Background

Emission offsets for increases of precursor organic compounds (POC) and nitrogen oxides (NOx) are required from both major and non-major facilities and modifications, pursuant to District Regulation 2-2-302.  Offsets may be provided using either contemporaneous emission reductions or emission reduction credits (ERCs) that have been formally deposited into the District's ERC bank. 

Federal guidelines require ERCs to be real, permanent, quantifiable, enforceable, and surplus.   To be surplus, ERCs are adjusted according to the following:

•  A District rule that is required for federal attainment demonstration purposes;
•  A District rule that has been approved into the State Implementation Plan (SIP);
•  New Source Performance Standard (NSPS); and
•  Maximum Achievable Control Technology (MACT) Standard.

Federal Equivalency

The U.S. EPA recognizes that under the District program (Regulation 2 Rule 4), ERCs generated at time of banking meet these federal guidelines.   However, the District program does not re-adjust ERCs again at the time of use, as required by EPA guideline.  In lieu of re-adjusting at time of use, EPA guidelines allow an alternative demonstration of offset equivalency.   Pursuant to Regulation 2-2-423, the District is required to make an annual demonstration that the quantity of offsets provided for all new or modified sources, less adjustments to those offsets for federal purposes, exceed the quantity of offsets required under federal law for new major facilities (Note 1) and major modifications at major facilities (Note 2).  This is possible because the District also requires offsets for emission increases at non-major facilities.

The following table summarizes the offset thresholds for POC and NOx emissions, based on facility emissions, in tons per year (TPY).

Note 1:  For the purposes of this demonstration, a major facility is a facility that has the potential to emit 100 tons per year or more of POC or NOx.

Note 2:  For the purposes of this demonstration, a major modification of a major facility is a modification at an existing major facility that will increase the facility’s emissions by 40 tons per year of POC or NOx (Regulation 2-1-204).

Contact:
Offset Equivalency	(415) 749-4742
Engineering Division	(415) 749-4990