SOUTH COAST AIR QUALIT Y MANAGEMENT DISTRICT

FINAL STAFF REPORT FOR

PROPOSED AMENDED RULE 1173 – CONTROL OF VOLATILE ORGANIC COMPOUND LEAKS AND RELEASES FROM COMPONENTS AT PETROLEUM FACILITIES AND CHEMICAL PLANTS

Dated: May 15, 2007

Deputy Executive Officer Planning, Rule Development, and Area Sources Elaine Chang, DrPH

Assistant Deputy Executive Officer Planning, Rule Development, and Area Sources Laki Tisopulos, Ph.D., P.E.

Planning and Rules Manager Planning, Rule Development, and Area Sources Larry M. Bowen, P.E.

Authors: Kennard Ellis Air Quality Specialist

Reviewed by: Ed Muehlbacher, P.E. Program Supervisor John Olvera Senior Depu ty District Counsel

Contributors: Roger Christopher S upervising Air Quality Inspector Martha Thomas Air Quality Inspector Helen Chin Air Quality InspectorSOUTH COAST AIR QUALIT Y MANAGEMENT DISTRICT

GOVERNING BOARD

Chairman: WILLIAM A. BURKE, Ed.D. Speaker of the Assembly Appointee

Vice Chairman: S. ROY WILSON, Ed.D. Supervisor, Fourth District Riverside County Representative MEMBERS:

MICHAEL D. ANTONOVICH Supervisor, Fifth District Los Angeles County Representative

BILL CAMPBELL Supervisor, Third District Orange County Representative

JANE W. CARNEY Senate Rules Committee Appointee

RONALD O. LOVERIDGE Mayor, City of Riverside Cities Representative, Riverside County

GARY OVITT Supervisor, Fourth District San Bernardino County Representative

JAN PERRY Councilmember, 9 th District Cities Representative, Los Angeles County, Western Region

MIGUEL PULIDO Mayor, City of Santa Ana Cities Representative, Orange County

TONIA REYES URANGA Councilmember, City of Long Beach Cities Representative, Los Angeles County, Eastern Region

Vacant Governor’s Appointee

DENNIS YATES Mayor, City of Chino Cities Representative, San Bernardino County

EXECUTIVE OFFICER:
BARRY R. WALLERSTEIN, D.Env.TABLE OF CONTENTS

EXECUTIVE SU MMARY -------------------------------------------------------------------------------- 1

CHAPTER 1 - BAC KGROUND ----------------------------------------------------------------------- 1-1

CHAPTER 2 – EMISSION INVENTORY ------------------------------------------------------------ 2-1

A. VOC Emissions from Components B. Emission Inventory for Atmospheri c Pressure Relief Devices (PRDs)

CHAPTER 3 - CONTROL TECHNOL OGY ASSESSMEN T ------------------------------------- 3-1

A. Electronic Valve Monitoring Devices for Atmospheric PRDs B. Implementing Leak Detection and Repair (LDAR) Program

CHAPTER 4– PROPOSED AMENDMENTS -------------------------------------------------------- 4-1

CHAPTER 5 - EMISSI ON IMPACTS ----------------------------------------------------------------- 5-1

A. LDAR Program for Lubrica ting Oil and Grease Re-Refiner B. Require Electronic Monitoring De vices for Atmospheric Process PRDs

CHAPTER 6 – COST AND COST EFFECTIVEN ESS --------------------------------------------- 6-1

A. LDAR Program B. Electronic Monitoring Devices for Atmospheric Process PRDs C Parameter Monitoring for all Atmospheric Process PRDs or Telltale Indicators if not Feasible

CHAPTER 7 – DRAF T FINDINGS -------------------------------------------------------------------- 7-1

CHAPTER 8 – CALIFORNIA ENVI RONMENTAL QUAL ITY ACT --------------------------- 8-1

CHAPTER 9 – SOCIO-ECON OMIC ANALYS IS --------------------------------------------------- 9-1

CHAPTER 10 – COMMENTS AND RESPONSES ------------------------------------------------ 10-1

APPENDIX A – COMPAR ATIVE ANALYS IS ----------------------------------------------------- A-1EXECUTIVE SUMMARY

Proposed Amended Rule 1173 ES-1 May 15, 2007 Rule 1173 reduces volatile organic compound (VOC ) leaks from the following for components in light liquid/gas/vapor and hea vy liquid service: valves, fitti ngs, pumps, compressors, pressure relief devices (PRDs), diaphragms, hatches, sight- glasses and meters. Faci lities subject to the rule are refineries, chemical plants, oil and ga s production fields, natura l gas processing plants, and pipeline transfer stations. This proposed am endment adds facilities en gaged in the blending, compounding and re-refining of lu bricating oils and greases and marine terminals to further reduce VOC leaks. In addition, Rule 1173 also requi res facilities subject to the rule to notify the AQMD of PRD releases and requires monitori ng of atmospheric PRDs installed on process equipment. The proposed amendment seeks to improve and strengthen monitoring requirements applicable to atmospheric PRDs.

After the December 2002 amendment, the AQMD established a PRD release notification program. As a result of several releases in the first year of th e notification program, staff has investigated the causes of the re leases to determine if rule amendments were appropriate for further control of PRD releases . For releases that were eac h in excess of five hundred pounds, the AQMD received notifications for eight in 200 3, three in 2004, none in 2005 and four in 2006. Although staff will continue to monitor the situ ation, amendments to further regulate VOC releases is not recommended at this time. Ho wever, during the investigation, staff discovered that technology has developed fo r more effective monitoring a nd recording the magnitude and duration of releases in a cost effective manner. Therefore, staff is proposing amendments to require improved monitoring of all atmospheric PR Ds. In addition, other parts of the rule are being clarified.

The following are highlights of the proposed amendments:

• Require marine terminals and facilities that re-refine l ubricating oils and greases and marine terminals to implement a leak detection and repair (LDAR) programs

.

• Require petroleum facilities refineries to install electronic m onitoring devices on their atmospheric process PRDs to improve monito ring and quantification of future potential releases.

• Require refineries, marine terminals and lubr icating oil and grease re-refiners to submit a new or revised compliance plan, identifying the atmospheric process PRD inventory and the monitoring method option selected.

• Require lubricating oil and grease re-refine rs to notify the AQMD of any atmospheric PRD releases exceeding the reportable quantity li mits as stipulated in 40 CFR, Part 117, Part 302 and Part 355 including any atmospheri c releases exceeding 100 pounds of VOC.

• Clarify that quarterly monitoring reports are required for all atmospheric process PRDs.

The emission reductions associated with the im plementation of heavy and light liquid LDAR program at lubricating oils and grease re-refiner s and marine terminals are estimated to be 0.4 tons per day VOC based on the 2003 AQMP inventory. The cost effectiveness of the proposed amendmen ts for heavy liquid and light liquid components LDAR was calculated at $919 per ton of VOC reduced.EXECUTIVE SUMMARY

Proposed Amended Rule 1173 ES-2 May 15, 2007 VOC emissions from PRD releases for 2003 thr ough 2006 have ranged from 89 to 0.04 tons per year. Although an emission reduction has not b een quantified for the improved monitoring, it is expected that the improved monitoring will ultim ately result in reduced VOC emissions from PRD leaks and fewer PRD releases . The cost for the proposed improved monitoring ranges from $3.3 million to $6.6 million based on the type of mon itoring device and installation and the cost of the data retrieval syst em selected by each refinery

.CHAPTER 1 - BACKGROUND

Proposed Amended Rule 1173 1-1 May 15, 2007 

### BACKGROUND

Rule 1173 was originally adopted on July 7, 1989 and subsequently amended on several occasions. The original intent of the rule was to control fugitive VOC leaks from light liquid/gas valves, fittings, pumps, compressors, PRDs, hatches, meters, diaphragms, and sight-glasses at refineries, chemical plants, o il and gas production sites, natu ral gas processing plants, and pipeline transfer stations. Subsequently, the rule was amended to control fugitive VOC emissions from components in heavy liquid service.

The most recent amendment on December 2, 2002, re quired monitoring and reporting of releases from atmospheric process PRDs, and control of PRDs that release significant amounts of VOCs or payment of a mitigation fee. The mitigation fees paid to the AQMD are to be used for air quality improvement projects in the area impacted by the release. This amendment also required facilities to control f ugitive VOC leaks from heavy liquid components.

The December 2002 rule required refineries to produce a PRD inventory and enhance monitoring by either equipping 20 percent of their atmos pheric PRDs with tamper-proof electronic monitoring devices by the next turnaround starting in 2004, or use electronic process control instrumentation by July 2004. One refinery chose to install electronic monito rs and all the others chose to monitor process parameters (temperature and/or pressure) or utilize telltale indicators where process monitoring was infeasible. The rule also requires that specific action be taken for releases in excess of specific amounts. For all releases greate r than 500 pounds of VOCs, the refinery has to perform a failure analysis within 30 days of each release. Also, in the event of a second release in excess of 500 pounds of VOCs from the same equipment w ithin any five year period or any one release that exceeds 2,000 pounds of VOC from a process unit requires that the company connect all PRDs from that unit to vapor recovery or control equi pment. The rule also has a provision which allows the refinery to elect to pay $350,000 for each release in lieu of connecting to vapor recovery or control, provided the refinery notifies the AQMD within 90 days of the date of the release.

The Resolution of the Governing Board adopting PAR 1173 (December 6, 2002) directed staff to provide periodic updates on PRD releases to appropriate Board Committees. On April 23, 2004, staff provided the Stationary Source Committee with a summary of the atmospheric PRD releases from process equipment to date and indicated that based on the reported releases in 2003 there were five releases which had exceeded 2,000 pounds. Two of these releases occurred at the BP West Coast Products refinery in Carson and another three occurred at the Equilon Enterprises (Shell Oil Company) refinery in Wilmington. Board members expressed concerns about the frequency and amount of emissions from PRDs (i.e. about 89 tons of VOCs in 2003). They indicated that staff should analyze the data gathered to decide whether or not further amendments to Rule 1173 should be recommended. One of the concerns expressed was that during the rule development and hearing in 2002, the refineries stated that large VOC releas es from atmospheric PRDs were extremely rare. However, if the releases in 2003 were an indication of normal activity, perhaps other options for controlling emissions from atmospheric PRDs should be considered.

Since the end of 2002, there have been nine atmospheric PRD releases that emitted between 500 and 2,000 pounds and eight releases greater than 2,000 pounds VOC, including one release that was categorized as exempt due to a Southern California Edison power outage. The total amount of VOCs released from atmospheric process PRDs have decreased from 2003 to 2005. ReleasesCHAPTER 1 - BACKGROUND

Proposed Amended Rule 1173 1-2 May 15, 2007 ranged from 89 tons in 2003, 4 tons in 2004 to less than 0.5 ton in 2005. However, these releases continued to be random with an increase in PRD releases reported in 2006. One refinery had four releases ranging from 713 pounds to over 11,000 pounds for a total of slightly more than 7.5 tons during 2006. It should be noted that in some cases refineries have taken actions to minimize potential PRD releases in the future by voluntarily connecting PRDs to vapor recovery systems, as well as implementing operational procedures.

Staff has evaluated the data from atmospheric PR D releases and emissions reported to the AQMD from 2003 through 2006 and concluded that amendments to require further control of atmospheric PRDs are not necessary at this time. However , staff has determined that PRD monitoring can be significantly enhanced by taking advantage of recent advancements in the wireless electronic monitoring technology and decided to proceed with a rulemaking process to amend Rule 1173 to require enhanced PRD monitoring on all atmospheric process PRDs. Staff will continue to monitor PRD release activity and recommend additional control if the situation changes.

Recent advances in wireless electronic monitoring are significant. Wireless monitors will enable real-time monitoring of atmospheric PRDs and can be used anywhere within a facility. Currently, there are facilities that have atmospheric PRDs which are equipped with telltale indicators consisting of “socks” and similar type devices. With wireless monitors in place, a facility operator will be able to continuously monitor PRDs, accurately measure pressure and the time span for releases and thereby allowing for effective quantification of releas es. In addition, this data can be incorporated into a facility’s existing data collection system without much added cost.

