## STAFF REPORT

Rule 10.9 : Rice Straw Emission Reduction Credits and Banking

Date of Release: August 22 , 20 14

Schedule of Meetings

Public Hearing: October 6 , 2014

Feather River AQMD

1007 Live Oak Blvd, Suite B

- 3,

Yuba City, California 95991Table of Contents

Contents Page

1. Executive Summary

................................ ................................ ........................... 1

2. Background

................................ ................................ ................................ ........ 1

3. Propo sed Rule Requirements

................................ ................................ ............. 2

4. Socioeconomic Impact

................................ ................................ ....................... 3

5. Impacts of the Pro posed Rule

................................ ................................ ............ 4

6. Estimated Cost Impact

................................ ................................ ....................... 4

7. Environmental Review and Compliance

................................ ........................... 4

8. Required Findings

................................ ................................ .............................. 5

9. Rule Analysis

................................ ................................ ................................ ..... 6Proposed Rule: 10

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1.0 Executive Summary:

On April 6, 2009, the Feather River Air Quality Management District (District) Board of

Directors adopted Rule 10.9

- Rice Straw Emission Reduction Credits and Banking. This rule

established procedures to ensure federal recognition of the banking of Emissi on Reduction

Credits (ERCs) resulting from the permanent reduction of open field burning of rice straw

located withi n the Sacramento Federal Nonattainment Area (SFNA). The portions of the District

in the SFNA that are affected by this rule include all rice acres located south of Subaco Road and

south of the Bear River in Sutter County

.

The requirements for Rule 10.9 include :

1. An application will be required to bank all ERC s under this program. There will be two

types of applications: new applications and re

- certification applications. Those parties

who previously banked rice straw ERCs in the SFNA m ay surrender their existing ERC s

and apply to “re

- certify” their credits. Any other parties who can substantiate that they

grew rice during the 1988

- 1992 baseli ne period may submit a “new” banking application

to obtain credits.

2. All applications must be received within six (6) months of rule adoption or upon approval

of this rule by the U nited States Environmental Protection Agency (US EPA) into the

State Implemen tation Plan (SIP) , whichever is later.

3. Each applicant must show that the property for which the application is submitted grew

and burned rice in the baseline period between 1988 and 1992.

4. Each applicant must show that the property for which the application is submitted is

limited by deed restriction to burning in any calendar year no more than 25% of the rice

growing acreage.

It is expected that most of the parties with rice straw ERCs will re

- bank their existing certificates

in accordance with t his rule

. In addition, the program will be available to other landowners who

either did not know about the program previously or who previously chose not to participate in

the program.

During the S IP submittal process, it was discovered that the Historic Burn F raction (HBF) was

erroneously defined in Rule 10.9 as 96%. The rice HBF has always been 100% for Yuba and

Sutter Counties, as documented by the Board approved Manual of Procedures (MOP) and

referenced in District Rule 10.2 .1

– Open Biomass Burning Emission Reduction Credit s . The

amendments in this rule will correct the definition to be consistent with all previously issued

ERCs.

2.0 Background :

Historically, the practice of rice growing included burning the field stubble or straw following

harvest to kill weeds and insects and prepare the field for next year’s plantings. In 1991,

California passed the Connelly

- Areias

- Chandler Rice Straw Burning Reduction Act of 1991

( California Health & Safety Code, Section 41865), which required a phase down of the allowable

rice straw burning acreage in the Sacramento Valley Air Basin. By 2001, the phase down was

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complete and only 125,000 acres or 25% of the hi storically burned rice growing acreage can now

be burned in any one year.

One unique feature of the state law was that it specifically allowed ERCs to be generated from

this curtailment, and stated that the emission reductions could not be relied upon f or

demonstrating reasonable further progress or attainment of a NAAQS. While FRAQMD has

previously issued rice straw ERCs under Rule 10.2, Rule 10.9 was designed to ensure that the

ERCs issued from this non

- traditional source would be recognized for the p urpose of providing

federal NSR offsets

.

The SFNA Districts have worked in conjunction with the Sacramento Valley Basinwide Control

Council (BCC) and the California Rice Commission to address all concerns and comments raised

by the California Air Resourc es Board (ARB) and the US EPA. The other Air Districts in the

SFNA have developed a model Rice Straw Emission Reduction Credit Rule and White Paper to

establish procedures which ensure federal re cognition of the banking of ERC s. The amendment

of this Dist rict rule i s based on the model rule and White Paper.

