SJVUAPCD 9610 - 1 06/20/2013

RULE 9610 STATE IMPLEMENTATION PLAN CREDIT FOR EMIS SION

REDUCTIONS GENERATED THROUGH INCENTIVE PROGRAMS (Adopted June 20, 2013)

1.0 Purpose

The purpose of this rule is to provide an administr ative mechanism for the District to receive credit towards State Implementation Plan re quirements for emission reductions achieved in the San Joaquin Valley Air Basin throug h incentive programs administered 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 authorize d to act on behalf of the APCO.

2.2 ARB: the California state Air Resources Board as established by California Health and Safety Code Section 39510, or any person author ized to act on its behalf.

2.3 Carl Moyer Program: the Carl Moyer Memorial Ai r Quality Standards Attainment Program; a State of California funded in centive program as defined by California Health and Safety Code Sections 44275– 4 4299.2.

2.4 Case-by-Case Determination: alternative proced ures approved by ARB for specific projects, as authorized under the Carl Moy er Program Guidelines.

2.5 Contract: a legally binding agreement signed b y the District, NRCS, or ARB and the Grantee to fund an incentive project for the pu rpose of reducing emissions. Contracts shall include provisions for ensuring tha t the emissions reductions occur, including, but not limited to, actions that the Gra ntee must take to achieve the emission reductions for the project, project specif ic deadlines, inspection and monitoring requirements, and non-performance remedi es.

2.6 Cost Effectiveness: the amount of incentive fu nding expended per ton of emissions reduced, as defined by the applicable inc entive program guidelines.

2.7 District: the San Joaquin Valley Unified Air P ollution Control District.

2.8 Enforceable: for purposes of this rule, emissi on reductions are enforceable if the incentive program includes provisions for ensuring the following:

2.8.1 The emission reductions are independently and practicably verifiable through inspections, monitoring, and/or other mecha nisms;SJVUAPCD 9610 - 2 06/20/2013 2.8.2 Incentive program violations are defined thro ugh legally binding contracts, including identifying the party or parti es 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-relate d information for reductions claimed in the annual demonstration report, as outl ined in Section 4.0.

2.9 EPA: the United States Environmental Protectio n Agency.

2.10 EQIP: Environmental Quality Incentives Program ; a voluntary program administered by the NRCS that provides financial an d technical assistance to agricultural producers to plan and implement conser vation practices that address natural resource concerns, including the improvemen t of combustion systems from stationary agricultural irrigation pump engines and mobile agricultural equipment.

2.11 Funding Source: a source of funding used to i mplement incentive programs, including, but not limited to, federal, state, and local sources. Examples of funding sources include Carl Moyer Program funds an d 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, NRCS, 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 practices funde d through incentive programs are put into service.

2.14 Incentive Program: a program that reduces emi ssions 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: administrative p rocedures, quantification methodologies, eligibility criteria, cost effective ness criteria, reporting practices, and/or other procedures and methodologie s used to implement incentive programs, as identified in Section 3.0.

2.16 Inspection: for purposes of this rule, a phys ical inspection by the APCO of the equipment, vehicle, or practice under contract as p art of an incentive project.SJVUAPCD 9610 - 3 06/20/2013

2.17 NRCS: the United States Department of Agricul ture Natural Resources

Conservation Service.

2.18 Permanent: for purposes of this rule, emissio n reductions are permanent if actions are taken to physically destroy or permanently disa ble existing or baseline equipment or vehicles, or to permanently amend prac tices to ensure the reduction of emissions for the duration of the project life.

2.19 Project: for purposes of this rule, actions t aken to reduce emissions through incentive programs, as contracted between the Grant ee and the District, NRCS, or ARB using incentive program guidelines at the time of contracting. Such actions include, but are not limited to, replacements, retr ofits, 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 emission re ductions. Project life shall not exceed the useful life of equipment, vehicles, or p ractices funded through incentive programs, and may vary across incentive programs an d project types.

