### ATTACHMENT B



## SOCIOECONOMIC IMPACT ASSESSMEN **T**

**PROPOSED NEW**  **RULE 66.1**  **- MISCELLANEOUS SURFACE COATING OPERATIONS AND OTHER PROCESSES** 

**EMITTING VOLATILE ORGANIC COMPOUNDS**

**October 200**  **9**

**Prepared by San Diego**  **County Air Pollution Control Di**  **strict**

**10124 Old Grove Road San Diego, CA**  **92131 SOCIOECONOMIC IMPACT ASSESSMENT**  **PROPOSED NEW**  **RULE 66.1**  **- MISCELLANEOUS SURFACE COATING OPERATIONS AND OTHER PROCESSES** 

**EMITTING VOLATILE ORGANIC COMPOUNDS**

**TABLE OF CONTENTS**
**PAGE** EXECUTI

VE SUMMARY 1 I. INTRODUCTION 2 II. NECESSITY OF FUNDAMENTAL REVI SI ONS OF RULE 66 2 III. SUMMARY OF NEW RULE 66.1 3 IV. TYPE OF INDUSTRIES AFFECTED BY RULE 66 .1 5 V. SOURCES RE GULATED BY CURRENT RULE 66 AND THEIR VOC EMI SSI ONS 5 VI
. EMI SSI ON REDUCTION POTENTIAL OF THE PROPOSED NEW RULE 8 VII
. RANGE OF PROBABLE COSTS TO I NDUSTRY INCLUDING SMALL BUSINESS 9 VIII
. IM PACT OF THE PROPOSED REVISED RULE ON EMPLOYMENT AND THE REGIONAL ECONOMY 10 IX. AVAILABILITY AND COST
- EFFECTIVENESS OF ALTERNATIVES 10SIA for SDAPCD Rule 66.1 B
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### EXECUTIVE SUMMARY This report represents the results of a socioeconomic impact assessment (SIA) of the San Diego County Air Pollution Control District’s (District) proposed new Rul e 66.1

– Miscellaneous C oating Operations and Other Processes Emitting Volatile Organic Compounds (VOCs)
. The new rule will replace existing Rule 66 , which regulates VOC emissions from the usage of organic solvents in miscellaneous processes. Rule 66 has become seriously outdated since its initial adoption in 1972 and minor revision in 1995
. The main purpose of the fundamental revision and replacement of Rule 66 is for consistency with other District rules regulating VOC emissions, e. g., to include a cur rent definition of VOC as it is now used to define p hotochemicall y r eactive c ompounds. Proposed Rule 66.1 contains VOC emission limits for the major processes or operations conducted b y the affected facilities , which are similar to the existing rule. How ever, the new rule will also control VOC emissions from surface cleaning and surface preparation operations by requiring the use of materials with a low VOC content or with a low VOC vapor pressure. (Existing Rule 66 has no limits on the VOC content or va

por pressure of cleaning materials.) Rule 66.1 includes recordkeeping requirements for manufacturers or suppliers of VOC containing materials and their users. The rule incorporates updated test methods and is reformatted according to similar District rul es. The proposed new rule is required pursuant to State requirements for expeditiously adopting every feasible control measure and federal requirements for use of Reasonabl y Available Control Technology (RACT) on sources of VOC emissions
. New Rule 66.1 w ill apply to the same 172 existing facilities , which are currently regulated under Rule 66, i.e. , miscellaneous processes not subject to other District rules
. The new rule implementation will result in the VOC emission reduction from the use of compliant cleaning materials of approximately 9.1 tons per ye ar , or by 16.4%. New Rule 66.1 is not anticipated to have a detrimental socioeconomic impact on the affected industries. The SIA demonstrates that cleaning materials with a lower VOC content are currentl y available and many of them are already being used b y the vast majority of businesses that are subject to the stricter VOC content standards. The cost of compliant materials is approximately

the same or lower than conventional organic solvents. Only two out of 55 permitted facilities must find a compliant solvent to use in their operations. In addition, many compliant materials are now water
- based, and therefore may provide additional health and environmental benefits by eliminating human exposure to organic solvents.SIA for SDAPCD Rule 66.1 B
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**I. INTRODUCTION**  California law requires air pollution control districts (excluding those with populations of less than 500,000 people) to perform a SIA when adopting, amending, or repealing rules and regulations that will significantly affect air quality

