(a) The holding limit is the maximum number of California GHG allowances that may be held by an entity or jointly held by a group of entities with a direct corporate association, as defined in section 95833, at any point in time.(b) Application of the Holding Limit.(1) The holding limit will apply to each entity registered as a covered, opt-in covered, or voluntarily associated entity pursuant to section 95830.(2) The holding limit calculation will not include allowances contained in limited use holding accounts or exchange clearing holding accounts created pursuant to section 95831.(3) The holding limit calculation will not include allowances contained in Annual Allocation Holding Accounts.(4) If the Executive Officer determines that a reported transfer request not yet recorded into the tracking system would result in an entity's holdings exceeding the applicable holding limit, then the Executive Officer shall not approve the transfer request pursuant to section 95921(a)(1).(5) If an entity is in compliance with the current vintage holding limit on December 31 of any year and the reclassification of future vintage allowances as current vintage allowances pursuant to section 95920(c)(1)(C) causes it to exceed the holding limit on January 1 of the next compliance year, then: (A) The accounts administrator will inform the entity; and(B) The entity will have five business days to bring its account balances within the holding limit. After that, the Executive Officer may transfer allowances in excess of the holding limit to the Auction Holding Account for consignment to auction pursuant to section 95910(d)(2).(C) Allowances transferred to the Auction Holding Account for consignment will be drawn first from the entity's Holding Account and, if necessary, from the entity's Compliance Account. The order for removing allowances for consignment will be the opposite of the retirement order in section 95856(h)(1).(6) Penalties for Holding Limit Violations. (A) For an entity that is out of compliance with the holding limit only as a result of the circumstances described in section 95920(b)(5), penalties may be applied if the entity fails to bring its account balances under the holding limit within the five business day period allowed pursuant to section 95920(b)(5)(B). Otherwise, penalties may be applied whenever the holding limit is exceeded.(B) Penalties may be applied if the violation of the holding limit is not discovered until after a transfer that would exceed the holding limit is registered into the tracking system.(c) The holding limit will be separately calculated to holdings of: (1) Current Vintage Allowances. This category of allowances consists of: (A) Allowances with a vintage year corresponding to the current or previous calendar years;(B) Allowances from any vintage purchased from the Allowance Price Containment Reserve pursuant to section 95913; and(C) Allowances originally purchased at the Advance auction but of a vintage year equal or prior to the current calendar year; and(D) Allowances issued by a GHG ETS program approved by ARB pursuant to section 95941 that have no vintage;(2) Future Vintage Allowances. This category of allowances consists of: (A) Allowances that were purchased at the Advance Auction and still have a vintage year greater than the current calendar year; and(B) Allowances with a vintage year greater than the current calendar year that were obtained through true-up allocation.(d) The holding limit will be calculated for allowances qualifying pursuant to section 95920(c)(1) as the sum of: (1) The number given by the following formula: Holding Limit = 0.1*Base + 0.025*(Annual Allowance Budget - Base) In which:
"Base" equals 25 million metric tons of CO2e.
"Annual Allowance Budget" is the number of allowances issued for the current budget year.
(2) Limited Exemption from the Holding Limit. (A) The limited exemption from the holding limit (limited exemption) is the maximum number of allowances that will not be included in the holding limit calculated pursuant to section 95920(c)(1). To qualify for inclusion within the limited exemption, allowances must be placed in the entity's Compliance Account. The limited exemption is available to covered entities and opt-in covered entities but not to voluntarily associated entities.(B) Calculation of the Limited Exemption for Entities Already Registered as of January 1, 2017 as Covered Entities or Opt-in Covered Entities. The limited exemption for these entities is the sum of the emissions contained in the most recent annual emissions data reports that have received a positive or qualified positive emissions data verification statement for emissions for which the entity now has a compliance obligation pursuant to section 95851, plus the amount of emissions in the oldest emissions report for which the entity now has a compliance obligation, and less the amount of any annual compliance obligations already due in the current compliance period.(C) Calculation of the Limited Exemption for Entities Registering as Covered Entities or Opt-in Covered Entities after January 1, 2017. The limited exemption for an entity that registers as a covered entity or opt-in covered entity after January 1, 2017 will be calculated as twice the annual emissions contained in the emissions report for the first year that the entity has a compliance obligation, provided that the emissions data report has received a positive or qualified positive emissions data verification statement for emissions that generate a compliance obligation pursuant to section 95851.(D) The limited exemption will be increased on November 2 of each year by the amount of emissions that generate a compliance obligation pursuant to section 95851 that are included in the emissions data report received that year that have received a positive or qualified positive emissions data verification statement.(E) If ARB has assigned emissions to an entity, for any year, in the absence of a positive or qualified positive emissions data verification statement, the limited exemption will be calculated using the assigned emissions. If the emission reports scheduled to be used to increase the limited exemption are not available at the time of a scheduled increase and ARB has not assigned emissions to the entity, the limited exemption will be increased by the amount of the most recently received report that has received a positive or qualified positive emissions data verification statement. If this procedure is used, the limited exemption will not be adjusted using data in the reports scheduled to be received that year until the next scheduled change in the limited exemption.(F) After ARB has evaluated an entity's surrender of compliance instruments pursuant to section 95856, an entity's limited exemption will be reduced to reflect any emissions obligation due during that calendar year. Following an annual surrender deadline, the limited exemption will be reduced by the amount of the annual surrender obligation due that calendar year. Following a compliance period surrender deadline, the limited exemption is reduced, starting with the oldest emissions report used to calculate the limited exemption, by the amount of emissions contained in the emissions reports reflecting the number of years for which a compliance obligation was due that calendar year, including emissions carried over from a previous compliance period pursuant to section 95853(d), but not including any emissions already removed from the limited exemption following an annual surrender deadline.(G) Allowances allocated pursuant to sections 95870(e), (f), and (g) and sections 95871(d), (e), and (f), which are transferred to the receiving entity's annual allocation holding account in a year preceding their vintage year, will not count against the Holding Limit or limited exemption until January 1 of their vintage year.(3) Petition to Adjust the Limited Exemption. (A) Prior to October 1 of any year, a covered entity may submit to the Executive Officer evidence demonstrating an increase in emissions for that year over the previous year and request a temporary increase in the limited exemption until verified data for that year are available.(B) The amount of the increase must be at least 250,000 metric tons CO2e on an annualized basis.(C) The Executive Officer will review the evidence and determine whether an adjustment is needed.(D) If an adjustment is granted, then the limited exemption for that covered entity will be increased immediately by the amount determined by the Executive officer.(E) When the verified emissions data are received for the year for which an adjustment was granted, the Executive Officer will use the verified emissions value when calculating the limited exemption.(e) The holding limit will be calculated separately for each vintage year for allowances qualifying pursuant to section 95920(c)(2) as the number given by the following formula: Holding Limit = 0.1*Base + 0.025*(Annual Allowance Budget - Base)
In which:
"Base" equals 25 million metric tons of CO2e.
