AIR POLLUTION CONTROL DISTRICT



## DRAFT STAFF REPORT

For the P roposed Revisions to

RULE 207 – New and Modified Stationary Source Review

, Rule 206 – Processing of Applications, and

RULE 101 - Definitions

October 22

, 2013

I INTRODUCTION

The Imperial County is currently designated as a nonattainment area for the state and federal ozone, PM 10 and PM 2.5 standards. The strategy in Imperial County to control air pollution is to reduce emissions from new and modified stationary sources through a New Source Review (NSR) program. The Imperial County Air Pollution Control Distric t (District) proposes to revise Rule 207, New and Modified Stationary Sour ce Review ; Rule 206, Processing of Applications, and Rule 101, Definitions, to include new federal

NSR requirements and to correct rule deficiencies that would allow for the incorporation of the revised Rules into the District’s State Implementation Plan (SIP)

.

The District adopted Rule 207 prior to March 17, 1980. This version of Rule 207 was submitted and approved into the District’s SIP. The District revised Rule 207 on September 7, 1993 and again on September 14, 1999. Both versions of R ule 207 were

submitted to the United States Environmental Protection Agency ( US EPA), Region IX

office , for inclusion into the District’s SIP. The US EPA identified several deficiencies

within the 1993 and 1999 submitted rules that require correction by the District

. The proposed revision s to Rule 207 reflects the corrected deficiencies identified by US EPA with regards to Title 40 Code of Federal R egulations part 51.165 (40 CFR 51.165) . The revision to Rule 207, similarly, addresses other federal Clean Air Act (CAA) requirements. In order to help the District better address the US EPA identified deficiencies, US EPA provided the District with a New Source Review Checklist, dated December 7, 1999. The list contains required elements that would improve the

District’ s NSR ru le and assist with meeting federal NSR requirements. In order to properly correct the identified deficiencies, t he District work ed closely with representatives from the US EPA, Region IX office , and the California Air Resources Board (CARB)

.

In a ddition to the identified deficiencies , the US EPA recently determined that the populated urban areas in Imperial County are in nonattainment for the national standard

of the fine particulate matter with an aerodynamic diameter of less than two and one

half microns ( PM 2.5 ) . The federal CAA and applicable regulations require that

nonattainment areas for PM 2.5 , such as Imperial County, incorporate certain requirements into their NSR program for sources that emit PM 2.5 and precursors, other pollutants that contribute to PM 2.5

. US EPA issued a final rule known as the

" Implementation of the New Source Review Program for Particulate Matter Less thanAIR POLLUTION CONTROL DISTRICT

2.5 Microns (PM 2.5 NSR Implementation Rule) R equirements " on May 16, 2008 (73 FR28321). The 2008 PM 2.5 NSR Implementation Rule explains how to apply NSR to

PM 2.5 emission sources and establishes the major source threshold, significant emission rates, offset ratios, inter

- pollutant emission offset ratios, and offset applicability

of PM 2.5 precursors. The proposed revisions to the existing NSR rule will implement mandatory provisions under the permitting program for the federal nonattainment PM 2.5

area.

The federal NSR permitting program relies on emission thresholds to determine when program requirements a pply to new facilities. If a new facility is determined to potentially emit target air pollutants in amounts greater than the major source threshold, the facility is considered a major source. Sources are defined as a major source for nonattainment NSR pr ovisions if they have the potential to emit 100 or more tons per year of PM 2.5

. In order to meet federal requirements, t he PM 2.5 offset threshold in revised R ule 207 has been established at 100 or more tons per year. The offset ratios established in US

EP A’s 2008 PM 2.5 NSR Implementation Rule are 1 to 1, so for every one pound of

emission increase one pound of emission reduction is required for PM 2.5 or PM 2.5 precursors. The federal 2008 PM 2.5 NSR Implementation Rule allows provisions for

inter

- pollutant trading of emission offsets. The f ederal rule, as written

, contains default

inter

- pollutant offset ratios which assign specific ratios for NOx to primary PM 2.5 at a
ratio of 100 to 1 (100 tons of NOx for 1 ton of PM 2.5 ) and for SOx to primary PM 2.5 at a
ratio of 40 to 1

. However, in a memorandum dated July 21, 2011, US EPA announced a change with its policy set forth in the 2008 PM 2.5 NSR Implementation Rule. The new policy requires a technical demonstration supporting the use of precursor ratios demonstrating the net air quality benefit resulting from any trading ratios involving PM 2.5 precursors (NOx and SO x) which are submitted for US EPA approval and for use in a

state’s inter

- pollutant offset program

. The policy does provide for an alternative, states may opt not to include PM 2.5 inter

- pollutant trading in the PM 2.5 SIP ’ s. Within the revisions proposed to Rule 207, the District is opting to allow PM 2.5 inter

- pollutant trading; however, specific inter

- pollutant ratios have not been established within the

rule . Instead, language within the revised rule allows for the adoption of specific inter

pollutant ratios to be delayed until such a time that a demonstration can be developed and approved by the US EPA . This language allows the flexibility for not having to

amend R ule 207, in the future, when the ratios are approved by US EPA

. The D istrict will be working closely with US EPA to determine the appropriate offs et ratios specific to Imperia l County.

