### Agenda Date: February 19, 2015

Prepared By: Don Duffy, Consultant to the Air Pollution Control District

Topic: Adoption of Amended Rule 515

, Stationary Rail Yard Control Emission

Reduction Credits

Action Requested:

1) Conduct a Public Hearing regarding the proposed a pproval of amended Rule 515

, Stationary

Rail Yard Control Emission Reduction Credits

.

2) A dopt Resolution # 15

- 01 (Attachment #1), thereby a pproving amended Rule 515

, Stationary Rail Yard Control Emission Reduction Credits

, and the f indings in the Staff Report ( Attachment #2 )

.

Introduction : The purpose of Rule 515, Stationary Rail Yard Control Emission Reduction

Credits , is to provide owners of a rail yard a mechanism for quantifying, certifying, and banking

emission reductions from the installation and use of a control device which reduces emissions from locomotive engines in rail yards. Rule 515 has been reviewed by EPA for incorporation into the State Implementation Plan (SIP)

, which resulted in several unofficial issues to be corrected before the rule can be approved. The District agreed to withdraw the rule from SIP

consideration and amend it to resolve the EPA approval concerns.

When the owner or operator of a stationary source of air pollution wishes to install a new source or modify an existing source of air pollution, he must obtain a permit from the District. The

District evaluates t he new air emission s through a process called New Source Review. If the increase in criteria pollutants is above a certain threshold, the owner or operator must “offset” these emissions by providing for reduced emissions from another nearby source. This is done through acquiring Emission Reduction Credits (ERC). ERCs are generated for facilities that reduce emissions according to District rules. Rule 504, Emission Reduction Credits is the general rule and applies to most situations. Rule 515, Stationar y Rail Yard Control Emission

Reduction Credits

, is a specific rule that applies only to rail yards.

Background : Rule 515 was promulgated on October 8, 2008 and sent to the California Air
Resources Board (ARB) on November 5, 2008 and then submitted to EPA for SIP consideration by ARB on December 23, 2008.

In June 2014

, an EPA staff member contacted the District t o notify the District that Rule 515 was being reviewed for SIP approval and that there are several issues that make the rule

un

- approvable as written. The rule was withdrawn from SIP consideration by a letter from the District to ARB on July 7, 2014. EPA and the District agreed to collaborate on finding acceptable rule language to allow the rule to be re

- submitted for SIP approval. This amendment incorporates the changes agreed to by both EPA and the District. 

# Board Agenda Item 3

Public Hearing/Action

### Rule 515 is an outgrowth of the December, 2 004 Memorandum of Understanding (MOU)

between the District and Union Pacific Railroad Company to reduce emissions from the J.R. Davis Rail Yard in Roseville. One of the elements of this work was development and feasibility testing of control equipment cap turing and treating diesel exhaust emissions from stationary locomotive engines at the yard. This control equipment was called the Advanced Locomotive Emission Control System (ALECS) and often referred to as the “hood”. ALECS demonstrated

over 90% contro l of NOx, SOx, and PM

- 10/PM

- 2.5.

This rule was promulgated to provide a means of obtaining emission reduction credits (ERCs) for installing and operating such a control system on locomotive exhaust at the rail yard.

Amendments of Rule 515 : The agreed upon amendments to the rule make it more enforceable

and assure that emission reductions will be obtained to sustain the Emission Reduction Credits issued pursuant to the rule. The primary changes in the rule to make it SIP approvable are:

 Amend “owners and operators” to be only “owners” so that possible third party operators without control of the rail yard are not responsible for achieving the emission reductions.

 Strengthen the Violations section by requiring a compliance plan from the operator to

spec ify how an emission shortfall will be made up. The rule specifies a two

- step process.

 Remove the reference to District Rule 404, Upset Conditions, Breakdown or Scheduled

Maintenance

.

Fiscal Impact: The amendment of Rule 515 will have insignificant fiscal impact on any persons using the rule

, compared with business under the current rule.

Public Comment: The amendments to the rule were developed in coordination with EPA to assure SIP approval. A notice was published in a local newspaper on January 11, 2 015 and posted on the District’s web site announcing the public hearing and giving instructions on how to obtain information on the proposed amendment.

The staff report and proposed amendment were sent to Union Pacific Railroad, the only party

that will b e able to obtain ERCs pursuant to Rule 515.

Recommendation: Staff recommends a doption of Resolution # 15

- 01

, (Attachment #1), thereby approving amended Rule 515

, Stationary Rail Yard Control Emission Reduction Credits

, and the findings in the Staff Report of Attachment #2

.

Attachment s: #1: Resolution # 15

- 01 , Adoption of Amended Rule 515

, Stationary Rail

Yard Control Emission Reduction Credits

, and Exhibit 1 , Rule 515

, Stationary Rail Yard Control Emission Reduction Credits

#2: Staff Report , and Exhibit 1, Strike

- Out Version of Rule
515, Stationary Rail Yard Control Emission Reduction

Credits

## ATTACHMENT #1

SUBJECT

Resolution # 15

- 01 , Adoption of Amended Rule 515

, Stationary Rail Yard Control Emission Reduction Credits

# Before the Placer County

Air Pollution Control District Board of Directors

In the Matter Of: Approval of an Amendment of the Placer County Air Pollution Control

District’s Rule 515

, Stationary Rail Yard Control Emission Reduction

Credits

.

The following RESOLUTION was duly passed by the Placer County Air Pollution Control District Board of Directors at a regular meeting held on February 19, 2015

, by the following

vote:

Ayes: Berlant

______ Douglass

______ Nader

___ ___ Weygandt___ ___ Black

______

Holmes, J. ___ ___ Ruslin

______ Montgomery

___ ___ Garcia

______

Noes: Berlant

______ Douglass

______ Nader

___ ___ Weygandt___ ___ Black

______

Holmes, J. ___ ___ Ruslin

______ Montgomery

___ ___ Garcia

______

Abstain: Berlant

______ Douglass

______ Nader

___ ___ Weygandt___ ___ Black

______

Holmes, J. ___ ___ Ruslin

______ Montgomery

___ ___ Garcia

______

Signed and approved by me after its passage:

________________________________ ____ Chairperson

____________________________________ Attest: Clerk of said Board

WHEREAS

, Section 40001 of the Health and Safety Code of the State of California authorizes

the Placer County Air Pollution Control District to adopt and enforce Rules and Regulations to

achieve and maintain ambient air quality standards within the District ; and

WHEREAS

, Section 40702 of the Health and Safety Code of the State of California requires a

district to adopt rules and regulations and do such acts as may be ne cessary or proper to execute

the powers and duties granted ; and 

# Board Resolution:

Resolution #

15

- 0 1

### WHEREAS , Section 40709 of the California Health and Safety Code requires that districts

establish, by regulation, a system by which all reductions in the emission of air pollutants which

are to be used to offset future increases in emissions are banked prior to their use as offsets ; and

WHEREAS

, the District is required to consider the relative cost effectiveness of control

measures by Health and Safety Code Sections 40922 and 40703, this proposed rule is not a

control measure so these sections do not apply ; and



### WHEREAS , these proceedings were held in a public hearing and were properly noticed

pursuant to Section 40725 of the Health and Safety Code of the State of California; with any

evid ence having been received concerning the proposed adoption of this Resolution and this

Board having duly considered such evidence; and

NOW, THEREFORE, BE IT RESOLVED , that this Board approves and adopts the

amendment of Rule 515

, Stationary Rail Yard Cont rol Emission Reduction Credits , as shown in

Exhibit I.

BE IT RESOLVED AND ORDERED that the Air Pollution Control Officer is hereby

authorized and directed to submit th is adopted rule for approval as a revision to the State

Implementation Plan (SIP).

B E IT FURTHER RESOLVED AND ORDERED that the Air Pollution Control Officer is

hereby authorized and directed to submit th is adopted rule, in the form as required by the

California Air Resources Board , on behalf of the Placer County Air Pollution Control Dist rict,

and to p erform such acts as are necessary to carry out the purpose of this resolution.

