1 Final Staff Report with Appendices for Revised Proposed Amendments to Rule 468 2 SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

FINAL STAFF REPORT

Revised Proposed Amendments to Rule 4682 (Polystyrene, Polyethylene, and Polypropylene Produ cts Manufacturing)

December 15, 2011

Prepared by: Chelsea Gonzales, Air Quality Speciali st Anna Myers, Senior Air Quality Specialist

Reviewed by: Dustin Brown, Senior Air Quality Engin eer Kathi Crump, Senior Air Quality Inspector Jessi Fierro, Rule Development Supervisor

Errol Villegas, Strategies and Incentives Manager Samir Sheikh, Director of Strategies and Incentiv es

I. SUMMARY

The San Joaquin Valley Unified Air Pollution Contro l District’s (District) Governing Board (Board) last amended Rule 4682 (Polystyrene, Polyet hylene, and Polypropylene Products Manufacturing) on September 20, 2007, after the Ozo ne Rate of Progress Plan included this rule amendment as a feasible measure, as sugge sted by the Environmental Protection Agency (EPA). The Rule 4682 amendment w as designed to reduce emissions of volatile organic compounds (VOC), tric hlorofluoromethane (CFC-11), and dichlorofluoromethane from manufacturing polymeric foam and foam products by specifying VOC emission limits and emission control devices. The District submitted the

2007 amended rule to the California Air Resources B oard (ARB) for forwarding to the EPA as an amendment to the State Implementation Pla n (SIP) in 2008.

Upon evaluation of Rule 4682, EPA proposed a limite d approval and limited disapproval of the rule as an amendment to the District portion of the SIP (Revisions to the California State Implementation Plan, San Joaquin V alley Unified Air Pollution Control District, 2011, 41745-41747). A copy of the Federa l Register and the Technical Support Document (EPA’s Analysis of San Joaquin Valley Air Pollution Control District’s Rule 4682, Polystyrene, Polyethylene, and Polypropylene Products Manufacturing [TSD], 2011) publication is included as Appendix C of this final 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 li mited disapproval, one or more sanctions shall be imposed until EPA determines tha t the State has come into compliance.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

2 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 The purpose of this project is to update Rule 4682 to address EPA comments, satisfy CAA requirements, and end the sanctions clock.

This rule addresses VOC emissions from a source cat egory that is relatively small. VOC emissions reductions are generally far less imp ortant 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 District will continue to seek as much VOC reductions as expeditiously practical, tec hnologically feasible, and as economically reasonable as determined by the Govern ing Board.

II. RULE DEVELOPMENT PROCESS

This rule development process is principally focuse d on ensuring that Rule 4682 meets requirements for Reasonably Available Control Techn ology (RACT). The District has conducted a thorough analysis and is proposing amen dments that are expected to result in full EPA approval of Rule 4682. The Distr ict proposes to make some administrative changes to the rule and to bifurcate the VOC limits of Section 5.2.1. Based on the District’s evaluation of sources subje ct to Rule 4682, this rule amendment is not expected to impact Valley facilities, given their current methods of compliance.

As part of the rule development process, District s taff hosted a public workshop on November 17, 2011. Staff solicited comments from t he public, stakeholders, ARB, and EPA at the workshop and during a 12 day commenting period after the workshop. Comments received during this period were evaluated and incorporated into the rule as appropriate.

Per the District’s new socioeconomic policy, adopte d by the District Governing Board in October 2011, staff solicited feedback from stakeho lders at the November 17 th

workshop on trade organizations effected by the rul e amendment. The Expandable Polystyrene (EPS) Air Quality Coalition has been id entified as an effected trade organization as a result of this effort.

The revised proposed rule and final draft staff rep ort will be published and made available to affected sources and interested partie s prior to a public hearing of the Board to consider adoption of the proposed rule ame ndments. Proposed amendments are scheduled to be presented to the Board during t he public hearing on December 15,

2011.

III. BACKGROUND

The two major categories of processes regulated in Rule 4682 are extrusion foam production and expansion foam production. Each pro cess employs a blowing agent toSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

3 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 create spaces in the plastic structure and to produ ce a strong, but lightweight material with good thermal insolating properties. The key d ifference between the two processes is that the expansion foam production facilities cr eate most of their products in batches and are able to determine daily emissions, whereas the extrusion facilities create all final products through a continuous process where d aily emissions are very difficult to determine. The following sections will elaborate o n extrusion, expandable polystyrene (EPS) molding, and the control technologies availab le to offset VOC emissions from these production processes.

A. Extrusion

Extrusion is a multi-day process that begins with p lastic beads that typically contain little or no VOC content. A VOC blowing agent is added to the plastic beads in the manufacturing process to create the final product. The extrusion process is detailed as

follows:

1. The plastic beads, which typically contain littl e or no VOC content, are delivered in bulk and pneumatically transferred to storage si los until needed.

2. The beads are moved from the storage silos and h eated with a VOC-containing blowing agent, under pressure in an auger.

3. As the materials mix, the blowing agent expands and forms bubbles in the plastic which is then extruded through a forming die to for m a continuous foam sheet of

a desired thickness.

4. The sheet of foam is cooled, cut to the needed w idth, and moved to a storage area for aging for 3-7 days because the cell struct ures within the foam need to stabilize for manufacturing purposes.

5. After aging, the foam sheets are moved to the th ermoforming machines. These machines use a combination of heat and pressure to produce a variety of products.

6. The completed products are packaged and sent to storage areas to continue the off-gassing of blowing agents and to await shipping for a minimum of 4 days.

7. Excess material that is trimmed off during manuf acturing is recovered and recycled either on-site or off-site at the bead man ufacturing facility.

