SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

FINAL STAFF REPORT FOR PROPOSED AMENDED RULE 1113 – ARCHITECTURAL COATINGS

July 2007

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

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

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

Author: Dan Russell Air Quality Specialist

Reviewed by: Barbara Baird Principal Deputy Distric t Counsel

William Wong Senior Deputy District Counsel Naveen Berry Program Supervisor David DeBoer Senior Staff Specialist

Contributors Heather Farr Air Quality SpecialistSOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

GOVERNING BOARD

Chairman: WILLIAM A. BURKE, Ed.D.

Speaker of the Assembly Appointee

Vice Chairman: S. ROY WILSON, Ed.D.

Supervisor, Fourth District Riverside County Representative

MEMBERS:

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

BILL CAMPBELL Supervisor, Third District Orange County Representative

JANE W. CARNEY Senate Rules Committee Appointee

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

GARY OVITT Supervisor, Fourth District San Bernardino County Representative

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

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

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

VACANT Governor’s Appointee

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

EXECUTIVE OFFICER:

BARRY R. WALLERSTEIN, D.Env.TABLE OF CONTENTS

Page

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

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

STAFF PROPOSAL .....................................

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

STAFF ASSESSMENT FOR THE PROPOSED AMENDMENTS ....... ................................. 2

EMISSIONS IMPACT, COST AND COST-EFFECTIVENESS ...... ...................................... 2

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)........ ..................................... 3

SOCIOECONOMIC ASSESSMENT ...........................

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

LEGISLATIVE AUTHORITY ..............................

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

AQMP AND LEGAL MANDATES............................

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

DRAFT FINDINGS UNDER CALIFORNIA HEALTH AND SAFETY C ODE ................... 3

CONCLUSION AND RECOMMENDATION ......................

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

REFERENCES.........................................

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

COMMENTS AND RESPONSES .............................

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

ATTACHMENT AFinal Staff Report

Proposed Amended Rule 1113 1 July 13, 2007 EXECUTIVE SUMMARY

Rule 1113 – Architectural Coatings was first adopte d in 1977 and has been amended numerous times. It is applicable to manufacturers, distribu tors, and end-users of architectural coatings. In November 1996, the South Coast Air Quality Manag ement District (AQMD) Governing Board (Board) amended Rule 1113 - Architectural Coa tings to include an averaging compliance provision as a flexibility option provid ing a more cost-effective and flexible approach for manufacturers to transition compliant product lines into the marketplace. To use the Averaging Compliance Option successfully, a man ufacturer must be able to distribute sufficient volumes of products with VOC content bel ow applicable limits in order to offset the excess emissions from products with VOC content abo ve the limits. One limitation of using the ACO, requires a manufacturer to have a broad ar ray of commercial products, with sufficient volume of sales of products that are bel ow the applicable VOC limit.

One manufacturer, affected by the limitation of the ACO described above, has recently requested that the Stationary Source Committee, a s ubcommittee of the Board, direct staff to prepare amendments to Rule 1113 by removing the spe cialty primer category from the ACO provision because they were at a competitive disadv antage. The Stationary Source Committee, as a result of these discussions, directed staff to propose an amendment to Rule 1113 – Architectural Coatings to remove specialty primers from the ACO provision. After staff commenced rule making and subsequent to the Station ary Source committee’s direction to staff, the manufacturer withdrew its request. The Stationary Source Committee then advised staff the requested rule amendment would not be nec essary.
However, during implementation of recent amendments to the rule, it became apparent that by adding mica to the definition of metallic pigmented coatings it is improperly less restrictive than the federal definition and a correction to del ete mica from the definition is therefore necessary. Staff also became aware that the test m ethod in the rule used to determine the metal content of metallic pigmented coatings was outdated . In addition, during the public outreach it was pointed out that a sentence in the Appendix to the Rule is obsolete and therefore it is proposed to be deleted.

