South Coast Air Quality Management District

Amend Rule 1173 – Control Of Volatile Organic Compound Leaks And Releases From Components At Petroleum Facilities And Chemical Plants

SYNOPSIS: 

The proposed amendments will further reduce fugitive VOC emissions from components at petroleum facilities and chemical plants by requiring an inspection and repair program for heavy liquids, and reducing the leak threshold and time to repair components in light liquid service. The amendments will also require the monitoring and reporting of releases from pressure relief devices. PAR 1173 implements portions of 1997/99 AQMD Control Measures FUG-04 and FUG-05.

COMMITTEE: 

Stationary Source, September 27, 2002, and October 25, 2003, Reviewed

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Certifying the Final Environmental Assessment (EA) for Proposed Amended Rule 1173 - Control Of Volatile Organic Compound Leaks And Releases From Components At Petroleum Facilities And Chemical Plants, and
   

2. Adopting Amended Rule 1173 - Control Of Volatile Organic Compound Leaks And Releases From Components At Petroleum Facilities And Chemical Plants.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In 1997, the Natural Resources Defense Council (NRDC), the Coalition for Clean Air and Communities for a Better Environment (CBE) sued the AQMD for failing to implement the 1994 AQMP control measures. In a settlement of the litigation, the AQMD committed to study several stationary source control measures for refineries within a specific time frame and adopt rules if the studies concluded that meaningful emission reduction potentials exist with technically feasible and cost effective controls.

The sources for further study included fugitive emissions from tanks and PRDs operated by refineries. More specifically, the AQMD further refined current emission inventories applicable to tanks and PRDs, including atmospheric PRDs and release events. The AQMD also identified and evaluated potential control options, including those identified by the Bay Area Air Quality Management District (BAAQMD) during the development of amendments to their Regulation 8 - Organic Compounds and Rule 5 - Storage of Organic Liquids.

With the adoption of Rule 1178 - Further Reduction of VOC Emissions from Storage Tanks at Petroleum Refineries in December 2001, the AQMD fulfilled its commitment regarding storage tanks operated by refineries.

AQMD staff has evaluated the reported emissions from the Rule 1173 universe of facilities and evaluated leak control strategies and has determined that further reductions are technically feasible and cost effective.

Proposed Amended Rule 1173 will implement Control Measure FUG-04 and Phase II of Control Measure FUG-05 by focusing on reducing emissions from components in heavy liquid service at petroleum facilities and chemical plants.

Affected Facilities

The facilities subject to this rule include refineries, chemical plants, oil and gas production sites, natural gas processing plants, bulk terminals and pipeline transfer stations.

Public Process

During the rulemaking process, AQMD staff formed a Fugitive VOC Working Group to develop PAR 1173. The Fugitive VOC Working Group included representatives of affected facilities and environmental groups. The Working Group met 12 times during the course of the rule development process. A public workshop was held on August 22, 2002 and a public consultation meeting was held on October 11, 2002. In addition, a Refinery Ad Hoc Committee, formed per Board's direction in early 2002 which received information from refinery and AQMD management representatives and was chaired by Board member Jane Carney, met on multiple occasions and helped shape the development of PAR 1173.

Initially, PAR 1173 was set for public hearing on October 4, 2002. The proposed amended rule and the draft staff report were released to the public on September 25, 2002. At the November 1, 2002 Public Hearing, PAR 1173 was continued to December 6, 2002 and a public notice was issued on November 5, 2002. Comments received on PAR 1173 prior to November 1, 2002, were evaluated by staff and the revised proposal was made available to the public on November 5, 2002. These changes included the following: a new definition for process PRD; revised implementation dates for the proposed amendments; clarification of rule requirements; a limited exemption for liquids with a flash point greater than 2500F; and a limited exemption for PRD releases caused by natural disasters, acts of terrorism, or power curtailment.

Additional comments were received after November 5, 2002, pertaining to the implementation dates for heavy liquid components and PRDs. Staff revised PAR 1173 to require operators to implement the heavy liquid program six months earlier than previously proposed and to allow an additional six months to initiate the PRD monitoring and reporting program.

Proposal

The primary objective of PAR 1173 is to further reduce fugitive VOC emissions from components and releases from pressure relief devices at petroleum facilities and chemical plants. By July 1, 2005, the Leak Detection and Repair (LDAR) program for heavy liquid components and enhancements to the light liquids LDAR is expected to achieve 0.57 ton per day of VOC reductions. The staff proposal is summarized as follows:

• Remove the current exemption for components in heavy liquid service, require quarterly inspection for pumps in heavy liquid service and establish a leak threshold of 100 parts per million (ppm) and a violation threshold at 500 ppm for all components in heavy liquid service. Allowance is granted for annual inspections of pumps in heavy liquid service for good performance for five consecutive quarters.
  
