October 13, 1995

South Coast Air Quality

Management District Board

In response to a request from the Governing Board, the AQMD staff has prepared the attached Concept Paper for Increased Compliance Flexibility which assesses the feasibility of intercredit trading while achieving air quality goals. Intercredit trading is based on the concept of allowing mobile and stationary sources to trade emission credits. This paper also includes preliminary responses to public requests in recent months for changes to the existing trading programs. It is important to emphasize that the policy decisions emanating from this effort could significantly affect the District's existing and future pollution control efforts.

Subsequent to the October Board meeting, staff plans to seek public input on the attached report through a series of workshops to be held in early November and will return to the Board with formal recommendations and an action plan for final approval in early 1996. The action plan is expected to identify future rule amendments, enforcement protocols, and auditing requirements.

THEREFORE IT IS RECOMMENDED THAT YOUR BOARD

--Receive and file the attached report.

--Direct staff to initiate a series of workshops on intercredit trading.

--Direct staff to report back to the Board in early 1996 with an action plan.

Respectfully,

James M. Lents, Ph.D.

Executive Officer

BRW:CSL:EC:SN

Attachment

(bl-flex.doc)