Chapter 3745-111 | Voluntary Emission Reduction Credit Banking Program

Rule 3745-111-01 | Definitions.

• Effective: June 25, 2015
• Promulgated Under: 119.03

[Comment: For dates of non-regulatory government publications, publications of recognized organizations and associations, federal rules, and federal statutory provisions referenced in this rule, see paragraph (K) of this rule titled "referenced materials.".]

(A) Except as otherwise provided in this rule, the definitions in rule 3745-31-01 of the Administrative Code shall apply to this chapter.

(B) "Emission reduction credit" or "ERC" means a surplus, quantifiable and permanent unit of reduction in actual emissions from an air contaminant source, as defined in rule 3745-31-01 of the Administrative Code, which is expressed in tons of pollutant per year, and that is federally enforceable no later than at the time of use.

(C) "Ohio EPA" means the Ohio environmental protection agency.

(D) "Permanent" means that emission reductions used to offset emission increases are assured for the life of the corresponding increase through a federally enforceable mechanism, regardless of whether the corresponding increase is limited or unlimited in duration.

(E) "Quantifiable" means that the amount, rate and characteristics of emissions and emission reductions can be determined or measured through a reliable and replicable method established by an applicable law or approved by the director.

(F) "Reasonable further progress" or "RFP" means any incremental emission reductions required to fulfill the requirements of paragraphs (b)(1)(A) and (c)(2)(B) of Section 182 of the Clean Air Act or specified in the Ohio state implementation plan.

(G) "Surplus" means emission reductions made below an applicable source baseline which are below allowable emission rates and are not relied upon in the Ohio state implementation plan or required attainment demonstration of the national ambient air quality standards and have not been required by any applicable laws. Emission reductions can be used for offsets or ERCs to the extent allowed under federal law.

(H) "Un-verified ERC" means an owner or operator has identified an emission reduction that may be surplus, quantifiable and permanent but the emission reduction has not been verified and deemed creditable by the Ohio EPA in accordance with this chapter and can not be transferred or used when participating in the banking program until it becomes a verified ERC.

(I) "Verified" means the Ohio EPA has reviewed the information supplied by the owner or operator in accordance with this chapter to ensure the emission reductions are creditable as permanent, surplus and quantifiable ERCs and are approvable for transfer or use at the time of verification.

(J) "Verified ERC" means an emission reduction that is surplus, quantifiable and permanent as verified by the Ohio EPA in accordance with this chapter.

(K) Referenced materials. This chapter includes references to certain subject matter or materials. The text of the referenced materials is not included in the rules contained in this chapter. Information on the availability of the referenced materials as well as the date of, and the particular edition or version of the material is included in this rule. For materials subject to change, only the specific versions specified in this rule are referenced. Unless otherwise noted, material is referenced as it exists on the effective date of this rule. Except for subsequent annual publication of existing (unmodified) Code of Federal Regulation compilations, any amendment or revision to a referenced document is not applicable unless and until this rule has been amended to specify the new dates.

(1) Availability. The referenced materials are available as follows:

(a) Clean Air Act and all sections thereof; information and copies may be obtained by writing to: "Superintendent of Documents, Attn: New Orders, PO Box 371954, Pittsburgh, PA 15250-7954." The full text of the Act as amended in 1990 is also available in electronic format at www.epa.gov/oar/caa/. A copy of the Act is also available for inspection and use at most public libraries and "The State Library of Ohio."

(b) Code of Federal Regulations (CFR). Information and copies may be obtained by writing to: "Superintendent of Documents, Attention: New Orders, PO Box 371954, Pittsburgh, PA 15250-7954." The full text of the CFR is also available in electronic format at http://www.gpo.gov/fdsys/. The CFR compilations are also available for inspection and use at most public libraries and "The State Library of Ohio."

(c) United States Code (USC). Information and copies may be obtained by writing to: "Superintendent of Documents, Attn: New Orders, PO Box 371954, Pittsburgh, PA 15250-7954." The full text of the United States Code is also available in electronic format at http://www.gpo.gov/fdsys/. The USC compilations are also available for inspection and use at most public libraries and "The State Library of Ohio."

(2) Referenced materials.

(a) 40 CFR 81.336; "Designation of Area for Air Quality Planning Purposes- Ohio;" as published in the July 1, 2014 Code of Federal Regulations.

