BOARD MEETING DATE: March 7, 2008
AGENDA NO. 35
PROPOSAL:
Amend Rule 461 – Gasoline Transfer and Dispensing
SYNOPSIS:
Proposed Amended Rule 461 Gasoline Transfer and Dispensing will assure timely implementation of CARB Phase II Enhanced Vapor Recovery, as required by State law. Other proposed amendments will improve compliance and rule clarity.
COMMITTEE:
Stationary Source, February 15, 2008, Reviewed
RECOMMENDED ACTIONS:
Adopt the attached resolution:
- Certifying the CEQA Final Environmental Assessment for Proposed Amended Rule 461 – Gasoline Transfer and Dispensing;
- Amending Rule 461 – Gasoline Transfer and Dispensing.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
Rule 461 was adopted on January 9, 1976, to regulate gasoline vapor emissions into the atmosphere from gasoline transfer and dispensing facilities (GDFs). The rule has been amended seventeen times to enhance the efficiencies of the vapor recovery systems and rule enforceability. The GDFs emit vapors that contain volatile organic compounds (VOCs) and toxic air contaminants (TACs) such as benzene, toluene and xylene. These emissions are regulated by the Enhanced Vapor Recovery (EVR) regulations of the California Air Resources Board (CARB) and the South Coast Air Quality Management District (AQMD) Rule 461. GDFs are the second largest VOC emission source category under the AQMD’s regulatory authority, following architectural coatings. VOC components react in the atmosphere photochemically to form several secondary air pollutants including ozone, a major ingredient of smog.
In 1999, several field inspections and audits conducted jointly by CARB and air districts staff have uncovered several problems with the performance and durability of the vapor recovery components at the GDFs. As a result, CARB staff acknowledged the need for expanding the certification for duration of the vapor recovery system and enhancing the test requirements during the certification procedure to thoroughly address the vapor recovery concerns which triggered the adoption of the EVR regulations.
The EVR regulations became state law on April 1, 2001, and have been amended several times since to address specific issues. These requirements resulted in the phase-out of less effective existing equipment and will require the installation of equipment that meets the EVR requirements. Health and Safety Code § 41945 allows four years from the date of adoption of a more stringent standard for existing facilities to comply with the newly adopted standard. New facilities or facilities undergoing major modifications are required to meet new standards immediately after their adoption
GDFs with underground storage tanks will need to upgrade to EVR Phase II vapor recovery. Approximately 4,500 GDFs in the AQMD and 13,000 GDFs statewide will need to upgrade to EVR Phase II vapor recovery by April 1, 2009. GDFs within the AQMD must get a permit to construct and operate from the AQMD, as well as other appropriate governmental agencies (such as City Planning Department and Fire Department), before starting construction or modification of the facility, install CARB certified equipment by a certified contractor, and demonstrate compliance with the EVR requirements through performance testing, again all by April 1, 2009. Only contractors/installers who are certified both by the equipment manufacturer and by the International Code Council (ICC) as approved vapor recovery installers are allowed to perform system installations and repairs. The large numbers of GDF owner/operators applying for permits will put an unusually high demand on the certified contractors/installers, and performance testing resources to demonstrate compliance; both in the AQMD and statewide. Although some GDF owner/operators have completed installation or began the process by submitting permit applications, most have not. Due to fixed, limited resources, all GDF owner/operators must start the process as soon as possible to avoid a potential shortage of available certified installation and testing contractors as the April 1, 2009 deadline approaches.
Proposal
PAR 461 will require the owner/operator of any existing GDF that has not demonstrated compliance with CARB certified Phase II EVR on or before October 1, 2008, to submit a compliance plan and associated fees by October 1, 2008. The objective of the compliance plan is to ensure that GDF owners start planning for the required updates and outline the increments of progress of Phase II EVR implementation to assure compliance with the CARB deadline of April 1, 2009. The compliance plan shall specify the increments of progress necessary to meet the compliance date. Alternatively, the owner/operator of any existing GDF that submits by September 1, 2008, a complete application for a permit to construct and operate a CARB certified Phase II EVR system that demonstrates the installation and testing of the system on or before April 1, 2009, will not have to submit the compliance plan.
