BOARD MEETING DATE: January 7, 2005 AGENDA NO. 25

The AQMD Governing Board adopted the Regional Clean Air Incentives Market (RECLAIM) program in 1993. The purpose of RECLAIM is to reduce NOx and SOx emissions through a market-based program. It is designed to provide facilities with flexibility to seek the most cost-effective solution to reduce their emissions. The program replaced a series of existing command-and-control rules and control measures specified in the 1991 Air Quality Management Plan (AQMP).

AQMD staff is proposing amendments to Regulation XX – RECLAIM to achieve additional NOx reductions pursuant to the 2003 AQMP Control Measure #2003CMB-10. The proposed amendments also address requirements for Best Available Retrofit Control Technology (BARCT) in accordance with California Health and Safety (H&S) Code §40440, which is applicable to market-based incentive programs and compliance with H&S Code § 39616. Reductions in NOx will help the Basin attain ozone and PM2.5 standards. Other proposed rule amendments include language clarifications and changes to the protocols.

Unless otherwise stated, references to Allocations, compliance costs, RTCs, and emissions only pertain to the pollutant NOx.

Since the implementation of RECLAIM in 1994, there has been a 50 percent decrease in reported emissions, some technology advancement, better monitoring and reporting, and high level of compliance in achieving facility emissions caps. However, the program was initially over allocated, which led to an under-utilization of available, cost-effective technologies. Even in the last compliance year, there were 6.6 tons per day of unused RTCs, resulting in low credit prices, and leaving little incentive for further controls.

2003 AQMP and BARCT Review
The 2003 AQMP was approved by the Board in August 2003. Subsequently, the AQMP was approved by the CARB and submitted to U.S. EPA to update the State Implementation Plan (SIP). The 2003 AQMP included control measure, #2003CMB-10, which estimated three (3) tons per day reduction of NOx from the program by 2010. As with all control measures, when rule development occurs, staff re-examines the estimate through a more thorough, extensive analysis. AQMD staff is proposing amendments to Regulation XX – RECLAIM to achieve additional NOx reductions pursuant to the 2003 AQMP control measure #2003CMB-10 and address requirements for BARCT.

As required in California H&S Code §39616, which is applicable to market-based incentive programs, RECLAIM must result in an equivalent or greater level of emission reductions at an equivalent or lower cost as would have been achieved under a command-and-control regulatory structure. This equivalency demonstration was made when the RECLAIM program was adopted in October 1993 and again seven years after rule adoption (October 2000). Beginning with the 2003 AQMP, BARCT will be evaluated every three years with future AQMP updates.

As a result of staff’s technical and cost analysis, new BARCT has been determined for several equipment categories covered by RECLAIM. They are: miscellaneous combustion; metal melting/heat treating; industrial boilers and heaters (non-refinery); utility boilers; refinery boilers and heaters; and fluid catalytic cracking units (FCCUs). Cost-effectiveness for these categories range from $4,000 – $11,000 per ton of NOx reduced for metal melting/heat treating and miscellaneous combustion to $9,000 to $10,000 per ton of NOx reduced for industrial boilers to $11,000 to $17,000 per ton of NOx reduced for refinery boilers/heaters and FCCUs. Categories of equipment where no new BARCT was determined include: gas turbines; cement kilns; internal combustion engines; glass melting furnaces; and curing/drying ovens.

RECLAIM allows flexibility in how a facility meets programmatic reductions. Therefore, facilities generally are not required to add BARCT to any specific equipment. Programmatic reductions may be met by a variety of options, including control beyond BARCT, changes to other equipment, efficiency improvements, or equipment replacements.

