ATTACHMENT B



## SOCIOECONOMIC IMPACT ASSESSMEN T

PROPOSED AMENDED RULE 67.11

-

WOOD PRODUCTS COATIN G OPERATIONS

August 20 11

Prepared by

San Diego County Air Pollution Control District

10124 Old Grove Road San Diego, CA 92131SOCIOECONOMIC IMPACT ASSESSMENT

PROPOSED AMENDED RULE 6 7

. 1 1

- WOOD PRODUCTS COATING OPERATIONS

TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY 1

I. INTRODUCTION 2

I I

. NECESSITY OF AMENDING RULE 6 7.11 3

I II

. SUMMARY OF PROPOSED AMENDED R ULE 6 7.11 3

IV

. TYPE OF INDUSTRIES AFFECTED BY AMENDED RULE 67.11 4

V. EMISSION REDUCTION POTENTIAL AND COST

- EFFECTIVENESS OF PROPOSED AMENDED RULE 5

V I

. RANGE OF PROBABLE COSTS TO INDUSTRY INCLUDING SMALL BUSINESS 6

REFERENCESSIA for SDAPCD Rule 67.11 B

- 1 

### EXECUTIVE SUMMARY

This report represents the results of a socioeconomic impact assessment (SIA) of the San Diego County Air Pollution Control District’s (District) proposed amended Rule 6 7.11

– Wood Products Coating Operations

. The proposed amended r ule will help fulfill S tate law requiring the adoption of all feasible control measures and federal law requiring Reasonably Available Control Technology (RACT)

.

The proposed amended rule will lower the volatile organic compound ( VOC ) content limit for

several wood coating cate gories, and surface preparation and cleaning materials. The small usage exemption limit for stationary sources will be reduced from 500 gallons to 20 gallons of coatings per consecutive 12 months

. The new 20 gallon limit is consistent with the permitting exemption threshold in Rule 11

– Exemptions from Rule 10 Permit Requirements

, and will not result in any additional facilities being subject to Rule 67.11. The amended rule also includes new and revised definitions and updated test methods for determining compliance. Additionally,

the District proposes to repeal outdated Rule 67.11.1

– Large Coating Operations for Wood Products, which applies only to facilit ies that emit 25 tons or more of VOC per calendar year. These same large sources are also subject to existing Rule 67.11

, and therefore the repeal will have no impact on existing facilities or on VOC emissions in the County of San Diego.

The rule applie s to 125 permitted facilities in San Diego County involved in wood products coating operations. Of these 125 facilities, about 80 will have to replace their higher VOC content wood coatings with lower VOC content coatings. The other 45 facilities are eit her already complying with the proposed limits or have operations that are exempt from the

standards of the rule. Compliant coatings are widely available in the market place at prices not much different from the products complying with the existing rule

.

The total annual VOC emissions from wood coating operations in San Diego County are approximately 157 tons per year (0.43 tons per day). Lowering the VOC content limit of several wood coatings and reducing the rule applicability limit will result in emiss ion reductions of approximate ly 19 tons of VOC per year, a 12 % reduction.

The proposed amendments are not expected to have a significant socioeconomic impact on affected industries. The SIA also demonstrates that proposed emission limits in the rule are feasible and that compliant materi als are available in the market place. The estimated cost

effectiveness of Rule 67.1 1 amendments will range from $0.51 to $1.78/lb of VOC emissions
reduced, well within the District threshold for rules regulating VOC emis sions that reflect Reasonably Available Control Technology.SIA for SDAPCD Rule 67.11 B

- 2

I. INTRODUCTION

California law requires air pollution control districts (excluding those with populations of less than 500,000 people) to perform a socioeconomic impact assessment (SIA) when adopting, amending, or repealing rules and regulations that will significantly affect air quality and emission

limitations

.

Health and Safety (H&S) Code S ection 40728.5 , subdivision (b)

, specifies the following

elements to be included in the socioeconomi c impact assessment:

1. The type of industries or business, including small business, affected by the rule or regulation.

2. The impact of the rule or regulation on employment and the economy of the region affected by the adoption of the rule or regulati on.

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.