STAFF PROPOSAL

Staff has withdrawn the proposal to amend the ACO p rovision but is continuing to propose the following amendments to clarify issues related to r ule implementation:

• Amend the definition of metallic pigmented coatings to make it consistent with the federal AIM rule by removing the words “mica partic les or any combination of metallic pigments and mica particles.”

• Update the Test Method used to determine the weight percent of elemental metal in metallic coatings, to reflect current practice.

• Delete the following obsolete sentence from Appendi x A, Section A of the rule: “Manufacturers that submitted an annual exemption r eport in 2002 for quick-dry primers, sealers and undercoaters and included thos e coatings in their most recent approved ACO Program, may continue to average those coatings until July 1, 2006, so long as these coatings do not exceed 450 grams of V OC per liter of coating less waterFinal Staff Report

Proposed Amended Rule 1113 2 July 13, 2007 and less exempt compounds, in lieu of the otherwise applicable VOC limit of 350 grams per liter.”

STAFF ASSESSMENT FOR THE PROPOSED AMENDMENTS

Metallic Pigmented Coatings

Staff developed the metallic pigmented coating cate gory with a VOC limit of 500 g/l for decorative coatings containing at least 0.4 pounds per gallon (48 grams/liter) of metal such as gold and silver. The category does not include coa tings in other categories with much lower VOC limits such as industrial maintenance coatings, zinc primers, and roof coatings that might contain metals as well. In 2003, at the request of some manufacturers, staff added mica to the definition of metallic pigmented coatings to allow a wider range of metallic color choices. During the implementation phase of this definition, it became apparent, however, that the addition of mica made the definition of metallic pi gmented coatings less restrictive than the federal definition for a metallic pigmented coating , which does not include mica under the “National Volatile Organic Compound Emission Standa rds for Architectural Coatings.” A local air district rule cannot be less stringent th an a federal regulation, but may be more restrictive; therefore, the staff proposal will eli minate reference to mica making the definition consistent with the federal definition, but continu e to exclude all industrial coatings and roof coatings from the metallic pigmented coating defini tion, which is more restrictive than the federal definition. On January 9, 2007, staff mail ed a letter to architectural coating manufacturers and their association, clarifying tha t mica would not be considered as part of the metallic content standard of 0.4 pounds per gal lon included in the definition. A copy of the letter is included as Attachment A.

Test Method Staff is recommending the test method referred to i n Rule 1113 - Architectural Coatings paragraph (e)(3), AQMD Method 311 Determination of Percent Metal in Metallic Coatings by Spectrographic Method, be updated to AQMD Method 31 8 Determination of Weight Percent Elemental Metal in Coatings by X-Ray Diffraction to reflect the method used in current practice. Although AQMD Method 311 is a valid meth od, it is based on outdated technology and requires equipment that the AQMD does not have and can no longer obtain. The AQMD laboratory has developed Method 318, an improved me thod for the determination of the elemental metal content in coatings. Method 318 ha s been accepted by the U.S. EPA and adopted by other regulatory agencies throughout Cal ifornia and the rest of the Nation. The AQMD laboratory specifically developed Method 318 t o address the analysis of elemental aluminum because that was the metal of interest in the majority of the coatings at the time of the test method development. The test method state s that it is currently only validated for the determination of the weight percent of elemental al uminum but also states that it is applicable for the determination of other elemental metals or crystalline materials for which appropriate standards are available and reasonable performance has been demonstrated. Validation of Method 318 for other elemental metals could be comp leted as necessary.

EMISSIONS IMPACT, COST AND COST-EFFECTIVENESS

Since mica is not a VOC, mica’s removal from the de finition of metallic pigmented coatings will not impact emissions. The other proposed chan ge to update the test method will likewise not impact emissions but make the rule more enforce able.Final Staff Report

Proposed Amended Rule 1113 3 July 13, 2007 The updated test method is currently in use nation- wide as the standard and therefore, no additional costs are expected from its use.