The staff proposal was developed by determining applicable BARCT for individual source categories. This was then converted into equivalent reductions under RECLAIM. Based on the 2003 AQMP base year inventory (i.e., 1997), and application of new BARCT and growth projections, this method results in a projection of future actual emissions. Control factors representing new BARCT levels were then applied to derive the remaining emissions, thereby quantifying the reductions feasible from current RTC holdings. Since the remaining emissions reflect projected actual emissions after application of BARCT, the proposal includes adding a 10% adjustment (increase) to remaining emissions to account for inaccessible RTCs due to imperfect market conditions and RTCs held by facilities to ensure compliance with annual audits. This assures that RECLAIM reductions are equivalent to command and control.

Under the staff proposal, total RTC reductions would be 7.7 tons per day, implemented across-the-board based on equal percent reductions to all RTC holdings. Reductions can be accomplished with application of two existing and proven technologies: low-NOx burners and selective catalytic reduction (SCR). The reductions analyzed by staff do not rely on any technology forcing assumptions. The reductions would be implemented in phases: 4 tons per day of reductions in compliance year 2007 and the remaining 3.7 tons per day of reductions would be implemented in equal increments beginning in compliance year 2008 and continuing through compliance year 2010, on a straight-line rate of reduction. Compliance year 2007 reductions would be submitted to the SIP prospectively. Compliance years 2008 through 2010 would be submitted to the SIP retrospectively.

The proposal provides that the RTC reductions during the phase two reductions (compliance years 2008, 2009, and 2010) will not occur if the average price exceeds $15,000 per ton. However, the rule also contains provisions by which reductions will be reinstated if the price drops back below $15,000 per ton.

During the rule development process, there were comments raised that the across-the-board reduction penalizes facilities that have already made changes to bring all of their equipment to BARCT levels or facilities that do not have equipment that has been identified for new BARCT. A further reduction could result in continual purchase of RTCs. An exemption from further reductions was requested. The staff proposal includes a limited exemption, provided certain criteria are met. The criteria reflect these situations and the exemption applies if costs are greater than what would have occurred in the absence of RECLAIM. An application is required to demonstrate that the criteria are met. The exemption is only applicable to original RTC allocations, not additional holdings (i.e., resulting from purchases or other transfers). The exemption, if approved, would only apply until new BARCT is determined, which will be assessed annually. To qualify for the exemption, the following criteria must be met:

It is unknown at this time exactly how many facilities would qualify for the exemption since the total compliance costs, especially the retrofit control costs, at the facility level are not available to staff. However, based on Rule 2009.1 Compliance Plans, there are six facilities that may potentially qualify for the exemption. These facilities have gone through the Rule 2009.1 process to demonstrate that all equipment at the facility meets current BARCT requirements. In addition, it is estimated that as many as 3 facilities, based on allocation data, would qualify for the exemption due to their equipment meeting BARCT and their starting and year 2000 Allocations were calculated using the same emission factors, resulting in about 0.02 tons per day of reductions foregone. Potential applicants for the exemption have two time periods to file: 1) within 6 months of rule adoption or 2) between January 1 and March 31, 2006. Any forgone reductions by facilities meeting the exemption criteria would be distributed evenly among the remainder of the RTC holders and implemented two years from the compliance year the exemption applies to. Public notification of the amount of distributed reductions would occur at least one year prior to implementation.

Power producers would be allowed to purchase RTCs for any compliance year, and sell compliance year 2007 or later RTCs as of adoption of the amendments. However, with the exception of being able to sell RTCs for compliance years 2005 and 2006 to new power generating facilities brought on-line on or after January 1, 2004, current restrictions on the sale of RTCs would remain in effect until the 2007 compliance year. The reason for the restriction in 2005 and 2006 is to retire excess emissions from power plant RTC holdings rather than have them enter the trading market, thereby delaying controls from other facilities.

Staff held numerous briefing sessions with CARB staff in the last several months regarding staff approaches/methodologies, and technology and policy issues.

