Sec. 95973 - Requirements for Offset Projects Using ARB Compliance Offset Protocols

§ 95973. Requirements for Offset Projects Using ARB Compliance Offset Protocols

(a) General Requirements for Offset Projects. To qualify under the provisions set forth in this article, an Offset Project Operator or Authorized Project Designee must ensure that an offset project:

(1) Meets all of the requirements in a Compliance Offset Protocol approved by the Board pursuant to section 95971;

(2) Meets the following additionality requirements, as well as any additionality requirements in the applicable Compliance Offset Protocol, as of the date of Offset Project Commencement:

(A) The activities that result in GHG reductions and GHG removal enhancements are not required by law, regulation, or any legally binding mandate applicable in the offset project's jurisdiction, and would not otherwise occur in a conservative business-as-usual scenario;

(B) The Offset Project Commencement date occurs after December 31, 2006, unless otherwise specified in the applicable Compliance Offset Protocol, except as provided in section 95973(c); and

(C) The GHG reductions and GHG removal enhancements resulting from the offset project exceed the project baseline calculated by the applicable version of the Compliance Offset Protocol under which the offset project has been listed pursuant to section 95975 or under which the offset project has been transitioned to pursuant to section 95973(a)(2)(D) for that offset project type as set forth in the following:

1. Compliance Offset Protocol Ozone Depleting Substances Projects, October 20, 2011, and Compliance Offset Protocol Ozone Depeleting Substances Projects, November 14, 2014, which are hereby incorporated by reference;

2. Compliance Offset Protocol Livestock Projects, October 20, 2011 and Compliance Offset Protocol Livestock Projects, November 14, 2014, which are hereby incorporated by reference;

3. Compliance Offset Protocol Urban Forest Projects, October 20, 2011, which is hereby incorporated by reference;

4. Compliance Offset Protocol U.S. Forest Projects, October 20, 2011, Compliance Offset Protocol U.S. Forest Projects, November 14, 2014, and Compliance Offset Protocol U.S. Forest Projects, June 25, 2015, which are hereby incorporated by reference;

5. Compliance Offset Protocol Mine Methane Capture Projects, April 25, 2014, which is hereby incorporated by reference; and

6. Compliance Offset Protocol Rice Cultivation Projects, June 25, 2015, which is hereby incorporated by reference.

(D) The Offset Project Operator or Authorized Project Designee may transition an offset project to the most recently incorporated version of the Compliance Offset Protocol by updating the listing information in an Offset Project Data Report pursuant to section 95976. Projects transitioning to the most recent version of the Compliance Offset Protocol may only do so with an Offset Project Data Report submitted to ARB or the Offset Project Registry prior to the site visit, pursuant to section 95977.1(b)(3)(D). To properly transition to the most recent version of the Compliance Offset Protocol, the Offset Project Data Report for the transitioning project must specify the most recent protocol version as the version under which the project is reporting, pursuant to section 95976(d)(10). Projects may only transition to the latest version of the Compliance Offset Protocol during a reporting period that is subject to a full offset verification. For projects using a protocol specified in section 95973(a)(2)(C)4., the first verification after transitioning to a new version of the Compliance Offset Protocol must meet all the requirements of section 95977.1(b)(3)(D)1. A project will be considered to have completed the transition to the most recent version of the Compliance Offset Protocol at the time a Positive or Qualified Positive Offset Verification Statement for the applicable reporting period has been approved by ARB. An offset project that transitions to a new version of the Compliance Offset Protocol during a crediting period will continue in the same crediting period and not start a new crediting period.

(E) The offset project must meet all the requirements in this Regulation for the applicable version of the Compliance Offset Protocol under which the offset project has been listed pursuant to 95975 or under which the offset project has been transitioned to pursuant to section 95973(a)(2)(D).

(F) The applicable version of the Compliance Offset Protocol is the version under which the offset project has been listed pursuant to section 95975 or transitioned to pursuant to section 95973(a)(2)(D).

(G) If any law, regulation, or legally binding mandate requiring GHG emission reductions or GHG removal enhancements comes into effect in California, in a linked jurisdiction pursuant to section 95943, or in a jurisdiction outside California, affecting the offset project, during an offset project's crediting period, then the offset project is eligible to continue to receive ARB offset credits for those GHG emission reductions and GHG removal enhancements for the remainder of the offset project's crediting period, but the offset project may not renew that crediting period. If an offset project has not been listed prior to the law, regulation, or legally binding mandate going into effect, or the law, regulation, or legally binding mandate goes into effect before the offset project's crediting period renews, then only emission reductions or removal enhancements that are in excess of what is required to comply with those laws, regulations, and/or legally binding mandates are eligible for ARB offset credits.

