# Technical Support Document

Proposed Approv al of Clean Air Act Section 172(c)(9) Contingency

Measures

— San Joaquin Valley State Implementation Plan for Attainment of the 1997 PM 2.5 

# Standards

Air Division U.S. EPA Region 9 August 15, 2013For further information on this technical support document, please contact:

Frances Wicher Office of Air Planning (AIR

- 2) U.S. Environmental Protection Agency

- Region 9 75 Hawthorne Street San Francisco, California 94105 (41 5) 972

- 3957 wicher.frances@epa.gov

D ocuments referenced in this technical support document may be found in the docket for this rulemaking , docket number EPA

- R09

- OAR

- 2013

- 0534 , which may be found at www.regulations.gov . Documents that are not available in an electronic format may be found at the address above.

## Table of Contents

i A. Background 1 1. The San Joaquin Valley 2008 PM 2.5 State Implementation Plan 1 2. The Contingency Measure Provisions in the San Joaquin Valley 2008 PM 2.5 State Implementation Plan 2 B. The Submitted SJV Contingency Measure SIP 6 C. Completeness Determination 7 D. CAA Requirements for Contingency Measures 13 E. Evaluation of the Submitted SJV Contingency Measure SIP 14

1. Calculation of One

- Year’s Worth of Reasonable Further Progress 14

2. Contingency Measures for the 2012 Reasonable Further Progress Milestone 14 3. Contingency Measures for the 2015 Attainment Date 18 a. Existing Regulatory Measures 18 i. Contingency Measures for Reducing NO x Emission s 18 ii. Contingency Measures for Reducing SO x Emissions 19 iii. Contingency Measures for Reducing Direct PM 2.5 Emissions 20 iv. Summary of Attainment Contingency Emission Reductions from Regulatory
Measures 21 b. Incentive Programs 22 i. The California Submittal 24 ii. Applicable Incentive Program Guidelines and Projects 26 iii. The Four Integrity Elements 29 iv. The District’s Enforceable Commitments 42 c. Substitu tion of Direct PM 2.5 Reductions for NO x Reductions 44 d. Summary of Attainment Contingency Emission Reductions 45 e. EPA’s Proposed Action on the Attainment Contingency Measures 46EPA

- Region 9 Page 1 

## Te chnical Support Document Proposed Approval of Clean Air Act Section 172(c)(9) Conti ngency Measures



## — San Joaquin Valley State Implementation Plan for Attainment of the

1997 PM 2.5 

## Standards

This document provides supporting information and analysis for EPA’s proposed rule to approve a state implementation plan (SIP) revision submitted o n July 3, 2013 by the State of California . This SIP submission address es Clean Air Act nonattainment area contingency measure requirements for the 1997 annual and 24

- hour PM 2.5 national ambient air quality standards in the San Joaquin Valley (SJV)

. We refe r to this SIP submission in this TSD and related Federal Register notices as the “Contingency Measure SIP.”



### A. Background

1. The San Joaquin Valley 2008 PM 2.5 State Implementation Plan

On July 18, 1997

, EPA established new national ambient air quality st andards (NAAQS) for PM 2.5 , particulate matter with a diameter of 2.5 microns or less, including annual standards of 15.0 micrograms per cubic meter (μg/m 3 ) based on a 3

- year average of annual mean PM 2.5 concentrations, and 24

- hour (daily) standards of 65 μ g/m 3 based on a 3

- year average of the 98th percentile of 24

- hour concentrations

. See 62 FR 36852 and 40 CFR § 50.7.
In 2005, EPA designated the San Joaquin Valley (SJV) in California as nonattainment for the 1997 annual and 24

- hour PM 2.5 standards

. See 70 FR 944 (January 5, 2005 ) and 40 CFR 81.305. 1 The SJV PM 2.5 nonattainment area is located in the southern half of California’s central valley and includes all or part of eight counties: San Joaquin, Stanislaus, Merced, Madera, Fresno, Tulare, Kings, and th e valley portion of Kern. The local air district with primary responsibility for developing the SIP to attain the PM 2.5 NAAQS in this area is the San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD or “ District ” ).

California has made numero us SIP submittals to address the SJV’s nonattainment designation for the 1997 PM 2.5 NAAQS. The two principal ones are the SJVUAPCD ’s “ 2008 PM 2.5 Plan, ” submitted on June 30, 2008 , and the California Air Resources Board’s (CARB’s) “State Strategy for Califo rnia’s 2007 State Implementation Plan” ( “ 2007 State Strategy ” ),

1 EPA has also designated the S an Joaquin Valley as nonattainment for the more stringent 24

- hour PM 2.5 NAAQS of 35 μg/m 3 , which EPA promulgated on October 17, 2006 and codified at 40 CFR § 50.13 ( 74 FR 58688 (November 13, 2009 ) ). In this preamble, all references to the PM 2.5 NAAQS, unless otherwise specified, are to the 1997 24

- hour PM 2.5 standards of 65 μg/m 3 and annual s tandards of 15 μg/m 3 as codified in 40 CFR § 50.7.TSD for the Proposed Approval of SJV

PM 2.5 Co ntingency Measure SIP August 15, 2013

EPA

- Region 9 Page 2 submitted on November 16, 2007 and revised in 2009 and 2011 through CARB’s “2009 State Strategy Status Report” 2 and “2011 Progress Report.” 3
On November 9, 2011, EPA partially approved and par tially disapproved the District’s 2008 PM 2.5 Plan and the revised 2007 State Strategy (collectively the “SJV PM 2.5 SIP”)

. See 76 FR 69896 (November 9, 2011 ). EPA’s partial disapproval of the SJV PM 2.5 SIP was based on our determination that its contingency measure provisions failed to meet the requirements of C lean Air Act (C AA ) section 172(c)(9) and 40 CFR § 51.1012

. See 76 FR 41338 at 41357 to 41359 (July 13, 2011) and 76 FR 69896 at 69918 to 69919 and 69924. EPA’s partial disapproval of the SJV PM 2.5 SI P triggered mandatory sanctions clocks under CAA section 179(b) and an obligation on EPA to promulgate a Federal Implementation Plan (FIP) under CAA section 110(c) within two years

. See 76 FR 69896 at 69924. The first sanction, the offset sanction under CA A section 179(b)(2), became effective in the SJV area 18 months after the effective date of EPA’s final disapproval, i.e., on July 9, 2013

. See 40 CFR 52.31(d)). The second sanction, the highway funding sanction under CAA section 179(b)(1), will become eff

ective 24 months after the effective date of EPA’s final disapprov al

, i.e. , on January 9, 2014. H owever, concurrent with our proposed full approval of the Contingency Measure SIP,

we are issuing an interim final determination that will stay the offset sanc tion and defer the application of the highway funding sanction

. See “Interim Final Determination to Stay and Defer Sanctions; San Joaquin Valley,” signed August 15, 2013

. Final approval of th e Contingency Measure SIP w ill terminate the sanctions clocks and the FIP clock triggered by EPA ’s partial disapproval

.

2 . The Contingency Measure Provisions in the S an Joaquin Valley 2008 PM 2.5 S tate Implementation Plan

Contingency measures in the SJV PM 2.5 SIP were described in Section 9.2.2 of the 2008 PM 2.5 Plan, on page 29 of the CARB Staff Report on the Plan

, 4 and Appendix A of the CARB Resolution 08

- 28 adopting the Plan. Updated information on both the RFP and attainment contingency measures was provided in the 2011 Progress Report and the CARB Progress Report

s up plement. 5 See 2011 Progress Report, Appendix A, p. 2, Appendix C, Table C

- 1, and CARB Progress Report supplement, Attachment 2.

The c ontingency measures in the SJV PM 2.5 SIP consisted of several types: a commitment by the SJV U APCD to encourage CARB to expe dite implementation of mobile

source measures; surplus reductions in the RFP demonstration ; post

- 2014 emission reduction s ; a

2 CARB, “Status Report on the State Strategy for California’s 2007 State Implementation Plan (SIP) and Proposed Revision to the SIP Reflecting Implementation of the 2007 State Strategy,” dated March 24, 20 09, adopted April 24, 2009

.

3 CARB, “Progress Report on Implementation of PM 2.5 State Implementation Plans (SIP) for the South Coast and San Joaquin Valley Air Basins and Proposed SIP Revisions,” dated March 29, 2011 and adopted April 28, 2011

.
4 CARB, “ St aff Report, Analysis of the San Joaquin Valley 2008 PM 2.5 Plan, ” Release Date: May 7, 2008

.

5 Letter dated May 18, 2011 from Lynn Terry, Deputy Executive Office, CARB, to Elizabeth Adams, Deputy Director, Air Division, EPA

– Region 9, with attachments.TSD for the Proposed Approval of SJV

PM 2.5 Co ntingency Measure SIP August 15, 2013

EPA

- Region 9 Page 3 contingency provision in an adopted rule ; reductions from incentive funds ; and reductions of specifically

- identified implemented ru les that are not otherwise relied on in the attainment and RFP demonstrations. EPA evaluated each of the contingency measures in the SJV PM 2.5 SIP and found that several met CAA requirements, several could potentially be approvable as contingency measures i f additional information was provided; and several failed to meet minimum CAA requirements. A summary of our findings regarding these contingency measures is given in Table s A

- 1 and A

2 . Our full evaluation can be found in the Final TSD for the SJV PM 2.5 SIP 6 , pp. 126 to 134 and in our proposed action on the SIP at 76 FR 41338 at 41357 to 41359 (July 13, 2011)

. Overall, we determined that the approvable contingency measures did not provide sufficient SIP

- creditable emission reductions for contingency measu re purposes and disapproved both the attainment and 2012 RFP milestone contingency measures on that basis. Id

. EPA did not evaluat e the provisions in the SJV PM 2.5 SIP that address ed contingency measures for failure to meet the 2009 RFP milestone . Instead, EPA found that the area had met its 2009 RFP milestone year emissions targets. See Final TSD for SJV PM 2.5 SIP, p. 120

– 121 and 76 FR 41338 at 41357

– 41359

. Accordingly

, EPA concluded that contingency measures for failure to meet the 2009 RFP benchmark no longer ha d any meaning or effect under the CAA and therefore required no action by EPA

. Id.

6 Air Division, U.S. EPA Region 9

, “Final Technical Support Document and Responses to Comments, Final Rulemaking Action on the San Joaquin Valley PM 2.5 State Implementation Plan,” September 30, 2011

.TSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

EPA

- Region 9 Page 4 Table A

- 1 

### Summary of Approvability of Contingency Measures from the SJV 2008 PM 2.5 

### Plan

Measure RFP or Attainment Contingency Measure? Approvable

as a Continge ncy Measure? Comment s Tons per Annual average Day

Year Direct

PM 2.5 NO x SO x Request CARB to expedite implementation of mobile source controls Both No Requires additional rulemaking, no short term reductions N/A N/A N/A

Ozone Nonattainment Area Fee 2012 RFP milestone/ Attainment No Reductions are not SIP creditable ( see Incentive funds

— currently not SIP creditable) Not quantified

Incentives Funds

– currently SIP creditable Both Yes Not quantified

Incentive Funds

– currently not SIP creditable B oth No Reductions are not SIP creditable Not quantified

Excess Reductions in RFP Demonstration RFP Yes 2012 0 19.7 5

Post Attainment Year Reductions Attainment Yes 2015 0.0 21 3TSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

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- Region 9 Page 5 Table A

- 1 (Continued) 

### Summary of Approvability of Contingency Measures from the SJV 2008 PM 2.5 

### Plan

Measure RFP or Attainment Contingency Measure? Approvable

as a Contingency Measure? Comment s Tons per Annual average Day

Year Direct

PM 2.5 NO x SO x

Revisions to SJVUAPCD Rule 4307

- Boilers, Steam Generators, and Process Heaters

- 2.0 MM BTU/hr to 5.0 MMBTU/hr 2012 RFP milestone/ Attainment No Reductions assumed in RFP and attainment demonstrations 2012 N/A N/A N/A

2015 N/A N/A N/A

Revisions to SJVAPCD Rule 4702

- I/C Engines

- Phase 2 Attainment No Rule not adopted 2015

– –– –

Contingency provision in Rule 4901 Attainment Yes 2015 1.6 Not quantified

Source: Final TSD for SJV PM 2.5 SIP, p. 135TSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

EPA

- Region 9 Page 6 Table A

- 2 

### Summary of Emission Reductions from Contingency Measures in the SJV PM 2.5 

### SIP (tons per annual average day)

Direct PM 2.5 NO x SO x

2012 RFP contingency reductions (

- 2.9) 18 5

Attainment contingency reductions 1.6 21 3

1

- year’s worth of RFP 2.5 31.6 0.2

Source: Final TSD for SJV PM 2.5 SIP, p. 136



### B. The Submitted SJV Contingency Measure SIP

On July 3, 201 3 , CARB sub mitted the Contingency Measure SIP as a revision to the California S tate Implementation Plan together with its supporting documentation

. The July 3, 2013 submi ssion included the following documents :

 SJVUAPCD, “ Quantifying Contingenc i es for the 20 08 PM 2.5 Plan ” (dated June 20, 2013 ) ;

 L etter dated July 3, 2013 from Richard Corey, Executive Officer, CARB , to Jared Blumenfeld, Regional Administrator, U.S. Environmental Protection Agency Region 9, submitting the Contingency Measure SIP;

 CARB Resolutio n 1 3

- 30 (June 27, 2013) adopting the Contingency Measure SIP ;

 CARB, “Staff Report San Joaquin Valley PM 2.5 Contingency Measures Update,” undated.

 L etter dated June 21, 2013 from Samir Sheikh, Director of Strategies and Incentives, SJVUAPCD, t o Richard Cor ey , Executive Officer, CARB submitting the adopted Contingency Measure SIP for CARB review and approval;

 SJVUPACD Governing Board Resolution No. 1 3

- 6

- 18 approving the Contingency Measure SIP ; and

 Memorandum dated June 20, 2013 from Seyed Sadredin, Executi ve Director/APCO, SJVUAPCD to SJVUAPCD Governing Board, re: Item Number 11: Quantification of Contingency Reductions for the 2008 PM 2.5 Plan.

