Adopted Part 205, Architectural and Industrial Maintenance (AIM) Coatings - Regulatory Impact Statement
Statutory Authority
New York faces a significant public health challenge from ground-level ozone, which causes health effects ranging from respiratory disease to death. In response to this public health problem, New York has enacted a series of regulations designed to control ozone and its chemical precursors which include volatile organic compounds (VOCs). Among other regulatory actions, New York has promulgated regulations designed to limit the VOCs emitted by various paints, stains, and sealers also known as architectural and industrial maintenance coatings (AIM coatings). See 6 NYCRR Part 205.
On July 18, 1997, the EPA promulgated the eight-hour ozone national ambient air quality standard (NAAQS). EPA has designated several areas within New York State to be in nonattainment with the eight-hour NAAQS. Previously, New York State had been subject to the one-hour ambient air quality standard for ozone, which remained in effect until June 2005. Federal regulations require New York State to develop and implement enforceable strategies to get those areas into attainment by 2009. Since attainment is determined over a three-year period, VOC emission reductions are needed during the three-year averaging period which commences in May 2007.
Given the ozone problems within the State and the Ozone Transport Region (OTR), which is comprised of the twelve Mid-Atlantic and Northeast states and the District of Columbia, the Clean Air Act requires New York and other OTR states to submit to EPA an implementation plan to reduce ozone for its review and approval. In 2003, the New York State Department of Environmental Conservation (Department) promulgated a revised regulation which sought to limit or reduce the amount of VOCs released into the atmosphere from AIM coatings. See 6 NYCRR Part 205 (AIM regulation). Consistent with New York's obligations under the Act, New York submitted its AIM regulation to EPA as part of New York's State Implementation Plan (SIP). In turn, EPA approved the incorporation of Part 205 into New York's SIP.
The Department now proposes to revise Part 205 to implement two rule changes. First, the Department proposes to modify the provision in section 205.7 whereby small manufacturers could apply for and obtain an exemption from VOC content limits through December 31, 2007, with the option to apply to renew the exemption for an additional three years. This exemption is otherwise known as the small manufacturer's exemption or "SME." The Department proposes to end the SME effective December 31, 2006. Second, the Department proposes to include a "sell-through" end date provision so that products manufactured prior to January 1, 2005, or granted a SME, which do not meet Part 205 VOC content limits, cannot be sold indefinitely. Together, these modifications will ensure that the State achieves the VOC emission reductions from AIM coatings needed to address the emission shortfall identified by EPA for the New York City Metropolitan Area (NYCMA) in connection with the one-hour ozone NAAQS and that the State can make immediate progress towards attaining the eight-hour ozone NAAQS statewide.
In 2005, the Department granted SMEs to twenty small manufacturers for specific AIM coatings. The Department has analyzed the information submitted in connection with the SME applications, and has now determined that the SMEs account for approximately 4 tons of VOC emission reductions per ozone season day (tpd) out of the 14 tpd of reductions that were anticipated to be achieved when the VOC content limits in Part 205 took effect in 2005. One of the objectives of this rulemaking is to recover for the 2007 ozone season and thereafter the 4 tpd of VOC emission reductions that were not achieved as a result of the SMEs. In addition to the VOC emission reductions lost due to the SMEs, the Department is concerned about the VOC emission lost from the continued sale of AIM coatings produced prior to the January 1, 2005 compliance date in Part 205. The VOC content limits in Part 205 do not apply to products manufactured prior to January 1, 2005, only products manufactured on or after that date. In discussions with AIM coatings manufacturers, the Department has learned that some pre-2005 product is still being sold. The Department proposes to add a "sell-through" end date of May 15, 2007, after which all AIM products sold in New York State must comply with the low VOC content limits in Part 205. By eliminating the SMEs and establishing a "sell-through" end date, the Department will be able to demonstrate progress towards attaining the eight-hour NAAQS for ozone.
The Department is filing an emergency adoption to make these rule revisions effective immediately. Under these revisions, the SMEs will not end until December 31, 2006. Manufacturers will have until May 15, 2007 to sell non-compliant products that were manufactured before January 1, 2005 or were granted a SME. The Department realizes, however, that manufacturers granted one or more SMEs will need time to shift their production to compliant coatings. Both large and small manufacturers who were selling non-compliant coatings manufactured before the new VOC standards took effect need time to liquidate their existing inventories or transfer those inventories to states outside of the OTR with less stringent AIM coatings regulations. The adoption of these revisions on an emergency basis ensures that manufacturers have significant advance notice to react to these rule changes in a timely manner and achieve compliance with Part 205 by the "sell-through" end date.
