Judith G. Case Supervisor, Fresno County

Ronn Dominici Supervisor, Madera County

Henry Jay Forman, Ph.D. Appointed by Governor

Randy Miller Mayor, City of Taft

William O'Brien Supervisor, Stanislaus County

Leroy Ornellas Supervisor, San Joaquin County

Chris Vierra Mayor, City of Ceres

Hub Walsh Supervisor, Merced County

Raymond A. Watson Supervisor, Kern County

Vacant Small City Representative, Kings County

Vacant Large City Representative, Tulare County

Vacant Appointed by Governor

Seyed Sadredin
Executive Director Air Pollution Control Officer

Northern Region Office 4800 Enterprise Way Modesto, CA 95356-8718 12091 557-6400 • FAX (209) 557-6475

Central Region Office 1990 East Gettysburg Avenue Fresno, CA 93726-0244 (559) 230-6000 • FAX (5591230-6061

Southern Region Office 34946 Flyover Court Bakers field, CA 93308-9725 (6611392-5500 • FAX 16611 392-5585 

# San Joaquin Valley

AIR POLLUTION CONTROL DISTRICT 

# HEALTHY AIR LIVINGA

GOVERNING BOARD

J. Steven Worthley, Chair Supervisor, Tulare County

Ann Johnston, Vice Chair Mayor, City of Stockton

Tony Barba Supervisor, Kings County DATE: August 18, 2011

TO: SJVUAPCD Governing Board

FROM: Seyed Sadredin, Executive Director/APCO

Project Coordinator: Errol Villegas



### RE: ADOPT REVISED PROPOSED NEW RULE 4566 (ORGANIC MATERIAL COMPOSTING OPERATIONS)

RECOMMENDATION:

1. Approve and authorize the Chair to sign the Negative Declaration prepared for proposed new Rule 4566 (Organic Material Composting Operations) finding that there is no substantial evidence that adoption of Rule 4566 will have significant adverse effect on the environment.

2. Adopt revised proposed new Rule 4566 (Organic Material Composting Operations).

3. Authorize the Chair to sign the attached Resolution.

BACKGROUND:

On April 30, 2007, your Board adopted the 2007 Ozone Plan (Ozone Plan) for the federal 8-hour ozone standard, as set by the U.S. Environmental Protection Agency (EPA) in 1997. To date, the District has achieved and surpassed several milestones and commitments from the Ozone Plan as part of its continued efforts to protect public health and help improve air quality for San Joaquin Valley residents. One of the commitments in the Ozone Plan is the adoption of a regulatory control measure for the reduction of Volatile Organic Compound (VOC) emissions from the composting of green waste.

Pursuant to the schedule in the Ozone Plan, District staff commenced the development of Rule 4566 in 2007 by working with affected stakeholders and conducting research on organic material composting operations and potential emission control techniques. In 2008, your

wlmv.valleyair.orgSJVUAPCD Governing Board

ADOPT REVISED PROPOSED NEW RULE 4566 (ORGANIC MATERIAL COMPOSTING OPERATIONS) August 18, 2011



### Board extended the rule adoption schedule to December 2010 to address stakeholders' concerns regarding the effectiveness of the potential emission control techniques and to allow for further evaluation and research in recognition of the environmental benefits associated with the composting industry. District staff continued to work closely with affected stakeholders and agencies throughout the rule development process to determine feasible mitigation measures that would help achieve emissions reductions. Through the cooperation of the San Joaquin Valleywide Air Pollution Study Agency, affected stakeholders, and other government agencies, a field study was successfully completed in 2010 that yielded new scientific information on the effectiveness of several promising emission reduction strategies. The new information has assisted the District in continuing its effort to develop an effective regulation for composting based on best available science.

In December 2010 and June 2011, District staff provided updates to your Board on the status of the project with plans to bring forth a proposed rule for Governing Board consideration in 2011. At that time, a number of questions still remained regarding the feasibility and cost of actually implementing various potential emission reduction strategies. District staff has made additional efforts, through continuous discussions with stakeholders and site visits, to discuss concerns, examine possible impacts, and to solicit information regarding the feasibility and cost of potential emission reduction strategies that will protect both the public's health and the economic viability of affected composting operations. District staff carefully reviewed the issues raised and made further adjustments to rule language.

