BOARD MEETING DATE: February 3, 2006
AGENDA NO. 36
(Continued from January 6, 2006 Board Meeting)

Annual Status Report on Rule 1113 – Architectural Coatings

SYNOPSIS:

This final report for 2005 updates technical information provided in a draft report presented to the Board in June 2005 and presents results of additional laboratory testing, field surveys and site visits. Conclusions are drawn relative to the achievability of the 2006 limits contained in Rule 1113. The report also discusses compliance actions and additional meetings held with the Technical Advisory Committee, Rule 1113 Ad Hoc Subcommittee and various coating manufacturers. Several changes have been made to this report to correct minor errors and to update information relative to the Board’s decision to continue this matter to the February, 2006 meeting.

COMMITTEE:

Stationary Source, December 21, 2005, Reviewed

RECOMMENDED ACTIONS:

Receive and file.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On August 13, 1999, the Board approved a workplan that required submittal of annual status reports summarizing issues and activities regarding the implementation of Rule 1113-Architectural Coatings. The first report, submitted on July 21, 2000, has been followed each year by new information on the implementation of future effective volatile organic compound (VOC) limits in the rule. In addition to rule requirements for technology assessments of specific coating categories, a Board-approved resolution in December of 2002 focused subsequent reports on progress toward achieving the 2006 VOC limits found in the rule. This is the sixth such report that staff will have presented to the Board. A draft of this report was presented to the Stationary Source Committee in June and was summarized as part of the committee’s minutes submitted at the July Governing Board meeting.

In preparing this report, staff has received input from the Technical Advisory Committee (TAC) and the Ad Hoc Committee established in 2005 by Governing Board Chairman Dr. William Burke. The TAC includes representatives of several manufacturing companies, the National Paints and Coatings Association, CARB, a consulting and engineering firm, a painting contractor and several members from academia. As mentioned in previous annual reports to the Board, the TAC is an important committee that staff relies upon for technical expertise and valuable feedback on all aspects of architectural coatings. The Ad Hoc Committee was formed for the purpose of providing an open forum to discuss key regulatory issues relative to the coatings industry and improving communication between AQMD and industry to resolve current and future regulatory issues in a non-litigious manner. The Committee is comprised of AQMD Board Members Michael Antonovich and Jan Perry, AQMD management representatives Dr. Barry Wallerstein and Dr. Laki Tisopulos, and industry representatives Christine Stanley of Ameron and Ron Widner of Benjamin Moore and Co.

AQMD staff continues to assess the significance of emissions contributing to ozone formation in the South Coast Air Basin (Basin) from VOCs attributable to architectural coatings and these coatings continue to be a critical component for attainment of Federal and State standards. The latest CARB architectural coating survey, for year 2000 sales, shows more than 50 tons per day of VOCs are attributed to the application of architectural coatings in the Basin based on demographics. After implementation of Rule 1113’s lower VOC limits effective in 2001 and 2003, the 2003 Air Quality Management Plan (AQMP) estimates the remaining architectural coating VOC inventory at 38.36 tons per day in 2005.

Technology Assessment

Many significant achievements have been made by raw material suppliers and coating formulators in the production of quality compliant products meeting the July 1, 2006 limits. This represents a strong industry commitment and the effort is commendable. Many products are currently available that meet the July 1, 2006 limits in the rule. In fact, staff’s research shows an ever-increasing number of products already available in the market that meet and exceed the 2006 limits. These products also meet the performance demands of industrial and consumer applicators based on field observations of applied materials.
Staff relied on a number of key sources of data and information for determining the availability and performance of coatings. These include:

1. CARB Survey. When comparing the data from previous CARB surveys, this most recent sales data provided by the coating manufacturers indicates an increase in the overall sales volume of lower VOC products in many categories that meet the AQMD’s proposed future limits.
2. Compliant Products Found in Web-Based Searches. Staff found compliant and super-compliant coatings listed by large and small manufacturers on their websites in all 11 coating categories with lower VOC limits that take effect on July 1, 2006. Staff verified product characteristics by examining Technical Data Sheets and Material Safety Data Sheets for each coating listed. (See Table 4 on page 8 of the report and Appendix A.)
3. Field Visits to New Construction Sites. Staff visited more than 100 new construction sites in 2004 and 2005 in order to determine what products the contractors are using and whether they are working. Overall, most of the construction sites visited had applied architectural coatings that are much lower than the current specified limits in many different categories and had used many super-compliant products that meet the future limits in Rule 1113. Even with the super compliant products, all of the contractors indicated that they were satisfied with their performance. (See Table 5 on page 11 of the report.)
4. Performance Studies by Public Service Agencies. Various public service agencies have completed testing of low-VOC industrial maintenance coatings in recent years and have found compliant products with acceptable performance. Some industrial coating manufacturers, however, have commented that exempting tertiary butyl acetate (TBAc) as a VOC would provide manufacturers with additional flexibility in formulating products with exceptionally long durability.
5. Meetings with Local Manufacturers (Large and Small). Staff visited local paint manufacturers individually to inquire about their successes and failures in preparing for the upcoming deadlines for July 2006. With several key exceptions detailed in the report, these manufacturers indicated that complaint products were available and that they exhibited acceptable performance for their markets. Staff concluded that most manufacturers were ready to market compliant products in all but 3 coating categories and staff is proposing amendments to Rule 1113 to allow additional time and flexibility to allow for product development.
6. Point of Distribution Product Inventory Survey. Staff conducted a survey of local store inventories in the Spring of 2004. The primary purpose of the survey was to obtain a snapshot of the currently available architectural products being sold from store shelves. A secondary benefit of the survey was to alert store owners to the rule requirements. This limited survey indicates that products meeting the 2006 VOC limits for many categories are currently available and being sold to consumers.
7. Review of Select Technical Papers and Articles on Advancements in the Coatings Industry. Manufacturers of coatings rely heavily on the research and development efforts of the raw materials suppliers. Successful reformulation by individual coating companies requires different resins and additives. The annual status report provides excerpts from these articles that overwhelmingly indicate that there are ongoing technological achievements to support compliant product formulation. Papers presented at the recent Western Coatings Society Symposium and Show indicate the availability and support from resin and additive suppliers of low-VOC components that meet and exceed the future VOC limits in Rule 1113 and expected performance characteristics as compared to traditional higher VOC containing materials.
8. AQMD Contracted Performance Studies. Staff has contracted with industry experts to conduct laboratory studies to assess the performance characteristics of the low-VOC products and determine whether these characteristics are compromised through reformulation. A review of these studies supports staff conclusions that overall super compliant coatings meet or exceed expected characteristic performance standards when compared to products that have much higher VOC content.

The overall results of the recent architectural coatings laboratory evaluation by the University of Missouri at Rolla, continues to support staff’s conclusions. In all instances and with the exception of the high gloss non-flats category, commercially available products that meet the 2006 limits listed in the Table of Standards for Rule 1113 have performance characteristics that are similar to and in many cases better than their higher-VOC counterparts. The results of the findings are summarized in the report, (see pages 32-36), with the empirical data available for review in Appendix C.

9. Studies of Alternate Means of Compliance Provided by the Rule. By examining the number of manufacturers who have taken advantage of alternate means of compliance allowed by the rule, staff has concluded that these flexibilities in the rule have allowed manufacturers additional time for product reformulation. These alternate methods include the averaging compliance and sell-through options as well as the small container exemption.

Key Issues

At the Ad Hoc Board Committee’s first meeting on July 8, 2005, the National Paints and Coatings Association (NPCA) recognized the extreme air quality needs of the region and suggested that they were ready to propose a new structure for the rule that would achieve the same overall VOC emission reductions while providing the industry flexibility to meet future limits. NPCA represented that its proposals would be “emissions neutral,” or in other words, offset any loss in air pollution reductions. AQMD representatives welcomed the suggestion and invited NPCA to submit its proposal.

Staff received three proposals from NPCA for manufacturers to make the transition to the future VOC limits. Unfortunately, none of the proposals met the “emissions neutral” standard.

The first proposal was to rollback the VOC limits for all coating categories in conjunction with ARB’s suggested Statewide Control Measures (SCM) with no other changes. Staff calculated that would result in a loss of 14 tons of VOC emissions. NPCA also suggested that the lost VOC emissions could be recovered voluntarily by industry through “over-compliance.” The District does not support this proposal since the District is legally required to have enforceable means of attaining emission reductions. This proposal would allude to unenforceable voluntary efforts.

