Texas SIP: 30 TAC 101.370-101.379. Discrete Emission Credit Banking and Trading; SIP effective 2006-10-06
Regulatory Text:
Texas Chapter 101 - General Air Quality Rules
SUBCHAPTER H: EMISSIONS BANKING AND TRADING
DIVISION 4: DISCRETE EMISSION CREDIT BANKING AND TRADING
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82).
Outline:
§101.370. Definitions. G-76, TXd82
§101.371. Purpose. G-74, TXd82
§101.372. General Provisions. G-74, TXd82
§101.373. Discrete Emission Reduction Credit Generation and Certification. G-76, TXd82
§101.374. Mobile Discrete Emission Reduction Credit Generation and Certification. G-76, TXd82
§101.376. Discrete Emission Credit Use. G-76, TXd82
§101.378. Discrete Emission Credit Banking and Trading. G-74, TXd82
§101.379. Program Audits and Reports. G-74, TXd82
§101.370. Definitions.
As adopted by TCEQ November 10, 2004 effective December 2, 2004 (G-76).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82).
The following words and terms, when used in this division, have the following meanings, unless the context clearly indicates otherwise.
(1) Activity - The amount of activity at a facility or mobile source measured in terms of production, use, raw materials input, vehicle miles traveled, or other similar units that have a direct correlation with the economic output and emission rate of the facility or mobile source.
(2) Actual emissions - The total emissions during a selected time period, using the facility’s or mobile source’s actual daily operating hours, production rates, or types of materials processed, stored, or combusted during that selected time period.
(3) Area source - Any facility included in the agency emissions inventory under the area source category.
(4) Baseline activity - The facility’s actual level of activity based on the facility’s actual daily operating hours, production rates, or types of materials processed, stored, or combusted averaged over two consecutive calendar years.
(5) Baseline emission rate - The facility’s rate of emissions per unit of activity during the baseline activity period.
(6) Baseline emissions - The facility’s actual emissions, in tons per year, occurring prior to an emission reduction strategy and calculated as the product of baseline activity and baseline emission rate not to exceed all limitations required by applicable local, state, and federal rules and regulations.
(7) Certified - Any emission reduction that is determined to be creditable upon review and approval by the executive director.
(8) Curtailment - A reduction in activity level at any facility or mobile source.
(9) Discrete emission credit - A discrete emission reduction credit or mobile discrete emission reduction credit.
(10) Discrete emission reduction credit - A certified emission reduction that is created during a generation period, quantified after the period in which emissions reductions are made, and expressed in tons.
(11) Emission reduction - An actual reduction in emissions from a facility or mobile source.
(12) Emission reduction strategy - The method implemented to reduce the facility’s or mobile source's emissions beyond that required by state or federal law, regulation, or agreed order.
(13) Facility - As defined in §116.10 of this title (relating to General Definitions).
(14) Generation period - The discrete period of time, not exceeding 12 months, over which a discrete emission reduction credit is created.
(15) Generator - The owner or operator of a facility or mobile source that creates an emission reduction.
(16) Mobile discrete emission reduction credit or discrete mobile credit - A certified emission reduction from a mobile source that is created during a generation period, quantified after the period in which emissions reductions are made, and expressed in tons.
(17) Mobile source - On-road (highway) vehicles (e.g., automobiles, trucks, and motorcycles) and non-road vehicles (e.g., trains, airplanes, agricultural equipment, industrial equipment, construction vehicles, off-road motorcycles, and marine vessels).
(18) Mobile source baseline activity - The level of activity of a mobile source during the applicable mobile source baseline emissions period.
(19) Mobile source baseline emissions - The mobile source's actual emissions, in tons per year, occurring prior to a mobile emission reduction strategy calculated as the product of mobile source baseline activity and mobile source baseline emission rate not to exceed all limitations required by applicable local, state, and federal rules and regulations.
(20) Mobile source baseline emissions rate - The mobile source’s rate of emissions per unit of mobile source baseline activity during the mobile source baseline emissions period.
(21) Most stringent allowable emissions rate - The emissions rate of a facility or mobile source, considering all limitations required by applicable local, state, and federal rules and regulations.
(22) Ozone season - The portion of the year when ozone monitoring is federally required to occur in a specific geographic area, as defined in 40 Code of Federal Regulations Part 58, Appendix D, §2.5.
(23) Permanent - An emission reduction that is long-lasting and unchanging for the remaining life of the facility or mobile source. Such a time period must be enforceable.
(24) Protocol - A replicable and workable method of estimating emission rates or activity levels used to calculate the amount of emission reduction generated or credits required for facilities or mobile sources.
(25) Quantifiable - An emission reduction that can be measured or estimated with confidence using replicable methodology.
(26) Real reduction - A reduction in which actual emissions are reduced.
(27) Shutdown - The permanent cessation of an activity producing emissions at a facility or mobile source.
(28) Site - As defined in §122.10 of this title (relating to General Definitions).
(29) Source - As defined in §101.1 of this title (relating to Definitions).
(30) State implementation plan - A plan that provides for attainment and maintenance of a primary or secondary national ambient air quality standard as adopted in 40 Code of Federal Regulations Part 52, Subpart SS.
(31) Strategy activity - The facility’s or mobile source's level of activity during the discrete emission reduction credit generation period.
(32) Strategy emission rate - The facility’s or mobile source’s emission rate during the discrete emission reduction credit generation period.
(33) Surplus - An emission reduction that is not otherwise required of a facility or mobile source by a state or federal law, regulation, or agreed order and has not been otherwise relied upon in the state implementation plan.
(34) Use period - The period of time over which the user applies discrete emission credits to an applicable emission reduction requirement.