(b) 40 CFR Part 51; "Requirements for preparation, adoption, and submittal of implementation plans;" as published in the July 1, 2014 Code of Federal Regulations.

(c) 40 CFR Part 51, Appendix S; "Emission Offset Interpretative Ruling;" as published in the July 1, 2014 Code of Federal Regulations.

(d) 40 CFR Part 52; "Approval and promulgation of implementation plans;" as published in the July 1, 2014 Code of Federal Regulations.

(e) Clean Air Act; contained in 42 USC 7401 to 7671q; "The Public Health and Welfare-Air Pollution Prevention and Control;" published May 7, 2014 in the 2012 Edition of the United States Code.

(f) Section 173 of the Clean Air Act; contained in 42 USC 7503; "Permit requirements;" published May 7, 2014 in the 2012 Edition of the United States Code.

(g) Section 182 of the Clean Air Act; contained in 42 USC 7511a; "Plan submissions and requirements;" published May 7, 2014 in the 2012 Edition of the United States Code.

(h) Title IV of the Clean Air Act; contained in 42 USC 7651 to 7651o; "Acid Deposition Control;" published May 7, 2014 in the 2012 Edition of the United States Code.

Supplemental Information

Authorized By: 3704.03(F)
Amplifies: 3704.03(A), 3704.03(F)
Five Year Review Date: 5/8/2025

Rule 3745-111-02 | ERC banking program for the purpose of enabling the acquisition of offsets.

• Effective: June 25, 2015
• Promulgated Under: 119.03

[Comment: For dates of non-regulatory government publications, publications of recognized organizations and associations, federal rules, and federal statutory provisions referenced in this rule, see paragraph (K) of rule 3745-111-01 of the Administrative Code.]

(A) Purpose and general clause.

(1) The purpose of this chapter is to establish a voluntary statewide ERC banking program for the purpose of enabling the acquisition of offsets that shall be implemented in accordance with this chapter.

(2) Nothing in this chapter shall be construed to be a mandatory requirement except when a person, as specified in paragraph (B)(2) of this rule, chooses to voluntarily participate in the ERC banking program. At such time, the requirements of this chapter shall apply.

(3) Nothing in this chapter shall be construed to restrict the director's authority to attain and maintain the national ambient air quality standards of the Ohio state implementation plan requirements.

(4) Nothing in this chapter shall be construed to restrict the use of offsets consistent with Chapter 3745-31 of the Administrative Code; Section 173 of the Clean Air Act; 40 CFR Part 51; 40 CFR Part 51, Appendix S; or 40 CFR Part 52.

(B) Applicability.

(1) The use of ERCs under this chapter applies to volatile organic compounds and oxides of nitrogen as ozone precursors, sulfur dioxide, carbon monoxide, PM10, PM 2.5 and lead. At the director's discretion, the use of ERCs may also apply to any other pollutant, or precursor thereof, for which a national ambient air quality standard has been set.

(2) Voluntary participants in this program may include one of the following:

(a) Any major stationary source or major modification that is to be constructed in an area designated in 40 CFR 81.336 as nonattainment for an air pollutant for which the major stationary source or major modification is major.

(b) Any person who voluntarily chooses to participate in the ERC banking program.

For any ERC generating source that voluntarily participates in the ERC banking program located outside the state of Ohio, this chapter and paragraph (A) of rule 3745-31-27 of the Administrative Code shall be applicable.

(C) General requirements.

(1) The generation, transfer and use of ERCs shall be consistent with the Ohio state implementation plan, the Clean Air Act, rules promulgated under the Clean Air Act, this chapter, and Chapter 3745-31 of the Administrative Code.

(2) The use of verified ERCs in a nonattainment area shall result in emission reductions consistent with the requirements for reasonable further progress for the nonattainment area and any attainment demonstration specified in the Ohio state implementation plan.

(3) Emission reductions made to correct violations or inaccurate reporting of any applicable emission standard of limitation or emission reduction resulting from a source, process, or process equipment in violation shall not be eligible to generate ERCs to be used or transferred under this chapter. Emission reductions in excess of what is required to correct a violation may be eligible to generate ERCs if they meet the requirements contained in this chapter and Chapter 3745-31 of the Administrative Code.

