SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 1 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

## APPENDIX A

Summary of Significant Comme nts and District Responses For Revised Proposed Amendments to Rule 4702

August 18, 2011SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 2 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 This page intentionally blank.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 3 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 SUMMARY OF SIGNIFICANT COMMENTS FOR REVISED

PROPOSED AMENDMENTS TO RULE 4702 RECEIVED DURING THE PUBLIC HEARING ON AUGUST 18, 2011

Stakeholder Comments Pacific Gas and Electric (PG&E) Southern California Gas (SCG) Fresno Metro Ministry (FMM) West Kern Water District (WKWD) Western States Petroleum Association (WSPA) Tehachapi Cummings County Water District (TCCWD)

1. COMMENT: After the one-time report required by Section 5.1.2 is submitted to the District, does the District expect updates to that report. If we install more engines after the submittal date for the r eport, are we expected to report those engines to the District? (PG&E)

RESPONSE: The report required by Secti on 5.1.2 is a one-time report to provide the District with more information regarding how many engines are in the valley that are sized between 25-50 bhp. We do not expect any more reports or updates after the submittal date. If you install an engine rated between 25 and 50 bhp after that date we will not expect y ou to submit another report to us.

2. COMMENT: Engines each have unique personalities of their own. The SCAQMD is pushing the NOx limits too lo w for industry to comply with. We appreciate the flexibility of the fee option. We still oppose the 11ppm limit, because we believe that only new engines can meet the 11ppm limit, it is too difficult to meet the 11 ppm for retrofit engines. (SCG)

RESPONSE: The fee option leaves the discret ion to the facility while still achieving much needed emi ssion reductions.

3. COMMENT: We support the amendments. We still have concern about the limited use engines because if these engi nes are used during times of high

ozone levels it could be detrim ental to air quality. (FMM)

RESPONSE: The District is proactive in providing Valley residents and

businesses with information when Ozone leve ls begin to rise. We appreciate the cooperation of industry to be discrete in the times they use these engines,

however we do not force them to not us e engines on high ozone days. It is also important to note that the emissions from thes e engines are low.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 4 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 4. COMMENT: If the water districts were allo wed a 50 ppm limit, then the emission reduction lost would be about 0.4 tpd of NOx. This is a minimal amount of emissions. The District allowed a provis ion for engines that have a variable load, but limited that provision to gas compre ssion only. Water di stricts deal with a variable load on our engines too. We r equest that the Distric t staff look at

variable load for water distri cts, and provide a provision for these engines similar to that of the one for gas compressi on, if appropriate. (WKWD, TCCWD)

RESPONSE: Staff awaits the submission of in formation from the water districts, specific to their facilities, supporting t he variability of the load on their engines; and data supporting the technological infeas ibility of adding SCR to engines due to the variability.

5. COMMENT: We support the recommendations presented to the Board today and thank District staff for their efforts and openness during this public workshop process. (WSPA)

RESPONSE: District staff thanks W SPA for the comment.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 5 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 SUMMARY OF SIGNIFICANT COMMENTS FOR

PROPOSED AMENDMENTS TO RULE 4702 (INTERNAL COMBUSTION ENGINES) DATED AUGUST 18, 2011

EPA REGION IX STAFF COMMENTS

1. COMMENT: Please provide further analysis of how the requirements for sparkignited agricultural operation (AO) engi nes fulfill the Clean Air Act (CAA) requirements for Reasonably Available C ontrol Technology (RACT) regarding technical and economic feasibility. Note that EPA's approval of the 1-hr ozone plan in March 2010 did not opine on RACT ( See 74 FR at 33936).

RESPONSE: As published in the Federal R egister, EPA determined that the requirements of AO engines, as added to Rule 4702, to be, “consistent with EPA regulations, and relevant policy and guidance regarding enforceability, BACM/BACT, RACM/RACT, and SIP relaxations.” 1 Additionally, the Technical Support Document (TSD) published in August 2007 for the Proposed Rulemaking and District Final Rule for the California SIP for Rule 4702 states

“Submitted Rule 4702 continues to implement BACM/BACT and other SIP approval criteria for stationary internal combustion engines. In addition, these revisions satisfy SJVAPCD’s commitment to apply BACT-level controls to agricultural engines, consistent with its Amended 2003 PM-10 Plan. Because

the criteria for BACM/BACT are strict er than for RACT, by meeting BACT requirements submitted Rule 4702 also fulfills RACT.” 2

As illustrated by the dates of the EPA actions to approve the Rule 4702 as RACT, spark-ignited AO engines have only recently been required to comply with rule 4702 and are in the first generation of ru le requirements. It is important to note that AO engines are currently in t he middle of the most recent compliance strategy and these engines are still in t he process of coming into compliance with new standards with compliance dates ranging from January 2009 through January 2015.

Additionally, as illustrated in Appendix D of Rule 4570 (Confined Animal Facilities), amended in October 2010, t he agriculture community cannot absorb the costs of additional controls, nor can t hey pass those costs onto the consumer because the agricultural industry competes in a global economy where prices are not determined by the individual farmers. Based on these findings, the District

1 Revisions to the California State Implementation Pl an, San Joaquin Valley Air Pollution Control District and Sacramento Metropolitan Air Quality management District, 73 Fed. Reg. 7, pp. 1818 – 1822. (2008, January 10).

2 Technical Support Document for EPA’s Notice of Pr oposed Rulemaking and Direct Final Rule for the California State Implementation Plan San Joaquin Valley Unified Air Pollution Control District Rule 4702, Internal Combustion Engines – Phase 2. (August 2007).SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 6 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 believes the current requirements in Rule 4702 satisfy RACT and imposing additional requirements to AO engines is not an economically feasible option at this time, and would go beyond RACT.

2. COMMENT: Appendix A of the staff report responds to our July 11th comment regarding the exemption of sulfur fuel requirement s for all AO engines, and states that all these engi nes already use low sulfur fuel. Please remove this exemption since there seem s to be no need for it.

RESPONSE: Staff do not feel that it would be appropriate to remove the implied exemption for AO engines from sulfur r equirements as stated in Section 5.7 andSection 5.10. The rule has been presented to the public throughout the ruleamendment process since the first draft am endments were released to the public for review in September 2010 as having Sections 5.7 and 5.10 being applicable specifically to Non-AO engi nes. All agricultural irrigation pump engines use PUC regulated gas, therefore, District staf f agree that this exemption could be interpreted as unnecessary. However, to amend rule language prior to the public hearing to include AO engines to these se ctions of the rule without first presenting the changes to the public th rough a public workshop process could possibly confuse stakeholders. As staff agree with EPA’s asse ssment that there is no need for the exemption, we also do not feel it will have an adverse affect to the integrity or enf orceability of the rule or it s requirements by leaving the exemption in proposed rule language. Staff will explore this option in future plan or rule development efforts.

