The Hazards of Interpretation: Solar in the Valley

No matter how well or how thorough a rule or regulation is written, there will invariably be instances where the rule must be interpreted for situations or circumstances that weren’t foreseen by the rule developers. At those times, it is critical to take into consideration the intent of the rule, and the history of the rule development. Without an understanding of why a rule is in place, it is easy to lose sight of where, when or how it is appropriate to exercise the regulatory authority. It’s a kind of ‘scope creep’ but for regulations.  How far can the interpretation of the rule vary from the original intent? About as far as staff at the responsible agency can apply it.

In the field of air quality, a prime example of this is the application of San Joaquin Valley Air Pollution Control District (SJVAPCD) Rule 9510 to solar projects. That’s the Indirect Source Review (ISR) Rule, which was written to help reduce the emissions associated with growth in the San Joaquin Valley Air Basin. On the surface, it sounds like a terribly dry subject. But to project developers, new businesses, cities, counties, and even solar companies trying to develop clean energy projects, how this rule is implemented by the SJVAPCD can mean hundreds of thousands of dollars of fees, project delays, and potentially the death or “financial infeasibility” of a project.

Speaking as the final rule developer for the ISR Rule, and the SJVAPCD staff lead for implementation of the ISR program after its adoption, the program has gone off the tracks when it comes to how it is applied to solar projects. To understand how the program has gone off the tracks, one needs to look back at the intent of the rule and the rule history (with a smidgeon of background on regulatory authorities thrown in for good measure… at the end). 

Rule Intent

The language in the SJVAPCD’s plans and Rule 9510 Staff Report clearly demonstrate that the rule is intended to reduce emissions associated with growth and new development within the San Joaquin Valley Air Basin; specifically, the rule is aimed at the traditional understanding of ‘development’ as residential, commercial, institutional (such as schools), and similar land uses.  Roadway projects were included in the rule applicability, as roadways facilitate vehicle trips.  Speaking as the final rule developer, I know that construction emissions were included in the rule because the SJVAPCD’s plans had committed the rule to a specific amount of emission reductions; and in the process of rule development it was determined that construction emissions should be included in order to achieve those reductions. Even recent SJVAPCD plans, such as the 2012 PM2.5 Plan, illustrate a clear understanding of the original intent of the rule:

These innovative strategies, such as the first-of-its-kind Indirect Source Review regulation that addresses emissions from residential and commercial development, have proven to be highly effective, as evidenced by the steady rate of improvement in the Valley’s air quality.

                And…

The District’s ISR rule reduces mobile source emissions from new development projects. ISR’s on-site mitigation component encourages beneficial changes in land development patterns and practices.

In order to limit the scope of the rule’s impact on construction emissions, the rule only assesses exhaust emissions from construction equipment greater than 50 horsepower.  Construction employee trips, delivery trips, or other vehicle primarily used off-site during construction are not included in the assessment.

Solar Projects?

Are solar projects subject to the application and emission reduction requirements of the ISR Rule? It depends on rule interpretation. The ISR Rule doesn’t mention solar projects, nor does the Staff Report. Truth be told, no one was thinking about solar projects when the rule was being developed. The ISR Rule does contain an exemption for energy production plants, under the exemption for facilities whose primary functions are subject to SJVAPCD New and Modified Stationary Source Review Rule and permit requirements. In more plain language, a new development whose main function is related to operation of SJVAPCD-permitted equipment or processes is exempt from ISR. 

Although a solar project is an energy production plant, the equipment doesn’t burn fuel, have smokestacks, or otherwise emit air pollutants in a way that is subject to SJVAPCD permit requirements – solar projects generate energy through a sustainable, renewable, and ‘clean’ method.  If the energy produced was the result of a stationary source, and thus permitted by the SJVAPCD, the project would be exempt from ISR requirements.  Energy produced from a stationary source permitted by the SJVAPCD would also result in more operational air pollutant emissions than from solar energy production. 

Furthermore, a solar project isn’t the type of development that the ISR Rule is intended to target. As discussed in the ISR Staff Report, cars and trucks are getting cleaner over time due to state and federal regulation. However, the growth in population and vehicle miles traveled (VMT) offsets emission reduction achieved through cleaner cars and trucks. The ISR Rule is intended to reduce emissions from growth in the San Joaquin Valley Air Basin – growth from what is traditionally understood as ‘development’, such as residential and commercial projects which facilitate increases in population and VMT.  Solar projects do not result in population increases.  Solar projects result in very few operational trips… far fewer trips than that generated by the ‘development’ project applicability section of the ISR Rule, which includes (but is not limited to): 50 residential units, 2,000 square feet of commercial space, 39,000 square feet of general office space. If judged by operational vehicle trips generated, solar projects would be exempt from the ISR Rule.

