1 Final Draft Staff Report: Rule 4701 and Rule 4702 SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

FINAL DRAFT STAFF REPORT

PROPOSED AMENDMENTS TO RULE 4701 (INTERNAL COMBUSTION ENGINES – PHASE 1) and RULE 4702 (INTERNAL COMBUSTION ENGINES – PHASE 2)

August 21, 2003

Prepared by: Joven R. Nazareno, Senior Air Quality Engineer Saul Gamez, Air Quality Engineer Manuel Salinas, Air Quality Engineer

Reviewed by: George Heinen, PE, Supervising Air Quality Engineer Kari Fuqua, Air Quality Inspector Richard Karrs, Air Quality Engineer Mike Oldershaw, Senior Air Quality Inspector Scott Nester, Planning Manager

I. REASONS FOR RULE DEVELO PMENT AND IMPLEMENTATION

The San Joaquin Valley Air Basin (SJVAB) is classified as a severe ozone nonattainment area and a serious PM10 nonattainment area fo r the health-based air quality standards established by the federal Clean Air Act. The SJVAB is also classified as severe nonattainment for the California ozone st andard and nonattainment for the California PM10 standard.

This rulemaking project is part of the District’s ozone and particulate matter attainment strategies. As such, this project is subject to the following state and federal requirements:

• Ozone and PM10 attainment plans need to implement control measures as expeditiously as practicable, and prov ide for attainment. Clean Air Act (CAA) Section 172(c)(1)

• Ozone attainment plans need to assure that reasonably available control technology (RACT) for VOC and NOx is in use at major sources and on source categories subject to control technology guidelines. CAA Sections 182(b)(2), 182(f)

• PM10 attainment plans for serious PM 10 nonattainment areas need to assure that the best available control measures ( BACM) for the control of PM10 shall beSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 2 implemented no later than 4 years after the date the area is classified (or reclassified) as a Serious Area. CAA Section 189(b)(1)(B)

• BACM provisions in attainment plans should include the application of best available control technology (BACT) to existing major stationary sources. (Federal Register 8/18/94)

• The control requirements for major stat ionary sources of PM10 also apply to PM10 precursors (precursors for PM10 in the SJV are VOC, NOx, SOx). CAA Section 189(e)

• Ozone attainment plans should provide for best available retrofit control technology (BARCT) for existing permitted sources. California Health & Safety Code (H&SC) Section 40919(a)(3)

• Ozone attainment plans should include “a ll feasible control measures.” H&SC Section 40914(a)(2)

To satisfy the attainment goals of the oz one and PM plans, this rulemaking project will seek to obtain as much emission reduction fr om each applicable source category as is expeditiously practicable, technologically feasible, and economically reasonable, as determined by the District’s Governing Board. The rulemaking project is also intended to satisfy the state and federal requirements identified above.

On September 14, 1998, the US Environmental Protecti on Agency (EPA) proposed a simultaneous limited approval and limited dis approval of Rule 4701 because the rule contains certain requirements that are not consistent with the CAA, and EPA regulations and policies. EPA finalized the rulemaking decis ion of the rule on April 1, 2002. EPA’s action started an 18-month sanction period, dur ing which the District must correct the EPA rule deficiencies or face penalties such as increased emission offset requirements for major sources and a loss of federal funds for transportation projects in the Valley. The offset sanction will engage in October 1, 2003 unless EPA approves revisions to Rule 4701 before that time.

In this project, new Rule 4702 (Internal Combustion Engines – Phase 2) is being developed to implement the EPA and Californi a Air Resources Board (ARB) control measures and to address the EPA rule deficiencies. New Rule 4702 would be applicable to spark-ignited internal combustion engines with a rated brake horsepower greater than 50 horsepower. Rule 4701 is being amend ed to correct the applicable EPA rule deficiencies. District staff intends to submit the am endments of Rule 4701 and new Rule 4702 to the District Governing Board on August 21, 2003 to ensure that ARB and EPA have sufficient time to review and approve t he amended rules before the expiration of the October 1, 2003 sanction deadline. The EPA deficiencies are discussed in Section III of the staff report.

II. RULE DEVELOPMENT PROCESS

As part of the rule de velopment process, District staff co nducted public scoping meetings in Bakersfield, Fresno, an d Modesto in March 2002. At the scoping meetings, District staffSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 3 presented the objectives of th e proposed rulemaking projec t. District staff solicited information from affected source operators , consultants, vendors and manufacturers of control technologies, and trade a ssociations on the technical feasibility and cost information that would be useful in devel oping proposed amendmen ts to the rules. Draft versions of Rule 4701 and Rule 4702 we re not presented at the scoping meetings.

District staff conduc ted public workshops in July 2002, December 2002, and May 2003 to present and discuss th e proposed amendments to Rule 4701 and the provisions of Rule 4702. The comments received fr om the public, affected source s, ARB, and EPA during the public workshop process we re incorporated into the draft rules as appropriate.

Pursuant to state law, District staff is requi red to perform a socioe conomic impact analysis prior to the adoption, amendment, or repeal of a rule that has significant air quality benefits or that will strengthen emission limitation s. As part of the Distri ct socioeconomic analysis process, District staff and t he District’s socioeconomic consul tant met with members of the Focus Group. The Focus Gr oup provided assistance in determining the appropriate method of gathering information on r egulatory compliance costs and business impacts resulting from compliance with the rules. The results of the socioeconomic analysis were presented to the public and inte rested parties along wi th the refined version of the proposed amendments during the final workshops for Rule 4701 and Rule 4702. The socioeconomic analysis is in Appendix C of this staff report.

The public hearing to consi der the proposed amendments to the rules by the District Governing Board is pla nned for Augus t 21, 2003.

III. BACKGROUND

A. Existing Rule 4701 Requirements

Rule 4701 was adopted on May 21, 1992, and subsequently amended on December 17, 1992, October 20, 1994, March 16, 1995, De cember 19, 1996, and November 12, 1999. The purpose of Rule 4701 is to limit NO x, CO, and VOC emissions from internal combustion engines (ICE). The rule applie s to ICE with a rated brake horsepower greater than 50 horsepower.

The NOx limits in Table 3 of the existing Rule 4701 range from 50 to 600 ppm, or 20 to 90% reduction depending on the type of engine (i .e., rich burn, lean burn, beam-balanced or crank-balanced pumping rich burn) and the type of fuel used (waste derived gaseous fuel, diesel, or dual fuel). The CO lim it is 2000 ppmv and the VO C limit is 250 to 750 ppmv depending on the type of engine and fuel used.

The rule contains requirements for periodic source testing, monitoring requirements, and recordkeeping. Additionally, Rule 4701 also allows operators to co mply with the emission limits of the rule through an Alternative Em ission Control by achieving an aggregated emission level no higher than the aggregated emission level that would have resulted if each unit in operation were controlled indivi dually in compliance with the specified emission limits.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 4 The change to the draft of Rule 4702 (Rule 4702 would apply to spark-ignited engines) would not affect how diesel engines are tr eated under Rule 4701. Diesels are mainly in three categories in Rule 4701:

1. Emergency standby engines, which can only operate in em ergencies and for 200 hours per year for testing and maintenance, are exempt from the NOx, VOC, and CO emission limits in Rule 4701. There are approximately 1 404 of these diesel engines currently under permit. Their NO x emissions are approximately 5. 04 tons per da y, based on an average of 200 hours pe r year of operation.

2. Low-use diesel engines, which can operate up to 1,000 hours per year, are also exempt from the emission limits in Rule 4701, except for low-use di esel engines operated outside the Westside area at a major NOx source with a po tential to emit 50 tons or more per year of NOx. There are approxim ately 74 of these dies el engines currently under permit. Their NO x emissions are approximately 0. 49 tons per da y, based on an average of 876 hours pe r year of operation.

3. High-use diesel engines - those over 1000 hours per year - mu st meet the very stringent NOx emission limit of 80 ppm, which is currently achievable only through the application of Selective Catalytic Reduction or must meet a limit of 600 ppmv, or 20% reduction, if the engine is owned by a public water district. There are approximately 17 of these high-use diesel engines current ly under permit. Their NOx emissions are approximately 0.33 tons per day, based on an average of 5256 hours per year of operation.

Rule 4702 was previously drafted to c ontinue the exemption for emergency standby engines, and change the annual operations th reshold from 1000 hours to 200 hours per year: diesel engines permitted to operat e over 200 hours per year would have been required to meet the 80 ppm NOx limit. District staff believes that because of the likelihood of other diesel engi ne regulations from ARB and EPA in the near future, it is appropriate to remove diesel engines from t he applicability of Rule 4702 at this time. The change would allow approximat ely 74 diesel engines that are currently permitted to operate up to 1000 hours per year, to avoid compliance with Rule 4702.

B. Proposed Amendments to Rule 4701 and Rule 4702

District staff has changed the previously dra fted applicability of new Rule 4702. Rule 4702 would now apply only to spark-igni ted internal combustion engines, not to compression-ignited internal combustion en gines (diesel engines). This change in applicability has been made as EPA and ARB are currently developing control measures and regulations for diesel fueled internal co mbustion engines. District staff will address the requirements for diesel fueled internal combustion engines as a separate project in the future after EPA and ARB have further developed their emission standards.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 5 The provisions of draft Rule 4702 that were presented in the first and second workshops were based on Rule 4702 applying to both spar k-ignited and compression-ignited internal combustion engines with a rated brake horsepower greater than 50 horsepower.

1. Control Measures for New Rule 4702

The purpose of new Rule 4702 is to limit NOx, CO, and VOC emissions from sparkignited internal combustion engines. The ru le would apply to spark-ignited ICE with a rated brake horsepower greater than 50 hor sepower. The proposed requirements of new Rule 4702 would implement control measures as required by the federal and state Clean Air Acts. In establishing the control measures, District staff used the standards recommended in the ARB Final RACT/BARCT Determination for Spark Ignited Internal Combustions Engines, dated November 2001, as the primary basi s for the proposed amendments.

The proposed emission limits in Rule 4702 are shown below.

NOx CO VOC Spark-Ignited Engine Type Percent Control ppmv at 15% O 2 Rich-Burn

• Waste gas fueled

• Cyclically loaded, field gas fueled

• All other engines 90

-- 96 50 50 25 2,000 2,000 2,000 250 250 250
Lean-Burn

• Two stroke, gaseous fueled, less than 100 horsepower

• All other engines 85

90 75

65 2,000

2,000 750

750

The likely control technology to meet the proposed emission limits for rich-burn engines, not cyclically loaded, using fuels other t han waste gases, will be nonselective catalytic reduction with air/fuel ratio controllers. For engines using waste gases, the use of prestratified charge controls are likely to be used to meet the proposed limits. The likely control technology to meet the proposed em ission limits for rich-burn engines cyclically loaded using field gas fuels will be nonselecti ve catalytic reduction . For four-stroke spark-ignited lean-burn engines and two-stro ke spark-ignited engines rated at 100 hp or more, the likely control technique would be to retrofit the engines with low-emission combustion controls. Other control te chniques may be used to supplement these retrofits, such as ignition system modifica tions and engine derating. For engines that do not have low-emission combustion modificati on kits available, Selective Catalytic Reduction (SCR) may be used to achieve the proposed limits.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 6 2. EPA Deficiencies and Proposed Amendments to Address the Deficiencies

EPA identified the following rule deficiencie s as needing to be corrected to make Rule 4701 fully approvable for inclusion in the SIP. District staff proposes to take the noted action to address the EPA deficiencies.

a. Westside exemption - Section 2.0: The SJVUAPCD is classified as a serious nonattainment area for PM-10. On the date of enactment of the 1990 Clean Air Act Amendments, PM-10 areas (including the SJ VUAPCD) meeting t he qualifications of section 107(d)(4)(B) of the Act were desi gnated non-attainment by operation of law. In accordance with section 188(a) of the Act, at the time of designation all PM-10 nonattainment areas were initially classified as moderate. Effective February 8, 1993, EPA reclassified the SJVUAPCD as serious under section 188(b)(1) of the Act (see 58 FR 3334).

Rule 4701 has been adopted by the SJVU APCD, and the control requirements contained therein are applicable under stat e law to facilities throughout the District. EPA therefore concludes that these contro l technologies are reasonably available. The rule contains requirements waivi ng RACT requirements under the SIP for facilities on the West Side. This constitu tes a failure to implement RACM at these facilities as required under section 189(a)(1)(C) of the Act. Section 110(l) of the Act forbids EPA from approving SIP revisions which would interfere with any applicable requirement, including section 189(a)(1)(C ). For this reason EPA disapproved the Westside exemption.

This deficiency was corrected in another ru lemaking project adopted by the Governing Board in December 2002. Rule 4701 allows federal enforceability for all sources including those located in the Westside. Rule 4702 would apply to all sources including those located in the Westside.

b. Section 3.11 defines low-use engine to be any internal combustion engine that is limited by District permit to operate no more than 1,000 hours in any one calendar year. This is inconsistent with the RACT Determination. The definition should be modified to state that the low-use engines are engines which are operated less than 100 hours in any calendar year as dete rmined by a nonresettable elapsed operating time meter.

This deficiency would be fixed in new Ru le 4702 which would apply to spark-ignited internal combustion engines with a ra ted brake horsepower of greater than 50 horsepower. The RACT/BARCT Determinat ion applies to spark-ignited internal combustion engines but not to compression-i gnited internal combustion engines. The low-use spark-ignited internal combusti on engines would be subject to Rule 4702 so no changes are necessary for Rule 4701.

Rule 4702 would not have a definition for low-use engines. Instead, Rule 4702 would provide the following exemption, whic h is consistent with the RACT/BARCT Determination: “Any internal combustion engine limited by permit condition to operateSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 7 no more than 200 hours per calendar year as determined by an operational nonresettable elapsed operating time meter and which is no t used to generate electrical power that is either fed into the electrical utility power grid or used to reduce electrical power purchased by a stationary source; to generate mechanical power that is used to reduce electrical power purchased by a stati onary source; or in a distributed generation application.”

c. Section 5.1.3, Table 3, Item 1, Waste De rived Gaseous Fuel: Waste derived fuel-fired engines operate primarily at landfills and wa stewater treatment facilities. The gaseous fuel generated from these fa cilities are burned in IC engines used to run equipment (e.g., electric generators and blowers). Beca use of the frequent vari ation in quality and quantity of this type of ga seous fuel, the District proposed a 125 ppmv emission limit for NOx or 80% control, 750 pp mv for VOC, and 2000 ppm v for CO, for this type of operation. The BARCT limit specified in the RACT/BARCT Determination is 50 ppmv or a 90% control for NOx and 250 ppmv for VOC. EPA recommend s that the limits in Rule 4701 be adjusted to 50 ppmv for NOx, and 250 ppmv for VOC.

This deficiency would be fixed in new Ru le 4702. Rule 4702 would specify the emission limits for waste gas fueled engines at 50 ppmv or 90% reduction for NOx, 250 ppmv for VOC and 2000 ppmv for CO to be consistent with the RACT/BARCT Determination. No changes are necessary for Rule 4701 for this deficiency.

d. Section 5.1.3, Table 3, Item 2, Engines Owned by Public Wate r Districts: Engines owned by the public water district are allowed higher emission limits because of the difficulty and long lead time necessary to secure funds for these facilities. EPA appreciates the concerns of the public wa ter district. However, water districts throughout the State are meeting the RACT /BARCT Determination, including those located in Kern C ounty owned by the Tehachapi-Cummings Valley Water District. Therefore, EPA believes, the RACT limits in the RACT/BARCT Determination are appropriate for these sources.

Rule 4702 would not specify any special consideration for spark-ignited internal combustion engines owned by public water di stricts. Engines subject to Rule 4702 owned by public water districts would need to meet the applicable proposed emission limits. No changes are necessary for Rule 4701 for this deficiency.

e. Section 5.1.3, Table 3, It em 3.a.i, Beam-balanced or cr ank-balanced pumping engine: Rich-burn, beam-balanced or gear-balanc ed pumping engines are used in oil production. District staff explained that this type of engines operate un der variable load conditions during pumping operations. Because of this, the Distr ict proposed a 300 ppmv emission limit which is higher than the RACT/ BARCT Determination. EPA recommends that the District implement th e values in the RACT /BARCT Determination for rich-burn engines.

Rule 4702 would require cyclic loaded, fiel d gas fueled engines to meet a proposed NOx emission limit of 50 ppmv. Based on the limits in other districts and theSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 8 measured emissions from San Joaquin Valley engines, District staff feels that these limits can be met. No changes are necessary for Rule 4701 for this deficiency.

f. Section 5.1.4, averaging time should be clearly s pecified for clarity. EPA recommends 15 consecutive minutes av eraging at 15% oxygen by volume on a dry basis for consistency with other districts and the RACT/BARCT Determination.

After discussions with Industry and EPA, Rule 4701and Rule 4702 would be amended as follows:

Rule 4701, Section 5.1.4 and Rule 4702, Section 5.2 A ll continuous emission monitoring systems (CEMS) emissions m easurements shall be averaged over a period of 15 consecutive minutes. Any 15- consecutive-minute block average CEMS measurement exceeding the applicable emission limits of this rule shall constitute a violation of this rule.

The following language has also been added to the indicated section:

Rule 4701, Section 5.4.3 and Rule 4702, Section 5.6.9 “NOx emission readings taken pursuant to this section shall be averaged over a 15 consecutive-minute period by either taking a cumulative 15 consecutiv e-minute sample reading or by taking at least five (5) readings, evenly spaced out over the 15 consecutive-minute period.”

Rule 4701, Section 6.3.2 and Rule 4702, Section 6.3.2 “For emissions source testing performed pursuant to Section 6.3.1 for the purpose of dete rmining compli ance with an applicable standard or numerical limitation, the arithmetic average of three (3) 30- consecutive-minute te st runs shall apply. If two (2) of three (3) runs are above an applicable limit, the test can not be used to demonstrate compliance with an applicable limit. ”

Rule 4702, Section 8.0, The correction s to this section are discussed below.

g. Section 6.2, Recordkeeping, the phrase “other informat ion deemed necessary by the APCO” is vague and not en forceable, and therefore s hould be dele ted. EPA recommends specific tasks should be identified clearl y such as engine/control equipment operational characteristics and corrective/pre ventive maintenance procedures used to maintain continual compliance with t he requirements of the rule.

Rule 4701 would be amended to clearly identify sp ecific tasks such as engine/control equipment operational charac teristics and corrective /preventive maintenance procedures used to maintain continual compliance with t he requirements of the rule. Rule 4702 would clearly identify sp ecific recordkeepi ng requirements.

h. Section 6.3, Compliance Testing: Rule 4701 requires complianc e every 24 months. However, internal co mbustion engines have greater wear and te ar as compared to boilers, heaters, and gas turbines. Ba sed on this premise and the RACT/BARCT Determination, EPA recommends the testing interval be ba sed on an accumulated capSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 9 operating hours of 8760 hours a nd/or 24 month interval whic hever comes first to ensure that engines operating continuously are test ed in a timely manne r while giving longer period for engines o perating a limited number of hours per year.

Rule 4701 would be amended to require owners/o perators to use a portable NOx analyzer to take NOx emission readings to verify compliance with the emission limits or percent control limits sp ecified in Section 5.1 during any qua rter in which a source test is not performed. Rule 4702 would specify similar requi rements for the use of portable NOx analyzers.

i. Section 6.3.2, EPA policy ge nerally does not allow emission test results from individual engines to represent emission s for a group of engines (i .e., allowing engines in the group to be exempt from testing requireme nts) for purposes of making compliance determinations. Therefore, EPA recommends th at Section 6.3.2 be deleted entirely and Section 6.3.2.7 be transferred under the re cordkeeping requirements in Section 6.2.

Rule 4701 would be amended to remove the option for representative testing as recommended by EPA. Rule 4701 would also be amended to trans fer the requirements of Section 6.3.2.8 (Section 6.3.2.7 is referenced in error by EPA) under the recordkeeping requirem ents in Section 6.2. Rule 4702 would not allow representative testing.

j. Section 6.5, Exempt Engines : The phrase “support document ation” in Section 6.5.1 is vague and should be clar ified to be enforceable.

The recordkeeping requirements for exempt engines of both rules would clearly specify what specific informati on should be recorded to ens ure better enforceability.

k. Section 7.3 provides the Emission Limit Compliance Schedule for the various classes of engines. Several classes of engines are allowed until May 31, 2001 to comply with RACT. This is inconsistent with EPA policy as contained in the “repowering memo.” All final compliance dates should be changed to no late r than May 31, 19 99 as required by EPA policy. Further, several classes of engi nes are given at least the option of never having to meet the emission li mits in Table 3. Since the emission limits in Tables 1 and 2 are less stringent than, and therefore fail to comply wi th the RACT Determination, all engines must be requir ed to ultimately meet the emission limits in Table 3 by no later than May 31, 1999.

EPA has acknowledged that this deficiency is moot and no action is to be taken as the May 31, 1999, date is past.

l. Section 8, AECP: This pr ovision does not meet EPA’s Economic Incentive Program (EIP) rules found in 40 CFR 51.493. EPA recommends that this pr ovision be deleted. If the District wishes to maintain this provision, the following modifications should be made:SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 10 (A) and (F) In Sections 8.1 and 8.1.1, the 10% environmental benefit described by EPA’s comment letter dated Au gust 22, 1996 and required in 40 CFR 51.493 should be added. Section 8.5, AECP Requirements: EPA recommends that the 10% additional emission reduction be included in the actual agg regated value and that the motor value be deleted. The Sect ion 8.5.2 equation would then read: AE actual <= 90% (AE limit + A E motor ).

Section 8, AECP, has been re moved from Rule 4701 as such provisions are no longer needed in the rule. Provisions for an AECP have been ad ded to Rule 4702 as requested by operators. The proposed AECP provisions in Rule 4702 contain the noted corrections to the defici encies identified by EPA.

Section 8.1 specifies the 10% additional emission reduc tion. The motor value has been deleted. See item E a bove. The Section 8.1 e quation reads as follows: AE actual <= 0.90 (AE limit ).

(B) In Sections 8.1, 8.3.1, and 8.3.2, the 14-calendar-day per iod averaging should be replaced by the averaging requirements recommended for Sect ion 5.1.4 as noted above.

Sections 8.1.1 and 8.1.2 have been changed to delete the 14-calendar-day period averaging. Compliance with AECP NOx emission requirements shall be demonstrated over any 7 (seven) consecut ive-calendar-day period on the basis of source test NOx emission factors. The 7 (seven) consecutive-calendar-days is a reasonable period which allows operational flexibility wh ile ensuring good air quality. The AECP also results in 10% less emissions so that there is a benefit from such a plan.

(C) In Sections 8.3.1, 8.3.2, and 8.4.2, the phrase “...or an equi valent, District-approved method,” must be delet ed because it represents inappropriate direct or’s discretion. If the District wishes to includ e this phrase, then it shou ld be modified to include “approved by the Dist rict, CARB, and EPA.”

Sections 8.1.1 and 8.1.2 include “app roved by EPA, ARB, and the APCO.” The requirements of Section 8.4.2 have been deleted.

(D) Section 8.3.2: the symbol Ef i should be defined as the ac tual emission of the engine rather than the emission factor.

EPA has noted that this item is not a deficien cy and has withdrawn this comment.

(E) Section 8.4, Electrification: this provision is inconsist ent with Section 5.3 and should be deleted.

EPA has noted that this item is not a deficiency and has withdrawn this comment. The requirements of Section 8.4, however, have been deleted from the final draft rule.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 11 m. Section 6.2, Recordkeeping: EPA recommends that records be kept on site for 5 years for compliance with Title 5 requirements and the federal statute of limitation.

Both rules would require t hat records “be readily ava ilable” and kept for 5 years.

3. Other Requirements for Rule 4701 and New Rule 4702

The proposed amendments for Rule 4701 would better clarify and/or specify the requirements for engines that would be ex empt, continuous monitoring systems, the emission control plan, recordkeeping, the inspection and monitoring plan, compliance testing, and the compliance schedule. Other proposed requirements for Rule 4702 would be very similar to Rule 4701.

Spark-ignited internal combustion engines will remain subject to the applicable requirements of Rule 4701 until the engine is required to be in full compliance with Rule 4702 pursuant to the schedule of Section 7.6 of Rule 4702. Compression-ignited engines will remain subject to Rule 4701 because Rule 4702 would apply only to spark-ignited engines. An operator of a spark-ignited inte rnal combustion engine can elect to transition from being subject to Rule 4701 and becoming subject to full compliance with Rule 4702 earlier than the applicable compliance date in the schedule of Section 7.6 of Rule 4702. Operators will transition a spark- ignited internal combustion engine from being subject to Rule 4701 and becoming subject to full comp liance with Rule 4702 by demonstrating full compliance with Rule 4702 and meeting the nec essary permitting requirements. There will be a period when a spark-ignited intern al combustion engine will be subject to both Rule 4701 and Rule 4702 simultaneously. This period is when an operator will need to comply with some requirements (for example, the submittal of an emission control plan and ATC) of Rule 4702 that need to be perfo rmed before full compliance with Rule 4702 can be demonstrated.

IV. CURRENT EMISSIONS AND EMISSIONS REDUCTION

District staff estimates that approximately 4 08 permitted spark-ignited internal combustion engines, including ni ne gaseous-fueled engine s that are permitted as low-use engines, would be subject to the NOx emission limit requirements of Rule 4702. District staff estimates total NOx emissions of approximatel y 4.3 tons per day from the 408 engines that would be subject to the NOx lim it requirements of Rule 4702. District staff estimates total NOx emissions reduction of appro ximately 1.8 tons per day if the 408 engines comply with the proposed NOx limit requ irements of Rule 4702.

V. COST EFFECTIVENESS ANALYSIS

District staff has prepa red a cost effectiveness analysis of the estimated costs to comply with the proposed amendments. The cost effectiveness analysis is atta ched as Appendix B to this staff report.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 12 VI. SOCIOECONOMIC ANALYSIS

Pursuant to state law, District staff is require d to analyze the socioe conomic impacts of any proposed rule or rule amendm ent that significantly affects air quality or strengthens an emission limitation. During the scoping meeting, District staff solic ited volunteers from stakeholders, and manufacturers and vendors of control device s to participate as members of the socioeconomic focus group for the rule. District staff worked closely with the focus group to estimate direct compliance costs of the proposed amendm ents. The District’s independent consultant participated with the focus group to ident ify and analyze the socioeconomic impacts of the proposed amendm ents to the rules. District staff has considered the socioeconomic anal ysis to further refine the propos ed rule amendments. The socioeconomic report is atta ched as Appendix C to this st aff report, and was presented to the public at the final workshop for the rules. The fina l socioeconomic re port will also be presented to the District Governing Board in order to disclose an y expected economic impacts.

VII. RULE CONSISTENCY ANALYSIS

Pursuant to state Health and Safety Code, Secti on 40272.2, District st aff has prepared a rule consistency analysis that compares the elements of the proposed ru le with the corresponding elements of othe r District rules and federal regulations and guidelines that apply to internal combustion engines. The rule consistency anal ysis is attached as Appendix D to this staff report.

VIII. ENVIRONMEN TAL IMPACTS

Pursuant to the California Environmental Qual ity Act (CEQA), District staff has investigated the likely environmental impa cts of the proposed amendments and will file a Negative Declaration. The Envi ronmental Analysis is attached as Appendix E to this staff report.

IX. REFERENCES

1. Federal Register, Volume 63, Num ber 77, September 14, 1998, page 49053. 2. Technical Support Document for EPA’s Notice of Proposed Rulemaking for Rule 4701, dated July 31, 1998. 3. SJVUAPCD Rule 4701, amended December 19, 2002. 4. ARB “Final RACT/BARCT Determination for Spark-Ignited Internal Combustion Engines), dated November 2001. 5. SJVUAPCD BACT Clear ing House Database. 6. ARB BACT Clearinghouse Database. 7. Ventura County APCD Rule 74-9 (Sta tionary Internal Combustion Engines), Revised 11/14/00.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 13 

# APPENDIX A

Comments and Responses for Rule 4701 (Internal Combu stion Engines– Phase 1) and Rule 4702 (Internal Com bustion Engines– Phase 2)

August 21, 2003SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 14 COMMENTS FROM SCOPING MEETING HELD MARCH 19, AND 20, 2002

EPA - No comments received.

ARB

1. COMMENT: Section 4.3: In this section, low-use engines operating less than 1,000 hours and not subject to the RACT require ments of Section 5. 2 are exempted from the provisions of the rule except for t he administrative requir ements of Section 6.1 and 6.5. Most districts with internal combustion engine rules have set the low-use threshold at 200 hours. In addition, the ARB Determination of Reasonably Available Control Technology and Best Available Re trofit Control Technology for Stationary Spark-Ignited Internal Combustion Engi nes, November 2001 (Determination) also specifies a low-use threshold of 200 hours. Based on cost estimates, it appears to be cost effective to control emissions from engines operating as little as 200 hours annually. We recommend that the Distr ict amend Rule 4701 to define low-use engines in Section 3.12 as engines operating less than 200 hours per year.

RESPONSE: Rule 4702 would specify the 200 hours threshold as contained in the RACT/BARCT Determination. No changes are necessary for Rule 4701.

2. COMMENT: Section 5.1: In general, the NOx emissi on limits found in this section are not as effective as those in the Determin ation. With the e xception of lean burn engines, we recommend that the District revi se their emission limi ts in Rule 4701 to correspond to those in the Determination. The fo llowing table summarizes the differences in the NOx limits betw een Rule 4701 and the Determination:SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 15 NOx EMISSION LIMITS COMPARISON

Engine Type Rule 4701 NOx Limit BARCT NOx Limits GENERAL Rich Burn 50 ppm or 90% reduction 25 ppm or 96% reduction Lean Burn 75 ppm or 85% reduction 65 pp m or 90% reduction Lean Burn, 2-Stroke, < 100 horsepower 75 ppm or 85% reduction 200 ppm Waste Gas-fueled 125 ppm or 80% r eduction 65 ppm/90% if lean burn, 50 ppm/90% if rich burn

PUBLIC WATER DISTRICTS Rich Burn 90 ppm or 80% reduction 25 ppm or 96% reduction Lean Burn 150 ppm or 70% redu ction 65 ppm or 90% reduction Lean Burn, 2-Stroke, < 100 horsepower 150 ppm or 70% reduction 200 ppm

CYCLICALLY-LOADED ENGINE Rich Burn 300 ppm 300 ppm

A review of source test data and the cost effectiveness analys is contained in the Determination indicates that these recomm ended limits may be met cost effectively.

RESPONSE: Rule 4702 would specify the BARCT NOx emission limits consistent with the emission limits in the RACT/BARCT Determination except for cyclic loaded, field gas fueled rich burn engines. T he proposed emission limits for cyclic loaded, field gas fueled rich burn engines are 50 ppmv for NOx, 2000 ppmv for CO and 250 ppmv for VOC. Based on the limits in other districts and the measured emissions from District sources, District staff feels that these RACM limits can be met. The new limits would not be necessary for Rule 4701.

3. COMMENT: Section 5.4: Section 5.4 specif ies either a CEMS or alternate monitoring equipment for engines with extern al control devices, and the monitoring of operational engine characteristics for engines without external control devices. We recommend that the District require quarterly monitoring on all engines during any quarter in which a source test is not performed. We believe that quarterly monitoring would ensure a higher degree of compliance because emissions would be checked regularly and brought into compliance as necessary in the intervening periods between source tests. In additi on, we recommend that the District require acceptable test methods, protocols, or procedures, which are to be followed when conducting a screening analysis using a portable analyzer.

RESPONSE: Rule 4701 and Rule 4702 would spec ify that a portable NOx analyzer be used to take NOx emission readings during each quarter that a source test is not performed. The rules would also requ ire that the analyzer be calibrated, maintained, and operated in accordance with the manufacturer’s specifications and recommendations or a protocol approved by the APCO.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 16 4. COMMENT: Section 6.3: Section 6.3 describes compliance testing requirements, but does not specify the conditions under which a complia nce test is to be conducted. NOx concentrations from an engine can vary significantly with load. These concentrations can be relative ly low at low power levels, and reach a peak at or near the engine’s maximum rated load. This coul d allow an engine that exceeds the rule’s emission limits to be found in compli ance if the engine is sour ce tested at a low power output. A similar situation could arise if the Alternative Emission Control Plan (AECP) option is exercised as expl ained in Section 8.3.2. Th e AECP emissions calculation procedure, which utilizes the results of source tests, may al low a group of engines which collectively exce ed the rule’s emission limits to be in compliance by source testing at low power levels. We recommend the modi fication of Section 6.3 so that all engines are required to be tested at peak rated load and under a typical duty cycle as specified in the RACT /BARCT Determination.

RESPONSE: The rules would require engines to be tested at peak rated load and under a typical duty cycle as specified in the Determination. Rule 4701 would be amended to delete Section 8.0, Alternative Em ission Control, as District staff is not aware of any operator using Section 8. 0. Rule 4702 would not contain any requirements for Alternative Emission Control Plans.

5. COMMENT: Section 6.3.2: This section allows the owner or operator of multiple, similar engines the option of source test ing 10 percent of these engines every year rather than source testing all engines once every 24 months , as required in Section 6.3.1. On average, an engine under the provisions of Sect ion 6.3.3 would be source tested only once every ten year s rather than once every tw o years. The provisions in Section 6.3.2 could significantly weak en compliance with the rule and should be deleted.

RESPONSE: Rule 4701 would be amended to delete the representative testing option requirements in Section 6.3.2 as recommend ed. The rule would also be amended to transfer the requirement s of Section 6.3. 2.8 (Section 6.3.2.7 is referenced in error by EPA) under the recordk eeping requirements in Section 6.2. Rule 47 02 would not contain any requirements fo r representative testing.

6. COMMENT: Section 6.3.3: This section indi cates that, once Section 6.3.2.9 has been satisfied, subsequent source testi ng shall be performed pursuant to Sections 6.3.1 or 6.3.2. This secti on should be rewritten to clarif y its meaning. It is unclear when Section 6.3.3 is “satisfied.” Secti on 6.3.2.9 indicates that if any of the representative engines exceeds the emissi ons limits, each engine in the group must be source tested. Failure to complete t he testing within 90 days will be considered a violation of the rule for each untested engine. It is unclear whether “satisfied” refers to finding a representative engine exceeding t he limits, or whether it refers to the failure to complete source testing of each engine in the group within 90 days.

RESPONSE: Rule 4701 would be amended to delete Section 6.3.2.8 and Section 6.3.2.9.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 17 STAKEHOLDERS

7. COMMENT: Rule 4701, Section 5.1.3, Table 3: District proposes to reduce the emission limits to meet the proposed limits on page 9 of the February 26, 2002 Preliminary Draft Staff Repor t. We are opposed to the addition of a 250 VOC limit for rich-burn cyclically loaded field gas fired engines. These engines operate under extreme variable load conditions. Currently , there is no field data to support the achievability of this new limit. We are also opposed to the reduc tion of the NOx limit for rich-burn “other” category engines that are continuously loaded. Currently, these engines have a 50 ppm NOx limit. The Distric t proposes to reduce this limit down to 25 ppm, or below. These engines normally run on produced field casing gas which has inherent variations in gas composit ion and BTU content. Based on historical source test and portable analyzer data, the 25 ppm limit for rich-burn engines is not reasonably achievable. We recommend the Dis trict maintain the emission limits for rich-burn engines currently in effect as spec ified in Section 5.1.3, Table 3 (3a.i and 3.a.ii) of the rule.

