Md. Code Regs. 26.11.32.21

Current through Register Vol. 51, No. 22, November 1, 2024

Section 26.11.32.21 - Surplus Reductions and Surplus Trading

A. Surplus Reductions.

(1) The Department shall issue surplus reduction certificates that establish and quantify, to the nearest pound of VOC reduced, surplus reductions achieved by a responsible ACP party operating under an ACP.

(2) The surplus reductions can be bought from, sold to, or transferred to a responsible ACP party operating under an ACP.

(3) A surplus reduction shall be calculated by the Department at the end of each compliance period within the time specified in the approved ACP.

(4) Surplus reduction certificates are not instruments, securities, or other form of property.

B. Surplus Reduction Requirements.

(1) The issuance, use, and trading of surplus reductions are subject to the provisions of this section.

(2) VOC reductions from sources of VOCs other than consumer products subject to the VOC standards specified in Regulation .04B of this chapter may not be used to generate surplus reductions.

(3) A surplus reduction is valid only when generated by a responsible ACP party and only while that responsible ACP party is operating under an approved ACP.

(4) A surplus reduction is valid only after the Department has issued an ACP agreement.

(5) A surplus reduction issued by the Department may be used by the responsible ACP party who generated the surplus reduction until the reductions expire or are traded, or until the ACP is canceled under Regulation .25 of this chapter.

(6) A surplus reduction may not be applied retroactively to a compliance period before the compliance period in which the reductions were generated.

(7) Except as provided in §B(8) of this regulation, only small or one-product businesses selling products under an approved ACP may purchase surplus reductions. An increase in the size of a small business or one-product business has no effect on surplus reductions purchased by that business before the date of the increase.

(8) Valid surplus reductions can be used only for the following purposes:

(a) To adjust either the ACP emissions of either the responsible ACP party who generated the reductions or the responsible ACP party to which the reductions were traded, if the surplus reductions are not to be used by a responsible ACP party to further lower its ACP emissions when its ACP emissions are equal to or less than the ACP limit during the applicable compliance period; or

(b) To be traded for the purpose of reconciling another responsible ACP party's shortfalls, if the reconciliation is part of the reconciliation of shortfalls plan approved by the Department under Regulation .17C(2)(j) of this chapter.

(9) A valid surplus reduction shall be in effect starting 5 days after the date of issuance by the Department and for a continuous period equal to the number of days in the compliance period during which the surplus reduction was generated. The surplus reduction shall then expire at the end of its effective period.

(10) At least 5 working days before the effective date of transfer of surplus reductions, both the responsible ACP party which is selling surplus reductions and the responsible ACP party which is buying the surplus reductions shall, either together or separately, submit to the Department a written notification of the transfer as described in Regulation .26 of this chapter.

(11) Surplus reduction credits shall be traded only between ACP product or products for consumer products.

C. The written notification of transfer of surplus reductions shall include all of the following:

(1) The date the transfer is to become effective;

(2) The date the surplus reductions being traded are due to expire;

(3) The amount, expressed as pounds of VOCs, of surplus reductions that are being transferred;

(4) The total purchase price paid by the buyer for the surplus reductions;

(5) The contact persons, names of the companies, street and mail addresses, and phone numbers of the responsible ACP parties involved in the trading of the surplus reductions;

(6) A copy of the Department-issued surplus reductions certificate, that:

(a) Is signed by both the seller and buyer of the certificate, showing transfer of all or a specified portion of the surplus reductions;

(b) States, if applicable, the amount of remaining non-traded surplus reductions and their expiration date; and

(c) Indicates that both the buyer and seller of the surplus reductions fully understand the conditions and limitations placed upon the transfer of the surplus reductions and accept full responsibility for the appropriate use of the surplus reductions as provided in this regulation.

Md. Code Regs. 26.11.32.21