South Coast Air Quality Management District

Summary of Key Issues

• Stakeholder Support
  A coalition of environmental and community organizations have commented that, in their view, all the recommendations except two (federal funding and federal control measure commitment) will weaken the enforcement of the CAA.
  
  
• Prioritization of Recommendations
  A concern has been expressed that the prioritization for implementing the Title III-Equivalency recommendation should account for previous efforts in resolving the issue. Specifically, since the past efforts have failed, it should be placed in Phase II. Another comment was raised to place NSR-Cost Exemption for LAER in Phase I to take advantage of the current EPA NSR Reform.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

1.1. Equivalency:

• EPA may approve local toxic rules if requirements are equal or more stringent than federal requirements.
  
  
• EPA evaluates equivalency on a line-by-line comparison.

(CAA § 112[l])

• Evaluating equivalency on a line-by-line basis is unnecessary and inappropriate test for equivalency.
  
  

• AQMD rules are source-specific and work in conjunction with general rules (e.g., breakdowns, records, etc.) and policies (e.g., BACT Guidelines).
  
  
• AQMD programs that are equal or more stringent than federal requirements have been unable to be deemed "equivalent" by the line-by-line comparison process.

• None of the following rules deemed equivalent: Secondary Lead Smelting (Rule 1407, Rule1420); Chromium Electroplating (Rule 1469); Aerospace Coating (Rule 1124); Wood Products Coating (Rule 1136); Gasoline Transfer and Dispensing (Rule 461)
  
  

• Most differences between federal and local regulations are in monitoring, recordkeeping, and reporting (MRR). EPA does not accept field inspection/compliance programs in lieu of extensive, detailed records.

• Request EPA to revise policies to allow equivalency based on toxic emission reduction basis.
  
  

• Establish practical minimum requirements for MRR.
  
  
• Streamline rule equivalency determination process.

1.2. MACT Hammer:

• If EPA is behind the CAA schedule to promulgate rules to reduce toxic emissions, applicable sources and AQMD are responsible for certain actions.
  
  
• Within 18 months of EPA missing deadline, an applicable source must submit an application for reductions. Reductions must be � level of control of top 12% of similar operations in the U.S.

(CAA �112[j])

Recent EPA action (April 2002) extended the due date of part 2 of the MACT Hammer application from May 2002 to May 2004, effectively alleviating the key issue.

• Filing date for more detailed application has been extended to May 2004.
  
  
• If EPA does not promulgate standards as required, request EPA to allow existing source specific toxic rules, in conjunction with AQMD Rules 1401 and 1402, as equivalent to the CAA �112(j) requirements.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

1.3. Residual Risk:

EPA is required to assess the risk to public health remaining after the implementation of each NESHAP.

(CAA �112 [f]).

• Include a de minimis risk level or exemption threshold that could be determined on a MACT-by-MACT basis or in general for all MACTs.
  
  
• Approach should integrate both technology-based programs (i.e., MACTs) and risk-based programs (i.e., residual risk), such as compliance AQMD�s comprehensive program of source-specific toxic rules coupled with AQMD Rule 1402 � Control of Air Toxic Emissions from Existing Sources.

The CAA establishes nationwide major source federally enforceable operating permit program. Title 40 – Code of Federal Regulations, Part 70, establishes minimum requirements for state and local programs. AQMD Regulation XXX implements the Title V requirements.

(CAA §§ 501-506)

• AQMD has previously worked with CARB and EPA to resolve the issues associated with AQMD’s unique challenges in implementing Title V as the only "extreme" ozone nonattainment area in the nation.
  
  

• Also, after EPA’s refusal in 1999 to recognize variances for Title V facilities granted by the AQMD Hearing Board, AQMD entered into extensive negotiations with stakeholders and EPA such that EPA proposed full approval of AQMD’s variance rule (Rule 518.2) on June 5, 2002.

No major recommendations other than monitoring and providing support for SIP approval of Rule 518.2 - Federal Alternative Operating Conditions.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

3.1. New Policy Applicability:

EPA applies new policies to previously submitted rules and SIP revisions.

(CAA §110[l])

When EPA has not acted on plans or rule submittals in a timely manner, these submittals are judged on policies adopted well after submittal dates, resulting in further delay of the federal approval process and thus extending the SIP Gap.

