Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a)
Applications for variances. Any person who cannot comply with
the standards or compliance requirements set forth in sections
2262,
2262.3,
2262.4,
2262.5,
2262.6,
2265.1, or
2265.5 because of reasons beyond
the person's reasonable control may apply to the executive officer for a
variance. Except for emergency variances as provided in section (h), the
application shall be accompanied by a fee of $6700.00 to cover the costs of
processing the variance. If the applicant withdraws the application before the
variance hearing is held, $4100.00 of the fee shall be refunded. The
application shall set forth:
(1) The
applicable section(s) from which the variance is sought;
(2) The specific grounds upon which the
variance is sought;
(3) The
proposed date(s) by which compliance with the provisions of the applicable
section(s) will be achieved; and
(4) A compliance plan reasonably detailing
the method by which compliance will be achieved. That proposed compliance plan
shall include increments of progress (i.e., specific events and dates) that
describe periodic, measurable steps toward compliance during the proposed term
of the variance.
(b)
(1)
Notices and public hearings for
variances. Upon receipt of an application for a variance containing
the information required in section (a), the executive officer shall hold a
hearing to determine whether, or under what conditions and to what extent, a
variance from the requirements of the applicable section(s) is necessary and
will be permitted. Notice of the time and place of the hearing shall be sent to
the applicant by certified mail not less than 20 days prior to the hearing.
Notice of the hearing shall also be submitted for publication in the California
Regulatory Notice Register and sent to every person who requests such notice,
not less than 20 days prior to the hearing.
(2)
Treatment of confidential
information. Information submitted to the executive officer by a
variance applicant may be claimed as confidential. Information claimed as
confidential shall be handled in accordance with the procedures specified in
Title 17, California Code of Regulations (CCR), sections Title 17, California
Code of Regulations (CCR), sections
Title 17,
California Code of Regulations (CCR), sections
91000 to
91022 except that:
(A) at the time the information is submitted,
the submitter must provide accompanying documentation in support of the claim
of confidentiality, including the documentation identified in section 91022(c),
and
(B) for the purposes of this
section 2271, the time period specified in
section 91022(e)(2) is 10 days instead of 21 days. The executive officer may
consider such confidential information in reaching a decision to grant or deny
a variance.
(c)
Public participation in the variance process. At least 20 days
prior to the hearing, the application for the variance shall be made available
to the public for inspection. Interested members of the public shall be allowed
a reasonable opportunity to submit written and oral testimony at the hearing
and their testimony shall be considered.
(d)
Necessary findings for granting
variances. The decision to grant or deny a variance shall be based
solely upon substantial evidence in the record of the variance proceeding. No
variance shall be granted unless the executive officer makes all of the
following findings:
(1) That, because of
reasons beyond the reasonable control of the applicant, requiring compliance
with the applicable section(s) would result in an extraordinary economic
hardship;
(2) That the public
interest in mitigating the extraordinary hardship by issuing the variance
outweighs the public interest in avoiding any increased emissions of air
contaminants which would result from issuing the variance; and
(3) That the compliance plan proposed by the
applicant can reasonably be implemented and will achieve compliance as
expeditiously as possible.
(e)
Factors to be considered in
making the necessary findings for granting variances.
In making the findings specified in section (d), the
factors set forth below shall be considered. It is the responsibility of the
applicant to provide the information necessary to adequately evaluate these
factors.
(1) Regarding the finding
specified in section (d)(1):
(A) To
demonstrate that noncompliance is "beyond the reasonable control of the
applicant," the applicant must demonstrate that reasonably diligent and timely
efforts to achieve compliance have been made. Where a variance is sought from
initial compliance with the CaRFG Phase 3 requirements, the applicant shall
show that timely capital expenditures and efforts to obtain the permits for
necessary refinery modifications have been made, and that the applicant has
been reasonably diligent in attempting to follow the periodic compliance plans
required by section
2269, "Submittal of Compliance
Plans." Where a variance is sought due to a breakdown, the applicant shall
demonstrate that the breakdown could not have been prevented or mitigated by
the application of standard industrial practices. "Standard industrial
practices" means elements of design, methods of operation, and levels of
oversight and maintenance that are regarded as generally accepted practice in
the applicant's type of business.
(B) To demonstrate that requiring compliance
would result in an "extraordinary economic hardship," the applicant must make a
substantial showing that no alternative to a variance would eliminate or
mitigate the need for a variance. Potential alternatives that the applicant
shall address include the following:
1.
obtaining complying gasoline from outside sources, or obtaining blending
materials that would allow production of complying gasoline,
2. using the applicable California Predictive
Model (as specified in Title 13, CCR, section
2265) to maximize the production
of complying gasoline, or to minimize the degree of noncompliance, through the
use of a PM alternative gasoline formulation,
3. electing to use the PM emissions
offsetting compliance option, and
4. applying for an alternative emission
reduction plan. The applicant shall compare the economics of operations without
a variance, for the period over which the variance is proposed, with the
economics of operations after the variance compliance plan has been implemented
(e.g., the economic hardship during the term of the variance shall be measured
against the eventual cost of long-term compliance.) The operations may include
facets of the applicant's business other than gasoline operations, if those
facets are directly affected by the ability to conduct the gasoline business.
