Statement of Basis Vigor Shipyards Inc. - Puget Sound Clean Air ...

Statement of BasisVigor Shipyards Inc.Administrative Amendment, June 13, 20111. Purpose of the Statement of BasisThis document summarizes the legal and factual bases for the permit conditions in the airoperating permit to be issued to the Todd Pacific Shipyards under the authority of theWashington Clean Air Act, Chapter 70.94 Revised Code of Washington (RCW), Chapter173-401 of the Washington Administrative Code (WAC), and Puget Sound Clean AirAgency (previously known as Puget Sound Air Pollution Control Agency (PSAPCA))Regulation I, Article 7. Unlike the permit, this document is not legally enforceable. Itincludes references to the applicable statutory or regulatory provisions that relate to ToddPacific Shipyards air emissions and provides a description of Todd Pacific Shipyard’sactivities, including a compliance history.2. Source Description2. 1 Why Todd Pacific Shipyards is an Air Operating Permit SourceThe Todd Pacific Shipyards qualifies as a major source and is required to obtain an airoperating permit because it exceeded the 10 tons per year or more of any singlehazardous air pollutant (single HAP-xylene) for 1996. Todd Shipyard received Notice ofViolation Nos. 36729 and 36730, issued on July 9, 1999, for exceeding its syntheticminor cap. The major sources of emissions are from the use of solvents and coatingsused to support cleaning and coating operations associated with ship building and repair.2. 2 Emission InventoryThe emission inventory is listed in Attachment A. The attached emission inventoryincludes a breakdown of the total annual emissions listed by chemical name, CASnumber, and the sources of the listed emissions. In 1996, the Todd Pacific Shipyardsemitted more than ten tons per year of the following Hazardous Air Pollutants (HAPs):Xylene, Methyl isobutyl ketone (MIBK; Hexone) and Naphthalene. In the last 5 years(1996–2000), Todd Pacific Shipyards has demonstrated over a 40% reduction in HAPemissions and a 30% reduction in volatile organic compounds (VOC) emissions. Thisreduction may be related to the cyclical nature of the business.The following table summarizes the reported HAP and VOC emissions from ToddPacific Shipyards over the last 5 years. However, for 1996, 1997 and 1998, Todd PacificShipyard’s actual emissions placed Todd Pacific Shipyards in the major source category.The information in the table is presented in tons per year.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 2 of 31Pollutant 1996Tons1997Tons1998Tons1999Tons2000TonsVOC (Reported) 36 27 31 23 25HAP (Singlereported)12 6 7 7 72. 3 Process DescriptionTodd Pacific Shipyards is located at 1801 16 th Ave SW in Seattle, Washington. ToddPacific Shipyards is a full service shipyard specializing in commercial and military vesselrepair and overhaul. The shipyard is the largest commercial shipyard in the Puget Soundregion. It is located on the northwest corner of Harbor Island in Seattle, Washington atthe intersection of 16th Avenue SW and SW Florida Street and is accessed from Seattlevia S. Spokane Street. The facility is approximately 23 acres in size, not including pierareas. The shipyard consists of three dry docks and associated piers located on the northend of Harbor Island, two shipways located in the southwest portion of the facility off theWest Waterway of the Duwamish River, and nine wet moorage berths located adjacent tothe shipyard’s piers.Todd Pacific Shipyards currently provides repair and overhaul services to approximately275 vessels a year, including Navy vessels, Coast Guard vessels, passenger ferries,barges, fishing vessels, cruise ships, tank vessels, and tugs. The hulls of these vessels aregenerally constructed of steel. The services include electrical and machine work,carpentry, steel fabrication, pipe-fitting, painting, abrasive grit blasting, and pressurewashing. Operational facilities include shops for abrasive grit blasting and painting, pipetreatment and fabrication, rigging, carpentry, welding, machining, plate bending,electrical, and copper work. Support facilities include storage and warehouse buildings;sheds for compressors, heating and power plants, and tools; administrative offices; firstaid office; and fuel storage.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 3 of 31Dry dock #1 is a steel dry dock located on the northwest corner of the property. It is 598feet long, 87 feet wide and can hold up to 17,500 tons. Dry dock #2 is a wooden drydock located east of Dry dock #3. It is 412 feet long and 66 feet wide and holds up to5,700 tons. Dry dock #3, the largest dry dock, is located between #1 and #2. Dry dock#3 is 873 feet long, 137 feet wide and can hold up to 40,000 tons. Dry docks #1 and #2are owned by the Navy and are operated by Todd Pacific Shipyards.Todd Pacific Shipyards used approximately 3,900 tons of abrasive grit blasting materialin 1998. More than 35% of the vessels hauled out (dry docked) require partial orcomplete hull blasting, accounting for 80% of the grit used. About 10% is used in theabrasive blast shed on shore. The remaining 10% is used in ship holds and shipsuperstructures. Spent grit is removed from the dry docks prior to launching a vessel.Spent grit is stored in a covered area prior to being hauled to Lafarge Cement for re-usein the manufacture of cement.Todd Pacific Shipyards applies paint to nearly every vessel it services. Approximately47,700 gallons of paint were used at the shipyard in 1998. The primary types of paintused are solvent based epoxy paints, solvent based non-epoxy paints, solvent based zincpaints, and solvent based anti-foulant paints. Painting operations occur both indoors andoutdoors at the shipyard. Vessel components small enough to be moved or separatedfrom a vessel can be painted indoors in one of several “paint shops”. Vessel paintingoccurs outdoors when the vessels are in dry dock (below water line work andsuperstructure painting) or are berthed adjacent to one of the shipyard’s piers(superstructure and above water line painting). The majority of air emissions from theshipyard originate from painting operations. Todd Pacific Shipyards uses VOCcompliant paints per Shipbuilding and Repair NESHAPS. [40 CFR part 63 Subpart II]3. Review of Permit ApplicationAn air operating permit application was received by the Puget Sound Clean Air Agencyfrom Todd Pacific Shipyards on May 4, 2000. The Puget Sound Clean Air Agencyacknowledged that the application was complete in a letter to Todd Pacific Shipyardsdated June 19, 20004. Compliance HistoryTodd Pacific Shipyards has been inspected by the Agency annually over the past fiveyears. During this time the Agency issued three Notices of Violations for exceeding thelimits of the synthetic minor emissions cap and one Notice of Violation for smokeemissions from a barge at the dock. These violations and their resolutions are discussedin further detail below.The Agency issued Notice of Violation (NOV) No. 36728 for violation of Regulation ISection 9.03(a), emissions greater than 20% opacity for more than 3 minutes in any onehour, on April 26, 1999. The emissions were from a diesel-oil fired power generationunit exhaust stack of the barge 'Margarita'. Both Todd Shipyards and the vessel owner,Man B&W Diesel AG, were cited. The Agency issued civil Penalty No. 9015 on Sept.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 5 of 315. 1 Applicable RequirementsTodd Pacific Shipyards is subject to all the requirements listed in all the tables containedin Section I of the permit. Section I.A. contains the requirements that are applicablefacility-wide. The Puget Sound Clean Air Agency did not repeat the facility-widerequirements listed in Section I.A in Section I.B unless the monitoring method wasspecific to the listed emission unit. Section I.B. contains the Emission Unit SpecificApplicable Requirements and Section I.C. contains Operations without SpecificApplicable Requirements.The tables in Section I.A list the citation for the “applicable requirement” in the secondcolumn. The third column, “Date,” contains the adoption or effective date of therequirement. In some cases, the effective dates of the “Federally EnforceableRequirement” and the “State Only Requirement” may be different because only rulesapproved by EPA through Section 110, 111, and 112 of the federal Clean Air Act arefederally enforceable and either the state has not submitted the regulation to the EPA orthe EPA has not approved it.The first column is used as an identifier for the requirement, and the fourth “RequirementParaphrase” column paraphrases the requirement. The first and fourth columns are forinformation only and are not enforceable conditions of this permit. The actualenforceable requirement is embodied in the requirement cited in the second and thirdcolumns.The fifth column, “Monitoring, Maintenance & Recordkeeping Method,” identifies themethods described in Section II of the permit. Following these methods is an enforceablerequirement of this permit. The sixth column, “Emission Standard Period,” identifies theaveraging time for the emission standard and/or the minimum length of one referencemethod run. Section V.N.1 of the permit identifies the number of separate runs fordetermining compliance using the reference method. The last column, “Reference TestMethod,” identifies the reference method associated with an applicable emission limitthat is to be used if and when a source test is required. In some cases where theapplicable requirement does not cite a test method, one has been added. This is called“gapfilling” and is authorized under WAC 173-401-615.The permit identifies a specific method and the adoption date. Puget Sound Clean AirAgency Regulation I, Section 3.07(a) states that testing for compliance must follow thecurrent EPA approved methods unless specific methods have been adopted by the PugetSound Clean Air Agency Board of Directors. WAC 173-400-105(4) allows either EPA40 CFR 60 Appendix A or procedures in Ecology’s “Source Test Manual – Proceduresfor Compliance Testing” as of July 12, 1990. These three requirements may conflict ifthe current method is not listed in the permit. However, EPA seldom significantlychanges the Reference Methods and the current method could be used as credibleevidence of an emission violation. Finally, major changes in the Reference Test Methodmay necessitate reopening the permit.In case of conflict or omission between the information contained in the fourth columnand the actual statue or regulation cited in the second column, the requirements andlanguage of the actual statute or regulation cited shall govern. For more information

