AQMD ANNUAL EMISSIONS REPORTS

The South Coast Air Quality Management District recently adopted amendments to Regulation III – Fees. The more salient changes are the switch from a fiscal year to a calendar year reporting program, the 4.1% fee increase for most fee categories and the mandatory on-line reporting requirement.

During the transitional period, from July 1, 2007 through December 31, 2007, facilities were required to only report the six-month transitional emissions (from 7/1 to 12/31), and to use either the existing AER software or the new web-based program. The emission fee rates are specified in Rule 301, Tables III and IV. Fees for Permit Processing, Annual Operating Permit Renewal and Annual Operating Emissions will not be subject to change. The greenhouse gas and annual emissions combined reporting starts in calendar year 2008. The deadline to submit the 2008 report is March 3, 2009.

The deadlines for facilities that are subject to the California Air Resources Board mandatory reporting of Greenhouse Gas (GHG) emissions and choose to report their GHG emissions to the AQMD and CARB are as follows:

1. April 1, 2009: Power generation & co-generation facilities, General Stationary Combustion Sources (> 25,000 metric tons CO2) excluding oil & gas production facilities with a NAICS code of 211111.
2. June 1, 2009: Cement plants, hydrogen plants, and refineries, general stationary combustion facilities within the oil & gas sector with a NAICS code of 211111.

Who is required to report and pay fees?

• 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 all un-permitted emissions equal 4 tons or more per year of criteria pollutants (VOCs, NOx, SOx, CO, PM, Specific Organics);
• 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 a 2008 Annual Emissions Report letter (the District to send letters out by December 23, 2008; facilities will no longer receive AER packets). The South Coast AQMD will issue an Administrative User Id number and a password. Companies who do not receive the AQMD letter containing a password and an Administrative User Id and their 2008 emissions exceeded the thresholds for criteria pollutants or toxics, must contact the AQMD to inform the agency. The AER Group would then decide whether to issue a password and an Administrative User Id for this facility and require filing.
• Facilities whose annual emissions exceed the thresholds in Table 1 shown below. The emission reporting thresholds (as shown in the table below) are found in Rule 301 (e)(5) and on Table IV on page 90 of the rule, for toxics compounds.

Table 1. Emission Thresholds

What if I miss the deadline?

The SCAQMD calendar 2008 Emissions Report will be accepted through March 3, 2009 without penalty. 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:

After submitting my report I found out I estimated emissions incorrectly

Companies who pay their emissions fees on time but underestimated their emissions, which resulted in underpayment to SCAQMD, can re-submit the report subject to underpayment penalties. If the underpayment is corrected within one year from the filing deadline and more than 90% of the amount due was paid, there will be no penalties. However, if payment was less than 90% of the amount due, the penalty is 15% of the underpayment amount. When the underpayment is determined more than one year and sixty days from the official due date, fee rates and penalties will be assessed based on 301(e)(10)(D). Fees are determined based on rates in effect for the year when the emissions are actually reported and not the year wherein the emissions occurred.

A facility can file a refund request when overestimating of the emissions resulted in overpayment to AQMD. The refund request must be submitted in writing as set forth in Rule 301.

Special circumstances

The AQMD has a Fee Review Committee to handle issues regarding fees and penalties.

Other changes

• On-line web-based filing is now mandatory;
• Amendment of the fees for the Portable Equipment Registration Program (PERP) for consistency with changes implemented by the California Air Resources Board (CARB);
• A waiver of plan fees for Rule 2449 – Control of Oxides of Nitrogen from Off-Road Diesel Vehicles;
• A special one time operating fee for petroleum refineries to fund a technology assessment to reduce SOx emissions from petroleum refineries;
• A waiver of the public notice preparation fee for dry cleaners located within 1,000 feet of a school that install, modify or replace Perchloroethylene dry cleaning equipment to comply with Rule 1421;
• Hearing Board petitioners who are individuals or other entities with limited annual revenue will be charged the lower Hearing Board fees applicable to small businesses (total annual gross receipts criterion, of $500,000 or less, as defined under “Small Business” in Rule 102).

