SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

FINAL DRAFT STAFF REPORT

PROPOSED AMENDMENTS TO RULE 2201 (NEW AND MODIFIED STAT IONARY SOURCE REVIEW RULE)

Prepared by: Carlos Garcia, Senior Air Quality Engineer Reviewed by: David Warner, Director of Permit Services

March 17, 2011

I. SUMMARY

As required under the federal Clean Air Act, the U.S. Environment al Protection Agency (EPA) set new national ambient air quality st andards for particulate matter less than 2.5 micrometers (PM2.5) to protect against pub lic health impacts. Consequently, the EPA determined that the San Joaquin Valley Air Pollution Control District (District) was in

nonattainment of the PM2.5 standards. This set into motion several actions for the District to take which included adoption of the District’s 2008 PM2.5 Plan which outlines the path to attainment of the federal PM2.5 standard. The Clean Air Act and applicable regulations require that PM 2.5 nonattainment areas, such as our valley, incorporate permitting requirements into their New Source Review (NSR) rules. The District’s NSR program ensures that the emissions of new or modified stationary sources are mitigated

and do not interfere with the Distr ict’s efforts to meet air quality standards. With this proposed rule development for Rule 2201, Distr ict staff is proposing amendments to our NSR rule to implement m andatory provisions of the federal nonattainment PM2.5 permitting program requirements.

Furthermore, the District amended Rule 2201 in September 2006 to add permitting requirements for agricultural sources (per SB 700, Florez) in the valley by directly referencing related portions of the Califor nia Health and Safety Code (CH&SC). EPA found this exemption to be am biguous, since the referenced code is not contained in the State Implementation Plan, and therefore found it to be a deficiency in Rule 2201. Consequently, the District will revise Rule 2201 to explicitly add the language describing the applicability of offsets for agricultural source s in Rule 2201, section 4.6.9. The direct addition of the agricultural offset exem ption language in Rule 2201 to address EPA’s limited disapproval will provide a clearer description of the exemption and does not change

the intent of the rule or the methods with which the District permi ts agricultural sources. It should be noted that EPA also found partial dis approval issues with agricultural source permitting exemption language in Rule 2020, “E xemptions”, but this rule is being addressed in a separate rule amendment action.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 Two workshops have been held under this rule development project to discuss, present

and take comments on the Draft Rule 2201 am endments. Due to mandatory timelines for incorporating the federal PM2.5 requirements, the pr oposed rule amendments will be considered for adoption by our Governing Board on April 21, 2011.

II. DESCRIPTION OF RULE 2201 (NEW AND MODIFIED STATIONARY SOURCE REVIEW RULE)

The District’s NSR rule provides a regulatory mechanism for allowing continued economic growth while minimizing the amount of emission increases due to this growth. District Rule 2201 applies to all new stati onary sources and all modifications to existing stationary sources that are subject to District permit requi rements. However, there are certain permitting exemptions allowed for smaller sources of emissions which are identified in Rules 2201 and Rule 2020 (Exemptions).

The District’s NSR program is designed to meet both the st ate and federal NSR requirements for nonattainment areas and applies to new and modified stationary sources that emit nitrogen oxides (NOx), vo latile organic compounds (VOC), particulate matter with an aerodynamic diamet er of less than ten microns (PM-10), sulfur oxides (SOx), carbon monoxide (CO) , and other pollutants subject to District permitting requirements pursuant to District Rule 2010 (Permits Required).

Key features of Rule 2201 include:

 Best Available Control Technology ( BACT): mandates emission controls to minimize emission increases above de minimis values;

 Emission offsets: requires emissions above specified offset threshold levels to be mitigated with either concurrent reducti ons or past reductions which have been banked as emission reduction credits (ERC);

 Public notification: a 30 or 45 day notice period prior to issuance of an Authority to Construct (ATC) to garner comments on proj ects that result in emissions above specified levels;

 Required elements for Authority to Cons truct, Permit to Operate and administrative requirements for the processing of NSR applications.

