BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 1387
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|Author: |De León, et al. |
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|Version: |4/7/2016 |Hearing |4/20/16 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Nonvehicular air pollution: market-based incentive
programs: South Coast Air Quality Management District board
ANALYSIS:
Existing federal law, under the Clean Air Act (CAA) requires the
United States Environmental Protection Agency (US EPA) to set
national ambient air quality standards (NAAQS); authorizes
states to adopt more stringent standards; and requires states to
develop a general plan, known as a state implementation plan
(SIP), to attain and maintain the standards for each area
designated nonattainment for an NAAQS. The plan is subject to US
EPA approval.
Existing California law:
1) Provides the California Air Resources Board (ARB) with
primary responsibility for control of mobile source air
pollution, including adoption of rules for reducing vehicle
emissions and the specification of vehicular fuel
composition. (Health and Safety Code §39000 et seq. and
§39500 et seq.). ARB is required to coordinate efforts to
attain and maintain ambient air quality standards (HSC
§39003).
2) Provides that air pollution control districts (APCDs) and air
quality management districts (AQMDs) have primary
responsibility for controlling air pollution from all
sources, other than emissions from mobile sources, and
establishes certain powers, duties, and requirements for
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those districts (HSC §40000 et seq.).
3) Creates certain AQMDs, with related authority, including the
South Coast Air Quality Management District (SCAQMD) under
the Lewis-Presley Air Quality Management Act. SCAQMD covers
portions of Los Angeles, Orange, Riverside, and San
Bernardino counties within the South Coast Air Basin (HSC
§40400 et seq.).
4) Establishes the SCAQMD Governing Board, and specifies the
Board consist of 13 members, where one member each is
appointed by the Governor, Senate Committee on Rules, and the
Speaker of the Assembly, and the other 10 members are
appointed by regional government entities in the South Coast
air basin, as specified.
5) Requires SCAQMD adopt a plan to achieve and maintain the
state and federal ambient air quality standards for the South
Coast Air Basin, and requires that plan and subsequent
revisions contain deadlines for compliance with federal air
quality standards and schedules and deadlines to achieve the
state ambient air quality standards by the earliest date
achievable, including by use of best available retrofit
control technology (BARCT).
6) Authorizes a district to adopt a market-based incentive
program as an element of the districts plan for attainment of
state or federal ambient air quality standards, if that plan
meets specified requirements.
7) Requires a district's plan for attainment or plan revision
submitted to the state prior to January 1, 1993 be designed
to achieve equivalent emission reductions and reduced cost
and job impacts compared to current command and control
regulations and future air quality measures that would
otherwise have been adopted as part of the district's plan
for attainment.
8) Prohibits a district from implementing a market-based
incentive program unless the state board determines the above
requirements are met.
9) Requires a district's plan or plan revision submitted on or
after January 1, 1993, be designed to allow the trading of
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reductions among a variety of sources and requires ARB to
approve the above plan or plan revision prior to program
implementation and make their determination no later than 90
days from the date of plan or plan revision submission.
10)Requires the district, upon adoption of rules and regulations
to implement the market-based program, to submit the rules
and regulations to ARB, and requires ARB, within 90 days, to
determine whether the rules and regulations meet specified
requirements.
This bill:
1) Strikes the January 1, 1993 date for plan or plan revision
submission, and requires any district plan or plan revision
achieve equivalent emission reductions and reduced cost and
job impacts compared to current command and control
regulations and future air quality measures that would
otherwise have been adopted as part of the district's plan
for attainment.
2) Prohibits a district from implementing any revisions to an
adopted market-based incentive program, unless ARB determines
the plan or plan revision complies with the above
requirements.
3) Requires, if ARB determines a plan or plan revision does not
meet the specified requirements for a market-based incentive
program, that ARB do all the following:
a) Notify the district;
b) Revise the plan or plan revision so that it complies
with specified requirements; and
c) Approve the plan or plan revision;
4) Specifies that the above plan or plan revision approved by
ARB shall take effect immediately and is binding on the
district.
5) Requires, if ARB determines a district rule does not meet the
specified requirements for a market-based incentive program,
ARB do all the following:
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a) Notify the district;
b) Revise the rule so that it complies with specified
requirements; and
c) Adopt the rule.