California Environmental Quality Act (CEQA)
Pursuant to California Environmental Quality Act (CEQA) Guidelines §15252 and AQMD Rule 110, the AQMD has prepared an Environmental Assessment (EA) for Proposed Amended Regulation XX. The Draft EA was released for a 45-day public review and comment period and one comment letter was received. The Draft EA identified a direct air quality benefit of reducing NOx emissions of 7.8 tons per day by the end of 2010. With additional refinements made to AQMD’s data in accordance with industry input, the overall projected reduction of NOx RTC holdings was adjusted slightly lower to 7.7 tons per day. However, based on the construction activities necessary to comply with the requirements in the proposed amendments, the quantity of emissions due to construction is not expected to be affected by the slight adjustment to the projected reductions in NOx RTC holdings. NOx, CO, and VOC emissions from construction-related activities exceed the AQMD’s daily CEQA significance thresholds.

Since the Draft EA was released, the staff proposal has been modified. However, staff has determined that the net result from the proposed changes is within the scope of the project-specific analysis and analysis of project alternatives (see in particular Chapters 4 and Chapter 5 of the Draft EA document). Aside from air quality, no other environmental areas were affected by the proposed modifications to Regulation XX. Further, none of the modifications alter any conclusions reached in the Draft EA. Based on the fact that the proposed modifications do not create any new significant adverse impacts nor do they result in a substantial increase in the severity of any impacts relative to the project-specific analysis or analysis of impacts of the project alternatives in Chapter 5 of the Draft EA, the proposed modifications do not constitute significant new information that would require recirculation of the Draft EA pursuant to CEQA Guidelines §15088.5. Therefore, a Final EA has been prepared with responses to the comment letter and is included as an attachment to this Board package.

Socioeconomic Assessment
A socioeconomic assessment has been conducted as part of this rulemaking process. The report can be found in Attachment G of this Board package. Highlights from the socioeconomic report and key points from the analysis provided by two economists are summarized below.

There are approximately 332 NOx RECLAIM facilities today and nearly all will be affected by the proposed amendments. They belong to all the sectors in the four-county economy. In 1993 during the adoption of RECLAIM, it was demonstrated that the cost of implementing RECLAIM was lower than that of the subsumed command-and-control regulations. A similar comparison was done for these proposed amendments. The total compliance costs of the proposed amendments to RECLAIM and their command-and-control counterpart are projected to be $16.96 and $46.74 million annually, on average, respectively. With respect to California Health and Safety Code §39616 (c)(1) on comparing the costs of RECLAIM and command-and-control, the cost of RECLAIM is less than the cost of its comparable command-and-control counterpart.

It is projected that the proposed amendments would result in 156 jobs forgone annually on average, compared with 157 jobs forgone under command-and-control. The difference in job impacts between the proposed amendments and command-and-control is within the noise of the Regional Economic Models, Inc. (REMI) model used for macroeconomic impact assessments. Relative to H&SC §39616 (c)(4) on comparing impacts of RECLAIM and command-and-control on high- versus low-skilled jobs, for the majority of the years in the simulation period (2007 to 2020), the proposed amendments have shown either more jobs created or fewer jobs forgone across all major industrial and occupational groups than command-and-control.

The market analysis provided by the two economists under contract with the AQMD has the following conclusions:

There are a number of issues key to the proposed amendments that have been discussed at length during the rule development process. These issues include:

Emission Reductions
District and ARB staffs have significant concerns that proposals with less than 7.7 tons per day would not meet the state law requirements for BARCT, represent expeditious progress or implementation of all feasible controls for RECLAIM. The reasons for this viewpoint are listed below.

Relative to the staff proposal, CARB supports a 7.7 tpd reduction by 2010 but recommends that all reductions be submitted to the SIP up front. Environmental representatives do not support the 10 percent market adjustment proposed by staff, and would like 10.2 tpd reductions by 2010, submitted into the SIP up front.

