### 1 United States Environmental Protection Agency, Region IX

Air & Toxics Division

Technical Support Document

for

EPA's Notice of Final Rulemaking

for the

California State Implementation Plan

South Coast Air Quality Management District

New Source Review

Gerardo C. Rios

October 29, 1996

### 2 Agency Name:

The South Coast Air Quality Management District submitted the following:

Date Date

Rule # Title of Rule Submitted Completeness

212 Public Availability 8/28/96 10/10/96

1301 General 8/28/96 10/10/96

1302 Definitions 8/28/96 10/10/96 1303 Requirements 8/28/96 10/10/96 1304 Exemptions 8/28/96 10/10/96

1306 Emission Calculations 8/28/96 10/10/96

1309 Emission Reduction Credits 8/28/96 10/10/96 1309.1 Priority Reserve 8/28/96 10/10/96 1310 Analysis and Reporting 8/28/96 10/10/96 1313 Permits to Operate 8/28/96 10/10/96

And, proposed to Delete the following State Implementation Plan (SIP) approved Rules:

Date

Rule # Title of Rule SIP Approved

212 Public Availability 2/3/89

1301 General 2/21/81

1302 Definitions 1/21/81 1303 Requirements 2/21/81 1304 Exemptions 3/12/86 1305 Special Permit Provisions 1/20/85

1306 Emission Calculations 1/21/81

1307 Emission Offsets 5/18/81 1308 Eligibility of Emission Offsets 1/21/81 1310 Analysis and Reporting 1/21/81

1311 Power Plants 1/21/81 1313 Permits to Operate 1/21/81

### 3 Rule Summary:

The South Coast Air Quality Management District (District) submitted to EPA for adoption into the applicable New Source Review (NSR) State Implementation Plan (SIP) Rule 212 and Regulation XIII, which is composed of Rules 1301, 1302, 1303, 1304, 1306, 1309, 1309.1, 1310, and 1313. These rules constitute the District's new source permitting regulations. Rule 212 contains the District's administrative requirements including the public consultation process for permitting. Rule 1301 is the general regulation specifying the purpose and applicability of Regulation XIII. Rule 1302 consists of definitions for all terms relating to new sources and modifications to existing sources of air pollution, and their regulation. Rule 1303 contains source permitting requirements including lowest achievable emission rate requirements, best available control technology requirements, offset requirements, statewide compliance requirements, Federal Land Manager notification and Class I Area visibility protection requirements, and alternative source siting analysis requirements. Rule 1304 establishes the exemptions from Regulation XIII. Rule 1306 establishes the emission calculation procedures. Rule 1309 establishes procedures for the creation, banking, and use of emission reduction credits. Rule 1309.1 establishes the priority reserve which will provide credits for specific priority sources. Rule 1310, Analysis and Reporting, establishes a thirty day review for the completeness determination of permit applications, and the requirement for public notification of proposed emission reduction credits. Rule 1313, Permits to Operate, establishes some permit to operate procedures for sources not required to obtain a permit to construct. These rules, plus existing SIP approved rule 201, contain all NSR requirements for sources located in nonattainment areas and replace existing NSR SIP approved Rules 212, 1301, 1302, 1303, 1304, 1305 1306, 1307, 1308, 1310, 1311, and 1313.

Rules 212, 1301, 1302, 1303, 1304, 1306, 1309, 1309.1, 1310, and 1313 represent comprehensive revisions to the District's NSR permitting regulations. These rules were submitted to EPA for approval into the SIP on August 28, 1996, and replace rules 212, 1301, 1302, 1303, 1304, 1305 1306, 1307, 1308, 1310, 1311, and 1313, which were adopted into the California SIP by EPA on 2/3/89, 1/21/81, 1/ 21/81, 2/21/81, 3/12/86, 1/20/85, 1/21/81, 5/18/81, 1/21/81, 1/21/81, 1/21/81, and 1/21/81, respectively. The District has adopted the new NSR rules in part to meet the 1990 Clean Air Amendments (CAA). Part D of the CAA specifies the requirements for NSR in areas designated nonattainment of the national ambient air quality standard (NAAQS). EPA interprets the statutor y requirements of part D in regulations at 40 CFR 51.160 through 51.165.