Since this is not an Air Quality Management Plan (A QMP) control measure and there is no change in emissions or costs from the proposed amen dments, there is no requirement to conduct a Socioeconomic Impact Assessment.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)

The proposed amendments to Rule 1113 - Architectura l Coatings has been reviewed pursuant to CEQA and an appropriate CEQA document has been p repared and will be considered for certification concurrently with the consideration f or adoption of PAR 1113.

SOCIOECONOMIC ASSESSMENT

The proposed amendments to Rule 1113 do not signifi cantly affect air quality or emissions limitations and therefore, a socioeconomic impact a nalysis pursuant to Health and Safety Code Section 40440.8 is not required.

LEGISLATIVE AUTHORITY

The California Legislature created the AQMD in 1977 (The Lewis Presley Air Quality Management Act, Health and Safety Code Section 4040 0 et seq.) as the agency responsible for developing and enforcing air pollution controls and regulations in the Basin. By statute, the AQMD is required to adopt an AQMP demonstrating com pliance with all state and federal ambient air quality standards for the Basin [Califo rnia Health and Safety Code Section 40440(a)]. Furthermore, the AQMD must adopt rules and regulations that carry out the AQMP [California Health and Safety Code Section 40440(a) ]

AQMP AND LEGAL MANDATES

The California Health and Safety Code requires the AQMD to adopt an AQMP to meet state and federal ambient air quality standards in the So uth Coast Air Basin. In addition, California Health and Safety Code requires the AQMD to adopt r ules and regulations that carry out the objectives of the AQMP. Although the proposed amen dments do not result in emission reductions, the amendments are consistent with AQMP objectives. This proposal does not impose a new emission limit or standard, make an ex isting emission limit or standard more stringent or impose new or more stringent monitorin g, reporting or recordkeeping requirements and therefore, is not subject to the comparative an alysis provisions of Health and Safety Code Section 40727.2.

DRAFT FINDINGS UNDER CALIFORNIA HEALTH AND SAFETY C ODE

Health and Safety Code Section 40727 requires that prior to adopting, amending or repealing a rule or regulation, the AQMD Governing Board shall make findings of necessity, authority, clarity, consistency, non-duplication, and referenc e based on relevant information presented at the hearing. The draft findings are as follows:

Necessity - The AQMD Governing Board has determined that a need exists to amend Rule 1113 - Architectural Coatings to amend the definiti on of metallic pigmented coatings, updateFinal Staff Report

Proposed Amended Rule 1113 4 July 13, 2007 the test method for metallic pigmented coatings and delete outdated text in Appendix A, Section A of the rule.

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

Clarity - The AQMD Governing Board has determined that the p roposed amendments to Rule 1113 - Architectural Coatings, are written and disp layed so that the meaning can be easily understood by persons directly affected by them.

Consistency - The AQMD Governing Board has determined that PAR 1 113 - Architectural Coatings, is in harmony with, and not in conflict w ith or contradictory to, existing statutes, court decisions, federal or state regulations.

Non-Duplication - The AQMD Governing Board has determined that the p roposed amendments to Rule 1113 - Architectural Coatings do not impose the same requirement as any existing state or federal regulation, and the propo sed amendments are necessary and proper to execute the powers and duties granted to, and impos ed upon, the AQMD.

Reference - In adopting these amendments, the AQMD Governing B oard references the following statutes which the AQMD hereby implements , interprets or makes specific: Health and Safety Code Sections 40001 (rules to achieve am bient air quality standards), 40440(a) (rules to carry out the Air Quality Management Plan ), and 40440(c) (cost-effectiveness), 40725 through 40728 and Federal Clean Air Act Sections 17 1 et sq., 181 et seq., and 116.

CONCLUSION AND RECOMMENDATION

Staff recommends amendments to the definition of me tallic pigmented coatings to be consistent with the federal definition, updating th e test method to determine the weight of elemental metals in metallic pigmented coatings and deleting outdated language in Appendix A, Section A of Rule 1113.

REFERENCES

40 CFR Part 59, Subpart D – National Volatile Organ ic Compound Emission Standards for Architectural Coatings, September 11, 1998.