6) Specifies that the above rule approved by ARB shall take
effect immediately and have the same legal force and effect
as a district rule.
7) Expands the SCAQMD Governing board by three to increase the
membership to 16, with the additional members appointed by
the Governor, the Senate Committee on Rules, and the Speaker
of the Assembly.
8) Requires the above appointees be representatives of a bona
fide nonprofit environmental justice organization that
advocates for clean air and pollution reductions in one or
more communities within the South Coast air basin.
Background
1) SCAQMD Governing Board. Local air districts and their
governing boards have primary jurisdiction over air pollution
from all sources in their air basin, other than emissions
from mobile sources.
As prescribed by state law, the SCAQMD board is made up of 13
members, where three are appointed by the state (one each by
the Senate Rules Committee, the Speaker of the Assembly, and
the Governor) and 10 are appointed by local governments, as
prescribed in statute. The members of the board serve
four-year terms. Currently Dr. William Burke, appointed by
the Speaker of the Assembly, serves as the Chairman of the
SCAQMD Board.
2) Air quality in the South Coast Air Basin and public health
effects. Under the federal Clean Air Act, the US EPA
establishes National Ambient Air Quality Standards (NAAQS)
that apply for outdoor air throughout the country. These
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federal standards exist for several air pollutants due to
their negative impact on public health above specified
concentrations, including ozone, particulate matter, oxides
of nitrogen, and oxides of sulfur, carbon monoxide, and lead.
Nonattainment areas are regions that do not meet the national
ambient air quality standard for one of those pollutants.
There are several nonattainment designations ranging from
concentrations slightly above the standard, termed marginal
nonattainment, to extreme nonattainment, where pollution
levels far exceed the national standard.
South Coast has some of the worst air quality in the nation,
and is in moderate nonattainment for particulate matter (<2.5
microns, or PM 2.5) and extreme nonattainment for ozone.
Particulate matter can be directly emitted or can be formed
in the atmosphere when gaseous pollutants such as SO2 and NOx
react to form fine particles. Very fine particulate pollution
is particularly dangerous since it burrows deep into the
lungs where it can enter the bloodstream and harm the heart
and other organs. Fine particulate pollution poses an
especially critical health danger for children, the elderly,
and people with existing health problems. Exposure to PM 2.5
is also linked to cardiovascular disease. In a 2010 ARB
report based on scientific assessments by the US EPA,
approximately 9,000 people in California are estimated to die
prematurely each year as a result of exposure to fine
particle pollution.
Oxides of nitrogen with volatile organic compounds in
sunlight produce ground-level (tropospheric) ozone. Ozone has
a number of negative health effects including irritated
respiratory system, reduced lung function, aggravated asthma
and inflammation and damage of the lining of the lung. Active
children are the group at highest risk from ozone exposure.
The federal standards for ozone have been ratcheted down over
the last several decades, as the science continues to show
even low levels of ozone pollution, formerly thought of as
safe, pose a public health risk. The South Coast air basin,
despite significant air quality improvements over the last
several decades, has never met a federal ozone standard. The
district, due to its unique and extreme air quality issues,
has until 2023 and 2031 to meet the federal 1997 and 2008
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ozone standards.
On November 25, 2014, the US EPA proposed to strengthen the
current 2008 NAAQS for ground-level ozone, based on extensive
scientific evidence about ozone's effects on public health
and welfare. US EPA's proposal found that the current
standard, 75 parts per billion, is not adequate to protect
public health. US EPA released the final rule for a revised
ozone standard of 70 ppm on October 1, 2015. The SCAQMD has
several years in which to develop a strategy for attainment
of the 70 ppm standard.
Air Quality Management Plan. Since the SCAQMD is a
nonattainment region for particulate matter and in extreme
nonattainment for ozone, statute requires the district to
adopt a plan, termed the Air Quality Management Plan (AQMP),
to achieve and maintain the state and federal ambient air
quality standards for the South Coast air basin and submit
this plan, subject to approval, to the ARB for inclusion into
the state implementation plan (SIP). SIPs are comprehensive
state plans required by the federal Clean Air Act for states
that have nonattainment regions, detailing how regions of the
state will attain and maintain attainment. The AQMP was
originally adopted in 1982, and is formally reviewed every
two years. The SCAQMD is currently working on the 2016 AQMP.
