KERAPCD RULE 210.3 EMISSION REDUCTIONS BANKING          
LAST REVISED 06/01/87
          
          
          RULE 210.3 Emission Reductions Banking - Adopted 4/25/83, 
                     Amended 6/1/87

          I.    General
                
                A. The purpose of this Rule is to:

                   1.  Facilitate use of emission reductions by industry as
                       tradeoffs or offsets for new or modified stationary
                       sources of air contaminants, including transfer of
                       ownership of such credits, and

                   2.  Provide the District with a means by which it can
                       verify that such emissions reductions are surplus,
                       permanent, quantifiable and enforceable.

                B. Should the Air Pollution Control Board (APCB) determine
                   that Reasonable Further Progress (RFP) towards
                   attainment of National Ambient Air Quality Standards as
                   required by the Clean Air Act is not occurring, it may,
                   after public hearing, establish a moratorium on Banking
                   System deposits and/or withdrawals.  It shall be the
                   policy of the APCB to terminate any moratorium at such
                   time as the APCB adopts those Rules and Regulations
                   necessary to show RFP.

                C. An owner or operator of a stationary source shall not be
                   required to obtain a Banking Certificate for emission
                   reductions used by that owner or operator in accordance
                   with Rule 210.1.

          II.   Definitions

                A. Source Operation means the last operation preceding the
                   emission of an air contaminant, which operation:

                   1.  Results in separation of the air contaminant from
                       process materials or in conversion of process
                       materials into air contaminants, as in the case of
                       combustion of fuels, and

                   2.  Is not an air pollution abatement operation.

                B. Stationary Source includes any structure, building,
                   facility, equipment, installation or operation (or
                   aggregation thereof or aggregation of installations)
                   owned, operated, or under control of the same person (or
                   persons under common control), and located within the
                   District on:

                   1.  One or more contiguous or adjacent properties; or

                   2.  One or more properties wholly within either the
                       Western Kern County Oil Fields or the Central Kern
                       County Oil Fields as defined in Rule 210.1, and used
                       for the production of oil.

                   Items of air contaminant emitting equipment shall be
                   considered aggregated into the same stationary source,
                   and items of non-air contaminant emitting equipment
                   shall be considered associated with air contaminant
                   emitting equipment only if:

                   1.  They have the same two digit Standard Industrial
                       Classification Code; or

                   2.  They are part of a common production process.
                       (Common production process includes industrial
                       processes, manufacturing processes, and any
                       connected processes involving a common raw
                       material.)

                   Emissions from all such aggregated items of air
                   contaminant emitting equipment and all such associated
                   items of non-air contaminant emitting equipment of a
                   stationary source shall be considered emissions of the
                   same stationary source.

                C. Baseline Emissions are the emissions from which all
                   Emission Reduction Credits are calculated and are the
                   emissions level of a source operation with control
                   equipment in operation as established by Rule 210.1,
                   Section IV. and representative of normal operation while
                   in compliance with District Rules and Regulations.

                D. Emission Reduction means the difference between a source
                   operation's baseline emissions and emissions that source
                   emits after a voluntary reduction.  Such source shall
                   have been operated under Permit to Operate or shall have
                   submitted an application for or have acquired a Permit
                   to Operate from the District at the time of the
                   reduction.

                E. Emission Reduction Credit (ERC) means emission reduction
                   recognized by the District as available for use as
                   tradeoffs or offsets for new or modified stationary
                   sources pursuant to requirements of Rule 210.1.

                F. ERC Validation means the procedure as defined by the
                   Control Officer for verifying, prior to determining an
                   emission reduction qualifies as an ERC, that an emission
                   reduction is surplus, permanent, quantifiable, and
                   enforceable by the District.  Such procedure may
                   include, but is not limited to, "before" and "after"
                   source testing, issuance of Permits to Operate
                   previously exempt source operations and identification
                   and modification of existing Permits to Operate
                   requiring revision.

                G. Milestone means a date before which an emission
                   reduction does not qualify for an ERC.
                H. Banking Certificate means the document issued by the
                   Control Officer which officially recognizes an ERC.
                   This document conveys no right to emit air contaminants,
                   but can be used in accordance with these Rules and
                   Regulations as tradeoffs or offsets for new or modified
                   stationary source emissions.  A Banking Certificate may
                   include revised existing Permits to Operate as riders if
                   ERC Validation so requires.

                I. Banking Certificate Registry means an official public
                   record maintained by the District including a record of
                   all certificate applications received, all certificates
                   issued and denied, all transfers of certificate
                   ownership, etc.

