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”) program rules:

SCAQMD Rule 2000 General

SCAQMD Rule 2001 Applicability

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

Sulfur (SOx)

SCAQMD Rule 2005 New Source Review for RECLAIM

SCAQMD Rule 2007 Trading Requirements

SCAQMD Rule 2010 Administrative Remedies and Sanctions

SCAQMD Rule 2011 Requirements for Monitoring, Reporting, and Recordkeeping for 

Oxides of Sulfur (SOx) Emissions

SCAQMD Rule 2011 Protocol Appendix A 

Protocol for Monitoring, Reporting, and Recordkeeping for Oxides of 

Sulfur (SOx) Emissions

SCAQMD Rule 2012 Requirements for Monitoring, Reporting, and Recordkeeping for 

Oxides of Nitrogen (NOx) Emissions

SCAQMD Rule 2012 Protocol Appendix A

Protocol for Monitoring, Reporting, and Recordkeeping for Oxides of 

Nitrogen (NOx) Emissions

Prepared by: Lily Wong

March 27, 2006
RULE IDENTIFICATION

Table 1

SCAQMD Date of:

Rule No. Rule Title Adoption

Current 

Version of 

Rule 

Subject to 

Today’s 

Action

Submittal

Current 

Version of 

Rule 

Subject to 

Today’s 

Action

Adoption

Existing 

SIPApproved 

Version

Submittal

Existing 

SIPApproved 

Version 

Approval

Existing SIPApproved 

Version 

Submittal

Interim 

Version of 

Rule Now 

Superseded 

2000 General 5/6/05 10/20/05 5/11/01 5/31/01 9/4/03

68 FR 52512

n/a

2001 Applicability 5/6/05 10/20/05 5/11/01 5/31/01 9/4/03

68 FR 52512

7/15/05

2002 Allocations for 

Oxides of Nitrogen 

(NOx) and Oxides of 

Sulfur (SOx)

1/7/05 12/21/0515/11/01 5/31/01 9/4/03

68 FR 52512

n/a1

2005 New Source Review 

for RECLAIM

5/6/05 10/20/05 4/20/01 10/30/01 9/04/03

68 FR 52512

n/a

2007 Trading 

Requirements

5/6/05 10/20/05 12/5/03 2/20/04 7/26/04

69 FR 44461

4/26/052

20093

2010 Administrative 

Remedies and 

Sanctions

1/7/05 7/15/05 5/11/01 5/31/01 9/4/03

68 FR 52512

n/a

 

1Rule 2002, amended 01/07/05, was submitted on 07/15/05. By letter to California Air Resources Board 

(“CARB”) dated 11/04/05, SCAQMD clarified that parts of provision (f)(1)(A) and (f)(1)(G) of Rule 2002 should 

not have been submitted for inclusion into the State Implementation Plan (“SIP”). SCAQMD corrected the rule by 

deleting text from provisions (f)(1)(A) and (f)(1)(G). Therefore, on 12/21/05, CARB withdrew the version of Rule 

2002 submitted on 07/15/05, and submitted the corrected version of Rule 2002 (Attachment 3).

2

SCAQMD amended Rule 2007 on 01/07/05, along with other RECLAIM rules, but requested that Rule 

2007 not be submitted to the SIP (Attachment 4). Consequently, CARB’s 07/15/05 submittal did not include Rule 

2007, and that version of the rule is not listed here as an interim superceded submittal.

3While Rule 2009 was submitted on 07/15/05, based on a request from SCAQMD, CARB withdrew Rule 

2009 from the SIP on 10/20/05 (Attachment 5).
3

SCAQMD Date of:

Rule No. Rule Title Adoption

Current 

Version of 

Rule 

Subject to 

Today’s 

Action

Submittal

Current 

Version of 

Rule 

Subject to 

Today’s 

Action

Adoption

Existing 

SIPApproved 

Version

Submittal

Existing 

SIPApproved 

Version 

Approval

Existing SIPApproved 

Version 

Submittal

Interim 

Version of 

Rule Now 

Superseded 

2011 Requirements for 

Monitoring, 

Reporting, and 

Recordkeeping for 

Oxides of Sulfur 

(SOx) Emissions

1/7/05 7/15/05 12/5/03 2/20/04 7/26/04

69 FR 44461

n/a

2011 

Protocol 

Appen-di

x A4

Protocol for 

Monitoring, 

Reporting, and 

Recordkeeping for 

Oxides of Sulfur 

(SOx) Emissions

5/6/05 10/20/0553/16/01 5/31/01 9/4/03

68 FR 52512

7/15/05

2012 Requirements for 

Monitoring, 

Reporting, and 

Recordkeeping for 

Oxides of Nitrogen 

(NOx) Emissions

1/7/05 7/15/05 12/5/03 2/20/04 7/26/04

69 FR 44461

n/a

 

4Rule 2011, “Requirements for Monitoring, Reporting, and Recordkeeping for Oxides of Sulfur (SOx) 

Emissions” includes “Rule 2011 Protocol Appendix A – Protocol for Monitoring, Reporting, and Recordkeeping 

for Oxides of Sulfur (SOx) Emissions.” Rule 2011 Protocol Appendix A contains Chapters 1 through 6 and 

Attachments A through F. In a previous SIP approval, the appendix was labelled, “Rule 2011-2,” but will be 

referred to in this rulemaking as “Rule 2011 Protocol Appendix A.”

5Only Chapter 1, “Overview” of Rule 2011 Protocol Appendix A was revised on May 6, 2005 and 

submitted on October 20, 2005. The remaining portions of Rule 2011 Protocol Appendix A (i.e. Chapters 2 

through 6, and Attachments A through F) were not revised. Consequently, the version of Rule 2011 Protocol 

Appendix A, Chapters 2 through 6, and Attachments A through F that is subject to today’s action was adopted on 

January 7, 2005 and submitted on July 15, 2005. 
4

SCAQMD Date of:

Rule No. Rule Title Adoption

Current 

Version of 

Rule 

Subject to 

Today’s 

Action

Submittal

Current 

Version of 

Rule 

Subject to 

Today’s 

Action

Adoption

Existing 

SIPApproved 

Version

Submittal

Existing 

SIPApproved 

Version 

Approval

Existing SIPApproved 

Version 

Submittal

Interim 

Version of 

Rule Now 

Superseded 

2012 

Protocol 

Appen-di

x A6

Protocol for 

Monitoring, 

Reporting, and 

Recordkeeping for 

Oxides of Nitrogen 

(NOx) Emissions

5/6/05 10/20/0573/16/01 5/31/01 9/4/03

68 FR 52512

7/15/05

 

6Rule 2012, “Requirements for Monitoring, Reporting, and Recordkeeping for Oxides of Nitrogen (NOx) 

Emissions” includes “Rule 2012 Protocol Appendix A – Protocol for Monitoring, Reporting, and Recordkeeping 

for Oxides of Nitrogen (NOx) Emissions.” Rule 2012 Protocol Appendix A contains Chapters 1 through 8 and 

Attachments A through G. In a previous SIP approval, the appendix was labelled, “Rule 2012-2,” but will be 

referred to in this rulemaking as “Rule 2012 Protocol Appendix A.”

7Only Chapter 1, “Overview” of Rule 2012 Protocol Appendix A was revised on May 6, 2005 and 

submitted on October 20, 2005. The remaining portions of Rule 2012 Protocol Appendix A (i.e. Chapters 2 

through 8, and Attachments A through G) were not revised. Consequently, the version of Rule 2012 Protocol 

Appendix A, Chapters 2 through 8, and Attachments A through G that is subject to today’s action was adopted on 

January 7, 2005 and submitted on July 15, 2005. 

BACKGROUND 

The RECLAIM program was initially adopted by SCAQMD in October 1993. The program 

establishes for many of the largest NOx and SOx facilities in the South Coast Air Basin a regional 

NOx and SOx emissions cap which declines over time. The program was designed to provide 

incentives for sources to reduce emissions and advance pollution control technologies by giving 

sources added flexibility in meeting emission reduction requirements. A RECLAIM source’s 

emissions may not exceed its holding of RECLAIM Trading Credits (RTCs) for any compliance 

year. A RECLAIM source may comply with this requirement by installing control equipment, 

modifying their activities, or purchasing RTCs from other facilities. 

