MOJAQMD RULE 1402 EMISSION REDUCTION CREDIT REGISTRY
LAST REVISED 06/28/95

                          Rule 1402
              Emission Reduction Credit Registry 

                              
(A)  General
                              
 (1)  Emission Reduction Credit Registry:
                              
  (a)  An Emission Reduction Credit Registry is hereby
  established for the District.
                              
   (i)  This shall be known as the Mojave Desert Air
   Quality Management District Emission
   Reduction Credit Registry (MDAQMD ERC
   Registry).
                              
  (b)  The MDAQMD ERC Registry shall consist of ERCs
  which have met all the following requirements: 
                              
   (i)  A timely and complete application for ERCs
   has been received pursuant to Section (B)(1);
                              
   (ii) The amount of ERCs have been calculated and
   approved by the APCO pursuant to District
   Rule 1404;

   (iii)     The amount and ownership of the ERCs has
   been entered into the Registry;

   (iv) A Certificate evidencing the amount, type and
   class of ERCs has been properly issued; and

   (v)  The ERCs have not yet been used as Offsets.
                              
  (c)  ERCs contained in the MDAQMD ERC Registry are
  permanent until used by the owner or by any person
  to whom the ERC has been transferred.
                              
  (d)  Subsequent changes in District Rules or
  Regulations to require a type of emission
  reduction which has previously been banked shall
  not reduce or eliminate such ERC.
                              
  (e)  Emission reductions are eligible to become ERCs
  if:
                              
   (i)  Such reductions are AERs and meet the
   requirements of 1401(A) and 1404(A)(3); or

   (ii) Such reductions were:
                              
    a.   previously recognized by the District in
    writing, pursuant to a formal internal
    tracking mechanism, as eligible for use
    as Offsets pursuant to Regulation XIII--New Source Review; and
                              
    b.   included in the emissions inventory after the shutdown or  
    modification occurred.
    
  (2)  Registration List:
                              
   (a)  All ERCs contained in the MDAQMD ERC Registry
   shall be listed in the Registration List.
                              
   (b)  The Registration List entry for each ERC shall
   contain the following information:
                              
    (i)  The name, address, and telephone number of
    the owner(s) of the ERC;
                              
    (ii) The amount and type of approved ERC;
                              
    (iii)     The Class of ERC (Class "A" ERC or Class
    "B" ERC);
                              
    (iv) Any information regarding liens, encumbrances
    and other changes of record.
                              
   (c)  The Registration List shall contain an entry for
   each ERC until such ERC is used, or otherwise
   altered by operation of law.
                              
  (3)  ERC Certificate:
                              
   (a)  All ERCs issued pursuant to this regulation shall
   be evidenced by a Certificate issued by the
   District and signed by the APCO.
                              
   (b)  The Certificate shall contain the same information
   as is contained in the Registration List entry for
   the issued ERC.
                              
   (c)  The APCO shall prescribe the form of the
   Certificate.
                              
   (d)  ERC Certificates shall not constitute instruments,
   securities or any other form of property.
                              
  (4)  Ownership of ERCs:
                              
   (a)  Initial title to approved ERCs shall be held by
   the owner(s) of the emissions unit(s) which
   produced the reduction in emission of air
   contaminants, in the same manner as such owner(s)
   hold title to the facility in which the emissions
   unit is located.

   (b)  Title for any approved ERC which has been
   transferred, in whole or in part, by written
   conveyance or operation of law from one person to
   another shall be held by the owner(s) in the
   manner indicated in the written conveyance or as
   indicated by the operation of law.
                              
   (c)  The owner(s) of an ERC as listed in the
   Registration List and on the ERC Certificate shall
   have the exclusive right to use such ERCs and/or
   to authorize such use.

  (5)  Classes of ERCs:
                              
   (a)  ERCs shall be classified as either Class "A" ERCs
   or as Class "B" ERCs.
                              
   (b)  ERCs shall be classified as Class "A" ERCs if:
                              
    (i)  The emissions reduction is the result of a
    modification or limitation of use of existing
    equipment such that after the reduction is
    made the equipment remains in service with an
    authority to construct or permit to operate
    pursuant to Regulation II - Permits or
    Regulation XII - Federal Operating Permits;
    or
                              
   (ii) The emission reduction is the result of a
   shutdown of emission unit(s) and there will
   likely be no resulting emission increase by a
   replacement emission unit(s).  The APCO shall
   etermine that there will likely be no
   resulting emission increase by a replacement
   emission unit(s) using the following factors:
                                                  
  a.   The product manufactured by or the
  material processed through the emission
  unit(s) are products or materials which
  will not likely be replaced by new or
  existing emission unit(s) located within
  the District;
                              
  b.   The emissions from any replacement
  emission unit(s) will not exceed the
  emission level of the shutdown unit;
                              
  c.   The emissions increase from any
  replacement emission unit(s) must be
  offset under the provisions of
  Regulation XIII--New Source Review.  
                              
