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

Prepared by: Laura Yannayon

Reviewed by:

Gerardo Rios

Air Division, Permits Office United States Environmental Protection Agency, Region IX San Francisco, California

February 8 , 2013Table of Contents

Section Page

Introduction 1

NSR Program SIP Revision Submittal 1

Background 1

Rule Summary 2

Rule Evaluation 2

Section 110(l) of the Act 5

Section 193 of the Act 6

Recommendations 6

Attachments 71 Introduction

Part D of title I of the Clean Air Act (CAA or Act) contains the requirements for areas designated “nonattainment” for any of the National Ambient Air Quality Standards (NAAQS). Among other things, Part D requires pre

- construction permit programs for certa in new or modified stationary sources of nonattainment pollutants in nonattainment areas, referred to as “Nonattainment NSR” (NSR). The NSR program applies to “major” stationary sources and “major modifications” as those terms are defined in 40 CFR Part 51 , Subpart I.

NSR Program SIP Revision Submittal

Rule 10.1

– New Source Review (NSR) was adopted by the Feather River Air Quality Management District ( FRAQMD or District) on February 6 , 201 2 and submitted to EPA via the California Air Resources Board (ARB) by a letter dated September 21 , 201 2

. The District adopted Rule 10.1 to implement the federal nonattainment NSR program requirements in the

District.

ARB is the governor’s designee for sub mitting official revisions of the California State Imp lementation Plan (SIP) to EPA , and FRAQMD is the local agency responsible for regulating the construction and modification of stationary sources within portions of Sutter and Yuba

Counties

.

Backgroun d

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

10.1

– New Source Review (NSR ). See 76 FR 44809. The effect of this action was to incorporate Rule 10.1 into the SIP and to trigger sanctions clocks with respect to certain provisions of the rule that did not satisfy the requirements of section 110 and title I, part D of the CAA. Sanc tions will be imposed under section 179 of the Act according to 40 CFR 52.31 unless EPA approves SIP revisions that correct the identified rule deficiencies by February 26, 2013. FRAQMD’s submitted Rule 10.1 is intended to address these previously identifi ed rule deficiencies.

The CAA defines a “nonattainment” area as any area that does not meet (or that contributes to ambient air quality in a nearby area that does not meet) the national primary or secondary NAAQS for a pollutant. CAA 107(d)(1)(A)(i). The FRAQMD contains all or parts of the Sacramento Valley (Sutter County portion), the Yuba City

- Marysville (all of Sutter County and a portion of Yuba County) and the Sutter Buttes (Sutter County portion) Air Basins. The Sacramento Valley portion is currentl y designated and classified as severe nonattainment for the

1997 and 2008 8

- hour ozone NAAQS and designated nonattainment for the 2006 24

- hour PM 2.5 NAAQS. The Sutter Buttes portion is currently designated and classified as moderate

nonattainment for the 1 997 8

- hour ozone NAAQS and designated nonattainment for the 2006

24

- hour PM 2.5 NAAQS. The Yuba City

- Marysville portion is currently designated nonattainment

for the 2006 24

- hour PM 2.5 NAAQS. See 40 CFR 81.305.2 Therefore, California is required to impleme nt a SIP

- approved NSR program for the Feather River area that applies, at minimum, to the following NAAQS pollutants and precursor pollutants: volatile organic compounds (VOCs), nitrogen oxides (NO

x ), particular matter of 2.5 microns or less (PM 2.5 ) and su lfur oxides (SO

x ). VOCs and NO

x are subject to NSR as precursors to ozone, and NO

x and SO

x are subject to NSR as precursors to PM 2.5

. See 40 CFR 51.165(a)(1)(xxxvii)(C). Rule 10.1 constitutes the District’s non

- attainment major source program, as well as its minor source program, for all regulated NSR pollutants.

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, S ection 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 5 5 definitions , 10 of which are ne w . Section E contains the requirements that apply to projects undergo ing 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 det erminations 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, which air

qu ality 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

This Technical Support Document (TSD) p rovides EPA’s evaluation of the District’s revised Rule 10.1 (including revisions made by the District to address the deficiencies identified in our July 27, 2011 final action on FRAQMD’s NSR program submittal). We have reviewed Rule 10.1 for compliance wi th the requirements of section 110 and part D of title I of the Act and EPA’s current implementing regulations at 40 CFR 51.160 through 51.165.

For a more comprehensive analysis of how Rule 10.1 satisfies the applicable requirements of the

Act and 40 CFR 51.160 through 51.165, please also see the TSD supporting our July 27, 2011 limited approval and limited disapproval of Rule 10.1 at 76 FR 44809. “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,” May 9, 2011. We also considered 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,” which was published in January 2001. EPA has condensed the approva l criteria contained in these various materials in this TSD, which describes reasons for our proposed action on the Rule 10.13 SIP submittal. All references below to “Rule 10.1” are to the rule as amended February 7, 2012,

unless otherwise noted.

