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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

FINAL STAFF REPORT

Revised Proposed Amendments to Rule 4625 (Wastewater Se parators)

December 15, 2011

Prepared by: Ross Badertscher, Air Quality Specialist Chelsea Gonzales, Air Quality Specialist Anna Myers, Senior Air Quality Specialist

Reviewed by: Dolores Gough, Air Quality Engineer Jessi Fierro, Rule Development Supervisor Leonard Scandura, Permits Manager Mike Oldershaw, Compliance Manager Errol Villegas, Strategies and Incentives Manager Samir Sheikh, Director of Strategies and Incentives

I. SUMMARY

The San Joaquin Valley Un ified Air Pollutio n Control District’s (Dis trict) Governing Board (Board) last amended Rule 4625 (Wastewater Separ ators) on December 17 , 1992, as part of

an effort to renumber rules to the current District rule numbering system. The District submitted the 1992 amended rule to the California Air Resources Board (ARB) for forwarding to the Environmental Protection Agency (EPA) as an amendment to the State Implementation Plan (SIP) in 2006.

Upon evaluation of Rule 4625, EPA finalized a limited approval of the rule as an

amendment to the Distric t portion of the SIP (Revisions to the California State Implementation Plan, San Joaquin Valley Un ified Air Pollution Control District 2011, 39777-39782), effective on August 8, 2011. A copy of the Federal Register and the Technical Support Document (EPA’s Analysis of San Joaquin Valley Air Pollution Control District’s Rule 4625, Wastewater Separator s [TSD]. 2010) publication is included as Appendix B of this fi nal staff report.

Pursuant to §179 of the Clean Air Act (CAA), unless the rule has been updated and approved into the SIP within 18 months after the limited disa pproval, one or more sanctions shall be imposed until EPA determines that the State has come in to compliance. The purpose of this rule amending project is to update Rule 4625 to address EPA comments, as identified in the Federal Register to satisfy CAA requirements and end the sanctions

clock.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: Rule 4625 December 15, 2011

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 This rule addresses VOC emissions from a source category that is relatively small. VOC emissions reductions are generally far less impor tant to the Valley’s long-term attainment goals than are NOx emissions reductions. As such, the Valley’s attainment strategies generally emphasize NOx reductions. The Distr ict will continue to seek as much VOC reductions as expeditiously practical, te chnologically feasible, and as economically reasonable as determined by the Governing Board.

II. RULE DEVELOP MENT PROCESS

This rule development process is principal ly focused on ensuring that Rule 4625 meets requirements for Reasonably Available Contro l Technology (RACT). Based on the

District’s evaluation of source s subject to Rule 4625, the District proposes to make a number of relatively minor and adminis trative amendments to the rule.

As part of the rule development process, District staff hosted a public workshop on October 18, 2011. Staff solicited comments from the public, stakehol ders, ARB, and EPA at the workshop and during a two week co mmenting period after the workshop. Comments received during the commenting peri od were evaluated and incorporated into the rule as appropriate.

As part of the District’s new socioeconomic po licy, adopted by the Dis trict Governing Board in October 2011, staff identifie d the Western States Petrol eum Association, Independent Oil Producers Association, and California I ndependent Petroleum Association as key trade organizations and solicited feedback on control co sts and feasibility of rule amendments. At the October 18, 2011 workshop, District sta ff asked for assistance in identifying other stakeholder groups who can prov ide additional cost and sour ce specific data. No additional stakeholder groups have been identified at this time. District staff also solicited

feedback from stakeholders to determine if any new Department of Transportation, Occupational Safety and Health Administration, safety or other r equirements that would

result from amendments. Thus far no addi tional requirements have been identified.

The proposed rule and final draft staff r eport will be published and made available to affected sources and interested parties prior to a public hearing of the District Governing Board to consider the amending the rule. The proposed amendments are scheduled to be presented to the Governing Board for the pub lic hearing to consider adoption of the

amendments to the rule on December 15, 2011.

III. DISCUSSION

EPA analyzed District Rule 4625 as adopted in 1992 and determined that it contains deficiencies that preclude full ap proval of the rule into the SIP. EPA’s comments are based on the need to improve rule clarit y, and enforceability, and to strengthen requirements to implement Reasonably Av ailable Control Technology (RACT).SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: Rule 4625 December 15, 2011

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 The following is a summary of the defici encies as identified by EPA with District responses; refer to Appendix B to revi ew the TSD in its entirety.