The costs associated with installing, mainta ining, troubleshooting and upgrading wiring have escalated while the costs of wireless technology have continued to drop, part icularly in areas of installation and maintenance. Installation cost s of wiring could range from $50 to $100 per foot, including labor. Also, as wires age, they can crack or fail. It should also be noted that inspecting, testing, troubleshooti ng, repairing and re placing wires require time, labor and materials. With wireless systems an operator will be able to eliminate the cost associated with the abovementioned activities in addition to costs associated with downtime and production stoppage. Based on information collected from manufac turers and distributors, the capital, operational and maintenance costs associated with wireless monitors are relatively low.

Wireless monitors have been proven to be intrinsically safe and they also allow facility operators greater flexibility in the pl acement of monitors. This advantage over wired systems is particularly significant due to the fact that mob ile equipment such as cranes are positioned at different locations of a facility during maintena nce, turnarounds and othe r downtime activities at a refinery.

While there may be great emphasis placed on the capital and maintenance costs associated with wireless systems, it should also be noted that with improved monitoring comes the benefit of being aware of when a release occurs. This a llows the operator to repair leaks in a timely manner and reduce lost product with which th ere is a cost-saving factor associated.

The facilities presently subject to this rule include refineries, chemical plants, oil and gas production sites, natural gas processing plants, and pipeline transfer stations. The proposed amendments will also require facilities engaged in blen ding, compounding and re-refiningCHAPTER 1 - BACKGROUND

Proposed Amended Rule 1173 1-3 May 15, 2007 lubricating oils and greases, as well as marine terminals that ha ndle organic liquids to implement a LDAR program and will require enhanced mon itoring of any atmospheric process PRDs that may be present. These facili ties are classified under Standa rd Industrial Code (SIC) 2992 – Lubricating Oils and Grease Re-Ref ining facility that operates dist illation equipment, heaters and storage tanks. Staff has determined that the operation of these equipment and the associated components, such as pumps, valves and connect ors has a potential for gaseous and liquid VOC leaks and potential emissions ar e no different than that of other petroleum operations and chemical plants regulated by Rule 1173. Staff’ s analysis identified one facility, Demenno Kerdoon, located in Compton, California, as a fac ility that should also be regulated under this proposed amendment to Rule 1173.

A total of twelve marine terminals that are operated by ten companies have been identified as well. These facilities are cla ssified under Standa rd Industrial Codes (SIC) 4226 and 5171 – A Facility, Equipment or Structure constructed to handle the loadi ng or unloading of organic liquid in or out of marine tank vessels. Staff has al so determined that the operations carried out at marine terminals and the associated components ha ve the potential to leak fugitive emissions as well.CHAPTER 2 – EMISSION INVENTORY

Proposed Amended Rule 1173 2-1 May 15, 2007 

### EMISSION INVENTORY

The emission inventory is comprised of fug itive VOC emissions from components and from process atmospheric PRD releases. The proposed amendments will require lubricating oil and grease re-refiners and marine terminals opera tions to implement the LDAR program as prescribed under Rule 1173. Although an estimat ed inventory can be developed for PRD releases, it is difficult to estimate an em ission reduction from an enhanced PRD monitoring program. Therefore, staff will only analyze the additional VOC emissions and emission reductions from the additional proposed source categories (re-refiners and marine terminals) to be regulated under Rule 1173 and those from PR D releases. There w ill be no emissions or inventory estimates associated with the enhan ced PRD monitoring provis ions of the proposal.

Table 2.1 New Sources added to Rule 1173

Oil and Gas Re-Refiner AQMD ID#

Demenno Kerdoon 800037

Marine Terminal AQMD ID#

BP West Coast Terminal 1 132137

BP West Coast Terminal 2 800052
Valero Refining (Ultramar) 800198
Equilon (Shell) LLC 117560
Equilon (Shell) Long Beach 117319

ExxonMobil 800092
ConocoPhillips 111642
Westway 110924

General Petroleum 108417
Vopak 800040
Amerigas 111896

Jankovich 1971

A. VOC Emissions from Components The emission inventory for fugitive VOC emissi ons from components was established based on reported emissions by the lubricating oil and grease re-refiner and marine terminals in the Rule 1173 universe for the fiscal year 2003-2004 and th e 2003 AQMP. Currently, as part of the AERCHAPTER 2 – EMISSION INVENTORY

Proposed Amended Rule 1173 2-2 May 15, 2007 program, facilities are required to report f ugitive VOC emissions for specific component categories such as components in light liquid/ga s/vapor (light liquid) service and fugitive VOC emissions from pumps and valves in heavy liqui d service. Fugitive VOC emissions from other components not explicitly listed in the AER su ch as connectors, hatc hes, sight glasses and meters) are to be reported under the “other” category.

Table 2.2 2003-04 Reported Emissions

Component Inventory 2003-2004 Emissions TPY
Heavy Liquid Valves 3,041 6.64
Heavy Liquid Pumps 120 24.16
Heavy Liquid Connectors 1,828 7.08

Other Components in Heavy Liquid 5,107 18.40

Light Liquid Valves 3,712 125.45
Light Liquid Pumps 98 25.04
Light Liquid Connectors 2,409 7.30
Other Components in Light Liquid Service 7,193 18.4

Total 23,508 232.47

After review of annual emissions reported by marine terminals, staff has determined that these emissions appear to be based on emission factors associated w ith a LDAR program as required by the current rule. While the use of lower emission factors may be appropriate for those facilities that are voluntarily implementing a LDAR program as specified in Rule 1173, even though they are not subject to this requirement, it is not appropriate for mo st other facilities that are not fully implementing the program. Ther efore, staff has elected to estimate annual emissions by using AQMD default factors until the re ported emission reducti ons can be verified.

B. Emission Inventory from Process Atmospheric PRDs

Releases from atmospheric PRDs occur randomly and therefore, an accurate inventory of emissions from this source category can only be approximated. Table 2.3 - Atmospheric PRD Inventory lists the number of atmospheric PRDs installed on process equipment at refineries.CHAPTER 2 – EMISSION INVENTORY

Proposed Amended Rule 1173 2-3 May 15, 2007 Table 2.3 Atmospheric PRD Inventory
Facility No. of Atmospheric Process PRDs (1)

In Gas/Vapor Service In Liquid Service

BP West Coast Products 387 205

Chevron 49 (2) 0

ConocoPhillips, Carson 15 0

ConocoPhillips, Wilmington 8 0

Edgington 14 0

ExxonMobil 35 0

Lundy Thagard 9 0

Equilon (Shell Oil) 40 0

Valero 8 0

TOTAL 565 205

( 1): Reported by refineries in 2005 (2): 9 of 49 PRDs have been equipped with electronic valv e monitoring devices; one more will be added at next turnaround

Since 2003, Rule 1173 requires refineries and chemical plants to report re leases from PRDs to the AQMD within 30 days of the event. Table 2.4 is a summary of atmospheric PRD releases from process equipment for the calendar years 2003 through 2006. The data is presented in a format to coincide with reporting and actio n requirements of the rule. Rule 1173 requires refineries with over 20,000 barrels per day crude o il throughput to connect all PRDs serving that equipment to a vapor recovery or control syst em following a second release from the same PRD within five years and exceedin g 500 pounds of VOC or after any release exceeding 2,000 pounds of VOC. In lieu of connecting the PRD to co ntrol, a refinery may pay a mitigation fee of $350,000. Table 2.4 also delineates PRD release data for major processing units, such as the crude distillation unit, coker unit and fluid catalytic cracking unit; staff believes these process units to have the greatest potential to experience atmospheric PRD releases.CHAPTER 2 – EMISSION INVENTORY

Proposed Amended Rule 1173 2-4 May 15, 2007 Table 2.4 Summary of Process Atmospheric PRD Releases from 2003 - 2006

PRD Release

Year Process Unit No. of Releases <500 lbs VOC Emissions (lbs) No. of Releases

500 - 2,000 lbs VOC Emissions (lbs) No. of Releases

>2,000

lbs VOC Emissions (lbs) Total VOC Emissions (lbs)

2003 FCCU 0 0 2 3,096 4 158,834

Crude Distillation 0 0 1 1,475 2 14,612

Other 3 415 0 0 0 0

Total 3 415 3 4,571 6 173,446 178,432

2004 FCCU 1 4 0 0 0 0

Coker 1 65 1 553 1 6,004
Super Fractionator 1 306 1 923 0 0

Other 4 399 0 0 0 0

Total 7 774 2 1,476 1 6,004 8,254

2005 FCCU 1 30 0 0 0 0

Other 13 768 0 0 0 0

Total 14 798 0 0 0 0 798

2006 Debutanizer 0 0 1 1,668 0 0

Reformer Depropanizer 0 0 0 0 1 11,564

Reformer

Suction Drum 0 0 1 713 0 0

Reformer Flash Drum 0 0 1 1,051 0 0

Other 2 338 0 0 0 0

Total 2 338 3 3,432 1 11,564 15,334

The data in Table 2.4 shows PRD releases in 2003 of more than 89 t ons of VOC; reducing significantly to approximately 4 tons and 0.4 tons for years 2004 and 2005, respectively; 2006 saw an increase in PRD releases to a total of slightly more than 7.5 tons of VOC. Table 2.5 lists the significant PRD releases si nce the beginning of 2003 and th e compliance options taken by the refineries. There were no report ed significant PRD releases in 2005.CHAPTER 2 – EMISSION INVENTORY

Proposed Amended Rule 1173 2-5 May 15, 2007 Table 2.5 Summary of Process Atmospheric PRD Releases Greater Than 500 Pounds VOC Year 2003 - 2006

PRD Release

Date Refinery Process Unit VOC Emissions >500 – 2,000 lbs VOC Emissions >2,000 lbs Comments

1/12/03 ExxonMobil Crude Tower 9,965 Exempt – SCE Power Outage

2/18/03 Equilon FCCU Fractionator 1,697 1 st Release > 500 lbs

3/19/03 BP FCCU Dehexanizer 1,399 1 st Release > 500 lbs

3/21/03 BP FCCU Debutanizer 122,293 Mitigation Fee - $350,000

5/3/03 Equilon FCCU Fractionator 11,854 Mitigation Fee - $350,000 (2 nd release from same unit)

7/23/03 Conoco Phillips Secondary Crude Column 1,475 1 st Release > 500 lbs

10/18/03 Equilon FCCU Fractionator 21,591 Mitigation Fee - $350,000 (3rd release from same unit)

11/2/03 BP Crude Tower 4,647 Connect to Control

12/15/03 Equilon FCCU Fractionator 3,096 Mitigation Fee - $350,000 (4th release same unit)

1/18/04 BP Coker Area DEA 553 1 st Release > 500 lbs

9/28/04 BP Super Fractionator 923 1 st Release > 500 lbs

11/23/04 BP Coker Debutanizer 6,004 Connect to Vapor Recover System

2/19/06 BP #3 Debutanizer 1,668 1 st Release > 500 lbs

3/6/06 BP #2 Reformer LPG Compressor

Suction Drum 713 1 st Release > 500 lbs

7/21/06 BP #3 Reformer Flash Drum 1,051 1 st Release > 500 lbs

12/5/06 BP #2 Reformer Straight Run Depropanizer 11,564 Mitigation Fee - $350,000CHAPTER 3 – CONTROL TECHNOLOGY ASSESSMENT

Proposed Amended Rule 1173 3-1 May 15, 2007 

### CONTROL TECHNOLOGY ASSESSMENT

In this chapter, control techniques for reduci ng fugitive emissions from atmospheric PRDs and components are described. A relatively new wire less technology that is used specifically to continuously monitor atmospheric PRDs will be discussed at length. In addition, the implementation of the LDAR program and modifi cation and replacement of existing components will also be discussed.

A. ELECTRONIC VALVE MONITORING DEVICES FOR ATMOSPHERIC PRDs

PRDs are designed to relieve pressure and provi de safe operations. They typically function by opening at a given set pressure, ve nting and then resealing when a safe pressure has been reestablished. In addition to the environmental concern resulting from emissions releases, any consistent leak through a PRD represen ts a loss of valuable process gas.

Without continuous monitoring and diagnostic in strumentation, PRDs are normally placed on a preventative maintenance schedule with inspections being done on scheduled intervals based on operating history. This practice re sults in repair of valves that may not be broken and a cost associated with such maintenance.

