BOARD MEETING DATE: March 5, 2010
AGENDA NO. 34
REPORT:
Stationary Source Committee
SYNOPSIS:
The Stationary Source Committee met Friday, February 19, 2010. Following is a summary of that meeting. The next meeting will be March 19, at 10:30 a.m., in Conference Room CC8.
RECOMMENDED ACTION:
Receive and file.
Dennis Yates, Chair
Stationary Source Committee
Attendance
The meeting began at 10:40 a.m. Present were Dennis Yates, Bill Campbell (attended by videoconference), Josie Gonzales, Jane Carney and Ronald Loveridge (left at 11:20 a.m.).
ACTION ITEMS
Approve Recommendation to Appoint Alternate to Home Rule Advisory Group
Dr. Elaine Chang, Deputy Executive Officer of Planning, Rule Development, and Areas Sources, recommended the appointment of Sue Gornick as alternate to Curt Coleman, of the Home Rule Advisory Group, pursuant to the Board’s Advisory Council and Advisory Group’s Policy and Guidelines.
Moved (Campbell) seconded (Carney), and unanimously recommended for approval.
Annual RECLAIM Audit Report for Compliance Year 2008
Danny Luong, Engineering & Compliance Manager, provided a brief overview of the findings that will be presented in the Annual RECLAIM Audit Report for 2008 Compliance Year (January 2008 through June 2009). The subjects discussed are summarized below.
RECLAIM met its NOx and SOx emission goals for Compliance Year 2008. In particular, aggregate RECLAIM NOx emissions were 22% below aggregate allocations and aggregate SOx emissions were 21% below aggregate allocations. Furthermore, individual RECLAIM facilities also had a high rate of compliance with their allocations—95% of NOx RECLAIM facilities (276 of292 facilities) and 97% of SOx RECLAIM facilities (31 of 32 facilities) complied with their allocations. The number of facilities subject to RECLAIM decreased from 292 to 286 over the course of Compliance Year 2008 because six facilities shut down.
As stated in the Annual RECLAIM Audit Report for 2007 Compliance Year, staff has updated all of the historical emissions data from the reports for the 1994 through 2007 compliance years to reflect audited emissions data in the report for Compliance Year 2008. Updating the emissions data did not change the overall programmatic compliance data reported in prior years; aggregate RECLAIM emissions were below aggregate allocations for all years except aggregate NOx emissions exceeded aggregate NOx allocations during Compliance Year 2000 due to the California Energy Crisis. However, aggregate Compliance Year 2001 NOx emissions no longer exceed aggregate allocations for that year, even though such an exceedance was previously reported. This change is primarily due to exclusion of emissions from military technical support equipment from RECLAIM pursuant to Health and Safety Code §41754(a)(3).
In calendar year 2009, $22.6 million worth of RECLAIM Trading Credits (RTCs) were traded compared to $58 million traded in 2008, and a total of $943 million in RTCs were traded in 1994 through 2009. Two facilities reported a total of 139 job losses that they attributed to RECLAIM and two additional facilities attributed a total of three job gains to RECLAIM during Compliance Year 2008. The applicable federal New Source Review offset ratios were met by RECLAIM facilities during Compliance Year 2008. Additionally, there were no significant shifts in seasonal emissions from the winter to summer months and no distinct shift in the geographical distribution of emissions occurred during the compliance year.
Board Member Jane Carney asked for more detail regarding the reported job losses and the manner in which the job loss information is obtained. Mr. Luong explained that each RECLAIM facility is asked to report information about job gains and losses on its annual RECLAIM emission reports, including an assessment of how many of the reported job gains or losses it attributes to RECLAIM. Staff reports the job data as reported accepting the reasons as perceived by the RECLAIM facility. Board Member Carney stated that doing business in Southern California is difficult for many reasons and that AQMD does not want to make it more so. She also suggested that staff should take reports of significant job losses seriously and investigate them, not to alter the numbers but to ascertain the causes for the job losses. Ms Carney wants staff to make sure that RECLAIM is not unduly blamed for job losses. Mohsen Nazemi, Deputy Executive Officer of Engineering and Compliance, provided further details of the job losses. Bently-Price-Street reported 136 of the 139 job losses attributed to RECLAIM and asserted that RECLAIM’s fees and compliance costs put it at a competitive disadvantage to competing facilities, including its sister facility in North Carolina. In looking at the compliance history of Bently Price-Street, staff found that it is not a “structural buyer” of RTCs based on its trading records, its emissions have been steady for the past four years and it had excess credits for each of those years. The other three job losses attributed to RECLAIM were reported by FS Precision Tech, which manufactures specialty metal parts.
