# STAFF REPORT

Rule 10.1 : New Source Review



### Date of Release: August 22 , 20 14

Schedule of Meetings Public Hearing: October 6 , 2014

Feather River AQMD

1007 Live Oak Blvd, Suite B

- 3,

Yuba City, California 95991

### Table of Contents

Contents Page

1. Executive Summary

................................ ................................ ........................... 1

2. Background

................................ ................................ ................................ ........ 1

3. Legal Mandate

................................ ................................ ................................ ... 1

4. Propo sed Rule Requirements

................................ ................................ ............. 3

5. Socioeconomic Impact

................................ ................................ ....................... 4

6. Impacts of the Pro posed Rule

................................ ................................ ............ 4

7. Estimated Cost Impact

................................ ................................ ....................... 4

8. Environmental Review and Compliance

................................ ........................... 5

9. Required Findings

................................ ................................ .............................. 6

10. Rule Analysis

................................ ................................ ................................ ..... 7Proposed Rule: 10.1 August 22 , 20 14



### 1.0 Executive Summary:

The Feather River Air Quality Management District’s (District) New Source Review (NSR) program was established in February 1993 to ensure that construction and operation of new and modified sources does not interfere with progress towards attainment of the National and State Ambient Air Quality Standards. Because por tions of the District have been designated as nonattainment for various pollutants, the United States Environmental Protection Agency (US EPA) requires the District to implement measures to reduce sources of these pollutants and their precursors. The Dist rict makes its commitment to reduce pollution through the State Implementation Plan (SIP). The SIP is federally enforceable through the US EPA and the Federal Clean Air Act ( CAA). A New Source Review, or preconstruction r eview, is required as part

of the SIP.

Rule 10.1 contains procedures for the review of new and modified stationary air pollution sources and provides mechanisms by which permits may be granted without interfering with the attainment or maintenance of ambient air quality standards and inc ludes the pre

- construction permit pr ogram required

under Part D of T itle I of the Clean Air Act. The purpose of the proposed amendments of Rule 10.1 is to correct the deficiencies in the rule as identified by the US EPA. Minor ch anges are needed to gain full

U S EPA approval into the State Implementation Plan (SIP).



### 2.0 Background :

On July 27, 2011, US EPA finalized a limited approval and limited disapproval of FRAQMD Rule 10.1

– New Source Review . The effect of this action was to incorporate Rule 10.1 into the SIP and to trigger sanctions clocks with respect to certain provisions of the rule that did not satisfy the requirements of the CAA. FRAQMD had until February 26, 2013 to correct the deficiencies or sanctions would be imposed.

On February 2, 2012 , the District amended Rule 10.1 to correct the stated deficiencies, and FRAQMD

submitted the amended rule to the SIP soon thereafter. The US EPA reviewed the rule and on September 24, 2013, final ized a new limited approval limited disapproval of FRAQMD Ru le 10.1. US EPA acknowledged that the previous deficiencies in the rule were fixed ; h owever, two new deficiencies were listed. FRAQMD is required to correct the new deficiencies to have a fully approv ed New Source Review

program.



### 3.0 Legal Mandate :

Fede ral Mandate : The District has multiple designations regarding attainment of the air quality standards set forth by the US EPA. The District currently has three separate nonattainment areas:

1. Sacramento Federal Non attainment Area (SFNA) for Ozone

The sout hern portion of Sutter County has been designated as a serious nonattainment area for the

federal 1997 and 2008 8

- hour ozone standard. This portion of Sutter County, along with Sacramento, Yolo, and portions of Placer, El Dorado and Solano Counties are in corporated into

the SFNA.

2. Sutter Buttes Non attainment Area (SBNA) for Ozone

The Sutter Buttes (portions above 2

, 000 feet elevation) in Sutter County is designated as a

moderate nonattainment area for the federal 1997 8

- hr ozone standard.

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3. Yuba City

- Marysville Non attainment Area (YC

- MNA) for PM 2.5
Sutter County and part of Yuba County is designated as a moderate nonattainment for the federal

PM 2.5 standard. The portion of Yuba County in the YC

- MNA is listed in 40 CFR 81.305 as: “That portion of Y uba County which lies west of the line described as follows: (Mount Diablo Base and Meridian) Beginning at the intersection of the Yuba

- Nevada county line and the range line common to ranges R7E and R8E, north to the southeast corner of township T18N R7E, then west along the township line common to T17N and T18N, then north along the range line common to ranges R6E and R7E, then west along the township line common to T19N and T18N

to the Yuba

- Butte County boundary.” Thus, the entire valley portion of Yuba County and the western portion of the foothills are

included in the nonattainment area.