Background

Part D of the CAA (Sections 171, 172, 173, 182, 187, and 189) requires that States incorporate into the applicable SIP an acceptable permitting program for the preconstruction review of new or modified major stationary sources in nonattainment areas. The 1990

### 4Amendments created certain new requirements for States, especially relating to ozone and PM10 nonattainment areas. The primary purpose of the submitted District rules is to update the applicable SIP to reflect changes in nonattainment area requirements that were mandated by the 1990 Amendments. The PSD provisions in Part C (Sections 161, 163, 165, 166, 168, and 169) specify the permitting requirements for new or modified sources proposing to locate in attainment areas. Unlike the nonattainment NSR requirements, local air pollution control agencies are not required to develop preconstr uction review programs for PSD. Instead EPA retains PSD permitting authority until the local agency requests 1) delegation of the federal PSD regulations at 40 CFR 52.21, or 2) approval into the applicable SIP of locally developed PSD provisions consistent with 40 CFR 51.166. The Di strict has submitted a signed PSD delegation agreement to implement the regulations at 40 CFR 52.21 which EPA is reviewing for approval separately.

The District is composed of Los Angele s County, Orange County, Riverside County, and San Bernardino County. The Air Quality Management Area of the District is designated as an

extreme ozone nonattainment area. The rest of the District, also recognized by the District as the South East Desert Air Basin (SEDAB), is designated as a severe ozone nonattainemt area. The District is also designated serious nonattainme nt for PM10, and nonattainment for NO2, and CO. For the detailed area designations that apply to the District, please refer to 40 CFR ' 81.305.

Rule Evaluation

The existing SIP approved NSR rules--Rules 212, 1301, 1302, 1303, 1305, 1304, 1306, 1307, 1309, 1309.1, 1310, 1311, and 1313--were approved by EPA on 2/3/89, 2/21/81, 1/21/81, 2/21/81, 3/12/86, 3/12/86, 1/20/85, 2/21/81, 5/ 18/81, 1/21/81, 1/21/81, 1/21/81, and 1/21/81, respectively. EPA has not taken any formal rulemaking action on the District's NSR rules to incorporate revisions that the District may ha ve adopted since that date. EPA's current rulemaking efforts to update the applicable SIP stem in large part from the changes to NSR permitting programs mandated by the 1990 Amendments. The statutory deadline for States to submit NSR revisions was November 15, 1992. Around that time, EPA Region IX conducted a review of local NSR programs to determine whether the States and Districts met the five core

criteria of the 1990 Amendments.

EPA Region IX is now taking action to correct deficiencies in the existing SIP approved NSR rules to conform those rules to the amended nonattainment area requirements of the 1990 Amendments. Although the District's rules in effect on November 15, 1992 met the specified core criteria, the rules contained other deficiencies that had to be corrected in order for EPA to fully approve the District's NSR program unde r the 1990 Amendments. Thus, the District modified and submitted the NSR rules which EPA is approving with this action.

EPA has further reviewed the District's NSR SIP submittal for compliance with the requirements of section 110 and Part D of the Cl ean Air Act and implementing regulations at 40 CFR 51.160 through 51.165. EPA relied on the following materials in the review of the

### 5 District's NSR SIP submittal: the General Preamble to Title I (see 57 FR 13498, April 16, 1992), the Emissions Trading Policy Statement (see 51 FR 43814, December 4, 1986), and other EPA policy and guidance. EPA has condensed the approval criteria contained in these various materials in this Technical Support Document (TSD) which describes reasons for our action promulgating direct final approval of South Coas t Air Quality Management District's NSR SIP

submittal.

General Nonattainment NSR Requirements

The Act requires all States to submit, by November 15, 1992, certain nonattainment NSR rules. To demonstrate that the District has met each requirement, EPA identifies the section(s) of the District's NSR rules which satisfy the listed NSR requirement. Where there has been correspondence between EPA and the District concerning the interpretation of the language in the rule, references to such correspondence is also listed below.

1. Provisions to assure that the calculation of emissions offsets, as required by Section 173(a)(1)(A), is based on the same emissions baseline used in the demonstration of reasonable further progress.

The District's NSR rules comply with the requirement by its definition of, and the calculation procedures for, Emission Reduction Credits (ERC). Although the rule does not explicitly state that the offset emissions baseline is the same one used in the RFP demonstration, both the RFP demonstration and the calculation of offsets use actual emissions as the emissions baselines. (Rules 1302 and 1306)

2. Provisions to assure, pursuant to Section 173(c )(1), that any emissions offsets obtained in conjunction with the issuance of a permit to a new or modified source must be enforceable by the time of issuance of the permit, and in effect by the time the new or modified source commences operation.

