(1) The CO₂ allowances, other than CO₂ offset allowances, are of allocation years that fall within a prior control period the same control period or the same interim control period for which the allowances will be deducted.

(2) The CO₂ allowances are held in the CO₂ budget source's compliance account as of the CO₂ allowance transfer deadline for that control period or interim control period or are transferred into the compliance account by a CO₂ allowance transfer correctly submitted for recordation under section 242-7.1 of this Part by the CO₂ allowance transfer deadline for that control period or interim control period.

(3) For CO₂ offset allowances, the number of CO₂ offset allowances that are available to be deducted in order for a CO₂ budget source to comply with the CO₂ requirements under section 242-1.5(c) of this Part for a control period or interim control period may not exceed 3.3 percent of the CO₂ budget source's CO₂ emissions for that control period, or of 0.50 times the CO₂ budget source’s CO₂ emissions for an interim control period, as determined in accordance with this Subpart and Subpart 242-8 of this Part.

(4) The CO₂ allowances are not necessary for deductions for excess emissions for a prior control period under subdivision (d) of this section.

(1) until the amount of CO₂ allowances deducted equals the number of tons of total CO₂ emissions less the CO₂ allowances deducted to meet the requirements of section 242-1.5(c)(2) of this Part with respect to the previous two interim control periods, or 0.50 times the number of tons of total CO₂ emissions for an interim control period, less any CO₂ emissions attributable to the burning of eligible biomass, determined in accordance with Subpart 242-8 of this Part from all CO₂ budget units at the CO₂ budget source for the control period or interim control period; or

(2) if there are insufficient CO₂ allowances to complete the deductions in paragraph (1) of this subdivision, until no more CO₂ allowances available under subdivision (a) of this section remain in the compliance account.

(1) The CO₂ authorized account representative for a source's compliance account may request that specific CO₂ allowances, identified by serial number, in the compliance account be deducted for emissions or excess emissions for a control period or interim control period in accordance with subdivision (b) or (d) of this section. Such identification shall be made in the compliance certification report submitted in accordance with section 242-4.1 of this Part.

(2) The department or its agent will deduct CO₂ allowances for a control period or interim control period from the CO₂ budget source's compliance account, in the absence of an identification or in the case of a partial identification of available CO₂ allowances by serial number under paragraph (1) of this subdivision, in the following order:

(1) After making the deductions for compliance under subdivision (b) of this section, the department or its agent will deduct from the CO₂ budget source's compliance account a number of CO₂ allowances, from allocation years that occur after the control period in which the source has excess emissions, equal to three times the number of the source's excess emissions. In the event that a source has insufficient CO₂ allowances to cover three times the number of the source's excess emissions, the source shall be required to immediately transfer sufficient allowances into its compliance account. No CO₂ offset allowances may be deducted to account for the source's excess emissions.

(2) Any CO₂ allowance deduction required under paragraph (1) of this subdivision shall not affect the liability of the owners and operators of the CO₂ budget source or the CO₂ units at the source for any fine, penalty, or assessment, or their obligation to comply with any other remedy, for the same violation, as ordered under applicable State law. The following guidelines will be followed in assessing fines, penalties or other obligations.

(3) The propriety of the department's determination that a CO₂ budget source had excess emissions and the concomitant deduction of CO₂ allowances from that CO₂ budget source's account may be later challenged in the context of the initial administrative enforcement, or any civil or criminal judicial action arising from or encompassing that excess emissions violation. The commencement or pendency of any administrative enforcement, or civil or criminal judicial action arising from or encompassing that excess emissions violation will not act to prevent the department or its agent from initially deducting the CO₂ allowances resulting from the department's original determination that the relevant CO₂ budget source has had excess emissions. Should the department's determination of the existence or extent of the CO₂ budget source's excess emissions be revised either by a settlement or final conclusion of any administrative or judicial action, the department will act as follows.

(1) The department may review and conduct independent audits concerning any submission under the CO₂ Budget Trading Program and make appropriate adjustments of the information in the submissions.

(2) The department may deduct CO₂ allowances from or transfer CO₂ allowances to a source's compliance account based on information in the submissions, as adjusted under paragraph (1) of this subdivision.