### SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT

Final Staff Report Proposed Amended Rule 463 - Organic Liquid Storage

November 2011

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

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

Planning and Rules Manager Planning, Rule Development & Area Sources Naveen Berry

AUTHOR: DAIRO MOODY - AIR QUALITY SPECIALIST
REVIEWED BY: DAVID ONO - PROGRAM SUPERVISOR JOHN OLVERA - PRINCIPAL DEPUTY DISTRICT COUNSEL MEGAN LORENZ - DEPUTY DISTRICT COUNSEL II CONTRIBUTORS: BARBARA RADLEIN - AIR QUALITY SPECIAL IST GREG HUNTER – AIR QUALITY SPECIALIST

### SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT GOVERNING BOARD

Chairman: DR. WILLIAM A. BURKE Speaker of the Assembly Appointee Vice Chairman: DENNIS YATES Mayor, Chino Cities of San Bernardino County MEMBERS:
MICHAEL D. ANTONOVICH Supervisor, Fifth District County of Los Angeles JOHN J. BENOIT Supervisor, Fourth District County of Riverside MICHAEL A. CACCIOTTI Councilmember, South Pasadena Cities of Los Angeles County/Eastern Region JANE W. CARNEY Senate Rules Appointee JOSIE GONZALES Supervisor, Fifth District County of San Bernardino RONALD O. LOVERIDGE Mayor, Riverside Cities of Riverside County JOSEPH K. LYOU, Ph. D. Governor’s Appointee JUDITH MITCHELL Councilmember, Rolling Hills Estates Cities of Los Angeles County/Western Region SHAWN NELSON Supervisor, Fourth District County of Orange JAN PERRY Councilmember, Ninth District City of Los Angeles MIGUEL A. PULIDO Mayor, Santa Ana Cities of Orange County EXECUTIVE OFFICER:
BARRY R. WALLERSTEIN, D.Env.Final Staff Report

Proposed Amended Rule 463 - i - November 2011 TABLE OF CONTENTS

SECTION PAGE EXECUTIVE SUMMARY .................................

................................................... ..............1 Background ........................................
................................................... .......................................... 2 Introduction ......................................
................................................... ........................................... 2 Regulatory History ................................
................................................... ...................................... 3 Affected Industries ...............................
................................................... ....................................... 3 SUMMARY OF PROPOSED AMENDED RULE 463 .............. .......................................3 Overview ..........................................
................................................... ............................................ 3 Test Methods ......................................
................................................... ........................................ 34 Applicability .....................................
................................................... .......................................... 45 Definitions .......................................
................................................... ............................................. 5 Administrative Changes ............................
................................................... ................................. 5 EMISSION REDUCTIONS ...............................

................................................... .............5 COMPARATIVE ANALYSIS ..............................

................................................... ...........5 SOCIOECONOMIC ASSESSMENT ..........................

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

.............................. 89 DRAFT FINDINGS UNDER CALIFORNIA HEALTH AND SAFETY C ODE SECTION 40727 .....................................

................................................... ....................... 89 COMMENTS AND RESPONSES.............................
................................................... 910 Comments from the Public ..........................
................................................... .................... 910 Comments from U.S. EPA ............................
................................................... ..................... 24Final Staff Report

Proposed Amended Rule 463 - 1 - November 2011 EXECUTIVE SUMMARY South Coast Air Quality Management District (AQMD) Rule 463 – Organic Liquid Storage controls Volatile Organic Compound (VOC) em issions from above-ground stationary tanks used for storage of organic liquid s. The proposed amendment addresses an issue associated with demonstrating co mpliance with true vapor pressure limitations for petroleum products. Histo rically, test methods relied upon the measurement of the so-called Reid vapor pressur e, which includes water vapor, and converting the measurement to true vapor pressu re. This approach works well with products that are in the gasoline range of vap or pressures; however, this approach does not work well with heavier products, such as middle distillates, diesel, and fuel oils, which are commonly known by industry as “non rule product” (i.e., not within the scope of Rule 463 control req uirements), and which when assessed by the conventional test method can result in values that are not representative due to the margin of error at the lo wer vapor pressure values. An inability to determine true vapor pressure for low volatile petroleum products became problematic when permit conditions and other regulations started to require vapor recovery for these products, especially those heavy products that needed to be heated when stored. The determination of true vapo r pressure for these products was addressed by looking at other chemical properti es, including flash point and percent volume loss under defined test conditions ( ASTM Method D-93 and ASTM Method D-86, respectively), and a similar approach was incorporated into Rule 1178 – Further Reductions of VOC Emissions From Sto rage Tanks at Petroleum Facilities as part of the April 7, 2006 amendment. The proposed amendment to Rule 463 aligns the test methods with those contain ed in Rule 1178, and also includes additional administrative changes to furth er clarify rule requirements and improve overall enforceability. SCAQMD sS taff has reviewed the proposed project amendment to Rule 463 – Organic Liquid Storage, pursuant to CEQA Guidelines §15002 (k)(1) , - Three Step Process, the first step of a three-step process for deciding which document to prepare for a project subject to CEQA. The SC AQMD has determined that it can be seen with certainty that there is no possibility th at the proposed project may have any significant effects on the environment and is t herefore, exempt from CEQA pursuant to CEQA Guidelines §15061 (b)(3) - Review for Exemption (General Rule Exemption), paragraph (b)(3) – “common sense” exemp tion . Furthermore, the proposed amendment s are is categorically exempt because they are it is considered
an action s to protect or enhance the environment pursuant to CEQA Guidelines §15308 – Class 8 Categorical Exemption. A Notice of Exemption has been prepared pursuant to CEQA Guidelines §15062 - Notice of Exemption. If approved, the Notice of Ex emption will be filed with the county clerks of Los Angeles, Orange, Riverside and San Bernardino counties.Final Staff Report

