April 8, 2008

Air Pollution Control Board

800 South Victoria Avenue Ventura, CA 93009

SUBJECT: PUBLIC HEARING TO ADOPT PROPOSED AMENDMENTS TO RULE 74.12, SURFACE COATING OF METAL PARTS AND PRODUCTS

RECOMMENDED ACTIONS:

1. Approve CEQA Notice of Exemption for Proposed Amended Rule 74.12, Surface Coating of Metal Parts a nd Products (Attachment 1).

2. Approve and adopt the stat utory rulemaking findings for Proposed Amended Rule 74.12, Surface Coating of Metal Parts and Products (Attachment 2).

2. Approve and adopt proposed amendments to Rule 74.12, Surface Coa ting of Metal Parts and Products (Attachment 3).

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

Control District.

4. Direct Air Pollution Control Officer or his designee to file the Notice of CEQA Exemption pursuant to CEQA Guidelines Section 15062.

FISCAL / MANDATES IMPACT:

Mandatory: Yes. Implements the provisions of Health and Safety Code section 40914(b)(2),

"All Feasible Measures."

Fiscal Impact: No impact; as proposed, the revi sions will be implemented by existing staff.

STATEMENT OF MATTER FOR BOARD CONSIDERATION:

Background

Rule 74.12, Surface Coating of Metal Parts and Products, was first adopted on November 19, 1985, and has been the subject of several revi sions since that time. The current proposed amendments to Rule 74.12 are necessary because th e District's Air Quality Management Plan isAir Pollution Control Board Page 2 April 8, 2008

required to expeditiously implement "every fe asible measure" to reduce ozone precursor emissions by at least 5 percent annually (inc luding reactive organic compounds, or ROC) to

attain the California ambient ozone standard. See Health and Safety Code § 40914(b)(2).

On October 9, 2001, your Board adopted an addendum to the Ventura County Triennial Plan that

included a Feasible Control M easure to amend Rule 74.12 and a ttain emission reductions from operations involved in the surface coating of meta l parts and products. In addition to the above, this proposal will implement Best Available Retrofit Control Technology (BARCT) for this stationary source category, as require d by the California Clean Air Act.

Proposed Rule 74.12 Amendments

1. Reduce the ROC limit for general air-dry one-component coatings from 2.8 pounds per gallon to 2.3 pounds per gallon (Subsection B.1).

2. Create a new multi-component coating cat egory with an ROC limit of 2.8 pounds per gallon; this category will exclude other lis ted specialty multi-component coatings.

Both of these revisions are based on similar coating categories and emission standards in South Coast Air Quality Management District (S CAQMD) Rule 1107, which became effective on March 1, 1999. Compliant metal co atings are available and currently in use in both the SCAQMD jurisdiction (i.e, Los Angeles, Orange , San Bernardino and Riverside Counties) and Ventura County.

3. Eliminate the special category in Subsection B.1 for laboratory furniture coatings. The only laboratory furniture manufacturer in the county, Hanson Lab Furniture, is using a very low-ROC coating material for its metal products. Any new lab furniture operation will be required to meet the Best Availabl e Control Technology (B ACT) requirements in Rule 26, New Source Review.

4. Require the use of low-emission cleanup so lvents for surface preparation, spray gun cleaning and general purpose cleanup in Subsect ion B.4. ROC content will be limited to no more than 25 grams per liter, or 0.21 pounds per gallon. This limit appears in the November 7, 2003, revision to SCAQMD Rule 1171, Solvent Cleaning Operations . This proposed amendment is considered feasible because compliant solvents, including acetone, acetone-blended solvents, and water, are available and in use at many metal parts paint shops in Ventura County.

5. Add new definitions for "Capture Effici ency," "One-component Coating," and "Multicomponent Coating." Revise the definition of "High Gloss Coating" to incorporate a multi-component requirement.

6. Revise the definition of "High Volume Lo w Pressure Application (HVLP)" and add an

HVLP test standard in Subsection E.9

7. Revise the capture efficiency test method in Subsection E.4.Air Pollution Control Board Page 3 April 8, 2008

8. Make various text changes required to accommodate the proposed revisions.

The effective date for these revisions is 90 days after the date of adoption.

