SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

DRAFT STAFF REPORT FOR DRAFT AMENDMENTS TO RULE 4702 (Internal Combustion Engines – Phase 2)

September 9, 2010

Prepared by: Joven R. Nazareno, Senior Air Quality Engineer

Reviewed by: Brian Clements, Senior Air Quality En gineer Patrick Houlihan, Senior Air Quality Specialist Kevin McCaffrey, Senior Air Quality Specialist George Heinen, Supervising Air Quality Engineer Errol Villegas, Planning Manager

I. SUMMARY

District staff is proposing to amend the rule in or der to implement a control measure in

the District’s 2007 Ozone Plan and 2008 PM2.5 Plan. Details of the proposed changes

to the rule are discussed later in Section VI of th is report. The proposed changes would apply only to non-emergency, non-low-use spark-igni ted engines that are used in nonagricultural operations (Non-AO). This rule-amendi ng project would strengthen rule requirements by proposing the changes to Rule 4702 as follows:

• Lower the applicability of the rule so it would ap ply to internal combustion engines (ICEs) rated at 25 brake horsepower (bhp) or greate r. Spark-ignited engines and compression-ignited engines rated at 25 to 50 bhp a re already subject to existing

federal Standards of Performance so the District wo uld include a point-of-sale provision in Draft Rule 4702 to ensure that only co mpliant ICEs are sold in the District. Owners of engines rated at 25 to 50 bhp that are used in non-agricultural operations (Non-AO) would be required to report the ir ICEs to the District. The report would include information on the engine size, model year, manufacturer, location of the engine, the type of fuel used, and engine opera ting hours.

• Lower the current Oxides of Nitrogen (NOx) limit f rom 25/65 ppmv to 11 ppmv (corrected to 15% O 2 ) for spark-ignited engines greater than 50 bhp tha t are used in Non-AO, except for cyclic loaded field gas fueled s park-ignited engines and waste gas fueled spark-ignited engines.

• Lower the current NOx limit from 50 ppmv to 25 ppm v (corrected to 15% O 2 ) for cyclic loaded field gas fueled spark-ignited engine s greater than 50 bhp.

• Lower the current Carbon Monoxide (CO) from 2000 p pmv to 500 ppmv (corrected

to 15% O 2 ) for Non-AO spark-ignited engines greater than 50 bhp, except for waste gas fueled spark-ignited engines.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

2 • Lower the current VOC from 250 ppmv to 30 ppmv (c orrected to 15% O 2 ) for NonAO spark-ignited engines, except for waste gas fuel ed spark-ignited engines greater than 50 bhp.

• Delete the existing provision for Alternate Emissi on Control Plan since no engine owner is using this alternate compliance option.

• Include a provision that would allow payment of an nual NOx emission fees to the District in lieu of complying with the proposed NOx , VOC, and CO emission limits.

• Include sulfur dioxide (SOx) emission control and monitoring requirements in the

rule.

II. REASON FOR RULE DEVELOPMENT AND IMPLEMENTATION

Air monitoring data in the San Joaquin Valley Air B asin (SJVAB) indicates ozone levels that exceed the eight-hour ozone National Ambient A ir Quality Standards (NAAQS) set by the federal government to protect public health and welfare. As a result, the United States Environmental Protection Agency (EPA) has cl assified the Valley as extreme

nonattainment. In accordance with the requirements of the federal Clean Air Act, nonattainment areas must develop plans to achieve a ttainment of the NAAQS. Consequently, the San Joaquin Valley Unified Air Po llution Control District (District), adopted the 2007 Ozone Plan. The SJVAB is also cur rently designated as nonattainment for the national ambient air quality standard (NAAQS) for particulate matter with aerodynamic diameter of 2.5 micrometers or less (PM2.5). As such, the District's Governing Board adopted the 2008 PM 2.5 Plan on April 30, 2008. The Ozone Plan and PM2.5 Plan are comprised of regulato ry and incentive-based measures to reduce emissions of nitrogen oxides (NOx), volat ile organic compounds (VOC), particulate matter 2.5 microns or less in diameter (PM2.5), and oxides of sulfur (SO2).

Since amending Rule 4702 (Internal Combustion Engin es - Phase 2) is a control measure (S-COM-6) commitment in the District’s 2007 Eight-Hour Ozone Plan and 2008 PM2.5 Plan, it is subject to Code of Federal R egulations (CFR), Clean Air Act (CAA), and California Health and Safety Code (CH&SC ) requirements. This rulemaking project is intended to support the attainment goals of the District’s Ozone Plan and

PM2.5 Plan. The draft amendments to Rule 4702 will seek to obtain as much reduction of NOx, VOC, PM2.5 and SOx from stationary internal combustion engines as is expeditiously practicable, technologically feasible , and economically reasonable, as determined by the District’s Governing Board. Furt hermore, the rule is intended to satisfy the Ozone Plan and PM2.5 Plan commitments a s identified in Table 1.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

3 Table 1: Ozone Plan and PM 2.5 Plan Commitments Subject Reference Requirement

Timeline CAA Section 172(c)(1) Ozone attainment plans shall implement control

measures as expeditiously as practicable, and provide for attainment.

RACT CAA Sections 182(b)(2) and 182(f) Ozone attainment plans shall assure that

reasonable available control technology (RACT) for NOx and volatile organic compounds (VOC) is in use at sources and on source categories at

or above the RACT threshold.

BARCT CH&SC 40919(a)(3) Ozone attainment plans should provide for best

available retrofit technology (BARCT) for existing permitted sources.

All Feasible Controls CH&SC 40914(b)(2) Ozone attainment plans should include "all

feasible control measures."

Deadline District 2007 Eight-Hour

Ozone Plan

and 2008

PM2.5 Plan Rule adoption by the Fourth Quarter of 2010.

Reductions District 2007 Eight-Hour

Ozone Plan

and 2008

PM2.5 Plan The plans did not quantify the reduction in NOx,

PM2.5 and SOx that could be achieved by amending Rule 4702. The emissions reduction will be calculated during the rule development

process.

III. DESCRIPTION OF THE PROJECT

A. Purpose of the Rulemaking Project

The purpose of amending Rule 4702 is to obtain addi tional emissions reduction of NOx, VOC, and SOx from stationary internal combustion en gines by implementing Control

Measure S-COM-6 in the District’s 2007 Ozone Plan a nd 2008 PM2.5 Plan. The control options recommended in the Plans for this source ar e indicated below. District staff’s concepts for addressing the above control options a re discussed in the latter part of this
report.

• Consider South Coast Air Quality Management Distri ct (SCAQMD) Rule 1110.2 (Emissions from Gaseous- and Liquid-Fueled Internal Combustion Engines).SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

4 • Consider replacing engines with electric motors wh ere possible.

• Investigate the feasibility of controlling SOx emi ssions from natural gas fired engines.

