Cross-State Air Pollution Rule (CSAPR)
Frequently Asked Questions
The Cross-State Air Pollution Rule (CSAPR) requires 28 states to significantly improve air quality by reducing power plant emissions that cross state lines and contribute to ozone and fine particle pollution in other states. To speed implementation, EPA is adopting Federal Implementation Plans, or FIPs, for each of the states covered by this rule. EPA is encouraging states to submit State Implementation Plans (SIPs) starting as early as 2016.
New Unit Set-aside
How do I apply for a new unit set-aside (NUSA) allocation? I have a unit that commenced commercial operation on or after January 1, 2010, and that therefore didn't receive an allocation as an existing unit under the CSAPR FIP.
- No application or request is required to receive an allocation from your respective state's new unit set-aside allowance "pool." Eligibility for receiving a NUSA allocation and the allocation amount are both determined based on data that EPA already has (or will have).
How does EPA determine which units are eligible for a NUSA allocation?
- Generally speaking, under the CSAPR FIP any CSAPR-affected unit that did not receive an allocation as an existing unit is eligible for a NUSA allowance allocation. Since EPA records all CSAPR allowance allocations to existing units, it knows which units did not receive such an allocation. Note that an allocation of "0" allowances to an existing unit does constitute an allocation and would bar such a unit from receiving a NUSA allowance allocation.
How does EPA determine how many allowances a unit eligible for a NUSA allocation will receive?
- NUSA allocation amounts are based on a unit's emissions from the previous control period, and in some cases (e.g., where a unit commenced commercial operation during the previous control period) may also be based on the unit's emissions from the current control period. The unit's emissions from the applicable control period(s) set a "cap" on the maximum number of NUSA allowances a unit may receive.
So, for example, if a unit was in commercial operation for all of calendar 2014 and emitted 100 tons of NOX during that year, that unit will receive a maximum NUSA allocation of 100 CSAPR NOx annual allowances for 2015?
- Yes, and that would be the allocation amount the unit would receive if the NUSA allowance pool in the state where the unit is located is not oversubscribed. If a NUSA allowance pool is oversubscribed, that unit would receive less than 100 allowances, and the allocation amount would be determined on a pro rata basis. For example, if the state's 2015 NUSA allowance pool held 950 allowances and all units in the state eligible to receive allocations from the pool had collective 2014 emissions of 1000 tons, then each eligible unit would receive a 2015 NUSA allocation equal to approximately 95% of its 2014 emissions.
How will I know if my units are receiving a NUSA allocation, and what the allocation amounts will be? Will EPA notify me?
- Under the CSAPR FIPs, there are two "rounds" of NUSA allocations for each CSAPR trading program for each calendar year. For each round, preliminary and final "notices of data availability" (NODAs) will be published in the Federal Register. Each NODA will identify a link on CAMD's website to a spreadsheet listing the units EPA believes are eligible for NUSA allocations and providing the associated emissions data, EPA calculations, and allocation amounts. Interested parties may comment on a preliminary NODA if they find any errors in the posted data.
- When each preliminary NODA is published in the Federal Register and the associated spreadsheet is posted on CAMD's CSAPR website, EPA will also send an email to DRs and ADRs with new CSAPR units (and to certain Agents associated with such DRs and ADRs) that will include links to the notice and the spreadsheet.
- EPA automatically sends an email notice to the DR, ADR, and certain Agents when allowance allocations are recorded in the compliance accounts of facilities, and will follow this procedure when CSAPR NUSA allowance allocations are recorded.
When are the NUSA NODAs published?
- For the 1st round of NUSA allocations for all CSAPR trading programs, the preliminary NODA must be published no later than June 1st of the compliance year, and the final NODA must be published no later than August 1st of the compliance year (which is also the deadline by which EPA must record the NUSA 1st round allocations).
- The NODA publication dates for the 2nd round of NUSA allocations differ for the ozone season and annual trading programs. For the 2nd round for the CSAPR NOX Ozone Season Trading Program, the preliminary NODA must be published no later than September 15 of the compliance year, and the final NODA must be published no later than November 15 of the compliance year (which is also the deadline by which EPA must record the NUSA 2nd round allocations for that trading program).