The promulgation of these Part 205 amendments is authorized by the following sections of the Environmental Conservation Law (ECL) which, taken together, clearly empower the Department to establish and implement the Program:
Section 1-0101. This Section declares it to be the policy of New York State to conserve, improve and protect its natural resources and environment and control air pollution in order to enhance the health, safety and welfare of the people of New York State and their overall economic and social well being. Section 1-0101 further expresses, among other things, that it is the policy of New York State to coordinate the State's environmental plans, functions, powers and programs with those of the federal government and other regions and manage air resources to the end that the State may fulfill its responsibility as trustee of the environment for present and future generations. This Section also provides that it is the policy of New York State to foster, promote, create and maintain conditions by which man and nature can thrive in harmony by providing that care is taken for air resources that are shared with other States.
Section 3-0301. This Section states that it shall be the responsibility of the Department to carry out the environmental policy of the State. In furtherance of that mandate, Section 3-0301(1)(a) gives the Commissioner authority to "[c]oordinate and develop policies, planning and programs related to the environment of the state and regions thereof..." Section 3-0301(1)(b) directs the Commissioner to promote and coordinate management of, among other things, air resources "to assure their protection, enhancement, provision, allocation, and balanced utilization consistent with the environmental policy of the State and take into account the cumulative impact upon all of such resources in making any determination in connection with any license, order, permit, certification or other similar action or promulgating any rule or regulation, standard or criterion." Pursuant to ECL Section 3-0301(1)(i), the Commissioner is charged with promoting and protecting the air resources of New York including providing for the prevention and abatement of air pollution. Section 3-0301(2)(a) permits the Commissioner to adopt rules and regulations to carry out the purposes and provisions of the ECL. Section 3-0301(2)(m) gives the Commissioner authority to "adopt such rules, regulations, and procedures as may be necessary, convenient, or desirable to effectuate the purposes of this chapter."
Section 19-0103. This Section declares that it is the policy of New York State to maintain the purity of air resources and to require the use of all available practical and reasonable methods to prevent and control air pollution in the State.
Section 19-0105. This Section declares that it is the purpose of Article 19 of the ECL to safeguard the air resources of New York State under a program which is consistent with the policy expressed in Section 19-0103 and in accordance with other provisions of Article 19.
Section 19-0301. This Section authorizes the Department to adopt regulations to prevent and control air pollution in such areas of the State that are affected by air pollution, develop a general comprehensive plan for the control and abatement of existing air pollution and for the control and prevention of new air pollution and cooperate with government agencies and other States or interstate agencies with respect to the control of air pollution.
Section 19-0305. This Section authorizes the Department to enforce the codes, rules and regulations established in accordance with Article 19.
Legislative Objectives
These revisions to Part 205 are among a series of sustained actions undertaken by New York State, in conjunction with EPA and other States, to control emissions of ozone precursors, including nitrogen oxides and VOCs, so that New York State and States in the OTR may attain the ozone NAAQS. In particular, the modification ending the SME by December 31, 2006 would make Part 205 consistent with AIM regulations in other states throughout the OTR which do not have an exemption for small manufacturers.
On December 16, 1999, several other jurisdictions in the Northeast (Philadelphia and Baltimore) were informed by EPA that their State Implementation Plans (SIP) did not provide sufficient emission reductions to attain the one-hour ozone NAAQS. To assist in the development of the SIP revisions needed for OTR States to meet the emission reduction shortfall identified by EPA, the Department entered into the "Memorandum of Understanding Among the States of the Ozone Transport Commission Regarding the Development of Specific Control Measures to Support Attainment and Maintenance of the Ozone National Ambient Air Quality Standards" (MOU) on June 1, 2000. The MOU was identified in the EPA rulemaking approving the ozone attainment demonstration for the New York City Metropolitan Area (NYCMA). EPA recognized in its approval that regional control measures could best address the emission reduction shortfalls in the Northeast.
