SJVUAPCD 3170 - 1 5/19/11

RULE 3170 FEDERALLY MANDATED OZONE NONATTAINMENT FE E (Adopted May

16, 2002; Amended July 17, 2003; Amended May 19, 20 11)

1.0 Purpose

The purpose of this rule is to satisfy requirements specified in Section 185 and Section 182(f) of the 1990 amendments to the federal Clean Air Act (CAA) by utilizing an alternative fee-equivalency program consistent with the principles of Section 172(e) of

the CAA.

2.0 Applicability

This rule applies to any major source of NOx or VOC . The fees required pursuant to this section shall be in addition to permit fees and oth er fees required under other Rules and Regulations. The fees established by this rule sha ll cease to be applicable when the San Joaquin Valley Air Basin (SJVAB) has met the revoke d federal one-hour ambient air quality standard for ozone.

For the purposes of this rule, the San Joaquin Vall ey Air Basin shall have met the revoked federal one-hour ambient air quality standa rd for ozone upon EPA’s determination, through notice-and-comment rulemakin g, of concurrence with a demonstration by the APCO and the California Air Re sources Board that the average number of days per calendar year with maximum hourl y average concentration above 0.12 ppm is less than or equal to one (1), for each monitor. To make this demonstration, the APCO will, using all available quality assured monitoring data, calculate at each monitor the average number of days over the standar d per year during a three-year period according to the procedures found in 40 CFR Part 50 Appendix H, and show that the improvement in air quality is due to permanent and enforceable emissions reductions.

3.0 Definitions

3.1 Actual Emissions: as defined in Rule 2201 (New and Modified Stationary Source Review Rule).

3.2 Baseline Period: for each major source, the Baselin e Period shall be one of the following periods:

3.2.1 Calendar year 2010; or

3.2.2 An alternative baseline period reflecting the avera ge of at least two consecutive years within 2006 through 2010, if thos e years are determined by the APCO as more representative of normal source operation.

3.3 Billing Year: the year in which a particular Rule 3170 fee is invoiced, generally the year following the fee assessment basis year.SJVUAPCD 3170 - 2 5/19/11

3.4 California Vehicle Code Fees: those fees collected by the California Department of

Motor Vehicles to be forwarded to the District as r equired under Vehicle Code Section 9250.17 and Health and Safety Code Section 40610-40613, which fees are required by Health and Safety Code Section 40612 to be expended on establishing and implementing incentive-based programs, such as the District’s Emissions Reductions Incentive Program, to achieve surplus em issions reductions to remediate air pollution harms created by motor vehicles and t hat are intended to achieve and maintain state and federal ambient air quality stan dards. These fees shall therefore be used in programs designed to reduce NOx and VOC emissions in the San Joaquin Valley.

3.5 Clean Emissions Unit: an emissions unit that t he APCO has determined meets one of the following criteria:

3.5.1 The unit is equipped with an emissions contro l technology with a minimum control efficiency of at least 95% (or at l east 85% for lean-burn, internal combustion engines); or

3.5.2 The unit is equipped with emission control te chnology that meets or exceeds the requirements for achieved-in-practice B est Available Control Technology as accepted by the APCO during the perio d from 2006 through 2010.

3.6 Fee Assessment Basis Year: the year in which e missions occurred for which fees

are assessed under Section 5.0 of this rule.

3.7 Major Source: as defined in Rule 2201 (New and Modified Stationary Source Review Rule).

3.8 NOx: any nitrogen oxide compounds.

3.9 VOC: any Volatile Organic Compound, as defined in Rule 1020 (Definitions).

4.0 Exemptions

4.1 Any unit that is a clean emissions unit for NOx shall not be subject to the NOx fee requirements of this rule.

4.2 Any unit that is a clean emissions unit for VOC shall not be subject to the VOC fee requirements of this rule.

5.0 Fee Requirements

5.1 Each major source of NOx or VOC will be assessed an annual fee payable to the

District. The fee shall be the sum of the NOx Fee and the VOC Fee, which shall be calculated as follows, in accordance with Sectio n 185 (b) of the federal CleanSJVUAPCD 3170 - 3 5/19/11 Air Act.

NOx Fee (in $) = [A – (0.8 x B)] x C

VOC Fee (in $) = [D – (0.8 x E)] x C

Where:

A = The total amount of NO X emissions actually emitted from permitted emissions units at a major NOx source during the ap plicable fee assessment basis year, in tons per year.

B = The actual average annual emissions of NO X during the baseline period, or the average annual emissions allowed by the facilit y’s permit during the baseline period, whichever is lower, in tons per ye ar. B shall be set equal to zero (0) if the unit was not permitted during th e baseline period, except for units replaced since the baseline period, B sha ll represent the emissions during the baseline period of the unit replaced.

C = The fee rate of $5,000 per ton of pollutant, in 1990 dollars, adjusted by the U.S. City Average Consumer Price Index for all-urba n consumers, in accordance with Section 502(b)(3)(B)(v) of the fede ral Clean Air Act.

D = The total amount of VOC emissions actually emit ted from permitted emissions units at a major VOC source during the ap plicable fee assessment basis year, in tons per year.

E = The actual average annual emissions of VOC dur ing the baseline period, or the average annual emissions allowed by the faci lity’s permit during the baseline period, whichever is lower, in tons per ye ar. E shall be set equal to zero (0) if the unit was not permitted during th e baseline period, except for units replaced since the baseline period, E sha ll represent the emissions during the baseline period of the unit replaced.

