1

United States Environmental Protection Agency, Region IX

Air Division

Technical Support Document

for

EPA's Notice of Proposed Rulemaking

for the 

California State Implementation Plan

Feather River Air Quality Management District

Rule 10.1 New Source Review 

Laura Yannayon

May 9, 2011

Reviewed by

Gerardo Rios
2

Table of Contents

Section Page

Introduction 1

NSR Program SIP Revision Submittals 1

Background 4

Rule Summaries 3

Rule Evaluation 6

General New Source Review (NSR) Requirements

New Source Review Reforms 

California Clean Air Act – New Source Review Program

NSR Reform Program Requirements

Impacts of Federal NSR Reforms on California NSR Permitting Programs

Section 110(l) of the Act 31

Section 193 of the Act 61

Recommendations 67

Attachments 74
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Introduction

Part C of title I of the Clean Air Act (CAA or Act) contains the provisions for the Prevention of 

Significant Deterioration (PSD) of air quality in areas designated as “attainment” or 

“unclassifiable” for the national ambient air quality standards (NAAQS). Part D of title I of the 

Act contains the requirements for areas designated “nonattainment” for any of the NAAQS. Both 

parts C and D of the Act require pre-construction permit programs for certain new or modified 

stationary sources of pollutants. The requirements under part C, referred to as “PSD New Source 

Review” (PSD) apply to certain new or modified sources that would be located within attainment 

areas, and apply to all regulated pollutants, except those pollutants for which an area has been 

designated as “nonattainment.” The requirements under part D, referred to as “Nonattainment 

NSR,” (NSR) apply to certain new or modified sources of nonattainment pollutants in 

nonattainment areas. Collectively, the pre-construction permit requirements related to PSD and 

Nonattainment NSR are commonly referred to simply as “NSR.” Both of these programs apply to 

“major” stationary sources and “major modifications” as those terms are defined in 40 CFR Part 

51, Subpart I. In addition to the regulation of major stationary sources, states are also required to 

adopt a program to provide for the regulation of the construction and modification of minor 

stationary sources and minor modifications at major sources, to assure that the NAAQS are 

achieved and/or maintained. These pre-construction requirements are commonly referred to as 

“minor NSR.” (See 40 CFR 51.160-164)

NSR Program SIP Revision Submittals

Rule 10.1 –New Source Review (NSR) was first adopted by the Feather River Air Quality 

Management (FRAQMD or District) on February 8, 1993 and submitted to EPA via the California 

Air Resources Board (ARB) by a letter dated March 23, 1993. EPA has not taken action on this 

submittal. Revisions to Rule 10.1 were adopted on October 5, 2009 and submitted to EPA via the 

ARB by a letter dated July 20, 2010. ARB is the governor’s designee for submitting official 

revisions of the California State Implementation Plan (SIP) to EPA. There is not a current version 

of this specific rule in the SIP. 

Background

In 2002, EPA promulgated changes to the NSR regulations for preparation, adoption, submittal 

and approval of implementation plans governing the NSR programs mandated by parts C and D of 

title I of the Act. These changes to the major NSR program, commonly referred to as “NSR 

Reform,” obligate states to develop and submit to EPA new NSR regulations for nonattainment 

areas, as well as attainment areas for states that elect to implement the PSD program. In response 

to NSR Reform and EPA’s reclassification of the Feather River portion of the Sacramento Metro 

Air Basin to a severe ozone nonattainment area (See 75 FR 24409, May 5, 2010), FRAQMD has 

submitted Rule 10.1 to fulfill these program requirements. This TSD contains EPA’s evaluation 

of new Rule 10.1 –New Source Review.
4

The CAA defines “nonattainment areas” as air quality planning areas that exceed the primary or 

secondary NAAQS for the given criteria pollutant (or that contribute to ambient air quality in a 

nearby area that does not meet the NAAQS). FRAQMD consists of both Sutter and Yuba 

counties. Rule 10.1 applies to sources located anywhere within the District, but contains separate 

requirements depending on the location of a project. Portions of the District are currently 

designated as nonattainment for the 8 hour ozone (severe) and PM2.5 NAAQS. A small southern 

section of Sutter County, referred to as the Sacramento Federal Nonattainment Area (SFNA), is 

designated as severe nonattainment for 8 hour ozone. All of Sutter County and all but the 

northern most part of Yuba County is designated nonattainment for the 2007 PM2.5 standard. A 

NSR rule submittal applicable to PM2.5 sources must be submitted no later than December 14, 

2012; therefore this submittal is not being evaluated for compliance with the NSR program 

requirements applicable to PM2.5 sources. FRAQMD does not take any credit in its attainment 

plans for any emission reductions achieved as part of these NSR regulations.

