United States Environmental Protection Agency, Region IX

Air Division

Technical Support Document

for

EPA's Notice of Proposed Rulemaking

for the

California State Implementation Plan

Monterey Bay Unified Air Pollution Control District

Rule 200

– Permits Required

Rule 203

– Application

Rule 204

– Cancellation of Applications

Rule 206

– Standards for Granting Applications

Rule 2 07

– Review of New or Modified Sources

Rule 208

– Standards for Granting Permits to Operate (Request to Repeal)

Rule 212

– Public Availability of Emission Data

Laura Yannayon

Reviewed by Gerardo Rios

September 29 , 201 4Table of Contents

Section Page

Introduction 1

SIP Revisions Submittals 1

Background 2

Rule Summar ies 2

Rule 200

– Permits Required

Rule 2 03

– Application

Rule 204

– Cancellation of Applications

Rule 206

– Standards for Granting Applications

Rule 207

– Review of New or Modified Sources

Rule 208

– Standards for Granting Permits to Operate (Request to Repeal)

Rule 212

– Public Availabili ty of Emission Data

Rule Revisions and Evaluation 4

Rule 200

– Permits Required

Rule 203

– Application

Rule 204

– Cancellation of Applications

Rule 206

– Standards for Granting Applications

Rule 207

– Review of New or Modified Sources

Rule 208

– Standards for Granting Permits to Operate (Request to Repeal)

Rule 212

– Public Availability of Emission Data

Permit Program Evaluations 10 Permit Requirements for Minor Sources Permit Requirements for Major Sources in Attainment Areas Permit Requirements for Major Sources in Nonattainment Areas

New Source Review Reforms 2 6

California Clean Air Act

– New Source Review Program NSR Reform Program Requirements Impacts of Federal NSR Reforms on California NSR Permitting Programs

Section 110(l) of the Act 3 0

Section 193 of the Act 3 2

Recommendations 3 3

Attachment s 3 51



### Introduction

Part C of title I of the Clean Air Act (CAA or Act) contains the provisions for the Prevention of Significant Deterioration (PSD) of air quality program in areas designated as “attainment” or “unclassifiable” for the national ambient air quality standards (NAAQS). The requirements under part C apply to “major stationary sources” and “major modifications” as those terms are defined in 40 CFR Part 51.166. In addition to regulation s for new and modified major stationary sources under part C, the CAA requires each state to include in its SIP a program to regulate the construction and modification of any stationary source as necessary to assure that the NAAQS

are achieved

. This program is commonly referred to as “minor new source review ( minor NSR).”

See 40 CFR 51.160

- 51.164.

The CAA defines “nonattainment areas” as air quality planning areas that exceed the primary or secondary NAAQS for the given criteria pollutant. The Monter ey Bay Unified Air Pollution Control District (MBUAPCD or District) is not designated nonattainment for any NAAQS, although the District was classified as nonattainment in the past. Because the MBUAPCD is not currently classified nonattainment for any NAAQ S, we are not evaluating the submitted rules for approval under 40 CFR 51.165, which contains the requirements for nonattainment NSR

programs. To the extent some rules contain provisions typically associated with nonattainment NSR programs (e.g. offset pro visions), we are approving those provisions only for purposes of the District’s minor NSR program.



### SIP Revision Submittal s

MBUAPCD submitted revised permit program related rules to comply with the federal PSD and minor NSR requirements. While the Distri ct may have submitted earlier versions of these rules, EPA is only acting on the most current versions of these rules, which were adopted or amended on the dates listed below in Table 1, and submitted to EPA via the California Air Resources Board (ARB) by a letter dated as indicated in the table. ARB is the governor’s designee for submitting official revisions of the California State Implementation Plan (SIP) to EPA.

Table 1

– Submitted Rules

Rule # Rule Title Adopted or

Amended Submitted

200 Permits Required 12/13/00 5/8/01

203 Application 10/16/02 12/12/02

204 Cancellation of Applications 3/21/01 5/31/01

206 Standards for Granting Applications 3/21/01 5/31/01

207 Review of New or Modified Sources 4/20/11 5/12/11

208 Standards for Granting Permits to Operate (Request to Repeal) 12/13/00 5/8/01

212 Public Availability of Emission Data 10/16/02 12/12/022



### Background

Table 2 provides a list of the current SIP approved versions of the rules being evaluated by EPA.

Table 2

– SIP Approved Rules 1

Rule # Rule Title SIP Approval

Date Federal

Register

Citation

200 Permits Required 7/1/99 64 FR 35577

204 Cancellation of Applications 7/1/99 64 FR 35577

206 Standards for Granting Applications 7/13/87 52 FR 26148

207 Review of New or Modified Sources 2/4/00 65 FR5433

208 Standards for Granting Permits to Operate (Request to Repeal) 7/13/87 52 FR 26148

212 Public Availability of Emission Data 7/13/87 52 FR 26148

Note 1: There is no current version of Rule 203

– Application , in the SIP.

MBUAPCD’s current SIP

- approved PSD and minor NSR program is contained in the rules listed

in Table 2 above, which were SIP

- approved on the dates listed. The rules contain both the general and specific program requirements.

In 2002, EPA promulgated change s to the NSR regulations for preparation, adoption, submittal and approval of implementation plans governing the NSR programs mandated by parts C and D of title I of the Act. These changes to the major NSR program, commonly referred to as “NSR Reform,” obl igate States to develop and submit to EPA revised NSR regulations for nonattainment areas, as well as attainment areas for states that elect to implement the PSD program. EPA also promulgated two rules to implement the new NAAQS for PM 2.5 , known as

the NSR PM 2.5 Implementation Rule (73 FR 28321, May 16, 2008) and the PM 2.5 PSD

Increments

– Significant Impact Levels (SILs)

– Significant Monitoring Concentration (SMC) Rule (75 FR 64864, October 20, 2010 )

. In response to these new program requirements,

MBUAPCD has submitted revised Rule 207. This TSD contains EPA’s evaluation for the rule s listed in Table 1.



### Rule Summar ies

Rule 200

– Permits Required

Rule 2 00 is comprised of four parts: Part 1

– General, Part 2

– Definitions, Part 3

– Requirements, and Part 4

– Administrative Requirements. Part 1 includes provisions that outline the purpose and applicability of the rule, as well as exemptions from all or porti ons of the rule,

the effective date and a list of references

. Part 2 is reserved. Part 3 contains the requirement to obtain an Authority to Construct and Permit to Operate, as well as provisions regarding the review, posting and alteration of such permit. This section also includes a provision regarding the use of control equipment and a prohibition for violating any term or condition of an Authority to3

Con struct, and Permit to Operate. Part 4 contains a single provision clarifying which permit

terms and co nditions are federally enforceable.

Rule 203

– Application Rule 203 is comprised of three parts: Part 1

– General, Part 2

– Definitions, and Part 3

– Requirements. Part 1 includes provisions that outline the purpose and applicability of the rule,

the effective date and a list of references. Part 2 is reserved. Part 3contains the requirements for submitting an application for an Authority to Construct or Permit to Operate and requires a separate permit for each permit unit.

Rule 204

– Cancellation of A pplications Rule 204 is comprised of three parts: Part 1

– General, Part 2

– Definitions, and Part 3

– Requirements. Part 1 includes provisions that outline the purpose and applicability of the rule,

the effective date and a list of references. Part 2 is r eserved. Part 3contains the requirements for when an Authority to Construct is automatically cancelled, and when and how it may be

extended.

Rule 206

– Standards for Granting Applications

Rule 20 6 is comprised of four parts : Part 1

– General, Part 2

– De finitions, Part 3

– Requirements, and Part 4

– Administrative Requirements. Part 1 includes provisions that outline the purpose and applicability of the rule, the effective date and a list of references. Part 2 is reserved. Part 3contains the requirements and criteria for issuing an Authority to Construct and a Permit to Operate. It also contains a provision allowing the District to require sampling and testing facilities as necessary and specifies that a permit holder is not exempt from existing and

future regulations of the air district. Part 4 contains a provision requiring the District to evaluate the project for compliance with this rule prior to taking a final action.

Rule 2 07

– Review of New or Modified Sources

Rule 2 07 is comprised of ten parts : Part 1

– General, Part 2

– Definitions, Part 3

– General Requirements

, Part 4

– Federal Clean Air Act Requirements , Part 5

– California Clean Air Act Requirements, Part 6

– Administrative Requirements, Part 7

– Calculations, Part 8

– Power Plants, Part 9

– Sour ce Impact Analysis, and Part 10

– Federal Enforceability, SIP Revisions

.

Part 1 includes provisions that outline the purpose and applicability of the rule and specifi es exemptions from all or portions of the rule , the effective date, a list of refer ences, and when a permit must be denied

. Part 2 contains 65 definitions. Part 3 contains requirements pertaining to air monitoring, visibility, soils and vegetation analysi s, and air quality increments. Th is part also contains a prohibition on the use of m andated reductions, requirements for emission reductions from shutdowns and curtailments and requirements for the use of interpollutant offsets. Part 4 contains requirements for carr ying out the federal CAA PSD and minor NSR programs

, including existing BACT and offset requirements, as well as provisions for protection of Class I

areas. EPA notes that some provisions in this Part , such as offset requirements

, are no longer required nonattainment NSR program element s because the District is now classified attainment for all NAAQS and we are only approving those elements as part of the District’s minor NSR

rule

. Part 5 contains requirements to carry out the California Clean Air Act, including California

BACT and State offset requirements, as well as provisio ns for California stationary source4

calculations

. Pursuant to the provision in Section 10.5 which reads: “ P ar t 5 of t h i s R u l e i s not

sub mitt e d a s a S I

P re v i s i on”, EPA is not acting on any provisions included in Part 5 of the rule.

Part 6 contains certain administrative requirements, such as applicant requirements for evaluating alternative siting, providing a complete application, obtaining a p lantwide applicability limit, and additional requirements for sources proposing to locate near a Class I area. This part also contains provisions requiring the District to perform certain evaluation s related to air quality

increments and u se certain air quality models. Part 6 also contains the public notice requirements, and requirements for th e District to make certain evaluations regarding permit

issu ance and to take final action within 180 days of receipt of a complete application. Part 7 provides the provisions for performing emission calculations. Part 8 contains specific provisions for app lications for power plants that must be licensed by the California Energy Commission. Part 9 contains specific provisions regarding the evaluation of an air impact analysis and provides a screening tool that may be used if certain conditions are met. Part 10 contains specific provisions regarding the federal enforceability of Rule 207. Specially, it lists what provisions of Rule 207 are not included as part of the SIP submittal to EPA, meaning that these provisions will

not be enforceable under the federal Clean Air Act.

Rule 208

– Standards for Granting Permits to Operate (Request to Repeal) This rule has been repealed locally as its requirements have been incorporated into Rule 207

– Review of New or Modified Sources.

Rule 212

– Public Availability of E mission Data Rule 212 is comprised of four parts : Part 1

– General, Part 2

– Definitions, Part 3

– Requirements, and Part 4

– Administrative Requirements. Part 1 includes provisions that outline the purpose and applicability of the rule, exemptions, the effective date and a list of references. Part 2 contains three definitions. Part 3 specifies the requirements for making a public record request and provides a timeline for a District response. Part 4 specifies the timeline for the District to respond to a trade secret claim and what steps must be taken if such a claim is rejected.



