Consequences of Reclassification to Severe

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Consequences Of Bump-Up to a Severe Classification on the Baton Rouge Community The area will be tagged with the stigma of having a “severe” air quality problem although monitored results show we have at worst a “marginal” problem. The area would be required to use reformulated gasoline (RFG). Enforceable transportation control measures (TCMs) may be required to offset growth in vehicle miles traveled in the five parishes. The definition of major source will be revised from 50 tons per year (TPY) to 25 TPY, thus certain small business will have to submit permit applications and be subject to enforcement monitoring and reporting. Offset requirements for modifications or new construction of major sources would be increased from 1.2 to 1 to 1.3 to 1. If the area does not achieve attainment by the new deadline (November 15, 2005), DEQ must impose emissions fees of $5,000 (1990 dollars-adjusted for inflation) per ton of VOC (and NOx ?) emitted from each major source.

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Potential Consequences of Reclassification The area will be tagged with the stigma of having a “severe” air quality problem although monitored results show we have at worst a “marginal” problem. It is difficult to quantify the impact of the stigma of having a “severe” ozone problem on the Baton Rouge area, because it is manifest primarily in opportunities lost, many of which we may never know of. The Baton Rouge area will be rated down in livability indices in national news and periodical articles. It will become more difficult to recruit new businesses and employees to the area because of the perception of severe air quality problems. Even the citizens within our own community may be unnecessarily concerned about the health implications for their families, even though the air we breathe now has considerably improved over the past decade.

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The area would be required to use reformulated gasoline (RFG). At 12 months following the effective date of the reclassification (i.e. June, 2004), the five-parish Baton Rouge ozone nonattainment area becomes subject to year-round reformulated gasoline (RFG). This requirement is mandated and cannot be waivered as some have suggested. Although EPA assigns a relatively low incremental cost for the RFG, knowledgeable local suppliers have indicated the additional cost of RFG may go as high as 10 to 15 cents/gallon because of logistics of storing and supplying the special blend for a relatively small geographical area. Using annual gasoline consumption estimates for the five-parish area and a 10 cent incremental cost per gallon, it can be estimated that there would be an additional annual cost to consumers of $48.1 million per year. With RFG containing the oxygenate MTBE, we face the risks of troublesome surface and groundwater contamination associated with spills. Potential Consequences of Reclassification

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Enforceable transportation control measures (TCMs) may be required to offset growth in vehicle miles traveled in the five parishes. §182(d)(1)(A) of the CAAA requires "severe" areas to offset increases in emissions resulting from VMT growth. VMT growth and emissions are projected from the 1990 base year to the area's attainment year (2005 in BR). If VMT growth results in emissions greater than the attainment year ceiling, those emissions must be offset with TCMs. If emissions due to VMT growth over time remain below the established ceiling, TCMs are not required. In BR, the VMT offset determination requires analysis of VOC and NOx in years:  1990, 1996, 1999, 2002, and 2005. We may not have to analyze NOx for years prior to 2002 because of the NOx waiver that was in place during that time.  Based on what we know at this time, we do not expect to have to implement mandatory TCMs to offset VMT growth. Potential Consequences of Reclassification

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The definition of major source will be revised from 50 tons per year (TPY) to 25 TPY, thus certain small business will have to submit permit applications and be subject to enforcement monitoring and reporting. Upon the effective date of reclassification, the Baton Rouge area becomes subject to the redefinition of “major source” from 50 tons per year (TPY) to 25 TPY. It is currently estimated that somewhere around 40-50 previously unregulated small businesses and industrial facilities will become subject to having to submit Title V permit applications, monitoring and reporting of their emissions, and enforcement inspections by DEQ. A considerable population of certain small businesses will have to have emissions inventories performed to determine if they are affected by the redefinition. Title V permit applications for all new major sources will have to be submitted by June, 2004. Potential Consequences of Reclassification

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Offset requirements for modifications or new construction of major sources would be increased from 1.2 to 1 to 1.3 to 1. It is expected that the 1.3:1 offset ratio w/LAER & 1.5:1 offset ratio w/o LAER will be required for all permits not deemed administratively complete prior to the effective date of the bump-up (June 2003). The total fiscal impact of this requirement has not been estimated; however, because of the diminishing availability of offsets, this new requirement will undoubtedly affect decisions on expansions and/or modifications to local industries.  Potential Consequences of Reclassification

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If the area does not achieve attainment by the new deadline (November 15, 2005), DEQ must impose emissions fees of $5,000 (1990 dollars-adjusted for inflation) per ton of VOC (and NOx ?) emitted above 80% of an operating baseline from each major source. If our area fails to achieve attainment of the 1-hour ozone standard by November of 2005, area major sources (soon 25 tons per year or greater) become subject to Section 185 penalty fees. This would begin in January 2006, with the first year’s annual penalties due to the state around March of 2007. Using 2000 emissions (VOC and NOx) data for our five-parish area, it is estimated that the annual cost of the penalties to major sources will be about $100 million. These annual penalty fees will continue until we achieve attainment. Estimates of annual fees for some of our local industries are (in millions $): ExxonMobil Chem $6.6 ExxonMobil Refinery $8.9 Dow Chemical $15.2 Georgia-Pacific $5.6 Entergy Willow Glen $7.3 C-F Industries $5.1 Shell Chemical $2.2 Placid Refining $2.2 Weyerhauser Holden $0.4 Potential Consequences of Reclassification

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??UNCERTAINTY?? Discussions with EPA have revealed a large amount of uncertainty concerning requirements and timing of the bump-up process. Although other areas have been bumped-up in the past, Baton Rouge will apparently be the first into the chute following the reversal of EPA’s attainment date extension policy. EPA asked for a remand of the extension date and reclassification rules, but left much of the existing SIP rulemakings intact. We are not sure there is any precedent for this. EPA and LEAN are in negotiations related to LEAN’s November, 2002 petition concerning the transport SIP, and we do not know what the outcome will be. Baton Rouge may be the first in line to have to promulgate rules implementing the Section 185 penalty fees for failure to attain. EPA can provide no guidance at this time. Potential Consequences of Reclassification