Section 101.302 - General Provisions(a) Applicable pollutants. (1) An emission credit may be generated from a reduction of a criteria pollutant, excluding lead, or a precursor of a criteria pollutant for which an area is designated nonattainment.(2) An emission credit generated from the reduction of one pollutant or precursor may not be used to meet the requirements for another pollutant or precursor, except as provided by § 101.306(d) of this title (relating to Emission Credit Use).(b) Eligible generator categories. The following categories are eligible to generate emission credits: (1) point source facilities;(3) any facility, including both point and area sources, or mobile source associated with actions by federal agencies under 40 Code of Federal Regulations Part 93, Subpart B, Determining Conformity of General Federal Actions to State or Federal Implementation Plans; and(4) area source facilities, including those comprised of multiple emission points as allowed under § 101.300(12) of this title (relating to Definitions). Credit generation from grouped emission points cannot exceed the lower of the group's actual emissions in the state implementation plan (SIP) emissions year or the historical adjusted emissions. Facilities comprised of grouped emission points may include equipment that was not operational during the SIP emissions year or the historical adjusted emissions years as long as the emissions from the group were present during the SIP emissions year. Characteristics that may be considered to determine if emission points qualify for consideration as a single facility for the purposes of generating emission credits, include but are not limited to: (A) source classification codes;(B) primary standard industrial classification code;(C) location, origin of, characteristics of, controls on the emissions; and(D) other credit calculation-related characteristics, such as fuel, equipment type, emissions reduction strategy, and quantification protocol.(c) Ineligible generator categories. The following categories are not eligible to generate emission credits: (1) residential area sources;(2) on-road mobile sources that are not part of an industrial, commercial, nonprofit, institutional, or municipal/government fleet; and(3) mobile sources that are not primarily operated within a specific nonattainment area with the exception of marine and locomotive sources that use capture and control emissions reduction systems.(d) Emission credit requirements. (1) An emission reduction credit (ERC) is a certified emission reduction that: (A) must be enforceable, permanent, quantifiable, real, and surplus;(B) must be surplus at the time it is created, as well as when it is used; and(C) must occur after the state implementation plan (SIP) emissions year for the facility.(2) Mobile emission reduction credits (MERCs) are certified reductions that meet the following requirements: (A) reductions must be enforceable, permanent, quantifiable, real, and surplus;(B) the certified reduction must be surplus at the time it is created, as well as when it is used;(C) in order to become certified, the reduction must have occurred after the SIP emissions year; and(D) the reduction must be from a mobile source that operated during the SIP emissions year.(3) Emission reductions from a facility or mobile source that are certified as emission credits under this division cannot be recertified in whole or in part as credits under another division within this subchapter.(e) Protocol. (1) All generators or users of emission credits shall use a protocol that has been submitted by the executive director to the United States Environmental Protection Agency (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 must be used as follows. (A) The owner or operator of a facility subject to the emission specifications under §§ 117.110, 117.310, 117.410, 117.1010, 117.1210, 117.1310, 117.2010, or 117.2110 of this title (relating to Emission Specifications for Attainment Demonstration; Emission Specifications for Eight-Hour Attainment Demonstration; and Emission Specifications) shall use the testing and monitoring methodologies required under Chapter 117 of this title (relating to Control of Air Pollution from Nitrogen Compounds) to show compliance with the emission specification for that pollutant.(B) The owner or operator of a facility subject to the requirements under Chapter 115 of this title (relating to Control of Air Pollution from Volatile Organic Compounds) shall use the testing and monitoring methodologies required under Chapter 115 of this title to show compliance with the applicable requirements.(C) Except as specified in subparagraphs (A) and (B) of this paragraph, the owner or operator of a facility subject to the requirements under Chapter 106 of this title (relating to Permits by Rule) or a permit issued under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification) shall use the testing and monitoring methodologies required under Chapter 106 of this title or a permit issued under Chapter 116 of this title to demonstrate compliance with the applicable requirements.(D) The executive director may approve the use of a methodology approved by the EPA to quantify emissions from the same type of facility or mobile source.(E) Except as specified in subparagraph (D) of this paragraph, if the executive director has not submitted a protocol for the applicable facility or mobile source to the EPA for approval, the following requirements apply: (i) the amount of emission credits from a facility or mobile source, in tons per year, 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 shall 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) the owner or operator of a facility with a continuous emissions monitoring system or predictive emissions monitoring system in place shall use this data in quantifying emissions;(iv) the chosen quantification protocol must be made available for public comment for a period of 30 days and must be viewable on the commission's website;(v) the chosen quantification protocol and any comments received during the public comment period must be submitted to the EPA for a 45-day adequacy review; and(vi) quantification protocols may not be accepted for use with this division if the executive director receives a letter objecting to the use of the protocol from the EPA during the 45-day adequacy review or the EPA adopts disapproval of the protocol in the Federal Register.(2) If the monitoring and testing data specified in paragraph (1) of this subsection is missing or unavailable, the generator or user shall determine the facility's emissions for the period of time the data is missing or unavailable using the most conservative method for replacing the data and these listed methods in the following order: (A) continuous monitoring data;(B) periodic monitoring data;(E) EPA Compilation of Air Pollution Emission Factors (AP-42), September 2000; or(3) When quantifying actual emissions in accordance with paragraph (2) of this subsection, the generator or user shall submit the justification for not using the methods in paragraph (1) of this subsection and submit the justification for the method used.