(4) No ERCs may be allowed for replacing one volatile organic compound with another of lesser reactivity, except where allowed under paragraph (H) of rule 3745-31-24 of the Administrative Code.

(5) Nothing in this chapter shall be construed to obviate the need to obtain a permit-to-install or PTIO under Chapter 3745-31 of the Administrative Code, or a Title V permit under Chapter 3745-77 of the Administrative Code. The use of verified ERCs which would be inconsistent with the requirements contained in Chapter 3745-31 of the Administrative Code is prohibited.

(D) ERC discounting.

The director may reduce the amount of ERCs under the following conditions:

(1) Discounting for attaining or maintaining the national ambient air quality standards or Ohio state implementation plan.

The director may reduce the quantity of available ERCs in order to attain or maintain the national ambient air quality standards of the Ohio state implementation plan requirements, provided that the director will exercise such authority through the Ohio state implementation plan process prior to removing ERCs from the bank established under this chapter.

Supplemental Information

Authorized By: 3704.03(F)
Amplifies: 3704.03(A), 3704.03(F)
Five Year Review Date: 5/8/2025

Rule 3745-111-03 | ERC generation for the purpose of enabling the acquisition of offsets.

• Effective: June 25, 2015
• Promulgated Under: 119.03

[Comment: For dates of non-regulatory government publications, publications of recognized organizations and associations, federal rules, and federal statutory provisions referenced in this rule, see paragraph (K) of rule 3745-111-01 of the Administrative Code.]

(A) Acceptable emission reduction techniques.

When voluntarily participating in the ERC banking program, ERCs shall be generated by the following emission reduction techniques:

(1) Permanent shutdown of one or more existing air contaminant sources or a facility.

(2) Permanent curtailment in production or operating hours at an existing air contaminant source or facility operating in accordance with applicable laws, provided the curtailment results in an actual emissions reduction and is not otherwise required to comply with the Clean Air Act.

(3) The installation and operation of pollution control equipment that reduces emissions below the level required from an existing air contaminant source or facility to less than that required by applicable laws.

(4) Technologies, materials or processes or process equipment modifications which are not otherwise required by the Clean Air Act.

(5) The incidental emissions reduction of air pollutants contained in paragraph (B)(1) of rule 3745-111-02 of the Administrative Code resulting from reductions of a collateral pollutant required under the Clean Air Act shall be permitted, provided the emission reduction meets the requirements of this chapter.

(6) Acceptable mobile source ERC generation that reduces actual emissions shall be approved by the director on a case-by-case basis.

(7) Any such other emission reduction technique, that reduces actual emissions, approved by the director on a case-by-case basis.

(B) ERC baseline determination.

The emission baseline from which ERCs may be generated shall be established to determine the amount of actual emissions from an air contaminant source, process, or process equipment for the purpose of generating ERCs that result in actual emission reductions. The emission baseline shall be expressed in tons of pollutant emitted per year.

(1) In establishing the baseline used to calculate ERCs, the Ohio EPA shall consider emission characteristics and operating conditions which include, at a minimum, the emission rate, capacity utilization, hours of operations and seasonal emission rate variations, in accordance with the following:

(a) The definition of actual emissions contained in rule 3745-31-01 of the Administrative Code.

(b) The baseline emissions rate may not be inconsistent with the emissions reported in the most recently filed or amended version of all relevant emission statements for the baseline period filed pursuant to Chapter 3745-78 of the Administrative Code for which fees have been paid, when applicable.

(c) The baseline emissions rate shall not exceed the allowable emissions rate taking into consideration the definition under paragraph (G) of rule 3745-111-01 of the Administrative Code.

(2) The baseline determination requirements under rule 3745-31-24 of the Administrative Code shall apply.

(C) ERC initial quantification.

(1) When participating in the ERC banking program, emission monitoring and quantification protocols to quantify emissions, emission reductions, and the generation of ERCs shall be reliable, enforceable, and replicable and may include the following:

(a) Continuous emission monitoring, stack testing, sampling of fuels and materials, or other direct measurements.

(b) Calculations using equations that are a function of process and control equipment.

(c) Mass-balance calculations.

(d) Emission factors, emission calculation methods, or emission quantification protocols approved for use at the time of emission reduction generation by the Ohio EPA.

