1 Revised Final Staff Report For Rule 4550 and Rule 3190 SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

REVISED FINAL STAFF REPORT

PROPOSED RULE 4550 (CONSERVATION MANAGEMENT PRACTICES) and PROPOSED RULE 3190 (CONSERVATION MANAGEMENT PRACTICES PLAN FEE)

August 19, 2004

Prepared by: Patia Siong, Air Quality Specialist Renee DeVere, Air Quality Specialist

Reviewed by: Dave Mitchell, Planning Manager Donald Hunsaker, Supervising Air Quality Planner Ted Strauss, Supervising Air Quality Inspector Saul Gamez, Air Quality Engineer Darrin Pampaian, Air Quality Engineer

I. REASONS FOR RULE DEVELOPM ENT AND IMPLEMENTATION

The San Joaquin Valley Air Basin (SJVAB) is classified as a serious nonattainment area for the National Ambient Air Quality Standard (NAAQS) for PM10. The federal Clean Air Act requires areas designated as serious nonattainment for PM10 to implement Best Available Control Measure (BACM) and Best Available Control Technology (BACT) on all significant sources of emissions. In addition, due to the failure by the SJVAB to attain the NAAQS PM10 standard, the San Joaquin Valley Pollution Control District (District) is required to show a five percent per year reduction in PM10 or PM10 precursors emissions starting in 2003 until attainment is reached. The District is also required to demonstrate attainment of the NAAQS PM10 standards at the earliest possible date.

District staff has identified agricultural sources as significant sources of emissions and a source for PM10 emissions reductions. Agricultural sources are defined as any activity or portion of land associated with the commercial growing of crops or the raising of fowl or animals. New Rule 4550 (Conservation Management Practices) is part of the District’s particulate matter attainment strategy. In this project, Rule 4550 would be developed to implement BACM on agricultural sources and to achieve PM10 emission reductions to help meet the five percent per year reduction in PM10 emissions. InSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

2 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 addition, new Rule 3190 (Conservation Management Practices Plan Fee) would be developed to allow the District to collect fees from the affected agricultural sources. Such fees would be used by the District to offset the administrative and compliance costs of the CMP Program.

The District’s 2003 PM10 Plan contains a commitment to implement the Conservation Management Practices (CMP) Program by July 2004. The 2003 PM10 Plan relies on emissions reduction expected from the CMP Program to achieve the mandated 5% per year reductions and to demonstrate attainment of annual and 24-hour PM10 standards. Therefore, District staff intends to submit Rule 4550 and Rule 3190 to the District Governing Board for consideration of adoption no later than the second quarter of 2004.

II. RULE DEVELOPMENT PROCESS

Ordinarily, District staff holds scoping meetings during the initial stages of the rule development process. The primary purpose of the scoping meetings is to introduce the objectives of the rule project, collect information, and solicit comments from interested parties, affected industry producers, and stakeholders useful in developing the draft staff report and draft rules. For this project, District staff utilized alternatives to the usual scoping meetings since District staff and agricultural representatives of the Agricultural Technical Advisory Committee, commonly known as the AgTech Committee, organized numerous grower and stakeholder meetings over the past two years to discuss the CMP Program and rule issues, and to collect information.

District staff conducted two rounds of workshops in the Fresno, Modesto, and Bakersfield offices in December 2003 and March 2004. District staff presented the objectives of the proposed rules at both workshops and presented the draft list of conservation management practices at the workshop in March. District staff received comments from interested parties, affected sources, and public agencies. The comments received during the workshops were incorporated in the proposed Rules 4550 and 3190, and the draft CMP list as appropriate. The District has included responses to comments in an appendix of this draft staff report. Clarifications were made to the rules and CMP list. Final drafts for the proposed rules, the CMP list and staff report will be published prior to a public hearing to consider the adoption of the proposed rules and approval of the CMP list by the District Governing Board. This public hearing is scheduled for May 2004.

In addition, District staff is required pursuant to state law to perform a socioeconomic impact analysis prior to the adoption, amendment, or repeal of a rule that has significant air quality benefits or that will strengthen emission limitations. As part of the District socioeconomic analysis process, District staff solicited representatives from interested groups to participate as members of a Focus Group. Due to the different types of industry affected by the proposed rules, several Focus Group meetings were held in January and February. Information gathered from the meetings assisted District staff in gathering information on regulatory compliance costs and financial impacts resulting from complying with the rule.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

3 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 III. BACKGROUND ON THE CONSERVATION MANAGEMENT PRACTICE PROGRAM

The most recent inventory for PM10 indicates that agriculture related sources produce over half of all directly emitted PM10 emissions. Data from the California Regional Particulate Air Quality Study (CRPAQS) indicates that geologic material comprises nearly 46 percent of the filter mass on an annual basis. Agriculture related sources are responsible for a significant portion of these geologic emissions. Review of regulations in other serious nonattainment areas revealed that two other air agencies (South Coast Air Quality Management District, California, and Arizona Department of Environmental Quality, Arizona) have adopted agricultural best management practices (BMPs) programs which were approved by EPA as BACM. The District’s Conservation Management Practices Program is similar to these programs, but goes further.

