Rulemaking - Chapter 173-446A WAC Criteria for Emissions-Intensive, Trade-Exposed Industries

Kenmore residents that live in the path of emissions from the asphalt plant, cement company, have suffered for years with asthma, bronchitis, COPD, headaches, dizziness, stroke, cognitive impairment, and cancer likely from hydro sulfide , petroleum a...↓nd particulate matter, from hot mix asphalt , cement , and 522 highway. Even those strolling or biking by the Burke Gilman trail for a few minutes complaint of symptoms of nausea, skin irritation, headaches, fatigue, gritty mouth and sore throat.

The concerns are only allowed to be reported as odor nuisances by stationary building. These toxins can be lethal. There is strong evidence that the particulate matter contains benzene, VOCs, PAHs, known Carcinogens by DOH and the EPA, which pose a health hazard to the general public and workers. These poisons are also deposited in our air, water, land, trees and wildlife. We desperately need compliance that relays more than on the owners or operators monitoring. We need all the agency required inspections to be performed. We need enforcement of all violators by agencies. We need requirements for cleaner processes that do little harm to public safety and our environment to be followed and enforced by penalties. We hope that Dept of Ecology will be the entity to take the opportunity of the climate commitment act to make a huge difference to require stronger standards that apply to new plants to apply to all violators and existing plants that no discharge of filterable particulate in excess of .04, performance test in accordance with 40cRF 60.8, penalize for any use of hot mix asphalt with petroleum binders, and add all air polluting plants to burn ban days. For the health and safety of our residents and climate action, we need actions to conserve and protect our ambient air, our waterways,our trees, our ecosystems and all living species now. Thank you for consideration.

January 31, 2022

Katie Wolt

Department of Ecology

Air Quality Program

P.O. Box 47600

Olympia, WA 98504-7600

Dear Ms. Wolt:

Thank you for the opportunity to provide you with my views on the proposed rule, WAC 173-446a.

We do have a problem with the use by th...↓e Climate Commitment Act of the term Emissions Intensity. It is never defined, so it is up to Ecology to do that. The draft proposed definition in WAC 173-446a-040 2(b)(i) is a mass-based term. After carefully reading and rereading RCW 70A.65.110 I can find no justification for using a mass-based definition for Emissions Intensity. An intensity is a rate term by definition. It cannot be a total mass quantity.

The definition of Emissions Intensity proposed by Ecology in the proposed rule is not just wrong it is an affront to reason. I propose that a much better way to define Emissions Intensity would be the GHG emissions as reported to Ecology under 441 divided by the firm's gross revenues for the facility that is reporting the GHG emissions, as reported or derived from the firm's B&O tax report to DOR. The units would be emissions per dollar.

The test of Emissions Intensity to qualify for consideration would be if the cost of compliance with the Climate Commitment Act is greater than the facility's B&O tax. This would be obtained by multiplying the Emissions Intensity by the emissions containment reserve price (in 446-340). If the product is greater than the B&O tax fraction, 0.00222, then the facility is emissions intensive. The units would be emissions per allowance.

The proposed test for a facility to be Trade Exposed in 040 2(b)(ii) is similarly inconsistent with the Climate Commitment Act. It is clear from 110 that the evaluation is to be of a specific facility, not the entire national industrial classification that the facility might fit into. An appropriate test for Trade Exposed is, is it exposed to sufficient quantity of directly competitive products imported into its sales territory that do not pay a GHG fee in the territories where they originate. That is, does a significant fraction of its total sales inside Washington or outside Washington where it is sold face competition from almost identical goods sourced in territories that are not requiring the payment of a GHG fee? The territories to be considered would include Washington, any linked state or province and any jurisdiction that has a similar fee that would similarly add to the producer's costs.

That is not captured by the formula you have proposed. Your proposal only captures market share in a world economy. That is not relevant to most of Washington manufacturers. It is most relevant to Boeing.

To be strict in determining if a facility is trade exposed requires two steps.

