Draft Part 242

(1) 'Account number'. The identification number given by the Department or its agent to each CO₂ Allowance Tracking System account.

(2) 'Acid rain emissions limitation'. As defined in 40 CFR 72.2, a limitation on emissions of sulfur dioxide or nitrogen oxides under the Acid Rain Program under title IV of the Clean Air Act.

(3) 'Administrator'. Administrator means the Administrator of the United States Environmental Protection Agency or the Administrator's authorized representative.

(4) 'Allocate or allocation'. The determination by the Department of the number of CO₂ allowances to be initially credited to the energy efficiency and clean energy technology account, or the general account of the sponsor of an approved CO₂ emissions offset project.

(5) 'Allocation year'. A calendar year for which the Department allocates or awards CO₂ allowances pursuant to Subparts 242-5 and 242-10. The allocation year of each CO₂ allowance is reflected in the unique identification number given to the allowance pursuant to subdivision 242-6.4(c).

(6) 'Attribute'. A characteristic associated with electricity generated using a particular renewable fuel, such as its generation date, facility geographic location, unit vintage, emissions output, fuel, state program eligibility, or other characteristic that can be identified, accounted, and tracked.

(7) 'Attribute credit'. An attribute credit represents the attributes related to one megawatt-hour of electricity generation.

(8) 'Automated data acquisition and handling system or DAHS'. That component of the continuous emissions monitoring system, or other emissions monitoring system approved for use under Subpart 242-8, designed to interpret and convert individual output signals from pollutant concentration monitors, flow monitors, diluent gas monitors, and other component parts of the monitoring system to produce a continuous record of the measured parameters in the measurement units required by Subpart 242-8.

(9) 'Billing meter'. To qualify as a billing meter, the measurement device must be used to measure electric or thermal output for commercial billing under a contract. The facility selling the electric or thermal output must have different owners from the owners of the party purchasing the electric or thermal output.

(10) 'Boiler'. An enclosed fossil or other fuel-fired combustion device used to produce heat and to transfer heat to recirculating water, steam, or other medium.

(11) 'CO₂ allowance'. A limited authorization by the Department under the CO₂ Budget Trading Program to emit up to one ton of CO₂, subject to all applicable limitations contained in this Part. No provision of this regulation shall be construed to limit the authority of the Department to terminate or limit such authorization to emit. This limited authorization does not constitute a property right.

(12) 'CO₂ allowance deduction or deduct CO₂ allowances'. The permanent withdrawal of CO₂ allowances by the Department or its agent from a CO₂ Allowance Tracking System compliance account to account for the number of tons of CO₂ emitted from a CO₂ budget source for a control period, determined in accordance with Subpart 242-8, or for the forfeit or retirement of CO₂ allowances as provided by this Part.

(13) 'CO₂ allowance price'. The price for CO₂ allowances in the CO₂ Budget Trading Program for a particular time period as determined by the Department or its agent, calculated based on a volume-weighted average of transaction prices reported to the Department or its agent, and taking into account prices as reported publicly through reputable sources.

(14) 'CO₂ allowances held or hold CO₂ allowances'. The CO₂ allowances recorded by the Department or its agent, or submitted to the Department or its agent for recordation, in accordance with Subparts 242-6 and 242-7, in a CO₂ Allowance Tracking System account.

(15) 'CO₂ Allowance Tracking System'. The system by which the Department or its agent records allocations, deductions, and transfers of CO₂ allowances under the CO₂ Budget Trading Program. The tracking system may also be used to track CO₂ emissions offset projects, CO₂ allowance prices and emissions from affected sources.

(16) 'CO₂ Allowance Tracking System account'. An account in the CO₂ Allowance Tracking System established by the Department or its agent for purposes of recording the allocation, holding, transferring, or deducting of CO₂ allowances.

(17) 'CO₂ allowance transfer deadline'. Midnight of the March 1 occurring after the end of the relevant control period or, if that March 1 is not a business day, midnight of the first business day thereafter and is the deadline by which CO₂ allowances must be submitted for recordation in a CO₂ budget source's compliance account in order to meet the source's CO₂ budget emissions limitation for the control period immediately preceding such deadline.

(18) 'CO₂ authorized account representative'. For a CO₂ budget source and each CO₂ budget unit at the source, the natural person who is authorized by the owners and operators of the source and all CO₂ budget units at the source, in accordance with Subpart 242-2, to represent and legally bind each owner and operator in matters pertaining to the CO₂ Budget Trading Program or, for a general account, the natural person who is authorized, under Subpart 242-6, to transfer or otherwise dispose of CO₂ allowances held in the general account.