• Reduce the leak threshold for components in light liquid/gas/vapor service from 1,000 ppm to 500 ppm.
  
• Reduce the allowable repair time for components found to have liquid and gaseous leaks. Allow additional time for problematic repairs, not to exceed current repair periods, for 0.05 percent of each component type.
  
• Allow the methane and ethane concentration to be subtracted from the measured leak concentration at oil and gas production facilities for the purpose of determining whether a leak is subject to a Notice of Violation.
  
• Require electronic recording of component inspections for any refinery with more than 25,000 components.
  
• Require refineries and chemical plants to either install electronic valve monitoring devices on 20 percent of their atmospheric process PRDs or, for all atmospheric process PRDs, monitor process parameters and use telltale indicators where parameter monitoring is not feasible.
  
• Require submittal of compliance plans, identifying the atmospheric process PRD inventory and the monitoring method option selected.
  
• Require refineries and chemical plants to notify the AQMD of any atmospheric PRD releases exceeding the reportable quantity limits as stipulated in 40 CFR, Part 117, Part 302 and Part 355 and all releases exceeding 100 pounds of VOC.
  
• Require refineries with crude oil throughputs greater than 20,000 barrels per day, after any release in excess of 2,000 pounds of VOC from a PRD; or a second release in excess of 500 pounds of VOC, to connect the PRD to an approved vapor recovery or control system. In lieu of controlling the PRDs, the refineries may pay a mitigation fee of $350,000 following the release and any subsequent release thereafter exceeding 500 pounds of VOC.
  
• Require quarterly monitoring reports for the atmospheric process PRDs.
  
• Require all records of operator inspection and repair to be kept at the facility for at least two years and at Title V facilities for at least five years.

The following implementation schedule is proposed:

• Reduce the repair period for light liquid components starting July 1, 2003;
  
• Start the LDAR program for heavy liquid components, submit electronic quarterly reports and electronically record component inspections beginning July 1, 2003;
  
• Install electronic monitoring devices on PRDs during the first turnaround after December 31, 2003, or use process parameter monitoring starting July 1, 2004 or install telltale indicators by December 31, 2004;
  
• Connect any PRD, including all serving the same piece or pieces of equipment, to a control device during the first turnaround following: a) a release in excess of 2,000 pounds VOC or b) a second release in excess of 500 pounds of VOC within a 5 year period from the same PRD or any PRD serving the same process equipment, during the turnaround immediately following the release. In lieu of controlling the PRD(s), the operator may pay a mitigation fee of $350,000 to the AQMD within 90 days following the release.

Cost Effectiveness Determination

The cost effectiveness of the proposed amendments ranges from $48 per ton of VOC to $10,712 per ton of VOC reduced. The overall cost effectiveness of the rule was determined to be $157 per ton of VOC reduced to implement a LDAR program for components in heavy liquid service and enhance the LDAR for components in light liquid service. Cost effectiveness for controls from PRDs was not included in the overall cost effectiveness determination since the need for control and amount of pollution reduced is unpredictable and control would be required only if there were multiple or large releases at a source.

Key Issues

Staff has worked diligently with the impacted industry and resolved most of the issues raised during the rule development process. However, industry continues to express concern about one issue: controlling atmospheric PRDs after one release of 2,000 pounds of VOC, or after two releases of at least 500 pounds of VOC each within a 5 year period. Industry is specifically concerned about the cost impact of this requirement. While industry acknowledges that such releases are rare, in the unlikely event they happen the refineries are concerned that the cost of controls may be significantly higher compared to staff's estimates. Based on information submitted by refineries for the last 10 years, staff also believes that such releases are very unlikely to occur. However, the release amounts which may also contain toxics are significant and such PRDs should be controlled as a matter of public and worker safety.

To address the cost impact concern expressed by industry, staff is proposing an alternative compliance option that allows the payment of a mitigation fee in lieu of controls. Some comments were received after the set hearing package was published. These are addressed in the Final Staff Report (Attachment F). As a result of the comments staff recommends a minor amendment to the identification requirements for heavy liquid components, to require the physical identification only for pumps in heavy liquid service. This recommended amendment does not significantly change the meaning of the proposed amended rule nor constitute significant new information pursuant to CEQA. However, it will slightly improve the cost effectiveness of the heavy liquid inspection and maintenance program.

Further, an exemption has been added to exclude atmospheric releases caused by natural disasters, acts of war or terrorism, loss of power beyond the refinery's control, from the control or mitigation requirements of the rule. Components handling heavy liquids with a flash point greater than 2500F are also proposed to be exempt from the tagging and inspection requirements of the rule.

