bluescape update: the south coast aqmd moratorium on permits 06/04/09

UPDATE - The South Coast AQMD Moratorium P ion Permits

James A. WestbrookBlueScape Environmental

June 4 2009June 4, 2009

Webinar Agenda• Snapshot of moratorium impacts• Recap New Source Review and offsets• Recap New Source Review and offsets• Update the permit moratorium situation

State Legislative Action SB696– State Legislative Action, SB696– Court Appeals– Rule 1315 Tracking System Re-adoptionRule 1315 Tracking System Re adoption– District Workshops and NSR “Reform”

• Current ERC pricingCurrent ERC pricing• Permit actions• QuestionsQuestions

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About BlueScape

• Air quality permitting & compliance• New Source Review; CA and nationalNew Source Review; CA and national• ERC applications and market strategies• AERMOD, ISCST3 and HARP air quality modelingq y g• GHG management, AB32, registries, life-cycle

analysis, carbon trading20 i ith i d t i i S th C t• 20 years experience with industries in South Coast

• Regulatory strategies to move business forward

See www.bluescapeinc.com/about/index.html for more information.

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Snapshot – Permit Moratorium Impacts• Facilities cannot get certain permits without offsets,

or emission reduction credits (ERCs)Permits to construct (P/Cs) to build– Permits to construct (P/Cs) to build

– Permits to operate (P/Os) to operate

• Offsets are scarce and very expensive• AQMD estimates 3,150 permits may be impacted• Costs to acquire offsets > $4 billion

– $ 150 million for a landfill gas waste-to-energy plant– $ 1.6 million to permit a tortilla fryer and oven

• Impacts:Impacts:– Project delays, lost jobs– Difficulty getting permits for essential services

Diffi lt d l i ti l f di l i t– Difficulty deploying stimulus funding, cleaner equipment

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see www.yesonSB696.com

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Reference: www.yesonsb696.com

Recap: Offsets in Permitting• New Source Review (NSR) - Regulation XIII

– Rule 1303 requires offsets for nonattainment pollutants– District policy, emission increases 0.5 lb/day and

greater• Rule 1304 exemptions from offsets• Rule 1304 exemptions from offsets• Rule 1309.1 offset bank (Priority Reserve) for large

essential projects, e.g. power plants• Rule 1309.2 offset budget for other projects• Rule 1315 new source review tracking system• Exemptions and Priority Reserve previously funded by theExemptions and Priority Reserve previously funded by the

District Offset Bank• Rule 1309.2 offset budget not active

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Timeline – Then & Now

• Nov. 2008: LA Superior Court Ruling (BS110792) –invalidates Rule 1315 District Bank Tracking

• Dec 2008: Court appeals filed• Jan 2009: South Coast AQMD issues moratorium

P it d ff t– Permits need offsets– Rule 1304 exemptions no longer available– Could be retroactive to permits issued after Sep. 8, 2006

• Feb 2009: amended SB696 by state Senator Wright• Mar 2009: Rule 1315 amendment proposed, CEQA

I iti l St d N ti f P tiInitial Study, Notice of Preparation• District NSR Stakeholder workshops, reform

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State Legislative and Court Activity

• State Legislation - SB696 (Wright)– Limited CEQA exemption to offset rulesLimited CEQA exemption to offset rules– Allow access to District offsets bank with

requirements met– Bill pulled from committee, negotiations (Capital

Weekly, May 21)www yesonsb696 com– www.yesonsb696.com

• Court Activity– Municipal court appeals stay on invalidating– Municipal court appeals, stay on invalidating

previous permits– Federal court case pending

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Rule 1315 & 1309.2 Rule Revision and CEQA Programmatic Study

• Purpose of amendments:– Ability to issue permits using District internal offsetsAbility to issue permits using District internal offsets– Codify procedures– Specify types of reductions

• Rule 1309.1 for large projects will not be amended• Amended Rule 1309.2 must be approved by EPA• Program Environmental Assessment• Program Environmental Assessment• Scheduled to go to AQMD Board Oct 2, 2009• No Rule 1304 exemptions currently allowed pendingNo Rule 1304 exemptions currently allowed pending

re-adoption of Rule 1315

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District NSR Workshops, Reform

• Workshops held on Jan 21, Mar 11, Apr 16 & May 1216, & May 12

• Near-term and long-term solutions• Supply-Side and Demand-side• Requires rule revisions• Next workshop on July 16

See: http://aqmd.gov/prdas/nsr/051209/FinalNSR051209.pdf

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What to do Now?

• A lot happening, nothing has changed .. yet• Can you wait, or need to act now?Can you wait, or need to act now?

- Permit process length and difficulty- Offset scarcity and market directionOffset scarcity and market direction- Business opportunity, stimulus funding

• Consider costs to purchase market offsets• Consider costs, to purchase market offsets versus other options

• Consult a permitting expert – make the rightConsult a permitting expert make the right decision, ideas to get your permit

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Current Open Market ERC Prices

Coastal (lb/day) Inland (lb/day)

NOx PM10 VOC NOx PM10 VOC

$90 000 – $270 000 - $5 000 - $55 000 - $100 000 - $5 000 -$90,000 –$150,000

$270,000 -$350,000

$5,000 -$9,500

$55,000 -$80,000

$100,000 -$170,000

$5,000 -$9,000

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Summary• Relief may come, from different fronts• South Coast AQMD permitting is complicated,

develop a permit strategy• BlueScape will help you:

Review your permit situation business goals and– Review your permit situation, business goals and other factors

– Develop and analyze various optionsp y p– Execute a permitting strategy

• Stay on top of the changing New Source Review landscape

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Contact with Questions

James A. WestbrookBlueScape Environmental

877-486-9257jwestbrook@bluescapeinc.com

www.bluescapeinc.comLos Angeles ~ San Diego

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