- For the 2nd round for the CSAPR NOX Annual, SO2 Group 1, and SO2 Group 2 Trading Programs, the preliminary NODA must be published no later than December 15 of the compliance year, and the final NODA must be published no later than February 15 of the following year (which is also the deadline by which EPA must record the NUSA 2nd round allocations for those trading programs).
For which years is EPA allocating the CSAPR NUSA allowances under the CSAPR FIPs?
- EPA will administer the NUSA allocations for all states and CSAPR trading programs for 2015 and 2016, including those states that submit SIP revisions to allocate CSAPR allowances to their existing units for 2016. For compliance years starting with 2017, states may elect to submit SIP revisions that allocate allowances to all their CSAPR-affected units, both new and existing. EPA will continue to administer the new unit set-aside for 2017 and subsequent years until a superseding SIP revision is submitted by a state and approved by EPA.
My new unit commenced commercial operation this year. Will it receive a new unit set-aside (NUSA) allowance allocation under the CSAPR FIP?
- Perhaps. The NUSA allocations procedures allocate allowances to new units (units that commenced commercial operation on or after January 1, 2010) in two stages (or "rounds", as they are referred to informally). Both the 1st and 2nd rounds allocate allowances from the same pool of allowances established for new units, and the calculations to determine allocation amounts for units for both rounds are emissions-based. New units that emitted before the current control period are eligible for both rounds, while new units that did not emit until the current control period are eligible only for the second round.
- The NUSA allowance pool for the state may or may not be entirely used up by allocations to eligible units in the 1st round. A unit eligible for a 2nd round NUSA allocation may receive an allocation in the 2nd round if there are allowances left in the NUSA allowance pool for the state after allocations for the 1st round have been completed.
So new units that are eligible for a NUSA 1st round allocation (i.e., new units that emitted in the previous control period) are given first preference for getting a NUSA allowance allocation?
If all of a state's NUSA allowance pool is claimed by new units in the 1st round, will a new unit eligible only for a 2nd round NUSA allocation still receive a NUSA allocation?
- No. If all of the allowances in a state's NUSA allowance pool are allocated in the 1st round, no allocations will be made to new units that year that are only eligible for a 2nd round allocation.
But if a state's NUSA allowance pool isn't "oversubscribed" in the 1st round, then a unit eligible for a 2nd round allocation will receive an allocation?
- Probably, depending on how many allowances are left in the state's NUSA allowance pool after completion of the 1st round and how that amount compares to the sum of all 2nd round allocation maximums for each eligible unit.
Let's say that there are plenty of allowances left in the 2nd round to cover all eligible units and their allocation "maximums." If a unit that commenced commercial operation this year that was eligible for a 2nd round NUSA allocation emitted 50 tons of SO2 in the current control period, would that unit receive a 50 allowance allocation in the 2nd round?
- Under 40 CFR part 75, units often start recording their emissions before the monitor certification deadline. However, for compliance purposes, only emissions that occurred after the monitor certification deadline are required to be covered by allowance holdings in a compliance account. For example, let's say unit 1 was required under 40 CFR part 75 to begin recording emissions on June 1, 2015, and had a monitor certification deadline of August 1, 2015. Let's further assume that unit 1 emitted 30 tons of SO2 from June 1 through December 31, but had emitted only 10 of those tons after the August 1, 2015 deadline for monitor certification. For compliance purposes, unit 1 would only need 10 allowances by the March 1, 2016 allowance transfer deadline for 2015 to cover its 2015 SO2 emissions. In like manner, 2nd round NUSA allocations to units that have monitor certification deadlines that fall in the control period are based on emissions that occur after the monitor certification deadline. Since unit 1 emitted 10 tons of SO2 in 2015 after its monitor certification deadline, it would receive a 2nd round NUSA allocation of 10 allowances, the same number of allowances it would need for compliance purposes for 2015.
What is the purpose of having two NUSA "rounds"? Wouldn't one round suffice?