and emission limitations
. The Health and Safety C ode S ection 40728.5 specifies the following elements to be included in the SIA : 1. The necessity

of adopting, amending, or repealing the rule or regulation in order to attain S tate an d federal ambient air quality standards. 2. The ty

pe of business, including small business, affected by the rule or regulation. 3. The range of probable costs, including costs to industry or business, including small business, of the rule or regulation. 4. The emission reduction potential o f the rule or regulation. 5. The impact of the rule or regulation on employ ment and the econom y of the region affected by the adoption of the rule or regulation. 6. The availability

and cost
- effectiveness of alternatives to the rule or regulation. This report presents the results of an SIA of San Diego Air Pollution Control District's (District) proposed new Rule 66.1 ( Miscellaneous Coating Operations and Other Processes Emitting Volatile Organic Compounds). Itshou ld be noted that the only new emission limitations introduced in Rule 66.1 are VOC content limits for surface cleaning and equipment cleaning materials , including those used in wipe cleaning operations . Therefore , accordi ng to State law , only the socioeco nomic impact of new VOC content limits for cleaning materials is considered in the following report.
**II. NECESSITY OF**  **REPLACING EXISTING RULE**  **66 WITH**  **A NEW RULE**  San Diego County does not meet the National and State Ambient Air Quality Standards for ozon e and is classified as an ozone nonattainment area. Both federal and State laws require the District to implement rules that regulate emissions of ozone precursors

– VOC s and nitrogen oxides. Existing Rule 66 regulates VOC emissions from the usage of org anic solvents in miscellaneous processes. Itwas approved by the Environmental Protection Agency (EPA) and is included in the State Implementation Plan
. Initiall y adopted b y the District in 1972, Rule 66 was the first rule to control emissions of photoch emicall y reactive compounds (presentl y known as VOCs) from stationary sources in SanSIA for SDAPCD Rule 66.1 B
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Diego County. It is presently used as a "catch
- all" regulation that applies to operations that are not covered b y other rules limiting VOC emissions for specific processe s or sources, such as Rule 67.11 (Wood Products Coating Operations) or Rule 67.15 ( Pharmaceutical and Cosmetic Manufacturing Op erations ). However, many provisions in the existing Rule 66 have become outdated and now the District proposes replacing it with new , fundamentall y revised , Rule 66.1
. The proposed new rule reflects the latest VOC definition , contains lower limits for the VO C content of cleaning materials already implemented in several California air districts , and updates recordkeeping requirements and test methods. The new rule will also help to fulfill the District’s commitment in the San Diego County Regional Air Quality

Strategy to implement all feasible emission control measures as required by S tate law as well as the federal requirement for RACT on sources of VOC emissions
. Existing Rule 66 will be repealed upon the effecti ve date of proposed new Rule 66.1 , i.e. , 12 month s a fter its adoption by

the Air Pollution Control Board.
**III. SUMMARY OF PROPOSED NEW RULE**  **66.1** New Rule 66.1 will:

 R equire any operation emitting volatile organic compounds and not covered by other District rules be controlled by air pollution control equipment unless the VOC emissions from this operation are less than 5 tons per year, excluding emissions from cleaning operations.

 Alternativel y, allow a surface coating operation to comply with emission control requirements b y using air
- dried coatings with a VOC content not exceeding 420 grams per liter or baked coatings with a VOC content not exceeding 360 grams per lit er.

 Require the use of surface preparation or solvent cleaning materials with a VOC content not more than 50 grams per liter (0.42 pounds/gallon) of VOCs, or having a total VOC vapor pressure 8mm Hg at 20 o C (68 o F) or less.

 Specify

coating application methods to be used and the requirements for cleaning of coating application equipment for surface coating operations subject to this rule.

