# San Joaquin 

# Valley 

# d AIR POLLUTION CONTROL DISTRICT

GOVERNING BOARD

Chris Vierra, Chair Councilmember, City of Ceres

Tony Barba, Vice Chair Supervisor. Kings County

Judith G. Case Supervisor, Fresno County

Ronn Dominici Supervisor, Madera County

Henry Jay Forman. Ph.0. Appointed by Governor

Michael G. Nelson Supervisor, Merced County

William O'Brien Supervisor, Stanislaus County

Leroy Ornellas Supervisor, San Joaquin County

John G. Telles, M.D. Appointed by Governor

Raymond A. Watson Supervisor. Kern County

J. Steven Worthley Supervisor, Tulare County

Vacant Large City

Vacant Large City

Vacant Small City, Central Region

Vacant Small City, Southern Region

Seyed Sadredin Executive Director Air Pollution Control Officer

Northern Region Office 4800 Enterprise Way Modesto, CA 95356.8718 (2091 557.6400 FAX (209) 557.6475

Central Region Office 1990 East Gettysburg Avenue Fresno, CA 93726-0244 (5591 230-6000 FAX (559) 230-6061

Southern Region Office
34946 Flyover Court Bakersfield, CA 93308-9725 (661) 392-5500 FAX (661) 392-5585 DATE: April 16, 2009

TO: SJVUAPCD Governing Boa

FROM: Seyed Sad redin, Executive project Coordinator: Errol Villegas

RE: APPROVE REASONABLY AVAILABLE CONTROL TECHNOLOGY (RACT) DEMONSTRATION FOR OZONE STATE IMPLEMENTATION PLANS (SIP) REPORT

RECOMMENDATION:

1. Approve the Reasonably Available Control Technology (RACT) Demonstration for Ozone State lmplementation Plans (SIP) Report,

2. Approve the Negative Declaration for two source categories covered by EPA Control Techniques Guidelines (CTG),



### 3. Authorize the Chair to sign the attached resolution, and

4. Direct staff to forward the accepted RACT Demonstration for Ozone SIP and the attached resolution to the California Air Resources Board (ARB) for incorporation as part of the California State Implementation Plan (SIP).

BACKGROUND:

The San Joaquin Valley Air Basin (SJVAB) is classified as an extreme ozone nonattainment area for the federal eight-hour ozone National Ambient Air Quality Standard (NAAQS).

To improve the SJVAB's air quality and move the region towards attainment of the NAAQS, the District has prepared and adopted several attainment plans since the eight counties within the SJVAB unified as a single air district in 1992. The District has also adopted over 500 new rules and amendments since 1992. Many current rules are fourth or fifth generation, meaning that they have been revised as new emission control technology has become available in

ww. valleyair.orgSJVUAPCD Governing Board APPROVE REASONABLY AVAILABLE CONTROL TECH NOLOGY (RACT) DEMONSTRATION FOR OZONE STATE IMPLEMEN TATION PLANS (SIP) April 16, 2009

2 the marketplace. The District’s continuous dedication to improving rule stringency has resulted in the District having met or ex ceeded required rate of progress (ROP) and reasonable further progress (RFP) emission reduction requirements imposed by the federal Clean Air Act.

The control measures in the District’s Rules and Regulations have been progressively advanced through the years such that they re flect technologies and methods that are far beyond RACT. Air quality improvements ev idence the success of the District’s innovative and effective rules. Signifi cant progress has been made towards the attainment of the ozone and PM2.5 NAAQS and the EPA has redesignated the SJVAB from nonattainment to attain ment for the PM10 NAAQS.

Despite the progress towards attainment, the SJVAB remains in nonattainment for ozone and Sections 182(b)(2) and 182(f) of the federal Clean Air Act require ozone nonattainment areas to implement RACT fo r sources that are subject to Control Techniques Guidelines (CTG) documents i ssued by EPA and for “major sources” of volatile organic compounds (VOCs) and oxid es of nitrogen (NOx), which are ozone precursors. RACT requirements are include d in the Clean Air Act to assure that significant source categories at major sour ces in the nation’s non attainment areas are controlled to a “reasonable” extent.

The purpose of this analysis is to fulfill mu ltiple requirements pur suant to the United States Environmental Protection Agency (EPA).

One-Hour Ozone Requirements : In June of 2004, United Stat es Environmental Protection Agency (EPA) designated San Joaquin Valley Air Basin as nonattainment for the new 8-hour ambient air quality standard for ozone. Subsequently, in June of 2005, EPA revoked the previous 1-hour ambient air quality standard. However, prio r to EPA's revocation of the 1-hour ozone standard, in October 2004, t he District had submitted an Ex treme Ozone Attainment Demonstration Plan (EOADP) for the 1-hour oz one standard. Within the EOADP, was a RACT discussion (Section 4.2.5) which sa tisfied all the requirements that EPA had specified at the time.