PAR 461 will postpone the implementation of EVR for equipment dispensing E85 into a mobile fueler or a vehicle fuel tank until April 1, 2012. This will allow time for CARB to certify EVR systems for the transfer and dispensing of E85. In addition, a similar postponement is included for fleet operators with GDFs that fuel exclusively vehicles equipped with onboard refueling vapor recovery (ORVR). The postponement is to complete the necessary analysis that assures that the control of VOC emissions with ORVR is at least equivalent to that of Phase II vapor recovery with EVR and in-station diagnostics (ISD) and demonstrates the longevity and reliability of ORVR in motor vehicles.
PAR 461 will require that all contractors installing, modifying or repairing any CARB certified Phase II EVR system or components to have successfully completed the applicable manufacturer and the International Code Council (ICC) training programs, or any equivalent state certification program that may be developed in the future for the replacement of components. The requirement for obtaining relevant certification shall take effect six months after such certification tests become available. Similar training requirements are also included for GDF owner/operator employees that do repairs and for performance and reverification testing contractors. These proposed amendments are needed to ensure emissions reductions are achieved through proper equipment installation, repair and testing only by trained personnel and are consistent with a statewide training certification process.
To reduce the number of days a new or modified GDF may operate in noncompliance, and adverse associated emissions impact, PAR 461 will require that owner/operators to demonstrate through performance testing that the vapor recovery equipment complies with the rule requirements prior to dispensing gasoline.
To address the complaints from GDF operators and vapor recovery testers concerning the reverification tests schedules, the proposed amendments offer a more flexible reverification test schedule set on the specific month (not the specific day) for future testing.
Furthermore, the proposed amendments improve the accountability of the testers with reoccurring violations, and contractors who install or repair vapor recovery systems.
PAR 461 also includes other minor amendments to enhance the clarity and the enforceability of the rule.
Policy Issues
Issue 1
Some owner/operators of GDFs have commented that the proposed amendments require the owner/operator of any GDF that has not demonstrated compliance with CARB certified Phase II EVR on or before October 1, 2008, to submit a compliance plan and associated fees by October 1, 2008, which moves the final installation date up six months from April 1, 2009 to October 1, 2008. Additionally, these owner/operators assert that the compliance plan inserts almost arbitrary compliance deadlines/dates, if the applicant does not provide dates for each task.
Staff foresees that there will be significant resource demand if a considerable number of GDFs owner/operators wait until near the April 1, 2009 deadline to start installation. On the other hand, state law prohibits any air pollution district from requiring an earlier installation deadline. As a result, staff is proposing that GDFs owner/operators are required to submit compliance plans or AQMD permit applications stating the increments of progress for implementation of the Phase II EVR requirements. The compliance plan deadlines serve as a guideline to the Phase II EVR implementation process and ensure compliance with the CARB deadline of April 1, 2009.
Issue 2
Concerns were expressed that the compliance plan declaration may foreclose their right to seek administrative relief if they failed to complete the implementation of Phase II EVR on or before April 1, 2009.
The declaration does not result in a waiver of rights to appeal to the AQMD Hearing board and language has been included in the proposed amended rule and staff report to clarify this matter.
Issue 3
Concerns were also expressed that the proposed amended rule states that failure to submit a compliance plan by October 1, 2008, for GDFs that do not comply with Phase II EVR as of that date, is a violation of the rule, and that exceedances of the emission standards, as determined by AQMD testing would also be considered a violation even if the In-Station Diagnostic (ISD) system indicated compliance (a no alarm status).
Staff believes it is critical that GDF owner/operators be proactive in complying with the Phase II EVR compliance date of April 1, 2009, as required by state law. Staff has added a provision in PAR 461 to relieve owner/operators acting in good faith from the requirement to submit a compliance plan if they have already submitted a complete application for permit to construct and operate by September 1, 2008, that includes the milestones ensuring compliance with the 2009 compliance date. With the added option of a permit application, staff believes that failure to submit either the permit application or compliance plan by the required dates warrants a notice of violation (NOV). All NOVs are evaluated by the AQMD’s Chief Prosecutors Office on the merits of each individual case. As for the issuance of NOVs for ISD systems that indicate compliance where AQMD testing determines non-compliance, staff believes it is imperative that GDF owner/operators properly maintain and periodically test their equipment, including the ISD system, to ensure compliance with the rule requirements and the evaluation based on the merits of each individual case ensure the appropriate level of culpability is taken into consideration.
Issue 4
It has been suggested that the AQMD provide a financial incentive for early compliance, by the AQMD refunding a substantial portion of the permit application fees for demonstration of early compliance or apply the fee reduction as a fee credit for future permit annual renewals.