There are different industry proposals. RFG and CMA support across-the-board reductions, with 2 tpd each in 2007 and 2008, an assessment in 2007 before additional reductions are sought for 2009 and future years. CCEEB and WSPA have recently recommended across-the-board reductions with 2 tpd reduced in 2007, 2 tpd in 2008, 0.9 tpd in 2009, and 0.8 tpd in 2010. An additional 2 tpd would be reduced by 2010 if an AQIP and SIP-approved credit generation rules are in place. Only the first 4 tpd reduction would be submitted into the SIP up front.

Other industry groups support facility- or industry-specific reductions, with exemptions, as described below.

Exemptions
CARB is concerned about any delay in making up reductions that result from an exemption. Environmental representatives do not support any exemptions.

CCEEB and WSPA do not support an exemption and will request that this issue be deferred for one year, pending additional study by a working group. This is consistent with RFG and CMA’s position on this issue.

Other industry representatives support exemption from reductions for facilities at BARCT, but do not concur with some of the criteria proposed by staff criteria.

Power Plant Trading
CARB supports staff’s proposal regarding power plant trading restrictions. Environmental representatives prefer that power plants remain separate from the general trading pool. RFG and CMA advocate lifting all restrictions upon rule adoption, while CCEEB and WSPA support the staff proposal if there is an additional option for individual power plants to sell credits in 2005 and 2006 if they accept their reductions early.

A summary of these issues and stakeholder positions is provided in Attachment B of this Board letter. Attachment B-1 summarizes staff’s concerns with industry proposals. Each of these issues is discussed at length in the staff report and appendices.

The working group process has been used extensively throughout this rule development process. The RECLAIM Working Group was first established at the time of original program development in the early 1990s and has been consulted numerous times over the years regarding amendments to the program. The RECLAIM Working Group includes members representing small and large businesses, the environmental community, as well as CARB and U.S. EPA. A Working Group meeting was first held on March 19, 2004 to receive input on the staff’s initial proposal, which included discussions of the methodology to reduce RTC holdings, preliminary impact analysis, and proposed amended rule language. Additional Working Group meetings were held April 1 and 15, May 11, June 23, July 14, August 12, September 10, November 18, and December 16, 2004 to review staff’s assessment of BARCT and cost-effectiveness; method, timing, and amount of RTC holding reductions; possible exemptions; and to provide feedback on the rule proposals. Subcommittee meetings were also held to address specific issues of the petroleum refining and power producing industries.

A Public Consultation meeting was held on November 19, 2003 to discuss the December 2003 amendments and to introduce the concepts for the proposal. A Public Workshop was held April 7, 2004 regarding staff’s initial proposal. A subsequent Public Consultation meeting was held on August 12, 2004 to summarize the proposed amendments and to provide a forum for additional public input. A final Public Workshop was held October 28, 2004 to summarize staff’s updated proposal and provide additional time for comment.

A White Paper was developed in preparation for an October 1, 2004 Informational Hearing before the Governing Board. This paper contained technical information related to BARCT and cost-effectiveness, key policy issues, different stakeholder viewpoints, and presented preliminary staff recommendations. At the Board meeting, staff summarized RECLAIM performance after more than a decade of implementation and outlined the legal requirements for further reductions. In addition, staff described a preliminary proposal and summarized proposals from industry and the environmental community. Staff also addressed concerns regarding the other proposals, as well as the main technical and policy issues. At the meeting, stakeholders were afforded the opportunity to address the Board directly with their comments, concerns, and suggestions.

In addition, significant technical data has been shared with interested parties. Several technical meetings were held with representatives from the petroleum refining, oil and gas extraction, and power producers, as well as several meetings with representatives from several trade organizations and individual companies. Data shared by the AQMD staff can be found on the AQMD website at, http://www.aqmd.gov/reclaim/reclaim_meetings.htm.

RTC levels have remained unchanged since compliance year 2003. With the exception of during the California energy crisis, there have been 15 to 20 percent of unused RTCs each year. In 2003, unused RTCs totaled approximately 6.6 tons per day. Staff’s analysis indicates that technologically and economically feasible controls exist for several equipment categories and that 7.7 tons per day reduction by 2010 is achievable.

