BOARD MEETING DATE: June 2, 2006 AGENDA NO. 33

PROPOSAL: Adopt Proposed Rule 223 – Emission Reduct ion Permits for Large

Confined Animal Facilities.

SYNOPSIS: The proposed rule establishes the permitt ing and other

requirements for large confined animal facilities, as defined by California Air Resources Board (CARB), in Californi a Health and Safety Code as a result of the enactment of Senate Bill 700

. The permit for large confined animal facilities must in clude a plan to

reduce emissions to the maximum extent feasible and the plan is to be updated annually.

COMMITTEE: Stationary Source, March 31, 2006, Revie wed

RECOMMENDED ACTION: Adopt the attached resolution:

1. Adopting Rule 223 – Emission Reduction Permits for Large Confined Animal Facilities; and

2. Certifying the Notice of Exemption (NOE) from the C alifornia Environmental Quality Act (CEQA) for Proposed Rule 223.

Barry R. Wallerstein, D.Env.

Executive Officer

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___________________________________________________ ___________________________________________________ _____________ Background Senate Bill 700 was signed into law on September 22 , 2003 and became effective as of January 1, 2004. One provision of the bill, codifi ed in California Health & Safety Code Section 40724.6, requires that local air pollution control and air management districts shall, not later than July 1, 2006, adopt, implemen t, and submit for inclusion in the state implementation plan, a rule or regulation that requ ires the owner or operator of a Large Confined Animal Facility (LCAF), as defined by Cali fornia Air Resources Board (CARB), to obtain a permit from the district to red uce, to the extent feasible, emissionsof air contaminants from the facility. Staff has d eveloped Proposed Rule 223 to satisfy

these requirements.

Summary of Proposed Adoption Proposed Rule 223 was developed to satisfy the requ irement that all LCAFs have permits that seek to minimize their emissions. In accordance with California Health & Safety Code Section 40724.6, Proposed Rule 223 requ ires that the owner or operator of LCAF submit an application for a permit that includ es:

(i) The information that the Executive Officer, or his designee, determines is necessary to prepare an emissions inventory of all regulated air pollutants emitted from the operation, including, but not limi ted to, precursor and fugitive emissions, using emission factors approved by CARB in a public hearing; and

(ii) List of all equipment and the regulating District r ules; and

(iii) List of all other sources of air pollution, includi ng but not limited to animals, birds, and lagoons; and

(iv) Total capacity of the facility in terms of animal a nd bird population; and

(v) An emissions mitigation plan that demonstrates that the facility will use Best Available Retrofit Control Technology (BARCT) to re duce emissions of pollutants that contribute to the non-attainment of any ambient air quality standard, and that are within the District’s regula tory authority.

Proposed Rule 223 requires that all LCAFs apply for and obtain a permit that includes a mitigation plan that the LCAF will implement to red uce its emissions.

Staff believes that the above requirements in Propo sed Rule 223, including the emissions mitigation plan, will further reduce emis sions from LCAFs.

Under other provisions of SB 700, confined animal f acilities (CAFs) under AQMD jurisdiction with annual emissions of half the majo r source threshold (5 tons/year) are already required to have an operating permit from t he AQMD. Based on the current emission factors, LCAFs are a subset of those CAFs. Therefore, operators of LCAFs that have already applied for or have received an o perating CAF permit on or before June 02, 2006, from the AQMD satisfy the informatio n requirements of the Proposed

Rule. Staff estimates that there are 55 dairies an d 4 egg ranches in the AQMD that are LCAF operations.

