9VAC5-140-7260. Compliance

A. CO 2 allowances that meet the following criteria are available to be deducted for a CO 2 budget source to comply with the CO 2 requirements of 9VAC5-140-7050 C for a control period or an interim control period. 1. The CO 2 allowances are of allocation years that fall within a prior control period, the same control period, or the same interim control period for which the allowances will be deducted. 2. The CO 2 allowances are held in the CO 2 budget source's compliance account as of the CO 2 allowance transfer deadline for that control period or interim control period or are transferred into the compliance account by a CO 2 allowance transfer correctly submitted for recordation under 9VAC5-140-7300 by the CO 2 allowance transfer deadline for that control period or interim control period. 3. For CO 2 offset allowances generated by other participating states, the number of CO 2 offset allowances that are available to be deducted in order for a CO 2 budget source to comply with the CO 2 requirements of 9VAC5-140-7050 C for a control period or an interim control period shall not exceed 3.3% of the CO 2 budget source's CO 2 emissions for that control period, or may not exceed 3.3% of 0.50 times the CO 2 budget source's CO 2 emissions for an interim control period, as determined in accordance with this article and Article 8 ( 9VAC5-140-7330 et seq.) of this part. 4. The CO 2 allowances are not necessary for deductions for excess emissions for a prior control period under subsection D of this section. B. Following the recordation, in accordance with 9VAC5-140-7310 , of CO 2 allowance transfers submitted for recordation in the CO 2 budget source's compliance account by the CO 2 allowance transfer deadline for a control period or an interim control period, the department or its agent will deduct CO 2 allowances available under subsection A of this section to cover the source's CO 2 emissions, as determined in accordance with Article 8 ( 9VAC5-140-7330 et seq.) of this part, for the control period or interim control period, as follows: 1. Until the amount of CO 2 allowances deducted equals the number of tons of total CO 2 emissions, or 0.50 times the number of tons of total CO 2 emissions for an interim control period, determined in accordance with Article 8 ( 9VAC5-140-7330 et seq.) of this part, from all CO 2 budget units at the CO 2 budget source for the control period or interim control period; or 2. If there are insufficient CO 2 allowances to complete the deductions in subdivision 1 of this subsection, until no more CO 2 allowances available under subsection A of this section remain in the compliance account. C. Identification of available CO 2 allowances by serial number and default compliance deductions shall be managed as follows: 1. The CO 2 authorized account representative for a source's compliance account may request that specific CO 2 allowances, identified by serial number, in the compliance account be deducted for emissions or excess emissions for a control period or interim control period in accordance with subsection B or D of this section. Such identification shall be made in the compliance certification report submitted in accordance with 9VAC5-140-7170 . 2. The department or its agent will deduct CO 2 allowances for an interim control period or a control period from the CO 2 budget source's compliance account, in the absence of an identification or in the case of a partial identification of available CO 2 allowances by serial number under subdivision 1 of this subsection, as follows: Any CO 2 allowances that are available for deduction under subdivision 1 of this subsection. CO 2 allowances shall be deducted in chronological order (i.e., CO 2 allowances from earlier allocation years shall be deducted before CO 2 allowances from later allocation years). In the event that some, but not all, CO 2 allowances from a particular allocation year are to be deducted, CO 2 allowances shall be deducted by serial number, with lower serial number allowances deducted before higher serial number allowances. D. Deductions for excess emissions shall be managed as follows. 1. After making the deductions for compliance under subsection B of this section, the department or its agent will deduct from the CO 2 budget source's compliance account a number of CO 2 allowances equal to three times the number of the source's excess emissions. In the event that a source has insufficient CO 2 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. 2. Any CO 2 allowance deduction required under subdivision 1 of this subsection shall not affect the liability of the owners and operators of the CO 2 budget source or the CO 2 budget 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: a. For purposes of determining the number of days of violation, if a CO 2 budget source 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. b. Each ton of excess emissions is a separate violation. c. For purposes of determining the number of days of violation, if a CO 2 budget source has excess interim emissions for an interim control period, each day in the interim 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. d. Each ton of excess interim emissions is a separate violation. 3. The propriety of the department's determination that a CO 2 budget source had excess emissions and the concomitant deduction of CO 2 allowances from that CO 2 budget source's account 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 CO 2 allowances resulting from the department's original determination that the relevant CO 2 budget source has had excess emissions. Should the department's determination of the existence or extent of the CO 2 budget source's excess emissions be revised either by a settlement or final conclusion of any administrative or judicial action, the department will act as follows: a. In any instance where the department's determination of the extent of excess emissions was too low, the department will take further action under subdivisions 1 and 2 of this subsection to address the expanded violation. b. In any instance where the department's determination of the extent of excess emissions was too high, the department will distribute to the relevant CO 2 budget source a number of CO 2 allowances equaling the number of CO 2 allowances deducted which are attributable to the difference between the original and final quantity of excess emissions. Should such CO 2 budget source's compliance account no longer exist, the CO 2 allowances will be provided to a general account selected by the owner or operator of the CO 2 budget source from which they were originally deducted. E. The department or its agent will record in the appropriate compliance account all deductions from such an account pursuant to subsections B and D of this section. F. Action by the department on submissions shall be as follows: 1. The department may review and conduct independent audits concerning any submission under the CO 2 Budget Trading Program and make appropriate adjustments of the information in the submissions. 2. The department may deduct CO 2 allowances from or transfer CO 2 allowances to a source's compliance account based on information in the submissions, as adjusted under subdivision 1 of this subsection.