• Implement ARB ATCM for stationary diesel engines t hrough the permitting process to control PM emissions (natural gas fuel i s inherently low in sulfur content).

B. Rule Amendment Process

The District’s 2007 Ozone Plan and 2008 PM 2.5 Plan identified Rule 4702 as control measure commitment, which would be implemented thro ugh the rule development process. As part of the rule development process, District staff conducted a Scoping meeting on June 24, 2010 to present and discuss the concepts for developing the draft

amendments to the rule. The comments received from the public, affected sources, interested parties during the Scoping Meeting were used to develop the draft amendments to the rule. District staff plans to c onduct at two public workshops in order to refine the draft rule amendments taking into con sideration appropriate comments from affected sources, EPA, ARB, and the public. T he first workshop will be conducted in September 2010. The deadline for considering ad option of the draft rule amendments by the Governing Board is December 16, 2 010.

Pursuant to state law, the District is required to perform a socioeconomic impact analysis prior to adoption, amendment, or repeal of a rule that has significant air quality benefits or that will strengthen emission limitatio ns. As part of the District socioeconomic analysis process, District staff will solicit volunteers from affected stakeholders and interested parties to participate as members of the Socioeconomic Focus Group. District staff will convene a meeting of the Focus Group in conjunction with the first workshop to assist District staff in gathering information on regulatory compliance costs and business impacts resulting fro m compliance with the draft amendments. The results of the socioeconomic analy sis will be published in a report and will be presented along with the draft rule ame ndments to the public and interested parties during the final workshop.

IV. BACKGROUND

A. Source Description

An internal combustion engine (ICE) is any engine t hat operates by burning its fuel inside the engine. ICEs generate power by the comb ustion of an air/fuel mixture. The main types of ICEs are spark-ignited (SI) engines a nd compression-ignited (or diesel) engines. In the case of spark-ignited (SI) engines , a spark plug ignites the air/fuel mixture. SI engines come in several designs such a s: two-stroke and four-stroke, richburn and lean-burn, turbocharged and naturally aspi rated. SI engines may use one orSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

5 more fuels, such as natural gas, propane, butane, l iquefied petroleum gas, oil field gas, digester gas, landfill gas, methanol, ethanol, and gasoline.

Compression-ignited (CI) or diesel engines rely on heating of the inducted air during the compression stroke to ignite the injected diesel fu el. Two types of CI engines are twostroke and four-stroke. Most diesel engines are fo ur-stroke, while larger diesel engines

often are two-stroke.

Most ICEs are used to power pumps, compressors, or electrical generators. ICEs are used by a large variety of private businesses and p ublic agencies throughout the SJVAB. Examples of businesses and industries that use ICEs that could be affected by this project include schools and universities, agri culture, oil and gas production and pipelines, petroleum refining, manufacturing facili ties, food processing, electrical power generation, landfill and waste water treatment faci lities, and water districts. Many of the permitted compression-ignited engines in the Distri ct are used as emergency engines. Such emergency engines are used to provide backup p ower when electric service is interrupted.

B. Emissions Inventory

Emissions of NOx, PM2.5, and SOx, are generated whe n the air/fuel mixture is

combusted in the ICE. The winter season and the an nual emissions inventory for ICE

as indicated in the District’s 2008 PM2.5 Plan is s hown below.

Table 2: Plan Baseline Emissions Inventory

Pollutant 2005 2009 2010 2011 2012 2013 2014 Tons/day – Winter Season

NOx 20.4 20.2 19.9 19.5 19.1 18.7 18.3

PM2.5 1.1 1.0 1.0 1.0 0.9 0.9 0.9

SOx 1.6 1.6 1.6 1.6 1.6 1.6 1.6 Tons/day – Annual Average

NOx 26.3 25.6 25.1 24.5 24.0 23.4 22.8

PM2.5 1.5 1.4 1.3 1.3 1.3 1.2 1.2

SOx 2.2 2.2 2.2 2.2 2.2 2.2 2.2

C. Number of ICEs

Based on available information from the District’s Permit database, the number of ICEs that have Permits to Operate (PTO), finalized Autho rity to Construct (ATC), or registered under the Permit Exempt Registration (PE ER) program is shown below. It is important to mention that industries within the Dis trict, both agriculture and nonagriculture, have replaced hundreds of their engine s with electric motors over the past several years which have resulted in significant em issions reductions. The District is continuing to improve the accuracy of the inventory of ICEs used in agricultural operations. As previously mentioned, the proposed changes to Rule 4702 would onlySAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

6 apply to approximately 598 permitted Non-AO spark-i gnited engines that are not emergency or low-use engines.

Table 3: Number of Engines in SJVAB Category Active PTO + Finalized ATCs PEER Non-AO Spark-Ignited Rich-Burn 453 Non-AO Spark-Ignited Lean-Burn 102 Non-AO Spark-Ignited Rich-Burn Cyclic loaded Field Gas-Fired 43

Non-AO Spark-Ignited Rich-Burn

Waste Gas 4

Non-AO Non-Emergency Compression-Ignited 305

All Low-Use 30 All Spark-Ignited Emergency 684 All Compression-Ignited Emergency 3516 AO Spark-Ignited (Irrigation pumps) 290 79 AO Compression-Ignited (Irrigation pumps) 1764 30

TOTAL 7191 109

V. DISCUSSION

A. Existing Rule 4702 - Phase 2

Rule 4702 was adopted in August 2003 and was subseq uently amended in June 2005, April 2006, and January 2007. The purpose of Rule 4702 is to limit NOx, CO, and VOC emissions from stationary internal combustion engin es. The rule applies to any stationary internal combustion engine with a rated brake horsepower (bhp) greater than 50. In November 2001, ARB published a guidance doc ument “Determination of Reasonably Available Control Technology (RACT)/Best Available Retrofit Control Technology (BARCT) for Stationary Spark-Ignited Int ernal Combustion Engines”, which presents the technologies for controlling NOx, CO, and VOC from spark-ignited ICEs

and the recommended RACT and BARCT emission standar ds in order to assist air districts in developing their own regulations. The current emission limits in Rule 4702 for spark-ignited ICEs are consistent with the reco mmended emission standards in ARB’s BARCT determination guidance document. The emission limits in Rule 4702 for compression-ignited engines are consistent with EPA ’s emission standards established

in the “Control of Emissions of Air Pollution from Nonroad Diesel Engines and Fuel” published by EPA in the Federal Register on October 23, 1998 and June 29, 2004.

Rule 4702 provides some exemptions from the emissio ns standards or other requirements of the rule for engines used in certai n specific applications, such as an emergency standby engine, military tactical equipme nt, and certain types of engines used in agricultural operations (e.g., wind machine s, mobile agricultural equipment,SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

7 engines used to propel implements of husbandry). R ule 4702 exempts engines from complying with the emission limits provided they do not exceed 200 hours of operation per calendar year and meet other conditions.

