[Code of Federal Regulations]
[Title 40, Volume 14]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR73.35]

[Page 157-159]
 
                   TITLE 40--PROTECTION OF ENVIRONMENT
 
         CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)
 
PART 73--SULFUR DIOXIDE ALLOWANCE SYSTEM--Table of Contents
 
                  Subpart C--Allowance Tracking System
 
Sec. 73.35  Compliance.

    (a) Allowance transfer deadline. No allowance shall be deducted for 
purposes of compliance with an affected unit's sulfur dioxide Acid Rain 
emissions limitation requirements pursuant to title IV of the Act and 
paragraph (b) of this section unless:
    (1) The compliance use date of the allowance is no later than the 
year in which the unit's SO2 emissions occurred; and
    (2) Such allowance is:
    (i) Recorded in the unit's compliance subaccount; or
    (ii) Transferred to the unit's compliance subaccount, with the 
transfer submitted correctly pursuant to subpart D of this part for 
recordation in the compliance subaccount for the unit by not

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later than the allowance transfer deadline in the calendar year 
following the year for which compliance is being established; or
    (iii) Held in the compliance subaccount of another affected unit at 
the same source in accordance with paragraph (b)(3) of this section.
    (b) Deductions for compliance. (1) Except as provided in paragraph 
(d) of this section, following the recordation of transfers submitted 
correctly for recordation in the compliance subaccount pursuant to 
paragraph (a) of this section and subpart D of this part, the 
Administrator will deduct allowances from each affected unit's 
compliance subaccount in accordance with the allowance deduction formula 
in Sec. 72.95 of this chapter, or, for opt-in sources, the allowance 
deduction formula in Sec. 74.49 of this chapter, and any correction made 
under Sec. 72.96 of this chapter.
    (2) The Administrator will make deductions until either the number 
of allowances deducted is equal to the amount calculated in accordance 
with Sec. 72.95 of this chapter, or, for opt-in sources, in accordance 
with Sec. 74.49 of this chapter, as modified under Sec. 72.96 of this 
chapter or until no more allowances remain in the compliance subaccount.
    (3)(i) If, after the Administrator completes the deductions under 
paragraph (b)(2) of this section for all affected units at the same 
source, a unit would otherwise have excess emissions and one or more 
other affected units at the source would otherwise have unused 
allowances in their compliance subaccounts and available for such other 
units under paragraph (a)(1) and (a)(2)(i) and (ii) of this section for 
the year for which compliance is being established, the Administrator 
will notify in writing the authorized account representative. The 
Administrator will state that the authorized account representative may 
specify in writing which of such allowances to deduct up to the amount 
calculated as follows, in order to reduce the tons of excess emissions 
otherwise at the unit:

Maximum deduction from other units = 0.95 x Excess emissions if no 
    deduction from other units

    Where:
``Maximum deduction from other units'' is the maximum number of 
allowances that may be deducted for the year for which compliance is 
being established, for the unit otherwise having excess emissions, from 
the compliance subaccounts of other units at the same source, rounded to 
the nearest allowance.
``Excess emissions if no deduction from other units'' is the tons of 
excess emissions that the unit would otherwise have if no allowances 
were deducted for the unit from other units under this paragraph 
(b)(3)(i) or paragraph (b)(3)(ii) of this section.

    (ii) Notwithstanding paragraph (b)(3)(i) of this section, if the 
amount calculated results in less than 10 tons of excess emissions, the 
maximum deduction from other units shall be adjusted so that 10 tons of 
excess emissions, or the tons of excess emissions that would result if 
no allowances could be deducted from other units, whichever is less, 
remain for the unit.
    (iii) If the authorized account representative submits within 15 
days of receipt of a notification under paragraph (b)(3)(i) of this 
section a written request specifying allowances to deduct in accordance 
with paragraphs (b)(3)(i) and (ii) of this section, the Administrator 
will deduct such allowances, and reduce the tons of excess emissions 
otherwise at the unit by an equal amount, up to the amount calculated 
under paragraphs (b)(3)(i) and (ii) of this section.
    (c)(1) Identification of allowances by serial number. By no later 
than sixty days after the end of the calendar year, the authorized 
account representative for each unit account may identify by serial 
number the allowances to be deducted from the compliance subaccount for 
purposes of compliance with the unit's sulfur dioxide emissions 
limitation requirements. Such identification shall be made pursuant to 
part 72 of this chapter.
    (2) First-in, first-out. In the absence of an identification or in 
the case of a partial identification of allowances by serial number, as 
provided for in paragraph (b)(1) or (d) of this section, the 
Administrator will deduct allowances on a first-in, first-out (FIFO) 
accounting basis beginning with those allowances with the earliest 
compliance use date originally allocated for the unit

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and recorded in its compliance subaccount. Following the deduction of 
all originally allocated allowances from the compliance subaccount, the 
Administrator will deduct those allowances that were transferred and 
recorded in the unit's compliance subaccount pursuant to subpart D of 
this part, beginning with those with the earliest date of recordation.
    (d) Deductions for excess emissions. Pursuant to Sec. 77.4 of this 
chapter, and following the process of recordation set forth in 
Sec. 73.34(a) of this part, the Administrator will deduct allowances for 
each unit with excess emissions for the preceding calendar year in an 
amount equal to the unit's excess emissions tonnage.
    (e) Deductions for units sharing a common emission stack. In the 
case of units sharing a common emission stack and have emissions that 
are not individually monitored pursuant to part 75 of this chapter, the 
authorized account representative may identify the percentage of 
allowances to be deducted from each unit's compliance subaccount. Such 
identification shall be made pursuant to part 72, subpart I of this 
chapter. In the absence of an identification, the Administrator will 
deduct an equal percentage of allowances from each unit's compliance 
subaccount.

[58 FR 3691, Jan. 11, 1993, as amended at 60 FR 17114, Apr. 4, 1995; 64 
FR 25842, May 13, 1999]