PROPOSED NEW RULE

RULE 518, PREVENTION OF SIGNIFICANT DETERIORATION

STAFF REPORT

01/04/11

Executive Summary

Prevention of Significant Deterioration (PSD) is a federal permitting program for new 

major stationary facilities and significant modification to existing major facilities located 

in areas classified as attainment or in areas that are unclassifiable for any criteria air 

pollutant. As a District, we are more familiar with the Title V Federal Operating Permit 

Program which is for major sources of pollutants regardless of attainment status. Title V 

permits ultimately incorporate PSD permit requirements. The PSD permitting program is 

a pre-construction permit that is currently administered by EPA Region IX for Placer 

County. There is currently only one PSD permit in Placer County; held by Sierra Pacific 

Industries.

With the recent addition of Greenhouse Gases (GHG) as a regulated pollutant, which 

makes these pollutants subject to federal permitting, EPA Region IX could possibly have 

a significant increase in PSD permit applications throughout the state. The EPA staff 

could be overwhelmed with these new permit applications and the delay in processing 

them could be two years or more. Consequently, EPA is encouraging local air districts to 

take on PSD permitting responsibility for projects that occur within their jurisdiction. For 

an air district to take on PSD permitting, the district needs to adopt a PSD permitting rule 

that mirrors the federal requirements and have that rule ARB and EPA approved for 

incorporation into the State Implementation Plan (SIP).

The most straightforward way for an air district to take on PSD responsibility is to adopt 

a rule that incorporates the federal requirements by reference (IBR). CAPCOA has 

developed a model rule in conjunction with EPA and ARB staff, and the air district 

engineering managers committee.

Placer County Air Pollution Control District staff is proposing that the Board adopt this 

CAPCOA model rule with various options in the model rule tailored to the District’s 

specifics.

Discussion

The federal PSD program is detailed in 40 Code of Federal Regulations (CFR) Part 

52.21. The details of the PSD program are quite involved. Below are some 

generalizations as they apply to Placer County.

Who is Subject to PSD Permitting?

A pre-construction PSD permit is required for any new major source or a significant

modification of an existing major source of any air pollutant regulated under the Federal 
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Clean Air Act; that is not a non-attainment pollutant. Currently in Placer County, the 

PSD pollutants include PM, PM 10, Carbon Monoxide, Nitrogen Dioxide, Sulfur 

Dioxide, Lead, Fluorides, Sulfuric acid mist, Total reduced sulfur, Reduced sulfur 

compounds, Greenhouse Gases (GHGs), and other industry specific pollutants, such as 

those from Municipal Waste Combustors.

• A major source is a facility that emits 250 tons per year of an applicable pollutant, 

except for GHGs which the facility must emit 100,000 tons per year in terms of 

Carbon Dioxide equivalent units (CO2e). There are 28 types of industries where 

a major source is defined as 100 tons per year of an applicable pollutant, with the 

same exception for GHGs. Only two of these 28 source types are likely to be 

constructed in Placer County; a fossil-fuel fired steam electric plant or a boiler of 

over 250 million British Thermal Units per hour heat input. 

• A significant modification of an existing major source is defined as a modification 

with an increase of as much or more than 100 tons per year (TPY) of Carbon

Monoxide, 15 TPY of PM 10, 40 TPY of Nitrogen Dioxide or of Sulfur Dioxide, 

0.6 TPY of Lead, or 75,000 TPY of GHGs.

With the recent addition of GHG as a pollutant that is subject to PSD regulation, there are 

three facilities in Placer County that are classified as major sources because of their GHG

emissions; Sierra Pacific Industries, Rio Bravo, and Roseville Energy Park. However, 

these facilities will only have to obtain a PSD permit for GHG emissions if they 

undertake a modification that will increase their GHG emissions by 75,000 tons per year

CO2e.

What are the Primary Requirements of a PSD Permit?

There are two main requirements to be met before a PSD permit is issued; Best Available 

Control Technology (BACT) is employed, and an air quality impact analysis is conducted 

showing that the emissions increase from the source will not cause or contribute to an 

exceedence of an National Ambient Air Quality Standard (NAAQS) or impact Class I areas 

such as National Parks.

