N.J. Admin. Code § 7:27C-6.9

Current through Register Vol. 56, No. 21, November 4, 2024

Section 7:27C-6.9 - Compliance

(a) CO[2] allowances are available to be deducted in order for a CO[2] Budget source to comply with the CO[2] requirements of N.J.A.C. 7:27C-1.4for a control period, the initial control period, or an interim control period, provided that:

1. The CO[2] allowances, other than CO[2] offset allowances, are of allocation years that fall within a prior control period or the same control period, initial control period, or interim control period for which the allowances will be deducted;

2. The CO[2] allowances are held in the CO[2] Budget source's compliance account as of the CO[2] allowance transfer deadline for that control period, the initial control period, or the interim control period or are transferred into the compliance account by a CO[2] allowance transfer correctly submitted for recording under N.J.A.C. 7:27C-7.1by the CO[2] allowance transfer deadline for that control period, the initial control period, or the interim control period;

3. For CO[2] offset allowances, the number of CO[2] offset allowances that are available to be deducted in order for a CO[2] Budget source to comply with the CO[2] requirements of N.J.A.C. 7:27C-1.4for a control period, the initial control period, or an interim control period may not exceed the number of allowances required to account for 3.3 percent of the CO[2] Budget source's CO[2] emissions for that control period or the initial control period, or 1.65 percent of the CO[2] Budget source's CO[2] emissions for an interim control period, as determined in accordance with this subchapter and N.J.A.C. 7:27C-8; and

4. The CO[2] allowances are not necessary for deductions for excess emissions for a prior control period or prior initial control period under (e) below.

(b) Following the recording, in accordance with N.J.A.C. 7:27C-7.2, of CO[2] allowance transfers submitted for recording in the CO[2] Budget source's compliance account by the CO[2] allowance transfer deadline for a control period, the initial control period, or an interim control period, the Department will deduct CO[2] allowances available under (a) above to cover the source's CO[2] emissions for the control period, the initial control period, or the interim control period, as follows:

1. Until the number of CO[2] allowances deducted equals the number of tons of total CO[2] emissions, (or 0.50 times the number of tons of total CO[2] emissions for an interim control period), less any CO[2] emissions attributable to the burning of eligible biomass and any CO[2] emissions eligible for deduction pursuant to N.J.A.C. 7:27C-5.3, determined in accordance with N.J.A.C. 7:27C-8, from all CO[2] Budget units at the CO[2] Budget source for the control period, the initial control period, or the interim control period; or

2. If there are insufficient CO[2] allowances to complete the deductions at (b)1 above, until there are NO[x] more CO[2] allowances remaining in the compliance account that are available to be deducted under (a) above.

(c) The CO[2] authorized account representative for a CO[2] Budget source's compliance account may request the deduction of specific CO[2] allowances in the compliance account, identified by serial number, for emissions or excess emissions for a control period, the initial control period, or an interim control period in accordance with (b) above or (e) below, as applicable. Such identification shall be made in the compliance certification report pursuant to N.J.A.C. 7:27C-4.1(b)2.

(d) Where there is no, or only partial, identification by the COauthorized account representative of available CO[2] allowances by serial number pursuant to N.J.A.C. 7:27C-4.1(b)2, the Department will deduct CO[2] allowances for a control period, the initial control period, or an interim control period from the CO[2] Budget source's compliance account, in the following order:

1. CO[2] offset allowances, subject to the relevant compliance deduction limitations under (a)3 above, in chronological order (that is, CO[2] offset allowances from earlier allocation years shall be deducted before CO[2] offset allowances from later allocation years). In the event that some, but not all, CO[2] offset allowances from a particular allocation year are to be deducted, CO[2] offset allowances shall be deducted by serial number, with lower serial number allowances deducted before higher serial number allowances; and

2. Any CO[2] allowances, other than CO[2] offset allowances, that are available for deduction under (a) above. CO[2] allowances shall be deducted in chronological order (that is, CO[2] allowances from earlier allocation years shall be deducted before CO[2] allowances from later allocation years). In the event that some, but not all, CO[2] allowances from a particular allocation year are to be deducted, CO[2] allowances shall be deducted by serial number, with lower serial number allowances deducted before higher serial number allowances.

(e) If, after the deduction of CO[2] allowances for compliance in accordance with (b) above, a CO[2] Budget source has excess emissions, the Department will deduct from the CO[2] Budget source's compliance account CO[2] allowances in an amount equal to three times the number of the CO[2] Budget source's excess emissions. In the event that a CO[2] Budget source has insufficient CO[2] allowances to cover three times the number of the CO[2] Budget source's excess emissions, the CO[2] Budget source shall immediately transfer CO[2] allowances into its compliance account in a quantity equal to three times the CO[2] Budget source's excess emissions. NO[x] CO[2] offset allowances may be deducted to account for the source's excess emissions.

(f) The deduction of any CO[2] allowances required under (e) above will not affect the liability of the owners and operators of the CO[2] Budget source or the CO[2] Budget units at the CO[2] Budget source for any fine, penalty, or assessment, or their obligation to comply with any other remedy, for the same violation, as ordered under applicable State law. The Department will apply the following guidelines in assessing fines, penalties, or other obligations:

1. For purposes of determining the number of days of violation, if a CO[2] Budget source has excess emissions for a control period, the initial control period, or an interim control period, each day in the control period, initial control period, or interim control period constitutes a day of violation, unless the owners and operators of the unit demonstrate that a lesser number of days should be considered; and

2. Each ton of excess emissions is a separate violation.

(g) The Department's determination that a CO[2] Budget source had excess emissions and the concomitant deduction of CO[2] allowances from that CO[2] Budget source's account may be later challenged in the context of an adjudicatory hearing, as set forth at N.J.A.C. 7:27C-1.6, or in the context of any civil or criminal judicial action arising from or encompassing that excess emissions violation. The commencement or pendency of any administrative enforcement or civil or criminal judicial action arising from or encompassing that excess emissions violation will not prevent the Department from deducting the CO[2] allowances resulting from the Department's original determination that the relevant CO[2] Budget source has had excess emissions. Should the Department's determination of the existence or extent of the CO[2] Budget source's excess emissions be revised, either by a settlement or as the result of any administrative or judicial action, the Department will act as follows:

1. In any instance where the Department's determination of the extent of excess emissions was held to be too low, the Department will take further action under (e) and (f) above to address the expanded violation; and

2. In any instance where the Department's determination of the extent of excess emissions was held to be too high, the Department will distribute to the relevant CO[2] Budget source CO[2] allowances in an amount equaling the number of CO[2] allowances deducted that are attributable to the difference between the original and final quantity of excess emissions. Should such CO[2] Budget source's compliance account NO[x] longer exist, the CO[2] allowances will be provided to a general account selected by the owner or operator of the CO[2] Budget source from which they were originally deducted.

(h) The Department will record, in the appropriate compliance account, all deductions from such an account made pursuant to (b) and (e) above.

(i) The Department may review and conduct independent audits concerning any submission under the CO[2] Budget Trading Program and make appropriate adjustments of the information in the submissions.

(j) The Department may deduct CO[2] allowances from, or transfer CO[2] allowances to, a CO[2] Budget source's compliance account based on information in the submissions, as adjusted under (i) above.

N.J. Admin. Code § 7:27C-6.9

Adopted by 51 N.J.R. 992(a), effective 6/17/2019