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 6 of 31regarding any of the requirements cited in the second and third columns, refer to theactual requirements cited.Recently amended Puget Sound Clean Air Agency Regulations. The Puget SoundClean Air Agency Board of Directors has recently amended several sections of itsregulations. These amended sections are listed as “State Only” in the permit. Thatmeans they are not federally enforceable. They are enforceable only by Puget SoundClean Air Agency and the Washington State department of Ecology. However, theserequirements will become federally enforceable if they are adopted in the SIP 1 .5. 2 Section I. A. (Facility-Wide)5. 2.1 Requirement I.A.1Both WAC 173-400-040(1) and Puget Sound Clean Air Agency Regulation I,Section 9.03 standards are 20% opacity and apply to all stationary sources. Although thepermit lists all these requirements together, Todd Pacific Shipyards must comply witheach.The monitoring method is based on visible emission inspections of the facility at leastonce per week. Todd Pacific Ship Yards shall conduct opacity determinations on shipslocated at the yard during startup and shut down activities. Inspections are to beperformed while the facility is in operation during daylight hours. If visible emissionsother than uncombined water are observed from a single unit or activity, Todd PacificShipyards shall, as soon as possible but within 24 hours of the initial observation, takecorrective action until there are no visible emissions or, alternatively, record the opacityusing the reference test method WDOE Method 9A, or shut down the unit or activity untilit can be repaired. If Todd Pacific Shipyards corrects the visible emissions within 24hours of initial observation or shuts down the unit or activity within 24 hours until it isrepaired or corrected, Todd Pacific Shipyards does not need to report the deviation underSection V.M. (Compliance Certifications) or Section V.Q. (Reporting). However, ifTodd Pacific Shipyards does not take appropriate action within 24 hours, Todd PacificShipyards must report the deviation. The Puget Sound Clean Air Agency has determinedthat the monitoring should be weekly for the reasons listed below.1) Compliance. Generally, none of the emission units at Todd Pacific Shipyardsnormally have visible emissions. The emission units are also unlikely to generatevisible emissions except under the most unusual circumstances. In addition, the1 “SIP” is an abbreviation for “state implementation plan” which is a plan for improvingor maintaining air quality and complying with the Federal Clean Air Act. The FederalClean Air Act requires states to submit these plans to the US EPA for its review andapproval. This plan must contain the rules and regulations of the state agency or local airauthority necessary to implement the programs mandated by Federal law. Once the EPAadopts the plan or elements of it, the plan and its requirements become “federallyenforceable” by EPA. New or modified state or local rules are not federally enforceableuntil they are “adopted into the SIP” by the EPA.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 7 of 31Puget Sound Clean Air Agency has inspected this facility at least annually since 1986and has not identified opacity issues, nor has Todd Pacific Shipyards. Therefore, weconclude that it is generally in compliance with the opacity requirement and themargin of compliance is large. In addition, the monitoring method is designed so thatTodd Pacific Shipyards will take corrective action before a violation occurs, furtherenhancing the compliance margin.2) Variability of process and emissions. Generally, none of the processes at ToddPacific Shipyards normally emit visible emissions, except as noted above. Whilemany of the processes are variable or batch operations, the most likely cause ofvisible emissions would be a significant change in the process, one that would requireapproval from the Puget Sound Clean Air Agency, or major equipment failure. Thespecific emission units that are most likely to fail and have significant visibleemissions, such as the boilers, spray booths- and baghouses, are addressed elsewherein the permit.3) Environmental impacts of problems. Observed opacity is generally related toemissions of particulate matter or finely divided liquid droplets. The manufacturingactivities at Todd Pacific Shipyards typically do not generate significant quantities ofparticulate matter. Hence, the environmental impacts of the emissions are smallespecially considering the amount of land on which the facility is located. Amaintenance problem is unlikely to result in emissions that would have a significantenvironmental impact.4) Technical considerations. The emission units that are likely to generate visibleemissions are addressed elsewhere in the permit.5. 2.2 Requirement I.A.2Both Puget Sound Clean Air Agency Regulation I, Section 9.07 and WAC 173-400-040(6) are equivalent requirements (SO 2 emissions not to exceed 1000 ppmv), except forthe second paragraph of the WAC, which is not in the Puget Sound Clean Air Agencyregulation. The second paragraph of WAC 173-400-040(6), which is not federallyenforceable, allows for exceptions to this requirement if the source can demonstrate thatthere is no feasible method of reducing the SO 2 concentrations to 1000 ppm. Since thePuget Sound Clean Air Agency’s rules are more stringent, this exception is not availableto Todd Pacific Shipyards and the second paragraph does not apply to Todd PacificShipyards.Todd Pacific Shipyards burns only pipeline grade natural gas in all combustion emissionunits except for Boiler No.1 (has diesel oil standby fuel).All the natural gas burned at Todd Pacific Shipyards must be pipeline quality, thecontents of which the Washington Utilities and Transportation Commission regulates tocontain less than 2000 grains of sulfur per million cubic feet. 2000 grains of sulfur permillion cubic feet is equivalent to approximately 3.4 parts of sulfur per million cubic feetof natural gas, as shown in the following calculation:

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 8 of 312,000 gr S 1lb385 31,000,000 ft nat.gas 7000 gr 323ftmoleSlbmoleS3.44106ft33ft S3.44nat.gasppmdvSAccording to Perry’s Chemical Engineer’s Handbook, each cubic foot of natural gasrequires approximately 10 cubic feet of air for combustion, yielding approximately 11cubic feet of combustion exhaust gases, consisting mostly of nitrogen, water vapor, andcarbon dioxide. The sulfur in the natural gas will almost all be converted to sulfurdioxide, with each cubic foot of sulfur producing the same volume of sulfur dioxide.Since each cubic foot of natural gas contains 3.44 10 -6 cubic foot of sulfur, each cubicfoot of stack exhaust will contain approximately:3.44106ft333ft S 1 ft SO3nat.gas 1 ft S231 ft nat.gas311 ft stack exhaust 3.13107ft3ft3SO2stack exhaustThis is equivalent to 0.31 ppmdv SO 2 . Note that this estimated value is less than onetenthof one percent of the 1,000 ppm SO 2 standard. Therefore, it is reasonable to assumethat combustion units that are fired on natural gas cannot exceed the 1,000 ppm SO 2limits in Puget Sound Clean Air Agency Regulation I, Section 9.07 and WAC 173-400-040(6). The other emission units are not capable of generating SO 2 emissions aspermitted. Therefore, the permit does not contain additional monitoring requirements forthe natural gas usage.5. 2.3 Requirement I.A.3Puget Sound Clean Air Agency Regulation I, Section 9.09 limits particulate emissions to0.05 gr/dscf from equipment used in a manufacturing process. WAC 173-400-060 limitsparticulate emissions to 0.1 gr/dscf from general process units (i.e., units using aprocedure or a combination of procedures for the purpose of causing a change in materialby either chemical or physical means, excluding combustion).The monitoring method is based on weekly visual inspections of the facility for visibleemissions, opacity monitoring as a surrogate to performing a Method 5 test with ToddPacific Shipyards taking corrective action if any visible emissions are noted. As withRequirement I.A.1, the Puget Sound Clean Air Agency has determined through itsinspections and permitting that it is unlikely that Todd Pacific Shipyards will have anyvisible emissions or exceed the particulate limit. Recording of visible emissions is notnecessarily a deviation of the particulate concentration standard because the threshold forobserving visible emissions occurs at a particulate concentration of less than 0.05 gr/dscf.However, failure to take timely corrective action, as defined in the permit, is a deviationfrom the specific permit requirement and must be reported to the Puget Sound Clean AirAgency. Taking corrective action does not relieve Todd Pacific Shipyards from theobligation to comply with the particulate concentration standard itself. The Puget SoundClean Air Agency has determined that the monitoring should be quarterly for the reasonslisted above in Section 5. 25. 2.2.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 9 of 315. 