SACRAMENTO METROPOLITAN
AIR QUALITY MANAGEMENT DISTRICT

STAFF REPORT

Proposed Amendments to

Rule 459, Automotive, Mobile Equipment and Associated Parts and Components Coating Operations (New Title)

July 25, 2011

Prepared by: Marc Cooley Associate Air Quality Engineer

David Yang Associate Air Quality Engineer

Reviewed by: Kevin J. Williams, Ph.D. Program Coordinator

Aleta Kennard Program Supervisor

Approved by: Brigette Tollstrup Division ManagerStaff Report

Rule 459 July 25, 2011, Page 2

BACKGROUND

Ground level ozone is a secondary pollutant formed from photochemical reactions of nitrogen oxides (NOx) and volatile organic compounds (VOC ) in the presence of sunlight. Ozone is a strong irritant that adversely affects human health and damages crops and other environmental resources. As documented by the U.S. Environmental Protection Agency (EPA) in the most

recent Criteria Document for ozone 1 , both short-term and long-term exposure to ozone can irritate and damage the human respiratory system, resulting in:

 decreased lung function;

 development and aggravation of asthma;

 increased risk of cardiovascular problems such as heart attacks and strokes;

 increased hospitalizations and emergency room visits; and

 premature deaths.

The District is currently designated as a nonattainment area for both the state and federal ozone standards. Since VOCs are a precursor to ozone, one of the strategies to control ozone pollution is to reduce VOC emissions from ex isting stationary sources. The projected 2012 VOC emission inventory for Sacramento County includes 303 tons per year for automotive coatings.

Suggested Control Measure (SCM) for Automotive Coatings

On October 20, 2005, the California Air Resources Board (CARB) adopted a Suggested Control Measure (SCM) for Automotive Coatings. The purpose of the SCM is to promote uniformity among California district rules, improve enforc eability, and achieve additional reductions in VOC emissions. The SCM consolidated coatings for Group I and Group II vehicles, replaced the specialty coating and multi-stage coating categories with specific coating categories, and established lower VOC limit for some coating categories. To date, ten other California air

districts have amended their rules to be consistent with the SCM.

Control Techniques Guidelines for Miscellaneous Metal and Plastic Parts Coatings

On October 7, 2008, EPA promulgated a Control Techniques Guidelines (CTG) for Miscellaneous Metal and Plastic Parts Coatings 2 . The CTG contains Reasonable Available Control Technology (RACT) guidelines and reco mmendations, including VOC content limits, specific exemptions, and recommended work practice procedures, for coatings applied on six different substrate categories: miscellaneous metal parts and products, miscellaneous plastic parts and products, transportation plastic parts, business machine plastic parts, pleasure craft,

and motor vehicle materials.

Section 182(b)(2) of the federal Clean Air Act (CAA) requires the District to implement RACT for the source categories included in the CTG. On October 28, 2010, the District adopted amendments to Rule 451 – Surface Coating of Miscellaneous Metal Parts and Products that lower VOC limits for specific coatings for miscellaneous metal parts and products to be as stringent as the requirements in the CTG. In addition, Staff is planning to propose a new rule for

1 “Air Quality Criteria for Ozone and Related P hotochemical Oxidants”, U.S. EPA, February 2006.

2 “Control Techniques Guidelines for Miscellaneous Metal and Plas tic Parts Coatings”, U.S. EPA, September 2008.Staff Report

Rule 459 July 25, 2011, Page 3

the coatings of miscellaneous plastic parts and products, transportation and business machine plastic parts, and pleasure craft. Staff is proposing to include the CTG requirements for motor vehicle materials in Rule 459. There are two coating categories for which the VOC limits in the CTG are more stringent that those in the SCM: multi-color coatings when applied to transportation plastic parts, and truck bed liner coatings. In these two cases, the CTG limits are proposed in the amendments to Rule 459. The proposed limits are described in the next

section.

Rule 459, Automotive, Mobile Equipment, and Associated Parts and Components Coating Operations (Proposed New Title)

Rule 459 was first adopted on December 7, 1995 and last amended on October 2, 1997. The rule applies to coating, coating removal (stripping), surface preparation, and cleanup operations for automotive, truck or heavy equipment finishing or refinishing operations. Rule 459 also regulates the sale of coatings within the District by prohibiting manufacturers and suppliers of coatings from selling coatings that do not comply with the rule.

Staff is proposing to amend Rule 459 to incorporate the requirements of the SCM. The proposed amendments will satisfy a State Implem entation Plan (SIP) commitment to reduce VOC emissions from this source category. Staf f will also ensure that the limits proposed in the SCM meet the CTG requirements for transportation plastic parts. Staff will use the most stringent VOC limit for coating categories from both the SCM and the CTG. Staff is also proposing to amend Rule 459 to incorporate the requirements of the CTG that are specific to motor vehicle materials used during coating operations. The proposed amendments will satisfy the Clean Air Act (CAA) requirement to implement RACT for these coatings and materials.

LEGAL MANDATES

Federal Mandates:

The District is designated as a “severe” nonattainment area for the federal 8-hour ozone standard. Title 40 of the Code of Federal Regulations, Section 51.908, requires “severe” nonattainment areas to comply with the attain ment demonstration requirements of CAA section 182(c)(2), which requires a plan to be submitted to EPA which demonstrates attainment of the standard by the applicable attainment date, and to include all control measures necessary for attainment. In 2009, the districts of the Sacramento Federal Nonattainment Area adopted an attainment demonstration plan to achieve the f ederal 8-hour ozone standard by the attainment date of June 15, 2019 3 . The plan includes a commitment for the District to achieve VOC emission reductions from automotive coating operations of 0.11 tons per day in 2018.

Federal Clean Air Act section 172(c)(1) specifies that SIPs for nonattainment areas must include “reasonably available control measures” (RACM), including “reasonably available control technology” (RACT), for sources of emissions. Section 182(b)(2)(A) of the CAA provides that for nonattainment areas classified as “moderate” or worse, states must revise their SIPs to include RACT for sources of VOC emissions for each category of VOC sources covered by a CTG document issued after November 15, 1990 and prior to the area’s date of attainment. EPA

3 “ Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan”, EDCAQMD, FRAQMD, PCAPCD, SMAQMD, YSAQMD, March 26, 2009.Staff Report

Rule 459 July 25, 2011, Page 4

defines RACT as “the lowest emission limitation that a particular source is capable of meeting by the application of control technology that is reasonably available considering technological and economic feasibility 4 .” Pursuant to CAA Sections 108(b) and (c), EPA periodically publishes information regarding available c ontrols. In developing Control Techniques Guidelines, EPA evaluates, among other things , the sources of VOC emissions and the available control approaches for addressing these emissions, including the costs of such approaches. CTG documents establish the presumptive minimum recommendations for RACT.

On October 7, 2008, EPA promulgated a Control Techniques Guidelines for Miscellaneous Metal and Plastic Parts Coatings. EPA’s CTG provides the presumptive minimum recommendations for RACT for various coating categories, including coatings for transportation plastic parts and motor vehicles materials. The proposed amendments to Rule 459 will satisfy the RACT requirements for motor vehicle materials and transportation plastic parts coating associated with automotive coating operations and also satisfy the federal plan commitment for automotive coating operations.

State Mandates:

The District is designated “serious” nonattainment for the state ozone standard. The California Clean Air Act requires areas designated as “serious” to adopt control measures required in Sections 40919 of the California Health and Safety Code (HSC). The plan commitment for this rule also satisfies the following requirements:

 California HSC Section 40919 requires districts designated serious nonattainment for ozone to adopt Best Available Retrofit Control Technology (BARCT) for all existing permitted sources. BARCT means an emission limitation that is based on the maximum degree of reduction achievable, taking into account environmental, energy, and economic impacts by each class or category of sources 5

.

 Transport Mitigation Emission Control Requirements: Title 17, Section 70600 of the California Code of Regulations requires that districts within the areas of origin of transported air pollutants, as identified in Section 70500(c), include sufficient emission control measures (including “all feasible measures” and BARCT) in their attainment plans for ozone to mitigate the impact of pollution sources within their jurisdictions on

ozone concentrations in downwind areas commensurate with the level of contribution. An upwind district must comply with the transport mitigation planning and implementation requirements set forth in this section regardless of its attainment status, unless the upwind district complies with the requirements of Section 70601.

The limits proposed for Rule 459 have been adopted in the following ten California districts, with the implementation dates in parentheses: San Joaquin Valley APCD (January 1, 2009), South Coast AQMD (July 1, 2008), Ventura County APCD (January 1, 2009), Santa Barbara APCD (January 1, 2009), San Luis Obispo APCD (July 1, 2009), Yolo Solano AQMD (July 1, 2009), Bay Area AQMD (October 1, 2009), Imperial County APCD (April 1, 2010), Mojave Desert AQMD (July 1, 2011), and Placer County APCD (Jul y 1, 2011). Waterborne coatings that meet the proposed limits also have been successfully implemented and shown to be feasible in Europe.

4 44 FR 53761, September 17, 1979.

5 California Health and Safety Code Section 40406.Staff Report

Rule 459 July 25, 2011, Page 5

The proposed amendments to Rule 459 will meet t he BARCT requirements and fulfill the state plan commitment.

SUGGESTED CONTROL MEASURE (SCM) FOR AUTOMOTIVE COATINGS

CARB’s Suggested Control Measure for Automotive Coatings contains recommendations for automobile and mobile equipment coating operations. The SCM consolidated Group I and II vehicles, replaced the multi-stage topcoat and specialty coating categories with specific coating categories, and lowered the VOC limits for some ex isting coating categories. For solvents used in surface preparation, cleanup and cleaning of application equipment, the SCM recommended to lower the VOC limit to 25 grams per liter. The following table shows the VOC limits from the

SCM:

SCM Suggested VOC Limits for Automobile and Mobile Equipment Coatings

Category VOC Limit (g/l)*

Adhesion Promoter 540 Clear Coating 250 Color Coating 420 Multi-Color Coating 680 Pretreatment Coating 660

Primer/Primer Sealer 250 Single-Stage Coating 340 Temporary Protective Coating 60 Truck Bed Liner Coating 310 Underbody Coating 430 Uniform Finish Coating 540 Any Other Coating Type 250

Solvents 25

* Less water and exempt compounds

In order to comply with the new coating limits, CARB anticipated that coating manufacturers would use exempt compounds in the coating reformulations or use water-based coatings. The SCM included a recommendation to exempt tertiary butyl acetate (TBAc) as a VOC for the purpose of complying with the VOC limits for coatings and solvents. The SCM also recommended a prohibition of possession provision which prohibits end users from possessing any coatings or solvents that do not meet t he VOC limits, except when the end user uses an emission control device with a control efficiency of at least 85%.

CTG RECOMMENDATIONS

The Control Techniques Guidelines for Miscellaneous Metal and Plastic Parts Coatings contains recommended VOC content limits coatings applied to transportation plastic parts and motor vehicle materials. The following tables show how the CTG categories and limits match up with the coating categories in the current rule and SCM.Staff Report

Rule 459 July 25, 2011, Page 6

Transportation Plastic Parts Coatings

CTG Current Rule SCM

Category CTG Limit (g/l) 1 Category Limit (g/l) 2 Category SCM Limit (g/l)

Flexible Primer 540 Specialty Coating 840 Adhesion

Promoter 540

Non-flexible Primer 420 Primer 250 Primer 250

Basecoat 520 Multi-stage Topcoat System 3 540 Color Coat 420

Multi-color Coating 680 4

Topcoat 420 Single-staged Coating 340

Clear Coat 480 Multi-stage Topcoat System 3 540 Clear Coat 250

Non-basecoat or
Non-clear Coat 520 Precoat 600

Any other coating 250 Pretreatment Wash

Primer 780

Specialty Coating 840

Touch-up and Repair Coatings 620 Specialty Coating 840 Uniform Coating 540

1 VOC limits are based on the “Bake Exte rior Parts” coating categories.

2 VOC limits are based on the “Group II, no color match” co ating categories.

3 Multi-stage topcoat system is topcoat system t hat composes of a base coat and clear coat.

4 This limit does not meet the CTG limit for railroad cars or transportation equipment not covered by the national rule.

The proposed VOC limits from the SCM are equal to or more stringent than the VOC limits listed for the corresponding coating categories in the CTG, except for the proposed VOC limit for “multi-color coating”. The VOC limit for “multi-col or coating” in the SCM is not as stringent asthe corresponding VOC limit for the “base coat” in the CTG. The CTG does not have a “multicolor coating” limit.

The CTG is applicable to coating operations that are not already covered under the National Volatile Organic Compound Emission Standards for Automobile Refinish Coatings 6 . The national rule applies to automobile refinish coatings for use on passenger cars, vans, motorcycles, trucks, and any equipment that is physically capable of being driven or drawn upon a highway including, but not limited to, construction vehicles, farming equipment, hauling equipment, and miscellaneous equipment. Railroad ca rs and other mobile equipment that is capable of being driven or drawn on rails are not covered under the national rule and are, therefore, subject to the CTG.

Since Rule 459 is applicable to railroad cars or other mobile equipment capable of being driven or drawn on rails, Staff is proposing a limit of 520 g/l VOC for multi-color coating for the transportation equipment not covered by the national rule. This VOC limit for multi-color coating

6 40 CFR Part 59, Subpart B: National Volatile Organic Compound Emission Standards for Automobile Refinish Coatings.Staff Report

Rule 459 July 25, 2011, Page 7

will be incorporated into the proposed amendments to Rule 459 to satisfy the federal Clean Air Act requirements.

Motor Vehicle Materials

CTG Current Rule SCM

Category CTG Limit (g/l) Rule/ Category Limit (g/l) SCM Category SCM Limit (g/l)

Gasket/Gasket Sealing Material 200 None -- None --

Cavity Wax 650 None -- None --

Deadener 650 None -- None --

Lubricating Wax/Compound 700 None -- None --

Sealer 650 Rule 460/

Other sealant 420* None --

Underbody coating 650 Rule 459/ Rubberized Asphaltic Underbody 540* Underbody coating 430

Trunk interior coating 650 Rule 459/ Solid Color Topcoat 420* Single-staged Coating 340

Bed liner 200 Rule 459/ Specialty coating 840 Truck Bed Liner Coating 310

* Indicates t his current rule limit is less stringent than the VOC limit listed for the corresponding coating category in

the CTG.

Sealer is regulated by Rule 460, ADHESIVES AND SEALANTS, under the category of “other sealant.” As shown above, the CTG limit for sealer would be less stringent than the limit listed in Rule 460. Staff is not proposing to include sealer in the proposed amendments to Rule 459 since it is currently regulated by Rule 460.

For underbody coatings and truck bed liner coatings, these categories are also coating categories in the SCM. As such, these coatings will be incorporated in the vehicle coatings section along with the other coating categories from the SCM and not in the motor vehicle materials section. For trunk interior coatings, the VOC limit from the CTG is less stringent than any coating in the SCM or current rule that might be used as a coating for trunk interiors. Trunk interior coatings could be applied either as single staged coatings or as solid color coat/clear coat systems. The limits for these coatings under the SCM are more stringent than the trunk interior coating limit in the CTG. Therefore, Staff is not proposing to add a coating category for trunk interior coatings.

All motor vehicle materials categories in the table above will be incorporated in the proposed amendments to Rule 459 except for sealer and trunk interior coating. Staff is proposing the most stringent VOC limits for motor vehicle materials from the CTG, SCM or a current District

rule.Staff Report

Rule 459 July 25, 2011, Page 8

SUMMARY OF PROPOSED AMENDMENTS

Staff is proposing to amend Rule 459 to reduce emissions from automotive and mobile equipment coating operations by incorporating the requirements from the SCM. The SCM for automotive coatings was adopted by CARB to promote consistency and uniformity among districts rule and reduce VOC emissions. Adoption of these requirements will help improve rule enforceability by simplifying coating categories and establishing individual coating limits. In addition, the VOC limits proposed in the SCM meet the CTG requirements for transportation plastic parts except for multi-colored coating for mobile equipment drawn or driven on rails and it associated parts and components. Staff will incorporate the CTG recommended VOC limit for this coating category in order to satisfy federal RACT requirements. Staff is also proposing to include the requirements recommended in the CTG for motor vehicle materials such as gasket/gasket sealing materials, deadener, cavity wax, and lubricating wax/compound.

The proposed amendments to Rule 459 will apply to the coating of motor vehicles, mobile equipment, and their associated parts and components. Only those pieces of equipment designed to be parts of motor vehicles or mobile equipment would be classified as associated parts and components. For example, truck trailers and camper shells are covered by this rule.

The significant proposed amendments for Rule 459 are summarized below. For a detailed list of changes, see Appendix B.

Changes to VOC Limits: The following table lis ts the changes to VOC limits for coatings, surface preparation solvents, and cleanup solvents currently regulated by Rule 459, and the new motor vehicle materials not currently regulated by a District rule. Each row applies to a coating or solvent type. The column labeled “Current VOC Limits” lists the current categories and their corresponding VOC limits. The column labeled “Proposed VOC Limits” refers to the new or replaced categories in the proposed amendments. Some categories are proposed to be changed as well as their corresponding VOC limits. Staff evaluated the VOC limits listed in the SCM and CTG. This table reflects the more stringent of the two and the last column lists which (SCM or CTG) limit was chosen.

Proposed VOC Limits

Current VOC Limits Proposed VOC Limits

Current Category 1 VOC Limit (g/l) 2 New/Replaced Category VOC Limit (g/l) 2 SCM

or CTG Pretreatment Wash Primer 780 Pretreatment Coating 660 SCM

Precoat 3 600

Primer/Primer Sealer 250 SCM Primer/Primer Surfacer 3 250

Primer Sealer 3 420 4

Solid Color Topcoat 420 Single-Stage Coating 340 SCM Color Coating 420 SCM Metallic/Iridescent Topcoat 420 4 Color Coating 420 SCM

Multi-Stage Topcoat System 5 540 4 Color Coating 420 SCM Multi-Color Coating 6

Mobile equipment driven or drawn on rails and its parts and components 520 CTGStaff Report

Rule 459 July 25, 2011, Page 9

Current VOC Limits Proposed VOC Limits

Current Category 1 VOC Limit (g/l) 2 New/Replaced Category VOC Limit (g/l) 2 SCM

or CTG

Multi-Stage Topcoat System 5 540 4 Multi-Color Coating 6

Motor vehicle or all other mobile equipment and its parts and components 680 6 SCM

Clear Coating 250 SCM Rubberized Asphaltic Underbody 540 Underbody Coating 430 SCM Temporary Protective Coating 60 7 Temporary Protective Coating 60 SCM

Specialty Coating 8 840 Adhesion Promoter 540 SCM Truck Bed Liner Coating 200 CTG Uniform Finish Coating 540 SCM Any Other Coating Type 250 SCM

Rule 451: Any other coatings – Air dried (for radiator, drive trains, differentials, and engine components) 340 Single-Staged Coating 340 SCM

N/A -- Gasket/Gasket Sealing

Material 200 CTG

N/A -- Cavity Wax 650 CTG

N/A -- Deadener 650 CTG N/A -- Lubricating Wax/Compound 700 CTG

Surface preparation solvents to clean plastic parts or to remove road tar, engine oil, grease, overspray, or adhesives 780 Bug and Tar Removers 25 or use regulated
Consumer

Product SCM

Solvents 25 SCM Other surface preparation

solvents 72 Solvents 25 SCM

Equipment cleanup solvents 72 9 Solvents 25 SCM

1 All current categories are listed from Rule 459, except as noted.

2 Less water and exemption compounds, except as noted.

3 These categories have been consolidated in the SCM in to the single category of Primer or Primer Surfacer.

4 VOC limit is the most stringent limit from Group I or Gro up II vehicle category. Group I and Group II vehicle have
been consolidated in the SCM.

5 This category has been eliminated in the SCM and has be en replaced by specific limits on each coating stage.

6 Multi-Color Coating was previously contained within the mu lti-stage topcoat system. Assuming a worst-case multicolor coating (VOC content 680 g/l) for the base coat and a co lor coating (420 g/l) as the clear coat of a multi-stage system the VOC of the multi- stage is 507 g/l. The proposed limits are more restrictive.

7 Including water and exempt compounds.

8 This category has been eliminated in the SCM and has been replaced by specific limits on each specialty coating.

9 The current rule allows the use of an encl osed system in lieu of meeting the VOC limit.

The current version of Rule 459 allows the use of any solvent for cleaning application equipment as long as the cleaning operation is performed in an enclosed system. The proposed amendments will eliminate this option for cleaning application equipment. All solvents used for cleaning application equipment after the proposed effective dates must meet the proposed limit.Staff Report

Rule 459 July 25, 2011, Page 10

The proposed amendments will also clarify that a coating remover (stripper) is not a solvent used in a cleaning operation. A material used to remove overspray or to clean application equipment is considered a solvent and is subjec t to the proposed limit of 25 grams per liter.

Effective Date for Proposed VOC Limits: Staff did not receive adverse comments regarding the proposed effective dates for the amendments. As such, Staff is recommending that the proposed requirements be effective six months after the date of adoption, as proposed at the public workshop. This effective date will achieve a level playing field in a relatively short period of time, placing District sources that have already invested in new technology and sources in surrounding air districts on equal footing with shops that have not yet converted to using lower VOC coatings.

Changes/Additions to the Exemptions: Changes or additions to the exemptions are proposed for Rule 459 for consistency with the SCM and/or the CTG. These are described as follows:

 The exemption for restoration of special inte rest vehicles and street rod vehicles is proposed for sunset six months after date of adoption. Currently, SMAQMD and San Diego County APCD are the only districts in California providing such an exemption. The SCAQMD rule, SJVAPCD rule and the SCM do not include this exemption.

 The exemption for radiators, drive trai ns, differentials, and engine components is proposed for sunset six months after the date of adoption. Radiators, drive trains, differentials and engine components will be considered associated parts and components and subject to the proposed amendm ents to Rule 459. Previously, the coating of these parts was regulated under Rule 451.

 The exemption for graphic arts operations (previously called stencil coatings) is proposed to be narrowed, consistent with the SCM. In the current rule, stencil coatings are exempt from all provisions of the rule. Under the proposed exemption, these coatings would be exempt only from the application method requirements.

 The exemption for aerosol containers is proposed to be revised to include any size aerosol coating products, which are regulated by the California Consumer Product Regulations 7 , consistent with the SCM.

 The exemption for touch-up coating from a container of two ounces or less will be lowered to a container of 0.5 fluid ounces or less, consistent with the SCM.

 An exemption is proposed to be added for coatings in an assembly line operation at an original equipment manufacturing plant. The current rule exempted this type of operation through its applicability and definitions, but this exemption is not clearly stated. In addition, the requirements suggested by the SCM are not intended to cover assembly line operations at an original equipment manufacturing plant.

 The applications of any coating use of no more than one fluid ounce when applied from a container with a capacity of no more than one fluid ounce, the application of underbody coating, and the application of truck bed liner coating are proposed to be exempted from the application method requirements. This ex emption is consistent with the SCM.

 An exemption is proposed for the VOC limits for new motor vehicle materials, which are materials from the CTG previously not regulated by other District rules, at stationary sources with total actual emissions of less than 2.7 tons of VOC per 12-month rolling period from truck bed liner and underbody coatings, motor vehicle materials, surface coating operation for miscellaneous metal parts and products subject to Rule 451, and

7 Title 17, California Code of Regulations, Se ctions 94520 – 94528, Aerosol Coating Products.Staff Report

Rule 459 July 25, 2011, Page 11

surface coating operation for miscellaneous plastic parts and products subject to new Rule 468. New Rule 468 will be proposed for adoption later this year. This exemption is
in the CTG.

