BOARD MEETING DATE: February 2, 2007
AGENDA NO. 33

Stationary Source Committee

SYNOPSIS:

The Stationary Source Committee met Friday, January 26, 2007.  Following is a summary of that meeting.  The next meeting will be February 23, at 10:30 a.m., in Conference Room CC8.

RECOMMENDED ACTION:

Receive and file.

Dennis Yates, Chair
Stationary Source Committee

Attendance

The meeting began at 10:30 a.m.  Present were Dennis Yates, Gary Ovitt, and Dr. Burke (attended by videoteleconference) and Jane Carney (attended by teleconference at 10:35 a.m.).  Absent was Ron Loveridge.

INFORMATIONAL ITEMS

1. Update on AQMP
   Due to time constraints this item was initially moved down on the agenda and later carried over to the February meeting.
    
2. Rule 1309.1 – Priority Reserve
   Laki Tisopulos, Assistant Deputy Executive Officer, for the Planning, Rules Development and Area Sources presented this item.  Rule 1309.1 was amended on September 8, 2006 to allow Electrical Generating Facilities (EGFs) limited access the Priority Reserve.  In adopting that amendment the Board directed staff to return with proposed amendments that impose additional requirements or limitations for accessing the Priority Reserve for EGFs located in heavily polluted areas of the AQMD.
   
   In developing the proposal staff conducted a public workshop at AQMD headquarters, held two additional meetings in the community and had numerous individual meetings with community groups, power plant proponents, public agencies and other interested parties.  Numerous comments were received and it became apparent no single proposal would address the concerns of all stakeholders.  Therefore, staff has prepared several proposed rule options for Board consideration that reflect the various comments received.
   
   The proposals divide the AQMD into three zones based on the severity of air pollution, specifically the ambient concentration of PM2.5.  Some of the options also consider areas of the highest cancer risk as determined by MATES II.  All the proposals have more stringent risk thresholds and higher mitigation fees for EGFs in the more polluted areas and some do not allow access to the priority reserve in the most polluted areas.  In fact, the public workshop version of the staff proposal did not allow Priority Reserve access in Zone 3, the area with the highest ambient PM2.5 concentrations.  This is one of the options for consideration.  Finally, there are options that would allow municipal utilities or peaking units Priority Reserve access under certain circumstances in the zones where Priority Reserve access is not authorized for other EGFs. 

   Staff will be recommending at the February Board meeting that the Board set the public hearing for the proposed rule options for March 2, 2007.  The following individuals provided comments during the public comment period on this item.

   Dave Warner – City of Riverside

   The city of Riverside is a municipality located entirely in Zone 3 of the staff proposal.  The entire city is currently supplied through one SCE substation that is at maximum capacity.  Demand for City of Riverside’s service area is growing and will continue to grow and already peak demand is beyond what SCE can provide.  To address this, the city has a very aggressive renewable energy program and was able to install two small peaking units but this will not be enough in the very near future.  The city is working with SCE to expand transmission capability which will also not be completed in time to avoid blackouts.  The only near term solution is to construct more peaking unit capacity in Riverside and the city has plans for that.  However, those units cannot be built if Priority Reserve credits are not accessible in Zone 3.  To keep the lights and air conditioning on in Riverside, one of the proposals that would allow the city Priority Reserve access for its proposed peaking units is necessary.

   Yuki Kidokoro and Bahram Fazeli – CBE

   CBE indicated that the discussion today seems to center around air conditioning versus clean air.  CBE believes clean air for all residents of the AQMD is a necessity.  We are pleased to see that staff considered our comments as well as those of many other community members and added proposal options that include cancer risk areas.  We suggest they also add additional air quality criteria such as respiratory hazard index and other social criteria such as the social vulnerability index.  We also support the CEC recommendation to amend Rule 1304 to lower the offset threshold for EGFs under 50 MW that will avoid both CEC review and AQMD offset requirements.  We believe the Board’s direction was for staff to bring forward a Rule 1309.1 amendment that adequately addresses all areas of the community that are disproportionately impacted.  Although what staff describes as Option D that disallows Priority Reserve access in Zone 3 and the high cancer risk areas is the most health protective of the options presented, it does not go nearly far enough.  Also, as was stated in at the September hearing and at the public workshops, opening of the Priority Reserve to conventional fossil fuel-fired power plants discourages the necessary development of renewable energy.

   Mike Carroll – Latham and Watkins

   As a representative of a number of power plant proponents there is support for a proposal that considers the more polluted areas of the AQMD.  However, that proposal should allow access to the Priority Reserve in all areas of the AQMD and if necessary, differentiate the mitigation required based upon the differences in air quality.  If access to Priority Reserve is not granted, multiple power plants will be built at smaller sizes to avoid offset requirements.  They will be less efficient and result in the same or greater amount of pollutions without the benefit of mitigations fees that could be used to address the toxics and other air pollution problems in these communities.

   Scott Galati – AES

   The proposed AES Highgrove facility is a peaking unit project designed to supply the necessary power to meet peak demand as requested by SCE.  It is to be constructed on the site of a shutdown power plant with all necessary infrastructure in place.  Do not deny access to the Priority Reserve that will have a net effect of prohibiting construction in Zone 3.

   Barbara Mc Bride – Calpine

   She echoed the comments of Mr. Carroll and Mr. Galati about allowing access to the Priority Reserve in Zone 3.  Calpine is considering a project on a brown field site in Zone 3.  Please also keep in mind that if projects are not built on existing  brown field sites in Zone 3 such as this one, not only will there not be the air quality improvement projects in Zone 3, there will also not be the overall environmental clean-up of these brown field sites.
    