Proposed Amended Rule 463 - 2 - November 2011 The addition of the test methods and administrative changes to the rule will not impact emissions of air pollutants or require insta llation of additional equipment; therefore no socio-economic impact is anticipated.

BACKGROUND

Introduction Rule 463 – Organic Liquid Storage was originally ad opted by the South Coast Air Quality Management District (AQMD) Governing Board on August 15, 1977 , to regulate above-ground stationary tanks with the cap acity of 75,000 liters (19,815 gallons) or greater containing organic liquids, and smaller tanks (251 gallons to 19,815 gallons) that store gasoline.
Rule 1178 – Further Reductions of VOC Emissions Fro m Storage Tanks at Petroleum Facilities was adopted December 21, 2001 , and amended April 7, 2006, for the purpose of achieving further VOC emission r eductions from storage tanks located in petroleum facilities with a design capac ity equal to or greater than 75,000 liters (19,815 gallons) that are used to store orga nic liquid with a true vapor pressure greater than 5mm Hg (0.1psi) absolute under actual storage conditions, and shares the same affected tank population as Rule 463. Whi le Rule 1178 applies to large above-ground petroleum storage tanks at petroleum f acilities emitting more than 20 tons of VOC annually, Rule 463 applies to internal or external floating roof tanks larger than 75,000 liters (19,815 gallons) in facil ities that emit less than 20 tons of VOC annually. Rule 463 also applies to tanks betwe en 950 liters (251 gallons) and 75,000 liters (19,815 gallons) used for gasoline st orage. Rule 463 relies on the ASTM D-323 test method for t he determination of vapor pressure of hydrocarbon products stored in above-gr ound tanks because it is readily translated into true vapor pressure through use of U.S. EPA AP-42 nomographs. Typically, the nomographs are representative for li ghter products such as gasoline and kerosene that easily vaporize at ambient temper atures. These products were referred to by industry as “Rule Products” because they were subject to Rule 463, including the required vapor recovery on storage ta nks. These products are well above 3.0 psia Reid vapor pressure (RVP). However, as the products being stored become heavier, with RVP values of 3.0 psia and low er, the nomograph translation became less representative for compliance demonstra tion purposes. Previously, this was not an issue since heavier products like diesel were considered low volatile, or what industry referred to as “Non-Rule Products”, t hereby not requiring vapor recovery when stored. However, this changed as per mitting requirements pursuant to New Source Review started to require vapor recov ery on certain mid-range products and heavier products that were heated in s torage. Accordingly, a different test method is needed to demonstrate compliance wit h the true vapor pressure standards for these heavy petroleum products. Ther e are a couple of alternative test methods that rely on measuring the flash point and boiling point of product that canFinal Staff Report

Proposed Amended Rule 463 - 3 - November 2011 more accurately reflect the true vapor pressure of heavier petroleum products. Heavier products stored at ambient temperature can rely on a test method that evaluates the flash point of the product. The flas h point is the lowest temperature at which the liquid starts to vaporize and become igni table. Using this temperature, the true vapor pressure can be determined by chart or calculation and used to assess rule applicability. Heavy products that are heated during storage and therefore above ambient temperature can rely on the use of th e boiling point or evaporation range of the product in order to determine the repr esentative vapor pressure. These ranges of measured temperatures are adjusted by for mula to a signal temperature used to evaluate the vapor pressure and therefore d etermine compliance with the appropriate rule or permitted standards.
The alternative test methods that utilize chemical properties like boiling point and flash point (ASTM Method D-93 and ASTM Method D-86, respectively) were incorporated in Rule 1178 when it was adopted in De cember 21, 2001 for storage tanks larger than 75,000 liters (19,815 gallons) in facilities emitting more than 40 tons of VOC. Regulatory History Rule 463 was adopted August 1977 and subsequently a mended three times. The 1984 amendment added a criterion for hydrogen sulfi de content in crude oil contained in floating roof tanks; a subsequent amen dment in March 2005 removed this limitation based on a comparative review of si milar regulations within the state and at the federal level. The March 1994 amendment restructured the rule, clarified rule language, streamlined compliance activities by including a self-compliance program, and corrected rule deficiencies identified by the U.S. EPA and California Air Resources Board (CARB).
Affected Industries The rule amendment applies to stationary above-grou nd tanks that store organic liquids, including existing and any future tank far m facilities and refineries.

