December 10, 2014 Gas Vapor Regulations: The Legislature’s Decentralized Approach Neither Requires nor Produces Consistency, and Current Regulations May Be Requiring Outdated Technology Zane Potter Preliminary Report

Key Points in Today’s Presentation December 10, 2014Gasoline Vapor Regulation2/25 Fees the local agencies set vary as well as the methodologies used to determine agency fees Gas station inspection processes are similar, but the frequency of inspection varies Current gas station regulations may be requiring outdated technology

Federal Clean Air Act Regulates Air Emissions in the United States December 10, 2014Gasoline Vapor Regulation3/25  Gasoline vapors are a source of ground-level ozone (smog) which poses a risk to human health and the environment  Environmental Protection Agency is responsible for establishing air quality standards and regulations  Federal Act gives states flexibility in how to organize themselves to meet EPA’s standards and regulations

Washington’s Clean Air Act Allows Decentralized Approach to Regulating Air Quality December 10, 2014Gasoline Vapor Regulation4/25 Cowlitz Wahkiakum Clark Skamania Lewis Southwest Clean Air Agency Mason Clallam Jefferson Grays Harbor Thurston Pacific Olympic Region Clean Air Agency Snohomish King Pierce Kitsap Puget Sound Clean Air Agency Grant Walla Franklin Adams Lincoln Ferry Stevens Pend Oreille Whitman Columbia Garfield Asotin Ecology: Eastern Regional Office Spokane Spokane Regional Clean Air Agency Yakima Yakima Regional Clean Air Agency San Juan Ecology: Northwest Regional Office Whatcom Skagit Island Northwest Clean Air Agency Kittitas Chelan Okanogan Douglas Ecology: Central Regional Office Klickitat Ecology: Central Regional Office Benton Benton Clean Air Agency Greyed areas = Tribal lands Note: EPA has authority over air quality issues on reservation lands

Other States Use a Decentralized Approach to Regulating Air Quality December 10, 2014Gasoline Vapor Regulation5/25 CO OH WA CA IN TN FL KS NE MO TX AL PA MA OR NV AZ IA NM KY NC MD AK IL NY MT Single Statewide Clean Air Agency 1-3 Local Clean Air Agencies 4 or more Local Clean Air Agencies

Washington Has Approximately 2,800 Gas Stations December 10, 2014Gasoline Vapor Regulation6/25 Puget Sound 1,300 stations Puget Sound 1,300 stations Northwest 166 stations Northwest 166 stations Ecology 416 stations Ecology 416 stations Spokane 172 stations Spokane 172 stations Benton 74 stations Benton 74 stations Yakima 103 stations Yakima 103 stations Olympic 292 stations Olympic 292 stations Southwest 334 stations Southwest 334 stations

1. Washington’s Current Regulations May Be Requiring Outdated Technology

Stage I Vapor Recovery Systems Are Used During the Transfer of Gasoline from Tanker Trucks to Gas Stations December 10, 2014Gasoline Vapor Regulation8/25 Vapor Liquid Vapor Liquid

Stage II Vapor Recovery Systems Capture Gasoline Vapors During the Refueling of Motor Vehicles December 10, 2014Gasoline Vapor Regulation9/25  1990 federal legislation required Stage II in 27 states (including WA) to meet federal ozone standard  Costs $20K to $60K to install per station; $3,000 per year to maintain Vapor Liquid Gas tank Vapor recovery nozzle Coaxial hose vapor liquid vapor liquid

Onboard Refueling Vapor Recover (ORVR) Systems Also Capture Gasoline Vapor During Refueling of Vehicles December 10, 2014Gasoline Vapor Regulation10/25  Federal legislation required EPA to adopt ORVR regulations for automobile manufacturers  This system was phased in for new vehicles beginning in 1998 Vapor Liquid Balance nozzle ORVR canister liquid Gas tank vapor liquid

Stage II Systems Were Intended to Help Regions Meet the Federal Ozone Standard December 10, 2014Gasoline Vapor Regulation11/25 Three jurisdictions require Stage II systems at more than 1,300 gas stations across seven counties Three agencies require Stage II systems at about 1,300 gas stations across seven counties: Puget Sound Clean Air Agency Snohomish King Kitsap Pierce Ecology Thurston Cowlitz Southwest Clean Air Agency Clark S NOHOMISH K ING P IERCE K ITSAP T HURSTON C OWLITZ C LARK

Feds No Longer Require Stage II Vapor Recovery Systems  Limited compatibility between ORVR systems installed on cars and some Stage II systems may increase emissions  In 2012 EPA determined that Stage II systems have become largely redundant because more cars have ORVR  EPA determination allowed, but did not require, states to remove Stage II  Published guidance to help states determine when to remove Stage II December 10, 2014Gasoline Vapor Regulation12/25

Other States Taking Steps to Remove Stage II December 10, 2014Gasoline Vapor Regulation13/25 NJ NV OR WA CA OH IN TN TX WI IL GA LA AZ PA ME VT CT RI DE MD NH VA KY MO NY Has not determined when to remove Stage II Completed analysis, determined that Stage II needed until about 2017 Completed analysis, will keep Stage II for at least another decade Taking steps to remove Stage II Not completed Stage II analysis No Stage II requirement MA