Rule Summary

Rule 10.1 contains the substantial requirements of the NSR program and is comprised of nine

sections: Section A – Purpose, Section B – Applicability, Section C – Effective Date, Section D –

Definitions, Section E – Requirements, Section F – Calculations, Section G – Air Quality Impact 

Analysis, Section H – Administrative Requirements, and Section I – Power Plants. Sections A 

and B include provisions that outline the purpose and applicability of the rule. Section D contains 

45 definitions. Section E contains the standards that apply to projects that undergo new source 

review, including Best Available Control Technology (BACT) and emission offset requirements. 

Section F contains the calculation methodologies to be used to make various determinations 

throughout the rule. Section G contains the requirements for performing an Air Quality Impact 

Analysis. Section H contains provisions for determining when an application is complete, what is 

required to make a preliminary decision, what air quality models must be used, public notice 

requirements, requirements for a final action, and other administrative provisions. Section I

contains specific requirements for power plant applications. 

Rule Evaluation

For this Technical Support Document (TSD), we have reviewed the submittal of Rule 10.1 to 

ensure it meets the requirements of section 110 and part D of title I of the Act and implementing 

regulations at 40 CFR 51.160 through 51.165. We also relied on the following materials in our 

review: General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 

1990 (see 57 FR 13498, April 16, 1992), EPA’s Emission Offset Interpretive Ruling (40 CFR part 

51, Appendix S), and EPA’s policy document entitled, “Improving Air Quality with Economic 

Incentive Programs” that was published in January 2001. EPA has condensed the approval 

criteria contained in these various materials in this TSD, which describes reasons for our proposed 

action on the Rule 10.1 submittal.

General Nonattainment NSR Requirements
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The Act requires all States with nonattainment areas to submit a NSR program that contains the 

following nonattainment NSR provisions. To demonstrate that FRAQMD has met each 

provision, EPA identifies the section(s) of Rule 10.1, or other rules which satisfy the listed 

requirement. Where necessary, a detailed discussion accompanies deficiencies in the rules that 

have been identified through this review. 

1. Provisions to assure that calculation of emissions offsets, as required by section 

173(a)(1)(A), are based on the same emissions baseline used in the demonstration of 

reasonable further progress.

First we note that the emissions inventories that have been prepared for the Ozone 

nonattainment plan and the demonstration of reasonable further progress (RFP) are based on 

actual emissions. An attainment plan for PM2.5 is not due until December 14, 2012. For new or 

modified major sources of VOC, NOx, SOx and PM2.5, Rule 10.1 Section E.2.a requires offsets to 

be provided when emission increases exceed specified thresholds. Rule 10.2 – Emission 

Reduction Banking Credits (ERCs) is used to provide emission reductions that satisfy the 

emission offset requirements. Rule 10.2 requires ERCs to be based on “actual” emission 

reductions. Thus, the basis for the demonstration of RFP and the calculation of NSR emissions 

offsets is the same (i.e., actual emissions). 

Second, regarding the amount of offsets that is necessary to show noninterference with RFP, 

EPA presumes that so long as a new source obtains offsets in an amount equal to or greater 

than the amount specified in the applicable offset ratio (or, where the statute does not specify an 

offset ratio, in an amount equal or greater than 1:1), the new source will not interfere with RFP. 

Rule 10.1 Section E.2.e.1 provides the ratios for federal offsets purposes, and is equal to or 

greater than the applicable offset ratio for the nonattainment pollutants. These offset ratio 

requirements ensure that the program for permitting of new or modified major sources will not 

interfere with RFP. 

These provisions satisfy the statutory requirement.

2. Provisions to assure, pursuant to section 173(c)(1), that any emissions offsets obtained 

in conjunction with the issuance of a permit to a new or modified source must be 

enforceable by the time of issuance of the permit, and in effect by the time the new or 

modified source commences operation. 

Rule 10.1 Section E.2.b requires that all offsets be enforceable and Section E.2.d requires that 

all offsets commence prior to initial startup of the new or modified source. These provisions 

satisfy the statutory requirement.

3. Provisions to assure that emissions increases from new or modified major stationary 

sources are offset by real reductions in actual emissions as required by section 

173(c)(1).

Rule 10.1 Section E.2.b requires that all offsets be real reductions. Section D.35 defines Real

as the decrease of actual emissions. These provisions ensure that emissions increases from 
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new or modified major stationary sources are offset by real reductions in actual emissions as 

required by section 173(c)(1).

4. Provisions, pursuant to section 173(c)(2), to prevent emissions reductions otherwise 

required by the Act from being credited for purposes of satisfying the part D offset 

requirements.

Rule 10.1 Section E.2.b requires that all offsets for be surplus when the reductions are 

surrendered to the District. Section D.43 defines surplus as reductions that are not otherwise 

required by federal, state or local law and not relied upon to meet any SIP requirement. These 

provisions prevent emissions reductions otherwise required by the Act from being credited for 

purposes of satisfying the part D offset requirements as required by section 173(c)(2). 