Under Rule 1306, Calculation Procedures, th e District includes a process for banking

Emission Reduction Credits. When the Emi ssion Reduction Credits are obtained from the bank, the District has ensured that all offsets are federally enforceable prior to permit issuance and will be in effect prior to the time a new or modified source commences operation. (Rule 1306)

3. Provisions to assure that emissions increas es from new or modified major stationary sources are offset by real reductions in actual emissions as required by Section 173(c)(1).

Under Rule 1303, the District requires that ne w or modified stationary sources mitigate

emission increases with emission reduction credits. Rule 1306 and 1309 contain the procedures to create emission reduction credits, and these procedures ensure that these

### 6 are real reductions in actual emissions. (Rules 1303, 1306, 1309)

4. Provisions, pursuant to Section 173(c)(2), to prevent emissions reductions otherwise required by the Act from being credited for purposes of satisfying the part D offset requirements.

Under Rule 1309, the District procedures for creating emission reduction credits prohibit the creation of ERCs if the emission reductions are not surplus. Specifically, Rule 1309(b)(5) requires that "the same emission reductions from the same equipment type as those proposed by the applicant are not (A) required by a Control Measure in the AQMP which has been assigned a target implementation date; or (B) required by a proposed District rule for which the first public workshop to consider such a rule has been

conducted. This exclusion shall remain in effect for 12 months from the date of such workshop, or until the Executive Officer or designee determines that the proposed rule is abandoned or the provisions of subparagraph (5)(C) become effective; or (C) required by an adopted federal, State, or District rule, re gulation, or statute; or (D) from a category or class of equipment included in a demonstra tion program required by a District rule or regulation." In addition, Rule 1309(b)(4)(E) requires that the amount of emission reduction credits to be granted in the non-SEDAB area "...are not greater than the equipment would have achieved if operating with [LAER]." Thus, Rule 1309 prohibits the creation of ERCs if the emission reductions were otherwise required by the Act. (Rule 1309)

5. Provisions, pursuant to Section 173(a)(5), that , as a prerequisite to issuing any part D permit, the District must require an analysis of alternative sites, sizes, production processes, and environmental control techniques for proposed sources that demonstrate that the benefits of the proposed source significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification.

The District's NSR rules provide that an Authority to Construct permit shall not be issued unless an appropriate alternatives analysis is provided for major stationary sources or major modifications at major stationary sources. (Rule 1303)

6. A definition of "stationary source" that requires certain internal combustion engines to be subject to control under State programs, but which excludes the category of "nonroad engines."

Under Rule 1301(b)(3), General Applicability, the District has a statement exempting nonroad engines from Regulation XIII as de fined under District Rule 301(b)(11) and (b)(13) once EPA approves Rule 301 in a separate action.

7. Provisions, pursuant to Section 173(a)(3), to assure that owners or operators of each proposed new or modified major stationary source must demonstrate that all other major

### 7 stationary sources under the same ownership in the State are in compliance with the

CAA.

The District has included this provision. An Authority to Construct permit shall not be issued unless the certification of statewide compliance is provided for major stationary sources or major modifications at major stationary sources. (Rule 1303(b)(5)(C), EPA letter to the District Dated July 12, 1996)

8. Definitions which contain language which is e ither identical or equivalent to that found in CAA Sections 169, 169A(g), and 171, and in 40 CFR 51.100, and 51.165(a), including the following:

Definition of: In rule section:

Actual emissions 1302(a) Allowable emissions 1302(c) Begin actual construction see explanation (i) Building, structure, facility, or installation 1302(ii) Commence Construction see explanation (i) Emissions unit 1302(x and gg) Federally enforceable 1302(n) Fugitive emissions see explanation (iii) Lowest achievable emission rate (LAER) 1302(f) Major modification 1302(o), see explanation (iv) Major stationary source 1302(p) Net emissions increase see explanation (iii) Potential to emit 1302(y) Representative actual annual emissions see explanation (iii) Secondary emissions 1302(aa) Significant see explanation (v) Stationary source 1302(m) Volatile Organic Compound (VOC) 1303(l and iii)

Although not all of the above definitions which are required under 40 CFR 51.165 were included in the South Coast Air Quality Management District submitted rules, EPA does not consider this an approvability issue. When necessary, these rules contain definitions or requirements equivalent to the definitions referenced above. This list is included mainly for reference. Below are explanations for why the District chose not to define

certain terms in the rule.

