South Coast Air Quality Management District

Adopt Proposed Changes to RECLAIM

SYNOPSIS: 

At the January 19, 2001 Board Meeting, the Board directed staff to initiate rule development to help stabilize RTC prices and address California energy issues. Key proposed changes for power producing facilities include removing the influence of power producing facilities from the market and requiring installation of controls. For other RECLAIM facilities, compliance plans are proposed for larger facilities and forecast reports are proposed for medium sized facilities. Other changes include development of temporary credit assistance programs to offset excess emissions from utilities and assist certain small or new RECLAIM facilities. Information requirements for trade registration and revised procedures for late or missing electronic reports will also be proposed.

COMMITTEE: 

Stationary Source, February 23, 2001, March 23, 2001, and April 27, 2001 Reviewed.

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Certifying the attached Final Environmental Assessment for Proposed New and Amended rules, Regulation XX – RECLAIM; Proposed Rule (PR) 1631 – Pilot Credit Generation Program for Marine Vessels; PR 1632 – Pilot Credit Generation Program for Hotelling Operations; PR 1633 – Pilot Credit Generation Program for Truck/Trailer Refrigeration Units; and PR 2507 – Pilot Credit Generation Program for Agricultural Pumps.
   
   
2. Amending Rules 2000, 2001, 2002, 2004, 2006, 2007, 2010, 2011, 2012, and 2015.
   
   
3. Adopting Proposed RECLAIM Rule 2009 – Compliance Plans for Power Producing Facilities; Rule 2009.1 – Compliance Plans and Forecast Reports for Non-Power Producing Facilities; and Rule 2020 – RECLAIM Reserve.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Regional Clean Air Incentives Market (RECLAIM) program was adopted in October 1993. The program sets an emissions cap and declining balance for many of the largest NOx and SOx facilities in the Basin. The program was designed to provide additional incentives for industry to reduce emissions and advance pollution control technologies. In addition, the program was designed to give facilities added flexibility in meeting emission reduction requirements. Facilities within the RECLAIM program have the option of complying with their allocation allowance by either installing control equipment or purchasing RECLAIM Trading Credits (RTCs) from other facilities.

Each year, an annual report on RECLAIM has been presented to the Governing Board. These reports highlighted that there would be a crossover point in approximately 1998 or 1999 where aggregate actual emissions would approach total allocations unless facilities installed control equipment.

Between compliance year 1994 and compliance year 1999, NOx emissions at RECLAIM facilities, in aggregate, were below allocations, and the price of NOx RTCs remained relatively stable. However, beginning June 2000, RECLAIM program participants experienced a sharp and sudden increase in NOx RTC prices for both 1999 and 2000 compliance years. This was due mainly to an increased demand for power generation and delayed installation of controls by power plants. The electric power industry purchased a large quantity of RTCs and depleted the available RTCs. This situation was compounded because few RECLAIM facilities added control equipment.

The Governing Board, at its October 2000 meeting, directed staff to form an Advisory Committee to help examine issues affecting the price of NOx RTCs and recommend actions that could be taken to stabilize RTC prices. This effort resulted in staff’s development of a White Paper, which included a series of recommendations developed to help address the energy situation and stabilize RTC prices. At the January 19, 2001 Governing Board meeting, the Governing Board directed staff to proceed with rule development based on the recommendations in the White Paper.

Public Process

Through the rule-making process, AQMD staff has worked with the RECLAIM Working Group which includes power producers, other RECLAIM facilities, environmental groups, EPA, ARB, CEC, and other interested parties. Many of these individuals and organizations participated in the Advisory Committee process that assisted staff in development of the White Paper. Since the January 11, 2001 Board meeting, there have been RECLAIM Working Group meetings every 1-2 weeks, a public workshop on February 28, 2001, and a pre-hearing Board meeting on March 16, 2001. The pre-hearing included an update on rule development efforts, including a description of the proposals and identification of key issues. The Board also heard testimony from many individuals and organizations regarding the draft proposals. AQMD staff has participated in weekly conference calls with EPA and ARB, consulted with California Independent System Operator (Cal-ISO) and the California Energy Commission (CEC) on electricity issues, and has met with power plants, refineries, and other parties.