SUMMARY OF PROPOSED AMENDED RULE 463
Overview Proposed Amended Rule 463 applies to owners and ope rators of above-ground stationary tanks used to store organic liquids that contain volatile organic compounds with a capacity of 75,000 liters (19,815 gallons) or greater and aboveground tanks with a capacity between 950 liters (25 1 gallons) and 75,000 liters (19,815 gallons) used to store gasoline. The propo sed amendment incorporates alternative test methods, clarifies rule applicabil ity, updates rule definitions, and includes other clarifications and administrative ch anges.Final Staff Report

Proposed Amended Rule 463 - 4 - November 2011 Test Methods Proposed Amended Rule 463 addresses a request from industry for alternative test methods for demonstrating compliance with the vapor pressure standards required by the rule and similar permit conditions. The pro posed amended rule incorporates the following alternative test methods and aligns t he rule with Rule 1178 in determining vapor pressure for heavier petroleum pr oducts:

• ASTM Method D-93 – Pensky Martens Closed Cup Method for Determining Flash Point, for determining flash poin t for organic liquids stored at ambient temperatures.

• ASTM Method D-86 – Distillation of Petroleum Produc ts at Atmospheric Pressure, for determining volume percent evaporated for organic liquids stored at above ambient temperatures. Applicability The proposed rule language addresses a request from industry to clarify the applicability of the rule to tanks storing low vapo r pressure organic materials, specifically to identify which provisions of the ru le apply to tanks that store organic liquids with a true vapor pressure of less than 25. 8 mm Hg (0.5 psi) absolute in tanks of more than 75,000 liters (19,815 gallons) c apacity or that store organic liquids with a true vapor pressure of 77.5 mm Hg (1 .5 psi) absolute under actual storage conditions other than a pressure tank or a tank designed and equipped with a vapor control device. Although tanks that contain these lower vapor press ure organic liquids are not subject to the majority of the requirements of Rule 463, they continue to be subject to a minimum level of due diligence, primarily focu sed on validating the low vapor pressure of the tanks in question. In summary, the se tanks are subject to the selfinspection requirements of subdivision (e) for floa ting roof tanks, except only to the first three steps in Attachment B, and are also sub ject to the emissions reporting, and recordkeeping requirements of subdivision s (f). The proposed amended rule renumbers the rule sections to segregate the record keeping and reporting requirements that do not apply to lower vapor press ure tanks and adds an additional statement to Attachment B to clarify the self-inspe ction requirements that do apply to low vapor pressure tanks. Furthermore, to minim ize confusion associated with the self-inspection requirements that apply to floa ting roof tanks, references to “tank(s)” in subdivision (e) have been revised to r efer to “floating roof tank(s)” in the proposed amendment. The following is the addit ional language added to Attachment B:
Attachment B 4. For floating roof tanks containing organic liqui d not subject to the provisions of subdivision (c) of Rule 463, conduct only steps 1 through 3Final Staff Report

Proposed Amended Rule 463 - 5 - November 2011

of this attachment. For all other floating roof ta nks, conduct steps 5 through 7 as applicable.
Definitions Proposed Amended Rule 463 updates the following def initions to improve clarity and consistency and in response to stakeholder inpu t:

• “Ambient Temperature” is added, consistent with the definition of Rule 1178.

• “Certified Person” is defined rather than “Certifie d”, consistent with the proposed amended rule language usage.

• “Drain-Dry Breakout Tank” is defined to support a l imited exemption from the vapor headspace limitation requirements for suc h tanks that are primarily used to receive product from pipelines and to distr ibute product back into pipelines and that are subject to the vapor control requirements of Rule 1149 - Storage Tank and Pipeline Cleaning and Degassing.

• “Vapor-Tight” is updated to reflect current detecti ng methods and limits (from 1,000 to 500 ppm)

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• “Volatile Organic Compound” is updated to refer to Rule 102 – Definitions.

• “Working Day” is defined as Monday through Friday a nd includes holidays that fall on any of the days Monday through Friday. Administrative Changes Proposed Amended Rule 463 clarifies regulatory purp ose, removes outdated language, streamlines reporting and notification re quirements, and updates rule language to address minor administrative changes.

