The annual report on the NOx and SOx RECLAIM program is prepared in
accordance with Rule 2015 - Backstop Provisions. The report assesses emission reductions,
average annual price and availability of RECLAIM Trading Credits (RTCs), job impacts,
compliance issues, and other measures of performance for the fourth year of this program.
COMMITTEE:
Stationary Source, February 19, 1999, Reviewed
RECOMMENDED ACTION:
Approve the attached report.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
The AQMD Governing Board adopted the RECLAIM program on October 15, 1993 with the goal
of providing facilities with added flexibility in meeting emissions reductions
requirements while lowering the cost of compliance. RECLAIM was designed to meet all state
and federal requirements for clean air programs and a variety of performance criteria to
ensure protection of public health, air quality improvement, effective enforcement,
implementation costs, and minimal job impacts.
RECLAIM represents a significant departure from traditional command-and-control
regulations. Therefore, the RECLAIM rules provide for annual program audits to verify that
the program objectives are being met. Rule 2015 requires annual audits focusing on
specific issues, as well as a more comprehensive three-year audit. The three-year audit
was presented to the Governing Board May 8, 1998. This report presents the annual audit
for the 1997 compliance year, which was the program’s fourth compliance year.
Pursuant to Rule 2015, the audit report is presented for a public hearing, and will be
included in AQMD's annual performance report to the California legislature.
Audit Findings
The audit findings indicate that RECLAIM met its objectives during the 1997 compliance
year. In particular, the analysis demonstrates that:
RECLAIM is continuing to meet its emissions reduction goals. As in previous years,
aggregate actual emissions from RECLAIM facilities were below allocations during the 1997
compliance year.
The RECLAIM Universe consisted of 329 facilities as of June 30, 1997. There were two
facility inclusions from July 1, 1997 through June 30, 1998. Additionally, five facilities
shut down during this period. RECLAIM was not cited as a contributing factor by any of the
closed facilities. Thus, there were 326 facilities in the RECLAIM Universe at the end of
the 1997 compliance year.
An active trading market for RTCs has developed. More than $79 million in RTCs have been
traded since the adoption of RECLAIM with over $21 million in trades occurring in calendar
year 1997 and more than $36 million during 1998. Sufficient RTCs were available to meet
the demand of RECLAIM facilities. Average prices, excluding RTCs, which were transferred
with a price of $0 (such as transfers between facilities of common ownership), were well
below the backstop price of $15,000 per ton established in Rule 2015. Average prices
during 1997 and 1998 are summarized below:
1997
1998
$227 per ton for 1997 NOx RTCs
$1,915 Per ton for 2003 NOx RTCs
$1,880 per ton for 2010 NOx RTCs
$64 per ton for 1997 SOx RTCs
$2,385 Per ton for 2003 SOx RTCs
$2,385 per ton for 2010 SOx RTCs
$451 per ton for 1998 NOx RTCs
$1,971 Per ton for 2003 NOx RTCs
$1,859 per ton for 2010 NOx RTCs
$303 per ton for 1998 SOx RTCs
$1,760 Per ton for 2003 SOx RTCs
$1,760 per ton for 2010 SOx RTCs
Once again, the vast majority of RECLAIM facilities complied with their allocations
during the 1997 compliance year. Preliminary audit results show that nineteen facilities
exceeded their allocations during this compliance year. Failure to reconcile emissions
with RTCs held was the leading cause of exceedance, rather than application of Missing
Data Procedures (the leading cause during the 1995 and 1996 compliance years) or lack of
familiarity with program requirements (the leading cause during the 1994 compliance year).
Notices of Violation have been issued to nine of the 19 facilities that exceeded their
allocations. Staff is finalizing the review of emissions reported by the remaining
facilities. As the allocation exceedances are confirmed, additional Notices of Violation
will be issued.
RECLAIM had minimal impact on employment during the 1997 compliance year, as in previous
years. Two facilities attributed RECLAIM with generating one job each. One facility which
experienced a job loss of eight positions reported that RECLAIM was one of a number of
factors contributing to its lost positions, but could not quantify the extent of
RECLAIM’s contribution. Another facility shut down, resulting in 153 lost jobs. This
facility reported that RECLAIM was a minor contributor to the decision to close, but did
not quantify the extent of the contribution.
AQMD staff will continue to monitor and assess the performance of the RECLAIM program
and work closely with RECLAIM participants to ensure continued program success.