In addition to complying with the emission limits, operators are required to comply with the provisions for monitoring, emission control pla n, recordkeeping, periodic compliance testing, and an option to comply with the requireme nts of the Alternative Emission Control Plan (AECP) in lieu of having each engine c omply with the emission limits.

The existing NOx emission limits in Rule 4702 are s hown in below. The VOC and CO limits are 250/750 ppmv and 2,000 ppmv, corrected t o 15% O2, respectively.

Table 4: Rule 4702 Existing NOx Limits Spark-Ignited Engines NOx Limit (ppmv corrected to 15% O 2 ) 1. Rich-Burn (Non-AO) a. Waste gas fuel 50 ppmv or 90% reduction b. Cyclic loaded, field gas 50 ppmv c. All other engines 25 ppmv or 96% reduction 2. Lean-Burn (Non-AO) a. Two stroke, gaseous fuel less than 100 bhp 75 ppmv or 85% reduction

b. All other engines 65 ppmv or 90% reduction 3. Rich-Burn AO engines 90 ppmv or 80% reduction (Comply by 1/1/09 or, if owner has an agreement to electrify, comply by 1/1/10). 4. Lean-Burn AO engines 150 ppmv or 70% reduction (Comply by 1/1/09 or, if owner has an agreement to electrify comply by 1/1/10). 5. Certified Spark-Ignited AO engines Meet certifi ed spark ignited standard HC + NOx <0.6 g/bhp-hr (Comply by 6/1/06). Compression-Ignited Engines Emission Limit/Standard 1. Non-certified Compression-Ignited Engines a. >50 to 500 bhp EPA Tier 3 or Tier 4 (Comply by 1/1/10). b. >500 to 750 bhp and less than 1000 annual operating hours EPA Tier 3 (Comply by 1/1/10).

c. >750 and less than 1000 annual operating hours EPA Tier 4 (Comply by 7/1/11).

d. >500 bhp and equal to or greater than 1000 annual operating hours 80 ppmv NOx (Comply by 1/1/08, or, if there is an agreement to electrify, comply by 1/1/2010). 2. Certified Compression-Ignited Engines a. EPA certified Tier 1 or Tier 2 engine s EPA Tier 4 (Comply by1/1/2015 or 12 yrs after installation date, whichever is later). b. EPA Certified Tier 3 or Tier 4 engines Me et certified compression ignited engine

standard in effect at the time of installation (Comply at the time of installation).SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

8 B. Other Air Districts’ Stationary Internal Combust ion Engine (ICE) Rules

District staff reviewed the engine rules of other C alifornia air districts as well as the ARB Determination of RACT/BARCT for Stationary Spark-Ig nited Internal Combustion Engines, and found that South Coast Air Quality Man agement District (SCAQMD) Rule 1110.2 (Emissions from Gaseous- and Liquid-Fueled I nternal Combustion Engines) has the most stringent regulatory emission limits. Cur rently, no air district rules regulate stationary ICEs rated less than 50 bhp. As previou sly mentioned, the current limits in existing Rule 4702 are consistent with the limits i n the ARB RACT/BARCT document, but are less stringent than SCAQMD Rule 1110.2.

SCAQMD Rule 1110.2 (Emissions from Gaseous- and Liq uid-Fueled Internal Combustion Engines)

SCAQMD Rule 1110.2, which was amended in February 2 008, applies to all stationary and portable engines over 50 bhp. The rule require s operators to remove stationary engines from service, or replace the engines with e lectric motors, or not operate the engines in a manner that exceed the limits indicate d below. For further details on emission requirements, please refer to Rule 1110.2 which is available for download at SCAQMD website at www.aqmd.gov.

Table 5: Rule 1110.2 Emission Limits for Stationar y Non-Biogas Engines Pollutant Current Limit (ppmvd) Effective 7/1/2010 (ppmvd) Effective

7/1/2011 (ppmvd) bhp ≥ 500 bhp>50<500 bhp ≥ 500 bhp>50<500 All

NOx 36 45 11 45 11

VOC 250 250 30 250 30

CO 2000 2000 250 2000 250

Table 6 – Emission Limits for Stationary Biogas Eng ines Concentration limits until June 30, 2012 NOx (ppmvd) VOC (ppmvd) CO (ppmvd) bhp ≥ 500: 36 x ECF 1

bhp < 500: 45 x ECF 1 Landfill Gas: 250 Digestor: 250 x ECF 1 2000

Concentration Limits on and after July 1, 2012 2

NOx: 11 ppmvd VOC: 30 ppmvd CO: 250 ppmvd

1 ECF (Efficiency Correction Factor) = (9250 Btu/hp-h r)÷Measured q

a in Btus/hp-hr. Measured q

a shall be based on the lower heating value of the fuel. ECF shall not be less than 1.

2 Concentration limits on and after July 1, 2012 shal l become effective provided SCAQMD conducts a technology assessment that confirms that the limits are achievable and reports to the Board by July 20 10. According to SCAQMD staff, the technology assessmen t is underway and will probably be completed in

2011.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

9 Table 7: SCAQMD Rule 1110.2 Emission Limits for Ne w NonEmergency Electrical Generation Engines Emission Standard (lb/MW-hr)

NOx 0.070

CO 0.20

VOC 0.10

C. EPA Regulations for Stationary Internal Combusti on Engines

In addition to evaluating other air districts’ stat ionary ICE rules, District staff also reviewed EPA’s New Source Performance Standards (NS PS) and National Emission Standards for Hazardous Air Pollutants (NESHAP) tha t apply to this source category. It is important to mention that sources subject to the NSPS and the NESHAP are required to comply with those requirements in addition to th e requirements of Rule 4702.

Spark-Ignited Engines

The NSPS requirements for stationary spark-ignition ICEs are specified in 40 CFR Part 60 Subpart JJJJ. District staff has determined tha t the existing emission limits of Rule 4702 are more stringent than the NSPS limits. For example, the NSPS emission limit for spark-ignited rich-burn engines rated at greate r than 50 bhp is 2.0 g/bhp-hr of HC+NOx is less stringent than the current Rule 4702 NOx limit of 25 ppmv (corrected to

15% O 2 on a dry basis) for spark-ignited rich-burn engine s. Spark-ignited engines rated between 25 to 50 bhp are already subject to the NSP S emission standards specified in 40 CFR 60 Subpart JJJJ (Standards of Performance fo r Stationary Spark Ignition Internal Combustion Engines). This NSPS became eff ective on March 18, 2008 and applies to new, modified, and reconstructed SI ICE regardless of the size and combusting any fuel. Emissions are controlled to l evels achievable by Best Demonstrated Technology. The regulated pollutants are NOx, CO, and VOC. The

HC+NOx emission limits in the NSPS for SI ICEs 25 t o 50 bhp range from 2.0 to 2.8 g/hp-hr, depending on the type of engine and fuel u sed.

