UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX AIR DIVISION

Technical Support Document

for EPA‟s Rulemaking for the California State Implementation Plan

R egarding

Yolo

- Solano Air Quality Management Distric t

Rule 3.21 , “ Rice Straw Emission Reduction Credit s”

Prepared by: Lily Wong

March 25 , 2010- 2

-

RULE IDENTIFICATION

Agency: Yolo

- Solano Air Quality Management District ( YSAQMD )

Current SIP Approved Rule: None

Submittal Subject to this TSD: Rule 3.21 “Rice Straw Emission Reduction Credits” Adopted : December 10, 2008 Submitted: March 17, 2009

BACKGROUND:

Under Section 107(d) of the Clean Air Act (CAA)

, EPA designated Yolo County and a portion of Solano County as nonattainment for the 1

- hour ozone National Ambient Air Quality Standards (NAAQS) and for the 1997 8

- hour ozone NAAQS. This combined Yolo

- Solano area is regulated by the Yolo

- Solano Air Quality Management District (YSAQMD) and the area i s part of the federal Sacramento Metropolitan ozone nonattainment area. 1 Part s of both Yolo and Solan o counties are also designated nonattainment for the PM 2.5 NAAQS 2

.

New or modified stationary sources subject to YSAQMD‟s New Source Review (NSR) program must obtain emission reductions to offset emission increases prior to constructing such sources. 3 While NSR offsets are typically emission reductions generated from permitted stationary source s (e.g., from shutdowns or over control), the opportunities for generating such reductions from traditional sources has been diminished due to implementation of stringent emission performance standards required by YSAQMD prohibitory rules. The purpose of R ule 3.21 is to provide procedu re s to quantify

, c ertify and issue emission reduction credits (ERCs) for emission reductions that have resulted f

rom the permanent curtailment of rice straw burning in YSAQMD to ensure such reductions meet federal offset requirements

. 4 Existing YSAQMD Rule 3.5

–

“ Emission Reduction Credits ” govern s the banking and transfer of ERCs , and Rule 3.4

–

“ New Source Review ” governs the use of ERCs . T hese two rules are not the subject of this rulemaking action

.

1 YSAQMD also refers to this area as the Sacramento Federal Nonattainmnet Area (SFNA).
2 YSAQMD is not part of the federal Sacramento County PM 10 nonattainment area

. 3 YSAQMD‟s NSR program

, Rule 3.4 “New Source Review

, ” includes requirements that are based on more stringent state law. Because Rule 3.4 has been approved into the SIP, the more s tringent state requirements (e.g., requiring offsets that would not normally be required for federal NSR purposes) are also federally enforceable.
4 E RCs used to offset emission increases of nonattainment area pollutant s generally must be generated from the same nonattainment area. Rule 3.21, if approved, would provide for the generation of federally recognized ERCs to address more stringent state offs et requirements even though YSAQMD is in federal attainment for PM 10 and CO. See Attachment 4.- 3

-

Historically, the practice of rice growing included burn ing the field stubble or straw following harvest to kill weeds and insects and prepare the field for next year‟s plantings

. In 1991, California passed the Connelly

- Areias

- Chandler Rice Straw Burning Reduction Act of 1991 (California Health & Safety Code (CH&SC) 41865 )

, which required a phase down of the allowable rice straw burning acreage in the Sacramento Valley Air Basin

. 5 By 2001, the phase down was complete and only 125,000 acres or 25% of the historically burned rice growing acreage can now be burned in any one year

. One unique feature of the state law was that it s pecifically allowed ERCs to be generated from this curtailment

, and stated that the emission reductions c ould not be relied upon for demonstrating reasonable further progress or attainment of a NAAQS

. While YSAQMD has previously issued rice straw ERCs under YSAQMD R ule 3.5

, 6 R ule 3.21 was designed to ensure that the ERCs issued from this non

- traditional source w ould be recognized for the purpose of providing federal NSR offsets. 7

RULE SUMMARY : Rule 3.21 establishes standards, the administrative process and enforceable procedures for calculating creditable emission reductions of volatile organic compounds ( VOC )

, nitrogen oxides ( NOx )

, carbon monoxide ( CO )

, particulate matter of 10 microns or less ( PM 10 )

, and sulfur oxides ( SOx ) created through the permanent curtailment of burning rice straw. Once an ERC certificate has been issued by the Air Pollution Control Officer (APCO), ERCs may be banked, traded, and used as offs ets to meet federal NSR requirements

.