(3) Is located in the United States or United States Territories.

(b) Local, Regional, State, and National Regulatory Compliance and Environmental Impact Assessment Requirements. An Offset Project Operator or Authorized Project Designee must fulfill all local, regional, state, and national requirements on environmental impact assessments that apply based on the offset project location. In addition, an offset project must also fulfill all local, regional, state, and national environmental and health and safety laws and regulations that apply based on the offset project location and that directly apply to the offset project, including as specified in a Compliance Offset Protocol. The project is considered out of regulatory compliance if the project activities were subject to enforcement action by a regulatory oversight body during the Reporting Period, although whether such enforcement action has occurred is not the only consideration ARB may use in determining whether a project is out of regulatory compliance.

(1) An offset project using a protocol from sections 95973(a)(2)(C)1., 2., 4., or 5. that is out of regulatory compliance is not eligible to receive ARB or registry offset credits for GHG reductions or GHG removal enhancements that occurred during the period that the offset project is out of regulatory compliance. The Offset Project Operator or Authorized Project Designee must provide documentation indicating the beginning and end of the time period that the offset project is out of regulatory compliance to the satisfaction of ARB.

(A) The time period that the offset project is out of regulatory compliance begins on the date that the activity which led to the offset project being out of regulatory compliance actually began and not necessarily the date that the regulatory oversight body first became aware of the issue. For determining the initial date of the offset project being out of regulatory compliance the Offsets Project Operator or Authorized Project Designee must provide one or more of the following to ARB:

1. Documentation from the relevant local, state, or federal regulatory oversight body that expressly identifies the precise start date of the offset project being out of regulatory compliance. Documentation must include evidence of the start date such as CEMS or other monitoring data, engineering estimates, satellite imagery, witness statements, or other reasonable method to aid in the identification of the precise start date; or

2. Documentation of the date of the last inspection by the relevant local, state, or federal regulatory oversight body that did not indicate the offset project was out of regulatory compliance for the activity in question. The project will be considered out of regulatory compliance beginning the day after the inspection.

3. If the last inspection described in section 95973(b)(1)(A)2. above was prior to the beginning of the Reporting Period, or if documentation regarding the date the project was out of regulatory compliance is not provided as set forth in sections 95973(b)(1)(A)(1) or (2) above to the satisfaction of ARB, then the time period that the offset project is out of regulatory compliance, for purposes of the Reporting Period, commences at the beginning of the Reporting Period.

(B) For determining the end date when the offset project returned to regulatory compliance, the Offset Project Operator or Authorized Project Designee must provide documentation from the relevant local, state, or federal regulatory oversight body stating that the offset project is back in regulatory compliance. The date when the offset project is deemed to have returned to regulatory compliance is the date that the relevant local, state, or federal regulatory oversight body determines that the project is back in regulatory compliance. This date is not necessarily the date that the activity ends or the device is repaired, and may include time for the payment of fines or completion of any additional requirements placed on the offset project by the regulatory oversight body, as determined by the regulatory oversight body. If the regulatory oversight body does not provide a written determination regarding the date when the project returned to regulatory compliance to the satisfaction of ARB, the Offset Project Operator or Authorized Project Designee may provide documentation to ARB from the regulatory oversight body clearly identifying the date the project returned to regulatory compliance. Documentation should be official dated correspondence with the relevant regulatory agency, such as a consent decree, inspection report, or other such documentation, identifying that the project has remedied the condition(s) that rendered it out of compliance. For purposes of this subsection, ARB may also take into consideration information pertaining to the date(s) the activity subject to enforcement action occurred; if the Offset Project Operator, Authorized Project Designee, or forest owner has acknowledged responsibility for the activity; and the ongoing status of the enforcement proceedings with the relevant local, state, or federal regulatory oversight body. If the relevant regulatory oversight body does not provide a written determination regarding the date when the project returned to regulatory compliance to the satisfaction of ARB, and the Offset Project Operator or Authorized Project Designee is unable to provide documentation clearly identifying the date the project returned to regulatory compliance to the satisfaction of ARB, then for purposes of the applicable Reporting Period, the Offset Project Operator or Authorized Project Designee must use the end of the Reporting Period for the date when the offset project returned to regulatory compliance.