Ecology and Local Agencies Have Not Determined When to Remove Stage II  Ecology has yet to undertake emissions analysis  Southwest completed an analysis in 2012, but agency staff indicated that it was not shared with Board or made publicly available  Puget Sound completed two analyses; however, concerns were raised by author of EPA’s guidance document December 10, 2014Gasoline Vapor Regulation14/25 JLARC staff worked with EPA staff and estimated that Stage II systems could begin to increase emissions as soon as 2020 in Southwest and Puget Sound

Legislative Auditor Recommendation: Complete Emissions Analysis December 10, 2014Gasoline Vapor Regulation15/25 The Department of Ecology and the local clean air agencies should estimate and publish when Stage II requirements will begin to increase emissions. This analysis should determine whether keeping Stage II systems helps the regions meet EPA’s current ozone standard and the costs and cost effectiveness associated with keeping these systems.

2. Fees the Local Agencies Set Vary As Well As the Methodologies Used To Determine Agency Fees

Washington’s Clean Air Act Allows Decentralized Approach to Regulating Air Quality December 10, 2014Gasoline Vapor Regulation17/25 Cowlitz Wahkiakum Clark Skamania Lewis Southwest Clean Air Agency Mason Clallam Jefferson Grays Harbor Thurston Pacific Olympic Region Clean Air Agency Snohomish King Pierce Kitsap Puget Sound Clean Air Agency Grant Walla Franklin Adams Lincoln Ferry Stevens Pend Oreille Whitman Columbia Garfield Asotin Ecology: Eastern Regional Office Spokane Spokane Regional Clean Air Agency Yakima Yakima Regional Clean Air Agency San Juan Ecology: Northwest Regional Office Whatcom Skagit Island Northwest Clean Air Agency Kittitas Chelan Okanogan Douglas Ecology: Central Regional Office Klickitat Ecology: Central Regional Office Benton Benton Clean Air Agency Greyed areas = Tribal lands Note: EPA has authority over air quality issues on reservation lands

Ecology and Local Agencies May Require Businesses to Register and Pay a Fee  Fees may only be used for administering an agency’s registration program December 10, 2014Gasoline Vapor Regulation18/25  No State Auditor’s Office audit findings regarding:  Any of the agencies' registration programs  Use of the fees to administer the programs

Annual Gasoline Station Fees Charged by Agencies Vary December 10, 2014Gasoline Vapor Regulation19/25 Puget Sound Avg Fee: $713 Puget Sound Avg Fee: $713 Northwest Avg Fee: $919 Northwest Avg Fee: $919 Ecology No Fee Ecology No Fee Spokane Avg Fee: $601 Spokane Avg Fee: $601 Benton Avg Fee: $525 Benton Avg Fee: $525 Yakima Avg Fee: $439 Yakima Avg Fee: $439 Olympic Avg Fee: $251 Olympic Avg Fee: $251 Southwest Avg Fee: $332 Southwest Avg Fee: $332

Methodologies Used by Clean Air Agencies to Determine Fees Vary December 10, 2014Gasoline Vapor Regulation20/25 Puget Sound Amount of gas dispensed Puget Sound Amount of gas dispensed Northwest Amount of gas dispensed Northwest Amount of gas dispensed Ecology Number of underground storage tanks Ecology Number of underground storage tanks Spokane Polluter-pays Spokane Polluter-pays Benton Amount of gas dispensed Benton Amount of gas dispensed Yakima Fixed fee based on average workload Yakima Fixed fee based on average workload Olympic Fixed fee based on average workload Olympic Fixed fee based on average workload Southwest Polluter-pays Southwest Polluter-pays

Methodologies Are Consistent with Government Accountability Office Guidance December 10, 2014Gasoline Vapor Regulation21/25 GAO provides four criteria when setting fees: Policymakers must consider tradeoffs among the criteria and recognize that no single fee design satisfies all interests Efficiency Equity Revenue adequacy Administrative burden Efficiency Equity Revenue adequacy Administrative burden

3. Gas Station Inspection Processes Are Similar, But the Frequency of Inspection Varies

Gas Station Inspection Processes Are Similar, Frequency of Inspections Varies Amongst Agencies December 10, 2014Gasoline Vapor Regulation23/25 Puget Sound About 20% inspected annually Puget Sound About 20% inspected annually Northwest Annually Northwest Annually Ecology Not currently conducted Ecology Not currently conducted Spokane Annually Spokane Annually Benton Once every two years Benton Once every two years Yakima At least once every 3 years Yakima At least once every 3 years Olympic At least once every 2 years Olympic At least once every 2 years Southwest Every 5 years Southwest Every 5 years

Three Agencies Require Testing of Stage II Systems December 10, 2014Gasoline Vapor Regulation24/25 Local Clean Air Agency Testing Frequency Puget Sound Once every six months Olympic Region Annual Southwest Annual for one type of Stage II system  Tests cost about $300 per test and are performed by private contractors

Next Steps and Contacts Proposed Final Report: January 7, 2015 Zane Potter, Research Analyst Eric Thomas, Research Analyst Valerie Whitener, Project Supervisor