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(Adopted December 5, 2008) (Amended February 4, 2011)

RULE 317. CLEAN AIR ACT NON-ATTAINMENT FEES

(a) Purpose

The purpose of this rule is to satisfy requirements as specified in Sections 182(d), 

182(e), 182(f) and 185 of the 1990 amendments to the federal Clean Air Act 

(CAA) by utilizing a fee equivalency approach applying the principle in Section 

172(e) of the CAA.

(b) Definitions 

For the purposes of this rule, the following definitions shall apply:

(1) ATTAINMENT YEAR is the calendar year that the Clean Air Act

establishes for the Basin to reach attainment of the federal one-hour ozone 

standard pursuant to the CAA. Under the Severe 17 area designation, the 

attainment year is 2007. Under the Extreme area designation, the 

attainment year is 2010.

(2) BASELINE EMISSIONS are emissions of VOC, NOx or both, (including 

major stationary source fugitive and unpermitted emissions), for which a 

source qualifies as a major stationary source, calculated using source 

information as reported to or amended by the District, through the 

District’s Annual Emissions Report (AER) program, as follows:

(A) For an existing major stationary source prior to or during the 

attainment year, the baseline emissions shall be the average 

amount of the actual emissions, including fugitives and 

unpermitted emissions, during fiscal years 2005-06 and 2006-07

(emissions not to exceed allowables), and programmatically

adjusted to account for regulatory effects between 2006 through 

2010, for the South Coast Air Basin. For an existing major 

stationary source in the Salton Sea Air Basin prior to or during the 

attainment year the baseline emissions shall be AER emissions as 

reported to the District or amended by the District for the 

attainment year (emissions not to exceed allowables).
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(B) For sources that become subject to this rule after the attainment 

year:

(i) For a non-RECLAIM major stationary source the baseline 

emissions shall be the amount of emissions allowed under 

the applicable implementation plan or the potential to emit 

(annual emissions including fugitives and emissions from 

unpermitted equipment). 

(ii) For an existing RECLAIM source that subsequently 

qualifies as a major stationary source for the purposes of 

this rule the baseline emissions shall be the higher of the 

RTC holdings at the beginning of the year available for use 

during the same calendar year or actual emissions during 

the calendar year the source becomes a major stationary 

source that do not exceed the RTC holdings at the end of 

the reconciliation period.

(iii) For a new RECLAIM source that qualifies as a major 

stationary source for the purposes of this rule the baseline 

emissions shall be the higher of RTC holdings purchased at 

the beginning of the attainment year or the initial calendar 

year of operation, as applicable, or actual emissions during 

the calendar year, not to exceed RTC holdings at the end of 

the reconciliation period.

If a major stationary source is operational for a period of less than

one calendar year in the attainment year or later, the allowable 

emissions or RTC credits or holdings based on subparagraph

(b)(2)(B) (i through iii) as applicable, in the attainment year or 

initial year of operation, (including unpermitted and fugitives)

shall be extrapolated over one full calendar year. 

(3) BASIN means either the Riverside county portion of the Salton Sea Air 

Basin (SSAB) or the South Coast Air Basin (SOCAB). The boundaries of 

each air basin shall be as defined by California Code of Regulations, 

Section 60104, Title 17.

(4) CLEAN AIR ACT NON-ATTAINMENT FEE means the fee that would 

have been assessed to a major stationary source pursuant to Section 185 of 
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the 1990 amendments to the Clean Air Act (CAA). The annual VOC 

(CAA) Non-Attainment Fee (pursuant to Section 185) for a major 

stationary source of VOC and the Annual NOx CAA Non-Attainment Fee 

for, a major stationary source of NOx (a source may be a major stationary 

source for either VOC, NOx or both and subject to the applicable fee) for 

excess emissions of these air contaminants in accordance with Section 185 

(b) of the CAA shall be calculated as follows:

Annual CAA Non-Attainment Fee = $5,000 x CPIF x [ A – ( 0.8 x B ) ]

Where: 

A is the total amount of emissions actually emitted during the applicable 

fee assessment year for pollutants included in B, in tons. If A is less than 

or equal to 80% of B; then there shall be no annual CAA non-attainment 

fee assessed for the subject year.

B is Baseline Emissions, of VOC, NOx or both for which a source 

qualifies as a major stationary source as defined in this rule, in tons. 

CPIF is the annual Consumer Price Index (CPI) adjustment factor as 

defined in this rule. 

