South Coast Air Quality Management District
South Coast Air Quality Management District
BOARD MEETING DATE: October 20, 2000 AGENDA NO. 37
(Continued from the September 15, 2000 Meeting)
Amend Rules 1302 – Definitions; 1303 – Requirements; 1306 – Emission Calculations; and 2000 – General; and approve BACT Guidelines
SYNOPSIS:
The proposed amendments will separate BACT for RECLAIM and non-RECLAIM sources into LAER for federal major sources, and BACT for minor sources pursuant to state law. Currently, LAER is required for emission increases from all sources. The proposed amendments will allow for cost considerations for minor source categories for BACT. Some minor source relocations will also be treated as modifications to existing sources. No significant adverse emissions impacts are expected as a result of the amendments at this time. Other amendments invalidate Emission Reduction Credits issued for the reduction of compounds previously, but not currently, identified as a VOC under Rule 102 and incorporate the current air basin designations and attainment status.
COMMITTEE:
Stationary Source, March 23, 2000 and June 24, 2000, Reviewed
RECOMMENDED ACTION:
Adopt the attached resolution:
Barry R. Wallerstein, D.Env.
Executive Officer
Background
As an extreme non-attainment area, the South Coast Air Basin has one of the most stringent pre-construction permit review programs known as New Source Review (NSR). This program requires Best Available Control Technology (BACT) and offsets for any emissions increase from new or modified sources. Existing sources that relocate are considered new sources for the purposes of NSR.
Although the definition of BACT has not significantly changed recently, the AQMD’s NSR and RECLAIM1 rules require that federal LAER be applied to any emissions increase from a new, modified, or relocated source whether or not the facility is a federal major source. The U.S. EPA has approved the current version of NSR and RECLAIM into the State Implementation Plan (SIP). Since the definitions of AQMD BACT and federal LAER have similar components, federal LAER is required for any emission increase from all sources subject to NSR.
In the new source permitting process, little consideration of cost is given in making LAER determinations according to U.S. EPA policy. Although the burden of a stringent control technology may not be extraordinary for a major source emitting 100 tons per year of a pollutant in other parts of the country, for smaller sources within the AQMD the implication of expensive control technology may be economic infeasibility. After considerable discussion with various U.S. EPA offices, it became clear that U.S. EPA is unwilling to consider cost in determining if a LAER technology is feasible for any size source.
1 RECLAIM facilities are facilities that, in 1990 or subsequent year, reported 4 or more tons per year of NOx or SOx emissions, excluding emissions from on-site, off-road mobile source and other equipment categories listed in AQMD Rule 2000.
Relocations are not considered a separate source category for LAER. Rather, U.S. EPA addresses relocations as new sources subject to the full requirements of LAER. U.S. EPA has expressed concern regarding the consideration of any relocated source as modification to an existing source, even under limited circumstances as proposed. Many sources relocate only due to economic hardships such as a loss of lease or natural disaster. Having to move and install current LAER can create a serious financial penalty on a source that is not creating any new emissions.
The AQMD is required to impose a strict federal program consisting of federal LAER and emission offsets on all new and modified sources which increase emissions. Relocated sources are considered brand new sources pursuant to federal LAER policy. The design of federal NSR program was intended for larger sources, and LAER and offsets can be quite restrictive and expensive for smaller sources.
ERCs have been issued for emissions reductions of compounds such as perchloroethylene that were previously, but are not now, considered VOCs. These compounds have been "de-listed" from the VOC list due to their low photochemical reactivity for ozone formation. There is concern that ERCs issued for such prior emissions reductions which are not considered real emissions decreases, could potentially be used to offset actual VOC emissions. Staff estimates that there is a total 25,000 lbs. of the VOC ERCs in the AQMD; and at least 1,800 lbs. of ERCs were issued for compounds that are now VOC-exempt compounds.
