# PROPOSED May 21, 2013

9610 - 1 Proposed New Rule 9610 RULE 9610 STATE IMPLEMENTATION PL AN CREDIT FOR EMI SSION REDUCTIONS GENERATED THROUGH INCENTIVE PROGRAMS (Adopted [ adoption

date ])

1.0 Purpose

The purpose of this rule is to provide an administrative mechan ism for the District to receive credit towards State Implementation Plan requirem ents for emission redu ctions achieved in the San Joaquin Valley Air Basi n through incentive programs ad ministered by the District,
NRCS, or ARB.

2.0 Definitions

2.1 APCO: the Air Pollution Control Officer of the San Joaquin Valley Unified Air Pollution Control District, or any person aut horized to act on beha lf of the APCO.

2.2 ARB: the California state Air Resources Board as established by California Health and Safety Code Section 395 10, or any person authoriz ed to act on its behalf.

2.3 Carl Moyer Program: the Carl Moyer Memorial Air Quality Standards Attainment Program; a State of California funded in centive program as de fined by California Health and Safety Code S ections 44275– 44299.2.

2.4 Case-by-Case Determination: alternat ive procedures approved by ARB for specific projects, as authorized under the Carl Moyer Program Guidelines.

2.5 Contract: a legally binding agreement signed by the Distri ct, NRCS, or ARB and the Grantee to fund an incentive project for the purpose of reducing emissions. Contracts shall include provisions for ensuri ng that the emissions reductions occur, including, but not limited to, actions that the Grantee must ta ke to achieve the emission reductions for the project, proj ect specific deadlines, inspection and monitoring requirements, and non-performance remedies.

2.6 Cost Effectiveness: the amount of incentive funding ex pended per ton of emissions reduced, as defined by th e applicable incentive program guidelines.

2.7 District: the San Joaquin Valley Unified Air Pollution Control District.

2.8 Enforceable: for purposes of this ru le, emission reductions are enforceable if the incentive program includes provisi ons for ensuring the following:

2.8.1 The emission reductions are independently and practicably verifiable through inspections, monitoring , and/or other mechanisms;

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9610 - 2 Proposed New Rule 9610 2.8.2 Incentive program violations are de fined through legally binding contracts, including identifying the party or parties responsible for ensuring that emission reductions are achieved;

2.8.3 Grantees are obligated to provide all records needed to demonstrate that emission reductions are achieved; and

2.8.4 The public has access to all emissions-related information for reductions claimed in the annual demonstration repor t, as outlined in Section 4.0.

2.9 EPA: the United States Environmental Protection Agency.

2.10 Environmental Quality Incentives Program (EQIP): a voluntary program administered by the NRCS that provides financial and techni cal assistance to agricultural producers to plan and implem ent conservation practices that address natural resource concerns, including the improvement of combustion systems from stationary agricultural irri gation pump engines and mobile agricultu ral equipment.

2.11 Funding Source: a source of funding used to implement incentive programs, including, but not limited to, federal, st ate, and local sour ces. Examples of funding sources include Carl Moyer Progr am funds and Proposition 1B – Goods Movement Emission Reduction Program funds.

2.12 Grantee: a person, business, association, pub lic agency, or other entity that enters into a contract with the District, N RCS, or ARB to reduce emissions under an incentive program.

2.13 Implementation Date: for the purposes of this rule, the date which new or replacement equipment, vehicles, or pract ices funded through incentive programs are put into service.

2.14 Incentive Program: a program that reduces emissions by promoting the adoption of lower emitting equipment, vehicles, or practices through the distribution of

financial incentives to a Grantee.

2.15 Incentive Program Guidelines: admi nistrative procedures, quantification methodologies, eligibility criteria, cost e ffectiveness criteria , reporting practices, and/or other procedures and methodol ogies used to implement incentive programs, as identified in Section 3.0.

2.16 Inspection: for purposes of this rule , a physical inspection by the APCO of the equipment, vehicle, or practice under contr act as part of an incentive project.

2.17 NRCS: the United States Departme nt of Agriculture Natural Resources

Conservation Service.