Many aspects of the manufacturing operation are var iable. This includes:

• Property fluctuations of the liquids and gases use d depending on the prevailing temperature and humidity in the manufacturing plantSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

4 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 • Property variations between the colored dyes utili zed

• The variety of products and product sizes manufact ured, requiring different levels of blowing agent

• Inconsistent amounts of recycled material affectin g the changeability in the amount of virgin material needed

Since the complete extrusion process is extensive, VOC emissions come from many phases, including:

• Extrusion and sheet forming processes

• Aging of the rolls

• Thermoforming

• Finished goods storage

• Continual VOC release from the residual blowing ag ent contained in the air pockets

The variability of process times combined with mult iple emissions sources contributes to the complexity of determining emissions.

B. Expandable Polystyrene Molding

In contrast to extrusion, the EPS molding process u ses raw beads that already contain the needed blowing agent. In certain cases where t he EPS facilities utilize continuous expanders, the complete production process can exte nd beyond 24 hours. The EPS molding process is detailed as follows:

1. Prior to molding, the beads are pre-expanded usi ng heat to slightly expand the blowing agent and puff the beads.

2. Beads are cooled and stored in emission-controll ed containers for intermediate aging and stabilization.

3. Products are molded:

a. The mold is filled with puffed beads b. The beads are heated to complete their expansion c. The molded product is released d. Sometimes, depending on the product, a vacuum is used to better fill the

mold

4. Finished products may require trimming to reduce flashing or seam material that escapes at mold joints or pour points. Any waste m aterials are collected for recycling.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

5 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 5. Finished materials are packaged and moved to sto rage until shipping.

There are three types of EPS molding encompassed wi thin the above process:

• Block molders produce large blocks of foam which are cut into sh eets such as building insulation, or other desired shapes after molding. There are currently no block molders in the Valley.

• Shape molders make custom foam shapes such as grape shipping box es or packing inserts to protect electronic equipment dur ing shipment. Three of the four EPS facilities subject to Rule 4682 are shape molders.

• Cup molders make cups, bowls, and other similar foam container s. There is currently only one cup molder in the Valley.

In all three types of molding, the two primary phas es that allow for emissions losses are during pre-expansion and molding steps; in both ste ps, steam is used to vaporize the blowing agent and puff the bead. However, methods for capturing these emissions differ based on the type of molding facility.

Cup molding operators have methods for capturing em issions from the pre-expansion step, but to date they have not been able to find a way to capture the molding emissions. Cup molders are unique in that there is no vacuum step in the cup molding process. Facilities do not have the option of tyin g into the vacuum line to collect emissions directly off the machine. Using individu al hoods to enclose the manufacturing operation is not a feasible option because they wou ld interfere with the air flow required for product handling, which is critical to product efficiency. It is not possible to capture the cup molding emissions unless the facility were to enclose the entire manufacturing operation using a permanent total enclosure (PTE), which is a costly alternative, and may also interfere with the air required for produc t handling.

C. Control Technologies

There are three control systems available for facil itating emissions reductions for

extrusion and EPS facilities. The District research ed the applicability of each option to Valley businesses.

1. Thermal Oxidation (Incineration) : A thermal oxidizer destroys VOCs through combustion. The systems can be divided into two ca tegories:

• Recuperative systems increase fuel efficiency by the use of a gas pre-h eating section and a heat recovery section to capture wast e heat to preheat incoming air. PM10 and VOC conversion efficiencies range fr om 97% to 99.9%.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

6 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 • Regenerative systems use a ceramic heat-exchange bed to preheat process ed air to within 5% of the oxidation temperature. PM 10 and VOC conversion efficiencies range from 95% to 99%.

Four extrusion and three EPS shape molding faciliti es in the Valley utilize regenerative thermal oxidizer (RTO) systems. Howev er, the cost per ton of VOC removed in RTO systems is high due to the large exh aust flow rates and low VOC

concentrations of the exhaust stream so this is not a viable option for all companies. For the 2007 rule amendment, the District estimated that the installation of a RTO would cost each of the three EPS shape molding faci lities $27,235/ton of VOC emissions reductions and $24,958/ton of reductions for the EPS cup molding facility. However, although it was a costly endeavor, in an e ffort to reduce emissions the shape molders still went through with the addition of this control technology.

2. Adsorption Vapor Recovery : This is accomplished by passing the VOC-laden ga s through beds containing adsorbents that have a high surface area to weight ratio. Adsorption of the hydrocarbon molecules proceeds un til the available surface area is

filled or saturated with VOC molecules. The VOC mo lecules are retained until the regeneration step, or disposal of the spent adsorbe nt.

There are three basic types of adsorption systems a vailable:

• Pressure Swing Regenerated Systems and Thermally Regenerated Systems regenerate the adsorbent in-situ for reuse.

• Canister systems require removal of the adsorbent to another site f or regeneration. While canister systems can be purchas ed directly from the manufacturer, the high volume of the exhaust stream and the amount of emissions to be controlled make this less practical than the other two
systems.

Currently, none of the facilities subject to Rule 4 682 use these systems. The main reasons are due to high costs and better results fr om other systems and technologies. As previously discussed, most extrus ion facilities in the Valley use RTOs as their control technology of choice. For EP S cup molding facilities, this is not a viable option because, as previously stated, they cannot capture the emissions from molding unless PTE is employed. If the VOC ga s cannot be contained, then it cannot be sent through adsorbent beds to eliminate emissions.