2.4 Requirement I.A.4Puget Sound Clean Air Agency Regulation I, Section 9.11 and WAC 173-400-040(5) aresimilar requirements that address emissions that may be environmentally detrimental orcause a nuisance. Although the permit lists all these requirements together, Todd PacificShipyards must comply with each. The monitoring method for all is based on respondingto complaints and general inspections of the facility to identify any emissions that arelikely to be injurious to human health, plant or animal life, or property, or thatunreasonably interfere with enjoyment of life and property. For the following reasons,the Puget Sound Clean Air Agency has determined that the monthly facility-wideinspections required in Section II.A.1(c) of the permit are sufficient to monitor forchanges that would cause a fugitive emission or unexpected buildup of dust on theroadways and plant grounds.1) Initial compliance. The Puget Sound Clean Air Agency has received complaintsconcerning overspray from the spray coating operations at Todd Pacific Shipyards(fugitive dust or odor emissions); however, over the past five years Puget SoundClean Air Agency has not observed visible or odorous emissions from plant activitiesduring any inspection, nor has Todd Pacific Shipyard; therefore, we conclude that it isgenerally in compliance with the nuisance requirements.2) Margin of compliance. Because the Agency has not observed nuisance problems, andthe fact that the current operations are unlikely to cause nuisance problems, the PugetSound Clean Air Agency has determined that the margin of compliance is sufficientto only require monthly inspections and response to complainants as necessary. Theemission of fugitive dust or odor is unlikely to generate off-site fallout or complaintsexcept under the most unusual circumstances.3) Variability of process and emissions. Todd Pacific Shipyards does have emissionunits that have the potential to generate emissions causing nuisance complaints.However, in the past 5 years no odor complaints have been received. In addition,Todd Pacific Shipyards is unlikely to install such emission units during the life of thepermit.4) Environmental impacts of problems. Nuisance emissions can cause personaldiscomfort; however, by their nature do not result in exceedances of federal emissionsor ambient standards. By responding quickly to complaints and identifying problemsbefore they cause complaints, the environmental impact of nuisances should be small.5) Technical considerations. Catastrophic failures of one of the boilers, a large dustcollector, or spray booth, are the only likely causes of a nuisance causing a deviationat Todd Pacific Shipyards. Boilers at Todd Pacific Shipyards are fueled on naturalgas and in accordance with an acceptable O&M plan, thereby minimizing theprobability of any nuisance emission. The dust collectors and spray booths areequipped with high efficiency filters and are monitored at least daily, monthly orquarterly by Todd Pacific Shipyard, thereby minimizing the chance of generatingemissions that may cause a nuisance. The permit requires Todd Pacific Shipyards to

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 10 of 31both look for possible nuisances on a regular basis and handle upset emissions ofnuisance causing particulate or odor bearing contaminants more frequently on an asneededbasis. This minimizes the probability of causing an emission that could beinjurious to health, plant or animal life, or property; or that unreasonably interfereswith the enjoyment of life and property. The monitoring method is designed so thatTodd Pacific Shipyards will take corrective action before a violation occurs. Inaddition, in the past five years the Puget Sound Clean Air Agency has not noted norreceived complaints about Todd Pacific Shipyards causing emissions that are likely tobe injurious to health, plant or animal life, or property or that unreasonably interferewith enjoyment of life and property. Therefore, the Puget Sound Clean Air Agencyhas determined that monthly monitoring is adequate. Receiving complaints does notnecessarily mean Todd Pacific Shipyards is in violation of this requirement, but ToddPacific Shipyards has a responsibility to investigate complaints and take correctiveaction if necessary. Failure to take timely corrective action, as defined by themonitoring method, is a deviation of the specific permit term. Taking correctiveaction does not relieve Todd Pacific Shipyards from the obligation to comply with thenuisance requirement itself.5. 2.5 Requirements I.A.5 through I.A.7The fugitive dust requirements are in I.A 5 through I.A.7 and addressed in Regulation I,Section 9.15 and WAC 173-400-040(3). The Puget Sound Clean Air Agency Board ofDirectors made significant revisions to Regulation I, Section 9.15 on March 11, 1999.The amended version will be forwarded to EPA as a SIP amendment. Upon approval ofthe SIP changes, the revised version of Regulation I, Section 9.15 will be federallyenforceable, and the old version will no longer apply. The revised rule requires the use ofreasonable precautions for fugitive dust. We have included both versions of Section 9.15because they are significantly different. The Monitoring, Maintenance, andRecordkeeping Methods are the same as those listed in I.A.5 through I.A.7.The SIP version of Puget Sound Clean Air Agency Regulation I, Section 9.15 requiresbest available control technology (BACT) for all fugitive dust, limits vehicle dust trackout,and limits fugitive dust from manufacturing and control equipment. The currentversion of Section 9.15 and WAC 173-400-040(3) requires reasonable precautions tominimize or prevent fugitive emissions. The Puget Sound Clean Air Agency’s currentrule also describes specific examples of reasonable precautions. There is no differencebetween the current and SIP versions of WAC 173-400-040(3).All the fugitive emission regulations have common monitoring methods of responding tocomplaints and looking for fugitive emissions. The Puget Sound Clean Air Agency hasdetermined that monitoring should be monthly for the reasons listed below.1) Initial compliance. The Puget Sound Clean Air Agency has not observed fugitiveemissions during any inspection in the past five years, nor has Todd Pacific Shipyard;however, Todd Pacific Shipyards has received some complaints of overspray onvehicles located in the area in the past 5 years. The parking lots are paved withasphalt and should not have any visible emissions. Tarps are put down in abrasive

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 11 of 31blasting areas in the dry docks to keep the dust contained to the dry dock area.Therefore, we conclude that it is generally in compliance with this requirement.2) Margin of compliance. For known sources of potential fugitive dust, the buildings atTodd Pacific Shipyards are enclosed and all of the yard roadways are paved andreasonably maintained. All the significant air pollution generating equipment has airpollution control devices and is inspected by Todd Pacific Shipyards periodically andmaintained on a regular basis. The overspray problems experienced by Todd PacificShipyards in the past have not occurred recently. Hence, the margin of compliance isconsidered large enough to warrant monthly and as needed inspections.3) Variability of process and emissions. While many of the processes are variable orrelated to number of ship repairs being conducted at any specific time, few if any arelikely to cause fugitive emissions. The most likely cause of fugitive emissions wouldbe a significant change in the process, one that would require approval from the PugetSound Clean Air Agency, or major equipment failure.4) Environmental impacts of problems. Because Todd Pacific Shipyards employsBACT for fugitive dust control, the likelihood of fugitive dust is very low. Anyfugitive dust emissions are likely to be small and without significant environmentalimpact.5) Technical considerations. The most likely causes of fugitive emissions at ToddPacific Shipyards would be failure of existing control equipment or vehicle track-outduring construction. Equipment failure is likely to be identified by some otherinspection or complaints. Track-out is minimized because all the roadways arepaved and maintained.5. 2.6 Requirement I.A.8Puget Sound Clean Air Agency Regulation I, Section 9.20 requires Todd PacificShipyards to maintain equipment in good working order. Section 9.20(a) applies tosources that received a Notice of Construction Order of Approval under Puget SoundClean Air Agency Regulation I, Article 6. Section 9.20(b) applies to equipment notsubject to Section 9.20(a). Section II, Monitoring, Maintenance and RecordkeepingProcedures, of the permit identifies the minimum monitoring criteria for maintainingequipment in good working order. The section identifies both facility-wide criteria andspecific criteria for the emission units and activities. In addition, the facility-wideinspections provide monitoring of the general effectiveness of Todd Pacific Shipyard’sOperation and Maintenance Plan. The Puget Sound Clean Air Agency chose to list all ofSection II as the monitoring method because many parts of Section II apply to severalemission units and activities. Where there are specific monitoring requirements forspecific emission units, the Puget Sound Clean Air Agency has listed them in SectionII.A.2. The Puget Sound Clean Air Agency has determined that following therequirements of Section II of the permit provides sufficient monitoring criteria to certifythat the equipment has been maintained in good working order. However, the Puget

