SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

(Adopted Sept. 10, 1982)(Amended Dec. 3, 1982)(Amended July 12, 1985)

(Amended June 28, 1990)(Amended May 3, 1991)(Amended August 13, 1993) 

(Amended December 7, 1995)

RULE 1309. EMISSION REDUCTION CREDITS

This rule addresses the application, eligibility, registration, use, and transfer of Emission 

Reduction Credits (ERCs). These credits shall be used as offsets for emission increases at new or 

modified facilities that are subject to Rule 1303(b)(2).

(a) Validation of Existing, Qualifying Net Emission Decreases

1. Existing NSR Balances 

Facilities which according to District records have a net emission decrease since October 

8, 1976, shall receive ERCs after the net emission decrease has been discounted by 80 

percent and verified by the Executive Officer or designee. Upon validation, an ERC shall 

be registered in the Register of Titles as a current ERC.

2. Existing ERCs 

Any ERC based on an application which was deemed complete prior to September 28, 

1990, resulting from the additional control of air contaminants through process changes 

or the installation of air pollution control equipment, unless included as an AQMP 

measure at the time, shall not be discounted. All other ERCs shall be discounted by 80 

percent and reissued.

(b) Application for an ERC for a New Emission Reduction

In order to obtain an ERC, an application made in the form and along with supporting data and 

documents required by the Executive Officer or designee shall be submitted for each existing 

source that is to be modified or permanently taken out of service. The application shall be 

submitted no more than 90 days after the emission reduction occurs.

1. The Executive Officer or designee shall not deem an ERC application complete nor 

process such application unless and until the ERC applicant supplies supporting data and 

documents to the District, including but not limited to: 

(A) the amount and type of emissions;

(B) the date on which the emission reduction took place or is planned to take place;

(C) the Regulation XIII zone from which the ERC is to originate;
(D) the reason for the emission reduction, such as a process change, addition of control 

equipment, or equipment or facility shutdown; and

(E) surrender of applicable District operating permits whenever emission reductions are 

the result of either equipment or facility shutdown.

2. The Executive Officer or designee shall notify the ERC applicant in writing within 30 

calendar days of the receipt of the ERC application whether the application contains 

sufficient information to be deemed complete. Upon receipt of any additional 

information, a new 30-day period will begin, during which time the Executive Officer or 

designee shall determine and notify the applicant whether the application is complete. An 

application which continues to be deemed incomplete 180 days after the date of the first 

submittal shall be cancelled by the Executive Officer or designee. A determination of 

incompleteness may be appealed to the District Hearing Board. 

3. Preliminary Decision 

No later than 180 days after the application for an ERC is deemed complete, a 

preliminary written decision shall be given that all, part, or none of the emission 

reductions can be registered as an ERC.

4. Emission Reduction Eligibility Requirements 

All Emission Reduction Credits shall be calculated pursuant to Rule 1306 and be subject 

to the approval of the Executive Officer or designee. The Executive Officer or designee 

shall consider reductions of air contaminants resulting from removal of equipment from 

service, and the additional control of mobile and stationary sources. The applicant must 

demonstrate to the Executive Officer or designee that all stationary and mobile source 

reductions are:

(A) real;

(B) quantifiable;

(C) permanent;

(D) federally enforceable, and

(E) not greater than the equipment would have achieved if operating with current Best 

Available Control Technology (BACT).

Reductions in emissions due to changes in the hours of operation shall not qualify for an 

ERC.

The BACT adjustment shall not apply to facilities located in the SEDAB.

5. Evaluation 
In evaluating the applications for ERC submitted pursuant to this regulation, the 

Executive Officer or designee shall consider emission reductions only if before a 

complete application is submitted, the same emission reductions from the same 

equipment type as those proposed by the applicant are not:

(A) required by a Control Measure in the AQMP which has been assigned a target 

implementation date; or

(B) required by a proposed District rule for which the first public workshop to consider 

such a rule has been conducted. This exclusion shall remain in effect for 12 months from 

the date of such workshop, or until the Executive Officer or designee determines that the 

proposed rule is abandoned or the provisions of subparagraph (5)(C) become effective; or

(C) required by an adopted federal, State, or District rule, regulation, or statute; or

(D) from a category or class of equipment included in a demonstration program required 

by a District rule or regulation.