In November 2005, EPA changed its policy for RA CT in SIPs, as outlined in their Final Rule to Implement the 8-hr Ozone National Ambient Air Quality Standard-Phase 2 (70 FR 71612). In 2008, EPA notified the District that the 2004 EOADP RACT discussion did not meet the requirements of the new policy. District staff, in discussions with EPA staff, determined that the mo st prudent course of action to address this discrepancy was to formally withdraw the RACT discussion from the 2004 EOADP, thereby removing it from EPA's review and approval process for the 1-hr ozone SIP requirements.

Therefore, on August 21, 2008, the District’s Governing Board approved agenda item

“ Adopt the Clarifications and Document ation Regarding the 2004 Extreme Ozone Attainment Demonstration Plan for the Revoked Federal I-Hour Ozone Standard ”, whichSJVUAPCD Governing Board APPROVE REASONABLY AVAILABLE CONTROL TECH NOLOGY (RACT) DEMONSTRATION FOR OZONE STATE IMPLEMEN TATION PLANS (SIP) April 16, 2009

3 provided EPA with the necessary documentati on and clarification needed to take final action on the 2004 1-hour ozone plan. Contained within this Governing Board item was the withdrawal of the RACT por tion of that plan (Section 4.2.5) and a commitment to replace it with a new RACT analysis.

Subsequently, on January 21, 2009, EPA published in the Federal Register a “Finding of Failure to Submit” for the RACT anal ysis of the one-hour ozone plan, which began sanction clocks. The first sanction clo ck runs for 18 months and, if not stopped, imposes a 2:1 ratio on offsets for new major stationary sources. The second sanction runs for 24-months and, if not stopped, would restrict the use of federal highway funds in the area, with the exception of ce rtain safety and air quality projects.

This RACT demonstration repor t will satisfy the commitment for a new RACT analysis for the one-hour ozone plan and prevent all s anctions that could be imposed by the “finding of failure to submit”.

Eight-Hour Ozone Requirements : According to the EPA’s Final Rule to Implement the Eight-Hour Ozone NAAQS (70 FR 71612, November 29, 2005), areas classified as moderate nonattainment or higher must submit a demonstration t hat their current rules fulfill eight-hour ozone RACT for all CTG categories and all major, non-CTG sources.

On August 17, 2006 the District Governing Board adopted a RACT SIP analysis for its eight-hour ozone serious nonattainment classi fication. Per Section 182 (c) of the federal Clean Air Act, areas classified as seri ous nonattainment have a 50 tons per year (tpy) major source definition. The Va lley did not, however, experience a 50 tpy threshold because of state law and the f ederal revocation of the 1-hour ozone standard. 1 The August 2006 RACT SIP analysis showed that the District’s rules met or exceeded RACT requirement s for all applicable EPA source categories. The final eighthour ozone attainment plan ( 2007 Ozone Plan), adopted on April 30, 2007, requested an extreme nonattainment classifi cation for the District. For ar eas classified as extreme nonattainment, the major source definition is 10 tpy VOC or NOx (Section 182 (e) of the federal Clean Air Act).

To assess the District’s rules based on the adjus ted major source definition of 10 tpy, on December 28, 2007 the District published a revised RACT SIP analysis for public comment. The analysis also evaluated District rules against four new CTGs promulgated between August 2006 and Dece mber 2007 and reviewed additional rules and rule amendments for RACT that were adopted by the District’s Governing Board between August 17, 2006 and December 2007. The District received comment letters from EPA and Earthjustice which suggested that the District conduct a more thorough

1 Section 42504 of the California Health and Safety Code stip ulates that any major source threshold in effect as of December 30, 2002 cannot be relaxed to a higher thres hold. On December 30, 2002 the Valley was classified as severe nonattainment for 1-hour ozone, so the threshold remained at 25 tpy. This stat e law prevented the Valley’s major source threshold from rising to 50 tpy upon classifyin g the Valley as serious nonattainment for 8-hour ozone.SJVUAPCD Governing Board APPROVE REASONABLY AVAILABLE CONTROL TECH NOLOGY (RACT) DEMONSTRATION FOR OZONE STATE IMPLEMEN TATION PLANS (SIP) April 16, 2009

4 analysis for each rule to address RACT and evaluate how emission limits found reasonable in other areas have changed since EPA approval of the District’s rules.

This RACT demonstration repor t therefore, replaces both the original August 17, 2006 RACT SIP analysis and the December 28, 2007 revised RACT SIP analysis as it assesses the District’s rules based on the adjus ted major source definition of 10 tpy, evaluates District rules against new CTGs promulgated since August 2006, and also reviews additional rules and rule amendments for RACT that have been adopted by the District’s Governing Board since August 17, 2006.

Additional EPA Requirements : As part of the August 2006 RACT SIP analysis, District staff identified eight rules 2 that were not previously submitted to EPA for incl usion into the SIP. In May 2007, District staff submitted the rules to the California Air Resources Board (A RB) for transmittal to EPA for inclusion into the SIP. On J anuary 2, 2008, EPA published in the Federal Register (73 FR 48) a direct final approval of the rules into the SIP. The direct final action was published without pr ior proposal because EPA anticipated no adverse comment. The direct final rule stated that if adverse comments were received by February 1, 2008, EPA would publish a timely removal in the Federal Register. EPA received a timely adverse comment which s uggested that the rules did not meet the federal Clean Air Act, Secti on 172(c)(1) requirements fo r RACT and consequently removed the direct final approval of the rule s. It should be noted that the EPA did not determine that these rules do not satisfy RACT.