O n July 24, 2013, the District clarified its intent that EPA review, as support documentation for the Contingency Measure SIP, additional materials related to incentive programs that the District had submitted to EPA under separate cover. See e

- mail dated July 24,TSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

EPA

- Region 9 Page 7 2013 from Samir Sheikh, SJVUAPCD, to Kerry Drake, EPA Region 9, “RE: Per our conversation earlier.” These supplemental materials include:

 SJVUAPCD Rule 9610, “ State Implementation Plan Credit for Emission Reductions Generated through Incentive Programs,” adopted June 20, 2013;

 SJVUAPCD, Rule 9610 Final Staff Report (including appendices), dated June 20, 201 3;

 SJVUAPCD, “ 2013 Annual Demonstration Report,” dated June 2013 (including associated electronic “Data Sheet”);

 CARB, “ Carl Moyer Program: Guideline Criteria for On

- Road and Off

- Road Projects,” dated July 2013;

 CARB, “San Joaquin Valley Air Pollution Co ntrol District Proposed Rule 9610, Responses to U.S. EPA’s Request to Address ‘Integrity Elements’ in the Proposition 1B: Goods Movement Emission Reduction Program Guidelines,” draft, revised June 6, 2013 ;

 CARB, “Proposition 1B: Goods Movement Emission Re duction Program, Final Guidelines for Implementation,” adopted February 28, 2008 (selected excerpts);

 CARB, “Proposition 1B: Goods Movement Emission Reduction Program, Final 2010 Guidelines for Implementation,” adopted March 25, 2010 (selected excerpts); and

 CARB, “The Carl Moyer Program Guidelines,” approved April 28, 2011 (selected excerpts).

On August 6 , 2013 , CARB submitted additional technical support for its PM 2.5 to NO x conversion analysis

. See Memorandum dated August 13, 2013 from Scott Bohning, EPA Region 9 to File for docket EPA

- R09

- OAR

- 2013

- 0534, San Joaquin Valley action; Subject : Contingency precursor effectiveness ratio using additional information

. The Contingency Measure SIP consists of (1) the District’s demonstration that actual emission levels in the SJV in 2012 were below the milestone year targets identified in the SJV PM 2.5 SIP and approved by EPA for the 2012 RFP year; and (2) identification of contingency measures that provide 2015 emission reductions not relied on for RFP or attain ment that are approximately equivalent to one

- year’s worth of RFP. The District’s calculation of 2015 emission reductions in the Contingency Measure SIP includes: reductions from contingency measures that we previously identified as SIP

- creditable in our 2 011 action on the SJV PM 2.5 SIP, a revised calculation of emission reductions from the District’s woodburning control measure (Rule 4901) based on updated air quality and emissions data , emission reductions resulting from the District’s implementation of i ncentive programs, and substitution of excess direct PM 2.5 reductions for NO x reductions.



### C . Completeness Determination

CAA section 110(k)(1)(B) requires EPA to determine whether a SIP submittal is complete within 60 days of receipt

. This section also prov ides that any plan that we have not affirmatively determined to be complete or incomplete will become complete by operation ofTSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

EPA

- Region 9 Page 8 law six months after the date of submittal. A completeness review allows us to determine if the submittal includes all the necess ary items and information we need to act on it. We make completeness determinations using criteria we have established in 40 CFR part 51, Appendix V

. These criteria fall into two categories: administrative information and technical support information

. The administrative information provides documentation that the state has followed basic administrative procedures during the SIP

- adoption process and thus we have a legally

- adopted SIP revision in front of us

. The technical support information provides the in formation we need to determine the impact of the proposed revision on attainment and maintenance of the air quality standards. We notify a state of our completeness determination by letter unless the submittal bec a me complete by operation of law

. A finding of completeness is not an approval of the SIP submittal nor does it indicate that the submittal is approvable

. It does start the 12

- month clock we have to act on the SIP submittal

. See CAA section 110(k)(2).

CARB submitted 2 hard copies and an electronic copy of the SJV Contingency Measure SIP and its supporting documentation on July 3, 2013. Additional supporting information was provided on July 24 and August 6, 2013

. We have reviewed th e subm ission and additional supporting information against the comple teness criteria in Appendix V and have determined that the SIP submi ssion is complete. See Table B

- 1. See also

, Letter dated August 12, 2013 from Deborah Jordan, Director, Air Division, EPA Region 9 to Richard W. Corey, Executive Officer, California Air Resourc es Board.TS D for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2 013

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- Region 9 Page 9 Table C

- 1 a 

### Completeness Checklist

– A dministrative Materials San Joaquin Valley PM 2.5 

### Contingency Measure SIP
Completeness Criterion Met? Comments
(a) Submittal letter from Governor/designee requesting EPA approval of the SIP revision Y Let ter dated July 3, 2013 from Richard W. Corey , Executive Officer, California Air Resources Board, to Jared Blumenfeld, Regional Administrator, EPA Region 9. CARB is the governor’s designee for the purposes of SIP submittals

. See CA Health and Safety Code section 39602

. (b) Evidence of adoption of the SIP revision in final form including date of adoption Y SJVUAPCD Governing Board Resolution 13

- 6

- 18 : In the Matter of Authorizing Submittal of the “Quantification of Contingency Reductions for the 2008 PM 2.5 Plan ” to EPA , June 20, 2013

. CARB Resolution 13

- 30, San Joaquin Valley PM 2.5 Contingency Measure Update, June 27, 2013.
(c) Evidence of State/District legal authority to adopt and implement the SIP revision Y SJVUAPCD Governing Board Resolution 13

- 6

- 18 : Califor nia H&SC 40 001 ( a ) /40702
CARB Resolution 13

- 30: CARB: California H&SC 41650(a)

(d1) Copy of actual rule/plan Y The document “Quantification of Contingency Reductions for the 2008 PM 2.5 Plan

, (SJVUAPCD) dated June 20, 2013 is included in the submittal
(d2) Rule changes indicated by underline/cross

- out N/A SIP revision does not incorporate any rules into SIP

.

(e) Evidence that the adoption met all
state procedural requirements Y See items (f) and (g) below.

(f) Copy of public notice including the date of publication Y San Joaquin Valley Unified Air Pollution Control District Notice of Public Hearing on “ Quantification of Contingency Reductions for the 2008 PM 2.5 Plan ,” Hearing date: June 20, 2013 , posted to SJVUAPCD’s website ( http://www.valleyair.org/ Wor kshops/ postings/2013/6

- 20

- 13

- R9601/R9610_NPH.pdf) on May 16, 2013.TS D for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2 013

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- Region 9 Page 10 Table C

- 1 a 

### Completeness Checklist

– A dministrative Materials San Joaquin Valley PM 2.5 

### Contingency Measure SIP
Completeness Criterion Met? Comments
(g) Certification that the hearing was held in accordance with the public notice and state and EPA requirements Y SJVUAPCD Governing Board Resolution 13

- 6

- 18, p p . 2 and 3

. CARB Resolutio n 13

- 30, p. 3.

(h) Compilation of p ublic comments & agency response Y No public comments received except from EPA (see docket)

.

Table C

- 1 b 

### Completeness Checklist

– Technical Support San Joaquin Valley PM 2.5 

### Contingency Measure SIP (per Appendix V, Se ction 2.2)

Completeness Criterion Met? Comment

(a) Identification of all r egulated pollutants identified Y “ Quantification of Contingency Reductions for the 2008 PM 2.5 Plan

, ” p. 2.

(b) Affected sources & attainment status identified Y SJVUAPCD Governing Board Resolution 13

- 6

- 18, p 1.

(c) Rule/plan emissions impact Y “Quantification of Contingency Reductions for the 2008 PM 2.5 Plan ,” p. 9.TS D for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2 013

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- Region 9 Page 11 Table C

- 1 b 

### Completeness Checklist

– Technical Support San Joaquin Valley PM 2.5 

### Contingency Measure SIP (per Appendix V, Se ction 2.2)

Completeness Criterion Met? Comment

(d) Demonstration that a ttainment, RFP & other required demonstration are protected if plan is approved Y Demonstra tion that the 2012 RFP milestone is met: “ Quantification of Contingency Reductions for the 2008 PM 2.5 Plan

, ” p. 2.
Demonstration of non

- interference with attainment demonstration: See “ Quantification of Contingency Reductions for the 2008 PM 2.5 Plan

, ” pp. 4 and 7 (reductions used to
meet the attainment contingency measure requirements are not included in the SIP

approved a ttainment demonstration )

. (e) Modeling support as appropriate Y “Quantification of Contingency Reductions for the 2008 PM 2.5 Plan ,” App endix A and Letter dated July 3, 2013 from Richard W. Corey, Executive Officer, California Air Resources Board, to Jared Blumenfeld, Regional Administrator, EPA Region 9

, p. 2. State is r elying on previously submitted and approved AQ modeling

. (f) Reliance on continuous emission reductions N/A Not applicable. SIP submittal contains no emission limitations.

(g) Evidence of emission limits & other needed requirements N/A Not applicable. SIP submittal contains no emission limitations.

(h) Compliance/enforcemen t strategy N/A CARB, “ Carl Moyer Program: Guideline Criteria for On

- Road and Off

- Road Projects,” dated July 2013; CARB, “San Joaquin Valley Air Pollution Control District Proposed Rule 9610, Responses to U.S. EPA’s Request to Address ‘Integrity Elements’ i n the Proposition 1B: Goods Movement Emission Reduction Program Guidelines,” draft, revised June 6, 2013 ; and SJVUAPCD Governing Board Resolution 13

- 6

- 18.TS D for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2 013

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- Region 9 Page 12 Table C

- 1 b 

### Completeness Checklist

– Technical Support San Joaquin Valley PM 2.5 

### Contingency Measure SIP (per Appendix V, Se ction 2.2)

Completeness Criterion Met? Comment

(i) Special e conomic/technological justifications per EPA policy or explanation of why such justific ation not necessary N/A No special economic/technological justifications needed under applicable EPA policyTSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

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- Region 9 Page 13 

### D. CAA Requirements for Contingency Measure s

Under CAA section 172(c)(9), all PM 2.5 attainment plans must include contingency measures to be imp lemented if an area fails to meet RFP (RFP contingency measures) and contingency measures to be implemented if an area fails to attain the PM 2.5 NAAQS by the applicable attainment date (attainment contingency measures). See 40 CFR § 51.1012. The purpose of contingency measures is to continue progress in reducing emissions while the SIP is being revised to meet the missed RFP milestone or correct continuing nonattainment. The principle requirements for contingency measures are:

 Contingency measures must be f ully adopted rules or control measures that are ready to be implemented quickly upon failure to meet RFP or failure of the area to meet the standard by its attainment date.

 The SIP should contain trigger mechanisms for the contingency measures, specify a

s chedule for implementation, and indicate that the measures will be implemented without further action by the state or by EPA. In general, EPA will expect all actions needed to affect full implementation of the measures to occur within 60 days after EPA not ifies the state of a failure.

 The contingency measures should consist of other control measures for the area that are not included in the control strategy for the SIP.

 EPA recommends that the measures provide for emission reduction s equivalent to approxima tely one year of reductions needed for RFP calculated as the overall level of reductions needed to demonstrate attainment divided by the number of years from the base year to the attainment year.

See 72 FR 20586, 20643 (April 25, 2007)

. The April 16, 1992 General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990 (57 FR 13498, 13512) provides the following guidance on contingency measures which continues to be applicable: States must show that their contingency measures can b e implemented without further action on their part and with no additional rulemaking actions such as public hearings or legislative review. In general, EPA will expect all actions needed to affect full implementation of the measures to occur within 60 days after EPA notifies the State of its failure. Contingency measures can include both Federal, state and local measures already scheduled for implementation or already implemented. The CAA requires contingency measures that provide for additional emission re duction s that are not relied on for RFP or attainment and are not included in these demonstrations. In other words, contingency measures are intended to achieve reductions over and beyond those relied on in the RFP and attainment demonstrations. Nothing in the CAA precludes a state from implementing such measures before they are triggered. See, e.g., LEAN v. EPA , 382 F.3d 575 (5th Cir. 2004) (upholding contingency measures that were previously required and implemented where they were in excess of the attain ment demonstration and RFP SIP). EPA has approved numerous SIPs under this interpretation. See , for example, 62 FR 15844 (April 3, 1997) (direct final rule approving an Indiana ozone SIP revision); 62 FR 66279 (December 18, 1997) (final rule approving an I llinoisTSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

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- Region 9 Page 14 ozone SIP revision); 66 FR 30811 (June 8, 2001) (direct final rule approving a Rhode Island ozone SIP revision); 66 FR 586 (January 3, 2001) (final rule approving District of Columbia, Maryland, and Virginia ozone SIP revisions); and 66 FR 634 (Jan uary 3, 2001) (final rule approving a Connecticut ozone SIP revision).



### E. Evaluation of the Submitted SJV Contingency Measure SIP

1. Calculation of One

- Year’s Worth of Reasonable Further Progress

As discussed in the previous section, a SIP’s contingency measure s should provide for emission reductions approximately equivalent to one year of reductions needed to demonstrate RFP

. One year’s worth of RFP is determined by dividing the emission reduction s from base year levels that are needed for attainment by the number of years between the base year (2005) and the attainment year (2014) . We reproduce our calculation to determine one

- year’s worth of RFP for the SJV PM 2.5 SIP in Table E

- 1 below

.

Table E

- 1



### Reductions Needed from Contingency Measures

(tons per an nual average day)

Direct PM 2.5 NO x SO x A 2005 baseline 86.0 575.4 26.4

B 2014 attainment level 63.3 291.2 24.6

C Emission reduction s needed for attainment (line A

- line B) 22.7 284.2 1.8

D One year’s worth of RFP (line C divided by 9) 2.5 31.6 0.2

Source: Final TSD for the SJV PM 2.5 SIP, Table I

- 1 , p. 1 31.

2

. Contingency Measures for the 2012 Reasonable Further Progress Milestone

The Contingency Measure SIP includes a demonstration that emissions of direct PM 2.5 , NO x , and SO x in 2012 were all below the corresponding 2012 RFP milestone year emissions targets that EPA approved as part of the SJV PM 2.5 SIP. See Contingency Measure SIP, p. 2 and Table E

- 2 below . To make this demonstration, the District used the emission inventory from the 2011 Progress R eport, adjusted to remove uncreditable reductions, and compared it to the SIP

approved 2012 RFP milestone year targets. Based on this comparison, the District concluded that it met its approved 2012 RFP milestone year targets and, accordingly, that RFP con tingency measures for this milestone year are no longer needed. Id.TSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

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- Region 9 Page 15 Table E

- 2 

### 2012 RFP Milestone Compliance Demonstration in the Contingency Measure SIP
Approved RFP Level Actual 2012

emissions RFP benchmark

met?

