1. A. An applicant may, in its application for a new permit, renewal of an existing permit, or as a significant permit revision, request an emissions cap for a particular pollutant expressed in tons per year as determined on a 12-month rolling average, or any shorter averaging time necessary to enforce any applicable requirement, for any emissions unit, combination of emissions units, or an entire source to allow operating flexibility including emissions trading for the purpose of complying with the cap. This Section shall not apply to sources that hold an authority to operate under a general permit pursuant to Article 5 of this Chapter.

2. B. An emissions cap for a Class II source that limits the emissions of a particular pollutant for the entire source shall not exceed any of the following:

   1. 1. The applicable requirement for the pollutant if expressed in tons per year;
   2. 2. The source’s actual emissions plus the applicable significance level for the pollutant established in R18-2-101(131).
   3. 3. The applicable major source threshold for the pollutant; or
   4. 4. A source wide emission limitation for the pollutant voluntarily agreed to by the source under R18-2-306.01 or R18-2-306.03.

3. C. In order to incorporate an emissions cap in a permit the applicant must demonstrate to the Director that terms and conditions in the permit will:

   1. 1. Ensure compliance with all applicable requirements for the pollutant;

   2. 2. Contain replicable procedures to ensure that the emissions cap is enforceable as a practical matter and emissions trading conducted under it is quantifiable and enforceable as a practical matter. For the purposes of this Section, “enforceable as a practical matter” shall include the following criteria:

      1. a. The permit conditions are permanent and quantifiable;
      2. b. The permit includes a legally enforceable obligation to comply;
      3. c. The limits impose an objective and quantifiable operational or production limit or require the use of in-place air pollution control equipment;
      4. d. The permit limits have short-term averaging times consistent with the averaging times of the applicable requirement;
      5. e. The permit conditions are enforceable and are independent of any other applicable limitations; and
      6. f. The permit conditions for monitoring, record keeping, and reporting requirements are sufficient to comply with R18-2-306(A)(3), (4), and (5).
4. D. Class I sources shall log an increase or decrease in actual emissions authorized as a trade under an emissions cap unless an applicable requirement requires notice to the Director. The log shall contain the information required by the permit including, at a minimum, when the proposed emissions increase or decrease occurred, a description of the physical change or change in method of operation that produced the increase or decrease, the change in emissions from the physical change or change in method of operation, and how the increase or decrease in emissions complies with the permit. Class II sources shall comply with R18-2-317.02(B)(5).
5. E. The Director shall not include in an emissions cap or emissions trading allowed under a cap any emissions unit for which the emissions are not quantifiable or for which there are no replicable procedures or practical means to enforce emissions trades.

Historical Note

New Section adopted by final rulemaking at 5 A.A.R. 4074, effective September 22, 1999 (Supp. 99-3). Section expired under A.R.S. § 41-1056(J) at 22 A.A.R. 2982, effective September 15, 2016 (Supp. 16-3). New Section made by final rulemaking at 32 A.A.R. 55 (January 2, 2026), effective February 7, 2026 (Supp. 25-4).