BOARD MEETING DATE: July 11, 2008
AGENDA NO. 43

RECOMMENDED ACTIONS:

Adopt the attached resolution:

1. Certifying the Notice of Exemption for Proposed Amended Rule 1610 – Old-Vehicle Scrapping; and
2. Adopt PAR 1610 – Old-Vehicle Scrapping.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Rule 1610 - Old-Vehicle Scrapping was originally adopted on January 8, 1993 for the purpose of providing an alternative method of compliance with various South Coast Air AQMD regulations. The rule provides a mechanism to generate Mobile Source Emission Reduction Credits (MSERCs) for volatile organic compounds (VOC), nitrogen oxides (NOx), carbon monoxide (CO), and particulate matter (PM) through scrapping of high emitting vehicles. Presently, all MSERCs issued under Rule 1610 are used for compliance with AQMD Rule 2202-On-Road Motor Vehicle Mitigation Options. Rule 1610 has always been and will continue to be a voluntary program.

In October 1995, SB 501(Calderon) added sections 44100 et seq., Article 10, to the California Health and Safety Code. These sections require CARB to adopt regulations governing the implementation of market-based, privately-operated voluntary accelerated vehicle retirement (VAVR) enterprises in the State of California for the purpose of meeting the emission reduction goals of the 1994 State Implementation Plan (SIP) for Ozone. In addition, SB 501 requires the regulations to be applicable to other VAVR enterprises operating throughout California.

On October 22, 1999, pursuant to SB 501, CARB adopted regulations for VAVR Enterprises (VAVR regulations). These regulations are incorporated in Title 13 of California Code of Regulations, Chapter 13, Article 1, Sections 2600 through 2610. As required by SB 501, these regulations are applicable to scrapping entities operating throughout California. It is discretionary with the local air district to determine whether to adopt a vehicle scrapping program. Local air pollution control and air quality management districts that authorize MSERC generation and use, are required to implement the CARB regulations or amend their existing rules to be consistent with, or no less stringent than, the CARB VAVR requirements.

AQMD Rule 1610 was amended upon the CARB adoption of the VAVR regulation in 1999. On February 21, 2002, CARB amended the VAVR regulation to minimize the differences between CARB VAVR regulations and Bureau of Automotive Repair (BAR) VAVR regulations as required in Health and Safety Code section 44102. The AQMD then amended Rule 1610 on December 6, 2002 to conform.

Most recently, the CARB VAVR regulation was updated on December 7, 2006, and the Office of Administrative Law (OAL) filed the approved version with the Secretary of State on August 12, 2007. The AQMD is proposing amendments to Rule 1610 in order to comply with the requirements of the most recent CARB amendment. The proposed amendments to Rule 1610 also include administrative changes to clarify the rule language.
 

Proposal

The proposed amendments to Rule (PAR) 1610 are necessary to ensure that the AQMD rule complies with the CARB VAVR regulations once they become effective. To comply with this requirement, the following changes are proposed:

1. Reinstate the vehicle registration requirements from 120 days to 24 months to be consistent with the CARB VAVR regulation and enabling legislation.
2. AQMD Rule 1610 originally required a 24 month registration and was changed to a 120 day requirement in the most recent amendment on December 6, 2002. The change to 120 days was initiated at CARB to simplify the vehicle registration requirements. Subsequently, on August 12, 2007, the CARB VAVR regulation was amended to reinstate the 24 month requirement. To be consistent with the CARB VAVR regulation, as required by state law, staff is recommending to amend Rule 1610 and reinstate the 24 month registration requirement.
3. Allow a vehicle into a scrapping program if it has been placed in non-operational status for up to 60 days during the continuous 24 month registration period provided the vehicle is in full operational status at least 90 days immediately prior to being sold to a Scrapper.
4. Allow a vehicle into a scrapping program if the registration has lapsed for 181 or fewer days during the continuous 24 month registration period provided that the vehicle is registered at least 90 days immediately prior to its date of sale to the Scrapper and all appropriate DMV fees and late penalties have been paid.
5. Remove restriction on individuals selling multiple vehicles provided such vehicles are registered within the district for at least 24 months.
    

Key Issues

A public workshop was held on April 10, 2008. There are a couple of issues raised by industry that were not resolved to their satisfaction due to the fact that Rule 1610 is required to be as stringent as or more stringent than the CARB VAVR regulation. The major issues are summarized below:

Issue: Registrations should not be considered to have lapsed solely for a lack of automobile insurance. Over 4 million vehicles driven on the roads in Southern California are un-insured. The program will potentially shrink by more than 80% if Scrappers must consider the insurance status of a vehicle. This change could lead to the end of this program.