COMMENTS AND RESPONSES

During the rule making process, both oral and writt en questions, comments, and suggestions were received and reviewed by staff and are summari zed in this section. After the review, staff revised the proposed amendments to reflect many of the comments and suggestions. If comments regarding the same topic were received fro m different individuals, staff summarized the topic into one comment and response.

U.S EPA sent a rule review comment letter on the Pr oposed Amended Rule 1113, work shopped on April 19, 2007, and strongly support the removal of mica from the Rule 1113 definition of metallic pigmented coatings so the de finition will be as stringent as the metallic pigmented coating definition in the National AIM Ru le in 40 CFR Part 59 Subpart D.Final Staff Report

Proposed Amended Rule 1113 5 July 13, 2007 Comment: Dry-fog coatings should be added to those categor ies allowed to be averaged in the Averaging Compliance Option of Rule 1113. The solvent-based dry-fog coatings do not require as much preparation prior to painting as th e water-based dry-fog coatings, which do not adhere to dirty substrates found in areas such as i ndustrial buildings.

Response: Dry-fog (dry-fall) coatings are defined as coatings applied by spray application only so that the overspray droplets dry before falling on floors and other surfaces. After staff contacted and met with manuf acturers of dry-fog coatings during amendments to Rule 1113 in 2006, the main issues di scussed were potential slower dry times associated with low-VOC coatings especially d uring high humidity conditions and adherence of the coating to dirty surfaces. It was generally agreed that low-VOC dry-fog coatings might require more substrate prepa ration than a solventborne coating. However, waterborne acrylic dry-fog coatings are an environmentally acceptable alternative to traditional solvent-based ceiling co atings. They emit a very low odor during application, and have a low flash point. Wa terborne acrylic dry-fog coatings are especially well suited for spaces with pre-cast concrete or steel beam ceilings. They can save time and make application easier in a n occupied space. Staff’s technology assessment confirmed excellent market pe netration and currently available dry-fog coatings at 150 g/l or less. The amendment s resulted in lowering the VOC limit for dry-fog coatings from 400 g/l to 150 g/l effect ive July 1, 2007. At that time architectural coating manufacturers did not request that dry-fog coatings be added to the list of categories allowed to be averaged in th e Averaging Compliance Option (ACO).

California Air Resources Board (CARB) is proposing changes to the Architectural Coatings Suggested Control Measure for adoption in 2007. AQMD staff will be reviewing the adopted amendments along with the mos t recent California architectural coating sales and emission data provided by CARB, t o further assess emission reductions for Rule 1113. At that time staff will also evaluate allowing additional coating categories to be averaged in the ACO.

Comment: CARB held a workshop on architectural coatings an d they stated in that meeting that their Board does not want staff to encourage t he exemption of carcinogens and they were referring to a question on Tertiary-Butyl Acetate ( TBAc) that one of the industry people asked if it were going to be exempted in the industrial m aintenance coatings. So CARB through their Board has decided not to consider exemptions for TB Ac. I would like to request that the AQMD revisit the exemption of TBAc for industrial m aintenance coatings.

Response: The commentator made the same request during the 2006 amendments to Rule 1113 during which TBAc was exempted from the d efinition of volatile organic compounds (VOC) for use in industrial maintenance c oatings (IM) only. A full review of comments both supporting the use of TBAc in arch itectural coatings and objections to its use along with staffs responses to comments may be read in the CEQA analysis and the comments and response section of the Staff Report for the June 2, 2006 Rule 1113 amendments.