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 12 of 31Sound Clean Air Agency reserves the right to evaluate the maintenance of each piece ofequipment to determine if it has been maintained in good working order.5. 2.7 Requirement I.A.9In accordance with Puget Sound Clean Air Agency Regulation I, Section 7.09(b), ToddPacific Shipyards is required to develop and implement an Operation and MaintenancePlan (O&M Plan) to assure continuous compliance with Puget Sound Clean Air AgencyRegulations I, II, and III. The requirement specifies that the plan shall reflect goodindustrial practice, but does not define how to determine good industrial practice. Toclarify the requirement, the Puget Sound Clean Air Agency added that, in most instances,following the manufacturer’s operations manual or equipment operational schedule,minimizing emissions until the repairs can be completed and taking measures to preventrecurrence of the problem may be considered good industrial practice. This language isconsistent with a Washington Department of Ecology requirement in WAC 173-400-101(4). The Puget Sound Clean Air Agency also added language establishing criteria fordetermining if good industrial practice is being used. These include monitoring results,opacity observations, review of operations and maintenance procedures, and inspectionsof the emission unit or equipment. The Puget Sound Clean Air Agency added thiswording in response to Washington State court decision, Longview Fibre Co. v. DOE, 89Wn. App. 627 (1998), which held that similar wording was not vague and gave sufficientnotice of the prohibited conduct.Puget Sound Clean Air Agency Regulation I, Section 7.09(b) also requires Todd PacificShipyards to promptly correct any defective equipment. However, the underlyingrequirement in most instances does not define “promptly”; hence for significant emissionunits and applicable requirements that Todd Pacific Shipyards has a reasonablepossibility of violating or that a violation would cause an air quality problem, the PugetSound Clean Air Agency added clarification that “promptly” usually means within 24hours. For many insignificant emission units and equipment not listed in the permit,“promptly” cannot be defined because the emission sources and suitable pollution controltechniques vary widely, depending on the contaminant sources and the pollution controltechnology employed. However, the permit identifies a means by which to identify ifTodd Pacific Shipyards is following good industrial practice.As described in Section V.Q, Todd Pacific Shipyards must report to the Puget SoundClean Air Agency any instances where it failed to promptly repair any defectiveequipment, both equipment that received approval from the Agency and that which didnot. In addition, Todd Pacific Shipyards has the right to claim certain problems were aresult of an emergency (Section V.S) or unavoidable (Section V.T).Following these requirements demonstrates that Todd Pacific Shipyards has properlyimplemented the O&M Plan, but it does not prohibit the Puget Sound Clean Air Agencyor EPA from taking any necessary enforcement action to address violations of theunderlying applicable requirements after proper investigation. However, not followingits own O&M Plan is an indication that Todd Pacific Shipyards was not using goodindustrial practice.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 13 of 315. 2.8 Requirement I.A.10Puget Sound Clean Air Agency Regulation I, Section 9.10 specifies that HCl emissionsshall not exceed 100 ppm (dry) corrected to 7% O 2 for combustion sources. Since ToddPacific Shipyards burns only pipeline grade natural gas and distillate fuel oil and theother processes do not use chlorine in a form likely to emit HCl, it is incapable ofviolating this standard while complying with the other requirements in the permit.Refer to the “Conversion Factors for Concentration” table in Section 2 of ReferenceMethod 19 to compute value for C d . Note that this factor is equal to molecular weight ofthe pollutant divided by 10 6 , and then divided by 385.3 ft 3 per mole. The conversionfactor for HCl is 36.4610 -6 /385.3 ft 3 = 9.46310 -8 lb/dscf-ppmdv. One part per millionof HCl is equivalent to 9.46310 -8 lb HCL per dry standard cubic foot of stack gas.Residual oil:EquationEquation 1According to AP-42, Section 1.3:• Burning 1,000 gallons of No. 6 “residual” oil produces 0.347 pound ofchloride. Assume all of the chloride is emitted in the form of hydrogenchloride.• There are 150 MMBtu/10 3 gallons of No. 6 oil.Equation converts the emission factor for chloride in Table 1.3-11 frompounds of HCl per 1,000 gallons of oil burned to pounds per million Btu.3lb10 gallbE 0.347 0.3470.00231310 gal 150 MMBtu MMBtuAccording to Table 19.1 of EPA Reference Method 19:• Burning a million Btu of oil produces 9,190 dry standard cubic feet ofstack gas.• One part per million HCl is equivalent to 9.46310 -8 pound of HydrogenChloride per dry standard cubic foot.Equation 1 is derived from Equation 19-1 from EPA Reference Method 19,which may be used to calculate parts per million HCl, corrected to 7% O 2 ,from HCL emissions in lb/MMBtu.Cd E20 .9%O2( dry)20.9 7 20.9Fd 0.00231lbMMBtu8MMBtudscf ppmdv20.9dscf lb9,1909.4610Therefore, based on the AP-42 emission factor for HCl (expressed aschloride) from new residual oil, the concentration of HCl in the boilerexhaust will be less than 2% of the regulatory limit of 100 ppmdv,corrected to 7% O 2 , 1.77ppmdv

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 14 of 31There are no AP-42 emission factors for HCl for #2 diesel fuel used inboilers. HCl is not a significant component of diesel fuel.Therefore, the permit does not contain additional monitoring requirements.5. 2.9 Requirement I.A.11WAC 173-400-040(4) addresses odors. The monitoring method is based on respondingto complaints and general inspections of the facility to identify emissions of odor-bearingcontaminants. Receiving complaints does not necessarily mean Todd Pacific Shipyardsis in violation of this requirement, since the regulation does not prohibit the emission ofodors, but prohibits the emissions of odors if reasonable control measures are notemployed. Complaints will trigger action by Todd Pacific Shipyards to investigate andprevent a violation. Since the Puget Sound Clean Air Agency and Todd PacificShipyards have not received odor complaints concerning Todd Pacific Shipyard, thePuget Sound Clean Air Agency has determined that responding to complaints withinthree working days is appropriate.5. 2.10 Requirement I.A.12WAC 173-400-040(2) prohibits the emission of particulate matter from the facility to bedeposited beyond the property line in sufficient quantity as to unreasonably interfere withthe use and enjoyment of the property upon which the material is deposited. Themonitoring method is based on responding to complaints and general inspections of thefacility to identify any particulate emissions or deposition of particulate that mayunreasonably interfere with the use and enjoyment of property. Receiving complaintsdoes not necessarily mean Todd Pacific Shipyards is in violation of this requirement, buttriggers action by the source to prevent a violation.5. 2.11 Requirement I.A.13RCW 70.94.040 is similar to Puget Sound Clean Air Agency Regulation I, Section 9.11and is listed separately here because it is not a federally enforceable requirement.5. 2.12 Requirement I.A.14Todd Pacific Shipyards is subject to the Ship Building and Repair NESHAP 40 CFRSubpart II. Option No. 2 was chosen as their compliance strategy for the NESHAP. Alist of the applicable sections of 40 CFR Subpart II is in the Air Operating Permit SectionII. The table lists the Federal NESHAP requirement, adoptive or effective date, therequirement paraphrased, monitoring method, emission standard (if any) and a referencetest method if required.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 15 of 315. 3 Emission Unit Specific Applicable RequirementsSection I.B. of the permit lists applicable requirements that are specific to an emissionunit or activity. Following the name of each emission unit is a brief description of theemission unit or activity and some identifying information such as location. Due to thesize of Todd Pacific Shipyard, the information is provided as an aid in understanding thepermit and as an aid to locate the specific emission point or activity. Following thedescription are the actual applicable requirement or compliance requirements.The Generally Applicable Requirements of Section I.A. apply to all the emission unitslisted in Section I.B. and are not repeated in this section. Monitoring Methods andReference Methods are also identified if they are different or in addition to those listed inSection I.A. Where a recently adopted federal regulation does not identify a monitoringmethod, the permit does not identify one either, because it is EPA’s policy to incorporateall necessary monitoring into recently adopted federal regulations except where the PugetSound Clean Air Agency has determined it necessary. Finally, any requirements that areinapplicable to the specific emission unit are also listed in this section.5. 3.1 EU-1 Abrasive Blasting OperationsThis section includes all activities and equipment associated with abrasive blastingoperations on production parts, tooling, or equipment. The following equipment in thissection has been permitted under an Order of Approval. For the purpose of defining anemission unit in this permit, each piece of equipment is considered a separate emissionunit.LocationVessel Blastingin dry docks 1, 2,and 3Order ofApproval #DateInstalledSource Description2452 12/13/1984 Abrasive blasting and spray coating operationN/A 1990 Abrasive blasting of vessels using curtain controland portable baghouseBldg T-206 N/A 1984 Abrasive blasting of ship components using 2baghousesTodd Pacific Shipyards uses abrasive blasting to clean ship components and vessels indry dock before final finishing and assembly and conducts the operation inside boothsenclosures with particulate control equipment or dry docks using tarping to control thefugitive dust. Monitoring of the particulate control equipment is consistent with Section5. 3. 2. EU-1 – Abrasive Dust Collectors Particulate Control Operations. In addition,WAC 173-460-060(6) is a state only requirement that regulates work practices thatgovern how and where abrasive blasting can occur. Because these are work practices themonitor requirement are consistent with other work practices and as with most otherwork practices the Puget Sound Clean Air Agency has inspected the facility at leastannually for the last five years and has not identified violations.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 16 of 315. 