(a) Requirements to use discrete emission credits. Discrete emission credits may be used if the following requirements are met.
  (1) The user shall have ownership of a sufficient amount of discrete emission credits before the use period for which the specific discrete emission credits are to be used.
  (2) The user shall hold sufficient discrete emission credits to cover the user's compliance obligation at all times.
  (3) The user shall acquire additional discrete emission credits during the use period if it is determined the user does not possess enough discrete emission credits to cover the entire use period. The user shall acquire additional credits as allowed under this section prior to the shortfall, or be in violation of this section.
  (4) The user may acquire and use only discrete emission credits listed in the registry.
  (5) The user shall obtain executive director approval to use nitrogen oxides (NOX ) discrete emission reduction credits (DERCs) in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties as provided by subsection (f) of this section.
  (6) A discrete emission credit may not be used unless it is available in the account for the site where it will be used.
(b) Use of discrete emission credits. With the exception of uses prohibited in subsection (c) of this section or precluded by a commission order or a condition within an authorization under the same commission account number, discrete emission credits may be used to meet or demonstrate compliance with any facility or mobile regulatory requirement including the following:
  (1) to exceed any allowable emission level, if the following conditions are met:
    (A) in ozone nonattainment areas, permitted facilities may use discrete emission credits to exceed permit allowables by no more than 10 tons for NOX or 5 tons for volatile organic compounds in a 12-month period as approved by the executive director. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested; or
    (B) at permitted facilities in counties or portions of counties designated as attainment or, attainment/unclassifiable, or unclassifiable, discrete emission credits may be used to exceed permit allowables by values not to exceed the prevention of significant deterioration significance levels as provided in 40 Code of Federal Regulations (CFR) §52.21(b)(23), as approved by the executive director before use. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested;
  (2) as new source review (NSR) permit offsets, if the following requirements are met:
    (A) the user shall obtain the executive director's approval prior to the use of specific discrete emission credits to cover, at a minimum, one year of operation of the new or modified facility in the NSR permit;
    (B) the amount of discrete emission credits needed for NSR offsets equals the quantity of tons needed to achieve the maximum allowable emission level set in the user's NSR permit. The user shall also purchase and retire enough discrete emission credits to meet the offset ratio requirement in the user's ozone nonattainment area. The user shall purchase and retire either the environmental contribution of 10% or the offset ratio, whichever is higher; and
    (C) the user shall submit a completed application form specified by the executive director at least 90 days before the start of operation and at least 90 days before continuing operation for any period in which discrete emission credits not included in a prior application will be used as offsets;
  (3) to comply with the Mass Emissions Cap and Trade Program requirements as provided by §101.356(h) of this title (relating to Allowance Banking and Trading); or
  (4) to comply with Chapter 115 or 117 of this title (relating to Control of Air Pollution from Volatile Organic Compounds; and Control of Air Pollution from Nitrogen Compounds), as allowed.
(c) Discrete emission credit use prohibitions. A discrete emission credit may not be used under this division:
  (1) before it has been acquired by the user;
  (2) for netting to avoid the applicability of federal and state NSR requirements;
  (3) to meet (as codified in 42 United States Code (USC), Federal Clean Air Act (FCAA)) requirements for:
    (A) new source performance standards under FCAA, §111 (42 USC, §7411);
    (B) lowest achievable emission rate standards under FCAA, §173(a)(2) (42 USC, §7503(a)(2));
    (C) best available control technology standards under FCAA, §165(a)(4) (42 USC, §7475(a)(4)) or Texas Health and Safety Code, §382.0518(b)(1);
    (D) hazardous air pollutants standards under FCAA, §112 (42 USC, §7412), including the requirements for maximum achievable control technology;
    (E) standards for solid waste combustion under FCAA, §129 (42 USC, §7429);
    (F) requirements for a vehicle inspection and maintenance program under FCAA, §182(b)(4) or (c)(3) (42 USC, §7511a(b)(4) or (c)(3));
    (G) ozone control standards set under FCAA, §183(e) and (f) (42 USC, §7511b(e) and (f));
    (H) clean-fueled vehicle requirements under FCAA, §246 (42 USC, §7586);
    (I) motor vehicle emissions standards under FCAA, §202 (42 USC, §7521);
    (J) standards for non-road vehicles under FCAA, §213 (42 USC, §7547);
    (K) requirements for reformulated gasoline under FCAA, §211(k) (42 USC, §7545); or
    (L) requirements for Reid vapor pressure standards under FCAA, §211(h) and (i) (42 USC, §7545(h) and (i));
  (4) to allow an emissions increase of an air contaminant above a level authorized in a permit or other authorization that exceeds the limitations of §106.261 or §106.262 of this title (relating to Facilities (Emission Limitations); and Facilities (Emission and Distance Limitations)) except as approved by the executive director and the United States Environmental Protection Agency (EPA). This paragraph does not apply to limit the use of discrete emission credits in lieu of allowances under §101.356 of this title;
  (5) to authorize a facility whose emissions are enforceably limited to below applicable major source threshold levels, as defined in §122.10 of this title (relating to General Definitions), to operate with actual emissions above those levels without triggering applicable requirements that would otherwise be triggered by such major source status;
  (6) to exceed an allowable emission level where the exceedance would cause or contribute to a condition of air pollution as determined by the executive director; or
  (7) in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties, if the NOX DERC usage requested exceeds the limit specified in subsection (f) of this section.
(d) Notice of intent to use.
  (1) A completed application form specified by the executive director, signed by an authorized representative of the applicant, must be submitted to the executive director in accordance with the following requirements.
    (A) Discrete emission credits may be used only after the applicant has submitted the notice and received executive director approval.
    (B) The application must be submitted:
      (i) except as provided in subsection (f)(4) of this section, for NOX DERC use in Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties, by August 1 before the beginning of the calendar year in which the DERCs are intended for use;
      (ii) for use for the Mass Emissions Cap and Trade Program in accordance with §101.356 of this title, by October 1 of the control period in which the DERC are intended for use; or
      (iii) for use for NSR offsets, as required by subsection (b)(2)(C) of this section; or
      (iv) for all other use, at least 45 days before the first day of the use period if the discrete emission credits were generated from a facility, 90 days if the discrete emission credits were generated from a mobile source, and every 12 months thereafter for each subsequent year if the use period exceeds 12 months.
    (C) A copy of the application must also be sent to the federal land manager 30 days prior to use if the user is located within 100 kilometers of a Class I area, as listed in 40 CFR Part 81 (2001).
Cont'd...