BOARD MEETING DATE: March 4, 2011 AGENDA NO. 41

REPORT: Annual RECLAIM Audit Report for 2009 Compliance Year

SYNOPSIS: The annual report on the NOx and SOx RECLAIM program is 

prepared in accordance with Rule 2015 - Backstop Provisions. The 

report assesses emission reductions, availability of RECLAIM 

Trading Credits (RTCs) and their average annual prices, job impacts, 

compliance issues, and other measures of performance for the 

sixteenth year of this program. In addition, recent trends in trading 

future year RTCs are analyzed and presented in this report. Further, 

a list of facilities that did not reconcile their emissions for 

Compliance Year 2009 is included with the report.

COMMITTEE: Stationary Source, February 18, 2011, Recommended for Board 

Consideration of Approval

RECOMMENDED ACTION:

Approve the attached annual report.

Barry R. Wallerstein, D.Env.

Executive Officer

MN:DL

Background

The Board adopted the RECLAIM program on October 15, 1993, to provide a more 

flexible compliance program than command and control for subject facilities, which

represent AQMD’s largest emitters of NOx and SOx pollutants. Although RECLAIM 

was developed as an alternative to command and control, it was designed to meet all state 

and federal clean air program requirements and a variety of performance criteria in order 

to ensure public health protection, air quality improvement, effective enforcement, same 

or lower implementation costs, and minimal job impacts.

RECLAIM represents a significant departure from traditional command-and-control 

regulations. Therefore, RECLAIM regulation’s Rule 2015 - Backstop Provisions,

requires AQMD to conduct annual program audits to assess various aspects of the 
-2-

program to verify that program objectives are being met. AQMD staff has completed

audits of facility records and completed the audit for Compliance Year 2009. Based on 

audited emissions, RECLAIM met its emissions goals for Compliance Year 2009, as well 

as for all previous compliance years with the only exception of NOx emissions in 

Compliance Year 2000, which exceeded programmatic allocations primarily due to the 

California energy crisis during that period. Audited NOx emissions were 29% less than 

programmatic NOx allocations and audited SOx emissions were 31% less than

programmatic SOx allocations during Compliance Year 2009.

At the September 7, 2007 AQMD Governing Board meeting, the Board approved the 

“Evaluation and Review of the RECLAIM Program and Assessment of RTC Price 

Reporting” Report and a new methodology for reporting RTC trade prices and 

determining average RTC prices. This methodology evaluates price data for trades 

involving individual discrete years and trades involving blocks of RTCs extending into 

perpetuity (infinite-year blocks or IYBs), separately. Trade data in the attached Annual 

RECLAIM Audit Report for calendar year 2010 are based on this methodology.

Audit Findings

The audit of the RECLAIM Program during Compliance Year 2009 and trades of 

RECLAIM Trading Credits (RTCs) during calendar Year 2010 show that:

• Audited NOx and SOx emissions from RECLAIM facilities were below programmatic 

allocations.

• The RECLAIM universe consisted of 286 facilities as of June 30, 2009. Two 

facilities were included into the RECLAIM universe and four RECLAIM facilities

shut down between July 1, 2009 and June 30, 2010. Thus, 284 facilities were left in 

the RECLAIM universe on June 30, 2010. One of the two included RECLAIM 

facilities opted to join the RECLAIM program, whereas the other facility was created 

through partial change of operator of an existing RECLAIM facility. Of the four 

shutdown facilities, one facility shut down after it was sold and its premises were

vacated, and another moved its operation to North Carolina citing a strategic business 

decision. Reasons for shutdown for the remaining two facilities are not known, but

both facilities are no longer in operation.

• The vast majority of RECLAIM facilities complied with their Allocations during the 

2009 compliance year (96% of NOx facilities and 97% of SOx facilities). Twelve 

facilities exceeded their NOx allocations and one facility exceeded its SOx allocation

during the 2009 compliance year. These exceedances did not impact the sum total of 

NOx or SOx emissions, each of which stayed below their respective programmatic

allocations.
-3-

• The RECLAIM program had minimal impact on employment during the 2009

compliance year, which is consistent with previous years. RECLAIM facilities 

reported an overall net loss of 7,792 jobs, representing 7.33% of their total 

employment. Among the changes in employment, a combined total of 188 jobs lost

due to RECLAIM were reported by two RECLAIM facilities, whereas two jobs

gained due to RECLAIM were reported by one other facility. The job losses and job 

gains information is strictly based on the RECLAIM facilities reported information 

and AQMD is not able to verify whether or not the reported job impacts from the 

RECLAIM facilities are real or perceived. However, AQMD staff has reviewed 

information available to AQMD for one facility which reported a major portion of the 

jobs lost (168) due to RECLAIM. The facility has been in the RECLAIM program 

since RECLAIM’s inception 16 years ago, reported job losses last year (Compliance 

Year 2008) of similar magnitude and attributed them to RECLAIM, has had emission 

decreases at a rate similar to the RECLAIM rate of emission reduction for NOx 

emissions, had adequate RTC allocations to cover its emissions in each of the last 

several years, and was not a structural buyer. The facility’s reported NOx emissions 

had a sharper rate of reduction from Compliance Year 2008 to 2009. This is 

indicative of decreased production during that period since there was no equipment 

modification reported. However, the facility’s NOx emissions remained 

approximately constant during Compliance Years 2003 through 2008 (although 

somewhat higher during Compliance Year 2007). Furthermore, the facility held 

adequate Compliance Year 2009 RTCs to sustain emissions at the Compliance Years 

2003 through 2008 (excluding 2007) level during its 2009 compliance year. 

Therefore, AQMD could not identify any specific reason why the RECLAIM program 

would have caused the job losses reported by this facility.

• The RTC trading market activity during calendar year 2010 remained slow and 

comparable to that of calendar year 2009. A total of $990 million in RTCs has been 

traded since the adoption of RECLAIM, of which $47.6 million occurred in calendar 

year 2010 (compared to $22.6 million in calendar year 2009), excluding swaps. 

During calendar year 2010, average annual prices for discrete-year NOx RTCs ranged 

from $741 per ton for Compliance Year 2009, through $2,367 per ton for Compliance 

Year 2010, to $8,052 per ton for Compliance Year 2011. The average annual prices 

for discrete-year SOx RTCs ranged from $451 per ton for Compliance Year 2009 to 

$1,286 per ton for Compliance Year 2010. There were no Compliance Year 2011 

discrete-year SOx RTCs traded in calendar year 2010. The average annual prices of

discrete-year NOx and SOx RTCs traded in calendar year 2010 were below the 

compliance program review threshold of $15,000 per ton established in Rule 

2015(b)(6), as well as below the $37,738 per ton for NOx and $27,172 per ton for 

SOx RTC overall program review thresholds established by the Governing Board 

pursuant to Health and Safety Code §39616(f). For calendar year 2010, the average 

annual price for IYB NOx RTCs was $95,761 per ton, and the average annual price 

for IYB SOx RTCs was $109,219 per ton (compared to $124,567 and $36,550 per ton 
-4-

for IYB NOx and SOx RTCs in calendar year 2009, respectively). Average annual 

prices for IYB NOx and SOx RTCs during calendar year 2010 were below the predetermined program review price thresholds of $566,076 per ton of IYB NOx RTCs 

and $407,575 per ton of IYB SOx RTCs established by the Governing Board pursuant 

to Health and Safety Code Section 39616(f). The average annual prices of RTCs 

traded during calendar years 2009 and 2010 are summarized in Tables 1 and 2 below.

Table 1 – Average Prices for Discrete-Years’ RTCs during Calendar Years 2009 and 

2010

2009 2010

• $809 per ton for Compliance Year 

2008 NOx RTCs

• $1,986 per ton for Compliance Year 

2009 NOx RTCs

• $4,780 per ton for Compliance Year 

2010 NOx RTCs

• $653 per ton for Compliance Year 

2008 SOx RTCs

• $1,488 per ton for Compliance Year 

2009 SOx RTCs

• No Compliance Year 2010 SOx 

RTCs traded

• $741 per ton for Compliance Year 2009 

NOx RTCs

• $2,367 per ton for Compliance Year 2010 

NOx RTCs

• $8,052 per ton for Compliance Year 2011 

NOx RTCs

• $451 per ton for Compliance Year 2009 

SOx RTCs

• $1,286 per ton for Compliance Year 2010 

SOx RTCs

• No Compliance Year 2011 SOx RTCs

traded

Table 2 – Average Prices for IYB RTCs during Calendar Years 2009 and 2010

2009 2010

• $124,576 per ton for NOx IYB RTCs

• $36,550 per ton for SOx IYB RTCs

• $95,761 per ton for NOx IYB RTCs

• $109,219 per ton for SOx IYB RTCs1

• The role of investors in the RTC market remains significant. Based on both trading 

values and volume of trades with price, investor-involved trades constituted the 

majority of the trades recorded in calendar year 2010. For discrete NOx and SOx 

trades, 77% and 92% of the value and 66% and 86% of the volume of the respective 

trades involved investors. For IYB NOx and SOx trades, 32% and 100% of the value 

and 27% and 100% of the volume of respective trades involved investors. Compared 

to calendar year 2009, investor RTC holdings of total IYB NOx RTCs remained 

unchanged at 5.5%, whereas investor RTC holdings of total IYB SOx RTCs decreased

from 5.5% to 0.01% over the course of calendar year 2010.

 1 The increase in the IYB SOx RTC price might have been largely influenced by the then-impending rule 

amendment reducing SOx allocations.
-5-

• RECLAIM also met other applicable requirements including adequately meeting the 

applicable federal offset ratio under New Source Review; having no significant 

seasonal fluctuation in emissions and no distinct shift in the geographical distribution 

of emissions; and having no significant increase in health impacts due to toxics, since 

all RECLAIM facilities are subject to the same requirements for controlling toxic 

emissions as other non-RECLAIM facilities.

Attachment

Annual RECLAIM Audit Report for the 2009 Compliance Year
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

Annual RECLAIM Audit Report for 2009 Compliance Year

March 4, 2011

Executive Officer

Barry R. Wallerstein, D.Env.

Deputy Executive Officer

Engineering & Compliance

Mohsen Nazemi, P.E.

Senior Enforcement Manager

RECLAIM Administration

Danny Luong, P.E.

Authors: Mitch Haimov, M.S., Air Quality Analysis and Compliance Supervisor

Don Nguyen, Senior Air Quality Engineer

Fortune Chen, Air Quality Specialist

Chris Hynes, Air Quality Specialist

Tom Lee, Air Quality Engineer II

Kyu-Kyu Leong Remillard, Air Quality Engineer II

Sandys Thomas, Air Quality Engineer II

Susan Tsai, Air Quality Engineer II

Shannon Lee, Assistant Air Quality Engineer

Contributors: Mark Bassett, Air Quality Specialist

Mark Coleman, Air Quality Specialist

Reviewed by: Mohsen Nazemi, P.E., Deputy Executive Officer

Danny Luong, P.E., Senior Enforcement Manager

Barbara Baird, District Counsel

William Wong, Principal Deputy District Counsel
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

GOVERNING BOARD

Chairman: Dr. William A. Burke

Speaker of the Assembly

Appointee

Vice Chairman: Dennis R. Yates

Mayor, Chino

Cities of San Bernardino County

Members:

Michael D. Antonovich

Supervisor, Fifth District

County of Los Angeles

John J. Benoit

Supervisor, 4th District

County of Riverside

Michael A. Cacciotti

Councilmember, South Pasadena

Cities of Los Angeles County/Eastern Region

Jane W. Carney

Senate Rules Committee Appointee

Josie Gonzales

Supervisor, Fifth District

County of San Bernardino

Ronald O. Loveridge

Mayor, City of Riverside

Cities of Riverside County

Joseph K. Lyou, Ph.D.

Governor's Appointee

Judith Mitchell

Councilmember, Rolling Hills Estates

Cities of Los Angeles County/Western Region

Shawn Nelson

Supervisor, Fourth District

County of Orange

Jan Perry

Councilmember, 9th District

City of Los Angeles Representative

Miguel A. Pulido

Mayor, City of Santa Ana

Cities of Orange County

EXECUTIVE OFFICER

Barry R. Wallerstein, D.Env.
TABLE OF CONTENTS

MARCH 2011

TABLE OF CONTENTS

List of Abbreviations _____________________________________________i

Executive Summary __________________________________________ ES-1

INTRODUCTION _______________________________________________ I-1

Chapter 1: RECLAIM Universe _______________________________________ 1-1

Chapter 2: RTC Allocations and Trading ________________________________ 2-1

Chapter 3: Emission Reductions Achieved ______________________________ 3-1

Chapter 4: New Source Review Activity ________________________________ 4-1

Chapter 5: Compliance _____________________________________________ 5-1

Chapter 6: Reported Job Impacts _____________________________________ 6-1

Chapter 7: Air Quality and Public Health Impacts _________________________ 7-1

Appendix A: RECLAIM Universe of Sources

Appendix B: Facility Inclusions

Appendix C: RECLAIM Facilities Ceasing Operation or Excluded

Appendix D: Facilities that Exceeded their Annual Allocations

Appendix E: Reported Job Impacts Attributed to RECLAIM

Appendix F: Quarterly NOx Emission Maps

Appendix G: Quarterly SOx Emission Maps
ANNUAL RECLAIM AUDIT

(i) MARCH 2011

LIST OF ABBREVIATIONS

ACEMS Alternative Continuous Emissions Monitoring System(s)

APEP Annual Permit Emissions Program

AQMD South Coast Air Quality Management District

AQMP Air Quality Management Plan

BACT Best Available Control Technology

BARCT Best Available Retrofit Control Technology

CAA Clean Air Act

CARB California Air Resources Board

CCAA California Clean Air Act

CEQA California Environmental Quality Act

CEMS Continuous Emissions Monitoring System(s)

CGA Cylinder Gas Audit

CPMS Continuous Process Monitoring System(s)

DAHS Data Acquisition Handling System

EDR Electronic Data Reporting

ERC Emission Reduction Credit

IYB RTC Infinite-Year Block RECLAIM Trading Credit

LAER Lowest Achievable Emission Rate

LAP Laboratory Approval Program

MDP Missing Data Procedures

MRR Monitoring, Reporting and Recordkeeping

MSERC Mobile Source Emission Reduction Credit

NAAQS National Ambient Air Quality Standard

NNI No Net Increase

NOx Oxides of Nitrogen

NSR New Source Review

QCER Quarterly Certification of Emissions Report

RACT Reasonably Available Control Technology

RATA Relative Accuracy Test Audit

RECLAIM REgional CLean Air Incentives Market

RTC RECLAIM Trading Credit

RTU Remote Terminal Unit

SIP State Implementation Plan

SOx Oxides of Sulfur

SSC Stationary Source Committee

SWG Standing Working Group

USEPA United States Environmental Protection Agency

VOC Volatile Organic Compound

WATERS Web Access To Electronic Reporting System
ANNUAL RECLAIM AUDIT

PAGE ES - 1 MARCH 2011

EXECUTIVE SUMMARY

Introduction

The South Coast Air Quality Management District (AQMD) Governing Board 

adopted the REgional CLean Air Incentives Market (RECLAIM) program on 

October 15, 1993. The RECLAIM program represents a significant departure 

from traditional command-and-control regulations. RECLAIM’s objective is to 

provide facilities with added flexibility in meeting emissions reduction 

requirements while lowering the cost of compliance. This is accomplished by 

establishing facility-specific emissions reduction targets without being 

prescriptive regarding the method of attaining compliance with the targets. Each 

facility may determine for itself the most cost-effective approach to reducing 

emissions, including reducing emissions at the subject facility, and/or purchasing 

RECLAIM Trading Credits (RTCs) from facilities that operate at emissions levels 

below their target levels and do not need some of their RTCs, or from other RTC 

holders.

Rule 2015 - Backstop Provisions includes provisions for annual program audits 

focusing on specific topics, as well as a one-time comprehensive audit of the 

program’s first three years to ensure that RECLAIM is meeting all state and 

federal requirements and other performance criteria and to provide backstop 

measures if the specific criteria is not met. This document constitutes the Rule 

2015 annual audit report for Compliance Year 2009 (January 1 through 

December 31, 2009 for Cycle 1 and July 1, 2009 through June 30, 2010 for Cycle 

2 facilities).

Chapter 1: RECLAIM Universe

When RECLAIM was adopted in October 1993, a total of 394 facilities were 

identified as the initial “universe” of sources subject to the requirements of 

RECLAIM. From program adoption through June 30, 2009, the overall changes 

in RECLAIM participants were 116 facilities included into the program, 70 

excluded from the program, and 154 facilities ceased operation. Thus, the 

RECLAIM universe consisted of 286 active facilities on July 1, 2009. From July 

1, 2009 through June 30, 2010, two facilities were included into the RECLAIM 

universe, no facility was excluded, and four facilities shut down and are no longer 

in the active RECLAIM universe. These changes resulted in a net decrease of 

two facilities in the universe, bringing the total number of active RECLAIM 

facilities to 284 by June 30, 2010. All these recent changes occurred within the 

oxides of nitrogen (NOx) universe and there were no changes to the facilities 

included in the oxides of sulfur (SOx) universe from July 2009 through June 

2010.

Chapter 2: RTC Allocations and Trading

On January 7, 2005, the Governing Board adopted amendments to RECLAIM 

that resulted in an overall 22.5% reduction in NOx Allocations from 2007 through 

2011. For Compliance Year 2009, the cumulative NOx RECLAIM Trading Credit 
ANNUAL RECLAIM AUDIT

PAGE ES - 2 MARCH 2011

(RTC) reduction was 17.1% since 2007. On November 5, 2010, the Governing 

Board adopted further amendments to RECLAIM that will result in an overall 

reduction of 5.7 tons/day (or 48.4%) in SOx Allocations from 2013 through 2019. 

Additionally, the Compliance Year 2009 RTC supply decreased by 8.5 tons and 

19.5 tons for NOx and SOx, respectively, due to allocation adjustments for clean 

fuel production pursuant to Rule 2002(c)(12). Therefore, NOx and SOx RTC 

supplies for Compliance Year 2009 were 10,377 and 4,280 tons, respectively.

The trading market activity was slower during calendar year 2010 compared to 

calendar year 2009. There were 394 registered RTC transactions compared to 

435 registered transactions in calendar year 2009. However, excluding swaps, 

the total value of $47.6 million traded in calendar year 2010 is much higher than 

the $22.6 million traded in calendar year 2009. This is mainly due to the increase 

in value of infinite-year block (IYB) SOx RTCs traded prior to the rule amendment 

for the SOx RECLAIM program. Since the inception of the RECLAIM program in 

1994, a total value of over $990 million has been traded in the RTC trading 

market, excluding swaps.

The average annual prices of discrete-year NOx RTCs traded during calendar 

year 2010 ranged from $741 per ton for Compliance Year 2009 RTCs, through 

$2,367 per ton for Compliance Year 2010, to $8,052 per ton for Compliance Year 

2011 RTCs. The average annual prices for discrete-year SOx RTCs traded 

during the same period ranged from $451 per ton for Compliance Year 2009 

RTCs, to $1,286 per ton for RTCs for Compliance Year 20101

The average annual price for IYB NOx RTCs traded in calendar year 2010 was 

$95,761 per ton, and the average annual price for IYB SOx RTCs traded in 

calendar year 2010 was higher at $109,219 per ton (compared to $124,576 and 

$36,550 per ton of IYB NOx and SOx RTCs traded in calendar year 2009, 

respectively). The large increase in the IYB SOx RTC price might have been 

largely influenced by the then-impending rule amendment for a shave to the SOx 

RECLAIM program. In calendar year 2010, average annual IYB RTC prices did 

not exceed the $566,076 per ton of IYB NOx RTCs or the $407,575 per ton of 

IYB SOx RTCs pre-determined overall program review thresholds established by 

the Governing Board pursuant to Health and Safety Code §39616(f).

. In calendar year 

2010, the average annual prices for discrete NOx and SOx RTCs for all 

compliance years remained well below the $15,000 per ton threshold to evaluate 

and review the compliance aspects of the program set forth by AQMD Rule 2015, 

as well as the $37,738 per ton of NOx and $27,172 per ton of SOx discrete RTCs 

pre-determined overall program review thresholds established by the Governing 

Board pursuant to Health and Safety Code §39616(f).

The role of investors in the RTC market remains significant. Based on both 

trading values and the number of trades with price, investors were involved in a

significant portion of the trades recorded in calendar year 2010 (77% and 92% 

with respect to value and 66% and 86% with respect to volume for discrete NOx 

and SOx trades, respectively; 32% and 100% with respect to value and 27% and 

100% with respect to volume for IYB NOx and SOx trades, respectively). 

Investors’ holdings of IYB NOx RTCs remained unchanged at 5.5% at the end of 

calendar year 2010 as compared to the end of calendar year 2009; however, 

 1 There were no discrete-year 2011 SOx RTCs traded in calendar year 2010.
ANNUAL RECLAIM AUDIT

PAGE ES - 3 MARCH 2011

investor holdings of IYB SOx RTCs decreased to 0.01% at the end of calendar 

year 2010 from 5.5% at the end of calendar year 2009.

Chapter 3: Emission Reductions Achieved

For Compliance Year 2009, aggregate NOx emissions were below total 

allocations by 29% and aggregate SOx emissions were below total allocations by 

31%. Therefore, based on audited emissions, it can be concluded that RECLAIM 

has clearly achieved its targeted emission reductions. Finally, no emissions 

associated with breakdowns were excluded from reconciliation with facility 

allocations in Compliance Year 2009. Accordingly, no mitigation is necessary to 

offset excluded emissions due to approved Breakdown Emission Reports.

Chapter 4: New Source Review Activity

The annual program audit assesses New Source Review (NSR) activity from 

RECLAIM facilities in order to ensure that RECLAIM is complying with federal 

NSR requirements and state no net increase (NNI) in emissions requirements, 

while providing flexibility to facilities in managing their operations and allowing 

new sources into the program. In Compliance Year 2009, two new facilities 

joined the RECLAIM NOx market, no new facilities joined the RECLAIM SOx 

market, 22 NOx RECLAIM facilities had NSR NOx emission increases due to 

expansion or modification, and three existing SOx RECLAIM facilities had NSR 

SOx emission increases due to expansion or modification. The consistent trend 

of surplus NOx and SOx RTCs over emissions for the past five years has allowed 

for expansion and modification by existing facilities. However, it has become 

apparent that due to full RTC hold requirements for potential to emit for new and 

modified emission units at the beginning of each compliance year, and the effect 

of the accumulation of these hold requirements over time, this may not continue 

to be the case. As a result, potential changes to Rule 2005 are being considered 

to facilitate expansion and modification of operations by existing RECLAIM 

facilities while ensuring that all emissions are covered by RTC allocations in 

compliance with federal NSR emissions offset requirements and state NNI 

requirements.

RECLAIM is required to comply with federal NSR emissions offset requirements 

at a 1.2-to-1 offset ratio for NOx emission increases and at least at a 1-to-1 offset 

ratio for SOx emission increases on a programmatic basis. In Compliance Year 

2009, RECLAIM provided an offset ratio of 30-to-1 for NOx, demonstrating 

federal equivalency. RECLAIM inherently complies with the federally-required 1-

to-1 SOx offset ratio for any compliance year provided aggregate SOx emissions 

under RECLAIM are lower than aggregate SOx allocations for that compliance 

year. As shown in Chapter 3, there were no programmatic SOx exceedances

during Compliance Year 2009, so RECLAIM more than complied with the 

federally-required offset ratio and further quantification of the SOx offset ratio is 

unnecessary. Compliance with the federally-required offset ratio also 

demonstrates compliance with the state NNI requirements for new or modified 

sources. In addition, RECLAIM requires application of Best Available Control 

Technology (BACT) for all new or modified sources with emission increases.
ANNUAL RECLAIM AUDIT

PAGE ES - 4 MARCH 2011

Chapter 5: Compliance

There were 286 NOx and 32 SOx active facilities in the RECLAIM program at the 

start of Compliance Year 2009. During Compliance Year 2009, two facilities 

were included into the NOx universe and four facilities ceased operations and 

shutdown. There were no changes in the SOx universe. Of these 288 active 

NOx RECLAIM facilities during Compliance Year 2009, 276 facilities (96%) 

complied with their NOx allocations, and all but one of the 32 SOx facilities (97%) 

complied with their SOx allocations. The 12 NOx facilities that exceeded their 

NOx allocations had aggregate NOx emissions in excess of their combined NOx 

allocations by a total of 9.4 tons, whereas, the one SOx facility exceeded its SOx 

allocation by one pound. These amounts are small compared to the overall 

allocations for Compliance Year 2009 (0.09% of NOx and much less than 0.01% 

of SOx allocations). The overall RECLAIM NOx and SOx emission reduction

targets and goals were met for Compliance Year 2009 (i.e., aggregate emissions 

were below aggregate allocations).

Chapter 6: Job Impacts

This chapter compiles data as reported by RECLAIM facilities in their Annual 

Permit Emissions Program (APEP). The analysis focuses exclusively on job 

impacts at RECLAIM facilities and if those job impacts were directly attributable 

to RECLAIM as reported by those facilities. There may be additional effects of 

the RECLAIM program on the local economy outside of RECLAIM facilities (e.g., 

generating jobs for consulting firms, source testing firms and CEMS vendors) and 

also factors other than RECLAIM (e.g., the current economic downturn), that 

impact the job market. These factors are not evaluated in this report.

According to the Compliance Year 2009 employment survey data gathered from 

APEP reports, RECLAIM facilities reported a net loss of 7,792 jobs, representing 

7.33% of their total employment. The vast majority of these losses were 

attributed to factors other than RECLAIM. Only three facilities (1% of the active 

facilities) attributed job impact at their facilities to the RECLAIM program. Four 

RECLAIM facilities were listed as shutdown during Compliance Year 2009. None 

of these facilities reported on their APEP report that RECLAIM was a contributing 

factor in their decision to close. Two facilities (0.70% of the RECLAIM universe) 

reported a combined loss of 188 jobs (0.19% of total employment) due to 

RECLAIM, whereas one facility (0.35% of the RECLAIM universe) reported a 

total of two jobs gained due to RECLAIM. AQMD staff has reviewed information 

available to AQMD for one facility which reported a major portion of the jobs lost 

(168) due to RECLAIM. This facility has been in the RECLAIM program since 

RECLAIM’s inception 16 years ago, reported job losses last year (Compliance 

Year 2008) of similar magnitude and attributed them to RECLAIM, has had 

emission decreases at a rate similar to the RECLAIM rate of emission reduction 

for NOx emissions, had adequate RTC allocations to cover its emissions in each 

of the last several years, and was not a structural buyer. The facility’s reported 

NOx emissions had a sharper rate of reduction from Compliance Year 2008 to 

2009. This is indicative of decreased production during that period since there 

was no equipment modification reported. However, the facility’s NOx emissions 

remained approximately constant during Compliance Years 2003 through 2008 

(although somewhat higher during Compliance Year 2007). Furthermore, the 

facility held adequate Compliance Year 2009 RTCs to sustain emissions at the 
ANNUAL RECLAIM AUDIT

PAGE ES - 5 MARCH 2011

Compliance Years 2003 through 2008 (excluding 2007) level during Compliance 

Year 2009. Therefore, AQMD could not identify any specific reason why the 

RECLAIM program would have caused the job losses reported by this facility.

