BOARD MEETING DATE: May 10, 1996

AGENDA NO.25

Report:

RECLAIM Compliance with Federal NSR Requirements

Synopsis:

Rule 2005 - New Source Review for RECLAIM, Subdivision (j), requires the Executive Officer to report to the Governing Board by May of each year, on the effectiveness of RECLAIM NSR in meeting the federal NSR requirements for the preceding year. This report details AQMD's success in meeting federal NSR requirements for 1995.

Committee:

Not applicable.

Recommended Action:

Receive and file this report.

James M. Lents, Ph.D.
Executive Officer

PL:CC:PM:BLY:PYP:scs

Background

The federal NSR program, Title 42, U.S.C. Section 7511a(e), requires major stationary sources in extreme non-attainment areas to mitigate their emissions increases by providing emissions offsets at a 1.5:1 or 1.2:1 ratio when the offsets are obtained from external sources, or a 1.3:1 ratio when the offsets are generated internally. In order to provide RECLAIM facilities with maximum flexibility, as well as to simplify the RECLAIM Trading Credit (RTC) transaction system, Rule 2005 establishes a NSR offset ratio of 1:1 for RECLAIM pollutants. AQMD Rule 2005 establishes pre-construction review requirements for construction of new RECLAIM facilities and for modifications to existing RECLAIM facilities in order to ensure continued progress toward attainment of National Ambient Air Quality Standards without restricting economic growth. Rule 2005, subdivision (j) requires the Executive Officer to annually report to the Governing Board on the effectiveness of RECLAIM NSR in meeting federal NSR requirements for the preceding year. This report summarizes RECLAIM's overall programmatic achievement of the federal NSR requirements. Because of the annual reduction to each facility mass cap in RECLAIM, the fundamental purpose of NSR is met in that new or modified source emission growth does not negatively affect Reasonable Further Progress goals.

By this report, AQMD demonstrates that RECLAIM generates sufficient excess emission reductions beyond the Clean Air Act requirements, such as reasonably available control technology (RACT), to mitigate the difference between the Rule 2005 offset ratio and the higher offset ratio in federal law.

NSR Compliance Demonstration

During 1995, five tons of NOx RTCs from external sources were provided to offset emissions increases due to operation of a new RECLAIM facility pursuant to Rule 2005(b)(2). In addition, 388 tons of NOx RTCs and 42 tons of SOx RTCs from RECLAIM facilities' allocations were held to offset increases in emissions due to modifications to 114 existing RECLAIM facilities pursuant to Rule 2005(c)(2).

Staff has determined that in 1995 the programmatic emission reductions exceeded the increases in NOx and SOx emissions due to NSR activities (i.e., new or modified existing sources) by the ratio of 8.4:1 and 12.6:1, respectively. Table I shows NSR activity related to RECLAIM NOx and SOx sources in 1995.

Table I: Availability of Programmatic RECLAIM Emission Reductions

Federal NSR Equivalency

(Tons per Year)

Pollutant	NSR Emission Increase	Max. Offsets Required by CAA (1.2:1)	RECLAIM Offsets by RTC (1:1)	Additional Offsets for Federal Equiv. (0.2:1)	RECLAIM Programmatic Total Emission Reductions1	Offsets Provided by Programmatic Reductions
NOx	393	471.6	393	78.6	3,299	8.4:1
SOx	42	50.4	42	8.4	530	12.6:1

¹ Programmatic Emission Reduction = Initial Allocation - 1995 Allocation

The total of 3,299 tons of programmatic NOx RTC reductions were 8.4 times greater than the 1:1 offset ratio already provided for in Rule 2005 for emissions increases from NSR activity, far exceeding federal NSR offset requirements of 1.2:1. Similarly, the total of 530 tons of programmatic SOx RTC reductions were 12.6 times greater than the SOx emissions increases.

Above and beyond the programmatic RECLAIM reductions, staff has also determined that in 1995 the allocated, but unused RTCs could also be used as emission offsets against NOx and SOx emissions increases due to NSR activities. The resulting offset ratio is 35.2:1 and 75.4:1 for NOx and SOx, respectively. Table II shows the actual RTC activity related to RECLAIM NOx and SOx sources in 1995.

TABLE 2: Availability of RTCs to Offset NSR Emissions Increase

Based on Actual RECLAIM Emissions Reductions

Federal NSR Equivalency

(Tons per Year)

Pollutant	NSR Emission Increase	RTC Allocated in 1995	Reported Emissions1	Unused RTCs Available for NSR Offset2	Offsets Provided by Unused RTC3
NOx	393	35,906	22,457	13,449	35.2:1
SOx	42	9,693	6,565	3,128	75.4:1

¹ These reported emissions are subject to revision.

² 1995 Unused RTCs = Total 1995 Allocation - total 1995 Reported Emissions

³ Offset Ratio = 1 + (1995 Unused RTCs / Total Increase) to 1

Reported NOx and SOx emissions, including emissions increases from operation of new and modified facilities, represent 64 percent and 68 percent of total 1995 NOx and SOx allocations, respectively. The total 13,449 tons of unused NOx RTCs were 35.2 times greater than the 1:1 offset ratio already provided for in Rule 2005 for emissions increases from NSR activity, far exceeding federal NSR offset requirements. Similarly, the total 3,128 tons of unused SOx RTCs were 75.4 times greater than the SOx emissions increases.

The total programmatic annual NOx and SOx reductions, and the unused NOx and SOx RTCs constitute creditable emission reductions since they are real, quantifiable, enforceable, and surplus of Clean Air Act required or RACT emission reductions. Therefore, both the programmatic RTC reductions and the unused RTCs can be used to offset emissions increases due to new or modified existing sources, and the total offset ratios shown in Tables III demonstrate that the RECLAIM program exceeds the federal NSR requirements of 1.2:1 and 1.3:1 for external and internal offsets.

TABLE 3: Total Availability of RTCs to Offset NSR Emissions Increase
Federal NSR Equivalency
(Tons per Year)

Pollutant	NSR Emission Increase	RECLAIM Programmatic Total Emission Reductions	Unused RTCs Available for NSR Offset	Offsets Provided by Programmatic Reductions	Offsets Provided by Unused RTC	Total Offsets Provided by RECLAIM
NOx	393	3,299	13,449	8.4:1	35.2:1	43.6:1
SOx	42	530	3,128	12.6:1	75.4:1	88:1

Conclusion

This analysis indicates that RECLAIM generates sufficient creditable emission reductions, and supplies adequate RTCs to offset NOx and SOx emissions increases due to NSR activities during 1995. Further, RECLAIM provided offsets for all NOx and SOx emissions increases at offset ratios of 43.6:1 and 88:1, respectively. These offsets provided by RECLAIM exceed the federal NSR requirements of 1.2:1 and 1.3:1 for external and internal offsets. Therefore we conclude that RECLAIM is in compliance with federal NSR requirements in 1995.