Wireless Instrument technology was chosen by one re finery based on the fact that operators were given the option in the 2002 amendment of the ru le to install tamper-p roof electronic valve monitoring devices on 20 percent of their atmo spheric PRDs. The 20 percent strategy was chosen to allow the technology to be tested and further developed over a period of time for this particular industrial application.

Wireless Instrument Network Integr ation to Existing Plant Systems

First Generation :
The initial form of wireless systems for industry has mostly used cellular phone style radio links, using point-to-point or point-to -multipoint transmission. The Wi reless Instrumentation products contain a radio transmission link that connects the wireless inst rument field unit (acoustic or pressure) to a base radio. This link is designed to serve in industrial applications for reliable transmission and receipt of sensor data.

The wireless field monitoring unit relays the status of valves b ack to a central base-radio where the emergency station location is tagged and iden tified. The base ra dios are designed to accommodate a networked installation, with each ba se radio defining a wireless cell and each wireless instrument field unit becoming a node in that cell. The size of each cell is determined by the effective transmission dist ance of the radio link between the base-radio and the various wireless instruments.

Depending on the brand of monitoring equipment each base radio may monitor up to 50 or more valves. The network can be expa nded to a total of as many as 16 base radios covering various operating units and providing the capability to continuously monitor up to 800 points.CHAPTER 3 – CONTROL TECHNOLOGY ASSESSMENT

Proposed Amended Rule 1173 3-2 May 15, 2007 Second Generation (Mesh Network System) :
Mesh Network is a new technology in which de vices assist each other in transmitting packets through the network, especially in adverse conditions and where there are obstructions. The mesh network system is a point-to-point-to- point system. A node can send and receive messages, as well as function as a router capable of relaying messages for its neighbors. A mesh network offers multiple redundant communicati on paths throughout the network. If one link fails for any reason, the network automatically routes messages through alternate paths and hence eliminates possible line of sight obstacles.

A wireless mesh network system may require an exte nsive survey of the facility site in order to determine the proper positioning of the sensor units. One mesh technology wireless manufacturer has set July 1, 2007 for its first production shipment, while another has installed more than 20 units at a local refinery (atmospheri c PRDs) and is in the pr ocess of testing them. It should also be noted that first generation wi reless systems can be integrated into second generation wireless systems and there should be no significant added cost s in incorporating a point-to-point system into a mesh network system.

Components of Wireless Pressure Relie f Device Monitoring System Technology

New (wireless) technology allows continuous m onitoring of PRDs wit hout significant capital expense and makes it easy for operators to identify valve leaks, even if they discharge into a common exhaust or flare header. VOCs that are emitted from PRDs may be accurately identified, estimated, remedied and reported immediately, thereby removing the need for unnecessary preventative maintenance procedures and emission releases.

Acoustic (Sensor) Field Unit

Recently, technology has been introduced that enables continuous monitoring of PRDs using sensors that can communicate through a wireless radi o link to a central data collection point. The new self-contained Monitoring Field Unit includes an acoustic sensor element and a transceiver providing two-way co mmunications and opera ting in the 900 MHz band with battery life that could be as long as five years depe nding on the manufacturer. During normal operations, a PRD remains closed until a specified amount of pressure builds up within the system. Once the pressure exceeds a certain safety limit, the PR D opens until pressure drops below the safety limit. During the time that the valve is open ultrasound is generated. The Acoustic Field Unit can effectively measure the duration of the overpressure event. If a PRD is leaking ultrasound will be generated and rise in proporti on to the flow rate and pressure

The non-invasive installation of an acoustic sensor coupled with wireless transmission of data on the PRD operation provides an easy and inexpe nsive monitoring solution when compared to hard-wired systems. Also, built into the system is a Frequency-Hopping Spread System (FHSS) which is a frequency modulation process that eliminates unauthorized interception.

Typically, an industrial environment is noisy by nature and noise activity can be continuous or intermittent. However, noise activity that is cr eated by valve leakage can be distinguished by employing filters of ultrasoni c magnitude and duration.CHAPTER 3 – CONTROL TECHNOLOGY ASSESSMENT

Proposed Amended Rule 1173 3-3 May 15, 2007 The acoustic unit is fairly maintenance free and is operated on a “C” size lithium battery that has a life of up to five years and remaining battery li fe may be one of the outputs from this unit for some manufacturers. The unit contains extens ive self-checking software and hardware that continuously monitors the operation. Any sensor or device parameter that is out of specification is identified and reported.

Pressure (Sensor) Field Unit

Wireless pressure sensors can be applied either on the inlet (upstream) or outlet (downstream) of a PRD. The pressure field unit is available in gauge pressure or absolute pressure versions. Each is self-powered and contains a pressure sensor, signal conditioning circuitry and an RF (radio frequency) transceiver that operates in a certain waveband that is normally license-free. Data from the sensor is transmitted to the Base Radio for centralized monitoring and data acquisition. Most manufacturers have distinct models that are desi gned to operate within certain ranges of pressure. The field un its can be used for conditions as low as 30 psig to 5,000 psig based on manufacturer’s information provided.

The advantages of using pressure sensors over acoustic sensors include the positive verification of actual system pressure and the elimination of the need to filter background noise from the monitoring data. Wireless pressure sensing also provides positive indication of release events as well as time stamps and duration. However, the downside of pressure sensing is its inability to detect leakage effectively. This problem is most li kely to exist in situations where flow rates are very high and turbulence occurs and it is common to have high ambient levels of ultrasound.

Differential Pressure (Sensor) Field Unit

This unit is equipped with an integrated different ial pressure sensor, sign al conditioning circuitry and an RF (radio frequency) transceiver. Data from the sensor is transmitted to the base radio for centralized monitoring a nd data acquisition.

Base Radio

The Base Radio is at the heart of the wireless technol ogy solution. It communi cates with all of the deployed Field Units and interfaces with the existing control system. One base radio can communicate with as many as 50 field units. Multip le based radios can be used to accommodate larger installations. The base radio comes in an explosion-proof and weatherproof housing. Depending on the layout of a facility which will de termine whether there is clear line of sight or not, the range of field units may be between 500 feet and 3,000 feet.

Electronic valve monitoring devices are designed for pressure relief valve monitoring. The devices provide information about overpressur e events and detect potentially unsafe or undesirable pressure relief valve conditions. The device calculates flow through the valve and records the date, time and event duration. The data can be retrieved from the device, at any time, with PC software.CHAPTER 3 – CONTROL TECHNOLOGY ASSESSMENT

Proposed Amended Rule 1173 3-4 May 15, 2007 B. IMPLEMENTING A LEAK DETECTI ON AND REPAIR (LDAR) PROGRAM

Rule 1173 requires petroleum related facilities and chemical plants to implement a LDAR program to reduce fugitive VOC releases. The L DAR program is best suited to pumps, valves and connectors where repairs of these componen ts could result in potentially significant VOC emission reductions. Facilities that are included in this amendm ent of Rule 1173 will be subject to an LDAR program which is outlined in th e rule and is defined by the following: (1) component identification; (2) leak thresholds ; (3) inspection freque ncies and (4) repair frequencies.

The facility operator is required to visibly and clearly identify all major components for the purpose of recording repairs, repl acements and re-inspections. In the event that there are changes in major component iden tification the operator must seek the approval of the Executive Officer.

The rule amendment defines leak limits based on either an instanta neous standard or a continuous 24-hour standard.

Inspections are a critical compone nt of the LDAR program and consist of two types. Audiovisual inspections involve direct physical observation to gather qualitative information, while quantitative inspections involve a direct measurement of components by use of an analyzer using EPA Method 21.

All accessible pumps, compressors and atmospheri c PRDs are required to be audio-visually inspected once during every 8-hour operating pe riod. The operator mu st also conduct EPA Method 21 quarterly inspections of all accessible components in light liquid/gas/vapor service and pumps in heavy liquid service, while all inaccessible components in light liquid/gas/vapor service require EPA Method 21 inspections a nnually. Provided an operator successfully operates and maintains all accessible components at a facility for five consecutive quarters based on a schedule that is outlined in the rule language, he/she may request for a change in inspection frequency from quarterly to annual. If a f acility has more than 25,000 components the operator is required to simultaneously record all component inspections in an electronic format.

Time periods for component repairs depend on the type of leak and may vary from one day to seven days from the time a leak is detected ac cording to a repair schedule outlined in the rule language. After a component has been repaired, the operator must conduct an inspection within one to 30 calendar days depending on the compone nt and service type. In the case of an atmospheric PRD release an inspection must be done within one calendar day of repair and a reinspection within 14 calendar days. Components f ound to be subjected to five or more repairs within a 12-month period must be replaced or vented to an air pollu tion control device upon approval by the Executive Officer.CHAPTER 4 – RULE PROPOSAL

Proposed Amended Rule 1173 4-1 May 15, 2007 

### RULE PROPOSAL

Proposed Amended Rule (PAR) 1173 will add two ne w facility groups that were not included in the rule when it was last amended in Decem ber 2002. The current version of Rule 1173 addresses control of VOC leaks and releases from components at petroleum f acilities and chemical plants. PAR 1173 will require a LDAR program to re duce leaks and releases from components at lubricating oil and grease re -refineries which are engaged in blending, compounding and re-refining lubricating oils and greases from purchased mineral, animal and vegetable materials, as defined in Standard I ndustrial Classification C ode (SIC) 2992; petroleum refineries engaged in the producti on of lubricating oils and grease s are classified in Standard Industrial Classification Code 2911, and theref ore are not included in this definition. PAR 1173 will also require a LDAR program to reduce f ugitive releases from components at marine terminals that handle organic liquids. Both lubr icating oil and grease re-refineries and marine terminals must be in compliance with Rule 1173 identification requirements by September 30, 2007, and in compliance with all other requirements starting January 1, 2008.

Definitions of Lubricating Oil a nd Grease Re-Refiner, Marine Term inal have been added and the definition of Facility has been amended to includ e these two new source categories. While SIC code 5171 specifically addresses dist ribution activities at petroleu m bulk stations and terminals, SIC code 4226 represents a number of different types of storage activities. Among these activities represented under SIC 4226 is storage that is limited to strictly petroleum bulk stations and terminals.

Among the issues addressed in the previous amendment of Rule 1173 was the monitoring of VOC releases from atmospheric process PRDs at petroleum refineries. The operator was provided with three options that would allow th e operator to monitor the PRD and estimate the duration of any releases. One op tion required PRDs to be monito red by use of electronic process control instrumentation to monito r certain process parameters such as temperature and pressure. In cases where operators did not have the capabil ity of electronic proce ss control, they were allowed to use telltale indicators to detect wh en a release occurred alt hough this option does not allow for very accurate quantific ation of VOC releases. The third option required that twenty percent of the atmospheric process PRDs be e quipped with tamper-proof electronic monitoring devices.

Since the last rule amendment, electronic valv e monitoring technology has improved and a larger number of companies have become involved in the manufacturing and distribution of wireless equipment that can be used for atmospheric PR D monitoring. With that development and the low cost and ease of installation staff has dete rmined that all atmospheric PRDs should be equipped with electronic monitoring devices unless it can be demons trated to the satisfaction of the Executive Officer that installation of this type of monitor is not feasible for a specific PRD. In that case, process monitoring or telltale indi cators would be required. However, situations where tamper-proof electronic monitoring device cannot be used are few, if any.

For a refinery with less than 50 atmospheric process PRDs, an operato r will be required to install tamper-proof electronic monitoring devices on a minimum of 50 percent of all atmospheric process PRDs by January 1, 2009. By July 1, 2009, the remaining atmospheric PRDs serving process equipment will have to be equipped with tamper-proof electronic monitoring devices.CHAPTER 4 – RULE PROPOSAL

Proposed Amended Rule 1173 4-2 May 15, 2007 Refineries that have more than 50 atmosphe ric PRDs must install tamper-proof electronic monitoring devices on a minimum of 20 percent of all atmospheric PRDs serving process equipment by January 1, 2009. By July 1, 2009 a minimum of 40 percent of all atmospheric PRDs must be equipped with tamper-proof electronic mon itoring devices. All remaining atmospheric PRDs serving process equipment must have electronic monitoring devices installed by July 1, 2010.