TBAc VOC Exclusion: On November 29, 2004, EPA exempted tertiary butyl acetate (TBAc) 8 from the federal definition of VOC in Title 40, Part 51 of the Code of Federal Regulations for the purposes of complying with VOC emission limits or VOC content requirements. However, EPA maintained TBAc as a VOC for the purposes of all recordkeeping, emissions reporting, photochemical dispersion modeling, and inventory requirements.

In 2006, CARB, with assistance from the Office of Environmental Health Hazard Assessment (OEHHA), conducted an environmental impact assessment on TBAc 9 . CARB determined that the increased use of TBAc is not expected to increase depletion of stratospheric ozone or contribute to global warming. CARB also conc luded that TBAc could pose a potential cancer risk to humans because TBAc metabolizes to tertiary butyl alcohol (TBA); TBA is a potential carcinogen that may result in a cancer risk to humans. Because TBAc may be a potential carcinogen, OEHHA developed an interim inhalation unit risk factor for TBAc of 4x10 -7 (ug/m 3 ) -1

. CARB recommended that the air districts determine whether the use of TBAc in certain products would pose an unacceptable exposure.

Furthermore, CARB had adopted the SCM which recommended exempting TBAc as a VOC to assist in reformulating products to comply with the proposed limits in the SCM. To ensure that there were no adverse impacts to nearby rece ptors, CARB performed a health risk assessment (HRA). According to CARB’s 2002 Automotive Coating Survey, toluene, xylene, and methyl ethyl ketone (MEK) accounted for approximately 27.5% of the VOC used in automotive coatings 10 . CARB assumed that TBAc replace all toluene, xylene, and MEK in the coating products at a 1:1 ratio. The HRA was performed using the largest known autobody shop in California, where the TBAc emissions were approximately 1,350 pounds per year after the assumed substitution. The HRA estimated the maximum potential risk to be 2.8 excess lifetime cancer cases per million cases for a resident living near the autobody shop. CARB concluded that the risk from replacing toluene, xylene, and MEK in all automotive coatings with TBAc would not be significant 10

.

In December 2005, SCAQMD amended its automobile refinishing rule (Rule 1151, Motor Vehicle and Mobile Equipment Non-assembly Line Coating Operations) which included a limited exemption for TBAc. TBAc is not considered a VOC when used in automotive coatings other than color coatings and clear coatings, citing the availability of sufficient compliant coatings on the market in the clear and color coating categories that meet the VOC limits of the rule without using TBAc 11 . The cancer risk for the potential use of TBAc in automotive coatings other than color coatings and clear coatings was calculated by SCAQMD to be 5 in a million and was below its threshold of significance of 10 in a million.

8 “Revision to Definition of Volatile Organic Compound s – Exclusion of t-Butyl Acetate” Federal Register, Volume 69, November 29, 2004, p. 69298 – 69304.

9 “ Environmental Impact Assessment of Tert iary-Butyl Acetate” CARB, January 2006.

10 “ Staff Report for the Proposed Suggested Control Measure for Automotive Coatings” CARB, October 2005, p. VI-2 – VI-4.

11 “Staff Report for Proposed Amended Rule 1151 – Motor Vehicle and Mobile Equipment Non-Assembly Line Coating Operations” SCAQMD, December 2005, p. 12.Staff Report

Rule 459 July 25, 2011, Page 12

SJVAPCD exempted TBAc from its automobile refinishing rule (Rule 4612, Motor Vehicle and Mobile Equipment Coating operations – Phase II) when it is used as a component of automotive coatings. SJVAPCD assumed that TBAc would replace up to 50 percent of non-exempt VOC compounds (xylene, toluene and methyl ethyl ketone) in automotive coatings. The cancer risk of the potential use of TBAc was 5.6 in a million, which is below its significance threshold of 10 in a million. As such, SJVAPCD concluded that the potential usage of TBAc is less than significant and should be exempted from automotive coatings at all facilities 12 . In addition, SJVAPCD later included TBAc as an exempt com pound in its Rule 1020, Definitions, with the requirement that an application be submitted to the district when TBAc usages are greater than one gallon per year. The application requirement will allow SJVAPCD to perform a health risk assessment on the total usage to ensure that the risk is less than significant 13

.

Unlike SCAQMD and SJVAPCD, BAAQMD did not include an exemption for TBAc in its automobile refinishing rule (Rule 8-45, Motor Vehicle and Mobile Equipment Coating Operations). BAAQMD has a policy not to exempt compounds that deplete stratospheric ozone or are toxic. However, BAAQMD has c onsidered exemptions for compounds where the compounds were needed to meet VOC limits in particular rules. According to BAAQMD, compliant coating products have been developed that meet the lower VOC standards and do not use TBAc. As a result, BAAQMD did not exempt TBAc in its Rule 8-45 because TBAc may potentially pose a cancer risk to humans and compliant coating products are commercially

available and in use 14

.

To evaluate the potential impact from the exemption of TBAc in Rule 459, Staff calculated the maximum emissions of TBAc that will cause adverse impact to human health. Generally, a cancer risk of less than 10 in a million per facility for a nearby receptor is below the threshold of significance and considered acceptable based on SMAQMD threshold of significance for the California Environmental Quality Act (CEQA). Staff used the Bowman Environmental Engineering Short Term (BEEST) 15 for Windows modeling program, version 9.63, to determine the unit emission rate concentration from a point source and volume source necessary to reach a cancer risk of 10 in a million. The specific detail and modeling assumptions are summarized in Appendix D and the modeling results are shown in the following table.

Source

Type Unit Emission

Rate
Annual Conc. (ug/m 3 )/(g/s) Inhalation

Unit Risk

Factor (ug/m 3 ) -1 Cancer

Risk (per 10 6
Cases) Emission

Rate (g/s) Annual TBAc

Emissions

(lb/year) Annual VOC

Emissions

(lb/year)

Point 95.1 4 x 10 - 7 10 0.26 4,340 15,800 Volume 1,880 4 x 10 - 7 10 0.01 220 798 Emission Rate, g/s = Cancer Risk/[(Unit Emission Rate (ug/m 3 )/(g/s) * (Inhalation Un it Risk Factor (ug/m 3 ) -1 ) Annual TBAc emissions, lb/year = emission rate, g/s * 0.0022 lb/g * 3600 s/hr * 8 hr/day * 5 day/wk * 52 wk/yr Annual VOC emissions, lb/ year = (annual TBAc emissions, lb/year)/(27.5%)

12 “Final Draft Staff Report for Proposed Amendments to Rule 4602, Motor Vehicle and Mobile Equipment Coating Operations, and Rule 4612, Motor Vehicle an d Mobile Equipment Coating Operations – Phase II” SJVAPCD, August 2006, p. 5 – 6.

13 “ Final Draft Staff Report: Proposed Amendments to Rule 1020 (Definit ions),” SJVAPCD, December 18, 2008, p. 5.

14 “Staff Report Regulation 8, Rule 45: Motor V ehicle and Mobile Equipment Coating Operations” BAAQMD, November 2008, p. 18 – 19.

15 Available from BEE-Line Softwar e at www.beeline-software.comStaff Report

Rule 459 July 25, 2011, Page 13

For a coating operation, a point source facility is a facility that spray paints inside a spray booth, and the emissions are exhausted through a stack. The maximum emission rate for TBAc from a point source facility to ensure that the cancer risk is less than 10 in a million is 0.26 grams per second. The emission rate is equivalent to 4,340 pounds of TBAc per year, assuming the facility operates 8 hours per day, 5 days per week, and 52 weeks per year. In CARB’s Environment Impact Assessment of Tertiary-butyl Acetate, CARB determined that TBAc may be used to replace xylene, toluene, and MEK in automotive coatings. According to the SCM, xylene, toluene and MEK accounts for approximately 27.5% of the total VOC emissions in automotive coatings. Assuming that 100% of xylene, toluene and MEK are replaced by TBAc, the VOC emissions, including TBAc emissions, from the coating facility would need to be more than 15,800 pounds per year to exceed the cancer risk of 10 in a million. Staff compared the

calculated annual emissions to actual emission s from the largest permitted automotive coating facility in the District. According to the inspection reports for 2006 16 , the largest permitted automotive coating facility emits approximat ely 6,000 pounds of VOC per year. Staff can conclude that it is unlikely for a point source facility to use amounts that would cause an adverse impact to nearby receptors.

Not all automotive coating occurs in a paint booth. A volume source technique in the BEEST model evaluates these facilities where coating does not occur in a spray booth, and the emissions are exhausted through ground level openings in the building, e.g. doors and windows, not through an exhaust stack. To determine, the maximum emission rate for TBAc

from a volume source where the cancer risk is less than 10 in a million was determined to be 0.01 grams per second. That emission rate is equivalent to 220 pounds of TBAc per year, assuming the operation is 8 hours per day, 5 days per week, and 52 weeks per year. As discussed above, if 27.5% of the total VOC is TBAc, the VOC emissions, including TBAc emissions, from the coating facility would need to be more than 798 pounds per year to exceed the cancer risk of 10 in a million. Most permitted sources use spray booths.

Rule 459 applies to both permitted and unpermitted facilities. Permitted facilities that do not use paint booths could have their permit conditioned to limit their TBAc usage to ensure they do not exceed the cancer risk threshold. Staff analyzed whether Rule 459 needed restrictions to ensure that unpermitted facilities remained below this level. Rule 201 – General Permit Requirements exempts from permit coating operations that use less than 1 gallon per day of coating materials and solvents. The analysis considered an unpermitted facility without a spray booth using the maximum amount of coatings allowed, (just under) 1 gallon per day, for 5 days per week and 52 weeks per year. Using an average VOC content for coating of 4.5 pounds per gallon (540 grams per liter), the VOC emissions for a non-permitted volume source would be 1,170 pounds per year. Because the potential maximum VOC emissions from an unpermitted facility that does not use a spray booth, 1,170 pounds per year, are more than the total VOC emissions that would exceed the cancer risk threshold, 798 pounds per year, restrictions are needed in Rule 459 that apply to unpermitted facilities.

To ensure that proposed rule does not adversely impact nearby receptors, Staff is proposing a limited exemption for TBAc. Staff is proposing that TBAc is exempt as a VOC for the purposes of complying with the proposed VOC standard when contained in an automotive coating or coating component that is applied only within a spray booth. This provision will ensure that TBAc emissions are exhausted through a stack, for which the point source modeling shows that

16 Calendar year 2006 was used because it represented the activities and VOC emissions from this industry before the economic downturn.Staff Report

Rule 459 July 25, 2011, Page 14

the cancer risk is less than 10 in a million. St aff is not proposing to exempt TBAc as a VOC when used outside of a spray booth or as a solvent during the cleaning operation (surface preparation and cleanup operations). Permitted and unpermitted facilities that do not have a spray booth will not be able to use TBAc as an exempt compound.

In addition, specific recordkeeping requirements for TBAc will be added to the rule as required by the federal exemption. Rule 459 current ly has no reporting requirements for VOC, and photochemical dispersion modeling and inventory requirements will not be addressed within the rule because these activities are performed by the District, not the coating manufacturers or end

users.

Proposed Recordkeeping Changes: Significant changes for recordkeeping are proposed. The duration of records maintained on site remains at three years, consistent with the SCM and in line with EPA guidelines for non-major sources 17,18 . Labeling is proposed to be required on all automotive coatings or components as proposed in the SCM. In addition to the VOC regulatory content (VOC content of a coating less water and exempt compounds) upon which VOC limits are based, VOC actual content (VOC content including water and exempt compounds) and reporting is required. VOC actual content is additional information that is used for calculating VOC emissions for inventory purposes. Details of the proposed recordkeeping requirements compared to the current Rule 459 are detailed in the following table. Only the differences in the requirements between the two rules are shown in the table. Requirements that are not proposed to change are not listed.

Recordkeeping

Requirement Current Rule 459 Proposed Rule 459

Data Sheet Data sheet should include:

- Name/code/manufacturer - Maximum VOC content,

as applied, after any mixing or thinning as recommended by

manufacturer

- Recommendation

regarding thinning, reducing, or mixing

materials For coatings, coating components and ready to spray mixtures: - VOC regulatory and VOC

actual - Weight percentage of

volatiles, water & exempt compounds - Volume percentage of

water and exempt compounds - Density of the material - For materials containing

TBAc, actual content of

TBAc For coating removers and

solvents:

- VOC content as supplied

17 “Guidance Document for Correcting Common VOC & Other Rule Deficiencies” U.S. EPA, August 21, 2001, p. 12.

18 Sacramento County does not have a Title V permitted automotive coating facility, which would require 5-year records.Staff Report

Rule 459 July 25, 2011, Page 15

Recordkeeping

Requirement Current Rule 459 Proposed Rule 459 List of Coatings / Materials - Identification of the materials exceeding the
VOC limits - VOC actual and VOC regulatory, as applied
- VOC content for solvents - Identify the material as

coating or solvent Usage/Purchase Records

- Monthly records of total applied volume of all coatings, thinners, reducers, hardeners, retarders and catalysts

- Application method used

for each category

- Alternative to monthly

recordkeeping is to

maintain records of inventory, purchase

invoices and amount of

waste

- Daily records of utility

bodies coated, type and amount of coatings used

in the emission control device, and type and amount of non-compliant

material - Monthly purchase records identifying the coating type and volume

of each material

- Daily records identifying

the coating type and

amount if an emission

control device is used

- Monthly records for

coating containing TBAc, including coating type

and content of TBAc contained in coating

Labeling None All automotive coatings and solvents subject to the proposed rule must be labeled
with VOC actual and VOC regulatory, as supplied. Sales Records Requires records for all sales

within District. Requires detailed sales records for those claiming exemption from proposed rule
under the Prohibition of Sale

or Manufacture section

For simplicity, the proposed rule will be republis hed without the definitions, coating categories, recordkeeping requirements, and any other requirements that are no longer applicable after the

effective date.

EMISSIONS IMPACT

The District’s projected emission inventory for 2012 is 303 tons per year (0.83 tons/day) of VOC emissions from automotive coatings, based on existing requirements. This total does not include emissions from aerosol coating products, which are regulated under the California Consumer Product Regulations and are not subject to requirements under Rule 459 or theStaff Report

Rule 459 July 25, 2011, Page 16

proposed amendments. Staff estimates that another 99 tons per year of VOC are emitted from the use of solvents associated with automotive coatings. CARB provided the following information to the District, based on the database developed from the 2002 Automotive Refinish Coating Survey:

 For each coating category, the average actual VOC content (including water and exempt compounds) of coatings that comply with the VOC regulatory limits (excluding water and exempt compounds) of the current Rule 459.

 For each coating category, the average actual VOC content (including water and exempt compounds) of coatings that comply with the SCM VOC regulatory limits (excluding water and exempt compounds) of the SCM that are being proposed for amendment in

Rule 459.

 For each coating category, the total number of gallons applied in Sacramento County in calendar year 2001, the most recent year surveyed prior to the SCM. Statewide volumes were apportioned to Sacramento County based on population.

Using the information provided by CARB, Staff estimates that implementation of the proposed coating limits will result in an emission reduction of 60%, as shown in Appendix C. Applying this percentage to the 2018 inventory, the proposed amendments will reduce VO C emissions by 189 tons per year (0.52 tons/day) in 2018 (the attainment year). The Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan includes a commitment for the
District to reduce VOC emissions from automotiv e coating operations by 0.11 tons per day in

2018 19 . The proposed amendments will exceed the SIP commitment.

The Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan also includes a commitment for the District to reduce VOC emissions from solvent cleaning and degreasing operations by 0.59 tons per day in 2018 20 . Nine rules with solvent cleaning requirements were amended in 2008, resulting in VOC emissions reductions of 0.53 tons per day in 2018, leaving a shortfall of 0.06 tons per day.

Although Rule 459 was not specifically identified in the solvent cleaning/degreasing plan commitment, additional emission reductions will be achieved by these amendments from solvent cleaning activities associated with automotive coating operations. The VOC emissions from application equipment cleaning and surface preparation/cleanup are projected to be 102 tons per year (0.28 tons/day) for 2018 under the current requirements of Rule 459 21 . Lowering the allowable VOC content from the current 72 g/l to the proposed 25 g/l will reduce VOC emissions from solvents by 67 tons per year (0. 18 tons/day) in 2018, and are necessary to meet the solvent cleaning/degreasing plan commitment.

19 “ Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan”, March 26, 2009, Appendix C, p. C-93 – C-95.

20 “ Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan”, March 26, 2009, Appendix C, p. C-103 – C-105.

21 “Staff Report for Rule 450 – Graphic Arts Operat ions, Rule 451 – Surface Coating of Miscellaneous Metal Parts and Products, Rule 452 – Can Coating, Rule 454 – Degreasing Operations, Rule 456 – Aerospace Assembly and Component Coating Operati ons, Rule 463 – Wood Products coatings, Rule 464 – Organic Chemical Manufacturing Operations, Rule 465 – Polyester Resin Operations, Rule 466 – Solvent Cleaning,” Sacramento Metropolitan Air Quality Management District, August 25, 2008.Staff Report

Rule 459 July 25, 2011, Page 17

Assuming that the effective date of the proposed amendments is six months after date of adoption, the emission inventory and reductions for the implementation year (2012), the milestone years (2014 and 2017) and the attainment year (2018) are shown in the following

table:

VOC Emission Inventory (Inv.) and Emission Reductions (Red.) Tons per Day

2012 2014 2017 2018

Inv. Red. Inv. Red. Inv. Red. Inv. Red. Automotive Coatings* 0.83 0.50 0.84 0.51 0.86 0.52 0.86 0.52

Associated Solvents** 0.27 0.18 0.27 0.18 0.28 0.18 0.28 0.18

Total 1.10 0.68 1.11 0.69 1.14 0.70 1.14 0.70 * Emission inventory for automotive coatings for Sacramento non-attainment area is from the CARB Ozone SIP Planning Inventory, Version 1.06. The reducti on is calculated by multiplying the inventory by 60%, the emission reductions achieved by the proposed amendments, as shown in Appendix C.

** Emission inventory for solvents associated with automotive coating operati ons was from the Staff Report for Rule 450 – Graphic Arts Operations, Rule 451 – Surface Coating of Miscellaneous Metal Parts and Products, Rule 452 – Can Coating, Rule 454 – Degreasing Operations, Rule 456 – Aerospace Assembly and Component Coating Operations, Rule 463 – Wood Products coatings, Rule 464 – Organic Chemical Manufacturing Operations, Rule 465 – Po lyester Resin Operations, Rule 466 – Solvent Cleaning. The inventory was for year 2010 and was grown at the same rate as the inventory for automotive coatings for 2012, 2014, 2017 and 2018.

COST IMPACT

Section 40703 of the California HSC requires that the District consider and make public its findings relating to the cost effectiveness of implementing an emission control measure.

Rule 459 applies to those who supply, sell, offer for sale, manufacture, distribute, use, or solicit the use or application of automotive coatings and solvents for use within the District. According to the staff report to the SCM, CARB concluded that most automotive refinishing facilities and coating manufacturers would be able to absorb the cost to comply with requirements of the SCM with no significant adverse impact on their profitability. Furthermore, CARB expected that the cost incurred by the coating manufacturers and automotive refinishing facilities would be passed on to consumers. As a result, most of the impact would be in the form of increased insurance premiums and only consumers who hav e their vehicle repaired or refinished are impacted 22

.

Since CARB adopted the SCM in 2005, economic times have changed, therefore, Staff evaluated the potential cost impacts from the proposed amendments to Rule 459. A cost impact was analyzed in a socioeconomic report (included in Appendix E) prepared by Eastern Research Group (ERG). According to the cost analysis, adoption of the proposed amendments is not expected to result in increased costs fo r coating manufacturers because coating products have already been developed to meet the proposed lim its. Distributors will not incur additional cost because the cost would be passed on to automotive coating facilities. As such, automotive

22 “ Staff Report for the Proposed Suggested Control Measure for Automotive Coatings” CARB, October 2005, p. VII-1 – VII-2.Staff Report

Rule 459 July 25, 2011, Page 18

coating facilities will incur some cost increases to comply with the proposed amendments. Costs for automotive coating facilities are discussed below:

Equipment Costs: Compliance with the proposed VOC limits for color coating is expected to require waterborne coatings. Coating manufacturers recommend autobody facilities use enhanced air movement and heating systems to accelerate the drying time of waterborne coatings. In CARB’s Staff Report, CARB listed several options for enhanced air movement and heating systems, which range from small hand held devices to fully integrated air movement systems. CARB estimated that these systems cost ranges from $1,600 to $60,000. CARB also estimated other equipment cost such as replacing mixing bank lids, upgrading spray gun equipment, purchasing spray gun tip air pressure gauges, and upgrading waste disposal equipment to be approximately $1,500 per facility. Total equipment cost per facility to comply with the SCM ranged from $3,100 to $61,500 23

.

After several site visits from Staff and conversation with coating manufacturers, compliance withthe proposed VOC limits did not require as much equipment as CARB had anticipated. Handheld dryers were sufficient equipment to achieve desirable coating results according to ERG. Prices for air movement equipment ranged from $80 for a hand-held dryer to $1,026 for a stand with two blower guns, air gauge and air-drying desiccants. Since hand-held dryers are the minimum equipment needed to comply with the proposed VOC limits, ERG used the average cost of $160 for a hand-held dryer.

In addition, other equipment needed to comply with the proposed VOC limits were new spray guns and spray gun cleaning kits. Prices for new spray guns ranged from $99 to $586, with an average price of $368; and prices for spray gun cleaning kits ranged from $11 to $31, with an average price of $21.

ERG assumes that a facility purchases one hand-held dryer, one spray gun, and one spray gun cleaning kit per spray booth. Therefore, the average equipment cost per facility to comply with the proposed amendments ranges from $550 for a facility with one spray booth to $2,200 for a facility with four spray booths 24

.

Training Costs: According to CARB’s Staff Report, there are non-recurring costs associated with the change from solvent-based to waterborne technology, including employee training and material loss. These non-recurring costs range from $3,500 to $6,500, depending on the size of the facility 25

.

The proposed new VOC limits are not effective until six months after the date of adoption. This will allow facilities to use up existing coatings, minimizing any costs associated with material loss. Therefore, Staff assumes that there would no costs associated with material loss. However, Staff expects facilities to incur some costs to train their employees to use waterborne coatings.

23 “ Staff Report for the Proposed Suggested Control Measure for Automotive Coatings” CARB, October 2005, p. C-3 – C-4.

24 “Socioeconomic Impact Analysis for SMAQMD Ru le 459 Amendments, Final Report” ERG, July 7, 2011, p. 4 – 5.

25 “ Staff Report for the Proposed Suggested Control Measure for Automotive Coatings” CARB, October 2005, p. C-3 – C-4.Staff Report

Rule 459 July 25, 2011, Page 19

Waterborne coatings are applied differently than solvent based coatings. As such, coating manufacturers offer training to facilities to demonstrate the proper application of waterborne coatings. Training is usually free and provided by the coating manufacturers as incentive for facilities to use their coating products. Manufacturers often provide on-site training to shops with sufficient volume in material purchases. For low-volume businesses, manufacturers provide off-site, one-day training. The training class may be offered for free or as much as $250

per person.

For the purpose of the analysis, ERG used a conservative assumption and assumed all training is done off site and costs $250 per person. ERG also assumed that the facility would send one employee per facility and incur the cost to pay the wages of the employee. The costs include 8 hours of training at $21.61 per hour or $172.88 per employee. ERG estimates the total training cost per facility to be approximately $423 26 . Larger facilities with more than one painter were assumed to train their “lead painter,” who then trains other employees (no additional cost for other painters).

