Section 101.372 - General Provisions(a) Applicable pollutants. (1) A discrete emission credit may be generated from a reduction of a criteria pollutant, excluding lead, or a precursor of a criteria pollutant.(2) A discrete 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 in § 101.376 of this title (relating to Discrete Emission Credit Use).(b) Eligible generator categories. Eligible categories include the following: (1) point source facilities;(3) any facility, including 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 § 101.370(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 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, and controls on the emissions;(D) the generation period; and(E) 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 discrete 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 within a nonattainment area that do not primarily operate within that nonattainment area with the exception of marine and locomotive sources that use capture and control emissions reduction systems.(d) Discrete emission credit requirements. (1) A discrete emission reduction credit (DERC) is a certified emission reduction that: (A) must be real, quantifiable, and surplus at the time the DERC is generated;(B) must occur after the year used to determine the state implementation plan (SIP) emissions for a facility in a nonattainment area; and(C) must occur at a facility with SIP emissions for a facility in a nonattainment area.(2) To be creditable as a mobile discrete emission reduction credit, 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 SIP emissions year for a mobile source in a nonattainment area; and(C) for a mobile source in a nonattainment area, the mobile source must have operated during the SIP emissions year.(3) Emission reductions from a facility or mobile source 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.(e) Protocol. (1) All generators or users of discrete emission credits must use a protocol which 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 shall 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, 117.2110, or 117.3310 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 control requirements or emission specifications 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) For area sources, 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.(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 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 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, upon approval by the executive director, 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 proposes 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 application. Beginning January 1, 2018, a credit application 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.(g) Credit certification. (1) The amount of discrete emission credits must be rounded down to the nearest tenth of a ton when generated and must be rounded up to the nearest tenth of a ton when used. A facility, aggregated fugitive emissions, or aggregated mobile sources that cannot generate at least 0.1 ton of credit after all adjustments are applied may not generate discrete emission credits. Fugitive emissions or mobile source emissions aggregated to meet the requirement that emission reductions be certified for at least 0.1 ton must be represented on the same application and will have an application deadline 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 and may certify reductions. Each DERC certified will be assigned a certificate number. 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 application in accordance with the requirements of this division.(4) If a facility's or mobile source's emissions exceed any applicable local, state, or federal requirement, reductions of emissions exceeding the requirement may not be certified as discrete emission credits.(h) Geographic scope. Except as provided in paragraph (7) of this subsection and § 101.375 of this title (relating to Emission Reductions Achieved Outside the United States), only emission reductions generated in the State of Texas may be creditable and used in the state with the following limitations. (1) volatile organic compounds (VOC) and nitrogen oxides (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) carbon monoxide (CO), sulfur dioxide (SO2), and particulate matter with diameters less than or equal to 10 micrometers (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 emission reductions in other 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.(i) 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.(j) Recordkeeping. The generator must maintain a copy of all forms and backup information submitted to the executive director for a minimum of five years, following the completion of the generation period. The user shall maintain a copy of all forms and backup information submitted to the executive director 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 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 mobile sources using discrete emission credits;(2) the amount of discrete emission credits being used by each facility or mobile source; and(3) the certificate number of each discrete emission credit used by each facility or mobile source.(k) 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.(l) 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 Federal Clean Air Act, and the Texas Clean Air Act, 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.(m) Program participation. The executive director has the authority to prohibit a person from participating in discrete 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.(n) 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) A user may not transfer its compliance burden and legal responsibilities to a third-party participant. A third-party participant may only act in an advisory capacity to the user.(o) Credit ownership. The owner of the initial discrete emission credit certificate shall be the owner or operator of the 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 mobile source incurred the cost of the emission reduction strategy; or(2) whether the owner or operator of the mobile source lacks the potential to generate one tenth of a ton of credit.30 Tex. Admin. Code § 101.372
The provisions of this §101.372 adopted to be effective January 17, 2003, 28 TexReg 83; 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 3896, eff. 6/25/2015; Amended by Texas Register, Volume 42, Number 40, October 6, 2017, TexReg 5476, eff. 10/12/2017