O wners of parcels are eligible to apply for ERCs if rice straw was burned during the baseline period , i.e., 1988 through 1992 ( Section s 102 and 301). By June 9, 2009 ( Section 401 ) , t he owner must submit an application that meet s all rule requirements

, includ ing d ocumentation of historic rice growing acreage and burning practices , and a statement of intent to file a deed restriction which prohibits agricultural burning that is not consistent wi th the ERC certificate ( Section 402). T hese requirements are designed to limit agricultural burning to no more than 25% of the total acreage historically used to
grow rice.

The rule sets an application deadline to ensure the APCO can consider all historic rice growing acreage and ensure compliance with the acreage limits provided under state law.

5 The “Sacramento Valley Air Basin,” as defined by the state, is larger than and completely encompasses the Sacramento federal nonattainment areas for ozone, PM 10 , and PM 2.5 . 6 Although a 1993 version of Rule 3.5 “Emission Reduction Credits” (formerly Rule 3.14) was approved into the SIP, there is a more recent version of this rule being implemented at the local level. See Attachment 4. However, Rule 3.5 do es not include the necessary provisions to ensure that emission reduction credits from nontraditional sources such as curtailing rice straw burning are surplus, quantifiable, enforceable, and permanent and therefore valid for federal NSR offset purposes. Because nontraditional sources have generally not been regulated, there is much less historic data. Nontraditional ERC generating rules must include more sp ecific quantification procedures to provide the necessary assurances that the reductions are valid and can be recognized as federal NSR offsets.
7 ERCs generated pursuant to Rule 3.21 may also be used to address California offset requirements which are not in the SIP.- 4

-

Section 302 provides that the total available acreage for generating ERCs in YSAQMD shall not exceed 28,279 acres. If the APCO receive s applications where the total acreage exceeds this amount, the APCO must adjust the available acreage for each applicant in accordance with the procedures in Section 404. This section ensures that the emission reductions come from a „real‟ reduction in r ice straw burning activities.

The emission reduction s for each applicant are calculat ed in accordance with procedures i n Section s 303 and 304, and rely on the following parameters: Available A creage (acres) = [applicant‟s eligible parcels (acres)] x 75% x [historic burn fraction 8 (%) ]

Emission F actor s (lbs/acre) listed in Section 303

, take into account: [fuel loading 9 (tons of rice straw burned /acre)] x [Jenkins‟ emission factors 10 for rice straw burning (lbs pollutant /ton s of rice straw burned )]

Annual E mission R eduction ( lbs ) = Available Acreage (acres) x Emission Factor (lbs/acre)

Consistent with state requirements, Rule 3.21 also apportions the annual emission reductions into quarter s bas ed on the historic rice growing and burn practices with in the district.

R ule 3.21 includes several section s regarding burn restrictions

. Section 305 requires a deed restriction be placed on the parcel and prohibits burning t hat is not consistent with the ERC certificate

. The issuance of an ERC is subject to Section 307 which limits agricultural burning to 25% of the rice growing acreage. Deed restrictions are filed with the county assessor‟s office and stay with the property in perpetuity. Section 306 requires YSAQMD to place the parcel on a “restricted burn list” which is reviewed by air district staff before agricultural burn permits are issued. Lastly, Section 307 explicitly
states that it is a v iolati on of R ule 3.21 if agricultural burning is conducted on more than 25% of the rice growing acreage for a parcel that has received an ERC certificate

.

An owner that rece i ved state rice straw ERCs pursuant to R ule 3.5 may re

- apply under Rule 3.21 to have its previous ERCs re

- certified as federal E RCs under this rule.

Applicants are also required to maintain , for a minimum of five years, records on amount of acres planted and burned as well as the type of crop grown. The District is required to conduct a program evaluation and provide a report to EPA.

8 The historic burn fraction (HBF) varies from district to district. The HBF in YS AQMD is 96%.
9 Fuel loading from rice is 3.0 tons/acre.
10 The emission factors (sometimes referred to as Jenkins II emission factors) come from a California A ir R esources B oard (CARB) memo, which was originally released 8/17/2000 and updated 9/12/2000. The factors in the memo are cited as being predominately from Bryan Jenkins‟ report entitled, “Atmospheric Pollutant Emission Factors from Open Burning of Agricultural and Forest Biomas s by Wind Tunnel Simulations

, ” 1996, UC Davis.- 5

-

EPA REVIEW CRITERIA: EPA generally considers three criteria in evaluating state and local prohibitory rules for approval into the SIP . For this rulemaking, we are considering two additional criteria.