The number of atmospheric PRDs that an operator will be required to install with tamper-proof electronic monitoring devices by each deadline date outlined in PAR 1173 will be based on a baseline PRD inventory that is es tablished in the plan that is required to be submitted to the AQMD by December 31, 2007. Staff recognizes that so me facilities have significantly more atmospheric process PRDs than other refineries and has taken this factor into consideration by creating a schedule that allows these refineries more time than refineries with a smaller number of atmospheric process PRDs. In addition, due to the relatively ine xpensive price of this monitoring technology and the fact that it has been proven to be successful for this application, the time allowed to meet the PRD deadlines are r easonable and the overall cost is not expected to be prohibitive.

During the period of time prior to refineries in stalling tamper-proof el ectronic monitoring on all atmospheric process PRDs, operators will be requi red to continue monitoring these PRDs with the existing electronic process co ntrol instrumentation that allo ws for real time continuous parameter monitoring or telltale indicators.

Petroleum facilities that can demonstrate to the satisfaction of the Executive Officer that installation of tamper-proof electronic valve monitoring devices on pr ocess unit PRD(s) by the specified dates would be infeasible or consti tute a safety hazard may be allowed to delay installation of these devices on the PRD(s) until no later than the next scheduled turnaround of that process unit after the adoption of this rule amendment.

PAR 1173 requires that all petr oleum facilities install and opera te tamper-proof electronic monitoring devices that are ca pable of measuring the duration of each PRD release and quantifying the amount of VOC released from each atmospheric process PRD. However, if a refinery chooses to adopt an alternative approach that includes the use of process parameter monitoring or telltale indicator, the operator will be required to install a tamper-proof electronic monitoring device at the PRD releas e point (on the process unit) th at is capable of accurately measuring the release duration and use continuous process parameter monitoring to quantify the VOC release. In cases where an operator does not have a process parameter in place, there must be a telltale indicator. Under these situations the quantification of the release will be dependent on data provided by the electronic monitor. Th e use of any such alternative approach will require that the operator demonstrate on or be fore the compliance dates in subparagraphs (h)(1)(A) and (h)(1)(B) , to the satisfaction of the Executive Officer, that continuous parameter monitoring of the process unit accurately represents the actual process conditions at the location of the PRD release to the atmosphere.

In the future, if a refinery decides to direct all the gases and vapors released from atmospheric PRD(s) to VOC vapor recovery or control system , the operator will not be required to install and operate electronic PRD monitors for those PR D(s), provided the operator submits a revised compliance plan no later than December 31, 2008. The compliance plan must clearly identifyCHAPTER 4 – RULE PROPOSAL

Proposed Amended Rule 1173 4-3 May 15, 2007 the PRDs to be connected and also include a schedule for connection. Staff has determined that this is sufficient time to complete plans and ma ke decisions associated with these projects. Refineries will be required to complete projects related to directing these PRDs to VOC vapor recovery or control systems by no later the next turnaround after December 31, 2008. However, prior to the completion of the connection to va por recovery or flare, operators will still be required to monitor thes e atmospheric PRDs by using electroni c process control instrumentation that allows for real time continuous parameter mon itoring or telltale indicators as required by the rule.

A refinery will not be required to install tampe r-proof electronic valve monitoring devices on atmospheric PRDs that release to drains and are subject to the requiremen ts of Rule 1176, if the operator can demonstrate to the sa tisfaction of the Executive Officer that all released material meets the definition of heavy liquid. By defi nition, heavy liquids cont ain less than 10 percent VOC by volume at 150 degrees C (by test me thods outlined in PAR 1173). VOC emissions associated with these releases are not expected to be significant. However, atmospheric PRDs in liquid service that release to grade have th e potential to release greater amounts of VOC emissions compared to PRD releases that are confined to drains due to the fact that upon release these liquids spread, thereby creating a larger surf ace area for evaporation. Therefore, a refinery will be required to install tamper-proof electro nic valve monitoring on all atmospheric PRDs that release to grade.

In order to provide the AQMD with a comprehe nsive status update on its atmospheric PRDs, operators at all facili ties subject to Rule 1173 must subm it a revised compliance plan by December 31, 2007. This update must include a process atmospheric PRD inventory, pressure set point, size, location and the opt ion selected for PRD monitoring.

Lubricating oil and grease re-ref iner and marine terminal operat ions are considerably different from the types of processes conducted at refine ries. In general, the liquids processed by lubricating oil and grease re-refiners tend to be heavier and less volatile, while marine terminals are predominantly involved in tran sporting of fluids via pipeline sy stems. Although some fluids at marine terminals are heated to assist in moving them, the fluid temperatures at marine terminals are significantly less than those at refine ries. Therefore, lubri cating oil and grease rerefiners and marine terminals will be required to monitor all process atmospheric PRDs using electronic process control instrume ntation that allows for real tim e process parameter monitoring starting January 1, 2009. Where process parameter m onitoring is not feasible , telltale indicators may be used instead. However, the deadline fo r installing telltale indicators is December 31, 2007.

Lubricating oil and grease re-refiners and mari ne terminals will be required to notify the Executive Officer within one hour of release follow ed by a written report within 30 days for all process atmospheric PRD releases in excess of 100 pounds of VOC or in excess of reportable quantity limits as stipulated in 40 CFR, Part 117 (Determination of Reportable Quantities for Hazardous Substances) Subchapter D – Water Program, Part 302 (Designation, Reportable Quantities and Notification) and Part 355 (Emergen cy Planning and Notification) Subchapter J – Superfund, Emergency Planning and Community Right to Know. The written report following the release must include information such PRD t ype, size and location; the cause, date, time and duration of each release, in additi on to corrective actions taken to pr event a subsequent release.CHAPTER 4 – RULE PROPOSAL

Proposed Amended Rule 1173 4-4 May 15, 2007 By December 31, 2007, an operator will be required to submit a compliance plan that contains the process atmospheric PRD invent ory, pressure set point, size, lo cation and the option selected for monitoring. Monitoring of process atmospheri c PRDs is to commence no later than January 1, 2009.

It should also be noted that the process PRD requirements of the rule were not intended to regulate VOC releases from PRDs that are loca ted on cooling water systems. Although industry argues that VOC leaks from these sources are sma ll, staff intends to m onitor and make future observations to determine if PRD VOC releases from the process side of the exchangers are significant enough to be addr essed in a future cooli ng water rule if needed.

All operators of facilities included in this rule amendment are required to submit quarterly electronic reports for all process atmospheri c PRDs indicating the process parameter(s) monitored as a function of time. These reports ar e required to be submitted no later than 30 days after the end of each calendar quarter.CHAPTER 5 – EMISSION IMPACTS

Proposed Amended Rule 1173 5-1 May 15, 2007 

### EMISSION IMPACTS

A. LDAR PROGRAM FOR LUBRICATING OIL AND GREASE RE-REFINERS

Currently, there is no rule requirement in place for an inspection and maintenance program for components in heavy and light liqui d service at lubricating oil and grease re-refiners and marine terminals. Including these components in a LDAR program can reduce these VOC emissions at this source category. As of January 1, 2007, one lubricating oil and grea se re-refiner, Demenno Kerdoon, has initiated implementa tion of a LDAR program as re quired under Rule 1173 as part of a settlement agreement in June 2006 with the AQMD.

In order to establish the emission impacts of the ru le, it is necessary to calculate the emission reductions associated with a LDAR program. Per AQMD Rule 301, affected facilities are required to report all fugitive emissions in the Annual Emission Report on forms R3, T1 or P1. To report emissions from all components not s ubject to a LDAR progr am, default emission factors are used.

Three marine terminals have already implemen ted a LDAR program at their facilities; the proposed amendments will not result in any additional VOC emission reductions or implementation costs for these marine terminals. The other nine marine terminals, based on the 2003-2004 AER reports they have submitted to the AQMD, indicated they have implemented a limited or screening-type LDAR program. For these nine facilities, staff will use the VOC emissions reported to the AQMD as the baseline emissions to determine additional VOC emission reductions that will be a result of the required LDAR program under the proposed amendments to Rule 1173.

Where an LDAR program is in place and mon itoring of components takes place, the following methods may be used to calculate emissions:

• The Correlation Equation and Factor Method, or

• The Screening Value Range Method.

These methods were developed based on data in the 1995 EPA Protoc ol and 1997 CAPCOA Review, and apply to components that are subject to the inspection and maintenance program of Rule 1173. (Guidelines for Fugitive Emissions Calculations – Petrol eum Industry, SCAQMD, June 1999).

During an inspection required by current Rule 1173, the leak rate from a component would be measured and recorded using a calibrated organi c vapor analyzer, according to EPA Reference Method 21. This measured value is called a screen ing value, and will be used in the following equations based on the Correlation Equation and F actor Method to determine fugitive emission inventories for the types of components listed below.

The current rule requires a LDAR program for pumps in heavy liquid service and a leak threshold of 100 ppm for all components in h eavy liquid service, including valves and connectors. Based on data from refineries im plementing an LDAR program for heavy and lightCHAPTER 5 – EMISSION IMPACTS

Proposed Amended Rule 1173 5-2 May 15, 2007 liquid components, it is assumed that pumps in heavy liquid service will average 25 ppm after the LDAR program and that valves and connect ors will average 50 ppm, or half the leak threshold; light liquid and gas/ vapor phase components will aver age 5,000 ppm, or half the leak threshold.

LDAR Emission Calculations for Componen ts in Heavy and Light Liquid Service for Refineries and Marine Terminals (per Ta ble IV-3a; CAPCOA-Revised 1995 Correlation Equations and Factors)

Valves:

Fugitive emissions (TPY) = 5 x 10 (-6) x 24 x 365 x (Screening Value) 0.747

Pumps:

Fugitive emissions (TPY) = 1.12 x 10 (-4) x 24 x 365 x (Screening Value) 0.622

Connectors:

Fugitive emissions (TPY) = 3.37 x 10 (-6) x 24 x 365 x (Screening Value) 0.736

Other Components:

Fugitive emissions (TPY) =1.92 x 10 (-5) x 24 x 365 x (Screening Value) 0.642

SAMPLE CALCULATIONS

Projected emissions from valves in heavy liquid service at 50 pp m average, calculated with the valve correlation equation, are:

Emissions valves = 3,041 x [5 x 10 -6 x (50) 0.747 ] lb/hr x 24 hrs/day x 365 days/yr /2000 lb/ton

= 1.24 TPY (See Column 3 of Table 5.1)

Projected emissions from pumps in heavy liquid se rvice at 25 ppm average, calculated with the pump correlation equation, are:

Emissions pumps = 120 x [1.12 x 10 -4 x (25) 0.622 ] lb/hr x 24 hr/day x 365 days/yr / 2000 lb/ton

= 0.44 TPY

Projected emissions from connectors in heavy liqui d service at 50 ppm average, calculated with the connector correlation equation, are:

Emissions conn. = 1,828 x [3.37 x 10 -6 x (50) 0.736 ] lb/hr x 24 hrs/day x 365 days/yr / 2000 lb/ton

= 0.48 TPYCHAPTER 5 – EMISSION IMPACTS

Proposed Amended Rule 1173 5-3 May 15, 2007 Projected emissions from other components in heavy liquid service at 50 ppm average, calculated with the correlation equa tion used for other components are:

Emissions other = 5,107 x [1.92 x 10 -5 x (50) 0.642 ] lb/hr x 24 hrs/day x 365 days/yr/ 2000 lb/ton

= 5.29 TPY

Table 5.1 Estimated Emission Reductions

Component Inventory 2003-2004 Emissions TPY Emissions after LDAR TPY Emissions Reduction TPY Heavy Liquid Valves 3041 6.64 1.24 5.40

