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Subpart 237-6: NOx Allowance Tracking System

(Statutory authority: Environmental Conservation Law, §§ 1-0101, 3-0301, 19-0103, 19-0105, 19-0301, 19-0303, 19-0305, 19-0311)

[Filed 3/28/05. Effective 30 days after filing.]

[This is page 1 of 1 of this Subpart. A complete list of Subparts in this regulation appears in the Chapter 3 contents page. A list of sections in this Subpart appears below.]

For administrative information about this posting, contact: Division of Air Resources. The Bureau of Air Quality Planning at (518) 402-8396 is the contact for technical questions pertaining to this rule.

Contents:

Sec.

§237-6.1 NOx allowance tracking system accounts

(a) Nature and function of compliance accounts and overdraft accounts. Consistent with section 237-6.2(a) of this Subpart, the department or its agent will establish one compliance account for each NOx budget unit and one overdraft account for each source with two or more NOx budget units. Allocations of NOx allowances pursuant to Subpart 237-5 or 237-9.9 of this Part and deductions or transfers of NOx allowances pursuant to sections 237-4.2, 237-6.5, 237-6.7, Subpart 237-7, or 237-9 of this Part will be recorded in the compliance accounts or overdraft accounts in accordance with this Subpart.

(b) Nature and function of general accounts. Consistent with section 237-6.2(b) of this Subpart, the department or its agent will establish, upon request, a general account for any person. Transfers of NOx allowances pursuant to Subpart 237-7 of this Part will be recorded in the general account in accordance with this Subpart.

§237-6.2 Establishment of accounts

(a) Compliance accounts and overdraft accounts. Upon receipt of a complete account certificate of representation under section 237-2.4 of this Part, the department or its agent will establish:

(1) a compliance account for each NOx budget unit for which the account certificate of representation was submitted; and

(2) an overdraft account for each source for which the account certificate of representation was submitted and that has two or more NOx budget units.

(b) General accounts.

(1) Any person may apply to open a general account for the purpose of holding and transferring NOx allowances. A complete application for a general account shall be submitted to the department or its agent and shall include the following elements in a format prescribed by the department or its agent:

(i) name, address, e-mail address, telephone number, and facsimile transmission number of the NOx authorized account representative and any alternate NOx authorized account representative;

(ii) at the option of the NOx authorized account representative, organization name and type of organization;

(iii) a list of all persons subject to a binding agreement for the NOx authorized account representative or any alternate NOx authorized account representative to represent their ownership interest with respect to the NOx allowances held in the general account;

(iv) the following certification statement by the NOx authorized account representative and any alternate NOx authorized account representative: "I certify that I was selected as the NOx authorized account representative or the NOx alternate authorized account representative, as applicable, by an agreement that is binding on all persons who have an ownership interest with respect to NOx allowances held in the general account. I certify that I have all the necessary authority to carry out my duties and responsibilities under the ADR NOx Budget Trading Program on behalf of such persons and that each such person shall be fully bound by my representations, actions, inactions, or submissions and by any order or decision issued to me by the department or its agent or a court regarding the general account.";

(v) the signature of the NOx authorized account representative and any alternate NOx authorized account representative and the dates signed; and

(vi) unless otherwise required by the department or its agent, documents of agreement referred to in the application for a general account shall not be submitted to the department or its agent. Neither the department nor its agent shall be under any obligation to review or evaluate the sufficiency of such documents, if submitted.

(2) Upon receipt by the department or its agent of a complete application for a general account under paragraph (1) of this subdivision:

(i) The department or its agent will establish a general account for the person or persons for whom the application is submitted.

(ii) The NOx authorized account representative and any alternate NOx authorized account representative for the general account shall represent and, by his or her representations, actions, inactions, or submissions, legally bind each person who has an ownership interest with respect to NOx allowances held in the general account in all matters pertaining to the ADR NOx Budget Trading Program, notwithstanding any agreement between the NOx authorized account representative or any alternate NOx authorized account representative and such person. Any such person shall be bound by any order or decision issued to the NOx authorized account representative or any alternate NOx authorized account representative by the department or its agent or a court regarding the general account.

