Title of Regulation: 9VAC5-140. Regulation for Emissions Trading Programs (repealing 9VAC5-140-1061, 9VAC5-140-1062, 9VAC5-140-2061, 9VAC5-140-2062, 9VAC5-140-3061, 9VAC5-140-3062).

Statutory Authority: §§ 10.1-1308 and 10.1-1322.3 of the Code of Virginia; §§ 108, 109, 110, and 302 of the federal Clean Air Act; 40 CFR Part 51.

Effective Date: August 18, 2010.

Agency Contact: Mary L. Major, Department of Environmental Quality, P.O. Box 10009, Richmond, VA 23240, telephone (804) 698-4423, FAX (804) 698-4510, TTY (804) 698-4021, or email mary.major@deq.virginia.gov.

Background:

The State Air Pollution Control Board adopted final regulations to implement the provisions of the Code of Virginia that address compliance in nonattainment areas for the state Clean Air Interstate Rule (CAIR) program in 2007. The regulations were adopted under the authority of the Code of Virginia that addressed compliance in nonattainment areas for the state CAIR program, as set forth in Chapters 867 and 920 the 2006 Acts of Assembly. A petition was filed; the effective date of the regulations was suspended, and litigation over the provisions continued through 2008 and 2009. On February 25, 2010, a final decision of the Court of Appeals of Virginia remanded the regulation and vacated the nonattainment provisions in both the Nitrogen Oxides (NO_X) Annual Trading Program (9VAC5-140-1061) and the NO_X Ozone Season Trading Program (9VAC5-140-2061). Chapters 783 and 867 of the 2010 Acts of Assembly amended § 10.1-1328 A 5 by removing the board's authority to restrict the purchase of allowances for compliance obligations for NO_X and sulfur dioxide (SO₂) sources in nonattainment areas. Therefore, the nonattainment provisions of 9VAC5-140-3061 of Article 5 (CAIR SO₂ Allowance Allocations) of the SO₂ Annual Trading Program are not consistent with the Code of Virginia.

Summary:

Based upon a final decision of the Court of Appeals of Virginia and amendments to the Code of Virginia, this action repeals regulations that implement the provisions of the Code of Virginia that address compliance in nonattainment areas for the state CAIR program.

9VAC5-140-1061. Nonattainment area requirements. (Repealed.)

A. The following requirements apply to any CAIR NO_X unit located in a nonattainment area designated in 9VAC5-20-204:

1. No owner, operator or other person shall cause or permit to be discharged into the atmosphere from any CAIR NO_X unit any NO_X emissions in excess of the NO_X annual emissions cap. For each control period, the NO_X annual emissions cap shall be equal to the number of NO_X allowances (expressed in tons) allocated for the CAIR NO_X unit for the control period in accordance with 9VAC5-140-1420.

2. A CAIR NO_X unit shall be subject to the requirements under subdivision 1 of this subsection for the control period starting on the later of January 1, 2009, or the deadline for meeting the unit's monitor certification requirements under 9VAC5-140-1700 C 1, 2, or 5 and for each control period thereafter.

3. Compliance with the NO_X annual emissions cap in subdivision 1 of this subsection shall be based on a comparison of (i) the total NO_X emissions (expressed in tons) from each CAIR NO_X unit during the control period, as determined in accordance with Article 8 (9VAC5-140-1700 et seq.) of this part and (ii) the NO_X annual emissions cap.

4. The owner or operator of a CAIR NO_X unit subject to this section shall be in violation of this subsection if the owner or operator fails to submit by April 1 of each year for the preceding control period (i) documentation to verify compliance with the NO_X annual emissions cap set forth in subdivision 1 of this subsection or (ii) a NO_X emissions compliance demonstration in accordance with 9VAC5-140-1062.