In the District’s CMP Program, the practices are called conservation management practices, which are practices that reduce the emission of air pollutants. Emissions from agricultural sources vary by many factors that are beyond the control of the grower or the animal feeding operation (AFO) producer. Limited research on the effectiveness of agricultural practices on emissions has been completed to date. The EPA has recognized these problems and has allowed programs where growers and AFO producers can select practices that are feasible for their operation as BACM.

California SB 700 is one of a package of air quality bills sponsored by Senator Dean Florez in 2003. SB 700 includes requirements for the District to adopt a rule or regulation that requires BACM and best available retrofit control technology (BARCT) for agricultural practices. The intent of the bill is to require PM10 nonattainment areas such as the District to adopt a management practice program such as the one proposed here. District staff has reviewed the legislation and made an interpretation of its requirements. Based on analysis by District staff, the District is to assume the role as the CMP Program Administrator and to have final approval of CMP Plans.

A. CMP Program Concept

The purpose of the CMP Program is to limit fugitive PM10 emissions from agricultural sources. The CMP Program also includes CMPs that reduce PM10 precursor emissions. Participation in the CMP Program will be mandatory unless the source falls below the exemption level described later. Growers and producers must select at least one CMP most appropriate for implementation for their operation from each of the identified applicable CMP categories, but have no specific individual emission reduction target. The AFO producers that also grow field crop must select CMPs for both their field crops and for their AFO. The selected CMPs must be noted on the applications provided and available in the CMP handbooks. The applications must be submitted to the District for approval. The program will use applications that only require the minimum amount of information needed for the District to calculate emission reductionsSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

4 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 and understand the CMPs selected. The completed applications will constitute a CMP Plan when approved by the District. Guidance handbooks and a CMP List will be provided to assist growers in selecting CMPs and in preparing the applications.

B. CMP Program Assistance

The District has in place a Memorandum of Understanding (MOU) with the Natural Resource Conservation Services (NRCS) and the California Department of Food and Agriculture (CDFA) that commits the agencies to work together on the development and implementation of measures dealing with agricultural operations. The NRCS and the Resource Conservation Districts (RCDs) can provide assistance to growers and AFO producers in selecting CMPs and filling out applications. The NRCS would also work with the applicants that submitted incomplete plans to obtain the necessary information. The District will be responsible for tracking emission reductions achieved by the CMP Program, for taking any enforcement action regarding the mandatory portions of the program, and for collecting the fees for the program. Additional assistance to growers and AFO producers may be available from the Agricultural Research Service (ARS), CDFA and agricultural groups, such as farm organizations, agriculture trade associations, and grower groups. The District will also work with county agencies that may be able to assume portions of program responsibilities where it would result in operational efficiencies and allow compliance with state and federal requirements.

C. Affected Sources

The CMP Program is applicable to agricultural sources that grow crops or have AFOs such as dairy, feedlot, chicken and turkey operations. As information becomes available for other livestock such as swine, sheep or horse operations, they would be included in Rule 4550 and in the CMP Program if necessary.

The District proposes a de minimis level of 100 contiguous acres above which farms would be required to submit applications to be approved as a CMP Plan. This level ensures that 90% of the harvested acres in the San Joaquin Valley will implement CMPs. This reduces the administrative burden and program costs while achieving the needed reductions. The District also proposes de minimis levels of 500 mature dairy cows, 190 beef cattle or heifers, 82,000 laying hens, 125,000 chickens (except layers), and 55,000 turkeys. With these levels, it is estimated that more than 70% of the population would be covered under the CMP Program. The de minimis level is based on emissions of 1 ton per year as allowed in SB 700. Based on economic data, owners of farms and animal feeding operations with size under the exemption threshold will tend to have less income and capital available to invest in the new equipment and systems to meet the CMP requirements. Another reason is the owner of these farms and operations is typically a primary laborer on the facility and may not have the flexibility to modify practices without adding additional labor.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

5 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 D. Conservation Management Practices

Through the work of the AgTech Committee and stakeholders, CMP categories and a preliminary list of CMPs have been identified and developed. Currently, there are five CMP categories for the crop growing and harvesting operations, four CMP categories for the dairy and feedlot operations, and five CMP categories for poultry operations. One CMP must be selected from the CMP list under each category.