Heavy Liquid Pumps 120 24.16 0.44 23.72

Heavy Liquid Connectors 1,2 1,828 7.08 0.48 6.60

Heavy Liquid (Others) 5,107 18.40 5.29 13.11

Light Liquid Valves 3,712 125.45 47.12 78.33

Light Liquid Pumps 98 25.04 9.61 15.43

Light Liquid Connectors 1,2 2,409 7.3 18.76 (0) 3

Light Liquid (Others) 7,193 18.4 143.36 (0) 3

Total 23,508 232.47 226.30 142.59

1. The number of connectors is assumed to be 25 % of components (connectors, sight-gla sses, meters and hatc hes) reported in the

other category of AQMD AER form R3. The remaining components were placed in to the “Others” category 2. When not reported, the ratio of connectors in heavy liquid to light liquid service was estimat ed based on the ratio of valve s in

heavy liquid to light liquid service. In cases where enough in formation was not provided, com ponents in heavy liquid and light liquid were divided evenly 3. Emissions reported were found to be less than the comput ed LDAR emissions and zero default will be used until the calculation methods used by the marine terminals are verified Staff is aware that a few impact ed facilities are voluntarily implementing a LDAR program and, therefore, a portion of the estimated emission reductions may have already been realized. Although PAR 1173 would make these reductions enforceable, staff intends to work with impacted facilities to verify the scope of th e LDAR program being implemented voluntarily, and to the extent warranted, adjust the emission reduction estimated a nd cost analysis accordingly.CHAPTER 5 – EMISSION IMPACTS

Proposed Amended Rule 1173 5-4 May 15, 2007 B. REQUIRE ELECTRONIC MONITORI NG DEVICES FOR ATMOSPHERIC PROCESS PRDs Electronic monitoring devices wi ll greatly improve the iden tification and quantification of releases from atmospheric process PRDs; these devices do not directly reduce PRD releases or emissions. However, staff believes that improved monitoring will ultimately result in reduced PRD leaks and fewer PRD releases. No direct emission reduction is claimed for this requirement.CHAPTER 6 – COST AND COST EFFECTIVENESS

Proposed Amended Rule 1173 6-1 May 15, 2007 

### COST AND COST EFFECTIVENESS

This chapter will present the cost calculations related to PAR 1173. In the case of the LDAR program for lubricating oil and grea se re-refiners and marine termin als, there are associated cost effectiveness calculations. However, in the ca se of atmospheric proc ess PRDs, releases are episodic and random in nature, but are quantifia ble. Potential VOC emission releases from PRDs will be subject to improved continuous m onitoring, but these emission releases are not reduced by specific control equipment. Therefor e, cost effectiveness calculations will not be applied to electronic monitoring.

The cost effectiveness of the pr oposed changes and associated cal culations and assumptions used to derive it are shown in the following sections. Cost effectiveness is expressed as the ratio between the present value of the total cost of implementing a proposed control measure and the benefit of installing th at control measure, which in th is case is the emission reduction.

A. LDAR PROGRAM

The rule amendment will add one lubricating oil and grease re-refining facility (Demenno Kerdoon) and twelve marine termin als to the list of facilities whose operations and equipment category qualify them to be subject to the requirements of this rule. The component inventory for these facilities is shown in Table 6.1 - Cost Effectiveness for a LDAR Program.

On January 1, 2007, Demenno Kerdoon initiated th e implementation of a LDAR program as required under Rule 1173 as part of a settlement agreement met in June 2006 with the AQMD.

The following analysis demonstrates the cost e ffectiveness to implement an LDAR program. Three of the twelve marine terminals that are included in the Rule 1173 program are already in compliance with the requirements of the rule and therefore staff has been determined that there will be no additional cost associated with these facilities.

In order to calculate the cost effectiveness of the LDAR program, the present value of the capital cost and operating cost during the useful life of the progra m must be calculated using the following formula:

PV = C + A x PVF, where:

PV = Present Value of the control equipment

C = Capital costs associated with implementing the LDAR program

A = Annual costs incurred to administ er the LDAR program, such as inspection and component repair

PVF = Present Value Factor, which is 8.11 for an assumed 10 years equipment life and 4% rate of inflation.CHAPTER 6 – COST AND COST EFFECTIVENESS

Proposed Amended Rule 1173 6-2 May 15, 2007 The following assumptions are made in order to calculate the present value for the LDAR program of components in hea vy and light liquid service:

- Quarterly inspection frequency for components

- Emission reductions for pumps are based on an average emission of 25 ppm based on data from a refinery that has a LDAR program.

- Emission reductions for valves and connector s are based on an average emission of 50 ppm base on AQMD staff field survey.

- All cost information from AQMD Rule 1173 Staff Report (December 2002) was indexed upward to 2006 cost by applying a factor of 18 percent to account for inflation (Marshall Swift Equipment Cost Index – Y ear 2002 = 1,104.2 and Year 2006 = 1,302.3)

- Inspection cost per component is $2.36

- Average repair time is 4 hours per pump

- Average repair time for valves = 10 minutes

- Average repair time for connectors = 20 minutes

- Average repair time for other components = 1 hr

- All components need tags

- Tagging a component takes 5 minutes and the cost of a tag is $2.36

- Components inventory is ente red in the database at 0.25 minutes per component and labor cost for data entry is $23.60/hr

- Repair labor costs are $35.40 per hour

- Equipment useful life is 10 years.

The cost effectiveness of the LDAR program w ill be calculated usi ng the emission reductions calculated in Chapter V and under the assumptions mentioned above. Table 6.1 - Cost Effectiveness for LDAR Program shows the cost effectiveness for the proposed LDAR program.CHAPTER 6 – COST AND COST EFFECTIVENESS

Proposed Amended Rule 1173 6-3 May 15, 2007 Table 6.1 Cost Effectiveness for LDAR Program
Number of Components

Heavy Liquid Service Light Liquid Service Valves Pumps Connectors 1 Others Total

3,041 3,712 120
98 1,828 2,409 5,107 7,193 23,508

Capital costs ($) (Tags, tagging, data entry) 36,522 1,179 22,915 66,522 127,138

Annual Costs ($) (Monitoring and repair) 2 35,838 9,775 23,741 76,610 145,964

Emission Reduction (TPY) 142.59

Cost-Effectiveness ($/ton) 919

1: The number of connectors is assumed to be 25% of components (connectors, sight-glasses, meters, etc.) reported in the other category of AQMD AER form R3 2. Monitoring of all light liquid and gas/vapor valves and components and heavy liquid pumps quarterly 3. Emission reductions for valves, pumps and connectors are calculated based on reported AER values 4. BP Terminals 1 and 2 and Valero are already meeting the requirements of Proposed Amended Rule 1173 and would not incur any additional costs. In addition, no emission reductions from thes e facilities were included in the Cost-Effectiveness Calculations

.

Cost effectiveness = Present Value Emission Reduction x Equipment Life

= 127,138 + ( 145,964 x 8.11) 142.59 x 10

= $919 per ton of VOC emissionsCHAPTER 6 – COST AND COST EFFECTIVENESS

Proposed Amended Rule 1173 6-4 May 15, 2007 B. ELECTRONIC MONITORING DEVI CES FOR ATMOSPHERIC PROCESS PRDs

There is no emission reduction associated with this requirement of the rule. Therefore, cost effectiveness is not calculated. However, it is expected that th e improved monitoring will ultimately result in reduced VOC emissions from PRD leaks and fewer PRD releases. Based on Compliance Plan data reported to the AQMD by the refineries as of 2005 there are 565 pressure relief valves on process equipment in gas servic e and venting to atmosphere. There were also another 205 pressure relief valves in liquid service venting to grade or drain with telltale indicators. Atmospheric PRDs that are in li quid service and are regulated under Rule 1176 will not be subject to the PRD electronic monitoring requirements of PAR 1173 if the operator can demonstrate that all released material meets the de finition of heavy liquid. Staff estimates that of the 205 PRDs in liquid service, 50 percent of thes e will have to be equipped with tamper-proof electronic monitoring devices.

Data provided by wireless industry re presentatives and a refinery that has installed ten electronic monitoring devices has indica ted that the unit de vice cost ranged from $5,000 to $10,000 which includes device parts, installation and maintenance. The cost also includes the data retrieval system which may vary depending on the choice of contractor. It should also be noted that the cost of electronic monitoring syst ems is not linear and facilities requiring a la rger number of monitors are expected to benefit from economies of scale. Based on these factors, staff has determined that the total cost of equipment and installation of electronic monitoring devices for the 657 PRDs (565 in gas/vapor service - 10 alr eady installed by one facility + 102 in liquid service) is estimated to range from $3.3 million to $6.6 million. Annual operating costs are minimal because they include periodic replacement of ine xpensive batteries.

C. PARAMETER MONITORING, OR US E OF TELLTALE INDICATORS IF ELECTRONIC MONITORING NOT FE ASIBLE, FOR ALL ATMOSPHERIC PROCESS PRDs

There is no emission reduction associated with th is requirement of the rule. Therefore, cost effectiveness is not calculated. In most cases, at affected facilities, the process is controlled by computer systems that continuously monitor proce ss parameters such as pressure, temperature, flow rates, etc. Daily parameter trends can be used to determine whether a release from the process equipment has occurred or not. Theref ore, there is no cost involved with this requirement for those facilities equipped with process parameter monitoring systems.

At facilities where process equipment is not co ntrolled by a computer system and parameter monitoring is not available, the us e of telltale indicators that woul d readily indicate a release is required. However, the cost associated with th ese indicators is expected to be minimal.

D. INCREMENTAL COST EFFECTIVENESSCHAPTER 6 – COST AND COST EFFECTIVENESS

Proposed Amended Rule 1173 6-5 May 15, 2007 Health and Safety Code 40920.6 requires determin ation of incremental cost-effectiveness of potential control options, defined as “the difference in the dollar costs divided by the difference in the emission reduction potentials between each progressive/most stringe nt potential control option as compared to the next less expensive control option”.

For components in heavy liquid service at lubr icating oil and grease re-refiners and marine terminals, PAR 1173 requires quarterly inspections only for pumps in heavy liquid service. The most stringent requirement would be a LDAR program for valves, pumps and connectors in heavy liquid service with a quarterly inspec tion frequency. Emission reductions are then calculated assuming that all components in heavy liquid service will have an average emission of 25 ppm after the LDAR program. The incrementa l cost effectiveness is shown in Table 6.2.

Table 6.2 Heavy Liquid LDAR Incremental Cost Effectiveness

Present Value ($) Emission Reduction (Tons per Year)

PAR 1173 1,310,906 142.59

Most Stringent Proposal 1,842,116 145.18

Incremental Cost Effectiveness ($/ton) 205,100

Incremental Cost = (1,842,116 – 1,310,906) / (145.18– 142.59) = $205,100/tonCHAPTER 7 – DRAFT FINDINGS

Proposed Amended Rule 1173 7-1 May 15, 2007 

### DRAFT FINDINGS

Health and Safety Code Section 40727 requires th at prior to adopting, amending or repealing a rule or regulation, the AQMD Governing Board shall make findings of necessity, authority, clarity, consistency, non-duplication, and reference based on relevant information presented at the hearing.

Necessity - The AQMD Governing Board has determined that a need exists to amend Rule 1173 for the following reason: to implement Contro l Measure FUG-05 – Emission Reductions from Fugitive VOC Sources of the 2003 Air Quality Ma nagement Plan (AQMP) by requiring a leak detection and repair program at lubricating oil a nd grease re-refiners and marine terminals and to reduce PRD releases by implementing an enhanced monitoring program.

Authority - The AQMD Governing Board obtains its auth ority to adopt, amend or repeal rules and regulations from California Health and Safety Code Sections 39002, 40000, 40001, 40440, 40702 and 41508.

Clarity - The AQMD Governing Board has determined that Rule 1173, as proposed to be amended, is written or displayed so that its meaning can be easily und erstood by the persons directly affected by it.

Consistency - The AQMD Governing Board has determined that Rule 1173, as proposed to be amended, is in harmony with and not in conflict w ith or contradictory to, existing statutes, court decisions or state or federal regulations.

Non Duplication - The AQMD Governing Board has determin ed that Rule 1173, as proposed to be amended, does not impose the same requirement s as any existing state or federal regulations, and the amendments are necessary and proper to execute the powers and duties granted to, and imposed upon, the AQMD.