3) RECLAIM. AB 1054 (Sher, Chapter 1160, Statutes of 1992)
authorizes local air districts to adopt a market-based
incentive program as an element of a local air district's air
quality management plan for attainment of the state or
federal ambient air quality standards and is authorized as a
substitute for command and control regulations and future air
quality measures that would otherwise have been adopted as
part of the district's plan for attainment.
The authorization to implement a market-based program in lieu
of other regulations and programs is contingent on specified
findings made by the district board, including, among other
things, that the program 1) will result in an equivalent or
greater reduction in emissions at equivalent or less cost
compared with regulations that would otherwise have been
adopted as part of the district's plan for attainment, and 2)
will not delay or hinder district compliance with
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expeditiously achieving and maintaining state air quality
standards.
Pursuant to AB 1054, the South Coast Air Quality Management
District adopted the Regional Clean Air Incentives Market, or
RECLAIM in 1993, which went into effect January 1994. The
program is unique in California, as no other air districts to
date have implemented a market-based program pursuant to
authority granted them under AB 1054.
RECLAIM was designed and adopted amidst an economic recession
in the region with widespread industry and electrical utility
support. The program replaced a series of existing command
and control rules and was designed to allow for the most
efficient emission reduction projects within the sector to
achieve the desired emissions reductions with the lowest
economic cost to industry.
Instead of permitting individual equipment and devices, the
program sets individual emissions limits on NOx and SOx for
facilities as a whole. Facilities that emit more than four
tons of NOx or SOx are covered under the program. Credits,
also called RECLAIM Trading Credits, or RTCs, are provided to
the facility in an amount equivalent to their emissions limit
assigned under the program. Each RTC, representing pounds of
NOx allowed to be emitted, is valid for one year and may be
traded or sold. RECLAIM sources may choose to install
emission control equipment that enables them to operate
within their allocation, or they may exceed emissions
allocations as long as they acquire sufficient RTCs from
other sources.
By the end of 2013, there were 275 facilities in the program,
including refineries, power plants, and other industrial
sources.
Over allocation of credits. RECLAIM has been criticized over
the years for an oversupply of credits, starting from the
original allocation of credits where the initial distribution
of RTCs in 1994 exceeded actual NOx emissions by 60%. This
significant over allocation was due in part to incorrect
economic growth assumptions for the region. Other than a few
notable exceptions, including during the energy crisis, the
oversupply of credits have kept credit prices relatively low
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compared to costs associated with installing pollution
control equipment. As a result, the largest polluters in the
region have primarily chosen to comply by purchasing RTCs to
exceed their NOx emissions cap under the program, instead of
by reducing NOx through installation of readily available
pollution control equipment.
RECLAIM amendments. Despite the initial excess allocation of
credits, RECLAIM has only been amended twice to reduce excess
RTCs for NOx (also called a credit "shave")-once in 2004, and
more recently in December of 2015.
According the December 4, 2012 staff report, amendments to
the program were needed to address best available retrofit
control technology (BARCT) requirements in state law. BARCT
reassessment is required by California law to assess the
advancement in control technology to ensure that RECLAIM
facilities achieve the same emission reductions that would
have occurred under a command-and-control approach and that
emissions reduction from the program fully contribute to the
efforts in the Basin to achieve the federal national ambient
air quality standards.
Specifically, the staff proposal recommended amendments to
shave NOx RTC credits from 26.5 tons/day (tpd) to 14 tpd with
a front loaded implementation schedule, to achieve 4 tpd of
the shave in 2016, and subsequent 2 tpd shaves until 2022.
The proposal notes that the 14 tpd day value represents the
emissions reductions necessary to comply with state law BARCT
requirements, with a 10% compliance margin, adjustments for
projected growth, and uncertainties in the BARCT analysis.
The staff proposal also recommended amendments to retire RTCs
from larger NOx emitting facilities that have shut down.