This RACT demonstration report also addresses EPA’s request for additional information regarding the eight rules proposed for direct final approval

DISCUSSION :

The RACT SIP analysis requires the District to evaluate rules that apply to sources that are covered by a CTG (CTG sources) and rule s that apply to major sources but are not covered by a CTG (major, non-CTG sources). A list of all District rules was prepared and refined to only include rules that control ozone precursors, NOx or VOC, since this analysis is for ozone attainment plans.

Chapter 2 of the report addresses District impl ementation of EPA CTGs . As a part of its RACT SIP analysis, the District is requir ed to assure that EPA’s CTGs are being appropriately implemented though Dis trict regulations. For this part of the analysis, staff matched the list of CTGs to District rules that apply to CTG source categories. Table 2-

2 Rule 4104 (Reduction of Animal Ma tter); Rule 4402 (Crude Oil Production Sumps); Rule 4404 (Heavy Oil Test Station – Kern County); Rule 4453 (Refinery Vacuum Prod ucing Devices or Systems); Rule 4454 (Refinery Process Unit Turnaround); Rule 4625 (Wastewater Separators); Rule 4641 (Cutback, Slow Cure, and Emulsified Asphalt, Paving and Maintenance Operations); and Rule 46 72 (Petroleum Solvent Dry Cleaning Operations)SJVUAPCD Governing Board APPROVE REASONABLY AVAILABLE CONTROL TECH NOLOGY (RACT) DEMONSTRATION FOR OZONE STATE IMPLEMEN TATION PLANS (SIP) April 16, 2009

5 1 of the report shows the CT Gs promulgated by the EPA to -date, and the corresponding District rules.

There are also two CTG source categories t hat have no associated District rules: (a) surface coating operations at shipbuild ing and ship repair facilities; and (b) Pharmaceutical manufacturing. Since t here are no such business establishments currently operating in the Dis trict, staff has prepared a negat ive declaration, which will be included in the resoluti on stating this finding. T he proposed negative declaration analysis is detailed in Chapter 2, Section 2.1. 2 of the report.

Chapter 3 of the report identifie s the facilities within the Distric t that have the potential to emit at least ten tons per y ear of either NOx or VOC (e.g . major sources) and identified the NOx and VOC rules that apply to the facility’s equipm ent (see Table 3-1 of the report).

The bulk of the District’s RACT Demonstrat ion effort was to review the District’s numerous NOx and VOC regulations for compli ance with federal RACT requirements. Criteria for determining that RACT is sati sfied included the RACT guidance from EPA, requirements per California law, and a co mparison against multiple federal rules, regulations, and technology guidelines as well as evaluating District rules against comparable rules from California’ s most technologically progressi ve air districts. District staff, upon application of the criteria, was then able to determine RACT status for each rule.

It should be noted that if a District rule had been recently SIP-approved, it was understood that the rule had been evaluated by the EPA and found to fulfill RACT, and no detailed analysis was conducted. However, since RACT is a moving target, if there were no recent SIP-approvals for a rule, Distr ict staff performed a detailed analysis to evaluate rule requirements against current technology.

District staff’s analysis concluded that all rule s that apply to CTG sources in the District and all rules that apply to major, non-CT G sources have been found to fulfill RACT or are on a schedule to fulfill RACT requirements. For the two CTG source categories that have no associated District rules, staff has prepared a negative declaration, in accordance with EPA’s directive.

Environmental Impact Analysis

The RACT Demonstration for Ozone SIP report is an evaluation of the current District rules. Therefore, adoption of the proposed analysis is not a project as described in Section 15378(a) of the CEQA guidelines and does not need to undergo CEQA analysis.

Project Development ProcessSJVUAPCD Governing Board APPROVE REASONABLY AVAILABLE CONTROL TECH NOLOGY (RACT) DEMONSTRATION FOR OZONE STATE IMPLEMEN TATION PLANS (SIP) April 16, 2009

6 A 30-day public review period for the report was held from March 16, 2009 to April 16, 2009. Comments received from EPA were general in nature and mainly required clarification within certain rule evaluations . The comments and the District’s responses have been incorporated in the report, as Appendi x A. No comments were received from the ARB and the public or interested parties.

Staff is recommending that the Govern ing Board consider adopting the RACT Demonstration for Ozone SIP report and the negative declaration at a public hearing scheduled for April 16, 2009. The notice of the public hearing was published in a general circulation newspaper in each of t he eight San Joaquin Valley counties, and was mailed to affected sources and interested parties. The notice of public hearing solicited written comments, and identified the name and telephone number of District staff that answered questions and responded to comments.

FISCAL IMPACT:

District staff expects no fiscal impact to t he District to result from this action.

Attachments: Resolution for the Reasonably Available Contro l Technology (RACT) Demonstration and Negative Declaration for Two Source Catego ries Covered by EPA Control Techniques Guidelines (4 pages) RACT Demonstration for Ozone SIP Report with Appendices (453 pages)