Reference - The AQMD Governing Board by adopting this regulation is implementing, interpreting or making specific th e provisions of: Health and Safe ty Code Sections 40001 (rules to achieve ambient air quality standards), 40440(a), (rules to carry out the Air Quality Management Plan), (b) (Best Available Reftrofi t Control Technology), and (c) (rules which are also cost-effective and efficient), 40702 (rules to execute duties) necessary to preserve original intent of rule) and 40910 et seq., (California Clean Air Act).CHAPTER 8 – CEQA

Proposed Amended Rule 1173 8-1 May 15, 2007 

### CALIFORNIA ENVIRONM ENTAL QUALITY ACT
Pursuant to California Environmental Qual ity Act (CEQA) Guidelines §15252 and SCAQMD Rule 110, the SCAQMD has prepared an Envi ronmental Assessment (EA) for PAR 1173. The Draft EA was released for a 30-day public re view and comment period from March 28, 2007 to April 26, 2007. No comment letters were received from the public relative to the Draft EA. The environmental analysis in the Draft EA conc luded that PAR 1173 w ould not generate any significant adverse environmental impacts.

Since the release of the Draft EA, minor modifi cations have been made to the document. However, none of the modifications alter any c onclusions reached in th e Draft EA, nor provide new information of substantial importance relativ e to the draft document. As a result, these minor revisions do not require recirculation of the Draft EA pursuant to CEQA Guidelines §15073.5. Therefore, the Draft EA is now a Final EA.CHAPTER 9 – SOCIOECONOMIC ANALYSIS

Proposed Amended Rule 1173 9-1 May 15, 2007 

### SOCIOECONOMIC ANALYSIS

The proposed amendments to Rule 1173 (PAR 1173) would require petrol eum refineries to install electronic monitoring devices on their pressure relief devices (PRDs) to improve monitoring and quantification of future potential releases of VOC emissions. In addition, the proposed amendments would require facilities th at re-refine lubricati ng oils and greases and petroleum marine terminals to implement a le ak detection and repair (LDAR) program. The implementation of PAR 1173 is projected to achie ve a reduction of 0.40 tons in VOC daily. The proposed amendments will affect 22 facilities. All 22 affected faciliti es are located in Los Angeles County. The affected fac ilities belong to the sectors of petroleum refineries [North American Industrial Classification System (NAICS) 324110], petroleum lubricating oil and grease manufacturing (NAICS 324191), petrol eum marine terminals (424710), and other warehousing and storage (493190). Table 9-1 shows the distribut ion of these facilities by industry.

Table 9-1 Number of Affected Facilities

Industry (NAICS) Number of Facilities

Petroleum Marine Terminals (424710) 11

Petroleum Refineries (324110) 9

Petroleum Lubricating Oil and Grease mfg.(324191) 1

Other Warehousing & Storage (493190) 1

Total 22

Based on the assumptions in the staff report fo r PAR 1173, the annual cost of complying with PAR 1173 is estimated to be $0.72 million, on average, from 2008 to 2020. The $0.72 million cost is divided into $0.56 million for electron ic monitoring devices on PRDs, starting in 2009; and $0.16 million for the LDAR program, starting in 2008.

Table 9-2 has the distribution of the total cost by industry by year. Refine ries would absorb 77 percent (or $0.56 million) of the $0.72 million estim ated cost. Since re fineries are capital intensive businesses, the proposed amendments would have few j ob impacts on refineries. The job impacts on the rest of sectors in the local ec onomy are expected to be small, or within the noise of the REMI model. Therefor e, the REMI model was not used.CHAPTER 9 – SOCIOECONOMIC ANALYSIS

Proposed Amended Rule 1173 9-2 May 15, 2007 Table 9-2 Estimated Annual Cost of Compliance (millions of 2006 dollars)

Industry (NAICS) 2008 2009 2010 Average Annual (2008-2020)

Petroleum Refineries (324110) $0.00 $0.60 $0.60 $0.56
Petroleum Marine Terminals (424710) $0.14 $0.14 $0.14 $0.14
Petroleum Lubricating Oil and Grease Manufacturing. (324191) $0.01 $0.01 $0.01 $0.01

Other Warehousing & Storage (493190) $0.01 $0.01 $0.01 $0.01

Total $0.16 $0.76 $0.76 $0.72

Rule Adoption Relative to the Cost-Effectiveness Schedule On October 14, 1994, the Governing Board adopted a resolution that requi res staff to address whether proposed rules being considered for adoption are presented in rank order by costeffectiveness as defined in the Air Quality Management Plan (AQMP). The proposed amendments implement part of VOC long-term measure commitment in the 2003 AQMP. This control measure was ranked seventh in th e 2003 AQMP at $13,500 per ton of VOC reduced. The cost-effectiveness of PAR 1173 is estima ted at $919 per ton of VOC reduced. The amendments were also proposed due to the co ncerns of Governing Board members about the high frequency, as well as high quantity of em ission releases from total PRDs since the amendments to Rule 1173 in 2002.CHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-1 May 15, 2007 

### COMMENTS AND RESPONSES

Applicability and Definitions

Comment 1-1 In the past, we have experienced issues with st aff regarding the partial exemption of tagging and inspection for “extremely heavy liquids” and the re quirements for heavy liquids. We request that the definition of Heavy Liquid be revised to include a statement th at “extremely heavy liquids,” are not a heavy liquid.

Response 1-1 Staff believes that the rule is clear on the defi nition of heavy liquids as well as the partial exemption for the extremely heavy liquids. Staff also believes that any compliance implementation issues could be resolved thr ough internal memoranda an d inspector guidance.

Comment 1-2 The definition of facility should be amended to include marine terminals and lubricating oil and grease re-refiners.

Response 1-2 The definition of facility has been revised to incorporate this comment.

Comment 1-3 Definitions for Marine Terminal and Lubricating Oil and Grease Re-refiner have been added to the PAR 1173 to address the two new source categorie s. A definition for petroleum facility was also added to PAR 1173 and it in cludes these two source categories, in addition to refineries. The definition of Petroleum Facility is unnece ssary and should be removed since PAR 1173 provides definitions for Marine Terminal a nd Lubricating Oil and Grease Re-refiner.

Response 1-3 Staff has revised PAR 1173 to de lete the proposed definition of Petroleum Facility and has added Lubricating Oil and Grease Re-r efiner and Marine Terminal to the “applicability” for Rule 1173.

Comment 1-4 The definition for Marine Terminal should be revised to exclude SIC Code 4226 and be limited to only SIC Code 5171.

Response 1-4 In submitting their Annual Emissions Report (AER) to the AQMD, most marine terminals used SIC Code 5171 to identify the type of activities conducted at thei r facilities. However, some marine terminals have used SIC Code 4226 in their AER, which includes “petroleum bulk stations and terminals that are used for hire.” The AQMD can not mandate the use of any specific SIC Code for an industry. Therefore, the definition of Marine Terminal includes both SIC Codes 4226 and 5171. Other industries listed under SIC Code 4226 are not subject to PAR 1173.CHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-2 May 15, 2007 LDAR Requirements

Comment 2-1 Extremely heavy liquids, such as lube oils in a uxiliary lubrication systems, that are currently exempt from the identification (or tagging) and inspection requirements of the rule should also be exempt from other requirements (leak standa rd, maintenance and repair and open –ended line requirements and PRD requirements) of Rule 1173. These extremely heavy liquids have virtually no emissions to the atmosphere.

Response 2-1 Staff disagrees. Staff believes that although extrem ely heavy liquid releases are not expected to produce high vapor pressures due to their lo w boiling points, there is a potential for VOC releases if larger amounts of heavy liquids are allo wed to leak. Therefore, the leak standards and maintenance and repair requirements will assist in controlling leaks and VOC emissions as is the case with lighter liquids and gases. As far as a uxiliary lubrication systems, there can be leakage that would result in VOC contamination of the lube oil. When this type of contamination occurs, the overall vapor pressure of the lube oil can be significantly a ffected and result in substantial VOC releases.

Comment 2-2 Open-ended lines and valves which are located at th e end of lines that are not sealed with a blind flange, plug, cap or a second clos ed valve at all times should be exempt from the leak standard requirements of the rule.

Response 2-2 Staff believes that since accessible pumps, compre ssors and atmospheric PRDs are required to be inspected only once during every eight-hour operating period and all other accessible components in light liquid/gas/vapo r service are required to be in spected quarterly, there is the potential for large leaks to go undetected for signi ficant periods of time. Therefore, the rule requirements serve to maintain the effectivene ss of the existing LDAR program by minimizing the potential for these VOC releases.

Comment 2-3 PAR 1173 should be amended to grant a leak standard exemption for open-ended lines and valves located on double-block and bleed systems sim ilar to an exemption that exists in Federal Regulations (40CFR Sec. 60.482-6) that allows a bleed valve to remain open during operations that require venting the line betw een the block valves, but require s that the bleed valve remain closed at all other times with a cap, blind flange, plug or a second valve.

Response 2-3 Staff believes that the scope of such an amendment is broad and woul d require significant review and discussion. However, staff would be willing to give consideration to this issue in future amendments of this rule. Staff has observed bleed valves wh ich are part of double-block and bleed valve systems in the field and concurs that in these particular situations the bleed valves fall into the category of open-ended lines. Subpa ragraph (d)(1)(E) already specifically addresses open-ended lines and valves located at the end of lines that are not sealed with a blind flange, plug, cap or a second closed valve at all times , except during operations requiring process fluidCHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-3 May 15, 2007 flow through the open-ended line

. Therefore, an amendment to address this comment is not needed.

PRD Requirements

Comment 3-1 We believe that the requirement to implement enhanced monitoring of process PRDs should only be applicable to refineries. Ho wever, by using the definition of petroleum facility in the rule language, the requirement of enha nced PRD monitoring is also placed on lubricating oil and grease re-refiners and marine terminals.

Response 3-1 Staff’s proposed amendment to PAR 1173 is to re quire enhanced PRD monitoring for refineries based on their operation of equipment that has th e potential to and have in the past released significant amounts of VOC to the atmosphere. Lubricating oil and grease re-refiners and marine terminals utilize atmospheric PRDs; however , the potential to release VOC is much less than that of the refineries. Therefore, PA R 1173 has been revised to remove the proposed definition of Petroleum Facility and has also been revised to require lubri cating oil and grease rerefiners and marine terminals to monitor th eir atmospheric PRDs using process parameter instrumentation or telltale indicators where th e use process parameter instrumentation is not feasible.

Comment 3-2 The enhanced process PRD electronic monitoring schedule should be amended to incorporate the following changes:

A. For facilities with less than 50 PRDs, change the deadline for requiring facilities to have 50 percent of all of their PRDs to be equippe d with electronic monitors from July 2008 to January 1, 2009.

B. For facilities with more than 50 PRDs, change the deadline for requiri ng facilities to have all inaccessible PRDs and 20 per cent of all accessible PRDs, respectively, to be equipped with electronic monitors from July 2008 to January 1, 2009. In addition, in order to allow refiners flexibility, indus try is requesting that referenc e made to monitors installed on inaccessible PRDs should be removed.

Response 3-2 The rule has been revised to incorporate these comments.

Comment 3-3 Larger facilities with greater th an 50 atmospheric process PRDs should be allowed an additional two years to install electronic monitors on their PRDs.

Response 3-3 Staff believes that despite the fact that one f acility has significantly more atmospheric process PRDs than all of the other affected facilities and will be required to install more electronic monitors, the time allowed is sufficient and the electronic monitor cost is not prohibitive toCHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-4 May 15, 2007 trigger a delay in the PRD monitoring program for an additional two years beyond the rule schedule. However, at industry’s request, the deadlines have been extended by six months to January 1, 2009.

Comment 3-4 Some refineries may plan to route atmospheric process PRDs to vapor recovery and/or other control. Such projects require substantial time for planning a nd implementation. Can an option be made that would not require those PRDs to be monitored if these vapors were scheduled to be routed to a recovery and/or control system during the next turnaround after the July 2009 deadline.

Response 3-4 Staff has revised PAR 1173 by addi ng subparagraph (h)(1)(F) that addresses atmospheric PRDs that are scheduled to be vented to vapor control systems or to vapor recovery systems during the next turnaround after December 31, 2008 for that pr ocess unit. Staff acknowledges that process of analyzing the feasibility, desi gning and planning a recovery and/ or control project will take time. Refineries will be required to submit a revised compliance plan by December 31, 2008, that identifies the PRDs to be connected to a reco very and/or control system . However, staff will require that prior to connection to vapor rec overy and/or control, these PRDs should be monitored by use of electronic pr ocess control instrumentation or telltale devices if such instrumentation is not feasible. This need to monitor is based on the PRD release data collected so far which indicates that there is the potenti al for process PRDs to release significant amounts of VOCs to the atmosphere.