Senate Bill (SB) 700, adopted in 2004 by the state legislature , removed the long

standing state air permitting exemption for agricultural operations and replaced it with a set of rules requiring agricultural sources with emissions over one

- half a district’s major

source threshold to obtain a permit. Essentially, SB 7 00, within its contents, eliminated the exemption for agricultural operations in the farming of crops or raising of fowl or animals from the permitting process of local air pollution control districts. As a result, on October 10, 2006 the Imperial County District Board adopted several rules requiring agricultural sources to obtain a Permit to Operate (PTO) with our office. However,AIR POLLUTION CONTROL DISTRICT

SB 700 prohibits districts from requiring some minor agricultural sources to offset their emission increases if the same agricultural source cannot be granted offsets for emission reductions because they do not meet the criteria for real, permanent, quantifiable, and enforceable. The California Air Pollution Control Officers Association (CAPCOA) interprets this exemption as saying that the District may not require offsets for minor agricultural sources unless emissions reduction credits can be issued to the

same source

- type. The proposed revision to Rule 207 includes a provision exempting

minor agricultural source s from the requirement to provide offsets. The direct addition of the agricultural offset exemption language in Rule 207 provides a clearer description of the exemption and does not change the intent of SB700 or the methods with which the District permits agricultural s ources

.

T wo new threshold s where included in the definition for Major Stationary Source. The

threshold for particulate matter with an aerodynamic diameter of less than ten microns (PM 10 ) was changed to 70 tons per year to reflect the federal threshold for "serious"

non

- attainment areas for PM 10

. The major source threshold of 100 t ons p er year (tpy)

is identified for PM 2.5

. Finally, t he D istrict made some necessary editorial changes

within the rule

.

Rule 206, Processing of Applications, sets the guidelines for the processing of NSR permits and as such it defines the projects that can be processed as either ministerial or as discretionary. Due to their level of complexity and a greater potential to em it , the great majority of the discretionary projects are required to go under a 30

- day public review period. R ule 206 defines the guidelines for public notification and exemption s

. The proposed Rule 206 include s a new arrangement of pollutants exempted fr om public

notification . T he list of pollutants is now presented in a table to facilitate reading. The threshold for public notification for PM 10 non

- fugitive was reduced from 100 lbs/day to 80 lbs/day, the new threshold was set below the significant thre shold for PM 10 (15 tpy).

For PM 2.5 a new public notification threshold was added, the new threshold was set below the significant threshold for PM 2.5 (10 tpy). The proposed rule adds fluorides, sulfuric acid mist and lead to the public notification table , the threshold for public notification for these toxic air pollutants is set at the BACT requirement levels found in

Rule 207. The revised rule also includes an option for publishing on the district’s website for final permit action notification.

Rule 101 contains those definitions for specific terms applicable to all District rules. Revisions to specific definitions were a direct result of revisions to Rule 207. In addition, administrative changes were made throughout all of Rule 101.

The pr oposed revisions are expected to have a net positive environmental impact, and no significant adverse economic impacts. The proposed revision s comply with

restrictions imposed by California law that prohibit the District from adopting changes to certain rules that make them less stringent.AIR POLLUTION CONTROL DISTRICT

II DESCRIPTION OF RULE 207, NEW AND MODIFIED STATIONARY SOURCE REVIEW (NSR) RULE

The District implements a comprehensive program to evaluate the expected air quality impacts of stationary, portable, and other non

- mobile sources, and where appropriate, to ensure those sources are constructed and operated in a manner that reduces the

exp ected impacts. The District permitting program includes, among other things, the

review of new and modified sources through preconstruction permits, the ongoing regulation of sources through operating permits and applicable emission standards, and regular inspection s of these sources to ensure that they comply with all applicable requirements. In addition, the District implements and enforces CARB (state) regulatory requirements and federal CAA requirements including federal implementing regulations.

The District’s NSR rule provides a regulatory mechanism for allowing continued

industrial and economic growth while minimizing resulting emission increases. District Rule 207 applies to all new stationary sources and all modifications to existing stationary sources that are subject to District permit requirements. However, there are certain permitting exemptions allowed for smaller sources of emissions which are

iden tified in Rule 202, Exemptions. Currently, all d efinitions appl icable to all District

rules are included in Rule 101, Definitions. However, in order to maintain SIP integrity, the District has opted to incorporate all definitions applicable to Rule 207 within the rule itself. The addition of the definitions within Rule 207 serves two primary pr oposes. The first purpose is that it provides the project proponent clarity by allowing all the information in one place. The second purpose is that it serves to maintain the integrity of the SIP rule by making any future required revisions , issued by US EPA, only applicable to Rule 207

. The revision is important because Rule 207 provides the mechanism for the District to issue permits to new and expanding business. The basic operating premise for industry is Rule 207 which list s the required elements fo r an Authority to Construct (ATC) , Permit to Operate (PTO) and it lists the administrative requirements for the processing of NSR applications

The District’s NSR program is designed to meet both the state and federal NSR requirements for nonattainment ar eas and applies to new and modified stationary sources that emit nitrogen oxides (NOx), volatile organic compounds (VOC), particulate matter with an aerodynamic diameter of less than ten microns (PM 10 ), fine particulate matter with an aerodynamic diameter of less than two and one half microns (PM 2.5 ), sulfur oxides (SOx), carbon monoxide (CO), as well as other hazardous pollutants subject to District permitting requirements pursuant to State law. For this reason two versions of Rule 207 are proposed : o ne addressing all federal SIP requirements and the second an all encompassing rule including not only the federal SIP requirements but the state requirements.