The NSPS requirements for stationary compression-ig nition ICEs are specified in 40 CFR Part 60 Subpart IIII. The current emission sta ndards of Rule 4702 for compression-ignited engines rated greater than 50 b hp are consistent with the NSPS. Compression-ignited engines rated between 25 to 50 bhp are already subject to the NSPS emission standards specified in 40 CFR 40 Subp art IIII ( Standards of Performance for Stationary Compression Ignition Int ernal Combustion Engines). This NSPS became effective on July 11, 2006, and it esta blishes requirements for manufacturers, owners, and operators of new engines whose construction, modification, or reconstruction began after July 11, 2005. The N SPS requires the on-engine controls, after treatment, and low sulfur fuel to achieve the same standards as required for nonroad engines. The regulated pollutants are NOx, NMHC (VOC), CO, and particulate matter (PM). Depending on the engine size, model y ear, use (fire pump or non-fire pump engines, and emergency or non-emergency), the emission standards in theSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

10 NSPS range from 3.0 to 7.8 g/hp-hr of NMHC+NOx, 3.7 to 4.1 g/hp-hr of CO, and 0.02 to 0.6 g/hp-hr of PM.

The NESHAP requirements for stationary reciprocatin g ICEs are specified in 40 CFR Part 63 Subpart ZZZZ. The NESHAP regulates certain polycyclic aromatic hydrocarbons (PAHs). Rule 4702 establish emission limits for volatile organic compounds (VOCs), which may not necessarily be PAHs . Therefore, the NESHAP standards cannot be compared to the VOC limits of R ule 4702. Copies of the NSPS

and the NESHAP can be downloaded from the website a t http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecf r.

VI. DRAFT AMENDMENTS TO RULE 4702

District staff considered comments provided by EPA and stakeholders at the June 24, 2010 Scoping Meeting in developing the draft amendm ents to Rule 4702. A summary of the written comments and District staff’s respon ses are discussed in Appendix A of the Draft Staff Report. The draft amendments to Ru le 4702 are discussed below.

Section 1.0 Purpose The purpose of the existing rule is to limit the em issions of nitrogen oxides (NOx) carbon monoxide (CO) and volatile organic compounds (VOC). This section would be modified to include limiting the emissions of sulfu r dioxide (SOx) from internal combustion engines.

Section 2.0 Applicability Currently, Rule 4702 does not apply to stationary I CEs rated at 50 brake horsepower (bhp) or less. District staff is proposing to chan ge the applicability of the rule so it would to also apply to small stationary ICEs rated at 25 to 50 bhp.

Section 3.0 Definitions

• The existing rule defines “Agricultural Operations ” by referencing it to the definition in Rule 4550 (Conservation Management Practices). For clarity the definition of “Agricultural Operation” will be included in Rule 4 702 instead of referring it to another

rule.

• A definition of Air Pollution Control Officer (APC O) would be added for clarity of the

rule.

• A definition of California Reformulated Diesel wou ld be included in the rule since the one of the SOx control requirement being proposed i s the use of this fuel type.

• A definition of Higher Heating Value would be adde d for clarity of the rule.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

11 • A definition of Low-use Engine would be included i n the rule. The existing provisions

of Section 4.2.2 would be deleted and then transfer red into the definition of Low-use Engine.

• The existing definition of Public Utilities Commis sion (PUC) Quality Natural Gas would be modified for consistency with the definiti on in Rule 4320 (Advanced Emission Reduction Options for Boilers, Steam Gener ators, and Process Heaters Greater than 5 MMBu/hr).

Section 4.0 Exemption

Section 4.2.2 would be modified to state that a “lo w-use engine” as defined in Section 3.0 is exempt from the rule. The existing conditio ns for exempting for this type of engine that are currently specified in Section 4.2. 2 would deleted, but they would be relocated in the definition of “low-use engine” in Section 3.0.

Section 4.4 allows an exemption from the requiremen ts of Best Available Control Technology (BACT) and Offset requirements of Rule 2 201 (New and Modified Stationary Source Review Rule) if the replacement e ngine is installed for the sole purpose of complying with Rule 4702. District staf f is proposing to delete Section 4.4 because in the past EPA has disapproved for inclusi on into the State Implementation Plan (SIP) District’s prohibitory rules which inclu ded a similar exemption. EPA has stated in previous rulemaking projects that BACT an d Offset requirements should be addressed in Rule 2201 instead of the prohibitory r ule. It should be mentioned that Rule 2201 Sections 4.2.3 and 4.6.8 provides an exemption from BACT and Offset requirements for existing facilities that installs or modifies an emission control technique solely for the purpose of compliance with the requi rements of District, State, or Federal air pollution control laws provided the conditions specified in Rule 2201 are met.

Section 5.0 Requirements

• New Section 5.1 This section would establish the requirements for s park-ignited engines and compression-ignited engines rated at 25 to 50 brake horsepower (bhp) that are used exclusively in Non-AO. These small engines are alr eady regulated under the existing federal Standards of Performance. The provision wo uld prohibit a person from supplying, selling, offering for sale, soliciting t he operation, or installing engines rated at 25 to 50 bhp horsepower unless the engines meet the applicable requirements and emission limits specified in 40 Code of Federal Reg ulation (CFR) 60 Subpart IIII (Standards of Performance for Stationary Compressio n Ignition Internal Combustion Engines) and 40 CFR 60 Subpart JJJJ (Standards of P erformance for Stationary Spark Ignition Internal Combustion Engines) for the year that the engine is purchased.

Estimated Number of Small ICEs

In 2008, District staff conducted a survey of non-a gricultural operations (Non-AO) permitted sources in the District to determine the number of small engines rated at 25 to 50 bhp. Data from the survey indicated that there are approximately 750 small engines.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

12 Some of these small engines may already be subject to the federal Standards of Performance depending on the model, year of manufac ture, fuel type, and engine usage/application. District staff would like to im prove the emission inventory on small engines and is proposing to require owners of Non-A O small engines in the District to submit a report to the District. The District is not requiring owners of small engines used AO to submit a report at this time because the District has determined, based on information gathered by the District’s Compliance D ivision, that there is an insignificant number of AO small engines. Engines that are rated at 25 to 50 bhp are too small for most farm water pumping, transfer, or booster pump purposes, therefore not typically

used in AO.

Therefore, the owner of a Non-AO engine rated 25 to 50 bhp would be required to submit a report to the District which includes info rmation on the number of small engines at a stationary source, location of each en gine, engine manufacturer, model designation and engine serial number, engine bhp, f uel type and consumption rate, ignition type and combustion type, purpose of the e ngine, and daily operating schedule. This is a one-time reporting requirement to allow t he District to improve the emission inventory for this category.