RESPONSE: Rich-burn cyclically loaded field gas fired engines can meet the 250 VOC limit as presented in the test re sults presented in Table IV-1 of the RACT/BARCT Determination. The RACT/ BARCT Determination also presents data demonstrating that the 25 ppm limit for rich-burn engines is reasonably achievable and is being met. The proposed new emission limits would be contained in Rule 4702.

8. COMMENT: Rule 4701, Section 6.3: District proposes to eliminate the allowance for representative testing of similar engines. Historical compliance source test data supports the effectiveness of representativ e testing. Repres entative testing also provides a more cost effective alternativ e to testing every 24 months. Our company recommends the representativ e testing provisions spec ified in Section 6.3.2 be retained. We are opposed to the 8760 hour (12 month) trigger for compliance testing. This proposal will have a sign ificant economic impact on operators since it increases the frequency of source testing from every 24 months down to every 12 months. If adopted, this requirement will increase our annual source testing costs by over $20,000 per year. In addition, t he increased source testing will not help to reduce emissions or bring the District any closer to achieving attainment. It is important to recognize that most engines are source tested every 24 months (unless they qualify for representative testing). T hey are also being tested at least every 6 months with the portable analyzer. In addition, all engines are being checked by District Inspectors annually during compliance inspections.

RESPONSE: Although District staff agrees that representative testing can provide a more cost effective alternative to testi ng every 24 months, District staff also agrees with EPA’s and ARB’s comments regarding representative te sting. Section 6.3.2, Representative testing of similar engines, in Rule 4701 would be deleted. Rule 4701 would also be amended to require ow ners/operators to use a portable NOxSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 18 analyzer to take NOx emission readings to verify compliance with the emission limits or percent control specified in Section 5. 1 during any quarter in which a source test is not performed. Rule 4702 would not c ontain any requirements for representative testing.

9. COMMENT: Even though mobile sources (cars and trucks) represent a significantly greater portion of the emissi ons inventory, the compliance testing requirements for mobile sources are much less stringent than for stationary IC engines. Motor vehicles older than 1973 are not required to be smog checked at all. New vehicles can qualify for smog check testing ever y 5 years. There are no tune-up requirements or periodic portable analyz er inspection requirements for motor vehicles as there are for stationary IC engines. Notwithstanding, the District is proposing that clean burn natural gas fired stationary IC engines be source tested every year in addition to existing requirem ents to check them every 6 months with the portable analyzer with periodic in spection, maintenance and tune-up requirements. We request the District justify the rationale for increasing the frequency of compliance testing of stationar y IC engines. We also request the District to quantify the projec ted emission reductions this requirement will provide as SIP approved reductions credited towa rd the Non-Attainment Plan.

RESPONSE: The District is not proposing that clean burn natural gas fired stationary IC engines be source tested every year. EPA recommended that the testing interval be based on an accumulated cap operating hours of 8760 hours and/or 24 month interval whichever comes first. Rule 4701 would be amended to require owners/operators to use a port able NOx analyzer to take NOx emission readings to verify compliance with the emi ssion limits or percent control specified in Section 5.1 during any quarter in which a sour ce test is not performed. The District will consider quantifying the projected emission reductions this requirement will provide as SIP approved reductions credited toward the Non-Attainment Plan. Rule 4702 would also require owners to use a portable NOx analyzer to take NOx emission readings to verify compliance with the emission limits or percent control during any quarter in which a source test is not performed.

10. COMMENT: Retrofit rules should establish c ontrol levels within which equipment can be expected to be in continuous compli ance during normal operation. Industry believes that the control levels proposed by the District may not be realistically achievable on a continuous basis. The NOx emission control levels proposed for most internal combustion engines would in e ffect require retrofit of all rich burn engines with non-selective catalytic reduction and air-to-fuel ratio controllers. The control requirements for lean burn IC engines (except for 2 stroke, gas fired engines <100 Hp) will require extensive combustion m odifications or the replacement of the post combustion controls (selective catalytic reduction).

RESPONSE: District staff feels that the proposed requirements can be met.

11. COMMENT: Regarding Rich Burn Engines (All En gines except Cyclically Loaded): Under certain conditions, non-selective ca talytic reduction (NSCR) has proven to beSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 19 a reliable control technology for reduci ng NOx emissions. However, NSCR systems are extremely sensitive to equipment load variations. Even small perturbations in engine load (which would not otherwise be defined as cyclic loading) can cause variations in the performance of the NSCR system and significantly effect engine emissions. Industry proposes that the District establis h a NOx limit of 40 ppmv (15% oxygen) for these engines. Industry proposed control levels for rich burn IC Engines are shown below.

NOx CO VOC Spark-Ignited Internal Combustion Engine Percent Control ppmv at 15% O 2 Rich-Burn (Cyclically loaded) -- 300 4,500 250 Rich-Burn (All Other Engines) 93.6 40 4,500 250

Regarding Lean Burn Engines (All Engines ex cept 2-Stroke, gas fueled, <100 Hp): The proposed control requirements for lean burn IC engines (except for 2-Stroke, gas fueled engines <100 Hp) will require ex tensive combustion modifications or the replacement engine or post combustion cont rols (selective catalytic reduction). These systems may not be able to operate reliably within the narrow constraints required by the proposed limits. Industry proposes that t he District establish a NOx limit of 70 ppmv (15% oxygen) for these engines. Industry proposed control levels for lean burn IC Engines are shown below.

NOx CO VOC Spark-Ignited Internal Combustion Engine Percent Control ppmv at 15% O 2 Lean-Burn (2-stroke, <100 Hp) -- 200 4,500 750 Lean-Burn (All Other Engines) 89.2 70 4,500 750

RESPONSE: Rule 4702 would contain the pr oposed RACM emission limits as noted in Section III (B) in the staff report. As noted in the staff report, the proposed RACM emission limits are based on existing li mits in Rule 4701 of the District, on the limits in other district s and the measured emissions fr om sources in the District. District staff feels that t hese limits can be met. Additi onally, some of the industry proposed limits (200 NOx ppmv for Lean-Bu rn, 2-stroke <100 Hp, and 4,500 ppmv for CO) are less stringent than the existing Rule 4701 limits and would be a rule relaxation which is not allowed by EPA.

COMMENTS FROM WORKSHOP HELD JULY 15, 17, AND 18, 2002

Rule 4701 (Internal Combusti on Engines– Phase 1) and Rule 4702 (Internal Comb ustion Engines– Phase 2)

EPA - No comments received.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 20 ARB - No comments received.

STAKEHOLDERS A.

1. COMMENT: Rules 4701, 4702 Industry is conc erned that the District rule making staff have not considered t he socio-economic or cost impacts the rules will have on the regulated community. Industry reco mmends staff build on their efforts by satisfying the requirements in the Clean Air Act that require districts “consider” the economic aspects of the proposed reasonabl y available control measure (RACM). Furthermore, Industry is also concerned the District rule making staff have indicated they will not seek to establish a cost-effectiveness threshold to evaluate what is “reasonable available” RACM.

RESPONSE: District staff is in the process of conducting a socioeconomic analysis and cost effectiveness analysis of Rule 4702. The analysis would be used to refine the draft rule. In general, we start th e socioeconomic analysis by convening a meeting with the Focus Group after completi ng the workshop for the second draft of Rule 4702. The purpose of the Focus Group meeting is to assist in determining industries' compliance costs for the rule , the economic impacts on industries, and the likely business responses to the cost s of compliance. Information obtained through the Focus Group as well as fr om affected sources will be analyzed to determine the regional economic impac ts on the San Joaquin Valley. The socioeconomic analysis report will be pub lished and presented at a final workshop for the rule. A final report along with t he proposed rule will be submitted to the Governing Board at a public hearing to consider adoption of the rule.

The District is required by state law to analyze the cost effectiveness prior to adopting new BARCT rules. The law, how ever, does not require the District to establish a specific cost effectiveness threshold value. The District no longer uses cost effectiveness thresholds to exclude emission controls that could achieve as much reduction possible from a control m easure. Instead, the District uses the socioeconomic analysis and cost effectiveness analysis to inform the rulemaking process. This practice has been in effect since early 2001 and has been used in four rules adopted by the Governing Boar d during the past year. While cost effectiveness analysis has a value in compar ing potential control techniques against each other, we believe that cost effe ctiveness does not adequately represent the rule's financial impact on businesses and industries. Our rulemaking process should consider not only the rule's complianc e costs, but also the affected industry's economic standing. This consideration is not possible through cost effectiveness analysis-it requires socioeconomic analysis. We do not have strict guidelines for what would be considered acceptabl e cost impacts because businesses and industries respond differently to costs. We rely on affected stakeholders to relay their concerns on excessive costs during the rulemaking process so that our socioeconomic analysis could account t he impacts on the affected businesses and industries. The District needs to achieve as much emissions reduction as possibleSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 21 so we do not feel that we can reject tec hnologically feasible controls solely based on cost effectiveness.

2. COMMENT: Rules 4701, 4702 Industry recommends staff assemble an Industry Focus Group as soon as possible so that i ndustry representatives can work together with staff in evaluating the cost and feasibility of controls as part of this rule making process – specifically in regards to t he proposed revisions to Rule 4306. Industry also recommends that monthly meetings of the group, along with staff, be scheduled throughout the rule making process. In the District’s Draft Staff Report (June 18, 2002), page 3 makes reference to an Industr y Focus Group, but suggests that the District should only schedule one meeting wit h the group. Industry does not feel this will allow sufficient time to “assist district staff in determining the appropriate method of gathering information on regulatory compliance costs and business impacts resulting from compliance with the rules.”

RESPONSE: The purpose of the Focus Group is to assist the District in determining the affected industries’ and businesses’ compliance costs for the rule and their likely business responses to the compliance costs as soon as possible in order to complete the project so that the Governing Board can act on adopting the rule by the first quarter of 2003 for the District to avoid being sanctioned by EPA.

3. COMMENT: Rules 4701, 4702 Industry believes the District needs to ensure retrofit rules in the rules establish cont rol levels within which equipment can be expected to be in continuous compliance during normal operation with an appropriate compliance margin. Many o il industry operators have units that are operated intermittently or cyclically loaded. It is critically important that whatever control levels are ultimately proposed through this process be realistically achievable in practice on a continuous basis throughout all normal operational modes (e.g., load swings, changes in firing rates.)

RESPONSE: The proposed limits are based in current control technologies as well as controls that are technologically f easible. Aside from the ARB RACT/BARCT Determination, other California air Distr icts such as Ventura County APCD and Santa Barbara County APCD have already implemented the same NOx limits that are being proposed for Rule 4702.

4. COMMENT: Rules 4701 and 4702 Industry requests all written comments be included within the District’s Staff Report.

RESPONSE: Rules 4701and 4702 District staff will continue to include those written comments that ar e meaningful and not duplicat ive in the staff report.

5. COMMENT: Rules 4701 and 4702 Due to short notice of the public workshops held during the week of July 15, 2002, there has been inadequate time for oil industry operators to conduct a thorough cost analysis for the proposed rules. Oil industry operators will be encouraged to provi de cost data to the District and will be encouraged to be involved in the Industry Focus Group.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 22 RESPONSE: Rules 4701 and 4702 District staff looks forward to receiving such cost data and constructive involvement in the Focus Group by affected sources and other interested parties.

6. COMMENT: Rule 4702 Industry incurred significant costs to satisfy Rule 4701 Phase 1 compliance. Capital costs to re trofit eight engines with NSCR catalysts and air/fuel controllers totaled approximately $147,000. This inclu des the replacement costs of the catalysts, but does not include maintenance, tune-up, monitoring, testing or administrative co sts required to maintain compliance with the existing limits. Now, the District is again proposing to ratchet down to a point of diminishing returns by further reducing the allowabl e emission limits. Phase 2 reductions will not be achievable without another significant cost to in dustry for minimal emission reductions. The District’s proposal should be termed “Phase 3”. Realistically, the first IC engine rule NOx limit was 90 ppmv in 1995 (Phase 1), then was reduced to 50 ppmv in 2000 (Phase 2) and is now bei ng further reduced to the proposed 25 ppmv in this rule change (Phase 3).

RESPONSE: District staff encourages stakeholders to provide cost data and likely business responses during the socioeconomic focus group meeting.

7. COMMENT: Rules 4701 and 4702 Due to short notice of the public workshops held during the week of July 15, 2002, there has been inadequate time to conduct a thorough cost impact analysis for the proposed rules. Industry will submit to the District additional data being requested from combustion technology companies at a later date.

RESPONSE: Comment noted.

8. COMMENT: Rules 4701 and 4702 Health and Safety Code Section 40920.6 requires an incremental cost effectivene ss evaluation. This very important information should be published in a staff report for the proposed changes to Rule 4701 and the new Rule 4702 prior to the nex t workshop. It is also extremely important that adequate time be allowed fo r the public to review and comment on the cost analysis. We would suggest t hat the rule development process would benefit greatly from further meetings with other interested stakeholders on this issue.

RESPONSE: Rules 4701 and 4702 A preliminar y absolute cost effectiveness is shown in Appendix C of the staff report. An increment al cost effectiveness analysis will be performed later in the rule dev elopment process. Stakeholders are encouraged to provide their cost information to the District as soon as possible so it could be used in refining the absolute cost effectiveness analysis as well as incremental cost effectiveness analysis.

9. COMMENT: In the draft staff report, Section III.B.1, the district identifies “nonselective catalytic reduction” as the likely control technology to be used for richSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 23 burn, cyclic loaded, field gas fueled ICE. At several ICE workshops that this operator has attended in the past, num erous emission control technology manufacturer representatives and technici ans have testified that NSCR was not a viable control technology for this fa mily of ICE, due to unstable exhaust temperatures and inconsistent fuel gas composition, among other reasons. In my experience, the few ICE in this family that have been successfully controlled with NSCR have near ideal operating conditions (i.e., not heavily loaded and near PUC quality fuel gas). Before t he NOx limits for this family of ICE is lowered, tests need to be performed on a true representative samp le of the ICE in the field in Kern County; not just a few hand picked engines from other air districts.

RESPONSE: The RACT/BARCT Determination cl early documents that rich burn, cyclic loaded, field gas fueled IC engi nes can meet the proposed 50 ppmv limit. Other California air districts have already implemented the same limit. District staff feels that the proposed limits for engines t hat are operated in the District can be met.

10. COMMENT: In Section III.B.2 of the draft staff report, the District contends that, for rich burn, cyclic l oaded, field gas fueled ICE, 50 ppmv NOx is achievable “based on the limits in other districts and the measured emissions from District sources.” Before the District imposes emission li mits based on test results from othe r air districts, it is imperative that the conditio ns under which these ICE operate are considered. It is my understanding that, as stated above, there is a very select group of rich burn, cyclic loaded, field gas fueled ICE meeting these NO x limits. If the Dist rict has source test data showing that these NOx limits are achievable, please ma ke this data available to affected parties before the next scheduled workshop. Pl ease include al l source test data from this family of IC E. It is my experience that few ICE in th is category can consistently obtain a 50-ppmv NOx limit. In dustry strongly sugges ts that the 300-ppmv limit be maintained.

RESPONSE: District staff feels that the propos ed limits can be met. Source test data is available for cyclically loaded engi nes (see source tests for PTO numbers S1737-14-1, S1737-17-1, and S- 1738-103-0) that demonstrat e NOx levels below 50 ppmv. Interested parties that would like to see the actual source test documents for these units are advised to submit the appropriate District information request documents.

11. COMMENT: Rule 4702 Would the permit to operate need to be modified for emergency engines currently permitt ed at 200 hours of non-emergency use.

RESPONSE: Rule 4702 In order to be exempted as an emergency engine in Rule 4702, such emergency engine would need to be limited to operate no more than 100 hours per year for non-emergency use. The permit to operate would need to be modified to reflect the 100 hour limit.

12. COMMENT: Rule 4702 How do the proposed requirements coincide with ARB’s efforts to reduce particulate matte r emissions from diesel engines.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 24 RESPONSE: We do not propose to change the limits for diesel engines. ARB’s project to reduce particulate matter emi ssions from diesel engines appears to be in an early stage so it is not possible to determine how the proposed requirements of Rule 4702 will affect ARB’s project. The AR B website for the project notes that: “A public workshop will be held at 9:30 AM (PST) on Nove mber 19, 2002, to discuss the possible regulatory approaches to reduc e diesel particulate matter emissions from stationary diesel-fueled engines

. ” The commenter is referred to the website for additional information. The website address is: http://www.arb.ca.gov/diesel/dieselrrp.htm

13. COMMENT: Rule 4702 Section 2.0 requires all eng ines rated at 50 hp or greater to comply with the limits of the rule. This is not consistent with the exemption in section 6.1.2 of Rule 2020 and s hould be revised accordingly.

RESPONSE: Rule 4702 Section 2.0 has been c hanged to specify that Rule 4702 applies to engines rated greater than 50 hp.

14. COMMENT: Rule 4702 Section 2.0 Applic ability has been changed from engines “greater than 50 bhp” to engines “50 bhp or greater”. Industry opposes this proposed change. Since engines 50 bhp or less are exempt from permit under Rule 2020, Section 6.1.3, it is cl ear the District has no invent ory of this new population of engines and can therefore not determine or estimate the anticipate emissions reductions from proposing controls on 50 bhp engines. It is Industry’s position that the Section 2.0 Applicability remain as it appears in the current Rule 4701.

RESPONSE: Rule 4702 Section 2.0 has been c hanged to specify that Rule 4702 applies to engines rated greater than 50 hp.

15. COMMENT: Rule 4702 Section 2.0 The rule applicability section has been changed to include ICE rated at 50 BHP (f rom ICE greater than 50 BHP to ICE 50 BHP or greater). By implementing this change, the District will be subjecting a family of non-permitted ICE to Rule 4702. Bec ause 50 BHP rated ICE do not require a permit, it is doubtful that the District has an accurate inventory of these ICE, hence the emission benefit to be gained by this change is unknown. Before the rule applicability is changed the District shoul d quantify the number of ICE that will be captured by this change. Once the emission reduction to be achieved by this change is quantified, the District and the affe cted public can decide whether or not it is feasible to control these ICE, taking into account the lengthy and expensive permit processing exercise the ow ners/operators will be subjected to.

RESPONSE: Rule 4702 Section 2.0 has been c hanged to specify that Rule 4702 applies to engines rated greater than 50 hp.

16. COMMENT: Rule 4702 Section 2.0 The District is proposing to extend control requirements to include internal combustion engines with a rated horsepower of 50 or greater that r equires a permit to operate (PTO.) Under the District’s permitSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 25 exemption rule (Rule 2020), IC engines with a rated brake horsepower (BHP) no greater than 50, are exem pt from permit requirem ents. Consequently, rule applicability would not extend to IC engines with a rated BHP equal to 50, until the District completes rulemaking to reduce the 50 BHP permit exemption threshold. On the other hand, if the Dis trict intends to interpret rule applicability in a manner other than described above, then Industry obj ects. During the workshop, several attendees pointed out that the District’s permit exemption rule and the proposed control measure appeared to conflict. Att endees were concerned that the proposed control measure would ess entially eliminate the Rule 2020 exemption for 50 BHP engines. In the past, the District has broadly interpreted Rule 2010 (Permits Required) to mean that permits must be obtained for the installation of control equipment. If Rule 4702 control require ments are extended to 50 BHP engines, then the need to obtain a permit for the inst allation of the control equipment, would essentially eliminate the existing permit exemption, without c onducting rulemaking required for amending Rule 2020. Industry obj ects to any type of rulemaking, which results in the circumvention of the rule making procedure.

RESPONSE: Rule 4702 Section 2.0 has been c hanged to specify that Rule 4702 applies to engines rated greater than 50 hp.

17. COMMENT: Rule 4702 Section 3.10 The District is proposing to reduce the amount of time allowed for conducting ma intenance on emergency standby engines from 200 hours per year to 100 hours per y ear. Industry believe s that the 200 hours per year currently allowed (Rule 4701) is a reasonable amount of time to allow for conducting engine maintenance activities. I ndustry also requests that the apparent prohibition on the use of the emergency standby engine for supplying power while maintenance is performed or repairs ar e made to the prim ary power supply be removed. Allowing use of the emer gency standby engine for no more than 200 hours per year of maintenance related activities would:

a. Help ensure the readiness of the em ergency standby engine, in the event of an emergency. b. Reduce overall emissions. Oper ators would be able to conduct maintenance activities on the primary power suppl y, while the emergency standby engine undergoes intermittent operation, required for ensuring readiness. Allowing the use of the emergency standby engine while maint enance activities are conducted on the primary power supply would not result in any additional emissions provided total maintenance operations do not exceed 200 hours per year. c. Providing operators with a means of conducting maintenance on the primary power supply without having to shutdow n operations helps to ensure the proper operation and minimizes emissions.

Industry suggests the proposed definiti on of an emergency standby engine be revised as follows:

Any internal combustion engine which op erates as a temporary replacement for primary mechanical or electrical pow er during an unscheduled outage caused bySAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 26 sudden and reasonably unforeseen disasters or events beyond the control of the operator. An engine shall not be consid ered to be an emergency standby engine if it is used for purposes other than: periodic maintenance on the engine or the primary power supply, periodic readiness te sting, readiness testing during or after repair work, unscheduled outages or to supply power while maintenance is performed or repairs are made to the primary power supply , and if it is not limited by permit condition to operate 100 200 hours or less per calendar year for nonemergency purposes as determined by a non-resettable elapsed operating time meter.

RESPONSE: Rule 4702 Section 3.10 District st aff feels that the 100 hours allowed for emergency engines is adequate to ens ure proper testing and maintenance. Operators that need to operat e an engine for a greater amount of time can do so by equipping the engine to meet t he requirements of the rule.

18. COMMENT: Rule 4702 Section 3.10 Do pow er outages qualify as “events beyond control of the operator?”

RESPONSE: Rule 4702 Section 3.10 Only if the power outage is due to circumstances beyond the c ontrol of the operator.

19. COMMENT: Rule 4702 Section 3.15 Lean-Burn Engine and 3.20 Rich-Burn Engine serve no useful purpose. Industry r equests the District justify why < or > 4% excess oxygen in the exhaust is used as t he trigger to categorize the difference between lean burn or rich burn engines?

RESPONSE: Rule 4702 Section 3.15 and Section 3.20 The 4% level is what has been and is currently used in many of the air districts in the state.

20. COMMENT: Rule 4701 and Rule 4702 Please modify the definition of rich and lean burn engines to eliminate the references to 4% excess oxygen. This definition falsely categorizes a rich burn engine t hat has been leaned out to greater than 4% excess oxygen as a lean burn engine (lean ing out has proven to be a successful means of reducing NOx emissions in certai n ICE). If the NOx limit for rich burn, cyclic loaded, field gas fueled ICE is kept at or near the current 300-ppmv (as Industry suggests) this definition chang e will be beneficial to Industry and have no negative environmental affect.

RESPONSE: Rule 4701 and Rule 4702 Additional justification would need to be provided by the commenter for District st aff to consider this comment further.

21. COMMENT: Rule 4702 Section 3.22 A transpor table engine is defined to be: “Any engine designed to be and capable of being carried or moved from one location to another and that is operated (emphasis added) at one location for no more than 12 consecutive months. Indications of trans portability include but are not limited to, wheels, skids, carrying handles, dolly, trailer or platform.” In Section 3.22.1 the District specifies that the time required fo r removal and installation of transportableSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 27 replacement engines, be counted towards t he 12 month limitation for transportable equipment. However, the Section 3.22 defin ition of transportable engines applies to the operation of the engines. Consequently , Industry requests that the section 3.22.1 be revised as follows: Any transport able engine that replaces a transportable engine at a location will be included in calculat ing the consecutive time if it performs the same function as the engine being replaced. In that case, the cumulative time of both engines shall not includeing the time between the remova l of the original unit and the installation of the replacem ent unit, would be counted towards the consecutive time period.

RESPONSE: Rule 4702 Section 3.22 The pr oposed definition of transportable engine is identical to the existing SIP ap proved definition in Rule 4701. Changing the allowable period of time by excludi ng the installation and removal period would constitute a SIP relaxation which is not consistent with EPA policy.

22. COMMENT: Rule 4701 and Rule 4702 Is an engine used to power a self powered (movable) crane that operates at a singl e site considered a transportable engine?

RESPONSE: Rule 4701 and Rule 4702 An engine that is used to power the crane equipment and is not used to propel or move the vehicle that the crane is transported on shall be considered a transpor table engine if it m eets the definition for “transportable engine” in Section 3.0.

23. COMMENT: Rule 4702 Section 4.2.2 This section will decrease the hours that “low use” engines are allowed to run fr om 1000 to 200 hours per year. As noted in other industry comments, the emission reductions attributed to this lowered run time are minimal, since most of these units operate for only short periods of time. Leaving the hours unchanged give facilities flexibility when operating under abnormal conditions.

RESPONSE: Rule 4702 Section 4.2.2 The aggregated emissions from low use engines are significant if all low use engi nes are allowed to run at up to 1000 hours per year. (Please refer to response to comment #25). Operator s would still have full flexibility to operate their engines provi ded they do not exceed 200 cumulative hours of operation per year. Engi nes that are not exempt an d that operate more than 200 hours would need to comply with most of the proposed requirements of the rule.

24. COMMENT: Rule 4701 and Rule 4702 Are t he engines that are operated by farmers for growing crops subject to the rules.

RESPONSE: Rule 4701 and Rule 4702 No, engines that are operated for growing crops are exempt per Section 4.0. This exemption would not be amended.

25. COMMENT: Rule 4702 Section 4.2.2 Low use engines limited by permit conditions to operate no more than 200 hours per year would be exempt from control requirements, provided the engines are not part of a distributed power generation system. Engines, which are rarely used or are operated for only shortSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 28 periods of time are not likely to contribut e to air quality impacts . Furthermore, the cost of retrofitting and maintaining em ission control systems on equipment, which is rarely operated is prohibitive and may not be justified by the amount of emission reductions actually achieved. Consequent ly, industry requests that the District retain the current definition of a low use engine or provide an analysis of the emission reductions expected to be achiev ed by reducing the allowable operating hours.

RESPONSE: Rule 4702 Section 4.2.2 As noted in Section IV of the staff report, District staff estimates that approximat ely 90 engines are permitted as low-use engines. Assuming that these 90 engi nes comply with the requirements of proposed Rule 4702 and have an average operating capacity fa ctor of 10%, District staff estimates that emissions reductions of 0.45 tons per day will be realized from these 90 low-use engines.

26. COMMENT: Rule 4702 Section 4.3.1 The District is proposing to allow up to 100 hours per year of maintenance operati on for engines required for emergency response. The readiness of emergency response equipment would be better assured by allowing up to 200 hours per year of maintenance operation.

RESPONSE: Rule 4702 Section 4.3.1 The comm enter did not provide any data as to why 100 hours per year of maintenance operation would not be adequate for engines to operate properly as expected duri ng emergency situations. District staff feels that 100 hours of operation is sufficient to properly maintain engines required for emergency response.

27. COMMENT: Rule 4702 Section 4.3.2 The District is proposing to regulate equipment registered under the California Air Resources Board (CARB) portable equipment registration program. Air dist ricts are precluded from regulating CARB registered portable equipment (N ote this comment is also applicable to Rule 4701.)

RESPONSE: Rule 4702 Section 4.3.2 Rule 4702 Section 4.3.2 exempts portable equipment that are subject to Rule 2280 or the Statewide Portable Registration Program, which includes portabl e engines registered with ARB.

28. COMMENT: Rule 4702 Industry is concerned t hat the emission limits proposed in Rule 4702 are below the level achievable in practice. Industry can support this concern with actual source test and por table analyzer data for engines that were retrofitted with Non-Selective Catalytic Re duction (NSCR) and air/fuel controllers to meet the Rule 4701 (Phase 1) limits. Indus try requests the District provide the data that can substantiate that the propos ed limits can be reasonably achieved in practice with at minimum a 20% compliance ma rgin (e.g., CARB certified source test results).

RESPONSE: Rule 4702 Industry is refe rred to the ICE RACT/BARCT Determination for such data.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 29 29. COMMENT: Rule 4702 Retrofit rules should establish control levels within which equipment can be expected to be in c ontinuous compliance during normal operation. Industry believes the control le vels proposed by the District in the Rule 4702 Phase 2 are not practically or reasonab ly achievable on a continuous basis. There is clearly insufficient compliance marg in built into the limits to account for engine load swings, catalyst life, fuel quality variations, or seasonal ambient temperature changes.

RESPONSE: Rule 4702 The proposed limits have already been implemented in other California air districts and are currently being achieved. District staff does not see any reason as to why the limits coul d not be achieved by engines operating in the District after the appropriate c ontrol technologies are installed.

30. COMMENT: Rule 4702 Section 5.1 Emission limits for lean burn engines are overly aggressive. While the water dist rict has met the proposed limits during some source testing events, these engines are located in specialized structures and operate at a constant load. These engines operate at a constant load coordinated with three other pumping plants in order to ma intain the flow of water from the valley to the Tehachapi Valley. These conditi ons are not typical of many lean-burn engines.

RESPONSE: Rule 4702 Section 5.1 District staff understands that engines operated by water districts in other Califor nia air districts are meeting the proposed limits which are consistent with the ARB RACT/BARCT Determination. We do not see any technological justification wh y the proposed limits are not achievable.

31. COMMENT: Rule 4702 Table 5.1.1 allows t he option to meet a ppmv limit or demonstrate a % reduction. This is not c onsistent with Section 6.3.2 that requires engines with controls to report source te sts results in ppmv and % reduction across the control device. It is Industry’s position that only t he ppmv limit should be verified in source testing.

RESPONSE: Rule 4702 Section 6.3.2 Engines that comply with a % reduction in Table 5.1.1 would need to have the % reduction verified by source testing. Operators that comply with a percent redu ction limit need to determine emissions in ppmv so % reduction can be determined. For clarification, Section 6.3.2 would be amended to specify “For engines that comply with a percent reduction in Table 1, the percent reduction of NOx emissi ons shall also be reported.”

32. COMMENT: Rule 4702 Section 5.1.1 The District is proposing to reduce NOx emissions from cyclically loaded rich bur n engines from 300 ppmv (15% O2) to 50 ppmv (at 15% O2). Due to the extreme va riation in engine load it is doubtful existing control technology is capable of reliably reducing cyclically lo aded engine emissions below 50 ppmv (15% O2). The Distr ict’s proposed control measure would essentially require all removal of cyclica lly loaded engines and t he electrification of the pumping unit. Cyclically loaded engines are typically used for pumping wells, which are remotely located in the areas w here electric power is unavailable. ManySAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 30 of these wells have low production rate s, other wells are owned by small oil production companies. In either case, the cost of electrification is likely to make the continued operation of the well uneconomic. Consequently , Industry requests that the District either retain the current control requirem ent (300 ppmv 15% O2) or that the District exempt remotely located we lls where power is unavailable and exempt wells where the cost of electrification w ould require the shutting in of the oil well.

RESPONSE: Rule 4702 Section 5.1.1 Distric t staff feels that the proposed requirements can be met. Justification for any less effective requirements would need to be provided by the commenter for Distric t staff to consider this item further.

33. COMMENT: Rule 4702 Section 5.1.2 The District is proposing that compliance with Section 5.1.1 emission limits be es tablished using a 15 minute averaging period. As discussed previously, Industr y recommends that compliance with rule 4702 emission limits be determined using t he average results from three 30-minute test runs.

RESPONSE: Rule 4702 Section 5.1.2 The 15-c onsecutive minute block averaging period is specified in order to correct the deficiency cited by EPA. Note that the 15- consecutive minute averaging period is consistent with the RACT/BARCT Determination and is used by several other air districts including South Coast AQMD and Ventura County APCD.

34. COMMENT: Rule 4701 Section 5.0 and Rule 4702 Section 5.1.2 These sections require that compliance testing be c onducted on 15 consecutive minute averages. CARB Test Method 100 and SJV APCD Policy require that the compliance test be based on the average of three 30 minute runs with the appropr iate instrument calibrations before and after each run. This section of the rule should be consistent with the appropriate test met hod rather than establishing new methods that have not been adequately evaluated.

RESPONSE: Rule 4701 Section 5.0 and Rule 4702 Section 5.1.2 As noted above, the15-consecutive minute block aver aging period is specified in order to correct the deficiency cited by EPA.

35. COMMENT: Rule 4701 Section 5.0 Revisions included in Section 5.0 now specify that for internal combustion engines (IC engines), compliance with specified limits (Table 5.1) be determined using a running 15-minute average. The District has historically determined complia nce with emission limits by averaging the results from three, 30-minute test runs. Essentially a ll of the workshop attendees objected to the revision and questioned the need for revisi ng an approved test method, which has successfully been used for determining comp liance for more than 20 years. The District’s only explanation for the proposed revision was that the “EPA wanted it.” Industry requests that The Dis trict either delete the new section 5.0 requirements specifying 15-minute averaging (or a 15 -minute running average) or specify that compliance be determined by averaging the results of three 30-minute test runs conducted in accordance with The District’s July 18, 2002 source test policy.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 31 Industry believes that the longer averaging in terval should be retained. Emissions measured using a short-term averaging per iod (15 minutes) can serve as a “spot check” for ensuring proper engine operation. However, short term averaging periods should not be used for determini ng compliance emission limits. Emissions from IC engines can vary over short per iods of time due to changes in load and operating parameters. Consequently, emi ssion measurements made over longer averaging intervals are more representat ive of normal operation and compliance with required emission limits. The Distric ts source test policy, which was just recently work-shopped and was adopted on July 18, 2002 requires that compliance tests on IC engines be performed by conducting three 30-minute test runs. Compliance is subsequently determined by aver aging the results of three test runs. The District’s enforcement group has alr eady concluded that compliance can be successfully established using the average resu lts of three 30-minut e test runs. The District has successfully used the existing test procedure for ensuring compliance with IC engine emission limits for more than 20 years. Many IC engine permits specify that engine tests be conducted using th ree, 30-minute test runs. Neither the District nor EPA has established any compelling reason to revise the existing test procedure.

RESPONSE: Rule 4701 Section 5.0 As not ed above, the 15-consecutive minute block averaging period is specified in order to correct the deficiency cited by EPA. Note that the 15-consecutive minute av eraging period is consistent with the RACT/BARCT Determination and is used by several other air districts including South Coast AQMD and Ventura County APCD.

. 36. COMMENT: Rule 4701 Section 5.0 and Rule 4702 Section 5.1.2 The proposal would require all emission m easurements to be taken over a 15 minute period. This conflicts with current source testing practi ce. This section of the rule should be clarified. Additionally, por table monitoring equipment may not be able to calculate a rolling 15-minute average.

