PLACER COUNTY AIR POLLUTION CONTROL DISTRICT

RULE 504 - EMISSION REDUCTION CREDITS
(Adopted 09/21/93; Revised 11/03/94)


                                       CONTENTS

          100  GENERAL


               101  PURPOSE

               102  APPLICABILITY

               110  EXEMPTION, NOTIFICATION REQUIREMENTS

               111  EXEMPTION, CONCURRENT STATIONARY SOURCE MODIFICATION


          200  DEFINITIONS


               201  ACTUAL EMISSION REDUCTIONS

               202  BANKING

               203  BEST AVAILABLE RETROFIT CONTROL TECHNOLOGY

               204  CERTIFIED

               205  ELECTRICAL POWER PLANTS

               206  EMISSION REDUCTION CREDITS

               207  EMISSIONS UNIT

               208  ENFORCEABLE

               209  ERC CERTIFICATE

               210  HISTORIC ACTUAL EMISSIONS

               211  NON-PERMITTED EMISSIONS

               212  OFFSET

               213  PARCEL(S)

               214  PERMANENT

               215  PROPOSED EMISSIONS

               216  PORTABLE EQUIPMENT

               217  QUANTIFIABLE

               218  QUARTERLY

               219  REAL

               220  REASONABLY AVAILABLE CONTROL TECHNOLOGY

               221  REGISTER

               222  REPLACEMENT EQUIPMENT

               223  SHUTDOWN

               224  TEMPORARY SOURCE

               225  TRANSFER


          300  STANDARDS


               301  CERTIFICATION

               302  REEVALUATION

               303  NON-PERMITTED SOURCES

               304  SHUTDOWNS

               305  USE OF ERC'S, BANKING

               306  USE OF ERC'S, OFFSETS

               307  RETURNS,  USE OF ERC'S FOR TEMPORARY STATIONARY SOURCES

                    AND PORTABLE EQUIPMENT

               308  RETURNS, ISSUANCE OF PERMIT TO OPERATE

               309  RETURNS, USE OF ERC'S FOR ELECTRICAL POWER PLANTS

               310  RETURNS, ERC'S FROM THE PRIORITY RESERVE


          400  ADMINISTRATIVE REQUIREMENTS


               401  APPLICATION PROCEDURES

               402  COMPLETE APPLICATION

               403  PRELIMINARY DECISION

               404  PUBLICATION AND PUBLIC COMMENT

               405  PUBLIC INSPECTION

               406  CERTIFICATION, FINAL ACTION

               407  WITHDRAWAL OF APPLICATION

               408  CALCULATION OF EMISSIONS, GENERAL

               409  PRIORITY RESERVE ADJUSTMENT OF CALCULATED CREDITS

               410  REGISTRATION

               411  ERC REGISTER

               412  MORATORIUM


          500  MONITORING AND RECORDS


               501  RECORDKEEPING

          
          100  GENERAL


               101  PURPOSE:  To  provide  an  administrative mechanism for

                    quantifying, adjusting and certifying  surplus emission

                    reductions for:



                    101.1     later  use as offsets pursuant  to  District,

                              state or federal rules or regulations, or



                    101.2     transfer to other sources as offsets pursuant

                              to Rule 502, NEW SOURCE REVIEW.



               102  APPLICABILITY:  This  rule shall apply to all emissions

                    reduction credits for use within a stationary source or

                    for transfer to other sources.



               110  EXEMPTION, NOTIFICATION REQUIREMENTS:  The requirements

                    of  Sections  404 and 405;  relating  to  notification,

                    publication,  and   public  inspection  of  Preliminary

                    Decisions; shall not  apply  if  the application is for

                    emission reduction credits less than  the following per

                    calendar quarter:



                                                     Emission

                       Affected Pollutant            Reduction

                                                     Credits

                       

                       Reactive Organic Compounds       9,000

                                                        lbs/quarter

                       

                       Nitrogen Oxides                  9,000

                                                        lbs/quarter

                       

                       Sulfur Oxides                    9,000

                                                        lbs/quarter

                       

                       PM10                             7,200

                                                        lbs/quarter

                       

                       Carbon Monoxide                  49,500

                                                        lbs/quarter



               111  EXEMPTION,  CONCURRENT  STATIONARY SOURCE MODIFICATION:

                    Pursuant to Section 40709(c)  of  the California Health

                    and Safety Code, need not be banked  prior  to  use  as

                    offsets,  if  those  reductions  satisfy  all  criteria

                    established  by  this  rule,  Rule  501, GENERAL PERMIT

                    REQUIREMENTS, and Rule 502, NEW SOURCE REVIEW.  For the

                    purposes  of  this  exemption,  "concurrent  stationary

                    source    modification"    means    the    simultaneous

                    modification  of emission units and/or the addition  of

                    new emissions units  to  a  stationary  source with all

                    emission reductions occurring after the issuance of the

                    Authority to Construct authorizing such reductions, but

                    before  the start of operation of the new  or  modified

                    emissions unit(s) with emission increases.