2.21 Project Type: for purposes of the annual demo nstration 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 R eduction Program; a State of California funded incentive program as codified in California Health and Safety Code Section 39625 et seq.

2.23 Quantifiable: for purposes of this rule, emis sion reductions are quantifiable if they can be reliably determined through the use of well- established, publicly available emission factors and calculation methodologies.

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

2.25 SIP-Creditable Emission Reduction: for purpos es of this rule, reductions of emissions achieved through incentive programs that are Surplus, Quantifiable, Enforceable, and Permanent, as those terms are defi ned 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 reductions is not achieved.SJVUAPCD 9610 - 4 06/20/2013

2.27 Surplus: for purposes of this rule, emission reductions are surplus when they are not otherwise required by any federal, state, or lo cal regulation, or other legal mandate, and are in excess of the baseline emission inventories underlying a SIP

attainment demonstration.

2.28 Valley: the San Joaquin Valley Air Basin incl uding 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 reductions under this rule in accordance with the following specific incentive program guidelines that provide for SIP-creditable

emission reductions:

3.1.1 ARB Carl Moyer Program Guidelines for incenti ve projects funded by either the Carl Moyer Program or non Carl Moyer fun ding sources, for the following project types:

3.1.1.1 On-Road Heavy-Duty Vehicle

3.1.1.1.1 New Vehicle Purchase (Chapter 1, approved

11/17/2005; Chapter 3, approved 2008; or Chapter 4, approved 4/28/2011);

3.1.1.1.2 Repower (Chapter 1, approved 11/17/2005;

Chapter 3, approved 2008; or Chapter 4, approved 4/28/2011); or

3.1.1.1.3 Retrofit (Chapter 1, approved 11/17/2005;

Chapter 3, approved 2008; or Chapter 4, approved 4/28/2011).

3.1.1.2 On-Road Heavy-Duty Vehicles Fleet

Modernization/Replacement (Chapter 2, approved 11/17/2005; Chapter 4, approved 3/27/2008; or Chapt er 5, approved 4/28/2011).

3.1.1.3 Off-Road Compression-Ignition Equipment

3.1.1.3.1 Repower (Chapter 5, approved 11/17/2005;

Chapter 5, approved 3/27/2008; or Chapter 7, approved 4/28/2011);SJVUAPCD 9610 - 5 06/20/2013 3.1.1.3.2 Replacement (Chapter 4, approved 3/27/200 8; or

Chapter 9, approved 4/28/2011); or

3.1.1.3.3 Retrofit (Chapter 5, approved 11/17/2005;

Chapter 5, approved 3/27/2008; or Chapter 7, approved 4/28/2011).

3.1.1.4 Portable and Stationary Agricultural Source s

3.1.1.4.1 Repower (Chapter 10, approved 11/17/2005 ;

Chapter 10, approved 3/27/2008; or Chapter 10, approved 4/28/2011);

3.1.1.4.2 New purchase of electric motor (Chapter 10,

approved 11/17/2005; Chapter 10, approved 3/27/2008; or Chapter 10, approved 4/28/2011);

or

3.1.1.4.3 Retrofit (Chapter 10, approved 11/17/200 5;

Chapter 10, approved 3/27/2008; or Chapter 10, approved 4/28/2011).

3.1.2 NRCS Conservation Practice Standard 372 - Com bustion System Improvement (approved September 2010); Conservation Practice Standard 723 – Combustion System Air Emission Manag ement (approved May 2009); NRCS General Manual, Title 450 , Part 401 – Conservation Practice Standards (approved October 1 8, 2009); NRCS General Manual, Title 450, Part 407 – Documentation , Certification, and Spot Checking (approved October 17, 2009); Conserva tion Practice Standard 372 Specification (approved September 2010 ); NRCS Interim Conservation Practice Standard 723 – Combustion Sys tem Air Emission management (approved May 2009); NRCS Combustion Sys tem Improvement 372 Operation and Maintenance; and asso ciated NRCS Program Combustion System Improvement of Mobile Eng ines Guidelines (December 2011; updated May 2012) for incentive pro jects funded by EQIP funds.