3. Boilers: Boilers can be used as a VOC control technology b ecause they provide necessary process steam for the operation and contr ol of VOC emissions. Boilers can be modified or designed to burn the collected v apors via direct combustion and decrease the boiler’s fuel consumption. Boilers at these types of facilities have

demonstrated VOC destruction efficiencies of at lea st 95% by weight. Multiple valleySAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

7 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 facilities transport pentane emissions from the raw bead handling system and preexpansion phase to a boiler system that reduces at least 95% of the pentane.

RTOS are the most effective control systems for han dling VOC emissions; however

issues of cost effectiveness can halt their install ation. While adsorption vapor recovery systems are effective, implementation of these syst ems comes secondary to RTOs and boilers for Valley facilities. Lastly, while boile rs serve as the most cost-effective solution extrusion and EPS facilities cannot solely rely on these systems to reach compliance goals.

IV. DISCUSSION

EPA analyzed District Rule 4682 and commented that requirements should be strengthened to implement Reasonably Available Cont rol Technology (RACT) and allow EPA to approve the rule into the SIP.

The following is a summary of EPA comments with the District’s responses; refer to Appendix C to review the TSD in its entirety.

A. Section 3.0 – Definitions

To improve rule clarity of Section 5.0, the followi ng definitions were added to the

rule:

Expandable Polystyrene Molding: A series of process es where expandable polystyrene beads, which are polystyrene resin part icles impregnated with blowing agent, undergo expansion, aging and then cu p, shape, or block molding to form a low-density foam product. During expansion, the beads are expanded to the appropriate desired density by expo sure to steam or hot air in a pre-expander. During aging, the expanded beads (or pre-puff) are transferred to storage silos or mesh bags to stabil ize and dry. During molding, the aged pre-puff is exposed to heat in a closed mo ld that causes the beads to soften, re-expand, and fuse together to form the shaped product.

Extrusion: the process in which a plastic resin is melted in an extruder and continuously forced through a die opening shaped li ke the finished product. As it leaves the die opening, the extruded plastic melt partially expands and is then drawn by a puller through forming equipment th at sizes, cools, and cuts the product to length or winds it into a roll. With extruded foam products, blowing agent is injected under pressure directly i nto the extruder where it mixes with the plastic melt.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

8 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 Operator: includes but is not limited to any person who owns, leases, supervises, or operates a facility and/or equipment

.

Total Product Emissions: includes emissions from t he manufacturing operation, after controls, plus the residual blowin g agent in the finished product.

The definitions of expandable polystyrene molding a nd extrusion were derived from the Bay Area Air Quality Management District (Bay Area) Rule 8-52 and the definition of operator was taken from District Rule 4566. For cl arity purposes, the definition of total product emissions was moved from Section 5.2.1 to t he definitions section of the revised proposed rule.

B. Section 5.0 – Requirements

Section 5.1 After reviewing the previously amended rule, the Di strict proposes to delete Section 5.1 since the requirements of the section are no longer valid.

Section 5.2.1

EPA Comment: Section 5.2.1 establishes an emission limit of 2.4 pounds of VOC per 100 pounds of total material processed, calculated over a monthly period. EPA generally cannot approve compliance periods exceedi ng 24 hours unless specific

criteria are met. These criteria are discussed in t he O’Connor memo 1 , which is included as Appendix C of the staff report. The O’Connor me mo states that longer averaging times may be permitted under certain conditions. Th e 2007 staff report for Rule 4682 does not provide a clear explanation of why daily e missions cannot be determined. Additionally, South Coast Air Quality Management Di strict (SCAQMD) Rule 1175 and Maricopa County (Arizona) Rule 358 contain similar limits without monthly averaging. The District needs to demonstrate why an emission l imit that appears to have been achieved in practice by existing operations in othe r districts cannot be met on a daily basis in the District. If needed, the District coul d consider creating distinct limits based on the type of facility.

District Response: To address EPA concerns, District staff reviewed the facilities subject to Rule 4682 and identified three affected categories: extrusion facilities, expandable polystyrene (EPS) cup molding facilities , and EPS shape molding facilities. The production processes of extrusion and EPS facil ities differ significantly and thus required separate evaluations of the effects of a d aily limit. To address differences in these operations, District staff proposes to bifurc ate the requirements for extrusion and

EPS facilities. These would become effective Janua ry 1, 2013. As explained in detail

1 O’Connor, John. (January 1984). Averaging Times f or Compliance with VOC Emissions Limits—SIP Revision Policy.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

9 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 below, Section 5.2.2 (which will apply to extrusion facilities) proposes to maintain the 2.4 pounds of VOC per 100 pounds of throughput limi t, calculated monthly and Section 5.2.3 (for EPS facilities), proposes a daily limit of 3.4 pounds of VOC per 100 pounds of throughput while maintaining the current monthly li mit of 2.4 pounds of VOC per 100 pounds of throughput.

Extrusion Facilities

As explained in the TSD, longer averaging times may be permitted under certain conditions in cases where daily emissions cannot be determined. Section 5.2.2 maintains existing monthly standards for extrusion facilities because the District

determined that some extrusion facilities would be unable to comply with the daily limit. The O’Connor memo provides five criteria that must be fulfilled in order to maintain the monthly averaging time for compliance. The five co nditions and the District analysis of existing Rule 4682 are as follows.

1. The VOC limits specified in an enforceable form wit h appropriate compliance

dates

.

Rule 4682 is intended to reduce VOC emissions from manufacturing polymeric foam and foam products by specifying VOC emission limits and approved emission control devices. The existing rule contains a volatile org anic compound (VOC) product emissions limit of 2.4 pounds per 100 pounds of tot al material processed. The product emissions include emissions from the manufa cturing operation, after controls, and the residual blowing agent in the fin ished product. Proposed

amendments will bifurcate Section 5.2.1 of the rule to Section 5.2.2 for extrusion and Section 5.2.3 for expansion facilities. Sections 5 .2.4 - 5.2.7 identify four other methods for compliance via emission control systems or technologies. Proposed amendments will have a compliance deadline of Janua ry 1, 2013. Therefore, Rule

4682 does contain VOC limits in an enforceable form with appropriate compliance

dates.