          200  DEFINITIONS:  Unless otherwise defined below, the terms used

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



               201  ACTUAL EMISSIONS  REDUCTIONS -  Reductions of emissions

                    from  an emissions unit.   Actual  emission  reductions

                    shall  be   calculated   pursuant   to   Section   407,

                    Calculation of Emissions, and meet all of the following

                    criteria:



                    201.1     The   emissions  reductions  shall  be  real,

                              enforceable, quantifiable, and permanent.



                    201.2     The emissions  reductions  shall  be  surplus

                              emissions   reductions   in   excess  of  any

                              emissions reduction which is:

                         a.   Required  or  encumbered by any laws,  rules,

                              regulations,  agreements,   or   orders,  and

                              unless such law by its terms states  that the

                              emission   reduction   shall   be  considered

                              surplus, or

                         b.   Attributed to a control measure  noticed  for

                              workshop  in  the  District,  or  proposed or

                              contained in a State Implementation Plan, or

                         c.   Proposed  or  contained  in the District  Air

                              Quality  Attainment  Plan for  attaining  the

                              annual reductions required  by the California

                              Clean Air Act.

                    201.3     Except   for   control  measures  which   are

                              federally mandated  or  otherwise required or

                              encumbered   by  law,  emissions   reductions

                              attributed to  a proposed control measure may

                              be re-eligible as  surplus  actual  emissions

                              reductions for:

                         a.   Control  measures  identified in the District

                              Air   Quality  Attainment   Plan   or   State

                              Implementation  Plan  where  no rule has been

                              adopted within two years from  the  scheduled

                              adoption  date,  provided,  however, the  Air

                              Pollution  Control Officer has  not  extended

                              the scheduled adoption date, or

                         b.   Control  measures   not   identified  in  the

                              District Air Quality Attainment Plan or State

                              Implementation Plan where no  rule  has  been

                              adopted and two years have elapsed beyond the

                              date of the latest public workshop notice, or

                         c.   Control measures proposed in the District Air

                              Quality   Attainment   Plan   which  are  not

                              included  into  the  Plan  adopted   by   the

                              District  Board shall become re-eligible upon

                              adoption of the Plan.



                    201.4     Source shutdowns  and curtailments may not be

                              given emission reduction  credit  in the case

                              of   non-attainment   pollutants,   including

                              precursors,  if  they  occurred prior to  the

                              date of application unless:

                         a.   The shutdown or curtailment  was  claimed  by

                              the  affected facility as a credit within 180

                              days of the last date of operation.  Shutdown

                              or curtailment credits not claimed within 180

                              days shall  pass to the Priority Reserve Bank

                              as provided in Rule 505, PRIORITY RESERVE.

                         b.   The crediting  of shutdown emissions complies

                              with the most recent  emission trading policy

                              of  the US Environmental  Protection  Agency;

                              and

                         c.   The District  has  met the statutory planning

                              mandates   and   air   quality    improvement

                              milestones; or

                         d.   The proposed new source or modification  is a

                              replacement,  and the shutdown or curtailment

                              occurred after August 7, 1977, or

                         e.   The proposed new  source or modification does

                              not  meet  the  US  Environmental  Protection

                              Agency definition of  a major source or major

                              modification;  the  shutdown  or  curtailment

                              occurred after August  7,  1977; the shutdown

                              or curtailment was document  by  a concurrent

                              application  to  the  District  for emissions

                              reduction; and the emission reduction  credit

                              is used at the same stationary source.



               202  BANKING   -   The  system  of  quantifying,  adjusting,

                    certifying, recording, and storing ERC's for future use

                    and transfer.  This system shall be called the Emission

                    Reduction Credit Bank (ERC Bank).



               203  BEST AVAILABLE RETROFIT CONTROL TECHNOLOGY (BARCT) - an

                    emission limitation that is based upon the maximum

                    degree  of  reduction  achievable,  taking into account

                    environmental,  energy,  and economic impacts by each

                    class or category of source.  The  criteria for BARCT

                    are specified in "California Clean Air Act Guidance for

                    the   Determination  of  Reasonably Available Control

                    Technology   and   Best Available Retrofit Control

                    Technology",  California Air Resources Board, April

                    1990.



               204  CERTIFIED -  Emission reduction credits which have been

                    evaluated under the requirements of this rule and other

                    applicable  District,  state  and  federal  rules   and

                    regulations  and  which have been authorized by the Air

                    Pollution Control Officer.

               205  ELECTRICAL POWER PLANTS -  An electrical  generating

                    facility  located  within the District that regularly

                    generates electricity so the local electric utility can

                    provide  its  daily energy requirements.  Emergency

                    electrical  generating  equipment are not considered

                    electrical power plants.