Staff’s proposal achieves the objectives of the 2003 AQMP control measure (2003#CMB-10) and requirements under state law regarding BARCT (H&SC §40440) and market incentive programs (H&SC §39616).

Proposed Amended Regulation XX - RECLAIM

The key proposed amendments to Regulation XX – RECLAIM are summarized as follows:

Amend Rule 2001 to propose an exemption specific to agricultural sources, in order to maintain consistency with the original intent of the RECLAIM program;
Amend Rule 2002 to:
- achieve reductions in NOx emissions by the year 2010 in accordance with the BARCT requirements under state law;
- establish an RTC price threshold by which reductions for compliance years 2008 through 2010 would become non-tradable;
- establish the allocation methodology for facilities joining RECLAIM after the rule amendments;
- provide a limited exemption for facilities whose starting and year 2000 Allocations were calculated using the same emission factors and facilities already achieving BARCT when compliance costs under RECLAIM exceed the costs that would otherwise have occurred to meet the BARCT limits under command and control rules;
- specify the process whereby foregone reductions from exempt facilities will be redistributed among the remaining RTC holders;
Amend Rule 2002 and 2012 by adding a new emission factor for micro-turbines and by clarifying that the ending emission factors in Table 1 are specifically for Tier 1, compliance year 2000, and add further emission reductions beyond 2003 allocations;
Amend Rule 2007 to modify trading restrictions for compliance years 2005 and 2006, and designate January 1, 2007 (i.e., compliance year 2007) as the date by which all existing trading restrictions on power plants would be lifted;
Amend Rule 2009 by removing the requirement for power producers to apply and keep detailed records of environmental dispatch procedures;
Amend Rule 2010 by clarifying the procedures for reducing annual emissions allocations when facilities violate the requirements of Rule 2004 (d);
Amend Rules 2011 and 2012, and their respective protocols, to:
- allow a delay in the due date for Relative Accuracy Test Audits (RATA) for equipment that is operated intermittently, and by adding alternative methods of compliance testing for natural gas combustion sources with high oxygen contents in the exhaust stream;
- allow reporting of emissions through the SCAQMD’s internet website;
- specify that emission reports from sources that are not listed on the Facility Permit, such as contractor equipment, various location equipment, and equipment covered under applications are due every quarter which is the same as reporting for process units;
- correct typographical errors, and clarify the rule language;
Amend Rule 2012 to
- reflect current requirements for large sources and process units equipped with stack flow monitors to measure exhaust flow rate and clarify that operating parameters are required for large sources and process units and corresponding emission rates that are required to be measured and reported;
- establish missing data provisions on an hourly basis instead of the current daily requirement; and
- allow an alternative test to demonstrate compliance with RECLAIM NOx concentration limits.

A Resolution of the Governing Board of the South Coast Air Quality Management District (AQMD) certifying the Final Environmental Assessment (EA) for Proposed Amended Regulation XX – Regional Clean Air Incentives Market (RECLAIM).

A Resolution of the AQMD Governing Board Amending Regulation XX – Regional Clean Air Incentives Market (RECLAIM).

WHEREAS, the 2003 AQMP was adopted by the AQMD Governing Board in August 2003 and subsequently approved by the California Air Resources Board and submitted to the U.S. Environmental Protection Agency for inclusion into the State Implementation Plan; and

WHEREAS, the 2003 AQMP contained a control measure, CMB-10, that will decrease allocations and to reflect Best Available Retrofit Control Technology (BARCT) as required by state law; and

WHEREAS, RECLAIM is subject to the requirement to make findings under state law requirement regarding market incentive programs; and

WHEREAS, the AQMD Governing Board finds and determines that Proposed Amended Regulation XX is considered a "project" pursuant to the California Environmental Quality Act (CEQA); and