1. Enforceability

- Section 110(a) of the C AA requires enforceable SIP requirements. Several EPA guidance documents are used to evaluate rule enforceability, including the “Bluebook” ( Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Clarification to Appendix D , November 24, 1978, 52 FR 45044) and EPA Region IX ‟ s Guidance Document for Correcting Common VOC and Other Rule Deficiencies (August 21, 2001, the “ Little Bluebook ” )

.

2. Rule Relaxation

- Where previous versions of rules or plans are SIP approved, EPA must evaluate whether new submittals comply with sections 110(l) and 193 of the CAA regarding SIP relaxations.

3. Stringency

- Section 182(b)(2) of the CAA requires certain S IP rules to apply Reasonably Available Control Technology (RACT). Other sections of the Act require other control levels.

4. New Source Review

– Section 173(c) of the CAA and 40 CFR Part 51, Appendix S, “Emission Offset Interpretative Ruling” require certa in sources to obtain emission reductions to offset increased emissions from new projects

.

5. Economic Incentive Programs

- EPA published the guidance, “Improving Air Quality with Economic Incentive Programs” on January 2001 (EPA

- 452/R

- 01

- 001). This guidan ce applies to discretionary economic incentive programs (EIPs) and represents the agency‟s interpretation of what EIPs should contain in order to meet the requirements of the CAA . Because this guidance is non

- binding and does not represent final agency ac tion, EPA is using the guidance as an initial screen to determine whether potential approvability issues arise.

EPA EVALUATION: Rule 3.21 complies with the evaluation criteria as discussed briefly below.

1. Enforceability

- The applicability and requirements of Rule 3.21 are generally clear and consistent with the Bluebook and other relevant EPA guidance regarding enforceability.

2. Relaxation

– Rule 3.21 does not replace any existing rule currently in the SI P. Therefore, approval of this rule will not relax the SIP.

3. Stringency

- None of these CAA sections apply to Rule 3.21 , so stringency is not being used to evaluate for SIP approval.- 6

-

4. New Source Review

– Emission reductions to be used as NSR offsets must be surplus, quantifiable, enforceable, and permanent.

In order for emission reductions from the curtailment of rice straw burning to be considered surplus, the emissions from this source category must be clearly and accurately quantified in the baseline emissions inventory and in future

- year projections of the emissions inventory used in the attainment demonstration . In addition, the emission reductions created under Rule 3.21 must not be relied upon in any attainmen t or progress plan s

. The air districts in the Sacramento Metropolitan area updated the ir 2002 emissions inventory to include agricultural burning, including rice straw burning . Furthermore, the photochemical modeling to determine the carrying capacity fo r the 8

- hour ozone attainment demonstration did not rely on the emission reductions from Rule 3.21 or other district‟s rice straw ERC rules . The modeling also assumed that the total quantity of rice straw emission reductions that can be issued under th e rice straw ERC rules for all Districts in the basin exist in the air

. Although CH&SC 41865 requires the curtailment of rice straw burning, these emission reductions are not being relied upon to demonstrate attainment, RFP or any other purpose and can th erefore be considered surplus

.

Rule 3.21 meets the quantification criteria because it includes a methodology to quantify emission s and emission reductions in Section s 302, 303, and 304. The emission factors and fuel loading factor come from a CARB memo that relies primarily on a 1996 paper by Bryan Jenkins of U.C. Davis. The determination of acreage which historically grew rice and burned rice straw is based on documentation such as the grower‟s rice sales record, U

. S

. D epartment of A griculture data on rice planting, air district burn permits , log books, and pictures

.

The emission reductions are permanent and enforceable because the owner of the parcel

, who has been issued an ERC under Rule 3.21

, is subject to the requirements of the rule , in cluding the requirement to burn no more than 25% of the rice growing acreage

. An owner who violates the rule is subject to enforcement and penalties. Should the property change ownership, a deed restriction filed with the assessor‟s office would alert su bsequent owners that they cannot burn more the 25% of the rice growing acreage in any given year.

