AGENDA NO.2
Proposal:
Set Public Hearing June 14, 1996 to Amend Rule 1304 - Exemptions and Rule 1306 - Emission Calculations (New Source Review)
Synopsis:
The proposed amendments to Rule 1304 - Exemptions and Rule 1306 - Emission Calculations provide technical clarification and extend an exemption from offsets for facilities that provided Emission Reduction Credits (ERCs) to comply with the requirement to offset positive New Source Review (NSR) balances. Furthermore, the proposed amendments also provide an exemption from offsets for methyl bromide fumigation equipment.
Committee:
Not applicable.
Recommended Action:
Set Public Hearing June 14, 1996 to Amend Rule 1304 - Exemptions and Rule 1306 - Emission Calculations.
James M. Lents, Ph.D.
Executive Officer
PL:AG:GQ:RAR
Background
Regulation XIII - New Source Review, consists of nine rules which, together with Rule 2005 - New Source Review for RECLAIM, set forth a pre-construction review program for new or modified sources located in the AQMD. The objective of the AQMD's NSR program is to ensure that the construction of new sources and the modification of existing sources does not interfere with progress towards attainment and maintenance of the National Ambient Air Quality Standards, and that future economic growth in the AQMD is not unnecessarily restricted.
The AQMD's Governing Board amended Regulation XIII on December 7, 1995. At that time, the Governing Board deferred some items and instructed staff to return with further recommendations in early 1996. The proposed amendments fulfill this Board directive and further streamline the NSR permitting process.
The staff proposal covers the following items:
1) technical clarifications for portable internal combustion engines (ICEs),
emission calculations, relocation of equipment or facilities, eligibility
to use the facility offset exemption, definition of Best Available Control
Technology (BACT), and the use of actual or permitted emissions for NSR
determinations;
2) additional flexibility under EPA proposed revisions to NSR rules;
3) privately-owned and -operated landfills' access to Priority Reserve credits;
4) compliance certification;
5) equity of eliminating the requirement to offset positive NSR balances;
and,
6) exemption from offset for facilities using methyl bromide as a fumigant.
The sixth issue regarding exemption from offset for facilities using methyl bromide as a fumigant was not presented to the Governing Board as part of the December 1995 amendments to Regulation XIII. However, this is an issue that has been under evaluation since October of last year and is being brought to the Board for consideration as part of the proposed amendments.
The proposed amendments maintain the air quality objectives of the current regulation while facilitating the ability of new and modified sources to comply with NSR requirements. The overall emission reduction potential of NSR is not expected to change as a result of these amendments.
Proposal
1) Technical Clarifications
NSR provides an exemption from modeling and offsets for portable equipment and portable ICEs. As currently written, this exemption states that a source must be periodically relocated and may not be located for more than one year at any one facility. The proposed amendments clarify that the one-year residency limit means a consecutive twelve-month period (both portable equipment and portable ICEs). For portable ICEs such residency period starts when the equipment is brought into the facility for operation or removed from storage and placed in operation. Further, the proposed amendments clarify that designated storage areas for portable ICEs must be defined and operations records maintained for compliance determination.
Procedures in Rule 1306 - Emission Calculations have been clearly stated so that past actual emissions are not discounted to BACT levels for the purpose of calculating emission increases when an existing source is modified.
In response to public comments, the term "relocated" has been removed from the facility offset exemption of Rule 1304 - Exemptions, subparagraph (d)(2), since this provision is already handled elsewhere in Rule 1304 (c)(1).
Small business advocates correctly pointed out that subparagraph (d)(2)(C) of Rule 1304 may unnecessarily restrict access to the facility offset exemption by limiting this offset exemption to facilities in existence prior to December 7, 1995, which was not intended by staff. Staff is, therefore, proposing to eliminate this language so that facilities with post-modification potential-to-emit below specified emission thresholds can access this exemption.
Staff is not proposing revisions to the definition of BACT at this time. Staff investigated the use of actual emissions instead of potential-to-emit in this context and discovered that the use of actual emissions in this case would be problematic and federally non-compliant, and cause unnecessary additional recordkeeping and reporting burdens. The Small Business BACT provision was not intended to apply to major polluting facilities with a potential-to-emit at or above the major source thresholds but the proposed change to actual emissions would have conferred a benefit to major polluting facilities and abrogate federal CAA Sections 171 and 173 requirements for NSR.