• Section 5.2 This section would restructure the existing the emi ssion limits/standards for Non-AO and AO spark-ignited engines and compression-ignite d engines greater than 50 bhp. This section would also specify the proposed limits for Non-AO spark-ignited engines greater than 50 bhp. The following are the section s being modified as well as the new provisions being proposed:

o Section 5.2.1 would indicate that Table 1 emission limits are engines used in non-agricultural operations (Non-AO). The existing emission limits for sparkignited engines used in AO would be removed from ex isting Table 1 and would

be relocated in new Table 3. Table 1 limits would effective until December 31,

2013.

o New Section 5.2.2 would establish the proposed emi ssion limits for Non-AO spark-ignited engines greater than 50 bhp as shown below. The emission limits for Non-AO spark-ignited engines, except waste gas fueled engines and cyclicloaded field gas fueled engines, are 11 ppmv NOx, 5 00 ppmv CO, and 30 ppmv VOC. The 11 ppmv NOx limit is consistent with SCAQ MD Rule 1110.2. For cyclicloaded field gas fueled engines, the limits are 25 ppmv NOx, 500 ppmv CO, and 30 ppmv VOC. The existing emission limits for waste g as fueled spark-ignited engines would remain the same as indicated in exist ing Table 1 of the draft rule.

o New Section 5.2.2.1 would indicate that the owner of Non-AO spark-ignited engines may comply with the proposed emission limit s or pay annual NOx emission fees as specified in new Section 5.2.2.2 a nd new Section 5.6.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

13 o New Section 5.2.2.2 would indicate that in lieu of complying with the proposed emission limits, the owner of Non-AO engine may ele ct to pay annual NOx emission fees and comply with the proposed SOx cont rol and monitoring requirements.

Table 8: Proposed Emission Limits for Non-AO Spar k-ignited Engines

Effective on and after January 1, 2014. All ppmv limits are corrected to 15% O 2 on a dry basis. Engine Type NOx Limit CO Limit VOC Limit All Spark-ignited Engines, Except

Waste Gas Fueled and Cyclic Loaded

Field Gas Fueled Engines 11 ppmv 500 ppmv 30 ppmv

Waste Gas Fueled Engines 50 ppmv or 90 percent reduction 2000 ppmv 250 ppmv

Cyclic Loaded, Field Gas Fueled Engines 25 ppmv 500 ppmv 30 ppmv

• District staff is proposing to delete the existing category for spark-ignited lean-burn two-stroke, gaseous fueled, less than 100 horsepowe r engine for consistency with
the SCAQMD Rule 1110.2. The SCAQMD Rule 1110.2 NOx limit of 11 ppmv effective July 1, 2011 applies to non-biogas engine s regardless of the size or the type of engines. In addition, the District is not aware of any two-stroke lean burn spark-ignited engines less than 100 horsepower curr ently operating within the San Joaquin Valley.

• Section 5.2.3 The existing emission limits for AO spark-ignited e ngines that are part of existing Table

1 would be relocated to new Table 3. There are no changes to the existing limits for

Non-AO emission limits.

• New Section 5.2.4 The existing requirements for compression-ignited e ngines currently specified in Section

5.1.2 would be relocated to new Section 5.2.4. Als o, the existing Table 2 (compressionignited engine emission limits/standards) would be renumbered as Table 4. No change to the existing emission limits/standards are being proposed for compression-ignited engines since they are technologically the most str ingent standards.

• New Section 5.6 This section would establish a compliance option to pay annual fees in lieu of complying with the proposed emission NOx limit for Non-AO spa rk ignited engines. The provision would include the method for calculating the total annual NOx emissions and the annual fee payments for engines that would comply under th is compliance option. This feeSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

14 provision is similar to that found in District Rule 4320 (Advanced Emissions Reduction Option for Boilers, Steam Generators, and Process H eaters – Greater than 5.0 MMBtu/hr).

• New Section 5.7 This section would specify the sulfur dioxide (SOx) control requirements for non-AO spark-ignited engines and non-AO compression-ignite d engines greater than 50 bhp. The owner would be required to comply with one of t he following:

o Fire the engine exclusively on PUC-quality natural gas, commercial propane, butane, or liquefied petroleum gas or a combination of such gases.

o Use California Reformulated gasoline for gasoline fueled engines.

o Use California Reformulated Diesel for all compres sion-ignited engines.

o Limit the sulfur content of gaseous fuel to no mor e than 5 grains of total sulfur per

100 standard cubic feet.

o Fire the engine on liquid fuel that contains no mo re than 15 ppm sulfur.

o Install and properly operate an emission control s ystem that reduces SO 2 emissions by at least 95% by weight.

• Renumbered Section 5.8.9 (previously Section 5.6.9) Portable NOx Analyzer Monitoring requirement for Non-AO Spark-Ignited Eng ines This existing section requires the owners of Non-AO spark-ignited engines to take NOx emission readings with a portable NOx analyzer to v erify compliance with the emission requirements during each calendar quarter in which a source test is not performed and the engine is operated. This section would be modi fied to allow owners of engines that operate less than 120 calendar days per calendar ye ar to take one NOx emission reading during that period in which a source test i s not performed and the engine is operated. This change is in response to stakeholde rs’ recommendation for portable NOx monitoring requirement for engines that only op erate a few months of the year. It would reduce unnecessary testing for engines which may only operate a few days in a given month. Such short term operation is not expe cted to be significantly different than the emissions from a previously tested quarter and therefore does not warrant additional testing.

• Existing Section 5.6.11 This section requires a nonresettable fuel meter or an APCO- approved alternative device for each engine that is subject to the Alter nate Emission Control Plan (AECP).

Section 5.6.11 would be deleted since District staf f is also proposing to delete the AECP provision because no engine owner is currently usin g the AECP compliance option.

• New Section 5.10 SOx Emissions Monitoring Requirem ents This section would require the owners of Non-AO spa rk-ignited engines or Non-AO compression-ignited engines to perform an annual fu el analysis if owner elects to comply with either the fuel sulfur content limit of 5 grains per 100 standard cubic feet or 15 ppmv sulfur. Engines fired exclusively on PUC-q uality natural gas, commercial propane, butane, liquefied petroleum gas, or a comb ination of such gases, as well asSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

15 California reformulated gasoline or California refo rmulated diesel would not require annual fuel analysis, since such analysis is routin ely provided by the supplier.

The owner of an engine who elects to install and op erate a SOx control device in order to comply with new Section 5.7.6 would need to subm it the key operating parameters and frequency of monitoring and recording for appro val by the District. Engines equipped with a SOx control device would need to be source tested annually to demonstrate compliance with 95% SOx reduction effic iency.

