July 2013

Adopt Subchapter 10 Climate Change, Article 5, Sections 95800 to 96023, 

Title 17, California Code of Regulations, to read as follows:

Article 5: CALIFORNIA CAP ON GREENHOUSE GAS EMISSIONS AND 

MARKET-BASED COMPLIANCE MECHANISMS TO ALLOW FOR THE USE

OF COMPLIANCE INSTRUMENTS ISSUED BY LINKED JURISDICTIONS

Note: Unofficial Electronic Version

The unofficial electronic version of the Regulation for the CALIFORNIA 

CAP ON GREENHOUSE GAS EMISSIONS AND MARKET-BASED 

COMPLIANCE MECHANISMS following this Disclaimer was produced by 

California AirResources Board (ARB) staff for the reader’s convenience. 

ARB staff has removed the underline-strikeout formatting however, the 

following version is not an official legal edition of title 17, California Code 

of Regulations (CCR),sections 95801-96022. While reasonable steps have 

been taken to make this unofficial version accurate, the officially published 

CCR takes precedence if there are any discrepancies. This version 

incorporates amendments that were in effect in September 2012, changes 

to some definitions that were in effect in January 2013, and the linkage with 

Quebec amendments that will be in effect starting October 1, 2013.

Subarticle 1: Table of Contents

§ 95800. Table of Contents.

SUBARTICLE 1: TABLE OF CONTENTS...........................................................1

§ 95800. TABLE OF CONTENTS. ......................................................................................................... 1

ARTICLE 5. CALIFORNIA CAP ON GREENHOUSE FAS EMISSIONS AND 

MARKET BASED COMPLIANCE MECHANISMS...............................................4

SUBARTICLE 2: PURPOSE AND DEFINITIONS................................................4

§ 95801. PURPOSE........................................................................................................................... 4

§ 95802. DEFINITIONS....................................................................................................................... 4

SUBARTICLE 3: APPLICABILITY.....................................................................50

§ 95810. COVERED GASES. ............................................................................................................ 50

§ 95811. COVERED ENTITIES. ......................................................................................................... 50

§ 95812. INCLUSION THRESHOLDS FOR COVERED ENTITIES. ............................................................ 52

§ 95813. OPT-IN COVERED ENTITIES............................................................................................... 54

§ 95814. VOLUNTARILY ASSOCIATED ENTITIES AND OTHER REGISTERED PARTICIPANTS. .................. 55

SUBARTICLE 4: COMPLIANCE INSTRUMENTS.............................................56

§ 95820. COMPLIANCE INSTRUMENTS ISSUED BY THE AIR RESOURCES BOARD. ................................ 56

§ 95821. COMPLIANCE INSTRUMENTS ISSUED BY APPROVED PROGRAMS.......................................... 57
2

SUBARTICLE 5: REGISTRATION AND ACCOUNTS.......................................58

§ 95830. REGISTRATION WITH ARB................................................................................................. 58

§ 95831. ACCOUNT TYPES.............................................................................................................. 61

§ 95832. DESIGNATION OF REPRESENTATIVES AND AGENTS............................................................. 65

§ 95833. DISCLOSURE OF CORPORATE ASSOCIATIONS. ................................................................... 70

§ 95834. KNOW-YOUR CUSTOMER REQUIREMENTS. ........................................................................ 76

SUBARTICLE 6: CALIFORNIA GREENHOUSE GAS ALLOWANCE BUDGETS

............................................................................................................................78

§ 95840. COMPLIANCE PERIODS. .................................................................................................... 78

§ 95841. ANNUAL ALLOWANCE BUDGETS FOR CALENDAR YEARS 2013-2020. .................................. 78

TABLE 6-1: CALIFORNIA GHG ALLOWANCES BUDGETS...................................................................... 78

§ 95841.1 VOLUNTARY RENEWABLE ELECTRICITY. ........................................................................... 79

SUBARTICLE 7: COMPLIANCE REQUIREMENTS FOR COVERED ENTITIES

............................................................................................................................82

§ 95850. GENERAL REQUIREMENTS. ............................................................................................... 82

§ 95851. PHASE-IN OF COMPLIANCE OBLIGATION FOR COVERED ENTITIES........................................ 83

§ 95852. EMISSION CATEGORIES USED TO CALCULATE COMPLIANCE OBLIGATIONS. ......................... 84

§ 95852.1. COMPLIANCE OBLIGATIONS FOR BIOMASS-DERIVED FUELS............................................. 91

§ 95852.1.1. ELIGIBILITY REQUIREMENTS FOR BIOMASS-DERIVED FUELS. ........................................ 92

§ 95852.2. EMISSIONS WITHOUT A COMPLIANCE OBLIGATION. .......................................................... 94

§ 95853. CALCULATION OF COVERED ENTITY’S TRIENNIAL COMPLIANCE OBLIGATION........................ 96

§ 95854. QUANTITATIVE USAGE LIMIT ON DESIGNATED COMPLIANCE INSTRUMENTS—INCLUDING 

OFFSET CREDITS. ........................................................................................................................ 97

§ 95855. ANNUAL COMPLIANCE OBLIGATION.................................................................................... 98

§ 95856. TIMELY SURRENDER OF COMPLIANCE INSTRUMENTS BY A COVERED ENTITY....................... 99

§ 95857. UNTIMELY SURRENDER OF COMPLIANCE INSTRUMENTS BY A COVERED ENTITY................. 101

§ 95858. COMPLIANCE OBLIGATION FOR UNDER-REPORTING IN A PREVIOUS COMPLIANCE PERIOD. 103

SUBARTICLE 8: DISPOSITION OF ALLOWANCES......................................105

§ 95870. DISPOSITION OF ALLOWANCES........................................................................................ 105

TABLE 8-1: INDUSTRY ASSISTANCE................................................................................................. 108

SUBARTICLE 9: DIRECT ALLOCATIONS OF CALIFORNIA GHG 

ALLOWANCES ................................................................................................111

§ 95890. GENERAL PROVISIONS FOR DIRECT ALLOCATIONS........................................................... 111

§ 95891. ALLOCATION FOR INDUSTRY ASSISTANCE. ....................................................................... 112

TABLE 9-1: PRODUCT-BASED EMISSIONS EFFICIENCY BENCHMARKS ............................................... 114

TABLE 9-2: CAP ADJUSTMENT FACTORS FOR ALLOWANCE ALLOCATION ........................................... 125

§ 95892. ALLOCATION TO ELECTRICAL DISTRIBUTION UTILITIES FOR PROTECTION OF ELECTRICITY 

RATEPAYERS. ............................................................................................................................ 126

TABLE 9-3: PERCENTAGE OF ELECTRIC SECTOR ALLOCATION ALLOCATED TO EACH UTILITY............. 129

SUBARTICLE 10: AUCTION AND SALE OF CALIFORNIA GREENHOUSE 

GAS ALLOWANCES .......................................................................................134

§ 95910. AUCTION OF CALIFORNIA GHG ALLOWANCES.................................................................. 134

§ 95911. FORMAT FOR AUCTION OF CALIFORNIA GHG ALLOWANCES. ............................................ 136

§ 95912. AUCTION ADMINISTRATION AND PARTICIPANT APPLICATION.............................................. 142

§ 95913. SALE OF ALLOWANCES FROM THE ALLOWANCE PRICE CONTAINMENT RESERVE................. 147

§ 95914. AUCTION PARTICIPATION AND LIMITATIONS...................................................................... 153

SUBARTICLE 11: TRADING AND BANKING.................................................156
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§ 95920. TRADING........................................................................................................................ 156

§ 95921. CONDUCT OF TRADE. ..................................................................................................... 161

§ 95922. BANKING, EXPIRATION, AND VOLUNTARY RETIREMENT..................................................... 166

SUBARTICLE 12: LINKAGE TO EXTERNAL GREENHOUSE GAS EMISSIONS 

TRADING SYSTEMS .......................................................................................167

§ 95940. GENERAL REQUIREMENTS. ............................................................................................. 167

§ 95941. PROCEDURES FOR APPROVAL OF EXTERNAL GHG ETS. ................................................. 168

§ 95942. INTERCHANGE OF COMPLIANCE INSTRUMENTS WITH LINKED EXTERNAL GREENHOUSE GAS 

EMISSIONS TRADING SYSTEMS. .................................................................................................. 168

§ 95943. LINKED EXTERNAL GHG ETS.......................................................................................... 169

SUBARTICLE 13: ARB OFFSET CREDITS AND REGISTRY OFFSET 

CREDITS..........................................................................................................169

§ 95970. GENERAL REQUIREMENTS FOR ARB OFFSET CREDITS. ................................................... 169

§ 95971. PROCEDURES FOR APPROVAL OF COMPLIANCE OFFSET PROTOCOLS............................... 170

§ 95972. REQUIREMENTS FOR COMPLIANCE OFFSET PROTOCOLS.................................................. 170

§ 95973. REQUIREMENTS FOR OFFSET PROJECTS USING ARB COMPLIANCE OFFSET PROTOCOLS.. 172

§ 95974. AUTHORIZED PROJECT DESIGNEE................................................................................... 173

§ 95975. LISTING OF OFFSET PROJECTS USING ARB COMPLIANCE OFFSET PROTOCOLS................ 174

§ 95976. MONITORING, REPORTING, AND RECORD RETENTION REQUIREMENTS FOR OFFSET 

PROJECTS. ................................................................................................................................ 179

§ 95977.1. REQUIREMENTS FOR OFFSET VERIFICATION SERVICES. ................................................ 186

§ 95977.2. ADDITIONAL PROJECT SPECIFIC REQUIREMENTS FOR OFFSET VERIFICATION SERVICES. 204

§ 95978. OFFSET VERIFIER AND VERIFICATION BODY ACCREDITATION............................................ 205

§ 95979. CONFLICT OF INTEREST REQUIREMENTS FOR VERIFICATION BODIES FOR VERIFICATION OF 

OFFSET PROJECT DATA REPORTS. ............................................................................................. 205

§ 95980. ISSUANCE OF REGISTRY OFFSET CREDITS....................................................................... 214

§ 95980.1. PROCESS FOR ISSUANCE OF REGISTRY OFFSET CREDITS. ............................................ 215

§ 95981. ISSUANCE OF ARB OFFSET CREDITS. ............................................................................. 216

§ 95981.1. PROCESS FOR ISSUANCE OF ARB OFFSET CREDITS..................................................... 218

§ 95982. REGISTRATION OF ARB OFFSET CREDITS. ...................................................................... 220

§ 95983. FORESTRY OFFSET REVERSALS...................................................................................... 221

§ 95984. OWNERSHIP AND TRANSFERABILITY OF ARB OFFSET CREDITS. ....................................... 224

§ 95986. EXECUTIVE OFFICER APPROVAL REQUIREMENTS FOR OFFSET PROJECT REGISTRIES. ...... 237

§ 95987. OFFSET PROJECT REGISTRY REQUIREMENTS.................................................................. 243

§95988. RECORD RETENTION REQUIREMENTS FOR OFFSET PROJECT REGISTRIES......................... 249

SUBARTICLE 14: RECOGNITION OF COMPLIANCE INSTRUMENTS FROM 

OTHER PROGRAMS .......................................................................................249

§ 95990. RECOGNITION OF EARLY ACTION OFFSET CREDITS.......................................................... 249

§ 95991. SECTOR-BASED OFFSET CREDITS. ................................................................................. 272

§ 95992. PROCEDURES FOR APPROVAL OF SECTOR-BASED CREDITING PROGRAMS. ...................... 272

§ 95994. REQUIREMENTS FOR SECTOR-BASED OFFSET CREDITING PROGRAMS. ............................ 273

§ 95995. QUANTITATIVE USAGE LIMIT............................................................................................ 274

SUBARTICLE 15: ENFORCEMENT AND PENALTIES ..................................274

§ 96010. JURISDICTION................................................................................................................. 274

§ 96011. AUTHORITY TO SUSPEND, REVOKE, OR MODIFY............................................................... 275

§ 96012. INJUNCTIONS.................................................................................................................. 275

§ 96013. PENALTIES..................................................................................................................... 276

§ 96014. VIOLATIONS.................................................................................................................... 276

SUBARTICLE 16: OTHER PROVISIONS........................................................277
4

§ 96020. SEVERABILITY, EFFECT OF JUDICIAL ORDER.................................................................... 277

§ 96021. CONFIDENTIALITY. .......................................................................................................... 277

§ 96022. JURISDICTION OF CALIFORNIA. ........................................................................................ 278

Article 5. California Cap on Greenhouse Gas Emissions and 

Market Based Compliance Mechanisms 

Subarticle 2: Purpose and Definitions

§ 95801. Purpose.

The purpose of this article is to reduce emissions of greenhouse gases 

associated with entities identified in this article through the establishment, 

administration, and enforcement of the California Greenhouse Gas Cap-andTrade Program by applying an aggregate greenhouse gas allowance budget on 

covered entities and providing a trading mechanism for compliance instruments. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95802. Definitions.

(a) Definitions. For the purposes of this article, the following definitions shall 

apply:

(1) “Account Viewing Agent” means an individual authorized by a 

registered entity to view all the information on the entity’s accounts 

contained in the tracking system.

(2) “Accounts Administrator” means the entity acting in the capacity to 

administer the accounts identified in this regulation. This may be ARB, 

or could be an entity ARB enters into a contract with.

(3) “Activity-Shifting Leakage” means increased GHG emissions or 

decreased GHG removals that result from the displacement of 

activities or resources from inside the offset project’s boundary to 
5

locations outside the offset project’s boundary as a result of the offset 

project activity.

(4) “Additional” means, in the context of offset credits, greenhouse gas 

emission reductions or removals that exceed any greenhouse gas 

reduction or removals otherwise required by law, regulation or legally 

binding mandate, and that exceed any greenhouse gas reductions or 

removals that would otherwise occur in a conservative business-asusual scenario.

(5) "Adjusted Clinker and Mineral Additives Produced" means annual 

amount of clinker and mineral additives (limestone and gypsum) 

derived by using the following metric: Adjusted clinker and mineral 

additives produced = clinker produced x (1 + (limestone and gypsum 

consumed)/clinker consumed)).

(6) “Adverse Offset Verification Statement” means an Offset Verification 

Statement rendered by a verification body attesting that the verification 

body cannot say with reasonable assurance that the submitted Offset 

Project Data Report is free of an offset material misstatement, or that it

cannot attest that the Offset Project Data Report conforms to the 

requirements of this article or applicable Compliance Offset Protocol.

(7) “Air Dried Ton of Paper” means paper with 6 percent moisture content.

(8) “Allowance” means a limited tradable authorization to emit up to one 

metric ton of carbon dioxide equivalent.

(9) “Alternate Account Representative” means an individual designated 

pursuant to section 95832 to take actions on an entity’s accounts.

(10) “Annual Allowance Budget” means the number of California 

Greenhouse Gas Allowances associated with one year of the Cap-andTrade Program in subarticle 6. 

(11) "API Gravity" means a scale used to reflect the specific gravity (SG) of 

a fluid such as crude oil, water, or natural gas. The API gravity is

calculated as [(141.5/SG) - 131.5], where SG is the specific gravity of 

the fluid at 60°F, where API refers to the American Petroleum Institute.
6

(12) “ARB Offset Credit” means a tradable compliance instrument issued by 

ARB that represents a GHG reduction or GHG removal enhancement 

of one metric ton of CO2e. The GHG reduction or GHG removal 

enhancement must be real, additional, quantifiable, permanent, 

verifiable, and enforceable.

(13) "Asphalt" means a dark brown-to-black, cement-like material obtained 

by petroleum processing and containing bitumens as the predominant 

component. It includes crude asphalt as well as the following finished 

products: cements, fluxes, the asphalt content of emulsions (exclusive 

of water), and petroleum distillates blended with asphalt to make 

cutback asphalts.

(14) “Asset Controlling Supplier” means any entity that owns or operates 

inter-connected electricity generating facilities or serves as an 

exclusive marketer for these facilities even though it does not own 

them, and is assigned a supplier-specific identification number and 

system emission factor by ARB for the wholesale electricity procured 

from its system and imported into California. 

(15) “Assigned Emissions” or “Assigned Emissions Level” means an 

amount of emissions, in CO2e, assigned to the reporting entity by the 

Executive Officer under the requirements of section 95103(g) of MRR.

(16) “Associated Gas” or “Produced Gas” means a natural gas that is 

produced in association with the production of crude oil.

(17) “Auction” means the process of selling California Greenhouse Gas 

Allowances, along with allowances from External Greenhouse Gas 

Emissions Trading Systems with which California has linked its Capand-Trade Program pursuant to subarticle 12, by offering them up for 

bid, taking bids, and then distributing the allowances to winning 

bidders.

(18) “Auction Purchase Limit” means the limit on the number of allowances 

one entity or a group of affiliated entities may purchase from the share 

of allowances sold at a quarterly auction.
7

(19) “Auction Reserve Price” means a price for allowances below which 

bids at auction would not be accepted.

(20) “Auction Settlement Price” means the price announced by the Auction 

Administrator at the conclusion of each quarterly auction. It is the price 

which all successful bidders will pay for their allowances and also the 

price to be paid to those entities which consigned allowances to the 

auction.

(21) “Authorized Project Designee” means an entity authorized by an Offset 

Project Operator to act on behalf of the Offset Project Operator.

(22) "Aviation Gasoline" means a complex mixture of volatile hydrocarbons, 

with or without additives, suitably blended to be used in aviation 

reciprocating engines. Specifications are as stated in MRR, section 

95102(a).

(23) “Balancing Authority” means the responsible entity that integrates 

resource plans ahead of time, maintains load-interchange-generation 

balance within a balancing authority area, and supports 

interconnection frequency in real time.

(24) “Balancing Authority Area” means the collection of generation, 

transmission, and loads within the metered boundaries of a balancing 

authority. A balancing authority maintains load-resource balance 

within this area.

(25) “Banking” means the holding of compliance instruments from one 

compliance period for the purpose of sale or surrender in a future 

compliance period.

(26) "Barrel of Oil Equivalent," with respect to reporting of oil and gas 

production, means barrels of crude oil produced, plus associated gas 

produced converted to barrels at 5.8 MMbtu per barrel.

(27) “Biodiesel” means a diesel fuel substitute produced from nonpetroleum 

renewable resources that meet the registration requirements for fuels 

and fuel additives established by the U.S. Environmental Protection 
8

Agency under section 211 of the Clean Air Act. It includes biodiesel 

that is all of the following:

(A) Registered as a motor vehicle fuel or fuel additive under 40 CFR 

Part 79;

(B) A mono-alkyl ester;

(C) Meets American Society for Testing and Material designation 

ASTM D 6751-08 (Standard Specification for Biodiesel Fuel 

Blendstock (B100) for Middle Distillate Fuels, 2008);

(D) Intended for use in engines that are designated to run on 

conventional diesel fuel; and

(E) Derived from nonpetroleum renewable resources.

(28) “Biogas” means gas that is produced from the breakdown of organic 

material in the absence of oxygen. Biogas is produced in processes 

including anaerobic digestion, anaerobic decomposition, and 

thermochemical decomposition. These processes are applied to 

biodegradable biomass materials, such as manure, sewage, municipal 

solid waste, green waste, and waste from energy crops, to produce 

landfill gas, digester gas, and other forms of biogas.

(29) “Biomass” means non-fossilized and biodegradable organic material 

originating from plants, animals, and microorganisms, including 

products, by-products, residues, and waste from agriculture, forestry, 

and related industries as well as the non-fossilized and biodegradable 

organic fractions of industrial and municipal wastes, including gases 

and liquids recovered from the decomposition of non-fossilized and 

biodegradable organic material. For the purpose of this article, 

biomass includes both California Renewable Portfolio Standard (RPS) 

eligible and non-eligible biomass as defined by the California Energy 

Commission.

(30) "Biomass-Derived Fuels” or “Biomass Fuels” or “Biofuels” means fuels 

derived from biomass.
9

(31) “Biomethane” means biogas that meets pipeline quality natural gas 

standards.

(32) “Blendstocks” are petroleum products used for blending or 

compounding into finished motor gasoline. These include RBOB 

(reformulated blendstock for oxygenate blending) and CBOB 

(conventional blendstock for oxygenate blending), but exclude 

oxygenates, butane, and pentanes plus.

(33) “Budget Year” means the annual allowance budget assigned pursuant 

to subarticle 6.

(34) “Business-as-Usual Scenario” means the set of conditions reasonably 

expected to occur within the offset project boundary in the absence of 

the financial incentives provided by offset credits, taking into account 

all current laws and regulations, as well as current economic and 

technological trends.

(35) "Calcium Ammonium Nitrate Solution" means calcium nitrate that 

contains ammonium nitrate and water. Calcium ammonium nitrate 

solution is generally used as agricultural fertilizer.

(36) “Calendar Year” means the time period from January 1 through 

December 31.

(37) “California Balancing Authority” shall have the same meaning ascribed 

in section 95102(a) of MRR.

(38) “California Electricity Transmission and Distribution System” means the 

combination of the entire infrastructure within California that delivers

electric power from electric generating facilities to end users over 

single or multiple paths.

(39) “California Greenhouse Gas Emissions Allowance” or “CA GHG 

Allowance” means an allowance issued by ARB and equal to up to one 

metric ton of CO2 equivalent.

(40) “Cap” means the total number of California GHG Allowances that the 

Executive Officer issues over a given period of time.

(41) “Cap-and-Trade Program” means the requirements of this article.
10

(42) “Carbon Dioxide” or “CO2” means the most common of the primary 

greenhouse gases, consisting on a molecular level of a single carbon 

atom and two oxygen atoms.

(43) “Carbon Dioxide Equivalent" or “CO2 equivalent” or “CO2e” means the 

number of metric tons of CO2 emissions with the same global warming 

potential as one metric ton of another greenhouse gas. Global 

warming potential values shall be determined consistent with the 

definition of Carbon Dioxide Equivalent in MRR section 95102(a).

(44) “Carbon Stock” means the quantity of carbon contained in an identified 

GHG reservoir.

(45) “Carbon Dioxide Supplier” or “CO2 Supplier” means (a) facilities with 

production process units located in the State of California that capture 

a CO2 stream for purposes of supplying CO2 for commercial 

applications or that capture the CO2 stream in order to utilize it for 

geologic sequestration where capture refers to the initial separation 

and removal of CO2 from a manufacturing process or any other 

process, (b) facilities with CO2 production wells located in the State of 

California that extract or produce a CO2 stream for purposes of 

supplying CO2 for commercial applications or that extract a CO2 stream 

in order to utilize it for geologic sequestration, (c) exporters (out of the 

State of California) of bulk CO2 that export CO2 for the purpose of 

geologic sequestration, (d) exporters (out of the State of California) of 

bulk CO2 that export for purposes other than geologic sequestration, 

and (e) importers (into the State of California) of bulk CO2. This source 

category is focused on upstream supply and is not intended to place 

duplicative compliance obligations on CO2 already covered upstream. 

The source category does not include transportation or distribution of 

CO2; purification, compression, or processing of CO2; or on-site use of 

CO2 captured on-site.

(46) “Carbon Dioxide Weighted Tonne” or “CO2 Weighted Tonne” or “CWT” 

means a metric created to evaluate the greenhouse gas efficiency of 
11

petroleum refineries and related processes stated in units of metric 

tons. The CWT value for an individual refinery is calculated using 

actual refinery throughput to specified process units and emission 

factors for these process units. The emission factor is denoted as the 

CWT factor and is representative of the greenhouse gas emission 

intensity at an average level of energy efficiency, for the same 

standard fuel type for each process unit for production, and for average 

process emissions of the process units across a sample of refineries. 

Each CWT factor is expressed as a value weighted relative to crude 

distillation.

(47) “Cement” means a building material that is produced by heating 

mixtures of limestone and other minerals or additives at high 

temperatures in a rotary kiln to form clinker, followed by cooling and 

grinding with blended additives. Finished cement is a powder used 

with water, sand, and gravel to make concrete and mortar.

(48) “Cogeneration” means an integrated system that produces electric 

energy and useful thermal energy for industrial, commercial, or heating 

and cooling purposes, through the sequential or simultaneous use of 

the original fuel energy. Cogeneration must involve onsite generation 

of electricity and useful thermal energy and some form of waste heat 

recovery. Some examples of cogeneration include: (a) a gas turbine or 

reciprocating engine generating electricity by combusting fuel, which 

then uses a heat recovery unit to capture useful heat from the exhaust 

stream of the turbine or engine; (b) Steam turbines generating 

electricity as a byproduct of steam generation through a fired boiler; (c) 

Cogeneration systems in which the fuel input is first applied to a 

thermal process such as a furnace and at least some of the heat 

rejected from the process is then used for power production. For the 

purposes of this article, a combined-cycle power generation unit, 

where none of the generated thermal energy is used for industrial, 

commercial, or heating and cooling purposes (these purposes exclude 
12

any thermal energy utilization that is either in support of or a part of the 

electricity generation system), is not considered a cogeneration unit.

(49) “Cold Rolling of Steel" means the changes in the structure and shape 

of steel through rolling, hammering or stretching the steel at a low 

temperature.

(50) “Cold Rolled and Annealed Steel Sheet" means steel that is cold rolled 

and then annealed. Cold rolling means the changes in the structure 

and shape of steel through rolling, hammering or stretching the steel at 

a low temperature. Annealing is a heat or thermal treatment process 

by which a previously cold-rolled steel coil is made more suitable for 

forming and bending. The steel sheet is heated to a designated 

temperature for a sufficient amount of time and then cooled.

(51) “Combustion Emissions” means greenhouse gas emissions occurring 

during the exothermic reaction of a fuel with oxygen.

(52) “Compliance Account” means an account created by the accounts 

administrator for a covered entity or opt-in covered entity with a 

compliance obligation, to which the entity transfers compliance 

instruments to meet its annual and triennial compliance obligations.

(53) “Compliance Instrument” means an allowance or offset, issued by ARB 

or by an External Greenhouse Gas Emissions Trading System to 

which California has linked its Cap-and-Trade Program pursuant to 

subarticle 12, or sector-based offset credit. Each compliance 

instrument can be used to fulfill a compliance obligation equivalent to 

up to one metric ton of CO2e.

(54) “Compliance Obligation” means the quantity of verified reported 

emissions or assigned emissions for which an entity must submit 

compliance instruments to ARB.

(55) “Compliance Offset Protocol” means an offset protocol adopted by the 

Board.

(56) “Compliance Period” means the three-year period for which the 

compliance obligation is calculated for covered entities except for the 
13

first compliance period. The compliance obligation for the first 

compliance period only considers emissions from data years of 2013 

and 2014.

(57) “Conflict of Interest” means, for purposes of this article, a situation in 

which, because of financial or other activities or relationships with other 

persons or organizations, a person or body is unable or potentially 

unable to render an impartial Offset Verification Statement of a 

potential client’s Offset Project Data Report, or the person or body’s 

objectivity in performing offset verification services is or might be 

otherwise compromised.

(58) “Conservative” means, in the context of offsets, utilizing project 

baseline assumptions, emission factors, and methodologies that are 

more likely than not to understate net GHG reductions or GHG removal 

enhancements for an offset project to address uncertainties affecting 

the calculation or measurement of GHG reductions or GHG removal 

enhancements.

(59) “Consumer Price Index for All Urban Consumers” means a measure 

that examines the changes in the price of a basket of goods and 

services purchased by urban consumers, and is published by the U.S. 

Bureau of Labor Statistics.

(60) "Container Glass Pulled" means the quantity of glass removed from 

the melting furnace in the container glass manufacturing process 

where "container glass" is defined as glass products used for 

packaging. 

(61) “Counterparty” means the opposite party in a bilateral agreement, 

contract, or transaction.

(62) “Covered Entity” means an entity within California that has one or more 

of the processes or operations and has a compliance obligation as 

specified in subarticle 7 of this regulation; and that has emitted, 

produced, imported, manufactured, or delivered in 2009 or any 
14

subsequent year more than the applicable threshold level specified in 

section 95812 (a) of this rule. 

(63) “Crediting Baseline” refers to the reduction of absolute GHG emissions 

below the business-as-usual scenario or reference level across a 

jurisdiction’s entire sector in a sector-based crediting program after the 

imposition of greenhouse gas emission reduction requirements or 

incentives.

(64) “Crediting Period” means the pre-determined period for which an offset 

project will remain eligible to be issued ARB offset credits or registry 

offset credits for verified GHG emission reductions or GHG removal 

enhancements.

(65) “Data Year” means the calendar year in which emissions occurred.

(66) “Deforestation” means direct human-induced conversion of forested 

land to non-forested land.

(67) “Delivered Electricity” means electricity that was distributed from a PSE 

and received by a PSE or electricity that was generated, transmitted,

and consumed.

(68) “Diesel Fuel” means Distillate Fuel No. 1 and Distillate Fuel No. 2, 

including dyed and non-taxed fuels.

(69) “Direct Delivery of Electricity” or “directly delivered” has the same 

meaning as ascribed to MRR section 95102(a).

(70) “Direct GHG Emission Reduction” means a GHG emission reduction 

from applicable GHG emission sources, GHG sinks, or GHG reservoirs 

that are under control of the Offset Project Operator or Authorized 

Project Designee.

(71) “Direct GHG Removal Enhancement” means a GHG removal 

enhancement from applicable GHG emission sources, GHG sinks, or 

GHG reservoirs under control of the Offset Project Operator or 

Authorized Project Designee.

(72) “Distillate Fuel No. 1” has a maximum distillation temperature of 550 F 

at the 90 percent recovery point and a minimum flash point of 100 F 
15

and includes fuels commonly known as Diesel Fuel No. 1 and Fuel Oil 

No. 1, but excludes kerosene. This fuel is further subdivided into 

categories of sulfur content: High Sulfur (greater than 500 ppm), Low 

Sulfur (less than or equal to 500 ppm and greater than 15 ppm), and 

Ultra Low Sulfur (less than or equal to 15 ppm).

(73) “Distillate Fuel No. 2” has a minimum and maximum distillation 

temperature of 540 F and 640 F at the 90 percent recovery point, 

respectively, and includes fuels commonly known as Diesel Fuel No. 2 

and Fuel Oil No. 2. This fuel is further subdivided into categories of 

sulfur content: High Sulfur (greater than 500 ppm), Low Sulfur (less 

than or equal to 500 ppm and greater than 15 ppm), and Ultra Low 

Sulfur (less than or equal to 15 ppm).

(74) “Distillate Fuel No. 4” is a distillate fuel oil made by blending distillate 

fuel oil and residual fuel oil, with a minimum flash point of 131 F.

(75) “Distillate Fuel Oil” means a classification for one of the petroleum

fractions produced in conventional distillation operations and from 

crackers and hydrotreating process units. The generic term “distillate 

fuel oil” includes kerosene, kerosene-type jet fuel, diesel fuels (Diesel 

Fuels No. 1, No. 2, and No. 4), and fuel oils (Fuel Oils No. 1, No. 2, 

and No. 4).

(76) "Dolime" is calcined dolomite.

(77) “Dry Gas” means a natural gas that is produced from gas wells not 

associated with the production of crude oil.

(78) “Early Action Offset Credit” means a tradable credit issued by an Early 

Action Offset Program that represents a GHG reduction or GHG 

removal enhancement equivalent to one metric ton of CO2e and meets 

the requirements of section 95990(c).

(79) “Early Action Offset Program” means a program that meets the 

requirements of section 95990(a) and is approved by ARB.
16

(80) “Early Action Offset Project” means an offset project that is registered 

with an Early Action Offset Program and has been issued early action 

offset credits.

(81) “Early Action Verification Report” means a verification report submitted 

to an Early Action Offset Program that covers GHG reductions or GHG 

removal enhancements achieved by an early action offset project over 

a specific time period.

(82) "Electric Arc Furnace" or "EAF" means a furnace that produces molten 

steel and heats the charge materials with electric arcs from carbon 

electrodes. Furnaces that continuously feed direct-reduced iron ore 

pellets as the primary source of iron are not affected facilities within the 

scope of this definition.

(83) “Electrical Distribution Utility(ies)” means an entity that owns and/or 

operates an electrical distribution system, including: 1) a public utility 

as defined in the Public Utilities Code section 216 (referred to as an 

Investor Owned Utility or IOU); or 2) a local publicly owned electric 

utility (POU) as defined in Public Utilities Code section 224.3 or 3) an 

Electrical Cooperative (COOP) as defined in Public Utilities Code 

section 2776, that provides electricity to retail end users in California.

(84) “Electricity Generating Facility” means a facility that generates 

electricity and includes one or more generating units at the same 

location. 

(85) “Electricity Importers” deliver imported electricity. For electricity that is 

scheduled with a NERC E-Tag to a final point of delivery inside the 

state of California, the electricity importer is identified on the NERC 

E-Tag as the purchasing-selling entity (PSE) on the last segment of the 

tag’s physical path with the point of receipt located outside the state of 

California and the point of delivery located inside the state of 

California. For facilities physically located outside the state of 

California with the first point of interconnection to a California balancing 

authority’s transmission and distribution system when the electricity is 
17

not scheduled on a NERC e-Tag, the importer is the facility operator or 

scheduling coordinator. Federal and state agencies are subject to the 

regulatory authority of ARB under this article, and include Western 

Area Power Administration (WAPA), Bonneville Power Administration 

(BPA) and California Department of Water Resources (DWR). 

(86) “Eligible Renewable Energy Resource” has the same meaning as 

defined in Section 399.12 of the Public Utilities Code.

(87) “Emissions” means the release of greenhouse gases into the 

atmosphere from sources and processes in a facility, including from 

the combustion of transportation fuels such as natural gas, petroleum 

products, and natural gas liquids. In the context of offsets, "emissions" 

means the release of greenhouse gases into the atmosphere from 

sources and processes within an offset project boundary.

(88) “Emissions Data Report” or “greenhouse gas emissions data report” or 

“report” means the report prepared by an operator or supplier each 

year and submitted by electronic means to ARB that provides the 

information required by MRR.

(89) “Emissions Efficiency Benchmark” or “GHG emissions efficiency 

benchmark” means a performance standard used to evaluate GHG 

emissions efficiency between and amongst similar facilities or 

operations in the same industrial sector.

(90) “End User” means a final purchaser of an energy product, such as 

electricity, thermal energy, or natural gas not for the purposes of 

retransmission or resale. In the context of natural gas consumption, an 

“end user” is the point to which natural gas is delivered for 

consumption.

(91) “Enforceable” means the authority for ARB to hold a particular party 

liable and to take appropriate action if any of the provisions of this 

article are violated.

(92) “Enhanced Oil Recovery” or “EOR” means the use of certain methods 

such as steam (thermal EOR), water flooding or gas injection into 
18

existing wells to increase the recovery of crude oil from a reservoir. In 

the context of this rule, EOR also applies to injection of critical phase 

carbon dioxide into a crude oil reservoir to enhance the recovery of oil.

(93) “Enterer” means an entity that imports, into California, motor vehicle 

fuel, diesel fuel, fuel ethanol, biodiesel, or non exempt biomass-derived 

fuel or renewable fuel and who is the importer of record under federal 

customs law or the owner of fuel upon import into California, if the fuel 

is not subject to federal customs law. Only enterers that import the 

fuels specified in this definition outside the bulk transfer/terminal 

system are subject to reporting under the regulation.

(94) “Entity” means a person, firm, association, organization, partnership, 

business trust, corporation, limited liability company, company, or 

government agency.

(95) “Environmental Impact Assessment” means a detailed public 

disclosure statement of potential environmental and socioeconomic 

impacts associated with a proposed project. Such disclosure is a 

matter of public record and provides detailed information to public 

agencies and the general public about the effect that a proposed 

project is likely to have on the environment and ways in which the 

significant effects of such a project might be minimized, and to indicate 

alternatives to such a project.

(96) “Executive Officer” means the Executive Officer of the California Air 

Resources Board, or his or her delegate.

(97) “Exported Electricity” shall have the same meaning ascribed in section 

95102(a) of MRR. 

(98) “External Greenhouse Gas Emissions Trading System” or “External 

GHG ETS” means an administrative system, other than the California 

Cap-and-Trade Program, that controls greenhouse gas emissions from 

sources in its program.

(99) (A) “Facility,” unless otherwise specified in relation to natural gas 

distribution facilities and onshore petroleum and natural gas 
19

production facilities as defined in section 95802(a), means any 

physical property, plant, building, structure, source, or stationary 

equipment located on one or more contiguous or adjacent 

properties in actual physical contact or separated solely by a 

public roadway or other public right-of-way and under common 

ownership or common control, that emits or may emit any 

greenhouse gas. Operators of military installations may classify 

such installations as more than a single facility based on distinct 

and independent functional groupings within contiguous military 

properties.

(B) “Facility,” with respect to natural gas distribution for the 

purposes of sections 95150 through 95158 of MRR, means the 

collection of all distribution pipelines and metering-regulating 

stations that are operated by a Local Distribution Company 

(LDC) within the State of California that is regulated as a 

separate operating company by a public utility commission or 

that are operated as an independent municipally-owned 

distribution system.

(C) “Facility,” with respect to onshore petroleum and natural gas 

production for the purposes of sections 95150 through 95158 of 

MRR, means all petroleum and natural gas equipment on a 

well-pad or associated with a well pad and CO2 EOR operations 

that are under common ownership or common control including 

leased, rented, or contracted activities by an onshore petroleum 

and natural gas production owner or operator and that are 

located in a single hydrocarbon basin as defined in section 

95102(a) of MRR. Where a person or entity owns or operates 

more than one well in a basin, then all onshore petroleum and 

natural gas production equipment associated with all wells that 

the person or entity owns or operates in the basin would be 

considered one facility.
20

(100) "Fiberglass Glass Pulled" means the quantity of glass removed from 

the melting furnace in the fiberglass manufacturing process where 

"Fiberglass" is defined as insulation products for thermal, acoustic and 

fire applications manufactured using glass.

(101) “Final Point of Delivery” means the sink specified on the NERC e-Tag, 

where defined points have been established through the NERC 

Registry. When NERC e-Tags are not used to document electricity 

deliveries, as may be the case within a balancing authority, the final 

point of delivery is the location of the load. Exported electricity is 

disaggregated by the final point of delivery on the NERC e-Tag.

(102) “First Deliverer of Electricity” or “First Deliverer” means the owner or 

operator of an electricity generating facility in California or an electricity 

importer. 

(103) “First Point of Receipt” means the generation source specified on the 

NERC e-Tag, where defined points have been established through the 

NERC Registry. When NERC e-Tags are not used to document 

electricity deliveries, as may be the case within a balancing authority, 

the first point of receipt is the location of the individual generating 

facility or unit, or group of generating facilities or units. Imported 

electricity and wheeled electricity are disaggregated by the first point of 

receipt on the NERC e-Tag.

(104) “Flash Point” of a volatile liquid is the lowest temperature at which it 

can vaporize to form an ignitable mixture in air.

(105) "Flat Glass Pulled" means the quantity of glass removed from the 

melting furnace in the flat glass manufacturing process where "flat 

glass" is defined as glass initially manufactured in a sheet form. 

(106) “Fluorinated Greenhouse Gas” means sulfur hexafluoride (SF6), 

nitrogen trifluoride (NF3), and any fluorocarbon except for controlled 

substances as defined at 40 CFR Part 82, subpart A and substances 

with vapor pressures of less than 1 mm of Hg absolute at 25 C. With 

these exceptions, “fluorinated GHG” includes any hydrofluorocarbon; 
21

any perfluorocarbon; any fully fluorinated linear, branched, or cyclic 

alkane, ether, tertiary amine, or aminoether; any perfluoropolyether; 

and any hydrofluoropolyether.

(107) “Fluting” means the center segment of corrugated shipping containers, 

being faced with linerboard (testliner/kraftliner) on both sides. Fluting 

covers mainly papers made from recycled fiber but this group also 

holds paperboard that is made from chemical and semichemical pulp.

(108) “Forest Buffer Account” means a holding account for ARB offset credits 

issued to forest offset projects. It is used as a general insurance 

mechanism against unintentional reversals, for all forest offset projects 

listed under a Compliance Offset Protocol.

(109) “Forest Owner” means the owner of any interest in the real (as 

opposed to personal) property involved in a forest offset project, 

excluding government agency third party beneficiaries of conservation 

easements. Generally, a Forest Owner is the owner in fee of the real 

property involved in a forest offset project. In some cases, one entity 

may be the owner in fee while another entity may have an interest in 

the trees or the timber on the property, in which case all entities or 

individuals with interest in the real property are collectively considered 

the Forest Owners, however, a single Forest Owner must be identified 

as the Offset Project Operator. 

(110) “Fossil Fuel” means natural gas, petroleum, coal, or any form of solid, 

liquid, or gaseous fuel derived from such material for the purpose of 

creating useful heat.

(111) “Fractionates” means the process of separating natural gas liquids into 

their constituent liquid products.

(112) “Fuel” means solid, liquid, or gaseous combustible material. Volatile 

organic compounds burned in destruction devices are not fuels unless 

they can sustain combustion without use of a pilot fuel, and such 

destruction does not result in a commercially useful end product.
22

(113) “Fuel Analytical Data” means data collected about fuel usage 

(including mass, volume, and flow rate) and fuel characteristics 

(including heating value, carbon content, and molecular weight) to 

support emissions calculation.

(114) “Fuel supplier” means a supplier of petroleum products, a supplier of 

biomass-derived transportation fuels, a supplier of natural gas, or a 

supplier of liquid petroleum gas as specified in MRR.

(115) “Fugitive Emissions” means those emissions which are unintentional 

and could not reasonably pass through a stack, chimney, vent, or other 

functionally-equivalent opening.

(116) "Galvanized Steel Sheet" means steel coated with a thin layer of zinc 

to provide corrosion resistance for such products as garbage cans, 

storage tanks, or framing for buildings. Sheet steel normally must be 

cold-rolled prior to the galvanizing stage.

(117) “Gas” means the state of matter distinguished from the solid and liquid 

states by: relatively low density and viscosity; relatively great 

expansion and contraction with changes in pressure and temperature; 

the ability to diffuse readily; and the spontaneous tendency to become 

distributed uniformly throughout any container.

(118) "Gaseous Hydrogen" means hydrogen in a gaseous state.

(119) “Geologic Sequestration” means the process of injecting CO2 captured 

from an emissions source into deep subsurface rock formations for 

long-term storage.

(120) “Global Warming Potential” or “GWP” means the ratio of the timeintegrated radiative forcing from the instantaneous release of one 

kilogram of a trace substance relative to that of one kilogram of a 

reference gas, i.e., CO2.

(121) “Greenhouse Gas” or “GHG” means carbon dioxide (CO2), methane 

(CH4), nitrogen trifluoride (NF3), nitrous oxide (N2O), sulfur hexafluoride 

(SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and other 

fluorinated greenhouse gases as defined in this section.
23

(122) “Greenhouse Gas Emission Reduction” or “GHG Emission Reduction” 

or “Greenhouse Gas Reduction” or “GHG Reduction” means a 

calculated decrease in GHG emissions relative to a project baseline 

over a specified period of time.

(123) “Greenhouse Gas Emissions Source” or “GHG Emissions Source” 

means, in the context of offset credits, any type of emitting activity that 

releases greenhouse gases into the atmosphere.

(124) “Greenhouse Gas Removal” or “GHG Removal” means the calculated 

total mass of a GHG removed from the atmosphere over a specified 

period of time.

(125) “Greenhouse Gas Removal Enhancement” or “GHG Removal 

Enhancement” means a calculated increase in GHG removals relative 

to a project baseline.

(126) “Greenhouse Gas Reservoir” or “GHG Reservoir” means a physical 

unit or component of the biosphere, geosphere, or hydrosphere with 

the capability to store, accumulate, or release a GHG removed from 

the atmosphere by a GHG sink or a GHG captured from a GHG 

emission source.

(127) “Greenhouse Gas Sink” or “GHG Sink” means a physical unit or 

process that removes a GHG from the atmosphere.

(128) “HD-5” or “Special Duty Propane” has the same meaning as contained 

in MRR.

(129) “HD-10” has the same meaning as contained in MRR.

(130) "Heavy Crude Oil" means a category of crude oil characterized by 

relatively high viscosity, a higher carbon-to-hydrogen ratio, and a 

relatively higher density having an API gravity of less than 20.

(131) “Hold” in the context of a compliance instrument, is to have the serial 

number assigned to that instrument registered into an account 

assigned to an entity that is registered into the California Cap-andTrade Program or an External Greenhouse Gas Emissions Trading 

System to which California has linked its Cap-and-Trade Program 
24

pursuant to subarticle 12, or an account under the control of the 

Executive Officer.

(132) "Horsepower Tested" means the total horsepower of all turbine and 

generator set units tested prior to sale. 

(133) "Hot Rolled Steel Sheet" means steel produced from the rolling mill 

that reduces a hot slab into a coil of specified thickness at a relatively 

high temperature.

(134) “Hydrocarbon” means a chemical compound containing predominantly 

carbon and hydrogen.

(135) “Hydrofluorocarbon” or “HFC” means a class of GHGs consisting of 

hydrogen, fluorine, and carbon.

(136) “Hydrogen” means the lightest of all gases, occurring chiefly in 

combination with oxygen in water; it exists also in acids, bases, 

alcohols, petroleum, and other hydrocarbons.

(137) “Imported Electricity” means electricity generated outside the state of 

California and delivered to serve load located inside the state of 

California. Imported electricity includes electricity delivered across 

balancing authority areas from a first point of receipt located outside 

the state of California, to the first point of delivery located inside the 

state of California, having a final point of delivery in California. 

Imported electricity includes electricity imported into California over a 

multi-jurisdictional retail provider’s transmission and distribution 

system, or electricity imported into the state of California from a facility 

or unit physically located outside the state of California with the first 

point of interconnection into a California balancing authority’s 

transmission and distribution system. Imported electricity includes 

electricity that is a result of cogeneration located outside the state of 

California. Imported electricity does not include electricity wheeled 

through California, defined pursuant to MRR section 95102(a). 

Imported electricity does not include electricity imported into the 

CAISO balancing authority area to serve retail customers that are 
25

located within the CAISO balancing authority area, but outside the 

state of California.

(138) “Initial Crediting Period” means the crediting period that begins with the 

date that the first GHG emission reductions or GHG removal 

enhancements took place according to the first Positive Offset or 

Qualified Positive Offset Verification Statement that is received by 

ARB.

(139) “Intentional Reversal” means any reversal caused by a forest owner's 

negligence, gross negligence, or willful intent, including harvesting, 

development, and harm to the area within the offset project boundary.

(140) "Intrastate Pipeline" means any pipeline wholly within the state of 

California that is not regulated as a public utility gas corporation by the 

California Public Utility Commission (CPUC), not a publicly owned 

natural gas utility and is not regulated as an interstate pipeline by the 

Federal Energy Regulatory Commission.

(141) “Interstate Pipeline” means any entity that owns or operates a natural 

gas pipeline delivering natural gas to consumers in the state and is 

subject to rate regulation by the Federal Energy Regulatory 

Commission.

(142) “Inventory Position” means a contractual agreement with the terminal 

operator for the use of the storage facilities and terminaling services for 

the fuel.

(143) “Issue” or “Issuance” means, in the context of offset credits, the 

creation of ARB offset credits or registry offset credits equivalent to the 

number of verified GHG reductions or GHG removal enhancements for 

an offset project over a specified period of time. In the context of 

allowances, issue means the placement of an allowance into an 

account under the control of the Executive Officer.

(144) “Joint Powers Agency(ies)” or “JPA” means an public agency that is 

formed and created pursuant to the provisions of Government Code 

sections 6500. et seq. 
26

(145) “Kerosene” is a light petroleum distillate with a maximum distillation 

temperature of 400 F at the 10-percent recovery point, a final 

maximum boiling point of 572 F, a minimum flash point of 100 F, and a 

maximum freezing point of -22 F. Included are No. 1-K and No. 2-K, 

distinguished by maximum sulfur content (0.04 and 0.30 percent of 

total mass, respectively), as well as all other grades of kerosene called 

range or stove oil. Kerosene does not include kerosene-type jet fuel.

(146) "Kerosene-Type Jet Fuel" means a kerosene-based product used in

commercial and military turbojet and turboprop aircraft. The product 

has a maximum distillation temperature of 400 °F at the 10 percent 

recovery point and a final maximum boiling point of 572 °F. Included 

are Jet A, Jet A–1, JP–5, and JP–8.

(147) “Lead Verifier” means, for purposes of this article, a person that has 

met all of the requirements in section 95132(b)(2) of MRR and who 

may act as the lead verifier of an offset verification team providing 

offset verification services or as a lead verifier providing an 

independent review of offset verification services rendered.

(148) “Lead Verifier Independent Reviewer” or “Independent Reviewer” 

means, for purposes of this article, a lead verifier within a verification 

body who has not participated in conducting offset verification services 

for an Offset Project Developer or Authorized Project Designee for the 

current Offset Project Data Report and who provides an independent 

review of offset verification services rendered for an Offset Project 

Developer or Authorized Project Designee as required in section 

95977.1(b)(3)(R). The independent reviewer is not required to also 

meet the requirements for a sector specific or offset project specific 

verifier.

(149) “Less Intensive Verification” means, for the purposes of this article, the 

offset verification services provided in interim years between full 

verifications of an Offset Project Data Report; less intensive verification 

of an Offset Project Data Report only requires data checks and 
27

document reviews of an Offset Project Data Report based on the 

analysis and risk assessment in the most current sampling plan 

developed as part of the most recent full offset verification services.

This level of verification may only be used if the offset verifier can 

provide findings with a reasonable level of assurance.

(150) "Light Crude Oil" means a category of crude oil characterized by 

relatively low viscosity, a lower carbon-to-hydrogen ratio, and a 

relatively lower density having an API gravity of greater than or equal 

to 20. 

(151) “Limited Use Holding Account” means an account in which allowances 

are placed after an entity qualifies for a direct allocation under section 

95890(b). Allowances placed in this account can only be removed for 

consignment to the auction pursuant to section 95831(a)(3).