The MOU contained a list of "short term priority control measures" that have the potential to provide emission reductions and could be adopted in time to help the OTR States meet the EPA identified emission reduction shortfall. The MOU directed the Ozone Transport Commission (OTC) to: (1) elaborate on the expected emission reductions, other benefits and associated costs of controls; (2) solicit and provide forums for input on the control measures; and, (3) consider all mechanisms to facilitate the completion of a multi-State agreement for the short term priority control measures by the 2001 OTC Winter Meeting. The OTC Stationary/Area Source (SAS) Committee established workgroups composed of and headed by OTC member States to carry out this directive.
The AIM Coatings and Consumer Products Workgroup (Workgroup) was established to consider control measures to limit the emissions from AIM coatings and consumer products. The State of New York was chosen to chair the Workgroup which included the States of Massachusetts, Pennsylvania, Maryland, New Hampshire, Delaware and New Jersey.
The revisions to Part 205 were adopted on November 22, 2003 (effective date) revised the architectural coatings VOC content limits that are found in New York State regulation. It set specific VOC content limits (in grams per liter) for 52 AIM coating categories and required compliance with those limits by January 1, 2005. These new limits are more stringent than the national AIM rule for 40 categories and 31 categories are more stringent than the old State rule (adopted in 1988). Compliance with the revised limits is accomplished either through reformulation or substitution with existing complying coatings. The VOC content limits in revised Part 205 were chosen based in part on the known availability of complying products on the market. Therefore, the technology already existed to produce these coatings and is currently being used to produce complying AIM coatings.
The 2003 amendments to Part 205 included the SME based upon the Department's understanding at the time that some small manufacturers could have a difficult time acquiring and producing compliant formulations by January 1, 2005. Since that rulemaking was completed, the Department has discovered that compliant formulations are available (often free of charge) through both the solvent and the raw material suppliers to this industry.
The most current information on the feasibility of VOC content limits can be found in the memorandum "Update on the Architectural Coatings Suggested Control Measure" dated December 30, 2002, and the report "Status Report Architectural Coatings Suggested Control Measure" dated December 2002 prepared by the California Air Resources Board (CARB). Pursuant to the adoption of the Suggest Control Measure (SCM), CARB is required to provide updates on the status of their architectural coating regulatory activities. As of December 2002, sixteen California air districts had adopted or amended their AIM rules, while six more districts were either working on, or considering, adopting or amending an AIM rule based on the SCM. Districts that adopted or amended AIM rules received minimal opposition and were able to address all comments without making major changes to the SCM. Furthermore, in carrying out the 2002 technology assessments for AIM coating limits effective on January 1, 2003, CARB utilized the 2001 AIM survey (2000 sales data), performance tests by National Technical Systems and KTA-Tator, and the South Coast Air Quality Management District's annual technology assessments. The December 2002 report concluded that all of the AIM coating limits contained in the SCM, which New York subsequently adopted in 2003, were technically feasible with no significant adverse effects on small business.
Pursuant to the Clean Air Act Amendments of 1990, EPA classified the NYCMA as a nonattainment area for ozone. As discussed previously, EPA required New York State to adopt several oxides of nitrogen (NOx) and VOC control regulations in order to address a "shortfall" of emission reductions in connection with the one-hour ozone NAAQS attainment determination. The additional reductions were deemed necessary in order for New York to demonstrate compliance with the one-hour NAAQS for ozone.
In June of 2004, EPA re-designated areas in New York State as nonattainment under the revised eight-hour ozone NAAQS. NYCMA, Lower Hudson and Jefferson County were classified as moderate ozone nonattainment areas pursuant to the more stringent standard. The attainment date for these areas under the eight-hour ozone standard is 2009. Attainment in 2009 is determined over a three-year averaging period which includes 2007, 2008 and 2009, so it is necessary to implement measures to achieve emission reductions in ozone precursor pollutants as expeditiously as possible.
