AIR POLLUTION CONTROL DISTRICT

COUNTY OF SAN LUIS OBISPO

STAFF REPORT

NEW RULE AND AMENDED RULES TO

IMPLEMENT EPA’S FEDERAL PREVENTION OF SIGNIFICANT DETERIORATION 

AND PART 70 GREENHOUSE GAS TAILORING RULE

Rules 216, 220 and 221

March 23, 2011 Hearing Date

BACKGROUND

The San Luis Obispo County Air Pollution Control District (District) proposes one new rule and two

amended rules to implement the United States Environmental Protection Agency’s (EPA’s) requirements 

on greenhouse gases and to seek delegation of EPA’s permit authority for the federal Prevention of 

Signification Deterioration (PSD) permit program. The rulemaking is needed to provide the regulated 

industry relief from applying “criteria” pollutant emission thresholds to greenhouse gas (GHG) emissions

and to avoid lengthy delays that result when EPA implements the federal PSD program. Without the 

proposed changes, hundreds of local businesses could be subject to federal permitting at very low 

emission levels and some larger projects could become subject to EPA’s lengthy permit timelines and 

onerous appeals process. The proposed rulemaking is expected to limit the additional federal GHG based 

permitting requirements to one source and allow the District to use local timelines and appeal processes 

for projects that are subject to federal PSD.

On April 7, 2007, the U.S. Supreme Court found that GHGs are air pollutants covered by the federal 

Clean Air Act (CAA). The U.S. Supreme Court also found that EPA was required to determine whether 

or not emissions of GHGs from new motor vehicles cause or contribute to air pollution that may 

reasonably be anticipated to endanger public health or welfare. 

On December 9, 2009, EPA’s Administrator made the finding that six key GHGs in the atmosphere 

threaten the public health and welfare of current and future generations. EPA’s Administrator also found 

that the combined emissions of these well-mixed gases from new motor vehicle engines contribute to the 

greenhouse gas pollution which threatens public health and welfare. By determining that GHG emissions 

from mobile sources contribute or cause air pollution that endangers public health or welfare, EPA also 

established that it is required to regulate GHG emissions from stationary sources.

At the time of the finding, the federal permitting thresholds for Prevention of Signification Deterioration 

(PSD) and Operating Permit (Part 70) were set at levels appropriate for the criteria pollutants for which 

they were intended; however, these thresholds were unreasonable and impractical when applied to typical 

GHG emission sources. The federal PSD and Part 70 permitting levels for all pollutants were: 

• PSD Permitting: 250 or 100 tons per year (tpy) (depending on the source type), and

• Part 70 Permitting (Title V): 100 tpy. 

These thresholds are based on a source’s potential to emit and are on a per pollutant basis. Sources above 

these levels are considered major sources. The above levels are also reflected in the District’s current 

Rule 216 and Rule 221(renumbered from Rule 421) and will apply to GHG emissions if they are not 

changed. This would result in federal permitting requirements for sources as small as a medium sized, 

natural gas commercial water heater, which is impractical and inappropriate.
To adjust the permit levels for GHGs, EPA issued the “Greenhouse Gas Tailoring Rule” (Tailoring Rule)

on May 13, 2010. EPA "tailored" their regulations by adjusting the GHG thresholds to much higher 

levels than those for “criteria” and hazardous pollutants.

The Tailoring Rule establishes thresholds for permitting in two steps: 

A. Step 1 - Beginning January 2, 2011: This step applies to stationary sources that are major due to 

their non-GHG pollutant emission rates. The following provisions will apply: 

PSD: For new major sources (of non-GHG gases), permits will be required to address GHG Best 

Available Control Technology [BACT]) if they will emit or will have the potential to emit 75,000 tpy

carbon dioxide equivalent (CO2e) or more (NOx and VOC have 40 tpy thresholds).

For existing major sources, permits will be required to address GHG Best Available Control 

Technology [BACT]) if they:

1. Increase net GHG emissions by at least 75,000 tons per year of carbon dioxide equivalent (CO2e), 

and

2. Have a significant net emissions increase in at least one non-GHG pollutant.1

Part 70 Sources: Sources must include GHG emission data in their applications and address any 

applicable GHG requirements when they apply for, renew, or revise their permits. 

B. Step 2 - Beginning July 1, 2011:

2

 Sources not already subject to federal PSD or Part 70 permitting 

may become subject to such permitting based solely on their GHG emissions. The following 

provisions will apply: 

PSD: New sources with PTE emissions above the 100,000 tpy CO2e threshold must obtain PSD 

permits and address GHG BACT. 

Existing sources that are major sources based on criteria pollutant thresholds or GHG emissions 

above 100,000 tpy CO2e will now become subject to PSD permitting if they undertake modifications 

that increase emissions of GHGs by at least 75,000 tpy CO2e or have a significant emissions increase 

in at least one non-GHG pollutant. 

Part 70: An existing or newly constructed source will become subject to Part 70 permitting if GHGs 

potential to emit equals or exceeds 100,000 tpy CO2e. Such sources have one year to submit a Part 

70 application. The Part 70 permits must include any applicable GHG requirements. 

EPA has committed to developing a third step for the Tailoring Rule (effective July 1, 2013). In Step 3, 

additional sources may become subject to PSD and Part 70 requirements if GHGs thresholds are lowered.

To implement the EPA Tailoring Rule requirements, the District proposes amending two existing rules, 

Rule 216, Federal Part 70 Permits and Rule 421, Federal Part 70 Potential to Emit Limitations and the 

adoption of a new Rule 220, Federal Prevention of Significant Deterioration (PSD).

With this rule revision, only one additional stationary source permit would become subject to Part 70 

permits during Step 2 if they chose not to accept emission limits that they currently meet because of 

future expansion needs. 