EMISSION REDUCTIONS Proposed Amended Rule 463 is not anticipated to ach ieve additional emission reductions.

COMPARATIVE ANALYSIS As required by Health and Safety Code Section 40727 .2, the purpose of this analysis is to identify and compare any other AQMD or federa l regulations that apply to the same equipment or source type.Final Staff Report

Proposed Amended Rule 463 - 6 - November 2011 Rule 463 shares a similar universe of affected sour ces as Rule 1178. Whereas Rule 463 contains minimum control standards for org anic liquid storage tanks, the purpose of Rule 1178 is to seek further reductions from facilities that exceed 20 tons per year of VOC emissions. In general, Rule 1 178 builds off of Rule 463 by lowering the vapor pressure thresholds for required controls and expanding the control requirements. As such, the requirements of Rule 463 and Rule 1178 are complementary and supportive. The following table has been prepared to compare th e current and proposed rule with Rule 1178:Final Staff Report

Proposed Amended Rule 463 - 7 - November 2011 Category Existing Rule 463 Proposed Amended Rule 463 Current Rule 1178 Purpose Not Stated Purpose and Applicability combined (see below) Further VOC emission reductions from AST at petroleum facilities Applicability Organic Liquid Storage Tanks:

 AST > 19,815 gals

 AST between 251 and 19,815 gallons containing gasoline Reduce VOC emissions from AST containing organic liquid. Same applicability as Existing Rule 463. Organic Liquid Storage Tanks:

 AST > 19,815 gals

 TVP > 0.1psia

 Petroleum facility > 20 tpy VOC Tank Requirements Applies to AST containing

organic liquid in excess of:

 > 39,630 gal with TVP > 0.5 psia

 > 19,815 gal with TVP >1.5 psia TVP Requirements:

 Pressurized or primary and secondary seal controls

 External, Internal FRT

- Vapor recovery system

- Vapor tight and efficiency requirements

- No visible gaps for covers, seals or lids Same as Existing Rule Installation of control roof devices. Requirements for primary and secondary seals, including vapor tightness for the following:

 External FRT

 Domed External FRT

 Internal FRT

 Fixed Roof Tank

Other Performance Requirements  Requires PVV for tanks

from 251 to 19,815 gal

 FR to float on product at all times except during continuous emptying and refilling

 Water refloat specifications for refilling with gasoline

 Prohibition for use of specific tanks for > 11 psia TVP organic liquids

 Seal replacement specifications Same as Existing Rule NA

Identification Requirements Requires clear identification on

tanks signage and changes require District approval Same as Existing Rule Requires operators to have a visible permanent sign with tank. Information and the number designation of the tank. Self-/Owner/ Operator Inspection/ Monitoring Requirements FRT Floating roof tanks inspected

by certified person twice annually, 4 to 8 months apart per Attachment B of Rule 463. Primary and secondary seals inspected by certified person when tank is emptied and degassed. Notify two weeks prior to tank degassing Same as Existing Rule Self-inspection requirements per Attachment A of Rule 1178 by a certified person for the following:

 External FRT

 Domed External FRT

 Fixed Roof Tanks

AST – Above-ground Storage Tank; FRT – Floating Roo f Tank; PVV – Pressure Vaccuum Valve; RVP – Reid Va por Pressure; TVP – True Vapor Pressure.Final Staff Report

Proposed Amended Rule 463 - 8 - November 2011 (table cont.) Category Existing Rule 463 Proposed Amended Rule 463 Current Rule 1178 Inspection/ Maintenance Requirements Any tank not in compliance

with rule has 72 hours from time determined out of compliance to be in compliance Same as Existing Rule Requires operators to make repairs or replace all devices and their gaskets that are defective have visible gaps, non vapor tight and not meeting requirements for filling , refilling and empting and degassing AST Record Keeping and Reporting Requirements All inspections recorded on

compliance inspection form. Submit inspection forms within five working days. If a tank is in violation a written report is due within 120 hours. All records of operator inspection maintained for 3 years Same as existing rule except for added provision for electronic reporting. Records of: Method 21 results, inspection of primary, secondary seals and tank openings. Reports of: semiannual inspections of tanks within five days, violation/correction report within 120 hours, results of emission control performance test. Maintain all records for 5 years Emission Reporting Emission Information Report

using Annual Emission Reporting Program. Owner/Operator provides all upset emission info and maintain records for 2 years. All person subject to rule keep records of liquid, vapor pressure, API gravity Temp, and boiling point Same as Existing Rule NA

Exemptions Oil Production Tanks Cap

19,815 to 42,008 gal. exempt when heated for only shipment and monthly average < 30 gal/day constructed before 1984 and properly maintained Same as existing rule except added limited exemption for drain-dry breakout tank turnovers subject to Rule 1149.  Pressurized storage tank >15 lbs psig w/o emissions

