### STAFF REPORT FOR PROPOSED RULE REVISIONS

RULE 214: PHASE I VAPOR RECOVERY REQUIREMENTS

RULE 215: PHASE II VAPOR RE COVERY SYSTEM REQUIREMENTS

RULE 228: SURFACE COATING OF METAL PARTS AND PRODUCTS

Prepared by Northern Sierra AQMD Staff, December, 2009

Date for Public Hearing: February 22, 2010 Date for Rule Adoption: February 22, 2010 (Unless comments received at public hearing necessitate significant modification)

INTRODUCTION

The Northern Sierra Air Quality Management Dist rict (NSAQMD) is proposing to revise Rules 214, 215 and 228 in fulfillment of requirements for Reasonably Available Control Technology (RACT) under the federal Clean Air Act (CAA).

BACKGROUND

Effective June 15, 2004, western Nevada County was designated under the CAA as a federal non-attainment area for the 1997 8-hour ozone National Ambient Air Quality Standards (NAAQS). Accordingly, the CAA mandates that western Nevada County develop and implement an attainment plan in order to attain the NAAQS by the earliest practicable date. One of the requirements in the CAA is that ozone non-attainment areas must adopt Reasonably Available Control Measures for ozone precursor s including, at a minimu m, RACT for specific categories of sources within their jurisdiction. Ozone precursors are ox ides of nitrogen (NOx) and volatile organic compounds (VOC s). The proposed rule revisi ons address VOC emissions.

EPA has published numerous RACT guidance docu ments. Most importantly, EPA issues Control Techniques Guidelines (CTG) documents for specific source categories. These CTGs establish EPA’s interpretation of minimum RACT . Section 182(b)(2)(A) requires areas that have been designated as federal ozone non-attain ment areas to adopt rules meeting RACT for VOC control. Based on federal guidance a nd communications with EPA, the NSAQMD believes the proposed rules satisfy federal re quirements for RACT fo r the subject emission source categories.

All three of the rules proposed for revision were identified by EPA as failing to fully meet RACT, and are being revised in order to meet fe deral requirements for in clusion in California’s State Implementation Plan (SIP), as required und er the CAA. Failure to adopt rules meeting

RACT can result in federal sa nctions including withholding of federal highway dollars and increased emission offset requirements for local, major emission sources.

Staff Report for Amendments to Rules 214, 215 and 228 Page 1SUMMARY OF PROPOSED RULE REVISION S, INCLUDING PO TENTIAL IMPACTS

TO AFFECTED SOURCES AND THE EN VIRONMENT



### RULE 214: PHASE I VAPOR RECOVERY REQUIREMENTS Phase I requirements apply to ga soline delivery and st orage tanks at gas stations. The existing Rule 214 (adopted 12-15-1988 and amended 3- 26-2007) was reviewed by EPA and some shortcomings were identified. Specifically, EPA communicated to the NSAQMD that the rule should contain a “definitions” paragraph; a requ irement for daily inspection of vapor recovery equipment for defects; a reference to the specific section of the Californi a Code of Regulations that lists defects; a requirement for initial and annual verifications of equipment via performance tests; a list of test methods; and a 2-year r ecordkeeping provision for performance tests and gasoline throughput. EPA indicated that althou gh the California Air Resources Board (CARB) has issued Executive Orders that may include such provisions, these Orders are not in the State SIP, which means that they need to be includ ed in the CAA-required rules for individual air districts. EPA recommended using Sacramento’s va por recovery rule as a model, which is what the NSAQMD has done in the proposed Rule. The proposed rule revision addresses the issues identified by EPA in order to meet RACT requi rements. A draft of the Rule was reviewed by ARB and EPA, and comments from these agencies were incorporated. Further, the Rule has been reorganized in order to be more easily understood.



### RULE 215: PHASE II VAPOR RE COVERY SYSTEM REQUIREMENTS Phase II requirements apply to vehicle fueling at gas stations. The existing Rule 215 (adopted 12-15-1988 and amended 3-26-2007) was reviewed by EPA and some shortcomings were identified. Specifically, EPA communicated to the NSAQMD that the rule should contain a requirement for daily inspection of vapor recove ry equipment for defects; a reference to the specific section of the California C ode of Regulations that lists de fects; a requirement for initial and annual verifications of equipm ent via performance te sts; a list of test methods; and a 2-year recordkeeping provision for pe rformance tests and gasoline throughput. EPA indicated that although the California Air Resour ces Board (CARB) has issued Executive Orders that may include such provisions, these Orde rs are not in the State SIP, which means that they need to be included in the CAA-required rules for indivi dual air districts. EPA recommended using Sacramento’s vapor recovery rule as a mode l, which is what the NSAQMD has done in the proposed Rule. The proposed rule revision addr esses the issues identif ied by EPA in order to meet RACT requirements. A draft of the Rule was reviewed by ARB and EPA, and comments from these agencies were incorporated. Further, the Rule has been reorganized in order to be more easily understood.