SCAQMD CURRENTLY NOT ABLE TO ISSUE PERMITS THAT REQUIRE OFFSETS

In a memo dated December 1, 2008, SCAQMD management instructed staff on how to implement the recent court decision of a lawsuit brought by environmental groups, including the Natural Resources Defense Council, against the District. The interim guidance is “in effect immediately and until further notice” and is applicable to new, modified or relocated equipment at major or non-major facilities. The court decision (see ATI Fourth Quarter 2008 Newsletter for details) found the South Coast Air Quality Management District in violation of state law (the California Environmental Quality Act [CEQA] ) and concluded that the District failed to conduct appropriate environmental and health analysis.

Under Rule 1304 (Exemptions), facilities did not have to provide offsets as outlined in Table A as follows:

According to District staff, due to the invalidation of Rules 1315 (Federal New Source Review Tracking System) and amendments of Rule 1309 (Priority Reserve), the SCAQMD

“is not able to issue any permits which rely on emission offset credits from Rules 1309.1 or 1304”
Permits to Construct (or Permits to Operate without any previously issued Permits to Construct) will NOT be issued without any Emission Reduction Credits (ERCs) for any permit where the application is processed using any of the provisions of Rule 1309.1 or any of the exemptions of Rule 1304, including, but not limited to, Replacements, Relocations and Concurrent Facility Modifications.

Any project’s emission increases (this means the sum of ALL emission increases from ALL applications for the project) in excess of 0.5 pounds per day for any non-attainment air contaminants (CO excluded) will need to be offset with ERCs. Whenever the existing permits for the facility, or a group of equipment, have an established New Source Review facility cap on VOC emissions and the new, modified or relocated equipment will be incorporated into the cap, no ERCs will be needed so long as there is no emission increases above the established cap. Permits for equipment where the applicant is proposing to net out of the offset requirements by reducing emissions somewhere else in the facility to offset emission increases for the permits for the new, modified or relocated equipment, will be considered on a case by case basis by top level management and District legal counsel in order to determine whether or not ERCs will be required. Permits to Operate for equipment that has been issued a Permit to Construct on or after September 8, 2006 where the permit was issued based on reliance on one of the provisions or Rule 1309.1 or exemptions of Rule 1304, will not be issued unless ERCs are furnished by the facility. Even the installation of air pollution control equipment that results in an emission increase over half a pound per day, will be required offsetting with ERCs.

New policies are also in place for:

• Extensions for Permits to Construct pursuant to Rule 205, if such a Permit to Construct was issued based on provisions of Rule 1309.1 or exemptions in Rule 1304;
• If an applicant for a permit which qualifies under provisions of Rule 1309.1 or exemptions of Rule 1304 provides ERCs to obtain their Permit(s) to Construct or Permit(s) to Operate now, and later on the AQMD re-adopts Rule 1315 and such a project could qualify to obtain a permit from AQMD using such provisions or exemptions again, the ERCs provided at this time to obtain the permits will not be returned back to the applicant. The ERCs status will be changed to “Used” and will no longer be available for use by the applicant or any other party.

The District is currently preparing for the re-adoption of Rule 1315, a process estimated to take between 9 and 12 months. Until such re-adoption, the only way the District will issue permits to new, modified and relocated equipment or facilities with resulting emission increases is if the applicants provide their own Emission Reduction Credits (ERCs). The price of ERCs (the going rate for VOC credits is approximately $20,000 per pound per day, according to some ERC brokers) could present a financial burden for facilities which are required to obtain permits before they can operate their equipment.

CARB REQUIREMENTS FOR COMPOSITE WOOD PRODUCTS TAKE EFFECT

Phase 1 of the California Air Resource Board’s Air Toxics Control Measure is in effect as of January 1, 2009. The emission standards control formaldehyde emissions from composite wood products and were originally approved by CARB in 2007. Phase 1 emission standards will take effect for hardwood plywood with veneer core, particleboard, medium density fiberboard (MDF) and thin MDF (thickness 8 millimeters or less). The Phase 1 emission standard for hardwood plywood composite core will take effect on July 1, 2009.

The ATCM requires that domestic and foreign manufacturers retain the services of a CARB approved independent third party certifier (TPC) to verify that their manufacturing mill production is in compliance with the applicable emission standards. Some of the certified mills have accumulated inventories of composite wood products that were produced before they received their official CARB certification approval by the TPC. CARB recently issued guidance for some of these composite wood products that emit formaldehyde at levels below the Phase 1 emission standards. These products that were produced before the mill was CARB certified may be retroactively certified using the “non-complying lots” provision in the ATCM.