(35) User - The owner or operator of a facility or mobile source that acquires and uses discrete emission reduction credits to meet a regulatory requirement, demonstrate compliance, or offset an emission increase.
(36) Use strategy - The compliance requirement for which discrete emission credits are being used.
Adopted November 10, 2004, Effective December 2, 2004 (G-76).
***end tx 101.370***G-76***EPA-R06-OAR-2005-TX-0029***TX035***TXd82***h32***
§101.371. Purpose.
As adopted by TCEQ December 13, 2002 effective January 17, 2003 (G-74).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82)
The purpose of this division is to allow the operator of a facility or mobile source to generate discrete emission credits by reducing emissions beyond the level required by any local, state, and federal regulation, and to allow the operator of another source to use these credits. Participation under this division is strictly voluntary.
Adopted December 13, 2002, Effective January 17, 2003 (G-74).
***end tx 101.371***G-74***EPA-R06-OAR-2005-TX-0029****TX035***TXd82***h32***
§101.372. General Provisions.
As adopted by TCEQ December 13, 2002 effective January 17, 2003 (G-74).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82)
(a) Applicable pollutants. Reductions of volatile organic compounds (VOC), nitrogen oxides (NOx), carbon monoxide (CO), sulfur dioxide (SO2), and particulate matter with an aerodynamic diameter of less than or equal to a nominal ten microns (PM10) may qualify as discrete emission credits as appropriate. Reductions of other criteria pollutants are not creditable. Reductions of one pollutant may not be used to meet the reduction requirements for another pollutant, unless:
(1) urban airshed modeling demonstrates that one may be substituted for another subject to approval by the executive director and the EPA; or
(2) the facility generating the emission reductions is located outside the United States and:
(A) the substitution:
(i) results in a greater health benefit and is of equal or greater benefit to the overall air quality of the area, as determined by the executive director;
(ii) is from the reduction of a criteria pollutant for which the area has been designated as nonattainment or which leads to the formation of a criteria pollutant for which an area has been designated as nonattainment; and
(iii) is for any criteria pollutant for which the area has been designated as nonattainment or leads to the formation of a criteria pollutant for which the area has been designated as nonattainment; and
(B) the user:
(i) demonstrates that the use of the reduction does not cause localized health impacts, as determined by the executive director;
(ii) submits all supporting information for calculations and modeling, and any additional information requested by the executive director; and
(iii) is located within 100 kilometers of the Texas - Mexico border.
(b) Eligible generator categories. Eligible categories include the following:
(1) facilities (including area sources);
(2) mobile sources; or
(3) any facility, including area sources, or mobile source associated with actions by federal agencies under §101.30 of this title (relating to Conformity of General Federal Actions to State Implementation Plans).
(c) Discrete emission credit requirements.
(1) To be creditable as a discrete emission reduction credit (DERC), an emission reduction must meet the following:
(A) the reduction be real, quantifiable, and surplus at the time the discrete emission credit is generated;
(B) the reduction must have occurred after the most recent year of emissions inventory used in the state implementation plan (SIP) for all applicable pollutants; and
(C) the facility's annual emissions prior to the reduction strategy must have been reported or represented in the emissions inventory used for the SIP.
(2) To be creditable as a mobile discrete emission reduction credit (MDERC), an emission reduction must meet the following:
(A) the reduction must be real, quantifiable, and surplus at the time it is created;
(B) the reduction must have occurred after the most recent year of emissions inventory used in the SIP for all applicable pollutants;
(C) the mobile source’s emissions must have been represented in the emissions inventory used for the SIP; and
(D) the mobile sources must have been included in the attainment demonstration baseline emissions inventory. If a mobile reduction implemented is not in the baseline for emissions, this reduction does not constitute a discrete emission reduction.
(3) Emission reductions from a facility or mobile source which are certified as discrete emission credits under this division cannot be recertified in whole or in part as emission credits under another division within this subchapter.
(d) Protocol.
(1) All generators or users of discrete emission credits must use a protocol which has been submitted by the executive director to the EPA for approval, if existing for the applicable facility or mobile source, to measure and calculate baseline emissions. If the generator or user wishes to deviate from a protocol submitted by the executive director, EPA approval is required before the protocol can be used. Protocols shall be used as follows.
(A) Facilities subject to the emission specifications under §§117.106, 117.206, or 117.475 of this title (relating to Emission Specifications for Attainment Demonstrations; and Emission Specifications) shall quantify reductions in NOx using the testing and monitoring methodologies identified to show compliance with the emission specification.
(B) Facilities subject to the requirements under §§115.112, 115.121, 115.122, 115.162, 115.211, 115.212, 115.352, 115.421, 115.541, or 115.542 (relating to Emission Specifications; and Control Requirements) shall quantify VOC reductions using the testing and monitoring methodologies identified to show compliance with the emission specifications or the requirements.
(C) If the executive director has not submitted a protocol for the applicable facility or mobile source to the EPA for approval, the following applies:
(i) the amount of discrete emission credits from a facility or mobile source, in tons, will be determined and certified based on quantification methodologies at least as stringent as the methods used to demonstrate compliance with any applicable requirements for the facility or mobile source;
(ii) the generator must collect relevant data sufficient to characterize the facility’s or mobile source’s emissions of the affected pollutant and the facility’s or mobile source’s activity level for all representative phases of operation in order to characterize the facility’s or mobile source’s baseline emissions;
(iii) facilities with continuous emissions monitoring systems or predictive emissions monitoring systems in place shall use this data in quantifying actual emissions;
(iv) the chosen quantification protocol shall be made available for public comment for a period of 30 days and shall be viewable on the commission’s web site;
(v) the chosen quantification protocol and any comments received during the public comment period shall, upon approval by the executive director, be submitted to the EPA for a 45-day adequacy review; and
(vi) quantification protocols shall not be accepted for use with this division (relating to Discrete Emission Credit Banking and Trading) after a proposed disapproval of the protocol by the EPA in the Federal Register.
