TITLE 35: ENVIRONMENTAL PROTECTION
SUBTITLE B: AIR POLLUTION
CHAPTER II: ENVIRONMENTAL PROTECTION AGENCY
PART 273
NO
x
TRADING PROGRAM PROCEDURES
Section
273.100
Purpose
273.105
Abbreviations and Acronyms
273.110
Definitions
273.120
NO
x
Allowances for Sale by the Agency
273.130
NO
x
Allowance Database
273.140
Transaction Procedures
273.150
Price of NSSA and Subpart W Extras
273.160
Price of ERCs
273.170
Disbursement of Proceeds of NSSA Sales
AUTHORITY: Implementing and authorized by Section 9.9 of the Environmental Protection
Act [415 ILCS 5/9.9].
SOURCE: Adopted at 29 Ill. Reg. 9467, effective June 14, 2005.
Section 273.100 Purpose
This Part provides procedures for the sale of NO
x
allowances by the Agency and disbursement of
certain proceeds from these sales pursuant to the requirements of Section 9.9 of the Act.
Section 273.105 Abbreviations and Acronyms
Unless otherwise specified in this Part, the abbreviations and acronyms used in this Part shall be
the same as those found in 35 Ill. Adm. Code 211 and 217. The following abbreviations and
acronyms are used in this Part.
ERC
Early Reduction Credit
NSSA
New Source Set-Aside
NO
x
Nitrogen oxides
ORIS
Office of Regulatory Information Systems
Section 273.110 Definitions
Except as otherwise defined in this Part, definitions of terms used in this Part shall be those used
in 40 CFR 96.2 and 35 Ill. Adm. Code 211 and 217.
Section 273.120 NO
x
Allowances for Sale by the Agency
The Agency may, but is not required to, sell allowances from the NSSA, Subpart W extra
allowances as defined in subsections (a)(2) and (b)(2) of this Section, and ERC allowances, as
follows, to:
a)
Non-EGUs subject to the requirements of 35 Ill. Adm. Code 217, Subpart U:
1)
Allowances from the NSSA as designated by 35 Ill. Adm. Code
217.468(c), if the unit commenced operation, as defined in 40 CFR 96.2,
on or after January 1, 2004, and is eligible to receive allowances from the
NSSA pursuant to 35 Ill. Adm. Code 217.468; and
2)
Any allowances under 35 Ill. Adm. Code 217, Subpart W, that remain after
each 3-year allocation period that could not be allocated on a pro-rata
basis pursuant to the provisions of Subpart W
(referred to in this Part as
"Subpart W extras"). [415 ILCS 5/9.9(d-5)(3)]
b)
EGUs subject to the requirements of 35 Ill. Adm. Code 217, Subpart W:
1)
Any unearned early reduction credits set aside for Non-EGUs under 35 Ill.
Adm. Code 217, Subpart U, but only to those sources that make qualifying
early reductions of NO
x
in 2003 pursuant to 35 Ill. Adm. Code 217 for
which the source did not receive an allocation thereunder
[415 ILCS
5/9.9(d-5)(1);
2)
Subpart W extras; and
3)
Allowances from the NSSA, as determined by 35 Ill. Adm. Code
217.768(c), if the unit commenced operation, as defined in 40 CFR 96.2,
on or after January 1, 2004, and is eligible to receive allowances from the
NSSA pursuant to 35 Ill. Adm. Code 217.768.
Section 273.130 NO
x
Allowance Database
a)
The Agency or its designee shall maintain a website that shall be available for
public access on which a listing of the NO
x
allowances the Agency has available
for sale will be posted. The website shall include the following information on
NO
x
allowances:
1)
Type of allowance (e.g., ERC, NSSA);
2)
Vintage;
3)
Price;
4)
Application deadline;
5)
Date posted;
6)
Payment due date; and
7)
Allocation date.
b)
Historical NO
x
allowance sales. The Agency or its designee shall maintain a
website that shall be available for public access on which a listing of the NO
x
allowance sales the Agency has made for the prior two control periods shall be
posted. The website shall include the following information on NO
x
allowances:
1)
Date of sale;
2)
Buyer;
3)
Type of source (Non-EGU or EGU);
4)
Volume;
5)
Vintage;
6)
Price; and
7)
Type of Allowance.
c)
The Agency or its designee shall maintain a NO
x
allowance sales database.
Notwithstanding the information on the Agency's website, the official record of
all NO
x
allowance transactions shall be the USEPA NO
x
Allowance Tracking
System.
Section 273.140 Transaction Procedures
The Agency may sell NO
x
allowances, subject to the requirements of Section 9.9 of the Act, to
sources subject to the requirements of 35 Ill. Adm. Code 217, Subparts U and W, pursuant to the
following requirements:
a)
Upon notification or posting by the Agency that it has NO
x
allowances for sale, a
NO
x
authorized account representative may submit an application to the Agency
requesting to purchase NO
x
allowances. Such application shall include the
following:
1)
Bureau of Air facility identification number;
2)
ORIS ID number;
3)
Source name;
4)
A statement setting forth the eligibility as set forth in Section 273.120 of
this Part;
5)
Name and signature of the NO
x
authorized account representative for the
source;
6)
NO
x
allowance tracking system account number; and
7)
Number, vintage and type of NO
x
allowances being requested for
purchase.
b)
Applications for the purchase of allowances from the NSSA must be submitted no
later than February 15 prior to the control period for which the NSSA allowances
are requested.
