Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The holding
limit is the maximum number of California GHG allowances that may be held by an
entity or jointly held by a group of entities with a direct corporate
association, as defined in section
95833, at any point in
time.
(b) Application of the
Holding Limit.
(1) The holding limit will
apply to each entity registered as a covered, opt-in covered, or voluntarily
associated entity pursuant to section
95830.
(2) The holding limit calculation will not
include allowances contained in limited use holding accounts or exchange
clearing holding accounts created pursuant to section
95831.
(3) The holding limit calculation will not
include allowances contained in Annual Allocation Holding Accounts.
(4) If the Executive Officer determines that
a reported transfer request not yet recorded into the tracking system would
result in an entity's holdings exceeding the applicable holding limit, then the
Executive Officer shall not approve the transfer request pursuant to section
95921(a)(1).
(5) If an entity is in compliance with the
current vintage holding limit on December 31 of any year and the
reclassification of future vintage allowances as current vintage allowances
pursuant to section
95920(c)(1)(C)
causes it to exceed the holding limit on January 1 of the next compliance year,
then:
(A) The accounts administrator will
inform the entity; and
(B) The
entity will have five business days to bring its account balances within the
holding limit. After that, the Executive Officer may transfer allowances in
excess of the holding limit to the Auction Holding Account for consignment to
auction pursuant to section
95910(d)(2).
(C) Allowances transferred to the Auction
Holding Account for consignment will be drawn first from the entity's Holding
Account and, if necessary, from the entity's Compliance Account. The order for
removing allowances for consignment will be the opposite of the retirement
order in section
95856(h)(1).
(6) Penalties for Holding Limit Violations.
(A) For an entity that is out of compliance
with the holding limit only as a result of the circumstances described in
section 95920(b)(5),
penalties may be applied if the entity fails to bring its account balances
under the holding limit within the five business day period allowed pursuant to
section 95920(b)(5)(B).
Otherwise, penalties may be applied whenever the holding limit is
exceeded.
(B) Penalties may be
applied if the violation of the holding limit is not discovered until after a
transfer that would exceed the holding limit is registered into the tracking
system.
(c) The
holding limit will be separately calculated to holdings of:
(1) Current Vintage Allowances. This category
of allowances consists of:
(A) Allowances
with a vintage year corresponding to the current or previous calendar
years;
(B) Allowances from any
vintage purchased from the Allowance Price Containment Reserve pursuant to
section 95913; and
(C) Allowances originally purchased at the
Advance auction but of a vintage year equal or prior to the current calendar
year; and
(D) Allowances issued by
a GHG ETS program approved by ARB pursuant to section
95941 that have no
vintage;
(2) Future
Vintage Allowances. This category of allowances consists of:
(A) Allowances that were purchased at the
Advance Auction and still have a vintage year greater than the current calendar
year; and
(B) Allowances with a
vintage year greater than the current calendar year that were obtained through
true-up allocation.
(d) The holding limit will be calculated for
allowances qualifying pursuant to section
95920(c)(1) as
the sum of:
(1) The number given by the
following formula:
Holding Limit = 0.1*Base + 0.025*(Annual Allowance
Budget - Base) In which:
"Base" equals 25 million metric tons of
CO2e.
"Annual Allowance Budget" is the number of allowances
issued for the current budget year.
(2) Limited Exemption from the Holding Limit.
(A) The limited exemption from the holding
limit (limited exemption) is the maximum number of allowances that will not be
included in the holding limit calculated pursuant to section
95920(c)(1). To
qualify for inclusion within the limited exemption, allowances must be placed
in the entity's Compliance Account. The limited exemption is available to
covered entities and opt-in covered entities but not to voluntarily associated
entities.
