BOARD MEETING DATE: April 2, 2004
AGENDA NO. 37

Adopt Rule 1470 – Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines

SYNOPSIS:

Proposed Rule 1470 will adopt the Air Toxics Control Measure (ATCM) for stationary compression ignition engines, as approved with 15-day changes by the ARB Board in February 2004. Proposed Rule 1470 establishes more stringent requirements than the ATCM for engines located on school grounds or 100 meters or less from existing schools, resulting in reduced emissions of diesel particulate matter.

COMMITTEE:

Stationary Source (February 27, 2004, March 26, 2004), Reviewed

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Certifying the Final Environmental Assessment (EA) for Proposed Rule 1470 – Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines; and
    
2. Adopting Rule 1470 - Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Stationary compression ignition engines, defined as engines that remain in one location for 12 months or longer and typically categorized as either prime engines or emergency standby engines, are used in a wide variety of applications. Prime engines are stationary engines that are used for routine purposes in a wide variety of applications such as compressors, irrigation pumps, cranes, rock crushers, and agricultural irrigation. Applications for emergency standby engines include providing emergency power for systems critical to human life (e.g., hospital and convalescent facility medical support systems). These engines use diesel fuel and emit particulate matter (PM), oxides of nitrogen (NOx), volatile organic compounds (VOC), and carbon monoxide (CO).

The second Multiple Air Toxics Exposure Study (MATES-II), released in 2000, shows that approximately 70 percent of the cancer risk from air toxics in the South Coast Air Basin (Basin) is due to diesel particulate matter (diesel PM). In June 2003, AQMD’s Governing Board directed staff to develop a rule to provide health protection to schools located near internal combustion engines utilizing diesel fuels. Proposed Rule (PR) 1470 – Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines, has been developed in response to the Board’s direction. PR 1470 includes requirements of the Air Toxics Control Measure for stationary compression ignition engines (ARB ATCM), as approved with 15-day changes by the Air Resources Board on February 26, 2004.

In addition to the requirements from the ARB ATCM, PR 1470 would establish more stringent requirements for engines located on or within 100 meters from existing schools. The purpose for the more stringent standards is to reduce exposure to diesel PM for school children, who are more susceptible to diesel PM than healthy adults. AQMD staff’s proposal seeks to ensure maximum protection for school children from diesel PM emissions from emergency standby engines under both predictable situations, such as engine maintenance and testing, as well as during unpredictable, inevitable emergencies.

The rule applies to new and existing prime and emergency engines, and new agricultural engines. The three main compliance avenues are clean fuels, limits on hours for testing and maintenance, and diesel particulate matter filters. Based on ARB analysis, approximately 90% of engines will be able to comply with the ATCM requirements with fuel and hour limits only.

Affected Facilities

AQMD staff estimates that there are nearly 4,900 facilities with approximately 7,800 stationary diesel-fueled engines in AQMD’s jurisdiction, with around 97 percent of these engines being emergency standby engines. There are an estimated 125 to 750 facilities, with approximately 180 to 1,100 diesel-fueled emergency standby engines on school grounds or 100 meters or less from existing schools (upper end of range based on 300 meters between facility addresses in AQMD database). It is estimated that implementation of the ARB ATCM under PR 1470 will result in Basin PM, NOx, VOC, and CO emission reductions of approximately 0.2, 3.3, 0.3, and 1.0 tons per day, respectively, by year 2020. Because PR 1470 would require more stringent controls on diesel emergency standby engines within 100 meters of schools, greater overall reductions of these pollutants are expected. Staff estimates that under a hypothetical case of 500 diesel emergency standby engines with a rating of 350 horse-power being subject to the more stringent controls proposed in PR 1470 operating in an emergency for 100 hours per engine in a given year, up to 10.4 tons of diesel particulate matter would be reduced.

Proposal

PR 1470 would implement the ARB ATCM, as well as establish more stringent requirements for engines located on or within 100 meters from existing schools.

Under the ARB ATCM, most stationary diesel engines would be required to use cleaner fuels (e.g., CARB diesel fuel, alternative diesel fuels, alternative fuels). In addition, emergency standby engines located 500 feet or less from schools would be prohibited from operating for non-emergency purposes from 7:30 a.m. - 3:30 p.m. unless meeting stringent PM emission limitations. In general, the stringency of emission limitations for owners and operators of diesel emergency standby engines would be contingent upon the number of hours per year needed for maintenance and testing purposes. Prime engines would be required to meet specific emission limitations. Engines participating in demand response programs must meet the most stringent emission levels by January 2008.

