UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX AIR DIVISION

Technical Support Document

for EPA’s Rulemaking for the

California State Implementation Plan

R egarding

Feather River Air Quality Management District

Rule 10.9 , “ Rice Straw Emission Reduction Credit s and Banking ”

Prepared by: Nancy Levin

December 9 , 20142

RULE IDENTIFICATION

Agency: Feather River Air Quality Management District ( FR AQMD )

Current SIP Approved Rule: None

Submittal Subject to this TSD: Rule 10.9 “Rice Straw Emission Reduction Credits and Banking ” Adopted April 6, 2009 & Amended October 6, 2014

Submitted November 6, 2014

BACKGROUND:

Under Section 107(d) of the Clean Air Act (CAA), EPA designated portions of Yuba and

Sutter counties nonattainment for the following three National Ambient Air Quality Standards (NAAQS): 1

- hour ozone, 1997 8

- hour ozone and 2008 8

- hour ozone. These areas are regulated by the Feather River Air Quality Management District (FRAQMD).

New or modified major sta tionary sources of nonattainment pollutants subject to

FR AQMD ’s Federal New Source Review (NSR) program must obtain emission

reductions to offset emission increases prior to constructing such sources. 1 While NSR

offsets are typically emission reductions g enerated from permitted stationary source s (e.g., from shutdowns or over

- control), the opportunities for generating such reductions

from traditional sources has been diminished due to implementation of stringent emission performance standards required by FR AQMD prohibitory rules. The purpose of R ule

10.9 is to provide procedure s to quantify

, c ertify

, and issue emission reduction credits (ERCs) for emission reductions that have resulted f rom the permanent curtailment of rice

straw burning in FR AQMD in orde r to ensure that such reductions meet federal offset requirements

. 2 Existing FR AQMD Rule 10.2 “Emission Reduction Credit and Banking ” ( Adopted 2/8/1993; Amended 4/11/1993 and 7/2/2011 ) govern s the banking and transfer

of ERCs , and Rule 10.1 “ New Source Review ” governs the use of ERCs . T hese two

rules are not the subject of this rulemaking action

.

1 Rule 10.1 New Source Review ( Adopted 10/5/2009

, Amended 2/7/2012 ) has been approved into the SIP (9/24/2013; 76 FR 58461 ). FRAQMD also submitted an amended Rule 10.1 on November 6, 2014

. Rule 10.1 requires the use of federally enforceable Emission Reduction Credits (ERCs). Rule 10.9 , if approved, would provide for the generation of federally recognized ERCs.

2 Rule 10.9 would provide for the generation of federally recognized ERCs to address

more st ringent state offset requirements for pollutants such as PM 10 and CO, even though FRAQMD is in federal attainment for PM 10 and CO. See Attachment 4

.3

Historically, the practice of rice growing included burn ing the field stubble and straw following harvest to kill weeds and insects and prepare the field for next year’s plantings

. In 1991, California passed the Connelly

- Areias

- Chandler Rice Straw Burning Reduction

Act of 1991 (California Health & Safety Code (CH&SC) 41865 )

, which required a phase down of the allowable rice straw burning acreage in the Sac ramento Valley Air Basin

. 3
By 2001, the phase down was complete and only 125,000 acres or 25% of the historically burned rice growing acreage can now be burned in any one year

. One unique feature of

the state law was that it s pecifically allowed ERCs to be generated from this curtailment

, and stated that the related emission reductions c ould not be relied upon for demonstrating reasonable further progress or attainment of a NAAQS

. While FRAQMD h ad previously

issued rice straw ERC certificates under FRAQM D R ule 10.2

, 4 R ule 10.9 was designed

to ensure that the ERCs issued from this non

- traditional source w ould meet the required offset integrity criteria for the purpose of providing federal NSR offsets. 5

RULE SUMMARY : Rule 10.9 establishes standards, the administrative process

, and enforceable procedures for calculating creditable emission reductions of volatile organic compounds ( VOC )

, nitrogen oxides ( NOx )

, carbon monoxide ( CO )

, particulate matter of 10 microns or less ( PM 10 )

, and sulfur oxides ( SOx ) created through the permanent curtailment of burning

rice straw. Once an ERC certificate has been issued by the Air Pollution Control Officer (APCO), ERCs may be used as offsets to meet federal or state NSR requirements

.