### RESOLUTION #15

- 01 EXHIBIT 1

Proposed Amended Rule 515, Stationary Rail Yard Control Emission Reduction CreditsFebruary 19, 2015

Placer County APCD 515

- 1 Rules and Regulations 

### RULE 515 STATIONARY RAIL YARD CONTROL EMISSION REDUCTION CREDITS

Adopted October 9, 2008 (Amended February 19, 2015 )

CONTENTS

100 GENERAL

101 PURPOSE

102 APPLICABILITY

200 DEFINITIONS

201 ACTUAL EMISSIONS

202 ACTUAL EMISSION REDUCTIONS

203 APCO

204 APPLICANT

205 BANKING

206 CERTIFIED ERCs

207 CONT ROL DEVICE

208 EMISSION REDUCTION CREDITS (ERC s )

209 EMISSION REDUCTION SHORTFALL

210 ENFORCEABLE

211 ERC CERTIFICATE

212 ERC OWNER

21 3 BASELINE ACTUAL EMISSIONS

214 OFFSET

215 PERMANENT

216 PRIORITY RESERVE BANK

217 QUANTIFIABLE

218 QUARTERLY

219 REAL

2 20 REGISTER

221 RELATIVE ACCURACY TEST AUDIT (RATA)

222 SURPLUS

223 TRANSFER

300 STANDARDS

301 CONTROL DEVICE PERMIT REQUIREMENTS

302 PROPOSED ERC ISSUANCE

303 FINAL ERC ISSUANCE

304 RESTRICTIONS ON USE OF ERCs

400 ADMINISTRATIVE REQUIREMENTS

401 APPLICATION PROCEDURES

402 ADMINISTRATIVE PROCEDURES AND TIMETABLE

403 REGISTRATION OF EMISSION REDUCTION CREDITS

404 QUANTIFICATION PROTOCOL

405 EMISSION REDUCTION CREDIT ADJUSTMENTS OF CALCULATED CREDITS

406 VIOLATIONSFebruary 19, 2015

Rules and Regulations 515

- 2 Placer County APCD 500 MONITORING , TESTING, RECORD KEEPING AND RE PORTING

501 CONTINUOUS MONITORS

502 TESTING

503 RECORD KEEPING AND REPORTING

600 PROGRAM EVALUATIONFebruary 19, 2015

Placer County APCD 515

- 3 Rules and Regulations 100 GENERAL

101 PURPOSE: To provide the owners of a rail yard a mechanism for quantifying, certifying, and banking emission reductions from the installation and use of a control device which reduces emissions from locomotive engines in rail yards.

102 APPLICABILIT Y:

102.1 Geographic: The provisions of this rule apply to rail operations located anywhere in Placer County.

102.2 Application: This rule applies to the owner of a rail yard who installs a control device

to reduce emissions from locomotive engines to generate ERCs

. The use of ERCs for offsets is subject to the requirements of Rule 502, NEW SOURCE REVIEW and

Section 304 of this rule.

102.3 Severability: If any section, subsection, sentence, clause, phrase, or portion of this rule is, for any reason, held invalid, unconstitutional, or unenforceable by any court of competent jurisdiction, that portion shall be deemed as a separate, distinct, and independent provision, and the holding shall not affect the vali dity of the remaining portions of the rule.

200 DEFINITIONS

201 ACTUAL EMISSIONS : The emissions measured by a certified CEMS at the inlet of a control

device which reduces emissions from locomotive engines in rail yards.

202 ACTUAL EMISSION REDUCTIONS: Actual emission reductions means the difference in emissions exiting a control device and emissions entering a control device, as measured by a

certified CEMS.

20 3 APCO: Air Pollution Control Officer.

20 4 APPLICANT : The owners of a rail yard submitting an application to bank ERCs and obtain

ERC certificates in accordance with this rule.

20 5 BANKING : The system of quantifying, adjusting, certifying, recording, and registering ER Cs

for future use or transfer. This system shall be called the Emission Reduction Credit Bank (ERC Bank).

206 CEMS: Continuous emission monitoring system.

207 CERTIFIED ERCs : E RCs which have been evaluated under the requirements of this rule and other applicable District, state and federal rules and regulations and which have been authorized by the Air Pollution Control Officer.

208 CONTROL DEVICE: Stationary equipment used to tr eat and/or control various air emissions

such that the outlet emissions are less than the inlet emissions.

209 EMISSION REDUCTION CREDITS (ERC s ) : Reductions of actual emissions that are registered with the District in accordance with the requirements of this rule.

2 10 EMISSION REDUCTION SHORTFALL: Amount of emissions in pounds that the quarterly

emission reductions achieved by the control device falls short of the permit requirement.

2 1 1 ENFORCEABLE : Emission reductions and other required actions are enforceable if: (1) they are independently verifiable ; (2) program and permit violations are defined; (3) those liable can be identified; (4) the U.S. Environmental Protection Agency (EPA) and the APCOFebruary 19, 2015

Rules and Regulations 515

- 4 Placer County APCD

maintain the ability to seek pena lties for violations and, where applicable, to secure appropriate corrective action; (5) citizens have access to all the emissions

- related information obtained from the source; (6) citizens can file suits against sources for violations; and (7) they

are pr acticably enforceable in accordance with EPA guidance on practicable enforceability.

2 12 ERC CERTIFICATE : A document which provides title to a defined quantity and pollutant type of ERC’s issued by the District

.

213 ERC OWNER: The person or legal entity in whose name the ERC Certificate is issued and listed in the Register.

214 BASELINE ACTUAL EMISSIONS: Baseline actual emissions are those exhaust emissions captured from locomotive engines and measured at the control device inlet during the first four calendar quarters of operation after the CEMS has been certified.

215 OFFSET: The use of an ERC to compensate for an emission increase of an affected pollutant from a new or modified source subject to the requirements of Rule 502, NEW

SOURCE REVIEW.

216 PERMANENT: Permanent means the actual emission reductions continue or endure for the duration of any project utilizing the resulting ERCs as offsets.

217 PRIORITY RESERVE BANK: A depository for preserving ERC s pursuant to Rule 505,

PRIORITY RESERVE.

218 QUANTIFIABLE: Ability to reliably replica te measure d emission reductions by adhering to the quantification protocol.

219 QUARTERLY: Pertaining to any calendar quarter beginning in January, April, July, and

October.

220 REAL: Actually occurring, implemented, and not artificially devised.

2 21 REGISTER: The document that records all ERC deposits, withdrawals, transfers, and

transactions.

222 RELATIVE ACCURACY TEST AUDIT (RATA): A quality performance procedure performed pursuant to 40 CFR Part 60, Appendix F, Procedure 1 to certify the accuracy of the

continuous emissions monitors.

223 SURPLUS: The amount of emission reductions that are, at the time of generation of an

ERC , not otherwise required by federal, state, or local law, not required by any legal settlement or consent decree, and not relied upon to meet any requirement related to the California State Implementation Plan (SIP)

. However, emission reductions required by a state statute that provides that the subjec t emission reductions shall be considered surplus may be considered surplus for purposes of the Rule if those reductions meet all other req uirements of

this s ection. Examples of federal, state, and local laws and of SIP

- related requirements
include, but ar e not limited to, the following:

223.1 T he federally

- approved California SIP;

223.2 O ther adopted State air quality laws, and regulations not in the SIP, including but

not limited to, any requirement, regulation, or measure that: (1) the District or the State has included on a legally

- required and publicly

- available list of measures that are scheduled for adoption by the District or the State in the future; or (2) is the subject of a public notice distributed by the District or the Date regarding an inten t to adopt such revision;February 19, 2015

Placer County APCD 515

- 5 Rules and Regulations

223.3 A nd other source

- or source

- category specific regulatory or permitting requirement,

including, but not limited to, Reasonable Available Control Technology (RACT), New Source Performance Standards (NSPS), National Emission S tandards for Hazardous Air Pollutants (NESHAP), Best Available Control Measures (BACM), Best Available Control Technology (BACT), and the Lowest Achievable Emission Rate (LAER); and

223.4 A ny regulation or supporting documentation that is required by the federal Clean Air

Act but is not contained or referenced in 40 C.F.R. Part 52, including but not limited to: assumptions used in attainment and maintenance demonstrations (including Reasonable Further Progress demonstrations and milestone demonstrations), including any proposed control measure identified as potentially contributing to an

enforceable near

- term emissions reduction commitment; assumptions used in conformity demonstrations, and assumptions used in emissions inventories.