"Annual Allowance Budget" is the number of California GHG allowances issued for a budget year.
(f) Application of Corporate Association Provisions to the Holding Limit.(1) The total number of allowances held by a group of entities with a direct corporate association pursuant to section 95833 must be less than or equal to the holding limits pursuant to sections 95920(d) and (e).(2) Calculation of the Limited Exemption for a Direct Corporate Association.(A) An entity with a direct corporate association that is not part of a consolidated account will calculate its limited exemption as described in section 95920(d).(B) The limited exemption for a consolidated account is the sum of the limited exemption calculation for the entities consolidated into the account.(3) Entities that are part of a direct corporate association that choose to opt out of account consolidation pursuant to sections 95830(c)(1)(I) or 95835(a) or (b) must allocate shares of the holding limit among themselves. This holding limit allocation results in each entity having a specified percentage share of the group's holding limit. The sum of the percentage shares allocated among the entities must sum to one hundred percent.(A) The primary account representatives or alternate account representatives of each of the associated entities must inform the accounts administrator of the allocation of the holding limit when registering pursuant to section 95833.(B) The holding limit allocation will remain in effect until the primary account representatives or alternate account representatives of each of the associated entities informs the accounts administrator of subsequent changes to the allocation of the holding limit.(g) The holding limit in section 95920(a) shall include holdings of any allowances issued by a jurisdiction operating an External GHG ETS to which California has linked pursuant to subarticle 12.(h) The "Annual Allowance Budget" in section 95920(d) is calculated as the sum for the current budget year of the annual compliance budgets of California and all External GHG ETS programs to which California has linked pursuant to subarticle 12. The "Annual Allowance Budget" in section 95920(e) is calculated as the sum for a budget year of the annual compliance budgets of California and all External GHG ETS programs to which California has linked pursuant to subarticle 12. In the event that an External GHG ETS program to which California has linked pursuant to subarticle 12 has taken an official act to revoke, repeal, or indefinitely suspend its ETS program or the Executive Officer has prohibited transfer to and from that program's entities to California entities, the "Annual Allowance Budget" in section 95920(d) is calculated as the sum for the current budget year of the annual compliance budgets of California and all External GHG ETS programs to which California has linked pursuant to subarticle 12 that continue in full force and effect. ARB will provide written notification to all California participants should a change to the holding limit be required.Cal. Code Regs. Tit. 17, § 95920
1. New subarticle 11 (sections 95920-95922) and section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
2. Change without regulatory effect amending subsections (b)(4) and (f)(2) filed 2-15-2012 pursuant to section 100, title 1, California Code of Regulations (Register 2012, No. 7).
3. Amendment filed 8-29-2012; operative 9-1-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 35).
4. Change without regulatory effect renumbering former subsection (c)(1)(D) to subsection (c)(2) filed 12-6-2012 pursuant to section 100, title 1, California Code of Regulations (Register 2012, No. 49).
5. New subsections (g) and (h) filed 6-24-2013; operative 10-1-2013 (Register 2013, No. 26).
6. Amendment filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).
7. Amendment of subsection (b)(2) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
8. Amendment filed 9-18-2017; operative 10-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
9. Amendment of subsections (a), (d)(2)(B)-(C), (d)(2)(G), (f)(1) and (h) filed 3-29-2019; operative 3-29-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13). 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.
1. New subarticle 11 (sections 95920-95922) and section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
2. Change without regulatory effect amending subsections (b)(4) and (f)(2) filed 2-15-2012 pursuant to section 100, title 1, California Code of Regulations (Register 2012, No. 7).
3. Amendment filed 8-29-2012; operative 9-1-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 35).
4. Change without regulatory effect renumbering former subsection (c)(1)(D) to subsection (c)(2) filed 12-6-2012 pursuant to section 100, title 1, California Code of Regulations (Register 2012, No. 49).
5. New subsections (g) and (h) filed 6-24-2013; operative 10-1-2013 (Register 2013, No. 26).
6. Amendment filed 6-26-2014; operative 7/1/2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).
7. Amendment of subsection (b)(2) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
8. Amendment filed 9-18-2017; operative 10/1/2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
9. Amendment of subsections (a), (d)(2)(B)-(C), (d)(2)(G), (f)(1) and (h) filed 3-29-2019; operative 3/29/2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).