B. Nothing in this part shall prevent the permitting authority from issuing a nonattainment area permit under the authority and procedures of the state operating permit program in order to:

1. Cap the emissions of a CAIR NO_X unit or CAIR NO_X source contributing to a violation of any air quality standard or a nonattainment condition;

2. Remedy a situation that may cause or contribute to nonattainment condition or the endangerment of human health or welfare; or

3. Establish a source-specific emission standard or other requirements necessary to implement the federal Clean Air Act or the Virginia Air Pollution Control Law.

C. Nothing in this part shall prevent the permitting authority from including in any nonattainment area permit issued to implement subdivision B 1 of this section any terms and conditions that would prohibit any CAIR NO_X unit or CAIR NO_X source subject to this part from engaging in any emissions trading activities or using any emissions credits obtained from emissions reductions external to the CAIR NO_X unit or CAIR NO_X source to comply with the requirements of subsection A of this section or any nonattainment area permit issued pursuant to subdivision B 1 of this section except that such terms and conditions may not prohibit any CAIR NO_X unit or CAIR NO_X source subject to this part from engaging in any emissions trading activities unrelated to compliance with the requirements of subsection A of this section or any nonattainment area permit issued pursuant to subdivision B 1 of this section.

D. Nothing in this section shall be construed to prohibit any CAIR NO_X unit or CAIR NO_X source from participating in the CAIR NO_X Annual Trading Program. Notwithstanding any other provision of this section or any regulation of the board, the permitting authority may not include in any permit any terms and conditions that restrict any emissions trading activities under the CAIR NO_X Annual Trading Program. Compliance with the CAIR NO_X Annual Trading Program and this section (including any nonattainment area permits issued pursuant to this section) shall be determined separately and in accordance with the terms of the provisions of each.

E. The provisions of subsection A of this section shall not apply once an area is no longer listed in 9VAC5-20-204 as nonattainment for any pollutant; however, regardless of the attainment status of the area, any nonattainment area permits issued to implement this section shall remain in effect until revoked by the permitting authority.

F. The provisions of subsection A of this section shall not apply to any CAIR NO_X unit commencing operation on or after January 1, 2006, until the later of (i) January 1, 2014, or (ii) the unit has operated each calendar year during a period of at least five consecutive calendar years.

9VAC5-140-1062. NO_X emissions compliance demonstration. (Repealed.)

A. Compliance with the NO_X annual emissions cap set forth in 9VAC5-140-1061 A 1 may also be achieved through a NO_X emissions compliance demonstration meeting the requirements of this section.

B. The NO_X emissions compliance demonstration submitted pursuant to this section may include one or more CAIR NO_X units in a CAIR NO_X source under common control and located in the nonattainment area.

C. NO_X emissions compliance demonstrations shall be submitted to the permitting authority by April 1 of each year for the preceding control period.

D. A complete NO_X emissions compliance demonstration shall include the following elements in a format acceptable to the permitting authority:

1. Identification of each CAIR NO_X unit in the NO_X emissions compliance demonstration.

2. The number of NO_X allowances (expressed in tons) allocated for each CAIR NO_X unit for the preceding control period.

3. The total NO_X emissions (expressed in tons) from each CAIR NO_X unit during the preceding control period.

4. The calculation for the equation in subsection E of this section.

E. Compliance with this section shall be demonstrated with the following equation:

where:

n is the number of CAIR NO_X units in the NO_X emissions compliance demonstration (n may equal 1).

Σ is the sum of all i CAIR NO_X units.

i is a CAIR NO_X unit identified in subsection B of this section.

ANOE (Actual Nitrogen Oxides Emissions) are the total NO_X emissions (expressed in tons) from each CAIR NO_X unit during the preceding control period, as determined in accordance with Article 8 (9VAC5-140-1700 et seq.) of this part.

X is the number of NO_X allowances (expressed in tons) allocated for the CAIR NO_X unit for the preceding control period in accordance with 9VAC5-140-1420.

F. The emissions measurements recorded and reported in accordance with Article 8 (9VAC5-140-1700 et seq.) of this part shall be used to determine compliance by each CAIR NO_X source with the NO_X annual emissions cap set forth in 9VAC5-140-1061 A.