(5) CPIF means the annual consumer price index (CPI) adjustment factor 

which is equivalent to the cumulative increase in the CPI beginning with 

the 1989 change in the index up to and including the change in the year 

prior to the year for which the fees are due. For any calendar year the CPI 

is the average of the CPI for all-urban consumers published by the 

Department of Labor, as of the close of the 12-month period ending on 

August 31 of each calendar year or the revision of the CPI which is most 

consistent with the CPI for calendar year 1989 in accordance with 

Sections 502(b)(3)(B)(v) and 185(b)(3) of the CAA. Section 185 crossreferences the methodology in section 502(b)(3)(B)(v) of the CAA. This 

method has been interpreted for use in determining permit fees in a 1992 

EPA memorandum. (See, Memorandum of October 15, 1992, from Frank 

Bunyard, "Calculating Fees for Operating Permits.") EPA has used this 

method to calculate the Part 70 permit fee rate since 1990, and will 

continue to update the rate every year in September, when the August 

values are available. The adjusted section 185 fee, then, would be prorated 

to that adjusted permit fee by multiplying the Part 70 permit fee rate by 
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200 ($5000/$25). Since Section 185 fees are assessed on a calendar year 

basis, and the inflation factor is applied in September the calendar year fee 

is determined as a weighted average (8/12 of the fee associated with 

January to August, and 4/12 of the fee associated with September to 

December). 

(6) FEE ASSESSMENT YEAR means the year for which CAA fees are being 

calculated and assessed under the provisions of this rule.

(7) MAJOR STATIONARY SOURCE shall, for the purposes of this rule:

(A) For a non-RECLAIM source-have the same meaning as in Sections 

181(b)(4)(B) and 182(d) of the CAA, or 182 (e) as applicable, or a 

Major Polluting Facility as defined in Rule 1302(s) – Definition of 

Terms. 

(B) For a RECLAIM source-have the same meaning as in paragraph 

(b)(2) of Rule 3001 – Applicability where the potential to emit for 

a RECLAIM facility is the higher of:

(i) the starting allocation plus non-tradeable credits; or

(ii) RECLAIM Trading Credits (RTCs) held in the allocation 

account after trading.

RTC’s held in the certificate account are not part of the allocation.

(8) NITROGEN OXIDES (NOx) means any compound that is an oxide of 

nitrogen.

(9) RECLAIM is the Regional Clean Air Incentives Market established by 

Regulation XX – Regional Clean Air Incentives Market (RECLAIM) 

which for the purposes of this rule comprises: 

(A) Existing RECLAIM sources with a District issued facility 

identification number during or prior to the attainment date; or

(B) New RECLAIM sources with a District issued facility 

identification number issued after the attainment year; or

(C) An existing source with a District issued facility identification 

number prior to the attainment date that becomes a RECLAIM 

source during the attainment year which shall be treated as an 

existing RECLAIM source for the purposes of determining 
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baseline emissions for the attainment year or the initial year of 

operation as applicable.

(10) VOLATILE ORGANIC COMPOUND (VOC) is as defined in Rule 102 –

Definitions.

(c) Requirements 

(1) Section 172 (e) Fee Equivalency Account

(A) The Executive Officer shall establish and maintain a Section 

172(e) fee equivalency account. The equivalency account shall be 

credited with expenditures from qualified programs that satisfy the 

following criteria:

(i) surplus to the State Implementation Program for the 

federal 1-hour ozone standard and are approved by 

the AQMD executive officer, Executive Officer of 

CARB, and the Administrator or Regional 

Administrator of US EPA Region IX as being 

surplus to the SIP;

(ii) designed to result in direct VOC or NOx reductions 

in the SCAQMD; or facilitate future VOC or NOx 

reductions in the SCAQMD through vehicle/engine 

fueling infrastructure or advanced technology 

development efforts for implementation within the 

next 10 years, or other uses approved by EPA;

(iii) expenditures occurring only in calendar years 

subsequent to 2008 from eligible projects;

(iv) only monies actually expended from qualified 

programs during a calendar year shall be credited. 

(B) Expenditures eligible for the Section 172 (e) fee equivalency 

account need not actually be held nor disbursed directly by the 

AQMD provided the underlying programs have been approved by 

CARB and EPA and tracked pursuant to subdivision (c).

(C) Funds shall be accounted for on a dollar for dollar basis and shall 

not be discounted due to the passage of time. Funds may be 
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accumulated in the accounts from year to year if a surplus exists in 

any given year, and used to offset the calculated Clean Air Act 

Non-attainment (Section 185) fees as needed. 