5. The emission reduction potential o f the rule or regulation.

6. The necessity of adopting, amending, or repealing the rule or regulation in order to attain State and federal ambient air quality standards.

Pursuant to H&S Code Section 40728.5(e), the analyses specified in paragraphs (2) an d (4) above are not required

, upon approval by a majority vote of the District Board, if the proposed rule is substantially similar to, or required by, a state or federal law, regulation, or formal guidance document, including federal Control Techniques Gu idelines (CTGs)

T he proposed amendments to Rule 67.11 are required by federal law. Specifically, the District must require Reasonably Available Control Technology (RACT) on all so urces covered by a

federal CTG. The wood furniture CTG was issued 15 years ago (in 1996) and its requirements

ha ve since become outdated and no longer repr esent RACT, according to EPA. In this case, the District must determine RACT by reviewing the existing wood coating r egulations in other air

districts in California. If a mo re stringent requirement in another district would be technically

feasible and cost

- effective for local sources, then that requirement is considered RACT and must

b e implemented by the District. The proposed amendments to Rule 67.11 were developed to

sati sfy this federal RACT requirement. Therefore, the analyses specified in paragraphs (2) and (4) above are not required , upon approval by a majority vote of the District Board

.SIA for SDAPCD Rule 67.11 B

- 3

II. NECESSITY OF AMENDING RULE 6 7.11

San Diego County does not meet the National and State Ambient Air Quality Standards for

ozone and is classified as an ozone nonattainment area

. Consequently, emissions of air pollutants that form ozone, including VOCs, must be reduced

. State and federal laws require the

District to implem ent new rules or amend existing rules to control VOC emissions from stationary sources as control technologies improve or control costs are reduced

.

The e xisting Rule 6 7.11 regulates VOC emissions resulting from the coating of wood products

and associated cleaning operations

. The rule was first adopted in 1989 and last amended in

2002

. Since then, several other air districts in California have amended their corresponding rules to further reduce VOC emissions from wood coating operations

. Proposed a mend ed R ule 67.11

will reflect the current availability of coating and cleaning materials with lower VOC content and

will generally update the rule, where necessary.

The amended rule will also help to fulfill the District’s commitment in the San Diego County Regional Air Quality Strategy to implement all feasible emission control measures as required by

S tate law

, as well as the federal requirement for implementing Reasonably Available Control Technology i n rules regulating sources of VOC emissions

.

III. SU MMARY OF PROPOSED AMENDED RULE 6 7.11

Amended Rule 6 7.11 will:

 Reduce the small usage exemption limit for a stationary source from 500 gallons to 20 gallons or less of coatings per consecutive 12

- month period, provided that the specified records are kept

.

 Exempt wood coating operations that emit 150 pounds or less of VOC per consecutive

12

- month period , excluding emissions from surface preparation, cleanup, and stripping materials, from most sections of the rule, provided that the required records are k ept

.

 Exempt wood coating operations that use no more than 20 gallons of non

- c ompl iant coatings per consecutive 12

- month period from most sections of the rule , provided that

not more than 20 gallons of such non

- compliant coatings are used at the stationary source and the specified records are kept.

 Update definitions for major terms used in the rule.

 Reduce VOC content limits for specified wood coating s applied to new wood products

, including low

- solids coatings

.

 Remove outdated references and the subsec tion specifying VOC content limits for coatings used in large coating o perations

. These separate limits are no longer needed

because the same VOC content limits will apply to all facilities , regardless of their size

.SIA for SDAPCD Rule 67.11 B

- 4

 Reduce the VOC content limit for surface preparation and equipment cleaning materials

t o 25 grams or less of VOC per liter of material

.

 Reduce the total VOC vapor pressure limit for stripping materials to 2 mm Hg or less, at 20°C (68°F)

.

 Clarify and update record keeping requirements for persons conducting operations subject to this rule

.

 Update the test met hods for determining compliance

.

Additionally, the District proposes to repeal outdated Rule 67.11.1

– Large Coating Operations

for Wood Products, which applies only to facilities that emit 25 tons or more of VOC per calendar year. These same large sources are also subject to existing Rule 67.11

, and therefore the repeal will have no impact on existing facilities or on VOC emissions i n the County of San Diego.