O wners of rice growing parcels are eligible to apply for ERCs if rice straw was burned during the baseline period , i.e., 1988 through 1992 ( s ection C.1 ). All applications to obtain rice straw ERCs must be submitted by October 6 , 2009

, ( s ection D.1 ) . The rule contains requirements for both new applications and recertification applications (sections

D.2 and D.3 ), including the list of each parcel included, the acreage used to grow rice during the baseline period, documentation that the rice straw burning occurred on the acreage used to g row rice during the baseline period, and a statement of intent to file a

deed restriction for each parcel (s) in the application. T hese requirements are designed to

3 A portion of the FRAQMD (South Sutter County ) is located in the “Sacramento Valley Air Basin,” as defin ed by the state.

4 Rule 10.2 ( Adopted 2/8/1993; Amended 4/11/1993 and 7/2/2011 ) “Emission Reduction

Credit and Banking ” does not include the necessary provisions to ensure that emission

reduction credits from nontraditional sources

, such as curtailing ric e straw burning

, are surplus, quantifiable, enforceable, and permanent and

, therefore

, valid for federal NSR offset purposes. Because nontraditional sources have generally not been regulated, there

are much less historic data. Nontraditional ERC generating rules must include more specific quantification procedures to provide the necessary assurances that the reductions are valid and can be recognized as federal NSR offsets.

5 ERCs generated pursuant to Rule 10.9 may also be used to address California offset requirements that are not in the SIP.4

limit agricultural burning to no more than 25% of the total acreage historically used to

gr ow rice.

The rule sets an application deadline to ensure the APCO can consider all historic rice growing acreage and ensure compliance with the acreage limits provided under state law.

Section C.2 provides that the total available acreage for generating ERCs in FR AQMD

shall not exceed 36,228 acres. 6 If the APCO receives applications where the total acreage exceeds this amount, the APCO must adjust the available acreage for each applicant in accordance with the p rocedures in s ection D.4

. Th ese section s ensure that the emission reductions come from a ‘real’ reduction in rice straw burning activities by limiting the total amount of acreage available to generate ERCs

.

E mission reduction s are calculat ed in accordance with procedures i n s ection s C.2, C.3,

and C.4 , and rely on the following parameters:

 Historic Burn Fraction (HBF): T he HBF is the percent of acres grown that were

burned . The air district establishes its district

- specific HBF, which may vary by district, based on available references

. 7 The FR AQMD states that 100% of the rice that was planted was burned. 8

 Available A creage (acres) =

[applicant’s eligible parcels (acres)] x [historic burn fraction (%) ]

 Emission F actor s (lbs /acre) listed in Section 3 0 3

, take into account:

6 The 36,228 limit for available acreage represents the total acres of rice planted in the

Feather River portion (South Sutter) of the SFNA in 1990, which FRAQMD selecte d as its “representative year.” See Sacramento Federal Non

- Attainment Area Rice Straw Emission Reduction Credit Model Rule Support Document ( “ White Paper ” ), October 16,

2008 , page 12 and 16.

7 Ibid, page s 3 and 11

. 8 Staff Report, Rule 10.9: Rice Straw Em ission Reduction Credits and Banking, August

22 , 2014, pp 2

- 3.5 [fuel loading 9 (tons of rice straw burned /acre)] x [Jenkins’ emission

factors 10 for rice straw burning (lbs pollutant /ton s of rice straw burned )] 11

Therefore, Annual E mission R eduction ( lbs ) = Available Acreage (acres) x Emission Factor (lbs/acre) x 75%.

Consistent with state requirements, Rule 10.9 also apportions the annual emission

reductions into quarter s bas ed on the historic rice growing and burn practices with in the

district.

