BOARD MEETING DATE: July 9, 2010
AGENDA NO. 42

(Continued from June 4, 2010 Board Meeting) 

PROPOSAL:

Amend Rule 1144 – Vanishing Oils and Rust Inhibitors

SYNOPSIS:

Rule 1144 was adopted on March 6, 2009 which partially implemented Control Measure CTS-01-Emission Reductions from Lubricants (CTS-01). The current proposal will expand the applicability of the rule to include Metalworking Fluids and Direct-Contact Lubricants by establishing VOC limits effective January 1, 2012. The proposal also prohibits the sale of non-compliant fluids, requires annual sales reporting and product labeling, provides an exemption for dimethyl carbonate use in a limited, unique application and incorporates a thermogravimetric test method for determining VOC content. These amendments will fully implement Control Measure CTS-01.

COMMITTEE:

Stationary Source, February 19, 2010, March 19, 2010 and May 21, 2010, Reviewed

RECOMMENDED ACTIONS:

Adopt the Resolution:

1. Certifying the CEQA Final Environmental Assessment for Proposed Amended Rule 1144 - Vanishing Oils and Rust Inhibitors; and
2. Adopting Proposed Amended Rule 1144 - Vanishing Oils and Rust Inhibitors.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In March 2009, Rule 1144 – Vanishing Oils and Rust Inhibitors, was adopted establishing VOC content limits for vanishing oils and rust inhibitors used during metalworking and metal-forming operations. Vanishing oils are a small subset of metalworking fluids designed to evaporate off shortly after use. Rust inhibitors, more commonly referred to as metal protecting fluids, are preventatives or inhibitors used to prevent the corrosion of metal substrates. However, the vast majority of fluids used during metalworking operations are lubricants and metalworking fluids.

While U.S. EPA Method 24 is the default method for determining VOC content, it did not meet the necessary repeatability and reproducibility requirements for semi-volatile materials typically found in metalworking fluids and direct-contact lubricants. It was decided not to include limits for metalworking fluids and direct-contact lubricants until a more repeatable and reproducible method was validated. A thermogravimetric test method, ASTM E 1868-10 Standard Test Method for Loss-On-Drying by Thermogravimetry was developed and validated by ASTM International. The public hearing for Proposed Amended Rule 1144 was set for April 2010 in anticipation that ASTM E 1868-10 was to receive final approval prior to the April Board meeting. Unfortunately, because ASTM E 1868-10 did not receive approval by the April Board meeting, staff recommended to postpone consideration of this item by 60 days to June 4, 2010. Approval was still not received and staff recommended postponing this item to July 9, 2010. In the event that ASTM does approve E 1868-10 before July 9, 2010, staff is recommending that this method along with quality assurance and quality control procedures pursuant to AQMD Additional Requirements to ASTM Standard Test Method E 1868-10 for Metalworking Fluids and Direct-Contact Lubricants be included as a test method for determining VOC content in the rule. Staff is also recommending that AQMD Method 319-10 be included in PAR 1144 to determine VOC content.

This allows limits to be set for these widely used fluids, facilitating the inclusion of metalworking fluids and direct-contact lubricants into Rule 1144.

Affected Facilities

The facilities subject to the proposed rule include machine shops (job shops), aerospace facilities, steel mills, auto part rebuilders, screw machine shops, steel tube (pipe) manufacturers, steel spring manufacturers and captive machine shops located inside of others type of businesses. In 2008, there are more than 7,000 machine shops in the 4 county area of the District. Of these machine shops, the U.S. Census (2002) estimates that 88 percent have fewer than twenty employees.

Public Process

During the rulemaking process, staff made six site visits and met eight times with industry and members of the community. A working group was formed comprised of industry and community representatives which met three times. A laboratory subcommittee was convened to establish a VOC content test method and met seven times over the past twelve months. A public workshop and CEQA scoping meeting was held on February 10, 2010.

Proposal

The proposed rule will reduce VOC emissions from metalworking fluids and direct-contact lubricants used at industrial facilities during manufacturing operations of parts and products. Such operations would include metal forming, metal removal, metal protecting and metal treating activities during the manufacturing and assembly of products and goods. Examples of these activities include, but are not limited to, broaching, drilling, drawing, forging, grinding, heading, honing, milling, quenching, stamping, tapping, thread cutting, turning and wire drawing. The existing and proposed VOC content limits and effective dates are shown in Table 1. The shaded limits indicate already existing limits.

The fluid categories and definitions used for describing products and processes subject to the rule have been modified to better conform to industry and government standards as defined in the Occupational Health and Safety Administration’s Metalworking Fluids: Safety and Health Best Practices Manual. These modifications will enhance the clarity of the rule for affected parties.