5. Provisions, pursuant to section 173(a)(5), that, as a prerequisite to issuing any part D 

permit, require an analysis of alternative sites, sizes, production processes, and 

environmental control techniques for proposed sources that demonstrates that the 

benefits of the proposed source significantly outweigh the environmental and social 

costs imposed as a result of its location, construction, or modification. 

Rule 10.1 Section E.7 requires an applicant for a major source or major modification to prepare 

such an analysis consistent with the requirements of CAA section 173(a)(5), by requiring the 

applicant to prepare an analysis functionally equivalent to the requirements of Division 13 of the 

Public Resources Code (CEQA). This section also requires the District to make the necessary 

findings prior to issuance of an Authority to Construct. This provision satisfies the section 

173(a)(5) requirement.

6. Definition of “stationary source” that certain internal combustion engines must be 

subject to control under State programs (i.e., those not used for transportation 

purposes), but excluding the category of “nonroad engines.” [See section 302(z) of the 

Act.]

SIP approved Rule 4.3 – Exemptions from Permit, provides exemptions from permitting 

requirements for various types of emission units. Sections (a) and (b) provide broad 

exemptions for vehicles as defined by the state vehicle code and vehicles used to transport 

passengers or freight. This current SIP exemption meets the requirements of requirements of 

Section 302(z) of the Act.

7. Provisions, pursuant to section 173(a)(3), to assure that owners or operators of each 

proposed new or modified major stationary source demonstrate that all other major 

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

Act.

Rule 10.1 Section E.5 requires an applicant for a major source or major modification to submit a 

certification that all existing major sources owned by the applicant in California which are subject 

to emission limitations are in compliance or on an expeditious schedule for compliance, with all 
7

applicable emissions limitations and standards. This provision satisfies the section 173(a)(3) 

requirement.

8a. Definitions which contain language which is either identical or equivalent to that found 

in CAA Section 171, 40 CFR 51.100, and 51.165(a)(1). 

In most cases, the definitions in Section D are either identical or equivalent to EPA’s language in 

the CAA and/or CFR. In some instances, the definitions do not match the federal definitions as 

closely, but we have determined that they satisfy the federal criteria. These specific definitions 

are discussed below. All section references are to 40 CFR Part 51, unless otherwise noted. 

Also see Section 8.b. below for a discussion of specific definitions affected by implementation of 

the NSR Reform requirements, and see Section 8c below for a discussion of the deficiencies 

pertaining to the required definitions.

Actual Emissions 

Rule 10.1 does not provide a definition for this term. Instead the rule provides a definition for the 

term “Historic Potential Emissions,” which is sufficiently similar and serves the same purpose as 

the term “Actual Emissions.” Therefore this is an acceptable substitution. 

Allowable Emissions

Rule 10.1 does not provide a definition for this term. Instead the rule provides a definition for the 

term “Historic Potential Emissions,” which when read with the definition of “Potential to Emit” is 

sufficiently similar to and serves the same purpose as, the section 165 definition for this term, in 

that only emissions allowed by the legally and practically enforceable permit may be counted. 

Construction

Rule 10.1 does not provide a definition for this term, but EPA believes the common usage 

definition of this term is adequate for the purposes of determining the requirements of Rule 10.1. 

Emissions Unit (EU)

The section 165(a)(1)(vii) definition of this term includes three elements: 1) what generally 

constitutes an EU, 2) what constitutes a “New EU” and 3) what constitutes an “Existing EU.” 

The Rule 10.1 definition of EU only covers what generally constitutes an EU, and does not 

differentiate between new and existing EUs. Because Rule 10.1 does not differentiate in its 

treatment of old and new EU’s, it is not necessary to provide separate definitions to clarify these 

distinctions. The Rule 10.1 definition of Emission unit is adequate and consistent with the 

section 165 definition for the purposes of this rule. 

Lowest Achievable Emission Rate (LAER)

Rule 10.1 does not provide a definition for this term. Instead the rule provides a definition for the 

term “Best Available Control Technology (BACT),” which incorporates the definition of LAER, in 

that it specifies that BACT is the most stringent of either 1) applied in practice technology (LAER 

standard) or 2) technology that is technically feasible and cost-effective (BACT standard). This 

is an acceptable substitution.

Major Modification 
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Section 165 (a)(1)(v) defines a major modification as a physical change in or change in the 

method of operation of a major stationary source that would result in both a significant emission 

increase and a significant net emissions increase for a regulated NSR pollutant. The definition 

of “significant,” which provides specific thresholds for each pollutant, is provided in section 165 

(a)(1)(x). Rule 10.1 defines the term “major modification” in section D.21 as a modification, as 

defined in section D.22, at a major source that results in a net increase in the PTE greater than 

25 tpy for NOx or VOCs. The definition of the term “modification” in Section D.22 is sufficiently 

similar to the section 165language used to describe the physical changes or changes in the 

method of operation as the term “major modification,” including a list of excluded activities. The 

“major” aspect of the section 165 definition is covered by the requirement that the source must 

already be a major source for the non-attainment pollutant and the 25 tpy threshold is the 

significant threshold for the only nonattainment pollutants in the District. We note that this 

definition does not require the project to also result in a significant net emissions increase, but 

believe this difference is acceptable because it is more stringent than the 51.165 requirements

that a project must result in both. See also the discussion in the section entitled “NSR 

Reforms”. 