(i)Existing SIP approved District Rule 201, Pe rmits to Construct, contains the following language:

### 8 "A person shall not build, erect, install, alter or replace any equipment, the use of which may cause the issuance of air contaminants or the use of which may eliminate, reduce or control the issuance of air contaminants without first obtaining written authorization for such construction from the Air Pollution

Control Officer."

EPA's interpretation of the language in District Rule 201 is that a source may not commence construction without first obtaining a written permit. EPA's interpretation of

Rule 201 is consistent with the federal definition of "commence construction" defined in 40 CFR 51.165(a)(1)(xvi). In 1993, EPA became aware that the District had applied a different interpretation of District Rule 201 than would have been allowed by EPA. The District's unallowable interpretation of Rule 201 was that a facility may commence construction with the executive officer's permission, but without a permit to construct, so long as the facility does not begin the procedure for making utility and process connections. Because of the differing interpretations, the District could allow sources to

commence construction in violation of federal regulations. EPA could therefore cite such sources for commencing construction without an authority to construct. However, in 1994, the District agreed to interpret Rule 201 in a manner consistent with federal regulations and EPA's longstanding policies prohibiting pre-permit construction

activities. The letters which record the above are as follows:

(a) EPA letter to the District dated December 3, 1993 (b) District letter to EPA dated February 25, 1994 (c) EPA letter to the District dated May 19, 1994 (d) South Coast Interim Rule 201 Interpretation dated September 19, 1994

District Rule 201 prohibiting construction until af ter issuance of an authority to construct is integral to Regulation XIII. EPA is taking this approval action of Regulation XIII with the understanding that the District will continue to enforce Rule 201 in a manner consistent with federal regulations as interpreted by the District in its interim Rule 201 interpretation dated September 19, 1994. The interpretation requires that the District use the terms "commence construction" and "begin actual construction" as defined in federal regulation. This interpretation applies to the definitions in Rule 1302.

(ii) The District's definition of "facility" and "emissions unit" achieve the same function as the definition under 40 CFR 51.165 for "Building, structure, facility, or installation." See also (i) above.

(iii) Although the District does not define the term "fugitive emissions," the District will use the definition under 40 CFR 51.165(a)(1)(ix) for fugitive emissions wherever the term is used in the District rule. In addition, the District stated in their April 18, 1995 response to EPA comments that the District includes fugitive emissions when calculating the potential to emit of a source (Rule 1302(y)).

### 9 (iv) When determining whether a proposed change at a facility constitutes a modification, the District will use the definition under Rule 1302(r) in conjunction with the calculation procedures under Rule 1306. For further details on the calculation procedures used see the Special Clarifications section.

(v) The term "significant" is not defined since the District uses emission levels in defining major modifications and major sources that are subject to the requirements of Part D of the CAA.

10. Provisions, pursuant to 40 CFR 51.161, that require opportunity for public comment, as well as the consideration of any comments received during this period in the final permit determination. These provisions must also ensure the availability of all information relevant to the proposed permit during the comment period, and allow for a public hearing upon request.

The District requires an opportunity for public comment and consideration of such comments in a final permit determination. (Rule 212)

11. Provisions, pursuant to 40 CFR 51.160 through 51.164, which contain substantive requirements for minor sources for Districts which have submitted a minor source NSR permitting program: These requirements include public notice, opportunity for--and consideration of--public comment, and the demonstration that a minor source will not contribute to a violation of any national standard or the area control strategy for

attainment.

The District requires public comment and consideration of such comments in a final permit determination at adequate levels of emissions. See also letter from EPA to the District dated July 12, 1996. (Rule 212) To make sure that no source causes or contributes to a violation of the national ambient air quality standard, or that the area control strategy for attainment is not compromised by any source, the District requires offsets for all sources through the NSR Tracking System. However, to aid small sources with the burden of this requirement, the District will be providing offsets for all sources that are exempt from offsets. These sources include sources that have the potential to emit less than 4 TPY of NOx, SOx, VOC, or PM10, or 29 TPY of CO, and sources exempt from Regulation XIII. (Rule 1309.1)

12. Provisions, pursuant to 40 CFR 51.118(a), to assure that the degree of emission limitation required of any source for control of any air pollutant must not be affected by so much of any source's stack height that exceeds good engineering practice.

