40 CFR § 97.54 - Compliance.
(a) NOX allowance transfer deadline. The 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) 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 § 97.60 by the NOX allowance transfer deadline for that control period.
(b) Deductions for compliance.
(1) Following the recordation, in accordance with § 97.61, 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 Administrator will deduct NOX allowances available under paragraph (a) of this section to cover the unit's NOX emissions (as determined in accordance with subpart H of this part), or to account for actual heat input under § 97.42(e), for the control period:
(i) From the compliance account; and
(ii) Only if no more NOX allowances available under paragraph (a) of this section remain in the compliance account, from the overdraft account. In deducting allowances for units at the source from the overdraft account, the Administrator will begin with the unit having the compliance account with the lowest account number and end with the unit having the compliance account with the highest 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 Administrator will deduct NOX allowances first under paragraph (b)(1)(i) of this section and then under paragraph (b)(1)(ii) of this section:
(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 H of this part, from the unit for the control period for which compliance is being determined, plus the number of NOX allowances required for deduction to account for actual heat input under § 97.42(e) for the control period; or
(ii) Until no more NOX allowances available under paragraph (a) of this section remain in the respective account.
(c)
(1) Identification of NOXallowances by serial number. 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 paragraph (b), (d), (e), or (f) of this section. Such identification shall be made in the compliance certification report submitted in accordance with § 97.30.
(2) First-in, first-out. The Administrator 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 (c)(1) of this section, 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 E or I 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 G 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 E or I of this part; and
(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 G of this part, in order of their date of recordation.
(d) Deductions for excess emissions.
(1) After making the deductions for compliance under paragraph (b) of this section, the Administrator 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 Administrator 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 allowance deduction required under paragraph (d) of this section 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 the Clean Air Act or 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 (153 days) 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.
(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 H 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 § 97.30.
(2) Notwithstanding paragraph (b)(2)(i) of this section, the Administrator will deduct NOX allowances for each such unit until the number of NOX allowances deducted equals the unit's identified percentage under paragraph (e)(1) of this section 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 H of this part, from the common stack for the control period for which compliance is being determined. In addition to the deductions under the first sentence of this paragraph (e)(1), the Administrator will deduct NOX allowances for each such unit until the number of NOX allowances deducted equals the number of NOX allowances required to account for actual heat input under § 97.42(e) for the unit for the control period.
(f) Deduction of banked allowances. Each year starting in 2006, after the Administrator has completed the designation of banked NOX allowances under § 97.55(b) and before May 1 of the year, the Administrator will determine the extent to which banked NOX allowances otherwise available under paragraph (a) of this section are available for compliance in the control period for the current year, as follows. For each State NOX Budget Trading Program that is established, and approved and administered by the Administrator pursuant to § 51.121 of this chapter, the terms “compliance account” or “compliance accounts”, “overdraft account” or “overdraft accounts”, “general account” or “general accounts”, “States”, and “trading program budgets under § 97.40” in paragraphs (f)(1) through (f)(3) of this section shall be read to include respectively: A compliance account or compliance accounts established under such State NOX Budget Trading Program; an overdraft account or overdraft accounts established under such State NOX Budget Trading Program; a general account or general accounts established under such State NOX Budget Trading Program; the State or portion of a State covered by such State NOX Budget Trading Program; and the trading program budget of the State or portion of a State covered by such State NOX Budget Trading Program.
(1) The Administrator will determine the total number of banked NOX allowances held in compliance accounts, overdraft accounts, or general accounts.
(2) If the total number of banked NOX allowances determined, under paragraph (f)(1) of this section, to be held in compliance accounts, overdraft accounts, or general accounts is less than or equal to 10 percent of the sum of the trading program budgets under § 97.40 for all States for the control period, any banked NOX allowance may be deducted for compliance in accordance with paragraphs (a) through (e) of this section.
(3) If the total number of banked NOX allowances determined, under paragraph (f)(1) of this section, to be held in compliance accounts, overdraft accounts, or general accounts exceeds 10 percent of the sum of the trading program budgets under § 97.40 for all States for the control period, any banked allowance may be deducted for compliance in accordance with paragraphs (a) through (e) of this section, except as follows:
(i) The Administrator will determine the following ratio: 0.10 multiplied by the sum of the trading program budgets under § 97.40 for all States for the control period and divided by the total number of banked NOX allowances determined, under paragraph (f)(1) of this section, to be held in compliance accounts, overdraft accounts, or general accounts.
(ii) The Administrator will multiply the number of banked NOX allowances in each compliance account or overdraft account by the ratio determined under paragraph (f)(3)(i) of this section. The resulting product is the number of banked NOX allowances in the account that may be deducted for compliance in accordance with paragraphs (a) through (e) of this section. Any banked NOX allowances in excess of the resulting product may be deducted for compliance in accordance with paragraphs (a) through (e) of this section, except that, if such NOX allowances are used to make a deduction under paragraph (b) or (e) of this section, two (rather than one) such NOX allowances shall authorize up to one ton of NOX emissions during the control period and must be deducted for each deduction of one NOX allowance required under paragraph (b) or (e) of this section.
(g) Recordation of deductions. The Administrator will record in the appropriate compliance account or overdraft account all deductions from such an account pursuant to paragraph (b), (d), (e), or (f) of this section.