Chapter 7: Air Quality and Public Health Impacts

Audited RECLAIM emissions have been in an overall downward trend since the 

program’s inception. NOx and SOx emissions in Compliance Year 2009 

continued their downward trend (reduced by 12% and 11%, respectively,

compared to Compliance Year 2008). Quarterly calendar year 2009 NOx 

emissions ranged from approximately five percent below to three percent above 

the mean NOx emissions for the year. Quarterly calendar year 2009 SOx 

emissions ranged from approximately 11% below to 11% above the year’s mean 

SOx emissions. There was no significant shift in seasonal emissions from the 

winter season to the summer season. Furthermore, based upon analysis of the 

geographical distribution of Compliance Year 2009 emissions on a quarterly 

basis, there was no distinct shift in the geographical distribution of emissions.

The California Clean Air Act (CCAA) required a 50% reduction in population 

exposure to ozone, relative to a baseline averaged over three years (1986 

through 1988), by December 31, 2000. Analysis of per capita exposure (the 

length of time each person is exposed) to ozone in 1998 and 2000 shows that 

the Basin achieved the December 2000 target for ozone well before the deadline. 

In fact, Los Angeles County, Orange County, and the South Coast Air Basin 

overall achieved compliance with the December 2000 target prior to 1994, and 

Riverside and San Bernardino Counties achieved compliance in 1996. In 

calendar year 2010, the per capita exposure to ozone continued to be well below 

the target set for December 2000.

Air toxic health risk is primarily caused by emissions of certain volatile organic 

compounds (VOCs) and metals, rather than NOx or SOx emissions. RECLAIM 

facilities are subject to the same air toxic, VOC, and solid and condensable 

particulate matter regulations as other sources in the Basin. All sources are 

subject, where appropriate, to the NSR Rule for Toxics (Rule 1401). In addition, 

sources with NOx or SOx emission increases are required to be equipped with 

BACT which minimizes to the best extent feasible the health effects of the NOx 

and SOx emissions. Therefore, it can be concluded that the RECLAIM program 

creates no increased toxic impact beyond what would have occurred with the 

rules and control measures RECLAIM subsumed, and therefore poses no 

increased adverse public health impacts.
ANNUAL RECLAIM AUDIT

PAGE I - 1 MARCH 2011

INTRODUCTION

The South Coast Air Quality Management District’s (AQMD’s) REgional CLean 

Air Incentives Market (RECLAIM) program was adopted in October 1993 and 

replaced certain command-and-control rules regarding oxides of nitrogen (NOx) 

and oxides of sulfur (SOx) with a new market incentives program for facilities that 

meet the inclusion criteria. The goals of RECLAIM are to provide facilities with 

added flexibility in meeting emissions reduction requirements while lowering the 

cost of compliance. The RECLAIM program was designed to meet all state and 

federal clean air program requirements, as well as other performance criteria, 

such as equivalent air quality improvement, equivalent enforcement, lower 

implementation costs, lower job impacts, and no adverse public health impacts.

Since RECLAIM represents a significant change from traditional command-andcontrol regulations, RECLAIM rules include provisions for program audits in order 

to verify that the RECLAIM objectives are being met. The rules provide for a 

comprehensive audit of the first three years of program implementation and for 

annual audits. The audit results are used to help determine whether any program 

modifications are appropriate. AQMD staff has completed the initial tri-annual 

audit and each individual annual audit report through the 2008 Compliance Year 

Audit.

This report presents the annual audit and progress report of RECLAIM’s 

sixteenth compliance year (January 1 through December 31, 2009 for Cycle 1 

and July 1, 2009 through June 30, 2010 for Cycle 2 RECLAIM facilities), also 

known as Compliance Year 2009. As required by Rule 2015(b)(1) – Annual 

Audits, this audit assesses:

• Emission reductions;

• Per capita exposure to air pollution;

• Facilities permanently ceasing operation of all sources;

• Job impacts;

• Average annual price of each type of RECLAIM Trading Credit (RTC);

• Availability of RTCs;

• Toxic risk reductions;

• New Source Review permitting activity;

• Compliance issues, including a list of facilities that were unable to 

reconcile emissions for that compliance year;

• Emission trends/seasonal fluctuations;

• Emission control requirement impacts on stationary sources in the 

program compared to other stationary sources identified in the Air Quality 

Management Plan (AQMP); and

• Emissions associated with equipment breakdowns.
ANNUAL RECLAIM AUDIT

PAGE I - 2 MARCH 2011

The annual audit is organized into the following chapters:

1. RECLAIM Universe

This chapter discusses changes in the universe of RECLAIM sources that 

occurred from July 1, 2009 through June 30, 2010.

2. RTC Allocations and Trading

This chapter summarizes changes in emissions allocations in the 

RECLAIM universe, RTC supply and RTC trading activity, including 

average annual prices, availability of RTCs, and market participants.

3. Emission Reductions

This chapter assesses emissions trends and reductions for RECLAIM 

sources, emissions associated with equipment breakdowns, and 

emissions control requirement impacts on RECLAIM sources compared 

to other stationary sources. It also discusses the latest amendments to 

the RECLAIM program.

4. New Source Review Activity

This chapter summarizes New Source Review (NSR) activities at 

RECLAIM facilities.

5. Compliance

This chapter discusses compliance activities and the compliance status of 

RECLAIM facilities. It also evaluates the effectiveness of AQMD’s 

compliance program, as well as the monitoring, reporting, and 

recordkeeping (MRR) protocols for NOx and SOx.

6. Job Impacts

This chapter addresses job impacts and facilities permanently ceasing 

operation of all emission sources.

7. Air Quality and Public Health Impacts

This chapter discusses air quality trends in the South Coast Air Basin, 

seasonal and geographic emission trends for RECLAIM sources, per 

capita exposure to air pollution, and the toxic impacts of RECLAIM 

sources.
ANNUAL RECLAIM AUDIT

PAGE 1 - 1 MARCH 2011

CHAPTER 1

RECLAIM UNIVERSE

Summary

When RECLAIM was adopted in October 1993, a total of 394 facilities were 

identified as the initial “universe” of sources subject to the requirements of 

RECLAIM. From program adoption through June 30, 2009, the overall changes 

in RECLAIM participants were 116 facilities included into the program, 70 

excluded from the program, and 154 facilities ceased operation. Thus, the 

RECLAIM universe consisted of 286 active facilities on July 1, 2009. From July 

1, 2009 through June 30, 2010, two facilities were included into the RECLAIM 

universe, no facility was excluded, and four facilities shut down and are no longer 

in the active RECLAIM universe. These changes resulted in a net decrease of 

two facilities in the universe, bringing the total number of active RECLAIM

facilities to 284 by June 30, 2010. All these recent changes occurred within the 

oxides of nitrogen (NOx) universe and there were no changes to the facilities 

included in the oxides of sulfur (SOx) universe from July 2009 through June 

2010.

Background

The RECLAIM program replaced the traditional “command-and-control” rules for 

a defined list of facilities participating in the program (the RECLAIM “Universe”). 

The criteria for inclusion in the RECLAIM program are specified in Rule 2001 –

Applicability. Facilities are generally subject to RECLAIM if they have NOx or 

SOx emissions greater than or equal to four tons in 1990 or any subsequent 

year. However, certain facilities are categorically excluded from RECLAIM. The 

categorically excluded facilities include dry cleaners; restaurants; police and fire 

fighting facilities; construction and operation of landfill gas control, processing or 

landfill gas energy facilities; public transit facilities, potable water delivery 

operations; facilities that converted all sources to operate on electric power prior 

to October 1993; and facilities, other than electric generating facilities established 

on or after January 1, 2001, located in the Riverside County portions of the 

Mojave Desert Air Basin or the Salton Sea Air Basin. Furthermore, other 

categories of facilities are not automatically included but do have the option to 

enter the program at their discretion. These categories include electric utilities 

(exemption only for the SOx program); equipment rental facilities; facilities 

possessing solely “various locations” permits; schools or universities; portions of 

facility research operations; ski resorts; prisons; hospitals; publicly-owned 

municipal waste-to-energy facilities; publically-owned sewage treatment facilities 

operating with an approved regional growth plan; electrical power generating 

systems owned and operated by the Cities of Burbank, Glendale, or Pasadena or 

their successors; facilities on San Clemente Island; agricultural facilities; and 

electric generating facilities that are new on or after January 1, 2001 and located 

in the Riverside County portions of the Mojave Desert Air Basin or the Salton Sea 

Air Basin. An initial universe of 394 RECLAIM facilities was developed using 

these criteria based on 1990, 1991 and 1992 facility emissions data.
ANNUAL RECLAIM AUDIT

PAGE 1 - 2 MARCH 2011

A facility that is not categorically excluded from the program may voluntarily join 

RECLAIM, regardless of its emission level. Additionally, a facility may be 

required to enter the RECLAIM universe if:

• It increases its NOx and/or SOx emissions above the four-ton per year 

threshold; or 

• It ceases to belong to an exempt category and its reported NOx and SOx 

emissions are greater than or equal to four tons per year; or

• It is determined by AQMD staff to meet the applicability requirements of 

RECLAIM, but was initially misclassified as not subject to RECLAIM.

RECLAIM facilities including those in the initial RECLAIM universe as well as 

existing facilities that were included in the program (either voluntarily or based on 

emissions above four tons per year), were issued at the time of joining RECLAIM 

an annually declining allocation of emission credits (“RECLAIM Trading Credits” 

or “RTCs”) based upon their historic production levels as reported to AQMD in 

their emission inventory reports (if any). Each RECLAIM facility’s RTC holdings 

constitute an annual emissions budget. RTCs may be bought or sold as the 

facilities deem appropriate (see Chapter 2 – RTC Allocations and Trading).

RECLAIM facilities that permanently go out of business after January 1, 1994 

(Cycle 1) or after July 1, 1994 (Cycle 2) are removed from the active emitting 

RECLAIM universe, but may retain their RTCs and participate in the trading 

market.

Universe Changes

The RECLAIM rules include several mechanisms to exclude facilities originally 

included in the program and to add new facilities. The overall changes to the 

RECLAIM universe from the date of adoption (October 15, 1993) through the end 

of Compliance Year 2008 (June 30, 2009) were: the inclusion of 116 facilities 

(86 facilities that were new or new to RECLAIM and 30 facilities created by 

partial change of operator of existing RECLAIM facilities), the exclusion of 70 

facilities, and the shutdown of 154 facilities. Thus, the net change in the 

RECLAIM universe during the first 15 compliance years was a decrease from 

394 to 286 facilities. From July 2009 through June 30, 2010, two facilities were 

included, no facility was excluded, and four facilities shut down. These changes 

brought the total number of facilities in the RECLAIM universe to 284 facilities. 

These include 252 NOx-only, no SOx-only, and 32 both NOx and SOx RECLAIM 

facilities. The list of active facilities in the RECLAIM universe as of June 30, 

2010 is provided in Appendix A.

Facility Inclusions and Exclusions

Between July 1, 2009 and June 30, 2010, two facilities were added to the 

RECLAIM universe. One of these facilities was created through partial change of 

operator of an existing RECLAIM facility. The second facility elected to enter 

(”opted in”) the RECLAIM program. These two facilities and the reasons for their 

inclusion are listed in Appendix B.

No facility was excluded from the RECLAIM universe during Compliance Year 

2009.
ANNUAL RECLAIM AUDIT

PAGE 1 - 3 MARCH 2011

Facilities Permanently Ceasing Operations

Four RECLAIM facilities permanently ceased operations between July 1, 2009 

and June 30, 2010. One of these facilities shut down as it was sold and its 

equipment was no longer operating. Strategic business decisions prompted 

another shutdown facility to move its operation to North Carolina. Reasons for 

shutdown for the remaining two facilities are not known. One of these two 

facilities was last inspected in October 2009 and submitted its last Quarterly 

Certified Emission Report (QCER) in first quarter of Compliance Year 2009. The 

second facility was last inspected in November of 2009 and submitted its last 

QCER in the second quarter of Compliance Year 2009. No indication of the 

impending shut down was noted by the inspectors. Subsequent attempts at 

contacting facility representatives for both facilities were unsuccessful. AQMD 

inspectors verified that both facilities were no longer operating. All shutdown 

facilities were NOx-only facilities. Appendix C lists the shutdown facilities and 

brief descriptions of the reported reasons for their closures.

The combination of the above stated inclusions and shutdowns resulted in a net 

decrease of two facilities in the RECLAIM universe. Table 1-1 summarizes 

changes in the RECLAIM universe between the start of the program and June 

30, 2010. Overall changes to the RECLAIM universe that occurred from July 1, 

2009 through June 30, 2010 are illustrated in Figure 1-1.

Table 1-1

RECLAIM Universe Changes

NOx

Facilities

SOx

Facilities

Total*

Facilities

Universe – October 15, 1993 (Start of Program) 392 41 394

Inclusions—October 15, 1993 through June 30, 2009 116 10 116

Exclusions—October 15, 1993 through June 30, 2009 -69 -4 -70

Shutdowns—October 15, 1993 through June 30, 2009 -153 -15 -154

Universe – June 30, 2009 286 32 286

Inclusions—July 1, 2009 through June 30, 2010 2 0 2

Exclusions—July 1, 2009 through June 30, 2010 0 0 0

Shutdowns—July 1, 2009 through June 30, 2010 -4 0 -4

Universe – June 30, 2010 284 32 284

* Total facilities is not the sum of NOx and SOx facilities due to the overlap of some facilities being 

in both the NOx and SOx universes.
ANNUAL RECLAIM AUDIT

PAGE 1 - 4 MARCH 2011

Figure 1-1

Universe Changes from July 1, 2009 through June 30, 2010

286

32

286

2 2

-4 -4

284

32

284

-50

0

50

100

150

200

250

300

350

NOx SOx Overall

Initial Inclusions Exclusions Shutdowns Current
ANNUAL RECLAIM AUDIT

PAGE 2 - 1 MARCH 2011

CHAPTER 2

RTC ALLOCATIONS AND TRADING

Summary

On January 7, 2005, the Governing Board adopted amendments to RECLAIM 

that resulted in an overall 22.5% reduction in NOx Allocations from 2007 through 

2011. For Compliance Year 2009, the cumulative NOx RECLAIM Trading Credit 

(RTC) reduction was 17.1% since 2007. On November 5, 2010, the Governing 

Board adopted further amendments to RECLAIM that will result in an overall 

reduction of 5.7 tons/day (or 48.4%) in SOx Allocations from 2013 through 2019. 

Additionally, the Compliance Year 2009 RTC supply decreased by 8.5 tons and 

19.5 tons for NOx and SOx, respectively, due to allocation adjustments for clean 

fuel production pursuant to Rule 2002(c)(12). Therefore, NOx and SOx RTC 

supplies for Compliance Year 2009 were 10,377 and 4,280 tons, respectively.

The trading market activity was slower during calendar year 2010 compared to 

calendar year 2009. There were 394 registered RTC transactions compared to 

435 registered transactions in calendar year 2009. However, excluding swaps, 

the total value of $47.6 million traded in calendar year 2010 is much higher than 

the $22.6 million traded in calendar year 2009. This is mainly due to the increase 

in value of infinite-year block (IYB) SOx RTCs traded prior to the rule amendment 

for the SOx RECLAIM program. Since the inception of the RECLAIM program in 

1994, a total value of over $990 million has been traded in the RTC trading 

market, excluding swaps.

The average annual prices of discrete-year NOx RTCs traded during calendar 

year 2010 ranged from $741 per ton for Compliance Year 2009 RTCs, through 

$2,367 per ton for Compliance Year 2010, to $8,052 per ton for Compliance Year 

2011 RTCs. The average annual prices for discrete-year SOx RTCs traded 

during the same period ranged from $451 per ton for Compliance Year 2009

RTCs, to $1,286 per ton for RTCs for Compliance Year 20101

The average annual price for IYB NOx RTCs traded in calendar year 2010 was 

$95,761 per ton, and the average annual price for IYB SOx RTCs traded in 

calendar year 2010 was higher at $109,219 per ton (compared to $124,576 and 

$36,550 per ton of IYB NOx and SOx RTCs traded in calendar year 2009, 

respectively). The large increase in the IYB SOx RTC price might have been 

largely influenced by the then-impending rule amendment for a shave to the SOx 

RECLAIM program. In calendar year 2010, average annual IYB RTC prices did 

not exceed the $566,076 per ton of IYB NOx RTCs or the $407,575 per ton of 

. In calendar year

2010, the average annual prices for discrete NOx and SOx RTCs for all 

compliance years remained well below the $15,000 per ton threshold to evaluate 

and review the compliance aspects of the program set forth by AQMD Rule 2015,

as well as the $37,738 per ton of NOx and $27,172 per ton of SOx discrete RTCs 

pre-determined overall program review thresholds established by the Governing 

Board pursuant to Health and Safety Code §39616(f).

 1 There were no discrete-year 2011 SOx RTCs traded in calendar year 2010.
ANNUAL RECLAIM AUDIT

PAGE 2 - 2 MARCH 2011

IYB SOx RTCs pre-determined overall program review thresholds established by 

the Governing Board pursuant to Health and Safety Code §39616(f).

The role of investors in the RTC market remains significant. Based on both 

trading values and the number of trades with price, investors were involved in a 

significant portion of the trades recorded in calendar year 2010 (77% and 92% 

with respect to value and 66% and 86% with respect to volume for discrete NOx 

and SOx trades, respectively; 32% and 100% with respect to value and 27% and 

100% with respect to volume for IYB NOx and SOx trades, respectively). 

Investors’ holdings of IYB NOx RTCs remained unchanged at 5.5% at the end of 

calendar year 2010 as compared to the end of calendar year 2009; however, 

investor holdings of IYB SOx RTCs decreased to 0.01% at the end of calendar 

year 2010 from 5.5% at the end of calendar year 2009.

Background

The AQMD issues each RECLAIM facility emissions allocations for each 

compliance year, according to the methodology specified in Rule 2002, based on 

the facility’s operational history. These allocations are issued as RTCs, 

denominated in pounds of NOx or SOx within a specific 12-month period or 

compliance year. Each RTC may only be used for emissions occurring within the 

term of that RTC. The RECLAIM program has two staggered compliance 

cycles—Cycle 1 with a compliance period of January 1 through December 31 of 

each year, and Cycle 2 with a compliance period of July 1 of each year through 

June 30 of the following year. Each RECLAIM facility is assigned to either Cycle 

1 or Cycle 2 and the RTCs it is issued (if any) have corresponding periods of 

validity.

The issuance of allocations for future years provides RECLAIM facilities 

guidance regarding their future emission reduction requirements. Facilities can 

plan their compliance strategies by reducing actual emissions or securing 

needed RTCs through trades (or a combination of the two), based on their 

operational needs.

RECLAIM facilities may acquire through trading RTCs issued for either cycle and 

apply them to emissions, provided that the RTCs are used for emissions 

occurring within the RTCs’ period of validity and the trades are made during the 

appropriate time period. RECLAIM facilities have 30 days at the end of each of 

the first three quarters to reconcile by securing RTCs to cover their quarterly and 

year-to-date emissions, and 60 days after the end of each compliance year to 

reconcile their total annual emissions by securing adequate RTCs.

In an effort to achieve additional NOx reductions pursuant to 2003 AQMP Control 

Measure #2003 CMB-10 – “Additional NOx Reductions for RECLAIM (NOx)” and 

to comply with requirements for demonstrating Best Available Retrofit Control 

Technology (BARCT) equivalency under state law, AQMD began the RECLAIM 

rule amendment process in early 2004. The process included a detailed analysis 

of control technologies that qualified as BARCT for NOx, and lengthy discussions 

with stakeholders—including regulated industry, environmental groups, the 

California Air Resources Board (CARB), and the United States Environmental 

Protection Agency (USEPA). On January 7, 2005, the Governing Board adopted 

several changes to the RECLAIM program. Among other amendments, the 

changes resulted in cumulative reductions of 7.7 tons NOx per day, a more than 
ANNUAL RECLAIM AUDIT

PAGE 2 - 3 MARCH 2011

20% reduction, from all RECLAIM facilities when fully implemented in 

Compliance Year 2011 (the reductions are being phased in from 2007 through 

2011: 4.0 tons per day in 2007 and an additional 0.925 tons per day in each of 

the following four years).

Also, in July 2007, AQMD adopted the 2007 AQMP, which serves as the region’s 

attainment demonstration for the annual average PM2.5 standards and included 

a formal request to extend USEPA’s annual average PM2.5 attainment date to 

2015. The 2007 AQMP includes Control Measure CMB-02 – “Further SOx 

Reductions for RECLAIM (SOx)” to address the implementation process to meet 

the annual average PM2.5 standards. This control measure proposes to further 

reduce SOx allocations by approximately three tons per day, with the reductions 

phased in from 2011 to 2014. AQMD started the rule amendment process in 

February 2008. The process included technical and cost analyses to determine 

BARCT for categories of SOx sources in RECLAIM. Third party consultants 

were hired to perform technical analysis of available SOx control technologies. 

Preliminary analysis indicated that current technology can result in higher 

emission reductions than the three tons per day level projected in the 2007 

AQMP. There have been many stakeholder meetings, three public workshops, 

two Stationary Source Committee Meetings, and two Refinery Source Committee 

Meetings. Additionally, California Environmental Quality Act (CEQA), socioeconomic and market analyses were performed.

As a result of this process, on November 5, 2010, the Governing Board adopted

changes to the RECLAIM program that will result in overall reduction of 5.7 tons 

SOx per day when fully implemented in 2019 (the reductions are being phased in 

from 2013 through 2019: 3.0 tons per day in 2013, 4.0 tons per day in years 

2014 through 2016, 5.0 tons per day in 2017 and 2018, and a cumulative 5.7 

tons per day starting in 2019 and continuing thereafter). This reduction in SOx is 

an essential part in the South Coast Air Basin’s effort in attaining the anticipated 

federal 24-hour average PM2.5 standard by 2020. These rule amendments also 

satisfied the requirements for BARCT in accordance with California Health and 

Safety Code §40440.

Although other chapters in this report present and discuss Compliance Year 

2009 data, RTC trading and price data discussed in this chapter are for calendar 

year 2010.

RTC Allocations and Supply

The methodology for determining RTC allocations is established by Rule 2002. 

According to the rule, allocations may change when the universe of RECLAIM 

facilities changes, emissions associated with the production of re-formulated 

gasoline increase or decrease, or reported historical activity levels are updated. 

In addition to the allocation, RTCs may be generated by conversion of emissions 

reduction credits from mobile and area sources pursuant to approved protocols. 

The total RTC supply in RECLAIM is made up of all RECLAIM facilities’ 

allocations, conversions of Emission Reduction Credits (ERCs) owned by 

RECLAIM and non-RECLAIM facilities (the window of opportunity to convert 

ERCs to RTCs other than during the process of a non-RECLAIM facility entering 

the program closed June 30, 1994), emissions associated with the production of 

re-formulated gasoline, and conversion of emission reduction credits from mobile 
ANNUAL RECLAIM AUDIT

PAGE 2 - 4 MARCH 2011

sources and area sources governed pursuant to approved protocols. Changes in 

the RTC supply during Compliance Year 2009 are discussed below.

Allocations Adjustments Due to Inclusion and Exclusion of Facilities

Allocations for a facility are based on the facility’s historical operations, emission 

reduction requirements under the command-and-control rules subsumed by 

RECLAIM, AQMP control measures subsumed by RECLAIM, and adjustments

for BARCT equivalency. Facilities entering RECLAIM after 1994 are issued 

allocations according to the same methodology as that used for issuing RTCs to 

facilities initially included at the beginning of the program. However, allocations 

issued for these facilities are only applicable for the compliance year upon entry 

and forward. In addition, these facilities are issued allocations and Nontradable/Non-usable Credits for Compliance Year 1994 for the sole purpose of 

establishing their starting allocation to ensure compliance with offset 

requirements under Rule 2005 - New Source Review for RECLAIM and the 

trading zone restriction to ensure net ambient air quality improvement within the 

sensitive zone established by Health and Safety Code §40410.5.

2

Allocations Adjustments Due to Clean Fuel Production

 One facility 

opted to join the NOx RECLAIM program during Compliance Year 2009 and no

facility was excluded during this compliance year. The opt-in facility did not 

qualify for any allocation because it is a new facility without any prior operating 

history. Therefore, no changes to the NOx or SOx RTC supplies occurred as a 

result of changes to the RECLAIM universe in Compliance Year 2009.

Rule 2002(c)(12) – Clean Fuel Adjustment to Starting Allocation, provides 

refineries with RTCs to compensate for their actual emissions increases caused 

by the production of CARB Phase II reformulated gasoline. The amount of these 

RTCs is based on actual emissions for the subject compliance year and historical 

production data. Based on the historical production data submitted, qualifying 

refineries were issued in 2000 an aggregate baseline of 86.5 tons of NOx and 

42.3 tons of SOx for Compliance Year 1999, 101.8 tons of NOx and 41.4 tons of 

SOx for Compliance Year 2000, and 98.4 tons of NOx and 40.2 tons of SOx for 

each subsequent Compliance Year. These refineries are required to submit, at 

the end of each compliance year in their Annual Permit Emissions Program 

(APEP) report, records to substantiate actual emission increases due solely to 

the production of reformulated gasoline. If actual emission increases for a

subject year are different than the projected amount, the RTCs issued are 

adjusted accordingly (i.e., excess RTCs issued will be deducted if emissions 

were less than projected; conversely, additional RTCs will be issued if emissions 

were higher than projected).

As a result of the amendment to Rule 2002 in January 2005 to further reduce 

RECLAIM NOx allocations, the NOx historical baseline Clean Fuel Adjustments 

for Compliance Year 2007 and subsequent years were also reduced by the 

appropriate shave factors as stated in Rule 2002(f)(1)(A). However, since Rule 

 2 These Compliance Year 1994 allocations and Non-tradable/Non-usable Credits are not included in the 

RTC supply as shown in Figures 2-1 and 2-2 of Chapter 2, and Figures 3-1 and 3-2 of Chapter 3. They 

are also not included in the “Total NOx RTCs” or “Total SOx RTCs” columns shown in Tables 3-1 and 3-2, 

respectively, of Chapter 3.
ANNUAL RECLAIM AUDIT

PAGE 2 - 5 MARCH 2011

2002(c)(12) entitles these refineries’ to a Clean Fuels adjustment based on 

actual emissions, these refineries’ Compliance Years 2007 (11.5 tons), 2008 

(14.2 tons) and 2009 (16.8 tons) NOx allocations (affected compliance years for 

which actual supporting data has been submitted by these refineries) have been 

re-adjusted to credit back the NOx amounts previously shaved pursuant to Rule 

2002(f)(1)(A). For Compliance Year 2009, the overall effect of adjusting NOx 

allocations to account for actual production and emissions data submitted in 

APEP reports, as well as crediting back the Rule 2002(f)(1)(A) shave amount, 

was that a total of 8.5 tons of NOx RTCs and 19.5 tons of SOx RTCs were 

deducted from refineries’ Compliance Year 2009 holdings based on actual 

production and emissions data submitted in the APEP.

Changes in RTC Allocations Due to Activity Corrections

RECLAIM facilities’ allocations are determined by their reported historical activity 

levels (e.g., fuel usage, material usage, or production). If a facility makes 

corrections to its reported activity levels, the allocation is adjusted accordingly. 