On April 18, 1995, in response to EPA's December 19, 1994 comments to the District rules, the District stated that the District procedures already incorporate good engineering

### 10 practice to ensure that a source's stack height does not affect the emission limitation required of the source. (Rule 1303, Letter from the District to EPA dated April 18, 1995)

13. Provisions, pursuant to 40 CFR 51.165(a)(5)(ii), which require NSR permitting for asource or modification which becomes major due to a relaxation in a federallyenforceable limit. Such sources and modifications are subject to NSR permitting "as though construction had not yet commenced."

In the District, all emission units are required to apply LAER, and all facilities which have the potential to emit more than four (4) tons/year of any pollutant, or 29 ton/year of CO, are required to apply offsets. Thus, even if there is a relaxation of any federally enforceable limit, sources will have already complied with the federal requirements for LAER and offsets if they became major due to relaxation of a federally enforceable requirement. In addition, the emissions calculation procedure allows the District to determine if additional offsets are required or if the requirements for Statewide compliance, alternative source siting analysis, public notice, and Class I Area Visibility Analysis and Federal Land Manager notification requirements are triggered. (Rule 1303 and 1306)

14. Provisions, pursuant to 40 CFR 51.307(b)(2), which require NSR permitting of any major source or modification to a major source, proposing to locate in a nonattainment area, if the source or modification may have an impact on visibility in any mandatory Class I

Federal Area.

The District has adopted provisions under rule 1303(b)(5)(B) that meet the specific needs of the District while meeting the federal requirements for visibility protection in Class I areas. Rule 1303(b)(5)(B) was crafted by the District with the cooperation and input of the Federal Land Managers.

15. Provisions, pursuant to 40 CFR 51.165(a)(iv)(C), which require that fugitive emissions be included in the major source applicability determination if the source belongs to one of the source categories listed in this section. Otherwise, fugitives may be excluded from the applicability determination.

The District requires that fugitive emissions be included in the potential to emit calculation for all sources and all permitting actions and calculations. Therefore, the District rules meet this requirement. (Rule 1302(y)).

Ozone (O3)

The general part D NSR permit requirements of Title I apply in severe and extreme ozone non-attainment areas. Section 182(e)(2) of the CAA applies to extreme ozone non-attainment areas and sections 182(c)(6),(7), and (8), and 182 (d) apply to severe ozone non-attainment areas.

### 11 The South East Desert Air Basin (SEDAB) ofthe South Coast AQMD is a severe ozone nonattainment area, while the rest of the District is designated as an extreme ozone non-attainment

area. These areas are further defined under 40 CFR ' 81.305.

1. The SEDAB area is designated as a severe ozone non-attainment area. Therefore, the special rules for serious and severe ozone non-attainment areas outlined under section 182(c)(6), (7), and (8), and 182(d) of the Clean Air Act apply to this area as explained

below:

a. Definition of the term "major stationary source" that reflects the 25 tons per year (TPY) volatile organic compound (VOC) threshold for determination of whether a source is subject to part D requirements as a major source.

The District has adopted a 25 TPY VOC threshold in the SEDAB area to meet the special major source requirements of part D of the CAA. The District, however, requires that all new emission units apply LAER and requires that sources emitting more than 4 TPY of any pollutant offset its emissions for that pollutant. The 25 TPY VOC threshold therefore applies to sources for the purposes of statewide compliance, federal land manager notification, visibility impact analysis on Class I areas, and the alterative source siting analysis. The 25 TPY VOC threshold is also used to determine when a source will be subject to permitting under the District's part 70 program. Thus, the District rule meets the federal requirements. (Rule 1302(p)).

b. Definition of the term "major modificati on" that reflects the 25 TPY thresholds of VOC and NOx for determination of whether a source is subject to part D requirements as a major modification to a major source of an ozone precursor.

The District has adopted a 25 TPY NOx threshold in the SEDAB area to meet the special major modification requirements of part D of the CAA. The District, however, requires that all new emission units apply LAER, and requires that sources emitting more than 4 TPY of any pollutant offset its emissions for that pollutant. The 25 TPY NOx threshold therefore applies to sources for the purposes of statewide compliance, Federal Land Manager notification, visibility impact analysis on Class I areas, and the alterative source siting analysis. The 25 TPY NOx threshold is also used to determine when a source will be subject to permitting under the District's part 70 program. Thus, the District meets this federal requirement. (Rule 1302(o)).