Major Stationary Source 

The Rule 10.1 definition for this term is consistent with the 51.165 definition as it applies to 

severe 8-hr ozone non-attainment areas. While not defined exactly the same as in section 165, 

this definition appropriately limits applicability to the applicable nonattainment pollutants and 

includes the appropriate major source emission thresholds. Therefore this definition is 

acceptable. 

Net Emission Increase

Rule 10.1 does include this term because sources are not allowed to perform a net emissions 

increase analysis to determine whether a project will result in a major modification. Instead, 

only a significant emissions test is used. Since Rule 10.1 does not use this test, it is not 

necessary to define this term.

Project

Rule 10.1 does not provide a definition for this term, but EPA believes the common usage 

definition of this term is adequate for the purposes of determining the requirements of Rule 10.1. 

Regulated NSR Pollutant

Rule 10.1 does not provide a definition for this term, but instead uses the term “Affected

Pollutant” and defines it as any pollutant or precursor for which a NAAQS or SAAQS has been 

established. This definition is sufficiently similar to and serves the same purpose as, the section 

165 definition for this term. Therefore this definition is acceptable. 

Secondary Emissions

Rule 10.1 does not provide a definition for this term. The only place in section 165 that this term 

is used is within the definition of Potential to Emit (PTE), to clarify that secondary emissions are 

not included when calculating PTE. Since Rule 10.1 does not use this term, it is not necessary 

to define it. 
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Temporary clean coal technology demonstration project, Clean coal technology, and 

Clean coal technology demonstration project

The above terms related to coal-fired facilities are not included in Rule 10.1. These terms are 

only used in section 165 within the definition of Major Modification, where it states that the 

installation of such projects does not constitute a major modification. Rule 10.1 does not 

include such an exclusion from its definition of the term modification, thus there is no need to 

define these terms in Rule 10.1. 

Volatile organic compounds (VOC)

Rule 10.1 provides a definition for the term “Reactive Organic Gases” which is consistent with 

the federal definition provided in 40 CFR 51.100(s) for this term.

8b. Definitions which contain language which are not either identical or equivalent to that 

found in 51.165(a)(1), related to implementation of the NSR Reform requirements. 

This section discusses the specific definitions affected by the Districts exclusion of the NSR 

Reform requirements. Please see the section of this TSD entitled “New Source Review 

Reforms” for a discussion of why we believe it is acceptable to approve Rule 10.1 without the 

inclusion of the following NSR related terms or terms that match the section 165 definitions for 

these terms: Baseline actual emissions, Electric utility steam generating unit, Emission unit, Net 

emission increase, Projected actual emissions, Significant, Significant emissions increase, and 

Significant net emissions increase.

8.c Definitions which EPA has determined are deficient, in that they are not either identical 

or equivalent to that found in CAA Section 171, 40 CFR 51.100, and 51.165(a)(1). 

The absence of these definitions has been noted in the Federal Register notice 

proposing action on this submittal, as a requirement that must be added or addressed for 

full approval.

Commence, Begin actual construction and Necessary preconstruction approvals or 

permits

Rule 10.1 does not define or use any of these interrelated terms. The term Commence is key to 

correctly applying the provisions of 51.165(a)(5)(ii). (See item 13) Since we identified the lack 

of this provision as a deficiency, when the District adds such a provision to correct the deficiency, 

it will also need to add definitions for each of these terms. 

9. Provisions, pursuant to 40 CFR 51.161 that require opportunity for public comment, as 

well as the consideration of any comments received during this period in the final 

permit determination. These provisions must also ensure the availability of all 

information relevant to the proposed permit during the comment period, and allow for a 

public hearing upon request.

Sections H.3, Publication and Public Comment, and H.4, Public Inspection, ensure that the 

requirements of 40 CFR 51.161 are met. These sections require the District to provide a 30 day 

public notice for each proposed permit and an opportunity to request a public hearing, and make 

available for inspection all related materials. 
10

10. For districts which have submitted a minor source NSR permitting program: 

provisions, pursuant to 40 CFR 51, sections 160 through 164, which contain 

substantive requirements for minor sources. These requirements include public 

notice, opportunity for–and consideration of–public comment, and the demonstration 

that a minor source will not contribute to a violation of any national standard or the area 

control strategy for attainment.