• 1997 Ozone SIP judged by feasible technologies in 1999.
  
  

• Approval of 2001 RECLAIM amendments delayed due to federally approved (1996) breakdown rule being subject to 1999 policy.

Request EPA to judge SIP revisions and rules by policies in effect at time they are submitted.

3.2. SIP Flexibility:

EPA policy prohibits revising the SIP to become less stringent; i.e., "anti-backsliding"

(CAA §110[l])

• Plan revision should be judged based on overall progress rather than number of measures included or excluded.
  
  

• A "relaxation" is not prohibited if it does not interfere with RFP, RACT, attainment as expeditiously as practicable, or any other specific requirement of Act.
  
  
• Renders meaningless specific anti-backsliding provisions for pre-1990 rules in CAA §193.
  
  
• Discourages technology-forcing rules if rule amendments based on reevaluation of technical feasibility at a later date.

• Proposed disapproval of 1997 AQMP; SIP litigation.
  
  

• Final emission limit in Rule 1171 not submitted for consideration in the SIP to avoid perceived backsliding until future technical assessment.

• Request EPA to create policy allowing 3-year "quota" or a de minimis level of rule relaxations and judging additional flexibility against CAA §110(l) test for attainment as expeditiously as practicable.
  
  

• Allow relaxation or delay of technology forcing limits, provided technical infeasibility findings are conducted at a public hearing.

3.3. Federal Control Measure Commitment:

EPA interprets CAA as not allowing states to "assign" part of clean air efforts to EPA, and will only commit to a "consultative process."

(CAA §301)

EPA’s exclusive authority to regulate federal sources (e.g., ships, trains, and airplanes) significantly hampers the attainment demonstration effort. EPA’s exclusive authority to regulate should be coupled with responsibility to assist in achieving attainment.

AQMD unable to demonstrate attainment without EPA commitment to achieve significantly reductions from federal sources.

• Stakeholders to encourage congressional delegation to seek EPA’s commitment to implement federal measures as part of EPA’s budget application process.
  
  

• Request EPA to commit to adopting and implementing specific, enforceable federal measures with defined strategies and quantified reductions when approving a SIP.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

3.4 SIP Gap:

• EPA has 18 months to take action on plan revisions, new rules, and rule revisions submitted by the AQMD through CARB to EPA.
  
  
• Prior approved version of plan or rule remains federally enforceable until EPA approves revision.

(CAA §110[k])

• EPA has often not acted on SIP submittals until well after the 18 months required by the CAA.
  
  

• EPA’s delay in timely determination of SIP submittals has resulted in SIP gaps that may lead to federal enforcement actions and citizen lawsuits.

• Delayed approval/disapproval of 1997 AQMP, resulting in litigation on non-implementation of 1994 SIP.
  
  

• Citizen lawsuits exploiting SIP gap, e.g., use of mobile source credits in the RECLAIM program.

• Seek additional resources for EPA through congressional delegation.
  
  

• Work with EPA to identify mechanisms to protect facilities from citizen lawsuits during SIP Gap.
  
  
• Request evaluation and streamlining of federal approval process.
  
  
• Partner with EPA to develop commitment to prompt actions, prioritize submittals, and assist in drafting approvability analyses.
  
  
• Lend AQMD staff to EPA so EPA can focus on South Coast submittals.
  
  
• Actively monitor timeliness of EPA action.

• Conformity must be based on:
   
  - most recent estimates of emissions based on most recent population, employment, travel, and congestion;
  
  - latest assumptions about current and future air quality background concentrations.
  
  

• Policy guidance defines most recent assumptions to be within the last five years.

(CAA §176(c)(B)[iii])

• The most recent planning assumptions by Metropolitan Planning Organizations include vehicle distribution that is an integral part of the EMFAC model. Therefore, it can’t be implemented without CARB’s EMFAC updates.
  
  

• Incorporating the most recent planning assumptions in the EMFAC model is a complicated and time-consuming process. Without an updated model, SCAG may be unable to meet Transportation Conformity milestone requirements.