For stationary diesel engines located 100 meters or less from existing schools, PR 1470 would be more stringent than the ARB ATCM, as follows:

• New and in-use engines would be prohibited from operating for non-emergency purposes from 7:30 a.m. - 3:30 p.m., regardless of diesel PM emission limitations met.
• New engines would be required to meet a diesel PM standard of 0.01 grams per brake horsepower-hour (g/bhp-hr) and operate no more than 100 hours per year for maintenance and testing purposes. This requirement would become effective on January 1, 2005.
• In-use engines would be required to meet one of three diesel PM standards, with the most stringent level being 0.01 g/bhp-hr for engines and allowing up to 100 hours per year for maintenance and testing. This requirement would become effective between January 1, 2006 through January 1, 2009, depending on the number of engines owned within the District and the age of the engines.

Public Process

During the PR 1470 rulemaking process, staff conducted a Public Workshop/CEQA Scoping Meeting on February 11, 2004 to present the proposed rule, with emphasis placed on differences from the then proposed ARB ATCM. The ARB ATCM development process, which began in 2001, consisted of eight Public Workshops, coordination with a working group of the California Air Pollution Control Officers Association, and three ARB Public Hearings (November 2003, December 2003, and February 2004).

On March 19, 2004, AQMD staff conducted a public meeting to discuss changes made to PR 1470 following the February 11, 2004 Public Workshop/CEQA Scoping Meeting, including changes to PR 1470 to incorporate the 15-day changes from the ARB February 26, 2004 Public Hearing. AQMD staff also met with industry and citizen groups on an individual basis.

Key Issues

Staff has worked with industry representatives and owners of engines potentially impacted by PR 1470 and resolved many of the issues raised during the rule development process. PR 1470 includes 15-day changes from the ARB Public Hearing on February 26, 2004.

In general, industry and engine owners have expressed broad support for the ARB ATCM and staff has been asked to adopt the ARB ATCM without more stringent requirements for emergency standby engines located at or near schools. Industry further expressed concern that the ARB ATCM is health-protective, there is no justification for further requirements, no benefits shown, and requiring controls on engines near schools could potentially prohibit use of these emergency engines. The distinction between the ARB ATCM and PR 1470 is that the ATCM is designed to limit toxic emissions only during non-emergency use. PR 1470 seeks to further reduce toxic emissions to school children even during emergency operation of engines. PR 1470 does not at all limit use of engines during an emergency situation, but instead requires feasible controls. Information has been added to the staff report regarding the increased sensitivity of children to diesel particulates, and an example of the reduced emissions that would occur during 100 hours of operation if emergency engines on or near schools have controls.

Comments have been made that AQMD should wait until the ARB ATCM, with 15-day changes, is finalized. ARB’s process will involve circulation of changes for a 15-day period for public comment. Ultimately, the ARB ATCM must be reviewed and approved by the State Office of Administrative Law. The ARB process could take several months. Staff is cognizant of the Board’s request last June to bring a rule for the Board’s consideration as soon as possible. PR 1470 includes changes identified when the state approved the ATCM with 15-day changes on February 26, 2004. However, in response to industry concerns, the resolution contains direction that staff will report to the Stationary Source Committee if any material changes are made to the ATCM and make recommendations relative to PR 1470.

In contrast to industry’s request not to go further than the ATCM, parents of students at schools located near diesel emergency standby engines have urged staff to consider even more stringent requirements than currently specified in PR 1470. They have requested more accelerated compliance schedules with a mitigation fee to extend the schedule that is currently proposed. Currently, PR 1470 mirrors the state ATCM by allowing owners of four or more engines in the District to have a phased compliance schedule, and requires that priority be given to any engines located on or near schools. This makes for a smoother transition and eases economic impacts. Older engines and engines on or near schools are required to be retrofitted earlier, and all engines will be controlled by 2009. Charging a mitigation fee as a disincentive for use of the phased compliance schedule could impose an undue economic impact on the facilities that require significant financial investments in order to comply with the rule requirements. Additional financial burden may further impede timely compliance.