An advisory letter was mailed to RECLAIM Facility Permit holders to provide information on available, cost-effective control options. AQMD staff also conducted 4 technology meetings (April 3-5, 2001, one meeting in each county) to help disseminate information on available control options.

Proposal

Staff has developed proposed amendments to existing RECLAIM rules and three proposed new rules to implement improvements to the RECLAIM program. The proposed amendments will work together to lower and stabilize RTC prices by increasing supply, reducing demand, and increasing the exchange of RTC trading information. Amendments are designed to expedite installation of the emissions control equipment at power plants, while reducing the impacts of the California electricity crisis on the RECLAIM market and facilitating the development of reliable statewide electricity supply. The rule amendments and the new rules include the following key elements:

• For existing large power plants: bifurcation from the rest of the RECLAIM market, requiring installation of Best Available Retrofit Control Technology (BARCT) through compliance plans, and a temporary mitigation fee program for emissions in excess of allocations, which will be used by the District to obtain emission reductions;
• Initiation of a temporary, limited, pilot RECLAIM Air Quality Investment Program (AQIP) for new power plants and structural buyers, allowing access to mobile and area source credits;
• Requiring large RECLAIM facilities to file a compliance plan to demonstrate compliance with NOx RTCs held by those facilities for Compliance Years 2001 through 2005;
• Improving registration and timely reporting of RTC trades; and
• Modifying procedures for late electronic reports.

In addition to modifying several existing rules, three new rules are being proposed including: PR 2009 – Compliance Plans for Power Producing Facilities; PR 2009.1 – Compliance Plans and Forecast Reports for Non-Power Producing Facilities; and PR 2020 – RECLAIM Reserve which includes a Mitigation Fee Program for power producing facilities, a RECLAIM Air Quality Investment Program (AQIP) for certain facilities, and a mechanism to use credits from the State’s Emission Reduction Credit Bank for new peaking generation units able to begin operation by September 1, 2001.

The main elements of the proposed amendments to Regulation XX and the new rules are summarized briefly below:

        Power Producing Facilities
The proposed rule changes will separate power producing facilities from the rest of the RECLAIM market while energy supply issues are being addressed. Existing power plants will not rejoin the full RECLAIM program unless the Governing Board, in a public hearing prior to July 2003, determines that their re-entry will not result in any negative impact on the remainder of the RECLAIM universe or California’s energy security needs. The proposed rules would require a compliance plan for power producing facilities with capacity > 50 megawatts and require installation of best available retrofit control technology at the earliest feasible date, but no later than 2003 for boilers or 2004 for turbines. In addition to the initial compliance plans, power producing facilities are required to update information annually for 2001 through 2005 Compliance Years. Annual update reports provide AQMD with the necessary information to access the impacts of emissions from these facilities on the RECLAIM program and anticipate future demands of credits from the Mitigation Fee Program. The proposed rules also include environmental dispatch, which requires prioritization of the use of cleaner emitting equipment first.

Trading would also be limited to isolate the rest of the market from credit demands from power producing facilities. RTC purchases after January 11, 2001 could only be used to reconcile facility emissions if the RTCs are from facilities under common ownership or have been generated from approved mobile source credit generation programs. Power Producing Facilities could sell credits back to the District for a price not to exceed $7.50 per pound. Any emissions in excess of their allocation can be offset by the payment of a mitigation fee of $7.50 per pound ($15,000 per ton) to the District, which will in turn invest the money in NOx emission reduction projects to mitigate the air pollution effects.

        Compliance Plans and Forecast Reports for other Facilities
For facilities other than large power producing facilities, compliance plans are proposed for facilities with 1999 or any subsequent year emissions greater than or equal to 50 tons per year (tpy). These compliance plans provide flexibility by including options for installing controls or purchasing credits. The plans are being designed to allow as much flexibility as possible, while requiring timely, enforceable commitments to be made to ensure compliance. Facilities may provide several options in their original plan submittal and can amend their compliance plans at any time. The Board resolution directs staff to expedite review and approval of compliance plans and plan modifications (60 days for plans and 30 days for modification).