An applicant may also address any supply shortages that could result from the
failure to grant a variance and the economic affects of such shortages on the
persons who do, or could, receive gasoline from the
applicant.
(2)
Regarding the finding specified in section (d)(2):
(A) The executive officer shall consider the
potential effects of issuing or denying the variance on the applicant's
customers, the producers of complying fuel, the general public, and upon air
quality. The executive officer shall also consider whether granting the
variance will place the applicant at a cost advantage over other persons,
including those persons who produce complying gasoline.
(B) To evaluate the potential effect upon air
quality, the excess emissions from granting the variance shall be estimated as
follows:
1.
Exhaust
emissions: The fractional change in emissions from using the variance
gasoline shall be estimated with the California Predictive Model (model).
Inputs to the model shall be the limits to be placed on the regulated
properties of the variance gasoline by the variance conditions and the limits
set forth in section
2262 that correspond in form (flat
or averaging) to the variance limits. For each air basin in which the variance
gasoline will be sold, the estimate of excess exhaust emissions shall be the
fractional change in emissions (output by the model), times the estimated
fraction of gasoline use in the air basin represented by the variance gasoline,
times the inventory of exhaust emissions from gasoline-powered vehicles in the
air basin.
2.
Evaporative
hydrocarbon emissions: Excess evaporative emissions shall be estimated
for a limit greater than 7.0 pounds per square inch (psi) on the Reid vapor
pressure (RVP) of variance gasoline. This estimate shall apply only for the
period when RVP is limited to 7.0 psi. The true vapor pressure corresponding to
the RVP limit for variance gasoline shall be divided by the true vapor pressure
corresponding to RVP at 7.0 pounds per square inch. For each air basin in which
the variance gasoline will be sold, the estimate of excess evaporative
emissions shall be that ratio, minus 1.0, times the estimated fraction of
gasoline use in the air basin represented by the variance gasoline, times the
inventory of emissions due to the evaporation of gasoline from all sources in
the air basin.
(3) Regarding the finding specified in
section (d)(3): The applicant shall demonstrate why the proposed compliance
plan is the most expeditious way to achieve compliance, and the applicant shall
demonstrate sufficient control over the implementation of the plan to make the
plan practical. In the case of a proposed variance that would begin on December
31, 2003, the compliance plan shall identify and provide a date for each key
step that remains to be accomplished for attaining compliance. As applicable,
these steps shall include financing, engineering plans, ordering and contracts,
receipt of major equipment, commencement and completion of construction, and
testing.
(f)
Conditions and fees in variance orders. In imposing fees and
conditions in variance orders, the executive officer shall take into account
the potential for such fees and conditions to place the applicant at a cost
advantage over other persons, including those persons who produce complying
gasoline.
(1) Conditions.
(A) Any variance order shall specify a final
compliance date by which the requirements of the applicable section(s) will be
achieved. Any variance order shall also contain a condition that specified
increments of progress necessary to assure timely compliance be achieved, and
such other conditions that the executive officer, as a result of the testimony
received at the hearing, finds necessary to carry out the purposes of Division
26 of the Health and Safety Code. Such conditions may include, but are not
limited to, reporting requirements, limitations on the gasoline specifications,
and the elements of the variance compliance plan as proposed by the applicant,
with any modifications made by the executive officer.
(B) Any variance order granting a variance
from 2262.4 shall impose a substitute gasoline Reid vapor pressure limit as
stringent as feasible under the circumstances, in no case to exceed 9.0 pounds
per square inch. For areas where, and in seasons when, federal regulations
require a lesser maximum Reid vapor pressure limit, a variance order shall not
impose a Reid vapor pressure limit that is less stringent than the federal
limit.
(C) The executive officer
may require, as a condition of granting a variance, that a cash bond, or a bond
executed by two or more good and sufficient sureties or by a corporate surety,
be posted by the party to whom the variance was granted to assure performance
of any construction, alteration, repair, or other work required by the terms
and conditions of the variance. Such bond may provide that, if the party
granted the variance fails to perform such work by the agreed date, the cash
bond shall be forfeited to the state board, or the corporate surety or sureties
shall have the option of promptly remedying the variance default or paying to
the state board an amount, up to the amount specified in the bond, that is
necessary to accomplish the work specified as a condition of the
variance.
(D) The variance order
shall limit the amount of variance gasoline sold or supplied from the
applicant's production or import facility during each 30-day period of the
variance, or during such other time period as the executive officer may
specify. In determining the limit on the amount of variance gasoline, the
Executive Officer shall consider available data on the applicant's production
of complying gasoline. The limit shall not exceed the applicant's capacity to
produce complying gasoline.
(E) The
variance order shall specify that once a quantity of variance gasoline has been
sold or supplied by the applicant in accordance with the variance, subsequent
transactions involving that variance gasoline by another producer, distributor,
retailer, end user, or other person shall also be exempt from the applicable
requirements.