5.2 In the equation for NOx Fee in Section 5.1, if A is less than or equal to 80% of B,

the fee assessment for NOx shall be set to zero.

5.3 In the equation for VOC Fee in Section 5.1, if D is less than or equal to 80% of E,

the fee assessment for VOC shall be set to zero.

5.4 By May 1, 2012, and each May 1 thereafter, the APCO shall assess a fee on each agency or person subject to this rule for emissions in the previous calendar year.

The assessed fee shall be calculated in accordance with Section 5.1.

5.5 By June 30, 2012, and each June 30 thereafter, each agency or person shall remit

the assessed fee to the District.

5.6 If all fees due have not been paid by June 30, the fee shall be increased inSJVUAPCD 3170 - 4 5/19/11 accordance with the schedule provided in Rule 3010 Section 11.0 (Late Fees). Nonpayment of the increased fees by July 30 may res ult in suspension of the facility’s Permit(s) to Operate.

6.0 Emissions Reporting

6.1 All major sources subject to this rule must provide baseline period actual emissions information within 60 days of the Distric t’s request, or by the due date of the initial annual emissions statement required under Section 6.2, whichever is

earlier. This information must include all necessa ry baseline period actual emissions data for VOC and NOx from each permitted emissions unit, and justification of any proposed alternative baseline period.

6.2 All major sources subject to this rule must provide annual emission statements that report actual emissions of VOC and NOx for the prior calendar year from each permitted emissions unit. Such statements sha ll be submitted in accordance with the format established by the District before March 31 of each year.

6.3 Operators of a clean emissions unit must distinguis h in their annual emission

statements which units are claimed as clean emissio ns units, and include a justification of that claim. Referencing of an app licable District-published clean unit determination suffices for such justification.

7.0 Fee Equivalency Demonstration System

7.1 Actual Emission Tracking System

The APCO shall implement a system for tracking all information necessary to

make an annual demonstration that the sum of fees c ollected under this rule, plus all California vehicle code fees collected, is equa l to or greater than the total penalty fee that would be collected under a direct implementation of the federal ozone nonattainment fee, codified in Section 185 of the federal Clean Air Act, including, but not limited to, the following:

7.1.1 All baseline period calculations, including d ocumentation of any approved alternative baseline period,

7.1.2 All emissions data reported in the annual emi ssions statements required under this rule,

7.1.3 The identification and justification of any c lean emissions unit exempted from paying a fee under this rule,

7.1.4 The NOx and VOC emissions and corresponding fee amo unt excluded from payment based on the clean emissions unit dete rmination.SJVUAPCD 3170 - 5 5/19/11

7.2 Annual Fee Equivalency Demonstration Report

On or before November 1 of each year, the APCO shal l prepare an Annual Fee Equivalency Demonstration Report.

7.2.1 The report shall document:

7.2.1.1 The total fees collected under this rule that have not been reported in a prior Annual Fee Equivalency Demonstr ation Report, and

7.2.1.2 The total California vehicle code fees collected th at have not been used to demonstrate equivalency in a prior Ann ual Fee Equivalency Demonstration Report.

7.2.1.3 The total Section 185 fees that would be collected under a direct implementation of the federal ozone nonattainment f ee, codified

in Section 185 of the federal Clean Air Act. For t he purposes of this report, the fee that would have been collected under Section 185 shall be calculated using the fee calculations of Section 5.1 through 5.3 of this rule, and calendar year 2010 sh all be used as the baseline period.

7.2.2 The report shall demonstrate whether the sum of the total Rule 3170 fees identified under Section 7.2.1.1, plus the total Ca lifornia vehicle code fees identified under Section 7.2.1.2, is equal to or gr eater than the total penalty fee that would be collected under a direct implemen tation of Section 185

of the federal Clean Air Act.

7.2.3 The report shall be made available to the public an d mailed to the federal EPA no later than November 1 of each billing year.

7.3 Remedy for Fee Collection Shortfall

7.3.1 If any Annual Fee Equivalency Demonstration Report demonstrates a shortfall in total fees collected compared to the f ees that would have been collected under a direct implementation of the Sect ion 185 penalty fee requirement, the District shall assess and invoice, within 90 days following the demonstration of the shortfall, suffi cient fees to recover the

entire amount of the shortfall.

7.3.1.1 The shortfall fee described in Section 7.3.1 shall be collected from major sources of NOx or VOC for which a fee wa s calculated according to Section 5.1 through 5.3 for the fee assessment basis year for which there was a shortfa ll in fee collection, and shall be assessed on an emissions-w eighted basis.

7.3.1.2 The emissions-weighted basis for the shortfall fee shall be basedSJVUAPCD 3170 - 6 5/19/11 on the emissions for which a fee was calculated per Section 5.1 through 5.3 during the respective fee assessment ba sis year.

7.3.1.3 Emissions from units for which a fee was already pa id under this rule for the respective fee assessment basis year s hall not be included in the emissions-weighting described above

.

7.3.1.4 Within 270 days of demonstrating a shortfall in an annual fee equivalency demonstration report, a shortfall remed y report shall be submitted to EPA demonstrating the implementatio n of this section and that the remedy was successful in colle cting

sufficient fees to recover the entire amount of the shortfall.

7.3.2 If all fees due from an individual facility u nder this section have not been paid by within 60 days of the invoice date, the fee shall be increased in accordance with the schedule provided in Rule 3010 Section 11.0 (Late Fees). Nonpayment of the increased fees within 90 days of the original invoice date may result in suspension of the facili ty’s Permit(s) to Operate.