Sunset Date for Regional Clean Air Incentives Market (“RECLAIM”) Program No Longer Effective
The South Coast Air Quality Management District (“South Coast AQMD”) launched the Regional Clean Air Incentives Market (“RECLAIM”) program in 1994 as a market-based approach to air quality regulation. It replaced traditional “command-and-control” regulations with a flexible “cap and trade” style system designed to reduce nitrogen oxides (NOx) and sulfur oxides (SOx) emissions. Participation in the program generally applied to facilities emitting four or more tons per year of NOx or SOx.
Pursuant to AB 617 and South Coast AQMD’s 2016 Final Air Quality Management Plan, South Coast AQMD began preparing to sunset the RECLAIM program in favor of best available retrofit control technology (BARCT) permits; essentially returning to traditional command-and-control permitting for facilities previously covered by RECLAIM. In July 2019, South Coast AQMD amended its Rule 2001(g)(1) such that no facility would be permitted to exit RECLAIM after July 12, 2019. This Amendment was made per US EPA’s direction, which recommended keeping facilities in the RECLAIM program until all rules associated with the RECLAIM transition had been adopted and approved into the State Implementation Plan (SIP).
By 2023, all of these new rules establishing BARCT for facilities that previously would be required to participate in RECLAIM (referred to as “landing rules”) had been adopted by South Coast AQMD. Some internal documents from South Coast AQMD had suggested that the transition away from and sunsetting of RECLAIM would be completed by the end of 2025 or early 2026. However, based on communications this firm has had with staff at South Coast AQMD, South Coast AQMD has determined that there is currently an insufficient offset marketplace for the BARCT permitting framework to operate independently without the RECLAIM program continuing as a backstop. Thus, the South Coast AQMD has been working with CARB and the US EPA to establish such a market, such that the BARCT regulation alone would be sufficient. In the meantime, however, there is no longer an imminent sunset date for the RECLAIM program.