Combined One-time Costs: The one-time cost (including additional equipment and training for one person) to comply with the proposed amendments is presented in the following table.

Description Spray Gun Spray Gun Cleaning Kit Hand-held Dryer Training Total

1 Spray Booth $368 $21 $160 $423 $972 2 Spray Booths $737 $42 $320 $423 $1,522 3 Spray Booths $1,105 $63 $480 $423 $2,071 4 Spray Booths $1,473 $85 $640 $423 $2,621

Coating Costs: Coating manufacturers have stated t hat it is very difficult to compare the cost between solvent based coatings and waterborne coatings. Factors that affect cost differences include the differences in coating mixing ratios and coating coverage rates. Some coating manufacturers have stated that waterborne coatings may be more expensive on a price per gallon basis but require less material for a coating job than solvent base coatings 27, 28

.

According to CARB’s Staff Report, CARB assumed that the increase in coating costs ranged from $378 per year to $2,367 per year, depending on the production of the autobody facility 29

.

Staff received coating cost data from four coating manufacturers for the coatings that comply with the current rule and the coatings that will comply with the proposed amendments. One coating manufacturer provided coating cost differ ences with adjustments to reflect the coverage rate showing an overall cost savings of 11% from waterborne coatings. The other three comparisons showed an increase in coating cost ranging from 6% to 12% that did not account for coating coverage. For the analysis, ERG assumed zero cost increase where there was a cost savings in order not to underestimate of the cost impacts to facilities affected by the proposed amendments. Therefore, recurring cost from increased coating cost may increase

26 “Socioeconomic Impact Analysis for SMAQMD Ru le 459 Amendments, Final Report” ERG, July 7, 2011, p. 4 – 5.

27 E-mail correspondence with Michael A. Veney, S herwin-Williams Automotive Finishes, June 3, 2011.

28 E-mail correspondence with Emily Taylor, DuPont Performance Coatings, May 23, 2011.

29 “Staff Report for the Proposed Suggested Control Measure for Automotive Coatings” CARB, October 2005, p. C-3 – C-4.Staff Report

Rule 459 July 25, 2011, Page 20

from 0% to 12%. This is equivalent to an increase in coating costs from $0 per gallon to $25.17 per gallon 30

.

ERG used the coating usage records from 2009 or 2010 field inspection reports for permitted facilities that have not converted to waterborne coatings. Fifty-one permitted facilities had coating usage records, and the coating usage records ranged from 12 gallons per year to 1,596 gallons per year. ERG categorized all 71 perm itted facilities that have not converted to waterborne coatings into six categories based on the facilities’ revenue as listed on Dun & Bradstreet Million Dollar Database. ERG calculated the median annual coating usages from the permitted facilities for each facility revenue size. Where a permitted facility did not have annual coating usage records, ERG used the median annual coating usages determined for its corresponding facility size category as shown in the following table. For facilities that do not spray enough coatings to require a permit, ERG used the average of the lowest 10 percent of the coating usage data from the 51 permitted sources, 18.4 gallons per year 31 , to estimate the coating usages for unpermitted facilities.

Facility Facility Size (Revenues) Annual Coating Usages (gallons/year)

Permitted Unknown 108 <$250,000 108 $250,000 - $500,000 232 $500,000 - $750,000 210 $750,000 - $1,000,000 204 > $1,000,000 388 Unpermitted All 18.4

The total increase in coating cost ranges from $0 per year to $40,171 per year, depending on the production of the facility. However, if waterborne coatings have higher coating coverage, then the coating cost increases will be less than noted above.

Solvent Costs: Currently, Rule 459 requires that spray guns be cleaned with a solvent containing no more than 72 g/l VOC, or cleaned within an enclosed gun cleaner. ERG reviewed the changes in costs of surface preparation and cleaning of application equipment that might result from changing from 72 g/l VOC to 25 g/ l VOC. ERG compared the prices for 72 g/l surface cleaners to cleaners that contain 25 g/l VOC or less. For all four manufacturers contacted, the cleaners meeting the 25 g/l limit were less expensive than the 72 g/l cleaners.

Typically, facilities that use solvent based coat ings use high VOC solvents such as lacquer thinner to clean spray guns within an enclosed gun cleaner. Lacquer thinner can be purchased for approximately $15/gallon in 5-gallon containers 32 and $9/gallon in 55-gallon drums 33 . The cleaning solvent is recirculated within the system until it contains too much paint waste to be effective. At that point, the spent solvent is drained out and the gun cleaning system is refilled with fresh solvent. At the majority of shops, the spent solvent is put into a drum for disposal as

30 “Socioeconomic Impact Analysis for SMAQMD Ru le 459 Amendments, Final Report” ERG, July 7, 2011, p. 5 – 6.

31 Ibid, p. 5 – 6.

32 TrueValue, www.truevalue.com (accessed on 7/22/2011)

33 The Nelson Paint Company, www.nelsonpaint.com/lacquer-thinner.html (accessed on 7/22/2011)Staff Report

Rule 459 July 25, 2011, Page 21

hazardous waste. Disposal costs approximately $2 to $3 per gallon 34 . Many shops contract with a service to maintain the gun cleaning systems and haul away hazardous waste. Some of the shops have solvent recycling systems, which a llow recovery of a portion of the solvent from the paint solids by evaporation. With the recycl ing systems, there is a disposal cost associated with the paint solids, as well as a cost for fresh makeup solvent. However, the proposed VOC limit of 25 g/l would likely preclude the use of recycled solvent because an initially compliant solvent would gain VOC content from the coatings as they are cleaned from the spray guns. The material and disposal costs of discontinuing solvent recycling, however, may be offset by a decrease in the amount of cleanup material used to clean water based spray equipment, as

discussed below.

In the proposed amendments, solvents used to clean application equipment must contain no more than 25 g/l VOC. For water based coatings, a spray gun can be cleaned primarily using only a few ounces of tap water (virtually no cost) followed by a final rinse with acetone from a squirt bottle. Acetone can be purchased for approximately $16/gallon in 5-gallon containers and $12/gallon in 55-gallon drums 35 . The spent cleaning solution is disposed as hazardous waste. Some shops may choose to use flocculants that settle and separate the paint solids so that the cleaning solution can be reused several times before disposal. Flocculants can be purchased for approximately $63 for a 2 kg container, which can treat 150 gallons of water 36

.

In 2008, the Institute for Research and Technical Assistance (IRTA) conducted a study of cleaning solvents and other materials used in the autobody industry 37 . One case study involved a facility that had recently converted from solvent based coatings to water based coatings. Prior to conversion, the total annual cost for application equipment cleaning, including material and disposal costs, was $1,832. After conversion to water based coatings, the cost decreased to $407 38 . Most of the reduced cost was due to the fact that a much lower volume of cleaning material was required to be purchased and disposed during the cleanup of water based spray

guns.

Based on the analysis above, ERG concluded that the proposed amendments would result in a cost savings for solvent cleaning and associated disposal, and therefore, included no cost impacts for solvent cost.

Cost Effectiveness

The one-time cost for a facility depends on the number of spray booths, and the annual cost is the increased coating cost based on the facilities’ coating usages. ERG used the information from the District permits, inventory, and inspection reports to determine the number of spray booths and annual coating usages for each permitted facility. Where a permitted facility did not have annual coating usage records, ERG used the median annual coating usages determined for its corresponding facility size category. Unpermitted facilities were assumed to have a single spray booth, train one person to use waterborne coatings, and use 18.4 gallons per year. A

34 “Safer Alternative Thinners, Cleanup Materials, Coatings and Sanding Methods in the Autobody Industry,” Katy Wolfe, Institute for Rese arch and Technical Assistance, May 2008.

35 Wood Finisher Depot, http://woodfinishersdepot.com /solvents-additives-36/ (accessed on 7/22/2011)

36 Restockit.com, www.restockit.com (accessed on 7/21/2011)

37 “Safer Alternative Thinners, Cleanup Materials, Coatings and Sanding Methods in the Autobody Industry,” Katy Wolfe, Institute for Rese arch and Technical Assistance, May 2008.

38 Ibid, p. 22.Staff Report

Rule 459 July 25, 2011, Page 22

total of 302 facilities will be impacted by the proposed amendments. Sixty-three facilities have already converted or partially converted to water borne coatings. Partially converted facilities are those that have already installed the necessary equipment and are using waterborne color coating, but may not yet be using primers and/or clear coat that meet the proposed VOC limits. Three coating manufacturers provided price data fo r clear coats and primer sealer that comply with the proposed limits, as well as the coatings that meet the current VOC limits but not the proposed limits. For the clear coats, the costs ranged from an increase of 0.2% to a cost savings of nearly 15 percent. For the primer sealers, there was a cost savings for all three manufactures, ranging from 3% to 7%. Therefor e, converted and partially converted facilities will not incur additional costs from the adoption of the amendments. The remaining 239 facilities will incur additional costs to convert their operations to comply with the proposed amendments. The following table summarizes the costs for the 239 facilities:

Facility Size (Revenues) No. of

Facilities One-time
Cost Annual
Cost Annualized
Cost* Unknown 13 $11,640 $0 – $32,217 $1,656 – $36,133 <$250,000 161 $159,470 $0 – $127,701 $22,680 – $159,397 $250,000 - $500,000 32 $32,140 $0 – $71,281 $4,570 – $80,854 $500,000 - $750,000 12 $13,290 $0 – $53,803 $1,888 – $59,462 $750,000 - $1,000,000 7 $7,340 $0 – $42,990 $1,043 – $47,044 > $1,000,000 14 $16,330 $0 – $181,927 $2,324 – $196,987 Total 239 $240,210 $0 – $509,919 $34,161 – $579,877

* Annualized cost is the one-time cost annualized over 10 year equipment life and 7% interest rate plus the annual

cost.

The total annualized cost is $34,161 to $579,877. Using the reductions achieved on implementation in 2012 (0.68 tons per day), the cost effectiveness of the rule amendments is $0.07 to $1.17 per pound of VOC reduced. In comparison, previously adopted District rules have cost effectiveness figures for VOC reductions, in 2010 dollars, ranging from $1.12 per pound of VOC reduced (for the 8/21/1990 adoption of Rule 452, Can Coating) to as much as $19.80 per pound of VOC reduced (for the 12/17/1991 adoption of Rule 449, Transfer of Gasoline into Vehicle Fuel Tanks).

INCREMENTAL COST EFFECTIVENESS

The District is required to identify one or more potential control options that achieve the emission reduction objective for the regulation 39

.

39 California Health and Safety Code, Section 40920.6.Staff Report

Rule 459 July 25, 2011, Page 23

The incremental cost effectiveness analysis performed for Rule 459 is based on the Discounted Cash Flow cost analysis method to the annualized costs of the proposed rule over a 10-year period (the assumed equipment lifetime), using a 7% interest rate.

The next most stringent alternative control option is to set limits achievable with add-on controls rather than the use of compliant, lower VOC coatings. The Best Available Control Technology for a spray booth is a control system that uses adsorption or catalytic incineration achieving an overall emission reduction of at least 85%. The capital cost to purchase and retrofit one spray booth with such a system, based on informati on from CAPCOA’s 2003 Engineering Symposium, is estimated to be $178,000 in 2010 dollars. Annual maintenance and operational costs are assumed to be 10% of the capital cost, or $17,800. With the capital cost annualized at 7% interest over 10 years, the annual cost (capital plus operation and maintenance) to retrofit and operate a single booth is $43,100. The total annualized cost for all 376 spray booths in the District is estimated to be $16,205,600. With the use of the add-on control device with an assumed 85 percent control efficiency, the em ission reduction for coatings for implementation year 2012 is approximately 258 tons per year. The overall emission reductions for using an add-on control device for coatings and compliant solvents is approximately 323 tons per year.

Another option is to require both the use of lower VOC coatings and add-on controls. The cost of this option is equal to the sum of the costs of the first two options, and would result in an overall reduction of 351 tons per year.

The cost effectiveness and incremental cost effectiveness of the three control options (2010 dollars) are shown in the following table.

Control Option Annualized Cost ($/yr) Annual

Emission Reduction,

2012 Basis (tpy) Cost

Effectiveness ($/lb) Incremental Cost

Effectiveness ($/lb) Compliant

Material (Proposed) $350,635 – $1,064,350 248 $0.07 – $1.17 --

Capture/Control System (Alternative 1) $16,205,600 323 $25.07 $104.16 – $107.80

Compliant

Material Plus Capture/Control System (Alternative 2) $16,556,235 – $17,269,950 351 $23.16 – $23.94 $0.62 – $10.59*

* ICE of control alternative 2 compared to control alte rnative 1. The ICE of cont rol alternative 2 compared to the proposed control is $79.14 per pound.

SOCIOECONOMIC IMPACT ANALYSIS

HSC Section 40728.5 requires a district to perform an assessment of the socioeconomic impacts before adopting, amending, or repealing a rule that will significantly affect air quality orStaff Report

Rule 459 July 25, 2011, Page 24

emission limitations. The District Board is r equired to actively consider the socioeconomic impacts of the proposal and make a good faith effort to minimize adverse socioeconomic impacts.

HSC Section 40728.5 defines “socioeconomic impact” as follows:

1. The type of industries or business, including small business, affected by the rule or regulations. 2. The impact of the proposed rule or regulations on employment and the economy of the region affected by the adoption of the rule or regulation. 3. The range of probable costs, including costs to industry or business, including small business, of the rule or regulation. 4. The availability and cost-effectiveness of alternatives to the rule or regulation being proposed or amended. 5. The emission reduction potential of the rule or regulation. 6. The necessity of adopting, amending, or repealing the rule or regulation to attain state

and federal ambient air standards.

Type of industry or business, including small business, affected by the proposed rule: Rule 459 applies to manufacturers and sellers or distribu tors of automotive coatings and solvents and to any person/business that performs coating of motor vehicles, mobile equipment, or their associated parts or components. The proposed amendments have the potential to affect coating manufacturers, coating distributors, government entities that paint/repaint vehicles, educational institutions that teach vehicle pai nting, businesses that paint/repaint their own vehicles as a part of a larger business activiti es, businesses whose primary business is vehicle painting/repainting and consumers who need/want a vehicle painted/repainted. The majority businesses affected by this rule are the businesses whose primary business is vehicle painting/repainting, most of which are small businesses 40

.

A review of District permit records shows there are approximately 134 permitted facilities. As of June 2010, 63 permitted facilities were identified as facilities that have converted or partially converted to waterborne coatings. Another 168 unpermitted sources were identified by Dun & Bradstreet Million Dollar Database that are also subject to Rule 459. Therefore, a total of 239 facilities automotive coating facilities will need to invest in waterborne technology to comply with the proposed amendments.

Impact on employment and economy in the District of the proposed rule: Based on 2007 U.S. Census data, there are an estimated 1,396 people employed in the automotive body, paint, and interior repair and maintenance industry and 1,365 people employed in general automotive repair industry in Sacramento County. General automotive repair facilities will experience minimal, if any, impacts because a very sma ll part of their business involves automotive coatings. Businesses that produce air movement equipment for spray booths or provide consulting services to affected businesses may benefit from increased industry spending. There are no manufacturers of automotive coatings within the District.

CARB utilized the “return-on-owner’s-equity” (ROE) method as an indicator of the SCM’s potential impacts on business profitability, as documented in CARB’s staff report. ROE is

40 The U.S. Small Business Administration defines an autobody shop (NAICS Code 811121) as small business if it has less than $7 million in annual revenues.Staff Report

Rule 459 July 25, 2011, Page 25

calculated by dividing the net profit by the net worth. The adjusted cost was then subtracted from the net profit data. The results were used to calculate an adjusted three-year average ROE. The adjusted ROE was then compared with the ROE before the subtraction of the adjusted cost to determine the potential impact on the profitability of the businesses. CARB considers a reduction of more than 10 percent in ROE indicates a potential for significant adverse economic impacts. CARB estimated an average decline in businesses’ ROE of about 0.07 percent for coating manufacturers, and about 15 percent for automotive coating facilities. Using CARB’s impact criteria, automotive coati ng facilities would be adversely impacted by the SCM. Therefore, CARB expected that automotive coating facilities will pass on the some of the costs from the SCM to consumers rather than absorbing all of the cost impacts on their profitability. If entire costs of the SCM were passed on to consumers, the average price for a repair or refinish would increase by $11, which represents an increase in cost of about 0.5 percent for a typical repair of $2,200. Because the price increase is small, the cost is expected to be passed to consumers. CARB concluded that the requirements of the SCM will have minimal impact on employment 41

.

ERG’s socioeconomic report (Appendix E) also concluded that coating manufacturers and distributors will pass through all increased costs to the automotive coating facilities, and will not be impacted by the proposed amendments. If t he automotive coating facilities absorbed all costs to comply with the proposed amendments, ERG estimated a decline in profitability ranging from 0.3 percent to 5.7 percent. This change in ROE is less than CARB’s criteria for being a significant adverse impact.

For automotive coating facilities whose primary business is vehicle painting/repainting, ERG believes that the automotive coating facilities may be able to pass some of the additional costs to consumers or their insurance companies. The insurance companies, in turn, distribute the costs among insurance policy holders. Facilities will not be able to pass the cost to an insurance company that reimburses on a fixed fee schedule, unless the insurance company adjusts the fee schedule to account for the additional increased coating cost from the proposed amendments. The fee adjustment may be done after the rule has been adopted and the limits are effective. If the entire costs (assuming only the high end of the cost) of the proposed rule were passed on to consumers, the average price increases ranges from $4.72 for a mid-sized car to $25.17 for a large vehicle, which represents an price increase of 0.21 percent to 1.1 percent for an average repair price of $2,295.

Furthermore, ERG calculated the impact on employment using the Regional Input-Output Modeling System (RIMS II) developed by the U. S. Commerce Department, Bureau of Economic Analysis. ERG estimated that with the added costs to the facilities, it will result in losing 0 to 6 jobs in Sacramento County if all cost s were absorbed by the coating facilities 42

.

Range of probable costs, including costs to industry or business, including small business of the proposed rule: As discussed in the Cost Impact section for Rule 459, capital and training costs range from $972 for a small refinishing facility with one spray booth to $2,621 for a large facility with four spray booths. Annual increased coating costs range from $0 per year to $40,171 per

41 “ Staff Report for the Proposed Suggested Control Measure for Automotive Coatings” CARB, October 2005, p. VII-1 – VII-11.

42 “Socioeconomic Impact Analysis for SMAQMD Ru le 459 Amendments, Final Report” ERG, July 7, 2011, p. 13 – 19.Staff Report

Rule 459 July 25, 2011, Page 26

year, depending on the coverage rate of the coatings and the production of the facility. Some of these costs may be passed on to consumers.

Availability and cost effectiveness of alternatives to the proposed rule: An alternative to the proposed amendments to the rule is to not adopt them. If the proposed amendments to Rule 459 are not adopted, the District will not fulfill the federal RACT requirements and the commitment in the Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan 43 . The proposed standards for Rule 459 have been implemented in other air districts in California. The proposed changes provide substantial, cost effective emission

benefits.

As discussed in the Incremental Cost-Effectiveness section, two alternative control options to the proposed Rule 459 were analyzed. This first alternative would reduce VOC emissions by an estimated 323 tons per year at an overall cost effectiveness of $25.07/lb. The incremental cost effectiveness for the additional 75 tons per year of VOC emissions that would be reduced ranges from $104.16/lb to $107.80/lb. The second alternative would reduce VOC emissions by an estimated 351 tons per year at an overall cost effectiveness ranging from $23.16/lb to $23.94/lb. The incremental cost effectiveness for the additional 28 tons per year of VOC emissions that would be reduced compared to t he first alternative ranges from $0.62/lb to $10.59/lb. Compared to the proposed option, the second alternative achieves an additional 103 tons per year of VOC emission reduction at an incremental cost effectiveness of $79.14/lb.

In conclusion, the alternatives are not recommended at this time because 1) the alternatives do not fulfill the purpose of these amendments to meet state and federal laws and regulations, and 2) the additional alternatives to Rule 459 are significantly higher in cost than the proposed

amendments.

Emission reduction potential of the proposed rule: The proposed amendments to Rule 459 are

estimated to achieve emission reductions of 190 t ons of VOC per year from the use of coatings in 2018, the attainment year. Another 66 tons per year are expected to be reduced from the use of solvents, for a total reduction in VOC emissions of 256 tons per year (see discussion under Emissions Impact).

Necessity of adopting the rule: Staff finds that the proposed amendments to Rule 459 are necessary to meet the requirements of the Health and Safety Code for “all feasible measures” 44

and BARCT 45 and to satisfy a District control measure commitment in the federal 8-hour ozone attainment demonstration plan. In addition, the proposed amendments to Rule 459 are necessary to satisfy the requirements of Section 182(b)(2) of the federal Clean Air Act, which requires the District adopt RACT for CTG source categories 46

.

43 “ Sacramento Regional 8-hour Ozone Attainment and Reasonable Further Progress Plan”, March 26, 2009, Appendix C, p. C-93 – C-95.

44 Health and Safety Code Section 40914(b)(2).

45 Health and Safety Code Section 40919.

46 “ Control Techniques Guidelines fo r Miscellaneous Metal and Plasti c Parts Coatings,” EPA-453/R-08- 003, September 2008.Staff Report

Rule 459 July 25, 2011, Page 27

PUBLIC COMMENTS

Staff held a public workshop to discuss the proposed amendments on September 16, 2010. A public notice for the workshop was mailed to interested and potentially affected parties, including all permitted stationary sources (except for gas stations and dry cleaners), industry associations, coating manufacturers and suppliers, and all persons who have requested to receive rulemaking notices. The notice was also published in the “Our Region” section of the Sacramento Bee and posted on the District web site. The draft rule and staff report were available for public review prior to the public workshop.

Staff received comments and questions concerning Rule 459 at the workshop, as well as written comments from coating manufacturers and distri butors. CARB and EPA reviewed the proposed amendments. CARB responded with a no comment letter. EPA had one comment, which

asked the District to include the full title and date of the ASTM test method referenced in the proposed rule. All comments and responses are included in Appendix F.

ENVIRONMENTAL REVIEW AND COMPLIANCE

California Public Resources Code Section 21159 requires an environmental analysis of the reasonably foreseeable methods of compliance. Compliance with the proposed VOC standard for coatings in Rule 459 is expected to be achi eved by replacement of currently used coatings with compliant products, including the use of waterborne color coatings and by installation of new heating and air movement equipment or the use of low VOC solvent borne coating products. In the Final Environmental Impac t Report (EIR) for the Sacramento Regional NonAttainment Area 8-Hour Ozone Attainment and Reasonable Further Progress Plan, the report concluded that future compliant coatings will contain less hazardous materials, or nonhazardous materials, as compared to conventional coatings, resulting in a net benefit regarding hazards. The impacts from hazardous materials are expected to be less than significant 47 . For the purpose of complying with the proposed coating standards, TBAc is proposed to be exempted as a VOC when contained in coatings that are applied only within a spray booth. This exemption may increase the use of coatings containing TBAc. CARB has determined that the increased use of TBAc is not expected to contribute to the formation of ozone or contribute to global warming. CARB also concluded that TBAc could pose a potential cancer risk to humans because TBAc metabolizes to t-butyl alcohol (TBA), a potential carcinogen 48 . To ensure the use of TBAc does not adversely impact human health, Staff performed an HRA and determined that the largest permitted automotive coating facility in the District is not likely to cause an adverse impact to nearby receptor if the coatings containing TBAc are applied only within a spray booth. Rule 459 does not exempt TBAc as a VOC when applied outside of a spray booth or when used as or part of a cleaning solvent.