RESPONSE: Rule 4701 Section 5.0 As not ed above, the 15-consecutive minute block averaging period is specified in order to correct the deficiency cited by EPA. Note that the 15-consecutive minute av eraging period is consistent with the RACT/BARCT Determination and is used by several other air districts including South Coast AQMD and Ventura County APCD.

37. COMMENT: Rule 4702 Section 5.1.4.2 Indus try recommends that the section be revised as follows: In this situati on, the engine’s typica l operating parameters, loading and duty cycle shall be documented and to the extent possible, repeated at each successive post control source tests to ensure that the engine is meeting the percent reduction limit. When representat ive, source sampling prior to the application of an emission control techno logy is not available, the APCO may approve the use of the manufacturer’s uncontrolled em issions information may be used or the APCO may approve the use of uncontrolled emissions information or source sampling from a similar, uncontrolled engine.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 32 RESPONSE: Rule 4702 Section 5.1.4.2 Distric t staff feels that the requirements as proposed in Rule 4702 provide adequat e provisions for the situation and therefore, no change to the proposed language is necessary.

38. COMMENT: Rule 4702 Section 5.1.4.2 To determine the control efficiency of engines without external controls the District is proposing to utilize the manufacturer’s uncontrolled emissions in formation or sampling from a similar uncontrolled engine. Please verify that for lean burn engines this would be represented by an uncontrolled rich -burn engine of similar design.

RESPONSE: Rule 4702 Section 5.1.4.2 It is not possible to provide such verification due to the potential for significant differences from one situation to the next. Instances such as these would best be handled on a case-by-case basis.

39. COMMENT: Rule 4701 Section 5.1.6 The owner or operator of a lean-burn engine with pre-combustion modifications will not be able to meet this requirement as they do not have, in many cases, external control devices. This section should be clarified that is applies only to externally controlled engines.

RESPONSE: Rule 4701 Section 5. 1.6 would be modified to specify “The owner of an internal combustion engine with an extern al emission control device that uses percent emission reduction to comply with the emission limits of Section 5.1 shall provide an accessible inlet and outlet on the external control device for taking emission samples and as approved by the APCO.”

40. COMMENT: Rule 4702 Section 5.3 The requirements for the installation and operation of a continuous monitoring syst em are broadly defined. The proposed language could be interpreted in such a m anner that a source operator would be obligated to install, operate and maintain a continuous monitoring system “that shall determine and record exhaust gas NOx co ncentrations corrected to 15% excess oxygen.” During the workshop, when the District was asked about how they intended to apply the section 5.3.1 requirement s, the District did not directly answer, but implied that the requirements for the continuous monitoring systems could be met using the same procedures currently allowed for alternative monitoring, under district rule 4701. Based on the reading of the proposed requirem ents, the District’s response to workshop questions and the currently approved procedures for alternative monitoring under Rule 4701, Industry understands that the rule 5.3.1 requirement will be applied by the Distric t in such a manner that: (a) The requirement to install, operate and maintain in calibration, a continuous NOx, CO and oxygen monitoring system, can be met using equipment other than a continuous emissions monitoring system or a predictive emissions monitoring system (PMS). An acceptable (i.e. APC O approvable) alternative, continuous monitoring system consists of one or more of the same elements sp ecified at 5.3.1.1 through 5.3.1.7. (b) The Dis trict does not intend to construe the requirement to determine and record NOx emissions co rrected to 15% excess oxygen, as a requirement to continuously determine and record NOx concentrations. (c) ForSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 33 engines which are already equipped with ex ternal control devices and are operating under an approved alternative monitoring pr ogram no further actions are required. If the District intends to apply Section 5.3. 1 requirements for continuous monitoring systems in a manner, other t han that described above, then Industry objects to the proposed language and requests t hat the section be revised in order to more clearly define continuous monito ring system requirements.

RESPONSE: Rule 4702 Section 5.3 Regarding it em (a): Section 5.3 specifies that “The continuous monitoring system may be a continu ous emissions monitoring system, parametric emissions monitoring system (PEMS), or an alternative approved by the APCO.” Regarding item (b): Distric t staff intends that the frequency that NOx emissions are determined and recorded will be based on the continuous monitoring system or alternative used. Regarding item (c): To ensure compliance with the proposed requirements of Rule 4702, any engines which are al ready equipped with external control devices and are operati ng under an approved alternative monitoring program will need to have the alternative monitoring system approved again by the APCO to ensure that the monitoring syst em could measure the emissions or parameters reflective of m eeting the emissions limits.

41. COMMENT: Rule 4702 Section 5.3.1 This section would require all monitoring systems or alternative monitoring progr ams to have data gathering and retrieval capabilities. This requirement seems excessive as many operators will utilize portable analyzers or other methods not easily connected to data gathering systems to meet the requirement. Many of the records will be maintained as hand written records.

RESPONSE: Rule 4702 Section 5.3 does not r equire electronic data gathering and retrieval capabilities from all monitoring syst ems or alternative monitoring programs. District staff expects that not all data will be in electronic format and some records will probably be maintained as hand written records.

42. COMMENT: Rule 4702 Section 5.3.1 mandates that IC engines be equipped with continuous emissions monitoring system. Ot her than the installation of monitoring stations that could cost upwards of $100,000, there does not seem to be any reasonably priced system that will economical ly satisfy this requirement. This section should be revised to clearly show that alternate monitoring, as allowed in Section 5.4 of Rule 4701, is incorporated into this rule.

RESPONSE: Rule 4702 Section 5.3 has been changed so that only engines that are greater than 1000 hp and are permitt ed to operate more than 2,000 hours per calendar year are required to be equipped with a continuous monitoring system and that other engines be equipped with a cont inuous monitoring system or with an alternative approved by the APCO. Alternate monitoring systems will cost significantly less than CEMS

43. COMMENT: Rule 4702 Our company has 14 permitted emergency standby engines and two portable diesel powered ai r compressors. Proposed Rule 4702SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 34 Section 5.3.3 would require the installati on of non-resettable fuel meters on all existing engines. The additional cost of adding these non-resettable fuel meters is currently being estimated. The engines currently have installed non-resettable hour meters. These hour meters are used to determine compliance with current permit conditions as well as calculating fuel usage based on manufacturers data regarding fuel consumption per hour of operation. While Section 5.3.3 does allow an allowance for alternative methods for deter mining monthly fuel consumption as long as the method has been approved by the APCO, the language is not clear as to whether fuel meters and hour meters are r equired if the owner or operator decides to follow an alternative course. In addition, Industry feels that the additional costs of installing these fuel meters for low use engines, such as emergency standby, does not justify the additional costs and has no foreseeable net benefit to air quality. Industry proposes relief from the fuel me ter requirement for emergency engines and low use engines proposing t he following language "5.3.3 Install a non-resettable fuel meter and a non-resettable elapsed operati ng time meter on any engine except for those engines subject to section 4.2. Engi nes subject to Section 4.2 shall install either an operating fuel meter or operat ing elapsed time meter provided that accurate fuel and time data may be obtained by use of either of these units. The owner or operator of any applicable engi ne may use an alternative device, method, or technique for determining fuel consumption in lieu of fuel or elapsed time meter provided the method has been approved by t he APCO. " A followup written letter will be submitted once the fuel meter costs have been estimated.

RESPONSE: Rule 4702 Section 5.3.7 would be amended to read “In lieu of installing a nonresettable fuel meter, the owner or opera tor may use an alternative device, method, or te chnique in determining monthly fuel consumpti on provided that the alternative is approved by the APCO.“ The objective of this section is to be able to verify not only the amount of time an engine is operated but also the horsepower level at which the engine is operated. The al ternative course only applies to the fuel meter and does not change the requi rement for the hour meter.

44. COMMENT: Rule 4701 Section 5.4.1 and 5.4. 2; and Rule 4702 Section 5.3.1, 5.3.2 and 5.3.3 reference APCO approved m onitoring systems. Will the District honor an operator’s existing APCO approved plans, or will these plans have to be renegotiated?

RESPONSE: Rule 4701 Section 5.4.1 and 5.4.2; and Rule 4702 Section 5.3, The plans have to be re-submitted as such plans will have additional or different requirements.

45. COMMENT: Rule 4701 Section 5.4.3 The phrase “Effective on and after three months after” is confusing. Does the Dis trict intend this to mean that a source must make its first emissions test, using a portable analyzer, on t he date the rule is approved by the board?

RESPONSE: Rule 4701 Section 5.4.3 The requirements of Section 5.4.3 will become effective three months afte r the amendments are adopted and will continueSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 35 to be in effect thereafter. Operators w ould need to perform the emission monitoring using a portable analyzer each quarter a fter the requirements become effective.

46. COMMENT: Rule 4701 Section 5.4.3 and Rule 47 02 Section 5.3.6 What is the cost of a portable NOx analyzer?

RESPONSE: Rule 4701 Section 5.4.3 and Rule 4702 Section 5.3.10 The cost of a portable NOx analyzer depends on the type, sensitivity, range, and other features. Some NOx analyzers may cost approximately $10,000.

47. COMMENT: Rule 4701 Section 5.4.4 and Rule 4702 Section 5.3.7 require operators to take corrective action on out -of-compliance ICE within 15 days and to notify the APCO within 8 hours. What is the purpose of the 8 hour notification provision; this should be expanded to at least 48 hours. As drafted, an operator would have to be more concerned with meet ing a notification deadline than getting an engine back in compliance.

RESPONSE: Rule 4701 Section 5.4.4 and Rule 4702 Section 5.3.7 (previous draft section number) have been deleted.

48. COMMENT: Rule 4702 Sections 6.1.1.9 and 6. 1.1.10 Please clarify. Does the District intend to require continuous in-stack monitoring or continuous source testing? What would be typical in-stack m onitoring specifications for the external controls and pre-combustion controls?

RESPONSE: Rule 4702 Sections 6.1.1.9 and 6. 1.1.10 Section 5.3, not Sections 6.1.1.9 and 6.1.1.10, s pecifies the proposed requirements for continuous monitoring. Section 6.1.1.9 pertains to stack modifications. For clarification, Section 6.1.1.9 would be amended to specify “stack modifications to facilitate continuous in-stack monitoring and to facilitate sour ce testing”. In regards to Section 6.1.1.10, if in-stack monitoring is not to be done, the operator would specify that information in the emission control plan.

49. COMMENT: Rule 4701 and 4702 Sections 6.2.1 and 6.2.2 Secti on 6.2.1 states that engine operating logs be k ept “on-site.” Most operating logs are currently located at the main field offices sinc e storage at the engine site would expose paperwork to destructive environmental elem ents. We request t hat the wording be changed in both rules, deleting the term “ on-site” and inserting “that is readily available” such that the sections read: “The owner of any engine subject to the requirements of this rule shall mainta in an engine operating log that is readily available to demonstrate compliance with this rule.” Deletion of the words “on-site” in Section 6.2.2 will make it cons istent with the proposed change to 6.2.1.

RESPONSE: Section 6.2.1 of Rule 4701 and Sect ion 6.2.2 of Rule 4702 would be modified to require that re cords be readily available.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 36 50. COMMENT: Rule 4701 Section 6.2.3 The record keeping requirements of Section 6.2.3.4 should not be modified by deletion of the ”or.” Some engines are by design and function obviously exempt from the rule, i.e. engines used to determine motor vehicle fuel octane and cetane. The addi tional record keeping requirements are excessive for these engines and are not necessary to verify the exempt status of the engine.

RESPONSE: Rule 4701 Section 6.2.3 An oper ator would need to comply with the requirements of Section 6.2.3 only for t hose engines that cannot demonstrate claim to the exemption when the requirements of Section 6.2.3.1 thro ugh 6.2.3.4 are met. If an operator can demonstrate claim to the exemption for an engine by complying with the requirements of Se ction 6.2.3.1 through 6.2.3. 4, the operator would not have to comply with Secti on 6.2.3.5 for that engine.

51. COMMENT: Rule 4701 Section 6.3 Rule 4701 requires compliance every 24 months. EPA has recommended the testi ng interval of 8760 hours and/or 24 months. We suggest that the word “and” be removed from the statement. It would then read “testing interval of 8760 hours or 24 months.” This would prevent the owner of an engine who tested at 8760 hours in month 22 from testing the same engine again at 24 months. The initial recommendation was founded on the assumption that the internal combustion engines experience greater wear and tear than boilers. But, the recommendation s hould not penalize operat ors with moderate use as described in the example above.

RESPONSE: Rule 4701 Section 6.3 As the “testing interval of 8760 hours” requirement is not in the RACT/BARCT Determination, this requirement is not proposed in Rule 4701 or Rule 4702. Distr ict staff feels that testing every 24 months as contained in the RACT/B ARCT Determination is reasonable and necessary to ensure that an engine is complying with the rule.

52. COMMENT: Rule 4701 Section 6.3.2 Please define “actual peak load” and “typical duty cycle.”

RESPONSE: Rule 4701 Section 6.3.2 “Actual peak load” is the condition when the engine is operating at its maximum hors epower to perform the function it is permitted to perform. The maximum horsepow er could be limited by the amount of load that a piece of equipment can receive from the engine. “Typical duty cycle” is the time that an engine uses to perform an operation through a full process. Section 6.3.2 has been modified to specify “Conduct emissions source testing with the engine operating either at conditions r epresentative of normal operations or conditions specified in the permit-to-operate.“

53. COMMENT: Rule 4702 Section 6.3.2 requires source testing to be conducted at the engine’s “actual peak load”. It is I ndustry’s position that the engine should be tested at “normal operating conditions”. Forcing a throttle open is a very dangerous practice and raises serious safety concerns.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 37 RESPONSE: Rule 4701 Section 6.3.2 has been modified to specify “C onduct emissions source testing with the engine operating either at conditions representative of normal operations or condi tions specified in the permit-to-operate.“

54. COMMENT: Rule 4701 and Rule 4702 Section 6. 3.2 requires emissions source testing to be conducted “at an engine’s ac tual peak load and under the engine’s typical duty cycle”. Because an engine’s duty cycle may be different than it’s peak load we recommend the following: “at an engine’s actual peak load or under the engine’s typical duty cycle”.

RESPONSE: Rule 4701 and Rule 4702 Section 6. 3.2 has been modified to specify “Conduct emissions source testing with the engine operating either at conditions representative of normal operations or condi tions specified in the permit-to-operate.“

55. COMMENT: Rule 4701 Sections 5.4.3 and 6. 3.2 and Rule 4702 Sections 5.3.6 and 6.3.2 These sections specify t hat analyzer readings and source tests be performed at the engines “actual peak l oad” and “engine’s typical duty cycle.” Engines typically experience variable l oads and operating conditions such as pressure restrictions, fuel gas availability and amount of fluid to be moved. As a result, the engine may not be able to run at peak or typical loads when the analyzer or source tests are performed. We reques t that the source testing and analyzer readings be taken at “an engine’s peak load, under the engine’s typical duty cycle, or under the maximum load possible at current operating conditions.”

RESPONSE: Rule 4701 Sections 5.4.3 and 6.3. 2 and Rule 4702 Sections 5.3.10 and 6.3.2 These sections have been chang ed to specify that analyzer readings and source tests be taken or performed “..wit h the engine operating either at conditions representative of normal operations or condi tions specified in the permit-to-operate.“

56. COMMENT: Rule 4702 Section 6.3.2 also requires that “For engines using exhaust controls, NOx shall also be reported as a percent reduction across the control device”. Section 5.1.1 sets NOx emission limits as either a ppmv limit or a percent reduction; therefore, Section 6.3.2 should be consistent wit h the limits set in Section 5.1.1 and require reporting of the percent reduction only when that is the proposed compliance limit. Those engines that propos e to comply with the ppmv limit should not have to demonstrate a control efficiency.

RESPONSE: Rule 4702 Section 6.3.2 woul d be amended to specify that “For engines that comply with a percent reductio n in Table 1, the percent reduction of NOx emissions shall also be reported.” Operators of engines that propose to comply with the ppmv limit do not have to dem onstrate a control efficiency.

57. COMMENT: Rules 4701 and 4702 Section 6.3. 2 of the proposed rules requires NOx emissions to be reported in both ppm v and as a percent reduction across the control device. Unless otherwise required fo r a specific type of engine in Table 5.1, Industry requests that this requirement be modified to allow an operator to test for either ppmv or percent reduc tion in order to avoid having to conduct two tests.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 38 RESPONSE: Rules 4701 and 4702 Section 6.3. 2 would be amended to specify that “For engines that comply with a percent reduction..., the percent reduction of NOx emissions shall also be reported.” Operators that comply with a percent reduction, may have to conduct two tests to obtain the emissions at the inlet and the emissions at the outlet. These emissions are then used to calculate the percent reduction.

58. COMMENT: Rule 4701 Section 6.3.2 specif ies operating conditions under which source tests are to be conducted. The se ction also requires that for engines using exhaust controls, oxides of nitrogen (N Ox) emissions be reported as a percent reduction across the control device. As pointed out by the workshop attendees, the requirement for determining NOx percent reduction should only apply to those engines for which compliance with Table 5.1 requirements are based on a percent reduction. Industry requests that Secti on 6.3.2 be revised as follows: “Conduct emission source testing at the engine’s actual peak load and under the engines typical duty cycle. VOC shall be r eported as methane. VOC, NOx and CO concentrations shall be reported in ppmv, corrected to 15% oxygen. For engines using exhaust gas controls, where co mpliance with Table 5.1 requirements is specified as a percent reduction, NOx shal l also be reported as a percent reduction across the control device.”

RESPONSE: Rule 4701 Section 6.3.2 See response to comment above.

59. COMMENT: Rule 4701 and Rule 4702 Section 6. 3.2 of both rules requires NOx emissions to be reported in ppmv and as a percent reduction across the control device. This would require two tests at double the expense. Please justify this requirement or modify it to allow test ing for either ppmv or percent reduction.

RESPONSE: Rule 4701 and Rule 4702 Section 6.3.2 See response to comment above.

60. COMMENT: Rule 4701 and 4702 Section 6.3.3 Both rules state that “In addition to other information, the sour ce test protocol shall descr ibe which critical parameters will be measured and incorporated into the I& M plan.” The term “c ritical parameters” is not defined in the rule. We request clar ification of the int ent and meaning of this phrase.

RESPONSE: Rule 4701 and 4702 Section 6.3.3 “Critical parameters” are the characteristics that can be used in verify ing or in determining that an engine is operating properly and is in compliance wit h the requirements of the rule. Such parameters include, but ar e not limited to, NOx emi ssions (ppmv), fuel usage, engine speed (rpm), air/fuel ra tio, and exhaust temperature.

61. COMMENT: Rule 4702 Section 6.5.1 Please expl ain what the District expects the operator to consider as “typic al control equipment parameters.”SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 39 RESPONSE: Rule 4702 Section 6.5.1 Cont rol equipment parameters are the characteristics that can be used in verify ing or in determining that a control is operating properly. Due to t he different types of contro l equipment, what is typical for one type is not necessarily typical for another type of control equipment. For example “typical control equipment par ameters” for NSCR include, but are not limited to, exhaust temperatures before and a fter the catalyst, an d oxygen levels.

62. COMMENT: Rule 4702 Section 6.5.2 requires “m onthly” emissions checks. This should be “quarterly” to be consistent with Se ction 5.3.6, or at least after consistent monthly compliance is documented.

RESPONSE: Rule 4702 Section 6.5.2 The m onthly emissions checks required in Section 6.5.2 refer to checking the data from the continuous monitoring system or it’s alternate. The quarterly emissions c hecks required in Section 5.3.10 are through the use of an APCO approved portable NOx ana lyzer that will help in ensuring that the CEMS data correctly reflect emissions.

63. COMMENT: Rule 4702 Section 6.5.2 If an oper ator is performing monthly portable emissions testing then parametric monitoring should not be required.

RESPONSE: Rule 4702 Section 6.5.2 As noted above, the monthly emissions checks required in Section 6.5.2 refer to checking the data from the continuous monitoring system or it’s alternate. C ontinuous monitoring, such as parametric monitoring, is needed to better ensure that engines are operating properly due to the extreme conditions t hat engines operate under.

64. COMMENT: Rule 4702 Section 6.5.5 The Dis trict needs to clarify the type of preventative and corrective maintenance procedures that must be prepared and submitted. Not all preventative and co rrective maintenance procedures affect emissions. Only preventative and corre ctive maintenance procedures involving emission control equipment or emissi ons should be part of the I&M program.

RESPONSE: Rule 4702 Section 6.5.5 woul d be amended to read as follows: “Procedures for preventive and corrective maintenance performe d for the purpose of maintaining an engine in pr oper operating condition.”

65. COMMENT: Rule 4702 Section 6.5.7 What is meant by “retrieval capabilities”? How does the District expect to retrieve I&M data? Much of the I&M data will be in the form of hand written records. It is excessive to expect such data to be in electronic format.

RESPONSE: Rule 4702 Section 6.5.7 “Retrieval capabilities” refers to the means and techniques that can be used to obtai n the data that has been collected. How the District retrieves I&M data will depend on t he “retrieval capabilities” of the data storage system. Such retrieval could be accomplished through means that include, but are not limited to, electronically or by taking a photocopy of hand written data. Not all data is expected to be in electronic format.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 40 66. COMMENT: Rule 4702 Section 6.5.8 This r equirement implies that the District would rather an engine operate out of co mpliance than have the operator proceed with the appropriate maintenance if such maintenance falls outside the I&M plan.

RESPONSE: Rule 4702 Section 6.5.8 The Distr ict expects the operator to bring the engine into compliance as soon as possi ble but at the same time the I&M plan would need to be changed accordingly to re flect the required action if similar conditions occur in the future.

67. COMMENT: Rule 4701 Section 7.4 and Rule 4702 Section 7.1 These sections state that when an engine becomes subject to the rules’ emission limits through loss of exemption, it shall demonstrate full compliance on the date the exemption status is lost. The source testing requirements of the rules specify a thirty-day notification. In addition, all new and modified units are a llowed sixty days after start-up to obtain a source-test. We recommend changing t hese sections to require full compliance within sixty days of loss of exemption.

RESPONSE: Rule 4701 Section 7.4 and Rule 4702 Section 7.1 would be amended to specify that an owner “...shall not operate the subject engine, except as required for obtaining a new or modified Di strict permit-to-operate for the engine, until the owner demonstrates full compliance with the requirements of this rule.”

68. COMMENT: Rules 4701 and 4702 The representat ive testing provisions of both 4701 and 4702 have been eliminated in the curr ent drafts. Indus try requests that these provisions be reinstated. The elimi nation of these provisions would increase compliance costs for the operator dramat ically. In our opinion, the proposed addition of the quarterly portable analyzer test requirement should be enough to satisfy the District that all IC Es are being kept in compliance.

RESPONSE: Rules 4701 and 4702 As noted in the staff report, the existing representative group testing in Rule 4701 was cited by EPA as a SIP deficiency and is being proposed for deletion. EPA comment ed that it “genera lly does not allow emission test results from individual engines to represent emissions for a group of engines (i.e., allowing engines in the group to be exempt from testing requirements) for purposes of making compliance determinations.”

69. COMMENT: Rules 4701 and 4702 Alternative Emission Control has been deleted from Draft Rule 4701. The reasons provi ded for the deletion of this section were that there has historically been little or no use of this provision and it doesn’t meet EPA’s Economic Incentive Program rules. Since an Alternative Emission Control Plan (AECP) requires enforceability on a da ily basis by the District, and written approval of the plan from t he APCO prior to implementat ion, there appears to be no emission related rationale for the removal of this section. The need to demonstrate compliance by way of aggregate NOx emissi ons may be utilized more frequently as emission limits are reduced. We would lik e to keep this provision in the rule to ensure flexibility of aggregat e NOx emission compliance.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 41 The potential for Alternative Emission C ontrols have not fully been examined, and the need for flexible, enforceable, alternat ives will be paramount in the pursuit of emission reductions. On and off road m obile source emissions and stationary sources in the form of agricultural engines are both large contributors to emissions in the San Joaquin Valley Air Basin. Funding for incentive programs to reduce emissions from mobile and stationar y sources has been an on going practice. These programs are extremely valuable to ensure additional emission reductions.

The following is a recommendation to enhanc e the value of these programs to further reduce emissions: Presently two major government incentiv e programs offered in the San Joaquin Valley, the Demand Side Management (DSM) and the Carl Moyer Program. The DSM program is a state fund that provides incentives for replacement, rebuilding and overhauling of existing engines. For stat ionary agricultural diesel engines these existing programs do not provide incentives to establishing clean fuel infrastructure. To solve this problem, we recommend a new incentive program designed a cut infrastructure cost for line extensions. Cutting line extension cost could ensure that cleaner burning fuels like natural gas bec ome a reality for the majority of gas engines in the valley.

As an example, the average distance to near by natural gas pipelines for engines in the San Joaquin Valley, where gas is pres ently unavailable is approximately 1⁄2 mile, plus or minus 1⁄4 mile. Our calculati ons show that the average cost of line extensions in the area is approximately $10.75 per linear foot. There are current programs provided by the gas company that can potentially cut those costs by about 50%. A new program that could provide approximately $5.00 per linear foot would make the cost almost nothing for those participating in the current gas company programs and a new infrastructure incent ive program. This could help guarantee that the many of the abov e-mentioned gas engines would at a minimum have dual fuel capabilities.

Several hundred engines with the potential to burn natural gas and/or diesel, as opposed to burning diesel exclusively would help further reduce NOx and Particulate Emissions (PM) in the San Joaqui n Valley. Conversion from diesel to dual fuel can result in a NOx reduction of 20-40%. This is a significant amount to improve the air quality for the area. This alternative also maintains a hedge for the farmer if reliability issues become a concern in fuel supplies. The incentive for clean fuel infrastructure will greatly enhance the options for the air district to reduce emissions in the area while keeping cost s and operation flexibi lity for the regulated community.

RESPONSE: Rules 4701 and 4 702 Alternative Emission Control Plan provisions would be deleted in Rule 47 01 as District staff determined that no operators are using such provisions in Rule 47 01 and the compliance deadline has already expired. Due to requests from Industry, District staff pl ans to add AECP provisio ns in the next draft of Rule 4702 that would contain provisions necess ary to gain EPA’s approval.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 42 70. COMMENT: Rule 4702 It is Industry’s posit ion that proposed Rule 4702 should allow the option of an Alte rnate Emissions Control Plan (AECP) and also allow continued representative testing of sim ilar engines. Currently, this company monitors all engines subject to Rule 4701 on a quarterly schedule and conducts representative testing on 10% of the total engines annually . These engines are also subject to ongoing periodic maintenance and t une-ups. It is Industry’s position that this ongoing monitoring, testing and I&M progr am are more than sufficient to verify compliance. It is interesting to note that mobile sources contri bute 67% of the total NOx emissions within the District but is not subject to such a stringent compliance program as sources within petroleum refiner ies, which only contribute 0.27% of the total NOx emissions within the District (t his includes internal and external fired equipment). This disparity may be viewed by some as being biased, inequitable and arbitrary.

RESPONSE: Rule 4702 Please refer to response to comment #69.

COMMENTS FROM WORKSHOP HELD DECEMBER 6 and 10, 2002

Rule 4701 (Internal Combustion Engines – Phase 1) and Rule 4702 (Internal Combustion Engines – Phase 2)

EPA - No comments received.

ARB - No comments received.

STAKEHOLDERS

ChevronTexaco

1. COMMENT: ChevronTexaco, as a member of the Western States Petroleum Association (WSPA), fully supports t he trade association’s comments dated 01/09/03.

RESPONSE: Comment noted.

2. COMMENT: Rule 4702 Sections 5.1.2 and 5.1.3: Both of these sections indicate that portable analyzer readings must be ta ken over a 15 minute period to validate compliance. Portable analyzers are designe d to take readings for short periods of time (spot checks). Requiring 15 minute r eadings per unit would result in a great reduction of unit readings per day, increased maintenance costs for the analyzers, increased purge time, and an increase in m anpower requirements without a net airSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 43 quality benefit. We request that the District reconsider and clarify this testing time requirement. Our other concerns r egarding the 15 minute testing period are addressed in WSPA’s comments.

RESPONSE: Rule 4702 Sections 5.1.2 and 5. 1.3: See response to Comment number 10 below.

3. COMMENT: Rule 4702 Section 5.3.10: This section requires that quarterly monitoring be performed either under normal operating conditions or as specified in the permit. Our policy is to shut a uni t down if it cannot be operated in accordance with permit conditions or District rules. Engines are typically located at remote locations that experience load and fuel fl uctuations but still operate within permit limits. Our technicians maintain an aggressive schedule to perform all required monitoring and source testing in a timely m anner. Despite their efforts to test under normal operating conditions, the units sometimes cannot be run under normal parameters during the times at which technici ans verify compliance. As a result, we request that the section be changed to allo w measurements “eit her at conditions representative of normal operat ion under existing conditions or conditions specified in the Permit to Operate”.

RESPONSE: Rule 4702 Section 5.3.10: Distric t staff feels that the proposed rule requirements of testing “wit h the engine operating either at conditions representative of normal operations or conditions specif ied in the permit-to-operate” provide sufficient flexibility to operators. Distric t staff feels that testing “under existing conditions” would not ensure that an engi ne would be tested under conditions that are truly representative of normal operating conditions.

4. COMMENT: Rule 4702 Section 7.6 – Column Heading: ChevronTexaco has several sources throughout the valley and may want to concentrate retrofits in a given area due to logistic or operational r easons. We request that the first column heading in the table be modified to read “Units to be in Compliance at a Stationary Source or under Single Operator”. Such wording would allow operators to effectively manage their compliance schedul e by offering additional flexibility while still obtaining the emission r eductions at the proposed pace.

RESPONSE: Rule 4702 Section 7.6: Distric t staff feels that the compliance schedule as proposed, in response to stakeholders’ recommendations, already offers sufficient flexibility to operat ors and that the proposed requirements could allow operators to effectively manage their compliance schedule. District staff does not agree that emission reductions would be obtained at the proposed pace.

Community Medical Centers

5. COMMENT: Rule 4702: As I understand it, Rule 4702 would require emergency standby generators to be limited to no mo re than 100 hours per year for nonemergency operation. Currently, 200 hours per year are permitted. This reductionSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 44 has the potential to cause hospitals to become non-compliant by virtue of their normal testing and maintenance procedures. This is a legitimate concern. Unlike other industries, California hospitals ar e required by state law to test their emergency generators every seven (7) days (Calif. Code of Regulations, Title 17, Public Health, Sect. 70841, Emergency Light ing and Power). Futhermore, power to emergency circuits must be automatically restored within 10 seconds after normal power failure.

We are not aware of another practical and affordable emergency power system that can meet the ten second requi rement other than diesel en gines. As a requirement of our recently obtained ATC permits, we have installed particulate filters (by GT Exhaust Systems, Inc. and CleanAIR System s, Inc.) on each of our new Caterpillar diesel gensets at the Community Regional Medical Center Central Energy Plant, scheduled to become operational in April 2003. These f ilters were an unplanned expense of approximately $550, 000, including purchase, installation, structural support, access platforms, design fees, and building permit fee from the Office of Statewide Health Planning and Development (OSHPD). Due to the size and weight (4,200 lbs.) of each of t hese filters, additional foundat ion and seismically braced supporting steel were added to the building design as a change order.

Our concern for the 100 hour non-emergency lim it is that we have no operational or maintenance history for the filt ers. We currently perform weekly testing in less than the 100 hours per year, but it is highly likel y that a longer test time will be required as the filters must heat up to a high operating temperature in order to ‘regenerate’ and burn the particulate into carbon dioxide and water vapor. It is highly likely that we will require more than 100 hours just to comply with the state law for weekly testing.

Because of the regulations above placed upon California hospitals that affect no other industry, I respectfully request a s pecial exemption to the 100 hour limit and continue to allow 200 hours of non- emergency operation for hospitals.

It appears that the special needs of hospi tals, especially those with emissions control systems such as catalytic particula te filters, have not been addressed in the drafting of proposed Rule 4702.

RESPONSE: Rule 4702: As ARB and EPA are currently considering control measures for diesel engines, the applic ability of Rule 4702 has been changed so that Rule 4702 only applies to spark- ignited internal combustion engines. Compression-ignited internal combustion engines that are subject to Rule 4701 would continue to be subject to Rule 4701. Rule 4701 allows standby engines 200 hours of non-emergency operation per year and therefore would satisfy the needs of the hospital situation noted.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 45 Crimson Resource Management

6. COMMENT: Rule 4701 Section 3.13: “Major NO X Source – Any major source as defined in Rule 2201 (New and Modified St ationary Source Review Rule), with a potential to emit 50 tons or more per year of NOx.” Rule 2201 defines Major Source threshold for NO X as 50,000 lbs. If your intent is to use Rule 2201 as your standard, I suggest removing “with a potential to em it 50 tons or more per year of NO X ”. If your intent is to relax t he definition, then you should add the word “and” between the phrases.

RESPONSE: Rule 4701 Section 3.13: District st aff intends that the applicability of proposed Rule 4701 not change as a result of the change in the definition of Major NOx Source. Proposed Rule 4702 would not reference “Major NOx Source” so the rule would control subject engines irrespecti ve of an operator’s major source status. Rule 4701, Section 3.13 would be changed to read as follows: “Major NOx Source: Any major source as defined in Rule 2201 (New and Modifi ed Stationary Source Review Rule), and with a potential to emit 50 tons or more per year of NOx.”

7. COMMENT: Rule 4701 Section 3.19: Can you remove the phrase “and not used in conjunction with any voluntary utility demand reduction program?” Who cares if industry uses an engine in conjunction wit h a utility demand reduction program so long as operation is less than 200 hours.

RESPONSE: Rule 4701 Section 3.20: Distric t staff feels that the requirement provides relief to operators who do not operat e their engines for financial gain. It is consistent with District BACT and offset requirements.

8. COMMENT: Rule 4701 Section 5.1.1: Is the correcting of oxygen “on a dry basis” identified in the specified test methods?

RESPONSE: Rule 4701 Section 5.1.1: The commenter is refe rred to the test methods for such information. Whether “on a dry basis” is specified in the test method, or not, the limits are to be met as proposed in the rule.

9. COMMENT: Rule 4701 Section 5.1.3: The st aff report specifies that lowering the NOx limits on beam-balanced and crank-balanced engines as been accomplished in other districts. Your previous reports indicate that Ventura County oil producers converted almost all of the engines to elec tric when the limits were reduced because the limits could not be met. The catalyst technology installed on rich burn engines must be maintained at a high exhaust tem perature; cyclic engines cannot meet the 50 ppm limit. No catalyst manufacture r will guarantee control efficiency especially during start-up operations that may occur with engines that operate periodically. It is possible to lower the limits to 200 ppm or 250 ppm but not any lower.

RESPONSE: Rule 4701 Section 5.1.3: This issue was addressed in the previous staff report. NOx emissions measurements on several cyclic loaded engines in theSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 46 San Joaquin Valley Air Basin have shown su ch engines to meet the 50 ppmv NOx limit.

10. COMMENT: Rule 4701 Section 5.1.4: Is the 15-consecutive-minute rule consistent with test methods? Does this section mean that portable monitors must test over 15 minutes? How often do the samples have to be taken over 15 minutes to be considered a valid test? Are we going to be required to modify our existing permits to add these conditions? This section sounds extremely onerous and may be interpreted as forcing CEMS or PEMS units on existing engines.