Part 205 currently includes the SME provision that allows the Department to grant an exemption to a small AIM coatings manufacturer in order to allow more time for the manufacturer to acquire the technology to comply with the new VOC content limits. Twenty-two small manufacturers applied for and twenty received SMEs pursuant to section 205.7. Revised Part 205 was estimated to achieve a VOC emission reduction of 14 tons per ozone season day (tpd) and the Department has determined that as a result of granting the SMEs, 4 tpd of VOC emission reductions that had been anticipated were not realized. These emissions are essential to the Department's strategy to bring NYCMA, and the other nonattainment areas of the state into attainment with the eight-hour NAAQS for ozone. In a letter dated January 27, 2006 from Raymond Werner, Chief, Air Programs Branch, USEPA Region 2 Office, to Dave Shaw, Director Division of Air Resources of DEC, EPA requested an accounting of the shortfall measures to meet the 42 tpd VOC emission reduction shortfall. New York cannot make this demonstration unless it is able to take credit for all of the emission reductions anticipated through implementation of the six "shortfall measures" (the six shortfall measures adopted were amendments to Part 205, AIM coatings; amendments to Part 226, Solvent Metal Cleaning; amendments to Subpart 227-2, NOx RACT; amendments to Part 228, Surface Coating Processes; adoption of Part 235, Consumer Products; and adoption of Part 239, Portable Fuel Containers; ), including the 4 tpd of VOC emission reductions lost through application of the SMEs.
In addition to evaluating the SME provision, the Department also reviewed a provision that was considered during the last rulemaking but not included in the final adopted rule in 2003. Part 205 currently does not contain a "sell-through" end date for sales of AIM coatings manufactured prior to January 1, 2005. Because the Department believed that AIM coatings moved quickly through the market (based upon discussions with industry during the rulemaking process), it was believed that there was not a need for a cut-off date. Since adoption of the final rule in 2003, the Department has discovered that some of these products do have long shelf lives and have remained in the market for periods sometimes exceeding two years. Moreover, the Department has also been advised that some manufacturers stockpiled AIM coatings manufactured prior to the rule implementation date of January 1, 2005 to ensure that they could continue to sell high VOC formulations after the revised rule took effect. As a result, it is important to establish a "sell-through" end date to ensure that the entire 14 tpd of VOC emission reductions are realized as soon as possible. Currently, Part 205 allows the sale of all AIM coatings manufactured prior to January 1, 2005 to continue indefinitely. The Department now concludes that if a "sell-through" end date is not invoked then noncompliant products will continue to be sold for a long time, and New York State will not realize the full potential of the VOC emission reductions expected during the rulemaking process. The Department's selection of May 15, 2007 as a "sell-through" end date effectively provides the regulated community with a "sell-through" period nearly two and a half years. Also, May 15th corresponds to the beginning of the ozone season, so removing these higher VOC products from the market before the start of the ozone season will improve New York's ability to attain the ozone NAAQS.
Needs and Benefits
There are two types of ozone, stratospheric and ground level ozone. Ozone in the stratosphere is naturally occurring and is desirable because it shields the earth from harmful ultraviolet rays from the sun which may cause skin cancer. In contrast, ground level ozone or smog, which results from the mixing of VOCs and NOx on hot sunny summer days, can harm humans and plants. The primary ozone NAAQS was established by EPA at a level the attainment and maintenance of which is requisite to protect the public health. In the northeastern United States the ozone nonattainment problem is pervasive as concentrations of ozone often exceed the level of the NAAQS by mid-afternoon on a summer day. The contiguous metropolitan areas of Washington, D.C., Baltimore, Philadelphia, New York, and Hartford are designated ozone nonattainment areas.
It is well-settled that ground-level ozone causes a host of major health problems, and recent studies have demonstrated a definitive link between even short-term ozone exposure and death in humans. See generally Senate Committee on Environment and Public Health, S. Rep. No. 101-228 (1990), reprinted in 1990 U.S.C.C.A.N. 3385. The United States Senate has recognized that a growing body of scientific evidence indicates that over the long term, chronic exposure to ozone may produce accelerated aging of the lung analogous to that produced by cigarette smoke exposure. Id. In 1995, EPA recognized that "[m]uch of the ozone inhaled reacts with sensitive lung tissues, irritating and inflaming the lungs, and causing a host of short-term adverse health consequences including chest pains, shortness of breath, coughing, nausea, throat irritation, and increased susceptibility to respiratory infections." 60 Fed. Reg. 4712-13 (Jan. 24, 1995). Moreover, two recent studies have shown a definitive link between short-term exposure to ozone and human mortality. See 292 Journal of the American Medical Asssn. 2372-78 (Nov. 17, 2004); 170 Am. J. Respir. Crit. Care Med. 1080-87 (July 28, 2004) (observing significant ozone-related deaths in the New York City Metropolitan Area). Even exercising healthy adults can experience 15 percent to 20 percent reductions in lung function from exposure to low levels of ozone over several hours.