(iii) Each submission concerning the general account shall be submitted, signed, and certified by the NOx authorized account representative or any alternate NOx authorized account representative for the persons having an ownership interest with respect to NOx allowances held in the general account. Each such submission shall include the following certification statement by the NOx authorized account representative or any alternate NOx authorized account representative: "I am authorized to make this submission on behalf of the persons having an ownership interest with respect to the NOx allowances held in the general account. I certify under penalty of law that I have personally examined, and am familiar with, the statements and information submitted in this document and all its attachments. Based on my inquiry of those individuals with primary responsibility for obtaining the information, I certify that the statements and information are to the best of my knowledge and belief true, accurate, and complete. I am aware that there are significant penalties for submitting false statements and information or omitting required statements and information, including the possibility of fine or imprisonment."

(iv) The department or its agent will accept or act on a submission concerning the general account only if the submission has been made, signed, and certified in accordance with subparagraph (iii) of this paragraph.

(3) (i) An application for a general account may designate one and only one NOx authorized account representative and one and only one alternate NOx authorized account representative who may act on behalf of the NOx authorized account representative. The agreement by which the alternate NOx authorized account representative is selected shall include a procedure for authorizing the alternate NOx authorized account representative to act in lieu of the NOx authorized account representative.

(ii) Upon receipt by the department or its agent of a complete application for a general account under paragraph (1) of this subdivision, any representation, action, inaction, or submission by any alternate NOx authorized account representative shall be deemed to be a representation, action, inaction, or submission by the NOx authorized account representative.

(4) (i) The NOx authorized account representative for a general account may be changed at any time upon receipt by the department or its agent of a superseding complete application for a general account under paragraph (1) of this subdivision. Notwithstanding any such change, all representations, actions, inactions, and submissions by the previous NOx authorized account representative prior to the time and date when the department or its agent receives the superseding application for a general account shall be binding on the new NOx authorized account representative and the persons with an ownership interest with respect to the NOx allowances in the general account.

(ii) The alternate NOx authorized account representative for a general account may be changed at any time upon receipt by the department or its agent of a superseding complete application for a general account under paragraph (1) of this subdivision. Notwithstanding any such change, all representations, actions, inactions, and submissions by the previous alternate NOx authorized account representative prior to the time and date when the department or its agent receives the superseding application for a general account shall be binding on the new alternate NOx authorized account representative and the persons with an ownership interest with respect to the NOx allowances in the general account.

(iii) (a) In the event a new person having an ownership interest with respect to NOx allowances in the general account is not included in the list of such persons in the application for a general account, such new person shall be deemed to be subject to and bound by the application for a general account, the representations, actions, inactions, and submissions of the NOx authorized account representative and any alternate NOx authorized account representative of the source or unit, and the decisions, orders, actions, and inactions of the department or its agent, as if the new person were included in such list.

(b) Within 30 days following any change in the persons having an ownership interest with respect to NOx allowances in the general account, including the addition of persons, the NOx authorized account representative or any alternate NOx authorized account representative shall submit a revision to the application for a general account amending the list of persons having an ownership interest with respect to the NOx allowances in the general account to include the change.

(5) (i) Once a complete application for a general account under paragraph (1) of this subdivision has been submitted and received, the department or its agent will rely on the application unless and until a superseding complete application for a general account under paragraph (1) of this subdivision is received by the department or its agent.

(ii) Except as provided in paragraph (4) of this subdivision, no objection or other communication submitted to the department or its agent concerning the authorization, or any representation, action, inaction, or submission of the NOx authorized account representative or any alternate NOx authorized account representative for a general account shall affect any representation, action, inaction, or submission of the NOx authorized account representative or any alternate NOx authorized account representative or the finality of any decision or order by the department or its agent under the ADR NOx Budget Trading Program.

(iii) Neither the department nor its agent will adjudicate any private legal dispute concerning the authorization or any representation, action, inaction, or submission of the NOx authorized account representative or any alternate NOx authorized account representative for a general account, including private legal disputes concerning the proceeds of NOx allowance transfers.

