United States Environmental Protection Agency, Region 9

Air Division

Technical Support Document

For

EPA’s Notice of Proposed Rulemaking

for the

California State Implementation Plan

South Coast Air Quality Management District

Rule 1610, Old

- Vehicle Scrapping

Prepared by: Idalia Pérez

October 2015Page 2 of 9 Table of Contents

I. Description of SIP submittal

................................ ................................ ............................... 3

II. Rule Summary

................................ ................................ ................................ .................... 3

III. Effect on Emissions

................................ ................................ ................................ ............ 4

IV. Criteria for Evaluation

................................ ................................ ................................ ........ 5

V. Rule Evaluation

................................ ................................ ................................ ................... 7

VI. Recommendation

................................ ................................ ................................ ................ 8Page 3 of 9 I. Description of SIP submittal

This Technical Support Document (TSD) addresses SCAQMD Rule 1610, Old

- Vehicle Scrapping :

• Adopted: May 9, 1997.

• Submitted for inclusion in the State Implementation Plan (SIP): June 3, 1997.

• Deemed complete by operation of law: December 3, 1997.

There are n o previous versions of Rule 1610 in the SIP, although the SCAQMD adopted earlier

version s of this rule on 02/11/94, 10/13/95, 02/08/96 and 04/11/97, and CARB submitted them to us on 07/13/94, 10/18/96, 10/18/96 and 06/03/97 respectively. While we can act on only the most recently submitted version, we have reviewed materials provided with previous submittals. In addition, Rule 1610 has been amended five times (07/10/98; 01/08/99; 02/12/99; 12/06/02; 07/11/08) since the 05/09/97 version, but these amendment s have not been submitted to EPA.

II. Rule Summary

Rule 1610 is a voluntary rule with the goal of reducing motor vehicle volatile organic compounds (VOC), nitrogen oxides (NO
x ), carbon monoxide (CO), and particulate matter (PM) exhaust emissions by issuing mobile source emission reduction credits (MSERCs) in exchange for the scrapping of old, high emitting vehicles. The r ule establishes that MSERCs can be used for compliance wi th various other SCAQMD regulations.

Section (b) of R ule 1610 includes definitions.

Section (c) of Rule 1610 describes the certification requirements of “Licensed Scrappers

, ” the entities certified by the Executive Officer to generate MSERCs by scrappi ng vehicles. Requirements include, but are not limited to:

- use of dismantlers licensed by the CA Department of Motor Vehicles;

- a minimum number of vehicles to be scrapped; and

- submission of a scrapping plan.

Section (e) of Rule 1610 describes the requirements and schedule for vehicle disposal, which

include but are not limited to:

- destruction of Vehicle Identification Number, License Plates, Body/Frame;

- rendering the engine inoperable by destruction of the c ylinder block, or introduction of sand into the combustion chamber or an alternate procedure approved by the Executive

Officer.

Sections (f) and (g) of Rule 1610 describe the requirements for vehicles to be eligible to generate MSERCs, which include but a re not limited to:

- be a passenger car or light

- duty truck model year 1981 or earlier;

- two years of registration with the DMV to addresses within the District;

- pass an inspection performed by the SCAQMD licensed scrapper; andPage 4 of 9 - vehicle must be driven to the scrapping site

.

Section (h) of the rule describes the methodology to determine the amount of MSERCs generated per vehicle scrapped. The formula uses emission rates of scrapped vehicles based on model year groups, average annual mileage of scrapped vehicles based on the model year and the average in

use vehicle emission rate for the year the vehicle is scrapped. Values for the emission rates of scrapped vehicles, average annual mileage of scrapped vehicles and in

- use vehicle emission rate s for 1993 a re included in the Sections (h)(2), (h)(3) and (h)(4) respectively. Section (h)(5) states that the emission rates and mileage data is based on EMFAC 1 and BURDEN 7F 2 , can be updated as the model is updated and the updates shall be submitted to EPA for inclu sion in the SIP. Section (h)(7) stipulates that MSERCs generated from vehicle scrapping are valid for five years, b u t no more than one

- third may be used within one year of generation and no more than two

thirds may be used within two years of generation.

Section (i) specifies the uses of MSERCs, the applicable discount factor for each use, and additional requirements in order to use MSERCs to comply with Regulation XI.

Section (j) of Rule 1610 includes recordkeeping requirements for SCAQMD licensed scrapp ers. Section (k) requires that scrappers report the number of vehicle s scrapped to SCAQMD every six months; MERCS are issued after the District reviews and approves this documentation.

Sources using MSERCs for compliance with other SCAQMD Regulations mus t submit a compliance plan per Rule 1610 Section (l).

Section (m) includes compliance verification and enforcement provisions.