RESPONSE: Rule 4701 Section 5.1.4: Distr ict staff has reconsidered the 15 consecutive-minute averaging issue and has concluded that emissions measurements should be consistent with the RACT/BARCT Determination. In addition, other California air districts’ engine rules require 15 minute averaging periods for emissions measurements. A ccordingly, all emissions measurements shall be averaged over a period of 15 consecutive minutes to demonstrate compliance with the applicable emission limits of this rule. Section 5.4.4 has been changed to make the 15-consecutive-minut e rule consistent with the testing requirements of the rule. Existing permits that contain conditions that conflict with the proposed amendments would need to be m odified to add these conditions for Rule 4701 purposes. Section 5.1.4 and Section 5.4.4 read as follows (the corresponding sections in Rule 4702 have bee n changed as needed to reflect these modified requirements).

5.1.4 All emissions measurements s hall be averaged over a period of 15 consecutive minutes to demonstrate comp liance with the applicable emission limits of this rule. If emissions are m easured for more than 15 minutes, any 15- consecutive-minute block average exceedi ng the applicable emission limits of this rule shall constitute a violation of this rule.

5.4.4 An APCO approved CEMS shall comply with the requirements of 40 Code of Federal Regulations (CFR) Pa rt 51, 40 CFR Parts 60.7 and 60.13 (except subsection h), 40 CFR Appendix B (Performance Specif ications), 40 CFR Appendix F (Quality Assurance Procedures) , and applicable provisions of Rule 1080 (Stack Monitoring).

11. COMMENT: Rule 4701 Section 5.1.5.2: What is the intent of the new verbiage? Do the operating parameters have to be recorded by District personnel, source testing companies, or by industry? What if some parameters change? For example – field gas pressures drop due to produc tion decline therefor e loading cannot be maintained, will retesting be required. Please clarify or remove verbiage.

RESPONSE: Rule 4701 Section 5.1.5.2: T he intent of the new language is to clarify the requirements of the section. The engine owner is responsible that the requirements of the rule are met.

12. COMMENT: Rule 4701 Section 5.1.8: Whic h reformulated gas are you referring to? The current reformulated gas or the new reformulated gas? It might be easierSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 47 to specify “vehicle grade, minimum 87 octane gasoline shall be used as fuel for all gasoline-fired, spark-ignited engines.”

RESPONSE: Rule 4701 Section 5.1.8: The reformulated gas referenced in Section 5.1.8 is the gasolin e approved and required by the st ate of California for the particular date of concern.

13. COMMENT: Rule 4701 Section 5.4.3: Many companies are already using portable monitors to verify NOx emissions. Wordi ng should be modified slightly to adjust to this condition. “Within 3 months of adopt ion of this rule, and once per quarter thereafter . . .Section 5.1. Monitoring is not required the same quarter as a source test is required. All emi ssion readings. . . Permit to O perate. The analyzer shall be calibrated, maintained, and operated in accordance with the manufacturer’s specifications and recommendations.” Protocol should not be approved by APCO because the District may limit industry to analyzers the District currently operates; this would limit competition and new technologies.

RESPONSE: Rule 4701 Section 5.4.3: T he proposed requirements provide all operators, including those t hat do not have portable monitors, three months after adoption of the amendments to prepare for use of the moni tors. The District has no intentions to limit industry to analyzers the District currently operates or to limit competition and new technologies.

14. COMMENT: Rule 4701 Section 6.1: Is this se ction required at all since all of the compliance dates have passed. The intent of this section was for industry planning and development. Any changes currently developed for engine compliance will require a permitting action.

RESPONSE: Rule 4701 Section 6.1: This section is required as new permitted engines would be subject to the requirements of this section.

15. COMMENT: Rule 4701 Section 6.2: What happens after rule adoption and we only have two years of documentation? Will we get an NOV for not having five years of documentation? The verbiage shoul d allow for “catching up” to the five years of documentation.

RESPONSE: Rule 4701 Section 6.2: Records kept prior to the effective date of the five-year proposed amendment must be kept for two years. The five-year record retention requirement applies to records k ept on and after the effective date of the proposed amendment. Compliance with the rule will be determined accordingly.

16. COMMENT: Rule 4701 Section 6.2.1: C an you modify the record keeping requirements based on the category or engi ne being operated? Hours of operation and fuel usage are only necessary for standby and emergency engines. Engines that are operated 24/7 are not limited by time or fuel us e. Please do not add record keeping requirements if the data is unnecessary; many facilities are burdened enough already.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 48 RESPONSE: Rule 4701 Section 6.2.1: Reco rdkeeping is only required where necessary to verify compliance. Hours of operation and fuel usage are necessary for verifying that engines are operated as required and help confirm compliance of emission levels.

17. COMMENT: Rule 4701 Section 6.2.2: The verbiage is redundant to the words in 6.2.1. One of them should go.

RESPONSE: Rule 4701 Section 6.2.2: District staff agrees, the proposed language of Section 6.2 has been chan ged to remove the redundant language.

18. COMMENT: Rule 4701 Section 6.2.3: This section is mostly redundant to 6.2.1 and the required data can be added to the previous section. If you want to maintain this section, I recommend “and at the end of each ca lendar year in a manner and form approved by the APCO” should be removed. Submitting data to the District is redundant and having data in a “form approv ed by the APCO” lends itself to capriciousness by the District. Can y ou guarantee that industry will not be required to modify permits to describe “form approved?”

RESPONSE: Rule 4701 Section 6.2.3: The requirements of Section 6.2.3 are specific for certain exempt engines and do not require as much information as Section 6.2.1. Operators ma y need to modify their permits pursuant to the District’s permitting requirements.

19. COMMENT: Rule 4701 Section 6.3.2: Should remove the phrase “or conditions specified in the permit to operate.” The phr ase adds a level of ambiguity that could create a new District policy that adds requi rements not intended in the Rule. The sentence “VOC shall be reported as me thane” should be removed; the sentence implies that VOC’s include methane and et hane components which is contrary to the Federal definition of VO C. The rest of the section should be removed because it is redundant with section 5.0.

RESPONSE: Rule 4701 Section 6.3.2: The phr ase “or conditions specified in the permit to operate” was added in response to Industry’s specific request. District staff does not see any added level of ambi guity. The require ment that VOC be reported as methane is consistent with the RACT/BARCT Determination. Converting VOC concentration measurements to a methane concentration does not imply that methane and ethane should be regarded as VOC.

20. COMMENT: Rule 4701 Section 6.3.2: For engines that were using the 10% provisions, when is source testing required on all of the engines?

RESPONSE: Rule 4701 Section 6.3.4 would be added as follows:

6.3.4 The owner of an engine which has been part of a repr esentative test group for the 24 months prior to (rule amendments adoption date) and has not demonstratedSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 49 compliance with applicable limits in accordance with the test methods in Section 6.4 within 24 months prio r to (rule amendments adoption dat e), shall, effective on and after (rule amendments adop tion date), demons trate compliance with applicable limits in accordance with the test methods in Section 6.4. Such compliance shall be demonstrated within 6 months after (rule amendments adoption date). Thereafter, such engine shall demonstrat e compliance pursuant to th e requirements of Section 6.3.1.

21. COMMENT: Rule 4701 Section 6.3.3: This section is redundant to Rule 1081 and should be removed.

RESPONSE: Rule 4701 Section 6.3.3: Distric t staff agrees that Section 6.3.3 contains some requirements that are r edundant to Rule 1081. Section 6.3.3 has been modified as follows: “In addition to other information, the source test protocol shall describe which critical paramet ers will be measured and how the appropriate range for these parameters s hall be established. The range for these parameters shall be incorporated into the I&M plan.”

22. COMMENT: Rule 4701 Section 6.3.4: This section is redundant to Rule 1081 and should be removed.

RESPONSE: Rule 4701 Section 6.3.4: Distric t staff agrees, Section 6.3.4 (“Submit all source test reports to the APCO”) has been deleted.

23. COMMENT: Rule 4701 Section 6.4.4: EPA Method 25 analyses for NMHC as methane, but does not exclude ethane compou nds; therefore will possibly read as a false high reading. Method 18 speciates compounds using GC/MS. Please identify the correct source test or modifi ed test for analyzing non-methane, non-ethane VOC’s. Recommend, at minimum, addi ng the following language: “Methane and Ethane constituents can be deducted from total emissions.”

RESPONSE: Rule 4701 Section 6.4.4: Sect ion 6.4.4 has been changed to read as follows: “Volatile organic compounds – EPA Method 25A or 25B, or ARB Method 100.”

24. COMMENT: Rule 4701 Section 7.1: Is an em ission control plan required with each application for Authority to Construct? S hould add wording to make clear either way you decide.

RESPONSE: Rule 4701 Section 7.1: No c hanges are required as the compliance date for Section 7.1 is past.

25. COMMENT: Rule 4701 Section 7.4: I don’t quite understand what is being said with the new language. If your intent is that the equipment be in compliance with District permitting rules prior to operation, just say so.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 50 RESPONSE: Rule 4701 Section 7.4: The intent is to specify the requirements that need to be complied with when an engine becomes subject to the emission limits of the rule through loss of exemption after the adoption date of the rule amendments.

26. COMMENT: Rule 4702: Rule Titles “Phase I” and “Phase II” sounds a little cheesy. Perhaps “Phase II” can be renamed “A RB Feasible Control Measures.”

RESPONSE: Comment noted.

27. COMMENT: Rule 4702: The staff report specif ies that Rule 4702 “adopt all feasible control measures.” The ru le exempts engines in agricultural operations. If the District does not consider regulating agricul tural engines as “feasible,” you should indicate why in your staff report in stead of remaining silent on the topic.

RESPONSE: District staff believes that most operators are aware that state law prohibits the District from requiring permits for agricultural engines and that agricultural engines do not meet the app licability requirements of Rule 4701 and Rule 4702. Most agricultural engines are diesel-fueled, and will be subject to upcoming ARB and EPA controls. These engines are being controlled through the District’s Heavy Duty Incentive Program.

28. COMMENT: Rule 4702 Section 2.0: Applic ability should read identical to the Applicability Section in Rule 4701. Ther e is no need to add a level of confusion unnecessarily. At minimum, please modify the phase “rated brake horsepower of 50 or greater” with 50 bhp or gr eater.” Common convention has the units following a number.

RESPONSE: Rule 4702 Section 2.0: Se ction 2.0 has been changed to read as follows: “This rule applies to any spark- ignited internal combustion engine with a rated brake horsepower greater than 50 hor sepower and that requires a Permit-toOperate (PTO).”

29. COMMENT: Rule 4702 Section 3.10: The phrase “emergency standby engine” is redundant. Define as an “emergency engine” or a “standby engine.” Previous comments from the District st ates, “District staff feels that the 100 hours allowed for emergency engines is adequate;” howev er, the District response to EPA deficiencies identifies 200 hours per year as being consistent with RACT. Please show the data that lead the District to f eel that 100 hours was adequate. Hospitals are required to test engines weekly; is 100 hours adequate for their needs? The potential emissions savings by reducing hour s of operation on this class of engine could easily be compensated by regulating onl y the largest agricultural use engines. I also recommend removing all other lim iting uses because they would not be enforceable.

RESPONSE: Rule 4702 Section 3.9: Distr ict staff agrees that the phrase “emergency standby engine” is somewhat r edundant. However, District staff feels that the phrase is beneficial as it is consistent with the terminology in theSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 51 RACT/BARCT Determination. The District response to EPA deficiencies that identified 200 hours per year as being c onsistent with RACT was made in 1998 when the District was in serious non-attainm ent status. The commenter is referred to the RACT/BARCT Determination, Vent ura County APCD Rule 74-9 (Stationary Internal Combustion Engines), and San Diego County APCD Rule 69.4 (Stationary Reciprocating Internal Combustion Engines - RACT), for the data that led the District to feel that 100 hours was adequate. See the response to Comment number 5 above regarding the engine testi ng requirements for hospitals.

30. COMMENT: Rule 4702 Section 3.11: Is this definition necessary?

RESPONSE: Rule 4702 Section 3.10: District staff feels that the definition is necessary for clarity.

31. COMMENT: Rule 4702 Section 3.12: Is this definition necessary?

RESPONSE: Rule 4702 Section 3.11: District staff feels that the definition is necessary for clarity.

32. COMMENT: Rule 4702 Section 3.18: Is this definition necessary?

RESPONSE: Rule 4702 Section 3.17: District staff feels that the definition is necessary for clarity.

33. COMMENT: Rule 4702 Section 3.23: Is this definition necessary?

RESPONSE: Rule 4702 Section 3.23: District staff feels that the definition is necessary for clarity.

34. COMMENT: Rule 4702 Section 4.2.2: The District should remove the verbiage regarding electrical power generation bec ause it is not enforceable. The 200 hour/year limit is sufficient.

RESPONSE: Rule 4702 Section 4.2.2: District staff feels that the requirements of the rule are enforceable. The verbi age regarding electrical power generation is consistent with the verbiage in the RACT/BARCT Determination.

35. COMMENT: Rule 4702 Section 4.3.1: Just say “emergency engine.” Add any needed words to that definition; do not try to redefine an emergency engine.

RESPONSE: Rule 4702 Section 4.3.1: District staff feels that Se ction 4.3.1 clearly states the intended requirements.

36. COMMENT: Rule 4702 Section 5.1.1: Is the correcting of oxygen “on a dry basis” identified in the specified test methods?SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 52 RESPONSE: Rule 4702 Section 5.1: The operator is referred to the test methods for such information. Whether “on a dry bas is” is specified in the test method, or not, the limits are to be me t as proposed in the rule.

37. COMMENT: Rule 4702 Section 5.1.4.2: What is the intent of the new verbiage? Do the operating parameters have to be recorded by District personnel, source testing companies, or by industry? What if some parameters change? For example – field gas pressures drop due to produc tion decline therefor e loading cannot be maintained, will retesting be required. Please clarify or remove verbiage.

RESPONSE: Rule 4702 Section 5.3.2: The intent of the new language is to ensure that the percent reduction of an engine is measured under the same conditions on a consistent basis. The engine operator is responsible that the requirements of the rule are met. Testing of su ch engines shall be under the engine’s typical opera ting paramete rs, loading, and duty cy cle as documented.

38. COMMENT: Rule 4702 Section 5.1.6: Whic h reformulated gas are you referring to? The current reformulated gas or the new reformulated gas? It might be easier to specify “vehicle grade, minimum 87 octane gasoline shall be used as fuel for all gasoline-fired, spark-ignited engines.”

RESPONSE: Rule 4702 Section 5.5: The refo rmulated gas referenced in Section 5.5 is the gasoline approved and required by the state of California for the particular date of concern.

39. COMMENT: Rule 4702 Section 6.1.1: Operators might not have hours of operation or amount of fuel consumed from the previous year; can this be removed or be optional?

RESPONSE: Rule 4702 Section 6.1.1: Oper ators that do not have hours of operation or amount of fuel consumed from the previous year would need to indicate the lack of such information on the emission control plan.

40. COMMENT: Rule 4702 Section 6.3.2: Pleas e explain how VOC will be tested as methane while concurrently removi ng non-methane, non-ethane constituents to meet the federal and District definition of VOC? This language should otherwise be removed. The rest of the verbiage is r edundant with other sections of the rule and are unnecessary.

RESPONSE: Rule 4702 Section 6.3.2: See response to Comment number 23 above.

41. COMMENT: Rule 4702 Section 6.3.3: The section is redundant with Rule 1081 and other sections of this rule and therefore could be removed.

RESPONSE: Rule 4702 Section 6.3.3: Distric t staff agrees that Section 6.3.3 contains some requirements that are r edundant to Rule 1081. Section 6.3.3 hasSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 53 been modified as follows: “In addition to other information, the source test protocol shall describe which critical paramet ers will be measured and how the appropriate range for these parameters s hall be established. The range for these parameters shall be incorporated into the I&M plan.”

42. COMMENT: Rule 4702 Section 6.3.4: The section is redundant with Rule 1081 and other sections of this rule and therefore could be removed.

RESPONSE: Rule 4702 Section 6.3.4: Distric t staff agrees that Section 6.3.4 requirements are redundant to Rule 1081 and has removed Section 6.3.4.

43. COMMENT: Rule 4702 Section 6.4.4: EPA Method 25 analyses for NMHC as methane, but does not exclude ethane compou nds; therefore will possibly read as a false high reading. Method 18 speciates compounds using GC/MS. Please identify the correct source test or modifi ed test for analyzing non-methane, non-ethane VOC’s. Recommend, at minimum, addi ng the following language: “Methane and Ethane constituents can be deducted from total emissions.”

RESPONSE: Rule 4702 Section 6.4.4: See response to Comment number 23 above.

44. COMMENT: Rule 4702 Section 6.5: This section adds onerous paperwork that does not contribute to air quality. Will the District guarantee th at a submitted plan will be in lieu of required Aut hority to Construct applications . If the requirements are going to be on the permit, why make i ndustry put them in a plan also?

RESPONSE: Rule 4702 Section 6.5: To reduce the paperwork for engine operators, the District will acc ept an Authority to Construct application as meeting the I&M plan requirements as long as t he ATC application contains the necessary I&M information. Section 7.4 would be changed to read as follows: “The owner of an engine subject to the requirements of this rule shall submit an I&M plan to the APCO by June 1, 2004, or at least 24 mont hs before compliance with the emission limits in Section 5.1 is required pursuant to Section 7.6, whichever is later. The I&M plan shall be submitted with the Authority-to-Construct pursuant to complying with Section 7.6 as applicable. In lieu of s ubmitting an I&M plan, the owner of an engine may comply with the submittal requirem ents of the I&M plan by including all information required in an I&M plan, pursuant to Section 6.5, in the ATC submitted pursuant to Section 7.3.”

45. COMMENT: Rule 4702 Section 6.5.1: The most reasonable way for industry to determine engine parameters is to use m anufacturer’s recommendations or use information based on source testing. However, even those source testing parameters can not be stagnant because of high fluctuations of ambient conditions like temperature. This requirement will onl y have two results: 1) industry will write the procedures and parameters very loos ely, trying to compensate for all possibilities, or 2) unwary industry will pai nt themselves into an operating parameter corner that is impossible to maintain. This section should be removed.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 54 RESPONSE: Rule 4702 Section 6.5.1: Distr ict staff does not agree that the section should be removed. District staff feels that operators would be better able to comply with the emission limits of the rule by meeting the requirements of Section 6.5.1.

46. COMMENT: Rule 4702 Section 6.5.2: S ee 6.5.1 above for comments. Please modify section to state “emi ssions will be monitored monthly.”

RESPONSE: Rule 4702 Section 6.5.2: See re sponse above. District staff feels that the requirements are clearly stated as proposed.

47. COMMENT: Rule 4702 Section 6.5.3: See 6.5.1 above for comments.

RESPONSE: Rule 4702 Section 6.5.3: Distr ict staff feels that the proposed requirements will better ensure the effectiveness of the I&M plan.

48. COMMENT: Rule 4702 Section 6.5.4: This is redundant to Title V deviation reporting requirements. As the requirements for majo r sources are reduced more facilities will be added to the Title V program. There is no need to add more paperwork for no net benefit.

RESPONSE: Rule 4702 Section 6.5.4: As Titl e V facilities are already complying with the proposed requirement, the requirement will not add any additional effort for them.

49. COMMENT: Rule 4702 Section 6.5.6: This is redundant. Section 6.5.2 states monitoring frequency. Procedures should be manufacturer’s documentation. You are also not considering using third-party testing company’s to do monitoring. How will a small company know if a third par ty is using the equipment appropriately? What if they change companies? What if a company with an analyzer needs to hire a third party because their unit is being serviced? Will the District require third parties to be independently certified? This requirement should be removed.

RESPONSE: Rule 4702 Section 6.5.6: The requirements of Section 6.5.2 are separate and distinct from the requirements of Secti on 6.5.6. The engine operator is responsible that the requirements of t he rule are complied with, even when a third party is contracted.

50. COMMENT: Rule 4702 Section 6.5.7: See 6.5.1 above for comments. The data is there or it is not.

RESPONSE: Rule 4702 Section 6.5.7: Distr ict staff feels that the proposed requirements will better ensure an effective I&M plan.

51. COMMENT: Rule 4702 Section 6.5.8: Should be removed. What are the requirements on the District for timeliness in approving the plan? As industry adaptsSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 55 to this rule there will be numerous modifi cations to a plan – how will industry know which is valid? Will the Distric t guarantee a reasonable approval period?

RESPONSE: Rule 4702 Section 6.5.8: A pproval action on plan modifications would depend on the amount and degree of co mplexity of the modifications. Approval action on plan modifications would be processed as expeditiously as possible. There are simple (revision date fo r example) techniques of identifying the plan in effect.

52. COMMENT: Rule 4702 Section 7.2: Are emission control plans required to be submitted with an Authority to Constr uct if the control technology has been modified? Do new plans have to be submi tted when control technology is changed after compliance dates have passed? Please add the necessary verbiage (this has been an issue in the interpretation of other rules).

RESPONSE: Rule 4702 Section 7.2: Yes, em ission control plans are required to be submitted with an Authority to Constr uct if the control technology has been modified. The intent is that engine operator s provide specific information so that the District can better evaluate the ATC applicat ion. Emission control plans are only required for engines subject to the requirements of this rule and especially the compliance schedules of Section 7.0 as s pecified in Section 6.1 and Section 7.2. Once an engine is in full compliance with the rule and the compliance dates in Section 7.6 have past, it is no longer necessa ry to submit an emission control plan.

53. COMMENT: Rule 4702 Section 7.3: This section is unnecessary. The plan gives industry and the District the needed push to plan for the addition of control technology. The verbiage causes extreme problems in the case of a transfer of ownership; the new owner misses the dead line to add control equipment, but the existing ATC’s cannot be transferred to the new company. Please remove this section.

RESPONSE: Rule 4702 Section 7.3: District staff feels that the lead times are necessary to ensure sufficient time is av ailable for getting all the ATC information, reviewing the ATC and performing the source te sting. It is reasonable to expect that some situations will develop that will pose so me difficulties, District staff will handle unique situations on a case by case basis. District staff feels that it would be too difficult and counter productive to address all possible situations in the rule.

54. COMMENT: Rule 4702 Section 7.4: Any I&M plan compliance dates should correspond exactly to the emission limit compliance schedule, because industry will not know the details of new contro l technology until it is installed.

RESPONSE: Rule 4702 Section 7.4: District staff feels that it is reasonable to expect that industry will know the details of new control technology when industry evaluates such technology prior to purc hasing such technology. District staff also feels that it is preferabl e that the I&M plan and the ATC be evaluated together. AsSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 56 some operators may not need to submit an ATC, Section 7.4 has been changed as noted in the response to Comment number 44 above.

55. COMMENT: Rule 4702 Section 7.5: No notification should be required for removing an engine. This action is contradi ctory with District practices for noticing requirements when removing other equipment. This requirement may result in an issuance of a Notice of Violation for electrifying an engine.

RESPONSE: Rule 4702 Section 7.5: Notification is necessary for confirming compliance with the quantity of engines purs uant to Section 7.6 and for scheduling of inspections. District staff cannot see where this requirement may result in an issuance of a Notice of Violation for electrifying an engine.

56. COMMENT: Rule 4702 Section 7.6: This section does not give industry “credit” for electrifying or removing an engine from servic e. If 3 of 10 engines are electrified on 6/1/05, 0% of the engines are in compli ance. You need to consider engines that were operating that have been cancelled. Base the total number of engines based on permitted on 6/1/04 or an earlier date.

RESPONSE: Rule 4702 Section 7.6: District staf f feels that Section 7.6 provides a simple and easy method to determine the number of engines that need to be in compliance per the schedule. To base the total number of engines based on engines permitted on 6/1/04 or an earlier dat e would require operators to keep and provide much more documentation in order to keep track of engines that have had a transfer of ownership, been derated, etc. Oper ators that want “cr edit” for electrifying or removing an engine from service are di rected to consider applying for ERCs.

Engine Manufacturers Association

57. COMMENT: Rule 4702: As it stands, the SJVUACPD has not proposed feasible or cost-effective emission control measures for diesel-fueled stationary engines with a rated brake horsepower of 50 or greater. More specifically, proposed Rule 4702 would establish a NOx emissions limit for diesel-fueled stationary engines of 80 ppmv, which is roughly equivalent to 1.14 g/bhp-hr. Simply stated, this emission standard is infeasible. Indeed, the corr esponding Tier 2 and Tier 3 federal nonroad engine standards (which are relevant bec ause stationary engines are often derived form nonroad engines) range from 3.0 to 5.6 g/bhp-hr, which standards are up to 5 times higher than what the SJVUAPCD has proposed.

Apparently, the SJVUAPCD is assuming t hat the owners and operators of dieselfueled stationary engines wi ll be able to add advanced selective catalytic reduction (“SCR”) exhaust aftertreatment systems to their engines to meet the 1.14 g/bhp-hr standard. But the SJVUAP CD has presented no actual emissions study data to prove that assumption. Moreover , the SJVUAPCD has presented no cost effectiveness data whatsoever in support of the proposed standard. And, in fact, no such data exist. The costs of equipping al l stationary diesel-fueled engines withSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 57 advanced SCR urea-injection syst ems, even if technologically feasible for all sizes and applications of stationary engines (w hich is doubtful at best), would be prohibitive. Presumably, that is wh y the SJVUAPCD’s “preliminary” costeffectiveness analysis (Appendix B to the Staff Report) only addresses rich-burn and lean-burn spark-ignited engines. But ignor ing the cost-prohibitive nature of the proposed diesel engine standards will not make the issue go away. To the contrary, it simply highlights and confirms t hat the SJVUAPCD has proposed unattainable NOx standards for diesel-f ueled stationary engines.

Accordingly, in light of the foregoi ng, the SJVUAPCD needs to amend proposed Rule 4702 so that it includes feasible and cost-effective emissions standards for diesel-fueled engines. Supporting test data and cost analyses also need to be included. In that regard, EMA reco mmends that the SJVU APCD adopt the NOx emission standard set forth in the OTC M odel Regulation adopted in March of 2001. That standard is 2.3 g/bhp-hr, and better reflects the NOx em ission limits that potentially could be achieved in practice on a relatively cost-effective basis.

RESPONSE: Rule 4702: As other contro l measures are currently under development by ARB and EPA for diesel engine s, the applicability of Rule 4702 has been changed so that Rule 4702 only applies to spark-ignited internal combustion engines. Compression-ignited internal combustion engines would continue to be subject to Rule 4701.

Federal Aviation Administration

58. COMMENT: Rule 4702: After reviewing Proposed Rule 4702, we would like to submit the following comments concerni ng the deletion of the low-use engine definition. The Federal Aviation Ad ministration (FAA) currently has an engine permitted as a low-use engine at the Fresno Yosemite International Airport and the proposed rule would change the classification of this engine. We would like you to consider including language in Section 4.0 of Rule 4702 that would put this engine in the same exemption category as emergency standby engines and engines that do not operate more than 200 hours per year. We recommend that the language that the California Air Resources Board (CARB) has included in their draft Diesel Particulate Matter Emissions Reductions regulation be included in Rule 4702. A copy of the draft regulation is enclosed. The CARB actually included this type of engine under the definition of “Emergency Use” because it operates in a similar fashion as a standby engine. Specifically, we recommend the following language be included under Sectio n 4.0 Exemptions:

4.2.3 An internal combustion engine us ed to power airport runway approach lights (ALSF-1 and ALSF-2 systems only) under Category II or III weather conditions. This engine would be limited to 100 hours or less per calendar year for periodic maintenance and periodic readiness testing. Operati on of the engine other than for maintenance will be limited to Catergory II and III weather conditions.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 58 The FAA does not expect that this propos ed change will result in any significant increases in Nox emissions. The engine o perates for a similar number of hours as the engines that are exempt in the proposed rule and it operates at a time of year when Nox emissions are generally lower. The FAA requests that the air district consider including the proposed c hange based on the following reasons:

1. This engine does not fit the cla ssification of an emergency standby engine because it is actually used as prime power when category II and III weather (low visibility typically due to fog) conditions exist. FAA has specific regulations that require that the engine power the facility during these weather conditions. Once the Category II or III conditions have s ubsided, the facility is returned to the commercial power source. These conditi ons exist periodically during the months of November – March.

2. The engine does not typically operate more than 200 hours per year but the FAA cannot guarantee that it wouldn’t exceed th is limit. Since the operation of the engine is entirely dependent on weather c onditions, it is possible that the operation of the engine could exceed the 200- hour limit. Since the installation of the engine in April 2000, the engine has operated a total of 343 hours, which is well below 200 hours per year. During 2002, the engine was operated 16 hours for testing and 87 hours for actual weather related conditions.

RESPONSE: Rule 4702: The applicability of Rule 4702 has been changed so that Rule 4702 would only apply to spark- ignited internal combustion engines. Compression-ignited internal combustion engines that are subject to Rule 4701would continue to be subject to Rule 4701. Rule 4701 would continue to allow lowuse compression-ignited internal co mbustion engines to operate 1000 hours per year without controls. See response to Comment number 5 above.

Independent Oil Producers Agency

59. COMMENT: Rule 4702, Section 2.0 (Applicability) : Please correct Section 2.0. (See Response to Comment #13). Section 2.0 currently states that the rule applies to “...any internal co mbustion engine with a ra ted brake horsepower of 50 or greater....” In response to comm ents on the prior draft of the rule, the Distr ict agreed to revise Section 2.0 to limit rule appl icability to internal comb ustion engines greater than 50 horsepower.

RESPONSE: Rule 4702 Section 2.0: Section 2.0 has been changed as noted in the response to Comment number 28 above.

60. COMMENT: Rule 4702, Definition 3.7 (Disas ter): The emergency use of equipment during catastrophes sh ould be allowed regard less of the cause of the catastrophe. The definition should be revised as follows:SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 59 Disaster or State of Emergency: A fire, fl ood, earthquake, explos ion or other similar natural catastrophe.

RESPONSE: Rule 4702 Definition 3.7: The def inition of “disaster” is consistent with the RACT/BARCT Determination. O perators that want to have engines for other situations, such as explosions, s hould consider having such engines permitted to be exempt under Section 4.2.2. Secti on 4.2.2 allows an operator to operate such an engine 200 hours per calendar year for these situations.

61. COMMENT: Rule 4701 and Rule 4702 Se ction 5.0 (15 Minute Averaging): Revisions included in Section 5.0 now sp ecify that for inte rnal combustion e ngines (IC engines), comply with specified limits (Table 5.1) based on a 15 minute average. Emissions measured over a short period of time can serve as a “spot check” for ensuring proper engine operation . However, short term averaging periods should not be used for determining compliance with emission li mits. Emissions m easured over longer averaging intervals are more representat ive of normal operatio n and compliance with required emission limits.

a. In response to comments the District has stated that the 15 minute averaging period is required in order to co rrect deficiencies noted by the EPA. However, the recommendations actu ally made by the EPA (67 FR 9212) only require that the District not allow long term (i.e. greater t han 24 hour) averaging.

b. The District has not shown why the existing compliance determination procedures for determining compliance are inadequate. Many permits specify that compliance with NOx emission limits be determined using EPA method 7E or requi re that compliance be determined based on the average result s of three 30 minute test runs. Neither the District nor EPA has established any reason to revise th e existing procedure.

c. The use of BARCT for existing stationary sources is one of th e specified (feasible) control measures. However, the Californi a Clean Air Act (CCAA) defines BARCT as an emission limitation that is based on the maximum de gree of reduction achievable, taking into account environmental, energy, and econom ic impacts by each class or category of source. Any combination or control requirements providing equivalent reductions may be used by a District.

In the California Ai r Resources Board (CARB) document entitled “Identification of Performance Standards For Existing Stat ionary Sources: A Resource Document (April 1999)” CARB states the following:

“...In developing their pl ans, each district determi nes which measures are necessary to include, as we ll as the specific details of each included measure. As guidance (emphasis added) to districts developing st ationary sour ce control measures, the ARB publishe s formal RACT/BARCT de terminations, developed in conjunction with the California Air Po llution Control Officers Association (CAPCOA)...SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 60 “...This identification of performance standard s is intended to complement the existing RACT/BA RCT process while providing furt her assistance to districts in developing or revising control measur es for stationary sources within their jurisdiction...”

“...In addition, we do not in tend to require every district to adopt each performance standard iden tified; rather, we expect them to evaluate the appropriateness of the perfo rmance standards for implementation in their district. As mentioned above, this will entail looking at distri ct-specific factors such as emissions, source characteristics, cost-effectiveness, and technology availability...”

d. Neither the District no r EPA has established an y reason to revise the procedure for determining compliance. Cons equently, IOPA r equest that the requirement for determinin g compliance using a 15 minute-averaging and all other proposed requirement s related to 15 minute averaging be deleted from the proposed rule. Comp liance with the rule requirements should be determined based on the average results of th ree thirty minute test runs conducted in acco rdance with EPA method 7E or CARB 100 procedures.

RESPONSE: Rule 4701 and Rule 4702 Section 5.0: See response to Comment number 10 above.

