10 CSR 10-6.410 - Emissions Banking and Trading
PURPOSE: This rule provides a mechanism for companies to acquire offsets for economic development in accordance with section 643.220, RSMo. The evidence supporting the need for this proposed rulemaking, per section 536.016, RSMo, is section 643.220, RSMo.
(1) Applicability.
(A) The generation of emission reduction
credits (ERCs) in conjunction with this rule is available to installations that
meet the following requirements:
1. Emit more
than ten (10) tons per year for a criteria pollutant or its precursors as
reported on their Emissions Inventory Questionnaire;
2. Have an operating permit as specified in
10 CSR 10-6.065
Operating Permits; and
3. Are
located within any of the following areas:
A.
An area that has been designated as a nonattainment area for a criteria
pollutant;
B. A maintenance area
for a criteria pollutant in which emissions offsets are required for new
sources or modifications by the state implementation plan (SIP); or
C. A United States Environmental Protection
Agency (U.S. EPA) approved attainment or maintenance demonstration or New
Source Review (NSR) preconstruction permit modeling domain, unless it is a
violation of federal law.
(B) The buying, selling, or trading of ERCs
in conjunction with this rule is available to all persons.
(C) The use of ERCs in conjunction with this
rule is limited to the following:
1.
Emissions offsets to satisfy New Source Review permitting requirements;
or
2. For sources needing emission
decreases from existing sources in their area of impact to mitigate air quality
impacts from new sources or modifications under prevention of significant
deterioration (PSD) requirements.
(2) Definitions.
(A) Activity level-The amount of activity at
a 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 of the source and is not affected by changes in the emissions
rate (i.e., mass per unit of activity).
(B) Definitions of certain terms specified in
this rule, other than those defined in this section, may be found in
10 CSR
10-6.020.
(3) General Provisions.
(A) General Rules for Generation and Use.
1. To become an account holder, a person must
complete an account application, as specified in subsection (4)(A) of this
rule, and be assigned a unique account identification number by the Missouri
Department of Natural Resources' Air Pollution Control Program.
2. Each account holder must designate an
authorized account representative and an alternate authorized account
representative on the account application.
3. Except as provided under paragraph
(3)(B)2. of this rule, any source may generate an ERC by reducing emissions, in
the amount determined under paragraph (3)(B)1. ERC generators must ensure that
ERCs are real, properly quantified, permanent, and surplus.
4. There shall be no resulting adverse impact
on air quality.
5. The director of
the Missouri Department of Natural Resources' Air Pollution Control Program may
not approve use of offsets where that use would interfere with the
nonattainment control strategy contained in the Missouri State Implementation
Plan.
6. Governmental approvals. No
ERC can be transferred without prior notification of intent to transfer to the
director of the Missouri Department of Natural Resources' Air Pollution Control
Program. No ERC can be retired without prior notification of intent to use.
ERCs that are used for NSR offsets shall have prior director
approval.
7. Market participation.
Any account holder may transfer, buy, sell, trade, or otherwise convey ERCs to
another account holder in any manner in accordance with this rule.
8. Limited authorization to emit. An ERC
created under this rule is a limited authorization to emit a criteria pollutant
or its precursor in accordance with the provisions of this rule. An ERC does
not constitute a property right. Nothing in this rule shall be construed to
limit the authority of the Missouri Air Conservation Commission to terminate or
limit such authorization.
9. Serial
numbers. Each ERC will be assigned a unique identification number.
10. Shutdowns.
A. ERCs may be generated when a unit is
shutdown or retired if the new replacement equipment is directly replacing the
retired unit and the permit is applied for within one (1) year of the shutdown
or retirement of the existing unit.
B. ERCs may be generated for entire
installation shutdowns if the installation is located in an area where offsets
are required by the state implementation plan and if the installation is
defined as a major source for the pollutant or a precursor of the pollutant for
which the area is classified. These ERCs shall be reduced by twenty-five
percent (25%) and rounded to the nearest ton at the time of deposit into the
generator's account.
C. In
nonattainment areas lacking an approved attainment plan, banking of ERCs from
shutdowns is subject to the provisions of
40 CFR
51.165(a)(3)(ii)(C), which
is incorporated by reference.