- Under the CAIR FIP, NUSA allocations were based solely on a unit's previous control period emissions. Units operating in their very first control period would therefore not receive a NUSA allocation for the current year, and owners and operators would have to acquire allowances through other means (purchase, etc.) to meet the requirement to hold enough allowances to account for emissions from the newly operating unit for compliance purposes. The 2nd round of the CSAPR NUSA process was created to help ease the burden on owners and operators of acquiring allowances for compliance purposes for units operating in their very first year.
NOx SIP Call Transition for Large Non-EGUs
My State is a NOX SIP Call state, and, as part of its compliance strategy, large non-EGUs (i.e., non-EGU boilers and combustion turbines with a maximum design heat input greater than 250 MMBTU/hr and, in New York, certain cement kilns) were brought into the CAIR NOX Ozone Season trading program. These units cannot be brought into the Transport Rule trading programs. Are these "large non-EGU boilers and combustion turbines" (which phrase should be read hereinafter to include, for New York, the relevant cement kilns) still required to comply with the NOX SIP Call?
- CSAPR does not preempt or replace the requirements of the NOX SIP Call. There are several options available to NOX SIP Call states to show continued compliance with NOX SIP Call requirements.
What options does my State have for meeting NOX SIP Call requirements with regard to large non-EGUs?
- There are a number of acceptable approaches to address NOX SIP Call requirements where large non-EGUs were included in the CAIR NOX Ozone Season Trading Program but will not be included in the Transport Rule NOX Ozone Season Trading Program. The following provides information on some acceptable options for showing that NOX SIP Call requirements are being met, but states may submit other approaches, which EPA will evaluate on a case-by-case basis.
- Acceptable options for a state include the following demonstrations (provided to EPA in a submission supporting the State's SIP):
- Option 1: Streamlined demonstration. Demonstrate that total ozone-season NOX emissions from large non-EGU boilers and combustion turbines in the State that were included in the NOX Budget Trading Program but will not be included in the TR ozone-season trading program could not exceed the large non-EGU budget imposed by the NOX SIP Call even if these units were to operate every hour of the ozone season. This demonstration should include a determination -- for each of these large non-EGUs -- of the average actual hourly ozone season NOX emission rate (i.e., total actual NOX emissions divided by actual operating hours) for the most recent ozone season of representative operation of the large non-EGU sector in the State, multiplied by the total number of hours in the ozone season (3,672). If the sum of the resulting NOX mass emissions for all of these large non-EGUs is less than the large non-EGU portion of the NOX SIP Call budget, then the NOX SIP Call requirements are satisfied for these sources.
- Option 2: Demonstrate that the NOX SIP Call reduction obligations for these large non-EGU boilers and combustion turbines are being met through alternative limits on these non-EGUs. As explained in 40 CFR 51.121(f)(2)(i), these alternatives include:
- Imposing a NOX mass emissions cap on each source;
- Imposing a NOX emissions rate limit on each source and assuming maximum operating capacity for every such source for purposes of estimating NOX mass emissions; or
- Imposing other regulatory requirements that the State has demonstrated to EPA provide equivalent or greater assurance that the State will comply with its ozone season NOX budget for large non-EGU boilers and combustion turbines.
- Option 3: Demonstrate that additional ozone season NOX emission reductions from other sources covered by the NOX SIP Call have achieved extra reductions, over and above any required for those other sources by the NOX SIP Call, to the degree that overall reduction requirements of the NOX SIP Call have been achieved without any reductions from large non-EGUs.
Demonstrations of emissions or reductions by large non-EGU boilers and combustion turbines must take into account both existing and new large non-EGUs. What approach should a state take to ensure that new large non-EGU boilers and combustion turbines would not lead to the non-EGU budget being exceeded in the future?
- When a new large non-EGU is permitted in the State, the State should revise the demonstration to take the new unit into account. That is, the State should confirm that emissions remain below the budget, taking emissions from the new large non-EGU into account in the calculation.
Must my State retain for large non-EGUs the 40 CFR Part 75 monitoring, record keeping, and reporting requirements?