• New Section 6.4.6 This section would specify the test methods for det ermining oxides of sulfur, total sulfur as hydrogen sulfide, sulfur content of liquid fuel, and calculation method for SOx control efficiency.

• Existing Sections 7.5.2.3, 7.5.2.3.1, and 7.5.2.3.2 This sections indicates that requirements of Rule 4 701 (Internal Combustion Engines - Phase 1) shall no longer apply to engines that are in full compliance with the existing requirements of current Rule 4702. This section w ould be deleted because it serves no useful purpose since all spark-ignited engines that were previously subject to Rule 4701 are already in full compliance with existing Rule 4 702. Rule 4701 does not regulate compression-ignited.

• New Section 7.7 This section would require the owner of a Non-AO sp ark-ignited engine to submit to the an Emission Control Plan, an Inspection and Mainten ance Plan, and a completed application for an Authority-to-Construct no later than July 1, 2013. By January 1, 2014, the owner shall demonstrate full compliance with Ta ble 2 emission limits. On and after January 1, 2014 operate the engine in such a manner that complies with the applicable requirements of the Rule 4702.

• New Section 7.8 The owner of a Non-AO spark-ignited engine who elec ts to pay annual NOx emission fees to the District in lieu of complying with the proposed emission limits would be required to submit an Emission Control Plan which i ncludes the information specified in new Section 7.8.1. The owner would be required to pay the total annual fee to the District no later than July 1 of each year for the emissions of the previous calendar year. The first payment would be due no later than July 1, 2014. P ayment would continue annually until the engine either is permanently removed from use i n the San Joaquin Valley Air Basin and the Permit to Operate is surrendered, or the op erator demonstrates compliance with then proposed Table 2 emission limits.

• Existing Section 8.0 Section 8.0 allows an owner to comply with the exis ting emission requirements of the rule for a group of engines through the use of the Alter native Emission Control Plan (AECP) instead of each engine individually complying with the emission limit. This section would be deleted because no owner is using the AECP.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

16 VII. CATEGORIES OF ENGINES WHERE NO RULE CHANGES AR E BEING

PROPOSED

District staff is not proposing any changes to the emission limits and standards for the following categories of engines:

1. Non-AO Waste Gas Fueled Spark Ignited Rich-Burn Engines

The current NOx limit in Rule 4702 for Non-AO waste gas fueled rich-burn engines is 50 ppmv (at 15% O 2 ) or 90 percent reduction. Although SCAQMD Rule 11 10.2 specifies a NOx limit of 11 ppmv for landfill gas or digester g as fired engines effective July 1, 2012, Rule 1110.2 includes a provision to complete a tech nology assessment by July 2010 and that the limit will only be implemented if the result of SCAQMD’s technology assessment that is confirms that 11 ppmv is indeed achievable. In a recent telephone conversation with SCAQMD staff, District staff has found that the technology assessment would not be completed until next year. Therefore, District staff is not proposing any change to the current limit for Non-A O waste gas fueled rich-burn engines until such time that SCAQMD’s technology as sessment confirms that it is technologically and economically feasible to achiev e their rule limit.

2. Emergency Engines and Low-Use Engines

District staff is not proposing any changes to the exemption requirements for emergency engines and low-use engines. The existing requirem ents are consistent with ARB RACT/BARCT Determination for Spark-Ignited Engines and ARB Air Toxics Control Measures (ATCM). In addition, the ATCM is already being implemented through the District’s process for issuing Permits to Operate.

3. Agricultural Spark-Ignited Engines

The current limits in existing Rule 4702 for agricu ltural spark-ignited engines are 90 ppmv corrected to15% O 2 (equivalent to 1.26 grams/hp-hr) or 80% reduction for richburn engines, 150 ppmv corrected to 15% O 2 (equivalent to 2.1 grams/hp-hr) or 70% reduction for lean-burn engines, and less than 0.6 grams/brake horsepower-hour (g/bhp-hr) for certified spark-ignited engines. Di strict staff is not proposing any changes to the existing emission limits for spark-ignited e ngines used in agricultural operations because the current limits have been recently imple mented in January 2009. Thus, the operators have not yet realized the economic benefi ts from the investment they made in retrofitting/replacing their older engines to compl y with the rule limits.

EPA commented that the District should provide furt her analysis of whether more stringent limits for AO engines are appropriate and if the standard qualifies as Reasonably Available Control Technology (RACT).

District staff believes that the existing Rule 4702 emission limits for agricultural engines meets Reasonably Available Control Technology (RACT ). In August 2007, EPASAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

17 published the Technical Support Document (TSD) 1 for the current version of Rule 4702 in conjunction with EPA’s full approval of the rule for inclusion into the State Implementation Plan (SIP). The TSD basically state d that SJVUAPD provided documentation for the process of determining BACM/B ACT 2 and in the staff report, provided analyses of the inventory of affected engi nes and the technological and economic feasibility of possible control technologi es. The TSD also stated that EPA concurs with the BACM/BACT analysis, and noted that the emission limits and other provisions in submitted Rule 4702 are quite stringe nt when compared with the Determination and comparable rules in other air dis tricts, and in light of the economic and social circumstances in the San Joaquin Valley. District staff believes that the existing emission standards for AO spark-ignited en gines in current Rule 4702 still meets RACT even though it they were established thr ee years ago because the current economic downturn in the San Joaquin Valley’s agric ulture makes it more economically infeasible to require lower emission limits for AO engines

.

4. Compression-Ignited (Diesel) Engines

The existing emission limits for compression-ignite d engines apply to both nonagricultural and agricultural engines. District s taff is not considering any changes to the existing NOx limits in Rule 4702 which requires EPA certified Tier 3 or Tier 4 diesel engines or meet 80 ppmv NOx, depending on the size of the engine and whether the diesel engine is non-certified or certified. It sh ould be noted that certified Tier 1 or Tier 2 diesel engines are required to comply with EPA cert ified Tier 4 by January 1, 2015 or 12 years after installation date, whichever is later. Non-certified diesel engines that are required to meet either Tier 3 or Tier 4 depending on the engine size and its operating hours have just began complying with the existing e mission limits early this year, and some of the larger engines will need to comply by m id-2011. Engines greater than 500 hp that operate at least 1,000 hours annually were required to meet 80 ppmv NOx last January 1, 2008 or by January 1, 2010, if the owner has an agreement to replace the diesel engine with electric motor.