11. Environmental contribution.
A. On December 31 of each year, the banked
ERCs that were deposited in previous calendar years shall be reduced by three
percent (3%).
B. The department
shall deduct three percent (3%) of these ERCs from each account holders' banked
ERCs. The remaining account balances shall be rounded down to the nearest
ERC.
C. If the account holder
wishes for specific serial numbered ERCs to be deducted for environmental
contribution, a letter specifying the serial numbers must be received by the
director of the Missouri Department of Natural Resources' Air Pollution Control
Program by December 1 of each year.
D. On December 31 of each year, ERCs that
have been reserved by an approved Notice of Intent to Use shall not be subject
to the three percent (3%) environmental contribution.
E. In the event that ERCs are not taxed on
December 31 due to being reserved and the ERCs are subsequently reinstated, a
three percent (3%) environmental contribution shall be deducted at that time
for each year that the ERCs were reserved and would have been subject to the
environmental contribution.
12. ERCs shall be used on a first-in,
first-out basis, unless specific serial numbers are included in the Notice of
Intent to Use, Notice of Withdrawal, Notice of Intent to Transfer, or at the
time of environmental contribution as specified in subparagraph (3)(A)11.C. of
this rule. If serial numbers are not specified, the oldest ERCs in an account
shall be reserved and/or retired first.
13. The trading or use of ERCs in a modeling
domain may be based on modeling performed on a concentration basis.
(B) ERC Generation.
1. Computation of ERCs.
A. The number of ERCs shall be the difference
between-
(I) The amount of actual emissions
that would have been emitted during the generation period based on actual
activity levels during that period and normal source operation; and
(II) The amount of actual emissions during
the generation period based on actual activity levels during that
period.
B. Protocols. The
amount of ERCs must be calculated using quantification protocols that meet the
requirements of paragraph (3)(B)7. of this rule.
2. Limitations on generation. An ERC shall
not be created by emissions reductions of activities or source categories
identified in this subsection:
A. Permanent
shutdowns or curtailments, unless it meets the requirements of paragraph
(3)(A)10. of this rule;
B.
Modification or discontinuation of any activity that is otherwise in violation
of any federal, state, or local requirements;
C. Emission reductions required to comply
with any state, federal, or local action including but not limited to:
(I) State, federal, or local consent
agreements;
(II) Any provision of a
state implementation plan; or
(III)
Requirements for attainment of a National Ambient Air Quality
Standard;
D. Emission
reductions of hazardous air pollutants from application of a standard
promulgated under section 112 of the Clean Air Act;
E. Reductions credited or used under any
other emissions trading program;
F.
Emission reductions occurring at a source which received an alternate emission
limit to meet a state reasonably available control technology (RACT)
requirement, except to the extent that the emissions are reduced below the
level that would have been required had the alternate emission limit not been
issued; or
G. Emission reductions
previously used in determining net emission increases or used to create
alternate emission limits.
3. Notice and Certification of Generation.
A. The owner or operator of a generator
source shall provide a Notice and Certification of Generation to the Missouri
Department of Natural Resources no later than ninety (90) days after the ERC
generation activity was completed.
B. Required information. The Notice and
Certification of Generation shall include the information specified in
subsection (4)(B) of this rule.
C.
The department shall review the Notice of Generation and notify the authorized
account representative of approval or denial of the Notice of Generation within
thirty (30) days of receipt of the notice.
D. The Notice and Certification of Generation
shall be accompanied by an operating permit modification application.
E. Certification under penalty of law. Any
Notice and Certification of Generation submitted pursuant to this subsection
shall contain certification under penalty of law by a responsible official of
the generator source of truth, accuracy, and completeness. This certification
shall state that based on information and belief formed after reasonable
inquiry, the statements and information in the document are true, accurate, and
complete.
4. ERC use.
A. Time of acquisition. ERCs may not be used
until they are acquired by the user source.
B. Sufficiency. The user source must hold
sufficient ERCs to cover its offset obligation.
C. Offset calculation. The amount of ERCs
needed to offset emissions shall be the anticipated actual emissions multiplied
by the offset ratio.
D. Notice of
Intent to Use ERCs.
