UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX AIR DIVISION

Supplemental Technical Support Document

F or

EPA’s Rulemaking

for the South Coast Air Quality Management District portion of the

California State Implementation Plan

CPV Sentinel Energy Project AB 1318 Tracking System

– Source

- specific SIP Revision

Prepared by Laura Yannayon

Reviewed by Gerardo Rios

August 9 , 20121 I. BACKGROUND DISCUSSION

A. Timeline Summary of Actions R elated to T his Rulemaking

The South Coast Air Quality Management District ( District ) adopted the CPV Sentinel Energy Project AB 1318 Tracking System on July 9, 2010. The California Air Resources Board (CARB) submitted the CPV Sentinel Energy Project AB 1318 Tracking System to EPA as a source specific SIP (State Implementation Plan) revisi on on September 10, 2010. EPA issued a completeness letter on October 27, 2010, finding that the submittal had met the completeness criteria in 40 CFR Part 51 Appendix V

. EPA proposed approval of the source specific SIP revision on January 13, 2011. On Apr il 20, 2011, EPA responded to comments and finalized approval of the source specific SIP revision. (76 FR 22038) California Communities Against Toxics (CCAT) and Communitie s for a Better Environment ( CBE ) filed a petition for review with the United States Court of Appeals for the Ninth Circuit. On July 26, 2011, CCAT filed their Opening Brief. CCAT and CBE’s Opening Brief set forth some detailed assertions regarding the quantification and surplus adjustments of the offset

transactions in the AB 1318 Trackin g System. The detailed arguments that CCAT and CBE included in their Ninth Circuit Opening Brief were not included in their comments on our proposed rulemaking.

On September 1 4 , 2011, EPA filed a motion request ing the Court to remand the rulemaking

to all ow EPA to supplement the record and provide additional justification for our action. Although the Ninth Circuit summarily denied this motion, several months later after briefing and oral argument, the Court remanded the rulemaking to EPA for additional jus tification.

The Court did no t vacate the rule upon remand. This technical support document (TSD) supports EPA’s supplemental notice of Proposed Rulemaking action for the CPV Sentinel Energy Project AB 1318 Tracking System as a source specific SIP revision.

B. Summary of EPA’s April 20, 2010 Rulemaking

On April 20, 2010, EPA published a final rulemaking (76 FR 22038) approving the CPV Sentinel Energy Project AB 1318 Tracking System as a source

- specific SIP revision to the South Coast portion of the California SIP. Please refer to our prior rulemaking for sp ecific

additional information. The SIP revision consists of enabling language an d the AB 1318 Tracking System. The SIP revision allows the District to transfer offsets for particulate matter less than 10 microns in diameter (PM 10 ) and one of its precurs ors, sulfur oxides (SO

x ),

from the District’s internal offset account to the AB 1318 Tracking System , for use by the CPV Sentinel Energy Project.

As part of that rulemaking, EPA evaluated whether the specific offsets included in the AB 1318 Tracking Syst em m et the federal criteria of being real, quantifiable, surp lus, permanent,

and en forceable emission reductions. EPA’s evaluation wa s based on our review of the

District’s supporting documentation , generally the “Offset Verification Forms” (OVF) and

the attachments the District submitted for each offset included in the AB1318 Tracking System. Because the quantity of offsets placed into the Tracking System was greater than the amount of offsets required by the Sentinel Energy P roject, EPA only revi ewed the supporting2 documentation for as many shutdown emission units as necessary to verify the needed quantity of offsets were provided. EPA explained the scope of our analysis by stating in the April 20, 2011, NFRM (Notice of Final Rulemaking) that “ EPA reviewed the submitted documentation demonstrating that a sufficient number of these specific emissions credits being transferred meet the federal integrity criteria required by section 173 of the CAA. ”