Facilities between 25 and 50 tpy emissions in 1999 will be required to submit informational forecast reports and update forecasts annually. Compliance plans and forecast reports from the large and medium facilities will help ensure adequate advance planning by facilities to meet the overall RECLAIM program emission targets.

        Mitigation Fee Program
A temporary mitigation fee program through compliance year 2004 is proposed for power producing facilities that exceed their RTC holdings. The facility would pay $7.50 per pound of NOx to the District, which uses the funds to achieve emission reductions from a variety of mobile source or other credit generation avenues. The current rules require that excess emissions be deducted from the subsequent year allocation to ensure that the environment is not impacted by additional emissions. In this proposed amendment, staff recommends the deduction of excess emissions from the second year to account for the lead time necessary for installation of control equipment at the power producing facilities. When emission reductions are secured for the Reserve by the District, the deduction would be credited back to the facility. In addition, if the mitigation fee program achieves emission reductions equal to at least 75 percent of those requested, in aggregate, by the second compliance year, an additional year can be granted to generate reductions, thereby minimizing the need to further deduct future year allocations.

        RECLAIM Air Quality Investment Program (AQIP)
Another short-term credit assistance program, the RECLAIM AQIP, is being proposed for use by certain facilities through the 2004 compliance year. This program would be available for structural buyers, such as new facilities and small facilities with installed controls at a minimum of BARCT. The RECLAIM AQIP would provide structural buyers additional compliance options to reduce the overall demand for RTCs from the RECLAIM trading market. Facilities that request participation would pay $7.50 per pound of NOx to use the RECLAIM AQIP, if reductions are available. No deduction from allocations is proposed for this program since emission reductions must be available prior to use. The District is pre-funding the AQIP program with emission reduction credits. The Governing Board has allocated $2 million from the AES Settlement Fund to use to obtain emission reductions from marine vessels.

        Other Rule Changes
To help improve trade information, the proposed rules would require identification of both the seller and buyer of RTCs after the completion of a trade. The rule includes registration requirements for pooled trading and contractual agreements for future transfer of RTCs. In addition, timely filing of trades is proposed to help facilitate market information.

Staff has also proposed that more time be afforded for submittal of late electronic reports, provided the original data is stored at the facility. The proposed amendments include a provision that missing data requirements would not apply if the problem is due to the receiving end of the transmission.

Key Issues

There were many issues involved in development of these RECLAIM amendments. Many issues have been resolved, including: federal enforceability of compliance plans in Title V permits, flexibility for compliance plans, missing data issues, and dissemination of market information. The AQMD staff has also committed to study the development of a centralized trading market. Attachment A highlights the key issues and staff’s recommendations. The Board resolution also includes several directions to staff regarding concerns expressed by various parties. Each of the key issues is also described briefly below.

        Power Producing Facilities
Key issues for power producing facilities include concerns about deductions from future allocations should the AQMD fail to produce adequate reductions for the mitigation fee program and would prefer less trading restrictions. Staff is committed to work diligently in funding reduction projects and is working with ARB and EPA on several mobile source credit rules that can be quickly approved by these agencies to increase credit generation opportunities. Staff believes that deductions from future allocations are a necessary element to ensure integrity for the environment, as a backstop method to ensure that exceedances are fully offset even if the Mitigation Fee Program does not obtain sufficient reductions.

        Compliance Plans
The business community has expressed concerns about proposed requirements for compliance plans. Staff has made significant revisions to the initial proposed rule amendments that were developed to implement recommendations in the White Paper. The White Paper recommendation was to require plans and addition of controls for all facilities over 10 tpy emissions in 1999. The proposed amendments would require plans for facilities over 50 tpy and afford the option of adding controls or securing credits.

Another issue related to compliance plans is that the facilities do not want an enforceable commitment which they believe would be difficult to change and cumbersome for Title V facilities. Staff has since designed the compliance plan requirements to be only locally enforceable, not part of Title V or SIP requirements. EPA has concurred with this approach. There are also concerns about the confidential information contained in plan submittals, which may offer advantages to competitors if that information was disclosed. Confidential information can be maintained in separate files to address this concern. Others would like forecast reports for all facilities on a quarterly basis, but not to have any elements that would be enforceable, even by AQMD. Staff does not object to more frequent updates to the compliance plans, if necessary. However, a non-enforceable forecast report does not ensure timely commitments toward meeting emission requirements. Compliance plans may be structured to allow multiple options for compliance, and plans may be amended to adapt to changed circumstances. The Board resolution directs staff to expedite review and approval of compliance plans and plan modifications (60 days for plans and 30 days for modifications).