(2) In the event that the monitoring and testing data required under paragraph (1) of this subsection is missing or unavailable, the facility may report actual emissions for that period of time using these listed methods in the following order of preference to determine actual emissions:
(A) continuous monitoring data;
(B) periodic monitoring data;
(C) testing data;
(D) manufacturer’s data;
(E) EPA Compilation of Air Pollution Emission Factors (AP-42), September 2000; or
(F) material balance.
(3) When quantifying actual emissions in accordance with paragraph (2) of this subsection, the generator shall use the most conservative method for replacing the missing data, submit the justification for not using the methods in paragraph (1) of this subsection, and submit the justification for the method used.
(e) Credit certification.
(1) The amount of discrete emission credits shall be rounded down to the nearest tenth of a ton when generated and shall be rounded up to the nearest tenth of a ton when used.
(2) Applications for certification will be reviewed in order to determine the credibility of the reductions. Reductions determined to be creditable will be certified by the executive director.
(3) The applicant will be notified in writing if the executive director denies the discrete emission credit notification. The applicant may submit a revised discrete emission credit notification in accordance with the requirements of this division.
(4) If a facility’s or mobile source’s emissions exceed its allowable emission limit, the amount of emissions exceeding the limit may not be certified as discrete emission credits.
(f) Geographic scope. Except as provided in paragraphs (7) and (8) of this subsection, only emission reductions generated in the State of Texas may be creditable and used in the state with the following limitations.
(1) VOC and NOx discrete emission credits generated in an ozone attainment area may be used in any county or portion of a county designated as attainment or unclassified, except as specified in paragraphs (4) and (5) of this subsection and may not be used in an ozone nonattainment area.
(2) VOC and NOx discrete emission credits generated in an ozone nonattainment area may be used either in the same ozone nonattainment area in which they were generated, or in any county or portion of a county designated as attainment or unclassified.
(3) VOC and NOx discrete emission credits generated in an ozone nonattainment area may not be used in any other ozone nonattainment area, except as provided in this subsection.
(4) VOC discrete emission credits are prohibited from use within the covered attainment counties, as defined in §115.10 of this title (relating to Definitions), if generated outside of the covered attainment counties. VOC discrete emission credits generated in a nonattainment area may be used in the covered attainment counties, except those generated in El Paso.
(5) NOx discrete emission credits are prohibited from use within the covered attainment counties, as defined in §115.10 of this title, if generated outside of the covered attainment counties. NOx discrete emission credits generated in a nonattainment area, except those generated in El Paso, may be used in the covered attainment counties.
(6) CO, SO2 , and PM10 discrete emission credits must be used in the same metropolitan statistical area (as defined in Office of Management and Budget Bulletin Number 93-17 entitled "Revised Statistical Definitions for Metropolitan Areas" dated June 30, 1993) in which the reduction was generated.
(7) VOC and NOx discrete emission credits generated in other counties, states, or nations may be used in any attainment or nonattainment county provided a demonstration has been made and approved by the executive director and the EPA, to show that the emission reductions achieved in the other county, state, or nation improve the air quality in the county where the credit is being used.
(8) A facility may use discrete emission reductions generated outside the United States provided that the emission reductions are quantifiable, real, and surplus to any applicable international, federal, state, or local law and the result would provide a greater health benefit to the area as determined by the executive director. The applicant must:
(A) demonstrate that the use of the reduction does not cause localized health impacts, as determined by the executive director;
(B) submit all supporting information for calculations and modeling, and any additional information requested by the executive director; and
(C) be located within 100 kilometers of the Texas - Mexico border.
(g) Ozone season. In areas having an ozone season of less than 12 months (as defined in 40 Code of Federal Regulations Part 58, Appendix D) VOC and NOx discrete emission credits generated outside the ozone season may not be used during the ozone season.
(h) Recordkeeping. The generator must maintain a copy of all notices and backup information submitted to the registry for a minimum of five years, following the completion of the generation period. The user must maintain a copy of all notices and backup information submitted to the registry for a minimum of five years, following the completion of the use period. Other relevant reference material or raw data must also be maintained on-site by the participating facilities or mobile sources. The user must also maintain a copy of the generator's notice and backup information for a minimum of five years after the use is completed. The records shall include, but not necessarily be limited to:
(1) the name, emission point number, and facility identification number of each facility or any other identifying number for mobile sources using discrete emission credits;
(2) the amount of discrete emission credits being used by each facility or mobile source; and
(3) the specific number, name, or other identification of discrete emission credits used for each facility or mobile source.
(i) Public information. All information submitted with notices, reports, and trades regarding the nature, quantity of emissions, and sales price associated with the use or generation of discrete emission credits is public information and may not be submitted as confidential. Any claim of confidentiality for this type of information, or failure to submit all information may result in the rejection of the discrete emission reduction application. All nonconfidential notices and information regarding the generation, use, and availability of discrete emission credits may be obtained from the registry.
(j) Authorization to emit. A discrete emission credit created under this division is a limited authorization to emit the specified pollutants in accordance with the provisions of this section, the FCAA, and the TCAA, as well as regulations promulgated thereunder. A discrete emission credit does not constitute a property right. Nothing in this division should be construed to limit the authority of the commission or the EPA to terminate or limit such authorization.
(k) Program participation. The executive director has the authority to prohibit a company from participating in discrete emission credit trading either as a generator or user, if the executive director determines that the company has violated the requirements of the program or abused the privileges provided by the program.
