BOARD MEETING DATE: December 5, 2008
AGENDA NO. 30
PROPOSAL:
Adopt Propose Rule 1147 - NOx Reductions from Miscellaneous Sources
SYNOPSIS:
The proposed rule will reduce nitrogen oxide emission from a variety of industrial combustion sources including ovens, dryers, furnaces and kilns. The proposal would, in part, implement control measures MCS-01 – Facility Modernization and CMB-01 – NOx Reductions from Non-RECLAIM Ovens, Dryers, and Furnaces of the 2007 AQMP.
COMMITTEE:
Stationary Source, October 17 and November 21, 2008, Reviewed
RECOMMENDED ACTIONS:
Adopt the attached resolution:
- Certifying the Final Environmental Assessment (EA) for Proposed Rule 1147 - NOx Reductions from Miscellaneous Sources; and,
- Adopting Proposed Rule 1147 - NOx Reductions from Miscellaneous Sources.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
Proposed Rule 1147 is based on two control measures from the South Coast Air Quality Management District (AQMD) 2007 Air Quality Management Plan (AQMP): control measure CMB-01 (NOx Reductions from Non-RECLAIM Ovens, Dryers, and Furnaces) and control measure MCS-01 (Facility Modernization). Emission reductions from the equipment addressed by PR 1147 and control measure CMB-01 of the 2007 AQMP was proposed in prior AQMPs (e.g., control measure 97CMB-092 from the 1997 AQMP).
Control measure MCS-01 is a new control measure developed for the 2007 AQMP that proposes companies upgrade their current technology to the cleanest technology available. Facility modernization proposes that equipment operators meet best available control technology (BACT) emission limits at the end of the equipment’s useful life. For equipment regulated by PR 1147, modernization would require either burner upgrades or replacement of burner systems.
Affected Facilities
Proposed Rule 1147 affects manufacturers (NAICS 333), distributors and wholesalers (NAICS 423) of combustion equipment, as well as owners and operators of ovens, dryers, furnaces, and other equipment in the district (NAICS 23, 31, 32, and 33). The units affected by the proposed rule are used in industrial, commercial and institutional settings for a wide variety of processes. Approximately one fourth of the units currently meet the NOx emission limits of PR 1147. Staff estimates that there are as many as 2,500 permitted units (excluding remediation units) with NOx emission limits greater than one pound per day that will potentially become subject to the emission limits of PR 1147 between 2010 and 2014. An additional 2,500 permitted units with NOx emission limits of less than one pound per day will become subject to the emission limits of the proposed rule between 2015 and 2019. The approximately 5,000 units subject to the emission limits of PR 1147 are located at approximately 3,000 facilities. In addition, staff estimates that 100 to 200 remediation units per year will become subject to the NOx emission limits of PR 1147 starting in 2011 and all units will meet the NOx emission limit by 2020.
Public Process
The rule development effort for Rule 1147 is part of an ongoing process to assess low NOx technologies for combustion equipment. For this rule development, staff held four Task Force meetings on process and burner technologies with representatives from affected businesses, manufacturers, trade organizations and other interested parties. At these meetings low NOx technology, emission limits, emission testing and compliance dates were discussed. Staff also held individual meetings with manufacturers and distributors of burner systems and visited local businesses to observe processes and equipment affected by PR 1147. A Public Workshop was held on September 30, 2008 and a Public Consultation meeting on October 28, 2008.
Summary of Proposal
PR 1147 applies to gaseous and liquid fueled combustion equipment including, but not limited to, ovens, dryers, dehydrators, heaters, kilns, calciners, furnaces, heated pots, cookers, roasters, fryers, closed and open heated tanks and evaporators, distillation units, degassing units, incinerators, soil remediation units. This proposed rule does not apply to solid fuel fired combustion equipment, internal combustion engines regulated under District Rule 1110.2, turbines, charbroilers, or boilers, water heaters, thermal fluid heaters or enclosed process heaters subject to District Rules 1109, 1146, 1146.1, or 1146.2. In addition, PR 1147 does not apply to equipment subject to AQMD Rules 1111, 1112, 1117, 1118, 1121 or 1135.
PR 1147 requires equipment to meet NOx emission limits in the range of 30 ppm to 60 ppm (referenced to 3% oxygen) depending upon the process and process temperature. To provide compliance flexibility, PR 1147 also provides equivalent set of limits, expressed in pounds per million Btu. The emission limits in PR 1147 can be achieved with low NOx burners. Currently, the lower limit for low NOx burners varies from less than 30 ppm to 60 ppm depending upon the burner, process temperature and nature of the process. There are a large variety of burners that emit less than 30 ppm NOx for process temperatures less than 1200° F. A number of manufacturers provide burners meeting the proposed NOx limits for the equipment regulated by the proposed rule.
PR 1147 also requires operators to keep equipment maintenance records and to install meters for monitoring fuel use starting January 1, 2010. Maintenance records must be kept on site by facilities for at least three years. Newer units are currently required to have fuel or time meters by their permit conditions. PR 1147 will place the same requirement on older equipment but allow time for installation.