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9610 - 3 Proposed New Rule 9610 2.18 Permanent: for purposes of this rule, em ission reductions are permanent if actions are taken to physically destroy or pe rmanently disable ex isting or baseline equipment or vehicles, or to permanently am end practices to ensure the reduction of emissions for the duration of the project life.

2.19 Project: for purposes of this rule, ac tions taken to reduce emissions through incentive programs, as contracted betwee n the Grantee and the District, NRCS, or ARB using incentive program guidelines at the time of contrac ting. Such actions include, but are not limited to, replacements , retrofits, new purchases, new practices, and repower.

2.20 Project Life: for purposes of this rule, the period of time over which an incentive program project achieves SIP-creditable emis sion reductions. Project life shall not

exceed the useful life of e quipment, vehicles, or practices funded through incentive programs, and may vary across incent ive programs and project types.

2.21 Project Type: for purposes of the annual demonstration report required by this rule, the project type is identified as the type of equipment, vehicle, or practice, and the

action taken.

2.22 Proposition 1B: the Goods Movement Emission Reduct ion Program; a State of

California funded in centive program as codi fied in California Health and Safety Code Section 39625 et seq.

2.23 Quantifiable: for purposes of this rule, emission reductions are quantifiable if they can be reliably determined through the use of well-established, publicly available

emission factors and cal culation methodologies.

2.24 SIP: the State Implementation Plan; a plan which provides for implementation, maintenance, and enforcement of National Ambient Air Quality Standards promulgated by EPA.

2.25 SIP-Creditable Emission Reduction: for purposes of this rule, reductions of emissions achieved through incentive progra ms that are Surplus, Quantifiable, Enforceable, and Permanent, as those terms are defined in this rule.

2.26 SIP Shortfall: for purposes of this rule, an instance when a commitment made pursuant to Section 7.0 in an adopted SIP to achiev e a certain amount of SIPcreditable emission reductio ns is not achieved.

2.27 Surplus: for purposes of this rule, emissi on 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 base line emission inventories un derlying a SI P attainment

demonstration.

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9610 - 4 Proposed New Rule 9610 2.28 Valley: the San Joaquin Valley air basi n including Fresno, Kings, Madera, Merced, San Joaquin, Stanislaus, and Tulare Countie s, and the San Joaquin Valley air basin portion of Kern County.

3.0 Incentive Program Guidelines

3.1 The District shall quantify emission reduc tions under this rule in accordance with the following specific incentive program guideli nes that provide for SIP-creditable

emission reductions:

3.1.1 ARB Carl Moyer Program Guidelin es for incentive projects funded by either the Carl Moyer Program or no n Carl Moyer funding sources, for the following project types:

3.1.1.1 On-Road Heavy- Duty Vehicle: replacement, new vehicle purchase, repower, or retrofit.

3.1.1.2 On-Road Hea vy-Duty Vehicles Fleet Modernization.

3.1.1.3 Off-Road Compre ssion-Ignition Equipment: repower, retrofit, or replacement.

3.1.1.4 Portable and Stationary Ag ricultural Sources: repower, new purchase of electric mo tor, or retrofit.

3.1.1.5 The Carl Moyer Incentive Pr ogram Guidelines applicable to Sections 3.1.1.1 through 3.1.1 .4 are the 2011 Carl Moyer Program Guidelines (approved 4/28/2011), the 2008 Carl Moyer Program Guidelines (a pproved 3/27/2008), and the 2005 Carl Moyer Program Guide lines (approved 11/17/2005).

3.1.2 NRCS Conservation Practice St andard 372 - Combustion System Improvement (approved September 2010) and Conservation Practice Standard 723 – Combustion System Ai r Emission Management (approved May 2009), and associated N RCS Program Combustion System Improvement of Mobile Engines Guide lines for incentive projects funded by EQIP funds.

3.1.3 ARB Proposition 1B Goods Move ment Emission Re duction Program Guidelines for Heavy-Duty Diesel Trucks repower, replacement, PM retrofit, or PM + NOx retrofit incentive projects funded by Proposition 1B funds or non-Proposition 1B funds. Applicab le ARB Proposition 1B

Goods Movement Emission Reducti on Program Guidelin es are the 2013 Proposition 1B: Goods Movement Emission Reduction Program Guidelines (approved 01/25/2013 ); the 2010 Proposition 1B: Goods Movement Emission Reduction Program Guidelines (approved

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9610 - 5 Proposed New Rule 9610 03/25/2010); and the 2008 Proposition 1B: Goods Movement Emission Reduction Program Guidelines (approved 02/28/2008).