- Yes. If the State chooses option 1 or 2 as described above the State must also retain Part 75 monitoring, record keeping, and reporting requirements for large non-EGUs that were included in the NOX Budget Trading Program but will not be included in the TR ozone-season trading program. Further, even if the State chooses an option, such as option 3 above, that demonstrates that the NOX SIP Call requirements have been achieved without any reductions from large non-EGUs, EPA recommends that the requirements for monitoring, record keeping, and reporting using Part 75 be retained for all existing and new large non-EGUs. This monitoring and reporting provides useful information on on-going large non-EGU operations.
What is my State's NOX SIP Call budget for large non-EGUs?
1The District of Columbia, Delaware, Illinois, Maryland, New Jersey, and Pennsylvania did not choose to include large non-EGUs in the CAIR NOX Ozone Season Trading Program. Remaining NOX SIP Call requirements in those states have been addressed separately.
Does the Cross-State Air Pollution Rule (CSAPR) only cover Power Plants?
- Yes. EPA is continuing to collect information to determine whether additional upwind state reductions, including from other source categories, are necessary for potential future rulemakings.
How does the Cross-State Air Pollution Rule (CSAPR) interact with Title IV, the Acid Rain Program?
- Title IV allowances cannot be used to comply with the CSAPR. This new rule creates a separate allowance system for SO2 emissions. Sources covered by the Acid Rain Program must still use Title IV allowances to comply with the program. The Acid Rain Program requirements will not be affected by the CSAPR.
What happens to CAIR after the Cross-State Air Pollution Rule (CSAPR) is implemented?
- The CSAPR replaces CAIR, the CAIR FIPs, and the associated SO2, annual NOX, and ozone season NOX trading programs. The Cross-State Air Pollution Rule takes effect January 1, 2015; CAIR will be implemented through the 2014 compliance periods, and then replaced by the CSAPR.
Is EPA finalizing FIPs for the Cross-State Air Pollution Rule (CSAPR)?
- Like CAIR, EPA is finalizing federal implementation plans, or FIPs, for each state covered by this rule, but states can replace the FIPs with SIPs to implement any or all CSAPR programs at any time. A state may choose to develop a SIP to achieve the required reductions, replacing its FIP, and may choose which types of sources to control. States also can choose to allocate allowances for any or all programs through the use of SIPs, starting as early as 2016.
Why are the NOX emission reductions in the final rule less than in the proposal for the Cross-State Air Pollution Rule?
- Due to a combination of modeling updates (including lower natural gas prices, reduced demand, newly-modeled consent decrees and state rules, and updated NOX rates to reflect 2009 emissions data), EPA revised the NOX emissions inventory for the final rule. The updated inventory significantly lowered NOX emission levels in the base case (without the CSAPR) from approximately 3 million tons in the proposal to 2.1 million tons in the final. This affected the total NOX emission reduction numbers for the final rule.
SIP Process for 2016 Allowance Allocations
What is the first possible year for which a state can submit state-determined allowance allocations to replace the allowance allocations determined by EPA in one or more of the Transport Rule (TR) trading programs applicable to the state under the CSAPR FIPs?
- Prior to the stay, each state affected by CSAPR had an opportunity to submit a letter by October 17, 2011, notifying EPA of its intention to submit state-determined allowance allocations for the 2013 control period. Twelve states submitted such notifications. Under CSAPR's tolled implementation schedule (see EPA's interim final rule), these twelve states now have an opportunity until April 1, 2015, to submit state-determined allowance allocations for the 2016 control period.
- (See later question regarding states that were brought into CSAPR by the Supplemental Rulemaking.)
What if a state did not submit a notification letter to EPA by October 17, 2011?
- If EPA did not receive the necessary notification by October 17, 2011, then EPA recorded the EPA-determined, existing-unit allocations for 2013 on October 25, 2011. As a result of the court action, those 2013 EPA-determined existing-unit allowances will be re-vintaged into 2016 allowances.
- If a state did not submit a notification letter by the October 17, 2011 deadline, it cannot request state-determined allowance allocations for the 2016 control period.
