PROPOSED ADOPTION OF 

RULE 516, RICE STRAW EMISSION REDUCTION CREDITS 

STAFF REPORT 

Executive Summary 

On February 19, 2009, the Placer County Air Pollution Control (District) Board of 

Directors will consider the proposed adoption of Rule 516, RICE STRAW EMISSION 

REDUCTION CREDITS. This rule establishes procedures which ensure federal 

recognition of the banking of Emission Reduction Credits (ERCs) resulting from the 

permanent reduction of open field burning of rice straw. 

The main requirements for Rule 516 will be: 

1. An application will be required to bank ERCs under this program. There will be 

two (2) types of applications; new applications and re-certification applications. 

Those parties who previously banked rice straw ERCs may surrender their 

existing ERCs and apply to “re-certify” their credits. Any other parties who can 

substantiate that they grew rice and burned the straw during the 1988 -1992 

baseline may submit a “new” banking application to obtain credits. 

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

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

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

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

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

the rice growing acreage. 

This rule is expected to affect landowners whose parcels grew rice during the baseline 

period of 1988 to 1992. In our District, there was only one party who previously banked 

ERCs from this category. This party banked ERCs on eight (8) parcels totaling 1,334 

acres. 

It is expected that this party will re-bank his ERCs in accordance with this new rule. In 

addition, the program will be available to other landowners who either did not know 

about the program previously or who chose not to participate in the program. During the 

baseline years, rice plantings were on the order of 10,000 acres per year, so there is 

opportunity for significant new applications under this proposed rule. 

Background 

Rice straw burning in the Sacramento Valley was “phased down” pursuant to state law 

adopted in 1991 (California Health & Safety Code 41865). Some Districts in the 
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Sacramento Federal Non-attainment Area (SFNA) have previously used their existing 

banking rules to issue ERCs to growers. The United States Environmental Protection 

Agency (EPA) did not recognize the credits issued as being valid offsets for “federal 

purposes” (i.e. major modification projects or new major stationary sources). 

The SFNA Districts have worked in conjunction with the Sacramento Valley Basin 

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

comments raised by the California Air Resources Board (ARB) and the US EPA. This 

working group created a white paper and model rule, upon which this local rule is based. 

Discussion of Proposed Rule 516 Requirements 

Listed below are descriptions of the proposed requirements for Rule 516. 

Section 100: General

As discussed above, our District has previously issued ERCs (in accordance with Rule 506, 

Biomass Emission Reduction Credits and Banking, however EPA did not recognize these 

credits. Therefore, the purpose of this rule is to provide a federally recognized procedure for 

quantifying and certifying rice straw burning emission reductions. This will be the only 

process available for growers to receive federally recognized credits from cessation (phasedown) of rice straw burning. 

Section 200: Definitions

Proposed Rule 516 provides definitions to clarify terms used in the rule, and to improve 

overall enforceability and compliance. Many of the definitions come from other District 

rules or the State and Federal law. The definition of Historic Burn Fraction is of particular 

interest. 

Section 211—Historic Burn Fraction (HBF): The amount of rice (as a percentage of the 

amount planted) which was burned during the baseline period, equal to 100%. As discussed 

in the White Paper, the average acres planted in rice in Placer County for the years between 

1982 and 1991 were 10,190 acres. The single year during the baseline for which the acres 

planted was closest to this 10-year average acres was 1989. In 1989, there were 10,303 

acres burned. Therefore, for PCAPCD, 1989 was the “representative” year for rice burning 

activity. This results in 100% historic burn fraction. 

Section 300: Standards

Section 301—Determination if a parcel is eligible: This section defines which parcels 

qualify to generate ERCs. The parcel has to be in the District and the applicant must 

demonstrate (see section 402.2 & 402.3) that rice straw burning occurred on the parcel 

during the baseline. For example, if a grower has a one thousand (1,000) acre parcel for 
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which credits are being sought, these sections will verify that the 1,000 acres are in the 

District and that rice straw burning occurred on the parcel between 1988 and 1992. 

Section 302—Determination of available acreage: This section establishes the amount of 

acreage that is eligible for banking. This is done by adding up all of the acres which were 

used to grow rice during the baseline and multiplying times the HBF. In the above example, 

for that 1,000 acre parcel, the available acreage for banking is 1,000 acres (1,000 x 1.00). 

The District knows the average acres burned during the baseline, and for four of the five 

years of the baseline, the daily burning by grower. As established in the White Paper (and 

approved by ARB and EPA), the “representative” year for Placer is 1989, during which time 

there were 10,303 acres burned. If the District receives applications with total available 

acreage more than 10,303 acres, the District will adjust the acres available for individual 

applications based on section 404. 

Section 303—Determination of annual emission reductions available: As established 

between the Districts in the SFNA, the ARB, and EPA, 75% of the emissions will be 

bankable under this program. This section establishes the formula as available acreage 

times 0.75 times the emission factors. These emission factor values come from an ARB 

memo released in 2000 (predominately from Brian Jenkins’ “Atmospheric Pollutant 

Emission Factors from Open Burning of Agricultural and Forest Biomass by Wind Tunnel 

Simulations”, 1996, UC Davis). 

Section 304—Determination of quarterly emission reductions available: This section 

establishes the quarterly breakdown of the annual emissions. These values came from the 

Manual of Procedures (MOP). 

Section 305—Priority reserve adjustment: The District will transfer 5% of the calculated 

quantity of emission reductions to the District’s priority reserve bank, 

Section 306—Deed restriction: This section requires that prior to issuing ERCs, a deed 

restriction be placed on the parcel. The deed restriction must limit the agricultural burning 

on the parcel to be consistent with the ERCs. This section (along with 307 and 308) was 

added at the request of the EPA to establish federal enforceability of the program. 

Section 307—Restricted burn list: This section requires that the District place the parcel on 

our “restricted burn list”, which is a feature of our agricultural burn program. 

Section 308—Burning prohibition: This section requires that any parcel that obtained ERCs 

pursuant to Rule 516 can not burn more than 25% of the rice growing acreage. 

Section 400: Administrative Requirements

This section establishes all of the administrative requirements associated with this program. 
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Fiscal Impact

This rule is proposed as a service to Placer County growers who have reduced rice straw 

burning and may wish to acquire ERCs. This is voluntary on the part of growers and has 

no requirement that they participate. There will be staff time involved with processing 

the ERC applications. Applications will require the usual application fee, currently 

$226.50. The costs of processing the applications will be tracked and the applicants will 

be billed for actual costs when the ERCs are issued. The cost is expected to be less than 

$1,000 per applicant. 

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 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”. As the proposed rule is not a 

control measure, no analysis is needed. 

However, proposed Rule 516 will have a direct cost impact on applicants for emission 

reduction credits for an application fee and an emission reduction analysis fee as specified in 

current Rule 601, Fees. The successful applicants for ERCs will gain a financial asset in the 

value of the ERCs. For example, recent sales of NOx ERCs have been in the range of 

$25,000 per ton. 

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. Proposed 

Rule 516 will not significantly affect air quality or emission limitations in Placer County. 

The evaluation set forth in H&S Section 40728 is not needed. 

California Environmental Quality Act (CEQA)

Proposed Rule 516, if utilized, 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 CEQA guidelines. A CEQA analysis is therefore not necessary. 

Findings
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A. Necessity – The adoption of proposed new Rule 516 is necessary in order to 

obtain federal recognition of the ERCs which are spelled out in state law 

(section 41865 of the CH&SC). 

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 proposed 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, and 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.