9VAC5-140-2061. Nonattainment area requirements. (Repealed.)

A. The following requirements apply to any CAIR NO_X Ozone Season unit located in a nonattainment area designated in 9VAC5-20-204:

1. No owner, operator or other person shall cause or permit to be discharged into the atmosphere from any CAIR NO_X Ozone Season unit any NO_X emissions in excess of the NO_X Ozone Season emissions cap. For each control period, the NO_X Ozone Season emissions cap shall be equal to the number of NO_X allowances (expressed in tons) allocated for the CAIR NO_X Ozone Season unit for the control period in accordance with 9VAC5-140-2420.

2. A CAIR NO_X Ozone Season unit shall be subject to the requirements under subdivision 1 of this subsection for the control period starting on the later of May 1, 2009, or the deadline for meeting the unit's monitor certification requirements under 9VAC5-140-2700 C 1, 2, 3 or 7 and for each control period thereafter.

3. Compliance with the NO_X Ozone Season emissions cap in subdivision 1 of this subsection shall be based on a comparison of (i) the total NO_X emissions (expressed in tons) from each CAIR NO_X Ozone Season unit during the control period, as determined in accordance with Article 8 (9VAC5-140-2700 et seq.) of this part and (ii) NO_x Ozone Season emissions cap.

4. The owner or operator of a CAIR NO_X Ozone Season unit subject to this section shall be in violation of this subsection if the owner or operator fails to submit by January 1 of each year for the preceding control period (i) documentation to verify compliance with the NO_X Ozone Season emissions cap set forth in subdivision 1 of this subsection or (ii) a NO_X emissions compliance demonstration in accordance with 9VAC5-140-2062.

B. Nothing in this part shall prevent the permitting authority from issuing a nonattainment area permit under the authority and procedures of the state operating permit program in order to:

1. Cap the emissions of a CAIR NO_X Ozone Season unit or CAIR NO_X Ozone Season source contributing to a violation of any air quality standard or a nonattainment condition;

2. Remedy a situation that may cause or contribute to nonattainment condition or the endangerment of human health or welfare; or

3. Establish a source-specific emission standard or other requirements necessary to implement the federal Clean Air Act or the Virginia Air Pollution Control Law.

C. Nothing in this part shall prevent the permitting authority from including in any nonattainment area permit issued to implement subdivision B 1 of this section any terms and conditions that would prohibit any CAIR NO_X Ozone Season unit or CAIR NO_X Ozone Season source subject to this part from engaging in any emissions trading activities or using any emissions credits obtained from emissions reductions external to the CAIR NO_X Ozone Season unit or CAIR NO_X Ozone Season source to comply with the requirements of subsection A of this section or any nonattainment area permit issued pursuant to subdivision B 1 of this section except that such terms and conditions may not prohibit any CAIR NO_X Ozone Season unit or CAIR NO_X Ozone Season source subject to this part from engaging in any emissions trading activities unrelated to compliance with the requirements of subsection A of this section or any nonattainment area permit issued pursuant to subdivision B 1 of this section.

D. Nothing in this section shall be construed to prohibit any CAIR NO_X Ozone Season unit or CAIR NO_X Ozone Season source from participating in the CAIR NO_X Ozone Season Trading Program. Notwithstanding any other provision of this section or any regulation of the board, the permitting authority may not include in any permit any terms and conditions that restrict any emissions trading activities under the CAIR NO_X Ozone Season Trading Program. Compliance with the CAIR NO_X Ozone Season Trading Program and this section (including any nonattainment area permits issued pursuant to this section) shall be determined separately and in accordance with the terms of the provisions of each.

E. The provisions of subsection A of this section shall not apply once an area is no longer listed in 9VAC5-20-204 as nonattainment for any pollutant; however, regardless of the attainment status of the area, any nonattainment area permits issued to implement this section shall remain in effect until revoked by the permitting authority.

F. The provisions of subsection A of this section shall not apply to any CAIR NO_X Ozone Season unit commencing operation on or after January 1, 2006, until the later of (i) January 1, 2014, or (ii) the unit has operated each calendar year during a period of at least five consecutive calendar years.