Which states submitted the notification letter to EPA by October 17, 2011?
- EPA received timely notification letters from twelve states. These states are Alabama, Florida, Kansas, Louisiana, Maryland, Mississippi, Missouri, Nebraska, New York, Ohio, Pennsylvania, and South Carolina.
- These states do not need to resubmit a notification letter to EPA.
What if a state is affected by the Supplemental Rulemaking under CSAPR?
- EPA finalized a rulemaking on December 15, 2011 to require five states - Iowa, Michigan, Missouri, Oklahoma, and Wisconsin - to make summertime NOx reductions under CSAPR ozone season control program.
- Because of the stay, states under the supplemental rulemaking under CSAPR could not submit a letter by the deadline specified in that rulemaking to notify EPA that they were interested in submitting state-determined allowance allocations for the 2013 control period. The interim final rule, aligning the dates in accordance with the DC Circuit Court's action, promulgated the new dates by which these states can request state-determined allowance allocations for the 2016 control period. To request state-determined allowance allocations, these states must submit a notification letter to EPA by March 6, 2015. This notification letter must be submitted in a manner prescribed by EPA (see - Resources for Implementation) and submitted electronically. The deadline for these states to submit state-determined allowance allocations is October 1, 2015.
What if a State does not submit a SIP revision after submitting their notification letter?
- If EPA does not receive a SIP revision by the submittal deadline, then EPA will record the 2016 EPA-determined, existing-unit allocations as prescribed under CSAPR. For states under CSAPR, this recordation date is April 15, 2015. For states covered by the supplemental rulemaking to CSAPR, this recordation date is October 15, 2015.
- If a state that provided timely notice to EPA of intent to replace the 2016 EPA-determined, existing-unit allocations is no longer interested in doing so, the state may notify EPA, prior to the SIP revision submittal deadline, that it does not intend to submit a SIP revision. EPA will then record the 2016 EPA-determined, existing-unit allocations as soon as practicable, but no later than April 15, 2015 (or October 15, 2015, in the case of states covered by the supplemental rulemaking).
When must a state submit to EPA a SIP revision to replace 2016 EPA-determined, existing-unit allocations with state-determined allocations?
- For states that submitted a notification letter under CSAPR, the SIP revision submittal deadline is April 1, 2015.
- States covered by the supplemental rulemaking to CSAPR that submit a notification letter by March 6, 2015, have a SIP revision submittal deadline of October 1, 2015.
If a state is subject to multiple TR trading programs, may a state choose to submit 2016 state-determined, existing-unit allocations for some, but not all, the trading programs applicable to the state?
- Yes, states may choose to submit 2016 state-determined allocations for one or more of the applicable trading programs while leaving unchanged the EPA-determined allocations for 2016 in the remaining applicable trading programs.
What requirements must the 2016 SIP revision meet?
- The 2016 SIP revision must meet the following requirements:
- Allocates to existing units only. An existing unit is a unit that commenced commercial operation (i.e., began producing electricity for sale) before January 1, 2010.
- Provides a list of the existing units and their 2016 state-determined allocations. The list must be provided electronically to EPA by the SIP revision submittal deadline and in a format prescribed by EPA. The instructions and templates for this format can be found on the Resources for Implementation page.
- May not contain provisions that allow for any change in the units and state-determined allocations on the list and in any allocation previously determined and recorded by EPA in the trading program.
- Allocates a total amount of allowances for 2016 for the trading program involved that does not exceed the state trading budget minus the new unit set-aside and the Indian country new unit set-aside (if any) for the trading program and for the state.
- Does not provide for any other distribution of allowances. For example, the SIP revision cannot provide for set-asides or auctions and cannot alter the new unit set-asides, the Indian country new unit set-asides, and any aspect of allowance allocation in the trading programs involved other than the 2016 existing-unit allocations.
When will EPA record 2016 state-determined, existing-unit allocations, assuming all requirements are met?