C. Summary of EPA’s Current Rulemaking Action

In thi s Supplemental TSD, EPA is providing additional information regarding our prior determination that at least 118,120 lbs of PM 10 and 13,928 lbs of SO

x offsets meet the requirements of Section 173 as transferred by the District into the AB 1318 Tracking Syst em. This TSD and Attachment A provide more detailed explanation s of our evaluation of those specific offsets we have determined meet the CAA Section 173 integrity requirements. EPA

reviewed each OVF submitted by the District as part of the source

- specific SIP revision. In some cases, EPA made additional adjustments, as shown in the column labeled “Verified Emissions 8/9/12” of Attachment A, to ensure emissions were quantified and surplus adjusted properly. Some examples of these adjustments, are (1) determi ning the appropriate percentage of PM to be attributed to PM 10 , (2) refining the surplus adjustment to account for new emission factors (EF) applied to certain rules as of the date the District issued the permit, or (3) ensuring that the same representativ e period was used for all shutdown equipment at a facility. A discussion of each emission unit for which EPA made an adjustment is provided in Section II. below.

Attachment A of this TSD lists each of the emission units for which EPA has determined the offset integrity criteria have been met

. The information provided in Attachment A includes the company name, equipment description, application number, year of shutdown, date for Year 1 and Year 2 data, emissions from Year 1 and Year 2, annual average emis sions, emissions verified for the December 29, 2010 TSD, and emissions verified for this August 9,

2012 TSD.

II. EVALUATION

A. Evaluation of Quantification Offset Criteria

EPA has determined that t he offsets listed in Attachment A are quantifiable as required by

Section 173. For the shutdown equipment listed, the offsets are quantifiable because the District provided OVFs that evaluate the emission data prior to shutdown in addition to other supporting information.

EPA concurs wi th the District’s evaluation, except as noted below in this TSD, for all of the

offsets listed in Attachment A. (See also TSD dated December 29, 2010, Section V. B.2.) EPA made the following revisions for two sources to ensure the offsets were properly

quan tified.3 1. Quantification: Adjustments to Account for PM 10 Portion of Reported PM

The District’s Annual Emission Report (AER) collects data on particulate matter (PM) emissions. The offsets needed for the Sentinel Energy Project are for PM 10 emissions. Therefore, as part of the offset verification process, the District need ed to determin e what portion of the reported PM emissions were also PM 10 emissions. For emission units combusting natural gas, the District correctly determined that 100% o f the PM emissions

are PM 10 or smaller emissions . This quantification is based on historical source test data for various natural gas combustion operations, as established in EPA’s AP

- 42 EF s for natural gas combustion sources. 1 For non

- combustion emission units, the District correctly determined that 50% of the PM emissions are assumed to be PM 10 emissions or

smaller. This quantification is based on PM and PM 10 source test data from various aggregate processing operations as compiled in EPA’s AP

- 42 Section 11.19. 2 Thus for

some of the non

- combustion emission units, such as the equipment shut down at Chandler Aggregates, the calculated “ Annual Average ” emissions were multiplied by

50% to determine the amount of PM 10 emissions that would be available as offsets . Th e District’s 50% PM 10 adjustment for non

- combustion emissions units was not always clearly detailed on the OVF’s, however EPA has verified that the offsets from each non

combustion emissions unit were properly adjusted as shown in Attachment A

.

AAA Glass Corporation operated a glass manufacturing facility. Furnace #1 (A/N C41204) was shutdown in 2001, while Furnace #2 (A/N 222144) was shutdown in 2005. The AER’s for each of these emission units separately quantified the amount of PM

emissions coming from the burning of natural gas to heat the furnace (a combustion emission unit) , and from the operation of the furnace itself (a non

- combustion emission unit)

. As stated above, based on EPA’s AP

- 42

, 100% of the PM emissions from the

combustion of n atural gas are properly quantified as PM 10 offset s. The District also applied this assumption to the PM emissions from the furnace. However, based on ARB speciation profiles for glass manufacturing facilities, only 98% of the PM emissions from

these non

- combustion units (i.e., the furnaces) are PM 10

. 3 Therefore, EPA adjusted the

amount of PM 10 offset s from both furnaces to reduce the quantities by two percent.