Request EPA and DOT to allow conformity determinations using the same assumptions contained in the SIP that establish the applicable emissions budgets if subject to periodic SIP update requirements no later than every five years.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

CAA § 105 Funding:

Pursuant to CAA, grants cannot be more than 10% of the total allocated funds granted for air pollution control programs in any one State (CAA §105(b)[2]). Additionally, no agency can receive any grant when its expenditures for air pollution control programs will be less than the preceding year.

(CAA §105[c]).

• Though the South Coast Air Basin has the worst air quality in the nation and the most comprehensive control program, the South Coast Air Basin/California receives less dollars per capita in federal grants than other districts/states.

• California and the South Coast Air Basin received $0.49 and $0.26 per capita in federal CAA §105 grants in 2001, respectively.
  
  

• Examples of dollars per capita in federal CAA §105 grants in 2001 for other states are $0.76 for Arizona, $0.55 for Hawaii, and $0.42 for Nebraska.

• Pursue more funding from CAA §103 allocations.
  
  

• Request that a portion of CAA §103 allocations be performance based, such as for overall air quality progress or innovative programs.

6.1. Emission Offsets:

• Regulation XIII has been SIP approved, including the use of short-term credits, specifically mobile source credits.
  
  
• EPA, however, has not approved any mobile source credit generation protocols for Regulation XIII sources in the region.

(CAA §173(c)[1])

• Ever increasingly stringent stationary controls restrict credit generating opportunities from permitted sources.
  
  

• Use of short-term credits and alternative emission offset mechanisms needed to stabilize the supply and cost of offsets under Regulation XIII.

Offsets unavailable to permit new power producing projects. Rule 1309.1 – Community Bank and Priority Reserve, recently amended to address problem for new power plants.

Consider Alternative Emission Offset Mechanisms (Refer to White Paper on Modernization of the Emission Reduction Credit System May 2002):

• Short-Term Credits (Mobile/Area Source)
  
  
• Shared ERCs
  
  
• SIP Offset Budget for NSR

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

6.2. Cost Exception for LAER Determination:

EPA’s current policy does not allow cost to be a factor in making a LAER determination.

(CAA §173[2])

• Transfer of technologies to other source categories may be cost-prohibitive.
  
  

• Voluntary equipment or facility upgrades not pursued due to cost of LAER compliance.

• A spray booth that may be cost-effective for metal coating in a small body shop with a certain throughput and VOC concentration is not necessarily cost-effective for another autobody shop that has lower VOC concentration or an aerospace operation with high volume/low VOC concentration.
  
  

• Add-on control equipment at auto repair shops may be more expensive than the equipment it is controlling.

Request that EPA grant AQMD the flexibility to consider cost as part of the feasibility determination for achieved in practice for a specific source category within the same industry in determining LAER.

6.3. Discount ERCs at Time of Use:

Current EPA policy requires the discounting of ERCs to Reasonably Available Control Technology at the time of use.

(CAA §172(c)[1])

EPA policy is in conflict with federally approved AQMD Regulation XIII. AQMD discounts ERCs at the time of issuance to BACT levels which alleviates uncertainties regarding value of credits, is easier to implement, and generally results in greater discounts.

Maintain EPA approval of AQMD’s Regulation XIII provision for discounting ERCs to BACT (i.e. federal LAER) at time of generation.

6.4. Relocation:

EPA’s current policy treats existing sources that relocate and are not expanding as "new" sources for purposes of LAER and offsets, even though such sources are neither new nor modified.

(CAA §172)

• Relocated sources are subject to NSR regardless of the remaining life of the equipment or that there would be no increase in emissions.
  
  

• Partially addressed through AQMD major vs. minor source BACT requirements.

Facility loses lease and needs to relocate operation. Facility is subject to NSR requirements.

EPA should interpret LAER as not applying to relocations where the facility previously received a LAER limit and operated under the same ownership for the previous two years and there is no increase in emissions.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

6.5. "Demonstrated in Practice" Determination:

To determine whether a control technology has been "demonstrated in practice" EPA uses the criterion of "operating at a minimum 50% of design capacity for six months."

(Proposed 40 CFR Parts 51 and 52, 1996)

The requirement for "demonstrated in practice" based on operation at 50% of design capacity is not a representative figure for a significant number of industry types.

