UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX AIR DIVISION

Technical Support Document 

for

EPA’s Rulemaking for the

California State Implementation Plan

regarding

South Coast Air Quality Management District (SCAQMD)

Regional Clean Air Incentives Market (RECLAIM)

SCAQMD Rule 2002 Allocations for Oxides of Nitrogen (NOx) and 

Oxides of Sulfur (SOx)

Prepared by: Lily Wong

May 13, 2011
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RULE IDENTIFICATION

Agency: South Coast Air Quality Management District

Current SIP Approved Rule: Adopted: January 7, 2005

Submitted: December 21, 2005

Approved: August 29, 2006

Submittal Subject to this TSD: Rule 2002

“Allocations for Oxides of Nitrogen (NOx) and Oxides of 

Sulfur (SOx)”

Adopted: November 5, 2010

Submitted: April 5, 2011

BACKGROUND

RECLAIM

The RECLAIM program (Regulation XX) was initially adopted by SCAQMD in October 1993 

and covers stationary sources emitting 4 tons or more per year of NOx or SOx in 1990 or in any 

subsequent year. The program established a NOx and a SOx emissions cap and trade program in 

the South Coast air basin, with the emissions cap declining over time until 2003. The program 

was designed to provide sources with incentives to reduce emissions and advance pollution 

control technologies by giving sources added flexibility in meeting emission reduction 

requirements. A NOx or SOx RECLAIM Trading Credit (RTC) is a limited authorization to emit 

one pound of NOx or SOx during a specified one year period. A RECLAIM source’s emissions

may not exceed its holding of RTCs for any compliance year. If a RECLAIM source’s emissions 

exceed its allowance allocation, it may choose among these compliance options: it may install 

control equipment to lower its emissions, it may modify its activities to lower emissions, or it 

may purchase additional RTCs from other facilities to cover its emissions. The RECLAIM 

program consists of Rules 2000 through 2020. 

Chemical Composition of PM2.5 in the South Coast

PM2.5 in the air is a complex mixture of components. Common components include: various 

forms of nitrate (NO3), sulfate (SO4), and ammonium compounds; elemental carbon; a great 

variety of organic compounds; and inorganic material (including metals, dust, sea salt, and other 

trace elements) generally referred to as “crustal” material, although it may contain material from 

other sources. “Primary” particles are emitted directly into the air as a solid or liquid particle 

(e.g., elemental carbon from diesel engines or fire activities, or condensable organic particles 

from gasoline engines). “Secondary” particles (e.g., nitrate and sulfate compounds) form in the 

atmosphere as a result of chemical reactions between precursor pollutants such as NOx, SO2, 

VOC, and ammonia. PM2.5 in the South Coast Air Basin is overwhelmingly formed as a 

secondary pollutant. (South Coast 2007 Air Quality Management Plan (AQMP), page ES-9). 

Therefore, the AQMP relies on reducing precursors to PM2.5 and some directly-emitted PM2.5 
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rather than fugitive dust (PM10). The AQMP includes a commitment to achieve 2.9 tons per day 

(tpd) of SOx emission reductions in 2014 from the RECLAIM program. 

RULE SUMMARY 

Amendments to SOX RECLAIM

Rule 2002 provides the methodology for allocating RTCs to RECLAIM sources and making 

adjustments to sources’ RTC holdings. The primary purposes of the current amendments to Rule 

2002 were to achieve additional SOx emission reductions as committed in AQMP, and to address 

a state requirement that Best Available Retrofit Control Technology be required at RECLAIM 

facilities. The amendments reduce the SOx RECLAIM emissions cap by lowering a source’s SOx

RTC holdings in accordance with a calculation procedure (the “shave”). The amendments are

projected to result in 5.7 tpd RTC reduction (51.4% shave) in 4 phases: 3 tpd in Calendar Year

2013, 4 tpd in CY 2014, 5 tpd in CY 2017, and 5.7 tpd in CY 2019, although emission reductions

achieved in years 2017 through 2019 would not be credited to the SIP unless the Executive 

Officer takes certain actions in accordance with provision (f)(1)(P). 