Conservation management practices reducing emissions fall into several broad CMP categories:

• Practices that reduce or eliminate the need to disturb the soil or manure;

• Practices that protect the soil from wind erosion;

• Equipment modifications to physically produce less PM10;

• Applying water or dust suppressants to reduce emissions entrained by moving vehicles and equipment;

• Reducing speed or access on unpaved roads and parking areas;

• Alternative practices to waste burning; and

• Practices that reduce pesticide use or emissions from agricultural internal combustion engines.

The overall list of CMPs is attached as an appendix to this staff report and will also be included in a CMP Handbook to be made available to the affected sources. EPA has requested that the draft list of CMPs be included in the State Implementation Plan submittal of Rule 4550. Therefore, District staff is proposing to present it to the Governing Board for approval. Revision to the draft list of CMPs will be approved by the APCO. This process is similar to what the District does with its list of BACT determinations for stationary sources.

As technology advances, new practices will become available. The District will conduct a major review of the CMPs as part of the Reasonable Further Progress Plan that is prepared every three years by the District (March 2006). Existing CMPs will be reviewed to ensure that they are still appropriate. Any practice to be considered a CMP and added to the CMP List will be reviewed by the AgTech Committee and approved by the APCO.

E. Compliance Assurance and Backstop Provisions

The 2003 PM10 Plan was required to include contingency measures that would be available to provide additional emission reductions in case a shortfall is encountered after rule implementation. For the CMP Program, the contingency measure is referred to as a backstop. The proposed backstop will be triggered if the projected emission reductions for the CMP Program are not achieved by the end of 2005 to meetSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

6 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 reasonable further progress (RFP) requirements. This backstop provision is further explained in the summary of Rule 4550 below.

F. Proposed Fee Rule

To recover costs related to its role as the CMP Program administrator, the District is proposing a schedule of fees based on an estimate of the cost of evaluating plans and monitoring and enforcing activities in accordance with Health and Safety Code Section 41512.5. The fee schedule was presented as new Rule 3190 at the workshops and will also be presented to the Governing Board for adoption in May 2004. Description of proposed Rule 3190 is provided later in the staff report.

G. Incorporating Rule 8081 (Agricultural sources) Requirements

During the rule development process, a number of stakeholders suggested that the District incorporate the requirements for agricultural sources from Rule 8081 into the CMP Plan to reduce duplicated effort. District staff plans to establish a process whereas the requirements for Rule 8081 would be identified in the CMP List and CMP Handbook. Thus, those subject to the unpaved road and unpaved equipment yard provisions of Rule 8081 would be able to comply with these requirements through their CMP Plans required by Rule 4550.

IV. PROPOSED RULE 4550

A. Proposed Provisions of New Rule 4550

The purpose of new Rule 4550 is to limit fugitive dust emissions from agricultural operation sites. The rule also provides reductions of PM10 precursors from some CMPs. Rule 4550 would apply to agricultural operation sites of 100 contiguous acres or more of cropland, AFOs with 500, or more, mature dairy cows, 190, or more, beef cattle or heifers, 82,000, or more, laying hens, 125,000, or more, chickens (except layers), and 55,000, or more, turkeys.

Rule 4550 would not apply to other types of AFOs such as swine, horse or sheep. PM10 emission factors for these operations are not available. Based on the population data from the 1997 agriculture census and comparing them with emissions from other species, District staff estimated that the emissions would likely be less than the 1 ton/year de-minimis level as allowed in SB700. The number of facilities of these operations is small in the San Joaquin Valley. In addition, it is reasonable to assume that fugitive PM10 emissions would not be significant based on the management of these operations. District staff may adjust the exemption thresholds and determination as new information becomes available.

The proposed provisions of Rule 4550 require growers and AFO producers who are subject to the CMP Program to participate by submitting applications for DistrictSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

7 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 approval as a CMP Plan and implement their selected CMPs. In the early development of the rule, District staff used the concept of the CMP Program in Appendix H of the 2003 PM10 Plan, as the primary basis for the proposed rule and modified it to meet requirements in SB 700.

The proposed requirements specify that the growers and AFO producers must select one CMP for each of the identified applicable CMP categories for their operations and implement the CMPs. The selected CMPs are to be listed on applications which would be submitted to the District by December 31, 2004 for approval as a CMP Plan. Changes to the CMP Plan must also be submitted to the District for approval.

Rule 4550 contains provisions that address the selection and implementation of CMPs. It is expected that there may be occasions where a CMP could not be selected or implemented for certain reasons. For example, if a CMP could not be selected from one CMP category due to infeasibility, Rule 4550 allows the selection of two CMPs in one CMP category to substitute for the other CMP category where no CMP could be selected. To address concerns identified after the workshops in March, Rule 4550 was revised to remove the provision allowing the complete opting out of CMP categories if growers/producers can demonstrate that no practices are technologically or economically feasible for their operation, subject to APCO approval. The list of CMPs is expected to provide sufficient choices so that the likelihood of situations where a grower would need to opt out of CMP categories will be minimal.