22 4 TRANSFER: The change in ownership of an ERC from one person or legal entity to another.

300 STANDARDS

301 CONTROL DEVICE PERMIT REQUIREMENTS :

301.1 The applicant shall obtain a permit pursuant to Rule 5 01, GENERAL PERMIT REQUIREMENTS to install a stationary control device in rail yards for the purpose of reducing exhaust emissions from locomotive engines.

301.2 The control device permit shall include enforceable conditions that ensure compliance with the applicable portions of Section 500

– Monitoring, Testing, Recordkeeping, and Reporting.

302 PROPOSED ERC ISSUANCE: Prior to proposing issuance of an ERC certificate pursuant to Section 402.6 of this rule, the APCO shall make the following determinations:

302.1 The actual emission reductions are real, surplus, enforceable, permanent, and quantifiable.

302.2 The continuous monitors used to measure inlet and outlet emissions of the control device meet the requirements of Section 500 of this rule.

302.3 The analysis provided by the applicant of historical locomotive activity and expected future emission reductions in the locomotive fleet are adequate to project future

actual emission reductions by the control device

.

302.4 Actual emissions reductions have been calculated and adjusted pursuant t o the provis ions of Sections 404 and 405 of this rule, respectively.

302.5 The applicant has paid the fees required pursuant to Rule 601, PERMIT FEES.

303 FINAL ERC ISSUANCE : The APCO shall not issue an ERC certificate until the permit for

the control device responsible for creating the emission reductions has been modified to include, at a minimum, the following:

303.1 The minimum quantity of ERC pollutant(s) to be removed from the exhaust stream per quarter, and

303.2 Conditions that ensure compliance with the applicable portions of Section 500

– Monitoring, Testing, Recordkeeping and Reporting , and

303.3 A statement that the permittee may not retire the permit for the control device unless the rail yard is shutdown or the permittee surrenders to the District a C ertified ERCFebruary 19, 2015

Rules and Regulations 515

- 6 Placer County APCD certificate for the same quantity of quarterly emission reductions required by the permit.

303.4 Statements that incorporate all of the provisions of Section 406

– Violations.

304 RESTRICTION S ON USE OF ERC s :

304.1 The use of PM 10 and/or PM 2.5 ERCs generated pursuant to this rule shall not be used to provide offsets for diesel particulate matter. The ERC certificate shall contain a

statement prohibiting such use

.

304.2 ERCs generated pursuant to this rule from locations in Federal Attainment A reas shall not be used for offset s in Federal Non

- attainment A reas.

400 ADMINISTRATIVE REQUIREMENTS

401 APPLICATION PROCEDURES:

401.1 The applicant shall submit an application on forms supplied by the District.

401.2 The application may be for reductions of on e or more affected pollutants. The application shall contain sufficient information to allow for adequate evaluation of the

actual emission reductions. At a minimum, for each pollutant for which an ERC certificate is requested, the application shall contain emissions data from a certified

CEMS for a minimum of four consecutive calendar quarters.

401.3 The applicant shall provide an analysis of historical locomotive activity at the control device location to support emission calculations and show reasonable expectation that a specific amount of emission reductions ca n be achieved on an on

- going basis, taking into account lower than expected activity level, and other factors.

401.4 The applicant shall provide an analysis of expected future emission reductions in the locomotive fleet as the fleet is upgraded with newer , lower

- emitting locomotives

.

401. 5 The applicable fees shall be submitted pursuant to Rule 601, PERMIT FEES.

402 ADMINISTRATIVE PROCEDURES AND TIMETABLE :

402.1 The APCO shall determine whether an ERC application is complete no later than thirty (30) calendar days following receipt of the application, or after a longer time period if agreed upon in writing by both the applicant and the APCO.

402.2 Upon determination that the application is complete, the APCO shall no tify the applicant in writing. Thereafter, only information to clarify, correct, or otherwise supplement the information submitted in the application may be requested by the

District.

402.3 If the APCO determin es that the application is not complete, the applicant shall be notified, in writing, of the decision, specifying the additional information that is required. The applicant shall have sixty (60) days, or a longer time period agreed upon in writing by both the applicant and the APCO, to sub mit the requested

information. Upon receipt of additional information, the APCO shall have another

thir t y (30) d ays to determine completeness. If no information is submitted or the application is still incomplete, the APCO may cance l the application with written notification to the applicant.

402.4 Withdrawal of an ERC application by the applicant shall result in ca ncellation of the application. Any re

- submittal shall be processed as a new application.February 19, 2015

Placer County APCD 515

- 7 Rules and Regulations

402.5 Upon determination that a n application is complete, the APCO shall have 180

calen dar days to take final action. During this time period, the District shall follow the public notification procedur es in Subsection s 402.6, 402.7, and 402.8.

402.6 U pon completion of the preliminary evaluation of the application, the APCO shall provide written notice of such to the applicant

, the ARB

, and EPA and publish a public notice in a local newspaper of general circulatio n. The public notice shall specify the applicant, the quantity of ERC s pro posed to be certified and the location

where a cop y of the preliminary evaluation and proposed revised operating permit may be inspected.

402.7 Publication of the public notice required in Subsection 402.6 shall commence a thirty (30) day public comment period during which the APCO shall accept written

comments on the merits of the preliminary evaluation. Upon conclusion of this thirty (30) day period, the APCO shall have another thirty (30) days to render a final decision to approve, conditionally approve, or d eny the application taking into

consi deration all written comments. This final decision shall be provided in writing to the applicant

, any commenters

, the US Environmental Protection Agency, and the

California Air Resources Board

.

402. 8 T he APCO shall make availab le for public inspection at the District’s office the information submitted by the applicant and the APCO’s preliminary evaluation no later than the date the public notice of the prel iminary decision is published.

402.9 The applicant or any ot her party may appeal the APCO’s final decision in accordance

with Regulation 7, PROCEDURE BEFORE THE HEARING BOARD.

403 REGISTRATION OF EMISSION REDUCTION CREDITS : ERC certificates issued in accordance with this rule shall be registered and maintained by the District according to the provisions of Rule 504, EMISSION REDUCTION CREDITS, Section 410, Registration and Section 411, ERC Register , respectively.

40 4 QUANTIFICATION PROTOCOL : The following procedures shall be used to calculate actual

emission reductions achieved by installing a control device to reduce locomotive exhaust

emissions.

4 04 .1 Actual emission reductions shall be calculated for each calendar quarter by subtracting measured emissions exiting the control device from measured emissions entering the control device, as measured for each pollutant by a CEMS which complies with the requirements of Sections 501 and 502.

404 .2 ERCs for particulate matter emission reductions shall be expressed in terms of PM 10 and/or P M 2.5

.

404 .3 ERCs for nitrogen oxides, reactive organic compounds, carbon monoxide, sulfur

oxid es, PM 10 and PM 2.5 shall be quantified in terms of pounds of pollutant per quarter for each calendar quarter.

404

. 4 Emission calculations for quantifying emission reductions shall be based upon at least four consecutive calendar quarters of CEMS data.

405 EMISSION REDUCTION CREDIT ADJUSTMENT S OF CALCULATED CREDITS: Before the APCO may issue an ERC certificate, the actual emission reductions calculated for each

calendar quarter pursuant to Section 404 shall be reduced by the following amounts:

405 .1 The APCO shall retire 10 % of the calculated quantity of NOx emission reductions for air quality benefit.February 19, 2015

Rules and Regulations 515

- 8 Placer County APCD

405 .2 The APCO shall transfer an additional 5% of the calculated quantity of emission reductions to the Priority Reserve Bank.

405.3 The APCO shall retire a n equivalent percentage of the calculated quantity of emission reductions to account for expected future improvements in the fleet, as determined by Section 401.4.

