(a) Credit use.

(1) Only refiners and importers may generate, use, transfer or own credits generated under this subpart O.

(2) CRa credits generated pursuant to subpart H of this part in the 2012 and 2013 averaging periods and generated pursuant to §80.1615 may be used by refiners and importers to meet the applicable annual average sulfur standards of §80.1603(a)(1).

(3) CRa credits generated under §80.1615 may be used to meet the requirements of either subpart H of this part or this subpart O, subject to the credit life restrictions in paragraph (b) of this section.

(4) [Reserved]

(5) Credits generated under §80.1615(c) may only be used to meet the requirements of this subpart O.

(6) CRT2 credits generated under §80.1615(d) may only be used to meet the requirements of subpart H of this part.

(b) Credit life.

(1) Except as provided in paragraph (b)(2) of this section, credits are valid for use for five years after the year in which they are generated.

(2) Credits generated under §80.1615(b) through (d) are valid for use for five years after the year in which they are generated, except that any CRa credits generated in 2015 and 2016 and any remaining CRT2 credits will expire and become invalid after December 31, 2019 (with the 2019 annual compliance report, due March 31, 2020).

(3) A refiner or importer possessing credits must use all credits prior to falling into a compliance deficit.

(4) In no case may a credit be transferred more than twice before being used or terminated.

(c) Credit transfers.

(1) Credits obtained from other refiners or importers may be used to meet the annual average standards of this subpart O, if all the following conditions are met:

(i) The credits are generated and reported according to the requirements of this subpart O.

(ii) The credits are used in compliance with the limitations regarding the appropriate periods for credit use pursuant to paragraph (a) of this section.

(iii) Any credit transfer takes place by March 31 following the calendar year averaging period when the credits are used.

(iv) The credit has not been transferred between EPA registered companies more than twice. The first transfer by the refiner or importer who generated the credit (“transferor”) may only be made to a refiner or importer who intends to use the credit (“transferee”); if the transferee cannot use the credit, it may make the second, and final, transfer only to a refiner or importer who intends to use the credit. Credit transfers that occur within a company are unlimited.

(v) The credit transferor must apply any credits necessary to meet the transferor's applicable average standard before transferring credits to any other refiner or importer.

(vi) The credit transferor does not create a negative credit balance as a result of the credit transfer.

(vii) Each transferor must supply to the transferee records indicating all the following:

(A) The years the credits were generated.

(B) The identity of the refiner or importer who generated the credits.

(C) The identity of the transferring party (if it is not the same party that generated the credits).

(2) In the case of credits that have been calculated or created improperly, or are otherwise determined to be invalid, all the following provisions apply:

(i) Invalid credits cannot be used to achieve compliance with the transferee's averaging standard, regardless of the transferee's good faith belief that the credits were valid.

(ii) The refiner or importer who used the credits, and any transferor of the credits, must adjust their credit records and reports and sulfur calculations as necessary to reflect the proper credits.

(iii) Any properly created credits existing in the transferor's credit balance after correcting the credit balance, and after the transferor applies credits as needed to meet the average standard at the end of the compliance year, must first be applied to correct the invalid transfers before the transferor trades or banks the credits.

(3) CRT2 credits generated under §80.1615(d) from January 1, 2017, through December 31, 2019, may only be traded to and ultimately used from January 1, 2017, through December 31, 2019, by small refiners and small volume refineries approved under §80.1622.

[79 FR 23655, Apr. 28, 2014, as amended at 81 FR 23645, Apr. 22, 2016; 85 FR 7085, Feb. 6, 2020]