A djust ing the PM emissions from the two furnaces by 98% resulted in a 26 lbs redu ction of reported PM 10 offset s from this facility.

2. Quantification: Adjustments to Account for Most Representative Baseline Year

For Diamond Pacific Products EPA noted that different shutdown and baseline years had been used for associated equipment at the facility. The following table shows the Diamond Pacific Products data in the Attachment A spreadsheet for PM 10 emissions.

1 See AP 42, Fifth Edition, Volume I, Chapter 1: External Combustion Sources, pg 1.4

- 3

2 See AP 42, Fifth Edition, Volume I, Chapter 11: Introduction to Mineral Products Industry . T able 11.19.2 Emission Factors for Crushed Stone Processing Operations

3 California Emission Invent ory and Reporting System (CEIDARS), Particulate Matter (PM) Speciation Profiles:

See http://www.arb.ca.gov/ei/speciate/dnldopt.htm#specprof4 Equipment Description App. # Year

Shut

down Year 1

Data Year 1 (lbs/yr) Year 2

Data Year 2 (lbs/yr) Annual Average (lbs/yr) Verified

Emissions
12/29/10 1 (lbs/yr) Verified

Emissions

8/9/12 2 (lbs/yr)

Bulk Load Truck (1 Rack) Grain 289836 2004 04

- 05 72 03

- 04 311 191.4 96 NA

Bulk Load Truck (1 Rack) Grain

EPA Revis ion 289836 2004 03

- 04 311 02

- 03 403 356.8 NA 178

Livestock Feed Rolling And Steam Flaking 289835 2005 04

- 05 1,155 03

- 04 12,774 6,964.4 3,482 NA

Livestock Feed Rolling And Steam Flaking

EPA Revis ion 289835 2005 03

- 04 12,774 02

- 03 10,370 11,572.0 NA 5,786

The supplemental documentation provided with the OVF’s showed the facility AER data

for reporting years 20 00

- 20 01 through 20 04

- 20 05 for each piece of equipment in the process line. (The reporting year begins on July 1 st of each year. For example, the 2000

- 2001 reporting year begins on July 1, 2000 and ends on June 30 , 2001 and is referred to

as the 00

- 01 reporting year.) After consultation with the District, EPA determined that the facility had surrendered their permits in November 2004, and thus had only operated a few months during the 04

- 05 reporting period , which began on July 1, 200 4

. Therefore that period was not representative of normal operations in that it did not represent annual emissions from the equipment. Therefore, as shown above, EPA revised the Year 1 and 2

data for the emission units shown above to re flect the most recent two years for which complete annual operating data was available. This adjustment increased the amount of

credited offsets from the Bulk Load Truck from 96 to 178 lbs and from the Livestock Feed Rolling and Steam Flaking from 3,482 lb s to 5,786 lbs.

B

. Evaluation of Surplus Offset Criteria

EPA has determined that t he offsets listed in Attachment A are surplus as required by Section 173. (See also TSD dated December 29, 2010, Section V.B.3 .) EPA made the following

revisions for four sources to ensure the offsets were surplus a t the time of use (i.e. when the permit was issued for the Sentinel Energy Project)

.

1

. Surplus: Adjustments to Account for Additional Rule 1157 Requirements

E ach of the facilities listed below shut down equipment subject to Rule 1157

– PM 10 Emission Reductions from Aggregate and Related Operations

. Rule 1157 was adopted by the District in January 2005. At rule adoption, the District calculated a baseline inventory for each facility subject to the rule an d established EFs for each phase of operations at a facility, such as loading and unloading activit ies , hoppers and surge bins, conveyor transfer points, crushers, screens, milling equipment, and truck load

- outs. An industry association, t he California Min ing Association, challenged Rule 1157 and the litigation

resulted in a settlement. Pursuant to the settlement agreement, in December 2006 the