406 VIOLATIONS :

406.1 Failure to comply with any provision of this rule or permit condition established pursuant to this rule shall constitute a violation of this rule

.

406.2 Failure to provide the quarterly emission reduction incorporated in the permit to operate for the control device shall be considered an emission reduction shortfall and

shall be a separate violatio n for each day of the quarter. If an emission reduction

sho rtfall occurs, the permittee shall take the following corrective actions in order :

406.2.1 The permittee shall average the actual emission reductions reported for the

previous four quarters to determine if a sufficient quantity of actual emission reductions occurred to satisfy the quarterly emission reduction requirement

on an annual basis. If the annual emission reductions satisfy the quarterly emission reduction requirement, the violation will be deemed resolved, if not the permittee shall comply with (ii) below.

406.2.2 The permittee shall submit a compliance plan quantifying the amount of the

emission reduction shortfall and indicating how the emission reduction

shortfall will be remedied within the next 4 quarters

. Such remedies may include cancelling any unused ERCs, reducing additional emissions during any of th e next four quarters, such that on an annual basis the required quarterly amount of emission reductions is provided, or purchasing and retiring the necessary amount of ERCs.

406. 3 Unnecessary idling or load testing for the sole purpose of providing the quarterly

emission reduction or make

- up of a prior quarter shortfall in emission reductions shall be a violation of this rule and the permit to operate.

406. 4 If a compliance plan is not submitted or any emission reduction shortfall is not made up within four quarters of the shortfall occurrence

, and any portion of the ERC

certificate remains unused, a portion of the ERC certificate equivalent to the shortfall shall be revoked by the District.

406. 5 If activity levels at the rail yard fall below those pr ojected pursuant to Section 401.3, the permittee may submit an application to revise the quarterly emission reductions required, based on the new activity levels. EPA must also provide written concurrence as to any new quarterly emission reduction requirem ent prior to issuance of a revised permit to operate.

500 MONITORING , TESTING, REC ORD KEEPING AND RE PORTING

501 CONTINUOUS MONITORS :

501.1 For each control device installed to generate ERCs, the applicant shall install, and thereafter operate, maintain, certify, and quality

- assure a continuous emission monitoring system (CEMS) which measures the inlet and outlet stack gas concentrations for each pollutant for which an ERC is to be issued and the oxygen concentrations in ppmv

. The measured concentrations s hall be corrected to 15 percent oxygen on a dry basis.

501.2 The CEMS shall meet the applicable requirements of 40 CFR 60 Appendix B, Performance Specifications 2 and 3, and 40 CFR Part 60 Appendix F, Procedure 1

.February 19, 2015

Placer County APCD 515

- 9 Rules and Regulations The CEMS shall complete a minimum of one cycle of operations (sampling, analyzing and data recording) for each successive 15

- minute period. CEMS for PM shall not be required to include condensables.

501.3 The CEMS shall be programmed to calculate and record the actual emission

reductions achiev ed by the control device, measured in pounds, on a daily basis, and summed quarterly.

501.4 A CEMS certification test protocol shall be submitted to the District and EPA no later than 30 days prior to the test date to allow review of the test plan and to arrange for an observer to be present at the test

. The protocol shall include a process for demonstrating the accuracy of the computer programmin g used to calculate

emissions. The certification test shall be conducted in accordance with the submitted proto col and any changes re quired by the District or EPA. The applicant shall furnish the District and EPA a written report of the results of performance tests within 60 days of completion. Certification testing of the CEMS may be conducted as part of

the initi al performance test for each control device.

501.5 For each control device installed to generate ERCs, the applicant shall install, and thereafter maintain and operate a continuous monitoring system to measure and record the stack gas volumetric flow rate

. The system shall meet the 40 CFR Part 52, Appendix E Performance Specifications.

502 TESTING :

502.1 The CEMS shall be tested annually and quarterly in accordance with the requirements of 40 CFR 60 Appendix F, Procedure 1. The PM testing shall include the filter catch only.

502.2 A performance test shall be performed on the control device once every five years, in accordance with the requirements of 40 CFR 60.13.

503 RECORDKEEPING AND REPORTING:

503.1 The control device permittee shall maintain CEMS records that contain the following: The occurrence and duration of any startup, shutdown or malfunction, performance testing, evaluations, calibrations, checks, adjustments, maintenance, duration of any periods during which a continuous monitoring system or monitoring device is inoperative, and emission measurements.

503.2 The control device permittee shall maintain records and submit a written report regarding operation of the control device and CEMS quarterly

. The report is due on

the 30 th day following the end of the calendar quarter and shall include the a pplicable time and date of each period during which the CEMS was inoperative (monitor down

ti me ), except for zero and span checks, and the nature of system repairs or adj ustments

.

503.3 The owner of the control device shall prepare and submit to the District a quarterly report which is due on the 30 th day following the end of the calendar quarter

. The quarterly report shall detail the quantity and type of emissions reduced by operation

of the control device ; calculated pursuant to Section 404.1

. If actual emission reductions achieved are less than the emission reduction requirements specified in the permit, the permittee shall also submit a compliance plan indicating how the

emission reduction shortfall will be remedied.

503. 4 All records required pursuant to this rule shall be kept for a minimum of five (5) years and made available to District inspectors upon request.February 19, 2015

Rules and Regulations 515

- 10 Placer County APCD 600 PROGRAM EVALUATION

601 The APCO shall evaluate this program at least once every 3 years after rule adoption and submit the evaluation program report to the EPA.

602 The evaluation report shall include for each applicant:

602 .1 The number of C ertified ERCs issued for each pollu tant (pounds per quarter).

6 02 .2 Actual emission reductions achieved for each pollutant (pounds per quarter).

602.3 The average cost of ERCs (dollars per ton) by pollutant during the evaluation period.

602.4 The attainment status for each pollutant for which an ERC was issued, at the ERC generation and use locations.

603 If there were any emission reduction shortfall, the evaluation report shall also describe:

603.1 The number of quarters where there was a shortfall.

603.2 The APCO’s analysis of factors which contributed to the shortfall.

603.3 Corrective measures taken to prevent recurrence of the shortfall.

603.4 How long it took the rail yard owner to make up the shortfall.

604 The evaluation report shall also describe:

604.1 Any unintentio nal beneficial or detrimental effects from the program.

604.2 Cost savings, if any, experienced by sources from using these ERCs.

604.3 Whether the APCO had sufficient resources to implement this program.

604.4 Any lessons learned.

## ATTACHMENT # 2

SUBJECT

Staff Report: Rule 515, Stationary Rail Yard Control Emission Reduction Credits

## PLACER COUNTY

AIR POLLUTION CONTROL DISTRICT



# STAFF REPORT

RULE 515 AMENDMENT

STATIONARY RAIL YARD CONTROL EMISSION

REDUCTION CREDITS

February 1 9 , 2015

Prepared By:

Don Duffy

, Consultant to the Air Pollution Control DistrictS TAFF R EPORT ▫ Rule 515 Amendment



### 1

INTRODUCTION

The purpose of Rule 515

, Stationary Rail Yard Control Emission Reduction Credits

, is to provide owners of a rail yard a mechanism for quantifying, certifying, and banking emission reductions

from the installation and use of a control device which reduces emissions from locomotive engines in rail yards. Rule 515 has been reviewed by EPA for i ncorporation into the State Implementation Plan (SIP) which resulted in several unofficial issues to be corrected before the rule can be approved. The District agreed to withdraw the rule from SIP consideration and amend it to resolve the EPA approval con cerns.

When the owner or operator of a stationary source of air pollution wishes to in stall a new source or modify an existing source of air pollution, he or she must obtain a permit from the District.

The District evaluates the proposed new air emission s through a process called “ New Source

Review ” . If the increase in criteria pollutants is above a certain threshold, the owner or operator must “offset” these emissions by providing for reduced emissions from another nearby source. This is done through a cquiring Emission Reduction Credits (ERC). ERCs are generated for facilities that reduce emissions according to District rules. Rule 504, Emission Reduction

Credits

, is the general rule and applies to most situations. Rule 515, Stationary Rail Yard

Cont rol Emission Reduction Credits

, is a specific rule that applies only to the reduction of

emissions from locomotives in rail yards.