2. A description of the affected processes and associa ted historical production and operating rates.

The length of the extrusion process and previously mentioned manufacturing variations foster inconsistencies in process time, the amount of materials used, and subsequent VOC emissions. The inherent lack of pre dictability in these conditions creates difficulties for extruders to accurately es timate emissions on a daily basis.

There are a variety of products needed from these f acilities that require beads with a higher VOC content. One key company’s biggest acco unt is producing meat trays for two large poultry companies. However, meat tra ys require increased levels of blowing agent in order to improve durability and le ak-resistance. This increases totalSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

10 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 product emissions from the facility and the likelih ood of exceeding the VOC limit. In order to comply daily, the company would have to el iminate production of high VOC products such as these and take a significant cut i n profits. The companies currently order 70% of their foam trays from the business, wh ich constitutes about 40% of total profits. A 40% loss would result in company cutbacks and job loss. In addition, the companies would start ordering out of state bec ause of quality standards that cannot be met anywhere else in California. This wo uld potentially increase transportation emissions to the Valley and make it questionable as to whether the reduced production of meat trays would create overa ll emissions reductions.

Also, demand changes quickly for extrusion faciliti es based on customer needs. In the past, affected businesses have received last mi nute requests from their major accounts. For example, when a food packaging proc esser got chickens that were too big for the current containers, they requested an emergency shipment of large containers. The company’s flexibility to meet the ever-changing customer demands contributed towards a stronger business relationshi p and helped them receive larger order requests in the future. However, these produ ction variations make it difficult for the facilities to comply on a daily basis. If forced to take daily emissions calculations, extruders would have to turn down las t minute requests from their large accounts and risk losing a significant amount of bu siness.

3. A description of the control techniques to be appli ed to the affected processes such as low solvent and waterborne coating; technol ogy and/or add-on

controls

.

The District considered the feasibility of faciliti es complying via 5.2.2 to switch their compliance method to one of the other four options.

Section 5.2.4 allows for compliance by the use of a non-VOC blowing agent; however, this option is not feasible for extrusion facilities. The affected companies currently use methyl formate (non-VOC) as a blowing agent for their plastic foam products manufacturing process. This is a costly e ffort for the companies because the use of non-VOC blowing agents requires reconstr uction and modification of the polystyrene extrusion lines. The companies have re cently proposed to increase the use of methyl formate to further reduce emissions. While the agent can be used for a good portion of products, it cannot be used to pr oduce everything due to durability requirements of certain items like meat trays. Thu s, the second option is unavailable

to them.

The next three options (Sections 5.2.5 -5.2.7) requ ire that at minimum, an emission capture system must collect 90% of emissions by wei ght and shall reduce emissions from the capture system at 95% by weight. All affe cted extrusion facilities currently use extensive capture and control systems, but it i s impossible for them to reachSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

11 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 90% emission capture efficiency. One business provi des a good example of how a thorough control system falls short of meeting this compliance option.

The company currently controls the VOC emissions th at result from the extrusion operations, thermoforming lines, and scrap reclaim systems with a 5.78 MMBtu/hr regenerative thermal oxidizer (RTO). The overall fa cility VOC capture efficiency from the extruders, thermoformers, grinders, reclaim ext ruders, fluff silos, and roll storage area is a minimum of 77.5%, as mandated by their cu rrent permit. The RTO controls the VOC emissions that are captured with a minimum destruction efficiency of 95%. However, the facility has trouble going too far bey ond the minimum capture efficiency level due to numerous manufacturing emis sion sources and the longevity of the extrusion process. While the company achiev es significant emissions reductions, their system cannot meet the minimum st andards of the other three options.

The other extrusion facilities also employ RTO’s wi th similar configurations. Likewise, their systems achieve excellent destructi on efficiency, but find it impossible to meet the 90% capture efficiency. Compliance opti on 1 in Section 5.2.2 remains the only option for these facilities that have alre ady fully extended company funds for efficient control technologies.

4. The nature of the emission control program whether a bubble, a regulation change, a compliance schedule, or some other form o f alternative control

program

.

This control measure was listed in the Ozone Rate o f Progress Plan as a feasible measure suggested by the EPA. Rule 4682 is intende d to reduce VOC emissions from manufacturing polymeric foam and foam products by specifying VOC emission

limits or emission control devices. Emission reduc tions requirements must be technologically and economically feasible for Valle y sources. This is why the District provides facilities subject to Rule 4682 with multi ple compliance options.

However, variable circumstances coupled with a long production period create a unique disadvantage for extrusion facilities in the Valley. Despite the funding and construction of thorough control systems, these fac ilities can only achieve compliance with option 5.2.2. Furthermore, these s ame difficulties preventing compliance through another route make compliance wi th 5.2.2 next to impossible if daily limits are mandated.

5. The method of record keeping and reporting to be em ployed to demonstrate compliance with the new emission limit requirement and to support the showing that the emission limit is consistent with RFP and the demonstration

of attainment

.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

12 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 The recordkeeping verifying the 30-day average emis sions limit is consistent with the District’s RFP (Reasonable Further Progress) an d attainment demonstrations as adopted in District attainment plans, such as the 2007 Ozone Plan . For ozone RFP
and attainment demonstrations, the District utilize s “summer average” (April through September) emissions expressed as an average tons p er day. In any emissions category, there will be some fluctuation from day t o day, but the emissions for the RFP and attainment calculations are meant to repres ent average days. The 30-day averaging in the Rule 4682 limit still allows for a n average tons per day reduction contributing to the District’s RFP and attainment d emonstrations.