               206  EMISSION  REDUCTION  CREDITS  (ERC)  -   Reductions  of

                    actual  emissions  from  an  emission  unit  that   are

                    registered  with  the  District  in accordance with the

                    requirements of this rule.



               207  EMISSIONS UNIT - An identifiable operation  or piece of

                    process equipment such as an article, machine, or other

                    contrivance which controls, emits, may emit, or results

                    in   the  emissions  of  any  affected  air  pollutant,

                    regulated  air  pollutant or Hazardous Air Pollutant

                    (HAP), directly or as fugitive emissions.  An emissions

                    unit shall not include the open burning of agricultural

                    biomass.   With  the  exception of early reductions  of

                    Hazardous Air Pollutants  in  accordance  with  Section

                    112(i)(5)  of  Title  V  of  Federal  Clean  Air Act as

                    amended in 1990, reduction credits may only be obtained

                    for reductions in affected pollutants.



               208  ENFORCEABLE - Verifiable and legally  binding.

                    Enforceable, for the purposes of federal requirements,

                    means   all   federally  enforceable  limitations   and

                    conditions enforceable by the administrator, including:

                    NSPS; NESHAP; requirements  within any applicable State

                    Implementation Plan; any permit requirement established

                    pursuant  to  40  CFR  52.21,  51.160-166;  or  federal

                    operating permit requirements.



               209  ERC  CERTIFICATE -  A document certifying  title  to  a

                    defined  quantity  and  type  of  ERC's  issued  by the

                    District to the owner(s) identified on the Certificate.



               210  HISTORIC ACTUAL EMISSIONS -

                    210.1     For  applications  for  emissions  reductions

                              deemed complete after the September 21, 1993,

                              "historic  actual  emissions" are the  actual

                              emissions  for  the existing  emissions  unit

                              averaged over the consecutive two year period

                              immediately preceding the date of application

                              for emission reduction  credits.  If the last

                              two  years  are  unrepresentative  of  normal

                              source operations  as  determined  by the Air

                              Pollution  Control  Officer,  then  any   two

                              consecutive years of the last five years that

                              represent  normal  source  operation  may  be

                              used.



                    210.2     For  applications  for  emissions  reductions

                              deemed  complete  prior to the September  21,

                              1993, "historic actual  emissions" are either

                              as calculated in Subsection 210.1, above, or,

                              at the option of the applicant  and  with the

                              approval   of   the   Air  Pollution  Control

                              Officer,  are the actual  emissions  for  the

                              existing emissions  unit  averaged  over  the

                              three  year  period immediately preceding the

                              date of application  for  emission  reduction

                              credits.



                    210.3     If, at any time during the two or three  year

                              period, actual emissions exceeded allowed  or

                              permitted   emission   levels,   then  actual

                              emissions   shall   be   reduced  to  reflect

                              emission levels that would  have  occurred if

                              the   unit   were   in  compliance  with  all

                              applicable limitations and rules.



                    210.4     Where an emissions unit has been in operation

                              for less than two years,  a shorter averaging

                              period  of  at least one year  may  be  used,

                              provided  that   the   averaging   period  is

                              representative   of   the   full  operational

                              history of the emissions unit.   If less than

                              one  year  has  passed  since  the  date   of

                              issuance  of  the  permit to operate then the

                              historic actual emissions shall be zero.

               211  NON-PERMITTED  EMISSIONS  -   Those   emissions  of  an

                    affected pollutant which are not required  to  obtain a

                    permit   pursuant   to   Rule   501,   GENERAL   PERMIT

                    REQUIREMENTS.  Non-permitted  emissions  may  include

                    emissions from mobile  sources,  indirect  sources, and

                    exempt equipment.



               212  OFFSET  -   The use of an emission reduction credit  to

                    compensate for  an  emission  increase  of  an affected

                    pollutant from a new or modified source subject  to the

                    requirements of Rule 502, NEW SOURCE REVIEW.



               213  PARCEL(S)  -   A legally identifiable piece of land  as

                    registered  with  the  County  Assessors's  office  for

                    property tax purposes.



               214  PERMANENT -  Only permanent reductions in emissions can

                    qualify for emission  reduction credit.  Permanence may

                    generally be assured for  sources  subject  to  federal

                    requirements by requiring federally enforceable changes

                    in  source permits, or applicable state regulations  to

                    reflect a reduced level of allowable emissions.



               215  PROPOSED  EMISSIONS  - Emissions based on the potential

                    to emit for the new or modified emissions unit.



               216  PORTABLE EQUIPMENT - Equipment  which  is  periodically

                    relocated and is not operated more than a total  of 180

                    days  at  any  one  location in the District within any

                    continuous 12 month period.



               217  QUANTIFIABLE -  Ability to estimate emission reductions

                    in terms of both their amount and characteristics.  The

                    same method of estimating emissions should generally be

                    used to quantify the  emission  levels before and after

                    the reduction.