### Rule Revisions and Evaluation

Rule 200

– Permits Required

The District ’s staff report states that the main reason for revising the rule is to update it to be

consistent with the District ’ s current rule format and make minor clarification s for ease of reading. All of the language in Part 1 is new to the rule. Th is new language can be considered

administrative in nature in that it do es not impose any requirements on an applicant or the

District. Instead it provide s clarifying information, such as when the rule requirements apply, where exemptions to these requirements can be found, the effective date of the rule

, and a

summary describing from where the rule requireme nts arise

.

The provisions in Part 3

– Requirements, contain several small clarifying edits that do no t change any rule requirement. Part 3.1 contains a new paragraph stating that an Authority to Construct5

allows for temporary operation as needed to verify compliance, until issuance of the Permit to Operate ; and that such temporary operation must be in compliance with all District rules and conditions of the Authority to Construct.

Part 4

– Administrative Requirements has been added to the rule and contain s a single provision stating that only permit conditions derived from federal requirements imposed by the federal CAA or EPA regulations shall be federally enforceable.

Except for the new provision in Part 4 of the rule, the new language and minor edits to the rule provide additional clarity and enforceability and are therefore acceptable revisions. The new language in P art 4 conflicts with the provisions of 40 CFR 52.23 which provides that all permit

conditions issued under an EPA

- approved permit program which are incorporated into the State implementation plan

, are federally enforceable conditions subject to enforcement under section

113 of the CAA. Thus the default enforcement status of permit conditions issued as part of a federally approved permit program is that they are federally enforceable, regardless of the origin

of the authority for the conditions. Because the new language in Part 4 explicitly contravenes th e provisions contained in 40 CFR 52.23, the revisions to Rule 200 cannot be approved into the

SIP. Therefore EPA is proposing to disapprove submitted Rule 200

– Permits Required

. The version of Rule 200 that is currently approved into the SIP ( 64 FR 35577 July 1, 1999 ), will

remain in effect.

Rule 203

– Applic ation

The District ’s staff report states that the main reason for revising the rule is to update it to be

consistent with the District ’ s current rule format and make minor clarification s for ease of reading. All of the language in Part 1 is new to the rule. This new language can be considered administrative in nature in that it does not impose any requirements on an applicant or the

District. Instead it provide s clarifying information, such as when the rule re quirements apply, where exemptions to these requirements can be found, the effective date of the rule

, and a

summary describing from where the rule requirements arise. The minor editorial revisions made

to Part 3

– Requirements, are clarifying in nature. T he new language and minor edits to the rule provide additional clarity and enforceability and are therefore acceptable revisions.

Rule 204

– Cancellation of Applications

The District ’s staff report states that the main reason for revising the rule is to update it to be

consistent with the District ’ s current rule format and make minor clarification s for ease of reading. All of the language in Part 1 is new to the rule. This new language can be consid ered administrative in nature in that it does not impose any requirements on an applicant or the

District. Instead it provide s clarifying information, such as when the rule requirements apply, where exemptions to these requirements can be found, the effect ive date of the rule

, and a

summary describing from where the rule requirements arise. The minor revisions made to Part 3

– Requirements, are clarifying in nature. The new language and minor edits to the rule provide additional clarity and enforceability and are therefore acceptable revisions.

Rule 206

– Standards for Granting Applications

The District ’s staff report states that the main reason for revising the rul e is to update it to be

consistent with the District ’ s current rule format and make minor clarification s for ease of6

reading. All of the language in Part 1 is new to the rule. This new language can be considered

administrative in nature in that it does not impose any requirements on an applicant or the District. Instead it provides clarifying information, such as when the rule requirements apply, where exemptions to these requirements can be found, the effective date of the rule and a

summary describing fro m where the rule requirements arise. Language has been added to Part 3

to more clearly specify the criteria fo r issuing a Permit to Operate. The District must deny a final permit unless the District determines the source has been constructed in accordance with the conditions of the Authority to Construct, ensure any offsets required will commence at the time of or prior to initial operation of the new or modified source

, and also provides that if the new source is a replacement source, that a maximum of 90 days may be allowed for simultaneous operation o f the existing and new source. Several minor revisions have also been made to Part 3 for clarity. The new language in Part 4 requires the District to verify compliance with this rule prior to issuing any fina l permits. The new language, evaluation criteria and minor revisions are clarifying in nature and are generally consistent with the requirements of 40 CFR Part 51 Subpart

I . Therefore, these revisions are acceptable.

Rule 207

– Review of New or Modified Sources Rule 207 is comprised of ten parts: Part 1

– General, Part 2

– Definitions, Part 3

– General Requirements, Part 4

– Federal Clean Air Act Requirements, Part 5

– California Clean Air Act Requirements, Part 6

– Administrative Requirements, Part 7

– Calculations, Part 8

– Power Plants, Part 9

– Source Impact Analysis, and Part 10

– Federal Enforceability, SIP Revisions. Rule 207 has been revised 4 times since it was last SIP approved. Compared to the current SIP approved version (approved in 2000) , th e following changes have been made.

In Part 1, Section 1.3.3 was added to provide an exemption from the requirements of Sections 4.2 and 5.3 (offset requirements for the state and minor NSR program s ), for Emergency Internal Combustion Engines that meet sp ecific listed requirements. Subsection 1.3.2.1 was revised to provide an exemption from the requirements of Sections 4.2 and 5.3 (offset requirements for the

state and minor NSR program s ), for control equipment required to comply with any District,

state o r federal emission limit, if the resulting increase is less than the thresholds for a federal major modification. Section 1.3. 4 was added to provide an exemption from the requirements of

Sections 3.2 (Visibility, Soils, and Vegetation Analysis), 4.2 ( F ederal Offsetting Requirements),

5.3 (State Offsetting Requirements), and 6.6 (Air Quality Increment Analysis) for Stationary

Sources that ha ve emissions of less than 10 tons/year of all in dividual criteria pollutants. Section 1.3.5 was added to provide an exemption from the requirements of Sections 1.6.2 (Statewide Compliance Certification) and 6.1 (Alternative Siting) if the modification is not a federal Major Modification. Other minor clarifying edits were also made.

The new exemptions based on the pro ject not resulting in a federal major modification (as

defined in the r ule) ( s ee Sections 1.3.2.1 and 1.3.5) or having emissions of less than 10 tpy of any criteria pollutant ( s ee Sections 1.3.4) are acceptable because the exempted provisions are not requir e d for sources that are not federal major sources and /or major modifications. EPA’s NSR review regulations do not provide any specific relief from offset requirements for Emergency Internal Combustion Engines that require a permit and would result in a new major source or major modification. However, at this time, the MBUAPCD is classified attainment for all criteria7

pollutants, and therefore is not required to provide any offsets as part of their federal permi tting

program. Therefore, at this time, we find the addition of Section 1.3.3 acceptable.

In Part 2, the definition of Best Available Control Technology (BACT) was revised to remove the language that implemented the definition of federal LAER (Lowest Achievable Emission Rate) as defined in 40 CFR 51.1 65. Additional language was also revised to make the definition

consistent with the California CAA’s definition of this term. These revisions are acceptable because the MBUAPCD is classified attainment for all criteria pollutants, and therefore its permitting program is not required to i mplement federal LAER. If the District becomes classified

non

- attainment for any criteria pollutant, pursuant to Section 107 of the CAA, then Rule 207 will need to be revised to require the application of LA E R for ma jor sources.

A new definition was added for the t erm Federal Major Modification. The term is defined the same as the term Major Modification found in 40 CFR 51.165 , which is the same as the term is

defined in 40 CFR 51.166

. The new provision also provide s specific definitions for the terms “reviewing authority” and “significant”, as used in the definition of Major Modification. The District has added this term to provide a definition for determining if a project will result in a major modification as defi ned in 51.165 to allow the use of new NSR R eform provisions which were added to the underlying federal NSR regulations in 2002. T he District is not currently required to maintain a nonattainment NSR program in its SIP, therefore this provision is approvabl e.

The definition of Affected Pollutant, in Section 2.1 was revised to (1) add PM 2.5 and (2) change the term “total suspended particulates ” (TSP) to “ particulate matter ” (PM). While PM 2.5 was already included in the definition of this term under Subsection 2.1.1, which applies to all pollutants for which an ambient air quality standard has been established, the revisions provide additional clarification by specifically listing these poll ut ants under Subsection 2.1.4. The definition of Affected Pollutant was also revised to remove ethylene, vinyl chloride, asbestos, beryllium and mercury. These revisions are consistent with the changes EPA has made to the definition of regulated NSR pollutan t s , in that all of these pollutants are regulated under section 112 of the CAA and are not pollutants for which there is a NAAQS

. T herefore these pollutants no longer meet the definition of a regulated NSR pollutant and we find that the revisions made to

t he definition of Affected Pollutant are acceptable.

The definition of Air Quality Increment has been revised in Subsection 2.5.1 to provide the appropriate baseline date for PM 2.5 . Subsection 2.5.2 has also been revised to add the appropriate

increments f

or PM 2.5 emissions. These revisions are consistent with the provisions of 40 CFR 51.166 and are therefore acceptable.

The definition of Net Emission Increase has been revised in Subsection 2.36.2 to include a specific provision for PM 2.5

. This provision is consistent with the definition of this same term in 40 CFR 51.166, therefore this revision is acceptable.

New definitions for Particulate Matter (PM) and Particulate Matter 2.5 (PM 2.5 ) have been added as Sections 2.46 and 2.47, respectively. In additi on, the term Total Suspended Particulates (TSP) has been deleted because it has been replaced by the term PM. These new definitions are8

consistent with EPA’s definitions for these terms, as found in 40 CFR 51.100 , therefore these revisions are acceptable. In addition, in various definitions and other places throughout the rule, the term “TSP” has been replaced with either PM, PM 10 and/or PM 2.5 , as appropriate. EPA finds all of these revisions acceptable as they provide additional clarity to the rule and its requirements.

The definition of Precursor has been revised in Subsection 2.51.2 and 2.51.3, to specify that NO
x and SO
x , are PM 2.5 precursors

. This is consistent with EPA’s definition of the term “ regulated NSR pollutant ” in 40 CFR 51.166, therefore we find these revisions acceptable. No revisions from the SIP approved version of Rule 207, Part 3 have been made.

In Part 4, the requirements of Section 4.1

– Best Available Control Technology (BACT) Requirements ha ve been revised by amending the Table 4.1.1 Emission Thresholds for BACT to

add PM 2.5 as a pollutant and a corresponding threshold of 54.79 lbs/day (10 tpy) . T he following pollutants were deleted from the table, since they no longer meet the 40 CFR 51.166 definition of regulated NSR pollutant: v inyl c hloride, a s bestos, b eryllium and m ercury. In addition, Subsection 4.1.12 was revised to require modifications resulting in PM 2.5 emission increases greater than the values specified in Table 4.1.1, to also require the application of BACT. These

rev isions are consistent with or more stringent than t he requirements of 40 CFR 51.166, and are therefore approvable.

A new provision was added to the requirements of Section 4.5

– Protection of Class I Areas to require any new or modified source to comply with Rule 207 if the source will result in a net
increase of PM 2.5 emissions greater than zero pounds per day and be constructed in an Area A (i.e., Class I area) or an Area A Impact Zone (i.e., an area that impacts or is within 15 miles of a Class I area), as defined in Part 2. This provision is more stringent than the requirement of 40

CFR 51.166(b)(23)(iii), which specifies that any new or modified source, located within 10 km of a Class I area, with an air quality impact equal to or greater than 1 μg/m 3 (24

- hour average), is a significant increase, thus triggering the requirement to obtain a PSD permit. Because the new provision is at least as stringent as the applicable federal requirements, we find this new provision acceptable.