According to the staff proposal, the program currently allows
RTCs from permanently shut down facilities to be reintroduced
into the RECLAIM program, and "this source of RTCs does not
provide adequate incentive for the remaining facilities to
reduce their NOx emissions."
During the public comment portion of the hearing, support was
expressed among industry representatives for a reduced shave
of 12 tpd, a back loaded implementation schedule and a
removal of the proposal to retire credits from facility shut
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downs from consideration at the hearing.
At the December 4th hearing of the SCAQMD Governing Board, a
motion was made by Supervisor Nelson to approve the
industry-supported amendments of a 12 tpd shave, a back
loaded implementation schedule, and the removal of the
provision to retire RTCs from facility shutdowns from
consideration, and move the matter back as an item for
further discussion to the NOx RECLAIM Working Group.
After two substitute motions failed that would approve an
alternate implementation schedule, and a shave of 13 tpd and
14 tpd, respectively, the original motion was seconded and
passed by a vote of 7 to 5.
4) Air Resources Board letter. On January 7, 2016, Richard
Corey, executive officer of the ARB, wrote a letter to Dr.
Barry Wallerstein, the former executive officer of the
SCAQMD, expressing significant concerns over the recent
SCAQMD Board vote on December 4, 2015.
Specifically, the letter noted that ARB staff "have two
serious concerns about the adequacy of the RECLAIM
amendments. The first is that the 12 ton/day NOx reduction
falls short of what is needed given the overall emission
reduction needs in the region to meet State and federal air
quality standards. The second is that based on District
staff's documentation in its staff report, the amendments do
not meet State law for air pollution sources in RECLAIM."
5) Recent SCAQMD Board actions. On February 12, 2016, a majority
of the members of the Senate Environmental Quality, as well
as several Senators representing regions of the South Coast
air district, sent a letter to Dr. Bill Burke, Chairman of
the SCAQMD Board, asking him to reconsider the recent RECLAIM
amendments and take action to ensure the RECLAIM program
complies with state and federal air quality laws. On March
4, 2016, the Board took up the item, but the motion to
reconsider the December 2015 RECLAIM amendments failed.
At that same March 4, 2014 hearing, the SCAQMD Board voted
7-6 during the Board's closed session to remove their
executive officer, Dr. Barry Wallerstein. Dr. Wallerstein
was appointed executive officer in 1997.
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Torrance refinery. On April 2, 2016, the Board voted after 12
hours of a public hearing to allow Exxon Mobil to fully
restore its refinery in Torrance, CA. The restart is
necessary for Exxon Mobil to complete the $537 million sale
of the refinery to PBF Energy, an independent refiner.
The refinery has been shut down since a February 18, 2015
explosion at the facility, and is currently the subject of an
ongoing investigation by the US Chemical Safety Bureau (CSB).
CSB's preliminary findings report multiple safety violations
that led to the explosion. They also found that debris
narrowly missed the hydrofluoric acid (HF) tank and that had
debris struck the tank, "a rupture could have been possible,
resulting in a potentially catastrophic release of extremely
toxic modified HF in to the neighboring community." CSB also
reports a lack of cooperation from Exxon Mobil for request
for information, and that as early as this year, CSB had no
responses or incomplete responses to almost 50% of their
subpoena requests.
Comments
Purpose of Bill. According to the author, "The SCAQMD is one of
the leading voices for clean air and climate pollution
reductions in the southern California region. In the past six
months, with its recent changes in governance, it has voted to
dismiss its longstanding executive officer and weaken clean air
regulations over its expert staff's recommendations. Outside
parties have worked to reduce diversity on the board and to
install a majority that is more concerned with polluters than
with public health. SB 1387 seeks to modernize the membership
of the governing board and to ensure the ARB can conduct speedy
oversight of any amendments to smoke stack regulations made by
the new board."
Related/Prior Legislation
AB 1288 (Atkins, Chapter 586, Statutes of 2015) expands the
Board membership of ARB from 12 to 14 members, and requires that
those members be persons who work directly with
pollution-burdened and vulnerable communities.
SOURCE: Author
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SUPPORT:
None received
OPPOSITION:
None received
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