62. COMMENT: Rule 4702 Section 5.1.1, Table 1 (Cyclically Loaded Engines):

The District is proposing to reduce NOx emissions from cyclically loaded beam balanced or crank balanced (o il well pump engi nes) rich burn engi nes from 300 ppmv (15% O2) to 50 ppmv (at 15% O2). The information provided in the District Staff report is structured in such a manner that casual reading could lead one to conclude that the 50 ppmv NOx limit pr oposed for cyclically loaded engines is required by EPA or CARB (RACT/BARCT). However, neither the EPA nor the CARB require that cyclically loaded engines meet a 50 ppmv NOx limit.

a. The Rule 4701 deficiencies identified by the EPA durin g analysis of Rule 4701 (63 FR 49053, September 14, 1 998 and 67 FR 9209, Febr uary 28, 20 02) do not include any requirements or recommendations applicabl e to cyclically loaded engines.

b. The USEPA Region IX “Technical Support Documen t, For Proposed Rule Making For Rule 4701 ), actually recommen ds that cyclically loaded engines meet RACT requirements for rich burn engines or that information be provided sh owing why the limits are not applicable. IOPA has se veral comments on the USEPA technical support document (TSD) refe renced by the District.

i. First, the technical suppor t document (TSD) wa s not subject to public review and comment and EPA did not incl ude any such reco mmendation in noti ce of limited approval published by the EPA for Rule 4701 (67 FR 9209). If EP A intended toSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 61 mandate requirements applicable to cyclic ally loaded oil well pump engines, then EPA should have identified the deficiency in the February 28, 2002 federal register and should have provided an opportunity for stakeholder revi ew and comment.

ii. Second, EPA recomme ndations for RACT are onl y applicable to engines operating at major stati onary sources. Non-major sources (small operators) would not be subject to the EPA recommendation.

iii. Third, the recommendation in the EPA technical suppo rt document states that the District can adopt standards for cyclic ally loaded engines, other than those required for rich burn e ngines, upon finding that the control technology is not reasonable available.

iv. IOPA believes that such a finding has been made by the California Air Resources Board in the “ DETERMINATION OF R EASONABLE AVAILABLE CONTROL TECHNOLOGY AND BEST AVAILABLE RETROF IT CONTROL TECHNOLOGY FOR STATIONARY SPARK IGNITED IC ENGINES” . In the document, CARB acknowle dges that cyclically loaded beam balanced and crank balance engines have uni que operating characteri stics. In the CARB guideline document (page IV-5 ) it states the following:

“For beam-balance and crank balanced pumping engines, the (proposed) NOx limits is 300 pp mv corrected to 15% excess oxygen”.

c. The District contends that the reductio ns from cyclically loaded engines can be achieved by equipping the engines with non -selective catalyti c reduction (NSCR) systems and air to fuel ratio controllers. Apparently CARB disa grees. In the CARB guideline Document it states the following:

“Cyclically-loaded (cyclic) engine s including those driving the beambalanced or crank-balanced oil pumps and fueled by oil field gas have characteristics that may affect the effectiveness of controls. These characteristics include lo w exhaust gas temperatur es (since the engines spend significant periods of time at idle) and rapid fluctuation in power output. The oilfield ga s may contain significant amounts of moisture and sulfur which may lead to formation of sulfuric acid which can damage catalyst. The energy content of th e field gas may va ry effecting engine performance. Because of the difficul ties and potential cost of controlling the emissions from field gas fueled IC engines driving beam balanced and crank balanced reciprocating oil pump s, the emission limits proposed for these engines are based on the Sa n Joaquin Valley Un ified APCD Rule 4701. For beam-bal ance and crank balanced pumping engines, the NOx limits is 300 ppmv corrected to 15% excess oxygen. It is expected that this limit for these rich -burn engines will be met by keeping the engines properly maintained and tuned, and by leaning the air/fuel mixture. WeSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 62 recommend that the district require replacement of thes e engines at the end of their useful life with prim e movers having lower NOx limits.”

d. The District’s proposed cont rol measure would essentia lly require the removal of cyclically loaded engines and the electrification of th e pumping unit. Cyclically loaded engines are typically us ed for pumping wells, whic h are remotely located in areas where electric power is unavailabl e. Many of these wells have low production rates and ar e owned by small oil production companies.

Neither the EPA nor the CARB require that th ese cyclically loaded engines meet limits proposed by the District. Consequently, IOPA requests t hat the District retain the current control requirements (300 ppmv 15 % O2), recommended by the CARB for cyclically loaded bea m balance or crank balance engines.

RESPONSE: Rule 4702 Section 5.1.1: T he control of these engines was addressed in the previous Draft Staff Report. Staff reports have also identified what EPA and CARB require the District to accomp lish. As stated previously, there are cyclic engines in the District that are already meeting the 50 ppmv NOx emission level. In addition, electrification cost s provided by an operator for these sources demonstrate that electrification c an be done on a cost effective basis.

63. COMMENT: Rule 4701 and 4702, Section 5.1.4: Th e procedures proposed in Section 5.1.4 specify that alternativ e monitoring be condu cted using 15 minute averages. The samplin g and purge times requ ired for alternative monitoring using 15 minute averages will require more manpower a nd purchase of addit ional monitors. IOPA believes that additional co st imposed on small operat ors is not su pported by any underlying information provided by the Distri ct. IOPA also believe s that the additional time required for conducting “spot checks” will limit t he number of emission units checked during the day and r educe the overall effectivene ss of the existing program.

RESPONSE: Rule 4701 and 4702 Section 5.1. 4: See response to Comment number 10 above.

64. COMMENT: Rule 4702, Section 5.2 (Surplus ERCs); Source operators should be allowed to bank surplus actual emission reduct ions in order to hel p defray the cost of electrification. Please revi se Section 5.1.3 as follows:

5.2 In lieu of compliance with emission limits of Section 5.1 an owner of any internal combustion engine may elect to permanently remove it from service. NOx emission reductions achieved by remo val of an engine in lieu of compliance wi th emission requirements of Section 5.1 shall not be av ailable for emission reduction credit (ERC), except for those reductions in excess of what would be required by this rule.

RESPONSE: Rule 4702 Section 5.2: The requirements of Section 5.2 have been removed to help defray the cost of electrification and to provide incentive for operators to achieve emission reductio n on a more timely basis.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 63 65. COMMENT: Rule 4702, Section 5. 3 (Continuous Monitoring): Section 5.3 specifies that internal combustion engi nes greater than 1,000 hors epower and o perated more than 2,000 hours per year incl ude continuous monitoring . Our comments on this section are summarized below:

As discussed during the December 6, 20 02 workshop (and as allowed by the EPA Credible Evidence Rule), Section 5.3 sh ould be revised to ena ble consideration of other monitoring techniques.

5.3 ...The continuous monitoring syst em may be a contin uous emissions monitoring system (CEM), a parametric monitoring system (PEMS) or an alternative continuous monitoring system approved by the APCO. A system other than a continuous system may be approved by the APCO provided it is sufficiently reliable and capable of providing timely info rmation for determ ining compliance.

RESPONSE: Rule 4702 Section 5.3: For better clarity, Section 5.3.1 and Section 5.3.2 have been changed to read as follows:

5.3.1 For each engine with a rated brake horsepower of 1,000 hp or greater and which is permitted to oper ate more than 2,000 hours per calendar year, or with an external emission control device, either install, operate, and maintain continuous monitoring equipment for NOx, CO, and oxyg en, as identified in Rule 1080 (Stack Monitoring), or install, op erate, and maintain APCO- approved alternate monitoring. The monitoring system may be a continuous emissions monitoring system (CEMS), a parametric emissions monito ring system (PEMS), or an al ternative monitoring system approved by the APCO. APCO-approved alte rnate monitoring shall consist of one or more of the following:

5.3.1.1 periodic NOx and CO emission concentrations, 5.3.1.2 engine exhaust oxygen concentration, 5.3.1.3 air-to-fuel ratio, 5.3.1.4 flow rate of reducing agen ts added to engine exhaust, 5.3.1.5 catalyst inlet and exhaust temperature, 5.3.1.6 catalyst inlet and ex haust oxygen concentration, 5.3.1.7 other operati onal characteristics.

5.3.2 For each engine not subject to Section 5.3.1, monitor operational characteristics recommended by the engine manufacturer or emission control system supplier, and approved by the APCO.

66. COMMENT: Rule 4701 and Rule 4702, Section 6.3.3 (Source Test Protocol): Requirements for test protocols (which are pr epared by source test contractors) should be separate from the I&M pl an. The District will be able to verify that the engine is operating in accordance with the I&M plan by reviewin g the engine operating log. Section 6.3 should be revised as follows:SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 64 6.3 Prior to any source test required by this rule, prepar e and submit a source test protocol to the APCO. The source test protocol shal l identify critical parameters included in the I&M plan to be monitored during the source test. In addi tion to other information the source test protocol shall descr ibe which critical parameters will be measured and incorp orated into the I&M plan.

RESPONSE: Rule 4701 and Rule 4702 Section 6.3. 3: For better clarity, Section 6.3.3 has been changed to read as follows: “In addition to other information, the source test protocol shall describe wh ich critical paramet ers will be measured and how the appropriate range for these parameter s shall be established. The range for these parameters shall be in corporated into the I&M plan.”

67. COMMENT: Rule 4702, Section 6.5. 8 (Revisions to I&M Plans): The intent of Section 6.5.8 is to specify procedures for revisi ng the I&M plan. Ho wever, the section as written prohibits changes in the operatio n of the engine, unless prior APCO approval is obtained. Changes in the operation of the engine ma y need to be made within relatively short time periods such as da ys. Such changes do not afford time for lengthy APCO revi ew and approval. The section as worded is un workable. The section needs to be restructured to more clearly align the require ment with its intended purpose.

6.5.8 Procedures for revising the I&M plan . Source operators making changes to critical I&M plan elements mu st notify the District within 10 days following the change and must submit an updated I&M plan to the APCO within 30 days of the change. The date and time of the ch ange shall be recorded in the engine operating log.

RESPONSE: Rule 4702 Section 6.5.8: For bett er clarity, Section 6.5.8 has been changed to read as follows: “Procedures for revisi ng the I&M plan. The I&M plan shall be updated to reflect any change in operat ion. The I&M plan shall be updated prior to any planned change in operatio n. An engine owner that changes significant I&M plan elements must notify the Di strict no later than seven days after the change and must submit an updated I&M plan to the APCO no later than 14 days afte r the change for approval. The date and time of the change to the I&M plan shall be reco rded in the engine operating log. For new engines and modifica tions to existing engines, the I&M plan shall be submitted to and approved by the APCO prior to issuance of the Permitto-Operate. The owne r of an engine may request a change to the I& M plan at any time.”

Quinn Engine Systems

68. COMMENT: Rule 4702, Section 4. 3.1: Hospital Standby Emergency gene rators need to run more than 100 hour s for maintenance, readiness testing and repair work. Please keep the level at 200 ho urs per year for hospitals or at least place a time scale on this requirement for hospitals so that an attempt can be made to change the certification requirements.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 65 RESPONSE: Rule 4702 Section 4.3.1: S ee response to Comment number 5 above.

69. COMMENT: Rule 4702 Se ction 4.2: There is a loop in the rule that d oes not clearly exempt emergency standby g enerators. Starti ng at page 4702-4 , paragraph 4.2. Emergency generators must meet the requirements of Se ction 6.1. Section 6.1states the requirements of Section 5. 1. Section 5.1 ha s the emission levels of Table 1. Please try to understand th e small business trying to pe rmit a standby generator and they get stuck in the above loop. Please review before adoption.

RESPONSE: Rule 4702 Section 4.2: An engi ne operator subject to Section 4.2 would need to specify in their emission cont rol plan that they are exempt from the emission requirements of Section 5.1 and pr ovide other required emission control plan information as applicable.

Tehachapi-Cummings County Water District

70. COMMENT: Rule 4702: The proposed rule changes which would require Tehachapi-Cummings County Water Distr ict (TCCWD) to install continuous emission monitoring systems on the four Waukesha Engines at our Pump Plant No.1 would create an expenditure of ov er $384,500 of taxpayer money, with no net positive effect on the air quality of the SJVAPCD.

TCCWD has demonstrated, by source test s, that we operate under the proposed 65 p.p.m NOx. We test in house, once a month with our own Bacharach ECA450 to document compliance. When in service pumping water, these engines do not change load or R.P.M.. They are serv iced every 1200 hours and then put back into service at a set load and R.P.M. In this application, continuous emissions monitoring will not do anything except add co st to maintain the monitoring system and cost to report the results.

During tough economic times, California pol icy makers should analyze exactly what their proposals would accomplish and at what price before saddling business and taxpayers with another costly mandate. There is no m easurable positive benefit by adding C.E.M.S.

Cars, trucks, tractors and trains, and mobile sources are the polluters in the Southern San Joaquin Valley, not well ma intained, natural gas fired, lean burn engines. T.C.C.W.D. opposes the C.E.M.S. requirement.

RESPONSE: Rule 4702: Operators may use an APCO- approved alternate monitoring system instead of a CEMS. Rule 4702 does not mandate engine operators to install CEMS. For better clar ity, Section 5.3.1 and Section 5.3.2 have been changed to read as noted in the response to Comment number 65 above.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 66 Western States Petroleum Association

71. COMMENT: Rule 4702, Section 2.0 (Applicability) : Please correct Section 2.0. (See Response to Comment #1 3) In response to comments on the prior draft of the rule, the District agreed to revise Section 2.0 to limit rule applic ability to inte rnal combustion engines greater than 50 horsepower. Section 2.0 currently states that the rule applies to “...any internal combustion engine with a rated br ake horsepower of 50 or greater....”.

RESPONSE: Rule 4702 Section 2.0: Section 2.0 has been changed as noted in the response to Comment number 28 above.

72. COMMENT: Rule 4702 Definition 3.7 (Disaster): The definition of disaster is ambiguous. The wording seems to imply that disaster must result from a natural cause. The emergency use of equipment during catastrophes should be allowed regardless of the cause of the catastrophe. WSPA requests that the definition be revised as follows:

3.7 Disaster or State of Emergency: A fire , flood, earthquake, explosion or other similar natural catastrophe.

RESPONSE: Rule 4702 Definition 3.7: No change is necessary as noted in the response to Comment number 60 above.

73. COMMENT: Rule 4701 and Rule 4702 Section 5.0 (15 Mi nute Averaging): Revisions included in Section 5.0 now sp ecify that for inte rnal combustion e ngines (IC engines), compliance with specified li mits (Table 5.1) be deter mined using a running 15 minute average. In the WSPA comments submitted on the June 18, 2002 draft version of the rule, WSPA requested that the District co ntinue to de termine compliance using the average results of three 30 minute test runs.

Emissions measured using a short-term aver aging period (15 minutes) can serve as a “spot check” for ensu ring proper engine ope ration. However, short term averaging periods should not be used for determining compliance with emission limi ts. Emission measurements made over longer averaging intervals are more representative of normal operation and compliance with required emission limits.

In response to comments the District stat ed that the 15 minute averaging period was required in order to corre ct an EPA deficiency and was consistent with the RACT/BARCT Guideline. WSPA believes th at the District has failed to adequately address the issues raised in the rulemaking comments. Co nsequently, pursuant to the California Health and Safe ty Code (H&S) Section 40727 , WSPA requests that the District establish the necess ity for the proposed revision.

1. In the District’s sta ff report on page 7, item (f), it states that the EPA recommends a 15 minute averaging pe riod. Even though EPA may recommend 15 minute averaging, 15 minute aver aging does not appear to be a rule approvability issue.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 67 a. In the August 21, 2001 document published by USEPA Region IX, entitled

“ GUIDANCE DOCUMENT FOR CORRECTING COMMON VOC AND OTHER RULE DEFICIENCIES” EPA states the following:

“Rule compliance periods generally must be consistent with the applicable NAAQS time frame. Since the ozone NAAQS is based on one-hour levels recorded over 24-hours, for example VOC requirements (or NOx, emphasis added) should ha ve daily or shorter compliance periods”.

(USEPA Region IX, “Little Blue Book” Fo r Correcting Rule Deficiencies, August 21, 2001; Compliance Periods and Averagin g Times, page 7)

b. EPA has acknowledged that reasonabl e available control technology (RACT) requirements and reasonable further progress can be me t though regulations using hourly, daily or in some cases even long er averaging periods. In response to questions raised by South Co ast Air Quality Management District (SCAQMD) the EPA stated the following (s ee attached letter).

“Currently, EPA generally considers instantaneous, hourly or daily emission rate limits to be RACT. If the South Coast can demonstrate that a mass emission limit averaged over a longer pe riod will produce e quivalent reductions on a daily basis, EPA would allo w longer term averaging for RACT requirements.”

Although EPA may recommend a 15 minute averaging peri od it is not a mandatory requirement. EPA guidance states that longe r averaging period s are allowable provided emission reductions are maintain ed (i.e. enforceable) on a daily basis.

Based on the guidance prov ided in the USEPA Region IX “Blue Book” and the guidance provided by EPA to the SCAQMD , WSPA believes that compliance with the applicable emission limits can be determined using a one-hour average, based on results of three thirty mi nute test runs. Continuous compliance with the rule requirements can be established through periodic monitoring using a hand held monitor as currently allowed by the existing Rule 4701.

2. The District has not established the nece ssity for requiring 15 minute averaging since the District has not quan tified any additio nal emission reduct ions obtained by the proposed amendment. If the District believes that the proposed re vision is necessary, then the District should quantify the increm ental reductions expected to be obtained by the proposed revision.

3. The District has not shown why the existing procedure for determining compliance is inadequa te. The District has successf ully used the existing test procedure for ensuring compliance for many years. Many permits specify that compliance with NOx em ission limits be de termined using EPA meth od 7E or require that compliance be determined based on the average results of three 30 minute testSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 68 runs. Neither th e District nor EPA has established any compelling reason to revise the existing procedure.

4. Even though the propos ed change may be consistent with the requirements contained in the California RACT/BARCT guideline do cument, the change is not required to comply with California requi rements for BARCT. On page I-1 the guideline document states the following:

“It is important to note that the determination is a non-regulatory (emphasis added) guidance document with the purpose of assistin g districts in developing regulations for stationary IC engines.”

The use of BARCT for existing stationary sources is one of th e specified (feasible) control measures. However, the California Clean Air Act (CCAA) defines BARCT as an emission limitation that is based on the ma ximum degree of reduction achievable, taking into account environmental, energy, and econom ic impacts by each class or category of source.

Any combination or control requirements prov iding equivalent redu ctions may be used by a District. In the California Air Resources Board (CARB) document entitled “Identification of Performance Standards fo r Existing Stationary Sources: A Resource Document (April 1999)” CARB states the following:

“...In developing their plans, each district determines wh ich measures are necessary to include, as well as the specific de tails of each included measure. As guidance (emphasis added) to districts de veloping stationary source control measures, the ARB publishes formal RACT/BARCT determinations, developed in conjunction with the California Air Polluti on Control Officers Association (CAPCOA)...

“...This identification of perfo rmance standards is intended to comple ment the existing RACT/BARCT process wh ile providing further assistance to districts in developing or revising control measures for stationary sources wi thin their jurisdiction...”

“...In addition, we do not intend to require every district to adopt each performance standard identified; rather, we expect them to evaluate the appro priateness of the performance standards for im plementation in thei r district. As m entioned above, this will entail looking at district-s pecific factors such as emissi ons, source c haracteristics, cost-effectiveness, and te chnology availability...”

The District does not have to require 15 minute averaging to satisf y requirements for every feasible measure or BARCT. The Dis trict has not provided any documentation showing that they considered District specific factors, such as increm ental emission reductions, improved rule effectiveness or improved enforceability. These issues need to be addressed in or der to establish the necessit y of the proposed revision.

5. The specified procedure also conflicts with federal requirement s at 40 CFR 60.13 which specify that the 15 minute averaging period is to be averaged with three otherSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 69 averaging periods to determ ine the hourly average emi ssions. In addition, the regulation states that a viol ation does not exist unless a three hour rolling average is exceeded. Therefore, imposition of a 15 minute average is not necessary.

The overall intent of 60.13 is the development and collection of representative data that can be utilized to determine compli ance on a continuous basis. Periodic monitoring employing short term averages may be used as an indi cation of proper engine performance, but em issions measured over longe r averaging per iods are more representative of the engines normal operation under varying conditions.

Neither the District nor EPA has established any compe lling reason to revise the procedure for determining compliance. WS PA believes that the District has failed to comply with the requirements at H&S Section 40727 which sp ecify that the need for a proposed amendment be established. Furthermore, WS PA believes that the inclusion of the 15 minute averaging pe riod is prohibited by H&S Section 39602 which states:

“...the State Implementation Plan shall only include those provisions necessary to meet the requirements of the Clean Air Act”.

Consequently, WSPA requests that the requirement for de termining compliance using a 15 minute-averaging and all other proposed requi rements related to 15 minute averaging be deleted from the proposed rule . As discussed in prior comments, WSPA believes that compliance with the rule requirements s hould be determined based on the average results of three thirty minute te st runs conducted in accordance with EPA method 7E or CARB 100 procedures. Addi tional comments on other Section 5.0 requirements follow:

RESPONSE: Rule 4701 and Rule 4702 Section 5.0: See response to Comment number 10 above.

74. COMMENT: Rule 4701 and 4702, Section 5.1.4: As discussed previously, WSPA requests that all re ferences to requirements for 15 minute averaging be deleted from the proposed amendments. The procedures proposed in Sectio n 5.1.4 specify that alternative monitoring be conducted using 15 minute aver ages. The sampling and purges times required for alternative m onitoring using 15 minute averages will limit the number of emission units c hecked during the day and redu ce the overall effectiveness of the existing program.

RESPONSE: Rule 4701 and 4702, Section 5.1. 4: See response to Comment number 10 above.

75. COMMENT: Rule 4702, Section 5.2 (Surplus E RCs): Section 5.2 prohibits issuance of emission reduction credits for surp lus reductions made available through electrification of engines subjec t to rule control requirement s. Source op erators should be allowed to bank surplus ac tual emission reductions in order to help defray the cost of electrification. Please re vise Section 5.1.3 as follows:SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 70 5.2 In lieu of compliance with emission limits of Section 5.1 an owner of any internal combustion engine may elect to permanently remove it fr om service. NOx emission reductions achieved by remo val of an engine in lieu of compliance wi th emission requirements of Section 5.1 shall not be av ailable for emission reduction credit (ERC), except for those reductions in excess of what would be required by this rule.

RESPONSE: Rule 4702 Section 5.2: See response to Comment number 64 above.

76. COMMENT: Rule 4702, Section 5.3 (Continuou s Monitoring): Section 5.3 specifies that internal combustion engi nes greater than 1,000 ho rsepower and operated more than 2,000 hours per year in clude a continuous emission s monitor, a parametric (predictive) emission monito ring system or an approv ed alternative continuous monitoring system. W SPA has the following co mments on Section 5.3.

1. Most of the discussion on 15 minute averaging is germane to the proposed requirement. The District ha s not established the need fo r continuous monitoring, has not quantified any likely emis sion reductions resulting from continuous monitoring and has not established a histor y of non-compliance which would justify the need for continuous monitoring.

2. In the preamble to the Credible Evidence Rule (62 FR 8313), EPA states the following

“...In addition, 504(b) of the Act gr ants discretionary authority to the Administrator to prescribe procedur es and methods for monitoring, and provides that continuous emission monitoring systems need not be required if
alternative methods are available that provide sufficiently reliable and timely information for determining compliance.”.

As discussed during the December 6, 2002 workshop, WSPA requ ests that Section 5.3 be more broadly st ructured in order to enable consideration of other alternative monitoring techniques. WS PA request that an additiona l sentence be included in section 5.3:

5.3 The continuous monitori ng system may be a continuous emissions monitoring system (CEM), a parametric monitoring syst em (PEMS) or an al ternative continuous monitoring system approved by the APCO. A system ot her than a continuous system may be approved by the APC O provided it is sufficie ntly reliable and capable of providing timely information for determining compliance.

RESPONSE: Rule 4702 Section 5.3: See response to Comment number 65 above.

77. COMMENT: Rule 4701 and Rule 4702, Section 6.3.2 (Sour ce Test Protocol): These sections specify that emission measuremen ts be made under normal or permittedSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 71 operating conditions. For an emission unit, normal operating conditions ar e relative to existing conditions. Consequently, WSPA request t hat respective conditions be revised as follows:

6.3.2 Conduct emission source testing with the engine op erating either at conditions representative of normal operat ion under existing conditions or conditions specified in the Pe rmit to Operate...”

RESPONSE: Rule 4701 and Rule 4702 Section 6. 3.2: See response to Comment number 3 above.

78. COMMENT: Rule 4701 and Ru le 4702, Section 6.3.3 (Source Test Protocol): Section 6.3 requires that source test protocols include a list of pa rameters to be measured and incorporated into the inspection and main tenance (I&M) plan. Requirements for test protocols (which are prepar ed by prepared by source te st contractors) should be separate from the I&M plan. The District will be able to verify that the engine is operating in accordance with the I&M plan by reviewin g the engine operating log. Section 6.3 should be revised as follows:

6.3 Prior to any source test required by this rule, prepar e and submit a source test protocol to the APCO. The source test protocol shal l identify critical parameters included in the I&M plan to be monitored during the source test. In addi tion to other information the source test protocol shall descr ibe which critical parameters will be measured and incorp orated into the I&M plan.

RESPONSE: Rule 4701 and Rule 4702 Section 6. 3.3: See response to Comment number 66 above.

79. COMMENT: Rule 4702, Section 6.5.8 (Revisions to I&M Plans): The intent of Section 6.5.8 is to specify procedures for revisi ng the I&M plan. Ho wever, the section as written prohibits changes in the operatio n of the engine, unless prior APCO approval is obtained. Changes in the operation of the engine ma y need to be made within relatively short time periods such as da ys. Such changes do not afford time for lengthy APCO revi ew and approval. The section as worded is un workable. The section needs to be restructured to more clearly align the requirement with its intended purpose.

6.5.8 Procedures for revising the I&M pl an. Source operators making changes to critical I&M plan elements must notify the District within 10 days following the change and must submit an updated I&M plan to the APCO within 30 days of the change. The date and time of the change s hall be recorded in the engine operating log.

RESPONSE: Rule 4702 Section 6.5.8: S ee response to Comment number 67 above.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 72 WRITTEN COMMENTS FROM WORKSHOP HELD MAY 27 and 28, 2003

Rule 4701 (Internal Combustion Engines – Phase 1) and Rule 4702 (Internal Combustion Engines – Phase 2)

General comments pertaining to the So cioeconomic Impact Analysis and responses prepared by District staff to such general comments are included below. Specific comments pertaining to the Socioeconomic Impact Analysis Report and responses prepared by the Socioeconomic consultant to such specific comments are included in an attachment to the Socioeconomic Impact Analysis Report. The Socioeconomic Impact Analysis Report is in Appendix C.

EPA - No comments received.

ARB

1. COMMENT: General Currently, both Ru le 4701 and Rule 4702 address sparkignited engines. There should be a provisi on in Rule 4701 to exempt spark-ignited engines that are subjected to Rule 4702 or a provision in Rule 4701 that requires spark-ignited engines to meet the mo re stringent requirements in Rule 4702.

RESPONSE: General Rule 4701 is needed for spark-ignited engines until all compliance deadlines in new Rule 4702 have passed.

2. COMMENT: Rule 4701 Section 3.0 For consistency between Rule 4701 and 4702, we suggest the following changes to the definitions.

A. Definition 3.4 for Cyclic Loaded Engine should be consistent in both Phase 1 and Phase 2. B. No need to define Diesel Engines in 3.6 Phase 2. C. The following definitions in Phase 2 should be defined in Phase 1; 3.7 Disaster or State of Emergency, 3.8 Distributed Generation, 3.10 Exhaust Controls, 3.11 Flood, 3.21 Stationary Source.

RESPONSE: Rule 4701 Definition 3.4, C yclic Loaded Engine, has been changed to be consistent in both Rule 4701 and Rule 4702. Although “Diesel Engine” is not used in Rule 4702, the definit ion is provided to clarify that diesel engines are considered to be compression-ignited engines and not spark-ignited engines. The terms “Disaster,” “State of Emergency, ” “Distributed Generation,” and “ExhaustSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 73 Controls” are not used in Rule 4701 so definitions are not needed. The terms “Flood” and “Stationary Source” are used in Rule 4701 and definitions have been added to Rule 4701 for better clarity.

3. COMMENT: Rule 4702 Section 3.0 For consistency between Rule 4701 and 4702, we suggest the following changes to the definitions.

The following definitions in Phase 1 should be defined in Phase 2; 3.7 Dual-Fuel Engine, 3.12 Low Use Engine, 3.13 Major NOx Source.

RESPONSE: Rule 4702 Section 3.0 These terms are not used in Rule 4702 so definitions for them are not needed.

4. COMMENT: Rule 4702 Section 3.0 For consistency between Rule 4701 and 4702, we suggest the following changes to the definitions.

D. The definition in Phase 1, Secti on 3.20 – Standby Engines, Section 3.23 - Waste Derived Gaseous Fuel and Phas e 2, Section 3.9 - Emergency Standby Engine, and Section 3.24 - Waste Gas should be consistent in both Rules.

RESPONSE: Rule 4702 Section 3.0 The defin itions for the terms “Emergency Standby Engine” and “Waste Gas” in Ru le 4702 are consistent with the ICE RACT/BARCT Determination. The definit ions for “Standby Engines” and “Waste Derived Gaseous Fuel” have not been changed in Rule 4701 in order to avoid the possibility of an engine having to comply wit h more stringent emission limits in Rule 4701 as the result of a definition change. District staff intends that engines that must comply with more stringent emi ssion limits should do so in Rule 4702.

5. COMMENT: Rule 4702 Section 5.6.6 The prov ision in Phase 2, Section 5.6.6 that requires the fuel usage to be monitored should also be inserted into Rule 4701’s Monitoring Equipment section.

RESPONSE: Rule 4702 Section 5.6.6 District staff intends that spark-ignited engines comply with the fuel usage m onitoring standards of the RACT/BARCT Determination in Rule 4702. As noted in the staff report and as the RACT/BARCT Determination does not address compressi on-ignited engines, District staff will address the requirements for diesel fuel ed internal combustion engines as a separate project in the future after EPA and ARB have established their emission standards for diesel fueled engines.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 74 STAKEHOLDERS

Written comments were received from the following organizations:

California Independent Petr oleum Association (CIPA) Castle Peak Resources (CPR) Independent Oil Producers’ Agency (IOPA) Lindh and Associates (L&A) Tehachapi-Cummings County Water District (TCCWD) Vintage Petroleum (VP) Western States Petroleum Association (WSPA)

6. COMMENT: On page 16, Table 10 of the So cio-economic Analysis, the costs of Rule 4702 to the Crude Oil, Natural Ga s, Oil Pipelines, Oil Refining and Field Services Industry, as a percent age of profits is given as 7. 4%. A portion of the costs from Rule 4701 is still being imposed on thes e same members of industry. Those costs should have also been included in this table. The CARB RACT/BARCT Determination does state that cost-e ffectiveness should be considered when imposing new rules on Industry. A review of these accumulated costs should be undertaken to determine if some portions of this rule should not be implemented due to Cost Effectiveness considerations. (CIPA, IOPA)

RESPONSE: Socioeconomic impact reports are prepared pursuant to the provisions of AB2061 (Section 40728.5 of t he California Health and Safety Code), which requires an assessment of socioec onomic impacts of proposed air quality rules. The state legislation authorizi ng the preparation of socioeconomic impact reports does not specify that cumulative cost impacts resulting from the previous rule and the proposed rule are to be addre ssed in the analysis. District staff believes that the intent of the state legisl ation is to treat each rule adoption project independently; thus requiring its own s eparate socioeconomic impact analysis. Previous costs are absorbed by affected businesses over time and become part of the market transaction for the affected produc ts and services. Therefore, examining the impact of the proposed rule in the curr ent economic baseline is equivalent to a cumulative analysis.

7. COMMENT: Rule 4701 Section 3.5 Engines with a horsepower rating are exempt from permit. Please explain how a de-rated engine can be limited by permit condition to 50 horsepower or less if a permit is not required for such engines. (TCCWD)

RESPONSE: Rule 4701 Section 3.5 There are two conditions for an engine to be classified as derated and not require a permit: one condition is that the engine be physically limited to 50 horsepower or less and the other condition is that the engine manufacturer nameplate be changed by the m anufacturer and reflect a rating of 50 horsepower or less. If an engine is physi cally limited to 50 horsepower or less but the manufacturer’s rating nameplate is not changed, such engine is not exempt from permit, since the nameplate rating is the basis for permit exemption.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 75 8. COMMENT: Rule 4702 Section 5.0 Several comments have been submitted to the District contesting the assertion t hat cyclic loaded ICE can achieve 50 ppmv NOx (reference Industry’s comments dat ed 4-1-02 and 7-31-02 and Comments # 9 and # 62 in Appendix A of the May 7, 2003 St aff Report). Excerp ts from CARB and EPA documents, acknowledging that there is no viable c ontrol device and that 300 ppmv is the achievable limit, have been present ed as evidence. Industry reiterates its opposition to the proposed 50-ppmv NOx limit. (VPI)

RESPONSE: Rule 4702 Section 5.0 District staff has addressed these concerns in previous staff reports and continues to feel that cyclically loaded engines can comply with the proposed requirement s in a cost effective manner.

9. COMMENT: Rule 4702 Section 5.0 At the May 28, 2003 workshop on the Proposed Rule 4702, a consultant present ed comments on the rule. The comments presented were:

1. The Rule as drafted establishes differ ent limits for different classes of engines.

• This provides economic incentive for users to choose the more polluting alternative.

• The distinctions between the different types of engines are non-existent or arbitrary.

Industry proposes a single lower limit based on the noted technology. Industry contends that the emissions limits can and should be the same for all classes of IC engines, including Diesels. (L&A)

RESPONSE: Rule 4702 Section 5.0 As noted in the staff repor t, the proposed amendments and proposed provisions of dr aft Rule 4702 have been developed to correct the deficiencies identified by EPA and to meet the BARCT standards contained in ARB’s Internal Combustion En gine RACT/BARCT Determination. After considering the information provided by the commenter, District st aff feels that the referenced technology cannot be considered as an “achieved-in-practice” technology at this time but may reevaluate as their technology is applied more broadly.

10. COMMENT: Rule 4702 Section 5.1 Industry continues to assert that the proposed Emission limits for lean burn engines are overly agg ressive. The oper ator has not met the proposed limits on every engine test and op erates these lean burn engines under highly specialized conditions; i.e. under ne arly constant load, using natural gas with consistent quality, th e engines are located within bu ildings designed to protect the engines from the elements, and there is approximately one engine mechanic for every two to three engines. Thes e conditions are not typica l of many lean-burn engine operations. (TCCWD)

RESPONSE: Rule 4702 Section 5.1 Comment noted.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 76 11. COMMENT: Rule 4701, Section 5.1.4, Section 5.4.3, Section 6.3.2 and Rule 4702, Section 5.2, Section 5.6.9, Section 6.3.2, Section 8.0 (Note: Several comments, summarized below for brevity and to mi nimize redundancy, were received from several commenters concerning the r equirements for 15 consecutive-minute averaging.) Industry believes that the requirement for 15-minute averaging for portable NOx Box emissions sampling shou ld be eliminated. Current Rule 4701, section 5.1.4 clearly specifies that only ICE with continuous emission monitoring systems (CEMS) are subject to violation fo r exceeding an applicable emission limit. Minor emission excursions during perio dic portable analyzer monitoring is not commonly treated as a violation. Industr y ICE permits have conditions stipulating that if a periodic inspection reveals emi ssions exceeding the limit of the rule, we have one hour to correct the condition or we must notify the District and schedule a source test.

In the case of the proposed rule where concentrations are determined using a 15 minute average, both EPA and CARB require that at least three 15 minute test runs be completed and averaged in order to determine compliance with the rule requirements. However, Industry believe s that compliance determinations should be made over longer periods of time wh ich are more repres entative of equipment operation. EPA also recommends that compliance determinations be based on emission measurements made over three, 30-minute runs. (CPR, IOPA, TCCWD, VP, WSPA)

RESPONSE: Rule 4701, Section 5.1.4, Section 5. 4.3, Section 6.3.2 and Rule 4702, Section 5.2, Section 5.6.9, Section 6.3.2, Section 8.0 After discussions with Industry and EPA, District staff has made c hanges so that these sections read as follows:

Rule 4701, Section 5.1.4 and Rule 4702, Section 5.2 “All continuous emission monitoring systems (CEMS) emissions measurements shall be averaged over a period of 15 consecutive minutes. Any 15-consecutive-minute block average CEMS measurement exceeding the applicable emission limits of this rule shall constitute a violation of this rule.”

Rule 4701, Section 5.4.3 and Rule 4702, Section 5.6.9 “NOx emission readings taken pursuant to this section shall be averaged over a 15 consecutive-minute period by either taking a cumulative 15 consecutive-minute sample reading or by taking at least five (5) readings, evenly spaced out over the 15 consecutive-minute period.”