 Domed external FRT installed before 2002

 Baker tanks w/ < 500 ppm vent stream per Method 21

 Tanks permitted with synthetic emission limits less than 20 tpy VOC

 District approved degassed and emptied tanks Test Methods Alternative Test methods used

if approved. AQMD Method 501.1 and EPA Method 25 for VRS efficiency. ASTM Method 323 RVP. VOC leaks Method 21 ASTM Method D-93 TVP>0.1 ASC, ASTM Method D-86 TVP>0.1>ASC Alternative test used if approved, VOC leaks Method 21 ASTM Method D-93 TVP> 0.1=ASC ASTM Method D-86 TVP>0.1 > ASC and ASTM Method D-323 for RVP Self Inspection Procedure Attachment B of Rule 463

Primarily a visual and physical inspection. Same as Existing Rule Attachment A of Rule 1178 Primarily a Method 21 inspection with accompanying visual and physical inspection for presence and condition of gaskets and similar leak prevention installations AST – Above-ground Storage Tank; FRT – Floating Roo f Tank; PVV – Pressure Vaccuum Valve; RVP – Reid Va por Pressure; TVP – True Vapor Pressure. SOCIOECONOMIC ASSESSMENT The proposed amendments contain clarifications of e xisting rule language, true vapor pressure test methods, and provide additional flexibility in existing ruleFinal Staff Report

Proposed Amended Rule 463 - 9 - November 2011 record keeping requirements. The proposed amendmen ts do not affect the scope of rule applicability nor impose additional requiremen ts on facilities subject to the existing rule. Staff expects the proposed reductio n from 1,000 ppm to 500 ppm in the definition of vapor tightness to have a negligi ble impact on emissions and compliance costs associated with tank hatches, clos ures and device maintenance. The vapor tightness definitional change serves to e ase administration of tank rule requirements by harmonizing the criterion for vapor tightness with that of other existing rules. Proposed changes in test methods u sed to comply with existing requirements for tanks with low true vapor pressure permit conditions are expected to modestly reduce compliance costs by providing a clear and uniform way to demonstrate compliance. The proposed addition of th e option to submit compliance records electronically will likely reduce the costs of record keeping for many facilities and not generate additional cost for fac ilities choosing not to submit records electronically. Overall, compared to the ex isting rule, the proposed amendments are expected to result in cost savings.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) SCAQMD sS taff has reviewed the proposed project amendment to Rule 463 – Organic Liquid Storage, pursuant to CEQA Guidelines §15002 (k)(1) , - Three Step Process, the first step of a three-step process for deciding which document to prepare for a project subject to CEQA. The SC AQMD has determined that it can be seen with certainty that there is no possibility th at the proposed project may have any significant effects on the environment and is t herefore, exempt from CEQA pursuant to CEQA Guidelines §15061 (b)(3) - Review for Exemption (General Rule Exemption), paragraph (b)(3) – “common sense” exemp tion . Furthermore, the proposed amendment s areis categorically exempt because they areit is considered an action s to protect or enhance the environment pursuant to CEQA Guidelines §15308 – Class 8 Categorical Exemption. A Notice of Exemption has been prepared pursuant to CEQA Guidelines §15062 - Notice of Exemption. If approved, the Notice of Ex emption will be filed with the county clerks of Los Angeles, Orange, Riverside and San Bernardino counties.

DRAFT FINDINGS UNDER CALIFORNIA HEALTH AND SAFETY C ODE SECTION 40727 Health and Safety Code Section 40727 requires that prior to adopting, amending or repealing rules, the AQMD Governing Board shall mak e findings of necessity, authority, clarity, consistency, non-duplication an d reference, based on relevant information presented at the hearing. The draft fi ndings are as follows: Necessity: The AQMD Governing Board has determined that a ne ed exists to amend Rule 463 – Organic Liquid Storage, to provide alternative test methods that are more representative and appropriate for low vap or pressure organic liquids forFinal Staff Report