Children and outdoor workers are especially at risk from exposure to ozone. Because children's respiratory systems are still developing, they are more susceptible than adults; this problem is exacerbated because ozone is a summertime phenomenon. Children are outside playing and exercising more often during the summer which results in children being exposed to ozone more than adults. Outdoor workers are also more susceptible to lung damage because of their increased exposure to ozone during the summer months when they are more likely to be working outdoors.
In July 2006, EPA again reaffirmed the serious public health consequences of ozone. EPA recognized a number of epidemiological and controlled human exposure studies that: suggest that asthmatic individuals are at greater risk for a variety of ozone-related effects including increased respiratory symptoms, increased medication usage, increased doctors visits, emergency department visits, and hospital admissions; provide highly suggestive evidence that short-term ambient ozone exposure contributes to mortality; and report health effects at ozone concentrations lower than the level of the current standards, as low as 0.04 parts per million (ppm) for some highly sensitive individuals. See Fact Sheet: Review of National Ambient Air Quality Standards for Ozone Second Draft Staff Paper, Human Exposure and Risk Assessments and First Draft Environmental Report, U.S. Environmental Protection Agency, July 2006.
Unlike other pollutants, ozone is a secondary pollutant - not emitted directly but formed in the atmosphere by a variety of photochemical reactions involving VOCs and NOx in the presence of sunlight. NOx is a by-product of fossil fuel combustion and is emitted primarily by utilities, motor vehicles and major industrial facilities.
Ground level ozone also interferes with the ability of plants to produce and store food. This compromises growth, reproduction and overall plant health. By weakening sensitive vegetation, ozone makes plants more susceptible to disease, pests and environmental stresses. Ozone has been shown to reduce yields for many economically important crops (e.g., corn, kidney beans, soybeans). Ozone damage to long lived species such as trees (by killing or damaging leaves) can significantly decrease the natural beauty of an area, such as the Adirondacks.
Implementation of the Part 205 revisions will, in concert with similar regulations adopted by other States and other measures undertaken by New York, lower levels of ozone in New York State and will decrease the adverse public health and welfare effects described above. In enacting the Title I ozone control requirements of the 1990 CAA amendments, Congress recognized the hazards of ozone pollution and mandated that States, especially those in the OTR, implement stringent regulatory programs in order to meet the ozone NAAQS.
The Department has implemented many programs to assist in bringing all areas in the State into attainment with the NAAQS for ozone. Examples of VOC controls include RACT on major sources, Stage I and Stage II gasoline vapor recovery, maximum volatility requirements for gasoline, limits on auto body and architectural paints, limits on consumer products such as hair sprays and deodorants, and controls on small industrial facilities such as printing operations and bakeries. The low emission vehicle program and the enhanced inspection and maintenance program control emissions of both VOCs and NOx. The compilation of these control programs constitutes the ozone NAAQS nonattainment SIP for New York State.
Costs
Costs to Regulated Parties and Consumers:
The cost of the proposed regulations will mostly affect the twenty manufacturers to whom the Department granted a SME. There may be some cost to other manufacturers that still have supplies of AIM coatings manufactured before January 1, 2005, but Department staff expect this to be minor. Large manufacturers who have existing inventories of product manufactured prior to January 1, 2005 will have to ensure that the product is sold before the "sell-through" end date or moved out of New York State for sale in other states which do not have an AIM coatings rule.
Small manufacturers may have increased costs associated with the production of compliant AIM coatings and may experience a reduction in profits to the extent that their sales increased during the SME as a result of their ability to make and sell higher VOC products. These manufacturers must now make and sell complying coatings and accordingly their production costs may increase slightly and they may sell less product. Since compliant formulations are available for all AIM coating categories, however, the Department expects that the financial effects of this rule are beneficial to the overall market since all manufacturers must meet the same VOC content limits.
