Approval of the South Coast Air Quality Management District’s 2016 Air Quality Management Plan

After many months of work, advisory groups and board meetings featuring angry activists and frustrated business leaders, the South Coast AQMD finally approved a new 2016 Air Quality Management Plan (AQMP) at their March 3, 2017 Governing Board meeting. Although there are various less far-reaching changes in regulations and emissions limits (VOC reductions from flaring, for example), this AQMP is recognized as a historic document. At its core are two major objectives to meet the Clean Air Act’s directives – a large increase in incentive funding for voluntary emission reductions and the sunsetting of RECLAIM, SCAQMD’s cap and trade program.

During the Governing Board debate over approval of the AQMP, the most controversial issues were related to the amendments proposed by LA County Supervisor Sheila Kuehl, to adopt indirect source regulations in the Plan (see Alta Article HERE), which target four major sectors, the seaports, warehouses, the airports and publicly owned fleets. Board members asked Supervisor Kuehl to soften the language of her proposed amendments from “adoption,” to, “consideration of” an indirect source regulation for all of her amendments, to which she conceded. LA City Councilman Buscaino and San Bernardino Supervisor Janice Rutherford made successful, impassioned arguments not to impose this type of regulation on the seaports and warehouses, respectively and the majority of the Board agreed with these positions. A majority of the Board, however, did vote to adopt Supervisor Kuehl’s proposed amendments for the development of indirect source regulations for airports and publicly owned fleets.

It has long been recognized that mobile sources are the largest contributor to ground-level ozone in the South Coast air basin. However, local air districts do not have jurisdiction over mobile sources and must look to the state and federal government to regulate those emissions. In lieu of sufficient state-wide regulations that will achieve the air basin’s particular needs, the AQMP proposes to offer various incentives towards meeting these goals – to the tune of approximately $1 billion per year over seven to ten years. To date, there have been few, if any, suggestions to what these incentives will specifically be and there have been few ideas as to how this $1 billion per year will be appropriated (there was an idea floated by at least one board member to add on a car registration fee). The SCAQMD is expecting to be able to provide some type of funding for near-zero emissions engine technology but how this funding will take place is still up in the air.

The sunsetting of RECLAIM will have an effect on virtually every facility that participates in the program. While RECLAIM has onerous recordkeeping and reporting requirements, coupled with strict deadlines and intense oversight from enforcement, it also gives some flexibility to the facility to meet emissions goals without necessarily meeting BACT (Best Available Control Technology) requirements for every single piece of equipment. RECLAIM looks at the facility’s emissions as a whole and requires the purchase of RECLAIM Trading Credits (RTCs) to offset each pound of NOx and/or SOx emissions. Many facility operators will no doubt be scrambling to replace equipment to meet BACT standards when the switch to command and control regulations come. Others already will meet those standards as they have been replacing equipment so as to not have to purchase RTCs. Those operators will no doubt be thrilled to be unburdened from the demands of RECLAIM’s reporting requirements. Leading up to the ultimate end of RECLAIM will be a gradual shave in RTC allocation until there is a five ton per day reduction. This may incentivize some operators to start making the switch to BACT early. The methodology by which the AQMD plans to make the switch from RECLAIM to command and control has not been laid out.

Alta is following the roll-out of these new incentives and regulations closely and plans to participate in every way possible from the development of new technologies and how they are funded to the change over from RECLAIM. We will keep our clients and the public up to date as these new changes are implemented.  

If you need strategic advisory support during this transition period, please contact us at  (888) 608-3010 David Park at David.Park@altaenviron.com or Kimba Anderson at Kimba.Anderson@altaenviron.com.