a. $24 per year per motor vehicle. Authorize the Chair to sign the 

adoption resolution (Attachment A). 

b. $12 per year per motor vehicle. Authorize additional $6 

increase effective in 2013, and an additional $6 increase 

effective in 201 5, for a maximum increase of $24 per year per 

motor vehicle. Authorize the Chair to sign the adoption 

resolution (Attachment B). 

c. $1 0 per year per motor vehicle. Authorize the Chair to sign the 

adoption resolution (Attachment C). 

Revenues generated shall be used to satisfy the requirements of 

Section 185 of the federal Clean Air Act in lieu of imposition of 

nonattainment penalties strictly on Valley businesses. Direct the 

Air Pollution Control Officer (APCO) to develop an alternative 

Section 185 program to exempt well-controlled Valley businesses 

from nonattainment penalties. Subsequent to the prerequisite 

public workshops and notification process, the alternative program 

shall be presented to the Governing Board for approval prior to 

submittal to the United States Environmental Protection Agency 

(E PA). 
SJVUA PCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 21, 201 0 

3. Spend revenues generated on reducing mobile source emissions as provided under 

California Health and Safety Code Sections 44223 and 44225 to help expedite 

attainment and maintenance of state and federal ambient air quality standards. 

Direct the APCO to provide an annual report to the,public detailing the new revenues 

generated, emission reduction projects funded, and expected reductions in 

emissions. 

4. Motor vehicle fees adopted here shall sunset upon expiration or revocation of the 

Section 185 nonattainment penalties. 

5. Direct the APCO to notify the California Air Resources Board that motor vehicle fees 

have been adopted; provide the California Air Resources Board with a copy of the 

adoption resolution and estimate of total annual funds generated by the above fees; 

and request that the California Air Resources Board make the finding that the District 

has undertaken all feasible measures to reduce nonattainment air pollutants from 

sources within the District's jurisdiction and regulatory control. 

6. Pursue federal legislative changes to repeal Section 185 of the federal Clean Air Act 

or eliminate inequities in the fee by providing an exemption from the fee for wellcontrolled stationary sources. 

BACKGROUND: 

With recent exceedances of the federal I-hour ozone standard, the federal Clean Air 

Act mandates the imposition of nonattainment penalties on stationary source 

businesses in the Valley. Federal law requires the District to promulgate regulations to 

comply with Section 185 of the federal Clean Air Act for the imposition and collection of 

these penalties. Failure to do so will result in the unilateral imposition and collection of 

these penalties from Valley businesses by the federal EPA. All penalties collected by 

EPA would then be deposited in the federal treasury with no expenditures in the Valley.. 

The District believes that these mandates are unfair to the Valley businesses that have 

made significant investments in clean-air technology. Considering their enormous 

expenditure and sacrifice, Valley businesses deserve our recognition and reward, rather 

than penalties. With that in mind, we asked for alternative approaches to imposing 

nonattainment penalties on stationary sources. In January 2010, EPA released 

guidance that provided alternative options for the equitable distribution of responsibility 

to mobile sources. This combined wi,th the authority granted to your Board by the state 

legislature in 2008 (Assembly Bill 2522 - Arambula), enables the District to craft an 

alternative solution that satisfies the above-referenced federal mandate in a more 

equitable fashion. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 27, 2070 

OPTIONS CONSIDERED BUT NOT RECOIVIMENDED: 

1. Take no action - Let current District Rule 3170 (Federally Mandated Ozone 

Nonattainment Fee) stand with no amendments to satisfy Section 185 

Requirements: 

This option is NOT recommended for the following reasons: 

Valley businesses will be required to pay the fees directly to the federal 

government and the revenues generated will not be reinvested in the Valley. 

If the District fails to adopt or implement a required fee program, EPA is 

required by federal law to collect the unpaid fees plus interest on any unpaid 

fees. Federal laws also require that any fees collected under Section 185 to 

be deposited in the United States Treasury. 

The Valley will be subject to expensive federal sanctions including a de-facto 

ban on new businesses locating in the Valley (i.e., 2-1 offset ratio), and the 

loss of federal highway funds ($250 million per year). 

The current version of District Rule 3170 was adopted by your Board On May 16, 

2002. This version includes special provisions to exempt well-controlled businesses 

("clean urrits") from the penalties and provides for multi-year averaging of err~issions 

to extend credit to businesses that invested in early reductions in emissions, and to 

account for fluctuations in production rates due to market conditions. 

Unfortunately, in January 2010, the U.S. Environmental Protection Agency (EPA) 

disapproved these special provisions and issued a limited approval and limited 

disapproval of Rl.lle 3170. This action by EPA began an 18-month sanction clock 

that mandates the submission of an approvable rule by the District. 

2. Strict adherence to Section 185 mandates - Apply nonattainment penalties to 

the Valley's stationary source businesses: 

This option is also NOT recommended for the following reasons: 

Well-controlled Valley businesses should not be penalized for failure to attain 

the federal I-hour ozone standard. 

Violations of the I-hour ozone standard are primarily due to emissions from 

mobile sources. Emissions from mobile sources constitute more than 80 

percent of emissions that contribute to the formation of ozone. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 2 1, 20 10 

Emissions from stationary sources in the Valley have already been reduced 

by over 80 percent. 

Valley's stationary source businesses are already subject to some of the 

toughest air regulations in the nation. lmposition of the nonattainment 

penalties on well-controlled stationary sources will NOT result in meaningful 

reductions in emissions from these sources as was initially intended under 

Section 185. 

lmposition of the Section 185 nonattainment fees on Valley businesses will 

result in a significant blow to the Valley's fragile economy. 

Recent guidance issued by the EPA provides the option to assess 

nonattainment fees on mobile sources of emissions. 

Section 185 of the federal Clean Air Act mandates that "Severe" and "Extreme" 

ozone nonattainment areas adopt a program requiring major NOx and VOC 

stationary sources of air pollution to pay nonattainment fees in the event the area 

fails to reach attainment by the required attainment date. Affected businesses would 

be required to pay these fees on an annual basis 1.1ntil the area reaches attainment. 

In 1990, the Clean Air Act set the fee at $5,000 per ton of VOC and NOx emitted by 

the source during the calendar year in excess of 80 percent of the facility's "baseline 

amount". The Act also required that the fees be adjusted for inflation based on the 

Consumer Price Index (CPI) on an annual basis. For 2009, the fee had escalated to 

$8,755.33 per ton. 

When Section 185 was first enacted by the United States Congress, it was intended 

to serve as a hammer compelling stationary sources to install additional controls to 

reduce emissions and expedite attainment. Given today's circumstances, however, 

these fees, if applied to stationary sources, will not have the intended impact in San 

Joaquin Valley. Most stationary sources in San Joaquin Valley are already equipped 

with Best Available Retrofit Control Technology (BARCT) or Best Available Control 

Technology (BACT). In reality, with the mature control programs that are in place in 

the San Joaquin Valley, most businesses have already made significant investments 

and installed the most advanced controls available for their facilities. Please refer to 

the District's recent 2010 Ozone Mid-Course Review for a detailed assessment of 

various stationary source regulations that Valley businesses must comply with. 

Under these circumstances, Section 185 has become a punitive fee with no real 

ability by most facilities to reduce their emissions. The only options available to 

Valley businesses to reduce or avoid the fees would be to curtail production or go 

out of business. Given the Valley's chronic high unemployment rates combined with 

the current global and regional economic distress, the consequences could be 

devastating. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 21, 2010 

Under a straightforward implementation of Section 185, Valley businesses that are 

major sources of NOx or VOC emissions wo~~ld be subject to a total of an estimated 

$29 million per year in penalty fees. These estimated penalties are dependent on 

several primary factors, including the level of business activity during the baseline 

(calendar year 201 0) and subsequent years, and an escalating penalty rate pegged 

to the CPI. The fees would continue until the District reaches attainment for the now 

revoked I -hour ozone standard, which would require three consecutive years 

without a violation. The Clean Air Act does not impose any restrictions on the 

manner by which the nonattainment fee revenues are to be spent by the District. 

Table I: Estimate of Section 185 Penalty Fees 

Source Category 

Agriculture 

ACTIONS RECOMMENDED: 

Section 185 Nonattainment Fees 

$5,511,014 

Commercial $1,385,399 

Adopt a multifaceted approach with the following elements: 

Electric Generation 

Pursue federal legislative changes to repeal Section 185 of the federal Clean Air 

Act or eliminate inequities in the fee by providing an exemption from the fee for 

well-controlled stationary sources. 

$4,123,852 

Exempt well-controlled stationary sources from the Section 185 nonattainment 

fees. 

Industrial $9,110,370 

Industrial - Oil and Gas $6,786,434 

Industrial - Oil and Gas Area-wide $1,674,600 

TOTAL $28,591,668 

Provide for an equitable distribution of responsibility by adopting motor vehicle 

fees for use in satisfying federal mandates under Section 185. The District has 

the authority to adopt motor vehicle fees at a rate greater than that necessary to 

satisfy Section 185 requirements. 
SJVUA PCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 21, 201 0 

Sunset motor vehicle fees upon expiration or revocation of the Section 185 

nonattainment penalties. 

Reinvest generated revenues in San Joaquin Valley to fund emission reduction 

projects throughout the Valley. 

Ensure strict public accountability with annual reports to the public detailing the 

new revenues generated, emission reduction projects funded, and expected 

reductions in emissions. 

Given the inherent inequities in Section 185 penalties, and the fact that its application to 

stationary sources in San Joaquin Valley cannot produce the intended results, the 

District should pursue appropriate legislative remedies at the federal level. The desired 

changes will require amendments to federal Clean Air Act that will take time and will be 

difficult to achieve. Historically, the Clean Air Act has been amended rarely and each 

time the amendment process has been lengthy and has involved a myriad of national 

issues. Although the District should devote significant resources to pursue legislative 

changes, expecting quick results is not realistic. In the meantime, it is prudent for the 

District to act timely to devise and implement a strategy that produces optimum results 

in the face of problematic and unfair circumstances generated by these federal 

mandates. 

In 2008, when Assembly Bill 2522 (Arambula) was enacted, the District had identified 

the need for these funds to expedite attainment of the federal health-based standards 

for ozone and particulate matter. In developing and adopting the 2007 Ozone Plan, the 

District left no stone unturned in finding and adopting feasible regulatory measures to 

reduce ozone precursor emissions. Ttris extensive research and planning effort 

revealed that the District cannot attain the federal &hour ozone standards with 

regulations alone. The conclusion was that a well-funded incentive-based strategy to 

provide grant funding to Valley businesses, residents, and municipalities was essential. 

The 2007 Ozone Plan estimated that it will take close to $3 billion (approximately $200 

million per year) in incentives to bring the Valley into attainment with the federal 

standard. With intensive advocacy at the state and federal level, the District has 

achieved a ten-fold increase in grant funding for a sum total of $1 10 million per year, 

leaving a shortfall of nearly $90 million per year. As can be seen in Table 2, an 

additional 1 million people in the San Joaquin Valley can breathe healthy air with a wellfunded incentive program. 

~ - 1 Population in Attainment in 2015 2 million 1 1.4 million 1 

Table 2: Benefit of lncentives on Attainment with Federal 8-Hour Ozone Standard 

I Population in Attainment in 2020 1 3.6million I 2.6 million I 

I 

With Incentives I Without Incentives 1 
SJVUA PCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 27, 2070 

District staff is suggesting that the Board consider the following options in selecting the 

appropriate amount for the magnitude of the motor vehicle fees: 

1. $24 per year per motor vehicle, or 

2. $12 per year per motor vehicle with a phased-in increase of an additional $6 in 2013, 

and an additional $6 in 2015, for a maximum of $24 per year, or 

3. $1 0 per year per motor vehicle. 

A $10 motor vehicle fee will generate approximately $28 million dollars per year which 

will be sufficient to meet the Section 185 mandates. The following factors should also 

be considered in selecting the amount and the tirr~ing for motor vehicle fees: 

Incentive-based programs expedite reductions and improve public health while 

offering financial assistance to the regulated community 

Cost of reductions is increasing with time 

- "lower hanging ,fruitv reductions already consumed 

- Funding eligibility reduced in the future due to existing and future state 

and local regulations 

Funds generated locally can be offered as a match for additional state and 

federal funding 

General public participation (fair share responsibility) 

Public's acceptability and ability to absorb fee given the current economic 

distress 

The Valley has seen stationary source businesses reduce their emissions by 80% over 

the past several decades. This has significantly reduced the number of days during 

which the Valley exceeds the I-hour ozone standard, as shown in the Table 3 below. 

