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BOARD MEETING DATE: June 9, 2006
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SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT EXECUTIVE OFFICE MEMORANDUM DATE: June 1, 2006 TO: Members of the Governing Board FROM: Barry R. Wallerstein
SUBJECT: Proposed Amended Rule 1113—Architectural Coatings Please be advised that there are three options before the Board regarding Proposed Amended Rule 1113 – Architectural Coatings at tomorrow’s meeting. Option Number One is the staff recommendation, Option Number Two is the motion made by Board Member Antonovich last month, and Option Number Three is the industry proposal. The Board Letter suggests that approval of Option Number Three would have to be continued to the July 7th meeting if the Board desires to select the industry proposal. However, District Counsel has further analyzed the feasibility of the Board taking action to approve Option Number Three tomorrow, if it so desires, and has determined that such action could take place at the June meeting. Lastly, staff continues to recommend Option Number One. If you have any questions, please contact me at your earliest convenience. BRW/drw * * * Errata Sheet
Barry R. Wallerstein, D. Env. EC:LT:LB Background Architectural coatings are one of the largest non-mobile sources of VOC emissions in the South Coast Air Quality Management District (AQMD). The 2003 AQMP projected that the 2006 Summer Planning Inventory would be 38.5 tons per day. Rule 1113 is applicable to manufacturers, distributors, and end-users of architectural coatings. These coatings are used to enhance the appearance of and to protect homes, office buildings, factories and other structures, and their appurtenances on a variety of substrates. The coatings may be applied primarily by brush, roller, or spray guns; and * * * ERRATA SHEET FOR AGENDA ITEM #3 Amend Rule 1113 – Architectural Coatings * * * Original Board Letter PROPOSAL:
SYNOPSIS:
COMMITTEE:
RECOMMENDED ACTION:
Barry R. Wallerstein, D. Env. Background Architectural coatings are one of the largest non-mobile sources of VOC emissions in the South Coast Air Quality Management District (AQMD). The 2003 AQMP projected that the 2006 Summer Planning Inventory would be 38.5 tons per day. Rule 1113 is applicable to manufacturers, distributors, and end-users of architectural coatings. These coatings are used to enhance the appearance of and to protect homes, office buildings, factories and other structures, and their appurtenances on a variety of substrates. The coatings may be applied primarily by brush, roller, or spray guns; and those applying those coatings include homeowners, painting contractors, or maintenance personnel. Rule 1113 was first adopted in 1977, and has undergone numerous amendments since then. PAR 1113 – Architectural Coatings has been developed to implement the recommendation of the most recent technology assessment for this rule. The amendment proposes to further reduce VOC emissions from various architectural coating categories used in the architectural coating industry and to provide relief for manufacturers from meeting certain future VOC limits for a few specific coating categories so they may continue adjusting formulations and to provide them additional time for field testing. Rule 1113 was last amended on July 9, 2004 to address SIP approvability issues identified by the U.S. EPA relative to the alternative compliance Option. Also, following the May 14, 1999 amendments to Rule 1113, CARB developed a suggested control measure (SCM) for architectural coatings that was largely based on the interim VOC limits and the averaging provision of Rule 1113 as adopted in May 1999. CARB has begun the process to update the 2000 SCM for Architectural Coatings this year. They will be using 2004 survey data as an important resource to update the SCM, but will not begin the formal SCM update process until the survey is completed. CARB anticipates bringing the SCM update to their Board in mid to late 2007. The SCM has been adopted by 19 of the 35 local air districts in California that have an architectural coating rule. During the course of Rule 1113 implementation, the AQMD Governing Board approved a work plan that required staff to submit annual status reports summarizing issues and activities regarding the implementation of the rule. In addition, the rule required technology assessments for specific coating categories. In preparing the annual status reports, staff has received input from the Technical Advisory Committee made up of individuals from