R ule 10.9 includes several section s regarding burn restrictions

. Section C.6 requires a deed restriction be placed on the parcel and prohibits burning t hat is not consistent with

the ERC certificate

. Section C.7 requires FRAQMD to place a parcel or group of contiguous parcels on a “restric ted burn list” prior to issuing an ERC, and that no agricultural burn permit may be issued for more than 25% of the rice growing acreage of any parcel on the restricted burn list. Section C.8 states that no one shall burn on more than 25% of the rice growing acreage of a parcel that has received an ERC certificate pursuant to Rule 10.9

.

A rice growing parcel owner who previously obtained state rice straw ERCs pursuant to

R ule 10.2 Emission Reduction Cred it and Banking

, may re

- apply under Rule 10.9 to have

these previous ERCs re

- certified as federal ERCs under this rule. The applicant must surrender all previous certificates issue d for rice straw burning on those parcels before an

ERC can be reissued.

Applicants are also required to maintain , for a minimum of five years, records on the

amount of acres planted and burned

, as well as the type of crop grown. The District is required to conduct a program evaluation and provide a report to EPA within two yea rs of rule adoption

.

EPA REVIEW CRITERIA: EPA generally considers three criteria in evaluating state

and local prohibitory rules for approval into the SIP . For this rulemaking, we are considering two additional criteria.

9 Fuel loading from rice is 3.0 tons/acre. See White Paper, Table A2

- Emission factors, page 16.

10 The emission factors (sometimes referred to as Jenkins II emission factors) come from

a California A ir R esources B oard (CARB) memo, which was originally released 8/17/2000 and updated 9/12/2000. The factors in the memo are cited as being predominately from Bryan Jenkins’ report entitled, “Atmospheric Pollutant Emission Factors from Open Burn ing of Agricultural and Forest Biomass by Wind Tunnel

Simulations

, ” 1996, UC Davis.

11 White Paper, p 3.6

1. Enforceability

- Section 110(a) of the CAA requires enforceable SIP requirements. Several EPA guidance documents are used to evaluate rule enforceability, including the “Bluebook” ( Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Clarificati on to Appendix D , November 24, 1978, 52 FR 45044)

and EPA Region IX ’ s Guidance Document for Correcting Common VOC and Other Rule Deficiencies (August 21, 2001, the “ Little Bluebook ” )

.

2. Non

- interference

- CAA § 110(l) prohibits EPA from approving any SIP revi sion that would interfere with any applicable requirement concerning attainment and reasonable further progress (RFP) or any other applicable requirement of the CAA. In addition, CAA § 193 prohibits the modification of any SIP

- approved control requirement i n effect before November 15, 1990, in a nonattainment area.

3. Stringency

- Section 182(b)(2) of the CAA requires certain SIP rules to apply Reasonably Available Control Technology (RACT) in ozone nonattainment areas

. Other sections of the Act require other control levels.

4. New Source Review

– Section 173(c) of the CAA and 40 CFR Part 51, Appendix S, “Emission Offset Interpretative Ruling” require certain sources to obtain

emission reductions to offset increased emissions from new projects

.
5. Economic Incentive Programs

- EPA published the guidance, “Improving Air Quality with Economic Incentive Programs” on January 2001 (EPA

- 452/R

- 01

- 001). This guidance applies to discretionary economic incentive programs (EIPs) and represents the agency’s in terpretation of what EIPs should contain in order to meet the requirements of the CAA . Because this guidance is non

- binding and does not represent final agency action, EPA is using the guidance as an initial screen to determine whether potential approvabil ity issues arise.

EPA EVALUATION: Rule 10.9 complies with the evaluation criteria as discussed briefly below.

1. Enforceability

- The applicability and requirements of Rule 10.9 are generally clear and consistent with the Bluebook and other relevant EPA guid ance regarding enforceability. Rule 10.9 includes references to other FR AQMD rules. We evaluated the referenced rules to determine the purpose of the reference, whether the rules were SIP approved, and whether the rules affected the criteria, standards, and procedures for generating valid ERCs under Rule 10.9 . We determined that these references did not affect the approvability of the rule.