                J. Banking means the process of obtaining and using Banking
                   Certificates, including deposit, full or partial
                   withdrawal, and transfer of ownership of ERC's.  Banking
                   does not include:

                   1.  Use of certificates to establish compliance with
                       Regulation IV emission limits, except Rules 411.1,
                       424 and 425, unless the Regulations include a Rule
                       specifically allowing such, or

                   2.  Use of certificates to satisfy NSPS, BACT or LAER
                       requirements.

          III.  Establishing Emission Reduction Credits (ERC's)

                A. Emission Reduction Milestone

                   Banking Certificates cannot be issued for emission
                   reductions represented by Authorities to Construct
                   originally issued before September 12, 1979 for heavy
                   oil production operations and cannot be issued for
                   emission reductions represented by Authorities to
                   Construct or Permits to Operate originally issued before
                   December 28, 1976 and achieved before this date for all
                   other industries.  A certificate can be utilized between
                   these two groups provided the issuance date does not
                   predate a milestone.

                   In accordance with EPA's ERC policy of April 7, 1982,
                   emission reductions resulting from shutdowns prior to
                   August 7, 1977 are not eligible for an external or off-
                   site ERC unless it can be demonstrated the reduction has
                   not already been included in the District's Non-
                   attainment Area Plans and Updates to the plans.

                B. Emission Reductions Not Eligible for ERC's

                   The following emission reductions cannot be validated as
                   ERC's, and therefore, are not eligible for receipt of
                   Banking Certificates:

                   1.  Emission reduction occurring from reduction of
                       emissions to achieve compliance with to-be-
                       implemented control strategies adopted as part of
                       the Air Quality Maintenance Plan/Non-attainment Area
                       Plan.

                   2.  Emission reduction occurring from shutdown or
                       curtailment of a stationary source which provides a
                       service or a product which will be replaced by other
                       stationary sources upon shutdown or curtailment,
                       e.g., a motor gasoline retail outlet.

                   3.  Emission reduction occurring at a cotton gin for
                       which the provisions of Rule 210.1, Section III.G.
                       have been implemented.

                   4.  Emission reduction occurring from operation of a
                       cogeneration facility due to reduced electrical load
                       demand at a fossil fuel fired power plant.

                   5.  Emission reduction occurring from shutdown or
                       curtailment of a stationary source for which the
                       District originally provided the required tradeoff
                       or offset, e.g., a cogeneration project.

                   6.  Emission reduction occurring from shutdown or
                       curtailment of a stationary source for which the
                       tradeoff or offset originally provided is not
                       enforceable by the District, e.g., reductions in
                       open burning of agricultural waste used to offset
                       emissions from a resource recovery project.

                   7.  Emission reduction occurring at a stationary source
                       different from that for which the application of ERC
                       has been submitted, e.g., reductions from combustion
                       sources provided with "low-polluting" fuel produced
                       at a refinery for which the application for ERC is
                       submitted.  This does not preclude submission of
                       separate applications by the owners of affected
                       stationary sources.

                   8.  Any other emission reduction the Control Officer
                       reasonably determines cannot be validated.

                   9.  Emission reductions occurring from shutdown or
                       curtailment of a stationary source are not eligible
                       as an external or off-site ERC unless and until
                       Federal Regulations so allow.

                C. Calculation of Emission Reductions

                   Emission reductions shall be calculated in a manner not
                   inconsistent with Rule 210.1.  An ERC for a source
                   operation shutdown shall be granted only in an amount
                   equal to emissions which would have occurred from the
                   specific source if Reasonably Available Control
                   Technology (RACT) for that source category had been
                   applied.

                D. Eligibility of Emission Reductions for ERC

                   Eligibility of emission reductions for ERC shall be
                   determined by the Control Officer using the following
                   criteria:

                   1.  Only emission reductions achieved in accordance with
                       provisions of the District's Rules and Regulations
                       and which fulfill ERC validation by the Control
                       Officer are eligible for issuance of a Banking
                       Certificate.

                   2.  To obtain an ERC, a stationary source owner/operator
                       shall file an application as prescribed by the
                       Control Officer no more than ninety (90) days after
                       date such reduction occurs commencing with date of
                       adoption of this Rule.  Applications for qualifying
                       emission reductions occurring before date of
                       adoption of this Rule shall be filed within one year
                       of adoption.  To obtain an ERC for actual emissions
                       reductions provided to obtain approval of an
                       Authority to Construct, an application must be filed
                       at least 90 days prior to expiration of that permit.
                       Should a deposit moratorium be implemented pursuant
                       to Section I. of this Rule, applications shall be
                       received for a period of ninety (90) days after the
                       moratorium is lifted for emission reductions
                       occurring during the moratorium.

                   3.  Existing source operations exempt from permit
                       requirements by Rule 202 and proposed for shutdown
                       or modification for purposes of achieving an
                       emission reduction, shall first acquire or apply for
                       Permits to Operate pursuant to Rule 202 and then
                       surrender such Permits before an ERC can be granted.
                       Source operations already under Permit to operate
                       shall likewise surrender such Permits.  Stationary
                       sources to be modified or curtailed shall receive
                       new Permits to Operate including conditions deemed
                       necessary to insure ERC validation.

