The following is a CAPCOA White



### The following is a CAPCOA White Paper on SB 700. It is intended to provide guidance to the California Air Districts as they implement the program. 

## Senate Bill 700 (Florez): Agriculture & Air Quality Summary and Implementation April 2004 

### TABLE OF CONTENTS I) Defining "Agricultural Source" (1)

a. Confined Animal Facilities (2) b. Internal Combustion Engines (2) c. Sources Subject to Title V (2) 1) Potential to Emit (3) 2) Point vs. Fugitive Emissions (3) 3) Contiguous Property (3) 4) Common Ownership or Control (3)

d. Sources Otherwise Subject to Regulation by Air Districts (4) II) Removing the Permit Exemption (4) III) Establishing Specific Permitting & Exemption Requirements (4)

e. Sources Subject to Federal Permitting Requirements (4) 1) New Source Review (4)

i. Best Available Control Technology (BACT) (5) ii. Emission Reduction Credits (ERCs) and Offset Requirements (5) 2) Title V (6)

f. Sources Whose Actual Emissions Equal or Exceed 50% of the Major Source Threshold (7) 1) Calculating "actual" emissions for the threshold (7) 2) How existing agricultural sources are affected (7) 3) How new agricultural sources are affected (8) 4) How existing prohibitory rules may apply (9) 5) The findings a district board must make to exempt larger sources (10)

g. Sources Whose Actual Emissions are Less than 50% of the Major Source Threshold (10) 1) How existing agricultural sources are affected (11) 2) How new agricultural sources are affected (11) 3) How existing prohibitory rules may apply (11) 4) The findings a district board must make to permit smaller sources (11)

h. Sources Whose Emissions are de minimis (12) i. Sources that Implement all Listed Mitigations (12) j. Summary and Timing (13)

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IV) Emission Control in Federal Nonattainment Areas for PM10 (14)

k. Serious PM Nonattainment Areas (14) l. Moderate PM Nonattainment Areas (15) m. Best Available Control Measures (BACM) (15) n. Best Available Retrofit Control Technology (BARCT) (16) o. Precursor Emissions (16) p. Procedures for Regulating Engines (17) V) Permits & Emissions Mitigation for "Large" CAFs (17)

q. Defining "Large" CAF (17) r. Permit Requirements and Schedule for "Large" CAFs (18) s. Emissions Mitigation for "Large" CAFs (19) t. Procedures to Assess Other Impacts of Rulemaking (20) u. Areas that Attain the federal Ozone Standard (20) VI) Mitigation Clearinghouse (21)

Appendices Appendix A Appendix E Appendix C



### On September 22, 2003, Governor Davis signed into law Senate Bill 700, authored by Senator Florez. The bill amended air pollutio n control requirements in the California Health and Safety Code to include requirements for agricultural sources of air pollution. Agricultural sources of air pollution were the focus of the bill for two main reasons. First, California law had previously exem pted these sources from requirements to obtain air permits. This resulted in a conflict between state and federal law, and California faced sanctions if it failed correct the problem. Had the bill not been signed, new and expanding businesses in the state would have faced signific ant and costly hurdles to obtain air permits required under federal law, and the state would have lost billions of dollars in federal tr ansportation funding. There was another reason for the bill to focus on air pollution resulting from agricultural activities, however. In some parts o f the state, air quality is very bad and agricultural activities are significant contributors to the problem. Poor air quality harms public h ealth; it causes and/or exacerbates asthma, respiratory illnesses, heart and lung disease, and early mortality. Children and the elderly are espe cially vulnerable. Parts of California, such as the San Joaquin Valley and the South Coast, have some of the highest asthma rates in th e nation. Senate Bill 700 was intended to address the agricultural contribution to these problems while recognizing that the problems are not the same, nor is the contribution of agricultural sources, in all the regions of the state. The bill does six main things: (1) It defines "agricultural source" in state law; (2) It removes the restriction from state law that prevented air districts from requiring permits for agricultural sources; (3) It establishes specific permitting and exemption requirements for agricultural sources; (4) It requires emission control regulations in areas that do not attain National Ambient Air Quality Stan dards for PM10; (5) It requires permits and emissions mitigation for Confined Animal Facilities (CAFs) that are defined by ARB as "large" (based on a review of current scientific data about emissions from CAFs and the impact of those emissions on attainment of ambient air sta ndards); and (6) It requires CAPCOA to compile a clearinghouse of information about available emissions control and mitigation for agricu ltural activities. It is important to note that the bill did not remove the exemption for agricultural operations from the general odor -nuisance provisions of the Health and Safety Code. What follows is a summary of the requirements of SB 700 in each of these six areas, including a discussion of how the air distri cts (and in some cases ARB) interpret these requirements, and how we believe they can be implemented. A copy of SB 700 is included in Append ix A. Appendix B provides flow diagrams of the requirements of the bill.