Previous NOx Amendments to RECLAIM

Rule 2002 was previously amended on January 7, 2005 and originally submitted on July 15, 

2005. The 2005 amendments to Rule 2002 pertained to the NOx provisions. However, it was 

SCAQMD’s intent at that time that parts of provision (f)(1)(A) and all of provision (f)(1)(G) of 

Rule 2002 should not be submitted to EPA for approval into the SIP. At the request of 

SCAQMD, California Air Resources Board (“CARB”) withdrew Rule 2002 submitted on July 

15, 2005, and on December 21, 2005 submitted a revised version of Rule 2002 that deleted parts 

of provision (f)(1)(A) and all of provision (f)(1)(G). EPA approved this revised submittal on 

August 29, 2006. 

In SCAQMD’s April 5, 2011 submittal of Rule 2002, it includes the previously deleted 

provisions (f)(1)(A) and (f)(1)(G). Consequently, EPA’s proposed action on this submitted rule 

will also affect the previously deleted provisions (f)(1)(A) and (f)(1)(G). The “new” provisions

in (f)(1)(A) and (f)(1)(G) specify the “shave” (in years 2008 through 2011 and after) to be 

applied to sources’ NOx RTC holdings as a mechanism to reduce the NOx RECLAIM emissions 

cap. These provisions result in NOx emission reductions.

EPA REVIEW CRITERIA: EPA generally uses the following four criteria in evaluating state 

and local NOx prohibitory rules for approval into the SIP, and for these rules a fifth

consideration.

1. Enforceability - Section 110(a) of the Clean Air Act requires enforceable SIP requirements. 

Several EPA guidance documents are used to evaluate rule enforceability, including the 

“Bluebook” (Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Clarification to 

Appendix D), November 24, 1978, 52 FR 45044), and “the Little Bluebook” (Guidance 
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Document for Correcting Common VOC & Other Rule Deficiencies), EPA Region 9, August 

21, 2001. 

2. Rule Relaxation - EPA must evaluate whether new submittals comply with sections 110(l) 

and 193 of the Clean Air Act regarding SIP relaxations. 

3. Stringency - Section 182(b)(2) of the Clean Air Act requires certain SIP rules to apply 

Reasonably Available Control Technology (RACT). Other sections of the Act require other 

control levels. 

4. “State Implementation Plans; Nitrogen Oxides Supplement to the General Preamble; Clean 

Air Act Amendments of 1990 Implementation of Title I; Proposed Rule,” (the NOx

Supplement), 57 FR 55620, November 25, 1992.

5. Economic Incentive Programs - EPA published the guidance, “Improving Air Quality with 

Economic Incentive Programs” on January 2001 (EPA-452/R-01-001). The guidance 

available at http://www.epa.gov/ttncaaa1/t1/meta/m1201.html. This guidance applies to 

discretionary economic incentive programs (EIPs) and represents the agency’s interpretation 

of what EIPs should contain in order to meet the requirements of the Clean Air Act. Because 

this guidance is non-binding and does not represent final agency action, EPA is using the 

guidance as an initial screen to determine whether potential approvability issues arise.

EPA EVALUATION: The submitted rules comply with the evaluation criteria as discussed 

below. 

1. Enforceability – The rules are generally clear and consistent with the Bluebook and the Little 

Bluebook and other relevant EPA guidance regarding enforceability.

2. Rule Relaxation – The amendments result in additional SOx emission reductions in the SOx

RECLAIM program and thus are strengthening. 

3. Stringency – In EPA’s original approval of the RECLAIM program, EPA determined that the 

program met the CAA RACT requirements. These amendments do not undermine EPA’s 

previous determination.

4. NOx Supplement – In EPA’s original approval of the RECLAIM program, EPA determined 

that the program is consistent with the NOx Supplement. These amendments do not 

undermine EPA’s previous determination.

5. EIP Guidance – In EPA’s original approval of RECLAIM, EPA determined that the program 

was consistent EPA’s 1994 guidance for economic incentive programs at 40 CFR 51 Subpart 

U. These amendments do not significantly modify the operation of the SIP-approved 

program and are generally consistent with EPA’s 2001 guidance as well. 
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EPA ACTION: EPA staff recommends full approval of the submitted version to Rule 2002

because it complies with all relevant Clean Air Act requirements including those regarding 

enforceability and they are consistent with EPA’s guidance for economic incentive programs. 

ATTACHMENTS:

1. SCAQMD Rule 2002 “Allocations for Oxides of Nitrogen (NOx) and Oxides of Sulfur 

(SOx).”

2. “Final Staff Report, SOx RECLAIM, Part 1 BARCT Assessment & RTC Reductions 

Analysis,” SCAQMD, dated November 2, 2010, and submitted to EPA on April 5, 2011.