(c) Registration of ERCs

Upon the Executive Officer's or designee's final determination to grant an ERC, the title to the 

ERC shall be registered in the Register of Title. All information concerning the title, interests, 

pertinent dates and other matters shall be registered, until the Certificate of Title is canceled or 

nullified by operation of law.

(d) Use of ERCs

ERCs may be used by the owner to offset emission increases due to new or modified sources of 

air pollution and to the extent allowed by federal law. An ERC shall qualify as an offset upon 

surrender of the Certificate to the District. Such ERC shall be used in a manner consistent with 

the Certificate record and in accordance with all other requirements of this regulation at the time 

of use, including the applicable offset ratio, determined pursuant to Rule 1303.

(e) Transfer of ERCs by Registered Owner

Transfer of the whole or any portion of an interest in a registered ERC is allowed, provided it is 

in writing, accompanied by the sale price of such ERCs, in dollars per pound, signed by the 

transferor, and acknowledged in any form authorized by law. Upon filing such instrument with 

the District, the transfer shall be complete and the title so transferred shall vest in the transferee. 

A new Certificate, certifying the title to the estate or interest in the ERC, shall be issued and the 

last previous original Certificate shall be cancelled. Such cancellation shall be recorded in the 

Register.

(f) Mobile Source Credit
Emission Reduction Credits shall be granted for emission reductions from the control of mobile 

sources pursuant to Regulation XVI rules.

1. ERCs may be issued based on emission reductions which comply with all requirements 

of any Regulation XVI rule. 

2. Limitations 

(A) The Executive Officer or designee will approve plans for scrapping vehicles pursuant 

to Rule 1610, for no more than 30,000 vehicles per year.

(B) Any permit to construct or operate a new or modified permit unit based upon ERCs 

obtained through the provisions of a Regulation XVI rule shall expire within the period 

for which the ERCs are issued, unless further emission offsets equal to or greater than 

such ERCs are obtained, or the subject permit unit's potential to emit is reduced to the 

extent that the ERCs granted pursuant to this paragraph would no longer be necessary.

(C) Pursuant to Rule 504, no variance or series of variances, including emergency 

granting of a variance, from a permit condition implementing a Regulation XIII offset 

requirement shall be granted if such permit condition is based upon the use of MSERCs.

(g) Interpollutant Offsets

The Executive Officer or designee may approve interpollutant offsets on a case-by-case basis, 

provided that the trade results in an equivalent or greater offset of the new, modified, or relocated 

source's nonattainment pollutants; and that the applicant demonstrates, to the satisfaction of the 

Executive Officer or designee, that the emissions from the new or modified source will not cause 

or significantly contribute to the violation of an ambient air quality standard as specified in Table 

A-2.

Interpollutant trades between PM10 and PM10 precursors may be allowed. PM10 emissions 

shall not be allowed to offset NOx or ROG emissions in ozone nonattainment areas. All 

interpollutant trading shall be subject to EPA's review and approval.

(h) Inter-Basin and Inter-District Offsets

1. Offsets between different stationary sources located in different air control districts shall 

be allowed so long as the air districts are in the same air basin. 

2. Offsets between different stationary sources located in different air basins shall be 

allowed only when: 

(A) The stationary source to which the emission reductions are credited is located in an 

upwind district that is classified as being in a worse nonattainment status than the 

downwind district pursuant to Chapter 10 of the Health and Safety Code commencing 

with Section 40910; and
(B) The stationary source at which there are emission increases to be offset is located in a 

downwind district that is overwhelmingly impacted by emissions transported from the 

upwind district, as determined by the state board pursuant to Health and Safety Code 

Section 39610.

3. Any offset transaction credited pursuant to paragraphs (h)(1) and (h)(2) above shall be 

approved by resolution adopted by the Governing Board of the upwind district and the 

Governing Board of the downwind district. The adopting resolution shall consider the 

impact of the offset on air quality, public health, and the regional economy.