ERMS Frequently Asked Questions

[Disclaimer: the questions and answers presented herein are intended to provide general information about the Emissions Reductions Market System (ERMS). No person should rely on this document to determine any requirements that may apply pursuant to applicable rules or statutes, including 35 Ill. Adm. Code 205 and 415 ILCS 5/39.5]

I. ERMS general

What is the ERMS?

The ERMS is a regulatory program for stationary sources emitting volatile organic material (VOM) in the ozone nonattainment area located in Northeastern Illinois. The program is called the Emissions Reduction Market System (ERMS) because it is designed to allow emissions trading among participating sources. Allotment trading units (ATUs) are issued to each source which reflects their baseline emissions, minus applicable adjustments (See Section III. Baseline Emissions). If a source reduces its VOM emissions below its specified limit, it can sell the excess to another source which, in turn, can demonstrate compliance using the purchased trading units rather than actually reduce its own emissions. In this way, the overall emissions cannot exceed a given level in the nonattainment area. The ERMS was fully operational in May 2000.

Why does Illinois need an ERMS?

Six counties and three other townships in Northeastern Illinois are currently designated as a severe ozone nonattainment area. Under provisions of the Clean Air Act Amendments (CAAA) of 1990, this area must be in attainment by 2007 and must also meet interim emission reduction milestones in 2002 and 2005. Extensive air quality modeling has shown that emissions of VOM must be further reduced to help achieve the ozone standard. VOM emissions have historically been controlled through a series of technology-based rules. Further emissions reductions using conventional command and control approaches would become progressively more costly. Under the CAAA, states may use market-based approaches to achieve the required reductions in emissions. The Illinois EPA has taken this approach and developed the ERMS to take advantage of cost savings that come from allowing emissions trading among sources.

What counties are in the nonattainment area?

This area includes Cook, DuPage, Kane, Lake, McHenry, and Will Counties; Aux Sable Township and Goose Lake Township in Grundy County; and Oswego Township in Kendall County.

Who is required to be in the ERMS program?

The ERMS applies to any source located in the Chicago ozone nonattainment area that is required to have a CAAPP permit and has seasonal emissions of at least 10 tons of VOM. These sources are called participating sources.

The ERMS also applies to a new participating source, which is a source not operating prior to May 1, 1999, located in the Chicago ozone nonattainment area, that is required to obtain a CAAPP permit and has or will have seasonal emissions of at least 10 tons of VOM. [35 IAC 205.200]

What sources are exempt from the ERMS?

Any existing source that otherwise meets the criteria for a participating source is exempt from the ERMS if it accepts a limit in its CAAPP permit that:

a. Restricts seasonal VOM emissions to no more than 15 tons per season; or

b. Restricts seasonal VOM emissions to a level that reflects an 18 percent reduction in its baseline emissions. [35 IAC 205.205]

How long will the ERMS program continue?

The ERMS rule, like any other VOM control rule, does not have an ending date. ERMS participating sources must continue to comply with the ERMS rule, unless the rule is modified.

What is the seasonal allotment period?

The ERMS designated seasonal allotment period begins May 1 and continues through September 30 each year. This five month period was selected based on air quality data which shows that exceedances of the ozone standard only occurred during these warmer months.

How is ERMS different from conventional command and control approaches?

Past regulations generally limited a source’s emission rates. ERMS is different in that sources are given seasonal allotments based on their actual amount of emissions. These "emissions caps" provide certainty that the program will reduce emissions in the nonattainment area.

How does ERMS affect the requirements under RACT, MACT, and NSR?

ERMS does not allow sources to remove controls or permit limitations required by previous regulations. ERMS does not affect RACT, MACT, and NSR. ERMS is an addition beyond those regulations. A source in ERMS still has to meet RACT, MACT, NSR, etc. plus the requirements of ERMS.

How does ERMS relate to CAAPP?

For participating sources, the ERMS is implemented through the source’s Clean Air Act Permit Program (CAAPP), which is Illinois’ version of the federal operating permit required by Title V of the Clean Air Act. All monitoring and record keeping requirements related to VOM emissions are made part of the source’s CAAPP permit. This approach avoids duplicative administrative provisions and gives sources more certainty about operation under ERMS.

How will the Agency evaluate progress in the ERMS?

