Section 336.1832. CAIR NOX annual trading program; hardship set-aside.

Rule 832. (1) After the provisions of R 336.1830 have been followed, an owner or operator 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 336.1830.

(2)   For existing EGUs subject to the CAIR NOX annual 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 annual allocation year for existing EGUs. This hardship set-aside pool shall be allocated on a yearly basis and contains 1,200 tons of CAIR NOX annual allowances per allocation year.

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

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

(ii)      The controls required for the 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 unit under this rule may submit to the department a written request, in a format specified by the department, to receive CAIR NOX annual hardship allowances. The authorized account representative shall submit the request for the amount of estimated hardship allowances they need, using historical annual heat input utilization levels multiplied by historical oxides of nitrogen emission rates, in the following manner:

(i)   Historical heat input utilization levels shall be based on the unit's average of the 2 highest heat input utilization levels for the annual control period 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 years during the 5-year time period, then the unit's single highest 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 2 and 3 years in advance of the 2009 and 2010 annual control periods, respectively, and 4 years in advance of each subsequent annual control period. The 3-year allocation shall be the same as provided in R 336.1830(2).

(d)   The department shall allocate the allowances based on the requests received as follows:

(i)   If the allocation hardship set-aside pool for the CAIR NOX annual control period for which CAIR NOX annual 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 annual budget allowances requested.

(ii)   If the allocation hardship set-aside pool for the CAIR NOX annual control period for which CAIR NOX annual 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 annual allowances allocated to each CAIR NOX annual unit so that the total number of CAIR NOx annual allowances allocated are equal to the amounts referenced in subdivision (a) of this subrule.

(3)   The department shall allocate CAIR NOX annual hardship allowances to existing EGUs which have submitted an engineering analysis as described as follows:

(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, a 0.15 pound per million Btu emission rate.

(ii)    The annualized cost associated with each control option. An annualized cost of more than $2,400 per ton of oxides 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 December 31, 2011, the state may require a revised engineering analysis and demonstration as detailed under subrule (3)(a) of this rule, at a minimum of once every 3 years.

History: 2007 AACS.; 2009 AACS.