Rule 10.1

– New Source Review In our May 19, 2011 Notice of Proposed Rulemaking on Rule 10.1 (see 76 FR 28944), we identified the following deficiencies and suggested corrections:

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

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 sou rces and modifications shall be subject to new source review “as though construction had not yet commenced.”

The District revised Rule 10.1 to address each of the se deficiencies

. The revisions made to Rule

10.1 , including those which address the deficien cies identified in EPA’s previous rulemaking,

are discussed below.

Item 1 : Definitions have been added for each of the following terms : Begin Actual

Construction

, Commence and Necessary Preconstruction Approvals or Permits

. These new

definitions are either identical or equivalent to EPA’s definitions in 40 CFR 51.165(a)(1) and

therefore correct the identified deficiencies.

Item 2 : New language consistent with the requirements of 40 CFR 51.165(a)(5)(ii) has been

added to Section B.2

. This new langua ge satisfies the identified deficiency.

Other Revisions:

A. New definitions have been added for the following terms: Class I Area, Construction, Federally Enforceable, PM 2.5 , Significant, Significant Emissions Increase

, Sutter Buttes Nonattainment Area for Ozone (SBNA) and Yuba City

- Marysville Nonattainment Area

for PM 2.5 (YC

- MNA)

. These new definitions are either identical or equivalent to EPA’s definitions in 40 CFR 51.165(a)(1) or 40 CFR 51.100; or they adequately define the

SBNA and YC

- MNA by referencing EPA’s definition s for these areas in 40 CFR 81.305. The definition of “Significant” has been properly delineated between the 3 different attainment areas in the District and their respective non

- attainment classifications. T hese new definitions are acceptable.

B. The definition of “Major Modification” has been revised so that it only applies to major

sources that are located within one of the three non

- attainment areas within the District,

rather than the entire District. The threshold s for triggering a major modification ha ve been changed to be based on a “ significant emission increase ” rathe r than 25 tpy for NOx

and VOC. This change allows th e definition to specify the major modification thresholds

for all non

- attainment poll utants by referencing a significant threshold table which4 includes all NAAQS. These changes provide clarity , are consistent with the requirements

of 40 CFR 51.165 and are therefore acceptable.

C. The definition of “Precursor” has been revised to add Nitrogen and Sulfur Oxides as precursors to PM 2.5

. This revision is consistent with the definition of regulated NSR pollutant in 40 CFR 51.165 (a) (1) and is therefore acceptable.

D. Subsections E.1.a and b have been revised to add language requir ing sources located in

the SBNA and YC

- MNA portions of the FRAQMD which emit NOx, VOC or PM 2.5 as applicable, to apply BACT at new major sources or modifications that result in major

modifications

. These revisions bring the rule up to date with the District’s recent non

attai nment classifications for o zone in the SBNA and PM 2.5 in the YC

- MNA, as required by 40 CFR 51.165, therefore these revisions ar e acceptable.

E. Subsection E.2.a.2 has been added to the rule to specify that PM 2.5 offsets are required for projects located in the YC

- MNA area if the emission increase would result in a new major source or major modification. This revision is consistent with the 40 CFR 51.165 requirements for PM 2.5 nonattainment areas, and is therefore acceptable.

F. Section E.2 contains several tables which list the required offset ratios based on the pollutant being emitted and the location of the source. The tables have been edited to provide separate tables for federal NO

x , VOC, PM 10 and PM 2.5 offset thresholds and State

PM 10 , NO

x and VOC offset thresholds. Edits have also been made to clarify that in each case, the offsets must come from the same non

- attainment area as the proposed source

. EPA has reviewed these revisions and the offset thresholds spe cified for each pollutant and determined that they are all equal to , or more stringent than

, those required by 40

CFR 51.165 and t he CAA. Therefore EPA finds these revisions acceptable.

G. Section E.8 has been added to specify when the APCO must consult with the Federal Land Manager on projects that have potential visibility i mpacts on Class I areas. These

thresholds are based on reasonable emission rates and location of the facility. Therefore EPA finds this new provision acceptable to satisfy the requirements of 40 CFR 51.307.

H. Subsection E.2.f.3 has been added to clarify that interpollutant offsets between PM 2.5 and its precursors are only allowed at specific ratios as approved into the SIP. At this time, no such ratios have been approved into the Feather River SIP, therefore no interpollutant

offsets can be used for PM 2.5 . This new language is consistent with EPA policy which requires the use of a SIP approved PM 2.5 interpollutant offset ratio. Therefore EPA find this revision is acceptable.

I. Oth er minor editorial changes have been made throughout the rule, such as updating

cross

- references to various renumbered sections to ensure accuracy of rule citations.