Proposal
The proposed amendments will separate minor sources from federal major sources for BACT determinations. Federal major sources will still be required to incorporate LAER for any emission increase. Minor source BACT will be required for all other sources. Minor source BACT provides more flexibility and cost considerations than federal LAER.
The policy guidance for determining and updating Minor Source BACT will be contained in a brand new Part C of the BACT Guidelines. Part D will also be added to the BACT Guidelines which will identify current BACT for about 130 equipment categories at facilities that are not federal major sources. These are not new BACT determinations but reflect currently applicable standards. The new BACT Guidelines format requires these Minor Source determinations to be separately listed.
Relocated minor sources, subject to certain conditions, would have the option of using a new calculation procedure for determining minor source BACT applicability. New minor source BACT will not be required if there is no emission increase from the relocated facility.
This provision is contingent upon the source operating under the same owner for the past two years and being a non-major source at the new location. Additionally, if there is any increase in emissions within two years after the relocation, the entire facility would be subject to BACT.
ERCs issued previously for compounds which are not now identified as a VOC in Rule 102 would be invalidated. This action is consistent with federal and state guidance, and eliminates any issues with real emission increases being offset with emission decreases that are not real.
As part of the proposed amendments, the basin boundaries will be updated to reflect the current titles and designations. The Southeast Desert Air Basin no longer exists and has been replaced by the Salton Sea Air Basin, which is classified as severe for ozone, and the Mojave Desert Air Basin, which is currently unclassified for ozone. Appropriate major source emission thresholds are also identified in the rule amendments.
Concurrent with these amendments, staff has revised the BACT guidelines to add Parts C & D for minor source BACT policy and determinations, respectively. Parts C & D have been added to the BACT Guidelines. Part C details the policy to determine and update minor source BACT. Part D includes current BACT listings for about 130 equipment categories for facilities that are not federal major sources.
The initial determinations in the minor source BACT guidelines are the same control levels staff had been using as LAER.
AQMP & Legal Mandates
Not Applicable.
CEQA Analysis
Pursuant to the California Environmental Quality Act (CEQA) and the AQMD’s Certified Regulatory Program (Rule 110), staff has prepared an Environmental Assessment (EA) for PAR XIII and PAR XX. The Draft EA, which was made available for a 30-day review period, concluded that proposed project would not have any significant adverse affect on the environment. All comments received on the Draft EA have been responded to and included in the Final EA.
The Final EA is included as part of the attached package for the public hearing on the proposed amendments.
Socioeconomic Impacts
The bifurcated process for BACT determinations does not exhibit differences in the present BACT/LAER requirement for major and minor sources. However, consideration of costs may lead to differences between BACT and LAER for major and minor sources in the future.
Additionally, the proposed amendments does not require certain relocated minor sources to use BACT. Since the basic offset requirement for these sources remains the same, the demand for RTCs or ERCs may rise. This is because the relocated source may no longer qualify for an existing offset exemption. Except for NOx, supplies of RTCs or ERCs for other pollutants are abundant to stave off any potential price increase from the demand side. As for NOx, only the NOx RTC market would be affected since a relocating minor source with greater than four tons of NOx emissions will be opted into RECLAIM and a less-than-four-ton minor source will be exempt from the ERC offset requirement. Because of a more limited supply of NOx RTCs presently, the additional demand for NOx RTCs will increase the price of NOx RTCs. However, a minor NOx source may elect to install BACT to reduce or eliminate its demand for NOx RTCs if the price of NOx RTCs is too high to render the BACT exemption infeasible. Future advances in NOx control would also provide opportunities to increase the supply of NOx RTCs, thus lessening the effect of the additional demand on the price of NOx RTCs.
Implementation Plan
Staff will expeditiously implement the policies and procedures proposed herein, upon approval by the Governing Board.
Resource Impacts
No significant changes to AQMD resources are anticipated, and the AQMD permitting program will follow the NSR rule revisions upon approval by the Governing Board.
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