No revis ions from the SIP approved version of Rule 207, Part 5 have been made.

In Part 6, new Section 6.3 has been added to allow sources to obtain Plantwide Applicability Limits (PAL), which will allow a source to avoid the otherwise applicable requirements of Sections 1.6.2 (Statewide Compliance) and Section 6.1 (Alternative Siting). Under the requirements of 40 CFR 51.165, these two requirements are only applicable if a project would result in a major modification in a nonattainment area. Sources with PALs tha t maintain actual emissions below their PAL are not subject to major modification requirements. Therefore EPA finds this revision acceptable.

Language is also included in Section 6.3 which requires the APCO to grant a PAL if the source

demonstrates that t he PAL conforms with the provisions of 40 CFR 51.165(f)(1) through (15). EPA notes that while the CFR citation references the PAL requirements for a nonattainment NSR program, the PAL requirements for the PSD program at 40 CFR 51.166(w)(1)

– (15) are9

essentially the same, with the 51.165 provisions containing a few additional requirements for nonattainment areas (e.g., 40 CFR 51.165(f)(1)(ii) prohibits the issuance of a PAL in an extreme ozone nonattainment area). Therefore EPA finds this revision acce ptable.

Section 6.8

– Air Quality Models, has been revised to refer specifically to Appendix W of 40 CFR part 51, rather than the most recent version of EPA’s guidance entitled “Guid elines on Air Quality Models.” This revision is consistent with the langu age contained in 40 C FR 51.166

. Therefore EPA finds the revision acceptable.

In Part 7, S ubs ection 7.4.2 has been revised to add the baseline date of October 20, 2010 for

PM 2.5 . The revision is consistent with EPA’s revisions to 40 CFR 51.16 6 (b)( 14 ) (i)(c )

. Therefore EPA finds the revision acceptable.

No revisions have been made to the SIP approved version of Rule 207, Parts 8, 9 and 10 . EPA notes that Part 10 provides instruction on which provisions in Rule 207 are not to be submitted to EPA for SIP app roval and which specific provisions are revised for purposes of the SIP submittal. While Rule 207 was not submitted with any specific provisions struck out or removed from the rule, we interpret the language to mean that the cited rule provisions are not i ncluded in

the SIP submittal.

Rule 208

– Standards for Granting Permits to Operate (Request to Repeal) The District has repealed this rule locally. The provisions contained in the rule were incorporated

into Rule 207. EPA is propos ing to approve the request to repeal this rule from the SIP because the provisions are now in Rule 207

.

Rule 212

– Public Availability of Emission Data

The District ’s staff report states that the main reason for revising the rule is to update it to be

consisten t with the District ’ s current rule format and make minor clarification s for ease of reading. All of the language in Part 1 is new to the rule. This new language can be considered

administrative in nature in that it do es not impose any requirements on an ap plicant or the

District. Instead it provide s clarifying information, such as when the rule requirements apply, the effective date of the rule and a summary describing from where the rule requirements arise. Part 2, Definitions has been reformatted to provi de the information of what constitutes a Public Record and Trade Secrets as definitions. Language has also been added to clarify that the written justification provided for claiming material is trade secret, is also a public record. A new

definition for St ationary Source has been added, by referencing the definition of the same term in

Rule 207. Section headers for Part 3

– Requirements and Part 4

– Administrative Requir e ments have been added, but the existing provisions have not been revised. EPA finds all of the revisions to this rule acceptable, because they do not conflict with any EPA regulations regarding Public

Records. In addition, section 110(a)(2 )(F) of the Act requires Districts to make periodic reports

on the nature and amounts of emissions avail able for public inspection.10



### Permit Program Evaluation s

For this Technical Support Document (TSD), EPA reviewed the submitted minor NSR and PSD

rule s for compliance with the CAA requirements for SIPs in general as set forth in CAA section 110(a)(2), the requirements for stationary source preconstruction permitting programs in 40 CFR part 51, subpart I (Review of New Sources and Modifications)

, excluding section 51.165 which

contains the nonattainment NSR program requirements , and the requirements related to SIP revisions in CAA sections 110(l) and 193. EPA also relied on the General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990 (57 FR 13498, April 16, 1992) , the NSR PM 2.5 Implementation Rule (73 FR 28321, May 16, 2008) and the PM 2.5 PSD

Increments

– Significant Impact Levels (SILs)

– Significant Monitoring Concentration (SMC) Rule (75 FR 64864, October 20, 2010 ) in the review of the District’s overall permitting

regu lations. EPA has condensed the approval criteria contained in these various materials in this TSD, which describes reasons for our proposed action on the SIP submittal s for MBUAPCD

.

Permit Requirements for Minor Sources

We reviewed th e submitted rule s for compliance with EPA’s regulations in 40 CFR 51, subpart I, excluding 40 CFR 51.165 and 51.166, which apply only to new major sources and major modifications under parts C and D of title I of the CAA.

1. 40 CFR 51.160

– Legally enforceable procedures

(a) Each plan must set forth legally enforceable procedures that enable the State or local agency to determine whether the construction or modification of a facility, building, structure or installation or combination of these will result in (1) a violat ion of applicable portions of the control strategy; or (2) interference with attainment or maintenance of a national standard in the state in which the proposed source (or modification) is located or in a neighboring State.

Discussion: Rule 207

-- Review of New and Modified Sources, Section 1.6 require s the District to deny issuance of an Authority to Construct ( ATC ) or Permit to Operate ( PTO ) unless the source is in compliance with all applicable rules and regulations. Section 3.3 prohibits the emissions from a new or modified stationary source from causing or contributing to the violation of an ambient air quality standard. Rule 20 3

– Application, Section 3.1 specifies the application requirements, including the requirement to provide all information nece ssary for the District to make determinations required by Rule 207. Taken together, these provisions are acceptable to satisfy this requirement.

(b) Such procedures must include means by which the State or local agency responsible

for final decision

- makin g on the application for approval to construct or modify will prevent such construction or modification if (1) it will result in a violation of applicable portions of the control strategy; or (2) it will interfere with the attainment or maintenance

of a na tional standard.

Discussion : Rule 200

-- Permits , Part 3, prohibits construction and operation of any source unless11

an ATC and PTO has been obtained from the District. The District may grant such permits only after verifying the new project will comply wi th all applicable rules and regulations and will not interfere with attainment or maintenance of the NAAQS (See (a) above for summary of these requirements). These provisions are acceptable to satisfy this requirement.

(c) The procedures must provide for the submission, by the owner of operator of the building, facility, structure, or installation to be constructed or modified, of such information on (1) the nature and amounts of emissions to be emitted by it or emitted by associated mobile sources; (2) th e location, design, construction, and operation of such facility, building, structure, or installation as may be necessary to permit the State or local agency to make the determination referred to in paragraph (a) of this section.

Discussion : Rule 200

– Permits, specifies the application requirements, includ ing the requirement

to submit application forms provided by the District and provide all information necessary for the District to make determinations required by Rule 207. The District ’ s application f orms specify the information the District needs to make all of the determinations required by paragraph (a) of this section, and therefore this provision is acceptable to satisfy this requirement.

(d) The procedures must provide that approval of any cons truction or modification must not affect the responsibility on the owner or operator to comply with applicable portions of the control strategy.

Discussion : Rule 206

– Standards for Issuing Authorities to Construct and Permits to Operate,
Section 3.4 stat es “The issuance of an Authorities to Construct or Permits to Operate does not exempt the holder from existing and future regulations of the Air Pollution Control District.” This provision is acceptable to satisfy this requirement.

(e) The procedures mus t identify types and sizes of facilities, buildings, structures, or installations which will be subject to review under this section. The plan must discuss the basis for determining which facilities will be subject to review.

Discussion : Rule 200

– Permit s, Part 3, prohibits construction and operation of any source unless an Authority to Construct and Permit to Operate has been obtained from the District. Rule 201

– Sources Not Requiring a Permit, which was last SIP approved by EPA on February 3, 1989,

spe cifies that types and sizes of equipment and operations not required to obtain a permit pursuant to Rule 200. Taken together, these provisions are acceptable to satisfy this requirement.

(f) The procedures must discuss the air quality data and the dispersion or other air quality modeling used to meet the requirements of this subpart. (1) All applications of air quality modeling involved in this subpart shall be based on the applicable mode ls, data bases, and other requirements specified in appendix W of this part (Guidelines on Air Quality Models). (2) Where an air quality model specified in appendix W of this part (Guideline on Air Quality Models) is inappropriate, the model may be modifie d or another model substituted. Such a modification or substitution of a model may be made on a case

- by

case basis or, where appropriate, on a generic basis for a specific State program. Written approval of the EPA must be obtained for any modification or substitution. In addition,12

use of a modified or substituted model must be subject to notice and opportunity for public comment under procedures set forth in 40 CFR 51.102.

Discussion : Rule 207

-- Review of New and Modified Sources, Part 9, provides the re quirements for analyzing air quality data. Specifically Section 9.1 allows for a screening method to be us ed to estimate the worst case air quality impact, if certain conditions are met. If these conditions are not met, then requirements of 40 CFR Part 51, Appendix W must be used. This language satisfies th is requirement

.

40 CFR 51.160(f) allows a model to be substituted or modified if its use is inappropriate

. Although

District Rule 207 does not provide this option , it is not an approval issu e

.

2. 40 C FR 51.161

– Public availability of information

(a) The legally enforceable procedures in 40 CFR 51.160 must also require the State or local agency to provide opportunity for public comment on information submitted by owners and operators. The public infor mation must include the agency’s analysis of the effect of construction or modification on ambient air quality, including the agency’s proposed approval or disapproval.

Discussion : Rule 207

– Review of New and Modified Sources, Sections 6.9 and 6.10 addre ss this requirement. Section 6.9 requires the District to provide an opportunity for public comment prior to issuing a permit for construction or modification

. Section 6.10 specifies that the information shall be made available for public inspec tion at the District’s office. This includes the information provided by the applicant, the District’s analysis , including the District’s proposed permit action and a copy of the proposed permit

. Section 6.9 is acceptable to satisfy th e portion of the requ irement regarding the type of information to be provided

.

The requirement to provide a public notice is triggered at the following thresholds: 25 tpy for NO x and VOC, 27.4 tpy for SO x and PM, 100 tpy for CO and 15 tpy for PM 10

. No threshold is specified

f or PM 2.5

. Public notice is also required if a source takes a voluntary emission limit.

These public notice thresholds have been in place since 199 3

. The MBUAPCD became attainment
for all NAAQS in 199 7 , and has continued to attain these standards, even as EPA has promulgated more stringent NAAQS. Therefore EPA agrees with the District that the se thresholds provide a reasonable threshold for requiring public notice of minor sources. The thresholds in the rule are the same or lower than the PSD significance thresholds for all pollutants except PM 2.5

. Because there is not threshold for providing public notice for a PM 2.5 increase, we are citing this as a rule deficiency and the District should correct the r ule to provide an explicit public notice threshold for

PM 2. 5 to address this deficiency.

(b) For the purposes of paragraph (a) of this section, opportunity for public comment shall include, as a minimum, (1) Availability for public inspection in at least one location in the area affected of the information submitted by the owner or operator and of the State or local agency’s analysis of the effect on air quality; (2) A 30

- day period for submittal of public comment; and (3) A notice by prominent advertisem ent in the area affected of the13

location of the source information and analysis specified in paragraph (b)(1) of this

section.