As noted above, the provisions of Sections H.3 and H.4 ensure the public notice provisions of 

161 are met for all sources required to provide offsets pursuant to Section E.2 – Offset 

Requirements. Thus public notice requirements apply to any source with a PTE of more than 

10 tpy of VOC or NOx, and 25 tpy of PM10 or SOX. These thresholds are below the 25 tpy major 

source threshold for VOC and NOx and the 100 tpy major source threshold for PM10 or SOx. In 

addition, Section G. requires that all projects be evaluated to ensure they will not prevent or 

interfere with the attainment or maintenance of any applicable air quality standard, including 

minor source projects.

11. Provisions, pursuant to 40 CFR 51.118(a), to assure that the degree of emission 

limitation required of any source for control of any air pollutant must not be affected by 

so much of any source's stack height that exceeds good engineering practice.

Section G.3, Air Quality Impact Analysis, states that for “...an impact analysis, if the proposed 

stack height is higher than is dictated by good engineering practices, the actual height used for 

the purposes of modeling shall be calculated in accordance with good engineering practices.” 

This provision satisfies the regulatory requirement.

12. Provisions, pursuant to 40 CFR 51.165(a)(3)(ii)(C), which limit “prior shutdown” 

emission reduction credits (ERCs), i.e., ERCs that are generated by facilities that have 

already ceased operation. While these credits can be allowed, the regulations prohibit 

such credits in two cases: (1) if the attainment plan has been disapproved, or, (2) if an 

attainment plan or other part D required submission is delinquent.

At present, FRAQMD has submitted all plan revisions currently required under part D of title I of 

the Act, and all of these plan revisions have been found to be complete (or have been deemed 

complete by operation of law). Therefore credit for prior shutdown is allowed so long as the other 

requirements in 40 CFR 51.165(a)(3)(ii)(C) are met. Rule 10.2 – Emission Reduction Banking 

Credits (ERCs) requires ERCs to be based on actual emission reductions and that such 

reductions, including those from source shutdowns, meet the basic requirements of being 

surplus, permanent, quantifiable, and federally enforceable. In addition, Section E.2 of Rule 

10.1 requires that all emission reductions, including those from shutdown operations, to be 

surplus to any reductions in the District’s attainment plan. Thus, credit for prior shutdowns 

under Rule 10.1 is acceptable.

13. Provisions, pursuant to 40 CFR 51.165(a)(5)(ii), which require new source review for a 

source or modification which becomes major due to a relaxation in a 
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federally-enforceable limit. Such sources and modifications are subject to new source 

review “as though construction had not yet commenced.” 

Rule 10.1 does not contain such a provision. This omission is a deficiency. To correct this 

deficiency, the District must submit a revised version of Rule 10.1 for SIP approval that contains 

such a provision. In addition, the District will need to include new definitions for the terms 

“Commence,” “Begin actual construction” and “Necessary preconstruction approvals or permits”

which are embedded within this provision. 

14. Provisions, pursuant to 40 CFR 51.307(b)(2), which identifies additional requirements 

for NSR for any new major source or major modification, proposing to locate in a 

nonattainment area, that may have an impact on visibility in any mandatory Class I 

Federal Area.

Rule 10.1 does not contain such a provision. However a Federal Implementation Plan, 

pursuant to 40 CFR 52.281(d) already ensures this provision is applicable for all new and 

modified major sources. For clarity, EPA recommends that the District provide language in 

Rule 502 to identify the necessary additional requirements pursuant to 40 CFR 51.307(b)(2). 

15. Provisions, pursuant to 40 CFR 51.165(a)(1)(iv)(C), which require that fugitive 

emissions be included in the major source applicability determination if the source 

belongs to one of the source categories listed in this section. Otherwise, fugitives may 

be excluded from the applicability determination.

The definitions of “major stationary source” in Section D.20 states that fugitive emissions must 

be counted when determining if a source is a major stationary source if the source belongs to 

one of the categories of stationary sources included in 40 CFR 51.165(a)(1)(iv)(C). This 

provision satisfies the statutory requirement.

16. Provisions, pursuant to section 173(a)(2), which require LAER, for a major source or 

major modification. 

Section D.5 defines BACT as the most stringent of several options. Section D.5.1 requires the 

most stringent emission limit or control technique which has been used for the specific type of 

equipment. This is consistent with the definition of LAER as defined in 40 CFR 51.165 

(a)(1)(xiii). Section E.1 requires any new or modified stationary source with an emission 

increase and a potential to emit for the project above specified thresholds (all of which are below 

the NSR significance levels for the same pollutants) to apply BACT. These provisions satisfy 

the statutory requirement.

New Source Review Reforms

California Clean Air Act – New Source Review Program

The air quality in California has historically been some of the worst in the nation. In light of this 

fact, California has always been at the forefront in implementing strict air quality regulations to 
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address the state’s serious air quality problems. 