2. Non

- interference

– Rule 10.9 does not replace any existing rule currently in the

SIP. Therefore, approval of this rule will not interfere with any applicable requirement concerning attainmen t and reasonable further progress (RFP) or any other applicable requirement of the CAA

.7

3. Stringency

- None of these CAA sections apply to Rule 10.9 , so stringency is not being used to evaluate for SIP approval.

4. New Source Review

– Emission reductions to be used as NSR offsets must be surplus, quantifiable, enforceable, and permanent.

In order for emission reductions from the curtailment of rice straw burning to be considered surplus, the emissions from this source category must be clearly and

accura tely quantified in the baseline emissions inventory and in future

- year projections of the emissions inventory used in the attainment demonstration

. This would be verified at the time of generation, pursuant to District Rule 10.1 New

Source Review. The Sout h Sutter County area of the District is part of the Sacramento Federal Nonattainment Area (SFNA). SFNA has updated their ozone emissions inventories to include agricultural burning, including rice straw burning. 12 In addition, the Yuba City

- Marysville PM2.5 Maintenance Plan included emissions from PM10, NOx and SOx ERCs in the future year (2017 and 2024) inventories. 13

In addition, the emission reductions created under Rule 10.9 must not be relied upon in any attainment or progress plans. Although CH&SC 41 865 requires the curtailment of rice straw burning, these emission reductions are not being relied

upon to demonstrate attainment, RFP or any other purpose and can therefore be

considered surplus

.

Rule 10.9 meets the quantification criteria because it includes a methodology to quantify emission s and emission reductions in S ection s C.2, C.3, and C.4

. The emission factors and fuel loading factor come from a CARB memo that relies primarily on a 1996 paper by B ryan Jenkins of U.C. Davis. The determination of acreage which historically grew rice and burned rice straw is based on documentation such as the grower’s rice sales record, U

. S

. D epartment of

A griculture data on rice planting, air district burn permits

, log books, and pictures

.

The emission reductions are permanent and enforceable because the owner of the parcel

, who has been issued an ERC under Rule 10.9

, is subject to the requirements of the rule , including the requirement to burn no more than 25% of the rice growing acreage

. Should the property change ownership, a deed restriction filed with the assessor’s office would alert subsequent owners that they

12 Tables A6

- 1 and A6

- 2, Appendix A 6: Emission Reduction Credits, 2012 SIP Revisions to the Sacramento Regional 8

- hour Ozone Attainment and Reasonable Further Progress Plan, September 26, 2013.

13 Email from Tim Mitro, FRAQMD to Nancy Levin, EPA RE: Rice Straw ERC Rule, September 8, 2014.8 cannot burn more the 25% of the rice growing acreage in any given year. Rule

10.9 is consistent wi th the Model Rule for Rice Straw ERCs (See A ttachment 3).

5. Economic Incentive Program

- Several fundamental principles described in the guidance include integrity (credits are based upon emission reductions which are surplus, enforceable, quantifiable, and permanent), equity, and environmental

benefit. The integrity principle is the same as those described under NSR

evaluation and described a bove

. This rule generates emissions offsets for the NSR program and does not raise any equity issues that are differ ent from the NSR program in general. The environmental benefit has been addressed in the offset ratio defined by the NSR program.

EPA ACTION: EPA staff recommend s full approval of the submitted version of Rule

10.9 because it complies with all relevant CAA requirements and is consistent with EPA’s guidance for NSR and economic incentive programs

.

REFERENCES:

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” (a.k.a., Bluebook) EPA OAQPS, May 25, 1988 (web citation).

2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” (a.k.a., Little Bluebook), EPA Region 9, August 21, 2001 ( http://www.epa.gov/region09/air/sips/littlebluebook2001.pdf ).

ATTACHMENTS:

1. FR AQMD Rule 10.9

, “ Rice Straw Emission Reduction Credits, ” a dopted on October 6, 2014 and submitted by CARB to EPA on November 6, 2014.

