AQMD ANNUAL EMISSIONS REPORT (AER) – CALENDAR 2014

The AQMD’s annual emissions reporting system is changing again. The new web-based system is now equipment-based. In other words, the criteria and toxic emissions from each piece of equipment at a facility will be reported separately from all other sources of emissions. The requirements are expected to remain almost the same as in the previous year.

Who is required to file?

• Facilities in the Annual Operating Permit Emission Fee Program. Those are companies who pay annual emissions for permitted equipment. Such facilities are subject to AQMD Rule 301(e) and are required to file when exceeding the corresponding reporting thresholds.
• Facilities whose permitted plus un-permitted emissions equal 4 tons or more per year of criteria pollutants (VOCs, NOx, SOx, PM, Specific Organics); or 100 tons or more per year of CO.
• Facilities which had emissions [thresholds specified in Rule 301(e)] of specific Toxic Air Contaminants or ozone depleting compounds, listed in form TAC.
• Facilities that receive an Annual Emissions Report Package. However, it is the operator’s responsibility to file a report if necessary, even if the facility does not receive a notification from SCAQMD.
• Facilities which prior to July 1, 2000 had equipment listed as exempt. There is no fee associated with these exempt emissions but they must be reported.

What if I miss the deadline?

The SCAQMD 2014 Annual Emissions Report (AER) is due by 5:00 p.m. on June 4, 2015. The Report applies to the Calendar Year 2014 reporting period (January 1, 2014 – December 31, 2014). If a facility misses the deadline and owes an emission fee, late payment penalties in the form of a percentage of the emission fees will apply. The penalties are set forth in AQMD Rule 301(e)(10)(B) and are as follows:

Fees are determined based on rates in effect for the year when the emissions are actually reported, not the year wherein the emissions occurred.

Special circumstances
The AQMD has a Fee Review Committee to handle issues regarding fees and penalties. The agency requires records related to the AER to be kept for a minimum of five years.

What is new this year?

• New equipment-based system for reporting emissions.
• No direct reporting of manifested waste VOC solvents. No direct VOC emissions credit. Material/mass balance demonstrations required when incorporating laboratory analyzed wastes streams only. Approximations no longer accepted.
• New emission fee rates are in effect for the 2014 Annual Emission Reporting Program for criteria pollutants, toxic air contaminants, and ozone depleting compounds in accordance with AQMD Rule 301(e).
• For 2014 AER, facilities in Phase 3 are required to file their 2588 Quadrennial Report.
• Updated Guidelines for Calculating Emissions with Screenshots of Example Data Entry.
• Added Guidelines for Calculating Emissions from Bulk Loading Terminals.

PERP REGULATIONS

Additional requirements took effect in July of this year. The Air Toxics Control Measure (ATCM) required owners of portable engines to submit a Fleet Compliance Report to the Air Resources Board by March 1, 2013. The next Fleet Compliance Report will be due March 1, 2017. Diesel engine owners submitting applications for PERP registration for the first time must include a Fleet Compliance Report. This includes transfer of existing registrations for engines purchased.

The Portable Equipment Registration Program (PERP) is administered by the California Air Resources Board. Registration under this regulation is voluntary for owners of portable engines or equipment units [§ 2451 (a)]. The regulations define “Portable” as designed and capable of being carried or moved from one location to another. The PERP regulations establish a statewide program for the registration and regulation of portable engines and engine-associated equipment (defined in the regulation).

Portable engines and equipment units registered under the Air Resources Board program may operate throughout the State of California without authorization (except as specified) or permits from air quality management or air pollution control districts. These regulations preempt districts from permitting, registering, or regulating portable engines and equipment units, including equipment necessary for the operation of a portable engine (e.g. fuel tanks), registered with the Executive Officer of the Air Resources Board, except in the circumstances specified in the regulations.

Effective July 1, 2014, all diesel engines seeking initial registration into PERP, must meet the following certification tier levels:

• 50 to 74 bhp – Final Tier 4
• 75 to 174 bhp – Interim Tier 4
• 175 to 750 bhp – Final Tier 4
• Over 750 bhp – Interim Tier 4
• Or, for all power categories – Flex engines certified under the flexibility provisions of Federal 40 CFR 1039.625, or CFR 89.102, or California Code of Regulations section 2423 (d).

The fleet recordkeeping and reporting requirements are found in the Portable Diesel Engine Air Toxics Control Measure, Section 93116.4.