(D) The Section 172 (e) fee equivalency account may be pre-funded 

according to the projects listed in Attachment A.

(2) Calculation of the CAA Non-Attainment (Section 185) Fee Obligation

By August 1, 2012, and continuing annually thereafter, the Executive 

Officer shall calculate the applicable prior calendar year CAA NonAttainment (Section 185) fees for each major source in the South Coast 

AQMD pursuant to paragraph (b) and then aggregate such fees for the 

entire universe of major stationary sources in the District that would 

otherwise be subject to Section 185. 

(3) Annual Demonstration of Equivalency

Beginning August 1, 2012, and continuing annually thereafter, the 

Executive Officer shall complete an equivalency demonstration to show

that adequate funding was available in the equivalency account for the 

prior calendar year to meet the CAA Non-Attainment (Section 185) fee 

obligation calculated pursuant to paragraph (c)(2). Any surplus funding 

available in the fee equivalency account will be carried forward to the 

following assessment year. The annual determination of equivalency shall 

be made according to the following equation: 

Bi-1 + Di-1 – Fi-1 = Bi > 0

Where,

Bi-1 is the Section 172 (e) fee equivalency account balance at the 

beginning of the prior calendar year i-1

Di-1 is the funds deposited (credited) into the Section 172 (e) fee 

equivalency account during the prior calendar year (i-1)

Fi-1 is the Section 185 fees calculated for all major stationary sources for 

prior calendar year calculated pursuant to paragraph (c) (2), and 

Bi is the Section 172 (e) fee equivalency account balance at the end of 

calendar year i-1, which is carried forward as the beginning balance for

the following year i.
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(4) Annual Preliminary Determination of Equivalency

Beginning July 1, 2012, and continuing annually thereafter, the Executive 

Officer shall complete a preliminary determination of equivalency to 

determine whether adequate funding is expected to be available in the 

Section 172 (e) fee equivalency account to meet the CAA Non-Attainment 

(Section 185) fee obligation for the current calendar year according to the 

following equation:

Bi + Di > 110% x Fi-1 

Where,

Bi is the Section 172 (e) Fee Equivalency Account balance at the 

beginning of the current calendar year i

Di is the funds expected to be deposited (credited) into Section 172 (e) Fee 

Equivalency Account in current calendar year i, and 

Fi-1 is the Section 185 fees calculated pursuant to paragraph (c) (2) for the 

prior calendar year (i-1) being used as surrogate Section 185 fee estimate 

for the current year.

(5) Reporting Requirements 

Beginning no later than September 3, 2012, and continuing annually 

thereafter, the EO shall file a report with CARB and US EPA that includes 

all of the following:

(A) A listing of all facilities subject to Section 185 and their

calculated prior calendar year fee obligation,

(B) The aggregate amount of prior calendar year CAA NonAttainment (Section 185) fees obligation calculated pursuant to 

paragraph (c)(2),

(C) The Section 172 (e) fee equivalency account beginning balance,

(D) The amount of any surplus funding carried over to the 

subsequent calendar year, 

(E) A listing of all programs, program descriptions, description of 

funding, certification of eligibility for each program, and 

associated expenditures that were credited into the Section 172

(e) fee equivalency account during the prior calendar year and 

those expected to be credited during the current year,
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(F) The results of the equivalency demonstration and preliminary 

determination of equivalency conducted pursuant to paragraph 

(c)(3) and (c)(4).

(6) Backstop Provision for Failure to Achieve Equivalency

In the event the annual determination of equivalency conducted for the 

prior year pursuant to paragraph (c)(3) shows a deficit (Bi < 0) or the 

preliminary determination of equivalency conducted for the current year 

pursuant to paragraph (c)(4) shows that adequate funding to meet the 

estimated Section 185 fees for the current year may not be available, then

the EO shall within 90 days submit to the Governing Board a back-stop 

rule for adoption that would require the Executive Officer to collect and/or 

track adequate fees for any shortfall. The Governing Board shall act on a 

backstop rule no later than 120 days from the funding inadequacy finding.

