(a) Definitions.
(1) "Actual emissions" means actual emissions as defined in the State New Source Review rules codified at 35 Ill. Adm. Code § 203.104, as may be amended.
(2) "C.A.A." means the Clean Air Act as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 – 7671, as may be amended.
(3) "Donor" means a source that donates credits to the city pursuant to a donation agreement.
(4) "Donation agreement" means an agreement between the city and a donor, substantially in the form determined by the E.R.C. committee in the plan.
(5) "Emission reduction credits" or "credits" means the amount of actual emission reductions at a source, as determined by I.E.P.A. in a final permit or other I.E.P.A. approved document.
(6) "Emission unit" means emission unit as defined in § 39.5 of the Illinois Environmental Protection Act ("I.E.P. Act"), as may be amended.
(7) “Emission reduction credit banking and trading committee” or “E.R.C. committee” means a City interdepartmental committee that includes the chairman of the City Council Committee on Environmental Protection and Energy or the chairman’s designee, and representatives from the Department of Fleet and Facility Management, Department of Planning and Development, and Department of Law.
(8) "Emission reduction credit management plan" or "plan" means a plan developed by the E.R.C. committee to implement and administer the program.
(9) "New source review" or "N.S.R." means the State of Illinois New Source Review rules codified at 35 Ill. Adm. Code § 203, as may be amended.
(10) "P.E.R.Q.S." means that the credits are permanent, enforceable, real, quantifiable, and surplus, as defined in applicable state and federal regulations, as may be amended.
(11) "Program" means the emission reduction credit banking and trading program established by this ordinance.
(12) "Reasonable further progress" or "R.F.P." means reasonable further progress as defined in the Clean Air Act, 42 U.S.C. § 7511a, as may be amended.
(13) "Recipient" means a qualified applicant to which credits have been awarded after the applicant has satisfied all applicable criteria.
(14) "Supplemental environmental project" means an additional project developed by the recipient that will benefit the environment but that is not required by environmental laws and regulations.
(15) "Source" means a source of V.O.M.s as defined in § 39.5 of the I.E.P. Act, as may be amended.
(16) "Stationary source" means any building, structure, facility or installation that emits or may emit V.O.M.s.
(17) "V.O.M.s" means volatile organic materials as defined in 35 III. Adm. Code § 211, as may be amended.
(b) Donation of Credits.
(1) The E.R.C. banking and trading committee ("E.R.C. committee") is authorized on behalf of the city to accept credits that are generated by actions taken by a donor, as set forth in the donor's permit issued by I.E.P.A. or other I.E.P.A. approved document. These donations may be accepted without notification to the board of ethics or the comptroller's office. The E.R.C. committee may accept donations in tons or partial tons or in a quantity designated by I.E.P.A. for trading purposes.
(2) In order for the E.R.C. committee to ensure that credits donated to the city are valid and acceptable, the donor must provide satisfactory documentation (e.g., a valid state permit) that the credits are a permanent, enforceable, real, quantifiable, and surplus ("P.E.R.Q.S.") emission reduction. The donor must, to the extent practicable, quantify and identify the hazardous air pollutant emissions associated with the donated credits.
(3) The donor is required to enter into a donation agreement with the city in substantially the form established by the E.R.C. committee in the E.R.C. Management Plan (the "plan").
(c) City Credit Bank.
(1) The E.R.C. committee shall hold credits donated to the city in the City of Chicago emission reduction credit bank (the "bank") until the credits are disbursed to a recipient.
(2) Each credit will be equivalent to a specific amount of volatile organic compound ("V.O.M.") emissions, to be determined in the plan and in accordance with the Illinois clean air requirements, as may be amended. The E.R.C. committee shall assign an identification number to each credit and record the credit in the bank for future use. At the time of disbursement, the E.R.C. committee shall provide documentation to the recipient for purposes of tracking each unit of credit awarded and to provide necessary documentation to I.E.P.A.