- If, not later than April 1, 2015, the state submits to EPA a SIP revision meeting all the above-described requirements and EPA approves the SIP revision by October 1, 2015, EPA will record state-determined, existing-unit allocations for 2016 by October 1, 2015 under CSAPR. Otherwise, EPA will record the EPA-determined, existing-unit allocations for 2016 by October 1, 2015.
- For states covered by the Supplemental Rulemaking, if, not later than, October 1, 2015, the state submits to EPA a SIP revision meeting all the above-described requirements and EPA approves the SIP revision by April 1, 2016, EPA will record state-determined, existing-unit ozone season allocations for 2016 by April 1, 2016 under CSAPR. Otherwise, EPA will record EPA-determined, existing unit ozone season allocations for 2016 by April 1, 2016.
Can states replace state-based allocations for allocations periods after 2016?
- Yes, states can submit SIP revisions to replace EPA-determined, existing unit allocations with state-determined allocations for control periods after 2016. SIP revisions that allocate 2017 and 2018 and beyond allowances are due December 1, 2015. EPA will provide guidance on the development of these SIP revisions.
Where can I view the EPA-determined, existing-unit allocations?
- On November 21, 2014, EPA posted the final EPA-determined, existing unit allocations under CSAPR on EPA's website and issued a Notice of Data Availability (NODA) announcing the availability of the allocations. The allocations are identical to allocations posted on EPA's website in June 2012 except that the years of the allocations have been changed to reflect CSAPR's revised implementation schedule.
What are the assurance provisions?
- The Transport Rule (TR) trading programs under CSAPR contain assurance provisions that apply beginning in 2017 and ensure that the necessary emissions reductions will occur within each TR-covered state. For each state for each TR trading program, the state's budget plus variability limit constitutes that state's assurance level for that TR trading program. Each state's assurance levels for its TR trading programs take into account the inherent variability in the state's baseline emissions from year to year. Note, however, that allowances are only allocated up to the level of a state's budget for that state's specific TR trading program and not to the level of the state's budget plus the variability limit.
When are the assurance provisions triggered?
- In 2017, or any later year, if a state's total emissions from all units covered by a specific TR program in that year are greater than the sum of the state's budget plus variability limit for that program and year, the assurance provisions are triggered for that state, program, and year.
Which owners and operators must surrender additional allowances under the assurance provisions if the provisions are triggered?
- To identify which owners and operators must surrender additional allowances under assurance provisions that are triggered, EPA calculates, for each common designated representative (common DR), the common designated representative's assurance level and common designated representative's share of emissions. If, for any common DR, his or her share of emissions is greater than his or her assurance level, the owners and operators of the group of units and sources represented by that common DR must surrender additional allowances under the assurance provisions.
What is a common designated representative?
- A common designated representative for a control period in a specific year is the individual who is designated, as of April 1 immediately following that year, through a certificate of representation, as the designated representative (not the alternate designated representative) for a group of one or more covered units and sources in a state.
How is the common DR's assurance level calculated?
- To determine a common DR's assurance level, EPA calculates the total amount of allowance allocations to the units at sources located in a specific state and whose owners and operators are represented by that common DR and multiplies that sum by the quotient of the state's budget plus variability divided by the state's budget. The product of that calculation is the common DR's assurance level.
- For example, assume that a state has a budget of 10,000 tons and a variability limit of 1,000 tons for the 2017 ozone season. Also assume that a common DR represents the owners and operators of units covered by the TR NOX Ozone Season Trading Program in that state and allocated for 2017 a total amount of 500 allowances (including allowances allocated from the new unit set-aside). The total amount of 500 allowances is multiplied by 1.1 because 11,000 tons (the state's budget plus the state's variability limit) divided by 10,000 tons (the state's budget) equals 1.1. The resulting product is 550 allowances, which is the common DR's assurance level.
How is the common DR's share of emissions calculated?
- The common DR's share of emissions is simply the sum of the emissions -- for a specific state, TR program, and year -- of the TR-covered units at the TR sources for which that person is the common DR .
If the assurance provisions are triggered in a specific state for a specific TR program and year and a common DR's assurance level is less than his or her share of emissions, how does EPA calculate how many additional allowances the owners and operators must surrender?