Key features of Rule 207 include:

Best Available Control Technology (BACT): mandates emission controls to minimizeAIR POLLUTION CONTROL DISTRICT

emission increases for any emission unit with a potential to emit equal or above 25 pounds per day;

Emission offsets: requires any new or modified stationary source with a potential to emit above 137 pounds per day to offset any emission increases with either concurrent reductions from the stationary source or emission reductions which have been banked

as E mission R eduction C redits (ERC) from other stationary sources;

Pu blic notification: a 30

- day notice period prior to the issuance of an ATC to garner comments on projects that result in emissions above 100 pounds per day (Rule 206) ;

III PROPOSED REGULATORY CHANGES

The District is proposing revisions to Rules 101, 207 and 206 in order to correct federal

and state deficiencies which are required prior to any CARB and US EPA approval allowing incorporation of the revised rules into the Air District ’ s SIP.

A Proposed revisions to Rule 101 Definitions :

Rule 101 currently contains the definitions for specific terms applicable to all District rules. With the current changing federal views on the existing stationary federal

programs t his may be problematic for the District’s NSR program. Including the

definitions in R ule 207 creates SIP integrity

, for example the rule includes both RACT

and BACT definitions, which then make it clear that sources are required to be reviewed

u nder two programs. Another example of SIP integrity would be to keep a ny future non

NSR related revisions to Rule 101 from unintentionally causing definitions applicable to Rule 207 open for review. Finally

, US EPA would not be able to approve Rule 207 without full approval of Rule 101

, since they are linked

. In order to resolve these

unintended issues, the D istrict is proposing to incorporate all the NSR related definitions

found in R ule 101 into Rule 207, Section B , for clarity and SIP integrity as such Rule

207 would become a stand

- alone Rule

.

The proposed revisions to Rule 101 are as follows:

The District made administrative changes t hroughout the Rule that occurred when the

rule was converted from WordPerfect to Word. The minor changes or errors in conversion were not immediately evident and are now being corrected.

Actual Emissions: the time period required for determination of actual emissions was revised to meet federal NSR (4 0 CFR 51.16 5( a )(1)(xii) ) requirements . Therefore , the time period necessary to evaluate actual emissions was changed to a consecutive 24 months, instead of three years. By reducing the averaging period for the evaluation of actual emissions, the averaging is less spread

- out and therefore this requirement will potential ly become more stringent th a n the requirement in the current definition

.AIR POLLUTION CONTROL DISTRICT

Because t his change is not a relaxation of any requirements it is in compliance with

SB288

. This definition w as revised to be consistent with the definition in Rule 207.

Actual Emissions Reductions (AER): minor editorial changes.

Actual Interruptions of Power : delete d the last part of the sentence “or when the power reserves of the serving utility fall below 5 percent ,” this action was taken for clarity of the

definition and to avoid confusion.

Affected Pollutants : this definition was revised to reflect regulatory changes that

occurred with PM 2.5 and Greenhouse Gases (GHG's) . As a known criteria pollutant

PM 2.5 was added to reflect the 2006 nonattainment designation given to Imperial County by the US EPA. In addition, with the adoption of the “Endangerment Finding” (74FR66496; December 15, 2009) the Administrator ( US EPA) identified six GHG’s which when combined where found to endanger both the public health and welfare. The Administrator’s finding created a regulatory framework for the identification and

disclosure of GHG ' s but fell short of creating an Ambient Standard specific to GHG ' s. Because the definition, as written, included a final sentence which was an all encompassing statement that pollutants determined to have a significant adverse effect by either the US EPA or CARB were considered affected pollutants the revised

definition deleted the last sentence and included an exemption for GHG's

. Furthermore,

a specific exclusion w as added which effectively excludes hazardous air pollutants from the list of affected pollutants as regulated under Rule 207

. Since the definition for both

terms is the same, we replaced the word ROC with VOC from the list of aff ected pollutants for consistency with other sections of Rule 207.

Agricultural Source : this definition was revised to replace the citation to Senate Bill 700

with the appropriate H&SC Section.

Best Available Control Technology (BACT): deleted the last sentence in item one “unless the applicant demonstrate s to the satisfaction of the Air Pollution Control Officer

that such limitations are not achievable.” This action was taken to avoid confusion since the first sentence means exactly the same

. In addition, the citation reference to 40 CFR found under item three was updated by adding " par t 63 ".

Class I Area : this is a new definition which was added. It is defined as a Class I as

listed in 40 CFR Part 81 Subpart D.

Complete Application : deleted the reference to the California Code of Regulations for

this definition to be self

- reliant and unaffected by any future changes in California

H&SC.

Daily Emissions Limitation : changed the name of the definition to “Daily Emissions Limit” for consistency with the definition in Rule 207. In addition, added the words “and

enforceable” in the first item to clearly indicate that the daily emission limit in theAIR POLLUTION CONTROL DISTRICT

documents th e item refer s to shall be enforcea ble. Also, the last sentence in item 3 "and used in the calculation of the stationary source daily potential to emit" was deleted

to avoid unnecessary reference to the daily potential to emit.

Emissions Increase : added clarification to the definition by adding the reference to an

Emissions Unit and clarified that an emission increase include s both

, the stationary source or the emissions unit. Also, the last sentence was update d to reference the section within Rule 207 that is applicable.

Equipment: added a new sentence to clarify the type of emissions that may be reduced

and include d fugitive emissions to the list

.

Federal Land Manager : this is a new definition which was added to meet federal NSR ( 51.165( a )(1)(xliii) ).