(19) 'CO₂ budget emissions limitation'. For a CO₂ budget source, the tonnage equivalent of the CO₂ allowances required for compliance deduction for the source for a control period.

(20) 'CO₂ budget permit'. The portion of the legally binding permit issued by the Department pursuant to Part 201 of this Title to a CO₂ budget source or CO₂ budget unit which specifies the CO₂ Budget Trading Program requirements applicable to the CO₂ budget source, to each CO₂ budget unit at the CO₂ budget source, and to the owners and operators and the CO₂ authorized account representative of the CO₂ budget source and each CO₂ budget unit.

(21) 'CO₂ budget source'. A source that includes one or more CO₂ budget units.

(22) 'CO₂ Budget Trading Program'. A multi-state CO₂ air pollution control and emissions reduction program established pursuant to this Part and corresponding regulations in other states as a means of reducing emissions of CO₂ from CO₂ budget sources.

(23) 'CO₂ Budget Trading Program base budget'. The annual amount of CO₂ tons available in New York for allocation in a given allocation year, in accordance with the CO₂ Budget Trading Program. CO₂ offset allowances allocated to project sponsors are separate from and additional to CO₂ allowances allocated from the CO₂ Budget Trading Program base budget.

(24) 'CO₂ budget unit'. A unit that is subject to the CO₂ Budget Trading Program requirements under section 242-1.4.

(25) 'CO₂ equivalent'. The quantity of a given greenhouse gas multiplied by its global warming potential (GWP).

(26) 'CO₂ offset allowance'. A CO₂ allowance that is awarded to the sponsor of a CO₂ emissions offset project pursuant to section 242-10.7 and is subject to the relevant compliance deduction limitations of section 242-6.5(a)(3).

(27) 'Combined cycle system'. A system comprised of one or more combustion turbines, heat recovery steam generators, and steam turbines configured to improve overall efficiency of electricity generation or steam production.

(28) 'Combustion turbine'. An enclosed fossil or other fuel-fired device that is comprised of a compressor (if applicable), a combustor, and a turbine, and in which the flue gas resulting from the combustion of fuel in the combustor passes through the turbine, rotating the turbine.

(29) 'Commence commercial operation'. With regard to a unit that serves a generator, to have begun to produce steam, gas, or other heated medium used to generate electricity for sale or use, including test generation. For a unit that is a CO₂ budget unit under section 242-1.4 on the date the unit commences commercial operation, such date shall remain the unit's date of commencement of commercial operation even if the unit is subsequently modified, reconstructed, or repowered. For a unit that is not a CO₂ budget unit under section 242-1.4 on the date the unit commences commercial operation, the date the unit becomes a CO₂ budget unit under section 242-1.4 shall be the unit's date of commencement of commercial operation.

(30) 'Commence operation'. To begin any mechanical, chemical, or electronic process, including, with regard to a unit, start-up of a unit's combustion chamber. For a unit that is a CO₂ budget unit under section 242-1.4 on the date of commencement of operation, such date shall remain the unit's date of commencement of operation even if the unit is subsequently modified, reconstructed, or repowered. For a unit that is not a CO₂ budget unit under section 242-1.4 on the date of commencement of operation, the date the unit becomes a CO₂ budget unit under section 242-1.4 shall be the unit's date of commencement of operation.

(31) 'Compliance account'. A CO₂ Allowance Tracking System account, established by the Department or its agent for a CO₂ budget source under Subpart 242-6, in which the CO₂ allowance allocations for the source are initially recorded and in which are held CO₂ allowances available for use by the source for a control period for the purpose of meeting the source's CO₂ budget emissions limitation.

(32) 'Continuous emissions monitoring system or CEMS'. The equipment required under Subpart 242-8 to sample, analyze, measure, and provide, by means of readings recorded at least once every 15 minutes (using an automated DAHS), a permanent record of stack gas volumetric flow rate, stack gas moisture content, and oxygen or carbon dioxide concentration (as applicable), in a manner consistent with 40 CFR part 75 and Subpart 242-8. The following systems are the principal types of continuous emissions monitoring systems required under Subpart 242-8.

(33) 'Control period'. The control period is a three-calendar-year time period, unless extended to four years upon occurrence of a stage two trigger event. The first control period is from January 1, 2009 to December 31, 2011, inclusive, provided if a stage two trigger event occurs during the first control period, then the first control period will be extended one-year to December 31, 2012, inclusive. Each subsequent sequential three-calendar-year period is a separate control period that is subject to one one-year extension upon occurrence of a stage two trigger event during the control period. In no event may a control period be longer than four calendar years.