There were no changes in RTC allocations due to activity corrections in 

Compliance Year 2009.

Conversions of Other Types of Emission Reduction Credits

Conversions of Mobile Source Emission Reduction Credits (MSERCs) and other 

types of emission reductions credits, besides regular stationary source ERCs 

issued under Regulation XIII – New Source Review, to RTCs are allowed under 

Rule 2008 – Mobile Source Credits, and several programs under Regulation XVI 

– Mobile Source Offset Programs and Regulation XXV – Intercredit Trading. 

Conversion of these credits to RTCs is allowed based on the respective 

approved protocol specified in each rule. Currently, there are no State 

Implementation Plan (SIP) approved protocols3

Net Changes in RTC Allocations 

for conversion of MSERCs to 

RTCs. As a result, no new RTCs were issued as a result of conversion of other 

types of emission reduction credits in Compliance Year 2009.

The changes to RTC supplies described in the above sections resulted in a net 

decrease of 8.5 tons of NOx RTCs and a decrease of 19.5 tons of SOx RTCs for 

Compliance Year 2009. Table 2-1 summarizes the changes in NOx and SOx 

RTC supplies that occurred in Compliance Year 2009 pursuant to Rule 2002.

 3 Projects may still be implemented under Rules 1610 and 1612, which are not approved under the SIP. 

Resultant emission reductions can be converted to RTCs.
ANNUAL RECLAIM AUDIT

PAGE 2 - 6 MARCH 2011

Table 2-1

Changes in NOx and SOx RTCs Supplies during Compliance Year 2009 (tons/year)

Source NOx SOx

Universe changes 0 0

Clean Fuel/Reformulated Gasoline -8.5 -19.5

Activity corrections 0 0

MSERCs 0 0

Net change -8.5 -19.5

Note: The data in this table represents the changes that occurred over the course of Compliance Year 2009 to 

the Compliance Year 2009 aggregate NOx and SOx RTC supplies originally issued pursuant to Rule 

2002, not the difference between 2009 aggregate RTC supply and that for any other compliance year.

Figures 2-1 and 2-2 illustrate the total NOx and SOx RTC supplies through the 

end of Compliance Year 2020.

Figure 2-1

NOx RTC Supply

40,534

17,208 12,485

12,486

11,046

10,705

10,377

10,037

9,677

9,677

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

NOx (tons)

Compliance Year
ANNUAL RECLAIM AUDIT

PAGE 2 - 7 MARCH 2011

Figure 2-2

SOx RTC Supply

10,335

6,194 5,567

4,299 4,282

4,286

4,280

4,280

4,299

4,299

3,204

2,839

2,839

2,474

2,219

0

2,000

4,000

6,000

8,000

10,000

12,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

SOx (tons)

Compliance Year

Upcoming Proposal for Credit Generation

AQMD is currently evaluating the adoption of two rules that would generate 

additional credits. One potential rule would allow generation of emission 

reduction credits through the control of exhaust emissions from auxiliary engines 

and/or boilers used on Ocean-Going Vessels while at berth in a commercial 

marine port (Proposed Rule 2512 – Credit Generation Program for Ocean-Going 

Vessels at Berth). The other potential rule would allow generation of emission 

reduction credits through the voluntary repowering of diesel–fueled auxiliary head 

end power generating units at passenger locomotives with cleaner engines 

(Proposed Rule 2511 – Credit Generation Program for Locomotive Head End 

Power Unit Engines). Currently, both proposed rules are scheduled for public 

hearing in May 2011. Under these two proposals, the resultant credits from both 

rules would be allowed to be used in the RECLAIM program.

RTC Price Reporting Methodology

On September 7, 2007, the Governing Board approved a new reporting 

methodology for RTC trades that is more reflective of the market and minimizes 

the potential for price manipulation. Under this new reporting methodology, 

trades of specific, discrete-year RTCs are reported to AQMD separately from 

trades involving blocks of RTCs with a specified start year and continuing into 

perpetuity (also known as infinite-year blocks or IYBs). Discrete-year trades 

continue to be reported in terms of dollars per pound and averaged in dollars per 

ton of RTCs for each discrete compliance year while IYB trade prices are 

reported separately and as total dollar value for total amount of IYB traded, and 

averaged as a total dollar value per ton of IYB RTC.
ANNUAL RECLAIM AUDIT

PAGE 2 - 8 MARCH 2011

In addition, the new reporting methodology also identified swap trades as having 

the potential to adversely impact the calculated average annual prices of RTCs,

because prices reported for swap trades are based on the agreed upon value of 

the trade by the participants, and do not involve exchange of funds for the total 

value agreed upon. Therefore, reported prices for swap trades are excluded 

from the calculation of average annual RTC price under this new reporting 

methodology. Further details regarding the new reporting methodology for RTC 

trades can be found in the report entitled “Evaluation and Review of the 

RECLAIM Program and Assessment of RTC Price Reporting,” dated September 

7, 2007.

The Governing Board also established new program review thresholds for IYB 

trades through Board Resolution No. 07-20. Accordingly, the new program 

review price thresholds for IYB RTCs (equivalent to 15 times the 1993 thresholds 

used for discrete trades with CPI adjustments) are $566,076 per ton of NOx 

RTCs and $407,575 per ton of SOx RTCs in 2010 dollars.

RTC Trading Activity

Overall Trading Activity

The RTC market activity was slower in calendar year 2010 compared to years 

past (before 2009). The calendar year 2010 trading activity—394 total registered 

trade transactions (345 NOx trades and 49 SOx trades)—was slightly lower than 

trading activity in calendar year 2009 (435 total registered trade transactions). 

These trades included discrete and IYB RTCs traded with prices, discrete and 

IYB RTC transfers with zero price, and discrete and IYB RTC swap trades. 

However, excluding swaps, a total value of $47.6 million was traded in calendar 

year 2010 ($17.3 million for NOx and $30.3 million for SOx) compared to the total 

value of $22.6 million traded in calendar year 2009 ($18.6 million for NOx and 

$4.0 million for SOx). This large increase in value traded was due to the 

increased trading of IYB SOx RTCs (total of $30.2 million). The high value was a 

combination of larger volume of IYB SOx RTCs traded (10 trades, 227 tons) and 

higher prices. The large volume and higher prices might have been largely 

influenced by the then-impending rule amendment of the SOx RECLAIM 

program. Figure 2-3 shows historical trading values (excluding swaps). Figure 

2-4 summarizes overall trading activity (excluding swaps) in calendar year 2010 

by pollutant.

RTC transfers with zero price generally occur when a seller transfers or escrows 

RTCs to a broker, when there is a transfer between facilities under common 

operator, or when there is a transfer between facilities that have gone through 

change of operator. Trades with zero price also occur when the trading parties 

have mutual agreements where one party provides a specific service (e.g.,

providing steam or other process components) for the second party. In return, 

the second party will transfer the RTCs necessary to offset emissions generated 

from the service.
ANNUAL RECLAIM AUDIT

PAGE 2 - 9 MARCH 2011

Figure 2-3

Annual Trading Values (Excluding Swaps)

$1.6 MM

$10.0 MM $9.9 MM

$22.2 MM

$37.4 MM

$26.1 MM

$218.3 MM

$260.9 MM

$31.3 MM

$23.5 MM $17.1 MM

$51.3 MM

$82.3 MM

$70.2 MM

$58.9 MM

$22.6 MM

$47.6 MM

$0

$50

$100

$150

$200

$250

$300

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Value Traded ($MM)

Calendar Year
ANNUAL RECLAIM AUDIT

PAGE 2 - 10 MARCH 2011

Figure 2-4

Calendar Year 2010 Overall Trading Activity (Excluding Swaps)

93 Trades

($0 Price)

NOx

$17.3 Million Traded $30.3 Million Traded

192 Trades

($3.0 MM) 6 Trade

($0 Price)

11 Trades

($81.5 M)

Discrete RTC Traded with Price Discrete RTC Traded with $0 Price

SOx

13 Trades

($14.3 MM) 4 Trades

($0 Price)

IYB RTC Traded with Price IYB RTC Traded with $0 Price

10 Trades

($30.2 MM)

4 Trades

($0 Price)

Discrete RTC Trading Activity

In calendar year 2010, there were a total of 285 trades and 17 trades of discrete 

NOx and SOx RTCs, respectively. Of the 285 discrete NOx trades, 192 were 

traded with price totaling 2,194 tons in volume and $3 million in value. Of the 17

SOx trades, 11 were traded with price totaling 161 tons in volume and $0.08 

million in value. In addition to trades with prices, there were 93 discrete NOx 

trades of 1,399 tons and 6 discrete SOx trades of 218 tons traded with zero 

price. In the past years, only discrete RTCs for Compliance Years 2010 and 

before were traded. However, in calendar year 2010, the market participants 

started trading discrete RTCs with prices for Compliance Years 2011. 

Additionally, there were transfers of discrete RTCs for later years at zero price. 

These transfers occurred between facilities under common ownership for 

Compliance Year’s 2012 to 2017 discrete year NOx RTCs.

Discrete NOx RTC trades with price in 2010 increased in total quantity traded 

and total value when compared to trades in 2009. The quantity of discrete NOx 

RTCs traded with price increased from 1,699 tons in calendar year 2009 to 2,194 

tons in calendar year 2010 and the total value of discrete NOx RTCs traded 

increased from $1.9 million in calendar year 2009 to $3 million in calendar year 

2010. The overall quantity of discrete NOx RTCs increased from 3,271 tons 
ANNUAL RECLAIM AUDIT

PAGE 2 - 11 MARCH 2011

traded in calendar year 2009 to 3,593 tons in calendar year 2010. Discrete SOx 

RTC trades with price in 2010 showed a significant decrease in both quantities 

traded and total value. The quantity traded with price decreased from 378 tons 

to 161 tons and the value of discrete SOx RTCs traded decreased from $0.3 

million to $0.08 million from calendar year 2009 to 2010, respectively. The 

overall quantity of discrete SOx RTCs declined from 933 tons to 379 tons. Figure 

2-5 illustrates the trading activity of discrete RTCs (excluding swaps) for calendar 

year 2010.

Figure 2-5

Calendar Year 2010 Trading Activity for Discrete RTCs (Excluding Swaps)

2,194 Tons

(192 Trades)

Discrete NOx

$3 Million Traded $82 Thousand Traded

1,399 Tons

(93 Trades)

218 Tons

(6 Trades)

161 Tons

(11 Trades)

RTC Traded with Price RTC Traded with $0 Price

Discrete SOx

IYB RTC Trading Activity

IYB RTCs include RTCs valid for a certain specified start year and continuing into 

perpetuity. In 2010, there were 29 IYB NOx trades and 14 IYB SOx trades. All 

of these IYB trades include 2010, 2011, or 2012 as the start year. Of the 29 IYB 

NOx trades, 13 trades were with price totaling 149 tons at $14.3 million 

(compared to 14 trades with price totaling 134 tons at $16.7 million in 2009). 

This represents a 23% drop in the 2010 average price for IYB NOx RTCs from 

the average price of 2009.

There were 10 IYB SOx RTC trades in calendar year 2010 with price totaling 277 

tons which was significantly higher than the 4 trades with price totaling 100 tons 
ANNUAL RECLAIM AUDIT

PAGE 2 - 12 MARCH 2011

traded in calendar year 2009. Moreover, the total value of these IYB SOx trades 

($30.2 million) was much higher than the total value in 2009 ($3.7 million), 

reflecting an almost 200% increase in average price for IYB SOx RTCs in 

calendar year 2010. This increase may have been caused by the thenanticipated rule amendment to the SOx RECLAIM program. In addition to trades 

with prices, there were also 16 IYB NOx trades totaling 148 tons and four IYB 

SOx trades totaling 52 tons traded with zero price. Figure 2-6 illustrates the 

calendar year 2010 IYB RTC trading activity excluding swap trades.

Figure 2-6

Calendar Year 2010 Trading Activity for IYB RTCs (Excluding Swaps)

149 Tons

(13 Trades)

IYB NOx

$14.3 Million Traded $30.2 Million Traded

148 Tons

(16 Trades)

52 Tons

(4 Trades)

277 Tons

(10 Trades)

IYB SOx

RTC Traded with Price RTC Traded with $0 Price

Trade data presented in this report, including historical data prior to 2001, are 

compiled strictly according to the new reporting methodology approved by the 

Governing Board in 2007. Swap information and details of discrete and IYB 

trades were not required to be provided by trade participants prior to the 

amendment of Rule 2007 – Trading Requirements in May 2001. In compiling 

data for calendar years 1994 through part of 2001, any trade registration 

involving infinite-year RTCs was considered as a single IYB trade and swap 

trades were assumed to be nonexistent. Trading activity since inception of the 

RECLAIM program is illustrated in Figures 2-7 through 2-10 (discrete NOx 

trades, discrete SOx trades, IYB NOx trades, and IYB SOx trades, respectively) 

based on the new trade reporting methodology.
ANNUAL RECLAIM AUDIT

PAGE 2 - 13 MARCH 2011

Figure 2-7

Discrete NOx RTCs Trades (Excluding Swaps) 559 11,785 5,437 4,872 5,135 4,720 7,228 4,172

2,810

3,258

2,479

2,606

2,896

3,394

2,401

1,699

2,194

7,500

65,263

38,356

15,220

9,220 8,399 6,929

4,295 2,734 2,556 2,583 1,733 2,191

2,909

1,976 1,572 1,399

$0.3 

$8.3 $4.4 $2.2 $2.1 $6.1 

$203.3 $206.1 

$12.4 $6.7 $4.4 $6.7 $13.2 

$21.1 

$4.8 $1.9 $3.0 

0

50

100

150

200

250

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Trading Value (million $)

NOx RTC Traded (tons)

Calendar Year Traded

Quantity Traded Without Price

Quantity Traded With Price

Total Price ($MM)

Figure 2-8

Discrete SOx RTCs Trades (Excluding Swaps)

5

3,052

5,172

232

992

1,051

2,220

1,953

798

343

150

262

300

37

959

378

161

286

14,120

16,815

3,195 2,428 2,390 2,206 1,675 787 711 243 445 938 1,000 528 555 218

$0.0 

$1.6 

$5.5 

$0.2 $0.2 $0.6 

$4.5 

$10.4 

$6.6 

$1.8 

$0.2 

$0.5 $0.3 $0.0 

$1.1 

$0.3 $0.1 

0

2

4

6

8

10

12

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Trading Value (million $)

SOx RTC Traded (tons)

Calendar Year Traded

Quantity Traded Without Price

Quantity Traded With Price

Total Price ($MM)
ANNUAL RECLAIM AUDIT

PAGE 2 - 14 MARCH 2011

Figure 2-9

IYB NOx RTCs Trades (Excluding Swaps) 86

0

0

405

1,448

438

184

417

109

388

557

565

433

233

246

134

149

5

10

258

2,384

780

1,706

713

291

986

563

801

655

425

816

363

146 148

$1.3 $0.0 $0.0 

$7.9 

$34.1 

$18.6 

$9.1 

$34.2 

$5.5 

$14.3 

$12.5 

$43.1 

$65.2 

$45.4 

$49.7 

$16.7 

$14.3 

0

10

20

30

40

50

60

70

0

1,000

2,000

3,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Trading Value (million $)

NOx RTC Traded (tons)

Calendar Year Traded

Quantity Traded Without Price

Quantity Traded With Price

Total Price ($MM)

Figure 2-10

IYB SOx RTCs Trades (Excluding Swaps)

0

0

0

429

50

55

51

307

148

111

0

142

242

155

147

100

277

0 0

150

1,862

514

954

291

229

680

8 229 106

280

636

48 17

52

$0.0 $0.0 $0.0 

$11.9 

$1.0 $0.8 $1.4 

$10.2 

$6.7 

$0.6 

$0.0 

$1.0 

$3.5 $3.7 $3.3 $3.7 

$30.2 

0

5

10

15

20

25

30

35

0

1,000

2,000

3,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Trading Value (million $)

SOx RTC Traded (tons)

Calendar Year Traded

Quantity Traded Without Price

Quantity Traded With Price

Total Price ($MM)
ANNUAL RECLAIM AUDIT

PAGE 2 - 15 MARCH 2011

Swap Trades

In addition to traditional trades of RTCs for a price, RTC swaps also occurred 

between the trading partners. There were swaps of RTCs with different zones, 

cycles, expiration years, and pollutants in 2010. Nine of the NOx RTC swaps in 

calendar year 2010 involved IYB RTCs. In some cases, swaps involved a 

combination of RTCs and cash payment as a premium. Trading parties 

swapping RTCs were required to report the agreed upon price of RTCs for each 

trade even though, with the exception of the above-described premiums, no 

money was actually exchanged. Over $10.6 million in total value was reported 

from RTCs that were swapped in 2010. The swap values are based on the 

prices reported on the RTC trade registrations. Since RTC swap trades occur 

when two trading partners exchange RTCs, values reported on both trades 

involved in the exchange are included in the calculation of the total value 

reported. However, in cases where commodities other than RTCs are involved in 

the swap, these commodity values are not included in the above reported total 

value. (For example, in the case of a swap of NOx RTCs valued at $10,000 for 

another set of RTCs valued at $8,000 together with a premium of $2,000, the 

value of such a swap would have been reported at $18,000 under Table 2-2).

For calendar years that have swap transactions with large values (e.g., 2009) the 

inclusion of swap transactions in the average trade price calculations would 

result in calculated average annual prices dominated by swap transactions, and 

therefore, may not be representative of market prices actually paid for RTCs. 

Under the Governing Board-approved price reporting methodology, prices of 

swap trades are likewise excluded from analysis of average trade prices because 

the values of the swap trades are solely based upon prices agreed upon between 

trading partners and do not reflect actual funds transferred. Tables 2-2 and 2-3 

present the calendar years 2001 through 2010 RTC swaps for NOx and SOx, 

respectively.

Table 2-2

NOx Registrations Involving Swaps

Calendar Year NOx

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Value ($ millions) $24.29 $14.31 $7.70 $3.74 $3.89 $7.29 $4.14 $8.41 $55.76 $3.73

IYB RTC Swapped with 

Price (tons) 6 64 70 0 19 15 0 4 394 18

Discrete RTC Swapped 

with Price (tons) 612 1,702 1,198 1,730 885 1,106 820 1,946 1,188 929

Number of Swap 

Registrations with Price 71 94 64 90 53 49 43 48 37 25

Total Number of Swap 

Registrations 78 94 64 90 53 49 49 50 42 31
ANNUAL RECLAIM AUDIT

PAGE 2 - 16 MARCH 2011

Table 2-3

SOx Registrations Involving Swaps

Calendar Year SOx

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Value ($ millions) $1.53 $6.11 $5.88 $0.39 $2.16 $0.02 $0.00 $0.40 $3.63 $6.89

IYB RTC Swapped with 

Price (tons) 18 27 21 0 44 0 0 0 55 79

Discrete RTC Swapped 

with Price (tons) 240 408 656 162 228 24 0 197 401 417

Number of Swap 

Registrations with Price 3 30 32 13 13 2 0 5 9 16

Total Number of Swap 

Registrations 4 30 32 13 13 2 0 8 10 18

RTC Trade Prices

Discrete-Year RTC Prices

In calendar year 2010, the average annual prices for discrete-year NOx RTCs 

were $741 per ton for Compliance Year 2009, $2,367 per ton for Compliance 

Year 2010, and $8,052 per ton for Compliance Year 2011. The average annual 

prices for discrete-year SOx RTCs were $451 per ton for Compliance Year 2009 

and $1,286 per ton for Compliance Year 20104

Investors were involved in a significant proportion of discrete-year RTC trades in 

calendar year 2010. They were involved with 77% with respect to value and 66% 

with respect to volume for discrete-year NOx RTCs and 92% with respect to 

value and 86% with respect to volume for discrete-year SOx RTCs.

. Figures 2-11 and 2-12 present 

the average annual prices for discrete-year NOx and SOx RTCs during calendar 

years 2002 through 2010, respectively. Note that prices for any Compliance 

Year RTC may also be shown for the following calendar year, since the price for 

a Compliance Year RTC is based on sales of both Cycle 1 RTCs expiring in 

December of that year as well as Cycle 2 RTCs expiring in June of the following 

year. Furthermore, Cycle 1 RTCs expiring in December may be traded during 

the 60-day reconciliation period following the expiration date, which extends to 

the next calendar year.

 4 There were no discrete-year 2011 SOx RTCs traded in calendar year 2010
ANNUAL RECLAIM AUDIT

PAGE 2 - 17 MARCH 2011

Figure 2-11

Average Annual Prices for Discrete-Year NOx RTCs during Calendar Years 2002 

through 2010

Calendar Year 2002

Calendar Year 2003 Calendar Year 2004 Calendar Year 2005

Calendar Year 2006

Calendar Year 2007

Calendar Year 2008

Calendar Year 2009

Calendar Year 2010

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

NOx Price ($/Ton)

RTC For Compliance Year

Calendar Year 2002

Calendar Year 2003

Calendar Year 2004

Calendar Year 2005

Calendar Year 2006

Calendar Year 2007

Calendar Year 2008

Calendar Year 2009

Calendar Year 2010

Figure 2-12

Average Annual Prices for Discrete-Year SOx RTCs during Calendar Years 2002 

through 2010

Calendar Year 2002

Calendar Year 2003

Calendar Year 2004 Calendar Year 2005

Calendar Year 2005

Calendar Year 2006

Calendar Year 2007

Calendar Year 2008

Calendar Year 2009 Calendar Year 2010

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2002 2003 2004 2005 2006 2007 2008 2009 2010

SOx Price ($/Ton)

RTC For Compliance Year

Calendar Year 2002

Calendar Year 2003

Calendar Year 2004

Calendar Year 2005

Calendar Year 2006

Calendar Year 2007

Calendar Year 2008

Calendar Year 2009

Calendar Year 2010
ANNUAL RECLAIM AUDIT

PAGE 2 - 18 MARCH 2011

Twelve-Month Rolling Average Prices of Compliance Year 2010 NOx RTCs

The Governing Board amended Rule 2002(f) in January 2005 to reduce 

Compliance Year 2007 and beyond NOx RTC holdings by 22.5% over five years 

(11.7% in 2007 and an additional 2.7 % in each of the years 2008 through 2011), 

to convert the 10.8% adjustment applied over years 2008 through 2011 to Nontradable/Non-usable RTCs, and to issue them to the parties that held the RTCs 

prior to conversion. These amendments also directed the Executive Officer to 

calculate the 12-month rolling average price of NOx RTCs (“rolling average 

price”) “for all trades for the current compliance year” excluding “RTC 

transactions reported at no price.” Pursuant to the RTC price reporting and 

averaging methodology approved by the Governing Board in September 2007, 

“swap” transactions (the exchange of RTCs for other RTCs or for other emissions 

credits) were also excluded from the calculation of rolling average prices. In the 

event that this rolling average price exceeds $15,000 per ton, the Executive 

Officer is required to report the rolling average price to the Governing Board. If 

the Governing Board determines that the rolling average price exceeds $15,000 

per ton, AQMD is required to review the compliance aspects of the RECLAIM 

program and the Governing Board may direct the Executive Officer to convert the 

annual incremental Non-tradable/Non-usable RTCs (2.7%) back to active, 

tradable RTCs valid for the compliance year in which Cycle 1 facilities are 

operating at the time the finding is made. In its resolution amending Rule 

2002(f), the Governing Board directed the Executive Officer to report the NOx 

RTC 12-month rolling average price data to the Stationary Source Committee 

(SSC) at least quarterly. Such reports have been prepared by AQMD staff and 

submitted the SSC on a quarterly basis, accordingly. To date the twelve-month 

rolling average prices have not exceeded the $15,000 per ton threshold.

As shown in Table 2-4, the twelve-month rolling average prices of Compliance 

Year 2010 NOx RTCs have generally been declining since January 2010 and 

have not exceeded the $15,000 per ton threshold specified in Rule 2002(f). 

Therefore, it was not necessary for the Executive Officer to report the rolling 

average price to the Governing Board or for the Governing Board to require a 

compliance audit and consider reinstating the incremental NOx RTC adjustment 

for Compliance Year 2010. For Compliance Year 2009 NOx RTCs, the same 

findings were true and were included in the last RECLAIM Annual Audit Report 

submitted to the Governing Board in March 2010.
ANNUAL RECLAIM AUDIT

PAGE 2 - 19 MARCH 2011

Table 2-4

Twelve-Month Rolling Average Prices of Compliance Year 2010 NOx RTCs

Reporting Month 12-Month Period Average Price

January 2010 January through December 2009 $4,780 per ton

February 2010 February 2009 through January 2010 $4,462 per ton

March 2010 March 2009 through February 2010 $4,534 per ton

April 2010 April 2009 through March 2010 $4,542 per ton

May 2010 May 2009 through April 2010 $4,038 per ton

June 2010 June 2009 through May 2010 $4,090 per ton

July 2010 July 2009 through June 2010 $4,094 per ton

August 2010 August 2009 through July 2010 $4,025 per ton

September 2010 September 2009 through August 2010 $3,655 per ton

October 2010 October 2009 through September 2010 $3,596 per ton

November 2010 November 2009 through October 2010 $3,367 per ton

December 2010 December 2009 through November 2010 $3,351 per ton

January 2011 January through December 2010 $2,367 per ton

Average Price for NOx RTCs Nearing Expiration

Generally, RTC prices decrease as their expiration dates approach. RTC prices 

are usually lowest during the 60 day-period following their expiration date during 

which facilities are allowed to trade to reconcile by securing RTCs to cover their

emissions. This general trend has been repeated every year since 1994 except 

for Compliance Years 2000 and 2001 (during the California energy crisis), when 

NOx RTC prices increased as the expiration dates approached because the 

power plants NOx emissions increased significantly and there was a shortage of 

NOx RTCs. In calendar year 2010, prices for NOx RTCs that expired within the 

same calendar year followed the general trend of RTC prices declining over the 

course of the Compliance Year.

The bi-monthly average price for these near-expiration NOx RTCs is shown in 

Figure 2-13 to illustrate the general price trend for these RTCs. The general 

declining trend of RTC prices nearing expiration indicates that there was an 

adequate supply to meet RTC demand during the final reconciliation period 

following the end of the compliance years. A similar analysis is not performed for 

the price of SOx RTCs nearing expiration because there are not enough SOx 

trades over the course of the year to yield meaningful data, however SOx RTC 

prices have generally followed the same trends.
ANNUAL RECLAIM AUDIT

PAGE 2 - 20 MARCH 2011

Figure 2-13

Bi-Monthly Average Price for NOx RTCs near Expiration

$-

$2,000 

$4,000 

$6,000 

$8,000 

$10,000 

$12,000 

$14,000 

Jan-Feb '06

Mar-Apr '06

May-Jun '06

Jul-Aug '06

Sep-Oct '06

Nov-Dec '06

Jan-Feb '07

Mar-Apr '07

May-Jun '07

Jul-Aug '07

Sep-Oct '07

Nov-Dec '07

Jan-Feb '08

Mar-Apr '08

May-Jun '08

Jul-Aug '08

Sep-Oct '08

Nov-Dec '08

Jan-Feb '09

Mar-Apr '09

May-Jun '09

Jul-Aug '09

Sep-Oct '09

Nov-Dec '09

Jan-Feb '10

Mar-Apr '10

May-Jun '10

Jul-Aug '10

Sep-Oct '10

Nov-Dec '10

NOx Price ($/ton)

Month of Trade

RTC expiring Dec-2006

RTC expiring Jun-2007

RTC expiring Dec-2007

RTC expiring Jun-2008

RTC expiring Dec-2008

RTC expiring Jun-2009

RTC expiring Dec-2009

RTC expiring Jun-2010

RTC expiring Dec-2010

Note: A limited set of data points are used for clarity.