Rule 3.21 includes references to other YSAQMD rules. We evaluated the referenced rules to determine the purpose of the reference, whether the rules were SIP approved, and whether the rules affected the criteria, standards, and procedures for generating valid ERCs under Rule 3.21. We determined that these references did not pose any problem as these references primarily provided additional definitions or referred to the administrative procedures for transferring ownership of ERCs generated under this rule. See Attachment 3 for a more detailed description of this evaluati on.- 7

-

5. Economic Incentive Program

- Several fundamental principles described in the guidance are integrity (credits are based upon emission reductions which are surplus, enforceable, quantifiable, and permanent), equity, and environmental benefit. The integrity principle is the same as those described under NSR evaluation and described a bove

. This rule generates emissions offsets for the NSR program and does not raise any equity issues that are different from the NSR program in general. The envi ronmental benefit has been addressed in the offset ratio defined by the NSR program.

EPA ACTION: EPA staff recommend s full approval of the submitted version of Rule 3.21 because it complies with all relevant CAA requirements and is consistent with E PA‟s guidance for NSR and economic incentive programs

.

ATTACHMENTS: 1. YSAQMD Rule 3.21, “ Rice Straw Emission Reduction Credits

, ” a dopted on December 10, 2008 and submitted by CARB to EPA on March 17, 2009

.

2. “Improving Air Quality with Economic Incentive Programs,” January 2001, EPA

452/R

- 01

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

3. Memo dated March 8, 2010 from Laura Yannayon, EPA Permits Office, “Rules referenced in Rule 3.21.”

4. Memo dated March 10

, 2010 from Lily Wong, EPA Rules Office, “ YSAQMD Attainment Status and ERCs. ”Yolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 1 RULE 3.21 RICE STRAW EMISSION REDUCTION CREDITS ADOPTED December 10, 2008

INDEX

100 GENERAL 101 PURPOSE 102 APPLICABILITY

200 DEFINITIONS 201 AGRICULTURAL BURNING 202 AGRICULTURAL BURN PERMIT 203 AGRICULTURAL OPERATION 204 AIR POLLUTION CONTROL OFFICER (APCO) 205 APPLICANT 206 APPLICANT DESIGNEE 207 BANKING 208 BASELINE PERIOD 209 CERTIFIED 210 EMISSION REDUCTION CREDITS (ERCs) 211 HISTORIC BURN FRACTION (HBF) 212 NEW APPLICATION 213 PARCEL 214 RE-CERTIFICATION APPLICATION 215 REGISTER 216 RESTRICTED BURN LIST 217 RICE STRAW BURNING 218 RICE STRAW BURNING EMISSION REDUCTIONS 219 RICE GROWING ACREAGE 220 SURPLUS

300 STANDARDS 301 DETERMINATION IF A PARCEL IS ELIGIBLE 302 DETERMINATION OF AVAILABLE ACREAGE 303 DETERMINATION OF ANNUAL EM ISSION REDUCTIONS AVAILABLE 304 DETERMINATION OF QUARTERLY EMISSION REDUCTIONS AVAILABLE 305 PRIORITY RESERVE ADJUSTMENT 306 DEED RESTRICTION 307 RESTRICTED BURN LIST 308 BURNING PROHIBITIONYolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 2 400 ADMINISTRATIVE REQUIREMENTS 401 APPLICATION FILING DEADLINE 402 APPLICATION REQUIREMENTS - NEW APPLICATIONS 403 APPLICATION REQUIREMENTS - RE-CERTIFICATION APPLICATIONS 404 AVAILABLE ACREAGE ADJUSTMENT 405 APPLICATION PROCESSING PROCEDURES 406 VIOLATIONS

500 MONITORING AND RECORDS 501 BURN RECORDS

600 PROGRAM EVALUATIONYolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 3 100 GENERAL

101 PURPOSE: The purpose of this Rule is to pr ovide a federally recognized procedure for quantifying and certifying rice straw bur ning emission reductions, and issuing the resulting Emission Reduction Credit (ERC) certificates.

This rule provides the only process by wh ich ERC certificates issued for reductions in rice straw burning may be stored for late r use to meet federal new source review offset requirements. Once issued in accordan ce with this rule, the procedures in Rule 3.5 EMISSION REDUCTION CREDITS shall be used as the administrative mechanism for sources to transfer ERCs to other sources for use as offsets.