(3) Once one or more credits are disbursed to a recipient, the city shall relinquish all control over the use of the credits and the recipient shall become entitled to sole use of the credits, except as set forth in subsections (e)(5)(B), (C) and (D).
(4) A credit held in the bank will have a limited life. If the credit is not awarded to a recipient within five years of the date of donation, the city shall donate the credit to the State of Illinois to be used for reasonable further progress ("R.F.P.").
(5) The credits in the bank shall be subject to an R.F.P. percent reduction of at least three percent per year, unless the E.R.C. committee and I.E.P.A. agree otherwise.
(6) Credits in the bank shall be discounted consistent with reductions required by state clean air rules, as may be amended, that are applicable to the emission unit(s) of the donor that generated the credit.
(d) Application Procedure.
(1) In order for an applicant to qualify as a recipient, the applicant must be:
(A) A new source locating in the city that would be required to meet the offset requirements of the C.A.A. and the N.S.R. rules;
(B) An existing source that is making a modification that would require the source to meet the offset requirements of the N.S.R. rules; or
(C) An existing source that may use credits to comply with applicable provisions of the I.E.P. Act or the pollution control board rules as may be specifically provided within such regulations, as amended from time to time.
(2) Before the applicant may qualify as a recipient, the applicant must satisfy the criteria set forth in subsection (e) and in the plan, as may be amended.
(3) An application for credits must be submitted to the E.R.C. committee for review.
(4) An application fee shall be set by the E.R.C. committee in the plan and the fee must accompany any application before it will be processed by the E.R.C. committee.
(e) Criteria For Recipients of Credits.
(1) Prior to recommending qualified recipients, the E.R.C. committee may consider the following criteria and information and any additional information specified in the plan, as may be amended.
(2) General Requirements – All applicants must provide the following information, if applicable:
(A) Name and address of proposed recipient;
(B) Illinois operating permit number, if the applicant has an existing permit;
(C) Location of proposed or existing source;
(D) Description of the business or activity;
(E) New or retained direct employment and indirect employment and/or jobs created by expansion;
(F) Composition of current and proposed work force and the likelihood of hiring local workers/community residents or Chicago residents in general;
(G) If the applicant is a new or expanding facility, the skill level of workers to be hired;
(H) Opportunity for applicant to provide additional employee training;
(I) If the applicant is a city contractor, how the applicant currently or in the future will meet applicable Women's Business Enterprise/Minority Business Enterprise ("W.B.E./M.B.E.") requirements;
(J) Commitment to the development of a supplemental environmental project ("S.E.P.") that will benefit the environment. Examples include but are not limited to: planning and implementing pollution prevention measures; adopting an employee commute options program when not required or providing other alternative means of commuting; providing recycling or using recycled materials; and conducting beautification programs, such as planting trees or community gardens or refurbishing neighborhood parks;
(K) Amount of credits requested, considering the amount available to the applicant from other means (the amount can be identified in pounds or tons per year, depending on the quantity desired);
(L) Quantity and identity of the V.O.M. emissions from the facility, including characterization of hazardous air pollutants ("H.A.P.s") to the extent practicable;
(M) If these V.O.M. emissions include hazardous air pollutants ("H.A.P.s"), the applicant must specify the means that it will use to minimize those H.A.P. emissions, as may be required by clean air requirements, as amended from time to time; and
(N) Any additional information requested by the E.R.C. committee from time to time.
