Cal. Code Regs. Tit. 17, § 95835 - Changes to Entity Type and Reassignment of Facilities Already Registered to Different Entity Accounts
(a) Assignment of Facilities to Entity
Accounts.
(1) Subdivision of MRR Facilities
with Distinct ARB IDs Currently Registered in the Tracking System. The
following provisions apply to facilities that are currently registered in the
tracking system and wish to change their entity type or account assignment(s):
(A) A facility may not be subdivided without
a demonstration of a change to the continuity of its ownership and control, as
defined in MRR, to one or more of its constituent units.
(B) The subdivided units must complete all
the requirements of MRR before they can be reassigned from existing tracking
system accounts, including the assignment of an ARB ID to each subdivided
unit.
(C) The subdivided units must
complete the disclosure process outlined in section
95835(b).
(D) The entity seeking the subdivision must
either indicate the existing accounts to which the subdivided facilities will
be assigned or complete an application for a new account, or for closure of an
existing account, if applicable.
(2) Assignment of a New Facility to an
Account. The owner or operator of a new facility that has received an ARB ID
but that is not yet assigned to a tracking system account must register
pursuant to section
95830 and request either a new
account or assignment of the facility to an existing account.
(3) Changing Account Assignments within a
Direct Corporate Association. Members of a direct corporate association may
request a change to the distribution of facilities within their set of accounts
only once per compliance period. Approved changes to consolidate or opt-out of
account consolidation pursuant to section
95830(b)(3) will
be effective at the beginning of the next compliance period provided that the
request is made by June 30 of the year immediately preceding that next
compliance period.
(b)
Change of Facility Ownership. When the ownership of a facility changes, whether
by merger, acquisition, or any other means, the successor entity after the
change in ownership is expressly liable for the unsurrendered compliance
obligation of the predecessor covered entity that is party to the change in
ownership transaction. For the avoidance of doubt, the unsurrendered compliance
obligation of the predecessor covered entity consists of the quantity of
verified reported emissions, assigned emissions, and emissions that have been
released from the subject facility but not reported yet for which the covered
entity would be required to submit compliance instruments to CARB absent the
change of ownership, but that the covered entity has not surrendered to CARB at
the time of the change of ownership. Subarticle 7 compliance requirements are
interpreted and enforced in light of the successor entity being expressly
liable for the unsurrendered compliance obligation of the predecessor covered
entity. When the ownership of a facility changes, the following information
must be submitted to CARB within 30 calendar days of finalization of the
ownership change:
(1) A description of the
merger or acquisition and the effective date of the change of ownership,
including whether the merger or acquisition is the purchase of a facility or
facilities from another entity or the purchase of an entity that owns a
facility or facilities;
(2) Both
the legal and operating names and the tracking system entity IDs of the
entities owning the facility or facilities prior to the change of
ownership;
(3) The legal name,
operating name, and the tracking system entity ID of the purchasing entity, if
any;
(4) Written direction
regarding whether the purchased facility or facilities will be added to a
consolidated entity account or whether the purchased facility or facilities
will be associated with an entity that will opt-out of account consolidation
pursuant to section
95830(b)(3);
(5) Documentation with signatures (original
or electronic pursuant to section
95803(a)) by a
director or officer from the entity owning the facility or facilities and from
the purchasing entity, notifying ARB of the change of ownership;
(6) Any changes to disclosures or new
disclosures pursuant to section
95833;
(7) Direction regarding the disposition of
compliance instruments that must be transferred by the jurisdiction to the
purchasing entity. Compliance instruments can be transferred only between
accounts of the same type (e.g., from a compliance account to a compliance
account) and any administrative transfers required may be requested as a
one-time occurrence scheduled to occur within five business days after the
facility or facilities are transferred in the tracking system to the purchasing
entity;
(8) It is the
responsibility of the entities participating in the change of ownership to
transfer any compliance instruments from tracking system holding accounts that
they control prior to closure. Prior to closure, the Executive Officer may
transfer compliance instruments from an entity's compliance account to its
holding account upon request by the entity. If a covered entity no longer owns
or operates any active facility in its tracking account due to a change of
facility ownership, then that covered entity may exit the Program and close its
tracking system accounts within five business days after the facility or
facilities are transferred in the tracking system to the purchasing
entity.
(c) Eligibility
for a Change of Entity Type.
(1) Eligibility
of an Opt-In Covered Entity to Change Its Entity Type.
(A) After a compliance period, an opt-in
covered entity may choose to exit the Program or apply for a new tracking
system account to change its entity type to a voluntarily associated entity
provided that it meets the requirements specified in section
95813(g).
(B) An opt-in covered entity choosing to exit
the Program must fulfill its compliance obligations as required pursuant to
subarticle 7 and report and verify emissions data, product data, and any other
data required pursuant to MRR for its final year with a compliance obligation
to allow for any true-up allocations pursuant to subarticles 8 and 9 before
requesting a change of entity type.
(2) Eligibility of a Covered Entity or Opt-In
Covered Entity to Change Its Entity Type.