Rule 4701, Section 6.3.2 and Rule 4702, Section 6.3.2 “For emissions source testing performed pursuant to Section 6.3.1 for the purpose of determining compliance with an applicable standard or numerical limitation, the arit hmetic average of three (3) 30-consecutive-minute test runs shall apply. If two (2) of three (3) runs are above an applicable limit, the test can not be used to demonstrate compliance with an applicable limit.”SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 77 12. COMMENT: Rule 4702 Section 5.6.1 I ndustry understands t hat the proposed requirement for Continuous Emissions Moni toring (CEM) has been modified to allow APCO alternate monitoring. The operator monitors operation of permitted IC engines at least quarterly using a portable analyzer and monitors the concentration of oxygen in the exhaust monthly. Addi tional operational parameters such as water flow rate and engine RPM are monitored on a weekly basis. Will this system of monitoring meet the District’s requirement for alternate moni toring proposed in Rule 4702? (TCCWD)

RESPONSE: Rule 4702 Section 5.6.1 This comment is outside the rulemaking process and has been forwarded to the District’s Permit Services Division for response.

13. COMMENT: Rule 4702 Section 5.6.3 As discussed during the May 27, 2003 workshop, Rule 4702, the word “conti nuous” should be deleted from Section 5.6.3 requirements in order to ensure consisten cy with the other monitoring provisions of the rule. (WSPA)

RESPONSE: Rule 4702 Section 5.6.3 has been changed as recommended.

14. COMMENT: Rule 4702, Section 5.6.9 Emissi on monitoring requirements contained in Rule 4702 at Section 6.5.2 conflict with monitoring requirements at Section 5.6.9 and Section 6.5.6. Industry under stood that it was the Distric t’s intent to require that emission monitoring using a portable NO x analyzer be conducted quarterly, not monthly. Please revise Rule 4702 Section 6.5.2 as follows: (WSPA)

RESPONSE: Rule 4702, Section 5.6.9 There is no conflict as Section 6.5.2 does not pertain to the use of a portable NOx ana lyzer. However, for clarity, Section 6.5.2 has been amended. The proposed provis ions of Section 5.6.9 require the taking of emission readings with a port able NOx analyzer to be conducted quarterly, not monthly.

15. COMMENT: Rule 4702 Section 5. 6.9 Industry objects to the requirement for reporting of NOx readings to the APCO. Industry maintains records of all NOx measurements for at least five years. Such records are av ailable upon request. (TCCWD)

RESPONSE: Rule 4702 Section 5.6.9 T here are a very limited number of situations where operators are required to report NOx readings to the APCO. In most cases having such records availabl e upon request is sufficient to comply with Section 5.6.9.

16. COMMENT: Rule 4701 and Rule 4702 Section 6.2. 1 Industry can’t see the benefit to anyone from the additional recordkeeping requirements. The original statement in 4701 asked for source testing, moni toring data, and other information deemed necessary by the APCO. Now we need to include hours of operat ion, the type andSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 78 quantity of fuel used, and maintenance plus modifications in our logs. Industry keeps maintenance records along with other information, but additional recordkeeping requirements require additional staff time. These types of costs are not included in the Cost Benefit Analysis. (CPR)

RESPONSE: Rule 4701 and Rule 4702 Section 6.2.1 The District relies on records to help verify compliance with the r equirements of the rules. In general, the costs of keeping any additional proposed records are assumed to be insignificant compared to other costs that operators could incur to comply with the proposed amendments.

17. COMMENT: Rule 4701 Section 6.3.3 What’s the purpose for the last sentence of this statement? There is no mention of an I&M plan in 4701, anywhere. (CPR, TCCWD)

RESPONSE: Rule 4701 Section 6.3.3 The last sentence was inadvertently included in Section 6.3.3 and has been deleted.

18. COMMENT: Rule 4701 Section 6.3. 3 The definition of cr itical parameters needs to be identified prior to finalization of the Rule.

Industry recommends that this require ment be removed from Rule 4701 and 4702 as the term “critical parameters” is no t defined or explained. Further, Industry believes that the establishment of “critica l parameters” is misleading, in that the relationship of engine operating parameter s and emissions is not well studied, and cannot be established by a si ngle source test. (TCCWD)

RESPONSE: Rule 4701 Section 6.3.3 “Critica l parameters” were addressed in an earlier staff report. For convenience, this is the definition that was previously provided: “Critical parameters” are the characteristics t hat can be used in verifying or in determining that an engine is operating properly and is in compliance with the requirements of the rule. Such paramet ers include, but are not limited to, NOx emissions (ppmv), fuel usage, engine s peed (rpm), air/fuel ratio, and exhaust temperature.” District sta ff feels that such paramet ers can be useful tools in ensuring that an engine is operating properly.

19. COMMENT: Rule 4702 Section 6.5 Sources will require written gu idance from the District prior to subm ittal of an I&M Plan. Industry objects to the establishment of policies in place of rule making. (TCCWD)

RESPONSE: Rule 4702 Section 6.5 Distr ict staff will provide appropriate assistance to operators as necessa ry to complete their I&M Plan.

20. COMMENT: Rule 4702 Section 6.5. 1 Clarification from Dist rict rule making staff is required prior to finalization of Rule 4702: The District s hould define what constitutes “engine control parameters” and “engin e operating parameters”. How do these parameters correlate with em issions? To determine the range of operating conditionsSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 79 and control parameters necessary to stay with in permitted limits w ill require extensive source testing. (TCCWD)

RESPONSE: “Engine control parameters” and “engine operating parameters are the characteristics that can be used in verifying or in determining that a control/engine is operating properly. D ue to the different types of control equipment/engines, what is typical for one type is not necessarily typical for another type of control equipment/engine. For example “typical control equipment parameters” for NSCR includ e, but are not limited to, exhaust temperatures before and after the catalyst, and oxygen levels . These parameters correlate with emissions by better ensuring that cont rol equipment/engines are operating properly and therefore not producing excessive emissions.

21. COMMENT: Rule 4702 Section 6.5. 2 Clarification fr om District rule making staff is required prior to finalizati on of Rule 4702: If a source elects to perform monthly monitoring of NOx, CO and O2 concentrat ion, will the District r equire monitoring of engine operating and cont rol parameters? (TCCWD)

RESPONSE: It’s possible that t he District will consider a so urce that performs monthly monitoring of NOx, CO and O2 concentrations as co mplying with the monthly emissions checks requir ement of Sectio n 6.5.2, however, such determination will be made on a case-by-case basis.

22. COMMENT: Rule 4702 Section 6.5.7 states that, “Data collected through the I&M plan shall have retrieval capabili ties as approved by the APCO. ” During the May 27, 2003 workshop in response to questions regarding the requirement, the District assured workshop attendees that they did not intend to require “electronic retrieval or any type of electronic database or any type of on-line data collection. The District stated that they just intended that operators maintain requi red records. In order to avoid any misunderstanding regarding the requirements, Industry recommends that the phrase be replaced by t he following requirements: “ be made readily available for District inspection upon request. ” (WSPA)

RESPONSE: Rule 4702 Section 6.5.7 Retrie val capabilities will be determined on a case-by-case basis. Section 6.5.7 does not specify that electronic retrieval or any type of electronic database or any type of on- line data collection is mandatory for all operators.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 80 WRITTEN COMMENTS ON DRAFT RULE 4701 AND DRAFT RULE 4702 VERSION DATED JULY 17, 2003

Rule 4701 (Internal Combustion Engines – Phase 1) and Rule 4702 (Internal Combustion Engines – Phase 2)

Any general comments pertaining to the Socioeconomic Impact Analysis and responses prepared by District staff to such general comments are included below. Any specific comments pertaining to the Socioeconomic Impact Analysis Report and responses prepared by the Socioeconomic consultant to such specific comments are included in an attachment to the Socioeconomic Impact Analysis Report. The Socioeconomic Impact Analysis Report is in Appendix C.

EPA - No comments received.

ARB

1. COMMENT: General Rules 4701 and 4702 should include a definition of “California Reformulated Gasoline.” The following language is recommended.

“California Reformulated Gasoline – Gaso line meeting California Air Resources Board requirements for motor vehicle f uel in accordance with California Code of Regulations, Chapter 5, Article 1, S ubarticle 2 - Standards for gasoline sold beginning March 1, 1996.”

RESPONSE: General Rules 4701 and 4702 The definition for California Reformulated Gasoline has been added to the rules as recommended.

Stakeholders

Crimson Resource Management

2. COMMENT: Rule 4702 Section 4.4 only allows engines derated prior to 6/1/04, but your applicability eliminates engines that don't require a PTO. An engine derated to less than 50 bhp would not need a permit, and would therefore not need to comply with this rule. I recommend removing the section.

RESPONSE: Rule 4702 As noted in the prev ious draft staff report, an engine derated to less than 50 bhp but that has not had the manufacturer’s nameplate modified would need a permit, and would therefore need to comply with this rule.

3. COMMENT: Rule 4702 Section 5.3.2 Please clarif y, if previous source tests can not be documented as uncontrolled, may t he APCO accept manufacturer's data, or would a new uncontrolled source test be completed?SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 81 RESPONSE: Rule 4702 Section 5.3.2 specifies that “When representative source sampling prior to the applicat ion of an emissions control te chnology or technique is not available, the APCO may ap prove the use of a manufacturer’s uncontrolled emissions information or source sampling from a similar, unco ntrolled engine.” These situations are handled on a case-by-case basis.

4. COMMENT: Rule 4702 Section 5.6.3 refers to alternative monitoring that is previously mentioned only in Section 5.6.1; therefore, this section should reference 5.6.1.

RESPONSE: Rule 4702 Section 5.6.3 Any oper ator that operates an alternative monitoring system will need to comply with the proposed requirements of Section 5.6.3. No changes to Section 5.6.3 are needed.

5. COMMENT: Rule 4702 Section 5.6 would be more clear if there was a section that spoke to engines not ident ified in Section 5.6.1.

RESPONSE: Rule 4702 Section 5.6 Secti on 5.6.2 addresses those engines.

6. COMMENT: Rule 4702 Section 5.6.3 specifies that the operator is responsible to demonstrate monitoring acceptability. This requirement implies that the operator must "reinvent the wheel" each time an al ternative monitoring system is requested. I request language that allows for "good engineering practices" or "historically acceptable data practices."

RESPONSE: Rule 4702 Section 5.6.3 Distric t staff feels that the proposed requirements are reasonable and that the permitting staff currently use “good engineering practices” in requiring and eval uating alternative monitoring. Previously approved monitoring examples are av ailable on the District website.

7. COMMENT: Rule 4702 I don't have a clue as to what you are trying to say with Section 5.6.5. Is this for CEMS, PEMS, or do operators have to computerize all of our maintenance logs for proper data gathering?

RESPONSE: Rule 4702 Section 5.6.5 This issue has been addressed in a previous draft staff report.

8. COMMENT: Rule 4702 Section 5.6.6 - Why do we need both the fuel meter and time meter. Each measurement dev ice may be needed to demonstrate compliance based on the operators m onitoring requirements.

RESPONSE: Rule 4702 Section 5.6.6 The meters are needed to help verify compliance with the rule.

9. COMMENT: Rule 4702 Section 5.6.9 requires engines with CEMS and PEMS to also do this monitoring. Has CARB or EPA completed appropriate testing methodologies for portable monitors? Are there any Stat e or EPA "certified"SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 82 monitors that have demonstrated accuracy and precision? This requirement should not be included in the rule.

RESPONSE: Rule 4702 Section 5.6.9 District staff is not aware whether CARB or EPA have completed appropriate testing methodologies for portable monitors, the commenter is referred to those agencies for such information. District staff is not aware whether there are any State or EPA "certified" monitors that have demonstrated accuracy and precision, the co mmenter is referred to those agencies for such information.

10. COMMENT: Rule 4702 In Section 6.3.2 VO C's are required to be reported as methane. How are methanes and ethanes removed from the total VOC concentration if all VOC's are tested as me thane? As written, t he testing will unfairly punish those facilities with methane and ethane in their gas streams. I recommend specifying a test method that eliminat es these compounds from the VOC total.

RESPONSE: Rule 4702 Section 6.3.2 This concern is addressed by Section 6.4 which specifies that “Compliance with th e requirements of Section 5.0 shall be determined in accord ance with the following test pr ocedures or any other method approved by EPA and the APCO.” Operator s can submit a test method that is not listed that suits their situat ion for approvable. Such subm ittals will be considered on a case-by-case basis.

11. COMMENT: Rule 4702 Section 7.0 does not consider companies that purchase engines after the June 1, 2004 compliance dat e and prior to full implementation of the rule. Could you add a section that st ates that "any operator that transfer's ownership of an existing engine prior to t he final compliance dat e shall submit all required control plans within six m onths of the transfer of ownership."

RESPONSE: Rule 4702 Section 7.0 In order to handle this type of situation, the following language has been added to Secti on 7.2: “The owner of an engine which is subject to the requirements of this ru le and which is acquired after June 1, 2004 shall submit to the APCO an emission cont rol plan pursuant to Section 6.1 with the ATC application for the engine.”SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 83 

# APPENDIX B

Cost Effectiveness Analysis for Rule 4702 (Internal Com bustion Engines– Phase 2)

August 21, 2003SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 84 COST EFFECTIVENESS ANALYSIS and INCREMENTAL COST E FFECTIVENESS ANALYSIS

Rule 4702 Internal Combustion Engines – Phase 2

I. SUMMARY

District staff has performed a cost e ffectiveness analysis and incremental cost effectiveness analysis for the proposed pr ovisions of new Rule 4702 (Internal Combustion Engines – Phase 2) as required by the California Health and Safety Code. New Rule 4702 is being developed to specify Be st Available Retrofit Control Technology (BARCT) emission limits and all feasible m easures for permitted spark-ignited internal combustion engines in the District. Cost effectiveness is the total annualized cost, in dollars, of the potential control option divided by emission reduction potential, in tons, of the potential control option.

Five general cases were analyzed for cost effectiveness and for incremental cost effectiveness. The five general case s analyzed for cost effectiveness were:

1. upgrade an existing non-selective catalyti c reduction (NSCR) cont rol system for a rich burn engine; 2. install a NSCR system for a rich burn engine; 3. install a NSCR system for a cyclic rich burn engine; 4. upgrade an existing selective catalytic r eduction (SCR) control system for a lean burn, engine; and 5. install a SCR system for a lean burn engine.

The five general cases above were analyzed for incremental cost effectiveness where the existing engine was replaced with an electric mo tor. All cases for the cost effectiveness analysis and incremental cost effectivene ss analysis were analyzed at two different operating capacity factor s: 25% (2190 hours/year) and 75% (6570 hours/year).

In general, the cost effectiveness analysis in dicated that the larger engines with the higher capacity factor had the lower cost ef fectiveness. The smaller engines with the lower capacity factor had the higher cost effect iveness. District staff feels that the annual compliance costs are reasonable for the five cases analyzed. Although a few of the results indicated a high cost effectiveness, such results are due to the low emission reductions and not from high annual costs. T he results of the anal yses are at the end of this appendix.

II. REQUIREMENTS OF THE ANALYSES

Pursuant to Section 40920.6 of the California Health and Safety Code, prior to adopting rules or regulations to meet the requirement for BARCT or for a feasible measure, the District is required to review the informati on developed to assess the cost effectiveness ofSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 85 the potential control option and to calculate the incremental cost effectiveness for the potential control option. Cost effectiveness is the total annualized cost, in dollars, of the potential control option divided by emission r eduction potential, in tons, of the potential control option.

The incremental cost effectiveness is the di fference in the dollar costs divided by the difference in the emission reduction pot entials between each progressively more stringent control option as compared to the next less expensive control option.

III. COST EFFECTIVENESS ANALYSIS

A. Cost Effectiveness Calculation

The cost effectiveness analysis was performed by calculating the difference (NOx emissions reduced per year) between the es timated current annual NOx emissions from engines complying with Rule 4701 and the es timated potential ann ual NOx emissions from engines complying with proposed Rule 4702. Installed equipment capital costs and operating and maintenance costs were esti mated. Total annual costs were then calculated. The cost effectiveness was calc ulated by dividing total annual costs by the tons of NOx emissions reduced per year.

The annual current and annual pot ential NOx emissions were calculated using the following equation:

B. NOx = (ppmv / K) x hp x 24 hr/day x 365 day/year x C x 1 lb/454 gram / 2,000 lb/ton

Where: NOx = NOx emissions in tons per year ppmv = NOx emissions in parts per million corrected to 15% oxygen K = ppmv to gram/bhp/hr correction factor and C = Capacity Factor correction value.

The value for K was taken from the EPA Alternative Techniques Document – NOx emissions from Stationary Reciprocating IC engines, page 4-11. For NOx, corrected to 15% oxygen, these factors are:

Rich Burn: 1 g/bhp/hr = 67 ppmv Lean Burn: 1 g/bhp/hr = 73 ppmv

B. Assumptions for the Cost Effectiveness Calculation

The more significant assumptions made in the Cost Effectiveness analysis are listed below.

1. The engines that will upgrade existing cont rols are operating at the current NOx limits in Rule 4701: 50 ppmv for Ric h Burn and 75 ppmv for Lean Burn. TheSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 86 engines that will install cont rols are operating at the following NOx limits: 640 ppmv for Rich Burn, 300 ppmv for Cyclic Rich Burn, and 740 ppmv for Lean Burn.

2. The engines will operate at the proposed NOx limits in Rule 4702: 25 ppmv for Rich Burn, 50 ppmv for Cyclic Rich Burn, and 65 ppmv for Lean Burn.

3. The engines operate on natural gas.

4. An engine controlled with an existing NSCR system or SCR system can meet the proposed limit by changing the catalyst el ement with a more effective material.

5. Equipment has a ten-year life and annual interest rates are 10%.

6. Operators with existing NSCR and SCR control system s already have compliant emissions monitoring systems.

C. Results of the Cost Effectiveness Calculation

The results of the cost effectiveness calculat ions are contained in Tables 1 through 5 at the end of this appendix.

IV. INCREMENTAL COST EFFECTIVENESS ANALYSIS

A. Incremental Cost Effectiveness Calculation

To calculate the incremental cost effectivene ss, the difference in the annual costs was divided by the difference in the emission reduction potentials between the more stringent control option as compared to the next less expensive control option. The next more stringent control option is to replace the engine with an electric motor. The next less expensive control option is the upgrading or installation of an emission control system.

The difference (NOx emissions reduced per year) between the estimated annual NOx emissions from engines complying by usi ng the next more stringent control option (electrification) and the estimated annual NOx emissions from engines complying by using the next less expensiv e control option (emission control system) was calculated. Installed equipment capital costs and operati ng and maintenance costs were estimated to determine total annual costs for both options . The difference (total annual costs) between the total annual costs for both options was then calculated. The incremental cost effectiveness was calculated by dividing the difference of the total annual costs by the difference of the NOx emissions reduced per year.

The annual NOx emissions and em ission reductions were calculated using the equation in Section III. A above. The amount of electr ical power required to operate a motor was calculated as follows:

KW = hp x 0.7457 kw/hp / Motor EfficiencySAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 87 Where: KW = Electrical power in kilowatts hp = Horsepower of the motor Motor Efficiency = Efficiency of the motor

The annual cost of operating an electric motor was calculated as follows:

Cost/Year = hrs/yr x Cost/KwH x KW

Where: Cost/Year = Annual operating costs of the motor hrs/yr = Number of hours per y ear that the motor is operated Cost/KwH = Cost of kilowatt hour of electric power KW = Electrical power in kilowatts

B. Assumptions for the Incremental Cost Effectiveness Calculation

The more significant assumptions made in the Incremental Cost Effectiveness analysis are listed below.

1. The engines that will be replaced with an elec tric motor are operating at the current NOx limits in Rule 4701: 640 ppmv or 50 ppmv for Rich Burn, 740 ppmv or 75 ppmv for Lean Burn, and 300 ppmv for Cyclic Rich Burn.

2. There are no NOx emissions from electric motors.

3. Costs of connecting to the electr ic power grid are insignificant.

4. Per the RACT/BARCT Determination, maintenance costs are unknown and were not included in the calculations.

5. Equipment has a ten-year life and annual interest rates are 10%.

C. Results of the Incremental Cost Effectiveness Calculation

The results of the incremental cost effectiv eness calculations are contained in Tables 6 through 10 at the end of this appendix.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470288Table 1 RULE 4702 COST EFFECTIVENESS ANALYSISRich Burn ICE Upgrade Existing NSCR ControlPowerOutput(HP)CapacityFactorCurrentNOx Limit(ppmv)AAnnualCurrent NOxEmissions(tons/yr)BProposedNOx Limit(ppmv)CAnnualPotential NOxEmissions(tons/yr)DEmissionReduction(tons/yr)EInstalledControlEquipmentCost ($)FAnnualizedEquipmentCost ($)GAnnualO&M Cost($)HTotalAnnualCost ($)CostEffectiveness($/ton)I50 0.25 50 0.09 25 0.04 0.043,375549 102 651 14,470200 0.25 50 0.36 25 0.18 0.184,625752 102 854 4,747500 0.25 50 0.90 25 0.45 0.455,125834 102 936 2,0801000 0.25 50 1.80 25 0.90 0.907,6251,241 102 1,343 1,4921500 0.25 50 2.70 25 1.35 1.3511,7501,912 102 2,014 1,49250 0.75 50 0.27 25 0.13 0.133,375549 102 651 4,823200 0.75 50 1.08 25 0.54 0.544,625752 102 854 1,582500 0.75 50 2.70 25 1.35 1.355,125834 102 936 6931000 0.75 50 5.40 25 2.70 2.707,6251,241 102 1,343 4971500 0.75 50 8.10 25 4.05 4.0511,7501,912 102 2,014 497ACurrent NOx Limit from Rule 4701, Table 3.BAnnual Current NOx Emissions = Rated Output x Capacity Factor x Current NOx LimitCProposed NOx Limit from draft Rule 4702.DAnnual Potential NOx Emissions = Rated Output x Capacity Factor x Proposed NOx LimitEEmissions Reduction = Annual Current NOxEmissions - Annual Potential NOx EmissionsFThe basis for the cost of the control system is the RACT/BARCT Determination.GAnnualized Equipment Cost was calculated based on a ten-year life and 10% interest. The annual cost factor is 0.1627.HAnnual O&M Costs were based on information from the RACT/BARCT Determination and the Annualized Equipment Costs.ICost Effectiveness = Total Annual Cost / Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470289Table 2 RULE 4702 COST EFFECTIVENESS ANALYSISRich Burn ICE Install NSCR ControlPowerOutput(HP)CapacityFactorCurrentNOx Limit(ppmv)AAnnualCurrent NOxEmissions(tons/yr)BProposedNOx Limit(ppmv)CAnnualPotential NOxEmissions(tons/yr)DEmissionReduction(tons/yr)EInstalledControlEquipmentCost ($)FAnnualizedEquipmentCost ($)GAnnualO&M Cost($)HTotalAnnualCost ($)CostEffectiveness($/ton)I50 0.25 640 1.15 25 0.04 1.1113,500 2,196 7,119 9,315 8,415200 0.25 640 4.61 25 0.18 4.43 18,500 3,010 7,819 10,829 2,446500 0.25 640 11.52 25 0.45 11.07 20,500 3,335 8,819 12,154 1,0981000 0.25 640 23.04 25 0.90 22.1430,500 4,962 11,319 16,281 7351500 0.25 640 34.56 25 1.35 33.2147,000 7,647 18,919 26,566 80050 0.75 640 3.46 25 0.13 3.3213,500 2,196 7,199 9,395 2,829200 0.75 640 13.82 25 0.54 13.2818,500 3,010 7,819 10,829 815500 0.75 640 34.56 25 1.35 33.2120,500 3,335 8,819 12,154 3661000 0.75 640 69.12 25 2.70 66.4230,500 4,962 11,319 16,281 2451500 0.75 640 103.68 25 4.05 99.6347,000 7,647 18,919 26,566 267ACurrent NOx Limit from Rule 4701, Table 1.BAnnual Current NOx Emissions = Rated Output x Capacity Factor x Current NOx LimitCProposed NOx Limit from draft Rule 4702.DAnnual Potential NOx Emissions = Rated Output x Capacity Factor x Proposed NOx LimitEEmissions Reduction = Annual Current NOxEmissions - Annual Potential NOx EmissionsFThe basis for the cost of the control system is the RACT/BARCT Determination.GAnnualized Equipment Cost was calculated based on a ten-year life and 10% interest. The annual cost factor is 0.1627.HAnnual O&M Costs were based on information from the RACT/BARCT Determination and the Annualized Equipment Costs.ICost Effectiveness = Total Annual Cost / Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470290Table 3 RULE 4702 COST EFFECTIVENESS ANALYSISCyclic Rich Burn ICE Install NSCR ControlPowerOutput(HP)CapacityFactorCurrentNOx Limit(ppmv)AAnnualCurrent NOxEmissions(tons/yr)BProposedNOx Limit(ppmv)CAnnualPotential NOxEmissions(tons/yr)DEmissionReduction(tons/yr)EInstalledControlEquipmentCost ($)FAnnualizedEquipmentCost ($)GAnnualO&M Cost($)HTotalAnnualCost ($)CostEffectiveness($/ton)I50 0.25 300 0.54 50 0.09 0.45 13,500 2,196 7,119 9,315 20,702200 0.25 300 2.16 50 0.36 1.80 18,500 3,010 7,819 10,829 6,016500 0.25 300 5.40 50 0.90 4.50 20,500 3,335 8,819 12,154 2,7011000 0.25 300 10.80 50 1.80 9.00 30,500 4,962 11,319 16,281 1,8092500 0.25 300 27.00 50 4.50 22.50 47,000 7,647 18,919 26,566 1,18150 0.75 300 1.62 50 0.27 1.3513,500 2,196 7,119 9,315 6,901200 0.75 300 6.48 50 1.08 5.40 18,500 3,010 7,819 10,829 2,005500 0.75 300 16.20 50 2.70 13.5020,500 3,335 8,819 12,154 9001000 0.75 300 32.40 50 5.40 27.0030,500 4,962 11,319 16,281 6032500 0.75 300 81.00 50 13.50 67.5047,000 7,647 18,919 26,566 394ACurrent NOx Limit from Rule 4701, Table 3.BAnnual Current NOx Emissions = Rated Output x Capacity Factor x Current NOx LimitCProposed NOx Limit from draft Rule 4702.DAnnual Potential NOx Emissions = Rated Output x Capacity Factor x Proposed NOx LimitEEmissions Reduction = Annual Current NOxEmissions - Annual Potential NOx EmissionsFThe basis for the cost of the control system is the RACT/BARCT Determination.GAnnualized Equipment Cost were calculated based on a ten-year life and 10% interest. The annual cost factor is 0.1627.HAnnual O&M Cost were based on information from the RACT/BARCT Determination and the Annualized Equipment Costs.ICost Effectiveness = Total Annual Cost / Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470291Table 4 RULE 4702 COST EFFECTIVENESS ANALYSISLean Burn ICE Upgrade Existing SCR SystemPowerOutput(HP)CapacityFactorCurrent NOxLimit (ppmv)AAnnualCurrent NOxEmissions(tons/yr)BProposedNOx Limit(ppmv)CAnnualPotential NOxEmissions(tons/yr)DEmissionReduction(tons/yr)EInstalledControlEquipmentCost ($)FAnnualizedEquipmentCost ($)GAnnualO&M Cost($)HTotalAnnualCost ($)CostEffectiveness($/ton)I50 0.25 75 0.12 65 0.11 0.024,500732 102 834 50,494200 0.25 75 0.50 65 0.43 0.074,500732 102 834 12,623500 0.25 75 1.24 65 1.07 0.176,000976 102 1078 6,5271000 0.25 75 2.48 65 2.15 0.3314,9002,424 102 2526 7,6461500 0.25 75 3.72 65 3.22 0.5018,5003,010 102 3112 6,27950 0.75 75 0.37 65 0.32 0.05 4,500 732 102 834 16,831200 0.75 75 1.49 65 1.290.20 4,500 732 102 834 4,208500 0.75 75 3.72 65 3.22 0.50 6,000 976 102 1,078 2,1761000 0.75 75 7.43 65 6.44 0.99 14,900 2,424 102 2,526 2,5491500 0.75 75 11.15 65 9.66 1.49 18,500 3,010 102 3,112 2,093ACurrent NOx Limit from Rule 4701, Table 3.BAnnual Current NOx Emissions = Rated Output x Capacity Factor x Current NOx LimitCProposed NOx Limit from draft Rule 4702.DAnnual Potential NOx Emissions = Rated Output x Capacity Factor x Proposed NOx LimitEEmissions Reduction = Annual Current NOx Emissions - Annual Potential NOx EmissionsFIt was assumed that the control system already exists and that the lower NOx limitscould be met by upgrading the existing control system. Thebasis for the cost of the control system is the RACT/BARCT Determination.GAnnualized Equipment Cost was calculated based on a ten-year life and 10% interest. The annual cost factor is 0.1627.HAnnual O&M Costs were based on information from the RACT/BARCT Determination and the Annualized Equipment Costs.ICost Effectiveness = Total Annual Cost / Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470292Table 5 RULE 4702 COST EFFECTIVENESS ANALYSISLean Burn ICE Install SCR SystemPowerOutput(HP)CapacityFactorCurrentNOx Limit(ppmv)AAnnualCurrent NOxEmissions(tons/yr)BProposedNOx Limit(ppmv)CAnnualPotential NOxEmissions(tons/yr)DEmissionReduction(tons/yr)EInstalledControlEquipmentCost ($)FAnnualizedEquipmentCost ($)GAnnualO&M Cost($)HTotalAnnualCost ($)CostEffectiveness($/ton)I50 0.25 740 1.22 65 0.111.12 45,000 7,322 20,102 27,424 24,593200 0.25 740 4.89 65 0.43 4.46 45,000 7,322 26,102 33,424 7,493500 0.25 740 12.22 65 1.07 11.15 60,000 9,762 35,102 44,864 4,0231000 0.25 740 24.45 65 2.15 22.30 149,000 24,242 78,102 102,344 4,5891500 0.25 740 36.67 65 3.22 33.45 185,000 30,100 117,102 147,202 4,40050 0.75 740 3.67 65 0.32 3.35 45,000 7,322 20,102 27,424 8,198200 0.75 740 14.67 65 1.29 13.38 45,000 7,322 26,102 33,424 2,498500 0.75 740 36.67 65 3.22 33.45 60,000 9,762 35,102 44,864 1,3411000 0.75 740 73.35 65 6.44 66.91 149,000 24,242 78,102 102,344 1,5301500 0.75 740 110.02 65 9.66 100.36 185,000 30,100 117,102 147,202 1,467ACurrent NOx Limit from Rule 4701, Table 1.BAnnual Current NOx Emissions = Rated Output x Capacity Factor x Current NOx LimitCProposed NOx Limit from draft Rule 4702.DAnnual Potential NOx Emissions = Rated Output x Capacity Factor x Proposed NOx LimitEEmissions Reduction = Annual Current NOxEmissions - Annual Potential NOx EmissionsFThe basis for the cost of the control system is the RACT/BARCT Determination.GAnnualized Equipment Cost was calculated based on a ten-year life and 10% interest. The annual cost factor is 0.1627.HAnnual O&M Costs were based on information from the RACT/BARCT Determination and the Annualized Equipment Costs.ICost Effectiveness = Total Annual Cost / Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470293Table 6 RULE 4702 INCREMENTAL COST EFFECTIVENESS ANALYSISRich Burn ICE - Upgrade NSCR vs ElectrificationPower OutputCapacity FaCurrent NOx Lim(ppmv)AElect. Motor EmissioReduction (tons/yr)NSCR EmissionReduction (tons/yrDifference in EmisReduction (tons/yrElect. Motor TotalCost ($)NSCR Total AnnCost ($)Difference in TotalACost ($)DIncremental CosEffectiveness ($50 0.2550 0.09 0.04 0.04 12,520 651 11,869 263,761200 0.2550 0.36 0.18 0.18 40,138 854 39,284 218,254500 0.2550 0.90 0.45 0.45 93,114 936 92,178 204,84910000.2550 1.80 0.90 0.90 189,433 1,343 188,091 208,99950 0.7550 0.27 0.13 0.13 28,578 651 27,927 206,879200 0.7550 1.08 0.54 0.54 104,373 854 103,519 191,709500 0.7550 2.70 1.35 1.35 253,701 936 252,765 187,24110000.7550 5.40 2.70 2.70 510,606 1,343 509,264 188,624ACurrent NOx Limit from Rule 4701, Table 3.BEmission Reduction based on a proposed NOxlimit of 25 ppmv from draft Rule 4702.CDifference in Emission Reduction = Elect Motor Emission Reduction - NSCR Emission ReductionDDifference in Total Annual Cost = Elect Motor Total Annual Cost - NSCR Total Annual CostEIncremental Cost Effectiveness = Difference in Total Annual Cost / Difference in Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470294Table 7 RULE 4702 INCREMENTAL COST EFFECTIVENESS ANALYSISRich Burn ICE - Install NSCR vs ElectrificationPowerOutput (HP)CapacityFactorCurrent NOxLimit (ppmv)AElect. MotorEmission Reduction(tons/yr)NSCR EmissionReduction (tons/yr)BDifference inEmission Reduction(tons/yr)CElect. MotorTotal AnnualCost ($)NSCR TotalAnnual Cost ($)Difference inTotal AnnualCost ($)DIncrementalCostEffectiveness ($/ton)E50 0.25 640 1.15 1.11 0.0412,520 9,315 3,204 71,212200 0.25 640 4.61 4.43 0.18 40,138 10,829 29,309 162,837500 0.25 640 11.52 11.07 0.45 93,114 12,154 80,960 179,9181000 0.25 640 23.04 22.14 0.90 189,433 16,281 173,152 192,39950 0.75 640 3.46 3.32 0.13 28,578 9,315 19,263 142,695200 0.75 640 13.82 13.28 0.54 104,373 10,829 93,544 173,237500 0.75 640 34.56 33.21 1.35 253,701 12,154 241,546 178,9311000 0.75 640 69.12 66.42 2.70 510,606 16,281 494,325 183,091ACurrent NOx Limit from Rule 4701, Table 1.BEmission Reduction based on a proposed NOxlimit of 25 ppmv from draft Rule 4702.CDifference in Emission Reduction = Elect Motor Emission Reduction - NSCR Emission ReductionDDifference in Total Annual Cost = Elect Motor Total Annual Cost - NSCR Total Annual CostEIncremental Cost Effectiveness = Difference in Total Annual Cost / Difference in Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470295Table 8 RULE 4702 INCREMENTAL COST EFFECTIVENESS ANALYSISCyclic Rich Burn ICE - Install NSCR vs ElectrificationPowerOutput (HP)CapacityFactorCurrent NOxLimit (ppmv)AElect. MotorEmission Reduction(tons/yr)NSCR EmissionReduction (tons/yr)BDifference inEmission Reduction(tons/yr)CElect. MotorTotal AnnualCost ($)NSCR TotalAnnual Cost ($)Difference inTotal AnnualCost ($)DIncrementalCostEffectiveness ($/ton)E50 0.25 300 0.54 0.45 0.0912,520 9,315 3,204 35,606200 0.25 300 2.16 1.80 0.36 40,138 10,829 29,309 81,419500 0.25 300 5.40 4.50 0.90 93,114 12,154 80,960 89,9591000 0.25 300 10.80 9.00 1.80 189,433 16,281 173,152 96,20050 0.75 300 1.62 1.35 0.27 28,578 9,315 19,263 71,348200 0.75 300 6.48 5.40 1.08 104,373 10,829 93,544 86,619500 0.75 300 16.20 13.50 2.70 253,701 12,154 241,546 89,4651000 0.75 300 32.40 27.00 5.40 510,606 16,281 494,325 91,546ACurrent NOx Limit from Rule 4701, Table 3.BEmission Reduction based on a proposed NOxlimit of 50 ppmv from draft Rule 4702.CDifference in Emission Reduction = Elect Motor Emission Reduction - NSCR Emission ReductionDDifference in Total Annual Cost = Elect Motor Total Annual Cost - NSCR Total Annual CostEIncremental Cost Effectiveness = Difference in Total Annual Cost / Difference in Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470296Table 9 RULE 4702 INCREMENTAL COST EFFECTIVENESS ANALYSISLean Burn ICE - Upgrade SCR vs ElectrificationPowerOutput (HP)CapacityFactorCurrent NOxLimit (ppmv)AElect. MotorEmission Reduction(tons/yr)SCR EmissionReduction (tons/yr)BDifference inEmission Reduction(tons/yr)CElect. Motor TotalAnnual Cost ($)SCR TotalAnnual Cost($)Difference in TotalAnnual Cost ($)DIncremental CostEffectiveness($/ton)E50 0.25 75 0.12 0.02 0.1112,520 834 11,686 108,827200 0.25 75 0.50 0.07 0.4340,138 834 39,304 91,508500 0.25 75 1.24 0.17 1.07 93,114 1,078 92,036 85,7111000 0.25 75 2.48 0.33 2.15 189,433 2,526 186,907 87,03250 0.75 75 0.37 0.05 0.3228,578 834 27,744 86,126200 0.75 75 1.49 0.20 1.29104,373 834 103,539 80,353500 0.75 75 3.72 0.50 3.22 253,701 1,078 252,622 78,4211000 0.75 75 7.43 0.99 6.44 510,606 2,526 508,080 78,861ACurrent NOx Limit from Rule 4701, Table 3.BEmission Reduction based on a proposed NOxlimit of 65 ppmv from draft Rule 4702.CDifference in Emission Reduction = Elect Motor Emission Reduction - SCR Emission ReductionDDifference in Total Annual Cost = Elect Motor Total Annual Cost - SCR Total Annual CostEIncremental Cost Effectiveness = Difference in Total Annual Cost / Difference in Emission ReductionSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTFinal Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003Final Draft Staff Report:Rule 4701 and Rule 470297Table 10 RULE 4702 INCREMENTAL COST EFFECTIVENESS ANALYSISLean Burn ICE - Install SCR vs ElectrificationPowerOutput (HP)CapacityFactorCurrent NOxLimit (ppmv)AElect. MotorEmission Reduction(tons/yr)SCR EmissionReduction (tons/yr)BDifference inEmission Reduction(tons/yr)CElect. MotorTotal AnnualCost ($)SCR TotalAnnual Cost($)Difference in TotalAnnual Cost ($)DIncremental CostEffectiveness($/ton)E50 0.25 740 1.22 1.12 0.11 12,520 27,424 -14,904 -138,795200 0.25 740 4.89 4.46 0.43 40,138 33,424 6,715 15,634500 0.25 740 12.22 11.15 1.07 93,114 44,864 48,250 44,9341000 0.25 740 24.45 22.30 2.15 189,433 102,344 87,089 40,55250 0.75 740 3.67 3.35 0.3228,578 27,424 1,155 3,585200 0.75 740 14.67 13.38 1.29 104,373 33,424 70,950 55,062500 0.75 740 36.67 33.45 3.22 253,701 44,864 208,837 64,8291000 0.75 740 73.35 66.91 6.44 510,606 102,344 408,262 63,368ACurrent NOx Limit from Rule 4701, Table 1.BEmission Reduction based on a proposed NOxlimit of 65 ppmv from draft Rule 4702.CDifference in Emission Reduction = Elect Motor Emission Reduction - SCR Emission ReductionDDifference in Total Annual Cost = Elect Motor Total Annual Cost - SCR Total Annual CostEIncremental Cost Effectiveness = Difference in Total Annual Cost / Difference in Emission ReductionSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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# APPENDIX C