Direct PM 2.5 71 70 Yes

NO x 336 336 Ye s
SO x 20 20 Yes

Source: Contingency Measure SIP, p. 2.

The RFP demonstration that EPA approved as part of its action on the SJV PM 2.5 SIP (reproduced i n Table E

- 3 below) is based on the demonstration in the 2011 Progress Report

. The RFP demonstration i n the 2011 Progress Report relied in part on uncreditable/erroneous emission reductions. EPA removed these reductions before approving the final RFP demonstration. See Final TSD for SJV PM 2.5 SIP at p. 123. Table E

- 4 list s the se uncreditable /erroneous emis sion reductions. These reductions continue to be uncreditable.

Table E

- 3 

### Approved RFP Demonstration for the 2012 Milestone

(tons per annual average day)

Direct PM 2.5 NO x SO x

Benchmark emissions level 68 354 25
Projected controlled emissions level 70 3 28 20
Currently uncreditable reductions from Rules 9410, 9510, and 4320 (Table &3 ) 0 8.2 0

Corrections to estimated reductions from Rule 4692 (Table &3 ) 0.9 0 0

Revised projected controlled emissions level ( approved RFP target levels ) 71 336 20

Emissio ns above/below benchmark emissions level +3

- 18

- 5

Percent below benchmark emissions level +4%

- 5%

- 20%

Source: Final TSD for the SJV PM 2.5 SIP, Table H

- 3, p. 122

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- Region 9 Page 16 Table E

- 4 

### Adjustments to Control Measures Reductions for the 2012 Milestone RFP Demonst ration (tons per annual average day)

Rule NO x Direct PM 2.5 Explanation

Rule 9410

– Employer Based Trip Reduction Program 0.3 0 Rule 9410 is not SIP approv ed; therefore, reductions from this rule are
not currently creditable for SIP
purposes.

Rule 9510

– Indirect Source Review 6.3 0 R eductions from Rule 9510 are not currently SIP creditable. See EPA’s approval of the rule at 76 FR 26609 ( May 9, 2011 )

.

Rule 4320

– AERO for Boilers 1.6 0 NO x reductions from Rule 4320 are not currently SIP creditable. See EPA’s approval of the rule at 76 FR 16696 (March 25, 2011)

.

Rule 4692

– Commercial Charbroiling 0 0.9 Reductions from Rule 4692 that were included in CARB’s RFP demonstration were incorrectly calculated.
Total Adjustment 8.2 0.9

Source: Final TSD for the SJV PM 2.5 SIP, Table H

- 4, p. 123

The emission inventor y used in the SJV PM 2.5 SIP’s RFP demonstration is expressed in tons per annual average day

, which is an appropriate metric for measuring progress for the annual PM 2.5 standard. 7 The inventory in t he 2011 Progress Report, used in the Contingency Measure SIP to demonstrate that the 2012 RFP targets have been met, is the most current annual
average day inventory available for the SJV and

, therefore, the most appropriate inventory to use for this demon stration. In March of this year, California submitted a winter average day inventory as part of the District’s 2012 PM 2.5 Plan for attain ment of the 2006 24

- hour PM 2.5 NAAQS

. 8 In general, a

7 SIP inventories are also expressed in average summer day and average winter day metrics. Summer day inventories are most commonly used in SIPs addressing the ozone NAAQS because they reflect conditions during the summer when the highest ozone levels typically occur. Winter day inventories are most commonly used in SIPs addressing the 24

- hour PM 2.5 NAAQS because they reflect conditions during the season when 24

- hour PM 2.5 standard violations typically occur.

8 SJVUAPCD, 2012 PM 2.5 Plan , December 20, 2012 , Appendix B

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- Region 9 Page 17 winter day inventory is not directly comparable to an annual day inventory because of the strong

season al pattern of emissions from certain categories (e.g., residential woodburning , agricultural equipment ). We can, however, review th e winter day inventory in the 2012 PM 2.5 Plan to determine if a finding that the SJV ha s met the 2012 RFP milestone targets is consistent with this inventory

. Table E

- 5 compares the annual average day inventory from the 2011 Progress Report with the winter average day f rom the 2012 PM 2.5 Plan

. As can be seen from Table E

- 6 , the total
average winter day inventory from the 2012 PM 2.5 Plan is lower than the total annual average day inventory from the SJV PM 2.5 SIP for all pollutants

.

Table E

- 5 

### Comparison of 2012 Inventories from the CARB Progress Report Supplement and 2012 PM 2.5 

### Plan

CARB P rogress Report Supplement

– A ttachment 1 Annual Average Day 2012 PM 2.5 Plan

– Appendix B
Winter Average Day

Direct PM 2.5 6 8 67.1

NO x 32 6 309.4

SO x 20 9.4

Historically, the average winter day inventories of direct PM 2.5 and NO x in the SJV have been higher than the corresponding average annual day inventories. See Table E

- 6 which shows the winter day and annual day inventories from the 2008 PM 2.5 Plan. Given this

, an average annual day inventory developed using the same methodologies and data as the w inter average day inventory in the 2012 PM 2.5 Plan would most likely be lower than th at winter day inventory. T he fact that the most recently

- developed average winter day inventory (f rom the 2012 PM 2.5 Plan) is lower than the annual average day inventory u sed by the District to demonstrate that the 2012 RFP milestone has been met adds support to the District’s finding that the SJV area met its 2012 milestone

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- Region 9 Page 18 Table E

- 6 

### Comparison of 2012 Baseline Annual Average and Winter Average Day

Emission invento r ies from the SJV 2008 PM 2.5 

### Plan

Annual Average Day Winter Average Day

Direct PM 2.5 77.0 79.1

NO x 424.4 428.4

SO x 23.8 23. 1

Source: SJV 2008 PM 2.5 Plan, Appendix B.

As shown on Table 2 in the Contingency Measure SIP (reproduced in Table E

- 2 above),

c ontrolled emissions levels for direct PM 2.5 , NO x , and SO x were at or below the benchmarks for 2012 . EPA, therefore, proposes to find that the SJV met its 2012 RFP milestone targets. Based

on this proposed finding, EPA also proposes to find that the RFP con tingency measure requirement for the 2012 RFP milestone year is now moot as applied to the S JV

. The sole purpose of RFP contingency measures is to provide continued progress if the area fails to meet its RFP goal. Failure to meet the 2012 milestone year ta rget would have required California to implement RFP contingency measures and to revise the SJV PM 2.5 SIP to assure that the plan still provided for attainment by the attainment date of April 5, 2015. In this case, however, the Contingency Measure SIP demo nstrates that actual emission levels in 2012 met the approved 2012 RFP milestone year targets for all three regulated pollutants ( direct PM 2.5 , NO x , and SO x )

. Accordingly, RFP contingency measures for 2012 no longer have meaning or purpose, and the require ment for them is now moot.

3 . Contingency Measure s for the 2015 Attainment Date

a. Existing Regulatory Measures

i. Contingency Measures for Reducing NO x Emission s
The SJV PM 2.5 SIP which EPA partially approved and partially disapproved in November 2011 ide ntified as contingency measures the 21 tpd of NO x emissions that accrue in 2015 from the continuing implementation of existing CARB mobile source measures. See CARB Progress Report supplement, A ttachment 2

. See also 76 FR 41359 ( Table 10) and Final TSD for SJV PM 2.5 SIP

, p. 135. These mobile source reduction s are from SIP

- approved or otherwise SIP

creditable adopted measures. See Final TSD for SJV PM 2.5 SIP , p. 100

- 105. They are also surplus to the reductions relied upon to demonstrate attainment because th ey occur in 2015 (afterTSD for the Proposed Approval of SJV

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- Region 9 Page 19 implementation of all control measures necessary for expeditious attainment)

. 9 The Contingency Measure SIP also identifies these same mobile source emissions reductions as attainment contingency measures, and EPA agrees that these e mission reductions qualify for approval as attainment contingency measures.

ii. Contingency Measures for Reducing SO x Emissions

The SJV PM 2.5 SIP identified as contingency measures the 3 tpd of SO x emission

r eductions that are surplus to SJV’s attainment needs

. See CARB Progress Report supplement, Attachment 2. The calculation of the amount of available surplus SO x reductions in the SJV PM 2.5 SIP’s attainment demonstration is shown in Table E

- 7. CARB attributed these reductions to baseline measures and rec ently

- adopted regulations but does not otherwise identify the measures generating the reductions

. Id

. Evaluation of the SO x reduction in the baseline ( Table E

- 7 , line C) show that they are principally from mobile sources and are attributable to CARB’s Low Sulfur Diesel regulations which lowered the allowable level of sulfur in on

- road and off

- road diesel fuel from 500 ppm to 15 ppm . The low sulfur limit was fully effective by September 1 , 2006. 10 EPA approved CARB’s diesel fuel regulations, including the 15 ppm sulfur limit in 2010. See 75 FR 26653 ( May 12, 2010 )

. Creditable reductions from the control strategy are from several District rules . These rules, their credited SO x reductions, and the date and cite of EPA’s action approving each rule are listed in Table E

- 8

. The Contingency Measure SIP also identifies these SO x reductions from State and District rules and regulations as attainment contingency measures, and EPA agrees that these measures provide 3 tpd of SO x reductions that are not relied on for RF P or attainment and, therefore, qualify for approval as attainment contingency measures

.

9 Consistent with CAA section 172(c)(1) and 40 CFR § 51.1007(b), the SJV PM 2.5 SIP provid e s for the implementation of all control measures needed for attainment as expeditiously as practicable and no later than the beginning of the year prior to the attainment date ( i.e., by January 2014) (76 FR 699 16 to 69917).

10 Title 13, California Code of Regulations, Division 3, Chapter 5, Article 2, section 2281 (“Sulfur Content of Diesel Fuel”) (operative August 4, 2005).TSD for the Proposed Approval of SJV

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- Region 9 Page 20 Table E

- 7 

### Surplus SO x 

### Reductions in the SJV PM 2.5 

### SIP for Attainment of the 1997 PM 2.5 

### NAAQS

SO x tons per average day

A 200 5 baseline 26.4

B Reductions from base line measures 1.0

C Creditable reductions from the control strategy 3.6

D Controlled 2014 level (line A

– line B

– line C ) 21.8

E Attainment t arget level 24.6

F Excess reductions available as contingency measures (line E

– line D ) 2.8

Source: Line C: Final TSD for the SJV PM 2.5 SIP, Table F

- 4, p. 94 ; Lines A, B, and E from Table F

- 9, p. 101

.

Table E

- 8 

### SJVUPACD Rules Controlling SO x 

### Emissions

SJVUAPCD Rule Approved Reductions (tpd)
4103

- Open Burning 77 FR 214 (January 4, 2012) 0.05

4306

- Boil ers

- Phase 3 & 4320

- Advanced Emission reduction s for Boilers, Steam Generators and Process Heaters (> 5 MMBtu/hr) Rule 4306: 75 FR 1715 (January 13, 2010)
Rule 4320: 76 FR 16696 (March 25, 2011) 1.92

4354

- Glass Melting Furnaces 1 76 FR 53640 (August 29, 2011) 1.62

4901

- Wood Burning Fireplaces and Wood Burning Heaters 74 FR 57907 (November 10, 2009) 0.02

Total SO 2 Reductions from Approved Measures 3.61

Source: Final TSD for the SJV PM 2.5 SIP, Tables F

- 3 and F

- 4, p p

. 92 and 94
1 EPA approved t he District’s May 21, 2011 revision to this rule at 78 FR 6740 (January 31, 2013). The revision did not affect the expected emission reductions from this rule. See SJVUAPCD, Final Staff Report, Amendments to Rule 4354 (Glass Melting Furnaces), June 20, 2011, p. 7.

iii. Contingency Measures for Reducing Direct PM 2.5 Emissions

The District’s Rule 4901

– Wood Burning Fireplace and Wood Burning Heaters (revised October 16 , 2008), includes a contingency provision in section 5.6.5. Th is contingencyTSD for the Proposed Approval of SJV

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- Region 9 Page 21 provision , if impl emented, would lower the level for mandatory curtailment of wood burning from a forecast ed 24

- hour PM 2.5 level of 30 μg/m3 to a forecasted level of 20 μg/m3. This lower curtailment level would result in more “No Burn” days and therefore more PM 2.5 and NO x emission reduction s from residential wood burning. We approved the October 2008 revision of Rule 4901

, including the contingency provision

, into the California SIP on November 10, 2009
at 74 FR 57907.