3. COMMENT: The national economic incentive program (EIP) guidance applies broadly to incentive programs including pr ohibitory rules, such as Rule 4702, which allow sources flexibility to comply with traditional emi ssion limits through emissions averaging and/or fees. The national guidance presumes that EIP provisions must provide the same le vel of deterrence to noncompliance as

traditional emission limits. Rule 4702' s AECP provisions allow emission averaging both over multip le days and among multiple units. Unfortunately, a source might argue for only one violati on under the existing rule language, potentially dramatically reducing liabilit y and hence deterrence to noncompliance under Federal law. Therefore, Rule 4702 should be revised to clarify that the violation will apply to each day and each eng ine that is part of the averaging provision if a source does not meet t he NOx emissions requirements in Section

8. Rule 4702 also allows sources to annua lly pay fees in lieu of complying with

emissions limits. Please ensure that the rule sufficiently deters noncompliance if it could be read that failure to pay the annual fee, even a lar ge annual fee, might result in only one rule violation for a y ear's emissions. Note that both these potential clarifications of t he number of potential rule vi olations might not affect penalties collected in specific District enforcement actions.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 7 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: The District concurs that the same level of deterrence to noncompliance should apply to traditional emissi on limits as well as Rule 4702’s Alternate Emissions Compliance Plan (AECP) option. District Rule 1090 (Penalty) states, “ Every day during any portion of which such violation occurs constitutes a separate offense. ” Any violation of the AECP would thus be considered a violation every day within the averaging period with penalties up to

the maximum allowable levels under the Clean Air Act.

4. COMMENT: Sections 4.1.6 and 4.3. 2 exempt units subject to California's Portable Engine Registration Program ( PERP) and to SJV Rule 2280 from complying with Rule 4702. California shoul d submit both these rules to the SIP consistent with CAA section 110(i).

RESPONSE: The District is currently discussing the matter with ARB and will consider submitting the rules into the SIP at a future date.

5. COMMENT: It is inappropriate to include specif ic NSR exemptions in prohibitory

rules such as Rule 4702 instead of in Rule 2201, where SJVUAPCD's BACT and offset requirements are found. Rule 2201 Sections 4.2.3 and 4.6.8 provide an exemption from BACT and offset requirement s for existing facilities which install an emission control technique perform ed solely for the purpose of compliance with the requirements of t he District. As stated in EPA’s 1999 TSD for Rule 2201, when equipment is installed for t he sole purpose of complying with new emission standards, whether they be Distr ict, State or Federal air pollution control laws, then that emission unit repl acement can be considered an emission control technique, and exempt from t he requirement to apply BACT and offsets pursuant to the exemptions provided in Rule 2201, Section 4.2.3 and 4.6.8.

RESPONSE: District staff have worked dilige ntly with EPA and ARB to resolve the issue of how to clarify this exempti on in rule language. The District, EPA, and ARB have come to an agreement that the exemption will remain in Section

4.4 of Rule 4702 but will be re-worded to cl arify the exemption. Please refer to the Revised Proposed Rule for rule lang uage and to the Final Draft Staff Report for a more complete discu ssion of this issue.

ARB STAFF COMMENTS

No comment letter has been received from ARB.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 8 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 STAKEHOLDER COMMENTS

Manufacturers of Emission C ontrols Association (MECA) Pacific Gas and Electric (PG&E)

6. COMMENT: We agree with staff’s conclusion that the 25-50 hp IC engines are already regulated under t he U.S. EPA’s NSPS and ther efore the point of sale provision is the most cost effective wa y to insure low NOx emissions for these small stationary engines. The NSCR techno logy to reduce emissions from small spark-ignited, rich burn off-road engines is based on automotive-type three-way catalyst closed-loop technology. Th ree-way catalysts have also been used effectively on thousands of large, natur al gas-fueled, reciprocating engines used for power production or pumping applications. These same catalyst technologies can be adapted to spark-ignited engi nes used in portable generators independent of engine displacement. For la rger displacement rich-burn engines, we agree with SJVUAPCD’s conclusion t hat non-selective catalytic reduction can be applied to meet the emi ssion standards outlined in the proposed rule. The use of NSCR technology is a cost-effect ive way to reduce NOx emissions from existing stationary rich-burn engines. NSCR is a proven technology based on automotive three-way catalysts that has been installed on thousands of rich-burn engines. Additionally, NSCR systems have been verified with ARB for use on large, spark-ignited off-road engines (engi nes 25 hp or greater) to reduce NOx, HCs, and CO. These verified systems can be used on existing stationary richburn engines as well. (MECA)

RESPONSE: District staff appreciates the comm ent and for the recognition of the Districts continuing efforts to improve air quality in the Valley.

7. COMMENT: SCR has long been the technology of choice for NOx emission reduction in industrial processes and st ationary power generat ion applications. The commercial use of SCR systems for the control of NO x from lean-burn stationary engines has been around since the mid- 1980s in Europe and since the early 1990s in the U.S. SCR syst ems have been installed worldwide for stationary engines with varying fuel combinations. These units have been deployed in power generati on applications including doz ens of gas compression units. More recently, cost-effectiv e urea-SCR systems hav e been developed for mobile source applications, including hea vy-duty trucks, light-duty vehicles, offroad equipment, marine engines, and locomoti ves. SCR is being used by most engine manufacturers for complying wit h U.S. EPA’s on-road heavy-duty diesel engine emission standards since 2010 and in Japan since 2009.

We agree with the cost estimates that the District has used in their costeffectiveness analysis in preparing these ru le amendments. The final costs of a system will depend on the condition and baseli ne emissions of the engine andSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 9 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 the percent level of reduction required to meet the established NOx concentration limit. Experience of our members has s hown that installation costs will vary but are typically on the order of the syst em costs. Retrofitting systems has been done both inside and outside of existing struct ures that house the engines. In the case where limited interior space may be available, systems have been installed in place of the existing exhaust muffler on the roof of buildings. Some systems have also been appropriately designed to oper ate in cold temperature climates like those in the gas fields of Wyoming or the Sierra Mountains of California. (MECA)

RESPONSE: District staff appreciates the comm ent and for the recognition of the Districts efforts to improv e air quality in the Valley.