3.0 Proposed Rule Requirements:

Table 1 below summarizes the proposed rulemaking by section:

Table 1

– Summary of Proposed Amendments

SECTION NUMBER PROPOSED LANGUAGE

Section A.2 Added clarification that only the SFNA is subject to the rule.

Section B.11 Amended definition for “ Historic Burn Fraction ” to be defined as 100%, rather

than 96%

. Section C.2 Fixed reference to the acreage adjustment calculations.

Section D.2.d Added clarification that the deed restr iction requirement is found in S ection C.6.

Section D.5.f Fixed reference to the publication requirements.

Section D.5.g Deleted redundant language about the application filing deadline, as it is already

defined in Section D.1.

Rule 10.9

- All Minor formatting and editing.

Historic Burn Fraction :

When the District initially adopted Rule 10.9, the District defined the Historic Burn Fraction

(HBF) as 96%. However, this language was an administrative oversight during the District’s rule

adoption process. The rice HBF has always been 100% for Yuba and Sutter Counties.

• Section D.3 of District Rule 10.2.1

– Open Biomass Burning Emission Reduction,

defines the rice HBF as 100%.

• T able 1 of the District’s Manual of Procedures for R ule 10.2, which has been Board

a dopted, defines the rice HBF as 100%.

• The SFNA Rice Straw ERC Model Rule White Paper shows that the rice HBF for Sutter

County is 100%.

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Hence, all rice ERCs that the District has ever issued has been at 100%, including the very first

rice ERC in 1999. The District intend s to change the HBF so tha t it matches District Rule 10.2.1

and the District ’s Manu al of Procedures

.

The HBF is calculated by taking the amount of acres burned and dividing it by the amount of

acres planted during the baseline period, so that it is given as a percentage. The Distr ict has the

following historic records which show the amount of acres planted and burned each year.

Year Acres Planted (Sutter) Acres Burned (Sutter)

1988 72,000 67,084

1989 70,000 72,375

1990 70,000 71,254

1991 62,500 69,957

1992 73,100 67,379

Total 347,600 348,049

Using the totals from the baseline period, the HBF is calculated to be 100.1% [348,049 acres

divided by 347,600 acres] . However, since the HBF cannot theoretically maintain a value higher

than 100% , the HBF for Sutter County will be exactly 100%

.

Alternatively, we can estimate the HBF for each year in the baseline period. Using this method,

we can assume that all acreage that was planted in one year will be burned the following year.

Hence, the HBF for each year is shown as follo ws:

Plant Year Acres Planted (Sutter) Burn Year Acres Burned (Sutter) Historic Burn

Fraction

1988 72,000 1989 72,375 100.5%

1989 70,000 1990 71,254 101.8%

1990 70,000 1991 69,957 99.9%

1991 62,500 1992 67,379 107.8%

1992 73,100

--- ------

On a per year basis , each calculation shows that the Historic Burn Fraction is still at or exceeds

100%. Again, the HBF cannot theoretically maintain a value higher than 100% , so the HBF for

Sutter County is still calculated to be 100%

.

I t can be reasonably argu ed that the burn practices in the SFNA will not differ from th e entirety

of Sutter. Hence, the H istoric B urn F raction for the S acramento F ederal N onattainment A rea is

100%

.

4 .0 Socioeconomic Impact :

California Health and Safety Code §40728.5 requires, i n part, that:

“Whenever a district intends to propose the adoption, amendment or repeal of a

rule or regulation that will significantly affect air quality or emissions limitations,

that agency shall, to the extent that data are available, perform an assess ment of

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the socioeconomic impacts of the adoption, amendment, or repeal of the rule or

regulation.”

However, districts with a population of less than 500,000 persons are exempt from the provisions

of CH&S §40728.5 (a). The District’s population is estimated to be approximately 168,000,

which is below the 500,000 person threshold. Therefore, a socioeconomic analysis for this

rulemaking is not required.

5 .0 Emission Impacts of the Pro posed Rule :

The District does not anticipate any emission impacts from the proposed rule.

6 .0 Estimated Cost Impact:

CH&SC § 40703 requires the District, in the process of the adoption of any rule or regulation, to

consider and make public its findings related to the cost effectiveness of the rule. Cost

effecti veness for rulemaking purposes is calculated by dividing the cost of air pollution controls

required by the rule by the amount of air pollution reduced.