(152) “Linkage” means the approval of compliance instruments from an 

external greenhouse gas emission trading system (GHG ETS) to meet 

compliance obligations under this article, and the reciprocal approval of 

compliance instruments issued by California to meet compliance 

obligation in an external GHG ETS.

(153) "Liquefied Hydrogen" means hydrogen in a liquid state.

(154) “Liquefied Petroleum Gas” or “LPG” means a flammable mixture of 

hydrocarbon gases used as a fuel. LPG is primarily mixtures of 

propane, butane, propene (propylene) and ethane. The most common 

specification categories are propane grades, HD-5, HD-10, and 

commercial grade propane. LPG also includes both odorized and nonodorized liquid petroleum gas, and is also referred to as propane.

(155) “Listed Industrial Sector” means covered industrial sectors that are 

eligible for industry assistance specified in Table 8-1 of subarticle 8.

(156) "Long-Term Contract" means a contract for the delivery of electricity 

entered into before January 1, 2006, for the term of five years or more.

(157) “Mandatory Reporting Regulation” or “MRR” means ARB’s Regulation 

for the Mandatory Reporting of Greenhouse Gas Emissions as set 
28

forth in title 17, California Code of Regulations, chapter 1, subchapter 

10, article 2 (commencing with section 95100).

(158) “Market Index” means any published index of quantities or prices 

based on results of market transactions.

(159) “Marketer” means a purchasing-selling entity that delivers electricity 

and is not a retail provider.

(160) “Market-Shifting Leakage,” in the context of an offset project, means 

increased GHG emissions or decreased GHG removals outside an 

offset project’s boundary due to the effects of an offset project on an 

established market for goods or services.

(161) “Methane” or “CH4” means a GHG consisting on the molecular level of 

a single carbon atom and four hydrogen atoms.

(162) “Metric Ton” or “MT” means a common international measurement for 

mass, equivalent to 2,204.6 pounds or 1.1 short tons.

(163) "Mixed Crude Oil" means a mix of both heavy and light crude oil.

(164) “Monitoring” means, in the context of offset projects, the ongoing 

collection and archiving of all relevant and required data for 

determining the project baseline, project emissions, and quantifying 

GHG reductions or GHG removal enhancements that are attributable 

to the offset project.

(165) "Motor Gasoline (finished)" has the same definition as MRR.

(166) “Multi-Jurisdictional Retail Provider” means a retail provider that 

provides electricity to consumers in California and in one or more other 

states in a contiguous service territory or from a common power 

system.

(167) “Municipal Solid Waste” or “MSW” means solid-phase household, 

commercial/retail, and/or institutional waste. Household waste 

includes material discarded by single and multiple residential 

dwellings, hotels, motels, and other similar permanent or temporary 

housing establishments or facilities. Commercial/retail waste includes 

material discarded by stores, offices, restaurants, warehouses, non-
29

manufacturing activities at industrial facilities, and other similar 

establishments or facilities. Institutional waste includes material 

discarded by schools, nonmedical waste discarded by hospitals, 

material discarded by non-manufacturing activities at prisons and 

government facilities, and material discarded by other similar 

establishments or facilities. Household, commercial/retail, and 

institutional wastes include yard waste, refuse-derived fuel, and motor 

vehicle maintenance materials. Insofar as there is separate collection, 

processing, and disposal of industrial source waste streams consisting 

of used oil, wood pallets, construction, renovation, and demolition 

wastes (which includes, but is not limited to, railroad ties and telephone 

poles), paper, clean wood, plastics, industrial process or manufacturing 

wastes, medical waste, motor vehicle parts or vehicle fluff, or used 

tires that do not contain hazardous waste identified or listed under 42 

U.S.C. §6921, such wastes are not municipal solid waste. However, 

such wastes qualify as municipal solid waste where they are collected 

with other municipal solid waste or are otherwise combined with other 

municipal solid waste for processing and/or disposal.

(168) “Natural Gas” means a naturally occurring mixture or process 

derivative of hydrocarbon and non-hydrocarbon gases found in 

geologic formations beneath the earth’s surface, of which its 

constituents include methane, heavier hydrocarbons, and carbon 

dioxide. Natural gas may be field quality (which varies widely) or 

pipeline quality. For the purposes of this rule, the definition of natural 

gas includes similarly constituted fuels such as field production gas, 

process gas, and fuel gas.

(169) “Natural Gas Liquids” or “NGLs”, means those hydrocarbons in natural 

gas that are separated from the gas as liquids through the process of 

absorption, condensation, adsorption, or other methods. Natural gas 

liquids can be classified according to their vapor pressures as low 

(condensate), intermediate (natural gasoline), and high (liquefied 
30

petroleum gas) vapor pressure. Generally, such liquids consist of 

ethane, propane, butanes, pentanes, and higher molecular weight 

hydrocarbons. Bulk NGLs refers to mixtures of NGLs that are sold or 

delivered as undifferentiated product from natural gas processing 

plants.

(170) “NERC E-tag” means North American Electric Reliability Corporation 

(NERC) energy tag representing transactions on the North American 

bulk electricity market scheduled to flow between or across balancing 

authority areas.

(171) "Nitric Acid" means HNO3 of 100% purity.

(172) “Non-exempt Biomass derived CO2” means CO2 emissions resulting 

from the combustion of fuel not listed under section 95852.2(a), or that 

is not verifiable under section 95131(i) of MRR.

(173) “Notice of Delegation” means a formal notice used to delegate 

authority to make an electronic submission to the accounts 

administrator. 

(174) “Offset Material Misstatement” means a discrepancy, omission,

misreporting, or aggregation of the three, identified in the course of 

offset verification services that leads an offset verification team to 

believe that an Offset Project Data Report contains errors resulting in 

an overstatement of the reported total GHG emission reductions or 

GHG removal enhancements greater than 5 percent. Discrepancies, 

omissions, or misreporting, or an aggregation of the three, that result in 

an understatement of total reported GHG emission reductions or GHG 

removal enhancements in the Offset Project Data Report is not an 

offset material misstatement.

(175) “Offset Project” means all equipment, materials, items, or actions that 

are directly related to or have an impact upon GHG reductions, project 

emissions, or GHG removal enhancements within the offset project 

boundary.
31

(176) “Offset Project Boundary” is defined by and includes all GHG emission 

sources, GHG sinks or GHG reservoirs that are affected by an offset 

project and under control of the Offset Project Operator or Authorized 

Project Designee. GHG emissions sources, GHG sinks or GHG 

reservoirs not under control of the Offset Project Operator or 

Authorized Project Designee are not included in the offset project 

boundary.

(177) “Offset Project Commencement” means, unless otherwise specified in 

a Compliance Offset Protocol, the date of the beginning of construction, 

work, or installation for an offset project involving physical construction, 

other work at an offset project site, or installation of equipment or 

materials. For an offset project that involves the implementation of a 

management activity, “offset project commencement” means, unless 

otherwise specified in a Compliance Offset Protocol, the date on which 

such activity is first implemented.

(178) “Offset Project Data Report” means the report prepared by an Offset 

Project Operator or Authorized Project Designee each year that 

provides the information and documentation required by this article or 

a Compliance Offset Protocol.

(179) “Offset Project Operator” means the entity(ies) with legal authority to 

implement the offset project.

(180) “Offset Project Registry” means an entity that meets the requirements 

of section 95986 and is approved by ARB that lists offset projects, 

collects Offset Project Data Reports, facilitates verification of Offset 

Project Data Reports, and issues registry offset credits for offset 

projects being implemented using a Compliance Offset Protocol.

(181) “Offset Protocol” means a documented set of procedures and 

requirements to quantify ongoing GHG reductions or GHG removal 

enhancements achieved by an offset project and calculate the project 

baseline. Offset protocols specify relevant data collection and 

monitoring procedures, emission factors, and conservatively account 
32

for uncertainty and activity-shifting and market-shifting leakage risks 

associated with an offset project.

(182) “Offset Verification” means a systematic, independent, and 

documented process for evaluation of an Offset Project Operator’s or 

Authorized Project Designee’s Offset Project Data Report against 

ARB’s Compliance Offset Protocols and this article for calculating and 

reporting project baseline emissions, project emissions, GHG 

reductions, and GHG removal enhancements.

(183) “Offset Verification Services” means services provided during offset 

verification as specified in sections 95977.1 and 95977.2, including 

reviewing an Offset Project Operator’s or Authorized Project 

Designee’s Offset Project Data Report, verifying its accuracy according 

to the standards specified in this article and applicable Compliance 

Offset Protocol, assessing the Offset Project Operator’s or Authorized 

Project Designee’s compliance with this article and applicable 

Compliance Offset Protocol, and submitting an Offset Verification 

Statement to ARB or an Offset Project Registry.

(184) “Offset Verification Statement” means the final statement rendered by 

a verification body attesting whether an Offset Project Operator’s or 

Authorized Project Designee’s Offset Project Data Report is free of an

offset material misstatement, and whether the Offset Project Data 

Report conforms to the requirements of this article and applicable 

Compliance Offset Protocol.

(185) “Offset Verification Team” means all of those working for a verification 

body, including all subcontractors, to provide offset verification services 

for an Offset Project Operator or Authorized Project Designee.

(186) “Operational Control” for a facility subject to this article means the 

authority to introduce and implement operating, environmental, health, 

and safety policies. In any circumstance where this authority is shared 

among multiple entities, the entity holding the permit to operate from 
33

the local air pollution control district or air quality management district 

is considered to have operational control for purposes of this article.

(187) “Operator” means the entity, including an owner, having operational 

control of a facility, or other entity from which an emissions data report 

is required under article 2, section 95104, title 17, Greenhouse Gas 

Emissions Data Report. For onshore petroleum and natural gas 

production, the operator is the operating entity listed on the state well 

drilling permit, or a state operating permit for wells where no drilling 

permit is issued by the state.

(188) “Opt-in Covered Entity” means an entity that meets the requirements of 

95811 that does not exceed the inclusion thresholds set forth in section 

95812 and may elect to voluntarily opt-in to the Cap-and-Trade 

Program and be willing to be subject to the requirements set forth in 

this article.

(189) “Oxidation” means a reaction in which the atoms in an element lose 

electrons and the valence of the element is correspondingly increased. 

(190) “Ozone Depleting Substances” or “ODS” means a compound that

contributes to stratospheric ozone depletion.

(191) “Perfluorocarbons” or “PFCs” means a class of greenhouse gases 

consisting on the molecular level of carbon and fluorine.

(192) “Permanent” means, in the context of offset credits, either that GHG 

reductions and GHG removal enhancements are not reversible, or 

when GHG reductions and GHG removal enhancements may be 

reversible, that mechanisms are in place to replace any reversed GHG 

emission reductions and GHG removal enhancements to ensure that 

all credited reductions endure for at least 100 years.

(193) “Permanent Retirement Registry” means the publicly available registry 

in which the Executive Officer will record the serial numbers of the 

retired compliance instruments.

(194) “Petroleum” means oil removed from the earth and the oil derived from 

tar sands, and/or shale. 
34

(195) “Petroleum Refinery” or “Refinery” means any facility engaged in 

producing gasoline, gasoline blending stocks, naphtha, kerosene, 

distillate fuel oils, residual fuel oils, lubricants, or asphalt (bitumen) 

through distillation of petroleum or through re-distillation, cracking, or 

reforming of unfinished petroleum derivatives. Facilities that distill only 

pipeline transmix (off-spec material created when different specification 

products mix during pipeline transportation) are not petroleum 

refineries, regardless of the products produced.

(196) "Pickled Steel Sheet" means hot rolled steel sheet that is sent through 

a series of hydrochloric acid baths that remove the oxides. 

(197) “Pipeline Quality Natural Gas” means, for the purpose of calculating 

emissions under MRR, natural gas having a high heat value greater 

than 970 Btu/scf and equal to or less than 1,100 Btu/scf, and which is 

at least ninety percent (90%) methane by volume, and which is less 

than five percent (5%) carbon dioxide by volume.

(198) "Plaster" is calcined gypsum that is produced and sold as a finished 

product and is not used in the production of plasterboard at the same 

facility.

(199) "Plasterboard" is a panel made of gypsum plaster pressed between 

two thick sheets of paper.

(200) “Point of Delivery” or “POD” means the point on an electricity 

transmission or distribution system where a deliverer makes electricity 

available to a receiver or available to serve load. This point can be an 

interconnection with another system or a substation where the 

transmission provider’s transmission and distribution systems are 

connected to another system, or a distribution substation where 

electricity is imported into California over a multi-jurisdictional retail 

provider’s distribution system. 

(201) “Point of Receipt” or “POR” means the point on an electricity 

transmission or distribution system where an electricity receiver 

receives electricity from a deliverer. This point can be an 
35

interconnection with another system or a substation where the 

transmission provider’s transmission and distribution systems are 

connected to another system.

(202) “Portable” means designed and capable of being carried or moved 

from one location to another. Indications of portability include wheels, 

skids, carrying handles, dolly, trailer, or platform. Equipment is not 

portable if any one of the following conditions exists:

(A) The equipment is attached to a foundation;

(B) The equipment or a replacement resides at the same location 

for more than 12 consecutive months;

(C) The equipment is located at a seasonal facility and operates 

during the full annual operating period of the seasonal facility, 

remains at the facility for at least two years, and operates at that 

facility for at least three months each year; or

(D) The equipment is moved from one location to another in an 

attempt to circumvent the portable residence time requirements 

of this definition.

(203) “Position Holder” means an entity that holds an inventory position in 

motor vehicle fuel, ethanol, distillate fuel, biodiesel, or renewable diesel 

as reflected in the records of the terminal operator or a terminal 

operator that owns motor vehicle fuel or diesel fuel in its terminal.

“Position holder” does not include inventory held outside of a terminal, 

fuel jobbers (unless directly holding inventory at the terminal), retail 

establishments, or other fuel suppliers not holding inventory at a fuel 

terminal.

(204) “Positive Emissions Data Verification Statement” means a verification 

statement rendered by a verification body attesting that the verification 

body can say with reasonable assurance that the covered emissions 

data in the submitted emissions data report is free of material 

misstatement and that the emissions data conforms to the 

requirements of MRR. For purposes of this definition, ‘material 
36

misstatement’ shall have the same meaning as ascribed to it in section 

95102(a) of MRR.

(205) “Positive Product Data Verification Statement” means a verification 

statement rendered by a verification body attesting that the verification 

body can say with reasonable assurance that the covered product data 

in the submitted emissions data report is free of material misstatement 

and that the product data conforms to the requirements of MRR. For 

purposes of this definition, ‘material misstatement’ shall have the same 

meaning as ascribed to it in section 95102(a) of MRR.

(206) “Positive Offset Verification Statement” means an Offset Verification 

Statement rendered by a verification body attesting that the verification 

body can say with reasonable assurance that the submitted Offset 

Project Data Report is free of an offset material misstatement and that 

the Offset Project Data Report conforms to the requirements of this 

article and applicable Compliance Offset Protocol.

(207) “Power” means electricity, except where the context makes clear that 

another meaning is intended.

(208) “Primary Account Representative” means an indivdual authorized by a 

registered entity through the registration process outlined in section 

95832 to make submissions to the Executive Officer and the tracking 

system in all matters pertaining to this article that legally bind the 

authorizing entity.

(209) "Primary Refinery Products" means aviation gasoline, motor gasoline

(finished), kerosene-type jet fuel, distillate fuel oil, renewable liquid 

fuels, and asphalt. For the purpose of calculating this value for each 

refinery ARB will convert blendstocks into their finished fuel volumes 

by multiplying blendstocks by an assumed blending ratio.

(210) “Primary Residence” means the property an individual uses as a 

residence the majority of the time during the year or as the principal 

place of abode of the individual's family members. The primary 

residence may be documented by the address listed on the individual's 
37

federal and state tax returns, driver's license, automobile registration, 

or voter registration card.

(211) “Proceeds” means monies generated as a result of an auction or from 

sales from the Allowance Price Containment Reserve. 

(212) “Process” means the intentional or unintentional reactions between 

substances or their transformation, including the chemical or

electrolytic reduction of metal ores, the thermal decomposition of 

substances, and the formation of substances for use as product or 

feedstock.

(213) “Process Emissions” means the emissions from industrial processes 

(e.g., cement production, ammonia production) involving chemical or 

physical transformations other than fuel combustion. For example, the 

calcination of carbonates in a kiln during cement production or the 

oxidation of methane in an ammonia process results in the release of 

process CO2 emissions to the atmosphere. Emissions from fuel 

combustion to provide process heat are not part of process emissions, 

whether the combustion is internal or external to the process 

equipment.

(214) “Process Unit” means the equipment assembled and connected by 

pipes and ducts to process raw materials and to manufacture either a 

final or intermediate product used in the onsite production of other 

products. The process unit also includes the purification of recovered 

byproducts.

(215) “Producer” means a person who owns leases, operates, controls, or 

supervises a California production facility.

(216) “Product Data Verification Statement” means the final statement 

rendered by a verification body attesting whether a reporting entity’s 

product data in their covered emissions data report is free of material 

misstatement, and whether the product data conforms to the 

requirements of the MRR. For purposes of this definition, ‘material 
38

misstatement’ shall have the same meaning as ascribed to it in section 

95102(a) of MRR.

(217) “Professional Judgment” means the ability to render sound decisions 

based on professional qualifications and relevant greenhouse gas 

accounting and auditing experience.

(218) “Project Baseline” means, in the context of a specific offset project, a 

conservative estimate of business-as-usual GHG emission reductions 

or GHG removal enhancements for the offset project’s GHG emission 

sources, GHG sinks, or GHG reservoirs within the offset project 

boundary.

(219) “Project Emissions” means any GHG emissions associated with the 

implementation of an offset project that must be accounted for in the 

Offset Project Data Report.

(220) “Propane” is a paraffinic hydrocarbon with molecular formula C3H8.

(221) “Property Right” means any type of right to specific property whether it 

is personal or real property, tangible or intangible.

(222) “Public Utility Gas Corporation” is a gas corporation defined in 

California Public Utilities Code section 222 that is also a public utility as 

defined in California Public Utilities Code section 216.

(223) “Publicly Owned Natural Gas Utility” means a municipality or municipal 

corporation, a municipal utility district, a public utility district, or a joint 

powers authority that includes one or more of these agencies that 

furnishes natural gas services to end users.

(224) “Purchase Limit” means the maximum percentage of allowances that 

may be purchased by an entity of a group of affiliated entities at an 

allowance auction.

(225) “Purchasing-Selling Entity” or “PSE” means the same meaning as 

ascribed in MRR. 

(226) “Qualified Export” means electricity that is exported in the same hour 

as imported electricity and documented by NERC E-tags. When 

imports are not documented on NERC E-tags, because a facility or unit 
39

located outside the state of California has a first point of 

interconnection with a California balancing authority area, the reporting 

entity may demonstrate hourly electriticy delivery consistent with the 

record keeping requirements of the California balancing authority area, 

including records of revenue quality meter data, invoices, or 

settlements data. Only electricity exported within the same hour and by 

the same importer as the imported electricity is a qualified export. It is 

not necessary for the imported and exported electricity (as defined in 

the MRR) to enter or leave California at the same intertie. Qualified 

exports shall not result in a negative compliance obligation for any 

hour.

(227) “Qualified Positive Offset Verification Statement” means an Offset 

Verification Statement rendered by a verification body attesting that the 

verification body can say with reasonable assurance that the submitted 

Offset Project Data Report is free of an offset material misstatement, 

but the Offset Project Data Report may include one or more 

nonconformance(s) with the quantification, monitoring, or metering 

requirements of this article and applicable Compliance Offset Protocol 

which do not result in an offset material misstatement.

(228) “Qualified Positive Emissions Data Verification Statement” means a 

statement rendered by a verification body attesting that the verification 

body can say with reasonable assurance that the covered emissions 

data in the submitted emissions data report is free of material 

misstatement and is in conformance with section 95131(b)(9) of MRR, 

but the emissions data may include one or more other

nonconformance(s) with requirements of MRR which do not result in a 

material misstatement. For purposes of this definition, ‘material 

misstatement’ shall have the same meaning as ascribed to it in section 

95102(a) of MRR.

(229) “Qualified Positive Product Data Verification Statement” means a 

statement rendered by a verification body attesting that the verification 
40

body can say with reasonable assurance that the covered product data 

in the submitted emissions data report is free of material misstatement

and is in conformance with section 95131(b)(9) of MRR, but the 

product data may include one or more other nonconformance(s) with 

the requirements of MRR which do not result in a material 

misstatement. For purposes of this definition, ‘material misstatement’ 

shall have the same meaning as ascribed to it in section 95102(a) of 

MRR.

(230) “Quantifiable” means, in the context of offset projects, the ability to 

accurately measure and calculate GHG reductions or GHG removal 

enhancements relative to a project baseline in a reliable and replicable 

manner for all GHG emission sources, GHG sinks, or GHG reservoirs 

included within the offset project boundary, while accounting for 

uncertainty and activity-shifting leakage and market-shifting leakage. 

(231) “Quantitative Usage Limit” means a limit on the percentage of an 

entity’s compliance obligation that may be met by surrendering offset 

credits, sector-based credits, or other compliance instruments 

designated to be subject to the limit under this article.

(232) “Rack” means a mechanism for delivering motor vehicle fuel or diesel 

from a refinery or terminal into a truck, trailer, railroad car, or other 

means of non-bulk transfer.

(233) “Radiative Forcing” means the change in the net vertical irradiance at 

the atmospheric boundary between the troposphere and the 

stratosphere due to an internal change or a change in the external 

forcing of the climate system such as a change in the concentration of 

carbon dioxide or the output of the Sun.

(234) “Real” means, in the context of offset projects, that GHG reductions or 

GHG enhancements result from a demonstrable action or set of 

actions, and are quantified using appropriate, accurate, and 

conservative methodologies that account for all GHG emissions 

sources, GHG sinks, and GHG reservoirs within the offset project 
41

boundary and account for uncertainty and the potential for activityshifting leakage and market-shifting leakage.

(235) “Reasonable Assurance” means a high degree of confidence that 

submitted data and statements are valid. 

(236) "Recycled Boxboard" means containers of solid fiber made from 

recycled fibers, including cereal boxes, shoe boxes and protective 

paper packaging for dry foods. It also includes folding paper cartons, 

set-up boxes, and similar boxboard products. Recycled boxboard is 

made from recycled fibers.

(237) "Recycled Linerboard" means types of paperboard made from recycled 

fibers that meet specific tests adopted by the packaging industry to 

qualify for use as the outer facing layer for corrugated board, from 

which shipping containers are made.

(238) “Recycled Medium" means the center segment of corrugated shipping 

containers, being faced with linerboard on both sides. Recycled 

medium is made from recycled fibers.

(239) “Reference Level” means the quantity of GHG emission equivalents 

that have occurred during the normal course of business or activities 

during a designated period of time within the boundaries of a defined 

sector and a defined jurisdiction.

(240) “Reformulated Gasoline Blendstock for Oxygenate Blending” or 

“RBOB” has the same meaning as defined in title 13 of the California 

Code of Regulations, section 2260(a).

(241) “Register,” in the context of a compliance instrument, means the act of 

entering the serial number of a compliance instrument into an account.

(242) “Registrant” or “Registered Entity” means an entity that has completed 

the process for registration.

(243) “Registry Offset Credit” means a credit issued by an Offset Project 

Registry for a GHG reduction or GHG removal enhancement of one 

metric ton of CO2e. The GHG reduction or GHG removal 

enhancement must be real, additional, quantifiable, permanent, 
42

verifiable, and enforceable and may only be issued for offset projects 

using Compliance Offset Protocols. Pursuant to section 95981.1, ARB 

may determine that a registry offset credit may be removed and issued 

as an ARB offset credit.

(244) “Registry Services” means all services provided by an ARB approved 

Offset Project Registry in section 95987.

(245) “Renewable Energy” means energy from sources that constantly 

renew themselves or that are regarded as practically inexhaustible. 

Renewable energy includes energy derived from solar, wind, 

geothermal, hydroelectric, wood, biomass, tidal power, sea currents, 

and ocean thermal gradients.

(246) “Renewable Energy Credit” or “REC” means a certificate of proof, 

issued through the accounting system established by the California 

Energy Commission pursuant to Public Utilities Code Section 399.13, 

that one megawatt hour of electricity was generated and delivered by 

an eligible renewable energy resource. As specified in Public Utilities 

Code Section 399.12, Subdivision (g)(2), a REC includes all renewable 

and environmental attributes associated with the production of 

electricity from an eligible renewable energy resource, except for an 

emissions reduction credit issued pursuant to Section 40709 of the 

Health and Safety Code and any credits or payments associated with 

the reduction of solid waste and treatment benefits created by the 

utilization of biomass or biogas fuels.

(247) "Renewable Liquid Fuels" means fuel ethanol, biomass-based diesel 

fuel, other renewable diesel fuel and other renewable fuels.

(248) “Reporting Period” means, in the context of offsets, the period of time 

for which an Offset Project Operator or Authorized Project Designee 

quantifies and reports GHG reductions or GHG removal enhancements 

covered in an Offset Project Data Report. The first reporting period for 

an offset project in an initial crediting period may consist of 6 to 24 

consecutive months; all subsequent reporting periods in an initial 
43

crediting and all reporting periods in any renewed crediting period must 

consist of 12 consecutive months.

(249) “Reporting Year” means data year.

(250) “Reserve Price” see “Auction Reserve Price.”

(251) “Reserve Sale Administrator” means the operator of sales from the 

Allowance Price Containment Reserve account, which may be the 

Executive Officer or an entity designated by the Executive Officer.

(252) “Resource Shuffling” means any plan, scheme, or artifice to receive 

credit based on emissions reductions that have not occurred, involving 

the delivery of electricity to the California grid.

(253) “Retail Provider” means an entity that provides electricity to retail end 

users in California and is an electrical corporation as defined in Public 

Utilities Code section 218, electric service provider as defined in Public 

Utilities Code section 218.3, local publicly owned electric utility as 

defined in Public Utilities Code section 224.3, a community choice 

aggregator as defined in Public Utilities Code section 331.1, or the 

Western Area Power Administration. For purposes of this article, 

electrical cooperatives, as defined by Public Utilities Code section 

2776, are excluded.

(254) “Retire” or “Retired” or “Retirement” means that the serial number for a 

compliance instrument is registered into the Retirement Account under 

the control of the Executive Officer. Compliance instruments 

registered into this account cannot be removed. 

(255) “Reversal” means a GHG emission reduction or GHG removal 

enhancement for which an ARB offset credit or registry offset credit 

has been issued that is subsequently released or emitted back into the 

atmosphere due to any intentional or unintentional circumstance.

(256) “Sector” or “Sectoral,” when used in conjunction with sector-based 

crediting programs, means a group or subgroup of an economic 

activity, or a group or cross-section of a group of economic activities, 

within a jurisdiction.
44

(257) “Sector-Based Crediting Program” is a GHG emissions-reduction 

crediting mechanism established by a country, region, or subnational 

jurisdiction in a developing country and covering a particular economic 

sector within that jurisdiction. A program’s performance is based on 

achievement toward an emissions reduction target for the particular 

sector within the boundary of the jurisdiction.

(258) “Sector-Based Offset Credit” means a credit issued from a sectorbased crediting program once the crediting baseline for a sector has 

been reached.

(259) “Self-Generation of Electricity” means electricity dedicated to serving 

an electricity user on the same location as the generator. The system 

may be operated directly by the electricity user or by an entity with a 

contractual arrangement.

(260) “Serial Number” means a unique number assigned to each compliance 

instrument for identification.

(261) “Sequestration” means the removal and storage of carbon from the 

atmosphere in GHG sinks or GHG reservoirs through physical or 

biological processes.

(262) “Sink” or “sink to load” or “load sink” means the sink identified on the 

physical path of NERC e-Tags, where defined points have been 

established through the NERC Registry. Exported electricity is 

disaggregated by the sink on the NERC e-Tag, also referred to as the 

final point of delivery on the NERC e-Tag.

(263) "Soda Ash Equivalent" means the total mass of all soda ash, biocarb,

borax, V-Bor, DECA, PYROBOR, Boric Acid, Sodium Sulfate, 

Potassium Sulfate, Potassium Chloride, and Sodium Chloride

produced.

(264) “Solomon Energy Intensity Index®” or “Solomon EII” or “EII” means a 

petroleum refinery energy efficiency metric that compares actual 

energy consumption for a refinery with the “standard” energy 

consumption for a refinery of similar size and configuration. The 
45

“standard” energy is calculated based on an analysis of worldwide 

refining capacity as contained in the database maintained by Solomon 

Associates. The ratio of a facility’s actual energy to the standard 

energy is multiplied by 100 to arrive at the Solomon EII for a refinery.

“Solomon Energy Review” means a data submittal and review 

conducted by a petroleum refinery and Solomon Associates. This 

process uses the refinery energy utilization, throughput and output to 

determine the Solomon EII of the refinery. 

(265) “Source” means greenhouse gas source; or any physical unit, process, 

or other use or activity that releases a greenhouse gas into the 

atmosphere.

(266) “Source of generation” or “generation source” means the generation 

source identified on the physical path of NERC e-Tags, where defined 

points have been established through the NERC Registry. Imported 

electricity and wheels are disaggregated by the source on the NERC eTag, also referred to as the first point of receipt.

(267) “Specified Source of Electricity” or “Specified Source” means a facility 

or unit which is permitted to be claimed as the source of electricity 

delivered. The reporting entity must have either full or partial 

ownership in the facility/unit or a written power contract as defined in 

MRR section 95102(a) to procure electricity generated by that 

facility/unit. Specified facilities/units include cogeneration systems. 

Specified source also means electricity procured from an assetcontrolling supplier recognized by ARB.

(268) “Standing Live Carbon Stocks” means the above ground carbon in live 

tree biomass. Live trees include the bole, stem, branches, roots, and 

leaves or needles.

(269) “Stationary” means neither portable nor self-propelled, and operated at

a single facility.

(270) "Steel Produced Using an Electric Arc Furnace" means steel produced 

by electric arc furnace or "EAF". EAF means a furnace that produces 
46

molten steel and heats the charge materials with electric arcs from 

carbon electrodes.

(271) “Supplier” means a producer, importer, exporter, position holder, or 

local distribution company of a fossil fuel or an industrial greenhouse 

gas.

(272) “Terminal” means a motor vehicle fuel or diesel fuel storage and 

distribution facility that is supplied by pipeline or vessel, and from 

which fuel may be removed at a rack. “Terminal” includes a fuel 

production facility where motor vehicle or diesel fuel is produced and 

stored and from which fuel may be removed at a rack.

(273) "Testliner" means types of paperboard that meet specific tests adopted 

by the packaging industry to qualify for use as the outer facing layer for 

corrugated board, from which shipping containers are made. Testliner 

is made primarily from fibers obtained from recycled fibers.

(274) “Tin Plate" means thin sheet steel with a very thin coating of metallic 

tin. Tin plate also includes Tin Free Steel or TFS which has an 

extremely thin coating of chromium, metallic, and oxide. Tin plate is 

used primarily in can making. 

(275) “Tissue” means a class of papers which are characteristically gauzy in 

texture and, in some cases, fairly transparent. They may be glazed, 

unglazed, or creped and are used for a variety of purposes. Examples 

of different types of tissue papers include sanitary grades such as 

toilet, facial, napkin, towels, wipes, and special sanitary papers.

(276) “Transaction,” when referring to an arrangement between registered 

entities regarding allowances, means an understanding among 

registered entities to transfer the control of an allowance from one 

entity to another, either immediately or at a later date.

(277) “Transfer” of a compliance instrument means the removal of the serial 

number of a compliance instrument from one account and placement 

into another account.
47

(278) “Transfer Request” means the communication by an authorized 

account representative or an alternate authorized account 

representative to the accounts administrator to register into the 

tracking system the transfer of allowances between accounts.

(279) “Tribe” means a federally-recognized Indian tribe and any entity 

created by a federally-recognized Indian Tribe.

(280) “Unintentional Reversal” means any reversal, including wildfires or 

disease that is not the result of the forest owner’s negligence, gross 

negligence, or willful intent.

(281) “Unspecified Source of Electricity” or “Unspecified Source” means a 

source of electricity that is not a specified source at the time of entry 

into the transaction to procure the electricity. 

(282) “Vented Emissions” means intentional or designed releases of CH4 or 

CO2 containing natural gas or hydrocarbon gas (not including 

stationary combustion flue gas), including process designed flow to the 

atmosphere through seals or vent pipes, equipment blowdown for 

maintenance, and direct venting of gas used to power equipment (such 

as pneumatic devices).

(283) “Verifiable” means that an Offset Project Data Report assertion is well 

documented and transparent such that it lends itself to an objective 

review by an accredited verification body.

(284) “Verification Body” means a firm accredited by ARB, which is able to 

render an offset verification statement and provide offset verification 

services for Offset Project Operators or Authorized Project Designees 

subject to providing an Offset Project Data Report under this article.

(285) “Verifier” means an individual accredited by ARB to carry out offset 

verification services as specified in sections 95977.1 and 95977.2.

(286) “Vintage Year” means the budget year to which an individual 

Californian GHG allowance is assigned pursuant to subarticle 6.

(287) “Voluntarily Associated Entity” means any entity which does not meet 

the requirements of section 95811 or 95813 in this article and that 
48

intends to purchase, hold, sell, or voluntarily retire compliance 

instruments or an entity operating an offset project or early action 

offset project that is registered with ARB pursuant to subarticle 13 or 

14 in this article. 

(288) “Voluntary Renewable Electricity” or “VRE” means electricity produced 

or RECs associated with electricity, produced by a voluntary renewable 

electricity generator, and which has not and will not be sold or used to 

meet any other mandatory requirements in California or any other 

jurisdiction. 

(289) “Voluntary Renewable Electricity Aggregator” or “VRE Aggregator”

means the entity that is aggregating systems for the purpose of 

allowance retirement pursuant to section 95841.1. 

(290) “Voluntary Renewable Electricity Generator” means any entity that 

produces renewable electricity and applies for allowance retirement 

pursuant to section 95841.1.

(291) “Voluntary Renewable Electricity Participant” or “VRE Participant”

means a voluntary renewable electricity generator, a REC marketer, or 

entity that purchases voluntary renewable electricity or RECs as an 

end-user or on behalf of an end-user and is seeking allowance 

retirement pursuant to section 95841.1.

(b) For the purposes of sections 95801 through 96023, the following 

acronyms apply:

(1) “AB 32” means Assembly Bill 32, the California Global Warming Solutions 

Act of 2006.

(2) “ARB” means the California Air Resources Board.

(3) “BAU” means business as usual.

(4) “BPA” means Bonneville Power Administration.

(5) “CAISO” means the California Independent System Operator.

(6) “CAR” means Climate Action Reserve.

(7) “CEC” means California Energy Commission.

(8) “CFR” means Code of Federal Regulations.
49

(9) “CH4” means methane.

(10) “CO2” means carbon dioxide.

(11)"CO2e" means carbon dioxide equivalent.

(12) “CRT” means Climate Reserve Tonne.

(13) “DWR” means California Department of Water Resources.

(14) “F” means Fahrenheit.

(15) “GHG" means greenhouse gas.

(16) “GHG ETS” means greenhouse gas emissions trading system.

(17) “GWP” means global warming potential.

(18) “HFC” means hydrofluorocarbon.

(19) “LPG” means liquefied petroleum gas.

(20) “MMBtu” means one million British thermal units. 

(21) “MRR” means the Air Resources Board’s Regulation for the Mandatory 

Reporting of Greenhouse Gas Emissions.

(22) “Mscf” means one thousand standard cubic feet. 

(23) “MWh” means megawatt-hour.

(24) “MT” means metric tons.

(25) “NAICS” means North American Industry Classification System. 

(26) “NGLs” means natural gas liquids.

(27) “NERC” means North American Electric Reliability Corporation.

(28) “N2O” means “nitrous oxide.”

(29) ”PFC” means perfluorocarbon.

(30) “PSE” means purchasing-selling entity.

(31) “PUC” means the Public Utilities Commission.

(32) “REC” means Renewable Energy Credit.

(33) “REDD” means reducing emissions from deforestation and degradation.

(34) “SCF” means standard cubic foot.

(35) “SF6” means sulfur hexafluoride.

(36) “WAPA” means Western Area Power Administration.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.
50

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 3: Applicability

This article applies to all of the entities identified in this subarticle. 

§ 95810. Covered Gases.

This article applies to the following greenhouse gases: carbon dioxide (CO2), 

methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), 

hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), nitrogen trifluoride (NF3), 

and other fluorinated greenhouse gases.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95811. Covered Entities.

This article applies to all of the following entities with associated GHG emissions 

pursuant to section 95812: 

(a) Operators of Facilities. The operator of a facility within California that has 

one or more of the following processes or operations:

(1) Cement production;

(2) Cogeneration;

(3) Glass production;

(4) Hydrogen production;

(5) Iron and steel production;

(6) Lime manufacturing;

(7) Nitric acid production;

(8) Petroleum and natural gas systems, as specified in section 95852(h); 

(9) Petroleum refining;

(10) Pulp and paper manufacturing;

(11) Self-generation of electricity; or

(12) Stationary combustion.
51

(b) First Deliverers of Electricity.

(1) Electricity generating facilities: the operator of an electricity generating 

facility located in California; or 

(2) Electricity importers.

(c) Suppliers of Natural Gas. An entity that distributes or uses natural gas in 

California as described below:

(1) A public utility gas corporation operating in California;

(2) A publicly owned natural gas utility operating in California; or

(3) The operator of an intrastate pipeline not included in section 

95811(c)(1) or section 95811(c)(2) that distributes natural gas directly 

to end users.

(d) Suppliers of RBOB and Distillate Fuel Oil. A position holder of one or 

more of the following fuels, or an enterer that imports one or more of the 

following fuels into California:

(1) RBOB;

(2) Distillate Fuel Oil No. 1; or

(3) Distillate Fuel Oil No. 2.

(e) Suppliers of Liquefied Petroleum Gas.

(1) The operator of a refinery that produces liquid petroleum gas in 

California;

(2) The operator of a facility that fractionates natural gas liquids to produce 

liquid petroleum gas; or

(3) A consignee of liquefied petroleum gas into California as defined under 

MRR.

(f) Sections 95811(c), (d), and (e) apply to suppliers of blended fuels that 

contain the fuels listed above. 

(g) Carbon dioxide suppliers.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
52

§ 95812. Inclusion Thresholds for Covered Entities.

(a) The inclusion threshold for each covered entity is based on the subset of 

greenhouse gas emissions that generate a compliance obligation for that 

entity as specified in section 95852. The entity must report and verify

annual emissions pursuant to sections 95100 through 95157 of MRR.

(b) If an entity’s reported or reported and verified annual emissions in any 

data year from 2009 through 2011 from the categories specified in section 

95852(a) equal or exceed the thresholds identified below, that entity is 

classified as a covered entity as of January 1, 2013, and for all future 

years until any requirement set forth in section 95812(e) is met.

(c) The requirements apply as follows:

(1) Operators of Facilities. The applicability threshold for a facility is

25,000 metric tons or more of CO2e per data year. 

(2) First Deliverers of Electricity. 

(A) Electricity Generating Facilities. The applicability threshold for 

an electricity generating facility is based on the annual 

emissions from which the electricity originated. The applicability 

threshold for an electricity generating facility is 25,000 metric 

tons or more of CO2e per data year.

(B) Electricity importers. The applicability threshold for an electricity 

importer is based on the annual emissions from each of the 

electricity importer’s sources of delivered electricity.

1. All emissions reported for imported electricity from specified 

sources of electricity that emit 25,000 metric tons or more of 

CO2e per year are considered to be above the threshold.

2. All emissions reported for imported electricity from 

unspecified sources are considered to be above the 

threshold.

(3) Carbon Dioxide Suppliers. The applicability threshold for a carbon 

dioxide supplier is 25,000 metric tons or more of CO2e per year. For 
53

purpose of comparison to this threshold, the supplier must include the 

sum of the CO2 that it captures from its production process units for 

purposes of supplying CO2 for commercial applications or that it 

captures from a CO2 stream to utilize for geologic sequestration, and 

the CO2 that it extracts or produces from a CO2 production well for 

purposes of supplying for commercial applications or that it extracts or 

produces to utilize for geologic sequestration. 

(4) Petroleum and Natural Gas Facilities. The applicability threshold for a 

petroleum and natural gas facility 25,000 metric tons or more of CO2e 

per data year. This threshold is applied for each facility type specified 

in section 95852(h). 

(d) If an entity’s annual, assigned, or reported and verified emissions from any 

data year between 2011-2014 equal or exceed the thresholds identified 

below from the categories specified in sections 95851(a) and (b), then that 

entity is classified as a covered entity as of January 1, 2015, for the year 

in which the threshold is reached and for all future years until any 

requirement set forth in section 95812(e) is met.

(1) Fuel Suppliers. The threshold for a fuel supplier is 25,000 metric tons 

or more of CO2e annually from the emissions of GHG that would result 

from full combustion or oxidation of the quantities of the fuels, identified 

in section 95811(c) through (f), which are imported and/or delivered to 

California. 

(2) Electricity importers. The threshold for an electricity importer of 

specified source of electricity is zero metric tons of CO2e per year and 

for unspecified sources is zero MWhs per year as of January 1, 2015. 

(e) Effect of Reduced Emissions on an Entity’s Compliance Obligation. A 

covered entity continues to have a compliance obligation for each data 

year of a compliance period, until the subsequent compliance period after 

one of the following conditions occurs:

(1) Annual reports demonstrate GHG emissions less than 25,000 metric 

tons of CO2e per year during one entire compliance period; or
54

(2) A covered entity has ceased reporting and shuts down all processes, 

units, and supply operations subject to reporting, and has followed the 

requirements of section 95101(h) of MRR.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95813. Opt-In Covered Entities.

(a) An entity that meets the requirements of section 95811, but does not 

exceed the inclusion thresholds set forth in section 95812 may elect to 

voluntarily opt-in to the Cap-and-Trade Program. 

(b) An entity that voluntarily elects to participate in this program under this 

section must submit its request to the Executive Officer for approval 

pursuant to section 95830(c). The Executive Officer shall evaluate such 

applications and designate approved applicants as opt-in covered entities.

(c) An opt-in covered entity is subject to all reporting, verification, 

enforcement, and compliance obligations that apply to covered entities. 

(d) An opt-in covered entity may be eligible to receive freely allocated 

allowances subject to subarticles 8 and 9.

(e) Opt-in participation shall not affect the allowance budgets set forth in 

subarticle 6. 

(f) Opting out. After the end of any given compliance period an opt-in 

covered entity may choose to opt out of the program provided its annual 

emission levels for any data year remain below the inclusion thresholds 

set forth in section 95812. An entity choosing to opt out of the program 

must either fulfill its compliance obligations as required pursuant to 

subarticle 7 or surrender allowances equivalent to all the directly allocated 

allowances it has received from the budget years for the compliance 

period in question. An opt-in covered entity that wishes to opt-out of this 

program must apply to the Executive Officer. 
55

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95814. Voluntarily Associated Entities and Other Registered Participants.

(a) Voluntarily Associated Entities (VAE). An entity not identified as a 

covered entity or opt-in covered entity that intends to hold California 

compliance instruments may apply to the Executive Officer pursuant to 

section 95830(c) for approval as a voluntarily associated entity. 

(1) The following entities may qualify as voluntarily associated entities:

(A) An individual, or an entity that does not meet the requirements 

of sections 95811 and 95813, that intends to purchase, hold, 

sell, or voluntarily retire compliance instruments;

(B) An entity operating an offset project or early action offset project 

that is registered with ARB pursuant to subarticles 13 or 14; or

(C) An entity providing clearing services in which it takes only 

temporary possession of compliance instruments for the 

purpose of clearing transactions between two entities registered 

with the Cap-and-Trade Program. A qualified entity must be a 

derivatives clearing organization as defined in the Commodities 

Exchange Act (7 U.S.C § 1a(9)) that is registered with the U.S. 

Commodity Futures Trading Commission pursuant to the 

Commodities Exchange Act (7 U.S.C. § 7a-1(a)).

(2) An individual registering as a voluntarily associated must have a 

primary residence in the United States.

(3) An entity registering as a voluntarily associated entity must be located 

in the United States, according to the registration information reported 

pursuant to section 95830(c).

(b) Other Registered Participants. 

(1) The following entities do not qualify to hold compliance instruments but 

may qualify as a Registered Participant:

(A) An offset verifier accredited pursuant to section 95978;
56

(B) A verification body accredited pursuant to section 95978;

(C) Offset Project Registries; or

(D) Early Action Offset Programs approved pursuant to subarticle 

14.

(2) To qualify as a Registered Participant the entity must obtain 

registration approval from the Executive Officer pursuant to section 

95830(c).

(c) A registered entity that has had its holding account revoked pursuant to 

section 95921(g)(3) may not hold compliance instruments or register with 

the accounts administrator in the Cap-and-Trade Program in any capacity.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 4: Compliance Instruments

§ 95820. Compliance Instruments Issued by the Air Resources Board.

(a) California Greenhouse Gas Emissions Allowances.

(1) The Executive Officer shall create California GHG allowances pursuant 

to the schedule set forth in subarticle 6.

(2) The Executive Officer shall assign each California GHG allowance a 

unique serial number that indicates the annual allowance budget from 

which the allowance originates.

(3) The Executive Officer shall place these allowances into a holding 

account under the control of the Executive Officer pursuant to section 

95831(b).

(b) Offset Credits Issued by ARB. 

(1) The Executive Officer shall issue and register ARB offset credits 

pursuant to the requirements of subarticles 13 and 14. 

(2) Surrender of ARB offset credits shall be subject to the quantitative 

usage limit set forth in section 95854.
57

(c) Each compliance instrument issued by the Executive Officer represents a 

limited authorization to emit up to one metric ton in CO2e of any 

greenhouse gas specified in section 95810, subject to all applicable 

limitations specified in this article. No provision of this article may be 

construed to limit the authority of the Executive Officer to terminate or limit 

such authorization to emit. A compliance instrument issued by the 

Executive Officer does not constitute property or a property right. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95821. Compliance Instruments Issued by Approved Programs.

The following compliance instruments may be used to meet a compliance 

obligation under this article:

(a) Allowances specified in section 95942(b) and issued by a program 

approved by ARB pursuant to section 95941;

(b) Offset credits specified in section 95942(c) and issued by a program 

approved by ARB pursuant to section 95941;

(c) ARB offset credits issued for purposes of early action pursuant to section 

95990; 

(d) Sector-based offset credits recognized pursuant to subarticle 14; and

(e) Compliance instruments specified in sections 95821(b) through (d) are 

subject to the quantitative usage limit set forth in section 95854.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
58

Subarticle 5: Registration and Accounts

§ 95830. Registration with ARB.

(a) The Executive Officer shall serve as accounts administrator or may 

contract with an entity to serve as accounts administrator.

(b) Eligibility and Restrictions: 

(1) An entity must qualify for registration pursuant to section 95811, 

95813, or 95814.

(2) An entity qualified to register cannot apply for more than one 

registration.

(3) An entity cannot hold a compliance instrument until the Executive 

Officer approves the entity’s registration with ARB.

(c) Requirements for Registration. 

(1) An entity must complete an application that contains the following 

information: 

(A) Name, physical and mailing addresses, and contact information,

type of organization, date and place of incorporation;

(B) Names and addresses of the entity’s directors and officers;

(C) Names and contact information for persons controlling over 10 

percent of the voting rights attached to all the outstanding voting 

securities of the entity;

(D) A business number, if one has been assigned to the entity by a 

California state agency;

(E) A U.S. Federal Tax Employer Identification Number, if assigned;

(F) Data Universal Numbering System number, if assigned;

(G) Statement of basis for qualifying for registration pursuant to 

sections 95811, 95813, or 95814; and

(H) Identification of all other entities registered pursuant to this 

article with whom the entity has a corporate association, direct 

corporate association, or indirect corporate association pursuant 

to section 95833, and a brief description of the association.
59

(2) Applicants may be denied registration: 1. based on information 

provided; or 2. if the Executive Officer determines the applicant has 

provided false or misleading information; or 3. if the Executive Officer 

determines the applicant has withheld information material to its 

application.

(3) Any individual listed by the registering entity in its registration 

application in a capacity requiring access to the tracking system must 

comply with the Know-Your-Customer requirements pursuant to 

section 95834 before access to the tracking system will be granted.

(4) An entity must designate a primary account representative, at least 

one and up to four alternate account representatives pursuant to 

section 95832. An individual registering as a voluntarily associated 

entity may elect to serve as both primary and alternate account 

representatives or designate additional persons.

(5) An individual registering as a voluntarily associated entity and having a 

primary residence in the United States, but not located in California, 

must designate an agent for service of process in California. The 

agent may be an individual who resides in California, or a corporation, 

that has previously filed a certificate pursuant to California 

Corporations Code section 1505.

(6) An entity applying for registration that is not an individual or an entity 

supplying exchange clearing services pursuant to section 

95814(a)(1)(C) must designate, pursuant to section 95832, either:

(A) A primary account representative or at least one alternate 

account representative with a primary residence in California; or

(B) An agent for service of process in California. For entites 

registering into California, the agent may be an individual who 

resides in California, or a corporation, that has previously filed a 

certificate pursuant to California Corporations Code section 

1505.

(d) Registration Deadlines.
60

(1) An entity that meets or exceeds the inclusion thresholds in section 

95812 must register with the accounts administrator pursuant to this 

section: 

(A) Within 30 calendar days of the reporting deadline contained in 

MRR if the entity is not a covered entity as of January 1, 2013; 

or

(B) By January 31, 2012 or within 30 calendar days of the effective 

date of this regulation, whichever is later, for an entity that 

exceeds the inclusion thresholds in section 95812 for any data 

year 2008 through 2011. 

(2) An opt-in covered entity must register with the accounts administrator 

by November 30 of the calendar year prior to the first year in which it 

voluntarily elects to be subject to a compliance obligation pursuant to 

section 95813.

(3) Any voluntarily associated entity that intends to hold an ARB-issued 

compliance instrument must register with the accounts administrator 

prior to acquiring such compliance instruments.