(l) Compliance burden and enforcement.
(1) The user is responsible for assuring that a sufficient quantity of discrete emission credits are acquired to cover the applicable facility or mobile source's emissions for the entire use period.
(2) The user is in violation of this section if the user does not possess enough discrete emission credits to cover the compliance need for the use period. If the user possesses an insufficient quantity of discrete emission credits to cover its compliance need, the user will be out of compliance for the entire use period. Each day the user is out of compliance may be considered a violation.
(3) Users may not transfer their compliance burden and legal responsibilities to a third party participant. Third party participants may only act in an advisory capacity to the user.
(m) Credit Ownership. The owner of the initial discrete emission credit certificate shall be the owner or operator of the facility or mobile source creating the emission reduction. The executive director may approve a deviation from this subsection considering factors such as, but not limited to:
(1) whether an entity other than the owner or operator of the facility or mobile source incurred the cost of the emission reduction strategy; or
(2) whether the owner or operator of the facility or mobile source lacks the potential to generate one tenth of a ton of credit.
Adopted December 13, 2002, Effective January 17, 2003 (G-74).
***end tx 101.372***G-74***EPA-R06-OAR-2005-TX-0029****TX035***TXd82***h32***
§101.373. Discrete Emission Reduction Credit Generation and Certification.
As adopted by TCEQ November 10, 2004 effective December 2, 2004 (G-76).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82).
(a) Methods of generation.
(1) Discrete emission reduction credits (DERC) may be generated using one of the following methods or any other method that is approved by the executive director:
(A) the permanent shutdown of a facility that causes a loss of capability to produce emissions;
(B) the installation and operation of pollution control equipment that reduces emissions below the level required of the facility; or
(C) a change in the manufacturing process that reduces emissions below the level required of the facility.
(2) DERCs may not be generated by the following strategies:
(A) temporary shutdown or permanent curtailment of an activity at a facility;
(B) modification or discontinuation of any activity that is otherwise in violation of a federal, state, or local law;
(C) emission reductions required to comply with any provision under 42 United States Code (USC), Subchapter I regarding tropospheric ozone, or 42 USC, Subchapter IV-A regarding acid deposition control;
(D) emission reductions of hazardous air pollutants, as defined in 42 USC, §7412, from application of a standard promulgated under 42 USC, §7412;
(E) emission reductions that occurred as a result of transferring the emissions to another facility at the same site;
(F) emission reductions credited or used under any other emissions trading program;
(G) emission reductions occurring at a facility that received an alternative emission limitation to meet a state reasonably available control technology requirement, except to the extent that the emissions are reduced below the level that would have been required had the alternative emission limitation not been issued;
(H) emission reductions at a site facility with a flexible permit, unless the reductions are made permanent and enforceable or the generator can demonstrate that the emission reductions were not used to satisfy the conditions for the facilities under the flexible permit;
(I) that portion of emission reductions funded through a state or federal program, unless specifically allowed under that program;
(J) emission reductions from a facility subject to Division 3 of this subchapter (relating to Mass Emissions Cap and Trade Program); or
(K) emission reductions from the shutdown of a facility that was not included in the state implementation plan (SIP).
(b) DERC baseline.
(1) The baseline emissions may not exceed the quantity of emissions reported in the most recent year of emissions inventory used in the SIP. For reductions being certified in accordance with §116.170(b) of this title (relating to Applicability of Emission Reductions as Offsets), the baseline emissions may not exceed the quantity of emissions reported in the emissions inventory used in the SIP in place at the time the reduction strategy was implemented.
(2) The two consecutive calendar years for the baseline activity and emissions rate must be selected from either a period including or following the most recent year of emission inventory used in the SIP or, if that period is less than ten years, the ten consecutive years immediately preceding the emission reduction.
(3) For facilities in an area in which a SIP demonstration is not required for a criteria pollutant, the two consecutive calendar years must include or follow the 1990 emission inventory.
(4) For reduction strategies that exceed 12 months, the baseline and SIP emissions inventory are established after the first year of generation and are fixed for the life of the strategy. A new baseline is established for each unique emission reduction strategy.
(5) For facilities in existence less than 24 months or not having two complete calendar years of activity data, a shorter time period of not less than 12 months may be considered by the executive director.
(c) DERC calculation.
(1) DERCs, except for shutdowns, are calculated according to the following equation.
Figure: 30 TAC §101.373(c)(1) ---- DERC Calculation
(SA) * (BER - SER) = reduction generated
Where:
SA = emission reduction strategy activity
BER = baseline emission rate, the lower of the emission rate used in reporting or representing emissions in the emissions inventory used for the state implementation plan or the average of the actual emission rates during the two-year baseline period.
SER = emission reduction strategy emission rate
(2) The sum of the reduction generated and the total strategy emissions must not be greater than the quantity of emissions reported or represented in the emissions inventory used for SIP determination or the two-year average baseline emissions, whichever is less.
(3) For shutdown emission reduction strategies, the quantity of emission reduction generated is equivalent to the baseline emissions.
(4) The generation period for a shutdown is five years. Shutdown DERCs must be generated and noticed to the registry on an annual basis.
(d) DERC certification.
(1) A DEC-1 Form, Notice of Generation and Generator Certification of Discrete Emission Credits, shall be submitted to the executive director no later than 90 days after the end of the generation period, or no later than 90 days after the completion of the first 12 months of generation. Submission of the DEC-1 Form should continue every 12 months thereafter for each subsequent year of generation.
(2) DERCs must be quantified in accordance with §101.372(d) of this title (relating to General Provisions). The executive director shall have the authority to inspect and request information to assure that the emission reductions have actually been achieved.
