SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 1 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

# APPENDIX A

COMMENTS AND RESPONSES FOR PROPOSED AMENDMENTS TO R ULE

4306 AND RULE 4307 AND PROPOSED NEW RULE 4320

October 16, 2008SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 2 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 SUMMARY OF SIGNIFICANT WRITTEN COMMENTS FROM THE FINAL COMMENT PERIOD ENDING SEPTEMBER 30, 2008

AND DISTRICT STAFF’S RESPONSES

EPA Comments:

1. COMMENT: The innovative fee provisions in proposed Rule 4320 raise complex issues related to EPA’s guidance on economic incentive pro grams (EIP). In 2006, EPA provided general comments on fee program strategies and approvability issues related to such programs, it is still not clear how any emi ssion reductions resulting from the fee provision would be achieved and quantified for SIP credit. Please let us know if you would like us to perform a more thorough analysis o f this provision at this time or if you would rather discuss some of the general issues fir st.

RESPONSE: The comments on the annual emissions fee provision in Rule 4320 might best be included in ongoing discussions between EPA and District staff on other issues involving SIP approvability and incentive programs.

2. COMMENT: In the staff report, the District notes that this r ule will help fulfill obligations from the District’s PM 2.5 plan. We understand tha t the District currently does not have any test data directly measuring PM 2.5 emissions f rom boilers. EPA Other Test Method 27, (formerly Conditional Test Method 40, se e: http://epa.gov/ttn/emc/prelim/otm27.pdf ), can be used to obtain these data. EPA encourages the District to use OTM 27 to directly m easure PM 2.5 emissions, and

consider future revisions to Rule 4306 based on tho se data.

RESPONSE: This suggestion will be considered by the District in any future revisions

to these rules.

ARB Comments:

Rule 4306 Boilers, Steam Generators, and Process Heaters – Ph ase 3

3. COMMENT: Section 5.2.1, in part, allows units to be test fir ed without triggering a tuneup requirement if the unit is otherwise not operate d during the year. ARB staff

recommends that the term “test fired” be limited in time by definition or in Section 5.2.1.

RESPONSE: It is not possible to create a single standard for test-firing. Test-firing requirements will vary in time and frequency depend ing on the use of a unit, e.g. hospital back-up units may have more frequent and l onger test-firing requirements than a commercial standby unit. Specific test-firing l imits are best set as permit conditions. Those units are limited in use by permit conditions so emissions are not expected to be significant during annual operations.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 3 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 4. COMMENT: The second sentence in Section 5.4.4 includes the w ord “periodically”. For improved clarity we recommend that the District provide a definition for the term “periodically” as it applies to this section.

Section 5.4.4 also allows one master meter to measu re fuel to a group of similar units to show the annual fuel energy input to be less than 9 .0 billion Btu per calendar year. Since it would be impossible to tell how the fuel w as distributed, and because any one unit could be exceeding the limit, ARB staff recomm ends that language be added to clarify that, if the combined group exceeds 9.0 bil lion Btu annually, all units in the group will be subject to the standards of Section 5.2.

RESPONSE: The need to compensate the volumetric flow measurem ents will depend on the meter and operating parameters so it is not possible to specify a specific calibration period in the rule. Automatically req uiring all units in a jointly metered group to comply with the more stringent emission limits r ule in case of an exceedance could be excessively punitive. Any such determination i s best made on a case-by-case basis by the Compliance Section should a violation occur.

Rule 4307 Boilers, Steam Generators, and Process Heaters – 2. 0 MMBtu/hr to 5.0

MMBtu/hr

5. COMMENT: We commend the District for removing the exemption for units used at schools. We would also encourage the District to c onsider shortening the time allowed to comply with the emission limitations from July 1 , 2015 to July 1, 2012 similar to the proposed deadlines in other district’s rules.

RESPONSE: The rules are not directly comparable due to higher fuel use exemption levels in the other districts’ rules (9 billion Bt u/yr versus 1.8 billion Btu/yr), the exemption of units less than 10 MMBtu/hr in the Bay Area’s rule and the District’s requirement for a much lower emission limit (9 ppmv NOx) for new or replacement units. The units in question are small or low-use units wh ich were not considered to be cost

effective to include in the last round of rule maki ng. By providing the longer compliance schedule for these units, operators can better reco ver their investment, thereby reducing the cost-effectiveness of the rule by lowe ring the residual equipment value.

6. COMMENT: ARB staff recommends that the term “test fired” be limited in time by

definition or in Sections 5.2.1.1 and 5.5.1.2.

RESPONSE: Please see response to Comment #3.