(e) Completion of Registration. Registration is completed when the Executive 

Officer approves the registration and informs the entity and the accounts 

administrator of the approval.

(f) Updating Registration Information.

(1) Registrants must update their registration information within 10 working 

days of changes to the information listed in section 95830(c).

(2) Information may be directly entered into the tracking system operated 

by the accounts administrator or, if that is not available, submitted to 

the accounts administrator by the entity.

(3) Registration may be revoked, suspended, or restricted if an entity does 

not update its registration within 10 days of a change pursuant to 

section 95921(g)(3).

(g) Information Confidentiality. The following information collected about 

individuals during the registration process will be treated as confidential by 
61

the Executive Officer and the accounts administrator to the extent 

possible, and except as needed in the course of oversight, investigation, 

enforcement and prosecution:

(1) Information collected pursuant to section 95830(c)(1)(B) and (C);

(2) Information collected about individuals pursuant to section 95834; and

(3) Information collected about individuals pursuant to section 95832.

(h) Linking. When California links to an External GHG ETS, each entity must

register into a jurisdiction based on the physical location information the 

entity must provide pursuant to section 95830(c)(1)(A).

(1) An entity located in California or in a jurisdiction operating an External 

GHG ETS to which California has linked pursuant to subarticle 12 must 

register with the jurisdiction in which they are located.

(2) An entity located in the United States may only register with California 

to participate in its Cap-and-Trade Program.

(3) California will recognize the registration of an entity that registers into 

an External GHG ETS to which California has linked pursuant to 

subarticle 12 and allow that entity to participate in the California Capand-Trade Program.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95831. Account Types.

(a) Accounts Created for Registered Entities.

(1) The Executive Officer shall not create more than one holding account, 

one limited use holding account, one compliance account, or one 

exchange clearing holding account for each entity registered pursuant 

to 95830.

(2) Holding Accounts. When the Executive Officer approves a registration 

for a covered entity, an opt-in covered entity, or a voluntarily 

associated entity, the accounts administrator will create a holding 

account for the registrant.
62

(3) Limited Use Holding Accounts. When an entity qualifies for a direct 

allocation under section 95890(b) the accounts administrator will 

create a limited use holding account for the entity that shall be subject 

to the following restrictions: 

(A) The entity may not transfer compliance instruments from other 

accounts into the limited use holding account; and

(B) The entity may not transfer compliance instruments from the 

limited use holding account to any account other than the 

Auction Holding Account. 

(4) Compliance Accounts. When the Executive Officer approves a 

registration for a covered entity or opt-in covered entity, the accounts

administrator will create a compliance account for the entity.

(A) A covered entity or opt-in covered entity may transfer 

compliance instruments to its compliance account at any time.

(B) A compliance instrument transferred into a compliance account 

may not be removed by the entity.

(C) The Executive Officer may transfer compliance instruments into 

a compliance account. The Executive Officer may remove 

compliance instruments to satisfy a compliance obligation, or 

when closing an account.

(5) Exchange Clearing Holding Accounts. When the Executive Officer 

approves registration for an entity identified as a voluntarily associated 

entity pursuant to section 95814(a)(1), then the accounts administrator 

will create an exchange clearing holding account for the entity.

(A) Entities may transfer compliance instruments to exchange 

clearing accounts only for the purpose of transferring control of 

the instruments to the entity performing the clearing function.

(B) The clearing entity may only transfer the compliance 

instruments in its exchange clearing holding account to the 

account designated by the entity receiving the allowances under 

the transaction being cleared.
63

(b) Accounts under the Control of the Executive Officer. The accounts 

administrator will create and maintain the following accounts under the 

control of the Executive Officer:

(1) A holding account to be known as the Allocation Holding Account into 

which the serial numbers of compliance instruments will be registered 

when the compliance instruments are created. 

(2) A holding account to be known as the Auction Holding Account into 

which allowances are transferred to be sold at auction from:

(A) The Allocation Holding Account; 

(B) The holding accounts of those entities for which allowances are 

being auctioned on consignment pursuant to section 

95921(g)(3); 

(C) The limited use holding accounts of those entities consigning 

allowances to auction pursuant to section 95910; and

(D) The compliance accounts of entities fulfilling an untimely 

surrender obligation pursuant to section 95857(d)(1)(A).

(3) A holding account to be known as the Retirement Account to which the 

Executive Officer will transfer compliance instruments from compliance 

accounts or from holding accounts under the control of the Executive 

Officer for the purpose of permanently retiring them. Alternatively, 

entities may voluntarily retire compliance instruments by transferring 

the serial numbers of compliance instruments they are retiring to the 

Retirement Account.

(A) When compliance instruments are registered into the 

Retirement Account, these compliance instruments cannot be 

returned to any other holding or compliance account.

(B) When compliance instruments are registered into the 

Retirement Account, any External GHG ETS to which California 

links pursuant to subarticle 12 will be informed of the 

retirements. 
64

(C) The Executive Officer will record the serial numbers of the 

retired instruments to a publicly available Permanent Retirement 

Registry.

(4) A holding account to be known as the Allowance Price Containment 

Reserve Account:

(A) Into which the serial numbers of allowances directly allocated to 

the Allowance Price Containment Reserve pursuant to section 

95870(a) will be transferred; and

(B) From which the Executive Officer will authorize the withdrawal

of allowances for sale to covered entities pursuant to section 

95913. 

(5) A holding account to be known as the Forest Buffer Account:

(A) Into which ARB will place ARB offset credits pursuant to section 

95983(a); and

(B) From which ARB may retire ARB offset credits pursuant to 

sections 95983(b)(2), (c)(3), and (c)(4) and place them into to 

the Retirement Holding Account.

(6) A holding account to be known as the Voluntary Renewable Electricity 

Reserve Account, which will be closed when it is depleted of the 

following originally allocated allowances:

(A) Into which the Executive Officer will transfer allowances 

allocated pursuant to section 95870(c); and

(B) From which the Executive Officer may retire allowances 

pursuant to section 95841.1.

(c) Account Closure.

(1) A registered entity’s accounts will be closed after the Executive 

Officer receives a report that an entity has ceased operation 

pursuant to MRR section 95101(h).

(2) A voluntarily associated entity’s accounts may be closed if no 

compliance instruments are transferred into or out of the 

accounts for a period of three years.
65

(3) Compliance instruments remaining in accounts closed by the 

Executive Officer and not needed to fulfill a compliance 

obligation will be consigned to auction pursuant to section 

95910(d) on behalf of the registered entity.

(d) Additional accounts may be created by the Executive Officer to implement 

the Cap-and-Trade Program.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95832. Designation of Representatives and Agents.

(a) An application for registration into the California Cap-and-Trade Program

for an account must designate a single primary account representative 

and at least one but no more than four alternate account representatives. 

Any communication between the accounts administrator and an alternate 

account representative must also be addressed to the primary account 

representative. A complete application for an account shall be submitted 

to the accounts administrator and shall include the following elements: 

(1) Name, business and primary residence addresses, email addresses, 

and phone numbers, of the primary account representative and any 

alternate account representatives and account viewing agents;

(2) Name of the organization designating the primary account 

representative or any alternate account representative to represent its 

ownership interest with respect to the compliance instruments held in 

the account;

(3) The primary account representative and any alternate account 

representative must attest, in writing, to ARB as follows: “I certify 

under penalty of perjury under the laws of the State of California that I 

was selected as the primary account representative or the alternate 

account representative, as applicable, by an agreement that is binding 

on all persons who have an ownership interest with respect to 
66

compliance instruments held in the account. I certify that I have all the 

necessary authority to carry out the duties and responsibilities 

contained in title 17, article 5, sections 95800 et seq. on behalf of such 

persons and that each such person shall be fully bound by my 

representations, actions, inactions, or submissions and by any order or 

decision issued to me by the accounts administrator or a court 

regarding the account”;

(4) An attestation verifying the selection of the primary account 

representative, alternate account representatives, and account viewing 

agents, signed by the officer of the entity who is responsible for the 

conduct of the primary account representative, alternate account 

representatives, and account viewing agents, and is one of the officers 

disclosed pursuant to section 95830(c)(1)(B);

(5) The signature of the primary account representative and any alternate 

account representative and the dates signed; and

(6) An attestation as follows: “I certify that I have personally examined, 

and am familiar with, the statements and information submitted in this 

document and all its attachments. I also certify under penalty of 

perjury of the laws of the State of California that all information 

required to be submitted to ARB is true, accurate, and complete.”

(b) Unless otherwise required by the Executive Officer, documents of 

agreement referred to in section 95832(a) in the application for an account 

shall not be submitted to the accounts administrator. The accounts 

administrator shall not be under any obligation to review or evaluate the 

sufficiency of such documents, if submitted.

(c) Authorization of primary account representative. Upon receipt by the 

accounts administrator of a complete application for an account under 

section 95830(c): 

(1) The accounts administrator will establish an account or accounts for 

the person or persons for whom the application is submitted pursuant 

to section 95831.
67

(2) The primary account representative and any alternate account 

representative for the account shall represent and, by his or her 

representations, actions, inactions, or submissions, legally bind each

entity that owns compliance instruments held in the account in all 

matters pertaining to this article, notwithstanding any agreement 

between the primary account representative or any alternate account 

representative and such entity. 

(3) Any such entity shall be bound by any decision or order issued to the 

primary account representative or any alternate account representative 

by the Executive Officer or a court regarding the account. Any 

representation, action, inaction, or submission by any alternate 

account representative shall be deemed to be a representation, action, 

inaction, or submission by the primary account representative or any 

alternate account representative.

(d) Each submission concerning the account shall be submitted, signed, and 

attested to by the primary account representative or any alternate account 

representative for the entity that owns the compliance instruments held in 

the account. Each such submission shall include the following attestation

statement by the primary account representative or any alternate account 

representative: “I certify under penalty of perjury under the laws of the 

State of California that I am authorized to make this submission on behalf 

of the entity that owns the compliance instruments held in the account. I 

certify under penalty of perjury under the laws of the State of California

that I have personally examined, and am familiar with, the statements and 

information submitted in this document and all its attachments. Based on 

my inquiry of those individuals with primary responsibility for obtaining the 

information, I certify under penalty of perjury under the laws of the State of 

California that the statements and information submitted to ARB are true, 

accurate, and complete.” I consent to the jurisdiction of California and its 

courts for purposes of enforcement of the laws, rules and regulations 

pertaining to title 17, article 5, sections 95800 et seq., and I am aware that 
68

there are significant penalties for submitting false statements and 

information or omitting required statements and information, including the 

possibility of fine or imprisonment.”

(e) The accounts administrator will accept or act on a submission concerning 

the account only if the submission has been made, signed, and attested to

in accordance with this section.

(f) Changing primary account representative and alternate account 

representative.

(1) The primary account representative for an account may be changed at 

any time upon receipt by the accounts administrator of a superseding 

complete application for an account under section 95830(c). 

Notwithstanding any such change, all representations, actions, 

inactions, and submissions by the previous primary account 

representative, or the previous alternate account representative prior to 

the time and date when the accounts administrator receives the 

superseding application for an account shall be binding on the new 

primary account representative and the entity that owns the 

compliance instruments in the account.

(2) The alternate account representative for an account may be changed 

at any time upon receipt by the accounts administrator of a 

superseding complete application for an account under section 

95830(c). Notwithstanding any such change, all representations,

actions, inactions, and submissions by the previous primary account 

representative, or the previous alternate account representative, prior 

to the time and date when the accounts administrator receives the 

superseding application for an account shall be binding on the new 

alternate account representative and the entity that owns the 

compliance instruments in the account.

(g) Objections Concerning Account Representatives.

(1) Once a complete application for an account under section 95830(c)

has been submitted and received, the accounts administrator will rely 
69

on the application unless and until a superseding complete application 

for an account under section 95830(c) is received by the accounts 

administrator.

(2) Except as provided in section 95832(f)(1), no objection or other 

communication submitted to the accounts administrator concerning the 

authorization, or any representation, action, inaction, or submission of 

the primary account representative or any alternate account 

representative for an account shall affect any representation, action, 

inaction, or submission of the primary account representative or any 

alternate account representative or the finality of any decision or order 

by the accounts administrator under this article. 

(3) The accounts administrator will not adjudicate any private legal dispute 

concerning the authorization or any representation, action, inaction, or 

submission of the primary account representative or any alternate 

account representative for an account, including private legal disputes 

concerning the proceeds of compliance instrument transfers. 

(h) Delegation by primary account representative and alternate account 

representatives.

(1) A primary account representative or an alternate account 

representative for a registered entity may authorize up to five natural 

persons per account that may view all information contained in the 

tracking system involving the entity’s accounts, information, and 

transfer records (account viewing authority). The persons delegated 

shall not have authority to take any other action with respect to an 

account on the tracking system.

(2) In order to delegate account viewing authority in accordance with 

section 95832(h)(1) the primary account representative or alternate 

account representative, as appropriate, must submit to the accounts 

administrator a notice of delegation, that includes the following 

elements:
70

(A) The name, address, email address, and telephone number of 

such primary account representative or alternate account 

representative;

(B) The name, address, email address, and telephone number of 

each such natural person, herein referred to as “account 

viewing agent;” and

(C) An attestation verifying the selection of the account viewing 

agent, signed by the officer of the entity who is responsible for 

the conduct of the account viewing agent, and is one of the 

officers disclosed pursuant to section 95830(c)(1)(B).

(3) A notice of delegation submitted under section 95832(h)(2) shall be 

effective, with regard to the accounts identified in such notice, upon 

receipt of such notice by the accounts administrator and until receipt by 

the accounts administrator of a superseding notice of delegation by 

such primary account representative or alternate account 

representative as appropriate. The superseding notice of delegation 

may replace any previously identified account viewing agent, add a 

new account viewing agent, or eliminate entirely any delegation of 

authority.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95833. Disclosure of Corporate Associations. 

(a) Criteria for Determining Corporate Associations.

(1) An entity has a corporate association with another entity if either one of 

these entities: 

(A) Holds more than 20 percent of any class of listed shares, the 

right to acquire such shares, or any option to purchase such 

shares of the other entity;
71

(B) Holds or can appoint more than 20 percent of common directors 

of the other entity;

(C) Holds more than 20 percent of the voting power of the other 

entity;

(D) In the case of a partnership other than a limited partnership, 

holds more than 20 percent of the interests of the partnership; 

or

(E) In the case of a limited partnership, controls the general partner.

(2) An entity has a “direct corporate association” with another entity if 

either one of these entities:

(A) Holds more than 50 percent of any class of listed shares, the 

right to acquire such shares, or any option to purchase such 

shares of the other entity;

(B) Holds or can appoint more than 50 percent of common directors 

of the other entity;

(C) Holds more than 50 percent of the voting power of the other 

entity;

(D) In the case of a partnership other than a limited partnership, 

holds more than 50 percent of the interests of the partnership; 

or

(E) In the case of a limited partnership, controls the general partner.

(3) An entity has a “direct corporate association” with a second entity if the 

two entities are connected through a line of more than one direct 

corporate association.

(A) An entity (A) has a “direct corporate association” with another 

entity (B) if the two entities share a common parent that is not 

registered into the California Cap-and-Trade Program and that 

parent has a direct corporate association with each entity (A and 

B) when applying the indicia of control contained in section 

95833(a)(2).
72

(B) An entity with a “direct corporate association” with a second 

registered entity has a direct corporate association with any 

registered entity with whom the second registered entity has a 

direct corporate association.

(4) An entity has an “indirect corporate association” with another entity if:

(A) The two entities do not have a direct corporate association;

(B) The two entities are connected through a line of more than one 

corporate association; and

(C) The controlling entity’s percentage of ownership or other indicia 

of control under section 95833(a)(1)(A), (B), (C), or (D) of the 

indirectly controlled entity is more than 20 percent but less than 

or equal to 50 percent after multiplying the percentages at each 

link in the chain of corporate associations.

(5) A publicly-owned electric utility or joint powers agency that is the 

operator of an electricity generating facility in California has a direct 

corporate association with the operator of another electricity generating 

facility in California if the same entity operates both generating 

facilities. A publicly-owned electric utility or joint powers agency that is 

the operator of an electricity generating facility in California has a direct 

corporate association with an electricity importer if the same entity 

operates the generating facility in California and is the entity importing 

electricity.

(b) If California links to one or more GHG ETS pursuant to subarticle 12, then 

entities shall disclose corporate associations with entities registered with 

those linked programs.

(c) Any registered entity subject to affiliate compliance rules promulgated by 

state or federal agencies shall not be required to disclose information or 

take other action that violates those rules.

(d) If an entity has a corporate, direct, or indirect association with another 

registered entity, or an unregistered entity involved in determinations 
73

made pursuant to 95833(a)(3), (4) or (5), it must disclose the following 

information for each associated entity:

(1) Information to identify the associated entity, including:

(A) Name, contact information, and physical address of the entity;

(B) Whether the entity is parent or subsidiary;

(C) Holding account number, if applicable;

(D) Primary account representative, if applicable;

(E) Data Universal Numbering System number, if assigned;

(F) A U.S. federal tax Employer Identification Number, if assigned; 

and

(G) Place and Date of Incorporation, if applicable;

(2) The type of corporate association and a brief description of the 

association, to include information sufficient to explain the entity’s 

evaluation of the measures contained in section 95833(a) used to 

determine the type of corporate association disclosed.

(e) The entity must disclose the information pursuant to section 95833(d) to 

the Executive Officer:

(1) When registering pursuant to section 95830;

(2) At any time after registering when a corporate, direct, or indirect 

association is created or exists;

(3) Within 30 days of a change to the information disclosed on corporate, 

direct and indirect corporate associations; and

(4) No later than the auction registration deadline established in section 

95912 when reporting a change to the information disclosed, otherwise 

the entity may not participate in that auction.

(f) Consolidation of Accounts for Corporate Associations.

(1) By January 1, 2013, the Executive Officer will consolidate the accounts 

held by entities registered into the California Cap-and-Trade Program 

pursuant to section 95830 that are part of a direct corporate 

association into a consolidated set of accounts.
74

(2) By October 1, 2012, the primary account representative or alternate 

account representative for all entities that are part of a direct corporate 

association and intend to have their accounts consolidated must 

provide to the Executive Officer:

(A) Confirmation of the corporate association if not already 

provided;

(B) Confirmation of the entity’s intent to have its account 

consolidated with that of the other entities within the corporate 

association; and

(C) A change of primary account representative and alternate 

account representative to new representatives that will serve as 

the primary account representative and alternate account 

representatives for the consolidated accounts.

(3) To opt out of consolidation of accounts, the primary account 

representative or alternate account representative for an entity within 

the corporate association must provide to the Executive Officer by 

October 1, 2012:

(A) Confirmation of the corporate association if not already 

provided;

(B) An attestation, signed by the officer of the entity who is 

responsible for the conduct of the account viewing agent and is 

one of the officers disclosed pursuant to section 95830(c)(1)(B), 

that the entity seeks exclusion of its account from the 

consolidated set of accounts to be created; and

(C) Confirmation of the opt-out decision by the primary account 

representative or alternate account representative for any entity 

opting out of consolidation, as well as the primary account 

representative or alternate account representative designated 

for any entities remaining in the corporate association 

consolidated account pursuant to section 95833(f)(2)(C). This 

confirmation will include a distribution of the purchase and 
75

holding limits between the consolidated corporate association 

and any associated entites opting out of consolidation.

(4) If an entity registered in the California Cap-and-Trade Program has a 

direct corporate association with an entity(ies) registered in an External 

Greenhouse Gas Emissions Trading System to which California has 

linked its Cap-and-Trade Program pursuant to subarticle 12, the entity 

registered in the California Cap-and-Trade Program must opt out of 

consolidation with the entity(ies) registered in an External Greenhouse 

Gas Emissions Trading System and meet all the requirements of 

section 95833(f)(3) except for the October 1, 2012 deadline.

(45) To consolidate the accounts for a corporate association the Executive 

Officer shall instruct the accounts administrator to:

(A) Create a single consolidated set of accounts for members of a 

corporate association that accept consolidation;

(B) Include a compliance account only for a corporate association 

with at least one member entity that accepts consolidation that 

is eligible for a compliance account;

(C) Include a limited use holding account only for a corporate 

association with at least one member entity that accepts 

consolidation that is eligible for a limited use holding account;

(D) Complete all valid transfer requests in the system involving any 

accounts for the members of the corporate association;

(E) Transfer all compliance instruments in the existing accounts 

held by the member entities to the appropriate corporate 

association accounts; and

(F) Close the accounts held by the individual member entities of the 

corporate association that have not opted out.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
76

§ 95834. Know-Your Customer Requirements. 

(a) General Requirements.

(1) The accounts administrator cannot provide access to the tracking 

system to an individual until the Executive Officer has determined the 

individual applying for participation has complied with the requirements 

of this section.

(2) The requirements of this section are in addition to any requirements 

contained elsewhere in this article that apply to the functions the 

individual will undertake in the tracking system.

(3) All documents submitted to the Executive Officer pursuant to this 

section shall be in English.

(4) Individuals with a criminal conviction in the five previous years 

constituting a felony in the United States are ineligible for registration 

and participation in the Cap-and-Trade Program.

(b) The individual must provide documentation of the following:

(1) Name;

(2) The address of the primary residence of the applicant, which may be 

shown by any of the following:

(A) A valid identity card issued by a state with an expiration date;

(B) Any other government-issued identity document containing an 

individual’s primary address; or

(C) Any other document that is customarily accepted by the State of 

California as evidence of the primary residence of the individual;

(3) Date of birth;

(4) Employer name, contact information, and address;

(5) Either a passport number or driver’s license number, if one is issued;

(6) An open bank account in the United States;

(7) Employment or other relationship to an entity that has registered or has 

applied to register with the California Cap-and-Trade Program if the 

individual is listed by an entity registering pursuant to section 95830;
77

(8) A government-issued document providing photographic evidence of 

identity of the applicant which may include:

(A) A valid identity card or driver’s license issued by a state with an 

expiration date and date of birth; or

(B) A passport; and

(9) Any criminal conviction during the previous five years constituting a 

felony in the United States. This disclosure must include the type of 

violation, jurisdiction, and year.

(c) Verification of information.

(1) Any copy of a document submitted pursuant to section 95834 must be 

notarized by a notary public no more than three months before 

submittal.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
78

Subarticle 6: California Greenhouse Gas Allowance Budgets 

§ 95840. Compliance Periods.

Duration of Compliance Periods is as follows:

(a) The first compliance period starts on January 1, 2013, and ends on 

December 31, 2014.

(b) The second compliance period starts on January 1, 2015, and ends on 

December 31, 2017.

(c) The third compliance period starts on January 1, 2018, and ends on 

December 31, 2020.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95841. Annual Allowance Budgets for Calendar Years 2013-2020.

The California GHG Allowance Budgets are set as described in Table 6-1. 

Table 6-1: California GHG Allowances Budgets

Budget Year Annual Allowance Budget 

(Millions of CA GHG 

Allowances)

First 

Compliance 

Period

2013 162.8

2014 159.7

Second 

Compliance 

Period

2015 394.5

2016 382.4

2017 370.4

Third 

Compliance 

Period

2018 358.3

2019 346.3

2020 334.2

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.
79

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95841.1 Voluntary Renewable Electricity.

(a) Program Requirements: The end-user, or VRE participant acting on behalf 

of the end-user, must meet the requirements of this section. Generation 

must be new and not have served load prior to July 1, 2005. Allowance 

retirement for purposes of voluntary renewable electricity will begin in 

2014 for 2013 generation. Voluntary renewable electricity must be directly

delivered to California.

(b) Reporting Requirements. The end-user, or the VRE participant acting on 

behalf of the end-user, requesting allowance retirement for eligible 

generation must meet the following requirements for the period in which 

allowance retirement is being requested:

(1) By July 1 of each year, provide a written request for allowance 

retirement for the previous year’s generation or REC purchases. 

Request must meet the requirements below:

(A) Report to ARB the quantity of renewable electricity in MWhs, 

and/or the number of RECs generated during the previous year 

from an eligible renewable electricity generator that meets the 

requirements of 95841.1(b)(2) or (3), as applicable;

(B) Generator of the renewable electricity or RECs must be certified 

as RPS eligible by the California Energy Commission, or must 

meet design and installation standards pursuant to the 

California Energy Commission’s Guidelines for California’s Solar 

Electric Incentive Programs, third edition, June 2010;

(C) For end-users, or the VRE participants acting on behalf of the 

end-user choosing to meet (B) above by meeting the California 

Energy Commission’s design and installation standards 

pursuant to the California Energy Commission’s Guidelines for 

California’s Solar Electric Incentive Programs, third edition, June 

2010, must submit an approval of incentive claim;
80

(D) Contract, tracking system data, or settlement data for the 

purchase of the electricity or RECs associated with the 

generation of the electricity must be submitted;

(E) Contract, tracking system data, or settlement data for sale of the 

electricity or RECs associated with the generation of the 

electricity to the end-user or entity purchasing on behalf of the 

end-user; and

(F) Submit the following attestations:

1. Attest, in writing, to ARB as follows: “I certify under penalty 

of perjury of the laws of the State of California that I have not 

authorized use of, or sold, any renewable electricity credits 

or any claims to the emissions, or lack of emissions, for 

electricity for which I am seeking ARB allowance retirement, 

in any other voluntary or mandatory program.”

2. Attest, in writing, to ARB as follows: “I understand I am 

voluntarily participating in the California Greenhouse Gas 

Cap-and-Trade Program under title 17, Cal. Code of Regs. 

article 5, and by doing so, I am now subject to all regulatory 

requirements and enforcement mechanisms of this voluntary 

renewable electricity program and subject myself to the 

jurisdiction of California as the exclusive venue to resolve 

any and all disputes.” 

(2) VRE Participants seeking allowance retirement for renewable 

electricity generation from an eligible facility > 200 KW nameplate 

capacity must submit the following with the report required in this 

section, for which the VRE participant is seeking allowance retirement:

(A) Provide the generator’s RPS certification identification number, 

as determined by the California Energy Commission, or proof 

that each facility or system has met design and installation 

standards pursuant to the California Energy Commission’s 
81

Guidelines for California’s Solar Electric Incentive Programs, 

third edition, June 2010;

(B) MWhs of renewable electricity generated designated for VRE 

retirement;

(C) Number of RECs designated for VRE retirement, as applicable; 

and

(D) REC retirement report or tracking system data.

(3) VRE participants seeking allowance retirement for renewable electricity 

generating from an eligible facility ≤ 200 KW nameplate capacity must 

submit the following with the report required in this section. Applicants 

may aggregate eligible systems, but must submit one application under 

one entity:

(A) Provide the generator’s RPS certification identification number, 

as determined by the California Energy Commission, or must 

meet design and installation standards pursuant to the 

California Energy Commission’s Guidelines for California’s Solar 

Electric Incentive Programs, third edition, June 2010;

(B) MWhs of renewable electricity generated;

(C) Number of RECs, as applicable; and

(D) REC retirement report or tracking system data, as applicable.

(c) The allowances requested to be retired, calculated as follows:

Number of MT CO2e = MWh x EF 

Where:

“Number of MT CO2e,” rounded down to the nearest whole ton, is the 

number of allowances to be retired from the Voluntary Renewable 

Electricity Reserve Account;
82

“MWh” is the MWh of voluntary renewable electricity claimed and 

generated from a generator that meets the requirements of this article; 

and

“EF” is the CO2e emissions factor equivalent to the default emission factor 

for unspecified power, pursuant to section 95111 of MRR.

ARB shall determine the actual MWh of voluntary renewable electricity 

purchases that occurred during the period indicated in the documentation. 

ARB shall retire allowances from the Voluntary Renewable Electricity 

Reserve Account in an amount up to the number of MT CO2e represented 

by actual voluntary renewable electricity purchases, based on actual MWh 

purchases and the emissions factor determined pursuant to this section.

(d) Once a voluntary renewable electricity tracking system is approved by the 

Executive Officer and it is in place, a voluntary renewable electricity 

generator or REC marketer which meets requirements section 95841.1(b) 

will always be considered to have satisfied section 95841.1(b), if they 

participate in the tracking system.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 7: Compliance Requirements for Covered Entities 

§ 95850. General Requirements.

(a) Reporting Requirements. Each covered entity identified in section 95811 

is subject to MRR.

(b) An entity’s compliance obligation is based on the emissions number for 

the emissions subject to a compliance obligation for every metric ton of 

CO2e for which a positive or qualified positive emissions data verification 

statement is issued, rounded to the nearest whole ton, or for which there 

are assigned emissions pursuant to MRR.
83

(c) Record Retention Requirements. Each entity must retain all of the 

following records for at least 10 consecutive years and must provide such 

records within 20 calendar days of receiving a written request from ARB, 

including:

(1) Copies of all data and reports submitted under this article and section 

95105 of MRR;

(2) Records used to calculate a compliance obligation as specified in 

section 95853;

(3) Emissions data and product data verification statements as required 

pursuant to section 95103(f) of MRR; and

(4) Detailed verification reports as required pursuant to section 95131 of 

MRR.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95851. Phase-in of Compliance Obligation for Covered Entities.

(a) Operators of facilities and first deliverers of electricity specified in sections

95811(a) and (b) and carbon dioxide suppliers specified in section 

95811(g) that meet or exceed the annual emissions threshold in section 

95812(c) have compliance obligations beginning with the first compliance 

period.

(b) Suppliers of natural gas, suppliers of RBOB and distillate fuel oils, and 

suppliers of liquefied petroleum gas specified in sections 95811(c), (d), 

(e), and (f) that meet or exceed the annual threshold in section 95812(d) 

will have a compliance obligation beginning with the second compliance 

period.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
84

§ 95852. Emission Categories Used to Calculate Compliance Obligations.

(a) Operators of Facilities. 

(1) An operator of a facility covered under sections 95811(a) and 

95812(c)(1) has a compliance obligation for every metric ton of CO2e

for which a positive or qualified positive emissions data verification 

statement is issued per section 95131 of MRR, including process 

emissions, stationary combustion emissions and vented emissions. If 

ARB has assigned emissions for the sources subject to a compliance 

obligation pursuant to this section, the facility will have a compliance 

obligation equal to the value of every metric ton of CO2e assigned 

emissions. The entity’s compliance obligation will be assessed at the 

facility level unless otherwise noted under section 95812(c). 

(2) Beginning in 2015, combustion emissions resulting from burning 

RBOB, distillate fuel oils, or natural gas liquids are not included when 

calculating an operator’s compliance obligation.

(b) First Deliverers of Electricity. A first deliverer of electricity covered under 

sections 95811(b) and 95812(c)(2) has a compliance obligation for every 

metric ton of CO2e emissions calculated pursuant to section 95852(b)(1) 

for which a positive or qualified positive emissions data verification 

statement is issued pursuant to MRR, or for which there are assigned 

emissions, when such emissions are from a source in California or in a 

jurisdiction where a GHG emissions trading system has not been 

approved for linkage by the Board pursuant to subarticle 12. 

(1) Calculation of emissions for compliance obligation. 

(A) For first deliverers that are operators of an electricity generating 

facility in California, the calculation for compliance obligation 

includes all emissions reported and verified or assigned

pursuant to MRR, except emissions without a compliance 

obligation pursuant to section 95852.2.
85

(B) For first deliverers that are electricity importers, emissions with a 

compliance obligation are calculated using the following 

equation:

ered unspecified specified specified not ered RPS adjustment QE adjustment linked CO e CO e CO e CO e CO e CO e CO e 2 cov 2 2 2 cov 2 _ 2 _ 2 = + ( − ) − − − −

Where:

CO2e covered = Annual metric tons of CO2e with a compliance 

obligation.

CO2e unspecified = Annual metric tons of CO2e from unspecified 

imported electricity calculated pursuant to MRR 95111.

CO2e specified = Annual metric tons of CO2e from imported 

electricity from specified sources that meet the requirements of 

MRR section 95111. 

CO2e specified-not covered = Annual metric tons of CO2e without a

compliance obligation pursuant to section 95852.2.from specified 

sources that meet the requirements in MRR section 95111,

CO2e RPS_adjustment = Annual metric tons of CO2e calculated 

pursuant to MRR that meets the requirements of section 

95852(b)(4).

CO2e QE_adjustment = Annual metric tons of CO2e from qualified 

exports pursuant to MRR section 95111 that meet the 

requirements of section 95852(b)(5).

CO2e linked = Annual metric tons of CO2e from electricity with a 

first point of receipt located in a jurisdiction where a GHG 

emissions trading system has been approved for linkage by the 

Board pursuant to subarticle 12.

(C) All deliveries of electricity not meeting the requirements for 

specified sources pursuant to MRR will have emissions 

calculated using the default emission factor for unspecified 

electricity pursuant to section MRR 95111. 
86

(2) Resource shuffling is prohibited and is a violation of this article. First 

Deliverers must submit the following attestations annually to ARB, by 

June 1, in writing, by certified mail only:

(A) “I certify under penalty of perjury of the laws of the State of

California that [facility or company name] for which I am an 

agent has not engaged in the activity of resource shuffling to 

reduce compliance obligation for emissions, based on emission 

reductions that have not occurred as reported under MRR.”

(B) “I understand [facility or company name], for which I am an 

agent, is participating in the Cap-and-Trade Program under title 

17, California Code of Regulations, article 5, and by doing so, it 

now subjects itself to all regulatory requirements and 

enforcement mechanisms of this program and subjects itself to 

the jurisdiction of California as the exclusive venue to resolve 

disputes.”

(3) The following criteria must be met for electricity importers to claim a 

compliance obligation for delivered electricity based on a specified 

source emission factor less than the default emission factor:

(A) Electricity deliveries must be reported to ARB and emissions 

must be calculated pursuant to MRR section 95111.

(B) The electricity importer must be the facility operator or have

right of ownership or a written power contract, as defined in 

MRR section 95102(a), to the amount of electricity claimed and 

generated by the facility or unit claimed;

(C) The electricity must be directly delivered, as defined in MRR 

section 95102(a), to the California grid; and

(D) If RECs were created for the electricity generated and reported 

pursuant to MRR, then the RECs must be retired and verified 

pursuant to MRR.

(4) RPS adjustment. Electricity imported or procured by an electricity 

importer from an eligible renewable energy resource reported pursuant 
87

to MRR must meet the following conditions to be included in the 

calculation of the RPS adjustment:

(A) The electricity importer must have either:

1. Ownership or contract rights to procure the electricity 

generated by the eligible renewable energy resource; or

2. Have a contract to import electricity on behalf of a California 

entity that has ownership or contract rights to the electricity 

generated by the eligible renewable energy resource, as 

verified under MRR.

(B) The RECs associated with the electricity claimed for the RPS 

adjustment must be used to comply with California RPS 

requirements during the same year in which the RPS 

adjustment is claimed.

(C) The quantity of emissions included in the RPS adjustment is 

calculated as the product of the default emission factor for 

unspecified sources, pursuant to MRR, and the reported 

electricity generated (MWh) that meets the requirements of this 

section, 95852(b)(4).

(D) No RPS adjustment may be claimed for an eligible renewable 

energy resource when its electricity is directly delivered.

(E) No RPS adjustment may be claimed for electricity generated by 

an eligible renewable energy resource in a jurisdiction where a 

GHG emissions trading system has been approved for linkage 

by the Board pursuant to subarticle 12.

(5) QE adjustment. An adjustment to the compliance obligation pursuant 

to the calculation in 95852(b)(1) may be made for exported and 

imported electricity during the same hour by the same PSE. Emissions 

included in the QE adjustment for qualified exports claimed by a first 

deliverer must meet the following requirements:
88

(A) During any hour in which an electricity importer claims qualified 

exports and corresponding imports, the maximum amount of QE 

adjustment for the hour shall not exceed the product of:

1. The lower of either the quantity of exports or imports (MWh) 

for the hour; multiplied by

2. The lowest emission factor of any portion of the qualified 

exports or corresponding imports for the hour.

(B) Emissions and MWhs included in the QE adjustment must be 

reported and verified or assigned pursuant to MRR, and must 

be documented by hourly import and export data pursuant to 

MRR.

(c) Suppliers of Natural Gas. A supplier of natural gas covered under 

sections 95811(c) and 95812(d) has a compliance obligation for every 

metric ton CO2e of GHG emissions that would result from full combustion 

or oxidation of all fuel delivered to end users in California contained in an 

emissions data report that has received a positive or qualified positive 

emissions data verification statement or for which emissions have been 

assigned, less the fuel that is delivered to covered entities, as follows:

(1) Suppliers of natural gas shall report the total metric tons CO2e of GHG 

emissions delivered to all end users in California pursuant to section 

95122 of MRR;

(2) ARB shall calculate the metric tons CO2e of GHG emissions for natural 

gas delivered to covered entities which are customers of the supplier. 

The emissions will be calculated according to section 95122 of MRR 

using the reported deliveries (in mmBtu) in emissions data reports that 

received a positive or qualified positive emissions data verification 

statement, or the assigned emissions from natural gas delivered to the 

covered entity by the supplier of natural gas;

(3) ARB shall provide the supplier of natural gas a listing of all customers 

and aggregate natural gas (in mmBtu) and emissions calculated from 

the supplier’s natural gas delivered to covered entities; and
89

(4) The Executive Officer shall calculate the metric tons CO2e for which 

the supplier will be required to hold a compliance obligation based on 

the supplier’s reported emissions less ARB’s calculated emissions 

from deliveries to covered entities which are customers of the supplier. 

The Executive Officer shall provide this value to the supplier of natural 

gas within 30 days of the verification deadline in section 95103 of 

MRR.

(d) Suppliers of RBOB and Distillate Fuel Oils. A supplier of petroleum 

products covered under sections 95811(d) or 95812(d) has a compliance 

obligation for every metric ton CO2e of GHG emissions included in an 

emissions data report that has received a positive or qualified positive 

emissions data verification statement or for which emissions have been 

assigned that would result from full combustion or oxidation of the 

quantities of the following fuels that are removed from the rack in 

California, sold to entities not licensed by the California Board of 

Equalization as a fuel supplier, or imported into California and not directly 

delivered to the bulk-transfer/terminal system as defined in section 95102 

of MRR, except for products for which a final destination outside California 

can be demonstrated: 

(1) RBOB;

(2) Distillate Fuel Oil No. 1; and

(3) Distillate Fuel Oil No. 2.

(e) Suppliers of Natural Gas Liquids:

(1) A producer of liquefied petroleum gas covered under sections

95811(e) and 95812(d) has a compliance obligation for every metric 

ton CO2e of GHG emissions included in an emissions data report that 

has received a positive or qualified positive emissions data verification 

statement or for which emissions have been assigned that would result 

from full combustion or oxidation of all fuel sold, distributed, or 

otherwise transferred for consumption in California; and
90

(2) An importer consignee, as defined under MRR, of liquefied petroleum 

gas covered under section 95811(e) has a compliance obligation for 

every metric ton CO2e of GHG emissions included in an emissions 

data report that has received a positive or qualified positive emissions 

data verification statement or for which emissions have been assigned 

that would result from full combustion or oxidation of all fuel imported 

into California.

(f) Suppliers of Blended Fuels. An entity that supplies any of the fuels 

covered under sections 95811(f) and 95812(d) as blended fuels has an 

aggregated compliance obligation for every metric ton of CO2e of GHG 

emissions based on the separate constituents of the blend included in an 

emissions data report that has received a positive or qualified positive 

emissions data verification statement or for which emissions have been 

assigned that would result from full combustion or oxidation of the fuel.

(g) Carbon Dioxide Suppliers. An entity that supplies carbon dioxide (defined 

in section 95802(a)(47) covered under sections 95811(g) and 95812(c)(3) 

has an aggregated compliance obligation based on the sum of MT CO2

included in an emissions data report that has received a positive or 

qualified positive emissions data verification statement or for which 

emissions have been assigned and which are defined in sections 

95802(a)(47)(a), 95802(a)(47)(b), and 95802(a)(47)(c), minus CO2 

verified to be geologically sequestered through use of a Board-approved 

carbon capture and geologic sequestration quantification methodology 

that ensures that the emissions reductions are real, permanent, 

quantifiable, verifiable, and enforceable.

(h) Petroleum and Natural Gas Systems. Operators of the facilities specified 

in section 95101(e)(2)-(5) of MRR have a compliance obligation for every 

metric ton of CO2e from the source types specified in sections 95152(c)-(f) 

of MRR, except as specified in section 95852.2 of this article, that is

contained in an emissions data report that has received a positive or 
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qualified positive emissions data report, or for which emissions have been 

assigned.

(i) The compliance obligation for sources specified in sections 95852(a) 

through (h) is calculated based on the sum of the following, as applicable:

(1) Emissions of CO2, CH4, and N2O which resulted from combustion of 

fossil fuel; 

(2) Emissions of CH4 and N2O which resulted from combustion of all 

biomass-derived fuel; 

(3) Emissions of CO2 which resulted from combustion of biomass-derived 

fuels that do not meet the requirements in section 95852.2(a); 

(4) Emissions of CO2 which resulted from combustion of biomass-derived 

fuels pursuant to section 95852.1; and 

(5) All process and vented emissions of CO2, CH4, and N2O as specified in 

the MRR except for those listed in section 95852.2(b). 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95852.1. Compliance Obligations for Biomass-Derived Fuels.

An entity that has emissions from combustion of biomass-derived fuels is 

required to report and verify its emissions pursuant to MRR and has a 

compliance obligation for every metric ton of CO2e emissions: 

(a) From combustion of fuel types that are not listed under section 95852.2; or 

(b) From combustion of fuels that do not meet the requirements of section 

95852.1.1; or

(c) That are reported as non-exempt biomass derived CO2 under MRR.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
92

§ 95852.1.1. Eligibility Requirements for Biomass-Derived Fuels.

(a) Biomass-derived fuel procured under contracts for biogas and biomethane

must meet one of the following criteria. Only the portion of the fuel that 

meets one of these criteria will be considered a biomass-derived fuel.

Emissions from combustion of this fuel will not be subject to a compliance 

obligation when reported as Biomass CO2 in an emissions data report that 

has received a positive or qualified positive emissions data verification 

statement and determined as exempt pursuant to section 95852.2 and 

95103(g) of MRR.

(1) The contract for purchasing any biomass-derived fuel must be 

executed prior to January 1, 2012 and remain in effect or have been 

renegotiated with the same California operator within one year of 

contract expiration. The delivery of the fuel under the contract must 

commence by one of the following dates to be eligible under this 

provision:

(A) 90 days after the execution date of the signed contract; or

(B) January 1, 2012; or

(C) 10 days after the date on which the CEC provides notice that 

the operator’s electricity generating facility is certified as eligible 

for California’s Renewables Portfolio Standard for the 

contracted biomass-derived fuel, or cannot be so certified, 

provided that the application for certification was submitted to 

the CEC before January 1, 2012. 

(2) The fuel being provided under a contract dated on or after January 1, 

2012 must only be for an amount of fuel that is associated with:

(A) An increase in the biomass derived fuel production capacity, at 

a particular site, where an increase is considered any amount 

over the average production at that site over the last three 

years; or
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(B) Recovery of the fuel at a site where the fuel was previously 

being vented or destroyed without producing useful energy 

transfer.

(3) The fuel being provided under a contract is for a fuel that was 

previously eligible under sections 95852.1.1(a)(1) or (2), and the 

verifier is able to track the fuel to the previously eligible contract; or

(4) If the biogas or biomethane is used at the site of production, and not 

transferred to another operator, thus not requiring a contract, the 

operator must demonstrate one of the following:

(A) The fuel has been combusted in California prior to January 1, 

2012; or

(B) The fuel was not previously used to produce useful energy 

transfer.

(b) An entity may not sell, trade, give away, claim, or otherwise dispose of any 

of the carbon credits, carbon benefits, carbon emissions reductions, 

carbon offsets or allowances, howsoever entitled, attributed to the fuel 

production that would, when combined with the CO2 emissions from 

complete combustion of the fuel, result in more CO2e emissions than 

would have occurred in the absence of the fuel production. In the case of 

biomethane or biogas produced from digesters or landfills, the resulting 

credit for avoided methane emissions may not exceed 23.75 metric tons of 

CO2e per ton of captured methane. All calculations of CO2e emissions are 

based on the 100-year global warming potentials included in MRR. 

Generation of Renewable Energy Credits is excluded from this analysis 

and will not prevent a biomass-derived fuel that meets the requirements in 

this section from being exempt from a compliance obligation. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
94

§ 95852.2. Emissions without a Compliance Obligation.

Emissions from the following source categories and from the combustion of the 

following fuel types count toward applicable reporting thresholds, as applicable in 

MRR, but do not count toward a covered entity’s compliance obligation set forth 

in this article unless those emissions are reported as non-exempt biomassderived CO2 under MRR. Emissions without a compliance obligation include:

(a) CO2 emissions from combustion of the following biomass-derived fuels:

(1) The biogenic fraction of solid waste materials as reported under MRR;

(2) Waste pallets, crates, dunnage, manufacturing and construction wood 

wastes, tree trimmings, mill residues, and range land maintenance 

residues;

(3) All agricultural crops or waste;

(4) Wood and wood wastes identified to follow all of the following 

practices:

(A) Harvested pursuant to an approved timber management plan 

prepared in accordance with the Z’berg-Nejedly Forest Practice 

Act of 1973 or other locally or nationally approved plan; and

(B) Harvested for the purpose of forest fire fuel reduction or forest 

stand improvement.

(5) Biodiesel:

(A) Agri-biodiesel derived solely from virgin oils, including esters 

derived from virgin vegetable oils from corn, soybeans, 

sunflower seeds, cottonseeds, canola, cramble, rapeseeds, 

safflowers, flaxseeds, rice bran, mustard seeds, and camelina, 

and from animal fats. 

(B) Biodiesel is defined as monoalkyl esters of long chain fatty acids 

derived from the following plant or animal matter that meets the 

requirements of the American Society of Testing Materials 

(ASTM) D6751:

1. Waste oils;

2. Tallow; or
95

3. Virgin oils.

(6) Fuel ethanol (including denaturant):

(A) Cellulosic biofuel produced from lignocellulosic or hemicellulosic 

material that has a proof of at least 150 without regard to 

denaturants;

(B) Corn starch; or

(C) Sugar cane.

(7) The biogenic fraction of municipal solid waste as reported under MRR, 

including MSW directly combusted or converted to a cleaner-burning 

fuel;

(8) Biomethane and biogas from the following sources:

(A) All animal, plant and other organic waste; or

(B) Landfills and wastewater treatment plants;

(b) The following additional process, vented, and fugitive emissions:

(1) Emissions from geothermal generating units and geothermal facilities, 

including geothermal geyser steam or fluids;

(2) Emissions from natural gas hydrogen fuel cells; 

(3) Vented and fugitive emissions from storage tanks used in petroleum 

and natural gas production and natural gas transmission;

(4) Vented and fugitive emissions reported under section 95153 of MRR 

by local distribution companies that report under section 95122 of 

MRR; 

(5) Vented and fugitive emissions from natural gas transmission storage 

tanks used in petroleum and natural gas production and natural gas 

transmission, and from produced water;

(6) Emissions reported by petroleum refineries from asphalt blowing 

operations, equipment leaks, storage tanks, and loading operations; 

(7) Emissions from low bleed pneumatic devices; 

(8) Emissions from high bleed pneumatic devices reported prior to 

January 1, 2015; 
96

(9) Vented emissions from well-site centrifugal and reciprocating 

compressors with a rated horsepower less than 250hp;

(10) Sources for which emissions are estimated using leak detection and 

leaker emission factors, as required by section 95153(q) of MRR; and 

(11) Carbon dioxide that is imported, or that is exported for purposes other 

than geologic sequestration.

(c) Additional Exemption. The operators of facilities with the NAICS code 

92811 are exempt from compliance with this article through December 31, 

2013.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95853. Calculation of Covered Entity’s Triennial Compliance Obligation.

(a) A covered entity that exceeds the threshold in section 95812 in any of the 

three data years preceding the start of a compliance period is a covered 

entity for the entire compliance period. The covered entity’s triennial 

compliance obligation in this situation is calculated as the total of the 

emissions with a compliance obligation that received a positive or qualified 

positive emissions data verification statement, or were assigned emissions

pursuant to section 95131 of MRR from all data years of the compliance 

period.

(b) A covered entity that initially exceeds the threshold in section 95812 in the 

first year of a compliance period is a covered entity for the entire 

compliance period. The covered entity’s triennial compliance obligation in 

this situation is calculated as the total of the emissions that received a 

positive or qualified positive emissions data verification statement, or were 

assigned emissions pursuant to section 95131 of MRR from all data years 

of the compliance period.

(c) A covered entity that initially exceeds the threshold in section 95812 in the 

second year of the second or subsequent compliance period is a covered 

entity for the second and third years of this compliance period. The 
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covered entity’s triennial compliance obligation in this situation is 

calculated as the total of the emissions that received a positive or qualified 

positive emissions data verification statement, or were assigned emissions 

pursuant to section 95131 of MRR for the second and third data years of 

the compliance period. 

(d) A covered entity that initially exceeds the threshold in section 95812 in the 

second year of the first compliance period or the third year of a later 

compliance period has a compliance obligation for its emissions that 

received a positive or qualified positive emissions data verification 

statement, or were assigned emissions pursuant to section 95131 of MRR

for that year, but the entity’s triennial compliance obligation for the current 

compliance period is not due the following year. Instead the entity’s 

reported and verified or assigned emissions for this year will be added to 

the entity’s triennial obligation for the subsequent compliance period.

(e) For a new entrant that is eligible to receive free allowances pursuant to 

subarticles 8 and 9, the first year for this entity to receive free allowances 

is the year following the first year in which its emissions exceed the 

threshold in section 95812. The number of free allowances for this new 

entrant to receive in that year is twice the number calculated pursuant to 

section 95891. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95854. Quantitative Usage Limit on Designated Compliance 

Instruments—Including Offset Credits.

(a) Compliance instruments identified in section 95820(b) and sections 95821 

(b), (c), and (d) are subject to a quantitative usage limit when used to meet 

a compliance obligation.
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(b) The total number of compliance instruments identified in section 95854(a) 

that each covered entity may surrender to fulfill the entity’s compliance 

obligation for a compliance period must conform to the following limit:

OO/S must be less than or equal to LO

In which:

OO = Total number of compliance instruments identified in section 

95854(a) submitted to fulfill the entity’s compliance obligation for the 

compliance period.