In 1959, the State passed its first air quality standards for total suspended particulates, 

photochemical oxidants, sulfur dioxide, nitrogen dioxide, and carbon monoxide. These state 

standards were amended in 1969 by the Air Resources Board. At that time, the California 

ambient air quality standard for ozone was lower than the federal standard, thus most of California 

was exceeding the state standard for Ozone. As a result, most California Air Pollution control 

agencies had developed permitting programs that contained non-attainment new source review 

requirements such as Lowest Achievable Emissions Rate (LAER) and offsets. 

In 1988, California adopted the California Clean Air Act of 1988 (California CAA). This 

legislation established new preconstruction review requirements for new and modified sources. It 

established uniform emission thresholds that trigger control and offset requirements for ozone 

(VOC and NOx), carbon monoxide (CO), sulfur dioxide (SO2) and nitrogen dioxide (NO2) at levels 

significantly lower than the federal thresholds in effect at the time of adoption. These thresholds 

are even lower than the thresholds established two years later by the federal Clean Air Act 

Amendments of 1990 (federal CAA). 

Under both state and federal requirements, all ozone nonattainment areas were classified 

according to the severity of the ozone violations measured for each area. Instead of a single major 

source threshold for all areas, the federal CAA set new major source and major modification 

thresholds of 100 and 40 tons per year (tpy) respectively, for areas classified as moderate or 

marginal; 50 and 25 tpy respectively, for areas classified as serious; 25 and 25 tpy respectively, for 

areas classified as severe; and 10 and 0 tpy respectively, for areas classified as extreme. These 

thresholds are used to determine when a proposed project requires the application of LAER and 

emission offsets. 

In comparison, the California CAA set thresholds for when project emissions trigger the 

application of California’s version of Best Available Control Technology (CA BACT) and offsets. 

(Note that CA BACT is defined in such a manner as to be equivalent to federal LAER 

requirements.) The application of CA BACT is triggered for emission increases of 25 lb/day in 

areas classified as moderate and 10 lbs/day in areas classified as serious, severe or extreme. In 

addition, some California Districts have adopted even lower CA BACT thresholds of two and zero 

lb/day. The requirement to provide offsets is triggered for all emission increases, once a facility’s 

emissions exceed 25 tpy in areas classified as moderate; 15 tpy in areas classified as serious; and 

10 tpy in areas classified as severe or extreme. 

California and Federal BACT/LAER and Offset Thresholds for 1-hr Ozone

CA Ozone Classification 

(ppm)

Marginal Moderate

(0.09 - ≤0.12)

Serious

(0.13 - ≤0.15)

Severe

(0.16 - ≤0.20)

Extreme

(>0.20)

CA BACT1 (tpy) [lb/day] NA 4.6 [25] 1.8 [10] 1.8 [10] 1.8 [10]

CA Offset1(tpy) NA 25 15 10 10

EPA Ozone Classification 

(ppm)

Marginal

(0.121 - <0.138)

Moderate

(0.138 - ≤0.160)

Serious

(0.160 - ≤0.180)

Severe

(0.180 - ≤0.280)

Extreme

(>0.28)

 

1 California Health & Safety Code §§ 40918, 40919, 40920 and 40920.5
13

Federal Major Source (tpy)

(Triggers both LAER & Offsets)

100 100 50 25 10

Federal Major Mods (tpy) 

(Triggers both LAER & Offsets)

40 40 25 25 0

Note: California design values are lower than federal values for the same classification.

NSR Reform Program Requirements

On December 30, 2002, EPA published a final rulemaking action to provide additional flexibility 

in the permitting of modified sources subject to the federal major source NSR and PSD programs. 

EPA’s intent was to allow existing sources additional flexibility in the NSR/PSD permitting 

process that would encourage facilities to make process improvements or undertake energy 

efficiency projects that would provide additional environmental benefits by reducing emissions on 

a capacity basis. In 2005, a court vacated two key NSR Reform provisions2, but also upheld the 

three key remaining provisions. These provisions all pertain to how emission increases from 

proposed modifications of existing sources are calculated. 

One provision allows an existing facility to set a Plantwide Applicability Limit (PAL), which in 

effect is a facility-wide emissions cap for a specific pollutant. Once the PAL is determined, a 

facility can make any physical modification or change in the method of operation, which might 

otherwise trigger a major modification, without obtaining a NSR permit, as long as the plantwide 

emissions remain below the PAL level. For certain types of industries that need significant 

operational flexibility to make quick changes in response to changing market conditions, the 

ability to make changes without having to wait for the issuance of construction permits is worth the 

additional work to ensure emissions from all operations remain below the PAL and maintain the 

additional records needed to verify compliance with the plant-wide emission limits.

Another provision changed the allowable time frame to be used to determine baseline actual 

emissions. Baseline emissions are generally considered to be the pre-project emissions from the 

facility or emission units proposed to be modified. Prior to implementing the NSR Reforms, EPA 

required a source to use the actual emissions emitted during the two year period immediately 

preceding the application date for the new project. Sources were allowed to use a different two 

year period within the five year period immediately preceding the application date if they could 

demonstrate that the alternative two year period was more representative of normal operations. 

