United States Environmental Protection Agency, Regi on 9

Air Division

Technical Support Document

for

EPA’s Notice of Proposed Rulemaking

for the

California State Implementation Plan

San Joaquin Valley Unified Air Pollution Control Di strict’s Rule 4320, Advanced Emission Reduction Options for Boilers, Steam Generators and Process Heaters Greater than 5.0 MMbtu/hr

Prepared by: Idalia Perez

August 19, 2010San Joaquin Valley Unified Air Pollution Control Di strict (SJVUAPCD)

Submitted Rule SJVUAPCD Rule 4320, Advanced Emission Reduction Opt ions for Boilers, Steam Generators and Process Heaters Greater than 5.0 MMbtu/hr

 Adopted: October 16, 2008

 Submitted: March 17, 2009

 Determined complete: April 20, 2009

Previous Rule Submittals There are no outstanding submittals of Rule 4320.

SIP-Approved Rule There is no SIP-approved version of Rule 4320.

Rule Summary Rule 4320 limits NOx, SO2, PM10 and CO emissions fr om boilers, steam generators and process heaters with a total rated heat input greater than 5 MMBtu/hour.

Rule 4320 provides three options for compliance: 1. Comply with the NOx emission limits and PM control measures specified in the Rule; or 2. Pay an annual NOx emissions fee to the District and comply with PM control measures;

or 3. Comply with the low-use requirements.

The NOx limits in the Rule are as follow: (Std = st andard schedule; Enh = enhanced schedule; SESIL = Staged Enhanced Schedule, Initial Limit; SE SFL = Staged Enhanced Schedule Final Limit) Category NOx Limit Compliance Deadline A. Units with a total rated heat input > 5.0 MMBtu/ hr to < 20.0 MMBtu/hr, except for Categories C through G un its STD

- 9 ppmv or 0.011 lb/MMBtu

ENH - 6 ppmv or 0.007 lb/MMBtu STD

– 07/01/2012

ENH – 01/01/2014

B. Units with a total rated heat input > 20.0 MMBtu/hr, except for Categories C through G units STD

- 7 ppmv or 0.008 lb/MMBtu

ENH - 5 ppmv or 0.0062 lb/MMBtu STD

– 07/01/2010

ENH – 01/01/2014

C. Oilfield Steam Generators C.1. Units with a total rated heat input > 5.0 MMBt u/hr to <20.0 MMBtu/hr STD

- 9 ppmv or 0.011 lb/MMBtu

ENH - 6 ppmv or 0.007 lb/MMBtu STD

– 07/01/2012

ENH – 01/01/2014

C.2. Units with a total rated heat input >20.0 MMBt u/hr STD

- 7 ppmv or 0.008 lb/MMBtu STD

– 07/01/2010SESIL - 9 ppmv or 0.011 lb/MMBtu;

SESFL - 5 ppmv or 0.0062 lb/MMBtu SESIL – 07/01/2012

SESFL – 01/01/2014

C.3. Units firing on less than 50%, by volume, PUC quality gas SESIL

- 12 ppmv or 0.014 lb/MMBtu

SESFL - 9 ppmv or 0.011 lb/MMBtu SESIL

– 07/01/2011

SESFL – 01/01/2014

D. R efinery units D.1. Units with a total rated heat input > 5.0 MMBt u/hr to < 20.0 MMBtu/hr STD

- 9 ppmv or 0.011 lb/MMBtu

ENH - 6 ppmv or 0.007 lb/MMBtu STD

– 07/01/2012

ENH – 01/01/2014

D.2. Units with a total rated heat input >20.0 MMBt u/hr to < 110.0 MMBtu/hr STD

- 6 ppmv or 0.007 lb/MMBtu

SESIL - 9 ppmv or 0.011 lb/MMBtu

SESFL - 5 ppmv or 0.0062 lb/MMBtu STD

– 07/01/2011

SESIL – 07/01/2012

SESFL – 01/01/2014

D.3. Units with a total rated heat input > 110.0 MMBtu/hr STD

- 5 ppmv or 0.0062 lb/MMBtu STD

– 06/01/2007

D.4. Units firing on less than 50%, by volume, PUC quality gas. SESIL

- 12 ppmv or 0.014 lb/MMBtu

SESFL - 9 ppmv or 0.011 lb/MMBtu SESIL

– 07/01/2011

SESFL - 01/01/2014

E. Units, from any Category, that were installed pr i or to 1/1/2009 and limited by a Permit to Operate to an a nnual heat input >1.8 billion Btu/year but < 30 billion B tu/year. STD

- 9 ppmv or 0.011 lb/MMBtu STD

– At the next

unit replacement but no later than 01/01/2014 F. Units at a wastewater treatment f acility firing on less than 50%, by volume, PUC quality gas. SESIL

