Section 101.376 - Discrete Emission Credit Use(a) Requirements to use discrete emission credits. Discrete emission credits may be used if the following requirements are met. (1) The user shall have ownership of a sufficient amount of discrete emission credits before the use period for which the specific discrete emission credits are to be used.(2) The user shall hold sufficient discrete emission credits to cover the user's compliance obligation at all times.(3) The user shall acquire additional discrete emission credits during the use period if it is determined the user does not possess enough discrete emission credits to cover the entire use period. The user shall acquire additional credits as allowed under this section prior to the shortfall, or be in violation of this section.(4) The user may acquire and use only discrete emission credits listed in the registry.(5) The user shall obtain executive director approval to use nitrogen oxides (NOX) discrete emission reduction credits (DERCs) in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties as provided by subsection (f) of this section.(6) A discrete emission credit may not be used unless it is available in the account for the site where it will be used.(b) Use of discrete emission credits. With the exception of uses prohibited in subsection (c) of this section or precluded by a commission order or a condition within an authorization under the same commission account number, discrete emission credits may be used to meet or demonstrate compliance with any facility or mobile regulatory requirement including the following: (1) to exceed any allowable emission level, if the following conditions are met: (A) in ozone nonattainment areas, permitted facilities may use discrete emission credits to exceed permit allowables by no more than 10 tons for NOX or 5 tons for volatile organic compounds in a 12-month period as approved by the executive director. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested; or(B) at permitted facilities in counties or portions of counties designated as attainment or, attainment/unclassifiable, or unclassifiable, discrete emission credits may be used to exceed permit allowables by values not to exceed the prevention of significant deterioration significance levels as provided in 40 Code of Federal Regulations (CFR) §52.21(b)(23), as approved by the executive director before use. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested;(2) as new source review (NSR) permit offsets, if the following requirements are met: (A) the user shall obtain the executive director's approval prior to the use of specific discrete emission credits to cover, at a minimum, one year of operation of the new or modified facility in the NSR permit;(B) the amount of discrete emission credits needed for NSR offsets equals the quantity of tons needed to achieve the maximum allowable emission level set in the user's NSR permit. The user shall also purchase and retire enough discrete emission credits to meet the offset ratio requirement in the user's ozone nonattainment area. The user shall purchase and retire either the environmental contribution of 10% or the offset ratio, whichever is higher; and(C) the user shall submit a completed application form specified by the executive director at least 90 days before the start of operation and at least 90 days before continuing operation for any period in which discrete emission credits not included in a prior application will be used as offsets;(3) to comply with the Mass Emissions Cap and Trade Program requirements as provided by § 101.356(h) of this title (relating to Allowance Banking and Trading); or(4) to comply with Chapter 115 or 117 of this title (relating to Control of Air Pollution from Volatile Organic Compounds; and Control of Air Pollution from Nitrogen Compounds), as allowed.(c) Discrete emission credit use prohibitions. A discrete emission credit may not be used under this division: (1) before it has been acquired by the user;(2) for netting to avoid the applicability of federal and state NSR requirements;(3) to meet (as codified in 42 United States Code (USC), Federal Clean Air Act (FCAA)) requirements for: (A) new source performance standards under FCAA, §111 (42 USC, § 7411);(B) lowest achievable emission rate standards under FCAA, §173(a)(2) (42 USC, § 7503(a)(2));(C) best available control technology standards under FCAA, §165(a)(4) (42 USC, § 7475(a)(4)) or Texas Health and Safety Code, § 382.0518(b)(1);(D) hazardous air pollutants standards under FCAA, §112 (42 USC, § 7412), including the requirements for maximum achievable control technology;(E) standards for solid waste combustion under FCAA, §129 (42 USC, § 7429);(F) requirements for a vehicle inspection and maintenance program under FCAA, §182(b)(4) or (c)(3) (42 USC, § 7511a(b)(4) or (c)(3));(G) ozone control standards set under FCAA, §183(e) and (f) (42 USC, § 7511b(e) and (f));(H) clean-fueled vehicle requirements under FCAA, §246 (42 USC, § 7586);(I) motor vehicle emissions standards under FCAA, §202 (42 USC, § 7521);(J) standards for non-road vehicles under FCAA, §213 (42 USC, § 7547);(K) requirements for reformulated gasoline under FCAA, §211(k) (42 USC, § 7545); or(L) requirements for Reid vapor pressure standards under FCAA, §211(h) and (i) (42 USC, § 7545(h) and (i));(4) to allow an emissions increase of an air contaminant above a level authorized in a permit or other authorization that exceeds the limitations of § 106.261 or § 106.262 of this title (relating to Facilities (Emission Limitations); and Facilities (Emission and Distance Limitations)) except as approved by the executive director and the United States Environmental Protection Agency (EPA). This paragraph does not apply to limit the use of discrete emission credits in lieu of allowances under § 101.356 of this title;(5) to authorize a facility whose emissions are enforceably limited to below applicable major source threshold levels, as defined in § 122.10 of this title (relating to General Definitions), to operate with actual emissions above those levels without triggering applicable requirements that would otherwise be triggered by such major source status;(6) to exceed an allowable emission level where the exceedance would cause or contribute to a condition of air pollution as determined by the executive director; or(7) in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties, if the NOX DERC usage requested exceeds the limit specified in subsection (f) of this section.