District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

1 

The District received the following comments based on the March 8 version of 

Rule 3170: 

1. Federal Environmental Protection Agency (EPA) 

2. An industry coalition made up of the following associations: 

African American Farmers of California 

California Citrus Mutual 

California Cotton Ginners Association 

California Cotton Growers Association 

California Dairy Campaign 

California Floral Council 

California Grape and Tree Fruit League 

Citizen’s Advisory Group of Industries 

Cross Creek Flood Control District 

Fresno County Farm Bureau 

Independent Oil Producers Agency 

Kings County Farm Bureau 

Madera County Farm Bureau 

Manufacturers Council of the Central Valley 

National Hmong American Farmers, Inc. 

Nisei Farmers League 

Raisin Bargaining Association 

Tulare County Farm Bureau 

Tulare Lake Basin Water Storage District 

Tulare Lake Drainage District 

Tulare Lake Resource Conservation District 

Vector Environmental 

Western Agricultural Processors Association 

3. Verallia (Saint Gobain) 

4. Turlock Irrigation District 

5. Chevron USA 

6. Coalition for Clean Air 

The comments (which may be captured in paraphrase form) and the District’s 

responses are found in the following: 

EPA Comment #1 

In Section 1.0, we recommend the following revisions: “... by utilizing an 

alternative fee-equivalency program consistent with the principles of 

section 172(e) of the CAA.” 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

2 

District Response: 

The District has made the change. 

EPA Comment #2: 

In Section 2.0, we recommend the following revisions: 

“... For the purposes of this rule, the San Joaquin Valley Air Basin shall 

have met the revoked federal one-hour ambient air quality standard for 

ozone upon EPA’s determination through notice-and-comment rulemaking 

on’s concurrence of a demonstration by the APCO and the California Air 

Resources Control Board...” 

Also, add to the end of the second paragraph, “... according to the 

procedures found in 40 CFR Part 50 Appendix H, and show that the 

improvement in air quality is due to permanent and enforceable emissions 

reductions.” 

EPA has informed us that these changes are necessary to make the 

APCO’s demonstration consistent with EPA’s process of redesignation. 

District Response: 

The District has made the changes. 

EPA Comment #3: 

In Section 6.0, add a reference to the appropriate rule or provisions which 

governs the reporting of actual emissions. 

District Response: 

We have added several provisions to define more clearly the reporting 

requirements that are necessary to assess baseline period, annual 

emissions, and clean emissions unit claims. 

EPA comment #4: 

(Verbal comment) The fee-equivalent program must be made federally 

enforceable via EPA’s approval of the program into the State 

Implementation Plan. Therefore, the rule must contain all the components 

necessary to demonstrate that the total fees collected are equivalent to 

those that would be collected under a section 185 clean air act fee 

program, as identified in EPA’s January 2010 guidance memo. To that 

end, we believe that the rule should include an annual equivalency 

demonstration and a backstop to recover any shortfall in fees collected for 

any particular year. 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

3 

District Response: 

Section 7.2, “Annual Fee Equivalency Report,” and section 7.3, “Remedy 

for Fee Collection Shortfall,” have been added to the rule. 

The following subsequent comments address sections 7.2 and 7.3, which were 

added per EPA’s verbal comment #4. 

EPA Comment #5: 

The rule should include the provisions for calculating the fee obligation 

based on a direct implementation of CAA Section 185. If these calculation 

procedures rely on the requirements in Section 5.0 (Fee Requirements), 

include the appropriate cross references. 

District Response: 

The rule now includes the requested cross reference in section 7.2.1.3, 

including a requirement that, for the purposes of calculating the 

comparison fee obligation under a direct implementation of Section 185, 

the baseline period of 2010 be used, regardless of any alternative 

baseline used to calculate the major source’s fee obligation under this 

rule. This maintains the sources’ ability to use a properly justified 

alternative baseline period, and clearly specifies the methodology and 

bases of demonstrating fee-equivalency. 

EPA Comment #6: 

The draft rule uses two terms (“literal application” and “direct 

implementation”) and we recommend consistently using the term “direct 

implementation” (see 7.1, 7.2, 7.2.2). 

District Response: 

We have changed all instances to the term, “direct implementation.” 

EPA Comment #7: 

We recommend adding a provision (e.g., Section 7.2.1.3) which requires 

the report to document the fee obligation under a direct implementation of 

CAA Section 185. 