- To calculate the surrender amount for the owners and operators of a group of units and sources with a common DR when the assurance provisions are triggered, EPA calculates, for all common DRs whose assurance levels are exceeded by their respective shares of emissions, the sum of those exceedances. The exceedance of a specific common DR is then divided by the sum of the exceedances, and that quotient is then multiplied by the amount in tons by which the total emissions for the state exceeded that state's budget plus variability limit. The product of that calculation is then multiplied by two, yielding the number of additional allowances that the owners and operators of the group of units and sources must surrender under the assurance provisions.
- Using numbers from the earlier example, assume that a state's TR NOX Ozone Season Program budget plus variability limit is 11,000 tons (budget of 10,000 tons plus variability limit of 1,000 tons). Also assume that the total state emissions for the compliance year in question were 11,200 tons, 200 tons above the budget plus variability limit (11,200 minus 11,000).
- Further assume that the owners and operators of a group of units and sources in the state have a common DR whose share of NOX ozone season emissions (i.e., the sum of the NOX ozone season emissions from the units at the sources) is 600 tons and whose assurance level (i.e., the sum of the allocations plus share of the variability limit) is 550 tons. In this case, the common DR's share of emissions exceeds the common DR's assurance level by 50 tons (600 minus 550).
- Finally assume that the sum of the exceedances, for the owners and operators of all groups of units and sources with a common DR in the state for that ozone season, totaled 200 tons. The specific group of owners' and operators' exceedance (50 tons) is then divided by the sum of total exceedances (200 tons), yielding a quotient of 0.25. That quotient is then multiplied by the amount of tons (200 tons) by which the state's total emissions exceeded the budget plus variability, yielding a product of 50 tons (200 multiplied by .25). That figure is then multiplied by two, with the result that this specific group of owners and operators must surrender, through transfer into their assurance account, an additional amount of 100 allowances under the assurance provisions.
What is an assurance account?
- If the assurance provisions are triggered for a state with regard to a TR program and a year, EPA establishes an assurance account for each group of owners and operators of a group of units and sources in the state whose common DR has an assurance level lower than his or her share of emissions with regard to the program and year. The owners and operators must use their assurance account for the surrender of additional allowances under the assurance provisions.
What is the deadline by which a group of owners and operators must transfer enough allowances into their assurance account to cover deductions to be made by EPA under the assurance provisions?
- If a group of owners and operators are required to surrender allowances under the assurance provisions, they must transfer enough allowances into their assurance account no later than November 1 of the year following the control period for which the allowance surrender is being made.
What vintage year TR allowances may be used for an allowance surrender under the assurance provisions?
- The group of owners and operators must surrender allowances of the vintage year for which the assurance provisions were triggered, any prior year, or the year immediately following the year for which the assurance provisions were triggered.
- For example, assume that a group of owners and operators must surrender allowances under the assurance provisions for emissions reported in the 2019 TR NOX Annual control period. The owners and operators must transfer sufficient allowances into their assurance account by November 1, 2020, and those allowances can have vintages of 2020 or of any prior year.
When an allowance surrender is required under the assurance provisions, does it matter to which compliance accounts the allowances to be surrendered were originally allocated? For instance, must the surrendered allowances have originally been allocated to compliance accounts in the same state whose emissions caused the surrender requirement?
- No. All that is required is that the owners and operators transfer into their assurance account the proper amount of allowances with the appropriate vintage years (as described in the immediately preceding Q & A) by the November 1 deadline. It doesn't matter to which accounts the allowances were originally allocated.
Can EPA or the state take enforcement actions seeking discretionary penalties against the owners and operators who must surrender additional allowances under the assurance provisions?
- It is not a violation of the Clean Air Act (CAA) to be required to surrender additional allowances under the assurance provisions. Since such a surrender is not a violation of the Act, discretionary penalties under CAA section 113 do not apply. However, failure to hold the required amount of allowances in the appropriate assurance account by the November 1 deadline is a violation of the CAA.