RULE 228: SURFACE COATING OF METAL PARTS AND PRODUCTS This proposed Rule revision applie s to businesses that coat (with paint or other coatings) metal parts and products. The existing Rule 228 (a dopted 11-27-06 and submitted to EPA in June, 2007) was based on EPA’s 1978 CTG for Surface Co ating of Metal Parts and Products. However, in 2008 EPA issued a CTG titled “Miscel laneous Metal and Plastic Parts Coatings,” which covers the same types of sources as the 1978 CTG plus additional types of sources, contains more stringent requirements than the 19 78 CTG, applies to a wider range of coatings, and also addresses solvent usage.

Staff Report for Amendments to Rules 214, 215 and 228 Page 2Existing Rule 228 was reviewed by EPA in July, 2009. EPA identified several inadequacies in

the Rule based on the 2008 CTG and communicated these to the NSAQMD, stating that the rule could be granted partial approval and entered into the SIP as inadequate (meaning that changes

would still have to be made and submitted as a RACT Revision before the RACT SIP could be approved), or that the NSAQMD could correct the identified rule deficiencies and submit it to EPA in order to avoid the partial approval. This second option is preferred by the NSAQMD

because various demonstrations would have to be made and more paperwork done to revise a rule that has received partial fe deral approval, complicating the pr ocess. Thus, the proposed rule

revision here addresses the issues identified by EPA in order to meet RACT requirements.

The only business in the District that this rule is anticip ated to affect is Se rra Corporation, off of Bitney Springs Road. The NSAQMD consulted w ith Serra Corporation during the process of revising this Rule. Most of the coatings Serra currently uses comply with the standards in the proposed revision. Serra would have to cha nge a few coatings. Coating suppliers and manufacturers in California and other parts of th e nation have already deve loped, and continue to develop, adequate substitutes largely in res ponse to ozone nonattainment requirements. The revision would provide for an a nnual emission reduction of approximately 1/4 ton per year of VOCs. Also, any future metal parts and products coating businesses with VOC emissions of 2.7 tons per year or more in the non-attain ment area would be subject to the rule.

Numerous minor changes were made in revising Rule 228 in the interest of clarity, simplicity and usability. In addition, the follo wing substantial changes were made.

The revised Rule includes alternative methods of compliance in the event that a source chooses to install VOC capture and contro l equipment. Specifically, the revised Rule includes a table based on VOC (mass) to solids (volume) ratios and an option of usi ng capture and control technologies to achieve an overall co ntrol efficiency of at least 90%.

The revised Rule uses an annual applicabil ity threshold with a monthly recordkeeping requirement (a system currently in use by Serra) ra ther than a daily threshold as in the original Rule, consistent with EPA guidance, with the re sult being a simpler applicability determination system and recordkeeping requirements that achie ve the same results (therefore being no less stringent). Requiring daily r ecordkeeping of all VOC-contai ning substance usage is an unnecessary burden on sources.

VOC content limits for some categories of coatin gs were lowered and VOC content requirements

for solvents are established in the revised Rule , as required to meet RA CT. ARB provided input

on a draft version of the revised Rule. In addi tion to suggested definition changes (which were incorporated with corrected spel ling), ARB’s analysis essentially supplements the federal CTG’s determination of Reasonably Available Contro l Technology by lowering VOC content limits of certain coating categories based on available, in -use coatings and rule s adopted by other air districts. The proposed revision follows the St ate’s RACT interpretation for some of these coating categories (which are not currently in use by the NSAQM D’s single source that is subject to the Rule), except for cases in which ARB’s analysis is incorrect. ARB erroneously

stated that Yolo-Solano’s and Sacramento’s rule s include lower limits for “general use, onecomponent” and both categories of “prefabricat ed architectural” coatings, whereas those

Staff Report for Amendments to Rules 214, 215 and 228 Page 3districts’ rules in fact incor porate the same limits as the pr oposed revision and the CTG; these

have been retained in the final draft revi sion. Also, ARB stated that Yolo-Solano has implemented a VOC content limit of 25 grams/liter for cleaning solvents. In fact, Yolo-Solano’s applicable rule incorporates a limit of 50 grams/liter along with responsible work practices until 2011, at which time it drops to 25 grams/liter and the rule, including required work practices, ceases to apply, potentially resulting in increas ed VOC emissions. The NSAQMD believes this approach is inconsistent with RACT, and was possibly a rule development oversight. Consequently, the proposed revi sion requires responsible work practices in addition to the federally recommended 25 grams /liter VOC content limit for solvents. The proposed revision

also includes limits from the CTG for “extreme performance” coatings, whereas the Sacramento

and Yolo-Solano air districts’ rules include limits that are less stringent than those in the CTG, making the proposed revision more stringent than Sacramento’s and Yolo-Solano’s rules in this

respect.

An exemption for up to 55 gallons per year of non-compliant coatings was added in revising the Rule, consistent with federal guidance cont ained in an August 10, 1990 EPA memorandum from G.T. Helms, Chief of EPA’s Ozone/Carbon Monoxi de Programs Branch to Chief, Air Branch, Regions I-X on the subject, “Exemption for Low-Use Coatings.”

