September 8, 1995

South Coast Air Quality

Management District Board

BACKGROUND

At the August 11, 1995 Board meeting, staff proposed a set hearing package for amend-ments to Rule 1136. The purpose of the amendments was to (1) make corrections identified by the United States Environmental Protection Agency (USEPA); (2) clarify rule language; (3) add a provision for VOC emission averaging; and (4) extend the final compliance limits for Architectural Millwork Goods. The USEPA corrections were published in the Federal Register as a Notice of Final Rulemaking, which finalized their limited disapproval of this rule. The corrections must be accomplished by November 16, 1995, to avoid federal sanctions which include withholding federal highway funds, or a 2:1 offset ratio for new and modified sources.

Of the four purposes identified above, the first two are technical corrections and clarifi-cations which will not change the substance of the rule. Averaging was included at the request of industry to potentially allow the use of hybrid (waterbased and solvent) systems. USEPA model rule language was used for this provision. Staff also proposed an extension for Architectural Millwork Goods to provide for additional time to develop a permanent solution for this industry.

At the August Board meeting, 14 industry representatives testified on Rule 1136. The testimony focused on five specific points - (1) extension of the final compliance dates until July 1, 1996; (2) include an averaging proposal without discounting; (3) "dovetail" Rule 1136 with RECLAIM; (4) include acetone as an exempt solvent; and (5) provide incentives for companies that switch early to compliant coatings. Based on that testimony, the Board directed staff to include these points as part of the rule package.

PROPOSAL

This package presented to the Board for approval includes the original (August 11, 1995) proposed amendments to Rule 1136 and additional language that addresses the 5 points raised by industry at the August 11, 1995 Board hearing. The five additional amend-ments are summarized as follows:

(1) By extending the final compliance dates until July 1, 1996, companies can continue to use solvent based clear topcoats, pigmented coatings, and sealers. However, some companies have already converted to waterbased coatings or have expended significant capital investment to install control equipment which will meet the final compliance limits in Rule 1136. Based on this, staff has included draft language which would extend the final compliance limits for consideration.

(2) To provide incentives for companies that make an early conversion to clean coatings, the resolution directs staff to bring a proposal back to the Board for reduced fees. Also, rule language will allow these sources to keep records up to a quarterly basis. Another benefit being proposed for companies that can use coatings with a VOC content lower than the July 1, 1996 limits is allowing spray equipment other than HVLP guns provided there are equivalent emissions. These incentives would be in addition to the other benefits that accrue to companies converting to waterbased coatings, such as lower fire insurance premiums, and reduced hazardous waste fees. Staff has committed to meet with this industry to identify further incentives which may be available.

(3) Language proposing averaging without a discount has been prepared. Preliminary discussions with USEPA indicate that the rule will be disapproved absent a 10% discount which is needed to ensure equivalency between averaging and an individually compliant approach. Should the final compliance dates be extended, there would not be an immediate need for this averaging as solvent based coatings can be used.

(4) VOC RECLAIM is currently scheduled for a public hearing in March 1996. This date is well in advance of the proposed extension of the final compliance limits for Rule 1136 and would provide for a bridge between Rule 1136 RECLAIM facilities and implementation of the VOC RECLAIM program. With this timing, no further action is recommended in Rule 1136 for VOC RECLAIM.

(5) Rule 102 - Definitions is on the Board calendar for November 1995. The proposed amendments to Rule 102 include incorporating acetone as an exempt solvent. As with the averaging provision, the use of acetone would only be required for coatings that are needed to meet the final compliance limits. It is not anticipated that acetone would be widely used as a coatings solvent prior to July 1, 1996.

Additionally, the original staff proposal recommended that the USEPA required corrections be adopted which will add test methods for capture efficiency of control systems and transfer efficiency of spray equipment; and will incorporate the USEPA method to calculate equivalent efficiencies of control systems. The other proposed amendments contained in the August 11, 1995, proposal clarify language relating to rule applicability, definitions, and exemptions. In addition, the proposal contains the most current analytical test methods. In practice, these methods and definitions are currently in use. The specific amendments are described in detail in the attached staff report.

ENVIRONMENTAL ANALYSIS

Pursuant to the California Environmental Quality Act (CEQA), staff has reviewed the proposed amendments to Rule 1136 and determined that there may be potential adverse impacts associated with some provisions of the proposed project. Any potential impacts from the project; however, have previously been analyzed in the Final Environmental Assessment for Rule 108 - Alternative Emission Control Plans and the Final Supplemental Environmental Assessment for Rule 1136 - Wood Products Coatings. Therefore, pursuant to state CEQA Guidelines Section 15153, the SCAQMD is relying on these previously prepared environmental assessments as the CEQA analysis for the currently proposed project. A Notice of Intent to Rely on a Previously Prepared Environmental Assessment was circulated for public review and comment from July 31, 1995, through August 29, 1995 and no comments were received.

Since the Set Hearing package, staff has revised its proposal and made several modifications to the project. State CEQA Guidelines Section 15164 require a lead agency to prepare an addendum to an EA if some changes or additions are necessary but none of the conditions for a Subsequent EA have occurred. Staff has prepared an Addendum for the proposed amendments to Rule 1136 which is incorporated herein. In addition, staff has prepared a Statement of Findings and a Statement of Overriding Considerations for the proposed project which is incorporated herein as an attachment to the Governing Board Resolution.

THEREFORE, IT IS RECOMMENDED THAT YOUR BOARD

--Amend Rule 1136 - Wood Products Coatings, as set forth in the attached documents.

--Certify the previously prepared CEQA documents and Addendum being used as the CEQA documentation for Proposed Amended Rule 1136.

Respectfully,

James M. Lents, Ph.D.

Executive Officer

Attachments

PL:WJF:RRP:cao

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