Compliance with the proposed VOC limit for cleaning materials is expected to be achieved by the replacement of current cleaning solvents with compliant products, which may contain higher levels of exempt compounds. Some replacement compounds, such as acetone, may have

47 “ Final Environmental Impact Report (EIR), Sacram ento Regional Non-attainment Area 8-Hour Ozone Attainment and Reasonable Further Progress Plan ” Sacramento Metropolitan Air Quality Management District, December 2008, p. 3-41 – 3-53.

48 “ Environmental Impact Assessment of Tertiary-But yl Acetate” CARB, January 2006, p.13 – 16, 19 –

25.Staff Report

Rule 459 July 25, 2011, Page 28

greater flammability and lower flash points than currently used materials. These potential impacts were also analyzed in the EIR for the 8-hour ozone plan and found to be less than significant.

In addition, compliance with the proposed VOC limit for cleaning materials will eliminate the use of solvent recycling systems, although ERG conc luded that most facilities would switch from solvent cleaners to water based cleaners, reducing disposal. If there were an increase in the disposal of spent solvent, this disposal is governed by state and federal regulations to ensure

that toxic waste is not released into the environment.

Staff finds that the proposed rule is exempt from the California Environmental Quality Act as an action by a regulatory agency for protection of the environment 49 and because it can be seen with certainty that there is no possibility that the activity in question may have a significant

adverse effect on the environment 50

.

49 State CEQA Guidelines, Section 1530 8, Class 8 Categorical Exemption.

50 State CEQA Guidelines, Section 15061(b)(3).Staff Report

Rule 459 July 25, 2011, Page 29

REQUIRED FINDINGS

The California Health and Safety Code (HSC), Division 26, Air Resources, requires local districts to comply with a rule adoption protocol as set forth in Section 40727 of the Code. This section contains six findings that the District must make when adopting, amending, or repealing a rule. The findings for the rule and their statutory definitions are listed in the following table.

Findings Required Findings Authority: The District must find that a provision of law or of a state or federal regulation permits or requires the District to adopt, amend, or repeal the

rule. The District is authorized to amend Rule 459 by California Health and Safety Code (HSC) Sections 40001, 40702, and 41010. [HSC Section 40727(b)(2)].

Necessity: The District must find that the rulemaking demonstrates a need exists for the rule, or for its amendment or repeal. It is necessary to adopt the proposed amendments to Rule 459 to comply with the Reasonably Available Control Technology requirements of the federal Clean Air Act Sections 172(c)(1) and 182(b)(2)(A), and BARCT requirements of HSC Section 40919(a)(3). In addition, the VOC emission reductions from the proposed amendments to Rule 459 are necessary to meet the

control measure commitment in the 2009 Triennial Report and Plan update and the Sacramento Regional 8- hour Ozone and Reasonable Further Progress Plan, submitted pursuant to 40 CFR 51.908 and Section 182(c)(2)(A) of the federal Clean Air Act. [HSC Section 40727(b)(1)]. Clarity: The District must find t hat the rule is written or displayed so that its meaning can be easily understood by the persons directly affected by it. Staff has reviewed the proposed amendments to the rule

and determined that it can be understood by the affected parties. In addition, the reco rd contains no evidence that people directly affected by the rule cannot understand the rule. [HSC Section 40727(b)(3)].

Consistency: The rule is in harmony with, and not in conflict with or contradictory to, existing statutes, court decisions, or state or federal regulations. The proposed amendments to the rule does not conflict with, and is not contradictory to, existing statutes, court decisions, or state or federal regulations. [HSC Section 40727(b)(4)].

Non-Duplication: The District must find that either: 1) The rule does not impose the same requirements as an existing state or federal regulation; or (2) that the duplicative requirements are necessary or proper to execute the powers and duties granted to, and imposed upon the District. The proposed amendments to the rule do not duplicate any existing state or federal regulations. [HSC Section 40727(b)(5)].

Reference: The District must refer to any statute, court decision, or other pr ovision of law that the District implements, interprets, or makes specific by adopting, amending or repealing the rule. In adopting the proposed amendments to the rule, the District is implementing t he requirements of 40 CFR
51.908, Section 182(c)(2)(A) of the federal Clean Air

Act and HSC Sections 40919(a)(3 ). [HSC Section 40727(b)(6)].

Additional Info r mational Requirements: In complying with HSC Secti on 40727.2, the District must identify all federal requirements and District rules that apply to the same equipment or source type as the proposed rule or amendments. Appendix B includes a comparison with federal requirements. [HSC Section 40727.2].Staff Report

Rule 459 July 25, 2011, Page 30

REFERENCES

1. Bay Area Air Quality Management District, Staff Report for BAAQMD Regulation 8, Rule 45: Motor Vehicle and Mobile Equipment Coating Operations, November 2008

2. California Air Resources Board. Draft Report: 2002 Survey of Automotive coatings. June,

2005.

3. California Air Resources Board, Environmental Impact Assessment of Tertiary-Butyl Acetate, Staff Report, January 2006.

4. California Air Resources Board, Staff Report for the Proposed Suggested Control Measure for Automotive Coatings, California Environmental Protection Agency, Stationary Source Division, Measures Assessment Branch, October 2005. (CARB, 2005A)

5. California Air Resources Board, Suggested Control Measure for Automotive Coatings as Approved by the Board on October 20, 2005, California Environmental Protection Agency, Stationary Source Division, Measures Assessment Branch, October 20, 2005. (CARB, 2005B)

6. California Autobody Association, telephone conversation between Pete Bezeck, California Autobody Association, and Kevin Williams, SMAQMD, September, 2010

7. DuPont Performance Coatings, e-mail from Em ily Taylor, DuPont Performance Coatings, to Kevin J. Williams, SMAQMD, May 23, 2011.

8. Eastern Research Group, Socioeconomic Impact Analysis for SMAQMD Rule 459 Amendments Final Report, July 7, 2011

9. El Dorado County Air Quality Management District, Feather River Air Quality Management District, Placer County Air Pollution Control District, Sacramento Metropolitan Air Quality Management District, Yolo-Solano Air Quality Management District, Sacramento Regional 8- hour Ozone Attainment and Reasonable Further Progress Plan, March 26, 2009.

10. Institute for Research and Technical Assistance, Safer Alternative Thinners, Cleanup Materials, Coating and Sanding Methods in the Autobody Industry, May 2008

11. Sacramento Metropolitan Air Quality Management District, 2009 Triennial Report and Plan Revision, January 28, 2010

12. Sacramento Metropolitan Air Quality Management District, Final Environmental Impact Report: Sacramento Regional Non-Attainment Area 8-Hour Ozone Attainment and Reasonable Further Progress Plan. State Clearinghouse No. 2006102136, December 2008.

13. Sacramento Metropolitan Air Quality Management District, Staff Report for Rule 450 – Graphic Arts Operations, Rule 451 – Surface Coating of Miscellaneous Metal Parts and Products, Rule 452 – Can Coating, Rule 454 – Degreasing Operations, Rule 456 – Aerospace Assembly and Component Coating Operations, Rule 463 – Wood Products coatings, Rule 464 – Organic Chemical Manufacturing Operations, Rule 465 – Polyester Resin Operations, Rule 466 – Solvent Cleaning, August 25, 2008.Staff Report

Rule 459 July 25, 2011, Page 31

14. San Joaquin Valley Air Pollution Control District. Final Draft Staff Report for Proposed Amendments to Rule 4602, Motor Vehicle and Mobile Equipment Coating Operations, and Rule 4612, Motor Vehicle and Mobile Equipment Coating Operations – Phase II, August

2006.

15. San Joaquin Valley Unified Air Pollution Control District. Final Draft Staff Report: Proposed Amendments to Rule 1020 (Definitions). December 18, 2008

16. Sherwin-Williams Automotive Finishes, e-mail from Michael A. Veney, Sherwin-Williams Automotive Finishes to David Yang, SMAQMD, June 6, 2011.

17. South Coast Air Quality Management District, Final Staff Report for: Proposed Amended Rule 1151 – Motor Vehicle and Mobile Equipment Non-Assembly Line Coating Operations. December, 2005.

18. U.S. Census Bureau. Online query of industry statistics. http://www.census.gov/. June, 2011.

19. U.S. Environmental Protection Agency. Air Quality Criteria for Ozone and Related Photochemical Oxidants, (EPA 600/R-05/004aF), February 2006.

20. U.S. Environmental Protection Agency. Control Techniques Guidelines for Automobile and Light-Duty Truck Assembly Coatings. (EPA-453/R-08-006), September 2008.

21. U.S. Environmental Protection Agency. Control Techniques Guidelines for Miscellaneous Metal and Plastic Parts Coatings. (EPA-453/R-08-003), September, 2008.

22. U.S. Environmental Protection Agency. Guidance Document for Correcting Common VOC & Other Rule Deficiencies, Amended August 21, 2001.

23. U.S Environmental Protection Agency. Revision to Definition of Volatile Organic Compounds – Exclusion of t-Butyl Acetate. 69FR69298, November 29, 2004.

24. U.S. Environmental Protection Agency 40 CFR Part 59, Subpart B: National Volatile Organic Compound Emission Standards for Automobile Refinish CoatingsStaff ReportRule 459July 25, 2011, Page A-1APPENDIX A40727.2 Matrix for Proposed Amendments to Rule 459 Automotive, Mobile Equipment and Associated Parts andComponents Coating OperationsComparative RequirementsElements ofComparisonProposedRule 459Best AvailableControl Technology(BACT)National Volatile Organic CompoundEmission Standards for AutomobileRefinish Coatings40 CFR Part 59, Subpart BNESHAP: Paint Stripping andMiscellaneous SurfaceCoating at Area Sources40 CFR Part 63,Subpart HHHHHHApplicability The provisions of this rule shall apply toany person who supplies, sells, offers forsale, manufactures, or distributes anyautomotive coating or associated solventfor use within the District, as well as anyperson who uses, applies, or solicits theuse or application of any automotivecoating or associated solvent within theDistrict.SCM ConsideredBACTAutomobile refinish coatings andcoating components that aremanufactured for sale or distribution inthe US.Perform paint stripping usingmethylene chloride (MeCl) forthe removal of dried paint fromwood, metal, plastic, and othersubstrates.Perform spray application ofcoatings to motor vehicles andmobile equipment containing thetarget HAP (Cr, Pb, Mn, Ni, andCd).Exemptions Aerosol containers; OEM AssemblyLines; touch-up coatings; use outside theDistrict; Application methods for thefollowing: underbody coatings, truck bedliner coatings, graphic arts, or coatingless than one fluid ounce.Aerosol containers;OEM AssemblyLines; touch-upcoatings; use outsidethe District;Application Methodsfor the following:underbody coatings,truck bed linercoatings, graphicarts, or coating lessthan one fluid ounce.Aerosol, lacquer topcoats or theircomponents, or touch-up coatings.Coatings or coating componentsmanufactured before the compliancedate of the ruleOriginal Equipment ManufacturingFor sale outside the U.S.Surface coating or paint strippingperformed: on site atinstallations owned or operatedby the Armed Forces of the US,NASA, or NNSA; militarymunitions; performed byindividuals on their personalvehicles & possessions;research and laboratoryactivities; quality controlactivities; covered by anotherNESHAP.VOC ContentStandards forAutomotiveRefinishCoatingsAdhesion Promoter 540 g/lSame as proposedruleSpecialty Coatings 840 g/lClear Coating 250 g/lSame as proposedrule2-Stage Topcoats 600 g/lTopcoats of 3 or more stages 630 g/lColor Coating 420 g/lSame as proposedMulti-colored Topcoats 680 g/lStaff ReportRule 459July 25, 2011, Page A-2Comparative RequirementsElements ofComparisonProposedRule 459Best AvailableControl Technology(BACT)National Volatile Organic CompoundEmission Standards for AutomobileRefinish Coatings40 CFR Part 59, Subpart BNESHAP: Paint Stripping andMiscellaneous SurfaceCoating at Area Sources40 CFR Part 63,Subpart HHHHHHrule Single/2-Stage Topcoats 600 g/lTopcoats of 3 or more stages 630 g/lMulti-Color Coating 520 or 680 g/lSame as proposedruleMulti-colored Topcoats 680 g/lPretreatment Coating 660 g/lSame as proposedrulePretreatment Wash Primer 780 g/lPrimer/Primer Sealer 250 g/lSame as proposedrulePrimer/Primer Surfacer 580 g/lPrimer Sealer 550 g/lSingle Stage Coating 340 g/lSame as proposedruleSingle Topcoats 600 g/lTemporary Protective Coating 60 g/lSame as proposedruleN/ATruck Bed Liner Coating 200 g/lSame as proposedruleSpecialty Coatings 840 g/lUnderbody Coating 430 g/lSame as proposedruleSpecialty Coatings 840 g/lUniform Finish Coating 540 g/lSame as proposedruleSpecialty Coatings 840 g/lAny Other Coating Type 250 g/lSame as proposedruleSpecialty Coatings 840 g/lApplicationMethodsHVLPElectrostatic application equipmentBrush/roll coating, dip coat, or flow coatLVLPAny alternative method that achieves atransfer efficiency equivalent to, or higherthan the above listed applicationmethods.HVLPBrush, dip or rollerElectrostatic sprayAny alternativemethod that achievesa transfer efficiencyequivalent to, orhigher than theabove listedapplication methodsHVLPElectrostatic applicationAirless spray gunAir-assisted airless spray gunOr equivalent technologydemonstrated to achieve transferefficiency comparable to one ofthe above listed spray guntechnologiesStaff ReportRule 459July 25, 2011, Page A-3Comparative RequirementsElements ofComparisonProposedRule 459Best AvailableControl Technology(BACT)National Volatile Organic CompoundEmission Standards for AutomobileRefinish Coatings40 CFR Part 59, Subpart BNESHAP: Paint Stripping andMiscellaneous SurfaceCoating at Area Sources40 CFR Part 63,Subpart HHHHHHWork PracticeRequirementsSolvents less than 25 g/l VOC; coatingsand solvents stored in closed, vapor-tightcontainers; wastestored in closed,vapor-tight containers; bug and tarremoval with a regulated consumerproductSolvents less than 25g/l VOC; coatingsand solvents storedin closed, vapor-tightcontainers; wastestored in closed,vapor-tightcontainers; spray guncleaning inside aclosed systemPractices require minimizingevaporative emissions of MeClcontaining solvents.Each motor vehicle and mobileequipment surface coatingoperation are required to certifyall painters have completedtraining; all coatings must beapplied in a spray booth, prepstation or mobile enclosure withmandatory filter technologydemonstrated to achieve at least98% capture of paint overspray.Booths/prep stations haverequirements for amount ofclosure.Monitoring/TestingTest methods specified in Section 504 ofruleSame as proposedruleNo performance testing is required. No performance testing isrequired.Monitoring/RecordkeepingVendors, repackagers, andmanufacturers: Labels with applicableuse category and VOC content; Productdata sheets for each coating, coatingcomponent, or ready to spray mixture;Records of noncompliant materials soldto sources outside the District or tosources with emissions controlequipment;End users: List of materials; product datasheets for each material, usage recordsrequired for end users detailing coatingsand solvents used; usage and purchaserecords.; records to demonstratecontinuous compliance if emissionsSame as proposedruleEach container must be labeled withday, month and year on which theproduct was manufactured.For the paint strippingoperations, records of paintstrippers containing MeCl,record of current MeClminimization plan on site for thepaint stripping operation if theoperations uses more than oneton of MeCl, records of anydeviation from the requirementsin the general provisions,general requirements andnotification sections, and recordof any assessment of sourcecompliance.Staff ReportRule 459July 25, 2011, Page A-4Comparative RequirementsElements ofComparisonProposedRule 459Best AvailableControl Technology(BACT)National Volatile Organic CompoundEmission Standards for AutomobileRefinish Coatings40 CFR Part 59, Subpart BNESHAP: Paint Stripping andMiscellaneous SurfaceCoating at Area Sources40 CFR Part 63,Subpart HHHHHHcontrol equipment is used.For the motor vehicle and mobilesurface coating operation,certification for each painter whohas completed the requiredtraining, documentation of filterefficiency, documentation fromthe spray gun manufacturer thatshows the spray gun isequivalent in transfer efficiencyequivalent to that of an HVLPspray gun, copies of anyrequired notifications, andrecords of any deviation from therequirements in the generalprovisions, general requirementsand notification sections.Records are required to bemaintained for at least five yearsafter the date of each record.Staff Report

Rule 459 July 25, 2011, Page B-1

APPENDIX B
LIST OF CHANGES TO RULE

Rule 459, Automotive, Mobile Equipment and Associated Parts and Components Coating Operations

NEW
SECTION

NUMBER EXISTING

SECTION

NUMBER PROPOSED CHANGES

N/A N/A Title changed from “Autom otive, Truck and Heavy Equipment Refinishing Operations” to “Automotive, Mobile Equipment, and Associated Parts and Components Coating Operations.” 101 Same Revised purpose consistent with the SCM. 102 Same Amended applicability language of the rule to apply to automotive coatings or associated solvents, consistent with the SCM and current rule applicability. 110 Same Added sunset date, six months after date of adoption, for exemption for restoration of special interest vehicles and street rod vehicles. The SCM does not contain such an exemption, nor do any other California district rules. This exemption will be removed from the rule when the rule is republished. 111 Same Revised exemption for aerosol coating products, consistent with the

SCM. 112 N/A Added exemption from the application method requirements when applying underbody coatings, truck bed liners, coatings under one fluid ounce, or graphic arts operations, consistent with the SCM. 113 N/A Added an exemption for an assembly line at original equipment manufacturing plant, consistent with the intent of the SCM while maintaining applicability of current rule language. N/A 112 Eliminated exemption for “stenc il coatings.” Exemption from application method requirements still included under new Section

112. 114 113 Added sunset date, six months after date of adoption for the exemption for “radiators, drive train, differential, and engine components.” These parts will be subject to Rule 459 as associated parts and components, consistent with the SCM. This exemption will be removed from the rule when the rule is republished. N/A 114 Eliminated exemption for “recordkeeping requirements.” No longer applicable because current Section 501 is being deleted. 115 Same Decreased the allowable container volume for exempt touch-up coating from two ounces to one-half ounce, consistent with the SCM. This change will be effective six months after the date of adoption.Staff Report

Rule 459 July 25, 2011, Page B-2

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

116 N/A Added an exemption for application of materials for vehicles for sources with actual emissions from specific coatings and coating operations less than 2.7 tons of VOC per 12-month rolling period, consistent with the 2008 CTG (EPA-453/R-08-003) that includes

motor vehicle materials in Section 303. Facilities who uses this exemption is required to substantiate with usage or purchase records that the actual emissions from the specific coatings and coating operations are less than 2.7 tons per 12-month rolling period.

This section references Rule 468, which has not been adopted. Definitions were added in order to clearly define the coating operations for miscellaneous plastic parts and products, transportation and business machine plastic part, and pleasure craft. These definitions are effective prior to the adoption of Rule 468. Upon adoption of Rule 468, these definitions will no longer apply and

will sunset.

117 116 Section renumbered. 201.1 201 Added sunset date to existing definition of “adhesion promoter.” 201.2 N/A Added new definition of “adhesion promoter,” consistent with the SCM, effective six months after the date of adoption. 202 Same Revised definition of “aerosol coating product,” consistent with the SCM while maintaining applicability to current rule language. 203 Same Added language to sunset this definition on (six months after date of adoption). It will no longer be in the specialty category, consistent
with the SCM. This definition will be removed from the rule when the rule is republished. 205 N/A Added definition of “assembly line,” consistent with the SCM. 206 N/A Added definition of “associated parts and components,” consistent
with the SCM. 207 N/A Added definition of “automotive coating,” consistent with the SCM. 208 N/A Added definition of “automotive coating component,” consistent with
the SCM. 209 N/A Added definition of “automotive coating facility,” consistent with the
SCM. 210-211 205-206 Added language to sunset these definitions on (six months after date of adoption) and sections renumbered. Definitions no longer used,
consistent with the SCM. These definitions will be removed from the rule when the rule is republished. 212 N/A Added definition of “business machine plastic part,” consistent with

the CTG. 213-214 206-207 Added language to sunset these definitions on (six months after date of adoption) and sections renumbered. Definitions no longer used,
consistent with the SCM. 215 N/A Added definition of “cavity wax” consistent with the CTG.Staff Report

Rule 459 July 25, 2011, Page B-3

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

216 209 Revised the term “cleanup operations” to “cleaning operations,” and revised definition consistent with the SCM while maintaining applicability to current rule language. 217 210 Revised the term “clear coat” to “clear coating,” and revised definition consistent with the SCM while maintaining applicability to current rule language.

218 211 Section renumbered. 219 212 Revised definition of “coating,” consistent with the SCM while maintaining applicability to current rule language. N/A 213 Eliminated “coating component” definition. Definition no longer used, consistent with the SCM. Will be covered by the new term “automotive coating component.” 220 214 Replaced the phrase “surface preparation material or cleanup
material” with “solvent” to be consistent with the SCM while maintaining applicability to current rule language. Added language to clarify that material used to clean application equipment is a solvent, not a coating remover. 221 N/A Added definition of “color coating,” consistent with the SCM. 222 215 Added language to sunset this definition on (six months after date of adoption) and sections renumbered. Definition no longer used,
consistent with the SCM. This definition will be removed from the rule when the rule is republished.

223 N/A Added definition of “deadener” consistent with the CTG. 224-225 216-217 Added language to sunset these definitions on (six months after date of adoption) and sections renumbered. Definitions no longer used,
consistent with the SCM. These definitions will be removed from the rule when the rule is republished. 226 218 Revised definition of “electrostatic spray application,” consistent with the SCM while maintaining applicability to current rule language. 227 N/A Added definition of “emission control system,” consistent with the

SCM. 228 219 Section renumbered and changed the term “cleanup material” to “solvent.” Added language to sunset this definition on (six months after date of adoption). Definition no longer used, consistent with the
SCM. This definition will be removed from the rule when the rule is republished. 229 220 Removed the terms “surface preparation material” and “cleanup material” and replaced with the term “solvent” consistent with the
SCM and section renumbered.

230 221 Section renumbered. N/A 222 Eliminated “finishing” definition. Definition no longer used, consistent

with the SCM. 231 N/A Added definition of “gasket/gasket sealing material” consistent with

the CTG. 232 N/A Added definition of “graphic arts operation,” consistent with the SCM.Staff Report

Rule 459 July 25, 2011, Page B-4

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

233-236 223-226 Added language to sunset these definitions on (six months after date of adoption) and sections renumbered. Definitions no longer used,
consistent with the SCM. N/A 227 Eliminated “high solids coating” definition. Definition no longer used,

consistent with the SCM. 237 228 Revised definition of “high volume low pressure,” consistent with the SCM while maintaining applicability to current rule language. 238-239 229-230 Added language to sunset these definitions on (six months after date of adoption) and sections renumbered. Definitions no longer used,
consistent with the SCM. These definitions will be removed from the rule when the rule is republished.