BACKGROUND

Rule 515 was promulgated on October 8, 2008 and sent to the California Air Resources Board (ARB) on November 5, 2008 and then submitted to EPA for SIP consideration by ARB on
December 23, 2008.

In June 2014 an EPA staff member contacted the District to notify the District that Rule 515 was being reviewed for SIP approval and there are several issues that make the rule un

- approvable as written. The rule was withdrawn from SIP consideration by a letter from the District to ARB on July 7, 2014 , in order to avoid formal disapproval occurring through a Federal Register Notice

. EPA and the District agreed to collaborate on finding acceptable rule language to allow the rule

to be re

- submitted for SIP approval

. This amendment incorporates the changes agreed to by both

EPA and the District.

Rule 515 is a n outgrowth of the December, 2004

, M emorandum of U nderstanding (MOU)

between the District and Union Pacific Railroad Company to reduce emissions from the J.R. Davis Rail Yard in Roseville. One of the elements of this work was development and feasibility

t esting of control equipment capturing and treating diesel exhaust emissions from stationary locomotive engines at the yard. This control equipment was called the Advanced Locomotive Emission Control System (ALECS) and often referred to as the “hood”. ALE CS demonstrated
over 90% control of NOx, SOx, and PM

- 10/PM

- 2.5.

This rule was promulgated to provide a means of obtaining emission reduction credits (ERCs) for installing and operating such a control system on locomotive exhaust at the rail yard. Because ERCs are difficult to create and are required for new large sou rces of air emissions, any ERCsS TAFF R EPORT ▫ Rule 515 Amendment (continued)



### 2

created through stationary locomotive emission reductions are marketable to others if not utilized by the ERC owner. Therefore the value of the ERCs serves as an incentive to reduce stationary

locomotive emissions.

AMENDMENTS OF RULE 515

Staff is proposing to make a nu mber of amendments to the rule to gain EPA SIP approval. These

amendments are described below. A strikeout version of the amended rule is included as Exhibit 1

to this staff report.

Owners or Operators

The rule addresses the applicant for ERCs as the “ owners or operators ” of the control system. EPA is taking the position that the party responsible for insuring that the conditions of the operating permit and the ERCs must be the owner of the rail yard since a third party owner and operator of the control equipment would ha ve no authority to require the locomotives to utilize the control system.

In all places where “owners or operators” is stated, it is changed to “operators”.

Final ERC Issuance

Section 303 of the rule requires that the operating permit for the control equipment contain certain conditions before ERCs can be issued for the emission reductions provided by the control equipment. One EPA concern is that the control equipment is shut down and does not continue to provide the emission reductions to support the ERCs. A condition is added to

address this situation.

303.3 A statement that the permittee may not retire the permit for the control device unless the rail yard is shutdown or the permittee surrenders to the District a Certified ERC certificate for the same quantity of quarterly emission reductions required by the permit.

The violation section (section 406) of the rule has been enhanced. A condition in section 303

is added to incorporate in the operating permit the following:

303.4 Statements that incorporate all of the provisions of Section 406

- Violations.

Calculation of Emission Reductions

Section 401 specifies the procedures and content of the applicant’s application for ERCs to the District. Section 401.4 requires that the applicant provide an analysis of how future
reductions in emissions from locomotives due to newer, lower

- emitting eng ines in the locomotive fleet will reduce the emissions available to be treated by the control equipment. A requirement in this section that required discounting of the emission reductions in the future due to improvements in the fleet is moved to Section 405.3 and reworded slightly.S TAFF R EPORT ▫ Rule 515 Amendment (continued)



### 3

405.3 The APCO shall retire an equivalent percentage of the calculated quantity of emission reductions to account for expected future improvements in the fleet, as determined by Section 401.4.

Violations

Section 406, Violations, mainly deals with the situation where the owner of the rail yard does not provide the quarterly emission reductions from the control system to support the ERCs issued pursuant to this rule. Section 406.2 has been reworded and expanded to read:

406.2 Failure to provide the quarterly emission reduction incorporated in the permit to operate for the control device shall be considered an emission reduction shortfall and shall be a separate violation for each day of the quarter. If an emission

red uction shortfall occurs, the permittee shall take the following corrective

actions in order:

406.2.1 The permittee shall average the actual emission reductions reported for the previous four quarters to determine if a sufficient quantity of actual emission reductions occurred to satisfy the quarterly emission reduction
requirement on an annual basis. If the annual emission reductions satisfy the quarterly emission reduction requirement, the violation will be deemed resolved. If not, the permittee shall comply with 406.2.2

below. 406.2.2 The permittee shall submit a compliance plan quantifying the amount of the emission reduction shortfall and indicating how the emission reduction shortfall will be remedied within the next 4 quarters. Such remedies may include cancelling any unused ERCs, reducing additional emissions during any of the next four quarters, su ch that on an annual basis the required quarterly amount of emission reductions is provided, or purchasing and retiring the necessary amount of ERCs.

Renumbered Section 406.4 deals with the situation of an emission reduction shortfall and the permittee do es not submit a compliance plan to specify how the shortfall will be remedied:

406.4 If a compliance plan is not submitted or any emission reduction shortfall is not made up within four quarters of the shortfall occurrence, and any portion of the

ERC cer tificate remains unused, a portion of the ERC certificate equivalent to the shortfall shall be revoked by the District.

Section 406.5 is added to specify the procedure for dealing with the situation where the rail yard activity falls below the level that allows support of the ERCs.

406.5 If activity levels at the rail yard fall below those projected pursuant to Section 401.3, the permittee may submit an application to revise the quarterly emission reductions required, based on the new activity levels. E PA must also provideS TAFF R EPORT ▫ Rule 515 Amendment (continued)



### 4 written concurrence as to any new quarterly emission reduction requirement prior to issuance of a revised permit to o p er ate.

Recordkeeping and Reporting

EPA has advised the District that any District rules referenced in a SIP approved rule must also be SIP approved. Section 503.4 requires the permittee to report breakdowns of the control device per District Rule 404

, Upset Conditions, Breakdown or Scheduled

Maintenance . Since Rule 404 is not SIP approved, this reference is no t acceptable. EPA suggested deleting this section because Rule 404 would still apply to the permittee since it is

a District rule. Section 503.4 is deleted.

FISCAL IMPACT

The amendment of Rule 515 will have insignificant fiscal impact on any persons us ing the rule compared with business under the current rule.

ANALYSIS AND FINDINGS

The following Analysis and the subsequent Findings are intended to address the requirements set

forth in the Health and Safety Code relating to adoption of a new or amended District Rule, as well

as other State statutes referenced herein.

Cost

- Effectiveness of a Control Measure

California Health & Safety Code (H&S) Section 40703 requires a District to consider and make public “the cost

- effectiveness of a control measure”. The amendment of Rule 5 15 should have insignificant financial impact on permit holders or the public as compared with business under
the current rule, therefore there is no cost

- effectiveness of this amendment.

Socioeconomic Impact

H&S Section 40728, in relevant part, requires the Board to consider the socioeconomic impact of any new rule if air quality or emission limits are significantly affected. However, Districts with a population of less than 500,000 persons are exempted from the socioeconomic anal ysis.

In 20 13 , the population of Placer County was approximately 3 57 ,000 persons.

California Environmental Quality Act (CEQA)

Proposed amended Rule 5 15 is not an activity that may cause a direct or reasonably foreseeable indirect physical effect in the environment therefore not considered a “project”, as defined by
Section 21065 of the California Public Resource Code and Section 15378(b)(4)&(5) of the

CE QA guidelines. A CEQA analysis is therefore not necessary.S TAFF R EPORT ▫ Rule 515 Amendment (continued)



### 5

Findings

A. Necessity

– The amendment of Rule 5 15 is necessary in order to obtain federal and state recognition of the District’s Emission Reduction Credit rule in the SIP. SIP approval of this rule will allow ERCs issued to the rule to be used as offsets for major sources and major modifications.

B. Authority

– California Health and Safety Code, Sections 40000, 40001, 40701, 40702, and 40716 are provisions of law that provide the District with the authority to adopt this

amended Rule.