S = Covered entity’s compliance obligation.

LO = Quantitative usage limit on compliance instruments identified in 

section 95854(a), set at 0.08.

(c) The number of sector-based offset credits that each covered entity may 

surrender to meet the entity’s compliance obligation for a compliance 

period must not be greater than 0.25 of the LO for the first and second 

compliance periods and not more than 0.50 of the LO for subsequent 

compliance periods.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95855. Annual Compliance Obligation.

(a) An entity has an annual compliance obligation for any year when the entity 

is a covered entity except for the condition specified in section 95853(d); 

and

(b) The annual compliance obligation for a covered entity equals 30 percent 

of emissions with a compliance obligation reported from the previous data 

year that received a positive or qualified positive emissions data 

verification statement, or were assigned emissions pursuant to section 

95131 of MRR.
99

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95856. Timely Surrender of Compliance Instruments by a Covered Entity.

(a) A covered entity must surrender one compliance instrument for each 

metric ton of CO2e of GHG emissions for the annual and triennial 

compliance obligations calculated pursuant to this subarticle beginning 

with the emissions data report for 2013 emissions and each subsequent 

year in which the covered entity has a compliance obligation.

(b) Compliance Instruments Valid for Surrender.

(1) A compliance instrument listed in subarticle 4 may be used to satisfy a 

compliance obligation. 

(2) To fulfill a compliance obligation, a compliance instrument must be 

issued from an allowance budget year within or before the year for 

which an annual compliance obligation is calculated or the last year of 

a compliance period for which a triennial compliance obligation is 

calculated, unless:

(A) The allowance was purchased from the Allowance Price 

Containment Reserve pursuant to section 95913; or

(B) The allowance is used to satisfy an excess emissions obligation.

(c) A covered entity must transfer from its holding account to its compliance 

account a sufficient number of compliance instruments to meet the 

compliance obligation set forth in sections 95853 and 95855. 

(d) Deadline for Surrender of Annual Compliance Obligations. For any year in 

which a covered entity has an annual compliance obligation pursuant to 

section 95855, it must fulfill that obligation:

(1) By November 1 of the calendar year following the year for which the 

obligation is calculated if the entity reports by April 10 pursuant to 

section 95103 of MRR; or
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(2) By November 1 of the calendar year following the year for which the 

obligation is calculated if the entity reports by June 1 pursuant to 

section 95103 of MRR.

(3) In years 2015, 2018, and 2021 there is no annual compliance

obligation for the preceeding compliance period, only a triennial 

compliance obligation.

(e) Determination of Triennial Compliance Obligation.

(1) When a positive or qualified positive emissions data verification 

statement or assigned emissions for any year is received by ARB, then 

those emissions for the source categories in section 95852 equal the 

triennial compliance obligation pursuant to section 95853. 

(2) If a positive or qualified positive emissions data verification statement 

for any year of the compliance period is not received by ARB by the 

applicable verification deadline as set forth in MRR, ARB will assign 

emissions according to the requirements set forth in section 95103(g) 

of MRR for the emissions for the source categories in section 95852.

The assigned emissions value then equals the compliance obligation.

(f) Surrender of Triennial Compliance Obligation.

(1) The covered entity must transfer sufficient valid compliance 

instruments to its compliance account to fulfill its triennial compliance

obligation by November 1 of the calendar year following the final year 

of the compliance period.

(2) The total number of compliance instruments submitted to fulfill the 

triennial compliance obligation is subject to the quantitative use limit 

pursuant to section 95854.

(3) The surrender of compliance instruments must equal the triennial 

compliance obligation calculated pursuant to section 95853 less 

compliance instruments surrendered to fulfill the annual compliance

obligation for the years in the compliance period.

(g) When the Executive Officer has determined the covered entity has met its 

compliance obligations, the Executive Officer shall:
101

(1) Retire the compliance instruments surrendered; and

(2) Inform programs to which California is linked or recognizes, pursuant 

to subarticles 12 and 14, of the retirements, including the serial 

numbers of the compliance instruments retired.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95857. Untimely Surrender of Compliance Instruments by a Covered 

Entity.

(a) Applicability.

(1) A covered entity or opt-in covered entity that does not meet the 

compliance deadline for surrendering its annual or triennial compliance

obligation pursuant to section 95856 is subject to the compliance 

obligation for untimely surrender as described in this section; and

(2) The compliance obligation for untimely surrender (“excess emissions”) 

will not apply to a covered entity or opt-in covered entity which is 

determined to have transferred insufficient instruments to meet the 

compliance obligations of section 95856 solely because of the 

invalidation of an ARB offset credit by the Executive Officer pursuant to 

section 95985 until six months after notice of invalidation.

(b) Calculation of the Untimely Surrender Obligation.

(1) The quantity of excess emissions is the difference between the 

compliance obligation calculated pursuant to this section and any 

compliance instruments timely surrendered by the entity;

(2) The entity’s compliance obligation for untimely surrender is calculated 

as four times the entity’s excess emissions; 

(3) At least three-fourths of an entity’s compliance obligation for untimely 

surrender may only be fulfilled with CA GHG allowances or allowances 

issued by a GHG ETS pursuant to subarticle 12; 
102

(4) Up to one-fourth of an entity’s compliance obligation for untimely 

surrender may be fulfilled with ARB offset credits or compliance 

instruments listed in sections 95821(b), (c), and (d);

(5) The quantitative usage limit provided in section 95854 will apply to the 

compliance instruments listed in section 95857(b)(4) for the 

compliance period for which the untimely surrender obligation applies; 

and 

(6) The untimely surrender obligation is due within five days of the first 

auction or reserve sale conducted by ARB following the applicable 

surrender date, whichever is the latter, and for which the registration 

deadline has not passed when the untimely surrender obligation is 

assessed.

(c) If an entity with an untimely surrender obligation fails to satisfy this 

obligation pursuant to section 95857(b)(6) then:

(1) ARB will determine the number of violations pursuant to section 96014;

(2) If a portion of the untimely surrender obligation is not surrendered as 

required, the entity will have a new untimely surrender obligation equal 

to the amount of the previous untimely surrender obligation which was 

not satisfied by the deadline stated in section 95857(b)(6) upon which 

the number of violations will be calculated pursuant to section 96014. 

The new untimely surrender obligation is due immediately; and

(3) The calculation of the untimely surrender obligation shall only apply 

once for each untimely surrender of compliance instruments per

annual or triennial compliance obligation.

(d) When the covered entity or opt-in covered entity meets its untimely 

surrender obligations pursuant to sections 95857(a) through (c), the 

Executive Officer shall:

(1) Transfer the compliance instruments used to fulfill the untimely 

surrender obligation in the following manner:

(A) At least three fourths of the compliance instruments to the 

Auction Holding Account. The three fourths of the compliance 
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instruments transferred to the Auction Holding Account shall 

only be comprised of allowances; and

(B) The remaining one fourth of compliance instruments to the 

Retirement Account.

(2) Inform programs to which California is linked or recognizes, pursuant 

to subarticles 12 and 14, of the retirements, including the serial 

numbers of the compliance instruments retired.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95858. Compliance Obligation for Under-Reporting in a Previous 

Compliance Period.

If, after an entity has surrendered its compliance instruments for a compliance 

period pursuant to section 95856, the Executive Officer determines, through an 

audit or other information, that the entity under-reported its emissions under MRR 

for any emissions sources that form the basis for entity’s the compliance 

obligation, then the following shall apply:

(a) If the difference between the emissions used to calculate the compliance 

obligation and subsequently used to calculate the number of compliance 

instruments surrendered pursuant to section 95856 and the emissions

determined by the Executive Officer to be under-reported for the sum of 

those emissions is less than five percent of the emissions number used to 

calculate the compliance obligation and subsequently used to calculate 

the number of compliance instruments surrendered pursuant to section 

95856, then the entity is not required to take any further action.

(b) If the difference between the emissions used to calculate the compliance 

obligation and subsequently calculate the number of compliance 

instruments surrendered pursuant to section 95856 and the emissions

determined by the Executive Officer to be under-reported for the sum of 

those emissions is more than five percent of the emissions number used 
104

to calculate the compliance obligation and subsequently used to calculate 

the number of compliance instruments surrendered pursuant to section 

95856, then the entity must surrender compliance instruments in the 

following amount:

Cla = EMd − CO − (CO ∗ 0.05)

Where:

‘Cla’ is the number of additional compliance instruments that must be 

surrendered to ARB to cover under-reported emissions;

‘CO’ is the emissions number used to determine the compliance 

obligation surrendered pursuant to section 95856 for any previous 

compliance period; and

‘EMd’ is the number of the emissions determined by the Executive 

Officer for the sum of the emissions sources subject to a compliance 

obligation;

(c) The entity will have six months from the time of notification by the 

Executive Officer to surrender additional compliance instruments for 

under- reporting emissions under MRR for the previous compliance period 

as determined pursuant to this section. The provisions of sections 95857 

and 96014 shall not apply during these six months. The entity may use 

compliance instruments from subsequent compliance periods to meet 

these requirements. The entity may only use CA GHG allowances or 

allowances issued by a GHG ETS approved pursuant to subarticle 12 to 

meet the requirements of this section. 

(d) Any determination that an entity under-reported its emissions for a 

previous compliance period shall be made by the Executive Officer no 

later than eight years from the applicable verification deadline for the 

emissions data report which contained the under-reporting of emissions. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
105

Subarticle 8: Disposition of Allowances 

§ 95870. Disposition of Allowances.

(a) Allowance Price Containment Reserve. Upon creation of the Allowance 

Price Containment Reserve Account, the Executive Officer shall transfer 

allowances to the Allowance Price Containment Reserve, as follows: 

(1) One percent of the allowances from budget years 2013-2014; 

(2) Four percent of the allowances from budget years 2015-2017; and 

(3) Seven percent of the allowances from budget years 2018-2020.

(b) Advance Auction. Upon creation of the Auction Holding Account, the 

Executive Officer shall transfer 10 percent of the allowances from budget 

years 2015-2020 to the Auction Holding Account.

(1) These allowances shall be auctioned pursuant to section 95910. 

(2) The proceeds from the sale of these allowances will be deposited into 

the Air Pollution Control Fund and will be available upon appropriation 

by the Legislature for the purposes designated in California Health and 

Safety Code sections 38500 et seq.

(c) Upon creation of the Voluntary Renewable Electricity Reserve Account, 

the Executive Officer shall transfer allowances to the Voluntary 

Renewable Electricity Reserve Account, as follows:

(1) 0.5 percent of the allowances from budget years 2013-2014; and

(2) 0.25 percent of the allowances from budget years 2015-2020.

(d) Electrical Distribution Utility Sector Allocation. Allowances available for 

allocation to electrical distribution utilities each budget year shall be 97.7 

million metric tons multiplied by the cap adjustment factor in Table 9-2 for 

each budget year 2013-2020. The Executive Officer will allocate to 

electrical distribution utilities on September 14, 2012 for vintage 2013 

allowances and November 1, or the first business day thereafter, of each 

calendar year from 2013-2019 for allocations from 2014-2020 annual 

allowance budgets. 
106

(e) Allocation to Industrial Covered Entities. Allowances allocated for the 

purposes of industry assistance shall be transferred to holding accounts 

for industrial sectors listed in Table 8-1. 

(1) The Executive Officer will place an annual individual allocation in the 

holding account of each eligible covered entity on or before November 

1, or the first business day thereafter, of each calendar year 2012-2019 

for allocations from 2013-2020 annual allowance budgets.

(2) Allocation to eligible covered entities shall be conducted using the 

assistance factors specified for each listed industrial activity found in 

Table 8-1 and the methodology set forth in section 95891.

(A) First Compliance Period Refining Sector Allocation. Allowances 

available for allocation to petroleum refineries from the 2013-2014 

allowance budgets shall be calculated using the following equation. 

Individual petroleum refiners will receive a portion of this sector 

allocation under the method calculated pursuant to section 

95891(d). 

SAt = Ot−2 ∗ BR ∗ AFR,t ∗ ct

Where:

“SAt” is the allocation to the refining sector from budget year “t”;

“Ot-2” is the output of primary refinery products, in barrels, from the 

refining sector in year “t-2”;

“BR” is the benchmark for primary products produced by the refining 

sector, equal to 0.0462 metric tons of allowances per barrel of 

primary refinery product;

“AFR, t” is the assistance factor for budget year “t” assigned to 

petroleum refining as specified in Table 8-1; and

“ct” is the cap adjustment factor for budget year “t” assigned to 

petroleum refining to account for cap decline as specified in Table 

9-2.
107

(B) Second and Third Compliance Period Refining Sector Allocation. 

For budget years 2015-2020, allowances available for allocation to 

individual petroleum refineries shall be calculated using the product 

output-based allocation calculation methodology in section 

95891(b). 

(3) The total amount of allowances allocated for the purposes of industry 

assistance shall not exceed the available amount of allowances after 

accounting for allocations made pursuant to section 95870(a) through 

(d). If the amount calculated under the methodology set forth in 

section 95891 exceeds the amount of allowances available, the 

number of allowances available will be prorated equally across all 

eligible industrial covered entities. The proration will be calculated 

using the share of allowances available after accounting for all 

allocations made pursuant to sections 95870(a) through (d) compared 

to total allowances that would be distributed according to the 

methodology set forth in section 95891.
108

Table 8-1: Industry Assistance 

Leakage Risk 

Classification NAICS Sector Definition NAICS 

Code Activity(a)

Industry Assistance Factor 

(AFa)

by Budget Year

2013-

2014

2015-

2017

2018-

2020

High

Crude Petroleum and Natural 

Gas Extraction 211111

Thermal EOR Crude Oil 

Extraction 100% 100% 100%

Non-Thermal Crude Oil 

Extraction 100% 100% 100%

Natural Gas Liquid Extraction 211112 Natural Gas Liquid Processing 100% 100% 100%

Potash, Soda, and Borate 

Mineral Mining

212391

Mining and Manufacturing of 

Soda Ash and Related 

Products 100% 100% 100%

All Other Nonmetallic Mineral 

Mining 212399 Diatomaceous Earth Mining 100% 100% 100%

Paper (except Newsprint) Mills 322121 Tissue Manufacturing 100% 100% 100%

Paperboard Mills 322130

Recycled Boxboard 

Manufacturing 100% 100% 100%

Recycled Linerboard 

(Testliner) Manufacturing 100% 100% 100%

Recycled Medium (Fluting) 

Manufacturing 100% 100% 100%

All Other Petroleum and Coal 

Products Manufacturing 

All Other Basic Inorganic 

Chemical Manufacturing

324199

325188

Coke Calcining 

All Other Basic Inorganic 

Chemical Manufacturing

100%

100%

100%

100%

100%

100%

All Other Basic Organic 

Chemical Manufacturing 325199 All Other Basic Organic Chemical Manufacturing 100% 100% 100%

Nitrogenous Fertilizer 325311 Nitric Acid Production 100% 100% 100%
109

Leakage Risk 

Classification NAICS Sector Definition NAICS 

Code Activity(a) Industry Assistance Factor (AFa)

Manufacturing Calcium Ammonium Nitrate 

Solution Production 100% 100% 100%

Flat Glass Manufacturing 327211 Flat Glass Manufacturing 100% 100% 100%

Glass Container Manufacturing 327213 Container Glass Manufacturing 100% 100% 100%

Cement Manufacturing 327310 Cement Manufacturing 100% 100% 100%

Lime Manufacturing 327410 Dolime Manufacturing 100% 100% 100%

Iron and Steel Mills 331111 Steel Production Using Electric Arc Furnace 100% 100% 100%

Rolled Steel Shape 

Manufacturing 331221 Hot Rolled Steel Sheet Production 100% 100% 100%

Medium

Food Manufacturing 311 Food Manufacturing 100% 75% 50%

Cut and Sew Apparel 

Manufacturing 3152 Cut and Sew Apparel Manufacturing 100% 75% 50%

Breweries 312120 Brewing 100% 75% 50%

Petroleum Refineries 324110 Petroleum Refining 100% 75% 50%

Industrial Gas Manufacturing 325120

Gaseous Hydrogen 

Production 100% 75% 50%

Liquefied Hydrogen 

Production 100% 75% 50%

Biological Product (Except 

Diagnostic) Manufacturing

325414 Biological Product (Except 

Diagnostic) Manufacturing 100% 75% 50%

Gypsum Product Manufacturing 327420 Plaster Manufacturing 100% 75% 50%

Plaster Board Manufacturing 100% 75% 50%

Mineral Wool Manufacturing 327993 Fiber Glass Manufacturing 100% 75% 50%

Rolled Steel Shape 

Manufacturing 331221

Picked Steel Sheet 

Production 100% 75% 50%

Cold Rolled and Annealed 

Steel Sheet Production 100% 75% 50%
110

Leakage Risk 

Classification NAICS Sector Definition NAICS 

Code Activity(a) Industry Assistance Factor (AFa)

Galvanized Steel Sheet 

Production 100% 75% 50%

Tin Steel Plate Production 100% 75% 50%

Secondary Smelting and 

Alloying of Aluminum 331314 Secondary Smelting and Alloying of Aluminum 100% 75% 50%

Secondary Smelting, Refining, 

and Alloying of Nonferrous 

Metal (Except Copper and 

Aluminum)

331492

Secondary Smelting, 

Refining, and Alloying of 

Nonferrous Metal (Except 

Copper and Aluminum) 100% 75% 50%

Iron Foundries 331511 Iron Foundries 100% 75% 50%

Turbine and Turbine Generator 

Set Units Manufacturing 333611 Testing of Turbines and Turbine Generator Sets 100% 75% 50%

Low

Pharmaceutical and Medicine 

Manufacturing 325412 Pharmaceutical and Medicine Manufacturing 100% 50% 30%

Aircraft Manufacturing 336411 Aircraft Manufacturing 100% 50% 30%

Support Activities for Air 

Transportation 4881 Support Activities for Air Transportation 100% 50% 30%
111

(f) Auction Proceeds for AB 32 Statutory Objectives. All remaining 

allowances not allocated for uses specified in sections 95870(a) through

(e) will be designated for sale at auction. The proceeds from the sale of 

these allowances will be deposited into the Air Pollution Control Fund and 

will be available for appropriation by the Legislature for the purposes 

designated in California Health and Safety Code sections 38500 et seq. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 9: Direct Allocations of California GHG Allowances 

§ 95890. General Provisions for Direct Allocations.

(a) Eligibility Requirements for Industrial Facilities. A covered entity or opt-in 

covered entity from the industrial sectors listed in Table 8-1 shall be 

eligible for direct allocations of California GHG allowances if it has 

complied with the requirements of MRR and has obtained a positive or 

qualified positive product data verification statement for the prior year

pursuant to MRR. 

(b) Eligibility Requirements for Electrical Distribution Utilities. An electrical 

distribution utility shall be eligible for direct allocation of California GHG 

allowances if it has complied with the requirements of MRR and has 

obtained a positive or qualified positive emissions data verification 

statement for the prior year pursuant to MRR.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
112

§ 95891. Allocation for Industry Assistance.

(a) The Executive Officer shall determine the amount of allowances directly 

allocated to each eligible covered entity or opt-in covered entity using the 

product output-based allocation calculation methodology specified in 

section 95891(b) if the entity conducts an activity listed in both Table 8-1 

and Table 9-1. The Executive Officer shall determine the amount of 

allowances directly allocated to each eligible covered entity or opt-in 

covered entity using the energy-based allocation calculation methodology 

specified in section 95891(c) if the entity conducts an activity listed in 

Table 8-1 but not listed in Table 9-1.

(1) First Compliance Period Refining Sector Allocation Exception. For 

budget years 2013-2014 petroleum refineries shall receive their 

allocation of allowances pursuant to the methodology stated in 

section 95891(d).

(2) Second and Third Compliance Period Refining Sector Allocation. 

For buget years 2015-2020 petroleum refineries shall receive their 

allocation of allowances pursuant to the product output-based 

allocation calculation methodology stated in section 95891(b). 

(b) Product Output-Based Allocation Calculation Methodology. The Executive 

Officer shall calculate the amount of California GHG Allowances directly 

allocated under a product output-based methodology annually using the 

following formula:

At = �Oa,initial ∗ Ba ∗ AFa,t ∗ ca,t + �Oa,trueup ∗ Ba ∗ AFa,t−2 ∗ ca,t−2

n

a=1

n

a=1

Where:
113

“At” is the amount of California GHG allowances directly allocated to the 

operator of an industrial facility for all activities with a product outputbased allocation from budget year “t”; 

“t” is the budget year from which the direct allocation occurs;

“t-2” is the year two years prior to year “t”;

“t-4” is the year four years prior to year “t”;

“a” is each eligible activity as defined in Table 9-1;

“n” is the number of eligible activities at a facility; 

“Oa, initial” will be calculated by the Executive Officer as the output in year “t2” as reported to ARB. 

“Oa,trueup” adjusts for any output in year “t” not properly accounted for in 

prior allocations. The Executive Officer will calculate this term using the 

difference between the output reported in data year “t-2” and the output 

reported in data year “t-4.”

“Ba

” is the emissions efficiency benchmark per unit of output for each 

eligible activity defined in Table 9-1; 

“AFa, t” is the assistance factor for budget year “t” assigned to each activity 

“a” as specified in Table 8-1; and 

“ca,t” is the adjustment factor for budget year “t” assigned to each activity 

“a” to account for cap decline as specified in Table 9-2.
114

Table 9-1: Product-Based Emissions Efficiency Benchmarks

NAICS Sector 

Definition

NAICS 

code Activity (a) Benchmark (Ba) Benchmark Units

Crude Petroleum 

and Natural Gas 

Extraction

211111

Thermal EOR 

Crude Oil 

Extraction

0.0816

Allowances / Barrel 

of Thermal Crude 

Oil Eqv.

Non Thermal 

Crude Oil 

Extraction

0.0082

Allowances / Barrel 

of Non Thermal 

Crude Oil Eqv.

Natural Gas Liquid 

Extraction 211112 Natural Gas Liquid Processing 0.0146

Allowances / Barrel 

of Natural Gas 

Liquids Produced

Potash, Soda, and 

Borate Mineral 

Mining

212391

Mining and 

Manufacturing of 

Soda Ash and 

Related Products

0.948

Allowances / Short 

Ton of Soda Ash 

Equivalent (Soda 

Ash, Biocarb, 

Borax, V-Bor, 

DECA, PYROBOR, 

Boric Acid, and 

Sulfate)
115

NAICS Sector 

Definition

NAICS 

code Activity (a) Benchmark (Ba) Benchmark Units

Paper (except 

Newsprint) Mills 322121 Tissue Manufacturing

1.14 Allowances / Air 

Dried Short Ton of 

tissue

Paperboard Mills 322130

Recycled Boxboard 

Manufacturing 0.499

Allowances / Air 

Dried Short Ton of 

recycled boxboard

Recycled 

Linerboard 

(Testliner) 

Manufacturing

0.562

Allowances / Air 

Dried Short Ton of 

recycled 

linerboard

Recycled Medium 

(Fluting) 

Manufacturing

0.392 Allowances / Air 

Dried Short Ton of 

recycled medium

Petroleum 

Refineries 324110

Petroleum Refining

0.0295 Allowances / CO2

(CO2 Weighted Weighted Tonne

Tonne)

All Other Petroleum 

and Coal Products 

Manufacturing

324199 Coke Calcining 0.341

Allowances/Short 

Ton Calcined 

Coke

Industrial Gas 

Manufacturing 325120

Gaseous Hydrogen 

Production 8.85

Allowances / 

Metric Ton of 

Hydrogen Gas

Liquid Hydrogen 

Production 8.85

Allowances / 

Metric Ton of 

Liquid Hydrogen
116

NAICS Sector 

Definition

NAICS 

code Activity (a) Benchmark (Ba)

Benchmark 

Units

Nitrogenous 

Fertilizer 

Manufacturing

325311

Nitric Acid 

Production 0.349

Allowances / 

Short ton of nitric 

acid (HNO3 

100%)

Calcium Ammonium 

Nitrate Solution 

Production

0.0902

Allowances / 

Short ton of 

calcium 

ammonium 

nitrate solution

Flat Glass 

Manufacturing 327211 Flat glass Manufacturing 0.471

Allowances / 

Short Ton of Flat 

Glass Pulled

Glass Container 

Manufacturing 327213 Container Glass Manufacturing 0.264

Allowances / 

Short Ton of 

Container Glass 

Pulled

Mineral Wool 

Manufacturing 327993 Fiber Glass Manufacturing 0.394

Allowances / 

Short Ton of 

Fiberglass Pulled

Cement 

Manufacturing 327310 Cement Manufacturing 0.718

Allowances / 

Short ton of 

adjusted clinker 

and mineral 

additives 

produced

Lime Manufacturing 327410 Dolime 

Manufacturing 1.40

Allowances / 

Short Ton of 

Dolime Produced

Gypsum Product 

Manufacturing 327420

Plaster 

Manufacturing 0.0454

Allowances / 

Short Ton of 

Plaster

Plaster Board 

Manufacturing 0.134

Allowances / 

Short Ton of 

Plaster Board

Iron and Steel Mills 331111

Steel Production 

Using an Electric

Arc Furnace

0.170

Allowances / 

Short ton of Steel 

produced using 

EAF
117

NAICS Sector 

Definition

NAICS 

code Activity (a) Benchmark (Ba)

Benchmark 

Units

Rolled Steel Shape 

Manufacturing 331221

Hot Rolled Steel 

Sheet Production 0.0843

Allowances / 

Short ton of hot 

rolled steel

Picked Steel Sheet 

Production 0.0126

Allowances / 

Short ton of 

pickled steel

Cold Rolled and 

Annealed Steel 

Sheet Production

0.0313

Allowances / 

Short ton of cold 

rolled and 

annealed steel

Galvanized Steel 

Sheet Production 0.0504

Allowances / 

Short ton of 

galvanized steel

Tin Steel Plate 

Production 0.0610

Allowances / 

Short ton of tin 

plate

Turbine and Turbine 

Generator Set Units 

Manufacturing

333611

Testing of Turbines 

and Turbine 

Generator Sets

0.00782

Allowances / 

Horsepower 

tested

(c) Energy-Based Allocation Calculation Methodology. The Executive Officer 

shall calculate the amount of California GHG Allowances directly allocated 

under the energy-based methodology annually using the following 

formula:

At = �SConsumed ∗ BSteam + FConsumed ∗ BFuel − eSold ∗ BElectricity� ∗ AFa,t ∗ ca,t

Where:

“At” is the amount of California GHG allowances directly allocated to the 

operator of an industrial facility with an energy-based allocation from 

budget year “t”; 
118

“t” is the budget year from which the direct allocation occurs; 

“SConsumed” is the historical baseline annual arithmetic mean amount of 

steam consumed, measured in MMBtu, at the industrial facility for any

industrial process, including heating or cooling applications. This value 

shall exclude any steam used to produce electricity. This value shall 

exclude steam produced from an onsite cogeneration unit;

“BSteam” is the emissions efficiency benchmark per unit of steam, 0.06244 

California GHG Allowances/MMBtu Steam; 

“FConsumed” is the historical baseline annual arithmetic mean amount of

energy produced due to fuel combustion at a given facility, measured in 

MMBtus. The Executive Officer shall calculate this value based on 

measured higher heating values or the default higher heating value of the

applicable fuel in Table C–1 of subpart C, title 40, Code of Federal 

Regulations, Part 98. This value shall include any energy from fuel 

combusted in an onsite electricity generation or cogeneration unit. This 

value shall exclude energy to generate the steam accounted for in the 

“SConsumed” term;

“BFuel” is the emissions efficiency benchmark per unit of energy from fuel

combustion, 0.05307 California GHG Allowances/MMBtu; 

“eSold” is the historical baseline annual arithmetic mean amount of 

electricity sold or provided for off-site use, measured in MWhs;

“BElectricity” is the emissions efficiency benchmark per unit of electricity sold 

or provided to off-site end users, 0.431 California GHG Allowances/MWh;
119

“AFa, t” is the assistance factor for budget year “t” assigned to each activity 

“a” as specified in Table 8-1; and 

“c a,t” is the adjustment factor for budget year “t” assigned to each activity 

“a” to account for cap decline as specified in Table 9-2.

(1) Data Sources. 

(A) In determining the appropriate baseline values, the Executive 

Officer may employ all available data reported to ARB under 

MRR for data years 2008-2010. If necessary, the Executive 

Officer will solicit additional data to establish a representative 

baseline allocation.

(B) Recognition of California Climate Action Registry membership. 

If a facility reported facility level, third-party verified, greenhouse 

gas emissions data to the California Climate Action Registry for 

data years 2000-2007, the Executive Officer may consider these 

years in determining the representative annual baseline value. 

If necessary the Executive Officer will solicit additional data for 

these data years.

(2) Maximum Free Allocation. The Executive Officer shall ensure that the 

annual amount of California GHG Allowances directly allocated under 

the energy-based methodology to a covered entity for operations at a 

facility shall not exceed 110% of the maximum annual level of 

greenhouse gas emissions, adjusted for steam purchases and sales 

and electricity sales, emitted during the historical data years used in 

establishing the baseline allocation for the facility in question.

(3) New Entrants. Covered entities of facilities that were not in operation 

prior to 2011 and are eligible for free allocation under the energybased methodology shall be assessed a baseline annual allocation 

based on expected activity levels as determined by the Executive 

Officer.
120

(4) Facility Closures. Covered entities that are no longer subject to the 

Cap-and-Trade Program due to reduced emissions or facility closure 

as determined pursuant to section 95812(e) shall no longer be eligible 

to receive allowances. 

(d) First Compliance Period Refining Sector Allocation Calculation 

Methodology. For the budget years 2013-2014, the Executive Officer shall 

calculate the amount of California GHG allowances allocated to an 

individual petroleum refinery annually using the following methodology.

(1) Facilities without an EII value. For refineries that did not participate in 

the 2008 Solomon Energy Review, or that do not have a representative 

EII value as determined by the Executive Officer, allowances will be 

allocated using the following equation:

If: OX,t−2 ∗ BR ∗ c t ∗ AFR,t ≤ BEX ∗ c t ∗ AFR,t

Then: AX,t = OX,t−2 ∗ BR ∗ c t ∗ AFR,t

If: OX,t−2 ∗ BR ∗ c t ∗ AFR,t > BEX ∗ c t ∗ AFR,t

Then: AX,t = BEX ∗ c t ∗ AFR,t

Where: 

“AX,t” is the allocation to refinery “X” without an EII value for year “t”;

“OX,t-2” is the output of primary refinery products, in barrels, from refinery 

“X” in year “t-2”;

“BR” is the benchmark for primary products produced by the refining 

sector, equal to 0.0462 metric tons of allowances per barrel of primary 

product;

“AFR, t” is the assistance factor for budget year “t” assigned to petroleum 

refining as specified in Table 8-1; and
121

“ct” is the adjustment factor for budget year “t” assigned to petroleum 

refining to account for cap decline as specified in Table 9-2.

“BEX” is the baseline average annual greenhouse gas emissions for 

refinery “X” adjusted for steam purchases and sales and electricity sales 

using the following equation:

BEX = GHG + (SPurchased − SSold) ∗ 0.06244 − eSold ∗ 0.431

“GHG” is the annual arithmetic mean amount of greenhouse gas 

emissions from the refinery;

“SPurchased” is the annual arithmetic mean amount of steam purchased 

by the refinery in MMBtu;

“SSold” is the annual arithmetic mean amount of steam sold from the 

refinery in MMBtu;

“eSold” is the annual arithmetic mean amount of electricity sold from the 

refinery in MWh; 

To calculate these values, the Executive Officer may employ data 

reported to ARB for data years 2008-2010. If the facility reported 

facility-level, third-party verified, greenhouse gas emissions data to the 

California Climate Action Registry for data years 2006-2007, the 

Executive Officer may consider these years in determining 

representative baseline values. If necessary, the Executive Officer will 

solicit data to establish a representative baseline. 
122

(2) Facilities with an EII value. For refineries that participated in the 2008 

Solomon Energy Review and have a representative EII value,

allowances will be allocated using the following approach:

(A) Initial Allocations. 2013 and 2014 vintage allowances will be 

allocated using the following equation:

AY,t = BEY ∗ DFY,t ∗ Ft

Where: 

“AY,t” is the initial allocation to refinery “Y” that has an EII value for year “t”;

“BEY” is the baseline average annual greenhouse gas emissions for 

refinery “Y” adjusted for steam purchases and sales and electricity sales 

using the following equation:

BEY = GHG + (SPurchased − SSold) ∗ 0.06244 − eSold ∗ 0.431

“GHG”, for the purposes of this calculation,is the annual arithmetic 

mean amount of greenhouse gas emissions from the refinery;

“SPurchased” is the annual arithmetic mean amount of steam purchased 

by the refinery in MMBtu;

“SSold” is the annual arithmetic mean amount of steam sold from the 

refinery in MMBtu;

“eSold” is the annual arithmetic mean amount of electricity sold from the 

refinery in MWh; 

To calculate these values, the Executive Officer may employ data 

reported to ARB for data years 2008-2010. If the facility reported 

facility level, third-party verified, greenhouse gas emissions data to the 
123

California Climate Action Registry for data years 2006-2007, the 

Executive Officer may consider these years in determining 

representative baseline values. If necessary, the Executive Officer will 

solicit data to establish a representative baseline allocation; 

“DFY,t” is a distribution factor calculated as:

DFY,t = ((Avg / EIIY) + Adjt) / (1 + Adjt)

"Avg” is the weighted average EII for all facilities with EII values calculated 

as:

Avg = ∑ BEY

∑(BEY/EIIY)

“EIIY” is the Solomon Energy Intensity Index (EII) for facility Y for 2008, 

2009 or 2010 as determined to be representative by the Executive Officer. 

For the purposes of this calculation, EII values shall be rounded to one 

digit after the decimal;

"Adj" is an adjustment factor designed to provide the facility with the best 

EII the most allowances relative to its baseline level:

Adjt = ((Avg/EIIBest) ∗ Ft − 1) / (1 − Ft)

“EIIBest” is the EII of most efficient facility (lowest EII in sector);

“Ft” is a fraction calculated as: 

Ft = SAt − ∑ AX,t

∑ BEY

“SAt” is the allocation to refining sector for year “t” specified in section 

95870(e)(2)(A);
124

(B) True-up Debit. If actual 2013 and 2014 emissions are less than the 

amount of allowances allocated, the entity will need to surrender

additional allowances according to the following equation:

If: (AEY,2013 + AEY,2014) < (AY,2013 + AY,2014)

Then: AY,Debit = 0.8 ∗ �(AEY,2013 + AEY,2014) − (AY,2013 + AY,2014)�

Where:

“AEY,t” = Actual GHG emissions from a facility in year “t” adjusted for heat 

sales and purchases and electricity purchases. 

“AY,Debit” = A debit (shown as a negative value in the equation above) to be 

surrendered in addition to the triennial compliance obligation for 

refinery “Y.”

(C) True-up Credit. If actual 2013 and 2014 emissions are greater than 

the assumed baseline emissions, a true-up allocation will be 

conducted using 2015 vintage allowances and the following 

equation:

If: (2 ∗ BEY) < (AEY,2013 + AEY,2014)

Then: AY,Credit = (AEY,2013 ∗ DFY,2013 ∗ F2013 ∗ AF2013 + AEY,2014 ∗ DFY,2014 ∗

F2014 ∗ AF2014 ) − (AY,2013 + AY,2014)

Where:

“AY,Credit” = An additional true-up allocation distributed by the Executive 

Officer to refinery “Y” using 2015 vintage allowances. 
125

Table 9-2: Cap Adjustment Factors for Allowance Allocation 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Budget 

Year

Cap 

Adjustment 

Factor (c) 

for All Other 

Direct 

Allocation

Cap Adjustment Factor (c) for Sectors with Process 

Emissions Greater Than 50% 

Sector NAICS Activity

Nitrogenous 

Fertilizer 

Manufacturing

325311

Nitric Acid Production

Calcium Ammonium 

Nitrate Solution Production

Cement 

manufacturing

327311 Cement manufacturing

Lime 

manufacturing

327410 Dolime Manufacturing

2013 0.981 0.991

2014 0.963 0.981

2015 0.944 0.972

2016 0.925 0.963

2017 0.907 0.953

2018 0.888 0.944

2019 0.869 0.935

2020 0.851 0.925
126

§ 95892. Allocation to Electrical Distribution Utilities for Protection of 

Electricity Ratepayers.

(a) Allocation to Individual Electrical Distribution Utilities. The allowances 

allocated to each electrical distribution utility from each budget year shall 

be the electrical distribution utility sector allocation calculated pursuant to 

section 95870(d) for the budget year multiplied by the percentage 

allocation factors specified in Table 9-3. Any allowance allocated to 

electrical distribution utilities must be used exclusively for the benefit of 

retail ratepayers of each such electrical distribution utility, consistent with 

the goals of AB 32, and may not be used for the benefit of entities or 

persons other than such ratepayers. 

(b) Transfer to Utility Accounts.

(1) Investor Owned Utilities. The Executive Officer will place allowances 

in the limited use holding account created for each electrical 

corporation. 

(2) Publicly Owned Electric Utilities or Electrical Cooperatives. When a 

publicly owned electric utility or electrical cooperative is eligible for a 

direct allocation, it shall inform the Executive Officer of the amounts to 

be placed:

(A) In the compliance account of an electrical generating facility 

operated by a publicly owned electric utility, an electrical 

cooperative, or a Joint Powers Agency in which the electrical 

distribution utility or electrical cooperative is a member and with 

which it has a power purchase agreement; or

(B) In the publicly owned electric utility’s or electrical cooperative’s 

limited use holding account. 

(3) Publicly owned electric utilities or electrical cooperatives receiving a 

direct allocation must inform the Executive Officer of the accounts in 

which the allocations are to be placed by September 1, or the first 

business day thereafter.
127

(c) Monetization Requirement. 

(1) In 2012 an electrical distribution utility must offer one third of the 

allowances placed in its limited use holding account in 2012 for sale at 

the auction scheduled for 2012. 

(2) Within each calendar year after 2012, an electrical distribution utility 

must offer for sale at auction all allowances in its limited use holding 

account that were issued:

(A) From budget years that correspond to the current calendar year; 

and

(B) From budget years prior to the current calendar year.

(d) Limitations on the Use of Auction Proceeds and Allowance Value. 

(1) Proceeds obtained from the monetization of allowances directly 

allocated to a publicly owned electric utility shall be subject to any 

limitations imposed by the governing body of the utility and to the 

additional requirements set forth in sections 95892(d)(3-5) and 

95892(e). 

(2) Proceeds obtained from the monetization of allowances directly 

allocated to investor owned utilities shall be subject to any limitations 

imposed by the California Public Utilities Commission and to the 

additional requirements set forth in sections 95892(d)(3-5) and 

95892(e).

(3) Auction proceeds and allowance value obtained by an electrical 

distribution utility shall be used exclusively for the benefit of retail 

ratepayers of each electrical distribution utility, consistent with the 

goals of AB 32, and may not be used for the benefit of entities or 

persons other than such ratepayers. 

(4) Investor owned utilities shall ensure equal treatment of their own 

customers and customers of electricity service providers and 

community choice aggregators.

(5) Prohibited Use of Allocated Allowance Value. Use of the value of any 

allowance allocated to an electrical distribution utility, other than for 
128

the benefit of retail ratepayers consistent with the goals of AB 32 is 

prohibited, including use of such allowances to meet compliance 

obligations for electricity sold into the California Independent System 

Operator markets. 

(e) Reporting on the Use of Auction Proceeds and Allowance Value. No later 

than June 30, 2014, and each calendar year thereafter, each electrical 

distribution utility shall submit a report to the Executive Officer describing 

the disposition of any auction proceeds and allowance value received in 

the prior calendar year. This report shall include:

(1) The monetary value of auction proceeds received by the electrical 

distribution utility;

(2) How the electrical distribution utility’s disposition of such auction 

proceeds complies with the requirements of this section and the 

requirements of California Health and Safety Code sections 38500 et 

seq.;

(3) The monetary value of allowances received by the electrical 

distribution utility which were deposited directly into electrical 

generating facility compliance accounts. The electrical distribution 

utility shall calculate the value of these allowances based on the 

average market clearing price of the four quarterly auctions held in the 

same calendar year that the allowances are allocated; and

(4) How the electrical distribution utility’s disposition of the monetary value 

of allowances, deposited directly into compliance accounts, complies 

with the requirements of this section and the requirements of California 

Health and Safety Code sections 38500 et seq.
129

Table 9-3: Percentage of Electric Sector Allocation Allocated to Each Utility

Utility Name Utility 

Type 

(1)

Annual % of Total Electric Sector Allocation to Utility

2013 2014 2015 2016 2017 2018 2019 2020

PG&E IOU 26.02909% 26.34522% 26.01510% 26.21500% 27.21147% 26.91164% 27.21091% 27.22981%

LADWP POU 14.18332% 14.18925% 14.00829% 14.43473% 14.91438% 15.28169% 14.96326% 14.04837%

SCE IOU 34.01733% 33.58115% 34.04480% 32.69831% 30.32124% 29.84140% 29.46661% 29.71342%

SDG&E IOU 7.21940% 6.96087% 6.96792% 7.08933% 7.29010% 7.24815% 7.28721% 7.38964%

SMUD POU 3.28172% 3.28283% 3.21338% 3.30147% 3.44817% 3.57259% 3.70519% 3.83415%

City of Anaheim POU 2.07532% 2.12074% 2.11355% 2.19270% 2.20963% 2.27089% 2.30639% 2.35434%

City of Azusa 

(Azusa Light & 

Water)

POU

0.18055% 0.18489% 0.18858% 0.19402% 0.20119% 0.20555% 0.21082% 0.21761%

City of Banning POU 0.09772% 0.10169% 0.10327% 0.10646% 0.11074% 0.11334% 0.11631% 0.12050%

City of Burbank POU 0.65354% 0.66027% 0.66532% 0.67128% 0.68296% 0.68319% 0.68787% 0.69354%

City of Cerritos POU 0.01827% 0.01887% 0.01945% 0.02004% 0.02090% 0.02128% 0.02186% 0.02240%

City of Colton POU 0.24485% 0.25185% 0.25876% 0.26535% 0.27437% 0.27891% 0.28559% 0.29302%

City of Glendale 

(Water and 

Power)

POU

0.65850% 0.66238% 0.66100% 0.67150% 0.69049% 0.69592% 0.68391% 0.70039%
130

Utility Name Utility 

Type 

(1)

Annual % of Total Electric Sector Allocation to Utility

2013 2014 2015 2016 2017 2018 2019 2020

City of Pasadena 

(Pasadena Water and 

Power)

POU

0.80141% 0.80710% 0.80920% 0.82057% 0.83784% 0.86949% 0.87876% 0.89190%

City of Riverside POU 1.12865% 1.13669% 1.13121% 1.17999% 1.20482% 1.24829% 1.27103% 1.30954%

City of Vernon POU 0.41385% 0.42014% 0.42987% 0.43256% 0.44276% 0.44174% 0.42961% 0.42477%

Imperial Irrigation District POU 1.77241% 1.81456% 1.82936% 1.90056% 1.97281% 2.00476% 2.05350% 2.11597%

Modesto ID POU 1.26426% 1.28335% 1.27289% 1.30523% 1.34388% 1.35267% 1.36746% 1.40098%

City of Alameda POU 0.05321% 0.05746% 0.05675% 0.06140% 0.06253% 0.07244% 0.07403% 0.07561%

City of Biggs POU 0.00680% 0.00729% 0.00674% 0.00681% 0.00733% 0.00711% 0.00710% 0.00721%

City of Gridley POU 0.01517% 0.01551% 0.01571% 0.01601% 0.01650% 0.01657% 0.01654% 0.01666%

City of Healdsburg POU 0.03290% 0.03271% 0.03126% 0.03325% 0.03567% 0.03777% 0.03889% 0.04195%

City of Lodi POU 0.16616% 0.16780% 0.16385% 0.16740% 0.17419% 0.17518% 0.17494% 0.17995%

City of Lompoc POU 0.04956% 0.04985% 0.04887% 0.05136% 0.05400% 0.05438% 0.05442% 0.05635%
131

Utility Name Utility 

Type 

(1)

Annual % of Total Electric Sector Allocation to Utility

2013 2014 2015 2016 2017 2018 2019 2020

City of Palo Alto POU 0.35530% 0.35717% 0.34944% 0.35460% 0.36639% 0.36628% 0.36537% 0.37403%

City of Redding POU 0.44750% 0.50262% 0.50106% 0.51053% 0.52983% 0.54582% 0.54607% 0.55913%

City of Roseville POU 0.48831% 0.50123% 0.50861% 0.53058% 0.55609% 0.54800% 0.54623% 0.55111%

City of Ukiah POU 0.03536% 0.03503% 0.03265% 0.03550% 0.03905% 0.04202% 0.04340% 0.04460%

Plumas-Sierra Rural 

Electric Cooperation COOP 0.06414% 0.06559% 0.06670% 0.06763% 0.06929% 0.06923% 0.06894% 0.06892%

Port of Oakland POU 0.03277% 0.03345% 0.03411% 0.03438% 0.03491% 0.03467% 0.03451% 0.03432%

Silicon Valley Power POU 1.13125% 1.14819% 1.13895% 1.20823% 1.29624% 1.33330% 1.33645% 1.38438%

Truckee-Donner Public 

Utility District POU 0.12089% 0.12415% 0.12749% 0.13067% 0.13480% 0.13722% 0.14051% 0.14406%

Turlock Irrigation District POU 0.94012% 0.97157% 0.98772% 1.01291% 1.05443% 1.06803% 1.06840% 1.08659%

Anza Electric Cooperative, 

Inc. COOP 0.02028% 0.02102% 0.02181% 0.02237% 0.02320% 0.02348% 0.02405% 0.02443%

Bear Valley Electric 

Service IOU 0.00006% 0.00006% 0.00006% 0.00007% 0.00007% 0.00007% 0.00007% 0.00007%
132

Utility Name Utility 

Type 

(1)

Annual % of Total Electric Sector Allocation to Utility

2013 2014 2015 2016 2017 2018 2019 2020

City of Needles POU 0.01027% 0.01086% 0.01148% 0.01183% 0.01248% 0.01250% 0.01284% 0.01316%

City of Rancho 

Cucamonga POU 0.02559% 0.02653% 0.02753% 0.02822% 0.02928% 0.02961% 0.03034% 0.03104%

City and County of San 

Francisco POU 0.09929% 0.11620% 0.13435% 0.15375% 0.17430% 0.19643% 0.22009% 0.24157%

City of Shasta Lake 

(Shasta Dam Area Public 

Utility District)

POU

0.05182% 0.05360% 0.05499% 0.05689% 0.05994% 0.06088% 0.06253% 0.06489%

Lassen Municipal Utility 

District POU 0.05079% 0.05279% 0.05492% 0.05638% 0.05866% 0.05927% 0.06075% 0.06219%

Merced Irrigation District POU 0.17105% 0.17687% 0.18268% 0.18770% 0.19525% 0.19791% 0.20285% 0.20835%

Moreno Valley Utilities POU 0.03929% 0.04073% 0.04227% 0.04334% 0.04495% 0.04547% 0.04657% 0.04765%

Mountain Utilities IOU 0.00306% 0.00317% 0.00329% 0.00337% 0.00350% 0.00354% 0.00362% 0.00369%

Port of Stockton POU 0.00538% 0.00558% 0.00579% 0.00594% 0.00616% 0.00623% 0.00638% 0.00648%

Power and Water 

Resource Pooling 

Authority

POU

0.06650% 0.06899% 0.07018% 0.07365% 0.07980% 0.08118% 0.08378% 0.08727%

Sierra Pacific Power 

Company POU 0.22625% 0.23453% 0.24340% 0.24957% 0.25888% 0.26194% 0.26839% 0.27259%
133

Utility Name Utility 

Type 

(1)

Annual % of Total Electric Sector Allocation to Utility

2013 2014 2015 2016 2017 2018 2019 2020

Surprise Valley Electrical 

Corporation COOP 0.05381% 0.05578% 0.05789% 0.05936% 0.06158% 0.06230% 0.06384% 0.06484%

Trinity Public Utility District POU 0.00000% 0.00000% 0.00000% 0.00000% 0.00000% 0.00000% 0.00000% 0.00000%

WAPA POU 0.33271% 0.35496% 0.37846% 0.39096% 0.41612% 0.41522% 0.42716% 0.43040%

Valley Electric Association, 

Inc. COOP 0.00012% 0.00012% 0.00013% 0.00013% 0.00014% 0.00014% 0.00014% 0.00014%

Victorville Municipal POU 0.02385% 0.02472% 0.02566% 0.02631% 0.02729% 0.02761% 0.02829% 0.02873%

Hercules POU 0.00656% 0.00674% 0.00687% 0.00711% 0.00747% 0.00761% 0.00782% 0.00813%

City of Industry POU 0.00910% 0.00945% 0.00982% 0.01008% 0.01047% 0.01058% 0.01085% 0.01101%

Corona POU 0.06050% 0.06248% 0.06438% 0.06621% 0.06897% 0.06999% 0.07176% 0.07331%

Pittsburg Power (Island) POU 0.00407% 0.00429% 0.00452% 0.00466% 0.00492% 0.00494% 0.00507% 0.00513%

Eastside POU 0.00487% 0.00522% 0.00558% 0.00577% 0.00616% 0.00613% 0.00631% 0.00635%

PacifiCorp IOU 0.75511% 0.77388% 0.79208% 0.81600% 0.84143% 0.86742% 0.89439% 0.92339%

(1) IOU = Investor Owned Electric Utility, POU = Publicly Owned Electric Utility, COOP = Rural Electric Cooperative
134

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 10: Auction and Sale of California Greenhouse Gas 

Allowances

§ 95910. Auction of California GHG Allowances.

(a) Timing of the Allowance Auctions.

(1) In 2012, an auction will held on November 14. 