Through these efforts, Revised Proposed New Rule 4566 consists of feasible, costeffective measures that would help achieve significant emissions reductions and satisfy, if not go beyond, RACT requirements for this source category. The District is committed in the Ozone Plan 

### to reduce at least 16% of VOC emissions from the baseline emissions for this source category. There are currently 16 Valley cornposting facilities that would be subject to the rule and District staff estimates that the proposed rule would achieve about a 30% reduction in VOC emissions by the time the rule is fully implemented.

DISCUSSION:



### Revised Proposed New Rule 4566 would apply to composting operations in the San Joaquin Valley, specifically the process of composting and/or stockpiling of organic material not subject to existing Rule 4565 (Biosolids, Animal Manure, and Poultry Litter Operations). Composting organic material provides benefits by reducing odors, eliminating pathogens, and reducing the bulk of organic material, but is also responsible for the release of VOC emissions during the process. The District is cognizant of the environmental benefits of the composting industry as it produces a material with various beneficial uses, while also helps local government agencies meet state solid waste

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ADOPT REVISED PROPOSED NEW RULE 4566 (ORGANIC MATERIAL COMPOSTING OPERATIONS) August 18, 2011

diversion goals to preserve landfill capacity by reducing the amount of organic material sent to landfills for disposal. Throughout the development of the rule, District staff has sought to balance the need to obtain emission reductions against the negative impacts that excessive compliance costs could have on this beneficial industry.

Although VOC emissions contribute to ozone, VOC reductions are generally less important to the Valley's long-term attainment goals as compared to reductions in NOx. However, since the District proposed to develop a rule as part of the 

### 2007 Ozone Plan commitment, the rule seeks to obtain as much VOC reductions as expeditiously practical, technologically feasible, and as economically reasonable as determined by your Board. Revised Proposed New Rule 4566 is not expected to have a significant impact on the economic viability of affected composting operations.

Summary of Revised Proposed New Rule 4566

Consistent with the 

### 2007 Ozone Plan commitments, Revised Proposed New Rule 4566 would establish VOC limits, including operational and administrative requirements, for organic material composting operations. However, with the collaborative efforts of the affected stakeholders and by utilizing the best scientific information available, the proposed rule satisfies the District's commitments for emissions reductions while attempting to minimize the fiscal impacts to this beneficial industry.



### Exemptions The following facilities and operations would be exempt from the proposed rule:

• Stockpile and composting operations that are subject to Rule 4565 (Biosolids, Animal Manure, and Poultry Litter Operations).

• Operations that stockpile organic material and are not required to obtain a composting permit from the District or a Compostable Materials Handling Facility Permit in accordance with Title 14.

• Composting of organic material that is generated and used onsite, which includes agricultural composting, community composting, household composting, nursery composting and recreational facilities composting.

• Stockpiling of wood material, finished compost, overs, and organic material that is not used on site for cornposting, provided that the material is not mixed with other organic material and the operator maintains records.

• Facilities and operations that handle organic material as part of their operations and are already subject to similar requirements from other District rules.

These exempt facilities/operations are small-scale composting operations, operations that compost material that is generated and used onsite, or (as expressed by numerous stakeholders) are operations that handle organic material as part of their operations and are already subject to similar requirements from other District rules.

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Composting Requirements 

### Revised Proposed New Rule 4566 would establish VOC emission reduction requirements on the basis of actual throughputs, rather than the maximum allowable capacity limits, for the composting operations, which is representative of the current baseline emissions for this source category.

Based on the results of the field study discussed above, District staff identified two effective potential VOC emissions control strategies for composting: utilization of a watering system and the application of a finished compost cover. To address stakeholder concerns regarding the cost impacts of implementing control techniques, proposed rule requirements are focused on the significantly higher emitting active phase of the composting process.

The proposed requirements are as follows:

• Composting operations with an organic material receiving volume of less than 200,000 wet tons per year (tpy) of organic material would be subject to the watering system requirements during the active phase. Operators would use a watering system to apply water to the windrow before/during turning or use an alternative mitigation measure that demonstrate at least a 19% reduction, by weight, in VOC emissions.

