2004 - 1 (Adopted October 15, 1993)(Amended December 7, 1995 )(Amended July 12, 1996) (Amended May 11, 2001)(Amended April 6, 2007)

RULE 2004. REQUIREMENTS

(a) Purpose The purpose of this rule is to establish the requi rements for operating under the RECLAIM program. The rule includes provisions pert aining to permits, Allocations, reporting, variances, and breakdowns.

(b) Compliance Period and Certification of Emission s (1) The compliance year shall be divided into four quarters for emission reporting and certification purposes. The 30 calen dar days after the conclusion of each of the first three quarters shal l be a reconciliation period. During the reconciliation period, the Faci lity Permit holder shall calculate the facility's total emissions for the qu arter, acquire and have credited to the facility, pursuant to Rule 2007 - T rading Requirements and Rule 2020 – RECLAIM Reserve, any RTCs necessary to reconcile the Allocation to the emissions, and except as providedunder paragraph (b)(6), submit to the Executive Officer a Quarterly Certification of Emissions. In addition, to reconcile the Allocatio n to the emissions, power producing facilities may utilize the Mitigati on Fee Program specified in subdivision (o) of this rule. (2) The Quarterly Certification of Emissions shall be made in the manner and

form specified by the Executive Officer and shall b e certified for accuracy by the highest ranking management official with res ponsibility for operation of equipment subject to the Facility Perm it, except as provided under paragraph (b)(6). The Quarterly Certificatio n of Emissions shall be calculated as required by Rules 2011 - Requirements for Monitoring, Reporting and Recordkeeping for Oxides of Sulfur (S O x ) Emissions, and 2012 - Requirements for Monitoring, Reporting and R ecordkeeping for Oxides of Nitrogen (NO x ) Emissions, and Facility Permit conditions applicable to the facility. (3) Upon receipt of the certified Quarterly Report , the Executive Officer will

debit the RTC Listing for the submitting facility b y the amount certified in the report.Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 2 (4) The 60 calendar days following the last day of each compliance year shall be the reconciliation period for the last quarter. On or before the last day of such reconciliation period, the Facility Permit holder shall calculate the facility's total emissions for the last quarter, ac quire and have credited to the facility, pursuant to Rule 2007 and Rule 2020, any RTCs necessary to reconcile the Allocations to the emissions, and exc ept as provided under paragraph (b)(6), submit an Annual Permit Emissions Program (APEP) report, as prescribed by the Executive Officer, for the purpose of compliance reporting, permit review, and determinat ion of fees. As part of the APEP report, the Facility Permit holder shal l accurately report the information specified in Rule 2015 subparagraph (b) (1)(C), (b)(1)(D), and (b)(1)(H) for the District's annual audit. (5) Except as provided in subdivision (c), the rec onciliation period following

the end of a quarter shall be used to reconcile the Allocation only with emissions from that quarter. (6) The Facility Permit holder of a facility that does not have any NOx or SOx

emitting sources located at the facility (including , but not limited to, permitted equipment, non-permitted equipment pursua nt to Rule 219, rental or leased equipment, or equipment operated b y contractors) shall not be required to submit Quarterly Certification o f Emissions pursuant to paragraphs (b)(1) and (b)(2) and APEP reports pursu ant to paragraph (b)(4) provided that the Facility Permit holder: (A) submits an application for permit amendment; (B) demonstrates to the satisfaction of the Execu tive Officer that there

are no NOx or SOx sources located at the facility; and (C) receives an amended Facility Permit containin g permit conditions

to ensure that there are no NOx or SOx emissions fr om the facility
at all times. (7) A Facility Permit holder which has submitted a n application for permit

amendment pursuant to paragraph (b)(6) for exemptio n from the reporting requirements of paragraphs (b)(1), (b)(2), and (b)( 4) shall not locate or operate NOx or SOx sources at the facility unless s uch application has been cancelled or denied or the permit has been ame nded to allow construction and operation of NOx or SOx sources. Once the Executive Officer has issued a permit amendment allowing cons truction and operation of a NOx or SOx source, the facility shal l no longer be exemptRule 2004 (Cont.) (Amended April 6, 2007)

2004 - 3 under this paragraph. If the Facility Permit holde r is found in violation of any permit condition issued pursuant to paragraph ( b)(6), the facility shall be assessed a single separate violation of this rul e for each source and each day the source was on the premises. For purposes o f determining emissions from each violating source, on each and e very day that the source was on the premises, emissions shall be calc ulated assuming the source was uncontrolled and operated at maximum cap acity for 24 hours a day.