8. COMMENT: Staff has exempted waste gas f ueled engines from NOx controls due to the variability in heat content of waste gas. SCR systems have been installed on large (3500 hp) digester gas fueled engines by automatically adjusting the BTU content of the digester gas by blending in natural gas to achieve the necessary BTU content of the mixture. This SCR system is successfully achieving the NOx design target of 9 ppmv. This type of an approach may provide addition al NOx reductions in the San Joaquin Valley.

We believe that the Distric t is missing a significant oppor tunity to reduce CO and VOC emissions from lean burn natural gas engines by not setting standards that would require inexpensive, passive catalyst controls that are in use today such as oxidation catalysts (OC). Oxidation catalyst s have been applied to over 250,000 off-road diesel mobile source applications and hundreds of stationary lean burn SI engines. Oxidation catalysts are extremely effective in achieving 90% reduction of HAPs from lean burn engi nes. These catalysts also provide significant reductions in toxic emissions by eliminating benzene, formaldehyde, acetaldehyde, methanol and other VOCs fr om the exhaust. Even a relatively inexpensive oxidation catal yst can provide significant multi-pollutant co-benefits in reducing CO, HC, VOC, and SOF and, th erefore, the Distric t should consider setting CO and VOC standards that would require emissions controls on all stationary reciprocating internal combustion engines. (MECA)

RESPONSE: While the District recognizes the potential for catalytic controls to reduce CO and VOC emissions; in order to focus on NOx emission reductions, the District has opted to not change the exis ting VOC limits in Rule 4702. This

decision is based on stakeholders’ reco mmendations and results of the South Coast AQMD variances. Keeping the ex isting VOC and CO emission limits in the current rule would allow engine manuf acturers and emission control system manufacturers to have the much-needed flexibility to be able to achieve much lower NOx emissions under varying field op erating conditions and applications.

Please refer to the Final Draft Staff R eport for a more deta iled discussion.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 10 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 9. COMMENT: SJVAPCD added Section 4.1.6 with t he intention of providing an exemption from the entirety of Rule 4702 to port able engines registered in Statewide PERP. However, as Section 4.1.6 is current ly written, the exemption is provided to portable engines regist ered under both SJVAP CD Rule 2280 and Statewide PERP. We respectfully request th at Section 4.1.6 be revised to clarify this exemption. (PG&E)

RESPONSE: Upon evaluation of the proposed ru le language for this exemption staff agree that it is co nfusing and appears to require registration in both programs. It was not the int ention of District staff to require registration in both programs. Therefore, st aff have amended proposed rule language to clarify the existing draft amendment. This exempti on is clarified by separating the two exemptions into Section 4. 1.6 and Section 4.1.7. This is not a change in the proposed exemption but rather a clarification to the exem ption. Please refer to the Revised Proposed Rule 4702 for the exact language.

10. COMMENT: Section 4.2 provides an exempti on from Rule 4702 to emergency standby engines and low-use engines, except for the requirements in Sections

5.9 and 6.2.3. SJVAPCD is proposing to change the applicability level from engines >50 hp to engines ≥ 25 hp. Therefore, em ergency and low-use engines between 25-50 hp would be subject to the operational and recordkeeping requirements of Sections 5.9 and 6.2.3.

We respectfully request that an exemption be added to Rule 4702, Section 4.1 to exempt emergency standby engines and lo w-use engines between 25-50hp from the entirety of t he rule. (PG&E)

RESPONSE: To clarify that engines rat ed between 25 and 50 bhp are only subject to the point of sale requirem ent and one-time reporting requirement of Section 5.1, District staff have added an exem ption, Section 4.5, to the revised proposed rule language. This additi onal exemption does not change the applicability, requirements, or meaning of rule l anguage, but is simply a

clarification of standards as int ended and explained to stakeholders throughout the rule-amendment process. Please re fer to Section 4.5 of the Revised Proposed Rule for rule language and to the Final Draft Staff Report for further discussion regarding this exemption.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 11 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 SUMMARY OF SIGNIFICANT COMMENTS FOR DRAFT AMENDMENTS TO RULE 4702 (INTERNAL COMBUSTION ENGINES) DATED JUNE 22, 2011

EPA REGION IX STAFF COMMENTS

1. COMMENT: Similar to the analysis provided in Appendix C of the staff report for other engines; please provide an analys is of how the requirements for agricultural operation (AO) engines fulfill the Clean Air Act (CAA) requirements for Reasonably Available Control Technol ogy (RACT) regarding technical and economic feasibility.

RESPONSE: As published in the Federal Register, EPA determined that the requirements of AO engines, as added to Rule 4702, to be, “consistent with EPA regulations, and relevant policy and guidance regarding enforceability, BACM/BACT, RACM/RACT, and SIP relaxations.” 3 Additionally, the Technical Support Document (TSD) published in August 2007 for the Proposed Rulemaking and District Final Rule for the California SIP for Rule 4702 states

“Submitted Rule 4702 continues to implement BACM/BACT and other SIP approval criteria for stationary internal combustion engines. In addition, these revisions satisfy SJVAPCD’s commitment to apply BACT-level controls to agricultural engines, consistent with its Amended 2003 PM-10 Plan. Because

the criteria for BACM/BACT are strict er than for RACT, by meeting BACT requirements submitted Rule 4702 also fulfills RACT.” 4

Additionally, as illustrated in Appendix D of Rule 4570 (Confined Animal Facilities), amended in October 2010, the agriculture community cannot absorb the costs of additional controls, nor can t hey pass those costs onto the consumer because the agricultural industry competes in a global economy where prices are not determined by the indi vidual farmers.

2. COMMENT: Appendix A of the previous draft staff report st ates that SOx regulation for AO engines are not nece ssary because most of these engines already use low sulfur fuel. Please prov ide further information on which type of AO engines do not use low sulfur fuel and whether it would be economically and technically feasible for these engines to use low sulfur fuel.

3 Revisions to the California State Implementation Pl an, San Joaquin Valley Air Pollution Control District and Sacramento Metropolitan Air Quality management District, 73 Fed. Reg. 7, pp. 1818 – 1822. (2008, January 10).