AQMP and Legal Mandates

PAR1173 will implement portions of FUG-04 and phase II of FUG-05. Implementation of PAR1173 will result in emission reductions that are needed to meet federal and state standards for ozone. At full implementation, PAR1173 would achieve approximately 0.57 tons per day of VOC emission reductions.

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 PAR1173. The Draft EA was released for a 30-day public review and comment period beginning October 2, 2002 and ending October 31, 2002. Responses to the comments are included in the Final EA, included as Attachment G of this Governing Board package.

Socioeconomic Analysis

The proposed rule will affect 11 refineries and 76 non-refinery facilities located in the South Coast Basin. The non-refinery facilities belong to the industries of crude petroleum and natural gas, special warehousing and storage, plastic materials and resins, refined petroleum pipelines and petroleum bulk stations & terminals. The total annualized cost of the proposed amended rule was projected to be $0.196 million, on average, from 2003 to 2015. Refineries will incur 81 percent ($0.158 million) of the cost, followed by oil and gas fields ($0.02 million) and petroleum bulk terminals ($0.007 million). The $0.196 million will translate into very few macro job impacts for the local economy.

Implementation and Resources

No additional AQMD resources are required to implement the proposed amendments.

Attachments

A. Summary of Proposal
B. Rule Development Process
C. Key Contacts List
D. Resolution
E. Rule Language
F. Final Staff Report
G. Final Environmental Assessment

ATTACHMENT A
SUMMARY OF PROPOSED AMENDMENTS

BP Arco	Chevron TexacoProducts Co.
Equilon Enterprises, LLC	Exxon Mobil
Edgington Oil	Philips Petroleum
Valero	Tosco Refining Co.
Paramount Petroleum Corp.	Kinder Morgan
Valero Wilmington Asphalt Plt.	Texaco Exploration &Production
Chemoil Terminals Corp.	Berry Petroleum Co.
AERA Energy	Medallion California Properties
Petro Diamond	Signal Hill Petroleum
Global Oil Co.	Stocker Resources Inc.
Greka Energy	Torch Operating Co.
The Termo Co.	Stocker Resources
Pacific Pipeline Systems	Breitburn Energy
West Newport Oil	Thums
Signal Hill Petroleum	Torch Operating Co.
Neville Chemical Co.	Ashland Chemical Inc.
Keysor-Century Corp.	Reichhold Inc.
Brea Canyon Oil	Barto-Signal Petroleum
Cooper & Brain	Elliott Ten Eyck Ltd.
Lunday-Thagard	Graner Oil
City of Huntington Beach	City of Newport Beach
Four Teams Oil Co.	Hellman Properties
Pacific Energy Resources	Richard Young & Associates
The Lansdale Co.	Terra Exploration & Production
Tidelands Oil Production Co.	Venoco
Plegel Oil	BP Arco Terminal Services
BP Arco Western Pipelines	Pacific Pipeline Systems

Others

Western States Petroleum Association
Western Independent Refiners Association
California Independent Petroleum Association
Avanti Environmental Consulting
Shaffer Environmental Consulting
Citizens for Better Environment

RESOLUTION NO. 2002-xx

     A Resolution of the South Coast Air Quality Management District Governing Board (Governing Board) certifying the Final Environmental Assessment for Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants.

     A Resolution of the Governing Board adopting Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants.

          WHEREAS, the AQMD Governing Board has determined with certainty that Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, is a "project" pursuant to the terms of the California Environmental Quality Act (CEQA); and

          WHEREAS, the AQMD has had its regulatory program certified pursuant to Public Resources Code §21080.5 and has conducted CEQA review pursuant to such program (AQMD Rule 110); and

          WHEREAS, AQMD staff has prepared a Draft Environmental Assessment (EA) pursuant to its certified regulatory program and state CEQA Guidelines §15252 setting forth the potential environmental consequences of Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants; and

          WHEREAS, the Draft EA was circulated for public review, comments received were responded to, and a Final EA has been prepared; and

          WHEREAS, the adequacy of the Final EA, including responses to comments, has been determined by the AQMD Governing Board prior to its certification; and

          WHEREAS, a Mitigation Monitoring Plan pursuant to Public Resources Code §21081.6, has not been prepared since no mitigation measures are necessary; and

          WHEREAS, the AQMD Governing Board voting on Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, has reviewed, considered, and hereby certifies the Final EA; and

          WHEREAS, the AQMD Governing Board has determined that the Socioeconomic Impact Assessment of the Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, is consistent with the Governing Board March 17, 1989 and October 14, 1994 resolutions and the provisions of Health and Safety Code Sections 40440.8, 40728.5 and 40920.6; and

          WHEREAS, the AQMD Governing Board has determined that the Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, will result in increased costs to industry, yet is considered cost-effective with a cost-effectiveness as described in the Socioeconomic Impact Assessment and Staff Report; and

