1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION III
1650 Arch Street Philadelphia, Pennsylvania 19103

- 2029

DATE: 11/17/2014

SUB JECT: Pennsylvania State Implementation Pl an Revision Request

– Revisions to Allegheny County Health Department Regulations incorporating Nonattainment New Source Review ( N NSR) requirements

FROM: Paul T. Wentworth, P.E

Office of Permits and Air Toxics Review

TO: Andrew Kreider

, Acting Associate Director

Office of Permits and Air Toxics Review

TECHNICAL SUPPORT DOCUMENT

EPA

- R03

- OAR

- 2013

- 0636 APPROVAL AND PROMULGATION OF AIR QUALITY IMPLEMENTATION PLANS; PENNSYLVANIA; REVISION TO ALLEGHENY COUNTY RULES;

PRECO NSTRUCTION PERMIT REQUIREMENTS

- NONATTAINMENT NEW

SOURCE REVIEW

I. BACKGROUND

The Pennsylvania Department of Environmental Protection (PADEP) on behalf of the Allegheny County Health Department (ACHD) submitted a revision to the Allegheny County portion of the Pennsylvania State Implementation Plan (“PA SIP”). This submittal (“June 2012 submittal”)

contains revisions to ACHD’ s nonattainment New Source Review (NNSR) prec onstruction permit regulations. The purpose of this submittal is to incorporate by reference PA’s NNSR provisions under 25 PA Code Chapter 127

, correct a citation error in ACHD’s NNSR regulations

and incorporate the federal NSR Reform rules and the federal program for implementing preconstruction permit review for the PM 2.5 National Ambient Air Quality Standards ( NAAQS)

known as the “2008 NSR PM 2.5 Rule”.Page 2 of 10

II. SUMMARY OF ACTION

On June 25, 2012, PAD EP submitted this SIP revision pertaining to revisions of the following sections in Allegheny County’s (ACHD’s) Rules and Regulations, Article XXI: 2102.20 (Definitions); 2102.04 (Installation permits); 2102.06 (Major sources Locating in or Impacting a

No nattainment Area); and 2102.08 (Emissions Offset Registration). The effect of these revisions

is to harmonize ACHD’s NNSR provisions with PA’s NNSR program provisions under 25 PA Code Chapter 127

. ACHD’s NNSR regulations were previously approved into the Pennsylvania SIP on November 14, 2002 (67 FR 68935).

EPA has determine d that the June 2012 submittal satisfies both the required SIP elements of the nonattainment portion of the 2002 NSR reform ru les at 40 CFR 51.165 and the 2008 NSR PM 2.5 Rule requirements for preconstruction permitting of major PM2.5 sources in PM 2.5 nonattai nment areas in Allegheny County. T here are certain deficiencies in the June 2012 submittal that reflect deficiencies identified by the United States Court of Appeals for the District of Columbia Circuit (the D.C. Circuit Court) in its January 4, 2013 decision on the 2008 NSR PM 2.5 Rule. However EPA has signed a rule resetting the deadline for states including ACHD that are subject to the Court’s ruling to submit SIP revis ions to address the deficiencies identified by the Court. This

makes it possible for EPA to fully approve this SIP s ubmission. EPA i s therefore proposing a

full approval for reasons described in its analysis of the June 2012 submittal below.

III. ANALYSIS

The analysis of the June 2012 submittal is broken down into (2) sections. Section ( A ) explains why the June 2012 submitt al addresses all of the requirements of the 2002 Reform Rules and

section ( B ) evaluates whether the submittal addresses the requirements of the 2008 NSR PM 2.5 Rule

A. NSR Reform

History

On December 31, 2002 (67 FR 80186), EPA published final rule changes to 40 CFR parts 51 and 52, regarding the C lean A ir A ct 's P revention of S ignificant D eterioration (PSD) and NNSR programs. On November 7, 2003 (68 FR 63021), EPA published a notice of final action on the reconsideration of the December 31, 2002, final rule changes. The December 31, 2002, and the November 7, 2003, final actions are collectively referred to as “NSR Reform.”

