WSR 19-12-092

PROPOSED RULES

DEPARTMENT OF ECOLOGY

[Order 18-07—Filed June 4, 2019, 11:56 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 18-15-099.

Title of Rule and Other Identifying Information: Chapter 173-460 WAC, Controls for new sources of toxic air pollutants, this rule includes air quality permitting requirements for businesses that emit toxic air pollutants.

For more information on this rule making visit https://ecology.wa.gov/Regulations-Permits/Laws-rules-rulemaking/Rulemaking/WAC173-460.

Hearing Location(s): On July 16, 2019, at 10:00 a.m., at a webinar and in-person at the Department of Ecology, 300 Desmond Drive S.E., Lacey, WA 98503.

Presentation, question and answer session followed by the hearing. We are also holding this hearing via webinar. This is an online meeting that you can attend from any computer using internet access.

Join online and see instructions https://watech.webex.com/watech/onstage/g.php?MTID=e3bd05ebe5ef75af71b97405bfdea30bb.

For audio call United States toll-free number 1-855-929-3239 and enter access code 809 785 606. Or to receive a free call back, provide your phone number when you join the event.

Date of Intended Adoption: October 21, 2019.

Submit Written Comments to: Elena Guilfoil, send via United States mail at Department of Ecology, Air Quality Program, P.O. Box 47600, Olympia, WA 98504-7600; or send parcel delivery services to Department of Ecology, Air Quality Program, 300 Desmond Drive S.E., Lacey, WA 98503; submit comments by mail, online, or at the hearing online http://ac.ecology.commentinput.com/?id=t7W9R, by July 23, 2019, at 11:59 p.m.

Assistance for Persons with Disabilities: Contact ecology's Americans with Disabilities Act (ADA) coordinator, phone 360-407-6831, people with speech disability may call TTY at 877-833-6341, people with impaired hearing may call Washington relay service at 711, email ecyADAcoordinator@ecy.wa.gov, by July 1, 2019.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed amendments make the following changes:

Anticipated effects include:

Reasons Supporting Proposal: The reasons for the proposed rule amendments are to:

The "Decision Making Documentation: Updating Chapter 173-460 WAC" provides the decisions and reasons supporting the proposal for the following topics:

Visit our web site for more information explaining the proposed changes https://ecology.wa.gov/Regulations-Permits/Laws-rules-rulemaking/Rulemaking/WAC173-460:

Statutory Authority for Adoption: Chapter 70.94 RCW, Washington Clean Air Act.

Statute Being Implemented: Chapter 70.94 RCW, Washington Clean Air Act.

Rule is not necessitated by federal law, federal or state court decision.

Agency Comments or Recommendations, if any, as to Statutory Language, Implementation, Enforcement, and Fiscal Matters: If we adopt this proposal, we will write a rule implementation plan as part of the information we share when we announce the adoption. The purpose of this plan is to inform those who must comply with chapter 173-460 WAC about how we intend to:

Also included in this plan is information about:

We intend to update or develop the following supporting materials:

Name of Proponent: Department of ecology, governmental.

Name of Agency Personnel Responsible for Drafting: Elena Guilfoil, Lacey, 360-407-6855; Implementation: Stuart A. Clark, Department of Ecology, Air Quality Program, Lacey, Washington, 360-407-6880; Benton Clean Air Agency, Kennewick, 509-783-1304; Northwest Clean Air Agency, Mount Vernon, 360-428-1617; Olympic Region Clean Air Agency, Olympia, 360-539-7610; Puget Sound Clean Air Agency, Seattle, 206-343-8800; Southwest Clean Air Agency, Vancouver, 360-574-3058; Spokane Regional Clean Air Agency, Spokane, 509-477-4727; Yakima Regional Clean Air Agency, Yakima, 509-834-2050; Ecology Central Regional Office, Air Quality Program, Union Gap, 509-575-2490; Ecology Eastern Regional Office, Air Quality Program, Spokane, 509-329-3400; Ecology Industrial Section (Solid Waste Management Program), Lacey, 360-407-6800; Ecology Nuclear Waste Program, Richland, 509-372-7950; and Enforcement: Same as implementation.

A school district fiscal impact statement is not required under RCW 28A.305.135.

A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Elena Guilfoil, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, phone 360-407-6855, people with speech disability may call TTY at 877-833-6341, people with impaired hearing may call Washington relay service at 711, to request ADA accommodation for disabilities, or printed materials in a format for the visually impaired, call ecology at 360-407-7668 or visit https://ecology.wa.gov/accessibility, email elena.guilfoil@ecy.wa.gov.

The proposed rule does impose more-than-minor costs on businesses.

This small business economic impact statement (SBEIS) presents the:

(1) Compliance requirements of the proposed rule.