Historic Actual Emissions : the time period required for determination of historic actual

emissions was revised to match the definition of actual emissions in the federal NSR (40 CFR 51.165( a )(1)(xii) ) ), the time period necessary to evaluate historic actual emissions was changed to 2 4 months, instead of three years. By reducing the averaging period for evaluation of historic actual emissions, the averaging is less spread

- out and therefore this requirement will potentially become more stringent than the requirement in the current defin ition

. Because t his change is not a relaxation of requirements it is in compliance with SB288

.

Identical Replacement Unit : this definition replaces the definition of “Identical Emissions

Unit” entirely. The new definition clarifies that the only difference between an existing emissions unit and a replacement emissions unit is the serial number. The current definition only described a “like

- kind” emission unit; therefore, the change is considered appropriate.

Major Modification : This is a new definition meeting federal NSR (40 CFR

51.165 (a )(1)(v) ). This term applies to facility modifications that are considered to be “major modifications” under federal NSR. Since under the current version of our NSR rule the offset threshold for criteria pollutants is below the major source threshold (25 tpy), PM 2.5 will be the only pollutant affected by the new definition because the offset threshold has been set at 100 tpy.

Major Stationary Source : This is a new definition meeting federal NSR (40 CFR

51.16 5(a )(1)(iv) ). The new definition specifies the PM 10 threshold for major sources as

7 0 tpy, which is required for “serious” non

- attainment areas, and adds the rest of the

non

- attainment pollutants to this definition at a threshold of 100 tpy, including PM 2.5

.

Modification : the last sentence in the first paragraph “except that routine maintenance or repair shall not be considered to be a physical change,” which clarifies that routine maintenance and repairs is not considered a physical change was deleted a nd theAIR POLLUTION CONTROL DISTRICT

clarification was made under item 2 ; th e routine maintenance and repairs exemption

was moved and added as item number 2. Deleted item number 3 because of inconsistency with the provisions of 40 CFR 51.165(b)(5) which lists the actions that are not considered modifications, this item is not part of the exclusion list.

Nonattainment Area : this definition was revised to indicate that only a state or federal agency can make a determination of an area ’ s attainment status and the threshold is either a state or federal Ambient Air Quality Standard.

Nonattainment Pollutant : added the correct citation to 40 CFR (Section 81.305) for federal designation of nonattainment pollutants.

Particulate Matter (PM 10 ): added sentence at the end of the definition to clarify that gaseous emissions which condensate to form PM at ambient temperature s shall be

included as PM 10

.

Particulate Matter (PM 2.5 ): this is a new definition for fine particulate matter with an aerodynamic diameter of less than two and one half microns (PM ).

Permanent: this definition was revised to clarify that actual emission reductions are those that “continue or endure” for the duration of the project utilizing the reductions as

credits.

Person : deleted reference to the California Code of Regulations for this definition to be

self

- reliant and unaffected by any future changes in California H&SC.

PM 2.5 Nonattainment Area : this is a new definition to identify the boundaries for the

PM 2.5 nonattainment area in Imperial County.

Potential Emissions : this definition clarified the type of enforceable conditions as “practically and legally enforceable” which shall be included in a permit and added the

PM 2.5 parameter as part of the expressed measurement of daily emissions.

Potential to Emit : replaced regulated air pollutant by Affected Pollutant for consistency with the updates in Rule 207. Also, the last phrase in this definition clarifie s that only “practically and legally” enforceable permit conditions can be accepted to limit the potentia l to emit and clarifie s the source type.

Precursor : added the list of secondary pollutants (VOCs, NOx, SOx and Ammonia) that are precursors to the formation of PM 2.5

.

Project : added language to clarify that a project includes all emission units associat ed with the scope of the preconstruction application for a new or modified stationary source and any emissions units indirectly affected.AIR POLLUTION CONTROL DISTRICT

Quantifiable : this definition was revised to clarify that the calculation of an emission

reduction as one that can only be calculated using a quantification protocol instead of an independent judgmen t from either the US EPA or CARB.

Shutdown : this definition contains a clarification regarding the calculation of Emission

Reduction Credits and requires surrender of an operating permit for calculation.

S ignificant : this is a new definition meeting federal NSR (40 CFR 51.165 (a)(1)(X))

.

Significant Emission Increase : this is a new definition meeting federal NSR (40 CFR

51.165 (a)(1)(xxvii)).

Significant Net Emission Inc rease : This is a new definition to complement the new definition of Major Modification.

Surplus : the current definition was replaced with a more specific definition. US EPA developed the new language and suggested the District ad opt the new definition with the purpose of standardizing th e term. The meaning of the new definition is basically the

same as the current one; however, the new definition contains an extensive list of examples of laws and SIP requirements that could be considered surplus. In a ddition,

the new definition makes a distinction between emission reductions that can be considered surplus since the time of “ generation ” and can be used to offset emission

increase for non

- major stationary source s and those that are required to be reevalu ated

at the time of “ use ” to offset emission increases for major stationary sources.

Revisions to Rule 101 that do not affect proposed revisions to Rule 207

Military Base : added a new definition of what constitute s as a military base closure according to federal regulation.

Reactive Organic Compound (ROC): this definition was updated according to the federally approved exemptions. In order to remain consistent this definition refers to the definition for Volatile Organic Compound (VOC)

Volatile Organic Compound (VOC ): this definition was updated according to the federally approved exemptions for propylene carbonat e , dimethy l carbonate, Perfluorocarbon, Methylated Siloxane, and Teritary

- Butyl Acetate.