Rule 2201, New and Modified Stat ionary Source Review Rule, provides the mechanism for the San Joaquin Valley Unified Air Pollution Control District (District) to issue permits to new and expanding businesses. Its prim ary purpose is to minimize and mitigate emissions associated with new growth. The District’s NSR program is designed to meet both the state and federal NSR requi rements for nonattainment areas, and applies to new and modified stationary sources t hat emit NOx, CO, VOC, SOx, PM10, PM2.5 (with this modification) and other pollutants subject to District permit.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 III. DISCUSSION OF PROPOSED RULE AMENDMENTS

A. Implementation of the New Source R eview Program for Particulate Matter Less than 2.5 Micrometers (PM2.5)

1. Background

The EPA set new national ambient air qua lity standards (NAAQS) for particulate matter less than 2.5 micrometers (PM2.5 ) to protect against public health impacts. Subsequently, the EPA determi ned that the San Joaquin Valley Air Basin was designated nonattainment fo r the 1997 PM2.5 NAAQS, and EPA also designated the Valley as nonattainm ent for the 2006 PM2.5 NAAQS on November 13, 2009 (effective December 14, 2009). Additionally, the SJVAB is designated as nonattainment under the PM 2.5 California st ate standards (CCR Title 17 Section 60210).

The federal Clean Air Act and applicable regulations requ ire that PM2.5 nonattainment areas, such as our valley, incorporate certain requirements into their New Source Review (NSR) rules fo r sources that emit PM2.5 and other pollutants that contribute to PM2.5. EPA issued final rules called Implementation of the New Source Review Program for Particulate Matter Less than 2.5 Microns (PM2.5 NSR Implementation Rule) requi rements on May 16, 2008 (73 FR28321). The PM2.5 NSR Implementation Rule ex plains how to apply NSR to PM2.5

emissions sources and establishes the ma jor source threshold, significant emissions rate, offset ratios, interpollu tant emission offset ratios, and offset applicability of PM2.5 precursors.

District staff is proposing amendments to its NSR rule to meet these federal requirements. Submittal of the PM2.5 NSR program requirements is due to EPA before May 16, 2011.

Currently, PM2.5 permitting requirements are being implemented through District policy, APR 1140, which outlines interim federal NSR requirements for PM2.5 for new major sources and federal major m odifications. These requirements are specified in 40 CFR Part 51.165 and the EPA Emission Offset Interpretive Ruling (Part 51 - Appendix S) and are effective as of July 15, 2008. District Policy APR 1140, Interim New Source Review Requi rements for PM2.5, will continue to apply until Rule 2201 has been amended by the District’s Governing Board to incorporate the federal NSR provisions for PM2.5.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 2. Major Source Thresholds

The federal NSR permitting program relies on emissions thresholds to determine when program requirements apply to new facilities. If a new facility will emit target air pollutants in amounts greater than the major source threshold, the facility is considered a major source. S ources are defined as a major source for nonattainment NSR provisions if they have the potential to emit of 100 or more tons per year of PM2.5.

3. Significant Emissions Rates

The federal NSR program applies signifi cant emission rate thresholds to determine when NSR requirements apply to ex isting major facilities. Significance

thresholds are used to determine the emissions for a proposed project at an existing facility is considered a federal major modification (as defined in Rule 2201 section 3.18.1.4).

The PM2.5 NSR Implementati on Rule outlines the followi ng significant threshold emissions rate in tons per year (tpy) fo r direct PM2.5 and precursor pollutants:

 Direct PM2.5 emissions at 10 tpy

 SO2 emissions at 40 tpy

 NOx emissions at 40 tpy

The District will include the mandatory requirement for sulfur dioxide (SOx) and nitrogen oxides (NOx) to be regulated as precursors to PM2.5. However,

because the District’s PM2.5 Plan did not demonstrate that volatile organic compounds (VOC) and ammonia are signific ant contributors to the formation of PM2.5 precursors in the SJVAB, they c an not be considered precursors for NSR

purposes.