(A)
Effect of Reduced Emissions on a Covered Entity's Compliance Obligation. A
covered entity that reports annual covered GHG emissions less than 25,000
metric tons of CO2e per year during one entire
compliance period may request a change to its entity type from the Executive
Officer by the deadlines specified in section
95835(e)(1). If
the covered entity does not complete the change in entity type by the deadline
and if the covered entity is not an opt-in covered entity, then the Executive
Officer will consider the entity as a voluntarily associated entity for the
assignment of purchase limit and holding limit, if applicable. If the entity
does not apply to change its entity type by the deadline, then the Executive
Officer maintains the ability to suspend or revoke the registration and any
compliance instruments remaining in the entity's tracking system accounts will
be consigned on the entity's behalf or transferred pursuant to section
95835(f) or
95890(k).
(B) Effect of a Facility Shutdown on a
Covered Entity's Compliance Obligation. Once a covered or opt-in covered entity
has fully met the reporting cessation requirements of section
95101(i) of MRR
due to ceasing to operate, full facility shutdown, and cessation of all
activities subject to reporting under section
95101(c) of MRR,
ARB will begin the account closure process pursuant to section
95835(f). Fuel
suppliers and electric power entities may not claim eligibility for a change of
entity type under this provision, and may only request to close their accounts
if no further activity is expected.
(C) A fuel supplier or electric power entity
that is eligible for a change in entity type and has fully met the reporting
and verification requirements of section
95101(h) of MRR,
and for fuel suppliers the requirements of section
95103(n)(2)(D) of
MRR, may exit the Cap-and-Trade Program pursuant to section
95835(f).
(3) A voluntarily associated entity is
eligible to request to exit the Cap-and-Trade Program at any time.
(4) The Executive Officer may close the
account of a voluntarily associated entity if no compliance instruments are
transferred into or out of the account for a period of two
years.
(d) Options for
Changing Entity Type. When an entity qualifies for a change in entity type
pursuant to section
95835(c), the
following shall apply:
(1) A covered entity
may elect to remain in the Cap-and-Trade Program as an opt-in covered entity
pursuant to section
95813(h) and does
not need to apply for a new set of tracking system accounts; or
(2) A covered entity or an opt-in covered
entity may elect to remain in the Cap-and-Trade Program and apply for a new
tracking system account as a voluntarily associated entity pursuant to section
95814; or
(e) If a covered entity or opt-in covered
entity qualifies for a change in entity type, it may request a change by
completing the following requirements:
(1)
Request Deadlines.
(A) A covered entity
requesting a change in entity type pursuant to section
95835(c)(2)(A)
must make the request to the Executive Officer by September 30 of the first
calendar year after the end of a compliance period.
(B) A covered entity or opt-in covered entity
requesting a change in entity type pursuant to section
95835(c)(2)(B)
has 30 days from the completion of the MRR cessation of reporting provisions
per section
95101(i), or
within 30 calendar days of the finalization of the ownership change, whichever
is sooner, to request to remain in the Program and apply as a voluntarily
associated entity.
(C) A covered
entity whose request to be an opt-in covered entity pursuant to section
95813(h) was
approved by the Executive Officer must request a change in entity type by
September 30 of the same year as the deadline specified in section
95813(h).
(D) An opt-in covered entity that intends to
exit the program entirely must make a request to the Executive Officer by
September 30 of the first calendar year immediately after the end of a
compliance period.
(2) A
covered entity or opt-in covered entity that qualifies for account closure
pursuant to section
95835(c)(2)(B)
must, after fulfilling its compliance obligation for its final year of
operations pursuant to section
95856 and addressing final
allocation provisions pursuant to section
95835(f), elect
one of the following options:
(A) Request to
close its tracking system accounts, comply with MRR cessation of reporting
provisions pursuant to section
95101(h) or (i),
and apply to be in the tracking system as a voluntarily associated entity as
defined in section
95814; or
(B) Request to consolidate its holding and
compliance accounts with an existing account held by another entity pursuant to
section 95830(b)(3) with
whom it has a direct corporate association and comply with MRR cessation of
reporting provisions pursuant to section
95101(h) or (i);
or
(C) Request to close its
tracking system accounts within 30 calendar days after the entity is qualified
to request an account closure, comply with MRR cessation of reporting
provisions per section
95101(h), and
exit the Program.
(f) Account Closure for Entities Exiting the
Program.
(1) Return of Initial Allocation for
Entities Exiting the Program. An entity may not exit the Program pursuant to
section 95835 until the entity has
satisfied the requirements in 95890(k). If an entity has met the cessation
requirements pursuant to MRR section
95101(h) or (i)
and remains in the Program solely to meet the requirements of section
95890(k), then
the entity need not report and verify data pursuant to MRR for any time period
after which the MRR cessation requirements have been met.
(2) When an entity requests that ARB close
its accounts in the tracking system, it must arrange to transfer all compliance
instruments out of its accounts before the accounts can be closed. If the
entity has compliance instruments in its compliance or holding account when a
request for account closure is submitted, then the entity may request a
one-time administrative transfer for ARB to either:
(A) Transfer the compliance instruments from
its compliance account to the entity's holding account to allow the entity to
transfer the allowances out of its account; or
(B) Transfer the compliance instruments from
its compliance and holding accounts to the account of another registered entity
or to the Retirement Account at the request of the entity closing the
account.
(3) When the
entity's accounts are clear of compliance instruments then the accounts will be
closed.
Notes
2. Amendment of subsection (b) filed 5-30-2018; operative 7-1-2018 (Register 2018, No. 22).
Note: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, Health and Safety Code. Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
2. Amendment of subsection (b) filed 5-30-2018; operative
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