U.S. Environmental Protection Agency

Region 9

RESPONSE TO COMMENTS

Revisions to California State Implementation Plan; Bay Area Air 

Quality Management District; Stationary Source Permits

EPA’s Response to Public Comments on the

Notice of Proposed Rulemaking

Regulation 2, Rule 1 – Permits, General Requirements

Regulation 2, Rule 2 – Permits, New Source Review

Docket No.: EPA-R09-OAR-2015-0280

May 23, 2016
Bay Area AQMD SIP Revision Submittal

Response to Comments

May 23, 2016

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TABLE OF CONTENTS

1. INTRODUCTION ............................................................................................................. 1

2. COMMENTS AND RESPONSES................................................................................... 2

2.1 The Air District’s Discretion in Developing a Regulatory Program to Satisfy the Federal 

NSR Requirements.......................................................................................................................... 2

2.2. SIP Requirements to Prevent Construction of New and Modified Sources that would 

Interfere with Attainment or Maintenance of a NAAQS................................................................ 4

2.3. SIP Requirements to Ensure Compliance with the Air District’s Control Strategy ....................... 9

2.4. Calculation of Offsets for Fully-Offset Sources............................................................................. 9

2.5. Providing Emission Reduction Credits for Shutdown of Fully-Offset Units............................... 16

2.6. Offset Requirements for SO2 as a PM2.5 Precursor....................................................................... 18

2.7. Visibility Analysis for Sources that May Impact Federal Mandatory Class I Areas.................... 19

2.8. Legal Effect of Limited Disapproval of Federal Enforceability of the Air District’s NSR 

Program Provisions....................................................................................................................... 22
Bay Area AQMD SIP Revision Submittal

Response to Comments

May 23, 2016

Page 1

1. INTRODUCTION

On August 28, 2015, the U.S. Environmental Protection Agency (EPA) provided notice of, and 

requested public comment on, a proposed Clean Air Act (CAA or Act) rulemaking to revise 

certain portions of the California State Implementation Plan (SIP) for the Bay Area Air Quality 

Management District (BAAQMD, Bay Area or District). 80 FR 52236. This document provides 

excerpts or summaries of the public comments received by EPA on our proposed action on the 

BAAQMD New Source Review (NSR)1 SIP submittal. Our responses to the comments are 

provided below. BAAQMD submitted a comment letter. The California Council for 

Environmental and Economic Balance (CCEEB) also submitted a comment letter although the 

substance of CCEEB’s comments was essentially identical to BAAQMD’s comment letter. EPA 

is responding to both comment letters in this document. EPA also received a late comment letter 

from the Sacramento Metropolitan Air Quality Management District that we are exercising our 

discretion to accept and consider. Finally, we received an anonymous non-substantive comment 

letter and a comment letter submitted on behalf of the California Air Pollution Control Officers 

Association (CAPCOA) that was withdrawn during the comment period. We are not providing 

responses to the anonymous, non-substantive comment letter or the withdrawn CAPCOA letter. 

The full text of all public comments and other documents relevant to this action are available in 

the docket (visit http://www.regulations.gov and search for Docket ID: EPA-R09-OAR-2015-

0280).

Index of Commenters

Name Title Organization

Jim Karas Director, Engineering 

Division

Bay Area Air Quality Management 

District (BAAQMD)

William J. Quinn Chief Operating Officer California Council for Environmental and 

Economic Balance (CCEEB)

Larry Greene Executive Director/Air 

Pollution Control Officer

Sacramento Metropolitan Air Quality 

Management District (SMAQMD)

Alan Abbs

(Comment letter 

withdrawn)

Executive Director California Air Pollution Control Officers 

Association (CAPCOA)

We have copied some of the comments verbatim and we have summarized others. We give equal 

weight to the comments whether they are copied verbatim or summarized in this document.

 1 By “NSR” or “NSR program” we are generally referring to the collective requirements of the minor NSR, 

Prevention of Significant Deterioration (PSD) and nonattainment NSR programs. 
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2. COMMENTS AND RESPONSES

2.1 THE AIR DISTRICT’S DISCRETION IN DEVELOPING A REGULATORY PROGRAM TO 

SATISFY THE FEDERAL NSR REQUIREMENTS

2.1.1. Comment: BAAQMD notes that the CAA is designed to achieve “cooperative 

federalism” and that “EPA’s role is simply to determine whether the local permitting 

authority’s choices satisfy or do not satisfy the federal NSR program requirements.” Bay 

Area Comment Letter (BACL) p. 1. BAAQMD states: “As long as the agency’s 

regulatory program satisfies the federal requirement, then EPA is required to approve it, 

even if EPA would choose to implement the requirement in a different manner or 

believes that some alternative approach is preferable.” Id. 

BAAQMD quotes language from appellate cases from the 5th and 11th Circuits.

BAAQMD highlights certain text from these cases, specifically from Luminant 

Generation Co., LLC v. United States EPA, 714 F.3d 841, 845-46 (5th Cir. 2013):

The Act confines the EPA to the ministerial function of reviewing SIPs for 

consistency with the Act’s requirements Id. at § 7410(k)(3). The EPA 

must approve the plan in its entirety if it meets the applicable requirements 

of the Act. [Citations omitted]

BAAQMD then states:

In some aspects, however, EPA’s Proposal seems based on a concern that 

the Air District’s rules do not implement certain federal NSR requirements 

in EPA’s preferred manner, rather than on a finding that they do not 

satisfy a federal NSR program requirement. For example, with respect to 

certain items in the proposal, EPA’s justification for its position (both in 

the published Proposal documents and in subsequent informal 

communication with EPA Region IX staff) has been based primarily on 

suggestions of a different way to implement a program element, rather 

than on an identification of what the federal NSR rules require and an 

explanation of why EPA believes that the Air District’s rule does not 

satisfy that requirement. 

Response: EPA understands its role under the cooperative federalism approach 

established by the structure of the CAA. However, cooperative federalism does not limit 

EPA’s review to a ministerial task of approving NSR rules if the rules under review do 

not meet the substantive requirements of the federal regulations set forth in 40 CFR 

51.160-51.166. The 9th Circuit recently considered the State of Arizona’s challenge to 

EPA’s denial of Arizona’s Best Available Retrofit Technology (BART) determination. 
Bay Area AQMD SIP Revision Submittal

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The court noted that the process for evaluating the State’s BART determination was 

similar to the SIP review process. The court stated:

EPA may only approve SIPs, or portions of SIPs, that ‘meet[] all 

applicable requirements’ of the Act. 42 U.S.C. 7410(k)(3). Thus, while the 

Act ‘gives states discretion in balancing the five BART factors, it also 

mandates that the state adhere to certain requirements when conducting a 

BART analysis.’ Oklahoma, 723 F.3d at 1208. Consequently, when

reviewing the regional haze SIPs, EPA may not approve ‘a BART 

determination that is based upon an analysis that is neither reasoned nor 

moored to the [Act]’s provisions.’ North Dakota, 730 F.3d at 761. In 

short, EPA is not limited to the ‘ministerial’ role of verifying whether a 

determination was made; it must ‘review the substantive content of the 

BART determination.’ Id.

Ariz. Ex rel. Darwin v. United States EPA, 815 F.3d 519 (9th Cir. 2016). EPA has applied 

the appropriate standard in reviewing the BAAQMD’s NSR rules and fully understands 

its role in the CAA’s cooperative federalism approach. EPA has proposed – and is now 

finalizing – a limited disapproval of a few provisions of the BAAQMD’s NSR rules that 

do not meet EPA’s regulatory requirements; this is not a matter of a different policy 

choice. EPA is finalizing some, but not all of the rule deficiencies we cited in our 

proposed rulemaking.

For the District’s minor NSR program, we are finalizing only the deficiencies in the 

rule’s definition of “Agricultural Source” in Section 2-1-239, and the provision in Section 

2-1-424 that cross-references the definition of “large confined animal facility” in 

Regulation 2, Rule 10 which is not in the California SIP. Our proposal cited two other 

deficiencies in the minor NSR program that we are not finalizing. We are not finalizing 

our proposal to find that BAAQMD Section 2-2-308 is deficient, for reasons discussed 

below in our responses to Comments 2.2.1 to 2.2.8. We are also not finalizing our 

proposal to find that the District’s rule is deficient because it does not contain a 

prohibition on issuing an ATC if the project does not meet all applicable requirements of 

the control strategy as discussed in in more detail in our response to Comment 2.3.1.