   (c)  ERCs shall be classified as Class "B" ERCs if the
   emission reduction meets all the other
   requirements for AERs as set forth in District
   Rules 1401(A) and 1404(A)(3) but does not qualify
   as a Class "A" ERC.
                                    
(B)  Issuance of Emission Reduction Credits
                              
 (1)  Applications for ERCs:
                              
  (a)  ERCs shall be applied for, in writing, by the
  owner or operator of the emissions unit from which
  the emission reduction has occurred or will occur,
  to the APCO.
                              
  (b)  Applications for ERCs shall be clearly identified
  as such and shall contain the following:
                              
   (i)  The name, address, and telephone number of
   the owner(s) of the emissions unit and a
   contact person if necessary.
                              
   (ii) Information sufficient to identify the source
   and/or causation of the emission reductions.
                              
   (iii)     Information sufficient to allow the
   calculations set forth in Rule 1404 to
   be performed.
                              
  (b)  No application for ERCs will be accepted until the
  applicable fees as specified in District Rule 313
  have been paid.
                              
  (c)  Applications for ERCs shall be submitted in a
  timely manner determined as follows:
                              
   (i)  For emissions reductions which occurred prior
   to June 28, 1995, an application for ERCs
   shall be submitted within one (1) year after
   June 28, 1995.
                              
   (ii) For emission reductions which occurred after
   June 28, 1995, an application for ERCs shall
   be submitted within six (6) months after any
   of the following:
                              
    a.   District issuance of an Authority to
    Construct pursuant to District
    Regulation II - Permits; or
                              
    b.   District issuance of an Authority to
    Construct pursuant to Regulation XIII -
    New Source Review; or
                              
    c.   District issuance of a modified permit
    pursuant to Regulation II - Permits; or
                              
    d.   District issuance of a modified permit
    pursuant to Regulation XII - Federal
    Operating Permits; or
                              
    e.   for emissions units not subject to
    permitting requirements, the completion
    of the modification or shutdown.
                              
   (iii)     Notwithstanding subsections (1)(c)(i)
   and (ii) above, a timely application for
   a Military Base subject to closure or
   realignment  shall be determined
   pursuant to the provisions of Health &
   Safety Code 40709.7.
                              
  (d)  Applications for ERCs may be withdrawn at any time
  by the applicant.
                              
   (i)  An applicant who withdraws an application
   shall only be entitled to a partial refund of
   fees as set forth in District Rule 313(E).
                              
   (ii) A withdrawn application for ERCs does not
   preclude an applicant from later submitting
   an application for ERCs based upon the same
   emissions reductions as those contained in
   the withdrawn application as long as such
   resubmitted application is timely.
                              
 (2)  Determination of Completeness:
                              
  (a)  The APCO shall determine if the application is
  complete no later than thirty (30) days after the
  receipt of the application, or after such longer
  time as both the applicant and the APCO may agree
  upon in writing.
                              
   (i)  An application is complete when it contains
   the information required by subsection
   (B)(1)(b) above.
                              
 (b)  Upon making this determination, the APCO shall
 notify the applicant, in writing, that the
 application has been determined to be complete or
 incomplete.
                              
   (i)  If the application is determined to be
   incomplete:
                              
    a.   The notification shall specify which
    part of the application is incomplete
    and how it can be made complete; and
                              
    b.   The applicant for ERC shall have thirty
    (30) days to submit the additional
    information, unless another time period
    is specified by the APCO in writing.
                              
    c.   The applicant for an ERC may request,
    and the APCO may grant for good cause
    shown, extension(s) of time for
    submission of the additional
    information.  Such request and any
    extension(s) granted shall be in
    writing.
                              
    d.   If the applicant does not submit the
    additional information within the time
    period specified or extended the
    application shall be deemed withdrawn by
    the applicant.
                              
 (3)  Calculation of ERCs:
                              
  (a)  Calculation of ERCs shall be performed pursuant to
  the provisions of District Rule 1404.
                              
 (4)  Proposed ERCs:

  (a)  Within thirty (30) days after the application for
  ERCs has been determined to be complete, or after
  such longer time as both the applicant and the
  APCO may agree upon in writing, the APCO shall
  determine, in compliance with the standards set
  forth in subsection (C) below, to issue or deny
  the ERCs.
                              
   (i)  The APCO shall notify the applicant in
   writing of the determination.
                              
    a.   If the determination is to issue ERCs
    then the notice shall include the amount
    type and class of the ERCs proposed to
    be issued; or
                              
    b.   If the determination is to deny the ERCs
    then the notice shall include an
    explanation of the reason for the
    denial.
                              