Illinois EPA is required by the ERMS rule to prepare an Annual Performance Review Report addressing the effect of ERMS on VOM emissions, reviewing trends and patterns that have emerged in the operation of the ERMS, and looking at nine specific areas of the program for the previous seasonal allotment period. The format for the Annual Performance Review Report was prepared in consultation with industry, environmental groups, the USEPA, and economists from the University of Illinois at Chicago, all of whom were participants in an ongoing dialogue that helped to form the report. The 2001 Report is available on the ERMS homepage.

What are important milestone dates in ERMS?

May 1 to September 30

Seasonal allotment period

October 1

Start of reconciliation period; and

Access to ACMA becomes available.

October 31 or November 30

Sources submit the seasonal emissions report by either one of these dates depending upon number of emission units.

December 31

Reconciliation period ends and access to ACMA closes

January (approximately)

Agency retires prior season emissions based upon seasonal reports; and

Emissions excursion compensations notices are sent.

March (approximately)

Agency issues allotments for next season.

May 1 to September 30

Start of next season.

May 15

Agency prepares ERMS Annual Performance Review Report for previous season.

ATUs

What is an ATU?

An allotment trading unit (ATU) is a tradable unit that represents 200 lbs. of VOM emissions and is a limited authorization to emit 200 lbs. of VOM emissions during the seasonal allotment period. ATUs are issued to sources each year and are valid for use during the period following issuance and the next succeeding period. This finite lifespan helps ensure a robust market (i.e., use it or lose it) and still gives sources some incentive to bank ATUs as a hedge for the future. [35 IAC 205.130]

How are ATUs created?

ATUs are created and allocated in the CAAPP permit through a formal determination of the number of ATUs to which a participating source is entitled per season. The amount allotted is based upon historical operations with appropriate adjustments.

How do participating sources obtain ATUs and how long will the ATUs be valid?

Participating sources receive a seasonal allotment of ATUs determined from their baseline emissions (after appropriate reductions), which are generally based on the two highest seasonal emission rates for 1994, 1995, and 1996. Each ATU is valid for the season of issuance and the following season (except for some special circumstances).
[35 IAC 205.400]

How are ATUs retired?

At the end of each reconciliation period, the Agency retires ATUs in the transaction accounts of each participating and new participating source to cover VOM emissions during the seasonal allotment period. ATUs are retired in order of issuance unless an account officer specifies which ATUs are to be retired. ATUs can also be retired by donating or selling to a special participant for air quality benefit.

How does trading between sources occur?

Participating sources may contact each other through private means or through the ERMS homepage to buy, sell, or otherwise transfer ATUs from one to another based on their ability to reduce emissions or their need for ATUs. A trade occurs when there is a recognized sale and purchase of ATUs between two parties in the ERMS, as recorded with the Illinois EPA.

What happens if a source does not have enough ATUs for the season at the end of the reconciliation period?

Sources that do not hold enough ATUs at the end of the annual reconciliation period to account for their seasonal emissions must provide emissions excursion compensation (1.2 times the excess amount for a first occurrence and 1.5 times the excess for subsequent consecutive occurrences).

What is a Transaction Account?

A Transaction Account is an account established by an ERMS participant, new participant, or general participant, as authorized by the Illinois EPA that allows market participants to buy or sell ATUs. [35 IAC 205.130]

ACMA

What is ACMA?

The Alternative Compliance Market Account (ACMA) is a reserve of ATUs managed by the Illinois EPA. The ACMA serves as an alternative source of ATUs to the marketplace from which participating and new participating sources may purchase additional ATUs under certain conditions. Unlike ATUs allocated to sources, ATUs in the ACMA have an indefinite life as long as they remain within the ACMA; once they are bought, they must be used to account for either the preceding or next seasonal allotment period. Because it is intended to be a secondary source of ATUs, the price of ATUs from ACMA is higher than costs of ATUs from the marketplace. [35 IAC 205.7109(a)]

How does ACMA obtain its ATUs?

The ERMS specifies that each year ATUs in an amount equivalent to one percent of each year’s allotment of ATUs to participating sources shall be placed in the ACMA. This occurs separately and independently from the allotment of ATUs to the participating source.

In addition, ACMA receives ATUs from the following:

  • Sources that choose to become exempt from the ERMS by taking an 18% reduction have 6 percent of that reduction allotted to the ACMA. (The ACMA receives the extra 6 percent reduction beyond the 12 percent reduction which would otherwise have been required);
  • Shutdowns of participating and ERG sources through withdrawal, revocation or termination of the CAAPP permit. The ACMA receives 20 percent of the source’s allotment of ATUs at the time of shutdown (as directed in the ERMS rule); and
  • From voluntary contributions.
    [35 IAC 205.710(c), 35 IAC 205.410(a), 35 IAC 205.500(b), 35 IAC 205.205(b)]

How does a source obtain access to ACMA?