For the District’s major attainment and nonattainment source programs, we are finalizing 

our limited disapproval based on the deficiencies cited in our proposal. Notwithstanding 

the BAAQMD characterization to the contrary, the rules we cite as deficiencies do not 

comply with federal requirements. These are not a difference in policy choices. The rules 

deficiencies are discussed in more detail below.

2.1.2. Comment: BAAQMD commented that “EPA should ensure that it is according 

appropriate deference to the Air District’s policy choices on how to implement its NSR 

program.” BAAQMD also commented that “EPA should ensure that it has considered the 

deference owed to the Air District in making policy choices on how to implement its 

NSR program” and that “any disapproval decisions are made only after carefully 

considering what the federal NSR requirement at issue is, and whether the Air District’s 

approach falls within the discretion that the District has to adopt its own policies, within 
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the bounds of the federal requirements.” BAAQMD requested that any disapproval 

decisions be made based on “(i) a clear explanation of what the federal regulation 

requires; (ii) a description of how specifically the Air District’s rule does not satisfy the 

federal requirement; and (iii) an outline of the standards under which EPA will judge any 

revised submission, in order that the Air District can understand how to craft a revised 

submittal that EPA will be able to approve.” BACL p. 2

Response: As discussed above, EPA understands the principle of cooperative federalism 

and has applied that principle appropriately in finalizing its limited approval and limited 

disapproval of the BAAQMD NSR rules. EPA’s proposal and this Response to 

Comments document provides a clear explanation of the federal regulatory requirements, 

a description of how the BAAQMD rules do not satisfy certain requirements, and 

suggestions for revisions to the rules with deficiencies that would be approvable. The 

provisions that EPA has determined do not meet federal regulatory requirements are not a 

matter of differing policy choices.

2.2. SIP REQUIREMENTS TO PREVENT CONSTRUCTION OF NEW AND MODIFIED 

SOURCES THAT WOULD INTERFERE WITH ATTAINMENT OR MAINTENANCE OF 

A NAAQS

2.2.1. Comment: BAAQMD argues that EPA’s approval of its NSR rule and the requirement 

for minor stationary sources to comply with its NSR rule “satisfies the requirement in 40 

CFR 51.160(b) to ensure that new and modified sources will not ‘interfere with the 

attainment and maintenance of a national standard.’” BACL at p. 5. The District contends 

that the enforceable measures, rules and regulations approved into its SIP, including its 

NSR program “satisf[y] 40 CFR Sections 51.160(a) and (b).” Id. BAAQMD also cites to 

a statement in our Technical Support Document (TSD) at section 7.4.1 and approval of 

exemptions in the San Joaquin Valley SIP as further support that it may omit a provision 

authorizing the APCO to prevent construction or modification of any minor stationary 

sources if the project would interfere with attainment and maintenance of the NAAQS.

Response: EPA is not finalizing its proposal to find that Section 2-2-308 is deficient for 

purposes of complying with 40 CFR 51.160(b)(2). Because EPA is not finalizing our 

proposed limited disapproval to find that Section 2-2-308 is deficient, it is not necessary 

to respond to the details provided in this comment.

EPA is clarifying that our basis for finalizing approval of Section 2-2-308 is the analysis 

cited in the District’s staff report2 that the annual emission increases from new and 

modified sources with project emissions below the emission levels specified in Section 2-

 2 Final Staff Report - Updates To BAAQMD New Source Review and Title V Permitting Programs. Regulation 2; 

Rules 1, 2, 4, And 6 (September 26, 2012), pg 88. (BAAQMD Staff Report)
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2-2273 may be exempted from the minor source permit program’s public notice 

requirements because they represent environmentally insignificant modifications. 

Projects with emissions that are small enough to qualify as exempt from the minor source 

public notice requirements may also be exempted from all minor source permitting 

requirements, including 40 CFR 160(b). See 40 CFR 51.160(e). 

Based on the District’s emissions analysis, EPA is now concluding that it is not necessary 

to apply the requirements in 40 CFR 51.160 – 51.164 to stationary sources with 

emissions below the emissions levels specified in Rule 2-2-227. Accordingly, EPA will 

finalize approval of BAAQMD Rule 2-2-308.

2.2.2. Comment: BAAQMD states that EPA’s proposed limited disapproval “would create an 

entire new source-specific air quality impact analysis requirement for minor NSR. The 

Clean Air Act never envisioned requiring such analyses for sources and modifications 

below the ‘major’ NSR thresholds, and EPA has never (to the Air District’s knowledge) 

held that such analyses are required.” BACL at p. 8. BAAQMD also states that EPA’s 

interpretation of 40 CFR 51.160(b)(2) would “create a new source-specific air quality 

impact analysis requirement for major Non-Attainment NSR as well.” Id. CCEEB stated 

that they disagree that the CAA requires a “NAAQS-compliance demonstration for nonattainment pollutants,” and that “it is hard to see how such a provision could be 

implemented in non-attainment areas without creating a de facto permit moratorium, as it 

would be very challenging if not impossible for sources to prove compliance using PSDmodeling methods.” [Footnote omitted]

Response: EPA has never indicated that compliance with 40 CFR 51.160(b)(2) requires 

sources to provide a “NAAQS-compliance demonstration” in the form of an air quality 

impact analysis or air quality modeling. EPA has not prescribed how a permitting agency 

must make the determination required by 40 CFR 51.160(b)(2). Many California air 

districts have complied with the requirement in 40 CFR 51.160(b)(2) without prescribing 

air quality modeling for all stationary source permit applicants and EPA has approved 

these rules. See Placer County APCD Rule 502, Section 305.2 and Sacramento 

Metropolitan AQMD, Rule 214, Section 306. On the other hand, the approved NSR SIPs 

for Clark County, Nevada and the Nevada Department of Environmental Protection do 

include such modeling provisions. See Clark County Rule 12.1.5.1(a)(4) and NAC 

445B.308(2)(a). 

As discussed in prior responses, however, EPA is not finalizing our proposal to find that 

Section 2-2-308 is deficient. Based on that determination, EPA is not responding to the 

additional details set forth in this comment.

 3 It is coincidental that the emission levels in Section 2-2-227 are the same as those in 40 CFR 51.166(b)(23). The 

appropriate emission levels for exempting minor sources from public notice and other minor source requirements 

must be established for each area based on its particular emission inventory and other relevant air quality issues. The 

District’s staff report cites their analysis of emission data showing the annual emissions from new and modified 

projects that will be exempt from all of the 40 CFR 51.160-164 general permit requirements will account for only 

0.02% to 0.34% of the region’s total emission inventory each year. BAAQMD Staff Report, pg. 88. 
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2.2.3. Comment: BAAQMD states that EPA has confused the standard for preventing 

construction or modification of a stationary source used in the PSD regulations at 40 CFR 

51.166(k) with the standard used in 40 CFR 51.160(a) and (b). The District also contends 

that EPA’s statement in section 7.4.1 of the TSD indicating the BAAQMD NSR rule 

complied with the requirement in 40 CFR 51.160(b)(2) was correct. BACL at p. 6. 

Response: EPA agrees that our discussion of these issues confused the language used in 

these two provisions and that our proposed limited disapproval of Section 2-2-308 was 

erroneous albeit for somewhat different reasons than those asserted by the District. EPA 

apologizes for our limited inaccurate statements. EPA is not finalizing our proposal to 

find that Section 2-2-308 is deficient for the reasons discussed in our response to 

Comment 2.2.1 above. Accordingly, it is not necessary to respond to the detailed 

comments in this section of the BAAQMD comment letter.