(34) 'Eligible biomass'. Eligible biomass includes sustainably harvested woody and herbaceous fuel sources that are available on a renewable or recurring basis (excluding old-growth timber), including dedicated energy crops and trees, agricultural food and feed crop residues, aquatic plants, unadulterated wood and wood residues, animal wastes, other clean organic wastes not mixed with other solid wastes, biogas, and other neat liquid biofuels derived from such fuel sources. Sustainably harvested will be determined by the Department.

(35) 'Energy efficiency and clean energy technology account'. A general account established by the Department and administered by the Department or its agent. The allowances in the account shall be sold or directly allocated to better achieve the emissions reduction goals of the CO₂ Budget Trading Program by promoting or rewarding investments in energy efficiency, renewable or non-carbon-emitting technologies, and/or innovative carbon emissions abatement technologies with significant carbon reduction potential.

(36) 'Energy efficiency service provider'. Any person engaged in implementing projects to improve the energy efficiency and/or carbon efficiency of commercial, industrial and/or residential operations so as to reduce the amount of electricity, natural gas, oil and/or propane consumed in connection with those operations.

(37) 'Excess emissions'. Any tonnage of CO₂ emitted by a CO₂ budget source during a control period that exceeds the CO₂ budget emissions limitation for the source.

(38) 'Fossil fuel'. Natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such material.

(39) 'Fossil fuel-fired'. One of the following:

(40) 'General account'. A CO₂ Allowance Tracking System account, established under Subpart 242-6, that is not a compliance account.

(41) 'Global warming potential (GWP)'. A measure of the radiative efficiency (heat-absorbing ability) of a particular gas relative to that of carbon dioxide (CO₂) after taking into account the decay rate of each gas (the amount removed from the atmosphere over a given number of years) relative to that of CO₂. Global warming potentials used in this Part are consistent with the values used in the Intergovernmental Panel on Climate Change, Third Assessment Report (2001).

(42) 'Gross generation'. The electrical output (in MWe) at the terminals of the generator.

(43) 'Life-of-the-unit contractual arrangement'. A unit participation power sales agreement under which a customer reserves, or is entitled to receive, a specified amount or percentage of nameplate capacity and/or associated energy from any specified unit pursuant to a contract:

(44) 'Market settling period'. The first fourteen months of any control period.

(45) 'Maximum design heat input'. The ability of a unit to combust a stated maximum amount of fuel per hour on a steady state basis, as determined by the physical design and physical characteristics of the unit.

(46) 'Maximum potential hourly heat input'. An hourly heat input used for reporting purposes when a unit lacks certified monitors to report heat input. If the unit intends to use appendix D of 40 CFR part 75 to report heat input, this value should be calculated, in accordance with 40 CFR part 75, using the maximum fuel flow rate and the maximum gross calorific value. If the unit intends to use a flow monitor and a diluent gas monitor, this value should be reported, in accordance with 40 CFR part 75, using the maximum potential flowrate and either the maximum carbon dioxide concentration (in percent CO₂) or the minimum oxygen concentration (in percent O₂).

(47) 'Monitoring system'. Any monitoring system that meets the requirements of Subpart 242-8, including a continuous emissions monitoring system, an excepted monitoring system, or an alternative monitoring system.

(48) 'Nameplate capacity'. The maximum electrical output (in MWe) that a generator can sustain over a specified period of time when not restricted by seasonal or other deratings as measured in accordance with the United States Department of Energy standards.

(49) 'Operator'. Any person who operates, controls, or supervises a CO₂ budget unit or a CO₂ budget source and shall include, but not be limited to, any holding company, utility system, or plant manager of such a unit or source.

(50) 'Owner'. Any of the following persons:

(51) 'Participating state'. A state that has established a corresponding regulation as part of the CO₂ Budget Trading Program.

(52) 'Receive or receipt of'. When referring to the Department or its agent, to come into possession of a document, information, or correspondence (whether sent in writing or by authorized electronic transmission), as indicated in an official correspondence log, or by a notation made on the document, information, or correspondence, by the Department or its agent in the regular course of business.

(53) 'Recordation, record, or recorded'. With regard to CO₂ allowances, the movement of CO₂ allowances by the Department or its agent from one CO₂ Allowance Tracking System account to another, for purposes of allocation, transfer, or deduction.

(54) 'Serial number'. When referring to CO₂ allowances, the unique identification number assigned to each CO₂ allowance by the Department or its agent under section 242-6.4(c).

(55) 'Source'. Any governmental, institutional, commercial, or industrial structure, installation, plant, building, or facility that emits or has the potential to emit any air pollutant. A "source," including a "source" with multiple units, shall be considered a single "facility."