(2) Beginning in 2013, auctions shall be conducted on the twelfth business 

day in California or a jurisdiction operating an External GHG ETS to 

which California has linked pursuant to subarticle 12 of the second 

month of each calendar quarter.

(b) General Requirements.

(1) Allowances allocated to the Auction Holding Account pursuant to 

section 95870(f) will be designated to specific auctions pursuant to 

section 95910(c).

(2) An allowance may be designated for auction prior to or after its vintage 

year.

(c) Allowances from future vintages will be auctioned separately from 

allowances from current and previous vintages each quarter. 

(1) Auction of Allowances from the Current and Previous Budget Years. 

(A) This auction will be known as the Current Auction.

(B) Beginning in 2013, one quarter of the allowances allocated for 

auction from the current calendar year’s budget will be 

designated for sale at each Current Auction.

(C) The Current Auction will include allowances consigned to 

auction pursuant to section 95910(d).

(D) The Current Auction may include allowances from the current 

and previous budget years which remained unsold at previous 
135

auctions and which are designated for auction pursuant to 

section 95911(f)(3).

(2) Auction of Allowances from Future Budget Years.

(A) This auction will be known as the Advance Auction.

(B) At the one Advance Auction taking place in 2012, the Executive 

Officer will designate for sale all of the allowances allocated for 

Advance Auction from the 2015 budget.

(C) Beginning in 2013, one quarter of the allowances allocated for 

Advance Auction from the budget year three years subsequent 

to the current calendar year will be designated for sale at each 

Advance Auction.

(D) The Advance Auction will include allowances which were 

returned to the Auction Holding Account following an Advance 

Auction which resulted in unsold allowances, and which are 

designated for auction pursuant to section 95911(f)(3).

(d) Auction of Consigned Allowances. 

(1) An entity may consign allowances to the Executive Officer for sale at 

the quarterly auctions only from a limited use holding account.

(2) When the Executive Officer withdraws compliance instruments from 

accounts closed pursuant to section 95831(c), accounts containing 

allowances in excess of the holding limit pursuant to section 

95920(b)(5), or accounts suspended or revoked pursuant to section

95921(g)(3):

(A) Allowances shall be consigned to the next auction;

(B) If, after review, the Executive Officer determines the withdrawn 

ARB offset credits are valid, the Executive Officer will retire 

them, withdraw a similar number of allowances from the Auction 

Holding Account, and consign those allowances to auction in 

place of the retired ARB offset credits.

(3) Each consigning entity agrees to accept the auction settlement price 

for allowances sold at auction.
136

(4) Deadline for Consignment. 

(A) For the auction conducted in 2012, allowances designated for 

consignment pursuant to section 95892(c) must be transferred 

to the Auction Holding Account at least 10 days before the

auction.

(B) Beginning in 2013, allowances consigned to auction through a 

transfer to the Auction Holding Account at least 75 days prior to 

the regular quarterly auction will be offered for sale at that 

auction. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95911. Format for Auction of California GHG Allowances.

(a) Auction Bidding Format.

(1) The auction will consist of a single round of bidding.

(2) Bids will be sealed.

(3) Bid quantities must be submitted as multiples of 1,000 California GHG 

allowances.

(4) Entities registered into the California Cap-and-Trade Program must 

submit bids in whole U.S. dollars and whole cents.

(5) The allowances for auction in section 95911(a)(3) will also include 

allowances from a jurisdiction operating an External GHG ETS system 

to which California has linked pursuant to subarticle 12.

(b) Auction Reserve Price Schedule.

(1) Each auction will be conducted with an auction reserve price.

(2) No allowances will be sold at bids lower than the auction reserve price.

(c) Method for Setting the Auction Reserve Price.

(1) The Auction Reserve Price for vintage 2013 allowances auctioned in 

2012 will be $10 per allowance. For Advance Auctions conducted in 
137

2012, the Reserve Price shall be $10 per allowance for vintage 2015 

allowances.

(2) Beginning in 2012, and each year thereafter, the Auction Administrator 

will announce the Auction Reserve Price for auctions to be conducted 

the following calendar year on the first day in December that is a 

business day in California. The Reserve Price shall be state in U.S. 

dollars.

(3) The Auction Administrator will calculate the Auction Reserve Price 

using the following procedure:

(A) The Auction Reserve Price in U.S. dollars shall be the U.S. 

dollar Auction Reserve Price for the previous calendar year 

increased annually by 5 percent plus the rate of inflation as 

measured by the most recently available twelve months of the 

Consumer Price Index for All Urban Consumers.

(B) Prior to the opening of the auction window on the day of the 

auction, the Auction Administrator shall announce the Auction 

Reserve Price.

(C) The auction administrator shall set the exchange rate as the 

most recently available noon daily buying rate for U.S. and 

Canadian dollars as published by the Bank of Canada, and shall 

announce the exchange rate prior to the opening of the auction 

window. 

(D) The Auction Reserve Price in Canadian dollars shall be the 

Canadian dollar Auction Reserve Price for the previous calendar 

year increased annually by 5 percent plus adjusted in the 

manner provided for in section 83.3 of the Financial 

Administration Act (R.S.Q., c. A-6.001) of Quebec. 

(E) The auction administrator will use the announced exchange rate 

to convert to a common currency the Auction Reserve Prices 

previously calculated separately in U.S. and Canadian dollars. 
138

The auction administrator will set the Auction Reserve Price 

equal to the higher of the two values.

(4) The Auction Reserve Price will be announced prior to the opening of 

the auction window at 10 a.m. Pacific Standard Time (or Pacific 

Daylight Time when in effect) on the day of the auction, and will be in 

effect until the window closes at 1 p.m. Pacific Standard Time (or 

Pacific Daylight Time when in effect).

(5) The Auction Reserve Price in section 95911(c)(2) will be announced 

on the first day in December that is a business day in California and in

any jurisdiction operating an External GHG ETS to which California 

has linked pursuant to subarticle 12 and the Reserve Price shall also 

be stated in the currency (or currencies) used in an External GHG ETS 

to which California has linked pursuant to subarticle 12.

(d) Auction Purchase Limit.

(1) The auction purchase limit is the maximum number of allowances 

offered at each quarterly auction which can be purchased by any entity 

or group of entities with a direct corporate association pursuant to 

section 95833.

(2) The auction purchase limit will apply to auctions conducted from 

January 1, 2012 through December 31, 2014. 

(3) For the Advance Auction of future vintage allowances conducted 

pursuant to section 95910(c)(2) the purchase limit is 25 percent of the 

allowances offered for auction. 

(4) For the auction of current vintage allowances conducted pursuant to 

section 95910(c)(1):

(A) The purchase limit for covered entities and opt-in covered 

entities will be 15 percent of the allowances offered for auction;

(B) The purchase limit for electrical distribution utilities will be 40 

percent of the allowances offered for auction; and 

(C) The purchase limit for all other auction participants is four 

percent of the allowances offered for auction.
139

(e) Determination of Winning Bidders and Settlement Price. The following 

process shall be used to determine winning bidders, amounts won, and a 

single auction settlement price:

(1) Each bid will consist of a price and the quantity of allowances, in 

multiples of 1,000 CA GHG Allowances, desired at that price.

(2) Each bidder may submit multiple bids.

(3) Beginning with the highest bid price, bids from each bidder will be 

considered in declining order by price, and the auction operator shall 

reject a bid for a bundle of 1,000 allowances: 

(A) If acceptance of the bid would result in violation of the purchase 

limit pursuant to sections 95911(d) and 95914; 

(B) If acceptance of the bid would result in violation of the holding 

limit pursuant to sections 95914 and 95920(b); or

(C) If acceptance of the bid would result in a total value of accepted 

bids for an auction participant greater than the value of the bid 

guarantee submitted by the auction participant pursuant to 

section 95912(i).

(4) Bids from all bidders will be ranked from highest to lowest by price. 

Beginning with the highest bid and proceeding to successively lower 

bids, entities submitting bids at each price will be sold allowances until:

(A) The next lower bid price is less than the auction reserve price, in

which case the current price becomes the auction settlement 

price; or

(B) The total quantity of allowances contained in the bids at the next 

lower bid price is greater than or equal to the number of 

allowances yet to be sold, in which instance, the next lower bid 

price becomes the auction settlement price and the procedure 

for resolution of tie bids in section 95911(e)(5) shall apply.

(5) Resolution of tie bids. If the quantity of allowances contained in the 

bids placed at the auction settlement price is greater than the quantity 

of allowances available to be sold at that price, then: 
140

(A) The auction administrator will calculate the share of the 

remaining allowances to be distributed to each entity bidding at 

the auction settlement price by dividing the quantity bid by that 

entity and accepted by the auction administrator by the total 

quantity of bids at the settlement price which were accepted by 

the auction administrator;

(B) The auction administrator will calculate the number of 

allowances distributed to each bidding entity by multiplying the 

bidding entity’s share calculated in section 95911(e)(5)(A) 

above by the number of allowances remaining, rounding the 

number down to the nearest whole number; and

(C) To distribute any remaining allowances, the auction 

administrator will assign a random number to each entity 

bidding at the auction settlement price. Beginning with the 

lowest random number, the auction administrator will assign one 

allowance to the last bundle purchased by each entity until the 

remaining allowances have been assigned.

(f) If the quantity of bids accepted by the Auction Administrator is less than 

the number of allowances offered for sale then some allowances will 

remain unsold.

(1) If allowances remain unsold at auction, the Auction Administrator will 

fulfill winning bids with allowances from consignment sources in the 

following order:

(A) Allowances consigned to auction pursuant to section 

95910(d)(2);

(B) Allowances consigned from limited use holding accounts 

pursuant to section 95910(d)(1);

(C) Allowances redesignated to the auction pursuant to section 

95911(f)(3); and

(D) Allowances designated by ARB for auction pursuant to section 

95910(c)(1)(B) and (c)(2)(B) and (C).
141

(2) When there are insufficient winning bids to exhaust the allowances 

from a consignment source in section 95911(f)(1), the auction operator 

will sell an equal proportion of allowances from each consigning entity 

in that source.

(3) Disposition of Allowances Designated by ARB for Auction Which 

Remain Unsold.

(A) Allowances designated by ARB pursuant to section 

95910(c)(1)(B) and (c)(2)(B) and (c)(2)(C) for an auction which 

remain unsold shall be kept in the Auction Holding Account for 

later auction.

(B) Allowances designated by ARB for auction which remain unsold 

will be re-designated for auction after two consecutive auctions 

have resulted in an auction settlement price above the Auction 

Reserve Price. If future vintage allowances remain unsold at 

the end of the calendar year for which they were designated for 

sale at Advance Auction, they will remain in the Auction Holding 

Account until their vintage year. They will then be designated 

for the Current Auction.

(C) The number of allowances re-designated to a subsequent 

current or Advance Auction will not exceed 25 percent of 

allowances already designated by ARB for that auction. 

Allowances which remain unsold above that level will be held in 

the Auction Account for later auction.

(D) Allowances designated for Advance Auction which remain 

unsold until their vintage year equals the current calendar year 

will be designated for Current Auction pursuant to section 

95910(c)(1)(B).

(4) Disposition of Consigned Allowances Remaining Unsold at Auction.

(A) Allowances consigned to auction from limited use holding 

accounts that remain unsold at auction will be held in the 

Auction Holding Account until the next auction.
142

(B) Allowances consigned to auction pursuant to section 

95921(g)(3) that remain unsold at auction will be held in the 

Auction Holding Account until the next auction.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95912. Auction Administration and Participant Application.

(a) Administration of the Auctions.

(1) The Executive Officer may serve as auction administrator or designate 

an entity to serve as auction administrator.

(2) The Executive Officer may serve as financial services administrator or 

may designate a qualified financial services administrator to conduct all 

financial transactions required by this article.

(b) The Executive Officer may direct that the California GHG allowances 

designated for auction be offered through an auction conducted jointly with 

other jurisdictions to which California links pursuant to subarticle 12, 

provided the joint auction conforms with this article. 

(c) Auction Notification. At least 60 days prior to each auction, the auction 

administrator shall publish the following information:

(1) The date and time of the auction;

(2) Auction application requirements and instructions;

(3) The form and manner for submitting bids;

(4) The procedures for conducting the auction;

(5) The administrative requirements for participation; and

(6) The number of allowances from California that will be available at the 

auction.

(7) For the announcement of the first quarter auction, the number of 

allowances to be available for sale during the calendar year and the 

Auction Reserve Price in effect for the calendar year pursuant to 

section 95911(c).
143

(8) If California has linked to a jurisdiction operating an External GHG ETS 

pursuant to subarticle 12, the number of allowances in section 

95912(c)(6) will also include the allowances made available by the 

linked jurisdiction.

(d) Auction Participation Application Requirements. 

(1) The Executive Officer must approve an entity’s auction participant 

application before that entity may participate in an auction.

(2) An entity applying for approval as an auction participant must be 

registered into the Cap-and-Trade Program as provided in section

95830.

(3) An entity whose holding account has been revoked or is currently 

suspended pursuant to section 96011 cannot participate in an auction. 

An individual associated pursuant to section 95830, 95832, and 95833 

with an entity whose holding account has been revoked or is currently 

suspended pursuant to section 96011 cannot participate in an auction.

(4) An entity will be required to complete and auction participant 

application at least 30 days prior to an auction in which it intends to 

participate. The entity must provide information and documentation 

including:

(A) Information and documentation regarding the corporate identity, 

ownership, and capital structure of the applicant;

(B) The existence of any direct or indirect corporate associations 

pursuant to sections 95833 and 95914(d);

(C) The identification of any previous or pending investigation with 

respect to any alleged violation of any rule, regulation, or law 

associated with any commodity, securities, or financial market; 

and

(D) The applicant’s holding account number.

(5) Prior to participating in an auction, any primary or alternate account 

representative that will be submitting bids on behalf of entities eligible 

to participate in Reserve sales must have already:
144

(A) Complied with the Know-Your-Customer requirements of 

section 95834; and

(B) Submitted the additional information required by the financial 

services administrator contained in Appendix A of this 

subarticle.

(e) Maintenance and Modification of Auction Participation Approval.

(1) Once the Executive Officer has approved an entity’s auction participant 

application, the entity need not complete another application for 

subsequent auctions unless there is a material change to the 

information contained in the approved application, there is a material 

change in the entity’s Cap-and-Trade Program registration pursuant to 

section 95830, or the Executive Officer has made a determination 

restricting an entity’s auction participation pursuant to section 95914.

(2) An entity approved for auction participation must inform the Auction 

Administrator at least 30 days prior to an auction when reporting a 

change to the information disclosed, otherwise the entity may not 

participate in that auction.

(f) An entity approved for auction participation may not communicate 

information on auction participation with any other entity that is not part of 

an association disclosed pursuant to section 95914, except as requested 

by the Auction Administrator to remediate an auction application. 

(g) Protection of Confidential Information. To the extent permitted by state 

law, the Executive Officer, the Auction Administrator, and the financial 

services administrator will treat the information contained in the auction 

application and not listed for release pursuant to section 95912(j)(5) as 

confidential business information.

(h) All bids will be considered binding offers for the purchase of allowances 

under the rules of the auction.

(i) Auction participants must provide a bid guarantee to the financial services 

administrator at least 12 days prior to the auction.
145

(1) The bid guarantee must be in one or a combination of the following 

forms:

(A) Cash in the form of a wire transfer or certified funds, such as a 

bank check or cashier’s check;

(B) An irrevocable letter of credit issued by a financial institution 

with a United States banking license; or

(C) A bond issued by a financial institution with a United States 

banking license.

(D) The bid guarantee submitted by any entity registered with 

California will be in U.S. dollars.

(E) The bid guarantee will be in the currency used by the jurisdiction 

with which the entity has registered.

(2) The amount of the bid guarantee must be greater than or equal to the 

maximum value of the bids to be submitted.

(A) The value of a set of bids equals the cumulative quantity of bids 

submitted at or above a price times that price. The value of the 

set of bids is calculated at each price at which the bidder will 

submit a bid.

(B) The maximum value of a set of bids is the highest value of a set 

of bids calculated at each price at which the bidder will submit a 

bid.

(3) The bid guarantee will be made payable to the financial services 

administrator.

(4) The bid guarantee will expire no sooner than 21 days after the auction 

date.

(5) The financial services administrator will evaluate the bid guarantee and 

inform the auction administrator of the value of the bid guarantee once 

it is found to conform to this section and is accepted by the Executive 

Officer.

(6) If an entity has submitted more than one form of bid guarantee then 

the financial services administrator will apply the instruments to the 
146

unpaid balance in the order the instruments are listed in section 

95912(i)(1).

(7) If the auction participant submits a single bid guarantee instrument to 

cover bids in both the Current and Advance Auctions, the auction 

administrator will apply the value of the bid guarantee to the Current 

Auction first when accepting bids pursuant to section 95911(e)(3). The 

remaining value of the bid guarantee will be used to determine 

acceptance of bids into the Advance Auction.

(j) After the auction administrator has notified the Executive Offier of the 

results of the auction the Executive Officer will:

(1) Review the conduct of the acution by the auction administrator, then 

certify whether the auction met the requirements of this article;

(2) After certification, direct the financial services administrator to:

(A) Notify each winning bidder of the auction settlement price, the 

number of allowances purchased, the total purchase cost, and 

the deadline and method for submitting payment;

(B) Collect cash payments from winning bidders within seven days 

of notifying them of the auction results;

(C) Use the bid guarantee to cover payment for allowance 

purchases by any entity that fails to make cash payment within 

seven days after bidders are notified of results and place the 

proceeds into the Air Pollution Control Fund;

(D) Deposit auction proceeds from sales of ARB allowances sold at 

auction into the Air Pollution Control Fund;

(E) Distribute auction proceeds to entities that consigned 

allowances for auction pursuant to section 95910(d); and

(F) Return any unused bid guarantee.

(3) Upon determining that the payment for allowances has been deposited 

into the Air Pollution Control Fund or transferred to entities that 

consigned allowances, transfer the serial numbers of the allowances 
147

purchased into each winning bidder’s Holding Account, or to its 

Compliance Account if needed to comply with the holding limit;

(4) Inform each approved external GHG emissions trading system and the 

associated tracking system of the serial numbers of allowances 

purchased at auction; and

(5) Following the auction, the Executive Officer will publish at 

www.arb.ca.gov the following information:

(A) The names of the bidders;

(B) Auction settlement price; and 

(C) Aggregated or distributional information on purchases with the 

names of the entities withheld.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95913. Sale of Allowances from the Allowance Price Containment 

Reserve.

(a) The Executive Officer may serve as reserve sale administrator to conduct 

sales from the Allowance Price Containment Reserve (Reserve) or 

designate an entity to serve as reserve sale administrator. The financial 

services administrator designated by the Executive Officer pursuant to 

section 95912(a) will conduct the financial transactions required to operate 

sales from the Reserve.

(b) If California links to an external greenhouse gas emissions trading system 

(GHG ETS) pursuant to subarticle 12, the linkage agreement will specify 

whether covered entities in the linked GHG ETS will be eligible to 

purchase from a jointly operated Reserve, or whether each GHG ETS will 

operate separate Reserves.

(c) Only entities registered into the California GHG Cap-and-Trade Program 

as provided in sections 95811 or 95813 shall be eligible to purchase 

allowances from the Reserve. Prior to participating in a Reserve sale, any 
148

primary or alternate account representative that will be submitting bids on 

behalf of entities eligible to participate in Reserve sales must have 

already:

(1) Complied with the Know-Your-Customer requirements of section 

95834; and

(2) Submitted the additional information required by the financial services 

administrator contained in Appendix A of this subarticle.

(d) Timing of Reserve Sales.

(1) The first Reserve sale will be conducted on March 8, 2013.

(2) Subsequent Reserve sales shall be conducted on the first business 

day six weeks after each quarterly allowance auction scheduled 

pursuant to section 95910.

(3) The Reserve sale administrator shall provide all eligible participants 

with notice of the number of allowances available for sale and the 

terms of the sale at least four weeks prior to the sale.

(4) The subsequent Reserve sales in section 95913((d)(2), shall be 

conducted on the first day six weeks after each quarterly allowances 

auction scheduled pursuant to section 95910 that is also a business 

day in California and any linked jurisdiction operating an External GHG 

ETS to which Calfornia has linked pursuant to subarticle 12.

(e) Reserve Tiers.

(1) Creation of Reserve Tiers. Prior to the first Reserve sale, the 

Executive Officer shall divide allowances allocated to the Reserve into 

three equal-sized tiers. 

(2) The Reserve sale administrator shall offer all of the allowances in the 

Reserve at each Reserve sale.

(3) Reserve Tier Prices. Sales of Reserve allowances in calendar year 

2013 shall be conducted at the following prices:

(A) Allowances from the first tier shall be offered for $40 per 

allowance;
149

(B) Allowances from the second tier shall be offered for $45 per 

allowance; and

(C) Allowances from the third tier shall be offered for $50 per 

allowance.

(4) Increase in Reserve Tier Prices. In calendar years subsequent to 

2013, allowances from each tier shall be offered at prices equal to the 

tier prices from the previous calendar year increased by five percent 

plus the rate of inflation as measured by the most recently available 

twelve month value of the Consumer Price Index for All Urban 

Consumers. 

(f) At least 12 days before the scheduled sale an entity intending to 

participate in a Reserve sale must submit to the financial services 

administrator a bid guarantee, payable to the financial services 

administrator, in an amount greater than or equal to the sum of the 

maximum value of the bids to be submitted by the entity.

(1) The maximum value of a set of bids is the quantity bid at each tier 

times the tier price, summed across the three tiers.

(2) The bid guarantee must be in one or a combination of the following 

forms:

(A) Cash in the form of a wire transfer or certified funds, such as a 

bank check or cashier’s check;

(B) An irrevocable letter of credit issued by a financial institution 

with a United States banking license; or

(C) A bond issued by a financial institution with a United States 

banking license.

(3) The bid guarantee will be made payable to the financial services 

administrator.

(4) The bid guarantee will expire no sooner than twenty-one days after the 

Reserve sale.

(5) The financial services administrator will evaluate the bid guarantee and 

inform the Reserve sale administrator of the value of the bid guarantee 
150

once it is found to conform to this section and is accepted by the 

Executive Officer.

(g) Purchase Determinations. 

(1) The reserve sale administrator will conduct sales from each tier in 

succession, beginning with the lowest priced tier and proceeding to the 

highest priced tier, until either all allowances are sold from the reserve 

or all the accepted bids are filled.

(2) The Reserve sales window will open at 10 a.m. Pacific Standard Time 

(or Pacific Daylight Time, when in effect) on the day of the sale, and 

bids may be submitted until the window closes at 1 p.m. Pacific 

Standard Time (or Pacific Daylight Time, when in effect).

(A) Each bid will consist of the price, in U.S. dollars, equal to one of 

the three tiers and a quantitiy of allowances in multiples of 1,000 

allowances.

(B) An entity may submit multiple bids.

(3) The reserve sale administrator will only accept a bid for a bundle of 

1,000 allowances:

(A) If acceptance of the bid would not result in violation of the 

holding limit pursuant to section 95920(b); 

(B) If acceptance of the bid would not result in a total value of 

accepted bids for a covered entity greater than the value of the 

bid guarantee submitted by the covered entity pursuant to 

section 95913(f); or

(C) If the bid entered by an entity for a tier is for a quantity less than 

or equal to the number of allowances available for sale in that 

tier.

(4) If the sum of bids at the tier price which are accepted by the reserve 

sale administrator is less than or equal to the number of allowances in 

the tier, then: 

(A) The reserve sale administrator will sell to each covered entity

the number of allowances for which the entity submitted bids for 
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that tier which were accepted by the reserve sale administrator; 

and

(B) If allowances remain in the tier after the sales pursuant to 

section 95913(g)(4)(A) are completed, the reserve sale 

administrator will assign a random number to each bundle of 

1,000 allowances for which entities submitted a bid for the tier 

above the current tier being sold. Beginning with the lowest 

random number assigned and working in increasing order of the 

random numbers assigned, the reserve sale administrator shall 

sell allowances to the bidder assigned the random number until 

the remaining allowances in the tier are sold or all bids have 

been fulfilled. The price for the allowances sold under this 

procedure will be the price for the tier from which they are sold, 

not the bid placed.

(5) If the sum of bids accepted by the reserve sale administrator for a tier 

is greater than the number of allowances in the tier, the reserve sale 

administrator will determine the total amount to be distributed from the 

tier to each covered entity using the following procedure:

(A) The reserve sale administrator will calculate the share of the tier 

to be distributed to each bidding entity by dividing the quantity 

bid by that entity and accepted by the reserve sale administrator 

by the total quantity of bids which were accepted by the reserve 

sale administrator; and

(B) The reserve sale administrator will calculate the number of 

allowances distributed to each bidding entity from the tier by 

multiplying the bidding entity’s share calculated in section 95913 

(g)(5)(A) above by the number of allowances in the tier, 

rounding the number down to the nearest whole number.

(6) After completing the sales for each tier the reserve sale administrator 

will repeat the processes in sections 95913(g)(4) and (g)(5) above for 

the next highest price tier until all bids have been filled or until the 
152

Reserve is depleted. At that time the reserve sale administrator will 

inform the Executive Officer of the sales from the Reserve to each 

participant. 

(h) Resolution of Sales.

(1) After reviewing the conduct of the sale by the Reserve sale 

administrator, the Executive Officer will certify whether the Reserve 

sale met the requirements of this article.

(2) Upon certification of the sale results, the Executive Officer will 

authorize the financial services administrator to:

(A) Notify Reserve sale participants of their purchases and total 

purchase cost;

(B) Process cash payments from participants and deposit proceeds 

into the Air Pollution Control Fund up to seven days after 

bidders are notified of results;

(C) Use the bid guarantee to cover payment for allowance 

purchases by any entity that fails to make cash payment within 

seven days after bidders are notified of results and place the 

proceeds into the Air Pollution Control Fund. If an entity has 

submitted more than one form of bid guarantee then the 

financial services administrator will apply the instruments to the 

unpaid balance in the order the instruments are listed in section 

95913(f)(2); and

(D) Return any unused bid guarantee.

(3) Upon determining that the financial services administrator has 

deposited the payment for allowances into the Air Pollution Control 

Fund, the Executive Officer shall transfer the serial numbers of the 

allowances purchased from the Allowance Price Containment Reserve 

Account into each winning bidder’s compliance account.

(4) The Executive Officer shall inform each approved external GHG 

emissions trading system and the associated tracking system of the 

serial numbers of allowances sold; and
153

(5) The Executive Officer shall publish the sale results at www.arb.ca.gov.

(i) Entities registered in an External GHG ETS to which California has linked 

pursuant to subarticle 12 are not eligible to purchase from the Reserve.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95914. Auction Participation and Limitations.

(a) The Executive Officer may cancel or restrict a previously approved auction 

participation application or reject a new application if the Executive Officer 

determines that an entity has:

(1) Provided false or misleading facts;

(2) Withheld material information for its application, with material meaning 

information that could probably influence a decision by the Executive 

Officer, the Board, or the Board’s staff;

(3) Violated any part of the auction rules pursuant to subarticle 10;

(4) Violated the registration requirements pursuant to subarticle 5; or

(5) Violated the rules governing trading pursuant to subarticle 11.

(b) If the Executive Officer determines an entity has committed any of the 

violations listed in section 95914(a), then:

(1) The Executive Officer may instruct the auction administrator to cancel 

a previously approved auction application or to not accept auction 

applications from the entity;

(2) The Executive Officer may instruct the auction administrator to restrict 

the auction application approval for any corporate associate of the 

entity to prevent the purchase of allowances at auction for subsequent 

transfer to the violator;

(3) Any cancellation or restriction imposed by the Executive Officer may 

be permanent or for a specified number of auctions; and

(4) The cancellation or restriction imposed by the Executive Officer shall 

be in addition to any other penalties, fines, and additional remedies 

available at law.
154

(c) Non-disclosure of Bidding Information Among Auction Participants.

(1) Unless it is to an auction advisor or other members of a direct 

corporate association not subject to auction participation restriction or 

cancellation pursuant to section 95914(b), an entity approved for 

auction participation shall not release any confidential information 

related to its auction participation, including:

(A) Qualification status;

(B) Bidding strategy;

(C) Bid price or bid quantity information;

(D) Information on the bid guarantee it provided to the financial 

services administrator; and

(E) Other information identified as confidential information in the 

auction application by the auction administrator.

(2) If an entity participating in an auction has retained the services of an 

advisor regarding auction bidding strategy, then:

(A) The entity must ensure against the advisor transferring 

information to other auction participants or coordinating the 

bidding strategy among participants; 

(B) The entity will inform the advisor of the prohibition of sharing 

information to other auction participants and ensure the advisor 

has read and acknowledged the prohibition under penalty of 

perjury; and

(C) Any entity that has retained the services of an advisor must 

inform ARB of the advisor’s retention. 

(d) Application of the Corporate Association to the Auction Purchase Limit.

(1) The total number of compliance instruments which may be purchased 

in a single auction by a group of entities with a direct corporate 

association is limited pursuant to section 95911(d).

(2) Entities that are part of a direct corporate association may allocate 

shares of the purchase limit amongst themselves. Each entity will then 

have a specified percentage share of the association’s purchase limit. 
155

The sum of the shares allocated among the entities must sum to one. 

Each associated entity’s allocated purchase limit share times the 

auction purchase limit assigned to the association becomes the 

purchase limit for that entity.

(3) If a corporate association consists of entities with a compliance 

obligation and voluntarilty associated entities, then the following 

additional restrictions apply:

(A) The total purchase limit for the association is 15 percent, unless 

some of the included covered entities are electrical distribution 

utilities, in which case the purchase limit is 40 percent.

(B) The total purchase limit assigned to voluntarily associated 

entities within the corporate association must be less than or 

equal to 4 percent.

(C) The purchase limit to be divided among the covered or opt-in 

entities is the purchase limit assigned to the corporate 

association less the value assigned to the voluntarily associated 

entities within the corporate association.

(4) The group of associated entities must inform the Executive Officer 

when submitting the auction participant application of an allocation of 

the purchase limit among the associated entities, if applicable.

(5) The purchase limit allocation will be in effect for the auction for which 

the associated entities submitted the application.

(6) If entities with a direct corporate association do not allocate shares of 

the purchase limit among themselves, then the auction administrator 

will apply the purchase limit to the entities as follows:

(A) The administrator will order the associated entities’ bids from 

highest to lowest bid price;

(B) Working from the highest to the lowest bid, the auction 

administrator will accept bids until the purchase limit for the 

associated entities is met;
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(C) The auction operator will conduct this procedure before 

conducting the auction pursuant to section 95911.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 11: Trading and Banking

§ 95920. Trading.

(a) The holding limit is the maximum number of California GHG allowances 

that may be held by an entity or jointly held by a group of entities with a

direct corporate association, as defined in section 95833 at any point in 

time.

(b) Application of the Holding Limit.

(1) The holding limit will apply to each entity registered as a covered, optin covered, or voluntarily associated entity pursuant to section 95830.

(2) The holding limit calculation will not include allowances contained in 

limited use holding accounts created pursuant to section 95831.

(3) Application of the Holding Limit to Exchange Clearing Holding 

Accounts. Compliance instruments transferred out of an exchange 

clearing holding account will count against the holding limit of the 

destination account listed in the transfer request submitted by an 

exchange clearing holding account at the time the transfer request is 

confirmed.

(4) If the Executive Officer determines that a reported transfer request not 

yet recorded into the tracking system would result in an entity’s 

holdings exceeding the applicable holding limit, then the Executive 

Officer shall not approve the transfer request pursuant to section 

95921(a)(1). 

(5) If the violation is not discovered until after a transfer request is 

recorded, or the holding limit is exceeded at the beginning of a 
157

compliance year when allowances purchased at Advance Auction now 

fall under the current vintage holding limit pursuant to section 

95920(c)(1)(C), then:

(A) The accounts administrator will inform the violator; and

(B) The violator will have five business days to bring its account 

balances within the holding limit. After that, the Executive 

Officer may transfer allowances in excess of the holding limit to 

the Auction Holding Account for consignment to auction 

pursuant to section 95910(d).

(6) Penalties may be applied whenever the holding limit is exceeded or 

transfer requests are filed with the accounts administrator that would

violate the holding limit.

(c) The holding limit will be separately calculated to holdings of:

(1) Allowances including:

(A) Allowances with a vintage year corresponding to the current or 

previous calendar years;

(B) Allowances from any vintage purchased from the Allowance 

Price Containment Reserve pursuant to section 95913; and

(C) Allowances originally purchased at the Advance Auction but of a 

vintage year equal or prior to the current calendar year; and

(2) Allowances that were purchased at the Advance Auction and still have 

a vintage year greater than the current calendar year.

(d) The holding limit will be calculated for allowances qualifying pursuant to 

section 95920(c)(1) as the sum of:

(1) The number given by the following formula:

Holding Limit = 0.1*Base + 0.025*(Annual Allowance Budget – Base)

In which:

“Base” equals 25 million metric tons of CO2e.
158

“Annual Allowance Budget” is the number of allowances issued for the 

current budget year.

(2) A Limited Exemption from the Holding Limit is calculated as:

(A) The limited exemption is the number of allowances which are 

exempt from the holding limit calculation after they are 

transferred by a covered entity or an opt-in covered entity to its 

compliance account.

(B) On June 1, 2012 the limited exemption will equal the annual 

emissions most recent emissions data report that has received

a positive or qualified positive emissions data verification 

statement. 

(C) Beginning in 2013 on October 1 of each year the limited 

exemption will be increased by the amount of emissions 

contained in the most recent emissions data report that has 

received a positive or qualified positive emissions data verified 

statement during that year.

(D) If for any year ARB has assigned emissions to an entity in the 

absence of a positive or qualified positive emissions data 

verification statement the calculation of the limited exemption 

will use the assigned emissions.

(E) For the first compliance period all reported emissions or 

assigned emissions used to calculate the limited exemption will 

include only the emissions associated with the scope for the 

program during the first compliance period.

(F) Beginning in 2015, all reported emissions or assigned emissions 

used to calculate the limited exemption will include the 

emissions associated with the change in scope taking place in 

2015. 

(G) On January 1, 2015 the limited exemption will be increased by 

the amount of emissions included in the emissions data report 
159

received during 2014 but not yet included in the limited 

exemption pursuant to section 95920(d)(2)(E). 

(H) On December 31 of the calendar year following the end of a 

compliance period, the limited exemption will be reduced by the 

sum of the entity’s compliance obligation over that compliance 

period.

(3) Petition to Adjust the Limited Exemption.

(A) Prior to October 1 of any year, a covered entity may submit to 

the Executive Officer evidence demonstrating an increase in 

emissions for that year over the previous year and request a 

temporary increase in the limited exemption until verified data 

for that year are available.

(B) The amount of the increase must be at least 250,000 metric 

tons CO2e on an annualized basis.

(C) The Executive Officer will review the evidence and determine 

whether an adjustment is needed.

(D) If an adjustment is granted, then the limited exemption for that 

covered entity will be increased immediately by the amount 

determined by the Executive officer.

(E) When the verified emissions data are received for the year for 

which an adjustment was granted, the Executive Officer will use 

the verified emissions value when calculating the limited 

exemption.

(e) The holding limit will be calculated separately for each vintage year for 

allowances qualifying pursuant to section 95920(c)(2) as the number given 

by the following formula:

Holding Limit = 0.1*Base + 0.025*(Annual Allowance Budget – Base)

In which:

“Base” equals 25 million metric tons of CO2e.
160

“Annual Allowance Budget” is the number of California GHG 

allowances issued for a budget year. 

(f) Application of the Corporate Association Disclosure to the Holding Limit.

(1) The total number of allowances held by a group of entities with a direct 

corporate association pursuant to section 95833 must sum to less than

or equal to the holding limits pursuant to sections 95920(d) and (e).

(2) The limited exemption for each entity which is part of a direct corporate 

association is the same as defined in section 95920(d).

(3) Entities that are part of a direct corporate association that choose to 

opt out of account consolidation pursuant to section 95833(f)(3) must

allocate shares of the holding limit among themselves. This holding 

limit allocation results in each entity having a specified percentage 

share of the group’s holding limit. The sum of the shares allocated 

among the entities must sum to one.

(A) The primary account representatives or alternate account 

representatives of each of the associated entities must inform 

the accounts administrator of the allocation of the holding limit 

when registering pursuant to section 95833. 

(B) The holding limit allocation will remain in effect until the primary 

account representatives or alternate account representatives of 

each of the associated entities informs the accounts 

administrator of subsequent changes to the allocation of the 

holding limit.

(g) The holding limit in section 95920(a) shall include holdings of any 

allowances issued by a jurisdiction operating an External GHG ETS to 

which California has linked pursuant to subartcle 12.

(h) The “Annual Allowance Budget” in section 95920(d) is calculated as the 

sum for the current budget year of the annual compliance budgets of 

California and all External GHG ETS programs to which California has 

linked pursuant to subarticle 12. The “Annual Allowance Budget” in 

section 95920(e) is calculated as the sum for a budget year of the annual 
161

compliance budgets of California and all External GHG ETS programs to 

which California has linked pursuant to subarticle 12.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95921. Conduct of Trade.

(a) Transfers of Compliance Instruments Between Accounts. 

(1) Except when a transfer is undertaken by the Executive Officer, the 

accounts administrator will not register a transfer of compliance 

instruments between accounts into the tracking system until the 

administrator receives a transfer request that the Executive Officer has 

determined meets the requirements of this article.

(A) To initiate the process, the primary account representative or an 

alternate account representative of the source account for the 

transfer must submit a transfer request to the accounts 

administrator.

(B) The primary account representative or another alternate 

account representative for the same entity must confirm the 

transfer request to the accounts admininstrator within two days 

of the initial submission of the transfer request.

(C) The primary account representative or an alternate account 

representative for the destination account must confirm the 

transfer request to the accounts administrator within the time 

remaining in the three days following the initial submission of 

the transfer request in section 95921(a)(1)(A).

(D) The Executive Officer must determine whether the transfer 

request and the transaction for which the transfer request was 

submitted meet the requirements of this article based on the 

information available at the time of approval.

(E) The completed transfer request must be received by the 

accounts administrator no more than three days following the 
162

day of settlement of the transaction agreement for which the 

transfer request is submitted.

(2) The following transfers do not require confirmation by an account 

representative of the destination account pursuant to section 

95921(a)(1)(C). 

(A) Transfers initiated by the Executive Officer.

(B) Transfers between a single entity’s holding and compliance 

accounts.

(3) The parties to a transfer will be in violation and penalties may apply if 

the above process is completed: 

(A) More than three days after the initial submission of the transfer 

request; or

(B) More than three days after the settlement day of the transaction 

for which the transfer request is submitted.

(b) Information Requirements for Transfer Requests. Parties to the transfer 

request agree to provide documentation about the transaction for which 

the transfer request was submitted upon the request of the Executive 

Officer. The following information must be reported to the accounts 

administrator as part of a transfer request before any transfer of 

allowances can be recorded on the tracking system:

(1) Holding account number of the source account and identification of two 

individuals who are the primary account representative and/or alternate 

account representatives initiating the transfer request;

(2) Holding account number of destination account and identification of a 

primary account representative or alternate account representative for 

the destination account confirming the transfer request;

(3) Serial numbers of the compliance instruments;

(4) Date of the transaction agreement for which the transfer request is 

submitted;

(5) Actual or expected settlement date, if not the same as date of the 

transaction agreement;
163

(6) Price of the compliance instrument in U.S. dollars. Disclosure of price 

is not required for transfers between entities with a direct corporate 

association or from an entity’s holding account to its compliance 

account.

(7) If California links to Canadian jurisdictions pursuant to subarticle 12,

the price of the compliance instrument may be reported in Canadian 

dollars in section 95921(b)(6).

(c) Transfer Request Deficiencies

(1) If the accounts administrator detects a deficiency in a transfer request 

before it is recorded into the tracking system:

(A) The accounts administrator will inform the entities submitting the 

request and the Executive Officer of the deficiency;

(B) The entities submitting the transfer request may resubmit the 

request with the deficiency corrected within the time limit set 

pursuant to sections 95921(a)(1)(C) and (E); and

(C) If the entities fail to submit an acceptable transfer request within 

the time limit, then they must either withdraw the transfer 

request or submit a new transfer request. Penalties may still 

apply pursuant to section 95921(a)(3).

(2) If the accounts administrator detects a deficiency in a transfer request 

after it is recorded into the tracking system:

(A) The accounts administrator will inform the entities submitting the 

request and the Executive Officer of the deficiency; and

(B) If the entities that submitted the transfer request cannot correct 

the defiency within five business days after notification by the 

accounts administrator, the Executive Officer may instruct the 

accounts administrator to reverse the transfer.

(d) Transfers Involving Exchange Clearing Holding Accounts.

(1) A request to transfer compliance instruements to an exchange clearing 

holding account will list the exchange clearing holding account as the 

destination account.
164

(2) All of the compliance instruments received by an exchange clearing 

holding account must be transferred to one or more destination 

accounts within five days of receiving them.

(3) A request to transfer compliance instruments to or from an exchange 

clearing holding account does not require confirmation by an account 

representative of the destination account pursuant to section 

95921(a)(1)(C).

(4) A request to transfer compliance instruments from an exchange 

clearing holding account does not require confirmation by a second 

account.

(e) Protection of Confidential Information. The Executive Officer will protect 

confidential information to the extent permitted by law by ensuring that the 

accounts administrator:

(1) Releases information on the transfer price and quantity of compliance 

instruments in a manner that is timely and maintains the confidentiality 

of the parties to a transfer; 

(2) Except as needed for market oversight and investigation by the 

Executive Officer, protects as confidential all other information 

obtained through transfer requests;

(3) Protects as confidential the quantity and serial numbers of compliance 

instruments contained in holding accounts; and

(4) Releases information on the quantity and serial numbers of compliance 

instruments contained in compliance accounts in a timely manner.

(f) General Prohibitions on Trading. 

(1) An entity cannot acquire allowances and hold them in its own holding 

account on behalf of another entity.

(2) A trade involving, related to, or associated with any of the following are 

prohibited: 

(A) Any manipulative or deceptive device in violation of this article;

(B) A corner or an attempt to corner the market for a compliance

instrument;
165

(C) Fraud, or an attempt to defraud any other entity;

(D) A false, misleading or inaccurate report concerning information 

or conditions that affects or tends to affect the price of a 

compliance instrument;

(E) An application, report, statement, or document required to be 

filed pursuant to this article which is false or misleading with 

respect to a material fact, or which omits to state a material fact 

necessary to make the contents therein not misleading; or

(F) Any trick, scheme, or artifice to falsify or conceal a material fact, 

including use of any false statements or representations, written 

or oral, or documents made by or provided to an entity on or 

through which transactions in compliance instruments occur, are 

settled, or are cleared.

(G) A fact is material if it could probably influence a decision by the 

Executive Officer, the Board, or the Board’s staff.

(g) Restrictions on Registered Entities. If an entity registered pursuant to 

section 95830 violates any provision specified in this article the Executive 

Officer may:

(1) Reduce the number of compliance instruments a covered entity or optin covered entity may have in its holding account below the amount 

allowed by the holding limit pursuant to section 95920;

(2) Increase the annual surrender obligation for a covered entity or an optin covered entity to a percentage of its reported and verified or 

assigned emissions above the 30% obligation pursuant to section

95855; 

(3) Suspend or revoke the registration of opt-in covered entities, 

voluntarily associated entities, and other entities registered pursuant to 

section 95830; 

(A) If registration is revoked or suspended the entity must sell or 

voluntarily retire all compliance instruments in its holding 

account within 30 days of revocation; and
166

(B) If registration is revoked or suspended and the entity fails to sell 

or voluntarily retire all compliance instruments in its holding 

account within 30 days of revocation, the accounts administrator 

will transfer the remaining instruments into the Auction Holding 

Account for sale at auction on behalf of the entity pursuant to 

section 95910(d);

(4) Limit or prohibit transfers in or out of the holding account; or

(5) All of the above.

(h) Information Reporting By Holders of Exchange Clearing Holding Accounts.

(1) Holders of exchange clearing holding accounts must make the 

transaction records available to ARB within 10 calendar days of a 

request from the Executive Officer.

(2) Holders of exchange clearing holding accounts must retain transaction 

records containing the information listed in 95921(b) for 10 years.

(3) Holders of exchange clearing holding accounts are not required to 

include the information listed in 95921(b)(4), (5), (6), and (7) in transfer 

requests to the accounts administrator.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95922. Banking, Expiration, and Voluntary Retirement.

(a) Allowances Issued for a Current or Previous Compliance Period. A CA 

GHG allowance or an allowance issued by an approved GHG ETS 

pursuant to subarticle 12 may be held (“banked”) by an entity registered 

pursuant to section 95830.

(b) Allowances Issued for a Future Compliance Period. A CA GHG 

Allowance or an allowance approved pursuant to subarticle 12 issued from 

an allowance budget year within a future compliance period may be held 

by an entity registered pursuant to section 95830.
167

(c) Expiration of Compliance Instruments. A California compliance instrument 

does not expire and is not retired in the tracking system until:

(1) It is surrendered by a covered entity or opt-in covered entity and retired 

by the Executive Officer; 

(2) An entity voluntarily submits the instrument to the Executive Officer for 

retirement; or

(3) The instrument is retired by an approved external GHG emissions 

trading system to which the Cap-and-Trade Program is linked pursuant 

to subarticle 12.

(d) Voluntary Retirement of Compliance Instruments. 

(1) An entity registered pursuant to section 95830 may voluntarily submit 

any compliance instrument for retirement.

(2) To voluntarily retire a compliance instrument, the registered entity 

submits a transaction report to the accounts administrator listing its 

account number, the serial numbers of the instruments to be retired, 

and the ARB Retirement Account as the destination account.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 12: Linkage to External Greenhouse Gas Emissions 

Trading Systems

§ 95940. General Requirements.

A compliance instrument issued by an external greenhouse gas emissions 

trading system (GHG ETS) may be used to meet the requirements of this Article 

if the external GHG ETS and the compliance instrument have been approved 

pursuant to this section and section 95941.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
168

§ 95941. Procedures for Approval of External GHG ETS.

The Board may approve a linkage with an external GHG ETS after public notice 

and opportunity for public comment in accordance with the Administrative 

Procedure Act (Government Code sections 11340 et seq.). Provisions set forth 

in this Article shall specify which compliance instruments issued by a linked GHG 

ETS may be used to meet a compliance obligation under this Article.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95942. Interchange of Compliance Instruments with Linked External 

Greenhouse Gas Emissions Trading Systems.

(a) Once a linkage is approved, a compliance instrument issued by the 

approved external GHG ETS, as specified in this section, may be used to 

meet a compliance obligation under this Article.

(b) An allowance issued by an approved external GHG ETS and specified in 

this section is not subject to the quantitative usage limit specified in 

section 95854. 

(c) An offset credit or sector-based credit issued by an external GHG ETS is 

subject to the quantitative usage limit specified in section 95854, when 

used to meet a compliance obligation under this Article.

(d) Once a linkage is approved, a compliance instrument issued by California

may be used to meet a compliance obligation within the approved External 

GHG ETS.

(e) Once a linkage is approved, a compliance instrument issued by the linked 

jurisdiction may be used to meet a compliance obligation in California.

(f) The administrator of the approved External GHG ETS must agree to 

inform the Executive Officer of any California compliance instruments that 

the External GHG ETS accepts for compliance.

(g) The Executive Officer will agree to inform the appropriate official in the 

approved External GHG ETS of any compliance instrument accepted by 

California for compliance.
169

(h) The Executive Officer will register into the Retirement Account compliance

instruments issued by California that are used for compliance within the

approved External GHG ETS, along with information identifying the

External GHG ETS actually retiring the compliance instruments.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95943. Linked External GHG ETS.

Covered or opt-in entities may use compliance instruments issued by the

following programs to meet their compliance obligation under this article:

(a) Government of Quebec (effective January 1, 2014).

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 13: ARB Offset Credits and Registry Offset Credits

§ 95970. General Requirements for ARB Offset Credits.

An Offset Project Operator or Authorized Project Designee must ensure the 

requirements for ARB offset credits and registry offset credits are met as follows: 

(a) A registry offset credit must:

(1) Represent a GHG emission reduction or GHG removal enhancement 

that is real, additional, quantifiable, permanent, verifiable, and 

enforceable; 

(2) Result from the use of a Compliance Offset Protocol that meets the 

requirements of section 95972 and is adopted by the Board pursuant 

to section 95971;

(3) Result from an offset project that meets the requirements specified in 

section 95973;

(4) Result from an offset project that is listed pursuant to section 95975;
170

(5) Result from an offset project that follows the monitoring, reporting and 

record retention requirements pursuant to section 95976;

(6) Result from an offset project that is verified pursuant to sections 95977 

through 95978; and

(7) Be issued pursuant to section 95980.1 by an Offset Project Registry 

approved pursuant to section 95986.

(b) An ARB offset credit must meet the requirements in sections 95970(a)(1) 

through (a)(6) and:

(1) Be issued pursuant to section 95981.1; 

(2) Be registered pursuant to section 95982; and

(3) When used for compliance under this article, be subject to the 

quantitative usage limit pursuant to section 95854.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95971. Procedures for Approval of Compliance Offset Protocols.

(a) The Board shall provide public notice of and opportunity for public 

comment prior to approving any Compliance Offset Protocols, including 

updates or modifications to existing Compliance Offset Protocols.

(b) All Compliance Offset Protocols shall be reviewed and periodically revised 

if needed. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95972. Requirements for Compliance Offset Protocols.