During the reconciliation period, any participating or new participating source may apply to the Illinois EPA for access to the ACMA to purchase ATUs for the preceding seasonal allotment period; and

During excursion compensation, any participating or new participating source may also access the ACMA to purchase ATUs for the preceding seasonal allotment period.

For a new participating source, "regular access" to ACMA is only available when there are sufficient ATUs in ACMA to supply the requesting source. [35 IAC 205.710(d)]

How much do the ATUs in ACMA cost?

A participating or new participating source with regular access to ACMA may purchase ATUs at a rate of $1,000 per ATU or 1.5 times the average market price, as determined by the Illinois EPA, whichever is less. [35 IAC 205.710(d)(3)]

When is special access to ACMA available?

Special access to ACMA is available only to participating sources when the ACMA balance is insufficient to meet the needs of requesting participating sources. [35 IAC 205.710(e)]

How can a source obtain special access to ACMA?

The Agency will grant special access to ACMA if:

  • Actual seasonal emissions have exceeded the ATUs held by the source for the applicable seasonal allotment period; and
  • During the reconciliation period, the source has not been able to obtain ATUs in the marketplace or has been unable to obtain regular access to ACMA.

[35 IAC 205.710(e)(2)]

Where do the ATUs in special ACMA come from and how much do they cost?

ATUs are advanced to special ACMA from the next year’s funding of ACMA. At most one percent of ATUs will be credited to special ACMA and the Illinois EPA is then required to take measures to replenish ACMA.

ATUs may be purchased at a rate of $1,100 per ATU or 2 times the average market price, as determined by the Illinois EPA, whichever is less. [35 IAC 205.710(e)]

What type of participation is there in the ERMS?

There are four types of participants in the ERMS:

  1. Participating source
  2. General participant
  3. Special participant
  4. New participating source

PARTICIPANTS

What is a participating source?

A participating source is a source that is required to have a CAAPP permit, have actual emissions of at least 10 tons during the season, was operating prior to May 1, 1999, and is located in the Chicago nonattainment area. These make up the vast majority of emissions sources in the ERMS program, and are required to hold ATUs for all of their VOM emissions during the season.

What is an exempt source?

An exempt source is exempt from the ERMS because the source has applied for and accepted a limitation of 15 tons per season of VOM in its CAAPP permit, or it reduces its seasonal emissions by at least 18 percent beginning in 2001.

What is a general participant?

A general participant is an individual or company that is not a participating source or new participating source i.e., that is not required to participate in the ERMS, but has made a decision to become active in the ERMS in order to buy and sell ATUs. [35 IAC 205.130]

Why are general participants included in the ERMS program?

General participants are included in the ERMS because they perform a valuable role in the marketplace as an intermediary to facilitate trades between sources. When they act on their own behalf, they provide an additional demand and supply of ATUs, thus enhancing stability in the market. [35 IAC 205.130]

How does one become a general participant?

To become a general participant, a person or company must apply for and obtain a Transaction Account and designate a trained account officer to represent that account in order to carry out ATU transactions. [35 IAC 205.610(c)]

What is a special participant?

A special participant is any person that registers with the Illinois EPA in order to purchase and retire ATUs, but not sell ATUs. [35 IAC 205.610(c)]

I would like to purchase and retire ATUs on behalf of my Boy Scout troop. Can you tell me how I can become involved in the ERMS program?

The Boy Scout group can become a special participant in the ERMS and acquire or purchase ATUs to retire for air quality benefit. All ATUs acquired by special participants are no longer available for trade or transfer between participants and are retired upon being acquired.

What is a new participating source?

A new participating source is required to have a CAAPP permit, has actual seasonal emissions of at least 10 tons, is located in the Chicago nonattainment area, but was not operating prior to May 1, 1999. A new participating source must also hold ATUs for all of its VOM emissions during the season, but is not given a baseline because it is not entitled to an allotment of ATUs. It must acquire ATUs through trades or long-term transfers. [35 IAC 205.210]

What is a source that newly enters the ERMS?

A source that has been in operation prior to October 1, 1999, and first becomes a participating source because its VOM emissions increase to 10 tons or greater during any seasonal allotment period beginning in 1999 becomes a participating source. It is entitled to an allotment of ATUs, as it is an existing source. [205.310(a)(2)]

When is a new participating source or a source that newly enters the ERMS required to submit an ERMS application?