2. “Improving Air Quality with Economic Incen tive Programs,” January 2001, EPA

452/R

- 01

- 001 (cover only ; text at http://www.epa.gov/ttn/oarpg/t1/memoranda/eipfin.pdf ).

3. Rice Straw Emission Reduction Credit Model Rule Support Document (White Paper), Sacramento Federal Non

- Attainment Area, October 16, 2008.

4. Memo dated December 3, 2014 from Nancy Levin

, EPA Rules Office, to proposed rulemaking file, “ FR AQMD Attainment Status and ERCs. ”9 ATTACHMENT 4

MEMORANDUM

Date: December 3, 2014 Subject: FRAQMD Attainment Status & ERCs

From: Nancy Levin , EPA Region 9 Air Division, Rules O ffice, AIR

- 4

To: File for Proposed Rulemaking on FR AQMD Rule 10.9

If FRAQMD Rule 10.9 is approved into the SIP, it will provide for the generation of federally

- enforceable Emission Reduction Credits (ERCs) for VOC, NOx, PM10, PM2.5, CO, and SO 2 . FRAQMD’s is only nonattainment for ozone after December 2014 . The following describes the area’s current federal attainment status, as well as where and how these ERCs can be used. This analysis takes into account the fact th at FRAQMD may be in federal attainment (e.g., where no offsets are required for federal New Source Review (NSR)) yet sources in the area may be subject to more stringent state offset requirements

embedded in the SIP

- approved NSR rule. The more stringent st ate requirements are typically implemented by having a lower emissions threshold for requiring offsets.

VOC and NOx as ozone precursors (1

- hour and 1997 and 2008 8

- hour Ozone NAAQS)

 Portions of FRAQMD are classified as federal nonattainment for the 1

- hour and

the 1997 and 2008 8

- hour ozone NAAQS.

 VOC and NOx are precursors to ozone.

 Therefore, VOC and NOx ERCs can be used for sources located within the

Feather River ozone nonattainment area downwind federal nonattainment if

certain conditions are met.

 Thes e VOC and NOx ERCs could also be used to meet more stringent state VOC and NOx offset requirements embedded in FRAQMD’s NSR rule.

PM10

 FRAQMD is classified as federal attainment for the PM10 NAAQS.

 Because these PM10 ERCs are being generated in an area tha t is in federal attainment, under the CAA, these PM10 ERCs cannot be used as NSR offsets in any federal nonattainment area.

 These PM10 ERCs could be used to meet more stringent state PM10 offset requirements embedded in FRAQMD’s NSR rule or in any other ar ea in

accordance with state law.

PM2.5

 FRAQMD is classified as federal attainment for the PM2.5 NAAQS. Because these PM2.5 ERCs are being generated in an area that is in federal attainment, under the CAA, these PM2.5 ERCs cannot be used as NSR offsets in a ny federal

nonattainment area.

 These PM2.5 ERCs could be used to meet more stringent state PM2.5 offset requirements embedded in FRAQMD’s NSR rule or in any other area in

accordance with state law.10 . CO

 FRAQMD (and the entire state) is classified as federa l attainment for CO.

 The CO ERCs could be used to meet more stringent state offset requirements embedded in FRAQMD’s NSR rule or in any other area in accordance with state

law.

SO 2

 FRAQMD is classified as federal attainment for SO 2

.

 SO 2 is a precursor to b oth PM10 and PM2.5.

 Because FRAQMD is in federal attainment for PM10, the SO 2 ERCs could be used for more stringent state offset requirements in FRAQMD, but cannot be used as PM10 offsets in any federal PM10 nonattainment area.

 Because FRAQMD is a federal attainment area for PM2.5, the SO 2 ERCs could be used for more stringent state offset requirements in FRAQMD, but cannot be

used as PM 2.5 offsets in any federal PM 2.5 nonattainment area.

NO 2

 FRAQMD is classified as federal atta inment for NO 2

.

 NO 2 is a precursor to PM2.5 and ozone (see above)

.

 Because FRAQMD is a federal attainment area for PM2.5, the NO 2 ERCs could

not be used as PM2.5 offsets.