Furthermore, the Valley’s nonattainment of the 8-ho ur ozone standard is characterized by persistent ozone concentrations, m ulti-day episodes of pollutant build-up, and many exceedance days each year. Unde r these circumstances, Rule 4682’s 30-day averaging is sufficient to contribute to improvements in the Valley’s ozone concentrations. In contrast, in an area expe riencing just a few days of peak ozone concentrations each year, a 24-hour limit cou ld be essential to eliminating these peaks. This is not the case in the Valley f or ozone.

Implementing stringent recordkeeping guidelines is essential to the effective execution of Rule 4682. The District largely utili zed EPA and ARB standards as the guideline for this section.

The four requirements of recordkeeping are as follo ws:

• All applicable facilities (including exempt facili ties) must maintain at least monthly totals of the material processed, equipment used, a nd type of blowing agent

used.

• All facilities using an emissions control system t o comply must maintain daily records of key operational characteristics to ensur e compliance with the VOC emission requirements such as temperature, pressure , and flowrates.

• Facilities choosing to comply via Section 5.2.1 mu st maintain records to show compliance with that section and shall calculate th e daily average VOC

emissions once a month.

• Facilities must keep and maintain records for at l east five years.

Extrusion facilities consistently abide by the afor ementioned guidelines and provide substantial documentation to prove monthly complian ce. However, due to the necessity of the multi-day production process, anyt hing shorter than monthly averaging will significantly deter the fluidity of their recordkeeping protocol. Most extrusion facilities have one Standard Accounting P rogram (SAP) to account for their processes continuously. This allows facilities to back calculate the monthly averageSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

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13 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 VOC emissions based on the usage of materials. It is a 10 hour process to complete the emissions calculations. This makes it impossible to conduct analyses daily with the current system. Furthermore, it is very costly for extrusion facilities to install a new recordkeeping system. Several device s would be needed in order to capture emissions data throughout the extrusion pro cess on a daily basis and process the data into a new data acquisition system . Table-1 lists these devices and

related costs for installation.

TABLE – 1: Recordkeeping Equipment Needed for Daily Limits

Item Item Cost Range of Items

Needed Average Facility

Cost (low estimate) Tank Level Sensor $5,000 2 - 4 $10,000 Fluff Silo Load Cells $75,000 6 - 11 $450,000 Virgin/RPP Silo Level $20,000 9 - 14 $180,000 Extruder Hopper Loader $57,655 4 - 10 $230,620 Data Acquisition System $25,000 1 $25,000

Micro Motion Flow Meter $20,000 4 - 5 $80,000

Reclaim weigh scale $215,000 1 $215,000 Average Total Cost $1,190,620

Installing the equipment and new accounting system necessary for daily recordkeeping would result in an average facility c ost of at least $1,190,620

. These costs would be in addition to the $2.5 million doll ars that affected businesses spent to install RTOs and comply with the 2007 rule revis ion.

Even with the installation of a new system, daily i nstantaneous numbers would not accurately represent emissions for extruders. This number is never consistent because the company never makes and stores the same things at the same times. Also, facilities do not make the various containers at the same ratios on a constant basis. The extrusion process variations, previousl y mentioned, further complicate a daily recordkeeping process. Daily recordkeeping i s neither feasible through current systems nor cost-effective in another system.

As discussed above, the situation of the Valley’s e xtrusion facilities meet the five criteria of EPA’s O’Connor memo. The inherent multi-day pro duction process necessitates monthly averaging for fluidity of recordkeeping, an d daily instantaneous numbers would not accurately represent emissions. Also, these fa cilities produce a very wide range of products, some of which require beads with a higher VOC content. Demand can change quickly for extrusion facilities based on cu stomer needs. Together, theseSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

14 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 variable circumstances and long production periods create a unique disadvantage for Valley extrusion facilities. The District conclude s that the 30-day averaging limit represents RACT for extrusion facilities based on t hese factors and the O’Connor analysis. The District will submit this analysis a nd documentation to EPA and request their approval of monthly averaging for extrusion a s RACT.

Expandable Polystyrene Facilities

Cup Molding Facilities

The District is proposing to add a daily VOC limit for EPS cup molding facilities. There is currently one EPS cup molding facility in the Va lley complying with Section 5.2.1 requirements.

The affected facility currently calculates manufact uring emissions daily for their permit requirements, so extending the daily calculations t o total product emissions will only create minor administrative changes. The District incorporated a new requirement into proposed Section 5.5 “Compliance Plan” to account f or the new daily limit. Operators complying with Section 5.2.3 will be required to su bmit a Compliance Plan, which includes all necessary information to show the prop osed method of compliance as of January 1, 2013.

The District considered the daily limits imposed by other air districts. South Coast has a limit of 2.4 pounds of VOC per 100 pounds of throug hput in their Rule 1175 and Bay Area has a limit of 2.8 pounds for EPS cup molding operations and 2.7 pounds for EPS shape and block molding operations in their Rule 8- 52. However, these limits would push the affected Valley company out of compliance when producing certain products.