Step 1. Identify the proportion of sales of the product from the facility that is within Washington, linked jurisdictions or jurisdictions that impose a similar fee on GHG emissions from similar facilities (e.g., European Union Emissions Trading System). Identify the proportion of almost identical products sold in those territories that originates outside the geographic limits. If the facility and other "local" producers (those inside the geographic limits) are market dominant inside the boundaries they will set the market price and the facility is then not trade exposed within those jurisdictions despite an difference in prices.

Step 2. If the proportion of sales of product from the facility outside the GHG-fee paying jurisdictions exceeds a fraction of total sales, which you seem to have chosen as 15%, and the facility and other "local" producers are not market dominant in the area outside the GHG fee paying region then the facility is trade exposed.

Frankly the data that would be required to compute this market competition evaluation are not available to Ecology. But they are likely known to, or at worst subject to a careful estimate by, the company that is applying under 446a to be designated an EITE facility. The best way to approach this is to simply require that the applicant demonstrate to the satisfaction of Ecology that it is a Trade Exposed facility. It is not necessary to reduce it to a simple formula or to establish bright line criteria for inclusion or exclusion.

The most likely applicant for inclusion as an EITE is a new facility to be based in Washington that is not within one of the NAICS classifications spelled out in 446a and does not now exist in Washington. Thus both the evaluation of its potential emissions, its expected revenues and its market share will all be hypothetical. We can state that the estimates of its potential emissions must be the "potential to emit" as used in PSD regulations. However, the rest is pure speculation. So allowing for a qualitative evaluation by Ecology in such a situation is really the only way to resolve it, should such an occasion ever arise.

Mike Ruby

mruby@envirometrics.com

My comment is about the formula used to define the emissions intensity of a facility in WA that is not already considered EITE under NAICS. To the best of my understanding, in the proposed rule, the formula used to calculate the emissions intensity i...↓s the sum of the direct GHG emissions from the production process and those associated with its annual electricity usage, without taking into account the volume of the production. This means any successful facility that expands into new markets and increases its yearly production volume can become eligible to be designated as EITE as soon as it emits more than the minimum threshold of 10,000 metric ton of CO2eq, therefore receiving free allowances from the WA state under the CCA. In such a scenario, this type of business has no incentive to reduce its emissions in the short term at all. This jeopardizes the overall success of the entire CCA as the emissions would not significantly decline in this decade if more and more businesses qualify as EITE and get free allowances without taking any steps to reduce their GHG emissions. This would create not a carbon "leakage" but a carbon "attractor" as companies in other states that are currently regulated under a cap and trade rule would move to WA to escape for a more lax regulatory environment. In brief, the current definition of the emissions intensity, because it isn't normalized to the actual production output or export volume, creates a loophole for all businesses not otherwise designated as EITE to get a free pass from the state's emissions reduction targets.

Comments on WAC 173-446A

Thank you for the opportunity to comment on these important rules for implementing Washington's Climate Commitment Act (CCA).

I believe it is important that terms be defined correctly and that equations be workable. In that sp...↓irit, I urge Ecology to attend to the following matters:

1. In the WAC173-446A hearing I learned that the term "emissions intensity" as used in the WAC173-446A is purposely different than the same term used in the California carbon laws, where carbon intensity is defined as emission per unit production. Since these two definitions are indeed different, Ecology should call its emission's intensity term by a different name.

2. I was also told in the question period before the hearing that the terms "emissions intensity" and "carbon intensity" were the same. However, in the CCA, RCW 70A.65, Section 110(3)(b)(i) states that "carbon intensity" means the amount of carbon dioxide equivalent emissions from a facility in metric tons divided by the facility specific measure of production... over the same period." That is not the same as what Ecology wishes "emissions intensity" to mean in WAC 173-446A. Should not the same term mean the same thing in both the Rule and the Law? Again, I urge Ecology to use a different term for "emissions intensity" if they do not mean it to be emissions per unit production. Perhaps just use the word "emissions?"

3. Having the trade exposure equation apply to a NAICS category as a whole seems unfair, as regional or individual industries do not share the same import or export characteristics. I fail to see how this protects Washington industries who may be more likely to import/export with pacific rim countries than other industries in the same NAICS code located in other parts of the country. Even if Washington links with other markets, wouldn't it be best if the industries participating in those markets were judged as trade exposed or not based on their individual import/export characteristics?