So, if the energy were generated by stationary sources, the facilities would emit more pollutants but would be exempt. Fields of photovoltaic arrays aren’t the type of ‘growth’ the ISR Rule was intended to mitigate. And if judged by operational trips generated, solar projects would generate fewer trips than those listed in the rule. So, why are the SJVAPCD requiring solar projects to submit applications and pay fees under the ISR Rule?  Because of the SJVAPCD’s current rule interpretation. The rule contains a catch-all of “9,000 square feet of space not identified above” in anticipation of development projects that didn’t easily fit the mold of ‘residential’ or ‘commercial’. 

If you are proposing acres of solar fields, the SJVAPCD can say that the project is subject to the ISR Rule requirements. If your project is subject to the ISR Rule requirements, you must submit an application ($700 to submit the application), probably hire a consultant to help you navigate the process (additional costs), proceed through the often months-long process of application review and approval (additional costs and time), pay a fee or implement onsite mitigation (which triggers additional mitigation monitoring and reporting requirements), and usually pay the SJVAPCD for any additional staff time taken to process your application (even more costs). In light of the intent of the rule, the application of rule requirements to solar projects is unwarranted.  Can the SJVAPCD change their interpretation of the rule in regards to solar projects? Yes, they can. That’s both the beauty and the hazard of rule interpretation.

A Brief and Somewhat Boring History of Air Quality Authorities

Air districts within California are responsible for demonstrating attainment of state and federal air quality standards.  If the air quality is poor and standards aren’t attained, the air district must fulfill specific planning requirements to show how air quality will improve. In the San Joaquin Valley Air Basin, ozone and particulate emissions are of concern, with on-road mobile vehicles (cars and trucks) generating a substantial portion of the pollution. But, air districts don’t have any regulatory authority over cars and trucks – only the State of California and the feds have authority to regulate emission from on-road vehicles. And although it’s known that certain land use patterns and development features reduce vehicle traffic (and thus vehicle-generated air pollutant emissions), air districts do not have any land use authority; they cannot dictate or require development to occur at any particular place, time or configuration.

The Clean Air Act does contain a clause, however, stating that an air district may adopt regulations to reduce or mitigate emissions from “indirect and areawide sources” of air pollutants. An indirect source is:

… a facility, building, structure, installation, real property, road, or highway which attracts, or may attract, mobile sources of pollutants. (Clean Air Act §110(a)(5)(C))

So, an air district may not pass regulation on emissions from the vehicles themselves or require certain features of development, but they can regulate the emissions from development of indirect sources – including requiring fees.

Back in 2003, California adopted legislation requiring the SJVAPCD to adopt, by regulation, a schedule of fees to be assessed on indirect sources of air emissions. The SJVAPCD then included a commitment to develop the ISR Rule in its 2003 PM10 Plan and the 2004 Extreme Ozone Attainment Demonstration Plan (EOADP). As stated in the 2004 EOADP:

Affected Sources:

Phase I of the program, contained in Rule 9510 and 3180, will be applicable to residential development projects that generate indirect emissions from mobile sources and area source emissions from other on-site activities not subject to District permitting. Phase II and Phase III will address commercial/institutional and industrial development projects (respectively) that generate indirect emissions from mobile sources and area source emissions from other on-site activities not subject to District permitting.

Description:

Indirect sources are land use activities, such as housing developments, shopping malls, and industrial sites, that attract or generate motor vehicle trips…The program is also considering emissions from area sources such as water heaters and landscape maintenance equipment. This program will have three phases at a minimum and will include residential, commercial, industrial, and institutional developments.

Other SJVAPCD plans mention the ISR rule. The 2007 PM10 Maintenance Plan states:

The District was the nation’s first to adopt a progressive Indirect Source Review (ISR) program, which reduces emissions from new indirect sources Valley-wide, such as commercial, industrial, and residential developments.

The SJVAPCD plans and ISR Staff Report illustrate the intent of the rule as reducing emissions from growth in the San Joaquin Valley Air Basin, not development of clean energy production facilities.

FirstCarbon Solutions (FCS) offers Energy Management Services to help you manage your energy data, gain foresight on possible energy trends, and manage risks associated with energy prices. Start effectively managing your energy today by clicking on the button below.