(3) The following criteria shall be considered by the E.R.C. committee in addition to the information provided by the applicant pursuant to subsection (e)(2):
(A) Likelihood of the applicant to locate elsewhere if credits are not provided;
(B) The ability of other facilities within the city to undertake the activity if the applicant does not do so;
(C) Community involvement and/or utilization by the applicant of neighborhood resources;
(D) Likelihood of the applicant's facility to have a significant positive or negative impact on existing neighborhood character, traffic, parking, utilities, and infrastructure;
(E) Period of time the applicant will sustain its major employment and other effects;
(F) Past growth of business and industry and whether other public subsidies are likely to be needed to stimulate investment;
(G) Community support or opposition to the project;
(H) Local ownership;
(I) The number of credits currently in the bank;
(J) The type of V.O.M.s for which the credits will be used. Only credits characterized as H.A.P. emission reductions may be utilized to offset emissions characterized as H.A.P.s from the applicant's source; provided, however, that the emission reduction committee may recommend a variance to this restriction to serve community development and/or health and safety concerns, and set forth the basis for such variance in its submittal to the city council;
(K) Whether disbursement of the credits to the applicant complies with the C.A.A. and corresponding state and federal regulations;
(L) The applicant's compliance with the Clean Air Act and corresponding regulations;
(M) The applicant's prior investigation and implementation of pollution prevention measures and the technical and economic feasibility of implementing additional measures and the likelihood of the applicant to do so;
(N) Whether the applicant is engaged in the development of environmentally beneficial products; and
(O) Any additional information required from time to time by the E.R.C. committee.
(4) In addition to the requirements set forth in subsections (e)(2) and (3), applicants applying for credits pursuant to subsection (d)(1)(A) or (B) must:
(A) Certify compliance with all state N.S.R. laws and regulations as set forth in 35 Ill. Adm. Code § 203, as may be amended; and
(B) Demonstrate that the applicant satisfies I.E.P.A.'s criteria for use of credits and the potential for acceptance by I.E.P.A. of the credits as an N.S.R. offset.
(5) In addition to the requirements set forth in subsections (e)(2) and (3), applicants applying for credits pursuant to subsection (d)(1)(C), must do the following:
(A) Satisfy the applicable requirements of the I.E.P. Act or pollution control board rulemakings as may be specifically provided for within such requirements, as amended from time to time;
(B) Agree to reduce emissions in accordance with the applicable clean air requirements within a specified time period in which the credits are valid. The credits shall be valid for a period of time as determined in the plan and in accordance with the I.E.P. Act and applicable regulations, as may be amended. Once the recipient comes into compliance with the applicable clean air requirements, the credits shall revert to the city;
(C) Agree that if the facility fails to achieve compliance pursuant to subsection (5)(B) in the time allotted, the credits shall revert to the city;
(D) Agree that if the facility shuts down within the time allotted, the credits shall revert to the city;
(E) Agree that it is the recipient's duty to discount the credits received, if such discounting is required by clean air requirements;
(F) Demonstrate the inability to technically or economically achieve compliance by other means or to obtain credits from other sources at a reasonable cost;
(G) Demonstrate that the applicant satisfies the I.E.P.A.'s criteria for use of credits;
(H) Demonstrate the likelihood of acceptance by I.E.P.A. of the use of the credits as a compliance strategy;
(I) Specify the amount of time before the applicant will be able to achieve compliance through actual emission reductions rather than the use of credits; and
(J) The application must specifically include, if applicable:
(i) A statement of the relief sought, including specific identification of the particular provisions of the laws and regulations under which the credits will be used as a compliance measure;
(ii) A description of the process or activity to which the credits will be applied and the identification of the emission units;
(iii) A statement of the reasons the applicant believes that compliance with the particular provisions of the regulations would impose an arbitrary or unreasonable economic hardship or is technically infeasible;
(iv) A statement as to why compliance with the laws and regulations cannot be achieved without credits;
(v) Past efforts to achieve compliance including costs incurred, results achieved, and permit status;
(vi) A detailed compliance plan describing the proposed methods to be investigated to achieve full compliance with the law and regulations without the use of credits; and
(vii) A statement of the measures to be undertaken during the period of time the credits are in use to minimize emissions.
(f) Disbursement of Credits.