The Valley’s EPS cup molding facility must use high er VOC content beads for quality purposes specific to its product line. While 90% o f the company’s products are produced using batch expanders with ultra-low penta ne beads with a VOC content of 3.2% or less, 10% of products require production on a continuous expander with regular pentane beads with a VOC content of 5.4%. These it ems are customized to print the customer’s logo on the cups and to provide increase d resistance to leakage. Printing on cups made with ultra-low pentane beads results i n poor graphic and material quality and thus, the limited use of regular pentane beads must be maintained. In South Coast, their only cup molding facility was forced to stop production of customized cups once a limit of 2.4 pounds of VOC per 100 pounds of throug hput was implemented. If the Valley facility was forced to comply with the 2.4 l imit daily, they would have to do the same and eliminate the production of these items be cause no other alternative exists. This would eliminate a major portion of the company ’s profits, which could have significant economic impacts.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

15 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 A higher daily limit also allows the company to uti lize molds for the continuous expanders for multiple days to fill orders and to b uild inventory. Without a higher limit, the company would have to purchase additional capit al equipment to keep the molds throughout the whole month and space out usage to a few hours each day. This type of systematic change would require the company to spre ad production of regular pentane bead cups to a small percentage of their production every day. This would decrease efficiency, increase natural gas costs, and increas e the amount of scrap. The company would incur a significant loss of productivity or p rofits. The inability to fill orders in a timely fashion could result in the loss of clientel e.

District staff determined that a daily limit of 3.4 pounds of VOC per 100 pounds of throughput is the lowest possible limit that will s till allow the facility to produce the 10% of products requiring regular pentane beads. By up holding the previous monthly limit and a new daily limit, the District is preventing b acksliding and enforcing a stricter provision. Maintaining the monthly limit ensures t hat the reliance on the daily maximum limit of 3.4 lbs of VOC per 100 pounds of throughpu t will be kept to a minimum.

The District’s two tier limit is more stringent tha n Bay Area’s limit because theoretically, a Bay Area EPS cup molding facility could release 2 .8 pounds of VOC per 100 pounds of throughput every day within a month and still be compliant with the rule. This exceeds the 2.4 pounds of VOC monthly limit maintai ned by the District. Also, Bay Area’s rule does not specify a specific averaging t ime. The rule states that a facility cannot exceed the limits at any time. Therefore, t he District’s rule maintains more stringent enforceability requirements.

To thoroughly analyze all options available to the affected facilities, the District considered the feasibility of cup molders complying via Section 5.2.3 to switch to compliance with one of the other four options.

Section 5.2.4 allows for compliance by the use of a non-VOC blowing agent; however, this compliance option is not available to the EPS cup molder. No current EPS technology exists using a non-VOC blowing agent and there is no non-VOC EPS

alternative on the market.

The next two options (Sections 5.2.5 and 5.2.6) req uire that at minimum, an emission capture system must collect 90% of emissions by wei ght and shall reduce emissions from the capture system at 95% by weight. As previ ously mentioned, molders have not been able to find a feasible, cost-effective method for capturing molding emissions. There is no vacuum step in cup molding and thus no vacuum line to collect emissions directly off the machine like there is in shape mol ding. It is impossible to capture the cup molding emissions at a 90% level unless the fac ility encloses the entire manufacturing operation. If permanent total enclos ure (PTE) is used, the facility would need to use over 120,000 cubic feet/minute of captu red air to ensure adequate face velocity at raw material and personnel entrances, a s well as product and personnel exitsSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

16 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 to keep the work environment adequate by removing t he excess heat generated by the steam needed for molding. In addition, the use of PTE would have to be combined with the use of a RTO system to achieve the 95% control efficiency required by Sections

5.2.5 and 5.2.6.

Based on permit data, staff estimates that current practices and technology reduce manufacturing emissions from this facility by 66.3% or 57.7 tons per year (tpy). The potential manufacturing emissions without controls is 87.1 tpy so the installation of a PTE/RTO system at this facility would reduce manufa cturing emissions by an additional 23.3 tpy since RTO systems at other molding facilit ies achieve a minimum capture and control efficiency of 93%. District staff determin ed the annualized cost of utilizing a PTE/RTO system in their current warehouse to be $1, 374,627/year, based on EPA Office of Air Quality Planning and Standards (OAQPS ) guidelines. Therefore, District

staff estimates the total cost effectiveness of a P TE/RTO system to be $58,997/ton of emission reductions. The calculations to support t hese cost effectiveness figures can be found in Appendix D of this final staff report.

Following the 2007 revision of Rule 4682, the compa ny made significant investments to comply. The company is currently paying in excess of $20,000/ton for these emission
control measures. As a result, the addition of a P TE/RTO system would not be financially feasible. Installing a RTO would also be difficult because the company would need to relocate its current truck garage so that i t could place the RTO in a safe area near the boilers and the bead preparation area. Th e use of the PTE and a RTO is neither practical nor economical and would produce NOx emissions from the destruction

combustion.

The fourth option, Section 5.2.7, requires the use of beads with an average VOC content of 4.2% or less by weight. As previously m entioned, Valley facilities have demonstrated a need for using the beads for the con tinuous expanders with a VOC content of 5.4% by weight. Therefore, this option is also unavailable as an alternative for the affected company.

While the aforementioned compliance options and con trol technologies are effective, these do not serve as solutions to bringing the aff ected source into compliance. As the only cup molding facility in the Valley, the compan y is prone to unique disadvantages, in terms of implementing other control systems and hav ing other compliance options. Therefore, the District proposes that the addition of a limit of 3.4 pounds of VOC per 100 pounds of throughput daily to the current monthly l imit is RACT for EPS cup molding

facilities.