manufacturing companies including NPCA members, CARB, a consulting and engineering firm, a painting contractor and several members from academia. The 2005 Annual Status Report and Technology Assessment indicates that the paint manufacturers have made significant progress toward developing future compliant products in practically all categories, which perform equally to their higher-VOC counterparts. In 2005 at Chairman Dr. William Burke’s request, the AQMD Governing Board established an Ad hoc Committee for the purpose of providing an open forum to discuss key regulatory issues relative to the coatings industry and improving communication between the AQMD and the architectural coating industry to resolve current and future regulatory issues in a non-litigious manner. Staff met with NPCA and member manufacturers more than 30 times including some all day meetings as well as many teleconferences. Over the course of the discussions, NPCA submitted a number of alternate proposals that all were to be emissions neutral. The NPCA proposals expanded the number of coating categories, maintained current limits and deleted future effective limits for those categories and advanced the future limit for a portion of the flat coating category. All the proposals resulted in emissions ranging from 4.7 tons per day to 13 tons per day permanently forgone, with temporary delays of up to 2.03 tons per day. The most recent formal NPCA proposal would eliminate the July 1, 2006 effective dates for many coating categories, permanently foregoing 4.74 tons per day, and postponing July 1, 2006 effective dates for some categories resulting in emission reductions forgone of 2.03 tons per day for one year. On May 5, 2006, the Governing Board set a public hearing for June 2, and agreed to consider Board Member Antonovich’s motion related to the hearing schedule for the proposed amendments as well as the July 1, 2006 implementation date for lower VOC limits for some coating categories. As a result, staff has prepared three options for Governing Board consideration. Option 1 is the staff’s recommendation set for hearing on May 5, 2006. Option 2 is Board Member Antonovich’s motion. Option 3 is NPCAs proposal. Staff Proposal The proposed amendments will allow the coating manufacturers to:
In addition, the proposed amendments will:
Staff has determined these amendments, proposed after the hearing was set, only clarifies the proposal and does not significantly change the meaning of the proposed amended rule and would not constitute significant new information pursuant to CEQA guidelines Board Member Antonovich Proposal At the May 5, 2006 AQMD Governing Board Meeting in consideration of setting a public hearing for June 2, 2006 to amend Rule 1113 – Architectural Coatings, Board Member Antonovich made a motion to (1) postpone the hearing date for the proposed amendments to Rule 1113 from June 2, 2006 until September 1, 2006; (2) delay the effective date for the amendments to Rule 1113 for 90 days until October 1, 2006; (3) direct AQMD Staff to continue to work through the Paint & Coatings Task Force (Ad hoc Board Committee) to find a resolution to the current dispute with the coatings industry and hold at least one task force meeting prior to the June Board Hearing; and (4) direct staff to present a final Paint & Coatings Task Force (Ad hoc Board Committee) report at the June 2006 Governing Board meeting. Staff has prepared a second recommendation option for Governing Board consideration that reflects the motion by Supervisor Antonovich with minor adjustments, directing staff for further analysis were necessary. National Paint and Coating Association (NPCA) Proposal The following reflects NPCAs proposal and is presented as a third recommendation option for Governing Board consideration.
Emission Inventory and Emission Reduction The emission inventory of architectural coatings is calculated from the CARB 2001 Architectural Coatings Survey based on 2000 reported sales of architectural coatings in California. Staff adjusts the California emission inventory to account for sales of coatings compliant with the proposed VOC limit as well as sales of exempt small containers and by assuming the coatings above the current AQMD VOC limit are compliant. The share of statewide sales in the AQMD is based upon the percentage of the California population within the AQMD jurisdiction. The emission reductions are also determined from the survey data by calculating the expected emissions on a solids basis as if all coatings comply with the proposed limits and comparing that to the current inventory.