3.2 E-1 Abrasive Dust Collectors and Other ParticulateControl OperationsThis section includes all activities and equipment associated with abrasive blastingoperations on Vessels in dry dock, and component parts or equipment in specificenclosures.Todd Pacific Shipyards uses abrasive blasting to clean vessels, component parts andequipment before final finishing and assembly and conducts the operation inside boothsenclosures with particulate control equipment or in dry docks equipped with tarping tocontrol fugitive dust. Monitoring of the particulate control equipment is consistent withSection II of the Air Operating Permit. In addition, WAC 173-460-060(6) is a state onlyrequirement that regulates work practices that govern how and where abrasive blastingcan occur. Because these are work practices, the monitoring requirements are consistentwith other work practices and as with most other work practices, the Puget Sound CleanAir Agency has inspected the facility at least annually for the last five years and has notidentified violations.The Puget Sound Clean Air Agency has determined the monitoring frequency based onthe following.Initial compliance. The Puget Sound Clean Air Agency has not observed visibleemissions from any of these activities during any inspection in the last five years;therefore, we conclude that Todd Pacific Shipyards is generally in compliance withthe particulate and opacity requirements.Margin of compliance. Because of the type of process (woodworking, grinding andmachining) and the control equipment (baghouses and cyclones), the Puget SoundClean Air Agency expects the concentration of particulate to be much less than thestandard when there is no visible emission, fallout or fugitive emissions.Variability of process and emissions. Although the equipment runs periodically, theactual emissions are not significant and not likely to cause a nuisance.Environmental impacts of problems. These are small dust collectors that combinednormally emit less than a ton of particulate per year. A maintenance problem isunlikely to result in emissions that would have a significant environmental impact.Technical considerations. The mostly likely type of problem would be a gradualequipment failure like normal wear and tear. Such failure could easily be detected bychecking for visible emissions, fugitive emissions, fallout, and pressure drop acrossthe control equipment. Because of the nature of the potential problems, Puget SoundClean Air Agency has determined that the units should be divided into those systemsthat should be checked for visible emissions weekly and fugitive dust monthly.5. 3.3 EU 2 – Spray Coating OperationsThis section includes all activities and equipment associated with surface coating,operations for both Vessel repair and ship building activities. These operations includecoating mixing, application, drying, and curing; spray gun cleaning; solvent wipe and

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 17 of 31solvent flush; and material and waste handling. The activities included in this section areconducted throughout the facility and the dry docks 1, 2, and 3. For the purpose ofdefining an “emission unit” in the permit, each piece of equipment listed below isconsidered a separate emission unit. The last column in this list indicates whether ShipBuilding and Repair NESHAP-regulated coatings are sprayed in the unit. However, fromtime to time Todd Pacific Shipyards may change the type of coatings applied or the partscoated.Order ofApprovalNo. Date Installed Source Description2277 10/15/1981 Paint spay booth Yes2452 12/21/1983 Paint spray booth and Yesabrasive blasting booth5671 11/22/1994 Outdoor spray coating Yesoperation7069 3/10/1998 Spray Booth T-230 in PaintShed #2YesShip Building and RepairNESHAP Coatings Used(a) Ship Building and Repair NESHAPS40 CFR 63 Subpart II requires Todd Pacific Shipyards use coatings to comply with theVOHAPS listed in table 2 of the rule. Option No. 2 was selected by Todd PacificShipyards to comply with the rule. This means that the volume of allowed thinners andVOHAPS in a coating category is compared with the actual facility usage each month.The actual usage cannot exceed the allowable usage of coatings and thinners in thecoating category.(b) Local RequirementsThe federally enforceable version of Puget Sound Clean Air Agency Regulation I,Section 9.16 requires that all spray coating operations be conducted inside an enclosurewith overspray controls and a vertical stack approved by the Puget Sound Clean AirAgency. It allows for some exemptions such as hand-held aerosol cans and largestationary objects like bridges and buildings. It also allows the Control Officer toapprove spray coating objects that cannot be reasonably handled in an enclosed sprayarea. The requirement is also listed in Section IV of the permit as an activity requiringadditional approval. Puget Sound Clean Air Agency has recently changed Section 9.16of Regulation I to exempt activities that must comply with the aerospace NESHAP. IfEPA approves this amended rule as a SIP change, this section will no longer apply whenTodd Pacific Shipyards conducts activities that must comply with the aerospaceNESHAP.The booths were approved by NOC Orders of Approval. The Puget Sound Clean AirAgency has determined, in addition to the Order of Approval Notice of Completion,Todd Pacific Shipyards will conduct periodic facility-wide inspections that includelooking for spray coating operations that do not comply with the requirements of Section9.16.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 18 of 315. 3.4 EU-3 Small Gas-Fired Boilers and One Boiler withdiesel Standby(a) Visible EmissionsBoth WAC 173-400-040(1) and Puget Sound Clean Air Agency Regulation I,Section 9.03 standards are 20% opacity and apply to the fuel burning equipment at ToddPacific Shipyards. Although the permit lists all these requirements together, Todd PacificShipyards must comply with each.The fuel burning equipment at Todd Pacific Shipyards can only burn natural gas exceptone boiler that has diesel fuel as a standby. The monitoring method requires checking forvisible emissions once per quarter, and the frequency was determined based on thefollowing.1) Compliance. None of the fuel burning equipment at Todd Pacific Shipyards normallyhas visible emissions. The Puget Sound Clean Air Agency has inspected this facilityat least annually since 1997 and has not identified opacity issues at the fuel burningequipment, nor has Todd Pacific Shipyards. Therefore, we conclude that it isgenerally in compliance with the opacity requirement and the margin of compliance islarge. In addition, the monitoring method is designed so that Todd Pacific Shipyardswill take corrective action before a violation occurs, further enhancing the compliancemargin.2) Variability of process and emissions. The equipment burns natural gas. The steamand heat demand at Todd Pacific Shipyards fluctuates throughout the day and fromseason-to-season, causing variations in load on the equipment. These boilers are onlyshut down completely for annual maintenance or if a problem occurs where morefrequent maintenance is required. Typically, one boiler is in operation while the othertwo are in "hot stand-by" mode, meaning the unit is still under pressure and theburner modulates to maintain a set pressure level. Once per year, the boilers aretaken down to undergo pressure vessel testing. However, the demand is verypredictable and seldom changes quickly.3) Environmental impacts of problems. Observed opacity is generally related toemissions of particulate matter or finely divided liquid droplets. The fuel burningactivities at Todd Pacific Shipyards typically do not generate significant quantities ofparticulate matter, typically less than one ton per year. Hence, the environmentalimpacts of the emissions are small especially considering the amount of land onwhich the facility is located. A maintenance problem is unlikely to result inemissions that would have a significant environmental impact.4) Technical considerations. Although the opacity standard is 20%, the monitoringmethod requires corrective action, or Reference Method testing, upon detection ofvisible emissions. This will provide an added margin of compliance.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 19 of 31(b) Fuel Burning ParticulatePuget Sound Clean Air Agency Regulation I, Section 9.09 also limits particulateemissions to 0.05 gr/dscf corrected to 7% oxygen from fuel burning equipment (i.e.,equipment that produces hot air, hot water, steam, or other heated fluids by externalcombustion of fuel) combusting natural gas. WAC 173-400-050(1) limits particulateemissions to 0.1 gr/dscf corrected to 7% O 2 from all combustion units (i.e., units usingcombustion for steam production or other process requirements, excluding open burning).Todd Pacific Shipyards burns only pipeline grade natural gas. It can be shown for SO 2 ,that if fuels are properly burned, Todd Pacific Shipyards is incapable of violating thisstandard while complying with the other requirements such as the fuel content andopacity requirements. Improper fuel burning that would result in high particulateemissions would also cause opacity problems and would be detected by the Fuel BurningOpacity monitoring requirement.(c) Fuel StandardsThe permit does not contain Puget Sound Clean Air Agency Regulation I, Section 9.08(a)and RCW, 70.94.610 “Burning used fuel oil in land-based facilities” because ToddPacific Shipyards does not and cannot burn such oil.(d) Federal StandardsPuget Sound Clean Air Agency Regulation I, Section 6.11 and WAC 173 400-115 bothadopt by reference the federal new source performance standards in 40 CFR Part 60.5. 3.5 EU-4 Gasoline Underground Storage TankTodd Pacific Shipyards has one underground gasoline storage tank used for fuelequipment used on site. Because, the motor vehicles are used on site and not on publicroads, the tank is not subject to Regulation II Section 2.07. However, the undergroundgasoline storage tank is subject to the registration (Regulation I Article 5) and new sourcereview (Regulation I Article 6). The notice of construction approval required the sourceto inspect the stage 1 vapor recovery equipment after each fuel delivery. Theunderground gasoline storage tank at Todd Pacific Shipyards can only be used for yardequipment that is not licensed to travel on public roadways.5. 3.6 EU-5 Ground Water Remediation EquipmentOver the years, Todd Pacific Shipyards’ soil has been contaminated with solvents. Thegroundwater remediation system draws water from all areas at the facility. Water isextracted and a solvent such as benzene is separated from the water. Air from thestripper is passed through an afterburner where the benzene and other solvents aredestroyed (turned into water and carbon dioxide). Less than 25,000 gallons of waterpassed through the system. The after burner operates at greater than 1,400 degrees F.Currently the system is shut down because the afterburner has failed and cannot be