The second proposal was the rollback of most but not all future VOC limits and offsetting lower emission limits for four other coating categories. Staff has calculated that this proposal would result in 6 tons of lost VOC emissions. In addition, staff also calculated that using the four coating categories to offset the 6 lost tons of VOC emissions actually amounted to just 0.8 tons of VOC emissions.

The third proposal was to postpone all future VOC limits for all categories for periods of one to four years with no offsetting reductions. Staff has calculated that this method would result in 13 tons per day of lost VOC emissions.

The District staff does not support the three NPCA proposals for two reasons. Staff has determined that none of the three proposals meet an “emission neutral” standard and many compliant coatings have already been identified for the categories that are available in the market and have been performing as well as and in some cases better than the higher-VOC counterparts.

Conclusions and Recommendations

As detailed in this report, AQMD staff’s research of technical information from many coating manufacturers, coating studies, assessments of sales data, marketing brochures, Material Safety Data Sheets and other sources clearly shows an ever-increasing number and volume of products that perform well and meet the future proposed limits.

However, as mentioned earlier, there are limited areas in high-gloss coatings where transitioning to the 2006 limits continues to be especially challenging for many manufacturers. While the recent improvements in the resin and raw material technology appear to address the product performance related challenges in high-gloss coatings, incorporation of the new technologies by July 1, 2006 continues to be a challenge for many manufacturers. Staff is therefore proposing specific rule amendments to allow additional time for manufacturers to take advantage of the latest improvements in resin and raw material technology for developing compliant products for non-flat high gloss coatings and quick dry (high-gloss) enamels.

AQMD staff also recognizes that there may be a lack of industrial maintenance atmospheric coatings available that meet certain rigorous standards desired by essential public service agencies such as the Metropolitan Water District (MWD). Typical industrial maintenance coatings (IMC) are expected to have a 7 year longevity, whereas, the MWD desires an IMC to last at least 15 years. The MWD has completed testing of some atmospheric IMCs with Tertiary-Butyl Acetate (TBAc), a solvent that they are extremely optimistic about. EPA and CARB have determined TBAc to be VOC exempt. AQMD staff agrees that TBAc has low photochemical reactivity and understands that TBAc is a desirable solvent from the formulator’s standpoint. Many IMC manufacturers and the MWD are seeking the District to delist TBAc as a VOC (i.e. consider TBAc an exempt compound) for use in coatings critical to the support of the public infrastructure. Staff is proposing to evaluate the partial delisting of TBAc for certain industrial maintenance coatings.

Consistent with the conclusions found in this annual report, staff recommends the following:

Amend Rule 1113 during the first quarter of 2006 to establish a new category for non-flat high gloss coatings with an interim VOC limit of 150 g/l effective on July 1, 2006 and a final limit of 50 g/l effective on July 1, 2007. This will allow additional time for development of compliant coatings for this special category of non-flat coatings. It is expected that by July 1, 2007, all manufacturers will be able to employ the latest technology to meet this limit. For the companion category of quick dry enamels, extend the final compliance date by one year to July 1, 2007 and establish an interim VOC limit of 150 g/l for July 1, 2006. Quick dry enamels are a companion category to non-flat high gloss. They utilize the same technology and therefore the manufacturers need additional time for development of adequately performing coatings.

As part of the rule development process, evaluate the partial delisting of tertiary butyl acetate (TBAc) for certain industrial maintenance coatings. TBAc is a solvent exempted under state and federal regulations. Staff evaluation will address toxicity concerns as well as air quality benefits that could result from such a de-listing. The use of this exempt solvent will provide manufacturers with the additional flexibility in reformulating products with exceptional performance characteristics while meeting the effective rule VOC limitation of 100 g/l by July 1, 2006.

Finally, in an effort to offset the emission reduction impacts of the above proposals, staff is also proposing that the Board consider tightening or accelerating the VOC limits for several categories where low-VOC compliant products are available (i.e. bond breakers, concrete curing compounds, dry fog coatings, traffic coatings).

Anticipating an April 2006 public hearing on these proposals, staff has held the first Rule 1113 public workshop on January 26, 2006 to seek public comment. Staff will report back to the Board, in the form of an annual report, in December 2006.

Attachments (EXE 1.7mb)

ATTACHMENT A

KEY CONTACTS LIST

/ / /