IYB RTC Prices

The average annual price for IYB NOx RTCs traded in calendar year 2010 is 

$95,761 per ton, which is significantly lower than the average annual price of 

$124,576 per ton traded in calendar year 2009. The average annual price for 

IYB SOx RTCs in calendar year 2010 is $109,219 per ton, substantially higher 

than the $36,550 per ton traded in calendar year 2009. This increase in IYB SOx 

RTC price and trading activity may have been caused by the anticipation of the 

rule amendment to the SOx RECLAIM program. Data regarding IYB RTCs 

traded with price (excluding swap trades) for NOx and SOx RTCs and their 

average annual prices since 1994 are summarized in Tables 2-5 and 2-6, 

respectively. In calendar year 2010, the average annual IYB RTC prices did not 

exceed the $566,076 per ton of NOx RTCs or the $407,575 per ton of SOx RTCs 

program review thresholds established by the Governing Board pursuant to 

California Health and Safety Code §39616(f).

Investors were again involved in a significant proportion of IYB trades in calendar 

year 2010. They were involved with 32% with respect to value and 27% with 

respect to volume for IYB NOx RTCs. Investors were involved either as buyer or 

seller in each IYB SOX RTCs trade (100% for both value and volume). A more 

detailed discussion of investor participation is presented later in this chapter.
ANNUAL RECLAIM AUDIT

PAGE 2 - 21 MARCH 2011

Table 2-5

IYB NOx Pricing (Excluding Swap Registrations)

Calendar 

Year

Total 

Reported 

Value ($MM)

IYB RTC 

Traded with 

Price (tons)

Number of 

IYB 

Registrations 

With Price

Average 

Price ($/ton)

1994* $1.3 85.7 1 $15,623

1995* $0.0 0 0 N/A

1996* $0.0 0 0 N/A

1997* $7.9 404.6 9 $19,602

1998* $34.1 1,447.6 23 $23,534

1999* $18.6 438.3 19 $42,437

2000* $9.1 184.2 15 $49,340

2001* $34.2 416.9 25 $82,013

2002 $5.5 109.5 31 $50,686

2003 $14.3 388.3 28 $36,797

2004 $12.5 557.0 52 $22,481

2005 $43.1 565.3 71 $76,197

2006 $65.2 432.9 50 $150,665

2007 $45.4 233.5 25 $194,369

2008 $49.7 245.6 27 $202,402

2009 $16.7 134.2 14 $124,576

2010 $14.3 149.0 13 $95,761

* No information regarding swap trades is available for trades occurring in 1994 through 2001.

Table 2-6

IYB SOx Pricing (Excluding Swap Registrations)

Calendar 

Year

Total 

Reported 

Value ($MM)

IYB RTC 

Traded with 

Price (tons)

Number of 

IYB 

Registrations 

With Price

Average 

Price ($/ton)

1994* $0.0 0 0 N/A

1995* $0.0 0 0 N/A

1996* $0.0 0 0 N/A

1997* $11.9 429.2 7 $27,738

1998* $1.0 50.0 1 $19,360

1999* $0.8 55.0 3 $14,946

2000* $1.4 50.6 5 $27,028

2001* $10.2 306.8 8 $33,288

2002 $6.7 147.5 5 $45,343

2003 $0.6 110.9 1 $5,680

2004 $0.0 0.0 0 N/A

2005 $1.0 141.5 3 $7,409

2006 $3.5 241.7 12 $14,585

2007 $3.7 155.2 5 $23,848

2008 $3.3 146.8 5 $22,479

2009 $3.7 100.0 4 $36,550

2010 $30.2 277.0 10 $109,219

* No information regarding swap trades is available for trades occurring in 1994 through 2001.
ANNUAL RECLAIM AUDIT

PAGE 2 - 22 MARCH 2011

Market Participants

RECLAIM market participants have traditionally included RECLAIM facilities, 

brokers, commodity traders, and private investors. Starting in calendar year

2004, mutual funds joined the traditional participants in RTC trades. Market 

participation expanded further in 2006, when foreign investors started 

participating in RTC trades.

RECLAIM facilities are the original sources and users of RTCs. They usually sell 

their surplus RTCs by the end of the compliance year or when they have a longterm decrease in emissions. Brokers match buyers and sellers, and usually do 

not purchase or own RTCs. Commodity traders and private investors actually 

invest in and own RTCs and seek profit by trading them. Three mutual funds and

two foreign entities are registered with AQMD for the purpose of trading RTCs. 

The three mutual funds are controlled by a common fund manager. These three 

mutual funds held 2.5% (239 tons) of the total IYB NOx RTCs and 5.4% (233 

tons) of the total IYB SOx RTCs as of the end of calendar year 2009. During 

calendar year 2010, the three funds sold all of their IYB SOx RTCs. There was 

no trading activity for IYB NOx RTCs in these three accounts during this same 

period. For discussion in this report, “investors” include everyone who holds 

RTCs and is not a RECLAIM facility permit holder or a broker.

Investors’ Participation

Commodity traders, mutual funds, and private investors invest in and own RTCs 

and seek profit by trading them. Investors’ involvement in discrete NOx and SOx 

trades registered with price in calendar year 2010 is illustrated in Figures 2-14 

and 2-15. In compiling data for these two figures, staff removed brokers’ 

involvement5

 5 The established convention for registering broker-involved RTC trades is to do so in two sequential steps: 

first from the seller to the broker, then from the broker to the buyer. However, to avoid double counting of 

brokered trades in this analysis, they are treated as if each brokered trade had been registered from the 

seller to the buyer in a single step. Trades reported without price are excluded from this analysis because 

they typically represent RTC exchanges between facilities under common ownership and trades 

associated with changes of facility operator, and are therefore, not reflective of market behavior.

. Figure 2-14 is based on total value of discrete NOx and SOx 

RTCs traded, and shows that investors were involved in 77% and 92%, 

respectively, of the NOx and SOx trades reported by value. Figure 2-15 is based 

on discrete volume traded with price and shows that investors were involved in 

66% and 86% of the NOx and SOx trades, respectively. Figures 2-16 and 2-17

provide similar data for both IYB NOx and SOx trades, and show that investors 

were involved in 32% of IYB NOx trades and 100% of IYB SOx trades on a 

reported value basis, and 27% of IYB NOx and 100% of IYB SOx trades on the 

basis of the number of pounds traded with price. As of the end of calendar year 

2010, investors holding of IYB NOx RTCs remained unchanged from the end of 

calendar year 2009 at 5.5%. However, they decreased their holding of IYB SOx 

RTCs substantially to 0.01% from 5.5% at the end of calendar year 2009.
ANNUAL RECLAIM AUDIT

PAGE 2 - 23 MARCH 2011

Figure 2-14

Investor-Involved Discrete NOx and SOx Trades Based on Value Traded

7%

60%

10%

23%

NOx

Investor sales to investor Investor sales to non-investor

8%

84%

8%

SOx

Non-investor sales to investor Non-investor sales to non-investor

Figure 2-15

Investor-Involved Discrete NOx and SOx Trades Based on Volume Traded with Price

10%

35%

21%

34%

NOx

13%

73%

14%

SOx

Investor sales to investor Investor sales to non-investor

Non-investor sales to investor Non-investor sales to non-investor
ANNUAL RECLAIM AUDIT

PAGE 2 - 24 MARCH 2011

Figure 2-16

Investor-Involved IYB NOx and SOx Trades Based on Value Traded

1%

14%

17%

68%

NOx

94%

6%

SOx

Investor sales to investor Investor sales to non-investor

Non-investor sales to investor Non-investor sales to non-investor

Figure 2-17

Investor-Involved IYB NOx and SOx Trades Based on Volume Traded with Price

1%

12%

14%

73%

NOx

91%

9%

SOx

Investor sales to investor Investor sales to non-investor

Non-investor sales to investor Non-investor sales to non-investor
ANNUAL RECLAIM AUDIT

PAGE 2 - 25 MARCH 2011

The supply of IYB RTCs available for sale has been mainly from facilities that 

have permanently shut down. In past years, investors have purchased IYB 

RTCs from RECLAIM facilities that were shutting down. However, the four

RECLAIM facilities that shut down during Compliance Year 2009 (refer to 

Chapter 1) held a total of 3.2 tons of IYB NOx RTCs. None of this amount was

sold to investors, 2.1 tons were sold to other RECLAIM facilities and the 

remaining 1.1 tons have expired and not been sold or transferred.

Investors’ Impacts on RTC Market

Theoretically, the role of investors in this market is to provide capital for installing 

air pollution control equipment that costs less than the market value of credits. In 

addition, investors can also improve price competitiveness. This market theory 

may not fully apply to RECLAIM due to the uniqueness of the program in that 

RECLAIM facility operators have no substitute for RTCs, and pollution controls 

cannot be implemented within a short time period. That is, there is no alternative 

source of credits available to RECLAIM facilities when RTC prices increase (they 

do not have the option to switch to another source of credits when RTCs become 

expensive). Therefore, they may be at the mercy of owners of surplus or 

investor-owned RTCs in the short term, particularly during times of rapid price 

increases, as evidenced in 2000 and 2001 during the California energy crisis.

To put investors’ holdings in context, RECLAIM facilities have generally held 

back approximately 10% of their allocations each compliance year as a margin to 

ensure that they did not inadvertently find themselves exceeding (failing to 

reconcile by securing sufficient RTCs to cover their emissions) their allocations if 

their reported emissions were increased as the result of any problems or errors 

discovered by AQMD annual audits. For Compliance Year 2009, the total 

RECLAIM NOx emissions were 7,317 tons. However, like Compliance Year 

2008, Compliance Year 2009 spans a period marked by a depressed economy 

with low production at many manufacturing facilities and thus low emissions 

compared to historical levels. If the economy were to improve, total RECLAIM 

NOx emissions would likely approach recent historical levels. RECLAIM NOx 

emissions as recent as Compliance Year 2007 totaled 8,794 tons. If emissions 

were to remain constant at that 2007 level, the NOx RTC surplus in 2011 would 

be 883 tons (9% of allocation)6

While it can be argued that the holding of IYB NOx RTCs by investors as a group 

is still small relative to the total supply of IYB NOx RTCs (5.5% overall), there is 

no clear basis to estimate the level of IYB RTCs available for sale by noninvestors or the extent of additional emissions reductions that will be achieved in

calendar year 2011 and beyond. IYB RTCs represent an even more critical 

aspect of the program because these streams of RTCs are sought after to 

support growth at new or existing facilities. Accordingly, active facilities are less 

likely to sell their future year RTCs as IYB. As a result, new RECLAIM facilities 

, which is less than the traditional 10% compliance 

margin. Therefore, the current aggregate investors’ holdings of 5.5% of NOx 

RTCs valid for Compliance Year 2011 and beyond (IYB RTCs) have the potential 

to result in a sellers’ market.

 6 Assuming emissions in 2011 stay at Compliance Year 2009 level, the NOx RTC surplus would be at 

24.4% [(9,677 - 7,317)/9,677].
ANNUAL RECLAIM AUDIT

PAGE 2 - 26 MARCH 2011

or facilities with emissions increases are potentially at the mercy of investors 

holding IYB RTCs. Moreover, investors may have the potential for greater 

market influence if the recent rise in investor-held IYB NOx RTCs continues.

On the other hand, overall emissions in RECLAIM will certainly change from now 

through 2011, and can be affected by various factors including installation of 

more emission control equipment, production changes, and shifts in industry 

sectors and in the economy in general. In January 2005, AQMD identified costeffective control opportunities outside the power producing industry that would 

amount to 3.7 tons per day of additional NOx reductions based on historical 

production rates. The significance of investors’ holdings will certainly depend on 

the ability of RECLAIM facilities to generate adequate emissions reductions in 

time to dampen the effect of a sellers’ market that may exist if demand surges in 

a short period of time, as it did during the California energy crisis of 2000-2001. 

Proposals to generate emission reduction credits from sources outside of 

RECLAIM (i.e., mobile and area sources) can also dampen sudden price 

increases. Nonetheless, AQMD staff remains concerned about investor 

participation and is evaluating ways to ensure that such participation does not 

adversely impact the RECLAIM program.

Other Types of RTC Transactions and Uses

Another type of RTC trade, besides traditional trading and swapping activities, is 

a trade involving the contingent right (option) to buy or sell RTCs. In those 

transactions, one party pays a premium for the right to purchase or sell RTCs 

owned by the other party at a pre-determined price within a certain time period. 

Until RTCs are transferred from seller to buyer, prices for options are not 

reported, because the seller is not paid for the actual RTCs, but only for the right 

to purchase or sell the RTCs at a future date. These rights may or may not be 

actually exercised. RTC traders are obligated to report options to the AQMD 

within five days of reaching an agreement. These reports are posted on the 

AQMD website. There was no trade involving the contingent right (option) to buy 

or sell RTCs in calendar year 2010.

As in prior years, RTCs were used in other programs during calendar year 2010. 

RTCs were surrendered to mitigate impacts from construction projects under the 

California Environmental Quality Act. RTCs were also surrendered to satisfy 

variance conditions and in settlements with the AQMD. In calendar year 2010, a 

total of 37.1 tons of NOx RTCs and less than 0.01 tons of SOx RTCs were 

surrendered to mitigate impacts from construction projects and to satisfy variance 

conditions. These consisted solely of discrete year RTCs. The majority of these 

RTCs were retired to satisfy excess emissions under variance conditions.
ANNUAL RECLAIM AUDIT

PAGE 3 - 1 MARCH 2011

CHAPTER 3

EMISSION REDUCTIONS ACHIEVED

Summary

For Compliance Year 2009, aggregate NOx emissions were below total 

allocations by 29% and aggregate SOx emissions were below total allocations by 

31%. Therefore, based on audited emissions, it can be concluded that RECLAIM 

has clearly achieved its targeted emission reductions. Finally, no emissions 

associated with breakdowns were excluded from reconciliation with facility 

allocations in Compliance Year 2009. Accordingly, no mitigation is necessary to 

offset excluded emissions due to approved Breakdown Emission Reports.

Background

One of the major objectives of the annual RECLAIM program audits is to assess 

whether RECLAIM is achieving its targeted emission reductions. The annual 

allocations issued to RECLAIM facilities reflect required emission reductions 

under the subsumed command-and-control rules and control measures. In 

January 2005, the Board adopted an amendment to Rule 2002 to further reduce 

RECLAIM NOx allocations to implement the latest BARCT. The adopted NOx 

allocation reductions are to be phased in during Compliance Years 2007 through 

2011. These changes will result in cumulative NOx allocation reductions of 

22.5% from all RECLAIM facilities when fully implemented in Compliance Year 

2011, with the biggest single-year reduction of 11.7% in Compliance Year 2007.

At the time previous annual audit reports were prepared, full audits of all facility 

records for all prior years had not been completed. Consequently, those annual 

audit reports were based on a mixture of both audited as well as reported 

emissions (APEP report and/or QCERs) data when fully audited emissions were 

not available. These emission data were not updated in subsequent audit 

reports to reflect additional completed audits. In the Compliance Year 2007 

Annual Audit Report (March 2009), staff committed to updating all years’ 

emissions (back to Compliance Year 1994) with audited data. The Compliance 

Year 2008 annual report updated emissions data for previous compliance years 

with audited data. Similarly, all emissions data presented in this annual audit 

report are compiled from audited facility emissions.

Emissions Audit Process

Since the inception of the RECLAIM program, AQMD has conducted regular 

audits of the emissions data submitted by RECLAIM facilities to ensure the 

integrity and reliability of facility reported data. The process begins when each 

facility submits a comprehensive APEP report within sixty days of the end of 

each compliance year. AQMD staff initially conducts a preliminary review of the 

APEP reports to assess the completeness and accuracy of reported emissions 

and compliance with allocations. If it is determined that a facility’s APEPreported emissions are in excess of its quarterly or year-to-date allocations, 

enforcement action is taken. The audit process is then implemented, including
ANNUAL RECLAIM AUDIT

PAGE 3 - 2 MARCH 2011

field inspections to check the equipment, monitoring devices, and operational 

records, as well as review of recorded data and calculations to verify accuracy of 

emission reports submitted during the course of the year (daily, monthly, 

quarterly, and annual submitted reports).

Common findings from these audits reveal that some facilities made errors in 

quantifying their emissions such as arithmetic errors, use of inappropriate 

emission factors or adjustment factors (e.g., pressure correction factors and bias 

adjustment factors), use of emission calculation methodologies not allowed under 

the rules, or inappropriate use of Missing Data Procedures (MDP). Other 

common mistakes include reporting non-RECLAIM emissions and excluding 

reportable emissions. AQMD staff adjusts the APEP-reported emissions based 

on audit results, as necessary, to correct such errors. Whenever AQMD staff 

finds discrepancies, they discuss the findings with the facility operators, and 

provide the operators an opportunity to review changes resulting from facility 

audits and to present additional data or arguments in support of the data stated 

in their APEP reports. This rigorous audit process, although resource intensive, 

reinforces RECLAIM’s emissions monitoring and reporting requirements and 

enhances the validity and reliability of the reported emissions data. The audited 

emissions are used to determine if a facility complied with its allocations. The 

most recent five compliance years’ audited emissions for each facility are posted 

on the AQMD’s web page after the audits are completed.

As mentioned previously, this annual audit report reflects up-to-date audited NOx 

and SOx emissions data. However, staff is currently working with four facilities to 

resolve outstanding issues involving emission calculations performed by 

computers that need further analysis. The impact of this analysis is not expected 

to change the overall findings related to RECLAIM program’s aggregate 

compliance. Any necessary adjustments for these four facilities, however, will be

reflected in next year’s annual RECLAIM audit report.

Emission Trends and Analysis

RECLAIM achieves its emission reduction goals on an aggregate basis by 

ensuring that annual emissions in total are below allocations. It is important to 

understand that the RECLAIM program is successful at achieving these emission 

reduction goals even when some individual RECLAIM facilities exceed their RTC 

account balances, provided aggregate RECLAIM emissions do not exceed 

aggregate RTCs issued. Therefore, aggregate NOx or SOx emissions from all 

RECLAIM sources are the basis for determining whether the programmatic 

emission reduction goals for that emittant are met each year. In aggregating 

emissions from RECLAIM facilities, audited emissions are used in the Annual 

RECLAIM Report for that Compliance Year. Issues related to five facilities’ 

Compliance Year 2008 NOx emissions were resolved and staff updated Table 3-

1 to reflect a net decrease in Compliance Year 2008’s aggregate NOx emissions 

of 13 tons. Table 3-1 and Figure 3-1 show aggregate NOx emissions based on 

audited emission data for Compliance Years 1994 through 2009.

Table 3-1 and Figure 3-1 show that, programmatically, there were excess NOx 

RTCs remaining after accounting for fully audited NOx emissions for every 

compliance year since 1994, except for Compliance Year 2000 when NOx 

emissions exceeded the total RTC allocations for that year due to the California 
ANNUAL RECLAIM AUDIT

PAGE 3 - 3 MARCH 2011

energy crisis. Even though there was a programmatic reduction to Compliance 

Year 2009 NOx holdings as part of the January 2005 rule amendments, 

Compliance Year 2009 NOx emissions still achieved aggregate RECLAIM 

emission reduction goals and were below the total allocations by 29%. Given the 

fact that there were programmatic reductions in NOx allocations starting with 

Compliance Year 2007 yet the percentage of leftover NOx RTCs in the program 

remains at 20% or higher for the last five compliance years, including 

Compliance Year 2009. There may be other forces at play to cause such results 

in addition to actual emission reductions implemented through the application of 

air pollution control systems by RECLAIM facilities. Potentially, the effects of the 

nation’s economic downturn and slow recovery over the last couple of years may 

also be a contributor to lower aggregate NOx and SOx emissions in the 

RECLAIM universe. Whether this development has short term or long lasting 

impacts is yet to be seen.

Table 3-1

Annual NOx Emissions for Compliance Years 1994 through 2009

Compliance

Year

Audited 

Annual 

NOx 

Emissions1

(tons)

Audited 

Annual 

NOx 

Emissions 

Change

from 1994

(%)

Total

NOx 

RTCs2

(tons)

NOx 

RTCs

Left Over

(tons)

NOx 

RTCs

Left Over

(%)

1994 25,420 0% 40,534 15,114 37%

1995 26,632 4.8% 36,484 9,852 27%

1996 24,414 -4.0% 32,742 8,328 25%

1997 21,258 -16% 28,657 7,399 26%

1998 21,158 -17% 24,651 3,493 14%

1999 20,889 -18% 20,968 79 0.38%

2000 19,148 -25% 17,208 -1,940 -11%

2001 14,779 -42% 15,617 838 5.4%

2002 11,201 -56% 14,111 2,910 21%

2003 10,342 -59% 12,485 2,143 17%

2004 10,134 -60% 12,477 2,343 19%

2005 9,642 -62% 12,484 2,842 23%

2006 9,152 -64% 12,486 3,334 27%

2007 8,794 -65% 11,046 2,252 20%

2008 8,346 -67% 10,705 2,359 22%

2009 7,317 -71% 10,377 3,060 29% 1 The RECLAIM universe is divided into two cycles with compliance schedules staggered by six 

months. Compliance years for Cycle 1 facilities run from January 1 through December 31 and 

Cycle 2 compliance years are from July 1 through June 30. 2 Total RTCs = Allocations + Converted ERCs.
ANNUAL RECLAIM AUDIT

PAGE 3 - 4 MARCH 2011

Figure 3-1

NOx Emissions and Available RTCs

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

NOx (tons)

Compliance Year

Total RTC Supply

Emissions

Similar to Table 3-1 and Figure 3-1 for NOx, Table 3-2 presents aggregate 

annual SOx emissions data for each compliance year based on audited 

emissions, and Figure 3-2 compares these audited aggregate annual SOx 

emissions with the aggregate annual SOx RTC supply. Furthermore, after 

resolving outstanding issues related to two facilities’ Compliance Year 2008 SOx 

emissions, staff updated Table 3-2 to reflect a net decrease in Compliance Year 

2008’s aggregate SOx emissions of 47 tons. As shown in Table 3-2 and Figure 

3-2, RECLAIM facilities have not exceeded their SOx allocations on an 

aggregate basis in any Compliance Year since program inception. For 

Compliance Year 2009, SOx emissions were below total allocations by 31%. 

Similar to NOx RTC leftovers, the SOx RTC leftovers for the last two compliance 

years remains in excess of 20%. The data indicates that RECLAIM met its 

programmatic SOx emission reduction goals and demonstrated equivalency in 

SOx emission reductions compared to the subsumed command-and-control rules 

and control measures. Based on updated emissions taken from audited data, 

annual SOx emissions have followed a general downward trend, except for slight 

increases in Compliance Years 1997, 2005, and 2007 compared to their 

respective previous year.
ANNUAL RECLAIM AUDIT

PAGE 3 - 5 MARCH 2011

Table 3-2

Annual SOx Emissions for Compliance Years 1994 through 2009

Compliance

Year

Audited 

Annual SOx 

Emissions1

(tons)

Audited 

Annual 

SOx 

Emissions 

Change

from 1994

(%)

Total

SOx 

RTCs2

(tons)

SOx 

RTCs

Left Over

(tons)

SOx 

RTCs

Left Over

(%)

1994 7,230 0% 10,335 3,105 30%

1995 8,508 18% 9,685 1,177 12%

1996 6,731 -6.9% 8,976 2,245 25%

1997 7,048 -2.5% 8,317 1,269 15%

1998 6,829 -5.5% 7,592 763 10%

1999 6,420 -11% 6,911 491 7.1%

2000 5,966 -17% 6,194 228 3.7%

2001 5,056 -30% 5,567 511 9.2%

2002 4,223 -42% 4,932 709 14%

2003 3,968 -45% 4,299 331 7.7%

2004 3,597 -50% 4,299 702 16%

2005 3,663 -49% 4,300 637 15%

2006 3,610 -50% 4,282 672 16%

2007 3,759 -48% 4,286 527 12%

2008 3,319 -54% 4,280 961 22%

2009 2,949 -59% 4,280 1,331 31% 1 The RECLAIM universe is divided into two cycles with compliance schedules staggered by six 

months. Compliance years for Cycle 1 facilities run from January 1 through December 31 and 

Cycle 2 compliance years are from July 1 through June 30. 2 Total RTCs = Allocations + Converted ERCs.
ANNUAL RECLAIM AUDIT

PAGE 3 - 6 MARCH 2011

Figure 3-2

SOx Emissions and Available RTCs

0

2,000

4,000

6,000

8,000

10,000

12,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

SOx (tons)

Compliance Year

Total RTC Supply

Emissions

Comparison to Command-and-Control Rules

RECLAIM subsumed a number of command-and-control rules1

 1

 See Tables 1 and 2 of Rule 2001.

and sought to 

achieve reductions equivalent to these subsumed rules. RECLAIM facilities are 

exempt from the subsumed rules’ requirements that apply to SOx or NOx 

emissions once the facilities comply with the applicable monitoring requirements 

of Rules 2011 and 2012, respectively. During Compliance Year 2009, one rule, 

Regulation IX – Standards of Performance for New Stationary Sources, was 

amended, which had the potential to impact NOx or SOx sources at RECLAIM 

facilities. Amended April 3, 2009, Regulation IX incorporated new or amended 

federal standards by reference. Seven actions enacted by USEPA in 2008, and 

incorporated by reference, affect facilities with stationary spark ignition internal 

combustion engines, facilities manufacturing synthetic organic chemicals, and 

petroleum refineries. These new source performance standards cover new 

standards for stationary spark ignition internal combustion engines; stay certain 

standards for equipment leaks of volatile organic compounds (VOCs) in the 

synthetic organic chemicals manufacturing industry and petroleum refineries; 

impose new standards for new, modified, or reconstructed process units at 

petroleum refineries; and provide temporary, interim and unlimited stays for 

certain provisions of the new standards for petroleum refineries. However, since 

Regulation IX was not subsumed by RECLAIM rules, the requirements of 

Regulation IX would apply equally to equipment at facilities under both command 

and control rules, as well as RECLAIM rules.
ANNUAL RECLAIM AUDIT

PAGE 3 - 7 MARCH 2011

Program Amendments

There were no new amendments to Regulation XX during Compliance Year

2009. However, in March of 2007, the USEPA issued the “Clean Air Fine 

Particle Implementation Rule,” which required non-attainment areas to meet 

particulate matter with aerodynamic diameter less than 2.5 microns (PM2.5) 

standards by 2010. The 2007 AQMP identified NOx and SOx reductions as the 

two most effective tools in reaching attainment with the PM2.5 standards. 

Consequently, the 2007 AQMP revision included both a formal request to extend 

USEPA’s PM2.5 attainment date to 2015, and Control Measure CMB-02 

(“Further SOx Reductions for RECLAIM”), which estimated that implementation 

of SOx BARCT could achieve at least three tons per day SOx emission 

reductions from 2011 to 2014. In order to implement this control measure, 

AQMD Governing Board adopted amendments to Rule 2002 – Allocations for 

Oxides of Nitrogen (NOx) and Oxides of Sulfur (SOx) on November 5, 2010. 

