Section R18-2-404. Offset Standards

A.      Increased emissions by a major source or major modification subject to R18-2-403 shall be offset by real reductions in the actual emissions of each pollutant for which the area has been designated as nonattainment and for which the source or mod- ification is classified as major. Except as provided in R18-2- 405, emissions increases shall be offset by decreases at a ratio of at least 1 to 1.

B.       Except as provided in subsection (B)(1) or (2), for sources and modifications subject to this Section, the baseline for deter- mining credit for emissions reductions is the emissions limit for the source generating the offset credit under the applicable implementation plan in effect at the time the application for a permit or permit revision is filed.

1.        The offset baseline shall be the actual emissions of the source from which offset credit is obtained where either of the following conditions is satisfied:

a.         The demonstration of reasonable further progress and attainment of ambient air quality standards is based upon the actual emissions of sources located within a designated nonattainment area for which the preconstruction review program was adopted.

Department of Environmental Quality – Air Pollution Control

b.        The applicable implementation plan does not con- tain an emissions limitation for that source or source category.

2.        Where the emissions limit under the applicable imple- mentation plan allows greater emissions than the poten- tial to emit of the source, emissions offset credit will be allowed only for control below this potential.

C.      For an existing fuel combustion source, emissions offset credit shall be based on the allowable emissions under the applicable implementation plan for the type of fuel being burned at the time the application to construct is filed. If the existing source commits to switch to a cleaner fuel at some future date, emis- sions offset credit based on the allowable or actual emissions for the fuels involved is not acceptable, unless the permit for the existing source is conditioned to require the use of a speci- fied alternative control measure which would achieve the same degree of emissions reduction should the source switch back to a fuel generating higher emissions. The owner or operator of the existing source must demonstrate that adequate long-term supplies of the new fuel are available before granting emis- sions offset credit for fuel switches.

D.      Offset Credit for Shutdowns.

1.        Emissions reductions achieved by shutting down an exist- ing emission unit or curtailing production or operating hours may be credited for offsets if they meet both of the following conditions.

a.         The reductions are surplus, permanent, quantifiable, and federally enforceable.

b.        The shutdown or curtailment occurred after the last day of the base year for the SIP planning process. For purposes of this subsection, the Director may choose to consider a prior shutdown or curtailment to have occurred after the last day of the base year if the projected emissions inventory used to develop the attainment demonstration explicitly includes the emissions from such previously shutdown or cur- tailed emission units. However, in no event may credit be given for shutdowns that occurred before August 7, 1977.

2.        Emissions reductions achieved by shutting down an exist- ing emissions unit or curtailing production or operating hours and that do not meet the requirements in subsection (D)(1)(b) may be credited only if one of the following conditions is satisfied:

a.         The shutdown or curtailment occurred on or after the date the construction permit application is filed.

b.        The applicant can establish that the proposed new emissions unit is a replacement for the shutdown or curtailed emissions unit, and the emissions reduc- tions achieved by the shutdown or curtailment met the requirements of subsection (D)(1)(a).

E.       No emissions credit may be allowed for replacing one hydro- carbon compound with another of lesser reactivity, except for those compounds listed in Table 1 of EPA’s “Recommended Policy on Control of Volatile Organic Compounds,” 42 FR 35314 (July 8, 1977).

F.       All emission reductions claimed as offset credits shall be fed- erally enforceable by the time a permit is issued to the owner or operator of the major source subject to this Section and shall be in effect by the time the new or modified source subject to the permit commences operation.

G.      The owner or operator of a major source or major modification subject to this Section must obtain offset credits from the same source or from other sources in the same nonattainment area, except that the Director may allow the owner or operator to

obtain offset credits from another nonattainment area if both of the following conditions are satisfied:

1.        The other area has an equal or higher nonattainment clas- sification than the area in which the source is located.

2.        Emissions from such other area contribute to a violation of the national ambient air quality standard in the nonat- tainment area in which the source is located.

H.      Credit for an emissions reduction can be claimed to the extent that the Director has not relied on it in issuing any permit under this Article or the state has not relied on it in a demon- stration of attainment or reasonable further progress.

I.        The total tonnage of increased emissions, in tons per year, resulting from a major modification that must be offset under this Section shall be determined by summing the difference between the allowable emissions after the modification and the actual emissions before the modification for each emissions unit.

J.        In ozone nonattainment areas classified as marginal, total emissions of VOC and oxides of nitrogen from other sources shall offset those proposed or permitted from the major source or major modification by a ratio of at least 1.10 to 1. In ozone nonattainment areas classified as moderate, total emissions of VOC and oxides of nitrogen from other sources shall offset those proposed or permitted from the major source or major modification by a ratio of at least 1.15 to 1. New major sources and major modifications in serious and severe ozone nonat- tainment areas shall comply with this Section and R18-2-405.

Historical Note

Former Section R9-3-404 repealed, new Section R9-3- 404 adopted effective May 14, 1979 (Supp. 79-1).

Amended by adding subsection (C) effective September 22, 1983 (Supp. 83-5). Former Section R9-3-404 renum- bered without change as Section R18-2-404 (Supp. 87-3). Amended subsection (C) effective December 1, 1988 (Supp. 88-4). Section R18-2-404 renumbered to R18-2- 604, new Section R18-2-404 adopted effective November 15, 1993 (Supp. 93-4). Amended effective February 28,

1995 (Supp. 95-1). Amended by final rulemaking at 5

A.A.R. 4074, effective September 22, 1999 (Supp. 99-3). Amended by final rulemaking at 8 A.A.R. 1815, effective

March 18, 2002 (Supp. 02-1). Amended by final

rulemaking at 18 A.A.R. 1542, effective August 7, 2012

(Supp. 12-2).