Discussion : Rule 207

– Review of New and Modified Sources, Sections 6.9 and 6.10 address this requirement. Section 6.9 requires the District to provide a 30

- day public comment prior to issuing

a n ATC with a potential to emit greater than the thresholds provided in Table 4.1.1.

. The notice requesting public comment must be published in at least one newspaper of general circulation and state how pertinent information can be obtained. Section 6.10 specifies that the information shall be made available for public inspec tion at the District’s office. This includes the information provided by the applicant, the District’s analysis, inclu ding the District’s proposed permit action and a copy of the proposed permit. These provisions are acceptable to satisfy this requirement.

(c) Where the 30

- day comment period required in paragraph (b) of this section would conflict with existing requireme nts for acting on requests for permission to construct or modify, the State may submit for approval a comment period which is consistent with such existing requirements.

Discussion : This is a discretionary component of a permit program that MBUAPCD’s subm itted regulations do not contain. All permits subject to public notice requirements under Rule 207 are subject to a 30

- day public comment period. This is acceptable.

(d) A copy of the notice required by paragraph (b) of this section must also be sent to the EPA through the appropriate Regional Office, and to all other State and local air pollution control agencies having jurisdiction in the region in which such new or modified installation will be located. The notice also must be sent to any other agency in the region having responsibility for implementing the procedures required under this subpart. For lead, a copy of the notice is required for all point sources. The definition of point source for lead is given in 40 CFR 51.100(k)(2).

Discussion : Subsect ion 6.10 requires t he District to send a copy of the information submitted by the applicant, the District’s analysis and a copy of the proposed permit to ARB, EPA and any other interested public agency or party requesting it. This provision is acceptable t o satisfy the first part of this requirement.

With respect to any “point source” of lead ( i.e., any stationary source that actually emits a total of 5 tpy or more, see 40 CFR 51.100(k)), the requirement is not met

. EPA is identifying the absence of

such a provision as a deficiency and proposing to disapprove Rule 207 with respect to this requirement. This limited disapproval, if finalized, would require the District to revise Rule 207 to include a provision meeting the requirement in 40 CFR 51.16 1(d) and t o submit the revised rule to EPA for approval into the MBUAPCD portion of the California SIP.

3. 40 CFR 51.162

– Identification of responsible agency

Each plan must identify the State or local agency which will be responsible for meeting the requirements of this subpart in each area of the State. Where such responsibility rests with an agency other than an air pollution control agency, such agency will consult with14

the appropriate State or local air pollution control agency in carrying out the provisions of this subpart.

Discussion : California law provides for the creation and authority of each air District. (See H&SC Division 26, Part 3.) California la w specifically provides that “ Local and regional authorities [e.g., the Districts] have the primary responsibility for control of air pollution from all sources other than

vehicular sources.” ( See CH&SC § 39002. ) Accordingly, the California SIP has been di vided into
sections for each of the 35 state permitting authorities. Each District that adopts rules and regulations and submits them for SIP approval is responsible for impl ementing and enforcing those

submitted rules. For the rules under review, all of the rules were adopted and submitted by the

MBUAPCD.

4. 40 CFR 51.163

– Administrative procedures

The plan must include the administrative procedures, which will be followed in making the determination specified in par agraph (a) of 40 CFR 51.160.

Discussion : Rule 203

– Application, Section 3 .1 requires applications for both ATCs and PTOs to

be file d in the manner and form prescribed by the District, and requires the applicant to provide all of the information necessary to enable the District to make the determinations required by Rules

206 and 207. This provision satisfies this requirement.

5. 40 CFR 51.164

– Stack height procedures

Such procedures must provide that the degree of emission limitation required of any

s ource for control of any air pollutant must not be affected by so much of any source’s stack height that exceeds good engineering practice or by any other dispersion technique, except as provided in 40 CFR 51.118(b). Such procedures must provide that befor e a State issues a permit to a source based on a good engineering practice stack height that exceeds the height allowed by 40 CFR 51.100(ii)(1) or (2), the State must notify the public of the availability of the demonstration study and must provide opportu nity for public hearing on it. This section does not require such procedures to restrict in any manner the actual stack height of any source.

Discussion : Rule 207, Section 6.8 states that “Credit shall not be given for stacks higher than that

dictat ed by good engineer practice.” This provision is sufficient to ensure that the air quality impacts of stationary sources are not underestimated due to stack heights that exceed good engineering practice or air dispersion modeling techniques that do not satisfy t he criteria of set

forth in 40 CFR 51.118(b).

Permit Requirements for Major Sources in Attainment Areas EPA offers States (and local air districts) two mechanisms by which to administer permitting programs for the prevention of significant deterioration (PSD) of air quality, established by Congress in part C of title I of the Act. First, where EPA has promul gated the Federal PSD

program under 40 CFR 52.21, EPA may delegate that permitting authority to a State or air district. Alternatively, a State or air district may develop its own PSD program meeting the15

requirements of 40 CFR 51.166, and submit these rule s for inclusion in the applicable SIP.

Sources under MBUAPCD jurisdiction have been subject to a SIP

- approved PSD program since

Ju ly 11 , 19 96 ( 61 FR 36501 ). We discuss below the criteria for approval of a State/local PSD permitting program and our evaluati on of MBUAPCD ’s PSD SIP submittal in accordance with these requirements.

1. Provisions, pursuant to 40 CFR 51.166(a)(7), which incorporate the requirements in 40 CFR 51.166(a)(7)(i) through (a)(7)(vi) regarding applicability of PSD program requirements.

a. 40 CFR 51.166(a)(7)(i) specifies that the PSD program must apply to the construction of any new major stationary source or any project at an existing major stationary source in areas designated attainment or unclassifiable.

Discussion : Rule 207, Section 1.2, Applicability, states that the rule applies to all new stationary sources and all modifications to existing stationary sources which, after construction or modification, emit or have the potential to emit any affected pollutants. While the rule applie s to sources emitting any affected pollutants, the key PSD program requirements, including BACT, an Air Quality Impact Analysis (AQIA), a Visibility, Soils, and Vegetation Analysis and an Increment analysis are all triggered at emission rates equivalent to or lower than the significant emission rates specified in 40 CFR 51.166. Taken together, Rule 207 requires the PSD program elements to be applied to all new major sources and major modifications. These provisions satisfy this requirement.

b. 40 CFR 51.166(a)(7)(ii) specifies that the PSD program must apply the requirements of 40 CFR 51.166 (j) through (r) to the construction of any new major stationary source or the major modification of any existing major stationary source.

D iscussion : We evaluate the requirements of paragraphs (j) through (r) , individually below.

c. 40 CFR 51.166(a)(7)(iii) specifies that the PSD program must prohibit the construction of a new major stationary source or major modification to which the requirem ents of paragraphs (j) through (r)(5) apply, without a permit ensuring compliance with those requirements.

Discussion : Rule 207, Section 1.6, Permit Denial, states that a permit shall be denied unless the new or modified source complies with all applicabl e rules and regulations. This provision satisfies this requirement.

d. 40 CFR 51.166(a)(7)(iv) specifies that the PSD program must use the specific provisions contained in paragraphs (a)(7)(iv)(a) through (f) to determine emission

increases , unless the State demonstrates that the submitted provisions are at least as stringent in all respects

.

Discussion : Rule 207 does not include provisions that match those found in paragraphs (a)(7)(iv)(a) through (f). However EPA has determined that R ule 207 provides prov isions that16 are at least as stringent (e.g., PSD program requirements such as BACT are triggered at lower emission thresholds)

. See the Section of this TSD titled New Source Review Reforms for
additional information.

e. 40 CFR 51.166(a)(7)( v) specifies tha t a PSD program must contain provisions requiring a source seeking a PAL for a regulated NSR pollutant to comply with the requirements of 40 CFR 51.166(w).

Discussion : The District ’ s provisions pertaining to PALs are found in Rule 207, Section 6.3. It states that a PAL may only be issued if the PAL will conform with the provisions specified in 40 CFR 51.165(f)(1) through (15). EPA notes that while the CFR citation references the PAL requirements for a nonattainment NSR program, the PAL requirements f or the PSD program are essentially the same, with the 51.165 provisions containing a few additional requirements for nonattainment areas (e.g., 40 CFR 51.165(f)(1)(ii) prohibits the issuance of a PAL in an extreme ozone nonattainment area) that are not app licable to a PSD program

. Therefore the provisions in Section 6.3 are sufficient to satisfy this requirement.

2. Applicable definitions found in CAA sections 169 and 169A(g), and in 40 CFR 51.100 and 51.166(b). EPA has reviewed the definitions in Rules 2 07 and 212 . In most cases,

the se definitions are either identical or nearly identical to the definitions in the CAA and EPA’s implementing regulations. In some cases, however, the definitions do not track the language in the federal definitions as closely. We explain below in more detail our proposed determinations as to whether these definitions are equivalent to the federal definitions and, therefore, adequate to meet these requirements of a PSD program.

a

. Definitions That Differ From EPA Definitions i n 40 CFR 51.166

Major Stationary Source
Discussion: The definition of this term provided in Section 2.32 of Rule 207 relies on a reference to the federal CAA to provide the annual emission rate thresholds for this definition. It reads in part “...which has the potential to emit greater than the threshold levels provided by the federal Clean Air Act (42 U.S.C. Section 7401 et seq.) for that designation.” This reference to the federal CAA is too vague to be enforceable as a practic al matter. The lack of the specific major source thresholds, as provided in 40 CFR 51.166(b)(1) is a deficiency.

Major Modification
Discussion: Rule 207, Section 2.31, provides a similar definition for this term by defining the term “Major Modification t o an Existing Source.” This definition uses the term “modification”, which is defined in Section 2.33 in a manner consistent with the definition provided in 40 CFR 51.166 regarding the types of changes that constitute a major modification. The definitions differ however

in two important ways.

First, the definition of this term relies on a reference to the federal CAA to provide the annual

emission rate thresholds for this definition. It reads in part “...which has the potential to emit greater

than the thre shold levels provided by the federal Clean Air Act (42 U.S.C. Section 7401 et seq.) for that designation and pollutant.” This reference to the federal CAA is too vague to be enforceable as17

a practical matter. The lack of the specific major source threshold s, as provided in 40 CFR 51.166(b)(1) is a deficiency.

Second, the definition in 40 CFR 51.166 (b)(2) provides that a modification is “major” if it would result in a “significant emissions increase” and a “significant net emissions increase” of a pollutant, whereas the definition in Rule 207 provides that a modification is “major” if it may result in a “p otential to emit” greater than the t h re sho l d l e v e l s p r ov i d e d by t he fe d era l CAA f or t h e area d e s i g n a ti on a nd po ll u t a n t . EPA reads this to mean that only increases above the existing potential to emit levels are considered emission increases when determining if a project will result in a major modification. This calculation methodology is inconsistent with the federal requirements which specify that emission increases from a modification be based on the differ ence between post

project projected actual or potential emissions and pre

- project actual emissions (Actual to Projected or Potential test , see 40 CFR 51.166(a)(7)((iv)(c) and (d) ). Using the Rule 207 definition, a project that would be considered a major m odification under federal regulations, may not be considered a major modification at an existing source under Rule 207. Because the Rule 207 definition results in an outcome that is not at least as stringent as required by 40 CFR 51.166’s definition of the term “significant”, we find this definition deficient.

We also note that the term “major modification at an existing source” is only used in Section 6.4

– Proposed Sources in Federal Class I Areas. For all other rule requirements a New Emission Increase , as defined in Section 2.37 is based on the difference between the historic actual emissions and the modified source ’ s post

- project potential to emit (see Section 7.4).