240 231 Section renumbered. 241 N/A Added definition of “lubricating wax/compound,” consistent with the

CTG. 242 232 Revised the term “metallic/iridescent topcoat” to “metallic/iridescent color coating,” consistent with the SCM. 243-244 233-234 Added language to sunset these definitions on (six months after date of adoption) and sections renumbered. Definitions no longer used,
consistent with the SCM. 245 N/A Added definition of “miscellaneous plastic parts and products,”
derived from the discussion in the CTG. 246 235 Revised definition of “mobile equipment,” consistent with the SCM while maintaining applicability to current rule language. 247 N/A Added definition of “motor vehicle,” consistent with the SCM. 248 N/A Added definition of “multi-color coating,” consistent with the SCM. 249 236 Added language to sunset this definition on (six months after date of adoption) and section renumbered. Definition no longer used,
consistent with the SCM. 250 N/A Added definition of “original equipment manufacturing plant” to clarify the assembly line exemption. 251 N/A Added definition of “permanently labeled” consistent with SJVAPCD

Rule 4612. 252 N/A Added definition of “pleasure craft” consistent with the CTG. 253 237 Added language to sunset this definition on (six months after date of adoption) and section renumbered. Definition no longer used,
consistent with the SCM. 254 238 Revised the term “pretreatment wash primer” to “pretreatment coating”, and revised definition consistent with the SCM while maintaining applicability to current rule language. 255 239 Revised definition of “primer,” consistent with the SCM while maintaining applicability to current rule language. 256 240 Revised definition of “primer sealer,” consistent with the SCM while maintaining applicability to current rule language.

N/A 241-243 Eliminated unused definitions. 257 N/A Added definition of “single-stage coating,” consistent with the SCM. 258 N/A Added definition of “solvent,” consistent with the SCM.Staff Report

Rule 459 July 25, 2011, Page B-5

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

259 244 Added language to sunset the definition on (six months after date of adoption), section renumbered and updated references to changed

section numbers. This definition will be removed from the rule when the rule is republished. 260 N/A Added definition of “spot repair,” consistent with the SCM. 261 N/A Added definition of “spray booth” derived from the parameters used

for the health risk assessment.

262 245 Section renumbered. N/A 246 Eliminated “stencil coating” definition. Now included under “graphic

arts.” 263 247 Added language to sunset the definition on (six months after date of adoption), and section renumbered. Definition no longer used,
consistent with the SCM. This definition will be removed from the rule when the rule is republished. 264 248 Revised definition of “temporary protective coating,” consistent with the SCM. Effective six months after the date of adoption, labeling is required consistent with the SCM. 265 249 Added language to sunset the definition on (six months after date of adoption) and section renumbered. Definition no longer used,
consistent with the SCM. 266 N/A Added definition of “transfer efficiency,” consistent with the SCM. 267 N/A Added definition of “transportation plastic part,” consistent with requirements of the CTG. The CTG does not applied to coating operations subject to the National Volatile Organic Compound Emission Standards for Automobile Refinish Coatings or the CTG for Automobile and Light-Duty Truck Assembly Coatings. 268 N/A Added definition of “truck bed liner coating,” consistent with the

SCM. 269 N/A Added definition of “underbody coating,” consistent with the SCM. 270 250 Revised the term “uniform finish blenders” to “uniform finish coating,” and revised definition consistent with the SCM while maintaining applicability to current rule language. 271 251 Added language to sunset the definition on (six months after date of adoption) and section renumbered. Definition no longer used,
consistent with the SCM. This definition will be removed from the rule when the rule is republished. 272 252 Revised term “refinishing” to “coating”. 273 253 Added language to exclude tertiary butyl acetate as a VOC for the purposes of this rule when contained in an automotive coating or automotive coating component that is applied only within a spray

booth. 274 254 Revised references to changed section numbers. 275 255 Added language to sunset the definition (six months after date of adoption), and section renumbered. Definition no longer used,
consistent with the SCM. This definition will be removed from the rule when the rule is republished.Staff Report

Rule 459 July 25, 2011, Page B-6

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

301.1 Same Added sunset date for current VOC limits. Removed limits with expired effective dates. Updated references to changed section

numbers. This section will be removed from the rule when the rule is republished.

301.2 Same Added sunset date for current VOC limits. Removed limits with expired effective dates. Updated references to changed section

numbers. This section will be removed from the rule when the rule is republished. 301.3 Same Added sunset date for this section. This section won’t be necessary because there will no longer be a distinction between Group I and Group II vehicles after the sunset date. This section will be removed from the rule when the rule is republished. 302 N/A Added section with the new requirements for all motor vehicles and mobile equipment, their parts or associated components. These VOC limits for coatings are consistent with the most stringent limit

from the SCM or the CTG and will take effect 6 months after the date of adoption. 303 N/A Added section with the new requirements for gasket/gasket sealing material, cavity wax, deadener, and lubricating wax/compound. TheVOC limits for these materials are consistent with the CTG (EPA453/R-08-003) and will take effect 6 months after the date of adoption. 304 N/A Added requirement that the most restrictive VOC limit shall apply to any coating that is represented or recommended for more than one category. This requirement applies to both Sections 301 and 302. For Section 301, this requirement would ensure that coatings with multiple uses are subject to the most restrictive VOC limit, which is consistent with Staff’s implementation of the current rule. This requirement for Section 302 is consistent with the SCM. 305 302 Revised to allow emission control equipment to be used in lieu of the new VOC limits for coatings materials. Added language that control equipment must be maintained and used at all times in proper working condition.

306.1 303.1 Added additional options for application equipment, consistent with the SCM and SJVAPCD Rule 4612. Application must be electrostatic, brush, roll, dip, flow, HVLP, LVLP, or demonstrate a minimum transfer efficiency of greater than or equal to HVLP.

306.1.b.1-

306.1.b.2 N/A Added section that required HVLP spray gun to be permanently labeled. If not, then the end user must demonstrate the spray gun meets the definition of HVLP in design and use. This section is
consistent with SJVAPCD Rule 4612. 306.1.e Same Revised requirement for alternative application methods consistent

with the SCM.

N/A 303.2-

303.3 Deleted these sections, which became unnecessary as of 1/1/98.Staff Report

Rule 459 July 25, 2011, Page B-7

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

307 304 Revised prohibition consistent with the SCM and updated terms and removed references to Group I and Group II vehicles. 308 305 Added “or manufacture” to reflect revised prohibition of sale or

manufacture. 308.1 305 Added manufacture, blend, repackage for sale, and distribute within the District to the list of prohibitions, consistent with the SCM. 308.2 N/A Added new paragraph, to state exceptions for use outside the District or with an emissions control system, consistent with the
SCM. 309 306 Added new paragraph, effective (six months after date of adoption), to prohibit the possession of surface preparation and cleaning operations materials that do not comply with the VOC limits for such material. This section does not apply to a facility when a facility uses emission control equipment that meets the requirement in Section 305. This is consistent with the SCM. Also updated to reflect new section numbers containing coating VOC limits. 310-310.1 307-307.1 Removed terms “surface preparation” and “cleanup” and replaced with “solvent” and “cleaning operations,” consistent with SCM and

sections renumbered. 310.2 307.2 Added “vapor-tight” requirement except while “adding to or removing them from the containers,” consistent with the SCM. 310.3 307.3 Added sunset date of (six months after date of adoption) for existing requirements for cleanup of application equipment. This section will be removed from the rule when the rule is republished. 310.4 N/A Added new requirement to use materials containing no greater than 25 g/l of VOC for the cleanup of application equipment. This requirement is effective (six months after date of adoption), and is
consistent with the SCM. 310.5 307.4 Added sunset date of (six months after date of adoption) for existing requirements for surface preparation. The 780 g/l limit for hand-held spray bottles used for removing road tar, engine oil, grease, overspray, or adhesives or used to clean plastic parts will no longer apply. This section will be removed from the rule when the rule is republished. 310.6 307.5 Added sunset date of (six months after date of adoption) for the provision that allows the soaking of spray gun nozzles in solvents without a limit on VOC content. This practice is not allowed under the SCM or under the solvent cleaning requirements of SCAQMD

Rule 1171. This section will be removed from the rule when the rule is republished. 310.7 N/A Added new requirement that for bug and tar removal (effective six months after date of adoption). Only bug and tar removers regulated under California Consumer Products Regulation or materials containing no more than 25 g/l VOC may be used. Consistent with

SJVAPCD Rule 4612.

311 308 Section renumbered.Staff Report

Rule 459 July 25, 2011, Page B-8

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

312 309 Added sunset date for the limitation on specialty coatings, which will no longer be applicable when new categories and VOC limits take

effect. This section will be removed from the rule when the rule is republished. 313 310 Added sunset date for the limitation on precoats, which will no longer be applicable when new categories and VOC limits take effect. This section will be removed from the rule when the rule is republished. 401 Same Added sunset date for the current product information sheet requirements section. Replaced “cleanup material(s)” with “solvent(s)”. Clarified the VOC content, including water and exempt compounds, of temporary protective coatings and all other materials to be also displayed for direct comparison to the limit in Section 301.

Section references revised. This section will be removed from the rule when the rule is republished. 402 N/A Added section for product data sheet requirements, consistent with the SCM, effective six months after date of adoption. 403 N/A Added section on labeling requirements, consistent with the SCM.

404-405 402-403 Revised section references and section renumbered. 406 N/A Added compliance schedule to comply with the proposed new limits.

This section will be removed from the rule when the rule is republished.

For existing operations, the facility is required to meet the proposed new limits six months after the date of adoption. For new operations installed after the adoption of the rule, the facility is required to meet the proposed new limits immediately. For existing facilities that modifies their operation after the adoption, these facilities will be subject to Rule 202, New Source Review. Staff expects EPA to approve the latest version of Rule 202, which sets the Best Available Control Technology (BACT) threshold at zero. As a result, any modified facility with increased emissions will have to apply BACT. BACT for an automotive coating facility is to comply with the proposed new VOC limits. 407 404 Revised the reference to the test method for determining the VOC

mass concentration.

408 405 Section renumbered. 409 406 Revised definition to be aligned with VOC Regulatory consistent with the SCM and updated to reflect changed section numbers. Corrected error in description of Wv. 410 N/A Added section to determine VOC Actual, consistent with the SCM. 411 407 Updated to reflect the changed definition of “cleanup” to “cleanup operations” and updated to reflect changed section numbers. Corrected error in description of Wv. 501 Same Eliminated the existing sales record requirements. Added requirements for recordkeeping for prohibition of sale or manufacture, consistent with the SCM.Staff Report

Rule 459 July 25, 2011, Page B-9

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

502 Same Revised language that records must be presented immediately on
request. 502.1 Same Updated to reflect new and changed section numbers, updated to reflect changed definitions and added a sunset date for this section. 502.2 N/A Added section specifying information to be kept for each material,

consistent with the SCM. 502.3 502.2 Updated to reflect new and changed section numbers, updated to reflect changed definitions and added a sunset date for this section. Section 502.4 replaces this section effective (six months after date of adoption). Also, updated to reflect changed section numbers and changed definitions. This section will be removed from the rule when the rule is republished. 502.4 N/A Added section for product data sheet requirements, consistent with

the SCM. 502.5 502.3 Added sunset date for the records of usage. Updated to reflect new and changed section numbers and updated to reflect changed

definition. This section will be removed from the rule when the rule is republished. 502.6 N/A Added new requirement for maintaining material purchase and usage records, consistent with of the SCM. 503 502.4 Revised section to require “all records required by this rule” to be maintained on-site for continuous 3 year period and section

renumbered. 504.1 503.1 Revised language to specify that the VOC content of coatings and

solvents shall be determined in accordance with EPA Method 24 and sections 406, 407 and 503.3 of this rule, consistent with the SCM and updated to reflect changed definition of “cleanup.” 504.2 503.2 Updated ASTM method to latest version and updated to reflect changed definition of “pretreatment coating.” 504.3 503.3 Added statement that this method only applies to exempt compounds other than those determined pursuant to section 504.8 (methyl acetate, acetone, t-butyl acetate, and PCBTF), for which a

new method has been added. 504.4 503.4 Updated test methods to latest versions.

504.5 503.5 Section renumbered. 504.6 503.6 Updated SCAQMD test method to latest version.504.7 N/A Added ASTM method for determination of methyl acetate, acetone, tbutyl acetate, and PCBTF, consistent with the SCM. 504.8 503.7 Updated test methods to latest versions. 504.9 N/A Added SCAQMD method for determining the transfer efficiency of spray equipment, consistent with the SCM. 504.10 N/A Added section allowing use, upon approval, of alternative test methods, consistent with the SCM.Staff Report

Rule 459 July 25, 2011, Page B-10

NEW
SECTION

NUMBER EXISTING
SECTION

NUMBER PROPOSED CHANGES

504.11 N/A To address U.S. EPA concerns about enforceability, added paragraph stating that where multiple test methods are specified, a violation established by any one of the test methods constitutes a

violation of the rule.Staff ReportRule 459July 25, 2011, Page C-1APPENDIX CEMISSION REDUCTIONSBASED ON 2002 CARB SURVEYSMAQMD CategorySMAQMDVOCLimits(g/l)1VOCactSMAQMD(g/l)2SCM CategorySCMVOCLimits(g/l)1VOCactSCM(g/l)2PercentReduction2001SMAQMDTotalVolume(gallons)32001Emissions,CurrentLimits(lb/yr)2001Emissions,ProposedLimits(lb/yr)Plastic Primer840 763 Adhesion Promoter 540 167 78% 134 853 187Adhesion PromoterClear Coat420 310 Clear Coat 250 157 49% 22,421 58,002 29,375Elastomeric ClearMetallic/Iridescent 520631 Color Coat 420 204 68% 64,085 337,452 109,097Camouflage 760Color Coat and MultiStage Color Coat780Pretreatment WashPrimer780 716 Pre-treatment Coating660 285 60% 1,645 9,831 3,912Primer and PrimerSurfacer250225 Primer 250 130 42% 19,167 35,988 20,793Primer Sealer andGround Coat420Precoat 600Flexible Primer 840Single Stage Color 420 331 Single Stage Coating 340 216 35% 17,786 49,128 32,060Temporary ProtectiveCoating60 16Temporary ProtectiveCoating60 16 5% 25 3 3Truck Bed Coating(Specialty Coatings)840 278 Truck Bed Liner Coating 310 278 0% 10 23 23Underbody Coating 540 266 Underbody Coating 430 240 10% 52 115 104Uniform Finish Coating 840 693 Uniform Finish Coating 540 258 63% 369 2,133 794Total 493,529 196,349Emission Reduction: 60.2%1. VOC regulatory limit is calculated as grams per liter, excluding water and exempt compound.2. Supplied by CARB, this is the average actual VOC content,including water and exempt compound, of coatings that complywith the corresponding regulatory limit.3. Total volume is based on calendar year 2001 as documented in CARB's 2002 Automotive Refinish Coatings Survey Report,and apportioned to Sacramento County based on population data.Staff Report

Rule 459 July 25, 2011, Page D-1

APPENDIX D
HEALTH RISK ASSESSMENT

Point Source Modeling Parameters

Emission Rate: 1 gram per second Release Type: Default Stack Height: 20 feet Stack Temperature: 140° Fahrenheit

Exit Diameter: 2.83 feet Exit Velocity: 31.8 feet per second Flow Rate: 12,000 cubic feet per minute Building Height: 14 feet

Land: Urban

Point Source BEEST for Windows Output

Max Annual Concentration: 95.09 (ug/m 3 )/(g/s)

Volume Source Modeling Parameters

Emission Rate: 1 gram per second Building Dimensions: 24 feet x 24 feet x 12 feet (length x width x height) Release Height: 10 feet

Horizontal Dim: 5. 58 feet (length/4.3) Vertical Dim: 5.58 feet (height/2.15)

Elevation: 0 feet

Land: Urban

Volume Source BEEST for Windows Output

Max Annual Concentration: 1,878 (ug/m 3 )/(g/s)

Cancer Risk Equation

Cancer Risk = Inhalation Unit Risk Factor (ug/m 3 ) -1 * Concentration (ug/m 3 )/(g/s) * Emission Rate (g/s)Staff Report

Rule 459 July 25, 2011, Page D-2

Tertiary Butyl Acetate

Density of TBAc: 7.18 lb/gal Inhalation Unit Risk Factor (URF) = 4 x 10 -7 (ug/m 3 ) -1

Calculating the maximum emission from a point source to have a cancer risk of less than 10 in a million:

ER = Cancer Risk/(URF*Annual Conc) ER = (10 x10 -6 )/(4 x 10 -7 (ug/m 3 ) -1 * 95.09 (ug/m 3 )/(g/s)) ER = 0.26 g/s

Annual Emission = ER * 0.0022 lb/g * 3600 s/hr * 8 hr/day * 5 days/wk * 52 wk/yr Annual Emission = 0.26 g/s * 0.0022 lb/g * 3600 s/ hr * 8 hr/day * 5 days/wk * 52 wk/yr Annual Emission = 4340 lb/year

Calculating the maximum emission from a volume source to have a cancer risk of less than 10 in a

million:

ER = Cancer Risk/(URF*Annual Conc) ER = (10 x10 -6 )/(4 x 10 -7 (ug/m 3 ) -1 * 1,878 (ug/m 3 )/(g/s)) ER = 0.01 g/s

Annual Emission = ER * 0.0022 lb/g * 3600 s/hr * 8 hr/day * 5 days/wk * 52 wk/yr Annual Emission = 0.01 g/s * 0.0022 lb/g * 3600 s/ hr * 8 hr/day * 5 days/wk * 52 wk/yr Annual Emission = 220 lb/yearStaff Report

Rule 459 July 25, 2011, Page E-1

APPENDIX E
EASTERN RESEARCH GROUP FINAL REPORT

SOCIOECONOMIC IMPACT ANALYSIS FO R SMAQMD RULE 459 AMENDMENTS

# SOCIOECONOMIC IMPACT
ANALYSIS FOR SMAQMD
RULE 459 AMENDMENTS

Final Report

Sacramento Metropolitan Air Quality Management District Program Coordination Division

777 12 th 

## Street, 3 rd 

## Floor Sacramento, CA 95814

July 25, 2011

## SOCIOECONOMIC IMPACT ANALYSIS
FOR SMAQMD RULE 459 AMENDMENTS

Final Report

Prepared for:

Sacramento Metropolitan Air Quality Management District Program Coordination Division

777 12 th 

### Street, 3 rd 

### Floor Sacramento, CA 95814

Prepared by:

Eastern Research Group, Inc. (ERG)
8950 Cal Center Drive
Suite 348 Sacramento, CA 95826

July 25, 2011Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 i 

## TABLE OF CONTENTS

Section Page

EXECUTIVE SUMMARY .................................

................................................... ..................... 1

1.0 INTRODUCTION ......................................

................................................... ..................... 3

2.0 OPTION CONSIDERED, COST COMPONENTS, AND CONVERSION COSTS ............ 3

2.1 Equipment Costs .....................................

................................................... .............4

2.2 Training Costs .......................................

................................................... ..............4

2.3 Total One-Time Costs ...............................

................................................... ...........5

2.4 Increased Coating Costs .............................

................................................... ..........5

2.4.1 Annual Coating Volumes................................ ..........................................6

2.4.2 Incremental Coating Costs .......................... ..............................................6

2.5 Solvent Recycling ..................................

................................................... ..............7

3.0 SUPPLIER INDUSTRIES ...............................

................................................... ................ 9

3.1 Affected Sectors ...................................

................................................... ...............9

3.2 Permitted Autobody Shops...............................

................................................... ....9

3.3 Dun & Bradstreet List of Auto Repair/Painting Facilities ...................................... 10

3.4 Merged and Updated Lists ................................

................................................... . 11

3.5 Final Industry Profile ...............................

................................................... .......... 11

4.0 ESTIMATED COST OF AMENDMENTS TO RULE 459 ............. ................................. 13

5.0 POTENTIAL IMPACTS .................................

................................................... .............. 13

5.1 Suppliers ...........................................

................................................... ................. 13

5.1.1 Who Might Bear Costs?.............................. ............................................ 13

5.1.2 Potential Impacts ................................... ................................................. 17

5.2 Consumers .........................................

................................................... ................ 21

5.2.1 Who Might Bear Costs?.............................. ............................................ 21

5.2.2 Potential Cost Increase to Consumers ............... ...................................... 23

5.2.3 Potential Demand Shifting to Non-Sacramento County Shops .... ............ 23

6.0 REFERENCES ........................................

................................................... ...................... 24Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 ii 

## TABLE OF CONTENTS - Continued

Tables Page

Table 1. Equipment Costs..............................

................................................... .......................... 5 Table 2. Imputed Coating Volumes .......................

................................................... .................. 7

Table 3. Noncommercial Permitted Facilities ..........

................................................... .............. 10 Table 4. Autobody Industry Profile .....................

................................................... .................. 12 Table 5. Cost Analysis—Low Cost Scenario ............

................................................... ............. 14 Table 6. Compliance Costs to Revenue and Net Income by Size Category Low Cost Scenario . 18 Table 7. Potential Impacts from Low Cost Scenario .....

................................................... ......... 21

Figures Page

Figure 1. Logic Diagram of Potential Impacts on Manufactur ers, Distributors, and Users of

Water-based Coatings................................

................................................... ............. 15 Figure 2. Logic Diagram of Potential Impacts on Commercia l Entities ..................................... 17 Figure 3. Logic Diagram of Potential Impacts on Consumers

.................................................. . 22Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 1 

### EXECUTIVE SUMMARY

Rule 459 (Automotive, Truck, and Heavy Equipment Refinishing Ope rations) is being

proposed for amendment. SMAQMD is considering a decrease in the allowable VOC content of

coatings used in the refinishing process. Compliance with the low VOC limits in the proposed

amendment will require autobody shops to use water-based c olor coatings instead of the

traditional solvent-based coatings.

ERG examined the potential impacts on manufacturers, distr ibutors (jobbers),

commercial facilities (permitted and unpermitted), non-c ommercial facilities, and consumers.

Through the use of SMAQMD information and commercial finan cial databases, ERG identified

302 facilities potentially affected by the Rule 459 amendment s. Of these, 63 have already

converted to water-based coatings. The remaining 239 facili ties (3 noncommercial permitted

facilities, 68 commercial permitted facilities, and 168 co mmercial unpermitted facilities) are

included in the cost analysis.

ERG developed equipment and costs based on the experience of Sacramento County

facilities that have already converted to water-based coatings and information provided in

industry articles and manufacturers’ websites. SMAQMD sta ff supplied ERG with coating price

information obtained from four coating manufacturers. ER G researched manufacturers’ VOC

compliance charts and developed “ready-to-spray” $/gallon costs for water-based and solventbased coatings based on usage data supplied to SMAQMD by comm ercial autobody shops. In

addition, one manufacturer also calculated the $/sq. ft . covered costs for water- and solventbased coatings. Water-based coatings are more efficie nt at coverage than solvent-based coatings;

that is, a smaller volume of water-based coating is n eeded to cover the same area covered by a

unit of solvent-based coating. When improved coverage is t aken into consideration, water-based

coatings were about 11 percent lower in cost than solvent-based coatings. Based on this

information, ERG developed two scenarios, both of which incorporate the assumption that no

costs can be passed through to the consumer and that insuran ce companies make no adjustment

in their reimbursement policies. The first scenario (“L ow Cost”) assumes $0/gallon incremental

coating cost (i.e., it does not consider potential cost s avings). The second scenario (“High Cost”)

uses the highest price differential ($25.17/gallon) between w ater-based and solvent-based

coatings.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 2 

### The cost analysis is based on facility-specific one-t ime and annual costs (based on

reported coating usage) for permitted facilities. For unperm itted facilities, the cost assumptions

include 1 spray booth, 1 person trained, and the average of th e lowest 10 percent of coating use

by permitted facilities. Under the Low Cost scenario, one-time costs of equipment and training

total $240,210 and total annualized costs is 34,161. Average annualized c osts per facility range

from $127 to $166 depending on the revenue category with an ove rall average of $143 per

facility. Under the High Cost scenario, the results are $240,210 in one-time costs, $509,919 in

annual costs, and $579,877. Average annualized costs per facility range from $990 to $14,071

depending on the revenue category with an overall average of $2,426 per facility.