Under Proposed Rule 223, applications to obtain a p ermit shall include an emissions mitigation plan to implement BARCT. The proposed r ule requires compliance with BARCT but does not mandate any specific measure. D istrict staff believes that the dust and emission control mitigation requirements in Dis trict Rules 403 – Fugitive Dust;403.1 – Supplemental Fugitive Dust Control Requirem ents for Coachella Valley

Sources; 1127 – Emission Reductions from Livestock Waste; and 1186 – PM10 Emissions from Paved and Unpaved Roads and Livestoc k Operations, satisfy most of the BARCT requirements for dairy and some portions of the poultry operations. In addition, Appendix A of Proposed Rule 223 contains a list of the Proposed Emission Mitigation Measures that staff is proposing for ope rators of LCAFs to implement in order to satisfy BARCT requirements, and also to mi tigate other emissions. The list of control measures included in Appendix A is largely based on the control measures list originally developed by the Dairy Permitting Adviso ry Group, which was tasked with identifying and recommending emissions mitigation m easures for the San Joaquin Valley Air Pollution Control District and was compr ised of representatives from the local District, dairy industry, academia, environme ntal organizations, and other

stakeholders. The control measures list was furthe r refined by AQMD staff for the South Coast District in consultation with and gener al agreement of stakeholders, including Western United Dairymen, Milk Producers C ouncil, Inland Empire Poultrymen, Inc. and Pacific Egg and Poultry Associ ation. Operators of LCAFs will be required to choose mitigation measures from the lis t of Proposed Emission Mitigation Measures shown in the tables in Appendix A.

District staff will continue to jointly work with t he stakeholders to further develop and update BARCT and other control measures for both da iry and poultry operations.

Permits that have been issued will be updated throu gh annual renewal, in accordance with District Rule 204, to add conditions that refl ect BARCT. Operators of LCAFs shall implement new or modified emission mitigation measures on a schedule approved by the Executive Officer.

In order to comply with California Health & Safety Code Section 40724.6(d)(4) noticing requirements, it is expected that permits already issued to LCAFs will be reissued and made available for public review and c omments for 30 days prior to reissuance. For any, current, new or modified perm it, staff will post a notice and the proposed permit on the District website and at the District headquarters for public review for 30 days. Staff will review the proposed permit with the applicant prior to posting. Based on the comments received, District staff may modify the permit, as

necessary.

Issues Although most of the issues have been addressed, th e industry remains concerned about the accuracy of the currently approved emission fac tors. Staff will continue to work with all stakeholders in developing revisions to th e emission factors, if there is new

scientific evidence that would warrant such revisio ns. For determination of emissions fees, an operator has the alternative of demonstrat ing factors more representative of

their emissions.During the public notice period, staff received two additional comments. One was that

the Agricultural Waste Management Field Handbook is not the proper document to use as a reference for mitigation measures. The correc t document is the California Field Office Technical Guide, and the staff proposal has been revised to reflect this. This revision does not significantly change the meaning of the proposed rule nor constitute significant new information. The second comment ha d to do with the combination of feed and silage measures in one of the tables in Ap pendix A. Staff will continue to work with stakeholders to track and evaluate any ne w evolving scientific evidence to ensure that BARCT and BACM continue to be implement ed based on the latest scientific evidence and research. An off-ramp is i ncluded in Appendix A that allows for the approval of alternate mitigation measures.

CEQA Analysis Pursuant to the California Environmental Quality Ac t (CEQA), the SCAQMD is the Lead Agency and has reviewed the proposed project p ursuant to CEQA Guidelines §15002 (k)(1). Because the proposed project will n ot require major modifications at existing facilities to comply and no daily operatio nal emission increases are anticipated, it can been seen with certainty that there is no po ssibility that the proposed project in question has the potential to have a significant ad verse effect on the environment. Thus, the proposed project is exempt from CEQA pursuant t o CEQA Guidelines §15061(b)(3) - Review for Exemption. A Notice of Exemption has been prepared pursuant to CEQA Guidelines §15062 - Notice of Exemption. The Notic e of Exemption will be filed with the county clerks of Los Angeles, Orange, Riverside and San Bernardino counties immediately following the adoption of the proposed project.

The Notice of Exemption is attached to this Board L etter.