Socioeconomic Impact Analysis Rule 4702 (Internal Com bustion Engines – Phase 2)

July 17, 2003SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 99 

# SOCIO-ECONOMIC ANALYSIS DRAFT RULE 4702: INTERNAL COMBUSTION ENGINES – PHASE 2

3 JULY 2003

Prepared for San Joaquin Valley Air Pollution Control District 1990 E. Gettysburg Avenue Fresno, CA 93726

Prepared by Applied Development Economics, Inc. 2029 University Avenue • Berkel ey, California 94704 • (510) 548-5912 1029 J Street, Suite 310 • Sacramen to, California 95814 • (916) 441-0323 www.adeusa.comSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 100 

## CONTENTS

1. Executive Summary .................................................................... 102

2. Introduction ................................................................................ 104 3. Description of Proposed Rules ................................................ 105 4. Methodology ............................................................................... 106 5. Industries Affected by Rule 4702 ............................................. 107 5.1 Regional Economic Trends .................................................... 107 5.2 Description of Affected Industries ........................................ 108

5. 3 Economic Characteristics of Affected Establishments ..... 109 5.4 Size of Industry by Employment ........................................... 112 6. Socioeconomic Impacts ............................................................. 114 6.1 Compliance Cost Estimates .................................................... 114 6.2 Business Response To Compliance Costs ............................ 114 6.3 Impact Analysis ......................................................................... 114 6.4 Job Creation Attributable To Draft Rule 4702 .................... 116 Attachment 1: Specific Public Comments And Responses To Draft Rule 4702 ......................................................................... 118 Attachment 2: List of Sic Codes Affected by Draft Rule 4702 ...................................................................................................... 120

FIGURE 1 Map of the San Joaquin Valley Unified Air Pollution Control District ..................................................... 5

TABLES

Table 1 Population Growth: San Joaquin Valley Region, 1990 - 2000............................................................................................... 8 Table 2 Employment Profile of The San Joaquin Valley Region 1995 - 2000 ....................................................................... 9 Table 3 Employment Trends: Industries Affected by Draft Rule 4702...................................................................................... 10 Table 4 Number of San Joaquin Valley Industries Affected by Rule 4702 General Categories of Industries Affected by Proposed Rule Changes.............................................................. 12SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 101 Table 5 Comparison of Affected San Joaquin Valley Industries Versus Region and State.......................................................................... 13 Table 6 Comparison of Employment In Affected San Joaquin Valley Industries Versus Region and State .............................. 13 Table 7 Measure of Productivity: Sales-Shipments per Employee...................................................................................... 14 Table 8 Distribution of Industries Affected by Rule 4702 by Size of Establishment ......................................................................... 15 Table 9 Annual Compliance Cost .................................................. 16 Table 10 Socioeconomic Impacts of Rule 4702........................... 18 Table 11 Worst Case Scenario: Employment Impacts of Rule 4702............................................................................................... 19 Table 12 Employment Impacts of Rule 4702............................... 21SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 102 

## 1. EXECUTIVE SUMMARY

The purpose of Draft Rule 4702 is to limit oxides of nitrogen (NOx), carbon monoxide (CO), and volati le organic compounds (VOC ) emissions from internal combustion engines (ICE), and to help the S an Joaquin Valley r egion in meeting federal and state health-bas ed ozone standards. Draft Rule 4702 would apply to internal combustion engines (ICE) with a rated brake hor sepower of 50 or greater. Draft Rule 4702 has th e potential of affecting 114 es tablishments in a broad set of industries. To satisfy the inte nt of the draft rule changes, establishments will need to purchase equipment and in cur operational costs that would result in annual expenditures of $6.7 milli on. This aggregate expenditu re includes capital costs, which are annualized over a ten-year period at 10 percent in terest. This cost represents an estimated 6.2 percent of profits for affe cted industrie s, with some business categories experiencing higher cost impa cts than others. The analysis shows that the 114 establishments em ploy an estimated 4,863 workers. These industries generate an esti mated $2.4 billion in sales and $199.8 million in wages. One-third of all workers (1,669) affected by Draft Rule 4702 are in crude oil and gas industrial category. The bulk of employees affected by the draft rule are in the “Other Industrial Category.” Comprised of a wide variety of industries, such as warehousing, trucking, industrial sand pro duction, fa rm supplies and business services, to na me a few industries, the “ Other Industri al Category” employs an estimated 1,950 workers, or 41 percent of all workers in industries affected by Dr aft Rule 4702. In the worst case scenario, the analysis shows that implementation of Draft Rule 4702 could result in the lo ss of at most seven jobs. The loss of seven jobs will induce the loss of another se ven jobs through regional economic multiplier effects, for a total loss of 14 jobs in the worst case scenario. The analysis concludes that the cost of rule compliance could result in small rate increases for some water and sewer customers. There is also the potential for some very small profit loss. Neither of these impacts would have significant economic effects within the District. The analysis also show s that an estimated five (5) jobs will be directly created as a result of Draft Rule 4702. Businesses in the region that se ll and service equipment required by the SJVUAPCD sh ould experience an incr ease in demand for their products, as a result of the draft rule. To fulf ill this demand, t hese businesses may have to increase their respective workforce. This report is a revision to the original draft report, which was submitted to the SJVUAPCD on April 8, 2003. The SJVU APCD provided an opportunity for stakeholders, including busin esses and trade associations affected by Draft Rule 4702, to review, as k questions about and comment on the socioeconomic impact analysis. This report in cludes suggestions and comm ents made by stakeholders who attended SJVUAPCD-facilitated work shops on the original socioeconomic impact report, as well as suggestions and comments transmi tted by phone, fax or e-mail. This report also includes responses to the comments and questions (seeSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 103 Attachment 1).SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

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## 2. INTRODUCTION

This report describ es the socio-economic impacts of Draft Rule 4702, which is intended to assist the San Joaquin Valley Air Basin (SJVAB) in attaining the federal National Ambient Air Quality Standard (N AAQS) standard for oz one. The purpose of Draft Rule 4702 is to limit NOx, CO, and VOC emissi ons from intern al combustion engines (ICE). Following this introduction, the report su mmarizes Draft Rule 4702 and describes the methodology fo r the analysis. After this, the report de scribes the economic characteristics of bu sinesses and industries affe cted by the draft rule. The fifth section analyzes the socio-economic impacts of Dr aft Rule 4702. The analysis of this report is based on the draft version of Rule 4702, da ted November 21, 2002. The report is prepared pursuant to the provisio ns of AB2051 (Secti on 40728.5 of the California Health and Safety Code), whic h requires an assessme nt of socioeconomic impacts of proposed air quality rules. The findings in this report ca n assist San Joaquin Valley Unified Air Poll ution Control District (SJVUAPCD) staff in understanding the socioeconomic impacts of Draft Rule 4702, and can assist staff in preparing a refined version of the rule. A final draft rule and staff report will be publis hed prior to a public hearing to consider adoption of the rules by the District Governi ng Board. District staff inte nds to submit the amendments to the District Governin g Board in the second quarter of 2003 to ensure that the EPA has sufficient time to review and approv e Rule 4702 before th e expiration of the October 1, 2003 sanction deadline.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

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## 3. DESCRIPTION OF PROPOSED RULES

The purpose of Draft Rule 4702 is to limit oxides of nitr ogen (NOx), carbon monoxide (CO), and volatile organic compounds (VOC) em issions from inte rnal combustion engines (ICE), and to help th e San Joaquin Valley region in meeting federal and state health-based ozone sta ndards. Draft Rule 47 02 would apply to internal combustion engines (ICE) with a rated brake horsepower of 50 or greater. The rule contains requirements for NOx, VOC and CO emi ssion limits, periodic source testing, monitoring requirement s, and record keeping. In December 2001, the San Joaquin Valley Air Basin (SJVAB) was re-classified from a serious to severe non-attainment for the health-based one-hour National Ambient Air Quality Standard (NAAQS) for ozone. The reclassification was due to the SJVAB’s failure to achieve attainment of the st andards by the federally-mandated deadline of November 15, 1999 . The new deadline for attainment of the standa rds is November 15, 2005. Because of the severe non-a ttainment recl assification, the SJ VUAPCD is required to implement measures as expeditiously as pr actical in order to attain the NAAQS by reducing ozone-forming emissions of vola tile organic compounds (VOC) and oxides of nitrogen (NOx). The Californi a Clean Air Act also requir es non-attainment areas to adopt all feasible control measures for stat ionary source air pollu tion. Draft Rule 4702 will reduce NO x emissions. The likely control technology to meet th e proposed emission limits for rich-burn engines not cyclically loaded using fuels other than waste gases will be Nonselective Catalytic Reduction (NCR) wi th air\fuel ratio controlle rs. For engine s using waste gases, the use of pre-stratified charge controls are likely to be used to promote limits. The likely control technology to meet th e proposed emission limits for rich-burn engines cyclically loaded us ing field gas fuels will be NCR. For four-stroke sparkignited lean-burn engines and two-stroke spark-ignited e ngines rated at 100 hp or more, the likely control technique would be to retrofit the engines with low-emission combustion controls. Other control techni ques may be used to supplement these retrofits, such as ignition system modifications and engi ne de-rating. For engines that do not have low-emis sion combustion modifica tion kits available, Selective Catalytic Reduction (SCR) may be used to achieve the proposed limits. District staff calculated compliance cost of Draft 4702 fo r engines greater than 50 HP. District staff estimates tota l NOx emissions redu ction of approximately 2.47 tons per day if the engines subject to the draft rule comply with the NOx requirements of Draft Rule 4702.

FIGURE 1 Map of the San Joaquin Valley Unif ied Air Pollution Control District (SJVUAPCD)SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

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## 4. METHODOLOGY

The socioeconomic analysis in volves the use of information provided directly by affected businesses as well as secondary data us ed to describe the industries affected by the draft rule. The approach is briefl y described below. The District staff develo ped the draft rule du ring 2002 beginning with the publication of a Preliminary Staff Report in March 2002. A scoping meeting was he ld in late March 2002 and a workshop was hel d in July. In early Decem ber 2002, the District held a focus group meeting, which included indu stry representatives and the District’s socioeconomic consultant, ADE, Inc., to discuss the esti mated costs associated with rule compliance and the likely business response anticipated by the affected businesses. At the focus group meeting, business representatives were asked to submit information about the co sts of compliance to the rule in January 2003. The District staff reviewed this informat ion and other data and prepar ed a comprehensive estimate of costs for each industry gr oup affected by the rule. ADE began the analysis by prep aring a statistical descriptio n of the affected industries that includes estimates of the number of jobs, the sales leve ls, the typical profit ratios and other economic indicators for each industry group . ADE also reviewed and summarized the verbal and written informat ion provided by the businesses at the focus group meeting, particularly the discu ssion of what contro l technologies would be employed and what business re sponses were most likely to address the cost impacts of the draft rule. Regarding the economic descri ption of the affected busines ses, it was necessary for ADE to estimate jobs and sales level since specific information from the actual affected businesse s is not available. For the most part, the estimating techniques used for this analysis assume that the affected businesses are average sized firms in their respective industries. The analysis presents da ta on the size distri bution of firms for each affected industry group. In order to evaluate the significance of the complia nce cost impacts, ADE obtained typical industry ratios of profit per dollar of sales for each industry group. The socioeconomic analysis shows what propor tion of profit th e compliance costs represent. Based on assumed thre sholds of significance, ADE di scusses in the report whether the affected business are lik ely to reduce jobs as a mean s of recouping the cost of rule compliance, or as a result of reduc ing business operations. To the extent that such jobs losses appear likely, the indirect multiplier effe cts of the jobs losses are estimated using a regional IMPLAN input-output model.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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## 5. INDUSTRIES AFFECTED BY RULE 4702

5.1 regional economic trends The San Joaquin Valley region experience d tremendous growth during the 1990s. Many came to this area because of affordable housing. As a result, population increased significantly. The ei ght-county region as a whol e increased by 20 percent, from 2.7 million in 1990 to 3.3 million individuals in 2000. While the state of California increased by 14 percent, all the counties in the region experienced faster rates of growth and two counti es doubled the state’s growth ra te, as Table 1 shows. While by many standards Madera County continues to be a small co unty– at 123,109 residents according to Census 2000–it still experienced a 40 percent growth in population during the last decade. Kings Coun ty grew by 28 percent.

TABLE 1 Population Growth: San Joaquin Valley Region 1990 - 2000

California San Joaquin Valley Region Fresno Kern Kings Madera Merced San Joaquin Stanislaus Tulare 1990 29,760,021 2,742,000 667, 490 543,477 101,469 88,090 178, 403 480,628 370,522 311,921 2000 33,871,648 3,302,792 799, 407 661,645 129,461 123,109 210, 554 563,598 446,997 368,021 Change 4,111,627 560,792 131,917 118,168 27,992 35,019 32,151 82,970 76,475 56,100 % Change 14% 20% 20% 22% 28% 40% 18% 17% 21% 18%
Source: US Census, 1990 and 2000

The region also experienc ed new developments in its ec onomy that were consistent with the dramatic shifts in population. While traditionally an agriculture-based economy, areas of economic growth occurr ed in parts of the economy associated with population. The service sector is the largest employing se ctor in the region, at 25.2 percent of all private sector jobs, or 245,2 77. In 1995, se rvices represen ted 23 percent of all jobs. Slowly, this sector is separa ting itself from the other major sector, agriculture, which today is a close second to services. Five years ago, these two sectors were in a virtual tie in terms of their respective share of private sector jobs.

TABLE 2 Employment Profile Of The San Joaquin Valley Region 1995 - 2000

1995 Employment 2000 Employment 2000
Distribution Change Percent Change Total 863,801 972,872 100% 109,071 13% Agriculture 194,876 208,232 21.4% 13,356 7% Mining 11,599 9,717 1.0% -1,882 -16% Construction 40,483 57,204 5.9% 16,721 41% Manufacturing 112,227 120,202 12.4% 7,975 7% Transportation And Public Utilities 45,110 50,295 5.2% 5,185 11% Wholesale Trade 44,313 47,269 4.9% 2,956 7%SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

Final Draft Staff Report: Rule 4701 and Rule 4702 108 Retail Trade 176,458 193,031 19.8% 16,573 9%
Finance, Insurance, And Re al Estate 39,039 41,584 4.3% 2,545 7%
Services 199,227 245, 277 25.2% 46,050 23%

Total non classifiable 465 63 0.0% -402 -86%

Source: Minnesota Implan Group, Inc.

In keeping with the increased population, the constructi on sector in the region increased by 41 percent during the five ye ar 1995-2000 period, growing from 40,483 to 57,204 jobs. Retail typically grows in parallel with population. Indeed, this sector grew by nine percent betwee n 1995 and 2000, which, if extr apolated over a ten year period from 1990 to 2000, translat es into 18 percen t growth, which is similar to population growth over the same time period. Table 3 below identifies econo mic trends for those industries in the District that are affected by Draft Rule 4702, and it provides a comparison between two points in time, 1995 and 2000. Overall, these industries ex perienced jobs increases in the range of 12 percent for the five-year peri od. However, the sanitary-s ewerage-refuse industry and construction services experienced signi ficant declines, as Table 3 shows.

TABLE 3 Employment Trends: Industries Affected By Draft Rule 4702 1995 - 2000

1995 Employment 2000 Employment Change Percent Change Crude Oil, N.G., Oil Pipelines, Oil Refi ning, and Field Services 14,847 12,489 -2,358 -16% Water Supply and Irrigation 511 601 90 18% General Government, Prisons, & National Security 8,898 8,581 -317 -4% Sanitary, Sewerage, & Refuse 1,916 1,309 -607 -32%

Construction Services an d Concrete 1,295 642 -653 -50% Agriculture and Food Processing 52,243 61,562 9,319 18% Manufacturing 2,065 2,964 899 44%

Other Industries 45,997 55,369 9,372 20% Total 127,772 143,517 15,745 12% Source: Minnesota Implan Group, Inc. \ State of California, EDD-LMID \ Applied Development Economics

5.2 description of Affected industries Draft Rule 4702 affects a broad set of industries that ca n be categorized under eight general categories. For the pu rposes of analysis, this repo rt organizes data by these categories. Data for the industries belo w are for the eight-c ounty San Joaquin Valley region, which consists of Fresno, part of Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, and Tu lare counties (s ee Figure 1 above). Belo w is a general description of the industrial categories. There are three types of indust ries within oil an d gas category. This category includes producers of natural gas and petroleum (SIC 1311 and SI C 1321), oil refineries (SIC 2911) and transmitters of these raw materials (SIC 46 12, SIC 4923, SIC 4924, and SIC 4925). All of these industri es use a variety of engines to extract and store oil andSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

109 Final Draft Staff Report: Rule 4701 and Rule 4702 natural gas from the ground, as well as to refine and distribute the product. The food production category can be broken down into tw o sub-categories. There are five industries (at the four -digit SIC level) related to agriculture and livestock production. The vast majority of industries in this ge neral category relate to food processing. There are three public or qua si-public categories. Government consists of transit regulators (SIC 9621) , state correctional facilities (SIC 9223) and government, not elsewhere classified (n.e.c.) (SIC 9199). There are two other quasi-public categories represented by water and sewage utilities. Other industrial categories include manufacturing, constr uction, and others services. 5. 3 Economic Characteristics of Affected Establishments In analyzing the industries affe cted by Draft Rule 4702, th e report relies heavily on data on establishments, empl oyment, wages, value-added 1 and sales collected in the 1997 Economic Census of the US Bureau of the Census. The Bureau of the Census surveys businesses every five years, in the second and seventh year of the decade, and issues its findings two to three years afterwards. Th us, the 1997 Economic Census is the most current available source of information on value-added and sales. With data from private-sector vendors such as the Mi nnesota Implan Group (MIG) and from the Census’ annual County Busine ss Patterns, we are able to identify establishment, employment and wage data for specific industries as of 2000. Using the 1997 Economic Census, County Busi ness Patterns and MIG together, we estimate valueadded and sales for industries in the year 2000 , in addition to id entifying employment and establishment trends. 2 Table 4 identifies the economic characteristi cs of the industries affected by Draft Rule 4702. This table shows that these industries are estimat ed to employ 4,863 workers. These affected industry grou ps are comprised of 114 establishments, and these establishments retain 506 engine units that are the fo cus of Draft Rule 4702. Table 4 also shows the economic importance of th e affected industries to the San Joaquin Valley region. The 114 establ ishments have an estimated aggregate payroll of $199.7 million, and estimated sales of $2.4 billion. Bu siness catego ries such as general government do not make sale s or shipments but are estima ted to employ 251 workers. As Table 4 shows, the 114 affected est ablishments produce an estimated $647 million in value-added.

1 Value-added measures the difference between sales and cost of inputs (i.e. materials an d labor). It is a measure of productivity.

2 This report uses the term “establishm ents” and “businesses” in the same way.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

110 Final Draft Staff Report: Rule 4701 and Rule 4702 TABLE 4 Number of San Joaquin Valley Industries Affected By Rule 4702 General Categories of Industries Affected by Proposed Rule Changes

Engine Units Establishments Employment Wages Value-added Sales Crude Oil, N.G., Oil Pipelines, Oil Refining, and Field Services 364 42 1,669 $69,982,606 $276,472,357 $1,342,761,429 Water Supply and Irrigation 40 11 70 $2,870,522 $18,836,968 General Government, Prison s, & National Security 13 8 251 $10,898,792 Sanitary, Sewerage, & Refuse 14 9 90 $3,448,084 $12,086,327 $27,743,267

Construction Services and Concrete 10 8 126 $5,929,573 $18,500,307 $31,481,305 Agriculture and Food Processing 16 7 405 $15,618,168 $91,803,331 $282,438,777 Manufacturing 17 12 303 $12,695,106 $59,591,788 $141,365,400

Other 32 17 1,950 $78,341,794 $188,611,938 $516,963,176 Total 505 114 4,863 $199,784,646 $647,066,048 $2,361,590,321
Sources: San Joaquin Valley Air Pollution Control District / US Bureau of the Census, Economic Census, ‘97 / Minnesota IMPLAN G roup 1997 and 2000 / ADE, Inc.
As Table 5 shows, the affected busines ses represent a small percentage of all establishments within thei r respective industries. For example, there are 196 establishments in the industr ies that comprise the crude oil and na tural gas category, and of these establishments, there are only 42 establishments (or 21 percent) with engine units that are subject to draft Rule 4702. There are 92 water supply and irrigation establishments in the region, and, of t hese, 11 are subject to the rule change (12 percent). There are 2,492 agricultural establishments in the eight-county region, and of these, only seven–o r less than one percent–are s ubject to the Rule 4702. Altogether, the 114 bus inesses represent two percent of all business in the District in industries with similar SIC clas sification as those covered by Draft Rule 4702. In other words, the vast majority of businesses that share the SIC codes wi th those affected by the draft rule are either exem pt from the rule or do not have t he type of engines that subjects them to this rule . About 80 percent of the e ngines in the SJVUAPCD database are exempt from th e Draft Rule 4702.

TABLE 5 Comparison of Affected San Joaquin Valle y Industries Versus Region and State

General Categories No. of Affected Businesses No. of SJV Businesses Per General

Industry

Group No. of Businesses in State Per

General Industry Group Affected Businesses As % of All SJV Businesses (N

= 77,436) Affected Businesses As % of All SJV Businesses Per Industry Affected SJV Industries As % of Same Industries In State
Crude Oil, N.G., Oil Pipelines, Oil Refining, and Field Services 42 196 823 0.1% 21% 5%

Water Su pp l y and Irri g ation 11 92 537 0.01% 12% 2%

General Government, Prison s, & National Securit y 8 309 3,711 0.01% 3% 0.2%
Sanitary, Sewerage, & Refuse 9 87 788 0.01% 10% 1%

Construction Services and Concrete 8 66 454 0.01% 12% 2%

A g riculture and Food Processin g 7 2,492 5,006 0.01% 0.3% 0.1%SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

111 Final Draft Staff Report: Rule 4701 and Rule 4702 Manufacturin g 12 131 2,403 0.02% 9% 0.5%

Other 17 2,109 20,590 0.02% 1% 0.1%

TOTALS 114 5,481 34,312 0.1% 2% 0.3% Sources: San Joaquin Valley Air Pollution Control District / US Bureau of the Census, Economic Census / US Bureau of the Census , County Business Patterns / US Bureau of the Census, ZIP Code Business Patterns / Minnesota IMPLAN Group, Inc. / ADE, Inc.
In terms of employme nt, establishments a ffected by the draft rule represent a small percentage of employment in the region in the same in dustries (see Table 6). All industries within the eight cat egories employ 4,863 workers, and this figure represents three percent of all workers in the region in industries simi lar to those comprising the eight categories.

TABLE 6 Comparison of Employment In Affected San Joaq uin Valley Industries Versus Region and State

General Categories Employment By Affected Businesses Employment SJV Businesses

Per General Industry Group Employment By Businesses

in State Per

General Industry

Group Affected Employment As % of All SJV Employment (N

= 943,773) Affected Employment As % of All SJV Employment Per Industry Affected SJV Industries As % of Same Industries In State
Crude Oil, N.G., Oil Pi p elines, Oil Refinin g , and Field Services 1,669 12,489 42,627 0.2% 13% 4%

Water Su pp l y and Irri g ation 70 601 5,536 0.01% 12% 1%

General Government, Prison s, & National Securit y 251 8,581 111,038 0.03% 3% 0.2%

Sanitar y , Sewera g e, & Refuse 90 1,309 22,433 0.01% 7% 0.4%

Construction Services and Concrete 126 642 6,865 0.01% 20% 2%

A g riculture and Food Processin g 405 61,562 130,128 0.04% 1% 0.3%

Manufacturin g 303 2,964 51,196 0.03% 10% 1%

Other 1,950 55,369 634,927 0.2% 4% 0.3%

TOTALS 4,863 143,517 1,004,750 0.5% 3% 0.5%

Sources: San Joaquin Valley Air Pollution Control District / US Bu reau of the Census, Economic Census / US Bureau of the Census

, County Business Patterns / US Bureau of the Census, ZIP Code Business Patterns / Minnesota IM PLAN Group, Inc. / ADE, Inc.

As Table 7 shows, affected bu sinesses in the SJVUAPCD regi on are, for the most part, more productive than their counterp arts in the State. For example, affected establishments in the crude oil-natural gas business ca tegory have sales that, on average, are worth $804,628 per employee, wh ile the statewide rate for like industries is $422,860. In other words, crude oil-natural gas establis hments are almost twice as productive as their counterparts elsewhere in the Stat e. Affected businesses in the crude oil-natural gas, wa ter supply-irrigation, agriculture, manufact uring, sanitation, and construction services categories also sell more per employee t han their co unterparts throughout California. As T able 8 shows, the affected businesses also are more productive than many of t heir counterparts in the nation as a whole, except for crude oil-natural gas.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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112 Final Draft Staf f Rule 4701 and R u TABLE 7 Measure of Productivity: Sales-Shipments per Employee

Affected Industries California United States Crude Oil, N.G., Oil Pipelines, Oil Re fining, and Field Se rvices $804,628 $422,860 $844,777 Water Supply and Irri gation $269,230 $250,529 $159,447 General Government, Prisons, & National Security Sanitary, Sewerage, & Refuse $309,091 $150,623 $166,619
Construction Services and Concrete $249,233 $186,370 $173,090 Agriculture and Food Processing $698,014 $289,343 $308,930 Manufacturing $450,342 $259,245 $156,513 Other $265,106 $136,275 $106,368
Sources: US Bureau of the Census, Economic Census, 1997 / Minnesota IMPLAN Group, Inc., 1997 and 2000 / ADE, Inc.

5.4 Size of Industry By Employment In estimating the impact of compliance costs on industries and businesses, one concern is whet her smaller businesses will be disproportionately affected. More than 50 percent of all busin esses in California an d the United States employ less than four people, and almost 80 percent employ less than 10. Table 8 distributes affected industries by number of em ployees per establis hment. Data for t he table come from County Business Patterns, wh ich is published by the US Bureau of the Census. County Business Patterns does not prov ide specific informa tion on governmental services. As a result, the general government, prisons an d national security industry category is not included below. As a group, San Joaquin Vall ey industries affe cted by Rule 4702 te nd to be slightly larger than stat e and national industries as a whol e. Employers with more than 250 workers represent 0.7 percent of all establ ishments in all indus tries in California and the United States. In contra st, slightly over one percent (1.4 percent) of affected industries employ at least 250 people. In large part , this is driven by establishments in the oil and natural gas industry category, of which two percent employ more than 250 people. Agriculture is also a major employer.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

113 Final Draft Staff Report: Rule 4701 and Rule 4702 TABLE 8 Distribution Of Industries Affected By Rule 4702 By Size Of Establishment

Employment Size Categories

1 thru 4 5 thru 9 10 thru 19 20-49 50-99 100-249 250

or more Crude Oil, N.G., Oil Pipelines, Oil Refining, and Field Services 36% 15% 24% 13% 6% 5% 2% Water Supply and Irrigation 70% 20% 5% 2% 3% 0.0% 0.0% Sanitary, Sewerage, & Refuse 45% 20% 17% 15% 3% 0.0% 0.0%

Construction Services and Concrete 20% 12% 30% 25% 10% 4% 0.0% Agriculture and Food Processing 56% 18% 12% 8% 3% 2% 1% Manufacturing 50% 18% 13% 10% 3% 5% 0.0%

Other 53% 23% 14% 6% 1% 2% 2%
Affected Industry Average 52.9% 20.7% 13.9% 7.1% 2.1% 2.0% 1.4%

California (all industries) 54.0% 18.5% 12.6% 9. 1% 3.2% 1.8% 0.7% US (all industries) 53.9% 19.3% 12.7% 8. 7% 3.0% 1.8% 0.7%

Source: United States Bureau of th e Census, County Business Patterns 1997
Affected manufacturing indust ries have a greater share of establishments in the middle-range category relative to the state and nation. Thirteen percent of all affected manufacturers employ betwe en 20 and 99 workers, and another 5 percent employ between 100 and 249 workers. Approximately fourteen percent of all establishments in California and the United St ates employ between 20 an d 249 workers. Construction services, and sanitary, sewage and refuse in dustries are also si gnificant middle-range employers.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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114 Final Draft Staff Report: Rule 4701 and Rule 4702 

## 6. SOCIOECONOMIC IMPACTS

6.1 COMPLIANCE COST ESTIMATES The District cost estimates are based in part on data provided by the affected industries and in part on independent analysis of control equipment manufacturers and studies by the EPA. The District’s cost of compli ance analysis indicates that, overall, engine operators would experience annual costs of approximately $6.7 million. Table 9 provides a breakdown of the estimated costs, as bo rne by the different business categories.

TABLE 9 Annual Compliance Cost

Cost Analysis Crude Oil, N.G., Oil Pipelines, O il Refining, and Field Services $4,430,708 Water Supply and Irrigation $429,858 General Government, Prisons, & National Security $264,816 Sanitary, Sewerage, & Refuse $242,661
Construction Servic es and Concrete $235,738 Agriculture and Food Processing $140,986 Manufacturing $397,999 Other $589,234 $6,732,000
Source: San Joaquin Valley Unified Air Pollution Control District

6.2 BUSINESS RESPONSE TO COMPLIANCE COSTS Businesses may respond in a variety of ways when faced with ne w regulatory costs. These responses may range from simply absorbing the cost s and accepting a lower rate of return to shutting down th e business operation altogether. Businesses may also seek to pass the costs on to th eir customers in the form of higher prices or they may renew efforts to increase product ivity and reduce costs elsewhere in their operation in order to recoup the regulatory costs and mainta in profit levels. These opti ons were discussed with the businesses that participated in the fo cus group session in early April 2003. Most of the businesses said they would attempt to absorb the cost s if they are not substantial. There may be some possibility of passing costs on to customers to the extent that other firms in California are experiencing similar air pol lution control costs, but the industry also faces competition fr om out of state producers that limits the pric e flexibility of the marketplace. Firms expressed the opinion that if effo rts to pass on the costs or absorb them are not succes sful, particularly if ce rtain plant operat ions are burdened with very high costs, then steps would be ta ken to move those operations and the a ssociated jobs offshore.