4 Technical Support Document for EPA’s Notice of Pr oposed Rulemaking and Direct Final Rule for the California State Implementation Plan San Joaquin Valley Unified Air Pollution Control District Rule 4702, Internal Combustion Engines – Phase 2. (August 2007).SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 12 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: Staff would like to clarify l anguage from the previous Appendix A to say that not most engines use low sulf ur fuel, but all AO engines use low sulfur

fuel. This correction is based on the best in formation available to District staff at

this time.

3. COMMENT: Some cost information was not incorporated in the cost effectiveness analysis because SJVUAPCD believes the lower costs did not reflect the entirety of inst alling and operating the requir ed controls. The District

should show all information available and fu rther explain why the additional cost information is not appropriate to incorporate.

RESPONSE: The cost analysis has been revised to reflect a broader range of compliance costs, and a more detailed discussion about costs used. See Appendix C of this staff report.

4. COMMENT: Although Rule 4702 is identifi ed as a control measure in the

District’s 2007 Ozone Plan and 2008 PM2. 5 Plan; no specific emission

reductions are associated with the contro l measure. Appendi x B now projects 1.49 tons/day of NOx emission reducti ons from this amended rule, although sources may pays fees in lieu of complying with the standards. EPA has previously raised concerns that emissi on reductions from similar incentive programs should not be credited until SJ VUAPCD provides additional information

to ensure that the emission reductions ar e surplus, quantifiable, enforceable and permanent. We understand, based on the District’s response to comments in the previous draft staff report, that emissions reductions from incentiv e programs will

not be counted/credited in the SIP until the reductions are achieved.

RESPONSE: The staff report and Appendix B have revised language that explicitly states t hat the emission reduction calculat ions are only for determining

the cost effectiveness. See Final Dra ft Staff Report and Appendix B for details.

5. COMMENT: Various sections (3.24.1, 4.2.1, 4.3.1.3 and 5.8.6) give the APCO

discretion to allow alternate devices fo r metering. Consist ent with long-standing national policy on APCO discret ion, these sections need to provide more detail

on the criteria the APCO will use to deem an alternate method approvable or include the need for EPA and ARB approval for alternate methods.

RESPONSE: Rule language has been amended to include EPA in the approval process. It is not necessary to include AR B approval in rule language; therefore, ARB was not added to rule language. Please see the proposed rule for changes.

6. COMMENT: Section 4.4 allows for an NSR permit exemption which is inappropriate in a prohibitory rule. This provision must be removed from the rule.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 13 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: Section 4.4 allows an exemption from the requirements of Best Available Control Technology (BACT) and Offset requirements of Rule 2201 (New and Modified Stationary Source Review Rule) if the replacement engine is installed for the sole purpose of comp lying with Rule 4702. The narrow and limited exemption from BACT and Offset specified in existing Rule 4702 for replacement engines is appropriate since Se ction 5.2 of the rule requires an operator to replace existing older comp ression-ignited engines with cleaner EPAcertified Tier 3 or Tier 4 engines. If the exemption were removed from Rule 4702, operators who, according to the rule, must replace their engines with Tier 3 engines, for instance, woul d instead be subject to BACT when they apply for permits to install those Tier 3 engines. In stead of installing a Tier 3 engine, in the absence of this exemption language, an oper ator may be required to electrify or install a Tier 4 engine to comply with BACT requirements. This outcome would be clearly unfair, as it would be contrary to the plain language of the rule and to the requirements as they were explained to stakeholders during the public ruledevelopment process. Although existi ng Rule 2201 Sections 4.2.3 and 4.6.8 allow exemptions from BACT and Offset requirements, the exemptions apply only to the installation or modification of an emission control technique performed solely for the purpose of compliance with the requirements of District, State or Federal air pollution control laws, regulations or orders. Such exemptions do not apply to replacement units needed to co mply with the prohibitory rules. Therefore, the District will retain the existing language in Rule 4702.

7. COMMENT: Language must be added to clarify that a fee cannot be paid in lieu of meeting limits of Tabl e 1 since the District must ensure that RACT will be implemented for appropriate source s subject to Rule 4702.

RESPONSE: It was never the District’s intent to allow operators to increase actual emissions above what is currently al lowed in Table 1 when they participate in the fee payment option. Language has been added to the rule to explicitly state this concept. See Proposed Rule 4702 for details.

8. COMMENT: Please explain how eliminating the percent reduction limits in the

rule does not constitute a rule relaxation.

RESPONSE : District staff has added a disc ussion about how removing the percent reduction does not constitute a rule relaxation. See th e Final Draft Staff Report for details.

9. COMMENT: Rule 4702 is an economic inc entive program because of the provisions which allow for alternativ e compliance – averaging emissions at multiple units over a 7-day averaging period (Section 8), and the annual payment of fees in lieu of complying with NOx em issions standards (Sections 5.6 and 7.8).SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 14 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: The District would like to clarify t hat Rule 4702 is a prohibitory rule that provides alternative compliance opt ions. These compliance options allow flexibility for the businesses in the Valle y to comply with regulations and protect public health by improving air quality by reducing emissions in the Valley; which is especially important in t hese tough economic times.

10. COMMENT: To ensure adequate deterrence to noncompliance with alternative provisions, Rule 4702 should specify that it is a violation of each and every day within the averaging period for each engine that is part of the averaging provision

if a source does not meet the NOx emissions requirement s in Section 8. We are aware of the District’s provisions for late payment of fees. Rule 4702 should also clarify that if a source fails to pay the annual fees that failure constitutes 365 days

of violations.

RESPONSE: When a facility fails to comply with a rule requirement, it is District policy to issue that facility a Notice of Violation until such time as the issue is resolved. Rule language requires engi nes participating in the averaging provision to meet NO x emission requirements in Sect ion 8. Rule language also requires the payment of annual fees by a specific date each year. Failure to comply with these requirements, as appropriate, would result in a violation of rule requirements and the issuance of a Notice of Violation. Fines and/or other penalties are determined by the Distr ict on a case-by-case basis.

ARB STAFF COMMENTS:

No comment letter has been received from ARB.

STAKEHOLDER COMMENTS

Aera Energy LLC (AERA) Engine Manufacturers Association (EMA) EnviroTech Consultants, Inc. (ETC) Henry Leasing and Manufacturing, LLC (HLAM) Kern Oil & Refining (KOR) Nisei Farmers League (NFL) Pacific Gas and Electric (PG&E) San Joaquin Farm Bureau (SJFB) Southern California Gas (SCG) West Kern Water District (WKWD) Vintage Production California, LLC (VPC) Western States Petroleum Association (WSPA)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 15 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 11. COMMENT: The definition of “replacement engi ne” in Section 3.33 – where is that in effect in the rule? (VPC, WSPA)

RESPONSE: The exemption in Section 4.4 re fers specifically to replacement engines; therefore a definition of repl acement engine was placed in Section 3.0 (Definitions).

