Dear Trevor,

Per your request here is what I have learned about the changes to the rules for PM 10 ERCs in the San Joaquin Valley Air District.

As part of EPA's recent action on the San Joaquin Air District's State Implementation Plan (SIP), PM ERCs generated in the nonattainment season (October - March) can now be used during the attainment season.  Previously, nonattainment PM ERCs could only be used as offsets in the quarter in which they were generated.

This provides more flexibility to holders of nonattainment PM ERCs and allows broader usage.

Part of the impetus for this change is that there were several cotton gins in the valley that closed in the fourth quarter, and the ERCs generated by the shutdowns could not be used throughout the year. The district believes this change is better for air quality and provides more flexibility.

The change has the effect of spreading PM ERCs from the nonattainment season to the attainment season.

The change is effective Aug. 20, 2001

Please see the link to the regulation below (page 23, Section 4.13.17)

http://www.valleyair.org/Workshops/postings/06-21-01/rule2201.pdf

There were two other regulatory changes as a result of EPA's action that might interest you.

1)  Page 22, 4.13.1 - ERCs from major source shutdowns and curtailments previously could only be used for replacement major sources or minor sources.  Under the rule change they can now be used for other major sources, as long as the ERCs are part of the EPA approved attainment plan.  (if you would like to see the lists of these pre-approved ERCs please let me know). 

2) Page 3, 3.7 - Baseline changes - A unit can use the pre-project potential to emit baseline if it falls under four categories (a unit located at a non-Major source; highly utilized unit at a major source; a fully-offset unit at a major source; a clean emissions unit at a major source).
 
If a unit does not fall under these categories it will need to follow rules for historic emissions, which could mean that it will need to acquire additional offsets.  However, the District believes that it captured all major sources through these categories.

Please call me with any questions.  Also, are we still on for our call on Tuesday, August 14 at 9:30 am Houston time?
 
Lisa Jacobson
Enron
Manager, Environmental Strategies
1775 Eye Street, NW
Suite 800
Washington, DC 20006

Phone: +(202) 466-9176
Fax: +(202) 331-4717