The 2002 NSR Reform Rules are part of EPA's implementation of parts C and D of title I of the CAA. Part C of title I of the CAA is the PSD program, which applies in areas that meet the NAAQS (“attainment” areas), as well as in areas for which there is insufficient information to determine whether the area meets the NAAQS (“unclassifiable” areas). Part D of title I of the CAA is the nonattainment NSR program, which applies in areas that are not in attainment of the NAAQS (“nonattainment” areas). Collectively, the PSD and nonattainment NSR programs arePage 3 of 10

referred to as the “New Source Review” or NSR programs. EPA regulations implementing these programs are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, appendix S.

The 2002 NSR Reform Rules made changes to five areas of the NSR programs. In summary, the 2002 Rules: (1) provided a new method for determining baseline actual emissions; (2) adopted

an actual

- to

- projected

- actual methodology for determining whether a major modifi cation has occurred; (3) allowed major stationary sources to comply with a Plantwide Applicability Limit (PAL) to avoid having a significant emissions increase that triggers the requirements of the major NSR program; (4) provided a new applicability provis ion for emissions units that are designated clean units; and (5) excluded pollution control projects (PCPs) from the definition of “physical change or change in the method of operation.” On November 7, 2003 (68 FR 63021), EPA published a notice of final a ction on its reconsideration of the 2002 NSR Reform Rules, which added a definition for “replacement unit” and clarified an issue regarding PALs.

After the 2002 NSR Reform Rules were finalized and effective (March 3, 2003), industry, state,

and environ mental petitioners challenged numerous aspects of the 2002 NSR Reform Rules, along with portions of EPA’s 1980 NSR Rules (45 FR 52676, August 7, 1980). On June 24, 2005, the United States Court of Appeals for the District of Columbia (D.C. Circuit Court) issued a decision on the challenges to the 2002 NSR Reform Rules. New York v. United States, 413 F.3d 3 (New York I). In summary, the D.C. Circuit Court vacated portions of the rules pertaining to clean units and PCPs, remanded a portion of the rules rega rding recordkeeping and the term “reasonable possibility” found in 40 CFR 52.21(r)(6) and 40 CFR 51.166(r)(6), and either upheld or did not comment on the other provisions included as part of the 2002 NSR Reform Rules. On June 13, 2007 (72 FR 32526), EPA took final action to revise the 2002 NSR Reform Rules to remove from federal law all provisions pertaining to clean units and the PCP exemption that were vacated by the D.C. Circuit Court.

With regard to the remanded portions of the 2002 NSR Reform Rule s related to recordkeeping, on December 21, 2007, EPA took final action to establish that a “reasonable possibility” applies where source emissions equal or exceed 50 percent of the CAA NSR significance levels for any pollutant (72 FR 72607). The “reasona ble possibility” provision identifies for sources and reviewing authorities the circumstances under which a major stationary source undergoing a modification that does not trigger major NSR must keep records.

Finally, on January 19, 2010, EPA denied a pet ition from the Natural Resources Defense Council (NRDC) and Sierra Club requesting EPA to reconsider and stay the Wisconsin Department of Natural Resources SIP revision that incorporated EPA’s New Source Review Reforms of 2002.

Petitioners submitted comme nts arguing that these NSR Reform provisions were “backsliding”, and thus prohibited under CAA sections 110(l) and 193. EPA approved the Wisconsin SIP revisions and addressed Petitioners’ arguments about backsliding by (1) noting that the provisions had b een upheld by the New York I court, (2) that the general analysis that EPA had done to support the 2002 rule supported NSR Reform in Wisconsin, and (3) Petitioners had not provided any information or arguments demonstrating that the general analysis did no t apply in Wisconsin, and that information in the record countered Petitioners’ specific arguments that the revisions would be backsliding. Additionally, in response to comments, EPA performed anPage 4 of 10

analysis specific to Wisconsin to examine the impacts of ap plying reform in that State. Our findings were consistent with those of the supplementary environmental analysis (SEA) for the 2002 Reform Rule (neutral).

