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Clean Air Markets

CAIR Frequent Questions – Applicability

Q: Do you have any recommendations on how a State might handle the allocation of CAIR NOx allowances to a unit whose applicability under CAIR is uncertain? My state would ideally like to allocate only to CAIR units, but to all CAIR units.

A: In responding to this question, EPA is assuming that the State intends that the unit whose applicability is in question would have an allowance allocation if the unit is subject to CAIR, but does not intend for the unit to have any allocation if the unit is not subject to CAIR. There are unique circumstances where the applicability of CAIR to a unit is uncertain because of a pending rulemaking that includes proposed revisions to the applicability of CAIR (e.g., the proposed revision to the definition of cogeneration unit in 72 FR 20465 - 80, April 25, 2007) or because of an ongoing adjudicative proceeding to determine whether a unit is subject to CAIR (such as a proceeding to respond to a petition for an applicability determination). In these unique cases, EPA suggests that the State might want to take the approach of including the unit in the NOx annual and NOx ozone season allowance allocation table submitted by the State to EPA, consistent with the CAIR allocation timing requirements and with the NOx allowance allocation methodologies adopted by the State in its CAIR rules (i.e., treat the unit as if it is a CAIR unit when determining allowance allocations).

Under this approach, the State might also want to include in its submission to EPA a statement requesting that EPA not record the allocations in the unit's compliance account until the unit's applicability under CAIR is determined. The State would get the unit owner's agreement in writing to this approach. All other CAIR NOx allowance allocations in the State's allocation table submission would be recorded by EPA by the applicable deadline for CAIR NOx allowance recordation, even if the unit's applicability is determined after that deadline. If it is ultimately determined that the unit is subject to CAIR, EPA would record the allowance allocations for the applicable control periods in the compliance account for the unit. If it is ultimately determined that the unit is not subject to CAIR, the State could then revise the allowance allocations - consistent with the State's NOx budgets and the allowance allocation formulas in the State's SIP as approved by EPA - to allocate to the State's CAIR NOx units the allowances initially reserved for the unit, and EPA would record the revised allocations. These allocations would be in addition to the initial allocations of allowances for CAIR NOx units for the control periods involved. The revised allocations would be made in a new State allocation table that would only include the additional allocations.

Alternatively, if the State is not opposed to a potentially-affected unit receiving allowances even if it is ultimately determined not to be a CAIR unit, the State might want to allocate to the potentially-affected unit and, if the unit is later determined not to be a CAIR unit, from then on not allocate additional allowances to the unit.

Q: Is there reasonable date window, such as that provided for in the Acid Rain program, for states to use in identifying units "serving at any time, since the startup of the unit's combustion chamber..."?

A: EPA recently proposed (signed on August 1, 2005, and available on EPA's web site) a FIP as well as some changes to CAIR. One of the proposed changes to CAIR is to modify the language quoted in your question to add the phrase "since the later of November 15, 1990 or the startup of the unit's combustion chamber..."

Q: Are generator capacities summed at the facility level when determining applicability of the 25 MWe threshold?

A: No, a unit must serve at least one single generator with a capacity of greater than 25 MW to be affected by CAIR.

Q: How is applicability treated at facilities utilizing common steam headers?

A: If the common steam header feeds into at least one single generator with a capacity of greater than 25 MW then any unit providing steam to that header would be affected by CAIR.

Q: How does CAIR applicability compare with affected, unaffected and exempted units as determined under provision of the Acid Rain Program? [Specifically IPPs, QFs, and simple combustion turbines.]

A: . There are exemptions in the Acid Rain Program for certain Independent Power Production Facilities and Qualifying Facilities (specifically an IPP or QF that has, as of November 15, 1990, one or more qualifying power purchase commitments to sell at least 15% of its total planned net output capacity and consists of one or more units designated by the owner or operator with total installed net output capacity not exceeding 130 percent of the total planned net output capacity) that do not exist in the CAIR program. There is some discussion of this in the preamble of CAIR at 70 FR 25278.

There is also an exemption regarding certain simple combustion turbines in the Acid Rain Program (specifically, simple combustion turbines that commenced commercial operation before November 15, 1990, and did not add or use auxiliary firing after November 15, 1990) that does not exist in CAIR.

Q: Does the 25 MW limit apply unit by unit or plant by plant? For turbines where there is a combustion and steam portion, does the 25MW apply to the turbine or to each portion of the turbine.

A: Applicability under the model rules is determined on a unit-level. For a combustion turbine (which for combined cycle includes any associated duct burners) applicability is based on the nameplate capacity of any generator served by the combustion turbine. See the definition of "combustion turbine" in §§ 51.123, 51.124, 96.102, 96.202, and 96.302. Note that there is a exemption for certain cogeneration units. See 70 FR 25276-8, §§ 96.104, 96.204 and 96.304 and the proposed CAIR FIP rulemaking package. See https://epa.gov/cair/rule.html.

Q: Can non-EGUs participate in the annual CAIR trading program? If so, how?

A: Non-EGUs may participate in the annual CAIR trading program through the opt-in provisions in §§ 96.180-96.188 and §§ 96.280-96.288, provided their State chooses to allow sources to opt-in. If a State chooses to allow opt-ins, the model rule opt-in provisions must be used.

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