(c) Correction of Quarterly Certification of Emissi ons (1) The Facility Permit holder may, at any time prior to the end of the

reconciliation period for the last quarter of the c ompliance year, make corrections to any quarterly certification of emiss ions, provided that the Facility Permit holder demonstrates that: (A) emissions were inaccurately certified due to an error caused by

conditions beyond the reasonable control of the Fac ility Permit holder; and (B) the corrected information is accurate; and (C) the Facility Permit holder has made the corre ction within thirty

days of discovering the error necessitating the correction or within thirty days of when the error reasonably could have been discovered, whichever is earlier. (2) If a correction is made to a Quarterly Certifi cation of Emissions: (A) the certification requirements set forth in p aragraph (b)(2) shall

apply to the correction; and (B) the RTC Listing will be amended to show the c orrected amount. (C) the Facility Permit holder shall, within 30 d ays of the correction of

the Quarterly Certification of Emission, but no lat er than the end of the reconciliation period for the last quarter, acq uire any RTCs as necessary pursuant to Rule 2007 and Rule 2020 to re concile the Allocation to the revised certification, and for a Facility Permit holder of a Power Producing Facility, comply with s ubdivision (o)
of this rule.Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 4 (d) Prohibition of Emissions in Excess of Annual Al location (1) Emissions from a RECLAIM facility from the beg inning of a compliance

year through the end of any quarter shall not excee d the annual emissions Allocation in effect at the end of the applicable r econciliation period for such quarter. Except as provided in paragraph (d)( 2), or subdivision (o), any such emissions in excess of the Allocation shal l constitute a single, separate violation of this rule for each day of the compliance year (365 days). (2) In the event of a violation of paragraph (d)(1 ), the Facility Permit holder

may, pursuant to this paragraph, establish a number of violations less than that set forth in paragraph (d)(1) above. The numb er of violations under this paragraph shall be the number of days or porti on thereof, during which any source of the subject RECLAIM pollutant o perated after the Allocation was exceeded, plus one violation for eac h 1,000 pounds, or portion thereof, emitted in excess of the Allocatio n. In order to establish the number of violations under this paragraph, the Facility Permit holder shall have the burden of establishing the number of days, or such lesser period as can be established, that the cumulative f acility emissions were
less than the annual emission Allocation. If the F acility Permit holder is not able to establish the number of days or period during which the cumulative facility emissions were less than the an nual emission Allocation, the facility shall be in violation purs uant to paragraph (d)(1) of
this rule. (3) If the average annual price of RTCs exceeds $8 ,000 dollars per ton then

for purposes of paragraph (d)(2) of this rule, one violation per 500 pounds or portion thereof, of excess emissions shall be us ed in lieu of one violation per 1,000 pounds or a portion thereof, of excess emissions. The average annual price of RTCs will be the price mostrecently determined pursuant to Rule 2015 (b)(1)(E).Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 5 (4) For purposes of this rule, emissions from the facility shall be determined

solely pursuant to methods and procedures specifiedin Regulation XX - Regional Clean Air Incentives Market (RECLAIM) and the Facility Permit, if applicable.

(e) Prohibition of Submission of an Inaccurate Quarterly Certification of Emissions (1) Any Quarterly Certification of Emissions determined by the Executive

Officer to be inaccurate, shall constitute a violat ion of this rule, unless the report was corrected by the Facility Permit holder in accordance with the requirements of paragraph (c)(1). (2) A violation of this subdivision shall constitu te a single, separate violation

of this rule for each day in the quarter.

(f) Permit Requirements (1) The Facility Permit holder shall, at all times , comply with all rules and

permit conditions applicable to the facility, as sp ecified in the Facility
Permit. (2) A person shall not build, erect or install a n ew source or a modification as

defined in Rule 2000 - General, without first compl ying with Rule 201 -
Permit to Construct.