(d) Notice of intent to use. (1) A completed application form specified by the executive director, signed by an authorized representative of the applicant, must be submitted to the executive director in accordance with the following requirements. (A) Discrete emission credits may be used only after the applicant has submitted the notice and received executive director approval.(B) The application must be submitted: (i) except as provided in subsection (f)(4) of this section, for NOX DERC use in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties, by August 1 before the beginning of the calendar year in which the DERCs are intended for use;(ii) for use for the Mass Emissions Cap and Trade Program in accordance with § 101.356 of this title, by October 1 of the control period in which the DERC are intended for use; or(iii) for use for NSR offsets, as required by subsection (b)(2)(C) of this section; or(iv) for all other use, at least 45 days before the first day of the use period if the discrete emission credits were generated from a facility, 90 days if the discrete emission credits were generated from a mobile source, and every 12 months thereafter for each subsequent year if the use period exceeds 12 months.(C) A copy of the application must also be sent to the federal land manager 30 days prior to use if the user is located within 100 kilometers of a Class I area, as listed in 40 CFR Part 81 (2001).(D) The application must include, but is not limited to, the following information for each use: (i) the applicable state and federal requirements that the discrete emission credits will be used to comply with and the intended use period;(ii) the amount of discrete emission credits needed;(iii) the baseline emission rate, activity level, and total emissions for the applicable facility or mobile source;(iv) the actual emission rate, activity level, and total emissions for the applicable facility or mobile source;(v) the most stringent emission rate and the most stringent emission level for the applicable facility or mobile source, considering all applicable local, state, and federal requirements;(vi) a complete description of the protocol, as submitted by the executive director to the EPA for approval, used to calculate the amount of discrete emission credits needed;(vii) the actual calculations performed by the user to determine the amount of discrete emission credits needed;(viii) the date that the discrete emission credits were acquired;(ix) the discrete emission credit generator and the original certificate number of the discrete emission credits acquired;(x) the price of the discrete emission credits acquired, except for transfers between sites under common ownership or control;(xi) a statement that due diligence was taken to verify that the discrete emission credits were not previously used, the discrete emission credits were not generated as a result of actions prohibited under this regulation, and the discrete emission credits will not be used in a manner prohibited under this regulation; and(xii) a certification of use, that must contain certification under penalty of law by a responsible official of the user of truth, accuracy, and completeness. This certification must state that based on information and belief formed after reasonable inquiry, the statements and information in the document are true, accurate, and complete.(2) Discrete emission credit use calculation. (A) To calculate the amount of discrete emission credits necessary to comply with §§ 117.123, 117.320, 117.323, 117.423, 117.1020, 117.1220, or 117.3020 of this title (relating to Source Cap; and System Cap), a user may use the equations listed in those sections, or the following equations. (B) The amount of discrete emission credits needed to demonstrate compliance or meet a regulatory requirement is calculated as follows. Attached Graphic
(C) The amount of discrete emission credits needed to exceed an allowable emissions level is calculated as follows. Attached Graphic
(D) The user shall retire 10% more discrete emission credits than are needed, as calculated in this paragraph, to ensure that the facility or mobile source environmental contribution retirement obligation will be met.(E) If the amount of discrete emission credits needed to meet a regulatory requirement or to demonstrate compliance is greater than 10 tons, an additional 5.0% of the discrete emission credits needed, as calculated in this paragraph, must be acquired to ensure that sufficient discrete emission credits are available to the user with an adequate compliance margin.(3) A user may submit a late application in the case of an emergency, or other exigent circumstances, but the notice must be submitted before the discrete emission credits can be used. The user shall include a complete description of the situation in the notice of intent to use. All other notices submitted less than 45 days prior to use, or 90 days prior to use for a mobile source, will be considered late and in violation.(4) The user is responsible for determining the credits it will purchase and notifying the executive director of the selected generating facility or mobile source in the application. If the generator's credits are rejected or the application is incomplete, the use of discrete emission credits by the user may be delayed by the executive director. The user cannot use any discrete emission credits that have not been certified by the executive director. The executive director may reject the use of discrete emission credits by a facility or mobile source if the credit and use cannot be demonstrated to meet the requirements of this section.