This amendment will result in an overall reduction of 5.7 tons SOx per day when 

fully implemented in 2019 (the reductions are being phased in from 2013 through 

2019: 3.0 tons per day in 2013, 4.0 tons per day in years 2014 through 2016, 5.0 

tons per day in 2017 and 2018, and 5.7 tons per day in 2019 and after). More 

detailed discussion of the amendments to Rule 2002 can be found in Chapter 2 

of this report.

Additionally, AQMD is proposing amendments to Rule 2005 – New Source 

Review for RECLAIM. In response to Governing Board Chairman Burke’s 

“Helping Hand Initiative for 2009”, staff has evaluated options to address the 

requirement under which existing facilities fully offset the maximum annual 

emissions increase(s) resulting from a new or modified source(s) at the start of 

the second compliance year, and every compliance year thereafter. A more 

detailed discussion of this proposal is presented in Chapter 4 of this report.

Backstop Provisions

Rule 2015 requires that AQMD review the RECLAIM program and implement 

necessary measures to amend it whenever aggregate emissions exceed the 

aggregate allocations by five percent or more, or whenever the average annual 

price of RTCs exceeds $15,000 per ton. Compliance Year 2009 aggregate NOx 

and SOx emissions were both below aggregate allocations as shown in Figures 

3-1 and 3-2. At the same time, average annual prices for NOx and SOx RTCs in 

calendar year 2009 were below $15,000 per ton, as shown in Chapter 2. 

Therefore, there is no need to initiate a program review.

Breakdowns

Pursuant to Rule 2004(i) – Breakdown Provisions, a facility may request that 

emissions in excess of normal emission levels due to a breakdown not be

counted towards the facility’s allocations. In order to qualify for such exclusion, 

the facility must demonstrate that the excess emissions were the result of a fire 

or a mechanical or electrical failure caused by circumstances beyond the facility’s 

reasonable control. The facility must also take steps to minimize emissions 

resulting from the breakdown, and mitigate the excess emissions to the 

maximum extent feasible. Applications for exclusion of unmitigated breakdown 

emissions from a facility’s total reported annual RECLAIM emissions must be 
ANNUAL RECLAIM AUDIT

PAGE 3 - 8 MARCH 2011

approved by AQMD in writing. In addition, facilities are required to quantify 

unmitigated breakdown emissions, for which an exclusion request has been 

approved, in their APEP report.

As part of the annual audit report, Rule 2015(d)(3) requires AQMD to determine 

whether excess emissions approved for exclusion from securing RTCs to cover 

their emissions have been programmatically offset by unused RTCs within the 

RECLAIM program. If the breakdown emissions exceed the unused RTCs, any 

excess breakdown emissions must be offset by either: (1) deducting the amount 

of emissions not programmatically offset from the RTC holdings for the 

subsequent compliance year from facilities that had unmitigated breakdown 

emissions, proportional to each facility’s contribution to the total amount of 

unmitigated breakdown emissions; and/or (2) RTCs obtained by the Executive 

Officer for the compliance year following the completion of the annual audit report 

in an amount sufficient to offset the unmitigated breakdown emissions.

As shown in Table 3-3, a review of APEP reports for Compliance Year 2009

found that no facilities requested to exclude breakdown emissions from being 

counted against their allocations. Thus, for Compliance Year 2009, no additional 

offset are required pursuant to Rule 2015(d)(3).

Table 3-3

Breakdown Emission Comparison for Compliance Year 2009

Emittant

Unmitigated 

Breakdown 

Emissions1

(tons)

Compliance Year 

2009

Unused RTCs2

(tons)

NOx 0 3,060

SOx 0 1,331

1 Data for unmitigated breakdown emissions (not counted against Allocation) as reported under 

APEP reports.

2 Unused RTCs = RTC supply – Audited Emissions.

Impact of Changing Universe

As discussed in Chapter 1, changes to the NOx RECLAIM universe from July 1, 

2009 to June 30, 2010 were: two facilities were included into RECLAIM, no 

facilities were excluded, and four facilities ceased operations. Staff conducted an 

analysis to evaluate the impact on emissions reductions due to these changes in 

the RECLAIM universe.

Facilities that were in operation prior to October 15, 1993 and are not 

categorically excluded may choose to enter the program even though they did 

not initially meet the inclusion criteria. They may also be included by AQMD if 

their facility-wide emissions increase to four tons or more per year of NOx or SOx 

or both. When one of these facilities enters the program, they are issued RTC 

allocations based on their operational history using the same methodology 

applied to facilities in the initial universe. Overall, inclusions shift the accounting 

of emissions from the universe of non-RECLAIM sources to the universe of 

RECLAIM sources without actually changing the overall emissions inventory. 
ANNUAL RECLAIM AUDIT

PAGE 3 - 9 MARCH 2011

Inclusions also change the rules and requirements that apply to the affected 

facilities. There were no facilities that were in operation prior to October 15, 1993 

that chose to opt-in to the RECLAIM program during Compliance Year 2009 and 

none were included into the RECLAIM program based on the Rule 2001 

threshold of actual NOx and/or SOx emissions greater than or equal to four tons.

Facilities that commenced operation on or after October 15, 1993 as nonRECLAIM facilities can either choose to enter RECLAIM or are included due to 

actual NOx or SOx emissions in excess of four tons or more per year. These 

facilities are not issued RTCs based on operational history except for those 

credits converted and issued based on external offsets provided by the facility.

When a newly-constructed facility joins the RECLAIM universe, it is required to 

obtain sufficient RTCs to offset its NOx or SOx emissions. These RTCs must be 

obtained through the trading market and are not issued by AQMD to the facility. 

Such facilities increase the overall demand for the fixed supply of RTCs because 

they increase total RECLAIM emissions without increasing the total supply of 

RTCs. There was one newly-constructed NOx-only facility included during 

Compliance Year 2009.

Additionally, facilities that undergo a partial change of operator may have an 

impact on emissions, depending on the operating conditions of the facility under 

the new operator. In terms of allocations, since the partial change of operator 

results in the splitting of one facility into two facilities, they now share the same 

“slice of pie.” Consequently, facilities that undergo a partial change of operator 

have no impact on the fixed supply of NOx or SOx RTCs. The one remaining 

NOx-only facility included into the RECLAIM universe during Compliance Year 

2009 resulted from the partial change of operator of an existing RECLAIM facility.

The shutdown of a RECLAIM facility results in a reduction in actual emissions. 

The shutdown facility retains its RTC holdings, which it may continue to hold as 

an investment, transfer to another facility under common ownership, or trade on 

the market. Therefore, although the facility is no longer emitting, its RTCs may 

be used at another facility. Shutdown facilities have the opposite effect on the 

RTC market as do new facilities: the overall demand for RTCs is reduced while 

the supply remains constant. Four NOx-only RECLAIM facilities shut down 

permanently during Compliance Year 2009.

A facility is excluded from the RECLAIM universe if AQMD staff determines that 

the facility was included in the program in error. In such cases, both the 

emissions and the RTCs that were issued to the facility for future years are 

withdrawn, thereby having a neutral impact on the RTC supply. No facilities were 

excluded in Compliance Year 2009.

In short, both included facilities, new facilities and facilities that result from a 

partial change of operator, and shutdown facilities change the demand for RTCs 

without changing the supply, while exclusions of existing facilities make 

corresponding changes to both the demand and the supply, thereby mitigating 

their own impact on the markets and shifting emissions between the RECLAIM 

and non-RECLAIM universes. Finally, inclusions of existing facilities most likely 

will affect demand more than supply because even though these facilities are 

issued RTC allocations based on their operational history, the amount, in many 

cases, is not enough to offset their current operations.
ANNUAL RECLAIM AUDIT

PAGE 3 - 10 MARCH 2011

Compliance Year 2009 NOx and SOx emissions and initial allocations for 

facilities that were included into the program, were shutdown, or were excluded 

are summarized in Tables 3-4 and 3-5.

Table 3-4

NOx Emissions Impact from the Changes in Universe (Tons)

Category

Compliance Year 2009

NOx Emissions

(tons)

Compliance Year 2009

NOx Initial Allocations

(tons)

Shutdown Facilities 0.7 20.2

Excluded Facilities Not applicable Not applicable

Included Facilities* 0 0

RECLAIM Universe 7,317 10,377

* Emissions from both included facilities, one opt-in and one created through partial change of 

operator, have no impact on Compliance Year 2009 emissions because both are Cycle 1 

facilities that entered RECLAIM in calendar year 2010.

Table 3-5

SOx Emissions Impact from the Changes in Universe (Tons)

Category

Compliance Year 2009

SOx Emissions

(tons)

Compliance Year 2009

SOx Initial Allocations

(tons)

Shutdown Facilities Not applicable Not applicable

Excluded Facilities Not applicable Not applicable

Included Facilities Not applicable Not applicable

RECLAIM Universe 2,949 4,280
ANNUAL RECLAIM AUDIT

PAGE 4 - 1 MARCH 2011

CHAPTER 4

NEW SOURCE REVIEW ACTIVITY

Summary

The annual program audit assesses New Source Review (NSR) activity from 

RECLAIM facilities in order to ensure that RECLAIM is complying with federal 

NSR requirements and state no net increase (NNI) in emissions requirements, 

while providing flexibility to facilities in managing their operations and allowing 

new sources into the program. In Compliance Year 2009, two new facilities 

joined the RECLAIM NOx market, no new facilities joined the RECLAIM SOx 

market, 22 NOx RECLAIM facilities had NSR NOx emission increases due to 

expansion or modification, and three existing SOx RECLAIM facilities had NSR 

SOx emission increases due to expansion or modification. The consistent trend 

of surplus NOx and SOx RTCs over emissions for the past five years has allowed 

for expansion and modification by existing facilities. However, it has become 

apparent that due to full RTC hold requirements for potential to emit for new and 

modified emission units at the beginning of each compliance year, and the effect 

of the accumulation of these hold requirements over time, this may not continue 

to be the case. As a result, potential changes to Rule 2005 are being considered 

to facilitate expansion and modification of operations by existing RECLAIM 

facilities while ensuring that all emissions are covered by RTC allocations in 

compliance with federal NSR emissions offset requirements and state NNI 

requirements.

RECLAIM is required to comply with federal NSR emissions offset requirements 

at a 1.2-to-1 offset ratio for NOx emission increases and at least at a 1-to-1 offset 

ratio for SOx emission increases on a programmatic basis. In Compliance Year 

2009, RECLAIM provided an offset ratio of 30-to-1 for NOx, demonstrating 

federal equivalency. RECLAIM inherently complies with the federally-required 1-

to-1 SOx offset ratio for any compliance year provided aggregate SOx emissions 

under RECLAIM are lower than aggregate SOx allocations for that compliance 

year. As shown in Chapter 3, there were no programmatic SOx exceedances

during Compliance Year 2009, so RECLAIM more than complied with the 

federally-required offset ratio and further quantification of the SOx offset ratio is 

unnecessary. Compliance with the federally-required offset ratio also 

demonstrates compliance with the state NNI requirements for new or modified 

sources. In addition, RECLAIM requires application of Best Available Control 

Technology (BACT) for all new or modified sources with emission increases.

Background

Emissions increases from the construction of new or modified stationary sources 

in non-attainment areas are regulated by both federal NSR and state no net 

increase (NNI) requirements to ensure that progress toward attainment of 

ambient air quality standards is not hampered. RECLAIM is designed to comply 
ANNUAL RECLAIM AUDIT

PAGE 4 - 2 MARCH 2011

with federal NSR and state NNI requirements without hindering a facility’s ability 

to expand or modify its operations1

Title 42, United States Code §7511a, paragraph (e), requires major sources in 

extreme non-attainment areas to offset emission increases of extreme 

nonattainment pollutants and their precursors at a 1.5-to-1 ratio based on 

potential to emit. However, if all major sources in the extreme non-attainment 

area are required to implement federal BACT, a 1.2-to-1 offset ratio may be 

used. Federal BACT is comparable to California’s BARCT. AQMD requires all 

existing major sources to employ federal BACT/California BARCT and, therefore, 

is eligible for a 1.2-to-1 offset ratio for ozone precursors (i.e., NOx and VOCs). 

The federal offset requirement for major SO2 sources is at least a 1-to-1 ratio, 

which is lower than the aforementioned 1.2-to-1 ratio. Even though the Basin is 

in attainment with SOx standards, SOx is a precursor to PM10 which is a 

nonattainment air pollutant in the Basin. The applicable offset ratio for PM10 is 

at least 1-to-1, thus, the applicable offset ratio for SOx is 1-to1. Health and 

Safety Code §40920.5 requires “no net increase in emissions from new or 

modified stationary sources of nonattainment pollutants or their precursors” (i.e., 

a 1-to-1 offset ratio on an actual emissions basis). All actual RECLAIM 

emissions are offset at a 1-to-1 ratio provided there is not a programmatic 

exceedance of aggregate allocations, thus satisfying the federal offset ratio for 

SOx and state NNI requirements for both SOx and NOx. Annual RTC allocations 

follow a programmatic reduction to reflect changes in BARCT and thereby 

comply with federal and state goals for attainment.

.

RECLAIM requires California BACT/federal Lowest Achievable Emission Rate 

(LAER) for new or modified sources with emissions increases of RECLAIM 

pollutants. This provision complies with both the state and federal requirements 

regarding control technologies for new or modified sources. In addition to offset 

and BACT requirements, RECLAIM subjects RTC trades that are conducted to 

mitigate emissions increases over the sum of the facility’s starting allocation and 

Non-tradable/Non-usable credits to trading zone restrictions to ensure net 

ambient air quality improvement within the sensitive zone established by Health 

and Safety Code §40410.5. Furthermore, facilities with actual RECLAIM 

emissions that exceed their initial allocation by 40 tons per year or more are 

required to analyze the potential impact of their emissions increases through 

modeling.

Rule 2005 – New Source Review for RECLAIM requires RECLAIM facilities to 

provide, prior to the start of operation, sufficient RTCs to offset the annual 

increase in potential emissions for the first year of operation at a 1-to-1 ratio. 

After the first year of operation, the same rule also requires RECLAIM facilities to 

provide sufficient RTCs to offset the annual potential emissions from newly 

permitted equipment at a 1-to-1 ratio at the commencement of each compliance 

year. Although RECLAIM allows a 1-to-1 offset ratio for emissions increases, 

RECLAIM complies with the federal offset requirement by complying with the 1.2-

to-1 offset requirement for NOx on an aggregate basis. This annual audit report 

assesses NSR permitting activities for Compliance Year 2009 to verify that 

 1 Federal NSR applies to federal major sources (sources with potential to emit 10 tons of NOx or 100 tons 

of SOx per year for the South Coast Air Basin) and state NNI requirements apply to all NOx sources and 

to SOx sources with the potential to emit at least 15 tons per year in the South Coast Air Basin. 

RECLAIM’s NSR provisions apply to all facilities in the program.
ANNUAL RECLAIM AUDIT

PAGE 4 - 3 MARCH 2011

programmatic compliance of RECLAIM with federal and state NSR requirements 

has been maintained.

NSR Activity

Compliance Year 2009 NSR activities were higher than previous compliance 

years, especially for NOx, likely a result of a concerted effort to issue permits 

after the permit moratorium2

Evaluation of NSR data for Compliance Year 2009 shows that RECLAIM facilities 

expanded or modified their operations while complying with NSR requirements. 

Two facilities (a partial change of operator and an opt-in) joined the RECLAIM 

program. During Compliance Year 2009, 22 RECLAIM facilities (11 facilities in 

each Cycle) experienced a total of 105 tons per year of NOx NSR emission 

increases due to expansion or modification. Three SOx RECLAIM facilities (1 

facility in Cycle 1 and 2 facilities in Cycle 2) experienced a total of 18.3 tons per 

year of SOx NSR emission increases due to expansion or modification. As in 

previous years, there were adequate unused RTCs (see Chapter 3) in the 

RECLAIM universe for use by new entrants into the program and for existing 

facilities to expand or increase production.

was lifted on January 1, 2010 pursuant to Senate 

Bill 827 (Wright; codified and California Health & Safety Code §40440.13). Once 

the permit moratorium was lifted, a large number of permits (1,415) that had 

been on hold were issued in early 2010. While RECLAIM emissions are not 

subject to Regulation XIII and were not directly subject to the permit moratorium, 

projects that are subject to RECLAIM NSR are typically combustion sources and

also result in emissions of non-RECLAIM air contaminants and so were unable to 

proceed under the permit moratorium.

NSR Compliance Demonstration

RECLAIM is designed to programmatically comply with the federal NSR offset 

requirements. Meeting the NSR requirement (offset ratio of 1.2-to-1 for NOx and 

at least 1-to-1 for SOx) also demonstrates compliance with the state NNI 

requirements. Section 173 (c) of the federal Clean Air Act (CAA) states that only 

emissions reductions beyond the requirements of the CAA, such as federal 

Reasonably Available Control Technology (RACT), shall be considered 

creditable as emissions reductions for offset purposes. Since the initial 

allocations (total RTC supply in Compliance Year 1994) already met federal 

RACT requirements when the program was initially implemented, any emissions 

reductions beyond the initial allocations are available for NSR offset purposes 

until RACT becomes more stringent. The programmatic offset ratio calculations

presented in the Annual RECLAIM Audit Reports for Compliance Years 1994 

through 2004 relied upon aggregate Compliance Year 1994 allocations as 

representing RACT. However, staff recognizes that RACT may have become 

 2 The permit moratorium resulted from a July 2008 Superior Court of the State of California, County of Los 

Angeles decision and subsequent November 2008 writ of mandate that prevented AQMD from 

implementing the portions of its non-RECLAIM NSR regulation (Regulation XIII – New Source Review) 

that provide exemptions from emissions offset requirements to specified sources and that provide certain 

other sources emissions offsets from AQMD’s Priority Reserve. Under the permit moratorium, no permits 

could be issued to sources resulting in non-RECLAIM emissions increases of VOC, NOx, SOx, or PM10 

unless the operator provided ERCs. However, the state law was changed in 2009 to allow AQMD to 

resume permitting of such sources for an interim period of time beginning January 1, 2010.
ANNUAL RECLAIM AUDIT

PAGE 4 - 4 MARCH 2011

more stringent in the intervening years, so it may no longer be appropriate to 

calculate the programmatic offset ratio based upon aggregate 1994 allocations. 

Aggregate allocations for each compliance year represent federal BACT, which is 

equivalent to local BARCT. Federal BACT is more stringent than federal RACT 

(i.e., the best available control technology is more stringent than what is 

reasonably available), so staff started using current allocations (federal BACT) as 

a surrogate for RACT as the basis for calculating programmatic NOx and SOx 

offset ratios in the annual audit report for Compliance Year 2005 and is 

continuing to do so for NOx in this report. This is a more conservative (i.e., more 

stringent) approach than using actual RACT and is much more conservative than 

using aggregate Compliance Year 1994 allocations. The advantage of this 

approach is that, as long as the calculated NOx offset ratio is at least 1.2-to-1, it 

provides certainty that RECLAIM has complied with federal and state offset 

requirements without the need to know exactly where RACT lies for RECLAIM 

facilities. However, if this approach should ever fail to demonstrate that the 

aggregate NOx offset ratio for any year is at least 1.2-to-1, that will not 

necessarily mean RECLAIM has not actually complied with the federally required 

1.2-to-1 NOx offset ratio. Rather it will indicate that further analysis is required to 

accurately identify RACT so that the actual offset ratio can be calculated and a 

compliance determination made.

Provided aggregate RECLAIM emissions do not exceed aggregate allocations, 

all RECLAIM emissions are offset at a ratio of 1-to-1. This leaves all unused 

allocations available to provide offsets beyond the 1-to-1 ratio for NSR emission 

increases. Unused allocations are based on all Cycle 1 and Cycle 2 RTCs of a 

given compliance year and the aggregate RECLAIM emissions for the selected 

time period. The NSR emission increase is the sum of emission increases due to 

permit activities at all RECLAIM facilities during the same compliance year. The 

aggregate RECLAIM offset ratios are expressed by the following formula:

Offset Ratio = (1 + compliance year’s total unused allocations

total NSR emission increases )-to-1

The Compliance Year 2009 NOx programmatic offset ratio calculated from this 

methodology is 30-to-1:

 Offset Ratio = (1 + 3,060 tons

105.01 tons )-to-1

 = 30 -to-1

RECLAIM continues to generate sufficient excess emissions reductions to 

provide greater than 1.2-to-1 offset ratio for NOx emissions, as required by 

federal law. This compliance with the federal offset requirements is built into the 

RECLAIM program through annual reductions of the allocations assigned to 

RECLAIM facilities and the subsequent allocation adjustments adopted by the 

Governing Board to implement BARCT. On the other hand, the required offset 

ratio for SOx is 1-to-1. Since RECLAIM facilities are required to secure at a 

minimum adequate RTCs to cover their actual emissions, the offset ratio is met 
ANNUAL RECLAIM AUDIT

PAGE 4 - 5 MARCH 2011

automatically provided there is no programmatic exceedance of aggregate SOx 

allocations for that compliance year. As stated earlier in Chapter 3, there were 

excess SOx RTCs (1,331 tons) when compared to the total SOx emissions 

during Compliance Year 2009. Therefore, a separate calculation of the SOx 

offset ratio is not necessary.

BACT and modeling are also required for any RECLAIM facility that installs new 

equipment or modifies existing sources if the installation or modification results in 

an increase in emissions of RECLAIM pollutants. Furthermore, the RTC trading 

zone restrictions in Rule 2005 – New Source Review for RECLAIM, limit trades 

conducted to offset emission increases over the sum of the facility’s starting 

allocation and Non-tradable/Non-usable credits to ensure net ambient air quality 

improvement within the sensitive zone, as required by state law.

The result of the review of the NSR activity in Compliance Year 2009 shows that 

RECLAIM is in compliance with both state NNI and federal NSR requirements. 

AQMD will continue to monitor NSR activity under RECLAIM in order to assure 

continued progress toward attainment of ambient air quality standards without 

hampering economic growth in the Basin.

Modeling Requirements

Rule 2004, as amended in May 2001, requires RECLAIM facilities with actual 

NOx or SOx emissions exceeding their initial allocation in Compliance Year 1994 

by 40 tons per year or more to conduct modeling to analyze the potential impact 

of the increased emissions. The modeling analysis is required to be submitted 

within 90 days of the end of the compliance year. For Compliance Year 2009, 

two RECLAIM facilities were found to be subject to this requirement. The 

facilities submitted modeling analyses that showed that their NOx emissions 

complied with the most stringent ambient air quality standard for NOx set forth in 

Rule 2005, Appendix A.

Possible Amendments to New Source Review for RECLAIM

Chairman Burke of AQMD’s Governing Board introduced his “Helping Hand 

Initiative for 2009” at the January 9, 2009 Board Meeting. One element of this 

Initiative is to provide enhanced customer service to permit applicants and permit 

holders, including revising the RTC hold requirement described below to make it 

less burdensome for facilities while continuing to comply with the requirements of 

federal NSR and state NNI.

Rule 2005 requires RECLAIM facilities that have had an emissions increase

subject to NSR since October 1993, to hold sufficient RTCs at the beginning of 

each compliance year equal to the increase in its maximum potential emissions. 

The evaluation of emission increases is performed on a device-by-device basis, 

so any time a new NOx- or SOx-emitting RECLAIM device is installed it triggers 

the RTC hold requirement, regardless if the new device is replacing an older 

device and is lower-emitting than the one being replaced. Therefore, as time 

goes on, the aggregate quantity of emission increases, and the associated 

aggregate hold requirement, continues to grow even as aggregate emissions 

decline. Therefore, there is concern that facilities may find themselves unable to 

modernize simply because they will not be able to obtain sufficient RTCs to 
ANNUAL RECLAIM AUDIT

PAGE 4 - 6 MARCH 2011

satisfy the hold requirement at the beginning of a compliance year due to the 

built-in decreasing allocations, despite the requirement to reconcile all actual 

emissions from that unit on a quarterly basis and at the end of the compliance 

year. The RTC hold requirement applies even if the net impact of the facility’s 

modernization effort will be a reduction in RECLAIM emissions. It is also noted 

that the amount of RTCs required to be held is equal to the maximum potential 

emission level rather than the anticipated actual emission level. This also 

creates an artificially high demand for RTCs at the beginning of a compliance 

year because actual emissions are always less than maximum potential to emit. 

The held RTCs are not allowed to be traded until either the end of a compliance 

year, or the end of a quarter if the permit so allows. Generally, the value of RTCs 

declines as they approach their expiration date. This increases the operating 

cost of a new lower emitting source without any emission benefits (i.e., the RTCs 

are required to be held when their cost is higher than the price they can be sold 

at the end of the holding period). AQMD is initiating the rule amendment process 

to alleviate the impacts of this RTCs holding requirement for existing facilities that 

do not emit at a level higher than their starting allocations plus Non-tradable/Nonusable RTCs for Compliance Year 1994 while continuing to satisfy federal 

emissions offset requirements. It is also intended that the year-to-year hold 

requirement remains for facilities that did not exist prior to October 1993 and that 

all RECLAIM facilities must hold adequate RTCs to reconcile with their emissions 

during a compliance year pursuant to Rule 2004 which is not being altered.
ANNUAL RECLAIM AUDIT

PAGE 5 - 1 MARCH 2011

CHAPTER 5

COMPLIANCE

Summary

There were 286 NOx and 32 SOx active facilities in the RECLAIM program at the 

start of Compliance Year 2009. During Compliance Year 2009, two facilities 

were included into the NOx universe and four facilities ceased operations and 

shutdown. There were no changes in the SOx universe. Of these 288 active 

NOx RECLAIM facilities during Compliance Year 2009, 276 facilities (96%) 

complied with their NOx allocations, and all but one of the 32 SOx facilities (97%) 

complied with their SOx allocations. The 12 NOx facilities that exceeded their 

NOx allocations had aggregate NOx emissions in excess of their combined NOx 

allocations by a total of 9.4 tons, whereas, the one SOx facility exceeded its SOx 

allocation by one pound. These amounts are small compared to the overall 

allocations for Compliance Year 2009 (0.09% of NOx and much less than 0.01% 

of SOx allocations). The overall RECLAIM NOx and SOx emission reduction

targets and goals were met for Compliance Year 2009 (i.e., aggregate emissions 

were below aggregate allocations).

Background

RECLAIM facilities have the flexibility to choose among compliance options to 

meet their annual allocations, by trading RTCs, reducing emissions, or a 

combination of both. However, this flexibility must be supported by standardized 

emission MRR requirements to ensure the reported emissions are real, 

quantifiable, and enforceable. As a result, specific and detailed MRR protocols 

are specified in the RECLAIM regulation to guarantee accurate and verifiable 

emission reports.