District Response: 

We have done so in Section 7.2.1.3. 

EPA Comment #8: 

Two comments relative to section 7.3, Remedy for Fee Collection 

Shortfall: 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

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a. The rule should define “invoiced” and include a deadline for 

collecting the shortfall. 

b. We recommend adding a provision on reporting to EPA following 

the implementation of this provision. 

District Response: 

We believe the term “invoiced” to be self-explanatory and consistent with 

the plain English dictionary definition – it means “billed.” We have added 

the word “assess”, changed the tense of the sentence, and added a 

deadline for payment. We believe the requirement to be clear and 

unambiguous: 

... the District shall assess and invoice, within 90 days following the 

demonstration of the shortfall, sufficient fees to recover the entire amount 

of the shortfall. 

We have also added a reporting requirement in section 7.3.1.4. 

EPA Comment #9: 

We understand the District intends to use the fees for reductions of ozone 

forming pollutants. These expenditures should be referred to in the rule. 

District Response: 

Discussions with EPA related to this comment have clarified that the fee 

equivalency program must, according EPA’s guidance memo, contain 

confirmation that the fees gathered from sources other than major sources 

of VOC and NOx will be spent on reductions in NOx and VOC. Of course, 

this is the intent of our program, since the vehicle code fees have been 

specified by the District, as required by SB 2522, to mitigate air quality 

problems caused by motor vehicles, and that means the fees will be spent 

on reducing VOC and NOx emissions. 

However, EPA insists that this confirmation be made federally enforceable 

by placing it in the SIP, and the mechanism for doing this is by including it 

in the rule. The District has therefore added a definition of the vehicle 

code fees that are being used to make up any fees not collected from 

stationary sources under this rule. The definition specifies the source of 

the fees and the programs that will be involved in their expenditure, and a 

confirmation that these programs will reduce VOC and NOx emissions: 

California Vehicle Code Fees: those fees collected by the California 

Department of Motor Vehicles to be forwarded to the District as required 

under Vehicle Code section 9250.17 and Health and Safety Code section 

40610-40613, which fees are required by Health and Safety Code section 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

5 

40612 to be expended on establishing and implementing incentive-based 

programs, such as the District’s Emissions Reductions Incentive Program, to 

achieve surplus emissions reductions to remediate air pollution harms 

created by motor vehicles and that are intended to achieve and maintain state 

and federal ambient air quality standards. These fees shall therefore be used 

in programs designed to reduce NOx and VOC emissions in the San Joaquin 

Valley. 

Industry Association Consortium Comments: 

In the latest draft of the proposed revisions to Rule 3170, the District has 

proposed to maintain an exemption for those units that have installed 

“clean unit technology”. The Associations continue to support that 

concept. 

For those sources that have installed clean unit technology, it is simply not 

appropriate to continue to be assessed expensive fees that were intended 

to “penalize” those sources that had not installed clean unit technology. 

The District’s proposed alternative to the non-attainment fee for those 

sources that have installed clean unit technology is a necessary and fair 

proposal. It is a recognition that there are facilities doing all they can to 

reduce air emissions. 

The Associations support the proposed revisions to Rule 3170, and 

support the use of combined revenue streams from Rule 3170 and the 

motor vehicle fees as equivalent to the revenue that would have resulted 

from a straightforward application of section 185. 

District Response: 

The District appreciates the support, and notes that other written and 

verbal comments have been provided that illustrate the unfair and 

nonsensical outcome of directly implementing Section 185. For instance, 

one glass manufacturing facility recently and significantly reduced NOx 

emissions (and other pollutants) from their glass-melting furnace. This 

was done voluntarily, prior to rules being in place that required these 

reductions. However, the facility is still major for NOx emissions, and 

because they made these reductions before the baseline period they will 

still be subject to Section 185 fees. What’s more, they will not be able to 

reduce emissions further, because they have already controlled them with 

BACT. This means that they would be paying these Section 185 fees until 

the District reaches attainment, unless the District incorporates some 

fairness provisions, like the clean emissions unit exemption, into Rule 

3170. 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

6 

On the other hand, if this facility had waited until 2011 to make these 

same clean-up modifications, they would have avoided all Section 185 

fees, because they would have reduced their emissions by well over 20% 

after the baseline date. Under those circumstances, the facility would 

have polluted far more every year, for a number of additional years. 