District revised the facilities’ baseline inventories and the EFs used for emission units5 operating in compliance with Rule 1157 requirements. 4 Based on the settlement agreement, the District published new PM EF s to provide guidance to sources subject to Rule 1157 when calculating their emission inventories. 5

The following shutdown facilities included in the AB 1318 Tracking System would be subject to the requirements of Rule 1157 if they were still operating: Chandler Aggregates, Oldcastle Westile, Elsinore Ready

- Mix, and Whitewater Rock and Supply

. For each of these facilities, in consultation with the District, EP A revised the system

wide controlled EF for each facility based on the new June 2007 EFs guidance for sources subject to Rule 1157. P lease see Attachment B of this TSD, which includes the additional information provided by the District.

Chandler Aggregates

Chandler Aggregates operated an aggregate processing system consisting of numerous hoppers, feeders, crushers, screens, and conveyors to produce various sizes of aggregate products . The facility used a system wide controlled PM 10 EF of 11.87 lbs /1,000 tons of throughput in its AER for the reporting periods of 03

- 04 and 04

- 05. Using the revised Rule 1157 EFs, the District calculated a new system wide controlled PM EF of 12.52 lbs/1,000 tons of throughput for this facility. Since the new Rule 1157 EF is higher than the EF used to quantify the AB 1318 Tracking System offsets, EPA has not made any additional adjustment to ensure the offse ts have been surplus adjusted. The verified emissions were not adjusted to reflect the higher 12.52 lbs/1,000 tons of throughput EF

.

Oldcastle Westile

Oldcastle Westile, Inc. operated a cement slurry system and sand handling systems to produce concrete roof tiles . EPA notes that the District used two different EFs in the

AER’s to determine baseline emissions. The reason two different EFs were used was because the District published new PM EF s , pursuant to the Rule 1157 settlement

agreement, for specific process equipment at Asphalt, Cement, Concret e and Aggregate

Product Plants in June 2007. To ensure the reported quantity of PM 10 offset s reflect any reductions otherwise required by Rule 1157, EPA recalculated the baseline emissions for both AERs using the reported throughputs and the revised June 2 007 Rule 1157 EFs. As shown in Attachment A, this resulted in the credited quantity of offsets being reduced

from 981 to 358 lbs. Only 358 lbs of offsets were credited for this source.

Elsinore Ready

- Mix

Elsinore Ready

- Mix operated a concrete batch plant (A/N 139185) and an aggregate handling system (A/N 229108) to produce various sizes of aggregate products. This facility reported PM emissions for the concrete batch plant and aggregate handling

systems in their AERs using an EF of 10 lbs/1,000 tons of throughput and 2 lbs/1,000

tons of throughput, respectively.

4 See Attachment C. L etter from Barry R. Wallerstein to Malcolm C. Weiss, Subject: Rule 1157

– PM10 Emission Reductions from Aggregate and Related Operations, dated December 15, 2006.

5 See Attachment D. South Coast AQMD document entitled “Particulate Matter (PM) Emission Factors For Processes/Equipment at Asphalt, Cement, Concrete and Aggregate Product Plants” dated June 2007.6 For the c oncrete batch plant the facility used a system wide controlled PM EF of 10 lbs/1,000 tons of throughput in its AER for the reporting period of 00

- 01. Using the revised Rule 1157 EFs, the District calculated a new system wide controlled PM EF of 9.68 lbs/1,000 tons of throughput for this facility. As shown in Attachment A, this resulted in the credited quantity of PM 10 offsets being reduced from 1,290 to 1,248 lb s. Only 1,248 lbs of off sets were credited for this facility.