(C) Nothing in this section precludes the invalidation of ARB offset credits issued for previous or subsequent Reporting Periods if ARB determines that the offset project was out of regulatory compliance in previous or subsequent Reporting Periods. The offset project will continue to be deemed out of regulatory compliance in subsequent Reporting Periods until the Offset Project Operator or Authorized Project Designee provides the documentation demonstrating regulatory compliance identified in section 95973(b)(1)(B) to ARB.

(D) ARB's written determination and any supporting documents from the regulatory oversight body relating to the offset project being out of regulatory compliance and the timeframe identified for removal from the Reporting Period will be made public.

(E) For determining GHG emission reductions or GHG removal enhancements for the Reporting Period as modified to reflect any period the offset project was out of regulatory compliance, the Offset Project Operator or Authorized Project Designee must remove the days when the project was out of regulatory compliance from the Reporting Period using the following methods:

1. For projects using a protocol in sections 95973(a)(2)(C)2. or 5., the entire calendar day during which any portion of the project was not in regulatory compliance must be removed from the modeled or measured project baseline;

2. For projects using a protocol in section 95973(a)(2)(C)1., the entire destruction(s) under a Certificate of Destruction that contains any time the project is out of regulatory compliance must be removed. For projects using a protocol in section 97973(a)(2)(C)1. that consist of a destruction under a single Certificate of Destruction that contains any time the project is out of regulatory compliance, the entire project will be ineligible for ARB or registry offset credits; and

3. For projects using a protocol in section 95973(a)(2)(C)4., the entire calendar day during which any portion of the project was not in regulatory compliance must be removed by dividing the total calculated emissions reductions for the 12 month period from the end of the previous Reporting Period, by the total number of days in the previous 12 months, either 365 days or 366 days, to calculate a daily emissions reductions. The daily emissions reductions will be multiplied by the number of days the project was not in regulatory compliance and this number will be added to the project baseline for the end of the Reporting Period and the emissions reductions for the Reporting Period, excluding the days the project was out of regulatory compliance, will be calculated.

(2) An offset project using a protocol from sections 95973(a)(2)(C)3., or 6., is not eligible to receive ARB or registry offset credits for GHG reductions or GHG removal enhancements for the entire Reporting Period if the offset project is not in compliance with regulatory requirements directly applicable to the offset project during the Reporting Period.

(3) Project activities subject to the regulatory compliance requirements of this section are set forth in Appendix E.

(c) Early Action Offset Project Commencement Date. Offset projects that transitioned to Compliance Offset Protocols pursuant to the Program for Recognition of Early Action Offset Credits may have an Offset Project Commencement date before December 31, 2006.

(d) Any Offset Project Operator or Authorized Project Designee seeking to list an offset project situated on any of the following categories of land must demonstrate the existence of a limited waiver of sovereign immunity between ARB and the governing body of the Tribe entered into pursuant to section 95975 (l):

(1) Land that is owned by, or subject to, an ownership or possessory interest of the Tribe;

(2) Land that is "Indian lands" of the Tribe, as defined by 25 U.S.C, § 81(a)(1); or

(3) Land that is owned by any person, entity, or tribe, within the external borders of such Indian lands.

(e) Only a Primary Account Representative or Alternate Account Representative on the Offset Project Operator's tracking system account may sign any documents or attestations to ARB or an Offset Project Registry on behalf of the Offset Project Operator for an offset project.

(1. New section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50). 2. Amendment of subsections (a)(2)(C)3.-4., new subsection (a)(2)(C)5. and amendment of subsections (a)(3) and (b) filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26). 3. Amendment of subsections (a)(2)(C)-(a)(2)(C)5. and new subsections (a)(2)(D)-(F) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1). 4. Amendment of subsections (a)(2)(C)4.-5. and new subsection (a)(2)(C)6. filed 10-20-2015; operative 11-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 43). 5. Amendment filed 9-18-2017; operative 10-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38). 6. Amendment of subsections (a)(2)(D), (b)(1), (b)(1)(B) and (b)(1)(E), new subsections (b)(1)(E)1.-3., amendment of subsection (b)(2) and new subsection (e) filed 3-29-2019; operative 3-29-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).)

Note: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, Health and Safety Code. Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

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