(56) 'Stage one threshold price'. The monetary amount, established as of the first day of each calendar year, derived annually from use of the following formula:

S1TP(2005+n) = S1TP(2005) × [1+(CPI(2005+n) - CPI (2005))/CPI(2005)]where:

"S1TP" is the stage one threshold price;

"S1TP(2005)" is $7;

"n" is the number of years since 2005; and

"CPI" means, for purposes of the CO₂ Budget Trading Program, the U.S. Department of Labor, Bureau of Labor Statistics unadjusted Consumer Price Index for All Urban Consumers for the U.S. city average, for All Items on the latest reference base, or if such index is no longer published, such other index as the Department determines is appropriate. The CPI for any calendar year is the twelve-month average of the CPI published by the United States Department of Labor, as of the close of the twelve-month period ending on August thirty-first of each calendar year.

(57) 'Stage one trigger event'. The occurrence of any twelve month period that completely transpires following the market settling period and is characterized by an average CO₂ allowance price that is equal to or greater than the stage one threshold price.

(58) 'Stage two threshold price'. The monetary amount, established as of the first day of each calendar year, derived annually from use of the following formula:

S2TP(2005+n) = [ S2TP(2005+(n-1)) × [[{CPI(2005+(n-1)) - CPI (2005+(n-2))}/CPI(2005+(n-2))]+0.02] + S2TP(2005+(n-1))

where:

"S2TP" is the stage two threshold price;

"S2TP(2005)" is $10; and

"n" is the number of years since 2005.

"CPI" means, for purposes of the CO₂ Budget Trading Program, the U.S. Department of Labor, Bureau of Labor Statistics unadjusted Consumer Price Index for All Urban Consumers for the U.S. city average, for All Items on the latest reference base, or if such index is no longer published, such other index as the Department determines is appropriate. The CPI for any calendar year is the twelve-month average of the CPI published by the United States Department of Labor, as of the close of the twelve-month period ending on August thirty-first of each calendar year.

(59) 'Stage two trigger event'. The occurrence of any twelve month period that completely transpires following the market settling period and is characterized by an average CO₂ allowance price that is equal to or greater than the stage two threshold price.

(60) 'State'. A State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa and includes the Commonwealth of the Northern Mariana Islands.

(61) 'Submit or serve'. To send or transmit a document, information, or correspondence to the person specified in accordance with the applicable regulation:

Compliance with any "submission," "service," or "mailing" deadline shall be determined by the date of dispatch, transmission, or mailing and not the date of receipt.

(62) 'Ton or tonnage'. Any "short ton", or 2,000 pounds. For the purpose of determining compliance with the CO₂ budget emissions limitation, total tons for a control period shall be calculated as the sum of all recorded hourly emissions (or the tonnage equivalent of the recorded hourly emissions rates) in accordance with Subpart 242-8, with any remaining fraction of a ton equal to or greater than 0.50 ton deemed to equal one ton and any fraction of a ton less than 0.50 ton deemed to equal zero tons. A short ton is equal to 0.9072 metric tons.

(63) 'Twelve month period'. A period of twelve consecutive months determined on a rolling basis where a new twelve month period begins on the first day of each calendar month.

(64) 'Unit'. A fossil fuel-fired stationary boiler, combustion turbine, or combined cycle system.

(65) 'Unit operating day'. A calendar day in which a unit combusts any fuel.

(1) 'Applicability'. Notwithstanding subdivision (a) of this section, any unit that, on or before January 1, 2008, applies for a binding permit condition restricting the supply of the unit's annual electrical output to the electric grid to less than or equal to 10 percent of the annual gross generation of the unit, and that from and after January 1, 2008 complies with the 10 percent restriction and the provisions in paragraph (b)(3) of this section, shall be exempt from the requirements of this Part, except for the provisions of this section, section 242-1.2, section 242-1.3, section 242-1.6.

(2) 'Effective date'. The exemption under paragraph (b)(1) of this section shall become effective as of January 1, 2009 and remain in effect unless and until the unit loses its exemption under subparagraph (b)(3)(v) of this section.

(3) 'Compliance'.

(1) The owners and operators and, to the extent applicable, the CO₂ authorized account representative of each CO₂ budget source and each CO₂ budget unit at the source shall comply with the monitoring requirements of Subpart 242-8.

(2) The emissions measurements recorded and reported in accordance with Subpart 242-8 shall be used to determine compliance by the unit with the CO₂ budget emissions limitation under subdivision (c) of this section.