IX. CONTROL TECHNOLOGIES FOR SPARK-IGNITED ENGINES

The control techniques for reducing NOx emissions f rom spark-ignited engines includes air/fuel adjustment, ignition timing retard, air/fu el adjustment plus ignition timing retard, prestratified charge, nonselective catalytic reduct ion, selective catalytic reduction, and low emission combustion. The likely control techno logies that would be used to achieve the lower NOx limits being considered in the draft amendments to Rule 4702 are nonselective catalytic reduction for spark-ignited rich-burn engines and selective catalytic reduction for lean-burn spark-ignited eng ines. Oxidation catalyst is the control technology that can achieve lower VOC emissions fro m spark ignited engines. The

1 Technical Support Document for EPA’s Notice of Pro posed Rulemaking and Direct Final Rule for the California State Implementation Plan – San Joaquin valley Unified air Pollution Control District Rule 4702 (Internal Combustion Engine – Phase 2), August 2007

. 2 The TSD stated that BACM includes BACT in the same way as RACM includes RACT.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

18 applicability of these control techniques on the ty pe of spark-ignited engines are

discussed below.

Air/Fuel Adjustment Adjusting the air/fuel toward fuel-rich operation r educes the amount of oxygen available to combine with nitrogen, which inhibits NOx format ion. The low oxygen environment also contributes to incomplete combustion, which re sults in lower combustion temperature, which lowers NOx formation rate. Howe ver, the incomplete combustion increases CO emissions and hydrocarbon emissions. The combustion efficiency is also reduced, which increases fuel consumption. Excessi vely rich A/F may result in combustion instability and unacceptable increases i n CO emissions. Sustained NOx reduction with changes in ambient conditions and en gine load is best accompanied by installing an automatic A/F control system. The ac hievable NOx emissions reduction ranges from 10 to 40 percent from uncontrolled leve ls.

Ignition Timing Retard Ignition timing retard delays initiation of combust ion to later in the power cycle, which

increases the volume of the combustion chamber and reduces the residence time of the combustion process. This increased volume and redu ced residence time offers the potential for reduced NOx formation. The extent to which the ignition timing can be

retarded to reduce NOx emissions varies for each en gine, as ignition timing retard increases exhaust temperature, which may adversely impact valve life and turbocharger performance, and extreme levels of timing retard ma y result in combustion instability and loss of power. Sustained NOx reduction with ch anges in ambient conditions and engine load is best accompanied by installing an el ectronic ignition control system. The achievable NOx reduction of ignition timing retard can be as high as 40 percent.

Air/Fuel (A/F) Adjustment Plus Ignition Timing Reta rd (IR)

The combination of A/F and IR can be used to reduce NOx emissions. The achievable

NOx reduction for the combination of these control techniques is about the same as for A/F alone (10 to 40 percent reduction) but offers s ome flexibility in achieving these reductions. Since the parametric adjustments affec t such operating characteristics as fuel consumption, response to load changes, and oth er emissions especially CO, the combination of A/F and IR offers the potential to r educe NOx while minimizing the impact on other operating parameters.

Prestratified Charge (PSC) Prestratified charge combustion is a retrofit syste m that is limited to 4-stroke carbureted natural gas engines. In this system, controlled amo unts of air are introduced into the intake manifold in a specified sequence and quantit y to create a fuel-rich and fuel-lean zone. This stratification provides both a fuel-rich ignition zone and rapid flame cooling in the fuel-lean zone, resulting in reduced formation of NOx. PSC can achieve about 87 percent NOx reduction.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

19 Nonselective Catalytic Reduction (NSCR) This technique uses the residual hydrocarbons and C O in the rich-burn engine exhaust as a reducing agent for NOx. In an NSCR system, hyd rocarbons and CO are oxidized by O2 and NOx. The excess hydrocarbons, CO, and NO x pass over a catalyst (usually a noble metal such as platinum, rhodium, or palladi um) that oxidizes the excess hydrocarbons and CO to H2O and CO2, while reducing NOx to N2.

NOx reduction efficiencies are usually greater than 90 percent, while CO reduction efficiencies are approximately 90 percent. The NSC R technique is effectively limited to engines with normal exhaust oxygen levels of 4 perc ent or less. This includes 4-stroke rich-burn naturally aspirated engines and some 4-st roke rich-burn turbocharged engines. Engines operating with NSCR require tight air-to-fuel control to maintain high reduction effectiveness without high hydrocarb on emissions. To achieve effective NOx reduction performance, the engine may need to b e run with a richer fuel adjustment than normal. This exhaust excess oxygen level would probably be closer to 1 percent. Lean-burn engines could not be retrofit ted with NSCR control because of the reduced exhaust temperatures.

Selective Catalytic Reduction Selective catalytic reduction is a postcombustion t echnology that has been shown to be effective in reducing NOx in exhaust from lean-burn engines. An SCR system consists of an ammonia storage, feed, and injection system, and a catalyst and catalyst housing. Selective catalytic reduction systems selectively r educe NOx emissions by injecting ammonia (either in the form of liquid anhydrous amm onia or aqueous ammonium hydroxide) into the exhaust gas stream upstream of the catalyst. Nitrogen oxides, NH3, and O2 react on the surface of the catalyst to form N2 and H2O. For the SCR system to operate properly, the exhaust gas must be within a particular temperature range (typically between 450 and 850 0 F). The temperature range is dictated by the catalyst (typically made from noble metals, base me tal oxides such as vanadium and titanium, and zeolite-based material). According to a report published by Manufacturers

of Emission Control Association 3 , “base metal catalysts, typically vanadium and titanium, are used for exhaust gas temperatures bet ween 450 0 F and 800 0 F. For higher temperatures (675 0 F to 1100 0 F), zeolite catalyst may be used. Precious metal S CR catalysts are useful for low temperatures (330 0 F to 550 0 F).” Exhaust gas temperatures greater than the upper limit will pass the NOx and ammonia unreacted through the catalyst. Ammonia emissions, called NH3 slip, are a key consideration when specifying a SCR system.

SCR is most suitable for lean-burn engines operated at constant loads, and can achieve efficiencies as high as 90%. For engines which typi cally operate at variable loads, such as engines on gas transmission pipelines, an SCR sy stem may not function effectively, causing either periods of ammonia slip or insuffici ent ammonia to gain the reductions needed.

3 “Emission Control Technology for Stationary Intern al Combustion Engines”, published by the Manufaturers of Emission Controls Association, July 1997.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

20 Catalytic Oxidation Catalytic oxidation is a postcombustion technology that has been applied, in limited cases, to oxidize CO in engine exhaust, typically f rom lean-burn engines. As previously mentioned, lean-burn technologies may cause increas ed CO emissions. The application of catalytic oxidation has been shown to be effecti ve in reducing CO emissions from lean-burn engines. In a catalytic oxidation system, CO passes over a catalyst, usually a noble metal, which oxidizes the CO to CO2 at effici encies of approximately 70 percent for two-stroke lean burn engines and 90 percent for four-stroke lean burn engines.