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

WHEREAS, AQMD staff has prepared a Draft EA pursuant to its certified regulatory program and state CEQA Guidelines §15252, setting forth the potential adverse environmental consequences of Proposed Amended Regulation XX; and

WHEREAS, the Draft EA was circulated for public review, all comments received were responded to, and the Draft EA has been revised such that it is now a Final EA; and

WHEREAS, it is necessary that the adequacy of the Final EA including responses to comments 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 CEQA Guidelines §§ 15091 and 15093, respectively, regarding adverse environmental impacts that cannot be mitigated to insignificance; and a Mitigation Monitoring Plan pursuant to CEQA Guidelines §15097, regarding the mitigation measures included in the Final EA; and

WHEREAS, the Governing Board prior to voting on Proposed Amended Regulation XX, has reviewed and considered the Final EA including responses to comments; and

WHEREAS, the AQMD Governing Board finds and determines, taking into consideration the factors in §(d)(4)(D) of the Governing Board Procedures, that the modifications adopted which have been made to Proposed Amended Regulation XX since notice of public hearing was published do not significantly change the meaning of the proposed project within the meaning of Health and Safety Code §40726 and would not constitute significant new information requiring recirculation of the Draft CEQA document pursuant to CEQA Guidelines §15088.5; and

WHEREAS, the Governing Board of the South Coast Air Quality Management District has determined that the Socioeconomic Report for Regulation XX (RECLAIM), as proposed to be amended, is consistent with the March 17, 1989 and October 14, 1994 Board Socioeconomic Resolution for rule adoption; and

WHEREAS, the Governing Board of the South Coast Air Quality Management District has determined that the Socioeconomic Report for REGULATION XX (RECLAIM) comply with Health and Safety Code §40440.8 (a) and (b), §40440.5, and §40728.5; and

WHEREAS, the Governing Board of the South Coast Air Quality Management District by adopting this regulation is implementing, interpreting, or making specific the provisions of Health and Safety Code §39616 (c)(1) (equivalent or less cost under RECLAIM compared with command-and-control regulations) and §39616 (c)(4) (no significant shift from high- to low-skilled jobs); and

WHEREAS, the AQMD Governing Board has determined that Proposed Amended Regulation XX may result in increased costs to the industry, yet is considered to be reasonable, with total annualized costs as specified in the Final Socioeconomic Impact Assessment; and

WHEREAS, the AQMD Governing Board has actively considered the Socioeconomic Impact Assessment and has made a good faith effort to minimize such impacts; and

WHEREAS, the AQMD Governing Board obtains its authority to adopt, amend or repeal rules and regulations from §§ 39002, 39650 et. seq., 40000, 40001, 40440, 40441, 40702, 40725 through 40728, 41508, 41700, and 44390 through 44394 of the Health and Safety Code; and

WHEREAS, Health and Safety Code §40727 requires that prior to adopting, amending or repealing a rule or regulation, the AQMD Governing Board shall make findings of necessity, authority, clarity, consistency, non-duplication, and reference based on relevant information presented at the public hearing and in the staff report;

WHEREAS, the AQMD Governing Board has determined that a need exists to amend Regulation XX to implement the 2003 AQMP and BARCT as required by state law; and

WHEREAS, the AQMD Governing Board has determined that Proposed Amended Regulation XX is written or displayed so that the meaning can be easily understood by the persons directly affected by it; and

WHEREAS, the AQMD Governing Board has determined that Proposed Amended Regulation XX is in harmony with and not in conflict with or contradictory to, existing statutes, court decisions or state or federal regulations; and

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

WHEREAS, the AQMD Governing Board has determined that by adopting Proposed Amended Regulation XX, the AQMD Governing Board will be implementing, interpreting and making specific the provisions of the Health and Safety Code §§ 39002, 39616, 40000, 40001, 40440 (a), 40440.1, 40702, and 40725 through 40728.5; and Title 42 U. S. C. §§ 7410 and 7511a; and

