SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

(Adopted May 11, 2001)

RULE 1631.

PILOT CREDIT GENERATION PROGRAM FOR MARINE VESSELS 
(a) Purpose
  The purpose of this rule is to provide opportunities to generate NOx mobile source emission reduction credits (MSERCs) for use in RECLAIM through the voluntary repowering of diesel-fueled marine vessels.
(b) Applicability
  (1) This rule applies to persons who voluntarily elect to generate NOx MSERCs, which may be used in RECLAIM pursuant to Rule 2008 - Mobile Source Credits through the repowering of diesel-fueled captive marine vessel engines with emissions that are at or below a specified emission standard.
  (2) This rule does not apply to any:
    (A) emission reductions produced by monies from any public air quality related funding program including but not limited to Rule 2202, the Carl Moyer Memorial Air Quality Standards Attainment Program, or AB2766 funding;
    (B) emission reductions required pursuant to any law, rule, or regulation, or legal instrument such as a legal settlement or consent decree; or
    (C) emission reductions from a marine engine included in the Certification, Averaging, Banking, and Trading Provisions specified in 40 CFR Part 94, Subpart D.
(c) Definitions
  (1) ACTIVITY LEVEL (AL) means for the purpose of this rule, the number of gallons of fuel consumed per year.
  (2) APPLICATION means for the purpose of this rule, the Rule 1631 MSERC Application as specified in subdivision (e).
  (3) BASELINE EMISSION FACTOR (EFbase) means the emission factor, used to quantify annual emissions from a diesel-fueled marine vessel engine prior to repowering as determined pursuant to paragraph (f)(3).
  (4) CAPTIVE MARINE VESSEL means a diesel-fueled marine vessel that exclusively operates within district waters at all times during the credit generation period.
  (5) CREDIT GENERATION PERIOD means the timeframe that MSERCs are being generated and begins on the date that the requirements of subdivision (d) are met and can extend no longer than June 30, 2005. The first segment of the credit generation period, which may be 12 months or less, is referred to as the "initial credit generation period" and each 12 month segment of the credit generation period thereafter, is referred to as the "annual credit generation period."
  (6) CREDIT ISSUANCE PERIOD means the timeframe that MSERCs are issued and begins on the date that the requirements of subdivision (g) are met.
  (7) DIESEL FUEL means any fuel that is commonly known as diesel fuel No. 1-D or 2-D, or meets the specifications in ASTM D 975, Standard Specifications for Diesel Fuel Oils.
  (8) DISTRICT WATERS means the overwater boundaries extending out 25 miles perpendicular from the northernmost coastal intersection point of Los Angeles County and southernmost coastal intersection point of Orange County.
  (9) GLOBAL POSITIONING SYSTEM OR GPS means a satellite-based radionavigation receiver capable of providing the time and position of a unit.
  (10) MARINE ENGINE means an internal combustion engine for propulsion on a marine vessel that is greater than or equal to 37 kilowatts (50 horsepower) and having a specific engine displacement less than 30 liters per cylinder.
  (11) MARINE VESSEL means for the purpose of this rule, any tug boat, tow boat, push boat, passenger/excursion boat, lighter barge, work boat, supply boat, crew boat, utility boat, passenger ferry, barge, dredge, or commercial fishing boat.
  (12) MOBILE SOURCE EMISSION REDUCTION CREDIT (MSERC) means for the purpose of this rule, emission reduction credits that meet the requirements of this rule and are issued as specified in paragraph (g)(2).
  (13) NEW MARINE ENGINE means a marine engine that has not been installed on a marine vessel and where the equitable or legal title to the engine has never been transferred to an ultimate purchaser.
  (14) OPTIONAL EMISSION FACTOR (EFopt) means for the purpose of this rule, the emission factor used to quantify annual emissions from a marine vessel after repowering as determined under paragraph (f)(4).
  (15) RECLAIM FACILITY means any stationary source subject to Regulation XX, pursuant to Rule 2001 - Applicability.
  (16) REPOWER OR REPOWERING means the replacement of an existing captive diesel-fueled marine vessel engine with an engine with emissions that are EPA certified to be at or below a specified emission standard.
  (17) RETIRE OR RETIRED means that the credit, regardless of the expiration date of the credit, can no longer be transferred or used.
  (18) SURPLUS means that emission reductions achieved throughout the duration of the emission reduction activity that are not required or relied upon by any local, state, or federal rule, or regulation, and the federal Clean Air Act; and are not required or relied upon in an attainment demonstration, reasonable further progress demonstration, or emissions inventory thereby ensuring that there is no double counting of emission reductions.
(d) Credit Generator Requirements
  Any person that elects to generate MSERCs under this rule shall meet all of the following requirements:
  (1) Replace existing diesel-fueled captive marine engines with new marine engines certified to an optional emission factor specified in paragraph (f)(4) prior to January 1, 2004;
  (2) Demonstrate that each marine vessel is equipped with GPS or another method that is approved by the District, CARB, and EPA that is capable of monitoring and recording that the marine vessel is within the district boundaries at all times during the credit generation period;