(2) Results of the analysis of relative compliance cost burden.

(3) Consideration of lost sales or revenue.

(4) Cost-mitigating action taken by ecology, if required.

(5) Small business and local government consultation.

(6) Industries likely impacted by the proposed rule.

(7) Expected net impact on jobs statewide.

A small business is defined by the Regulatory Fairness Act (chapter 19.85 RCW) as having fifty or fewer employees. Estimated costs are determined as compared to the existing regulatory environment, the regulations in the absence of the rule. The SBEIS only considers costs to "businesses in an industry" in Washington state. This means that impacts, for this document, are not evaluated for nonprofit or government agencies.

The existing regulatory environment is called the "baseline" in this document. It includes only existing laws and rules at federal and state levels.

COMPLIANCE REQUIREMENTS OF THE PROPOSED RULE, INCLUDING PROFESSIONAL SERVICES: The baseline for our analyses generally consists of existing rules and laws, and their requirements. This is what allows us to make a consistent comparison between the state of the world with and without the proposed amendments.

For this proposed rule making, the baseline includes:

The proposed amendments:

Baseline: The baseline rule contains three hundred ninety-five TAPs.

Proposed: The proposed amendments remove and add chemicals to the list of TAPs.

Removing chemicals from the TAP list: We are proposing to remove eight TAPs from the baseline TAP list. We are basing these amendments on the:

Adding chemicals to the TAP list: We are proposing to add forty-five chemicals to the baseline TAP list. We are basing these amendments on current scientific information sufficient to identify the chemical as a TAP. We then set an appropriate ASIL, SQER, and de minimis emission value for it.

Removing chemicals from the TAP list: New or modified facilities emitting four of the chemicals we are proposing to remove from the TAP list would potentially be required to do less modeling or health impact analysis as part of permit application if their emissions exceed the baseline SQER. If emissions of these chemicals exceed baseline ASILs, they could be able to reduce the amount of preplanned emissions controls:

New or modified facilities emitting these four chemicals will notice no change because emissions from those chemicals are subject to another TAP:

If a permitting agency permits a facility under the baseline and they exceed only the baseline de minimis levels for removed TAPs, the facility could become exempt from permitting (all TAP emissions below de minimis).

Adding new chemicals to the TAP list: New or modified facilities emitting the chemicals we propose to add to the [list] as TAPs would potentially be required to do additional modeling or health impact analysis as part of a permit application. This occurs if their emissions of those chemicals exceed proposed de minimis emission values or SQERs. If emissions of these chemicals exceed proposed ASILs, they would need to preplan additional emissions controls or submit a health impact assessment under second tier review.

If the baseline does not require facilities to do additional analysis (because they do not emit baseline TAPs in excess of de minimis levels), they would need to do additional analysis if they emit a proposed new TAP in excess of the de minimis level.

The public also benefits from added protection from the proposed new TAPs. They are based on up-to-date scientific values and better reflect their true toxicity.

Baseline: The baseline rule includes de minimis emission values for three hundred ninety-five TAPs. New or modified facilities emitting below these levels are not subject to additional emissions analysis (first tier review review).

Proposed: The proposed amendments would modify de minimis emission values for four hundred twenty-eight TAPs (including the new and removed TAPs; see section 2.3.1). 0.5 percent of de minimis values increase (become less stringent), while 99.5 percent decrease (become more stringent).

We note that one percent of de minimis levels change the number of significant figures to which facilities report and compare emissions in a permit application. While rounding to the appropriate number of significant figures can numerically change the de minimis level, facilities round reported emissions in the same way. The comparison between de minimis levels and reported emissions is therefore unchanged.

Expected impact: Increasing de minimis values would result in reduced emissions analysis and review for these TAPs if they emit them. If these were the only TAPs they emit, they would not need the first tier review at all.

Decreasing de minimis values would result in more emissions analysis and review for those TAPs if they emit them. If these were the only TAPs they emit, they would need the first tier review that they would not need under the baseline.

Decreasing de minimis values also better protects the public. We base them on up-to-date scientific values that better reflect their true toxicity. This indicates the baseline under-protects public health compared to the proposed amendments.

Baseline: The baseline rule includes SQERs for three hundred ninety-five TAPs. New or modified facilities emitting above these levels are subject to more complex dispersion modeling or additional analysis when emissions exceed ASILs (second tier review review).

Proposed: The proposed amendments would modify SQERs for four hundred thirty-two TAP (including the new and removed TAPs; see section 2.3.1). About 0.5 percent of SQERs increase (become less stringent), while 99.5 percent decrease (become more stringent).

Expected impact: SQERs increasing could result in facilities needing less emissions modeling for these TAPs, if they emit them. For TAPs with lower or new SQERs under the proposed amendments, this could result in a larger number of TAPs for which additional emissions modeling is required (or operational changes to reduce emissions below the SQER).