9VAC5-140-2062. NOX emissions compliance demonstration. (Repealed.)

A. Compliance with the NO_X Ozone Season emissions cap set forth in 9VAC5-140-2061 A 1 may also be achieved through a NO_X emissions compliance demonstration meeting the requirements of this section.

B. The NO_X emissions compliance demonstration submitted pursuant to this section may include one or more CAIR NO_X Ozone Season units in a CAIR NO_X Ozone Season source under common control and located in the nonattainment area.

C. NO_X emissions compliance demonstrations shall be submitted to the permitting authority by January 1 of each year for the preceding control period.

D. A complete NO_X emissions compliance demonstration shall include the following elements in a format acceptable to the permitting authority:

1. Identification of each CAIR NO_X Ozone Season unit in the NO_X emissions compliance demonstration.

2. The number of NO_X allowances (expressed in tons) allocated for each CAIR NO_X Ozone Season unit for the preceding control period.

3. The total NO_X emissions (expressed in tons) from each CAIR NO_X Ozone Season unit during the preceding control period.

4. The calculation for the equation in subsection E of this section.

E. Compliance with this section shall be demonstrated with the following equation:

where:

n is the number of CAIR NO_X Ozone Season units in the NO_X emissions compliance demonstration (n may equal 1).

Σ is the sum of all i CAIR NO_X Ozone Season units.

i is a CAIR NO_X Ozone Season unit identified in subsection B of this section.

ANOE (Actual Nitrogen Oxides Emissions) are the total NO_X emissions (expressed in tons) from each CAIR NO_X Ozone Season unit during the preceding control period, as determined in accordance with Article 8 (9VAC5-140-2700 et seq.) of this part.

X is the number of NO_X allowances (expressed in tons) allocated for the CAIR NO_X Ozone Season unit for the preceding control period in accordance with 9VAC5-140-2420.

F. The emissions measurements recorded and reported in accordance with Article 8 (9VAC5-140-2700 et seq.) of this part shall be used to determine compliance by each CAIR NO_X Ozone Season source with the NO_X Ozone Season emissions cap set forth in 9VAC5-140-2061 A.

9VAC5-140-3061. Nonattainment area requirements. (Repealed.)

A. The following requirements apply to any CAIR SO₂ unit located in a nonattainment area designated in 9VAC5-20-204:

1. No owner, operator or other person shall cause or permit to be discharged into the atmosphere from any CAIR SO₂ unit any SO₂ emissions in excess of the SO₂ annual emissions cap. For each control period, the SO₂ annual emissions cap shall be equal to the number of SO₂ allowances (expressed in tons) allocated for the CAIR SO₂ unit for the control period in accordance with 9VAC5-140-3420.

2. A CAIR SO₂ unit shall be subject to the requirements under subdivision 1 of this subsection for the control period starting on the later of January 1, 2010, or the deadline for meeting the unit's monitor certification requirements under 9VAC5-140-3700 C 1, 2, or 5 and for each control period thereafter.

3. Compliance with the SO₂ annual emissions cap in subdivision 1 of this subsection shall be based on a comparison of (i) the total SO₂ emissions (expressed in tons) from each CAIR SO₂ unit during the control period, as determined in accordance with Article 8 (9VAC5-140-3700 et seq.) of this part, and (ii) the SO₂ annual emissions cap.

4. The owner or operator of a CAIR SO₂ unit subject to this section shall be in violation of this subsection if the owner or operator fails to submit by April 1 of each year for the preceding control period (i) documentation to verify compliance with the SO₂ annual emissions cap set forth in subdivision 1 of this subsection or (ii) an SO₂ emissions compliance demonstration in accordance with 9VAC5-140-3062.