Proposed Amended Rule 463 - 10 - November 2011 those permitted facilities that are also subject to more stringent vapor pressure standards and to make administrative changes to fac ilitate compliance with the rule. Authority: The AQMD obtains its authority to adopt, amend or repeal rules and regulations from California Health and Safety Code Sections 39002, 39650, 40000, 40001, 40440, 40441, 40463, 40702, and 40725 throug h 40728, 41508, 41700, and 42300. Clarity: Rule 463 – Organic Liquid Storage as proposed to be amended, is written or displayed so that its meaning can be easily unde rstood by the persons directly affected by it. Consistency: Proposed Amended Rule 463 – Organic Liquid Storag e is in harmony with, and not in conflict with or contradic tory to, existing statutes, court decisions, or federal or state regulations. Non Duplication: Rule 463 – Organic Liquid Storage, as proposed t o be amended, does not impose the same requirements as any existi ng state or federal regulations, and the amendments are necessary and proper to exec ute the powers and duties granted to, and imposed upon, the AQMD. The propos ed amendment consolidates existing state and federal requirements.
Reference: This regulation would implement, interpret or mak e specific the provisions of: Health and Safety Code Sections 40001 (rules to achieve ambient air quality standards), 40440(a) and (c) (rules to carr y out the Air Quality Management Plan and rules which are also cost-effective and ef ficient), 40702 (rules to execute duties necessary to preserve original intent of rul e), 40910 et seq., (California Clean Air Act), and Federal Clean Air Act §111 (New Sourc e Performance Standards).40440(a) (rules to carry out Air Quality Management Plan), 40440(c) (cost effectiveness), 41508, 41700, and Federal Cle an Air Act Section 172(c)(1) (RACT).

COMMENTS AND RESPONSES
Comments from the Public Comments were received on the Proposed Amended Rule (PAR) during the public workshop conducted on August 24, 2011. The followi ng written comments were received during the public comment period and inclu ded the comments received during the workshop.Final Staff Report

Proposed Amended Rule 463 - 11 - November 2011 Comment Letter # 1 – Plains West Coast Terminals

Response to Comment #1-1 Rule 463 subdivision (g) [PAR463 renumbered subdivi sion (h)] currently provides a mechanism for use of alternative test methods, re lying on review by the staffs of the District, the California Air Resources Board, a nd the U.S. EPA. Following such approvals, and contingent on widespread applicabili ty, staff may consider incorporation into rule language in the future. Response to Comment #1-2 See response to Comment #1-1 Response to Comment #1-3 See response to Comment #1-1Final Staff Report

Proposed Amended Rule 463 - 12 - November 2011 Comment Letter # 2 – Valero RefineryFinal Staff Report

Proposed Amended Rule 463 - 13 - November 2011 Response to Comment #2-1 Staff agrees with the intent of this comment and ha s updated rule language to further clarify the applicability of the rule. Specifically, tanks that contain organic liquids th at do not exceed the vapor pressure thresholds identified in subdivision (c), such as d istillate tanks, are subject to the reporting and recordkeeping requirements of (f)(2) and (f)(3), as well as the selfinspection requirements of subdivision (e) and Atta chment B, sections 1 through 3. In short, owners/operators are required to perform a minimum level of due diligence to demonstrate that the organic liquids stored do n ot exceed the vapor pressure thresholds of subdivision (c) in order to validate the presumption that the remaining tank roof requirements of subdivision (c) do not ap ply. Staff also notes that subdivision (e) applies to floating roof tanks but additional rule language in the existing rule refers merely to “tanks” rather than “floating roof tanks

. ”

. As such, staff has updated the proposed rule language to ref er to “floating roof tank” within the context of subdivision (e) to minimize confusio n. Below is a summary of the rule sections that apply to these low vapor pressur e tanks: (e) Self-Inspection of Floating Roof Tanks (f)(2) Emissions Reporting
Attachment B 4. For floating roof tanks containing organic liqui d not subject to the provisions of subdivision (c) of Rule 463, conduct only steps 1 through 3 of this attachment. For all other floating roof ta nks, conduct steps 5 through 7 as applicable. Response to Comment #2-2 Alignment with Rule 1178 is limited to accommodatio n of alternative test methods for facilities subject to both rules and to update vapor tightness detection capability. The purpose of PAR 463 is not to align the vapor pr essure thresholds of the rules because they serve different purposes: Rule 463 def ines minimum control requirements for organic liquid storage tanks while Rule 1178 requires further emission reductions from larger emissions sources. Where facilities are subject to both rules, the alternative test methods provided b y PAR 463 are intended to provide flexibility.Final Staff Report

Proposed Amended Rule 463 - 14 - November 2011 Comment Letter # 3 – Kinder MorganFinal Staff Report

Proposed Amended Rule 463 - 15 - November 2011 Response to Comment # 3-1 See response to Comment # 2-1. Response to Comment # 3-2 See response to Comment # 2-1. Response to Comment # 3-3 Staff has revised the proposed rule to incorporate the intent of your comment by adding a definition for Drain-Dry Break out Tank and providing an exemption for Drain-Dry Break out Tanks from the provisions of (d)(2) as follows: (b)(4) DRAIN-DRY BREAKOUT TANK is an above-ground s torage tank designed such that the floating roof rests on suppo rt legs no higher than one foot along the tank shell with a bottom sloped to a sump or sumps such that no product or sludge remains on the tank bottom and walls after emptying except clingage and is primarily used to r eceive product from pipelines and to distribute product back into pipel ines. (g)(2) The provisions of (d)(2) shall not apply to drain-dry breakout tanks that are subject to the provisions of Rule 1149 - Storage Ta nk And Pipeline Cleaning And Degassing. Response to Comment # 3-4 See response to Comment #3-3.Final Staff Report

