BOARD MEETING DATE: July 9, 2010
AGENDA NO. 39

PROPOSAL:

Adopt SIP Revision to Implement AB 1318 (2009, V.M. Perez), Health and Safety Code 40440.14

SYNOPSIS:

Effective January 1, 2010, AB 1318 requires the Executive Officer of AQMD to credit to the AQMD’s internal emission credit accounts and transfer to eligible electrical generating facilities emission credits in the full amounts needed to issue permits for eligible electrical generating facilities to meet requirements for sulfur oxides and particulate matter emissions. AB 1318 requires the power plants receiving credits to pay mitigation fees in accordance with the provisions of AQMD Rule 1309.1 as amended August 3, 2007. The proposed CPV Sentinel Energy Project Power Plant to be located in Desert Hot Springs, CA is the only known plant to be eligible under this section. The proposed SIP revision provides a federally-approved mechanism for the transfer of credits to CPV Sentinel Energy Project, and will establish the CPV Sentinel Energy Project AB 1318 Tracking System used to account for such credits.

COMMITTEE:

Not Applicable

RECOMMENDED ACTIONS:

Approve the attached revisions to the SIP text for the AQMD and the attached CPV Sentinel Energy Project AB 1318 Tracking System and direct the Executive Officer to submit them to U.S. EPA through CARB for review and approval into the SIP, as specified in the attached.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In 2009, the Legislature adopted and Governor Schwarzenegger signed into law AB 1318 (V.M. Perez) relating to the use of offsets from the AQMD’s internal accounts. AB 1318 requires the AQMD Executive Officer to credit to the AQMD’s internal offset credit accounts and to transfer credits to eligible electrical generating facilities credits in the full amounts needed to issue permits to meet the requirements for sulfur oxides and particulate matter. The CPV Sentinel, LLC’s, proposed CPV Sentinel Energy Project Power Plant, to be located in Desert Hot Springs, CA, in the Salton Sea Air Basin, is the only known electrical generating facility project eligible for credits under AB 1318 (Health and Safety Code Section 40440.14).

Proposal

Staff proposes that the Board approve the attached proposed revisions to the SIP for the AQMD, including the attached CPV Sentinel Energy Project AB 1318 Tracking System, and direct the Executive Officer to submit them to U.S. EPA through CARB for approval into the SIP. AB 1318 mandates the transfer of offsets. The proposed action provides a federally-approved mechanism to authorize such transfer and to comply with NSR offset requirements for sulfur oxides and particulate matter. AQMD has decided to establish a new tracking system specific to CPV Sentinel and AB 1318, which includes specific offset credits that have been identified from reductions of SOx and PM10 occurring between 1999 and 2008 from permitted equipment that has permanently ceased operations in the AQMD. The AQMD has not issued any ERCs to these private companies for these specific reductions, and has inactivated the permits for such equipment. These SOx and PM10 offsets have been removed from the AQMD’s internal offset accounts and have not been used by any other source, nor will they be used for any other source in the future if they are used for the CPV Sentinel Energy Project. The attached AB 1318 offset tracking system for CPV Sentinel is also proposed to be submitted to U.S. EPA through CARB for approval in accordance with the provisions of AB1318.

CEQA

AB 1318 establishes a statutory CEQA exemption for “The selection, credit, and transfer of emission credits by the South Coast Air Quality Management District pursuant to Section 40440.14 of the Health and Safety Code, until the repeal of that section on January 1, 2012, or a later date.” (Public Resources Code Section 21080(b)(16)). The appropriate Notice of Exemption will be prepared.

Benefits to AQMD

The proposal allows AQMD to implement its statutory duty under Health and Safety Code Section 40440.14 to credit to its internal accounts and transfer to the eligible electrical generating facility, CPV Sentinel, the offset credits needed to issue permits and meet the requirements for offsets for SOx and PM10.

Resource Impacts

The proposal will be carried out with existing AQMD resources.

Attachments (EXE, 553k)

Errata (PDF, 107k)

• Resolution

• Revision to the State Implementation Plan for the South Coast Air Quality Management District, State of California: Sulfur Oxides and Particular Matter Offset Requirements for the Proposed CPV Sentinel Energy Project Power Plant to Be Located in Desert Hot Springs, California, Including AB 1318 Tracking System

• CPV Sentinel Energy Project AB 1318 Tracking System

• Air Quality Demonstration: SIP Revision for CPV Sentinel Energy Project

• Notice of Exemption

RESOLUTION NO. 2010-____

A Resolution of the Governing Board of the South Coast Air Quality Management District (AQMD) certifying that the Revision to the State Implementation Plan (SIP) for the AQMD in the State of California to include Offset Requirements for the Proposed CPV Sentinel Power Plant to be Located in Desert Hot Springs, California, Including CPV Sentinel AB 1318 Offset Tracking System is exempt from the requirements of the California Environmental Quality Act (CEQA).