- 12 ppmv or 0.014 lb/MMBtu

SESFL - 9 ppmv or 0.011 lb/MMBtu SESIL

– 07/01/2011

SESFL – 01/01/2014

G. Units operated by a small producer in which the rated heat input of each burner is < 5 MMBtu/hr but the total rated heat input of all the burners in a unit is rated between 5 and 20 MMBtu/hr, as specified in th e Permit to Operate, and in which the products of combustion do not come in contact with the products of combustion of any other burner. STD

- 9 ppmv or 0.011 lb/MMBtu STD

– At the next

unit replacement but no later than 01/01/2014The emission fee is the sum of an administrative fe e and a fee based on the amount of emissions

of the unit: Total Fee = Admin Fee + (Total Emission of unit/yea r) (Fee Rate)

By January 1, 2010, operators must decide if they w ill comply with Rule 4320 by paying a fee or by complying with the NOx emission limits. The fee shall be paid by July 1 of each year for the previous year’s emissions. Operators of units for w hich an annual fee is paid must also meet RACT.

Before January 1, 2014, a unit designated to comply with the NOx emission limits of the Staged Enhanced Schedule can be redesignated to comply wit h the Rule by paying an emission fee if: 1. The unit meets the Initial NOx Limit (SESIL in Tabl e above); 2. Emission fees are paid at time of the application f or redesignation, for all past emissions from the unit since January 1, 2009 throu gh the calendar year prior to the calculation date; and 3. The total annual fee is paid from that date forward

. The PM control requirements include: 1. Fire exclusively on gas; or 2. Fire fuel with less than 5 grain of sulfur per 100 standard cubic feet; or 3. Use emission control systems to reduce SO2 emission s by 95% or emit 9 ppm or less; and 4. Refinery units must be in compliance by July 1, 201 3.

Low-use unit requirements apply to units with a hea t input of 1.8 billion Btu/year or less.

The Rule also includes start-up/shutdown provisions (Section 5.6), monitoring provisions (Section 5.7), requirements to demonstrate complian ce (Section 5.8), recordkeeping requirements (Section 6.1), a list of test methods (Section 6.2), testing requirements (Section 6.3), requirements for an emission control plan, a compliance schedule (Section 7.0) and calculation requirements (Section 8.0).

Effects on Emissions NOx Reductions The District projects emission reductions for the t wo NOx compliance deadlines. The first estimates an emission reduction of 3.3 tons of NOx/ day for compliance with the standard limits. This is a reduction of 46.5% from the calculated ba seline of 7.1 tons of NOx/day. The 2007 Ozone Plan had a 2011 baseline of 4.6 tons of NOx/d ay with a commitment to reduce emissions by 0.71 tons NOx/day or 15%. The District normaliz ed the 46.5% reduction to the baseline in the ozone plan (4.6 tons/day) and calculated a norm alized emission reduction of 2.1 tons per day. This projection satisfies the 2007 Ozone Plan commi tment of 0.71 tons NOx/Day. The District also estimates an emission reduction of 3.9 tons NO x/day for the applicable enhanced limits. This would represent the maximum reductions which w ould be expected from Rule 4320 implementation.SO2 Reductions

SJVUAPCD states that the majority of units would co mply with Options 1 and 2 and expects no additional reductions from these units. District st aff identified some units that may need to install and operate an emission control system reducing SO2 emissions by at least 95% to comply with Option 3. They estimate that this would result in e mission reductions of 5.4 tons of SO2/day.

Criteria for Rule Evaluation Generally, SIP rules must be enforceable (see secti on 110(a) of the Clean Air Act, hereafter CAA); must require Reasonably Available Control Tec hnology (RACT) for major sources in nonattainment areas (see CAA section 182(a)(2)(A)); must not interfere with applicable requirements, including requirements concerning att ainment (see CAA section 110(l)); and must not relax existing requirements in effect prior to enactment of the 1990 CAA amendments (see section 193). In addition, SIP rules must implemen t Reasonably Available Control Measures (RACM) for PM2.5 nonattainment areas (see CAA secti on 172(c)(1)).

The SJVUAPCD regulates a severe ozone nonattainment area (40 CFR 81) and a PM2.5 nonattainment area, thus, submitted Rule 4320 must fulfill RACT and RACM requirements.

Guidance and policy documents that we used to defin e specific enforceability and RACT requirements include the following:

• Issues Relating to VOC Regulation, Cutpoints, Defic iencies, and Deviations (the "Blue Book"), US EPA, OAQPS (May 25, 1988).

• Guidance Document for Correcting Common VOC and Oth er Rule Deficiencies , EPA Region IX (August 21, 2001, the “Little Bluebook”).