(c) Account identification. The department or its agent will assign a unique identifying number to each account established under subdivision (a) or (b) of this section.

§237-6.3 NOx allowance tracking system responsibilities of NOx authorized account representative

(a) Following the establishment of a NOx Allowance Tracking System account, all submissions to the department or its agent pertaining to the account, including, but not limited to, submissions concerning the deduction or transfer of NOx allowances in the account, shall be made only by the NOx authorized account representative for the account.

(b) Authorized account representative identification. The department or its agent will assign a unique identifying number to each NOx authorized account representative.

§237-6.4 Recordation of NOx allowance allocations

(a) The department or its agent will record the NOx allowances for the control periods in 2004-05, 2005-06 and 2006-07 in the NOx budget unit's compliance accounts and the allocation set-asides, as allocated under Subpart 237-5 of this Part. The department or its agent will also record the NOx allowances allocated under section 237-9.9(a)(1) of this Part for each NOx Budget opt-in unit in its compliance account.

(b) Each year, after the department or its agent has made all deductions from a NOx budget unit's compliance account and the overdraft account pursuant to section 237-6.5 of this Subpart, the department or its agent will record NOx allowances, as allocated to the unit under Subpart 237-5 or under section 237-9.9(a)(2) of this Part, in the compliance account for the year after the last year for which NOx allowances were previously allocated to the compliance account. Each year, the department or its agent will also record NOx allowances, as allocated under Subpart 237-5 of this Part, in the allocation set-aside for the year after the last year for which NOx allowances were previously allocated to an allocation set-aside.

(c) Serial numbers for allocated NOx allowances. When allocating NOx allowances to and recording them in an account, the department or its agent will assign each NOx allowance a unique identification number that will include digits identifying the year for which the NOx allowance is allocated.

§237-6.5 Compliance

(a) NOx allowance transfer deadline. NOx allowances are available to be deducted for compliance with a unit's NOx budget emissions limitation for a control period in a given year only if the NOx allowances:

(1) except with respect to future control period NOx allowances which may be deducted pursuant to subdivision (f) of this section, were allocated for a control period in a prior year or the same year; and

(2) are held in the unit's compliance account, or the overdraft account of the source where the unit is located, as of the NOx allowance transfer deadline for that control period or are transferred into the compliance account or overdraft account by a NOx allowance transfer correctly submitted for recordation under section 237-7.1 of this Part by the NOx allowance transfer deadline for that control period.

(b) Deductions for compliance.

(1) Following the recordation, in accordance with section 237-7.2 of this Part, of NOx allowance transfers submitted for recordation in the unit's compliance account or the overdraft account of the source where the unit is located by the NOx allowance transfer deadline for a control period, the department or its agent will deduct NOx allowances available under subdivision (a) of this section to cover the unit's NOx emissions (as determined in accordance with Subpart 237-8 of this Part):

(i) from the compliance account; and

(ii) only if no more NOx allowances available under subdivision (a) of this section remain in the compliance account, from the overdraft account. In deducting NOx allowances for units at the source from the overdraft account, the department or its agent will begin with the unit having the compliance account with the lowest NOx Allowance Tracking System account number and end with the unit having the compliance account with the highest NOx Allowance Tracking System account number (with account numbers sorted beginning with the left-most character and ending with the right-most character and the letter characters assigned values in alphabetical order and less than all numeric characters).

(2) The department or its agent will deduct NOx allowances first under subparagraph (1)(i) of this subdivision and then under subparagraph (1)(ii) of this subdivision:

(i) until the number of NOx allowances deducted for the control period equals the number of tons of NOx emissions, determined in accordance with Subpart 237-8 of this Part, from the unit for the control period for which compliance is being determined; or

(ii) until no more NOx allowances available under subdivision (a) of this section remain in the respective account.

(c) (1) Identification of NOx allowances by serial number. Except in instances when a NOx budget unit seeks to use future control period NOx allowances pursuant to subdivision (f) of this section, the NOx authorized account representative for each compliance account may identify by serial number the NOx allowances to be deducted from the unit's compliance account under subdivision (b), (d), or (e) of this section. Such identification shall be made in the compliance certification report submitted in accordance with section 237-4.1 of this Part.