Section 173 of Title I of the Federal Clean Air Act Amendments of 1990 requires permitting authorities to establish a permitting program for reviewing applications for construction of new sources or modification of existing sources of air pollutants. A New Source Review, or preconstruction r eview, is required as part of the SIP under 40 Code of Federal Reg ulations (CFR) Part 51 Subpart I to ensure that the construction or modification of a source will not cause violations of the State’s control strategy or interfere with attainment or maintenance of ambient air quality standards. 40 CFR Part 51 also requires the District to adopt a permitting program that requires the application of B est Available Control Technology (B ACT ) and Lowest Achievable Emission Rate (LAER) for a new major stationary source or modification to an existing major stationary source that results in a significant net emission s increase.

State Mandate : California Health and Safety (CH&S) Code § 40918 and 40919, require that the District’s permitting program be designed to achieve no net increase in emissions of nonattainment pollutants from stationary sources with emissions exceeding specified thresho lds. Furthermore, Title 17

C alifornia C ode of R egulations (CCR) §7 0600 requires ozone nonattainment d istricts in the Broader Sacramento Area to adopt more stringent thresholds. The Broader Sacramento Ar ea is d efined in Title 17 CCR § 70500. T he entire SF NA portion of FRAQMD is designated in the Broader Sacramento Area

. CH&S Code § 40918 and 40919 also require the District’s permitting program to require the use of BACT for any new or modified stationary source which has a potential to e mit greater than or equal to specific

thresholds , which vary depending on the attainment status of the area.

Chapter 4.5, Protect California Air Act of 2003 Requirements : In an effort to minimize the potential impact of the 2002 federal NSR reform s , the state legislature p assed the Protect California Air Act of

200 3 (SB288). The Act (CH&S Code § 42500 through 42507) is intended to minimize the impact of the relaxation of the federal new source review program on air quality in California. The Act prohibits

districts from maki ng revisions to their SIP approved NSR rules in existence on December 30, 2002 that would result in weakening their rules. These revisions include but are not limited to, revisions to rule applicability, changing the definition of modification so that NSR is not triggered or triggered at a higher level of emission increases, or relaxing BACT, air quality analysis, and public participation requirements. The Act does permit districts to deviate from these requirements under specified conditions.

The propose d amendments to Rule 10.1 meet this mandate. Rule 10.1 does not relax the requirements to obtain a permit and undergo NSR analysis

, does not relax the requirement to apply BACT to a new or modified emission unit, does not relax the requirements or threshol ds for performing an air quality impact

anal ysis as required by Rule 10.1 G, does not relax the requirement f or regulating any air pollutant, does not relax any requi rement for public participation, and d oes not relax the requirements for monitoring,

recor dkeeping, and reporti ng

.

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### 4.0 Proposed Rule Requirements:

T able 1 below summarizes the proposed rulemaking by section:

Table 1

– Summary of Proposed Amendments

SECTION NUMBER PROPOSED LANGUAGE

B .4 & B.5 Added language to limit the exemption applicability to more specific sections rather than exempting any re

- designated areas from the entirety of Section E.

D.34 & D.35 A mended the definitions of PM 10 and PM 2.5 to include condensable particulate

matter.

H.3 Added public notice requirements for lead point sources pursuant to federal regulations.

Rule 10.1

- All Minor formatting and editing

.

Exemption Language 

### Sections B.4 and B.5 were added to the rule in 2012 and provide that if the US EPA re

- designates specific nonattainment portions of the District to attainment for PM 2.5 

### or ozone, then the requirements of Section E of the rule would not apply to those areas. While the District is allowed to include provisions that would change the applicability of the rule bas ed on a redesignation by the US EPA to attainment, the District mistakenly wrote into the rule the exempt ion from all of the requirements of Section E . Some of the subsections of Section E contain requirements that apply to

minor sources and so these must apply even if the areas are re

- designated attainment

. H ence, the District has added language to the exemptions to limit the applicability to more specific sections rather than exempting them from the entirety of Section E.