2.2.4. Comment: BAAQMD asserts that EPA’s limited disapproval of Section 2-2-308 based 

on the NSR rule’s omission of authority for the District to prevent construction and 

modification of minor stationary sources that will interfere with attainment and 

maintenance of the NAAQS is contrary to the de minimis doctrine established in 

Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979). The District reaches this 

conclusion based on our discussion proposing to find BAAQMD Rule 2-2-308 deficient

and other issues discussed in the TSD. The District states:

The Air District further requests that, with respect to EPA’s statement that the Air 

District must apply Section 2-1-308 to all sources, EPA clarify that this is not 

consistent with the federal NSR program, and that 40 CFR Section 51.160, like 

the rest of EPA’s NSR regulations, allow states to exclude de minimis sources 

from their NSR programs (for both minor and major NSR). BACL at p. 11.

Response: EPA agrees that federal minor source permitting requirements are not 

necessary for small new and modified projects in the Bay Area that do not exceed 

specified thresholds in Section 2-2-27, as provided by 40 CFR 51.160(e). As noted above

in our response to Comment 2.2.1, EPA agrees that the BAAQMD has provided an 

analysis showing that the emission levels specified in Section 2-2-227 may be used to 

relieve new and modified small projects from complying with certain permitting 

requirements in the Bay Area.

4 Because we are no longer citing Section 2-2-308 as a 

deficiency, we are not providing a detailed response to the remainder of this comment.

We assume that the BAAQMD reference to Section 2-1-308 in the quotation above is a 

typographical error. Section 2-1-308 concerns fugitive emissions and we did not cite that 

rule as a deficiency in our proposed approval of the NSR rules into the SIP.

2.2.5. Comment: BAAQMD commented that EPA should confirm that “Section 2-2-308 is 

approvable because it uses the very same de minimis thresholds that EPA adopted for the 

 4 Id.
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federal NSR program in the wake of the Alabama Power decision.” BACL p. 11

BAAQMD also points out that the same de minimis thresholds are used under EPA’s 

PSD Delegation Agreement with BAAQMD pursuant to 40 CFR Section 52.21, and for 

major PM2.5 sources in the Bay Area under its federal nonattainment NSR permitting

program set forth in 40 CFR Part 51 Appendix S. BAAQMD also noted “that if EPA 

requires the Air District to use lower de minimis thresholds under 40 CFR Section 51.160 

than EPA requires for the federal PSD requirements under 40 CFR Section 51.166, that 

would set up two different standards that apply to major sources.” BACL p. 13.

Response: As stated in our response to Comment 2.2.1 above, EPA is finalizing approval 

of Section 2-2-308 because the District may exempt certain small emitting projects from 

the general permit provisions as provided in 40 CFR 51.160(e). EPA disagrees with the 

BAAQMD’s statement that it is appropriate to use the “very same de minimis thresholds”

provided in the federal PSD program as the basis for this determination. See Footnote 2

above.

2.2.6. Comment: CCEEB commented that, while they disagreed with the District’s decision to 

include Section 2-2-308 as part of the SIP revision because the air quality impact analysis

is not required under federal NSR rules, they do agree that the BAAQMD has authority to 

apply de minimis thresholds and they support the use of significance levels for major 

NSR purposes. CCEEB adds that requiring minor sources to conduct an air quality 

impact analysis would be administratively burdensome and costly, and that California 

State law already requires the application of Best Available Control Technology at 10 

tpy. CCEEB also commented that “Adding an air impact analysis requirement gains 

almost nothing additional in terms of air quality since, in total, minor sources account for 

only 0.02% to 0.34% of the air basin’s total inventory.” CCEEB Comment Letter (CCL)

p. 3.

Response: See our response to Comment 2.2.1 above. We note that BAAQMD 

conducted an analysis of the contribution of small new and modified projects emitting 

below the emission levels specified in Section 2-2-227 compared to the Bay Area’s 

overall emissions of criteria pollutants and found that these sources have historically 

accounted for only 0.02 to 0.34 percent of the Bay Area’s total annual emissions (from all 

sources).5

2.2.7. Comment: BAAQMD commented that in further discussions with EPA Region IX, the 

staff “pointed to regulatory requirements adopted by other agencies that simply state that 

emissions from new and modified sources may not interfere with attainment or 

maintenance of any NAAQS, and then leave it entirely up to the permitting agency’s 

discretion to determine whether or not an analysis of a source’s emissions should be 

conducted for any particular permit application” and suggested that District consider the 

same approach instead of establishing a bright-line de minimis exemption threshold.

 5 Final Staff Report - Updates To BAAQMD New Source Review and Title V Permitting Programs. Regulation 2; 

Rules 1, 2, 4, And 6 (September 26, 2012), pg 88. (BAAQMD Staff Report)
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BAAQMD stated that it believes such vague and open-ended requirements will be 

difficult to implement because they do not specify the applicable standard for a decision 

on when an analysis is required and when it is not. BACL p. 15 BAAQMD stated that 

this could lead to disagreements on whether or not the requirements apply in specific 

situations, which are often time-consuming to resolve and can even result in litigation. 

BAAQMD stated that in South Terminal Corp. v. EPA, 504 F.2d 646, 670 (1st Cir. 1974), 

the courts have made clear that regulatory requirements of this type are not appropriate or 

valid. BACL p. 16 BAAQMD further commented that EPA should specify that: 1) such

vague requirements — “which simply state that new and modified sources must not 

interfere with attainment and maintenance of the NAAQS, and do not specify how that 

determination will be made (or leave it entirely up to the permitting authority’s unfettered 

discretion as to how that determination will be made) —are not required by 40 CFR 

Sections 51.16[5](a) and (b)”; 2) “it is appropriate to adopt requirements aimed at 

preventing interference with attainment and maintenance that incorporate bright-line 

numerical exemption thresholds”; and “the decision on whether a particular application is 

subject to the requirement or exempt from the requirement does not have to be based 

entirely on the permitting authority’s discretion.” BACL p. 17

Response: As discussed in response to Comment 2.2.1, EPA has determined that the 

BAAQMD appropriately set emission levels below which permits do not need to be 

required for purposes of a federal minor new source review program. On that basis, EPA 

agrees that Section 2-2-308 is not deficient and for this reason it is not necessary to 

respond in detail to the additional assertions in this comment. 

2.2.8. Comment: BAAQMD stated that they are concerned that EPA has not explained what is 

required under 40 CFR Sections 51.160(a) and (b) with sufficient clarity, and that EPA 

has not provided sufficient guidance as to what is required under these provisions, and 

what the District needs to do to satisfy these requirements. BACL p. 17 BAAQMD stated 

that EPA should explain what the federal NSR program requires for a local agency’s SIP 

submission, and how the Air District’s rules satisfy or do not satisfy those requirements, 

in order to make any Final Decision legally supportable. To the extent that EPA is going 

to disapprove any elements of the Air District program, the District will need to know the 

rules governing such determinations if it is going to have to revise its NSR program in 

order to re-submit a program that EPA will be able to approve. BACL p. 18.

Response: As discussed in our responses to prior comments raising the same substantive 

issue, EPA is finding Section 2-2-308 to be fully approvable. Because we are not 

finalizing our proposed limited disapproval of Section 2-2-308 on the basis stated in our 

proposal, we find it unnecessary to respond to the questions posed in this comment. The 

questions have also already been answered in our TSD and previous responses.
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2.3. SIP REQUIREMENTS TO ENSURE COMPLIANCE WITH THE AIR DISTRICT’S 

CONTROL STRATEGY

2.3.1. Comment: BAAQMD commented that our proposal found that the District’s NSR rule 

was deficient because it did not contain a prohibition on the issuance of an ATC if the 

project does not meet all applicable requirements of the control strategy as required in 40 

CFR 51.160(b)(1). BAAQMD stated that in subsequent discussions with EPA, EPA

indicated that the provisions in Sections 2-1-304 and 2-1-321 satisfy this requirement. 

Regulation 2-1-304 provides that the APCO will deny an Authority to Construct and 

Permit to Operate for a new or modified source that will not comply with any 

requirement of any District regulation (or other applicable regulatory requirement). 