7. COMMENT: Section 5.5.2 allows one master meter to measure fu el to a group of similar units to show the annual fuel energy input to be less than 5.0 billion Btu or 1.8 billion Btu, as appropriate, per Section 5.2.1 or S ection 5.2.2. Since it would be impossible to tell how the fuel was distributed, an d because any one unit could be exceeding the limit, ARB staff recommends that lang uage be added to clarify that if theSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 4 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 combined group exceeds 5.0 billion Btu annually, as appropriate, that all units in the group will be subject to the standards of Section 5 .2.1 or Section 5.2.2, as appropriate.

RESPONSE: Please see response to Comment #4.

8. COMMENT: The emission limits in Table 2 apply to new and rep lacement units. To improve enforceability of the rule, ARB staff recom mends that the term “replacement

unit” be defined in Section 3.0.

RESPONSE: The rule uses the plain English meaning of replac ement and the rule definition of unit and replacement unit does not ha ve a special meaning as defined in

other rules. For the purpose of Table 2, replacement of a “unit” , as defined in the rule, does not include just a burner replacement. If onl y a burner were replaced, the unit, that contains that burner, would still be subject to the 30 ppmv NOx limit and not 9 ppmv limit.

Rule 4320 Advanced Emission Reduction Options for Boilers, St eam Generators, and

Process Heaters Greater Than 5.0 MMBtu/hr

9. COMMENT: Section 5.5.1, in part, allows units to be test fir ed without triggering a tuneup requirement if the unit is otherwise not operate d during the year. ARB staff

recommends that the term “test fired” be limited in time by definition or in Section 5.5.1.

RESPONSE: Please see response to Comment #3.

10. COMMENT: Section 5.7.3 allows one master meter to measure fu el to a group of similar units to show the annual fuel energy input to be less than 1.8 billion Btu per calendar year. Since it would be impossible to tel l how the fuel was distributed, and because any one unit could be exceeding the limit, ARB staff recommends that language be added to clarify that if the combined g roup exceeds 1.8 billion Btu per calendar year that all units in the group will be s ubject to the standards of Section 5.5.

RESPONSE: Please see response to Comment #4.

Industry Comments:

Comments were received from the following stakehold ers: Big West of California, LLC, (BWC) California Independent Petroleum Association, (CIPA ) Enovity, Inc., (EI) Independent Oil Producers Agency, (IOPA) Kern Oil & Refining Co., (KERN) Plains LPG Services, L.P., (PLPG) Western States Petroleum Association, (WSPA) Any further comments received, will be included in the Final Staff Report.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 5 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 11. COMMENT: During our discussions with District staff and mana gement, District staff and management committed to continue working with m embers of the Refiners Council to develop an alternative, refinery-specific rule f or the units covered by Rule 4320.

We proposed implementation of a facility-specific " bubble" concept, so that each refinery would have the option of complying through achievement of NOx reductions across all of its covered units. This would provide refiners with the opportunity to 'overcomply' through installation of SCR technology wher e it was practical and cost-effective to do so, providing greater flexibility and opportu nities for refiners to creatively manage their overall NOx emissions. (BWC), (KERN), (PLPG)

RESPONSE: Future rule development concerning refinery units may be accomplished through creating a separate rule applicable to them . Other air districts in and out of California have taken this approach. Similarly the District may seek emissions reductions by focusing on a refinery’s summative em issions.

12. COMMENT: We understand you will look to see whether the staf f report can explain how Rule 4320 will not re-establish BACT. As you k now, BACT is the more stringent of: Achieved in practice, required by a SIP/local air r egulation, or cost-effective and technically feasible. (BWC), (PLPG)

RESPONSE: The NOx emission limits of Rule 4320 would require the very forefront of controls for boilers, steam generators, and process heaters. The District has not sought to reestablish Best Available Control Technology (B ACT) through the implementation of these advanced limits. Rule 4320 includes an optio n to pay an emissions fee in addition to the option to meet the control requirements. A BACT analysis would have to consider the impacts of that option, not merely the proposed emission limits.

13. COMMENT: The proposed compliance dates in Table 1, Category C are overly

burdensome. Several of our members have made subst antial capital investments in order to comply with current SJVUAPCD Rules 4306 an d 4320. That rule required these operators to install equipment on a phased co mpliance schedule. At least 25% of their equipment was required to be in compliance by June 1, 2005, 62.5% of their equipment by June 1, 2006 and the remainder by June 7, 2007. (CIPA), (IOPA)

RESPONSE: District staff accepted stakeholder input and sugg ested changes to the initial compliance deadlines. The proposed complia nce deadlines have already been appropriately modified.

