PHASE II ENHANCED VAPOR RECOVERY (EVR) UPGRADE PENALTY POLICY FOR BAY AREA GAS STATIONS

PHASE II ENHANCED VAPOR RECOVERY (EVR) UPGRADE
PENALTY POLICY

EFFECTIVE APRIL 1, 2009 – JUNE 1, 2009

Policy Statement: The California Air Resources Board and the District require that as of April 1, 2009, gasoline dispensing facilities (GDFs) must operate with an ARB-certified Phase II EVR system in place. GDFs are subject to monetary penalties for violating District regulations pertaining to the Phase II EVR upgrade.
The penalty amounts are based on whether the GDF is a large facility (dispensing more than 1.8 million gallons of gasoline in the previous twelve-month period), a medium facility (dispensing 601,000 to 1.8 million gallons of gasoline) or a small facility (dispensing 600,000 gallons or less of gasoline). Currently, the penalty amounts are as set forth below. The penalty amounts are subject to increases after June 1, 2009, based on facilities’ delays in commencing the upgrade work.
Notices of Violation:

• NOV: Failure to obtain a District authority to construct the Phase II EVR System (but work completed as of April 1, 2009) – District Regulations 2-1-301, 302:
Large facility: $800
Medium facility: $600
Small facility: $400

• NOV: Operating as of April 1, 2009 without the Phase II EVR System – District Regulation 8-7-302.1:
Large facility: Maximum penalty - $2,500
Medium facility: Maximum penalty - $1,500
Small facility: Maximum penalty - $1,000

For this NOV, the District will consider factors that may reduce the maximum penalty amount on a case-by-case basis. One of the key factors will be the facility owner’s diligence prior to April 1, 2009 to meet the deadline, e.g. having submitted or obtained an authority to construct, hired a contractor, or having ordered or obtained the upgrade equipment.

• NOV: Failure to pass required source tests for the installed Phase II EVR upgrade – District Regulations 8-7-302; 2-1-301/302:
Large facility: $1,000
Medium facility: $750
Small facility: $500

Compliance and Settlement Agreements: The District encourages facility owners who will not be able to complete the upgrade work by April 1, 2009 to contact the District about entering into a compliance agreement with the District that will enable the facility to operate while completing the upgrade work on an expedited schedule and to pass the necessary source tests. The compliance agreement will include penalties for not complying with the requirements of the agreement, as well as penalties for violations of District regulations, which are described above.

• NOV: Operating as of April 1, 2009 without the Phase II EVR System (see above).

• NOV: Failure to pass required source tests for the installed Phase II EVR upgrade (see above).

• Breach of Agreement: Failure to meet the agreement’s extended deadline to install the upgrade (including installation of in-station diagnostic equipment for large facilities):

Large facility: $4,000
Medium facility: $2,000
Small facility: $1,000

If, 60 days later, the facility has failed to meet the extended deadline, the District will assess daily penalties until the work is completed:
Large facility: $65.00 per day
Medium facility: $45.00 per day
Small facility: $35.00 per day

• Breach of Agreement: Failure to submit monthly progress reports on the status of the upgrade work:

Large facility: $65.00 for each late or missed report
Medium facility: $45.00 for each late or missed report
Small facility: $35.00 for each late or missed report

Bay Area Gas Station EVR Deadline Alert

ATTENTION: OWNER/OPERATORS OF STATIONS WITH UNDERGROUND STORAGE TANKS

SUBJECT: ENFORCEMENT OF CARB ENHANCED VAPOR RECOVERY EVR) PHASE II DEADLINE

By April 1, 2009 all gas stations with underground tanks are required to have an
Enhanced Vapor Recovery certified Phase II system. Any station that failed to
perform the upgrade by April 1, 2009 is in violation of District regulations and state law.

The Air District will enforce the requirements of Phase II EVR and all stations not in compliance by the deadline will receive a citation; however, non-complying gas stations can continue to operate while working towards compliance provided the following actions are taken:

The owner/operator must contact the District’s Legal Division representative for the
county in which his/her GDF is located and enter into a Compliance and Settlement
Agreement (Compliance Schedule) to comply with state requirements.

Contact information:

• Susan Adams, Assistant Counsel for stations located in Solano, Sonoma, Marin,
Contra Costa, and Santa Clara Counties

• Randi Wallach, Assistant Counsel for stations located in San Francisco, Napa,
Alameda, and San Mateo.

Office of the District Counsel
939 Ellis Street
San Francisco, CA 94109
(415) 749-4920

The Compliance Schedule, is a legally binding contract and will include the following
elements:

• Extended deadlines to complete installation of the Phase II EVR System and pass the
required source tests; and
• Penalties for being in violation—penalty information can be found at:

http://www.baaqmd.gov/enf/evr_phase_ii_penalty_description_3-20-09.pdf

Failure to meet the extended deadlines, or to comply with the Compliance Schedule, can result in higher penalties and possible station tag out per State law.

More Information can be obtained from the following sources:
For further questions regarding this Advisory, contact Dennis Baker, Air Quality
Technician, at (415) 749-4717.

For compliance assistance, call (415) 749-4999, the Compliance Counselor Hotline.

For permit assistance or Authority to Construct application forms, visit
http://www.baaqmd.gov/pmt/index.htm or call (415) 749-4990, Engineering.