The MRR requirements were designed to provide accurate and up-to-date 

emission reports. Once facilities install and complete certification of the required 

monitoring and reporting equipment, they are relieved from command-andcontrol rule limits and requirements. Mass emissions from RECLAIM facilities 

are then determined directly by monitoring and reporting equipment for some 

sources and from data generated by monitoring equipment for others. If 

monitoring equipment fails to produce quality-assured data or the facility fails to 

file timely emissions reports, RECLAIM rules require emissions be determined by 

a rule-prescribed methodology known as Missing Data Procedures. Depending 

on past performance of the monitoring equipment (i.e., availability of qualityassured data), MDP use a tiered approach to calculate emissions. As availability 

of quality-assured data increases, the MDP-calculated emissions become more 

representative of the actual emissions, but when the availability of qualityassured data is low, MDP calculations approach to some extent “worst case” 

assessments.
ANNUAL RECLAIM AUDIT

PAGE 5 - 2 MARCH 2011

Allocation Compliance

Requirements

At the beginning of the RECLAIM program in 1994, each RECLAIM facility 

received an annual allocation for each compliance year. For an existing facility 

new to the program, annual allocations are issued according to the same 

methodology used for those facilities that were included at the start of the 

program. However, a facility without an operating history prior to 1994 receives 

no allocation and must purchase enough RTCs to cover the emissions for their 

operations, except facilities that have provided ERCs to offset emission 

increases prior to entering RECLAIM. These facilities are issued RTCs 

equivalent to the amount of offsets provided on an annual basis. Knowing their 

emission goals, RECLAIM facilities have the flexibility to manage their emissions 

in order to meet their allocations in the most cost-effective manner. Facilities 

may buy RTCs to increase their allocations, sell unneeded RTCs, or employ 

emission control technology to further curtail emissions.

At the end of the reconciliation period for each quarter and each compliance 

year, a RECLAIM facility must hold sufficient RTCs in its allocation account to 

cover its quarterly as well as year-to-date emissions for the compliance year. 

Facilities may buy or sell RTCs at any time during the year in order to ensure that 

their emissions are covered. In addition, at the end of each compliance year, 

there is a 60-day reconciliation period during which facilities have a final 

opportunity to buy or sell RTCs for that compliance year. By the end of each 

quarterly and annual reconciliation period, each facility is required to certify the 

emissions for the preceding quarter and compliance year by submitting its 

QCERs and APEP report, respectively.

Compliance Audit

Since the beginning of the program, AQMD has conducted annual audits of all 

emission reports submitted by RECLAIM facilities to ensure their integrity and 

reliability. The audit process includes conducting field inspections to check 

process equipment, monitoring devices, operational records, and emissions 

calculations in order to verify emissions reported electronically to AQMD or 

submitted in QCERs and APEP reports. These inspections revealed that some 

facilities made errors in quantifying their emissions such as arithmetic errors, 

used inappropriate emission factors or adjustment factors (e.g., pressure 

correction factors and bias adjustment factors), used emission calculation 

methodologies not allowed under the rules, or used MDP inappropriately. Other 

common mistakes included reporting non-RECLAIM emissions and excluding 

reportable emissions.

Whenever an audit revealed a facility’s emissions to be in excess of its annual 

allocation, the facility was provided an opportunity to review the audit and to 

present additional data to further refine audit results. Emissions data are 

ensured to be valid and reliable through this extensive and rigorous audit 

process.
ANNUAL RECLAIM AUDIT

PAGE 5 - 3 MARCH 2011

Compliance Status

Prior to the Compliance Year 2008 Annual Audit Report, each year’s compliance 

status was based on QCER or APEP data when audited data was not available. 

In the Compliance Year 2007 Annual RECLAIM Audit Report, staff committed to 

update and present the compliance status of all years based on the results of 

AQMD facility audits. As a result of this effort, all compliance data presented in

the Compliance Year 2008 annual report forward is based on audited rather than 

a combination of audited and reported emissions data.

At the beginning of Compliance Year 2009, there were 286 NOx RECLAIM 

facilities and 32 SOx facilities. As stated in Chapter 1, the only changes to the 

NOx RECLAIM universe were two facilities were included and four facilities 

ceased operations during Compliance Year 2009. During this compliance year, a 

total of 13 RECLAIM facilities failed to reconcile their emissions. Of these 13 

facilities, seven facilities failed to secure sufficient RTCs to cover their reported 

emissions during either the quarterly or annual year-to-date reconciliation periods 

and confirmed through audits. Additionally, two facilities also failed to secure 

sufficient RTCs to cover their reported emissions, but audits determined that 

these facilities had additional reasons for exceedance related to incorrectly 

calculating fuel usage. Finally, four facilities exceeded their allocations based 

solely on the audit of the facility. For one audit, the facility exceeded its 

allocation because non-major source MDP was applied due to invalid fuel usage 

records. In another audit, the facility exceeded its allocation because the facility 

failed to account for emissions from three internal combustion engines (classified 

as Large Sources) for the entire compliance year. The third audit showed the 

facility exceeded its allocation because the major source Data Acquisition and 

Handling System (DAHS) was not accounting for emissions from hours during 

which the source only operated for a portion of the hour. And for the fourth audit, 

the facility exceeded its allocation because it did not include fuel usage for one 

month from a process unit in its quarterly emissions calculations. Of these 13 

facilities, 12 failed to reconcile their NOx emissions and one facility failed to 

reconcile their SOx emissions, corresponding to an overall allocation compliance 

rate of 96% (280 out of 292 facilities) for NOx RECLAIM facilities and 97% (31 

out of 32 facilities) for SOx RECLAIM facilities. The amounts of emissions from 

these facilities in excess of their individual allocations totaled 9.4 tons of NOx and 

one pound of SOx (0.09% of aggregate NOx and much less than 0.01% of 

aggregate SOx allocations).

Impact of Missing Data Procedures

MDP was designed to provide a method for determining emissions when an 

emission monitoring system fails to yield valid emissions. For major sources, 

these occurrences may be caused by failure of the monitoring systems or of the 

DAHS. Major sources are also required to use MDP for determining emissions 

whenever daily emissions reports are not submitted by the applicable deadline. 

When comparing actual emissions with a facility’s use of substituted MDP 

emissions, the range of MDP emissions can vary from “more representative” to 

emissions being overstated to reflect a “worst case”1

 1 Based on uncontrolled emission factor at maximum rated capacity of the source and 24 hours per day.

scenario. For instance, an 

MDP “worst case” scenario may occur for major sources that fail to have their 
ANNUAL RECLAIM AUDIT

PAGE 5 - 4 MARCH 2011

Continuous Emission Monitoring System (CEMS) certified in a timely manner, 

and therefore, have no valid CEMS data that can be used in the substitution. In 

other cases, where prior CEMS data is available, MDP is applied in tiers 

depending on the duration of missing data periods and the historical availability

of monitoring systems. As the duration of missing data periods gets shorter and 

the historical availability of monitoring systems gets higher, the substitute data 

yielded by MDP becomes more representative of actual emissions2

In addition to MDP for major sources, RECLAIM rules also define MDP for large 

sources and process units. These procedures are applicable when a process 

monitoring device fails or when a facility operator fails to record fuel usage or 

other monitored data (e.g., hours of operation). The resulting MDP emissions 

reports are reasonably representative of the actual emissions because averaged 

or maximum emissions from previous operating periods may be used. However, 

for extended missing data periods (more than two months for large sources or 

greater than four quarters for process units) or when emissions data for the 

preceding year are unavailable, large source and process unit MDP are also 

based on worst case assumptions.

.

Based on APEP reports, 103 NOx facilities and 15 SOx facilities used MDP in 

reporting their annual emissions during Compliance Year 2009. In terms of mass 

emissions, 7.8% of the total reported NOx emissions and 13.8% of the total 

reported SOx emissions in the APEP reports were calculated using MDP for 

Compliance Year 2009. Table 5-1 compares the impact of MDP on reported 

annual emissions for the last few compliance years and the second compliance 

year, 1995 (MDP was not fully implemented during Compliance Year 1994).

Table 5-1

MDP Impact on Annual Emissions

Emittant

Percent of Reported Emissions Using Substitute Data*

1995 2003 2004 2005 2006 2007 2008 2009

NOx

23.0% 4.5% 8.3% 3.0% 2.5% 5.6% 7.6% 7.8%

(65/6,070) (87/443) (106/824) (88/359) (48/220) (78/489) (86/625) (103/554)

SOx

40.0% 4.7% 10.4% 3.6% 0.0% 7.0% 7.5% 13.8%

(12/3,403) (15/181) (16/373) (15/161) (0/0) (14/262) (9/242) (15/403)

* Numbers in parenthesis that are separated by a forward slash represent the number of facilities 

that reported use of MDP in each compliance year and tons of emissions based on MDP.

Most of the issues associated with CEMS certifications were resolved prior to 

Compliance Year 1999. Since then, very few facilities have had to submit 

emissions reports based on the worst case scenario under MDP, which may 

considerably overstate the actual emissions from major sources. As an example, 

most facilities that reported emissions using MDP in 1995 did so because they 

did not have their CEMS certified in time to report actual emissions. Since their 

CEMS had no prior data, MDP called for an application of the most conservative 

procedure to calculate substitute data by assuming continuous uncontrolled 

 2 Based on averaged emissions during periods before and after the period when data is not available.
ANNUAL RECLAIM AUDIT

PAGE 5 - 5 MARCH 2011

operation at the maximum rated capacity of the facility’s equipment, regardless of 

the actual operational level during the missing data periods. As a result, the 

calculations yielded substitute data that may have been much higher than the 

actual emissions. In comparison to the 65 NOx facilities implementing MDP in 

Compliance Year 1995, 103 facilities reported NOx emissions using MDP in 

Compliance Year 2009. Even though the number of facilities is higher, the 

percentage of emissions reported using MDP during Compliance Year 2009 is 

much lower than it was in 1995 (7.8% versus 23%). Additionally, in terms of 

quantity, NOx emissions in Compliance Year 2009 were less than 10% of that in 

Compliance Year 1995 (554 tons versus 6,070 tons). Since most CEMS were 

certified and had been reporting actual emissions by the beginning of 

Compliance Year 2000, facilities that had to calculate substitute data were able 

to apply less conservative methods of calculating MDP for systems with high 

availability and shorter duration of missing data periods. Therefore, the 

substitute data they calculated for their missing data periods were more likely to 

be representative of the actual emissions.

It is important to note that portions of annual emissions attributed to MDP include 

actual emissions from the sources as well as the possibility of overestimated 

emissions. As shown in Table 5-1, approximately 7.8% of NOx annual emissions 

were calculated using MDP in Compliance Year 2009. MDP may significantly 

overestimate emissions from sources that operate intermittently and have low 

monitoring system availability, and/or lengthy missing data periods. Even though 

a portion of the 7.8% may be overestimated emissions due to conservative MDP, 

a significant portion (or possibly all) of it could have been actual emissions from 

the sources. Unfortunately, the portion that represents the actual emissions 

cannot be readily estimated because the extent of this effect varies widely, 

depending on source categories and operating parameters, as well as the tier of 

MDP applied. As an example, refineries tend to operate at near maximum 

capacity for 24 hours per day and seven days per week, except for scheduled 

shutdowns for maintenance and barring major breakdowns or other 

unforeseeable circumstances. For Compliance Year 2009, a significant portion 

of NOx MDP emissions data (55%) as well as SOx MDP emissions data (41%)

were reported by refineries. Therefore, missing data emissions calculated for 

such facilities could be more reflective of the actual emissions than those 

calculated for facilities that do not operate on a continuous basis but, due to low 

data availability, are required to calculate MDP based upon continuous operation.

Emissions Monitoring

Overview

The reproducibility of reported RECLAIM facility emissions—and thereby the 

enforceability of the RECLAIM program—is assured through a three-tiered 

hierarchy of MRR requirements. A facility’s equipment falls into an MRR 

category based on the kind of equipment it is and on the level of emissions 

produced or potentially produced by the equipment. RECLAIM divides all NOx 

sources into major sources, large sources, process units, and equipment exempt

from obtaining a written permit pursuant to Rule 219. All SOx sources are 

divided into major sources, process units, and equipment exempt from obtaining 
ANNUAL RECLAIM AUDIT

PAGE 5 - 6 MARCH 2011

a written permit pursuant to Rule 219. Table 5-2 shows the monitoring 

requirements applicable to each of these categories.

Table 5-2

Monitoring Requirements for RECLAIM Sources

Source Category Major Sources

(NOx and SOx)

Large Sources

(NOx only)

Process Units and

Rule 219 Equipment

(NOx and SOx)

Monitoring 

Method

Continuous Emission 

Monitoring System 

(CEMS)

Fuel Meter or Continuous 

Process Monitoring 

System (CPMS)

Fuel Meter, Timer, or 

CPMS

Reporting 

Frequency Daily Monthly Quarterly

Continuous Emission Monitoring System (CEMS)

Requirements

CEMS represent both the most accurate and the most reliable method of 

calculating emissions because they continuously monitor all of the parameters 

necessary to directly determine mass emissions of NOx and SOx. They are also 

the most costly method. These attributes make CEMS the most appropriate 

method for the largest emission-potential equipment in the RECLAIM universe, 

major sources, which are relatively few in number but represent a majority of the 

total emissions from all equipment. Based on emissions reported in the QCERs, 

79% of all RECLAIM NOx emissions come from major sources and 97% of all 

RECLAIM SOx emissions come from major sources.

Alternatives to CEMS, or Alternative Continuous Emission Monitoring System 

(ACEMS), are allowed under the RECLAIM regulation. These are devices that 

do not directly monitor NOx or SOx mass emissions; instead, they correlate 

multiple process parameters to arrive at mass emissions. To be approved for 

RECLAIM MRR purposes, ACEMS must be determined by the AQMD to be 

equivalent to CEMS in relative accuracy, reliability, reproducibility, and 

timeliness.

Compliance Status

By the end of calendar year 1999, almost all facilities that were required to have 

CEMS had their CEMS certified or provisionally approved. The only remaining 

uncertified CEMS are for sources that recently became subject to major source 

reporting requirements and sources that modified their CEMS. It is expected that 

there will be a few new major sources each year. Therefore, there will continue 

to be a small number of CEMS in the certification process at any time. There are 

no longer any CEMS that have been in the certification process for a significant 

length of time due to unusual technical issues.
ANNUAL RECLAIM AUDIT

PAGE 5 - 7 MARCH 2011

Standing Working Group on RECLAIM CEMS Technical Issues

CEMS technical issues, which delayed certification of many CEMS, arose over 

the course of RECLAIM implementation. To address these issues and further 

assist facilities in complying with major source monitoring requirements, a 

Standing Working Group (SWG) on RECLAIM CEMS Technical Issues was 

formed to provide a forum in which facility representatives, consultants and 

AQMD staff could discuss and work out technically-sound and reasonable 

solutions to CEMS issues. In the past, the SWG met quarterly to discuss 

progress and also bring up new issues. However, since existing issues have 

been resolved and new issues are infrequent, the SWG currently is only 

convened as necessary.

Semiannual and Annual Assessments of CEMS

RECLAIM facilities conduct their Relative Accuracy Test Audit (RATA) of certified

CEMS using private sector testing laboratories approved under the AQMD 

Laboratory Approval Program (LAP). These tests are conducted either 

semiannually or annually, depending on the most recent relative accuracy value 

(the sum of the average differences and the confidence coefficient) for each 

source. The interval is annual only when all required relative accuracies 

obtained during an audit are 7.5% or less (i.e., more accurate).

To verify the quality of CEMS, the RATA report compares the CEMS data to data 

taken simultaneously, according to approved testing methods (also known as 

reference methods), by a LAP-approved source testing contractor. The relative 

accuracy performance requirements for the RATAs are ±20% for pollutant 

concentration, ±15% for stack flow rate, and ±20% for pollutant mass emission 

rate (the product of concentration and stack flow rate). The RATAs also 

determine whether CEMS data must be adjusted for low readings compared to 

the reference method (bias adjustment factor), and by how much. The RATA 

presents two pieces of data, the CEMS bias (how much it differs from the 

reference method on the average) and the CEMS confidence coefficient (how 

variable that bias or average difference is).

Tables 5-3 and 5-4, respectively, summarize the 2009 and 2010 calendar years’ 

passing rates for RATAs of certified CEMS for NOx and SOx concentration, total 

sulfur in fuel gas concentrations, stack flow rate (in-stack monitors and F-factor 

based calculations), and NOx and SOx mass emissions. However, the tables do 

not include SOx mass emissions calculated from total sulfur analyzer systems 

because such systems serve numerous devices, and therefore are not suitable 

for mass emissions-based RATA testing.
ANNUAL RECLAIM AUDIT

PAGE 5 - 8 MARCH 2011

Table 5-3

Passing Rates Based on RATAs of Certified CEMS in 20091

Concentration Stack Flow Rate Mass Emissions

NOx SO2 Total2

Sulfur

In-Stack 

Monitor

F-Factor 

Based Calc.

NOx SOx3

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

340 100 72 100 17 100 45 100 322 100 340 100 51 100

1. All passing rates calculated from data submitted before January 8, 2010 and may exclude some data from the 

fourth quarter of calendar year 2009. 2. Includes Cylinder Gas Audit (CGA) tests. 3. Does not include SOx emissions calculated from total sulfur analyzers.

Table 5-4

Passing Rates Based on RATAs of Certified CEMS in 20101

Concentration Stack Flow Rate Mass Emissions

NOx SO2 Total2

Sulfur

In-Stack 

Monitor

F-Factor 

Based Calc.

NOx SOx3

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

No. % 

Pass

391 100 79 100 17 100 56 100 354 100 391 100 79 100

1. All passing rates calculated from data submitted before January 11, 2011 and may exclude some data from the 

fourth quarter of calendar year 2010. 2. Includes Cylinder Gas Audit (CGA) tests. 3. Does not include SOx emissions calculated from total sulfur analyzers.

As indicated in Tables 5-3 and 5-4, the passing rates for NOx/SO2 concentration, 

stack flow rate, and mass emissions were high. Since the inception of RECLAIM 

there have been significant improvements with respect to the availability of 

reliable calibration gas, the reliability of the reference method, and an 

understanding of the factors that influence valid total sulfur analyzer data.

Electronic Data Reporting of RATA Results

Facilities operating CEMS under RECLAIM are required to submit RATA results. 

Traditionally, these results are presented in formal source test reports. AQMD, 

with help of the SWG, set up an electronic reporting system, known as Electronic 

Data Reporting (EDR), to allow RATA results to be submitted on storage media 

such as floppy diskettes, compact discs (CDs) and digital video discs (DVDs), or 

by electronic mail using a standardized format. This system minimizes the 

amount of material the facility must submit to AQMD and also facilitates the 

RATA review process. With this added option, many facilities have employed the 

EDR system to report RATA results, which has helped the AQMD expedite the 

review process. About 95% of RATA results were submitted using EDR in 

calendar year 2009 and about 97% in 2010.

Non-Major Source Monitoring, Reporting, and Recordkeeping 

Emissions quantified for large sources are primarily based on a concentration 

limits or emission rates specified in the Facility Permit. Other variables used in 
ANNUAL RECLAIM AUDIT

PAGE 5 - 9 MARCH 2011

the calculation of large source emissions are dependent on the specific process 

of the equipment, but generally include fuel usage, applicable dry F-factor, and 

the higher heating value of the fuel used. RECLAIM requires large sources to be 

source tested within defined three-year windows in order to validate the 

equipment’s concentration limit or emission rate. Since emissions are fuelbased, the monitoring equipment required to quantify emissions is a nonresettable fuel meter that must be corrected to standard temperature and 

pressure. Large source emission data must be submitted electronically on a 

monthly basis.

Process unit emission calculations are similar to those of large sources in that 

emissions are quantified using either the fuel-based calculations for a 

concentration limit or an emission factor specified in the Facility Permit. Similar 

to large sources, variables used in emission calculations for process units are 

dependent on the equipment’s specific process, but generally include fuel usage, 

applicable dry F-factor, and the higher heating value of the fuel used. Process 

units that are permitted with concentration limits are also required to be sourcetested, but within specified five-year windows. Emissions for equipment exempt 

under Rule 219 are quantified using emission factors and fuel usage. No source 

testing is required of equipment exempt under Rule 219. Since emissions are 

fuel-based for both process units and equipment exempt under Rule 219, the 

monitoring equipment required to quantify emissions is a non-resettable fuel 

meter, corrected to standard temperature and pressure. Additionally, a timer 

may be used to record operational time. In such cases, fuel usage is determined 

based on maximum rated capacity of the source. Process units and equipment 

exempt under Rule 219 must submit emission reports electronically on a 

quarterly basis.

Emissions Reporting

Requirements

RECLAIM is designed to take advantage of electronic reporting technology to 

streamline reporting requirements for both facilities and AQMD, and to help 

automate compliance-tracking. Under RECLAIM, facilities report their emissions 

electronically on a per device basis to AQMD’s Central Station computer as 

follows:

• Major sources must use a Remote Terminal Unit (RTU) to 

telecommunicate emission data to the AQMD Central Station. The RTU 

collects data, performs calculations, generates the appropriate data files, 

and transmits the data to the Central Station. This entire process is 

required to be performed by the RTU without human intervention.

• Emission data for all equipment other than major sources may be 

transmitted via RTU or compiled manually and transmitted to the Central 

Station via modem. Alternatively, since January 2005, the existing AQMD 

internet based application, Web Access To Electronic Reporting System 

(WATERS), was upgraded to allow RECLAIM facilities to transmit 

emission data for non-major sources via internet connection. The data 

may be transmitted directly by the facility or through a third party.
ANNUAL RECLAIM AUDIT

PAGE 5 - 10 MARCH 2011

Compliance Status

The main concern for emission reporting is the timely submittal of daily reports 

from major sources. If daily reports are not submitted by the specified deadlines, 

RECLAIM rules may require that emissions from CEMS be ignored and the 

emissions be calculated using MDP. Daily emission reports are submitted by the 

RTU of the CEMS to the AQMD Central Station via telephone lines. Often 

communication errors between the two points are not readily detectable by 

facility operators. Undetected errors can cause facility operators to believe that 

daily reports were submitted when they were not received by the Central Station. 

In addition to providing operators a means to confirm the receipt of their reports, 

the WATERS application can also display electronic reports that were submitted 

to, and received by, the Central Station. This system helps reduce instances 

where MDP must be used for late or missing daily reports, because the operators 

can verify that the Central Station received their daily reports, and can resubmit 

them if there were communication errors.

Protocol Review

Even though review of MRR protocols was only required by Rule 2015(b)(1) for 

the first three compliance years of the RECLAIM program, staff continues to 

review the effectiveness of enforcement and MRR protocols. Based on such 

review, appropriate revisions to the protocols may be needed to achieve 

improved measurement and enforcement of RECLAIM emission reductions, 

while minimizing administrative costs to AQMD and RECLAIM participants.

Since the RECLAIM program was adopted, staff has produced rule 

interpretations and implementation guidance documents to clarify and resolve 

specific concerns about the protocols raised by RECLAIM participants. In 

situations where staff could not interpret existing rule requirements to adequately 

address the issues at hand, the protocols and/or rules have been amended. 

During Compliance Year 2009, there were no new amendments to Regulation 

XX related to MRR protocols3

Finally, with respect to rule interpretations and implementation guidance 

documents, a Compliance Advisory (dated November 13, 2009) was mailed to all 

RECLAIM facilities with major sources as well as CEMS vendors to clarify the 

rules’ requirement for calculating the mass emission rate for RECLAIM major 

sources. The advisory re-iterated that mass emission rate calculations are to be 

. However, as discussed earlier in Chapter 3 of this 

report, AQMD initiated the amendment process to amend Rule 2002 –

Allocations for Oxides of Nitrogen (NOx) and Oxides of Sulfur (SOx) and 

implement Control Measure CMB-02 (“Further SOx Reductions for RECLAIM”), 

which estimated that implementation of SOx BARCT could achieve at least 3 

tons per day SOx emission reductions from 2011 to 2014. In order to implement 

this control measure, on November 5, 2010, the AQMD Governing Board 

adopted amendments to Rule 2002 – Allocations for Oxides of Nitrogen (NOx) 

and Oxides of Sulfur (SOx) that will result in an overall reduction of 5.7 tons of 

SOx per day when fully implemented in 2019 (the reductions are being phased in 

from 2013 through 2019). More detailed discussions of amended Rule 2002 can 

be found in Chapter 2 of this report.

 3 An amendment to Rule 2002 was adopted on November 5, 2010, resulting in an overall reduction of 5.7 

tons of SOx per day by 2019. See Chapter 2 for a more detailed discussion.
ANNUAL RECLAIM AUDIT

PAGE 5 - 11 MARCH 2011

conducted at the 15-minute level and that the mass emission rate for each 15-

minute period is the product of that period’s average stack flow value (the 

average of all valid stack flow data obtained from the stack flow analyzer in that 

15-minute period) and that period’s average concentration value (the average of 

all valid concentration data obtained from the concentration analyzer in that 15-

minute period). The deadline to make any changes to CEMS DAS/RTU software 

to comply with this Compliance Advisory was either of (a) the facility’s first 2010 

RATA due date for each major source, or (b) March 31, 2010, whichever was

later. Furthermore, once the changes are implemented, major source emissions 

must be recalculated back to January 1, 2010 using the corrected software.
ANNUAL RECLAIM AUDIT

PAGE 6 - 1 MARCH 2011

CHAPTER 6

REPORTED JOB IMPACTS

Summary

This chapter compiles data as reported by RECLAIM facilities in their Annual 

Permit Emissions Program (APEP). The analysis focuses exclusively on job 

impacts at RECLAIM facilities and if those job impacts were directly attributable 

to RECLAIM as reported by those facilities. There may be additional effects of 

the RECLAIM program on the local economy outside of RECLAIM facilities (e.g., 

generating jobs for consulting firms, source testing firms and CEMS vendors) and 

also factors other than RECLAIM (e.g., the current economic downturn), that 

impact the job market. These factors are not evaluated in this report.

According to the Compliance Year 2009 employment survey data gathered from 

APEP reports, RECLAIM facilities reported a net loss of 7,792 jobs, representing 

7.33% of their total employment. The vast majority of these losses were 

attributed to factors other than RECLAIM. Only three facilities (1% of the active 

facilities) attributed job impact at their facilities to the RECLAIM program. Four 

RECLAIM facilities were listed as shutdown during Compliance Year 2009. None 

of these facilities reported on their APEP report that RECLAIM was a contributing 

factor in their decision to close. Two facilities (0.70% of the RECLAIM universe) 

reported a combined loss of 188 jobs (0.19% of total employment) due to 

RECLAIM, whereas one facility (0.35% of the RECLAIM universe) reported a 

total of two jobs gained due to RECLAIM. AQMD staff has reviewed information 

available to AQMD for one facility which reported a major portion of the jobs lost 

(168) due to RECLAIM. This facility has been in the RECLAIM program since 

RECLAIM’s inception 16 years ago, reported job losses last year (Compliance 

Year 2008) of similar magnitude and attributed them to RECLAIM, has had 

emission decreases at a rate similar to the RECLAIM rate of emission reduction 

for NOx emissions, had adequate RTC allocations to cover its emissions in each 

of the last several years, and was not a structural buyer. The facility’s reported 

NOx emissions had a sharper rate of reduction from Compliance Year 2008 to 

2009. This is indicative of decreased production during that period since there 

was no equipment modification reported. However, the facility’s NOx emissions 

remained approximately constant during Compliance Years 2003 through 2008 

(although somewhat higher during Compliance Year 2007). Furthermore, the 

facility held adequate Compliance Year 2009 RTCs to sustain emissions at the 

Compliance Years 2003 through 2008 (excluding 2007) level during Compliance 

Year 2009. Therefore, AQMD could not identify any specific reason why the 

RECLAIM program would have caused the job losses reported by this facility.