Shape Molding Facilities

There are currently three shape molding facilities in the Valley. One of the facilities is a custom shape molder that specializes in packaging, componentry, and proprietary itemsSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

17 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 production. The other two facilities primarily man ufacture EPS table grape boxes that allow Valley table grape growers to store and ship grapes without loss of freshness, over extended periods of time. This allows the grow ers to extend their selling season domestically and also allows them to compete intern ationally in a $500,000,000 table grape export market that is extremely valuable to t he nation and to California. Due to the importance of the shape molding industry in the Valley, the District gave thoughtful consideration to how these proposed amendments woul d affect the three facilities.

Recognizing that there are some differences between the production processes of shape and cup molding, the District separately eval uated how shape molding facilities would be affected by the inclusion of a daily VOC l imit. However, all three EPS shape molding facilities utilize one of the other complia nce options in Sections 5.2.5-5.2.7 and employ an approved VOC control system. None of the facilities are choosing to comply with rule requirements with the monthly VOC limit o ption and as a result, they would not be subject to a daily VOC limit with this rule amen dment.

However, one affected shape molding facility has ex pressed concern with how this rule amendment could affect their company if they ever c hose to switch compliance options. If one of the EPS shape molding facilities switched from their current compliance option of Rule 4682 to the requirements of proposed Rule 4 682, Section 5.2.3, this would modify the facility’s daily potential to emit (PTE) . As a result, Best Available Control Technology (BACT)/ Lowest Achievable Emissions Rate (LAER) requirements would likely be triggered if the adjusted increase in per mitted emissions (AIPE) exceeded 2.0 lb/day for VOC emissions. BACT requires the use of a capture and control system consisting of a thermal oxidizer. Since every shap e molding facility currently uses a thermal oxidizer system, each facility would have t o continue the use of this control
system.

Since shape molders already comply with a more stri ngent compliance option and cannot choose to comply by utilizing Section 5.2.3 for anti-backsliding purposes, the District finds separating the requirements of Secti on 5.2.3 for shape and cup molding facilities to be unnecessary. Therefore, the Distr ict proposes that Section 5.2.3 apply to all EPS facilities, at this time.

Section 5.2.7.1 The District is proposing to make some minor amendm ents to the proposed rule posted on November 15, 2011. The proposed version of the rule changed the language of Section 5.2.7.1, by inadvertently deleting annual-a veraging provisions. However, multiple stakeholders voiced concerns at the public workshop about changing this language because allowing an annual-average for the VOC content of the beads is an important component of this section and deleting th e language would have negative implications for Valley facilities. Therefore, in the revised proposed version of the rule, the District proposes to leave this section as it w as originally.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

18 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 Section 5.5 In Section 5.5, the District originally proposed to delete the text “No later than March 20, 2009,” to streamline rule requirements and remove o utdated language. However, upon further review, the District proposes leaving the p hrase in the text because it adds clarity

to the section.

C. Section 6.0: Administrative Requirements

Section 6.1.4 Section 6.1.4 originally stated that operators shal l, “once every day, calculate the daily average VOC emissions, for the preceding 24 hour pe riod.” District staff changed this section to read, “once every day, calculate the dai ly VOC emissions,” because the original text could be interpreted incorrectly and the District’s original intent was to require daily VOC emissions calculations.

V. GLOBAL CLIMATE CHANGE AND GREENHOUSE GASES

The California Global Warming Solutions Act of 2006 (AB 32) created a comprehensive, multi-year program to reduce greenhouse gas (GHG) e missions in California, with the overall goal of restoring emissions to 1990 levels by the year 2020. In the coming years, the Air Resources Board (ARB) and the Legisl ature will be developing policies and programs to implement AB 32. The District beli eves that the evidence and the rationale that climate change is occurring is compe lling and convincing. In addition to the long-term consequences of climate change, the D istrict is concerned with the potential ramifications of more moderate but immine nt changes in weather patterns. The Valley depends heavily on agriculture for its e conomy and has developed agricultural practices based on the last several de cades of weather patterns. Unanticipated and large fluctuations in these patte rns could have a devastating effect on the Valley’s economy.

While there are many win-win strategies that can re duce both GHG and criteria/toxic pollutant emissions, when faced with situations tha t involve tradeoffs between the two, District staff believes that the more immediate pub lic health concerns that may arise from an increase in criteria or toxic pollutant emi ssions should take precedence. The San Joaquin Valley Air Pollution Control District’s Governing Board adopted the Climate Change Action Plan (CCAP) in August 2008. For Cali fornia Environmental Quality Act (CEQA) requirements, one of the goals of the CCAP i s 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.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

19 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 VI. HEALTH BENEFITS

This rule contributes to the Valley’s progress towa rds federal health-based air quality standards (National Ambient Air Quality Standards, or NAAQS). Progressing the Valley towards attainment of the NAAQS helps reduce the Va lley’s air pollution-related health impacts and health-related costs. The District per iodically compiles attainment plans to quantify the amount of emissions reductions needed and identifies the individual control

measures that will achieve these reductions. The c ontrol strategy as a whole has important public health benefits and health costs s avings.

However, for a number of reasons, it can be difficu lt or even misleading to attempt to subdivide this total plan benefit on a rule-by-rule basis. For example, photochemical reactions in the Valley’s atmosphere combine precur sor 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 precursor. Al so, considering the extensive emissions reductions that have already been achieve d in the Valley over the past several years, some emissions sources may appear re latively small and inconsequential from a health perspective. In real ity, all attainment plan rule commitments are important to the District’s overall strategy for reducing ambient air pollutant concentrations and the associated health impacts and costs.

VII. ANALYSES

A. Emission Reduction Analysis

The proposed rule amendments are intended to addres s the limited approval and limited disapproval from EPA concerning RACT. Dist rict staff reviewed all subjected facility’s permit data and determined units are alr eady in compliance with the proposed amendments. Therefore, no emission reductions are expected from this rule-amending project.