        RECLAIM AQIP
Several facilities have requested that access to the RECLAIM AQIP be expanded to allow more facilities to use this program. Others have expressed the concern that the RECLAIM AQIP may discourage credit generation from the private market. Staff is trying to balance the need for providing market stability and direct AQMD assistance with the function of a private market. The Board resolution directs staff to evaluate the threshold for access to AQIP during annual reports to the Board on RECLAIM.

        Other Issues
Other issues include the use of mobile source credits by RECLAIM facilities, the function and structure of the market, and how to make better market information available. Some environmental representatives remain unchanged in their position that the use of mobile source credits should not be included in RECLAIM. Staff has worked with these groups to help address the issues that they raised. Mobile and area source credit programs can help stabilize RTC prices and provide credits for temporary credit assistance programs or for facilities that need RTCs to balance emissions while controls are being planned and installed. In addition, state law directs AQMD to allow for mobile source trading in RECLAIM (see Health & Safety Code §40440.1), and mobile source trading was included in the original design of RECLAIM as reflected in Rule 2008. Staff has committed to evaluating a central market, and how to streamline trade registration. AQMD has also recently added a spreadsheet on the AQMD website to list trades within days of their receipt by AQMD.

California Environmental Quality Act (CEQA)

Pursuant to the California Environmental Quality Act (CEQA) and the AQMD’s Certified Regulatory Program (Rule 110), staff has prepared appropriate CEQA documentation for the proposed project, including a Draft Environmental Assessment (EA). The Draft EA is a joint assessment of the proposed RECLAIM amendments and Proposed Rules 1631, 1632, 1633, and 2507. The Draft EA concluded that the proposed project may result in significant adverse impacts relative to air quality and the increased use of hazardous materials (i.e., ammonia for NOx control). Comments on the Draft EA and staff’s responses are included in the Final EA, which is included as part of this Adoption Hearing package.

Socioeconomic Assessment

Staff has also prepared a socioeconomic assessment (see Appendix C) to identify overall RECLAIM market impacts and potential cost impacts to facilities affected by the proposed amendments. Several noted economists were retained to evaluate the proposed changes. They provided input on the draft socioeconomic assessment. Impacts would result from the installation of control equipment, or access to a RECLAIM Air Quality Investment Program or Mitigation Fee Program. The economic impacts of the amendments are expected to be less than impacts if the program is not amended.

Recommendations

Staff recommends that proposed changes to Regulation XX – RECLAIM be adopted. Staff continues to support market-based programs and believes that market-based programs are essential to achieving clean air objectives. The proposed changes will help stabilize RECLAIM credit prices and enable the overall program to function in compliance. The proposed rule amendments will not affect the findings in Health & Safety Code Section 39616, including equivalent emission reductions at lower or equal cost. In the unforseen event that the RECLAIM program needs further enhancement, staff recommends that development commence on backstop measures. Compliance plans and requiring BARCT at power plants should facilitate emission reduction projects at facilities with the majority of the emissions in RECLAIM. In addition, staff will expedite review of compliance plans and report to the Governing Board in November on projected emission reductions, schedule and impact on overall program compliance. At that time, the Board can consider whether any other actions are necessary to further enhance RECLAIM.

Attachment (2,354 KB)

Summary of Proposal
Key Issues and Responses
Rule Development Process
Key Contact List
Resolution
Proposed Rule Language
Staff Report (including Socioeconomic Assessment)
Final Environmental Assessment

ATTACHMENT C

RULE DEVELOPMENT PROCESS

Proposed Amended Regulation XX – Regional Clean Air Incentives Market (RECLAIM)

ATTACHMENT D

KEY CONTACTS LIST

Over 100 industry representatives attended one or more of the working group meetings and public workshop over the last seven months. ARB and EPA staff also participated extensively in this effort. Other agencies that were involved include the California Energy Commission, California Independent System Operators, and State of California Trade and Commerce Agency. The lists below include those Industry Organizations and Companies that participated in working group meetings on a regular basis:
 