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 20 of 31repaired. A consultant is working on sizing a new afterburner that would be moreefficient than the existing unit.5. 3.7 Operations without Specific Applicable RequirementsThis emission activity consists of any equipment and associated activities that generateair contaminants that do not have specific applicable requirements as listed elsewhere inthis permit.Todd Pacific Shipyards may conduct operations at Todd Pacific Shipyards that do nothave specific applicable requirements but are still subject to the generally applicablerequirements listed in Section I.A. of the permit. Most of those activities are listed underthis emission unit. Todd Pacific Shipyards requested that the Puget Sound Clean AirAgency include this emission unit to ensure that these activities are listed in the permitand protected by the permit shield. The Puget Sound Clean Air Agency concluded thatthe permit contains all the applicable requirements elsewhere in the permit andrecognizes that Todd Pacific Shipyards may conduct these activities. By listing theseemission units and activities, the Puget Sound Clean Air Agency is not implying that theother requirements of the permit do not apply. For example, if Todd Pacific Shipyardswere to modify an activity, listed in this emission activity, in such a way that requirednew source review under Section IV.A. of the permit, the Puget Sound Clean Air Agencywould require a Notice of Construction.5. 3.8 Inapplicable Orders of ApprovalThe following Orders of Approval are no longer applicable to Todd Pacific Shipyards forthe following reasons.Order ofDescriptionReasonApprovalPrevious7253(11/14/00)Groundwater Remediation/Soil Vapor Extractor System Order of Approval No.7253 (11/14/00) wasSuperceded by Order ofApproval No. 7253 toinstall newer control5671,7069 and7070One Binks Dry Filter Spray Coating Booth (T- 199,Paint Shop #3),Spray Coating Room (T-230, Shop#2),Outdoor Spray Coating for Large Fabrications up to40” x 60” that could weigh 80 tons that cannot be SprayCoated in existing Spray Booths and Rooms.Designated Spray coating areas are located behind Paintshop No. 2, in front of Paint Shop 1 and 2, Pier 3 Slab,between Buildings T-201 and T-114 and Building Ways(existing).equipment.Replaced obsoleteconditions with new Orderof Approval No. 8678(6/10/02)

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 21 of 316. Monitoring, Maintenance and Recordkeeping ProceduresMany of the procedures in Section II of the permit are grouped according to types ofactivities or the Todd Pacific Shipyards organizational unit responsible for performingthe procedure. For example, the activities in Section II.A.2(e) Equipment Maintenanceare normally performed by maintenance personnel while the other activities in SectionII.A of the permit are normally performed by operators or environmental staff. Forexample, maintenance staff checks to see that the pressure drop gauge on a spray booth isoperating properly and that the acceptable ranges are marked, but the operator isresponsible for logging the pressure drop.6. 1 Following Monitoring, Maintenance and RecordkeepingProceduresTodd Pacific Shipyards must follow the procedures contained in Section II of the permit,Monitoring, Maintenance and Recordkeeping Procedures. Failure to follow arequirement in Section II may not necessarily be a deviation of the underlying applicableemission standard in Section I. However, not following a requirement of Section II is adeviation of Section II and Todd Pacific Shipyards must report such violations, as well asdeviations from any other permit condition, as a deviation under Section V.Q.1 of thepermit. In addition, all information collected as a result of implementing Section II canbe used as credible evidence under Section V.N.2. of the permit. Reporting a permitdeviation and taking corrective action does not relieve Todd Pacific Shipyards from itsobligation to comply with the underlying applicable requirement.6. 2 Standard Approval ConditionsA standard Puget Sound Clean Air Agency Notice of Construction Order of Approvalcondition, Condition No. 1, requires that the equipment, device or process be installedaccording to plans and specifications submitted to the Puget Sound Clean Air Agency.Once the equipment is installed, the Puget Sound Clean Air Agency requires certificationby the applicant that the installation was as approved; this is usually done with a Noticeof Completion. Normally within six months to a year after receiving a Notice ofCompletion, a Puget Sound Clean Air Agency inspector verifies by inspection that theequipment was installed as specified and in accordance with the Order of Approval.While the Notice of Completion is a one-time requirement that Todd Pacific Shipyardshas complied with, Todd Pacific Shipyards cannot change the approved equipment insuch a manner that requires an NOC Order of Approval without first obtaining an NOCOrder of Approval which is addressed in Section IV.A of the permit.6. 3 Work Practice InspectionsThe permit requires Todd Pacific Shipyards to conduct quarterly work practiceinspections. These inspections are to ensure that the work practices required by thepermit are being followed. The Puget Sound Clean Air Agency determined the frequencyof these inspections after considering the potential for emissions, the lack of federallyrequired monitoring, Todd Pacific Shipyards in-house training practices and similar

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 22 of 31factors. If problems are identified, Todd Pacific Shipyards has the responsibility to makea record of the problem, correct the specific problem, and adjust the work practices andtraining to prevent future problems.6. 4 Monitoring FrequencyIn determining the appropriate monitoring frequency, the Puget Sound Clean Air Agencyconsidered several factors including the following:Todd Pacific Shipyards compliance history and the likelihood of violating theapplicable requirement;The complexity of the emission unit including the variability of emissions overtime;The likelihood that the monitoring would detect a compliance problem;The likely environmental impacts of a deviation;Whether add-on controls are necessary for the unit to meet the emission limit;Other measures that Todd Pacific Shipyards may have in place to identifyproblems;The type of monitoring, process, maintenance, or control equipment data alreadyavailable for the emissions unit;The technical and economic considerations associated with the range of possiblemonitoring methods; andThe kind of monitoring found on similar emissions units.6. 5 Operation and Maintenance (O&M) Plan RequirementsTodd Pacific Shipyards O&M Plan shall include equipment operation and maintenanceprocedures specifying how Todd Pacific Shipyards will assure continuous compliancewith Puget Sound Clean Air Agency Regulations I, II and III.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 23 of 317. Prohibited ActivitiesSome of the requirements Todd Pacific Shipyards identified in the operating permitapplication are included in Section III as prohibited activities. Since these activities areprohibited, routine monitoring of parameters is not appropriate. Instead, the Puget SoundClean Air Agency has listed these activities in this section to highlight that they cannotoccur at the facility. Personnel that perform the facility-wide inspections, required inSection II of the permit, should be aware of these requirements and if they find anyevidence that any of these activities are being conducted, they should take appropriateaction to investigate them and take corrective action if necessary.7. 1 Requirement III.B Open BurningPuget Sound Clean Air Agency Regulation I, Article 8 prohibits most open burning inmost areas within the Agency's jurisdiction. However, Regulation I, Section 8.07specifically allow fire extinguisher training under certain conditions.7. 2 Requirement III.D & E. Concealment and MaskingPuget Sound Clean Air Agency Regulation I, Section 9.13, and WAC 173-400-040(7)contain similar requirements addressing concealment and masking of emissions.Although the effective dates for the federally enforceable and the state-only versions ofWAC 173-400-040(7) differ, the actual wording of the two versions are the same.8. Activities Requiring Additional ApprovalSome of the requirements Todd Pacific Shipyards identified in the operating permitapplication are included in Section IV as activities that require additional approval.8. 1 Requirement IV.A. New Source ReviewFor new source review, the permit language has been simplified. Chapter 173-460 WAC(State-Only) and Puget Sound Clean Air Agency Regulation I, Article 6 New SourceReview Programs require approval to construct, install, establish, or modify an aircontaminant source. All these requirements apply, but the language in these requirementshas been incorporated into one section to simplify the permit language. WAC 173-400-110 applies statewide, yet defers to local authority programs which provide the same,equivalent function. Since Puget Sound Clean Air Agency has had a New SourceReview Program under Regulation I, Article 6 for many years, the regulatory programused to review activities for this purpose is that Regulation and not the statewide versionmanaged by the Washington Department of Ecology. New and modified sources arerequired to apply Best Available Control Technology (BACT), and BACT is defined toinclude all requirements in the NSPS and NESHAP. Therefore, the NESHAPrequirements for new and reconstructed sources (procedural requirements included in thegeneral provisions in 40 CFR 63.5) are covered by this language as are the requirementsin 40 CFR 60.7, 60.14, and 60.15.