  (ii) The information submitted by the applicant
  and the APCO's analysis shall be transmitted
  to the California Air Resources Board and the
  USEPA regional office no later than the date
  of publication of the notice of the
  preliminary determination pursuant to
  1402(B)(5)(a), if the amount of ERCs proposed
  to be granted are greater than any of the
  following amounts:
                              
     Pollutant   ERC Threshold
                              
       NOx       50,000 lbs/yr
                              
       SOx       50,000 lbs/yr
                              
       ROC       50,000 lbs/yr
                              
       PM10      30,000 lbs/yr
                              
       CO        200,000 lbs/yr
                              
       H2S       20,000 lbs/yr
                              
       Pb        1,200 lbs/yr
                              
 (5)  Public Notice and Comment:
                              
  (a)  After the APCO has determined to issue ERCs, the
  APCO shall publish a notice in at least one daily
  newspaper of general circulation within the
  District and shall send a copy of the notice to
  all persons who are included on a list of persons
  requesting notice, on file with the Clerk of the
  Board for the District.
                              
  (b)  The notice shall provide the following:
                              
   (i)  The name and address of the applicant and the
   facility generating the emissions reductions,
   if different;
                              
   (ii) The amount, type and class of ERCs proposed
   to be issued;
                              
   (iii)     The name, address and telephone number
   of a person from whom additional
   information may be obtained; and
                              
   (iv) At least a thirty day period in which
   interested persons may submit written
   comments to the District regarding the
   proposed issuance of the ERCs.

  (c)  The APCO shall accept all germane and nonfrivilous
  comments which are received during the comment
  period.  The APCO shall consider such comments
  prior to issuance of the ERCs.
                              
  (d)  The APCO shall include all accepted comments with
  the records regarding the issuance of the ERCs and
  shall retain such records for a period of at least
  five (5) years.
                              
 (6)  Issuance of ERCs:
                              
  (a)  Upon the expiration of the public comment period;
  after review of comments accepted, if any; and
  upon payment of the appropriate analysis fee, if
  any, the APCO shall issue the ERCs by including
  the appropriate information in the Registration
  List and issuing a Certificate.
                              
  (b)  The APCO shall provide written notice of the final
  action to the applicant (and to USEPA and the
  California Air Resources Board, if the preliminary
  determination was sent to such agencies pursuant
  to(B)(4)(a)(ii)).
                                                                           
(C)  Standards for Granting Emission Reduction Credits
                              
 (1)  ERCs shall be real, enforceable, permanent,
 quantifiable and surplus.
                              
 (2)  ERCs shall only be granted for emissions reductions
 which are not otherwise required by Federal, State or
 District law, rule, order, permit or requirement.
                              
 (3)  ERCs shall only be granted if the applicable changes to
 permits have occurred or other enforceable documents
 have been submitted as indicated.
                              
  (a)  If the emission reduction is the result of a
  modification or limitation of use of existing
  equipment: 
                              
   (i)  A revised permit to operate containing
   federally enforceable conditions reflecting
   the modification and/or limitations has been
   issued.
                              
 (b)  If the emission reduction is the result of a
 shutdown of permit unit(s):
                              
  (i)  The relevant permits have been surrendered
  and voided.
                              
  (ii) The emissions unit(s) for which the permits
  were surrendered will not be repermitted
  within the District, unless their emissions
  are completely offset pursuant to Regulation
  XIII - New Source Review.
                              
 (c)  If the emission reduction is the result of a
 shutdown of a emission unit(s) which did not have
 a District permit:
                              
  (i)  A valid District permit has been obtained or
  a contract enforceable by the District has
  been executed by the applicant which contains
  enforceable limitations reflecting the
  reduced emissions.
                              
 (d)  If the emission reduction is the result of the
 application of a more efficient control technology
 to a previously unpermitted emission unit(s):
                              
  (i)  A valid District permit has been obtained
  which contains enforceable limitations
  reflecting the reduced emissions.
                              
 (4)  If the emission reduction originates from a previously
 unpermitted emission unit, no ERCs may be granted
 unless the emissions are included in the District's
 Emissions Inventory.
                                           
(D)  (Transfer, Encumbrance, and Readjustment of
Emission Reduction Credits
                              
 (1)  ERCs may be transferred in whole or in part by written
 conveyance or by operation of law from one person to
 another in accordance with the provisions contained in
 this rule.
                              
 (2)  A voluntary transfer of ownership in whole or in part
 shall be performed according to the following
 procedure:
                              
  (a)  The owner(s) of the ERC may file a request for
  transfer of ownership with the APCO.  Such request
  shall include:
                              
   (i)  Information regarding the new owner of the
   ERC sufficient for entry in the registry.
                              