Unfortunately, the Valley is still triggering Section 185 penalty fees due to exceedances 

of the standard this year. Mobile sources now make up over 80% of ozone-forming 

emissions, and are the primary reason for ozone exceedances in the Valley. Commute 

traffic before and after school, for example, pose an ongoing challenge in eliminating 

exceedances of the standard. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October21. 2010 

Table 3: Vallev I -Hour Ozone Exceedances 

1 Year I Exceedances I 

In response to calls for added flexibility by the District and other agencies, EPA issued 

national guidance in January 2010 providing for alternative approaches to satisfy 

Section 185 requirements. The guidance includes several different alternative 

approaches that could utilize new funding to avoid the imposition of straight penalties on 

Valley businesses, as follows: 

201 0 

Fee-Equivalent Alternative Program: Program that raises at least as much revenue 

as the otherwise required Section 185 penalties if the proceeds are spent to pay for 

emissions reductions in the same geographic area subject to the section 185 

program. 

7 

Emissions-Equivalent Alternative Programs: Program that achieves at least as much 

additional emissions reductions as the amount of emissions against which fees 

would be assessed each year under the Section 185 penalty program (i.e., actual 

emissions in excess of 80 percent of the baseline emissions). 

*Most violations attributed to wild fires 

Combination of the Above Options: Program that combines features of the abovementioned alternatives. Under this option, a part of the reductions that are 

necessary to show equivalence come from program components that directly 

achieve the estimated reductions, and the remainder could come from imposition of 

fees on a set of sources identified in the alternate program. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 21, 2010 

PROGRAM FOR EXPEDI'TWRE OF REVENUES: 

Revenues generated shall be reinvested in the Valley to reduce mobile source 

emissions as provided under California Health and Safety Code Sections 44223 and 

44225. Utilizing the District's highly successful grant administration program, the funds 

generated here will be awarded to Valley businesses, residents, and municipalities to 

generate real and quantifiable reductions in emissions. 

The District has nearly 20 years of experience implementing highly successful voluntary 

incentive programs. To date, the District has awarded over $300 million in funds, 

achieving more than 80,000 tons of emission reductions through a variety of incentive 

programs aimed at reducing emissions primarily from mobile sources, but also other 

sources, such as fireplaces and residential lawn equipment. 

The District's incentive program has gained a reputation for excellence and serves as a 

model for grant programs throughout the State. The District has been acknowledged 

through a number of recent audits conducted by the California Air Resources Board, the 

Department of Finance, the Bureau of State Audits and the Sierra Nevada Air Quality 

Group (funded by the William and Flora Hewlett Foundation) as operating with a high 

degree of accountability, efficiency and the ability to do more with less. These audits 

are a reflection of the commitment by your Board to aggressively pursue and compete 

for available incentive funds and allocate the necessary resources to effectively 

administer these important programs. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 21, 2010 

The following is a list of program areas that will be eligible for grants under the motor 

vehicle fee revenues generated here: 

Table 4: Program Areas for lncentive Funding 

Van Pools 

Public Transit Incentive 

Annual Funding Need 

$1 50 rnillion 

$1 00 million 

$40 million 

Program 

A 

B 

C 

$0.5 million 

$0.5 million 

Park & Ride Lots 

Traffic Signal Synchronization 

Clean Alternative Fuel Infrastructure 

Electronic mobility systems (i.e. online services) 

Bicycle Infrastructure 

Citylcounty assistance to devise and implement 

Sustainable Community Strategies to reduce 

Vehicle Miles Traveled 

Gross Polluting Vehicles 

Q I Ag Irrigation Pump $5 million 

Description 

Truck Replacement 

School Bus Replacement 

Mass Transit 

$1.5 rr~illion 

$1 2 million 

$8 million 

$3 million 

$0.5 million 

$1 5 million 

$6 million 

Inland Ports (Truck-to-Rail) 

Short Sea Shipping (Truck-to-Ship) 

Construction Equipment Replacement 

Ag Off-Road Equipment Replacement 

I R I Forklifts I $1 rnillion 

$12.5 million 

$2.5 million 

$4 million 

$30 million 

Portable Off-Road Engines 

Locomotives 

X ( School Boilers $1 million 

$5 million 

$10 million 

U 

V 

W 

Specific funding designations and allocations will be made, on an annual basis, by the 

District Governing Board through the District's public budget development and adoption 

process. 

Clean Lawn Equipment 

Fireplace Change Out 

Residential Furnace 

$1 million 

$0.5 million 

$0.5 million 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 21, 2010 

EXPENDITLIRE IN ENVIRONMENTAL JUSTICE AREAS: 

The California H&SC includes a specific requirement that $1 0 million of funds collected 

under the increased motor vehicle fees be used to mitigate the impact of air pollution in 

disproportionately impacted neighborhoods, commor~ly referred to as "environmental 

justice" communities. The District has an excellent track record of distributing the 

majority of its funds to these areas, and fully expects to meet this requirement. 

Additionally, the legislation also requires that the District "convene an environmental 

justice advisoty committee, selected from a list given to the board by environmental 

justice groups from the San Joaquin Valley, to recommend the neighborhoods in the 

district that constitute environmental justice communities, and how to expend funds 

within these communities." In 2007, the District formed the Environmental Justice 

Advisory Group (EJAG), comprised of members from the environmental justice 

commur~ity. EJAG has been consulted on the potential of increased motor vehicle fees 

and their advisory role in the process, and would be utilized by the District to satisfy the 

advisory requirements in the legislation. 

PROCESS AND LEGAL REQUIREMENTS: 

California H&SC Sections 40610 through 40613 provide the authority for the District 

Board to increase motor vehicle surcharge fees, and lay out specific requirements for 

such an increase to take effect. The requirements include (see attached legislation for 

detailed requirements): 

Majority vote of the Governing Board and a majority vote of the elected members of 

the Board. 

Adoption of a resolution providing for both the fee increase and a corresponding 

program for expenditure of the moneys raised by the increased fees for the 

reduction of mobile source emissions. 

ARB make the following findings: 

The District has undertaken all feasible measures to reduce nonattainment air 

pollutants from sources within the District's jurisdiction and regulatory control. 

The District has notified ARB that fees have been adopted pursuant to this 

section and provided ARB with an estimate of the total funds that will be 

provided annually by each of those fees. 

Collection of the new fees nine months after ARB'S findings, above. 

Assessment by ARB of the District's progress in using the new fees to achieve and 

maintain state and federal ambient air quality standards every two years that the fee 

is assessed, and subrr~ittal of these assessments to the Legislature within two weeks 

of their completion. 
SJVUAPCD Governing Board 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF MANDATED FEDERAL 

NONATTAINMENT PENALTIES TO SOURCES WITHIN THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

October 2 1, 20 10 

Fees may be collected between fiscal years 2009-1 0 and 2023-24. If approved by your 

Board, the District estimates that the process for increasing motor vehicle fees would 

take approximately 12 months before new fees are ultimately received by the District, 

with fees being received no sooner than fiscal year 201 1-12. 

FISCAL IMPACT: 

No new motor vehicle fees are anticipated in the 201 0-201 1 fiscal year. Given the 

prerequisite process outlined under AB 2522 and the DMV's administrative process, a 

delay of approximately 9 months is expected before any new motor vehicle fees are 

collected and submitted to the District. 

No new staffing is proposed at this time for the administration of new grants with the 

revenues generated under Section 185 or from new motor vehicle fees. To minimize 

administrative costs, the District will utilize and leverage existing grant programs for the 

expenditure of new revenues. With this approach, it is anticipated that the bulk of 

additional administrative work can be absorbed by the existing staff. Additional staffing, 

if needed, will be subject to Board approval in future budgeting actions. 

Attachments: 

A) Resolution to lncrease Motor Vehicle Fees by $24, 5 pages 

B) Resolution to lncrease Motor Vehicle Fees by $12, with additional $6 increases in 2013 and 

201 5, 5 pages 

C) Resolution to lncrease Motor Vehicle Fees by $1 0, 5 pages 

D) Assembly Bill No. 2522, 3 pages 

E) EPA's January 5 2010 memo, "Guidance on Developing Fee Programs Required by Clean 

Air Act Section 185 for the 1-hour Ozone NAAQS", 17 pages 

F) Support Letter from California Partnership for the San Joaquin Valley, Februaty 18, 20 10, 2 

pages 

G) Support Letter from San Joaquin Business Council, October 12, 2010, 2 pages 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

October 21,201 0 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment A: 

RESOLUTION TO INCREASE MOTOR VEHICLE FEES BY $24 

(5 PAGES) 
SJVUAPCD 

1990 E. GEmSBURG 

AVENUE 

FRESNO, CA 93726-0244 

BEFORE THE GOVERNING BOARD OF THE 

SAN JOAQUIN VALLEY UNIFIED 

AIR POLLUTION CONTROL DISTRICT 

IN THE MATTER OF CONSIDER RESOLU'TION N,O. 

ALTERNATIVES FOR THE EQUITABLE 

APPLICATION OF FEDERAL NONATTAINMENT PENAL1-IES TO SOURCES WITHIN 

THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

WHEREAS, The San Joaquin Valley Unified Air Pollution Control District 

(District) is a duly constituted unified district, as provided in California Health and Safety 

Code sections 401 50 to 401 61 ; and 

11 WHEREAS, said District is authorized by California Health and Safety Code 

11 section 40702 to make and enforce all necessary and proper orders, rules and I( regulations to accomplish the purpose of Division 26 of the Health and Safety Code. 

11 and; and 

11 WHEREAS, Federal law under Section 185 of the federal Clean Air Act 

11 mandates that the District adopt a rule to impose nonattainment penalty fees on the 

I(Valleyls stationary sources due to failure to reach attainment of the now-revoked 

federal one-hour ozone standard; and 

WHEREAS, under Section 185 of the Clean Air Act, Valley businesses that are 

11 major sources of NOx or VOC emissions will be subject to a total of approximately 

11 $29 million per year in nonattainrnent penalty fees; and 

)I WHEREAS, the imposition of $29 million per year fee on Valley businesses can )I have a devastating economic impact on Valley residents and businesses; and 

I I WHEREAS, a January 201 0 guidance by the federal Environmental Protection (1 ~~enc~ provides alternatives for meeting Section 185 mandates by assessing all or 

11 part of the nonattainment penalty fees to mobile sources; and 

11 WHEREAS, more than 80 percent of the Valley's NOx emissions, the leading 11 contributor to Valley's ozone and particulate exceedances, come from mobile sources 

outside of the District's regulatory jurisdiction; and 

1 

ATTACHMENTA - RESOLUTION 
SNUAPCD 

1990 E. GEIlYSBURG 

A VENUE 

FRESNO, CA 937264264 

WHEREAS, Valley stationary sources are already subject to some of the most 

stringent air pollution regulations in the nation and, therefore, imposition of Section 

185 nonattainment penalties to stationary sources will not have the intended effect of 

compelling further reductions of emissions from stationary sources; and 

WHEREAS, Assembly Bill 2522 (Arambula) added Chapter 5.8 (commencing 

with Section 40610) to Part 3 of Division 26 of the Health and Safety Code, authorizing 

the District to increase the motor vehicle fee specified in Sections 44223 and 44225 of 

the Health and Safety Code by an amount up to twenty-four dollars ($24) per motor 

vehicle per year to provide funding for air pollution control programs needed to achieve 

and maintain state and federal ambient air quality standards; and 

WHEREAS, section 9250.17 of the California Vehicle Code authorizes the 

Department of Motor Vehicles to collect fees requested by the District Board pursuant to 

Health and Safety Code Sections 44223 and 44225; and 

WHEREAS, said fees are in addition to any other fees imposed by the District 

and may be charged in any of fiscal years 2009-10 to 2023-24, inclusive, and as of that 

date are repealed unless a later enacted statute, that is enacted prior to 2023-24, 

deletes or extends the date; and 

WHEREAS, the San Joaquin Valley Air Pollution Control District has been 

designated as extreme nonattair~rnent for ozone by the United States Environmental 

Protection Agency; and 

NOW, THEREFORE, IT IS RESOLVED THAT, to minimize the economic impact 

to Valley residents and businesses, and to more equitably distribute responsibility for 

Dzone violations, the Governing Board of the San Joaquin Valley Unified Air Pollution 

Control District, hereby: levies an additional twenty four dollar ($24) fee on all motor 

ilehicles subject to registration fees in the counties of Fresno, Kings, Madera, Merced, 

San Joaquin, Stanislaus and Tulare and the San Joaquin Valley portion of Kern in 

accordance with Chapter 5.8 (commencing with Section 40610) to Part 3 of Division 26 

3f the Health and Safety Code; requests that the California Air Resources Board make 

ATTACHMENT A - RESOLUTION 
SNUAPCD 

1990 e GETNS~URG 

AVENUE 

FRESNO, CA 93726-0244 

required findings under California Health and Safety Code Section 40612; and requests 

that the California Department of Motor Vehicles collect the fee in accordance with 

Section 9250.17 of the Vehicle Code. 