A new participating source is required to submit an ERMS application at the time a construction permit application is submitted.

A source that newly enters the ERMS is required to submit an ERMS application by December 1 of the year in which changes at the source result in VOM increases as stated above [35 IAC 205.310(a)(3)]

What happens when a participating source shuts down?

A participating sources that completely shut down operations and withdraws its CAAPP permit will continue to receive allotments if it becomes a general participant. The shutdown source receives 80% of its seasonal allotment with the other 20% going to the ACMA (unless the source has previously entered into a long term transfer agreement to trade away these ATUs).

INTER-SECTOR TRANSACTIONS

What are Inter-Sector Transactions?

ERMS allows reductions in the mobile or area sectors to be converted to ATUs and used by sources. Potential sponsors of inter-sector emission reduction projects must submit a proposal to the Agency outlining the proposed project. The proposal must be accepted by the Agency before ATUs can be used. Proposals may be based on applicable regulations that are in place or on a sponsor’s own approach for showing that valid emissions reductions have occurred from mobile sources or area sources.

Internet for ERMS

What information is available on the ERMS portion of the Illinois EPA Website?

The ERMS portion of the Illinois EPA Website, available to the public, includes:

  • General items of interest concerning the ERMS program, including a program overview
  • Various ERMS reports
  • ERMS frequently asked questions
  • ERMS contacts at the Illinois EPA
  • Downloadable copies of all of the ERMS forms
  • Annual Performance Review Report for each year

What actions can be carried out through the ERMS portion of the Illinois EPA Website?

Website capabilities available to account officers include:

  • Creating buy/sell postings
  • Initiating transactions to sell
  • Confirming buyer transactions
  • Changing the PIN for an account officer

Must the Internet be used to participate in the program?

No, the Internet is provided as an option for use in the ERMS program.

Where can the ERMS forms be obtained?

The forms may be downloaded from the ERMS portion of the Illinois EPA Website at http://www.epa.state.il.us/air/erms/index.html. Printed copies of the ERMS forms may also be obtained by contacting Illinois EPA Air Quality Planning Section at (217) 524-4343.

Once the forms are downloaded from the Website, can they be submitted to the Illinois EPA electronically?

For the forms that require an original written signature from the responsible official or account officer, the original signed document must be submitted to the Illinois EPA. On forms where a signature is not required, and the use of a personal identification number (PIN) number is available, the applicable information may be submitted electronically.

Baseline emissions

What are baseline emissions?

Baseline emissions are the historical seasonal VOM emissions (with various adjustments and corrections) which are established in the CAAPP permit and are the basis of the allocation of ATUs. Baseline emissions may reflect positive adjustments for voluntary over-compliance and negative adjustments for noncompliance. [35 IAC 205.320]

How are baseline emissions determined?

Baselines are calculated as a two-year average of the greatest emissions from 1994 to 1996, or other representative years from 1990 to 1997. Certain increases may be made for voluntary over-compliance or decreases for noncompliant conditions. Seasonal allotments are established from a source’s baseline emissions, reduced by 12 percent.

How can a source make revisions to its baseline emissions?

All changes to the baseline emissions must be approved by the Illinois EPA and require a revision to the CAAPP permit. Changes to baseline emissions can only be made if an alternative method of calculating seasonal emissions is being sought. In addition, emission units constructed prior to January 1, 1998, are allowed to obtain three seasons of data and the average of the two highest seasons may be added to the baseline. [35 IAC 205.320]

Are future ATU allotments for individual sources and the entire Chicago area going to be further reduced?

The ERMS rule does not contain any provisions for further reducing ATU allotments for either specific companies or the Chicago area as a whole beyond the levels initially required in the ERMS. As a general matter, allotments under the ERMS will remain constant, i.e. at the initial levels, unless the Illinois Pollution Control Board revises the ERMS. Before any such change to the ERMS, sources and the public will be allowed to comment just as with any rule change.

Seasonal emissions report

Does a source need to submit all the ERMS forms for the seasonal emissions report (forms 100, 100A-E) even if the requested information does not apply to the source?

No, only the information on forms 100 and 100A must be submitted if the information on the other forms is not applicable. There should be some indication, through a comment or cover letter, that the information does not apply to the source.

What sources must file a seasonal emissions report?

All participating sources and new participating sources will be required to file a seasonal emission report for their VOM emissions as specified in their CAAPP permit. [35 IAC 205.300]
In addition exempt sources that have accepted the 15-ton limit or the 18% reduction must file seasonal emission reports to demonstrate compliance.