3.2 Subject to sections 3.2.1 and 3.2.2 below, the District may quantify emissions under

this rule in accordance with incentive program guidelines not specifically identified in Section 3.1, provided the District subm its to EPA, pursuant to Section 7.0, a

demonstration that each such guideline provides for SIP-Creditable Emission Reductions. Incentive program guidelines subject to these procedures may include ARB Carl Moyer Program Guidelines, NRCS Combustion Sy stem Improvement

Conservation Practice Standard 372 a nd associated NRCS Program Combustion System Improvement of M obile Engines Guidelines , and ARB Proposition 1B Goods Movement Emission Reduction Program Guidelines.

3.2.1 Incentive program guidelines develo ped by the District to reduce emissions

from mobile sources shall be deve loped in consulta tion with ARB.

3.2.2 Notwithstanding Sect ions 3.1 or Section 3.2, no case-by-case determination may be used to quantify emission redu ctions under this rule unless such determination is reviewed through a pub lic process and submitted to EPA for approval into the SIP in accordance with Section 7.0.

3.3 The District shall develop and maintain a Manual of Procedures that includes all incentive program guidelines used to achieve SIP-creditable emission reductions from incentive programs, pursuant to Se ction 3.0. The Manual of Procedures

shall:

3.3.1 Be made publically available on the District’s website and maintained on an ongoing basis as incentive prog ram guidelines are adopted; and

3.3.2 Include a description of how the incentive program guidelines ensure that incentive program em ission reductions are SIP-creditable.

4.0 Annual Demonstration Report

The APCO shall annually prepare a report that demonstrates the quantity of SIPcreditable emission reductions. This report shall include the following elements, and shall be prepared and submitted to ARB and EPA through a public process in accordance

with Section 5.0.

4.1 Description of incentive program guidelines used by the District, NRCS, or ARB to implement the incentive programs genera ting claimed SIP-creditable emission reductions, a description of how the guidelines ensure that the claimed emission reductions are SIP-creditable, and a list of any guidelines that are being used for the

first time under this rule.

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9610 - 6 Proposed New Rule 9610 4.2 SIP-creditable emission reductions generated through incentive programs, as implemented in the preceding year(s), su mmarized by pollutant, years that the emission reductions are occurring (project life), cost effectiveness, funding amount, incentive program guideline, and project type.

4.3 Adjustments to SIP-creditable emission reductions claimed in prior annual demonstration reports shall be reported in the annual demonstration report the year that the adjustments are made with a discussion explaining the cause for the adjustments. Adjustments to emissi on reductions claimed in prior annual demonstration reports may be the result of , but are not limited to, updated project information received during th e course of project implementation or the adoption of new local, state, or federal requirements th at might affect the surplus nature of

emission reductions achieved by incentive programs.

4.4 Identification of SI P commitment(s) identifi ed in District adopted SIP(s) (by year, pollutant, and magnitude), which the Distri ct has satisfied, in whole or in part, through SIP-creditable emission reductions. Such comm itments include, but are not limited to, emission reduction commitme nts adopted to meet Clean Air Act requirements concerning the demonstratio n of attainment, Reasonable Further Progress, Rate of Progress, contingenc y measures, and long-term measures as defined by the federal Clean Air Act Secti on 182(e)(5) (“black box” reductions).

The District shall id entify and quantify SI P commitment shortf alls, if any, and remedies for addressing said shortfalls.