NRDC v. Jackson : On June 16, 2011, the U.S. Court of Appeals for the Seventh Circuit (Seventh

Circu it) denied the petitions for review filed by NRDC and Sierra Club challenging EPA's approval of the 2002 NSR Reform provisions into the Wisconsin SIP. The primary issue addressed in the opinion was whether EPA's approval of Wisconsin’s NSR SIP was backsli ding prohibited by CAA sections 110(l) and 193. The Court held that EPA's decision was not contrary to these provisions. First, the Court found that Petitioners’ arguments were a repeat of the arguments that they had made and lost in New York I. Second, the Court held that the general analysis that supported the NSR Reform provisions when they were challenged after promulgation “supply substantial evidence for the EPA’s decision [with respect to the Wisconsin SIP] and show that it is neither arbitrary no r capricious.” But, the Court did note that some states have implemented the NSR Reform provisions and that the experience in those states might support or refute EPA’s conclusions and that “[a]t some point, preferring predictions over facts is no longer rational.”

Analysis

O n November 14, 2002 (67 FR 68935) ACHD’s NNSR program was established by approval of

a rev ision to PA’s SIP

. This revision also included a reference to a provision under PADEP’s NNSR program at 25 PA Code 127.211 on which part of ACHD’s NNSR program relied.

ACHD’s federally approved NNSR program was in place until PA revised its NNSR program

, deleting the provision at 25 PA Code 127.11and recodifiying it at 25 PA Code 127.203. PA’s revised NNSR prog ram was approv ed into the PA SIP on May 14, 2012 (77 FR 28261)

. As a

result

, ACHD’s NNSR provisions were now made deficient because it referred to a nonexistent

PA r egulation: 127.211. ACHD has now revise d its regulation s to cite the actual PADEP NNSR Program regulations in the June 2012 submission. ACHD has also incorporated by reference, all the provisions under 25 PA Code Chapter 127

. As mentioned above

, EPA has already approved PA’s revised NNSR program so there is no need to re

- evaluate the June 2012 submission in terms of meeting the requirements of NSR Reform

.

EPA has determi ned that the June 2012 submission has incorporated all of PADEP ’s NNSR construction, modification, reactivatio n, and operating permit program provisions at 25 PA Code Section 121.1 and 25 PA Code Chapter 127 ( PADEP’s NNSR program) and should be approved as meeting the requirements of the NNSR portion of the NSR Reform rule, whose provisions were upheld by the D.C. Circuit in 2005, and reaffirmed in the Se venth Circuit’s denial of the petition to reconsider EPA’s approval of NSR Reform into Wisconsin’s SIP (NRDC v. Jackson).

B. Implementation of PM 2.5 NSR requirements in Nonattainment Areas

HistoryPage 5 of 10

On May 16, 2008, EPA finalized the “Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers ( PM 2.5 ) ” (the 2008 NSR PM 2.5 Rule) to implement the 1997 PM 2.5 NAAQS, including changes to the NSR program ( See, 73 FR 28321). The 2008 NSR PM 2.5 Rule revised the NSR program requirements to establish the framework for implementing preconstruction permit review for the PM 2.5 NAAQS in both

attainment and nonattainment areas.

The 2008 NSR PM 2.5 Rule est ablished the following requirements to implement the PM 2.5 NAAQS: (1) Require NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) establish significant emission rates for direct PM 2.5 and precursor pollutants (including sulfur dioxide (SO 2 ) and oxides of nitrogen (NO X ); (3) establish PM 2.5 emission offsets; and (4) require

states to establish PM 2.5 emission limits that account for gases that condense to form particles ( condensables )

.

The 2008 NSR PM 2.5 Rule, as well as the 2007 “Final Clean Air Fine Particle Implementation Rule” (2007 PM 2.5 Implementation Rule) 1 were subsequently challenged before the United States Court of Appeals for the D.C. Circuit (the Court) in Natural Resources Defense Council v. EPA. 2
On January 4, 2013, the Court remanded to EPA both the 2007 PM 2.5 Implementation Rule and

the 2008 NSR PM 2.5 Rule. The Court found that in both rules EPA erred in implementing the