NEW SOURCE REVIEW UPDATE

South Coast Air Quality Management District (SCAQMD) Rule 1315 requires that the agency prepare a Preliminary Determination of Equivalency (PDE) and Final Determination of Equivalency (FDE), which cover New Source Review activities for twelve-month periods. The agency presented a report showing that AQMD’s NSR (New Source Review) program is in final compliance with federal requirements from January 2012 to December 2012. The report demonstrates compliance with federal NSR requirements by establishing aggregate equivalence with federal offset requirements for sources that were not exempt from federal offset requirements, but were either exempt from offsets or obtained their offsets from SCAQMD pursuant to Regulation XIII.

SCAQMD Rule 1325 incorporates the U.S. Environmental Protection Agency’s (EPA) requirements for Particulate Matter (PM) 2.5 into Regulation XIII – New Source Review. The rule mirrors federal requirements and is applicable to major polluting facilities, which are defined as sources with actual emissions, or the potential to emit of 100 tons per year or more of PM2.5 or its precursors. Based on comments received from the U.S. EPA regarding State Implementation Plan (SIP) approvability of Rule 1325, the District amended the rule to incorporate changes to definitions, provisions and exclusions.

An environmental group filed a lawsuit against EPA seeking an order from the court to retroactively declare the South Coast Basin in “serious non-attainment” for PM 2.5 and to compel the District to submit a State Implementation Plan or face sanctions. The lawsuit is ongoing but the SCAQMD has intervened, arguing that it has already met the PM 2.5 standard and thus no further SIP is needed.

MOTOR VEHICLE & MOBILE EQUIPMENT COATINGS

Rule 1151– Motor Vehicle and Mobile Equipment Non-Assembly Line Coating Operations was recently amended to include transfer efficiency requirements and incorporate the State’s Suggested Control Measure. Rule 1151 is applicable to any person who supplies, sells, offers for sale, manufactures, or distributes any automotive coating or associated solvent for use within the District, as well as any person who uses, applies, or solicits the use or application of any automotive coating or associated solvent within the District. The AQMD staff estimates there are 1,079 Rule 1151 facilities.

The amendment removed 18 pages of expired rule language. New definitions were added for “Automotive Graphic Arts Operation” and “Weld-Through Primer.” Transfer efficiency requirements were aligned with the State Suggested Control Measure to include the following:

• Spray Application equipment that meets HVLP in design
• Brush, Roller and Dip Coating Processes
• Automotive Graphic Arts Operations
• Truck Bed Liner and Underbody applications

Additionally, the completion date for the Technical Assessment for Tertiary Butyl Acetate (TBAc) was extended to December 31, 2016.

CHANGES FOR FURNACES

The SCAQMD recently adopted changes to Rule 1111–Reduction of NOx Emissions From Natural Gas-Fired, Fan-Type Central Furnaces. The rule was amended in 2009, but at that time there were no commercially available units that could meet the future limits. In order to encourage the development of compliant technologies, the District included incentives for early compliance and a commitment to fund residential furnace technology demonstration projects, in the rule. Changes include delaying compliance dates for condensing units and adding mitigation fees.

The District will now fund contemporaneous NOx emission reductions projects that will offset excess emissions from sale of non-compliant heating furnaces through the Rule 1111 mitigation fee alternate compliance plans. The funds were set aside in 2009 for early compliance with the rule emission limits.

The manufacturers will have additional time to produce residential furnaces that meet the NOx emission limit of 14 ng/J (Nano Grams per Joule). The District expects that not all manufacturers will be able to produce compliant furnaces by the compliance dates. Proposed Amended Rule 1111 will add an alternate compliance option to the rule. In lieu of meeting the new lower NOx emission limit, PAR 1111 will provide manufacturers of residential furnaces subject to Rule 1111 an option to pay a per unit mitigation fee of $200 for each condensing furnace and $150 for each non-condensing, weatherized and mobile home furnace distributed or sold into the SCAQMD. In addition, the proposed rule will delay the compliance date for condensing (high efficiency) units from October 1, 2014 until April 1, 2015. The mitigation fee alternate compliance option can be used for up to 36 months past the applicable compliance date. However, 60 days prior to the applicable compliance date, the manufacturer must submit a separate alternate compliance application for each 12 month alternate compliance period after the compliance date. A manufacturer must submit with each alternate compliance application a compliance plan fee and estimate of the number of units distributed or sold into the SCAQMD during the 12 month time period (July 1 to June 30) prior to the applicable compliance date. At the end of each 12 month alternate compliance period the number of units distributed or sold into the SCAQMD is reconciled and the manufacturer pays fees for the actual number of units distributed or sold into the SCAQMD.

