US: ARB to make final decision Wednesday on pending offset investigation

The Air Resources Board (ARB) will announce Wednesday its final decision of its pending offset investigation into more than 15,000 livestock credits.

The ARB, the cap-and-trade regulator, began to review 15,070 livestock credits from T&M Bos Dairy farm in Indiana on 29 September for potential violations related to air permits for an emissions unit. Indiana did not fine the farm for the issue.

California allows for any credits to be voided if they are found to be in violation of any federal, state, or local health, safety or environmental law. Credits can be invalidated up to eight years after their issuance.

The California regulator said Tuesday that the decision would be made at noon on Wednesday. The ARB announced it had started the 30-day review in mid-January, meaning a final decision is coming slightly before that prescribed deadline.

The investigation stems from a complaint letter sent by the Indiana Department of Environmental Management (IDEM) to the farm about potential air permitting violations. The IDEM said the farm built and began operating an emissions unit that had the potential to emit more than 25tCO2e per year without first obtaining the required permits.

IDEM awarded the farm an air permit for an anaerobic manure digester and a gas-fired electrical generating facility on 9 January 2015. The minor source violation was discovered during the permit review, and a violation letter was sent to the farm on 4 March 2015.

In the letter, IDEM said it would not take legal action on the violation. The violation does not show up in the IDEM’s enforcement or compliance database.

Offset developer ClimeCo, which owns the offsets after purchasing Environmental Credit Corp, has continuously said the complaint letter should not invalidate the credits.

Because of the small size, the investigation has not had the same impact as the six-month investigation into 4.4m ozone-depleting substance credits. That investigation reduced project development, offset issuance and purchases.

The impact of the investigation has also been muted by the larger size of the market. Large fuel suppliers, who joined the market this year, are able to minimise the risk associated with offsets, and that sector is keen to use offsets as a cost-saving strategy, market participants said. dan.mcgraw@icis.com