(a) To be approved by the Board, a Compliance Offset Protocol must:

(1) Accurately determine the extent to which GHG emission reductions 

and GHG removal enhancements are achieved by the offset project 

type;
171

(2) Establish data collection and monitoring procedures relevant to the 

type of GHG emissions sources, GHG sinks, and GHG reservoirs for 

that offset project type;

(3) Establish a project baseline that reflects a conservative estimate of 

business-as-usual performance or practices for the offset project type;

(4) Account for activity-shifting leakage and market-shifting leakage for the 

offset project type, unless the Compliance Offset Protocol stipulates 

eligibility conditions for use of the Compliance Offset Protocol that 

eliminate the risk of activity-shifting and/or market-shifting leakage;

(5) Account for any uncertainty in quantification factors for the offset 

project type;

(6) Ensure GHG emission reductions and GHG removal enhancements 

are permanent;

(7) Include a mechanism to ensure permanence of GHG removal 

enhancements for sequestration offset project types; 

(8) Establish the length of the crediting period pursuant to section 

95972(b) for the relevant offset project type; and

(9) Establish the eligibility and additionality of projects using standard 

criteria, and quantify GHG reductions and GHG removal 

enhancements using standardized baseline assumptions, emission 

factors, and monitoring methods.

(b) Crediting Periods. The crediting period for a non-sequestration offset 

project must be no less than 7 years and no greater than 10 years, unless 

specified otherwise in a Compliance Offset Protocol. The crediting period 

for a sequestration offset project must be no less than 10 years and no 

greater than 30 years. 

(c) Geographic Applicability. A Compliance Offset Protocol must specify 

where the protocol is applicable. The geographic boundary must be within 

the United States or its Territories, Canada, or Mexico.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.
172

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95973. Requirements for Offset Projects Using ARB Compliance Offset 

Protocols.

(a) General Requirements for Offset Projects. To qualify under the provisions 

set forth in this article, an Offset Project Operator or Authorized Project 

Designee must ensure that an offset project:

(1) Meets all of the requirements in a Compliance Offset Protocol 

approved by the Board pursuant to section 95971;

(2) Meets the following additionality requirements, as well as any 

additionality requirements in the applicable Compliance Offset 

Protocol, as of the date of Offset Project Commencement:

(A) The activities that result in GHG reductions and GHG removal 

enhancements are not required by law, regulation, or any legally 

binding mandate applicable in the offset project’s jurisdiction, 

and would not otherwise occur in a conservative business-asusual scenario;

(B) The Offset Project Commencement date occurs after December 

31, 2006, unless otherwise specified in the applicable 

Compliance Offset Protocol, except as provided in section 

95973(c); and

(C) The GHG reductions and GHG removal enhancements resulting 

from the offset project exceed the project baseline calculated by 

the Compliance Offset Protocol for that offset project type as set 

forth in the following:

1. Compliance Offset Protocol Ozone Depleting Substances 

Projects, incorporated by reference October 20, 2011;

2. Compliance Offset Protocol Livestock Projects, incorporated 

by reference October 20, 2011;

3. Compliance Offset Protocol Urban Forest Projects, 

incorporated by reference October 20, 2011; and
173

4. Compliance Offset Protocol U.S. Forest Projects, 

incorporated by reference October 20, 2011.

(3) Is located in the United States or its Territories, Canada, or Mexico.

(b) Local, Regional, and National Environmental Impact Assessment 

Requirements. An Offset Project Operator or Authorized Project Designee 

must fulfill all local, regional, and national requirements on environmental 

impact assessments that apply based on the offset project location.

(c) Early Action Offset Project Commencement Date. Offset projects that 

transition to Compliance Offset Protocols pursuant to section 95990(k) 

may have an Offset Project Commencement date before December 31, 

2006.

(d) Any Offset Project Operator or Authorized Project Designee seeking to list 

an offset project situated on any of the following categories of land must 

demonstrate the existence of a limited waiver of sovereign immunity 

between ARB and the governing body of the Tribe entered into pursuant

to section 95975(l):

(1) Land that is owned by, or subject to, an ownership or possessory 

interest of the Tribe;

(2) Land that is “Indian lands” of the Tribe, as defined by 25 U.S.C, 

§81(a)(1); or 

(3) Land that is owned by any person, entity, or tribe, within the external 

borders of such Indian lands.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95974. Authorized Project Designee.

(a) General Requirements for Designation of Authorized Project Designee. 

An Offset Project Operator may designate an entity as an Authorized 

Project Designee at the time of offset project listing or any time after offset 

project listing as long as it meets the requirements of section 95974(b). 

The Offset Project Operator must identify to ARB or an Offset Project 
174

Registry the rights and responsibilities they are assigning or delegating to 

an Authorized Project Designee.

(1) The Offset Project Operator may assign ownership rights of ARB offset 

credits or registry offset credits to the following:

(A) Authorized Project Designee; or

(B) Any other third party not otherwise prohibited by this article.

(2) The Offset Project Operator may delegate responsibility to the 

Authorized Project Designee for performing or meeting the 

requirements of sections 95975, 95976, 95977, 95977.1, 95977.2, 

95981, 95981.1, 95983, and sections 95985, and 95990, where 

specifically identified.

(b) Modifications to Authorized Project Designee and Activities. An Offset 

Project Operator may modify or change an Authorized Project Designee, 

or any other third party authorized pursuant to section 95974(a)(1) for a 

listed offset project once within each calendar year after the offset project 

has been listed by ARB or an Offset Project Registry by submitting a 

request, in writing, to ARB or an Offset Project Registry.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95975. Listing of Offset Projects Using ARB Compliance Offset 

Protocols.

(a) General Requirements for Offset Project Operators or Authorized Project 

Designees Who Are Submitting an Offset Project for Listing. Before an 

offset project can be listed by ARB or an Offset Project Registry the Offset 

Project Operator, its Authorized Project Designee and, if applicable, 

another third party as provided in section 95974(a)(1) must:

(1) Register with ARB pursuant to section 95830; and

(2) Not be subject to any Holding Account restrictions imposed pursuant to 

section 96011.
175

(b) If the offset project is not listed by ARB, it must be listed by an Offset 

Project Registry approved pursuant to section 95986.

(c) General Requirements for Offset Project Listing. For offset projects being 

listed by ARB or an Offset Project Registry in an initial or renewed 

crediting period, the Offset Project Operator and any Authorized Project 

Designees approved pursuant to section 95974 must:

(1) Attest, in writing, to ARB as follows:

“I certify under penalty of perjury under the laws of the State of 

California the GHG reductions and/or GHG removal enhancements for 

[project] from [date] to [date] will be measured in accordance with the 

[appropriate ARB Compliance Offset Protocol] and all information 

required to be submitted to ARB is true, accurate, and complete;”

(2) Attest, in writing, to ARB as follows:

“I understand I am voluntarily participating in the California 

Greenhouse Gas Cap-and-Trade Program under title 17, article 5, and 

by doing so, I am now subject to all regulatory requirements and 

enforcement mechanisms of this program and subject myself to the 

jurisdiction of California as the exclusive venue to resolve any and all 

disputes arising from the enforcement of provisions in this article.”;

(3) Attest in writing to ARB as follows:

“I understand that the offset project activity and implementation of the 

offset project must be in accordance with all applicable local, regional, 

and national environmental and health and safety regulations that 

apply to the offset project location. I understand that offset projects are 

not eligible to receive ARB or registry offset credits for GHG reductions 

and GHG removal enhancements that are not in compliance with the 

requirements of the cap-and-trade program.”;

(4) Provide all documentation required pursuant to section 95975(e) to 

ARB or an Offset Project Registry; and

(5) Disclose GHG reductions and GHG removal enhancements issued 

credit by any voluntary or mandatory programs for the same offset 
176

project being listed or any GHG reductions and GHG removal 

enhancements used for any GHG mitigation requirement.

(d) The attestations in section 95975(c)(1), 95975(c)(2), and 95975(c)(3) may 

be provided to an Offset Project Registry with the listing information but 

must be provided to ARB when the requirements in section 95981(b) 

apply.

(e) Offset Project Listing Information Requirements. Before an offset project 

is publicly listed for an initial or renewed crediting period the Offset Project 

Operator or Authorized Project Designee must provide the listing 

information in a Compliance Offset Protocol for that offset project type as 

set forth in:

(1) Compliance Offset Protocol Ozone Depleting Substances Projects, 

October 20, 2011;

(2) Compliance Offset Protocol Livestock Projects, October 20, 2011;

(3) Compliance Offset Protocol Urban Forest Projects, October 20, 2011; 

and

(4) Compliance Offset Protocol U.S. Forest Projects, October 20, 2011.

(f) Notice of Completeness for Offset Project Listing Information. The Offset 

Project Operator or Authorized Project Designee will be notified after 

review by ARB or the Offset Project Registry, if the information submitted 

pursuant to section 95975(e) is complete and may be listed. If it is 

determined that the information submitted pursuant to section 95975(e) is 

incomplete, the Offset Project Operator or Authorized Project Designee 

will be notified within 30 calendar days by ARB or an Offset Project 

Registry.

(g) Timing for Offset Project Listing in an Initial Crediting Period. The Offset 

Project Operator or Authorized Project Designee must submit the 

information in section 95975(e) to ARB or an Offset Project Registry no 

later than the date at which the Offset Project Operator or Authorized 

Project Designee submits its required Offset Project Data Report to ARB 

or an Offset Project Registry pursuant to section 95976.
177

(h) Listing Status of Offset Projects in an Initial Crediting Period. After the 

Offset Project Operator or Authorized Project Designee submits the offset 

project for listing in an initial crediting period and the required 

documentation pursuant to section 95975(e) and ARB or the Offset 

Project Registry has reviewed the offset project against the additionality 

requirements in section 95973(a)(2), the offset project listing status will be 

“Proposed Project.” If the offset project is not accepted for listing by an 

Offset Project Registry, the Offset Project Operator or Authorized Project 

Designee may request ARB to make a final determination if the offset 

project meets the requirements in section 95975 to be listed for an initial 

crediting period by the Offset Project Registry. In making this 

determination, ARB may consult with the Offset Project Registry before 

making the final determination. 

(i) Timing for Offset Project Listing in a Renewed Crediting Period. The 

Offset Project Operator or Authorized Project Designee must submit the 

information in section 95975(e) for a renewed crediting period to ARB or 

an Offset Project Registry no earlier than 18 months and no later than 9 

months before conclusion of the initial crediting period or a previous 

renewed crediting period.

(j) Listing Status of Offset Projects in a Renewed Crediting Period. After the 

Offset Project Operator or Authorized Project Designee submits the offset 

project for listing in a renewed crediting period and the required 

documentation pursuant to section 95975(e), and ARB or the Offset 

Project Registry has reviewed the offset project against the additionality 

requirements in section 95973(a)(2)(A) and 95973(a)(2)(C) as of the date 

of the commencement of the renewed crediting period, the offset project 

listing status will be “Proposed Renewal.” If the offset project is not 

accepted for listing by an Offset Project Registry, the Offset Project 

Operator or Authorized Project Designee may request ARB to make a final 

determination if the project meets the requirements in section 95975 to be 

listed for a renewed crediting period by the Offset Project Registry. In 
178

making this determination, ARB may consult with the Offset Project 

Registry before making the final determination. 

(k) Limitations for Crediting Period Renewals. A crediting period may be 

renewed if the offset project meets the requirements for additionality 

pursuant to section 95975(j). 

(1) The crediting period for non-sequestration offset projects may be 

renewed twice for the length of time identified by the Compliance 

Offset Protocol.

(2) Sequestration offset projects are not subject to any renewal limits.

(l) Additional Offset Project Listing Requirements for Tribes. In addition to 

meeting the listing requirements in sections 95975(c)(1) through (5), 

Tribes must meet the following requirements before offset projects located 

on the categories of land specified in section 95973(d) can be listed with 

ARB or an Offset Project Registry pursuant to this section. The 

requirements of this article apply regardless of the category of land on 

which the offset project is located.

(1) The governing body of the Tribe must enter into a limited waiver of 

sovereign immunity with ARB related to its participation in the 

requirements of the Cap-and-Trade Program for the duration required 

by the applicable Compliance Offset Protocol(s). This waiver must 

include a consent to suit by the State of California, Air Resources 

Board, in the courts of the State of California, with respect to any 

action in law or equity commenced by the State of California, Air 

Resources Board to enforce the obligations of the Tribe with respect to 

its participation in the Cap-and-Trade Program, irrespective of the form 

of relief sought, whether monetary or otherwise.

(2) The Tribe must provide ARB with documentation demonstrating that 

the limited waiver of sovereign immunity entered into pursuant to 

section 95975(l)(1) has been properly adopted in accordance with the 

Tribe’s Constitution or other organic law, by-laws and ordinances, and 

applicable federal laws. 
179

(3) For offset projects located on Indian lands, as defined in 25 U.S.C. 

§81(a)(1), the Tribe must also provide ARB with proof of federal 

approval of the Tribe’s participation in the requirements of the Capand-Trade Program, or documentation from the U.S. Department of the 

Interior, Bureau of Indian Affairs that federal approval is not required.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95976. Monitoring, Reporting, and Record Retention Requirements for 

Offset Projects.

(a) General Requirements for Monitoring Equipment for Offset Projects. The 

Offset Project Operator or Authorized Project Designee must employ the 

procedures in the Compliance Offset Protocol for monitoring 

measurements and project performance for offset projects. All required 

monitoring equipment must be maintained and calibrated in a manner and 

at a frequency required by the equipment manufacturer, unless otherwise 

specified in the applicable Compliance Offset Protocol. All modeling, 

monitoring, sampling, or testing procedures must be conducted in a 

manner consistent with the applicable procedure. 

(b) The Offset Project Operator or Authorized Project Designee must use the 

missing data methods as provided in a Compliance Offset Protocol for that 

offset project type, if provided and applicable. 

(c) An Offset Project Operator or Authorized Project Designee must put in 

place all monitoring equipment or mechanisms required by a Compliance 

Offset Protocol for that offset project type as set forth in:

(1) Compliance Offset Protocol Ozone Depleting Substances Projects, 

October 20, 2011;

(2) Compliance Offset Protocol Livestock Projects, October 20, 2011;

(3) Compliance Offset Protocol Urban Forest Projects, October 20, 2011; 

and
180

(4) Compliance Offset Protocol U.S. Forest Projects, October 20, 2011.

(d) Offset Project Reporting Requirements. An Offset Project Operator or 

Authorized Project Designee shall submit an Offset Project Data Report to 

ARB or an Offset Project Registry annually for each Reporting Period. 

Each Offset Project Data Report must cover a single Reporting Period. 

Reporting Periods must be contiguous; there must be no gaps in reporting 

once the first Reporting Period has commenced. The Offset Project 

Operator or Authorized Project Designee must submit an Offset Project 

Data Report to ARB or an Offset Project Registry within 24 months of 

listing their offset project pursuant to section 95975. The Offset Project 

Data Report shall contain the information required by a Compliance Offset 

Protocol for that offset project type as set forth in:

(1) Compliance Offset Protocol Ozone Depleting Substances Projects, 

October 20, 2011;

(2) Compliance Offset Protocol Livestock Projects, October 20, 2011;

(3) Compliance Offset Protocol Urban Forest Projects, October 20, 2011; 

and

(4) Compliance Offset Protocol U.S. Forest Projects, October 20, 2011.

(5) The Offset Project Operator or Authorized Project Designee must 

attest, in writing, to ARB as follows:

“I certify under penalty of perjury under the laws of the State of 

California the GHG reductions and/or GHG removal enhancements for 

[project] from [date] to [date] are measured in accordance with the 

[appropriate ARB approved protocol] and all information required to be 

submitted to ARB in the Offset Project Data Report is true, accurate, 

and complete.”

This attestation may be provided to an Offset Project Registry with the 

Offset Project Data Report but must be provided to ARB when the 

requirements in section 95981(b) apply.

(6) All Offset Project Data Reports must be submitted within four months 

after the conclusion of each Reporting Period. 
181

(7) If an Offset Project Data Report is not submitted to ARB or an Offset 

Project Registry by the applicable reporting deadline, the GHG 

reductions and GHG removal enhancements quantified and reported in 

the Offset Project Data Report are not eligible to be issued ARB offset 

credits pursuant to section 95981.

(e) Requirements for Record Retention for Offset Projects. An Offset Project 

Operator or Authorized Project Designee must meet the following 

requirements:

(1) The Offset Project Operator or Authorized Project Designee must 

retain the following documents:

(A) All information submitted as part of the Offset Project Data 

Report;

(B) Documentation of the offset project boundary, including a list of 

all GHG emissions sources, GHG sinks, and GHG reservoirs 

included in the offset project boundary and the project baseline, 

and the calculation of the project baseline, project emissions, 

GHG emission reductions, and GHG removal enhancements;

(C) Fuel use and any other underlying measured or sampled data 

used to calculate project baseline emissions, GHG emission 

reductions, and GHG removal enhancements for each source, 

categorized by process and fuel, or material type;

(D) Documentation of the process for collecting fuel use or any 

other underlying measured or sampled data for the offset project 

and its GHG emissions sources, GHG sinks, and GHG 

reservoirs for quantifying project baseline emissions, project 

emissions, GHG emission reductions, and GHG removal 

enhancements;

(E) Documentation of all project baseline emissions, project 

emissions, GHG emission reductions, and GHG removal 

enhancements;
182

(F) All point of origin and chain of custody documents required by a 

Compliance Offset Protocol, if applicable;

(G) All chemical analyses, results, and testing-related 

documentation for material and sources used for inputs to 

project baseline emissions, project emissions, GHG emission 

reductions, and GHG removal enhancements;

(H) All model inputs or assumptions used for quantifying project 

baseline emissions, project emissions, GHG emission 

reductions, and GHG removal enhancements;

(I) Any data used to assess the accuracy of project baseline 

emissions, GHG emission reductions, and GHG removal 

enhancements from each offset project GHG emissions source, 

GHG sink, and GHG reservoir, categorized by process;

(J) Quality assurance and quality control information including 

information regarding any measurement gaps, missing data 

substitution, calibrations or maintenance records for monitoring 

equipment, or models providing data for calculating project 

baseline emissions, project emissions, GHG emission 

reductions, and GHG removal enhancements;

(K) A detailed technical description of any offset project continuous 

measurement/monitoring system, including documentation of 

any findings and approvals by federal, state, and local agencies; 

(L) Raw and aggregated data from any measurement system; 

(M) Documentation of any changes over time and the log book on 

tests, down-times, calibrations, servicing, and maintenance for 

any measurement/monitoring equipment providing data for 

project baseline calculations, project emissions, GHG emission 

reductions, and GHG removal enhancements; 

(N) For sequestration offset projects, documentation of inventory 

methodologies and sampling procedures including all 
183

calculation methodologies and equations used, and any data 

related to plot sampling; and 

(O) Any other documentation or data required to be retained by a 

Compliance Offset Protocol, if applicable.

(2) Documents listed in section 95976(e)(1) associated with the 

preparation of an Offset Project Data Report shall be retained in paper, 

electronic, or other usable format for a minimum of 15 years following 

the issuance of ARB offset credits related to that Offset Project Data 

Report. All other documents shall be retained in paper, electronic, or 

other usable format for a minimum of 15 years. 

(3) The documents retained pursuant to this section must be sufficient to 

allow for the verification of each Offset Project Data Report. 

(4) Upon request by ARB or an Offset Project Registry, the Offset Project 

Operator or Authorized Project Designee must provide to ARB or an 

Offset Project Registry all documents pursuant to this section, 

including data used to develop an Offset Project Data Report within 10 

calendar days of the request.

(f) General Procedure for Interim Gas or Fuel Analytical and Monitoring 

Equipment Data Collection. This section only applies if a Compliance 

Offset Protocol does not already include methods for collecting or 

accounting for data in the event of missing data due to an unforeseen 

breakdown of gas or fuel analytical monitoring data equipment. 

(1) In the event of an unforeseen breakdown of offset project data 

monitoring equipment and gas or fuel flow monitoring devices required 

for the GHG emission reductions and GHG removal enhancement 

estimation, ARB may authorize an Offset Project Operator or 

Authorized Project Designee to use an interim data collection 

procedure if ARB determines that the Offset Project Operator or 

Authorized Project Designee has satisfactorily demonstrated that:
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(A) The breakdown may result in a loss of more than 20 percent of 

the source’s gas or fuel data for the year covered by an Offset 

Project Data Report;

(B) The gas or fuel analytical data monitoring equipment cannot be 

promptly repaired or replaced without shutting down a process 

unit significantly affecting the offset project operations, or that 

the monitoring equipment must be replaced and replacement 

equipment is not immediately available;

(C) The interim procedure will not remain in effect longer than is 

reasonably necessary for repair or replacement of the 

malfunctioning data monitoring equipment; and

(D) The request was submitted within 30 calendar days of the 

breakdown of the gas or fuel analytical data monitoring 

equipment.

(2) An Offset Project Operator or Authorized Project Designee seeking 

approval of an interim data collection procedure must, within 30 

calendar days of the monitoring equipment breakdown, submit a 

written request to ARB that includes all of the following:

(A) The proposed start date and end date of the interim procedure;

(B) A detailed description of what data are affected by the 

breakdown;

(C) A discussion of the accuracy of data collected during the interim 

procedure compared with the data collected under the Offset 

Project Operator’s or Authorized Project Designee’s usual 

equipment-based method; and

(D) A demonstration that no feasible alternative procedure exists 

that would provide more accurate emissions data.

(3) ARB may limit the duration of the interim data collection procedure or 

include other conditions for approval.

(4) Data collected pursuant to an approved interim data collection 

procedure shall be considered captured data for purposes of 
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compliance with a Compliance Offset Protocol. When approving an 

interim data collection procedure, ARB shall determine whether the 

accuracy of data collected under the procedure is reasonably 

equivalent to data collected from properly functioning monitoring 

equipment, and if it is not, the relative accuracy to assign for purposes 

of assessing possible offset material misstatement under section 

95977.1(b)(3)(Q) of this article.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95977. Verification of GHG Emission Reductions and GHG Removal 

Enhancements from Offset Projects.

(a) General Requirements. An Offset Project Operator or Authorized Project 

Designee must obtain the services of an ARB-accredited verification body 

for the purposes of verifying Offset Project Data Reports submitted under 

this article.

(b) Schedule for Verification of Non-Sequestration Offset Projects. The 

verification of GHG emission reductions for non-sequestration offset 

projects must be performed annually and cover the Reporting Period for 

which the most recent Offset Project Data Report was submitted. For 

Reporting Periods in which an Offset Project Data Report for a nonsequestration offset project shows that the offset project produced fewer 

than 25,000 metric tons of GHG reductions, the Offset Project Operator or 

Authorized Project Designee may choose to perform verification that 

covers two consecutive Reporting Periods. 

(c) Schedule for Verification of Sequestration Offset Projects. The verification 

of GHG emission reductions and GHG removal enhancements for 

sequestration offset projects must be performed at least once every six 

years and may cover up to six Reporting Periods for which Offset Project 

Data Reports were submitted. After an initial verification with a Positive 

Offset Verification Statement, reforestation offset projects may defer the 
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second verification for twelve years, but verification of Offset Project Data 

Reports must be performed at least once every six years thereafter. 

(d) Timing for Submittal of Offset Verification Statements to ARB or an Offset 

Project Registry. Any Offset Verification Statement must be received by 

ARB or an Offset Project Registry within nine months after the conclusion 

of the Reporting Period for which offset verification services were 

performed. If the Offset Verification Statement is not submitted to ARB or 

an Offset Project Registry by the verification deadline, the GHG reductions 

and GHG removal enhancements quantified and reported in the Offset 

Project Data Report are not eligible to be issued ARB offset credits or 

registry offset credits.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95977.1. Requirements for Offset Verification Services.

(a) Rotation of Verification Bodies. An offset project shall not have more 

than six consecutive years of offset project data verified by the same 

verification body or verifier(s). An Offset Project Operator or Authorized 

Project Designee may contract with a previous verification body or 

verifier(s) only if at least three years of the offset project data have been 

verified by a different verification body or verifier(s) before the previous 

verification body is selected again. The six year rotation requirement is 

applied between the Offset Project Operator or Authorized Project 

Designee and the verification body or verifier(s) on an offset project 

basis. 

(b) Offset Verification Services. Offset Verification Services shall be subject 

to the following requirements.

(1) Notice of Offset Verification Services for Offset Projects. Before offset 

verification services may begin, the verification body must submit a 

Notice of Offset Verification Services to ARB and an Offset Project 
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Registry, if applicable. The verification body may begin offset 

verification services for the Offset Project Operator or Authorized 

Project Designee 10 working days after the Notice for Offset 

Verification Services is received by ARB or the Offset Project 

Registry, or earlier, if approved by ARB in writing. The Notice for 

Offset Verification Services must include the following information:

(A) The name of the offset project type, including the length of the 

offset project crediting period, and title of the Compliance 

Offset Protocol used to implement the offset project;

(B) A list of staff who will be designated to provide offset 

verification services as part of an offset verification team, 

including the names of each designated staff member, the lead 

verifier, independent reviewer, all subcontractors, and a 

description of the roles and responsibilities each team member 

will have during the offset verification process;

(C) Documentation that the offset verification team has the skills 

required to provide offset verification services for the Offset 

Project Operator or Authorized Project Designee. At least one 

offset verification team member must be accredited by ARB as 

an offset project specific verifier for an offset project of that 

type; and

(D) General information on the Offset Project Operator or 

Authorized Project Designee, including:

1. The name of the Offset Project Operator or Authorized 

Project Designee, including contact information, address, 

telephone number, and email address;

2. The locations that will be subject to offset verification 

services; 

3. The date(s) of on-site visits, with address and contact 

information; and
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4. A brief description of expected offset verification services to 

be performed, including expected completion date.

(2) If any information submitted pursuant to sections 95977.1(b)(1)(B) 

and 95977.1(b)(1)(D) changes after the Notice for Offset Verification 

Services is submitted to ARB and the Offset Project Registry, if 

applicable, the verification body must notify ARB and the Offset 

Project Registry by submitting an updated conflict of interest selfevaluation form as soon as the change is made, but, at least five days 

prior to the start of offset verification services. If any information 

submitted pursuant to sections 95977.1(b)(1)(B) and 95977.1(b)(1)(D) 

changes during offset verification services, the verification body must 

notify ARB and the Offset Project Registry, if applicable. In either 

instance, the conflict of interest must be resubmitted to ARB or the 

Offset Project Registry, as applicable. 

(3) Offset verification services must include the following: 

(A) Offset Verification Plan. The Offset Project Operator or 

Authorized Project Designee must submit the following 

information necessary to develop an Offset Verification Plan:

1. Information to allow the offset verification team to develop a 

general understanding of offset project boundaries, 

operations, project baseline emissions, and annual GHG 

reductions and GHG removal enhancements;

2. Information regarding the training or qualifications of 

personnel involved in developing the Offset Project Data 

Report;

3. The name and date of the Compliance Offset Protocol used 

to quantify and report project baselines, GHG reductions, 

GHG removal enhancements, and other required data as 

applicable in the Compliance Offset Protocol; and

4. Information about any data management system, offset 

project monitoring system, and models used to track project 
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baselines, GHG reductions, GHG removal enhancements, 

and other required data as applicable in the Compliance 

Offset Protocol.

(B) Timing of Offset Verification Services. Such information shall 

include:

1. Dates of proposed meetings and interviews with personnel 

related to the offset project;

2. Dates of proposed site visits;

3. Types of proposed document and data reviews; and 

4. Expected date for completing offset verification services.

(C) Planning Meetings with the Offset Project Operator or 

Authorized Project Designee. The offset verification team must 

discuss with the Offset Project Operator or Authorized Project 

Designee the scope of the offset verification services and 

request any information and documents needed for initial offset 

verification services. The offset verification team must review 

the documents submitted and plan and conduct a review of 

original documents and supporting data for the Offset Project 

Data Report.

(D) Site Visits for Offset Projects. For a non-sequestration offset 

project, at least one accredited offset verifier in the offset 

verification team, including the offset project specific verifier, 

must make at least one site visit every year to each offset 

project location for which an Offset Project Data Report is 

submitted, except for those non-sequestration offset projects 

that qualify for a two-year offset verification period pursuant to 

section 95977(b). In this case, at least one offset verifier in the 

offset verification team, including the offset project specific 

verifier, must make a site visit to each offset project location in 

the year that offset verification services are performed. For a 

forest or urban forest offset project, at least one accredited 
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offset verifier in the offset verification team, including the offset 

project specific verifier, must make a site visit every year that 

offset verification services are provided, except for those offset 

projects approved for less intensive verification, for which a site 

visit must be performed at least once every six years. A site 

visit is also required after the first full calendar year of 

operations of an offset project. During the site visit, the offset 

verification team member(s) must conduct the following:

1. During the initial site visit the offset verification team 

members must:

a. Assess offset project eligibility and additionality 

according to section 95973 and the applicable 

Compliance Offset Protocol;

b. Review the information submitted for listing pursuant to 

section 95975;

c. Confirm that the offset project boundary is appropriately 

defined; 

d. Review project baseline calculations and modeling; 

e. Assess the operations, functionality, data control 

systems, and review GHG measurement and monitoring 

techniques; and

f. Confirm that all applicable eligibility criteria to design, 

measure, and monitor the offset project conforms to the 

requirements of the applicable Compliance Offset 

Protocol.

2. During the initial and each subsequent site visit the offset 

verification team must:

a. Check that all offset project boundaries, GHG emissions 

sources, GHG sinks, and GHG reservoirs in the 

applicable Compliance Offset Protocol are identified 

appropriately;
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b. Review and understand the data management systems 

used by the Offset Project Operator or Authorized 

Project Designee to track, quantify, and report GHG 

reductions, GHG removal enhancements, or other data 

required as applicable in the Compliance Offset 

Protocol. This includes reviewing data collection 

processes and procedures, sampling techniques and 

metering accuracy, quality assurance/quality control 

processes and procedures, and missing data 

procedures. The offset verification team member(s) 

must evaluate the uncertainty and effectiveness of these 

systems;

c. Interview key personnel involved in collecting offset 

project data and preparing the Offset Project Data 

Report;

d. Make direct observations of equipment for data sources 

and equipment supplying data for GHG emission 

sources in the sampling plan determined to be high risk;

e. Collect and review other information that, in the 

professional judgment of the team, is needed in the 

offset verification process;

f. Confirm the offset project conforms with all local, state, 

or federal environmental regulatory requirements 

pursuant to section 95973(b), including health and 

safety regulations; and 

g. Review all chain of custody documents as required in 

the Compliance Offset Protocol, if applicable.

h. If the offset project is found by the offset verification 

team to not meet the requirements of section 

95977.1(b)(3)(D)(2.)(f.), the offset project is ineligible to 

receive ARB offset credits or registry offset credits for 
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GHG reductions and GHG removal enhancements 

quantified and reported in the Offset Project Data 

Report.

i. The activities performed pursuant to sections 

95977.1(b)(3)(D)(2.)(f.) through (b)(3)(D)(2.)(h.) may be 

included in a site visit or, alternatively, may be 

conducted as part of a desk review.

(E) The offset verification team must review offset project 

operations to identify applicable GHG emissions sources, 

project emissions, GHG sinks, and GHG reservoirs required to 

be included and quantified in the Offset Project Data Report as 

required by the applicable Compliance Offset Protocol. This 

must include a review of each type of GHG emissions source, 

GHG sink, and GHG reservoir to ensure that all GHG 

emissions sources, GHG sinks, and GHG reservoirs required to 

be reported for the offset project are properly included in the 

Offset Project Data Report.

(F) An Offset Project Operator or Authorized Project Designee 

must make available to the offset verification team all 

information and documentation used to calculate and report 

project baseline and annual GHG emissions, GHG reductions, 

and GHG removal enhancements and other information 

required by the applicable Compliance Offset Protocol.

(G) Sampling Plan for Offset Project Data Reports. As part of 

confirming the Offset Project Data Report, the offset verification 

team must develop a sampling plan that meets the following 

requirements:

1. The offset verification team must develop a sampling plan 

based on a strategic analysis developed from document 

reviews and interviews to assess the likely nature, scale, 

and complexity of the offset verification services for an 
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Offset Project Operator or Authorized Project Designee. 

The analysis must review the inputs for the development of 

the submitted Offset Project Data Report, the rigor and 

appropriateness of the GHG data management systems, 

and the coordination within an Offset Project Operator’s or 

Authorized Project Designee’s organization to manage the 

operation and maintenance of equipment and systems used 

to develop the Offset Project Data Reports;

2. The offset verification team must include a ranking of GHG 

emissions sources, GHG sinks, and GHG reservoirs within 

the offset project boundary by amount of contribution to 

total CO2e emissions, GHG reductions, and GHG removal 

enhancements, and a ranking of GHG emissions sources, 

GHG sinks, or GHG reservoirs with the largest calculation 

uncertainty; and

3. The offset verification team must include a qualitative 

narrative of uncertainty risk assessment in the following 

areas as applicable to the Compliance Offset Protocol:

a. Data acquisition equipment;

b. Data sampling and frequency;

c. Data processing and tracking; 

d. Project baseline and annual GHG emissions, GHG 

reductions, and GHG removal enhancement 

calculations;

e. Data reporting;

f. Chain of custody requirements; and 

g. Management policies or practices in developing Offset 

Project Data Reports.

(H) After completing the analysis in section 95977.1(b)(3)(G), the 

offset verification team must include in the sampling plan a list 

which includes the following:
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1. GHG emissions sources, GHG sinks, and GHG reservoirs 

that will be targeted for document reviews to ensure 

conformance with the Compliance Offset Protocol and data 

checks as specified in section 95977.1(b)(3)(L) and an 

explanation of why they were chosen;

2. Methods used to conduct data checks for each GHG 

emissions source, GHG sink, and GHG reservoir; and

3. A summary of the information analyzed in the data checks 

and document reviews conducted for each GHG emissions 

source, GHG sink, and GHG reservoir.

(I) The sampling plan list, prepared pursuant to section 

95977.1(b)(3)(H), must be updated and finalized prior to the 

completion of offset verification services. The final sampling 

plan must describe in detail how the GHG emissions sources, 

GHG sinks, and GHG reservoirs with identified risk, subject to 

data checks, were reviewed for accuracy.

(J) The offset verification team must revise the sampling plan to 

describe tasks completed or needed to be completed by the 

offset verification team as relevant information becomes 

available and potential issues emerge of offset material 

misstatement or nonconformance with the requirements of the 

Compliance Offset Protocol and this article.

(K) The verification body must retain the sampling plan in paper, 

electronic, or other format for a period of not less than 15 years 

following the submission of each Offset Verification Statement. 

The sampling plan must be made available to ARB or the 

Offset Project Registry within 10 days upon request. The

verification body must also retain all material received, 

reviewed, or generated to render an Offset Verification 

Statement for an Offset Project Operator or Authorized Project 

Designee for 15 years following the submittal of each Offset 
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Verification Statement. The documentation must allow for a 

transparent review of how a verification body reached its 

conclusion in the Offset Verification Statement.

(L) Data Checks for Offset Project Data Reports. To determine the 

reliability of the submitted Offset Project Data Report, the offset 

verification team must use data checks. Such data checks 

must focus first on the largest and most uncertain estimates of 

project baseline GHG emissions, project emissions, GHG 

reductions, and GHG removal enhancements, and the offset 

verification team must:

1. Use data checks to ensure that the appropriate 

methodologies and GHG emission factors have been 

applied in calculating the project baseline and annual GHG 

emissions, project emissions, GHG reductions, and GHG 

removal enhancements calculations in the Compliance 

Offset Protocol;

2. Choose GHG emissions sources, project emissions, GHG 

sinks, and GHG reservoirs for data checks based on their 

relative sizes and risks of offset material misstatement or 

nonconformance as indicated in the sampling plan;

3. Use professional judgment in the number of data checks 

required for the offset verification team to conclude with 

reasonable assurance whether the Offset Project Operator’s 

or Authorized Project Designee’s total reported GHG 

reductions and GHG removal enhancements are free of 

offset material misstatement and the Offset Project Data 

Report otherwise conforms to the requirements of the 

Compliance Offset Protocol and this article. At a minimum a 

data check must include the following:

a. Tracing data in the Offset Project Data Report to its 

origin;
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b. Looking at the process for data compilation and 

collection;

c. Reviewing all GHG inventory designs for GHG sources, 

GHG sinks, and GHG reservoirs, and sampling 

procedures, if applicable;

d. Recalculating GHG emissions, project emissions, GHG 

reductions, and GHG removal enhancements estimates 

to check original calculations;

e. Reviewing calculation methodologies used by the Offset 

Project Operator or Authorized Project Designee for 

conformance with the Compliance Offset Protocol and 

this article;

f. Reviewing meter and fuel analytical instrumentation 

calibration, if applicable; and 

g. Reviewing the quantification from models approved for 

use in the Compliance Offset Protocol, if applicable; and

4. Compare its own calculated results with the reported offset 

project data in order to confirm the extent and impact of any 

omissions and errors. Any discrepancies must be identified. 

The comparison of data checks must also include a narrative 

to indicate which GHG emissions sources, GHG sinks, and 

GHG reservoirs were checked, the types and quantity of 

data that were evaluated for each GHG emissions source, 

GHG sink, and GHG reservoir, and any discrepancies that 

were identified.

(M) Offset Project Data Report Modifications. As a result of review 

by the offset verification team and prior to completion of an 

Offset Verification Statement, the Offset Project Operator or 

Authorized Project Designee must make any possible 

improvements or corrections to the submitted Offset Project 

Data Report, and a revised Offset Project Data Report must be 
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submitted to ARB or the Offset Project Registry. 

Documentation for all Offset Project Data Report submittals 

must be retained by the Offset Project Operator or Authorized 

Project Designee for the length of time specified in section 

95976(e)(2).

(N) To verify that the Offset Project Data Report is free of offset 

material misstatement, the offset verification team must make 

its own determination of GHG reductions or GHG removal 

enhancements relative to the project baseline, and must 

determine whether there is reasonable assurance that the 

Offset Project Data Report does not contain an offset material 

misstatement for the Offset Project Operator or Authorized 

Project Designee, on a CO2e basis. To assess conformance 

with this article and the Compliance Offset Protocol the offset 

verification team must review the methods and factors used to 

develop the Offset Project Data Report for adherence to the 

requirements of this article and the Compliance Offset Protocol 

and ensure that other requirements of this article are met.

(O) Issues Log. The offset verification team must keep a log of any 

issues identified in the course of offset verification services that 

may affect determinations of offset material misstatement and 

nonconformance. The issues log must identify the section of 

this article or Compliance Offset Protocol related to the 

nonconformance, if applicable, and indicate that the issues 

were corrected by the Offset Project Operator or Authorized 

Project Designee prior to completing the offset verification 

services. Any other concerns that the offset verification team 

has with the preparation of the Offset Project Data Report must 

be documented in the issues log. The issues log must indicate 

whether the issues could have any bearing on offset material 

misstatement or conformance.
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(P) An assessment of offset material misstatement is conducted for 

annual net GHG reductions and GHG removal enhancements 

relative to the project baseline in metric tons of CO2e.

(Q) The offset verification team must determine whether the GHG 

reductions and GHG removal enhancements quantified and 

reported in the Offset Project Data Report contain an offset 

material misstatement using the following equation:

∑ + + = Total reported emissions

Discrepancies Omissions Misreporting x Percent error[ ] 100%

Where:

“Discrepancies” means any differences between the reported 

GHG emissions, project emissions, GHG reductions, and GHG 

removal enhancements and GHG emissions, project emissions, 

GHG reductions, and GHG removal enhancements for a data 

source subject to data checks in 95977.1(b)(3)(L) calculated by 

the offset verification team.

“Omissions” means any GHG emissions, GHG reductions, 

project emissions, and GHG removal enhancements that the 

offset verification team concludes must be part of the Offset 

Project Data Report, but were not included by the Offset Project 

Operator or Authorized Project Designee in the Offset Project 

Data Report.

“Misreporting” means duplicative, incomplete, or other GHG 

emissions, project emissions, GHG reductions, and GHG 

removal enhancements the offset verification team concludes 

should, or should not, be part of the Offset Project Data Report.
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“Total reported emissions” means annual reported net GHG 

reductions and GHG removal enhancements relative to the 

project baseline in metric tons CO2e.

(R) Completion of offset verification services must include: 

1. Offset Verification Statement. Upon completion of the offset 

verification services pursuant to section 95977.1(b), the 

verification body must complete an Offset Verification 

Statement and provide it to the Offset Project Operator or 

Authorized Project Designee and ARB or the Offset Project 

Registry by the verification deadline pursuant to section 

95977(d). Before the Offset Verification Statement is 

completed, the verification body must have the offset 

verification services and findings of the offset verification 

team independently reviewed within the verification body by 

an independent reviewer not involved in offset verification 

services for that offset project.

2. The independent reviewer shall serve as the final check of 

the offset verification team’s work to identify any significant 

concerns, including:

a. Errors in planning; 

b. Errors in data sampling; and 

c. Errors in judgment by the offset verification team that are 

related to the draft offset verification statement.

3. The independent reviewer must maintain independence 

from the offset verification services by not making specific 

recommendations about how the offset verification services 

should be conducted. The independent reviewer will review 

documents applicable to the offset verification services 

provided and identify any failure to comply with the 

requirements of this article or with the verification body’s 
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internal policies and procedures for providing offset 

verification services. The independent reviewer must 

concur with the offset verification findings before the Offset 

Verification Statement can be issued.

4. When the offset verification team completes its findings: 

a. The verification body must provide to the Offset Project 

Operator or Authorized Project Designee a detailed 

verification report. The detailed verification report must 

at a minimum include the Offset Verification Plan, the 

detailed comparison of the data checks conducted 

during offset verification services, the issues log 

identified in the course of offset verification activities and 

the issue resolutions, and any qualifying comments on 

findings during offset verification services. The detailed 

verification report must also include the calculations 

performed in 95977.1(b)(3)(Q) and be made available to 

ARB within 10 calendar days upon request. If the Offset 

Verification Statement is being submitted to an Offset 

Project Registry, then the verification body must submit 

the detailed verification report to the Offset Project 

Registry with the Offset Verification Statement. The 

detailed verification report must be submitted to the 

Offset Project Operator or Authorized Project Designee 

at the same time or before the Offset Verification 

Statement is submitted to ARB or the Offset Project 

Registry.

b. The verification body must provide the Offset Verification 

Statement to the Offset Project Operator or Authorized 

Project Designee and ARB or the Offset Project 

Registry, attesting to ARB whether the verification body 

has found the submitted Offset Project Data Report to 
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be free of offset material misstatement, and whether the 

Offset Project Data Report is in conformance with the 

requirements of this article and the Compliance Offset 

Protocol. 

c. A Compliance Offset Protocol may restrict the use of a 

Qualified Positive Offset Verification Statement for 

certain project types, in which case the verification body 

must submit either a Positive Offset Verification 

Statement or an Adverse Offset Verification Statement. 

In the case of a Qualified Positive Offset Verification 

Statement, when not restricted by a Compliance Offset 

Protocol, the verification body will qualify the Offset 

Verification Statement to indicate any non-conformances 

contained within the Offset Project Data Report and that 

these nonconformances do not result in an offset 

material misstatement.

d. The offset verification team must have a final discussion 

with the Offset Project Operator or Authorized Project 

Designee explaining their findings and notifying the 

Offset Project Operator or Authorized Project Designee 

of any unresolved issues noted in the issues log before 

the Offset Verification Statement is finalized.

e. The lead verifier in the offset verification team must 

attest to ARB in the Offset Verification Statement that 

the offset verification team has carried out all offset 

verification services as required by this article, and the 

lead verifier who has conducted the independent review 

of offset verification services and findings must attest to 

his or her independent review on behalf of the 

verification body and his or her concurrence with the 

offset verification findings.
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f. The lead verifier must attest in the Offset Verification 

Statement, in writing, to ARB as follows:

“I certify under penalty of perjury under the laws of the 

State of California that the offset verification team has 

carried out all offset verification services as required by 

sections 95977.1 and 95977.2 and the findings are true, 

accurate, and complete and have been independently 

reviewed by an independent reviewer as required under 

sections 95977.1(b)(3)(R)(1.) through 

95977.1(b)(3)(R)(3.).”

5. Prior to the verification body providing an Adverse Offset 

Verification Statement to ARB or the Offset Project Registry, 

the Offset Project Operator or Authorized Project Designee 

must be provided at least 10 working days to modify the 

Offset Project Data Report to correct any offset material 

misstatement or nonconformance found by the offset 

verification team. The modified Offset Project Data Report 

and Offset Verification Statement must be submitted to ARB 

or the Offset Project Registry before the applicable 

verification deadline, unless the Offset Project Operator or 

Authorized Project Designee makes a request to ARB 

pursuant to section 95977.1(b)(3)(R)(6.).

6. If the Offset Project Operator or Authorized Project 

Designee and the verification body cannot reach agreement 

on modifications to the Offset Project Data Report that 

result in a Positive Offset or Qualified Positive Offset 

Verification Statement due to a disagreement on the 

requirements of this article or Compliance Offset Protocol, 

the Offset Project Operator or Authorized Project Designee 

may petition ARB to make a decision as to the verifiability of 

the submitted Offset Project Data Report. 
203

7. If ARB determines that the Offset Project Data Report does 

not meet the standards and requirements specified in this 

article, the Offset Project Operator or Authorized Project 

Designee must provide any additional information within 30 

calendar days of the ARB determination. ARB will review 

the new information and notify the Offset Project Operator or 

Authorized Project Designee and verification body of its final 

decision. In re-verifying a revised Offset Project Data 

Report, the verification body and offset verification team 

shall be subject to the requirements in sections 

95977.1(b)(3)(R)(1.) through 95977.1(b)(3)(R)(4.) and must 

submit the revised Offset Verification Statement to ARB or 

the Offset Project Registry within 15 calendar days.

(S) Upon submission of the Offset Verification Statement to ARB or 

the Offset Project Registry, the Offset Project Data Report must 

be considered final and no further changes may be made. All 

offset verification requirements of this article shall be 

considered complete.

(T) If the Executive Officer finds a high level of conflict of interest 

existed between a verification body and an Offset Project 

Operator or Authorized Project Designee pursuant to section 

95979(b)(3) and section 95979(b)(4), or an Offset Project Data 

Report that received a Positive Offset or Qualified Positive 

Offset Verification Statement fails an ARB audit, the Executive 

Officer may set aside the Positive Offset or Qualified Positive 

Offset Verification Statement submitted by the verification body 

and require the Offset Project Operator or Authorized Project 

designee to have the Offset Project Data Report re-verified by 

a different verification body within 90 calendar days of this 

finding.
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(U) Upon request by ARB or the Offset Project Registry, the Offset 

Project Operator or Authorized Project Designee must provide 

the data used to generate an Offset Project Data Report, 

including all data available to the offset verification team in the 

conduct of offset verification services, within 10 working days of 

the request.

(V) Upon request by ARB or the Offset Project Registry the 

verification body must provide ARB or the Offset Project 

Registry the detailed verification report given to the Offset 

Project Operator or Authorized Project Designee, as well as the 

sampling plan, contracts for offset verification services, and any 

other supporting documentation. All documentation must be 

provided by the verification body to ARB or the Offset Project 

Registry within 10 working days of the request.

(W) Upon written notification by ARB the verification body and its 

staff must be available for an offset verification services audit 

when providing offset verification services for an offset project 

listed with ARB or an Offset Project Registry using a 

Compliance Offset Protocol. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95977.2. Additional Project Specific Requirements for Offset Verification 

Services.

In addition to meeting the offset verification requirements in sections 95977 and 

95977.1, Offset Project Operators or Authorized Project Designees must ensure 

the GHG emission reductions and GHG removal enhancements resulting from an 

offset project meet any additional verification requirements in the Compliance 

Offset Protocol, if applicable, for an offset project of that type.
205

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95978. Offset Verifier and Verification Body Accreditation.

An offset verifier or verification body must meet the accreditation requirements in 

section 95132 of MRR to provide offset verification services to verify GHG 

emission reductions and GHG removal enhancements for offset projects listed 

pursuant to this article.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95979. Conflict of Interest Requirements for Verification Bodies for 

Verification of Offset Project Data Reports.

(a) The conflict of interest provisions of this section shall apply to verification 

bodies, lead verifiers, and offset verifiers accredited by ARB to perform 

offset verification services for Offset Project Operators or Authorized 

Project Designees.

(b) The potential for a conflict of interest must be deemed to be high where:

(1) The verification body and Offset Project Operator or Authorized Project 

Designee share any senior management staff or board of directors 

membership, or any of the senior management staff of the Offset 

Project Operator or Authorized Project Designee have been employed 

by the verification body, or vice versa, within the previous three years; 

or

(2) Within the previous five years, any staff member of the verification 

body or any related entity has provided to the Offset Project Operator 

or Authorized Project Designee any of the following non-offset 

verification services:

(A) Designing, developing, implementing, reviewing, or maintaining 

an inventory or offset project information or data management 
206

system for air emissions, unless the review was part of 

providing GHG offset verification services;

(B) Developing GHG emission factors or other GHG-related 

engineering analysis, including developing or reviewing a 

California Environmental Quality Act (CEQA) GHG analysis that 

includes offset project specific information;

(C) Designing energy efficiency, renewable power, or other projects 

which explicitly identify GHG reductions and GHG removal 

enhancements as a benefit;

(D) Designing, developing, implementing, internally auditing, 

consulting, or maintaining an offset project resulting in GHG 

emission reductions and GHG removal enhancements;

(E) Owning, buying, selling, trading, or retiring shares, stocks, or 

ARB offset credits or registry offset credits from the offset 

project;

(F) Dealing in or being a promoter of ARB offset credits or registry 

offset credits on behalf of an Offset Project Operator or 

Authorized Project Designee;

(G) Preparing or producing GHG-related manuals, handbooks, or 

procedures specifically for the Offset Project Operator or 

Authorized Project Designee;

(H) Appraisal services of carbon or GHG liabilities or assets;

(I) Brokering in, advising on, or assisting in any way in carbon or 

GHG-related markets;

(J) Directly managing any health, environment or safety functions 

for the Offset Project Operator or Authorized Project Designee;

(K) Bookkeeping or other services related to the accounting records 

or financial statements;

(L) Any service related to information systems, including 14001 

certification, unless those systems will not be reviewed as part 

of the offset verification process;
207

(M) Appraisal and valuation services, both tangible and intangible;

(N) Fairness opinions and contribution-in-kind reports in which the 

verification body has provided its opinion on the adequacy of 

consideration in a transaction, unless the information reviewed 

in formulating the Offset Verification Statement will not be 

reviewed as part of the offset verification services;

(O) Any actuarially oriented advisory service involving the 

determination of amounts recorded in financial statements and 

related accounts;

(P) Any internal audit service that has been outsourced by the 

Offset Project Operator or Authorized Project Designee that 

relates to the Offset Project Operator’s or Authorized Project 

Designee’s internal accounting controls, financial systems, or 

financial statements, unless the systems and data reviewed 

during those services, as well as the result of those services will 

not be part of the offset verification process;

(Q) Acting as a broker-dealer (registered or unregistered), promoter, 

or underwriter on behalf of the Offset Project Operator or 

Authorized Project Designee;

(R) Any legal services; and

(S) Expert services to the Offset Project Operator or Authorized 

Project Designee or a legal representative for the purpose of 

advocating the Offset Project Operator’s or Authorized Project 

Designee’s interests in litigation or in a regulatory or 

administrative proceeding or investigation, unless providing 

factual testimony.

