1. (1) Offset project types. The following type of offset project is eligible for the award of CO₂ offset allowances:

   1. (i) avoided methane emissions from agricultural manure management operations.

2. (2) Offset project locations. To qualify for the award of CO₂ allowances under this Subpart, eligible offset projects may be located in any of the following locations:

   1. (i) in New York State;
   2. (ii) projects located (in whole or in part) in one or more participating states are not eligible for CO₂ offset allowances under this Subpart unless more of the CO₂ equivalent emissions reduction or carbon sequestration due to the offset project is projected to occur in New York than in any other participating state; and

   3. (iii) in any state or other United States jurisdiction in which a cooperating regulatory agency has entered into a memorandum of understanding with the department and the appropriate regulatory agencies of all participating states to carry out certain obligations relative to CO₂ emissions offset projects in that state or U.S. jurisdiction, including but not limited to the obligation to perform audits of offset project sites, and report violations of this Subpart.

      (b) Project sponsor.

      Any person may act as the sponsor of an eligible CO₂ emissions offset project, provided that person meets the requirements at section 242-10.4 of this Subpart.

      (c) General additionality requirements.

      Except as provided with respect to specific offset project standards in section 242-10.5 of this Subpart, the following general requirements shall apply.

3. (1) CO₂ offset allowances shall not be awarded to an offset project that is required pursuant to any local, State or Federal law, regulation, or administrative or judicial order. If an offset project receives a consistency determination under section 242-10.4 of this Subpart and is later required by local, State or Federal law, regulation, or administrative or judicial order, then the offset project shall remain eligible for the award of CO₂ offset allowances until the end of its current allocation period but its eligibility shall not be extended for an additional allocation period.
4. (2) CO₂ offset allowances shall not be awarded to an offset project that includes an electric generation component, unless the project sponsor transfers legal rights to any and all attribute credits (other than the CO₂ offset allowances awarded under section 242-10.7 of this Subpart) generated from the operation of the offset project that may be used for compliance with a renewable portfolio standard or other regulatory requirement, to the department or its agent.
5. (3) CO₂ offset allowances shall not be awarded to an offset project that receives funding or other incentives from any system benefit fund, or funds or other incentives provided through the energy efficiency and clean energy technology account allocation required pursuant to section 242-5.3(a) of this Part.

6. (4) CO₂ offset allowances shall not be awarded to an offset project that is awarded credits or allowances under any other mandatory or voluntary greenhouse gas program.

   (d) Maximum allocation periods for CO₂ emissions offset projects.

   Maximum allocation periods. Except as provided in paragraph (2) of this subdivision, the department may award CO₂ offset allowances under section 242-10.7 of this Subpart for an initial 10-year allocation period. At the end of the initial 10-year allocation period, the department may award CO₂ offset allowances for a second 10-year allocation period, provided the offset sponsor has submitted a consistency application pursuant to section 242-10.4 of this Subpart prior to the expiration of the initial allocation period, and the department has issued a consistency determination pursuant to section 242-10.4(e)(2) of this Subpart.

   (e) Offset project audit.

   Project sponsors shall provide, in writing, an access agreement to the department granting the department or its agent access to the physical location of the offset project to inspect for compliance with this Subpart. For offset projects located in any state or other U.S. jurisdiction that is not a participating state, project sponsors shall also provide, in writing, an access agreement to the department granting the cooperating department with access to the physical location of the offset project to inspect for compliance with this Subpart.

   (f) Ineligibility due to noncompliance.

   If at any time the department determines that a project sponsor has not complied with the requirements of this Subpart, then the department may revoke and retire any and all CO₂ offset allowances in the project sponsor's account. If at any time the department determines that an offset project does not comply with the requirements of this Subpart, then the department may revoke any approvals it has issued relative to that offset project.

(a) Eligible CO₂ emissions offset projects.

To qualify for the award CO₂ offset allowances offset projects shall satisfy all the applicable requirements of this Subpart.