Potential to Emit
Discussion: While Rule 207 does not contain a specific definition for this term, Section 7.1 requires

that the Potential to Emit of a new or modified source be calculated in a manner consistent with the definition provided in 40 CFR 51.166(b)(4). This provision is ade quate to satisfy the requirement for
this term to be defined.

Regulated NSR Pollutant and Subject to Regulation
Discussion: Rule 207 does not contain definitions for either of these terms, but Section 2.1, provides a similar definition for Regulated NSR Pollutant by defining the term “Affected Pollutants.” Both definitions list pollutants (and their precursors) for which a NAAQS has been established. The definition of Regulated NSR Pollutant includes pollutants otherwise subject to regulatio n under the CAA as defined by the term “subject to regulation,” whereas Rule 207 includes all pollutants regulated by EPA or ARB, as well as pollutants for which either EPA or ARB has determined may have a significant adverse effect on the environment, the public health or the public welfare. Rule 207 does not provide a definition for “subject to regulation” or any other provisions to clarify when pollutants are considered to be regulated by EPA or ARB.

The definition of the term “Affected Pollutant” in R ule 207 also differs from the definition of “Regulated NSR Pollutant” because it does not contain the exclusion language provided in paragraph 51.166(b)(49)(iv), which clarifies that hazardous air pollutants listed in section 112 of the CAA are not regulat ed NSR pollutants, unless the pollutant is also regulated as a general pollutant. Again, the lack of this exclusionary language means that for the purposes of Rule 207, all HAP pollutants which are regulated under section 112 of the CAA are also “affected pollutants,” subject to all applicable requirements of Rule 207. Overall, the Rule 207 definition of “affected pollutant s ” includes more pollutants that are included in the definition of “Regulated NSR Pollutant” and thus18

we find the definition satisf ies t he requirement to define these two terms. EPA suggests that the District update the definition of this term the next time Rule 207 is revised to include the important clarifications provided in the definition of the term “Regulated NSR Pollutant.”

Review ing Authority
Discussion : Rule 207 defines the term “District” as the Monterey Bay Unified Air Pollution Control District (MBUAPCD) and its authorized representatives, which is the correct local air pollution control agency authorized to carry out a permit program under 40 CFR 51.166 for this area. EPA finds this substitute definition acceptable.

Project and Construction
Discussion : The Rule 207 definition of the term “Modification” is sufficiently equivalent to the 40

CFR 51.166 definitions of these term s. EPA finds these substitute definitions acceptable.

Actual Emissions
Discussion : While Rule 207 does not contain a specific definition for this term, Section 7.2 requires

that historical emissions be calculated based on actual operating conditions of th e existing source averaged over three consecutive years immediately preceding the date of application. This requirement is consistent with the definition provided in 51.166(b)(21). Therefore this provision is adequate to satisfy the requirement for this te rm to be defined.

Begin Actual Construction
Discussion : Rule 207 does not use or define the term “begin actual construction.” 40 CFR 51.166(a)(7)(iii) specifies that no new major stationary source or major modification to which the rule provisions apply “shall begin actual construction without a permit...”. In turn, 51.166(b)(11) provides a definition of the term “Begin actual construction.” Rule 200, Section 3.1 states:

N o perso n shal l build

, erect

, alter

, o r replac e an y article

, machine

, equipmen t o r other

contrivanc e whic h ma y caus e th e issuanc e o f ai r contaminant s o r th e us e o f whic h may eliminat e o r reduc e o r contro l th e issuanc e o f ai r contaminant s unles s th e facilit y owner or operator has obtained a separate written Authority to Construct for each permit unit fro m th e Ai r Pollutio n Contro l Officer

.

Because the prohibition in Rule 200 prohibits all building until an ATC is issued, there is no need to provide a definition for “begin action construction.” Accordingly, EPA does not find the lack of a definition for this term to be a deficiency.

Baseline Concentration
Discussion : While Rule 207 does not contain a specific definition for this term , the definition of “Air Quality Increment” in Section 2.5 includes language stating that the “Baseline air quality shall be the ambient concentration level reflecting actual air quality as monitored or modeled as of the existing baseline date....” The langu age within the definition of the term Air Quality Increment is adequate to satisfy the requirement for this term to be defined.19

Major source baseline date and Minor source baseline date
Discussion : While Rule 207 does not contain a specific definition for these terms , the definition of “Air Quality Increment” in Section 2.5 lists specific dates for each pollutant which serve as the baseline for increment consumption by new and modified sources. The inclusion of the specific baseline dates, which are applic able based on the 40 CFR 51.166 definitions of these terms is acceptable to satisfy the requirement for these terms to be defined.

Significant
Discussion : While Rule 207 does not contain a specific definition for this term , Table 4.1.1 provides

emission t hresholds that are the same or lower for all listed pollutants and requires the emission
increase to be calculated on an “Actual to Potential” basis

. 1 The thresholds provided in Table 4.1.1 serves the same purpose as the thresholds found in paragraph (i) o f the 40 CFR 51.166(b)(23) definition of “significant”. Therefore we find that the thresholds provided in Table 4.1.1. are
sufficient to satisfy the paragraph (i) definition

.

The definition of “significant” contained 40 CFR 51.166(b)(23)(iii) reads “any emissions rate or any

net emissions increase [NEI] associated with a major stationary source or major modification, which would construct within 10 kilometers of a Class I area, and have an impact on such area equal to or greater than 1 μg/m 3 (24

- hour aver age).” Section 4.5, Protection of Class I Areas contains provisions similar to this definition in that it requires any new or modified stationary source

that results in a NEI greater than zero to be subject to the requirements of Rule 207 if it is located with 15 miles of a Class I area (identified in the rule as Area A ) and has an increase in ambient pollutant concentration of the Area A by one microgram per cubic meter (24

- hr basis) or a less er amount depending on the pollutant. (Emphasis added)

There a re two issues with the provisions provided in Section 4.5. First i t is not clear what “subject to the requirements” of Rule 207 means. This language requires additional clarification to ensure such sources are subject to all PSD program requirements, inclu ding BACT, an Air Quality Impact Analysis (AQIA), a Visibility, Soils, and Vegetation Analysis and an Increment analysis. Second, Rule 207 provides a significantly different definition of the term NEI than found in 51.166(b)(3). The key difference is that the definition provided in 51.166 only allows contemporaneous emission increases and decreases (typically occurring within the last 5 years) to be used in determining the NEI from a project, whereas the definition of NEI in Secti on 2. 36 of requires the use of all emission increases and decreases since specified baseline dates for each pollutant. Except for PM 2.5 , these

dates are between 20 and 30 years old

. Because Rule 207 does not accurately define the term

“Net Emissions Increa se” and this term is necessary to accurately define the term “significant” as provided in 40 CFR 5 1.166(b)(23)(iii), we find this definition deficient.

EPA could not locate any provisions in Rule 207 or any other SIP approved rule that would satisfy

the d efinition in paragraph (ii) contained in the 51.166 definition of significant. Paragraph (ii) specifies the definition of significant for any regulated NSR pollutant not listed in paragraph (i )

. The

1 The threshold for PM is 27.4 tpy, which is slightly higher than the federal threshold of 25 tpy, but given that the threshold is specified in terms of pounds per day, EPA believes this shorter emission rate period provide s a sufficiently equivalent threshold for PM and we therefore find it a minor deficiency that does not rise to the level of a disapproval issue.20

lack of any provisions to satisfy the requirements of par agraph (ii) contained in the definition of

“ significant ” is a deficiency.

Allowable emissions
Discussion : While Rule 207 does not contain a specific definition for this term , Section 7.1

– Determination of the Potential to Emit provides that limitations on the operation of the source, if included in an ATC and PTO, may be used to determine the PTE from the new or modified source. This provision essentially applies the definition of the term “allowable emissions.” This provision is acceptable to satisfy th e requirement for this term to be defined.

Net emissions increase
Discussion : Rule 207 does not contain a specific definition for this term

. The term is only used in Sections 4.2, Offset Requirement, General and 4.5, Protection of Class I Areas. EPA notes that in both cases, it is not used to determine if a modification will result in an emission increase that would trigger the PSD program requirements, including BACT, an Air Quality Impact Analysis (AQIA), a Visibility, Soils, and Vegetation Anal ysis and an Increment analysis. Because the MBUAPCD is currently not classified nonattainment for any NAAQS, EPA is not evaluating the rule for compliance with the provisions of 51.165, including how emission increases (including net emission increases) ar e calculated to determine if offsets are required. Because Rule 207 does not evaluate an emission increase on a “significant net emissions” basis (which would require calculations dependent on the definition of Net Emissions Increase), we find that the lac k of a definition for this term is not a deficiency.

b

. Terms not used or defined in Rule 207

, but are defined in 40 CFR 51.166.

Discussion : Rule 207 does not contain any definitions for certain terms because they are not used

in the rule. These definiti ons tend to relate to optional program provisions, such as the operation of a Clean Coal facility, modeling or monitoring terms that may be used elsewhere, but not in any specific 40 CFR 51.166 requirement. This includes definitions for the following terms: Clean coal technology, Clean coal technology demonstration project, Temporary clean coal technology demonstration project, Repowering, Reactivation of a very clean coal

- fired electric utility steam generat ing unit, Pollution Prevention, High terrain, Low Terrain, Indian Reservation, Indian Governing Body, Continuous emissions monitoring system (CEMS), Predictive emissions monitoring system (PEMS), Continuous parameter monitoring system (CPMS), and Continuou s emissions rate monitoring system (CERMS) . EPA has reviewed each term and determined that since no provisions require the use of these specific terms, their absence from Rule 207 is acceptable.

Necessary preconstruction approvals or permits and Commence
Discussion : While Rule 207 does not contain a specific definition for these terms , these terms are only used in the definition of “baseline concentration”. As discussed above, Rule 207 does not provide a definition for baseline concentration ; therefore it is not necessary to provide a definition for these terms, as they are not used in Rule 207.

c

. Terms not defined in Rule 207

– Used only by NSR Reform provisions21

Discussion : As discussed below in the section of this TSD titled New Source Review Reforms , EPA has determined that the District is not required to include any provisions adopted by EPA in our “NSR Reform” rulemaking, dated December 31, 2002. Accordingly, definitions for the following terms, all related to NSR Reform provisions, are not require d to be included in Rule 207: Emissions unit (all but first sentence), Projected Actual Emissions, Baseline Actual Emissions, and Electric utility steam generating unit.

d

. Additional defined terms in Rule 207

Discussion : The following terms are defined in Rule 207 but are not specifically defined in EPA’s regulations in 40 CFR 51.100, 51.165 or 51.166. EPA has reviewed these terms and believes that they strengthen the program by providing clear definitions for terms used i n Rule 207.

These terms include the following: Air Basin, Air Pollution Control Officer, air Resources Board (ARB), Ambient Air Quality Standards, Authority to Construct, California Coastal Waters, Chloroflourocarbon (CFC), Cost Effective, District, Dist rict Board, Hydrochloroflourocarbon (HCFC), Hydroflourocarbon (HFC), National Ambient Air Quality Standards (NAAQS), Net Air Quality Benefits, New Source Review (NSR), Nonattainment Pollutant, Permit to Operate, Prevention of Significant Deterioration (PSD ), Seasonal Source, State Ambient Air Quality Standards, and State Implementation Plan (SIP).

3. Provisions which establish the maximum allowable ambient air increments and ambient air ceilings as set forth in 40 CFR 51.166(c) and (d), for any designated attainment or

unclassifiable area.