12. COMMENT: If NSCR’s are already on existing facility permits and installed on all units, then an ATC shouldn’t be required if upsizing the NSCR to meet new

reduced emission reductions. The rule should be modified to allow these changes without an ATC. The APCD could track modifications in the Emission Control Plan or Inspection & Maintenance Plan, submitted by facilities. This action would save money, expedite the pr ocess, and save paper work. (VPC, WKWD, WSPA)

RESPONSE: An authority to construct (ATC) is simply the vehicle which the District uses to approve either construc tion or other types of alterations or modifications to how operations actually operate. The District uses the ATC process for all changes needed to comply with a prohibitory rule, such as Rule 4702, to review the proposed measures and ensure the appropriate conditions are placed on the permit. Additionally , the requirements imposed on an ATC application are determined by what modifi cation is being sought. An application to upsize an NSCR unit to comply with Rule 4702 would have minimal, if any, requirements from New Source Re view (District Rule 2201).

13. COMMENT: West Kern Water District has 20 IC engines that again will require the installation of larger NSCR’s on 18 rich-burn engines and proposed new SCR installation on our 2 lean-burn engines. T he 18 larger NSCR’s will cost $30,000
each. The new SCR’s, for the lean burn engines, will cost $150,000 each. This

doesn’t include installation or t he cost to replace elements every 2 or 3 years. In the past we could get 1 or 2 washings on each element but West Kern Water District doesn’t believe that will be an opt ion at 11 ppmv NOX limit. (WKWD, WSPA)

RESPONSE: District staff thanks the commentor for submitting cost information.

14. COMMENT: Installing new SCR systems on lean- burn engines will require major facility modifications. These costs woul d place an undue hardship on facilities. The socioeconomic analysis did not acc ount for the SCR for lean burn engines, or for the additional costs of heavy metals and it should account for these costs. (WKWD, WSPA)

RESPONSE: The District recognizes that eac h facility has its own challenges with respect to installing additional equipment, some of which may include the modification of existing structures. Dis trict staff has solicited cost information andSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 16 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 estimates from stakeholders throughout the rule development process and has not received submittal of any cost data that included the increase in cost for

metals or structure amendment s; therefore, did not include such data in the cost effectiveness analysis. District staff c ontinues to encourage the submission of cost data, and would be happy to include it in the cost effectiveness analysis once it has been submitted, as long as that submission is in a timely manner.

15. COMMENT: Industry has only had between 5 to 6 years to recover costs

associated with Rule 4702 Phas e 1. Water Districts, as well as some other industries, have costly project upgrades and scheduled facility maintenance that is adversely affected by ongoing air regulat ion costs. The cost effectiveness and socioeconomic analysis should include a di scussion about the costs from the previous rule-amending pr oject. (WKWD, WSPA)

RESPONSE: When looking at impacts to industry, increases in maintenance and operating costs from previous years ar e included in a facility’s expenses for that year. It would be difficult to det ermine from the financial statements what

exact costs are associated with a rule change compared to other reasons why the maintenance costs might be higher (e .g., increased raw material costs, inflation, additional safety requirement s, compliance with rules from other regulatory agencies, etc.).

16. COMMENT: Although the appendices and staff report calculat e and report on the annual compliance costs and cost effect iveness of the proposed rule, those numbers are essentially r eported with no discussion or comparison regarding how these costs compare to other District rules. Such a comparison is needed in order to determine if the proposed rule and NOx emission standard is economically justified and cost effective for the regulated co mmunity. (EMA)

RESPONSE: The District is in non-attainment of the federal ambient air quality

standards for both ozone and PM2.5. The Di strict’s mandate is to strive to protect the health of Valley residents th rough efforts to meet health-based state and federal ambient air-quality standards. The reduction in NOx emissions from stationary engines is one strategy to bri ng the District into attainment of the

ozone and PM2.5 health-based standards. As a single number, cost effectiveness does not fully characterize how a change to an existing emission

limit affects businesses. Businesse s make decisions based on how the compliance cost affects their profits, not on the dollars per ton for a particular technology. If a business owner determi nes that the installation of control equipment is too expensive, the proposed rule allows the payment of a fee. The

District would then use the fee to fund other emission-reducing pr ojects to offset the engine’s emissions. For an individual business, this fee payment may be the right decision. In other cases, the installation of enhanced control equipment may make more business sense.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 17 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 17. COMMENT: The District has not accounted fo r all the costs in the cost effectiveness and socioeconomic analyses. We request the staff report provide

additional details of how the cost effe ctiveness analysis was performed. (WSPA, VPC, NFL)

RESPONSE: The cost effectiveness analysis has been revised to add more details of how the analysis was performed. See Appendix C of this staff report for the changes.

18. COMMENT: The District should remove all references to 25 to 50 hp engines

from Rule 4702. No other air district regulates engines between 25 and 50 bhp, and they have always been considered an in significant source of emissions, regulating them will do very little to improve air quality but could have devastating financial effects. Also, these engines are already subject to Federal regulations

and these amendments would create duplicative requirements imposing overlapping and unnecessary costs on operat ors. (HLAM, ET C, WSPA, VPC, WKWD)

RESPONSE: Proposed rule language has been am ended to be a point of sale requirement, meaning that only those engi nes that change ownership would be affected. The proposed requirement does not alter or duplicate any of the federal regulations for this size range engines. Please refer to the Final Draft Staff Report for more details about the pr oposed language and refer to the Proposed Rule for the actual proposed language.

19. COMMENT: We request the staff report prov ide the cost effectiveness analysis and socioeconomic analyses needed to address the 25 to 50 bhp draft rule language. (WSPA, VPC)

RESONSE: Rule requirements for 25 to 50 b hp requirements have been updated and are now point of sale requirements. Please refe r to the Proposed Rule for language amendments and to the Final Dra ft Staff Report fo r the discussion about the amendments. The language, as proposed as a point of sale requirement would only affect the replac ement of an engine, at the time the operator chooses to replace an engine. As such, the costs would be incurred regardless of this requiremen t. It is the operator’s choi ce as to when to replace an engine; the district is not requiring the operator to replace an engine. Therefore, there are no additional costs associated with this requirement.