(I) ERCs may be used only
if the authorized account representative of the user source submits to the
staff director of the Missouri Department of Natural Resources' Air Pollution
Control Program a Notice of Intent to Use.
(II) Required information. The Notice of
Intent to Use ERCs shall include the information specified in subsection (4)(C)
of this rule.
(III) The department
shall review the Notice of Intent to Use and notify the facility of approval or
denial within thirty (30) days of receipt of the notice.
(IV) The Missouri Department of Natural
Resources' Air Pollution Control Program shall reserve the specified ERCs when
the permit application is deemed complete by the Initial Review Unit.
(V) Upon issuance of the construction permit,
the appropriate number of reserved ERCs shall be permanently retired.
E. Notice of Withdrawal.
(I) An account holder may at any time
withdraw ERCs from the program.
(II) Required information. The Notice of
Withdrawal shall include the information specified in subsection (4)(D) of this
rule.
(III) The department shall
review the Notice of Withdrawal and notify the facility of approval or denial
within thirty (30) days. Upon approval, the specified ERCs shall be removed
from the facility's account.
F. Notice of Transfer.
(I) Account holders seeking an account
transfer must submit a Notice of Transfer.
(II) Required information. The Notice of
Transfer shall include the information specified in subsection (4)(E) of this
rule.
(III) The department shall
review the Notice of Transfer and notify the facilities of approval or denial
within thirty (30) days. Upon approval, the specified ERCs shall be transferred
to the specified account.
5. Use limitations. ERCs may not be used-
A. Before acquisition by the user of the
ERCs;
B. For netting or to avoid
the applicability of NSR requirements;
C. For NSR offsets unless the requirements of
paragraph (3)(B)8. of this rule are met;
D. To meet Clean Air Act requirements for new
source performance standards (NSPS) under section 111; lowest achievable
emission rate (LAER) standards; best available control technology (BACT)
standards; hazardous air pollutant (HAP) standards under section 112;
reasonably available control technology (RACT);
E. To meet the requirements for one (1) class
of criteria pollutants or precursor by using ERCs generated in a different
class of pollutants or precursors (e.g., NOx reductions
may not be exchanged for volatile organic compound (VOC) increases, or
vice-versa); or
F. To meet
requirements contained in Title IV of the Federal Clean Air Act.
6. Geographic scope of trading.
A. ERCs may be used in a nonattain-ment or
maintenance area only if generated in the same nonattainment or maintenance
area.
B. ERCs generated inside a
modeling domain may be used in the same modeling domain. Trading of ERCs within
a modeling domain is subject to the limitations of subparagraph (3)(B)6.A. of
this rule.
C. Interstate trading.
(Reserved)
7. Protocol development and approval. To
quantify the amount of ERCs generated and the amount needed for compliance, all
sources shall use the following hierarchy as a guide to determine the most
desirable emission data to report to the department. If data is not available
for an emission estimation method or an emission estimation method is
impractical for a source, then the subsequent emission estimation method shall
be used in its place:
A. Continuous Emission
Monitoring System (CEMS) as specified in
10
CSR 10-6.110;
B. Stack tests as specified in
10
CSR 10-6.110;
C. Material/mass balance;
D. AP-42 (Environmental Protection Agency
(EPA) Compilation of Air Pollution Emission Factors) or FIRE (Factor
Information and Retrieval System);
E. Other U.S. EPA documents as specified in
10
CSR 10-6.110;
F. Sound engineering calculations;
or
G. Facilities shall obtain
department approval of emission estimation methods other than those listed in
subparagraphs (3)(B)7.A.-F. of this rule before using any such method to
estimate emissions in the submission of data.
8. ERC use for NSR. All ERCs used to meet NSR
offset requirements shall comply with the requirements of state rule
10 CSR
10-6.060 Construction Permits Required.
9. Compliance burden.
A. The ERC user source is responsible for
assuring that the generation and use of ERCs comply with this rule.
B. The ERC user source (not the enforcing
authority) bears the burden of proving that ERCs used are valid and sufficient
and that the ERC use meets all applicable requirements of this rule. The ERC
user source is responsible for compliance with its underlying obligations. In
the event of enforcement against the user source for non-compliance, it shall
not be a defense for the purpose of determining civil liability that the user
source relied in good faith upon the generator source's
representations.