Proposed Amended Rule 463 - 16 - November 2011 Comment Letter # 4 – Exxon Mobil

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Proposed Amended Rule 463 - 17 - November 2011 Response to Comment #4-1 Staff has revised the proposed rule to incorporate the intent of your comment by updating the definition of ambient temperature to m atch the Rule 1178 definition. Response to Comment #4-2 Staff has revised the proposed rule to incorporate the intent of your comment by incorporating the term “either of” into the alterna tive test method provision language.Final Staff Report

Proposed Amended Rule 463 - 18 - November 2011 Comment Letter # 5 – Western States Petroleum Assoc iation

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Proposed Amended Rule 463 - 19 - November 2011 5-1 contd

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Proposed Amended Rule 463 - 20 - November 2011 5-7 contd

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Proposed Amended Rule 463 - 21 - November 2011 Response to Comment #5-1 The purpose of incorporating the alternative test m ethods is to provide facilities that are subject to both Rule 463 and Rule 1178 the flex ibility of using the same 5-11

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Proposed Amended Rule 463 - 22 - November 2011 methods to demonstrate compliance for both. Becaus e the additional test methods are alternatives and optional, staff does not belie ve that inclusion of these test methods broaden the applicability to Rule 463, and none should be inferred. While the differences between the originally propos ed language of paragraph (g)(4) and the equivalent language from Rule 1178 was mean t to improve clarity, due to the nature of the change and your comment, staff ha s revised paragraph (g)(4) to more closely match the equivalent language from Rul e 1178. Response to Comment #5-2 See response to Comment #4-1

. Response to Comment #5-3
A review of the District ’s compliance records indicate that the majority of regulatory citations under Rule 1178 that involved vapor tightness on hatches and closure devices were in the 2,000 to 100,000 ppm ra nge, well in excess of both the current Rule 463 threshold of 1,000 ppm and propose d threshold of 500 ppm. During the last two years there has been only one i ncident with a reading between 500 and 1,000 ppm. Typically, tanks inspected unde r Rule 463 normally exhibit only background levels below 500 ppm. Therefore, i t is expected that no cost increase or emission reduction would result from th e proposal. Response to Comment #5-4 Staff appreciates the review effort. Response to Comment #5-5 Staff has revised the draft staff report to incorpo rate the intent of your comment by describing flash point as “the lowest temperature a t which the liquid starts to vaporize and become ignitable.” Response to Comment #5-6 Staff has revised the draft staff report to incorpo rate the intent of your comment by removing the extensive discussion associated with r emoval of outdated requirements. Response to Comment #5-7 Staff has revised the draft staff report to incorpo rate the intent of your comment by updating the sentence in question and incorporating a comparison table in the report. The sentence in question has been updated as follows:

“ The rule amendment applies to stationary above-grou nd tanks that store organic liquids, including existing and any future tank far m facilities and refineries. ”Final Staff Report

Proposed Amended Rule 463 - 23 - November 2011 Response to Comment #5-8 See response to Comment #2-1 Response to Comment #5-9 The provisions of Rule 1178, which appl iesy to larger emission source facilities, supersede s the visible gap requirement as part of subparagrap h (d)(1)(C) of Rule 1178, which requires that instead of meeting the de fined one-eight h inch gap definition of (c)(43) of Rule 1178, instead meet th e vapor tightness definition of paragraph (c)(42) of Rule 1178 by July 1, 2003, whi ch is a less than 500 ppm leak determined by Method 21. Currently Rule 463 relies on a common sense definit ion for “visible gaps” which is intended to provide a minimum protective standard f or smaller emission sources. Staff has also reviewed the language in nine Califo rnia Air Districts for requirements equivalent to Rule 463 and determined that eight Districts similarly rely on similar common sense definitions for visibl e gaps, while the ninth (Kern County) uses a one-sixteenth inch definition. Staf f is not aware of any arbitrary subjective enforcement action taken with respect to this term under Rule 463, and believes that aligning the definition to the vapor tight condition would require additional use of Method 21 sampling for smaller em ission sources not subject to Rule 1178. As such, staff does not recommend incor porating the Rule 1178 definition as part of Rule 463 at this time. Response to Comment #5-10 Staff has revised the proposed rule to incorporate the intent of your comment by removing the requirement to demonstrate 95% control efficiency for vapor recovery when tank emissions are vented to a fuel gas system similar to Rule 1178 (d)(4)(A)(i) ( 5 ) : (c)(3)(C) For purposes of this paragraph, the effic iency of a vapor recovery system shall be determined by making a comparison of contr olled emissions to those emissions which would occur from a fixed cone roof tank holding the same organic liquid without a vapor control or vapor recovery system. The vapor recovery system shall have an efficiency of at least 95 percent by weight, or vent tank emissions to a fuel gas sys tem. Response to Comment #5-11 Staff has revised the proposed rule to incorporate the intent of your comment by referring to the requirement to demonstrate vapor p ressures less than a defined threshold rather than a vapor pressure requirement as follows: (4) Notwithstanding the provisions of paragraph (gh )(3), if a permit condition or District rule requires a demonstration of true v apor pressure of less thanFinal Staff Report