Section 2.0 – Applicability

To improve rule clarity, language was added to indicate that the rule applies to air flotation units and only to the separati on of crude oil and water after custody

transfer.

Section 3.0 – Definitions

To improve rule clarity, the followi ng definitions were added to the rule:

APCO: the Air Pollution Control Officer of the San Joaquin Valley Unified Air Pollution Control District, or any pers on authorized to act on behalf of the APCO.

ARB: California Air Resources Board as established by the California Health and Safety Code Section 39510, or any per son authorized to act on its behalf.

Custody Transfer: the physical and cont ractual ownership transfer of produced fluids from an oil prod ucer to another entity.

District: San Joaquin Valley Unifi ed Air Pollution Control District.

EPA: United States Environmental Protection Agency.

Operator: includes but is not limited to any person who owns, leases, supervises, or operates a facility and/or equipment.

Volatile Organic Compound (VOC): as defined in Rule 1020 (Definitions).

Section – 4.0 Exemptions

EPA Comment: The exemption for air flot ation units precludes regulation of potentially significant VOC sources (Section 4.2). Even though these sources are currently regulated via District permit conditions, t he District should subject them to SIP requirements as part of Rule 4625 or demonstr ate why that is not necessary. There is no specific allowance in the CTG or other guidance documents for exempting air

flotation units from r egulation and no other California air district rules include such an exemption under their sim ilar rules (TSD, 2010).

District Response: Section 2.0 of Rule 462 5 states that “The requ irements of this rule are not intended to apply to the separation of crude oil and water prior to custody transfer.” With the limited scope of applicab ility for this rule, the District does not believe this exemption precludes a significant source of VOC emissions. To improve clarity, the definitio n of “custody transfer” was added to Section 2.0. There are airSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 flotation units within the District; however, the majority of those units are used to separate crude oil and water prior to cu stody transfer and are subject to the requirements of District Rules 4623 and 4455. District staff identified two air floatation units at refineries. These operators were contacted and confirmed that these units already meet the requirements of the rule. District staf f proposes removing exemption

4.2.

EPA Comment: Exemption 4.3 states: “For existing facilities, if an incineration device is added or modified for the sole purpose of complying with the requirements of this rule, such a device shall be exempt from the Best Available C ontrol Technology and the Offset requirements of Rule 2201 (New and Modified Stationary Source Review Rule).” This exemption should be removed from Rule 4625. An y exemptions to new source review (NSR) requirements should be evaluated in context of the District’s NSR program and incorporated within that program only if appropr iate. Such exemptions should not be in source-specific prohibitory rules like Rule 4625 (TSD, 2010).

District Response: Based on the District’s interpretation of Rule 2201, the current exemption from BACT and offsets as allo wed under Rule 4625 Section 4.3 would already be covered under the existing Rule 2201 Section 4.2.3 language. Therefore, to address EPA concerns, remove duplicative languag e, and simplify the rule, District staff proposes removing the exemption fr om Section 4.3 of Rule 4625.

EPA Comment: The District should delete or justif y exemption 4.1 for wastewater separators exceeding a set value for a sump surface area to the rate of oil vapor loss ratio (TSD, 2010).

District Response: District staff was unable to identify any existing units that use this exemption, and based on historical data, no fa cilities are expected to in the foreseeable future. District staff proposes to re move exemption 4.1 from the rule.

Section 5.0 – Requirements

EPA Comment: Although Rule 4625 includes simila r requirements to the 1977 Control Technique Guideline (CTG), the District has not adequatel y demonstrated that Rule 4625 currently implements Reasonably Avail able Control Technology (RACT) because RACT can change over time as control te chnology improves and/or becomes more available. More stringent requirements exis t in the New Source Performance Stantard (NSPS), National Emission Standards for Hazardous Air Pollutant (NESHAP), Bay Area Air Quality Management District ( BAAQMD), and South Coast Air Quality Management District (SCAQMD). These regulat ions have requirements for stricter VOC controls, additional design requirements for controlling fugitive emissions or breathing losses, and additional design requi rements for inspection and maintenance (TSD, 2010). District Response: District staff reviewed the re ferenced rules and regulations (SCAQMD Rule 1176, BAAQMD Rule 8- 8, NSPS Subpart QQ Q - Standards ofSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 Performance for VOC Emissions From Petr oleum Refinery Wastewater Systems, NESHAP 40 CFR Part 63 Subpart G - National Emission Standards for Organic

Hazardous Air Pollutants Fr om the Synthetic Organic Chemical Manufacturing Industry for Process Vents, Storage Ve ssels, Transfer Operations, and Wastewater) to identify if any deficiencies existed that would prevent RACT demonstration.