BACT must be employed on each emissions unit that emits an applicable air pollutant in 

excess of the significant modification threshold for that pollutant. Because GHGs are a 

newly regulated pollutant, BACT for GHG has not been thoroughly developed. The most 

likely PSD source of GHGs would be a fossil-fueled boiler of about 200 million Btu/hr or 

more operating full time. In this case, BACT would likely result in a fuel efficiency 

requirement in order to minimize Carbon Dioxide emissions.

An air quality impact analysis can be a very rigorous analysis which compares the 

background concentration of a pollutant plus the potential to emit of the new emissions units 

to the NAAQS on an hour by hour basis over the course of a year. In order to determine the 
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background concentration of a pollutant, either a public monitoring site nearby which has 

collected three to five years of ambient data, or one year of site-specific monitoring is 

required where the pollutant concentration and weather data is collected on an hourly basis. 

If there are other facilities with issued Authorities to Construct that have not begun 

operation at the time of the site monitoring, the potential to emit of these other facilities 

must be added to the background concentration.

If the air quality impact analysis shows an exceedence of the NAAQS, additional emission 

controls or operational limitations must be imposed to prevent the exceedence. If there is 

still concern that the NAAQS may be exceeded, then post-project air quality monitoring 

may be imposed on the applicant.

The federal regulations impose a maximum amount of concentration that a single source can 

increase the ambient air concentration regardless of whether the NAAQS is exceeded or not. 

This is called an ambient air increment and is different for each pollutant and is measured in 

micrograms per cubic meter.

There are no NAAQS or ambient air increment established for GHGs, therefore the air 

quality impact analysis is not required for GHGs. Rule 518 exempts the applicant from 

some of the air quality analyses for GHGs.

What are the Possible Benefits of the District Taking on PSD Permitting?

For a source within the District that is planning a new major facility, or an existing major 

facility planning a significant modification, the time to obtain a PSD permit from EPA under 

the current situation could take several years. If the District were to have PSD authority, 

then the permit process time would likely be much shorter.

When EPA is the permitting authority for a PSD permit, then the federal Fish and Wildlife 

Service and the National Marine Fisheries Service must be consulted regarding the 

Endangered Species Act (ESA) requirements because issuance of the PSD permit is 

considered a federal action. If the air district is the permitting authority, then this 

consultation is not required, although the source is still required to comply with applicable 

ESA requirements. However, such impacts may also be considered in CEQA by the lead 

agency.

Any appeals of a PSD permit issued by EPA are heard by the federal Environmental 

Appeals Board (EAB) in Washington, DC. Appeals concerning a PSD permit issued by the 

District are heard by the District Hearing Board. When the District is the permitting 

authority, appeals are handled locally with more scheduling flexibility.

The downside of the District doing PSD permitting is additional cost to the applicant for 

costs incurred by the District. A downside to the District will be the need to acquire the 
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knowledge base to administer the PSD permitting program. The timing of gaining the PSD 

knowledge base is uncertain since there are currently no new PSD facilities on the horizon.

Scheduled Regulatory Measures

An air district is required by Health and Safety Code (H & SC) article 40923 to publish by 

January 1 of each year a list of regulatory measures scheduled or tentatively scheduled for 

consideration during the following year. A PSD permitting rule was included in the list for 

2011. 

Fiscal Impact

Adoption of Rule 518 will have an additional fiscal impact on businesses that are 

proceeding with a new major source or a significant modification of an existing major 

source of an attainment pollutant. The District is proposing to impose an initial PSD 

permit filing fee and then charge actual expenditures in issuing the permit on a time and 

materials basis. Currently, EPA does not charge any fees for processing a PSD permit 

because EPA is funded with taxpayer dollars. Rule 601, Permit Fees was amended in 

December 2010 to add PSD fees.

The actual labor hours required to process the PSD permit are estimated to be 

approximately the same as for processing a Title V permit. For Title V permits, the 

District advises applicants that the time required is approximately 68 hours. However, 

this could vary considerably depending on the level of public and EPA participation in 

the process. The loaded labor rate proposed is the Title V labor rate of $108.25 which is 

the rate of a Senior Air Quality Engineer loaded with benefit and overhead costs. This 

nominal labor cost then is $7361.