B The following changes are proposed for Draft Rule 207:

Section A.1.a : the term “regulation” was replaced in this section and throughout this rule

with the word “rule” for clarity.

Section A.1.b: Added abbreviation for term “ Health and Safety Code (H&SC)” in this

section . The term Health and Safety Code will be replace d throughout this rule by itsAIR POLLUTION CONTROL DISTRICT

abbreviation “ H&SC ” to facilitate reading

.

Section A.2 .a : Since the word “District” is already defined in Section B, the reference in this section and throughout the rule was changed from “Air Pollution Control District” to “District” (only) to facilitate reading

.

Section A.2.b : Added new language that requires the stationary source to comply with

any new more stringent federal requirements not yet incorporated into the current

version of this rule. This language was added to comply with SB288 ; this exemption is applicable only to federal requirements that are more stringent than the requirements currently included in t h is rule so no relaxation of requirements is allowed

.

Section A.2.c : this section was added to require following the guidelines in Rule 206, Processing of Applications, for public notification and public inspection for processing of applications. Rule 206 has been already approved into the District’s SIP; however, a revised version of this rule is proposed for adoption concurrent with Rule 207 to ensure full approval into our SIP.

Section A.2.d: a new section was added, this provision is required pursuan t to 40 CFR,

P art 51.165(a)(5)(ii).

Section B : added new language to clarify that if a term i s not defined in this rule then the definitions in 40 CFR 51.165 will apply. 40 CFR 51.165 includes the definitions in

the federal NSR. This section incorporates the definitions of terms applicable to this rule that are currently in Rule 101

.

Section C.1 : the term “Best Available Control Technology” was replaced in this section and throughout this rule by its abbreviation “BACT” to facilitate reading.

Section C.1.a and C.1.b : Added new language to specify that BACT shall be applied on a pollutant by pollutant basis and clarify that BACT applies to those pollutants with a potential to emit equal to and exceeding the threshold. In addition, new language was added to clarify that PM 2.5 BACT requirement s shall apply only to the PM 2.5 non

attainment area, which covers only the populated area in Imperial County.

Section C.1.c : Added new language to specify that BACT shall be applied for each pollutant for which a threshold is met or exceeded. In addition, since federal NSR regulates only criteria pollutants, the hazardous air pollutants listed in this section will

not be included in the SIP version of Rule 207; therefore, a clarification note was added at the end of this section to relieve these pollutants from federal enforceability and make them only enforceable at a state and local level.

Section C.1. d : Added new language to specify that for projects to be constructed in phases, a “ BACT determination” is required for equipment added or modified in each phase.AIR POLLUTION CONTROL DISTRICT

Section C.1.f: new language was added to specify that while an exemption from BACT is required for new or modified emission units required to comply with District or state air pollution control regulations, these emission units are still required to apply reasonable

availab le control technology for secondary pollutants exceeding the threshold. This exemption does not apply to new emission units that result in a major stationary source or major modification.

Section C.1.h : the last phrase in the first sentence was deleted to avoid repetition.

Section C.2.a : the language in this section was revised to change the ROC offset

threshold t o VOC offset threshold ; the definition for both components is the same

therefore the District opted to replace the word ROC for VOC throughout the rule. In addition, since the offset threshold for major stationary sources is 100 tpy and the

thresholds applicable to this section are below 100 tpy

, this makes the offset requirements in this section only applicable to minor stationary sources (minor stationary sources are not regulated by federal NSR) . Th erefore, this subsection will

not b e included for SIP approval.

Section C.2.b : this section is being deleted because it includes outdated requirements.

Section C.2. b

. c : the last paragraph in the subsection was deleted

, the requirement s for major sources to fully mitigate emission increases was transferred into a new section

C.2.c. In addition, s ince the offset threshold for major stationary sources is 100 tpy and

the thresholds applicable to this section are below 100 tpy, this makes the offset requirements in this section only applicable to minor stationary sources (minor stationary sources are not regulated by federal NSR). Therefore, this subsection will not be included for SIP approval.

Section C.2.c : this paragraph was added as a separated sub section to require full mitigation of criteria pollutants for new major stationary sources, as required by federal NSR. In addition, new language was added to clarify tha t full mitigation of PM 2.5 emissions shall apply only to the PM 2.5 non -a ttainment area, which include s only the populated area in Imperial County.

Section C.2.d : new language was added to require existing major stationary sources of

PM 2.5 to mitigate all PM 2.5 increases which result in a major modification. Since existing major stationary sources are already required to offset all other criteria pollutants exceeding 137 pounds per day, this requirement will apply only to new federal major

modification of P M 2.5 . This requirement only applies to the PM 2.5 non

- attainment area,

which includes only the populated area in Imperial County.

Section C.2. e d : this section was updated to reflect a new method to evaluate PM 10 emissions using current emission factors, instead of assuming a 50% TSP ratio. Presently, there are emissions factors available for PM 10 ; therefore, the 50% TSPAIR POLLUTION CONTROL DISTRICT

assumption for PM 10 is outdated.

Section C.2. g f .1 : new language was added to require emergency engines to comply with the requirements of CARB’s ATCM for Stationary Compression Engines, which are

in most cases more stringent than the requirements of this section.

Section C.2. h g : editorial changes to facilitate reading.

Section C.2. i h .1 : a new sentence was added specifying applicability of this section to equipment registered under PERP and deleted citation to portable equipment. This change is necessary for clarity.

Section C.2. i h .2 : a new sentence was added to exclude applicability o f this sub section to any new major stationary Source s or major modification s because this exemption

contradict s federal NSR.