               218  QUARTERLY  -   Calendar quarter beginning  in  January,

                    April, July, and October.



               219  REAL  -   Actually   occurring,  implemented,  and  not

                    artificially devised.



               220  REASONABLY AVAILABLE CONTROL  TECHNOLOGY  (RACT) -  The

                    lowest emission limitation that a particular  source is

                    capable  of  meeting  by  the  application  of emission

                    control   technology   that   is  reasonably  available

                    considering  technical and economic  feasibility.   The

                    criteria for RACT  are  specified  in "California Clean

                    Air  Act Guidance for the Determination  of  Reasonably

                    Available   Control   Technology   and  Best  Available

                    Retrofit Control Technology", California  Air Resources

                    Board, April 1990.



               221  REGISTER -  The document that records all ERC deposits,

                    withdrawals, transfers, and transactions.

               222  REPLACEMENT EQUIPMENT -

                    222.1     Functionally   Identical  Replacement:    The

                              replacement of or  modification  of  emission

                              units(s)  where  the  replacement unit serves

                              the identical function  as  the unit(s) being

                              replaced,  and  the  maximum rating  and  the

                              potential to emit any  pollutant  will not be

                              greater  from  the  new or modified emissions

                              unit(s) than the replaced  unit(s),  when the

                              emissions  unit(s)  are operated at the  same

                              permitted conditions.



                    222.2     Identical Replacement:   The total or partial

                              replacement of an emissions  unit  where  the

                              replacement  is the same as the original unit

                              in all respects except for serial number.

               223  SHUTDOWN  -   The  earlier   of  either  the  permanent

                    cessation of emissions from a  source  or  an  emission

                    unit  or  the  surrender  of  that  unit's  or source's

                    operating permit.



               224  TEMPORARY SOURCE - Temporary emission sources  such  as

                    pilot  plants,  and  portable  facilities which will be

                    terminated or located outside the  District  after less

                    than a cumulative total of 90 days of operation  in any

                    12 continuous months , and the emissions resulting from

                    the construction phase of a new source.



               225  TRANSFER -  The change in ownership of an ERC from  one

                    person or legal entity to another.



          300  STANDARDS



               301  CERTIFICATION:   Only  actual emission reductions shall

                    be certified as ERC's.  Such actual emission reductions

                    shall meet the following  requirements  to be certified

                    as ERC's.



                    301.1     Apply for emission reduction credits pursuant

                              to Section 401, and



                    301.2     Receive written approval of the Air Pollution

                              Control Officer, and



                    301.3     If the emission reduction is created  from an

                              emission   unit  where  the  demand  for  the

                              services or  product  could  shift  to  other

                              similar sources in the District, submittal of

                              data  to  document  that such reductions will

                              result in District-wide  emission  reductions

                              may be required by the Air Pollution  Control

                              Officer.  Such documentation must be approved

                              by the Air Pollution Control Officer.



                    301.4     Emissions  decreases  shall be prescribed  by

                              enforceable emission limitations contained in

                              authorities  to  construct   and  permits  to

                              operate,   or   result   from  the  permanent

                              surrender  or  the  voiding  of   permits  to

                              operate.



               302  REEVALUATION:   Actual  emission  reductions calculated

                    prior to September 21, 1993, shall be reevaluated under

                    the requirements and procedures specified in this rule.



               303  NON-PERMITTED SOURCES:

                    303.1     Except  as  provided in Section  303.2,  non-

                              permitted  emissions   units   or  stationary

                              sources requesting emission reduction credits

                              from  such  emissions  units shall  void  the

                              exemption  from  Rule  501,   GENERAL  PERMIT

                              REQUIREMENTS.  Such sources shall not operate

                              such  emissions  unit  or  stationary  source

                              without first obtaining a permit  pursuant to

                              Rule 501, GENERAL PERMIT REQUIREMENTS.



                    303.2     If   state   or  federal  law  prohibits  the

                              District  from   requiring  an  authority  to

                              construct or a permit  to operate pursuant to

                              Rule  501, GENERAL PERMIT  REQUIREMENTS,  the

                              applicant   for  emission  reduction  credits

                              shall execute a legally binding contract with

                              one or more owner(s)  or  operator(s)  of the

                              non-permittable  emissions  unit that ensures

                              the  sum of all emission reductions  will  be

                              provided  in accordance with the requirements

                              of this rule,  and will continue for the life

                              of the stationary source using the credits or

                              life  of  the  credits  as  provided  in  the

                              application.  Such  a contract shall be filed

                              with  the  District and,  by  its  terms,  be

                              enforceable  by  the  Air  Pollution  Control

                              Officer.  For sources subject to federal  NSR

                              requirements,  in  the  absence  of federally

                              enforceable  conditions, the execution  of  a

                              source specific SIP revision is required.