• Composting operations with an organic material receiving volume of greater than or equal to 200,000 tpy and less than 750,000 tpy would be subject to both the watering system and the finished compost cover requirements for each windrow during the active phase of composting. Operators would be required to cover the windrow after formation and after the first three turns or use an alternative mitigation measure that demonstrate at least a 60% reduction, by weight, in VOC emissions.

• Composting operations with total throughput of 750,000 tpy or more would be subject to mitigation measures that demonstrate at least 80% reduction, by weight, in VOC emissions for organic material.

District staff has revised the language for the finished compost cover requirements from the July 19, 2011 version of the proposed rule for clarification purposes and addressed EPA comments in the rule. The concepts and requirements have not changed due to the revisions.

In lieu of measuring actual moisture content with an expensive apparatus, based on recommendations of the composting stakeholders, the District has included provisions that will allow a facility to conduct a very simple, yet effective (industry standard) "ball/squeeze test" to demonstrate that they are properly implementing the watering system requirements.

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Stockpiling Requirements The proposed rule further reduces VOC emissions from composting operations by limiting the number of days that the organic material could be stockpiled. To simplify the District's requirements and minimize rule impacts, the District has aligned Rule 4566 requirements with the State of California Title 14 requirements. The stockpiling requirements are as follows:

• Composting operations with less than 100,000 tpy of organic material would be subject to a 10-day stockpile requirement.

• Composting operations with 100,000 tpy or more of the material would be subject to a three-day stockpile requirement.

Compliance Schedule To minimize rule impacts, the District is proposing an extended compliance schedule for those facilities that would be subject to the finished compost cover or engineered control requirements. Allowing the facility additional years for compliance allows operators operational flexibility in implementing fee increases incrementally (if necessary), or allows additional time for determining an alternative compliance option. The following table shows the compliance schedule for composting operations that would be subject to this rule.

Table 1 — Summary of Compliance Schedule Compliance Schedule Operators Subject to the following Requirements One year after rule adoption date • Stockpile requirements

• Watering system requirements or equivalent alternative mitigation measure Five years after rule adoption date • Finished compost cover or equivalent alternative mitigation measure

• Mitigation measure that demonstrate at least 80% reduction, by weight, in VOC emissions

Emission Reduction Analysis District staff estimates that Revised Proposed New Rule 4566 will result in approximately 4.2 tons per day (tpd) of VOC emission reductions by the time the rule is fully implemented in 2017, which is equivalent to a 30% VOC reduction from the 2010 baseline inventory. Starting in 2012, District staff estimates a reduction of approximately 3.5 tpd of VOC emissions or an equivalent reduction of 25% from the baseline emissions. The emissions reduction that would be achieved by 2012 include all facilities that would be required to implement the watering system and the facility that is already in compliance with both the watering system and finished compost cover requirements. Please refer to Appendix B of the Final Draft Staff Report for the emissions reduction analysis.

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Cost Effectiveness Analysis Pursuant to California Health and Safety Code (CH&SC) Section 40920.6(a), the District is required to analyze the cost effectiveness of new rules or amendments that implement best available retrofit control technology (BARCT) or all feasible measures. For composting operations with less than 200,000 tpy of organic material, the cost effectiveness would be $390 per ton of VOC reduced. The cost effectiveness for composting operations with 200,000 tpy or more and less than 750,000 tpy of organic material ranges from about $2,393 to $2,525 per ton VOC reduced. The range in costs for this category is based on different operational methods and equipment at the facilities. There currently no facilities that process more than 750,000 tons per year of organic material; therefore, no additional emissions reduction is expected from this category. The cost effectiveness analysis is attached as Appendix C of the Final Draft Staff Report.

Socioeconomic Impact Analysis

Pursuant to CH&SC Section 40728.5, the District is required to analyze the socioeconomic impacts of any proposed rule that significantly affects air quality or that strengthens an emission limitation. The socioeconomic report is attached as Appendix D of the Final Draft Staff Report.

The socioeconomic analysis includes the added costs of implementing the watering system requirements for composting operations with less than 200,000 tpy of organic material and costs of implementing both the watering system and finished compost cover requirements composting operations with 200,000 tpy or more and less than 750,000 tpy of organic material. The costs for facilities subject to the watering system requirements are equivalent to 9.8 percent of estimated net income for these facilities, slightly below the 10 percent threshold of significance for socioeconomic impacts.