Regulation 2-1-321 further provides that issuance of an NSR permit does not relieve the 

permit-holder from compliance with all applicable regulatory provisions. BAAQMD 

requested that EPA clarify in its final decision that the District’s NSR rules are not 

deficient with respect to this issue. BACL p. 19 

Response: EPA apologizes for overlooking Section 2-1-304 as a provision that satisfies

the requirements to ensure that all new and modified sources will comply with all 

applicable requirements of the Air District’s control strategy. EPA will be finalizing 

approval of the BAAQMD minor new source review program (except for the definition 

of “Agricultural Source” in Section 2-1-139, and the provision in Section 2-1-424 which 

cross-references the definition of “large confined animal facility” in Regulation 2, Rule 

10 which is not in the California SIP) based on finding the Air District’s rules meet the 

requirements of 40 CFR 51.160 – 164, including 40 CFR 51.160(b)(1). 

2.4. CALCULATION OF OFFSETS FOR FULLY-OFFSET SOURCES 

2.4.1. Comment: BAAQMD stated: “EPA has proposed a limited disapproval of the Air 

District’s NSR rules with respect to the calculation procedures for the amount of offsets 

required under District Regulations 2-2-302 (offsets for NOx and VOC) and 2-2-303 

(offsets for SO2, PM2.5, and PM10). Specifically, EPA has proposed to disapprove the way 

the Air District calculates the amount of additional offsets that need to be provided where 

a source has already provided offsets for its maximum permitted emissions – i.e., its full 

potential to emit (PTE), or what EPA calls the source’s “allowable emissions.” (80 FR at 

52241, col. 2-3; TSD § 6.2.6, pp. 68-69, § 7.3.22, pp. 117-120, and p. 137, Deficiency 

Item #13.)” BACL p. 19-20

BAAQMD further stated: “EPA has proposed to find this calculation for modifications to 

sources for which offsets have already been provided as set forth in Section 2-2-606.2 to 

be deficient (at least with respect to federal major new sources and major modifications). 

EPA stated that the calculation of how many additional offsets are required in such a 

situation cannot be limited to increases in PTE. EPA stated that under 40 CFR Section 

51.165(a)(3)(ii)(J), the amount of additional offsets that need to be provided in a case 

where offsets have already been provided for the source’s full PTE must be the difference 
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between the source’s actual emissions level before the modification and its PTE 

(“allowable emissions”) after the modification. (80 FR at p. 52241, col. 2-3; TSD § 

7.3.22, pp. 117-120, § 11, p. 137.)” BACL p. 20

Finally, BAAQMD contends: “This interpretation is problematic because it would require 

facilities to provide additional offsets even if they have already provided offsets for the 

full amount of their maximum possible emissions, based on the difference between their 

actual emissions before they implement a modification and their potential emissions after 

they implement the modification. Such an interpretation would require sources to provide 

far more offsets than they could ever actually emit, even under the worst-case scenario. 

The Air District refers to this as “double-counting” the amount of offsets required, as 

sources could be required to offset their emissions two (or three or more) times over by 

providing two (or three or more) times as many actual emission reduction credits as the 

maximum amount of emissions they could ever possibly emit. The Air District disagrees 

with this interpretation of how the CAA requires States to implement the Act’s offsets 

requirements.” BACL p. 21.

Response: EPA, not BAAQMD, is responsible for interpreting the federal regulatory 

requirements for nonattainment NSR rules and ensuring rules submitted for the SIP 

comply with those requirements. See Arizona ex rel Darwin v. EPA, 815 F.3d. 519 (9th

Cir. 2016) (stating: “From our determination that EPA has a substantive role in deciding 

whether state SIPs are compliant with the Act and its implementing regulations follows 

the conclusion that the ordinary APA ‘arbitrary and capricious” judicial review standard 

applies, with the requisite deference to EPA’s determinations. Again, neither American 

Corn Growers nor ADEC supports a contrary conclusion. In particular, neither ADEC nor 

American Corn Growers bolsters Arizona’s contention that upon judicial review, EPA 

bears the burden of proving that the State’s BART determinations are unreasonable.”) 40 

CFR 51.165(a)(3) establishes the federal requirements for SIP rules concerning offsets. 

40 CFR 51.165(a)(3)(ii)(J) requires SIPs to include rules to provide that: 

[t]he total tonnage of increased emissions, in tons per year, resulting from 

a major modification that must be offset in accordance with section 173 of 

the Act shall be determined by summing the difference between the 

allowable emissions after the modification (as defined by paragraph 

(a)(1)(xi) of this section) and the actual emissions before the modification 

(as defined in paragraph (a)(1)(xii) of this section) for each emissions unit.

EPA has consistently held, and continues to find, that this provision requires offsets for 

each major modification at a major source in an amount equal to the difference between 

pre-modification actual emissions and post-modification PTE (which are generally 

equivalent to allowable emissions). EPA interprets the language in the regulation 

referring to “the modification” to mean each major modification that is undertaken at a 

major source. EPA’s interpretation of this provision is reasonable and consistent with our 

approval of NSR SIP rules as discussed in our TSD and this Response to Comments. 

BAAQMD’s interpretation would require an examination and consideration of, not only 

the currently requested modification, but all prior modifications. As 40 CFR 
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51.165(a)(3)(ii)(J) is plainly stated as a discrete requirement applicable to each proposed 

major modification, EPA disagrees with BAAQMD’s interpretation. Additionally, some 

major sources never undertake a major modification requiring additional offsets, while 

other major sources operate with actual emissions at levels close to the PTE where a 

major modification would increase the PTE. Given these considerations, the scope of the 

BAAQMD’s concern about “double counting” would be relatively narrow if BAAQMD 

chooses to limit this offset requirement to major modifications at major sources. 

2.4.2. Comment: BAAQMD commented that the CAA only allows EPA to require offsets 

sufficient to ensure reasonable further progress and does not allow EPA to “doublecount” how many offsets are required. BAAQMD quotes statutory language in Section 

173(a)(1)(A) of the CAA to assert “[t]he Act requires States to ensure that they obtain 

sufficient offsets from permitted sources subject to the offsets requirement as are 

necessary to ensure Reasonable Further Progress (RFP) towards attainment.” BACL at 

p. 22. BAAQMD then states that it “has already achieved sufficient reductions from the 

total regional emissions inventory to bring ambient concentrations back below the 

NAAQS, and no additional ‘annual incremental reductions in emissions’ are necessary to 

ensure attainment.” BACL at p. 22-23. The BAAQMD also contends that even if it were 

not demonstrating attainment, its program would ensure reasonable further progress 

because the BAAQMD uses a ratio of 1:1 for offsets. BAAQMD states: “Instead of 

discussing the provision in CAA Section 173(a)(1) specifying the amount of offsets that a 

State needs to require, EPA instead cites the provision of CAA Section 173(c)(1) that 

specifies the criteria for determining what emission reductions qualify for use in 

providing the offsets.” The District summarizes: “Section 173(a)(1) specifies how to 

calculate the amount of offsets required – which is the calculation addressed in District 

Regulation 2-2-606.2 – whereas Section 173(c)(1) addresses a different issue, which is 

what emission reductions can be used to satisfy the requirement once the amount of 

offsets is established under Regulation 2-2-606.2” BACL at 23-24. 

Response: EPA disagrees with BAAQMD’s position that federal CAA offsets are only 

required in a sufficient amount to show that an area is achieving reasonable further 

progress. We also disagree with the District’s opinion that it need not require federal 

offsets for federal major modifications at major sources once an area has a Clean Data 

Determination. EPA interprets the offset provisions in Section 173 of the CAA to require 

NSR SIPs to meet two key criteria: that is (1) to achieve reasonable further progress 

(CAA 173(a)(1)(A), and (2) to offset the “total tonnage of increased emissions of the air 

pollutant from the new or modification source . . . .” (CAA 173(c)). Non-attainment NSR 

rules must require major modifications at major sources to calculate the amount of offsets 

based on the difference between pre-modification actual emissions and post-modification 

potential or allowable emissions for each major modification. 40 CFR 51.165(a)(3)(ii)(J).

