Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The Executive Officer shall issue
Executive Orders (Surplus Reduction Certificates) which establish and quantify,
to the nearest pound of VOC reduced, any Surplus Reductions achieved by a
responsible ACP party operating under an ACP. The Surplus Reductions can be
bought from, sold to, or transferred to a responsible ACP party operating under
an ACP, as provided in subsection (b) of this section. All Surplus Reductions
shall be calculated by the Executive Officer at the end of each compliance
period within the time specified in the approved ACP. Surplus Reduction
Certificates shall not constitute instruments, securities, or any other form of
property.
(b) The issuance, use,
and trading of all Surplus Reductions shall be subject to the following
provisions:
(1) For the purposes of this
article, VOC reductions from sources of VOCs other than consumer products
subject to the VOC standards specified in section
94509 may not be used to generate
Surplus Reductions;
(2) Surplus
Reductions are valid only when generated by a responsible ACP party, and only
while that responsible ACP party is operating under an approved ACP;
(3) Surplus Reductions are valid only after
the Executive Officer has issued an Executive Order pursuant to subsection (a)
of this section.
(4) Any Surplus
Reductions issued by the Executive Officer may be used by the responsible ACP
party who generated the surplus until the reductions expire, are traded, or
until the ACP is cancelled pursuant to section
94551;
(5) Surplus Reductions cannot be applied
retroactively to any compliance period prior to the compliance period in which
the reductions were generated;
(6)
Except as provided in subsection (b)(7)(B) of this section, only small or
one-product businesses selling products under an approved ACP may purchase
Surplus Reductions. An increase in the size of a small business or one-product
business shall have no effect on Surplus Reductions purchased by that business
prior to the date of the increase.
(7) While valid, Surplus Reductions can be
used only for the following purposes:
(A) to
adjust either the ACP Emissions of either the responsible ACP party who
generated the reductions or the responsible ACP party to which the reductions
were traded, provided the Surplus Reductions are not to be used by any
responsible ACP party to further lower its ACP Emissions when its ACP Emissions
are equal to or less than the ACP Limit during the applicable compliance
period; or
(B) to be traded for the
purpose of reconciling another responsible ACP party's shortfalls, provided
such reconciliation is part of the reconciliation of shortfalls plan approved
by the Executive Officer pursuant to section
94543(a)(7)(J).
(8) A valid Surplus Reduction shall be in
effect starting five (5) days after the date of issuance by the Executive
Officer, for a continuous period equal to the number of days in the compliance
period during which the Surplus Reduction was generated. The Surplus Reduction
shall then expire at the end of its effective period.
(9) At least five (5) working days prior to
the effective date of transfer of Surplus Reductions, both the responsible ACP
party which is selling Surplus Reductions and the responsible ACP party which
is buying the Surplus Reductions shall, either together or separately, notify
the Executive Officer in writing of the transfer. The notification shall
include all of the following:
(A) the date the
transfer is to become effective;
(B) the date the Surplus Reductions being
traded are due to expire;
(C) the
amount (in pounds of VOCs) of Surplus Reductions that are being
transferred;
(D) the total purchase
price paid by the buyer for the Surplus Reductions;
(E) the contact persons, names of the
companies, street and mail addresses, and phone numbers of the responsible ACP
parties involved in the trading of the Surplus Reductions;
(F) a copy of the Executive Officer-issued
Surplus Reductions Certificate, signed by both the seller and buyer of the
certificate, showing transfer of all or a specified portion of the Surplus
Reductions. The copy shall show the amount of any remaining non-traded Surplus
Reductions, if applicable, and shall show their expiration date. The copy shall
indicate that both the buyer and seller of the Surplus Reductions fully
understand the conditions and limitations placed upon the transfer of the
Surplus Reductions and accept full responsibility for the appropriate use of
such Surplus Reductions as provided in this section.
(10) Beginning on January 1, 2024, in order
to generate surplus reductions, a product with a VOC Standard under section
94509(a) that
falls within the ranges in Table 94547(b)(10) 'Column A' may not exceed the
corresponding percent of that standard identified in Table 94547(b)(10) 'Column
B'.