Background

The APEP reports submitted by RECLAIM facilities include survey forms that are 

used to evaluate the socioeconomic impacts of the program. Facilities were 

asked to indicate on the forms the number of jobs at the beginning of Compliance 

Year 2009 and any changes that took place during the compliance year in each 

of three categories: manufacturing, sale of products, and non-manufacturing. 
ANNUAL RECLAIM AUDIT

PAGE 6 - 2 MARCH 2011

The number of jobs gained and lost reported by facilities in each category during 

the compliance year was tabulated.

Additionally, the APEP reports ask facilities that shutdown during Compliance 

Year 2009 to provide the reasons for their closure. The APEP reports also allow 

facilities to indicate whether the RECLAIM program led to the creation or 

elimination of jobs during Compliance Year 2009. Those facilities that reported a 

change in the number of jobs due to RECLAIM were asked to specify the number 

of jobs lost or gained, and to state why the job loss or creation was attributed to 

RECLAIM.

Since data regarding job impacts and facility shutdowns are derived from the 

APEP reports, the submittal of these reports are essential in assessing the 

influence that the RECLAIM program has on these issues. The following 

discussion represents data obtained from APEP reports submitted to AQMD for 

Compliance Year 2009 and clarifying information collected by AQMD staff. 

AQMD has no way to verify that the reported job impacts from RECLAIM facilities 

are real rather than perceived.

Job Impacts

Table 6-1 summarizes job impact data gathered from Compliance Year 2009 

APEP reports and follow-up telephone interviews. It should be noted that the

total number of facilities reporting job gains or losses does not equal the sum of 

the number of facilities reporting job changes in each category (i.e., the 

manufacture, sales of products, and non-manufacture categories) due to the fact 

that some facilities may report changes under more than one of these categories. 

A total of 110 facilities reported 5,757 job gains, while 137 facilities reported a 

total of 13,549 job losses. Net job losses were reported in all three categories: 

manufacturing (1,308), sales of products (74), and non-manufacturing (6,410). 

Table 6-1 shows a total net loss of 7,792 jobs, which represents a net decrease 

of 7.33% at RECLAIM facilities during Compliance Year 2009.

Table 6-1

Job Impacts at RECLAIM Facilities for Compliance Year 2009

Description Manufacture Sales of 

Products

NonManufacture Total

Initial Jobs 43,899 850 61,548 106,297

Overall Job Gain 3,440 98 2,219 5,757

Overall Job Loss 4,748 172 8,629 13,549

Final Jobs 42,591 776 55,138 98,505

Net Job Change -1,308 -74 -6,410 -7,792

Percent (%) Job Change -2.98% -8.71% -10.4% -7.33%

Facilities Reporting Job Gains 85 24 60 110

Facilities Reporting Job Losses 118 38 100 137

The above figures include four RECLAIM facilities that were reported to be 

shutdown in Appendix C during Compliance Year 2009. Of the four facilities that 

reported shutting down their manufacturing operations during Compliance Year 
ANNUAL RECLAIM AUDIT

PAGE 6 - 3 MARCH 2011

2009, one facility shut down after it was sold and the plant was vacated. Two 

other facilities were deemed shut down by AQMD because no APEP report was 

submitted, AQMD inspectors found both facilities were no longer operating, and 

attempts to contact representatives from the two facilities were unsuccessful. 

The fourth facility reported moving to Greenville, North Carolina as part of a 

strategic business decision.

Three facilities reported job impacts attributed to the RECLAIM program (refer to 

Appendix E). One facility reported job gains and two reported job losses. One 

facility reported a gain of two jobs to meet the monitoring, reporting and 

recordkeeping, as well as additional maintenance requirements, of the RECLAIM 

program. One facility declared a loss of 168 jobs and cited RECLAIM 

compliance costs as one of the reasons putting them at a competitive 

disadvantage compared to other facilities, including their own sister company 

located outside of California. However, AQMD staff has reviewed available 

information for this facility and found that the facility has been in the RECLAIM 

program since RECLAIM’s inception, reported job losses last year (Compliance 

Year 2008) of similar magnitude and attributed them to RECLAIM, has had 

emission decreases at a rate similar to the RECLAIM rate of emission reduction 

for NOx emissions, had adequate RTC allocations to cover its emissions in each 

of the last several years, and was not a structural buyer. The facility’s NOx 

emissions had a sharper rate of reduction from Compliance Year 2008 to 2009. 

This is indicative of decreased production during that period since there was no 

equipment modification reported. However, the facility’s NOx emissions 

remained approximately constant during Compliance Years 2003 through 2008 

(although somewhat higher during Compliance Year 2007). Furthermore, the 

facility held adequate Compliance Year 2009 RTCs to sustain emissions at the 

Compliance Years 2003 through 2008 (excluding 2007) level during Compliance 

Year 2009. Therefore, AQMD could not identify any specific reason why the 

RECLAIM program would have caused the job losses reported by this facility. 

Another facility stated that higher manufacturing costs, decreased profit margins, 

facility maintenance costs (which also included RECLAIM compliance costs), and 

a tight annual budget were the reasons that prevented the facility from rehiring 

for 20 job positions left vacant due to terminations or retirements. However, 

there was no information from this facility indicating whether or not the reduction 

in jobs was permanent.

It should be noted that this analysis of socioeconomic impacts based on APEP 

reports and follow-up interviews is focused exclusively on changes in 

employment that occurred at RECLAIM facilities. The effect of the program on 

the local economy outside of RECLAIM facilities, including consulting and source 

testing jobs, is not considered.

It is not possible to compare the impact of the RECLAIM program on the job 

market vis-à-vis a scenario without RECLAIM. This is because factors other than 

RECLAIM (e.g., the current economic downturn), also impact the job market. 

Based on the current year and past few years of data collected from RECLAIM 

facilities, the job gains or losses attributed only to RECLAIM comprise a very 

small percentage of the total number of jobs lost or gained in that period. 

Furthermore, there is no way to compare job impacts attributed to RECLAIM to 

job impacts attributed to command and control rules that would have been 

adopted in RECLAIM’s absence, because these command and control rules do 
ANNUAL RECLAIM AUDIT

PAGE 6 - 4 MARCH 2011

not exist. As mentioned in the previous paragraph, the effect of the RECLAIM 

program on the local economy outside of RECLAIM facilities (e.g., generating 

jobs for consulting firms, source testing firms and CEMS vendors) is also not 

considered in this report.
ANNUAL RECLAIM AUDIT

PAGE 7 - 1 MARCH 2011

CHAPTER 7

AIR QUALITY AND PUBLIC HEALTH IMPACTS

Summary

Audited RECLAIM emissions have been in an overall downward trend since the 

program’s inception. NOx and SOx emissions in Compliance Year 2009

continued their downward trend (reduced by 12% and 11%, respectively,

compared to Compliance Year 2008). Quarterly calendar year 2009 NOx 

emissions ranged from approximately five percent below to three percent above 

the mean NOx emissions for the year. Quarterly calendar year 2009 SOx 

emissions ranged from approximately 11% below to 11% above the year’s mean 

SOx emissions. There was no significant shift in seasonal emissions from the 

winter season to the summer season. Furthermore, based upon analysis of the 

geographical distribution of Compliance Year 2009 emissions on a quarterly 

basis, there was no distinct shift in the geographical distribution of emissions.

The California Clean Air Act (CCAA) required a 50% reduction in population 

exposure to ozone, relative to a baseline averaged over three years (1986 

through 1988), by December 31, 2000. Analysis of per capita exposure (the 

length of time each person is exposed) to ozone in 1998 and 2000 shows that 

the Basin achieved the December 2000 target for ozone well before the deadline. 

In fact, Los Angeles County, Orange County, and the South Coast Air Basin 

overall achieved compliance with the December 2000 target prior to 1994, and 

Riverside and San Bernardino Counties achieved compliance in 1996. In 

calendar year 2010, the per capita exposure to ozone continued to be well below 

the target set for December 2000.

Air toxic health risk is primarily caused by emissions of certain volatile organic 

compounds (VOCs) and metals, rather than NOx or SOx emissions. RECLAIM 

facilities are subject to the same air toxic, VOC, and solid and condensable 

particulate matter regulations as other sources in the Basin. All sources are 

subject, where appropriate, to the NSR Rule for Toxics (Rule 1401). In addition, 

sources with NOx or SOx emission increases are required to be equipped with 

BACT which minimizes to the best extent feasible the health effects of the NOx 

and SOx emissions. Therefore, it can be concluded that the RECLAIM program 

creates no increased toxic impact beyond what would have occurred with the 

rules and control measures RECLAIM subsumed, and therefore poses no 

increased adverse public health impacts.

Background

RECLAIM is designed to achieve the same, or higher level of, benefits in terms of 

air quality and public health as would have been achieved from implementation 

of the control measures and command-and-control rules that RECLAIM 

subsumed. Therefore, as a part of each annual program audit, AQMD evaluates 

per capita exposure to air pollution, toxic risk reductions, emission trends, and 

seasonal fluctuations in emissions. AQMD also generates quarterly emissions 
ANNUAL RECLAIM AUDIT

PAGE 7 - 2 MARCH 2011

maps depicting the geographic distribution of RECLAIM emissions. This chapter 

addresses:

• Emission trends for RECLAIM facilities;

• Seasonal fluctuations in emissions;

• Geographic patterns of emissions;

• Per capita exposure to air pollution; and

• Toxics impacts.

Emission Trends for RECLAIM Sources

Concerns were expressed during program development that RECLAIM might 

cause sources to increase their aggregate emissions during the early years of 

the program due to perceived over-allocation of emissions. In Figures 7-1 and 7-

2, which show NOx and SOx emissions from RECLAIM sources since 1989, the 

analysis of emissions from RECLAIM sources indicates that, in fact, the reverse 

is true. Overall, RECLAIM emissions have been in a downward trend since 

program inception. Compliance Year 2009 NOx emissions were 12% lower and 

SOx emissions were 11% lower than they were in Compliance Year 2008.

Figure 7-1

NOx Emission Trend for RECLAIM Sources

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tons of NOx

Compliance Year

Start of RECLAIM

Note: 1989-1993 emissions presented in this figure are the emissions from the facilities in the 1994 NOx 

universe.
ANNUAL RECLAIM AUDIT

PAGE 7 - 3 MARCH 2011

Figure 7-2

SOx Emission Trend for RECLAIM Sources

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tons of SOx

Compliance Year

Start of RECLAIM

Note: 1989-1993 emissions presented in this figure are the emissions from the facilities in the 1994 SOx 

universe.

NOx emissions have decreased every year since Compliance Year 1995. Since 

Compliance Year 1995, annual SOx emissions have also followed a general 

downward trend, except for slight increases in Compliance Years 1997, 2005,

and 2007 compared to their respective previous compliance year.

The increase in NOx emissions from Compliance Year 1994 to 1995 can be 

attributed to the application of MDP at the onset of RECLAIM implementation. At 

RECLAIM’s adoption in 1993, facilities with major sources were allowed to report 

emissions (interim reporting) for their first year in the program by quantifying 

emissions using an emission factor and fuel throughput. This interim period 

allowed major sources time to certify their CEMS. However, many facilities with 

major sources had difficulties in certifying their CEMS by the end of the interim 

period, and consequently, reported emissions using MDP during Compliance 

Year 1995. As discussed in Chapter 5, since CEMS for these major sources had 

no prior data, MDP required the application of the most conservative procedure 

to calculate substitute data by assuming continuous operation at the maximum 

rated capacity, regardless of the actual operational level during missing data 

periods. As a result, the application of MDP during this time period yielded 

substitute data that may have been much higher than the actual emissions. 

Overall, the figures clearly show that RECLAIM facilities did not increase their 

aggregate emissions during the earlier years of the program, dispelling the 

concerns about increased emissions in the early years.
ANNUAL RECLAIM AUDIT

PAGE 7 - 4 MARCH 2011

Seasonal Fluctuation in Emissions for RECLAIM Sources

During program development, another concern was that RECLAIM might cause 

facilities to shift emissions from the winter season into the summer ozone 

season, thus exacerbating poor air quality. To address this concern, AQMD staff 

analyzed quarterly audited emissions during calendar year 2009 and compared 

them with quarterly audited emissions for prior years to assess if there had been 

such a shift in emissions. This analysis is reflected in Figures 7-3, 7-4, 7-5, and 

7-6.1

Figure 7-3 shows the 2009 mean quarterly NOx emissions, which are the 

average of the aggregate emissions for each of the four quarters, versus the 

2009 actual quarterly emissions and Figure 7-4 compares the 2009 quarterly 

NOx emissions with the quarterly emissions from 2002 through 2008. During 

calendar year 2009, aggregate quarterly NOx emissions varied from about three

percent above the mean in the third quarter (July through September) to about 

five percent below the mean in the fourth quarter (October through December). 

Furthermore, Figure 7-4 shows that all four quarters of 2009 had lower aggregate 

RECLAIM NOx emissions than the corresponding quarter of any prior year since 

the program began in 1994. Additionally, the 2009 quarterly aggregate NOx 

emissions profile is similar to the corresponding profiles for several other recent 

years. Figures 7-3 and 7-4, together, show that the RECLAIM program has not 

caused a significant shift in NOx emissions from the winter season into the 

summer season and that, although aggregate RECLAIM NOx emissions in 2009

were lower than in previous years, the 2009 seasonal emissions profile was 

consistent with previous years.

 1 Data used to generate these figures were derived from audited data. Similar figures for calendar years 

1994 through 2007 in previous annual reports were generated from a combination of audited and reported 

data available at the time the reports were written.
ANNUAL RECLAIM AUDIT

PAGE 7 - 5 MARCH 2011

Figure 7-3

Calendar Year 2009 NOx Quarterly Emissions

1,700

1,725

1,750

1,775

1,800

1,825

1,850

1,875

1,900

1,925

1,950

1,975

2,000

2,025

2,050

2,075

2,100

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

NOx (tons)

Quarterly 2009 NOx Emissions

Mean NOx Emissions

Figure 7-4

Quarterly NOx Emissions from Calendar Years 2002 through 2009

2002

2003

2004

2005

2006

2007

2008

2009

1,600

1,800

2,000

2,200

2,400

2,600

2,800

3,000

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

NOx (tons)

2002

2003

2004

2005

2006

2007

2008

2009

Figure 7-5 presents the 2009 mean quarterly SOx emissions versus the 2009

actual quarterly emissions and Figure 7-6 compares the 2009 quarterly SOx 

emissions with the quarterly emissions from 2002 through 2008. Figure 7-5 

shows that quarterly SOx emissions during calendar year 2009 varied from 11%

below the mean in the first quarter (January through March) to 11% above the 

mean in the third quarter (July through September). Figure 7-6 reveals that the
ANNUAL RECLAIM AUDIT

PAGE 7 - 6 MARCH 2011

2009 quarterly aggregate SOx emissions profile was similar to those for previous 

years and all four quarters had lower aggregate RECLAIM SOx emissions than 

the corresponding quarter of any prior year since the program began in 1994.

AQMD staff discovered that the 11% peak above the mean in the third quarter 

would have been eliminated if the effect of one facility’s reported emissions 

based on the use of MDP were removed. The CEMS used by the facility was in 

operation for less than one year and had operational problems for two months. 

With this long period of invalid data, the emissions were calculated using the 

lifetime maximum value for part of the missing data period. The missing data 

caused a significant deviation from the facility’s normal emissions. Figure 7-7 

shows the 2009 mean quarterly SOx emissions versus what the 2009 actual 

quarterly SOx emissions would have been if the missing data applied to the 

facility was replaced with the highest normal quarterly emission value during the 

compliance year from the facility. By substituting the missing data with even the 

highest quarterly emissions for just this one facility during the third quarter, SOx 

emissions in the third quarter are only slightly greater than the second quarter. 

SOx emissions now vary by six percent below the mean in the first quarter to four 

percent above the mean in the third quarter.

Although the magnitude of the peak in the summer quarter emissions was larger 

than in previous years, this analysis shows that the RECLAIM program has not 

caused a significant shift in SOx emissions from the winter season into the 

summer season and that the calendar year 2009 seasonal emissions profile was 

consistent with previous years. The spike in emissions during the summer 

quarter was primarily due to missing data applied to one facility, not seasonal 

emission shifts.

Figure 7-5

Calendar Year 2009 SOx Quarterly Emissions

500

550

600

650

700

750

800

850

900

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

SOx (tons)

Quarterly 2009 SOx Emissions

Mean SOx Emissions
ANNUAL RECLAIM AUDIT

PAGE 7 - 7 MARCH 2011

Figure 7-6

Quarterly SOx Emissions from Calendar Years 2002 through 2009

2002

2003

2004

2005

2006

2007

2008

2009

600

700

800

900

1,000

1,100

1,200

1,300

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

SOx (tons)

2002

2003

2004

2005

2006

2007

2008

2009

Figure 7-7

Calendar Year 2009 SOx Quarterly Emissions removing MDP from the Summer 

Quarter

500

550

600

650

700

750

800

850

900

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

SOx (tons)

Quarterly 2009 SOx Emissions

Mean SOx Emissions

Geographic Distribution of Emissions

As part of this program audit, AQMD staff examined the quarterly emissions 

maps (developed pursuant to Rule 2015(b)(2)), for any notable changes in the 

geographic distribution of emissions. RECLAIM facilities have the flexibility to 
ANNUAL RECLAIM AUDIT

PAGE 7 - 8 MARCH 2011

increase emissions as much as they need to, as long as they can provide RTCs 

to offset the emissions exceeding their allocations; however, there are NSR 

implications if they increase their annual emissions above their Compliance Year 

1994 Allocation including Non-tradable/Non-usable credits. This flexibility that a 

RECLAIM facility has to control emissions by installing air pollution control 

equipment and/or the ability of RECLAIM facilities to purchase RTCs from other 

facilities to offset their emissions presents cause for concern that RECLAIM 

could alter the geographic distribution of emissions in the Basin and adversely 

affect air quality in certain areas.

Quarterly reported RECLAIM emissions for both NOx and SOx were mapped for 

Compliance Year 2009 (all four quarters of calendar year 2009 and the first two 

quarters of calendar year 2010). These maps are included in Appendices F and 

G. Grids are superimposed on these emission maps in order to geographically 

represent emissions, with shaded cells identifying emission ranges. Each map 

also identifies the highest emission level among all the grids (i.e., maximum 

emissions). Comparisons were made of cell patterns and of maximum emissions 

identified on each map for both NOx and SOx pollutants on a quarterly basis 

between Compliance Year 2008’s and Compliance Year 2009’s NOx and SOx 

quarterly emission maps to determine if there were any distinct shifts of 

emissions.

A comparison of the cell patterns on quarterly maps for both NOx and SOx 

pollutants, representing ranges of emissions, revealed no significant geographic 

shift in the cell patterns. The comparison of maximum emissions was also made 

for both NOx and SOx pollutants to determine if there were any emissions 

increases greater than five percent (a conservative threshold for review) for 

either pollutant. Both the quarterly NOx and SOx emission map comparisons for 

Compliance Year 2009 revealed that there were no emissions increases greater 

than five percent for either pollutant. Rather, both NOx and SOx emissions 

decreased during all four quarters for calendar year 2009 and the first two 

quarters in calendar year 2010. In summary, the emission maps show no distinct 

shift in emissions geographically based on cell patterns from quarter to quarter.

Per Capita Exposure to Pollution

The predicted effects of RECLAIM on air quality and public health were 

thoroughly analyzed through modeling during program development. The results 

were compared to projected impacts from continuing traditional command-andcontrol regulations and implementing control measures in the 1991 AQMP. One 

of the criteria examined in the analysis was per capita population exposure.

Per capita population exposure reflects the length of time each person is 

exposed to unhealthful air quality. The modeling performed in the program 

development analysis projected that the reductions in per capita exposure under 

RECLAIM in calendar year 1994 would be nearly identical to the reductions 

projected for implementation of the control measures in the 1991 AQMP, and the 

reductions resulting from RECLAIM would be greater in calendar years 1997 and 

2000. As reported in previous annual reports, actual per capita exposures to 

ozone for 1994 and 1997 were below the projections.

As part of the Children’s Environmental Health Protection Act that was passed in 

1999, and in consultation with the Office of Environmental Health Hazard 
ANNUAL RECLAIM AUDIT

PAGE 7 - 9 MARCH 2011

Assessment, CARB is to “review all existing health-based ambient air quality 

standards to determine whether these standards protect public health, including 

infants and children, with an adequate margin of safety.” As a result of that 

requirement, CARB adopted a new 8-hour ozone standard (0.070 ppm), which 

became effective May 17, 2006, in addition to the 1-hour standard (0.09 ppm) 

already in place. Table 7-1 shows the number of days that both the new state 8-

hour ozone standard of 0.070 ppm and the 1-hour standard of 0.09 ppm were 

exceeded.

In July 1997, the USEPA established a new ozone National Ambient Air Quality 

Standard (NAAQS) of 0.085 ppm based on an 8-hour average measurement. As 

part of the Phase I implementation that was finalized in June 2004, the federal 1-

hour ozone standard (0.12 ppm) was revoked. Effective May 27, 2008, the 8-

hour NAAQS ozone standard was reduced to 0.075 ppm. To reflect this revised 

standard, Table 7-1 shows monitoring results based on this revised 8-hour 

federal standard.

Table 7-1 summarizes ozone data for calendar years 2001 through 2010 in terms 

of the number of days that exceeded the state and federal ambient ozone 

standards and the Basin’s maximum concentration in each calendar year. This 

table shows that in calendar year 2010, the state 1-hour standard was exceeded 

on 83 days, which is the lower than previous years. The state 8-hour standard 

was exceeded on 128 days, which is about the average since calendar year 

2006. As for the federal 8-hour standard, calendar year 2010 shows about the 

same number of exceedances as calendar year 2007. Finally, the table shows 

that in calendar year 2010 the Basin maximum 1-hour and the Basin maximum 8-

hour values are the lowest to date.
ANNUAL RECLAIM AUDIT

PAGE 7 - 10 MARCH 2011

Table 7-1

Summary of Ozone Data

Calendar Year

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Days exceeding 

state 1-hour 

standard 

(0.09 ppm)

121 118 133 110 111 102 99 98 100 83

Days exceeding 

state new 8-hour 

standard 

(0.07 ppm)

156 149 161 161 142 121 128 136 131 128

Days exceeding 

federal 8-hour 

standard

(0.075 ppm)

132 135 141 126 116 114 108 121 113 109

Basin Maximum 

1-hour ozone 

concentration 

(ppm)

0.191 0.169 0.216 0.163 0.163 0.175 0.171 0.176 0.176 0.143

Basin Maximum 

8-hour ozone 

concentration 

(ppm)

0.146 0.148 0.200 0.148 0.145 0.142 0.137 0.131 0.128 0.123

The CCAA, which was enacted in 1988, established targets for reducing overall 

population exposure to severe non-attainment pollutants in the Basin—a 25% 

reduction by December 31, 1994, a 40% reduction by December 31, 1997, and a 

50% reduction by December 31, 2000 relative to a calendar years 1986-88 

baseline. These targets are based on the number of hours on average a person 

is exposed (“per capita exposure”2

 2 AQMD staff divides the air basin into a grid of square cells and interpolates recorded ozone data from 

ambient air quality monitors to determine ozone levels experienced in each of these grids. The total 

person-hours in a county experiencing ozone higher than the state ozone standard is determined by 

summing over the whole county the products of the number of hours exceeding the state ozone standard 

per grid cell with the number of residents in the corresponding cell. The per capita ozone exposures are 

then calculated by dividing the sum of person-hours by the total population within a county. Similar 

calculations are used to determine the Basin-wide per capita exposure by summing and dividing over the 

whole Basin.

) to ozone above the state 1-hour standard of 

0.09 ppm. Table 7-2 shows, the 1986-88 baseline, the actual per capita 

exposures each year since 1994 (RECLAIM’s initial year), and the 1997 and 

2000 targets set by the CCAA for each of the four counties in the district and the 

Basin overall. As shown in Table 7-2, the CCAA reduction targets were achieved 

as early as 1994 (actual 1994 Basin per capita exposure was 37.6 hours, which 

is below the 2000 target of 40.2 hours). The per capita exposure continues to 

remain much lower than the CCAA targets since RECLAIM started in 1994. For 

calendar year 2010, the actual per capita exposure for the Basin was 1.18 hours, 

which represents a 98.5% reduction from the 1986-88 baseline level.
ANNUAL RECLAIM AUDIT

PAGE 7 - 11 MARCH 2011

Table 7-2

Per Capita Exposure to Ozone above the State One-Hour Standard of 0.09 ppm (hours)

Calendar Year Basin Los 

Angeles Orange Riverside San Bernardino

1986-88 baseline1 80.5 75.8 27.2 94.1 192.6

1994 actual 37.6 26.5 9 71.1 124.9

1995 actual 27.7 20 5.7 48.8 91.9

1996 actual 20.3 13.2 4 42.8 70

1997 actual 5.9 3 0.6 13.9 24.5

1998 actual 12.1 7.9 3.1 25.2 40.2

2000 actual 3.8 2.6 0.7 8.5 11.4

2001 actual 1.73 0.88 0.15 6 5.68

2002 actual 3.87 2.16 0.13 11.12 12.59

2003 actual 10.92 6.3 0.88 20.98 40.21

2004 actual 3.68 2.26 0.50 6.82 12.34

2005 actual 3.11 1.43 0.03 6.06 12.54

2006 actual 4.56 3.08 0.68 8.02 13.30

2007 actual 2.90 1.50 0.35 4.65 10.53

2008 actual 4.14 2.04 0.26 7.50 14.71

2009 actual 2.872 1.538 0.078 3.884 10.539

2010 actual 1.184 0.377 0.107 2.451 4.476

1997 target2 48.3 45.5 16.3 56.5 115.6

2000 target3 40.2 37.9 13.6 47 96.3

1 Average over three years, 1986 through 1988. 2 60% of the 1986-88 baseline exposures. 3 50% of the 1986-88 baseline exposures.

Table 7-2 shows that actual per capita exposures during all the years mentioned 

were well under the 1997 and 2000 target exposures limits. It should also be 

noted that air quality in the Basin is a complex function of meteorological 

conditions and an array of different emission sources, including mobile, area, 

RECLAIM stationary sources, and non-RECLAIM stationary sources. Therefore, 

the reduction of per capita exposure beyond the projected level is not necessarily 

attributable to implementation of the RECLAIM program. It is possible that actual 

per capita exposure might have been as low, if not lower, with continuation of 

command-and-control regulations.

Toxic Impacts

Based on a comprehensive toxic impact analysis performed during program 

development, it was concluded that RECLAIM would not result in any significant 

impacts on air toxic emissions. Nevertheless, to ensure that the implementation 

of RECLAIM does not result in adverse toxic impacts, each annual program audit 

is required to assess any increase in the public health exposure to toxics caused 

by RECLAIM.

RECLAIM sources are subject to the same air toxic statutes and regulations 

(e.g., AQMD Regulation XIV, State AB 2588, Federal National Emissions 

Standards for Hazardous Air Pollutants, etc.) as other sources in the Basin. 