Beginning in June 2000, RECLAIM sources experienced a sharp and sudden increase in NOx RTC 

prices for both 1999 and 2000 compliance years. In response, SCAQMD significantly amended the 

program in 2001. The amendments were designed to lower and stabilize RTC prices by increasing 

supply, reducing demand, and increasing the exchange of RTC trading information. The 2001 

amendments separated the power producing facilities (i.e., electric utilities) from the rest of the 
5

RECLAIM market and placed other trading restrictions on the power producers. The 2001 

amendments added the RECLAIM Air Quality Investment Program (AQIP) and the Mitigation Fee 

Program which provided additional compliance flexibility to certain sources. The 2001 

amendments were approved into the SIP.

The primary purposes of the amendments to the RECLAIM rules in 2005 were to: 

1) lower the NOx emissions cap in the RECLAIM program to achieve additional reductions

2) address California Health and Safety Code requirements on Best Available Retrofit Control 

Technology (BARCT)

3) remove the remaining trading restrictions placed on the power producers

4) modify the monitoring, recordkeeping, and reporting requirements and protocols

5) modify the NSR requirements for RECLAIM sources

6) implement other administrative and clarifying changes 

RULES SUMMARY 

Lowering NOx Emissions Cap and Revisions to Allocation Methodology and RTC Holdings

The amendments to RECLAIM would lower, from the year 2003 emissions cap, NOx emissions in 

the RECLAIM program by 4 tons per day beginning with the 2007 compliance year. The lowering 

of the NOx emissions cap is accomplished through the amendment to Rule 2002, “Allocations for 

Oxides of Nitrogen (NOx) and Oxides of Sulfur (SOx),” where each RECLAIM source’s 2007 

compliance year NOx RTC holdings, issued through the allocation process, would be reduced by 

multiplying the NOx RTC holdings by an adjustment factor. RTCs are further designated as being 

“tradeable/usable” or “non-tradable/non-usable.” The rule also specifies criteria and procedures 

that would allow non-tradable/non-usable RTCs to become tradable or usable if the price of RTCs 

exceeded $15,000 per ton. 

Other Rule 2002 changes include:

S specifying the allocations methodology and allocations for sources joining RECLAIM after the 

rule amendments

S specifying a limited exemption to the adjustment factors, provided certain criteria are met

S specifying a process whereby foregone reductions from exempt facilities will be proportionally 

redistributed among the remaining RTC holders

S adding a new emission factor for micro-turbines and allowing the use of an emission factor that 

is equivalent to the permitted Best Available Control Technology (BACT) limits the internal 

combustion engine (ICE) achieves

Removing Trading Restrictions on Power Producers

Power producers have been subject to provisions which restricted their ability to trade freely. While 

some restrictions were removed in 2003, the 2005 amendments remove most of the remaining 

trading restrictions. 

Revisions to Monitoring, Recordkeeping, and Reporting Provisions

The amendments include several revisions to the monitoring, recordkeeping, and reporting 

provisions.

S Rule 2012:
6

S includes a new NOx emission factor for micro-turbines

S requires large sources and process units equipped with stack flow monitors to measure 

exhaust flow rate and clarifies the required operating parameters for large sources and 

process units and corresponding emission rates that are to be measured and reported

S establishes missing data provisions on an hourly basis versus the previous daily 

requirement

S allows alternative test to demonstrate compliance with RECLAIM NOx concentration 

limits

S Rules 2011 and 2012 and their respective protocols:

S allow a delay in the due date for Relative Accuracy Test Audits (RATA) for equipment 

that is operated intermittently, and by adding alternative methods of compliance testing 

for natural gas combustion sources with high oxygen contents in the exhaust stream

S allow reporting of emissions through the SCAQMD’s internet website

S specify that emission reports from sources that are not listed on the Facility Permit, such 

as contractor equipment, various location equipment, and equipment covered under 

applications are due every quarter which is the same as reporting for process units

S include correction of typographical errors, and rule language clarifications

New Source Review (NSR)

Sources that are subject to Rule 2005, “New Source Review for RECLAIM” are required to acquire 

RTCs at the beginning of the compliance year for the maximum permitted amount. Previously, 

sources were able to sell unused RTCs only at the end of the compliance year. The amendment 

allows sources the option of selling unused RTCs at the end of a quarter, if the source voluntarily 

accepts an enforceable permit condition limiting the source’s quarterly emissions. A source that 

repeatedly violates the quarterly limit will no longer be eligible for this optional program to sell 

unused RTC at the end of the quarter. The amendments to Rule 2005 do not change the core NSR 

provisions which require sources to hold sufficient RTC to offset emissions increases. 