WHEREAS, the AQMD Governing Board has determined that there is a problem, that the proposed amendments to Regulation XX will alleviate (Health and Safety Code § 40001(c)). Specifically the amendments will reduce NOx credits in the market to reflect BARCT; and

WHEREAS, the AQMD Governing Board finds, pursuant to Health and Safety Code §39616(c)(1), that the proposed amendments to RECLAIM are designed to achieve the emissions levels projected to result from implementation of the rules and control measures subsumed by RECLAIM and any future air quality measures that would otherwise have been adopted as part of the District’s plan for attainment at equal or less cost; and

WHEREAS, the AQMD Governing Board finds, pursuant to Health and Safety Code §39616(c)(2), that the proposed amendments to RECLAIM do not change the previous findings that RECLAIM provides a level of enforcement and monitoring comparable to more stringent than command and control air quality measures by requiring more frequent and more accurate monitoring, more frequent and more complete emissions reports, electronic emissions reporting, maintenance of on-site records of their emissions reports and underlying data for three years, annual or more frequent facility inspections, and annual emissions audits; and

WHEREAS, the AQMD Governing Board finds, pursuant to Health and Safety Code §39616(c)(4), that the proposed amendment to RECLAIM will not result in a greater loss of jobs or more significant shits from higher to lower skilled jobs, on an overall District-wide basis, than would exist under command and control air quality measures; and

WHEREAS, the AQMD Governing Board finds, pursuant to Health and Safety Code §39616(c)(6), that the proposed amendments to RECLAIM will not in any manner delay, postpone, or otherwise hinder district compliance with District plans to attain state Ambient Air Quality Standards; and

WHEREAS, the AQMD Governing Board finds, pursuant to Health and Safety Code §39616(c)(7), that the proposed amendment to RECLAIM will not result in disproportionate impacts, measured on an aggregate basis, on those stationary sources included in the program compared to other permitted stationary sources in the District’s plan for attainment ; and

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

WHEREAS, the AQMD Governing Board has determined that proposed amendments to Regulation XX should be adopted for the reasons contained in the staff report; and

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

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

NOW, THEREFORE, BE IT RESOLVED, that the AQMD Governing Board hereby certifies, pursuant to the authority granted by law, the Final EA for Proposed Amended Regulation XX; and

BE IT FURTHER RESOLVED, that the Governing Board adopts a Statement of Findings and a Statement of Overriding Considerations pursuant to CEQA Guidelines §15091 and 15093, respectively, and a Mitigation Monitoring Plan pursuant to CEQA Guidelines §15097 regarding adverse environmental impacts that cannot be mitigated to insignificance, as required by CEQA, and which are included as Attachment 1 and incorporated herein by reference; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby approve the Socioeconomic Report; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby amend, pursuant to the authority granted by law, Regulation XX, as set forth in the attached, and incorporated herein by reference; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to report to the Stationary Source Committee prior to public notification of exemption requests that result in redistribution of reductions; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to include information on the twelve-month rolling average in a report at least quarterly to the Stationary Source Committee; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to work with stakeholders to identify additional parameters that should be monitored as possible indications of market anomalies; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to annually assess BARCT for each category of equipment at facilities receiving an exemption from RTC reductions and include information pertaining to the assessment in the RECLAIM annual audit; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to re-evaluate programmatic BARCT and command and control equivalency as part of future AQMP revisions, and propose AQMP control measures to further reduce emissions as necessary in accordance with such evaluation; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to develop cost-effective emission credit generation rules, such as cold ironing, for inclusion in the SIP no later than January 1, 2008 to further mitigate RECLAIM compliance costs, and report to the Governing Board no later than July 1, 2008 regarding the SIP-approval status of these credit generation rules; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby direct staff to begin a program evaluation if the average RTC price is higher than $15,000 per ton for 3 consecutive months and report to the Stationary Source Committee if this or any anomalies in the market occur and direct staff to respond quickly to recommend appropriate actions for the Board’s consideration to address any problems.