# San Joaquin Valley AIR POLLUTION CONTROL DISTRICT

GOVERNINGBOARD
Chris Vierra, Chair Councilmember, City of Ceres Tony Barba, Vice Chair Supervisor, Kings County
David C. Ayers Councilmember, City of Hanford
Judith C. Case Supervisor, Fresno County Ronn Oominici Supervisor, Madera County HenryJay Forman, Ph.0. Appointedby Governor Ann Johnston Mayor. City of Stockton Randy Miller Councilmember, City of Taft
Michael C. Nelson Supervisor, Merced County William O'Brien Supervisor, Stanislaus County Leroy Ornellas Supervisor, San Joaquin County John C. Telles. M.D. Appointed by Governor RaymondA. Watson Supervisor, Kern County J. Steven Worthley Supervisor, Tulare County
Vacant Large City SeyedSadredin Executive Director Air Pollution Control Officer

Northern RegionOffice 4800 Enterprise Way Modesto, CA 95356.8718 (209)557-6400 FAX 12091557-6475

Central RegionOffice 1990 East Gettysburg Avenue Fresno, CA 93726-0244 (559)230-6000 FAX (559)230-6061

Southern RegionOffice 34946 Flyover Court Bakersfield, CA 93308-9725 (661)392-5500 FAX (661) 392-5585 DATE: Decerr~ber 17,2009 TO: SJVUAPCD Governing Board FROM: Seyed Sadredin, Executive DirectorIAPCO Project Coordinator: George Heinen
RE: ADOPT REVISED PROPOSED AMENDMENTS TO RULE 4601 (ARCHITECTURAL COATINGS)

RECOMMENDATION:
1. Adopt revised proposed amendments to Rule 4601. (Architectural Coatings).
2. Authorize the Chair to sign the attached Resolution.

BACKGROUND: The San Joaquin Valley Air Basin has been designated by the United States Environmental ProtectionAgency as nonattainmentfor the federal ozone standard. The District's 2007 Ozone Plan identified architectural coatings as potential sources for reducing emissions of volatile organic compounds (VOCs) which will help the District reach attainment of the federal air quality standards. Inaddition, as a nonattainmentarea for the state air quality standards, the revised proposedamendments would also fulfill the state law to implement Best Available Retrofit Control Technology (BARCT).
The San Joaquin Valley Air District is a public health agency whose mission is to improvethe health and quality of life for all Valley residents through efficient, effective, and entrepreneurial air-quality management strategies. In fulfillment of this mission, District staff is proposingto lower the VOC emission limits in Rule 4601, capitalizing on recent advances in low-VOC coating technologies and formulations. Amending Rule 4601 will satisfy VOC control measure S-SOL-1 (Architectural Coatings) in the District's 2007 Ozone Plan. The revised proposed amendments would establish more stringent emission limits'SJVUAPCD Governing Board ADOPT PROPOSED AMENDMENTS TO RULE4601 (ARCHITECTURAL COATINGS) December 17, 2009