3.1.3 ARB Proposition 1B Goods Movement Emission Re duction Program Guidelines for Heavy-Duty Diesel Trucks repower, re placement, PM retrofit, or PM + NOx retrofit incentive projects f unded by Proposition 1B funds or non-Proposition 1B funds. Applicable A RB Proposition 1B Goods Movement Emission Reduction Program Guideline s are the 2013 Proposition 1B: Goods Movement Emission Reduction P rogram Guidelines (Appendix A, approved 01/25/2013); the 2 010 PropositionSJVUAPCD 9610 - 6 06/20/2013 1B: Goods Movement Emission Reduction Program Guide lines (Appendix A, approved 03/25/2010); and the 2008 Pro position 1B: Goods Movement Emission Reduction Program Guideline s (Appendices A or B, approved 02/28/2008).

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

reductions under this rule in accordance with incen tive program guidelines not specifically identified in Section 3.1, provided th e District submits to EPA, pursuant to Section 7.0, a demonstration that each such guideline provides for SIPcreditable emission reductions. Incentive program guidelines subject to these procedures may include ARB Carl Moyer Program Guide lines, NRCS Combustion System Improvement Conservation Practice Standard 3 72 and associated NRCS Program Combustion System Improvement of Mobile Eng ines Guidelines, and ARB Proposition 1B Goods Movement Emission Reductio n Program Guidelines.

3.2.1 Incentive program guidelines developed by th e District to reduce emissions

from mobile sources shall be developed in consultat ion with ARB.

3.2.2 Notwithstanding Sections 3.1 or Section 3.2, no case-by-case determination

may be used to quantify emission reductions under t his rule unless such determination is reviewed through a public process and submitted to EPA

in accordance with Section 7.0.

3.3 The District shall develop and maintain a Manua l of Procedures that includes all incentive program guidelines used to achieve SIP-cr editable emission reductions from incentive programs, pursuant to Section 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 program guidelines ar e adopted; and

3.3.2 Include a description of how the incentive pr ogram guidelines ensure that incentive program emission reductions are SIP-credi table.

4.0 Annual Demonstration Report

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

accordance with Section 5.0.

4.1 Description of incentive program guidelines use d by the District, NRCS, or ARB to implement the incentive programs generating clai med SIP-creditable emission reductions, a description of how the guidelines ens ure that the claimed emissionSJVUAPCD 9610 - 7 06/20/2013 reductions are SIP-creditable, and a list of any gu idelines that are being used for

the first time under this rule.

4.2 SIP-creditable emission reductions generated th rough incentive programs, as implemented in the preceding year(s), summarized by pollutant, years that the emission reductions are occurring (project life), c ost effectiveness, funding amount, incentive program guideline, and project ty pe.

4.3 Adjustments to SIP-creditable emission reductio ns claimed in prior annual demonstration reports shall be reported in the annu al demonstration report the year that the adjustments are made with a discussion exp laining the cause for the adjustments. Adjustments to emission reductions cl aimed in prior annual demonstration reports may be the result of, but are not limited to, updated project information received during the course of project i mplementation or the adoption of new local, state, or federal requirements that m ight affect the surplus nature of emission reductions achieved by incentive programs.

4.4 Identification of SIP commitment(s) identified in District adopted SIP(s) (by year, pollutant, and magnitude), which the District has s atisfied, in whole or in part, through SIP-creditable emission reductions. Such co mmitments include, but are not limited to, emission reduction commitments adop ted to meet Clean Air Act requirements concerning the demonstration of attain ment, Reasonable Further Progress, Rate of Progress, contingency measures, a nd long-term measures as defined by the federal Clean Air Act Section 182(e) (5) (“black box” reductions). The District shall identify and quantify SIP commit ment shortfalls, if any, and remedies for addressing said shortfalls.

