(a) Method of generation.
  (1) Mobile discrete emission reduction credits (MDERCs) may be generated by any mobile source emission reduction strategy that creates actual mobile source emission reductions under this division, and is subject to the approval of the executive director. The number of years that an emissions reduction strategy can be used to generate MDERCs is limited by the expected remaining useful life of the mobile source except if a capture and control system is used to reduce marine or locomotive mobile source emissions.
  (2) MDERCs may not be generated from the following strategies:
    (A) that portion of reductions funded through a state or federal program, unless specifically allowed under that program;
    (B) through the transfer of emissions from one mobile source to another mobile source within the same nonattainment area and under common ownership or control; or
    (C) reduction strategies resulting in secondary emissions increases that exceed limits established under state or federal rules or regulations.
(b) MDERC baseline emissions.
  (1) Mobile source baseline emissions must be calculated with either measured emissions of an appropriately sized sample for the participating mobile sources using a United States Environmental Protection Agency (EPA)-approved test procedure, or estimated emissions of the participating mobile sources using the most recent edition of the EPA on-road or non-road mobile emissions factor model or other model as applicable.
  (2) The historical adjusted emissions and state implementation plan (SIP) emissions must only include actual emissions that occurred when the mobile source was operating inside a specific nonattainment area.
  (3) The activity data used to calculate mobile source's historical adjusted emissions must be from any two consecutive calendar years from the five consecutive years immediately before the emissions reduction occurs unless detailed operational records are available for more than five years. If these detailed operational records are available and do not demonstrate decreasing use due to vehicle age or inoperability, the historical adjusted emissions for a mobile source may be determined from two consecutive calendar years up to six to ten consecutive years immediately before the emissions reduction is achieved.
  (4) For a mobile source in existence less than 24 months or not having two complete calendar years of activity data, a shorter period of not less than 12 months may be approved by the executive director.
  (5) Baseline emissions for quantifying MDERCs should include, but not be limited to, the following information and data as appropriate:
    (A) the emission standard to which the mobile source is subject or the emission performance standard to which the mobile source is certified;
    (B) the estimated or measured in-use emissions levels per unit of use from all significant mobile source emissions sources;
    (C) the number of mobile sources in the participating group;
    (D) the type or types of mobile sources by model year; and
    (E) the actual activity level, hours of operation, or miles traveled by type and model year.
(c) MDERC calculation. The quantity of MDERCs must be calculated from the annual difference between the mobile source baseline emissions and the strategy emissions. The MDERC must be based on actual in-use emissions of the modified or substitute mobile source.
  (1) For mobile sources generating credits from a shutdown, the amount of MDERCs generated will be reduced by 15% or 0.1 ton, whichever is greater.
  (2) The amount of MDERCs generated will be adjusted to account for the quality of the data used to quantify the emissions. The reduction will be 15% or 0.1 ton, whichever is greater, for records supporting approved alternative methods according to §101.372(e)(1)(E) of this title (relating to General Provisions).
  (3) If the mobile source is subject to an adjustment based on both the reduction strategy being a shutdown and the quality of the data used to quantify the emissions, the total combined reduction will be 20% or 0.1 ton, whichever is greater.
  (4) If a capture and control system is used to reduce mobile source emissions, the strategy emissions used in the MDERC calculation must include the mobile source emissions that are not captured by the system, any emissions that are not controlled by the system, and any emissions caused by or as a result of operating and moving the system. The initial owner of the MDERCs is the owner or operator of the capture and control system.
(d) Emission offsets. Mobile source reduction strategies that reduce emissions in one criteria pollutant or precursor for which an area is designated as nonattainment or near nonattainment, yet result in an emissions increase from the same mobile source in another criteria pollutant or precursor for which that same area is nonattainment or near nonattainment, must be offset at a 1:1 ratio with discrete emission reduction credits or MERCs.
(e) MDERC certification.
  (1) A designated application form signed by an authorized account representative must be submitted to the executive director no later than 90 days after the end of the generation period, or no later than 90 days after the completion of each 12 months of generation.
  (2) MDERCs will be determined and certified in accordance with §101.372(e) of this title using:
    (A) EPA methodologies, when available;
    (B) actual monitoring results, when available;
    (C) calculations using the most current EPA mobile emissions factor model or other model as applicable; or
    (D) calculations using creditable emission reduction measurement or estimation methodologies that satisfactorily address the analytical uncertainties of mobile source emissions reduction strategies. The generator shall collect relevant data sufficient to characterize the process emissions of the affected pollutant and the process activity level for all representative phases of source operation during the period under which the MDERCs are created or used.
  (3) An application for MDERCs must include, but is not limited to, a completed application form signed by an authorized account representative, along with the following information for each pollutant reduced for each mobile source:
    (A) the date of the reduction;
    (B) a complete description of the generation activity;
    (C) the amount of discrete mobile source emission credits generated;
    (D) documentation, including records for approved or approvable methods to quantify emissions, supporting the mobile source baseline activity, mobile source baseline emission rate, mobile source baseline emissions, and the mobile source strategy emissions;
    (E) a complete description of the protocol used to calculate the discrete mobile source emission reduction generated;
    (F) the actual calculations performed by the generator to determine the amount of discrete mobile source emission credits generated; and
    (G) a demonstration that the reductions are surplus to all local, state, and federal rules and to emissions modeled in the SIP.

Source Note: The provisions of this §101.374 adopted to be effective January 17, 2003, 28 TexReg 83; amended to be effective December 2, 2004, 29 TexReg 11038; amended to be effective October 12, 2017, 42 TexReg 5441