South Coast Air Quality Management District

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Public Hearing to Ratify Findings Required by Health and Safety Code Section 39616(e) Pertaining to the RECLAIM Program

SYNOPSIS: 

Health and Safety Code Section 39616(e) requires the Board to again ratify findings that, relative to the subsumed rules and control measures, RECLAIM (1) achieves equivalent or greater emission reductions at equivalent or less cost, (2) has comparable enforcement and monitoring, (3) does not delay attainment with California ambient air quality standards, (4) allows the use of emissions reduction from other sources such as mobile and area sources, and (5) promotes privatization of compliance and electronic availability of data. Staff has prepared a technical report addressing program implementation over the past six years to assist the Governing Board in its assessment of the program. The report includes data regarding emission reductions, ambient air quality status, program costs, and monitoring and enforcement.

COMMITTEE: 

Stationary Source, August 25, 2000, Reviewed.

RECOMMENDED ACTION:

1. Receive and approve the attached report; and
   
   
2. Adopt the attached resolution ratifying the identified findings in Health and Safety Code Sections 39616(c)(1), (2), (5), and (6), and 40440.1.

Barry R. Wallerstein, D. Env.
Executive Officer

Background

The AQMD Governing Board adopted the Regional Clean Air Incentives Market (RECLAIM) program on October 15, 1993 with the goal of providing facilities with added flexibility in meeting emission 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 regulates emissions on a mass basis rather than limiting emission rates. The goal of RECLAIM is to provide facilities with added flexibility in meeting emission reduction requirements while lowering the cost of compliance. This is accomplished by establishing annual facility-specific emission reduction targets (i.e., allocations) without being prescriptive regarding the method of attaining compliance with the targets. Total allocations are reduced each year from 1994 through 2003 to achieve equivalent emissions reductions as would have been achieved through implementation of the rules and 1991 AQMP control measures subsumed by RECLAIM (allocations remain constant after 2003). Each facility may determine for itself the most cost-effective approach to reducing emissions, including purchasing emission credits from facilities which reduce emissions below their target levels. Facilities which are able to reduce their annual emissions below their allocation levels have the option to sell the excess portion of their allocations to facilities which have a need for additional allocations. Rigorous emissions monitoring and recordkeeping is essential to ensure compliance with RECLAIM’s emissions requirements. Highly accurate emissions monitoring equipment (e.g., continuous emissions monitoring systems or CEMS) is required for determining emissions from the sources accounting for approximately eighty percent of RECLAIM emissions. In addition, sources are required to maintain daily, monthly, and quarterly emissions records and to reconcile their emissions with their allocations on a quarterly basis.

RECLAIM represents a significant departure from traditional command-and-control regulations. Therefore, pursuant to Health and Safety Code §39616, the Governing Board made a variety of findings regarding the program’s projected performance during the Public Hearing at which RECLAIM was adopted. Health and Safety Code §39616(e) directs the Governing Board to ratify certain of these findings within seven years of adoption. These findings pertain to achieving equivalent or greater emissions reductions at equivalent or less cost, providing a level of enforcement and monitoring to ensure compliance with emission reduction requirements, promoting privatization of compliance and the availability of data in computer format, achieving emission reductions across a spectrum of sources including mobile, area, and stationary sources, and achieving timely compliance with state ambient air quality standards.

Staff previously prepared an audit report covering the first three years of program implementation (Three-Year Report) in collaboration with a variety of interested parties, as well as individual reports for each of the first five years of RECLAIM. The attached report builds on the work done in preparing the Three-Year Report and incorporates data collected since the Three-Year Report was prepared. In addition to addressing the findings requiring ratification pursuant to Health & Safety Code §39616(e), the attached report includes a chapter addressing various issues such as the cost of RECLAIM Trading Credits and RECLAIM facilities with emissions below four tons per year.

The Governing Board commenced public hearings regarding ratification of these findings at its May 1998 meeting as part of the hearing regarding the Three-Year Report. Staff has subsequently held three public consultation meetings to distribute information to RECLAIM participants and interested parties and to seek comment and input.

Report Findings

The attached report addresses each of the above-identified findings which the Governing Board is directed to ratify by California Health & Safety Code §39616(e). The report findings are summarized below:

• The 1991 Air Quality Management Plan (AQMP) was designed to achieve its targeted emissions reductions by 2010. RECLAIM was designed to reduce collective emissions from the sources subject to the program to the same endpoint mass emissions they would have achieved through implementation of the control measures in the 1991 AQMP by 2003. RECLAIM emissions have been below the emissions allocations each year since the beginning of the program. Thus, RECLAIM is on track to achieve equivalent emissions reductions as would have resulted from continued implementation of the subsumed rules and control measures. [§39616(c)(1)]
  
  
• Adequate control technology and opportunities for further emissions reductions have been shown to exist for RECLAIM participants to collectively achieve their emissions goals for 2003. [§39616(c)(1)]
  
  
• The main costs of complying with RECLAIM are monitoring, reporting, and recordkeeping (MRR) costs; equipment and installation costs; and administrative costs. These cost factors under RECLAIM have continued to stay below those costs projected at the time of adoption. Current projections of the cost to install the necessary controls to achieve compliance with 2003 allocations are below the projections made at the time RECLAIM was adopted. [§39616(c)(1)]
  
  
• Continuous emissions monitoring systems (CEMS) are the most accurate and reliable equipment for real time monitoring of emissions. RECLAIM requires the use of mass CEMS on all major sources, which represent the vast majority of RECLAIM emissions. The subsumed rules and control measures required the use of far fewer CEMS, and most of those measured emissions concentration rather than mass. RECLAIM also includes detailed monitoring requirements for non-major sources and requires electronic reporting of emissions on a daily, monthly, or quarterly basis depending on the emission potential of the source. The inspection and enforcement program under RECLAIM is more structured and regular than under the subsumed rules and control measures. Overall, RECLAIM’s MRR and enforcement requirements are more rigorous and provide more accurate and complete data than the corresponding requirements of the subsumed rules and control measures. [§39616(c)(2)]
  
  
• RECLAIM has successfully promoted, and even required, privatization of compliance and the availability of electronic data. For example, periodic third-party source tests are required for large NOx sources, relative accuracy source tests are required for CEMS, and RECLAIM includes daily, monthly, and quarterly electronic emissions reporting. Furthermore, AQMD is committed to amending RECLAIM’s MRR requirements to allow the use of electronic alternatives to strip chart recorders. The proposed rule amendment is currently targeted for March 2001. [§39616(c)(5)]
  
  
• RECLAIM provides for trading of emissions reductions from a variety of non-RECLAIM sources, including Emission Reduction Credits (ERC), and emission credits generated pursuant to Regulation XVI - Mobile Source Offset Programs or pursuant to Rule 2506 - Area Source Credits for NOx and SOx. Additionally, it may become possible to generate emission credits for use in RECLAIM through the Air Quality Investment Program (Rule 2501) and/or the Intercredit Trading Program (currently under development). [§40440.1]
  
  
• Per capita exposure to ozone in the South Coast Air Basin met the target reductions specified for year 2000 in Health and Safety Code §40920(c) several years ahead of schedule. Additionally, RECLAIM is still on target to achieve the same emissions reductions as was projected to result from implementation of the subsumed rules and control measures. RECLAIM's reductions are also more certain than the projected reductions from the subsumed rules and control measures. Thus, RECLAIM is not delaying attainment with state ambient air quality standards. [§39616(c)(6)]

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.

Attachment

Review of RECLAIM Findings

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