Section C.2. i h .4: this subsection was deleted since state law supersedes District requirements.

Section C.2.j : new language was added to provide agricultural sources with limited exemption from offsetting emissions increases if the exempted emission increases would not meet the criteria for creating real, permanent, quantifiable, and enforceable emission reductions, as it was the intention of H&SC 42301.18(c). This exemption is not applicable to agricultural sources subject to major source permitting requirements, including federal major modifications.

Section C.3.a : new language was added in the table to specify the parameters under which the offset ratio will be assessed for those sources requiring offsets and which are located more than 50 miles from the offset generation source. The offset ratio shall be

assessed with the goal of preventing interference of any stationary source with the attainment or maintenance of the ambient air quality standards.

Section C.3.b : new language was added to allow higher offset ratios to stationary sources for pollutants that are determined, based on an air quality analysis, to be

interferin g with the attainment of any ambient air quality standard.

Section C.3. c

. b : deleted the last item in the subsection since it is considered an unnecessary requirement and it limits the availability of offsets

.

Section C.4.a : new language was added to require offsets from another district (but same Air Basin) to comply with the guidelines of H&SC Section 40709.6 . New language was added to require US EPA’s approval for any intra

- district offsets used to meet major stationary source offset requirements. This requirement was included at US EPA’s request to meet federal NSR requirements.AIR POLLUTION CONTROL DISTRICT

Section C.4.b : deleted “Interpollutant trades between PM 10 and PM 10 precursors may be allowed,” this sentence was deleted to avoid repetition and create easy of read ing . In addition, new language was added to allow interpollutant offset trade s between PM 2.5 and PM 2.5 precursors; however, trading ratios are not established with in th e rule. I n a memorandum dated July 21, 2011, US EPA announced a change in its policy set forth

in the 2008 PM 2.5 NSR Implementation Rule. The new US EPA policy requires that any trading ratios involving PM 2.5 precursors which are submitted to US EPA for approval for use in a state’s interpollutant offset program must be accompanied by a technical demonstration supporting the appropriate ratios that shows the net air quality benefits for the proposed ratios. As an alternative, the states are allowed to opt not to include

PM 2.5 interpollutant trading in the PM 2.5 SIPs. The D istrict is opting to allow PM 2.5 interpollutant trading in the proposed rule; however, specific interpollutant ratios have not been established. Instead, adoption of specific interpollutant ratios have been delayed until such a time that a demo nstration is developed and approved by the US EPA. This language allows the flexibility for not having to am end R ule 207 at the time that the ratios are approved.

Section C.4.c : deleted the last sentence in this subsection because it conflicts with

feder al regulations. Federal regulations do not allow discretion by the APCO or CARB to exempt a source from the requirement to provide offsets for emission reductions occurring during the same time of operation of the stationary source.

Section C.4.e : thi s sub section has been deleted; our SIP does not contain emission reduction allowances to offset for emission increases generated from cogeneration or resource recovery projects; therefore, the offset exemption for resource recovery projects cannot be allow ed.

Section C.5.a : changed to the correct citation of CAA Section (173).

Section C.5.b.2 : at the suggestion of US EPA, Section C.5.b.1 with in the current rule was divided in two parts for clarity then a new Section C.5.b.2 was created; however, the content was not changed.

Section C.5.b. 3

. 2 : deleted first paragraph because it conflicts with US EPA’s policies

. US EPA’s policies do not allow discretionary power to the APCO to exempt a source from the requirement to demonstrate compliance with an air quality impact analysis when required. In addition, new language was added to limit the requirement for an air quality impact analysis to those projects exceeding the public notice thresholds of Rule 206. Also, Sections C.5.b(a) and C.5.b(b) were deleted to avoid repetition of these requirements.

Section C.5.d : added new language to exempt federal major sources and major modifications from complia nce with Health and Safety Code Sections 42314.1 and 42315. These provisions in H&S Code exempt power projects which burn municipal waste, landfill gas, or digester gas, from the requirement to secure emission offsets toAIR POLLUTION CONTROL DISTRICT

mitigate the impact of the projects; however, since this exemption is not allowed by federal regulations, a new sentence was added for clarification

Section C.5.e : this provision is required to be incorporated to comply with 40 CFR Part
51.165(a)(5)(i).

Section D , deleted reserved sections D.1 through D.5.

Section D. 1 .f. 6 : added new language to require the District to consult with the Federal Land Manger on a proposed Major Stationary Source or Major Modification, should the source or modification have an impact on visibility in any Class I federal area. This section was added to comply with 40 CFR Part 51.307.

Section D. 1 .g. 6 : added new language to specify that this section shall not be part of the SIP. Since federal NSR regulates only criteria pollutants, the notification require ments
for sources emitting hazardous air pollutants will remain out of the NSR SIP . T his section is included to address a Health and Safety Code permitting requirement for emission sources of hazardous air pollutants.

Section D.3.b : added new language to clarify that a violation of emissions limitation provisions in the contract with the unpermitted source generating offsets will i nvalidate the contract and the Applicant for the Source using the se Offsets shall be required to provide new Offsets. In addition, added new language to specify that th e entire section shall not be part of the SIP. Federal NSR does not allow the creation of ERCs from

non

- traditional emission sources not subject to a district permit; therefore, this section

will remain out of t he NSR SIP and it will be only D istrict enforceable.