(g) Emissions in Excess of a Concentration Limit (1) In the event emissions exceed a concentration limit, as established by a

source test, the days of violation shall be presume d to include the date of the source test and each and every day thereafter u ntil the Facility Permit holder establishes that continuous compliance has b een achieved, except to the extent the Facility Permit holder can prove that there were intervening days during which no violation occurredor that the violation was not continuing in nature. (2) In the event emissions exceed a concentration limit, as established by a

source test, the emissions from the source to which the concentration limit applies shall be calculated using the higher concen tration for purposes of determining compliance with the facility's Allocati on until the Facility Permit holder demonstrates that it is in compliance with the concentration limit set forth in the Facility Permit.Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 6 (h) Federal Requirements for the Use of Clean Fuels or Advanced Control Technology Effective November 15, 1998, each new, modified, a nd existing electric utility
and industrial and commercial boiler which emits mo re than 25 tons per year of Oxides of Nitrogen shall: (1) burn as its primary fuel natural gas, methanol , or ethanol (or a comparably

low polluting fuel); or (2) use advanced control technology, such as catal ytic control technology or

other comparably effective control methods, for red uction of emissions of Oxides of Nitrogen. For purposes of paragraph (h)(1), the term "primary fuel" means the fuel which is used 90 percent or more of the operating time. Thi s subdivision shall not apply during any natural gas supply emergency as defined in Title III of the Natural Gas Policy Act of 1978.

(i) Breakdown Provisions (1) Reporting Requirements (A) The Facility Permit holder shall report any b reakdown which

results in: (i) a violation of any rule or permit condition not specified in subparagraph (i)(2)(B); or (ii) a request of excess emissions not be counte d in determining compliance with the RECLAIM facility’s
annual allocations. Such breakdown shall be reported by telephone, o r other Districtapproved method to the Executive Officer within one hour of such
breakdown or within one hour of the time the Facili ty Permit holder knew or reasonably should have known of its occurrence. Such report shall identify the time, specific locat ion, equipment involved, responsible party to contact for further information, and to the extent known, the causes of the breakdown an d the estimated time for repairs. In the case of emergen cies that prevent a person from reporting all required information wi thin the onehour limit, the Executive Officer may extend the ti me for the reporting of required information provided such per son hasRule 2004 (Cont.) (Amended April 6, 2007)

2004 - 7 notified the Executive Officer of the breakdown within the onehour limit. (B) Within seven (7) calendar days after the breakdown has been

corrected, but no later than thirty (30) calendar d ays from the initial date of the breakdown, unless an extension has been approved in writing by the Executive Officer, the F acility Permit holder shall submit a Breakdown Emissions Report to the
Executive Officer which contains all of the followi ng: (i) an identification of the equipment involved in causing or suspected in having caused or having been affected by the breakdown; (ii) the duration of the breakdown; (iii) the date of correction and information dem onstrating that compliance is achieved; (iv) an identification of the types of emissions , if any, resulting from the breakdown; (v) a quantification of the emissions in excess of those occurring under normal operating conditions (“exces s emissions”), if any, resulting from the breakdown u sing a District-approved method consistent with the requirements of Rules 2011 and 2012 and Appendix A for each rule; (vi) information substantiating that the breakdo wn did not result from operator error, neglect or improper ope ration or maintenance procedures; (vii) information substantiating that steps were immediately taken to correct the condition causing the breakdow n and to minimize the emissions, if any, resulting from the breakdown; (viii) a description of the corrective measures undertaken and/or
to be undertaken to avoid such a breakdown in the f uture;
and (ix) pictures of the equipment which failed, if available.Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 8 (2) Compliance During Breakdown (A) Any rule or permit condition not specified in subparagraph