4.5 Project Information

Reported project information shall includ e the following information for incentive projects achieving SIP-creditable emi ssions reductions, as applicable:

4.5.1 Unique project identification nu mber, as established by the District,
NRCS, or ARB;

4.5.2 Project location;

4.5.3 Project type;

4.5.4 Project life;

4.5.5 Implementation date of project;

4.5.6 Funding amount provided by District, NRCS, or ARB;

4.5.7 Incentive program guideline(s) used to implement the project, including revision date;

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9610 - 7 Proposed New Rule 9610 4.5.8 Quantified emissions per year, and aggregated over the project life, by pollutant; and

4.5.9 Description of both the baseline and the new equipment, vehicles, or practices, including the following for each, as applicable:

4.5.9.1 Make and model of equipment or vehicle;

4.5.9.2 Equipment or vehicl e rating or horsepower;

4.5.9.3 Model year; and

4.5.9.4 Historical and pr ojected annual usage.

4.5.10 Additional project details, as neces sary to demonstrate the SIP-creditable

emission reductions claimed in the annual demonstration report.

4.6 Project Monitoring and Enforcement

The annual demonstration report shall include a summary of monitoring and enforcement activities conducted during the reporting period for incentive projects

for which SIP-creditable emission reduc tions are being clai med, as follows:

4.6.1 Identification of project audits, us age reports, inspections, and other project monitoring activities; and

4.6.2 List of actions taken to enforce emission reductions associated with contract requirements, in cluding the following:

4.6.2.1 Identification of projects that do not satisfy contractual requirements; and

4.6.2.2 Identification of enforcement actions and remedies, including penalties, additional contractual requirements, or other actions.

4.7 Incentive Program Evaluation

The District shall perform a retrospectiv e assessment of the performance of its incentive program to evaluate overall in centive program performance and develop

recommendations for future enhancements to incentive progra m implementation.

This assessment shall includ e a summary of the public pr ocess to receive comments on the draft report, as re quired by Section 5.0.

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9610 - 8 Proposed New Rule 9610 5.0 Annual Demonstration Report Process

5.1 The APCO shall submit the annual demonstration report and information

described in Section 4.0 to ARB and EPA no later than A ugust 31 of each year.

5.2 The APCO shall release the draft annua l demonstration report to the public and present it to the District Governing Boar d prior to submittal to ARB and EPA for

concurrence.

5.3 Previously submitted annual demonstration reports shall be made available on the

District’s website.

6.0 Recordkeeping Requirements

6.1 All documents created and/or used in implementing the requirements of Section 4.0 shall be kept and maintained as re quired by the applicab le incentive program guidelines. Consistent with the Californ ia Public Records Act and other related requirements, such records shall be made available for public review. Information regarding the process for the public review of such records shall be

included in the annual de monstration report.

6.2 Records related to implementation of the NRCS Program Combustion System Improvement of Mobile En gines incentive program are prohibited from mandatory disclosure, pursuant to the Federal Food Secu rity Act of 1985 (7 U.S.C. § 608d(2)).

7.0 Use of Projected Incentive Program Reductions in SIPs

Where the District intends to rely on proj ections of SIP-creditable emission reductions under this rule to satisfy a federal Clean Air Act SIP requirement (e.g., attainment, Reasonable Further Progress, Rate of Prog ress, contingency meas ures, or long-term measures as defined by th e federal Clean Air Act Section 182(e)(5) (“black box” reductions)), the District shall identify sp ecific amounts of SIP-creditable emission reductions for a particular year or years in the relevant SIP. Each SIP submission in which the District relies on such projections sh all contain a demonstratio n that the applicable incentive program guideline(s) continues to pr ovide for SIP-creditable emissions reductions

and shall contain an enfor ceable commitment that:

7.1 Identifies incentive program guidelines, as specified in Section 3.0, used to generate projected SIP-cred itable emission reductions;

7.2 Identifies emission reductions not to ex ceed the amount projected to be achieved through the use of secured or reasonably anticipated incenti ve program funding and the estimated availability of emission reductions projects and willing participants, based on historical par ticipation and estimates of remaining equipment;

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9610 - 9 Proposed New Rule 9610 7.3 Is specifically adopted by the District as a part of the SIP and accounted for in the annual demonstration report as SIP-cred itable emission reductions are achieved through provisions of this rule; and

7.4 States that if either the District or EPA finds that th ere 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 equivale nt emission reductions as expeditiously as practicable and no later than any applicable implementation

deadline in the Clean Air Act or EPA’s implementing regulations.

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