2. Non-South East Desert Portion. The non-Sout h East Desert Portion of the South Coast Air Quality Management District is designated as an extreme ozone nonattainment area. Therefore, the requirements outlined under section 182(e) of the CAA apply to this area as explained below:

### 12 a. Definition of the term "major stationary source" that reflects the 10 TPY VOC/NOx threshold for determination of whether a source is subject to part D requirements as a major source.

The District has adopted a 10 TPY VOC and 10 TPY NOx threshold in the nonSEDAB area to meet the special major source requirements of part D of the CAA. The District, however, requires that all new emission units apply LAER, and requires that sources emitting more than 4 TPY of any criteria pollutant, but 29 TPY of CO, offset its emissions for that pollutant. The 10 TPY VOC and NOx thresholds therefore apply to sources for the purposes of statewide compliance, federal land manager notification, visibility impact analysis on Class I areas, and the alterative source siting analysis. The 10 TPY VOC and NOx thresholds are also used to determine when a source will be subject to permitting under the District's part 70 program. Thus, the District rule meets the federal requirements. (Rule 1302(p)).

b. .Definition of the term "major modification" that reflects that any increase at any emission unit of a major stationary source of an ozone precursor is a major modification and subject to part D requirements as a major modification to a major source of an ozone precursor.

The District has adopted a 1 lb/day VOC/NOx threshold in the SEDAB area to meet the special major modification requirements of part D of the CAA. Because the District requires that all new emission units apply LAER, and requires that sources emitting more than 4 TPY of any pollutant, but 29 TPY of CO, mitigate its emissions for that pollutant, the 1 lb/day VOC/NOX threshold actually applies to sources mainly for the purposes of statewide compliance, federal land manager notification, visibility impact analysis on Class I areas, and the alterative source siting analysis. This threshold is also used to determine when a source will be subject to permitting under the District's part 70 program. Thus, the District rule meets the federal requirements. (Rule 1302(o)).

Carbon Monoxide (CO)

The general part D NSR permit requirements of Title I apply in CO nonattainment areas, and are supplemented by the CO requirements in subpart 3 of part D.

1. All States with moderate CO nonattainment areas with a design value greater than 12.7 ppm were required to submit proposed part D NSR programs by November 15, 1992. Such programs must have the following provisions . A demonstration that the District has met the requirement follows each provision, with the applicable subsection of the

### 13 submitted rule in parentheses:

a. Definition of the term "major stationary source" that reflects the 100 TPY CO threshold for determination of whether a source is subject to part D requirements as a major source.

The District has adopted a CO major stationary source threshold of 100 TPY. Thus, the District rule meets the federal requirements. (Rule 1302(p).

b. Provisions to ensure that new or modifi ed major stationary sources obtain offsets at a ratio of at least 1 to 1 in order to obtain an NSR permit.

The District rule meets the federal requirements. (Rule 1303(b)(2)).

Particulate Matter (PM-10)

1. PM-10 NSR programs for areas designated as serious nonattainment must have the following provisions. A demonstration that the District has met the requirement follows each provision, with the applicable subsection of the submitted rule in parentheses:

a. Definition of the term "major stationary source" that reflects the Section 189(b)(3) thresholds of 70 TPY for PM-10 and 70 TPY for each PM-10 precursor (in certain cases) for determination of whether a source is subject to part D requirements as a major source.

The District has adopted a PM-10 major stationary source threshold of 70 TPY. At this time, EPA has not made a finding as to whether major sources of precursors of PM-10, such as NOx or SOx, in the District do or do not contribute significantly to PM-10 levels in excess of the NAAQS in either the SEDAB or the non-SEDAB areas. Therefore, at this time, the District is not obligated to require major sources of PM-10 precursors to meet the same requirements as major sources of PM-10. However, EPA may in the future make a finding that major sources of PM-10 precursors do contribute significantly to PM-10 levels in excess of the NAAQS. At that time, the District may be required to revise its NSR rules accordingly. Therefore, at this time the District rules meet this requirement. In anticipation of this requirement, however, the District has adopted a 70 TPY major source threshold for sources emitting SOx located or proposed to be located in the non-SEDAB area. For sources located in the SEDAB area, the District has a major source definition of 100 TPY of SOx. (Rule 1303(p))

b. Provisions under Section 173(a)(1)(A) to ensure that new or modified major stationary sources obtain an offset ratio of at least 1 to 1.

### 14 The District requires that offsets for major new sources and modifications of PM10 be obtained at a ratio of 1.2 to 1. (Rule 1303(b)(2)).

c. Under Section 189(e), requirements applicable to major sources of PM-10 are also applicable to major sources of PM-10 precursors, except where theAdministrator determines that such sources do not contribute significantly to PM10 levels which exceed the standards in the area.