In our 2011 action on the SJV PM 2.5 SIP, we found the c ontingency provision in section 5.6. 5 of Rule 4901 met CAA requirements for contingency measures , and we stated that the District had preliminarily quantified the emission reduction s expected from this contingency provision at 1.6 tpd (annual average) of d irect PM 2.5 emission reductions. See 76 FR 41338, 41358 (July 13, 2011). In the Contingency Measure SIP, the District updated its estimate of emission reductions from the contingency provision in Rule 4901 , using measured air quality data from 2009 throug h 2012 to assess the number of mandatory curtailment days that would occur at the 20 μg/m 3
threshold. See Contingency Measure SIP, pp. 5

- 6 . The revised estimates are 3.12 tpd of direct PM 2.5 and 0.32 tpd of NO x . Id. We have reviewed the District’s methodol ogy for calculating these revised estimates and find it appropriate for determining the reductions from Rule 4901’s contingency provision.

iv. Summary of Attainment Contingency Emission Reductions from Regulatory Measures Reductions from regulatory measur es provided in the SJV PM 2.5 SIP that EPA previously identified as credit able toward meeting the attainment contingency measure requirement are summarized in Table E

- 9 below.TSD for the Proposed Approval of SJV

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- Region 9 Page 22 Table E

- 9 

### Reductions from Regulatory Measures that are Creditable toward Conting ency Measures

Tons per annual average d ay

– 2015

Direct PM 2.5 NO x SO x
CARB mobile source control program

— 21

— Surplus reductions in the attainment demonstration — — 3

Rule 4901 contingency provision 3. 1 0.3

—
Total 3. 1 21.3 3

b. Incentive P r ograms

T he Contingency Measure SIP states that NO x and PM 2.5 emission reductions to be achieved through the implementation of specific incentive programs in the San Joaquin Valley are available for contingency measure purposes in 2015. See Contingency Meas ure SIP at 7

– 9. The incentive programs identified in the Contingency Measure SIP for this purpose are as follows: the Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program), implemented through a partnership between CARB and lo cal air districts; the Proposition 1B: Goods Movement Emission Reduction Program (Prop 1B), also implemented through a partnership between CARB and local air districts ; and the U.S. Department of Agriculture, Natural Resources Conservation Service’s (NRCS) Environmental Quality Incentives Program (EQIP), implemented by NRCS. See id . We are proposing to approve 4.15 tpd of NO x reductions and 0.10 tpd of direct PM 2.5 reductions from specific Carl Moyer Program and Prop 1B projects, as identified in the Contin gency Measure SIP and in this proposed rule, for purposes of satisfying the contingency measure requirement for the 1997 PM 2.5 NAAQS. The CAA explicitly provides for the use of economic incentives as one tool for states to use to achieve attainment of the NAAQS. See, e.g., CAA section 110(a)(2)(A) (requiring that each SIP “include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights ), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of [the Act]”) ; see also section 172(c)(6), 183(e)(4). Economic incentive programs (EIPs) use market

- based strategies to encourage the reduction of emissions from stationary, area, and/or mobile sources in an efficient manner. EPA has promulgated regulations for statutory EIPs required under section 182(g) of the Act and hasTSD for the Proposed Approval of SJV

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- Region 9 Page 23 issued guidance for discretionary EIPs. 11 See 59 FR 16690 (A pril 7, 1994) (codified at 40 CFR part 51, subpart U) and “Improving Air Quality with Economic Incentive Programs,” U.S. EPA, Office of Air and Radiation, January 2001 (EPA

- 452/R

- 01

- 001) (“2001 EIP”)

. Where a State relies upon a discretionary EIP in a SIP submission, EPA evaluates the programmatic elements of the EIP to determine whether the resulting emission reductions are quantifiable, surplus, enforceable and permanent

. See 2001 EIP at Section 4.1. These four fundamental “integrity elements,” which appl y to all EIPs and other incentive/voluntary measures relied on for SIP purposes, are designed to ensure that such programs and measures satisfy the applicable requirements of the Act. See id. ; see also “Guidance on Incorporating Vo luntary Mobile Source Emi ssion R eduction Programs in State Implementation Plans (S IPs),” October 24, 1997 (“1997 VMEP”) ; “Incorporating Voluntary Stationary Source Emission Reduction Programs Into State Implementation Plans

– Final Policy,” January 19, 2001; “Incorporating Emergin g and Voluntary Measures in a State Implementation Plan (SIP),” September 2004 (“2004 Emerging and Voluntary Measures Policy”) ; “Guidance on Incorporating Bundled Measures in a State Implem entation Plan,” August 16, 2005; and “Roadmap for Incorporating Ene rgy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans,” July 2012. EPA has generally defined the four fundamental integrity elements for discretionary EIPs and other incentive/voluntary measures as follows:

1. Quanti fiable: emissions and emission reductions are quantifiable if someone can reliably and replicably measure or determine them;

2. Surplus: Emission reductions are surplus if they are not otherwise required by or assumed in a SIP

- related program ( e.g., an attain ment or reasonable further progress plan or a transportation conformity demonstration), any other adopted State air quality program, a consent decree, or a federal rule designed to reduce emission of a criteria pollutant or its precursors ( e.g., a new sour ce performance standard or federal mobile source requirement);

3. Enforceable: emission reductions and other required actions are enforceable if they are independently verifiable; program violations are defined; those liable can be identified; the State and E PA may apply penalties and secure appropriate corrective action where applicable; citizens have access to all emissions

- related information obtained from participating sources; and the required reductions/actions are practicably enforceable consistent with EPA guidance on practical enforceability.

4. Permanent: emission reductions are permanent if the State and EPA can ensure that the reductions occur for as long as they are relied upon in the SIP.

See 2001 EIP at Section 4.1, 1997 VMEP at pp. 6

- 7, and 2004 Emerging and Voluntary Measures Policy at pp. 3

- 4. The District’s Rule 9610 (as adopted June 20, 2013) contains definitions that are generally consistent with EPA’s definitions of these terms. See Rule 9610 at

11 A “discretionary economic incentive program” is “any EIP submitted to the EPA as an imp lementation plan revision for purposes other than to comply with the statutory requirements of sections 182(g)(3), 182(g)(5), 187(d)(3), or 187(g) of the Act.” 40 CFR § 51.491.TSD for the Proposed Approval of SJV

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- Region 9 Page 24 section 2.8 (definition of “enforceable”); sec tion 2.18 (definition of “permanent”); section 2.23 (definition of “quantifiable”); and section 2.27 (definition of “surplus”). We are evaluating the incentive

- based emission reductions in the Contingency Measure SIP in accordance with these fundamental i ntegrity elements as applied, in particular, to discretionary “financial mechanisms EIPs” and “voluntary mobile source emission reduction programs” (VMEPs). See 2001 EIP at Section 8.0 (describing “financial mechanism EIP” as a mechanism that indirectly re duces emissions by increasing costs for high emitting activities

– e.g. , through fees/taxes on emissions and subsidies targeted at promoting pollution

- reducing activities or products) and 1997 VMEP at p. 3 (describing “VMEP” as a mobile source strategy tha t complements existing regulatory programs through voluntary, nonregulatory changes in local transportation sector activity levels or changes in in

- use vehicle and engine fleet composition). A discretionary EIP or VMEP submission must be accompanied by suf ficient technical support for EPA to determine that the statutory criteria for approval are met

– e.g., procedures designed to compare projected emission reductions with actual emissions reductions achieved; State commitments to monitor, assess, and report on program implementation and actual emission reductions achieved; and procedures for the State to remedy emission reduction shortfalls in a timely manner. See 2001 EIP at Section 5.0 and 1997 VMEP at pp. 6, 7

. The State must also demonstrate that it has adequate personnel and program resources to implement the program and that the EIP or VMEP does not interfere with other requirements of the Act. See id. and 2001 EIP at Section 11.0. With respect to VMEPs, EPA has generally limited the amount of emission reductions allowed in a SIP to 3 percent of the total projected future year emission reductions required to attain the relevant NAAQS, and with respect to any particular SIP submittal to demonstrate attainment or maintenance of the NAAQS or progress toward attainment (RFP), 3 percent of the specific statutory requirement. See 1997 VMEP at p. 5.

i . The California Submittal The Contingency Measure SIP states that a total of 10.9 tpd of NO x reductions and 0.44 tpd of PM 2.5 reductions, to be achieved in 2015 th rough implementation of the Carl Moyer Program, Prop 1B, and EQIP, are available for contingency measure purposes and that these emission reductions exceed the 4.15 tpd of NO x reductions and 0.10 tpd of direct PM 2.5 reductions needed to satisfy the conting ency measure requirement for 2015. See Contingency Measure SIP at 7. To support the District’s conclusion that these NO x and direct PM 2.5 reductions from incentive programs are quantifiable, surplus, enforceable and permanent, the Contingency Measure SIP c ites specified requirements in proposed SJVUAPCD Rule 9610, a regulation adopted by the District on June 20, 2013 to establish administrative processes and criteria for documenting emission reductions achieved through incentive programs for CAA SIP purpose s. See id . at pp. 7, 8 (citing Proposed SJVUAPCD Rule 9610, section 7.0, and related support documents). According to the District, the 4.15 tpd of NO x reductions and 0.10 tpd of direct PM 2.5 reductions from incentive programs that it is relying upon to sa tisfy the attainment contingency measure requirement (for 2015) satisfy the requirements of section 7.0 of proposed Rule 9610 12 and, therefore, qualify for SIP credit under the CAA.

12 The Contingency Measure SIP references “proposed” Rule 9610 because the rule was not yet adopted at the time the District was developing the Contingency Measure SIP. Rule 9610, as adopted by the SJVUAPCD Governing Board on June 20, 2013, is substantively unchanged from the proposed rule that the District madeTSD for the Proposed Approval of SJV

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- Region 9 Page 25 EPA is not proposing at this time to act on Rule 9610 itself

. To the extent the Contingency Measure SIP relies upon emission reductions that are quantified and tracked pursuant to the requirements of Rule 9610, however, EPA has reviewed relevant provisions of the rule and related support document s , consistent with the District’s intent. See e

- mail dated July 24, 2013 from Samir Sheikh, SJVUAPCD, to Kerry Drake, EPA Region 9, “RE: Per our conversation earlier.” Under section 7.0 of Rule 9610, each SIP submission in which the District relies on projections of emission reductions fr om incentive programs to satisfy a CAA SIP requirement must include a demonstration that each applicable incentive program guideline continues to provide for “SIP

- creditable emission reductions”

– i.e., emission reductions that are quantifiable, surplus, e nforceable, and permanent , as those terms are defined in Rule 9610. See Rule 9610, section 7.0 and section 2.25 (definition of “SIP

- Creditable Emission Reduction”). In addition, each such SIP submission must include an enforceable commitment that: (1) iden tifies incentive program guidelines used to generate projected SIP

- creditable emission reductions; (2) identifies emission reductions “projected to be achieved through the use of secured or reasonably anticipated incentive program funding” and estimated nu mbers of projects and willing participants; (3) is specifically adopted by the District as part of the SIP and accounted for in subsequent annual demonstration reports; and (4) states that “if either the District or EPA finds that there is a SIP shortfall for a particular year, the District will adopt and submit to EPA, by specified dates, substitute rules and measures that will achieve equivalent emission reductions as expeditiously as practicable and no later than any applicable implementation deadline in the Clean Air Act or EPA’s implementing regulations.” See Rule 9610, sections 7.1 through 7.4.
Consistent with these criteria, the Contingency Measure SIP contains the State’s demonstration that specified portions of the following Prop 1B and Carl Moyer Program guidelines provide for emission reductions that are quantifiable, surplus, enforceable, and permanent 13 :
1. “Proposition 1B: Goods Movement Emission Reduction Program, Final 2010 Guidelines for Implementation,” adopted March 25, 2010;

2. “Proposition 1B : Goods Movement Emission Reduction Program, Final Guidelines for Implementation,” adopted February 28, 2008; and

3. “The Carl Moyer Program Guidelines,” approved April 28, 2011

.

available for public c omment on May 21, 2013, and section 7.0 of the adopted rule is identical to the text in the proposed rule. Unless otherwise noted, all references to Rule 9610 herein are to the rule as adopted June 20, 2013.

13 The District’s Board Resolution adopting the C ontingency Measure SIP broadly identifies “the incentive program guidelines identified in Section 3.1 of Rule 9610, the 20 13 Draft Annual Demonstration Report, and the Manual of Procedures to quantify SIP

- creditable emission reductions relied upon to satis fy the PM 2.5 contingency measure requirement for 2015 in the amount of 4.15 tons per day (tpd) of NO x reductions and 0.10 tpd of PM 2.5 reductions...,” and the Contingency Measure SIP similarly identifies the Carl Moyer Program, Prop 1B, and EQIP (NRCS) in th eir entirety as the basis for the District’s claimed NO
x and PM 2.5 emission reductions. See SJVUAPCD Board Resolution No. 13

- 6

- 18 at p. 3 and Contingency Measure SIP at 7. In this proposed rule, however, EPA is evaluating only a subset of these guidelines ( i.e., specified portions of those Carl Moyer Program and Prop 1B guidelines identified herein), as the Contingency Measure SIP does not contain adequate technical documentation for EPA to fully evaluate all of the incentive programs referenced in the SIP submission.TSD for the Proposed Approval of SJV

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- Region 9 Page 26 See “San Joaquin Valley Air Pollution Control District Proposed Rule 9610, Res ponses to U.S. EPA’s Request to Address ‘Integrity Elements’ in the Proposition 1B: Goods Movement Emission Reduction Program Guidelines,” draft revised June 6, 2013, transmitted to EPA via e

mail dated June 10, 2013 from Elizabeth Yura, CARB, to Andy Stec kel, EPA Region 9, RE: Draft Deliberative

- Prop 1B Documentation. In addition, the Contingency Measure SIP contains an enforceable commitment by the District: (1) to “account for” the District’s claimed 4.15 tpd of NO x reductions and 0.10 tpd of PM 2.5 re ductions “in annual demonstration reports pursuant to the requirements of Rule 9610”; and (2) if there is a shortfall in emission reductions from these incentive programs, to “adopt and submit to EPA substitute rules and measures that will achieve equivale nt emission reductions as expeditiously as practicable and no later than any applicable implementation deadline in the CAA or EPA’s implementing regulations, by no later than December 31, 2016.” See SJVUAPCD Board Resolution No. 13

- 6

- 18 at p. 3. Finally, information provided to support the Contingency Measure SIP demonstrates that the District has adequate personnel and program resources to implement the Carl Moyer Program and Prop 1B programs. See, e.g., “ The Carl Moyer Program Guidelines” (approved April 28), Chapter 3 (“Program Administration”); “ 201 1 Proposition 1B: Goods Movement Emission Reduction Program, Final 2010 Guidelines for Implementation” ( adopted March 25, 2010 ) at Chapter III (“Local Agency Project Proposal”); and letter dated January 2, 20 13 from James Goldstene, Executive Officer, CARB, to Seyed Sadredin, Air Pollution Control Officer, SJVUAPCD, enclosing “Incentive Program Review Report, San Joaquin Valley Air Pollution Control District Fiscal Years 2006

- 07 through 2009

- 10 .” We note that t he 4.15 tpd of NO x reductions and 0 .10 tpd of direct PM 2.5 reductions attributed to the Carl Moyer Program and Prop 1B in 2015 for contingency measure purposes each amount to less than 2 percent of the total projected emission reductions of each pollutant needed to attain the 1997 PM 2.5 NAAQS in the SJV

. 14
We discuss below our evaluation of these elements of the Contingency Measure SIP.

ii . Applicable Incentive Program Guidelines and Projects The Contingency Measure SIP states that it relies on incentive

- ba sed emissions reductions to be achieved from “already

- executed, legally binding contracts” rather than on projections of future funding and participation rates. See Contingency Measure SIP at pp. 7, 8. According to t he 2013 Annual Demonstration Report and associated “ Data Sheet ,” 15 on

- road vehicle replacement projects 16 that have been funded through the Prop 1B program and off

- road

14 The SJV PM 2.5 SIP projects the total amounts of emission reductions needed to attain the PM 2.5 NAAQS, from a 2005 base year to a 2014 attainment year, are as follows: 284.2 tpd of NO x reductions; 22.7 tpd of direct PM 2.5 reductions; and 1.8 t pd of SO x reductions. See 76 FR 69896, 69923 (Table 4, line A) and Final TSD for SJV PM 2.5 SIP, p. 113 (Table G

- 2, line C). Thus, the incentive program reductions identified in the Contingency Measure SIP amount to approximately 1.5 percent of the NO x redu ctions and 0.4 percent of the direct PM 2.5 reductions needed for timely attainment of the PM 2.5 NAAQS in the SJV.