(e) For facilities in which emission rates vary over time, an Ohio EPA approved alternative method for quantifying the reduction and ensuring the continued emissions reduction, if the method is approved by the director.

(f) Measurement methods, procedures, and calculations shall be approved by the director.

(D) ERC generation notification.

(1) When participating in the ERC banking program, an ERC generation notification shall be submitted in a form and manner prescribed by the director and shall include the following information, at a minimum:

(a) Verified ERC generation.

(i) The name of the owner and operator of the air contaminant source or facility.

(ii) The initial intended use of the ERCs.

[Comment: identifying an intended use does not obligate the generator to that identified use and does not prohibit the generator from requesting a change to the identified use while the ERCs are in the bank The intended use information will provide information to the public regarding which ERCs are available for transfer.]

(iii) The intended or actual date of initiation of emission reductions.

(iv) Identification of the type of pollutant and quantity of ERCs being generated.

(v) A description of the emission reduction techniques used to generate the ERCs.

(vi) Full characterization of the emission reductions in accordance with this chapter.

(b) Un-verified ERC generation.

(i) Information consistent with paragraph (D)(1)(a)(i) to (D)(1)(a)(v) of this rule.

(ii) An estimation of the emission reductions and the basis of the estimation.

(c) Except for paragraph (E)(2) of this rule, un-verified ERCs may be submitted via an ERC generation notification for participation in the ERC banking program only by the facility that actually generated the emission reductions, the current owner or operator, or a successor owner or operator.

(E) Shutdown notification and potential forfeiture of ERCs.

(1) Regardless of any owner or operator choosing to participate in the voluntary banking program, for each air contaminant source or facility permanent shutdown that may result in ERCs, the director may provide a notification through certified mail that requests the owner or operator of the facility to inform Ohio EPA if the owner or operator will participate in the ERC banking program. The owner or operator may submit a response, through certified mail, electronic mail or fax, with one of the following:

(a) The owner or operator may inform Ohio EPA that they request to retain possession of the ERCs and intend to do one of the following:

(i) Participate in the banking program which shall include submittal of information required under paragraph (D)(1)(a) of this rule for approval of verified ERCs.

(ii) Participate in the ERC banking program which shall include submittal of information required under paragraph (D)(1)(b) of this rule for approval of un-verified ERCs.

(iii) Participate in the ERC banking program at a future date or not participate in the ERC banking program.

(b) The owner or operator may inform Ohio EPA that they request the director to obtain possession of the ERCs to use at the director's discretion.

(2) Any owner or operator who does not respond to the above shutdown notification shall subject the ERCs to paragraph (E)(2)(d) of this rule provided the conditions of paragraphs (E)(2)(a) to (E)(2)(c) of this rule are met.

(a) The facility has permanently shutdown and either of the following:

(i) The owner or operator of the facility is undergoing court-supervised liquidation, has had its articles of incorporation or its license to conduct business in Ohio revoked.

(ii) The owner of operator of the facility has otherwise taken formal steps to discontinue conducting business in Ohio.

(b) The owner, operator or legal representative responsible for the assets of the facility was provided the notification pursuant to paragraph (E)(1) of this rule but did not provide a response.

(c) The director made every effort to contact the owner, operator or legal representative, including public notice in a prominent newspaper in the area of the permanently shutdown air contaminant source or facility.

(d) The facility shall forfeit possession of the ERCs to Ohio EPA, upon the date the permanent shutdown is certified with, or verified by Ohio EPA for use at the director's discretion. Forfeited ERCs shall be made available free of charge by Ohio EPA to a stationary source, at the director's discretion, for use as emission offsets provided the use of ERCs meet the requirements of Chapter 3745-31 of the Administrative Code and this chapter. In the event the new or modified stationary source is not installed, the ERCs shall be forfeited back to Ohio EPA.

(F) Any mobile source or stationary source generating an ERC may be verified by Ohio EPA through compliance monitoring and reporting programs.

Supplemental Information

Authorized By: 3704.03(F)
Amplifies: 3704.03(A), 3704.03(F)
Five Year Review Date: 5/8/2025
Prior Effective Dates: 1/8/2009

Rule 3745-111-04 | ERC transfer and use for the purpose of enabling the acquisition of offsets.