New Deficiencies:5 A. Sections B.4 and B.5 have been added to the rule and provides that if EPA re

- designates specific non

- attainment portions of the District to attainment for PM 2.5 or o zone, then

Section E of the rule s hall not apply to those areas. While the District is allowed to include provisions that would change the applicability of the r ule based on a redesignation by EPA to attainment, the District cannot exempt sources from all of the requirements of Section E of the rule , as some of the subsections contain requirements that apply to minor sources. (e.g., Subsection E.3, which prohibits a new source from causing or making worse an ambient air quality standard.) Based on a redesignation to attainment, Sections B4 and B.5 should only exempt a source from the requirements of E.1, E.2, E.5, E.7 and E.8. Therefore the inclusion of new Section s B.4 and B.5 creates a new disapproval issue for Rule 10.1.

B. The definition of “NSR Regulated Pollutant” does not specify that gaseous emissions

which condense to form either PM 10 or PM 2.5 must be counted as PM 10 or PM 2.5 , respectively. This revision to t he definition of NSR Regulated Pollutant was made as part of our Phase II rulemaking for Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 ) . See 73 FR 28321. This omission creates a deficiency which must be corrected by providing this clarification regarding the treatment of condensable gaseous emissions within the definition NSR Regulated Pollutant or the definitions of PM 10 and PM 2.5

.

Section 110( l ) of the Act

Section 110(l) states: “Each revision to an implementation plan submitted by a State under this chapter shall be adopted by such State after reasonable notice and public hearing. The Administrator shall not approve a revision of a plan if the revision would interfere with any applicab le requirement concerning attainment and reasonable further progress (as defined in section 7501 of this title), or any other applicable requirement of this chapter.”

With respect to the procedural requirements of CAA section 110(l), based on our review o f the public process documentation included in FRAQMD’s September 21, 2012 rule submittal, we find that the State has provided sufficient evidence of public notice and opportunity for comment and public hearings prior to adoption and submittal of these rul es to EPA.

With respect to the substantive requirements of section 110(l), our approval of revised Rule 10.1 (to replace current SIP Rule 10.1) would strengthen the SIP

- approved nonattainment NSR and minor NSR programs in the FRAQMD compared to the exist ing SIP program as approved July 27, 2011. As discussed above, the District has added several required definitions to Rule 10.1 and corrected a provision that was inconsistent with the applicable NSR regulations in 40 CFR 51.165. The rule revisions strengt hen the nonattainment NSR program in the FRAQMD by clarifying its applicability and compliance provisions and addressing NSR requirements that the current SIP program fails to adequately address. None of the revisions to Rule 10.1 relax any control require ment or related compliance provision.6 In addition, we are unaware of any reliance by FRAQMD on the continuation of any aspect of the permit

- related rules for the purpose of continued attainment or maintenance of the NAAQS. Given all these considerations, we propose to conclude that our approval of Rule 10.1 into the California SIP would not interfere with any applicable requirement concerning attainment and reasonable further progress (RFP) or any other applicable requirement of the Act.

Section 193 of t he 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 i n 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

s uch air pollutant.” Ru le 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

stationar y 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 wit h section 110(l) and 193 of the Act because the new rule does not relax control technology and offset requirements and therefore would not interfere with the strategy for attainment of the Ozone or

PM 2.5 NAAQS in FRAQMD or the continued attainment of the o ther NAAQS in FRAQMD. 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).

Deficiencies as listed in th is TSD under subsection entitled “New Deficiencies.”

1. Sections B.4 and B.5 have been added to the rule and provides that if EPA re

- designates specific non

- attainment portions of the District to attainment for PM 2.5 or ozone, then

Section E of the rule shal l not apply to those areas. While the District is allowed to include provisions that would change the applicability of the rule based on a redesignation by EPA to attainment, the District cannot exempt sources from all of the requirements of Section E of t he rule , as some of the subsections contain requirements that apply to minor sources. (e.g., Subsection E.3, which prohibits a new source from causing or making worse an ambient air quality standard.) Based on a redesignation to attainment, Sections B4 and B.5 should only exempt a source from the requirements of7 E.1, E.2, E.5, E.7 and E.8. Therefore the inclusion of new Sections B.4 and B.5creates a new disapproval issue for Rule 10.1.

2. The definition of “NSR Regulated Pollutant” does not specify that gase ous emissions

which condense to form either PM 10 or PM 2.5 must be counted as PM 10 or PM 2.5 , respectively. This revision to the definition of NSR Regulated Pollutant was made as part of our Phase II rulemaking for Implementation of the New Source Review (NS R) Program for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 ) . See 73 FR 28321. This omission creates a deficiency which must be corrected by providing this clarification regarding the treatment of condensable gaseous emissions within the definitio n NSR Regulated Pollutant or the definitions of PM 10 and PM 2.5

.

Attachments

1. Submitted FRAQMD Rule 10.1

– New Source Review , adopted February 6, 2012.

2. FRAQMD Staff Report for Proposed Amendments: Regulation X Rule 10.1, New Source

Review ; undated.

3. “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,” May 9 , 2011.