The added costs of the Low Cost scenario might lead to t he loss of $44,905 in output,

$43,528 in earnings, and 0 jobs. For perspective, this is 0.07 perce nt of the earnings in this

industry in Sacramento County, and no discernable impact on output or employment. The added

costs for the High Cost scenario might lead to the l oss $762,248 in output, $738,705 in earnings,

and 6 jobs. For perspective, this is 0.03 percent of the output , 1.25 percent of the earnings, and

0.37 percent of the employment in this industry in Sacrament o County. Neither scenario has any

discernable impact on the Sacramento County unemployment rate. On an industry-wide basis,

return on equity (ROE) is projected to decline by 0.3 to 5.7 pe rcent, depending on the scenario.

ERG examined a third scenario where a consumer had to pay for the cost increase

associated with the switch to water-based coatings. Un der the “High Cost” scenario, the

consumer would spend up to an additional $25 or about 1.1 percent of the average repair price of

$2,295 (Autobody Shop Business, 2010). Based on this small differe nce, ERG does not consider

the Rule 459 amendments to pose an incentive to move busi ness out of the county.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 3 

### 1.0 INTRODUCTION

The District is considering amendments to Rule 459—Automoti ve, Truck and Heavy

Equipment Refinishing Operations. The purpose of the amendmen ts is to reduce volatile organic

compound (VOC) emissions from the refinishing of motor ve hicles and mobile equipment.

Emissions will be reduced by decreasing the allowable VOC con tent of coatings used in the

refinishing process by changing from solvent-based coatings to water-based coatings.

This report presents the socioeconomic analysis for th e amendments to Rule 459

conducted by Eastern Research Group, Inc. (ERG). ERG iden tified the equipment, one-time

costs, and annual cost components to change to water-base d coatings (Section 2); identified the

universe of facilities to which Rule 459 amendments could appl y (see Section 3); and calculated

the estimated costs for the rule amendment (Section 4 ).

The socioeconomic analysis (Section 5) examines two sc enarios to estimate the potential

impact on the suppliers. Both scenarios incorporate the assumption that autobody shops are not

able to raise prices. This approach maximizes the potential impacts on the shops while

minimizing the impacts on the consumers. The first sc enario is what is likely to happen (Low

Cost scenario) given the price and coverage difference s between water-based and solvent-based

coatings. The second scenario examines the impacts of t he highest incremental cost identified

between water-based and solvent-based coatings (High C ost scenario). Another analysis

examines the potential impact on a consumer should all i ncremental costs incurred to comply

with Rule 459 amendments be passed on to the consumer; this minimizes impacts on the

autobody shops but maximizes them for consumers.

2.0 OPTION CONSIDERED, COST COMPONENTS, AND CONVERS ION COSTS

The socioeconomic analysis considers the change from solvent-based to water-based

coatings. Section 2.1 examines the equipment, training, an d material changes needed to comply

with the Rule 459 amendments while Section 2.2 addresses th e increased coating costs (“annual

costs”). These data are combined with the industry profil e (discussed in Section 3) to provide the

estimated industry costs of the Rule 459 amendments presen ted in Section 4.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 4 

### ERG found that there was a significant difference betwe en the equipment that retailers

would like to sell to the autobody shops to convert to wat er-borne coatings and the minimum

amount of equipment that the shops actually use for the conversion. For example, information

from the PPG website suggests several substantial piece s of equipment, such as booth blowers,

fans, floor stands, or a waterborne downdraft booth, are likely to be needed in order to convert to

water-borne coatings (see http://www.ppg.com/coatings/refinish/en/products/waterborne/

Pages/equipment.aspx ) while at the same time (also on their website) they suggest that the

amount of new equipment needed may consist of only a spray gun, gun washing equipment, and

possibly air movement equipment (see http://www.ppg.com/coatings/refinish/en/products/

waterborne/Pages/FAQ.aspx ). ERG developed costs for the minimum equipment needed t o

convert to water-based coatings (i.e., spray guns, gun washi ng equipment, and air movement

equipment).

2.1 Equipment Costs

Several distributors provide lists of spray guns that ar e compatible with their water-borne

products; ERG searched the Internet for vendor prices for these models. Spray gun prices ranged

from $99 to $586, with an average price of $368.

Prices for spray gun cleaning depend on whether the shop purcha sed a wash cabinet

($563 to $1,839) or used gun cleaning kits ($11 to $31). ERG assumed the shops used spray gun

cleaning kits with an average price of $21.

Prices for air drying equipment ranged from a low of $80 for a hand-held dryer to as high

at $1,026 for a stand with two blower guns, air gauge and air dr ying desiccants. However, based

on observations and information collected by SMAQMD sta ff, hand-held guns were the standard

equipment; these ranged from $80 to $225 with an average pric e of $160.

2.2 Training Costs

Based on information gathered from site visits conducted by S MAQMD and telephone

calls made by SMAQMD and ERG with distributors, it was de termined that most manufacturers

provide training to shop personnel at autobody shops which the y convert to water-borne coatings

when the facility is likely to provide a sufficient volum e in material purchases. For low-volume

businesses, training costs were about $250 per person. To the class cost, ERG added $423 toSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 5 

### reflect 8 hours of training time at $21.61/hour, the Level 3 wage rate for industry 40900-

automotive body and related repairers for the Sacrament o Metropolitan Statistical area (FLC,

2011)

.



### 2.3 Total One-Time Costs

Table 1 shows the equipment costs for a facility depend ing on the number of spray

booths at a location. A facility is assumed to purchase one spray gun per booth. Locations with

are assumed to purchase one spray gun cleaner per spray gun

.

All jobbers indicated that training was necessary due to th e differences between the types

of coatings. A mobile operator with whom ERG spoke indi cated that the training costs would be

picked up by his manufacturer (Barkman, 2011). This is consisten t with recommendations given

in an industry journal (Clark, 2009a; Clark, 2009b; Clark, 2009c). It is likely that most permitted

facilities have their training provided free of charge by t he manufacturer while many small

unpermitted facilities may be required to pay the cost of training one person. ERG used the

conservative assumption that all unconverted shops would nee d to pay for training one person.

Table 1. Equipment and Training Costs

Description Spray

Gun Spray Gun

Cleaner Hand

- held

Dryer Training Total Total
Rounded

1 booth $368.26 $21.16 $160.00 $422.88 $972.29 $970

2 booths $736.51 $42.32 $320.00 $422.88 $1,521.71 $1,520

3 booths $1,104.77 $63.47 $480.00 $422.88 $2,071.12 $2,070

4 booths $1,473.02 $84.63 $640.00 $422.88 $2,620.53 $2,620



### 2.4 Increased Coating Costs

The annual incremental cost incurred by a facility when it changes from solvent-based to

water-based coatings depends on two parameters:

• Annual volume of coatings used

• Incremental cost per unit volumeSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 6 

### 2.4.1 Annual Coating Volumes

ERG analyzed data collected by SMAQMD on coating usage fro m 51 permitted

autobody shops that had not converted to water-based coati ngs. ERG extrapolated quarterly

volumes to annual volumes and the annual amounts ranged from 12 gallons/year to 1,596



### gallons/year. The amounts used do not always correlate wit h the location revenues. Some shops

whose primary business is not automobile refinishing (i.e .., automobile dealers, businesses that

maintain their own fleets, or those for which paintin g is subsidiary to the primary business of

repairing vehicles) may have substantial revenues but low coating usage. Conversely, a relatively

small shop for which automobile refinishing is the only bus iness might show a much larger

amount of coating usage but much smaller revenues.

As part of the socioeconomic analysis, ERG classifie d the autobody shops into six

revenue categories. ERG calculated the median volume o f coating use within each revenue

category and used the median to impute the coating use for f acilities in that category without

data. Unpermitted facilities in the SMAQMD region will also incur the costs of changing to

water-based coatings. Because such facilities do not spra y enough coating to require a permit,

ERG used the average of the lowest 10 percent of the coa ting volume data from the permitted

facilities to estimate coating use for unpermitted facilities. Table 2 summarizes the coating

volumes used to complete missing data.

2.4.2 Incremental Coating Costs

ERG used price lists obtained from four coating manufactur ers, specifications (i.e.,

mixing ratios for the highest volume coatings: color co ats, clear coats, primers, and primer

sealers), and VOC compliance charts for the Sacramento, San Joaquin, and Yolo-Solano

districts. The requirements considered for the Rule 459 am endments are already in effect in the

San Joaquin and Yolo-Solano districts. Based on this info rmation, ERG developed $/gallon

“ready to spray” costs for clear coats, primers, prime r sealers, and a range of colors. ERG

combined the costs according to the usage patterns provided to S MAQMD by some permitted

facilities to create a “composite” cost for a gallon o f solvent-based coatings (based on

Sacramento County and Placer County VOC charts) and wate r-based-coatings (based on San

Joaquin County and Yolo/Solano Counties VOC charts).Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 7 

### Table 2. Imputed Coating Volumes

Permit Status Annual Revenues (2009$) Imputed Annual Coating Use by Facilities With Missing Data (gallons/year)

Permitted Unknown 108 <$250,000 108 $250,000 - $500,000 232 $500,000 - $750,000 210 $750,000 - $1,000,000 204 >$1,000,000 388 Unpermitted all 18.4



### On a percentage basis, water-based coatings ranged from 6 to 12 percent higher in price

per gallon than solvent-based coatings for the manufactur ers included in the analysis. However,

one manufacturer took the initiative to provide dollars per square foot ($/sq. ft.) covered values

for water- and solvent-based coatings. Water-based coatings have higher coverages than solventbased coatings; that is, a smaller volume of water-b ased coating is needed to cover the same area

covered by a unit of solvent-based coating. When improved coverage is taken into consideration,

water-based coatings were about 11 percent lower in cost than solvent-based coatings. ERG

considers it likely that similar findings would result f rom the other three manufacturers.

In order not to underestimate impacts, ERG did not include cost savings from product

substitution in the socioeconomic analysis but instead c onsidered a $0/gallon incremental coating

cost as the Low Cost scenario. ERG used the highest in cremental cost/gallon from the remaining

manufacturers as the High Cost scenario. In absolute terms, water-based coatings are estimated

to be $25.17/gallon more expensive than solvent-based coatings.

2.5 Solvent Costs

The proposed amendments to Rule 459 will require a switch to very low VOC solvents

for cleanup and surface preparation. Currently, Rule 459 requ ires surface preparation solvent to

contain no more than 72 g/l VOC. The proposed amendment s lower this limit to 25 g/l. ERG

compared the prices for 72 g/l surface cleaners to cleaner s that contain 25 g/l VOC or less. For

all four manufacturers, the cleaners meeting the 25 g/l l imit were less expensive than the 72 g/l

cleaners.

Currently, Rule 459 requires that spray guns be cleaned wit h a solvent containing no

more than 72 g/l VOC, or cleaned within an enclosed gun clea ner. Typically, facilities that useSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 8 

### solvent based coatings use high VOC solvents such as lac quer thinner to clean spray guns within

an enclosed gun cleaner. Lacquer thinner can be purchased for approximately $15/gallon in 5-

gallon containers and $9/gallon in 55-gallon drums. The cle aning solvent is recirculated within

the system until it contains too much paint waste to be effective. At that point, the spent solvent

is drained out and the gun cleaning system is refilled with f resh solvent. At the majority of

shops, the spent solvent is put into a drum for disposal as hazardous waste. Disposal costs

approximately $2 to $3 per gallon. Many shops contract with a s ervice to maintain the gun

cleaning systems and haul away hazardous waste. Some of t he shops have solvent recycling

systems, which allow recovery of a portion of the solv ent from the paint solids by evaporation.

With the recycling systems, there is a disposal cost a ssociated with the paint solids, as well as a

cost for fresh makeup solvent. However, the proposed VO C limit of 25 g/l would likely preclude

the use of recycled solvent because an initially comp liant solvent would gain VOC content from

the coatings as they are cleaned from the spray guns. Th e material and disposal costs of

discontinuing solvent recycling, however, may be offset by a decrease in the amount of cleanup

material used to clean water based spray equipment, as di scussed below.

In the proposed amendments, solvents used to clean applica tion equipment must contain

no more than 25 g/l VOC. For water based coatings, a spra y gun can be cleaned primarily using

only a few ounces of tap water (virtually no cost) follo wed by a final rinse with acetone from a

squirt bottle. Acetone can be purchased for approximately $16/gallon in 5-gallon containers and

$12/gallon in 55-gallon drums. The spent cleaning solution is disposed as hazardous waste.

Some shops may choose to use flocculants that settle a nd separate the paint solids so that the

cleaning solution can be reused several times before dispo sal. Flocculants can be purchased for

approximately $63 for a 2 kg container, which can treat 150 gallo ns of water.

In 2008, the Institute for Research and Technical Assistanc e (IRTA) conducted a study of

cleaning solvents and other materials used in the autobody industry (Wolf 2008). One case study

involved a facility that had recently converted from solv ent based coatings to water based

coatings. Prior to conversion, the total annual cost for application equipment cleaning, including

material and disposal costs, was $1,832. After conversion to water based coatings, the cost

decreased to $407. Most of the reduced cost was due to the f act that a much lower volume ofSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 9 

### cleaning material was required to be purchased and less waste was generated during the cleanup

of water based spray guns.

ERG concludes that the proposed amendments will not inc rease costs for solvent cleaning

and associated disposal. For both the Low Cost and High Cost scenarios, ERG assumed no

incremental costs.

3.0 SUPPLIER INDUSTRIES

3.1 Affected Sectors

Rule 459 amendments have the potential to affect a varie ty of sectors:

• Coatings manufacturers

• Coatings distributors (jobbers)

• Government entities that paint/repaint vehicles

• Educational institutions that teach vehicle painting

• Businesses that paint/repaint their own vehicles as part of a larger business activity

• Businesses whose primary business is vehicle painting/repain ting

• Customers that need/want a vehicle painted/repainted

According to discussions with jobbers, coating manufacture rs charge higher prices for

water-based coatings. ERG therefore assumed no impacts from Rule 459 amendments to the

manufacturing sector because additional costs are passed th rough to the jobbers. In support of

this project, ERG spoke with eight jobbers. Every jobbe r that we contacted stated that they

passed the higher costs to the autobody shops. ERG therefo re assumed no impacts from Rule 459

amendments to jobbers.

3.2 Permitted Autobody Shops

SMAQMD refines and updates its list of permitted facilitie s on an ongoing basis. As of

June 2011, 63 facilities were identified as converted to water -based coatings and 72 as

unconverted facilities. One facility (Porter Sprague) appe ars on both the converted and

unconverted list because it performs both water-based and solvent-based coatings. For the

purpose of the economic analysis, this facility is cons idered converted. Thus the total number of

SMAQMD permitted facilities is 134.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 10 

### One government facility has all the equipment and trai ning necessary for water-based

operations but has not switched to using water-based color coatings. For the economic analysis,

this facility incurs incremental coating costs, but no equ ipment or training costs. For the purpose

of the economic analysis, there are 63 converted facil ities and 71 unconverted facilities. The

unconverted facilities are likely to incur costs under Rule 459 amendments.

Six noncommercial facilities hold permits (see Table 3 ); four are government institutions

and two are educational institutions. The four government i nstitutions (two for Regional Transit,

one for the City of Sacramento Public Works, and one for the State of California Department of

Transportation (Caltrans)) have a total of six spray booth s. Of these, three booths have converted

to water-based coatings, one booth has partially converte d, and two have not converted. The two

educational institutions (Los Rios District College and Uni versal Technical Institute) have a

combined total of 11 spray booths—all of which have been conver ted to water-based coatings.

Thus, of the six noncommercial facilities, three are likely to incur costs under Rule 459

amendments.

Table 3. Noncommercial Permitted Facilities

Category Data

Source Number

of
Facilities Number of

Spray
Booths Converted Partially
Converted Not

Converted

Government SMAQMD 4 6 3 1 2

Educational SMAQMD 2 11 11 0 0



### 3.3 Dun & Bradstreet List of Auto Repair/Painting F acilities

Under District Rule 459, General Permit Requirements, fa cilities that use less than 1

gallon per day of coating/solvent are exempt from permits . Thus, there are additional facilities

that do not appear on the SMAQMD list but might incur cos ts under the amendments to Rule

459. The unpermitted facilities are likely to be small busi nesses. In order to better characterize

this segment, ERG extracted all locations with primar y or secondary NAICS code 811121

(Automotive Body, Paint, and Interior Repair and Mainten ance) from the Dun & Bradstreet

(D&B) Million Dollar Database 1 

### . Given the time lag for reporting data and its incorpor ation in

commercial databases, financial date extracted in ear ly 2011, as was done for this report, reflects

1 Which, despite its name, tracks businesses with annual rev enues as low as $50,000 although coverage might not be as complet e as for businesses with larger annual revenues.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 11 

### 2009 data. After removing facilities that only did interior w ork, (i.e., upholstery), and an industry

organization (California Autobody Association), ERG’s fi nal list included 280 locations that

potentially could be affected by the rule.

3.4 Merged and Updated Lists

ERG, with input from SMAQMD, merged the permitted facilit ies and D&B lists. This

involved tracking name changes, entities that held permits under one name but “did business as”

under a second name, distinguishing mailing and location addresse s, etc. After matching

facilities to the D&B list extracted under the NAICS co de 811121, ERG searched the D&B

database for the names of unmatched businesses. These gene rally do auto painting as a small part

of a larger business. In all, 112 matches were made betwee n the two sets of commercial

facilities. The resultant profile includes 6 noncommerci al permitted facilities, 128 commercial

permitted facilities, and 168 commercial unpermitted facili ties for a total of 302 facilities.

3.5 Final Industry Profile

Table 4 describes the overall industry profile. The first set of rows shows the 134

permitted facilities (i.e., 6 noncommercial and 128 commer cial). There are an additional 168

commercial facilities that are not permitted. The seco nd set of rows shows the counts of

converted facilities. While 63 of 134 permitted facilities h ave already converted to water-based

coatings, ERG assumes that none of the unpermitted fac ilities have done so.

The third set of rows identifies the counts of unconverte d facilities likely to be affected

by Rule 459 amendments. Three noncommercial permitted fa cilities, 68 commercial permitted

facilities, and 168 commercial unpermitted facilities are in the cost analysis for a total of 239

facilities. ERG could not identify revenues for 10 commerc ial permitted facilities; these are listed

under the column labeled “Unknown.”

Unpermitted facilities are smaller operations (i.e., n one fall into the revenue categories

greater than $750,000 per year). Of the 41 facilities with annua l revenues greater than

$1,000,000 (2009 data), 27 have already converted. As a result, all but 14 of the 239 commercial

facilities considered to incur costs under Rule 459 amendment s have less than $1,000,000 in

annual revenues.Socioeconomic Impact Analysis - Rule 459 AmendmentsJuly 25, 201112Table 4. Autobody Industry ProfileRevenue CategoryCategorySourceUnknown<$250,000$250,000 -$500,000$500,000 -$750,000$750,000 -$1,000,000>$1,000,000TotalALLNonCommercial SMAQMD66Commercial SMAQMD23329131041128Commercial D&B 013925400168Total 302CONVERTEDNonCommercial SMAQMD33Commercial SMAQMD13102532760Commercial D&B 0000000Total 63INCURRING COSTSNonCommercial SMAQMD33Commercial SMAQMD10227871468Commercial D&B 013925400168Total 239Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 13 

### 4.0 ESTIMATED COST OF AMENDMENTS TO RULE 459

ERG used SMAQMD permit, inventory, and inspection data on th e number of spray

booths and annual coating usage to conduct a facility-specifi c cost analysis for each permitted

facility. Unpermitted facilities were assumed to have a single spray booth, train one person in the

use of water-borne coatings, and use 18.4 gallons of coati ngs per year. Equipment, training, and

incremental coating costs are incurred in the first yea r while only incremental coating costs are

incurred in subsequent years. The initial costs were annual ized over a 10-year period with a 7

percent discount rate.

Table 5 summarizes the results of the Low Cost and Hig h Cost scenarios. Costs are

aggregated by revenue category. For both scenarios, the one -time costs of equipment and

training total $240,210. The scenarios differ according to the incremental cost incurred every

year for using waterborne coatings (i.e., the Low Cost scenario assumes zero incremental coating

costs on a coverage basis). For the Low Cost Scenari o, the total annual cost is $0 and the total

annualized cost is $34,161. Average annualized costs per facility range from $127 to $166

depending on the revenue category with an overall average of $143 per facility.

Under the High Cost scenario, the results are $509,919 in a nnual costs, and $579,877 in

annualized costs. This High Cost scenario is conservati ve because the improved coverage of

water based coatings has not been taken into account. I mproved coverage will likely result in a

decrease in coating usage.

5.0 POTENTIAL IMPACTS
5.1 Suppliers

5.1.1 Who Might Bear Costs?

Figure 1 is a logic diagram of how different groups might b e affected by Rule 459

amendments. Beginning at the top of the figure, the coatin gs manufacturers incur the cost of

adding a new product line (water-based coatings). These re quirements have already been in place

in different areas of California. Based on conversati ons with the distributors, the manufacturers

pass all increased costs for water-based coatings to the distributors. Thus, ERG estimates that

there will be no impacts on the manufacturers. The sa me conversations consistently indicatedSocioeconomic Impact Analysis - Rule 459 AmendmentsJuly 25, 201114Table 5. Cost AnalysisRevenue CategoryCategoryVariableTotalUnknown<$250,000$250,000 -$500,000$500,000 -$750,000$750,000 -$1,000,000>$1,000,000SMAQMD Counts 33Non-Commercial One-time $1,940$1,940Annual$0-$8,054$0-$8,054Annualized$276-$8,895$276-$8,895SMAQMD Counts 68102278714Commercial One-time $75,310$9,700$24,640$7,890$9,410$7,340$16,330Annual$0-424,060$0-$24,163$0-$63,327$0-$59,703$0-51,590$0-42,990$0-$181,927Annualized$10,701-$464,470$1,380-$27,238$3,498-$71,271$1,120-$65,004$1,336-$56,926$1,043-$47,044$2,324-$196,987D&B Counts 168013925400Commercial One-time $162,960$0$134,830$24,250$3,880$0$0Annual$0-$77,805$0$0-$64,374$0-$11,578$0-$1,852$0$0Annualized$23,184-$106,512$0$19,182-$88,126$3,450-$15,850$552-$2,536$0$0Totals Counts 239131613212714One-time $240,210$11,640$159,470$32,140$13,290$7,340$16,330Annual$0-$509,919$0-$32,217$0-$127,701$0-$71,281$0-$53,803$0-$42,990$0-$181,927Annualized$34,161-$579,877$1,656-$36,133$22,680-$159,397$4,570-$80,854$1,888-59,462$1,043-$47,044$2,324-$196,987AverageAnnualizedCost perFacility$143-$2,426$127-$2,779$141-$990$143-$2,527$157-$4,995$149-$6,721$166-$14,071Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 15 

### Figure 1. Logic Diagram of Potential Impacts on Man ufacturers, Distributors, and Users of Water-based Coatings

that distributors pass through all increased costs to their customers. Thus, ERG estimates there

will be no impacts on the distributors.

Government and educational entities conduct repainting operat ions to maintain their fleet

of vehicles or to teach automobile painting and several of them appear in SMAQMD’s list of

permitted facilities. Under the Low Cost scenario, the combined annualized cost incurred for the

three noncommercial facilities is $276. This minimal cos t is likely to have no adverse impact on

government facilities. Under the High Cost scenario, t he combined annualized cost is $8,895.