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### I. Defining "agricultural source": The bill generally defines "agricultural source" as a source, or group of sources, used in the production of crops or the raisin g of fowl or animals located on contiguous property and under common ownership or control. The bill specifically lists four categorie s of emissions sources that are part of the agricultural source: (a) Confined Animal Facilities; (b) internal combustion engines, inc luding portable and off-road engines; (c) sources subject to requirements under Title V of the 1990 Amendments to the Federal Clean Air Act; and (d) sources of emissions that are otherwise subject to district regulation under the Health & Safety Code or the federa l Clean Air Act. a) Confined Animal Facilities (CAFs): The bill defines "confined animal facility" to include essentially any type of confinement for animals or fowl that restricts th em to a specific area, and involves feeding the animals by any method other than grazing. This specifically includes barns, pens, corrals, and coops, but should be interpreted broadly. The definition also specifically lists other markers of CAFs, including feed storage, milking parlors, and systems to collect, store, treat, and distribute liquid or solid manure from the confined animals. b) Internal Combustion Engines: The bill includes in the "agricultural source" any internal combustion engine that is used in the production of crops or the raising of animals or fowl. It specifically includes portable engines and offroad engines, unless the engines are "used to propel implements of husbandry." That means these engines are specifically subject to the air permit requirements of the bill (see Item #3, below, for further explanation of these requirements). The ARB currently implements a registration program for portable equipment and engines that opt to register in the state program are relieved of the obligation to obtain local permits. The ARB registration program currently excludes agricultural engines by regulation. In order to open the program to agricultural engines, ARB would have to amend its rule, which would, among other things, require a finding that the engines would be subject to the same degree of emissions control as required under local permit programs, including the requirements of SB 700. Such a finding would have to be made at a public hearing. ARB staff and CAPCOA further believe that before an agricultural engine could be registered with the state, the district in which that engine resides would have to take formal action allowing state registration in lieu of local permits. c) Sources subject to Title V: Title V is the federal Operating Permits Program. It applies to "major stationary sources" and is intended to consolidate all ai r pollution control and compliance requirements into a single document. Sources are considered "major" on the basis of their potential to emit federally regulated air pollutants. The amount of emissions that is considered "major" depends on the magnitude of the air quality problem in a given area. In areas that meet federal standards, for example, a "major" source is one that has the potential to emit 100 tons per year of a regulated air pollutant, or 10 tons per year of a single Hazardous Air Pollutant, or 25 tons per year of a combination of two or more Hazardous Air Pollutants. A listing with the threshold for "major" in each air district is included in Appendix C. Appendix C also identifies current federally "regulated air pollutants." 1) Potential to Emit: A source’s "potential to emit" is generally considered to be the maximum amount it can emit, considering physical and other enforceable limitations. In traditional air pollution terms, it means that if a factory is physically capable of running three shifts, seven days a week, that it must be assumed to do so unless there is some enforceable restriction that prevents that from occurring. Some air districts have established a regulatory framework to bridge the gap between "potential" and "actual" emissions. Where that framework exists, it may help an agricultural source to determine whether or not it needs to have a permit under Title V. CAPCOA also has a subcommittee that works on Title V implementation issues. This subcommittee is developing materials to assist sources in determining whether they are subject to Title V, and districts will be working with U.S. EPA to identify what additional mechanisms may be available and/or needed to bridge the gap between "potential" and "actual" emissions at agricultural operations. 2) Point vs. Fugitive Emissions: Some air pollutants are emitted directly through a chimney, pipe, vent, or stack, or they can be reasonably collected

