Oklahoma DEQ Proposes Emissions Reduction Credits Program

On June 15, 2026, the Oklahoma Department of Environmental Quality (DEQ) announced their plans to propose adding a new subchapter to the Oklahoma Administrative Code Air Pollution Control chapter (OAC 252:100-10) to establish a voluntary ozone precursor trading program associated with the existing Prevention of Significant Deterioration (PSD) program. In addition, the minor source (OAC 252:100-7) and major source (OAC 252:100-8) subchapters would be revised to support the proposed new subchapter.

The proposed trading program, known as the Emissions Reduction Credits (ERC) Program, would allow planned PSD projects to claim off-site emission offsets to reduce their proposed emission increases. The program is intended to encourage economic development while improving air quality within the local airshed affected by the planned PSD project.

How Would the ERC Program Work?

An ERC is a documented reduction in actual emissions that is permanent, verifiable, and federally enforceable. ERC generators are owners or operators of facilities that obtain a New Source Review (NSR) permit and create ERCs in accordance with proposed OAC 252:100-10. ERC users are owners or operators of facilities that acquire and use ERCs as part of a permitting action to offset project-related emission increases. The purpose of these offsets is to improve local air quality by reducing emissions within the local airshed relative to the pre-project baseline.

The ERC program may only be used for reductions in nitrogen oxides (NO_X) or volatile organic compounds (VOC), and credits may only be used to offset emissions of the same pollutant (e.g., NO_X credits may not be used to offset VOC emissions). ERCs may be used to offset emissions from PSD projects that would otherwise exceed a primary or secondary National Ambient Air Quality Standard (NAAQS).

ERCs may be generated through the issuance of an NSR construction permit where the following requirements are met:

• The ERC must be permanent, verifiable, and federally enforceable.
• The ERC must represent actual emissions based on baseline actual emissions, as defined in OAC 252:100-8-31, and must be:
  • Generated from existing emission units that have been operating for at least 24 months; or
  • Based on all units with NO_X or VOC emissions during any consecutive 24-month period within the five years immediately preceding submission of the ERC generation permit application. The average emission rate must include all fugitive, startup, shutdown, and malfunction emissions while excluding any noncompliant emissions resulting from operation above a legally enforceable emission limitation. The selected 24-month period may differ by pollutant.
• The ERC must be surplus at the time of generation and use.
• The ERC must be generated by a facility located in Oklahoma.
• The facility is not operating under a Plantwide Applicability Limit (PAL).
• The ERC must be generated by permanently shutting down a facility or by adopting a NO_X or VOC limit that results in a permanent reduction of emissions. Emissions reductions as a result of shifting emissions from one unit to another, an applicable federal rule, or an enforcement action are not eligible as ERCs.
• If the facility operates under a Title V permit, the construction permit application must meet the requirements of OAC 252:100-8-5(d) and the construction permit must undergo Tier II or Tier III public review.
• If the facility operates under an individual minor source Federally Enforceable State Operating Permit (FESOP), the construction permit application must meet the requirements of OAC 252:100-7-15(c) and the construction permit must undergo Tier II or Tier III public review.
• The generating facility must have been in operation for more than 24 months before submission of the ERC generation permit application.

ERCs may be used through the issuance of an administratively complete PSD construction permit application where the following requirements are met:

• The PSD project is to be located in an area that is in attainment for the relevant pollutant to be offset.
• The PSD construction permit application requests to offset air quality impacts using ERCs with documentation that the applicable ERCs have been acquired.
• The PSD construction permit application shall demonstrate the use of the Lowest Achievable Emission Rate (LAER) for each pollutant to be offset from new or modified emission units.
• The PSD project is to be located within 100 miles of the ERC-generating facility as determined by the distance between each facility’s center point. DEQ may grant exceptions to this requirement on a case-by-case basis given reasonable justification backed by air modeling, weather patterns, or other methods.
• The ERCs offset all project emission increases for a new major stationary source or new major modification to an existing source such that 110% of the project emissions are covered by ERCs. The ERC user must extinguish the extra 10% of project emission increases to ensure an improvement to the local airshed’s air quality.
• The PSD construction permit application must undergo Tier II or Tier III public review.

ERCs that are certified and approved by DEQ are added to a common registry of generated ERCs available for purchase. ERCs will expire five years after the date of creation unless the ERC is included in an administratively complete application for a PSD construction permit submitted no later than five years after the date of ERC creation. ERC users shall notify DEQ within thirty days of acquiring ERCs so that the registry may be updated. ERC users must notify DEQ in writing when actions and/or dates, as dictated by the PSD permit, have taken place such that the ERCs may be extinguished. DEQ will update the registry once the ERCs have been extinguished.

What’s Next?

Written comments may be submitted via email to [email protected]. Though the agenda has not been set at this time, we expect that oral comments may be heard at the next Air Quality Advisory Council (AQAC) meeting. The meeting will be held on December 9, 2026 from 9:30AM to 12PM at the 707 N Robinson Ave, 1^st Floor Multipurpose Room, Oklahoma City, OK 73102. If the AQAC recommends adoption, the rule will be proposed to the Environmental Quality Board (EQB). If passed by the EQB, the rule will pass to the state legislature for approval before the governor provides their final ruling.

If you have any questions or need assistance planning your upcoming projects as a result of the ERC program, please contact the Trinity Oklahoma Office or call 918.622.7111.