BAAQMD Rule 8-8 Section 302.4 was identified as having additional design requirements for controlling fugitive emissi ons or breathing losses. However, this section refers to high volume waste water separators. The District does not have any high volume separators; theref ore, Section 302.4 is not applicable to District Rule 4625. It is more appropriate to re fer to the lower flow secti on of BAAQMD Rule 8-8 Section 301 language. The design requi rements of this section are less stringent than Rule 4625 because BAAQMD Rule 8-8 section 301 allows a 0.32 cm gap for solid cover while Rule 4625 does not allow a gap.

Rule 4625 requires 90% control efficiency for vapor control systems while SCAQMD Rule 1176 requires 95% control efficiency fo r vapor control. Staff reviewed permit conditions for units subject to Rule 4625, spoke with each affected facility, and confirmed that all units that comply with t he rule by venting to vapor control systems are already achieving 95% control efficiency. District staff requested that stakeholders provide cost estimates for increasing the cont rol efficiency from 90% to 95% or provide justification why the 95% level would not be achievable. Since all sources using the compliance option are confirmed as already achieving 95% control efficiency, District staff proposes increasing control efficiency to 95%, as presented in section 5.1.3 of the proposed amendments to Rule 4625.

NESHAP 40CFR Part 63 Subpart G does not c ontain requirements for vapor control efficiency and allows gaps in both the prim ary and secondary seals, and is therefore less stringent than Rule 4625. NSPS Subpart QQQ requires compliance by the use of a fixed roof cover, or venting to vapor cont rol system with a control efficiency of 95%. By increasing Rule 4625 vapor control effici ency requirements to 95% it will be at least as stringent as NSPS Subpart QQQ.

EPA Comment: The RACT Demonstration mentions t hat the requirements in District Rule 4455 apply to oil-water separators. The District should include those leak requirements directly in Rule 4625 or by reference to improve enforceability, or

demonstrate that this is not appropriate (TSD, 2010).

District Response : Refinery wastewater separator ope rations are also subject to leak standards specified in Rule 4455. To mainta in rule clarity and not be duplicative, District staff proposes to not add l eak requirements in to Rule 4625.

EPA Comment: To ensure ongoing compliance and strengthen enforceability, the District should add requirements for inspections of covers, access hatches and other openings and emissions control equipment, al ong with recordkeepi ng requirements forSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 inspections and testing, or demonstrate t hat it’s not appropriate (TSD, 2010).

District Response: District staff reviewed permit condit ions for units currently subject to Rule 4625. Although Rule 4625 does not have specific requirements for recordkeeping or inspection, existing permi ts require inspection and recordkeeping pursuant to Rules 2520, 4451, 4452, 4455, and 4623. To address EPA concerns and enhance the enforceability of Rule 4625 require ments, the District staff proposes to include provisions for inspection (Secti on 5.5) and recordkeeping (Section 6.2).

Staff revised the proposed langua ge to clarify that this new recordkeeping requirement pertains to all operators subject to inspec tion requirements (section 5.5) as was the original intent of the proposed amendment.

Section 6.0 – Administrative Requirements

EPA Comment: To improve enforceability, the Distric t should revise Section 6.0 Test Methods to remove inappropriate or outdat ed test methods. We also recommend including EPA Test Method 21 (measurement of leaks) as referenced in District Rule 4455 (TSD, 2010).

District Response: Rule 4625 requires that efficien cy of VOC control devices be determined by EPA Test Method 25, which is consistent with other districts rules (SCAQMD Rule 1176, BAAQMD Rule 8-8). The rule doesn’t have requirements for leaks. As discussed earlier, some component s are subject to Rule 4455, which already contains Method 21 requirements. As discu ssed earlier, to not be duplicative, District staff proposes to not add new test methods into Rule 4625, because they are addressed by requirements pursuant to Rule 4455.

District staff also reviewed test methods presented in Section 6.2 and determined that the test method ARB Method 432 is not applicab le to wastewater separators. District staff therefore propose to remove this test method from the rule.

Section 7.0 – Compliance Schedule (removed)

EPA Comment: In addition to the deficiencies that are required to be addressed, EPA

also recommended the deletion of Section 7.0 Compliance Schedule since it is no longer applicable as an improvem ent to the rule, but this ac tion is not required (TSD, 2010).