The total permit processing fee is less than two percent of the installed cost of a Phase II EVR system and staff believes this may not be a significant financial incentive to motivate early compliance. On the other hand, if a large number of GDF owner/operators take advantage of this incentive, as suggested, the impact on AQMD revenues could be $1 million to $3 million depending on the number of GDFs seeking the rebate or credit and the percentage of the fee reduced. As a primarily fee-based organization, the AQMD would likely need to increase rates to other fee payers to recover the revenue shortfall. In this case there would be some concern about the required findings that such a fee rate increase would be necessary and equitable. For these reasons, staff does not recommend a fee rebate or credit for demonstration of early compliance.
Issue 5
Several entities operating non-retail GDFs have requested to be exempt from installing Phase II vapor recovery systems due to the high Onboard Refueling Vapor Recovery (ORVR) system penetration in their fleets. U.S. EPA is encouraging states to eliminate the requirement for Phase II vapor recovery systems on gasoline refueling dispensers for certain motor vehicle fleets in light of the growing use of ORVR systems in those fleets. CARB also supports this exemption and have stated they will encourage air districts to revise their vapor recovery rules accordingly.
Staff has reviewed the federal and state recommendation concerning Phase II exemption for non-retail GDFs where 95 percent of vehicles refueled are equipped with ORVR. While properly operating, ORVR technology can be instrumental in reducing emissions during refueling; staff has concerns about the lack of information relative to the long term efficiency and durability of such systems and therefore, is not supportive of an open-ended exemption. Instead, staff will propose a limited deferral of the installation of Phase II EVR to select non-retail GDFs with high ORVR penetration. This deferral to install Phase II EVR until April 1, 2012, will allow the collection of additional data to better assess the efficiency of ORVR systems. Specific recordkeeping will be required to demonstrate continued compliance with this provision of the rule.
AQMP and Legal Mandates
The California Health and Safety Code requires the AQMD to adopt an Air Quality Management Plan (AQMP) to meet state and federal ambient air quality standards within the South Coast Air Basin. In addition, California Health and Safety Code requires the AQMD to adopt rules and regulations that carry out the objectives of the AQMP.
The proposed amendments address the timely implementation of CARB Phase II EVR requirements as specified in State law and do not result in additional emission reductions; however the amendments are consistent with AQMP objectives of ensuring emission reductions from previous rule amendments.
This proposal does not impose a new emission limit or standard, make an existing emission limit or standard more stringent or impose new or more stringent monitoring, reporting or recordkeeping requirements and therefore is not subject to the comparative analysis provisions of California Health and Safety Code Section 40727.2.
CEQA & Socioeconomic Analysis
Pursuant to the California Environmental Quality Act (CEQA) and the AQMD’s Certified Regulatory Program (Rule 110), staff has prepared an Environmental Assessment (EA) for PAR 461. The Draft EA, which was made available for a 30-day review period on January 18, 2008, concluded that PAR 461 would not have any significant adverse affect on the environment. Response to comments received on the Draft EA will be prepared and included in the Final EA. The Final EA is included as Attachment G.
The proposed amendments to Rule 461 would affect 3,500 GDFs facilities which have not yet submitted applications for EVR Phase II. Based on the staff’s estimate, 60 percent of these facilities (2,100 facilities) are expected to complete installation and testing of their Phase II EVR by October 1, 2008. Staff believes that a large percentage of the remaining 1,400 facilities will submit permit applications by September 1, 2008, with a small number filing using the compliance plan option (submit compliance plan by October 1, 2008). However, assuming a worst case scenario that the remaining 2,100 GDFs will select the compliance plan option, an owner/operator will have to pay a one-time plan filing fee of $107.88 and another one-time evaluation fee of $377.57 for a total of $485.45. The total one-time cost of the proposed amendments is estimated at $679,630 (1,400 facilities times $485.45).
Implementation Plan
The proposed rule will affect all gasoline transfer and dispensing facilities. Staff has been working with these affected facilities and will continue to be available should a need for assistance arise during implementation.
Resource Impacts
When fully implemented, PAR 461 is expected to temporarily increase the workload for compliance, engineering and legal staff, primarily until April 1, 2009. The increased workload will include handling the permit applications, compliance plan; and verifying the increments of progress and the implementation of the compliance plan deadlines. The temporary increase in workload will be handled by existing staff.
Attachments (exe 1.4mb)
- Summary of Proposed Rule
- Rule Development Process
- Key Contacts
- Resolution
- Rule Language
- Staff Report
- Environmental Assessment