(1) The owners and operators of each CO₂ budget source and each CO₂ budget unit at the source shall hold CO₂ allowances available for compliance deductions under section 242-6.5, as of the CO₂ allowance transfer deadline, in the source's compliance account in an amount not less than the total CO₂ emissions for the control period from all CO₂ budget units at the source, as determined in accordance with Subparts 242-6 and 242-8.

(2) Each ton of CO₂ emitted in excess of the CO₂ budget emissions limitation shall constitute a separate violation of this Part and applicable state law.

(3) A CO₂ budget unit shall be subject to the requirements under paragraph (c)(1) of this section starting on the later, of January 1, 2009 or the date on which the unit commences operation.

(4) CO₂ allowances shall be held in, deducted from, or transferred among CO₂ Allowance Tracking System accounts in accordance with Subparts 242-5, 242-6, and 242-7, and section 242-10.7.

(5) A CO₂ allowance shall not be deducted, in order to comply with the requirements under paragraph (c)(1) of this section, for a control period that ends prior to the allocation year for which the CO₂ allowance was allocated. A CO₂ offset allowance shall not be deducted, in order to comply with the requirements under paragraph (c)(1) of this section, beyond the applicable percent limitations set out in paragraph 242-6.5(a)(3).

(6) A CO₂ allowance allocated by the Department under the CO₂ Budget Trading Program is a limited authorization to emit one ton of CO₂ in accordance with the CO₂ Budget Trading Program. No provision of the CO₂ Budget Trading Program, the CO₂ budget permit application, or the CO₂ budget permit or any provision of law shall be construed to limit the authority of the State to terminate or limit such authorization.

(7) A CO₂ allowance allocated by the Department under the CO₂ Budget Trading Program does not constitute a property right.

(1) forfeit the CO₂ allowances required for deduction under paragraph 242-6.5(d)(1), provided CO₂ offset allowances may not be used to cover any part of such excess emissions; and

(2) pay any fine, penalty, or assessment or comply with any other remedy imposed under paragraph 242-6.5(d)(2).

(1) No permit revision shall excuse any violation of the requirements of the CO₂ Budget Trading Program that occurs prior to the date that the revision takes effect.

(2) Any provision of the CO₂ Budget Trading Program that applies to a CO₂ budget source (including a provision applicable to the CO₂ authorized account representative of a CO₂ budget source) shall also apply to the owners and operators of such source and of the CO₂ budget units at the source.

(3) Any provision of the CO₂ Budget Trading Program that applies to a CO₂ budget unit (including a provision applicable to the CO₂ authorized account representative of a CO₂ budget unit) shall also apply to the owners and operators of such unit.

(1) In the event a new owner or operator of a CO₂ budget source or a CO₂ budget unit is not included in the list of owners and operators submitted in the account certificate of representation, such new owner or operator shall be deemed to be subject to and bound by the account certificate of representation, the representations, actions, inactions, and submissions of the CO₂ authorized account representative and any alternate CO₂ authorized account representative of the source or unit, and the decisions, orders, actions, and inactions of the Department, as if the new owner or operator were included in such list.

(2) Within 30 days following any change in the owners and operators of a CO₂ budget source or a CO₂ budget unit, including the addition of a new owner or operator, the CO₂ authorized account representative or alternate CO₂ authorized account representative shall submit a revision to the account certificate of representation amending the list of owners and operators to include the change.

(1) identification of the CO₂ budget source and each CO₂ budget unit at the source for which the account certificate of representation is submitted;

(2) the name, address, e-mail address, telephone number, and facsimile transmission number of the CO₂ authorized account representative and any alternate CO₂ authorized account representative;

(3) a list of the owners and operators of the CO₂ budget source and of each CO₂ budget unit at the source;

(4) the following certification statement by the CO₂ authorized account representative and any alternate CO₂ authorized account representative: "I certify that I was selected as the CO₂ authorized account representative or alternate CO₂ authorized account representative, as applicable, by an agreement binding on the owners and operators of the CO₂ budget source and each CO₂ budget unit at the source. I certify that I have all the necessary authority to carry out my duties and responsibilities under the CO₂ Budget Trading Program on behalf of the owners and operators of the CO₂ budget source and of each CO₂ budget unit at the source and that each such owner and operator shall be fully bound by my representations, actions, inactions, or submissions and by any decision or order issued to me by the Department or a court regarding the source or unit."; and

(5) the signature of the CO₂ authorized account representative and any alternate CO₂ authorized account representative and the dates signed.

