340-253-1040 Credit Clearance Market (1) If a registered party did not retire sufficient credits to meet its compliance obligation under OAR 340-253-1030(1) - (6), exclusive of any deficits carried forward to the next compliance period under OAR 340-253-1030(4), it must enter and purchase its pro-rata share of credits in the credit clearance market under section (5). (a) The credit clearance market is separate from the normal year-round market opportunities for parties to engage in credit transactions. (b) DEQ will consider a registered party in compliance with OAR 340-243-1030 if it acquires its pro-rata obligation in the credit clearance market and retires that number of credits within 30 calendar days of the end of the credit clearance market. (2) The maximum price for the credit clearance market will be: (a) $200 per credit for the markets held upon the submission of the annual reports for 2017. (b) For markets held upon submission of annual reports in 2018 and thereafter DEQ shall adjust the maximum price for the credit clearance market annually for inflation at the end of each January using the inflation rate as provided by the last twelve months of data from the US Bureau of Labor Statistics West Region Consumer Price Index for All Urban Consumers for All Items. The formula for that adjustment is as follows: maximum price = [Last year’s maximum price] * (1 + [CPI-U West]). DEQ will publish the new maximum price on its webpage each year. (3) Acquisition of credits in the credit clearance market. The credit clearance market will operate from June 1 to July 31. (a) Registered parties subject to section (1) must acquire their pro-rata share of the credits in the credit clearance market calculated in section (5). (b) A registered party may only use credits acquired in the credit clearance market to retire them against its unmet compliance obligation from the prior year. (c) To qualify for compliance through the credit clearance market, the registered party in question must have: (A) Retired all credits in its possession; and (B) Have an unmet compliance obligation for the prior year that has been reported to DEQ through submission of its annual report in the OFRS. (4) Selling credits in the clearance market. (a) On the first Monday in April each year, DEQ shall issue a call to all eligible registered parties in the OFRS to pledge credits into the credit clearance market, or will issue a notification that it will not hold a credit clearance market that year. Registered parties are eligible to sell credits in the clearance market if they will have excess credits upon the submission of their annual report. Parties wanting to pledge credits into the credit clearance market will notify DEQ by April 30. DEQ will announce if a clearance market will occur by May 15. (b) In order to participate in the credit clearance market, sellers must: (A) Agree that they will sell their credits for no higher than the maximum price as published by DEQ for that year; (B) Agree to withhold any pledged credits from sale in any transaction outside of the credit clearance market until the end of the credit clearance market on July 31, or if no clearance market is held in a given year, then on the date which DEQ announces it will not be held; (C) Not reject an offer to purchase the credits at the maximum price for that year as published by DEQ, unless the seller has already sold or agreed to sell those pledged credits to another regulated party participating in the credit clearance market; and (D) Agree to replace any credits that the seller pledges into the clearance market if those credits are later found to be invalid by DEQ due to fraud or non-compliance by the generator of the credit, unless the buyer of the credits was a party to that fraud or non-compliance. (5) Operation of the credit clearance market. Prior to June 1, DEQ will inform each registered party that failed to meet its annual compliance obligation under OAR 340-253-1030 of its pro-rata share of the credits pledged into the credit clearance market. (a) Calculation of pro-rata shares. (A) Each registered party’s pro-rata share of the credits pledged into the credit clearance market will be calculated by the following formula: Registered Party A’s pro-rata share = ( A’s total deficit / All parties’ total deficits) X (the lesser of [pledged credits] or [All parties’ total deficits]) (i) “Total deficit” refers to the registered party’s total obligation for the prior compliance year that has not been met under OAR 340-253-1030; (ii) “All parties’ total deficit” refers to the sum of all of the unmet compliance obligations for registered parties in the credit clearance market; and (iii) “Pledged credits” refers to the sum of all credits pledged for sale into the credit clearance market. (B) If there is at least one large importer of finished fuels participating in the credit clearance market, DEQ will determine the pro-rata share of the available credits in two phases. (i) The first phase will begin with all of the credits pledged into the credit clearance market and the deficits from large importers of finished fuels in place of “all parties’ total deficit” in (5)(a)(A)(ii). (ii) The second phase will begin with the remainder of the pledged credits into the credit clearance market in place of “pledged credits” in (5)(a)(A)(iii) and the deficits from all other registered parties in place of “all parties’ total deficit” in (5)(a)(A)(ii). (iii) The calculation for each phase will be done as in paragraph (A). (b) On or before June 1, DEQ will post the name of each registered party that is participating in the credit clearance market as a buyer, and the name of each registered party that is participating as a seller in the market and the number of credits they have pledged into the market. (c) Following the close of the credit clearance market, each registered party that was required to purchased credits in the credit clearance market must submit an amended annual compliance report in the OFRS by August 31 which shows the acquisition and retirement of its pro-rata share of credits purchased in the credit clearance market, and any remaining unmet deficits. (6) If a registered party has unmet deficits upon the submission of the amended annual report, DEQ will increase the registered party’s number of unmet deficits by five percent and the total unmet deficits will be carried over into the next compliance period for that regulated party. (7) If the same registered party has been required to participate in two consecutive credit clearance markets and carries over deficits under section (6) in both markets, DEQ will conduct a root cause analysis into the inability of that registered party to retire the remaining deficits. (a) If multiple registered parties are subject to this section in a single year, DEQ may produce a single root cause analysis for those registered parties if it determines the same general set of causes contributed to those parties’ inability to retire those deficits. DEQ will also analyze whether there were specific circumstances for the individual parties. (b) Based on the results of the root cause analysis, DEQ may issue a deferral under OAR 340-253-2000(6)(c)(A) through (C) or craft a remedy that addresses the root cause or causes. The remedy cannot: (A) Require a registered party to purchase credits for an amount that exceeds the maximum price for credits in the most recent credit clearance market; or (B) Compel a registered party to sell credits. Statutory/Other Authority: ORS 468.020, 468A.266, 468A.268 & 468A.277 Statutes/Other Implemented: ORS 468.020 & ORS 468A.265 through 468A.277 History: DEQ 17-2022, amend filed 09/23/2022, effective 01/01/2023 DEQ 199-2018, amend filed 11/16/2018, effective 01/01/2019 DEQ 27-2017, adopt filed 11/17/2017, effective 11/17/2017