Discussion : Rule 207, Section 2.5 provide a definition for “air quality increment” and provides a table of the allowable air quality increments for all of the pollutants liste d in 40 CFR 51.166(c) and (d). This provisi on is acceptable to satisfy this requirement.

4. Provisions concerning the initial designation of all attainment areas as Class I, II, or III, as listed in 40 CFR 51.166(e) and (g).

Discussion : Rule 207, Section 2.14 contains a definition for Class I are a. It defines it as “any area ... which has been designated Class I by a federal or state authority empowered to make such a
decision.” This includes all areas design at ed as Class I by EPA pursuant to 40 CFR 5 1.166(e)(1). Rule 207 does not contain any definitions for the terms Class II or Class III, but all the applicable requirement s listed in the rule are based on the area being designated Class II (e.g., Air Quality Increments, Significant Impact L evels). The inclusion of the applicable Class II prov isions in the rule text, plus the definition of a Class I area, are sufficient to satisfy this requirement.

5. Provisions, pursuant to 40 CFR 51.166(h), to assure that the degree of emission limitation required of any source for control of any air pollut ant must not be affected by so much of any source's stack height that exceeds good engineering practice.22

Discussion : Section 6.8

, Air Quality Models , contains provisions concerning stack height and

associated emission limitations. It states that “Credit s hall not be given for stacks higher than that dictated by good engineering practice.” This provision satisfies the regulatory requirement.

6. Provisions, pursuant to 40 CFR 51.166(i ), which allow for specified exemptions from the PSD program at the State’s election.

Discussion : Rule 207 does not contain any of the specific exemptions allowable under 40 CFR 51.166(i), but since these are optional exemptions, not including them is no t a deficiency. Rule 207 does contain several exemptions from Rule 207 requirements, but they are tailored to only apply to

non

- major sources, that are not subject to the requirements of 40 CFR 51.166. Therefore Rule 207

satisfies with this optional provision.

7. Provisions, pursuant to 40 CFR 51.166(j), which require BACT, determined on a case

by

- case basis, for a new major source or major modification.

Discussion : 40 CFR 51.166(b)(1) defines a major source as any facility included in the listed 28 source categories which have a potential to emit more than 100 tpy of any regulated NSR pollutant or any other facility emitting more than 250 tpy any regulated NSR pollutant. Thus BACT is required for all new sources that have a potential to emit either 100 or 250 tpy of each regulated NSR pollutant emit ted , depending on the source category.

40 CFR 51.166(b)(2) defines a major modification as a change that would result in both a significant emission increase and a significant net emission increase of an y regulated NSR pollutant. 40 CFR 51.166(j)(3) specifies that if the project results in a major modification (for any one regulated NSR pollutant) then BACT must be applied for each NSR regulated pollutant that results in a significant net emission increas e. The term Significant is then defined in 40 CFR 51.166(b)(23) with a list of pollutants and emission rates.

Rule 207, Section 4.1 requires BACT for all new or modified sources which have an emission

increase for the listed pollutants, greater than the thresholds listed in Table 4.1.1 Emission
Thresholds for BACT

. The following table lists all the pollut ants and thresholds provided in Table

4.1.1.

, and the pollutants and significant emission rates specified in 40 CFR 51.166(b)(23). (Note values listed in Table 4.1.1 are all in units of pounds per day , but also shown here in units of tpy for

convenience .) The thresholds for each pollutant listed in Table 4.1.1., except for PM, are the same

or lower than the values listed in 40 CFR 51 .166(b)(23). The threshold for PM is 27.4 tpy, which is slightly higher than the federal threshold of 25 tpy, but given that the threshold is specified in terms of pounds per day, EPA believes this shorter emission rate period provides a sufficiently equiv alent threshold for PM and we therefore find it a minor deficiency that does not rise to the level of a disapproval issue. In addition, we note that the thresholds for PM 10 and PM 2.5 are at the same or lower thresholds than specified by 51.166.23

Pollutan t 40 CFR 51.66

Emission

Rate s (tpy) MB Emission

Rate s (lb/day) MB Emission

Rate s (tpy)

Carbon monoxide Nitrogen oxides (NO x ) Sulfur dioxide (SO 2 )

Particulate matter

PM 10 PM 2.5 (direct PM 2.5 emissions) or
SO2 emissions or
NO x emissions
Ozone:

Volatile organic compounds

, or NO x emissions

Lead

Fluorides
Sulfuric acid mist Hydrogen sulfide (H 2 S)

Total reduced sulfur (including H 2 S)

Reduced su lfur compounds (including

H 2 S)

Mun icipal waste combustor organics

M unicipal waste combustor metals Municipal waste combustor acid gases Municipal solid waste landfill emissions 100

40

40

25

15

10

40

40

40

40

0.6

3

7

10

10

10

3.5 x 10

- 6

15

40

50 550

150

150

150

82

54.79

150

150

3.28

16.44

38.35

54.79

54.79

54.79

Not included

Not included

Not included
Not included 100.4

27.4

27.4

27.4

14.97

10

27.4

27.4

0.6

3

7

10

10

10

EPA notes that Table 4.1.1 does not provide any thresholds for emissions from municipal waste combustors and municipal solid waste landfill emissions. The state of California has adopted a

state

- wide ban on the construction of municipal waste combustors. Since such sources cannot be constructed in California, we do not find the lack of these thresholds to be a deficiency. For municipal solid waste landfill s , emission s are to be measured as nonmethane organic compounds, which are essentially VOCs as defined in Rule 207 and the Table already provides a lower threshold of 27.4 tpy for VOCs. Therefore, Section 4.1 satisfies the regulatory requirement to require BACT be ap plied to all new major sources and all major modifications.

8. Provisions , pursuant to 40 CFR 51.166(k), which address the demonstration required

from a source impact analysis. This includes showing that the allowable emission increases from the project a nd all other applicable emissions increases or reduction s
, would not cause or contribute to air pollution in violation of any NAAQS or any

increment.

Discussion : Section 3.3

, Ambient Air Quality Standards and Emission Increments addresses this provision

. It provides that “In no case shall the emissions from the new or modified stationary source, or in conjunction with other increases in emissions, cause or contribute to the violation of an ambient air quality standard or exceed any air quality increment.” In addition, Section 6.6 Air24

Quality Increment Analysis, requires the District to evaluate the impact of the emission increases on the air quality increment. It specifies that the emissions from secondary source growth shall also

be included in the determi nation of increment consumption. Th ese provision s satisf y the regulatory requirement.

9. Provisions pursuant to 40 CFR 51.166(l) requiring air quality modeling consistent with the applicable requirements of appendix W of 40 CFR part 51 (“Guideline on Air Quality Models”), and provisions pursuant to 40 CFR 51.166(m) to assure that a major source or major modification will perform an air quality analysis, including pre

- application air monitoring for any pollutant for which the net emissions increase of the s ource or modification is significant, and post

- construction monitoring as necessary to determine the effect the emissions may have, or are having, on air quality in any area.

Discussion : .Section 6.8, Air Quality Models, requires that all air quality mode ls used shall be consistent with the requirements specified in 40 CFR Part 51, Appendix W (“Guideline on Air Quality Models”), except where the District and EPA approve a modification or substitution to such a model following public comment period. S ection 3.1

, Pre

- Construction and Post

- Construction Air Monitoring

, contains the requirement for an air quality analysis including pre

- application and post

constructi on monitoring requirements. These provisions satisfy the regulatory requirements.

10. Provision s, pursuant to 40 CFR 51.166(n), requiring the submission of all information necessary to perform any analysis or make any determination required under the PSD

program.

Discussion : Rule 203, Section 3.1

, Application

, requires applications to be filed in the manner and from prescribed by the District and to provide all information necessary for the District to make the determinations required by Rule 207

– Review of New and Modified Sources. This provision
satisfies this requirement.

11. Provisions, pursu ant to 40 CFR 51.166(o), to assure that the owner of operator of a major source or major modification will perform additional impact analyses of the impairment to visibility, soils, and vegetation and the air quality impact projected for the area as a

resu lt of general commercial, residential, industrial and other growth associated with the

source or modification.

Discussion : S ection 3.2, Visibility, Soils, and Vegetation Analysis, in cludes the requirements necessary to assure that the required additional impact analyses are performed. This provision
satisfies this requirement.

12. Provisions to assure protection of air quality related values (including visibility) in Class I areas pursuant to 40 CFR 51.166 (p).

Discussion : The requirements for protection of air quality related values (AQRV) (including visibility) are found in section 165(d)(2) of the Act, 40 CFR 51.166(p) and 40 CFR 51.307. These requirements include notification of a permit application to the Federal land manager (FLM) and the Federal official charged with direct responsibility for management of any lands within a Class I area25

which may be affected by emissions from a proposed major source or major modification. Also, the PSD program must p rovide a mechanism whereby an FLM or other Federal official may present to

the permitting authority, after their preliminary determination, a demonstration that the emissions from the proposed source or modification would have an adverse impact on the AQRV (including visibility) of any Federal mandatory Class I lands, notwithstanding that the change in air quality resulting from emissions from such source or modification would not cause or contribute to

concentrations which would exceed the maximum allowabl e increases for a Class I area. If the reviewing authority concurs with such demonstration, the reviewing authority must not issue the permit.

The Ventana Wilderness and Pinnacles National Monument , both Class I areas, lay within the

boundaries of the MBU APCD

. Rule 207, Section 6.4

, Proposed Sources in Federal Class I Areas

, requires the District to provide notice of any project whose emissions would affect a federal Class I area to the FLM for that area within 10 days of dee ming the application complete. This provision also requires the District to provide a copy of the complete application and notify the FLM of any subsequent actions relating to the permit. Subsection 6.4.2 requires the District to accept and consider any comments provided by the FLM, and that if the FLM demonstrates that the emissions from the proposed project would have an adverse impact on the AQRV, and the District concurs,

then the District shall deny the ATC. T hese provisions satisfy the regulatory requirement.

13. Provisions to as sure agency and public participation under 40 CFR sections 51.166(p)(1) and 51.166(q).

Discussion : 40 CFR 51.166 (p)(1) requires the PSD reviewing authority to transmit to EPA a copy of each permit application relating to a major new source or major modifi cation and to provide notice to EPA of every action related to the consideration of such permit.

Section 6.10 requires the District to provide EPA with the infor mation submitted by the applicant

, the District’s analysis and the proposed permit, no later than the time a public notice is published pursuant to Section 6.9. This provision provides for the necessary coordination with EPA.

Discussion : 40 CFR 51.166(q) contains several provisions pertaining to pub l ic participation. These
include a timeline for determining and notifying the source if their application is complete, taking action on the permit within one year of it being deemed complete, public notice requirements, notifying EPA and other interested parties of the proposal and providing opportunit y for a public hearing. It also requires the permit authority to consider all of the written comments and make a final determination on the proposed permit, and notify the applicant of the final decision.

Section 6.2, Complete Application, requires the D istrict to determine if an application is complete within 30 days of receipt or after such longer time as both agree, and to notify the applicant in writing. Section 6.9 requires the District to publish a notice in at least one newspaper of general

circula tion stating the preliminary decision, how permit information may be obtained and inviting written public comments for a 30 day period follow the date of publication. Section 6.10 requires the District to provide ARB, EPA and any other interested party wit h the information submitted by the applicant, the District’s analysis and the proposed permit. Section 6.11, Authority to Construct, Final Action, requires the District to take a final action on the complete application within 180 days.26

Thus, Rule 207 cont ains all the necessary provisions, expect in regards to providing an opportunity for a public hearing, to satisfy the requirements of 40 CFR 51. 166(q) (2)(iii)

. We find that Rule 207 is deficient in that it does not include a requirement to provide the oppo rtunity for a public hearing to consider a proposed permit action.