(1) The name, address, e-mail address, telephone number, and facsimile transmission number of such CO₂ authorized account representative or alternate CO₂ authorized account representative;

(2) The name, address, e-mail address, telephone number and facsimile transmission number of each such natural person, herein refereed to as the "electronic submission agent";

(3) For each such natural person, a list of the type of electronic submissions under subdivision (a) or (b) of this section for which authority is delegated to him or her; and

(4) The following certification statements by such CO₂ authorized account representative or alternate CO₂ authorized account representative:

(1) identification of the CO₂ budget source, including plant name and the ORIS (Office of Regulatory Information Systems) or facility code assigned to the source by the Energy Information Administration of the United States Department of Energy, if applicable;

(2) identification of each CO₂ budget unit at the CO₂ budget source; and

(3) the standard requirements under section 242-1.5.

(1) identification of the source and each CO₂ budget unit at the source;

(2) at the CO₂ authorized account representative's option, the serial numbers of the CO₂ allowances that are to be deducted from the source's compliance account under section 242-6.5 for the control period, including the serial numbers of any CO₂ offset allowances that are to be deducted subject to the limitations of paragraph 242-6.5(a)(3); and

(3) the compliance certification under subdivision (c) of this section.

(1) whether the source was operated in compliance with the CO₂ budget emissions limitation

(2) whether the monitoring plan applicable to each unit at the source has been maintained to reflect the actual operation and monitoring of the unit, and contains all information necessary to attribute CO₂ emissions to the unit, in accordance with Subpart 242-8;

(3) whether all the CO₂ emissions from the units at the source were monitored or accounted for through the missing data procedures and reported in the quarterly monitoring reports, including whether conditional data were reported in the quarterly reports in accordance with Subpart 242-8. If conditional data were reported, the owner or operator shall indicate whether the status of all conditional data has been resolved and all necessary quarterly report resubmissions have been made;

(4) whether the facts that form the basis for certification under Subpart 242-8 of each monitor at each unit at the source, or for using an excepted monitoring method or alternative monitoring method approved under Subpart 242-8, if any, have changed; and

(5) if a change is required to be reported under paragraph (c)(4) of this section, specify the nature of the change, the reason for the change, when the change occurred, and how the unit's compliance status was determined subsequent to the change, including what method was used to determine emissions when a change mandated the need for monitor recertification.

(1) The Department will establish, and the Department or its agent will manage, the energy efficiency and clean energy technology account.

(2) The Department will allocate the entire CO₂ Budget Trading Program base budget to the energy efficiency and clean energy technology account.

(3) The Department or its agent will administer the energy efficiency and clean energy technology account so that all allowances for each allocation year will be sold in an open and transparent allowance auction or auctions no later than the 1st day of October of the allocation year, and the proceeds of the auction will be used to promote the purposes of the energy efficiency and clean energy technology account. The auction will be carried out to achieve the following objectives to the extent practicable: achieve fully transparent and efficient pricing of allowances; promote a liquid allowance market by making entry and trading as easy and low-cost as possible; be open to participation for bidding by any individual or entity that meets reasonable minimum financial requirements; monitor for and guard against the exercise of market power and market manipulation; be held as frequently as is needed to achieve design objectives; avoid interference with existing over-the-counter allowance markets; align well with wholesale energy and capacity markets; and be designed to not act as a barrier to efficient investment in existing or new electricity generating sources.

(4) If for any reason the Department or its agent is unable to carry out the sale by auction of the allowances called for by this Section, then the Department or its agent shall directly allocate the allowances in the energy efficiency and clean energy technology account to energy efficiency service providers that submit a comprehensive and detailed plan for investing the allowance resources in energy efficiency and clean energy technology projects in the State in accordance with this subparagraph:

(1) The CO₂ budget source must submit its application for the award of ERAs by May 1, 2009.

(2) The CO₂ budget source must demonstrate that all CO₂ budget units that existed at the source during the baseline period (2003, 2004, and 2005) are included as CO₂ budget units for the early reduction period. New CO₂ budget units added at the CO₂ budget source must also be accounted for during the early reduction period.

(3) The Department will calculate the number of ERAs to be awarded to a particular CO₂ budget source for the early reduction period pursuant to the following methodology:

(4) The CO₂ budget source must demonstrate that the data submitted in support of the early reduction application was recorded in compliance with the requirements of Subpart 242-8 for all of the baseline years and the early reduction years for which the CO₂ budget source was required to report CO₂ data pursuant to 40 CFR part 75. A CO₂ budget source that was not required to submit CO₂ data pursuant to 40 CFR part 75 for any of the years contained in the baseline period or early reduction period may petition the Department as part of its application under this Subpart for the use of an alternative data source or sources for the calculation of early reduction allowances.