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### and passed through some exit point. These kinds of "point" emissions are counted towards a source’s potential to emit. Other emissions can’t be collected, like dust that is created when a vehicle travels on an unpaved road or when a field is tilled. These emissions are called "fugitive" and they are only counted towards a source’s potential to emit if federal regulations list them; the current list includes about two dozen heavy industrial categories of sources, as well as any emission of Hazardous Air Pollutants. For the most part, fugitive emissions at agricultural operations have not been federally listed, so they are not counted where federal requirements, like Title V, are concerned. There are some gray areas, however, and fugitive emissions do need to be considered for other state and local air requirements. 3) Contiguous Property: The simplest definition of "contiguous" is when two property parcels are actually touching at a boundary. There are other situations that the courts have determined to be "contiguous" for the purposes of determining what emitting activities are part of the source. Some examples include parcels that are divided by roadways, or which are separated by some distance but are functionally interconnected. Generally, the courts have ruled that artificial separations between related activities do not create separate sources. 4) Common Ownership or Control: Property is under "common ownership or control" if the same person owns both parcels or operations. Contractual agreements between two parties can also constitute "common ownership or control." This is another area that has been defined over time by court rulings. d) Sources otherwise subject to district regulation: The federal Clean Air Act and the California Health & Safety Code give air districts broad authority to regulate non-mobile sources of air pollution. This includes traditional stationary sources of air pollution (like factories, stationary engines, or fuel dispensing), but also things like dust emitted from travel over unpaved roads, open fires to reduce vegetation in forests, range lands, or crop fields, and small, ubiquitous sources of pollution like woodstoves and water heaters. In the case of agricultural operations, equipment or activities like gasoline or diesel fuel storage or dispensing, degreasers for machine parts, storage silos, and on-the-farm operations for manufacturing feed would be considered "otherwise subject to district regulation." This is not a complete list, however. II. Removing the Permit Exemption: The bill eliminated the permit exemption language in the Health & Safety Code in its entirety. This allows California law and im plementing regulations to conform with federal law and implementing regulations, which do not exempt agricultural sources of air emissions. As a result, agricultural sources may now be required to obtain air permits from the local air district with jurisdiction. The bill s ets up some more specific guidance and requirements, but ultimately it will be up to individual air districts to determine how to implement the bill, and local air quality and source contribution may affect permitting requirements in a given district. The air districts are working together to identify common approaches and promote consistency across the state, but different regions have substantially different air qual ity needs, and this will affect both the thresholds of applicability (see Appendix C), and types of emission mitigation measures that are r equired (see Sections IV and V). III. Establishing specific Permitting and Exemption requirements: The bill addresses general air permits for agricultural sources in five groups: (a) Sources subject to federal permitting requir ements; (b) Sources whose actual emissions equal or exceed 50% of the major source threshold; (c) Sources whose actual emissions are less th an 50% of the major source threshold; (d) Sources that are de minimis; and (e) Sources that implement all listed mitigations. Each of these areas is discussed below. a) Sources subject to Federal Permitting requirements: The bill requires districts to ensure compliance with federal requirements for permits under Title I and Title V of the federal Clean Air Act, consistent with those requirements. Title I permits are required for new "major sources," or for existing "major source s" that are undertaking "major modifications", before the source begins construction. The Act requires that sources subject to this "New Source Review" use the best measures to reduce or mitigate emissions from the new or modified operation. The source may also be required to provide emission reductions to offset the emission increases associated with the new or modified operation. As described in Section I (c) above, Title V permits are required for existing "major sources." 1) New Source Review (NSR): SB 700 requires "any agricultural source that is required to obtain a permit pursuant to