14. Provisions, pursuant to 40 CFR 51.166(r), which address source obligation requirements.

Discussion : Rule 207 does not contain any provisions to satisfy the requirements of 40 CFR

51.1 66(r), paragraphs (1) and (2). The lack of these provisions is a rule deficiency. Paragraphs 3

- 5 are reserved, and thus do not co n tain any requirements that must be included in Rule 207. Paragraphs 6 and 7 contain requirements pertaining to NSR reform provisions which EPA has

determined a re not applicable to Rule 207

. Please see the TSD section entitled New Source

Review Reforms for a further discussion of these requirements.

Permit Requirements for Major Sources in Nonattainment Areas Monterey Bay i s currently designated attainment for all NAAQS, but designated nonattainment

under state law for ozone and PM 10

. Accordingly, Rule 207 is not required to meet the federal nonattainment NSR program requirements for major sources pursuant to 40 CFR 51.165. Instead any requirements applicable under state law to a nonattainment pollutant are only evaluated for general clarity and enforceability. These include the provisions found in Section 4 as they apply to minor (i.e., non

- major sources) and the provisions found in Section 5, which are not included

in the SIP submittal.



### New Source Review Reforms

California Clean Air Act

– New Source Review Program The air quality in California has historically been some of the worst in the nation. In light of this fact, California has always been at the forefront in implementing strict air quality regulations to address the state’s serious air quality problems.

In 1959, the State passed its first air quality standards for total suspended particulates, photochemical oxidants, sulfur dioxide, nitrogen dioxide, and carbon monoxide. These state standards were amended in 1969 by the Air Resources Board. At that time, the California ambient air quality standard for ozone was lower than the federal standard, thus most of

Ca lifornia was exceeding the state standard for Ozone. As a result, most California Air Pollution control agencies developed permitting programs that contained non

- attainment new source review requirements such as Lowest Achievable Emissions Rate (LAER) and offsets around the same time as the adoption of the federal Clean Air Act in 1970

.

In 1988, California adopted the California Clean Air Act of 1988 (California CAA). This legislation established new preconstruction review requirements for new and modifie d sources. It established uniform emission thresholds that trigger control and offset requirements for ozone (VOC and NO
x ), carbon monoxide (CO), sulfur dioxide (SO 2 ) and nitrogen dioxide (NO 2 ) at27

levels significantly lower than the federal thresholds in e ffect at the time of adoption. These thresholds are even lower than the thresholds established two years later by the federal Clean Air Act Amendments of 1990 (federal CAA).

Under both state and federal requirements, all ozone nonattainment areas were cl assified according to the severity of the ozone violations measured for each area. Instead of a single major source threshold for all areas, the federal CAA set new major source and major

modification thresholds of 100 and 40 tons per year ( tpy ) respective ly, for areas classified as moderate or marginal; 50 and 25 tpy respectively, for areas classified as serious; 25 and 25 tpy respectively, for areas classified as severe; and 10 and 0 tpy respectively, for areas classified as

extreme. These thresholds are used to determine when a proposed project requires the application

of LAER and emission offsets.

In comparison, the California CAA set thresholds for when project emissions trigger the application of the California version of Best Available Control Techn ology (BACT) and offsets. (Note that CA BACT is defined in such a manner as to be equivalent to federal LAER requirements.) The application of CA BACT is triggered for emission increases of 25 lb/day in areas classified as moderate and 10 lbs/day in areas classified as serious, severe or extreme. In addition, some California Districts have adopted even lower CA BACT thresholds of two and zero lb/day. The requirement to provide offsets is triggered for all emission increases, once a facility’s emissions exce ed 25 tpy in areas classified as moderate; 15 tpy in areas classified as serious; and 10 tpy in areas classified as severe or extreme.



### California and Federal BACT/LAER and Offset Thresholds for 1

- hr Ozone

CA Ozone Classification (ppm) Marginal Moderate

(0.09

- ≤0.12) Serious

(0.13

- ≤0.15) Severe

(0.16

- ≤0.20) Extreme

(>0.20) CA BACT 2 (tpy) [lb/day] NA 4.6 [25] 1.8 [10] 1.8 [10] 1.8 [10]

CA Offset 1 (tpy) NA 25 15 10 10

EPA Ozone Classification
(ppm) Marginal

(0.121

- <0.138) Moderate

(0.138

- ≤0.160) Serious

(0.160

- ≤0.180) Severe

(0.180

- ≤0.280) Extreme

(>0.28)

Federal Major Source (tpy)
(Triggers both LAER & Offsets) 100 100 50 25 10

Federal Major Mods (tpy)
(Triggers both LAER & Offsets) 40 40 25 25 0

Note: California design values are lower than federal values for the same classification.

NSR Reform Program Requirements On December 30, 2002, EPA published a final rulemaking action to provide additional flexibility in the permitting of modified sources subject to the federal major s ource NSR and PSD

programs. EPA’s intent was to allow existing sources additional flexibility in the NSR/PSD permitting process that would encourage facilities to make process improvements or undertake energy efficiency projects that would provide addition al environmental benefits by reducing

2 California Health & Safety Code §§ 40918, 40919, 40920 and 40920.528

emissions on a capacity basis. In 2005, a court vacated two key NSR Reform provisions 3 , but also upheld the three key remaining provisions. These provisions all pertain to how emission increases from proposed modificat ions of existing sources are calculated.

One provision allows an existing facility to set a Plantwide Applicability Limit (PAL), which in effect is a facility

- wide emissions cap for a specific pollutant. Once the PAL is determined, a facility can make an y physical modification or change in the method of operation, which might otherwise trigger a major modification, without obtaining a NSR permit, as long as the plantwide

emissions remain below the PAL level. For certain types of industries that need signi ficant operational flexibility to make quick changes in response to changing market conditions

, the ability to make changes without having to wait for the issuance of construction permits is worth the additional work to ensure emissions from all operations remain below the PAL and maintain the additional records needed to verify compliance with the plant

- wide emission limits.

Another provision changed the allowable time frame to be used to determine baseline actual

emissions. Baseline emissions are generally considered to be the pre

- project emissions from the facility or emission units proposed to be modified. Prior to implementing the NSR Reforms, EPA required a source to use the actual emissions emitted during the two year period immediately preced ing the application date for the new project. Sources were allowed to use a different two year period within the five year period immediately preceding the application date if they could demonstrate that the alternative two year period was more representat ive of normal operations. The NSR Reforms revised the allowable time frame to be any 24 month period during the 10 year period immediately preceding the application date. EPA believes that the use of a 10 year period allows a source to look back to a perio d from a more representative business cycle, i.e., 10 years vs. five years, and that significant resources are conserved by allowing the source to choose the 24 month period used to establish baseline actual emissions, rather than spend time

and resources determining what period most represents “normal operations.” While going back further in time means a source may be able to choose a period with higher average emissions, the NSR Reforms also added requirements to ensure the baseline period is adjusted for any excess emissions or any additional emission reductions required by new regulations which have become effective since the baseline period.

The third provision upheld by the court changed how post

- project emissions are determined. Prior to implementin g the NSR Reforms, EPA required a source to use the worst case potential to emit (PTE) assumptions (i.e., operating at 100% capacity, 24 hrs/day, 7 days a week), unless the applicant agreed to practically enforceable permit conditions to limit operation of the emission unit (i.e. fuel usage limits or limits on hours of operation). In this “actual to potential” test, often the difference between the baseline actual emissions and the PTE of an operation would be greater than the major modification significanc e thresholds. As a result, many modifications were treated as major modifications, even when the actual emissions would decrease, not change, or the actual increase in emissions would not be significant. T he NSR Reforms changed the post

- project emission ca lculation methodology to allow a source to use the

3 The United States Court of Appeals for t he District of Columbia Circuit in State of New York, et al., v. U.S. Environmental Protection Agency, et al., 413 F.3d 3 (D.C. Cir. 2005)29

highest actual emission rate projected to occur over the next 5 or 10 years and to subtract emissions the emission units could have accommodated prior to the project, that were unrelated to the project, in order to determine the emission increase from the proposed project.

It is important to note that none of these revisions changed the major modification significance thresholds for triggering control technology and offset requirements. They only changed the calculation to determine if the major modification threshold is triggered.

Impacts of Federal NSR Reforms on California NSR Permitting Programs By not adopting the NSR Reforms, the NSR program in California Districts would not include the three progr am elements described earlier: use of PALs, a 10 year look back period for baseline actual emissions and projected actual emissions. The use of two of these three provisions (baseline actual emissions and projected actual emissions) is required under 40 CF R 51.165(a)(2). The requirement to adopt a NSR program that allows the use of PALs is found in 40 CFR 51.165 (f). The MBUAPCD added Section 6.3 to provide sources the option of obtaining

a PAL. This provision satisfies the requirement to allow the use of P ALs.

Section 116 of the CAA 4 provides that nothing in the Act shall preclude the rights of States to adopt air pollution regulations that are more stringent than those contained in the CAA or implementing regulations. As noted above, the California CAA of 1988 adopted lower emission thresholds for triggering emission control (BACT/LAER) and offset requirements for new and modified sources as part of its NSR program. Consistent with this concept, when EPA adopted new calculation methods to implement the NSR reforms in 40 CFR 51.16 6 (a)( 7 ), 5 we also stated that each plan must use the specific applicability provisions specified unless the State specifically demonstrates that the submitted plan provisions “are more stringent than or at least as stringent” in all respect s as the specified paragr aphs. These applicability provisions specify the use of baseline actual emissions and projected actual emissions, two of the new NSR Reform provisions, but also retain the option for a source to use the actual to potential emission test.

Several air d ist ricts in California have argued that their NSR and PSD permit programs are inherently more stringent than the required federal program because the applicability thresholds

for apply ing CA BACT and offsets are significantly lower than those in the federal C AA. In addition, for modifications, a source does not need to be a major source, as it does for federal purposes, before these lower applicability threshold s apply to a proposed project. The districts also point out that if a District adopted the NSR Refor m calculation methods, and a project using

4 Section 116 of the CAA: Except as otherwise provided in sections 119 (c), (e), and (f) (as in effect before the dat e of the enactment of the Clean Air Act Amendments of 1977), 209, 211(c)(4), and 233 (preempting certain State regulation of moving sources) nothing in this Act shall preclude or deny the right of any State or political subdivision thereof to adopt or enfo rce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution; except that if an emission standard or limitation is in effect under an applicable implementation plan or und er section 111 or 112, such State or political subdivision may not adopt or enforce any emission standard or limitation which is less stringent than the standard or limitation under such plan or section.

5 The NSR reforms are also codified for nonattainmen t programs in 40 CFR 51.165 (a)(2). However, since MBUAPCD is currently classified attainment or unclassifiable for all NAAQS, the requirement to have a permit program that satisfies the requirements of 40 CFR 51.165 is not applicable.30

these methods was no longer classified as a major modification, it would no t be subject to Federal LAER and offsets requirements for NSR or Federal BACT for PSD ; but the project would still have to apply CA BACT a nd provide offsets in accordance with the CA CAA requirements. These lower state emission thresholds are already in almost all Districts’ portion of the California SIP, making these requirements enforceable under both state and federal law.

As a result, CA Districts have argued that the regulatory framework found in other states, where adopting the NSR Reforms provide additional permitting flexibility and environmental benefits, do not exist in California because adoption of the reform requirements would have no e ffect on the application of control technology or offset requirements.