It should be noted that the impact to consumers is expected to be minimal since there are already a large amount of complying coatings on store shelves (produced by manufactures that did not receive a SME). Competition from these existing complying coatings will likely constrain any price increases as manufacturers will not be able to pass on all of their costs to the consumers. This is likely to control any actual retail price increases.
Costs to State and Local Governments:
There are no direct costs to State and local governments associated with this proposed regulation. No record keeping, reporting, or other requirements will be imposed on local governments. The authority and responsibility for implementing and administering Part 205 resides solely with the Department. Requirements for record keeping, reporting, etc. are applicable only to the person(s) who manufactures, sells, supplies, or offers for sale AIM coatings.
Costs to the Regulating Agency:
There will be no increase in administrative costs to the regulating agency.
Local Government Mandates
No mandates will be imposed on local governments.
Paperwork
No additional paperwork will be imposed on manufactures.
Duplication
The SME provision is specific to only the New York State AIM coatings regulation. Its removal is unique and will provide for regional consistency across the OTR with states that have adopted the OTC model AIM coatings rule. The "sell-through" end date is also unique to New York among the OTR States, but is consistent with the AIM rules adopted in California.
Alternatives
The following alternatives have been evaluated to address the goals set forth above. These are:
1. Take no action.
2. End the SME in December 2006 and the "sell-through" in May 2007.
3. End the SME in December 2007 with no "sell-through" cut off.
1. Take No Action:
The Take No Action alternative is not acceptable because New York needs the additional 4 tpd as soon as possible in order to meet its attainment goals. Moreover, this alternative does not provide the anticipated reductions of 4 tpd of VOC from ending the SMEs in December 2006, which will benefit New York citizens starting in 2007. Without these rule revisions, the Department could not impose an end date for "sell-through" of noncompliant AIM coatings manufactured before January 1, 2005, which is also necessary to further our air quality goals.
2. Ending the SME in December 2006 and the "sell-through" in May 2007:
Under this option, the SME will end on December 31, 2006, after which small manufacturers cannot manufacture products which do not comply with Part 205. It also provides time for the manufacturers who have products granted a SME or products manufactured prior to January 1, 2005 to "sell-through" any remaining inventory. In particular, ending the "sell-through" by May 15, 2007 allows manufacturers time to liquidate inventory while ensuring that sale of non-complying products is curtailed by the 2007 ozone season. This is the preferred option because it ensures New York can realize the necessary VOC emission reductions.
3. Ending the SME in December 2007 with no "sell-through" end date:
Ending the SME on December 31, 2007 would delay the air quality improvements that will result from the reduced VOC emissions from AIM coatings. Ending the SME without cutting off the "sell-through" would allow the continued sale of higher VOC AIM coatings during the 2007 ozone season and beyond. This would encourage small manufacturers to stock pile noncompliant AIM coatings, allow large manufacturers to "sell-through" non-complying products manufactured prior to January 1, 2005, and unscrupulous manufacturers (large and small) to improperly date their product and "sell-through" non-compliant AIM coatings disguised as compliant via the lack of a "sell-through" end date provision. This option would not provide New York citizens with a 4 tpd reduction of VOCs in the upcoming 2007 ozone season. Furthermore, this will affect the Department's ability to demonstrate attainment in 2009.
Federal Standards
EPA approved Part 205 into New York's State Implementation Plan on December 13, 2004. As a result of EPA's action, the VOC content limits in Part 205 represent the Federal standards for AIM coatings in New York. EPA has asked New York to demonstrate compliance with the ozone NAAQS. To do this, the Department needs to demonstrate 42 tpd of VOC emission reductions identified by EPA as the shortfall. In order to achieve the 42 tpd of shortfall reductions, the Department adopted six VOC control measures including the Part 205 AIM coatings rule. The AIM coatings rule was expected to produce 14 tpd of the VOC shortfall emission reductions but because of the SME and the unlimited sell-through provisions the Department is not able to make its shortfall demonstration to EPA. These revisions will allow the Department to comply with that federal mandate.
Compliance Schedule
The SMEs granted to twenty AIM coatings manufacturers will expire on December 31, 2006, and the "sell-through" end date of AIM coatings is May 15, 2007. All manufacturers (small and large) must comply with the VOC content limits and remove any noncompliant AIM coatings from the market in New York State by May 15, 2007.