  (3) Demonstrate that the purchase contract for acquisition of the new marine vessel engine used for repowering is signed no earlier than October 1, 2000 and that the engine is not installed prior to May 11, 2001;
  (4) Demonstrate that the marine vessel is a captive marine vessel during the credit generation period;
  (5) Submit an Application as specified in subdivision (e); and
  (6) Demonstrate compliance with the monitoring, recordkeeping, and reporting requirements specified in subdivision (j).
(e) Application
  (1) Any person that elects to generate MSERCs under this rule shall submit an Application to the District no later than 30 days after repowering the marine vessel and before January 1, 2004. The Application shall include the following:
    (A) A description of the repower project, including, at a minimum, the marine vessel name, marine vessel identification number, marine vessel type, owner, and for both the original and replacement engine, the engine make, engine model, engine model year, engine serial number, horsepower, and engine speed;
    (B) Identification of the geographic area served by the marine vessel during the credit generation period;
    (C) Identification of the location where the repowered marine vessel is anchored or docked when not in service;
    (D) Documentation showing the date of purchase and installation for the new marine vessel engine;
    (E) In-use source test data for establishing the baseline emission factor pursuant to paragraph (f)(3), in units of either grams of NOx per kilowatt-hour (g/kW-hr) or grams of NOx per brake horsepower-hour (g/bhp-hr) that demonstrates compliance with paragraph (f)(3);
    (F) Engine manufacturers emission test data for establishing the optional emission factor pursuant to paragraph (f)(4), in units of either g/kW-hr or g/bhp-hr, and all necessary conversion factors for the new engine used in the repowering that demonstrates compliance with paragraph (d)(1);
    (G) The projected initial service date of the repowered captive marine vessel that would represent the beginning of the credit generation period;
    (H) Identification of the intended user(s) of the MSERCs, if available.
    (I) The historical annual average activity level for the repowered captive marine vessel for the previous calendar two-year period;
    (J) Designation of the RECLAIM Compliance Cycle for each marine vessel for the initial and each annual credit generation period through the entire credit generation period.
    (K) The projected activity level for the initial credit generation period and the projected annual activity level after the initial credit generation period which coincides with either RECLAIM Compliance Cycle 1 or 2, up to June 30, 2005. The projected activity level for any single repowered marine vessel should not exceed 120% of the most recent two-year historical annual average activity level specified in subparagraph (e)(1)(I).
  (2) If the initial service date, as specified in subparagraph (e)(1)(G) of the repowered captive marine vessel is before the Application is approved, the Application shall include the following additional information:
    (A) Proof of delivery of the new replacement marine vessel engine;
    (B) Proof that the original marine vessel engine is destroyed, sold, or otherwise transferred to a new owner who operates the engine outside of the district with the location and identity of the new owner along with a copy of a written notification informing the new owner that the original engine must not be installed in a marine vessel or other mobile source in the state of California; and
    (C) Written certification or signed declaration from the credit generator that any original marine vessel engine that is not sold, scrapped, or otherwise transferred to a new owner or location outside the district has not been and will not be installed in a marine vessel or other mobile source which is operated in the state of California.
  (3) If the initial service date, as specified in subparagraph (e)(1)(G) is after the Application is approved, the credit generator shall provide information specified under paragraph (e)(2) prior to credit issuance pursuant to paragraph (g)(1).
  (4) The Application shall be deemed a plan, and plan fees shall be assessed in accordance with Rule 309 - Fees for Regulation XVI.
  (5) The Executive Officer shall approve or disapprove the Application and any subsequent revisions submitted pursuant to paragraph (e)(6), in writing within 90 days of submittal of a complete Application or Application revision.
  (6) Notwithstanding subparagraph (e)(7), any person that submits an Application may amend the Application to:
    (A) revise information provided under subparagraphs (e)(1)(A) through (e)(1)(I) at any time;
    (B) revise the original projected activity levels specified in subparagraph (e)(1)(K) no later than 30 days for the initial credit generation period and 180 days for the annual credit generation period after the beginning eligibility credit issuance date pursuant to subparagraph (g)(2)(B) of the MSERCs; or
    (C) remove a marine vessel from the Application, provided the credit generator retires MSERCs or MSERCs converted into RTCs to cover reductions projected for that marine vessel for the entire current and subsequent credit generation periods in which the replaced vessel would have generated credits.
  (7) An Application shall not be amended to add a marine vessel that is removed from the Application pursuant to subparagraph (e)(6)(C) until the following annual credit generation period.
(f) MSERC Quantification
  (1) MSERCs shall be quantified using the following equation:
    MSERC =  