III. E ffect on E missions

The 1997 submittal does not assign specific emission reductions to implementation of Rule 1610, as the rule does not limit emissions directly. The rule only provides for an alternative method of compliance for stationary and other emission sources subject to District regulations which allow the use of credits as a compliance option. At this time, we have not credited emission reductions from this rule in an approved SIP. ( See, for example, Final Technical Support Document and Response to Comments, Final Rul emaking Action on the South Coast 2007 AQMP for PM2.5 and the South Coast Portions of the Revised 2007 State Strategy, US EPA Region 9, September 30, 2011, Appendix B, associated with 76 FR 69928, (November 9, 2011); and Technical Support Document for the Final Rulemaking Action on the South Coast 2007 8

- Hour Ozone Plan and the South Coast Portions of the Revised 2007 State Strategy, U.S. EPA Region 9, December 2011, Appendix B, associated with 77 FR 123674 (March 1, 2012).) Lastly, we are not aware of

1 The EMFAC emissions model is developed and used by ARB to assess emissions from on

- road vehicles including cars, trucks, and buses in California

. 2 The BURDEN model is used to calculate regional (area

- specific) emissions in tons/day using emission factors that have been corrected for ambient conditions and speeds combined with vehicle activity

. See “EMFAC2007 Calculating emission inventories for vehicles in California,” available at http://www.arb.ca.gov/msei/onroad/downloads/docs/user_guide_emfac2007.pdf

.Page 5 of 9 a S CAQMD plan submitted to EPA that relies on emission reductions from this rule to fulfill a CAA requirement.

IV. Criteria for Evaluation

EPA evaluation criteria that are generally applicable to Rule 1610 include the following.

SIP Revisions

SIP rules must not interfere with applicable requirements concerning attainment and reasonable further progress or other CAA requirements (see CAA section 110(l)), and must not modify certain SIP control requirements in nonattainment areas without ensuring equivalent or greater emissions reductions (see CAA section 193).

Rule Stringency

SIP rules must also require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each major

source of VOCs and NO
x in ozone nonattainment areas classified as moderate or above (see CAA section 182(b)(2) and 182(f)). The SCAQMD regulates an ozone nonattainment area

classified as extreme for the 2008 and 1997 8

- hour ozone standard s (4 0 CFR 51. 305 ). T his rule does not apply to stationary sources , thus it does not have to implement RACT. Nonetheless, the rule intends to generate MSERCs that could be used by stationary sources subject to RACT requirements. An evaluation of the implicati ons of using MSERCS to comply with rules subject

to RACT requirement s should be included with the evaluation of those rules.

SIP rules must implement Reasonably Available Control Measures (RACM), including RACT,

in moderate PM 2.5 nonattainment areas (see CAA sections 172(c)(1) and 189(a)(1)(C)). The SCAQMD regulates a PM 2.5 nonattainment area classified as moderate for the 24

- hour and

annual PM 2.5 standards (40 CFR 51. 305 ). A RACM evaluation is generally performed in context of a broader plan.

In addi tion, SCAQMD can “ control, regulate, or restrict the use, operation, or movement of registered or licensed motor vehicles” (CAA Section 209(d)) but is no t require d to do so.

Enforceability

CAA section 110(a)(2)(A) requires that regulations submitted to EPA for approval into a SIP must be clear and legally enforceable.

Voluntary and Economic Incentive Programs

The following guidance documents provide EPA’s interpretation of the CAA requirem ents that apply to SIP submittals that rely on discretionary economic incentive programs (EIPs) and otherPage 6 of 9 nontraditional emission reduction programs for emission reduction credit. These guidance

documents are non

- binding and do not represent final agency action.

o “Guidance on Incorporating Voluntary Mobile Source Emission Reduction Programs in State Implementation Plans (SIPs),” Richard D. Wilson, Acting Assistant Administrator for Air and Radiation, October 24, 1997 [1997 VMEP].

o “Improving Air Quality with Economic Incentive Programs” January 2001 (EPA

- 452/R

01

- 001) [2001 EIP Guidance].

o “Guidance on SIP Credits for Emission Reductions from Electric

- Sector Energy Efficiency and Renewable Energy Measures,” Brian McLean, Office of Atmospheric Programs, and Ste ve Page, OAQPS, August 5, 2004 [2004 Electric

- Sector Guidance].

o “Incorporating Emerging and Voluntary M easure in a State Implementation Plan (SIP),” Stephen D. Page, OAQPS, October 4, 2004 [ 2004 Emerging and Voluntary Measures

Guidance ]

.

o “Guidance on Incorporating Bundled Measures in a State Implementation Plan

, ” Stephen D. Page, OAQPS , and Margo Oge, OTAQ, August 16, 2005 [ 2005 Bundled Measure s Guidance]

.

o “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs

into State an d Tribal Implementation Plans,” July 2012 (EPA

- 456/D

- 12

- 001a) [2012 EE/RE Guidance].

o “Diesel Retrofits: Quantifying and Using Their Emission Benefits in SIPs and Conformity: Guidance for State and Local Air and Transportation Agencies,” February 2014 (EPA

- 420

- B

- 14

- 007) [2014 Diesel Retrofits Guidance].

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 sch edules 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). EIPs

use market

- based strategies to encourage the reduction of emissions from stationary, ar ea, and/or mobile sources in an efficient manner. EPA has promulgated regulations for statutory EIPs required under section 182(g) of the Act and has issued guidance for discretionary EIPs. 3 See 59 FR 16690 (April 7, 1994) (codified at 40 CFR part 51, subp art U) and 2001 EIP Guidance

. 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 Guidance at Section 4.1. These four fundamental “integrity elements,” which apply 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 req uirements of the Act. See id

.