          WHEREAS, the AQMD Governing Board has actively considered the Socioeconomic Impact Assessment and has made a good faith effort to minimize such impacts; and
          WHEREAS, the AQMD Governing Board has reviewed and considered the staff's findings related to cost and employment impacts of the Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, set forth in the Socioeconomic Impact Assessment made public with the agenda package for this meeting, and hereby find and determines that cost and employment impacts are as set forth in that assessment; and

          WHEREAS, the AQMD Governing Board has determined that a need exists to adopt the Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, to reduce VOC from releases at petroleum facilities by implementing Control Measures FUG-05 and portions of FUG-04 of the Amendments to the 1999 AQMP and to achieve federal PM10 and ozone standards in 2006 and 2010 respectively; and

          WHEREAS, the AQMD Governing Board of the South Coast Air Quality Management District obtains its authority to adopt this proposed rule referencing to Sections 39002, 40000, 40001, 40440, 40702 and 41508 of the California Health and Safety Code; and

          WHEREAS, the AQMD Governing Board has determined that Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, as proposed to be adopted is written or displayed so that its meaning can be easily understood by the persons directly affected by it; and

          WHEREAS, the AQMD Governing Board has determined that Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, as proposed to be adopted is in harmony with, and not in conflict with or contradictory to, existing federal or state statutes, court decisions, or regulations; and

          WHEREAS, the AQMD Governing Board has determined that that Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, as proposed to be adopted does not impose the same requirements as any existing state or federal regulation and the proposed rule is necessary and proper to execute the powers and duties granted to, and imposed upon, the District; and

          WHEREAS, the AQMD Governing Board has determined that Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, as proposed to be adopted, references the following statutes which the AQMD hereby implements, interprets or makes specific: Title 42 U.S.C. Section 7411 (performance standards for new stationary sources); Health and Safety Code 40001(a) and (b) (air quality standards and air pollution episodes); 40702 (adoption of rules and regulations), and 40440 (rules and regulations to carry out the air quality management plan and to require best available retrofit control technology); and

          WHEREAS, the AQMD Governing Board has determined that there is a problem that Proposed Amended Rule 1173 will alleviate, i.e., the Basin is in extreme non attainment of the federal ozone standards, and the Proposed Amended Rule will promote attainment of these standards,

          WHEREAS, a public hearing has been properly noticed in accordance with the provisions of Health and Safety Code Section 40725; and

          WHEREAS, the AQMD Governing Board has held a public hearing in accordance with all provisions of law; and

          WHEREAS, the AQMD Governing Board specifies the manager of Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, as the custodian of the documents or other materials which constitute the record of proceedings upon which the adoption of this proposed amendment is based, which are located at the South Coast Air Quality Management District, 21865 E. Copley Drive, Diamond Bar, California; and

          WHEREAS, the AQMD Governing Board finds and determines, taking into consideration the factors in Section (d)(4)(D) of the Governing Board Procedures, that the modifications adopted which have been made to Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, since notice of public hearing was published do not significantly change the meaning of the proposed amended rule within the meaning of Health and Safety Code Section 40726 and would not constitute significant new information pursuant to CEQA Guidelines Section 15088.5; and

          WHEREAS, the AQMD Governing Board has determined that Proposed Amended Rule 1173 should be adopted instead of the more stringent option of quarterly inspection of all components because the incremental cost effectiveness of the more stringent option exceeds one half million dollars per ton, and

          WHEREAS, the AQMD Governing Board has determined that Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, should be adopted for the reasons contained in the Final Staff Report, and

          WHEREAS, the AQMD Governing Board hereby directs staff to work closely with Western States Petroleum Association and its members to evaluate the leak rates and refine associated emission inventory of components in heavy liquid service, and monitor implementation of Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, provide periodic implementation status reports to appropriate Board Committees and recommend amendments if appropriate, and

          WHEREAS, the AQMD Governing Board hereby directs staff to provide periodic updates on PRD releases to the appropriate Board Committees and to develop the air quality improvement projects to be funded by mitigation fees collected as a result of a PRD release, in cooperation with representatives of both the community impacted and the source of the release, and

          NOW, THEREFORE, BE IT RESOLVED, that the AQMD Governing Board hereby certifies, pursuant to the authority granted by law, the Final EA for Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, and

          BE IT FURTHER RESOLVED, that because no significant adverse environmental impacts were identified as a result of implementing Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, a Statement of Findings, a Statement of Overriding Considerations, and a Mitigation Monitoring Plan are not required; and

          BE IT FURTHER RESOLVED, that the AQMD Governing Board does hereby adopt, pursuant to the authority granted by law, Proposed Amended Rule 1173 - Control Of Volatile Organic Compounds From Leaks And Releases At Petroleum Facilities And Chemical Plants, as set forth in the attached and incorporated herein by reference.

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