for volatile organic compounds (VOC). This rule projectwould also amend Rule 4601 to implement the errlission control requirements listed in the California Air Resources Board (ARB) Suggested Cor~trol Measure (SCM) for architecturalcoatings, promulgated September 2007. Implementing SCM standards will ensure that Rule 4601 meets Reasonably Available Control Technology (RACT) requirements in accordance with the federal Clean Air Act. The SIP commitment in the District's 2007 Ozone Plan calls for this rule project to reduce 2.0 tons per day (tpd) of VOC, a 21% reduction from the baseline inventory, upon rule implementation in 2012. Revised proposed amendments would reduce VOC emissions by 2.8 tpd (28%) upon rule implementation. This reduction exceeds the commitment in the 2007 Ozone Plan. DISCUSSION: District Rule4601 (ArchitecturalCoatings) is applicable to any personwho supplies, sells, offersfor sale, applies, or solicits the application of any architectural coating, or who manufactures, blends, or repackages any architectural coating for usewithi.nthe District, and any associated solvent cleaning operations. District Rule 4601 sets limits for VOC contents of architecturalcoating products and associated organic solvent cleaning operations. Rule languagespecifiesthe VOC content limit for 43 different coating categories, expressed as grams of VOC per liter of coating product. As a part of the rule-amending process, staff evaluated the possibility of irrlplementing the architectural coating limits currently in place inthe South Coast Air Quality Management District (SCAQMD),which has twelve VOC content limits that are lower than the SCM. Several factors led staff to recommendthe SCM VOC content limits in lieu of the SCAQMD VOC content limits. The cost for emission reductions using the SCAQMD VOC limitswould be an increaseof $2.91 per gallon, more than twice that of the SCM VOC limits. It is also importantto note that the San Joaquin Valley Air Basin (SJVAB) is a NOx limitedozone area, while the South Coast Air Basin is a VOC limited attainment area. Air-quality computer modeling used for the District's 2007 Ozone Plan demonstrated that reductions in VOC emissions are relatively weak in affecting 8-hour ozone levels compared to the same amount of NOx reductions. The SCAQMD, on the other hand, is much moreVOC-limited than the SJVAB due to topography, meteorology; and the chemical compositionof the air pollutants. As stated in the 2007 Air Quality'Management Plan (AQMP) for SCAQMD, the pathwayto lower ozone levels and attainment of the 8-hour ozone standard [for SCAQMD] would be more biased towards loweringVOC emissions.SJVUAPCD Governing Board ADOPT PROPOSED AMENDMENTS TO RULE 4601 (ARCHITECTURAL COATINGS) December 17, 2009

In conclusion, since the SCAQMD VOC content limits would providevery little air quality benefit in the Valley but would result in significant additional cost, District staff has chosen to recommendthe SCM requirements. EPA has submitted written comments supporting the adoptionof the 2007 ARB SCM VOC limits. Summary of ProposedAmendments to Rule 4601 The following are the proposed amendments to Rule 4601, effective on and after January 1,2011: Numerous definitions would be added, deleted, or modified in order to make this rule harmonize with definitions and rule requirements presented in the 2007 ARB SCM. A reporting requirement would be added for any architectural coating that is sold in a containerwith a volume of one liter or less. The exemptionfor architectural coatings would be further defined by adding "coatings that are supplied and offered for sale" to current language, in order to makethis rule consistent with the 2007 ARB SCM. VOC content limits would be amendedto implement the recommended VOC limits ' per the 2007 ARB SCM.
o 15 coating categorieswould be deleted effective December 31, 2010. o 10 coating categories would be added to rule language effective on and after January 1,2011 and January 1,2012. o 19coating categories would remain unchanged. o 10 coating categories would be made more stringent effective on and after January 1,2011 and January 1,2012. Labeling requirements would be updatedto add new labeling standards consistent with new coatings categories per the 2007 ARB SCM. A new section would be added to include reporting requirements per the 2007 ARB SCM. Including a requirenientto submit sales data, as authorized in the California Health and Safety Code. New test methodswould be added to rule languageto account for the new coatings categories. The amendments are revised proposed because minor changeswere made to the original proposal, to add referencesfor test methods and labeling in the definitions section of the rule. Issues and Responses
EPA supports the District's adoption of the 2007 ARB SCM coating categories and correspondingVOC limits over the SCAQMD limits.
ARB and industry, requestedthe 2013 effective date be changed to 2012 to align with other districts adoptingthe SCM. District staff has includedthe requested changes, which would accelerate compliance with the new standard.'SJVUAPCD Governing Board ADOPT PROPOSED AMENDMENTS TO RULE 4601 (ARCHITECTURAL COATINGS) December 17, 2009