Proposed Amended Rule 463 - 24 - November 2011

5 mm Hg (0.1 psi) absolute, either of the following test methods may be used to show compliance: See also response to Comment #5-1

. Response to Comment #5-12 Staff has revised the proposed rule to incorporate the intent of your comment by inserting the decimal place to correct the value fr om 260 to 26.0. Response to Comment #5-13 Staff has revised the proposed rule to incorporate the intent of your comment by removing the additional detail associated with the Test Method as follows: (6) Vapor tight condition specified in subparagraph s (c)(3)(A) and (c)(3)(B) shall be determined according to U.S. EPA's Referen ce Method 21 subject to the following limitationsusing an appropriate an alyzer calibrated with methane. (A) vapor tight condition shall be determined at a distance of 1 cm. or less from the source; and (B) the soap bubble test shall not be used in lieu of quantitative test methods for vapor tightness determination. Response to Comment #5-14 Staff has revised the proposed rule to incorporate the intent of your comment by defining working day to minimize confusion. Howeve r, staff disagrees that the term “Working Day” was intended to include holidays as a ssociated with the term “business day”; rather, as similar in other federal and District rules (such as Rule 1403 - Asbestos Emissions from Demolition/Renovatio n Activities) where five working days translates to seven calendar days, hol idays are not excluded from the definition.
Comments from U.S. EPA The following comments were received from U.S. EPA on October 25, 2011. Comment #1: As discussed in South Coast's December 11, 2001 sta ff report for SC 1178, ASTM D93 (Flash Point) and D86 (Distillation) do not dir ectly measure vapor pressure, but are used as surrogate test methods as an indicator of vapor pressure. These ASTMs are used to determine applicability in Rule 1178, b ut in Rule 463, it appears they may be used to determine compliance with a 0.1 psi vapor pressure limit in anotherFinal Staff Report

Proposed Amended Rule 463 - 25 - November 2011 rule or permit. As such, South Coast should review whether it is appropriate to state that these surrogate test methods can demonst rate compliance. Response to Comment #1 Staff has reviewed the appropriateness of stating t hat the surrogate test methods can demonstrate compliance and determined that while th e test methods are used to determine applicability, the practical use of the t est method results would be to demonstrate compliance with control requirements th at would otherwise apply should the true vapor pressure threshold be exceede d. Staff’s review of the requested use of the surrogate test methods indicat es that the intended use would be appropriate as stated, and does not foresee any ina ppropriate application of the proposed provision. However, the proposed amendmen t language has been revised to further clarify the use of the test method as fo llows: “Notwithstanding the provisions of paragraph (h)(3) , if a permit condition or District rule requires a demonstration of true vapo r pressure of less than 5 mm Hg (0.1 psi) absolute, either of the following test me thods may be used to show compliance:” Comment #2: Per EPA Region 9's Guidance Document for Correcting Common VOC and Other Rule Deficiencies, the referenced ASTMs should, at a minimum include the date of the version being referenced and preferably also in clude the title of the method. This is because newer versions of ASTM test methods are not automatically submitted to or reviewed by EPA. ASTM D-323 should include a year and ASTM D-93 and ASTM D-86 should include the year and titl e of the methods. Response to Comment #1 The proposed rule has been updated to include the t est method titles and date of the version being referenced. Comment #3: Similarly, the date of the Lawrence Berkeley Nation al Laboratory test method for heavy crude oil should be included. The latest ver sion approved by EPA is dated May 28, 2002. Response to Comment #3 The proposed rule has been updated to include the M ay 28, 2002 latest version date. Comment #4 The reference to nomographs in section (h)(3) shoul d specify where in U.S. EPA AP-42 the applicable nomographs are found. For exa mple, include the edition ofFinal Staff Report

Proposed Amended Rule 463 - 26 - November 2011 U.S. EPA AP-42 and the chapter where the figures ar e located. The latest versions are from AP-42 Fifth Edition, Volume 1, Chapter 7. Response to Comment #4 The proposed rule has been updated to refer to the latest version of the applicable nomographs from AP-42 Fifth Edition, Volume 1, Chap ter 7.