Parents have also requested that engines on or near schools not be allowed to participate in demand response programs. Staff proposes being consistent with the state ATCM, which allows such engines to participate in demand response programs. Such engines only run when specifically directed by the California Independent System Operator to prevent rolling brown- or black-outs in a specific area. The engines are used to supply power to the facility only, not to sell power to the grid. In the absence of their participation in a demand response program, the same engines and many others would operate if a black-out occurred. The ATCM and PR 1470 require that new engines enrolling in demand response programs meet a PM emission limit of 0.01 g/bhp-hr, which is the cleanest level currently achievable, by January 1, 2005 and that in-use engines in demand response programs meet an emission limit of 0.15 g/bhp-hr until January 1, 2008, after which time the emission limit will be 0.01 g/bhp-hr.

Industry representatives have also questioned the technological feasibility of diesel particulate filters (DPFs). DPF technology has been demonstrated to achieve the PM emission limits in the rule. There are two types of DPFs – passive and active. Passive DPFs are effective in removing diesel PM provided that a longer period of operation occurs periodically, which allows the temperature to increase enough for regeneration. Active DPFs, which are either not catalyzed or lightly catalyzed and, as a result, not dependent on high operating temperatures for regeneration of the filter, are suggested by control equipment manufacturers for equipment that is used intermittently.

AQMP and Legal Mandates

PR 1470 is an air toxic rule that is not an AQMP requirement. Adoption of PR 1470 will satisfy requirements, as specified in Health and Safety Code §39666 (d), to implement the ARB ATCM.

California Environmental Quality Act (CEQA) Analysis

Pursuant to the California Environmental Quality Act (CEQA) and the AQMD’s Certified Regulatory Program (Rule 110), staff has prepared an Environmental Assessment (EA) for Proposed Rule 1470 – Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines. The Draft EA, which was made available for a 30-day public review period from January 29, 2004 to February 27, 2004, concluded that Proposed Rule 1470 would provide an overall air quality benefit and would not result in a significant adverse effect on the environment. No comments were received on the draft EA. The final EA is included as part of the attached package for the public hearing on the proposed rule.

Socioeconomic Analysis

The socioeconomic analysis was conducted to assess the impact of PR 1470. PR 1470 will affect around 4,900 facilities with stationary internal combustion engines, while only those within 100 meters of a school will be subject to additional local requirements. The affected facilities are located throughout the four-county area and span every sector of the local economy. Approximately 90% of engines will comply without adding control equipment. DPF cost is $38 per horsepower of the engine.

The annual cost of implementing PR 1470 is projected to be approximately $1.1 to $3.6 million from 2006 to 2015. Of the $1.1 to $3.6 million annual cost, the cost of implementing the additional AQMD requirements (more stringent emission standards for emergency engines near schools) ranges from $0.45 to $1.48 million. The range of compliance costs is based on the range of engine sizes and cost of DPF per horsepower. Overall, it is projected that between 27 and 85 jobs would be foregone annually between 2006 and 2015. Job impacts from the more stringent portions of PR 1470 are estimated between 12 – 38 jobs, which is within the noise level of the model. Based on AQMD’s database, for facilities within 300 meters of schools, two percent are small businesses, while 75 percent are not. There is no data on the remaining 23 percent of the facilities for the purpose of identifying small businesses.

Schools or school districts which own emergency standby engines on school grounds may apply for funding under an AQMD program. On September 5, 2003, AQMD issued Program Announcement & Application #PA2004-01, which established a fund of $250,000 for installation of PM traps on diesel backup generators. Applications under this program will be accepted until June 30, 2004, with the possibility that the program will be extended beyond the closing date if funding is still available. Staff will report periodically to the Stationary Source Committee regarding use of this fund and make recommendations as appropriate.

Implementation and Resources

It is anticipated at this time that existing AQMD resources will be used to implement PR 1470 requirements. A workload increase is expected due to permit applications, modifications for multiple engines under common ownership, and compliance plans. To assist with compliance with PR 1470, staff will conduct outreach with facilities with stationary diesel-fueled engines.

Attachments

1. Summary of Proposal
2. Key Issues and Responses
3. Rule Development Process
4. Key Contacts List
5. Resolution
6. Rule Language
7. Final Staff Report
8. Final Socioeconomic Impact Assessment
9. Final Environmental Assessment

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