C. Clarity

– There is no indication, at this time, that the proposed Rule is written in such a manner that persons affected by the Rule cannot easily understand them.

D. Consistency

– The regulation is in harmony with, an d not in conflict with or contradictory to, existing statutes, court decisions, or state or federal regulations.

E. Non

- duplication

– The regulation does not impose the same requirements as an existing state or federal regulation.

F. Reference

– All statutes, court decisions, and other provisions of law used by PCAPCD in interpreting this regulation is incorporated into this analysis and this finding by

reference.

### STAFF REPORT EXHIBIT 1

Strike

- Out Version of Proposed Amended Rule 515,

Stationary Rail Yard Control Emission Reduction CreditsOctober 9, 20 08 February 19, 2015

Placer County APCD 515

- 1 Rules and Regulations 

### RULE 515 STATIONARY RAIL YARD CONTROL EMISSION REDUCTION CREDITS

Adopted October 9, 2008 (Amended February 19, 2015 )

CONTENTS

100 GENERAL

101 PURPOSE

102 APPLICABILITY

200 DEFINITIONS

201 ACTUAL EMISSIONS

202 ACTUAL EMISSION REDUCTIONS

203 APCO

204 APPLICANT

205 BANKING

206 CERTIFIED ERCs

207 CONT ROL DEVICE

208 EMISSION REDUCTION CREDITS (ERC s )

209 EMISSION REDUCTION SHORTFALL

210 ENFORCEABLE

211 ERC CERTIFICATE

212 ERC OWNER

21 3 BASELINE ACTUAL EMISSIONS

214 OFFSET

215 PERMANENT

216 PRIORITY RESERVE BANK

217 QUANTIFIABLE

218 QUARTERLY

219 REAL

2 20 REGISTER

221 RELATIVE ACCURACY TEST AUDIT (RATA)

222 SURPLUS

223 TRANSFER

300 STANDARDS

301 CONTROL DEVICE PERMIT REQUIREMENTS

302 PROPOSED ERC ISSUANCE

303 FINAL ERC ISSUANCE

304 RESTRICTIONS ON USE OF ERCs

400 ADMINISTRATIVE REQUIREMENTS

401 APPLICATION PROCEDURES

402 ADMINISTRATIVE PROCEDURES AND TIMETABLE

403 REGISTRATION OF EMISSION REDUCTION CREDITS

404 QUANTIFICATION PROTOCOL

405 EMISSION REDUCTION CREDIT ADJUSTMENTS OF CALCULATED CREDITS

406 VIOLATIONSOc tober 9, 20 08 February 19, 2015

Rules and Regulations 515

- 2 Placer County APCD 500 MONITORING , TESTING, RECORD KEEPING AND RE PORTING

501 CONTINUOUS MONITORS

502 TESTING

503 RECORD KEEPING AND REPORTING

600 PROGRAM EVALUATIONOctober 9, 20 08 February 19, 2015

Placer County APCD 515

- 3 Rules and Regulations 100 GENERAL

101 PURPOSE: To provide the owners or operators of a rail yard a mechanism for quantifying, certifying, and banking emission reductions from the installation and use of a control device

which reduces emissions from locomotive engines in rail yards.

102 APPLICABILIT Y:

102.1 Geographic: The provisions of this rule apply to rail operations located anywhere in Placer County.

102.2 Application: This rule applies to the owner and/or operator of a rail yard who installs

a control device to reduce emissions from locomotive engines to generate ERCs

. The

use of ERCs for offsets is subject to the requirements of Rule 502, NEW SOURCE

REVIEW and Section 304 of this rule.

102.3 Severability: If any section, subsection, sentence, clause, phrase, or portion of this rule is, for any reason, held invalid, unconstitutional, or unenforceable by any court of competent jurisdiction, that portion shall be deemed as a separate, distinct, and independent provision, and the holding shall not affect the validity of the remaining portions of the rule.

200 DEFINITIONS

201 ACTUAL EMISSIONS : The emissions measured by a certified CEMS at the inlet of a control

device which reduces emissions from locomotive engines in rail yards.

202 ACTUAL EMISSION REDUCTIONS: Actual emission reductions means the difference in emissions exiting a control device and emissions entering a control device, as measured by a

certified CEMS.

20 3 APCO: Air Pollution Control Officer.

20 4 APPLICANT : The owners or operators of a rail yard submitting an application to bank ERCs

and obtain ERC certificates in accordance with this rule.

20 5 BANKING : The system of quantifying, adjusting, certifying, recording, and registering ER Cs

for future use or transfer. This system shall be called the Emission Reduction Credit Bank (ERC Bank).

206 CEMS: Continuous emission monitoring system.

207 CERTIFIED ERCs : E RCs which have been evaluated under the requirements of this rule and other applicable District, state and federal rules and regulations and which have been authorized by the Air Pollution Control Officer.

208 CONTROL DEVICE: Stationary equipment used to tr eat and/or control various air emissions

such that the outlet emissions are less than the inlet emissions.

209 EMISSION REDUCTION CREDITS (ERC s ) : Reductions of actual emissions that are registered with the District in accordance with the requirements of this rule.

2 10 EMISSION REDUCTION SHORTFALL: Amount of emissions in pounds that the quarterly

emission reductions achieved by the control device falls short of the permit requirement.

2 1 1 ENFORCEABLE : Emission reductions and other required actions are enforceable if: (1) they are independently verifiable ; (2) program and permit violations are defined; (3) those liable can be identified; (4) the U.S. Environmental Protection Agency (EPA) and the APCOOc tober 9, 20 08 February 19, 2015

Rules and Regulations 515

- 4 Placer County APCD

maintain the ability to seek pena lties for violations and, where applicable, to secure appropriate corrective action; (5) citizens have access to all the emissions

- related information obtained from the source; (6) citizens can file suits against sources for violations; and (7) they

are pr acticably enforceable in accordance with EPA guidance on practicable enforceability.

2 12 ERC CERTIFICATE : A document which provides title to a defined quantity and pollutant type of ERC’s issued by the District

.

213 ERC OWNER: The person or legal entity in whose name the ERC Certificate is issued and listed in the Register.

214 BASELINE ACTUAL EMISSIONS: Baseline actual emissions are those exhaust emissions captured from locomotive engines and measured at the control device inlet during the first four calendar quarters of operation after the CEMS has been certified.

215 OFFSET: The use of an ERC to compensate for an emission increase of an affected pollutant from a new or modified source subject to the requirements of Rule 502, NEW

SOURCE REVIEW.

216 PERMANENT: Permanent means the actual emission reductions continue or endure for the

duration of any project utilizing the resulting ERCs as offsets.

217 PRIORITY RESERVE BANK: A depository for preserving ERC s pursuant to Rule 505,

PRIORITY RESERVE.

218 QUANTIFIABLE: Ability to reliably and replica te bly measure d emission reductions by adhering to the quantification protocol.

219 QUARTERLY: Pertaining to any calendar quarter beginning in January, April, July, and

October.

220 REAL: Actually occurring, implemented, and not artificially devised.

2 21 REGISTER: The document that records all ERC deposits, withdrawals, transfers, and

transactions.

222 RELATIVE ACCURACY TEST AUDIT (RATA): A quality performance procedure performed pursuant to 40 CFR Part 60, Appendix F, Procedure 1 to certify the accuracy of the

continuous emissions monitors.

