(a) Availability for deduction for compliance. Texas SO2 Trading Program allowances are available to be deducted for compliance with a source's Texas SO2 Trading Program emissions limitation for a control period in a given year only if the Texas SO2 Trading Program allowances:
(1) Were allocated for such control period or a control period in a prior year; and
(2) Are held in the source's compliance account as of the allowance transfer deadline for such control period.
(b) Deductions for compliance. After the recordation, in accordance with § 97.923, of Texas SO2 Trading Program allowance transfers submitted by the allowance transfer deadline for a control period in a given year, the Administrator will deduct from each source's compliance account Texas SO2 Trading Program allowances available under paragraph (a) of this section in order to determine whether the source meets the Texas SO2 Trading Program emissions limitation for such control period, as follows:
(1) Until the amount of Texas SO2 Trading Program allowances deducted equals the number of tons of total SO2 emissions from all Texas SO2 Trading Program units at the source for such control period; or
(2) If there are insufficient Texas SO2 Trading Program allowances to complete the deductions in paragraph (b)(1) of this section, until no more Texas SO2 Trading Program allowances available under paragraph (a) of this section remain in the compliance account.
(c) Selection of Texas SO2 Trading Program allowances for deduction -
(1) Identification by serial number. The designated representative for a source may request that specific Texas SO2 Trading Program allowances, identified by serial number, in the source's compliance account be deducted for emissions or excess emissions for a control period in a given year in accordance with paragraph (b) or (d) of this section. In order to be complete, such request shall be submitted to the Administrator by the allowance transfer deadline for such control period and include, in a format prescribed by the Administrator, the identification of the Texas SO2 Trading Program source and the appropriate serial numbers.
(2) First-in, first-out. The Administrator will deduct Texas SO2 Trading Program allowances under paragraph (b) or (d) of this section from the source's compliance account in accordance with a complete request under paragraph (c)(1) of this section or, in the absence of such request or in the case of identification of an insufficient amount of Texas SO2 Trading Program allowances in such request, on a first-in, first-out accounting basis in the following order:
(i) Any Texas SO2 Trading Program allowances that were recorded in the compliance account pursuant to § 97.921 and not transferred out of the compliance account, in the order of recordation; and then
(ii) Any other Texas SO2 Trading Program allowances that were transferred to and recorded in the compliance account pursuant to this subpart, in the order of recordation.
(d) Deductions for excess emissions. After making the deductions for compliance under paragraph (b) of this section for a control period in a year in which the Texas SO2 Trading Program source has excess emissions, the Administrator will deduct from the source's compliance account an amount of Texas SO2 Trading Program allowances, allocated for a control period in a prior year or the control period in the year of the excess emissions or in the immediately following year, equal to three times the number of tons of the source's excess emissions.
(e) Recordation of deductions. The Administrator will record in the appropriate compliance account all deductions from such an account under paragraphs (b) and (d) of this section.
[82 FR 48364, Oct. 17, 2017, as amended at 86 FR 23208, Apr. 30, 2021]