Clearly this can not be the intent of the Section 185 fee requirement, and 

so the District remains committed to the clean emissions unit exemption. 

Verallia Comment #1: 

Verallia supports the “Alternative Fee-Equivalent Program” and 

appreciates the District’s efforts to revise Rule 3170 to minimize unfair 

impacts on Valley businesses. 

District Response: 

The District notes and appreciates the support. 

Verallia Comment #2: 

The District must process and determine “Clean Unit Exemptions” as soon 

as possible. It is vitally important for sources to know which units qualify 

for the clean unit exemption. 

District Response: 

We agree. The District is already working on policies and procedures to 

determine and list BACT determinations for the appropriate period. We 

will be working with the affected sources over the second half of 2011 to 

clearly identify units that can be considered “clean emissions units” and to 

determine the baseline emissions for 2010. We hope to have both of 

these efforts completed by the end of 2011. 

Verallia Comment #3: 

The District should provide a mechanism to defer or refund Rule 3170 

fees to facilities that commit to implement NOx and VOC control projects 

in the near future. If fees must be collected, they should be returned to 

facilities to fund emissions reductions projects to achieve the 20% 

reduction intended by section 185 of the CAA. Such a refund mechanism 

is within the scope of section 185, as there are no restrictions on the use 

of the money collected. 

District Response: 

Section 185 is a penalty fee intended to provide an incentive to facilities to 

reduce their emissions. While we certainly understand that Rule 3170 

may have serious fiscal impacts on facilities, and we remain strongly 

committed to avoiding the fees altogether for those that have done all that 

they can to reduce their emissions, through the implementation and 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

7 

installation of “clean emissions units,” we also believe that maintaining the 

fees for units that have not been cleaned-up is important for several 

reasons. First, while we have strongly defended the District’s plan to 

exempt from fees those units that have done all that they can to reduce 

their emissions, providing the incentive to stationary sources that haven’t 

equipped all their units with advanced pollution control equipment to 

reduce emissions as soon as possible remains a key component of the 

clean air act fee contained in section 185, and of our rule. In addition, 

charging the non-clean units also provides for the fee-equity between 

mobile and stationary sources of pollution that we have been attempting to 

achieve. We currently believe that about 20% of the fees necessary to 

demonstrate equivalency with the section 185 requirements will come 

from stationary sources with non-clean units, while the remainder will 

come from the vehicle code fees. This corresponds very well with the 

approximate 80/20, mobile/stationary mix in emissions that are currently 

contributing to ozone formation in the San Joaquin Valley. Providing 

additional fee exemptions or deferments to stationary sources that haven’t 

yet equipped their emissions sources with advanced pollution control 

technology would affect our ability to make that claim. Finally, this 

approach has been the basis for all the District’s public presentations and 

actions on this issue, to date. We are concerned that developing such a 

fee refund mechanism at this time would negate a great deal of the public 

support that we have thus far received for our fee-equivalent approach. 

TID Comment #1: 

The “clean emission unit” exemption from the fee requirements of Rule 

3170 should be pollutant specific. For example, a permit unit that meets 

the definition of “clean emissions unit” for NOx but not for VOC should be 

exempt from the NOx component of the fee. 

District: 

The District agrees and has changed the fee exemption based on “Clean 

Emissions Units” to be clearly pollutant specific. 

TID Comment #2: 

A facility that is currently not a major source of either NOx or VOC but is a 

major source of the other pollutant, is not subject to the existing rule. 

However, such a facility will be subject to the proposed rule. 

District Response: 

On the contrary, our existing rule does apply to facilities that are only 

major for one of the two pollutants, as required by section 185 of the 

Clean Air Act (actually, Section 185 (7511d) addresses the fee associated 

with major VOC sources, and 7511a (f) specifies that plan requirements 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

8 

for VOC are also applicable for NOx). However, we did clarify the 

language in the revised rule to remove any ambiguity, as suggested by 

EPA in their January 2010 partial approval/partial disapproval of our rule 

(see Federal Register, Volume 75, No. 8, page 1720, comment 11). 

TID Comment #3: 

In Section 5.0 (Fee Requirements), the use of the term “baseline period” in 

establishing whether the “average annual emissions” are set to zero (0) is 

confusing, especially since the “baseline period” is not fixed. TID requests 

that the District clarify this language to more clearly specify how the fee 

calculation applies to existing units permitted prior to the baseline period 

and new units permitted after the baseline period. 