3. Rule 445 – PM Emissions from Wood-Burning Fireplaces and Wood Stoves
   Due to time constraints this item was carried over to the February meeting.
    
4. Severe 17 to Extreme “Bump-up” – Implications for Stationary Sources
   Board Member Carney suggested this item be waived.  Ms. Carney felt it would not be necessary to have a presentation due to the excellent job Barbara Baird did in preparation of the handout.  The Committee agreed.
    
5. RECLAIM Shave Exemption Issues “TXI-Riverside Cement and Cal Portlaand Cement” (Item request by Mayor Yates)
   Mohsen Nazemi, Assistant Deputy Executive Officer, Engineering and Compliance, presented this item.  As a background, Rule 2002 was amended on January 7, 2005; to require adjustments to NOx allocations for years 2007 and beyond.  The rule also provided criteria for requesting and to qualify for the exemption.  To date, two companies, Riverside Cement (RCC) and Cal Portland Cement (CPCC) have submitted applications requesting this exemption; and, no final action has been taken on either application.  

   At this point, Mr. Nazemi described the exemption criteria and the status of each company’s evaluation.  RCC has not complied with the criteria because their emissions do not satisfy the applicable Rule 2002, Table 1 NOx Ending Emission Factor of 2.85 lbs NOx / 1000 gallons of fuel oil.  RCC believes that the applicable emission factor is 2.73 lbs NOx / ton of clinker, which the District believes is for gray not white cement.  In addition, RCC did not submit any cost information to meet the applicable emission factor.

   Next, Mr. Nazemi commented on the status of CPCC’s request application by saying that CPCC’s cogeneration emissions were not less that or equal to the Rule 2002, Table 1 Ending Emission Factors.  In addition, certain cost information submitted by CPCC was incomplete and did not meet the rule criteria.  Mr. Nazemi summarized his presentation by saying that preliminary determinations indicate that both companies do not meet all of the applicable rule criteria and final staff determinations are still pending.

   During public comments on this item, Mr. Greg Knapp of RCC, stepped forward with a handout for the committee and staff that he summarized with the following:
   -  a history of the Rule 2002 exemption with emphasis on the Rule 2002 modification
      exemption stated that it applied to facilities at BARCT;
   -  RCC’s exemption application was submitted in June, 2005 and satisfied all of the
      applicable rule criteria with emphasis on that RCC’s white cement kilns have the
      lowest NOx emission rates in the US and likely in the world with their current
      emission rate of approximately 1.5 lbs NOx / ton of clinker; and,
   -  an allegation that the District staff has made at least three attempts to re-write
      history in order to establish a basis for RCC’s application denial.

Mr. Knapp indicated that the District is now trying to modify the Rule 2002, Table 1 cement kiln Ending Emission Factors to further emphasize that the 2.85 factor is for white cement kilns only.  This is equivalent to 0.15 lbs NOx / ton of clinker level, which is about 90% below where they are now and there is no technology that can achieve this.

Mr. Knapp concluded his presentation by asking that the District approve RCC’s exemption from the RECLAIM allocation “shave”.

After all comments were received from the public, Mayor Yates asked Mr. Nazemi about the Rule 2002 modification in Year 2005.  Mr. Nazemi explained that the Board’s rule modification approval did not grant exemptions to these two companies or any other company but provided a mechanism for granting an exemption if certain criteria were satisfied.  At this point,   Mayor Yates asked what the next step is.  In response, Mr. Nazemi indicated that RCC’s application for exemption would most likely be denied.

6. NSR Annual Status Update/Equivalency Determination
   William Thompson, Sr. Manager of Engineering and Compliance, presented this item.  The South Coast AQMD (AQMD) has Regulation XIII – New Source Review that differs in some respects with federal law.  These differences, described for the most part in Rules 1309.1 – Priority Reserve and 1304 – Exemptions, must be accounted for in establishing that the   AQMD’s new source review rule achieves equivalent or greater emissions reductions than federal law.  To this end, the AQMD has presented reports to the Governing Board that has proven equivalency (or better) with federal law extending back to 1990.  In the early 2000s, federal EPA requested that the equivalency process be formalized into a rule.  Subsequently, Rule 1315 – Federal New Source Review Tracking System was adopted on September 8, 2006.  The report presented is the first prepared under this new rule and is different from previous reports in that it presents a preliminary conclusion using projected data and a final conclusion for the preceding period using actual data.  The final determination of equivalency (FDE), using actual data, is for the period August 2002 to July 2004.  A preliminary determination of equivalency (PDE) is presented for August 2004 through December 2005.  The data show that for the period August 2002 to July 2004, AQMD’s account maintained a positive balance thus showing equivalency for that period.  Additionally, using projected data for credits and actual amounts for debits, AQMD balances remained positive for the period August 2004 through December 2005.  Finally, projected data into the years 2006 and 2007 show continued equivalency is expected.  The next report will be presented to the Stationary Source Committee and the Board in mid 2007.

WRITTEN REPORTS

All written reports were acknowledged by the Committee.

PUBLIC COMMENTS

Howard Berman requested Rule 1113 – Architectural Coatings be revisited for specific requirements that create a competitive disadvantage for his client.  Mayor Yates indicated that Rule 1113 be placed on the February Agenda.  The Committee agreed.

The meeting was adjourned at 12:05 p.m.

Attachments (DOC 64kb)
January 26, 2007 Committee Agenda (without its attachments)