“Member” for the purposes of this section means any employee 

or subcontractor of the verification body or related entities of the 

verification body. “Member” also includes any individual with 
208

majority equity share in the verification body or its related 

entities. 

“Related entity” for the purposes of this section means any 

direct parent company, direct subsidiary, or sister company.

(3) The potential for conflict of interest will be deemed to be high when any 

member of the verification body provides any type of incentive to an 

Offset Project Operator or Authorized Project Designee to secure an 

offset verification services contract.

(4) The potential for a conflict of interest will also be deemed to be high 

where any member of the verification body has provided offset 

verification services for the Offset Project Operator or Authorized 

Project Designee, except within the time periods in which the Offset 

Project Operator or Authorized Project Designee is allowed to use the 

same verification body as specified in section 95977.1(a).

(c) The potential for a conflict of interest must be deemed to be low where no 

potential for a conflict of interest is found under section 95979(b) and any 

non-offset verification services provided by any member of the verification 

body to the Offset Project Operator or Authorized Project Designee within 

the last five years are valued at less than 20 percent of the fee for the 

proposed offset verification, except where medium conflict of interest 

related to personal or family relationships is identified pursuant to section 

95979(d).

(d) The potential for a conflict of interest must be deemed to be medium 

where the potential for a conflict of interest is not deemed to be either high 

or low as specified in sections 95979(b) and 95979(c), or where there are 

any instances of personal or familial relationships between the verification 

body and management or employees of the Offset Project Operator or 

Authorized Project Designee, and when a conflict of interest selfevaluation is submitted pursuant to section 95979(g). If a verification body 
209

identifies a medium potential for conflict of interest and intends to provide 

offset verification services for the Offset Project Operator or Authorized 

Project Designee for an offset project listed with ARB or an Offset Project 

Registry, the verification body must submit, in addition to the submittal 

requirements specified in section 95979(e), a plan to avoid, neutralize, or 

mitigate the potential conflict of interest situation. At a minimum, the 

conflict of interest mitigation plan must include:

(1) A demonstration that any members with potential conflicts have been 

removed and insulated from the project;

(2) An explanation of any changes to the organizational structure or 

verification body to remove the potential conflict of interest. A 

demonstration that any unit with potential conflicts has been divested 

or moved into an independent entity or any subcontractor with potential 

conflicts has been removed; and

(3) Any other circumstance that specifically addresses other sources for 

potential conflict of interest.

(e) Conflict of Interest Submittal Requirements for Accredited Verification 

Bodies. Before providing any offset verification services, the verification 

body must submit to the Offset Project Operator or Authorized Project 

Designee, and ARB or the Offset Project Registry, a self-evaluation of the 

potential for any conflict of interest that the verification body, its staff, its 

related entities, or any subcontractors performing offset verification 

services may have with the Offset Project Operator or Authorized Project 

Designee for which it will perform offset verification services. The 

submittal must include the following:

(1) Identification of whether the potential for conflict of interest is high, low, 

or medium based on factors specified in sections 95979(b), (c), and 

(d);

(2) Identification of whether any member of the offset verification team has 

previously provided offset verification services for the Offset Project 
210

Operator or Authorized Project Designee, and, if so, the years in which 

such offset verification services were provided; and

(3) Identification of whether any member of the offset verification team or 

related entity has engaged in any non-offset verification services of any 

nature with the Offset Project Operator or Authorized Project Designee 

either within or outside California during the previous three years. If 

non-offset verification services have previously been provided, the 

following information must also be submitted:

(A) Identification of the nature and location of the work performed 

for the Offset Project Operator or Authorized Project Designee 

and whether the work is similar to the type of work to be 

performed during offset verification;

(B) The nature of past, present, or future relationships with the 

Offset Project Operator or Authorized Project Designee 

including:

1. Instances when any member of the offset verification team 

has performed or intends to perform work for the Offset 

Project Operator or Authorized Project Designee;

2. Identification of whether work is currently being performed 

for the Offset Project Operator or Authorized Project 

Designee, and if so, the nature of the work;

3. How much work was performed for the Offset Project 

Operator or Authorized Project Designee in the last three 

years, in dollars;

4. Whether any member of the offset verification team has any 

contracts or other arrangements to perform work for the 

Offset Project Operator or Authorized Project Designee or a 

related entity; and

5. How much work related to GHG reductions and GHG 

removal enhancements the offset verification team has 

performed for the Offset Project Operator or Authorized 
211

Project Designee or related entities in the last three years, in 

dollars;

(C) Explanation of how the amount and nature of work previously 

performed is such that any member of the offset verification 

team’s credibility and lack of bias should not be under question;

(D) A list of names of the staff that would perform offset verification 

services for the Offset Project Operator or Authorized Project 

Designee, and a description of any instances of personal or 

family relationships with management or employees of the 

Offset Project Operator or Authorized Project Designee that 

potentially represent a conflict of interest;

(E) Identification of any other circumstances known to the 

verification body, or Offset Project Operator or Authorized 

Project Designee that could result in a conflict of interest; and

(F) Attest, in writing, to ARB as follows:

“I certify under penalty of perjury of the laws of the State of 

California the information provided in the Conflict of Interest 

submittal is true, accurate, and complete.”

(f) Monitoring Conflict of Interest Situations.

(1) After commencement of offset verification services, the verification 

body must monitor and immediately make full disclosure, in writing, to 

ARB or the Offset Project Registry regarding any potential for a conflict 

of interest situation that arises for an offset project using a Compliance 

Offset Protocol. This disclosure must include a description of actions 

that the verification body has taken or proposes to take to avoid, 

neutralize, or mitigate the potential for a conflict of interest.

(2) The verification body must continue to monitor arrangements or 

relationships that may be present for a period of one year after the 

completion of offset verification services for an offset project using a 

Compliance Offset Protocol. During that period, within 30 days of the 

verification body or any verification team member entering into any 
212

contract with the Offset Project Operator or Authorized Project 

Designee for which the verification body has provided offset verification 

services, the verification body must notify ARB or the Offset Project 

Registry of the contract and the nature of the work to be performed. 

ARB or the Offset Project Registry, within 30 working days, will 

determine the level or conflict using the criteria in sections 95979(a) 

through (d), if the Offset Project Operator or Authorized Project 

Designee must re-verify their Offset Project Data Report, and if 

accreditation revocation is warranted by ARB.

(3) The verification body must notify ARB or the Offset Project Registry 

within 30 calendar days, of any emerging conflicts of interest during the 

time offset verification services are being provided for an offset project 

using a Compliance Offset Protocol.

(A) If ARB or the Offset Project Registry determines that an 

emerging potential conflict disclosed by the verification body is 

medium risk, and this risk can be mitigated, then the verification 

body meets the conflict of interest requirements to continue to 

provide offset verification services for the Offset Project 

Operator or Authorized Project Designee and will not be subject

to suspension or revocation of accreditation as specified in 

section 95132(d) of MRR.

(B) If ARB or the Offset Project Registry determines that an 

emerging potential conflict disclosed by the verification body is 

medium or high risk, and this risk cannot be mitigated, then the 

verification body will not be able to continue to provide offset 

verification services for the Offset Project Operator or 

Authorized Project Designee, and may be subject to the 

suspension or revocation of accreditation by ARB under section 

95132(d) of MRR.

(4) The verification body must report to ARB and the Offset Project 

Registry, if applicable, any changes in its organizational structure, 
213

including mergers, acquisitions, or divestitures, for one year after 

completion of offset verification services.

(5) ARB may void a Positive Offset or Qualified Positive Offset Verification 

Statement received in section 95981 if it discovers a potential conflict 

of interest has arisen for any member of the offset verification team. In 

such a case, the Offset Project Operator or Authorized Project 

designee shall be provided 90 calendar days to complete 

re-verification.

(6) If the verification body or its subcontractor(s) are found to have violated 

the conflict of interest requirements of this article, the Executive Officer 

may rescind accreditation of the body, its verifier staff, or its 

subcontractor(s) for any appropriate period of time as provided in 

section 95132(d) of MRR.

(g) Specific Requirements for Air Quality Management Districts and Air 

Pollution Control Districts.

(1) If an air district has provided or is providing any services listed in 

section 95979(b)(2) as part of its regulatory duties, those services do 

not constitute non-verification services or a potential for high conflict of 

interest for purposes of this article;

(2) Before providing offset verification services, an air district must submit 

a conflict of interest self-evaluation pursuant to 95979(e) for each 

Offset Project Developer or Authorized Project Designee for which it 

intends to provide verification services. As part of its conflict of interest 

self-evaluation submittal under section 95979(e), the air district shall 

certify that it will prevent conflicts of interests and resolve potential 

conflict of interest situations pursuant to its policies and mechanisms 

submitted under section 95132(b)(1)(G) of MRR;

(3) If an air district hires a subcontractor who is not an air district employee 

to provide offset verification services, the air district shall be subject to 

all of the requirements of section 95979.
214

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95980. Issuance of Registry Offset Credits.

(a) One registry offset credit, which represents one metric ton of CO2e for a 

direct GHG emission reduction or direct GHG removal enhancement, will 

be issued pursuant to section 95980.1 only if:

(1) An Offset Project Registry has listed the offset project pursuant to 

section 95975;

(2) The GHG emission reductions or GHG removal enhancements were 

issued a Positive Offset or Qualified Positive Offset Verification 

Statement pursuant to sections 95977.1 and 95977.2; and

(3) An Offset Project Registry has received a Positive Offset or Qualified 

Positive Offset Verification Statement issued and attested to by an 

ARB-accredited verification body for the Offset Project Data Report for 

which registry offset credits would be issued. 

(b) An Offset Project Registry will determine whether the GHG emission 

reductions and GHG removal enhancements meet the requirements of 

section 95980(a), the information submitted pursuant to section 95980(a) 

is complete, and the Positive Offset or Qualified Positive Offset 

Verification Statement meets the requirements of 95977, 95977.1, and 

95977.2 within 45 calendar days of receiving it.

(c) Determination for Timing and Duration of Initial Crediting Periods for 

Offset Projects Submitted Through an Offset Project Registry. The initial 

crediting period will begin with the date that the first verified GHG emission 

reductions and GHG removal enhancements occur, according to the first 

Positive Offset or Qualified Positive Offset Verification Statement that is 

received by an Offset Project Registry. An early action offset project that 

transitions pursuant to section 95990(k) will begin its initial crediting period 

pursuant to section 95990(k)(2).
215

(d) Determination for Timing and Duration of Renewed Crediting for Offset 

Projects Submitted through an Offset Project Registry. A renewed 

crediting period will begin the day after the conclusion of the prior crediting 

period.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95980.1. Process for Issuance of Registry Offset Credits.

(a) An Offset Project Registry may issue a registry offset credit that meets the 

requirements of section 95980(a) to an Offset Project Operator, 

Authorized Project Designee, or any other third party authorized by the 

Offset Project Operator pursuant to section 95974(a)(1), no later than 15 

calendar days after an Offset Project Registry makes a determination 

pursuant to section 95980(b).

(b) Change of Listing Status at the Offset Project Registry. When an Offset 

Project Registry issues a registry offset credit for an offset project, the 

listing status for that offset project will be changed to either “Active 

Registry Project” or “Active Registry Renewal” at the Offset Project 

Registry and ARB.

(c) Notice of Determination of Issuance of Registry Offset Credits. Not later 

than 15 calendar days after an Offset Project Registry issues a registry 

offset credit, an Offset Project Registry will notify the Offset Project 

Operator, Authorized Project Designee, or any other third party authorized 

by the Offset Project Operator pursuant to section 95974(a)(1) of the 

issuance. 

(d) After notifying the Offset Project Operator, Authorized Project Designee, 

or any other third party authorized by the Offset Project Operator pursuant 

to section 95974(a)(1) of the issuance, the Offset Project Registry will 

create a unique serial number for each registry offset credit.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
216

§ 95981. Issuance of ARB Offset Credits.

(a) One ARB offset credit, which represents one metric ton of CO2e for a 

direct GHG emission reduction or direct GHG removal enhancement, will 

be issued only if:

(1) ARB or an Offset Project Registry has listed the offset project pursuant 

to section 95975;

(2) The GHG emission reductions and GHG removal enhancements were 

issued a Positive Offset or Qualified Positive Offset Verification 

Statement pursuant to sections 95977.1 and 95977.2; and

(3) ARB or an Offset Project Registry has received a Positive Offset or 

Qualified Positive Offset Verification Statement issued and attested to 

by an ARB-accredited verification body for the Offset Project Data 

Report for which registry offset credits were issued pursuant to section 

95980.1 or for which ARB offset credits would be issued pursuant to 

section 95981.1.

(b) Requirements for Offset Projects Submitted Through an Offset Project 

Registry Seeking Issuance of ARB Offset Credits. If an Offset Project 

Operator or Authorized Project Designee provides information for listing 

pursuant to section 95975, monitors and reports pursuant to section 

95976, and has their offset project verified pursuant to sections 95977, 

95977.1, and 95977.2 through an Offset Project Registry, the Offset 

Project Operator or Authorized Project Designee must provide the 

following information to ARB for issuance of ARB offset credits pursuant to 

section 95981.1:

(1) The attestations required in sections 95975(c)(1), 95975(c)(2), 

95975(c)(3), 95976(d)(5), 95977.1(b)(3)(R)(4.)(b.), 

95977.1(b)(3)(R)(4.)(e.), and 95977.1(b)(3)(R)(4.)(f.) and any in the 

applicable Compliance Offset Protocol;

(2) Offset project listing information submitted to an Offset Project Registry 

pursuant to sections 95975(c) and (e);
217

(3) Offset Project Data Reports submitted to an Offset Project Registry 

pursuant to section 95976(d); and

(4) Offset Verification Statements submitted pursuant to section 

95977.1(b)(3)(R)(4.)(b.).

(c) ARB will determine whether the GHG emission reductions and GHG 

removal enhancements meet the requirements of section 95981(a), the 

information submitted in sections 95981(b) and (c) is complete, and the 

Positive Offset or Qualified Positive Offset Verification Statement meets 

the requirements of sections 95977, 95977.1, and 95977.2 within 45 

calendar days of receiving it.

(d) Before ARB issues an ARB offset credit pursuant to section 95981.1 for 

GHG reductions and GHG removal enhancements achieved by an offset 

project in an Offset Verification Statement the Offset Project Operator or 

Authorized Project Designee must provide the following attestations, in 

writing, to ARB:

(1) “I certify under penalty of perjury under the laws of the State of 

California the GHG reductions or GHG removal enhancements for 

[project] from [date] to [date] have been measured in accordance with 

the [appropriate ARB Compliance Offset Protocol] and all information 

required to be submitted to ARB is true, accurate, and complete.”;

(2) “I understand I am voluntarily participating in the California 

Greenhouse Gas Cap-and-Trade Program under title 17, article 5, and 

by doing so, I am now subject to all regulatory requirements and 

enforcement mechanisms of this program and subject myself to the 

jurisdiction of California as the exclusive venue to resolve any and all 

disputes arising from the enforcement of provisions in this article.”;

(3) “I understand that the offset project activity and implementation of the 

offset project must be in accordance with all applicable local, regional, 

and national environmental and health and safety regulations that 

apply based on the offset project location. I understand that offset 

projects are not eligible to receive ARB or registry offset credits for 
218

GHG reductions and GHG removal enhancements that are not in 

compliance with the requirements of this Article.”;

(4) “I certify under penalty of perjury under the laws of the State of 

California all information provided to ARB for issuance of ARB offset 

credits is true, accurate, and complete.”; and

(5) “I certify under penalty of perjury under the laws of the State of 

California that the GHG reductions and GHG removal enhancements 

for which I am seeking ARB Offset Credits have not been issued any 

offset credits or been used for any GHG mitigation requirements in any 

other voluntary or mandatory program, except, if applicable, an Offset 

Project Registry pursuant to section 95980.1.”

(e) Determination for Timing and Duration of Initial Crediting Periods for 

Offset Projects Submitted Through ARB. The initial crediting period will 

begin with the date that the first verified GHG emission reductions and 

GHG removal enhancements occur, according to the first Positive Offset 

or Qualified Positive Offset Verification Statement that is received by ARB. 

An early action offset project that transitions pursuant to section 95990(k) 

will begin its initial crediting period pursuant to section 95990(k)(2).

(f) Determination for Timing and Duration of Renewed Crediting for Offset 

Projects Submitted Through ARB. A renewed crediting period will begin 

the day after the conclusion of the prior crediting period.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95981.1. Process for Issuance of ARB Offset Credits.

(a) ARB will issue an ARB offset credit that meets the requirements of section 

95981(a) to an Offset Project Operator, Authorized Project Designee, or 

any other third party authorized by the Offset Project Operator pursuant to 

section 95974(a)(1), no later than 15 calendar days after ARB makes a 

determination pursuant to section 95981(c).
219

(b) Change of Listing Status at ARB. When ARB issues an ARB offset credit 

for an offset project, the listing status for that offset project will be changed 

from “Active Registry Project” to “Active ARB Project” or “Active Registry 

Renewal” to “Active ARB Renewal” at the Offset Project Registry and 

ARB.

(c) Notice of Determination of Issuance of ARB Offset Credits. Not later than 

15 calendar days after ARB issues an ARB offset credit, ARB will notify 

the Offset Project Operator, Authorized Project Designee, or any other 

third party authorized by the Offset Project Operator pursuant to section 

95974(a)(1) of the issuance. 

(d) Requests for Additional Information. ARB may request additional 

information for offset projects submitted through an Offset Project Registry 

seeking issuance of ARB offset credits.

(1) ARB will notify the Offset Project Operator, Authorized Project 

Designee, or other third party identified in section 95974(a)(1) within 15 

calendar days of its determination pursuant to section 95981(c) if the 

information in section 95981(b) and (c) is incomplete and request 

additional specific information.

(2) ARB may request any additional information from the Offset Project 

Operator, Authorized Project Designee, Offset Project Registry, or 

verification body before issuing ARB offset credits that meet the 

requirements of section 95981. 

(3) If ARB determines the information submitted in sections 95981(b), 

95981(c), and 95981.1(d)(2) does not meet the requirements for 

issuance of ARB offset credits, then ARB may deny issuance of ARB 

offset credits. The Offset Project Operator or Authorized Project 

Designee may petition ARB within 10 days of denial for a review of 

submitted information in sections 95981(b), 95981(c), and 

95981.1(d)(2) and respond to any issues that prevent the issuance of 

ARB offset credits.
220

(4) ARB must make a final determination within 30 calendar days of 

receiving the request in section 95981.1(d)(3) and may request 

additional information from the Offset Project Operator or Authorized 

Project Designee, verification body, or Offset Project Registry. This 

determination made by the Executive Officer is final.

(e) A registry offset credit issued pursuant to section 95980.1(a) must be 

removed or cancelled by the Offset Project Registry within 10 calendar 

days of ARB notification, such that the registry offset credit is no longer 

available for transaction on the Offset Project Registry system. Registry 

offset credits must be removed or cancelled by the Offset Project Registry 

before ARB issues an ARB offset credit pursuant to this section.

(f) Receipt of ARB Offset Credits. ARB will transfer ARB offset credits into 

the Holding Account of the Offset Project Operator, Authorized Project 

Designee, or any other third party authorized by the Offset Project 

Operator pursuant to section 95974(a)(1), within 15 working days of the 

notice of determination pursuant to sections 95981.1(c) and (d)(4). 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95982. Registration of ARB Offset Credits.

An ARB offset credit will be registered by:

(a) Creating a unique ARB serial number; and

(b) Transferring this serial number to the Holding Account of the listed Offset 

Project Operator, Authorized Project Designee, or another third party as 

provided in section 95974(a)(1) unless otherwise required by section 

95983.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
221

§ 95983. Forestry Offset Reversals.

(a) For forest sequestration projects, a portion of ARB offset credits issued to 

the forest offset project will be placed by ARB into the Forest Buffer 

Account. 

(1) The amount of ARB offset credits that must be placed in the Forest 

Buffer Account shall be determined as set forth in Compliance Offset 

Protocol U.S. Forest Projects, October 20, 2011.

(2) ARB offset credits will be transferred to the Forest Buffer Account by 

ARB at the time of ARB offset credit registration pursuant to section 

95982.

(3) If a forest offset project is originally submitted through an Offset Project 

Registry an equal number of registry offset credits must be removed or 

cancelled by the Offset Project Registry, such that the registry offset 

credit is no longer available for transaction on the Offset Project 

Registry system, and issued by ARB for placement in the Forest Buffer 

Account.

(b) Unintentional Reversals. If there has been an unintentional reversal, the 

Offset Project Operator or Authorized Project Designee must notify ARB 

and the Offset Project Registry, in writing, of the reversal and provide an

explanation for the nature of the unintentional reversal within 30 calendar 

days of its discovery.

(1) In the case of an unintentional reversal the Offset Project Operator or 

Authorized Project Designee shall provide in writing to ARB and an 

Offset Project Registry, if applicable, a verified estimate of current 

carbon stocks within the offset project boundary within one year of the 

discovery of the unintentional reversal.

(2) If ARB determines that there has been an unintentional reversal, and 

ARB offset credits have been issued to the offset project, ARB will 

retire a quantity of ARB offset credits in the amount of metric tons of 

CO2e reversed from the Forest Buffer Account.
222

(c) Intentional Reversals. Requirements for intentional reversals are as 

follows:

(1) If an intentional reversal occurs, the Offset Project Operator or 

Authorized Project Designee shall, within 30 calendar days of the 

intentional reversal:

(A) Give notice, in writing, to ARB and the Offset Project Registry, if 

applicable, of the intentional reversal; and

(B) Provide a written description and explanation of the intentional 

reversal to ARB and the Offset Project Registry, if applicable. 

(2) Within one year of the occurrence of an intentional reversal, the Offset 

Project Operator or Authorized Project Designee shall submit to ARB 

and the Offset Project Registry, if applicable, a verified estimate of 

current carbon stocks within the offset project boundary.

(3) If an intentional reversal occurs from a forest offset project, and ARB 

offset credits have been issued to the offset project, the forest owner 

must submit to ARB for placement in the Retirement Account a 

quantity of valid ARB offset credits or other approved compliance 

instruments pursuant to subarticle 4, in the amount of metric tons of 

CO2e reversed within six months of notification by ARB. 

(A) Notification by ARB will occur after the verified estimate of 

carbon stocks has been submitted to ARB, or after one year has 

elapsed since the occurrence of the reversal if the Offset Project 

Operator or Authorized Project Designee fails to submit the 

verified estimate of carbon stocks. 

(B) If the forest owner does not submit valid ARB offset credits or 

other approved compliance instruments to ARB within six 

months of notification by ARB, ARB will retire a quantity of ARB 

offset credits in the amount of metric tons of CO2e reversed 

from the Forest Buffer Account and the forest owner will be 

subject to enforcement action and each ARB offset credit retired 
223

from the Forest Buffer Account will constitute a separate 

violation pursuant to section 96014.

(4) In the event of an early forest offset project termination ARB will retire 

from the Forest Buffer Account a quantity of ARB offset credits in the 

amount calculated pursuant to project termination provisions in 

Compliance Offset Protocol, U.S. Forest Projects, October 20, 2011. 

This provision only applies to ARB offset credits that have been issued 

to the offset project. 

(A) ARB will notify the forest owner of retirement within 10 calendar 

days. 

(B) The forest owner must submit to ARB for placement in the 

Retirement Account a valid ARB offset credit or another 

approved compliance instrument pursuant to subarticle 4 for 

each ARB offset credit retired by ARB from the Forest Buffer 

Account within six months of ARB’s retirement. 

(C) If the forest owner does not submit valid ARB offset credits or 

other approved compliance instruments to ARB within six 

months of ARB’s retirement, they will be subject to enforcement 

action and each ARB offset credit retired from the Forest Buffer 

Account will constitute a separate violation pursuant to section 

96014.

(d) Disposition of Forest Sequestration Projects After a Reversal. If a reversal 

lowers the forest offset project’s actual standing live carbon stocks below 

its project baseline standing live carbon stocks, the forest offset project will 

be terminated by ARB or an Offset Project Registry. 

(1) If the forest offset project is terminated due to an unintentional 

reversal, ARB will retire from the Forest Buffer Account a quantity of 

ARB offset credits equal to the total number of ARB offset credits 

issued pursuant to section 95981, and where applicable, all early 

action offset credits issued to the offset project pursuant to section 

95990(i) over the preceding 100 years.
224

(2) If the forest offset project is terminated due to an unintentional 

reversal, another offset project may be initiated and submitted to ARB 

or an Offset Project Registry for listing within the same offset project 

boundary. 

(3) If the forest offset project has experienced an unintentional reversal 

and its actual standing live carbon stocks are still above the approved 

baseline levels, it may continue without termination as long as the 

unintentional reversal has been compensated by the Forest Buffer 

Account. The Offset Project Operator or Authorized Project Designee 

must continue contributing to the Forest Buffer Account in future years 

as quantified in section 95983(a)(1).

(4) If the forest offset project is terminated due to any reason except an 

unintentional reversal, new offset projects may not be initiated within 

the same offset project boundary, unless otherwise specified in a 

Compliance Offset Protocol.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95984. Ownership and Transferability of ARB Offset Credits.

(a) Initial ownership of an ARB offset credit will be with the registered Offset 

Project Operator, Authorized Project Designee, or another third party as 

provided in section 95974(a)(1), unless otherwise required by section 

95983. An ARB offset credit may be sold, traded, or transferred, unless: 

(1) It has been retired, surrendered for compliance, or used to meet any 

GHG mitigation requirements in any voluntary or regulatory program;

(2) It resides in the Forest Buffer Account pursuant to section 95983; or

(3) It has been invalidated pursuant to section 95985.

(b) An ARB offset credit may only be used: 
225

(1) To meet a compliance obligation under this article, except if used by a 

covered entity in a program approved for linkage pursuant to subarticle 

12; or

(2) By a Voluntarily Associated Entity for purposes of voluntary retirement.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95985. Invalidation of ARB Offset Credits.

(a) An ARB offset credit issued under this article will remain valid unless 

invalidated pursuant to this section.

(b) Timeframe for Invalidation. ARB may invalidate an ARB offset credit 

pursuant to this section within the following timeframe if a determination is 

made pursuant to section 95985(f):

(1) Within eight years of issuance of an ARB offset credit unless one of the 

following requirements is met; 

(A) An offset project developed under Compliance Offset Protocol 

Ozone Depleting Substances Projects, October 20, 2011, may 

only be subject to invalidation within three years of issuance of 

an ARB offset credit if the Offset Project Data Report is reverified pursuant to sections 95977 through 95978 by a different 

offset verification body within those three years; or

(B) An offset project developed under the protocols listed below, 

may only be subject to invalidation within three Reporting 

Periods if a subsequent Offset Project Data Report for that 

offset project is verified pursuant to sections 95977 through 

95978 by a different offset verification body and issued a 

Positive Offset or Qualified Positive Offset Verification 

Statement within three years of issuance of the ARB Offset

Credit. This provision applies if an offset project is developed 

under one of the following Compliance Offset Protocols;
226

1. Compliance Offset Protocol Livestock Projects, October 20, 

2011;

2. Compliance Offset Protocol Urban Forest Projects, October 

20, 2011; and

3. Compliance Offset Protocol U.S. Forest Projects, October 

20, 2011.

(c) Grounds for Initial Determination of Invalidation. ARB may determine that 

an ARB offset credit is invalid for the following reasons:

(1) The Offset Project Data Report contains errors that overstate the 

amount of GHG reductions or GHG removal enhancements by more 

than five percent; 

(A) If ARB finds that there has been an overstatement by more than 

five percent, ARB shall determine how many GHG reductions 

and GHG removal enhancements were achieved by the offset 

project for the applicable Reporting Period. Within 10 calendar 

days of this determination, ARB will notify the verification body 

that performed the offset verification and the Offset Project 

Operator or Authorized Project Designee. Within 25 calendar 

days of receiving the written notification by ARB, the verification 

body shall provide any available offset verification services 

information or correspondence related to the Offset Project Data 

Report. Within 25 calendar days of receiving the written 

notification by ARB, the Offset Project Operator or Authorized 

Project Designee shall provide data that is required to calculate 

GHG reductions and GHG removal enhancements for the offset 

project according to the requirements of this article, the detailed 

offset verification report prepared by the verification body, and 

other information requested by ARB. The Offset Project 

Operator or Authorized Project Designee shall also make 

available personnel who can assist ARB’s determination of how 

many GHG reductions and GHG removal enhancements were 
227

achieved by the offset project for the applicable Reporting 

Period.

1. ARB will determine the actual GHG reductions and GHG 

removal enhancements achieved by the offset project for the

applicable Reporting Period based on, at a minimum, the 

following information:

a. The GHG sources, GHG sinks, and GHG reservoirs 

within the offset project boundary for that Reporting 

Period; and

b. Any previous Offset Project Data Reports submitted 

by the Offset Project Operator or Authorized Project 

Designee, and the Offset Verification Statements 

rendered for those reports.

2. In determining how many GHG reductions and GHG removal 

enhancements were achieved by the offset project for the 

applicable Reporting Period, ARB may use the following 

methods, as applicable:

a. The applicable Compliance Offset Protocol;

b. In the event of missing data, ARB will rely on the 

missing data provisions pursuant to section 95976, 

and, if applicable, the Compliance Offset Protocol; 

and

c. Any information reported under this article for this 

Reporting Period and past Reporting Periods.

3. ARB shall determine how many GHG reductions and GHG 

removal enhancements were achieved by the offset project 

for the applicable Reporting Period using the best 

information available, including the information in section 

95985(c)(1)(A)(1.) and methods in section 

95985(c)(1)(A)(2.), as applicable. 
228

(B) If ARB determines that an overstatement has occurred pursuant 

to section 95985(c)(1), ARB shall determine the amount of ARB 

offset credits that correspond to the overstatement using the 

following equation, rounded to the nearest whole ton:

If: IARBOC > ROPDR X 1.05

Then: OR = IARBOC − ROPDR

Where:

“OR” is the amount of overstated GHG reductions and GHG removal 

enhancements for the applicable Offset Project Data Report, rounded 

to the nearest whole ton;

“IARBOC” is the number of ARB offset credits issued under the applicable 

Offset Project Data Report pursuant to section 95981.1 or 95990(i);

“ROPDR” is the number of GHG reductions and GHG removal 

enhancements determined by ARB pursuant to section 95985(c)(1) for 

the applicable Offset Project Data Report;

(2) The offset project activity and implementation of the offset project was 

not in accordance with all local, state, or national environmental and 

health and safety regulations during the Reporting Period for which the 

ARB offset credit was issued; or

(3) ARB determines that offset credits have been issued in any other 

voluntary or mandatory program within the same offset project 

boundary and for the same Reporting Period in which ARB offset 

credits were issued for GHG reductions and GHG removal 

enhancements.
229

(4) The following shall not be grounds for invalidation:

(A) An update to a Compliance Offset Protocol will not result in an 

invalidation of ARB offset credits issued under a previous 

version of the Compliance Offset Protocol; or

(B) A reversal that occurs under a forest offset project. If such a 

reversal occurs the provisions in section 95983 apply. 

(d) Suspension of Transfers. When ARB makes an initial determination 

pursuant to section 95985(c) it will immediately block any transfers of ARB 

offset credits for the applicable Offset Project Data Report. Once ARB 

makes a final determination pursuant to section 95985(f) the block on 

transfers for any valid ARB offset credits will be cancelled. 

(e) Identification of Affected Parties. If ARB makes an initial determination 

that one of the circumstances listed in section 95985(c) has occurred,

ARB will identify the following parties:

(1) The current holders that hold any ARB offset credits in their Holding 

and/or Compliance Accounts from the applicable Offset Project Data 

Report; 

(2) The entiies for which ARB transferred any ARB offset credits from the 

applicable Offset Project Data Report into the Retirement Account; and

(3) The Offset Project Operator and Authorized Project Designee, and, for 

forest offset projects the Forest Owner(s).

(f) Final Determination and Process of Invalidation. ARB will notify the 

parties identified in section 95985(e) of its initial determination pursuant to 

section 95985(c), and provide each party an opportunity to submit 

additional information to ARB prior to making its final determination, as 

follows:

(1) ARB will include the reason for its initial determination in its notification 

to the parties identified in section 95985(e).

(2) After notification the parties identified in section 95985(e) will have 25 

calendar days to provide any additional information to ARB.
230

(3) ARB may request any information as needed in addition to the 

information provided under this section.

(4) The Executive Officer will have 30 calendar days after all information is 

submitted under this section to make a final determination that one or 

more conditions listed pursuant to section 95985(c) has occurred and 

whether to invalidate ARB offset credits.

(A) The parties identified pursuant to section 95985(e) will be 

notified of ARB’s final determination of invalidation pursuant to 

this section.

(B) Any approved program for linkage pursuant to subarticle 12 will 

be notified of the invalidation at the time of ARB’s final 

determination pursuant to this section.

(g) Removal of Invalidated ARB Offset Credits from Holding and/or 

Compliance Accounts. If the Executive Officer makes a final 

determination pursuant to section 95985(f) that an ARB offset credit is 

invalid, then:

(1) ARB offset credits will be removed from any Holding or Compliance 

Account, as follows;

(A) If an ARB offset credit is determined to be invalid due to the 

circumstance listed in section 95985(c)(1), then:

1. ARB will determine which ARB offset credits will be removed 

from the Compliance and/or Holding Accounts of each party 

identified in section 95985(e)(1) according to the following 

equation, rounded to the nearest whole ton:

HARBOC = �

TOTHolding

IARBOC

� OR

Where: 
231

“OR” is the amount of overstated GHG reductions and GHG 

removal enhancements for the applicable Offset Project Data 

Report calculated pursuant to section 95985(c)(1);

“IARBOC” is the number of ARB offset credits issued under the 

applicable Offset Project Data Report pursuant to section 95981.1 

or 95990(i);

“TOTHolding” is the total number of ARB offset credits currently being 

held in a Compliance and/or Holding Account by each party 

identified in section 95985(e)(1) for the applicable Offset Project 

Data Report;

“HARBOC” is the total number of ARB offset credits, rounded to the 

nearest whole ton, that will be removed from the Holding and/or 

Compliance Account of each party identified in section 95985(e)(1).

2. ARB will determine the lowest serial numbers assigned to 

ARB offset credits issued under the applicable Offset Project 

Data Report in the amount calculated pursuant to section 

95985(g)(1)(A) and remove them from any Holding and/or 

Compliance Account of the parties identified in section 

95985(e)(1).

(B) If an ARB offset credit is determined to be invalid due to the 

circumstances listed in sections 95985(c)(2) or (c)(3), ARB will 

remove all ARB offset credits issued under the applicable Offset 

Project Data Report from any Holding and/or Compliance 

Account of the parties identified in section 95985(e)(1).

(2) The parties identified pursuant to section 95985(e) will be notified of 

which serial numbers were removed from any Compliance and/or 

Holding Accounts.
232

(3) Any approved program for linkage pursuant to subarticle 12 will be 

notified of which serial numbers were removed from any Compliance 

and/or Holding Accounts. 

(h) Requirements for Replacement of ARB Offset Credits for NonSequestration Offset Projects. 

(1) If an ARB offset credit in the Retirement Account from a nonsequestration offset project is determined to be invalid pursuant to 

section 95985(f) for only the circumstance listed in section 95985(c)(1); 

then:

(A) Each party identified in section 95985(e)(2) must replace ARB 

offset credits in the amount calculated for the individual party 

according to the following equation, rounded to the nearest 

whole ton:

RARBOC = �

TOTRetired

IARBOC

� OR

Where: 

“RARBOC” is the calculated total number of retired ARB offset credits for 

the applicable Offset Project Data Report, rounded to the nearest 

whole ton, that must be replaced by each individual party identified in 

section 95985(e)(2);

“TOTRetired” is the total number of ARB offset credits for which ARB 

transferred the ARB offset credits from the applicable Offset Project 

Data Report into the Retirement Account for the individual party 

specified in section 95985(e)(2);

“IARBOC” is the number of ARB offset credits issued under the applicable 

Offset Project Data Report pursuant to section 95981.1 or 95990(i);
233

“OR” is the amount of overstated GHG reductions and GHG removal 

enhancements calculated pursuant to section 95985(c)(1) for the 

applicable Offset Project Data Report.

(B) Each party identified in section 95985(e)(2) must replace ARB 

offset credits in the amount calculated pursuant to section 

95985(h)(1)(A) with valid ARB offset credits or other approved 

compliance instruments pursuant to subarticle 4, within six 

months of notification by ARB pursuant to section 95985(g)(2).

(C) If each party identified in section 95985(e)(2) does not replace 

each invalid ARB offset credit in the amount calculated pursuant 

to section 95985(h)(1)(A) within six months of notice of 

invalidation pursuant to section 95985(g)(2), each unreplaced 

invalidated ARB offset credit will constitute a violation for that 

party pursuant to section 96014.

1. If the party identified in section 95985(e)(2) is no longer in 

business pursuant to section 95101(h)(2) of MRR, ARB will 

require the Offset Project Operator to replace each 

invalidated ARB offset credits and will notify the Offset 

Project Operator that they must replace them. 

2. The Offset Project Operator must replace each ARB offset 

credit with a valid ARB offset credit or another approved 

compliance instrument pursuant to subarticle 4, within six 

months of notification by ARB pursuant to section 

95985(h)(1)(C)(1.). 

3. If the Offset Project Operator does not replace each invalid 

ARB offset credit within six months of notification by ARB 

pursuant to section 95985(h)(1)(C)(1.), each unreplaced 

invalidated ARB offset credit will constitute a violation for that 

Offset Project Operator pursuant to section 96014.
234

(D) ARB will determine the lowest serial numbers assigned to ARB 

offset credits issued under the applicable Offset Project Data 

Report in the amount calculated pursuant to section 

95985(h)(1)(A) and invalidate those serial numbers.

(E) The parties identified pursuant to section 95985(e) will be 

notified of which serial numbers were invalidated.

(F) Any approved program for linkage pursuant to subarticle 12 will 

be notified of which serial numbers were invalidated. 

(2) If an ARB offset credit in the Retirement Account from a nonsequestration offset project is determined to be invalid pursuant to 

section 95985(f) for any circumstance listed in sections 95985(c)(2) 

and (c)(3); then:

(A) The party identified in section 95985(e)(2) must replace each 

ARB offset credit it requested ARB to transfer into the 

Retirement Account for the applicable Offset Project Data 

Report with a valid ARB offset credit or another approved 

compliance instrument pursuant to subarticle 4, within six 

months of notification by ARB pursuant to section 95985(g)(2). 

(B) If the party identified in section 95985(e)(2) does not replace 

each invalid ARB offset credit within six months of the notice of 

invalidation pursuant to section 95985(g)(2), each unreplaced

invalidated ARB offset credit will constitute a violation for that 

party pursuant to section 96014. 

1. If the party identified in section 95985(e)(2) is no longer in 

business pursuant to section 95101(h)(2) of MRR ARB will 

require the Offset Project Operator to replace each 

invalidated ARB offset credit and will notify the Offset Project 

Operator that they must replace them. 

2. The Offset Project Operator must replace each ARB offset 

credit with a valid ARB offset credit or another approved 

compliance instrument pursuant to subarticle 4, within six 
235

months of notification by ARB pursuant to section 

95985(h)(2)(B)(1.). 

3. If the Offset Project Operator does not replace each invalid 

ARB offset credit within six months of notification by ARB 

pursuant to section 95985(h)(2)(B)(1.), each unreplaced 

invalidated ARB offset credit will constitute a violation for that 

Offset Project Operator pursuant to section 96014.

(C) The parties identified pursuant to section 95985(e) will be 

notified of which serial numbers were invalidated.

(D) Any approved program for linkage pursuant to subarticle 12 will 

be notified of which serial numbers were invalidated. 

(i) Requirements for Replacement of ARB Offset Credits for Forest Offset 

Projects. 

(1) If an ARB offset credit in the Retirement Account from a forest offset 

project is determined to be invalid pursuant to section 95985(f) for only 

the circumstance listed in section 95985(c)(1): 

(A) The Forest Owner identified in section 95985(e)(3) must replace 

ARB offset credits in the amount calculated according to the 

following equation, rounded to the nearest whole ton:

RFARBOC = �

TFRetired

IFARBOC

� OFR

Where: 

“RFARBOC” is the total number of retired ARB offset credits for the 

applicable forest offset project’s Offset Project Data Report, rounded to 

the nearest whole ton, that must be replaced by the Forest Owner;

“TFRetired” is the total number of ARB offset credits issued for the 

applicable forest offset project’s Offset Project Data Report for which

ARB transferred any ARB offset credits from into the Retirement 

Account;
236

“IFARBOC” is the number of ARB offset credits issued under the 

applicable Offset Project Data Report for the forest offset project 

pursuant to section 95981.1 or 95990(i);

“OFR” is the amount of overstated GHG reductions and GHG removal 

enhancements calculated pursuant to section 95985(c)(1) for the forest 

offset project for the applicable Offset Project Data Report.

(B) The Forest Owner identified in section 95985(e)(3) must replace 

ARB offset credits in the amount calculated pursuant to section 

95985(i)(1)(A) with valid ARB offset credits or other approved 

compliance instruments pursuant to subarticle 4, within six 

months of notification by ARB pursuant to section 95985(g)(2).

(C) If the Forest Owner identified in section 95985(e)(3) does not 

replace each invalid ARB offset credit in the amount calculated 

pursuant to section 95985(i)(1)(A) within six months of notice of 

invalidation pursuant to section 95985(g)(2), each unreplaced 

invalidated ARB offset credit will constitute a violation for that 

Forest Owner pursuant to section 96014.

(D) ARB will determine the lowest serial numbers assigned to ARB 

offset credits issued under the applicable Offset Project Data 

Report in the amount calculated pursuant to section 

95985(i)(1)(A) and invalidate those serial numbers.

(E) The Forest Owner identified pursuant to section 95985(e) will be 

notified of which serial numbers were invalidated.

(F) Any approved program for linkage pursuant to subarticle 12 will 

be notified of which serial numbers were invalidated. 

(2) If an ARB offset credit in the Retirement Account from a forest offset 

project is determined to be invalid pursuant to section 95985(f) for any 

circumstance listed in sections 95985(c)(2) and (c)(3):
237

(A) The Forest Owner must replace each ARB offset credit 

transferred by ARB into the Retirement Account for the 

applicable Offset Project Data Report with a valid ARB offset 

credit or another approved compliance instrument pursuant to 

subarticle 4, within six months of notification by ARB pursuant to 

section 95985(g)(2). 

(B) If the Forest Owner does not replace each invalid ARB offset 

credit within six months of the notice of invalidation pursuant to 

section 95985(g)(2), each unreplaced invalidated ARB offset 

credit will constitute a violation for that Forest Owner pursuant to 

section 96014. 

(C) The parties identified pursuant to section 95985(e) will be 

notified of which serial numbers were invalidated. 

(D) Any approved program for linkage pursuant to subarticle 12 will 

be notified of which serial numbers were invalidated. 

(j) Nothing in this section shall limit the authority of the State of California 

from pursuing enforcement action against any parties in violation of this 

article.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95986. Executive Officer Approval Requirements for Offset Project 

Registries.

(a) The approval requirements specified in this subarticle apply to all Offset 

Project Registries that will operate to provide registry services under this 

article.

(b) The Executive Officer may approve Offset Project Registries that meet the 

requirements specified in this section.

(c) The Offset Project Registry must be registered with ARB pursuant to 

section 95830. 
238

(1) Offset Project Registry Approval Application. To apply for approval as 

an Offset Project Registry, the applicant shall submit the following 

information to the Executive Officer:

(A) Name of applicant; 

(B) Name of president or chief executive officer;

(C) List of all board members, if applicable;

(D) Addresses of offices located in the United States;

(E) Documentation that the applicant carries at least five million 

U.S. dollars of professional liability insurance; and 

(F) List of any judicial proceedings and administrative actions filed 

against the applicant within the previous five years, with a 

detailed explanation as to the nature of the proceedings.

(2) The applicant must submit, in writing, the procedures to screen and 

address internal conflicts of interest. The applicant must provide the 

following information to the Executive Officer:

(A) A staff, management, and board member conflict of interest 

policy where there are clear criteria for what constitutes a 

conflict of interest. The policy must:

1. Identify specific activities and limits on monetary and nonmonetary gifts staff, management, or board members must 

not conduct or accept to meet the Offset Project Registry’s 

internal policies of conflict of interest policy, or alternatively 

provide a comprehensive policy on the applicant’s 

requirements for the reporting of any and all conflicts based 

on internal policies that guard against conflict of interest; and

2. Include a requirement for annual disclosure by each staff, 

management, or board member of any items or instances 

that are covered by the applicant’s conflict of interest policy 

on an ongoing basis or for the previous calendar year.
239

3. The applicant must have appropriate conflict of interest and 

confidentiality requirements in place for any of its 

contractors;

(B) List of all service types provided by the applicant; 

(C) The industrial sectors the applicant serves; 

(D) Locations where services are provided; and

(E) A detailed organizational chart that includes the applicant and 

any parent, subsidiary, and affiliate companies.

(F) If the applicant under section 95986 is going to designate a 

subdivision of its organization to provide registry services, then 

the prohibition in section 95986(d)(1) on serving as an offset 

project consultant shall apply at the subdivision level and the 

applicant must provide the following general information for its 

self:

1. General types of services; and

2. General locations where services are provided.

(3) The applicant has the following capabilities for registration and tracking 

of registry offset credits issued under this article:

(A) A comprehensive registration requirement for all registry 

participants;

(B) Tracking ownership and transactions of all registry offset credits 

it issues at all times; and

(C) Possesses a permanent repository of ownership information on 

all transactions involving all registry offset credits it issues under 

this article from the time they are issued to the time they are 

retired or cancelled.

(d) The applicant’s primary business must be operating an Offset Project 

Registry for voluntary or regulatory purposes and meet the following 

business requirements:

(1) The applicant may not act as an Offset Project Operator, Authorized 

Project Designee, or offset project consultant for offset projects 
240

registered or listed on its own Offset Project Registry and developed 

using a Compliance Offset Protocol once approved as an Offset 

Project Registry. The applicant must annually disclose to ARB any 

non-offset project related consulting services it provides to an Offset 

Project Operator or Authorized Project Designee who lists a project

using a Compliance Offset Project with the applicant as part of the 

information included in the annual report required in section 95987(j);

(2) The applicant may not act as a verification body or provide offset 

verification services pursuant to sections 95977.1 and 95977.2 once 

approved as an Offset Project Registry;

(3) If the applicant designates a subdivision of its organization to provide 

registry services, the applicant may not be an Offset Project Operator 

or Authorized Project Designee for offset projects listed at the 

subdivision’s registry, act as a verification body, or be a covered entity 

or opt-in covered entity;

(4) The applicant must demonstrate experience in the continuous 

operation of a registry serving an environmentally-focused market for a 

minimum of two years in a regulatory and/or voluntary market; and

(5) The applicant’s primary incorporation or other business formation and 

primary place of business, or the primary place of business of the 

designated subdivision, if the applicant designates a subdivision to 

provide registry services pursuant to this section, must be in the United 

States of America.

(e) The Offset Project Registry must continue to maintain the professional 

liability insurance required in section 95986(c) while it provides registry 

services to Offset Project Operators or Authorized Project Designees who 

are implementing offset projects using Compliance Offset Protocols.

(f) If any information submitted pursuant to sections 95986(c) through (e) 

changes after the approval of an Offset Project Registry, the Offset Project 

Registry must notify the Executive Officer within 30 calendar days and 
241

provide updated information consistent with that required in sections 

95986(c) through (e).

(g) The Offset Project Registry must attest, in writing, to ARB as follows:

(1) “As the authorized representative for this Offset Project Registry, I 

understand that the Offset Project Registry is voluntarily participating in 

the California Cap-and-Trade Program under title 17, article 5, and the 

Offset Project Registry is now subject to all regulatory requirements 

and enforcement mechanisms of this program.”;

(2) “All information generated and submitted to ARB by the Offset Project 

Registry related to an offset project that uses a Compliance Offset 

Protocol will be true, accurate, and complete.”;

(3) “All information provided to ARB as part of an ARB audit of the Offset 

Project Registry will be true, accurate, and complete.”;

(4) “All registry services provided will be in accordance to the 

requirements of section 95987.”;

(5) “The Offset Project Registry is committed to participating in all ARB 

training related to ARB’s compliance offset program or Compliance 

Offset Protocols.”; and

(6) The authorized representative of the Offset Project Registry must 

attest in writing, to ARB: “I certify under penalty of perjury under the 

laws of the State of California I have authority to represent the Offset 

Project Registry and all information provided as part of this application 

is true, accurate, and complete.”.

(h) At least two of the management staff at the Offset Project Registry must 

take ARB provided training on ARB’s compliance offset program and pass 

an examination upon completion of training. 

(i) The Offset Project Registry must have staff members who have 

collectively completed ARB training and passed an examination upon 

completion of training in all Compliance Offset Protocols. 
242

(j) The Offset Project Registry must have experience in, and requirements 

for, staff oversight of the offset project review, listing, and registry offset 

credit issuance process.