(5) Once the Department confirms a CO₂ budget source's early reductions of CO₂ emissions, it will allocate the ERAs to the CO₂ budget source's compliance account by December 31, 2009.

(1) The CO₂ allowances, other than CO₂ offset allowances, are of allocation years that fall within a prior control period or the same control period for which the allowances will be deducted.

(2) The CO₂ allowances are held in the CO₂ budget source's compliance account as of the CO₂ allowance transfer deadline for that control period or are transferred into the compliance account by a CO₂ allowance transfer correctly submitted for recordation under section 242-7.1 by the CO₂ allowance transfer deadline for that control period.

(3) For CO₂ offset allowances, the number of CO₂ offset allowances that are available to be deducted for compliance with a CO₂ budget source's CO₂ budget emissions limitation for a control period may not exceed the number of tons representing the following percentages of the CO₂ budget source's CO₂ emissions for that control period, as determined in accordance with Subparts 242-6 and 242-8:

(1) until the amount of CO₂ allowances deducted equals the number of tons of total CO₂ emissions, less any CO₂ emissions attributable to the burning of eligible biomass, determined in accordance with Subpart 242-8, from all CO₂ budget units at the CO₂ budget source for the control period; or

(2) if there are insufficient CO₂ allowances to complete the deductions in paragraph (b)(1) of this section, until no more CO₂ allowances available under subdivision (a) of this section remain in the compliance account.

(1) The CO₂ authorized account representative for a source's compliance account may request that specific CO₂ allowances, identified by serial number, in the compliance account be deducted for emissions or excess emissions for a control period in accordance with subdivision (b), or (d) of this section. Such identification shall be made in the compliance certification report submitted in accordance with section 242-4.1.

(2) The Department or its agent will deduct CO₂ allowances for a control period from the CO₂ budget source's compliance account, in the absence of an identification or in the case of a partial identification of available CO₂ allowances by serial number under paragraph (c)(1) of this section, in the following descending order:

(1) After making the deductions for compliance under subdivision (b) of this section, the Department or its agent will deduct from the CO₂ budget source's compliance account a number of CO₂ allowances, allocated for allocation years that occur after the control period in which the source has excess emissions, equal to three times the number of the source's excess emissions. In the event that a source has insufficient CO₂ allowances to cover three times the number of the source's excess emissions, the source shall be required to immediately transfer sufficient allowances into its compliance account. No CO₂ offset allowances may be deducted to account for the source's excess emissions.

(2) Any CO₂ allowance deduction required under paragraph (d)(1) of this section shall not affect the liability of the owners and operators of the CO₂ budget source or the CO₂ units at the source 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.

(1) The Department may review and conduct independent audits concerning any submission under the CO₂ Budget Trading Program and make appropriate adjustments of the information in the submissions.

(2) The Department may deduct CO₂ allowances from or transfer CO₂ allowances to a source's compliance account based on information in the submissions, as adjusted under paragraph (f)(1) of this section.

(1) the transfer is correctly submitted under section 242-7.1; and

(2) the transferor account includes each CO₂ allowance identified by serial number in the transfer.

(1) a decision not to record the transfer, and

(2) the reasons for such non-recordation.

(1) Install all monitoring systems required under this Subpart for monitoring CO₂ mass emissions. This includes all systems required to monitor CO₂ concentration, stack gas flow rate, O₂ concentration, heat input, and fuel flow rate, as applicable, in accordance with 40 CFR 75.13, 75.71 and 75.72 and all portions of appendix G of 40 CFR part 75, except for equation G-1 in 40 CFR part 75. Equation G-1 in Appendix G shall not be used to determine CO₂ emissions under this part.

(2) Successfully complete all certification tests required under section 242-8.2 and meet all other requirements of this Subpart and 40 CFR part 75 applicable to the monitoring systems under paragraph (a)(1) of this section.

(3) Record, report and quality-assure the data from the monitoring systems under paragraph (a)(1) of this section.

(1) The owner or operator of a CO₂ budget unit, except for a CO₂ budget unit under paragraph (b)(2) of this section, that commences commercial operation before July 1, 2008, must comply with the requirements of this Subpart by January 1, 2009.

(2) The owner or operator of a CO₂ budget unit that commences commercial operation on or after July 1, 2008 must comply with the requirements of this Subpart by the later of the following dates:

(1) Except as provided in paragraph (c)(2) of this section, the owner or operator of a CO₂ budget unit that does not meet the applicable compliance date set forth in paragraphs (b)(1), (b)(2) and (b)(3) of this section for any monitoring system under paragraph (a)(1) of this section shall, for each such monitoring system, determine, record, and report maximum potential (or as appropriate minimum potential) values for CO₂ concentration, CO₂ emissions rate, stack gas moisture content, fuel flow rate and any other parameter required to determine CO₂ mass emissions and heat input in accordance with 40 CFR 75.31(b)(2) or (c)(3), section 2.4 of appendix D of 40 CFR part 75 or section 2.5 of appendix F of 40 CFR part 75 as applicable.