The aggregate handling system is made of numerous pieces of equipment. If only 3 of the main pieces of equipment are reviewed, the jaw crusher and two screens, the revised Rule

1157 EF from June 2007 for these devices is 4.71 lbs/1,000 tons of throughput, which is significantly more than the 2 lbs/1,000 tons EF used to report emission in the AER for this process line. Since the new Rule 1157 EF is higher than the EF used to quantify the

amount of PM 10 offsets, EPA has not made an y additional adjustment to ensure the

offsets have b een surplus adjusted. The verified quantity of offsets in Attachment A are
, therefore, lower than what would have been allowed by Rule 1157 for this facility.

Whitewater Rock and Supply Whitewater operated two separate rock crushing and processing lines. AER data for these operations was only reported for year 06

- 07, the year prior to shutdown; therefore the quantity of emission reductions was based on this single year of reported emissio n data. To ensure the reported offset s reflect any emission reductions otherwise required by Rule 1157, the baseline emissions were recalculated using the reported throughputs and the

revised Rule 1157 EFs. 5 As shown in Attachment A, this resulted in the credited quantity of offsets being r educed from 2,821 to 95 lbs for A/N 120515, and from 2,015 to 68 lbs

for A/N 03115E. The reason for the significant difference in the quantity of offsets is because the facility use d uncontrolled EFs in its AER. The quan tified offsets were allocated between the two lines based on the capacity of each rock crushing processing line, which is correct because both lines are closed and the total PM 10 offset s are the same, regardless of how they are allocated.

C

. Evaluation of Permanent and Enforceable Offset Criteria

EPA has determined that t he offsets listed in Attachment A meet CAA Section 173’s requirements to be permanent and enforceable because the owner or operator surrendered the permits to the District. It is illegal under SCAQMD Rule 203 for any source to emit any amount of an air pollutant without a valid permit, unless the source is specifically exempted from this requirement under District Rule 219

– Equipment Not Requiring a Written Permit Pursuant to Regulation I I . The Federal government or local air agency may bring an enforcement action against a source operating without a permit. Citizens may also bring such actions because Rule 203 is included in the SIP. For these reasons,

when a source shuts down and surrend ers its permit to the District, its emissions reductions are permanent and enforceable. The source would be required to apply for a new permit, and provide new offsets, in order to operate again.7 III. EPA ACTION

The December 29, 2010, TSD provided a discussion of the five offset integrity criteria and how the emission reductions met each of these criteria. EPA continues to rely on the evaluation provided in our earlier TSD, but has supplemented certain subsections in this

TSD

.

As discussed above , t he CAA requires that NSR offsets be actual emission reductions which are quantifiable, surplu s, permanent, and enforceable. EPA has reviewed each of the OFVs and associated documents demonstrating the PM 10 and SO

x offset s listed in Attachment A

and submitt ed as part of this source

- s pecific SIP revision comply with the integrity criteria

. EPA has determined that more than 11 8

, 120 lbs of PM 10 offsets and 13,928 lbs of SO

x offsets in the AB 1318 Tracking System meet the necessary criteria, in that they are rea l, quantifiable, surplus, permanent and enforceable . Therefore, this source

- specific SIP revision

is approv able into the SIP and the offsets listed in Attachment A and included in the AB 1318 Tracking System are federally enforceable.

This source

- specific SIP revision complies with the EPA review criteria as discussed above and in our TSD dated December 29, 2010 ; therefore EPA i s propos ing full approval of the

SIP revision because it complies with all relevant CAA requirements and is consistent wit h

EPA’s regulations for NSR

.

ATTACHMENTS

A. Verified PM 10 and SO

x Offset Summaries

B. Additional information provided by South Coast AQMD, via email, dated August 8

, 2012, regarding Rule 1157 adjustments.

C. L etter from Barry R. Wallerstein to Malcolm C. Weiss, Subject: Rule 1157

– PM10 Emission Reductions from Aggregate and Related Operations, dated December 15, 2006.

D. SC AQMD Particulate Matter (PM) Emission Factors Guidance For Processes/Equipment at Asphalt, Cement, Concrete, and Aggreg ate Product Plants

, June

2007

.