This cost is small compared to the operating budget and can b e mitigated by training in properSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 16 

### and efficient application of water-based coatings. Both educational entities in the analysis have

already converted to water-based coatings with no disce rnable impact.

However, there might be impacts on commercial entiti es and these are described in more

detail in Figure 2. Rule 459 amendments might affect busines ses where vehicle painting/painting

is part of a larger business (see box labeled “Secondary Bus iness”). For example, MCM

Construction in Sacramento is on the list of permitte d facilities where vehicle repainting appears

to be part of the maintenance program for its own equip ment (MCM, 2011). The Rule 459

amendment costs would be very small compared to the overa ll operations of such businesses and

ERG believes that it is highly likely that all costs c ould and would be passed on to the consumer.

However, we analyzed secondary businesses as if they c ould not pass costs through to the

consumers of their primary business’s products and service s.

The right side of Figure 2 shows some of the possible si tuations for entities whose

primary (if not sole) business is vehicle painting/repaint ing. If the repainting job is discretionary

(e.g., the customer doesn’t like the color any more, etc .), the business might be able to pass

through some of the additional costs subject to the pressur e on prices from the local competition.

The next branch in the logic diagram concerns repainti ng that is necessary, perhaps part

of a vehicle repair. If the driver is insured and the insur ance company uses a cost-reimbursement

approach, then the autobody shop is able to pass through the additional costs. The insurance

company, in turn, distributes the cost among its policy hol ders. Given the relative magnitude of

the costs associated with accident repairs and the marg inal cost increase for water-based

coatings, ERG considers it likely that the insured com munity would see miniscule, if noticeable,

increases in policy costs.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 17 

### Figure 2. Logic Diagram of Potential Impacts on Co mmercial Entities

If, on the other hand, the insurance company uses a fixed f ee schedule of repayment, then

the autobody shop would be forced to absorb all the increm ental costs. This is a “High Cost”

scenario where none of the incremental cost can be recovered and, as such, is the case that will

be analyzed for impacts. One insurer mentioned that the company takes such regional regulatory

requirements into consideration when it calculates re gional fee schedules (Williams, 2011b).

Finally, if the driver is not insured, the driver will ha ve to pay for the repair and

painting/repainting on an out-of-pocket basis. This is sim ilar to the discretionary case where the

autobody shop would be able to pass through cost increases a s constrained by local competition.

5.1.2 Potential Impacts

Costs as Percent of Revenues and Net Income. ERG examined IRS data for the

automotive repair and maintenance industry for tax year 2007 (the most recent year available)

(IRS, 2011). These data represent more than 110,000 returns nati onwide. For this industry, a

substantial proportion of businesses (44 percent) do not have net income (i.e., the business

showed a loss for the year). For the 56 percent of busines ses reporting net income, the profit

margin was 6.2 percent. However, in keeping with the Hig h Cost analysis approach, ERG

calculated the profit margin for all returns, profitable and not profitable. The profit margin used

in the calculations is 4.3 percent.

Table 6 shows the annualized compliance costs compared to r evenues and net income by

revenue category and by total industry. Both converted and unc onverted facilities were included - -Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 18 

### when calculating the category average for a total of 273 fac ilities. 2 

### Table 6 compares the

category average revenues (per facility) with the avera ge annualized cost per facility. Annualized

costs from 0.0 percent to 0.9 percent of revenues for all size categories under both scenarios.

Annualized costs range from 0.0 percent to 3.0% of net incom e under the Low Cost scenario and

from 3.1 percent to 21.0 percent under the High Cost scenar io. On an industry basis, under the

High Cost scenario, the annualized costs are 3.1 percent of net income; the impacts reflect the

substantial proportion of the industry that has already converted to wa ter-based coatings (63 of 302

facilities or 21 percent of the population). 

### These results are not inconsistent with other analyses ;

BAAQMD 2008 found the cost/net income ratio was 19.5 percent for their smallest category.

Even under High Cost assumptions (no costs passed through to the customer and highest

incremental cost for water-based coatings) did the annua lized costs exceed net income.

Table 6. Compliance Costs to Revenue and Net Incom e by Size Category

No. Incurring
Costs Average

Revenues Average

Net Income Annualized

Cost Annualized Cost to

Category Revenues Net Income

Unknown 13 — a

— a $127-$2,779 — a

— a

<$250,000 161 $109,194 $4,717 $141-$990 0.1%-0.9% 3.0%-21.0% $250,000 - $500,000 32 $346,629 $14,973 $143-$2,527 0.0%-0.7% 1.0%-16.9% $500,000 - $750,000 12 $614,249 $26,534 $157-$4,955 0.0%-0.8% 0.6%-18.7% $750,000 - $1,000,000 7 $884,500 $38,207 $149-$6,721 0.0%-0.8% 0.4%-17.6%

>$1,000,000 14 $10,658,408 $460,408 $166-$14,071 0.0%-0.1% 0.0%-3.1% Industry Average 239 $1,782,928 $77,017 $143-$2,426 0.0%-0.1% 0.2%-3.1%

a Unable to calculate average revenues or net income due to lack of data.



### Return on Equity. The average net worth and net income can be calculated from the IRS

data. The ratio of these values is the return on equity . Under the Low Cost scenario, the return on

equity declines by 0.3 percent. Under the High Cost Scenari o, the return on equity declines by

5.7 percent. 3



### Output, Earnings, and Employment. ERG used the Regional Input-Output Modeling

System (RIMS II) developed by the U.S. Commerce Departme nt, Bureau of Economic Analysis

2 ERG could not locate revenue information for 23 commercial permitted facilities, see Table 4. Adding these and the si x noncommercial facilities results in a total count of 302 f acilities in the analysis.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 19 

### (BEA) for detailed industry 8111A0 (automotive repair and mai ntenance, except car washes) to

estimate the loss in output, earnings, and employment (B EA, 2011a). RIMS multipliers are done

on the basis of 2007 dollars. For output and earnings, the m ultipliers are from dollars to dollars.

Hence, no adjustment needs to be made for a change in t ime. The multiplier for employment,

however, is in terms of jobs per $1 million (2007 dollars). ERG used the change in Consumer

Price Index (CPI-U) (BLS, 2011a) to deflate the annualized re gulatory cost to 2007 dollars

before applying the multiplier.

ERG used BEA estimates of Gross Domestic Product (GDP) by Metropolitan Area for

the Sacramento-Arden-Arcade-Roseville, CA (Metropolitan Statistical Area or MSA) (BEA,

2011b). The estimated 2009 GDP for the NAICS Sector 81 “other s ervices except government”

is $2.47 billion. The sector includes other services, such as computer and office equipment repair

and maintenance and personal and laundry services. As a r esult, the relative impacts on output

might be underestimated, but no further detail was availabl e from BEA.

ERG used annual payroll data for NAICS 81112 from the 2008 County Business Patterns

for Sacramento County to estimate earnings (Census, 2011a). 4 

### This is about $59.2 million.

Estimating the number of jobs associated with the industr y is complicated by the large

proportion of single-person facilities. If these are so le proprietorships and the proprietor does not

pay himself or herself a set wage, they would not appear in County Business Pattern data as a

“paid employee.” Thus, ERG used both County Business Patte rn data and data from the Census’

Non-employer statistics (Census, 2011b) to estimate the number of jobs associated with the

industry. For Sacramento County, in 2008, this is about 1,605 jobs

.

Table 7 presents the data and calculations for estimating impacts on output, earnings, and

employment. The added costs for the Low Cost scenario m ight lead to the loss of $44,905 in

output, $43,518 in earnings, and 0 jobs. For perspective, this is 0.07 percent of the earnings in

this industry in Sacramento County, and no discernable impac t on output or employment. The

added costs for the High Cost scenario might lead to the loss of $762,248 in output, $738,705 in

3 These findings are more favorable than those in CARB (2005) which found a 15% change in the ROE and said “If the automotive refinishing facilities absorbed all costs, they would be adversely impacted by the proposed SCM” (p. VI I-9).

4 The most recent year for which data are available.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 20 

### earnings, and 6 jobs. For perspective, this is 0.03 percent of t he output, 1.25 percent of the

earnings, and 0.37 percent of the employment in this industry i n Sacramento County.

Sacramento County Unemployment Rate. The preliminary estimate of the December

2010 unemployment rate for Sacramento County is 12.61 percent (BLS, 2011b). Neither the Low

Cost or High Cost scenario has an effect on the unemp loyment rate.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 21



### Table 7. Potential Impacts from Low Cost Scenario

Parameter Data

Annualized Cost of the Rule (2010$) $34,161- $579,887

Annualized Cost of the Rule (2007$) $32,483- $551,385

RIMS II Multipliers For Automotive Repair and Maint enance Output ($/$) 1.3145
Earnings ($/$) 1.2739
Employment (Jobs per $1 million, 2007$) 11.6816

Potential Impacts

Output $44,905- $762,248

Earnings $43,518 $738,705

Employment 0.00-6.00

Sacramento County Data

Output (2009)--all other services except government ( $) $2,470,000,000

Earnings (2008)--NAICS 81112 $59,236,000

Paid employees in NAICS 811121 (2008) 1,156

Nonemployer firms in NAICS 81112 449

Total Jobs 1,605

Relative Impacts

Output 0.00%-0.03%

Earnings 0.07%-1.25%

Jobs 0.00%-0.37%



### 5.2 Consumers

5.2.1 Who Might Bear Costs?

Figure 3 is the logic diagram for evaluating the potential impacts on consumers. In these

analyses, the suppliers are assumed to pass through all increased costs to the consumer. That is,

there are no impacts on the suppliers. A consumer might wish to touch up paint flaws that

accumulate through routine use. If the consumer decides to do it herself/himself, the amendments

to Rule 459 contain exemptions for aerosol coating products (Section 459.111) and containers

with no more than 1 fluid ounce of product (Section 459.112).Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 22



### Figure 3. Logic Diagram of Potential Impacts on Con sumers

If, in his or her discretion, a consumer decides to use an autobody shop to repaint all or

parts of a vehicle to match its original color or the change the vehicle’s color, there are three

possible reactions to any cost increases for the use of water-borne coatings. The consumer can

forego or delay the paint job, pay the increased cost, o r go outside the SMAQMD region to a

business that is not required to use water-based coatings.

For this analysis, if the paint job is associated with a repair, the paint job is considered

necessary. If the customer is insured, he or she would se e no impact from Rule 459 amendments.

If the customer is not insured—and, during 2002-2004, about 15 percent of the motorists inSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 23 

### Sacramento County were not insured 5 

### —then the consumer faces the same three decisions as he

or she would for discretionary painting (California, 2011).

For this analysis, ERG assumes that accidents are equal ly likely to occur to insured and

uninsured motorists. Thus a consumer might be exposed to hig her prices for water-based

coatings in the 15 percent of the cases where an uninsured motorist pays out-of-pocket for

accident repairs plus some unknown percentage of discre tionary paint jobs.

5.2.2 Potential Cost Increase to Consumers

ERG found several references that refer to the amount o f coatings needed to coat an

entire vehicle (AutocolorLibrary.com, 2011; Lutz, 2010; and Wis e, 2011). These range from

three to four quarts for a mid-sized car to seven to eigh t quarts for a truck or large vehicle. Most

of the time, customers are not looking to recoat an ent ire car. The vehicle is painted as part of a

repair, which might be a quarter to half the vehicle. Unde r the High Cost scenario, the estimated

cost differential for water-borne coatings is $25.17 per gal lon. 6 

### Thus, the price increase for a

mid-sized car might range from $4.72 (three quarts for car, one-quarter painted) to $12.58 (4

quarts per car, half painted) for a mid-sized car. For a la rge vehicle, the estimated price increase

ranges from $11.01 to $25.17

. 

### Given that the average ticket price for a repair is $2,295

(Autobody Shop Business, 2010), the price increase to the custo mer would range from 0.21

percent to 1.1 percent of the repair price.

The 2008 median household income for Sacramento County is $56, 882 (Census, 2011c).

Thus, the incremental cost of using water-based coatings to repaint an entire vehicle is less than

0.1 percent of median household income.

5.2.3 Potential Demand Shifting to Non-Sacramento C ounty Shops

ERG does not anticipate any discernable loss in business to surrounding areas for two

reasons. First, the neighboring counties of San Joaquin , Placer, Yolo, and Solano have already

enacted requirements comparable to the Rule 459 amendments. That these areas converted to

water-based coatings with minimal, if any, impacts suppor ts Sacramento’s use of the Low Cost

scenario as the primary findings for the socioeconomic a nalysis. Even if there were a price

5 The most recent years for which data appear to be avail able

6 Under the Low Cost scenario, there is zero incremental coating cost so there are no impacts to the consumer.Socioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 24 

### differential for water-borne coatings, these region s would have already incorporated them in the

prices offered to customers. Second, the High Cost estim ate for painting half a large vehicle is

$25.17 or 1.1 percent of the overall repair cost. Any incenti ve to take the job outside of

Sacramento is likely to be negated by the additional trave l time, travel expenses, and annoyance

factors involved.

6.0 REFERENCES

AutocolorLibrary.com, 2011. How Much Paint Does It Take To Fully Paint A Car? Internet: http://www.tcpglobal.com/autocolorlibrary/P101-13.html

BAAQMD; 2008. Bay Area Air Quality Management District. BA AQMD Regulation 8, Rule 45: Motor Vehicle and Mobile Equipment Coating Operations. J une 2008

BEA, 2011a. U.S. Commerce Department. Bureau of Economic A nalysis. Regional Input-Output Modeling System. Benchmark detailed industry multipliers for Sacramento County, CA.

Internet: https://www.bea.gov/regional/rims/rimsii/placeorder.a spx

BEA, 2011b. U.S. Commerce Department. Bureau of Economic A nalysis. Gross Domestic Product by Metropolitan Area. Internet: http://www.bea.gov/regional/gdpmetro/

BLS, 2011a. U.S. Bureau of Labor Statistics. Consumer Pri ce Index. All Urban Consumers (CPIU). ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

BLS, 2011b. U.S. Bureau of Labor Statistics. Local Area Unemployment Statistics. Sacramento County, California. Internet: http://www.bls.gov/lau/

Barkman, D. 2011. Personal communication between D. Bar kman, Colors on Parade, and Gopi Manne, Eastern Research Group, Inc., February.

BodyShop Business, 2011. Operations Profile. Internet: http://www.bodyshopbusiness.com/Content/Site303/ContentBlo cks/3063operations0_000000208 65.pdf

California. 2011. California Department of Insurance. Estimat ed Rate of Uninsured Motorist

2002 – 2004. Internet: http://www.insurance.ca.gov/0400-news/0200-studies-reports/1200- uninsured-motorist/upload/um0204.pdf

CARB. 2005. California Air Resources Board. Staff Report fo r The Proposed Suggested Control Measure For Automotive Coatings. October 2005.

Census. 2011a. U.S. Census Bureau. County Business Patterns. 2008 data for Sacramento County. Internet: http://censtats.census.gov/cbpnaic/cbpnaic.shtmlSocioeconomic Impact Analysis - Rule 459 Amendments

July 25, 2011 25 

### Census. 2011b. U.S. Census Bureau. Nonemployer Statistics. Internet: http://censtats.census.gov/cgi-bin/nonemployer/nonsect.pl

Census. 2001c. U.S. Census. Sacramento County, California Q uick Facts. Internet: http://quickfacts.census.gov/qfd/states/06/06067.html

.

Clark, Mark, 2009a. A history of automotive finishes. Bodyshop B usiness. January 14. Internet: http://www.bodyshopbusiness.com/Article/38902/a_history_of_automot ive_finishes.aspx

Clark, Mark, 2009b. Equipment Needed for Waterborne Conversion . Bodyshop Business. February 9. Internet: http://www.bodyshopbusiness.com/article/45721/Equipment_Needed_for _Waterborne_Conversi on.aspx?refresh=1

Clark, Mark, 2009c. Preparing a Body Shop for Waterborne Pain t Conversion. Bodyshop

Business. March 2. Internet: http://www.bodyshopbusiness.com/article/46078/Preparing_a_Body_Sho p_for_Waterborne_Pai nt_Conversion.aspx?refresh=1

D&B, 2011. Dun & Bradstreet, Inc. Million Dollar Directory . Accessed through Boston public Library.

FLC, 2011. Foreign Labor Certification Data Center. Onli ne Wage Library. Internet: http://www.flcdatacenter.com/

IRS, 2011. Internal Revenue Service. Table 1.Number of Re turns, Selected Receipts, Cost of Goods Sold, Net Income, Deficit, Income Subject to Tax, T otal Income Tax Before Credits, Selected Credits, Total Income Tax After Credits, Tota l Assets, Net Worth, Depreciable Assets, and Depreciation Deduction by Minor Industry. Internet: http://www.irs.gov/pub/irssoi/07co01ccr.xls

.

Lutz, Virginia M., 2010. How Much Paint Does One Need to Paint a Car? Internet: http://www.ehow.com/way_6171457_much-one-need-paint-car_.html

MCM, 2011. MCM Construction. Company Website. http://www.mcmconstructioninc.com/About_MCM/about_mcm.html

Wise, Lauren, 2011. How Much Paint Does it Take to Paint a Car? Internet: http://www.ehow.com/about_4811338_much-paint-does-paint-car.html

Wolf, Katy, 2008. Safer Alternative Thinners, Cleanup Materials, Coatings a nd Sanding Methods in the Autobody Industry. Institute for Research and Technical Assistance. May.

Internet: http://www.irta.us/DTSC%20Autobody%20Report%202008%20 Without%20MSDS.pdfStaff Report

Rule 459 July 25, 2011, Page F-1

APPENDIX F
COMMENTS AND RESPONSES

Public Workshop for Rules 101, 451 and 459 September 16, 2010, 2:00 PM

Attendees:

Allen Cripe, CalTrans Josh Cox, Jerry’s Paint Brad Gacke, SMUD June Livingston, BERC Brett Hayes, Hayes Brothers Collision Ke lly Hitt, Nestle Waters North America Brittany Marcotte, Nestle Waters Nort h America Kendall McCane, Jerry’s Paint Bryon Theis, 3M Kevin Holley, MAC’s Distribution Cerlut Fre, Sherwin Williams Kevin Thompson, Thompson Sales
Clifford Waters, Sherwin-W illiams Larry Medrano, PBE Inc
Dale Schell, Jims Color Corner Lisa Dobeck, Caltrans Dan Porreau, Lyondell Basell Mark McCleskey, Jerry’s Paint Danny Nunez, Finish Masters Mark Tavianini, CARB Dave Fisher, Morrison Paint Supply Matt Stevens, Shanahan’s Autobody Dave Harshbarger, MAC’s Distribut ion Mike Veney, Sherwin Williams David Luer, MAC’s Distribution Pat Newcomb, Jerry’s Paint David McClune, California Autobody Asso ciation Pat Stickle, Angel Warehouse David Roznowski, Lyondell Basell Peter Bezeck, California Autobody Association Debra Wynne, Original Paint Phil Brown, PPG Industries
Dennis Barkman, Colors On Pa rade Rich Mott, Jerry’s Paint Deran Berggne, Terry’s Paint Rick Hays, MAC’s Distribution Eric Cooc, Precision Autobody Robert Blair, Finish Master George Contos, Blomberg Window Shane Whitcomb, Ellis & Ellis Sign Systems Glenn Galbaugh, DuPont Company Stan Brecetu, 3M Grey Calhorn, Finish Master Steve Nesbitt, PCL Jason Kowen, Spies Hecker Terry Klemin, Matrix
Jeanette Duncan, Ellis & Ellis Sign Systems Todd Everitt, Valspar Refinish Jeremy Tiner, Warehouse Paint Tom Walther, Jims Color Corner
Jim Brett, CalTrans Vern Heffner, Ci ty of Sacramento Fleet Management Jim Cropper, CARB

Oral Comments from the Public Workshop

Note: A combined workshop was held for proposed amendments to Rule 451, Rule 101 and Rule 459. Only comments pertaining to the proposed amendments to Rule 459 are shown

below.

Comment #1 Why is Rule 459 not being proposed nationwide? Why is it just

California?

Response: California has some of the worst air quality areas in the nation. Sacramento County, in particular, has been designated as “severe” nonattainment for ozone. To improve air quality, the District is required toStaff Report

Rule 459 July 25, 2011, Page F-2

implement control measures to reduce the ozone precursor pollutants,
NOx and VOCs.

Comment #2 Is the cost shown for Rule 459 an additional fee to business?

Response: No. The costs are the capital costs of equipment and additional operational and maintenance costs to comply with the proposed amendments. The District is not proposing additional fees for

businesses.

Comment #3 Lyondell supports the exemption of TBAc in Rule 459 to comply with coating VOC limits.

Response: Thank you for your comment.

Comment #4 What year did air quality st art to monitor emissions from coating vehicles? AB32 wants to lower our emissions to 1990 levels by 2020. My automobile coating operation was established in the early 1980s and regulations have lowered my emissions below the 1990 levels. We are already doing our part.

Response: AB32 requires CARB to implement regulations to reduce greenhouse gas emissions to the 1990 levels by 2020. These regulations are not related to the proposed amendments to Rule 459. Proposed amendments to
Rule 459 will reduce VOC emissions fr om automotive coating operations. The proposed amendments are necessary to meet a federal 8-hour ozone plan commitment. See “Legal Mandates” Section in the Staff Report.

Comment #5 Why is SMAQMD the only district to add recordkeeping for using TBAc? Additional recordkeeping is a burden and very costly (hundreds of thousands of dollars) to the manufacturer to label all products just to comply with SMAQMD’s rule. The information for TBAc may be available on the MSDS or provided to the District by the manufacturer.

Response: The requirement for facilities to keep records of the TBAc content is necessary to comply with the federal TBAc exemption requirements in 40 CFR 51.100(s)(1). Staff has changed the rule proposal to remove labeling requirements for TBAc; however, the content of TBAc in coating must be listed on the product data sheet or the MSDS.

Comment #6 The exemption for aerosol coating in Rule 459 is confusing. Can you explain this? Does it have to be an aerosol to be exempt?

Response: This exemption exempts any aerosol coating product from the requirements in Rule 459. It has to be an aerosol and a coating.

Comment #7 Where does bug and tar remover fall if it is not an aerosol? Does bug and tar remover have to be in an aerosol can? Can it be in a bucket or gallonStaff Report

Rule 459 July 25, 2011, Page F-3

can? Is bug and tar remover available in the aftermarket for automotive refinishing?

Response: Bug and tar remover does not have to be in an aerosol can; however, it does have to be labeled as a bug and tar remover. Bug and tar remover is classified as a solvent in the proposed amendments and subject to the 25 g/l VOC limit. In lieu of using low VOC solvents, facilities may elect to use bar and tar removers that are subject to the requirements of CARB’s Consumer Products Regulations. Bug and tar removers are available in

the aftermarket.

Comment #8 What is the District doing to regulate mobile applicators? Is the District going to lower the permitting threshold to regulate mobile applicators?

Response: Mobile applicators must comply with Rule 459. The District is not proposing to lower the permitting threshold, which is specified in Rule 201, General Permit Requirements.

Comment #9 There is an exemption that exempts operations if their emissions are below the 2.7 tons of VOC per year. Mobile operations are below 2.7 tons per year. Are they exempt from the requirements?

Response: No. This proposed exemption exempts an operation only from the requirements for motor vehicle materials in Section 303, Vehicle Material Limits, if their VOC emissions from specific coatings and coating operations are less than 2.7 tons per 12-month rolling period. Mobile operations are subject to the requirements in the proposed amendments

to the rule.