Comment 3-5 The provision that allows refineries to delay in stallation of electronic m onitors on a process unit PRD(s) by demonstrating to the satisfaction of the Executive Officer that the installation at an earlier date is not feasible or constitutes a sa fety hazard should be amended to allow the operator to install the electron ic monitor(s) no la ter than the next scheduled turnaround for the process unit following the requirement to install the electronic monitoring device(s).

Response 3-5 Staff has amended the rule to allow industry to delay electronic m onitor installation to no later than the next turnaround fo llowing rule adoption. Staff believes that allowing installation of electronic monitors by the process unit’s next scheduled turnaround following rule adoption should allow sufficient time for industry to comple te any activities associ ated with the purchase and installation of the electronic PRD monitors. However, refineries must continue to monitor these PRDs by use of electronic process control instrumentation or telltale devices if such instrumentation is not feasible, as required by th e current rule.

Comment 3-6 The atmospheric process PRD requirements of the ru le should be amended to allow operators the option of utilizing either, a combination of tamp er-proof electronic valve monitoring devices and continuous parameter monitoring or a combination of tamper-proof electronic valve monitoring devices and telltale devices in order to be able to record the duration of each release and to quantify the amount of compound s released, provided the opera tor can demonstrate to theCHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-5 May 15, 2007 Executive Officer that either combination accura tely represents the act ual process condition at the PRD release location. We understand that the release duration and quantification will have to come from the electronic monitoring system.

Response 3-6 Staff has revised PAR 1173 to in corporate this comment.

Comment 3-7 PRDs in cooling water service should not be subject to the requireme nts of Rule 1173. PRDs that are located on cooling water systems are si zed based on hydrocarbon leak from the process side of the exchanger. Any hydrocarbon leak to th e water side of an exch anger is usually small and would not be large enough to require pressure relief from the cooling water system. In addition, the cooling water is usually analyzed and when hydrocarbon leaks occur they tend to be small and are detected and corrected before they cause an increase in the pressure of the cooling system.

Response 3-7 Staff agrees that the intent of PAR 1173 was not to address PRDs in cooling water service. However, staff will monitor the release of VOC containing materials into cooling water systems and take corrective measure if necessary in future rule development.

Comment 3-8 We appreciate the allowance for alternative mon itoring for PRDs in liquid service as described by section (h)(1)(F). We recomm end that the condition referen ce the existing definitions for light and heavy liquids for defining what PRDs are included as opposed to the existing language that requires all the material to ‘remain in a liquid state under atmosphe ric conditions’. This could be interpreted that any material exerting a measurable vapor pressure could not be included in this alternative monitoring approach.

Response 3-8 Staff has revised PAR 1173 subparagr aph (h)(1)(F) to iden tify heavy liquids as the material from liquid PRDs that will not require PRD monitoring. Staff believes that VOC emissions from light liquids can be significant a nd that PRDs on light liquid lines must be monitored.

Comment 3-9 Please clarify that the intent of the rule is to allow different types of electronic monitors including pressure sensors on the inlet pipe of the relief valve (or a pressure sensor in close proximity to the PRD). In othe r words, the rule is not requir ing the use of acoustic monitors.

Response 3-9 PAR 1173 requires refineries to monitor their atmospheric process PRDs through the use of tamper-proof electronic valve monitoring devices th at can record the duration of each release and to quantify the amount of compounds released. An alternative PRD monitoring requirement allows refineries to monitor PRDs through a combination of tamper-proof electronic valve monitoring devices and continuous parameter m onitoring or a combination of tamper-proof electronic valve monitoring devices a nd telltale devices in order to be able to record the durationCHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-6 May 15, 2007 of each release and to quantify the amount of compounds released, pr ovided the operator can demonstrate to the Executive Officer that either combination accurately represents the actual process condition at the PRD release location. Alt hough acoustic monitors can be used as part of the monitoring system, the proposed amendments do not require the use of acoustic monitors.

Comment 3-10 Please clarify that we will be able to use manufacturer recommended settings on the electronic devices and/or other pro cess data to establish what detection levels are sufficient to determine when an actual release has occurred to avoid false positives.

Response 3-10 In evaluating the proposed devices and equipment that will be used to demonstrate compliance with rules, staff typically w ill use manufacturer recommended settings. However, the final approval of the monitoring devices/s ystem(s) will be completed as part of staff review of the compliance plan.

Comment 3-11 We appreciate the inclusion of an allowance to customize the schedule to install the monitors based on feasibility and safety considerations. However, it is not clear what will be deemed infeasible or a safety hazard when seeking approval from AQMD staff. We would define feasible as including, but not limite d to, availability of monitor s upply, delivery time of monitors and related components, etc. We believe that requiring a hot tap on a safety critical system presents a safety hazard and should be sp ecifically mentioned in this condition.

Response 3-11 The proposed alternative schedule for installing electronic PRD monitoring devices stated under PAR 1173 subparagraph (h)(1)(D) allows refineries to delay installation of the monitors to no later than the next scheduled tu rnaround for that proce ss unit with atmospheric PRD(s). Staff has contacted three manufacturers/ distributors of wireless electronic valve monitoring devices/systems; all three manufacturers/distributors assured staff that these devices are readily available and can be delivered in a timely manner. The phrase “not feasible or constitutes a safety hazard” was developed to address the issue of “safe” inst allation of PRD monitors that will require hot tap on that PRD or accessibility to safely install the PRD monitor. However, staff is understands that the basis for delay of inst allation of monitors can al so be due to activities which present a safety hazard as documented a nd established in a safety manual or policy and that these vary among the refineries. In circum stances where safety hazards are not documented or established in a safety manual or policy, the operator will still be required to demonstrate to the Executive Officer that the scheduled installation activity will present a safety hazard. Safe operation of facilities and the safe ty of the workers and the public, which includes the installation of monitoring equipment, are of the highest importance to the AQMD.

Staff Report

Comment 4-1 The rule refers to tamper-proof electronic monitors, but does not provide a definition.CHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-7 May 15, 2007 Response 4-1 A description, requirements and spec ifications of tamper-proof el ectronic monitors are included in the staff report. The definition of TAMPER-PR OOF has been added to PAR 1173.

Comment 4-2 It is not clear if the cost of wireless technology in cludes cost of installati on and the cost of data transmission and analytical devices that are capable of accurate measurement of emission releases as required by the rule.

Response 4-2 The staff report has been amended to include a range of cost that includes installation and data retrieval. However, it shoul d be noted that the PRD complia nce plan for refineries with atmospheric process PRDs outlines a quantitativ e approach for calculation of VOC emissions based on the parameters measured by the electroni c monitor that include temperature, pressure, flow rate and the composition of release streams.

Comment 4-3 A large portion of the technology assessment secti on in the staff report discussed the emerging new wireless technology, but di d not provide adequate informa tion regarding the analytical devices available in the market that are capabl e of accurately quantifying mass emissions from the PRDs. The staff report should include additional information regarding the analytical devices capable of accurately quantifying “the amount of the compounds released” that can be placed on the PRDs located on the process equipment. The staff report should also clarify the requirement for facilities to accurately quantify “the amount of th e compounds released.” It is not clear if the proposed rule intends for the instrument to m easure and quantify each compound released, or the total amount of all the compounds released.

Response 4-3 The proposed requirement to use electronic PRD monitoring devices is n ecessary to accurately determine that a release has occurred and the durat ion of that release. As you have stated, the staff report discusses the PRD monitoring device technology. However, the requirement to accurately quantify mass emissions from the PRDs is a current rule requirement that was developed during the 2002 Rule 1173 amendment. Mass emissions are calculated by use of the refinery’s process parameters instrumentation fo r that process equipment (which varies for each refinery) and the refinery’s know ledge of what materials are be ing processed. Calculation methodology and procedures are speci fied in their compliance pla n. The rule does not specify type of analytical device. The current rule a nd proposed amendments requ ire facilities subject to the PRD release requireme nts to measure and quantify the to tal amount of all the compounds released.

Comment 4-4 The staff report lists LDAR cost informati on from 2002; AQMD may wi sh to update this information.CHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-8 May 15, 2007 Response 4-4 Staff has updated the staff report to reflect the cost to implemen t LDAR at lubricating oil and grease re-refiners and marine terminals in 2007.

Comments Received After PAR 1173 Noticed for Public Hearing

Comment 5-1 We suggest that the following bolded language and dates be added to improve clarity and implementation of PAR 1173:

• Lubricating Oil and Grease Re-R efiner Definition: Petroleu m refineries engaged in the production of lubricating oils and greases are classified in Standard Industrial Classification Code 2911 and therefore are not included in this definition ;

• Subparagraph (h)(1)(C): ...the op erator of a refinery shall continue monitor all atmospheric PRDs ...;

• Subparagraph (h)(1)(E): ...provided th at the operator demonstrates on or before the compliance dates in subparagr aphs (h)(1)(A) and (h)(1)(B) to the satisfaction of the Executive Officer ...;

• Subparagraph (h)(1)G): The requirements of sub paragraphs (h)(1 )(A) through (h)(1)(F) do not apply to atmospheric PRDs in liquid serv ice that release to drains regulated under Rule 1176;

• Paragraph (h)(3): The operator of a lubri cating oil and grease re -refiner or a marine terminal shall monitor atmospheric process PRDs located on process equipment by use of electronic process contro l instrumentation that allo ws for real time continuous parameter monitoring;

• Paragraph (l)(6): Add Lubricating oil and grease re-r efiners and marine terminals shall comply with the requirements of subdi vision (e) no later than September 30, 2007. The additional rule language is needed to ensure the appropriate components at these facilities are properly id entified prior to the requireme nt for periodic inspection.

Response 5-1 Staff has revised PAR 1173 as suggested.

Comment 5-2 We acknowledge staff efforts to require enhanced monitoring of atmospheric process PRDs. We believe that venting all PRDs to vapor recovery is the much preferred method of control; even better than flaring. That being said, we are requesting that the staff post PRD release information on the AQMD website and reopen the rule if there is an increase in atmospheric PRD releases.

Response 5-2 Staff has in the past and continues to monito r the number, type and quantity of atmospheric process PRD releases, as well as any new technology which will im prove the reduction and quantification of releases. In fact, the increase in atmospheric process PRD releases in 2003 and improvement in electronic monitoring that can be applied to atmospheric process PRDs is the basis of the proposed amendments to Rule 1173. Staff is also committed to amend Rule 1173 when technologically feasible and cost effec tive control and measurement measures can beCHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-9 May 15, 2007 implemented. Staff agrees that PRDs vented to vapor recovery and control is preferred to closely-monitored atmospheric proc ess PRDs. However, with the current rule, refineries have connected some atmospheric proces s PRDs to vapor recovery and co ntrol. It should be pointed out that the refineries are committed to connecti ng atmospheric process PRDs to vapor recovery and control such that they have requested that alternative PRD monitoring (the currently required PRD monitoring using process un it operating parameters) be allo wed until PRD connections to recovery and control are comple ted in the near term as requi red by PAR 1173. It is in the refinery’s best interest to rec over useable fluids from PRD releases, but it also necessary to back up these recovery systems with flares for those ex treme release scenarios. Lastly, staff will post atmospheric process PRD release information as practical and consistent with other AQMD rules.

Comment 5-3 Since refineries will no longer be able to choos e the monitoring device to be installed based on the requirement of the new paragraph (h)(1) of PAR 1173, was the requirement for submittal of a revised compliance plan intended for facilities th at are still allowed to make monitoring device selections?