1997 PM 2.5 NAAQS solely pursuant to the general implementation provisions of subpart 1 of part D of title I of the CA A, rather than pursuant to the implementation provisions specific to particulate matter in subpart 4 of part D of title I. 3 Relative to subpart 1, subpart 4 is more specific about what states must do to bring areas into attainment through the establishmen t of a two tier classification system for nonattainment areas (Moderate or Serious). Additionally, subpart 4 does not provide for the presumptive exclusion of VOCs and ammonia as regulated

precursors to PM 2.5 . As a result, the Court remanded both rules a nd instructed EPA “to re

promulgate these rules pursuant to Subpart 4 consistent with this opinion.” On April 25, 2014, the Administrator signed a final rulemaking that begins to address the remand ( see http://www.epa.gov/airquality/particlepollution/actions.html ). Upon its effective date, the final

rule classifies all existing PM 2.5 nonattainment areas as "Moderate" n onattainment areas and sets a deadline of December 31, 2014, for states to submit any SIP submissions, including

nonattainment NSR SIPs that may be necessary to satisfy the requirements of subpart 4 with respect to PM 2.5 nonattainment areas.

In a separate rulemaking process that will follow the April 2014 rule

, EPA is evaluating the requirements of subpart 4 as they pertain to, among other things, nonattainment NSR for PM 2.5 emissions. With respect to nonattainment NSR in particular, subpart 4 includes se ction 189(e) of the CAA, which requires the control of major stationary sources of coarse particulate matter (PM 10 ) precursors "except where the Administrator determines that such sources do not

1 72 FR 20586 (April 25, 2007)

2 706 F.3d 428 (D.C. Cir. 2013)

3 The Court’s opinion did not specifically address the point that implementation under subpart 4 requirements would still require consideration of subpart 1 requirements, to the extent that subpart 4 did not override subpart 1. EPA assumes that the Court presumed that EPA would address this issue of potential overlap between subpart 1 and subpart 4 requirements in subsequent actionsPage 6 of 10

contribute significantly to PM 10 levels which exceed the stan dard in the area." Under the D.C.

Circuit's decision in NRDC, section 189(e) of the CAA also applies to PM 2.5

.

Additionally, the 2008 NSR PM2.5 Rule authorized states to adopt provisions in their nonattainment NSR rules that would allow major stationary sources locating in areas designated

nonattainment for PM 2.5 and major modifications at stationary sources located in areas designated nonattainment for PM 2.5 to offset emissions increases of direct PM 2.5 emissions or

PM 2.5 precursors with reductions of e ither direct PM 2.5 emissions or PM 2.5 precursors in accordance with offset ratios contained in the approved SIP for the applicable nonattainment area. The inclusion, in whole or in part, of the interpollutant offset provisions for PM 2.5 is discretionary o n the part of the states. In the preamble to the 2008 NSR PM 2.5 Rule, EPA included preferred or presumptive offset ratios, applicable to specific PM 2.5 precursors that a state may adopt in conjunction with the new interpollutant offset provisions for PM 2.5 , and for which a state could rely on the EPA's technical work to demonstrate the adequacy of the ratios for use in any PM 2.5 nonattainment area. Alternatively, the preamble indicated that states may adopt their own ratios, subject to the EPA's approva l, that would have to be substantiated by modeling or other technical demonstrations of the net air quality benefit for ambient PM 2.5 concentrations. The preferred ratios were subsequently the subject of a petition for reconsideration, which the Administra tor granted. EPA continues to support the basic policy that sources may offset increases in emissions of direct PM 2.5 or of any PM 2.5 precursor in a PM 2.5 nonattainment area with actual emissions reductions in direct PM 2.5 or PM 2.5 precursors in

accordanc e with offset ratios as approved in the SIP for the applicable nonattainment area. However, EPA no longer considers the preferred ratios set forth in the preamble to the 2008

PM2.5 NSR Rule for PM 2.5 NSR implementation to be presumptively approvable. Ins tead, any ratio involving PM 2.5 precursors adopted by the state for use in the interpollutant offset program

for PM 2.5 nonattainment areas must be accompanied by a technical demonstration that shows the net air quality benefits of such ratio for the PM 2.5 nonattainment area in which it will be applied.