Socioeconomic Impacts PR 223 requires LCAF to obtain permits from the AQM D, provide emission inventory and emission mitigation plans along with their annu al updates to the AQMD, and keep

records of animal counts at facilities. There are 55 dairies (NAICS 112120—dairy cattle and milk production) and four egg ranches (N AICS 112310—chicken egg production) affected by the proposed rule. The 55 dairies are also subject to Rule

1127—Emission Reductions from Livestock Waste—which has requirements for dairies similar to those in PR 223. Therefore, there is no additional cost for the 55 dairies

under PR 223.

Three of the four egg ranches are located in Rivers ide County and the remaining one is in San Bernardino County. The four ranches have al ready filed permits under Rule 203. Based on field visits, these ranches have been impl ementing control measures to mitigate potential emissions. As such, there would be no additional cost associated with

control measures that would be identified in their initial emission mitigation plans.In conclusion, PAR 223 would not result in cost imp act at this time.

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 am bient air quality standards in the South Coast Air Basin. In addition, the California Health and Safety Code requires that the AQMD adopt rules and regulations that carry out the objectives of the AQMP. Furthermore, California Health & Safety Code establ ishes permitting requirements for LCAFs. California Health and Safety Code authorize s the AQMD to adopt a fee schedule to cover the reasonable cost of permitting , planning, enforcement and monitoring.

Resource Impacts PR 223 requirements can be accommodated within the current staffing levels.

Attachments

A. Rule Development Process

B. Key Contacts

C. Resolution

D. Rule Language

E. Staff Report

F. CEQA – Notice of ExemptionATTACHMENT A

RULE DEVELOPMENT PROCESS

Proposed Rule 223

SB 700 Working Group Meeting January 18, 2006

Public Workshop March 28, 2006

Set Hearing May 5, 2006

Public Hearing June 2, 2006

Total Time Spent in Rule Development: 6 MonthsATTACHMENT B

KEY CONTACTS

Proposed Rule 223

Alan Lee

Avanti Environmental

Alene M. Taber Jackson, DeMarco & Peckenpaugh

Andrew Steckel

U.S. EPA

Brent Newell Center on Race, Poverty

& the Environment

Bruce Scott Scott Bros. Dairy Farm

Cynthia L. Cory

California Farm Bureau

Debbie Murdoch Pacific Egg & Poultry

Association

Don Bell UCR Co-op Extension, Aviary Div.

Don Brown

Norco Ranch

Douglas R. Kuney

UCR-Riverside Ext.

Jim Reifkert

Kallisto Greenhouses John Billheimer Enviro-Reality

John E. Demler Demler Egg Ranch

Joseph Hower

Environ

Julia A. Lester

Environ

Kathy Nakase

OC Farm Bureau

Kathy Reifkert

Kallisto Greenhouses

Kevin Clutter

PEPA

Laura Blank LA County Farm

Bureau

Lucinda Roth San Joaquin Valley

APCD

Nathan De Boom

Milk Producers Council

Patricia Van Dam National Dairy Board Patrick Gaffney

CARB

Paul Martin

Western United Dairymen

Paul Sousa

Western United Dairymen

Rachael R. Scott

SBC Farm Bureau

Steven A. Pastor Riverside County Farm

Bureau

Tony Andreoni

CARB

Will Harrison

Sunrise Growers

William Van Dam

California Milk

Producers Council

Wilma Dreessen

ENSR Intl.ATTACHMENT C

RESOLUTION

A Resolution of the Governing Board of the South Co ast Air Quality Management District (AQMD) certifying that proposed adoption of Proposed Rule 223 – Emission Reduction Permits for Large Confined Animal Facilities is exempt from the requirements of the California Environment al Quality Act (CEQA).

A Resolution of the Governing Board of the AQMD ado pting Proposed Rule 223 – Emission Reduction Permits for Large Confined Animal Facilities.