               304  SHUTDOWNS:  Shutdowns or  curtailments  occurring after

                    the September 21, 1993, claimed for emission  reduction

                    credit shall comply with the following:



                    304.1     Applicants for emission reductions due to the

                              shutdown   of   permitted   or  non-permitted

                              emissions  units  shall  demonstrate  to  the

                              satisfaction  of  the  Air Pollution  Control

                              Officer that such equipment will no longer be

                              operated within the District.



                    304.2     Emission  reductions  from  the  shutdown  of

                              retail  dry  cleaners  and   retail  gasoline

                              stations shall be prohibited.



                    304.3     An application for emission reduction credits

                              from  the  shutdown  of  emissions  units  or

                              stationary sources shall be  submitted within

                              180 days after the surrender of the permit to

                              operate or for non-permitted sources the last

                              date of operation of such emissions  unit  or

                              stationary source.



               305  USE  OF  ERC'S, BANKING:  ERC's may be banked for later

                    use as offsets.   The name of the user shall be entered

                    into the Register for  the applicable ERC's.  Except as

                    provided in Section 308,  309,  310, and 311 such ERC's

                    may not be returned to the bank following  the start of

                    operation  of  the stationary source or emissions  unit

                    using the ERC as offsets.



               306  USE OF ERC'S, OFFSETS:   ERC's  may be used immediately

                    as offsets.  The ERC shall be entered into the Register

                    along with the name of the user.  Except as provided in

                    Sections 308, 309, 310, and 311 such  ERC's  may not be

                    returned  to  the bank following the start of operation

                    of the stationary  source  or  emissions unit using the

                    ERC  as  offsets.   ERC's  may not be  used  to  offset

                    increases in toxic air contaminants.



               307  RETURNS, USE OF ERC'S FOR TEMPORARY  STATIONARY SOURCES

                    AND  PORTABLE  EQUIPMENT:   ERC's used as  offsets  for

                    temporary stationary sources or emissions units or used

                    as offsets for portable equipment  shall be returned in

                    full to the owner upon verification  of shutdown of the

                    temporary   stationary  source,  emissions   unit,   or

                    portable  equipment   by   the  Air  Pollution  Control

                    Officer.  ERC's must then be  re-deposited  in the Bank

                    and  re-entered into the Register by the owner,  within

                    60 days.



               308  RETURNS,   ISSUANCE  OF  PERMIT  TO  OPERATE:   If  the

                    applicant for  a  Permit to Operate requests a lowering

                    of the quarterly emission  limitation  as  a  result of

                    emissions testing conducted pursuant to an Authority to

                    Construct  and  the  requested new emissions limitation

                    has been demonstrated  as  achievable by such emissions

                    testing   and  will  be  continuously   achieved,   the

                    difference  in emission reductions credits necessary to

                    offset the emissions  unit  pursuant  to  Rule 502, NEW

                    SOURCE  REVIEW, shall be re-deposited in the  Bank  and

                    re-entered into the Register.



               309  RETURNS,  USE  OF  ERC'S  FOR  ELECTRICAL POWER PLANTS:

                    ERC's may be used at electrical  power plants to offset

                    emission increases resulting from increased power plant

                    operation needed to compensate for reduced operation at

                    other  electrical power plant(s) within  the  District,

                    due to emergency breakdown, pursuant to Rule 404, UPSET

                    CONDITIONS,  BREAKDOWNS  OR  SCHEDULED  MAINTENANCE, or

                    regularly   scheduled  maintenance.   ERC's  shall   be

                    returned in full  to  the  owner  upon  verification of

                    return  to  normal  operation  of  the using electrical

                    power plant.  ERC's shall be re-deposited  in  the Bank

                    and  re-entered into the Register.  The application  of

                    the provisions  of  this  Section  shall be approved in

                    writing by the Air Pollution Control  Officer  prior to

                    use.

               310  RETURNS,  ERC'S  FROM  THE  PRIORITY RESERVE:  Emission

                    Reduction Credits are returned  after a being loaned in

                    accordance with Rule 505, PRIORITY  RESERVE,  shall  be

                    returned  to  the  originating Priority Reserve.  Legal

                    title to ERC's transferred  to  the  ERC  Bank from the

                    Priority Reserve remains with the District  and not the

                    borrower.



          400  ADMINISTRATIVE REQUIREMENTS



               401  APPLICATION PROCEDURES:

                    401.1     Any person or entity, or an authorized agent,

                              which owns or operates a source at  which  an

                              eligible  emission  reduction has occurred or

                              will occur may apply  for  an ERC certificate

                              in accordance with the requirements  of  this

                              rule.



                    401.2     The  person  or  entity  requesting  the  ERC

                              certificate  shall  make  an  application  on

                              forms supplied by the District.