15 Available at http://www.valleyair.org/MOP/docs/96 10ProjectDataforPublicUNLOCKED8

- 7

- 13.xlsx

16 Section 2.19 of Rule 9610 defines the term “project” as follows: “for purposes of this rule, actions taken to reduce emissions through incentive programs, as contracted between the Grantee and the District, NRCS , orTSD for the Proposed Approval of SJV

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- Region 9 Page 27 vehicle replacement projects that have been funded through the Carl Moyer Program are expected to achieve NO x and direct PM 2.5 em ission reductions in amounts adequate to cover the incentive

- based emission reductions claimed by the District in the Contingency Measure SIP ( i.e., the 4.15 tpd of NO x reductions and 0.10 tpd of direct PM 2.5 reductions claimed for 2015). These funded proj ects are subject to the three specific incentive program guidelines identified above: (1) “ Proposition 1B : Goods Movement Emission Reduction Program , Final 2010 Guidelines for Implementation,” adopted March 25, 2010 ; (2 ) “ Proposition 1B : Goods Movement Emi ssion Reduction Program , Final Guidelines for Implementation,” adopted February 28, 2008 ; and (3) “The Carl Moyer Program Guidelines,” approved April 28, 2011. 17
Specifically, the Data Sheet identifies 1243 “on

- road vehicle replacement” projects funded thr ough the Prop 1B program that have a “project life” ending on or after January 1, 2016 and therefore will continue to achieve emission reductions at least through the end of 2015. 18 Collectively, these 1243 funded projects are projected to achieve 3.78 tpd of NO x reductions and 0.15 tpd of PM reductions in 2015. 19 These totals are consistent with the emission reduction estimates for 2015 provided in Table 18 of the 2013 Annual Demonstration Report , which identifies the total reductions, in tpd, of NO x , parti culate matter ( PM ) and “reactive organic gases” (ROGs) 20 that the District expects will be achieved by Prop 1B projects related to on

- road trucks between 2009 and 2020. See 2013 Annual Demonstration Report at p. 40, Table 18 (“SIP

Creditable Incentive

- Based Emission Reductions for On

- Road Trucks”). Additionally, the Data Sheet indicates that 8 53 of these 1243 projects subject to Prop 1B funds have a project life ending after December 31 , 201 6 and will, therefore, continue to generate emission reductions

CARB using incentive program guidelines at the time of contracting. Such actions include, but are not limited to, replacements, retrofits, new purchases, new practices, and repower.”

17 In the absence of specific identification of the applicable guidel ines in the Contingency Measure SIP ( see n. 3, supra ) , EPA focused its evaluation on specified portions of these three guidelines because they contain program criteria that adequately support the incentive

- based emission reductions relied upon in the Conti ngency Measure SIP. In any future SIP that relies on incentive

- based emission reductions quantified pursuant to the requirements of Rule 9610, we expect the District will identify the specific types of projects relied upon to generate the emission reductio ns and the specific incentive program guideline s that apply to those projects, together with a detailed demonstration that those guidelines (or relevant portions thereof ) satisfy the four fundamental integrity elements , as discussed herein and identified i n Attachment A and Attachment B to this TSD

. In subsequent annual demonstration reports, the District must then specify the individual projects relied upon to achieve those emission reductions. See Rule 9610, section 4.5.

18 In the Data Sheet, these Prop 1 B projects are listed under the following columns: (1) Component: “On

Road Prop 1B”; (2) Component Option: “Vehicle Replacement” or “Vehicle Replacement 2 for 1”; and (3) Applicable Guideline: “Prop 1B 2008” and “Prop 1B 2010.” EPA has compiled these Prop 1B projects into a separate document which identifies each project by its unique “project identification” code and information regarding the emission reductions it will achieve over its lifetime , in tons. See Attachment A (“Prop 1B: On

- Road Vehicle Replace ment projects achieving emission reductions through 2015”).

19 For each individual project, EPA calculated the NO x and PM emission reductions (in tons per day), respectively, by dividing each of the “NO
x Lifetime Reduced Adjusted Percent Operation (tons)” and “PM Lifetime Reduced Adjusted Percent Operation (tons)” figures by the corresponding “Project Life” (in days). The sum of the NO x emission reductions for all identified projects is 3.78 tpd, and the sum of the PM reductions for all identified projects is 0.15 tpd. See Memorandum dated July 22 , 2013 from Idalia Perez to File.

20 California uses the term “reactive organic gases” (ROGs) to refer generally to volatile organic compounds (VOCs) as defined in 40 CFR § 51.100(s).TSD for the Proposed Approval of SJV

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- Region 9 Page 28 thro ugh at least the end of 2016. See Attachment A (“Prop 1B: On

- Road Vehicle Replacement projects achieving emission reductions through 2015”) and Memorandum dated July 22 , 2013 from Idalia Perez to File. The se funded projects are expected to achieve 2.35 tpd of NO x reductions and 0.09 tpd of PM reductions in 2016. See id. and 2013 Annual Demonstration Report at p. 40, Table 18. Similarly, the Data Sheet identifies 675 “off

- road vehicle replacement” projects funded through the Carl Moyer Program that have a “ project life” ending on or after January 1, 2021 and therefore will continue to achieve emission reductions well past the end of 2015. 21 Collectively, these 675 funded projects are projected to achieve 1.23 tpd of NO x reductions and 0.06 tpd of PM reduction s in 2015. 22 These totals are consistent with the emission reduction estimates for 2015 provided in Table 13 of the 2013 Annual Demonstration Report , which identifies the total reductions, in tpd, of NO x , PM and ROGs that the District expects will be achiev ed by Carl Moyer Program projects related to off

- road vehicle replacement between 2009 and 2020. See 2013 Annual Demonstration Report at p. 37, Table 13 (“SIP

- Creditable Incentive

- Based Emission Reductions for Off

- Road Compression

- Ignition Equipment Replac ement Claimed Pursuant to Section 3.1”). All of these projects are expected to continue achieving ERs through at least 2021. See Attachment B (“Carl Moyer Program: Off

- Road Vehicle Replacement projects achieving emission reductions through 2015”) and Memor andum dated July 22 , 2013 from Idalia Perez to File. Although Chapter 9 of the 2011 Carl Moyer Pro gram guideline contains several provisions allowing for case

- by

- case determinations

, 23 we understand that the District’s 2015 emission reduction estimates for Carl Moyer projects in Table 13 of the 2013 Annual Demonstration Report do not rely on any projects subject to case

- by

- case determinations, as such determination s are not eligible for SIP credit unless reviewed through a public process and submitted to EP A as part of a SIP submission meeting the requirements of Rule 9610. 24

21 In the Data Sheet, these Carl Moyer Program projects are listed under the following columns: (1) Component: “Off

- Road”; (2) Component Option: “Vehicle Replacement”; and (3) Applicable Guideline: “Carl Moyer 2011.” EPA has compiled these Carl Moyer Program projects into a separate docum ent which identifies each project by its unique “project identification” code and information regarding the emission reductions it will achieve over its lifetime , in tons

. See Attachment B to this TSD (“Carl Moyer Program: Off

- Road Vehicle Replacement proj ects achieving emission reductions through 2015”).

22 For each individual project, EPA calculated the NO x and PM emission reductions (in tons per day), respectively, by dividing each of the “NO
x Lifetime Reduced Adjusted Percent Operation (tons)” and “PM Li fetime Reduced Adjusted Percent Operation (tons)” figures by the corresponding “Project Life” (in days). The sum of the NO x emission reductions for all identified projects is 1.23 tpd, and the sum of the PM reductions for all identified projects is 0.06 tp d. See Memorandum dated July 22 , 2013 from Idalia Perez to File

.

23 See, e.g., “The Carl Moyer Program Guidelines,” approved April 28, 2011, Chapter 9 (Off

- Road Equipment Replacement) at section C.1(C)(5) (“Project Life”).

24 Rule 9610 specifically prohibit s the use of any case

- by

- case determination to quantify emission reductions for SIP purposes “unless such determination is reviewed through a public process and submitted to EPA in accordance with Section 7.0 [of Rule 9610].” See Rule 9610 at section 3.2.2 ; see also 2013 Annual Demonstration Report at 11. Neither the 2013 Annual Demonstration Report nor the Contingency Measure SIP specifically identifies any case

- by

- case determination for EPA review.TSD for the Proposed Approval of SJV

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- Region 9 Page 29 iii . The Four Integrity Elements We have evaluated specific portions of the three incentive program guidelines identified above (the 2008 and 2010 Prop 1B guidelines 25 and 2011 Carl Moyer Program guideline 26 ) and believe, with one exception, that they provide for emission reductions that are quantifiable, surplus, enforceable, and permanent consistent with the requirements of the CAA as interpreted in EPA policy. 27 The one exception is the o ption for the State to grant a longer project life on a

case

- by

- case basis “if an applicant provides justifying documentation.” See, e.g., “The Carl Moyer Program Guidelines,” approved April 28, 2011, Chapter 9 (Off

- Road Equipment Replacement) at section C .1(C)(5) (“Project Life”). This option to grant a longer project life on a

case

- by

- case basis provides the State with broad discretion to extend the duration of emission reductions claimed from an equipment replacement project without any EPA oversight or public
process

. Because these case

- by

- case determinations c ould undermine the integrity of the program ( e.g., by undermining EPA’s ability to limit SIP credit to the period during which the emission reductions are “surplus” to other requirements ) , EPA cann ot grant SIP credit for emission reductions from projects subject to such a determination unless the District submits the individual determination for EPA review and approval through the SIP process. With the limited exception of these provisions regarding case

- by

- case determinations

, 28 the portions of the identified program guidelines that we have reviewed establish clear criteria that enable the District to quantify the emission reductions attributed to specified projects with a reasonable level of accurac y; verify that those emission reductions are “surplus” in accordance with section 2.27 of Rule 9610 29 ; enforce the conditions of program grants to ensure that contracted emission reductions a re achieved; and monitor the continuing implementation of program grants to ensure that emission reductions are “permanent” throughout the life of each project. We describe our evaluations in more detail below.

25 See “Proposition 1B: Goods Movement Emission Reduction Program, Final Guidelines for Implementation,” adopted February 28, 2008 ( relevant excerpts available on EPA’s docket for this rulemaking ) and “Proposition 1B: Goods Movement Emission Reduction Program, Final 2010 Guidelines for Implementation,” adopted Ma rch 25, 2010 ( relevant excerpts available on EPA’s docket for this rulemaking )

.

26 See “The Carl Moyer Program Guidelines,” approved April 28, 2011 ( relevant excerpts available on EPA’s docket for this rulemaking )

.

27 EPA has reviewed only the identified por tions of these three incentive program guidelines for the purpose of determining whether the Contingency Measure SIP satisfies the requirements of CAA section 172(c)(9) and is not, at this time, proposing to reach any conclusion regarding other portions no t specifically addressed in this TSD.

28 EPA understands that none of the Carl Moyer Program projects relied upon in the Contingency Measure SIP are subject to case

- by

- case determinations. See Section b.ii above (“ Applicable Incentive Program Guidelines and Projects ”).

29 Section 2.27 of Rule 9610 defines the term “surplus” as follows: “for purposes of this rule, emission reductions are surplus when they are not otherwise required by any federal, state, or local regulation, or other legal mandate, and are in excess of the baseline emission inventories underlying a SIP attainment demonstration.”TSD for the Proposed Approval of SJV

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- Region 9 Page 30 Prop 1B Overview California voters approved Proposition 1B in November 2006, authoriz ing the Legislature to app ropriate $1 billion in bond funding to the Air Resources Board (ARB) to reduce air pollution emissions and health risks from freight movement along California’s priority trade corridors. See “ Pro position 1B Program: Goods Movement Emissi on Reduction Progra m, Final 2013 Guidelines for Implementation,” adopted January 25, 2013, at pp. 1

- 12

. 30 The State bills that created the Program are codified in the California Health and Safety Code, section 39625 et seq . By statute, the Program can only fund emission reduc tions not otherwise required by law or regulation. CARB awards grants following the program guidelines to fund projects proposed by local agencies, including the SJVUAPCD, that are involved in freight movement or air quality improvements associated with go ods movement activities. CARB staff developed the initial Proposition 1B: Goods Movement Emission Reduction Program Guidelines for Implementation (Guidelines) in consultation with stakeholders, including: air districts, metropolitan planning organizations, port authorities, shipping lines, railroad companies, trucking companies, harbor craft owners, freight distributors, terminal operators, local port community advisory groups, community interest groups, and airports. When the CARB Governing Board adopted t he initial Guidelines in 2008, the Board directed CARB staff to reassess those Guidelines following each appropriation of funding. Updates to the Guidelines are based on evaluating advances in technology, changes in equipment costs, regulatory actions, dem and for Program funds, and other new information that influences the design of project specifications. The process involves the release of a concept paper and workshops to obtain feedback from stakeholders. See id.

Prop 1B Enforceable Specific funding cri teria established in the Prop 1B program guidelines ensure that emission reductions claimed for these projects will be independently verifiable and practicably enforceable consistent with EPA policy. The CARB Governing Board holds a noticed public hearing to consider recommendations for funding local agency projects. The Board’s funding decisions become legally enforceable by CARB through executed grant agreements between CARB and the selected local agencies. The requirements for these grant agreements are in:

 Section II.D.10, Local Agency Project Grant Agreement , of the 2008 guidelines.

 Section II.E.10, Local Agency Grant Agreement , of the 2010 guidelines.

These sections include requirements that the local agency complete equipment project
pre

- inspections and post

- inspections. This requirement ensure s that equipment information provided by the project owner is consistent with actual operating equipment and that the existing equipment is in working condition. Additional requirements for pre

- inspections inclu ding verification of usage and requirements for photographic confirmation of the equipment are in:

30 Available at http://www.arb.ca.gov/bonds/g mbond/docs/prop_1b_goods_movement_2013_program_guidelines_for_implementat ion.pdfTSD for the Proposed Approval of SJV

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- Region 9 Page 31  Section III.D.8, Equipment Project Contracts , of the 2008 guidelines.

