BOARD MEETING DATE: April 6, 2007
AGENDA NO. 40

PROPOSAL:

Amend Rules 2004, 2007, and 2010

SYNOPSIS:

Staff is proposing administrative amendments to three of the Regulation XX – Regional Clean Air Incentives Market (RECLAIM) rules.  Proposed amendments to Rule 2004 would provide an exemption from submitting Quarterly Certification Reports for facilities that no longer have any NOx or SOx emitting equipment located on site.  Proposed amendments to Rule 2007 would clarify trading requirements for entities who are not residing in California and clarify reporting requirements for parties entering into a forward contract or a contingent right contract.  Proposed amendments to Rule 2010 would specify liability for allocation violations when changes of operator occur.  Other minor administrative changes are proposed to improve the clarity of these rules.

COMMITTEE:

Stationary Source, March 23, 2007, Reviewed

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Certifying the Notice of Exemption (NOE) for Proposed Amended Rules 2004 – Requirements, Rule 2007 – Trading Requirements, and Rule 2010 – Administrative Sanctions and Remedies; and
2. Amending Rules 2004 – Requirements, Rule 2007 – Trading Requirements, and Rule 2010 – Administrative Remedies and Sanctions.

Barry R. Wallerstein, D.Env.
Executive Officer

Introduction

The AQMD Board adopted Regulation XX – 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 AQMP.  To ensure effectiveness and consistent implementation of the RECLAIM program, staff is proposing administrative amendments to Rules 2004 - Requirements, 2007 – Trading Requirements, and 2010 – Administrative Remedies and Sanctions.

Proposed Amendments

The objectives of the proposed amendments are to provide regulatory relief from reporting for facilities that no longer have any NOx or SOx emissions (Proposed Amended Rule 2004) and to improve enforceability of the rules by making the proposed changes to Rules 2007 and 2010 that are described below. 

Proposed amendments to Rule 2004 would provide an exemption from submitting certified reports from facilities with zero emissions, under certain conditions.

Proposed amendments to Rule 2007 add requirements for sellers or buyers of RTCs that do not reside in California in order to make the rule more enforceable.  Proposed amendments to Rule 2007 clarify the reporting requirements for parties entering into a forward contract or a contingent right contract.

Proposed amendments to Rule 2010 would clarify liability for excess emissions for situations involving change of operator and prior violations of the facility’s allocation.  A mechanism is proposed to assign liability among the various impacted operators

Potential Impacts

California Environmental Quality Act (CEQA)

Staff has reviewed the proposed amendments to Rule 2004 – Requirements, Rule 2007 – Trading Requirements, and Rule 2010 – Administrative Remedies and Sanctions pursuant to CEQA Guidelines §15002(k)(1) - Three Step Process.  Based on this review, staff has determined that the proposed amendments are exempt from CEQA pursuant to CEQA Guidelines §15061(b)(3) – Review for Exemption.  The proposed amendments are covered by the general rule that CEQA applies only to projects which may have a significant effect on the environment. Staff has reviewed the proposed amendments and has determined that they are primarily administrative in nature.  Therefore, it can be seen with certainty that there is no possibility that the proposed amendments will have a significant impact on air quality or other environmental areas and, therefore, the proposed project is exempt from CEQA.  If approved by the Board, the Notice of Exemption (NOE) that has been prepared will be mailed to the county clerks of Los Angeles, Orange, Riverside, and San Bernardino counties.

Socioeconomic Assessment

Staff has reviewed the proposed amendments to Rule 2004 – Requirements, Rule 2007 – Trading Requirements, and Rule 2010 – Administrative Remedies and Sanctions, and has determined that the proposed amendments are administrative in nature, and therefore would not result in any adverse cost or socioeconomic impacts.

Public Process

A Public Consultation meeting was held on January 19, 2007.  Approximately 22 people attended.  Staff also had a conference call with several of the parties interested in proposed amendments to Rule 2007.  Only one written comment letter was received.

Implementation Plan

The proposed amendments are administrative in nature and impose no additional requirements.  Existing District resources will be used to implement the amended rules.

Attachments (EXE 377KB)
A.  Summary of Proposal
B.  Key Issues and Responses
C.  Rule Development Process
D.  Key Contacts List
E.  Resolution
F.  Final Staff Report for Proposed Amended Rules 2004, 2007, 2010
G.  Notice of Exemption