Comment #10 The issues here are the non-licensed industry that uses non-compliant product and operates after regular business hours. What is the District doing to deal with these operations? Where and to whom do we report these operations if some are found? Will we be notified on what actions are taken if we report these operations?

Response: The District will take the appropriate enforcement action when an unpermitted or non-compliant facility is discovered. The public may file a complaint about an unpermitted or non-compliant facility. The public can contact the District at 916-874-4800 to file the compliant. The District will log and investigate all complaints. If requested, the District will report to the public on what actions were taken.

Comment #11 Why is end user required to demonstrate a HVLP spray gun meets the pressure requirement? Would it be enough if the spray gun has been certified as a HVLP spray gun or has been proven to be as efficient as a HVLP spray gun?

Response: This section ensures that the HVLP spray equipment is operated within the pressure requirement and in accordance with the manufacturer’s specifications. After discussing the intent of this requirement with CARB,Staff Report

Rule 459 July 25, 2011, Page F-4

Staff has determined that if a HVLP spray gun is permanently labeled as HVLP, then it would satisfy this requirement. Staff has incorporated this change to the proposed rule. This section is applicable only to HVLP spray guns. Spray guns that are not HVLP or have been proven to be as efficient as a HVLP spray gun are not required to meet this requirement.

Comment #12 Are there enough spray tip pressure gauges available for each shop? How much are these devices? If there is no air pressure tip gauge for the spray gun, does that mean the spray gun is not allowed to be used?

Response: Staff has changed the proposed rule to allow the use of an HVLP spray gun permanently labeled as HVLP in lieu of demonstrating that the HVLP spray gun meets the pressure requirement. Therefore, not all shops will be required to purchase air pressure tip gauges. The cost of air pressure tip gauges ranges from $30 to $225 depending on the model of the HVLP spray gun. If the HVLP spray gun is not permanently labeled as a HVLP and does not have an air pressure tip gauge kit, then the spray gun cannot demonstrate compliance with this requirements and the operator will be in violation, if used.

Comment #13 Is the end user the shop or the person applying the coating?

Response: In most cases, the shop owner/operator is the end user who will be in violation if the rule requirements are not met. In some cases, the owner/operator is the painter.

Comment #14 What is the effective date of the labeling requirements? Is there a sellthrough provision? Is that for the manufacturer or the shop? Placer County APCD based the requirement on the manufacturer date of the product.

Response: The effective date of the labeling requirement is six months after the date of adoption, and the manufacturer or repackager of the coatings, coating components, coating removers, or solvents are responsible for the labels. The proposed rule does not contain a sell-through provision, consistent
with the SCM.

Comment #15 Is an open spray gun cleaning system allowed with these proposed

amendments?

Response: Yes, however, the solvent used must meet the VOC limit of 25 g/l or less.

Comment #16 With the proposed amendments, the use of acetone may increase. Has the District looked at the impacts (flammability issues) with the increased

use of acetone?

Response: The District has adopted other coating rules that require the stringent 25 g/l limit and has reviewed the flammability issues regarding the increased

use of acetone. Acetone has characteristics that are similar to conventional solvents; however, acetone has a lower flash pointStaff Report

Rule 459 July 25, 2011, Page F-5

compared to other solvents. Nevertheless, acetone vapors cannot cause an explosion until the vapor concentration exceeds 26,000 ppm. Operating under state and federal OSHA guidelines by working with flammable materials in well-ventilated areas, it would be difficult to achieve concentrated streams of such vapors.

In addition, coating facilities subject to other District coatings in Sacramento are already using acetone for cleaning operations, and Staff is not aware of any flammability problems associated with its use. Also, requirements for solvents to contain 25 g/l or less VOC have been in effect in South Coast AQMD Rule 1171, Solvent Cleaning Operations, since 2003. Sources there have largely used acetone to comply, with no significant adverse effects.

Comment #17 Spot repair is defined in Rule 459. Where is it used?

Response: The term “spot repair” is used in the definition of “uniform finish coating.”

Comment #18 Solvent is defined in Rule 459 as a fluid used to perform cleaning operations. Solvent can be used in coatings such as a solvent reducer. Why is the definition limited to only cleaning operations?

Response: Solvents used to perform cleaning operations is subject to a specific VOC limit in the rule (25 g/l). Solvents used as component of a coating, such as solvent reducers, are not subject to a specific VOC limit; only the VOC content of the coating as applied.

Comment #19 Could TBAc be used as a reducer for a TBAc-based coating?

Response: Yes. TBAc is exempted as a VOC when contained in a coating or used as a coating component. TBAc is not exempted when used as a solvent or coating remover.

Comment #20 When is the adoption date for Rule 459?

Response: Our board hearings date occur on the fourth Thursday of every month, except for November and December. At the workshop, Staff had planned to take the proposed amendments to our board during the first quarter of 2011. With the current economic situation, Staff wanted to ensure that adoption of this rule will adversely impact the economy for Sacramento County. As such, a socioeconomic report was completed. Since there are minimal economic impacts, we are now planning to bring the proposed amendments to Rule 459 to our board in August of 2011. Staff will be mailing notices 30 days prior to the board hearing date to the original mailing list and to every workshop participant.

Comment #21 Can trunk interior coating be merged with another category like underbody coating?Staff Report

Rule 459 July 25, 2011, Page F-6

Response: Trunk interior coating was removed from the proposed amendments since the CTG VOC limit for trunk interior coating would be less stringent than any VOC limits for coatings in the SCM that might be used as a coating for trunk interiors. The coating category in the SCM that will most likely be used as a trunk interior coating is single-staged coating.

Comment #22 Repackaging labels may be too large to fit on a small container. Can the label be referenced to a website instead of trying to fit it on the container? Placer County APCD asked CARB about this issue and CARB agreed to

allow it as an alternative.

Response: The proposed amendments requires repackaging labels for coatings to include only applicable use categories, and the actual and regulatory VOC content of the coating. For solvents, the proposed amendments only require the VOC content. Staff believes that the required information is reasonable on a label of any size container. These labeling requirements are consistent with the SCM and Placer County APCD.

Placer County APCD requires that product information be provided to the purchaser of automotive coatings or solvents on a product data sheet or other medium such as electronic copies or web media format. The proposed amendments to Rule 459 specify the information that must be included on product data sheets but do not set requirements on how the data sheets are to be provided. The proposed amendments require that the facility using automotive coatings and solvents maintain the product

data sheets on site.

Comment #23 Regarding the stripper VOC limit in Rule 459, can the District allow for a low use exemption for stripper exceeding the 200 g/l limit? For products that meet the EPA’s NESHAP (6H), these products have higher limits than the 200 g/l limit.

Response: The 200 g/l VOC limit for strippers is contained in the current, SIPapproved version of Rule 459. This requirement has been in place since 1997, and adding a low use exemption would be a relaxation to the rule requirements. Staff is not proposing to add a low usage exemption for strippers. Facilities using strippers that contain methylene chloride must also comply with the NESHAP (40CFR Part 63, Subpart HHHHHH) as appropriate.

Written Comments from EPA

Comment #24 In Sections 504.2 and 504.3, please include the full title and date of the ASTM methods being specified.

Response: Full titles and dates were added to all ASTM methods referenced in the rule, including the ASTM methods in Sections 504.2 and 504.3.Staff Report

Rule 459 July 25, 2011, Page F-7

Written Comments from LyondellBasell

Comment #25 We support the exemption of TBAc in Rule 459 for automotive coatings.

Response: Thank you for your comment.

Comment #26 We request that AQMD extend the exemption of TBAc for automotive cleaners. This will greatly reduce the flammability risks and emissions associated with cleaning and gun-flushing with acetone-based cleaners.

Response: Staff performed a health risk assessment for using TBAc and determined that emissions of TBAc in a spray booth will not adversely impact nearby receptors. Emissions of TBAc used at a facility and not within a spray booth have the potential to exceed a cancer risk of 10 in a million, the threshold of significance, to nearby receptors. Because of the potential adverse impacts, Staff is not proposing to exempt TBAc for automotive

cleaners.

In regards to the flammability risks of using acetone or acetone-based cleaners, see response to Comment #16.

Written Comments from Sherwin-Williams

Comment #27 The addition of trunk interior coating category is unnecessary. This type of application is covered by multiple categories such as underbody coating, single-stage coating, or color coating. We recommend that this coating category be removed from the proposal.

Response: See response to Comment #21.

Comment #28 While washing a vehicle with soap and water will remove most of the dirt and water-soluble contaminants, it does not remove grease and oil. To properly remove grease and oil, slow evaporating solvents work best. Products that meet the 25 grams per liter limit, while feasible through the use of acetone or other exempt solvents, do not result in very good products. We request that the limit for solvent cleaning be increased to 160 grams per liter. This will allow for cleaning to be properly done, which may possibly result in a greater reduction of VOC emissions by eliminating the need to redo paint jobs because of using ineffective cleaning solvents.

Response: Staff has found several products in the current market that meet the 25 grams per liter limit and are specifically designed to effectively remove grease or oil. Since there are compliant products on the market, Staff is not proposing to increase the solvent cleaning limit for surface preparation.

Comment #29 We request the VOC limit on gun and equipment cleaners be set at 160 grams per liter. This will allow for the proper cleaning of applications equipment and eliminate the expenses of frequent replacements fromStaff Report

Rule 459 July 25, 2011, Page F-8

cleaning with acetone. We believe the actual emitted VOC of gun and equipment cleaners will be very low since shops are required to carry out gun and equipment cleaning operations in a closed system.

Response: The District has adopted the 25 grams per liter limit for application equipment cleaning in other District coatings rules and had not heard of any issues with using low VOC cleaners. In addition, Staff has visited automotive refinishing facilities that have switched to acetone, and they have not encountered the need to replace their application equipment. Also, other air districts have adopted similar requirements. In particular, South Coast AQMD has had this requirement in effect since 2003, and sources there have largely used acetone to comply, with no known damage to application equipment.

The use of an enclosed gun cleaner may limit the VOC emissions from the cleaning process; however the amount of VOC release has not been quantified and may still be significant, To quantify and limit the VOC emissions from this process, Staff is proposing a 25 gram per liter limit for cleaning application equipment. Enclosed gun cleaners are no longer required to be used, although the District still encourages the use of enclosed gun cleaners.

Comment #30 We request the wording in the Section 309, Prohibition of Possession, be amended so this requirements only affects end user.

Response: Staff has moved the statement, “This section shall apply only to end users (e.g. automotive coating facilities)” to the end of the section. As a result, Section 309 is only applicable to end users.

Comment #31 The requirements of Sections 402.1(f) and 402.2(f) are unnecessary in determining compliance with rule requirements because the data required for compliance is already listed in Section 402.1(d) and 402.2(d) and the exact amount of TBAc can be found on the MSDS. We request the Sections 402.1(f) and 402.1(f) be removed from the proposal.

Response: The requirements of Sections 402.1(f) and 402.2(f) are necessary to assist the end user to comply with the federal requirements for the TBAc exemption in 40 CFR 51.100(s)(1). TBAc is exempt as a VOC for the purpose of complying with VOC content limit, but it is a VOC for the purpose of recordkeeping.

Comment #32 Requiring TBAc on labels in Section 403 is impractical because it would require coating manufacturers to label products specifically for Sacramento County. Coating manufacturers will also incur significant cost to comply with this labeling requirement. The content of TBAc is already listed on the MSDS. We request that the labeling requirement for

TBAc be removed from Section 403.

Response: See response to Comment #5.Staff Report

Rule 459 July 25, 2011, Page F-9

Comment #33 The recordkeeping requirements spec ific to TBAc in Section 502.6(d) are overly burdensome to end user and should be removed. The end user does not have a means of gathering and reporting the information required using coatings containing TBAc.

Response: The recordkeeping requirement is a federal requirement in 40 CFR 51.100(s)(1). To ease the burden on the end user, Staff is requiring that manufacturer include the actual content of TBAc for coatings containing TBAc on product data sheets or MSDS. The information on TBAc content will be readily available to end users and maintained with their facility

records.

Comment #34 The labeling requirement in Section 403 needs to be redrafted to eliminate confusion. The label should include applicable use category and should not include the coating components such as reducers and

hardeners.

Response: Staff has separated Section 403 into subsections 403.1 and 403.2 to clarify the labeling requirements. Subsection 403.1 is the labeling requirements for coatings and coating components. The labeling of coating components such as reducers and hardeners are necessary to help determine compliance with the VOC limits for specific coatings. Subsection 403.2 is the labeling requirement for solvent removers (strippers) and solvents. This format is consistent with the SCM.

Comment #35 The monthly purchase records requirement to identify coating type creates an unnecessary burden.

Response: Staff’s proposal to require monthly purchase records to identify the coating type is consistent with the SCM. Nine other air districts have also adopted similar requirements. In particular, SCAQMD has had this requirement in place since January 1, 2008. For consistency with SCM and other air districts, Staff is not proposing any changes to this requirement.

Written Comments from AkzoNobel

Comment #36 AkzoNobel supports the comments made by Sherwin-Williams regarding the proposed changes to Rule 459.

Response: See responses to Comments #27-35.

Comment #37 Section 309 should be modified to make it clear that this prohibition does not apply to wholesalers, retailers, or other distributors.

Response: This section was modified to apply to only end users. See response to

Comment #30.

Comment #38 Section 502.6(a) requires purchase records to show the coating type. This requirement would involve significant changes to the enterpriseStaff Report

Rule 459 July 25, 2011, Page F-10

management systems used by manufact urers or wholesalers to create invoices and shipping documents with this additional information. Since there is no regulation limiting the amount of material in a given coating category that can be purchased by a facility, there is no valid reason to require this information.

Response: See response to Comment #35. Monthly purchase records are necessary to determine the compliance with the requirements of the rule and permit. It is also necessary to determine the total emissions from this source category when actual usage records are not available.

Comment #39 Section 502.6(c) should not include a requirement to record that a noncompliant coating was not use in a given day. A no entry on a given day

should be sufficient to indicate that none was used.

Response: Staff has removed this requirement since the rule prohibits the possession and use of non-compliant coatings, coating removers, and

solvents.

Comment #40 Regarding Section 502.6(d), there is no need for any recordkeeping requirements related to the TBAc content of coatings used.

Response: See responses to Comment #31 and Comment #33.

Comment #41 AkzoNobel questions why TBAc, exempt as a VOC for this rule, is treated differently than other similar compounds that are exempt as a VOC.

Response: See response to Comment #5. When EPA exempted TBAc as a VOC, EPA added restriction to the exemption that required additional monitoring and recordkeeping requirements. This restriction only applied to TBAc, and therefore, TBAc is treated differently than other exempt compounds. Local requirements have to be as stringent as federal requirements. As such, Staff has proposed additional recordkeeping requirements for TBAc, which is the only requirement applicable to end

users.

Comment #42 Both the SCAQMD and YSQMD allow the use of aerosol surface cleaners, up to 160 fluid ounces per day. Therefore, we request that this limited use of aerosol surface cleaner be adopted in Rule 459.

Response: SCAQMD and YSAQMD each have a solvent cleaning rule separate from their automotive coating rule. The solvent cleaning rule applies generally to all types of operations, including automotive coating operations. The SCM does not have a limited use exemption for aerosol surface cleaners. To be consistent with the SCM, Staff is not proposing to add a limited use exemption for aerosol cleaner in Rule 459.

Comment #43 TBAc has been fully exempt as a VOC by the U.S. EPA and in SJVAPCD, SBAPCD, and YSAQMD. We suggest that the exemption for TBAC should be moved from Rule 459 to Rule 101 in order to clarify thatStaff Report

Rule 459 July 25, 2011, Page F-11

TBAC is exempt and would eliminate the need for any further tracking of

use.

Response: EPA exempted TBAc with specific provisions that TBAc is not a VOC for the purpose of meeting VOC emission limits or VOC content limits, but it is VOC for recordkeeping, emissions reporting, photochemical dispersion modeling, and inventory requirements. To comply with the federal requirements, recordkeeping for TBAc is necessary.

Because TBAc is a potential carcinogen, CARB recommended that the air districts determine whether the use of TBAc in certain products would pose an unacceptable exposure. As recommended by CARB, Staff will evaluate TBAc on a case-by-case basis. Staff is not proposing a full exemption for TBAc unless Staff is confident that it will not adversely impact human health. For inclusion in Rule 459, Staff is proposing that TBAc is only exempt as a VOC when used in coatings that are applied in a spray booth because it is unlikely to cause a significant adverse impact to nearby receptors.

Written Comments from PPG Industries

Comment #44 PPG requests to eliminate the trunk interior coating definition and VOC limit in Rule 459 and merge trunk interior coating with the underbody coating definition and VOC limit.

Response: See response to Comment #21.

Comment #45 PPG has recently changed labels to meet the SCM labeling requirements and would be hesitant to again change labels to meet a new, unique labeling requirement set in Rule 459. PPG proposes that the Section 403 label requirements to show TBAc content be withdrawn as the same requirement for product data sheets is sufficient.

Response: Staff has removed the labeling requirement to include the content of TBAc. Also see response to Comment #5.

Comment #46 PPG proposes that the District consider following Bay Area AQMD’s practical approach to applicator cleaners, setting no limit but requiring efficient devices that minimize vapor releases.

Response: The use of efficient devices that minimize vapor releases, such as enclosed gun cleaners, may limit the VOC emissions from the cleaning process; however the amount of VOC release has not been quantified and may still be significant. To quantify and limit the VOC emissions from this process, Staff is proposing a 25 gram per liter limit for cleaning application equipment. This limit for cleaning solvents is consistent with
the SCM.Staff Report

Rule 459 July 25, 2011, Page F-12

Written Comments from Colors on Parade

Comment #47 We request that SMAQMD include a permit for mobile operators with a

nominal fee.

Response: The proposed amendments to Rule 459 established requirements for the coating operation of automotive, mobile equipment and its associated parts and components to be consistent with the SCM. The proposed amendments do not establish permit requirements or permit fees for these coating operations. Permit requirements are established in Rule 201, General Permit Requirements, and permit fees are established in Rule 301, Stationary Source Permit Fees. For this proposal, Staff is not amending Rules 201 and 301.

Comment #48 We request that SMAQMD include requirements for equipment used by mobile operators to be in line with the national “6H” rule.

Response: The NESHAP for Paint Stripping and Miscellaneous Surface Coating Operations at Area Sources (40 CFR Part 63, Subpart HHHHHH) exempts coating operations that use spray equipment with a cup size capacity equal to or less than 3.0 fluid ounces. This exemption applies primarily to small operations that do only spot repairs and touchups like mobile refinishing operations. In the proposed amendments to Rule 459, there is no requirement or exemption specific for mobile operations, and they are not treated differently fr om stationary automotive coating facilities. Both mobile and stationary operations are subject to the same requirements in the proposed amendments to Rule 459. Therefore, it is not necessary to add additional restrictions to mobile operators.

Comment #49 We request that SMAQMD in clude an allowance for a “touch-up kit” which may include extra-small quantities of non-compliant paint and chemicals for the purpose of stone-chip and small scratch repair.

Response: The proposed amendments do not have a specific exemption for a “touch-up kit”. However, the proposed amendments will allow the use of touch-up paint in a container of 0.5 fluid ounces or less which is intended for repairing tiny surface imperfections.

Written Comments from DuPont (Letter dated September 17, 2010)

Comment #50 Revise the definition of Aerosol Coating Product to remove the statement “...or for use in specialized equipment for ground traffic/marking applications.”

Response: The definition of “Aerosol Coating Product” is consistent with the SCM. Therefore, no changes were made.

Comment #51 We request that the definition of Spot Repair be modified to be more reflective of the process, and propose the following, taken from BAAQMD Rule 8-45-236: Spot Repair: Repair of an area on a motor vehicle, pieceStaff Report

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or mobile equipment, or associated parts or components of less than an entire panel.

Response: The term “spot repair” is used in the definition of “uniform finish coatings”

and is used to determine when the end user can use a uniform finish coating. BAAQMD developed a definition of “spot repair” which is different from the SCM. BAAQMD also required that end-user limit the usage of uniform finish coating, adhesion promoter and multi-color coating to not exceed 5.0 percent of all topcoats applied. To enforce this requirement, BAAQMD required end user to track the usage percentage of these specific coatings.

Staff did not proposed BAAQMD’s approach because Staff did not want to add additional recordkeeping requirements for the end user. Furthermore, the proposed definition is also consistent with the SCM, where this definition has been adopted by nine other air districts. Therefore, Staff is not proposing any changes to the definition of “spot repair.”

Comment #52 The coating category of trunk in terior coating is unnecessary and serves to complicate labeling requirements for manufacturers.

Response: See response to Comment #21.

Comment #53 The prohibition of possession in Section 309 should be applicable only to end-users and not applicable to product distributors that may serve

customers outside of the District.

Response: See response to Comment #30.

Comment #54 The 25 grams per liter is ineffective for surface preparation. We request it be increased to 160 grams per liter.

Response: Generally, surface preparation cleaning products that meet the 25 grams per liter VOC limit, such as soap and water or solvent containing exempt compounds, are effective in cleaning most of the contaminants on a substrate. For more challenging cleaning tasks, there are cleaning products that are formulated for a specific purpose and meet the 25 grams per liter limit. The lone exception is the limit for bug and tar remover, where the proposed amendments allow the use of products labeled as bug and tar remover and regulated by the state Consumer Products Regulation in lieu of complying with the 25 grams per liter limit. Also, see response to Comment #28.

Comment #55 For bug and tar removal, we request the District include provisions in line
with BAAQMD Rule 8-45-308.5.

Response: BAAQMD adopted a higher limit (340 grams per liter) for bug and tar remover than suggested in the SCM because the higher limit was equivalent to the requirement for bug and tar remover in the CARB’sStaff Report

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Consumer Products Regulation. Staff has proposed that in lieu of using solvent meeting the 25 grams per liter, the end user may elect to use a product labeled as bug and tar remover and regulated by the Consumer Products Regulation. The current proposal will allow the use of a higher limit solvent for bug and tar. Therefore, Staff is not proposing to change the VOC limit for bug and tar removers.

Written Comments from DuPont (Letter dated January 11, 2011)

Comment #56 The definition of “Spot Repair” limits the damaged area, and does not take into consideration the variety of vehicles requiring this process. The rule is applicable to all types of vehicles and mobile equipment; some of which are larger than others. We would request that the SMAQMD use the definition of “Spot Repair” from BAAQMD Rule 8-45 in SMAQMD

Rule 459.

Response: See response to Comment #51.

Comment #57 We would request that the District consider the legitimate need for a higher VOC limit for more challenging cleaning tasks, such as the removal of road tar, grease and bugs. Low VOC cleaning solvents are not effective in the removal of road tar, grease and bugs. Our cleaning products are not targeted to the consumer segments and are designed for industrial use. We would request that the District consider a volume use restriction for this higher VOC material similar to the requirements implemented in BAAQMD.

Response: See responses to Comments #28, #54, and #55.

Comment #58 Manufacturers have already made required changes to product labels and data sheets at a relatively significant cost from earlier implementation of the SCM in other air districts. The labeling and product data sheet requirements in the proposed revision would require additional changes at additional costs. In addition, since this requirement will be unique to Sac Metro Air District, manufacturers would have to create a supply chain management process to segregate materials destined to Sac Metro.

Response: See response to Comment #5.

Comment #59 To pass the tracking requirement for TBAc on to the end users is unnecessarily burdensome. If the District is interested in tracking the disclosable amount of TBAc in products, why not conduct a survey with product manufacturers?

Response: See responses to Comment #31 and #33. The amount of TBAc in products reported by product manufacturers does not reflect the actual TBAc emissions emitted from the products containing TBAc and will not meet the federal requirements.