BOARD MEETING DATE: January 7, 2005
AGENDA NO. 22
Stationary Source Committee
SYNOPSIS:
The Stationary Source Committee met Friday, December 17, 2004. Following is a summary of that meeting. The next meeting will be January 28, at 10:30 a.m., in Conference Room CC8.
RECOMMENDED ACTION:
Receive and file.
Ronald O. Loveridge, Chairman
Stationary Source Committee
Attendance
The meeting began at 9:00a.m. Present were Ronald Loveridge, Chairman, William Craycraft, Dennis Yates, Jane Carney and Bill Postmus (joined by videoteleconference at 9:20).
INFORMATIONAL ITEMS
- Report on RECLAIM Rule Development
- Rule 403 – Fugitive Dust
- Potential Permitting Impacts from Revisions to Rule 1401 Risk Assessment Procedures
Jill Whynot, Planning and Rules Manager, gave a briefing to the committee regarding RECLAIM rule development. The discussion highlighted the current staff proposal and key issues, including different viewpoints expressed. Staff has continued to meet with the working group, technical subcommittees, individual companies, and the ARB. The proposal was set for hearing at the December Board meeting for a January 7th public hearing date.
The staff proposal regarding reductions, power plant trading, and a limited exemption was discussed. Staff recommends 7.7 tpd reductions by 2010, with reductions occurring across the board in 2 phases. The first 4 ton reduction would occur in 2007 and be submitted into the SIP upon rule adoption. To address concerns about market impacts, the second phase would include the remaining 3.7 tpd in equal increments in 2008, 2009 and 2010. These reductions would be included in the SIP after they occurred. Phase 2 reductions would also become tradable if the 12-month rolling RTC price exceeded $15,000 per ton.
Board Member Carney asked how the cost effectiveness for refinery boilers and heaters relates to the $15,000 per ton price trigger. Staff explained that they are independent of each other and that each facility will make choices as to which equipment to control. The average cost effectiveness for these RECLAIM amendments is $8,300 to 13,000 per ton. Staff also provided examples of past Board actions to adopt rules above $15,000 per ton.
ARB has commented that 7.7 tpd by 2010 represents BARCT and should be submitted into the SIP upon rule adoption. Environmental representatives recommend 10.2 tpd reduction by 2010, submitted into the SIP upon rule adoption. This amount reflects the staff analysis without a 10 percent market adjustment. There are two groups of industry representatives with comments. The first group advocates across the board reductions with no exemption (or more time to study this issue) with a cautious, incremental approach. Reductions would be 2 tpd each in 2007 and 2008, a reevaluation in 2007, and further reductions to occur starting in 2009. Other industry groups support facility-specific reductions and exemptions for facilities at BARCT.
Regarding exemptions, staff has developed a set of criteria for a limited exemption. The criteria were not designed for any particular situation, but represents staff’s attempt to develop fair criteria in response to the Board’s direction at the Informational Hearing to have language for their consideration. The criteria can be summarized as applying to facilities that have no equipment subject to new BARCT, have at least BARCT on all other equipment, have not sold or transferred credits for 2007 or any later year, and are experiencing higher costs under RECLAIM than they would have had under a traditional command and control approach. Staff proposes that the amount of reductions subject to the exemption be shared by all other RTC holders with a 2-year lead time.
ARB is concerned about any delay in making up reductions due to an exemption. Environmental representatives do not support any exemptions. Some industry representatives do not support exemptions, some want to take one year to study this issue further through formation of a Task Force, and other industry representatives support the concept but may want the exemption to be broader.
Staff described the proposal for power plant trading which was designed to address concerns expressed by power plants. Power plants would be allowed to purchase credits for any year, could sell credits in 2005 and 2006 for new power projects, and would have full trading in 2007 and beyond. Power plants would prefer to take a reduction early on a case by case basis and then be allowed to trade without restriction. ARB has no objection to the staff’s proposal, and environmental representatives prefer to keep the remaining restrictions in place.
The CEQA and socioeconomic impacts were discussed. There would be air quality impacts due to construction of SCRs at refineries. A 45-day document was available for public comment, with only one comment letter received. Economic costs are lower for RECLAIM than under command and control, and job impacts are low, and similar, for both approaches.
Other comments that are likely at the public hearing include requests to delay the hearing for one or more months. Staff recommends proceeding with the hearing and will report regularly to the Board regarding some of the new elements of the program, such as exemptions and the rolling price indicator.
One refinery representative summarized the industry proposal for 4 tons by 2008 and clarified that the evaluation would occur in 2007, with reductions in 2009 if appropriate. A gas company representative explained that there is some disagreement regarding BARCT still, that the program is complex, and that a cautious approach would be better for the market. He further commented that for 200 facilities under 10 tons in the program, there are limited options. Regarding an exemption, more time is needed and perhaps RECLAIM should be redesigned.
A representative for California Portland Cement asked for a delay in the hearing for one month to have more time to review the rule language. He stated that his client may not be able to qualify for the exemption. Dr. Wallerstein offered to meet with them next week for further discussion.
Board Member Craycraft suggested that facilities that qualify for an exemption be reevaluated every year to determine if new BARCT is available. This will be added to the resolution. The resolution will also direct staff to examine additional credit generation opportunities, such as cold ironing. This is in response to Board member Carney’s suggestion to allow alternative ways to meet some of the more expensive reductions. A refinery representative commented that NOx emissions from one ship would be approximately 20 to 40 tons per year, and that he liked the suggestion of a cold ironing credit generation rule. The gas company representative mentioned that an AQIP program, with projects in the port area and environmental justice communities would be beneficial. He suggested that this be examined in conjunction with the exemptions over the next year.
Further comments from industry representatives were that the Board was not required to adopt the staff’s proposed reductions because economics can be considered in determining BARCT. Board Member Craycraft asked about the price trigger, which has historical reference to the existing program evaluation level, but could be adjusted. Dr. Wallerstein reiterated that staff would be open to adjustments to the trigger level.
Board Member Loveridge requested that the times listed on the agenda for different items be more realistic and more reflective of the importance of the item. Staff agreed to be more careful in this respect.
This item was removed from the agenda.
Susan Nakamura, Planning and Rules Manager, discussed potential permitting impacts from implementation of the Revised Risk Assessment Procedures. This was a follow-up item from the November 2004 Stationary Source Committee meeting based on two comments that were raised regarding potential permitting impacts on affected facilities and implementation issues. Impacts on permit units are not expected to be significant as most industrial processes are required to install Best Available Control Technologies (BACT) which is the same as toxic BACT (T-BACT), thereby not requiring additional control technology and allowing the source to be permitted at a risk level of 10-in-a-million since T-BACT requirement is satisfied. Regarding implementation issues, it was recommended to extend the lead time from two to four months to allow additional time to AQMD staff prior to implementation of Revised Risk Assessment Procedures. The AQMD staff will request approval from the Board to extend the lead time to four months at the February 2005 Board meeting. In addition, the AQMD staff will monitor permitting impacts and provide an implementation status report in January 2006.
WRITTEN REPORTS
All written reports were acknowledged by the Committee.
The meeting was adjourned at 10:40 a.m.
December 17, 2004 Committee Agenda (without its attachments)
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