102 APPLICABILITY: The provisions of this Rule shall apply to any agricultural operation that grew rice and burned rice straw in the District during the baseline period.

200 DEFINITIONS: Unless otherwise defined below, the te rms used in this Rule are the same as defined in District Rule 3.5, EM ISSION REDUCTION CREDITS, Rule 3.4, NEW SOURCE REVIEW, or Rule 1.1, GENERAL PR OVISIONS, in that order of priority.

201 AGRICULTURAL BURNING: Open outdoor fires used in the growing of crops. For the purpose of this Rule, agricultural bur ning is considered to be a source and such activity requires an agricultural burn permit.

202 AGRICULTURAL BURN PERMIT: A permit issued by the District, which is required in order to conduct an agricultural burn.

203 AGRICULTURAL OPERATION: Equipment used exclusively in the growing of agricultural crops or in the commercial raising of fowl or animals.

204 AIR POLLUTION CONTROL OFFICER (APCO): The Air Pollution Control Officer of the Yolo-Solano Air Quality Manage ment District (District), or his or her designee.

205 APPLICANT: For a new application, the owner (o r his/her designee) of the parcel. For a re-certification application, the current owner (or his/her designee) of an existing rice straw burning ERC.

206 APPLICANT DESIGNEE: The person, company, or entity submitting an application on behalf of the applicant. Such designee shall provide written authorization signed by the applicant to serve as the designee.

207 BANKING: The system of quantifying, certifyi ng, recording, and storing ERCs for future use and transfer. This system shall be called the ERC Bank.Yolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 4 208 BASELINE PERIOD: Calendar years 1988 through 1992.

209 CERTIFIED: ERCs which have been evaluated under the requirements of this Rule and other applicable District, State, and Federal Rules and Regulations and which have been granted by the APCO.

210 EMISSION REDUCTION CREDITS (ERCs): Reductions of actual emissions that are registered with the District in acco rdance with the requirements of Rule 3.5, EMISSION REDUCTION CREDITS.

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 96%.

212 NEW APPLICATION: An application submitted in acco rdance with this rule for which the District has not already issued an ERC for reductions in rice straw burning for a parcel(s) prior to adoption of this Rule.

213 PARCEL: A legally identifiable piece of land as registered with a County Assessor’s office for property tax purposes and assigned an Assessors Parcel Number (APN).

214 RE-CERTIFICATION APPLICATION: An application submitted in accordance with this rule for which the District has previously issued an ERC for reductions in rice straw burning for a parcel(s) prior to adoption of this Rule.

215 REGISTER: The document that records all E RC deposits, withdrawals, transfers, and transactions.

216 RESTRICTED BURN LIST: A list (maintained by the Di strict) of parcels which have restrictions related to future agricultural burning.

217 RICE STRAW BURNING: The intentional open burning of rice straw material. For the purpose of this Rule, rice straw burni ng is considered to be a source and such activity requires an agricultural burn permit.

218 RICE STRAW BURNING EM ISSION REDUCTIONS: Emission reductions that qualify for banking pursuant to Section 41865 of the California Health and Safety Code.

219 RICE GROWING ACREAGE: The amount of acreage contained in a parcel that was used for the production of rice during the baseline period.

220 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 requirementYolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 5 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 considered surplus for purposes of this Rule if those reductions meet all other requirements of this Section. Examples of federal, state, and local laws, and of SI P-related requirements, include, but are not limited to, the following:

220.1 The federally-approved California SIP;

220.2 Other adopted State air quality laws a nd 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 State regarding an intent to adopt such revision;

220.3 Any other source- or source-cate gory specific regulatory or permitting requirement, including, but not limited to, Reasonable Available Control Technology (RACT), New Source Perfor mance Standards (NSPS), National Emission Standards for Hazardous Air Po llutants (NESHAP), Best Available Control Measures (BACM), Best Av ailable Control Technology (BACT), and the Lowest Achievable Emission Rate (LAER); and

220.4 Any regulation or supporting documentation that is required by the federal Clean Air Act but is not contained or referenced in 40 Code of Federal Regulations (CFR) Part 52, including but not limited to: assumptions used in attainment and maintenance demonstr ations (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.