223 SURPLUS: The amount of emission reductions that are, at the time of generation of an

ERC , not otherwise required by federal, state, or local law, not required by any legal

settlement or consent decree, and not relied upon to meet any requirement related to the California State Implementation Plan (SIP)

. However, emission reductions required by a state statute that provides that the subject emission reductions shall be considered surplus may be

co nsidered surplus for purposes of the Rule if those reductions meet all other req uirements of

this s ection. Examples of federal, state, and local laws and of SIP

- related requirements include, but are not limited to, the following:

223.1 T he federally

- appro ved California SIP;

223.2 O ther adopted State air quality laws, and regulations not in the SIP, including but

not limited to, any requirement, regulation, or measure that: (1) the District or the State has included on a legally

- required and publicly

- available list of measures that are scheduled for adoption by the District or the State in the future; or (2) is the subject of a public notice distributed by the District or the Date regarding an intent to adopt such revision;October 9, 20 08 February 19, 2015

Placer County APCD 515

- 5 Rules and Regulations

223.3 A nd other so urce

- or source

- category specific regulatory or permitting requirement,

including, but not limited to, Reasonable Available Control Technology (RACT), New Source Performance Standards (NSPS), National Emission Standards for Hazardous Air Pollutants (NESHAP ), Best Available Control Measures (BACM), Best Available Control Technology (BACT), and the Lowest Achievable Emission Rate (LAER); and

223.4 A ny regulation or supporting documentation that is required by the federal Clean Air

Act but is not contained or referenced in 40 C.F.R. Part 52, including but not limited to: assumptions used in attainment and maintenance demonstrations (including Reasonable Further Progress demonstrations and milestone demonstrations), including any proposed control measure ident ified as potentially contributing to an

enforceable near

- term emissions reduction commitment; assumptions used in conformity demonstrations, and assumptions used in emissions inventories.

22 4 TRANSFER: The change in ownership of an ERC from one person or legal entity to another.

300 STANDARDS

301 CONTROL DEVICE PERMIT REQUIREMENTS :

301.1 The applicant shall obtain a permit pursuant to Rule 5 01, GENERAL PERMIT REQUIREMENTS to install a stationary control device in rail yards for the purpose of reducing exhaust emissions from locomotive engines.

301.2 The control device permit shall include enforceable conditions that ensure compliance with the applicable portions of Section 500

– Monitoring, Testing, Recordkeeping, and Reporting.

302 PROPOSED ERC ISSUANCE: Prior to proposing issuance of an ERC certificate pursuant to Section 402.6 of this rule, the APCO shall make the following determinations:

302.1 The actual emission reductions are real, surplus, enforceable, permanent, and quantif iable.

302.2 The continuous monitors used to measure inlet and outlet emissions of the control device meet the requirements of Section 500 of this rule.

302.3 The analysis provided by the applicant of historical locomotive activity and expected

future emission reductions in the locomotive fleet are adequate to project future

actual emission reductions by the control device

.

302.4 Actual emissions reductions have been calculated and adjusted pursuant t o the provisions of Sections 404 and 405 of this rul e, respectively.

302.5 The applicant has paid the fees required pursuant to Rule 601, PERMIT FEES.

303 FINAL ERC ISSUANCE : The APCO shall not issue an ERC certificate until the permit for the control device responsible for creating the emission reductions has been modified to include, at a minimum, the following:

303.1 The minimum quantity of ERC pollutant(s) to be removed from the exhaust stream per quarter, and

303.2 Conditions that ensure compliance with the applicable portions of Section 500

– Monitoring, Testing, Recordkeeping and Reporting , and

303.3 A statement that the permittee may not retire the permit for the control device unless the rail yard is shutdown or the permittee surrenders to the District a C ertified ERCOc tober 9, 20 08 February 19, 2015

Rules and Regulations 515

- 6 Placer County APCD certificate for the same quantity of quarterly emission reductions required by the permit.

303.4 S tatements that incorporate all of the provisions of Section 406

– Violations.

A statement that any quarterly emission reduction shortfall constitutes a separate violat ion for each day of the compliance period, and

303.4 A condition that requires an emission reduction shortfall be made up within four quarters of the end of the compliance period in which the shortfall occurred.

304 RESTRICTION S ON USE OF ERC s :

304.1 The use of PM 10 and/or PM 2.5 ERCs generated pursuant to this rule shall not be used

to provide offsets for diesel particulate matter. The ERC certificate shall contain a

statement prohibiting such use

.

304.2 ERCs generated pursuant to this rule from locations in Federal Attainment A reas

shall not be used for offset s in Federal Non

- attainment A reas.

400 ADMINISTRATIVE REQUIREMENTS

401 APPLICATION PROCEDURES:

401.1 The applicant shall submit an application on forms supplied by the District.

401.2 The application may be for reductions of on e or more affected pollutants. The application shall contain sufficient information to allow for adequate evaluation of the

actual emission reductions. At a minimum, for each pollutant for which an ERC

certificate is requested, the application shall contain emissions data from a certified CEMS for a minimum of four consecutive calendar quarters.

401.3 The applicant shall provide an analysis of historical locomotive activity at the control device location to suppor t emission calculations and show reasonable expectation that a specific amount of emission reductions can be achieved on an on

- going basis, taking into account lower than expected activity level, and other factors.

401.4 The applicant shall provide an ana lysis of expected future emission reductions in the locomotive fleet as the fleet is upgraded with newer, lower

- emitting locomotives

. The actual emission reductions measured by the CEMS shall be reduced to account for expected future improvements in the fleet.

401. 5 The applicable fees shall be submitted pursuant to Rule 601, PERMIT FEES.

402 ADMINISTRATIVE PROCEDURES AND TIMETABLE :

402.1 The APCO shall determine whether an ERC application is complete no later than thirty (30) calendar days following receipt of the application, or after a longer time period if agreed upon in writing by both the applicant and the APCO.

402.2 Upon determination that the application is complete, the APCO shall no tify the applicant in writing. Thereafter, only information to clarify, correct, or otherwise supplement the information submitted in the application may be requested by the

District.

402.3 If the APCO determin es that the application is not complete, the applicant shall be notified, in writing, of the decision, specifying the additional information that is required. The applicant shall have sixty (60) days, or a longer time period agreed upon in writing by both the applicant and the APCO, to sub mit the requestedOctober 9, 20 08 February 19, 2015

Placer County APCD 515

- 7 Rules and Regulations information. Upon receipt of additional information, the APCO shall have another

thir t y (30) d ays to determine completeness. If no information is submitted or the application is still incomplete, the APCO may cance l the application with written notification to the applicant.

402.4 Withdrawal of an ERC application by the applicant shall result in ca ncellation of the application. Any re

- submittal shall be processed as a new application.

402.5 Upon determination that an application is complete, the APCO shall have 180

calen dar days to take final action. During this time period, the District shall follow the public notification procedur es in Subsection s 402.6, 402.7, and 402.8.

402.6 U pon completion of the preliminary evalua tion of the application, the APCO shall provide written notice of such to the applicant

, the ARB

, and EPA and publish a public notice in a local newspaper of general circulatio n. The public notice shall specify the applicant, the quantity of ERC s proposed to be certified and the location

where a cop y of the preliminary evaluation and proposed revised operating permit may be inspected.

402.7 Publication of the public notice required in Subsection 402.6 shall commence a thirty (30) day public comment period during which the APCO shall accept written

comments on the merits of the preliminary evaluation. Upon conclusion of this thirty (30) day period, the APCO shall have another thirty (30) days to render a final decision to approve, conditionally approve, or deny th e application taking into

consi deration all written comments. This final decision shall be provided in writing to the applicant

, any commentors commenters

, the US Environmental Protection Agency, and the California Air Resources Board

.

402. 8 T he APCO shall make availab le for public inspection at the District’s office the information submitted by the applicant and the APCO’s preliminary evaluation no later than the date the public notice of the prel iminary decision is published.

402.9 The applicant or any other party may appeal the APCO’s final decision in accordance

with Regulation 7, PROCEDURE BEFORE THE HEARING BOARD.

403 REGISTRATION OF EMISSION REDUCTION CREDITS : ERC certificates issued in accordance with this rule shall be registered and maintained by the District according to the provisions of Rule 504, EMISSION REDUCTION CREDITS, Section 410, Registration and Section 411, ERC Register , respectively.

40 4 QUANTIFICATION PROTOCOL : The following procedures shall be used to calculate actual emission reductions achieved by installing a control device to reduce locomotive exhaust

emissions.

4 04 .1 Actual emission reductions shall be calculated for each calendar quarter by subtracting measured emissions exiting the control device from measured emissions entering the control device, as measured for each pollutant by a CEMS which complies with the requirements of Sections 501 an d 502.