Table 1 – Fluid Categories and VOC Limits

A thermogravimetric test method or methods shall be used to determine VOC content of applicable fluids. ASTM E 1868 - 10 Standard Test Method for Loss-On-Drying by Thermogravimetry and SCAQMD Method 319 are both included in the rule. Water content shall be determined by ASTM D 4017 (Standard Test Method for Water in Paints and Paint Materials by Karl Fischer Method) if applicable to the specific sample. The proposed method has been validated to provide repeatable and reproducible test results for semi-volatile materials, such as metalworking fluids and lubricants.

Further, to facilitate the enforceability of the proposed rule, the proposal expands the prohibition of sale of non-compliant products to the expanded categories. Likewise, the use and sell-through provision has been expanded to the new categories. This will allow manufacturers, suppliers and users to deplete their existing inventories. In addition to displaying the date of manufacture on the container, the container must now also display the maximum VOC content.

A streamlined recordkeeping option is included as an alternative to Rule 109 – Recordkeeping for Volatile Organic Compound Emissions. Fluids used to comply with the proposed rule that have a VOC content of 50 g/l or less, will qualify them as “Super Compliant” materials. Super Compliant materials are exempt from recordkeeping at facilities that do not exceed four tons of VOC emissions in any calendar year, determined by annual recordkeeping.

An exemption has been included in PAR 1144 to allow the use of dimethyl carbonate as a cooling solvent in computed numerically controlled (CNC) machines where permeable media are used to maintain a vacuum that holds the part in place during cutting. The exemption further requires that the equipment be enclosed and emissions be vented and discharged outside of the building to protect worker safety. This type of use is very limited in terms of equipment and volume, and based on a risk assessment, has acute or chronic health impacts well below the threshold of significance and minimizes any potential worker exposure.

Finally, the proposal includes an annual quantity and emission reporting requirement of metalworking fluids and direct-contact lubricants. Beginning in April 2012 and continuing until April 2014, manufacturers and suppliers will be required to report annual sales and VOC content of products that are sold into or within the District. This information will provide an improved emission inventory and identify opportunities to further reduce VOC limits in applicable fluid categories.

Key Issues

Several key issues have been brought to staff’s attention during the rule making period. Staff worked closely with industry and managed to identify reasonable resolutions to the issues presented. The most notable issues and their resolutions are summarized below:

Emission Reductions and Cost Effectiveness Determination

As proposed, the rule would reduce emissions by 0.86 tons per day with a one-time maximum cost of $2.5 million dollars for testing VOC content. The overall cost-effectiveness of the proposed rule, using the discounted cash flow methodology, is estimated to be $796 per ton of VOC emissions reduced.

AQMP and Legal Mandates

Proposed Amended Rule (PAR) 1144 will fully implement Control Measure CTS-01 – Emission Reductions from Lubricants of the 2007 Air Quality Management Plan (AQMP) by limiting emissions at the source and at the point of sale/use.

California Environmental Quality Act

Pursuant to California Environmental Quality Act (CEQA) Guidelines §15252 and AQMD Rule 110, the AQMD has prepared an Environmental Assessment (EA) for PAR 1144. The Draft EA was released for a 30-day public review and comment period beginning February 16 and ending March 17, 2010. Staff received four comment letters as of March 9, 2010. Three of the four comment letters were related to the staff report and were answered therein. One comment letter was responded to in the EA.

Socioeconomic Analysis

PAR 1144 expands the applicability of limits for the VOC content of fluids to include direct-contact lubricants and metalworking fluids. Most provisions of PAR 1144 would result in no additional costs.  The VOC content testing requirement would affect facilities in the petroleum and coal products manufacturing [North American Industry Classification System (NAICS) Code 324], wholesale trade (NAICS 423 and 424), chemical manufacturing (NAICS 325),  and waste management and remediation services (NAICS 562) sectors of the AQMD. Staff estimates that there are 17 firms in these sectors in the AQMD.

Based on the inventory of affected fluids, it is assumed that manufacturers and suppliers of metalworking fluids and direct-contact lubricants will conduct between 2,000 and 10,000 tests in 2011 to ensure compliance with the revised VOC content and labeling requirements of the proposed amendments.  Industry provided laboratory cost data were used to estimate the cost of each test, $250.  No additional costs are assumed for other provisions of the proposed amendments.   The one-time cost of VOC content testing is projected to be in the range of $0.5 and $2.5 million depending on the number of tests performed. 

Overall, there would be few job impacts of the proposed amendments on the local economy. Job impacts at the sectorial level relative to total industry employment are very small. In 2011, between 8 and 38 jobs are projected to be created due to additional testing requirements, depending on the number of tests conducted.  In later years, job impacts are negligible. The proposed rule amendment is expected to have very few changes in the relative costs of production and prices of goods in the local economy. 

Implementation and Resources

Staff anticipates the need for additional compliance resources to adequately implement and enforce the proposed rule.

Attachments (EXE, 1.8m)

A. Summary of Proposed Amendments

B. Rule Development Process

C. Key Contacts List

D. Resolution

E. Rule Language

F. Final Staff Report

G. Socioeconomic Report

H. Final Environmental Assessment

Errata (DOC, 29k)