300 STANDARDS

301 DETERMINATION IF A PARCEL IS ELIGIBLE: A particular parcel qualifies to generate ERCs under this rule if the following requirements are met:

301.1 The parcel is located in the Sacramento Federal Non-attainment Area (SFNA); and

301.2 Rice straw burning occurred on the parcel during the baseline period.

302 DETERMINATION OF AVAILABLE ACREAGE: The available acreage for generating ERCs shall be determined by a dding all of the rice gr owing acreage of anYolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 6 applicant’s eligible parcels and multiplying by the HBF. In no case shall the total available acreage for the entire District exceed 28,279 acres. In the event that the District receives applications for which the total available acreage exceeds 28,279 acres, the District shall lower the amount of available acreage for each application in accordance with section 404.

303 DETERMINATION OF ANNUAL EMISSION REDUCTIONS AVAILABLE: The amount of annual emission reductions available shall be determined by multiplying the available acreage times 75% times the applicable emission factor in the following table:

Pollutant Emission Factor (lbs/acre)
Volatile Organic Compounds (VOC) 14.1
Nitrogen Oxides (NOx) 15.6
Carbon Monoxide (CO) 172.2

Particulate Matter less than 10 microns (PM10) 18.9

Sulfur Oxides (SOx) 3.3

304 DETERMINATION OF QUARTER LY EMISSION REDUCTIONS AVAILABLE: The emission reductions shall be quantified on a calendar quarter basis. The following percentages shall be used to determine the amount of emission reductions in each calendar quarter:

Calendar Quarter Percentage
First Quarter 28%
Second Quarter 26%

Third Quarter 8%
Fourth Quarter 38%

305 PRIORITY RESERVE ADJUSTMENT: Before the APCO may issue an ERC, the calculated emission reductions shall be adjusted 1.05 emission reductions to 1.0 ERC. Emission reductions captured by this adjustment shall pass to the District’s Priority Reserve Bank.

306 DEED RESTRICTION: Prior to the issuance of an ERC, a deed restriction shall be placed on the parcel or group of co ntiguous parcels for which ERCs will beYolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 7 granted and a copy provided to the District. The deed restriction shall prohibit agricultural burning on the parcel which is not consistent with the ERC.

307 RESTRICTED BURN LIST: Prior to the issuance of an ERC, the District shall place the parcel or group of contiguous par cels on the restricted burn list. In each calendar year, no agricultural burn permit may be issued for greater than 25% of the rice growing acreage of any parcel listed on the restricted burn list.

308 BURNING PROHIBITION : No person shall conduct agricultural burning on more than 25% of the rice growing acreage of a parcel which has received an ERC certificate pursuant to the provisions of th is rule. In addition, applicants must comply with California Health & Safety Code (CH&SC) 41865.

400 ADMINISTRATIVE REQUIREMENTS

401 APPLICATION FILING DEADLINE: All applications to obtain rice straw ERC certificates in accordance with this rule shall be submitted by June 10, 2009. Applications submitted after June 10, 2009 shall not be eligible for ERCs under this rule.

402 APPLICATION REQUIREMENTS - NEW APPLICATIONS: The applicant shall submit one application for each parcel or for each set of contiguous parcels. The application shall contain the following information:

402.1 List of each parcel included in the application, including APN and any owner’s designation or identifier.

402.2 The acreage of each parcel that was used to grow rice during the baseline period, and documentation of such acreage.

402.3 Documentation that rice straw burning occurred on the acreage of each parcel (identified above) during the baseline period. Examples of acceptable documentation include, but are not limited to, copies of a District burn permit, log books, pictures, or other Dist rict approved verifiable records. In the event that a burn permit or other r ecords are not available, the District may accept a signed affidavit (under penalty of perjury) from the applicant certifying that rice straw on the parcel was burned during the baseline period.

402.4 A statement of intent to file a d eed restriction required by Section 305 for each parcel or for each set of contiguous parcels for which an application is being submitted (A copy of the deed re striction must be provided prior to final issuance of the rice straw ERC certificate).

402.5 Filing fees for the evaluation and issuance of ERCs in accordance with District Rule 4.1, PERMIT FEES - STATIONARY SOURCE.Yolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 8 403 APPLICATION REQUIREMENTS - RE-CERTIFICATION APPLICATIONS: The applicant shall submit one application for each existing ERC certificate. In addition to the information in 402, prior to re-issuance of the ERC, the applicant must surrender all previous certif icates issued for rice straw burning on the parcel or group of contiguous parcels.