 
       
    Where    
    MSERC = Mobile source emission reduction credit (pounds)
    EFbase = Baseline emission factor (grams of NOx/bhp-hr or grams of NOx/kW-hr)
    EFopt = Optional emission factor (grams of NOx/bhp-hr or grams of NOx/kW-hr)
    ECopt = Energy Consumption Factor at the maximum rated speed for the replacement engine (bhp-hr/gallon or kW-hr/gallon)
    AL = Activity level (gallon)
    454 = Conversion factor from grams to pounds
  (2) The projected and actual activity level used to quantify the MSERCs shall be determined from the information submitted pursuant to subdivisions (e) and (h), respectively.
  (3) To quantify MSERCs from the repowering of marine vessels the value of the baseline emission factor shall be:
    (A) determined using an emission factor in grams of NOx per brake horsepower-hour or grams of NOx per kilowatt-hour:
    (B) based on emissions testing using either ISO 8178-E3 or CARB-approved in-situ source testing referenced in Diesel Marine Vessel Emissions Testing Protocol, Santa Barbara County Air Pollution Control District, July 1999. If the Santa Barbara protocol is used, the appropriate manufacturer propeller curves shall be used to reflect any changes to the propeller or transmission of the repowered marine vessel; and
    (C) less than or equal to 19.8 grams of NOx per brake horsepower-hour (26.6 grams of NOx per kilowatt-hour).
  (4) To quantify MSERCs from the repowering of marine vessels the value of the optional emission factor shall be:
    (A) based on engine manufacturer's test data using certification test protocols referenced in 40 CFR Part 94 - Control of Emissions of Air Pollution from New Marine Compression-Ignition Engines at or Above 37 kW;
    (B) determined using an emission factor in grams of NOx per brake horsepower-hour or grams of NOx per kilowatt-hour; and
    (C) Certified by EPA to be less than or equal to the applicable emission standards specified in Table 1 - Thresholds for NOx Optional Emission Factors.
(g) Credit Issuance
  (1) The Executive Officer shall issue MSERCs provided the credit generator has written approval of the Application and has provided the information specified in subparagraph (e)(2)(A) through (e)(2)(C);
  (2) The Executive Officer shall issue MSERCs:
    (A) in pounds of NOx for the amount indicated in the approved Application in one-year increments:
       