(2) First-in, first-out. The department or its agent will deduct NOx allowances for a control period from the compliance account, in the absence of an identification or in the case of a partial identification of NOx allowances by serial number under paragraph (1) of this subdivision, or the overdraft account on a first-in, first-out (FIFO) accounting basis in the following order:

(i) those NOx allowances that were allocated for the control period to the unit under Subpart 237-5 or 237-9 of this Part;

(ii) those NOx allowances that were allocated for the control period to any unit and transferred and recorded in the account pursuant to Subpart 237-7 of this Part, in order of their date of recordation;

(iii) those NOx allowances that were allocated for a prior control period to the unit under Subpart 237-5 or 237-9 of this Part;

(iv) those NOx allowances that were allocated for a prior control period to any unit and transferred and recorded in the account pursuant to Subpart 237-7 of this Part, in order of their date of recordation;

(v) those NOx allowances that were allocated for a future control period to the unit under Subpart 237-5 of this Part and which may be deducted for compliance purposes under subdivision (f) of this section, in order of their date of recordation; and

(vi) those NOx allowances that were allocated for a future control period to any unit and transferred and recorded in the account pursuant to Subpart 237-7 of this Part and which may be deducted for compliance purposes under subdivision (f) of this section, in order of their recordation.

(d) Deductions for excess emissions.

(1) After making the deductions for compliance under subdivision (b) of this section, the department or its agent will deduct from the unit's compliance account or the overdraft account of the source where the unit is located a number of NOx allowances, allocated for a control period after the control period in which the unit has excess emissions, equal to three times the number of the unit's excess emissions.

(2) If the compliance account or overdraft account does not contain sufficient NOx allowances, the department or its agent will deduct the required number of NOx allowances, regardless of the control period for which they were allocated, whenever NOx allowances are recorded in either account.

(3) Any NOx allowance deduction required under this subdivision shall not affect the liability of the owners and operators of the NOx budget unit for any fine, penalty, or assessment, or their obligation to comply with any other remedy, for the same violation, as ordered under applicable State law. The following guidelines will be followed in assessing fines, penalties or other obligations:

(i) For purposes of determining the number of days of violation, if a NOx budget unit has excess emissions for a control period, each day in the control period constitutes a day in violation unless the owners and operators of the unit demonstrate that a lesser number of days should be considered.

(ii) Each ton of excess emissions is a separate violation.

(4) The propriety of the department's determination that a NOx budget unit had excess emissions and the concomitant deduction of NOx allowances from that unit's accounts may be later challenged in the context of the initial administrative enforcement, or any civil or criminal judicial action arising from or encompassing that excess emissions violation. The commencement or pendency of any administrative enforcement, or civil or criminal judicial action arising from or encompassing that excess emissions violation will not act to prevent the department or its agent from initially deducting the NOx allowances resulting from the department's original determination that the relevant NOx budget unit has had excess emissions. Should the department's determination of the existence or extent of the NOx budget unit's excess emissions be revised either by a settlement or final conclusion of any administrative or judicial action, the department will act as follows:

(i) In any instance where the department's determination of the extent of excess emissions was too low, the department will take further action under paragraphs (1) - (3) of this subdivision to address the expanded violation.

(ii) In any instance where the department's determination of the extent of excess emissions was too high, the department will obtain NOx allowances in an amount equaling the number of NOx allowances deducted which are attributable to the difference between the original and final quantity of excess emissions and will transfer the NOx allowances to the compliance account of the NOx budget unit from which they were originally deducted. Should such compliance account no longer exist, the NOx allowances will be provided to a general account selected by the owners or operators of the NOx budget unit from which they were originally deducted.

(e) Deductions for units sharing a common stack. In the case of units sharing a common stack and having emissions that are not separately monitored or apportioned in accordance with Subpart 237-8 of this Part:

(1) The NOx authorized account representative of the units may identify the percentage of NOx allowances to be deducted from each such unit's compliance account to cover the unit's share of NOx emissions from the common stack for a control period. Such identification shall be made in the compliance certification report submitted in accordance with section 237-4.1 of this Part.