Response 5-3 PAR 1173 paragraph (h)(1) will require refineries to implement electronic monitoring of atmospheric process PRDs, except for those case by case requests for alte rnative monitoring. The requirement that refineries submit a revi sed compliance plan is needed to update the atmospheric process PRD inventory that was submitted prior to January 2003; the updated inventory is needed to establish the number of electronic monitors that must be installed and operated pursuant the dates in subparagraphs (h )(1)(A) and (h)(1)(B) consistent with other alternative monitoring op tions under paragraph (h)( 1) that may be approved. Subsequent revised plan(s) may be needed based on individual refinery turnaround schedules. Staff has added language under paragr aph (h)(4) to clarify that lubricating oil and greas e re-refiners and marine terminals will need to submit a compliance plan to establish their PRD inventory and monitoring option chosen; chemical plants only need to su bmit a revised plan if their PRD inventory has changed since their previous plan submittal.

Comment 5-4 Please clarify the monitoring, recordkeeping an d reporting requirements for atmospheric PRDs associated with process equipment and other equipment.

Response 5-4 Rule 1173, as amended on December 6, 2002, requires re fineries and chemical plants to monitor all of their atmospheric process PRDs, timely notify and report to AQMD specific releases, maintain specific records, and submit quarterly reports; and to notify and report to AQMD specific releases and maintain specific records associated with other equipment, including but not limited to storage tanks, pi pelines and loading and unloadi ng equipment. In addition to existing requirements, PAR 1173 will require enhan ced monitoring of atmospheric process PRDs at refineries and will require lubricating oil and grease re-refi ners and marine terminals to comply with the monitoring, r ecordkeeping and reporting requirements for atmospheric PRDs associated with process equipment and other e quipment summarized in the previous sentence.CHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-10 May 15, 2007 To improve the clarity of PAR 1173, staff has added the term “p rocess” to atmospheric PRD in subdivision (h).

Comment 5-5 We request that AQMD continue to establish requirements that reduce emissions and improve air quality in communities near refineries an d require the best monitoring technology for atmospheric PRD releases.

Response 5-5 PAR 1173 will require the use of el ectronic monitoring of atmospheric process PRDs that when used in conjunction with process parameter monitors for process eq uipment at the refineries will more accurately quantify emissions from a PRD release. PRD monitoring device technology has significantly improved since the 2002 Rule 1173 amendments (when staff initially evaluated PRD monitoring). The proposed enhanced monito ring is a method that will ultimately result in reduced emissions from atmospheric process PRD leaks and fewer PRD releases, which will help to improve air quality in communities near refineries.

Comment 5-6 Please explain how the exemption from all rule requirements under subparagraph (l)(1)(D) relates to the definition of H eavy Liquid under paragraph(c)(10).

Response 5-6 Rule 1173 (l)(1)(D) [Exemptions] is used to dete rmine whether components handling a mixture of fluids (gas/vapor and/or liqui d) are subject to the rule. Th e determination is made by using ASTM Method D1945 for gas mixtures and SC AQMD Method 304-91 for liquid mixtures, both based on the VOC content by weight . Rule 1173 applies to components handling fluids that contain more than 10 percent VOC by weight a nd therefore, components exclusively handling fluids (liquid or vapor) with a VOC content of 10 percent by weight or less are exempted from Rule 1173 requirements. Once it is determined th at the fluid is subject to Rule 1173, the next step is to determine whether the liquid meets the definition of “heavy liquid ” or “light liquid.” Heavy liquids are define d as any liquid with 10 percent or less VOC by volume evaporated at 150 o C (302 o F), determined according to ASTM Method D-86 on a by volume basis. Although both the exemption from the rule requirements and definition of heavy liquid include the words “10 percent or less,” the exemption is based on “ by weight” test method, while the definition is based on “by volume,” test method, which are completely different standards.

Comment 5-7 We urge the AQMD to begin the process immediately for anothe r amendment to Rule 1173 to require the control of all atmospheric process PR Ds with a cost effectiveness analysis based on potential to emit.

Response 5-7 The December 2002 amendment of the rule ha s significantly improved the monitoring, recordkeeping and reporti ng requirements applicable to atmosphe ric process PRDs at refineries. Atmospheric process PRD release data that have been collected between 2003 and 2006 have indicated that the number of large releases was at tributed to a very small fraction of the overall number of atmospheric process PRDs that were inventoried. In addition, the total amount ofCHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-11 May 15, 2007 VOCs released annually has decrea sed significantly and some refine ries have already taken steps to connect their PRDs to vapor recovery or co ntrol. Connecting atmospheric process PRDs to vapor recovery or control and especially those ha ve had no VOC emission re leases can be a very costly and cost-ineffective stra tegy. Instead, staff’s proposal to amend the ru le by requiring enhanced electronic monitoring of atmospheric process PRDs will better verify and quantify PRD releases and assist in identifying PRDs that can be cost-effectivel y controlled. Process PRDs release to prevent over pressurization of process equipment; thes e releases are random events. Potential to emit (PTE) may be the proper basis for continuous, semi-continuous and batch type operation, staff believes it is not appropriate to use PTE to determine cost effectiveness for random release events.

Comment 5-8 The provision in the rule that allows refine ries to pay a mitigation fee of $350,000 for VOC releases in lieu of connecting atmospheric proc ess PRDs to vapor recovery or vapor control should be removed as part of this rule amendment.

Response 5-8 The pros and cons of a mitigation fee altern ative were thoroughly argued during the December 2002 rule amendment and ultimately approved by the Board. Although th is option has been selected for some releases, there has been no evidence of abuse of this provision. Staff will continue to monitor releases and periodically report the status to th e Stationary Source Committee of the Board. Should abuse of the pr ovision become evident, staff would recommend a rule amendment.

Comment 5-9 Subparagraph (h)(1)(D) allo ws the refinery operator to delay the installation of tamper-proof electronic valve monitoring devices to no later th an the next scheduled turnaround following rule adoption for that process unit PRD(s), provided that the operator demonstrates to the satisfaction of the Executive Officer that the in stallation at an earlier date is not feasible or constitutes a safety hazard. The AQMD should amend the ru le to add a firm de adline to this PRD requirement to ensure that the delayed inst allation from monitoring equipment cannot be indefinitely put off.

Response 5-9 The propose rule requirement was included to specifically addre ss situations where operators would need to delay installation of tamper-pr oof electronic valve monitoring devices until the next scheduled turnaround based on feasibility or safety concerns. This alternative monitoring option requires a request by the refinery through a compliance plan submittal and AQMD approval. Staff will closely monitor and ensure compliance that rule and compliance plan conditions and requirements are met. Establishm ent of a date certain in the rule does not ameliorate feasibility or safety concerns of installation that s hould not exist if installation was completed during the next turnaround.CHAPTER 10 – COMMENTS AND RESPONSES

Proposed Amended Rule 1173 10-12 May 15, 2007 Comment 5-10 PAR 1173 should be revised to delete subparagra ph (h)(1)(E) that weakens the requirement for direct and thorough monitoring of PRDs by allowing the use of some combination of monitoring at the PRD and parameter monitoring upstream at some other location.

Response 5-10 PAR 1173 requires that all petr oleum facilities install and opera te tamper-proof electronic monitoring devices that are ca pable of measuring the duration of each PRD release and quantifying the amount of VOC released from each atmospheric process PRD. Electronic monitors include devices that can measure pressu re, flow, temperature or an acoustic measuring device that can be used to de termine if PRD has opened. The proposed amendments allow a refinery to use a combination of electronic m onitors and process parameters or electronic monitors and telltale in dicators if the refinery can demons trate that the proposed combination provides equivalent results at the PRD release poi nt. Staff does not belie ve that this proposed alternative is a weakeni ng of the electronic monitoring requirement, but in fact may actually provide additional methods and techniques to verify a PRD release.

Comment 5-11 The AQMD should consider controlling methane as an ozone reduction strategy and the staff analysis should be presented to the Stationary Source Committee early next year with a proposal to the full Board by next spring.

Response 5-11 Any approach by the AQMD to rem ove methane or other pollutants that are currently included in the list of exempt VOC compounds will not be d ealt with as an issue isolated to PAR 1173 but would be analyzed as part of overall strate gy to address current and future air pollution challenges, through a cooperative effort with th e other appropriate stat e and federal regulatory agencies..APPENDIX A – COMPARATIVE ANALYSIS

Proposed Amended Rule 1173 A-1 May 15, 2007 

### COMPARATIVE ANALYSIS

Pursuant to Health and Safety Code Section 40727.7 staff has prepar ed an analysis of existing or proposed AQMD rules, regulations, requirements a nd federal air pollution control measures that apply to the same source type.

Comparison of PAR 1173 and 40C FR60 VV, GGG, KK K and 40CFR63CC

PAR 1173 40CFR60 VV, GGG, KKK, 40CFR63

Applicability
Components at refineri es, chemical plants, lubricating oil and greas e re-refiners, marine terminals, oil and gas production fields, natural gas processing plants and pipeline transfer stations. Affected equipment in petroleum refineries, syntheti c organic chemicals manufacturing facilities, onshore natural gas processing plants.

Requirements
LDAR program for components in light liquid/gas/vapor service and pumps in heavy liquid service. Quarterly inspections with annual option afte r 5 quarters based on certain leak criteria. Inaccessible components inspected yearly. Pumps and valves inspected monthly. Valves in light liqui d/gas/vapor service inspected monthly. After two monthly inspections without le aks, they may be inspected quarterly until a leak is detected.

Leak threshold at 100 ppm for components in heavy liquid service. Leak threshold at 10,000 ppm for pumps and valves in heavy liquid service.

Leak threshold at 500 ppm for components in light liquid/gas/vapor service. Pumps, valves, PRDs and connectors in light liquid/gas/vapor service leak threshold at 10,000 ppm. Compressors required to have a seal system with barrier fluid. PRDs in gas/vapor service leak threshold at 500 ppm.

Leaks >500 but < 10K ppm - seven days repair.

Leaks >10K but < 25K ppm - 2 days repair

Leaks > 25K ppm 1 day repair Leaks > 10K ppm - 15 days repair maximum, first attempt at repair within 5 days.

Monitor all process atmospheric PRDs by use of combination of electronic monitoringAPPENDIX A – COMPARATIVE ANALYSIS

Proposed Amended Rule 1173 A-2 May 15, 2007 PAR 1173 40CFR60 VV, GGG, KKK, 40CFR63
devices and continuous parametric monitoring prior to July 1, 2010.

Connect to control after any release greater than 2000 pounds of VOC or after second release or subsequent release greater than 500 pounds VOC from same PRD within a 5-year period.

Lubricating oil and grease re-refiners and marine terminals must physically identify (tag) components and submit a compliance plan showing the loca tion of the regulated components and comply with all other requirements commencing January 1, 2008.

Recordkeeping and Reporting
All leaks, repairs and re-inspections records to be submitted in electronic form as quarterly or annual report to AQMD. Submit semiannual reports containing the number of components, by type, that were repaired and for which repair was delayed, and the reason for delay.

Report all releases exceeding 100 pounds VOC within 1 hour. Submit a written report within 30 days from the release.

Submit quarterly PRD monitoring reports.

Test Methods
U.S. EPA Method 21 for leak screening, ASTM Method D86 for VOC content of light liquids and heavy liquids, ASTM Method D1945 for VOC content of gases, ASTM Method D93 for flash point of heavy liquids. U.S. EPA Method 21 for leak screening, ASTM E-260, E-168, E-169 for the VOC content, ASTM Method D-2879 for the
vapor pressure.

Exemptions

Components that present a safety hazard Components that present a safety hazardAPPENDIX A – COMPARATIVE ANALYSIS

Proposed Amended Rule 1173 A-3 May 15, 2007 PAR 1173 40CFR60 VV, GGG, KKK, 40CFR63
Components handling exclusively natural
gas

Components handling gases with 10 percent VOC by weight or less a nd liquids with less than 10% VOC by weight and a flash point greater than 250 0 F. Components handling fluids with less than 10% by weight VOC.

Components operating under negative pressure or totally enclosed, components buried underground. Components operating under negative pressure, pumps with a closed vent system, PRDs vented to a control device.

Pressure vacuum valves on storage tanks.

PRDs installed for thermal protection of liquid lines provided th ey are vented to a drain or back in the line.

Components handling liquids with a flash point greater than 250 0 F.

Releases caused by natural disasters, acts of terrorism and events beyond the petroleum facility’s control.

Lubricating oil and grease re-refiners and marine terminals will not be subject to the requirements of the rule, except for the component identification and the PRD compliance plan submittal requirements until after December 31, 2007.