1. (1) General Provisions.

   1. (a) All advance credits must represent actual reductions of greenhouse gas emissions against the clean fuel standards and
   2. (b) Vehicles must be registered in the State of Oregon to be eligible to earn advance credits.

2. (2) Eligibility to generate Advance Credits.

   1. (a) The following entities may apply for advance credits:

      1. (A) Public Transit Agencies;
      2. (B) Political subdivisions of the State of Oregon;
      3. (C) Tribes;
      4. (D) School Districts;
      5. (E) Companies under contract to provide services to a political subdivision of the State of Oregon or an Oregon School District if the political subdivision endorses the application, and the vehicles covered by the application are intended to provide contracted services to the public; and
      6. (F) Owners of electric charging equipment that is part of a project that receives funds from the National Electric Vehicle Infrastructure (NEVI) formula program under the Bipartisan Infrastructure Law (Paragraph 2 of Title VIII of Division J of Public Law 117-58).

   2. (b) The entities identified in subsection (a) may apply to earn advance credits for the purchase and use of the following vehicle types:

      1. (A) Zero emission medium and heavy duty vehicles; and
      2. (B) Zero emission light-duty vehicles if they are part of an organization’s plan to fully convert its light-duty vehicle fleet to zero-emission vehicles within a 15-year time period.

   3. (c) The entities identified in subsection (a) may apply to earn advance credits for the purchase, installation and use of the following fueling infrastructure types:

      1. (A) Direct current (DC) fast charging equipment; and
      2. (B) Hydrogen fueling equipment, provided that the planned source or sources of the hydrogen achieve a CI rating of 117gCO2e/MJ or below.

3. (3) Applications for Advance Credits. All of the following requirements apply to applications for advance credits:

   1. (a) Applications for advance crediting will be accepted by DEQ at least once per year from entities eligible to apply under section (2). DEQ will notify stakeholders when applications will be accepted and will provide application materials and guidance about how it will process and consider applications.

   2. (b) Applicants must supply the following information to DEQ:

      1. (A) A letter describing the activities or purchases that they want to receive advance crediting for, including the number of vehicles, charging equipment, and estimated timeframes for when those vehicles and equipment will be put into useful service;

      2. (B) A detailed estimate of the potential credit generation that will result from the zero emissions vehicles and fueling or charging equipment they will purchase, install and use, as authorized under section (2). The estimate must include:

         1. (i) In the case of zero-emission vehicles, an estimate of the number of miles each vehicle will travel within Oregon annually and the estimated amount of electricity or hydrogen needed for each vehicle;
         2. (ii) If the covered zero-emission vehicles will mainly use existing charging or fueling equipment, the ownership of that charging or fueling equipment, and how the applicant will ensure that another entity will not generate credits from that vehicle until it has exited the payback period;
         3. (iii) In the case of electric vehicles, where the vehicles will be charged, if they will be charged using grid or renewable electricity, and, if applicable, the utility-specific CI for where the charging equipment will be located;
         4. (iv) In the case of hydrogen vehicles or fueling equipment, information on the CI(s) and supplier(s) of the hydrogen. including the contract(s) with their hydrogen supplier(s). If the applicant will be supplying their own hydrogen, then it must submit its plans for the hydrogen production system or systems if it does not already have an approved fuel pathway code;

         5. (v) If the applicant is a company under contract to provide school bus services to an Oregon School District, it must also provide:

            1. (I) A contract with the Oregon School District that the school buses will be serving that shows they will be the provider of school bus services to that district for at least three years following their purchase or lease of the school buses covered by the Advance Crediting Agreement; and
            2. (II) A letter from the school district that is endorsing their application for advance crediting;

         6. (vi) If the applicant is a company under a multi-year contract with a political subdivision of the State of Oregon, it must also provide:

            1. (I) A contract with the political subdivision showing how the electric vehicles will be used and that they will be used in state for at least three years following their purchase or lease; and
            2. (II) A letter endorsing the application from the political subdivision;
         7. (vii) A proposed number of credits to be advanced for each vehicle or installed charger; and
         8. (viii) An attestation that the applicant will remain the owner or lessee of the vehicle or equipment until they have paid back the advanced credits, or that, if the vehicle or equipment is sold prior to the end of the payback period, that the applicant will buy and retire credits against the remaining unpaid amount.
         9. (c) In considering applications under this rule, DEQ will prioritize applications where the vehicles or charging equipment will reduce emissions in vulnerable communities disproportionately impacted by climate change, air toxics, and criteria air pollution.
         10. (d) DEQ may request additional documentation from an applicant prior to making a decision on an application submitted under this section. If the applicant does not provide the requested documentation, then DEQ may deny the application without prejudice.

4. (4) Approval of Advance Credits. If DEQ determines that an application for advance credits meets the requirements of sections (2) and (3) and is in the best interest of the program, then DEQ will negotiate an agreement with the applicant to issue advance credits consistent with this division, and based on all of the following considerations and requirements:

   1. (a) A clear and objective milestone for issuing advance credits that represents when the vehicles and equipment covered by the application are placed into useful service;
   2. (b) The number of credits being advanced in total or per vehicle;
   3. (c) The length of the payback period, which must be one year longer than the number of years of credits that will be advanced;
   4. (d) An attestation from the applicant that it understands that the advanced credits must represent real reductions and that if the activity covered by the agreement does not generate sufficient credits within the payback period that it is responsible for retiring a sufficient number of credits to make up the difference. The attestation must also include a statement that the applicant understands that it is responsible for making up the difference in credits if it sells or relocates covered vehicles outside of Oregon; and
   5. (e) An attestation from the applicant that it will ensure that actual credits are not generated from charging equipment serving these vehicles until the credits have been paid back.

5. (5) Issuance of Advance Credits. If DEQ approves an application and has executed an agreement with the applicant under section (4), then:

   1. (a) DEQ will issue advance credits to the applicant only after the vehicles or equipment are placed into useful service as agreed to under section (4) of this rule;
   2. (b) Credits will only be issued to the applicant named in the agreement; and
   3. (c) DEQ may advance no more than six years of credits for any single vehicle or piece of infrastructure.

6. (6) Payback Period. Advanced credits issued under this rule are subject to the following requirements:

   1. (a) The payback period for a vehicle or charging equipment will be specified in the agreement between DEQ and the applicant, except that the payback period may not exceed nine years. The payback period must be at least one year longer than the number of years of credits advanced to the applicant;
   2. (b) In the event that the number of advanced credits was not realized during the payback period, the recipient is responsible for acquiring and retiring sufficient credits to ensure the environmental integrity of the program; and
   3. (c) If a vehicle or charging equipment is sold to another entity prior to the close of the payback period, the applicant is responsible for purchasing and retiring credits against the volume of advanced credits that has not yet been covered by actual credit generation.

7. (7) Reporting Requirements. An applicant that has received advance credits under this rule must:

   1. (a) File quarterly reports to DEQ showing the amount of charging going into the individual electric vehicles covered by the agreement; and
   2. (b) May not generate additional credits for such charging until the advanced credits are paid back. DEQ and the applicant will monitor the amount of charging or fueling and credits that would have been generated to determine when an equal number of credits has been generated to the number of credits advanced.
8. (8) Overall limitation on advance credits. DEQ will process applications, negotiate and issue advance credits on a first-come, first served basis, and will stop working on any pending applications when it has issued advance credits equal to five percent of the number of deficits generated in the prior compliance year.

Statutory/Other Authority

ORS 468.020, ORS 468A.266, ORS 468A.268, ORS 468A.277 & ORS 468A.265 through 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 7-2021, adopt filed 03/26/2021, effective 03/26/2021