B. Cost Effectiveness Analysis

Pursuant to California Health & Safety Code Section 40920.6(a), the District is required to analyze the cost effectiveness of new rules or r ule amendments that implement Best Available Retrofit Control Technology (BARCT) or pl anning requirements to incorporate all feasible measures. The proposed amendments to this rule would only add federal RACT requirements but not BARCT or all feasible mea sures, and are therefore not subject to the cost effectiveness analysis mandate. Given that operators are generally complying with the new limits currently and there a re no significant emission reductions or compliance costs expected from these rule change s, a cost effectiveness analysis has not been performed.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

20 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 C. Socioeconomic Analysis

Pursuant to CH&SC 40728.5(a), “Whenever a district intends to propose the adoption, amendment, or repeal of a rule or regulation that w ill significantly affect air quality or emissions limitations, that agency shall, to the ex tent data are available, perform an assessment of the socioeconomic impacts of the adop tion, amendment, or repeal of the rule or regulation. This section does not apply to the adoption, amendment, or repeal of any rule or regulation that results in any less res trictive emissions limit if the action does not interfere with the district's adopted plan to a ttain ambient air quality standards, or does not result in any significant increase in emis sions.”

This rule-amending project does not significantly a ffect air quality and no significant emission reductions are expected or claimed. The E PS facility complying via Section 5.2.3 could be impacted by increased inspection and recordkeeping practices, due to the addition of a daily VOC emissions limit. Howev er, District staff has determined that the facility already calculates manufacturing emiss ions daily to meet permit requirements so this rule-amending project would pr imarily result in minor administrative changes. Based on discussions with other operators subject to Rule 4682, the changes do not create a change to their operations or econo mic situation since they utilize one of the other compliance options. Therefore, staff con cludes that, if a detailed socioeconomic analysis were conducted, there would be no significant socioeconomic impact from this rule.

D. Environmental Impact Analysis

Pursuant to §15061 of the Guidelines for Implementa tion of the California Environmental Quality Act (CEQA), District staff investigated the possible environmental impacts of the proposed amendments to Rule 4682. Based on the lac k of evidence to the contrary, District staff has concluded that the proposed amen dments to this rule will not have any significant adverse effects on the environment. St aff recommends filing a Notice of Exemption under the provisions of Public Resource C ode 15061(b)(3).

E. Rule Consistency Analysis

Pursuant to CH&SC §40727.2, District staff prepared a rule consistency analysis that compared the elements of amendments with the corres ponding elements of other District rules and federal regulations. District s taff found that none of the proposed

amendments would conflict with other District rules , or federal rules, regulations, or policies covering similar stationary sources. That analysis is presented in Appendix B of this Final Staff Report.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

21 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 F. Reasonably Available Control Technology Analysis

CAA §182(b)(2) states that ozone attainment plans s hall assure that RACT for VOC is applied at certain sources. A RACT analysis requir es an examination of a rule against Federal rules, regulations, and technology guidelin es as well as comparing it against

rules from other air districts in California. On J uly 15, 2011 EPA published in the Federal Register a RACT analysis of District Rule 4 682. As documented in the Federal Register, EPA determined that Rule 4682 satisfies R ACT with one exception. The purpose of this rule-amending project is to address the RACT deficiency as identified by EPA and as discussed in this Final Staff Report. As such, this rule satisfies RACT requirements.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4682 December 15, 2011

22 Final Staff Report with Appendices f or Revised Proposed Amendments to Rule 4682 VIII. REFERENCES

Bay Area Air Quality Management District [BAAQMD]. (1999, July 7). Rule 8-52, Polystyrene, Polypropylene and Polyethylene Foam Pr oduct Manufacturing Operations. Retrieved from http://www.arb.ca.gov/DRDB/BA/CURHTML/R8-52.HTM

Environmental Protection Agency [EPA]. (August 1990 ). Control of VOC Emissions From Polystyrene Foam Manufacturing.

Environmental Protection Agency [EPA]. (January 200 2). EPA Air Pollution Control

Cost Manual.

Environmental Protection Agency [EPA]. (June 2011). Technical Support Document. EPA’s Analysis of San Joaquin Valley Air Pollution Control District’s Rule 4682, Polystyrene Foam, Polyethylene & Polypropylene Manu facturing

.

O’Connor, John. (January 1984). Averaging Times for Compliance with VOC Emissions Limits—SIP Revision Policy

.

Revisions to the California State Implementation Pl an, San Joaquin Valley Unified Air Pollution Control District, 76 Fed. Reg. 136, pp 41 745-41747. (2011, July 15). (to be codified at 40 CFR Part 52)

San Joaquin Valley Unified Air Pollution Control Di strict [District]. (2011, August 18). Rule 4566, Organic Material Composting Operations. Retrieved from http://www.valleyair.org/rules/currntrules/Rule4566 CleanRule.pdf

San Joaquin Valley Unified Air Pollution Control Di strict [District]. (September 2007). Final Staff Report for Rule 4682, Polystyrene Foam, Polyethylene & Polypropylene Manufacturing

.

San Joaquin Valley Unified Air Pollution Control Di strict [District]. (September 2007). Rule 4682, Polystyrene Foam, Polyethylene & Polypro pylene Manufacturing

. Retrieved from http://www.valleyair.org/rules/currntrules/r4682.pd f

South Coast Air Quality Management District [SCAQMD ]. (2010, November 5). Rule 1175, Control of Emissions from the Manufacture of Polymeric Cellular (Foam)

Products. Retrieved from http://www.arb.ca.gov/DRDB/SC/CURHTML/R1175.PDF