• Effective: June 25, 2015
• Promulgated Under: 119.03

(A) Conditions for approval of the use of ERCs for enabling the acquisition of emission offsets.

The use of ERCs from an existing air contaminant source or facility for the purpose of offsetting emissions of a proposed major stationary source or major modification (whether or not under the same ownership) shall meet the requirements contained in rule 3745-31-22 of the Administrative Code, including that there will be reasonable progress, as determined by the director, toward attainment of the applicable national ambient air quality standard.

(1) The owner or operator of the proposed air contaminant source or facility shall secure approval from the director to use the ERCs for the purpose of offsetting emissions prior to the time of use.

(2) ERCs may not be used in an area with a higher nonattainment classification than the one in which they were generated.

(3) ERCs that are used shall be surplus and quantifiable at the time of use in accordance with paragraphs (E) and (G) of rule 3745-111-01 of the Administrative Code.

(4) An owner or operator proposing new or increased emissions shall demonstrate that sufficient offsetting ERCs, at the ratio specified in rule 3745-31-26 of the Administrative Code have been acquired from a nonattainment area that meets the requirements of paragraph (B) of this rule.

(5) A stationary source located in the state of Ohio may use ERCs generated by a source located in a neighboring state only upon the approval of both the director and the appropriate authority within the neighboring state. ERCs generated in another state may not be used at a facility within the state of Ohio unless the facility's generated ERCs are enforceable by the neighboring state and by the Ohio EPA in accordance with this chapter and paragraph (A) of rule 3745-31-27 of the Administrative Code.

(B) Location of emission offsets.

Location of offsetting emissions shall meet the requirements of rule 3745-31-25 of the Administrative Code, paragraph (B) of rule 3745-31-26 of the Administrative Code, and rule 3745-31-27 of the Administrative Code.

(C) Administrative procedures.

(1) Transfer and use of ERCs for the purpose of offsetting emissions shall meet the administrative procedures of rule 3745-31-27 of the Administrative Code.

(2) Mobile source ERCs.

A mobile source owner or operator may generate ERCs, consistent with paragraph (A)(6) of rule 3745-111-03 of the Administrative Code, for the purpose of offsetting emissions of a proposed major stationary source or major modification wishing to locate in an area that meets the location requirements of paragraph (B) of this rule provided the offset ratio requirements of rule 3745-31-26 of the Administrative Code are met. The emission offsets shall come from existing mobile sources. The use of mobile source ERCs must be submitted as a Ohio state implementation plan revision or must be contained in a federally enforceable permit. The use of mobile source ERCs under this paragraph shall be approved by the director on a case-by-case basis.

(D) ERC transfer and use.

When any owner of ERCs elects to participate in the ERC banking program, the following are applicable:

(1) Only verified ERCs may be transferred and used through a transfer or use notification in accordance with paragraph (E) of this rule.

(2) Verified ERCs generated in accordance with paragraph (A)(1) of rule 3745-111-03 of the Administrative Code, resulting from the permanent shutdown of an existing air contaminant source or facility, may not be transferred or used prior to Ohio EPA receiving notification from the responsible official of a Title V facility, as defined in rule 3745-77-01 of the Administrative Code, or from the person with signatory authority under rule 3745-31-02 of the Administrative Code for a facility that is not Title V, certifying the permanence of the shutdown.

(3) Verified ERCs generated in accordance with paragraphs (A)(2) to (A)(7) of rule 3745-111-03 of the Administrative Code, may not be transferred until the ERCs are permanent and federally enforceable in accordance with paragraph (C)(2) of rule 3745-111-02 of the Administrative Code.

(E) Notification of transfer or use.

When participating in the ERC banking program, an ERC transfer or use notification shall be submitted in a form and manner prescribed by the director and shall include the following information, at a minimum, except paragraph (E)(6) of this rule shall be optional:

(1) The name of the owner or operator of the air contaminant source or facility generating the ERC or the name of the person transferring the ERC.

(2) The name of the person, owner or operator of the air contaminant source or facility, receiving or using the ERC.

(3) The intended use of the ERCs.

[Comment: identifying an intended use does not obligate the person receiving the ERCs to that identified use and does not prohibit the person receiving the ERCs from requesting a change to the identified use while the ERCs are in the bank. The intended use information will provide information to the public regarding which ERCs are available for transfer.]