4. PM2.5 Offset Ratios

The offset ratios established in EPA’s PM 2.5 NSR Implementati on Rule are 1 to 1, so one pound of emissions reduction is required for one pound of emissions increase of PM2.5 or PM2.5 precursors.

5. PM2.5 Interpollutant Emission Offset Ratios

The federal PM2.5 NSR Implem entation Rule allows provisions for interpollutant trading of emission offsets. In the federal rule, default interpollutant offset ratios were assigned for NOx to primary PM2.5 at a 100 to 1 ratio (100 tons NOx for 1 ton PM2.5) and for SOx to pr imary PM2.5 at a 40 to 1 ra tio. Ratios for other pollutants were not specifically established but states have an option to add them if the interpollutant rati os are established in attain ment demonstration plans and approved into the State Im plementation Plan (SIP).San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 The EPA’s interpollutant offset ra tios established in the PM2.5 NSR Implementation Rule are to be used unle ss states choose to incorporate other

ratios that are substantia ted through modeling or othe r technical demonstrations to be more representative for specific geographic areas such as the valley.

EPA acknowledges that variat ions that occur across geographic regions can vary the relationship between pollutants. Thus, the District is proposing to submit different trading ratios as outlined by EPA which include, but is not limited to:

 The relative magnitude of emissi ons of direct PM2.5 and precursor gases (e.g., SO2 and NOX) within the geographic area of interest.

 The relative contribution to loca l PM2.5 nonattainment of directly

emitted PM2.5 and individual precursors from the various sources or source categories under consider ation as part of a potential interpollutant trade.

 The meteorological conditions and topography of the area, which result in different source-recept or relationships across pollutants

within the local area.

Through preliminary analysis, the District be lieves that the interpollutant offset ratios set by EPA are much greater t han would be actually needed for sources to adequately offset their PM2.5 emissions increases in the valley.

At the December 2010 works hop for Rule 2201, the District stated that it may propose new interpollutant offset ratios for inclusion into the SIP through

amendments to Rule 2201 or through the PM2.5 plan.

At this time, the District is proposi ng to prepare and send to EPA for approval alternative interpollutant ratios for SOx for PM2.5 and NOx for PM2.5 that are more appropriate for the valley, thr ough amendments to the 2008 PM2.5 Plan SIP process. Therefore, Section 4.13.3.2 was added to allow the use of any EPA approved interpollutant offset ratios. This section is intended to allow the use of the District’s interpollutant offset rati os once they are approved by EPA into the

SIP.

The District is proposing to move rapidly on this issue, and will workshop the proposed PM2.5 interpollutant ratios by second quarter 2011, wit h the intent of taking them before the governing board for their consideration and approval by third quarter 2011.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 B. Title V Program

EPA established the major source threshold for PM2.5 at 100 tons per year. Sources with potential emissions over the th reshold would be subject to federal permitting requirements

under Title V.

No changes to the District’s Title V rule , Rule 2520 (Federally Mandated Operating Permits), are needed because the majo r source definition refers to the definition in Rule 2201 which will include the 100 tpy major source threshold level for PM2.5.

C. Rule 2530 (Federally Enforceable Potential to Emit)

The primary purpose of Rule 2530 is to provide facilities whose emissions are consistently low certain mechanisms to escape Title V permitting requirements.

Facilities that maintain sufficient records to demonstrate that actual emissions from the facility are less than 50 percent of all major s ource emissions thresholds are considered to have a “federally enforceable potential to em it” that is less than the District’s major source, or Title V, thresholds.

PM2.5 emissions constitute a portion of PM10 emissions. For exampl e, PM2.5 emissions from sources of combustion generally account for more than 90% of the PM10 emissions. Non-combustion sources generally have a much sm aller fraction of PM2.5. If a stationary source is not considered a major source for PM 10 , which threshold is 70 tons per year, then the source can not be a major source for PM2. 5 since the PM2.5 major source threshold is established at the higher level of 100 tons per year. The District will utilize the PM10 Title V permitting exemption thresholds in Rule 2530 as a conservative measure to assure a federally enforceable limit on PM2. 5 emissions also exists.