For information about EVR requirements from the California Air Resources Board,
visit http://www.arb.ca.gov/vapor/vapor.htm or http://www.evrhome.org, or contact the
ARB Engineering and Certification Branch at (916) 327-0900.


Steve Lee is an Equipment Finance Specialist at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Steve is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Expected savings from Phase II EVR Equipment

Expected savings from Phase II EVR Equipment:

Although the state deadline to upgrade to Phase II EVR equipment is seeming to come at the most inopportune time, there may be some peace of mind in knowing that there is an expected savings from the volume of fuel that would otherwise be lost as vapor. Manufacturers have claimed that operators can expect product savings in the range of 0.15% to as high as 0.6%. This may produce enough savings, even at the lower figure, to pay for the cost of the upgrade itself.

For the Healy Clean Air Separator, savings could be from .015% to 0.25% of liquefied product. This could potentially produce a savings of 250 gallons for every 100,000 gallons of fuel dispensed.

With the average California station pumping about 1.3 million gallons of fuel per year, this potentially vents 10 tons of hydrocarbons into the air each year. This is the equivalent of losing 3,000 gallons of product per year. At only $2.50 per gallon, that’s $7,500 of lost revenue, each year.

Steve Lee is an Equipment Finance Specialist at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Steve is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

There Is No Excuse

The Air Resources Board is reminding California’s service station owners that they must upgrade vapor recovery systems on their gasoline pumps by April 1, 2009. The deadline is fast approaching, and less than 15% of the 11,000 gas stations are currently in compliance.

The state has invested millions of dollars into this initiative. There will be no exceptions with respect to this deadline:

"There's no excuse for not meeting the deadline - people know it's coming, the technology to comply is there and the public health benefits are easily quantifiable. Penalties for missing the deadline will not only cost operators, but delay clean air for many regions of the state." -- ARB Chairman Mary Nichols

Financing is becoming harder to obtain during these volatile economic times. Please begin your prequalification process immediately to secure your financing…it may not be there come 2009. Banks are increasingly calling lines of credit used for EVR upgrades, due to the high amount of soft costs involved and because the equipment is essentially non-revenue generating.

Steve Lee is an Equipment Finance Specialist at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Steve is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Veeder-Root Announces New Carbon Canister Enhanced Vapor Recovery System

October 17, 2008 Veeder-Root has finally announced the release of the eVRgreen System with CARB Certification. This system is a complete vapor recovery and monitoring system that meets California’s state mandated April 1, 2009 Stage II EVR upgrade deadline. Veeder-Root claims this is the "simplest, most cost-effective solution available for retail petroleum station owners in California who need to comply with new EVR regulations." Gas stations owners can expect installation times to be cut in half, with seamless operation from the start.

For complete details or to order this solution contact your Veeder-Root distributor today. Veeder-Root is offering informational sessions for Enhanced Vapor Recovery at several locations in California. Contact your Veeder-Root distributor to learn more about these sessions. You can also register for more information and updates from Veeder-Root at http://www.veeder.com/page/EVR_Solutions.

Steve Lee is an Equipment Finance Specialist at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Steve is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

How Much Will Your Station Cost?

With the deadline around the corner, many gas station owners are asking how much their station's upgrade will cost. The best way to know is to have a contractor visit your station and give you a quote. Nonetheless, ARB of California has give a few estimates as to how much the upgrades could cost.

Phase II Franklin/Healy EVR equipment (*assuming labor costs are $75 per hour):

For 2 Dispensers:
Dispenser Equipment $7,240
Dispenser Equipment Installation* $600
Clean Air Separator $7,245
CAS Installation* $2,000
TOTAL $17,240

For 4 Dispensers:
Dispenser Equipment $14,480
Dispenser Equipment Installation* $1,200
Clean Air Separator $7,245
CAS Installation* $2,000
TOTAL $24,925

For 6 Dispensers:
Dispenser Equipment $21,720
Dispenser Equipment Installation* $1,800
Clean Air Separator $7,245
CAS Installation* $2,000
TOTAL $32,765

For 12 Dispensers:
Dispenser Equipment $43,440
Dispenser Equipment Installation* $3,600
Clean Air Separator $7,245
CAS Installation* $2,000
TOTAL $56,285

The numbers may seems overwhelming at first. Shop around with different contractors, but keep in mind: You get what you pay for. Sometimes the labor is much cheaper, but the equipment may not be installed correctly costing you more in the long run.

Steve Lee is an Equipment Finance Specialist at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Steve is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

Benefits of EVR Upgrade

Many gas station owners have been asking us what the new Phase II EVR upgrade will actually do. How will it help the environment?

According to evrhome.org, the EVR systems reduce gasoline vapor emissions. By reducing the emissions, this will save gasoline. California's total throughput is about 16 billion gallons of gasoline per year.

The Phase II EVR systems in California alone will:

• Reduce hydrocarbon emissions by 372 tons/day. Hydrocarbons, which make up the gasoline vapors, react with other air pollutants in the ozone's atmosphere.


• Save 120,000 gallons of gasoline each day


• Station owners and consumers save $360,000 each day

So the upgrade will save gas, money, and improve the atmosphere. This is something that is both valuable, and at our present time, needing to be preserved as best as possible.


Steve Lee is an Equipment Finance Specialist at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Steve is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.