Table 94547(b)(10)
| Column
A | Column B |
| 20% < VOC Standard < 100% | 97% |
| 1% < VOC Standard < 20% | 95% |
| VOC Standard < 1% | 90% |
(c) Limited-Use Surplus Reduction Credits for
Early Reformulations of ACP Products
(1) For
the purposes of this subsection (c), "early reformulation" means a
reformulation of an ACP product which results in a reduction in the product's
VOC Content, and which occurs during the one-year (365 day) period immediately
prior to the date on which the application for a proposed ACP is submitted to
the Executive Officer. "Early reformulation" does not include any reformulation
which occurs more than one year prior to the date on which the ACP application
is submitted to the Executive Officer.
(2) If requested in the application for a
proposed ACP, the Executive Officer shall, upon approval of the ACP, issue
Surplus Reduction Credits for early reformulation(s) of ACP product(s),
provided that all of the following documentation has been provided by the
responsible ACP party to the satisfaction of the Executive Officer:
(A) accurate documentation showing that the
early reformulation(s) reduced the VOC content of the ACP product(s) to a level
which is below the Pre-ACP VOC content of the product(s), or below the
applicable VOC standard(s) specified in section
94509, whichever is the lesser of
the two;
(B) accurate documentation
demonstrating that the early reformulated ACP product(s) was sold in California
retail outlets within the time period specified in subsection (c)(1);
(C) accurate sales records for the early
reformulated ACP product(s) which meet the definition of "Enforceable Sales
Records" in section
94542(a)(11), and
which demonstrate that the Enforceable Sales for the ACP product(s) are at
least 75.0% of the Gross California Sales for the product(s), as specified in
section 94543(a)(4);
(D) accurate documentation for the early
reformulated ACP product(s) which meets the requirements specified in sections
94543(a)(3)-(4), (a)(7)(G)-(H), and
(a)(8), and which identifies the specific
test methods for verifying the claimed early reformulation(s) and the
statistical accuracy and precision of the test methods as specified in section
94543(a)(7)(D).
(3) Surplus Reduction Credits issued pursuant
to this subsection (c) shall be calculated separately for each reformulated ACP
product by the Executive Officer according to the following equation:
|
SR = Enforceable Sales
x | ([VOC
Content]initial - [VOC
Content]final) | |
|
|
| 100 |
|
where,
SR = Surplus Reductions for the ACP product, expressed to
the nearest pound
Enforceable Sales = the Enforceable Sales for the early
reformulated ACP product, expressed to the nearest pound of ACP product,
VOC Contentinitial = the Pre-ACP
VOC content of the ACP product, or the applicable VOC standard specified in
section 94509, whichever is the lesser of
the two, expressed to the nearest 0.1 pounds of VOC per 100 pounds of ACP
product,
VOC Contentfinal = the VOC Content
of the early reformulated ACP product after the early reformulation is
achieved, expressed to the nearest 0.1 pounds of VOC per100 pounds of ACP
product.
(4) The use of
Surplus Reduction Credits issued pursuant to this subsection (c) shall be
subject to all of the following provisions:
(A) Surplus Reduction Credits shall be used
solely to reconcile the responsible ACP party's shortfalls, if any, generated
during the first compliance period occurring immediately after the issuance of
the Executive Order approving an ACP, and shall not be used for any other
purpose;
(B) Surplus Reduction
Credits shall not be transferred to, or used by, any other responsible ACP
party;
(C) Except as provided in
this subsection (c), Surplus Reduction Credits shall be subject to all
requirements applicable to Surplus Reductions and Surplus Trading, as specified
in subsections
94547(a) and
(b).
1. New
section filed 8-10-95; operative 9-9-95 (Register 95, No. 32).
2.
Amendment of subsections (b)(1), (b)(10), (c)(2)(A), (c)(2)(D) and (c)(3), new
subsection (c)(4)(C) and subsection relettering filed 1-8-96; operative 1-8-96
pursuant to Government Code section
11343.4(d)
(Register 96, No. 2).
3. Amendment subsection (b)(1), repealer and
new subsection (b)(10), amendment of subsections (c)(3) and (c)(4)(C) and
amendment of NOTE filed 8-1-2022; operative 8-1-2022 pursuant to Government
Code section
11343.4(b)(3)
(Register 2022, No. 31). The one year deadline in Government Code section
11346.4(b)
and the filing deadline specified in Government Code section
11349.3(a)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order
N-71-20.
Note: Authority cited: Sections
39515,
39516,
39600,
39601,
39607,
39701,
41503.5,
41511
and
41712,
Health and Safety Code. Reference: Sections
39000,
39002,
39003,
39600,
39602,
40000,
41504,
41511,
41700
and
41712,
Health and Safety Code.