Analysis

In light of the signing of the April 2014 final rule that begins to address the subpart 4 deficiency,

EP A can grant full approval to the June 2012 submittal, because this submittal contains all the

elements that are contained in the 2008 PM 2.5 rule and ACHD will be able to address the

deficien cies identified by the Court in a separate SIP revision in response to the April 2014 rule by December 31, 2014

. In particular, subpart 4 includes sect ion 189(e) of the CAA, which requires the control of major stationary sources of PM10 precursors (and hence under the court decision, PM 2.5 precursors) “except where the Administrator determines that such sources do not contribute significantly to PM 10 lev els which exceed the standard in the area.” The evaluation of which precursors need to be controlled to achieve the standard in a particular area is typically conducted in the context of the state’s preparing and the EPA’s reviewing of an area’s attainmen t plan SIP. W hile the June 2012 submittal does contain the same deficiencies identified by the Court in the remanded Federal regulations, the proposed revisions do establish preconstruction permit review for the PM 2.5 NAAQS in Allegheny County’s nonattain ment areas and so

represent s a considerable strengthening of the ACHD’s existing NNSR program as currentlyPage 7 of 10

approved in P A SIP 4

. Furthermore, we note that Appendix S to 40 CFR part 51 governs in case s where a permitting authority does not have SIP approved nonattainment NSR regulations that

satisfies all the required federal provisions (as characterized by ACHD’s existing program). In the case here, Appendix S only re gulates SO 2 as a precursor to PM 2.5 , and does not provide for the regulation of additional precursors (i.e. NOx, VOC, ammonia) even if a demonstration can be made that emissions of such pollutants from sources in a specific area contribute significantly to

that area’s ambient PM 2.5 concentrations. In contrast, ACHD’s revised program does provide for the regulation of additional precursors based on an appropriate demonstration of a significant impact to ambient PM 2.5 concentrations

. For the reasons previously discussed, EPA is not evaluating at this time whether ACHD’s submittal will require addi tional revisions to satisfy the subpart 4 requirements. Furthermore, in a June 2, 2014 final rulemaking entitled “Identification of Nonattainment Classification and Deadlines for Submission of State Implementation Plan (SIP) Provisions for the 1997 Fine P article (PM 2.5 ) National Ambient Air Quality Standard (NAAQS) and 2006 PM 2.5 NAAQS; Final Rule,” (79 FR 31566) , EPA identified the classification under subpart 4 for areas currently designated nonattainment for the 1997 and 2006

PM 2.5 NAAQS. These areas i nclude the Liberty

- Clairton and Pittsburgh nonattainment

attainment areas, portions of which are regulated by ACHD and therefore subject to the regulatory revisions being proposed for approval in this action. That rulemaking also established

a December 31 , 2014 deadline for the submissi on of any additional attainment

- related SIP elements that may be needed to meet the applicable requirements of subpart 4. Therefore, those requirements are not yet due. EPA believes that it is appropriate for the EPA to ta ke into consideration the timing and sequence of related SIP submissions as part of determining what it is reasonable to expect a State to have addressed in a SIP for a NAAQS at the time when the EPA acts on such submission. Such an approach is reasonable, and to adopt a different approach by which the EPA could not approve a SIP, whenever there was any impending or future revision to the SIP that will be required by another collateral rulemaking action would result in regulatory gridlock. The EPA believes that such an outcome would be an unreasonable reading

of th e statutory process for the SIP s contemplated in section 110(a) (1) and (2). Therefore, E PA is proposing to approve both the nonattainm ent NSR provision s in ACH D’s June

2012 submittal in the same way it did wi th PA’s NNSR program in May 2012 . EPA is also proposing approval of the remainder of the NNSR provisions that pertain to the implementation

of PM 2.5 requirements. ACHD will be required to respond to the April 2014 rule in a separate

SIP subm ission that addresses the subpart 4 deficiency pointed out by the court by December 31

2014.

C. Automatic Incorporation by Reference

By letter dated June 27 , 2014, PADEP modified their request for approval of the J une 2012 SIP

revision withdrawing specific language from portions of ACHD’s revised NNSR regulations before EPA for approval into the SIP. The withdrawn language would allow any additions, revisions, or deletions to PADEP’s NNSR regulations to be automatically incorporated in to

4 ACHD’s submittal does contain the same deficiencies identified in the January 4, 2013, D.C. Circuit Court
decision, since PA’s NNSR program contains provisions of 2008 NSR PM 2.5 Rule which were approved into the PA

SIP on August 13, 2012 (see Docket No. EPA

- R03

- OAR

- 2011

- 0925) and these provisions are also incorporated into

the June 2012 submission.Page 8 of 10

ACHD’s SIP effective on the date established by PADEP’s regulation revision. This withdrawal means that this language is no longer considered as part of the ACHD SIP submittal and is not being approved as part of this action.

