PROPOSAL:

Set Public Hearing November 14, 1997 to
Adopt Proposed Rule 2503 - Enforceable Procedures

SYNOPSIS:

Proposed Rule 2503 will expand on the enforceable procedures guidelines developed in Rule 2501 - Air Quality Investment Program (AQIP) and establish monitoring, recordkeeping, and reporting (MRR) requirements for applying AQIP emission reductions as an alternative to compliance with the emission limitation requirements of Regulation IV - Prohibitions and Regulation XI - Source Specific Standards. The proposed rule will also specify the quantification methodologies necessary to determine the amount of AQIP emission reductions required.

COMMITTEE:

Mobile Source, September 26, 1997, Reviewed

RECOMMENDED ACTION:

Set Public Hearing November 14, 1997 to Adopt Proposed Rule 2503 - Enforceable Procedures.

Barry R. Wallerstein, D. Env.
Acting Executive Officer

Background

The AQMD is developing a series of market-based incentive rules under Regulation XXV - Intercredit Trading. One element of the proposed Intercredit Trading Program which was adopted May 9, 1997, is Rule 2501 - Air Quality Investment Program (AQIP). Under Rule 2501, Regulation IV, XI and Rule 2202 sources that meet the eligibility requirementsair quality investment fund that will be used to provide equivalent emission reductions that will otherwise be required of AQIP participants. Participants can voluntarily submit a specified fee into the AQIP which will be used to fund projects that will produce equivalent or greater emission reductions.

Contingent to the participation of Regulation IV and XI sources in the Rule 2501 AQIP, is the availability of an adopted AQMD rule specifying enforceable procedures for using AQIP emission reductions. Thus, as part of the Resolution to Rule 2501, AQMD staff is committed to develop a rule prior to January 1, 1998, that specifies enforceable procedures for using AQIP emission reductions as required under subdivision (e) of Rule 2501. Proposed Rule 2503 - Enforceable Procedures is the fulfillment of that commitment.

Proposal

Proposed Rule 2503 specifies monitoring, recordkeeping, and reporting (MRR) requirements based on the guidelines outlined in Rule 2501. In addition to establishing enforceable MRR requirements, the proposed rule specifies the quantification methodologies for determining the amount of emission reductions required.

Monitoring Requirements

For most sources, Proposed Rule 2503 establishes a four-step hierarchy for appropriate monitoring test methods and frequency. The hierarchy is: (1) Continuous Emissions Monitoring Systems (CEMS), (2) monitoring requirements specified in the applicable Regulation IV or XI rule, (3) monitoring requirements specified in the applicable Permit to Construct/Operate, and (4) appropriate test or laboratory methods identified in Rule 2503 paragraph (e)(6). Monitoring of the emission limitation for sources using VOC-Containing Materials will be accomplished by requiring that documentation be provided specifying the VOC content of the material which meets the labeling requirements of Rule 443.1 - Labeling of Materials Containing Organic Solvents. Documents which may meet this requirement include Laboratory Analysis Reports, Material Safety Data Sheets, and Technical Data Sheets.

Recordkeeping Requirements

The recordkeeping provisions of Proposed Rule 2503 are designed to be consistent with the existing recordkeeping requirements of Regulation IV, XI, and XIII. For instance, recordkeeping requirements for sources using VOC-containing materials in coating or solvent processes are based on Rule 109 - Recordkeeping for Volatile Organic Compound Emissions and other similar requirements pursuant to Regulation XIII.

Reporting Requirements

Rule 2501 requires that summaries quantifying the amount of AQIP emission reductions used and remaining be submitted to the Executive Officer at six and twelve months from the Starting Investment Date in an approved format which summarizes the sources’ AQIP emission reduction activity on a monthly basis.