Ship Emissions

While ship emissions are not counted toward the applicability thresholds to determine if the source is 

subject RECLAIM, amendments to rules 2001, 2005, and 2012 clarify that ship emissions at a new 

or relocated RECLAIM facility subject to New Source Review is part of total emissions that needs 

to be offset. 

Other Miscellaneous or Adminstrative Changes

S Because of recent changes in state law that requires permitting and regulation of agricultural 

sources, Rule 2001 now clarifies that agricultural sources are exempt from the RECLAIM 

program and are subject to existing command and control rules.

S Rule 2010 is amended to clarify the procedures for reducing annual emissions allocations when 

facilities have emissions in excess of the annual allocation.

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

and local NOx prohibitory rules for approval into the SIP, and for this rule a sixth consideration.
7

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 

Document for Correcting Common VOC & Other Rule Deficiencies), EPA Region 9, August 

21, 2001. 

2. Rule Relaxation - Where previous versions of rules or plans are SIP approved, 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. New Source Review - Section 173 of the Clean Air Act requires certain sources to offset 

increased emissions by obtaining sufficient offsetting emission reductions. 

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

Economic Incentive Programs” on January 2001 (EPA-452/R-01-001). 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 – While some of the rule amendments could arguably be viewed as a rule 

relaxation (e.g. allowing sources to sell unused RTCs at the end of a quarter instead of at the end 

of the year), other rule amendments are strengthening (e.g. requiring such sources to be subject 

to a quarterly permit limit, and clarifying that ship emissions, at a new or relocated RECLAIM 

facility subject to New Source Review, are part of total emissions which must be offset). Also, 

the amendments result in significant additional emission reductions through the lowering of the 

emissions cap in the year 2007. Consequently, EPA believes that the amendments on balance 

are strengthening. 
8

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 withe the NOx Supplement. These amendments do not undermine 

EPA’s previous determination.

5. NSR – In EPA’s original approval of the RECLAIM program EPA had determined that the 

NSR criteria had been met. These amendments do not modify the NSR requirement that 

sources subject to NSR must offset increased emissions by obtaining sufficient offsetting 

emission reductions. 

6. 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. 

EPA ACTION: EPA staff recommend full approval of the submitted version to Rules because 

they comply with all relevant Clean Air Act requirements including those regarding enforceability 

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

a reduction in emission associated with this SIP revision.

ATTACHMENTS:

1. SCAQMD Rule 2000, Rule 2001, Rule 2002, Rule 2005, Rule 2007, Rule 2010, Rule 2011, 

Rule 2011-2, Rule 2012, and Rule 2012-2; current versions of the rules subject to this proposed 

rulemaking as identified in Table 1.

2. SCAQMD Staff Report for amendments to Regulation XX - RECLAIM, dated January 2005 

and submitted to EPA on July 15, 2005.

3. CARB cover letter dated December 21, 2005 addressed to Wayne Nastri withdrawing Rule 

2002 submitted on July 15, 2005 and replacing it with a corrected version of Rule 2002. 

4. SCAQMD letter dated March 29, 2005 addressed to Sally Rump of CARB, transmitting rules 

adopted on January 7, 2005 and requesting that Rule 2007 be removed from the SIP submittal.

5. CARB letter dated October 20, 2005 addressed to Wayne Nastri withdrawing Rule 2009.

6. Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations; Clarification to 

Appendix D November 24, 1978 Federal Register, May 25, 1988 (the “Bluebook”), and

Guidance Document for Correcting Common VOC & Other Rule Deficiencies, EPA Region 

9, August 21, 2001 (the “Little Bluebook,” cover only).
9

7. “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 (cover only).

8. “Improving Air Quality with Economic Incentive Programs”, EPA-452/R-01-001, January 

2001 (cover only; text available at http://www.epa.gov/ttncaaa1/t1/meta/m1201.html).