Moreover, EPA’s discussion of offsets and reasonable further progress in our 1994 

General Preamble does not support the interpretation offered by BAAQMD. The General 

Preamble notes that “[t]he 1990 CAA [Amendments] clarify and expand the basic 

requirements for emissions offsets already contained in section 173 of part D.” 57 FR 

13498, 13552. It continues, stating: “[t]he EPA interprets section 173(a)(1)(A) to ratify 
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current EPA regulations requiring that the emissions baseline for offset purposes be 

calculated in a manner consistent with the emissions baseline used to demonstrate RFP.” 

Id at 13552. 

BAAQMD bases its planning documents on its actual emissions inventory.6 Therefore, 

the baseline for determining the amount of offsets required is a source’s pre-modification 

actual emissions. EPA discussed this issue at length in its TSD. BAAQMD notes that 

EPA cited CAA Section 173(c) rather than 173(a). Both provisions of Section 173 apply 

to calculating the offsets required for major modifications.

2.4.3. Comment: BAAQMD stated that District Regulation 2-2-606.2 is consistent with 

40 CFR 51.165(a)(3)(ii)(J) under any reasonable interpretation. BAAQMD makes several 

repetitive arguments in this portion of its comment letter. First, the District contends that 

EPA must construe 40 CFR 51.165(a)(3)(ii)(J) to be consistent with the BAAQMD’s 

interpretation that Section 173(a)(1) limits offsets to an amount necessary to demonstrate 

reasonable further progress. The BAAQMD then cites to 40 CFR 51.165(a)(1)(xii)(C), 

stating that the permitting authority may presume actual emissions are the same as 

allowable emissions for purposes of the actual emissions baseline. BACL at p. 25. 

Second, the BAAQMD contends that its interpretation is correct because EPA’s method 

of quantifying offsets based on actual to PTE emissions for every major modification 

would require more offsets than is necessary for RFP, and, therefore, is void and 

unenforceable. Third, BAAQMD contends that because 40 CFR 51.165(a)(3)(ii)(J) was 

added during NSR Reform, EPA could not have intended to require additional offsets 

over and above the source’s full PTE. BACL at p. 27. BAAQMD also states that the 

“regulatory history is fully consistent with interpreting the actual emissions before the 

modification” as being the source’s baseline actual emissions before it came into the 

offsets program, which is how the Air District’s ‘cumulative increase’ calculations 

work.” BACL at p. 27-28. Fourth, the District asserts that 40 CFR Part 51, Appendix S 

only requires “sufficient offsets to offset the project’s potential to emit and no more.” 

BACL at p. 28. The District appears to contend that Appendix S only requires offsets for 

the cumulative increase and that EPA is asking the BAAQMD to use a different method 

than EPA would use to calculate the amount of offsets necessary for a major modification 

at a major stationary source. Fifth, BAAQMD argues that only requiring a source to 

offset its PTE once is consistent with EPA’s policy concerns. BACL at p. 29. Sixth, 

BAAQMD states that EPA has approved rules in other California Air District’s that use 

the same approach as the BAAQMD. BACL at p. 29-30. 

Response: EPA disagrees with the six points articulated in this comment. First, as 

discussed above, EPA clearly interprets the requirement in 40 CFR 51.165(a)(3)(ii)(J) to 

obtain offsets (for the difference between pre-modification actual emissions and postmodification PTE for a major modification at a major source) to be independent of the 

requirement for nonattainment areas to demonstrate RFP. BAAQMD’s reliance on 40 

CFR 51.165(a)(1)(xii)(C) is misguided. 40 CFR 51.165(a)(1)(xii)(C) states that “[t]he 

 6 68 FR 42174, 42175 (July 16, 2003)
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reviewing authority may presume that source-specific allowable emissions for the unit 

are equivalent to the actual emissions of the unit.” BAAQMD cites this provision as 

support to calculate PTE as “the difference between future ‘allowable emissions’ and past 

‘allowable emissions’” rather than past actual emissions. BACL at 25. However, 40 CFR 

51.165(a)(1)(xii)(C) is not a two way street. The provision permits the presumption that 

allowable emissions be equivalent to actual emissions, it does not, however, permit the 

presumption that actual emissions be presumed equivalent to allowable emissions, as 

required for BAAQMD’s interpretation.

Second, there is no prohibition in nonattainment NSR on obtaining more offsets than are 

necessary for RFP. Third, the fact that 40 CFR 51.165(a)(3)(ii)(J) was added as a part of 

EPA’s NSR Reform rulemaking7 does not support the BAAQMD’s interpretation. EPA 

agrees the intent was to continue to require offsets based on post-modification PTE 

(rather than projected actual emissions). However, this addition only clarified that EPA 

would continue to calculate offsets by comparing the difference between premodification actual emissions and post-modification PTE for each major modification at 

a major source. The addition of this regulation did not compel a change in EPA’s longstanding calculation methodology to the cumulative increase interpretation favored by 

BAAQMD for federal major modifications. 

Fourth, EPA disagrees with BAAQMD’s reading of Appendix S. We note that Appendix 

S does not apply here because BAAQMD has an approved non-attainment NSR program. 

In any event, EPA has consistently interpreted both 40 CFR 51.165(a)(3)(ii)(J) and 

Section IV.A, Condition 3 of Appendix S to require the amount of offsets for each major 

modification at a major source to be calculated as the difference between premodification actual emissions and post-modification PTE. BAAQMD notes that EPA 

promulgated a FIP pursuant to Appendix S for the Tri-Cities Landfill located on the Salt 

River Pima-Maricopa Indian Community and contends that the FIP was consistent with 

the District’s interpretation of the federal requirements. BAAQMD is incorrect. The FIP 

allowed construction of a new major stationary source - not a major modification -

because the owner/operator provided offsets for the PTE of the new major stationary 

source. 64 FR 65660, 65661 (Nov. 23, 1999). There is no disagreement between the 

BAAQMD and EPA that a new major source must provide offsets up to the full PTE of 

the source. Our disagreement, and hence the narrow scope of our limited disapproval, 

concerns the BAAQMD’s requirements only as they pertain to major modifications in 

accordance with the requirements of 40 CFR 51.165. EPA’s regulations require a 

comparison between the pre-modification actual emissions and post-modification PTE 

for each major modification. BAAQMD’s rules only require such a comparison when a 

modification causes a source’s initially offset PTE to be exceeded. The Tri-Cities 

Landfill FIP is irrelevant to the offset calculation for a major modification. 

BAAQMD’s fifth argument is that its interpretation is supported by policy 

considerations. Because the language in Section 173 and 40 CFR 51.165 are clear 

 7 67 FR 80186 (December 31, 2002)
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concerning the calculation of offsets for major modifications, it is not necessary to 

examine these considerations.

Finally, the sixth assertion in this portion of the BAAQMD’s comment letter concerns 

nonattainment NSR rules for other California Air Districts, including Sacramento and 

San Joaquin Air Districts. Without citation or support, the District states that “most if not 

all of the other air districts in California calculate their offsets requirements the same 

way, and EPA has approved their NSR rules as well.” BACL at 29. We disagree with the 

District’s unsupported statement. We provided citations to California Air District rules 

that are consistent with the requirements in our TSD. With respect to Sacramento Rule 

214, BAAQMD’s comment letter mischaracterizes how that rule works, as confirmed by 

the late comment letter submitted by the Sacramento Metropolitan AQMD on December 

22, 2015. The Sacramento Metropolitan AQMD states: “[W]hile [Rule 214] does allow 

major modifications to use potential to emit instead of actual emissions in offset 

calculations, it does so only in very limited circumstances. EPA accurately concluded that 

these limitations are reasonable restrictions. In fact, no sources have utilized the limited 

calculation procedure since Rule 214 was adopted five years ago.”8 BAAQMD also cites 

EPA’s approval of Placer County and Feather River NSR rules. These two rules are 

consistent with our approval of Sacramento Rule 214. For the same reasons discussed in 

our TSD, our approval of those rules placed reasonable restrictions (a five year window) 

on using a PTE to PTE test. 

Finally, the BAAQMD refers to our approval of the San Joaquin NSR rule that requires 

that District to demonstrate equivalency. This rule was also thoroughly discussed in our 

TSD and the BAAQMD has not provided any new information concerning any other of 

the California NSR rules in its comment letter. 