(2) The owner or operator of a CO₂ budget unit that does not meet the applicable compliance date set forth in paragraph (b)(3) of this section for any monitoring system under paragraph (a)(1) of this section shall, for each such monitoring system, determine, record, and report substitute data using the applicable missing data procedures in Subpart D, or appendix D or appendix E of 40 CFR part 75, in lieu of the maximum potential (or as appropriate minimum potential) values for a parameter if the owner or operator demonstrates that there is continuity between the data streams for that parameter before and after the construction or installation under paragraph (b)(3) of this section.

(1) No owner or operator of a CO₂ budget unit or a non-CO₂ budget unit monitored under 40 CFR 75.72(b)(2)(ii) shall use any alternative monitoring system, alternative reference method, or any other alternative for the required continuous emissions monitoring system without having obtained prior written approval in accordance with section 242-8.6.

(2) No owner or operator of a CO₂ budget unit or a non-CO₂ budget unit monitored under 40 CFR 75.72(b)(2)(ii) shall operate the unit so as to discharge, or allow to be discharged, CO₂ emissions to the atmosphere without accounting for all such emissions in accordance with the applicable provisions of this Subpart and 40 CFR part 75.

(3) No owner or operator of a CO₂ budget unit or a non-CO₂ budget unit monitored under 40 CFR 75.72(b)(2)(ii) shall disrupt the continuous emissions monitoring system, any portion thereof, or any other approved emissions monitoring method, and thereby avoid monitoring and recording CO₂ mass emissions discharged into the atmosphere, except for periods of recertification or periods when calibration, quality assurance testing, or maintenance is performed in accordance with the applicable provisions of this Subpart and 40 CFR part 75.

(4) No owner or operator of a CO₂ budget unit or a non-CO₂ budget unit monitored under 40 CFR 75.72(b)(2)(ii) shall retire or permanently discontinue use of the continuous emissions monitoring system, any component thereof, or any other approved emissions monitoring system under this Subpart, except under any one of the following circumstances:

(1) The monitoring system has been previously certified in accordance with 40 CFR part 75; and

(2) The applicable quality-assurance and quality-control requirements of 40 CFR 75.21 and appendix B, appendix D and appendix E of 40 CFR part 75 are fully met for the certified monitoring system described in paragraph (a)(1) of this section.

(1) 'Requirements for initial certification'. The owner or operator shall ensure that each continuous emissions monitoring system required under paragraph 242-8.1(a)(1) (which includes the automated data acquisition and handling system) successfully completes all of the initial certification testing required under 40 CFR 75.20 by the applicable deadlines specified in subdivision 242-8.1(b). In addition, whenever the owner or operator installs a monitoring system in order to meet the requirements of this Subpart in a location where no such monitoring system was previously installed, initial certification in accordance with 40 CFR 75.20 is required.

(2) 'Requirements for recertification'. Whenever the owner or operator makes a replacement, modification, or change in a certified continuous emissions monitoring system under paragraph 242-8.1(a)(1) that the Administrator or the Department determines significantly affects the ability of the system to accurately measure or record CO₂ mass emissions or heat input or to meet the quality-assurance and quality-control requirements of 40 CFR 75.21 or appendix B to 40 CFR part 75, the owner or operator shall recertify the monitoring system according to 40 CFR 75.20(b). Furthermore, whenever the owner or operator makes a replacement, modification, or change to the flue gas handling system or the unit's operation that the Administrator or the Department determines to significantly change the flow or concentration profile, the owner or operator shall recertify the continuous emissions monitoring system according to 40 CFR 75.20(b). Examples of changes which require recertification include: replacement of the analyzer, change in location or orientation of the sampling probe or site, or changing of flow rate monitor polynomial coefficients.

(3) 'Approval process for initial certifications and recertification'. Subparagraphs (d)(3)(i) through (iv) of this section apply to both initial certification and recertification of a monitoring system under paragraph 242-8.1(a)(1). For recertifications, replace the words "certification" and "initial certification" with the word "recertification," replace the word "certified" with "recertified," and follow the procedures in 40 CFR 75.20(b)(5) and (g)(7) in lieu of the procedures in subparagraph (d)(3)(v) of this section.