BE IT FURTHER RESOLVED THAT at least ten million dollars ($10,000,000) of 

said fees shall be used to mitigate the impacts of air pollution on public health and the 

environment on disproportionately impacted environmental justice communities in the 

San Joaquin Valley. 

BE IT FURTHER RESOLVED THAT the District Governing Board shall convene 

an environmental justice advisory committee, selected from a list given to the District 

Governing Board by environmental justice groups from the San Joaquin Valley, to 

recommend the neighborhoods in the District that constitute environmental justice 

communities, and how to expend funds in these communities. 

BE IT FURTHER RESOLVED THAT the fees adopted PI-~rsuant to this 

section, shall become effective after the California Air Resources Board makes the 

following findings: A) the District has undertaken all feasible measures to reduce 

nonattainment air pollutants from sources within the District's jurisdiction and 

regulatory control; and 6) the District has notified the California Air Resources 

Board that the fees have been adopted pursuant to this section and has provided 

the California Air Resources Board with an estimate of the total funds that will be 

provided annually by each of those fees. 

BE IT FURTHER RESOLVED THAT said fees shall cease to be levied upon 

expiration or revocation of the Section 185 nonattainment penalties, or June 30, 

2024, whichever is earlier. 

BE IT FURTHER RESOLVED THAT the District shall pursue federal 

legislative changes to repeal Section 185 of the federal Clean Air Act or eliminate 

inequities in the fee by providing an exernption from the fee for well-controlled 

stationary sources. 

'11 
SJVUAPCD 

1990 E. Gl3lYSBURG 

AVENUE 

FRESNO, CA 93726-0244 

BE IT FURTHER RESOLVED 'THAT Pursuant to Chapter 5.8 (commencing 

with Section 40610) to Part 3 of Division 26 of the Health and Safety Code the fees 

shall be collected beginning nine months after the above requirements are met. 

BE IT FURTHER RESOLVED THAT the San Joaquin Valley Unified Air 

Pollution Control District shall utilize its Emission Reduction Incentive Program to 

use the above fees in accordance with Chapter 5.8 (commencing with Section 

40610) of Part 3, and Chapter 7 (commencing with Section 44220) of Part 5 of 

Division 26 of the Health and Safety Code to achieve attainment with state and 

federal ambient air quality standards by the earliest practicable date. 

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ATTACHMENT A - RESOLUTION 
SJVUAPCO 

1990 E. G~BURG 

AVENUE 

f RESNO. CA 93726-0244 

THE FOREGOING was passed and adopted by the following majority vote of the 

Governing Board and majority vote of the elected officials of the Governing Board of the 

SAN JOAQUIN VALLEY UNIFIED AIR POLLUI-ION CONTROL DISTRICT this 21st 

day of October, 201 0, to wit: 

AYES: 

NOES: 

ABSENT: 

SAN JOAQUIN VALLEY UNIFIED 

AIR POLLUTION CONTROL DISTRICT 

BY 

Tony Barba, Chair 

Governing Board 

4TTEST: 

Jerk to the Governing Board 

3~ 

Michelle Franco 

ATTACHMENT A - RESOLUTION 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

' October21, 2010 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment B: 

RESOLUTION TO INCREASE MOTOR VEHICLE FEES BY $12, WITH ADDITIONAL 

$6 INCREASES IN 2013 AND 2015 

(5 PAGES) 
BEFORE THE GOVERNING BOARD OF THE 

SAN JOAQUIN VALLEY UNIFIED 

AIR POLLUTION CONTROL DISTRICT 

IN THE MATTER OF CONSIDER RESOLUTION NO. 

ALTERNATIVES FOR THE EQUITABLE I APPLICATION OF FEDERAL NONATTAINMENT PENALTIES TO SOURCES WITHIN 

THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

WHEREAS, The San Joaquin Valley Unified Air Pollution Control District 

(District) is a duly constituted unified district, as provided in Califor~iia Health and Safety 

Code sections 401 50 to 401 61 ; and 

WHEREAS, said District is authorized by California Health and Safety Code 

section 40702 to make and enforce all necessary .and proper orders, rules and 

regulations to accomplish the purpose of Division 26 of the Health and Safety Code, 

and; and 

WHEREAS, Federal law under Section 185 of the federal Clean Air Act 

mandates that the District adopt a rule to impose nonattainment penalty fees on the 

Valley's stationary sources due to failure to reach attainment of the now-revoked 

federal one-hour ozone standard; and 

WHEREAS, under Section 185 of the Clean Air Act, Valley businesses that are 

major sources of NOx or VOC emissions will be subject to a total of approximately 

$29 million per year in nonattainment penalty fees; and 

WHEREAS, the imposition of $29 million per year fee on Valley businesses can 

have a devastating economic impact on Valley residents and businesses; and 

WHEREAS, a January 2010 guidance by the federal Environmental Protection 

Agency provides alternatives for meeting Section 185 mandates by assessing all or 

part of the nonattainment penalty fees to mobile sources; and 

WHEREAS, more than 80 percent of ,the Valley's NOx emissions, the leading 

corltributor to Valley's ozone and particulate exceedances, come from mobile sources 

outside of the District's regulatory jurisdiction; and 

SJVUAPCD 

1990 E. GRPISBURG 

AVENUE 

FRESNO, CA 937264244 
SNUAPCD 

1990 E. GETTYSBURG 

AVENUE 

FRESNO, CA 937260244 

L 

WHEREAS, Valley stationary sources are already subject to some of the most 

stringent air pollution regulations in the nation and, therefore, imposition of Section 

185 nonattainment penalties to stationary sources will not have the intended effect of 

compelling further reductions of emissions from stationary sources; and 

WHEREAS, Assembly Bill 2522 (Arambula) added Chapter 5.8 (commencing 

with Section 40610) to Part 3 of Division 26 of the Health and Safety Code, authorizing 

the District to increase the motor vehicle fee specified in Sections 44223 and 44225 of 

the Health and Safety Code by an amount up to twenty-four dollars ($24) per motor 

vehicle per year to provide funding for air pollution control programs needed to achieve 

and maintain state and federal ambient air quality standards; and 

WHEREAS, section 9250.17 of the California Vehicle Code authorizes the 

Department of Motor Vehicles to collect fees requested by the District Board pursuant to 

Health and Safety Code Sections 44223 and 44225; and 

WHEREAS, said fees are in addition to any other fees imposed by the District 

and may be charged in any of fiscal years 2009-10 to 2023-24, inclusive, and as of that 

;late are repealed unless a later enacted statute, that is enacted prior to 2023-24, 

jeletes or extends the date; and 

WHEREAS, the San Joaquin Valley Air Pollution Control District has been 

jesignated as extreme nonattainment for ozone by the United States Environmental 

'rotection Agency: and 

NOW, THEREFORE, IT IS RESOLVED THAT, to minimize the economic impact 

o Valley residents and businesses, and to more equitably distribute responsibility for 

)zone violations, the Governing Board of the San Joaquin Valley Unified Air Pollution 

2ontrol District hereby: levies an additional twelve dollar ($12) fee on all motor vehicles 

;ubject to registration fees in the counties of Fresno, Kings, Madera, Merced, San 

Joaquin, Stanislaus and Tulare and the San Joaquin Valley portion of Kern in 

iccordance with Chapter 5.8 (commencing with Section 40610) to Part 3 of Division 26 

)f the Health and Safety Code; requests that the California Air Resources Board make 
SJVUAPCD 

1990 E. GE~TVSBURG 

AVENUE 

FRESNO, CA 93726-0244 

required findings under California Health and Safety Code Section 40612; and requests 

that the California Department of Motor Vehicles collect the fee in accordance with 

Section 9250.1 7 of the Vehicle Code. 

BE IT FURTHER RESOLVED THAT, beginning on January 1, 2013, the 

Governing Board of the San Joaquin Valley Unified Air Pollution Control District hereby 

levies an additional six dollar ($6) fee on motor vehicles subject to registration fees in 

the counties of Fresno, Kings, Madera, Merced, San Joaquin, Stanislaus and Tulare 

and the San Joaquin Valley portion of Kern in accordance with Chapter 5.8 

:commencing with Section 40610) to Part 3 of Division 26 of the Health and Safety 

Code and requests that the California Department of Motor Vehicles collect the fee in 

accordance with Section 9250.17 of the Vehicle Code. 

BE IT FURTHER RESOLVED 'THAT, beginning on January 1, 2015, the 

Soverning Board of the San Joaquin Valley Unified Air Pollution Control District hereby 

evies an additional six dollar ($6) fee for a maximum increase of twenty-four dollars 

;$24) on all motor vehicles subject to registration fees in the counties of Fresno, Kings, 

Vladera, Merced, San Joaquin, Stanislaus and Tulare and the San Joaquin Valley 

)ortion of Kern in accordance with Chapter 5.8 (commencing with Section 40610) to 

Dart 3 of Division 26 of the Health and Safety Code and requests that the California 

lepartment of Motor Vehicles collect the fee in accordance with Section 9250.17 of the 

Jehicle Code. 

BE IT FURTHER RESOLVED THAT at least ten million dollars ($10,000,000) of 

;aid fees shall be used to mitigate the impacts of air pollution on public health and the 

znvironment on disproportionately impacted environmental justice communities in the 

;an Joaquin Valley. 

BE IT FURTHER RESOLVED THAT the District Governing Board shall convene 

In environmental justice advisory committee, selected from a list given to the District 

Soverning Board by environmental justice groups from the San Joaquin Valley, to 

I! 

3 

AITACHMENT B - RESOLUTION 
SJVUAPCD 

1990 E. GEllYSBURG 

AVENUE 

FRESNO, CA 93726-0244 

recommend the neighborhoods in the District that constitute environmental justice 

communities, and how to expend funds in these communities. 

BE IT FURTHER RESOLVED 'THAT the fees adopted pursuant to this 

section, shall become effective after the Califorrria Air Resources Board makes the 

following findings: A) the District has undertaken all feasible measures to reduce 

nonattainment air pollutants from sources within the District's jurisdiction and 

regulatory control; and B) the District has notified the California Air Resources 

Board that the fees have been adopted pursuant to this section and has provided 

:he California Air Resources Board with an estimate of the total funds that will be 

~rovided annually by each of those fees. 

BE IT FURTHER RESOLVED THAT said fees shall cease to be levied upon 

3xpiration or revocation of the Section 185 nonattainment penalties, or June 30, 

2024, whichever is earlier. 

BE IT FURTHER RESOLVED THAT the District shall pursue federal 

egislative changes to repeal Section 185 of the federal Clean Air Act or eliminate 

nequities in the fee by providing an exemption from the fee for well-controlled 

;tationary sources. 

BE IT FURTHER RESOLVED THAT Pursuant to Chapter 5.8 (commencing 

vith Section 4061 0) to Part 3 of Division 26 of the Health and Safety Code the fees 

;hall be collected beginning nine months after the above requirements are met. 

BE IT FLIRTHER RESOLVED THAT the San Joaquin Valley Unified Air 

>ollution Control District shall utilize its Emission Reduction Incentive Program to 

rse the above fees in accordance with Chapter 5.8 (commencing with Section 

10610) of Part 3, and Chapter 7 (commencing with Section 44220) of Part 5 of 

Iivision 26 of the Health and Safety Code to achieve attainment with state and 

ederal ambient air quality standards by the earliest practicable date. 

