§ 95485. Demonstrating Compliance.
17 CA ADC § 95485Barclays Official California Code of Regulations
17 CCR § 95485
§ 95485. Demonstrating Compliance.
ComplianceObligation = DeficitsGenerated + DeficitsCarriedOver CreditBalance = (CreditsGenerated + CreditsAcquired + CreditsReleased + CreditsCarriedOver) - (CreditsRetired + CreditsSold + CreditsOnHold + CreditsCCMPledge + CreditsAdjustments)
where:
DeficitsGenerated are the deficits generated pursuant to sections 95486 and 95489 in the current compliance period;
DeficitsCarriedOver are the deficits carried over from the previous compliance period and not deferred pursuant to section 95485(c);
CreditsGenerated are the credits generated pursuant to sections 95486 and 95489 in the current compliance period;
CreditsAquired are the credits purchased or otherwise acquired in the current compliance period, including carryback credits acquired pursuant to section 95486;
CreditsReleased are the credits released from the hold due to enforcement or administrative action;
CreditsCarriedOver are the credits carried over from the previous compliance period;
CreditsRetired are the credits retired within the LCFS in the current compliance period;
CreditsSold are the credits sold or otherwise transferred in the current compliance period;
CreditsOnHold are the credits placed on hold due to enforcement or administrative action. While on hold these credits cannot be used for meeting an annual compliance obligation;
CreditsCCMPledge are the credits pledged for the Credit Clearance Market and withheld from the ongoing LCFS market; and
CreditsAdjustments are the credits adjusted or invalidated due to administrative or enforcement action.
(B) If no Credit Clearance Market occurs, the Executive Officer will record any entity's unmet compliance obligation, and the fuel reporting entity will be deemed in compliance for that year, provided that it has retired all credits in its account, and retires credits equivalent to the Accumulated Deficits, with interest as explained in section 95485(c)(5) below, within five years.
(A) Clearance Market Period. The Clearance Market, if one occurs, will operate from June 1st to August 30th. A fuel reporting entity subject to section 95485(c)(1) must acquire credits pledged into the Credit Clearance Market to be retired toward compliance in the previous compliance year. Credits acquired for this purpose are defined as “Clearance Market” credits.
(C) A regulated entity that participates in the Credit Clearance Market for two consecutive years must submit a Compliance Plan to CARB, by August 31st of that second consecutive year, detailing its plan to obtain sufficient credits to meet future annual compliance obligations within a five-year period.
2. Compliance Plan Approval. The Executive Officer shall approve each submitted compliance plan if it meets the requirements of section 95485(c)(2)(C) paragraph 1. If the Executive Officer determines that the requirements for approval have not been met, the Executive Officer will notify the regulated entity of which specific requirements of section 95485(c)(2)(C) paragraph 1 have not been met. The regulated entity must then submit additional information to correct deficiencies identified by the Executive Officer. If the regulated entity is unable to correct any deficiencies found with their plan within 45 days of the Executive Officer's receipt of the original plan, the plan will be denied on that basis, and the regulated entity will be informed in writing. At any point during the evaluation process, the Executive Officer may request in writing additional information or clarification from the regulated entity.
3. Compliance Plan Implementation Reporting. In addition to other reports required to be submitted by this subarticle, entities required to submit compliance plans must submit annual compliance plan implementation reports that clearly demonstrate actions taken and progress made to comply with the approved plan. The regulated entity must disclose and explain any deviations from the submitted plan in their compliance plan implementation report and identify the actions that will be taken to correct these deviations.
(D) Entities required to acquire credits in the Credit Clearance Market must complete payment to the seller before the credit transfer is initiated, unless the buyer and seller agree on other payment terms. All credit transfers must be completed on or before the final date of the Clearance Market Period.
(A) Call for Credits. On the first Monday in April, the Executive Officer shall issue to all fuel reporting entities and credit generators a call for credits to be pledged for sale in the Clearance Market. When calling for credits, the Executive Officer will inform fuel reporting entities of that year's Maximum Price for Credits as determined in section 95487(a)(2)(D).