Condensable PM : 

### Primary Particulate Matter (PM) is the sum of filterable PM and C ondensable Particulate Matter (CPM) . Filterable PM are particles that are directly emitted by a sour ce as a solid or liquid at stack conditions and captured on the filter of a stack test train. CPM a re emissions that are vapor phase at

stack conditions, but which condense and/or react upon cooling and dilution in the ambient air to form solid or liquid PM immediately after discharge from the stack.

The NSR regulations require that the measurement and control of PM from major stationary sources and major modifications include the condensable component for both PM 10 

### and PM 2.5 

### emissions. Accordingly, CPM must be considered for permits addressing PM 10 

### and PM 2.5 

### that are issued under the Prevention of Sign ificant Deterioration (PSD) program and the nonattainment NSR program in areas that are classified attainment/unclassifiable and nonattainment, respectively, for the PM 10 

### and

PM 2.5 

### National Ambient Air Quality Standards (NAAQS). By amending the definitions in Rule 10.1, the District’s NSR rule will adequately reflect this requirement for CPM.

Omitting VOC and Ammonia as PM 2.5 precursors: The District was designated “non attainment” for the federal PM 2.5 NAAQS on December 14, 2009. Based

on the 2009

- 2011 monitoring data, the District demonstrated meeting the PM 2.5 NAAQS and submitted a Clean Data Finding for PM 2.5 . As part of US EPA approval of the Clean Data Finding, the District submitted a Redesignatio n Request and Maintenance Plan. The PM 2.5 Redesignation Request and Maintenance Plan is intended to provide necessary data and analyses to demonstrate that the Yuba City

Marysville PM 2.5 nonattainment area has attained the 2006 24

- hour PM 2.5 national ambie nt air quality standard and shall continue to maintain the standard for ten years from the approval of the Plan. The District is still waiting on final US EPA approval of the Maintenance Plan.

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-Proposed Rule: 10.1 August 22 , 20 14

During this rule development process, the US EPA also requeste d that FRAQMD reviews the District emission inventory to determine if VOC and ammonia ( NH 3 ) “contribute significantly” to the PM 2.5 inventory

. See Section 189(e) of the CAA. This request is based on EPA’s final rulemaking dated June 2, 2014, which reclassi fied all PM 2.5 nonattainment areas pursuant to Subpart 4 of Title I of the CAA, rather than Subpart 1. Under Subpart 4, the CAA assumes all PM 2.5 precursors are subject to an areas nonattainment program, unless a showing is made that specific precursors f rom major sources do not “contribute significantly to PM 10 (or PM 2.5 ) levels which exceed the standard in the area.”

The District does not have any VOC or NH 3 major sources, therefore there is no significant contribution from major sources to PM 2.5 levels which exceed the PM 2.5 standard. In addition, as noted above the area has maintained the standard for the past four years without any additional VOC or ammonia controls

. On the basis of these facts, the District believes that these two precursors do not contribute significantly to

PM 2.5 levels which exceed the standard in the area, and therefore, are not required to be regulated as PM 2.5 precursors under section 189(e) of the CAA.



### 5.0 Socioeconomic Impact :

Cali fornia Health and Safety Code § 40728.5 re quires, in part, that:

“Whenever a district intends to propose the adoption, amendment or repeal of a rule or regulation that will significantly affect air quality or emissions limitations, that agency shall, to the extent that data are available, perform an assessment of the socioeconomic impacts of the adoption, amendment, or repeal of the rule or regulation.”

However, districts with a population of less than 500,000 persons are exemp t from the provisions of CH&S § 40728.5 (a). The District’s population i s estimated to be approximately 168,000

, which is below the 500,000 person threshold. Therefore, a socioeconomic analysis for this rulemaking is not required.



### 6.0 Emission Impacts of the Pro posed Rule :

The District does not anticipate any emission impacts from the proposed rule.



### 7.0 Estimated Cost Impact:

CH&SC § 40703 requires the District, in the process of the adoption of any rule or regulation, to consider and make public its findings related to the cost effectiveness of the rule. Cost effecti veness for rulemaking purposes is calculated by dividing the cost of air pollution controls required by the rule by the amount of air pollution reduced.