When is the seasonal emissions report due?

Depending upon the number of emission units,

  • By October 31 of each year for participating source or new participating sources that generate VOM emissions from less than 10 emission units; or
  • By November 30 of each year for participating or new participating sources that generate VOM emissions from 10 or more emission units. [35 IAC 205.300]

If a source finds that its previously submitted seasonal emission report is in error, how does it make a correction?

Within 30 days after the discovery of the error, the source must notify the Illinois EPA in writing and provide the correct information. [35 IAC 254.135]

Are sources required to provide fugitive emission data on the seasonal emission report?

Sources must report all emissions from all units, except for those from units and activities that are identified as insignificant activities in the source’s CAAPP permit.
[35 IAC 205.220]

What pollutants are considered Hazardous Air Pollutants (HAPs) for ERMS?

The pollutants considered as HAPs for ERMS are pollutants identified as HAPs by USEPA.

Do I have to report Hazardous Air Pollutants (HAPs) in the seasonal emissions report?

HAPs that are also VOM must be included on the seasonal emissions report if:

  • The HAPs are regulated at the source by a MACT or NESHAP;
  • The source is considered a major source of HAPs based on emissions of a single HAP or combination of HAPs; or
  • The source reported that pollutant on the Toxic Chemical Release Inventory Reporting Form (Form R). [35 IAC 254.501(b)]

Emergency conditions

What is the difference between a regular malfunction and an emergency condition under the ERMS?

A malfunction is when the system is operating within the design conditions and a breakdown occurs which causes an exceedence of air emissions. An emergency condition under ERMS means any situation arising from a sudden and unforeseeable event beyond the control of the source, i.e. lightning or flash flooding.
[35 IAC 205.130]

Are sources required to hold ATUs for the excess VOM emissions attributable to the emergency?

No, the source would not be required to hold ATUs for emergencies that occur as long as it meets the criteria of an emergency condition that was properly reported, documented, and approved by the Illinois EPA.

Where and when do sources report emergency conditions (telephone and written)?

The source must submit an initial emergency conditions report to the Agency within two days after the time when excess emissions occurred due to the emergency. Telephone notification must occur as soon as practicable.

Written notification should be sent to:

Illinois Environmental Protection Agency,
Compliance and Enforcement Section (MC #40)
Bureau of Air
P.O. Box 19276
Springfield, IL 62794-9276

Telephone and written notification to:

Illinois Environmental Protection Agency
Des Plaines Regional Office
Bureau of Air
9511 Harrison
Des Plaines, IL 60016
(708) 338-7900

Compliance master file

What is a compliance master file?

A compliance master file consists of information relating to the ERMS program, which is maintained by the source. [35 IAC 205.700(b)] It should include everything related to the ERMS program, including seasonal emission reports, information on ATU transactions, account officer certifications, baseline calculations, and any other supporting documentation as required by the CAAPP permit. [35 IAC 205.700(a)]

What supporting data and level of detail regarding emissions should be in the compliance master file? Are summaries adequate or should daily batch sheets be included?

Summary sheets are often adequate with sample batch sheets; however, the daily batch sheets must be retrievable and may be requested during an inspection.

Is an electronic format of data acceptable for the compliance master file?

Data may be maintained in electronic format, however, the source must have the ability to print and provide a hard copy to the Illinois EPA, if requested.

Should all the data of a compliance master file be in one location or can I retrieve it from different areas and departments?

The owner or operator of each participating source or new participating source is required to maintain and retain for five years at the source, or at another location agreed to by the Illinois EPA, all of the portions of the compliance master file. The Illinois EPA would prefer that all the information be in one location so that it is readily accessible and available for review during a field inspection. [35 IAC 205.700]

Seasonal emissions management

When is the seasonal allotment period?

The seasonal allotment period runs from May 1 through September 30 of each year.
[35 IAC 205.150(a)]

What is the reconciliation period?

The reconciliation period includes the three months following the seasonal allotment period (October 1, through December 31). During the reconciliation period, participating sources must compile their seasonal VOM emission data and report seasonal emissions (by either October 31 or November 30 depending upon the source’s size). This seasonal report and records of emissions maintained throughout the seasonal allotment period serves as an indicator of whether the source will hold sufficient ATUs at the end of the reconciliation period to cover its preceding seasonal VOM emissions. During this time, trades may occur. [35 IAC 205.150]

What happens at the end of the reconciliation period?