In other words, facilities found to be exempt from Title V pe rmitting because they maintain annual emissions of less than 35 tons of PM10 each year are automatically known to be exempt based on their PM2.5 emissions as well, as their PM2.5 emissions are obviously below 50 tons per year. Therefore, no change is necessary in Rule 2530.

D. 2008 PM2.5 Plan: Pre-baseline Usag e of Emission Reductions Credits (PM2.5 Caps)

The rule amendments will also include limits, or caps, to the quantity of certain emission reduction credits (ERCs) that can be used as mitigation for new source s. The limits are specified in the District’s 2008 PM2.5 Plan and may be included in subsequent EPA approved attainment plans, and apply to so-ca lled “pre-baseline” ERCs. Pre-baseline

ERCs are those that pre-date the applicable baseline per iod for each of the District’s SIP approved attainment plans. The plans s pecify caps for each pollutant, and the NSR rule will incorporate language t hat references these limits. These caps have been established through a very conservative proc ess, and we do not expect that ERC usageSan Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 will exceed the caps. However, if the quantity of pre-baseli ne ERCs that get used as offsets reaches the caps, use of pre-baseline offsets will be curtailed until the respective plans can be revisited to extend the caps.

The District’s 2008 PM2.5 Plan outlines the stra tegy for achieving the NAAQS for PM2.5 (1997 Standard). Pre-baseline ERCs are considered as gr owth and must be included in the PM2.5 plan to the extent that these credits will be used as offsets or netting prior to

the attainment of t he PM2.5 standards by 2015. Theref ore, a cap on the amount of prebaseline credits that can be used is required to assure that the use of pre-baseline

ERCs do not interfere with the attainment e ffort and the applicable ra te of progress. The District committed to amending our Rules and Regulations to require tracking and

enforcement of the c ap within 12 months after EPA approval of this Plan. The 2008 PM2.5 Plan has been submitted to EPA for appr oval, and it should be noted that on November 30, 2010, EPA issued it ’s proposal of limited approv al and limited disapproval of the plan (75 FR74518).

As shown in Tables D-1 through D-4 of appendix D of the District’s 2008 PM2.5 Plan, the expected pre-baseline offset usage a fter 2005 through 2014, was estimated as

follows:

NOx ..................................... 4.8 tons/day VOC ..................................... 9.8 tons/day PM2.5.................................... 0.9 tons/day

SOx ...................................... 1.7 tons/day

References to these caps, and the relat ed tracking and enforcem ent provisions, are incorporated into Rule 2201, Section 7.5.

As currently written in Rule 2201, Section 7.5 allows the Distr ict to directly incorporate future pre-baseline emission reduction c aps contained in District-adopted and EPA SIP approved attainment plans.

E. Agricultural Permitting and EPA Appr oval and Disapproval of Rule 2201

In January of 2004, new state la ws took effect pertaining to the permitting of agricultural operations in the State of Ca lifornia (SB 700, Florez). In part, these laws removed the long-standing state air permitting exemption for agricultural operations and replaced it with a set of rules requiring agricultural sour ces with emissions over one-half a district’s major source thresholds to obtain permits, and requiring air district s to make certain findings before requiring permits of agricultu ral sources with emissions less than those

thresholds. See California Heath and Safety Code (CH&SC), Section 42301.16.