   (ii) An executed copy of the instrument
   transferring the ERC or a memorandum
   describing the transaction which transfers
   the ERC which is signed by all parties to the
   transaction.
                              
   (iii)     The purchase price, if any, of the ERCs
   in terms of total cost by pollutant
   purchased.
                              
   (iv) The existing ERC Certificate(s) for the ERCs
   to be transferred.
                              
  (b)  Upon payment of the appropriate transfer fee as
  set forth in District Rule 313, the APCO shall
  cancel the existing ERC Certificate(s) and issue
  new certificate(s) in the name of the new owner
  and indicate the transfer in the Registration
  List.
                              
 (3)  An involuntary transfer of ERCs shall be performed
 pursuant to the following procedure:
                              
  (a)  The transferee shall file with the District a
  certified copy of the document effecting the
  transfer.  The transferee shall certify that the
  document represents a transfer which is final for
  all purposes.
                              
  (b)  Upon payment of the appropriate transfer fee as
  set forth in District Rule 313, the APCO shall
  demand the original ERC Certificate from the
  original owner.  Upon the surrender of the
  existing ERC Certificate to the District or after
  90 days (whichever comes first), the existing ERC
  Certificate shall be considered cancelled, and the
  APCO shall issue a new ERC Certificate and
  indicate the involuntary nature of the transfer in
  the registry.
                              
  (c)  The APCO shall thereafter not allow the use or
  subsequent transfer of the ERC by the original
  owner.  
                              
 (4)  Other encumbrances upon ERCs shall be placed as
 follows:
                              
  (a)  The holder of the encumbrance shall file with the
  District a certified copy of the final document
  creating the encumbrance.
                              
  (b)  Upon payment of the appropriate transfer fee as
  set forth in District Rule 313, the APCO shall
  indicate the encumbrance in the Registration List.
                              
  (c)  Thereafter the APCO shall not allow the use or
  subsequent transfer of the ERC by the owner
  without receipt of a certified copy of the
  satisfaction of the encumbrance or by the removal
  of the incumbrance by its holder of the
  encumbrance.
                              
 (5)  Readjustments of ERCs due to the readjustment of AERs
 pursuant to District Rule 1404 shall be processed as
 follows:
                              
  (a)  The owner of the ERC shall file an application to
  adjust the AER.
                              
  (b)  The APCO shall determine if the adjustment of the
  AER is warranted and the amount of such adjustment
  pursuant to the provisions of District Rule 1404.
                              
  (c)  After the APCO has determined the amount of the
  adjustment, upon surrender of the prior ERC
  Certificate, the APCO shall issue an adjusted ERC
  Certificate to the owner.
                              
 (6)  Any transfer of an ERC shall not modify or otherwise
 alter the requirements contained in a permit or
 contract which render the ERC real, enforceable,
 permanent and quantifiable.
                              
 (7)  Notwithstanding any other provision of law, conflicting
 interests in ERCs shall rank in priority according to
 the time of filing with the District.

(E)  Use of Emission Reduction Credits
                              
 (1)  Class "A" ERCs:
                              
  (a)  Class "A" ERCs may be used as offsets in
  accordance with the provisions of Regulation XIII--New Source Review.
                              
 (2)  Class "B" ERCs:
                              
  (a)  Class "B" ERCs may not be used as offsets unless
  and until they have been reclassified as Class "A"
  ERCs.
                              
  (b)  Class "B" ERCs may be reclassified as Class "A"
  ERCs as follows:
                              
   (i)  The owner of the Class "B" ERC applies to the
   APCO in writing for reclassification.
                              
   (ii) The APCO determines that the ERC now meets
   the requirements for Class "A" status.  The
   APCO shall consider all relevant factors
   including: 
                              
    a.   The length of time the emission unit(s)
    have been out of service;
                              
    b.   Whether other similar emission unit(s)
    have experienced increased activity
    caused by the shutdown;
                              
    c.   Whether a permit application for a
    replacement emission unit has been filed
    within one year of the date of the
    shutdown.
                              
   (iii)     The APCO notifies the owner of the Class
   "B" ERC of his/her determination in
   writing.
                              
   (iv) If the APCO determines that reclassification
   is warranted then, upon receipt of the Class
   "B" ERC Certificate and payment of the
   appropriate fee as set forth in District Rule
   313, the APCO shall cancel the Class "B" ERC
   Certificate and issue a Class "A" Certificate
   to the owner.

(F)  Appeal of the Granting or Denial of Emission
Reduction Credits
                              
 (1)  An applicant for ERCs may, within 30 days after receipt
 of the notice of denial of ERCs, petition the District
 Hearing Board for a hearing on whether the application
 for ERCs was properly refused.
                              
 (2)  The procedural provisions applicable to such a hearing
 shall be the same as those used for hearings regarding
 the denial of a permit application pursuant to Health &
 Safety Code 42302.