404 AVAILABLE ACREAGE ADJUSTMENT : In the event that the District receives applications in which the requested available acreage totals to more than 28,279 acres, the District shall lower the percentage available as follows:

404.1 The re-certification applications meeting the criteria of this rule shall get full credit on their acreage.

404.2 The applications with verifiable burn records will have second priority. Ifthe total available acreage for all these applications along with the recertification applications does not exceed 28,279 acres, these applications will get full credit. If th e total of all these applications along with the recertification applications exceeds 28,279 acres, these applications shall be adjusted proportionally so that the to tal acreage for which all rice straw burning ERCs are issued does not exceed 28,279 acres.

404.3 For all remaining applications with affidavits for burn documentation, the amount of rice straw acreage determined to be available shall be adjusted proportionally so that the total acreag e for which all rice straw burning ERCs are issued does not exceed 28,279 acres.

405 APPLICATION PROCESSING PROCEDURES:

405.1 COMPLETE APPLICATION: The APCO shall determine whether the application is complete not later than 30 days after receipt of the application for ERC certificates. If the APCO de termines that the application is not complete, the applicant shall be notified in writing of the decision specifying the information required. If the specifi ed information is not submitted within 30 days the application shall be canceled by the APCO.

405.2 ADDITIONAL INFORMATION: Upon receipt of additional information for an incomplete application a new 30 day period to determine completeness shall begin. During the processing of the application, the APCO may request an applicant to clarify, amplify, correct, or otherwise supplement the information submitted in the application.

405.3 PRELIMINARY DECISION: Following acceptance of an application as complete, the APCO shall perform th e evaluations required to determine compliance with all applicable District Rules and Regulations and make aYolo-Solano AQMD Adopted December 10, 2008 Reg. III, Rule 3.21, Page 9 preliminary written decision as to wh ether the emission reduction should be certified as ERCs. The decision should be supported by a succinct written analysis.

405.4 PUBLICATION AND PUBLIC COMMENT: Within 10 calendar days following a preliminary decision, the APCO shall publish, in at least one newspaper of general circulation in the District, a notice stating the preliminary decision of the APCO, noti ng how the pertinent information can be obtained, and inviting written public comment for a 30 day period following the date of publication.

405.5 DEED RESTRICTION: Within 90 calendar days of the public notice being published, the applicant shall submit a fi nal copy of a legal deed restriction.

405.6 PUBLIC INSPECTION: The APCO shall make available for public inspection at the District office the information submitted by the applicant and the APCO’s analysis no later than the date the notice of the preliminary decision is published, pursuant to Section 405.4. Further, all such information shall be transmitted to th e California Air Resources Board and the US Environmental Protection Agency (EPA) regional office, and to any party which requests such information no later than the date of publication.

405.7 FINAL ACTION: Within 180 days after the application filing deadline in Section 401 of this rule, the APCO sha ll take final action on the applications, after considering all written comments.

406 VIOLATIONS: Failure to comply with any provision or restriction of this rule shall be considered a violation of this rule.

500 MONITORING AND RECORDS

501 BURN RECORDS: For any parcel or group of c ontiguous parcels for which a rice straw ERC certificate has been issued, th e initial ERC holder or current land owner shall keep records of the amount of acres, crop type and burning that has occurred during the previous 5 years.

600 PROGRAM EVALUATION: Within two (2) years after adoption of this rule, the District shall evaluate the program and submit an eval uation report to EPA. The report shall include a discussion of the total number of applications approved, total acreage subject to this rule, and total amount of ERCs issued.United States Environmental Protection Agency Office of Air and Radiation €PA-452lR-01-001 January 2001



# OEPA 

# Improving Air Quality with Economic Incentive ProgramsTo : Lily Wong March 8, 2010

From : Laura Yannayon

Re: Rules referenced in Rule3

. 21

The main context in which other rules are cited in Rule 3.21 is to provide additional definitions. (There is also a citation to their fee rule, but it is not required t o be included in the SIP). In addition, Rule 3.5 is cited as the source of administrative requirements for transferring ownership of ERCs generated by this rule. In this capacity, it is not necessary for Rule 3.5 to be SIP approved.