At this time, EPA has not made a finding as to whether major sources of precursors of PM-10 in the District do or do not contribute significantly to PM-10 levels in excess of the NAAQS in either the SEDAB or the non-SEDAB areas. Therefore, at this time, the District is not obligated to require major sources of PM-10 precursors to meet the same requirements as major sources of PM-10. However, EPA may in the future make a finding that major sources of PM-10 precursors do contribute significantly to PM-10 levels in excess of the NAAQS. At that time, the District may be required to revise its NSR rules accordingly. Therefore, at this time the District rules meet this requirement. (1302(p)).

d. Provisions to ensure that the significance threshold for a modification to be major,and therefore subject to the Section 173 permit requirements, is 15 TPY for PM10 and, presumptively, 15 TPY for each PM-10 precursor.

The District has adopted a PM-10 significance threshold of 15 TPY for major modifications of PM-10 sources, and a 40 TPY significance threshold for SOx. As noted in paragraph (c) above, at this time, the District is not obligated to require major sources of PM-10 precursors to meet the same requirements as major sources of PM-10. However, EPA may in the future make a finding that major sources of PM-10 precursors do contribute significantly to PM-10 levels in excess of the NAAQS. At that time, the District may be required to revise its NSR rules accordingly. Therefore, at this time the District rules meet this requirement. Therefore, the District rules meet the federal requirements. (1302(o)).

Rule Deficiencies:

None

### 15 Special Clarifications:

Offset ratio in the aggregate:

The District has committed to apply a tracking system which will continuously show that in the aggregate the District will be able to provide for the necessary offsets required to meet the appropriate statutory offset ratio. Through the track ing system, the District will also show that it will offset emissions from sources exempted fr om offsets under rule 1304, which are not exempt from federal regulation, except sources switchi ng from ozone depleting compounds to VOCs. Emission increases from sources switching from ozone depleting compounds to VOCs will be offset by the District through reductions achieve d by the District's 1994 attainment plan for which EPA has proposed approval at FR 10920 [Vol.61, No. 53/Monday, March 18, 1996][CA114-1-7280;FRL-5439-8]. The District will, however, track such reductions so that they are not double counted with reductions used to meet the offset ratio on the aggregate. In the event that the District modifies the attainment plan so that it no longer covers sources switching emissions from ODCs to VOCs, then the District will have to show that those VOC emissions increases will be covered by the District through the tracking system as all other emissions sources exempt under Rule 1304, or modify Rule 1304 to exclude exemptions for such sources.

In the following letters, EPA determined that the District's proposal to offset all emissions increases with emissions reductions not otherwise required by the Act could be met in the aggregate was consistent with the language in the Act:

(1) William G. Rosenberg to James M. Lents, February 28, 1992 (2) David P. Howekamp to James M. Lents, September 8, 1993 (3) David P. Howekamp to James M. Lents, October 14, 1993

Although these letters generally address issues in the RECLAIM program, the questions related to the tracking system and section 173(c)(2) of the Act apply to the New Source Review Program within the District.

ERC tracking system:

The District will maintain a tracking system which will keep track of emission reductions achieved by the District rules. Sources of emission reductions are as follows: emission reductions obtained from orphaned shutdowns, Best Available Control Technology discounting (rule 1306(c)) of emission reduction credits generated, surplus reductions created from external

offset factor for sources less than 10 TPY VOC, and emission reductions created from the application of the zero BACT threshold. Emission increases will be the community bank allocations of rule 1309.1, priority reserve allocations (rule 1309.1(b)), the difference between the actual amount of offset required by the District rule and the Clean Air Act for facility emission increases which require external offsets, the difference between the amount of offsets required by the District rule and the amount of offsets required by the CAA from sources

### 16 proposing to provide internal offset, emission in creases from sources exempt from offsets under rule 1304 that are not exempt by federal requirements (with the exception of increases in emissions caused by sources switching from ozone depleting compounds to VOCs). The summary of the tracking system is included in the SIP submittal.

Construction related activities:

District Rule 201, which prohibits construction prior to permit issuance, is integral to Regulation XIII. EPA is taking this approval action with the understanding that the District will continue to enforce Rule 201 in a manner consistent with federal regulations as interpreted by the District in its interim Rule 201 statement dated September 19, 1994. See also letters from EPA to the District dated December 3, 1993, May 19, 1994, and June 7, 1996, and EPA Policy Memorandum dated November 4, 1993.