C. In the event of
an invalid ERC, the generator source shall receive a Notice of Violation and
the ERC user must find additional ERCs to comply with offset
requirements.
10. Sources
that emit less than ten (10) tons per year.
(Reserved)
(C) Offsets. Offsets referred to in
10 CSR
10-6.060 subsection (7)(B) are subject to the
following conditions:
1. Except for
previously banked emission reduction credits, no offset credit may be taken for
emission reductions occurring prior to the base year used to project attainment
of the pollutant standard in the state implementation plan; and
2. No offset credit may be taken for emission
reductions previously used in determining net emission increases or used to
create alternate emission limits.
(D) Banking. Banking credit for emission
reductions to use as offsets, at some future time, shall be allowed under the
following circumstances:
1. The person
requesting banking is the owner or operator of:
A. A new or modified installation who obtains
a permit by applying offsets which exceed the requirements of
10 CSR
10-6.060; or
B. An existing installation in an area where
offsets are required by the state implementation plan and that voluntarily
reduces emissions of the pollutant or a precursor of the pollutant for which
the area is classified after the base year used in the state implementation
plan;
2. For source
operations in the nonattainment areas for which reasonably available control
technology (RACT) would be required, but as yet has not been defined, actual
emission levels shall be reduced to represent post-RACT levels. The control
technology assumed for these calculations shall be mutually agreed upon by the
applicant and the director of the Missouri Department of Natural Resources' Air
Pollution Control Program. Only emission reductions beyond the post-RACT
emissions levels will be creditable;
3. Credit for emission reductions beyond
those that were required by RACT or paragraph (3)(D)2. of this rule at a
shutdown installation and that are in excess of those needed to offset a
replacement installation can be banked;
4. It shall be a violation of this rule for
any person to operate a source operation from which banked credit for emission
reductions was obtained so as to emit the pollutant at levels greater than
identified in the offset calculation referred to in subparagraph (3)(B)4.C. of
this rule, unless the person who banked credit for the reductions, or their
transferee, first files a notice with the director of the Missouri Department
of Natural Resources' Air Pollution Control Program stating that credit for the
reductions or a part of the credit is being withdrawn from the bank, and credit
has not previously been withdrawn; and
5. The amount of banked emission reduction
credits shall be discounted without compensation to the holder in the
applicable source category when new rules requiring emission reductions are
adopted by the commission. The amount of discounting of banked emission
reduction credits shall be calculated on the same basis as the reductions
required for existing sources which are subject to the new rule. A portion of
banked credits, equivalent to the anticipated required reductions may be
temporarily frozen by the director of the Missouri Department of Natural
Resources' Air Pollution Control Program in anticipation of a new rule being
adopted by the commission. This paragraph, however, shall not apply to emission
reductions, discounted at the time of banking in accordance with paragraph
(3)(D)2. of this rule, unless the new rule provides for the replacement of RACT
with BACT or another more stringent level of control.
(4) Reporting and Record Keeping.
(A) The Account Application shall include the
following information, submitted on a form supplied by the Missouri Department
of Natural Resources:
1. The name and address
of account holder;
2. Authorized
account representative and alternate authorized account representative;
and
3. County plant identification
number (if applicable).
(B) The Notice and Certification of
Generation shall include the following information, submitted on a form
supplied by the Missouri Department of Natural Resources:
1. Account identification number;
2. Date generating activity was
completed;
3. A brief description
of the generation activity;
4. The
amount of ERCs generated;
5.
Affected emission units;
6. The
protocols that were used to calculate and document the ERCs;
7. Information on all the generator source's
applicable emission rates;
8. A
statement that the reductions were calculated in accordance with paragraph
(3)(B)1. of this rule;
9. A
statement that the ERCs were not generated in whole or in part from actions
prohibited pursuant to paragraph (3)(B)2. of this rule;
10. For each source subject to reporting
toxic chemical releases for the Community Right-to-Know provisions under 40 CFR
part 372, the estimated amount of hazardous air pollutants, as defined below,
emitted to the air as the result of the generation of the ERC.