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 24 of 31The recently amended Puget Sound Clean Air Agency Regulation I, 6.03(c) exemptscertain equipment from new source review. It does not exempt any equipment from anyfederally required new source review or federally required notifications. For purposes ofcomplying with the recordkeeping requirement in Puget Sound Clean Air AgencyRegulation I, 6.03(c), Todd Pacific Shipyards shall provide in a timely manner, uponrequest by the Agency, any information reasonably necessary to document theexemption. However, physical evidence of the emission unit or activity itself canoftentimes fully document the applicability of the exemption.8. 2 Requirement IV.D Spray CoatingBoth the 1993 federally enforceable version and the current version of Regulation I,Section 9.16 are included in the permit. However, the two versions differ enough thatTodd Pacific Shipyards could only comply with one. Therefore, the Puget Sound CleanAir Agency will only enforce the current version.9. Standard Terms and ConditionsSome of the requirements Todd Pacific Shipyards identified in the operating permitapplication are included in Section V, Standard Terms and Conditions. This provided aneasier mechanism for describing requirements that are more general in nature. Thissection also contains the standard terms and conditions specifically listed in WAC 173-401-620.9. 1 V. O RecordkeepingWAC 173-401-615(2) requires maintain a record of the time that each sample ormeasurement is taken. If the sample or measurement needs to be recorded once a shift orless frequently, then Todd Pacific Shipyards needs to identify the shift that the sample ormeasurement was take. If sample or measurement needs to be recorded more frequentlythan once a shift, then Todd Pacific Shipyards must record the hour that the sample ormeasurement was taken.9. 2 V. P Data recoverySome of the applicable requirements in the permit did not have specific monitoringrequirements associated with them. For such requirements, the Puget Sound Clean AirAgency developed monitoring requirements. (This is sometimes called gap filling.)Section V.P Data recovery addresses the amounts of data recovery required for thesemonitoring requirements that were developed specifically for the permit. The sectionalso address procedures to follow if the monitoring system fails or data is lost. Therequirements of the section only apply as noted in Section II of the permit and under nocircumstances does this section apply if a specific underlying applicable requirement ismore stringent.In developing the data recovery requirements, the agency consider similar data recoveryrequirements such as Regulation I, Section 12.03, the frequency of the monitoring, andthe nature of the information required to monitor.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 25 of 319. 3 V. Q ReportingSection V.Q lists the reports that Todd Pacific Shipyards must submit, and theresponsible official must certify the report. In many cases, Puget Sound Clean AirAgency used its authority under 40 CFR 60.7 and 40 CFR 63.10 to adjust the reportingdates and reporting frequencies to be consistent with other reporting requirements. Forexample, Puget Sound Clean Air Regulation I, Section 12.03(f) requires all continuousemissions monitoring reports to be submitted to the Agency within 30 days after the endof each calendar month. However, 40 CFR 60.7(c) requires such reporting semiannuallyunless the administrator determines that more frequent reporting is necessary. The PugetSound Clean Air Agency rule clearly requires more frequent reporting, and the reportsare similar. In addition, WAC 173-401-615(3)(b) specifically requires monthly reportingof all deviations. Rather than Todd Pacific Shipyards submitting two or three differentreports with the same information at different times, the Agency determined that morefrequent reporting of the federal requirement is warranted.Similarly, 40 CFR 63.788 requires certain deviation reporting semiannually, normally onJanuary 31 and July 31 of each year. However, 40 CFR 63.9(i) allows Puget SoundClean Air Agency to adjust the reporting date. In this case, the Puget Sound Clean AirAgency requires the semiannual report by January 30 for the reporting period of June 1 stthrough December 31st and by July 31 for the reporting period of January 1st throughJune 30. In addition the permit requires monthly reporting of all deviations. Thosedeviation reports contain different information and are not intended to be a substitute forthe semiannual or annual reports.Section V.M.2(e) Startup, Shutdown, and Malfunction Reports requires Todd PacificShipyards to report certain startup, shutdown and malfunctions. After reviewing therequirements of 40 CFR 63.6 and 63.10, the Puget Sound Clean Air Agency hasdetermined that such reports are only required if the startup, shutdown or malfunctionresulted in excess emissions. In addition, 40 CFR 63.10(d)(5)(ii) allows the permittingauthority to make alternative reporting arrangements. For example, in this case PugetSound Clean Air Agency established an alternative reporting arrangement for theImmediate Startup, Shutdown, and Malfunction Reports, for the Ship Building andRepair NESHAP, to be consistent with other deviation reports.10. Permit ShieldThe permit shield applies to all requirements contained in Sections I through VI of thepermit, including a monitoring, maintenance, recordkeeping, and reporting requirements.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 26 of 3111. Public Comments and ResponsesThe following comments were received by email on November 28, 2002 and by mail onNovember 30, 2002.Comment from Richard Smith of Smith & Lowney P.L.L.C. on theTodd Pacific Shipyards Draft Air Operating Permit40 C.F.R. § 70.6(c)(1) requires that an air operating permit must include testing,monitoring, reporting, recordkeeping and compliance certification requirements that aresufficient to "assure compliance" with the terms and conditions of the permit. 40 C.F.R.§ 70.6(a)(3)(i)(B) requires that where the underlying applicable requirement does notalready specify some form of "periodic" monitoring, the air operating permit must fill thegap by specifying periodic monitoring that satisfies the "three R's": reliable data from therelevant time period that are representative of the source's compliance with the permit.The monitoring requirements in the draft permit are not sufficient to "assure compliance"with the terms and conditions of the permit.Part I.A. of the draft permit indicates that there are no monitoring requirements forsubstantive requirements nos. I.A.2 and I.A.10. Part I.B.1. Table B indicates that there isno monitoring requirement for requirement no. EU-1.2. This is plainly inadequate toassure compliance.Agency ResponseIn I.A.2, there is a reference test method identified in the event a source test wasrequired. The equipment where SO 2 emissions would occur include the boilers.However, Todd Pacific Shipyards has one boiler that has diesel stand-by fuel (normallyfired on natural gas). The boiler fuel used by Todd Pacific Shipyards is clean dieselwhich has 0.5 % sulfur or less by weight and would not exceed the SO 2 concentrationin this rule even if it were source tested. The calculation demonstrating this fact, basedon material balances, has been added to the Statement of Basis for clarification.In I.A.10, the permit identifies a reference test method in the event a source test wasrequired. Todd Pacific Shipyards may have incidental levels of HCL from combustionsources such as boiler. When Todd Pacific Shipyards combusts clean diesel, theywould not exceed the limits in the rule. The calculation demonstrating this fact, basedon material balances and fuel oil properties, has been added to the Statement of Basisfor clarification.In E.U.1.2, the reference test method for source testing equipment such as baghousevents for particulate emissions are listed, in the event a test were necessary. In theAOP, daily visual checks for the abrasive blasting baghouse (per EU-1.1) and requiredroutine maintenance would negate the requirement to source test the equipment.These daily checks require responses to any visible emissions and the discussion in theSOB for the monitoring identified for Condition I.A.3 is also applicable in this case.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 27 of 31Part II.A.1.(a) addresses opacity monitoring. It requires that the permittee "shall conductweekly inspections of the coating booths, abrasive blasting areas, and combustion sources…."Although it specifies that "[i]nspections are to be performed while the equipment isin operation during daylight hours", the frequency of inspections required is not clear.Must each identified area of the facility be inspected at least once a week while it is inoperation or is a single weekly inspection of all of these areas all that is required? It ispredictable that all of these emissions units will not be operating at any one time duringany given week. The permit language should be clarified to require inspections for eachemissions unit on a weekly basis while that unit is operating. As written, thisrequirement is practically unenforceable.Agency ResponseIn Part II.A.1 requires the coating booths, abrasive blasting areas and combustionsources to be inspected once a week when they are in operation and during daylighthours. Todd Pacific Shipyards must have logs indicating the inspections have beenconducted. If the equipment is not operated during the week Todd Pacific Shipyardswill note this on the log. Normally, the equipment operator inspects the equipmentprior to startup and maintains the log.This first paragraph of part II.A.1.