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(ii) A showing in accordance with who owns, controls, rents, leases or opSubparts C, D, and E of this part that erates an existing powerplant which is the powerplant would qualify for an subject to the prohibitions may be exemption for reasons relating to its subject to sanctions provided by the inability to comply with Clean Air Act

Act or these regulations. requirements because of environmenta), financial or physical limitations. 8 504.3 Statutory prohibitions (power

(3) Statement. A statement indicat- plants). ing which fuels were presented for

(a) Section 301(a)(1) of the Act proconsideration to the agency which cer

hibits the use of natural gas as a pritified with regard to the Clean Air Act, and to the extent known by the

mary energy source by an existing applicant, why they were rejected as a

electric powerplant on or after Janumethod of compliance.'

ary 1, 1990, unless, and to the extent (4) Evidence of duration. The dura

that, ERA has either granted a tempotion of any permit to increase the use

rary or permanent exemption or apof petroleum granted under this para

proved a system compliance plan graph shall not exceed the demon

under Title V of the Act. strated need. Such duration shall be

(b) Section 301(a)(2) of the Act profor the period the powerplant would

hibits the use of natural gas as a priqualify for an exemption, up to and in- mary energy source in any existing cluding the remaining lifetime of the electric powerplant before January 1, powerplant, or for the period of time 1990, unless it used natural gas as a that will be required to eliminate any primary energy source any time impairment of reliability of electric during calendar year 1977, unless, and service, whichever period is less.

to the extent that, ERA has either (5) Limitation

duration of granted a temporary or permanent expermit. ERA may issue a temporary emption, or approved a system complipermit under this subsection to enable ance plan under Title V of the Act. the applicant to demonstrate it would (c) Section 301(a)(3) of the Act proqualify for an exemption under Title hibits the use of natural gas as a priIII of FUA for reasons relating to the

mary energy source by any existing inability to comply with Clean Air Act

electric powerplant, in any calendar requirements. ERA reserves the right year before 1990, in greater proportion to require additional information nec

than the average yearly proportion of essary for a determination of duration.

natural gas which: (e) Environmental Protection

(1) The powerplant used as a primaAgency procedures. [Reserved)

ry energy source in calendar year 1974

through 1976; or Subpart B-Prohibitions and System

(2) If the powerplant began operCompliance Option

ations on or after January 1, 1974, the 8 504.2 Purpose and scope.

powerplant used as a primary energy

source during the first two calendar Section 504.3, below, sets forth the

years of its operation, unless, and to statutory prohibitions imposed by the the extent that, ERA has either grantAct upon existing powerplants. The

ed a temporary or permanent exempprohibitions in this subpart apply to tion from the prohibition or approved all existing electric powerplants as de

a system compliance plan under Title fined by $ 500.2, unless, and to the

V of the Act. extent that, ERA has either granted a

(d) Any prohibition against the use temporary or permanent exemption,

of natural gas on or after January 1, or approved a system compliance plan

1990, will be stayed while any petition under Title V of the Act. Any person

filed for an exemption is resolved. The

stay will include the time required for 'ERA encourages the applicant to request

judicial review. Such petition for exa pre-permit conference be held with EPA and ERA to discuss alternate fuel use strat

emption may be filed at any time after egies and to decide which fuels may be feasi. May 8, 1979, the effective date of ble.

FUA, but it must be filed at least one

year before the date the prohibition is first to take effect.

8 504.4 Electric utility system compliance

option. (a) General. Section 501 of the Act provides for an electric utility system compliance option. An existing powerplant will be considered in compliance with any prohibition under Title III of the Act relating to the use of natural gas if ERA has issued an order approving a system compliance plan including such powerplant. No exemption, except an emergency exemption, for use of natural gas will be available for those powerplants which are covered or which have ever been covered by an approved plan.

(b) Requirements for approval. To qualify, the utility operating the existing powerplant must provide the information requested and demonstrate to the satisfaction of ERA its commitment to the following terms.