Section D. 3.d: replaced the term “Major Project” by “Major Stationary Sources and Major Modifications” for clarity. Deleted “as defined in Rule 900,” this language is not necessary due to the definitions for these terms are included in Section B of this rule.

Section D.4.e.3 : this section was created by splitting the previous section i n two subsections for clarity. The addition of this subsection did not create a new requirement.

Section D. 4 .f : added language to specify methodology for accepting an application for certification of a power project as complete.

Section D. 4 .g : added language to narrow applicability to conditions related to air pollution.

Section E.2 5 : added new language to make clear that the actual emission reductions (AER) resulting from modifications to existing emission units do not need to be banked if the AER are planned to be used within the same stationary source.

Section E. 2 .d.1: added “Surplus” to the list of requirements that actual emissions shallAIR POLLUTION CONTROL DISTRICT

meet (State and federal requirements).

Section E. 2 .d.3 : deleted the first item in the subsection. If a control measure is

identified in a state or District plan, the actual emission reductions cannot be used until the plan is modified to replace the projected emissions with other reductions or showing

that these reductions ar e no longer included.

Section E. 2 .d. 4 : replace “Clean Air Act Amendments of 1990” with “the base y ear used in an attainment plan demonstration for that pollutant ”. This change is necessary to comply with update federal NSR.

Section E.3 6 : deleted last paragraphs to get rid of outdated requirements.

Section F.1.a : added specific reference to 40 CFR Part 51 Appendix W which contains the guidelines on air quality model s.

Section F .1.b : added new language to define “good engineering practices” by requiring compliance with 40 CFR 51.100(ii) to meet federal NSR requirements.

Section G : deleted the entire section. Since this section deals with the creation and funding for the community bank, this section was moved to Rule 215, Community Bank and Priority Reserve.

C The following changes are proposed for Draft Rule 206 :

Section A.2 : the term “Air Pollution Control Officer ” was replaced with the acronym

“APCO”
– this administrative change was done throughout the Rule for consistency.

Section A.5 : is a new subsection containing definitions previously found only in Rule 101, Definitions. Two definitions were added: Ma jor Project and Minor Project.

Section B.1 : A statement, inserted as the last sentence

, is made to clarify that all non

ministerial permits are to be processed as discretionary permits, including being subject to public notification according to Section C of Rule 206

.

Section B.5 : is a new subse ction to ensure that all major stationary sources or major

modifications meet federal NSR requirements.

Section C.3 : changed the arrangement of pollutants listed in this section to tabular to facilitate reading. Reduced the threshold for public notifica tion for PM 10 non

- fugitive

emissions from 100 lb s /day to 80 lb s /day , the new threshold was set below the significant threshold for PM 10 (15 tpy). The exemption threshold is appropriate, since all emission units are required to comply with BACT at a PM 10 threshold of 25 lb/day (4.5 tpy) regardless of public notification, it is not anticipated an increase of PM10 emissions due to the new exemption threshold. Added new public notification threshold for PM 2.5 ,AIR POLLUTION CONTROL DISTRICT

the new threshold was set below the significant threshold for PM 2.5 (10 tpy). Reduced the carbon monoxide threshold for public notification for those projects that elect not to request an exemption for carbon monoxide offsets, these projects will be subject to public notification at a new threshold of 137 lb s /day. Added fluorides, sulfuric acid mist and lead to the public notification table, the threshold for public notification for these toxic air pollutants was set at BACT requirement level s found in Rule 207.

Section C.6 : added the option for publishing on the district’s website for final permit

action notification.

Section D.9 : changed the term “Major Projects” to “Major Stationary Sources or Modifications to Major Stationary Sources,” for clarity.

IV PROTECT CALIFORNIA AIR ACT OF 2003 – SENATE BILL 288

The California Health and Safety Code

, sections 42500 through 42507 (SB 288)

, mandates that a District ’s NSR rule cannot be made less stringent, in a variety of specified areas, than the rule that existed on December 30, 2002. This legislation was crafted and signed into law specifically to prevent Districts from implementing any

Federal NSR reforms that would relax California’s stringent NSR requirements. C ARB has provided guidance on the implementation of SB 288, and has concluded that there are four components of NSR that are affected:

1. NSR applicability determinations.

2. The definitions of “modification” , “major modification”, “routine maintenance”, and “repair or maintenance”.

3. The calculation methodology, thresholds, or other procedures of new source

review. C ARB further interprets this to apply to baseline determinations, calculating emissions changes, offset amounts required and major source and major modification thresholds.

4. The definitions and requirements of NSR regulations, including, on a program

wide basis, the requirement to obtain offsets

The proposed NSR rule revisions outlined in t his staff report implement required federal provisions and correct several deficiencies in th e rule with 40 CFR 51.165 and other CAA requirements, as well as add new requirements for PM 2.5 and a limited offsetting exemption for agricultural sources . N one of the changes relaxes existing District NSR requirements in any of the two previously amended versions of Rule 207 adopted before December 30, 2002.

. V. COST EFFECTIVENESS AND SOCIOECONOMIC IMPACT ANALYSISAIR POLLUTION CONTROL DISTRICT

Pursuant to the California H& SC Section 40920.6(a), the District is required to analyze the cost effectiveness of new rules or rule amendments that implement Best Available Retrofit Control Technology (BARCT). The district does not anticipate that any of the proposed changes will require existing sources to be retrofitted with additional control technology. Therefore, t he draft revis i ons do not add BARCT requirements and therefore are not subject to the cost effectiveness analysis mandate.