The NSR Reforms revised the allowable time frame to be any 24 month period during the 10 year 

period immediately preceding the application date. EPA believes that the use of a 10 year period 

allows a source to look back to a period from a more representative business cycle, i.e., 10 years 

vs. five years, and that significant resources are conserved by allowing the source to choose the 24 

month period used to establish baseline actual emissions, rather than spend time and resources 

determining what period most represents “normal operations.” While going back further in time 

means a source may be able to choose a period with higher average emissions, the NSR Reforms 

also added requirements to ensure the baseline period is adjusted for any excess emissions or any 

additional emission reductions required by new regulations which have become effective since the

baseline period. 

 

2 The United States Court of Appeals for the District of Columbia Circuit in State of New York, et al., v. U.S. 

Environmental Protection Agency, et al., 413 F.3d 3 (D.C. Cir. 2005)
14

The third provision upheld by the court changed how post-project emissions are determined. 

Prior to implementing the NSR Reforms, EPA required a source to use the worst case potential to 

emit (PTE) assumptions (i.e., operating at 100% capacity, 24 hrs/day, 7 days a week), unless the 

applicant agreed to practically enforceable permit conditions to limit operation of the emission unit 

(i.e. fuel usage limits or limits on hours of operation). In this “actual to potential” test, often the

difference between the baseline actual emissions and the PTE of an operation would be greater 

than the major modification significance thresholds. As a result, many modifications were treated 

as major modifications, even when the actual emissions would decrease, not change, or the actual 

increase in emissions would not be significant. The NSR Reforms also changed the post-project 

emission calculation methodology to allow a source to use the highest actual emission rate 

projected to occur over the next 5 or 10 years and to subtract emissions the emission units could 

have accommodated prior to the project, that were unrelated to the project, in order to determine 

the emission increase from the proposed project. 

It is important to note that none of these revisions changed the major modification significance 

thresholds for triggering control technology and offset requirements. They only changed the 

calculation to determine if the major modification threshold is triggered. 

Impacts of Federal NSR Reforms on California NSR Permitting Programs

By not adopting the NSR Reforms, the NSR program in California Districts would not include the 

three program elements described earlier: use of PALs, a 10 year look back period for baseline 

actual emissions and projected actual emissions. The use of two of these three provisions 

(baseline actual emissions and projected actual emissions) is required under 40 CFR 51.165(a)(2). 

The requirement to adopt a NSR program that allows the use of PALs is found in 40 CFR 51.165 

(f).

Section 116 of the CAA3provides that nothing in the Act shall preclude the rights of States to 

adopt air pollution regulations that are more stringent than those contained in the CAA or 

implementing regulations. As noted above, the California CAA of 1988 adopted lower emission 

thresholds for triggering emission control (BACT/LAER) and offset requirements for new and 

modified sources as part of its NSR program. Consistent with this concept, when EPA adopted 

new calculation methods to implement the NSR reforms in 40 CFR 51.165 (a)(2), we also stated 

that each plan must use the specific applicability provisions specified unless the State specifically 

demonstrates that the submitted plan provisions “are more stringent than or at least as stringent” in 

all respects as the specified paragraphs. These applicability provisions specify the use of baseline 

actual emissions and projected actual emissions, two of the new NSR Reform provisions, but also 

retain the option for a source to use the actual to potential emission test. 

 

3 Section 116: of the CAA: Except as otherwise provided in sections 119 (c), (e), and (f) (as in effect before the date of 

the enactment of the Clean Air Act Amendments of 1977), 209, 211(c)(4), and 233 (preempting certain State 

regulation of moving sources) nothing in this Act shall preclude or deny the right of any State or political subdivision 

thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement 

respecting control or abatement of air pollution; except that if an emission standard or limitation is in effect under an 

applicable implementation plan or under section 111 or 112, such State or political subdivision may not adopt or 

enforce any emission standard or limitation which is less stringent than the standard or limitation under such plan or 

section.
15

Several air districts in California have argued that their NSR permit programs are inherently more 

stringent than the required federal program because the applicability thresholds to apply CA 

BACT and offsets are significantly lower than those in the federal CAA. In addition, for 

modifications, a source does not need to be a major source, as it does for federal purposes, before 

these lower applicability thresholds apply to a proposed project. The Districts also point out that 

if a District adopted the NSR Reform calculation methods, and a project using these methods was 

not classified as a major modification, it would not be subject to Federal LAER and offsets 

requirements; but the project would still have to apply CA BACT and provide offsets in 

accordance with the CA CAA requirements. These lower state emission thresholds are already in 

almost all Districts’ portion of the California SIP, making these requirements enforceable under 

both state and federal law. 