The public also benefits from added protection from the TAPs with decreasing SQERs. We base them on up-to-date scientific values that better reflect current dispersion modeling techniques. This indicates the baseline may in some cases under-protect public health compared to the proposed amendments.

Baseline: The baseline rule includes ASILs for three hundred ninety-five TAPs. New or modified facilities may not emit above these levels, and so preplan additional emissions controls.

Proposed: The proposed amendments would modify ASILs for one hundred fifty TAPs (including new and removed TAPs). About sixteen percent of ASILs would increase (become less stringent), and eighteen percent would decrease (become more stringent). ASILs for sixty-six percent of TAPs would not change under the proposed amendments.

Expected impact: Higher ASILs could result in facilities not needing to preplan as many emissions controls (plan for emissions control or other measures) as under the baseline. Lower ASILs could mean they incur second tier review costs, or need to preplan for additional controls, if they emit the TAPs for which ASILs would change under the proposed amendments.

The public also benefits from added protection from the TAPs with decreasing ASILs. We base them on up-to-date scientific values that better reflect current understanding of toxicity, instead of the information supporting their baseline SQERs. This indicates the baseline under-protects (eighteen percent of TAPs) or over-protects (sixteen percent of TAPs) public health compared to the proposed amendments.

Baseline: The existing rule varies in the number of significant digits used for emissions rates and concentrations.

Proposed: The proposed amendments round all values to two significant digits.

Expected impact: We do not expect this proposed amendment to result in costs or benefits other than clarity. Since values are rounded, this amendment would not change exceedances of de minimis emission values, SQERs, or ASILs.

Baseline: We use the term "toxic air pollutant" throughout the existing rule.

Proposed: We replace the term "toxic air pollutant" with "TAP."

Expected impact: We do not expect this proposed amendment to result in costs or benefits other than clarity through conciseness.

Compliance with the proposed amendments, compared to the baseline, is not likely to impose additional costs of equipment.

Compliance with the proposed amendments, compared to the baseline, is not likely to impose additional costs of supplies.

Compliance with the proposed amendments, compared to the baseline, is not likely to impose additional costs of labor.

Potential first tier review, TBACT, and permitting costs for unidentified facilities emitting added TAPs.

Recalculated de minimis emission values:

Recalculated SQERs:

Recalculated ASILs:

Where applicable, ecology estimates administrative costs ("overhead") as part of the cost of labor and professional services, above.

Not applicable.

We calculated the estimated per-entity costs to comply with the proposed amendments, based on the primary compliance costs estimated in Chapter 3, and the primary compliance cost savings estimated in Chapter 4. In this section, we summarize compliance cost per employee at affected businesses of different sizes.

The average affected small business likely to be covered by the proposed amendments employs about eight people. (Database of Washington employment. Where ranges of employment were provided, we used the lowest number of employees in the range.) The largest ten percent of affected businesses employ an average of ten thousand five hundred people. (Ibid. Note that the primary employment database lists highest-employment businesses as 10,000+. The actual average for the largest ten percent of businesses is likely higher. This would make the disproportions shown in Table 7 larger.) Based on cost estimates from Chapter 3, we estimated the following compliance costs per employee. Some existing private employers potentially experience a net benefit, through avoided second tier review costs or reductions in preplanned emissions control equipment. Negative low net cost indicates a potential reduction in compliance costs.

While cost savings per employee are disproportionately larger for small businesses when a cost-savings is experienced, compliance costs are disproportionately higher for small businesses when net compliance costs are positive. We conclude that the proposed amendments are likely to have disproportionate impacts on some small businesses, and therefore must include elements in the proposed amendments to mitigate this disproportion, as far as is legal and feasible.

Businesses that would incur costs could experience reduced sales or revenues if the changes would significantly affect the prices of the goods they sell. The degree to which this could happen is strongly related to each business's production and pricing model (whether additional lump-sum costs significantly affect marginal costs), as well as the specific attributes of the markets in which they sell goods, including the degree of influence of each firm on market prices, and the relative responsiveness of market demand to price changes.

We used the REMI PI+ model for Washington state to estimate the impact of the proposed amendments on directly affected markets, accounting for dynamic adjustments throughout the economy. The model accounts for interindustry impacts; price, wage, and population changes; and dynamic adjustment of all economic variables over time.

For existing facilities (representing potential future facilities in each year), we identified the associated industry. (See https://www.census.gov/eos/www/naics/index.html for more North American Industry Classification System (NAICS) information, industry groupings, and descriptions.) For preconstruction permits for which we did not have corresponding emissions data that was comparable with the baseline and proposed amendments, we assumed costs and benefits estimated for modeled facilities were distributed across identified industries in the same proportions as in facilities on which we had comprehensive emissions data. Net compliance costs (positive or negative) were assumed to be transfers to/from environmental consultants (NAICS 5413, Engineering Services, including environmental engineering services).