20. COMMENT: It is not uncommon to move 25 to 50 hp engines from one location

to another. If the current draft versi on of Rule 4702 is adopted, it will add an extreme financial burden to our Company, po ssibly resulting in shutting down our engine leasing division, resulting in t he loss of several jobs. This must be

addressed in the Cost Effe ctiveness Analysis. (HLAM)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 18 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 An engine can be “supplied” and/or “installed” several times to several users at several locations within the engine’s us eful lifespan. Draft language would subject these engines to CFR standards ev ery time they are “supplied” and/or “installed” resulting in the premature replacement of perfectly good engines with newly manufactured engines; which would signi ficantly increase op erating costs.

These additional costs must be included in the cost effectiveness analysis and the loss of jobs must be included in the socioeconomic analysis to make these analyses valid. (HLAM, VPC)

RESPONSE: Language has been revised to clar ify that the engine must meet

the latest emission standards at the time ownership of the engine changes. An operator who moves an engine from one physical site to another would not be affected as long as ownership of the engi ne does not change hands. In the case where ownership of the engine changes, only those engines that meet the

cleanest-available emission limits would be allowed to conti nue operation within the District’s boundaries. Engines not meet ing the latest federal emission limits

could be sold to areas out side the District, but would be prohibited from operating within the Valley.

21. COMMENT: The cost effectiveness for NOx reductions from rich burn and for lean burn engines exceeds the maximums cost effectiveness threshold for NOx established by the District Governing Board. The District should seriously consider forgoing the adoption of control measures where the cost effectiveness

of the reductions achieved exceed the maximum cost effectiveness thresholds established by the District’s Governing Board in the BACT Cost Effectiveness

Threshold adopted on May 14, 2008. (WSPA, SCG)

RESPONSE: The cost effectiveness threshold adopted in 2008 relates to obtaining permits for new and modified source s and is not used for rule projects. Rule projects use a combination of t he cost effectiveness and the socioeconomic impact analysis to determine the most effective control strategies.

22. COMMENT: The NOx reductions achieved fr om each engine are included in Appendix B. The annualized retrofit cost for each engine is r eported in Appendix C. However, the results of the cost effectiveness calculations for each engine are not included in the staff report. T he missing information is easily derived by combining the data sets r eported by the District in Appendices B and C. We

recommend that the informati on be included in the sta ff report prepared for this rule making session. (WSPA, SCG)

RESPONSE: The Final Draft Staff Report has been updated with a discussion

that addresses the comment. It is important to note th at the rule has an annual fee option as a compliance option that is not included in the aforementioned tables. Please see Appendix C of the Fi nal Draft Staff Report for the detailed

discussion.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 19 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 23. COMMENT: The District should do a comprehensiv e review of the test methods cited in both rules; some of the test methods cited are not commonly used by local laboratories and the local laboratories have more commonly used test methods that are just as e ffective or more effective t han the test methods cited in

the rules. In some case s, test methods have actually been superseded by new methods and the superseded methods ar e no longer supported. The rules should be written such that new equiva lent test methods approved by EPA

and/or ARB can be used. Test methods cited should not include the “dash number” (indicating year method revision) unl ess there is something very specific

to that version of the test method that is essential in showing compliance with the

rule. If the “dash numbers” are included, they get inco rporated into conditions in Title V permits, then when the test method is revised, a new “dash number” is assigned, and the Title V Permit holder can no longer comply with the condition. (AERA)

RESPONSE: EPA given the general guidance to include the dash # for ASTM test methods be included in rule language. Existing rule language for Rule 4702 provides operators to use “or any other method approved by EPA and the APCO”; meaning that if EPA has appr oved a more recent versio n of an ASTM, it can be

used as a test method. Please see Section 7.4 for this test met hod language. Rule 2020 is not a prohibitory rule, and la nguage in Rule 2020 includes language allowing for the most recent EPA approved version of the ASTM test methods, or alternative test methods for compliance for most of the ASTM test methods mentioned in rule langua ge. It is also impo rtant to note that operator concerns with specific language in a permit should be addres sed with the permit s department and handled by the Title V permit department.

24. COMMENT: EMA supports the staff revisions to the June 2010 version of the

draft rule that maintain current VOC and CO emission levels for all engines and NOx levels for waste gas, cyclic-loaded, and limited-use engines. (EMA)

RESPONSE: The District appreciates the support of the commentor on proposed amendments.

25. COMMENT: The District should include an alte rnate NOx emission standard for existing engines equivalent to 90% reducti on from uncontrolled NOx levels. It is likely that some existing engines will be able to achieve the proposed emissions limit of 11 ppm. However, older engi nes were not necessarily engineered to work together with advanced air-fuel ra tion controllers and after treatment systems needed to meet the proposed standar d. In some cases, it may be impossible to retrofit ex isting engines with the cont rols and after treatments systems to meet the 1 1ppm standard. Because compliance with an 11ppm standard is not achievable for all engines, Rule 4702 should include an alternative NOx standard equi valent to a 90% reduction in emissions. Such an option would allow owners and operators to continue to us e existing engines thatSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 20 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 cannot effectively meet an 11ppm NOx emi ssion level, but may be able to add after treatment systems to reduce engine-out NOx by 90%. (EMA)

RESPONSE: The District is proposing to remove the percent reduction option

from the rule. As envisioned in t he ARB RACT/BARCT for engines, the 90%

reduction is across the emission control device and not from a theoretical uncontrolled emission factor. Enforcing the percent control across the control device would add even more cost as operat ors would have to install a test port between the engine exhaust and the control dev ice as well as the cost of the additional source testing.

26. COMMENT: More discussion regarding the cost -effectiveness of the rule is needed in the staff report. O ne aspect of the cost-effect iveness calculations is

incorrect. Staff makes the assumption that compliance costs essentially increase linearly with engine size and make the comment that the some of the higher compliance cost estimates submitted to the District are likely associated with the complexity of larger engines. In fact, compliance costs for smaller, lean-burn engines will be relatively higher compared to much larger engines since there are baseline controls and systems that must be established for all engine sizes and

then incremental costs increases as the si ze of catalyst beds and urea tanks are scaled up with engine size. Retrofit and co mpliance costs for operators of small engines will be relatively higher compar ed to costs associated with larger engines. (EMA)

RESPONSE: Throughout the rule project, District staff has requested that

stakeholders submit cost information to enhance the compliance cost analysis. The information in the cost analysis r epresents the data made available to

District staff.