IV. SUMMARY OF CHANGES

The revisions in the June 2012 submittal update the NNSR program in Allegheny County which through amendment and incorporation by reference reflects all the changes in PA’s SIP revision as approved o n May 14, 2012

.

A. SIP Revision #66

Article XXI Air Pollution Control The following is a brief summary of the changes.

Section 2102.20 : Definitions

Section Status Description

2102.20 Added Text Clarified the definition of “Major Source

. ”

2102.20 Added Text Clarified the defi nition of “Major modification”. Added text identifying 2 5 PA Code § 127.203 and 25 PA Code § 127.204 as the requirements used to determine if modification is major.

Section 2102.04: Installation Permits

Section Status Description 2102.04.g Modified Text Clarified construction permit term requirements.

Section 2102.06 : Major Sources Locating in or Impacting a Nonattainment AreaPage 9 of 10

Section Status Description

2102.06.a Modified Text Replaced the term “major New Source” with “new major facility as defined by 25 PA Code §121.1

. ”

Modified Text Replaced text describing the applicability of this section with

text referring to 25 PA Code §127.203a to be followed to determine if a modification at a major source is a major

modification

. 2102.06.a.1 Modified Text Deleted reference to 25 PA Code §127.211 and added incorporated by reference language as modified by the July
1, 2014 letter from PADEP to EPA withdrawing specific language from portions of ACHD’s revised NNSR regulations

. Clarified terms

.

2102.06.a.2 Modified Text Replaced text with “Department and “ Plan Approval”

definitions

. 2102.06.a.3 Modified Text Reor dered subsection. Replaced original text with Circumvention provision.

2102.06.b Modified Text Repla ced first 3 sub paragraphs with incor poration by reference language.

2102.06.b.3 Reordered and

Modified “Emissions Offsets” original text at b.4. Replaced all text at

b.4.B through b.4.D with incorporation by reference

lan guage as modified by the July 1, 2014 letter from PADEP to EPA withdrawing specific language from portions of ACHD’s revised NNSR regulations . Additional replacements

include “plan approval” and “d epartment ” definitions

. 2102.06.c Modified Text Corrected “ temporary sources ” requirements

. 2102.06.d Modified Text Corrected “ f uel switch ” requirements

. 2102.06.e Modified Text Replaced original text with “ portable facilities ” requirements

. 2102.06.f Modified Text Replaced original text with modeling requirements language

relocated from original location at 2102. 06.g

. 2102.06.g Added Text “Plantwide Applicability Limit” requirements

.

Section 2102.08: Emission Offset Registration

2102.08.a & b Modified Text Replaced all text with incorporation by reference language and “plan approval” and “department definitions

. ”

2102.08.c Re

- orded Formerly at 2102.08.d

. 2102.08.d Re

- orded Formerly at 2102.08.a.3. text modified

. 2102.08.a.4 Deleted text Entire text deleted

. 2102.08.e Re

- orded Formerly at 2102.08.a.5

. 2102.08.f Re

- orded Formerly at 2102.08.a.6 Text unchanged

. 2102.08.g Re

- orded Formerly at 2102.08.a.7 Text unchanged

.Page 10 of 10

2102.08.h Re

- orded Formerly at 2102.08.e Text unchanged

.

V. RECOMMENDED AGENCY ACTION

By correcting the citation error

, incorporating the federal NNSR Reform elements and provisions for implementing NNSR for PM2.5 in Allegheny County

, the June 12 submission significantly strengthens the SIP

. EPA is proposi ng approval revisions to ACHD’s NNSR program which include the elements of the 2008 PM2.5 rule. EPA is not acting on ACHD’s submittal for purposes of determining compliance with the subpart 4 requirements relating to PM 2.5

. In light of the signing of the April 2014 final rule th at begins to address the subpart 4 deficiency, EPA can grant full approval to the June 2012 submittal. ACHD will be able to address the deficiencies identified by the Court in a separate SIP revision in response to the April 2014 rule by December 31, 2014

.