(B) Calculation of the
Limited Exemption for Entities Already Registered as of January 1, 2017 as
Covered Entities or Opt-in Covered Entities. The limited exemption for these
entities is the sum of the emissions contained in the most recent annual
emissions data reports that have received a positive or qualified positive
emissions data verification statement for emissions for which the entity now
has a compliance obligation pursuant to section
95851, plus the amount of
emissions in the oldest emissions report for which the entity now has a
compliance obligation, and less the amount of any annual compliance obligations
already due in the current compliance period.
(C) Calculation of the Limited Exemption for
Entities Registering as Covered Entities or Opt-in Covered Entities after
January 1, 2017. The limited exemption for an entity that registers as a
covered entity or opt-in covered entity after January 1, 2017 will be
calculated as twice the annual emissions contained in the emissions report for
the first year that the entity has a compliance obligation, provided that the
emissions data report has received a positive or qualified positive emissions
data verification statement for emissions that generate a compliance obligation
pursuant to section
95851.
(D) The limited exemption will be increased
on November 2 of each year by the amount of emissions that generate a
compliance obligation pursuant to section
95851 that are included in the
emissions data report received that year that have received a positive or
qualified positive emissions data verification statement.
(E) If ARB has assigned emissions to an
entity, for any year, in the absence of a positive or qualified positive
emissions data verification statement, the limited exemption will be calculated
using the assigned emissions. If the emission reports scheduled to be used to
increase the limited exemption are not available at the time of a scheduled
increase and ARB has not assigned emissions to the entity, the limited
exemption will be increased by the amount of the most recently received report
that has received a positive or qualified positive emissions data verification
statement. If this procedure is used, the limited exemption will not be
adjusted using data in the reports scheduled to be received that year until the
next scheduled change in the limited exemption.
(F) After ARB has evaluated an entity's
surrender of compliance instruments pursuant to section
95856, an entity's limited
exemption will be reduced to reflect any emissions obligation due during that
calendar year. Following an annual surrender deadline, the limited exemption
will be reduced by the amount of the annual surrender obligation due that
calendar year. Following a compliance period surrender deadline, the limited
exemption is reduced, starting with the oldest emissions report used to
calculate the limited exemption, by the amount of emissions contained in the
emissions reports reflecting the number of years for which a compliance
obligation was due that calendar year, including emissions carried over from a
previous compliance period pursuant to section
95853(d), but not
including any emissions already removed from the limited exemption following an
annual surrender deadline.
(G)
Allowances allocated pursuant to sections
95870(e), (f), and
(g) and sections
95871(d), (e), and
(f), which are transferred to the receiving
entity's annual allocation holding account in a year preceding their vintage
year, will not count against the Holding Limit or limited exemption until
January 1 of their vintage year.
(3) Petition to Adjust the Limited Exemption.
(A) Prior to October 1 of any year, a covered
entity may submit to the Executive Officer evidence demonstrating an increase
in emissions for that year over the previous year and request a temporary
increase in the limited exemption until verified data for that year are
available.
(B) The amount of the
increase must be at least 250,000 metric tons CO2e on an
annualized basis.
(C) The Executive
Officer will review the evidence and determine whether an adjustment is
needed.
(D) If an adjustment is
granted, then the limited exemption for that covered entity will be increased
immediately by the amount determined by the Executive officer.
(E) When the verified emissions data are
received for the year for which an adjustment was granted, the Executive
Officer will use the verified emissions value when calculating the limited
exemption.
(e)
The holding limit will be calculated separately for each vintage year for
allowances qualifying pursuant to section
95920(c)(2) as
the number given by the following formula:
Holding Limit = 0.1*Base + 0.025*(Annual Allowance
Budget - Base)
In which:
"Base" equals 25 million metric tons of
CO2e.
"Annual Allowance Budget" is the number of California
GHG allowances issued for a budget year.
(f) Application of Corporate Association
Provisions to the Holding Limit.
(1) The total
number of allowances held by a group of entities with a direct corporate
association pursuant to section
95833 must be less than or equal
to the holding limits pursuant to sections
95920(d) and
(e).
(2) Calculation of the Limited Exemption for
a Direct Corporate Association.