                    401.3     The  application may be for reductions in one

                              or more affected pollutants.  The application

                              shall contain sufficient information to allow

                              for adequate  evaluation  of  actual emission

                              reductions.



                    401.4     Applicants  may  claim  confidentiality   for

                              submitted  information  to the extent allowed

                              and provided for by provisions of the Federal

                              Clean   Air   Act   and   the  Administrative

                              Procedures of the California Government Code.



                    401.5     To  verify  emission  reductions  claimed  in

                              conjunction with an application  for  an  ERC

                              certificate,  the District may require source

                              tests  by  California   Air  Resources  Board

                              and/or  US  Environmental  Protection  Agency

                              approved   methods,  continuous   monitoring,

                              production records,  fuel use records, or any

                              other appropriate means.



               402  COMPLETE APPLICATION:

                    402.1     The  Air  Pollution  Control   Officer  shall

                              determine whether the application  for ERC is

                              complete not later than 30 days after receipt

                              of  the  application  for ERC, or after  such

                              longer time as both the applicant and the Air

                              Pollution  Control  Officer  have  agreed  in

                              writing.   If  the  Air   Pollution   Control

                              Officer  determines  that the application  is

                              not complete, the applicant shall be notified

                              in  writing  of the decision  specifying  the

                              information    required.      If    specified

                              information is not submitted by the applicant

                              within 60 days from the notification from the

                              District that the application is  incomplete,

                              the   application   shall   be  automatically

                              canceled unless the applicant  has  requested

                              an extension of time, in writing and prior to

                              the  end  of the 60 day period, from the  Air

                              Pollution Control Officer.  The Air Pollution

                              Control Officer  may  grant  an  extension of

                              time   not   to   exceed  90  days.   If  the

                              application is for  a shutdown or curtailment

                              emission reduction credit, failure to provide

                              the  additional  information  or  failure  to

                              request an extension  of time shall result in

                              those credits passing to the Priority Reserve

                              Bank pursuant to Rule 505, PRIORITY RESERVE.



                    402.2     Upon  receipt  of  any  re-submittal  of  the

                              application, a new 30-day period to determine

                              completeness shall begin.



                    402.3     Completeness    of    an    application    or

                              re-submitted application shall  be  evaluated

                              on  the basis of the information requirements

                              set forth  in  District  regulations (adopted

                              pursuant to Article 3, 65940 through 65944 of

                              Chapter 4.5 of Division l  of  Title 7 of the

                              California Government Code) as they  exist on

                              the   date   on   which  the  application  or

                              re-submitted application  was  received.  The

                              Air Pollution Control Officer may, during the

                              processing  of  the  application, request  an

                              applicant to clarify,  amplify,  correct,  or

                              otherwise    supplement    the    information

                              submitted in the application.



                    402.4     A fee shall be required pursuant to Rule 601,

                              PERMIT FEES - STATIONARY SOURCE.



                    402.5     For  offsets  provided  in  accordance   with

                              Health  and  Safety  Code  Sections  41605.5,

                              42314.5,   and   41865   concerning  emission

                              reductions from open field  burning,  an  ERC

                              application   covering   the  total  emission

                              reductions  necessary  to  offset  stationary

                              source emissions may be submitted at the time

                              of application for an Authority to Construct.

                              Applications  for  ERC's  from   agricultural

                              burning   shall   not  be  required  if  such

                              emissions are covered  by  an ERC obtained by

                              the stationary source utilizing such emission

                              reductions.



                    402.6     The  applicant  shall  submit  to   the   Air

                              Pollution  Control  Officer  records required

                              pursuant to Section 501.



               403  PRELIMINARY  DECISION:  Except as provided  in  Section

                    110,  following   acceptance   of   an  application  as

                    complete,  the  Air  Pollution  Control  Officer  shall

                    perform   the   evaluations   required   to   determine

                    compliance  with  all  applicable  District  rules  and

                    regulations  and make a preliminary written decision as

                    to whether the  emission reductions should be certified

                    as  an  ERC.  The decision  shall  be  supported  by  a

                    succinct written analysis.



               404  PUBLICATION  AND PUBLIC COMMENT:  Except as provided in

                    Section  110, within  ten  calendar  days  following  a

                    preliminary decision, the Air Pollution Control Officer

                    shall publish,  in  at  least  one newspaper of general

                    circulation  in  the  District,  a notice  stating  the

                    preliminary  decision  of  the  Air  Pollution  Control

                    Officer,  noting how the pertinent information  can  be

                    obtained, and  inviting  written  public  comment for a

                    30-day period following the date of publication.



               405  PUBLIC INSPECTION:  Except as provided in Section  110,

                    the  Air Pollution Control Officer shall make available

                    for public  inspection  at  the  Air  Pollution Control

                    District's  office  the  information submitted  by  the

                    applicant  and  the  Air  Pollution  Control  Officer's

                    analysis  no later than the  date  the  notice  of  the

                    preliminary  decision is published, pursuant to Section

                    404.   Information   submitted   which  contains  trade

                    secrets  shall  be handled in accordance  with  Section

                    6254.7 of the California  Government  Code and relevant

                    sections   of   the  California  Administrative   Code.