(1) Identification of all powerplants owned or operated by the utility, and an indication of those which would or could be subject to prohibitions under Title III (Existing Facilities) of the Act relating to the use of natural gas if a plan for the utility system were not approved;

(2) Identification of those powerplants covered in paragraph (b)(1) of this section that the utility believes would be likely to be entitled to an exemption if a plan were not approved;

(3) A commitment that if a plan is approved the utility will not thereafter use natural gas or petroleum as a primary energy source in any new baseload powerplant;

(4) A commitment that if a plan is approved, the utility will not use natural gas on and after January 1, 1990, in excess of: (i) 20 percent of the base period usage of natural gas adjusted for emergency or peakload purposes, if applicable, or, if lower (ii) the utility's minimum peakload requirement adjusted for emergency or peakload purposes, if applicable;

(5) A commitment that if a plan is approved, the utility will not on or after January 1, 1995, use natural gas except in peakload or intermediate load powerplants identified in paragraph (b)(1) above and the volumes of

gas consumed in tiose pont! will not exceed 75 percentu amount permitted under (b)(4),

(6) A commitment that ond January 1, 2000, tip utility wi use natural gas as : prima source unless ERA Tants it rary extension for ( nergens load purposes under parag this section;

(7) A commitment hat un al of the system compliant utility will obtain nitural & the system only ur er th. of: (i) A contract wich the ecuted prior to Nisvember other than under , exten newal of the contri on or vember 9, 1978; (ii 1 cont the utility execute on or vember 9, 1978, bu only i: tract has been ap:

vedt (iii) an extension o enew on or after Noveml. 9, 197 tract entered into ore Nu. 1978, but only if t exten. newal has been apr ved by 1

(8) A 10-year for ist, to and extended anı ally, 1 vides support for a nclusion that the commitni is in the compliance plan wi be met. cast should includ lemand tricity, constructio. ians an cial plan; and

(9) A plan for u. of fuel tion measures thai ģill min: utility system's nat i al gas a: leum consumption.

(c) Deadline for submiss? period for submissi' of the system compliance plan ex} August 1, 1980.

(d) Calculations of 1990 nat. volumes for $ 504.4(1)(4)(i). Fr, poses of $ 504.4(b)(4)(i), volu. natural gas are the sum of the f ing:

(1) Twenty percent of the fiel gas used in calendar year 1976 b utility's powerplants that were p! in service on or before January 1, i

(2) Ten percent of the natural used in the first 24 months of ser by the utility's powerplants what were placed in service after Januari, 1976, and before May 8, 1979;

(3) Natural gas volumes for emergincy purposes within the meaning of

$ 504.57 of these regulations, to the tension or renewal, do not exceed extent that such volumes exceed the those which are necessary to meet the volumes of natural gas enumerated in requirements of the powerplants paragraphs (d)(1) and (2) above, if under such plan. ERA will not approve ERA has approved use of the volumes any contract, or extension or renewal, for such purposes;

which provides for the delivery of (4) Natural gas volumes for peakload such natural gas after December 31, purposes

within the meaning of 1999, unless ERA has approved the $ 504.58 of these regulations, to the use of such natural gas under paraextent that such volumes exceed the graph (h) below. volume of natural gas enumerated in (g) Fuel conservation measures for paragraphs (d) (1) and (2) above, if $ 504.4(b)(9). Fuel conservation measERA has approved use of the volumes ures include generation efficiency for such purposes; and

measures which conserve natural gas (5) Natural gas volumes, if ERA has and petroleum by increasing the effiapproved use of the volumes for such ciency of the generation process. A purposes, required (i) because of utility may present plans for any delays which occurred, despite diligent other activity, service, or investment good faith efforts in the construction that would result in lower consumpof powerplants which will use a prima- tion of natural gas and petroleum as ry energy source other than natural primary energy sources. gas, or (ii) because without increased (h) Temporary extension for volumes reliability of service would be $ 504.4(6)(6). ERA may grant an extenimpaired.

sion of up to 5 years of the limitation (e) Calculation of volumes for ad- in $ 504.4(b)(6) with respect to the use justed minimum peakload require- of natural gas if the utility demonments for $ 504.4(6)(4)(ii). For pur- strates that such gas is needed for: poses of $ 504.4(b)(4)(ii), volumes of (1) Emergency purposes consistent natural gas are the sum of the follow- with $ 504.57 of these regulations; or ing:

(2) Peakload purposes consistent (1) The volume of natural gas re- with § 504.58 of these regulations. quired to produce 17.1 percent of the (i) Evidence. To submit an adequate total electricity generated by the util- plan for review by ERA the utility ity in 1990;

must include in the plan at least the (2) Natural gas volumes, for emer- following, in order to make the demongency purposes within the meaning of stration required by this section: $ 504.57 of these regulations, to the (1) A ten year forecast of the utiliextent that such volumes exceed the ty's construction plans, financial volume of natural gas enumerated in plans, and electric demand with suffiparagraph (e)(1) above, if ERA has ap- cient detail to conclude that the comproved use of the volumes for such mitments in the plan will be carried purposes, and

out; (3) Natural gas volumes, for peak- (2) A schedule for an orderly proload purposes within the meaning of gression to meet the commitments for § 504.58 of these regulations, to the the years 1995 and 2000; extent that such volumes exceed the (3) A description of meetings, correvolume of natural gas enumerated in spondence, and understandings or paragraph (e)(1) above, if ERA has ap- agreements reached, if any, with approved use of the volumes for such propriate state regulatory authorities purposes.

regarding the commitments contained (f) ERA approval of natural gas con- in the plan; and tracts for $ 504.4(6)(7). ERA will ap- (4) A description of the planned peprove any contract, or contract exten- troleum and natural gas conservation sion renewal, for purposes of measures, including their practicabil$ 504.4(b)(7) with respect to any plan, ity, effectiveness, cost, anticipated savif it determines that the electric util- ings, and implementation steps. ity which submitted such plan has (j) Reporting. The utility must annudemonstrated that the quantities ally update the information contained available under such contract, or ex. in its plan, including progress on im

or

plementing the proposed conservation measures.

(k) Terms and conditions. ERA will condition approval of a system compliance plan on such terms and conditions as ERA determines to be appropriate, including the permissible level of natural gas use prior to 1990 and the use of effective fuel conservation measures which are practicable and consistent with the purposes of the Act.

(1) Plan revision. A system compliance plan may be revised for substantially changed circumstances supported by clear and convincing evidence. A revision to a system compliance plan may be proposed by the utility or by ERA on its own motion. No proposed revision will be effective without the utility's approval and the approval of ERA.

(m) Plan revocation. ERA reserves the right to revoke a system compliance plan at any time on the basis of the utility's material noncompliance with such plan.

(n) Incorporation of Parts 500 and 501. The administrative and definitional provisions contained in 10 CFR Parts 500 and 501, are incorporated by reference herein, and shall be applicable to the extent that they do not conflict with any of the provisions of this section.

8 504.6 Prohibitions by order (case-by

case). (a) ERA may prohibit, by order, the use of natural gas or petroleum as a primary energy source in an existing facility if ERA finds that:

(1) The unit currently has, or previously had, the technical capability to use an alternate fuel as a primary energy source;

(2) The unit has this technical capability now, or it could have the techni. cal capability without:

(i) A substantial physical modification of the unit; or

(ii) A substantial reduction in the rated capacity of the unit; and

(3) It is financially feasible for the unit to use an alternate fuel as its primary energy source.

(b) ERA must make a proposed finding regarding the technical capability of a unit to use alternate fuel as identified in paragraph (a)(1) above prior to the date of publication of the notice of the proposed prohibition. ERA will publish this finding in the FEDERAL REGISTER along with the notice of the proposed prohibition.

(c) Technical capability. (1) ERA will consider “technical capability"on a case-by-case basis. In making this assessment, ERA will consider the characteristics of the unit itself and will not ordinarily consider the nature or absence of appurtenances outside the unit. ERA's major concern is the ability of the unit, from the point of fuel intake to physically sustain combustion of a given fuel and to maintain heat transfer.2

(2) ERA considers that a unit "had” the technical capability to use an alternate fuel if the unit was once able to burn that fuel (regardless of whether the unit was expressly designed to burn that fuel or whether it ever actu

$ 504.5 Purpose and scope.