4.5 Project Information

Reported project information shall include the foll owing information for incentive projects achieving SIP-creditable emission reductio ns, as applicable:

4.5.1 Unique project identification number, as esta blished 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;SJVUAPCD 9610 - 8 06/20/2013 4.5.7 Incentive program guideline(s) used to implem ent the project, including revision date;

4.5.8 Quantified emission reductions 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 app licable:

4.5.9.1 Make and model of equipment or vehicle;

4.5.9.2 Equipment or vehicle rating or horsepower;

4.5.9.3 Model year; and

4.5.9.4 Historical and projected annual usage.

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

emission reductions claimed in the annual demonstra tion report.

4.6 Project Monitoring and Enforcement

The annual demonstration report shall include a sum mary of monitoring and enforcement activities conducted during the reporti ng period for incentive projects

for which SIP-creditable emission reductions are be ing claimed, as follows:

4.6.1 Identification of project audits, usage repor ts, inspections, and other project monitoring activities; and

4.6.2 List of actions taken to enforce emission red uctions associated with contract requirements, including the following:

4.6.2.1 Identification of projects that do not sati sfy contractual

requirements; and

4.6.2.2 Identification of enforcement actions and r emedies, including

penalties, additional contractual requirements, or other

actions.

4.7 Incentive Program Evaluation

The District shall perform a retrospective assessme nt of the performance of its incentive program to evaluate overall incentive pro gram performance and develop

recommendations for future enhancements to incentiv e program implementation.SJVUAPCD 9610 - 9 06/20/2013 This assessment shall include a summary of the publ ic process to receive comments on the draft report, as required by Sectio n 5.0.

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 th an August 31 of each year.

5.2 The APCO shall release the draft annual demonst ration report to the public and present it to the District Governing Board prior to submittal to ARB and EPA

for concurrence.

5.3 Previously submitted annual demonstration repor ts shall be made available on

the District’s website.

6.0 Recordkeeping Requirements

6.1 All documents created and/or used in implementi ng the requirements of Section 4.0 shall be kept and maintained as required by the applicable incentive program guidelines. Consistent with the California Public Records Act and other related requirements, such records shall be made available for public review. Information regarding the process for the public re view of such records shall be included in the annual demonstration report.

6.2 Records related to implementation of the NRCS P rogram Combustion System Improvement of Mobile Engines incentive program are prohibited from mandatory disclosure, pursuant to the Federal Food Security A ct of 1985 (7 U.S.C. § 608d(2)).

7.0 Use of Projected Incentive Program Reductions i n SIPs

Where the District intends to rely on projections o f SIP-creditable emission reductions under this rule to satisfy a federal Clean Air Act SIP requirement (e.g., attainment, Reasonable Further Progress, Rate of Progress, cont ingency measures, or long-term measures as defined by the federal Clean Air Act Se ction 182(e)(5) (“black box” reductions)), the District shall identify specific amounts of SIP-creditable emission reductions for a particular year or years in the re levant SIP. Each SIP submission in which the District relies on such projections shall contain a demonstration that the applicable incentive program guideline(s) continues to provide for SIP-creditable emission

reductions and shall contain an enforceable commitm ent that:

7.1 Identifies incentive program guidelines, as spe cified in Section 3.0, used to generate projected SIP-creditable emission reductio ns;SJVUAPCD 9610 - 10 06/20/2013

7.2 Identifies emission reductions not to exceed th e amount projected to be achieved through the use of secured or reasonably anticipate d incentive program funding and the estimated availability of emission reductio ns projects and willing participants, based on historical participation and estimates of remaining equipment;

7.3 Is specifically adopted by the District as a pa rt of the SIP and accounted for in the annual demonstration report as SIP-creditable e mission reductions are achieved through provisions of this rule; and

7.4 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 equ ivalent emission reductions as expeditiously as practicable and no later than any applicable implementation deadline in the Clean Air Act or EPA’s implementing regulations.