In revising Rule 228, the “Prohibition of Sale” subsection was removed because it was confusing and unenforceable. Formerly, it stated, “3.6 Prohibition of Sale: No person shall offer for sale or sell within the District any coating if such product is prohib ited by any provisions of this Rule. This prohibition shall apply to sale of any coating to be applied at any physical location within

the District.” Since the Rule only applies (aside from recordk eeping requirements) to sources emitting 2.7 tons or more of VOC per year, the only way a product that is prohibited by the rule

could be sold would be if it were sold to a s ource emitting at least that threshold quantity, and it

would be both unreasonable and unenforceable to specify that certain products which are available for general sale to the public cannot be sold to certain indi viduals or businesses.

The method for determining capture and control efficiency has been updated in the proposed Rule, in order to rely on a more widely know n and accepted test method. Measurements obtained via the proposed method and the previous met hod are expected to be essentially the same.

The test method for determining acid content was updated from the 1985 ASTM D1613 to the

2006 ASTM D1613. The metallic/irid escent topcoat quantification method was also revised to

reflect a more current method.

Negative Declaration for Coating of Pl astic Parts and New Heavier Vehicles The 2008 CTG addresses coating of plastic parts and new “heavier vehicles” (as defined in 40CFR Section 63.3176) as well as coating of metal parts and products. However, the NSAQMD does not have any sources that coat plastic parts or heavier vehicles and approach or exceed the CTG’s recommended applicability th resholds (15 pounds per day VOC emissions, 2.7 tons per rolling 12-month period or approximately two gallons of solvent evaporation per day).

This determination was made based on intervie ws with sources and an examination of the emissions inventory. Therefore, these types of sources are not addressed in the proposed Rule

Staff Report for Amendments to Rules 214, 215 and 228 Page 4amendment. If, in the future, such sources locat e in the District, the Rule will be modified in accordance with the CTG, pursuant to federal RACT requirements.

AUTHORITY AND RULE ADOPTION REQUIREMENTS

The District is authorized to re gulate sources of air pollutants by the California Health and Safety Code (HSC) §40001 and §40702. HSC §41508 allows lo cal air districts to adopt stricter standards than the State, but not more relaxed standards.

HSC §40728.5 requires a socioecono mic analysis for proposed rules in districts having a population greater than 500,000 persons. The NSAQMD’s population is approximately 120,000 so this requirement does not apply.

California Health and Safety C ode (HSC) §40703 requires that all air quality districts consider and make public findings relating to the cost effectiveness of implementing an emission control measure. No cost is associated with impl ementing the proposed rules, with the possible exception that Serra Corporation may have to cha nge some of the coatings it uses on metal parts and products. The NSAQMD has discussed this with Serra Corporation. It is not known if the new coatings will cost more or less than the coatings currently in use. There may be some time involved in finding and switching to appropriate alternative coati ngs. However, since the major coating suppliers in California are familiar with low VOC emission standards throughout the State (many of which are lower than the standard s in the proposed rule because of historical nonattainment reclassifications), it is not anticipated that finding suitable alternatives will be

difficult.

These rules are exempt from the requirement s of CEQA per Class 8 (§15308) of the CEQA guidelines.

The California Health and Safety Code requires the District to comply with a rule adoption protocol as set forth in §40727 of the Code. Ther e are six findings the District must make when developing, amending, or repealing a rule:

FINDINGS DEFINITION REFERENCE Authority A provision of law or of a state or federal regulation permits or requires the regional agency to adopt, amend, or repeal the regulation. HSC Sections 40001, 40702, and

41511.

Necessity A need exists for the regulation, or its amendment, or appeal, as demonstrated by the record or rule making authority. It is necessary for the NSAQMD to revise these rules in order to comply with the Clean Air Act and thereby avoid federal sanctions. Further, the source categories to which they apply

exist in the non-attainment area. Clarity The regulation is written or displayed so that its meaning can be easily The proposed rules are written in such a manner that they can be easily

Staff Report for Amendments to Rules 214, 215 and 228 Page 5understood by the persons directly affected by it. understood by affected sources, and their subsections are descriptively

titled. Consistency The regulation is in harmony with, and not in conflict with or contradictory to, existing statutes, court decisions, or state or federal regulation. The NSAQMD has determined these

rules are consistent with State and federal regulations and do not conflict with existing statutes or court

decisions.

Nonduplication A regulation does not impose the same requirements as an existing state or federal regulation unless a district finds that the requirements are necessary or proper to execute th e powers and duties granted to, and imposed upon, a district. The NSAQMD has evaluated the proposed rule revisions in light of existing rules and has found no duplication.

Reference Any statute, court decision, or other provision of law th at the district implements, interprets, or makes specific by adopting, amending, or repealing a regulation. These rule revisions are being proposed consistent with the requirements of CAA Title 1, Part D, Section 172(c)(1) and 40 CFR Part 51.912(c).

RECOMMENDATION

Approval by the Northern Sierra Air Quality Ma nagement District Board of Directors of the proposed rule revisions and findings herein.

Staff Report for Amendments to Rules 214, 215 and 228 Page 6