The average prices of individual year NOx RTCs were below the applicable program review thresholds in Rule 2015 and those established by the Governing Board, as were the average prices of individual year SOx RTCs. The average prices of infinite-year blocks of NOx and SOx RTCs were $124,576 per ton and $36,550 per ton, respectively. These average infinite-year block (IYB) RTC prices were below the corresponding program review thresholds established by the Governing Board. Investors participated in significant portions of RTC transactions during the 2009 calendar year, including 52% of trades involving IYB NOx RTCs and all trades involving IYB SOx RTCs. As a result, investors held 5.5% of IYB NOx RTCs and 5.5% of IYB SOx RTCs at the end of 2009. Mr. Nazemi explained that the annual compliance margin (the difference between aggregate emissions and aggregate allocations) is typically about ten percent of aggregate allocations. So, if a new facility was entering the program and in need of purchasing RTCs, it would need to identify and acquire some of the RTCs in that ten percent. Therefore, the 5.5% holdings held by investors are potentially significant, especially if the facilities holding the balance of the surplus RTCs are unwilling to sell them.
In summary, programmatic compliance was achieved, facility compliance was high, and average RTC prices remained below applicable program review thresholds. There were no public comments.
Motion to present the RECLAIM Audit Report for 2008 Compliance Year to the Board for consideration of approval was moved (Gonzales) seconded (Carney), and unanimously approved.
INFORMATIONAL ITEMS
As per Jane Carney’s request, Agenda Item #4 was discussed out of order.
Rule 310 – Amnesty for Unpermitted Equipment
Dr. Laki Tisopulos, Assistant Deputy Executive Officer with Office of Planning, Rule Development and Area Sources gave the staff presentation on Proposed Rule 310. Proposed Rule 310 is intended to implement Chairman Burke’s initiative regarding permit application penalty holiday. The proposal will exempt owners and operators of unpermitted equipment that meet certain conditions from late filing fees and referrals for civil and criminal prosecution provided they voluntarily apply for permits during the six-month period (February 5 through August 4, 2010) offered by Rule 310 and comply with all other applicable rules and regulations. In response to a question from the Committee Members regarding the effectiveness of such programs, Dr. Tisopulos responded that a similar program implemented in 1995 had resulted in permit applications for over 600 equipment operating illegally without a permit.
Committee Member Jane Carney left the meeting for Agenda Item #3 citing possible conflict of interest, as Modular Metal Fabricators is a source of income for her.
Rule 1144 – Vanishing Oils and Rust Inhibitors
Naveen Berry, Planning & Rules Manager, presented a summary on Proposed Amended Rule 1144 – Vanishing Oils and Rust Inhibitors. The proposed VOC limits and requirements of the rule were discussed as well as industry’s concerns with the proposed 2015 future limits. Mr. Berry indicated that staff is working closely with industry stakeholders and expects to report back to the March Stationary Source Committee meeting with resolutions to the outstanding issues. John Burke of the Independent Lubricant Manufacturers Association commented that further work on SCAQMD Method 313L should be terminated and reserved his support for the rule until the issues were addressed. Mike Pearce of W.S. Dodge Oil commented that emission reductions from the proposed 2015 would be small leading to an unacceptably high cost-effectiveness for the proposed rule. Both Mr. Burke and Mr. Pierce acknowledged that the proposed rule, with the additional discussion, was progressing towards consensus. Mr. Berry addressed all the comments presented.
WRITTEN REPORTS
All written reports were acknowledged by the Committee.
PUBLIC COMMENTS
Bill LaMarr of the Small Business Alliance expressed his support for the Rule 310 proposal and offered his assistance in publicizing its availability through their website and other means.
Mayor Yates announced that the next Stationary Source Committee meeting will be on March 19, 2010.
The meeting was adjourned at 11:30 a.m.
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