At the end of the reconciliation period each participating source must hold enough ATUs to cover their previous seasonal VOM emissions. The Agency will retire ATUs from each participating source’s account to cover the source’s VOM emissions for the preceding seasonal allotment period. [35 IAC 205.150]

If a source determines during the reconciliation period that it will not have enough ATUS at the end of the reconciliation period, where can it obtain ATUs?

  • A source may enter into a trade (or transfer agreement) with another participant to obtain the additional ATUs; or
  • A source may obtain ATUs from the ACMA.

What is an emissions excursion?

Emissions excursion refers to the event that occurs when a participating source or new participating source does not hold sufficient ATUs at the end of a reconciliation period to account for its VOM emissions from the preceding seasonal allotment period.
[35 IAC 205.720]

If a source determines at the end of the reconciliation period that it will not have enough ATUs, and it did not obtain the additional ATUs, what will happen?

On December 31, the end of the reconciliation period, sources become subject to emissions excursion compensation if they don’t have enough ATUs to cover the preceding seasonal VOM emissions. The Illinois EPA will send the source an Excursion Compensation Notice and require the source to provide compensation.
[35 IAC 205.720]

How does a source provide compensation in response to the Excursion Compensation Notice?

The source must provide compensation by obtaining the necessary ATUs in one of two ways :

  • Purchasing ATUs from ACMA (the default method); or
  • Taking the ATUs from its next year’s allotment.

Sources subject to emissions excursion compensation must obtain ATUs in an amount greater than the excursion. This is either 1.2 or 1.5 times the excursion amount.

For example: During a seasonal allotment period, a participating source emits VOM that requires that they hold 250 ATUs. As of December 31 the source has 200 ATUs in its Transaction Account. As a consequence, the source is 50 ATUs short and becomes subject to emissions excursion compensation. This source must now purchase ATUs from ACMA or take ATUs from its next year’s allotment and it must purchase ATUs in an amount 1.2 times (1.5 if this is their second excursion in a row) its excursion. The source would be required to purchase 60 ATUs (50 x 1.2) from ACMA. If this source instead chooses to deduct the excursion from next year’s allotment, 60 ATUs would be immediately retired at the time of the next allotment.

[35 IAC 205.720]

How will the Illinois EPA proceed with emissions excursion compensation?

The Excursion Compensation Notice will require that the source obtain additional ATUs in an amount equivalent to 1.2 times (or 1.5 times in the case of emissions excursion for a second consecutive seasonal allotment period) from ACMA, unless the source requests that the ATUs be deducted from the next year’s allotment. Unless the request to utilize the next year’s allotment is made to the Illinois EPA within 15 days, a bill to cover the cost of the ATUs purchased from ACMA will be sent to the source.

Account officers and responsible officials

ACCOUNT OFFICERS

What is an account officer and who can be one?

An account officer is an Illinois EPA trained individual who is responsible for managing the Transaction Account for a participant, new participant, or general participant in the ERMS program. Account officers designated by the participant must be approved by the Illinois EPA, and must meet all of the following criteria:

  • Be at least 18 years of age
  • Be an American citizen or legal alien
  • Not have been convicted or had a final judgment entered against him/her in any State or federal court for a violation of State or federal air pollution laws or regulations, or for fraud
  • Be scheduled to attend the next scheduled training program (or have already completed the training program)
  • Certify that all the requirements above have been met [35 IAC 205.620]

What duties and responsibilities are required from an account officer?

An account officer has the following duties and responsibilities:

  • Register and attend account officer training
  • Provide current information regarding account officer status
  • Submit information for the purchase or sale of ATUs
  • Post buy/sell notices on the ERMS
  • Website Request transfer agreements on behalf of the participating source
  • Ensure that proper authorization information is included in all correspondence
  • Determine that there are enough ATUs in the Transaction Accounts to cover proposed trades or transfers
  • Notify the Illinois EPA regarding errors in the Transaction Account
  • Keep updated on status and conduct business through the ERMS portion of the Illinois EPA Website, if desired

[35 IAC 205.620(b)]

How many account officers may each source have?

There is no limit on the number of account officers a participating source, new participating source, or general participant may designate to represent a single Transaction Account. Once designated, each of the account officers may perform some or all of the duties of an account officer. To avoid confusion or conflict, it is important that if multiple account officers are designated, these individuals coordinate their activities.

Can one account officer represent both seller and buyer?

Yes, as long as both the seller and buyer have designated him/her as account officer.