Quantification Methodologies

The proposed rule specifies the methodologies for determining the amount of emission reductions required to demonstrate compliance with Rule 2501. The emission quantification methodologies for the proposed rule establish the manner in which the amount of required AQIP emission reductions are to be calculated. The proposed rule provides two types of equations for determining the amount of required AQIP emission reductions: (1) for non-coating operations; and (2) for coating operations. These equations are dependent on the activity of the operation and are based on the difference between the emission limitations (concentration, percent by weight, or emission rate of a pollutant) during the Investment Period and currently allowed under existing requirements. Additional equations are specified for (1) determining the AQIP emission reduction remaining; and (2) the amount of adjustment to the AQIP emission reductions used due to the quantity of VOC-containing waste recycled.

Policy Issues

To date, public comment on Proposed Rule 2503 has focused chiefly on the policy issue of alternative MRRs.

The business community has commented that Rule 2501 should allow sources to use AQIP emission reductions as an alternative to monitoring requirements specified in Regulation IV and XI rules. For instance, there has been a suggestion to provide relief from a Regulation IV or XI monitoring requirement such as use of CEMS. Rule 2501 allows use of AQIP emission reductions as an alternative to compliance with a specific emission limitation. AQMD staff has determined that allowing use of AQIP emission reductions as an alternative to MRR requirements is beyond the scope of Rule 2501 and Proposed Rule 2503. However, this concept will be further evaluated as part of the rule development process for the proposed Intercredit Trading Program.

The business community has also commented that staff’s proposal for alternative MRRs are too burdensome. Specifically, the business community has indicated that relying on EPA Method 301 as a benchmark for reviewing alternative MRRs, is too restrictive. EPA has indicated that this requirement is necessary and is unsure if it is sufficient to eliminate Executive Officer discretion. AQMD staff believes that the proposed rule provides a proper mechanism for the business community to develop alternative MRRs while meeting EPA guidance.

EPA staff has also raised several rule approvability issues. The alternative MRRs specified in the proposed rule contain many areas where Executive Officer discretion is used to review and approve these alternative monitoring and recordkeeping protocols. EPA indicates that either specific criteria be provided on what is considered acceptable or EPA prior approval is needed. AQMD staff understands the concern and is adding language to the proposed rule to specify criteria for approval.

EPA has also commented that the proposal should only reference the monitoring methods from Regulation IV and XI rules which are SIP approved. The AQMD staff is concerned that if Proposed Rule 2503 relies solely on test methods included in SIP approved rules, it will cause significant enforcement problems and does not reflect the best available monitoring techniques (i.e., multiple test methods for compliance determination). The EPA has also expressed concern that it has not reviewed the monitoring methods specified in Regulation IV or XI rules to determine if they are technically sufficient for trading purposes. The AQMD staff believes that the monitoring and test methods in Regulation IV and XI rules are sufficient to verify compliance. AQMD staff will continue to work with EPA to resolve these issues.

AQMP & Legal Mandates

Proposed Rule 2503 satisfies the commitment that the Board made in the Resolution to Rule 2501 to develop a rule prior to January 1, 1998, that specifies enforceable procedures for using AQIP emission reductions as required under subdivision (e) of Rule 2501.

CEQA & Socioeconomic Analysis

The AQMD has reviewed the proposed project pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15002(k) - Three Step Process, to determine which type of CEQA document to prepare for the proposed action. The AQMD has determined that the proposed project is exempt from CEQA pursuant to CEQA Guidelines Section 15321 - Enforcement Actions by Regulatory Agencies, since the activity is covered by this Class 21 exemption for actions to enforce a rule adopted by a regulatory agency.

The Notice of Exemption, prepared pursuant to state CEQA Guidelines Section 15062 - Notice of Exemption, will be filed with the county clerks of Los Angeles, Orange, Riverside and San Bernardino counties immediately following the adoption of the proposal.

The AQMD has determined that the proposed rule would not generate any additional costs on affected sources because it specifies current MRR requirements as dictated in existing regulations for a voluntary program. As such, the proposed rule will not result in any adverse socioeconomic impacts.

Implementation Plan

Not Applicable

Resource Impacts

Not Applicable

Attachments

A. Rule Development Flow Chart

B. Rule Language

C. Staff Report

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