2.4.4. Comment: BAAQMD asserts that CAA Section 173(a)(1) requires local permitting 

authorities to obtain offsets sufficient to achieve RFP, and that this principle applies 

generally to all aspects of the offset requirements, not just to the procedures for 

calculating the amount of additional offsets necessary when a source is modified. BACL 

at 31. BAAQMD stated:

EPA should clarify generally that with respect to all of the offsets 

requirements in the federal NSR regulations, local permitting authorities 

must implement these requirements in order to ensure that RFP is 

maintained. This is what the Clean Air Act requires under Section 173, as 

EPA has itself recognized. (FN omitted) Furthermore, this is what EPA 

requires in its own Non-Attainment NSR permitting regulations that it 

implements when it is the permitting authority under 40 CFR Part 51, 

Appendix S. (FN omitted) Requiring local permitting authorities to 

implement their offsets provisions in a manner that goes beyond this 

mandate is not contemplated or authorized under the Clean Air Act. EPA 

 8 See SMAQMD Comment Letter dated November 13, 2015.
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should clarify that this principle is inherent in all of its 

approval/disapproval determinations in its Final Decision on the Air 

District’s NSR rules. EPA should further clarify that any revised Air 

District submittal will not be required to implement any offsets 

requirements beyond what is required to achieve RFP.

Response: EPA has explained above that the requirements for offsets under CAA 173(c) 

represent independent requirements of the CAA in addition to the requirement to 

demonstrate RFP at CAA 173(a)(1). EPA interprets the requirements of 40 CR Part 51, 

Appendix S to be consistent with the offset requirements in 40 CFR 51.165, including 

51.165(a)(3)(ii)(J). EPA’s interpretation of its regulations is entitled to deference. 

Appendix S is intended to apply to an area that is newly designated nonattainment while 

the area develops regulations for nonattainment NSR. During implementation of 

Appendix S, EPA expects the permitting agency to require offsets for each major 

modification at a major source to be calculated as the difference between the premodification actual emissions and post-modification PTE.

As noted above, EPA does not agree that the CAA offset requirements are satisfied once 

an area has demonstrated RFP. The CAA requires that new and modified sources do not 

interfere with RFP, not merely that demonstrating RFP satisfies NSR offset requirements. 

As the General Preamble provides, the baseline for NSR offsets must be consistent with 

the emissions used in the plan for RFP. But there are independent offset requirements in 

the CAA that must be met. In particular, the permitting authority must require offsets for 

each major modification at a major source based on the difference between the premodification actual emissions and the post-modification PTE. BAAQMD can include a 

provision that is consistent with the EPA’s offset requirement and limit it’s applicability 

to major modifications as defined in 40 CFR 51.165(a)(1)(v). Alternatively, BAAQMD 

can provide the difference in the amount of offsets required through its offset equivalency 

tracking system similar to the program approved in the San Joaquin nonattainment NSR 

rules (Rule 2201).

2.4.5. Comment: BAAQMD stated:

To the extent that EPA finds any aspect of the Air District’s offset 

requirements deficient with respect to satisfying the federal NSR 

program’s requirements, EPA should clarify that the Air District can 

address any such deficiencies by incorporating EPA’s own offsets 

requirement in Appendix S by reference. Incorporating elements of EPA’s 

own regulations that EPA uses to implement the Clean Air Act’s NSR 

requirements when it does permitting at the federal level is an appropriate 

method for state agencies to implement their own NSR programs at the 

state level, and EPA has repeatedly approved SIP rules utilizing this 

approach. EPA should confirm that the Air District can use the same 

approach for satisfying the federal NSR program’s offsets requirements –

i.e., by incorporating by reference the requirement in Condition 3 of 

Section IV.A. of Appendix S, which provides that offsets must be 
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provided “such that there will be reasonable further progress toward 

attainment of the applicable NAAQS. 

Response: EPA disagrees. The provisions contained in Appendix S are not intended to 

satisfy the requirements for a SIP approved NSR program implementing the requirements 

of 40 CFR 51.165. Appendix S only applies to new and modified major sources when an 

area is newly designated nonattainment area for a specific pollutant. Appendix S no 

longer applies when EPA approves an NSR program for the area into the SIP. While 

Appendix S currently applies to sources emitting PM2.5 in the Bay Area (because the area 

was newly designated nonattainment for this pollutant) the District is required to obtain 

SIP approval of a NSR program that meets the requirements of 40 CFR 51.165, not 

Appendix S. 

2.4.6. Comment: The APCO of the Sacramento Metropolitan Air Quality Management District 

(SMAQMD) commented that BAAQMD mischaracterized SMAQMD’s New Source 

Review rule. SMAQMD does not agree that EPA Region IX is “changing its position” 

regarding what is required for approval of districts NSR programs. SMAQMD also 

disagrees with BAAMQD’s statements that “in many cases” SMAQMD rules allow 

potential to emit (PTE) to be utilized in the offset calculation procedure for major 

modifications instead of actual emissions.

SMAQMD stated that its Rule 214 (Federal New Source Review) was approved by EPA 

allowing major modifications to use pre-modification PTE instead of actual emissions in 

offset calculations only in very limited circumstances. EPA accurately concluded that 

these limitations are reasonable restrictions. In fact, no sources have utilized the limited 

calculation procedure since Rule 214 was adopted five years ago.

Response: EPA acknowledges and agrees with SMAQMD’s response regarding the rule 

language and implementation of Rule 214.

2.5. PROVIDING EMISSION REDUCTION CREDITS FOR SHUTDOWN OF FULLYOFFSET UNITS

2.5.1. Comment: BAAQMD asserted that District’s NSR rules provide that a “fully offset” 

source (i.e., a source for which offsets have been provided for the full amount of the 

source’s maximum permitted emissions or PTE) can claim ERCs based on the full 

amount of its pre-shutdown PTE when it is shut down or curtailed. BAAQMD also stated 

since its current EPA-approved SIP allows a “fully offset” source to claim ERCs based 

on the full amount of its pre-shutdown PTE when it is shut down or curtailed, because it 

was approved by EPA in the past for BAAQMD’s SIP. BAAQMD stated this is 

“appropriate from an air quality perspective because it returns the situation to where it 

was before the source was ever built: there are no longer any emissions from the source, 

which was the situation before it was built; and the ERCs that were provided go back to 

the facility, which was the situation before the source was built.”
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Response: This comment asserts that EPA should approve rules that allow offsets to be 

generated from the source’s PTE rather than actual emissions because (1) EPA previously 

approved such a rule in 1999 and (2) doing so will not worsen air quality, i.e. it will return 

the air quality to status quo before the source generating offsets was built and operated. 

The comment does not provide any authority supporting the claim that the CAA allows 

offsets to be generated from a source’s PTE. In fact, CAA 173(c)(1) provides that the 

offset shall be “an equal or greater reduction, as applicable, in the actual emissions . . .”

The comment also does not provide any justification for EPA depart from our 

interpretation that 40 CFR 51.165(a)(3) requires offsets to be generated by actual 

emissions reductions.

EPA explained in its TSD that the requirement for offsets to be generated from actual 

emissions rather than PTE is only applicable to offsets that are being used to allow 

construction of new major sources or major modifications. The District may offset its 

minor sources and minor modifications differently. BAAQMD, consistent with the 

California Clean Air Act, does not distinguish between major modifications and major 

sources in the same manner as the federal CAA. During the 1990s, EPA tried to 

accommodate these discrepancies between the state and federal statutes. During the 17 

years since our approval of the BAAQMD NSR program, we have gained experience 

establishing that EPA must apply the federal major source requirements based on the 

federal CAA. Thus, our prior accommodation of the differences between the state and 

federal statutes could not be continued. Our approval of NSR programs for nonattainment 

areas throughout California is now focused on ensuring that the federal offset 

requirements are applied to new major sources and major modifications, even for those 

NSR programs for which we had approved provisions that were contrary to the federal 

CAA in the earlier years after the 1990 amendments.