Can a person who is not employed by an ERMS participating source attend account officer training?

Yes, anyone who meets the qualification requirements may attend the account officer training, however, the person may not function as an account officer in the ERMS program until an ERMS participant, (i.e. participating source, new participating source or general participant) designates him/her as the account officer for the Transaction Account. [35 IAC 205.620(b)]

What training is required for an account officer?

The ERMS rule specifies that all prospective account officers participate in an Illinois EPA sponsored account officer training prior to representing a Transaction Account. Training sessions are approximately five hours in length and all account officers are given a take home manual for reference.

What is included in the training agenda?

The training sessions include CAAPP permitting, ERMS program overview, ATU creation review, seasonal emissions reporting, emissions compensation process, functioning in the ERMS marketplace, Transaction Accounts, ACMA and the ERMS website.

How often is account officer training given and how will notice be provided?

Account officer training occurs at least on an annual basis. Information regarding upcoming training (time, date, and location) will be provided on the ERMS portion of the Illinois EPA Website and mailed to persons who express interest in attending.
[35 IAC 205.620(b)]

How will an account officer be kept apprised of ERMS program updates?

Updates are available on the ERMS portion of the Illinois EPA Website at www.iepa.state.il.us. Trained account officers will also receive periodic updates by mail or e-mail.

What if a designated account officer unexpectedly leaves the position?

The participating source, new participating source, or general participant may make a request in writing to the Illinois EPA for expedited approval for a new account officer. This request shall affirm that the candidate meets the requirements for account officer and shall complete the training program, no later than one year from the date of the approval request. [35 IAC 205.620(d)]

RESPONSIBLE OFFICIAL

Who is the responsible official under the ERMS?

The responsible official in the ERMS program should be the same individual responsible for the CAAPP permit.

What are the duties of the responsible official in market operations under the ERMS?

The responsible official’s duties include:

  • Applying to the Illinois EPA for the Transaction Account for the source
  • Designating account officer(s) to be responsible for the source’s Transaction Account
  • Notifying the Illinois EPA of proposed discrepancies in the account balance
  • Submitting requests to the Illinois EPA for Regular or Special ACMA access, if necessary. (It is recommended that the responsible official consult with the account officer regarding the need to access Regular ACMA or Special ACMA)

Can the responsible official also be the account officer?

The same individual may serve as both a responsible official and an account officer.

IX. Monetary value of ATUs

Is market price the same thing as average price paid for ATUs that are reported on the ERMS portion of the Illinois EPA web page?

No, the market price is established through trading amongst the participants. In the ERMS portion of the Illinois EPA Website, the market price may be reflected in the individual ATU postings to buy or sell. The Illinois EPA is not involved in determining the market price of ATUs. [35 IAC 205.600]

How will the Illinois EPA calculate the average price paid for ATUs that it reports on the ERMS portion of the Illinois EPA Website?

The average price paid for ATUs is calculated from the data submitted by account officers along with their transactions. The average is calculated by taking the total price of the transactions in a period divided by the number of ATUs traded in that period.

There will actually be three averages calculated for ERMS:

Monthly average: The average price for a calendar month. This value will be calculated monthly.

Weekly average: The average price for a calendar week (Sunday through Saturday). This value will be calculated weekly.

ACMA average: This average will be calculated four times a year to set the price per ATU used in purchasing from ACMA. The averages are calculated at the following times if sufficient trades have occurred to calculate an average price:

  • October Average - Average of all trades from January through September of that year
  • November Average - Average of all trades from January through October of that year
  • December Average - Average of all trades from January through November of that year
  • January Average - Average of all trades from January through December of the previous year. This average holds until the next October.

[35 IAC 205.600]

Will the Illinois EPA include all trades in its average price paid for ATUs calculation?

Purchases from ACMA will not be included in the average price calculation. The Illinois EPA also will exclude specific trades from the average calculation if consideration other than money was involved. [35 IAC 205.600]

Market transactions

Who should account officers contact with questions regarding their Transaction Account(s)?

Questions may be directed to the Air Quality Planning Section at (217) 524-4343.

What is a market transaction in the ERMS?

A market transaction includes either a trade or transfer agreement between two parties in the ERMS. [35 IAC 205.630]

What is a trade?

A trade occurs when there is a recognized sale and purchase of ATUs between two parties in the ERMS as recorded with the Illinois EPA. [35 IAC 205.630]

What is a transfer agreement?

A transfer agreement is an agreement that authorizes the future transfer of ATUs for one or more season as recorded with the Illinois EPA. [35 IAC 205.630]

How are individual ATUs handled in a trade or transfer agreement?