6.3 IMPACT ANALYSIS Using the cost estimates developed by SJVUAPCD, Applied Development Economics calculated the socioeconomic impacts of Draft Rule 4702. In calculat ing impacts of Draft Rule 4702 on industry profits, ADE used industry retu rn on sales ratios identified by DunSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

115 Final Draft Staff Report: Rule 4701 and Rule 4702 and Bradstreet, which annually issues a re port called “Industry No rms and Key Business Ratios.” These ratios are specific to industries at the four-digit SIC level. Applied Development Economics calculated the average return on sale ra tio for specific industries. These averages are based on indu stry ratios over a five-year period stretching from 1996 to 2000. Table 10 summarizes the estimated socioe conomic impacts of this rule. Affected industries will incur an aggrega te cost of $6.7 milli on as a result of Draft Rule 4702. This cost represents an estimated 6.2 percent of pr ofits, with some business categories (such as water supply and irrigation industries, sanitary , sewage and refuse industries, and construction services industries) experiencin g higher cost impacts. Oil and gas related industries bear the largest a nnual costs – at $4.4 million – and these costs represent an estimated 7.4 percent of profits.

TABLE 10 Socio-Economic Impacts of Rule 4702

Sales (000's) Estimated Profits (000's) Compliance Costs (000's) Costs as Percent of Sales Costs as Percent of Profits Crude Oil, N.G., Oil Pipelines, Oil Refini ng, and Field Services $1,342,761 $60,023 $4, 431 0.3% 7.4% Water Supply and Irriga tion $18,837 $2,014 $430 2.3% 21.3% General Government, Prisons, & National Security NA NA $265 NA NA Sanitary, Sewerage, & Refuse $27,743 $1,998 $243 0.9% 12.1%

Construction Services and Concrete $31,481 $1, 168 $236 0.7% 20.2% Agriculture and Food Processing $282,439 $6,642 $141 0.0% 2.1% Manufacturing $141,365 $5,228 $398 0.3% 7.6%

Other $516,963 $31,884 $589 0.1% 1.8% Total $2,361,590 $108,958 $6,732 0.3% 6.2%
Source: Applied Development Economics

Based on the limited input at the industry focus group meeting, several business responses can be expe cted. In the petroleum industr y, the costs will generally be absorbed in lower profits as indicated in Table 10. Some wells may become uneconomic and be shut down; however, ov erall the 7.4 percent reduction in profit levels would not be considered significant. A gr eater potential impact exists for utili ties such as water suppliers, wastewater and refuse collect ion and disposal. However, fo r these kinds of businesses there is more opportunity to pass increased cost s on to customers, si nce they serve local markets. The column in Table 10 that shows the compliance costs as a percent of sales is a relevant indicator of the le vel of price increase needed to recoup the costs. At most, price levels for water purveyors would need to rise 2.3 percent to meet the estimated costs, while rates for sanitary , sewerage and refuse services need rise le ss than one percent. Again, it is unlikely that such increases would create significant economic impacts. One industry group that may experience more significant impact is the construction services industry, which operates on very th in profit margins. The compliance costs are estimated at only 0.7 percent of sales for th ese businesses but this represents more than 20 percent of profits. These businesses are also likely to attempt to re coup the costs inSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

116 Final Draft Staff Report: Rule 4701 and Rule 4702 higher prices, since relatively small price incr eases would be required. However, this may have some effect on the competitiveness of th e affected businesses. Although the affect ed industries have not indicated that job r eductions are a likely response to the compliance cost s for this rule, a hypothetical analysis of potential job losses has been conducted as a worst case scenario for the socioeconom ic analysis. If the affected industries are able to incorporate a productivity meas ure and thus recover labor costs, these three industries could at most lose an estimated total of seven jobs as a result of Draft Rule 4702 (Tab le 11). The estimated job lo ss is a small fraction (0.14 percent) of total employment (4,863 jobs) of all industries affected by Rule 4702. The estimated number of jobs lost by water supply and irrigation industry category is equivalent to a six percent reduction of this industry’s workforce. Th e sanitary, sewerage and refuse industrial category could lose an estimated 1 percent of it s workforce as a result of Draft Rule 4702. Similarly, construc tion services catego ry could lose an es timated 2 percent of its workforce as a result of the draft rule.

TABLE 11 Worst Case Scenario: Employment Impacts of Rule 4702

Total Profit Compliance Cost Percent of Profit Above Threshold Average Wages and Benefits Per Employee Potential Number of Jobs Lost: Worst Case

Scenario Percentage Change

Water Su pp l y and Irri g ation $2,014,385 $429,858 22.3% 12.3% $53,336 4 -6%
Sanitary, Sewerage, & Refuse $1,997,897 $242,661 12.9% 2.9% $49,940 1 -1%

Construction Services & Concrete $1,168,463 $235,738 23.0% 13.0% $61,027 2 -2%

Source: Applied Development Economics
This potential loss of jobs re presents the worst case scenario . For example, water supply and irrigation can keep the four employees it is at risk of lo sing by increasing water rates by 2.3 percent. Likewise with the sanitary, sewerage and refuse industri al category, which could keep the one employee it is at risk of losing by raising rates by 0.9 percent. Moreover, job attrition thr ough retirement and a corres ponding set of measures to enhance the product ivity of remaining employees co uld preclude act ually terminating anyone. If job reductions do occur through attrition or termination, eliminating the seven positions will have ripple affects throu gh the regional economy. The loss of income as sociated with the direct loss of seven positions will induce the loss of another seven jobs. 3 These jobs are primarily in local serving industries such as retail and personal services. The previous section profiled af fected industries in terms of their respective employment patterns. Based on this discussion, it is determined that smal l businesses are not disproportionately affect ed by Draft Rule 4702. 6.4 job creation attributable to draft rule 4702 Using the cost estimates developed by SJVU APCD and the IMPLAN Input-Output Model, Applied Development Economi cs calculated the socioeconom ic impacts of Draft Rule 4702. The previous section analyzed socioe conomic impacts in te rms of possible job

3 Multiplier effects are esti mated using the IMPLAN Input-Output mode l for the eight county District region.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

117 Final Draft Staff Report: Rule 4701 and Rule 4702 losses attributable to Draft Ru le 4702. This se ction analyzes socioeconomic impacts in terms of potential jobs created as a result of Draft Rule 4702. According to the District staff, ther e are three businesses repres ented in the District that manufacture, ship, and service equipment used by industries subject to Draft Rule 4702. Businesses within th ese industries should ex perience an increase in demand for their products, as a result of th e draft rule. None of the ma nufacturing of control equipment occurs within the District, but these businesses have sales and installation operations in the District and also do monito ring services on the equipmen t. The volume of increased demand could require some additional job creation as shown in Table 12.

TABLE 12 Aggregate Job Creation Impacts of Draft Rule 4702

Jobs Created

Directly By Draft Rule Jobs Created Indirectly By

Draft Rule Induced Jobs Created By Draft Rule Total Job Creation All Establishments That Sell and Service Required Equipment Per Draft Rule 4702 3 1 15

Source: Applied Development Economics

As Table 12 shows, Draft Rule 4702 should directly create th ree (3) jobs within industries that sell and service air quality equipment. In addition, industries that sell and service equipment will, in tu rn, purchase goods and services from their ne twork of suppliers. As a result, Draft Rule 4702 should al so indirectly create one (1 ) additional job as a result of these transactions. Moreover, the employees who occupy the jobs that are directly and indirectly created as a result of the draft rule will, in turn , generate new demand for personal and household items, which, in turn, should i nduce the creation of an additional job.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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118 Final Draft Staff Report: Rule 4701 and Rule 4702 

## ATTACHMENT 1: SPECIFIC PUBLIC COMMENTS AND RESPONSES TO DRAFT RULE 4702

RESPONSE TO COMMENTS ON THE SOCIOECONOMIC reports The San Joaquin Valley Unified Ai r Pollution Control District provided an opportunity for stakeholders, including businesses and trade asso ciations affected by Draft Rule 4702, to review, ask questions about and make commen ts on the socioeconom ic impact analysis. Below are specific comments pertaining to the socioeconomic impact analysis report. Included are responses prepared by the Applied Development Economics, the socioeconomic consultan t, to the specific comments. General comments pertaining to the socioeconomic impact analysis a nd responses prepared by Dist rict staff to such general comments are includ ed in Appendix A. C. D. Specific Comments on the 4702 Socioeconomic Analysis Report 1. IOPA—Are the profit measures used in the analysis before tax or after tax? RESPONSE The profit measures come from a public ation of Dun and Bradstreet, called “Industry Norms and Key Business Ratios.” This work provi des financial norm and business ratio data developed from actual company inco me statements and balance sheets. The information is arr anged by SIC code, with a short industry title, and an indication of the number of companies in each industry sa mple. The profit measures are after-tax

measures.

2. IOPA—The employment tre nds show growth in the oil industry when many businesses are actually cutting back. Spec ifically, the Socio-economic Analysis prepared by Applied Development Economics, Inc. fo r Draft Rule 4702 indicate s on page 8, Table 3 that employment for Crude Oil, Natural Gas, Oil Pipelines, Oil Refining and Field Services has increased by 4,642, or a 59% increase since 1995. In li ght of the numerous down-sizings and mergers in the Oil Industry, we woul d like to know how these numbers were generated. We do not th ink that they are correct.

RESPONSE We have reviewed the employment data and made co rrections where necessary. In the original analysis, we estimated that the oil industries affect ed by Draft Rule 4702 employed 7,846 workers in 1995. In reviewing the estimate, we determi ned that employment estimate for ce rtain oil and oil-related industries were regrettably omitte d. Moreover, in reviewing 1995 employment data for SI C 2911 (oil refini ng) and SIC 4925 (MMLP distribution), we dete rmined that the original employ ment estimates we re too low and made appropriate corrections. As a result, th e aggregate 1995 employment figure for oil industries (also known as “Cr ude Oil, NG, Propane, Oil Pipe line Industries”) affected by Draft Rule 4702 is estimated at 14,847. Thus, between 1995 and 2 000, employment in “Crude Oil, NG, Propane, Oil Pipeline Indust ries” declined by 16 percent between 1995 and 2000, or by 2,358 worker s. These correcti ons have been made in Table 3 of theSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

119 Final Draft Staff Report: Rule 4701 and Rule 4702 socioeconomic report.

3. Agriculture/Food Industry—What detaile d SIC codes are used in the socioeconomic study to define the affected industries? RESPONSE The San Joaquin Valley Unified Air Pollution Control District maintains a database of companies in the regi on and their respective SIC co des. In order to perform the socioeconomic analysis, ADE obtained from the District a list of SIC codes of businesses in industries that woul d be affected by Dra ft Rule 4702. Attachme nt 2 lists the SIC codes of industries affected by Draft Rules 4702.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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120 Final Draft Staff Report: Rule 4701 and Rule 4702 

## ATTACHMENT 2: LIST OF SIC CODES AFFECTED BY DRAFT RULE 4702

The San Joaquin Valley Unifie d Air Pollution Control Dist rict maintains a database of companies in the regi on and their respective SIC co des. In order to perform the socioeconomic analysis, ADE obtained from the District a list of SIC codes of businesses in industries that woul d be affected by Draft Rule 4702. Below is th e list of SIC codes of businesses in industries af fected by the draft rule.

DRAFT RULE 4702
SIC Description

Crude Oil, N.G., Oil Pipelines, Oil Refining, and Field Services 1311 Crude petroleum and natural gas 1321 Natural gas liquids 1389 Oil and gas field services, nec 2911 Petroleum refining 4612 Crude petroleum pipelines 4923 Natural gas transmission and distribution 4924 Natural gas distribution 4925 Petroleum gas production and distribution Agricultural Industries 0172 Grapes

0723 Crop preparation services for market, except cotton ginning 0724 Cotton ginning 2033 Canned fruits and vegetables 2048 Prepared feeds, nec 2084 Wines, brandy, and brandy spirits 2099 Food preparations, nec Manufacturing Industries 2411 Logging 2421 Sawmills and planing mills, general 2873 Nitrogenous fertilizers 2951 Asphalt paving mixtures and blocks 3295 Minerals, ground or treated 3471 Plating and polishing 3499 Fabricated metal products, nec 3732 Boat building and repairing 3999 Manufacturing industries, nec General Government, Prisons, & National Security 9199 General government nec
9223 Correctional facilities 9532 Community Development 9621 Transit regulatory agency, inclu air traffic control
Other Industries
1446 Industrial sand
4111 Local and suburban transitSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

121 Final Draft Staff Report: Rule 4701 and Rule 4702 4213 Trucking, except local 4222 Refrigerated warehousing and storage
4911 Electric services 5013 Motor vehicle supplies and new parts
5171 Petroleum bulk stations & terminals 5191 Farm supplies
5541 Gasoline service stations 6519 Lessors of real property, nec 7532 Top & body repair & paint shops 7699 Repair services, nec 7999 Amusement and recreation, nec 8062 General medical and surgical hospitals 8221 Colleges, universities and professional schools Water Supply and Irrigation 4941 Water supply 4971 Irrigation systems
Construction Services and Concrete 1442 Construction sand and gravel 3273 Ready-mixed concreteSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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122 Final Draft Staff Report: Rule 4701 and Rule 4702 

# APPENDIX D

Rule Consistency Analysis for Rule 4702 (Internal Com bustion Engines – Phase 2)

July 17, 2003SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

123 Final Draft Staff Report: Rule 4701 and Rule 4702 RULE CONSISTENCY ANALYSIS

RULE 4702 (INTERNAL COMBUSTION ENGINES – PHASE 2)

I. REQUIREMENTS OF ANALYSIS

Pursuant to Section 40727.2 of the California Health and Safety Code, prior to adopting, amending, or repealing a rule or regulation, the District is required to perform a written analysis that identifies and compares the ai r pollution control elements of the proposed rule with the corresponding elements of other existing or proposed District and United States Environmental Protection Agency rule s, regulations, and guidelines that apply to the same source category. The rule elem ents that were analyzed are emission limits, control efficiency, operating parameters and wo rk practices, monitoring and testing, and recordkeeping and reporting requirements.

II. RESULTS OF ANALYSIS

A. District Rules

New Rule 4702 limits the NOx, CO, and VOC em issions from the use of spark-ignited internal combustion engines with a rated brake horsepower greater than 50 horsepower. No other District rules, existing or proposed, subject the source categories to the same requirements of Rule 4702. Internal combustion engines subject to Rule 4702 could also be subject to other District rules including Rule 2201 (New and Modified Stationary Source Review), Rule 4102 (N uisance), and Rule 4201(Particulate Matter Concentration).

B. EPA Standards, Rules, and Regulations

There are no federal Control Technique Gui delines (CTG), National Emission Standards for Hazardous Air Pollutants (NESHAP) regul ations, or Lowest Achievable Emission Rate (LAER) regulations for the control of NOx, CO, and VOC emi ssions from the use of spark-ignited internal combustion engines . There are no approved federal Maximum Achievable Control Technology (MACT) r egulations although they are in development with a tentative adoption date of November 2003.

C. EPA Policy and Guidelines

Except for recordkeeping policy and Economic Incentive Program policy, there are no EPA Policy and Guidelines pertaining to limit ing NOx, CO, and VOC emissions from the use of spark-ignited internal combus tion engines. The proposed recordkeeping requirements of Rule 4702 include the five-year record retention period to comply withSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

124 Final Draft Staff Report: Rule 4701 and Rule 4702 EPA recordkeeping policy requirements. The proposed Alternative Emission Control Plan (AECP) requirements of Rule 4702 include the 10 percent emission reduction benefit to comply with EPA Economic In centive Program policy requirements.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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125 Final Draft Staff Report: Rule 4701 and Rule 4702 

# APPENDIX E

Environmental Analysis for Rule 4701 (Internal Combusti on Engines – Phase 1) and Rule 4702 (Internal Com bustion Engines– Phase 2)

July 17, 2003SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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126 Final Draft Staff Report: Rule 4701 and Rule 4702 SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

INITIAL STUDY

A. PROJECT BACKGROUND INFORMATION

1. Project Title: Rule 4701 (Internal Combustion Engines – Phase 1) and Rule 4702 (Internal Combustion Engines – Phase 2)

2. Lead Agency Name and Address

San Joaquin Valley Unified Air Poll ution Control District (District) 1990 E. Gettysburg Ave. Fresno, CA 93726

3. Contact Person:

CEQA: Mr. Hector R. Guerra (559) 230-5800

Rule: Mr. Saul Gamez (559) 230-5800

4. Project Location:

The rules apply to new and modified st ationary sources located within the boundaries of the San Joaquin Valley Unifi ed Air Pollution Control District (see Exhibit 1, Map of District boundaries).

5. Project Sponsor’s Name and Address:

San Joaquin Valley Unified Ai r Pollution Control District 1990 E. Gettysburg Ave. Fresno, CA 93726

6. Description of Project:

This Initial Study is based on draft Rule 4701 and draft Rule 4702 dated May 7, 2003. The proposed amendments to Rule 4701 are intended to co rrect the rule deficiencies identified on February 28, 2002, by the United State En vironmental Protection Agency (EPA) in order to make the rule full y approvable for inclusion in the State Implementation Plan (SIP). Unless the rule deficiencies are co rrected and the rule is fully approved fo r inclusion in the SIP by October 1, 2003, EPA will impose sanctions inSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

127 Final Draft Staff Report: Rule 4701 and Rule 4702 the San Joaquin Valley consisti ng of increased o ffset requirements for major sources and revocation of federal funding for highways. Ne w Rule 4702 is intended to implement Reasonably Available Control Meas ures as required by the federal Clean Air Act. Further, the Califor nia Clean Air Act, as well as the District’s 2002 and 2005 Rate of Progress Plan, require the implemen tation of all feasible control measures to reduce the emissions of VOC and NOx in order to achieve attainment of the federal and state health-based ozone standards. Th is rulemaking project to amend Rule 4701 and to develop Rule 47 02 is intended to reduce the emissions of nitrogen oxides (NOx) and carbon monoxide (CO) pu rsuant to the District’s ozone and part iculate matter attainment strategies.

Rule 4701 applies to sources that operate permitted intern al combustion engines with a brake horsepower greater th an 50 horsepower. Rule 47 02 would apply to sources that operate permitted spark-ignited inte rnal combustion en gines with a brake horsepower greater than 50 horsepower. For the engines subject to Rule 4702, District staff proposed emission limits ba sed on control technologies that have been achieved in practice as well as controls that are technologically fe asible for retrofit to existing units.

The likely control technology to meet t he proposed Rule 4702 emission limits for rich-burn engines not cyclically loaded usi ng fuels other than waste gases will be nonselective catalytic reduction (NSCR) with air/fuel ratio controllers. For engines using waste gases, the use of prestratifi ed charge controls are likely to be used to meet the proposed limit s. The likely control tec hnology to meet the proposed emission limits for rich-burn engines cyclic ally loaded using fi eld gas fuels will be nonselective catalytic reduction. For fou r-stroke spark-ignited lean-burn engines and two-stroke spark-ignited engines rated at 100 hp or more, the likely control technique would be to retrofit the engines with low-emission co mbustion controls. Other control techniques may be used to supplement these retrofits, such as ignition system modifications and engine derating. For engines that do not have lowemission combustion modification kits avai lable, selective catalytic reduction (SCR) may be used to achieve the proposed limits.

The tiered implementation sch edule (June 1, 2005, June 1, 2006, and June 1, 2007) for the proposed controls has been designed to achieve the maximum reductions yet provide a reasonable amount of time to des ign and install the required controls. The emission limits for each implem entation schedule are the same.

The District’s 2005 NOx emissi ons from internal combus tion engines are estimated at 20 tons per day. District staff expec ts implementation of Rule 4702 to reduce NOx emissions by 1.76 tons per day. No emission reduction is expected from the amendments to Rule 4701.

7. Other Agencies Whose Approvals Is Required and Permits Needed:

No other agencies have discretionar y authority over this project.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

128 Final Draft Staff Report: Rule 4701 and Rule 4702 8. Project Compatibility with Existing Zones and Plans:

Adoption of this plan will not affe ct any land use zones or plans.

9. Name of Person Who Prepared Initial Study:

Hector R. Guerra Senior Environmental Planner

B. ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED

The environmental factors checked below would be potentially affected by the proposed project, involving at least one impact that is a “Less Than Significant Impact” as indicated by the checklist on the following pages.

Land Use and Planning Population and Housing Geophysical Water Air Quality Transportation/Circulation Biological Resources Energy and Mineral Resources Hazards Noise Public Services Utilities and Service Systems Aesthetics Cultural Resources Recreation Mandatory Findings of Significance

C. DETERMINATION

I certify that this document reflects the independent judgment of the District.

__X _I find that the propos ed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared.

_____I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A NEGATI VE DECLARATION will be prepared.

_____ I find that the proposed project M AY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required.

_____ I find that the proposed project MAY have a significant effect(s) on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applic able legal standards, and 2) hasSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

129 Final Draft Staff Report: Rule 4701 and Rule 4702 been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the ef fect is a “potent ially significant impact” or “potentially significant unless mitigat ed.” An ENVIRONMENTAL IMPACT REPORT is requir ed, but it must analyze only the effects that remain to be addressed.

Signature: / si gned/_______________________ Date : June 10, 2003_________

Printed name: Hector R. Guerr a_______________________ Title: Senior Air Q uality Planner

_______________________SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

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130 Final Draft Staff Report: Rule 4701 and Rule 4702 

### San Joaquin Valley Air Po llution Control District RULE 4701 (INTERNAL COMBUSTION ENGINES – PHASE1) RULE 4702 (INTERNAL COMBUSTION ENGINES – PHASE 2)

D. ENVIRONMENTAL IMPACT CHECKLIST

Explanations of some answers on the checkoff list are located in Section E.

Potentially Significant

Impact Potentially Significant

Impact Unless Mitigated Less Than Significant

Impact No Impact I. Geologic Problems. Would the proposal result in or expose people to potential impacts involving:

a) Fault rupture? X b) Seismic ground shaking? X c) Seismic ground failure, including liquefaction? X

d) Seiche, tsunami, or volcanic hazard? X e) Landslides or mudflows? X f) Erosion, changes in topography or unstable soil conditions from excavation, grading, or fill? X

g) Subsidence of the land? X h) Expansive soils? X i) Unique geologic or physical features? X II. Air Quality. Would the proposal: a) Violate any air quality standard or contribute to an existing or projected air quality violation? X

b) Expose sensitive receptors to pollutants? X c) Alter air movement, moisture, or temperature, or cause any change in climate? X

d) Create objectionable odors? X III. Water. Would the proposal result in: a) Changes in absorption rates, drainage patterns, or the rate and amount of surface runoff? X

b) Exposure of people or property to water related hazards such as flooding? X c) Discharge into surface water, or other alteration of surface water quality (e.g., temperature, dissolved oxygen or turbidity)? X

d) Changes in the amount of surface water in any water body? X e) Changes in currents, or the course or direction of water movements? XSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

131 Final Draft Staff Report: Rule 4701 and Rule 4702 Potentially Significant

Impact Potentially Significant

Impact Unless Mitigated Less Than Significant

Impact No Impact f) Change in the quantity of ground waters, either through direct additions or withdrawals, or through interception of an aquifer by cuts or excavations, or through substantial loss of groundwate r recharge capability? X

g) Altered direction or rate of flow of ground waters? X
h) Impacts to groundwater quality? X i) Substantial reduction in the amount of water otherwise available for public water supplies? X
IV.Biological Resources Would the proposal result in impacts to:

a) Endangered, threatened, or rare species or their habitats (including but not limited to plants, fish, insects, animals, and birds)? X

b) Locally designated species (e.g., heritage trees)? X
c) Locally designated natural communities (e.g., oak forest, coastal habitat, etc.)? X
d) Wetland habitat (e.g., marsh, riparian, and vernal pool)? X
e) Wildlife dispersal or migration corridors? X V. Noise. Would the proposal result in: a) Increases in existing noise levels? X b) Exposure of people to severe noise levels? X VI. Land Use and Planning. Would the proposal: a) Conflict with general plan designation or zoning? X
b) Conflict with applicable environmental plans or policies adopted by agencies with jurisdiction over the project? X

c) Be incompatible with existing land use in the vicinity? X
d) Affect agricultural resources or operations (e.g., impacts to soils or farmlands, or impacts from incompatible land uses)? X

e) Disrupt or divide the physical arrangement ofan established community (including a lowincome or minority community)? X

VII. Energy and Mineral Resources . Would the proposal: a) Conflict with adopted energy conservation plans? X b) Use non-renewable reso urces in a wasteful and inefficient manner? XSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

132 Final Draft Staff Report: Rule 4701 and Rule 4702 Potentially Significant

Impact Potentially Significant

Impact Unless Mitigated Less Than Significant

Impact No Impact c) Result in the loss of availability of a known mineral resource that would be of future value to the region and the residents of the State? X

VIII. Hazards. Would the proposal involve: a) A risk of accidental explosion or release of hazardous substances (including, but not limited to: oil, pesticides, chemicals, or radiation)? X

b) Possible interference with an emergency response plan or an emergency evacuation plan? X

c) The creation of any health hazard or potential health hazard? X d) Exposure of people to existing sources of potential health hazards? X e) Increased fire hazard in areas with flammable brush, grass, or trees? X IX. Population and Housing. Would the proposal: a) Cumulatively exceed official regional or local population projections? X b) Induce substantial growth in an area either directly or indirectly (e.g., through projects in an undeveloped area or extension of major infrastructure)? X

c) Displace existing housing, especially affordable housing? X X. Transportation/Circulation. Would the proposal result in:

a) Increased vehicle trips or traffic congestion? X b) Hazards to safety from design features (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? X

c) Inadequate emergency access or access to nearby uses? Xd) Insufficient parking capacity on-site or offsite? X e) Hazards or barriers for pedestrians or bicyclists? X f) Conflicts with adopted policies supporting alternative transportation (e.g., bus turnouts, bicycle racks)? X

g) Rail, waterborne or air traffic impacts? X XI. Public Services. Would the proposal have an effect upon, or result in a need for new or altered governmental services in any of the following areas: a) Fire protection? X b) Police protection? XSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

133 Final Draft Staff Report: Rule 4701 and Rule 4702 Potentially Significant

Impact Potentially Significant

Impact Unless Mitigated Less Than Significant

Impact No Impact c) Schools? X d) Parks or other recreational facilities? X e) Maintenance of public facilities, including roads? X

f) Other governmental services? X XII. Utilities and Service Systems. Would the proposal result in need for new systems or supplies or substantial alterations to the following utilities: a) Power or natural gas? X b) Communication systems? X c) Local or regional water treatment or distribution facilities? X d) Sewer or septic tanks? X e) Storm water drainage? X f) Solid waste and disposal? X g) Local or regional water supplies? X XIII. Aesthetics. Would the proposal: a) Affect a scenic vista or scenic highway? X b) Have a demonstrable negative aesthetic effect? X c) Create light or glare? X XIV. Recreation. Would the proposal: a) Increase the demand for neighborhood or regional parks or other recreational facilities? X b) Affect existing recreational opportunities? X XV. Cultural Resources. Would the proposal: a) Disturb paleontological resources? X b) Disturb archaeological resources? X c) Affect historical resources? d) Have the potential to cause a physical change which would affect unique cultural values? X

e) Restrict existing religious or sacred uses within the potential impact area? XSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

134 Final Draft Staff Report: Rule 4701 and Rule 4702 Potentially Significant

Impact Potentially Significant

Impact Unless Mitigated Less Than Significant

Impact No Impact XVI. Mandatory Findings of Significance. a) Potential to degrade: Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal, or eliminate important examples of the major periods of California history or prehistory? X

b) Short-term: Does the project have the potential to achieve short-term, to the disadvantage of long-term, environmental goals? (A short-term impact on the environment is one which occurs in a relatively, brief, definitive period of time. Long-term impacts will endure well into the future.) X

c) Cumulative: Does the project have impacts which are individually limited, but cumulatively considerable? (“Cumulatively considerable” means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.) X

d) Substantial adverse: Does the project have environmental effect s which will cause substantial adverse effects on human beings, either directly or indirectly? XSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

135 Final Draft Staff Report: Rule 4701 and Rule 4702 E. ENVIRONMENTAL IMPACT CHECKLIST COMMENTS

I. Geologic Problems

The proposed provisions of Rule 4702 may require some facilities to alter their existing facilities to accommodate additi onal emission control equipment. There are no provisions in the proposed rules that would call for a si gnificant disruption or over-covering of soil, changes in t opography or surface relief features, the erosion of beach sand, or a change in ex isting siltation rates. The proposed project will not increase the exposure of people or property to geologic hazards.

II. Air Quality

The San Joaquin Valley Air Basin is clas sified as a severe ozone nonattainment area and a serious PM10 nonattainment area for the health-based air quality standards established by the federal Clean Air Act. The San Joaquin Valley Unified Air Pollution Control District is considering dow ngrading the ozone classification to extreme nonattainment. The serious PM10 classification and the extreme ozone classification are the wo rst possible categories. NOx is a precursor to both ozone and PM10. It is expected that the us e of NOx emission control devices will have posit ive effects on the air qualit y of the Valley. It is anticipated that some increased emissions of ammonia will result from the use of selective catalytic reduction (SCR) contro l systems for some units that could not achieve the emission limits in the rule by installing other controls. The amount of ammonia emissions is assumed to be a small fraction of t he amount of NOx which is controlled and that the large, net, positive air quality benefit outweighs the small increase in fugitive ammonia emissions.

III. Water

The operation of non-selective catalyti c reduction (NSCR) and SCR would not require the use of water. Therefore, there is no expect ed negative impact on existing water resources or the need to ex plore new water resources as a result of adopting the proposed projec t in the San Joaquin Valley.

IV. Biological Impacts

The proposed project is not ex pected to adversely affect existing plant or animal species or communities, unique or endan gered plant or animal species, or agricultural crops. No additional signif icant adverse impacts to biological resources are expected to result from the propos ed project because proposed rules are expected to affect existing faci lities in industrial or commercial areas where biological resources are already di sturbed. Further, improvements in air quality expected from the pr oposed rules are expected to provide health benefits to plant and animal species as well as to the human residents of the District.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

136 Final Draft Staff Report: Rule 4701 and Rule 4702 V. Noise

The retrofitting of existing engines wit h NSR or SCR systems is not expected to result in significant noise impacts. The engines operate mainly in industrial settings where noise levels are already high. Existing engines typically generate a certain amount of noise and any in crease in noise associated with the installation of add-on control equipm ent is expected to be negligible.

VI. Land Use and Planning

There are no provisions in the proposed ru les that would affect land use plans, policies, or regulations. It is also ex pected that the proposed rules will not affect infrastructure development or require changes to existing zone designations because the proposed provisions primar ily regulate equipment at existing facilities. Local governments det ermine land use and other planning considerations, and no land use or pl anning requirement s will be altered by amending the NOx emission limits from engi nes. Therefore, present or planned land uses in the region will not be affe cted as a result of the proposed rules.

VII. Energy and Mineral Resources

The operation of NSCR and SCR systems will require el ectrical power for electronics and control motors. Additiona lly, some operators may opt to replace their existing engines with electric moto rs. The power consumption of these control systems and replacement motors is not expected to have any significant impact on existing power resources.

VIII. Hazards

It is anticipated that for some engines , the operators may need to install and operate SCR control systems to comply with the proposed emission limits. SCR is known to cause an increase in amm onia emissions, or ammonia slip, under some circumstances. The levels of a mmonia emissions from potential ammonia slip are not expected to reach hazardous levels, as ammonia emissions can be reduced by properly operating and maintaining the equipment.

Ammonia transportation vessels, handli ng equipment, and st orage tanks must comply with state and local safety regulat ions that minimize the potential for accidental release. Some SCR syst ems can also use non-hazardous urea or aqueous ammonia injection to achieve the proposed emission limits without anhydrous ammonia.

Certain catalysts may contain hazardous materials that must be properly disposed of at the end of t heir useful life. Existing wa ste disposal regulations are considered to be adequate to prevent a significant impact from occurring.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

137 Final Draft Staff Report: Rule 4701 and Rule 4702 IX. Population and Housing

There are no provisions in the proposed rule s that would result in the creation of any industry that would effect population gr owth, or directly or indirectly induce the construction of single- or multiple-f amily units. No population relocation or growth inducement is expected from implementation of the amended rules.

X. Transportation and Circulation

The proposed rules will not increase the number of bus inesses operating engines in the District. Further, the proposed rules will not caus e a substantial increase in the number of transport trip s to deliver ammonia becaus e it is anticipated that only a few additional existing engines would use SCR. The delivery of anhydrous ammonia throughout the Valley for SCR systems is already occurring at some existing facilities which cu rrently use ammonia injection systems. Deliveries are also made to agricultura l sources which use ammonia as a soil amendment.

XI. Public Services

The proposed provisions of new Rule 4702 are expected to result in the increased use of ammonia as a catalyti c reagent. Ammonia is a colorless gas with a pungent suffocating odor and is corrosive to the skin, eyes, and lungs. Prolonged contact at concentrations gr eater than 300 ppm c an cause permanent injury or death. Fortunately, ammoni a has a low odor threshold (20 ppm), so most people will seek relief at much lo wer concentrations. Ammonia does not meet the DOT definit ion of a Flammable Gas but is flammable at concentrations of 15% to 28% by volume in air. Be cause of state-mandated safety requirements in the transportation and handling of ammoni a, the District does not anticipate an adverse impact to fire department services.

XII. Utilities and Service Systems

The operation of NSCR and SC R systems require electrical power for electronics and control motors. The power consumpt ion of these additional control systems is not expected have any significant impact on existing power resources.

XIII. Aesthetics

The proposed rules are not expected to adversely affect or change land use in the District. The proposed rules will not require any changes in the physical environment that would obstruct any scenic vistas or views of interest to the public. The proposed rules w ould not create aesthetically offensive sites visible to the public. No significant adverse aesthetic or recreation impacts are expected from the propos ed rule provisions.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

138 Final Draft Staff Report: Rule 4701 and Rule 4702 XIV. Recreation

It is expected that recreational facilitie s and resources in the District will not be affected adversely. These conclusions ar e based on the fact that any physical changes would occur at existing industrial or commercial sites. No significant adverse aesthetic or recreation impac ts are expected from the proposed rule provisions.

XV. Cultural Resources

As previously noted, any effects from implementing the proposed rules will occur at existing facilities in commercial/indus trial areas. As a result, significant impacts to cultural resources are not expected because the proposed rules will not require the destruction of existing buildings or site s with prehistoric, historic, archaeological, religious, or ethnic signi ficance. The proposed rule provisions are, therefore, not anticipated to result in any acti vities or prom ote any programs, which could have a significant adverse impact on cultural resources within the District.

XVI. Mandatory Findings of Significance

a. The project does not have the pot ential to degrade the quality of the environment, substantially reduc e the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self sustaining levels, threaten to eliminate a plant or animal community, r educe the number or restrict the range of a rare or endangered plant or animal, or eliminate important examples of the major periods of Californi a history or prehistory.

b. The project does not hav e the potential to achieve short-term, to the disadvantage of long-term, environmental goals.

c. The project does not have impacts, which are individually limited, but cumulatively considerable.

d. The project does not have environmental effects, which will cause substantial adverse effects on human beings, either directly or indirectly.SAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

139 Final Draft Staff Report: Rule 4701 and Rule 4702 III. EXHIBIT 1 

### MAP OF DISTRICT BOUNDARIESSAN JOAQUIN VALLEY UNIFIED AI R POLLUTION CONTROL DISTRICT

Final Draft Staff Report: Rule 4701 and Rule 4702 August 21, 2003

140 Final Draft Staff Report: Rule 4701 and Rule 4702