X. EMISSION REDUCTION ANALYSIS

As part of the rule development process, District s taff prepared a Preliminary Emission Reduction Analysis that would result from lowering the current NOx and VOC emission limit. The analysis indicates that the NOx emissio ns would be reduced by 75% from the 2014 baseline emission inventory or 7.6 tons per da y. The VOC emissions would be reduced by 92% from the 2014 baseline emission inve ntory or 2.6 tons per day. The CO emissions would be reduced by 75% from the 2014 baseline emission inventory or 10.3 tons per day. The emission reduction analysis will be revised when additional information becomes available. Please refer to App endix B for details of the emission reduction analysis.

XI. COST EFFECTIVENESS ANALYSIS

CH&SC Section 40920.6(a), requires the District to analyze the cost effectiveness of new rules or rule amendments that implement Best Av ailable Retrofit Control Technology (BARCT) or all feasible measure. Distri ct staff prepared a Preliminary Cost Effectiveness Analysis based on extrapolation of co sts information from the 2001 ARB’s Determination of Reasonably Available Control Techn ology and Best Available Retrofit Control Technology for Stationary Spark-Ignited Int ernal Combustion Engines.

The analysis indicated the cost effectiveness range d from about $1,000 to $31,800 per ton of NOx for spark-ignited rich-burn ICEs to upgr ade existing NSCR control system, depending on the engine size and annual operating h ours. For spark-ignited lean-burn ICEs that would need to upgrade existing SCR contro l system, the cost effectiveness ranged from $1,000 to $22,500 per ton of NOx, depen ding on the engine size and annual operating hours. For lean-burn ICEs rated at 200 to 1,500 brake horsepower that might need to install an SCR control system, t he cost effectiveness ranged from $22,500 to $38,400 per ton of NOx, depending on the engine size and annual operating hours. For lean-burn ICEs rated at 50 brake horsep ower the cost effectiveness is $126,000 per ton of NOx reduced 4 . For cyclic loaded field gas rich-burn engines, t he cost effectiveness to upgrade the existing NSCR con trol system ranged from $600 to $17,800 per ton of NOx, depending on the engine siz e and operating hours. The

4 It is important to mention that there are no permi tted lean-burn ICEs rated below 330 brake horsepowe r currently operating in the District.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

21 preliminary cost effectiveness analysis is presente d in Appendix C of the Draft Staff Report.

District staff will revise the preliminary cost eff ectiveness analysis when additional information is received from affected source operat ors, vendors and manufacturers of engine emission control system. District staff enc ourages operators and control equipment vendors to provide cost information that would be useful in refining the draft

rule amendments.

Furthermore, the District will explore potential fu nding opportunities to provide monetary incentives for the purposes of assisting with the c ost of retrofitting non-agricultural engines subject to the proposed amendments to Rule 4702. Funding may be provided for retrofits that are completed prior to applicabl e compliance dates as long as the retrofits provide cost-effective, surplus emission reductions. Any incentives provided by the District would be subject to the requirements a nd potential limitations applicable to the specific funding source.

XII. SOCIOECONOMIC ANALYSIS

California Health and Safety Code (CH&SC) Section 4 0728.5(a) requires the District to perform an assessment of the socioeconomic impacts of the adoption, amendment, or repeal of a rule or regulation that will significan tly affect air quality or emission limitations. The socioeconomic analysis will be pr epared later in the rule development process after the draft amendments to Rule 4702 hav e been refined.

XIII. ENVIRONMENTAL IMPACT ANALYSIS

Pursuant to the California Environmental Quality Ac t (CEQA), District staff will investigate any potential environmental impacts of the draft ru le amendments to Rule 4702 and will recommend appropriate action to the District Govern ing Board later in the rule development process after the draft amendments to R ule 4702 have been refined.

XIV. GLOBAL CLIMATE CHANGE

Global Climate Change (GCC), which is now generally accepted by the scientific community to be caused by Greenhouse Gases (GHGs), is a widely discussed scientific, economic, and political issue in the Un ited States. Briefly stated, GCC is the cumulative change in the average weather of the ear th that may be measured by changes in temperature, precipitation, storms, and wind. GHGs are gases that trap heat in the atmosphere. The scientific and policy communities in the State of California have collectively concluded that a significant and growing scientific body of evidence supports the need for regulating GHG emissions. Wo rldwide, California is estimated toSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

22 be the 15 th largest emitter of carbon dioxide (CARB 2008), and this fact has added to the impetus behind California’s leadership in this area.

California is exercising climate change leadership in two significant efforts: one, the passage and implementation of Assembly Bill 32 (AB3 2), “California Global Warming Solutions Act of 2006”, designed to significantly r educe existing GHG emissions in the State of California; and two, in the analysis of en vironmental impacts of new GHG emissions related to discretionary project approval s under the California Environmental Quality Act (CEQA). This latter effort has been pa rticularly difficult to implement as no state or local agency has provided definitive guida nce on how to address GHG emissions impacts under CEQA.

Recognizing the dearth of regulatory guidance, the San Joaquin Valley Air Pollution Control District’s Governing Board adopted the Clim ate Change Action Plan (CCAP) in August 2008. The CCAP directed the District’s Air Pollution Control Officer to develop guidance documents to assist District staff, valley businesses, land–use agencies, and other permitting agencies in addressing GHG emissio ns as part of the CEQA process.

With the adoption of the District’s policy on Clima te Change and Greenhouse Gases (GHG), each new rule or rule amendment will evaluat e the potential impact on GHG later in the rule development process after the dra ft amendments to Rule 4702 have

been refined.

XV. RULE CONSISTENCY ANALYSIS

Pursuant to CH&SC Section 40272.2, District staff will prepared a rule consistency analysis of Rule 4702 later in the rule development process that compares the elements of proposed rule amendments with the corresponding elements of other District rules, federal regulations and guidelines that apply to th e same source category or type of equipment.

XVI. REFERENCES

1. District Rule 4702 (Internal Combustion Engines – Phase 2). Amended on January 18, 2007.

2. SJVUAPCD Draft Feasibility Study Report for Reci procating Internal Combustion Engines. December 31, 2008.

2. ARB Determination of Reasonably Available Contro l Technology and Best Available Retrofit Control Technology. November 20 01.

3. South Coast Air Quality Management District’s Ru le 111.2 (Emissions from Gaseous- and Liquid- Fueled Engines). Amended on F ebruary 1, 2008.SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

Draft Staff Report: Rule 4702 September 9, 2010

23 4. South Coast Air Quality Management District’s Dr aft Final Staff Report for Proposed Amended District Rule 111.2 (Emissions fro m Gaseous- and LiquidFueled Engines). December 2007.

5. 40 CFR Part 60 Subpart IIII – Standards of Perfo rmance for Stationary Compression Ignition Internal Combustion Engines.

6. 40 CFR Part 60 Subpart JJJJ – Standards of Perfo rmance for Stationary Spark Ignition Internal Combustion Engines.

7. 40 CFR 63 Subpart ZZZZ – National Emission Stand ards for Hazardous Air Pollutants for Reciprocating Internal Combustion En ginesSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICT

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