 Provide operating parameters and requirements for air pollution control equipment if it is used by a facility
.
 Exempt from all rule requirements the use of pesticides, research and development operations, or testing for quality control or quality

assurance purposes, touch
- up operations and stripping of cured inks, coatings and adhesives, digital printing, and cleaning of electronic or electrical components, medical devices, laser optics, or precision optics.SIA for SDAPCD Rule 66.1 B
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 Exempt the o perations involved in the manufacture of biotechnology pharmaceutical or bio
- agricultural products that do not a require permit to operate pursuant to Rul e 11.

 Exempt from all rule requirements any coating operation that uses not more than 20 gallons of coatings per consecutive 12 months or emits not more than 150 pounds of VOCs for the same period , provided that the specified records are kept
.
 Exempt fro m the limitations on the VOC content of cleaning materials any cleaning operation that uses not more than 20 gallons of such materials per consecutive 12 months or emits not more than 150 pounds of VOCs per the same period , provided that not more than the 20 gallons of such non - compl iant material or not more than 150 lbs of VOCs are emitted per consecutive 12 months from all non
- compl iant cleaning materials at the stationary source and the specified records are kept
.
 Exempt materials used for cleaning and surface preparation of aerospace components, including wipe cleaning from the VOC content limit provided these operations are not associated with surface coating operations and are in compliance with the requirements of Subsection (d)(4) of Rule 67.9 (Aero space Coating Operations ).

 Exempt certain cleaning operati ons involved in the manufacture of gas turbine engines or in military ship repair operations
.
 List recordkeeping requirements for persons conducting operations subject to this rule
.
 Require manuf

acturers, sellers or suppliers to provide specified information related to any VOC containing material that is used in an operation that may be subject to this rule
.
 Provide definitions f

or major terms used in the rule including the reference to the most recent definition of VOCs and exempt c ompounds as specified in Rule 2
.
 Update the test methods for determining compliance
.
 Provide a compliance schedule for new and existing operations that are or may be subject to this rule. It should be noted that the definition of VOC in the new proposed rule is significantly different from the definition of photochemically reactive compound in the old rule. Itrelates to the current understanding of photochemical reactivity and the concept of exempt compoun ds. A “photochemicall y reactive compound” in the old rule was defined in terms of its chemical composition and structure such as a presence of double or triple bonds, aromatic bonds, etc . For example, saturated h ydrocarbons were considered non
- photochemicall y r eactive because they have onl y single bonds. Therefore, existing Rule 66 has stricter emission limitations (40 pounds /day) for compounds that comply with this definition than for the rest of organic compounds. For example, the existing rule does not require an additional emission control unless the emissions of “organic compounds” exceed 3 , 000 lbs per day
.SIA for SDAPCD Rule 66.1 B
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The current concept of photochemical reactivity as defined b y EPA considers all VOC s to be photochemicall y reactive except those that are proven to have negligible or very low photochemical reactivity

(exempt compounds). Therefore, while the VOC emission limitations in the proposed rule seem similar to the existing rule, they are fundamentally

different. The proposed new rule limits such emissi ons to 5 tons/year for all organic compounds except for those designated as “exempt compounds
. ”
**IV. TYPE OF INDUSTRIES AFFECTED BY NEW RULE**  **66.1 .**  New Rule 66 .1 is considered a “catch
- all” general rule that is applicable to VOC emitting sources that are not sub

ject to the District source
- specific rule s . Therefore , th e new rule as well as existing Rule 6 6 will apply to a variety of industries and pro cesses such as plastic products, glass and rubber coating operations, golf club manufacturing, soil remediation, a sbestos removal , or other sources that emit VOCs as a part of production or cleaning operations. The following table presents the list of industries and their North American Industry Classification Sy stem (NAICS ) codes that are subject to existing Rule 66 and also could be affected by the proposed new Rule 66.1
. **Table 1. NAICS Classification**  **of Industries**  **Type of Operations NAICS Code**  **Industry** Golf Club Assembly 339920 Sporting and athletic g oods manufacturing Miscellaneous Coating Operations on plast ic, glass, rubber, composites, etc. 332811 Coating, heat treating and allied activities Electronic Products Manufacturing 334 4 11 Semiconductor and other electronic components mfg. Soil Remediation 562910 Remediation services, environmental Asbestos Abat ement 562910 Asbestos abatement services Other Operations Using VOC Containing Materials 333611, 325411, 336611, 336411 Miscellaneous