(3) An application for DERCs must include, but is not limited to, a completed DEC-1 Form signed by an authorized representative of the applicant along with the following information for each pollutant reduced at each applicable facility:
(A) the generation period;
(B) a complete description of the generation activity;
(C) for shutdown emission reduction strategies, an explanation as to whether production shifted from the shutdown facility to another facility at the same site;
(D) the amount of discrete emission credits generated;
(E) for volatile organic compound reductions, a list of the specific compounds reduced;
(F) documentation supporting the baseline activity, baseline emission rate, strategy emission rate, and strategy activity;
(G) emissions inventory data from the most recent year of emissions inventory used in the SIP and emissions inventory data for the two consecutive years used to determine the baseline activity for each applicable pollutant and emission point;
(H) the most stringent emission rate for the applicable facility, considering all the local, state, and federal applicable regulatory and statutory requirements;
(I) a complete description of the protocol used to calculate the emission reduction generated; and
(J) the actual calculations performed by the generator to determine the amount of discrete emission credits generated.
Adopted November 10, 2004, Effective December 2, 2004 (G-76).
***end tx 101.373***G-76***EPA-R06-OAR-2005-TX-0029***TX035***TXd82***h32***
§101.374. Mobile Discrete Emission Reduction Credit Generation and Certification.
As adopted by TCEQ November 10, 2004 effective December 2, 2004 (G-76).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82).
(a) Method of generation.
(1) Mobile discrete emission reduction credits (MDERC) may be generated by any mobile source emission reduction strategy that creates actual mobile source emission reductions under this division (relating to Discrete Emission Credit Banking and Trading), and is subject to the approval of the commission.
(2) MDERCs may not be generated from the following strategies:
(A) that portion of reductions funded through a state or federal program, unless specifically allowed under that program;
(B) through the transfer of emissions from one mobile source to another mobile source within the same nonattainment area and under common ownership or control; or
(C) reduction strategies resulting in secondary emissions increases that exceed limits established under state or federal rules or regulations.
(b) MDERC baseline emissions.
(1) Mobile source baseline emissions must be calculated with either measured emissions of an appropriately sized sample for the participating mobile sources using a United States Environmental Protection Agency (EPA)-approved test procedure, or estimated emissions of the participating mobile sources using the most recent edition of the EPA on-road or non-road mobile emissions factor model or other model as applicable.
(2) Mobile source baseline emissions for each year of the proposed mobile source reduction strategy must be the same as, or lower than, those used or proposed to be used in the state implementation plan (SIP) in which the reduction strategy is proposed.
(3) Baseline emissions for quantifying MDERCs should include, but not be limited to, the following information and data as appropriate:
(A) the emission standard to which the mobile source is subject or the emission performance standard to which the mobile source is certified;
(B) the estimated or measured in-use emissions levels per unit of use from all significant mobile source emissions sources;
(C) the number of mobile sources in the participating group;
(D) the type or types of mobile sources by model year; and
(E) the actual activity level, hours of operation, or miles traveled by type and model year.
(c) MDERC calculation. The quantity of MDERCs must be calculated from the annual difference between the mobile source baseline emissions and the strategy emissions. The MDERC must be based on actual in-use emissions of the modified or substitute mobile source.
(d) Emission offsets. Mobile source reduction strategies that reduce emissions in one criteria pollutant or precursor for which an area is designated as nonattainment or near nonattainment, yet result in an emissions increase from the same mobile source in another criteria pollutant or precursor for which that same area is nonattainment or near nonattainment, must be offset at a 1:1 ratio with DERCs or MERCs.
(e) MDERC certification.
(1) An MDEC-1 Form, Notice of Generation and Generator Certification of Mobile Discrete Emission Credits, shall be submitted to the executive director no later than 90 days after the discrete emission reduction strategy activity has been completed, or no later than 90 days after the completion of the first 12 months of generation. Submission of the MDEC-1 Form shall continue every 12 months thereafter for each subsequent year of generation.
(2) MDERCs will be determined and certified in accordance with §101.372(d) of this title (relating to General Provisions) using:
(A) EPA methodologies, when available;
(B) actual monitoring results, when available;
(C) calculations using the most current EPA mobile emissions factor model or other model as applicable; or
(D) calculations using creditable emission reduction measurement or estimation methodologies that satisfactorily address the analytical uncertainties of mobile source emissions reduction strategies. The generator shall collect relevant data sufficient to characterize the process emissions of the affected pollutant and the process activity level for all representative phases of source operation during the period under which the MDERCs are created or used.
(3) An application for MDERCs must include, but is not limited to, a completed MDEC-1 Form signed by an authorized representative of the applicant along with the following information for each pollutant reduced for each mobile source:
(A) the date of the reduction;
(B) a complete description of the generation activity;
(C) the amount of discrete mobile source emission credits generated;
(D) documentation supporting the mobile source baseline activity, mobile source baseline emission rate, mobile source baseline emissions, and the mobile source strategy emissions;
(E) a complete description of the protocol used to calculate the discrete mobile source emission reduction generated;
(F) the actual calculations performed by the generator to determine the amount of discrete mobile source emission credits generated; and
(G) a demonstration that the reductions are surplus to all local, state, and federal rules and to emissions modeled in the SIP.
Adopted November 10, 2004, Effective December 2, 2004 (G-76).
***end tx 101.374***G-76***EPA-R06-OAR-2005-TX-0029***TX035***TXd82***h32***
§101.376. Discrete Emission Credit Use.
As adopted by TCEQ November 10, 2004 effective December 2, 2004 (G-76).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82).
(a) Requirements to use discrete emission credits. Discrete emission credits may be used if the following requirements are met.
(1) The user shall have ownership of a sufficient amount of discrete emission credits before the use period for which the specific discrete emission credits are to be used.