404 .2 ERCs for particulate matter emission reductions shall be expressed in terms of PM 10 and/or PM 2.5

.

404 .3 ERCs for nitrogen oxides, reactive organic compounds, carbon monoxide, sulfur

oxid es, PM 10 and PM 2.5 shall be quantified in terms of po unds of pollutant per quarter for each calendar quarter.

404

. 4 Emission calculations for quantifying emission reductions shall be based upon at least four consecutive calendar quarters of CEMS data.Oc tober 9, 20 08 February 19, 2015

Rules and Regulations 515

- 8 Placer County APCD 405 EMISSION REDUCTION CREDIT ADJUSTMENT S OF CALCULATED CREDITS: Before the APCO may issue an ERC certificate, the actual emission reductions calculated for each

calendar quarter pursuant to Section 404 shall be reduced by the following amounts:

405 .1 The APCO shall retire 10 % of the calculated quantity of NOx emission reductions for air quality benefit.

405 .2 The APCO shall transfer an additional 5% of the calculated quantity of emission reductions to the Priority Reserve Bank.

405.3 The APCO shall retire a n equivalent percentage of the calculated quantity of emission reductions to account for expected future improvements in the fleet , as determined by Section 401.4

.

406 VIOLATIONS :

406.1 Failure to comply with any provision of this rule or permit condition established pursuant to this rule shall constitute a violation of this rule

.

406.2 Failure to provide the quarterly emission reduction incorporated in the permit to operate for the control device shall be considered an emission reduction shortfall and

shall be a separate violatio n for each day of the quarter. If an emission reduction shortfall occurs, the permittee shall take the following corrective actions in order :

406.2.1 The permittee shall average the actual emission reductions reported for the

previous four quarters to determine if a sufficient quantity of actual emission reductions occurred to satisfy the quarterly emission reduction requirement

on an annual basis. If the annual emission reductions satisfy the quarterly emission reduction requirement, the violation will be deemed resolved, if not the permittee shall comply with (ii) below.

406.2.1 406.2.2 The permittee shall submit a compliance plan quantifying the amount of the

e mission reduction shortfall and indicating how the emission reduction

shortfall will be remedied within the next 4 quarters

. Such remedies may include cancelling any unused ERCs , reducing additional emissions during any of t he next four quarters, such that on an annual basis the required quarterly amount of emission reductions is provided, or purchasing and retiring the necessary amount of ERCs. Any such shortfall shall be made up within four quarters of the shortfall occurrence. The sh ortfall may be made up through

...

406. 2 3 Unnecessary idling or load testing for the sole purpose of providing the quarterly

emission reduction or make

- up of a prior quarter shortfall in emission reductions shall be a violation of this rule and the permit to operate.

406. 3 4 If the owner is unwilling or unable to produce the emissions reduction required in the

control device permit to operate and a compliance plan is not submitted or any such

emission reduction shortfall is not m ade up within four quarters of the shortfall

occurrence

, and any portion of the ERC certificate remains unused, a portion of the

ERC certificate equivalent to the shortfall shall be revoked by the District.

406. 5 If activity levels at the rail yard fall below those projected pursuant to Section 401.3

, the permittee may submit an application to revise the quarterly emission reductions required, based on the new activity levels. EPA must also provide written

concurre nce as to any new quarterly emission reduction requirement prior to issuance of a revised permit to operate.

500 MONITORING , TESTING, REC ORD KEEPING AND RE PORTING

501 CONTINUOUS MONITORS :October 9, 20 08 February 19, 2015

Placer County APCD 515

- 9 Rules and Regulations

501.1 For each control device installed to generate ERCs, the applicant shall install, and thereafter operate, maintain, certify, and quality

- assure a continuous emission monitoring system (CEMS) which measures the inlet and outlet stack gas concentrations for each pollutant for which an ERC is to be issued and the o xygen concentrations in ppmv

. The measured concentrations shall be corrected to 15 percent oxygen on a dry basis.

501.2 The CEMS shall meet the applicable requirements of 40 CFR 60 Appendix B, Performance Specifications 2 and 3, and 40 CFR Part 60 Appendi x F, Procedure 1

. The CEMS shall complete a minimum of one cycle of operations (sampling, analyzing and data recording) for each successive 15

- minute period. CEMS for PM shall not be required to include condensables.

501.3 The CEMS shall be programmed to calculate and record the actual emission reductions achieved by the control device, measured in pounds, on a daily basis, and summed quarterly.

501.4 A CEMS certification test protocol shall be submitted to the District and EPA no later than 30 days prio r to the test date to allow review of the test plan and to arrange for an observer to be present at the test

. The protocol shall include a process for demonstrating the accuracy of the computer programmin g used to calculate

emissions. The certification tes t shall be conducted in accordance with the submitted protocol and any changes re quired by the District or EPA. The applicant shall furnish the District and EPA a written report of the results of performance tests within 60 days of completion. Certificatio n testing of the CEMS may be conducted as part of the initial performance test for each control device.

501.5 For each control device installed to generate ERCs, the applicant shall install, and thereafter maintain and operate a continuous monitoring system to measure and record the stack gas volumetric flow rate

. The system shall meet the 40 CFR Part 52, Appendix E Performance Specifications.

502 TESTING :

502.1 The CEMS shall be tested annually and quarterly in accordance with the requirements of 40 CFR 60 Appendix F, Procedure 1. The PM testing shall include the filter catch only.

502.2 A performance test shall be performed on the control device once every five years, in accordance with the requirements of 40 CFR 60.13.

503 RECORDKEEPING AND REPORTING:

503.1 The control device permittee shall maintain CEMS records that contain the following:

The occurrence and duration of any startup, shutdown or malfunction, performance testing, evaluations, calibrations, checks, adjustments, maintenance, duration of any periods during which a continuous monitoring system or monitoring device is inoperative, and emission measurements.

503.2 The control device permittee shall maintain records and submit a written report regarding operation of the control device and CEMS quarterly

. The report is due on

the 30 th day following the end of the calendar quarter and shal l include the a pplicable time and date of each period during which the CEMS was inoperative (monitor down

ti me ), except for zero and span checks, and the nature of system repairs or adjustments

.

503.3 The owner or operator of the control device shall prepare and submit to the District a quarterly report which is due on the 30 th day following the end of the calendarOc tober 9, 20 08 February 19, 2015

Rules and Regulations 515

- 10 Placer County APCD quarter

. The quarterly report shall detail the quantity and type of emissions reduced by operation of the control device ; calculated pursua nt to Section 404.1

. If actual emission reductions achieved are less than the emission reduction requirements specified in the permit, the permittee shall also submit a compliance plan indicating

how the emission reduction shortfall will be remedied.

503.4 The control device permittee shall report breakdowns of the control device or the CEMS per District Rule 404, UPSET CONDITI ONS, BREAKDOWN OR

SCHEDULED MAINTENANCE.

503. 5 4 All records required pursuant to this rule shall be kept for a minimum of five (5) years and made available to District inspectors upon request.

600 PROGRAM EVALUATION

601 The APCO shall evaluate this program at least once every 3 years after rule adoption and submit the evaluation program report to the EPA.

602 The evaluation report shall include for each applicant:

602 .1 The number of C c ertified ERCs issued for each pollutant (pounds per quarter).

6 02 .2 Actual emission reductions achieved for each pollutant (pounds per quarter).

602.3 The average cost of ERCs (dollars per ton) by pollutant during the evaluation period.

602.4 The attainment status for each pollutant for which an ERC was issued, at the ERC generation and use locations.

603 If there were any emission reduction shortfall, the evaluation report shall also describe:

603.1 The number of quarters where there was a shortfall.

603.2 The APCO’s analysis of factors which contributed to the shortfall.

603.3 Corrective measures taken to prevent recurrence of the shortfall.

603.4 How long it took the rail yard owner /operator to make up the shortfall.

604 The evaluation report shall also describe:

604.1 Any unintentional beneficial or detrimental effects from the program.

604.2 Cost savings, if any, experienced by sources from using these ERCs.

604.3 Whether the APCO had sufficient resources to implement this program.

604.4 Any lessons learned.