PR 1147 provides two options for owner/operators, burner manufacturers and installers to provide evidence that replacement burners comply with the emission limit. One option is to source test the unit using an AQMD approved protocol and test method. The second option is for the manufacturer to certify burners and equipment using an AQMD approved protocol and test method. The AQMD would provide certification of specific combinations of burners and equipment to the manufacturer and a copy of that certification, provided by the manufacturer, must be kept on site by the owner/operator. The AQMD will monitor manufacturers, sellers and installers in addition to owner/operators to assure that certified installations comply with PR 1147 emission limits.
The set hearing version of PR 1147 released to the public in November included a requirement for the operator to periodically source test each unit. In the spirit of reducing implementation and compliance costs, instead of requiring owners and operators of affected units to periodically re-test each unit, staff is now proposing to implement a program where the District conducts random testing on a statistically significant sample size of units subject to the rule. Sample size will be selected in a manner that provides the District with a high level of confidence regarding the industry-wide compliance rates. This testing program could be implemented starting in 2012 after half of the equipment have replaced burners and completed their initial source tests and manufacturers have certified equipment.
The cost of this random testing program is expected to be significantly less than the periodic source testing required in earlier versions of the proposed rule. It is proposed that the District recover implementation costs by applying a source testing surcharge or other fee type to the annual operating permit fees, applicable to units subject to this rule.
Emission Reductions and Cost Effectiveness
The proposed rule is estimated to reduce annual average emissions of NOx by 3.5 tons per day in 2014 from an annual average inventory of 6.2 tons per day. PR 1147 will reduce emissions an additional 0.3 tons per day by 2023. The approximately 6,600 units subject to the emission limits of PR 1147 are located at approximately 3,000 facilities. However, only about 2,200 facilities are expected to require retrofit of burners in their equipment.
Rule cost effectiveness is based on replacement of burners. Replacement cost includes burner price, tax and installation. The cost effectiveness for burners meeting 30 ppm is about $5,000 per ton of NOx reduced. The average cost effectiveness for burners meeting 40 or 60 ppm is about $7,000 per ton. The cost effectiveness for commonly used 1 to 2 mmBtu/hour burners meeting 30 ppm varies widely from $4,000 to $13,000 per ton.
Key Issues
Key issues raised at public meeting include source testing of air heating equipment, source testing many similar units would be burdensome, multiple units requiring retrofit in one year, and metal heat treating and forging furnaces must meet temperature uniformity requirements in order to meet customer specifications. These key issues and staff’s responses are summarized in Attachment B.
AQMP and Legal Mandates
The California Health and Safety Code requires the AQMD to adopt an Air Quality Management Plan to meet state and federal ambient air quality standards and adopt rules and regulations that carry out the objectives of the AQMP. The Health and Safety Code also requires the AQMD to implement all feasible measures to reduce air pollution. This proposed adoption of Rule 1147 relies on feasible technologies to further reduce NOx emissions. The NOx reductions from this proposed rule will further reduce emissions by 3.5 tons/day by 2014 with an additional reduction of 0.3 ton/day by 2023 and help achieve compliance with federal and state ambient air quality standards for ozone and PM2.5.
California Environmental Quality Act (CEQA) Analysis
Pursuant to California Environmental Quality Act (CEQA) Guidelines § 15252 and AQMD Rule 110, the AQMD has prepared an Environmental Assessment (EA) for proposed Rule 1147. The environmental analysis in the Draft EA concluded that proposed Rule 1147 would not generate any significant adverse environmental impacts. The Draft EA was released for a 30-day public review and comment period from October 16, 2008 to November 14, 2008 and no comment letters were received from the public regarding the Draft EA.
Since the release of the Draft EA, minor modifications have been made to the document. However, none of the modifications alter any conclusions reached in the Draft EA, nor provide new information of substantial importance relative to the draft document. As a result, these minor revisions do not require recirculation of the Draft EA pursuant to CEQA Guidelines § 15073.5. Therefore, the Draft EA is now a Final EA and is included as an attachment to this Governing Board package.
Socioeconomic Analysis
An analysis of PR 1147 assessing the socioeconomic impacts was conducted and the Socioeconomic Impact Assessment was released 30 days prior to the Board hearing. The Final Socioeconomic Impact Assessment is included as an attachment to this Governing Board package. The socioeconomic assessment for PR 1147 analyzed 2,162 facilities with a total of 4,924 affected units. The affected facilities belong to a number of sectors, of which the sectors of manufacturing, retail and wholesale trade, and repair and maintenances services have most of the affected units.
The average annual cost of PR 1147 is projected to be $9.12 million between 2010 and 2025. The sectors of fabricated metal, primary metal, and printing and related support activities are expected to incur higher shares of the total cost ($1.53, $0.78, and $0.7 million, respectively). PR 1147 is projected to have 102 jobs forgone annually in the entire four-county economy between 2010 and 2025, which is less than one-hundredth of one percent of the total four-county employment.
Resource Impacts
To determine the state of compliance with the proposed limits in PR 1147, staff is proposing to initiate a random testing program which will be significantly less costly than requiring owners/operators to periodically source test each of their units. To recover the cost of the program, staff intends to prepare an amendment to Regulation III – Fees for Board consideration in 2009, that establishes a source testing surcharge or other appropriate fee type to the annual operating permit fees applicable to the units subject to this rule.
Attachments (ZIP, 967k)
- Summary of Proposal
- Key Issues and Responses
- Rule Development Process
- Key Contacts List
- Resolution
- Proposed Rule
- Final Staff Report
- Socioeconomic Impact Assessment
- Final Environmental Assessment