The initial PSD permit filing fee is proposed to be the same as the Title V permit filing 

fee. This filing fee is currently $1070.25 and is equivalent to approximately 10 labor 

hours at the Title V labor rate. These labor hours will be expended in consulting with the 

applicant for a PSD permit while he is preparing the application. This will involve 

discussions on Best Available Control Technology, availability of background air 

monitoring data for the site, possible on-site air and weather monitoring data, and 

potential requirements for an air quality impact analysis, among other requirements for 

application content.

Public Comment

One public comment was received by email concerning adoption of Rule 518. The 

comment deals with the air quality analyses required by CFR 52.21 and how that relates to 

GHGs. EPA guidance says that these analyses are not required for GHGs because EPA has 

established no National Ambient Air Quality Standards or PSD increments for GHGs and 

therefore there is no unacceptable concentration of GHGs in the local atmosphere. The 
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comment suggests that Rule 518 contain a specific exemption from these analyses for GHG 

to preclude any possible appeals that might be made against an issued PSD permit due to not 

performing these analyses.

Staff agrees with this comment and explored the idea with EPA as to whether it would be 

approvable. After much discussion, EPA decided that two of the five subsections relating to 

air quality analyses could be exempted. Staff added the exemption from 40 CFR 52.21 

subsections (k) and (m) as Section 104 of the rule.

Analysis and Findings

The following Analysis and the subsequent Findings are intended to address the 

requirements set forth in the Health and Safety Code relating to adoption of a new or 

amended District Rule, as well as other State statutes referenced herein.

Cost-Effectiveness of a Control Measure

California Health & Safety Code (H&S) Section 40703 requires a District to consider and 

make public “the cost-effectiveness of a control measure”. The adoption of Rule 518 will 

have an additional cost on the applicant for a PSD permit beyond what that applicant would 

pay under the current situation where the permit is issued by EPA. The additional cost 

would be the filing fee plus the actual District hours expended to process the permit, 

estimated to be $8433. There should be no difference in emissions from a PSD facility 

regardless if the permit were processed by EPA or the district, therefore a cost-effectiveness 

cannot be calculated. However, the advantage of the District issuing the PSD permit would 

be in avoiding a possible EPA backlog that could delay EPA permit issuance by up to two 

years. 

Socioeconomic Impact

H&S Section 40728, in relevant part, requires the Board to consider the socioeconomic 

impact of any new rule if air quality or emission limits are significantly affected. However, 

Districts with a population of less than 500,000 persons are exempted from the 

socioeconomic analysis. In 2009, the population of Placer County was approximately 

340,000 persons.

California Environmental Quality Act (CEQA)

Applicants for PSD permits under the proposed rule are already required to obtain PSD 

permits under the Federal Clean Air Act. The requirements of the permit will be the same 

whether EPA or the District issues the permit.

California Public Resources Code Section 21159 requires that an environmental analysis 

of the reasonably foreseeable methods of compliance be conducted. Compliance with the 
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proposed rule is expected to result in reduced emissions to the environment. Therefore, 

the proposed rule will reduce emissions from sources and will not cause any significant 

adverse effects on the environment. Staff has concluded that no adverse environmental 

impacts will be caused by compliance with the proposed rule.

According to the above conclusion, Staff finds that the proposed rule is exempt from the 

California Environmental Quality Act (CEQA) because 1) it can be seen with certainty 

that there is no possibility that the activity in question may have a significant adverse 

effect on the environment (CEQA Guidelines §15061(b)(3)) and 2) it is an action by a 

regulatory agency for protection of the environment (Class 8 Categorical Exemption, 

CEQA Guidelines §15308).

Findings

A. Necessity – The adoption of Rule 518 is necessary in order for a potential 

applicant for a PSD permit to avoid an unacceptably long wait of up to two 

years for EPA to process the permit application and issue a PSD permit.

B. Authority – California Health and Safety Code, Sections 40000, 40001, 40701, 

40702, and 40716 are provisions of law that provide the District with the 

authority to adopt this rule.

C. Clarity – There is no indication, at this time, that the proposed rule is written in 

such a manner that persons affected by the rule cannot easily understand them.

D. Consistency – The regulation is in harmony with, and not in conflict with or 

contradictory to, existing statutes, court decisions, or state or federal 

regulations.

E. Non-duplication – The regulation does not impose the same requirements as an 

existing state or federal regulation.

F. Reference – All statutes, court decisions, and other provisions of law used by 

PCAPCD in interpreting this regulation is incorporated into this analysis and 

this finding by reference.