'I 

ATTACHMENT B - RESOLUTION 
SJVUAPCD 

1990 E. GETWSBURG 

AVENUE 

FRESNO, CA 93726-0144 

THE FOREGOING was passed and adopted by the following majority vote of the 

Governing Board and majority vote of the elected officials of the Governing Board of the 

SAN JOAQUIN VALLEY UNIFIED AIR POLLUI-ION CONTROL DISTRICT this 21st 

day of October, 201 0, to wit: 

AYES: 

NOES: 

ABSENT: 

SAN JOAQUIN VALLEY UNIFIED 

AIR POLLU-TION CONTROL DISTRICT 

Tony Barba, Chair 

Governing Board 

ATTEST: 

Clerk to the Governing Board 

BY 

Michelle Franco 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

October 21,201 0 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY 'THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment C: 

RESOLUTION TO INCREASE MOTOR VEHICLE FEES BY $10 

I5 PAGES) 
BEFORE THE GOVERNING BOARD OF THE 

SAN JOAQUIN VALLEY UNIFIED 

AIR POLLUTION CONTROL DISTRICT 

3 IN THE MATTER OF CONSIDER I I ALTERNATIVES FOR THE EQUITABLE 

RESOLUTION NO. 

11 WHEREAS, The San Joaquin Valley Unified Air Pollution Control District 

4 

5 

11 (District) is a duly constituted unified district, as provided in California Health and Safety 

APPLICATION OF FEDERAL NONATTAINMENT PENALTIES TO SOURCES WITHIN 

THE SAN JOAQUIN VALLEY THROUGH THE 

USE OF MOTOR VEHICLE FEES 

Code sections 401 50 to 40161 ; and I I 

10 11 WHEREAS, said District is authorized by California Health and Safety Code 

11 (1 section 40702 to make and enforce all necessary and proper orders, rules and 

l2 (1 regulations to accomplish the purpose of Division 26 of the Health and Safety Code, 

13 (1 and; and 

l4 11 WHEREAS, Federal law under Section 185 of the federal Clean Air Act 

15 11 mandates that the District adopt a rule to impose nonattainment penalty fees on the 

l6 Valley's stationary sources due to failure to reach attainment of the now-revoked I I 

l7 federal one-hour ozone standard; and I I 

18 11 WHEREAS, under Section 185 of the Clean Air A& Valley businesses that are 

l9 l(rnajor sources of NOx or VOC emissions will be subject to a total of approximately 

20 $29 million per year in nonattainment penalty fees; and I I 

21 11 WHEREAS, the imposition of $29 million per year fee on Valley businesses can 

' 22 11 have a devastating economic impact on Valley residents and businesses; and 

23 11 WHEREAS, a January 2010 guidance by the federal Environmental Protection 

24 (1 Agency provides alternatives for meeting Section 185 mandates by assessing all or 

25 11 part of the nonattainment penalty fees to mobile sources; and 

26 11 WHEREAS, more than 80 percent of the Valley's NOx emissions, the leading 

27 11 contributor to Valley's ozone and particulate exceedances, come from mobile sources 

28 11 outside of the District's regulatory jurisdiction; and 

SJVUAPCD 

t 990 L GElTYSBURG I I 
SJVUAPCD 

1990 E. GET'NSBURG 

AVENUE 

FRESNO, CA 93726-0244 

WHEREAS, Valley stationary sources are already subject to some of the most 

stringent air pollution regulations in the nation and, therefore, imposition of Section 

185 nonattainment penalties to stationary sources will not have the intended effect of 

compelling further reductions of emissions from stationary sources; and 

WHEREAS, Asserr~bly Bill 2522 (Arambula) added Chapter 5.8 (commencing 

with Section 40610) to Part 3 of Division 26 of the Health and Safety Code, authorizing 

the District to increase the motor vehicle fee specified in Sections 44223 and 44225 of 

the Health and Safety Code by an amount up to twenty-four dollars ($24) per motor 

ilehicle per year to provide funding for air pollution control programs needed to achieve 

and maintain state and federal ambient air quality standards; and 

WHEREAS, section 9250.17 of the California Vehicle Code authorizes the 

3epartment of Motor Vehicles to collect fees requested by the District Board pursuant to 

iealth and Safety Code Sections 44223 and 44225; and 

WHEREAS, said fees are in addition to any other fees imposed by the District 

and may be charged in any of fiscal years 2009-10 to 2023-24,' inclusive, and as of that 

jate are repealed unless a later enacted statute, that is enacted prior to 2023-24, 

jeletes or extends the date; and 

WHEREAS, the San Joaquin Valley Air Pollution Control District has been 

lesignated as extreme nonattainment for ozone by the United States Environmental 

Drotection Agency; and 

NOW, THEREFORE, IT IS RESOLVED 'THAT, to minimize the economic impact 

o Valley residents and businesses, and to more equitably distribute responsibility for 

)zone violations, the Governing Board of the San Joaquin Valley Unified Air Pollution 

:ontrol District hereby: levies an additional ten dollar ($10) fee on all motor vehicles 

iubject to registration fees in the counties of Fresno, Kings, Madera, Merced, San 

loaquin, Stanislaus and Tulare and the San Joaquin Valley portion of Kern in 

~ccordance with Chapter 5.8 (commencing with Section 40610) to Part 3 of Division 26 

,f the Health and Safety Code; requests that the California Air Resources Board make 
SJVUAPCD 

1990 E, G-BURG 

AVENUE 

FRESNO, CA 93726-0244 

required findings under California Health and Safety Code Section 40612; and requests 

that the California Department of Motor Vehicles collect the fee in accordance with 

Section 9250.17 of the Vehicle Code. 

BE IT FURTHER RESOLVED THAT at least ten million dollars ($10,000,000) of 

said fees shall be used to mitigate the impacts of air pollution on public health and the 

environment on disproportionately impacted environmental justice communities in the 

San Joaquin Valley. 

BE IT FURTHER RESOLVED THAT the District Governing Board shall convene 

an environmental justice advisory committee, selected from a list given to the District 

Governing Board by enviror~mental justice groups from the San Joaquin Valley, to 

recommend the neighborhoods in the District that constitute environmental justice 

communities, and how to expend funds in these communities. 

BE IT FURTHER RESOLVED THAT the fees adopted pursuant to this 

section, shall become effective after the California Air Resources Board makes the 

following findings: A) the District has undertaken all feasible measures to reduce 

nonattair~ment air pollutants from sources within the District's jurisdiction and 

regulatory control; and 6) the District has notified the California Air Resources 

Board that the fees have been adopted pursuant to this section and has provided 

the California Air Resources Board with an estimate of the total funds that will be 

provided annually by each of those fees. 

BE IT FURTHER RESOLVED THAT said fees shall cease to be levied upon 

expiration or revocation of the Section 185 nonattainment penalties, or June 30, 

2024, whichever is earlier. 

BE IT FURTHER RESOLVED THAT the District shall pursue federal 

legislative changes to repeal Section 185 of the federal Clean Air Act or eliminate 

nequities in the fee by providing an exemption from the fee for well-controlled 

stationary sources. 

'I1 

A~ACHMENT C - RESOLUTION 
SJVUAPCD 

1990 E. GmYSBURG 

AVENUE 

FRESNO, CA, 93726-0244 

BE IT FURTHER RESOLVED THAT Pursuant to Chapter 5.8 (commencing 

with Section 40610) to Part 3 of Division 26 of the Health and Safety Code the fees 

shall be collected beginning nine months after the above requirements are met. 

BE IT FURTHER RESOLVED THAT the San Joaquin Valley Unified Air 

Pollution Control District shall utilize its Emission Reduction Incentive Program to 

use the above fees in accordance with Chapter 5.8 (commencing with Section 

40610) of Part 3, and Chapter 7 (commencing with Section 44220) of Part 5 of 

Division 26 of the Health and Safety Code to achieve attainment with state and 

federal ambient air quality standards by the earliest practicable date. 

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Ill 
SJWAPCD 

1990 E..GETTYSBURG 

AVENUE 

FRESNO. CA 93726-0244 

THE FOREGOING was passed and adopted by the following majority vote of the 

Governing Board and majority vote of the elected officials of the Governing Board of the 

SAN JOAQUIN VALLEY UNIFIED AIR POLLU-I-ION CONTROL DISTRICT this 21st 

day of October, 201 0, to wit: 

AYES: 

NOES: 

ABSENT: 

SAN JOAQUIN VALLEY UNIFIED 

AIR POLLU'I'ION CONTROL DISTRICT 

BY 

Tony Barba, Chair 

Governing Board 

ATTEST: 

Clerk to the Governing Board 

BY 

Michelle Franco 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

October 21,201 0 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment D: 

ASSEMBLY BILL NO. 2522 

(3 PAGES) 
Assembly Bill No. 2522 

CHAPTER 677 

An act to add Chapter 5.8 (commencing with Section 4061 0) to Part 3 of 

Division 26 of the Health and Safety Code, relating to air quality. 

[Approved by Governor September 30,2008. Filed with 

Secretary of State Scptcrnbcr 30, 2008.1 

LEGISLATIVE COUNSEL'S DIGEST 

AB 2522, Arambula. San Joaquin Valley Unified Air Pollution Control 

District. 

Existing law authorizes air pollution control districts and air quality 

management districts, except as provided, to levy a fee of up to $2 on motor 

vehicles, and authorizes the districts to increase this fee to up to $6 if certain 

conditions are met. 

This bill would authorize the San Joaquin Valley Unified Air Pollution 

Control District to increase this fee to up to, but not exceeding, $30 for 

incentive-based programs to achieve surplus emissions reductions, as 

specified. The bill would require the state board to assess the use of these 

fees in achieving and maintaining state and federal ambient air quality 

standards. 

The bill would authorize the San Joaquin Valley district to adopt rules 

and regulations to reduce vehicle trips in order to reduce air pollution from 

vehicular sources. 

The people of [he Stale of Cul~ornia do enact m follows: 

SECTION 1. Chapter 5.8 (commencing with Section 40610) is added 

to Part 3 of Division 26 of the Health and Safety Code, to read: 

40610. The Legislature finds and declares as follows: 

(a) Residents of the San Joaquin Valley suffer some of the worst air 

quality in the world. This poor air quality poses a significant threat to public 

health, the environment, and the economy of the valley. 

(b) The extreme difficulty for the valley to meet state and federal ambient 

air quality standards requires an urgent and unified program that combines 

more strict clean air rules and regulations and ongoing funding to clean up 

those sources that cannot be regulated effectively. 
Ch. 677 -2- 

(c) The purpose of this chapter is to establish a program for the San 

Joaquin Valley to achieve state and federal ambient air quality standards 

by the earliest practicable date. 

406 12. (a) In order to provide funding for air pollution control programs 

needed to achieve and maintain state and federal air quality, the district may 

do both of the following: 

(1) Notwithstanding the limits on the amount of the motor vehicle fee 

s~ecified in Sections 44223 and 44225. increase the fee established eursuant 

tb these sections to up to, but not exceeding, thirty dollars ($30) pkr motor 

vehicle per year for the purposes of establishing and implementing 

incentive-based programs to achieve surplus emissions reductions that the 

district determines are needed to remediate air pollution harms created by 

motor vehicles on which the fee is imposed and that are intended to achieve 

and maintain state and federal ambient air quality standards required by the 

federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). Except for the amount 

of the fee, any increase shall be subject to Chapter 7 (commencing with 

Section 44220) of Part 5, including, but not limited to, the adoption of a 

resolution providing for both the fee increase and a corresponding program 

for expenditure of the moneys raised by the increased fees for the reduction 

of mobile source emissions. 

(2) Notwithstanding Section 407 17.9, adopt rules and regulations to 

reduce vehicle trips in order to reduce air pollution from vehicular sources. 