(2) The user shall hold sufficient discrete emission credits to cover the user's compliance obligation at all times.
(3) The user shall acquire additional discrete emission credits during the use period if it is determined the user does not possess enough discrete emission credits to cover the entire use period. The user shall acquire additional credits as allowed under this section prior to the shortfall, or be in violation of this section.
(4) Facility or mobile source operators may acquire and use only discrete emission credits listed on the registry.
(b) Use of discrete emission credits. With the exception of uses prohibited in subsection (c) of this section or precluded by commission order or condition within an authorization under the same commission account number, discrete emission credits may be used to meet or demonstrate compliance with any facility or mobile regulatory requirement including the following:
(1) to exceed any allowable emission level, if the following conditions are met:
(A) in ozone nonattainment areas, permitted facilities may use discrete emission credits to exceed permit allowables by no more than ten tons for nitrogen oxides or five tons for volatile organic compounds in a 12-month period as approved by the executive director. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested; or
(B) at permitted facilities in counties or portions of counties designated as attainment or unclassified, discrete emission credits may be used to exceed permit allowables by values not to exceed the prevention of significant deterioration significance levels as provided in 40 Code of Federal Regulations (CFR) §52.21(b)(23), as approved by the executive director prior to use. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested;
(2) as new source review (NSR) permit offsets, if the following requirements are met:
(A) the user shall obtain the executive director's approval prior to the use of specific discrete emission credits to cover, at a minimum, one year of operation of the new or modified facility in the NSR permit;
(B) the amount of discrete emission credits needed for NSR offsets equals the quantity of tons needed to achieve the maximum allowable emission level set in the user's NSR permit. The user shall also purchase and retire enough discrete emission credits to meet the offset ratio requirement in the user's ozone nonattainment area. The user shall purchase and retire either the environmental contribution of 10% or the offset ratio, whichever is higher; and
(C) the NSR permit must meet the following requirements:
(i) the permit must contain an enforceable requirement that the facility obtain at least one additional year of offsets before continuing operation in each subsequent year;
(ii) prior to issuance of the permit the user shall identify the discrete emission credits; and
(iii) prior to start of operation the user shall submit a completed DEC-2 Form, Notice of Intent to Use Discrete Emission Credits, along with the original certificate;
(3) to comply with the Mass Emissions Cap and Trade Program requirements as provided in §101.356(g) of this title (relating to Allowance Banking and Trading); or
(4) to comply with Chapters 114, 115, and 117 of this title (relating to Control of Air Pollution from Motor Vehicles; Control of Air Pollution from Volatile Organic Compounds; and Control of Air Pollution from Nitrogen Compounds), as allowed.
(c) Discrete emission credit use prohibitions. A discrete emission credit may not be used under this division:
(1) before it has been acquired by the user;
(2) for netting to avoid the applicability of federal and state NSR requirements;
(3) to meet (as codified in 42 United States Code (USC) Federal Clean Air Act (FCAA)) requirements for:
(A) new source performance standards under FCAA, §111 (42 USC, §7411);
(B) lowest achievable emission rate standards under FCAA, §173(a)(2) (42 USC, §7503(a)(2));
(C) best available control technology standards under FCAA, §165(a)(4) (42 USC, §7475(a)(4)) or Texas Health and Safety Code, §382.0518(b)(1);
(D) hazardous air pollutants standards under FCAA, §112 (42 USC, §7412), including the requirements for maximum achievable control technology;
(E) standards for solid waste combustion under FCAA, §129 (42 USC, §7429);
(F) requirements for a vehicle inspection and maintenance program under FCAA, §182(b)(4) or (c)(3) (42 USC, §7511a(b)(4) or (c)(3));
(G) ozone control standards set under FCAA, §183(e) and (f) (42 USC, §7511b(e) and (f));
(H) clean-fueled vehicle requirements under FCAA, §246 (42 USC, §7586);
(I) motor vehicle emissions standards under FCAA, §202 (42 USC, §7521);
(J) standards for non-road vehicles under FCAA, §213 (42 USC, §7547);
(K) requirements for reformulated gasoline under FCAA, §211(k) (42 USC, §7545); or
(L) requirements for Reid vapor pressure standards under FCAA, §211(h) and (i) (42 USC, §7545(h) and (i));
(4) to allow an emissions increase of an air contaminant above a level authorized in a permit or other authorization that exceeds the limitations of §106.261(3) or (4) or §106.262(3) of this title (relating to Facilities (Emission Limitations); and Facilities (Emission and Distance Limitations)) except as approved by the executive director. This paragraph does not apply to limit the use of discrete emission reduction credits (DERC) or mobile discrete emission reduction credits in lieu of allowances under §101.356(h) of this title;
(5) to authorize a facility whose emissions are enforceably limited to below applicable major source threshold levels, as defined in §122.10 of this title (relating to General Definitions), to operate with actual emissions above those levels without triggering applicable requirements that would otherwise be triggered by such major source status; or
(6) to exceed an allowable emission level where the exceedance would cause or contribute to a condition of air pollution as determined by the executive director.
(d) Notice of intent to use.
(1) A completed DEC-2 Form, signed by an authorized representative of the applicant shall be submitted to the executive director in accordance with the following requirements.
(A) Discrete emission credits may be used only after the applicant has submitted the notice and received executive director approval.
(B) The application must be submitted at least 45 days prior to the first day of the use period if the discrete emission credits were generated from a facility, 90 days if the discrete emission credits were generated from a mobile source, and every 12 months thereafter for each subsequent year if the use period exceeds 12 months.
(C) A copy of the application shall also be sent to the federal land manager 30 days prior to use if the user is located within 100 kilometers of a Class I area, as listed in 40 CFR Part 81 (2001).