Cost-Effectiveness Staff has estimated the cost-effectiveness to be in the range of $4,882 per ton of VOC reduced from lower VOC limits for concrete-curing compounds, dry-fog coatings, traffic coatings and fire-retardant coatings. The range of cost-effectiveness is within that for other VOC rules adopted by your Board. Issues NPCA Proposal NPCA has formally requested that the AQMD amend Rule 1113 for coating categories with future VOC limits. Their request would postpone and delete future VOC limits for some categories while dividing other categories into interior and exterior keeping future limits for interior and postponing future limits indefinitely for exterior coatings. All issues before the Governing Board are related to the specified VOC limits in the Table of Standards in Rule 1113 that take effect in July of this year, next year and in 2008 with the exception of clear wood finishes in containers greater than one quart. In trying to reduce the enormous emission impact of architectural coatings to the air quality in the South Coast Basin, the AQMD, through rule amendments, has made architectural coating manufacturers aware of these VOC limits since 1996, 1999 and 2003. Recent industry proposals have requested that the effected categories retain the VOC limits in Rule 1113 as they are today, regardless of technology advancements made in architectural coatings over the last eight to ten years. The most recent proposal submitted to AQMD staff would result in 4.7 tons per day of emissions permanently forgone with 2.03 tons per day delayed for one year. Staff’s technology assessment indicates the significant progress in the resin technology registered over the last several years and the increasing number of well performing compliant products practically in all categories of Rule 1113 with a few exceptions. Therefore, the broad relaxation proposed by NPCA is not justifiable. Staff’s proposal focuses on those few categories where additional transition time is needed. The proposed VOC limits are largely based on technology assessments presented to the Governing Board beginning with the 1999 amendments and with the annual reports since 2000. These assessments are supported by coatings currently available in the marketplace, CARB Survey data showing many compliant coatings offered by multiple manufacturers for each category with current market penetration based on sales, and technical studies conducted by AQMD contractors and public agencies comparing performance of low- and high-VOC products using empirical tools. Based on staff’s technology assessment and detailed review of data from its contractors or manufacturers, staff is recommending to exempt TBAc for IM Coatings and a one year delay for some categories to allow other manufacturers time to develop additional compliant products. In addition, manufacturers will have an additional three-year product sell through period and the Averaging Compliance Option that can provide additional flexibility to transition to compliant products. Expiring Small Container Exemption NPCA and several coating manufacturers have requested an amendment to rescind the elimination of the small container exemption for clear wood finishes effective July 1, 2006. Staff has not found any justification for such an unlimited exemption and its continuance is actually counter-productive to air quality goals. The CARB Survey data indicates a relatively high percentage of sales of products complying with the proposed limits in the larger containers. However, quite the opposite is true for sales in the smaller containers. A large percentage of products sold in the small containers do not even meet current limits that would otherwise be applicable except for the small container exemption. To further compound the matter more than 40% of total gallonage sold of clear wood finishes is in small containers and, based upon small container sales reported to the AQMD, the volume of these small container sales has increased significantly over the last several years. Elimination of the exemption alone for clear wood finishes will achieve close to a ton per day of emission reductions. Sell-Through Provision for Small Containers Some manufacturers have requested that the three year sell-through provision included in the current rule also be applied to clear wood finishes in small containers to allow for the sale and use of those coatings currently located in distribution centers and retail stores to prevent recalling these products. The three year sell-through provision, as currently written, is only available to coatings in small containers provided they were manufactured prior to the July 1, 2006 effective date and meet the VOC limit of 350 g/l in the Table of Standards. The three year sell-through provision is not available for all other products with a VOC content exceeding that of the Table of Standards. The manufacturers had plenty of time to prepare for and were reminded of the sunsetting exemption. Nevertheless, in response to comments received and in an effort to assist manufacturers with the transition and alleviate the need for a product variance, staff is proposing a one year sell-through provision for coatings in small containers above the current VOC limit of 350 g/l to allow time for the products to be sold and used after the exemption expires on July 1, 2006. That one year sell-through was to apply to clear wood finishes in small containers that were manufactured and distributed before July 1, 2006, provided certain records were maintained. Staff has continued to meet with industry representatives after the public hearing was noticed to address specific issues. One of those issues had to do with the ability to control the distribution chain of these coatings manufactured prior to the exemption expiration date and the detail of the records to be maintained for these coatings. Staff has amended the proposal to change the applicability for these coatings from manufacture and distribution prior to the expiration of the exemption to simply manufacture prior to the date of expiration of the exemption. In addition, the recordkeeping and reporting requirements have been amended to require the same reporting requirements for the one year sell-through that has been required of manufacturers to maintain their small container exemption. Staff has determined this amendment, proposed after the hearing was set, does not significantly change the meaning of the proposed amended rule and would not constitute significant new information pursuant to CEQA guidelines. Tertiary-Butyl Acetate (TBAc) TBAc is a solvent