(k) ARB Approval.

(1) Within 60 calendar days of receiving an application for approval as an 

Offset Project Registry and completion by all management staff of the 

training required in section 95986(h), the Executive Officer will inform 

the applicant in writing either that the application is complete or that 

additional specific information is required to make the application 

complete.

(2) The applicant may be allowed to submit additional supporting 

documentation before a decision is made by the Executive Officer.

(3) Within 60 calendar days following completion of the application 

process, the Executive Officer shall approve an Offset Project Registry 

if evidence of qualification submitted by the applicant has been found 

to meet the requirements of section 95986 and issue an Executive 

Order to that effect.

(4) The Executive Officer and the applicant may mutually agree, in writing, 

to longer time periods than those specified in subsections 95986(k)(1) 

and 95986(k)(3).

(5) The Executive Officer approval for an Offset Project Registry is valid 

for a period of 10 years, whereupon the applicant may re-apply. At the 

time of re-application, the Offset Project Registry must:

(A) Demonstrate it consistently met all of the requirements in 

section 95986; 

(B) Pass a performance review, which, at a minimum shows the 

Offset Project Registry consistently:

1. Demonstrates knowledge of the ARB compliance offset 

program and Compliance Offset Protocols;

2. Meets all regulatory deadlines; and
243

3. Provides registry services in accordance with the 

requirements of this article; and

(C) Not have been subject to enforcement action under this article.

(l) Modification, Suspension, and Revocation of an Executive Order 

Approving an Offset Project Registry. The Executive Officer may review, 

and, for good cause, modify, suspend, or revoke an Executive Order 

providing approval to an Offset Project Registry. 

(1) During revocation proceedings, the Offset Project Registry may not 

continue to provide registry services for ARB.

(2) Within five working days of suspension or revocation of approval, an 

Offset Project Registry must notify all Offset Project Operators or 

Authorized Project Designees for whom it is providing registry services, 

or has provided registry services within the past 12 months, of its 

suspension or revocation of approval.

(3) An Offset Project Operator or Authorized Project Designee who has 

been notified by an Offset Project Registry of a suspended or revoked 

approval must re-submit its offset project information with a new Offset 

Project Registry or ARB. An offset project listed at ARB or a new 

Offset Project Registry will continue to operate under its originally 

approved crediting period, provided that ARB may extend the crediting 

period or the relevant deadline in section 95977(d) for one year if ARB 

determines that such extention is necessary to provide time for resubmission of information to the new Offset Project Registry or ARB.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95987. Offset Project Registry Requirements.

(a) The Offset Project Registry shall use Compliance Offset Protocols 

approved pursuant to section 95971 to determine whether an offset 

project may be listed with the Offset Project Registry for issuance of 
244

registry offset credits. The Offset Project Registry may list projects under 

non-Compliance Offset Protocols, but must make it clear any GHG 

emission reductions and GHG removal enhancements achieved under 

those protocols are not eligible to be issued registry offset credits or ARB 

offset credits. 

(b) The Offset Project Registry must make the following information publicly 

available for each offset project developed under a Compliance Offset 

Protocol:

(1) Within 10 working days of the offset project listing requirements being 

deemed complete in section 95975(f):

(A) Offset project name;

(B) Offset project location;

(C) Offset Project Operator and, if applicable, the Authorized Project 

Designee;

(D) Type of offset project;

(E) Name and date of the Compliance Offset Protocol used by the 

offset project;

(F) Date of offset project listing submittal and Offset Project 

Commencement date; and

(G) Identification if the offset project is in an initial or renewed 

crediting period;

(2) Within 10 working days of the Offset Project Data Report being issued 

an Offset Verification Statement:

(A) Annual verified project baseline emissions;

(B) Annual verified GHG reductions and GHG removal 

enhancements achieved by the offset project;

(C) The unique serial numbers of registry offset credits issued to the 

offset project for the applicable Offset Project Data Report;

(D) Total verified GHG reductions and GHG removal enhancements 

for the offset project by Reporting Period for when an Offset 

Project Data Report was submitted; 
245

(E) Offset Verification Statement for each year the Offset Project 

Data Report was verified; and

(3) Clear identification of which offset projects are listed and submitting 

Offset Project Data Reports using Compliance Offset Protocols.

(c) Conflict of Interest Review by Offset Project Registries. The Offset Project 

Registry must apply the conflict of interest requirements in section 95979 

when making a conflict of interest determination for a verification body 

proposing to conduct offset verification services under sections 95977.1 

and 95977.2. The Offset Project Registry must review and make sure the 

conflict of interest submittal in section 95979(e) is complete. When an 

Offset Project Operator or Authorized Project Designee submits its 

information pursuant to section 95981(b) to ARB, the Offset Project 

Registry must provide ARB with the information and attestation identified 

in section 95979(e) within 15 calendar days.

(d) The Offset Project Registry may provide guidance to Offset Project 

Operators, Authorized Project Designees, or offset verifiers for offset 

projects using a Compliance Offset Protocol, if there is no clear 

requirement for the topic in a Compliance Offset Protocol, this article, or 

an ARB guidance document.

(1) An Offset Project Registry must maintain all correspondence and 

records of communication with an Offset Project Operator, Authorized 

Project Designee, or offset verifier when providing clarifications or 

guidance for an offset project using a Compliance Offset Protocol.

(2) Before providing such guidance, the Offset Project Registry may 

request ARB to provide clarification on the topic.

(3) Any Offset Project Operator or Authorized Project Designee requests 

for clarifications or guidance must be documented and the Offset 

Project Registry response must be submitted on an ongoing monthly 

basis to ARB beginning with the date of approval as an Offset Project 

Registry.
246

(e) The Offset Project Registry must audit at least 10 percent of the annual 

offset verifications developed for offset projects using a Compliance Offset 

Protocol.

(1) The audit must include the following checks:

(A) Attendance with the offset verification team on the offset project 

site visit;

(B) In-person or conference call attendance for the first offset 

verification team and Offset Project Operator or Authorized 

Project Designee meeting;

(C) In-person or conference call attendance to the last meeting or 

discussion between the offset verification team and Offset 

Project Operator or Authorized Project Designee;

(D) Documentation of any findings during the audit that lead to the 

Offset Project Registry to provide guidance or require corrective 

action with the offset verification team, including a list of issues 

noted during the audit and how those were resolved;

(E) A review of the detailed verification report and sampling plan to 

ensure that it meets the minimum requirements in sections 

95977.1 and 95977.2 and documentation of any discrepancies

found during the review; and

(F) An investigative review of the conflict of interest assessment 

provided by the verification body, which includes the following:

1. Discussions with both the lead verifier who submitted the 

conflict of interest assessment form and the Offset Project 

Operator or Authorized Project Designee to confirm the 

information on the conflict of interest assessment form is 

true, accurate, and complete;

2. An internet-based search to ascertain the existence of any 

previous relationship between the verification body and the 

Offset Project Operator or Authorized Project Designee, and 

if so the nature and extent; and
247

3. Any other follow up by the Offset Project Registry to have 

reasonable assurance that the information provided on the 

conflict of interest assessment form is true, accurate, and 

complete.

(2) All information related to audits of offset projects developed using a 

Compliance Offset Protocol must be provided to ARB within 10 

calendar days of an ARB request.

(3) The audits must be selected to provide a representative sampling of 

geographic locations of all offset projects, representative sampling of 

verification bodies, representative sampling of lead verifiers, 

representative sampling of offset project types, and representative 

sampling of offset projects by size.

(4) The Offset Project Registry must provide an annual report to ARB by 

January 31 for its previous year’s audit program of offset projects 

developed using Compliance Offset Protocols that includes:

(A) A list of all offset projects audited;

(B) Locations of all offset projects audited;

(C) Verification bodies associated with each offset project and 

names of offset verification team members;

(D) Dates of site visits;

(E) Offset Project Registry staff that conducted the audit; and

(F) Audit findings as required in section 95987(e)(1)(D) through (F).

(f) The Offset Project Registry must review each detailed verification report 

provided in section 95977.1(b)(3)(R)(4.)(a.) for completeness and 

accuracy and to ensure it meets the requirements of section 

95977.1(b)(3)(R)(4.)(a.) before accepting the associated Offset 

Verification Statement for the Offset Project Data Report and issuing 

registry offset credits.

(g) The Offset Project Registry must provide all information in its possession, 

custody, or control related to a listed offset project under a Compliance 

Offset Protocol within 10 calendar days of request by ARB.
248

(h) The Offset Project Registry must make its staff and all information related 

to listed offset projects under Compliance Offset Protocols by the Offset 

Project Registry available to ARB during any audits or oversight activities 

initiated by ARB to ensure the requirements in section 95987 are being 

carried out as required by this article. 

(i) The Offset Project Registry must remove or cancel any registry offset 

credits issued for an offset project using a Compliance Offset Protocol, 

such that the registry offset credits are no longer available for transaction 

on the Offset Project Registry system, once notified by ARB that the offset 

project is eligible to be issued ARB offset credits.

(j) The Offset Project Registry must provide an annual report by January 31 

of the previous year’s offset projects that are listed using a Compliance 

Offset Protocol. The report must contain the name of the offset project, 

type of offset project and applicable Compliance Offset Protocol, name of 

Offset Project Operator or Authorized Project Designee, location of offset 

project, status of offset project, associated verification body, crediting 

period, amount of any registry offset credits issued to date, amount of any 

registry offset credits retired or cancelled for the offset project by the 

Offset Project Registry to date.

(k) The Offset Project Registry may choose to offer insurance or other 

products to cover the risk of invalidation of ARB offset credits, but 

purchase or use of the insurance or other invalidation risk mechanisms will 

be optional for all entities involved with registry offset credits and ARB 

offset credit transactions.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
249

§95988. Record Retention Requirements for Offset Project Registries.

All information submitted, and correspondence related to, listed offset projects 

under Compliance Offset Protocols by the Offset Project Registry must be 

maintained by the Offset Project Registry for a minimum of 15 years.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 14: Recognition of Compliance Instruments from Other 

Programs

§ 95990. Recognition of Early Action Offset Credits.

(a) Approval of Early Action Offset Programs. To qualify as an Early Action 

Offset Program, either the Executive Officer shall issue an Executive 

Order pursuant to section 95986(k) or the program must demonstrate to 

ARB that it meets the following requirements:

(1) The program must provide documentation that it carries at least one 

million U.S. dollars of professional liability insurance.

(2) The program must have the following capabilities for registration and 

tracking of offset credits:

(A) A registration requirement for all registry participants;

(B) A system for tracking ownership and transactions of all early 

action offset credits it issues under the quantification 

methodologies listed pursuant to section 95990(c)(5) at all 

times; and

(C)A permanent repository of ownership information on all transactions 

involving all early action offset credits that have been or will be 

issued for any early action offset project until they are retired or 

cancelled.

(3) The program’s primary business (or that of the designated subdivision, 

if the Early Action Offset Program applicant designates a subdivision to 

provide services as an Early Action Offset Program pursuant to this 
250

section) is operating a registry for issuing offset credits for voluntary or 

regulatory purposes and must meet the following business 

requirements:

(A) The Early Action Offset Program may not act as an Offset 

Project Operator, Authorized Project Designee, or offset project 

consultant for early action offset projects registered on its own 

registry system and developed under protocols approved 

pursuant 95990(c)(5). The Early Action Offset Program 

applicant may act as an offset project consultant for early action 

offset projects as long as these are registered with an Early 

Action Offset Program or an Offset Project Registry unaffiliated 

with the applicant;

(B) The applicant may not act as a verification body and provide 

offset verification services pursuant to section 95990(f);

(C) If the applicant designates a subdivision of its organization to 

provide registry services, the applicant may not be an Offset 

Project Operator or Authorized Project Designee for offset 

projects listed at the subdivision’s registry, act as a verification 

body, or be a covered entity or opt-in covered entity; and

(D) The applicant’s primary incorporation or other business 

information and primary place of business, or the primary place 

of business of the designated subdivision, if the applicant 

designates a subdivision to be an Early Action Offset Program 

pursuant to this section, must be in the United States of 

America.

(4) The program must agree to submit to ARB the original documentation 

submitted by an Offset Project Operator or Authorized Project 

Designee or third-party verifier regarding the early action offset project, 

including registration documentation, sampling plans, and Early Action 

Verification Reports. 
251

(5) The program must agree to retire, and not allow for further use, any 

early action offset credits it issues when retired or used in any 

voluntary or regulatory program, including when ARB requests 

retirement for ARB offset credit issuance pursuant to section 95990(i).

(6) An authorized representative of the Early Action Offset Program must 

attest in writing, to ARB, as follows:

“I certify under penalty of perjury under the laws of the State of 

California the information provided in demonstrating this program 

meets the requirements in section 95990(a) and is true, accurate, and 

complete.”

(b) ARB shall accept early action offset credits from early action offset 

projects registered with Early Action Offset Programs approved pursuant 

to section 95990(a), if the early action offset credits meet the criteria set 

forth in this section. 

(c) Criteria for Approval of Early Action Offset Credits Issued by Early Action 

Offset Programs. An early action offset credit may be issued an ARB 

offset credit pursuant to section 95990(i) if the early action offset credit 

results from a GHG reduction or GHG removal enhancement which:

(1) Occurred between January 1, 2005 and December 31, 2014;

(2) Is verified pursuant to section 95990(f);

(3) Results from an early action offset project that is listed or registered 

with an Early Action Offset Program prior to January 1, 2014;

(4) Results from an early action offset project located in the United States; 

and 

(5) Results from the use of one of the following offset quantification 

methodologies and relied on the most recent version thereof at the 

time of offset project submittal:

(A) Climate Action Reserve U.S. Livestock Project Protocol versions 

1.0 through 3.0;

(B) Climate Action Reserve Urban Forest Project Protocol versions 

1.0 through 1.1; 
252

(C) Climate Action Reserve U.S. Ozone Depleting Substances 

Project Protocol version 1.0; and

(D) Climate Action Reserve Forest Project Protocol versions 2.1 

and 3.0 through 3.2, if the early action offset project contributes 

early action offset credits into a buffer account based on its 

reversal risk calculated according to the Compliance Offset 

Protocol U.S. Forest Projects, October 20, 2011. 

(E) Reserved for additional early action offset project protocols.

(d) The following parties must register with ARB pursuant to section 95830 

before ARB offset credits may be issued pursuant to section 95990(i):

(1) The Offset Project Operator or Authorized Project Designee for a forest 

or urban forest early action offset project that does not transition to a 

Compliance Offset Protocol pursuant to section 95990(k); and

(2) The Offset Project Operator or Authorized Project Designee for the 

following early action offset projects, except as provided in section 

95990(d)(3):

(A) A forest or urban forest early action offset project that transitions 

to a Compliance Offset Protocol pursuant to section 95990(k);

(B) An early action offset project developed under one of the 

protocols identified in section 95990(c)(5)(A) and (C).

(3) If the Offset Project Operator or Authorized Project Designees 

identified in section 95990(d)(2) do not register with ARB or list the 

early action offset project pursuant to section 95990(e), the holder of 

early action offset credits may register with ARB and seek issuance of 

ARB offset credits pursuant to section 95990(i), as long as the holder 

lists the early action offset project pursuant to section 95990(e) and 

provides ARB with the attestations required pursuant to section 

95990(h)(6). 

(e) Listing of Early Action Offset Projects. Before ARB can issue ARB offset 

credits pursuant to section 95990(i): 
253

(1) The following parties must submit the information listed in section 

95990(e)(2) to ARB:

(A) The Offset Project Operator or Authorized Project Designee for 

a forest or urban forest early action offset project that does not 

transition to a Compliance Offset Protocol pursuant to section 

95990(k); and

(B) The Offset Project Operator or Authorized Project Designee for 

the following early action offset projects, except as provided in 

section 95990(e)(1)(C); 

1. A forest or urban forest early action offset project that 

transitions to a Compliance Offset Protocol pursuant to 

section 95990(k);

2. An early action offset project developed under one of the 

protocols identified in section 95990(c)(5)(A) and (C).

(C) If the Offset Project Operator or Authorized Project Designees 

identified in section 95990(e)(1)(B) do not register with ARB 

pursuant to section 95990(d) or list the early action offset 

project, the holder of early action offset credits may list the early 

action offset credit by submitting the information listed in section 

95990(e)(2) and seek issuance of ARB offset credits pursuant to 

section 95990(i), as long as the holder registers with ARB 

pursuant to section 95990(d) and provides ARB with the 

attestations required pursuant to section 95990(h)(6).

(2) The parties identified in section 95990(e)(1) must submit the following 

information to ARB:

(A) Early action offset project name;

(B) Early action offset project location;

(C) Offset Project Operator, or if applicable, the Authorized Project 

Designee;

(D) Name and date of protocol used by the early action offset 

project, including, if applicable, a version number;
254

(E) Date of early action offset project listing or registration date and 

Offset Project Commencement Date; and

(F) The name of any verification bodies associated with the early 

action offset project.

(3) The Early Action Offset Program must make the following information 

available on a publicly available website and clearly indicate which 

early action offset projects and Offset Project Data Report years qualify 

for early action under this article:

(A) Early action offset project name;

(B) Early action offset project location;

(C) Offset Project Operator, or if applicable, the Authorized Project 

Designee;

(D) Name and date of protocol used by the early action offset 

project, including, if applicable, a version number;

(E) Date of early action offset project listing or registration date and 

Offset Project Commencement Date; and

(F) The name of any verification bodies associated with the early 

action offset project.

(f) Regulatory Verification of Early Action Offset Credits. Any early action 

offset credit issued by an Early Action Offset Program must be verified 

under the following requirements before being issued an ARB offset credit 

pursuant to section 95990(i):

(1) The project must be verified by an ARB-accredited verification body 

that meets the accreditation requirements in section 95978. The 

verification body performing regulatory verification pursuant to this 

section must be different than the verification body that conducted 

offset verification services for the early action offset project under the 

Early Action Offset Program. 

(2) Conflict of interest must be assessed against parties identified 

pursuant to section 95990(g) and the conflict of interest assessment 

must meet the requirements of section 95979.
255

(3) A verification body must conduct a desk review for each Offset Project 

Data Report year eligible and applicable pursuant to section 

95990(c)(1) for each early action offset project that generates early 

action offset credits under the quantification methodologies listed in 

section 95990(c)(5). The desk review of all Offset Project Data Report 

for years eligible and applicable pursuant to section 95990(c)(1) for 

each early action offset project may be applied as one single desk 

review. The desk review must include the following:

(A) Review of the early action offset project original documentation, 

including the Early Action Verification Reports and Offset 

Verification Statements submitted to the Early Action Offset 

Program, to ensure that the previously provided offset 

verification services were sufficient to render a reasonable 

assurance to support the issuance of early action offset credits 

by the Early Action Offset Program;

(B) Review of the data checks conducted by the offset verification 

body for the Early Action Offset Program to ensure they were 

calculated correctly;

(C) If the verification body concludes with reasonable assurance 

that they concur that a positive verification statement should 

have been issued based on the Early Action Verification Report 

and the Offset Verification Statement submitted to the Early 

Action Offset Program for the applicable Offset Project Data 

Report year, the verification body must submit the attestation in 

section 95990(f)(3)(D) to ARB.

(D) The verification body must attest, in writing, to ARB as follows:

“I certify under penalty of perjury under the laws of the State of 

California that I have conducted a desk review in accordance 

with the requirements of section 95990(f)(3) and concur with the 

issuance of a positive verification statement based on the Early 

Action Verification Report and Offset Verification Statement that 
256

was submitted to the Early Action Offset Program for the 

applicable Offset Project Data Report year.”

(E) For each early action offset project the Offset Project Operator 

or Authorized Project Designee or the Early Action Offset 

Program must provide the Early Action Verification Report(s) for 

all years eligible and applicable pursuant to section 95990(c)(1) 

to the offset verification team to assist in offset verification 

services and desk review.

(4) If during the desk review performed pursuant to section 95990(f)(3) the 

verification body cannot conclude with reasonable assurance that a 

positive verification statement should have been issued based on the 

Early Action Verification Report and the Offset Verification Statement 

submitted to the Early Action Offset Program for the applicable Offset 

Project Data Report year then the verification body must prepare a 

report for ARB and explain the reasons for this conclusion.

(5) ARB will review the information submitted by the verification body 

pursuant to section 95990(f)(4) and may request additional information 

from, and consult with, the Early Action Offset Program or the 

verification body as necessary. 

(6) If ARB finds that the Offset Project Data Report should not have been 

issued a positive verification statement after reviewing the information 

submitted in section 95990(f)(5), the Offset Project Data Report must 

be verified and offset verification services pursuant to sections 95977.1 

and any additional verification requirements in the applicable protocol 

identified in section 95990(c) must be conducted. The Offset 

verification services for each Offset Project Data Report year may be 

done by the same verification body that performed the desk review and 

may be applied as one single offset verification service and meet the 

following requirements:
257

(A) If the early action offset project is still in operation, the 

verification body must conduct a site visit as required in section 

95977.1(b)(3)(D).

(B) If the early action offset project is no longer in operation, the 

verification body must conduct a desk review of the original 

documentation to confirm any previous verification findings 

related to the types of offset verification services required in 

section 95977.1(b)(3)(D).

(C) The sampling plan in section 95977.1(b)(3)(G) must cover all 

serialized early action offset credits issued to the early action 

offset project for all years eligible and applicable pursuant to 

section 95990(c)(1);

(D) The data checks in section 95977.1(b)(3)(L) must include 

checks across the sources identified in the sampling plan, 

covering all serialized early action offset credits issued to the 

early action offset project for all years eligible and applicable 

pursuant to section 95990(c)(1); and

(E) The verification body must submit an Offset Verification 

Statement pursuant to section 95977.1(b)(3)(R) to ARB 

covering all serialized early action offset credits issued to the 

early action offset project for all years eligible and applicable 

pursuant to section 95990(c)(1). For non-forestry offset 

projects, the verification body may submit a Positive, Qualified 

Positive, or Adverse Offset Verification Statement. Forestry 

Offset projects may only receive a Positive or Adverse Offset 

Verification Statement.

(7) Once ARB offset credits have been issued for an Offset Project Data 

Report pursuant to section 95990(i) subsequent offset verification 

services provided for additional Offset Project Data Reports for the 

same early action offset project will not trigger a desk review of those 
258

Offset Project Data Reports for which ARB offset credits have already 

been issued pursuant to section 95990(i).

(g) Conflict of Interest Requirements for Early Action. For each Early Action 

Verification Report that a verification body reviews pursuant to section 

95990(f), the verification body must assess conflict of interest according to 

the following requirements against each party identified in section 

95990(g)(2). The conflict of interest assessment for each Early Action 

Verification Report must be submitted to ARB before ARB issues an ARB 

offset credit pursuant to section 95990(i). 

(1) The verification body is subject to the conflict of interest requirements 

in section 95979. 

(2) The conflict of interest requirements in section 95979 must be 

assessed against the following parties at the time that offset 

verification services are conducted pursuant to section 95990(f):

(A) The Offset Project Operator or Authorized Project Designee for 

the project; and 

(B) Any party that holds greater than 30 percent of the early action 

offset credits issued to an early action offset project for each 

individual Early Action Verification Report reviewed as part of 

offset verification services conducted pursuant to section 

95990(f). 

(h) Issuance of ARB Offset Credits for Early Action. ARB will issue ARB 

offset credits pursuant to section 95990(i) for early action if the following 

requirements are met:

(1) The early action offset credits meet the requirements of section 

95990(c);

(2) The GHG reduction or GHG removal enhancement occurred by 

December 31, 2014;

(3) The GHG reduction or GHG removal enhancement was determined to 

meet the requirements for regulatory verification pursuant to section 

95990(f);
259

(4) The early action offset project has been listed pursuant to section 

95990(e); and 

(5) The following parties must submit the attestations listed in section 

95990(h)(6) to ARB:

(A) The Offset Project Operator or Authorized Project Designee for 

a forest or urban forest early action offset project that does not 

transition to a Compliance Offset Protocol pursuant to section 

95990(k); and

(B) The Offset Project Operator or Authorized Project Designee for 

the following early action offset projects, except as provided in 

section 95990(h)(5)(C):

1. A forest or urban forest early action offset project that 

transitions to a Compliance Offset Protocol pursuant to 

section 95990(k);

2. An early action offset project developed under one of the 

protocols identified in section 95990(c)(5)(A) and (C).

(C) If the Offset Project Operator or Authorized Project Designees 

identified in section 95990(h)(5)(B) do not register with ARB 

pursuant to section 95990(d) and list the early action offset 

project pursuant to section 95990(e), the holder of early action 

offset credits may seek issuance of ARB offset credits pursuant 

to section 95990(i), as long as the holder provides ARB the 

attestations required pursuant to section 95990(h)(6).

(6) The parties identified in section 95990(h)(5) must submit the following 

information to ARB:

(A) Attest, in writing, to ARB as follows:

“I certify under penalty of perjury under the laws of the State of 

California the GHG reductions and GHG removal 

enhancements for [project] from [date] to [date] have been 

measured in accordance with the [appropriate Early Action 
260

Offset Program offset protocol] and all information required to 

be submitted to ARB is true, accurate, and complete;” 

(B) Attest, in writing, to ARB as follows:

“I understand I am voluntarily participating in the California 

Greenhouse Gas Cap-and-Trade Program under title 17, article 

5, and by doing so, I am now subject to all regulatory 

requirements and enforcement mechanisms of this program and 

subject myself to the jurisdiction of California as the exclusive 

venue to resolve any and all disputes;” and

(C) Attest in writing to ARB as follows:

“I understand that the offset project activity and the 

implementation of the offset project must be in accordance with 

all applicable local, regional, and national environmental and 

health and safety regulations that apply based on the offset

project location. I understand that offset projects are not eligible 

to receive ARB offset credits for GHG reductions or GHG 

removal enhancements that are not in compliance with the 

requirements of this Article.”

(7) An ARB offset credit may not be issued for an early action offset credit 

that has been retired, canceled, used to meet a surrender obligation, 

used to meet a voluntary commitment, or used to meet any GHG 

mitigation requirements in any voluntary or regulatory system.

(i) Process for Issuance of ARB Offset Credits for Purposes of Early Action. 

ARB will issue an ARB offset credit that meets the requirements of section 

95990(h) in the amount calculated pursuant to section 95990(i)(1) :

(1) ARB offset credits will be issued according to the following schedule:

(A) One ARB offset credit will be issued for one early action offset 

credit generated under Climate Action Reserve Urban Forest 

Project Protocol versions 1.0 through 1.1; 
261

(B) One ARB offset credit will be issued for one early action offset 

credit generated under Climate Action Reserve U.S. Ozone 

Depleting Substances Project Protocol version 1.0;

(C) One ARB offset credit will be issued for one early action offset 

credit generated under Climate Action Reserve U.S. Livestock 

Project Protocol versions 1.0 through 3.0; and

(D) ARB offset credits will be issued for early action offset credits 

generated under Climate Action Reserve Forest Project 

Protocol version 2.1 and versions 3.0 through 3.2, pursuant to 

the following:

1. If any ARB offset credits are being issued to an early action 

forest offset project pursuant to this section, the Early Action 

Offset Program must transfer all of the early action offset 

credits in its buffer account for forest projects for that project 

to ARB by removing the early action offset credits, such that 

they are no longer available on the Early Action Offset 

Program’s system.

a. For vintages 2001-2004 early action offset credits in the 

Early Action Offset Program buffer account for forest 

projects transferred for the early action forest offset 

project, ARB will create a series of unique serial numbers 

that identify them as being from these vintage years. 

b. Vintage 2001-2004 serial numbers may only reside in the 

Forest Buffer Account and will only be retired by ARB in

the event of a project termination pursuant to section 

95983(d). These vintages will not be able to count 

towards the contribution to ARB’s Forest Buffer Account 

pursuant to this section.

2. A specified number of the issued ARB offset credits must be 

placed in the Forest Buffer Account in the amount 

determined by the project-specific risk rating calculation in 
262

Compliance Offset Protocol U.S. Forest Projects, October 

20, 2011 for each Offset Project Data Report year eligible 

and applicable pursuant to section 95990(c)(1).

3. If the Offset Project Operator or Authorized Project Designee 

registers and lists the early action offset project pursuant to 

sections 95990(d) and (e) and is seeking issuance of ARB 

offset credits for an Offset Project Data Report year ARB will 

determine the number of ARB offset credits that will be 

issued to the Offset Project Operator or Authorized Project 

Designee as follows: 

a. If the following condition applies, then ARB will issue one 

ARB offset credit for each early action offset credit:

EAOPBuffer ≥ EAOCIssue × RRCOP

Where:

“EAOPBuffer” is the total number of early action offset credits in 

the Early Action Offset Program’s buffer account for forest 

projects that meet the requirements of section 95990(h) and are 

being transferred to ARB for the applicable Offset Project Data 

Report; 

“EAOCIssue” is the total number of early action offset credits that 

meet the requirements of section 95990(h) for which the Offset 

Project Operator or Authorized Project Designee is seeking 

issuance of ARB offset credits pursuant to this section for the 

applicable Offset Project Data Report;

“RRCOP” is the percentage that must be applied for the early 

action forest offset project pursuant to the project-specific risk 
263

rating calculation in Compliance Offset Protocol U.S. Forest 

Projects, October 20, 2011;

b. If the amount of early action offset credits being 

transferred to ARB from the Early Action Offset 

Program’s buffer account for forest projects does not 

cover the number of ARB offset credits to be placed in 

the Forest Buffer Account, the following applies:

If: EAOPBuffer < EAOCIssue × RRCOP

Then: ARBIssue = EAOCIssue − �(EAOCIssue × RRCOP) − EAOPBuffer�

Where:

“ARBIssue” is the total number of ARB offset credits that will be 

issued to the Offset Project Operator or Authorized Project 

Designee for the applicable Offset Project Data Report;

“EAOCIssue” is the total number of early action offset credits that 

meet the requirements of section 95990(h) for which the Offset 

Project Operator or Authorized Project Designee is seeking 

issuance of ARB offset credits pursuant to this section for the 

applicable Offset Project Data Report;

“RRCOP” is the percentage that must be applied for the early 

action forest offset project pursuant to the project-specific risk 

rating calculation in Compliance Offset Protocol U.S. Forest 

Projects, October 20, 2011;

“EAOPBuffer” is the total number of early action offset credits in 

the Early Action Offset Program’s buffer account for forest 
264

projects that meet the requirements of section 95990(h) and are 

being transferred to ARB for the applicable Offset Project Data 

Report; 

4. If the holder of early action offset credits registers and lists 

the early action offset project pursuant to sections 95990(d) 

and (e), provides the attestations listed in section 

95990(h)(6) to ARB, and is seeking issuance of ARB offset 

credits pursuant to this section for an Offset Project Data 

Report year, ARB will determine the number of ARB offset 

credits that will be issued to each holder of the original early 

action offset credits as follows:

a. If the following condition applies, then ARB will issue one 

ARB offset credit for each early action offset credit for 

which the holder is seeking issuance of ARB offset 

credits:

EAOPBuffer ≥ EAOCIssue × RRCOP

Where:

“EAOPBuffer” is the total number of early action offset credits in 

the Early Action Offset Program’s buffer account for forest 

projects that meet the requirements of section 95990(h) and are 

being transferred to ARB for the applicable Offset Project Data 

Report; 

“EAOCPIssue” is the total number of early action offset credits that 

meet the requirements of section 95990(h) that would qualify to 

be issued ARB offset credits pursuant to this section for the 

applicable Offset Project Data Report;
265

“RRCOP” is the percentage that must be applied for the early 

action forest offset project pursuant to the project-specific risk 

rating calculation in Compliance Offset Protocol U.S. Forest 

Projects, October 20, 2011;

b. If the amount of early action offset credits being transferred 

to ARB from the Early Action Offset Program’s buffer 

account for forest projects does not cover the number of 

ARB offset credits to be placed in the Forest Buffer Account, 

the following applies:

If: EAOPBuffer < EAOCPIssue × RRCOP

Then: ARBHIssue = EAOCHIssue − |(EAOCHIssue × RRCOP) − (EAOCHIssue × RREAP)|

Where:

“EAOPBuffer” is the total number of early action offset credits in 

the Early Action Offset Program’s buffer account for forest 

projects that meet the requirements of section 95990(h) and are 

being transferred to ARB for the applicable Offset Project Data 

Report; 

“EAOCPIssue” is the total number of early action offset credits that 

meet the requirements of section 95990(h) that would qualify to 

be issued ARB offset credits pursuant to this section for the 

applicable Offset Project Data Report;

“ARBHIssue” is the total number of ARB offset credits that will be 

issued to the holder of early action offset credits seeking 

issuance of ARB offset credits pursuant to this section for the 

applicable Offset Project Data Report;
266

“EAOCHIssue” is the total number of early action offset credits that 

meet the requirements of section 95990(h) for which the holder 

of early action offset credits is seeking issuance of ARB offset 

credits pursuant to this section for the applicable Offset Project 

Data Report;

“RRCOP” is the percentage that must be applied for the early 

action forest offset project pursuant to the project-specific risk 

rating calculation in Compliance Offset Protocol U.S. Forest 

Projects, October 20, 2011;

“RREAP” is the percentage that was calculated and applied for 

the early action forest offset project pursuant to the projectspecific risk rating calculation in the applicable early action 

protocol;

5. If there is an unintentional reversal for any early action forest 

offset project, even after it transitions to ARB’s Compliance 

Offset Protocol U.S. Forest Projects, October 20, 2011, the 

provisions in section 95983(b) and (d) apply.

6. If there is an intentional reversal for any early action forest 

offset project, even after it transitions to ARB’s Compliance 

Offset Protocol U.S. Forest Projects, October 20, 2011, the 

provisions in section 95983(c) and (d) apply.

(E) If an early action offset project is issued ARB offset credits 

pursuant to section 95990(i)(1)(D) and transitions from Climate 

Action Reserve Forest Project Protocol version 2.1 to 

Compliance Offset Protocol U.S. Forest Projects, October 20, 

2011 pursuant to section 95990(k) the early action offset project 

may calculate its project baseline pursuant to section 
267

95990(k)(1)(D) and use the following method to determine if it 

could qualify for additional early action offset credits:

1. Based on the project baseline calculated in section 

95990(k)(1)(D), the early action offset project must calculate 

and sum the net GHG emission reductions and GHG 

removal enhancements it achieves following all the 

provisions of the Compliance Offset Protocol U.S. Forest 

Projects, October 20, 2011 and the requirements in this 

article, from the date of offset project commencement under 

the Early Action Offset Program through the date the early 

action offset project applies for transition pursuant to section 

95990(k).

2. The early action offset project must subtract the number of 

early action offset credits issued by the Early Action Offset 

Program for the period from the date of offset project 

commencement through the time the early action offset 

project applies for transition pursuant to section 95990(k) 

from the number of sum determined pursuant to section 

95990(i)(E)(1.):

a. If the difference is positive, ARB will issue ARB offset 

credits equivalent to the difference at the time of offset 

project transition pursuant to section 95990(k) for the 

timeframe specified in section 95990(i)(1)(E)(1.).

b. If the difference is negative, ARB will only issue ARB 

offset credits pursuant to section 95990(i)(D)(1.) for the 

timeframe specified in section 95990(i)(1)(E)(1.).

(2) ARB will notify the Early Action Offset Program within 10 calendar days 

of ARB’s determination of issuance of ARB offset credits pursuant to 

this section.

(3) Early action offset credits must be removed by the Early Action Offset 

Program within 10 calendar days of ARB notification, such that the 
268

early action offset credits are no longer available for transaction on the 

Early Action Offset Program registry system.

(4) Not later than 15 calendar days after ARB issues an ARB offset credit 

for purposes of early action, ARB will notify the Offset Project 

Operator, Authorized Project Designee, and holders of the original 

early action offset credits of the issuance.

(j) Registration and Transfer of ARB Offset Credits for Purposes of Early 

Action. An ARB offset credit issued pursuant to section 95990(i) will be 

registered by creating a unique ARB serial number. ARB will transfer the 

serial numbers into Holding Accounts as follows within 15 working days of 

the notice of issuance pursuant to section 95990(i)(4), unless otherwise 

required in section 95990(i)(1)(D):

(1) If the Offset Project Operator or Authorized Project Designee 

registered the early action offset project pursuant to section 95990(d), 

lists the early action offset project pursuant to section 95990(e), 

provides ARB the attestations pursuant to section 95990(h)(6), and is 

issued ARB offset credits pursuant to section 95990(i), ARB will 

transfer the ARB offset credit into the Holding Account of the Offset 

Project Operator or Authorized Project Designee.

(2) If the holder registered the early action offset project pursuant to 

section 95990(d), lists the early action offset project pursuant to 

section 95990(e), provides ARB the attestations pursuant to section 

95990(h)(6), and is issued ARB offset credits pursuant to section 

95990(i), ARB will transfer the ARB offset credit into the Holding 

Account of the holder. The holder must prove ownership of the original 

early action offset credits, including the original serial numbers issued 

by the Early Action Offset Program, before ARB will transfer the ARB 

offset credits.

(k) Transition of Early Action Offset Projects to the Compliance Program.
269

(1) Early Action Offset Project Transition to ARB Compliance Offset 

Protocols. Early action offset projects must transition to ARB 

Compliance Offset Protocols no later than February 28, 2015:

(A) Early action offset projects using Climate Action Reserve U.S. 

Livestock Project Protocol versions 1.0 through 3.0 must use 

and meet all the requirements in Compliance Offset Protocol 

Livestock Projects, October 20, 2011;

(B) Early action offset projects using Climate Action Reserve Urban 

Forest Project Protocol versions 1.0 through 1.1 must use and 

meet all the requirements in Compliance Offset Protocol Urban 

Forest Projects, October 20, 2011;

(C) Early action offset projects using Climate Action Reserve U.S. 

Ozone Depleting Substances Project Protocol version 1.0 must 

use and meet all the requirements in Compliance Offset 

Protocol Ozone Depleting Substances, October 20, 2011; 

(D) Early action offset projects using Climate Action Reserve Forest 

Project Protocol version 2.1 must use and meet all the 

requirements in Compliance Offset Protocol U.S. Forest 

Projects, October 20, 2011. At the time of transition the early 

action offset project must calculate its project baseline 

according to all the provisions in Compliance Offset Protocol 

U.S. Forest Projects, October 20, 2011 and the requirements in 

this article from the date of offset project commencement under 

the Early Action Offset Program to the date the early action 

offset project applies for transition pursuant to section 95990(k). 

This project baseline will remain valid for the duration of the 

offset project life. Registry offset credits and ARB offset credits 

issued for the first Reporting Period after the early action offset 

project is listed pursuant to section 95975 using the Compliance 

Offset Protocol U.S. Forest Projects, October 20, 2011, will only 

be for the increased carbon stocks beyond what was already 
270

issued early action offset credits in the last year before the early 

action offset project transitioned to a Compliance Offset 

Protocol pursuant to this section.

(E) Early action offset projects using Climate Action Reserve Forest 

Project Protocol versions 3.0 through 3.2 must use Compliance 

Offset Protocol U.S. Forest Projects, October 20, 2011 and 

subtract from the project baseline any carbon stocks from any 

optional pools that are excluded in the Compliance Offset 

Protocol beginning with the last reporting period under the Early 

Action Offset Program. Decreases will not constitute a reversal.

(2) Crediting Periods for Early Action Offset Projects. When an early 

action offset project transitions to a Compliance Offset Protocol 

pursuant to section 95990(k)(1), it will begin an initial crediting period. 

The initial crediting period will begin with the date that the first verified 

GHG emission reductions or GHG removal enhancements occur using 

a Compliance Offset Protocol approved pursuant to section 95971.

(3) Listing Requirements for Transition of Early Action Offset Projects. At 

the time an early action offset project transitions to a Compliance 

Offset Protocol pursuant to section 95990(k)(1), the Offset Project 

Operator or Authorized Project Designee must:

(A) Meet the requirements for offset projects pursuant to section 

95973; and

(B) List the offset project pursuant to section 95975.

(C) To transition an early action offset project to the ARB 

compliance offset program, the offset project must be listed with 

ARB or an Offset Project Registry by February 28, 2015, but 

has until September 30, 2015 to complete the verification of 

GHG reductions and GHG removal enhancements pursuant to 

section 95990(f) that were achieved in 2014. These GHG 

reductions and GHG removal enhancements are eligible for 

early action offset credits.
271

(4) After an early action offset project lists with ARB pursuant to section 

95990(k)(3), it must meet the following requirements: 

(A) Monitoring, reporting, and record retention requirements 

pursuant to section 95976;

(B) GHG reduction and GHG removal enhancement verification 

requirements pursuant to sections 95977 through 95978; 

(C) Be issued a registry offset credit pursuant to section 95980.1 or 

an ARB offset credit pursuant to section 95981.1 for any GHG 

reductions or GHG removal enhancements it achieves.

(l) An ARB offset credit issued pursuant to section 95990(i) may be 

invalidated pursuant to section 95985 as follows: 

(1) ARB Offset Credits from Non-Sequestration Offset Projects. An ARB 

offset credit from a non-sequestration project may be invalidated 

pursuant to sections 95985(a) through (h) and section 95985(j): 

(A) If an Offset Project Operator or Authorized Project Designee 

registers and lists the early action offset project pursuant to 

sections 95990(d) and (e), submits the attestations to ARB 

pursuant to section 95990(h)(6), and was issued offset credits 

pursuant to section 95990(i) and the party identified in section 

95985(e)(2) is no longer in business pursuant to section 

95101(h)(2), the provisions in sections 95985(h)(1)(C)(1.) 

through (3.) and sections 95985(h)(2)(B)(1.) through (3.) still 

apply to the Offset Project Operator; or

(B) If the holder of early action offset credits registers and lists the 

early action offset project pursuant to sections 95990(d) and (e), 

submits the attestations to ARB pursuant to section 95990(h)(6), 

and was issued ARB offset credits pursuant to section 95990(i) 

and the party identified in section 95985(e)(2) is no longer in 

business pursuant to section 95101(h)(2), the provisions in 

sections 95985(h)(1)(C)(1.) through (3.) and sections 

95985(h)(2)(B)(1.) through (3.) apply to the holder that was 
272

issued ARB offset credits pursuant to section 95990(i) and not 

the Offset Project Operator.

(2) ARB Offset Credits from Forest Offset Projects. An ARB offset credit 

from a forest offset project may be invalidated pursuant to sections 

95985(a) through (g) and sections 95985(i) and (j). 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 95991. Sector-Based Offset Credits.

Sector-based offset credits may be generated through reduced or avoided GHG 

emissions from within, or carbon removed and sequestered from the atmosphere 

by, a specific sector in a particular jurisdiction. The Board may consider for 

acceptance compliance instruments issued from sector-based offset crediting 

programs that meet the requirements set forth in section 95994 and originate 

from developing countries or from subnational jurisdictions within those 

developing countries, except as specified in subarticle 13.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety 

Code.

§ 95992. Procedures for Approval of Sector-Based Crediting Programs.

The Board may approve a sector-based crediting program in an eligible 

jurisdiction after public notice and opportunity for public comment in accordance 

with the Administrative Procedure Act (Government Code section 11340 et seq.). 

Provisions set forth in this article shall specify which compliance instruments 

issued by an approved sector-based crediting program may be used to meet a 

compliance obligation under this Article.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety 

Code.
273

§ 95993. Sources for Sector-Based Offset Credits.

Sector-based credits may be generated from:

(a) Reducing Emissions from Deforestation and Forest Degradation (REDD) 

Plans.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety 

Code.

§ 95994. Requirements for Sector-Based Offset Crediting Programs.

(a) General Requirements for Sector-Based Crediting Programs. The Board 

may consider for approval a sector-based crediting program which may 

include the following sectoral requirements: 

(1) Sector Plan. The host jurisdiction has established a plan for reducing 

emissions from the sector.

(2) Monitoring, Reporting, Verification, and Enforcement. The program 

includes a transparent system that regularly monitors, inventories, 

reports, verifies, and maintains accounting for emission reductions 

across the program’s entire sector, as well as maintains enforcement 

capability over its reference activity producing credits.

(3) Offset Criteria. The program has requirements to ensure that offset 

credits generated by the program are real, additional, quantifiable, 

permanent, verifiable and enforceable. 

(4) Sectoral Level Performance. The program includes a transparent 

system for determining and reporting when it meets or exceeds its 

crediting baseline(s), and evaluating the performance of the program’s 

sector during each program’s crediting period relative to the business 

as usual or other emissions reference level. 

(5) Public Participation and Participatory Management Mechanism. The 

program has established a means for public participation and 

consultation in the program design process. 
274

(6) Nested Approach. If applicable, the program includes:

(A) Offset project-specific requirements that establish methods to 

inventory, quantify, monitor, verify, enforce, and account for all 

project-level activities

(B) A system for reconciling offset project-based GHG reductions in 

sector-level accounting from the host jurisdiction. 

(b) Sector-Specific Requirements. Specific sectors may have specific 

requirements unique to that sector. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety 

Code.

§ 95995. Quantitative Usage Limit.

Sector-based offset credits approved by ARB for compliance pursuant to section 

95821(d) are subject to the quantitative usage limit specified in section 95854. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety 

Code.

Subarticle 15: Enforcement and Penalties

§ 96010. Jurisdiction.

Any of the following actions shall conclusively establish a person’s consent to be 

subject to the jurisdiction of the State of California, including the administrative 

authority of ARB and the jurisdiction of the Superior Courts of the State of 

California:

(a) Registration with ARB pursuant to subarticle 5;

(b) The purchase or holding of a compliance instrument issued by ARB:, 

unless the entity holding the compliance instrument is registered in an 

approved External GHG ETS pursuant to subarticle 12;
275

(c) Receipt of compensation of any kind, including sales proceeds and 

commissions, from any transfers of allowances or offset credits issued by 

ARB pursuant to subarticle 13 or recognized by ARB pursuant to 

subarticle 14; or

(d) Verification of an offset credit to be issued by ARB.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 96011. Authority to Suspend, Revoke, or Modify.

(a) The Executive Officer may suspend, revoke, or place restrictions on the 

Holding Account of a voluntarily associated entity determined to be in 

violation of any provision of this article. 

(b) The Executive Officer may place restrictions on a Holding Account of a 

covered entity or an opt-in covered entity determined to be in violation of 

any provision of this article or of article 2 of this subchapter. 

(c) The Executive Officer may suspend, revoke, or modify any Executive 

Order issued under this article or under article 2 of this subchapter, 

including an order accrediting a verifier, for a violation of any provision of 

this article.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 96012. Injunctions.

Any violation of this article may be enjoined pursuant to Health and Safety Code 

section 41513.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
276

§ 96013. Penalties.

Penalties may be assessed pursuant to Health and Safety Code section 38580 

for any violation of this article as specified in section 96014. In determining any 

penalty amount, ARB shall consider all relevant circumstances, including the 

criteria in Health and Safety Code section 42403(b). 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 96014. Violations.

(a) If an entity fails to surrender a sufficient number of compliance instruments 

to meet its compliance obligation as specified in sections 95856 or 95857, 

and the procedures in 95857(c) have been exhausted, there is a separate 

violation of this article for each required compliance instrument that has 

not been surrendered, or otherwise obtained by the Executive Officer 

under 95857(c). 

(b) A separate violation accrues every 45 days after the end of the Untimely 

Surrender Period pursuant to section 95857 for each required compliance 

instrument that has not been surrendered.

(c) It is a violation to submit any record, information or report required by this 

article that:

(1) Falsifies, conceals, or covers up by any trick, scheme or device a 

material fact;

(2) Makes any false, fictitious or fraudulent statement or representation;

(3) Makes or uses any false writing or document knowing the same to 

contain any false, fictitious or fraudulent statement or entry; or

(4) Omits material facts from a submittal or record.

(5) A fact is material if it could probably influence a decision by the 

Executive Officer, the Board, or the Board’s staff.

(d) The violations stated in section 96014(c) are additional to violations of any

obligations of any entity subject to this regulation under other provisions of 
277

this article requiring submissions to ARB to be true, accurate and 

complete.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

Subarticle 16: Other Provisions

§ 96020. Severability, Effect of Judicial Order.

Each provision of this article shall be deemed severable, and in the event that 

any provision of this article is held to be invalid, the remainder of this article shall 

continue in full force and effect. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 96021. Confidentiality.

(a) Emissions data submitted to ARB under this article is public information 

and shall not be designated as confidential. 

(b) Any entity submitting information to the Executive Officer pursuant to this 

subarticle may claim such information as “confidential” by clearly 

identifying such information as “confidential.” Any claim of confidentiality 

by an entity submitting information must be based on the entity’s belief 

that the information marked as confidential is either trade secret or 

otherwise exempt from public disclosure under the California Public 

Record Act (Government Code, section 6250 et seq.). All such requests 

for confidentiality shall be handled in accordance with the procedures 

specified in California Code of Regulations, title 17, sections 91000 to 

91022. 

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.
278

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

§ 96022. Jurisdiction of California.

Any party that participates in the Cap-and-Trade Program is subject to the 

jurisdiction of the State of California unless the party is subject to the jurisdiction 

of an External GHG ETS to which California has linked its Cap-and-Trade 

Program pursuant to section 95830(h) and subarticle 12.

NOTE: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, 

Health and Safety Code.

Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
279

Appendix A

Entity Information

Legal Name

Operating Name

U.S. Federal Tax Employer Identification Number

Value Added Tax Identification Number

Data Universal Numbering System Number

Date of incorporation

Place of Incorporation

Country of Incorporation

Business Number (Assigned by California Agency)

Physical Address (City, State, postal Code)

Mailing Address (City, State, postal Code)

Country

Contact Information (Name, address, phone, email)

Website Address

Type of Organization

Individual Information

First Name

Middle Name

Last Name

Personal Residence Address

Phone number

Email

Social Security Number

Date of Birth

Citizenship

Employer Name

Employer Address

Copy of a valid identity card issued by a state or province with an 

expiration date

Copy of a government-issued identity document

Copy of a Passport

Documentation of an open bank account

Documentation of any felony convictions during the previous five years