I have reviewed bo th the SIP and local versions of each rule to determine any changes to defined terms and ensure terms not otherwise defined in Rule 3

. 21 are acceptable for SIP approval of this rule. Key definitions were reviewed to verify no changes between the two rule versions (SIP and Local), and that defined terms, not otherwise defined in Rule 3

. 21, are acceptable for Rule 3

. 21. My analysis is provided below.

Rule 1.1

– General Provisions and Definitions SIP Version: Adopted 8/13/97. SIP approved 3/22/04. 69 FR 13234 Local Version: REVISED December 8, 1993

REVISED August 13, 1997 REVISED December 14, 2005 REVISED May 14, 2008

The following defined terms have been added : APCO, ASTM, CARB and EPA ; and the definition of Exempt Compound was updated . None of the se changes affect implementation of Rule 3

. 21.

Rule 3.4

– New Source Review SIP Version: Adopted 12/11/96. SIP approved 7/7/97

. 62 FR 36214 Local Version: REVISED August 13, 1997

There are no new or deleted terms defined and there appear s to be no changes to any terms.

Rule 3.5

– Emission Reduction Credits SIP Version: Rule 3.14

– Adopted 9/22/93. SIP approved 7/7/97 . 62 FR 36214

Local Version: ADOPTED September 22, 1993

REVISED February 23, 1994 REVISED October 12, 1994 REVISED Novembe r 13, 1996

The following defined terms have been added: Biomass, No

- burn List, Parcel, Registered Owner and Temporary Actual Emission Reduction. Only the terms Restricted Burn List and Parcel are used in Rule 3

- 21 and both of these terms are already defi ned within Rule 3

- 21 , therefore the definitions of Rule 3

- 5 would not be applicable

.1 ATTACHMENT 4

MEMORANDUM

Date: March 10, 2010

Subject: YS AQMD A ttainment Status & ERCS

From: Lily Wong

Rules Office, Air

- 4

To: File for Proposed Rulemaking on YSAQMD Rule 3.21

If YSAQMD Rule 3.21 is approved into the SIP

, it will provide for the generation of federally recognized ERCs for VOC, NO x , PM 10 , CO, and SO x . YSAQMD ’s attainment status varies depending on the pollutant. The following describes the area’s federal attainment status , as well

as where and how the se ERCs can be used . This an alysis tak es into account th e fact that YSAQMD may be in federal attainment (e.g., where no offsets are required for federal NSR ) yet sources in the area may be subject to more stringent state offset requirements embedded in the SIP

- approved NSR rule

. The more stringent state requirements are typically implemented by having a lower emissions threshold for requiring offsets.

VOC and NO x (1

- h ou r and 8

- h our Ozone NAAQS ) YSAQMD is federal nonattainment for 1

- hour and 8

- hour ozone

. VOC and NO x are precurs ors to ozone. ERCs for VOC and NO x can be used within the federal Sacramento Metropolitan ozone nonattainment area.

PM 10 YSAQMD is federal attainment for PM 10 , although Sacramento County is federal nonattainment for PM 10
. Because t hese PM 10 ERCs are being generated in an are a that is in federal attainment,

u nder the CAA, these PM 10 ERCs cannot be used as NSR offsets in any federal nonattainment area, including Sacramento County.
These PM 10 ERCs could be used to meet more stringent state PM 10 offset require ments which are embedded in YSAQMD’s SIP

- approved NSR rule.2

PM 2.5 While YSAQMD is federal nonattainment for PM 2.5 , the designation was finalized in December 2009. T he attainment plan for PM 2.5 is not due until December 2012 and the issue of generating P M 2.5 ERCs will need to be addressed later in the context of the PM 2.5 attainment plan

. This rule does not generate PM 2.5 ERCs.

CO YSAQMD (and the entire state) is federal attainment for CO

. The CO ERCs could be used to meet more stringent state offse t requirements which are embedded in YSAQMD’s SIP

- approved NSR rule or a ny other area in accordance with state law

.

SO X SO X is a precursor to PM 10 and PM 2.5
. Because Y SAQMD is in federal attainment for PM 10 , the SO x ERCs could be used for more stringent state offset requirements in YSAQMD, but cannot be used as NSR offsets in any federal PM 10 nonattainment area (see PM 10 discussion above). Because YSAQMD is a federal nonattainment area for PM 2.5 , the SO x ERCs could be used for both federal and the more st ringent state offset requirements in YSAQMD, and as NSR offsets in any federal PM 2.5 nonattainment area that meets the necessary criteria.