District Response: To improve rule clarity, Distric t staff proposes removing section 7

from the rule.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 IV. GLOBAL CLIMATE CHANGE AND GREENHOUSE GASES

The California Global Warming Solutions Ac t of 2006 (AB 32) created a comprehensive, multi-year program to reduc e greenhouse gas (GHG) emissions in California, with the overall goal of restoring emissi ons to 1990 levels by the year 2020. In the coming years, the Air Resources Board (ARB) and the Legi slature will be developing policies and programs to implement AB 32. The District believes that the evidence and the rationale that climate change is occurring is compelling and convincing. In addition to the long-term consequences of climate change, the District is concerned with the potential ramifications

of more moderate but imminent changes in weather patterns. The Valley depends heavily on agriculture for its economy and has developed agr icultural practices based on the last several decades of weather patterns. Unant icipated and large fluctuations in these patterns could have a devastating effect on the Valley’s economy.

While there are many win-win strategies that can reduc e both GHG and criteria/toxic pollutant emissions, when faced with situations that involve tradeoffs between the two,

District staff believes that the more immediate public health concerns that may arise from an increase in criteria or toxic pollutant emissions should take precedence. The San Joaquin Valley Air Pollution Control District’s Governi ng Board adopted the Climate Change Action Plan (CCAP) in August 2008. For California Environmental Quality Act (CEQA) requirements, one of t he goals of the CCAP is to establish District processes for assessing the significance of greenhouse gas im pacts. The District has developed a policy and guidance for addressing greenhouse gases under CEQA.

V. HEALTH BENEFITS

This rule contributes to the Valley’s progr ess towards federal health-based air quality standards (National Ambient Ai r Quality Standards, or NAAQS) . Progressing the Valley towards attainment of the NAAQS helps redu ce the Valley’s air pollution-related health impacts and health-related costs. The District periodically compiles attainment plans to quantify the amount of emissions reductions needed and identify the individual control

measures that will achieve these reductions. The control strategy as a whole has important public health benefit s and health costs savings.

However, for a number of reasons, it can be difficult or even misl eading to attempt to subdivide this total plan benefit on a rule-b y-rule basis. For example, photochemical reactions in the Valley’s atmosphere combi ne precursor emissions to generate ozone and particulate matter in the atmosphere, so it is not always appropriate to attribute the health and cost benefits to just one pr ecursor. Also, considerin g the extensive emissions reductions that have already bee n achieved in the Valley ov er the past several years, some emissions sources may appear relatively small and inconse quential from a health perspective. In reality, all attainment plan rule commitments are important to the District’s overall strategy for reducing ambient air pollu tant concentrations and the associated health impacts and costs.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 VI. ANALYSES

A. Emission Reduction Analysis

The revised proposed rule am endments are intended to address the limited approval from EPA concerning RACT. District staff review ed all affected facility’s permit data and determined units are already in compliance with the revised proposed rule. Therefore, no emission reductions are expected from this rule making project.

B. Cost Effectiveness Analysis

Pursuant to California Health & Safety Code Section 40920.6(a), the District is required to analyze the cost effe ctiveness of new rules or rule amendments that implement Best

Available Retrofit Control Te chnology (BARCT) or planning re quirements to incorporate all feasible measures. The proposed amendments to this rule would only add federal RACT requirements but not BARCT or all feasible me asures, and are therefore not subject to the cost effectiveness analysis m andate. Given that operators ar e generally complying with the new limits currently and there are no significant emission re ductions or compliance costs expected from these ru le changes, a cost effect iveness analysis has not been performed.

C. Socioeconomic Analysis

Pursuant to CH&SC §40728.5, “whenever a dist rict intends to propose the adoption, amendment, or repeal of a rule or regulation that will significantly affect air quality or emissions limitations, that agency shall, to the extent data is available, perform an assessment of the socioeconomic impacts of the adoption, amendmen t, or repeal of the rule or regulation.”

The wastewater separator sour ce category is applicable to any operator of a device that separates oil and water after custody transfe r within the Valley. This rule-amending project, would primarily be maki ng administrative changes to the rule such as the addition of inspection and recordkeeping. Affected sources could be impacted by increasing the required the control efficiency of vapor c ontrol systems from 90% to 95%. However,

District staff has determined t hat all sources subject to Rule 4625 that utilize vapor recovery as the sole means of complying with the rule already achieve 95% control efficiency.