                    A Resolution of the South Coast Air Quality Management District Governing Board (Governing Board) certifying the Final Environmental Assessment for Proposed New and Amended rules, Regulation XX – RECLAIM; Proposed Rule (PR) 1631 – Pilot Credit Generation Program for Marine Vessels; PR 1632 – Pilot Credit Generation Program for Hotelling Operations; PR 1633 – Pilot Credit Generation Program for Truck/Trailer Refrigeration Units; and PR 2507 – Pilot Credit Generation Program for Agricultural Pumps.

                    A Resolution of the Governing Board amending Rules 2000 – General, 2001 – Applicability, 2002 – Allocation for Oxides of Nitrogen (NOx) and Oxides of Sulfur (SOx), 2004 – Requirements, 2006 – Permits, 2007 – Trading Requirements, 2010 – Administrative Remedies and Sanctions, 2011 – Requirements for Monitoring, Reporting and Recordkeeping for Oxides of Sulfur (SOx) Emissions, 2012 - Requirements for Monitoring, Reporting and Recordkeeping for Oxides Nitrogen (NOx) Emissions, and 2015 – Backstop Provisions and adopting Rules 2009 – Compliance Plans for Power Producing Facilities, 2009.1 – Compliance Plans and Forecast Reports for Non-Power Producing Facilities, and 2020 – RECLAIM Reserve.

                    WHEREAS, the AQMD Governing Board recognizes the need to have adequate power supply for the region and the need to act quickly to address energy related issues, to help relieve the energy emergency declared by the Governor on January 17, 2001, and to implement the Governor's Executive Orders issued February 8, 2001, while balancing the need for environmental protection and reliable power supply; and

                    WHEREAS, the AQMD Governing Board has determined with certainty that proposed amended rules and proposed new rules, Regulation XX – RECLAIM, are a "project" pursuant to the terms of the California Environmental Quality Act; and

                    WHEREAS, the AQMD has had its regulatory program certified pursuant to Public Resources Code § 21080.5 and has conducted CEQA review pursuant to such program (AQMD Rule 110); and

                    WHEREAS, AQMD staff has prepared a Draft Environmental Assessment (EA) pursuant to its certified regulatory program and state CEQA Guidelines Section 15252, setting forth the potential environmental consequences of proposed amended rules and proposed new rules, Regulation XX – RECLAIM; and

                    WHEREAS, the Draft EA was circulated for public review, comments received were responded to, and a Final EA has been prepared; and

                    WHEREAS, the adequacy of the Final EA, including responses to comments, must be determined by the AQMD Governing Board prior to its certification; and

                    WHEREAS, it is necessary that the AQMD prepare a Statement of Findings and Statement of Overriding Considerations pursuant to state CEQA Guidelines Section 15091 and 15093, respectively, regarding adverse environmental impacts that cannot be mitigated to insignificance; and a Mitigation Monitoring Plan pursuant to Public Resources Code Section 21081.6, regarding the mitigation included in the Final Subsequent EA; and

                    WHEREAS, the AQMD Governing Board voting on proposed amended rules and proposed new rules, Regulation XX – RECLAIM, has reviewed, considered, and hereby certifies the Final Subsequent EA and approves the Statement of Findings, the Statement of Overriding Considerations, and the Mitigation Monitoring Plan of these proposed rules; and

                    WHEREAS, the Governing Board has determined that the socioeconomic impact assessment of the proposed amended rules and proposed new rules, Regulation XX – RECLAIM, is consistent with the provisions of Health and Safety Code Sections 40440.8, 40728.5 and 40920.6; and

                    WHEREAS, the Governing Board has reviewed and considered the staff's findings related to cost and employment impacts of the proposed amended rules and proposed new rules, Regulation XX – RECLAIM as set forth in the socioeconomic impact assessment, and hereby finds and determines that cost and employment impacts are as set forth in that assessment; and

                    WHEREAS, the Governing Board has actively considered the socioeconomic impact analysis and has made a good faith effort to minimize any socioeconomic impacts; and

