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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
emissions; reduction credits; counties
Purpose
Allows a county to claim concurrent jurisdiction over components of a portable source and mobile sources within the county jurisdiction for the sole purpose of issuing, revising or enforcing a permit for emission reduction credits (ERCs). Allows the Director of the Arizona Department of Environmental Quality (ADEQ) to require additional reductions in emissions from specified sources if the applicant voluntarily applied and agreed at the time of issuance for a permit relating to alternative emission limitations.
Background
The federal Clean Air Act (CAA) establishes various air control measures, including a comprehensive permit system for mobile sources of air pollution and for sources of 187 hazardous air pollutants. The CAA assigns primary responsibility to the states to assure compliance with minimum national air quality standards established by the U.S. Environmental Protection Agency (EPA). Areas not meeting the standards, referred to as nonattainment areas must implement specified air pollution control measures. The Arizona Legislature places primary responsibility for air pollution control and abatement in the ADEQ and the county air pollution hearing boards (U.S. Congress; A.R.S. § 49-401).
If an existing source submits an application for statutorily prescribed air permits demonstrating a reduction of 90 percent or more of federally listed hazardous air pollutants or 95 percent in the case of federally listed hazardous air pollutant particulates, the Director of ADEQ must issue a permit or permit revision allowing the source to meet an alternative emission limitation reflecting such reduction in lieu of an emission limitation required under the CAA. The alternative emission limitation applies for a period of six years from the compliance date (A.R.S. § 49-426.03).
ADEQ administers a voluntary Arizona Emissions Bank (Bank) for registering the deposit, transfer and use of ERCs. Arizona, any political subdivision of Arizona and any person that reduces qualifying emissions may apply to ADEQ to certify ERCs to be deposited into the Bank. In a nonattainment area, a business that voluntarily reduces emissions of the pollutant or its precursors can deposit those reductions in the Bank as ERCs. That business can then sell the ERCs to a business that needs them to satisfy the emission offset requirements for nonattainment areas.
ERC means a reduction in qualifying emissions that has been certified for potential use as an offsetting emission reduction in a permit issued under the statutes relating to air quality and section 173 of the CAA (ADEQ; A.R.S. § 49-410).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows a county, after receiving a voluntary request from an applicant and for the sole purpose of issuing, revising or enforcing a permit for ERCs, to claim concurrent jurisdiction over:
a) components of a portable source within the county's jurisdiction; and
b) mobile sources within the county's jurisdiction.
2. Deems that a permit or permit revision issued by the county certifying ERCs is binding on the applicant.
3. Specifies that, if an applicant voluntarily submits a permit application, the statutory requirements relating to alternative emission limitation and the powers and duties of the Director of ADEQ do not preclude the Director or the control officer from issuing a permit or permit revision that requires reductions in emissions from motor vehicles, agricultural vehicles or equipment, mobile sources or nonroad engines in a permit that the applicant agreed to at the time of issuance.
4. Requires permits and permit revisions that an applicant has voluntarily applied for and are issued by the Director of ADEQ or control officer for the sole purposes of certifying ERCs to:
a) remain subject to all applicable rules, conditions and enforcement provisions of the permit program;
b) allow the permitting authority to maintain the discretion to issue the permit; and
c) be for a term of not more than 20 years.
5. Defines control officer and nonroad engines.
6. Makes technical and conforming changes.
7. Becomes effective date on the general effective date.
House Action
NREW 2/3/26 DPA 10-0-0-0
3rd Read 2/25/26 54-0-6
Prepared by Senate Research
March 13, 2026
SB/SF/hk