These regulations ensure that RECLAIM does not result in adverse air toxic 
ANNUAL RECLAIM AUDIT

PAGE 7 - 12 MARCH 2011

health impacts. In addition, air toxic health risk is primarily caused by emissions 

of VOCs and certain metals, rather than NOx or SOx emissions. VOC sources at 

RECLAIM facilities are subject to source-specific command-and-control rules the 

same way these rules apply to non-RECLAIM facilities, in addition to the toxics 

requirements described above. Sources of toxic metals emissions are also 

subject to the above-identified regulations pertaining to toxic emissions. 

Additionally, sources with NOx or SOx emission increases are also required to be 

equipped with BACT which minimizes to the best extent feasible the health 

effects of NOx and SOx emissions.

In conclusion, implementation of NOx and SOx RECLAIM is not expected to 

adversely impact air toxic emissions. That is, the substitution of NOx and SOx 

RECLAIM for the command-and-control rules and the measures RECLAIM 

subsumes are irrelevant to toxic emissions; the same toxics requirements and 

VOC rules and control measures apply in either case; and any emission 

increases are controlled by BACT. However, AQMD will continue to monitor and 

assess toxic risk reduction as part of future annual audits.
ANNUAL RECLAIM AUDIT

PAGE A - 1 MARCH 2011

APPENDIX A

RECLAIM UNIVERSE OF SOURCES

The RECLAIM universe of active sources as of June 30, 2010 is provided below.

Facility ID Cycle Facility Name Market

800088 2 3M COMPANY NOx

104017 1 AERA ENERGY LLC NOx

23752 2 AEROCRAFT HEAT TREATING CO INC NOx

115394 1 AES ALAMITOS, LLC NOx

115389 2 AES HUNTINGTON BEACH, LLC NOx/SOx

42676 2 AES PLACERITA INC NOx

115536 1 AES REDONDO BEACH, LLC NOx

148236 2 AIR LIQUIDE LARGE INDUSTRIES U.S., LP NOx/SOx

3417 1 AIR PROD & CHEM INC NOx

101656 2 AIR PRODUCTS AND CHEMICALS, INC. NOx

5998 1 ALL AMERICAN ASPHALT NOx

114264 1 ALL AMERICAN ASPHALT NOx

3704 2 ALL AMERICAN ASPHALT, UNIT NO.01 NOx

140499 2 AMERESCO HUNTINGTON BEACH, L.L.C. NOx

800196 2 AMERICAN AIRLINES INC NOx

145836 2 AMERICAN APPAREL DYEING AND FINISHING INC. NOx

156722 1 AMERICAN APPAREL DYEING AND FINISHING INC. NOx

10141 2 ANGELICA TEXTILE SERVICES NOx

21598 2 ANGELICA TEXTILE SERVICES NOx

74424 2 ANGELICA TEXTILE SERVICES NOx

16642 1 ANHEUSER-BUSCH INC., (LA BREWERY) NOx/SOx

117140 2 AOC, LLC NOx

11640 1 ARLON ADHESIVE SYSTEM/DECORATIVE FILMS NOx

12155 1 ARMSTRONG WORLD INDUSTRIES INC NOx

16737 2 ATKINSON BRICK CO NOx

10094 2 ATLAS CARPET MILLS INC NOx

117290 2 B BRAUN MEDICAL, INC NOx

800016 2 BAKER COMMODITIES INC NOx

117785 1 BALL METAL BEVERAGE CONTAINER CORP. NOx

800205 2 BANK OF AMERICA NT & SA, BREA CENTER NOx

40034 1 BENTLEY PRINCE STREET INC NOx

119907 1 BERRY PETROLEUM COMPANY NOx

155474 2 BICENT (CALIFORNIA) MALBURG LLC NOx

132068 1 BIMBO BAKERIES USA INC NOx

149491 2 BOEING REALTY CORP NOx

115241 1 BOEING SATELLITE SYSTEMS INC NOx

800067 1 BOEING SATELLITE SYSTEMS INC NOx

800343 2 BOEING SATELLITE SYSTEMS, INC NOx

131003 2 BP WEST COAST PROD.LLC BP CARSON REF. NOx/SOx

131249 1 BP WEST COAST PRODUCTS LLC,BP WILMINGTON NOx/SOx

98159 2 BREITBURN ENERGY CORP NOx

25638 2 BURBANK CITY, BURBANK WATER & POWER NOx

128243 1 BURBANK CITY, BURBANK WATER & POWER SCPPA NOx

800344 1 CALIFORNIA AIR NATIONAL GUARD, MARCH AFB NOx

22607 2 CALIFORNIA DAIRIES, INC NOx

138568 1 CALIFORNIA DROP FORGE, INC NOx

800181 2 CALIFORNIA PORTLAND CEMENT CO NOx/SOx

46268 1 CALIFORNIA STEEL INDUSTRIES INC NOx

107653 2 CALMAT CO NOx

107654 2 CALMAT CO NOx
ANNUAL RECLAIM AUDIT

PAGE A - 2 MARCH 2011

Facility ID Cycle Facility Name Market

107655 2 CALMAT CO NOx

107656 2 CALMAT CO NOx

119104 1 CALMAT CO NOx/SOx

153992 1 CANYON POWER PLANT NOx

94930 1 CARGILL INC NOx

22911 2 CARLTON FORGE WORKS NOx

118406 1 CARSON COGENERATION COMPANY NOx

141555 2 CASTAIC CLAY PRODUCTS, LLC NOx

800373 1 CENCO REFINING COMPANY NOx/SOx

148925 1 CHERRY AEROSPACE NOx

800030 2 CHEVRON PRODUCTS CO. NOx/SOx

56940 1 CITY OF ANAHEIM/COMB TURBINE GEN STATION NOx

129810 1 CITY OF RIVERSIDE PUBLIC UTILITIES DEPT NOx

139796 1 CITY OF RIVERSIDE PUBLIC UTILITIES DEPT NOx

16978 2 CLOUGHERTY PACKING LLC/HORMEL FOODS CORP NOx

800210 2 CONEXANT SYSTEMS INC NOx

800362 1 CONOCOPHILLIPS COMPANY NOx/SOx

800363 2 CONOCOPHILLIPS COMPANY NOx/SOx

38440 2 COOPER & BRAIN - BREA NOx

2537 2 CORONA CITY, DEPT OF WATER & POWER NOx

68042 2 CORONA ENERGY PARTNERS, LTD NOx

65384 1 CRITERION CATALYST CO L.P. NOx

50098 1 D&D DISPOSAL INC, WEST COAST RENDERING CO NOx

63180 1 DARLING INTERNATIONAL INC NOx

3721 2 DART CONTAINER CORP OF CALIFORNIA NOx

7411 2 DAVIS WIRE CORP NOx

143738 2 DCOR LLC NOx

143739 2 DCOR LLC NOx

143740 2 DCOR LLC NOx

143741 1 DCOR LLC NOx

132071 1 DEAN FOODS CO. OF CALIFORNIA NOx

47771 1 DELEO CLAY TILE CO INC NOx

800037 2 DEMENNO/KERDOON NOx

125579 1 DIRECTV NOx

800189 1 DISNEYLAND RESORT NOx

142536 2 DRS TECHNOLOGIES, INC. NOx

800264 2 EDGINGTON OIL COMPANY NOx/SOx

133813 1 EI COLTON, LLC NOx

115663 1 EL SEGUNDO POWER, LLC NOx

800372 2 EQUILON ENTER. LLC, SHELL OIL PROD. US NOx/SOx

124838 1 EXIDE TECHNOLOGIES NOx/SOx

17344 1 EXXONMOBIL OIL CORP NOx

25058 2 EXXONMOBIL OIL CORP NOx

800089 1 EXXONMOBIL OIL CORPORATION NOx/SOx

800094 1 EXXONMOBIL OIL CORPORATION NOx

95212 1 FABRICA NOx

11716 1 FONTANA PAPER MILLS INC NOx

346 1 FRITO-LAY NORTH AMERICA, INC. NOx

2418 2 FRUIT GROWERS SUPPLY CO NOx

142267 2 FS PRECISION TECH LLC NOx

5814 1 GAINEY CERAMICS INC NOx

152857 2 GEORGIA PACIFIC NOx

153033 2 GEORGIA-PACIFIC CORRUGATED LLC NOx

124723 1 GREKA OIL & GAS, INC NOx

137471 2 GRIFOLS BIOLOGICALS INC NOx

106325 2 HARBOR COGENERATION CO NOx

157359 1 HENKEL NOx

123774 1 HERAEUS METAL PROCESSING, INC. NOx

141585 1 HEXION SPECIALTY CHEMICALS, INC. NOx
ANNUAL RECLAIM AUDIT

PAGE A - 3 MARCH 2011

Facility ID Cycle Facility Name Market

15164 1 HIGGINS BRICK CO NOx

113160 2 HILTON COSTA MESA NOx

160888 1 HINES REIT EL SEGUNDO, L.P. NOx

800066 1 HITCO CARBON COMPOSITES INC NOx

2912 2 HOLLIDAY ROCK CO INC NOx

800003 2 HONEYWELL INTERNATIONAL INC NOx

124619 1 IMPRESS USA INC NOx

124808 2 INEOS POLYPROPYLENE LLC NOx/SOx

129816 2 INLAND EMPIRE ENERGY CENTER, LLC NOx

23589 2 INTERNATIONAL EXTRUSION CORP NOx

157363 2 INTERNATIONAL PAPER NOx

106810 2 INTERSTATE BRANDS CORP NOx

22364 1 ITT INDUSTRIES, CANNON NOx

16338 1 KAISER ALUMINUM & CHEM CORP NOx

21887 2 KIMBERLY-CLARK WORLDWIDE INC.-FULT. MILL NOx/SOx

1744 2 KIRKHILL RUBBER CO NOx

800335 2 LA CITY, DEPT OF AIRPORT NOx

800170 1 LA CITY, DWP HARBOR GENERATING STATION NOx

800074 1 LA CITY, DWP HAYNES GENERATING STATION NOx

800075 1 LA CITY, DWP SCATTERGOOD GENERATING STN NOx

800193 2 LA CITY, DWP VALLEY GENERATING STATION NOx

61962 1 LA CITY, HARBOR DEPT NOx

550 1 LA CO., INTERNAL SERVICE DEPT NOx

9053 1 LA ENERGY CORPORATION NOx

9217 1 LA ENERGY CORPORATION NOx

11034 2 LA ENERGY CORPORATION NOx

115277 1 LAFAYETTE TEXTILE IND LLC NOx

141295 2 LEKOS DYE AND FINISHING, INC NOx

144455 2 LIFOAM INDUSTRIES, LLC NOx

83102 2 LIGHT METALS INC NOx

151394 2 LINN WESTERN OPERATING, INC. NOx

151415 2 LINN WESTERN OPERATING, INC. NOx

151532 2 LINN WESTERN OPERATING, INC. NOx

152054 1 LINN WESTERN OPERATING, INC. NOx

115314 2 LONG BEACH GENERATION LLC NOx

17623 2 LOS ANGELES ATHLETIC CLUB NOx

58622 2 LOS ANGELES COLD STORAGE CO NOx

125015 2 LOS ANGELES TIMES COMMUNICATIONS LLC NOx

800080 2 LUNDAY-THAGARD COMPANY NOx/SOx

38872 1 MARS PETCARE U.S., INC. NOx

14049 2 MARUCHAN INC NOx

3029 2 MATCHMASTER DYEING & FINISHING INC NOx

148340 2 MCDONNELL DOUGLAS CORP/COM AIRCRAFT SERV NOx

2825 1 MCP FOODS INC NOx

115563 1 METAL COATERS OF CALIFORNIA NOx

94872 2 METAL CONTAINER CORP NOx

155877 1 MILLERCOORS, LLC NOx

12372 1 MISSION CLAY PRODUCTS NOx

121737 1 MOUNTAINVIEW POWER COMPANY LLC NOx

11887 2 NASA JET PROPULSION LAB NOx

40483 2 NELCO PROD. INC NOx

12428 2 NEW NGC, INC. NOx

131732 2 NEWPORT FAB, LLC NOx

18294 1 NORTHROP GRUMMAN CORP, AIRCRAFT DIV NOx

800408 1 NORTHROP GRUMMAN SPACE & MISSION SYSTEMS NOx

800409 2 NORTHROP GRUMMAN SPACE & MISSION SYSTEMS NOx

112853 2 NP COGEN INC NOx

45471 2 OGLEBAY NORTON INDUSTRIAL SANDS INC NOx

89248 2 OLD COUNTRY MILLWORK INC NOx
ANNUAL RECLAIM AUDIT

PAGE A - 4 MARCH 2011

Facility ID Cycle Facility Name Market

47781 1 OLS ENERGY-CHINO NOx

35302 2 OWENS CORNING ROOFING AND ASPHALT, LLC NOx/SOx

7427 1 OWENS-BROCKWAY GLASS CONTAINER INC NOx/SOx

151594 1 OXY USA, INC NOx

151601 1 OXY USA, INC NOx

45746 2 PABCO BLDG PRODUCTS LLC PABCO PAPER, DBA NOx/SOx

17953 1 PACIFIC CLAY PRODUCTS INC NOx

59618 1 PACIFIC CONTINENTAL TEXTILES, INC. NOx

151178 1 PACIFIC ENERGY NOx

2946 1 PACIFIC FORGE INC NOx

137520 1 PACIFIC TERMINALS LLC NOx

800416 1 PACIFIC TERMINALS LLC NOx

800417 2 PACIFIC TERMINALS LLC NOx

800419 2 PACIFIC TERMINALS LLC - HUNTINGTON NOx

800420 2 PACIFIC TERMINALS LLC - LONG BEACH NOx

130211 2 PAPER-PAK INDUSTRIES NOx

800183 1 PARAMOUNT PETR CORP NOx/SOx

800168 1 PASADENA CITY, DWP NOx

133987 1 PLAINS EXPLORATION & PRODUCTION CO, LP NOx

133996 2 PLAINS EXPLORATION & PRODUCTION COMPANY NOx

800431 1 PRATT & WHITNEY ROCKETDYNE, INC. NOx

7416 1 PRAXAIR INC NOx

42630 1 PRAXAIR INC NOx

152501 1 PRECISION SPECIALTY METALS INC NOx

136 2 PRESS FORGE CO NOx

105903 1 PRIME WHEEL NOx

132191 1 PURENERGY OPERATING SERVICES, LLC NOx

132192 1 PURENERGY OPERATING SERVICES, LLC NOx

8547 1 QUEMETCO INC NOx/SOx

19167 2 R J NOBLE COMPANY NOx

3585 2 R. R. DONNELLEY & SONS CO, LA MFG DIV NOx

20604 2 RALPHS GROCERY CO NOx

115041 1 RAYTHEON COMPANY NOx

114997 1 RAYTHEON COMPANY NOx

115172 2 RAYTHEON COMPANY NOx

800371 2 RAYTHEON SYSTEMS COMPANY - FULLERTON OPS NOx

20543 1 REDCO II NOx

15544 2 REICHHOLD INC NOx

115315 1 RELIANT ENERGY ETIWANDA, INC. NOx

52517 1 REXAM PLC, REXAM BEVERAGE CAN COMPANY NOx

114801 1 RHODIA INC. NOx/SOx

61722 2 RICOH ELECTRONICS INC NOx

139010 2 RIPON COGENERATION LLC NOx

800182 1 RIVERSIDE CEMENT CO NOx/SOx

800113 2 ROHR,INC NOx

18455 2 ROYALTY CARPET MILLS INC NOx

4242 2 SAN DIEGO GAS & ELECTRIC NOx

161300 2 SAPA EXTRUDER INC. NOx

155221 2 SAVE THE QUEEN LLC (DBA QUEEN MARY) NOx

15504 2 SCHLOSSER FORGE COMPANY NOx

20203 2 SCOPE PRODUCTS INC, DEXT CO NOx

14926 1 SEMPRA ENERGY (THE GAS CO) NOx

37603 1 SGL TECHNIC INC, POLYCARBON DIVISION NOx

131850 2 SHAW DIVERSIFIED SERVICES INC NOx

117227 2 SHCI SM BCH HOTEL LLC, LOEWS SM BCH HOTE NOx

16639 1 SHULTZ STEEL CO NOx

54402 2 SIERRA ALUMINUM COMPANY NOx

85943 2 SIERRA ALUMINUM COMPANY NOx

101977 1 SIGNAL HILL PETROLEUM INC NOx
ANNUAL RECLAIM AUDIT

PAGE A - 5 MARCH 2011

Facility ID Cycle Facility Name Market

43201 2 SNOW SUMMIT INC NOx

4477 1 SO CAL EDISON CO NOx

5973 1 SO CAL GAS CO NOx

800127 1 SO CAL GAS CO NOx

800128 1 SO CAL GAS CO NOx

8582 1 SO CAL GAS CO/PLAYA DEL REY STORAGE FACI NOx

14871 2 SONOCO PRODUCTS CO NOx

800338 2 SPECIALTY PAPER MILLS INC NOx

126498 2 STEELSCAPE, INC NOx

105277 2 SULLY MILLER CONTRACTING CO NOx

19390 1 SULLY-MILLER CONTRACTING CO. NOx

23196 2 SUNKIST GROWERS, INC NOx

2083 1 SUPERIOR INDUSTRIES INTERNATIONAL INC NOx

3968 1 TABC, INC NOx

18931 2 TAMCO NOx

14944 1 TECHALLOY CO., INC. NOx/SOx

151798 1 TESORO REFINING AND MARKETING COMPANY LOS ANGELES REFINERY NOx/SOx

800436 1 TESORO REFINING AND MARKETING COMPANY LOS ANGELES REFINERY NOx/SOx

96587 1 TEXOLLINI INC NOx

14736 2 THE BOEING COMPANY NOx

800110 2 THE BOEING COMPANY NOx

800038 2 THE BOEING COMPANY - C17 PROGRAM NOx

11119 1 THE GAS CO./ SEMPRA ENERGY NOx

153199 1 THE KROGER CO/RALPH GROCERY CO NOx

11435 2 THE PQ CORP NOx/SOx

97081 1 THE TERMO COMPANY NOx

800330 1 THUMS LONG BEACH NOx

129497 1 THUMS LONG BEACH CO NOx

800325 2 TIDELANDS OIL PRODUCTION CO NOx

68118 2 TIDELANDS OIL PRODUCTION COMPANY ETAL NOx

800240 2 TIN, INC. TEMPLE-INLAND, DBA NOx

137508 2 TONOGA INC, TACONIC DBA NOx

53729 1 TREND OFFSET PRINTING SERVICES, INC NOx

43436 1 TST, INC. NOx

800026 1 ULTRAMAR INC NOx/SOx

9755 2 UNITED AIRLINES INC NOx

73022 2 US AIRWAYS INC NOx

800149 2 US BORAX INC NOx

800150 1 US GOVT, AF DEPT, MARCH AIR RESERVE BASE NOx

12185 2 US GYPSUM CO NOx/SOx

18695 1 US GYPSUM CO NOx

1073 1 US TILE CO NOx

800393 1 VALERO WILMINGTON ASPHALT PLANT NOx

111415 2 VAN CAN COMPANY NOx

14502 2 VERNON CITY, LIGHT & POWER DEPT NOx

115130 1 VERTIS, INC NOx

148897 2 VINTAGE PETROLEUM NOx

148896 2 VINTAGE PETROLEUM, INC DEL VALLE OIL FLD NOx

151899 2 VINTAGE PRODUCTION CALIFORNIA LLC NOx

14495 2 VISTA METALS CORPORATION NOx

126501 2 VOUGHT AIRCRAFT INDUSTRIES NOx

143261 1 WELLHEAD POWER COLTON LLC NOx

42775 1 WEST NEWPORT OIL CO NOx/SOx

17956 1 WESTERN METAL DECORATING CO NOx

51620 1 WHEELABRATOR NORWALK ENERGY CO INC NOx

127299 2 WILDFLOWER ENERGY LP/INDIGO ENERGY FAC NOx

158950 1 WINDSOR QUALITY FOOD CO. LTD. NOx
ANNUAL RECLAIM AUDIT

PAGE B - 1 MARCH 2011

APPENDIX B

FACILITY INCLUSIONS

As discussed in Chapter 1, two facilities were added to the RECLAIM universe through 

inclusions from July 1, 2009 through June 30, 2010. The reasons for the inclusion are 

also provided.

Facility 

ID Cycle Facility Name Market Date Reason

160888 1 HINES REIT EL SEGUNDO, L.P. NOx 4/9/2010 Partial change of operator from an 

existing facility.

153992 1 CANYON POWER PLANT NOx 3/23/2010 Opt-in at facility request.
ANNUAL RECLAIM AUDIT

PAGE C - 1 MARCH 2011

APPENDIX C

RECLAIM FACILITIES CEASING OPERATION OR EXCLUDED

AQMD staff is aware of the following RECLAIM facilities that permanently shut down all 

operations, inactivated their RECLAIM permits, or were excluded from the RECLAIM 

universe from July 1, 2009 through June 30, 2010. The reasons for shutdowns and 

exclusions cited below are based on the information available to AQMD staff.

Facility ID 16395

Facility Name AAA Glass Corp.

City and County Los Angeles, Los Angeles County

SIC 3229

Pollutants NOx

1994 Allocation 9,152

Reason for Shutdown Facility shut down after it was sold. A new owner bought the facility 

and decided not to operate the permitted equipment. AQMD 

inspectors confirmed that the facility had been shut down and that the 

facility was vacated.

Facility ID 60531

Facility Name Pacific Fabric Finishing

City and County Vernon, Los Angeles County

SIC 2262

Pollutants NOx

1994 Allocation 7,534

Reason for Shutdown The RECLAIM audit inspection for the prior compliance year was 

performed on 10/9/2009. The audit showed facility emissions were 

reconciled with RTC holdings. No indication of impending shutdown 

was noted in the inspector’s report. For the Compliance Year 2009, 

the facility did not submit QCERs after the first quarter, or their APEP. 

AQMD staff was unable to contact facility as of 12/9/2010. All permits 

expired on 10/8/2009 due to non-payment of renewal fees and other 

dues. The assumed date of shutdown was 6/30/2010.

Facility ID 153478

Facility Name Mega Printex, Inc.

City and County Gardena, Los Angeles County

SIC 2262

Pollutants NOx

1994 Allocation 0

Reason for Shutdown The RECLAIM audit inspection for the prior compliance year was 

performed on 11/5/2009. The audit showed that though the facility 

emissions were in exceedance of its RTC holdings in the first 3 

quarters, it successfully reconciled all its emissions in the last quarter. 

No indication of the impending shutdown was noted in the inspector’s 

report. For the Compliance Year 2009, the facility did not submit 

QCERs after the second quarter, or their APEP. Subsequently, AQMD 

staff was unable to reach facility by phone. Compliance Year 2009 

APEP forms were returned undeliverable. Attempts to deliver the 

forms in-person at equipment location and forwarding addresses were 

also unsuccessful. The assumed date of shutdown was 6/30/2010.
ANNUAL RECLAIM AUDIT

PAGE C - 2 MARCH 2011

Facility ID 800437

Facility Name Attends Healthcare Products Inc.

City and County La Verne, Los Angeles County

SIC 2823

Pollutants NOx

1994 Allocation 67,590

Reason for Shutdown Strategic business decision to move to Greenville, NC.
ANNUAL RECLAIM AUDIT

PAGE D - 1 MARCH 2011

APPENDIX D

FACILITIES THAT EXCEEDED THEIR ANNUAL ALLOCATIONS 

FOR COMPLIANCE YEAR 2009

The following is a list of facilities that failed to reconcile by securing RTCs to cover their 

NOx and/or SOx emissions in Compliance Year 2009 based on the results of audits 

conducted by AQMD staff.

Facility 

ID Facility Name

Compliance

Year Emittant

3704 ALL AMERICAN ASPHALT 2009 NOx

5998 ALL AMERICAN ASPHALT 2009 NOx

21598 ANGELICA TEXTILE SERVICES 2009 NOx

23196 SUNKIST GROWERS, INC 2009 NOx

56940 CITY OF ANAHEIM/COMB TURBINE GEN STATION 2009 NOx

89248 OLD COUNTRY MILLWORK INC 2009 NOx

101656 AIR PRODUCTS AND CHEMICALS, INC. 2009 NOx

124723 GREKA OIL & GAS 2009 NOx

125579 DIRECTV 2009 NOx

141295 LEKOS DYE AND FINISHING, INC 2009 NOx

145836 AMERICAN APPAREL DYEING & FINISHING, INC 2009 NOx

800182 RIVERSIDE CEMENT CO 2009 SOx

800373 CENCO REFINING COMPANY 2009 NOx
ANNUAL RECLAIM AUDIT

PAGE E - 1 MARCH 2011

APPENDIX E

REPORTED JOB IMPACTS ATTRIBUTED TO RECLAIM

Each year, RECLAIM facility operators are asked to provide employment data in their 

APEP reports. The report asks company representatives to quantify job increases 

and/or decreases, and to report the positive and/or negative impacts of the RECLAIM 

program on employment at their facilities.

The detailed information for facilities reporting that RECLAIM contributed to job gains or 

losses during Compliance Year 2009 (January 1 through December 31, 2009 for cycle1 

facilities and July 1, 2009 through June 30, 2010 for cycle 2 facilities) is summarized 

below:

Facilities with actual job gains or losses attributed to RECLAIM:

Facility ID 40034

Facility Name Bentley Prince Street Inc.

City and County City of Industry, Los Angeles County

SIC 2273

Pollutant(s) NOx

Cycle 1

Job Gain 0

Job Loss 168

Comments Fees and costs of compliance resulted in a competitive disadvantage with 

companies outside of RECLAIM.1

Facility ID 153033

Facility Name Georgia-Pacific Corrugated LLC

City and County Buena Park, Orange County

SIC 2679

Pollutant(s) NOx

Cycle 2

Job Gain 0

Job Loss 20

Comments Facility stated that higher manufacturing costs, lower profit margins, facility 

maintenance costs (including RECLAIM compliance costs), and a tight 

 1 AQMD staff has reviewed information available to AQMD for this facility and found that the facility has 

been in the RECLAIM program since RECLAIM’s inception, reported job losses last year (Compliance 

Year 2008) of similar magnitude and attributed them to RECLAIM, has had emission decreases at a rate 

similar to the RECLAIM rate of emission reduction for NOx emissions, had adequate RTC allocations to 

cover its emissions in each of the last several years, and was not a structural buyer. The facility’s NOx 

emissions had a sharper rate of reduction from Compliance Year 2008 to 2009. This is indicative of 

decreased production during that period since there was no equipment modification reported. However, 

the facility’s NOx emissions remained approximately constant during Compliance Years 2003 through 

2008 (although somewhat higher during Compliance Year 2007). Furthermore, the facility held adequate 

Compliance Year 2009 RTCs to sustain emissions at the Compliance Years 2003 through 2008 

(excluding 2007) level during Compliance Year 2009. Therefore, AQMD could not identify any specific 

reason why the RECLAIM program would have caused the job losses reported by this facility.
ANNUAL RECLAIM AUDIT

PAGE E - 2 MARCH 2011

annual budget prevented the facility from rehiring for 20 positions left 

vacant due to terminations or retirements. There was no information 

indicating whether or not the reduction in jobs was permanent.

Facility ID 800074

Facility Name LA City, DWP Haynes Generating Station

City and County Long Beach, Los Angeles County

SIC 4911

Pollutant(s) NOx

Cycle 1

Job Gain 2

Job Loss 0

Comments Facility cited monitoring, reporting and recording responsibilities, as well as 

additional maintenance for compliance as the reasons for job gains.