BAAQMD’s second point is that air quality in the area will not worsen based on 

generating offsets from a source’s PTE. As we have discussed above, the requirement for 

NSR offsets is independent of RFP or showing that an area’s air quality is not becoming 

worse. We have also noted that BAAQMD may request redesignation to attainment to 

avoid implementing federal offset requirements. Because BAAQMD remains 

nonattainment for certain pollutants, its NSR program is required to implement the 

federal requirements for offsets that will be used to construct new major sources and 

major modifications. These offsets are required to be generated from reductions in actual 

emissions. See CAA Section 173(a) and 40 CFR 51.165(a)(3).

2.5.2. Comment: CCEEB stated that “EPA’s proposed actual-to-PTE calculation is a departure 

from its own federal program, which uses an actual-to-allowable emissions calculation 

for offsets.”

Response: EPA disagrees. EPA’s criteria contained in the federal regulations for 

reviewing NSR SIP programs in 40 CFR 51.165 has not changed with respect to 

calculation of ERCs generated from a project. BAAQMD’s NSR rules allow ERCs to be 

calculated based on a PTE-to-PTE calculation method (i.e., the PTE before and after the 

change). EPA requires that BAAQMD’s SIP comply with the federal regulations. Using 
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an “actual-to-allowable emissions calculation” is generally the same as the actual to PTE 

calculation required by federal regulations; it is not the PTE-PTE calculation in the 

BAAQMD rules.

2.5.3. Comment: BAAQMD asserts that EPA’s NSR regulation governing this issue in 40 CFR 

51.165(a)(3) explicitly authorizes the District to use permitted emissions as the baseline 

for determining the amount of ERCs available from fully offset sources. BAAQMD 

stated that 40 CFR 51.165(a)(3) provides that the default requirement for setting the 

baseline for calculating ERCs is to use the source’s PTE. BAAQMD also stated that this 

regulation “clearly states that an actual emissions baseline is required only in two specific 

circumstances: (i) where the demonstration of reasonable further progress (RFP) and 

attainment is based upon the actual emissions of sources in the area; and (ii) where there 

is no emissions limitation in the SIP for a particular source or source category.” 

BAAQMD further states that neither of these circumstances apply to the Bay Area’s NSR 

program, and so the default rule applies, and that the amount of ERCs available may be 

based on the source’s PTE.9

Response: EPA disagrees that we may approve the BAAMQD PTE to PTE calculation 

for generating offsets. The District’s comment indicates that it is not required to use an 

actual emissions baseline because BAAQMD does not submit a demonstration of RFP 

based on actual emissions. As discussed in our TSD, BAAQMD is somewhat unusual 

because its nonattainment planning requirements are suspended for both the ozone and 

PM2.5 NAAQS. Therefore, BAAQMD is not required to submit a RFP demonstration. 

This circumstance does not negate the requirement to require a reduction in actual 

emissions (not PTE) for offsets to be used in the major source nonattainment program. 

The BAAQMD emission inventories are based on actual emissions.10 If BAAQMD were 

required to submit a RFP demonstration, it would be based on actual emissions. 

Therefore, the fact that BAAQMD is not required to make this particular submission does 

not mean its major source offsets can be based on reductions in PTE. 

2.6. OFFSET REQUIREMENTS FOR SO2 AS A PM2.5 PRECURSOR

2.6.1. Comment: BAAQMD commented that EPA cannot require nonattainment offset 

provisions for SO2 because the San Francisco Bay Area is not designated as 

nonattainment for SO2, and because the District believes SO2 does not significantly 

contribute to the formation PM2.5 in the area per CAA Section 189(e). 

 9 BAAQMD has not been not required to submit a RFP demonstration for the 1-hour ozone, 8-hour ozone, and 24-

hour PM2.5 NAAQS because of Clean Data Determinations for 1-hour ozone and 24-hour PM2.5 (see 69 FR 21717

(April 22, 2004) and 78 FR 1760 (January 9, 2013) and because the San Francisco Bay Area is a marginal 

nonattainment area for the 8-hour ozone NAAQS. Thus, the requirement for BAAQMD to submit certain planning 

elements, including a RFP demonstration, does not apply or is suspended.

10 68 FR 42174, 42175 (July 16, 2003)
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Response: EPA disagrees with the District’s characterization of EPA’s requirements. 

40 CFR 51.165(a)(1)(xxxvii), which provides the definition for the term “Regulated NSR 

pollutant” specifies in paragraph (C)(2) that “Sulfur dioxide is a precursor to PM2.5 in all 

PM2.5 nonattainment areas.”

EPA notes that BAAQMD may submit a request for EPA to redesignate the Air District 

to attainment. If EPA redesignates the area to attainment, the District would no longer be 

required to apply the federal nonattainment NSR program to PM2.5 or its precursors.

2.6.2. Comment: BAAQMD stated that EPA’s analysis for determining that ammonia does not 

contribute significantly to PM2.5 levels that exceed the NAAQS in the Bay Area is 

sufficient to support the same conclusion for all PM2.5 precursors (i.e., NOx and SO2). 

BAAQMD asserted that if there are no PM2.5 levels that currently exceed the NAAQS, 

then by definition there can be no sources of any PM2.5 precursors that contribute 

significantly to any PM2.5 levels that exceed the NAAQS. BAAQMD based this assertion 

on EPA’s discussion in the TSD regarding the agency’s 2013 Clean Data Determination 

for the San Francisco Bay Area for the 2006 24-hour PM2.5 NAAQS (TSD at Section 

7.3.28, p. 125 (citing 78 FR 1760 (Jan. 9, 2013)). 

Response: For the reasons stated above, EPA disagrees. A determination that SO2 does 

not contribute significantly to any PM2.5 levels exceeding the PM2.5 NAAQS requires a 

separate analysis. This analysis is required to determine if major stationary sources of a 

particular precursor can be exempted from nonattainment NSR requirements per section 

189(e). Although EPA’s 2013 Clean Data Determination means that the Bay Area has 

attained the 2006 24-hour PM2.5 NAAQS and suspends certain planning requirements for 

the area, BAAQMD is still required to meet the nonattainment NSR SIP requirements 

such as LAER and offsets for PM2.5 and its precursors, VOC, SO2 and NOx, until 

BAAQMD requests and EPA re-designates the Bay Area to attainment for PM2.5. 

2.6.3. Comment: BAAQMD requested that EPA clarify that the PM2.5 offset requirements 

apply only to directly-emitted PM2.5, and not to NOx and SO2 as PM2.5 precursors. 

BAAQMD also asserted that EPA cannot find that there are any major sources of SO2 or 

NOx that can contribute significantly to any PM2.5 levels in excess of the PM2.5 standard 

in the Bay Area, where it has determined that there are in fact no PM2.5 levels in the Bay 

Area that exceed the standard. 

Response: EPA disagrees. See our responses to Comments 2.6.1 and 2.6.2.

2.7. VISIBILITY ANALYSIS FOR SOURCES THAT MAY IMPACT FEDERAL 

MANDATORY CLASS I AREAS

2.7.1. Comment: BAAQMD and CCEEB commented that although EPA’s visibility 

regulations at 40 CFR 51.307(b) require an analysis of visibility impacts on Class I areas 

for any new major source or major modification project that “may have an impact on 
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visibility” in a Class I area, the regulations do not specify how States need to define what 

projects “may have an impact” for the purpose of triggering this requirement.

Response: BAAQMD is correct that EPA’s visibility regulations do not specify how a 

State agency determines if a new major source or major modification “may have an 

impact on visibility” in a federal mandatory Class I area. In general, because a visibility 

impact analysis may be based on a number of factors, the applicant of a new major source 

or major modification must make a determination on a case-by-case basis in consultation 

with the applicable Federal Land Manager (FLM). EPA is aware that the FLMs use the 

Federal Land Manager’s Air Quality Related Workgroup guidance (FLAG) for 

determining when a project may affect a Class I area.11 EPA has also provided guidance 

on this issue in a letter to the North Carolina Department of Justice and the North 

Carolina Department of Environment and Natural Resources regarding visibility impact 

assessment requirements.12 BAAQMD may consider referencing the FLAG guidance or 

incorporating the procedures from EPA’s letter to North Carolina into its rule for new 

major stationary sources or major modifications. EPA notes that we cited the rule as 

deficient because it limited the source’s responsibility to determine if a project “may have 

any impact on visibility” to projects that are located within 100 km of a Class I area. The 

District may choose to require all major sources within 100 km to perform an analysis of 

visibility impacts and use these guidance documents to make a determination of the need 

for such analysis for sources located at distances greater than 100 km from the mandatory 

Class I area.13

2.7.2. Comment: BAAQMD and CCEEB stated that EPA’s own guidance recommends using a 

100-km proximity test to determine whether or not to require a new or modified source to 

conduct a visibility impact analysis for Class I areas. BAAQMD stated that this policy is 

on EPA Region 9’s website for addressing the visibility impact analysis requirements.