(2) Fees. A
fee of $0.15 shall be levied on the applicant for each gallon of gasoline sold
or released for sale under variance during the term of the variance. The fee
shall be paid by the applicant periodically, in advance of the sale or release
of variance gasoline in each period. The executive director shall specify the
payment schedule in the variance order.
(g)
Duration of variances.
(1) A variance shall be granted only for the
minimum period necessary for the applicant to attain compliance with the
applicable regulations. Except for a variance related to a physical
catastrophe, no variance shall have a duration of more than 120 days; however,
a variance may be extended for up to 90 additional days if the applicant
demonstrates that the requirements of sections (d) and (e) are met. In order to
receive an extension of a variance, the applicant must submit an application as
specified in section (a), and a hearing must be held as specified in sections
(b) and (c).
(2)
Variances
related to a physical catastrophe. Notwithstanding the provisions of
section (g)(1), a refiner may be granted a variance with a duration of more
than 120 days, or a variance extension of more than 90 days, if the applicant
demonstrates that the additional time is necessary due to a physical
catastrophe, and the requirements of sections (d) and (e) are met. In order to
receive a variance or variance extension, the applicant must submit an
application as specified in section (a) and a hearing must be held as specified
in sections (b) and (c). As used in this section, "physical catastrophe" means
a sudden unforeseen emergency beyond the reasonable control of the refiner,
causing the severe reduction or total loss of one or more critical refinery
units that materially impact the refiner's ability to produce complying
gasoline. "Physical catastrophe" does not include events which are not physical
in nature such as design errors or omissions, financial or economic burdens, or
any reduction in production that is not the direct result of qualifying
physical damage.
(h)
Emergency variances.
(1) The executive officer
may, after holding a hearing without complying with the provisions of sections
(b) and (c), issue an emergency variance to a person from the requirements of
the applicable section(s) upon a showing of reasonably unforeseeable
extraordinary hardship and good cause that a variance is necessary. The
applicant for an emergency variance shall pay a fee of $2500.00. Section (f)
shall apply to emergency variances, except that a variance order is not
required to specify a final compliance date by which the requirements of the
applicable sections(s) will be achieved.
(2) No emergency variance may have a duration
of more than 45 days. If the applicant for an emergency variance does not
demonstrate that he or she can comply with the provisions of the applicable
section(s) within such 45-day period, an emergency variance shall not be
granted unless the applicant makes a prima facie demonstration that the
findings set forth in section (d) should be made. The executive officer shall
maintain a list of persons who have informed the executive officer in writing
of their desire to be notified by telephone in advance of any hearing held
pursuant to section (h), and shall provide advance telephone notice to any such
person as soon as practicable, considering the nature of the
emergency.
(i)
Situations in which variances shall cease to be effective. A
variance shall cease to be effective upon failure of the party to whom the
variance was granted substantially to comply with any condition of the
variance.
(j)
Modification
and revocation of variances. Upon the application of any person, the
executive officer may review and for good cause modify or revoke a variance
from the requirements the applicable section(s) after holding a hearing in
accordance with the provisions of sections (b) and (c).
1. New
section filed 11-16-92; operative 12-16-92 (Register 92, No. 47).
2.
Change without regulatory effect amending subsections (a), (a)(3)-(a)(4) and
(d)(1)-(d)(3) filed 8-5-93 pursuant to section
100, title 1, California Code of
Regulations (Register 93, No. 32).
3. Amendment of section and NOTE
filed 2-15-96 as an emergency; operative 2-15-96 (Register 96, No. 7). A
Certificate of Compliance must be transmitted to OAL by 6-14-96 or emergency
language will be repealed by operation of law on the following
day.
4. Certificate of Compliance as to 2-15-96 order transmitted to
OAL 4-4-96 and filed 5-16-96 (Register 96, No. 20).
5. Amendment of
section and NOTE filed 8-3-2000; operative 9-2-2000 (Register 2000, No.
31).
6. Amendment of subsection (e)(3) filed 12-24-2002; operative
12-24-2002 pursuant to Government Code section 11343.4 (Register 2002, No.
52).
7. Amendment of subsections (a) and (e)(1)(B) filed 8-29-2008;
operative 8-29-2008 pursuant to Government Code section 11343.4 (Register 2008,
No. 35).
8. Amendment of subsection (g)(2) filed 10-9-2012;
operative 10-9-2012 pursuant to Government Code section 11343.4 (Register 2012,
No. 41).
Note: Authority cited: Sections 39600, 39601, 43013,
43013.1, 43013.2, 43018 and 43101, Health and Safety Code; and Western Oil and
Gas Ass'n. v. Orange County Air Pollution Control District, 14 Cal.3d 411, 121
Cal. Rptr. 249 (1975). Reference: Sections 39000, 39001, 39002, 39003, 39010,
39500, 39515, 39516, 40000, 41511, 43000, 43013, 43013.1, 43013.2, 43016, 43018
and 43101, Health and Safety Code; and Western Oil and Gas Ass'n. v. Orange
County Air Pollution Control District, 14 Cal.3d 411, 121 Cal. Rptr. 249
(1975).