                    Further, all such  information  shall be transmitted no

                    later than the date of publication  to  the  California

                    Air Resources Board and the US Environmental Protection

                    Agency regional office, and to any party which requests

                    such information.



               406  CERTIFICATION, FINAL ACTION:

                    406.1     Within  180  days  after  acceptance  of   an

                              application  as  complete,  the Air Pollution

                              Control  Officer shall take final  action  on

                              the application after considering all written

                              comments.



                    406.2     Except as  provided  in  Section 110, the Air

                              Pollution  Control  Officer   shall   provide

                              written  notice  of  the  final action to the

                              applicant,  the  US Environmental  Protection

                              Agency,  and  the  California  Air  Resources

                              Board, and shall publish  such  notice  in  a

                              newspaper  of  general  circulation and shall

                              make the notice and all supporting  documents

                              available   for   public  inspection  at  the

                              District's office.

               407  WITHDRAWAL   OF   APPLICATION:    Withdrawal    of   an

                    application   for   certification  of  an  ERC  by  the

                    applicant shall result in cancellation.



               408  CALCULATION   OF  EMISSIONS,   GENERAL:    Calculations

                    performed pursuant  to  procedures  specified  in  this

                    Section  shall  not  conflict  with the requirements of

                    state  law.   The  following procedures  apply  to  the

                    calculation  of  ERC's   for   all  sources,  with  the

                    exception of ERC's from the open burning of biomass:



                    408.1     Actual emission reductions from modifications

                              to, or shutdowns of, existing emissions units

                              shall be calculated for each calendar quarter

                              by  subtracting the proposed  emissions  from

                              historical  actual  emissions.   Any positive

                              value  shall  qualify  for conversion  to  an

                              emission reduction credit.



                    408.2     Credits  for  particulate   matter   emission

                              reductions  shall  be  expressed in terms  of

                              PM10.



                    408.3     Credits for nitrogen oxides, reactive organic

                              compounds, carbon monoxide, sulfur oxides and

                              PM10 shall be quantified  in  terms of pounds

                              of  pollutants per quarter for each  calendar

                              quarter.



                    408.4     Actual  emission reductions shall be adjusted

                              to at least reflect emission rates achievable

                              with reasonably  available control technology

                              (RACT)  or  best available  retrofit  control

                              technology (BARCT),  whichever results in the

                              greatest adjustment.



               409  PRIORITY  RESERVE  ADJUSTMENT  OF  CALCULATED  CREDITS:

                    Before the Air Pollution Control Officer  may  issue  a

                    certificate  of  ownership  for any ERC's, the emission

                    reductions calculated in Section  408 shall be adjusted

                    1.05   emission   reductions  to  1.0  ERC.    Emission

                    reductions captured by the ERC adjustment shall pass to

                    the  Priority  Reserve   Bank  pursuant  to  Rule  505,

                    PRIORITY RESERVE.



               410  REGISTRATION:

                    410.1     Following certification of emission reduction

                              credits and verification  that  the  proposed

                              emission  reductions  have  been implemented,

                              the Air Pollution Control Officer shall issue

                              an original ERC Certificate to  the  owner(s)

                              by certified mail or in person.



                         The  issuance  of  an  ERC  certificate  shall not

                         constitute  evidence of compliance with the  rules

                         and   regulations    of   the   District,   or   a

                         representation or assurance  to the recipient upon

                         which reliance is authorized or  intended that the

                         ERC   represented  by  the  ERC  certificate   are

                         available from the District ERC bank.



                    410.2     The ERC Certificate shall contain:

                         a.   Certificate number, and

                         b.   Date of issuance, and

                         c.   Street  address  and APN of site creating the

                              surplus emissions  reductions  for  which the

                              ERC Certificate is issued, and

                         d.   Signature   of   the   responsible   District

                              official, and

                         e.   The  name of the owner shall be typed on  the

                              certificate  and  the  owner  shall  sign the

                              certificate.   If  the  owner is a public  or

                              private business entity,  a person authorized

                              to sign on behalf of the owner shall sign the

                              certificate, and

                         f.   Conditions of operation or use, including the

                              life of the credit.



                    410.3     A copy of each ERC Certificate  issued  shall

                              be maintained in the Bank Register.

                    410.4     Multiple owners of emission reduction credits

                              shall  be  separated according to agreements,

                              filed with the  District,  between the owners

                              with one ERC Certificate issued to each owner

                              for their respective portion.