(D) The application must include, but is not limited to, the following information for each use:
(i) the applicable state and federal requirements that the discrete emission credits will be used to comply with and the intended use period;
(ii) the amount of discrete emission credits needed;
(iii) the baseline emission rate, activity level, and total emissions for the applicable facility or mobile source;
(iv) the actual emission rate, activity level, and total emissions for the applicable facility or mobile source;
(v) the most stringent emission rate and the most stringent emission level for the applicable facility or mobile source, considering all applicable regulatory requirements;
(vi) a complete description of the protocol, as submitted by the executive director to the United States Environmental Protection Agency for approval, used to calculate the amount of discrete emission credits needed;
(vii) the actual calculations performed by the user to determine the amount discrete emission credits needed;
(viii) the date that the discrete emission credits were acquired or will be acquired;
(ix) the discrete emission credit generator and the original certificate of the discrete emission credits acquired or to be acquired;
(x) the price of the discrete emission credits acquired or the expected price of the discrete emission credits to be acquired, except for transfers between sites under common ownership or control;
(xi) a statement that due diligence was taken to verify that the discrete emission credits were not previously used, the discrete emission credits were not generated as a result of actions prohibited under this regulation, and the discrete emission credits will not be used in a manner prohibited under this regulation; and
(xii) a certification of use, that must contain certification under penalty of law by a responsible official of the user of truth, accuracy, and completeness. This certification must state that based on information and belief formed after reasonable inquiry, the statements and information in the document are true, accurate, and complete.
(2) DERC use calculation.
(A) To calculate the amount of discrete emission credits necessary to comply with §§117.108, 117.138, 117.210, or 117.223 of this title (relating to System Cap; and Source Cap), a user may use the equations listed in those sections, or the following equations.
(i) For the rolling average cap:
Figure: 30 TAC §101.376(d)(2)(A)(i)
Amount of DERCs Required (tons)
= Sum 1=1 to N [(EHi x ERi) - (Hi x Ri)] x (d/2000)
Where:
d = the number of days in the use period
i = each emission unit in the source or system cap
N = the total number of emission units in the source or system cap
Hi = actual daily heat input, in million British thermal units (MMBtu) per day, as calculated according to §§117.108(c)(1), 117.138(c), 117.210(c)(1) or (2), or 117.223(b)(1) of this title (relating to System Cap; and Source Cap) as applicable
Ri = actual emission rate, in pounds (lb)/MMBtu, as defined in §§117.108(c)(1), 117.138(c), 117.210(c)(1) or (2), or 117.223(b)(1) of this title as applicable
EHi = expected new daily heat input, in MMBtu per day
ERi = expected new emission rate, in lb/MMBtu.
(ii) For maximum daily cap:
Figure: 30 TAC §101.376(d)(2)(A)(ii)
Amount of DERCS Required (tons)
1
= Sum i= 1 to N [(EHMi x ERi) - (HM x Ri) x -----
2000
Where:
i = each emission unit in the source or system cap
N = the total number of emission units in the source or system cap
Ri = in lb/MMBtu, is defined as in §§117.108(c)(2), 117.210(c)(3), or 117.223(b)(1) of this title (relating to System Cap; and Source Cap) as applicable
HMi = the maximum daily heat input, in MMBtu/day, as defined in §§117.108(c)(2), 117.210(c)(3), or 117.223(b)(1) of this title as applicable
EHMi = expected new maximum daily heat input, in MMBtu per day
ERi = expected new emission rate, in lb/MMBtu.
(B) The amount of discrete emission credits needed to demonstrate compliance or meet a regulatory requirement is calculated as follows.
Figure: 30 TAC §101.376(d)(2)(B)
(ELA) x (EER - RER) = discrete emission credits needed
Where:
ELA = expected level of activity
EER = expected emission rate per unit activity
RER = regulatory emission rate per unit activity.
(C) The amount of discrete emission credits needed to exceed an allowable emissions level is calculated as follows.
Figure: 30 TAC §101.376(d)(2)(C)
(ELA - PLA) x (PER) = discrete emission credits needed
Where:
ELA = expected level of activity
PLA = permitted level of activity
PER = permitted emission rate per unit activity
(D) The user shall retire 10% more discrete emission credits than are needed, as calculated in this paragraph, to ensure that the facility or mobile source environmental contribution retirement obligation will be met.
(E) If the amount of discrete emission credits needed to meet a regulatory requirement or to demonstrate compliance is greater than ten tons, an additional 5.0% of the discrete emission credits needed, as calculated in this paragraph, must be acquired to ensure that sufficient discrete emission credits are available to the user with an adequate compliance margin.
(3) A user may submit a notice late in the case of an emergency, but the notice must be submitted before the discrete emission credits can be used. The user shall include a complete description of the emergency situation in the notice of intent to use. All other notices submitted less than 45 days prior to use, or 90 days prior to use for a mobile source, will be considered late and in violation.
(4) The user is responsible for determining the credits it will purchase and notifying the executive director of the selected generating facility or mobile source in the notice of intent to use. If the generator's credits are rejected or the notice of generation is incomplete, the use of discrete emission credits by the user may be delayed by the executive director. The user cannot use any discrete emission credits that have not been certified by the executive director. The executive director may reject the use of discrete emission credits by a facility or mobile source if the credit and use cannot be demonstrated to meet the requirements of this section.
(5) If the facility is in an area with an ozone season less than 12 months, the user shall calculate the amount of discrete emission credits needed for the ozone season separately from the non-ozone season.
(e) Notice of use.
