March 10, 2009

Air Pollution Control Board

800 South Victoria Avenue Ventura, CA 93009

SUBJECT: PUBLIC HEARING REGARDING PROPOSED AMENDED RULE 70,

STORAGE AND TRANSFER OF GASOLINE

RECOMMENDED ACTIONS:

1. Approve and Adopt the proposed statutory findings and the proposed CEQA Notice of Exemption for proposed amended Rule 70, Storage and Transfer of Gasoline (Attachments 1 and 2).

2. Approve and Adopt proposed amendments to Rule 70, Storage and Transfer of Gasoline (Attachment 3).

3. Direct the Clerk of the Board to forward tw o certified minute orders , and an affidavit of publication of the public hearing notice, for all proposed actions to the Air Pollution

Control District.

4. Direct Air Pollution Control Officer or his designee file a CEQA Notices of Exemption pursuant to CEQA Guidelines Sections 15061(b)(3) and 15062 for amended Rule 70.

FISCAL / MANDATES IMPACT:

Mandatory: No

Fiscal Impact: No impact.

STATEMENT OF MATTER FOR BOARD CONSIDERATION:

Background

Rule 70, first adopted on June 25, 1974, regulates the storage and transfer of gasoline at bulk plants, terminals, and vehicle dispensing facilities (service stations). The rule has been amended

several times since its initial a doption to reflect changes in air pollution control technology and/or regulations.Air Pollution Control Board March 10, 2009 Page 2

In December, 2006, EPA released guidance on the re moval of "Stage II gasoline vapor recovery systems" from gasoline dispensing facilities which service motor vehicle fleets with at least a 95% penetration of Onboard Refu eling Vapor Recovery (ORVR) systems. These vehicle fleets

include:

1. Initial fueling of new vehicles at automobile assembly plants. 2. Refueling of rental cars at vehicle rental facilities. 3. Refueling of flexible fuel vehicles at E85 dispensing pumps (85% ethanol fuel). 4. Corporate fleets (which was a category added in November, 2007).

The Air Resources Board followed up on this U.S. EPA guidance in February, 2008, by encouraging, but not requiring, all local air pollu tion control districts to modify their respective gasoline dispensing facility rules to exempt specific ORVR fleets from Phase II vapor recovery requirements. This rule action proposes such an exemption for this District.

There are other proposed revisions, unrelated to the ORVR issue, to various subsections of Rule

70 which are discussed below.

Proposed Revisions

A. Onboard Refueling Vapor Recovery and E85

To implement an exemption from the Phase II va por recovery requirements for vehicle fleets with ORVR systems at the 95% penetration leve l, new Subsection F.8 is proposed . This new subsection exempts motor vehicle fleets where no less than 95 percent of the vehicles fueled are equipped with Onboard Refue ling Vapor Recovery (ORVR) systems from Phase II vapor recovery requirements. Storage containers must be owned by the vehicle fleet operator. The proposal is more general than the EPA sugges tion noted above, allowing other operations to qualify for an exemption. The proposal is consiste nt with rules already in place at the Bay Area AQMD, the San Joaquin Valley APCD, the Monter ey Bay Unified APCD, and the Santa Barbara County APCD. Recordkeeping requirements for the exemption are proposed in new Subsection

G.3.

Staff is creating a special exemption for E85 fuel. CARB has issued an executive order stating that no certified Phase II vapor recovery system exists for E85. In Ventura County, one E85station has been built; staff believes that few additional stations are likely. Therefore, an exemption from Phase II vapor recover for E85 fuelin g systems is proposed in new Subsection F.9.

B. Other Proposed Revisions:

● Add new definitions of "E85 fuel," "Fleet" and "ORVR" to Section J.

● Add new Subsection B.17 to prohibit standi ng gasoline in the spill boxes that surround gasoline delivery connectors on underground storage tanks.Air Pollution Control Board March 10, 2009 Page 3

● Add new Subsection B.18 to require daily inspections of Phase II vapor recovery hardware. This includes nozzles, coaxial hose, retractors and other related equipment. Recordkeeping of this new requireme nt is added in new Subsection G.6.

● Add new Subsection H.11 to require the submittal of final written reverification reports no later than 14 days after the date of the te sts. The District’s Compliance Division has had occasional problems getting final test reports from operators or testing contractors and this requirement is expected to increase compliance.

● Revise the definition of "Major Modificati on" (renumbered Subsection J.16) to clarify that the replacement of a Ph ase II system is a major m odification and, as such, will require a complete round of Phase II testing.

Discussion

The proposed exemption for ORVR will result in no measurable increase or reduction in ROC emissions in Ventura County. As noted in the EPA December, 2006, guidance letter, EPA assumes that, when ORVR penetr ation is above 95 percent, ROC emission reductions from the ORVR systems are equal to the reductions that occur at a typical facility equipped with Phase II vapor recovery. EPA also stat es that no significant additional ROC reduction occurs when the two systems are used together.

Note that the ROC emission reductions expected from other proposed revisions to Rule 70 are not possible to quantify because it is impossible to know how long or to what extent excess emissions occur at gasoline dispensing facilitie s. While District compliance personnel observe over 95 percent of the testing done at gasoline di spensing facilities, pre- testing causes some compliance problems to be corrected befo re District compliance personnel arrive.

Public Participation

Staff held a public workshop on the proposed revisions to Rule 70 on November 11, 2008. There were no attendees. USEPA provided 'no comment' letter. The Air Resources Board requested a minor change to S ubsection C.2.c, which is included in the attached proposed rule. Affiliates of the Western States Petroleum Association (WSPA) commented on two aspects of the proposed rule; these issues have been resolved. The Advisory Committee recommended adoption of the proposed rule unanimously on January 27, 2009.

PROPOSED FINDINGS:

Health and Safety Code Section 40727 directs th at, prior to adopting the proposed revision to Rule 70, your Board adopt findings of necessity, authority, clarity, consistency, nonduplication, and reference, based upon relevant information presented at the hearing. Therefore, if your Board votes to approve the proposed revisions to Rule 70, it is recommended that your Board also adopt the proposed findings set forth in Attachment 1.Air Pollution Control Board March 10, 2009 Page 4

Proposed revisions to Rule 70 have been determined to be exempt from the requirements of the California Environmental Qualit y Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that this change may have a significant effect on the environment. A Notice of Exemption with respect to this CEQA exemption is included as Attachment 2.

This proposal has been reviewed by County Couns el. If you have any questions, please contact

me at 645-1440 or Don Price at 645-1407.

MICHAEL VILLEGAS

Air Pollution Control Officer

Attachments: 1. Proposed Legislative Findings – Rule 70 2. Proposed Notice of CEQA Exemption - Rule 70 3. Proposed Rule 70 (strikeout/underline, 2/9/09) 4. Proposed Rule 70 (clean version, 2/9/09) 5. Final Staff Report (3/2/09) 6. Advisory Committee Voting Record (1/27/09)