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### Title I ... to obtain a permit in a manner consistent with the federal requirements." The bill also specifies that this be done through district regulations. This section applies to new major sources and major modifications, which are defined in the federal regulations based on an area’s attainment status. However, once a source triggers NSR, the applicable requirements will be determined by the district’s federally approved local NSR rule, unless the district develops a new rule and that rule is submitted for federal approval. In areas where the NSR thresholds are high, and new, large agricultural operations are not common, there may be sufficient time for the district to adopt a new rule to implement SB 700 permitting requirements. In areas where the threshold is lower, and where it is likely that new agricultural operations will reach NSR thresholds sooner, the district will probably not have sufficient time to develop a new, federally approvable rule, and will therefore have to use its existing program. Agricultural sources that were in existence prior to January 1, 2004 and are now being permitted will be considered "grandfathered" under NSR, which means they are not subject to this review until they are modified. Existing Agricultural sources that undertake a modification and new agricultural sources which initiate construction or installation after January 1, 2004, may be subject NSR if their emissions reach the applicable thresholds for a "major source" and "major modification" (see Appendix C). The timeline for submitting permit applications, and the specific requirements that apply will be determined by the applicable regulations of the local air district. i) Best Available Control Technology (BACT): Generally speaking, "BACT" is the best technology or practice for reducing emissions from a source, that is either technologically feasible and cost-effective, OR it has been achieved in practice at other similar sources. Typically, this is a top-down review of technology and practices, where the most effective reduction strategy is considered first and is required if it has been achieved in practice at another similar source. If it has not been achieved in practice, the strategy will be required if it is feasible and cost-effective for the source. If the most effective strategy is not feasible or cost-effective, the next most effective strategy is considered. Each air district has a definition in its regulations for "BACT" and that definition will govern the specifics of the control requirement and the process by which the requirement is determined and costs are considered. Many districts also have guidance materials available to assist in this process, and there are also compilations, or clearinghouses, of BACT determinations that can be consulted. ii) Emission Reduction Credits (ERCs) and Offset requirements: Sources that are subject to federal NSR are required to offset the emissions they increase by providing emission reductions. This is generally done with emission reduction credits, or ERCs. There are very strict federal requirements for the "quality" of ERCs that can be used to offset emissions increases under NSR. The emission reductions must be (1) real, (2) permanent, (3) quantifiable, (4) enforceable, and (5) surplus. Over time, EPA policies and court determinations have established fairly rigorous definitions and tests for each of these terms. For certain agricultural operations, it is difficult to demonstrate that emission reductions are real, permanent, quantifiable, enforceable, and surplus – as those terms are defined by EPA and case law. Under SB 700, the air districts are prohibited from requiring offsets for sources for which the above demonstration cannot be made. These sources may include, for example, crop farm fugitive dust, agricultural burning, and non-equipment operations at CAFs. When it becomes possible to demonstrate that emissions (increases and reductions) are real, permanent, quantifiable, enforceable, and surplus, ERCs may be granted and offsets required. A program to allow this would have to include a regulation that is approved by EPA and incorporated into the State Implementation Plan (SIP). Such regulations specify appropriate quantification methodologies, and other provisions that ensure the reduction meet all the applicable tests, and the regulatory process allows for public review and comment. To date, California air districts have not succeeded in gaining EPA approval to issue ERCs for agricultural activities. This has been the case even for reductions from on-the-farm equipment that is similar to traditional stationary sources. Therefore, ERCs will not be granted, nor will offsets be required for agricultural sources until the local district has adopted the needed regulations, and EPA has approved those regulations and incorporated them into the SIP. The local regulation that implements federal Title I review for agricultural sources will need to specify the offsetting requirements for sources subject to federal NSR. For an air district to provide exemptions from this requirement, theymust have EPA approval and may need to make certain adjustments in their SIP-approved NSR regulations, until a SIPapproved rule enabling the district to grant ERCs for agricultural sources is in place. 2) Title V: SB 700 does not change the applicability criteria or timelines associated with Title V permitting. Applicable federal regulations and air districts’ federally approved Title V programs establish the requirements and timelines for Title V applications and permits. For instance, fugitive emissions will generally not have to be included when determining Title V applicability (see Section I (c) above). Title V permit applications will not be due until January 1, 2005, unless the air distr ict establishes an earlier submittal date.

