Tenn. Comp. R. & Regs. 1200-03-27-.07 - VOLUNTARY NO[x] EMISSIONS REDUCTION PROGRAM

(1) The purpose of this rule is to provide. a method by which sources that emit NOx but are not subject to the requirements of Rule .06 of this chapter can voluntarily make emission reductions and thereby earn marketable NOx allowances for use in the EPA's NOx Budget Trading Program.

(2) Terms used in this rule shall have the meanings given in Rule .06 of this chapter, Rule .02 of this chapter, and other rules of Division 1200-03, in this order of precedence.

(3) Any owner or operator of a stationary source may submit to the technical secretary a NOx emission reduction proposal, as described in Paragraph (6) below, for reducing NOx emissions during control periods, if each emission unit from which NOx reductions at the source will be obtained meets the following criteria at the time a NOx emission reduction proposal is submitted and during each control period thereafter for which creditable emission reductions are claimed:

(a) Discharges NOx emissions through a stack;

(b) Is fossil fuel-fired;

(c) Has a major source operating permit issued under Chapter 1200-03-9-.02 or a comparable local program rule;

(d) Is not subject to the requirements of Rule .06 of this chapter, including opt-in units;

(e) Is in compliance with all NOx emission requirements applicable to the source and unit so that any NOx reductions made pursuant to this rule are surplus to those requirements;

(f) Installed or implemented a NOx emission control strategy after July 1, 2002;

(g) Conducted an emission baseline determination using the protocol described in Paragraph (5) below prior to initiating the NOx emission control strategy;

(h) Makes emission reductions that are not the result of shutting down; and

(i) Is not an IC engine that according to EPA's final NOx SIP Call inventory had actual average daily NOx emissions of one ton or more during the five-month period May 1 through September 30, 1995.

(4) Any owner or operator of an eligible unit may participate by:

(a) Submitting a NOx emission reduction proposal in accordance with Paragraph (6) below;

(b) Making NOx emission reductions during a control period that are federally enforceable, quantifiable, and surplus to regulatory requirements; and

(c) Submitting a quantification report, in accordance with Paragraph (7) below, after any control period for which creditable reductions are claimed.

(5) Emission reductions made at a participating unit shall be quantified. using an emission reduction quantification protocol approved by the EPA or approved by the technical secretary and submitted to EPA for approval. The emissions measurements recorded and reported in accordance with this protocol shall be used to determine the emission reductions made by the source under this rule and eligible to be issued as allowances for use in the EPA's NOx Budget Trading Program. Each participating unit shall comply with the applicable monitoring requirements prescribed by the approved protocol.

(6) Each NOx emission reduction proposal shall contain the elements and be processed as follows:

(a) Each NOx emission reduction proposal shall include the following:

1. Information identifying each emission reduction unit from which NOx emission reductions have been or will be achieved, including the name, location, operating permit number, and identification number of the source and unit;

2. Description of the NOx controls present on the unit prior to making emission reductions;

3. Explanation of the methods used to achieve the NOx emission reductions;

4. Identification of the emission reduction quantification protocol, approved by the EPA or approved by the technical secretary and submitted to EPA for approval, that will be used to calculate the proposed emission reductions; and

5. Emissions baseline determination for each unit made in accordance with the approved protocol described in Paragraph (5) above.

(b) The technical secretary shall notify in writing the owner or operator submitting a NOx emission reduction proposal of his decision with respect to the proposal. If the technical secretary disapproves a proposal, this written notice shall include a statement of the specific reasons for the disapproval of the proposal. Following such a disapproval the owner or operator may submit an amended or a different NOx emissions reduction proposal for the unit.

(7) Each NOx emission reduction quantification report shall be submitted and processed as follows:

(a) By October 30 following the control period during which the emission reductions were made, the owner or operator of the participating unit must submit a quantification report to the technical secretary stating the reductions achieved during the control period.

(b) The quantification report shall include the following:

1. The amount in tons of the NOx emission reductions made during the control season, calculated based on the approved quantification protocol and including supporting calculations and documentation;

2. Certification by the owner or operator that the NOx reductions achieved during the control period were calculated based on the approved protocol; and

3. A written statement signed by the owner or operator certifying the following:

Based on information and belief formed after reasonable inquiry, I believe the statements and information in this document are true, accurate and complete.

(c) The technical secretary shall. review the quantification report and either approve the emission reductions as being in accordance with the quantification protocol or disapprove them. If they are approved, the technical secretary shall notify the EPA of such approval in accordance with Paragraph (8) below. If they are disapproved, the technical secretary shall notify the, source in writing and shall state the specific reasons for the disapproval, The source may rectify the deficiencies in its quantification report and submit an amended report.

(8) Upon approval of a quantification report, the technical secretary shall notify the EPA of the number of allowances to be transferred from the state's general account into an account of the source or its designee for use in the federal NOx Budget Trading Program. The total number of allowances to be transferred shall be ninety percent (90%) of the creditable NOx emission reductions achieved by the unit. The remaining ten percent (10%) shall be retired by the state. The Administrator shall record the transfer.

(9) Each NOx allowance issued for NOx emission reductions meeting the requirements of this rule is an authorization to emit one ton of NOx in accordance with the federal NOx Budget Trading Program.

(10) Within 90 days after the NOx allowance transfer deadline for the NOx Budget Trading Program, the technical secretary shall provide the Administrator a report reconciling the allowances transferred for the purpose of this rule, including:

(a) The number of allowances deposited into the state's general account for the control period immediately preceding such deadline;

(b) The number of allowances earned by sources pursuant to this rule; and

(c) The number of unused allowances, which shall be retired.

(11) The owner or operator of a source submitting a quantification report that contains an error that affects an allocation must notify the technical secretary in writing within 30 days of the error.

(12) If the owner or operator of a unit has submitted a quantification report that incorrectly overstated the amount of emission reductions achieved and, as a result of this report, allowances in excess of those that should have been have been transferred from the state's general account were transferred into another account for use in the federal NOx Budget Trading Program, the owner or operator shall place into the state's general account an amount of allowances equal to three times the amount of the overstatement within 30 days of discovery of the overstatement by the owner or operator.

(13) The owner or operator of a source, or its designee, shall maintain all records used to calculate the emission reductions in accordance with the quantification protocol. Each record shall be maintained for five (5) years following the date the record is created and shall be made available for inspection by the technical secretary or his representative immediately upon request.

(14) After the third control period this program has been in effect, and every three years thereafter, the technical secretary shall evaluate the program and submit a report to the board, summarizing the results of the evaluation.

Notes

Tenn. Comp. R. & Regs. 1200-03-27-.07

Original rule filed September 11, 2003; effective November 25, 2003.

Authority: T.C.A. §§ 4-5-201 et seq. and 68-201-105.