GOVERNING BOARD PROCEDURE FOR PUBLIC COMMENTS

Following complaints from industry that staff made last minute changes to a rule without proper public notification, the South Coast Air Quality Management District’s Board adopted new procedures for conducting board meetings and clarify policy on making modifications to the text of proposals at the Board hearing.

The California Health and Safety Code [Section 40725(b)] require the SCAQMD to provide the full text of proposed rules or rule amendments to the public at least 30 days before the public hearing at which the Board takes up the item. The Health and Safety Code prohibits making “substantial” changes to the text at the Board adoption hearing. The Board heard comments that staff had made last minute changes to a proposal to provide an unrestricted exemption for HFO-1233zd, without notification to stakeholders. Board members expressed concern for the late notice to stakeholders regarding the change to the exemption, indicating that industry should be provided appropriate notice in order to provide input.

The new policy tightens the time period in which changes can be made. It specifies that the Board will not accept changes to the text of any item after the Friday of the week before the Board meeting unless the change responds to an emergency or is necessary to prevent harm or risk of harm to public health.

NEW COMMERCIAL FOOD OVENS RULE

Rule 1153.1– Emissions of Oxides of Nitrogen from Commercial Food Ovens was amended in order to remove food ovens, roasters and smokehouse ovens from Rule 1147 and place them in a new rule with higher emission limits and later compliance dates than Rule 1147.

The new rule regulates NOx emissions. Rule 1153.1 has higher NOx emission limits than Rule 1147. Compared with Rule 1147, PR 1153.1 delays NOx emission limit compliance dates for existing (in-use) permitted equipment and includes a carbon monoxide emission limit. PR 1153.1 also establishes test methods and provides alternate compliance options. Other proposed requirements include equipment maintenance and recordkeeping.

CHANGES TO SOCIOECONOMIC ANALYSIS

In response to industry requests, the SCAQMD Board hired an independent firm to analyze the agency’s socioeconomic analysis process. Socioeconomic analysis is part of rulemaking and of the Air Quality Management Plan (AQMP). For the AQMP, a more comprehensive analysis is performed that includes costs, benefits (health, visibility, material, agriculture and congestion relief) and macroeconomic impacts (including employment) in the four-county region. Industry groups have disputed some of the assumptions used by staff, claiming that they do not represent the current state of the economy.

The socioeconomic impact assessments for the following rules and AQMP were analyzed:

• Socioeconomic Assessment of the Air Quality Management Plan (2012 and 2007) as well as the AQMP documents;
• Proposed Rule 1304.1-Electrical Generating Facility Fee for Use of Offset Exemption (September 2013);
• Proposed Amended Regulation – Regional Clean Air Incentives Market (RECLAIM) (November 2010);
• Proposed Amended Rule1146.1-Emissions of Oxides of Nitrogen from Industrial, Institutional, and Commercial Boilers, Steam Generators, and Process Heaters (August 2008);
• Proposed Rule 1143-Consumer Paint Thinners and Multi-purpose Solvents (February 2009);
• Proposed Rule 2449-Control of Oxides of Nitrogen Emissions from Off-road Diesel Vehicles (May 2008);
• Proposed Amended Rule 1146.2-Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers and Process Heaters (April 2006).

Key Findings

The report, which was made publicly available at the November meeting of the AQMD Board, found that:

“None of the economic models used by these agencies were able to predict small business impacts…”

“While a few respondents commended the SCAQMD for its efforts in reaching out to industry for input on its analyses and assessment, a large majority had significant concerns. It was noted that especially with small businesses, the SCAQMD does not sufficiently involve affected entities.”

“Respondents noted that even larger businesses learn about the regulations and the socioeconomic assessment too late in the process to provide useful feedback and recommendations on alternative policies.”

“Even when industry participates in the process, one respondent notes that the SCAQMD often distrusts policy recommendations from industry, generally overlooking alternative perspectives. For example, one respondent felt that the SCAQMD uses stakeholder committees simply to present information rather than in a good-faith effort to receive feedback to use in revising their proposals. This has resulted in an overall impression that stakeholder input does not affect the outcomes of any the SCAQMD rulemakings and that they are already finalized even before reaching the public comment stage.”

“For cost analysis, there does not appear to be specific consideration of uncertainty (e.g. assumptions used in estimating the capital and O&M costs, the discount rate, or the emission reductions achieved by the controls).”

Recommendations included: Expanding the environmental justice analysis to identify “hotspots,” further analysis to assess policy impact, present cost effectiveness based on Discounted Cash Flow and Levelized Cash Flow to allow comparison across agencies, increase the transparency of the socioeconomic assessment process by implementing a new reporting system, convening a Science Advisory Group, and outreach to strengthen public participation.