(1) The user shall calculate:
(A) the amount of discrete emission credits used, including the amount of discrete emission credits retired to cover the environmental contribution, as described in subsection (d)(2)(C) of this section, associated with actual use; and
(B) the amount of discrete emission credits not used, including the amount of excess discrete emission credits that were purchased to cover the environmental contribution, as described in subsection (d)(2)(C) of this section, but not associated with the actual use, and available for future use.
(2) DERC use is calculated by the following equations.
(A) The amount of discrete emission credits used to demonstrate compliance or meet a regulatory requirement is calculated as follows.
Figure: 30 TAC §101.376(e)(2)(A)
(ALA) x (AER - RER) = discrete emission credits used
Where:
ALA = actual level of activity
AER = actual emission rate per unit activity
RER = regulatory emission rate per unit activity.
(B) The amount of discrete emission credits used to comply with permit allowables is calculated as follows.
Figure: 30 TAC §101.376(e)(2)(B)
(ALA - PLA) x (AER) = discrete emission credits used
Where:
ALA = actual level of activity
PLA = permitted level of activity
AER = permitted emission rate per unit activity
(3) A DEC-3 Form, Notice of Use of Discrete Emission Credits, shall be submitted to the commission in accordance with the following requirements.
(A) The notice must be submitted within 90 days after the end of the use period;
(B) The notice must be submitted within 90 days of the conclusion of each 12-month use period, if applicable.
(C) The notice is to be used as the mechanism to update or amend the notice of intent to use and must include any information different from that reported in the notice of intent to use, including, but not limited to, the following items:
(i) purchase price of the discrete emission credits obtained prior to the current use period, except for transfers between sites under common ownership or control;
(ii) the actual amount of discrete emission credits possessed during the use period;
(iii) the actual emissions during the use period for volatile organic compounds and nitrogen oxides;
(iv) the actual amount of discrete emission credits used;
(v) the actual environmental contribution; and
(vi) the amount of discrete emission credits available for future use.
(4) Discrete emission credits that are not used during the use period are surplus and remain available for transfer or use by the holder. In addition, any portion of the calculated environmental contribution not attributed to actual use is also available.
(5) The user is in violation of this section if the user submits the report of use later than the allowed 90 days following the conclusion of the use period.
Adopted November 10, 2004, Effective December 2, 2004 (G-76).
***end tx 101.376***G-76***EPA-R06-OAR-2005-TX-0029***TX035***TXd82***h32***
§101.378. Discrete Emission Credit Banking and Trading.
As adopted by TCEQ December 13, 2002 effective January 17, 2003 (G-74).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82)
(a) The credit registry. All discrete emission credit generators, users, and holders will be included in the commission’s credit registry.
(1) All notices submitted by a generator, holder, or user will be reviewed for credibility; and when deemed certified, posted to the credit registry.
(2) The credit registry will assign a unique number to each certificate which will include the amount of emission reductions generated to the tenth of a ton.
(3) The credit registry will maintain a listing of all credits available or used for each ozone nonattainment area. One combined listing for all the counties or portions of counties designated as attainment or unclassified will be provided by the credit registry.
(4) The registry shall not contain proprietary information.
(b) Life of a discrete emission credit. A discrete emission credit is available for use after the DEC-1 Form, Notice of Generation and Generator Certification of Discrete Emission Credits, has been received, deemed creditable by the executive director, and deposited in the commission credit registry in accordance with subsection (a) of this section, and may be used anytime thereafter. All credits are deposited in the credit registry and reported as available credits until they are used or withdrawn.
(c) Trading. Discrete emission credits are freely transferable in whole or in part, and may be traded or sold to a new owner at any time after certification.
(1) Prior to the transfer, the executive director must be notified by means of a completed DEC-4 Form, Application for Transfer of Discrete Emission Credits.
(2) The executive director will issue a letter to the discrete emission credit purchaser reflecting the discrete emission credits purchased by the new owner, and a letter to the discrete emission credit seller showing any remaining discrete emission credits available to the original owner. Discrete emission credits are considered transferred only after the executive director grants approval of the transaction.
(3) The trading of discrete emission credits may be discontinued by the executive director in whole or in part and in any manner, with commission approval, as a remedy for problems resulting from trading in a localized area of concern.
Adopted December 13, 2002, Effective January 17, 2003 (G-74).
***end tx 101.378***G-74***EPA-R06-OAR-2005-TX-0029****TX035***TXd82***h32***
§101.379. Program Audits and Reports.
As adopted by TCEQ December 13, 2002 effective January 17, 2003 (G-74).
Approved by EPA September 6, 2006 (71 FR 52703) effective October 6, 2006 (TXd82)
(a) No later than three years after the effective date of this section, and every three years thereafter, the executive director will audit this program.
(1) The audit will evaluate the timing of credit generation and use, the impact of the program on the state's attainment demonstration and the emissions of hazardous air pollutants, the availability and cost of credits, compliance by the participants, and any other elements the executive director may choose to include.
(2) The executive director will recommend measures to remedy any problems identified in the audit. The trading of discrete emission credits may be discontinued by the executive director in part or in whole and in any manner, with commission approval, as a remedy for problems identified in the program audit.
(3) The audit data and results will be completed and submitted to the EPA and made available for public inspection within six months after the audit begins.
(b) No later than February 1 of each calendar year, the executive director shall develop and make available to the general public and the EPA a report that includes:
(1) the amount of each pollutant emission credits generated under this division;
(2) the amount of each pollutant emission credits used under this division; and
(3) a summary of all trades completed under this division.
Adopted December 13, 2002, Effective January 17, 2003 (G-74).
***end tx 101.379***G-74***EPA-R06-OAR-2005-TX-0029****TX035***TXd82***h32***
***************end texas chapter 101 subchapter h division 4***TXd82***h32***