On Monday, July 17, 2017, the California legislature passed a two-bill package, Assembly Bill (AB) 398, which extends California’s Cap-and-Trade Program to 2030, and AB 617, the companion bill that didn’t get as much attention as AB 398, but will have a major impact on businesses in California.
AB 617 will require increased monitoring, a change in emissions reporting for stationary sources, an expedited schedule for the implementation of best available retrofit control technology (BARCT), and an increase in air emission penalties. Key provisions also require the California Air Resources Board (CARB) to prepare a statewide strategy to reduce toxic air contaminants and criteria pollutants in communities affected by a high cumulative exposure burden, and establish a statewide clearinghouse that identifies the best available control technology (BACT), BARCT for criteria pollutants, and related technologies for the control of toxic air contaminants.
Stationary Source Reporting
AB 617 defines “stationary source” as a facility required to report its greenhouse gas (GHG) emissions to CARB under the Cap-and-Trade Program, or which emits 250 or more tons per year of any nonattainment pollutant or its precursor, or receives an elevated prioritization score for cancer or non-cancer health impacts.
CARB must also establish a uniform statewide system for the annual reporting of criteria pollutants and toxic air contaminants from stationary sources.
Statewide and Community Emissions Reduction Program
By October 1, 2018, CARB must prepare a statewide strategy to reduce emissions of toxic air contaminants and criteria air pollutants in communities affected by a high cumulative exposure burden. CARB must update the strategy at least once every five years.
The strategy must include criteria for the development of community emission reduction programs including:
Within one year of CARB’s identification of a site, the air district must adopt a community emissions reduction program using cost-effective measures, including BACT, BARCT and TBACT.
The districts must submit community emissions reduction programs to CARB for review and approval within 60 days following CARB’s identification of affected sites. Programs that are rejected must be resubmitted within 30 days.
Community and Fence-Line Monitoring
AB 617 requires CARB to develop and implement a monitoring plan that includes the use of advanced sensing monitoring technologies to assist in identifying areas that are most impacted, the responsible emissions sources and the steps needed to address public health impacts.
By January 1, 2019, air districts in nonattainment areas must adopt a schedule for the implementation of BARCT at industrial facilities covered under the Cap-and-Trade Program. These retrofits must be completed by the earliest feasible date, but no later than December 31, 2023.
The schedule must give highest priority to those facilities that have not modified emissions-related permit conditions for the greatest period of time. Facilities that have implemented BARCT since 2007 are exempt from the schedule.
Statewide BARCT Clearinghouse
AB 617 requires CARB to establish and maintain a statewide clearinghouse that identifies the BACT, BARCT for criteria pollutants, and related technologies for the control of toxic air contaminants.
Air districts must use the information in the statewide clearinghouse when updating control technology determinations.
Air Emissions Penalty Increases
AB 617 increases penalties from $1,000 per day to $5,000 per day for specified air emissions violations and starting January 1, 2018, maximum penalties assessed will increase annually based on the California Consumer Price Index.
Although the statute imposes significant new duties upon air districts, it does not provide funding for the implementation of these new programs. In addition to the cost of overseeing and implementing these programs, the capital cost of setting up community monitoring systems will be significant. California businesses can expect districts to look to the businesses for additional fees to support these programs.
Lois Miyashiro, an environmental analyst in the firm’s San Francisco office, assisted in the preparation of this client alert.