Response: Staff is fully aware that registration lapse due to lack of insurance could potentially limit the universe of vehicles eligible for participating in the scrapping program under Rule 1610. The State of California requires motor vehicle operators to have liability insurance that provides financial responsibility for any damage or injury caused by a traffic accident regardless of fault. To help reduce the number of uninsured vehicles from the California highways, legislation was passed in October 2006 that requires insurance companies to electronically report to DMV all private-use vehicle liability information. This legislation was aimed at preventing vehicle owners from obtaining insurance to register a vehicle and then canceling the insurance once they obtain the registration card. DMV will notify vehicle owners once they become aware that the insurance has been cancelled and allow 45 days to reinstate the automobile insurance. The period of time the vehicle remains with a suspended registration will be considered a lapse in registration. Furthermore, in reviewing vehicle registration histories from DMV, staff has no means of ascertaining whether the vehicle suspension was due to lack of insurance or some other reason. Staff has also discussed this issue with CARB staff who also reiterated that suspended registration due to lack of insurance should be considered as lapsed registrations. PAR 1610 allows for a registration lapse for up to 181 days. PAR 1610 also allows for a vehicle to be placed in planned non-operational status for up to 60 days. This added flexibility allows up to 6 months of lapse time during a 24 month (730 day) period, provided the lapse occurred more than 90 days prior to the date of sale to the Scrapper.

Issue: Scrappers should be able to rely solely on copies of printed registration cards to determine vehicle eligibility as the rule language (f)(2)(D) suggest.

Response: Rule 1610 requires Scrappers to utilize registration data from DMV. That information includes, but is not limited to, the printed history that AQMD staff utilizes to confirm a vehicles registration history. Vehicle owners can also obtain that information from the DMV. A few Scrappers have similar access to the DMV database as the AQMD; others rely on an online source of registration history called Logan Registration Services that can provide a vehicle registration history from the DMV. As the rule states, only copies of registration certificates may be used if these methods of confirming the registration history prove inconclusive.
 

CEQA

A Notice of Exemption (NOE) has been prepared for the project based on the determination that the project is ministerial and, thus, exempt under CEQA guideline 15168 (a). Staff has determined that there is no possibility of significant adverse effect on the environment, so the project is exempt under CEQA guideline 15061 (b)(3).
 

Socioeconomic Analysis

PAR 1610 will not have a significant affect on air quality or emissions limitations, so no socioeconomic assessment pursuant to the Health and Safety Code §40728.5 or 40440.8 is required. Staff did conduct a brief analysis of the estimated socioeconomic impacts. Rule 1610 is a voluntary program. Fewer vehicles will be eligible for scrapping under the proposed amendments due to the extension of the registration requirement from 120 days to 24 months. Thus, fewer MSERCs will be generated. Reduced supply of MSERCs from the extended registration requirement will increase the price of MSERCs. The magnitude of increases cannot be predicted as Rule 2202 facilities are not obligated to report MSERC prices to the AQMD and prices of Rule 1610 MSERCs under the AQMP depend on the amount of MSERC purchases, the timing of purchase, and mixture of vehicle types.
 

Since Rule 1610 is a voluntary vehicle scrapping program, vehicle owners can decide when and if they will surrender their vehicles for scrapping. Under the proposed amendments, Scrappers and credit vendors may face a temporary reduction in MSERCs and thus an increase in their prices. On the other hand, insurance brokers and auto repair shops may experience a slight gain in their business. However, all these impacts are expected to be relatively small.
 

AQMP and Legal Mandates

The California Health and Safety Code requires the AQMD to adopt an Air Quality Management Plan (AQMP) to meet state and federal ambient air quality standards within the South Coast Air Basin. In addition, California Health and Safety Code requires the AQMD to adopt rules and regulations that carry out the objectives of the AQMP.
 

Rule 1610 is not in the AQMP and is a voluntary rule. If an air agency elects to adopt such a rule and program, the program is required to be consistent with the CARB VAVR requirements or more strict.
 

Implementation Plan and Resource Impact

A subsequent Board resolution resulting from amendments incorporated into Rule 1610 on July 10, 1998, directed AQMD “staff to provide complete enforcement coverage…to the fullest extent possible, by inspecting each and every vehicle voluntarily submitted to all Rule 1610 programs…”  AQMD staff will continue to attend all Scrapper vehicle intakes on the dates scheduled.

In July 2006, amendments to Rule 306 gave latitude to the AQMD for the recovery of fees relative to the review, inspection and monitoring of plans.  This allows recovery of fees associated with time spent implementing Rule 1610, such as verifying compliance with approved plans. As such, current AQMD resources are sufficient to implement the proposed Rule 1610 amendments with no additional fiscal impact.
 

Attachments (exe 6580 kb)

1. Summary of Proposed Amendments
2. Rule Development Process Flow Chart
3. Key Contacts
4. Resolution
5. Rule Language
6. Final Staff Report
7. CEQA – Notice of Exemption