3 A “discretionary economic incentive program” is “any EIP submitted to the EPA as an implemen tation 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.Page 7 of 9 EPA has generally defined the four fundamental integrity elements for discretionary EIPs and other incentive/voluntary measures as follows:

1. Quantifiable: emissions and emission reductions are quantifiable if they can be

measu red in a manner that is reliable and replicable by different users.

2. Surplus: Emission reductions are surplus if they are not otherwise required by or

assumed in a SIP

- related program ( e.g., an attainment or reasonable further progress plan
or a transportat ion 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 source performance standard or federal mobile source requirem ent); Additionally, the emission reductions are “surplus” only for the remaining useful life of the vehicle, engine, or equipment being replaced.

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

- related information obtained from participating sources ; citizens may file suit against a responsible entity for violations; 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 EP A can ensure that the reductions occur for as long as they are relied upon in the SIP; the time period that the emission reductions are used in the SIP can be no longer than the remaining useful life of the retrofitted or replaced engine, vehicle, or equi pment.

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

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

- 4 and 2014 Diesel Retrofits Guidance at p. 11.

V. Rule Evaluation

Our evaluation summarized below focusses on the enforceability criteria. Because we identify

s everal enforceability deficiencies that are too significant to approve the rule, we have not attempted to identif y all other potential approvability issues and are not providing a detail ed analysis of the other criteria (e.g., stringency) listed above.

Enforceability

EPA has laid out enforceability criteria in various guidance documents. (see “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency,” f rom J. Craig Potter, Thomas L. Adams Jr., Francis S. Blake, September 23, 1987 and “Guidance an Enforceability Requirements for Limiting Potential to Emit through SIP and §112 Rules and General Permits” from Kathie A. Stein, January 25, 1995.) Some of the criteria essential in practically enforceable rules include clear statements of applicability, specificity of the standard that must be met, how compliance is determined, and inclusion of record keeping requirements.

Several Rule 1610 provisions are clear and specific consistent with CAA enforceability requirements. For example, Section (d) states “ SCAQMD licensed scrappers shall submit written notice to the Executive Officer or designee at least two weeks prior to vehicle scrapping

, ”Page 8 of 9 and Section (j)(1) st ates “ SCAQMD licensed scrappers shall maintain a copy of the scrapping plan... for one year following termination of vehicle scrapping. ” However, other important rule requirements are not adequately enforceable.

Rule 1610 ’s requirement that engine s of scrapped vehicles be destroyed is insufficiently federally enforceable for reasons including the following

.

• Section (e)(2) states that the “ SCAQMD licensed scrapper or DMV licensed auto dismantler shall render the engine inoperable within ten days subsequent to possession of the old vehicle, ” and describes two procedures that can be used to demonstrate compliance

. Because the requirement is for either the scrapper or the dismantler, it is unclear who is liable if this action is not completed.

• The r ule does not require recordkeeping or reporting (e.g. photographic evidence)

, to

ensure that the engine has been rendered inoperable as required in section (e)(2)

.

• S ections (c)(4)(D) and (e)(2)(C) allow for alternate procedures to render engines inoperab le as approved by the Executive Officer, but do not include specific, objective and replicable criteria that identify how compliance with this requirement will be

determined. Thus, it is inconsistent with long

- standing national policy on executive

officer discretion. 4

• Section (e)(3) f urther diminish es the enforceability of the requirement that engine s be rendered inoperable by sanction ing removal of reusable vehicle components including engine components during the 90

- day period subsequent to possession of the old vehicle by the scrapper or dismantler.

O ther rule requirements that are not adequately enforceable includ e the following:

• Section (f)(4)(B) undermines the section (f)(2)(A) requirement of two years of registration with SCAQMD by allowing the Executive Officer to approve other

documentation without includ ing specific, objective and replicable criteria that identify how compliance with this requirement will be determined

.

• Section (g) requires a visual and functional inspection of the vehicle to be performed by the SCAQMD licensed scrapper but there are no recordkeeping requirements (e.g. no photographic records of the presence of required vehicle components per Section (g)( 5)) ) to ensure the vehicle complies with the requirements.

• T here is no requirement to demonstrate compliance with the Sect ion (g)(1) requirement

that vehicle s be driven under their own power to the scrapping site

.

• There is no requirement to maintain reco rds for the life of the MSERCs because Section (j)(1) requires scrapping plans and other records be kept for one year after vehicle scrapping, but the MSERCs are valid for five years after vehicle scrapping per Section (h)(7))

.

VI. Recommendation

4 See , e.g., “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviati ons,” EPA, May 25, 1988 (the Bluebook) and “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).Page 9 of 9 Because of the example enforceability concerns summarized above, EPA staff recommend s a full disapproval of SCAQMD Rule 1610. If this action is finalized, it would not trigger CAA

sanction s or have FIP implications because the rule is not required under th e CAA.