The District does not anticipate any cost impacts from the proposed rule or any additional need

for s taff resources upon adoption of the rule.

7 .0 Environmental Review and Compliance:

California Public Resource Code Section 21159 requires the District (at the time of adopting a rule

requiring the installation of pollution control equipment, or a performance standard) to perform an

environmental analysis of the reasonably foreseeable methods of compliance. This rule does not require

installation of control equipment or a performance standard; therefore, the analysis is not required.

This rule is a n administrative rule and the proposed amendments will not result in a direct or reasonably

foreseeable indirect phy sical change in the environment . Therefore, staff has determined that the project is

exempt from the requirements of the CEQA pursuant to Se ction 15060(c)(2) of the State CEQ A

Guidelines.

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8 .0 Required Findings:

California Health and Safety Code §40727(a) requires that prior to adopting or amending a rule

or regulation, an air district’s board must make findings of necessity, authority, cl arity,

consistency, non

- duplication and reference. The findings must be based on the following:

1. Information presented in the District’s written analysis, prepared pursuant to CH&S

§40727.2;

2. Information contained in the rulemaking records pursuant to CH&S §40728; and

3. Relevant information presented at the Board’s hearing for the rule.

The table below describes each finding and the basis for making the finding:

REQUIRED FINDING FINDING DETERMINATION

Necessity:

The District must find that the rulemaking

demonstrates a need exists for the rule or for its

amendment or repeal. [CH&S §40727 (b)(1)] It is necessary for the District to adopt the

proposed amendments in order to correct

deficiencies found by the EPA during the SIP

approval process.

Authority:

The District must find that a provision of law or of

a state or federal regulation permits or requires the

District to adopt, amend, or repeal the rule.

[CH&S §47027(b)(2)] The District is authorized to adopt rules and

regulations by CH&S §40001, 40702, 40919,

41010, and 42300.

Clarity:

The District must find that the rule is written or

displayed so that its meaning can be easily

understood by the persons directly affected by it.

[CH&S §40727(b)(3)] The District has reviewed the proposed

amendments and determined that they can be

easily understood by the affected industry. In

addition, the record contains no evidence that the

persons directly affected by the rule cannot

understand the rule.

Consistency:

The rule is in harmony with, and not in conflic t

with or contradictory to, existing statutes, court

decisions, or state or federal regulations.

[CH&S §40727(b)(4)] The proposed rul e does not conflict with and is

not contradictory to existing statutes, court

decisions, or state or federal regulations.

Non

- Duplication:

The District must find that either: 1) The rule does

not impose the same requirements as an existing

site or federal regulation; or 2) that the duplicative

requirements are necessary or proper to execute the

powers and duties granted to, and imposed upon

t he District.

[CH&S §40727(b)(5)] The proposed rule does not impose requirements

that duplicate existing laws or regulations.

Reference:

The District must refer to any statute, court

decision, or other provision of law that the District

implements, inte rprets, or makes specific by

adopting, amending or repealing the rule. [CH&S

§40727(b)(6)] References to statutes are noted where

applicable.

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9 .0 Rule Analysis

Section 40727.2 requires a written analysis comparing the proposed rules with existing federal

regulations, state regulation, and any other AQMD existing or proposed rules and regulations

that apply to the same source type.

Comparison of Proposed Rule 10.1 and

Feather River AQMD Rules and Regulations

District Rules and Regulations Does proposed rule

conflict or contradict

any provisions?

Regulation 1

– General Provisions No

Regulation 2

– Open Burning No

Regulation 3

– Prohibition

– Stationary Emission Sources No

Regulation 4

– Stationary Emission Sources Permit System and

Registration No

Regulation 5

– Hearing Board Procedures No

Regulation 6

– Variances No

Regulation 7

– Fees No

Regulation 8

– Penalties and Abatement No

Regulation 9

– Enforcement Procedures No

Regulation 10

– New Source Review No

Regulation 11

– Air Toxic Control Measure No

Comparison of Proposed Rules and o ther Federal and State Regulations

Under CH&S § 40727.2(g), the District finds that the proposed amendments do not strengthen or

impose new emission limits or impose more stringent monitoring, reporting, or recordkeeping

requirements; therefore , it complies with CH&S Code § 40727.2.

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