Discussion

Emission Reductions

There are currently 53 facilities that coat metal pa rts or products in Ventura County. Of those, 33 currently comply with the proposed amended surface coating requirements in Rule 74.12, and 26 comply with the proposed cleaning solvent requirements. The 53 facilities have a total actual average emission rate of about 35 tons of ROC per year. The proposal will reduce actual ROC emissions from this source category by about 19 pe rcent, or 6.64 tons per year. About 36 percent

of the total annual emi ssion reduction, or 2.40 tons per year, is a result of the change to the coating requirements. The remain ing emission reductions (4.24 tons pe r year) are attributable to the proposed low-ROC cleaning solvent requirements.

To determine actual emissions, staff reviewed annual inspection reports back to about 1999. These reports include coating and solvent descri ptions and annual throughput totals. This information was used to determine average actual emission rates and material use.

Cost Effectiveness

To determine the cost of the proposed coating re quirements, staff surveyed a number of coating suppliers and collected current prices for 14 co mplying single-component coatings; the average cost of these coatings is $41.95 per gallon. In add ition, prices for four in-use coatings were also obtained; the average cost is $38.05. The differe nce in cost is $3.90 per gallon. Non-complying

facilities were deter mined to use a total of 9,502 gallons of coating per year (Staff Report, Appendix C). On this basi s, and assuming a 2.40 ton per year ROC reduction, the costeffectiveness of replacing certain 2.8 lb/gal co atings with 2.3 lb/gal coatings is $15,441 per ton

of ROC reduced.

For the cleaning solvent revisions, staff assumed that the ROC solvent currently in use is common lacquer thinner; local i nquiries establish the cost of this solvent at $12.00 per gallon. The cost of three replacement complying solvents were also determined: these costs range from $13.00 per gallon to about $30 per gallon. Non-comp lying facilities were determined to use a total of 1,524 gallons of solvent per year (Sta ff Report, Appendix B). On this basis, and assuming an emission reduction of 4.24 tons of ROC per year (4.40 for acetone, an exempt solvent), the cost-effectiveness of the proposed low-ROC solvent requirement ranges from $359 per ton of ROC reduced to $6,470 per ton.

The District maintains a Best Available C ontrol Technology (BACT) cost-effectiveness guideline of $18,000 per ton of ROC reduced. All of the above cost effectiveness estimates are below this threshold. Therefore, the proposed revisions are reasonable based on the cost of

control.Air Pollution Control Board Page 4 April 8, 2008

Public Participation

Staff held a public workshop on the proposed amendments to Rule 74.12 on August 30, 2007. No modifications to the proposed revisions we re suggested. The Environmental Protection Agency, Region IX, made informal comments on the rule; these comments were incorporated into the proposed amended rule. The A dvisory Committee unanimously recommended the proposed revisions to Rule 74.12 on February 26, 2008.

PROPOSED FINDINGS:

Health and Safety Code Sections 40001( c), 40703, 40727, 40728.5 and 40920.6(a) direct that, prior to adopting the proposed revisions to Ru le 74.12, your Board adopt findings of necessity, authority, clarity, consistency, nonduplication, re ference, cost-effectiveness, incremental costeffectiveness, and socioecono mic impacts, based upon relevant information presented at the hearing. Health and Safety Code Secti on 40727.2 requires a written analysis, comparison, and consideration of existing air pollution regulations that apply to the same type of source. Therefore, if your Board approves the proposed revisions to Rule 74.12, it is recommended that your Board also adopt the proposed findings set forth in Attachment 1.

District staff has determined that the propos ed amendments to Rule 74.12 are categorically exempt from the requirements of the Califor nia Environmental Quality Act (CEQA) under Sections 15307 (Actions by Regulatory Agencies for Protection of Natu ral Resources) and 15308 (Actions by Regulatory Agencies for Protection of the Environment) of the CEQA Guidelines. A Notice of Exemption with respect to this CEQA exemption is included as Attachment 2.

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

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

MICHAEL VILLEGAS

Air Pollution Control Officer

Attachments: 1. Proposed Notice of CEQA Exemption - Rule 74.12 2. Proposed Legislative Findings – Rule 74.12 3. Proposed Rule 74.12 (strikeout/underline, 2/29/08) 4. Proposed Rule 74.12 (clean version, 2/29/08) 5. Final Staff Report (2/29/08) 6. Advisory Committee Voting Record (2/26/08)