Section 336.1824. CAIR NOx ozone season trading program; hardship set-aside.

(1) After the provisions of R 336.1822 have been followed, the authorized account representative may pursue a request for hardship allowances.   These requests

must be submitted not later than 30 days prior to the deadline for department submittals to the U.S.  environmental protection agency as described in R 336.1822.

(2)     For existing EGUs and non-EGUs subject to the CAIR NOx ozone season budget, the department shall allocate CAIR NOx hardship allowances under the following procedures:

(a)   The department shall establish a hardship allocation set-aside pool for each CAIR NOx ozone season allocation year starting in 2010. This hardship set-aside pool shall be allocated on an ozone season basis and contains a total of 650 tons per allocation year of CAIR NOx ozone season allowances, for any qualifying EGUs or non-EGUs.

(b)   Hardship allowances may be allocated to an EGU or non-EGU, if the requesting authorized account representative demonstrates both of the following:

(i)    The owner or operator of the EGU or a non-EGU has less than 250 employees within its company or its electric generating division or department.

(ii)   The controls required for the EGU or non-EGU under this part result in excessive or prohibitive costs for compliance, pursuant to the procedures in subrule (3) of this rule.

(c)   The CAIR authorized account representative of a CAIR NOx ozone season unit under this rule may submit to the department a written request, in a format specified by the department, to receive CAIR NOx ozone season hardship allowances. The authorized account representative shall submit the request for the amount of estimated hardship allowances they need, using historical ozone season heat input utilization levels multiplied by historical oxides of nitrogen emission rates as follows:

(i)   Historical heat input utilization levels shall be based on the unit's average of the 2 highest heat input utilization levels for the ozone season in the 5 years immediately preceding the year in which the department is required to submit the oxides of nitrogen allocations to the U.S. environmental protection agency. If the unit operated less than 2 full ozone seasons during the 5-year time period, then the unit's single highest ozone season heat input level shall be used.

(ii)    Historic oxides of nitrogen rates shall be based on the oxides of nitrogen rate reported by the authorized account representative in its 40 C.F.R.  part 75 reports to the

U.S.   environmental protection agency in the calendar year immediately preceding the year in which the department is required to submit the oxides of nitrogen allocation.

(iii)    Units receiving hardship allowances shall receive a 3-year allocation that is 3 years in advance of the 2010 ozone season. The 3-year allocation shall be the same as provided in R 336.1822(3).

(d)   The department shall allocate the allowances from the hardship set-aside pool based on the requests received as follows:

(i)   If the allocation hardship set-aside pool for the CAIR NOx ozone season control period for which CAIR NOx ozone season allowances are requested has an amount of oxides of nitrogen allowances greater than or equal to the number requested, then the department shall allocate the amount of the CAIR NOx ozone season allowances requested.

(ii)   If the allocation hardship set-aside pool for the CAIR NOx ozone season control period for which CAIR NOx ozone season allowances are requested has an amount of oxides of nitrogen allowances less than the number requested, then the department shall proportionately reduce the number of CAIR NOx ozone season allowances allocated to

each CAIR NOx ozone season unit so that the total number of CAIR NOx ozone season allowances allocated are equal to the amounts in R 336.1822(1)(a)(v) or (b)(v).

(3)   The department shall allocate CAIR NOx ozone season hardship allowances to existing EGUs and existing non-EGUs which have submitted an engineering analysis as described in the following procedures:

(a)    The authorized account representative shall demonstrate to the department that the control level required pursuant to this rule results in excessive or prohibitive cost for compliance. The demonstration shall include all of the following:

(i)    An engineering study analyzing all control options that are technically available for the unit, including control options that would achieve a level of control meeting, at a minimum, the levels as specified in subparagraphs (A), (B), and (C) of this paragraph. Sources that previously submitted an engineering analysis and received hardship allowances pursuant to R 336.1810(4)(f) for the oxides of nitrogen budget program may submit written updates to their previous plan.

(A)   A NOx emission rate of 0.15 pound per million Btu for EGUs during the 2010 through 2014 time period.

(B)   A NOx emission rate of 0.125 pound per million Btu for EGUs from 2015 and beyond.

(C)  A NOx emission rate of 0.17 pound per million Btu for non-EGUs.

(ii)    The annualized cost associated with each control option. An annualized cost of more than $2,400 per ton of oxide of nitrogen reduced shall generally be considered to be an excessive cost for compliance with this rule.

(iii)   Other considerations that contribute to prohibitive cost of compliance.

(b)   For a source to remain eligible for hardship allowances under this rule after the initial 3-year allocation period, ending on September 30, 2011, the state may require a revised engineering analysis and demonstration as referenced in subrule (3)(a) of this rule, at a minimum of once every 3 years.

History: 2007 AACS.