B. Nothing in this part shall prevent the permitting authority from issuing a nonattainment area permit under the authority and procedures of the state operating permit program in order to:

1. Cap the emissions of a CAIR SO₂ unit or CAIR SO₂ source contributing to a violation of any air quality standard or a nonattainment condition;

2. Remedy a situation that may cause or contribute to nonattainment condition or the endangerment of human health or welfare; or

3. Establish a source-specific emission standard or other requirements necessary to implement the federal Clean Air Act or the Virginia Air Pollution Control Law.

C. Nothing in this part shall prevent the permitting authority from including in any nonattainment area permit issued to implement subdivision B 1 of this section any terms and conditions that would prohibit any CAIR SO₂ unit or CAIR SO₂ source subject to this part from engaging in any emissions trading activities or using any emissions credits obtained from emissions reductions external to the CAIR SO₂ unit or CAIR SO₂ source to comply with the requirements of subsection A of this section or any nonattainment area permit issued pursuant to subdivision B 1 of this section except that such terms and conditions may not prohibit any CAIR SO₂ unit or CAIR SO₂ source subject to this part from engaging in any emissions trading activities unrelated to compliance with the requirements of subsection A of this section or any nonattainment area permit issued pursuant to subdivision B 1 of this section.

D. Nothing in this section shall be construed to prohibit any CAIR SO₂ unit or CAIR SO₂ source from participating in the CAIR SO₂ Annual Trading Program. Notwithstanding any other provision of this section or any regulation of the board, the permitting authority may not include in any permit any terms and conditions that restrict any emissions trading activities under the CAIR SO₂ Annual Trading Program. Compliance with the CAIR SO₂ Annual Trading Program and this section (including any nonattainment area permits issued pursuant to this section) shall be determined separately and in accordance with the terms of the provisions of each.

E. The provisions of subsection A of this section shall not apply once an area is no longer listed in 9VAC5-20-204 as nonattainment for any pollutant; however, regardless of the attainment status of the area, any nonattainment area permits issued to implement this section shall remain in effect until revoked by the permitting authority.

F. The provisions of subsection A of this section shall not apply to any CAIR SO₂ unit for which no SO₂ allowances are allocated in accordance with 9VAC5-140-3420.

9VAC5-140-3062. SO₂ emissions compliance demonstration. (Repealed.)

A. Compliance with the SO₂ annual emissions cap set forth in 9VAC5-140-3061 A 1 may also be achieved through an SO₂ emissions compliance demonstration meeting the requirements of this section.

B. The SO₂ emissions compliance demonstration submitted pursuant to this section may include one or more CAIR SO₂ units in a CAIR SO₂ source under common control and located in the nonattainment area.

C. SO₂ emissions compliance demonstrations shall be submitted to the permitting authority by April 1 of each year for the preceding control period.

D. A complete SO₂ emissions compliance demonstration shall include the following elements in a format acceptable to the permitting authority:

1. Identification of each CAIR SO₂ unit in the SO₂ emissions compliance demonstration.

2. The number of SO₂ allowances (expressed in tons) allocated for each CAIR SO₂ unit for the preceding control period.

3. The total SO₂ emissions (expressed in tons) from each CAIR SO₂ unit during the preceding control period.

4. The calculation for the equation in subsection E of this section.

E. Compliance with this section shall be demonstrated with the following equation:

where:

n is the number of CAIR SO₂ units in the SO₂ emissions compliance demonstration (n may equal 1).

Σ is the sum of all i CAIR SO₂ units.

i is a CAIR SO₂ unit identified in subsection B of this section.

ASDE (Actual Sulfur Dioxide Emissions) are the total SO₂ emissions (expressed in tons) from each CAIR SO₂ unit during the preceding control period, as determined in accordance with Article 8 (9VAC5-140-3700 et seq.) of this part.

X is the number of SO₂ allowances (expressed in tons) allocated for the CAIR SO₂ unit for the preceding control period in accordance with 9VAC5-140-3420.

F. The emissions measurements recorded and reported in accordance with Article 8 (9VAC5-140-3700 et seq.) of this part shall be used to determine compliance by each CAIR SO₂ source with the SO₂ annual emissions cap set forth in 9VAC5-140-3061 A.