**V. SOURCES REGULATED BY CURRENT RULE**  **66 AND THEIR VOC EMISSIONS**  1. Historical Data The main purpose of revising current Rule 66 was to modernize it according to the current interpretation of photochemical reactivity and to include emission limits reflecting the availability

of low VOC content cleaning materials. Simultaneously , the rule was reformatted to be consist ent with other District rules regulating VOC emissions. After R ule 66 was last revised in 1995, the District implemented or strengthened a number of rules that control VOC emissions from coating operations on a variety of substrates such as wood products, metal parts, aerospace components, automotive products, etc. The District also adopted or revised a few rules regulating manufacturing operations that take place in San DiegoSIA for SDAPCD Rule 66.1 B
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County , such as paint and printing ink manufacturing and bio
- poly mer manufacturing. In addition, since 1995, some industries , e.g. , a significant part of aerospace industry , left the San Diego area due to the diminished government financing or outsourcing. Therefore, Rule 66 is presently applicable onl y to miscellaneous coating operations and processes , which were considered by the District not to be a significant source of VOC emissions and therefore do not warrant separate individual rules. It should also be noted that as a result of the current recession and other factors, many companies have significantl y reduced their production volumes and emplo yee work force
. Some of them have closed down or moved their major operations to another state or abroad. This may be the reason for the smaller number of sources now subject to the r ule and their corresponding air emissions. This trend is seen very

clearl y in golf club manufacturing companies subject to this rule. They underwent significant operational changes in the last couple of ye ars which was reflected in their reduced air emis sions. As shown in the District permit files, in 2007 there were eight golf club assembly companies, one of them a large company, with total VOC emissions of 72.7 tons/year. By September 2009 , there were seven companies emitting only 35.5 tpy from coatin g and cleaning operations . One of the factors in such a drastic decrease in emissions was the cut in production of golf clubs at a large company and the subsequent transfer of its manufacturing operations abroad. The same trend was observed in miscellane ous coating operations. In the last ye ar alone , at least three companies subject to the rule closed down or moved their operations from San Diego County
. To further illustrate this point, the following table shows a change in the number of plastic and co mposite coating operations and their VOC emissions from the cleaning operations subject to existing Rule 66 in the period between 1997 and 2008. **Table 2 .**  **Number of C**  **om panies**  **and their VOC E**  **missions from**  **C leaning**  **O perations**  **1997 -**  **2008** Substrate Number of Facilities Total VOC emissions from cleaning operations (tons/year) 1997 2003 2008 1997 2003 2008 Plastics 26 15 18 2.8 1.4 1.6 Composites (includes golf club manufacturing companies) 16 10 11 15.1 23.0* 17.1

Total 42 25 29 18.0 24.4 18.7 * Includes VOC emissions from new wipe cleaning operations at a large company , which were subsequently reduced. 2. Existing facilities subject to the proposed rule
.SIA for SDAPCD Rule 66.1 B
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There are presentl y 17 2 existing facilities that are regulated b y Rule 66 and will be subject to Rul e 66.1 after the new rule takes effect. The number of these facilities and their VOC emissions are grouped b y ty pe of operation in Table 3 below. **Table 3**  **. Number of**  **F acilities**  **S ubject**  **to Rule 66.1**  **and E**  **stimated VOC**  **E missions** 
Type of Operation Number of