This rule-amending project is expected to have minimal or no costs associated with it; as

there would be no costs associated with this rule-amending project, there will be no socioeconomic impacts.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 D. Environmental Impact Analysis

Pursuant to Guidelines for Implementation of the California Environmental Quality Act (CEQA) §15061, District staff investigated the possible environmental impacts of the proposed amendments to Rule 4625. Based on the lack of evidence to the contrary, District staff has concluded that the pr oposed amendments to this rule will not have any significant

adverse effects on the environmen t. Staff recommends filing a Notice of Exemption under the provisions of Public Re source Code 15061(b)(3).

E. Rule Consis tency Analysis

Pursuant to §40727.2 of the CH&SC, prior to adopting, amending, or repealing a rule or regulation, the District is requi red to perform a written analysis that identifies and compares the air pollution control element s of the rule or regulation with corresponding elements of existing or proposed District and United States Environment al Protection Agency (EPA) rules, regulations, and guidelines that apply to the same sour ce category. The elements analyzed are emission standards , monitoring and testing, and recordkeeping and reporting requirements.

District Rules Facilities subject to District Rule 4625 coul d be subject to other Dis trict rules including:

 Rule 2201 New and Modified Stationary Source Review

 Rule 4001 New Source Performance Standards

 Rule 4002 National Emissions St andards for Hazardous Air Pollutants

 Rule 4101 Visible Emissions

 Rule 4102 Nuisance

 Rule 4455 Components at Petroleum Refineries, Gas Liquids Processing Facilities, and Chemical Plants

 Rule 4623 Storage of Organic Liquid

The above-listed rules are not in conflict wit h, nor are they inc onsistent with, the requirements of Revised Proposed Rule 4625.

Federal EPA Rules and Regulations

EPA evaluated District Rule 4625 and i dentified NSPS Subpart QQQ, and NESHAP 40CFR Part 63 Subpart G as t he federal regulations applic able to Rule 4625. As discussed Section III-B, District staff examin ed both regulations and determined that with the addition of recordkeeping and inspection s requirements, Rule 4625 is at least as stringent. In addition, District staff analyzed the require ments of Control Tec hnique Guideline 450/2- 77-025 Control of Refinery Vacuum Produci ng Systems, Wastewater Separators and

Process Unit Turnarounds and determined t hat it contained no specific control requirements for wastewater separation.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4625 Conclusion Based on the above analysis, District staff co ncludes that proposed amendments to Rule

4625 are consistent with other Distr ict rules and is not in conflict with these rules. Further, the revised proposed rule is consistent with EPA rules, regulations, and guidelines that apply to the same source category.

F. Reasonably Available Control Technology Analysis

CAA §182(b)(2) states that ozone attainment plans shall assure that RACT for VOC is applied at certain sources. A RACT analysis requires an examinati on of a rule against Federal rules, regulations, and technology guide lines as well as comparing it against rules

from other air districts in California. On July 7, 2011, EPA published in the Federal Register an analysis of District Rule 4625. As documented in the Federal Register, EPA

determined that Rule 4625 satisfies RACT with a few exceptions. The purpose of this ruleamending project is to address the RACT de ficiencies as identified by EPA and as discussed in this Final Staff Report. As su ch, with the adoption of the rule amendments, this rule will satisfy, or go beyond, RACT requirements.

VII. REFERENCES

South Coast Air Quality Management Distric t [SCAQMD]. (Amend ed September 13, 1996). Rule 1176 VOC Emissions from Wastewater Systems . Retrieved from http://www.aqmd.gov/rul es/reg/reg11/r1176.pdf

Bay Area Air Quality Management Distr ict [BAAQMD]. (Amended September 15, 2004). Regulation 8 Organic Compounds Rule 8 Wastewater Collections and Separation Systems . Retrieved from http://www.baaqmd.gov/~/media/Files/Pl anning%20and%20Research/Rules%20an d%20Regs/reg%2008/rg0808.ashx?la=en

Environmental Protection Agency [EPA ]. (October 2010). Technical Support

Document. EPA’s Analysis of San Joaquin Valley Air Pollution Control District’s Rule 4625, Wastewater Separators

Revisions to the California State Implement ation Plan, San Joaquin Valley Unified Air Pollution Control District, 76 Fed. Reg. 130, pp 39777-39782. (2011, July 7). (to be codified at 44 CFR Part 64)