Section 504.6 below sets forth the prohibitions that ERA, pursuant to Title III of FUA, may impose upon existing facilities. The prohibitions may be made to apply to existing electric powerplants and existing major fuel burning installations, as defined in $ 500.2, unless an exemption is granted by ERA under Subparts D and E of this part or a system compliance plan is approved by ERA under Subpart B of this part. Any person who owns, controls, rents or leases an existing facility may be subjected to the prohibitions imposed by and the sanctions provided for in the Act or these regulations, if ERA can make the findings required by sections 301 (b) and (c) and 302 (a) and (b) of the Act.

2 For example, ERA will examine the furnace configuration and ash removal capability but will not normally consider the need to install pollution control equipment as a measure of technical capability. Furthermore, ERA will not conclude that the absence of fuel handling equipment, such as conveyor belts, pulverizers, or unloading facilities, bears on the issue of a unit's "technical capability" to burn an alternate fuel.

ally did burn it), but is no longer able to do so at the present due to temporary or permanent alterations to the unit itself.:

(3) A unit "has" the technical capability to use an alternate fuel if it can burn an alternate fuel, notwithstanding the fact that adjustments must be made to the unit beforehand or that pollution control equipment may be required to meet air quality requirements.

(d) Substantial physical modifications. ERA will make its determination on whether a physical modification to a unit is "substantial” on a case-by-case basis. ERA will consider physical modifications made to the unit as “substantial” where warranted by the magnitude and complexity of the engineering task or where the modification would impact severly upon operations at the site." ERA will not, however, assess physical modification on the basis of cost or the installation of pollution control or fuel handling equipment.

(e) Substantial reduction in rated capacity. (1) ERA regards a unit's derating of 25 percent or more, as a result of converting a unit from oil or gas to an alternate fuel, as substantial.

(2) ERA will presume that a derating of less than 10 percent, as a result of converting a unit from oil or gas to an alternate fuel, is not substantial unless convincing evidence to the contrary is submitted in rebuttal..

(3) ERA will assess units for which a derating is claimed of 10 percent or more, but less than 25 percent, on a case-by-case.

(4) In assessing whether a unit's derating is not substantial, ERA will consider the impact of a reduction in rated capacity of the unit taking into consideration all necessary appurtenances such as air pollution control equipment required to burn an alternate fuel in compliance with applicable environmental requirements. However, the potential order recipient may raise the following impacts on derating in rebuttal, if under paragraph (e)(2), case-by-case, if under paragraph (e)(3).

(A) for an existing powerplant, on the site at which the unit is located and on the system as well as on the unit itself; and

(B) for an existing installation, on the site at which the unit is located as well as on the unit itself.

(f) Financial feasibility. (1) ERA will presume that it is financially feasible for a unit to use an alternate fuel as its primary energy source if the cost

7

For example, a unit which at one time burned solid coal but which could no longer do so because its coal firing ports and sluicing channels had been cemented over, would be classified as having “had” the technical capability to use coal. (The question of whether it again “could have” such capability without “substantial physical modification” is a separate and additional question.)

* A unit designed to burn natural gas shall be presumed to have the technical capability to burn a synthetic fuel such as medium Btu gas from coal (assuming such gas is available unless convincing evidence to the contrary is submitted in rebuttal). Also a unit designed to burn oil may, depending upon the chemical characteristics, be a unit that "has" the technical capability to burn liquefied coal. The fact that certain adjustments may be necessary does not render this a “hypothetical" as opposed to a “real” capability. Even an oil fired unit converting from the use of #2 distillate to #6 residual oil may be required to adjust or replace burner nozzles and add soot blowers.

5 Significant alternations affecting the furnace configuration or a complete respacing of the tubes would likely fall into this category. A combination of modifications involving changes required for bottom ash removal, related construction and engineering work, and other modifications to the boiler, other than furnace configuration or tube spacing may, in some circumstances, cause modifications to be considered substantial.

6 For example, units that are the subject of a prohibition order will not have installed any operating air pollution control equipment sufficient to burn coal in compliance with applicable environmental equipments. The installation and use of air pollution control equipment alone can, in many cases, produce a derating. Moreover, the shift to coal itself will, because of differences in energy density and fuel flow characteristics, typically involve some derating.

? For example, the proposed order recipient may claim and ERA may find that the derating of a unit is substantial if, due to the lack of excess capacity, the derating produces an appreciable effect upon the operations of the site at which the unit is located, if an MFBI, or upon the site and the system of the unit, if a powerplant.

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