(C) Advanced Credits. If, for any compliance year, insufficient credits are pledged for sale into the Credit Clearance Market to fully clear outstanding deficits, the Executive Officer shall issue credits equal to the difference between the number of outstanding deficits and the number of credits pledged for sale in the Credit Clearance Market subject to the following:
1. Advanced credits will be issued to eligible Large IOUs and Large POUs that opt into the LCFS and are eligible to receive base credits per section 95483(c)(1)(A). Advanced credits will be allocated to eligible utilities based on their prorata share of base credits received in the most recent issuance. Advanced credits must be pledged for sale in the current Credit Clearance Market and may only be sold at the maximum LCFS price per section 95487(a)(2)(D). A minimum portion of proceeds generated from the sale of advanced credits must be allocated using the 2023 and onward contribution percentages found in section 95483(c)(1)(A) paragraph 1. to the Clean Fuel Reward program.
4. Adjusting Future Issuance of Base Credits. After the six-year advanced credit window is closed, total base credits issued every year will be adjusted downwards to account for advanced credits as per the following schedule. Base credit adjustment for each EDU will be pro-rated based on their share of total advanced credits received. Annual adjustments will be spread equally across each quarter.
Year | Percent of total advanced credits |
---|---|
Year 7 | 5% |
Year 8 | 10% |
Year 9 | 20% |
Year 10 | 30% |
Year 11 | 35% |
where:
Year n refers to the nth year from the first year the advanced credits were issued. For example, if the first advanced credits are issued in 2021, marking year 1, then the first year that base credit issuance will be adjusted would be 2027.
(E) Eligibility to Sell. Only fuel reporting entities that demonstrated compliance pursuant to section 95485(a) for the prior year can pledge credits for sale into the Clearance Market. Fuel reporting entities that have an Accumulated Deficit obligation cannot pledge credits for sale into the Clearance Market.
Fuel reporting entity A's pro-rata share =
where:
deficit refers to one fuel reporting entity's obligation for the compliance year that has not been met pursuant to section 95485(a);
total deficits refers to the sum of all fuel reporting entities' obligations for the compliance year that have not been met pursuant to section 95485(a); and
pledged credits means the sum of all credits pledged pursuant to section 95485(c)(3).
(C) Submission of Amended Annual Compliance Reports. Fuel reporting entities that purchased credits in the Clearance Market must submit to the Executive Officer an Amended Annual Compliance Report by August 31st that accounts for the acquisition and retirement of their pro-rata share of Clearance Market credits, and for all deficits carried over as Accumulated Deficits.
(A) Compound Interest on Accumulated Deficits. Fuel reporting entities with an Accumulated Deficit will be charged interest to be applied annually to all deficits in a fuel reporting entity's account. Interest will be applied on Accumulated Deficit from previous compliance years in terms of additional deficits that must be retired pursuant to section 95485(c)(1)(A) at a rate of 5 percent annually, applied on each September 1st.
(C) Restrictions on the Repayment of Accumulated Deficits. Fuel reporting entities may repay Accumulated Deficits as part of a subsequent annual report. However, no repayment of any Accumulated Deficits is allowed unless the fuel reporting entity meets 100 percent of its current compliance obligation.
Credits
Note: Authority cited: Sections 38510, 38530, 38560, 38560.5, 38571, 38580, 39600, 39601 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 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).
History
1. New section filed 1-12-2010; operative 1-12-2010 pursuant to Government Code section 11343.4 (Register 2010, No. 3).
2. Amendment of subsections (a)-(a)(1) and (a)(3)(C) filed 11-26-2012; operative 11-26-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 48).
3. Repealer and new section filed 11-16-2015; operative 1-1-2016 (Register 2015, No. 47).
4. Editorial correction of subsection (b)(2) (Register 2019, No. 1).
5. Amendment filed 1-4-2019; operative 1-4-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 1).
6. Amendment of subsections within subsection (c) filed 5-27-2020; operative 7-1-2020 (Register 2020, No. 22).
This database is current through 6/14/24 Register 2024, No. 24.
Cal. Admin. Code tit. 17, § 95485, 17 CA ADC § 95485
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