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### Once a source is subject to Title V, all emission sources have to be included in the Title V permit, unless the source has been listed as "insignificant" on a federally approved list. The air districts will provide application forms and guidelines to help with the application process. When a complete application is submitted to the local district, the district drafts the permit, which i s then subject to public comment and review by U.S. EPA. The permit becomes final only after EPA approves it. A Title V permit is valid for five years, subject to the conditions specified in the permit and in the local Title V program regulations. It must be reopened and revised when certain significant changes occur; these are outlined in the local Title V regulations as well. The Title V regulations also specify timelines for permit actions. All Title V permits have to be issued within three years, wit h one third issued each year. b) Sources whose actual emissions equal or exceed 50% of the major source threshold: The bill requires air districts to issue permits to sources that reach or exceed this "50%" threshold, unless the district board makes certain findings; Appendix C lists both thresholds ("major" and "50%") for each air district. The bill specifies that the thresh old is based on "actual" emissions, which is different from "potential to emit." It also specifies that "fugitive dust" is excluded fro m the calculation of "actual" emissions. Examples of "fugitive dust" would include the particulate matter (dust) created when soil is disturbed by vehicle traffic, or during operations like discing and harvesting. Although fugitive dust is excluded when calculat ing emissions for this threshold, other types of fugitive emissions are not excluded. Calculating "actual" emissions for the "50%" threshold: It is easier to calculate actual emissions for existing sources, because usually there are historical records of activity that can be used to estimate emissions. For example, records of fuel us e can be used to calculate combustion emissions from an engine, and the number and type of fuel tanks would be used to calculate evaporative emissions of reactive organic gases. Emissions are calculated on an annual basis, which helps account for some seasonal variation in activity. If there is significant variation from one year to the next, the highest emission level is used because that level has been shown to be part of a reasonably foreseeable operating scenario. To compare emissions to the threshold, emissions of a pollutant (e.g., particulate matter) from all equipment and activities are added together and compared to the threshold for that pollutant. This is done for each pollutant. If the total emissions of any pollutant reach the "50% threshold, then a permit is required. Once a permit is required, all pollutants may be covered in that permit, not only the pollutant which exceed ed the threshold. New sources do not have historical records. For local permitting requirements, districts generally use an estimate based on a conservative but reasonable scenario using information they have about similar operations. If this information is either not ava ilable or is deemed not to apply in a particular case, actual emissions are the same as the source’s potential to emit. How existing agricultural sources are affected: Beginning January 1, 2004, existing sources with actual emissions (including fugitive emissions other than fugitive dust) at or above one half the major source thresholds, for any single pollutant, will be subject to local permitting requirements, unless the local rule specifically exempts them. Some districts have rules that specif ically exempt agricultural operations, others relied on the exemption in state law without specifically restating it. In order to compl y with SB 700, any district with permitting rules that currently exempt agricultural sources will have to change the rules, or adopt a new rule for permitting agricultural sources with actual emissions at or above the 50% threshold. The bill does not provide any grace period to locate existing sources, estimate their emissions, or provide application material s. Nor does it provide a grace period for sources that self-identify to submit an application. Most districts, however, have a process to permit sources that previously enjoyed an exemption but are no longer able to use it. When an exemption is lost, most districts will establish a reasonable grace period for applications to be submitted. They publish notices (and use other mechanisms) to alert affected sources that the exemption is lost and the grace period in effect. The sources that apply and receive permits are not reviewed as "new" sources, rather as sources with a "loss of exemption." This means that BACT and offsets are not required, but the source may be subject to emission reduction requirements under other local prohibitory rules (see paragraph (4), below). Sources that fail to submit applications during the grace period may face enforcement action. Once a source has been issued a permit, the activities at the source have to comply with the conditions of the permit or the sou rce may face enforcement action. Permits are generally valid for a one year term and are renewed annually. If the source proposes an operational or physical change that constitutes a "modification" under the applicable district rules, or under Title I (see Sect ion III (a) (1), above), the change would require a pre-construction permit. The local district can help clarify whether a change consti tutes a "modification." The requirement for existing sources to obtain a local permit is separate from the requirement to obtain a Title V permit. Air districts have separate programs for local and federal permits. This is primarily because local permits cannot substitute for fe deral permits, and permits issued under Title V are subject to additional restrictions and processes, which makes changing them more difficult. Although the permits and processes are separate, some districts may be able (consistent with applicable regulations) to

