PLACER COUNTY AIR POLLUTION CONTROL DISTRICT

RULE 505 - PRIORITY RESERVE
(Adopted 09/21/93)

                                       CONTENTS


          100  GENERAL


               101  PURPOSE

               102  APPLICABILITY


          200  DEFINITIONS


               201  CLEANUP OPERATION

               202  ESSENTIAL PUBLIC SERVICES

               203  PRIORITY RESERVE BANK

               204  QUARTERLY


          300  STANDARDS


               301  CRITERIA

               302  PRIORITY RESERVE

               303  ALLOCATION FOR ESSENTIAL PUBLIC SERVICES

               304  DISBURSEMENT

               305  PRIORITY RESERVE PRIORITIZATION

               306  RESERVING PRIORITY RESERVE CREDITS

               307  UNUSED CREDITS

               308  TRANSFERS

               309  RETURNS

               310  MORATORIUM


          400  ADMINISTRATIVE REQUIREMENTS


               401  CALCULATION PROCEDURES

               402  EMISSION REDUCTION CREDITS


          500  MONITORING AND RECORDS


               501  RECORDKEEPING

                    

          100  GENERAL


               101  PURPOSE:  The Priority Reserve Bank is established

                    within the Emission Reduction Bank for the following

                    purposes:


                    101.1     Use in achieving the emissions reduction rate

                              of progress requirements of the District Air

                              Quality Attainment Plan or State

                              Implementation Plan; and



                    101.2     Use in mitigating emission increases by

                              stationary sources, represented by permit

                              applications for new or modified permits, in

                              the period of July 1, 1991, through January

                              1, 1993, and the period of January 1, 1993,

                              through September 21, 1993, to the extent

                              mitigation was required by law and was not

                              obtained under the adopted District Rules and

                              Regulations; and



                    101.3     Use in providing loans of emission reductions

                              for use as offsets for new or modified

                              stationary sources that are essential public

                              services.



               102  APPLICABILITY:  Emission reduction loans from the

                    Priority Reserve shall be made to the extent that

                    banked emission reductions are available and the

                    transfer is allowed pursuant to Section 304, to

                    publicly owned or non-profit essential public services.

                    The applicant must have secured all potential offsets

                    available by modifying emission units at the same

                    stationary source.  Disbursement of emission reduction

                    loans shall not be provided for on-site power

                    generation.  Disbursement of emission reduction loans

                    shall not be provided for emissions units not necessary

                    to provide or maintain public health and safety.

                    Disbursement of emission reduction loans must be made

                    with banked emission reductions that are surplus to

                    mandated reductions - the emission reductions required

                    to meet rate of progress plan commitments and to

                    mitigate emission increases occurring prior to

                    September 21, 1993.





          200  DEFINITIONS:  Unless otherwise defined below, the terms used

               in this rule are defined in Rule 502, NEW SOURCE REVIEW, and

               Rule 504, EMISSIONS REDUCTION CREDITS.



               201  CLEANUP OPERATION -  Operation to remove environmental

                    contaminants from soil or water.



               202  ESSENTIAL PUBLIC SERVICES -  Except as provided in

                    Section 102, the following sources shall be considered

                    essential public services.

                    a.   Sewage treatment operations which are publicly

                         owned and operated consistent with the approved

                         General Plan; or

                    b.   Prison, jail, correctional facility; or

                    c.   Police or fire fighting facility; or

                    d.   School or hospital; or

                    e.   Landfill gas control or processing systems; or

                    f.   Water delivery operations which are publicly owned

                         and operated consistent with the approved General

                         Plan; or

                    g.   Cleanup or remediation operations mandated by

                         Regional Water Quality Control Board, California

                         Department of Health Services, Environmental

                         Protection Agency or any other state or federal

                         law, rule or regulation.



               203  PRIORITY RESERVE BANK -  A depository of emission

                    reductions used by the District toward achieving

                    mandated emission reductions or for loans to applicable

                    essential public services for use as offsets pursuant

                    to Rule 502, NEW SOURCE REVIEW.



               204  QUARTERLY -  Calendar quarter beginning in January,

                                 April, July, and October.

          300  STANDARDS



               301  CRITERIA:  The Priority Reserve Bank shall be supported

                    by actual emission reductions which are certified as

                    emission reduction credits (ERC) pursuant to Rule 504,

                    EMISSION REDUCTION CREDITS.



               302  PRIORITY RESERVE BANK:  Support for the Priority

                    Reserve Bank shall include, but not be limited to:



                    302.1     The adjustment on all emission reductions in

                              accordance with Rule 504, EMISSION REDUCTION

                              CREDITS.



                    302.2     Shutdowns or modifications of stationary

                              sources or emission units not claimed for

                              emission credits by the facility as provided

                              in Rule 504, EMISSION REDUCTION CREDITS.



               303  ALLOCATION FOR ESSENTIAL PUBLIC SERVICES:  On or before

                    December 31st of each year, the Air Pollution Control

                    Officer shall determine the amount of emission

                    reductions from the Priority Reserve Bank to be made

                    available for withdrawal and application to essential

                    public services for the upcoming year.  Additional

                    emission reductions not included in the yearly

                    determination may be added, if the Air Pollution

                    Control Officer determines there is a need, to the

                    previously established quarterly allocations.

