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SCAQMD Rule 317.1 – Clean Air Act Nonattainment Fees for 8-Hour Ozone Standards

August 15, 2024

The South Coast Air Quality Management District (SCAQMD) recently adopted Rule 317.1,  imposing new fees on major stationary sources of air emissions (i.e., Title V permit holders) in the South Coast Air Basin.  The air quality in Southern California is not currently in attainment with the clean air standards for ozone, per the regulations established under the federal Clean Air Act (CAA).  CAA Section 185 requires that major stationary sources of nitrogen oxides (NO_x) and/or volatile organic compounds (VOCs) either: reduce their emissions by 20% from their baseline; or pay an annual nonattainment fee.  The first fee assessment is expected to begin in 2026, using 2024 as the baseline year for fee calculations.  

Rule 317.1 Summary

Background and Purpose: CAA Section 185 requires areas designated as “severe” or “extreme” nonattainment to implement measures to reduce emissions or, alternatively, pay fees based on their pollution levels.  The rule applies as the United States Environmental Protection Agency (U.S. EPA) has determined that the South Coast Air Basin failed to meet the National Ambient Air Quality Standard (NAAQS) for ozone.  Ozone is formed from the reaction of NO_x and VOCs in the atmosphere.  Rule 317.1 standardizes the process for determining the fees to be imposed on major sources of VOCs and NO_x that exceed 80% of the baseline levels. 

Implementation and Timeline: Rule 317.1 was adopted June 7, 2024.  Facilities subject to this rule will begin paying fees starting in 2026.  The fees are calculated based on the quantity of VOCs and NO_x emitted above 80% of their 2024 emission levels.  This baseline year is crucial for determining the initial fee assessments.  Fees will be due annually, and they will be adjusted to account for changes in emission levels, as well as indexed for inflation.

Rule 317.1 Exclusion Plan: Rule 317.1 includes a provision for facilities to take an enforceable permit limit and agree that actual NO_x and VOC emissions, as reported to SCAQMD, are less than major source thresholds.  Facilities that qualify for an Exclusion Plan will not pay nonattainment fees so long their emissions are below their permit limit.

Key Considerations for Facilities:

• Financial Impact: Rule 317.1 fees will be calculated starting at approximately $11,922 per ton of emissions for both VOCs and NO_x exceeding 80% of the facility’s 2024 baseline.  Actual emissions are reported on the SCAQMD Annual Emission Report (AER).
• First Payment Due Date: Rule 317.1 CAA nonattainment fees are due no later than 365 days after an invoice is issued by the SCAQMD Executive Officer.  The invoices are expected in 2026 for 2025 NO_x and VOC nonattainment fees.
• Annual Payment:  Following the initial payment, major stationary sources must continue to pay the CAA nonattainment fee for each subsequent year that the U.S. EPA determines the basin fails to meet the ozone NAAQS.

Planning and Preparation

To prepare for the upcoming fee assessments based on the 2024 baseline year, ensure all your NO_x and VOC emissions are included in your SCAQMD AER.

You can run a quick calculation of the expected fees, based on 2024 NO_x and VOC emissions, to estimate what the fees might be starting in 2026.  If you assume your 2025 emissions are the same as 2024, calculate 20% of the baseline 2024 emissions of NO_x and VOCs, then multiply by $11,922 per ton.

However, if you can reduce NO_x and VOC emissions to less than 80% of the 2024 baseline from operational changes or additional emission controls, your nonattainment fees may be zero.

You can explore whether a Rule 317.1 Exclusion Plan is an option for your facility to avoid nonattainment fees.  The Rule 317.1 Exclusion Plan establishes an alternate pathway to Title V exclusion for facilities with actual VOC and/or NO_x emissions of less than 10 tons per year.

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If you’re looking for assistance with evaluating how Rule 317.1 affects your facility, Yorke Engineering is ready to help.  We can estimate the size and schedule for future nonattainment fees based on current emission levels.  We can also evaluate whether a Rule 317.1 Exclusion Plan, or Title V exclusion, are options to avoid nonattainment fees. Yorke Engineering has completed over 7,500 air quality projects, including over 3,000 air permits, hundreds of emission reports, air dispersion modeling/health risk assessments (HRAs), and a variety of unique compliance projects. 

Learn more by contacting us today or by visiting the following page on our website: Air Quality | Yorke Engineering, LLC (YorkeEngr.com)

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