(2) Notwithstanding subparagraph (b)(2)(i) of this section, the department or its agent will deduct NOx allowances for each such unit until the number of NOx allowances deducted equals the unit's identified percentage under paragraph (1) of this subdivision or, if no percentage is identified, an equal percentage for each unit multiplied by the number of tons of NOx emissions, as determined in accordance with Subpart 237-8 of this Part, from the common stack for the control period for which compliance is being determined.

(f) Use of future control period NOx allowances by certain NOx budget units. A NOx budget unit may use for compliance purposes NOx allowances otherwise allocated for use in future control periods subject to the following requirements:

(1) Certification of electric grid reliability emergency. The department must receive by the NOx allowance transfer deadline a certification from the New York State Department of Public Service that the NOx budget unit is located in an area that experienced one or more electric grid reliability emergencies during the control period. The certification must state the beginning and ending times (to the minute) of each electric grid reliability emergency.

(2) Statement of intent and report of emissions. The department must receive from the NOx authorized account representative of the NOx budget unit both a statement of intent to use future control period NOx allowances for compliance purposes and a report detailing the number of tons of NOx emitted during the duration of each electric grid reliability emergency. The report must be based on the emissions data generated by use of a monitoring system certified in accordance with Subpart 237-8 of this Part. The statement and report must be provided as part of the compliance certification report submitted in accordance with section 237-4.1 of this Part.

(3) NOx allowances that can be deducted. The number of future control period NOx allowances that can be used by the NOx budget unit is limited to the number of tons of NOx emitted as detailed in the report submitted pursuant to paragraph (2) of this subdivision. Any future control period NOx allowances in the NOx Allowance Tracking System accounts of the NOx budget unit (regardless of the identity of the account to which such NOx allowances were initially allocated) can be deducted for compliance purposes.

(4) NOx allowance deduction protocol. The department or its agent will deduct NOx allowances from the NOx Allowance Tracking Systems accounts of the NOx budget unit pursuant to the FIFO protocol set forth in paragraph (c)(2) of this section. The department or its agent will not act on any identification of NOx allowances submitted for the NOx budget unit pursuant to section 237-4.1(b)(2) of this Part and paragraph (c)(1) of this section should such an identification be made.

(g) The department or its agent will record in the appropriate compliance account or overdraft account all deductions from such an account pursuant to subdivisions (b), (d), and (e) of this section.

§237-6.6 Banking

Except as provided under section 237-5.3(d)(6) of this Part concerning use of supplemental NOx allowances, and section 237-5.3(e) of this Part concerning the use of early reduction allowances, any NOx allowance that is held in a compliance account, an overdraft account, or a general account will remain in such account unless and until the NOx allowance is deducted or transferred under this section, sections 237-4.2, 237-6.5, 237-6.7, Subpart 237-7, or 237-9 of this Part.

§237-6.7 Account error

The department or its agent may, at its sole discretion and on his or her own motion, correct any error in any NOx Allowance Tracking System account. Within 10 business days of making such correction, the department or its agent will notify the NOx authorized account representative for the account.

§237-6.8 Closing of general accounts

(a) The NOx authorized account representative of a general account may instruct the department or its agent to close the account by submitting a statement requesting deletion of the account from the NOx Allowance Tracking System and by correctly submitting for recordation under section 237-7.1 of this Part a NOx allowance transfer of all NOx allowances in the account to one or more other NOx Allowance Tracking System accounts.

(b) If a general account shows no activity for a period of a year or more and does not contain any NOx allowances, the department or its agent may notify the NOx authorized account representative for the account that the account will be closed and deleted from the NOx Allowance Tracking System following 20 business days after the notice is sent. The account will be closed after the 20-day period unless before the end of the 20-day period the department or its agent receives a correctly submitted transfer of NOx allowances into the account under section 237-7.1 of this Part or a statement submitted by the NOx authorized account representative demonstrating to the satisfaction of the department or its agent good cause as to why the account should not be closed.