                    410.5     Upon transfer of ERC's between  parties,  the

                              transferor's  ERC  certificate, and a copy of

                              an  agreement,  signed   by  the  transferor,

                              authorizing and memorializing the transfer of

                              the ERC to the transferee must be surrendered

                              to the Air Pollution Control  Officer  by the

                              transferee, within 30 days of the date of the

                              writing   authorizing  the  transfer  of  the

                              ERC's.



                         Upon receipt and  review of said documents the Air

                         Pollution Control Officer  shall  issue  a new ERC

                         certificate  in  the  name of the transferee.   If

                         fewer   than  all  the  transferor's   ERC's   are

                         transferred,  a new certificate shall be issued to

                         the transferor  showing  the remaining ERC's.  The

                         District may refuse to recognize  any  transfer of

                         ERC's  that  does not comply with the requirements

                         of this section.



                    410.6     The original  ERC  Certificate surrendered by

                              the registered owner  shall  be  filed in the

                              register and marked with the date of issuance

                              of the new ERC Certificate(s), the  number of

                              credits   transferred,   and   the   new  ERC

                              Certificate  number(s).   If  fewer than  all

                              ERC's are transferred, the new balance in the

                              name of the original owner shall  be  entered

                              in the register.



                    410.7     Prior  to  the  issuance of a permit allowing

                              the use of ERC's,  the registered owner shall

                              surrender  the  ERC Certificate  to  the  Air

                              Pollution Control  Officer.   The certificate

                              surrendered by the owner shall  be  filed  in

                              the  register  and  marked  with  the  permit

                              number,  street  address  and  APN of site of

                              use,  and  the  name  of the owner using  the

                              ERC's.  If a balance of  ERC's  remain, a new

                              ERC  Certificate  shall  be  issued  to   the

                              original   owner   and   the   original   ERC

                              Certificate shall be filed in accordance with

                              the provisions of this rule.



                    410.8     Unless  such  records  and  information  were

                              previously  submitted  to  the  Air Pollution

                              Control Officer, each ERC transaction must be

                              accompanied  submittal of the information  of

                              Section 501.



               411  ERC REGISTER:

                    411.1     The  register  shall  contain  the  following

                              information for  each  ERC Certificate issued

                              by the Air Pollution Control Officer:

                         a.   Certificate number, and

                         b.   Date of issuance, and

                         c.   Name and address of the registered owner, and

                         d.   Street address and APN of  site  creating the

                              surplus  emissions  reductions for which  the

                              ERC Certificate is issued, and

                         e.   Number of ERC's registered.



                    411.2     Upon  notice  of  a  transfer   of   an   ERC

                              Certificate the Air Pollution Control Officer

                              shall  enter the following information in the

                              register:

                         a.   Original ERC Certificate number, and

                         b.   New  ERC   Certificate   number,   or  street

                              address, APN, and permit numbers at which the

                              ERC's are being used, and

                         c.   Name and address of new owner(s), if any, and

                         d.   Number of ERC's being transferred.

                    411.3     Upon  use  of  the  ERC's  for  offsets,  the

                              following information shall be entered in the

                              register:

                         a.   All  information  required  in Section 411.2,

                              and

                         b.   Date ERC Certificate was surrendered  to  the

                              Air Pollution Control Officer, and

                         c.   Permit  numbers  to  which  ERC's  are  being

                              applied, and

                         d.   Name and address of ERC user, and

                         e.   Name,  if any, address, and APN of site where

                              ERC's are being used as offsets, and

                         f.   Number of ERC's being used for offsets.



               412  MORATORIUM:   If  the   District   Board  of  Directors

                    determines, after review of periodic  reports  prepared

                    by  the  Air Pollution Control Officer, that additional

                    emission reductions  are  necessary,  a  moratorium  on

                    withdrawals  may  be  imposed.   Prior  to  imposing  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 issuance of a

                    moratorium  to  owners  of  ERC  and  other  interested

                    parties.   The  moratorium   shall   be   lifted   upon

                    determination  that  additional emission reductions are

                    not  necessary  by  the District  Board  of  Directors.

                    Except as provided in Section 201.2, after the issuance

                    of   an   ERC  Certificate,   subsequent   changes   in

                    regulations,  except  Regulation 5, shall not reduce or

                    eliminate the deposit.



          500  MONITORING AND RECORDS



               501  RECORDKEEPING:



                    501.1     Cost of Offsets:   Each  applicant to seeking

                              to deposit, withdrawal, or  transfer Emission

                              Reduction   Credits   shall,  as  applicable,

                              report to the District each emissions trading

                              transaction;  the  amount  of  emissions  for

                              offsets purchased, by pollutant; the year the

                              offset transaction occurred;  and  the  total

                              cost, by pollutant, of the offsets purchased,

                              and other such information as may be required

                              to  perform  the  cost  analysis  required by

                              Section  40709.5(e) of the California  Health

                              and Safety  Code.   This information shall be

                              part of the public record.