As a result, CA Districts have argued that the regulatory framework found in other states, where 

adopting the NSR Reforms provide additional permitting flexibility and environmental benefits, 

do not exist in California because adoption of the reform requirements would have no effect on the 

application of control technology or offset requirements. This claim is based on the more 

aggressive CA CAA program requirements not only for new and modified sources, but existing 

sources as well. For example, whereas the federal CAA requires States to apply at least 

Reasonably Available Control Technology (RACT) for all major source categories located in a 

nonattainment area, the CA CAA requires the application of Best Available Retrofit Control 

Technology (BARCT)4 5for all source categories where it is economically feasible to do so. Thus 

even if an existing source is not proposing any physical or operational modifications, it must still 

reduce emissions periodically as part of an area’s attainment plan by applying stringent control 

technologies. The Districts contend that this requirement leaves little room for additional 

voluntary emission reduction projects and eliminates any practical benefits of obtaining a PAL. 

EPA has reviewed the Districts’ claims and considered how the CA CAA provisions affect the 

effectiveness of the NSR Reforms to provide the intended regulatory relief, and we agree that the 

application of CA BACT and offsets at significantly lower thresholds means that the federal NSR 

Reform provisions do not provide any of EPA’s intended additional flexibility to proposed 

projects that may otherwise trigger federal major modification requirements. If the State adopts 

these provisions, a new project will have to complete two different sets of emission calculations; 

and even if the federal requirements are not applicable, the source will still have to comply with the 

CA BACT control and offset requirements if they are triggered. In light of these facts, EPA is 

proposing to find that it is acceptable for FRAQMD to not incorporate the NSR Reform provisions 

into their SIP approved NSR programs, since the same level of control will be required for 

modified sources, with or without inclusion of these provisions in the SIP, and their programs will 

not be any less stringent than the federal program. 

 

4 BARCT must meet the same evaluation criteria as BACT, except as it applies to existing, rather than new or 

modified sources.

5 California Health and Safety Code Section 41010(b) and California Code of Regulations Title 17, Division 3, 

Chapter 1.5, Article 6, Section 70601 
16

Section 110(l) of the Act

Section 110(l) of the Act prohibits EPA from approving any revision of a SIP if the revision would 

interfere with any applicable requirement concerning attainment and reasonable further progress, 

or any other applicable requirement of the Act. In nonattainment areas we may approve SIP 

relaxations so long as they would not interfere with any applicable requirement concerning 

attainment and reasonable further progress, or any other applicable requirement of the Act. The 

requirements contained in the new rule submittal were compared with the contents and 

requirements of the existing SIP rules to evaluate compliance with the 110(l) requirements. 

Rule 10.1 is a new SIP submittal for both counties under the jurisdiction of the FRAQMD. 

Neither Rule 10.1 or any earlier version of this rule has been approved into the SIP and we are 

proposing to find that the submittal meets the section 110(a)(2)(C) and part D of title I of the Act. 

Therefore approval of this rule into the SIP will represent a strengthening of the SIP. 

Section 193 of the Act

Section 193 of the Act, which was added by the Clean Air Act Amendments of 1990, includes a 

savings clause which provides, in pertinent part: “No control requirement in effect, or required to 

be adopted by an order, settlement agreement, or plan in effect before November 15, 1990, in any 

area which is a nonattainment area for any air pollutant may be modified after November 15, 1990, 

in any manner unless the modification insures equivalent or greater emission reductions of such air 

pollutant.” Rule 10.1, nor any earlier version of this rule was approved into the SIP as of the 

November 15, 1990 applicability date of Section 193; therefore this provision does not apply to 

this rulemaking action. 

Recommendations

Pursuant to section 110(k)(3) of the Act, we recommend a limited approval / limited disapproval of 

the submitted NSR rule. We recommend limited approval based on our determination that the 

rule complies with applicable statutory and regulatory provisions requiring regulation of stationary 

sources in general and requiring permit programs for major stationary sources in particular, 

including section 110(a)(2)(C) and part D of title I of the Act. In support of this recommendation, 

we have concluded that our approval of Rule 10.1, complies with sections 110(l) and 193 of the 

Act because the new rule does not replace any existing SIP approved rules and therefore these 

provisions are not applicable to this evaluation. We recommend limited disapproval to correct

the deficiencies listed below. If we finalize this action as proposed, our action would be codified 

through revisions to 40 CFR 52.220 (identification of plan).

1. Add definitions for the terms “commence,” “begin actual construction,” and “necessary 

preconstruction approvals or permits.” (See item 8c and 13)

2. Add a provision, pursuant to 40 CFR 51.165(a)(5)(ii), which requires new source review 

for a source or modification which becomes major due to a relaxation in a 

federally-enforceable limit. Such sources and modifications shall be subject to new 

source review “as though construction had not yet commenced.” (See item 13)
17

Attachments

1. FRAQMD Submitted Rule 10.1, New Source Review (NSR), adopted October 5, 2009.

2. EPA’s reclassification of the Feather River portion of the Sacramento Metro Air Basin, (75 

FR 24409, May 5, 2010).