(A) An entity
with a direct corporate association that is not part of a consolidated account
will calculate its limited exemption as described in section
95920(d).
(B) The limited exemption for a consolidated
account is the sum of the limited exemption calculation for the entities
consolidated into the account.
(3) Entities that are part of a direct
corporate association that choose to opt out of account consolidation pursuant
to sections
95830(c)(1)(I) or
95835(a) or (b)
must allocate shares of the holding limit among themselves. This holding limit
allocation results in each entity having a specified percentage share of the
group's holding limit. The sum of the percentage shares allocated among the
entities must sum to one hundred percent.
(A)
The primary account representatives or alternate account representatives of
each of the associated entities must inform the accounts administrator of the
allocation of the holding limit when registering pursuant to section
95833.
(B) The holding limit allocation will remain
in effect until the primary account representatives or alternate account
representatives of each of the associated entities informs the accounts
administrator of subsequent changes to the allocation of the holding
limit.
(g) The
holding limit in section
95920(a) shall
include holdings of any allowances issued by a jurisdiction operating an
External GHG ETS to which California has linked pursuant to subarticle
12.
(h) The "Annual Allowance
Budget" in section
95920(d) is
calculated as the sum for the current budget year of the annual compliance
budgets of California and all External GHG ETS programs to which California has
linked pursuant to subarticle 12. The "Annual Allowance Budget" in section
95920(e) is
calculated as the sum for a budget year of the annual compliance budgets of
California and all External GHG ETS programs to which California has linked
pursuant to subarticle 12. In the event that an External GHG ETS program to
which California has linked pursuant to subarticle 12 has taken an official act
to revoke, repeal, or indefinitely suspend its ETS program or the Executive
Officer has prohibited transfer to and from that program's entities to
California entities, the "Annual Allowance Budget" in section
95920(d) is
calculated as the sum for the current budget year of the annual compliance
budgets of California and all External GHG ETS programs to which California has
linked pursuant to subarticle 12 that continue in full force and effect. ARB
will provide written notification to all California participants should a
change to the holding limit be required.
1. New
subarticle 11 (sections
95920-95922) and section filed
12-13-2011; operative 1-1-2012 pursuant to Government Code section
11343.4
(Register 2011, No. 50).
2. Change without regulatory effect
amending subsections (b)(4) and (f)(2) filed 2-15-2012 pursuant to section
100, title 1, California Code of
Regulations (Register 2012, No. 7).
3. Amendment filed 8-29-2012;
operative 9-1-2012 pursuant to Government Code section
11343.4
(Register 2012, No. 35).
4. Change without regulatory effect
renumbering former subsection (c)(1)(D) to subsection (c)(2) filed 12-6-2012
pursuant to section
100, title 1, California Code of
Regulations (Register 2012, No. 49).
5. New subsections (g) and (h)
filed 6-24-2013; operative 10-1-2013 (Register 2013, No. 26).
6.
Amendment filed 6-26-2014; operative 7-1-2014 pursuant to Government Code
section
11343.4(b)(3)
(Register 2014, No. 26).
7. Amendment of subsection (b)(2) filed
12-31-2014; operative 1-1-2015 pursuant to Government Code section
11343.4(b)(3)
(Register 2015, No. 1).
8. Amendment filed 9-18-2017; operative
10-1-2017 pursuant to Government Code section
11343.4(b)(3)
(Register 2017, No. 38).
9. Amendment of subsections (a),
(d)(2)(B)-(C), (d)(2)(G), (f)(1) and (h) filed 3-29-2019; operative 3-29-2019
pursuant to Government Code section
11343.4(b)(3)
(Register 2019, No. 13).
Note: Authority cited: Sections
38510,
38560,
38562,
38570,
38571,
38580,
39600
and
39601,
Health and Safety Code. Reference: Sections
38530,
38560.5,
38564,
38565,
38570
and
39600,
Health and Safety Code.