(4) Identification of the type of pollutant and quantity of verified ERCs being transferred or used.

(5) Identification of the ERC certificate number associated with the ERCs, and if transfer or use of the ERCs identified in the certificate are in part, the exact ERCs contained in the banking system that are included in the transaction.

(6) The cost, in dollars per ton, of ERCs transferred or used shall be optional.

(F) Public notice.

Consistent with the requirements of Chapter 3745-31 of the Administrative Code, the Ohio EPA shall provide the public with notice of owners or operators proposing to use verified ERCs at the time they are made federally enforceable.

Supplemental Information

Authorized By: 3704.03(F)
Amplifies: 3704.03(A), 3704.03(F)
Five Year Review Date: 5/8/2025
Prior Effective Dates: 1/8/2009

Rule 3745-111-05 | ERC banking system.

• Effective: June 25, 2015
• Promulgated Under: 119.03

The Ohio EPA shall establish a voluntary ERC banking system to track the deposit and withdrawal of ERCs and the generation, transfer and use of ERCs in accordance with this chapter.

(A) Prior to deposit of ERCs into the banking system, the Ohio EPA shall do one of the following:

(1) Verify the information submitted by the owner or operator in accordance with paragraph (D)(1) of rule 3745-111-03 of the Administrative Code and classify the ERCs as verified ERCs in the banking system.

(2) Review the information submitted by the owner or operator in accordance with paragraph (D)(2) of rule 3745-111-03 of the Administrative Code and classify the estimated ERCs as un-verified ERCs in the banking system.

(B) The banking system shall identify the following:

(1) Whether the ERCs are un-verified or verified ERCs.

(2) The applicable criteria pollutant.

(3) The quantity of ERCs.

(4) A description of the source.

(5) The county in which the ERCs were generated.

(6) The ERC generation date. The ERC generation date entered in the banking system shall reflect the anticipated date of emissions reduction and shall be amended as necessary to reflect the actual emissions reduction date.

(C) ERC certificate.

(1) Upon registration and deposit of verified ERCs into the ERC banking system an ERC certificate with a unique ERC certificate number shall be generated by the director to the verified ERC holder. Un-verified ERCs will receive an ERC certificate upon verification by Ohio EPA.

(2) If the owner of an ERC certificate uses or transfers ERCs to a new owner in part or whole, the director shall generate an ERC certificate to the new owner reflecting the transferred amount of ERCs and, if applicable, shall issue an ERC certificate to the current owner reflecting the amount of ERCs remaining after the transfer or use. Upon issuance of a permit allowing the use of verified ERCs for the purpose of offsetting emissions, or upon transfer of ERCs, the banking transactions shall be updated in the banking system, including identifying any remaining ERCs available for transferring or use after the transaction.

(D) Withdrawal of ERCs from the banking system.

Nothing in this rule shall prohibit the transfer of ERCs that do not meet the requirements of paragraph (D) of rule 3745-111-04 of the Administrative Code if the ERCs are withdrawn from the banking system. ERCs and ERC certificates may be withdrawn by the current owner from the ERC banking system at any time, upon written notice to the director. Upon withdrawal, all ERC certificates shall be terminated and the ERCs shall be withdrawn from the banking system.

(E) The director shall publish a list of deposited ERCs into the banking system that are available for transfer and use on the Ohio EPA website and the list shall be updated on a thirty day basis, at a minimum.

(F) Supporting documentation.

The Ohio EPA shall maintain supporting documentation, including permit decisions, generator information and other information required to sufficiently characterize the emissions, which shall allow the Ohio EPA and ERC users to determine if the ERCs are suitable for use at a specific facility.

(G) Annual publication.

The director may produce an annual publication related to banking transactions.

(1) The publication may include, at a minimum, the costs, in dollars per ton, of ERCs purchased for transfer or use during the calendar year, the pollutant type and the county where the ERC was generated, transferred or used.

(2) Information on the identity of any party involved in the ERC transactions and data used to calculate the purchase price of the ERCs shall not be included in the publication.

(3) The document may be published by the first of March of the following year.

Supplemental Information

Authorized By: 3704.03(F)
Amplifies: 3704.03(A), 3704.03(F)
Five Year Review Date: 5/8/2025
Prior Effective Dates: 1/8/2009