• State Implementation Plans; General Preamble for th e Implementation of Title I of the Clean Air Act Amendments of 1990, 57 FR 13498 (April 16, 1992); 57 FR 18070 (April 28, 1992).

• Clean Air Fine Particle Implementation Rule; Final Rule , 72 FR 20586 (April 25, 2007)

• Determination of Reasonably Available Control Techn ology and Best Available Retrofit Control Technology for Industrial, Institutional, a nd Commercial Boilers, Steam Generators, and Process Heaters , CARB (July 18, 1991). http://www.arb.ca.gov/ractbarc/boilers.pdf

• Alternative Control Techniques Document-- NOx Emiss ions from Industrial/Commercial/Institutional (ICI) Boilers

, US EPA 453/R-94-022 (March 1994). http://nepis.epa.gov/EPA/html/Pubs/pubtitleOAR.htm

• Alternative Control Techniques Document-- NOx Emiss ions from Utility Boilers , US EPA 452/R-93-008 (March 1994). http://nepis.epa.gov/EPA/html/Pubs/pubtitleOAR.htm

• Control Techniques for Sulfur Oxide Emissions from Stationary Sources , US EPA 450/3- 81-004 (April 1981). http://nepis.epa.gov/EPA/html/Pubs/pubtitleOAR.htm

• Because Rule 4320 includes a fee provision in Secti on 5, EPA considers this rule an economic incentive program subject to EPA’s guidanc e , “Improving Air Quality with Economic Incentive Programs ,” US EPA, 452/R-01-001 (January 2001) http://www.epa.gov/ttncaaa1/t1/memoranda/eipfin.pdf

Rule EvaluationEnforceability, SIP Relaxation, RACT and RACM

Recordkeeping and other compliance provisions in th e rule ensure that the requirements are adequately enforceable. Since this rule has not be en previously incorporated in the SIP and it does not supersede an existing SIP-approved rule, t he submitted rule does not relax the SIP and complies with CAA §110(l) and §193.

At a minimum, the District must ensure that RACT wi ll be implemented for appropriate sources subject to Rule 4320. Section 5.3.3 states: “Oper ators of units for which an annual fee is provided must also certify that the units meet fede ral RACT control measures at the time the annual fee is provided.” This provision alone is n ot sufficient to ensure that RACT will be implemented. However, Rule 4306, adopted October 1 6, 2008, implements RACT for this source category. EPA approved Rule 4306 on January 13, 2010 (75 FR 1715). Because sources have a separate obligation to comply with Rule 4306 (which does not allow payment of fees in lieu of compliance), the necessary regulatory frame work is in place to ensure that RACT will be implemented for this source category. If, in the f uture, the District intends to rely on Rule 4320 to implement RACT, the District would need to modif y Rule 4320 to delete the provision which allows sources to pay fees in lieu of compliance or otherwise ensure RACT implementation.

There is no specific guidance on what constitutes R ACM for PM2.5 for this source category. According to an EPA report (US EPA 450/3-81-004), t he most straightforward way to reduce SOx emissions, a PM2.5 precursor, is to burn fuels with low sulfur content. Rule 4320 requirement that units burn gas or low sulfur fuel addresses this approach to reducing SOx emissions. For units burning fuel with higher sulf ur content, Rule 4320 requires add-on controls to minimize SOx emissions. The combination of thes e two approaches (fuel switching or add-on controls) is appropriate to fulfill CAA RACM requir ements regarding SOx. RACM requirements for NOx, another PM2.5 precursor are also fulfilled by Rule 4306, as discussed above regarding RACT.

Emission Reductions Beyond RACT The amount of emission reductions projected for Rul e 4320 assumes compliance with the emission limits in section 5.2.3, although sources may pay fees instead of directly meeting these limits. SJVUAPCD’s staff report explains that the District will use these fees to purchase emission reductions more cost effectively than dire ct compliance with section 5.2.3, and thus will actually achieve more emission reductions if s ources elect to pay fees.

However, to ensure that all emission reductions pur chased by the District are adequately surplus, quantifiable, enforceable, permanent and otherwise consistent with EPA’s EIP guidance, this component of the program must be fully described an d included in a SIP submittal. The existing submittal of Rule 4320 does not include all necessa ry details on how creditable emission reductions will be achieved. We list below the min imum elements and supporting documentation needed, along with some suggestions o n how this information may be provided:

The submittal should describe and provide supportin g documentation on:

• How public input is/will be provided for in the dev elopment and implementation of the
program.• The protocols and quantification methodology and pr ocedures used to calculate emission

reductions. The submittal may rely on and refer to relevant Moyer Program Guidelines or emissions quantification protocols that have bee n adopted by the SJVUAPCD Governing Board after a public process.

• Criteria, policies and procedures to ensure that th e reductions are surplus. 1

• The potential source categories generating the emis sion reductions and the demonstration that the reductions are surplus.