Briefly, staff made the decision to exempt TBAc for IM coatings based on its risk assessment for use in IM Coatings, where applicator s typically use Personal Protective Equipment (PPE) including respirators, and the dist ance to sensitive receptors isFinal Staff Report

Proposed Amended Rule 1113 6 July 13, 2007 sufficient to mitigate the acute risks. The health risk analysis was prepared for AQMD staff using standard health risk protocol, health r isk values provided by California’s Office of Environmental Health Hazard Assessment (O EHHA) staff and parameters used by CARB to estimate risk from TBAc. In the ca se of TBAc, there is little available information on the toxicity of TBAc, but there is s ome toxicity information available on one of its metabolites, tert-butyl alcohol (TBA). While there are studies that indicate tumors in rats and mice when exposed to high concen trations of TBA, TBA has not yet been classified as a human carcinogen. In analyzin g TBAc’s impacts staff also considered CARB documents that assert TBAc’s ozone reduction benefits. Staff’s very conservative analysis from the use of TBAc based pr oducts only, indicates that the potential chronic cancer risk and acute risk is bel ow the AQMDs significant risk threshold. Staff does not recommend expanding the exemption for TBAc to other categories because alternative compliant products t hat do not pose the added potential risk exist. By limiting the exemption for TBAc to IM coatings, the AQMD recognizes and limits the potential cancer risk exposure due t o the use of TBAc while providing the coating manufacturers with flexibility in formulati ng products compliant with the future IM coatings limits in PAR 1113. Staff will continu e to evaluate additional information relative to TBAc’s toxicity including toxicity stud ies conducted by the manufacturer of TBAc, as it becomes available and reevaluate its po sition as necessary.

Comment: AQMD should consider a broader exemption of TBAc for other categories of architectural coatings during this amendment.

Response: See the above response.

Comment: The AQMD should reconsider the methodology by whi ch you are trying to achieve your ends. To preclude the broad concept o f industrial maintenance coatings from ever being a metallic pigmented coatings doesn’t ma ke sense to me. Aluminum metallic pigmented coatings are both decorative and function al as a protective coating. The proposed definition would only allow the coating to be marke ted as a decorative coating without functionality. The definition could say the coatin gs must have metallic appearance, they should look metallic, gold, silver, or bronze-like which would give the decorative appearance staff is looking for. Functionality should not be eliminated from the definition.

Response: Staff’s primary issue with the definition of meta llic pigmented coatings is to remove reference to mica particles in order to make the definition as stringent as the federal and state definition for this category. I n response to several comments regarding the proposed changes to the definition of metallic pigmented coatings, staff will remove the word “decorative” recognizing that metallic pigmented coatings have both functionality and decorative characteristics. In addition, staff will also remove reference to the exclusion of “all industrial maint enance coatings” with a reminder that the most restrictive clause in the rule requir es a coating to have the lower VOC limit if the coating is labeled or advertised to fa ll into two or more coating categories.

Comment: Staff might want to consider whether the followin g sentence located in Appendix A, Section (A) is necessary: “Manufacturers that s ubmitted an annual exemption report in 2002 for quick-dry primers, sealers and undercoater s and included those coatings in their most recent approved ACO Program, may continue to averag e those coatings until July 1, 2006, soFinal Staff Report

Proposed Amended Rule 1113 7 July 13, 2007 long as these coatings do not exceed 450 grams of V OC per liter of coating less water and less exempt compounds, in lieu of the otherwise applicab le VOC limit of 350 grams per liter.”

Response: Thank you for pointing out the obsolete language which staff is proposing to delete from Appendix A, Section A of Rule 1113.

Comment: Several commentators strongly suggested that staf f should not remove primers, sealers, undercoaters; quick-dry primers, sealers, undercoaters; and specialty primers from the Averaging Compliance Option. Allowing these catego ries to be in the averaging provision provides more flexibility to the manufacturers and does not affect emission reductions for the AQMD one way or the other. Some commentators expre ssed a need for the lower VOC primers in the averaging provision to offset emissi ons from high-VOC products in other categories.

Response: The amendments to the ACO provision has been with drawn from the staff proposal. The Stationary Source Committee Board me mbers directed staff to propose an amendment to remove specialty primers from the A veraging Compliance Option at the request of an architectural coating manufacture r (as explained in this Staff Report) when it was determined the requesting manufacturer could not take advantage of the ACO as its competitors have been able to do. It is noted that since staff received that direction from the Stationary Source Committee, the manufacturer has withdrawn its request for the amendment.