c)
Applications for the purchase of Subpart W extras must be submitted no later than
30 days after the Agency posts on its website that such allowances are available
for sale.
d)
Applications for the purchase of ERCs must be submitted within the time period
specified by the Agency on its website.
e)
Once an application to purchase NO
x
allowances is reviewed and deemed
complete, the Agency shall notify the account representative of the number of
allowances it may purchase by the dates specified on the Agency's website. The
Agency may reject an incomplete application or an application received after the
application deadline. For applications that include requests exceeding the
maximum number of allowances for which the source is eligible to purchase, the
Agency will limit the number of allowances that the account representative is
eligible to purchase to a number less than or equal to the maximum number for
which the source is eligible.
f)
ERCs, Subpart W extras and allowances from the NSSA will be sold in a pro-rata
basis to eligible sources. In the event that ERCs, Subpart W extras or allowances
from the NSSA cannot be sold on a pro-rata basis to eligible sources, then the
Agency will determine eligibility by randomly selecting one or more sources that
did not receive the full number of allowances approved by the Agency.
g)
Adjustments:
1)
If an account representative disagrees with the Agency's calculations of
the number of allowances it is eligible to purchase, it may submit a written
comment to the Agency explaining the reason for its disagreement and any
necessary documentation no later than:
A)
By March 25 prior to the applicable control period for allowances
from the NSSA.
B)
Within 40 days after the application deadline for Subpart W extras.
C)
By the date specified for ERCs by the Agency on its website.
2)
The Agency will respond in writing to comments, make any necessary and
appropriate adjustments to its proposed allotments and send a notification
of final allotments no later than:
A)
April 7 prior to the applicable control period for allowances from
NSSA.
B)
Within 54 days after the application deadline for Subpart W extras.
C)
By the date specified by the Agency on its website for ERCs.
h)
Payment: The Agency must receive a certified check for the NO
x
allowances from
the account representative by the deadline specified by the Agency in the
notification of the final allotments pursuant to subsections (f) and (g)(2) of this
Section. The check must be sent to the attention of the Compliance Unit, Bureau
of Air, Illinois EPA, 1021 North Grand Avenue East, P.O. Box 19276,
Springfield, Illinois 62794-9276. The date specified shall be at least eight
business days after the date of the notification of the final allotment.
i)
If the opportunity to purchase allowances is forfeited due to nonpayment, the
Agency will notify the account representative that the source's opportunity to
purchase has been forfeited. The Agency will also notify the remaining eligible
EGUs or Non-EGUs whose original request it was unable to meet that additional
allowances are available for purchase. The Agency will offer forfeited Subpart W
extras, ERCs, and allowances from the NSSA to eligible purchasers on a pro-rata
basis. In the event that the forfeited allowances cannot be sold on a pro-rata basis
to eligible purchasers, then the Agency will determine eligibility by randomly
selecting one or more sources that did not receive the full number of allowances
approved by the Agency until all such allowances are sold. All forfeited
allowance purchase transactions must be completed by the dates specified by the
Agency in the notification to eligible purchasers or on the Agency's website.
j)
The minimum sale allowed under the NO
x
budget trading program shall be one
NO
x
allowance.
k)
Official Record of Transactions: The official record of all NO
x
allowance
transactions shall be USEPA's NO
x
Allowance Tracking System. Any
discrepancies found by the authorized account representative shall be reported
pursuant to the applicable procedures in 40 CFR 96.
Section 273.150 Price of NSSA and Subpart W Extras
The selling price for allowances from the NSSA pursuant to 35 Ill. Adm. Code 217.768(k)(2)
and Subpart W extras will be the average price at which NO
x
allowances are traded in the NO
x
Interstate Trading Program for the preceding control period as follows:
a)
The Agency will obtain the published market price indices by Cantor
Environmental Brokerage and Evolution Markets LLC, or similarly recognized
brokerage firms, for the particular allowance vintage as of 15½ months prior to
the applicable control period (i.e., January 15 of the year previous to the current
control period).
b)
The Agency will calculate the arithmetic mean of the two prices determined
pursuant to subsection (a) of this Section, and the resulting number will be the
purchase price. The purchase price shall be published on the Agency's website,
along with the market indices used to calculate the purchase price.
c)
If one or both of these services or a similarly recognized brokerage service fails to
publish a price for the applicable date, the Agency may use any reasonable
indication of market price.
Section 273.160 Price of ERCs
The selling price for ERCs shall be $2,000 per allowance.
Section 273.170 Disbursement of Proceeds of NSSA Sales
a)
After the Agency has recouped the reasonable costs incurred by the Agency in the
administration of the NO
x
Interstate Trading Program, it shall disburse the
proceeds of the sale of the NO
x
allowances from the NSSA, to the extent that
proceeds remain, pro-rata to the owners or operators of the EGUs or Non-EGUs,
as applicable, that received allowances from the Agency but not from the
Agency's NSSA for EGUs or Non-EGUs.
b)
The Agency shall annually notify each eligible source of the Agency's calculation
of the source's pro-rata share of the proceeds from the sale of allowances from the
NSSA, if applicable, and shall post this information on the Agency's website. The
Agency shall allow at least five business days for sources to provide written
comments and shall provide a brief response to comments on the Agency's
website. Once an allocation of proceeds has been made, it is final and there will
be no adjustments.