(a) Eligibility. An entity that meets one or more of the following criteria may opt into the LCFS program, thereby becoming a credit generator.
(1) Opt-in Fuel Reporting Entity. An entity meeting any of the following criteria can opt into the LCFS program in a capacity of fuel reporting entity.
(A) A qualified fuel reporting entity who provides a fuel specified in section 95482(b) that meets the requirements of section 95483, wherever applicable;
(B) An out-of-state producer of oxygenate for blending with CARBOB or gasoline, or biomass-based diesel for blending with CARB diesel, who is not otherwise already subject to the LCFS regulation as an importer. An out-of-sate producer under this subsection may retain the ability to generate credits or deficits, for a specific quantity of fuel or blendstock, only if it opts in as a first fuel reporting entity and meets the requirements of section 95483, wherever applicable.
(C) An entity that is in the distribution/marketing chain of imported fuel and is positioned on that chain between the producer in subsection (B) above and the importer (“intermediate entity”). The intermediate entity is subject to the following requirements.
The intermediate entity must provide written documentation demonstrating all the following requirements to the Executive Officer's written satisfaction before opting into the LCFS:
1. The entity received ownership of the fuel for which the entity is claiming to generate LCFS credits;
2. Either:
a. The entity received the fuel reporting entity status from a producer that opted in under section 95483.1; or
b. The producer did not opt in under section 95483.1(a)(1).
3. The entity actually delivered the fuel or caused the fuel to be delivered to California for use in California;
The fuel delivered under subsection 3. is shown to have been sold for use in California or was otherwise actually used in California; and
4. The entity is not otherwise already subject to the LCFS regulation as a fuel reporting entity.
5. The demonstrations in paragraphs 1. through 4. above must be made for the specific quantity of fuel upon which the entity first elects to opt into the LCFS. For subsequent quantities of fuel for which the entity is claiming to be the fuel reporting entity pursuant to this subsection, the entity must retain documentation to support the demonstrations required in paragraphs 1. through 4., above, and must submit such documentation to the Executive Officer within 30 calendar days upon request.
(2) Project Operators. An entity that has a project approved for crediting or is applying for approval by the Executive Officer under section 95489 must apply to opt into the LCFS program as a credit generator.
(3) Clearing Service Provider.
(A) An entity providing clearing services in which it takes only a temporary possession of LCFS credits for the purpose of clearing transactions between two entities with registered accounts in LRT-CBTS, may apply to opt in as a clearing service provider if the following conditions are met:
1. The eligible entity must be a derivatives clearing organization as defined in the Commodities Exchange Act (7 U.S.C § 1a (9)) that is registered with the U.S. Commodity Futures Trading Commission pursuant to the Commodities Exchange Act (7 U.S.C. § 7a-1(a)).
2. The entity must register in the LRT-CBTS pursuant to section 95483.2(b).
3. The entity must be located in the United States, according to the registration information reported pursuant to section 95483.2(b).
(B) A clearing service provider cannot own credits but can hold LCFS credits up to five days for clearing purposes only.
(b) Opting in Procedure. The procedure for opting into and opting out of the LCFS for such a person is set forth as follows.
(1) Opting into the LCFS program becomes effective when the opt-in entity establishes an account in the LRT-CBTS, pursuant to section 95483.2. The opt-in entity may not report and generate credits and deficits based on transactions that precede the quarter in which the entity opted in.
(2) Establishing an account in the LRT-CBTS under subsection (b)(1) above means that the entity understands the requirements of the LCFS regulation and has agreed to be subject to all the requirements and provisions of the LCFS regulation.
(c) Opting Out Procedure. An opt-in entity may decide later to opt out of the LCFS program by following the following procedure:
(1) For opt-out to be effective, the opt-in entity must complete all actions specified below:
(A) Provide to the Executive Officer a 90-day notice of intent to opt out and a proposed effective opt-out date;
(B) Submit in the LRT-CBTS any outstanding quarterly fuel transactions or project reports up to the quarter in which the effective opt-out date falls and a final annual compliance report (covering the year through the opt-out date); and
(C) Identify in the 90-day notice any actions to be taken to eliminate any remaining deficits by the effective opt-out date.
(2) Opt-Out Approval. The Executive Officer shall notify the opt-in entity of the final “approval” status of the opt-out request. Any credits that remain in the opt-in entity's account at the time of the effective opt-out date shall be forfeited and the opt-in entity's account in the LRT-CBTS shall be closed.
Credits
Note: Authority cited: Sections 38510, 38530, 38560, 38560.5, 38571, 38580, 39600, 39601, 41510, 41511 and 43018, Health and Safety Code; 42 U.S.C. section 7545; and Western Oil and Gas Ass'n v. Orange County Air Pollution Control District, 14 Cal.3d 411, 121 Cal.Rptr. 249 (1975). Reference: Sections 38501, 38510, 39515, 39516, 38571, 38580, 39000, 39001, 39002, 39003, 39515, 39516, 41510, 41511 and 43000, Health and Safety Code; Section 25000.5, Public Resources Code; and Western Oil and Gas Ass'n v. Orange County Air Pollution Control District, 14 Cal.3d 411, 121 Cal.Rptr. 249 (1975).