that can be used in the formulation of some architectural coatings. The manufacturer of TBAc and architectural coating manufacturers have requested that TBAc be delisted as a VOC. At the same time, a request has been made to not delist TBAc as an exempt VOC compound because one of its metabolites has been found to cause tumors in rats and therefore could potentially be carcinogenic. U.S. EPA has delisted TBAc from the VOC definition because of its low photochemical reactivity. Staff agrees with EPA’s assessment that TBAc has low photochemical reactivity, but is concerned about its potential toxicity. The proposed amendments limit the use of TBAc to industrial maintenance coatings and the toxics analysis in the Draft EA examines both cancer and non-cancer health effects from IM coatings, which could be reformulated with TBAc to meet the lower VOC content limit. In the case of TBAc, there is little available information on the toxicity of TBAc, but there is some toxicity information available on one of its metabolites, tertiary-butyl alcohol (TBA). While there are studies that indicate tumors in rats and mice when exposed to high concentrations of TBA, TBA has not been classified as a human carcinogen yet. Estimated risk factors for TBA provided by the Office of Environmental Health Hazard Assessment (OEHHA) staff members were used as a surrogate for determining potential cancer risk and non-cancer effects resulting from the limited exemption for TBAc. It should be noted that these surrogate risk factors developed by OEHHA staff have not been formally approved by the Scientific Review Panel yet, but have been peer reviewed. However, they reflect the best available information from OEHHA at this time, and these factors were used to conservatively estimate potential cancer risk and non-cancer effects from TBAc used to formulate IM coatings. In analyzing TBAc’s impacts staff also considered CARB documents that assert TBAc’s ozone reduction benefits. Staff’s very conservative analysis from the use of TBAc based products only, indicates that the potential chronic cancer risk and acute risk is below the AQMDs significant risk threshold. Staff does not recommend expanding the exemption for TBAc to other categories because numerous alternative compliant products that do not pose the added potential risk exist in large volume, whereas atmospheric IM coatings for extraordinary long durability were limited in availability. By limiting the exemption for TBAc to IM coatings, the AQMD recognizes and limits the potential cancer risk exposure due to the use of TBAc while providing the coating manufacturers with flexibility in formulating products compliant with the future IM coatings limits in PAR 1113. Staff will continue to evaluate additional information relative to TBAc’s toxicity as it becomes available and reevaluate its position as necessary. Averaging Compliance Option Clarification Rule 1113 specifies the coating categories that manufacturers can select for their averaging compliance plan and, as currently written, nonflat and industrial maintenance coatings may be averaged. Since staff is proposing to separate the nonflat high gloss coatings as a subcategory of the nonflats and zinc-rich primers are a subcategory of industrial maintenances coatings, comments were received as to whether the subcategories could also be averaged. For clarification of the categories that may be averaged, staff is proposing to include the nonflat high gloss and zinc-rich primer subcategories into the averaging list. Staff has determined this amendment, proposed after the hearing was set, does not significantly change the meaning of the proposed amended rule and would not constitute significant new information pursuant to CEQA guidelines. CEQA Pursuant to the CEQA and AQMD Rule 110, AQMD has prepared an EA for the proposed amendments to Rule 1113. The Draft EA finding significant impacts was circulated for a 45-day public review and comment period from April 5, 2006 to May 19, 2006. Comments received on the Draft EA and responses to the comments have been incorporated into the Final EA for the proposed project. Socioeconomic Analysis Proposed amendments to Rule 1113 would potentially impact manufacturers and end users of architectural coatings. The former belongs to the industry of chemical and allied products (SIC 2851 or NAICS 325510), and the latter are a part of the industry of painting and paper hanging (SIC 1721 or NAICS 235210) and do-it-yourself consumers and homeowners. The total annualized cost of the proposed amendments is projected to be $1.14 million. It is estimated that approximately 43 jobs could be forgone annually from the future projected growth in the four-county area between 2007 and 2020. Legal Mandates In December 1999, the AQMD entered into a Settlement Agreement with several environmental organizations based on a complaint filed in the U.S. District Court in which it was alleged that the AQMD and CARB had failed to adopt and implement 34 control measures from the 1994 SIP. Of the 34 control measures identified by the environmental organizations, the AQMD is responsible for implementing 31. The Settlement Agreement identifies the AQMDs control measures, including those that have been fully or partially adopted. Control Measure CTS-07 - Further Emission Reductions from Architectural Coatings, is one of the control measures listed. The Settlement Agreement states that the above control measures with implementation dates later than 2006 require the Governing Board at the time of adoption of such rule to make a written finding that it is infeasible to implement the measure in 2006 in order to adopt an ending implementation date in 2007 or that it is infeasible to implement the measure in 2006 or 2007 in order to adopt an ending implementation date in 2008. The Settlement Agreement further states that the AQMD could relax or delay implementation of emission limitations in the Rules set forth in the Agreement, which includes Rule 1113 as long as (i) the Board makes a finding that it is infeasible to implement the measure by specified date; (ii) the implementation date for an individual rule is not delayed by more than 2 years or alternative measures are adopted and implemented to eliminate the shortfall in reductions within 2 years after scheduled implementation of the original rule, but no later than 2010. Implementations and Resources Existing AQMD resources will be sufficient to implement the proposed changes to this rule with minimal impact on the budget. Attachments
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