27. COMMENT: Section 4.3.2 exempts engines regi stered in the Statewide Portable Equipment Registration Program (PERP) from Ru le 4702 except for the administrative requirements in Secti on 6.2.3. The PERP regulation was amended earlier this year to reduce record-keeping requirements. PERP engines registered to Providers of Public Services (PEPS) now have zero recordkeeping and reporting requirements. Sect ion 6.2.3 requires record-keeping that is not required by ARB PERP. Th is puts a record-keeping burden on our company that ARB recognized and rectif ied by removing that burden from the PERP regulation. PERP engine record-keeping would be required in the SJVAPCD only thus requiring us to di fferentiate the use of our PERP engines

inside and outside the SJVAPCD. (PG&E)

RESPONSE: Staff has researched the ARB PER P and has come to the same conclusion as ARB regarding these reco rdkeeping requirement s. The Proposed

Rule has been amended to remove the recordkeeping requirement. Please seeSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 21 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 Section 4.1.6 of the Propos ed Rule for new language and re fer to the final draft staff report for the discussion.

28. COMMENT: Remove the term “Existing” from sections 3.17 and Section 5 Table 2. It has been demonstrated that cyc lic loaded engines cannot achieve or maintain a high enough exhaust gas temper ature to effectively make a catalyst operate at manufacturer’s re commended performance specif ications. This issue

is relevant whether or not the cyclic loaded engine is “n ew” or “existing”. (VPC)

RESPONSE: After evaluating stakeholde r comments, the suggested change has been made. See proposed rule for changes.

29. COMMENT: Basing an engine type, (rich or lean- burn) with same characteristics cannot feasibly be done because of the desi gn technology built into a lean-burn engine, which is nothing like a rich-burn. If the NOx limit for the 6 water supply facilities were allowed 50 ppm limit from your proposed 11 ppm, the net increase would be .04 tons/day. West Kern Water District is requesting that a limit of 50 ppm be given to the water suppliers, which is the same as given to Limited Use, Cyclic Loaded and Waste Gas Fired IC engines. (WKWD)

RESPONSE: Staff believes, based on the best available information to us at this time, that SCR controls are technol ogically feasible for these engines. The

District does understand that there are cost s associated with these changes and

those costs are reflected in t he cost effectiveness analysis and the socioeconomic analysis. Staff also feels that it is important to point out that the District has provided alternatives for co mpliance including the addition of the limited use category, the annual f ee option, and an extended phased in compliance schedule.

30. COMMENT: 40 CFR 63 Subpart ZZZZ will require lean-burn engines to meet a

carbon monoxide emission limit which can be achieved with a much less expensive oxidation catalyst with minimal facility modifications. The Air District should hold a workshop or workshops to cover how 40 CFR 63 Subpart ZZZZ and Rule 4702 Phase 2 will affect industry. Cover exactly what requirements will be added facility wide and permit units prior to any final decision on proposed

Rule 4702 Phase 2. Cover both Title V and Non Title V facilities. (WKWD)

RESPONSE: This section of the CFR covers most internal combustion engines, not just spark-ignited ones and the car bon monoxide limit is only one of many possible requirements of t he federal regulation. O perators with questions can

contact the District’s Small Business A ssistance Program to discuss how Rule 4702 and Subpart ZZZZ affect their particula r operation. The operator does not

need to be a small business to utilize this service.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 22 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 31. COMMENT: Will the Air District be submi tting data that assures accurate

reduction numbers from t he fees that are being collected? (WKWD)

RESPONSE: The District operates highly successful and efficient incentive programs; some of which are funded by local, state, and federal grants. The District has required and enforced usage ob ligations to ensure that predicted

emission reductions have been achieved. T he District submits regular reports to state and federal government agencies as well as an Annual Report to the community that detail how funds were spent and the emission reductions associated with grant program projects. Recent audits by the ARB, Department of Finance, and the California Bureau of State Audits c oncurred that the District has a robust incentive program that is one of the best in the state. Additionally, several of the District practices were included as best management practices in the 2008 Carl Moyer Guidelines.

32. COMMENT: Appendix B IV Emission Reduction Analysis, Your conservative number of 3 engines that w ould electrify out of 67 affected engines will offset the net increase in GHG emissions. Can you show how that assessment was done? (WKWD)

RESPONSE: Appendix B has been revised to include language explaining this assessment. Please refer to Ap pendix B for this language.

33. COMMENT: Appendix C IV, A 2 Lean-Burn Engines, West Kern Water District feels that your cost effective number is inaccurate. The Air District should have

Staff research actual costs as well as getting information from Stakeholders. Anytime you force industry to install cont rol equipment like an SCR for lean-burn engines as the only option, or throwing money into a pool to reduce someone else’s pollution when the st ationary source owners have already spent so much money just isn’t right. It should be the re sponsibility of the regulator to give

accurate cost numbers in their reports. (WKWD)

RESPONSE: District staff has worked dilige ntly with our Permit Services Department, vendors, and other stakeholder s to reflect the best available information, including the costs submitt ed by the commentor and the District has revised Appendix C to include this new data. Please refer to Appendix C for more

details.

34. COMMENT: The District acknowledged that reducing NOx from lean-burn engines would be extremely costly since it entails installing S CR. Consequently,

WSPA and other stakeholders have been repeatedly recommending that control requirements for lean-burn engines remain at the current control level. WSPA continues this recommendation. (WSPA, SCG)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 23 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: The District made the commitment to achieve NOx emission

reductions from this source cat egory, and meets this commitment by acknowledging that in some cases it ma y be costly to comply with rule standards, and providing alternatives for complianc e. The rule has been crafted with different categories of engines with vary ing requirements, provided phased in compliance dates for certain engine cat egories, and the District has provided compliance options such as the annual fee payment option and the alternative emission control plan for certain engine types.

35. COMMENT: Given that the reductions achieved by this rule are not committed to in the SIP and given the extremely high cost of the control equ ipment required to meet the proposed NOx limit s, WSPA requests that the compliance timeline be extended to 2018 with full complianc e by 2020. (WSPA, SCG)

RESPONSE: While staff recognizes that ther e is not a specif ic NOx reduction commitment in the attainment plans, we are committed to obtaining emission reductions as expeditiously practical, technologically feasible, and economically

reasonable. Staff feels t hat providing a nine year compliance schedule would be counterproductive to the dual path stra tegy adopted by our Governing Board during the adoption of the 2007 Ozone Plan. Staff is proposing to extend the compliance deadline for operators with more than 12 engines until 2017. Please

refer to the Final Draft St aff Report for further explanat ion of this proposal and refer to the Proposed Rule for the new timeline language.

