Maricopa County Air Quality Department (MCAQD) is currently revising language for Rule 204 (Emission Offsets Generated by Voluntary Mobile Source Emission Reduction Credits) and Rule 205 (Emission Reduction Credit (ERC) Generation, Certification, and Use). MCAQD has drafted these rules for approval into the Arizona State Implementation Plan (SIP) as part of the state’s effort to address the moderate ozone nonattainment area in Maricopa County. In the Clean Air Act (CAA) under the New Source Review program, it is required for any area in nonattainment of ozone to implement an emission offset program. The U.S. Environmental Protection Agency (EPA) had requested MCAQD to revise the prior language of Rule 204 to address this CAA requirement. Prior to revisions, limited ways to generate emission reduction credits existed in Rule 204 and the added revisions would provide additional avenues for emission reduction credits. The EPA must approve of the revisions to the rules before credits can be issued in Maricopa County for programs detailed in the revised sections.
Emission Reduction Credit Explanation
Emission Reduction Credits and Mobile Source Emission Reduction Credits (MERC) can be used to offset emissions from new major sources or major modifications of existing major sources. For a new or modified source to be approved, the potential source must be offset by a greater number of emission credits. ERCs and MERCs can either be utilized by the company that has created the credit or traded and sold with other potential emitters. ERCs and MERCs provide companies with new avenues to boost revenue. These credits are generated by companies and sources when existing emission sources are modified and a saving of emissions is found. Different ways to generate ERCs and MERCs are discussed in Rule 204 and Rule 205, respectively.
Rule 204
MCAQD Rule 204 covers the creation and implementation of ERCs. Rule 204 was modified to allow for increased paths to generate ERCs in Maricopa County. Revisions to the rule were adopted into law in 2019 and submitted to the EPA as part of the Arizona SIP. Revisions at the time included creation of ERCs from non-traditional sources such as electrification of onsite equipment. The EPA recently disapproved of the revisions added to the rule. MCAQD is now in the process of editing the rule to satisfy the feedback provided by the EPA. New revisions to be added will address approvability of the onsite equipment provisions in the rule, as well as an additional option to generate ERCs through replacement or retrofit of off-road equipment (such as backhoes and bulldozers). These proposed revisions will undergo Stakeholder workshops and hearings in late Spring or early Summer 2024.
Rule 205
MCAQD Rule 205 specifically covers the creation and implementation of MERCs. The rule was created and adopted in Spring 2023 and sent to the EPA for approval at that time. Rule 205 outlines that MERCs can be generated through voluntary captive vehicle fleet replacements or retrofits. “Captive vehicle fleets” refer to vehicles that are operated in the Maricopa County nonattainment area and return to base on a daily basis (i.e. delivery trucks). Recently, the EPA reviewed the rule and determined it can be conditionally accepted into the Arizona SIP with minor revisions. With conditional acceptance of the rule by the EPA, MERCs can now be issued and can be used or generated.
Summary
With conditional acceptance of Rule 205, MERCs will now be issued by the MCAQD and be available for emission offsets. This news is exciting for operators of captive vehicle fleets as it provides an opportunity for expansion or additional revenue. If operators retrofit or modify their vehicle fleet, they will now be able to apply for MERCs from the county.
For Rule 204, revisions to the rule will be added and the rule will have to gain EPA approval before implementation of the changes. Once implemented, the rule would provide companies with new paths toward ERCs. The proposed addition of ERC generation through off-road equipment replacement and retrofitting means new industries can find supplemental methods to offset emissions from new or modified projects and facilities. MCAQD’s plans to keep the onsite equipment provisions also provides an exciting opportunity for ERC generation once the revisions are finalized.
While parts of these rules are not in effect, it is important to understand how these proposed revisions may affect future planning and projects. If you would like to discuss these updates and how they may impact your facility and any future facilities, please email Trinity’s Phoenix office or call 602.274.2900.