A Resolution of the Governing Board of the AQMD revising the SIP for the AQMD in the State of California to include Offset Requirements for the Proposed CPV Sentinel Power Plant to be Located in Desert Hot Springs, California, Including CPV Sentinel AB 1318 Offset Tracking System. 

WHEREAS, the AQMD Governing Board finds and determines that the revision to the SIP for the AQMD in the State of California to include Offset Requirements for the Proposed CPV Sentinel Power Plant to be Located in Desert Hot Springs, California, Including CPV Sentinel AB 1318 Offset Tracking System, is considered a "project" pursuant to the CEQA; however, AQMD staff reviewed the proposed project and because the Public Resources Code § 21080(b)(16) provides a statutory CEQA exemption for “the selection, credit, and transfer of emission credits by the SCAQMD pursuant to § 40440.14 of the Health and Safety Code”, it was determined that it is statutorily exempt from the requirements of CEQA pursuant to Public Resources Code § 21080(b)(16); and

WHEREAS, AQMD staff has prepared a Notice of Exemption (NOE) for the revision to the SIP for the AQMD in the State of California to include Offset Requirements for the Proposed CPV Sentinel Power Plant to be Located in Desert Hot Springs, California, Including CPV Sentinel AB 1318 Offset Tracking System that is completed in compliance with CEQA Guidelines § 15002(k)(1) – Three Step Process, and § 15062 – Notice of Exemption; and

WHEREAS, a public hearing has been properly noticed in accordance with the information provided in the public notice and provisions of 40 C.F. R. § 51.102 and provisions of state law; and

WHEREAS, the AQMD Governing Board has determined that the SIP revision is necessary in order to provide a federally-approved method to quantify emissions increases from the project, quantify offsets in the AB 1318 Tracking System, and transfer offsets from the SCAQMD’s internal accounts to the CPV Sentinel proposed power plant as required by Assembly Bill 1318 (V.M. Perez, 2009) and Health and Safety Code § 40440.14; and

WHEREAS, the AQMD Governing Board finds and determines that any changes made to the proposed SIP revision since the publication of public notice constitute a logical outgrowth of the original proposal; and

WHEREAS, the AQMD Governing Board specifies the Deputy Executive Officer for Engineering and Compliance as the custodian of the documents or other materials which constitute the record of the proceedings upon which the revision of the SIP is based, as well as upon which the CEQA Notice of Exemption is based, in accordance with California Public Resources Code §21081.6(a)(2), and specifies that the record is located at the South Coast Air Quality Management District, 21865 Copley Drive, Diamond Bar, California 91765; and

WHEREAS, the SIP revision, including the CPV Sentinel AB 1318 Offset Tracking System, the CEQA NOE, and the Board letter, were presented to the AQMD Governing Board and that the Board has reviewed and considered the entirety of this information prior to approving the project; and

WHEREAS, the AQMD Governing Board obtains its authority to adopt, amend, or rescind rules provisions of the applicable SIP to effectuate Health And Safety Code Section 40440.14 from Sections 40000, 40001, 40440.14, and 40702 of the California Health and Safety Code, and sections 110, 172, and 173 of the Federal Clean Air Act (42 U.S.C. §§ 7410, 7502, and 7503); and

WHEREAS, the AQMD Governing Board does hereby certify that a public hearing has been held in accordance with the information provided in the public hearing notice and consistent with the public hearing requirements in 40 C.F.R. § 51.102 and state law.

NOW, THEREFORE, BE IT RESOLVED, that the AQMD Governing Board does hereby certify the Notice of Exemption for the revision to the SIP for the AQMD in the State of California to include Offset Requirements for the Proposed CPV Sentinel Power Plant to be Located in Desert Hot Springs, California, Including CPV Sentinel AB 1318 Offset Tracking System as proposed, completed in compliance with Public Resources Code § 21080(b)(16) and CEQA Guidelines §§ 15002(k)(1) and 15061, and that it was presented to the Governing Board, whose members reviewed, considered, and approved the information therein before acting on SIP revision, as proposed; and

BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby revise the SIP for the AQMD in the State of California to include Offset Requirements for the Proposed CPV Sentinel Power Plant to be Located in Desert Hot Springs, California, Including CPV Sentinel AB 1318 Offset Tracking System, pursuant to the authority by law, as set forth in the attached and incorporated herein by this reference; and

BE IT FURTHER RESOLVED, that the Executive Officer is directed to adjust the offsets contained in the AB 1318 Tracking System to assure that the offsets remain surplus at the time they are transferred to the CPV Sentinel Energy Project.