Net Emissions Increase Calculation:

EPA understands that the District has two net emissions calculations procedures outlined under rule 1306. The first procedure, an actual to potential net emissions increase calculation procedure, is used for sources that have never undergone the NSR process. See rule 1306(d)(2)(B). The second procedure uses a potential to potential net emissions increase calculation. See rule 1306(d)(1)(A). EPA is making the determination in this action that the District's net emissions increase calculations meet the federal requirements as shown below.

The District requires LAER on all new or modified units that have a net emissions increase. Thus, if the facility adds a new emissions unit, then such a unit will apply LAER. In addition, if the emissions unit is modified and the modification causes that emission unit to have a change in potential emissions, then the unit will again be subject to LAER requirements.

The District also requires all new facilities that have the potential to emit more than 4 TPY of NOx, VOC, SOx, or PM10, or 29 TPY of CO to offset the total amount of emissions. Similarly, all modifications that cause sources to have a potential to emit greater than 4 TPY of NOx, VOC, SOx, or PM10, or 29 TPY of CO must offset the corresponding net emissions increase. For modifications, the District does not, however, require mitigation for pre-existing equipment that emitted pollutants in amounts below the 29 TPY of CO or 4 TPY of NOx, VOC, SOx, or PM10.

Rule 212 outlines the public notice requirements. Public notification requirements apply to sources that have new or modified emissions units, and facilities that have emissions increase of 30 lbs/day VOC, 40 lbs/day of NOx, 30 lbs/da y of PM10, 60 lbs/day SOx, 220 lbs/day of CO, and 3 lbs/day of Pb. The public notification requirements outlined under 40 CFR 51.161 would then be met by sources with modifications above the thresholds stated above. For sources that propose net emissions increase outlined above, the District requires a lower level of public

### 17 notification. EPA feels that the level of notif ication is appropriate since it provides ample notification for sources proposing emission increases above the thresholds above, while providing the District with the much needed administrative relief from the large number of public notification that the District must perform.

Based on the above, EPA concludes that all new major sources and all major modifications at major sources will be appropriately subject to the LAER, offset, and public notification requirements. Thus, the net emissions increase calculation when used to determine if the facility has made a major modification applies mainly to the Statewide Compliance determination (CAA ' 173(B)(3)), the Alternative Siting Analysis (CAA ' 173(B)(5)), and Visibility Protection and Federal Land Manager Notification (CAA ' 169A and 40 CFR 51.307) requirements. Since the emissions from facilities that have undergone the District's NSR process will have mitigated all emissions, or actual emission increases, then the analysis resulting from a modification at such facilities differ only when the potential to emit at the facility increases. Thus, since Regulation XIII requires facilities to perform the analysis essentially only when the analysis will be different, then Regulation XIII applies these requirements in a manner consistent with federal requirements.

Therefore, EPA concludes that the net emissions increase calculation, as used in Regulation XIII meets the federal requirements.

Permits to Operate:

Rule 1313, Permits to Operate, should not be confused with the Federal Operating Permit Program. Major Sources of air pollution are required to obtain a federal operating permit as outlined under District Regulation XXX. The main purposes of rule 1313 is for the District to permit to sources that are not subject to Regula tion XXX, or that may not be required to obtain an authority to construct because they were gra ndfathered or previously exempt from Regulation

XIII.

Interpollutant trading:

Lastly, EPA understands that any interpollutant trading proposed at the District will be subject to EPA approval.

Documents included in the EPA docket for this review:

NSR Checklist Letter from EPA to the District, February 28, 1992 Letter from EPA to the District, September 8, 1993 Letter from EPA to the District, October 14, 1993 Letter from EPA to the District dated December 3, 1993 District letter to EPA dated February 25, 1994

### 18 Letter from EPA to the District dated May 19, 1994 South Coast Interim Rule 201 Interpretation dated September 19, 1994 Letter from EPA to the District dated June 7, 1996 EPA Policy Memorandum dated November 4, 1993. South Coast AQMD Response to EPA comments, April 18, 1995

Submitted Rule 212

Submitted Rule 1301

Submitted Rule 1302

Submitted Rule 1303

Submitted rule 1304

submitted Rule 1306

Submitted Rule 1309

Submitted Rule 1309.1

Submitted Rule 1310

Submitted Rule 1313 Submitted Summary of the NSR Tracking System