317

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

RULE 3 17

. 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 fede ral 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 E MISSIONS 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, th rough 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 fugitive s and

unpe rmitted emissions , during fiscal year s 200 5

- 0 6 and 200 6

- 07 (emissions not to exceed allowable s ) , and programmatically adjusted to account for regulatory effects between 2006 through
2010 , for the South Coast Air Basin. For an existing major stationary sou rce 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).R ule 317 (Cont.) (Amended February 4, 2011)

317

- 2 (B) For sources that becom e 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 fu gitives 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 sourc e 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 emi ssions 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 cre dits 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

- ATT A INMENT FEE means the fee that would
have been assessed to a major stationary source pursuant to Section 185 ofR ule 317 (Cont.) (Amended February 4, 2011)

317

- 3 the 1990 amendments to the Clean Air Act (CAA). The a nnual 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 t han or equal to 80% of B; then there shall be no annual CAA non

- attainment fee assessed for the subject year.

B is Baseline E missions, of VOC, NOx or both for which a source qualifies as a major stationary source as defined in this rule, in tons.

CPIF is t he 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
Au gust 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 cross

references the method ology 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 byR ule 317 (Cont.) (Amended February 4, 2011)

317

- 4 200 ($5000/$25). Since S ection 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 o f 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 SOU RCE shall, for the purposes of this rule:
(A) For a non

- RECLAI M 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 cert ificate 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 f or the purposes of this rule comprise s :
(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 issu ed afte r 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 purpos es of determiningR ule 317 (Cont.) (Amended February 4, 2011)

317

- 5 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 Executiv e 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 S tate Implementation P rogram for t he
federal 1

- hour ozone standard and are approved by the AQMD executive officer, E xecutive O fficer 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 reduct ions in the SCAQMD ; or facilit ate 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 ) e xpendit ures occurring only in calendar years subsequent to 2008 from eligible projects ;
( iv ) o nly monies actually expended from qualified

programs during a calendar year shall be credited.

(B) Expenditures eligible for the Section 1 7 2 (e) fee equivalency

accou nt 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 disc ounted due to the passage of time. Funds may beR ule 317 (Cont.) (Amended February 4, 2011)

317

- 6 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 app licable prior calendar year CAA Non

Attainment (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 De monstration of Equivalency
Beginning August 1, 2012, and continuing annually thereafter, the
Executive Officer shall complete an equivalency demonstration to show
that adequate funding wa s 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:

B i

- 1 + D i

- 1 – F i

- 1 = B i > 0 Where,

B i

- 1 is the Section 172 (e) fee e quivalency a ccount balance at the beginning of the prior calendar year i

- 1

D i

- 1 is the funds d eposited ( credited ) into the Section 172 (e) fee

e quivalency a ccount during the prior calendar year ( i

- 1)

F i

- 1 is the Section 185 fees calculated for all major stationary sources for prior calendar year calculated pursuant to paragraph ( c ) (2) , and

B i is the Section 172 (e) fee e quivalency a ccount balance at the end of calendar year i

- 1

, w hich is carried forward as the beginning balance for the following year i

.R ule 317 (Cont.) (Amended February 4, 2011)

317

- 7 (4) Annual Preliminary De ter m ina tion 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 o bligation for the current calendar year according to the following equation:

B i + D i > 110% x F i

- 1 Where,

B i is the Section 172 (e) Fee Equivalency Account balance at the beginning of the current calendar year i

D i is the funds expected to be deposited (c redited) into Section 172 (e) Fee Equivalency Account in current calendar year i, and

F i

- 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 the i r

calculated prior calendar year fee obligation,

(B) The aggregate amount of prior calendar year CAA Non

Attainment (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 in to the Section 172 (e) fee equivalency account during the prior calendar year and those expected to be credited during the current year

,R ule 317 (Cont.) (Amended February 4, 2011)

317

- 8 (F ) The results of the equivalency demonstration and preliminary

determination of equivalency conducted pursuant to par agraph (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 (B i < 0) or the preliminary determination of equ ivalency 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 , the n the EO shall within 90 days submit to the Governing Board a back

- stop

ru le for adoption that would require the Executive Officer to collect and / or track adequate fees for any sho rtfall. 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

o wners 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 e mission data for the ten (10) years precedi ng 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 consecuti ve two (2) years selected; and/or;

( iii ) Adjusted annual emissions considering the impact of subparagraphs (ii ) above; andR ule 317 (Cont.) (Amended February 4, 2011)

317

- 9 ( iv ) Certification, in writing, by the highest

- ranking executive
on site that the source’s emissions are irregular, cyclical, or
othe rwise 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

- si te aggregation, may aggregate multi

- site baseline and future year
emissions.

( C ) Regulation III

– Fees credit
Each major stationary source paying C lean A ir A ct N on

- 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
C lean A ir A ct N on

- attainment Section 185 fees due , or exceed the
other wise 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 validi ty 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 operatio n upon a determination by the A dministrator 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.R ule 317 (Cont.) (Amended February 4, 2011)

317

- 10 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 2009/20 10 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, C A 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

AB2766R ule 317 (Cont.) (Amended February 4, 2011)

317

- 11 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 P rogram 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 fund ing unless indicated otherwise.