                    WHEREAS, the Governing Board obtains its authority to amend/adopt the proposed rules, Regulation XX – RECLAIM, pursuant to California Health and Safety Code Sections 39002, 39616, 39620, 40000, 40001, 40440, 40440.1, and 40702; and

                    WHEREAS, the Governing Board has determined that a need exists to amend Regulation XX – RECLAIM to address the current energy emergency and to lower and stabilize RTC prices by increasing supply, reducing demand, and increasing RTC trading information availability and accuracy while helping address California's energy emergency; and

                    WHEREAS, the Governing Board has determined that Regulation XX – RECLAIM should be adopted for the reasons contained in the staff report.

                    WHEREAS, the AQMD specifies the manager of Regulation XX - RECLAIM as the custodian of the documents or other materials which constitute the record of proceedings upon which the adoption of this proposed amendment is based, which are located at the South Coast Air Quality Management District, 21865 E. Copley Drive, Diamond, California; and

                    WHEREAS, the Governing Board has determined that proposed amended rules and proposed new rules, Regulation XX – RECLAIM are written or displayed so that their meaning can be easily understood by the persons directly affected by them; and

                    WHEREAS, the Governing Board has determined that proposed amended rules and proposed new rules, Regulation XX – RECLAIM are in harmony with and not in conflict with or contradictory to, existing statutes, court decisions or state or federal regulations; and

                    WHEREAS, the Governing Board has determined that proposed amended rules and proposed new rules, Regulation XX – RECLAIM will not impose the same requirements as any existing state or federal regulations. The amendments and the proposed rules are necessary and proper to execute the powers and duties granted to, and imposed upon, AQMD; and

                    WHEREAS, the Governing Board has determined that by adopting the proposed amended rules and proposed new rules, Regulation XX – RECLAIM the AQMD Governing Board will be implementing, interpreting and making specific the provisions of the California Health and Safety Code Sections 39002, 39616, 40001, 40440 (a), 40440.1, 40702, and 40725 through 40728.5; and Title 42 U. S. C. Sections 7410, 7502, 7503, 7511a; and

                    WHEREAS, the Governing Board has determined that the California Health and Safety Code 39616 findings are not altered by these amendments and the Governing Board incorporates, by reference, the findings in the staff report; and

                    WHEREAS, a public hearing has been properly noticed in accordance with the provisions of Health and Safety Code Section 40725; and

                    WHEREAS, the Governing Board has held a public hearing in accordance with all provisions of law;

                    WHEREAS, the Governing Board has determined a need exists for an expedited review and approval of compliance plans submitted by facilities as required by proposed Rules 2009 and 2009.1; and

                    WHEREAS, AQMD staff believes the proposed amended rules and proposed new rules, Regulation XX – RECLAIM will stabilize the RECLAIM RTC market, however, a possibility exists that additional measures may need to be taken to ensure adequate emission reductions in future years to decrease RTC demand and ensure compliance with RECLAIM’s emission reduction requirements;

                    WHEREAS, the Governing Board finds and determines, taking into consideration the factors in Section (d)(4)(D) of the Governing Board Procedures, that the modifications adopted which have been made to Regulation XX – RECLAIM since notice of public hearing was published do not significantly change the meaning of the proposed new and amended rules within the meaning of Health and Safety Code Section 40726 and would not constitute new information pursuant to CEQA;

                    NOW, THEREFORE BE IT RESOLVED that the Governing Board hereby certifies, pursuant to the authority granted by law, the Final EA for Proposed New and Amended rules, Regulation XX – RECLAIM; Proposed Rule (PR) 1631 – Pilot Credit Generation Program for Marine Vessels; PR 1632 – Pilot Credit Generation Program for Hotelling Operations; PR 1633 – Pilot Credit Generation Program for Truck/Trailer Refrigeration Units; and PR 2507 – Pilot Credit Generation Program for Agricultural Pumps; and

                    BE IT FURTHER RESOLVED, that the AQMD Governing Board hereby approves the Statement of Findings and Statement of Overriding Considerations pursuant to state CEQA Guidelines Sections 15091 and 15093, respectively, regarding adverse environmental impacts that cannot be mitigated to insignificance; and the Mitigation Monitoring Plan pursuant to Public Resources Code Section 21081.6, regarding the mitigation included in the Final Subsequent EA, which are included in Attachment 1, attached and incorporated herein by reference; and