36. COMMENT: The District reports that the total annual cost to retrofit 227 engines is likely to range between 11.3 million and 41.3 million dollars annually. This information is misleading. The costs repor ted by the District are not the total costs, but is the average cost incurred each year over a ten year period. The

actual installation cost is ten time s greater than the r eported costs; a range

between 114.5 million and 414.8 million dollars. (WSPA)

RESPONSE: The statement that the cost range provided in the cost effectiveness analysis is an annualized co st is a correct statement. Language has been added to the cost effectiveness analysis discussion and to Table 1 of Appendix C that clar ifies that this range is an annualized number. Please see Appendix C for this discussion.

37. COMMENT: The District dismisses the impac ts resulting from the proposed controls by pointing out t hat the operator can pay a fee to operate the equipment.

Given the fact that the fees will continue for the life of the equipment and source operators with multiple engines will pay multiple fees, the cost of the fee option can be prohibitive. While we support the in clusion of the fee option, we object to the use of such an option in an effort to dismiss the adverse economic impacts resulting from the adoption of dr aft amendments. (WSPA, SCG)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 24 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: The impacts of the proposed cont rols have been accounted for in the cost effectiveness analysis, and thos e impacts have been submitted to the

economist for inclusion into the so cioeconomic impact report and will be presented to the Governing Board as a par t of the rule package. However, the District has crafted the proposed rule with many compliance options that can help mitigate the fiscal impacts to a facility, should they choose to take advantage of

them.

38. COMMENT: On January 10, 2008 the EPA conclu ded that the District Rule 4702 satisfied federal requirement s as RACM and RACT. On March 8, 2010 in their approval of the District Ozone Plan, EPA aga in concluded that existing rule 4702 satisfies RACM and RACT. According to the District, EPA contends that an 11ppmv NOx limit is RACT for lean-burn in ternal combustion engines. The EPA

claim is based on the SCAQMD Rule 11 10.2. However, within the SCAQMD, engines located at major stationary s ources are subject to “RECLAIM” and operators are allowed to provide equivalent NOx reductions from other equipment in lieu of retr ofitting engines. During the January 18, 2011 stakeholder meeting, Mr. Gregg Arney, of the “Team Leader Gas Engineering and Air Quality and Compressor Services” for Sempra Energy testified that to the best of his knowledge not a single lean- burn engine operating in the SCAQMD was actually retrofit to meet an 11 ppmv NOx limit. Ou r understanding is that the

District verified this information with SCAQMD. WSPA believes the EPA

conclusion that RACT for lean-burn engines at 11 ppmv NOx is unfounded. (WSPA, SCG)

RESPONSE: District staff has confirmed the NO x limits in the SCAQMD. Staff

has also confirmed the ex istence of the RECLAIM pr ogram as an alternative compliance method. Staff would like to point out that our proposed Rule 4702 also provides alternative options for co mpliance with the 11 pp mv NOx limits.

39. COMMENT: Neither the EPA nor the District has shown the retrofit requirements proposed for lean-burn engines to be achieved in practice. How can the District support such a proposal given th e fact that in the Staff Report they conclude that the, “... NOx limit may not be actually ac hieved-in-practice for many classes of engines.” The District has an obligation to ensure that retr ofit requirements contained in their regulations are bas ed on available control technology, demonstrated to be achieved-in-practice. Consequently WSPA is opposed to the proposed control requirements for l ean-burn engines. We recommend the requirements for lean-burn engines contained in existing Rule 4702 be retained. 11ppmv for lean burn engines has only been achieved in engines installed under NSR because they were engineered that way from the beginning. The controls are too expensive and too sophisticated and they can’t meet manufacture guarantee. Does any manufacturer guar antee 11 ppm for retrofit? (SCG (WSPA, SCG)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 25 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: While the 11 ppmvd limit may not be achievable for all lean-burn engines, there are many engi nes within the District’s boundaries that are already operating at or below this limit. For this reason, the proposed rule does contain a provision for certain lean-burn engines to have the stringent NOx limit.

40. COMMENT: The rule has a new definition for higher heating value (hhv) which includes a section for source testing. This will require us to send certifications to each facility that the fuel meets the hhv requirements, and this could become onerous. Also, we use different test me thods then the ASTM test methods listed in the rule. (SCG)

RESPONSE: The proposed rule language does not require multiple submissions of the hhv of the fuel, t herefore once a certification has been submitted to a facility it would not need to be resubmitt ed unless the compositi on of the fuel is changed. Also, Section 6.4 allows a prov ision that any other test method than those listed can be used as long as they are approved by the APCO and the EPA. This provides flexibility for oper ators to comply with test methods.

41. COMMENT: EPA just disapproved the Santa Barbara engine rule. EPA’s reasoning behind the disapprov al of that rule was bec ause they say portable analyzers are good tools but t hey will still require a s ource test any time an

exceedance is discovered with a portable analyzer. (SCG)

RESPONSE: District staff will continue to inve stigate the issues that Santa Barbara County APCD is encountering with their engine rule and make amendments to our rule as appropriate.

42. COMMENT: The SCAQMD RECLAIM program is much more flexible and less expensive than the fees allowed for th is rule; the District should adopt the RECLAIM fee program instead. (SCG)

RESPONSE: Although the South Coast RECLAI M Program (RP) appears to be more flexible and less expensive, ther e is no way to directly compare the program with the annual fee r equirement being imposed by Rule 4702. Firstly, the RP is applicable to the entire facili ty and not specifically associated with a singular rule. In addition, the RP establishes RECLAIM credits based on historical emissions and uses a cap and trade system to govern the program. In fact, the money generated through the RP is only beneficial to the credit holders, whereas the annual fee paym ent program associated wi th Rule 4702 will be utilized by the District to purchase additi onal emissions reductions which will go

towards attainment.

43. COMMENT: Only the voters can raise the ra tes, we are non-profit and cannot

absorb the costs incurred because of this ru le. The most recent rate increases

were due to a combination of this rule and increased energy costs. (SCG)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Re sponses August 18, 2011

A - 26 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 RESPONSE: The socioeconomic analysis cons iders the differences between private and public industries and includes a di scussion in the report to that effect. Please see the socioeconomic analysis report for this discussion.