          IV.   Banking Emission Reductions Credits (ERC's)

                A. Application for Validation of an ERC

                   Application for an ERC shall be submitted and validation
                   of an ERC by the Control Officer shall be conducted in
                   the following manner:

                   1.  A stationary source owner/operator wanting to obtain
                       an ERC shall submit a filing fee and an application
                       as prescribed by the Control Officer, including all
                       information and data deemed necessary for
                       validation.

                   2.  The Control Officer, utilizing material submitted by
                       the applicant and any other pertinent data
                       available, shall conduct a concise written
                       validation of the proposed ERC including the
                       determination the emission reduction:

                       a.  Has, in fact, actually occurred,

                       b.  Is surplus, i.e., has not previously been
                           required by law or utilized as a tradeoff or
                           offset,

                       c.  Will be permanent,

                       d.  Can be quantified, and

                       e.  Can be enforced.

                   3.  Applications shall be processed and reviewed within
                       time limits set forth in Chapter 4.5, Division 1,
                       Title 7 of the California State Government Code.

                B. Issuance or Denial of Banking Certificates

                   After completing the validation procedure required by
                   Subsection IV.A.2., the Control Officer shall either
                   issue or deny a Banking Certificate.

                   1.  Payment of the issuance fee prescribed by Regulation
                       III, Schedule 9 shall be made by the applicant for
                       issuance of the Banking Certificate upon completion
                       of a thirty-day public comment period noticed in a
                       least one newspaper of general circulation.  The
                       Control Officer's validation analysis shall be made
                       available for public inspection during this period
                       and all public comments shall be given due
                       consideration in the final decision to issue a
                       Banking Certificate.  Banking Certificate shall be
                       issued within thirty (30) days after payment of
                       issuance fee.

                   2.  An applicant shall be informed, in writing, of an
                       ERC denial.  The Control Officer's notification of
                       denial shall include the reasons therefore, and
                       shall provide for a period of thirty (30) days
                       during which the applicant may appeal the denial
                       before the Kern County Air Pollution Control
                       District Hearing Board.

                C. Banking Certificates and Registry

                   Upon payment of the required issuance fee, the Control
                   Officer shall issue and enter in the Banking Certificate
                   Register a Banking Certificate including as a minimum:

                   1.  Applicant's name,

                   2.  Issuance and expiration dates,

                   3.  Quantity of ERC,

                   4.  Location of ERC, and

                   5.  Other items necessary to insure ERC validation.

                       a.  A duplicate copy of all Banking Certificates
                           issued, including corresponding ERC validation,
                           shall be entered in the Banking Certificate
                           Registry available for public inspection.

                       b.  Each certificate shall be issued to represent no
                           more than one specific criteria pollutant and
                           for particulates it shall specify type of
                           particulates (e.g., combustion, cement,
                           agricultural, etc.).

                       c.  Upon application and payment of a filing fee,
                           the Control Officer shall reissue a Banking
                           Certificate under new ownership provided he can
                           verify the original ERC validation remains
                           intact.

                D. Banking Certificate Longevity

                   1.  Once granted by the Control Officer, Banking
                       Certificates shall be valid for a period of two
                       years.  Upon payment of the renewal fee, a Banking
                       Certificate may be reviewed for successive two-year
                       periods provided the ERC remains intact.

                   2.  Upon written request to the Control Officer, a
                       Banking Certificate still owned by the original
                       applicant may be canceled.  After cancellation,
                       the ERC may still be used in accordance with
                       Rule 210.1.

                E. Banking Certificate Fees

                   Banking Certificate fees shall be assessed and
                   administered in accordance with Rule 301.1.

          V.    Use of Banking Certificates

                A. Tradeoffs and Offsets

                   An ERC represented by a valid KCAPCD Banking Certificate
                   may be used by the owner to tradeoff or offset new or
                   modified stationary source emissions as required and
                   allowed by Rule 210.1.

                B. Partial Use of an ERC

                   Partial use of an ERC entitles the Banking Certificate
                   owner to receive, after payment of the issuance fee, a
                   new Banking Certificate representing the remainder of
                   the ERC.

                C. Transfer of Ownership

                   After payment of the transfer fee, ownership of a
                   Banking Certificate may be transferred.  Until
                   provisions are incorporated in this Rule, leasing of
                   Banking Certificates shall not be allowed.

                   1.  Tradeoffs and offsets are limited to actual
                       historical emissions, as established in
                       Section IV., Rule 210.1, in the event a Banking
                       Certificate transfer of ownership has taken place.

                   2.  Banking Certificates issued for fugitive particulate
                       emissions may not change ownership.


                D. Hazardous Air Contaminants

                   Emission reduction of a hazardous air contaminant are
                   eligible as an ERC and shall be recorded on the Banking
                   Certificate as a criteria pollutant and can only be used
                   to offset non-hazardous air contaminants.