(5) If the facility is in an area with an ozone season less than 12 months, the user shall calculate the amount of discrete emission credits needed for the ozone season separately from the non-ozone season.(e) Notice of use. (1) The user shall calculate: (A) the amount of discrete emission credits used, including the amount of discrete emission credits retired to cover the environmental contribution, as described in subsection (d)(2)(D) of this section, associated with actual use; and(B) the amount of discrete emission credits not used, including the amount of excess discrete emission credits that were purchased to cover the environmental contribution, as described in subsection (d)(2)(D) of this section, but not associated with the actual use, and available for future use.(2) Discrete emission credit use is calculated by the following equations. (A) The amount of discrete emission credits used to demonstrate compliance or meet a regulatory requirement is calculated as follows. Attached Graphic
(B) The amount of discrete emission credits used to comply with permit allowables is calculated as follows. Attached Graphic
(3) A form specified by the executive director for using credits must be submitted to the executive director in accordance with the following requirements. (A) The notice must be submitted within 90 days after the end of the use period. Each use period must not exceed 12 months.(B) The notice is to be used as the mechanism to update or amend the notice of intent to use and must include any information different from that reported in the notice of intent to use, including, but not limited to, the following items: (i) purchase price of the discrete emission credits obtained prior to the current use period, except for transfers between sites under common ownership or control;(ii) the actual amount of discrete emission credits possessed during the use period;(iii) the actual emissions during the use period for volatile organic compounds and NOX;(iv) the actual amount of discrete emission credits used;(v) the actual environmental contribution; and(vi) the amount of discrete emission credits available for future use.(4) Discrete emission credits that are not used during the use period are surplus and remain available for transfer or use by the holder. In addition, any portion of the calculated environmental contribution not attributed to actual use is also available.(5) The user is in violation of this section if the user submits the report of use later than the allowed 90 days following the conclusion of the use period.(f) DERC use in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties. (1) For the 2015 calendar year, the use of NOX DERCs in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties may not exceed 42.8 tons per day.(2) Beginning in the 2016 calendar year, the use of NOX DERCs in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties may not exceed 17.0 tons per day.(3) If the total number of DERCs submitted for the upcoming calendar year in all applications received by the August 1 deadline in subsection (d)(1)(B)(i) of this section is greater than the applicable limit in paragraph (1) or (2) of this subsection, the executive director shall apportion the number of DERCs for use.(A) In determining the amount of DERC use to approve for each application, the executive director may take into consideration: (i) the total number of DERCs existing in the nonattainment area bank;(ii) the total number of DERCs submitted for use in the upcoming control period;(iii) the proportion of DERCs requested for use to the total amount requested;(iv) the amount of DERCs required by the applicant for compliance;(v) the technological and economic aspects of other compliance options available to the applicant; and(vi) the location of the facilities for which owners or operators are requesting use of DERCs.(B) The executive director shall consider the appropriate amount of DERCs allocated for each application submitted on a case-by-case basis.(4) If the total number of DERCs submitted for use during the upcoming calendar year in all applications received by the August 1 deadline in subsection (d)(1)(B)(i) of this section is less than the limit, the executive director may:(A) approve all requests for DERC usage provided that all other requirements of this section are met; and(B) consider any late application submitted as provided under subsection (d)(3) of this section that is not an Electric Reliability Council of Texas, Inc. (ERCOT)-declared emergency situation as defined in paragraph (5) of this subsection, but will not otherwise approve a late submittal that would exceed the limit established in this subsection.(5) If the applications are submitted in response to an ERCOT-declared emergency situation, the request will not be subject to the limit established in this subsection and may be approved provided all other requirements are met. For the purposes of this paragraph, an ERCOT-declared emergency situation is defined as the period of time that an ERCOT-issued emergency notice or energy emergency alert (EEA) (as defined in ERCOT Nodal Protocols, Section 2: Definitions and Acronyms (June 1, 2012) and issued as specified in ERCOT Nodal Protocols, Section 6: Adjustment Period and Real-Time Operations (June 1, 2012)) is applicable to the serving electric power generating system. The emergency situation is considered to end upon expiration of the emergency notice or EEA issued by ERCOT.(g) Inter-pollutant use of discrete emission credits. With prior approval from the executive director and the EPA, a NOX or VOC discrete emission credit may be used to meet the nonattainment new source review offset requirements for the other ozone precursor if photochemical modeling demonstrates that overall air quality and the regulatory design value in the nonattainment area of use will not be adversely affected by the substitution.30 Tex. Admin. Code § 101.376
The provisions of this §101.376 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 to be effective January 1, 2009, 33 TexReg 10455; 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