B. Backstop provision of Rule 4550

If by December 31, 2005, Rule 4550 does meet its reduction target, the backstop will require the District to take actions necessary to meet the goal of the CMP Program by increasing the number of CMPs to be implemented, or lowering the exemption thresholds, or taking other actions. Based on comments received during the workshops, the first action that should be taken would be to lower the exemption levels of the rule. This would allow for less disruption of the existing program for growers with CMP Plans in place and would reduce the potential administrative burden of accepting thousands of plan revisions. Should additional reductions be necessary to achieve the necessary emission reductions, the potential to require additional CMPs or different CMPs will be available. In addition, the PM10 Plan update scheduled for March 2006 will provide the Governing Board with an option to revise the program if better methods are identified from experience during the initial implementation of Rule 4550.

V. PROPOSED RULE 3190

Rule 3190 (Conservation Management Practices Plan Fee) is being developed to recover the cost related to the review, approval of the applications, and enforcement of the CMP Applications/Plans in accordance with Rule 4550.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

8 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 Rule 3190 contains fee schedules that establish a range of initial review and approval fee rate and a biennial fee of $100 for each agricultural operation site required tohave a CMP Plan. The initial review and approval fee rate is on a sliding scale and is based on the acreage and number of animals within an agricultural operation site. Each grower and operator subject to Rule 4550 would be assessed this one-time initial review and approval fee and the biennial renewal fee.

Rule 3190 contains opportunity for owners/operators to reduce their fee. One example is a reduced initial review and approval fee if the application is verified by a CMP Program Evaluator such as the NRCS or RCD prior to submitting it to the District for approval and if other conditions are met.

District staff plans to present Rule 3190 for adoption along with Rule 4550. District staff already presented the fiscal impacts, which included financial and staffing increases to manage the CMP Program to the Governing Board for approval in January 2004 District staff received comments from some stakeholders on the fee schedules and recommends that, after the District gains experience operating the CMP Program, District review the cost of the CMP Program and bring recommendations for revisions to the Governing Board if needed.

VI. CURRENT EMISSIONS AND EMISSION REDUCTION ESTIMATE

The 2002 emissions inventory indicates that PM10 emissions from agriculture-related sources total 197 tons per day, or more than half of all directly emitted PM10 emissions. For the 2003 PM10 Plan, District staff estimated that PM10 emissions will be reduced by 34 PM10 tons per day by 2010 or about 23 percent of the emissions from these source categories. The report is included as an appendix to this staff report.

VII. COST AND COST EFFECTIVENESS ANALYSIS

District staff has estimated the potential cost effectiveness to be achieved from implementing Rule 4550. This analysis is also addressed in an appendix of this staff report.

VIII. SOCIOECONOMIC ANALYSIS

The District’s independent contractor, Applied Development Economics (ADE), has prepared the draft socioeconomic impact analysis report of the proposed Rules 4550 and 3190. District staff used the socioeconomic impact analysis to further evaluate the appropriateness of the proposed rules. The socioeconomic report was presented to the public at the final workshop for the rule. The final report will be presented to the Governing Board to disclose any socioeconomic impacts. The final draft socioeconomic impact analysis report is an appendix of this staff report. The report concludes that the rules will not have a significant adverse economic impact on agriculture.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Revised Final Draft Staff Report: Rule 4550 and Rule 3190 August 19, 2004

9 Revised Final Draft Staff Report For Rule 4550 and Rule 3190 IX. ENVIRONMENTAL IMPACTS

In accordance with current CEQA requirements the District prepared an Initial Study of draft Rule 4550. District staff made the preliminary determination that Rule 4550 would not have a significant effect on the environment and that a Negative Declaration would be prepared. On March 31, 2004 the District posted a Notice of Availability for the proposed Negative Declaration for Draft Rule 4550. The posting was made available to the public and other potentially affected agencies via the eight county clerks offices within the San Joaquin Valley air basin, valley newspapers, and State Clearinghouse filing and circulation (SCH#2004031144). The commenting period closed on April 29, 2004 without any comments being received. The District prepared a proposed Negative Declaration and will file a Notice of Declaration upon approval by the Governing Board.

X. RULE CONSISTENCY ANALYSIS

Pursuant to state Health and Safety Code, Section 40272.2, District staff prepared a rule consistency analysis and is included as an appendix to this staff report.

XI. REFERENCES

1. SJVAPCD 2003 PM10 Plan 2. SJVAPCD 2003 PM10 Plan, Appendix H “Concept - Conservation Management Practice Program for the San Joaquin Valley” 3. Proposed Amendments to the SJVAPCD 2003 PM10 Plan 4. California Senate Bill 700