Sample of industry types operating at greater than 50 percent of design capacity include:

Cement manufacturing; aluminum extruded products; motor vehicle parts and accessories; clay refractories; steel works, blast furnaces, and rolling mills; vitreous china plumbing fixtures; cottonseed oil mills; glass containers; and hardware manufacturing.

(source: Southern California Gas Co)

Grant flexibility to use higher capacity level that reflects customary practice of the specific industry of concern.

6.6 Reactivation:

EPA’s reactivation policy considers an existing facility that had been shutdown for two years as a new source subject to NSR upon reopening.

(CAA §§ 172 and 173)

• Certain sources that begin operating after being shutdown for two years should not be subject to NSR. Depends why permits were inactivated.
  
  

• Creates an unnecessary demand for ERCs.
  
  
• Policy may encourage continued operations to keep permits active instead of a temporary shutdown and the resultant air quality benefits.

Facility stops operations and goes bankrupt. A few years later, the facility is financially ready to start operating, but must go through NSR upon reopening.

• EPA should reevaluate its Reactivation Policy to clarify the circumstances under which restart of a long-dormant source should be subject to NSR as a new source.
  
  

• Reactivation Policy should meet regulatory requirements while providing fairer treatment to existing sources that are neither "new" nor "modified".

6.7. Incentives for Energy-Efficient Technologies:

LAER does not consider emissions on a production per unit basis.

(CAA § 171[3])

There exist little to no incentives for sources to voluntarily install energy-efficient technologies. While NSR inherently acknowledges energy efficiency by requiring less offsets for operations that emit less due to energy efficiency, it has no further incentives to promote energy efficient technologies.

A boiler has higher NOx concentration than LAER, but is more energy efficient and has lower overall mass emissions for an equivalent amount of energy produced.

Request EPA to develop a policy to promote efficiency by incorporating energy efficiency in LAER determinations.

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

7.1. Environmental Benefit:

EPA’s preferred approach for expedited approval is that emission reductions be at least 10 percent lower than would have otherwise occurred.

(EPA-42/R-01-001)

• For those programs subject to the 10% environmental benefit, EPA allows limited flexibility depending upon the type of environmental benefit, but provides no specific guidance or criteria.
  
  

• 10% environmental benefit may prohibit emission reduction strategies using averaging for compliance flexibility, yet certain emission sources are best controlled with an emission averaging strategy.

• There is a concurrent toxic emission reduction when reducing diesel particulate emissions, but AQMD pilot credit rules, as approved by EPA, require a 9% environmental benefit with limited recognition for PM10 reductions.
  
  

• Rule 1113 – Architectural Coatings averaging provisions to allow incorporation of technology forcing limits.

• Request EPA to include explicit examples of equivalent environmental benefit to recognize concurrent toxic reductions, especially in EJ areas.
  
  

• Waive 10 percent environmental benefit if reductions employ advanced clean technologies (e.g., fuel cells).
  
  
• Exclude from EIP applicability if averaging provision implements emission reduction strategy and emission credits are not generated or traded.

7.2. Multi-Pollutant Reductions:

Must retire concurrent reductions of other pollutants when generating credits of a particular pollutant.

(EPA-42/R-01-001)

Current policy does not recognize legitimate multi-pollutant emission reduction credits (i.e., real, surplus, quantifiable, enforceable, etc.).

Federal approval of recently adopted pilot credit generation rules predicated on granting credit only for NOx reductions though other pollutants are concurrently reduced.

Track credits separately and allow use of all valid credits

7.3. Monitoring, Recordkeeping, and Reporting (MRR):

• Prescriptive MRR requirements do not account for all the compliance provisions set forth in a particular rule and/or AQMD’s overall compliance program.
  
  

• More practical, less costly MRRs would effectively verify compliance

FEDERAL POLICY

ISSUE

EXAMPLE

RECOMMENDATION

(EPA-42/R-01-001)

• High end of cost range not reflective of cost of generating equivalent emission reductions.
  
  

• Participation cost threshold based on high end cost range may result in unnecessarily high compliance costs.
  
  
• Policy is unnecessarily complicated.
  
  
• Participation better determined on a case-by-case basis.

• Using high end cost range for RTCs to establish AQIP participation fee would have been too high and led to reduced market efficiency

Facilities participating in EIP cannot have any confidential information.

(EPA-42/R-01-001)