(1) The E.R.C. committee shall determine whether the applicant has provided adequate information to satisfy all applicable criteria set forth in subsections (d) and (e), and based on this determination recommend to the city council that the credits be awarded to the applicant. City council approval shall be required before credits are awarded.
(2) The E.R.C. committee shall recommend whether the credits should be donated or sold, as determined on a case-by-case basis. If the credits are sold the price shall be established by the E.R.C. committee in the plan.
(3) After approval of the applicant by the city council and the E.R.C. committee, the E.R.C. committee shall notify the applicant that the applicant qualifies as a recipient and the number of credits to be awarded.
(4) The E.R.C. committee shall issue a certificate to the recipient indicating the number of credits awarded, and the length of time the credits are eligible for use, if applicable. The certificate shall contain the identification numbers for all of the credits that shall be disbursed to the recipient.
(5) It is the duty of the recipient to obtain I.E.P.A. acceptance of the use of the credits. After approval of the award by the city and I.E.P.A. acceptance, the E.R.C. committee shall disburse the credits and transfer to the recipient shall be complete.
(6) If I.E.P.A. denies the use of the credits or the recipient fails to use them in a specified time or manner, the credits are considered not awarded and revert back to the city.
(7) Each recipient shall be required to enter into an agreement with the E.R.C. committee, acting on behalf of the city, in a form approved by the law department, agreeing to comply with the requirements of this program and such other terms and conditions required by the law as reasonably necessary to protect the city.
(8) The E.R.C. committee shall give priority consideration to applicants that have evaluated opportunities to reduce or prevent pollution at the source through changes in production processes, operations or raw materials use. To assist in the determination of pollution prevention opportunities, the E.R.C. committee shall ensure that applicants have access to the technical services of the Illinois Hazardous Waste Research and Information Center.
(g) Program Administration.
(1) The City hereby establishes an E.R.C. committee to administer the program. The duties of the E.R.C. committee include but are not limited to:
(A) Developing a plan, reviewing that plan at least annually, and amending the plan as necessary;
(B) Reviewing applications from potential recipients and recommending approval of these applications; and
(C) Developing procedures from time to time for the implementation of the program.
(2) The E.R.C. committee has the authority to act on behalf of the city to administer the program, in accordance with federal and state law, as may be amended.
(3) The plan shall specify, at a minimum:
(A) The form of the donation agreement;
(B) Any additional information, other than specified in subsections (d) and (e), that the city may need to consider before awarding credits to recipients;
(C) The proportion of the credits donated to the city that shall be used for N.S.R., compliance purposes, and R.F.P.;
(D) The application fee;
(E) The factors to consider in establishing a fair price for the credits, if they are sold. The factors may include consideration of the current market value of the credits, ability of sources to pay, establishment of a below-market value price, and the comparative benefit and cost of the applicant's proposed S.E.P.; and
(F) A process that provides residents who may be affected by a proposed facility with reasonable notice and opportunity to provide comments to the E.R.C. committee at least 30 days before the committee makes a recommendation to the City Council that credits be awarded to a qualified applicant.
(4) This program does not exclude the consideration of credits generated from area or mobile sources, as may be determined by the E.R.C. committee in the plan.
(5) Copies of the plan shall be provided by the Department of Fleet and Facility Management to the I.E.P.A. and interested parties upon request.
(Added Coun. J. 11-2-94, p. 59095; Amend Coun. J. 11-19-08, p. 47220, Art. VIII, § 1; Amend Coun. J. 11-17-10, p. 106597, Art. IX, § 8; Amend Coun. J. 11-16-11, p. 13798, Art. III, § 2; Amend Coun. J. 11-26-13, p. 67481, Art. I, § 22; Amend Coun. J. 11-26-19, p. 11390, Art. III, § 21; Amend Coun. J. 1-27-21, p. 26741, Art. II, § 15; Amend Coun. J. 11-15-23, p. 6542, Art. I, § 21)