    (B) designated with a beginning and ending date based on the date of credit issuance;
    (C) for the number of credit issuance periods up to June 30, 2005, and shall be based on the annual projected activity level specified in subparagraph (e)(1)(K); and
    (D) discounted upon issuance by ten percent which will be retired for the benefit of the environment.
  (3) Any reductions other than NOx that result from implementation of projects subject to this rule shall be for the benefit of the environment and ineligible for transfer or use.
  (4) The actual amount of MSERCs issued shall be based on the approved Application or any subsequent verification by the Executive Officer.
  (5) Notwithstanding Rule 2008 - Mobile Source Credits, MSERCs converted to RTCs shall be issued for either RECLAIM Compliance Cycle 1 or 2 provided that each annual credit generation period coincides with the entire cycle selected. If the initial credit generation period begins prior to the start of a complete RECLAIM Compliance Cycle, that portion of MSERCs converted to RTCs shall be issued for the current or previous cycle provided that this initial credit generation period completely coincides with the cycle selected.
  (6) Any MSERCs not used by the specified expiration date shall be retired to benefit the environment and be ineligible for transfer or use.
(h) Monitoring, Recordkeeping, and Reporting
  (1) For all repowered marine vessels identified in the approved Application, the credit generator shall monitor and maintain quarterly records of the gallons of fuel consumed per captive marine vessel.
  (2) For each captive marine vessel, the credit generator shall maintain quarterly records of:
    (A) the location where the repowered marine vessel is anchored or docked, when not in service;
    (B) marine vessel identification number, engine make, engine model, engine model year, and engine serial number;
    (C) marine vessel loss, sale, lease, repower, or engine overhaul;
    (D) when a marine vessel is replaced due to loss or malfunction, identification of replaced marine vessel and engine and replacement engine make, engine model, engine model year, and engine serial number;
    (E) when a marine vessel is sold or leased, identification and location of new owner or lessee; and
    (F) any emission test results completed to verify or certify a participating engine.
  (3) Within 30 days after the end of each twelve-month credit generation period, the credit generator shall submit:
    (A) the activity level specified in paragraph (h)(1) for the previous twelve-month credit generation period; and
    (B) the information specified in subparagraphs (h)(2)(A) through (h)(2)(F) if any marine vessel identified in the Application is lost or malfunctions.
  (4) Notwithstanding paragraph (h)(3), if the initial credit generation period begins prior to the start of a complete RECLAIM Compliance Cycle and is three months or less, the credit generator shall submit the information specified in paragraph (h)(3) within 30 days after the end of the annual credit generation period following the initial credit generation period. For an initial credit generation period that is greater than three months, the credit generator shall submit the information specified in paragraph (h)(3) within 30 days after the end of the initial credit generation period.
  (5) If the evaluation performed under subdivision (g) indicates that a portion or all future MSERCs are surplus, and if the credit generator elects to continue generating MSERCs, at least 60 days before the end of the evaluation year, the credit generator shall submit the projected annual activity level for the following credit generation period, not to exceed four years.
  (6) Record and maintain data collected through a GPS or another method as approved by the District, CARB and EPA to demonstrate that the marine vessel is a captive marine vessel throughout the credit generation period.
(i) Annual Reconciliation
  (1) The actual activity level submitted pursuant to paragraphs (h)(3) and (h)(4) shall be reviewed upon submittal to evaluate if any shortfall exists between the actual activity level and the projected activity level submitted.
  (2) If a shortfall exists between the actual and projected activity levels, the credit generator and user are subject to the penalty provisions specified under subdivision (k).
  (3) If the actual activity level exceeded the projected activity level, then the Executive Officer shall after performing the evaluation required by paragraph (i)(1) issue additional MSERCs equal to the amount of the increase and pursuant to subdivision (g) for use in the current RECLAIM Compliance Cycle that ends no later than six months from the last day of the credit generation period of which the increase in activity level occurred.
(j) Credit Use
  MSERCs generated under this rule may be used as RTCs under the provisions of Regulation XX - Regional Clean Air Incentive Market (RECLAIM).
(k) Penalties
  (1) If a shortfall exists pursuant to paragraph (i)(1), credits equal to 110 percent of the shortfall shall be obtained and surrendered to the Executive Officer such that the applicant shall retire NOx MSERCs generated under the same or different Application or RTCs that are approved and designated for use within the same RECLAIM cycle or if not available, from the next RECLAIM cycle.
  (2) Any person submitting an Application who falsifies information in the Application or fails to implement any provision of the Application, shall be subject to the penalties specified in the Health and Safety Code for violation of District rules and in addition shall be grounds for the Executive Officer to take one or more of the following actions:
    (A) disapprove the Application and void all previously issued MSERCs, and those already converted to RTCs, that have not yet expired;
    (B) designate the applicant to be ineligible to generate MSERCs; or
    (C) assess the penalty specified in paragraph (k)(1).
  (3) If the shortfall cannot be reconciled through paragraph (k)(1), any person who uses MSERCs or MSERCs converted into RTCs generated under this rule at a RECLAIM facility where there is a shortfall in emission reductions or where previously issued MSERCs, and those already converted to RTCs, that have not yet expired are voided, shall be subject to the provisions specified in Rule 2010 - Administrative Remedies and Sanctions for RECLAIM rule violations. If there are multiple credit holders or users of credits generated under the same Application, each holder or user shall retire MSERCs or RTCs according to their prorated share of credits purchased.
(l) Program Review
  (1) On or before April 2003 and April 2005, the Executive Officer shall complete a review and present a report to the Governing Board that includes but not be limited to the following information:
    (A) General description of projects participating in the pilot program and the amount of NOx MSERCs, including the amount converted to RTCs, generated under the pilot program;
    (B) The location of the credit generation projects and facilities using RTCs under this pilot program;
    (C) The amount of NOx MSERCs retired to benefit the environment; and
    (D) The amount of concurrent non-NOx emission reductions such as PM and toxic air contaminants, generated under the pilot program that have been retired to benefit the environment.
  (2) The Governing Board may suspend approval of pending Applications and receipt of additional Applications through a noticed public hearing.

Table 1
Thresholds for NOx Optional Emission Factors

Engine Speed, n
(rpm)

NOx1
(g/kW-hr)

NOx1
(g/bhp-hr)

< 130

17

12.7

130 < n < 2000

45 * n-0.2

33.6 * n-0.2

> 2000

9.8

7.3

1. Emission Standards in Table 1 represent the NOx emission limits referenced in MARPOL Annex VI.