                    BE IT FURTHER RESOLVED, that the Governing Board does hereby approve the written response to CEQA comments; and

                    BE IT FURTHER RESOLVED, that the Governing Board does hereby approve the Socioeconomic Impact Assessment; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to expedite review and approval of compliance plans, with a goal of review within 60 days for initial compliance plan submittal and 30 days for plan modifications, to ensure timely program compliance; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to expedite SIP submittals and to work with CARB and EPA to facilitate their expedited review and approval; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to diligently pursue projects for the RECLAIM Reserve that will achieve sufficient emission reductions within the allowable time specified in Rule 2010 to satisfy the need for such reduction and minimize the potential for future year deductions; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to evaluate the access threshold for the RECLAIM AQIP as a part of the annual program review conducted pursuant to Rule 2015; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff that excess credits from the RECLAIM AQIP may be purchased by AQMD for use in the Mitigation Fee Program; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to report to the Board in November 2001 on the status of compliance plan submittals, estimated emission reductions for compliance years 2001-2005, types of control options identified, cost information submitted, and whether the compliance plans demonstrate, in aggregate, overall programmatic compliance; and

                    BE IT FURTHER RESOLVED, the Governing Board directs staff during compliance years 2001 and 2002 to report to the Stationary Source Committee monthly on 1) permit applications received for NOx control equipment, estimated emission reductions and when equipment will become operational and 2) trading activities and price and make a quarterly status/progress report to the Governing Board; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to report to the Board, prior to July 2003, as to whether the reentry of Power Producing Facilities into RECLAIM would result in any negative impact on remainder of the RECLAIM facilities or on California's energy security needs. Further staff is directed to report on whether power producing facilities will be able to comply with their allocations, and if not, consider extending the mitigation fee program, and also to evaluate and report on whether any threat to California energy security needs which would occur due to inability to comply without substantial power curtailments outweighs any negative impact on the remainder of RECLAIM, and prepare amendments as appropriate; and

                    BE IT FURTHER RESOLVED, that the Governing Board directs staff to develop proposed amendments to Rule 1309.1 - Community Bank and Priority Reserve, for the Board's consideration by December 2001 to establish SOx offsets from the Priority Reserve for power producing facilities; and

                    BE IT FURTHER RESOLVED, the Governing Board is strongly supportive of trading programs, including RECLAIM, and believes that market incentive programs are essential to achieving clean air objectives. The Governing Board thereby directs staff to begin development of backstop measures, deemed appropriate, to further enhance the RECLAIM program, taking into consideration the information submitted in compliance plans, to ensure program compliance in a timely fashion; and

                    BE IT FURTHER RESOLVED, the Governing Board directs staff, in conjunction with stakeholders, to develop implementation guidelines to set forth the criteria for approving compliance plans and subsequent modifications and streamlining the trade registration process, and report to the Stationary Source Committee at their July 2001 meeting; and

                    BE IT FURTHER RESOLVED, that the Governing Board does hereby adopt/amend, pursuant to the authority granted by law, proposed amended rules and proposed new rules, Regulation XX – RECLAIM (Rules 2000 – General, 2001 – Applicability, 2002 – Allocation for Oxides of Nitrogen (NOx) and Oxides of Sulfur (SOx), 2004 – Requirements, 2006 – Permits, 2007 – Trading Requirements, 2010 – Administrative Remedies and Sanctions, 2011 – Requirements for Monitoring, Reporting and Recordkeeping for Oxides of Sulfur (SOx) Emissions, 2012 - Requirements for Monitoring, Reporting and Recordkeeping for Oxides Nitrogen (NOx) Emissions, and 2015 – Backstop Provisions and adopting Rules 2009 – Compliance Plans for Power Producing Facilities, 2009.1 – Compliance Plans and Forecast Reports for Non-Power Producing Facilities, and 2020 – RECLAIM Reserve) as set forth in the attached and incorporated herein by reference.

DATE:_______________________                ____________________________
                                                                                Clerk of the District Board

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