(b) Fees adopted pursuant to this section are in addition to any other fees 

imposed by the district, and may be charged in any of fiscal years 2009-10 

to 2023-24, inclusive. Fees may be assessed after the 2012-13 fiscal year 

only if the United States Environmental Protection Agency approves the 

district's proposed reclassification of its nonattainment status for ozone 

from severe to extreme. The fees adoeted pursuant to this section are for 1. 

the district portion of the total amount needed to achieve and maintain state 

and federal ambient air quality standards. At least ten million dollars 

($10,000,000) shall be used to mitigate the impacts of air pollution on public 

health and the environment in disproportionately impacted environmental 

justice communities in the San Joaquin Valley. The district board shall 

convene an environmental justice advisory committee, selected from a list 

given to the board by environmental justice groups from the San Joaquin 

Valley, to recommend the neighborhoods in the district that constitute 

environmental justice communities, and how to expend funds within these . . communities. 

(c) (1) The fees adopted pursuant to this section shall become effective 

after the state board makes both of the following findings: 

(A) The district has undertaken all feasible measures to reduce 

nonattainment air pollutants from sources within the district's jurisdiction 

and regulatory control. 

(B) The district has notified the state board that fees have been adopted 

pursuant to this section and provided the state board with an estimate of the 

total funds that will be provided annually by each of those fees. 
-3- Ch. 677 

(2) The state board shall file a written copy of its findings made pursuant 

to this subdivision with the Secretary of State within two days of its 

determination. 

(3) The fees adopted pursuant to this section shall be collected nine 

months after the requirements of paragraph (2) are met. 

40613. The state board shall assess the district's progress in using any 

fees assessed pursuant to Section 406 12 to achieve and maintain state and 

federal ambient air quality standards every two years that the fee is assessed, 

and shall submit these assessments to the Legislature within two weeks of 

their completion. 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

October 21,201 0 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment E: 

EPA'S JANUARY 5 2010 MEMO, "GUIDANCE ON DEVELOPING FEE PROGRAMS 

REQUIRED BY CLEAN AIR ACT SECTION 185 FOR THE 1-HOUR OZONE NAAQS" 

/I7 PAGES) 
Q+<eD "'4% 

2' db % LlNlTED STATES ENVIRONMENTAL PROTECTION AGENCY 

RESEARCH TRIANGLE PARK,NC 2771 1 

OFFCE OF 

AIR OUALlTY PLANNING 

AND STANDARDS 

MEMORANDUM 

SUBJECT: Guidance on Developing Fee Programs Required by Clean Air Act Section 185 

for the 1 -hour ozone N&QS 

FROM: Stephen D. Page, Director 

Office of Air Quality Planning M- and Standard 

TO: Regional Air Division Directors, Regions I-X 

Section 185 of the Clean Air Act (CAA) requires states with ozone nonattainment areas 

classified'as Severe or Extreme to develop, as a revision to their state implementation plan (SIP), 

. a fee collection rule to be implemented in the event that an area fails to attain the ozone standards 

by the required attainment date.' This memorandum provides additional guidance on fee 

collection programs for the 1 -hour ozone National Ambient Air Quality Standard (NAAQS or 

standard), which are i-equired as anti-backsliding measures during transition to the 1997 8-hour 

ozone standard. 

~oplicabilitv of Section 185 to Ozone NAAQS Nonattainment Areas , 

The section 185 fee program requirement applies to any ozone nonattainment area that is 

classified as Severe or Extreme under the NAAQS, including any area that was classified Severe 

or Extreme under the 1 -hour ozone NAAQS as of the effective date of the area's 8-hour 

de~i~nation.~ The EPA had previously waived the section I85 fee program requirements 

applicable under the revoked 1-hour ozone NAAQS in rules issued to address the transition from 

the 1-hour standard to the 1997 8-hour ~tandard.~ However, on December 23,2006, the United 

States Court of Appeals for the District of Columbia Circuit issued an opinion determining that 

EPA improperly waived the application of the section 185 fee provision for Severe and Extreme 

nonattainment areas that failed to attain the I -hour ozone standard by their attainment date. 

South Coast Air Quality Management District v. EPA, 472 F.3d 882 (D.C. Cir. 2006). 

' See Attachment A for the text of CAA section 185. The CAA requires that fee program SIPS for 

nonattainrnent areas initially classified as Severe or Extreme for the I -hour ozone standard be submitted to EPA by 

December 3 1,'2000 (see CAA section 182(d)(3)). Areas subsequently reclassified as Severe or Extreme have a SIP 

submission date as determined by EPA. ' The 1-hour ozone NAAQS were established in 1982 and revoked on June 15,2004 for most areas. The 

8-hour ozone NAAQS were first established in 1997. EPA is currently reconsidering the 8-hour ozone NAAQS that 

was last revised in 2008. EPA intends to complete the reconsideration by August 3 1,2010. ' See 69 Fed Reg 2395 1 (April 30,2004). 

Interne! Address (URL) htlp:l~.epa.gov 

RosycledlRecyclaMe Printed with Vegetable OU Based Inks on Recyded Paper (Mlnlmum 25% Poslmnsumer) 
Summary of Sectioh 1 85 Requirements 

. . 

In the event that a nonattainmint area classified as Severe or Extreme fails to attain the 

ozone standard by the required date, section 185 of the CAA requires each major stationary 

source of volatile organic compounds (VOC) and nitrbgen oxides located in such area to ' 

pay a'fee to the state for eachcalendar ye? fo'llowing the attainment year for emissions above a . , 

"baseline amount." In 1990, the CAA set the fee as $5,000 per ton of VOC and NOx emitted by 

the source'during the calendar year in excess of 80 percent' of the "bcke~ine amount." The fee 

must be adjusted.for inflation based on the Consumer Price Index (CPI) on an annual basis. , 

Attachment B. sets forth the fees, as adjusted for ifiatidn, for the years 1990-2009. . . 

. 

The CAA provides that the computation of a source's "baseline amounty' must be the 

lower of the amount of actual or alIowable emissions under the permit applicable to the source 

(or if no permit has been issued for the attainment year, the amount of VOC and NOx emissions 

allowed under the applicable implementation plan) during the attainment year. The CAA also 

provides that EPA may issue guidance on the calculation of the "baseline amount" as the lower 

of the average actual emissions or average allowable emissions over a period of more than one 

year in cases where a "source's emissions are irregular, cyclical or otherwise vary significantly 

from year to year." Accordingly, on i arch 21,2008, EPA issued a memorandum entitled 

"Guidance on Establishing Emissions Baselines under Section 185 of the CAA for Severe and 

Extreme Ozone Nonattainment Areas that Fail to Attain the 1 -hour Ozone NAAQS by their 

Attainment Date." 

The CAA does not specify how states may spend or allocate the fees collected under a 

section 185 fee program. Therefore, states have discretion on how to use the fees. We believe 

that one beneficial approach would be to channel the fees into innovative programs to provide 

incentives for additional ozone precursor emissions reductions from stationary or mobile sources, 

or for other purposes aimed at reducing ambient ozone concentrations in the affected area. 

If the state fails to adopt or implement a required fee program, EPA is required to collect 

the unpaid fees and may also collect interest on any unpaid fees. All revenue collected by EPA 

under authority of section 185 is required to be deposited in a special fund in the United States 

Treasury for licensing and other services and may be used to fund the Agency's activities for 

coIlecting such fees. See, CAA sections 185(d) and 502(b)(3)(C). 

Alternatives to Section 1 85 Fee Proerams 

' 

& a result of the 2006 court decision in South ~oast~states with areas classified as .. 

.Severe or Extreme nonattainrnent for the I-hour ozone standard at the time of the'initial 

nonattaiment designation for the.8-hour standard are~~ubjbct to the requirements of section 185. 

We believe'states can meet this obligation through a SIP revision containing either the fee . 

program prescribed in section 185, or an equivalent. alternative program,, as fbther explained 

. . while section 185 expressly rnentidns only VOC, sectio! I82(f) extends the application of this provision. ' 

to NOx, by providing that "plan provisions required unde! [iubpart D] for major stationary sources df [VOCI- shall 

also apply to major stationary sources. ..of [NOx]." , ' ' - 
below. EPA believes that an alternative program may be acceptable if it is consistent with the 

principles of section 172(e) of the CAA,' which allows EPA thrdugh rulemaking to accept 

alternative programs that are "not less .&ingent" where EPA.has revised the NAAQS to make it 

. . less stringent. This discretion does not currently apply to a section 1'85 fee program obligation 

arising from failure to attain the 1997 8-hour ozone NAAQS by the attainment date associated 

with a Severe or Extterne classification for that NAAQS because, that NAAQS has not been 

revoked. 

Section 172(e) is an anti-backsliding provision of the CAA that requires EPA to develop 

regulations to ensure that controls are "not less stringent" than those that applied prior to relaxing 

a standard where EPA has revised a NAAQS to make it less stringent In the implementation 

rule for the 1997 ozone NAAQS, EPA determined that although section 172(e) does not directly 

apply where EPA has strengthened the NAAQS, as it did in 1997, it was reasonable to apply the 

same principle for the transition from the 1 -hour NAAQS to the 1997 8-hour NAAQS. As part 

of applying the principle in section 172(e) for purposes of the transition fiom the 1 -hour standard 

to the 1997 8-hour standard, EPA can either require states to retain programs that applied for 

purposes of the 1-hour standard, or alternatively can allow states flexibility to adopt alternative 

programs, but only if such alternatives are "not less stringent" than the mandated program. 

EPA is electing to consider alternative programs to satisfy the section 185 fee program 

SIP revision requirement. The remainder of this memorandum describes the circumstances 

under which we believe we can approve an alternative program that is "no less stringent." These 

interpretations will only be finalized through EPA actions taken under notice-and-comment 

demaking to address the fee program obligations associated with each applicable nonattainment 

area. If a state chooses to adopt an aIternative program to the section 185 fee program, the state 

must demonstrate that the alternative program is no less stringent than the otherwise applicable 

section 185 fee program. If our preliminary assessment indicates that the alternative program is 

not less stringent, we would issue a notice in the Federal Register proposing to make such a 

determination at the same time we propose and take action on any accompanying SIP revision 

pursuant to section 1 1 O(k). 

EPA believes that for an area that we determine is attaining either the I -hour or 1997 8- 

hour ozone NAAQS, based on permanent and enforceable emissions reductions, the area would 

no longer be obligated to submit a fee program SIP revision to satisfy the anti-backsliding 

requirements associated with the transition from the 1-hour standard to the 1997 8-hour standard. 

In such cases an area's existing SIP should be considered an adequate alternative program. Our 

reasoning follows from the.fact that an area's existing SIP measures, in conjunction with other 

eliforceable federa1 measures, are adequate for the area to achieve attainment, which is the 

purpose of the section I85 program. The section 185 fee program is an element of an area's 

attainment demonstration, and its object is to bring about attainment after a failure of an area to 

attain by its attainment date. Thus, areas that have attained the 1 -hour standard, the standard for 

which the fee program was originally required, as a result of permanent and enforceable 

emissions reductions, would have a SIP that is not less stringent than the SIP required under 

section 185. Also, once an area attains the 1997 8-hour ozone standard, which replaced the now 

revoked I-hour standard, the purpose of retaining the section 185 fee program as an antibacksliding measure would also be fulfilled as the area would have attained the 8-hour standard 
for which the fee program was retained as a transition measure. We believe that it would 

unfairly penalize sources in these areas to require that fees be paid after an area has attained the 

8-hour standard due to permanent and enforceable emission reductions because the fees were 

imposed due to a failure to meet the applicable attainment deadline for the 1 -hour standard, not 

any failure to achieve the now applicable 8-hour standard by its attainment date. Similarly, for 

the reasonsedescribed above, areas that must still develop and submit a fee program may submit 

an alternative that provides that the fees end at the time that the area attains either the I-hour or 

1997 8-hour standard due to the existence of permanent and enforceabIe measures. 

There is also an additional, independent basis for EPA's approach to determining that the 

anti-backsliding requirements associated with section 185 have been satisfied. Although section 

185 provides that fees are to continue until the area is redesignated for ozone, EPA no longer 

promulgates redesignations for the I-hour standard because that standard has been revoked. 

Therefore, relief from the 1 -hour fee program requirements under the terms of the statute is an 

impossibility, since the conditions the statute envisioned for relieving an area of its fee program 

obligation no longer can exist. There is, thus, a gap in the statute which must be filled by EPA. 

We believe that under these circumstances we must exercise our discretion under Chevron USA. 

Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), to fill this gap, so as to cany 

out Congressional intent in the unique context of anti-backsliding requirements for a revoked 

standard. We believe that it is reasonable for the fee program obligation that applies for 

purposes of anti-backsliding to cease upon a determination, based on notice-and-comment 

rulemaking, that an area has attained the 1 -hour or 8-hour standard due to permanent and 

enforceable measures. This determination centers on core criteria for redesignations under CAA 

section 107(8)(3). We beIieve these criteria provide reasonable assurance that the purpose of the 

I-hour anti-backsliding fee program obligation has been fulfilled in the context of a regulatory 

regime where the area remains subject to other applicable 1-hour anti-backsliding and 8-hour 

measures. Under these circumstances, retention of the fee program under the anti-backsliding 

rule is no longer necessary for the purpose of achieving attainment of the 8-hour standard. 

Additional Potential Equivalent Alternative Program Conceits 

Following is a summary of concepts for additional alternative programs that a state might 

consider if all 1 -hour nonattainment areas subject to the section 185 fee program anti-backsliding 

requirements within that state are not eligible for the EPA determination set forth in the section 

above, and/or if the state chooses to develop another alternative program that is no less stringent 

than a section 185 fee program. While section 185 focuses most directly on assessing emissions 

fees, we believe it is usell to interpret section 185 within the context of the CAA's ozone 

implementation provisions of subpart 2 (which includes section 185). The subpart 2 provisions 

are designed to provide an ever-growing incentive to reduce ozone-forming pollutant emissions 

to levels that achieve attainment of the ozone NAAQS. In this context, to satisfy the 

requirements of section 185 associated with the 1-hour NAAQS we believe it is appropriate for 

states to focus on fee assessments, achieving fbrther emissions reductions, or some combination 

of both in developing an alternative program. For any alternative program adopted by a state, the 

state's demonstration that the program is no less stringent should consist of comparing expected 

fees andlor emissions reductions directly attributable to application of section 185 to the 

expected fees andlor emissions reductions from the proposed alternative program. For a valid 
demonstration to ensure equivalency, the state's submission should not underestimate the 

expected fees andor emissions reductions fiom the section 185 fee program, nor overestimate 

the expected fees andlor emissions reductions associated with the proposed alternative program. 

Recently, a task force composed of members of the Clean Air Act Advisory Committee 

(CAAAC) was formed to discuss alternate ideas on complying with section 185.~ The concepts 

described here were discussed by the task force, and the CAAAC forwarded a list of potential 

program features to EPA for review. EPA's assessment of whether and how certain program 

features identified by the CAAAC can be used in the context of satisfying the requirements of 

section 1 85 is included as Attachment C to this memorandum. 

EPA cannot conclude at this time whether specific state-developed programs relying on 

these concepts or containing any of the features presented by the CAAAC would be approvable 

because such a determination would be based on the specific parameters of the program adopted. 

Further, any such determination would need to be made through notice-and-comment 

rulemaking. States may decide to develop unique &ternathe programs for each applicable 

nonattainment area, and we will independently evaluate the approvability of each alternative 

program. To assure a valid demonstration that an alternative is no less stringent, we'recommend 

that states work with EPA on a case-by-case basis. 

~dditional Fee-Ec~uivalent Altetnative Programs 

. . 

We anticipate (subject to notice-and-comment rulemaking as noted above) that we could 

approve a program that clearly raises at least as much revenue as the otherwise required section 

185 fee program if the proceeds are spent to pay for emissions reductions of ozone-forming 

pollutants (NOx andor VOC) in the same geographic area subject to the section 185 program. 

Under this approach, the state would estimate revenues that would result under the section 185 

fee program if all section 185 sources paid fees for each applicable calendar year, develop an 

alternative program that would raise at least that much revenue, and establish a process where the 

revenues would be used to pay for emissions reductions that will further improve ozone air 

quality. 

Under this concept, states could develop programs that shift the fee burden from the 

specific set of major stationary sources that are otherwise required to pay fees according to 

section 185, to other non-major sources of emissions, including ownersloperators of mobile 

sources. This could allow states to recognize through reduced fees those major sources of 

emissions that have already installed the latest technology, and assess the remainder of the total 

required fees on other sources that are not already as well controlled. EPA recognizes that 

section 185 is not strategic in imposing emissions fees on 4 major stationary sources, including 

already well-controlled sources that have few, if any, options for avoiding fees by achieving 

additional reductions. States can be more strategic by crafting alternative programs that exempt 

or reduce the fee obligation on wellkontrolled sources, and assign the required fees to less wellcontrolled sources as an incentive for those sources to further reduce emissions of ozone-forming 

, pollutants. The alternative program should not rely on emissions reductions already required by 

' For more information on the CAAAC and the proceedings of the Task Force on section 185 fee programs, ' visit the following Web site: http://www.epa.~ov/air/caaac/185.html 
the applicable SIP, since the goal is to achieve fiuther reductions to move the area expeditiously 

to attainment. 

Additional Emissions-Eauivalent Alternative Programs 

EPA believes that as an alternative to the section 185 fee program a state could adopt a 

program that achieves at least as much additional emissions reductions as would be expected to 

result &om the fee-minimization incentive of the section 185 fee program. EPA believes this 

would clearly be demonstrated if the alternative program achieves emissions reductions each 

year that are equal to or greater than the amount of emissions against which fees would be 

assessed each year under the section 185 fee program (i.e., actual emissions in excess of 80 

percent of the baseline emission^).^ For purposes of estimating the emissions reductions required 

in such a program, the state would assume that sources would reduce their emissions to the fee 

applicability threshold. This conservative approach would assure that emissions reductions from 

the alternative program are at least as great as reductions that might have occurred if the statutory 

fee program resulted in all major stationary sources reducing their emissions to no more than 80 . percent of the baseline emissions. The emissions reductions in the alternative program could 

come from the same set of major sources subject to section 185, or from a different set of 

sources, in whole or in part, so long as all reductions come from within the nonattaiment area 

and are equally beneficial in reducing ozone formation. The alternative program should not rely 

on emissions reductions already required by the' applicable SIP, since the goal is to achieve 

fkther reductions to move the area expeditiously to attainment. 

Under this approach, states would first calculate the emissions baseline for the major 

stationary sources of VOC and NOx in accordance with the methodology required under CAA 

section 185(b)(2) and as further described in the March 2 1,2008 guidance memorandum. Once 

a state calculates the baseline amount of each pollutant for each source affected by section 185, 

the amount of emissions in excess of 80 percent of the baseline would be the amount of 

emissions of each pollutant that sources within the area would need to reduce on a calendar year 

basis in each year following the I-hour ozone attainment year until such time as the feeprogram 

no longer applies. I 

Additional Alternative Programs Combining Emissions Reductions and Fees . 

A program that combines features of an emissions-equivalent program with a feeequivalent program could also be adopted. For example, some portion of the emissions 

reductions necessary to demonstrate equivalence (as explained above) could be offset by fees 

collected.on each ton of emissions that is offset. To illustrate, assume that 1000 tons of 

emissions reductions is needed to demonstrate equivalence. The state could instead adopt a 

program that obtains 600 tons of emissions reductions and collect fees totaling $2.0 million - (calculated as the remaining 400 tons times $5,000 per ton). 

Aprogram that achieves less 'than this amount of emissions reductions may also. be approvable depending an the, 

case-specific circumstances. . . .. . 
.. EPA Assistance 

My office is available to provide any additional guidance and to consult with any state 

that wants to develop m alternative equivalent program to the section 185 fee program. For 

additional consultation you may contact Denise Gerth, 919-541-5550. 
ATTACHMENT A 

Text of CAA Section 185 

SEC. 185. ENFORCEMENT FOR SEVERE AND EXTREME OZONE NONAlTAINMENT 

AREAS FOR FAILURE TO ATTAIN. 

(a) General Rule.-' Each implementation plan revision required under section 182 (d) and (e) 

(relating to the attainment plan for Severe and Extreme ozone nonattainment areas) shall provide 

that, if the area to which such plan revision applies has failed to attain the national primary 

ambient air quality standard for ozone by the applicable attainment date, each major stationary 

source of VOCs located in the area shall, except as otherwise provided under subsection (c), pay 

a fee to the State as a penalty for such failure, computed in accordance with subsection (b), for 

each calendar year beginning after the attainment date, until the area is redesignated as an 

attainment area for ozone. Each such plan revision should include procedures for assessment and 

collection of such fees. 

(b) Computation of Fee.- 

(1) Fee amount.- The fee shall equal $5,000, adjusted in accordance with paragraph (3), per 

ton of VOC emitted by the source during the calendar year in excess of 80 percent of the baseline 

amount, computed under paragraph (2). 

(2) Baseline amount.- For purposes of this section, the baseline amount shall be computed, 

in accordance with such guidance as the Administrator may provide, as the lower of the amount 

of actual VOC emissio'ns ("actuals") or VOC emissions allowed under the permit applicable to 

the source (or, if no such permit has been issued for the attainment year, the amount of VOC 

emissions allowed under the applicable implementation plan "allowables")) during the 

attainment year. Notwithstanding the preceding sentence, the Administrator may issue guidance 

authorizing the baseline amount to be determined in accordance with the lower of average 

actuals or average allowables, determined over a period of more than one calendar year. Such 

guidance may provide that such average calculation for a specific source may be used if that 

source's emissions are irregular, cyclical, or otherwise vary significantly from year SO year. 

(3)'Amual adjustment.- The fee amount under paragraph (1) shall be adjusted annually, 

beginning in the year beginning after the year of enactment, in accordance with section 

502(b)(3)(B)(v) (relating to inflation adjustment). 

(c) Exception.- Notwithstanding any provision of this section, no source shall be required to pay 

any fee under subsection (a) with respect to emissions during any year that is treated as an 

Extension Year under section 18 l(a)(5). 

(d) Fee Collection by the Admjnistrator.- If the Administrator has found that the fee provisions 

of the implementation plan do not meet the requirements of this section, or if the Administrator 

makes a finding that the State is not administering and enforcing the fee required under this 

section, the Administrator shall, in addition to any other action authorized under this title, collect, 

in accordance with procedures promulgated by the Administrator, the unpaid fees required under , 

subsection (a). If the Administrator makes such a finding under section 179(a)(4), the 

Administrator may collect fees for periods before the determination, plus interest computed in 

accordance with section 662l(a)(2) of the Internal Revenue Code of 1986 (relating to 

computation of interest on underpayment of Federal taxes), to the extent the Administrator finds 

such fees have not been paid to the State. The provisions of clauses (ii) through (iii) of section 

502(b)(3)(C) (relating to penalties and use of the funds, respectively) shall apply with respect to 

fees collected under this subsection. 
(e) Exemptions for Certaih Small Areas.- For areas with a total population under 200,000 which 

fail to attain the standard by the applicable attainment date, no sanction under this section or 

under any other provision of this Act shall apply if the area can demonstrate, consistent with 

guidance issued by the Administrator, that attainment in the area is prevented because of ozone 

or ozone precursors transported from other areas. The prohibition applies only in cases in which 

the area has met a11 requirements and implemented all measures applicable to the area under this 

Act. \ 

[42 U.S.C. 75 1 Id] 
ATTACHMENT B 

~nflation Adiustment for Section 185 Fees 

Section 1 85 cross-references the methodology in section 502(b)(3)(B)(v) of the CAA. 

This method has been interpreted for use in determining permit fees in a 1992 EPA 

memorandum. (See, Memorandum of October 15, 1992, from Frank Bunyard, "Calculating Fees 

for Operating Permits.") EPA has used this method to calculate the Part 70 permit fee rate since 

1990, and will continue to update the rate every year in September, when the August values are 

available. The adjusted section 185 fee, then, would be prorated to that adjusted permit fee, as 

shown in Table 1 below, by multiplying the Part 70 permit fee rate by 200 ($5000/$25). Since 

section 185 fees are assessed on a calendar year basis, and the inflation factor is applied in 

~eptember; the calendar year fee is determined as a weighted average (8112 of the fee associated 

with January to August, and 4/12 of the fee associated with September to December). The 

weighted fees appear in Table 2 below. These will be updated each year in the fall. 