(f) Credit certification. (1) The amount of emission credits in tons per year will be determined and certified to the nearest tenth of a ton per year. Credits will not be issued for a facility, fugitive emissions from aggregated facilities, or aggregated mobile sources that cannot generate at least 0.1 ton per year of credit after all adjustments are applied. Fugitive emissions or mobile source emissions aggregated to meet the requirement that emission reductions be certified for at least 0.1 ton per year must be represented on the same application and will have an application deadline and credit expiration date determined by the earliest emission reduction date among the aggregated sources.(2) The executive director shall review an application for certification to determine the credibility of the reductions. Each ERC or MERC certified will be assigned a certificate number. A new number will be assigned when an ERC or MERC is traded or partly used. Reductions determined to be creditable and in compliance with all other requirements of this division will be certified by the executive director.(3) The applicant will be notified in writing if the executive director denies the emission credit application. The applicant may submit a revised application in accordance with the requirements of this division. If a facility's or mobile source's actual emissions exceed any applicable local, state, or federal requirement, reductions of emissions exceeding the requirement may not be certified as emission credits. An application for certification of emission credit from reductions quantified under subsection (e)(1)(E) of this section may only be approved after the EPA's 45-day adequacy review of the protocol.(g) Credit application submission and conditions.(1) Beginning January 1, 2018, an application to certify credits must be submitted through the State of Texas Environmental Reporting System unless the applicant receives prior approval from the executive director for an alternative means of application submission.(2) As a condition for the certification of a credit, the executive director may specify monitoring, testing, recordkeeping, or other requirements through an Emissions Banking and Trading Certification of Emission Reductions Form (Form EBT-CERT), or other forms considered equivalent by the executive director.(3) The generator must comply with all conditions specified in a Form EBT-CERT, or other forms considered equivalent by the executive director, once the credit is certified.(h) Geographic scope. Except as provided in § 101.305 of this title (relating to Emission Reductions Achieved Outside the United States), only emission reductions generated in nonattainment areas can be certified. An emission credit must be used in the nonattainment area in which it is generated unless the user has obtained prior written approval of the executive director and the EPA; and(1) a demonstration has been made and approved by the executive director and the EPA to show that the emission reductions achieved in another county or state provide an improvement to the air quality in the county of use; or(2) the emission credit was generated in a nonattainment area that has an equal or higher nonattainment classification than the nonattainment area of use, and a demonstration has been made and approved by the executive director and the EPA to show that the emissions from the nonattainment area where the emission credit is generated contribute to a violation of the national ambient air quality standard in the nonattainment area of use.(i) Recordkeeping. The generator shall maintain a copy of all notices and backup information submitted to the executive director and all records required or necessary to verify the certified emissions reduction for a minimum of five years. The user shall maintain a copy of all notices and backup information submitted to the executive director from the beginning of the use period and for at least five years after. The user shall make the records available upon request to representatives of the executive director, EPA, and any local enforcement agency. The records must 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 each mobile source using emission credits;(2) the amount of emission credits being used by each facility or mobile source; and(3) the certificate number of emission credits used for each facility or mobile source.(j) Public information. All information submitted with notices, reports, and trades regarding the nature, quantity, and sales price of emissions associated with the use, generation, and transfer of an emission credit 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 emission credit application. All nonconfidential information will be made available to the public as soon as practicable.(k) Authorization to emit. An emission credit created under this division is a limited authorization to emit the pollutants identified in subsection (a) of this section, unless otherwise defined, in accordance with the provisions of this section, 42 United States Code, §§ 7401 et seq., and Texas Health and Safety Code, Chapter 382, as well as regulations promulgated thereunder. An emission credit does not constitute a property right. Nothing in this division may be construed to limit the authority of the commission or the EPA to terminate or limit such authorization.(l) Program participation. The executive director has the authority to prohibit a person from participating in emission credit trading either as a generator or user, if the executive director determines that the person has violated the requirements of the program or abused the privileges provided by the program.(m) Compliance burden. A user may not transfer their compliance burden and legal responsibilities to a third-party participant. A third-party participant may only act in an advisory capacity to the user.(n) Credit ownership. The owner of the initial emission credit 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 0.1 ton per year of credit after all adjustments are applied.30 Tex. Admin. Code § 101.302
The provisions of this §101.302 adopted to be effective January 17, 2003, 28 TexReg 83; amended to be effective December 2, 2004, 29 TexReg 11038; amended to be effective October 26, 2006, 31 TexReg 8684; amended to be effective August 16, 2007, 32 TexReg 4985; Amended by Texas Register, Volume 40, Number 25, June 19, 2015, TexReg 3886, eff. 6/25/2015; Amended by Texas Register, Volume 42, Number 40, October 6, 2017, TexReg 5469, eff. 10/12/2017