The backstop rule, to the extent applicable to major stationary sources of

VOC and/or NOx, shall include the following baseline elements which 

owners or operators may request in writing:

(A) Alternative Baseline Period

Emissions from an alternative baseline period reflecting the 

average of two consecutive years within the last ten (10) years 

prior to and including the attainment year may be substituted for 

baseline emissions from the attainment year subject to the 

following analysis:

(i) Annual emission data for the ten (10) years preceding and 

including the attainment year; and

(ii) Analysis of adopted local, state, and federal rules or 

regulations that would have restricted the source’s ability to 

either operate or emit a particular pollutant, had they been 

in effect during the consecutive two (2) years selected; 

and/or;

(iii) Adjusted annual emissions considering the impact of 

subparagraphs (ii) above; and
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(iv) Certification, in writing, by the highest-ranking executive 

on site that the source’s emissions are irregular, cyclical, or 

otherwise vary significantly from year to year.

(B) Multi-Site Aggregation

Major stationary sources within a single non-attainment region, 

under common ownership and control, and that comport with the 

Federal definition of major stationary source for multi-site 

aggregation, may aggregate multi-site baseline and future year 

emissions.

(C) Regulation III – Fees credit

Each major stationary source paying Clean Air Act Non-attainment 

Section 185 fees pursuant to the backstop rule adopted pursuant to 

paragraph (c) (6) shall receive a credit for their fees paid for annual 

operating fees and annual operating emissions fees during the 

preceding calendar year. In no case, shall the credit exceed the 

Clean Air Act Non-attainment Section 185 fees due, or exceed the 

otherwise applicable annual operating fees and annual operating 

emissions fees.

(d) Severability

If any provision of this rule is held by a USEPA or CARB, finding or decision or 

a court decision to be invalid, such finding or decision will not affect the validity 

of the remainder of this rule and major stationary sources shall be subject to and 

must comply with the provisions contained in the reminder of this rule. 

(e) Termination

This rule shall become inoperative and have no further effect or further operation 

upon a determination by the Administrator or Regional Administrator of the US 

EPA that in a given year the air basin is in attainment with the federal one-hour 

ozone standard, or upon approval by EPA of a replacement program, such as a 

state-wide program adopted by CARB.

(f) The Executive Officer shall submit Rule 317 for inclusion into the SIP by CARB 

and U.S. EPA within 14 days of adoption.
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ATTACHMENT A – LIST OF PROGRAMS PRE- FUNDING SECTION 172 (e) FEE EQUIVALENCY ACCOUNT*

Name Date of Award Initial Year of 

Expenditure

One-time/

Ongoing* Expenditure

U.S. EPA DERA

School Bus Retrofit 6/5/2009 2010 One-time $870,000

School Bus Replacement 6/30/2010 2011 One-time $1,065,465

U.S. EPA DERA Earmark

LNG Truck Replacement 5/2/2008 2009/2010 One-time $5,000,000

LNG Truck Replacement 11/6/2009 2010/2011 One-time $7,500,000

Crane, Shore Power, Off Road 4/21/2010 2011/2012 One-time $5,000,000

U.S. EPA Emerging Technologies

Truck Retrofits/SCRT 4/28/2009 2010 One-time $900,000

Truck Retrofits-SCRT (ARRA) 8/31/2009 2011 One-time $2,000,000

Truck Retrofits-SCCRT (ARRA) 8/31/2009 2011 One-time $2,000,000

U.S. DOE Clean Cities

ARRA-LNG Truck Replacement 11/6/2009 2010 One-time $7,900,000

New LNG Station Ontario, CA 3/12/2010 2010/2011 One-time $150,000

UPS Ontario-Las Vegas LNG.... (ARRA) 12/18/2009 2010/2011 One-time $5,591,611

AB2766
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Name Date of Award Initial Year of 

Expenditure

One-time/

Ongoing* Expenditure

Local Governments** FY 2008/2009 Continuous $14,000,000

MSRC** 2009 – 2010 (2 yrs.) Continuous $24,000,000

ARB AB118 Program

Hybrid Truck and Bus Voucher Incentive Project (HVIP) 2010 One-time $9,200,000

Clean Vehicle Rebate Program (CVRP) 2010 One-time $117,000

Lawn Mower 2010 One-time $816,000

California Energy Commission Funding

LNG Truck Replacement 7/9/2010 2011 One-time $5,142,000

NG Infrastructure: South Coast Air Basin 5/17/2010 2011 One-time $2,900,000

SCAQMD Clean Fuels Program 2009 – 2010 (2 yrs.) Continuous $16,000,000

Grand Total $110,152,076

*: Pending CARB and USEPA approval 

**: Based reported expenditures by local governments and MSRC that were spent in VOC/NOx emission reduction related 

projects.

(Funding sources marked “continuous” indicate expected annual funding unless indicated otherwise.