14. COMMENT: A requirement in Section 5.4.1.3 of this rule requi res operators to install and properly operate emission control systems to re duce SO 2 by 95% by the NO

x compliance deadline. The steam generator exhaust w ill be limited to a 9 ppm

v concentration. According to the District Staff fig ures, these control systems will increase the costs of reducing the NO

x emissions between $16,438 and $230,608 per ton of NO

x reduced. We are concerned that District Staff have included cost-effectivenessSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 6 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 numbers for SO 2 control equipment and then expressed them in terms of $/ton of NO

x reduced. We requests that this requirement be revi sed to accurately express the true cost. (CIPA), (IOPA)

RESPONSE: Table C-14 lists the SO 2 control equipment cost effectiveness and the final column mistakenly reads $/ton NOx. The units should read $/ton SO 2 . These costs are analyzed separately as suggested. The co st for SO 2 control equipment as stated would add to the overall costs including NOx control equipment costs. The District has mitigated the additional SO 2 control equipment costs by including several options for particulate matter control. Most units would comply by firing on PUC quality natural gas or by limiting fuel sulfur content.

15. COMMENT: Based on additional information obtained outside th is process, if urea is used to control NOx emissions, then the requirement is 5.0 lbs/hr/unit. Based on your Emissions Reduction Analysis, there will be 1,176 u nits affected by this rule and only 50 units currently comply with a 5 ppm

v NO

x limit. Table B-1 of that Analysis indicates that 656 steam generators will be affected. If each of those units were to consume 5 lbs/hr, then 551,040 lbs/week would be required. If an ope rator were to choose Ammonia for their Selective Cataytic Reaction control system, w e assume that an equivalent amount of Ammonia would be used. The Initial Study and Pr oposed Negative Declaration, Table III and Table VI do not indicate a potentiall y significant impact nor do they state that any mitigation will be required. (CIPA), (IOP A)

RESPONSE: The Initial Study was completed assuming the worst case scenario with the maximum number of units utilizing a selective c atalytic reduction system (SCR). The study includes calculating greenhouse gas emiss ions from units subject to the rule and utilizing SCR. As stated in the study it is ex pected that the use of NOx emission control devices will have positive effects on the a ir quality of the Valley. It is anticipated

that some increased emissions of ammonia will resul t from the use of SCR control systems. The amount of ammonia emissions is assumed to be a small fraction of the amount of NOx that is controlled and that the large , net, positive air quality benefit outweighs the small increase in fugitive ammonia em issions. District staff also believe that operators will not install the maximum number of SCR systems assumed in the study. Rule 4320, Table 1, contains NOx limits tha t can be met in some cases with ultra-low NOx burners. In some cases operators may choose to pay the annual

emissions fee.

16. COMMENT: We recommend that the District work in coordination with us and PG&E to promote energy efficiency measures and the technica l services and financial incentives/rebates that are available to help offse t costs for efficiency upgrades. A sample list of common boiler energy efficiency meas ures include burner controls upgrades, burner fan VFD, high-efficiency burners, feed-water economizer heat recovery, condensing economizer heat recovery, blow -down heat recovery, process heater recovery, condensate return, pipe & tank ins ulation, pump VFD, high-efficiency boilers including direct-contact water heaters and condensing boilers. (EI)SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 7 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 RESPONSE: Comment noted.

17. COMMENT: Several of our members have inquired about inclusio n of multiple control strategies in the ECP. Based on guidance provided by the District, it is our understanding the ECP may include more than one con trol option for a given emission unit. Operators would be allowed to implement eith er one of the designated options, provided that the selected option is implemented pr ior to the compliance trigger date for a given NOx target. (WSPA)

RESPONSE: The ECP can include more than one control option fo r a given emission unit or can be changed from one option to another. The critical factor would be complying with the dates in Rule 4320 such as the e missions fee payment date, ATC deadline, or final compliance deadline. The emissi ons fee is to be paid until the units either comply with the limits or are removed from s ervice. Also, the rule allows paying the fee retroactively only for units that comply wi th the staged enhanced initial limit but cannot achieve the staged enhanced final limit.

18. COMMENT: In order for Section 5.4.1.1 to function as intende d it should be revised to remove the word “all”. (WSPA)

RESPONSE: District staff concur. The section has been modifi ed so as not to exclude any options. Please refer to the rule for details.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix A: Comments and Responses O ctober 16, 2008

A - 8 Final Draft Staff Report with Appendices For Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 This page intentionally blank.