are not technologically feasible and that the EPA has indicated that it does not intend to regulate MWCs further. The commentator said that some commentators argue that MWCs should be exempt from the requirements of this rulemaking for reasons including: the difficulty of predicting emissions due to the variability of fuel; the facilities have already implemented MACT; the limits set by this proposed rulemaking may not be achievable; and these facilities provide other environmental benefits. The final-form rulemaking clarifies that it does not apply to municipal waste combustors.

   One commentator stated that neither the Department nor the OTC included MWCs in its cost or technical analyses, and that promulgating a rule in this instance is not legal. The final-form rulemaking clarifies that it does not apply to municipal waste combustors.

   The Naval Surface Warfare Center Ship Systems Engineering Station located in Philadelphia recommended that naval units that are used to simulate shipboard conditions be exempted. This request was based on several rationales, including technical infeasibility and low utilization rates. Extensive technical data and analysis were provided. The final-form rulemaking does not apply to these units.

   One commentator said that auxiliary boilers that serve larger electric generating units emit very little over the course of the year. The commentator stated that controls to meet the proposed regulatory limits would not achieve substantive reductions. The commentator recommended a cost effectiveness threshold of $3,000 per ton reduced. The Department responds that the final-form rulemaking allows source operators to use averaging and NOx allowances to demonstrate compliance with the emission limits. Therefore, establishment of a cost-effectiveness level in the regulation is not necessary.

   One commentator suggested that boilers greater than 250 MMBTU/hr should be afforded the 60% reduction option. The final-form rulemaking specifies straightforward emission limits for affected classes of sources. Requirements related to specification of base year emission are not necessary.

Combustion Turbines

   One commentator stated that the control requirements of this rule for combustion turbines would not be cost-effective due to permit caps at 5% of annual capacity, high operating expenses and resultant low utilization rates of 1-2.5%. The commentator said that averaging would be useful for some of these units. The commentator stated that the combustion turbine portion of the rule would achieve about a 55% reduction, and that based on historical data, 25 to 45 tons would have been reduced in 2000 and 2002, respectively, from the 23 units the company operates. The commentator recommended that the following options be considered: de minimis or cost-effectiveness exemptions, or NOx allowance surrender--which the commentator said should be an option in any event. The commentator felt that limiting allowances to the area of allocation does not make sense if this option is provided. The Department responds that the final-form rulemaking includes NOx allowance surrender and averaging as compliance options. The inclusion in the final-form rulemaking of de minimis and cost-effectiveness exemptions is not necessary.

   The same commentator stated that the rule, as it pertains to combustion turbines, should apply Statewide for competitive and environmental reasons. The commentator said that if the rule does not apply Statewide, peaking units located outside the five-county Southeast Pennsylvania ozone nonattainment area will be cheaper to run and will pick up the load from the units affected by this rule, the emissions will just occur in upwind areas and the benefits of the rule will be defeated. The Department does not expect the rule to result in load shifting because the control costs for existing combustion turbines are small in relation to operating expenses.

   The Naval Surface Warfare Center Ship Systems Engineering Station located in Philadelphia recommended that naval units that are used to simulate shipboard conditions be exempted. This request was based on several rationales, including technical infeasibility and low utilization rates. Extensive technical data and analysis were provided. The final-form rulemaking does not apply to these units.

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