Two facilities in the District are of sufficient size to invoke both the watering system and finished compost cover requirements, but one already complies with the proposed requirements at a very similar cost of compliance. For the other facility (Recology), which processes large quantities of material from the San Francisco Bay Area, the implementation costs are more than ten percent of estimated annual net income. However, the proposed rule allows for an extended 5 year period prior to requiring the facility to implement the finished compost cover requirements. Although current market conditions would not permit a large price increase; the District believes through a 5-year period, the increase may be achievable. In addition, the rule allows for an alternative compliance option in lieu of implementing the finished compost cover, so as technology and research advances within the next 5 years, a less expensive option may become feasible for the facility to implement.

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Rule Consistency Analysis

Pursuant to CH&SC Section 40727.2, District staff has prepared a rule consistency analysis that compares the elements of Proposed New Rule 4566 with the corresponding elements of other District rules, federal regulations and guidelines that apply to the same type of equipment or source category.

Based on the analysis of local, District, state, and federal rules that apply to the sources that would be affected by Rule 4566 (Organic Material Composting Operations), District staff has concluded that no provisions of Rule 4566 conflict with requirements of local, District, state, or federal rules, regulations, or policies for these facilities. Please refer to Appendix E of the Final Draft Staff Report for the analysis.

Environmental Impacts

Pursuant to the California Environmental Quality Act (CEQA), staff investigated the possible environmental impacts of Proposed New Rule 4566, and finds that there is no substantial evidence that the project may have a significant effect on the environment. Pursuant to CEQA Guidelines §15063 (a), District staff prepared an Initial Study and Negative Declaration for the project. The District has issued and made available an initial study and draft negative declaration for public review and comment. Upon approval of the proposed new rule by your Board, District staff will file a Notice of Determination with each County Clerk within the boundaries of the District, CEQA Guidelines §15075(d). District staff did not receive any significant comments during the public commenting period. Please refer to Appendix F of the Final Draft Staff Report for further discussion of this analysis.

Rule Development Process

District staff began the rule development process with extensive research in 2007, which was followed by a public scoping meeting on January 10, 2008. Based on the research conducted and information obtained with the best available data, the District created a draft version of Rule 4566 that proposed to adopt a menu based approach and require the implementation of various management practices (such as monitoring carbon to nitrogen ratios, moisture content, and oxygen concentration), including installation of engineered control systems. To obtain comments on the draft rule, the District held a public workshop in April 2008 and convened several site visits and technical workgroup meetings during 2008 and 2009 to work with various stakeholders to address costs, technical feasibility, economic impacts, and other limitations or benefits to this regulatory approach.

Although the meetings and visits in 2008 were intended to culminate in the Governing Board adoption of Rule 4566 in the first quarter of 2009, information that came to light during those meetings showed that more time would be needed to increase the

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scientific justification behind proposed rule requirements which would allow the District to develop an effective composting rule. District staff had determined that emissions from this source category were much lower than previously estimated in the 2007 Ozone Plan. There was also insufficient information available, at that time, on the effectiveness of reducing VOCs from potential mitigation measures. For these reasons, District staff determined that additional time was needed to study the effectiveness of various emissions control methods. District staff therefore requested an extension to the rule development schedule in 2008 from the first quarter of 2009 to the fourth quarter of 2010.

In 2009, multiple agencies contributed $200,000 for the composting field study, which was conducted at Tulare County Composting by the San Diego State University Research Foundation. The District engaged in extensive stakeholder involvement and numerous technical workgroup meetings to help define the parameters of the field study. Participants of these meetings included composting operators, ARB, California Department of Resources Recycling and Recovery (CalRecycle), agricultural groups, environmental advocates, other air districts, and city and county agencies. The results of this study were successfully completed in 2010 and formed the basis for the Proposed New Rule 4566.