Comment: The proponent of the initial request to remove sp ecialty primers from the Averaging Compliance Option has notified staff it w ishes to withdraw that request. Subsequent to the last Stationary Source Committee meeting some unintended consequences were made apparent and therefore; the proponent has since submitted a letter to the AQMD requesting withdrawal of the initial request. All Board members of the Stationary Source Committee, the Chairman of the Governing Board and the Executive Officer have been made aware of the withdrawal request and discussion of t his matter will be included on the next Stationary Source Committee Meeting agenda.

Response: See the above comment and response.

Comment: The averaging program provides a needed mechanism for the continued supply of effective architectural and industrial maintenance coatings in the face of ever more stringent reductions in the VOC content of the coatings manda ted by Rule 1113. We oppose many of the VOC limits of the rule because we believe that they do not allow technologically feasible coatings to be manufactured with all of their neces sary performance characteristics. We do not believe that the averaging program can fully compen sate for these deficiencies in Rule 1113. Moreover, not all companies can avail themselves of the benefits of the program because they do not have a sufficiently large product mix to all ow them to do so.

Response: During litigation on the VOC limits specified in The Table of Standards for Rule 1113, the courts have validated staff’s techno logy assessments showing that lowVOC coating performance characteristics meet or exc eed those of their higher-VOC counterpart. The current proposal does not change any VOC limits and staff does not recommend relaxing any VOC limits. Staff relies on a number of key sources of data and information for determining the availability an d performance of coatings. These include:Final Staff Report

Proposed Amended Rule 1113 8 July 13, 2007 • CARB Surveys which provide sales, emission data, ma rket penetration and VOC content of coatings actually sold in California.

• Web-based searches where staff has found compliant and super-compliant lowVOC coatings verified by examining Technical Data S heets and Material Safety Data Sheets.

• Field Visits to New Construction Sites where staff visited more than 100 new construction sites in 2004 and 2005 in order to det ermine what products the contractors are using and whether they are working. Overall, most of the construction sites visited had applied architectura l coatings that are much lower than the current specified limits in many different categories and had used many super-compliant products that meet the future limit s in Rule 1113. Even with the super-compliant products, all of the contractors in dicated that they were satisfied with their performance.

• Performance studies by various public service agenc ies which have completed testing of low-VOC industrial maintenance coatings (some with the exempt solvent TBAc) in recent years and have found compliant prod ucts with acceptable performance.

• Meetings with local manufacturers (large and small) to inquire about their successes and failures in preparing for the low-VOC limits. These manufacturers indicated that compliant products are available and that they exhibit acceptable performance for their markets.

• A point of distribution survey of local store inven tories. The primary purpose of the surveys was to obtain a snapshot of the currently a vailable architectural products being sold from store shelves. This limited survey indicated that products meeting the 2006 VOC limits were available and being sold t o consumers.

• A review of select technical papers and articles on advancements in the coatings industry. Manufacturers of coatings rely heavily o n the research and development efforts of the raw materials suppliers. Successful reformulation by individual coating companies requires different resins and add itives. The 2005 Annual Status Report on architectural coatings provides excerpts from these articles that overwhelmingly indicate that there are ongoing tech nological achievements to support compliant product formulation. Papers pres ented at the recent Western Coatings Society Symposium and Show indicate the av ailability and support from resin and additive suppliers of low-VOC components that meet and exceed the future VOC limits in Rule 1113 and expected perform ance characteristics as compared to traditional higher VOC containing mater ials.

• AQMD contracted performance studies with industry e xperts to conduct laboratory studies to assess the performance characteristics o f low-VOC products. A review of these studies supports staff conclusions that overa ll super-compliant coatings meet or exceed expected characteristic performance stand ards when compared to products that have much higher VOC content.

• Studies of alternate means of compliance provided b y the rule by examining the number of manufacturers who have taken advantage of the Averaging Compliance Option and sell-through provisions as well as the s mall container exemption.

## ATTACHMENT A

Letter to coating manufacturers, distributors and a ssociations regarding metallic pigmented coatings