(a) also requires that, if visible emissions are observed,the permittee shall "within 24 hours of the initial observation, take corrective action untilthere are no visible emissions or, alternatively, record the opacity using the reference testmethod or shut down the unit or activity until it can be repaired." Is this consistent withthe remedy requirements for the specific substantive requirements found elsewhere in thepermit? Corrective action should be required immediately if visible emissions areobserved.Agency ResponseIn Part II.A.1 Todd Pacific Shipyard must correct opacity problem immediately but nolater than 24 hours from initial observation. This is consistant with the notice ofconstruction order of approvals issued for the specific equipment . The enforcementhistory at Todd Pacific Shipyards supports the condition to maintain compliance at thefacility.The first sentence of the second paragraph of part II.A.1.(a) is unclear. It requires thepermittee "or subcontractor [to] monitor opacity using Ecology reference test Method 9Afrom all ships located at their facility during startup, propulsion system testing and shutdown." Is the opacity of emissions from ships to be monitored or is opacity of otherfacility emissions to be monitored from shipboard? Also, what ensures that any"subcontractor" is qualified to do opacity monitoring? The permittee should be requiredto have its own qualified personnel conduct opacity monitoring.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 28 of 31Agency ResponseShips located at Todd Pacific Shipyards start up and shut down equipment as part ofthe repair process. There is a high probability of smoke emissions during this timeperiod. Sometimes Todd Pacific Shipyards are the contractor; however, outsidecontractors are contracted to complete the work. Currently, Todd Pacific Shipyardshas a qualified smoke reader that observes the smoke from the ships during startupand shut down. This has been and will continue to be standard practice.The permit should require opacity monitoring sufficient to determine whether there wasmore than 20% opacity for three minutes in any one hour period and to derive an averageof three 1-hr tests whenever visible emissions are observed to determine compliance withsubstantive permit conditions, including permit requirements nos. I.A.1, I.A.2, I.A.3,I.A.10, EU-1.1, and EU-1.2.Agency ResponseThe current opacity rules limit emission of air contaminants for periods or periods ofaggregating more than 3 minutes in any 1 hour. There is no requirement to conductor average 3 one hour tests. Opacity observations do not need to be conducted whenthere are no visible emissions.Part II.A.1.(c) requires the permittee to "conduct a facility-wide inspection at least onceper Month." This is insufficient. Conditions at the permittee's facility are highly variabledepending on the wide variety of work that might be scheduled on any given day.Facility-wide inspections should be required on a daily basis.Agency ResponseA weekly (and in some circumstances, daily) inspection frequency has already beenincluded in the permit for activities which present the most compliance challenges forthe site. The compliance history of Todd Pacific Shipyard indicated that the monthlyfrequency of facility wide inspections is in concert with the other required inspectionsis adequate to maintain compliance at the facility.This part also requires the permittee to "correct any problems identified by theseinspections within 24 hours of identification or shut down the unit or activity until theproblem can be corrected." Shut down or immediate repair should be requiredimmediately upon observation of a problem and a deviation report should be required forany observation of non-compliance.Agency ResponseThis requirement is in the Puget Sound Clean Air Agency Order of Approvals for spraybooths. Todd Pacific Shipyard is required to shutdown or correct and emissions fromthe facility immediately but not later than 24 hours. In reviewing the compliancehistory of Todd Pacific Shipyard, this is a reasonable requirement and would ensurecontinued compliance with rules.

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 29 of 31Part II.A.2.(a) requires checking of "differential pressure across the filters in each spraybooth that is equipped with a manometer to ensure operation within an acceptable range…" This implies that some spray booths are not equipped with manometers. The permitshould require all spray booths to have manometers.Agency ResponseAll indoor spray booths and abrasive blasting baghouses at Todd Pacific Shipyard areequipped with manometers or magnihelic gauges to measure pressure drop.Parts II.A.2.(b), (c), and (e) all require the permittee to "initiate repairs" to tarping systemrips, tears, or gaps "immediately upon discovery, by not later than the next work shift."This is unclear and practically unenforceable. The permit should require tarping systemrips, tears, or gaps to be repaired immediately, period, and should require a deviationreport for any observation of non-compliance. The draft permit language allows work tocontinue and repairs to be "initiated" only sometime during the next work shift, wheneverthat may be. It does not even specify that repair of such tarping problems be completedat any particular time.Agency ResponsePuget Sound Clean Air Agency believes that having equipment problems is not aviolation provided the company repairs, replace or corrects the problem in a timelymanner. Some minor tears or rips do not need immediate attention by the companyand some cannot wait until the next shift to repair or correct. If Todd PacificShipyards repairs or corrects any equipment problems as required in the AOP timelimits it is not a permit deviation. If they fail to correct the problem as required in theAOP, then that failure is a deviation and must be reported. The compliance historyhas not indicated any compliance issues with the tarping.Part II.A.2.(d) requires the permittee to "[c]heck differential pressure across the baghousefilters for each abrasive blasting booth that is equipped with a manometer to ensureoperation within an acceptable range in accordance with the manometer or baghousemanufacturer's recommendations. [The permittee] shall mark the acceptable range on ornear the gauge for each booth that is equipment [sic] with a gauge." This implies thatsome blasting booths do not have manometers or gauges. The permit should requiremanometers and gauges on all blasting booths. In addition, this permit language exemptsblasting booths without manometers from the requirement to ensure operation with thebaghouse manufacturer's recommendations. There is also a typographical error.Agency ResponseTodd Pacific Shipyard has pressure drop gauges on the blasting booth baghouses andhas already complied with this monitoring requirement.Part II.A.3.(b) concerns ground water remediation equipment. It states that "[i]f, duringthe scheduled inspection or at any other time, evidence of non-compliance is observed,Todd Pacific Shipyards shall, as soon as possible, but no later than within 24 hours of the

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 30 of 31initial observation, shut down the unit or activity until it can be corrected, or report theproblem as a deviation under Section V.Q.2." Shut down should be required immediatelyupon observation of non-compliance and a deviation report should be required for anyobservation of non-compliance.Agency ResponseThis monitoring requirement is in the Puget Sound Clean Air Agency Order ofApproval for the water remediation equipment.Part II.A.3.(c) requires inspection of the Stage 1 vapor recovery equipment of theunderground storage tank "prior to all gasoline deliveries." This is unclear andpractically unenforceable. This part of the draft permit also requires inspection after eachgasoline delivery. The post-delivery inspection is "prior" to the next delivery. What isthe intent of the requirement to inspect "prior to all gasoline deliveries"? To requireinspection before each gasoline delivery, the permit should clearly require inspection"immediately before", or, perhaps, "within two hours before", each gasoline delivery.This part also states that, if evidence of non-compliance is observed, the permittee "shall,as soon as possible, but no later than within 24 hours of the initial observation, shut downthe unit or activity until it can be corrected, or report the problem as a deviation underSection V.Q.2." Shut down should be required immediately upon observation of noncomplianceand a deviation report should be required for any observation of noncompliance.Agency ResponsePuget Sound Clean Air Agency gas station rule [Regulation II Section 2.07(b)(2)]requires the stage 1 system be visually inspected after each product delivery and anyequipment found defective is repaired or replaced as soon as possible but no later than7 days after the inspection. Requiring Todd Shipyards to correct the problem no laterthan 24 hours or shut down is more stringent that the rule. Gasoline emissionsgenerally occur from stage 1 equipment during product delivery only and this permitwould require correction prior to another delivery.The following comment was received by email from the EPA on November14, 2002.From: Kral.Laurie@epamail.epa.govSent: Thursday, November 14, 2002 11:31 AMTo: larryv@pscleanair.orgCc: Waddell.Elizabeth@epamail.epa.gov; Kenknight.Jeff@epamail.epa.govSubject: no epa comments re: Todd Pacific Shipyards T5 permit

Statement of Basis forVigor Shipyards, Inc.Administrative Amendment: June 13, 2011 Page 31 of 31Draft TV PermitRE:Todd Pacific Shipyards CorpThank you for the opportunity to review the above mentioned draftTitle V permit. I am writing to notify you that, EPA will not bereviewing this draft permit action.Please note that if the permit is later found to requirecorrective steps (including, but not limited to, objecting to theproposed permit or reopening the issued permit for cause), EPA'sfailure to review the draft permit does not compromise the Agency'sauthority to take such measures.If you have any questions or concerns regarding this letter orwould like to discuss these matters further, please call Jeff Kenknightat (206) 553-6641.cc:J. KenknightE. WaddellTV Source Activity FileTV Comment NotebookI. Administrative AmendmentOn June 9, 2011, the Agency received a request from Vigor Shipyards, Inc. to change thename from Todd Pacific Shipyards Corp. to Vigor Shipyards, Inc. The Operating Permitwas updated.