TABLE 1: SECTION 185 FEE RATE BASED ON PART 70 PERMIT FEE RATE 

* From www.e~a.aov/oar/o~aa~d~emits/histona~rates~html , . 
TABLE.9: ANNUALIZED SECTION 185, FEE RATE 
ATTACHMENT C . . 

Response to CAAAC Task Force Options 

. EPA's Clean Air Act.Advisory Committee (CAAAC) submitted a letter toEPA dated 

May -15,2009, asking whether "it is legally permissible under either section 185 or 172(e) for a 

state to exercise the discretion identified" in 10 bullet points listed in an attachment to the letter 

(see Attachment D). In general, we believe the language in section 185 is relatively clear 

regqrding the provisions that must comprise an approvable program and, as indicated in the 

discussion below, we do not believe that many of the flexibilities raisedby the CAAAC would, 

be approvable provisions of a state-adopted section 185 fee program. However, EPA believes 

that an.alternative progrmthat contains some of these flexibilities may be acceptable if it is 

consistent-with the principles'of section 172(e) of the CAA, which allows EPA through . . 

rulemaking to accept alternative programs that are "not less stringent" where EPA has revised 

the NAAQS. Although the anti-backsliding provisions of section 172(e) facially apply only. ' ' where EPA has revised the NAAQS to make it less stringent, in its implementation rule 

governing the transition fiom the 1-hour ozone standard to the more stringent 1997 8-hour 

standard, EPA concluded that it made sense to rely ,on the governing principles in section 172(e). 

Applying this pIinciple for the transition from the I&ur standard to the 1997 8-hour ozone 

standard, EPA can either require states to retain a specific program that applied for purposes of . . 

the 1-hour standard, or alternatively can allow states, flexibility to adopt alternative programs, but 

only if such alternatives are "not less stringent" than the mandated program. EPA has not yet 

concluded whether to apply the principles of section 172(e) to any future transitions from the 

1997 ozone NAAQS to any new or revised ozone NAAQS. 

Consistent with the preceding distinction between a section I85 fee program and an 

alternative program that is "not less stringent," we address each of the 10 points separately 

below. 

Point A asks whether a state may "authorize multi-facility operators to aggregatc 

emissions from commonly-owned and -operated facilities within a single nonattainment area for 

the purpose of calculating the fee." We have defined "major stationary sources" in many , 

contexts and have interpreted that definition in certain circumstances to allow for aggregation of 

sources. We anticipate that we would be able to approve a section 185 fee program SIP that 

relies on a definition of "major stationary source" that is consistent with the CAA as interpreted 

in our exjsting regulations and policies. 

Point B asks whether a state "may permit major sources to'aggregate their VOC and NOx 

emissions on a site-wide basis in calculating the fee" and includes a description of certain 

limitations that would be assumed for such aggregation. Provided that aggregation is not used to 

avoid a "major source" applicability finding, and aggregation is consistent with the attainment 

demonstration (e.g., if the area has received a NOx waiver under section 182(f), then NOx 

reductions cannot be substituted for VOC reductions), we believe states have discretion to allow 

a major source to aggregate VOC and NOx emissions. 

Points C and D concern whether states may allow a discount for certain "pre-attainment 

year or attainment year" controls. We do not believe that section 185 allows for any such. . . 
consideration. The statutory language is clear that the baseline emissions are the lower of the 

actual emissions or emissions allowed under the applicable permit during the attainment year or 

allowed under the SIP during the attainment year where there is no such permit. The only 

exception to this calculation for baseIine emissions is where a source's emission are "irregular, 

cyclical or otherwise vary significantly from year to year." EPA has previously issued guidance 

addressing this exception. Although consideration of these controls is not consistent with the 

express terms of section 185, states may be able to develop a "no less stringent" progr'vn 

consistent with the principles in section 172(e), taking into consideration such pre-attainment 

controls. See discussion of point I below. 

Point E asks whether the purchase of emissionneduction credits, or allowances, that are 

part of an area's attainment control measures "may reduce the amount of emissions upon which 

the fee is based or constitute an investment that should be credited against the fee." In the 

context of calculating both the attainment-year baseline emissions and the post-attainment year 

emissions, section 185 requires such emissions be the lower of actual or allowable emissions. 

We believe aIlowable emissions can include emission reduction credits or emissions allowances 

held by a source subject to fees. Whether holding the emissions allowances will affect a source's 

fee obligation depends on the amount that is determined to be the lower of actuaI or allowable 

emissions for that source. If states wish to provide some other form of credit for sources that 

purchase market-based control measures, they may be able to do so in the context of a program 

that is no less stringent than a section 185 program consistent with the principle in section 

172(e). See discussion of point I below. 

Point F asks whether sources may receive credit for post-attainment year emissions 

reductions or air qudity investments. The Act is clear that post-attainment year emission 

reductions will be credited to the extent that they reduce emission levels from the baseline year. 

For example, if a source has 1000 tons of emissions in the attainment "baseline" year, the CAA 

requires that source to pay fees on any emissions in excess of 800 tons (80 percent of baseline) in 

each post-attainment year. If the source is able to reduce post-attainment year emissions from 

1000 tons to 900 tons, then the source will pay fees on only 100 tons of emissions. With regard 

to crediting emission-reducing or air-quality investments, we note that section 185 does not 

specify how collected fees must be spent. In general, we believe that a state may choose to use 

collected fees to support air quality improvement projects at sources. However, we caution that 

any such provisions should not be developed in a way such that the provisions would appear to 

defeat the purpose of section 185, which is to encourage emission reductions that will bring the 

area into attainment with the ozone NAAQS in the near-term. 

Point G asks whether post-attainment year new sources must be subject to the fees. We 

believe it is clear that the fee imposed is on major sources. Thus, to the extent a "new source" is 

considered a part of a major source that existed in the attainment year, the emissions from the 

new source must be considered as emissions from that major source. For new major sources that 

are not part of existing major sources, we believe section 185 does not provide a clear 

interpretation of the source's fee obligation. Therefore, we believe states have discretion in . determining how fees apply to these sources. States should consider that section 185 requires 

"each major stationary source" to pay a fee; however, the baseline amount for sources that did 

not have a permit in the attainment year is calculated according to what the SIP "allowed" during 
the attainment yeat. Therefore, states should examine how the applicable SIP addressed 

emissions fiom potential new major sources in the attainment year. For example, a state could 

determine that the SIP's new source review (NSR) requirements would provide that a new source 

employ emissions control that meets the requirements of "lowest achievable emissions rate" 

(LAER). Therefore, the attainment-year baseline for a new source is the level allowable after 

application of LAER. Alternatively, a state could determine the SIP's NSR requirements would 

provide that a new source's net emissions impact be no greater than zero (i.e.;emissions levels 

after application of LAER must be offset at a ratio of at least 1 to 1). Therefore the attainmentyear baseline for a new source is zero, subjecting the entire,amount of a source's post-attainment 

year emissions to the per-ton emissions fee. Also, states may be able to develop "not less 

stringent" programs consistent with the principles in section 172(e), that exempt new major 

sources from fees, provided the alternative programs meet the 172(e) standard of equivalence. 

See discussion of point I below. 

With regard to Point H, which references state discretion rqgarding the.use of collected ' - fees, we point to our.response above for Point F. 

Point I asks whether section 172(e) authorizes a state to develop an alternative program to . 

that mandated under section 185. As an initial matter, we note that section 172(e) does not 

directly apply here, where we are transitioning from the 1-hour ozone standard to the more 

stringent 1997 8-hour standard. However, in developing our anti-backsIiding rules in the Phase 1 

Rule for Implementing the 8-hour Standard (69 FR 2395 1, April 30,2004), we indicated that 

although section 172(e) did not.directly apply, we were relying on the principles in section 

172(e), as well as other indications of Congressional intent, in developing our anti-backsliding 

rules. In South Coast Air Quality Management District v. EPA, 472 F.3d 882 (D.C. Cir. 2006), 

the Court rejected our waiver of the section 185 fee program for the 1 -hour standard, holding that 

such program was a "control applicable" to the area as that phrase is used in section 172(e) and 

thus must be retained under EPAYs decision to apply section 172(e) to the transition from the 1- 

hour standard to the more stringent 8-hour standard. Not before the Court was the issue of the 

remaining language in section 172(e) that provides that EPA "shall promulgate requirements . . . t 

to provide for controls which are not less stringent than the controls applicable to areas 

designated nonattainrnent before such relaxation." EPA believes that this language clearly 

allows EPA by regulation to accept alternative control programs that "are not less stringent" than 

those that were mandated by the Act for the standard that has been replaced (i.e., the 1-how 

standard) . 

Point J requests ,hat EPA "clearly indicate the conditions under which the collection of 

fees may be terminated." Furthermore, it indicates that some members of the task force "would 

like the authority to terminate the section 185 fee program upon the first year in which an area 

achieves the relevant standard.'' EPA believes that for an area EPA determines through noticeand-comment rulemaking is attaining either the 1-hour or 1997 8-hour ozone NAAQS based on 

permanent and enforceable emissions reductions, the area would no longer be obIigated to 

submit a fee program SIP revision, nor be obligated to continue implementing a section 185 fee 

program (or approved alternative equivalent program). The bases for EPA to make such a 

determination through notice-and-comment rulemaking are provided in the memorandum 

associated with this Attachment. 
ATTACHMENT D . . 

CAAAC Letter 

United States Environmental Protection Agency 

Clean Air Act Advisory Committee 

May 15,2009 .. 

The Honorable Elizabeth Craig 

Acting Assistant Administrator 

Ofice of Air and Radiation 

U.S. EPA 

Ariel Rios North 

1200 Pennsylvania Avenue, N.W. 

Mail Code 6 10 1 A 

Washington, DC 20460 

Re: Clean Air Act Sections 185 and 172(e) 

Dear Assistant Administrator Craig: 

At the May 14,2009 meeting of the US EPA Clean Air Act Advisory Committee, on a 

unanimous vote, the Committee resolved to urge the Agency to provide prompt guidance to the States 

regarding the following question arising under the Clean Air Act: 

Is it legally permissible under either section 185 or 172(e) for a State to exercise 

the discretion identijied in Options A-J? 

The Clean Air Act Section 185 Task Force, a work group established under the Clean Air Act 

Advisory Committee, identified ten areas (A-J) of potential state discretion. These options are Listed in 

the attachment to this letter. The Committee took no position on the reasonableness or legal 

permissibility of any option. 

As several States are in the process of developing their section 185 nonattainment fee programs, 

time is of the essence in providing appropriate legal and policy guidance. 

' Thank you sincerely, 

Co-Chairs of the Section 185 Task Force: 

. . 

Eddie Terrill Robert A. Wyman 

Director Latham & Watkins L;LP 

Department of Environmental Quality'. 355 South Grand Avenue 

. Air Quality Division . . Los' Angeles, CA 

707 North Robinson 9007 1 

Oklahoma City, OK 73 101-1677 . . 
A. þÿÿ reg at ion of Emis'sions Among Commonly-Owned Facilities 

At its option, a State may authorize multi-facility operators to aggregate emissions 

Erom commonly-owned and -operated facilities within a single nonattainment 

area for the purpose of calculating the fee. 

. . . . 

, B. ~~~re&on ofVOC and NOx Emissions . . .. . 

At its option, a State may permit major sources to aggregate their VOC and NOx 

emissions on a site-wide basis in calculating the fee to the extent such aggregation 

is consistent with attainment modeling previously submitted by the State for the 

applicable air quality control region. Such aggregation is not to be used for the 

purpose of avoiding a "major source" applicability finding (e.g., by spreading 

emissions over multiple sources so as to render the average facility emissions less 

than the major source threshold). 

C. . Consideration of Pre-Attainment Year or Attainment Year Installation of BACT 

or LAER 

. . .. At its option, a State may consider to appropriate extent pre-attainment or . 

. . attainment year:emission control investments by major sources. .Without 

intending to define the precise boundaries of a state's discretion to recognizethe .' degree of control already achieved by a.source, the participants determined that 

sources that had recently (e.g., withinlive (.5) years of the year for which the fee 

would be.irnposed) undergone new source review and, as a result, installed BACT . 

. . or LAER, should not be required to include emissions from such equipment ir! 

calculating the fee. . .. 

D. ' Consideration of Pre-Attainment Yearor Attainment Year Installation of Retrofit 

. . Controls. . . 