EPA has reviewed the Districts’ claims and considered how the CA CAA provisions a ffect the effectiveness of the NSR Reforms to provide the intended regulatory relief, and we agree that the application of CA BACT and offsets at significantly lower thresholds means that the federal NSR Reform provisions do not provide any of EPA’s intended additional flexibility to proposed projects that may otherwise trigger federal major modif ication requirements. If the State adopts these provisions, a new project will have to complete two different sets of emission calculations ; and even if the federal requirements are not applicable, the source will still have to comply with

the CA BACT cont rol and offset requirements if they are triggered. In light of these facts, EPA is proposing to find that it is acceptable for MBU A PC D to not incorporate the NSR Reform provisions into their SIP approved NSR and PSD programs, since the same level of contro l will be required for modified sources, with or without inclusion of these provisions in the SIP, and their program will not be any less stringent than the federal program.



### Section 110( l ) of the Act

Section 110( l ) of the Act prohibits EPA from approving any revision of a SIP if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress, or any other applicable requirement of the Act. The SIP approved version of the rules being evaluated und er this TSD were approved into the SIP on the dates listed in Table 2 of this

document. While the District has adopted revisions to the se rule s since that time, for the purposes of the 110(l) evaluation, we must compare the submitted rule s with the current SIP

version. The SIP approved rules contain provisions for all major source and minor source permitting actions

. Because the air basin is currently classified attainment or unclassifiable for all NAAQS, our evaluation only considers the requirements of th e PSD program found in 40 CFR

51.166 and the minor source program requirements found in 40 CFR 51.160

- 164. In addition, since the District is currently designated as attain ment for all the NAAQS, no rule revisions could interfere with reasonable further progress. Based on the following analysis, we conclude

that full approval of Rules 203, 204, 206 and 212 and limited approval / limited disapproval of

Rule 207, and the repeal of Rul e 20 8 from the SIP would overall strengthen the applicable SIP.

Rule 203

– Application This rule is being submitted for SIP approval for the first time. The provisions provided in Rule 203 help clar ify the application process. Rule 203 will not interfere with any applicable31

requirement concerning attainment and reasonable further progress, or any other applicable requirement of the Act.

Rule 204

– Cancellation of Applications

All of the revisions to this rule are minor in nature (see rule summary section) and can be considered administrative in nature in that they do not change any applicable thresholds for requirements or emission limits. Therefore the revisions made to Rule 204 will not interfere with any applicable requi rement concerning attainment and reasonable further progress, or any other applicable requirement of the Act.

Rule 206

– Standards for Granting Applications All of the revisions to Part 1 of this rule are minor in nature (see rule summary section) and can be considered administrative in nature in that they do not change any applicable thresholds for requirements or emission limits. The revisions made to Parts 3 and 4 of this rule strengthen the SIP in that they clarify the criteria for issuing a Permit to Operate, require the District to deny a final permit unless specific requirements have been meet. Therefore the revisions made to Rule 204 will not interfere with any applicable requirement concerning attainment and reasonable further progress, or any othe r applicable requirement of the Act.

Rule 207

– Review of New or Modified Sources Rule 207 applies to any pollutant subject to regulation under the CAA, which includes at least 7 pollutants, such as fluorides, PM, hydrogen sulfide and greenhouse gases fo r which EPA has not established a NAAQS

. We are not evaluating th ese 7 pollutants for compliance with the requirements of CAA section 110(l) since these pollutants cannot affect attainment and reasonable further progress.

Several revisions have been made to Rule 207 since EPA last approved the rule into the SIP. Most of these revisions are administrative in nature and provide additional clarification and/or enforceability to the rule. We discuss below additional revisions which may affect continued

attain ment of the NAAQS in the Monterey Bay air basin.

In Part 1, new provisions have been added which exempt Stationary Sources with emissions of less than 10 tpy of all individual criteria pollutants, certain Emergency Internal Combustion Engines

, and the installation of control equipment required to comply with applicable requirements , if the resulting increase is less than the thresholds for a federal major modification

, from providing offsets . While the underlying requirement to provide emission offsets is no longer applicable because MBUAPCD is no longer classified nonattainment for any NAAQS

, the result of these new provisions is that the quantity of offsets provided for these sources w ould

be fewer than required under the current SIP approved version o f Rule 207

.

EPA notes that each of these new offset exemptions is either narrow in scope or apply to small stationary sources (those emitting less than 10 tpy). For example, the new exemption for Emergency Engines i s limited in scope in that it only appli es to engines used for emergency power when line service fails or for the emergency pumping of water. In addition, these engines may only be operated less than 60 hours per year for testing and exercise. Likewise the new32

exemption for the installation of r equired control equipment is limited to emission increases that would not otherwise result in a major modification.

In Part 2, the definition of Best Available Control Technology (BACT) was revised to remove the language that implemented the definition o f federal LAER (Lowest Achievable Emission Rate) as defined in 40 CFR 51.165. While this revision is permissible because the District is no longer required to maintain a nonattainment NSR program pursuant to 51.165, it means that the level of control requi red for some projects will not be as low as it might otherwise be if the control technology standard was LAER rather than BACT. EPA notes that for minor sources,

there is often no difference between LAER and BACT control levels.

The MBUAPCD has been desi gnated as attain ment of the NAAQS for many years. These new exemption provisions and the change to the definition of BACT were adopted locally in 199X, and have not interfered with the District’s ability to continue to attain the NAAQS. Therefore,

EPA does not believe that approval of these narrowly written offset exemptions or the change in

the definition of BACT will interfere with the District’s continued ability to attain the NAAQS.

Rule 208

– Standards for Granting Permits to Operate (Request to Repeal) The provisions contained in Rule 208 were incorporated into Rule 207. We evaluate any changes

made from the SIP version of this rule under our evaluation for Rule 207.

Rule 212

– Public Availability of Emission Data This rule contains no provisio ns that would interfere with any applicable requirement concerning attainment and reasonable further progress, or any other applicable requirement of the Act. Therefore this provision is not subject to the requirements of 110(l).

Overall the District has made many small revisions which improve the clarity and enforceability

of each rule. In Rule 207, there are some new provisions which may result in somewhat lager emission increases when compared to the existing SIP approved versions of Rule 207, we

believ e these emission increases to be sufficiently small as to not interfere with the ability to

maintain the NAAQS. In addition, Rule 207 has been strengthened by providing new requirements for the regulation and control of PM 2.5 emissions. Therefore we find t he revisions provided in the submitted rules to be approvable under 110(l).



### Section 193 of the Act

Section 193 of the Act, which was added by the Clean Air Act Amendments of 1990, includes a savings clause which provides, in pertinent part: “ No control requirement in effect, or required to be adopted by an order, settlement agreement, or plan in effect before November 15, 1990, in any area which is a nonattainment area for any air pollutant may be modified after November 15, 1990, in any manner unless th e modification insures equivalent or greater emission reductions of such air pollutant. ”33

The MBUAPCD is currently classified as attainment or unclassifiable for all NAAQSs, therefore the provisions of Section 193 are not applicable to this action.



### Rec ommendations
Pursuant to section 110(k)(3) of the Act, we recommend disapproval of Rule 200

– Permits Required, approval of the request to repeal Rule 208

– Standards for Granting Permits to Operate

, full approval of Rules 203

– Application , 204

– Cancella tion of Applications , 206

– Standards for Granting Applications and 212

– Public Availability of Emission Data , and limited approval/limited disapproval of submitted Rule 207

– Review of New or Modified Sources

.

W e recommend disapproval of Rule 200 based on our determination that the additional language added to Part 4 of the rule contravenes the provisions of 40 CFR 52.23, and therefore the revision is not approvable. The existing version of Rule 200, approved by EPA on July 1, 1999

will remain as the SI P approved version of this rule.

We recommend approval of the request to repeal Rule 208 based on our determination that all the applicable requirements have been incorporated into Rule 207.

W e recommend the approval of submitted Rules 203, 204, 206 an d 212

, based on our

determination that the rule s compl y with applicable statutory and regulatory provisions requiring regulation of stationary sources. In support of this recommendation, we have concluded that our approval of Rules 203, 204, 206 and 212, c omplies with section 110(l) of the Act because the revisions to these rules do not relax control technology requirements and therefore would not interfere with the strategy for continued attainment of the NAAQS in MBUAPCD.

We recommend the limited approv al of submitted Rule 207 based on our determination that the rule complies with applicable statutory and regulatory provisions requiring regulation of stationary sources in general and requiring permit programs for major stationary sources in particular, i ncluding section 110(a)(2)(C) and part C of title I of the Act. In support of this recommendation, we have concluded that our limited approval/limited disapproval of Rule 207 complies with section 110(l) of the Act because while the revisions provide some relaxations to the control technology requirements, the impacts of these revisions are not likely to interfere with the strategy for continued attainment of the NAAQS in MBUAPCD. However we also recommend limited disapproval of Rule 207 to correct the deficiencies listed below.

If we finalize this action as proposed, our action would be codified through revisions to 40 CFR

52. 220 (identification of plan)

.

Deficiencies as listed in TSD under section titled Permit Program Evaluations :

1. Add a provision t o provide an explicit public notice threshold for PM 2.5 . (See page 13.)

2. Add a provision to provide an explicit public notice threshold for lead. (See page 14.)34

3. Revise the definition of the terms “ Major Stationary Source” and “ Major Modification to

an Exis ting Source ” to include the specific applicability thresholds as provided in 40 CFR 51.166 for these terms. (See page 17)

4. Revise the definition of the term “ Major Modification to an Existing Source ” to clarify

that the calculation of the emission increase for the modification is based on an actual to potential to emit or an actual to projected actual emissions basis. (See page 18)

5. Add provisions to satisfy the requirement to define significant as defined in 51.166(b)(23)(ii) and (iii). (See page 20 )

6. Add provisions to satisfy the 40 CFR 51.166(q) requirement to provide the opportunity for a public hearing to consider a proposed permit action. (See page 26)

7. Add provisions to satisfy the requirements, pursuant to 40 CFR 51.166(r)(1) and (2), regarding source s obligations

. (See page 26)35



### Attachments

1. Current MBUAPCD SIP Rule 200, Permits Required

, SIP approved July 1 , 19 99

2. Current MBUAPCD SIP Rule 204

, Cancellation of Applications

, SIP approved July 1,

1999

3. Current MBUAPCD SIP Rule 206

, Standards for Granting Applications

, SIP approved July 13, 1987

4. Current MBUAPCD SIP Rule 207

, Review of New or Modified Sources

, SIP approved February 4, 2000

5. Current MBUAPCD SIP Rule 208

, Standards for Granting Permits to Operate

, SIP approved July 13, 1987

6. Current MBU APCD SIP Rule 212

, Public Availability of Emission Data

, SIP approved July 13, 1987

7. Submitted MBUAPCD Rule 200

, Permits Required , adopted December 13, 2000

8. Submitted MBUAPCD Rule 203

, Application , adopted October 16, 2002

9. Submitted MBUAPCD Rule 204

, Cancel lation of Applications

, adopted March 21, 2001

10. Submitted MBUAPCD Rule 206

, Standards for Granting Applications

, adopted March
21, 2001

11. Submitted MBUAPCD Rule 207

, Review of New or Modified Sources , adopted April 20,

2011

12. Submitted MBUAPCD Rule 208

, Standar ds for Granting Permits to Operate , Request to Repeal on December 13, 2000

13. Submitted MBUAPCD Rule 212

, Public Availability of Emission Data

, adopted October
16, 2002