September 8, 1995

South Coast Air Quality

Management District Board

Proposed Rules 1612 and 1620 will provide greater opportunities to generate mobile source emission reduction credits (MSERC) that could be used as an alternative means of compliance with AQMD regulations. The administrative procedures are similar between the two proposed rules. Proposed Rule 1612 applies to on-road motor vehicles and 1620 applies to off-road mobile equipment. The proposed rules will meet the 1994 Air Quality Management Plan commitment for control measures MON-05, MON-06, and MOF-04.

Under the provisions of Proposed Rules 1612 and 1620, on-road motor vehicle operators or off-road mobile equipment operators can choose the most cost-effective compliance alternatives to suit their needs. Voluntary implementation through the purchase of new low- or zero-emission vehicles or off-road equipment, or retrofitting or repowering of existing heavy-duty vehicles and off-road equipment, or permanent replacement of existing off-road mobile equipment with non-polluting alternatives, will result in MSERCs which can be used to comply with other AQMD regulations or be traded to other facilities. The MSERC calculation is based on emission standards established by the California Air Resources Board (ARB) or the U.S. Environmental Protection Agency (EPA) or through alternative engine testing which follows ARB certification test procedures (subject to AQMD and ARB approval). Operators will participate in these programs if these alternatives are less costly to implement than other AQMD regulations. In addition, the proposed rules provide additional incentives to promote advanced-technology vehicles and equipment by providing credits for these technologies. On balance, implementation of the proposed rules will result in increased flexibility and lower cost of compliance.

Staff has incorporated a number of modifications to the proposed rule language based on additional comments received following the release of the original proposal. These modifications include:

(1) language that would allow the generation of MSERCs for high-mileage fleet vehicles

(2) a mechanism for establishing alternative baseline or ceiling emission standards for off-road mobile equipment

(3) a mechanism for establishing alternative optional emission standards for both clean on-road vehicles and off-road mobile equipment

(4) allowance of non-polluting alternative replacements for off-road mobile equipment

(5) a two year credit life to allow greater ability to trade MSERCs

(6) a mechanism for generating MSERCs for SOx and PM (in addition to VOC, NOx and CO)

(7) issuance of credits for the operation of clean on-road vehicles and off-road mobile equipment purchased prior to the adoption of the proposed rules, and

(8) further streamlining of reporting requirements.

A significant number of comments have been addressed in the proposed rule language. However, several comments (regarding credit banking, use of a discount factor in inter-source crediting, interpollutant trading, and retroactive crediting - the issuance of credits for prior years of operation of clean vehicles or off-road mobile equipment purchased prior to the adoption of the proposed rules) are under evaluation as part of a study directed by the Board as part of the adoption of Rule 1501.1 - Alternatives to Work Trip Reduction Plans. The findings of this study will be available in the fall of this year. Based on the findings, staff may propose further amendments to Proposed Rules 1612 and 1620 as necessary.

Pursuant to the AQMD's Certified Regulatory Program (Rule 110), the AQMD has prepared appropriate California Environmental Quality Act documentation, consisting of a Final Environmental Assessment (EA). The analysis in the EA indicates that the implementation of Proposed Rules 1612 and 1620 would not cause any significant adverse environmental impacts. The Draft EA has been circulated for a 30-day public review and comment period which ended August 1, 1995. No comments were received on the Draft EA.

The attachments to this package contain an outline of the rule development process (Attachment A), summary of issues and staff response on Proposed Rules 1612 and 1620 (Attachment B), Governing Board Resolution (Attachment C), Proposed Rules 1612 and 1620 along with a final staff report for each rule (Attachments D and E), Final EA (Attachment F), and the Final Socioeconomic Analysis (Attachment G).

THEREFORE IT IS RECOMMENDED THAT YOUR BOARD

--Certify the Final Environmental Assessment for Proposed Rule 1612 - Credits for Clean On-Road Motor Vehicles and Proposed Rule 1620 - Credits for Clean Off-Road Mobile Equipment, as proposed, in accordance with the attached Resolution.

--Adopt Rule 1612 - Credits for Clean On-Road Motor Vehicles and Rule 1620 - Credits for Clean Off-Road Mobile Equipment.

Respectfully,

James M. Lents, Ph.D.

Executive Officer

BRW:JPB:HH

Attachments

hh: sept-bdr.doc

ATTACHMENT A

RULE DEVELOPMENT PROCESS

ATTACHMENT B

SUMMARY OF ISSUES AND STAFF RESPONSE ON

PROPOSED RULES 1612 AND 1620

ATTACHMENT C

GOVERNING BOARD RESOLUTION

ATTACHMENT D

PROPOSED RULE 1612 -
CREDITS FOR CLEAN ON-ROAD VEHICLES

ATTACHMENT E

PROPOSED RULE 1620 -
CREDITS FOR CLEAN OFF-ROAD MOBILE EQUIPMENT

ATTACHMENT F

FINAL ENVIRONMENTAL ANALYSIS

ATTACHMENT G

FINAL SOCIOECONOMIC ANALYSIS