IV. TY PE OF INDUSTRIES AFFECTED BY AMENDED RULE 6 7.11

Proposed amended Rule 67.11 will affect owners and operators of companies involved in wood products coating operations. The following table presents the list of industries

, and their North American Industry Classification System ( NAICS ) codes

, that could be impacted by the proposed amended r ule

.

Table 1

. NAICS Classification of Industries

Type of Industries NAICS Code

Wood Window and Door Manufacturing 321911
Other Millwork (including Flooring) 321918
All Other Miscellaneous Wood Product Manufacturing 3 21999
Wood Kitchen Cabinet and Countertop Manufacturing 337110
Upholstered and Non

- upholstered Wood Household Furniture Manufacturing 337121, 337122

Institutional Furniture Manufacturing 337127
Wood Office Furniture Manufacturing 337211
Custom Architectural Woodwork and Millwork Manufacturing 337212

Re

- upholstery and Furniture Repair 811420

There a re approximately 125 permitted facilities in San Diego County involved in wood coating operations and subject to current Rule 67.11. These facilities vary in size from one and two person shops engaged in cabinet making or furniture refinishing to manufacturing fa cilities employing over 100 people. Abou t half of all facilities subject to Rule 67.11 employ less than 10 employees. A pproximately 25% of companies employ over 100 people.SIA for SDAPCD Rule 67.11 B

- 5

Affected b usinesses also vary in the types of products they manufacture

. About 80% of facilities

are involved in eithe r kitchen cabinet or furniture making (including refinishing operations). The

remain ing 20% of facilities are involved in w indow and door manufacturing or other millwork manufacturing. A few businesses manufactur e musical instruments and therefore are ex empt
from the VOC content coating limits in the rule.

Businesses in the wood coating industry also vary greatly in the type of coatings they use . Wood coatings include various stains, sealers, paints, lacquers and specialty coatings which are applied

to numerous types of wood products. Some examples of wood products typically coated include bookcases, desks, entertainment centers, bedroom furniture, spa housings, shutters, kitchen and bathroom cabinets, and custom household and church furniture.

Wood coatings are primarily air

- dried coatings, though some coatings require drying with heated air or lamps. Depending upon the quality of the final wood product, several different types of coating processes are used. While a coating system may be as si mple as a single stain application, the most common system consists of three parts, and typically contains a stain, sealer and topcoat. A few high quality systems may require seven or eight coating steps. Most coatings are applied with high transfer effi ciency equipment such as High Volume

- Low Pressure (HVLP) spray guns, flow coating, hand wiping, rollers or brushes. 1

Coating a pplication equipment such as spray guns, hoses, cups and pots are typically cleaned by soaking, wiping, flushing, or spraying the equipment within an enclosed container with organic solvents (i.e., acetone). For equipment used with water

- based coatings, water is oft en used to clean the equipment.

V. EMISSION REDUCTION POTENTIAL AND COST

- EFFECTIVENESS OF

PROPOSED AMENDED RULE

1. Emission reductions.

The proposed amendments to Rule 67.11 will reduce the VOC content limit of five wood coating categories : fillers , high

- solid s stains, multi

- colored coatings, sealers, and low

- solids coatings.

The amendments will also lower the small usage exemption for a stationary source from 500 gallon s to 20 gallons of coatings or less per consecutive 12

- months , requir ing those currently

exempt facilities to comply with the VOC content standards of the rule. The new 20 gallon limit is consistent with the permitting exemption threshold in Rule 11

– Exemptions from Rule 10 Permit Requirements

, and will not result in any additional facilities being subject to Rule 67.11. In addition, the amendments will require surface preparation and equipment cleaning materials to comply with a VOC content limit of 25 grams per liter , reduced from 200 grams per liter

.

According to the District’s files, the proposed amen dments will impact approximately 80 of the

total 125 permitted facilities subject to the r ule. The other 45 facilities are either already complying with the proposed limits or have operations that are exempt from the standards of the

rule. The total annual VOC emissions from wood coating operations in San Diego County are approximately 157 tons per year (0.4 3 tons per day)

. 2 Lowering the VOC content limit of theSIA for SDAPCD Rule 67.11 B

- 6

above mentioned wood coatings will result in emission reductions of approximately 19 tons of

VOC per year, a 12 % reduction.