The REMI PI+ model output represents many aspects of the state economy, modeling the impact of positive and negative transfers across industries, and comparing it to a baseline model reflecting the status quo and forecast trends. To examine whether businesses were likely to lose sales or revenue, we looked at model output related to prices and demand (sales reflected in dollars). While the aggregate net increase in economic activity would create a very small increase in statewide (all industry) total demand (less than 1/100 of one percent), none of the industries we identified as incurring net compliance costs or experiencing net compliance benefits were found to experience a significant change in demand. Similarly, the model indicated that there would be no significant impacts to commodity prices or the overall price level. We therefore do not expect businesses to experience a significant impact to their sales and revenue.

RFA (RCW 19.85.030(2)) states that: Based upon the extent of disproportionate impact on small business identified in the statement prepared under RCW 19.85.040, the agency shall, where legal and feasible in meeting the stated objectives of the statutes upon which the rule is based, reduce the costs imposed by the rule on small businesses. The agency must consider, without limitation, each of the following methods of reducing the impact of the proposed rule on small businesses:

(a) Reducing, modifying, or eliminating substantive regulatory requirements;

(b) Simplifying, reducing, or eliminating recordkeeping and reporting requirements;

(c) Reducing the frequency of inspections;

(d) Delaying compliance timetables;

(e) Reducing or modifying fine schedules for noncompliance; or

(f) Any other mitigation techniques including those suggested by small businesses or small business advocates.

We considered all of the above options, and included the following legal and feasible elements in the proposed amendments that reduce costs. In addition, we considered the alternative amendment contents discussed in Chapter 6, and excluded those elements that would have imposed excess compliance burden on businesses:

Because the purpose of this rule making is to update the basis of preconstruction permitting to current scientific values and understanding of toxicity, it is otherwise difficult to reduce compliance costs stemming from the proposed amendments. Moreover, it is difficult to reduce compliance costs specifically for small businesses, since there is not necessarily a correlation between business size and the types or amounts/rates of TAPs they emit. If review of new or modified facilities was reduced below what is deemed necessary based on current evidence regarding the toxicity of TAPs, for small businesses, the rule would not be able to meet the goal of protecting public health and the environment in the authorizing statute.

Ecology involved small businesses and local government in its development of the proposed amendments by:

We note that it is time consuming and costly to participate in the rule-making process, and this can be a significant effort to small businesses. However, we did consult with them through organizations representing broader industries.

We used the REMI PI+ model for Washington state to estimate the impact of the proposed amendments on jobs in the state, accounting for dynamic adjustments throughout the economy. The model accounts for inter-industry impacts; price, wage, and population changes; and dynamic adjustment of all economic variables over time. The proposed amendments would result in transfers of money within and between industries. We based model inputs on forecast quantifiable costs and benefits (cost-savings) estimated in Chapters 3 and 4.

For existing facilities (representing potential future facilities in each year), we identified the associated industry (see NAICS list in section 7.6). See https://www.census.gov/eos/www/naics/index.html for more NAICS information, industry groupings, and descriptions. For preconstruction permits for which we did not have corresponding emissions data that was comparable with the baseline and proposed amendments, we assumed costs and benefits estimated for modeled facilities were distributed across identified industries in the same proportions as in facilities on which we had comprehensive emissions data. Net compliance costs (positive or negative) were assumed to be transfers to/from environmental consultants (NAICS 5413, Engineering Services, including environmental engineering services).

The REMI PI+ model output represents many aspects of the state economy, modeling the impact of positive and negative transfers across industries, and comparing it to a baseline model reflecting the status quo and forecast trends. To examine the proposed amendments' impact on jobs, we looked at the aggregate jobs impact (across all industries and jobs in the state), as well as job impacts specific to industries directly impacted by the proposed amendments, and the industry of consultants that receive increases in emissions analysis spending, or lose income when emissions analysis spending is reduced or avoided. Since job impacts vary by year (as the state economy adjusts to a change in expenditures), the table below summarizes low and high impacts to jobs.

These prospective changes in overall employment in the state are the sum of multiple small increases and decreases across all industries in the state.

The public may obtain a copy of the small business economic impact statement or the detailed cost calculations by contacting Elena Guilfoil, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, phone 360-407-6855, people with speech disability may call TTY at 877-833-6341, people with impaired hearing may call Washington relay service at 711, to request ADA accommodation for disabilities, or printed materials in a format for the visually impaired, call ecology at 360-407-7668 or visit https://ecology.wa.gov/accessibility, email elena.guilfoil@ecy.wa.gov.

June 3, 2019

Polly Zehm

Deputy Director