WHEREAS , the AQMD staff reviewed the proposed project and determined that it is exempt from the requirements of CEQA; an d

WHEREAS , the AQMD Governing Board obtains its authority to adopt, amend, or repeal rules and regulations from Sections 40000 , 40506, 40510, 40702, 40725 through 40728, and 40724.6 of the California Health and Safety Code; and

WHEREAS , the AQMD Governing Board has determined that a ne ed exists to adopt Rule 223 – Emission Reduction Permits for Lar ge Confined Animal Facilities, to provide a permit processing rule for agricultural s ources required to comply with the permit issuance requirements mandated by California Health & Safety Code Section 40724.6; and

WHEREAS , the AQMD Governing Board has determined that Prop osed Rule 223 – Emission Reduction Permits for Large Confined Animal Facilities, as proposed to be adopted is written or displayed so that its mean ing can be easily understood by the persons directly affected by it; and

WHEREAS , the AQMD Governing Board has determined that Prop osed Rule 223 – Emission Reduction Permits for Large Confined Animal Facilities, as proposed to be adopted is in harmony with, and not in conflict with or contradictory to, existing statutes, court decisions, or state or federal regu lations; and

WHEREAS , the AQMD Governing Board has determined that Prop osed Rule 223 – Emission Reduction Permits for Large Confined Animal Facilities, as proposed to be adopted, does not impose the same requirements a s any existing state or federalregulation and is necessary and proper to execute t he power and duties granted to, and

imposed upon, the AQMD; and

WHEREAS , a public hearing has been properly noticed in acc ordance with the provisions of Health and Safety Code Section 40725; and

WHEREAS , the AQMD Governing Board has held a public hearin g in accordance with all provisions of law; and

WHEREAS , the AQMD Governing Board, in adopting this rule, references the following statutes which the AQMD hereby implements , interprets, or makes specific: Health and Safety Code Sections 39011.5, 40522, 423 01, and 40724.6; and

WHEREAS , the AQMD Governing Board finds and determines, ta king into consideration the factors in § (d)(4)(D) of the Gov erning Board Procedures, that the modifications adopted which have been made to PR 22 3 – Emission Reduction Permits for Large Confined Animal Facilities, since notice of public hearing was published do not significantly change the meaning of the propose d rule within the meaning of California Health & Safety Code § 40726 and would n ot constitute significant new information requiring recirculation of the Draft CE QA document pursuant to CEQA Guidelines § 15088.5; and

WHEREAS , the AQMD Governing Board has determined that the socioeconomic impact assessment of Proposed Rule 22 3 – Emission Reduction Permits for Large Confined Animal Facilities, as proposed t o be adopted, is consistent with the March 17, 1989 Board Socioeconomic Resolution for r ule adoption; and

WHEREAS , the AQMD Governing Board specifies the manager of Proposed Rule 223 – Emission Reduction Permits for Large Con fined Animal Facilities, as proposed to be adopted, as the custodian of the doc uments or other material which constitute the record of proceedings upon which the adoption of this proposed rule adoption is based, which are located at the South C oast Air Quality Management District, 21865 Copley Drive, Diamond Bar, Californ ia; and

NOW, THEREFORE, BE IT RESOLVED , that the AQMD Governing Board does hereby certify the Notice of Exemption for Rul e 223 – Emission Reduction Permits for Large Confined Animal Facilities, as pr oposed to be adopted, completed in compliance with state CEQA Guidelines Sections 1500 2(k)(1), 15061(b)(1), and 15273, and that it was presented to the Governing Board, w hose members reviewed, considered, and approved the information therein be fore acting on Rule 223 as proposed to be adopted; andBE IT FURTHER RESOLVED , that the AQMD Governing Board does hereby

approve the Socioeconomic Impact Assessment; and

BE IT FURTHER RESOLVED that the AQMD Governing Board hereby

directs staff to continue to work with stakeholders for further developing more accurate

emission factors based on research and scientific d ata and to update the emission factors as and when more reliable data is available, and

BE IT FURTHER RESOLVED , that the AQMD Governing Board does hereby adopt Rule 223 – Emission Reduction Permits for Lar ge Confined Animal Facilities, pursuant to the authority by law, as set forth in t he attached and incorporated herein by

this reference.

DATE: _________________________ CLERK OF THE BOARDATTACHMENT D

RULE LANGUAGE