                    Allocated emissions reductions shall be made available

                    on the first Wednesday of each calendar quarter.  The

                    amount available shall never exceed the emission

                    reductions in the Priority Reserve Bank.  The Air

                    Pollution Control Officer may reserve a portion or all

                    of the available emission reductions in the Priority

                    Reserve Bank to meet mandated emission reduction

                    requirements.  In the event the Priority Reserve Bank

                    lacks sufficient emission reduction credits to offset

                    emission increases for eligible stationary sources or

                    emission units, or such emissions have not been

                    allocated, the owner or operator of the new or modified

                    stationary source or emission unit shall be responsible

                    for obtaining the offsets required.



               304  DISBURSEMENT:  A loan of emission reductions from the

                    Priority Reserve Bank shall be based upon issuance of a

                    final action on an Authority to Construct, pursuant to

                    Rule 502, NEW SOURCE REVIEW, and no later than 15 days

                    following the end of the calendar quarter or other

                    schedule deemed applicable by the Air Pollution Control

                    Officer.



                    304.1     Legal Title to the emission reductions

                              borrowed from the Priority Reserve Bank

                              remains with the District.  An ERC

                              certificate of ownership will not be issued

                              for emission reductions loaned from the

                              Priority Reserve Bank.



                    304.2     A borrower of emission reductions from the

                              Priority Reserve Bank will be issued an ERC

                              Bank account number and the borrowed emission

                              reductions will be credited to that account.



                    304.3     Upon application by the borrower for an

                              authority to construct and permit to operate

                              the emission reductions in the borrower's

                              account will be credited to the permit.



                    304.4     The District will enter the permit number and

                              the amount of emission reductions credited

                              from the borrower's account on the permit and

                              in the borrower's account history.

                    304.5     Disbursement of emission reductions from

                              source shutdowns and curtailments shall be in

                              accordance with the most current US

                              Environmental Protection Agency emissions

                              trading policy and applicable federal

                              regulations.



               305  PRIORITY RESERVE PRIORITIZATION:  Priority shall be

                    given to mandated emission reductions, the emission

                    reductions required to meet rate of progress plan

                    commitments and to mitigate emission increases

                    occurring prior to September 21, 1993.  To the extent

                    surplus emission reductions are available, priority for

                    essential public services shall be given to

                    applications to the Priority Reserve Bank with the

                    earliest date an application is deemed complete.  The

                    Board of Directors of the District may determine that a

                    specific project shall be given priority for access to

                    the Priority Reserve based on public health or safety,

                    regardless of the application submittal date.



               306  RESERVING PRIORITY RESERVE CREDITS:  Sources may, if

                    the Air Pollution Control Officer determines a need,

                    reserve Priority Reserve credits for up to three years

                    to allow multi-year projects to be planned.  The sum of

                    such credits shall amount to no more than 25 percent of

                    each calendar quarter allocation for the Priority

                    Reserve for those three years.



               307  UNUSED CREDITS:  During any calendar quarter for which

                    there are fewer requests for emission credits in the

                    Priority Reserve Bank than are available for the

                    calendar quarter allocation, the credits not allocated

                    shall be made available for use the following calendar

                    quarter.



               308  TRANSFERS:  Priority Reserve Bank credits shall not be

                    transferable from one person to another.



               309  RETURNS:  Emission reductions shall be returned in full

                    from the borrower's account to the Priority Reserve

                    Bank under any of the following conditions:



                    309.1     Construction is not complete within two years

                              of date of issuance of the loan.



                    309.2     Voluntary surrender or revocation of an

                              Authority to Construct or Permit to Operate.



                    309.3     Emission reduction credits are issued to the

                              stationary source pursuant to Rule 504,

                              EMISSION REDUCTION CREDITS.



               310  MORATORIUM:  Except as provided in Section 309, a loan

                    of emission reduction credits shall exist for the life

                    of the emissions unit using such credits.  If the

                    District Board of Directors determines that additional

                    emission reductions are necessary, a moratorium on

                    loans may be imposed.  Prior to issuing a moratorium,

                    the Air Pollution Control Officer shall provide a

                    notice of the date of the meeting of the District Board

                    of Directors to consider such actions.  The moratorium

                    shall be lifted upon determination that additional

                    emission reductions are not necessary by the District

                    Board of Directors.



          400  ADMINISTRATIVE REQUIREMENTS



               401  CALCULATION PROCEDURES:  Emission reductions deposited

                    in the Priority Reserve Bank shall be quantified

                    pursuant to calculation procedures specified in Rule

                    504, EMISSION REDUCTION CREDITS.

               402  EMISSION REDUCTION CREDITS:  Any stationary source

                    which holds Emission Reduction Credits for the affected

                    pollutant requested in this application or requested in

                    prior applications, must first use these to replenish

                    credits previously obtained or for the pending

                    application, prior to being allowed access to the

                    Priority Reserve Bank.



          500  MONITORING AND RECORDS



               501  RECORDKEEPING



                    501.1     Each stationary source shall maintain a

                              cumulative total of emission credits obtained

                              from the Priority Reserve Bank.



                    501.2     The District shall maintain records of the

                              source and amount of emission reductions

                              obtained for deposit in the Priority Reserve

                              Bank, and transfers of these credits to

                              applicants and to satisfy mandated emission

                              reduction measures.