Facilities Total VOC emissions

from affected operations including cleaning operations (tons/year) VOC emissions

from cleaning operations only (tons/year) % of VOC emissions

from cleaning operations, per type of operation Misc. Coating Operations 30 59. 2 7.2 12.2 Misc. Processes using VOC Containing Materials 29 58.1 21.2 36.5 Golf Club Assembly Operations 7 35.5 22.9 64.5 Electronic Mfg. 21 38.1 4.2 11.0 Asbestos Abatement 23 2.7 0 0 Soil Remediation 62 33.5 0 0 TO TAL 172 227.1 55.5 N/A Overall, the emissions from solvent cleaning operations are approximately 24.4 % of the total VOC emissions from all sources that will be regulated b y the proposed rule. In formation provided in Table 2 also shows that solvent cleaning operations are onl y conducte d in four out of six categories of affected operations that will be subject to Rule 66.1 , i.e. , miscellaneous coating operations , miscellaneous other processes using VOC s, golf club manufacturing , and electronic manufacturing. Facilities conducting c oatin g operations are painting various substrates such as plastics, glass, ceramics, leather , or rubber. Miscellaneous processes in Table 2 include a variety of operations such as chemical distillation, solvent recovery , resin manufacturing, rubber glove manuf acturing, etc. Many of them have add
- on emission control equipment or do not use any VOC containing cleaning materials. One large facility in this category that conduct s wipe cleaning operations is using organic solvents for precision cleaning of laser o ptics components, precision welding , and thermal spray

operations that have a limited exemption in the proposed rule for a volume of non
compliant materials used . The largest source of emissions in this category is a military

facility that cleans aerospac e components
. The cleaning materials used in this facility also have a limited exemption from Rule 66.1 VOC limits with the condition that these materials compl y with the VOC content or boiling point limits of District Rule 67.9 (Aerospace Coating Operati ons)
.SIA for SDAPCD Rule 66.1 B
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The last category

of processes that utilize cleaning materials is electronic manufacturing. Many of these operations not specificall y exempt from the proposed rule have add
- on air pollution control equipment that reduces emissions from cleaning mat erial s in compliance with the rule.
**VI. EMISSION REDUCTION POTENTIAL**  **OF THE PROPOSED NEW RULE** As mentioned above, the main purpose of revising Rule 66 was to bring it to the current state - of
- the
- art in air pollution control regulations, specificall y , to update the definition of photochemicall y reactive compounds and to include the necessary recordkeeping and manufacturers’ requirements that will improve rule enforceability
. Additionally , the proposed new rule is required pursuant to State requirements f or expeditiously

adopting every

feasible control measure and federal requirements for use of RACT to control VOC emissions
. The VOC emission limit for many operations and process es ( excluding solvent cleaning operations ) in the proposed new Rule 66.1 is 5 tons per year . Facilities with uncontrolled emissions higher than 5 tons/year w ill be required to reduce emissions either by using low VOC content products or by install ing an add
- on emission control sy stem. This limit is similar to the requirements in existing Rule 66 . Therefore , there will be n o additional emission reductions from this part of the rule because the regulated sources are already in compliance with this requirement. In addition, as shown in Table 2 , the majority of operations such as as bestos abatement, soil remediation , and many miscellaneous coating operations are small sources with average emissions of less than 2 t ons p er year . Some coating operations are also using onl y compl iant coatings (VOC content < 420 grams /l iter). Other sources such as electronic manufacturing facilities have add
- on emission control in place that comply with the rule requirements for the capture and control efficiency of such systems. The expected emission reductions will be a result of new limits for the V OC content of cleaning materials that must not exceed 50 grams /l iter , or a total VOC vapor pressure of 8mm Hg at 20 o C. Current Rule 66 has no limits on the VOC content or vapor pressure of cleaning materials. As shown in Table 3 , there are 30 facilities involved in miscellaneous coating operations on various substrates, such as plastics, glass, ceramics , or rubber. A recent District survey showed that at least 23 of them are already using compl iant cleaning materials including exempt compounds (acetone, methyl acetate, or combination of exempt compounds), solvents with low vapor pressure or water - based cleaners. Others are using pure water for surface preparation and cleaning. Six facilities are exempt from the VOC content limits because they use less than 20 gal lons /year of cleaning materials or conduct coating operations on electronic or medical equipment that are also exempt from the rule. Consequently , there will be only one facility in this miscellaneous coating operations category that may be affe cted b y the proposed rule. Another facility

affected by

the rule is involved in g olf club assembly operations that presently us e high VOC content solvents for wipe cleaning of golf clubs
. The estimated VOC emission s reductions from the se operations affec ted b y the new VOC content limits for cleaning materials are provided in Table 4 below.SIA for SDAPCD Rule 66.1 B
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**Table 4**  **. Expected VOC E**  **mission R** **eductions from the**  **I mplementation**  **of N**  **ew Rule**  **66.1** Type of Operation VOC emissions from cleaning operations ( tons/year) VOC Emission