A. A pollutant shall be reported under this
paragraph, only if it is listed both in
40 CFR
372.65 and section 112(b) of the Clean Air
Act, and a chemical which the source is reporting or expects to report under 40
CFR part 372 for the calendar year in which the ERC was generated.
B. The requirements in 40 CFR 373.30(b) shall
be followed for the notice.
C. The
exemptions listed in
40
CFR 372.38 for determining the amount of
release to be reported under
40 CFR
372.30 shall also be exemptions for
determining the amount emitted under this subsection.
D. The notice shall include:
(I) The name and Chemical Abstracts Service
(CAS) number (if applicable) of the chemical reported;
(II) If the chemical identity is claimed
trade secret under 40 CFR 372, a generic name for the chemical as reported
under
40 CFR
372.85(b)(11);
(III) A mixture component identity if the
chemical identity is not known; and
(IV) An estimate of total air emissions, in
pounds, for the relevant time period of ERC generation. Releases of less than
one thousand (1,000) pounds may be indicated in ranges.
11. Signature of authorized
account representative and the signature of an official responsible for the
truth, accuracy, and completeness of the notice.
(C) The Notice of Intent to Use ERCs shall
include the following information submitted on a form supplied by the Missouri
Department of Natural Resources:
1. The name
of the facility;
2. The emissions
unit and the applicable pollutant;
3. Account identification number;
4. The date(s) on which the ERCs were
acquired;
5. The amount of ERCs
used and the associated serial numbers;
6. The applicable state and federal
requirements that the ERCs were used to comply with;
7. The emissions quantification protocols
that were used to calculate the amount of ERCs required to demonstrate
compliance and documentation for the compliance calculation under paragraph
(3)(B)7. of this rule;
8. A
statement that due diligence was made to verify that the ERCs were not
previously used and not generated as a result of actions prohibited under this
regulation or other provisions of law;
9. A statement that the ERCs were not used in
a manner prohibited under this regulation or other provisions of law;
10. For each source subject to reporting
toxic chemical releases for the Community Right-to-Know provisions under 40 CFR
part 372, the estimated amount of hazardous air pollutants emitted to the air
as the result of the use of the ERC to meet otherwise applicable requirements.
The estimated amount shall include emissions increases and any emission
reductions used for ERCs instead of non-ERC compliance with otherwise
applicable requirements. The same procedures shall be followed as the similar
requirement under the Notice and Certification of Generation; and
11. Signature of authorized account
representative and the signature of an official responsible for the truth,
accuracy, and completeness of the notice.
(D) The Notice of Withdrawal shall include
the following information submitted on a form supplied by the Missouri
Department of Natural Resources:
1. The name
of the facility;
2. The emissions
unit and the applicable pollutant;
3. Account identification number;
4. The serial numbers of the ERCs to be
withdrawn;
5. The reason for the
withdrawal;
6. A copy of the Notice
and Certification of Generation submitted by the generator source to the state;
and
7. Signature of authorized
account representative and the signature of an official responsible for the
truth, accuracy, and completeness of the notice.
(E) The Notice of Transfer shall include the
following information submitted on a form supplied by the Missouri Department
of Natural Resources:
1. The name of the
account holder that is trading the ERCs;
2. The name of the account holder that is
receiving the ERCs;
3. Account
identification number;
4. The
amount of ERCs to be transferred and the associated serial numbers and
applicable pollutants;
5. A
statement that due diligence was made to verify that the ERCs were not
previously used and not generated as a result of actions prohibited under this
regulation or other provisions of law; and
6. Signature of authorized account
representatives from both accounts signifying that both account holders agree
to the requested transfer.
(F) The generator source shall document the
protocol and specific data by which an ERC is quantified. Generator sources
shall transfer all such documentation to any transferee at the time that
ownership of an ERC is transferred. The user source shall document the protocol
and specific data by which the amount of ERCs needed for compliance was
determined. The user source shall maintain all relevant documentation for a
minimum of five (5) years after an ERC is used for compliance. Records shall be
kept with at least the same frequency as required for the underlying
requirement.
(5) Test
Methods. (Not Applicable)
Notes
*Original authority: 643.050, RSMo 1965, amended 1972, 1992, 1993, 1995, 2011 and 643.220, RSMo 2001, amended 2002.
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