No significant emission reductions are expected from lowering the VOC content limit of surface preparation and equipment cleaning materi als from 200 grams per liter to 25 grams per liter . The

ma jority of permitted facilities alread y us e either acetone (an exempt compound) or water for cleaning or surface preparation

. The lower VOC content limit was included in the proposed

amended rule to reflect the availability of low VOC content cleaning mate rials and for consistency with other District rules regulating VOC emissions and with other regions

.

2. Cost

- Effectiveness of the proposed rule.

M any air districts in California, including large districts such as Bay Area and South Coast Air Qu ality Mana gement District (SC AQMD) , have very similar or more stringent wood products coating rules. Consequently , low VOC content wood coatings and cleaning materials are widely available in the marketplace at prices not much different from products with higher VO C content

sold.

The information obtained from local wood coating manufacturer s show that there is no significant difference between the cost of wood coatings that comply with the proposed amended rule and those presently being used. For example, a high V OC content sealer is sold for about $16 per gallon, while a low VOC content product cost s about $17 per gallon.

Some of the 50 permitted f acilities currently using less than 500 gallons of wood coating s per

year , and thus exempt from portions of the c urrent rule

, may need to replace their current spray

guns with High

- Volume Low

- Pressure (HVLP) spray guns to comply with the proposed

amended rule. For this analysis, i t was assumed that 10% of these previously exempt facilities will have to purchase HVLP spray guns at a cost of $500 per facility.

The estimated cost

- effectiveness of Rule 67.11 amendments will range from $0. 5 1/lb of VOC

emissions reduced for facilities only replacing their high VOC content coatings, to $1.78/lb of

VOC emissions reduced f or facilities also having to upgrade to an HVLP spray gun. Th ese value s are significantly lower than the District’s co st

- effectiveness threshold of $6 /lb of VOC reduced for prohibitory rules reflecting RACT.

VI. RANGE OF PROBABLE COSTS TO INDUSTRY INCLUDING SMALL

BUSINESS

Hi storically, for purposes of SIA s , the District has defined a small business as an entity that

meets all of the conditions below.

1. The business is independently owned and operated. (California Government Code,

Section 11342 .610, Small Business definition)

2. The business is not dominant in its field of operation. (Same)SIA for SDAPCD Rule 67.11 B

- 7

3. The business has gross annual receipts not more than $500,000. (SCAQMD, Rule 102)

4. The business employs ten persons or less. (SCAQMD Rule 102)

5. The business has total annual VOC emissions less than 10 tons. (H&S Code, Section 42323, Small Stationary Source)

According to the District’s permit files and information obtained from the California Employment Development Department

, 3 57 of the total 125 permitted facilities subject to the proposed amended rule meet all conditions mentioned above.

As mentioned previously , all wood coatings complying with the VOC content limits in the proposed amended rule are presently available in the marketplace. This is due to other districts in California having adopted similar wood product coating regulations, in particular by the

a djacent SCAQMD. Those facilities that have to replace their high VOC content wood coatings can find compliant coatings at comparable prices.

T he estimated cost

- effectiveness of Rule 67.11 ame ndments will range from $0.51 to $1.78/lb of

VOC emissions re duced

. It is expected that the cost

- effectiveness for small business will fall in the higher end of the range at $1.78/lb of VOC reduced

, because they are more likely to have to upgrade to an HVLP spray gun. Therefore, the proposed amendments are not ex pected to have a significant impact on affected facilities, including small business.SIA for SDAPCD Rule 67.11 B

- 8

References

1. San Diego Air Pollution Control District. Final Staff Report for the SDAPCD Rule 67.11

– Wood Parts & Products Coating Operations, July 1995

.

2. California Air Resources Board, Almanac Emission Projection Data by EIC, San Diego County APCD, for 2008. http://www.arb.ca.gov/app/emsinv

3

. California Employment Development Department, Labor Market Information

. http://www.labormarketinfo.edd.ca.gov