Scott Nester SJVUAPCD Planning Manager November 4, 2003 Rulemaking Process Scott Nester SJVUAPCD Planning Manager November 4, 2003

Rulemaking Process Research & prepare Initial Staff Report Scoping Meeting 1st Draft Rule Workshop 2nd Draft Rule CAC reviews Internal Draft Rule Socioeconomic Data Focus Group Workshop Socioeconomic & Cost Effectiveness Analyses Workshop Proposed Rule Governing Board Public Hearing Final Draft Rule I’m here to give you a brief overview of our rulemaking process. The BARCT and BACM rules that come out of SB 700 will follow this process, or one that’s very similar. A typical rule development project will take about a year and a half to complete, sometimes longer. The process starts with District staff researching air pollution control techniques for the source category. We write our findings up in a Preliminary Staff report and present the information at a Scoping Meeting, at which stakeholders can have input in the regulatory process before the rule is drafted. After the Scoping meeting we develop an internal draft of the rule and send it to the Citizens Advisory Committee for their review. After addressing the CAC’s comments we publish the first public draft of the rule and present it at workshops. After the first workshop we address all the comments we received and prepare a second draft of the rule. [CLICK] At that point we start the economic analysis process, which consists of looking at the cost effectiveness of the rule and at the socioeconomic impacts. At about the same time as the second workshop, we convene a focus group of industry stakeholders to help identify the estimated direct costs of complying with the rule. These cost data are then used in the cost effectiveness analysis and socioeconomic analysis, which I’ll talk more about in a moment. [CLICK] We take the comments from the second workshop, plus the results of the economic analyses and further refine the draft rule. This Final draft rule goes to a last series of workshops, where we discuss it with stakeholders in a technical setting one last time. After the final workshop the proposed rule and all the supporting analysis are submitted to the District Governing Board for their consideration.

Cost Effectiveness Analysis Required by SB 700 for BARCT/BACM rules Uses compliance cost data gathered from stakeholder focus group and staff research Cost Effectiveness ($/ton reduced) shows raw cost of reductions, not direct indicator of business impacts District staff calculate cost effectiveness of most likely rule compliance scenarios Use cost effectiveness and socioeconomic analysis to refine the draft rule Cost Effectiveness analysis is required by SB 700, as well as by other sections of the health and safety code. District staff works with affected stakeholders and control equipment experts to develop the range of costs that will be used in the analysis. Cost effectiveness essentially shows the dollar price of a ton of emission reductions for a particular compliance situation. What we’ve found is that cost effectiveness analysis is valuable for comparing the cost of reductions, and finding where reductions can be achieved the cheapest, But to find out how how businesses will be affected by compliance costs we really need to look at the impacts on individual industries and listen to businesses operators when they tell us how the rule will affect them. And that will happen in the socioeconomic analysis.

Socioeconomic Analysis Required by SB 700 for BACM/BARCT rules Assesses direct impacts on each affected industry group: jobs, profitability Uses input-output economic model to identify regional economic impacts: employment, discretionary spending Draft Report is used to refine final draft rule, presented at final workshop Final Report is presented to Governing Board Socioeconomic analysis is required by SB 700 and by other sections of state law for rulemaking projects that will benefit air quality. We start with the same cost data developed by the industry focus group, and I should note that the San Joaquin Valley Air District employs an independent contractor Applied Development Economics, Inc., to do the analysis and prepare the report. Pursuant to state law, the analysis assesses the direct impacts on each major industry group affected by the new rule. Those employment and profitability impacts are then used in a regional economic model to assess any impacts on the regional economy. District staff uses the results of the socioeconomic analysis along with those of the cost effectiveness analysis when we are preparing the final draft of the rule. Using the the economic analyses, the district has been able to refine our proposed rules to avoid unnecessary economic impacts and achieve significant emission reductions. Thank you for your attention.