In September 2010, the District held a workshop to present and discuss the proposed rule concepts. Based on the results of the study, the District drafted rule requirements that would require facilities with annual throughputs of more than 10,000 tons year and less than 25,000 tons per year to implement the watering system requirements, whereas, composting facilities with throughputs greater than 25,000 tons per year would have been required to implement the finished compost cover. Based on the industry reaction to the proposed rule requirements, District staff worked closely with the affected stakeholders to refine the rule requirements, as well as address the cost impacts to affected facilities and feasibility concerns for the watering system and finished compost cover requirements. The District convened additional technical working group meetings to discuss potential applicability thresholds greater than the 10,000 ton per year limit and refine other proposed rule requirements.

Approaching the extension deadline with a number of questions still remaining regarding the feasibility and cost of actually implementing these various potential emission reduction strategies; in December 2010, District staff provided an update to the District's Governing Board on the status of this project with plans to bring forth a proposed rule for Governing Board consideration in 2011. District staff continued to work closely with stakeholders to address these remaining issues. District staff conducted weekly discussions with affected operators and composting representatives to obtain cost estimates and devise solutions to overcome feasibility questions. Staff and management have conducted additional site visits throughout the Valley to discuss stakeholder concerns in person and to better understand the implications of proposed rule requirements to the operations. Based on the collaboration with the interested

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### stakeholders, the District was able to refine the rule requirements and minimize the overall impacts associated with the proposed rule.

Using the costs and information received from stakeholders, District staff refined the draft rule concepts to include detailed information on the watering system requirements for composting operations with less than 200,000 tons per year of organic material and finished compost cover requirements for composting operations with 200,000 tons per year or more of organic material. To further solicit input from affected stakeholders, the District held a technical working group meeting in March 2010 to present the revised rule concepts to the workgroup. The rule concepts would allow operators the ability to comply with the requirements with minimal impact to the composting operations. District staff also addressed operators concerns with rain events and water run off issues with implementing the watering system. After the meeting, District staff continued to work with the operators to address the costs of implementing the mitigation measures, update the facility throughput information, and gather information on the feasibility of implementing the finished compost cover.

District staff conducted a public workshop in June 2011 to present, discuss, and receive comments on the draft rule, staff report, and a socioeconomic analysis report. During the commenting period, District staff worked with the affected stakeholders to resolve any remaining concerns, specifically on industry's costs of implementing the watering system and the feasibility of implementing the finished compost cover requirement for one facility. District staff has incorporated the additional information received from stakeholders into the staff report and proposed rule, as appropriate.

While the feasibility of implementing the selected mitigation measures was no longer a primary concern, the cost of implementing the finished compost cover was still a concern for one facility (Recology). Staff has continued to work closely with Recology staff to understand and refine their cost estimates to develop the best information possible to evaluate potential rule requirements.

Based on discussion and information received from the Valley stakeholders, District staff has found that the finished compost cover application would be too costly for most facilities and that one large composting facility is already implementing the finished compost cover requirement as part of its operation. For the one facility that would be impacted by the finished compost cover requirements, based on its throughput capacity, the additional cost on a per ton basis is close to the cost of what the other facility is absorbing as part of its operation.

To address the remaining operator's concern with implementing the finished compost cover requirements, the proposed rule would extend the schedule for the finished compost cover to five years. District staff recognizes the potential implications that the proposed requirements may have on Recology's facility and will continue to work with the operator to evaluate ways to comply with the proposed requirements. The operator

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### would be given five years to determine and develop effective control strategies specific to the facility's operation. The additional time would also allow for any incremental absorption of costs or increase in tipping fees/sales.

District staff has published the notice of public hearing for the Proposed New Rule 4566 in general circulation newspapers in each of the eight San Joaquin Valley counties. The proposed new rule and staff report with appendices were made available for public review on July 19, 2011. The publication provided affected sources and interested parties the opportunity to review and comment on the proposal prior to the public hearing on August 18, 2011. A summary of the significant comments received and District responses are presented in Appendix A of the Final Draft Staff Report.

FISCAL IMPACTS:

District staff expects no fiscal impact to the District to result from this action.

Attachments: Resolution for Proposed New Rule 4566 (5 pages) California Environmental Quality Act (CEQA) Initial Study and Final Negative Declaration for Proposed New Rule 4566 (31 pages) Proposed New Rule 4566 (16 pages) Final Draft Staff Report with Appendices for Proposed New Rule 4566 (148 pages)



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