• The process to ensure that protocols are revised as appropriate to reflect new emission standards and emission factors, and that emission r eductions thus continue to be surplus.

• A real-time, transparent and publicly available sys tem for tracking and evaluating program implementation. The purposes of the tracki ng system are at least the following: 1. To help ensure that the program achieves actual emi ssion reductions. 2. To allow the District to compare actual reductions with projected emission reductions in the SIP in order to address any emiss ion reduction shortfall expeditiously. 3. To collect information for the District’s retrospec tive evaluation of program implementation. 2 See EIP Guidance Section 5.3(b). 4. To maximize transparency regarding use of public fu nds. 5. To increase opportunities for technology transfer.

• Real time information available through the tracki ng system should include 3 : 1. Grant/Project Level

 Name of grantee

 Funding per grant per year

 Activity and sources 4 that generate emission reductions, and the project ed emission reductions by source

 Actual reductions for the source and actual reducti ons for the project.

 The emission reduction calculation for each source, including information/assumptions on baseline emissions.

 Start date of project and duration the reductions w ill be claimed for credit

2. Funding Source/Rule Level

 Amount of funds collected or provided from the fund ing source/rule

 Amount of funds spent

 Actual emission reductions achieved

 The SIP commitment, by year, on projected emission reductions

1 EPA’s guidance, “Improving Air Quality with Econom ic Incentive Programs” (EIP Guidance) defines surpl us in sections 4.1(a) and 4.1(b). The EIP Guidance is av ailable at: http://www.epa.gov/ttn/oarpg/t1/memoranda/eipfin.pd f
2 Prohibitory rules that include fee provisions are economic incentive programs subject to the EIP Guid ance. As such, implementation of each rule should be evaluat ed. For example, the program evaluation should inc lude evaluation of the District’s original purpose for t he fee provision, how the fee provision affected co mpliance within the source category, whether the fee provision had the desired effect, whether the fee rate was approp riate to accomplish the District’s objectives, and whether t here are any recommendations to improve the program

. 3 “Funding source/rule level” means for example the Carl Moyer Program, Rule 9510, Rule 4320, and other prohibitory rules which allow sources to pay fees i n lieu of compliance with the emissions requirement

. 4 If the activity was changing heavy-duty diesel eng ines, the “source” is a specific engine. Comparison of projected with actual emission reduct ions 5

3. Overall Incentive Program Summary Level

 Amount of available funds

 Funds spent each year

 Actual emission reductions achieved annually

 The SIP commitment, by year, on projected emission reductions

 Comparison of projected with actual emission reduct ions

• The audit and enforcement program that ensures impl ementation of grantees’ contractual obligations.

• Annual reporting to EPA (where the public had the o pportunity to review and comment on the draft report) which includes:

o amount of funds spent for each funding source,

o amount of emission reductions achieved versus proje cted for each funding source (see footnote 5),

o discussion of any quantification or surplus issues that arose during the year and how the issues were resolved,

o description and timing of measures to address any s hortfalls in emission reductions, and

o summary of inspections, audits, non-compliance find ings, enforcement actions, and resultant penalties and remedies.

We understand that SJVUAPCD intends to document the amount of reductions from sources that already comply with the emission limits. This is p ossible because Rule 4320 provides a deadline which has passed for sources to notify the District of their intent to pay fees in lieu of complying with the limits. To the extent that SJVUAPCD provid es documentation of sources meeting the emission limits, it is appropriate to credit Rule 4 320 with emission reductions separate from the fee component discussed above.

Suggested Rule Improvements EPA recommends that the SJVUAPCD make the following improvements in the next revision of Rule 4320: 1. The term normal operations in Section 5.8.2 should be clearly defined in the Rule or the Rule should state that it must be defined in the pe rmit to operate. 2. Ensure compliance with all provisions of EPA’s EIP Guidance in order to fully credit emission reductions for this rule as discussed in t he Rule Evaluation section above. 3. After January 1, 2011, take into consideration the condensable fraction of direct PM2.5 emissions per EPA's Fine Particulate Rule, 40 CFR p art 51, subpart Z (see 51.1002(c)).

Recommendation Rule 4320 is enforceable, strengthens the SIP and i s consistent with RACT and RACM requirements. Therefore, EPA staff recommends appr oval of SJVUAPCD submitted Rule 4320

5 The District may choose to compare projected emiss ion reductions with actual emission reductions at t he Overall Incentive Program Summary Level instead of the Fund ing Source or Rule Level.for incorporation into the California Applicable SI P. However, it is not appropriate to fully

credit emission reductions for this rule without ad ditional submitted materials described above.

Attachments 1. Submitted Rule 4320 2. SJVAPCD Staff Report