r eductions ( tons/y ea

r) VOC e mission reductions per type of operation ( % ) Misc
. Coating Operations 7.2 0.9 12.5 Misc
. P rocesses using VOC C ontaining M aterials 21.2 None None Golf C lub A ssembly O perations 22.9 8.2 35.8 Electronic M anufacturing 4.2 None None TO TAL 55.5 9.1 N/A Overall, the VOC emissions from solvent cleaning operations as a result of the proposed rule will be reduced b y an estimated 9.1 tons/year or 16.4%. Although not quantified here, substantial additional e mission reductions have already been realized by

facilities voluntarily

using compliant products prior to rule adoption, given that compliant products are already commerciall y available
. (See Section VIII below for additional information.) Adoption of the proposed rule will ensure the San Diego Air Basin continues to benefit from these low
- VOC materials and associated emission reductions
. **VII. RANGE OF PROBABLE COSTS TO INDUSTRY INCLUDING SMALL**  **BUSINESS** As mentioned above, the majority of businesses affected b y the lower VOC content limits for cleaning materials are already using either exempt or water
- based solvents. Considering that such materials are widel y available and their prices are similar or lower than those for organic solvents, proposed Rule 66.1 will not impose any ad ditional costs for the majority of the industrial sources, including small businesses. Also, all air districts in Southern California (outside of San Diego County) and the majority of districts in non
- attainment areas in the n orthern part of the S tate already have rule s requiring the use of low VOC content solvents. However, one large company in San Diego County

will have some extra expenses to modify their wipe cleaning operations that ac cording to the recent data result in approximatel y 8. 2 tons/year of VOC emissions. The company is actively searching for a compl iant material that will also satisfy

their quality

control requirements. According to company i nformation, the use of one of the alternative compliant material s would require additional drying steps and a consequent increase in labor costs
. The District estimated that the cost of a compliant material and additional labor will result in the yearl y cost increase of approximately $51,000 , which corresponds to a cost effectiveness of $3.3 per pound of VOC reduced. This cost
- effectiveness is significantl y below the District guideline s of $6 per pound of VOC reduced for rules regulating VOC emissions.SIA for SDAPCD Rule 66.1 B
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**VIII. IMPACT OF THE PROPOSED NEW RULE ON EMPLOYMENT AND THE**  **REGIONAL ECONOMY** Proposed new Rule 66.1 wil l have no significant impact on employ ment and econom y of the region because all compliant materials are widel y available in the County at prices comparable or lower than conventional organic solvents. As it was discussed above, many companies are already using low or non
- VOC containing cleaning materials. This phenomenon can be partly explained as a result of market penetration of cleaning products mandated for use in the South Coast Air Quality M anagement District (SCAQMD) adjacent to San Diego County. Since earl y 2000, SCAQMD Rule1171 ha d a low VOC content limit (25 grams /liter) for the majority of industrial cleaning solvents . That District also has published on its website a list of “Clean Air Solvents , ” including the names and addresses of the sol vents manufacturers that comply with Rule 1171 requirements. In addition, many of these materials have the same or even better cleaning properties combined with a decreasing health risks and improved fire safety in the workplace. As a result , many compan ies have voluntarily switched to more environmentall y friendly materials or eliminated solvent cleaning steps altogether.
**IX. AVAILABILITY AND COST**  **- EFFECTIVENESS OF ALTERNATIVES**  There are no reasonably

available alternatives for the proposed rule. Not adopt ing it at this time would be a disservice to the District’s regulated community because the current rule is seriousl y outdated. In addition, the District has an obligation under S tate law to expeditiously adopt all feasible control measures and under federal law to require RACT on sources of ozone precursor emission s. To adopt a more stringent ru le for the VOC content limit of cleaning materials (25 grams/liter) does not seem reasonable because it would result in minimal additional emission reduction s (approximately

600 lbs VOC per year) and exclude many cleaning products with a low VOC content or a low VOC vapor pressure that are presently successfull y used by some facilities
.