14

BAAQMD stated that, based on this guidance, the District revised its Class I Area 

visibility protection requirement in Section 2-2-401.4 in its NSR rules to provide that any 

new major source or major modification located within 100 km of any Class I Area must 

prepare an analysis of potential visibility impacts in that Class I Area for consideration by 

the area’s FLM. 

 11 See Federal Land Manager’s Air Quality Related Workgroup (FLAG) Phase I Report (December 2000) and 

Federal Land Manager’s Air Quality Related Workgroup (FLAG) Phase I Report – Revised (October 2010). 12 See letter (with attachments) from Beverly H. Banister, EPA Region 4, to Kathleen Waylett, North Carolina 

Department of Justice, and Sheila C. Holman, North Carolina Department of Environment and Natural Resources 

dated April 16, 2013.

13 See John S. Seitz Memo entitled Clarification of Prevention of Significant Deterioration (PSD) Guidance for 

Modeling Class I Area Impacts, dated October 19, 1992. 14 BAAQMD’s comments reference the webpages http://www.epa.gov/region9/air/maps/r9_clss1.html and 

http://www.epa.gov/region9/air/maps/flm.html. (We note that these web pages have been changed to 

https://www3.epa.gov/region9/air/maps/r9_clss1.html and https://www3.epa.gov/region9/air/maps/flm.html as of the 

date of this Response to Comments document).
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Response: We acknowledge that the EPA Region 9 website for federal mandatory Class 

1 areas and Class I FLMs contained an inaccurate statement at the time of the public 

comment period for our rulemaking proposal. We are now clarifying that 40 CFR 51.307 

does not specifically require a 100 km distance for review of any new major stationary 

source or major modification located within that distance of a federal mandatory Class I 

area. It requires that the SIP provide for the review of any new major stationary source or 

major modification that may have any impact on any federal mandatory Class I area, 

regardless of whether it is located more or less than 100 km of a Class I area. We suggest 

that BAAQMD follow the recommendations in our response to Comment 2.7.1.

2.7.3. Comment: BAAQMD and CCEEB disagree with EPA’s proposed disapproval of the 

100 km threshold requirement for determining when a visibility impact analysis is 

required. BAAQMD commented that EPA has not specified any basis for finding that the 

District cannot use its 100 km threshold to satisfy 40 CFR 51.307(b)(2). BAAQMD 

stated that the 100 km threshold is fully supported as an appropriate means through which 

to implement Section 51.307(b)’s “may have an impact on visibility” requirement. 

CCEEB requested that EPA provide further guidance to clarify when and why the 100

km test is insufficient. 

Response: BAAQMD’s 100 km threshold is a “bright line” threshold, and does not 

account for certain situations that may affect a Class I area. For example, a source that 

will emit substantial visibility impairing pollutants located 102 km from a federal 

mandatory Class I area may impact that area. Because the provisions of 40 CFR 

51.307(b)(2) are required to apply to any major source or major modification project that 

“may have any impact on visibility”, inclusion of a “bright line” threshold to satisfy this 

requirement is not permissible. We recommend that BAAQMD consider following the 

suggestions in our response to Comment 2.7.1. 

2.7.4. Comment: BAAQMD stated that the only specific policy that EPA has ever provided in 

any EPA guidance document is the 100 km threshold that the District uses in Section 2-2-

401.4. 

Response: EPA disagrees. See our response to Comments 2.7.1 and 2.7.2.

2.7.5. Comment: BAAQMD commented that the FLAG guidance is not a required approach 

for implementing the “may have an impact” language in EPA’s visibility regulations in 

Section 51.307(b) since EPA has not required other California air districts to use this 

guidance. BAAQMD states that EPA suggested looking at the Rule 1303 of the South 

Coast Air Quality Management, and the District stated that because South Coast requires 

a different approach in its rule than the one provided in the FLAG guidance document 

demonstrates that that guidance cannot be mandatory or required in order to satisfy 

Section 51.307(b). BAAQMD asserts that the 100 km distance threshold on EPA’s 

website is the required approach. 

Response: EPA disagrees. As provided in our responses to Comments 2.7.1 and 2.7.2 

above, 40 CFR 51.307(b)(2) does not provide a required approach for determining 
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whether a project “may have an impact” on visibility in a federal mandatory Class I area. 

However, as provided in our response to Comment 2.7.3, the “bright line” distance 

threshold of 100 km is not approvable because it might exclude sources that are outside 

that distance, but that may still have an impact on visibility in a Class I area. EPA does 

not agree with BAAQMD that our approval in 1996 of Rule 1303 for the South Coast Air 

Quality Management District indicates that the requirements of 40 CFR 51.307(b)(2) may 

not be mandatory. There are numerous factors to consider in evaluating the compliance of 

a particular rule with our regulations. Here, BAAQMD has exempted any source located 

beyond 100 km with the requirements of 40 CFR 51.307 creating a deficiency that must 

be corrected.

2.7.6. Comment: BAAQMD requested that if EPA continues to believe that the 100 km 

threshold is not approvable under 40 CFR 51.307(b)(2), that EPA explain what exactly 

Section 51.307(b)(2) requires, in EPA’s interpretation; provide a legal justification for 

that interpretation, explain with specificity why the Air District’s rule does not satisfy the 

requirement, explain the standard under which EPA will evaluate any revised approach in 

a future submittal. 

Response: See our responses to Comments 2.7.1 and 2.7.2.

2.8. LEGAL EFFECT OF LIMITED DISAPPROVAL OF FEDERAL ENFORCEABILITY OF 

THE AIR DISTRICT’S NSR PROGRAM PROVISIONS

2.8.1. Comment: BAAQMD requests that EPA confirm that when the agency finalizes a 

limited approval and limited disapproval the legal effect of this action is to make the Air 

District’s NSR rules as a whole part of the California SIP and federally enforceable under 

the CAA. BAAQMD requests that EPA clarify that the limited disapproval does not 

carve out any specific provisions in the Air District’s NSR rules and exclude them from 

the District’s approved SIP NSR program or from federal enforceability under the CAA.

The BAAQMD further requests EPA to confirm that “the effect of any “limited 

disapproval” would be to approve Regulations 2-1 and 2-2 in their entirety, but to require 

the Air District to adopt revisions to certain provisions to address any identified 

deficiencies and submit them for approval by EPA by a stated deadline.” 

Response: EPA agrees. This rulemaking action is a limited approval and limited 

disapproval because, while strengthening the existing SIP, the BAAQMD SIP submittal

did not fully meet the CAA provisions regarding plan submissions and requirements for 

nonattainment areas. The rule as written will become federally enforceable under the SIP. 

The limited disapproval does not carve out any specific provisions in the Air District’s 

NSR rules and exclude them from the Bay Area’s approved SIP NSR program or from 

federal enforceability under the CAA. 

However, as the District correctly alludes to, the limited disapproval action triggers an 

obligation for EPA to promulgate a Federal Implementation Plan (FIP) unless California 

submits and we approve SIP revisions that correct the deficiencies that triggered our 
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limited disapproval within two years of the final action. For certain deficiencies the 

limited disapproval will also trigger sanctions under CAA section 179 unless California 

submits and we approve SIP revisions that correct the deficiencies within 18 months of 

final action. The limited disapproval does not affect incorporation of the Regulation 2, 

Rules 1 and 2 into the approved, federally enforceable SIP.15

 15 See Memorandum from John Calcagni to Air Program Directors (Regions I through X) re “Processing of State 

Implementation Plan (SIP) Submittals” dated July 9, 1992.