Additionally, state law requires the District to analyze the socioeconomic impacts of any proposed rule revision s that significantly affect air quality or strengthen an emission

limitation. The draft revisions will have neither effect, and are therefore not subject to the socioeconomic analysis mandate.

VI. RULE CONSISTENCY ANALYSIS

Pursuant to the C alifornia H&SC Section 40727.2 (g) a rule consistency analysis of the draft rule is not required. The draft rule s do not strengthen emission limits or impose more stringent monitoring, reporting, or recordkeeping requirements.

VII. ENVIRONMENTAL ASSESSMENT

Pursuant to §15061 of the Guidelines for the Implementation of the California Environmental Quality Act (CEQA), District staff analyzed the likely environmental impacts of the proposed r evisions to Rule 207 , Rule 206 and Rule 101. The revisions to Rule 207 are considered a project under CEQA and the intent of this project is to clarify

and/or otherwise add the federal PM 2.5 new source review requirements, which include establishing the PM 2.5 major source permitting thresholds, offset ratios, and the PM 2.5 precursor offset app licability. Additionally, the revisions will include some administrative language change to improve clarity and assure SIP approval of the limited offset exemption fo r minor agricultural sources. The revisions to Rule 207 do not include the tightening of limits, the establishment of new limits, or the requirement of additional add

on equipment. Similarly, the d raft revisions are based on existing federal requirements and do not change the meaning of the current rule language. §15061(b)(3) of the CEQA Guidelines allows for an exemption when a project does not have the potential for causing a significant effect on the environment. Based on the information provided

abov e

, District staff conclude d that the proposed revisions to Rule 207 will not have any significant adverse effect on the environment. In fact, it is with certainty that there is no possibility that the proposed revisions may have a significant effect on the environment therefore the project as proposed is not subject to CEQA. Staff is recommend ing the filing of a Notice of Exemption under the provisions of California Code of Regulations §15061(b)(3).

V II I RULE DEVELOPMENT PROCESS

T he District held several m eeting s with US EPA and CARB representatives via teleconference, to dis cuss the revisions to Rules 207, 206 and 101. District StaffAIR POLLUTION CONTROL DISTRICT

conducted a public workshop on September 19 , 201 3 to present, discuss and to receive comments on the proposed rulemaking. The District considered written comments received from the public, affected sources, C ARB, and US EPA during the public workshop process and these comments have been incorporated into the proposed draft rules as appropriate.

A Public notice for a public hearing inviting the community to review and comment on the proposed revisions was published in the Imperial County local newspaper of greatest circulation, the Imperial Valley Press, on September 18, 2013, and the District’s

website.

Adoption by our Governing Board is scheduled for October 22, 2013, after which Rule s 207, 206 and 101 will be forwarded to US EPA for inclusion into the SIP.

IX RECOMMENDATIONS

A. APCD ADVISORY BOARD

The Air Pollution Control District Advisory Board is scheduled to me et on October 10,

2013 to discuss the proposed revisions to Rules 101, 206 and 207. Once the final recommendation is made by the Air Pollution Control District Advisory Board this section of the Draft Staff Report will be updated and the final recommendation will be announced during the scheduled Public Hearing on October 22, 2013.

B. STAFF RECOMMENDATION

ICAPCD staff recommends the adoption of the proposed revisions to Rule 207, New and Modified Stationary Source Review ; Rule 206, Proce ssing of Applications ; and Rule 101, Definitions. After considering public comments at today’s hearing, District staff recommends that this Air Board determine that the adoption of revised Rule 207

, revised Rule 206, and revised Rule 101 are exempt from CEQA and adopt this rule for inclusion in the Imperial County’s State Implementation Plan (SIP).

X DECLARATION OF FINDING

The Imperial County Air Pollution Control District Board hereby finds as follows:

The adoption of the proposed revised rules for the Imperial County, is considered a project within the meaning of §21065 of the California Environmental Quality Act (CEQA).

Th e adoption of the staff report and its findings are exempt from the requirements of Public Resources Code Section 21000 et seq. under the CEQA Guidelines, in the California Code of Regulations § 15061 (b)(3).AIR POLLUTION CONTROL DISTRICT

The District is a regulatory agency and the public agency with the principle responsibility for carrying out projects related to air pollution and the control thereof.

Clean air is a valuable and essential natural resource.

The proposed revised rules will serve to reduce the amount of criteria air pollutants

introduced into the ambient air.

The adoption of the proposed revised rules will serve to enhance and protect the environment by controlling air pollutant sources of criteria pollutants.

There has been no evidence presented to suggest that the implementation of the proposed revised rules , the staff report, or its findings will have an adverse effect on the

environment.

There has been no evidence presented to suggest that the implementation of the proposed revised rules, the staff report, or its findings will lead to or result in cumulati ve adverse impacts

.

Health and Safety Code §40702 provides the authority to the

District to enact and adopt the proposed revised r ules.

The requirements of the proposed revised rules, the staff report, and it’s findings are clear and capable of being understood by those persons directly affected by it.

The proposed revised rules, the staff report, and it s findings do not conflict with or contradict any existing statute, court decision, or state or federal regulation.

The requirements of the proposed revised rules, the staff report, and it’s findings are not duplicative of any existing state or federal regulation.

The proposed revised rules, the staff report, and it’s findings described herein will not significantly affect air quality or emissions limit ations and therefore is exempt from California Health and Safety Code section §40728.5 (d), which requires a socioeconomic impact analysis of the proposed action to be performed.

The Imperial County has a population of less than 500,000 people

.