ARB has added several new coating categoriesto the 2007 SCMfor architectural coatings that were not in the 2000 SCM. However, in the SCM, four of the new coating categories (basement specialty coatings, reactive penetrating sealers, stone consolidants, and tub and tile refinishing coatings) were assignedVOC content limits that are less stringent than the general VOC content limits in Rule 4601 that would apply upon adoption of the rule amendments. Therefore, industry requested a oneyear exemption from the general coating limits. To avoid imposing unintended and technologically infeasibleVOC limitsfor the four coating categories, District staff would include a special provision in the requirements section of the rule ratherthan an exemption. It is important to note that these coating categories are specialized niche categories with small sales volumes and low emissions, and that this temporary provisionwill not increase emissions. Cost Effectiveness Analysis Pursuantto CH&SC section 40920.6(a), a cost effectiveness analysis is required for rules that implement BARCT. The purpose of the cost effectiveness analysis isto evaluatethe economic reasonableness of the rule or rule amendments. The analysis also serves as a guidelinefor developing the control requirementsof the rule. District staff conducted a cost effectiveness analysis of the revised proposed amendments based on reports from ARB in the SCM as well as the SCAQMD staff report. The overall average costeffectiveness of the revised proposed limits is estimated to be $2,240 perton of VOC reduced. This compares favorably with the cost-effectivenessof similar regulations. Please see Appendix C of the Final Draft Staff Reportfor further details. Socioeconomic Impact Analysis Pursuantto CH&SC 40728.5, "whenever a district intendsto proposethe adoption, amendment, or repeal of a rule or regulationthat will signi.ficalitlyaffect air quality or emissions limitations,that agency shall, to the extent data are available; perform an assessment of the socioeconomic impacts of the adoption, amendment, or repeal of the rule or regulation." As a part of the District's socioeconomic analysis process, District staff convened a Focus Group on March 3,2009. The Focus Group consisted of volunteerswho assisted by gathering and providing informationabout costs expected to be incurredto corr~ply with the rule and hypothetical business responsesto those costs. Operators and other interested partieswere invited to submit their estimate of compliance costs and possible business responsesto aid District staff in estimatingthe regulatory compliance costs and business impacts resulting from compliancewith the rule. This information and supporting data was providedto the District's consultant who identified and analyzedthe socioeconomic impacts of the revised proposed amendments to Rule 4601 on the regional economy. Please see Appendix D of the Final Draft Staff Report for further details.SJVUAPCD GoverningBoard ADOPT PROPOSEDAMENDMENTS TO RULE4601 (ARCHITECTURAL COATINGS) December 17. 2009

Rule Consistency Analysis Pursuantto CH&SC 40272.2, District staff prepared a rule consistency analysis that compares the elements of amendments with the corresponding elements of other District rules, federal regulations, and guidelines that apply to the same source category or type of equipment. District staff found that none of the revised proposed requirements of these rules would conllict with other District rules, or federal rules, regulations, or policiescovering similar stationary sources. The rule consistency analysis is presented in Appendix E of the Final Draft Staff Report. Environmental Impacts Pursuantto the California EnvironmentalQuality Act (CEQA), staff investigatedthe possible environmental irnpacts of the revised proposed amendments to Rule 4601. Based on the lack of evidenceto the contrary, District staff has concluded that the revised proposed amendments to the rules will not have any significant adverse effects on the environment. Staff recommends filing a Notice of Exemption under the provisions of Public Resource Code 15061 (b) (3). Rule Development Process District staff conducted a scoping meeting in November2008, and two public workshops in March and September2009 as well as a Socioeconomic Focus Group meetingto present and discuss proposed amendments to Rule 4601. District staff solicited information of control technologies on the technological feasibility and cost information used in developing the draft amendments. Staff incorporated comments received during the rule development process as appropriate. Revised proposed amendmentsto Rule 4601 and the Draft Staff Reportwere published and made availableto affected sources and interested parties for review and comment prior to a public hearing by the Governing Board. Comments received during the public comment period were evaluated and incorporated into the revised proposed rule language, as appropriate. A summary of the comments received and District responses inAppendix A of the Final Draft Staff Report. FISCAL IMPACT: District staff expects no fiscal impact to result fro111 this.action.

Attachments: Resolution for Revised Proposed Amendments to Rule 4601 (5pages) ProposedAmendments to Rule 4601 (40 pages) Final Draft StaffReport with Appendices for Proposed Amendments to Rule 4601 (84 pages)