In addition, SB 700 enacted CH&SC Section 42301.18(c). This section prohibits districts from requiring minor agricultural s ources to offset their emissions increasesSan Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 unless certain criteria are met, which criteria would then allow the same types of agricultural sources to bank credits after generating voluntary emissions reductions. On May 11, 2010, EPA published in the Federal Register (75 FR26102) a final limited approval and limited disapproval of District Rule 2201 and Rule 2020 (Exemptions). The EPA’s final approval/disapproval was e ffective on June 10, 2010. The EPA’s final limited disapproval triggered an 18-month sancti on clock requiring the District to submit a SIP approval revision of Rule 2201 by Dece mber 10, 2011. Unless the rule deficiency is corrected and a SIP approvable rule is subm itted by the District before the sanction deadline expires, EPA will impose federal s anctions which include withholding highway

funds and an increase emission offset ration requirement for stat ionary sources within the San Joaquin Valley. In addition to the 18 -month sanction, the District could face a Federal Implementation Plan by EPA if the District fails to s ubmit a fully approvable SIP revision of Rule 2020 within 24 months by June 10, 2012.

EPA found that the limited permi tting exemption for agricultural sources of emissions

found in section 4.6.9 of the rule was inappropriately ambiguous due to a reference to state law, which law is not in the SIP. To correct the rule deficiency, EPA recommended replacing the statutory referenc e to the CH&SC with a clear description of the sources covered by the exemption.

Specifically, current Rule 2201, Section 4. 6.9, says that the following sources are exempt from permitting offset requirements:

Agricultural sources, to t he extent provided by Californi a Health and Safety Code, Section 42301.18(c), except t hat nothing in this section shall circumvent the requirements of section 42301.16(a).

Staff is proposing to remove the ambiguity caused by the reference to state law by restating that emissions offs ets shall not be required for:

4.6.9 Agricultural Sources, for criteria pollutants for that source if emissions

reductions from that source would not meet the criteria for real, permanent, quantifiable, and enforceable emission reductions.

4.6.9.1 In no case shall the offset ex emption in section 4.6.9 apply to an agricultural source that is also a major stationary source for the pollutant for which the offset exemption is sought.

To support the new language above, staff reco mmends the addition of a definition for “Agricultural Source” to Section 3.0 (Definitions) of Rule 2201 as follows:

3.5 Agricultural Source: equipment or operations that emit air contaminants and that are used in the production of crops or the raising of fowl or animals.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 These changes remove the ambiguity caused by referencing the state law but do not change the applicability of the exemption in any way because applying the referenced

state law would lead to the same result.

It should be noted that the White Paper on SB 700 produced by the California Air Pollution Control Officers Association (CAPC OA) interprets the language we have captured in Section 4.6.9 as saying that t he District may not require offsets for minor agricultural sources unless we can issue emissions reduction credits to the same source-types.

It should also be noted that SB 288 prohibits changes to certain permitting requirements such that they relax those requirements in place on December 30, 2002. As discussed later in this report (section IV) and more thoroughly in the Distric t’s September 21, 2006 final staff report for Rule 2201 and 2020, this is not a change in requirements at all, but merely an incorporation of ex isting state law requirements. In addition, all agricultural operations were exempt from permits by state law in 2002, and remained exempt until state law changed in 2004. T herefore, neither this ch ange, nor the one discussed below, could relax any permitting requirements that existed on December 30, 2002, and

so SB 288 is not violated.

F. Proposed Rule Amendments

The following changes are proposed for Draft Rule 2201:

 Section 3.4: PM2.5 was added to the list of affected pollutants applicable to NSR.

 Section 3.5: An agricultural source definition was added to support the offset exemption in section 4.6.9.

 Section 3.18.1.4: Added the federal major modification si gnificance thresholds for PM2.5 which include direct PM2.5 and the pr ecursors of SOx and NOx. Ammonia and VOC were not included as precursors.

 Section 3.24: Added the federal major source threshold for PM2.5. The threshold for major sources of PM2.5 is 200,000 pounds per year (100 tons per year).

 Section 3.28: PM2.5 was defined as particulate matter with an aerodynamic diameter smaller than or equal to a nominal 2.5 microns.

 Section 3.31: NOx and SOx are included as precursors for the nitrate fraction and sulfate fraction for PM2.5, respectively.