The District does not anticipate any cost impacts from the proposed rule or an y additional need for s taff resources upon adoption of the rule.



### 8 .0 Environmental Review and Compliance:

California Public Resource Code Secti on 21159 requires the District ( at the time of adopting a rule requiring the installation of pollution control equipment, or a performance standard) to perform an

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environmental analysis of the reasonably foreseeable methods of compliance. This rule does not require

installation of contro l equipment or a performance standard; therefore, the analysis is not required.

The amendment of this rule is an action taken to protect the environment. Therefore, staff has determined that the proposed rule is categorically exempt under Class 8 from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines sections 15061(b)(2) and 15308 because it is an action taken by a regulatory agency to assure the maintenance, restoration, enhancement, or protection of the environment and no except ions apply.

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### 9 .0 Required Findings:

California Health and Safety Code §40727 (a) requires that prior to adopting or amending a rule or regulation, an air district’s board must make findings of necessity, authority, clarity, consistency, non

duplication and reference. The findings must be based on the following:

1. Information presented in the District’s written analys is, prepared pursuant to CH&S § 40727.2;

2. Information contained in the rulema king records pursuant to CH&S § 40728; and

3. Relevant information presented at the Board’s hearing for the rule.

The table below describes each finding and the basis for making the finding :

REQUIRED FINDING FINDING DETERMINATION

Necessity: The District must find that the rulemaking

demonstrates a need exists for the rule or for its amendment or repeal. [CH&S § 40727 (b)(1) ] It is necessary for the District to adopt the proposed amendments in order to correct deficiencies found by the EPA during the SIP approval process

. Authority:

The District must find that a provision of law or of a state or federal regulation permits or requires the District to adop t, amend, or repeal the rule. [CH&S § 47027(b)(2) ] The District is authorized to adopt rules and regulations by CH&S § 40001, 40702, 40919, 41010, and 42300.

Clari ty:
The District must find that the rule is written or displayed so that its meaning can be easily understood by the per sons directly affected by it. [CH&S § 40727(b)(3) ] The District has reviewed the proposed amendments and determined that they can be

ea sily understood by the affected industry. In addition, the record contains no evidence that the persons directly affected by the rule cannot

understand the rule. Consistency: The rule is in harmony with, and not in conflict with or contradictory to, exi sting statutes, court decisions, or state or federal regulations. [CH&S § 40727(b)(4) ] The proposed rul e does not conflict with and is not contradictory to existing statutes, court decisions, or state or federal regulations.

Non

- Duplication:

The District must find that either: 1) The rule does not impose the same requirements as an existing site or federal regulation; or 2) that the duplicative requirements are necessary or proper to execute the powers and duties granted to, a nd imposed upon

the District. [CH&S § 40727(b)(5) ] The proposed rule duplicates federal rules or regulations for permitting programs. The duplicative requirements are necessary in order to execute the powers and duties imposed upon

the District.

Reference:

The District must refer to any statute, court decision, or other provision of law that the District implements, interprets, or makes specific by adopting, amending or repealing the r ule. [CH&S
§ 40727(b)(6) ] The proposed amendments are intended to clarify existing law. References to statutes are noted where applicable.

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### 10 .0 Rule Analysis

Section 40727.2 requires a written analysis comparing the proposed rules with existing federal regulations, state regulation, and any other AQMD existing or proposed rules and regulations that apply to the same source type.

Comparison of Proposed Rule 10.1 and Feather River AQMD Rules and Regulations

District Rules and Regulations Does proposed rule

conflict or contradict any provisions?

Regulation 1

– General Provisions No

Regulation 2

– Open Burning No

Regulation 3

– Prohibition

– Stationary Emission Sources No

Regulation 4

– Stationary Emission Sources Permit System and Registration No

Regulation 5

– Hearing Board Procedures No

Regulation 6

– Variances No

Regulation 7

– Fees No

Regulation 8

– Penalties and Abatement No

Regulation 9

– Enforcement Procedures No

Regulation 10

– New Source Review No

Regulation 11

– Air Toxic Control Measure No

Comparison of Proposed Rules and o ther Federal and State Regulations

Under CH&S § 40727.2(g), the District finds that the proposed amendments do not strengthen or impose new emission limits or impose more stringent monitoring, reporting, or recordkeeping requirements; therefore , it complies with CH&S Code § 40727.2.

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