Account officers have the ability to identify the specific ATU or block of ATUs that are to be traded or transferred; however, the default method will be to transfer the older ATUs first. [35 IAC 205.630]

Do both trades and transfer agreements require authorization from both parties and review and approval by the Illinois EPA?

Yes, proper authorization from both parities will ensure the trade or transfer agreement is valid.

Will specific information regarding price of ATUs be required for posting on the Agency’s ERMS Website?

No, buy/sell postings on the Agency’s ERMS Website do not have to include specific price(s) listed for the ATUs being sought on the open market.

What obligations do I have as a seller when posting on the Agency’s ERMS Website?

Posting on the Agency’s ERMS Website is similar to advertising in a local newspaper and independent of any obligations specifically entered into by the buyer and seller.

May both the buyer and seller use the same form to enter into a trade (or transfer agreement)?

Yes, the same paper form may be used, or two separate forms may be submitted (one from the buyer and one from the seller). For more information, please refer to the accompanying instructions on each applicable form.

May the buyer and seller use a combination of paper and electronic means to enter into a trade?

Yes, any combination of paper or electronic means may be used to submit a trade to the Agency.

TRADES

How may an account officer submit a trade request to the Illinois EPA?

Trades may be submitted in writing by various means (mail, fax, etc.) or may be performed on the ERMS website.

What is considered a valid trade?

A trade is considered valid if it meets the following requirements:

  • Is submitted by a designated account officer;
  • Includes proper authorization (signature or PIN) from designated account officers;
  • Involves active Transaction Accounts; and
  • Contains enough ATUs in a Transaction Account to execute the trade.

[5 IAC 205.630]

What circumstances would prevent a trade being executed by Illinois EPA?

Trades will not be executed for the following reasons:

  • Either the buyer or seller lacks a designated account officer, or the trade is submitted by a person other than the designated account officer;
  • The transaction request includes an incorrect or missing account officer authorization (signature or PIN);
  • The Transaction Account is not active; or
  • The seller does not have enough ATUs to completely execute the trade or the trade includes a partial ATU. [35 IAC 205.630]

How long will the Illinois EPA take to process a trade?

One week should be allowed for the Illinois EPA to process the trade, however all trades will be processed as soon as possible. Use of the Internet may expedite the request. The time for the Illinois EPA to process the trade should be taken into consideration when entering into a trade with other entities.

How will a seller know that the trade is effective?

Trades are not effective in the ERMS database until transaction requests are received and processed by the Illinois EPA. A written confirmation statement will be sent to both account officers (and both responsible officials) representing the buyer and seller. Account officers may also check trade status information via the ERMS portion of the Illinois EPA Website. [35 IAC 206.630(a)(4)]

If a source needs to wait one week for the Illinois EPA to process a trade, when should it ask for payment for ATUs?

All issues regarding payment or invoicing are the responsibility of the participants. Whether a source agrees to full payment in advance, a down payment, or payment on a fixed schedule is up to the parties involved in the trade. The Illinois EPA will not pre-certify trades or ATU ownership beyond the information available over the ERMS portion of the Illinois EPA Website.

TRANSFER AGREEMENTS

How are transfer agreements processed by the Illinois EPA?

Once a complete transfer agreement is received, the Illinois EPA will automatically transfer ATUs each year on the transfer date.
[35 IAC 205.630(a)(2)(B)]

If two sources enter into a transfer agreement, on what date will the transfer of ATUs occur?

ATUs will be transferred on the date specified on the completed transfer agreement form recorded with the Illinois EPA, or otherwise when allotted ATUs are generally distributed to participating source.

What happens if there are insufficient ATUs in a Transaction Account to execute a transfer agreement?

If there are not enough ATUs at the time of transfer, the transfer will not be executed and both parties will be notified that there are insufficient ATUs in the Transaction Account to complete the transfer. If the seller and buyer want to submit a new transfer agreement with an adjusted total, they may do so.

[35 IAC 205.630 and 35 IAC 205.720]

If a source is the recipient of a transfer agreement and the seller informs them that there will not be enough ATUs available in its Transaction Account, what does this mean?

Before the transfer agreement is finalized both parties should ensure that the situation has been evaluated carefully so that there are not any sudden or unforeseen problems for either the seller or buyer. In this circumstance, the seller would not have met its obligation under the agreement and the buyer would have the remedies set forth in the agreement, or generally available under applicable law.