 Section 4.5.4: Added the following language that requires PM2.5 offsets: “Offsets shall be required for PM2. 5 and PM2.5 precursor emission increases for such increases that constitute new major sour ces or federal major modifications.”San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 In the initial version of this modifica tion of Rule 2201 (12/14/2010), The District proposed to use language that would require ma jor PM2.5 projects to offset their emissions using “surplus at time of use” creditable emissions reduction for offsetting purposes, consistent with the federal offse tting requirements. Th is would follow the existing federal offsetting requirements and would remove the need to include

PM2.5 emissions in the Annual Offset Equivalency Demonstration tracking processes of Sections 7.1 through 7.4 of Rule 2201.

However, stakeholders commenting on this draft of the rule were unanimously opposed to this concept because of the i nherent discouragement of the development of innovative air pollution controls and techniques.

The District agrees that requiring “surplus at time of use credits” creates a

disincentive for the creation of ERCs, since there is no certainty that the reductions will be valid at the time they are used. Companies have indicated to the District in the past that they were not willing to inve st in innovative and voluntary emissions reduction technologies if there was no certai nty that the credits created would be valid at the time they were needed. We al so agree that this issue was the reason that we negotiated the offset equivalency program with EPA.

Section 7 of Rule 2201 specifies the tra cking and reporting actions involved with the annual equivalency demonstration and steps to be taken to correct any ERC

shortfalls. This section also details t he required actions to be taken if an ERC

shortfall occurred. Rule 2201 has a self -implementing offset shortfall remedy procedure which entails follo wing the federal offsetting requirements directly, until the shortfall is eliminated. The system is designed to be invisible to permittees unless equivalency cannot be demonstrated and the indicated remedies must be implemented.

Nothing in this section, or in the underlying agreement, proh ibits that application of the equivalency tracking system to PM2.5 em issions. Therefore, the District is proposing to amend section 4.5.4 to elim inate the surplus at time of use requirement, and instead demonstrate through section 7 that we have, on an annual basis, required sufficient surplus at time of use PM2.5 emission reductions to satisfy federal PM2.5 offsetting requirements. We will, upon adoption of this rule, add PM2.5 to subsequent annual offset equivalency reports.

 Section 4.6.9: Remove the CH&SC 42301.18(c) reference in Section 4.6.9 and add the specific language specified above that agr icultural sources are provided some limited exemption from offsetting emissions increases. Agricultural sources subject to major source permitting, including feder al major modifications, would need to provide offsets for the corresponding po llutants. This cl arifies EPA’s limited disapproval issues, and does not change t he District’s current practices and methods of permitting agricultural sources.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201  Section 4.8.2 added t he following language: “For PM2.5 and PM2.5 precursor offsets for new major sources and federal ma jor modifications, the offset ratio shall

be 1.0.” Again, this requirement is to rema in consistent with the federal PM2.5 permitting requirements.

 Section 4.13.3.2: This se ction was added to allow a source to provide interpollutant offsets for PM2.5 emissions increases. As currently proposed, the interpollutant offset ratios are those set by EPA (see sect ion III.A.5) until such time that the District

demonstrates and submits alternative rati os to EPA, and EPA approves them into

the SIP.

IV. PROTECT CALIFORNIA AIR ACT OF 2003 - SENATE BILL 288

California Health and Safety Code sect ions 42500 through 42507 (SB 288) mandates that a District’s New Source Review (N SR) rules cannot be made less stringent, in a variety of specified areas, than the ru les that existed on December 30, 2002 1 . This legislation was crafted and signed into law s pecifically to prevent Districts from implementing any Federal NSR reforms that would have relaxed California’s stringent NSR requirements. The state Air Resour ces Board (ARB) has provided guidance on the implementation of SB 288, and has concluded that ther e are four components of

NSR that are affected:

1. NSR applicability determinations.

2. The definitions of “modification”, “majo r modification”, “routine maintenance”, and “repair or maintenance”.

3. The calculation methodology, thresholds , or other procedures of new source review. ARB further interprets this to apply to baseline determinations, calculating emissions changes, offset amounts required and major source and major modification thresholds.