(i)(2)(B) shall be inapplicable to a violation dire ctly caused by a breakdown, provided that all of the following crite ria are met: (i) the Facility Permit holder meets the reporti ng requirements specified in paragraph (i)(1); (ii) the breakdown did not result from operator error, neglect, or improper operation or maintenance procedures; (iii) steps are immediately taken to correct con ditions leading to the breakdown, and emissions caused by the break down are mitigated to the maximum extent feasible; and (iv) the equipment in violation is shut down by the end of an operating cycle, or within twenty-four hours from the time the Facility Permit holder knew or reasonably shoul d have known of the breakdown, whichever is sooner. For the purpose of this rule, an operating cycle means a period of

time within which a round of regularly recurring ev ents is completed, and cannot be stopped without the risk o f endangering public safety or health, causing material damage to the equipment or product, or cannot be stopped due to technical c onstraints.
Economic reasons alone will not be sufficient to ex tend this time period. The operating cycle includes batch process es that may start and finish several times within a twenty-four hour period, in which
case each start to finish interval is considered a complete cycle. (B) Subparagraph (i)(2)(A) shall not apply to the following District

Regulations, Rules and permit conditions: (i) Regulations I, IX, X, XIV, XVII, XXX, and XX XI; (ii) Rules 402, 2004 (b), (d), (e), (j), and (l) , 2011, and 2012; (iii) any permit condition which implements any Rule or Regulation specified in clause (i) or (ii). (C) If a violation of any rule or permit conditio n not specified in

subparagraph (i)(2)(B) is likely or suspected as a result of a reported breakdown, the Executive Officer will promptly investigate and determine whether the occurrence co nstitutes a
breakdown in accordance with the criteria set forth inRule 2004 (Cont.) (Amended April 6, 2007)

2004 - 9 subparagraph (i)(2)(A). If the Executive Officer d etermines that the occurrence did not constitute a breakdown, no r elief shall be granted under subparagraph (i)(2)(A). (D) Equipment may be operated beyond the time lim it in clause

(i)(2)(A)(iv), provided that a petition for an emer gency variance has been filed with the Clerk of the Hearing Board in accordance with Regulation V. In the event that the breakdown occurs or the time limit in clause (i)(2)(A)(iv) ends outside of the normal District working hours, the intent to file for an e mergency variance
shall be transmitted to the District in the manner and form prescribed by the Executive Officer. (3) Excess Emissions and Annual Allocations (A) The Facility Permit holder meeting the report ing requirements

specified in paragraph (i)(1) may request that exce ss emissions not be counted in determining compliance with the RECLA IM facility’s annual Allocation pursuant to the requir ements specified in subparagraphs (i)(3)(B) or (i)(3)(C). (B) Excess emissions occurring within the first 2 4 hours after the

breakdown shall not be counted in determining compl iance with the RECLAIM facility's annual Allocation if the Bre akdown Emissions Report specified in subparagraph (i)(1)(B ) contains the following additional information, and the Executive Officer approves the Breakdown Emissions Report: (i) the names of operators of the identified equ ipment, their immediate supervisors, and the managers responsible for the operation and/or maintenance of the identified equipment; and (ii) the names of any other witnesses to the bre akdown, if any. (C) Excess emissions occurring beyond the first 2 4 hours and up to

thirty (30) calendar days after the breakdown shall not be counted in determining compliance with the RECLAIM facility 's annual Allocation if the Breakdown Emissions Report specif ied in subparagraph (i)(1)(B) contains the additional info rmation specified in subparagraph (i)(3)(B) and the followi ng additional information, and the Executive Officer approves the Breakdown Emissions Report:Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 10 (i) information substantiating that it was beyon d the RECLAIM Facility Permit holder's reasonable control to correct the breakdown condition within 24 hours; an d (ii) information substantiating that the RECLAIM Facility Permit holder was unable to provide on-site offsets for the excess emissions resulting from the breakdown. (D) The Executive Officer will notify the RECLAIM Facility Permit

holder, in writing, within thirty calendar days of submission of a Breakdown Emissions Report, regarding whether the report is approved or disapproved. If approved, the notification shall specify the duration during which the excess emissi ons resulting
from the breakdown shall not be counted in determin ing the RECLAIM facility's annual Allocation, and the type and amount of emissions so exempt. If the Executive Officer does not respond within thirty days, the Facility Permit holder may deem the report denied for appeal purposes.

(j) Tampering A person shall not tamper or interfere with, alter or adjust any monitoring or other equipment used to detect the amount, concentration, rate or other characteristic of emissions emanating from any source in a RECLAIM fa cility in any way which conceals or disguises the type and quantity of any such emissions.