 Section IV.A.10, Equipment Project Pre

- Inspections , of the 2010 guidelines.

Prop 1B fu nding is obligated by the SJVUPACD for each project by contracts between the District and the equipment owner. The requirements for these contracts, which are legally enforceable by the SJVUAPCD, are in:

 Section III.D.10, Equipment Project Contracts , of th e 2008 guidelines.

 Section IV.A.11, Equipment Project Contracts , of the 2010 guidelines.

These sections of the Prop 1B guidelines include general requirements for recordkeeping, reporting, audits and other verification mechanisms that all project contracts must contain, including provisions requiring equipment owners to agree to the installation and use of an electronic monitoring device at any time during the contract term. Contract non

- performance provisions per these sections of the guidelines specify so me of the actions that would constitute a breach of contract as well as remedies for non

- performance, including cancellation of the contract and recovery of all or a portion of Program funds. Additional requirements specific to truck replacements are in:

 2008 Prop 1B guidelines, Appendix A, Trucks Serving Ports and Intermodal Rail Yards

, and Appendix B, Other Heavy Duty Diesel Trucks , Section C, Recordkeeping Requirements , Section D, Annual Reporting Requirements , and Section E, Ongoing Evaluation and Audi ts.

 2010 Prop 1B guidelines, Appendix A, Heavy Duty Diesel Trucks , Section E, Post

Inspection , Section F, Recordkeeping Requirements , and Section G, Annual Reporting Requirements.

Annual reporting requirements for heavy duty diesel replacement projects in these portions of the Prop 1B guidelines include but are not limited to:

 Current odometer reading, including the date read.

 Certification of annual California VMT since last report.

 Certification of the required percent operation in California.

 Certificat ion of at least 50 percent of travel within the four California trade corridors as well as provide the percentage of annual VMT in the Central Valley trade corridor.

Finally, failure to comply with the terms of a project contract may result in:

 Recovery of all or a portion of Program funds.

 Other fiscal penalties on equipment owners based on the severity of the nonperformance.

 Cancellation of the contract.

 A ban on the equipment owner’s ability to participate in future State incentive programs.TSD for the Proposed Approval of SJV

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- Region 9 Page 32  Prohibiti ng a specific piece of equipment from participating in another State incentive
program.
These provisions are in:

 2008 Prop 1B guidelines, Section IV.G, Equipment Project Non

- Performance

.

 2010 Prop 1B guidelines, Section VI.I, Equipment Project Non

- Perform ance

.

These criteria for on

- road vehicle replacement projects funded through the 2008 and 2010 Prop 1B guidelines ensure that actions required of grantees are independently verifiable; program violations are defined; those liable can be identified; and the District may apply penalties and secure appropriate corrective action where applicable. Additionally, the District has submitted an enforceable commitment to (1) account for its claimed emission reductions through annual demonstration reports pursuant to Rule 9610, and (2) adopt and submit substitute rules and measures in the event of a shortfall in emission reductions. See Section iv below (“The District’s Enforceable Commitments”). These commitments, which will become federally enforceable upon EPA’s app roval of the Contingency Measure SIP, ensure that citizens and EPA will have access to all emissions

- related information obtained from the sources. We find these provisions adequate to meet the enforceability criterion as defined in EPA guidance and in sec tion 2.8 of SJVUAPCD Rule 9610.

Prop 1B Quantifiable The Prop 1B Program Guidelines direct CARB staff to develop and make publicly available a “Project Benefits Calculator” to determine the emission reductions achieved by funded projects. See 2008 and 2010 Prop 1B guidelines, Section II.C.2.b, Project Benefits Calculator. According to the “directions” document for this Project Benefits Calculator (“Directions Document”), 31 e mission factors for diesel heavy duty trucks are based on in

- use testing of Class 7 a nd Class 8 diesel trucks. See Directions Document at p. 7

. The emission factors are the same ones used for California’s On

- Road Heavy

- Duty Diesel Vehicles (In

- Use) Regulation and used in EMFAC2011, which EPA has approved for use in California SIP s and
tran sportation conformity demonstrations (78 FR 14533 , March 6, 2013 ). The publicly available Project Benefits Calculator uses vehicle miles traveled, which must be recorded and reported as explained above in the “Prop 1B Enforceable” section, together with em ission factors obtained from the On

- Road Heavy

- Duty Diesel Vehicles (In

- Use) Regulation , to determine emissions. See Directions Document at pp. 4

- 7

. Existing vehicle usage is based on vehicle activity data for the past two years. See 2008 Prop 1B guideline s, Appendices A and B, Section F, Application Information ; 2010 Prop 1B guidelines, Appendix A, Section C, Application Information

.

31 See “Proposition 1B: Goods Movement Emission Reduction Program, Directions: Benefits Calculators,” March 17, 2011, available at http://www.arb.ca.gov/bonds/gmbond/docs/prop_1b_goods_movement_2008

- 09_calculator_directions.pdf

.TSD for the Proposed Approval of SJV

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- Region 9 Page 33 Using engine

- specific inputs obtained from the Annual Demonstration Report Data Sheet and the “Project Benefits Calculator” for the Prop 1B 2010 Guidelines

, 32 we calculated the “lifetime” NO x and PM emission reductions for a specific replacement engine and confirmed that the resulting totals are consistent with the emission reduction totals provided for this engine in the Data S heet. Specifically, we obtained information about Project C

- 14625

- A (unit 1) from the Data Sheet, such as the model year and fuel type of the old engine and the gross vehicle weight rating (GVWR) for the old and new engines ( s ee Table E

- 10 below), and ente red those data into the “data input” tab in the Project Benefits Calculator. Based on these inputs, the “lifetime” emission reductions calculated by the Project Benefits Calculator for this unit are 9.42 tons of NO x and 0.33 tons of PM, consistent with the “lifetime” emission totals in the Data Sheet. 33 We then adjusted these emission reduction totals to account for the percentage of its operations that the engine spends within the San Joaquin Valley (20%), w hich results in 1.88 tons of NO x and 0.07 tons of PM. Accordingly, the “lifetime” emission reductions for this particular engine are 1.88 tons of NO x and 0.07 tons of PM. See Data Sheet, row 3515 at column N (“NO x Lifetime Reduced Adjusted Percent Operations (tons)”) and column P (“PM Lifetime Reduced Adj usted Percent Operations (tons)”). 34

Table E

- 10



### P roject Information for Prop 1B Sample Calculation
Project Identification C

- 14625

- A

Unit Number 1 Applicable Guideline Prop 1B 2010 Implementation Date (First Year of Operation) 11/01/ 12 Component Option Vehicle Replacement Drayage Status No Old Engine Year 1997

Old GVWR 52000

Annual Miles (VMT) 99699 Fuel Type Baseline Diesel

New GVWR 50000

32 Available at http://www.arb.ca.gov/bonds/gmbond/docs/prop_1b_goods_movement_2008

- 09_truck s_calculator.xlsx

33 The Project Benefits Calculator calculates the “lifetime” emission reduction in pounds, which we then multiplied by 0.0005 (1 ton per 2000 pounds ) to obtain the equivalent tonnage.

34 We divided these lifetime emission reductions totals by the “project life” (in days) to obtain the SIP

creditable emission reductions for this engine on a ton per day basis. See n. 19

, supra.TSD for the Proposed Approval of SJV

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- Region 9 Page 34 Table E

- 10 

### P roject Information for Prop 1B Sample Calculation
Project Identification C

- 14625

- A

NO x Cert Values 0.2 Project Life (years) 5 Percent Operation SJV 20

By providing for well

- established, publicly available emission factors and calculation method s and requiring that grantees record and report activity data to the District on an annual basis, the 2008 and 2010 Prop 1B guidelines ensure that emission reductions from on

- road vehicle replaceme nt projects funded through these guidelines can be determined using reliable and replicable methods. We find these provisions adequate to meet the criterion for emission reductions to be “quantifiable,” as defined in EPA guidance and in section 2.23 of SJV UAPCD Rule 9610. As the inputs needed for the Project Benefits Calculator have changed over the years (e.g. the Calculator for the 2010 guidelines requires “NO x Cert Levels” which the previous version of the Calculator did not), we expect that future Annua l Demonstration Reports will include all of the needed inputs for past and future Calculators, to ensure that the public can quantify the emission reductions for any given Prop 1B project.

Prop 1B Surplus Prop 1B Guidelines explicitly state that “Local ag encies shall certify that the local agency project would achieve emission reductions not otherwise required by law or regulation,” which means that “the emission reductions are not required pursuant to any local, State, or federal law, rule, or regulation; any requirements imposed by the California Environmental Quality Act (CEQA); or any requirements imposed by a legal instrument such as a legal settlement or consent decree (collectively referred to as ‘law or regulation’).” See Section III.B.1, Legal Rest rictions, of the 2008 and 2010 Prop 1B guidelines. Recordkeeping, reporting and application requirements described above in the “Prop 1B Enforceable” and “Prop 1B Quantifiable” sections ensure that historic and future emission estimates correctly represen t emissions occurring in the San Joaquin Valley. Pre

- inspection requirements discussed above in the “Prop 1B Enforceable” section ensure that the unit to be replaced is still in useable form and thus would not have been replaced by normal fleet turnover. T hese requirements ensure that emission reductions from normal fleet turnover that have already been accounted for in the future baseline emission inventories underlying a SIP attainment demonstration are not treated as surplus.

The se provisions ensure tha t emission reductions attributed to On

- Road Vehicle Replacement projects funded through the Prop 1B 2008 and 2010 guidelines are not required by any existing regulation or other legal mandate and are not accounted for in the future baseline inventories und erlying a SIP. We find these provisions adequate to meet the criterion forTSD for the Proposed Approval of SJV

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- Region 9 Page 35 emission reductions to be “surplus,” as defined in EPA guidance and in section 2.27 of SJVUAPCD Rule 9610.

Prop 1B Permanent For Prop 1B truck replacement projects, two key types of requirements ensure that emission reductions are “permanent” for the life of the project: (1) requirements to demonstrate that both replaced (old) and replacement (new) equipment are used similarly in the San Joaquin Valley, and (2) requirements to docume nt the destruction of the replaced equipment. The Prop 1B guidelines require that the local agency ensure that old equipment is scrapped. The following sections delineate the procedures that must be implemented for all replacement projects, which include s pecifics of how the units shall be destroyed and documentation requirements to demonstrate that the unit replaced was destroyed:

 Section III.D.13, Equipment Project Scrap Requirements , of the 2008 guidelines.

 Section IV.A.14, Equipment Project Scrap Requir ements , of the 2010 guidelines.

Additional scrapping requirements specific to each project option are in Section D, Scrap Requirements , of Appendix A of the 2010 guidelines. The information in these tables for the 2010 guidelines is included in Section III .D.13 for the 2008 guidelines. Recordkeeping and reporting requirements discussed in the “Prop 1B Enforceable” section above (e.g., requirements to certify that at least 50 percent of travel is within the four California trade corridors and to provide the percentage of annual VMT in the Central Valley trade corridor ) provide further documentation of the emission reductions from a Prop 1B truck replacement project which occur in the San Joaquin Valley. Finally, both the 2008 and 2010 Prop 1B guidelines req uire that each equipment project contract identify a “term of contract,” i.e., the project completion time plus the “ equipment project life.” See 2008 Prop 1B guideline at section III.D.10 (“Equipment project contracts”) and 2010 Prop 1B guideline at secti on IV.A.11 (“Equipment project contracts”). The term “equipment project life” is specifically defined in both guidelines as “the length of time an equipment owner is obligated (under an equipment project contract) to maintain and operate the bond

- funded eq uipment according to the requirements of the Program.” See 2008 and 2010 Prop 1B guidelines at table 1.4 (definitions). These contract provisions enable EPA and the public to evaluate the duration for which the District attributes emission reductions to a particular project and to determine whether that duration adequately covers the period for which the reductions are relied upon in a SIP. We find these provisions adequate to meet the criterion for emission reductions to be “permanent,” as defined in EPA g uidance and in section 2.18 of SJVUAPCD Rule 9610.

Carl Moyer Program Overview The Carl Moyer Program funds the incremental cost of cleaner

- than

- required sources of air pollution (e.g diesel engines) and has provided over $680 million in State and local fu nds to reduce emission from over 24,000 engines in its first 12 years. See “The Carl Moyer ProgramTSD for the Proposed Approval of SJV

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- Region 9 Page 36 Guidelines,” approved April 28, 2011, at Chapter 1 (“Program Overview”). 35 CARB adopted the first set of Carl Moyer Program Guidelines in early 1999, and legi slation (Assembly Bill (AB) 1571) enacted in 1999 formally established the statutory framework for the program (Health & Safety Code § 44275, et seq ). Multiple changes have been made since the original guidelines were developed, and CARB continues to updat e the program guidelines, following public processes, in response to legislative and regulatory changes and to ensure that emission reductions funded through the Carl Moyer Program are “real, surplus, quantifiable, and enforceable” consistent with the unde rlying statutory mandates. CARB is required to make proposed changes to the Guidelines available to the public at least 45 days prior to final adoption and is required to hold one public meeting to consider public comments before final adoption of any chan ges. The Carl Moyer Program is implemented through a partnership between CARB and local air districts. CARB manages program funds and distributes them to participating air districts for program implementation each year; develops and revises guidelines, pro tocols, and criteria for covered projects; and determines methodologies used for evaluating project cost

effectiveness. Air dis tricts follow the Moyer Guidelines to select, fund, and monitor projects in their areas. The Guidelines describe requirements for administrative procedures, eligibility criteria for projects in different source categories, cost

- effectiveness criteria, and reporting practices. See id. Chapter 9 of the 2011 Carl Moyer Program Guidelines, Off

- Road Equipment Replacement, describes the m inimum requirements for mobile, self

- propelled off

- road compression

- ignition (Off

- Road CI) and large spark

- ignition (LSI) equipment replacement projects funded through Carl Moyer Program grants. Below we describe how this chapter, in conjunction with progr am

- wide requirements, ensures that the emission reductions generated from Off

- Road CI engine replacements meet EPA’s four integrity criteria. Chapter 9 states that “All provisions regarding the in

- use regulations described in Chapters 7 and 8: Off

- Road Com pression

- Ignition Equipment and Off

- Road Large Spark

- Ignition Equipment also apply in this chapter.” As such, we also evaluate provisions in chapters 7 and 8 that inform our assessment of Off

- Road CI engine replacement projects funded through Carl Moyer in light of the four integrity elements. We are not evaluating LSI equipment replacement projects at this time.