2) Additional Flexibility
EPA recently proposed additional flexibility in proposed revisions to federal NSR rules. Staff is investigating those options and will return to the Board with further recommendations as soon as EPA's intent is clarified. This is optimistically expected to occur in early 1997, according to EPA sources.
3) Private vs. Public Landfills
Staff initially proposed to delete privately-owned and -operated landfills from the definition of an essential public service and thus remove their access to the Priority Reserve. In spite of this exemption, the AQMD must offset on a 1.2-to-1 ratio such emission increases with creditable emission decreases from other sources. After discussing this issue with industry representatives, staff determined that, at this time, the amount of NSR emission increases from privately-owned and privately-operated landfills is not warranted because such emissions do not cause an imbalance in the AQMD's showing of equivalency with state and federal requirements as was first expected. Thus, staff is proposing no change to the existing definition of an essential public service but will re-evaluate the situation with the annual status report to the Board, as required by NSR rules.
4) Compliance Certification
At the December 7, 1995 Public Hearing, Rule 1303 - Requirements (NSR) was amended to include the requirement for a statewide compliance certification for new major stationary sources or major modifications at existing major stationary sources. Staff was requested to investigate whether this requirement could be implemented in a streamlined manner by providing a one-year life to a compliance certification and the future merger of this provision with a similar requirement for Title V facility permit holders. Staff agrees with the request, and is communicating with EPA, Region IX, to seek their concurrence on this approach.
5) Equity Adjustment
At the last NSR rule amendment, the Board forgave all emission debts from existing sources by eliminating the requirement to offset positive NSR balances as a prerequisite for obtaining a permit for a new or modified source. Ultramar, a petroleum refinery, requested an "equity" adjustment at that time because they had provided external offsets to repay their emission debt in the past, and considered themselves at a competitive disadvantage to other petroleum refineries who would now not have to repay their emissions debt. Based on a policy decision from the AQMD Governing Board, staff is proposing an offset exemption for such facilities that provided emission reduction credits (ERCs) to comply with the past requirement to offset positive NSR balances. The amount of offset exemption is proposed to be equal to the amount of ERCs provided to offset positive NSR balances since October 1990, and can be utilized for future emission increases subject to NSR rules at that facility. It should be noted that, although emission increases exempted from offsets are only 0.01, 0.2, and 0.04 tons per day of VOC, CO, and PM10, respectively, AQMD must show creditable emission decreases of an equivalent amount, as required by state and federal NSR rules and requirements.
6) Methyl Bromide Offset Exemption
Staff proposes that methyl bromide fumigation equipment be exempt from the offset requirements of AQMD's NSR program. There are four companies in the AQMD permitting system using methyl bromide to fumigate commodities, such as cotton, fruits and vegetables. The federal Clean Air Act requires the phase-out of methyl bromide production as an upper atmospheric ozone depleting compound by the turn of this century, and the state is also investigating a similar ban due to its associated health risk. However, this is a hotly debated issue with little or no cost-effective control options or replacement compounds available today. Staff proposal requires AQMD to show creditable emission decreases to offset an estimated increase of 0.7 tons per day of VOC resulting from this action.
AQMP & Legal Mandates
AQMD is required to comply with federal and state NSR requirements. The proposed amendments streamline the NSR permitting process and meet the air quality objectives of the NSR requirements of state and federal law.
CEQA Analysis
Pursuant to state California Environmental Quality Act (CEQA) Guidelines and AQMD's Certified Regulatory Program (Rule 110), staff prepared appropriate CEQA documentation, consisting of a Draft Supplemental Environmental Assessment (EA). The Draft Supplemental EA has been circulated for a 30-day public review and comment period which ends April 23, 1996. A Final Supplemental EA will be prepared and will include responses to all comments received on the draft document.
Implementation Plan
Permitting staff will be trained on the changes to Rule 1304 - Exemptions and Rule 1306 - Emission Calculations (NSR). Any required modifications to the NSR Tracking System will be performed by AQMD's Information Management with the assistance of the NSR policy development team.
Resource Impact
Current AQMD resources are sufficient to implement the proposed rule amendments with no budget impact.
Attachments (Down Load self-extracting compressed attachment package for this letter in M.S. Office 4.2.)
Summary of Key Issues
Rule Development Flow Chart
Key Contacts List
Rule Language
Staff Report
Socioeconomic Report