(k) Compliance Dates The failure to comply with any requirement in this regulation within the time specified shall constitute a separate violation for each day until such requirement
is satisfied.

(l) Variances No variance may be granted from the following pro visions of this

regulation: (A) any provisions which require Permits to Construct or which set

forth requirements for Permits to Construct; (B) subdivision (n) of this rule or the missing d ata provisions of

Appendices A to Rules 2011 and 2012; and (C) subdivisions (b) and (d) of Rule 2004, and an y permit conditions

which state annual Allocations.Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 11 (m) Emergencies In the event that responses to national, regional, or local emergencies require increased emissions in excess of Department of Defe nse (DoD) facility Allocations, such emissions shall not be counted fo r purposes of determining compliance with Rule 2004 (d)(1). The DoD facility will notify the Executive Officer, in writing, within one week after the start of increased emissions caused by emergency operations as listed above.

(n) Missing Data Provisions for Recordkeeping and R eporting (1) In the event the Executive Officer determines that the emissions data

developed or reported by the Facility Permit holder are inaccurate or incomplete or not derived in the manner required by this regulation or the Facility Permit, the missing data provisions set fo rth in Rules 2011 and 2012, Appendices A shall be used for the purpose of calculating emissions for recordkeeping, reporting, certification, and co mpliance with
Allocations. (2) In the event a facility does not meet the moni toring requirements,

emissions shall be determined pursuant to the missi ng data provisions of the applicable Rule 2011 or 2012 Appendices A for p urposes of determining compliance with Rule 2004 (d)(1).

(o) Emission Mitigation Fee Program for Power Produ cing Facilities (1) The mitigation fee program specified in Rule 2 020 may be used through

the 2004 compliance year by power producing facilit ies that emit greater than their annual allocations provided the facility or any facility under common ownership has not transferred or sold RTCs t o any other entity (other than facilities under common ownership) or the District since January 11, 2001 for any compliance year during whi ch the mitigation fee program is used. (2) The Executive Officer will: (A) deduct RTCs in accordance with paragraphs (b) (3) and (b)(4) of

Rule 2010; and (B) replace the amount of deducted RTCs on a pror ated basis

according to the amount of RTCs generated, but not to exceed the original amount of RTCs deducted, no later than the compliance year during which RTCs are deducted.Rule 2004 (Cont.) (Amended April 6, 2007)

2004 - 12 (3) Notwithstanding the provisions of paragraphs ( b)(3) and (b)(4) of Rule

2010, if the RTCs required to reconcile emissions p ursuant to Rule 2004 (b)(1) is: (A) less than the amount requested from the Mitig ation Fee Program,

then the difference between RTCs deducted from the future year allocation and RTCs required to reconcile emissions shall be refunded to the facility; or (B) greater than the amount requested from the Mi tigation Fee

Program, then the facility shall be subject to the provisions of subdivision (d) of this rule, and paragraph (b)(1) and subdivisions (c) and (d) of Rule 2010, for the emissions in exce ss of the amount requested from the Mitigation Fee Program.

(p) RECLAIM Air Quality Investment Program (AQIP) Emission reductions from the RECLAIM AQIP may be u sed through the 2004 compliance year by RECLAIM facilities that meet the definition of Structural Buyer, as defined in Rule 2000 (c)(74).

(q) Modeling Requirements (1) If actual NOx or SOx emissions for any complia nce year from a

RECLAIM facility exceed its initial allocation prov ided by the District for that facility by forty (40) tons per year or more, the Facility Permit holder shall conduct modeling to analyze the potential imp act of the increased
emissions. (2) The modeling analysis shall be submitted withi n 90 days of the end of the

compliance year. (3) Analysis shall be conducted for all equipment identified as a major source,

as defined by Rule 2011 and Rule 2012 for the RECLA IM pollutants subject to the requirement in paragraph (q)(1), pur suant to the methodology in Rule 2005, Appendix A, consistent wi th applicable portions of 40 CFR Part 51, Appendix W, or other me thod approved by AQMD, CARB, and EPA.