35

Available at http://www.arb .ca.gov/msprog/moyer/guidelines/2011gl/2011cmpgl_3_27_13.pdfTSD for the Proposed Approval of SJV

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- Region 9 Page 37 Moyer Program Enforceab le Specific funding criteria established in the 2011 Carl Moyer Program Guidelines ensure that emission reductions claimed for Off

- Road CI engine replacement projects will be independently verifiable and practicably enforceable consistent with EPA policy. According to the Moyer Guidelines, once the SJVUAPCD has selected a project for funding through the Moyer Program, the Dis trict must execute contracts with the grantees who will receive funds under the Program. See 2011 Carl Moyer Program Guidelines at Chapter 3

, Section Z .1. The requirements for these contracts, which are legally enforceable by CARB and the SJVUAPCD,

are con tained in Chapter 3, Section Z, Minimum Contract Requirements , of the 2011 Carl Moyer Program Guidelines. Section Z includes general requirements for recordkeeping, annual reporting, post

- inspection, audits and other verification mechanisms that all projec t contracts must contain and also identifies specific types of “Repercussions for Nonperformance” that the District must include in each contract to address c ontract non

- performance . Chapter 3, Section FF, Nonperforming Projects , discusses specific steps t hat the District must take with respect to “nonperforming project grantees” to ensure that emission reductions are achieved . Provisions in these sections of the guidelines specify some of the actions that would constitute a breach of contract as well as re medies for non

- performance, including cancellation of the contract and recovery of all or a portion of Program funds.

Pre

- inspections are also required for funded projects in Chapter 3 Section AA.1 of the guidelines. This requirement ensures information pr ovided by the project owner is consistent with actual operating equipment and that the existing equipment is in working condition. Additional requirements for pre

- inspections including verification of usage and requirements for photographic confirmation of the equipment are in Chapter 3 Section AA, Project Pre

Inspection , of the guidelines. In addition to the requirements for all projects funded through the Moyer program, Chapter 9 of the guidelines includes specific provisions that further ensure the emiss ion reductions from Off

- Road CI engine replacement projects funded pursuant to these guidelines are verifiable. The guidelines require that the grantee demonstrate that it owned and operated the old equipment in California for the previous two years ( see C hapter 9, Section C.2(E)) and to verify the operational status of the equipment being replaced by providing two years of usage documentation ( see Chapter 9, section C.2(F).) To verify the usage of the new equipment, the guidelines require that new replacem ent equipment have an installed and fully operational hour meter or that fuel logs or purchase receipts of fuel be kept. ( see Chapter 9, Section C.3.(I).)

These criteria for Off

- Road CI engine replacement projects funded through the 2011 Carl Moyer Progra m Guidelines ensure that actions required of grantees are independently verifiable; program violations are defined; those liable can be identified; and the State and District may apply penalties and secure appropriate corrective action where applicable. Ad ditionally, the District has submitted an enforceable commitment to (1) account for its claimed emission reductions through annual demonstration reports pursuant to Rule 9610, and (2) adopt and submit substitute rules and measures in the event of a shortfa ll in emission reductions. See Section iv below (“The District’s Enforceable Commitments”). These commitments, which will become federally enforceable upon EPA’s approval of the Contingency Measure SIP, ensure that citizens and EPA will have access to all emissions

- related information obtained from the sources.TSD for the Proposed Approval of SJV

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- Region 9 Page 38 We find these provisions adequate to meet the enforceability criterion as defined in EPA guidance and in section 2.8 of SJVUAPCD Rule 9610.

Moyer Program Quantifiable Appendix C of the Moyer Guidelin es contain s the formulas used to determine annual emissions and annual emission reductions based on usage information, including options for using hours of operation, fuel consumption and miles traveled to determine annual usage. Appendix D, Tables for Emi ssion Reduction and Cost

- Effectiveness Calculations , of the Guidelines has tables containing the data needed to calculate the emission reductions of projects using formulas in Appendix C. Tables D

- 10 through D

- 12 contain the data needed to calculate emissi on reductions for Off

- Road Diesel Projects, including Off

- Road CI engine replacement projects. The data in these tables is based on certified emission standards and Tier designation for the engine from engine emission standards adopted by CARB and U.S. EPA through a public process. ( See Chapter 7, Section D.1.(C).). The actual standards, in grams per kilowatt

- hour (g/kW

- hr), may be found in California Code of Regulations, title 13, sections 2449, et seq. The activity data reporting requirements discussed in the “ Moyer Project Enforceability ” section above, the formulas in Appendix C, Chapter 9 of the 2011 Moyer guidelines, and the supporting chapters provide for well

- established, publicly available emission factors and calculation methods that ensure that em ission reductions from Off

- Road CI engine replacement projects funded pursuant to these guidelines can be determined using reliable and replicable methods

. Appendix C and Appendix D of the 2011 Carl Moyer Program guideline provide the methodology for calcu lating emission reductions from potential projects, using hours of operation, fuel consumption or miles traveled as activity factors. In Table E

- 11 below, we have calculated the emission reductions attributed to project C

- 8464

- A (using project

- specific inf ormation obtained from the Annual Demonstration Report Data Sheet).

Table E

- 11 

### Project Information for Moyer Sample Calculation
Project Identification C

- 8464

- A Component Off

- Road Primary Function Agricultural Tractor Project Life (years) 10 Applicabl e Guideline Carl Moyer 2011 Percent Operation SJV 1 00

NO x Lifetime (tons) 14.56
PM Lifetime (tons) 0.59

Annual Hours 700 Old Engine Year 1974TSD for the Proposed Approval of SJV

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EPA

- Region 9 Page 39 Table E

- 11 

### Project Information for Moyer Sample Calculation

Old Horse p ower 282

Old Tier Uncontrolled New Engine Year 2013

New Horse p ower 350

New Tier 4A

F ormul a C

- 6 in Appendix C ( see Appendix C at p. C

- 5) is used to calculate annual emissions within the San Joaquin Valley based on hours of operation:

Emission = EF * hp * LF * Activity * Percent Operation in the San Joaquin Valley *

(1/907,200)

where

Emission = tons per year calculated independently for both the existing and replacement

engines

EF = Emission Factor in grams per brake horsepower

- hour , obtained from Table D

- 11 for the existing engine and Table D

- 12 for the replacement engine ( see Appendix D at
pp

. D

- 12 and D

- 13) hp = horsepower of the engine
LF = Load Factor, obtained from Table D

- 10 (Appendix D at p. D

- 10) Activity = hours per year

First, because the primary function of the engine is “agricultural tractor,” the load factor is 0.7 ( see Table D

- 10, Appendix D at p. D

- 10). Second, because the existing uncontrolled engine has a model year between 1970 and 1979, and a horsepower greater than 120, the existing engine ’ s emission factors in g/bhp

- hr are 11.16 for NO x and 0.396 for PM 10 ( see Table D

- 11, Ap pendix D at p. D

- 12). Finally, because the replacement engine has a horsepower between 300 and 750 and is certified to Tier 4 Phase

- In/Alternate NO x standards, the replacement engine’s emission factor s in g/bhp

- hr are 1.29 for NO x and 0.008 for PM 10 ( see T able D

- 12, Appendix D
at p. D

- 14). Using these inputs, we calculate the NO x emissions from the existing engine as follows:

NO x Emission (existing) = 11.16 (g/bhp

- hr) * 282 (bhp) * 0.7 * 700 (hrs) * 1 * (tons /907,200 g )

NO x Emission (exis ting) = 1.700 tons/yearTSD for the Proposed Approval of SJV

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- Region 9 Page 40 Similarly, we calculate the NO x emissions for the replacement engine to be 0.244 tons/year. The difference between these two emissions is the annual surplus emission reduction for the project ( s ee Formula C

- 13, Appendix C at p. C

- 12 ):

Annual emission reductions = 1.70 tons/year

– 0.24 tons/year = 1.456 tons/year.

Since the lifetime of the project is ten years, the lifetime NO x emission reductions are 14.56, consistent with the lifetime NO x reduction total for this project in the Dat a Sheet. A similar calculation using the PM 10 emission factors yields a lifetime emission reduction of PM 10 of 0.59 tons consistent with the lifetime PM 10 reduction total for this project in the Data Sheet. See Data Sheet, row 1932 at column N (“NO x Lifeti me Reduced Adjusted Percent Operations (tons)”) and column P (“PM Lifetime Reduced Adjusted Percent Operations (tons)”). 36
By providing for well

- established, publicly available emission factors and calculation method s and requiring that grantees record and annually report activity data to the District, the 2011 Carl Moyer Program Guidelines ensure that emission reductions from Off

- Road CI engine replacement projects funded through these guidelines can be determined using reliable and replicable methods. We f ind these provisions adequate to meet the criterion for emission reductions to be “quantifiable,” as defined in EPA guidance and in section 2.23 of SJVUAPCD Rule 9610.

Moyer Pro gram Surplus Chapter 2 of the Moyer Guidelines specifies that emission reducti ons “must not be required by any federal, state or local regulation, memorandum of agreement/understanding, settlement agreement, mitigation requirement, or other legal mandate ” ( s ee Chapter 2, Section A )

. The guidelines also state that “rule approval da te (or the promulgation date of a federal regulation) represents the cutoff date by which a Carl Moyer Program project contract must be fully executed, without needing to consider the rule in evaluating the surplus nature of the project’s emission reductio ns. After that date, the new rule must be considered in the evaluation of a project’s eligibility” ( s ee Chapter 2, Section B )

. Chapter 9 requires that the replacement equipment is functionally equivalent to new equipment to help ensure that new equipmen t is surplus. The guidelines require that replacement equipment serve the same function and perform the same work as the old equipment ( s ee Section C.3.(B)) and documentation must be provided to verify this ( see Section C.3.(D)). Additionally, the guidelin es require that the horsepower rating for the replacement engine not be greater than 125 percent of the original manufacturer rated hp (baseline hp) for the old (existing) equipment engine ( s ee Section C.3.(D) ) . These requirements are designed to ensure that the new equipment is replacing an existing (higher

- polluting) piece of equipment that is currently being used, instead of expanding a fleet. For projects s ubject to California’s In

- Use Off

- Road Diesel Vehicle Regulation , Chapter 9 specifies that “no e mission reductions achieved from a funded program can count towards a fleet’s regulatory requirements for the duration of the project life ” ( s ee Section C.7.(C) ) . If

36 We divided these lifetime emission reductions totals by the “project life” (in days) to obtain the SIP

creditable emission reductions for this engine on a ton per day basis. See n. 22

, supra.TSD for the Proposed Approval of SJV

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- Region 9 Page 41 subject to this regulation, the guidelines require that the grantee submit data to deter mine if old equipment or equipment to be repowered is registered in the Off

- road In

- Use regulations reporting system ( s ee Section C.2.(D) ) . Additionally, Sections C.7.(E) through C.7.(G) specify years through which funding is available based on the compl iance deadline in the In

- Use Off

Road Diesel Vehicle Regulation

. Recordkeeping and reporting requirements described above in the “ Moyer Project Enforceability ” and “ Moyer Project Quantifiable” sections ensure that historic and future emission estimates co rrectly represent emissions occurring in the San Joaquin Valley. Pre

inspection requirements described in the “ Moyer Project Enforceability ” section ensure that the unit to be replaced is still in useable form and thus would not have been replaced by norma l fleet turnover. These requirements ensure that emission reductions from normal fleet turnover that have already been accounted for in the future baseline emission inventories underlying a SIP attainment demonstration are not treated as surplus.

The se pr ovisions ensure that emission reductions attributed to Off

- Road CI engine replacement projects funded pursuant to the 2011 Carl Moyer Program Guideline s are not required by any existing regulation or other legal mandate and are not accounted for in the fut ure baseline inventories underlying a SIP. We find these provisions adequate to meet the criterion for emission reductions to be “surplus,” as defined in EPA guidance and in section 2.27 of SJVUAPCD Rule 9610.

Moyer Program Permanent For Carl Moyer Off

- Ro ad CI engine replacement projects, two key types of requirements ensure that emission reductions are “permanent” for the life of the project: (1) requirements to demonstrate that both replaced (old) and replacement (new) equipment are used similarly in the San Joaquin Valley, and (2) requirements to document the destruction of the replaced equipment. The post inspection requirements of Moyer include a requirement that the “District must verify that the existing (old) engine is destroyed and rendered permane ntly unusable and irreparable.” S ee Chapter 2, Section BB. In addition to the program

- wide requirements for scrapping in Moyer, Section C.4.(C) of Chapter 9 further requires that the old equipment must be destroyed within 60 days of being replaced.

Record keeping and reporting requirements discussed in the “ Moyer Project Enforceability ” section above (e.g., the requirement that the grantee demonstrate that it owned and operated the old equipment in California for the previous two years) provide further docu mentation of the emission reductions from an Off

- Road CI engine replacement project that occur in the San Joaquin Valley. Finally, the 2011 Carl Moyer Program Guidelines require that each contract executed with a grantee identify a “contract term” which mu st include two time frames

– “project completion” and “project implementation”

– to ensure that the District and C ARB can fully enforce the contract during the life of the Carl Moyer Program

- funded project. See 2011 Carl Moyer Program Guidelines at Chapter 3, Section Z.5 (“Contract Term”)

. These contract provisions enable EPA and the public to evaluate the duration for which the District attributes emission reductions to a particular Off

- Road CI engine replacement project and to determine whether that durat ion adequately covers the period for which the reductions are relied upon in aTSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

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- Region 9 Page 42 SIP. We find these provisions adequate to meet the criterion for emission reductions to be “permanent,” as defined in EPA guidance and in section 2.18 of SJVUAPCD Rule 9610.

iv

. The District’s Enforceable Commitments We have evaluated the Board commitments submitted as part of the Contingency Measure SIP and find that they establish clear obligations on the District’s part to monitor, assess, and report on program implementation and actual emission reductions achieved and to remedy any emission reduction shortfalls in a timely manner, consistent with EPA policy. Specifically, Board Resolution No. 13

- 6

- 18 contains two key components designed to ensure that the 4.15 tpd of NO x reduc tions and 0.10 tpd of PM 2.5 reductions claimed in the District’s Contingency Measure SIP are enforceable under the CAA.