In addition, at its option under appropriate circumstances; a State may designate 

emission perfdrmance stahdhds that it has determined represeqt well-controlled. 

(e.g., in the range of or'superior to BACT or LAER) units for a given pcriod o'f 

time and authorize a facility to demonstrate what portion of.its emissions should . ' 

be excluded from the fee.calculation on that basis, . 

... 

E. ' Consideration of Market-Based Programs . . 

At its option under appropriate circumstances, a State may determine that 

purchases of emission reduction credits, or allowances, as part of a State's 

market-based attainment control measure may reduce the amount of emissions 

upon which the fee is based or constitute an investment that should be credited 

against the fee. 
Credit Sources for Post-Attainment Year Emissions-Reducing or Air Quality 

Investments 

At its option, a State should recognize and appropriately credit qualifying postattainment year emissions-reducing or air quality-beneficial investments by major 

sources. These investments should be credited to such sources in a manner that 

reduces or eliminates fees that otherwise would be due under the program. States 

should identi@ the qualifications for such investments based on their unique 

attainment needs. . 

~osi-~ttairhent Year New Sources 

There was agreement that new sources constructed after the attainment year 

would not have a baseline; would already have instailed'~~~~ or LAER, would 

already have provided offsets, and therefore shouldnot be subject to the fee for . . 

such equipment. 1 

use of Program ~evenues 

States retgn full discretion regarding the use of collected revenues.: Participants 

encouraged States to tailor strategies to their unique attainment challenges and to 

consider ways to address under-regulated sources (e.g., legacy vehicles and 

engines and 'certain area .sources). 

Equivalent Programs 

Under section 172(e), a State should have the option of collecting equivalent or 

greater fees, or of requiring equivalent or greater emission reductions, by shifting 

the program target in part or in whole to under-regulated sources (e.g., legacy 

vehicles and engines, under-regulated area sources) or by applying the progrim in 

a manner that addresses other attainment gaps. Likewise, the task force 

envisioned that any recommended strategy not directly approvable under section 

185 should be considered as an equivalent alternative program under 172(e). In 

such circumstances, the state may need to shift the fee burden among sources to 

demonstrate equivalency. 

Program Sunset . . 

EPA needs to ~learl~indicate the conditions under which the collection of fees 

' 

may be terminated. .Some members of the taskforce would like the authority to 

terminate the section 185 fee program upon the first year in which an area 

achieves the reIevant standard. 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

October 21,201 0 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment F: 

SUPPORT LETTER FROM THE CALIFORNIA PARTNERSHIP FOR THE SAN 

JOAQUIN VALLEY, FEBRUARY 18,2010 

12 PAGES) 
California Partnership for the 

San Joaquin Valley 

February 1 8,20 10 

Mr. Seyed Sadredin 

Air Pollution Control Officer 

San Joaquin Valley Air Pollution Control District 

1990 East Gettysburg Avenue 

Fresno, CA 93726 

RE: California Partnership Support for the Implementation of AB 2522 

Dear Mr. Sadredin, 

On behalf of the California Partnership for the San Joaquin Valley (Partnership), 1 write 

to urge prompt action by the San Joaquin Valley Air Pollution Control District (Air 

District) on the implementation of AB 2522, which authorizes the Air District to increase 

DMV surcharge fees for the purpose of generating air quality mitigation funds for the San 

Joaquin Valley. 

The Partnership board includes representatives from both the public and private sector in 

all eight Valley counties in the San Joaquin Valley. The Partnership Air Quality Work 

Group (AQWG) is comprised of representatives from a very broad and diverse group of 

Valley stakeholders, including environmental advocacy groups as well as business and 

agricultural interests. At a recent meeting, a recommendation of support for prompt 

implementation of AB 2522 was unanimously approved by the AQWG. The rationale for 

this recommendation follows. 

As you are well aware, the Valley experiences some of the worst ozone and particulate 

air pollution in the nation, and failure to take all possible action toward improving the 

Valley's air will result in the continuation of the significant health, social and economic 

consequences that have plagued the region for decades. Additionally, we risk losing 

federal transportation dollars if the Valley fails to comply with federal standards. 

The adverse economic impact of the Valley's air quality is staggering, causing 192,000 

missed school and workdays annually. One in three Valley families has a member with a 

respiratory ailment, and the poor air quality contributes to 460 deaths per year. These 

statistics, along with the challenges in meeting state and federal air quality standards, 

501 0 N Woodrow Ave. 

2nd Floor, MIS WC 142 

Fresno, California 93740 
prompted the Partnership to help get AB 2522 approved by the Legislature in 2008. 'The 

bill is consistent with the actions and objectives of the Partnership, as set forth in our 

Strategic Action Proposal, by generating funding needed to "implement incentive 

mechanisms to accelerate adoption of air quality mitigation technologies." 

Technology to significantly improve the Valley's air quality is available today; however, 

the cost is often prohibitive. Even in the best of economic times, accelerated adoption of 

these technologies is financially very difficult for industry and agriculture. In the current 

economic environment, such investments border on being impossible for most in the 

Valley, making funding for incentive-based programs even more important and timely. 

We do not take lightly the recommendation to increase fees in these difficult economic 

times, but it is the consensus opinion of the diverse stakeholders represented in the 

AQWG that a certain amount of self-sacrifice is necessary to help clean our air and 

address the economic consequences of failure to comply with federal standards in a way 

that reduces the burden on the economic engines of the Valley. 

We also do not take lightly the burden of additional fees on Valley residents when much 

of our air quality problem comes from sources outside the Valley and vehicles using the 

Valley as a transit route. While the Partnership, in close consultation with the Air 

District, has worked hard and has been successful in raising state and federal funds for air 

quality mitigation in the Valley, there remains a tremendous need for additional funding. 

AB 2522 is an additional resource to add to our collective effort in realizing critical air 

quality improvement throughout the San Joaquin Valley. It is our self-help measure, and 

its implementation will provide us with matching funds to help generate more air quality 

mitigation funding from state and federal sources. Conversely, failure to utilize the 

authority provided in the legislation will likely limit our ability to be effective in lobbying 

for additional funding in the future. 

On behalf of the California Partnership for the San Joaquin Valley, I respectfully request 

the Air District take prompt action in moving forward with the implementation of AB 

2522 and thank you in advance for your consideration. The Partnership looks forward to 

continuing to work with the Air District in improving the quality of life in the San 

Joaquin Valley. 

Sincerely, 

Fritz Grupe, Deputy Chair 

PAGE 2 OF 2 
San Joaquin Valley Unified Air Pollution Control District 

Meeting of the Governing Board 

October 21,201 0 

CONSIDER ALTERNATIVES FOR THE EQUITABLE APPLICATION OF 

MANDATED FEDERAL NONATTAINMENT PENALTIES TO SOURCES 

WITHIN THE SAN JOAQUIN VALLEY THROUGH THE USE OF MOTOR 

VEHICLE FEES 

Attachment G: 

SUPPORT LETTER FROM SAN JOAQUIN BUSINESS COUNCIL, 

OCTOBER 12,2010 

(2 PAGES) 
BUSINESS COUNCIL 0I;I~ICEIZS 

IIUSlNL:.SS COUNCIL Dll<EC1'01<S 

1990 East Gettysburg Avenue 

Fresno, CA 93726 

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Ivlichilcl Ilc~fly. I:itrtrttcitr/ Cutr/et. G.etiit 

Ur~iotr 

J;l~nos li. Dyer, Ir.. Don~rej~ /Ir.otttl 

Dollg Ehcrh:~rd[, llotrk q/!l'Sto~:R/ott 

Dr. I'nmcla Eibeck, Utrilvr.\.ity c!/'tltc IJnc;/ic 

13ill Filios, AKF Di:~t~k~l~ttrc,trt 

C:~rso~i Fu~ltlcrburk. I;otoztl d/ills 

I<;II.~II Garrett, /I. (2 Sl~ctttos COIIII)NII~CS 

I)ylall Gcorgc. /'(;&I: 

Gcnc Gilli, Collitrs Elec/t.icctl Co. 

COI\V~II l.I:irpcr, Koiset. Fotttt(l(t/iott t/os/~i~c~/ 

Maria11 .lacobs, Ptrblic /(elcttiotrs. 1<et. 

Phil Johnso~l. /.itrcoltr C(:rr/er. 

Brad Langc, Lottgefi~ins 

Jol111 I.ctlbctler. I/i,tu I~(~t.ttrs, Itrc.. 

Kc11 Monroe. /loll ol'Colfot~rtio 

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Andy I'rokop. Cirtiled Il/o.v of'S(ttt .lortqtritt 

.loll11 Quinn, Food 4 Le.ss 

,1011 11 T<i ng. Il/ells F'(ttgo lttstirotrce Set.~.ices 

L.orcrla 'frevelia, Orrk lirrllej> Cotti. llorrli 

TJill T~~czz;~, Ortttk o/',l~ S. Cot~rtttet~re 

Greg Tutlol: Bel<itrs-Ptrci/ic S!ot.o,ye 

'l'ol~hie Wells, Ijoi~~ttrrtt~. CPlI 

I>o~laltl 1. Wilcy, Sr. .loscl)h '.r h,lerlicol Cetrlo 

l3nl1 %.;~~noro, Zcrrtrot~cr ~ltt/utttutii:c G~.urtp 

RE: San Joaquin Business Council Support for the Implementation of AB 2522 

Dear Mr. Sadredin, 

We are writing on behalf of the board of the San Joaquin Business Council to 

support prompt implementation of AB 2522, which authorizes the Air District to 

increase DMV surcharge fees for the purpose of generating air quality mitigation 

funds for the San Joaquin Valley. The board of the San Joaquin Business Council is 

made up of CEO's of prominent businesses in San Joaquin County. 

As you are well aware, the Valley experiences some of the worst ozone and 

particulate air pollution in the nation, creating severe health issues and major 

economic impacts. Valley stationary sources have invested a significant amount of 

resources to comply with Air District requirements and now constitute only 20% 

of the oxides of nitrogen emissions in the San Joaquin Valley while mobile sources, 

which largely fall under EPA's jurisdiction, make up 80% of emissions. 

The Section 185 penalty fee that has been imposed on the Valley by the EPA fails 

to recognize the circumstances of the Valley. If imposed, it will cost Valley 

businesses approximately $29 million per year, with no recognition of the 

substantial investments that have been made to implement the most stringent 

controls in the country. At the same time, mobile sources that make LIP the 

majority of the emissions inventory are not required to pay the fee. We are 

pleased that the Air District's call for flexibility has resulted in the EPA being 

willing to accept AB 2522 revenues as an alternative, if the proceeds are spent to 

pay for emissions reductions of ozone precursors. 

We believe AB 2522 should be implemented expeditiously for two reasons: (a) 

-the Valley urgently needs incentive funding to help reduce mobile source 

emissions through voluntary measures; and (b) revenues raised through AB 2522 

will enable the Valley to meet 185 fee requirements without adding an unfair 

burden on businesses. 

We do not take lightly the recommendation to increase fees in these difficult 

economic times, but vehicle owners must be willing to accept a certain amount of 

self-sacrifice, given the huge contribution of mobile sources to our poor air 

quality. 

BUSINESS COUNCIL INC. OF SAN JOAQLTIN COUNTY 

2800 West Adarch Laiie, Suite 473. Stoclcton, California 952 19 (209) 956-3388 /fax (209) 9.56- 1520 

E-Allail: Dci3sjpirel. org 
Mr. Seyed Sadredin October 12,2010 Page 2 

We also do not take lightly the burden of additional fees on Valley residents when much of our air 

quality problem comes from sources outside the Valley and vehicles using the Valley as a transit route. 

The Air District must continue to address this inequity, but we need a self-help measure while we 

continue to address this challenge, Implementation of AB 2522 will provide us with matching funds to 

help generate more air quality mitigation funding from state and federal sources. Conversely, failure to 

utilize the authority provided in AB 2522 will liltely limit our ability to be effective in lobbying for 

additional funding in the future. 

On behalf of the San Joaquin Business Council, we respectfully request the Air District take prompt 

action in moving forward with the implementation of AB 2522, and thank you in advance for your 

consideration. 

Sincerely, 

*@G 

I 

Fritz Grupe Ron Addington / 

Chairman President/CEO