 1 40 CFR 52.21(b)(49)(iii) provides information on “significant emissions increase.” 2 Sources subject to the Step 1 provisions will continue to be covered by those requirements.

Comment [LRA1]: 221?
The Tailoring Rule provisions benefit the regulated community by increasing the GHG emission 

threshold that would otherwise trigger PSD or a Part 70 permit. For example, without the Tailoring Rule 

provisions, a source with a mid-size natural-gas fired commercial water heater rated at 0.2 MMBtu/hour 

would require a Part 70 permit. Under the Tailoring Rule provisions, a source consisting of one boiler 

will not trigger the Part 70 provisions unless the boiler is 197 MMBtu/hour or greater.1

 

PROPOSED RULES

The proposed rules are contained in Appendix A. The following summarize the new/amended rule

provisions.

Rule 220, Prevention of Significant Deterioration (PSD)

Proposed new Rule 220 will incorporate by reference the federal Prevention of Significant Deterioration 

of Air Quality rule requirements. Once approved, the District will request EPA to incorporate it into the

State Implementation Plan. Proposed Rule 220 is an EPA-approved model rule. If adopted exactly as 

proposed, EPA will accept the rule.

Rule 216, Federal Part 70 Permits

Rule 216 will be amended for consistency purposes and to reference the federal GHG permitting 

thresholds (i.e., the levels at which GHGs are “subject to regulation”) specified in the Greenhouse Gas 

Tailoring Rule. The Rule 216 amendments also incorporate the federal definition of GHGs, found in the 

Part 70 (Title V) regulation (40 CFR 70.2).

Rule 221, Federal Part 70 Potential to Emit Limitations (currently listed as Rule 421)

Rule 221, will be amended to allow Part 70 Permit exemptions based on actual emission levels or 

federally enforceable permitted emission levels. Exemptions may apply if actual stationary source 

emissions are maintained less than 50% of a Part 70 threshold, as demonstrated by 12 months of records 

consistent with the rule requirements. 

EMISSION REDUCTION / COST-EFFECTIVENESS

Emission Reductions

The new and proposed amended rules are administrative in nature relative to permitting actions; they are 

not control measures. Hence, there are no emission reductions expected from the proposed rule action.

Cost-Effectiveness and Incremental Cost-Effectiveness

There are no cost-effectiveness or incremental cost-effectiveness figures relative to this rulemaking task. 

The new/amended rules are not implementing a control measure or retrofit control requirements. Further, 

there are no emission reductions anticipated from them. Thus, the requirements of California Health and 

Safety Code (H&SC) Section 40703 and Section 40920.6 do not apply.

 1 Based on the boiler’s CO2e emissions alone.
ANALYSIS OF EXISTING FEDERAL AND DISTRICT REGULATIONS

H&SC Section 40727.2(a) requires districts to provide a written analysis of existing regulations prior to 

adopting, amending or repealing a regulation. However, the proposed rule action is consistent with 

categories described in H&SC Section 40727.2(g). Hence, the requirements of H&SC Section 40727.2(a) 

are satisfied.

COMMENTS AND PUBLIC MEETINGS

The only comments received were from EPA; they were incorporated and appear in Attachment 1. The 

District contacted the representative of one affected source individually and they had no comment.

COMPARISON OF ADJOINING AIR POLLUTION CONTROL DISTRICT RULES

The adjoining air districts are in the process of adopting similar rule provisions to implement the EPA 

Tailoring Rule requirements. 

FINDINGS

As required in Section 40727 of the California Health and Safety Code (H&SC), the District 

Board must make findings of necessity, authority, clarity, consistency, nonduplication, and 

reference.

A. Necessity: The rulemaking is necessary to implement new federal requirements and 

to ensure consistency with neighboring Air Districts.

B. Authority: Authority is given to the District to adopt rules pursuant to H&SC Sections 40001 

and 40702.

C. Clarity: The proposed rules have been found by the District to be written in clear English and 

to be as easily understood as possible.

D. Consistency: The District has found that the proposed rules are consistent with existing 

District Rules and Regulations and with existing state and federal guidelines.

E. Nonduplication: The proposed rules doe not result in a duplication of any existing State or 

Federal statute or regulation where the requirements of any such statute or regulation would 

be the same. Proposed Rule 220 would implement a federal requirement through a local 

process and not duplicate it.

F. Reference: By adoption of the proposed rule, the District is implementing, and making 

specific by adoption, applicable provisions of H&SC Section 40001 et seq.

CONCLUSION AND RECOMMENDATION

The proposed revisions will help reduce the procedural burden on our permit holders and align our 

thresholds with new federal requirements. Staff recommends that the proposed rules be adopted as 

written.
ATTACHMENTS

Attachment 1: includes the full text of Proposed Rules 216 and 221, with additions to the existing rule 

indicated by underline format, and deletions in strikethrough format; the full text of Proposed Rule 220, a 

new rule, is also included. 

Attachment 2: includes comments received and the District's response

REFERENCES

1. Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 40 CFR Parts 51, 

52, 70, and 71, Federal Register, Volume 75, No. 106, U.S. Environmental Protection Agency, June 

3, 2010.

2. Federal Regulation citation: 75 FR 31514, June 3, 2010.

3. Fact Sheet, Final Rule: Prevention of Significant Deterioration and Title V Greenhouse Gas 

Tailoring Rule, U.S. Environmental Protection Agency, April 13, 2010. (Available at: 

http://www.epa.gov/nsr/actions.html#may10) 
ATTACHMENT 1

UNDERLINE/STRIKEOUT REVISION FORMAT
ATTTACHMENT 2

COMMENTS RECEIVED AND DISTRICT'S RESPONSE

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