Commitment to monitor, assess, and report on emission reductions achieved The first key component is a commitment to “account for” thes e emission reductions “in annual demonstration reports pursuant to the requirements of Rule 9610.” SJVUAPCD Board Resolution No. 13

- 6

- 18 at p. 3. Rule 9610 specifically requires the District to submit to EPA, no later than August 31 of each year, an “annua l demonstration report” that includes the following elements: (1) identification of SIP

- creditable emission reductions generated through incentive programs implemented in the preceding year(s), summarized by pollutant, years that the emission reductions oc cur (project life), cost effectiveness, funding amount, incentive program guideline, and project type; (2) identification of SIP commitment(s) that the District has satisfied, in whole or in part, through SIP

- creditable emission reductions from the identif ied incentive programs; (3) identification and quantification of SIP commitment shortfalls, if any, and remedies for addressing said shortfalls; (4) detailed information about each specific project achieving SIP

- creditable emission reductions, e.g., unique project identification numbers, implementation dates, applicable incentive program guideline(s), and quantified emission reductions per year and aggregated over the project life, by pollutant; and (5) a summary of monitoring and enforcement activities con ducted during the reporting period for incentive projects for which SIP

- creditable emission reductions are being claimed. See Rule 9610, sections 4.1

- 4.6 and 5.0. We note that the District’s 2013 Annual Demonstration Report, which we reviewed as part of our evaluation of the incentive

- based emission reductions in the Contingency Measure SIP, does not provide all of the information required under Section 4.0 of Rule 9610. See e.g., Rule 9610, section 4.5.8 (requiring that each annual demonstration report c ontain “quantified emission reductions per year . . . by pollutant” for each project relied upon for SIP credit). These deficiencies in the 2013 Annual Demonstration Report do not affect our current evaluation of the Board commitments submitted with the Co ntingency Measure SIP, given the District submitted the 2013 Annual Demonstration Report primarily for informational purposes together with other supporting materials, which as a whole provide an adequate technical basis for EPA’s evaluation of the incenti ve

- based emission reductions in the Contingency Measure SIP

. G oing forward, however

, SJVUAPCD Board Resolution No. 13

- 6

- 18 obligates the District to account for the District’s claimed incentive

- based emission reductions in the Contingency Measure SIP throu gh annual demonstration reports that satisfy the requirements of Rule 9610, and we encourage the District to consult with EPA through its development of the 2014 Annual Demonstration Report to ensure that it fully satisfies these Board commitments.TSD for the Proposed Approval of SJV

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- Region 9 Page 43 Commit ment to a timely remedy The second key component is a commitment to adopt and submit to EPA, no later than December 31, 2016, “substitute rules and measures that will achieve equivalent emission reductions as expeditiously as practicable and no later than any applicable implementation deadline in the CAA or EPA’s implementing regulations,” if there is a shortfall in emission reductions. SJVUAPCD Board Resolution No. 13

- 6

- 18 at p. 3. Consistent with this commitment, EPA expects the District to confirm as par t of its 2014 and 2015 Annual Demonstration Reports whether the claimed 4.15 tpd of NO x reductions and 0.10 tpd of PM 2.5 reductions are expected to occur in 2015 as projected, and to provide the basis for its conclusion

– e.g., information about actual pro gram participation rates, actual reported activity data, project audits, usage reports, and other project monitoring activities consistent with the requirements of Rule 9610, section 4.0. If the District finds that there may be a shortfall in the claimed e mission reductions for 2015, the District will be required to identify in its 2014 or 2015 Annual Demonstration Report both the estimated amount of the SIP shortfall (in tons per day, by pollutant) and the specific remedy to be implemented in the event of a shortfall

– i.e., the substitute rules and measures that will achieve equivalent emission reductions, to be submitted to EPA no later than December 31, 2016. See Rule 9610, section 4.4 (“The District shall identify and quantify SIP commitment shortfalls, if any, and remedies for addressing said shortfalls” as part of the annual demonstration report). Finally, EPA expects the District’s 2016 Annual Demonstration Report will either confirm that the claimed 4.15 tpd of NO x reductions and 0.10 tpd of PM 2.5 re ductions actually occurred in 2015 as projected or identify and quantify the specific SIP shortfalls and specific remedies to be implemented consistent with the District’s commitment. Any conclusion that the District’s claimed 4.15 tpd of NO x reductions an d 0.10 tpd of PM 2.5 reductions actually occurred in 2015 must be supported by documentation of actual emissions, based on historical annual usage (i.e., reported activity data), actual program participation rates, project audits, and other information cons istent with the requirements of sections 4.0

– 4.6 of Rule 9610. These Board commitments obligate the District to monitor, assess, and report on program implementation and actual emission reductions achieved and, ultimately, enable EPA to determine whether the District’s claimed emission reductions (4.15 tpd of NO x reductions and 0. 10 tpd of PM 2.5 reductions ) actually occurred in 2015. Should EPA find, based on the 2014 or 2015 Annual Demonstration Report, that the District’s claimed 4.15 tpd of NO x reducti ons and 0.10 tpd of PM 2.5 reductions may not occur in 2015 as projected, EPA will promptly notify the District of its potential obligation to adopt and submit substitute rules and measures consistent with its Board commitment no later than December 31, 201 6, so that the District has ample time to develop and adopt such rules/measures consistent with this deadline. Subsequently, should EPA determine that the SJV area has failed to attain the PM 2.5 NAAQS by the applicable attainment date of April 5, 2015, the District will be obligated to verify through its next annual report to EPA ( i.e., the 2016 Annual Demonstration Report) whether the 4.15 tpd of NO x reductions and 0. 10 tpd of PM 2.5 reductions identified in the Contingency Measure SIP occurred in 2015, and if not, to adopt and submit substitute rules and measures to EPA consistent with its Board commitment no later than December 31, 2016. Based on our evaluation of the District’s commitments regarding the Carl Moyer Program and Prop 1B and related technica l documentation provided by the District in its SIP submission, we propose to find that the 2015 emission reductions associated with the se specificTSD for the Proposed Approval of SJV

PM 2.5 Contingency Measure SIP August 15, 2013

EPA

- Region 9 Page 44 incentive p rogram s satisfy the statutory criteria for SIP credit and to approve these emission reductions as attainment contingency measures for the 1997 PM 2.5 NAAQS in the SJV

. Upon EPA’s final approval of the Contingency Measure SIP

, these Board commitments will become federally enforceable under sections 113 and 304 of the CAA, and the District will be obliga ted to monitor, assess, and report to EPA on implementation of the Carl Moyer Program and Prop 1B program grants with respect to the specific projects identified herein

. See Attachment A to this TSD (“Prop 1B: On

- Road Vehicle Replacement projects achieving emission reductions through 2015”) and Attachment B to this TSD (“Carl Moyer Program: Off

- Road Vehicle Replacement projects achieving emission reductions through 2015”)

.

c. Substitution of Direct PM 2.5 Reductions for NO x Reductions

To demonstrate that it provides for sufficient NO x reductions to meet the contingency measure requirement, the District is relying in part on trading excess reductions of direct PM 2.5 for NO x reductions. The District estimated, based on monitored air quality over the past five winter seasons, that triggering the contingency provision in its woodburning rule would reduce direct PM 2.5 emissions by a further 3.12 tpd. See Contingency Measure SIP, p. 6. This level of reduction exceeds the 2.5 tpd of direct PM 2.5 reductions needed to meet the CAA contingency requirement for this pollutant by 0.62 tpd. Taking into account the 0.1 tpd of direct PM 2.5 reductions from incentive programs, the District proposes to convert the total amount of surplus direct PM 2.5 reductions (0.72 tpd) into N O x reductions at a ratio of 9 tons of NO x for each ton of direct PM 2.5 . Based on this PM 2.5 to NO x conversion, the District concluded that a 0.72 tpd reduction in direct PM 2.5 emissions has the same ambient air quality impact as a 6.48 tpd reduction in NO x emissions. Id.

Documentation for this NO x :PM 2.5 ratio is found in Appendix A to the Contingency Measure SIP, in supplemental information provided in the CARB letter submitting the Contingency Measures SIP, 37 and in the EPA memorandum 38 which summariz es addi tional information provided to EPA by C ARB verbally and via electronic mail. Using the Community Multiscale Air Quality (CMAQ) modeling application underlying the attainment demonstration in the SJV PM 2.5 Plan

, 39 in two separate runs CARB simulated an addit ional 10 percent reduction in modeling domain NO x emissions and in direct PM 2.5 emissions. The modeling domain emissions totals were 235.4 tons/day of NO x and 126.4 tons/day of direct PM 2.5 ; the 10 percent thus represented reductions of 23.5 and 12.6 tons/ day

, of NO x and direct PM 2.5 respectively . For the three monitors with the highest PM 2.5 concentrations in the SJV, the modeled ambient PM 2.5 design value effect of each reduction was divided by the respective emissions change. This calculation gave a conc entration change per emissions change, or effectiveness for each

37 Letter dated July 3, 2013 from Richard Corey, Executive Officer, CARB, to Jared Blumenfeld, Regional Administrator, EPA Region 9, July 3, 2013

.

38 Memorandum dated August 13 , 2013 from Scott Bohning, EPA Region 9, to File for docket EPA

- R09

- OAR

- 2013

- 0534, San Joaquin Valley action

, Subject: Contingency precursor effectiveness ratio using additional information. This memorandum can be found in the docket for this proposal.

39 EPA approved this air quality modeling as part of its approval of the attainment demonst ration in the SJV
PM 2.5 Plan. See 76 FR 41338, 41349 and 76 FR 69896, 69924

.TSD for the Proposed Approval of SJV

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- Region 9 Page 45 pollutant. Finally, the direct PM 2.5 effectiveness was divided by the NO x effectiveness to arrive at a NO x :PM 2.5 ratio for each monitor; the average of these is 9. As we noted in our 2011 pr oposed action on the SJV PM 2.5 SIP ( see 76 FR 41338, 41349) , this method appears to be adequate for purposes of assessing the effect of area

- wide emissions changes, e.g., in the analyses used to address RFP, contingency measures, and conformity budgets. 40 T he method modeled “across the board” emission changes over the entire modeling domain. CARB’s submittal letter for the contingency Measure SIP notes that PM 2.5 concentrations are highest in winter, and highest then in urban areas; reductions of direct PM 2. 5 emissions via residential wood burning restrictions would thus be especially effective at reducing these high concentrations. By contrast, NO x emissions, as well as NO x emission reductions, are more Valley

- wide. Therefore, the CARB approach of simulating reductions over the full modeling domain tends to understate the benefit of direct PM 2.5 reductions from curtailment of wood burning relative to regional NO x reductions on air quality in areas most likely to see high PM 2.5 concentrations, and so in this c ase the 9:1 NO x to PM 2.5 ratio gives a conservatively high estimate of the amount of direct PM 2.5 emissions needed to substitute for a given amount of the NO x reductions required for attainment contingency measures. Therefore, EPA proposes to approve the u se of this ratio for purposes of quantifying emission reductions to satisfy the CAA section 172(c)(9) attainment contingency measure requirement is met for the 1997 PM 2.5 NAAQS in the SJV. Trading in other contexts could involve additional consideration of spatial and temporal variation of the emissions and would require an additional technical demonstration by the State and evaluation by EPA. EPA is not proposing to approve this trading ratio at this time for any purpose other than to address attainment co ntingency measures for the 1997 PM 2.5 NAAQS in the SJV. This proposal does not affect our previous approval of the ratio for use in transportation conformity determinations ( s ee 76 FR 69896, 69923 )

.

d

. Summary of Attainment Contingency Emission Reduction s In sum, the Contingency Measure SIP identifies SIP

- creditable attainment contingency measures that will achieve a total of 31. 9 tpd of NO x , 2.5 tpd of direct PM 2.5 , and 3 tpd of SO x reductions in 2015. These emission reductions equal or exceed one

- year’ s worth of RFP as calculated in EPA’s 2011 final action on the SJV PM 2.5 SIP. See Table E

- 12 below

.

40 EPA a pproved the use of this NO x to PM 2.5 interpollutant trading ratio in transportation conformity determination s for the 1997 PM 2.5 standards in the SJV and for the 2006 24

- ho ur PM 2.5 NAAQS but only until such time as EPA finds adequate or approves budgets developed specifically for the 2006 standard s

. See 76 FR 69896, 69923 and 76 FR 41338 , 41360

- 41361.TSD for the Proposed Approval of SJV

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- Region 9 Page 46 Table E

- 12 

### Summary of Emission Reductions for Attainment Contingency Measure s Tons per a nnual average d ay

- 2015

Direct PM 2.5 NO x SO x Reductions from regulatory measures ( Table E

- 9) 3.1 21.3 3

SIP

- creditable incentives 0.1 4.2

—
PM 2.5 reductions substituted for NO x - 0.7

— — NO x reductions from PM 2.5 substitution

— 6. 5

— Total contingency reductions achieved * 2.5 31.9 3

Contingency reductions re quired (1

- year’s worth of RFP) 2.5 31.6 0.2

Contingency need met? Yes Yes Yes

* Totals may not sum due to rounding.

e. EPA ’s Proposed Action on the Attainment Contingency Measure s Based on our evaluation, w e are proposing to fully approve the Continge ncy Measure SIP

as satisfying the attainment contingency measure requirement in CAA section 172(c)(9) for the 1997 PM 2.5 NAAQS in the San Joaquin Valley nonattainment area. All of the emission reductions relied on to meet the attainment contingency measure requirement are provided by control measures or incentive programs that are fully adopted under State law

. These measures and programs provide SIP

- creditable emission reductions that are not relied on in the SJV PM 2.5 SIP to demonstrate RFP or attainment and provide for an appropriate level of continued emission reduction progress should the SJV area fail to attain by its statutory attainment date and necessitate additional planning.The following attachments to this TSD are in the electronic file “Att achments to SJV CM

Proposal TSD” which may be found in docket for this rulemaking (EPA

- R09

- OAR

- 2013

- 0534 )

on www.regulations.gov

Attachment A

- Prop 1B: On

- Road Vehicle Replacement projects achieving emission reduct ions through 2015

Attachment B

- Carl Moyer Program: Off

- Road Vehicle Replacement projects achieving emission reductions through 2015