4. The definitions and requirements of NSR regulations, including, on a programwide basis, the requirement to obtain offsets 2

.

The proposed NSR rule amendments outlined in th is report implement required federal provisions to add new requirements fo r PM2.5 and to reword, but not change implementation or meaning, a limited offsetting exemption. Neither of these changes relaxes existing District NSR requirements.

1 There are some narrowly defined exceptions to t hese “anti-backsliding” provisions, but none apply to this rule amendment and therefore the exceptions will not be discussed further in this staff report.

2 While the District believes that this final com ponent is an overly broad legal interpretation of the legislation, and inconsistent with t he development and intent of the legisl ation, we believe the District’s proposed amendments are complying with ARB’s interpretation on this issue. However, we will reserve our right to challenge ARB on this issue at a later date, or if ARB uses this in terpretation to contravene any of the District’s proposed NSR amendments.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 V. RULE DEVELOPMENT PROCESS

EPA’s Final Rule To Implement the PM2.5 National Ambient Air Quality Standard; Final Rule (effective January 30, 2006) provides states three year s to submit an approvable NSR program for the PM2.5 standard. Thus for this requirement, EPA mandates that our NSR program needs to be submitted into the SIP before May 16, 2011 (73 FR 28321).

Two workshops for public input to proposed amendments to Rule 2201 have been completed. District Staff conducted the fi rst workshop meeting on December 14, 2010 and the second workshop on F ebruary 10, 2011 to present, discuss and take comments on the proposed rulemaking. The District c onsidered written comments received from the public, affected sources, ARB, and EPA during the public workshop process which were addressed in the previous staff report for Rule 2201. For the first workshop, comments have been incorporated into the dra ft rules as appropriate. There were no

written comments received for the second works hop to address in this final draft staff
report.

Adoption by our Governing Board is schedul ed for April 21, 2011, after which Rule 2201

will be forwarded to EPA for inclusion into the SIP.

VI. COST EFFECTIVENESS AND SO CIOECONOMIC IMPACT ANALYSIS

Pursuant to CH&SC Section 40920. 6(a), the District is required to analyze the cost

effectiveness of new rules or rule amendments that implement Best Available Retrofit Control Technology (BARCT). The dra ft amendments do not add BARCT requirements and therefore are not subject to the cost effectiveness analysis mandate.

Additionally, state law requires the District to analyze the socioeconomic impacts of any proposed rule amendment that significantly affects air quality or strengthens an

emission limitation. The dra ft amendments will have neither effe ct, and is therefore not subject to the socioeconomic analysis mandate.

VII. RULE CONSISTENCY ANALYSIS

Pursuant to CH&SC Section 40727.2 (g) a rule consistency analysis of the draft rule is not required. The draft rule does not strengthen emission limit s or impose more stringent monitoring, reporting, or recordkeeping requirements.San Joaquin Valley Unified Air Pollution Control District

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for Rule 2201 VIII. ENVIRONMENTAL ASSESSMENT

Pursuant to §15061 of the Guidelines fo r Implementation of the California Environmental Quality Act (CEQA), District staff investigated the likely environmental impacts of the proposed amendments to Rule 2201. The purpose of this rule-amending project is to add the federal PM2.5 new source review requirements, which include establishing the PM2.5 major source permi tting thresholds, offset ratios, and PM2.5 precursor offset applicability. Additiona lly, the amendments will include some language changes to improve clarity and assure SIP appr oval of the limited o ffset exemption for minor agricultural sources. Draft amendm ents are based on federal requirements and do not change the meaning of current rule l anguage. As such, District staff concludes that it can be seen with certainty that the proposed amendment s to the rule will not have any significant adverse effect on the envir onment. Staff will recommend filing a Notice of Exemption under the provisions of California Code of Regul ations section 15061(b)(3).