District Response: 

The District appreciates the opportunity to clarify this section. The 

baseline period is fixed for a source: it is either the calendar year 2010 or 

it is the average of a period of at least two years during 2006-2010, as 

defined by the rule. Once it is determined for a source, it is fixed for the 

source, and there is no need, nor opportunity, to revisit the baseline 

period. This baseline period will be used for all future fee calculations. 

Fees for equipment that existed before the baseline period are therefore 

based on the emissions from that equipment during the baseline period, 

and the required comparison to emissions in subsequent years. 

Emissions from new units have zero emissions in the baseline period, and 

therefore would be subject to fees for the full amount of their emissions, 

except that new units at major sources will be equipped with BACT and 

will therefore be exempt from fees. 

Chevron USA Comment #1: 

Chevron supports many of the features of the rule, and the alternative feeequivalent program. 

District Response: 

The District notes and appreciates the support. 

Chevron USA Comment #2: 

The achieved in practice BACT “look-back” period could be 2005-2009, 

rather than 2006-2010, since the attainment deadline was in 2010. 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

9 

District Response: 

We do not agree. The BACT “look-back” period and the alternative 

baseline period should be consistent, and the alternate baseline period 

must certainly include 2010. Therefore, we will maintain BACT look-back 

period of 2006-2010. 

Chevron USA Comment #3: 

The District should add a section that specifically excludes permit-exempt 

equipment from the fees assessed under Rule 3170. 

District Response: 

We agree and have addressed this by specifying in section 5.1 that the 

fee basis emissions (terms “A” and “D”) must be emissions from permitted 

sources. In addition, we have created a sample fee calculation worksheet 

(Attachment I to the Final Draft Staff Report) to clarify further the fee 

calculation process for a facility. 

Chevron USA Comment #4: 

Change the fee deadline to July 1, rather than June 30, to make it 

consistent with the Rule 4320 AERO fee payment deadline. 

District Response: 

Unfortunately, the July 1 deadline from Rule 4320 has created some 

accounting headaches for the District, as July 1 is the first day of a new 

fiscal year and consequently the July 1 date in Rule 4320 is likely to be 

changed to June 30 in the future. We do not propose to make the 

suggested change. 

Chevron USA Comment #5: 

Change the emissions reporting deadline from March 1 to April 1, to make 

the reporting deadline the same as for Rule 4320 AERO fees. 

District Response: 

We have made this change, but we use March 31, rather than April 1. 

Coalition for Clean Air Comment: 

(Verbal comment) The District should consider reanalyzing Best Available 

Control Technology (BACT) on an annual basis, or perhaps on some 

longer frequency, such that units that are considered “clean emission 

units” today may have to upgrade their control equipment in the future, to 

maintain the “clean emission unit” exemption from the nonattainment fees. 
District’s Response to Comments on the 3/8/2011 version of 

Proposed Draft Rule 3170 

May 19, 2011 

10 

District Response: 

The “clean emission unit” determination timeframe is intentionally tied to 

the attainment year, 2010, which is also the standard baseline year for 

determining future emissions-related nonattainment fees. 

To understand the rationale for this, consider the inherently unfair nature 

of the Section 185 requirement that is more thoroughly discussed above – 

without this “clean emission unit” exemption, very clean operations that 

had done all that they could to reduce emissions prior to 2010 would not 

be able to control their emissions by a further 20% to avoid the 

nonattainment fees. On the other hand, sources that had not cleaned up 

their emissions would have a relatively easy task of reducing emissions by 

20%, and would therefore avoid all future fees. 

This unfair situation would persist into the future under the commenter’s 

suggestion. Those emissions sources that had not cleaned up their 

emissions prior to 2010 are presumably able to reduce their emissions by 

20% and escape the fee, so the suggestion only impacts those operations 

that had done all that they could prior to 2010 to reduce emissions. These 

clean facilities would, theoretically, be subject to fees at some future time 

if their emissions controls were no longer considered to be BACT because 

of evolution in emissions control technologies. On the other hand, the 

operations that delayed their emissions clean-up until after 2010 are still 

escaping any fee requirements, because they reduced their emissions by 

20%. 

In conclusion, we see any future reevaluation of whether a unit remains a 

“clean emission unit” as a perpetuation of the inherent unfairness of the 

Section 185 fees, and therefore we do not believe that it would be 

appropriate.