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### coordinate the application process for local and Title V permits to avoid duplication. Title V is discussed in Section III (a) ( 2), above. How new agricultural sources are affected: Effective January 1, 2004, new agricultural sources with actual emissions at or above the "50%" threshold will be subject to permits. If the source also triggers federal NSR, the source will be required to us e BACT, and possibly provide offsets (see Section III (a) (1), above). Some districts are required under the California Clean Air Act to have additional, local NSR provisions. Most districts in this situation have a consolidated rule for federal and local NSR. In t hese districts, a new agricultural source that reaches the "50%" threshold may be subject to local NSR requirements, including new source emission controls and possibly offsets, as determined by the local rules. The applicability of NSR and the timelines for application submittal and processing will be determined under the local rules. In most air districts, the sources will have to o btain permits before initiating construction or installation. If neither federal nor local NSR applies, the source would not be subject to new source emission controls or offsets, but there may be emission control requirements under other local prohibitory rules (see paragraph 4, below). Permits will not be required for new agricultural sources when actual emissions are expected to be less than one-half the major source threshold, unless the district board has made certain findings in a public hearing (see paragraph (c) (4), below). How existing prohibitory rules may apply: Local air districts have rules other than permitting rules. The rules are adopted to directly reduce the air pollution emitted from a specified group of sources to which a particular rule applies, whether the sour ce is new or already existing. These rules generally prohibit emission of one or more pollutants above the levels in the rule, or unde r certain conditions, or they prohibit the operation of a source without the use of specified controls, fuels, or other emission reduction techniques. For this reason, they are called "prohibitory" rules. An example would be the prohibition against operatin g a gasoline dispensing system that pumps more than a specified amount of gas each month without approved vapor recovery equipment. Another example would be a prohibition against releasing particulate matter emissions in such a way that the emission s plume exceeds a specified opacity limit. Prohibitory rules apply to both new and existing sources. Sometimes they have different requirements for different classes of sources, such as older sources or sources that only experience limit use, but not always. Some of these already existing prohibi tory rules may specifically exempt or exclude agricultural operations, but many do not. For example, in some districts, prohibitory r ules apply only to sources that require permits. If a prohibitory rule does not specifically exempt agricultural operations, and an agricultural source has equipment, or employs a practice, that is otherwise within the scope of the rule, then the rule applies and the source will have to comply with it. If the source will need additional time to comply, the source can apply for a temporary "variance" from the requirement. Variance requests are heard by the district’s Hearing Board and before one can be granted, the Hearing Board must make certain findings that are specified in state law. Variances are granted for a finite period, and varianc es cannot be granted to avoid the requirement to obtain a permit. Air districts have been reviewing their existing prohibitory rules to identify rules that will apply to agricultural sources, no w that the permit exemption has been removed. A district may find that some of these rules need to be amended, either to add or remove exemptions for agricultural sources, or to revise requirements. Any changes to a prohibitory rule have to be made through a public hearing and approved by the district’s governing board. Almost all prohibitory rules are also included in the SIP, and therefore undergo a federal review as well. This means that changes can take considerable time and resources. Each district will determine which, if any, existing prohibitory rules should be changed, based on the way the local rules are written, the impacts of changing or not changing a rule, and the resources available. If a district plans to change a rule to exempt agricultural sources, the source may be able to obtain a variance from those requirements until the change is effective. If, on the other hand, a district plans to change a rule to include agricultural sources, the sources can participate in the rule development process and the rule, once changed, would provide a reasonable compliance period. Good communication between the district and the potentially affected sources will help clarify how existing prohibitory rules apply. The findings a district board must make to exempt larger sources: After reviewing local air quality problems, and the nature and contribution of agricultural sources to those problems, a district may determine that it does not need to permit some of the agricultural sources that exceed the "50%" threshold. The district cannot exempt sources from federal permitting under Title I and Title V, however, so the group of sources to which this might apply are those that have potential emissions smaller than the major source threshold, and actual emission larger than half that level. Although the bill does not specifically require regulatory action, such an exemption would have to be included in whatever rule governs the permitting of agricultural sources in order for it to have effect. The bill does specify that before it exempts any of these sources, the district board must make specific findings, in a public hearing. The findings are listed below, and all three of the findings must be made before an exemption can be granted. However, the findings do not need to be made for each source individually; it can be made for a group of sources all at once, provided that the findings apply to all sources within the grou p. The source is required to obtain a permit under another provision of the bill because it is a large Confined Animal Facility (see Sections I(a) and V). This means that other types of agricultural sources (i.e., field or tree crops) that

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### exceed the "50%" threshold cannot be exempted from permits. Further, any large CAF that would be exempted under this provision must have a permit as required for large CAFs, so this provision does not provide an exemption from permits altogether. The permit is unnecessary to impose or enforce reductions in emissions that cause or contribute to the violation of a state or federal ambient air quality standard. This essentially means that the district board must find that there are no emission reduction requirements that apply to the source (or group of sources), and that none need be imposed in order to reach attainment of air quality state and federal ambient standards. Alternatively, the district board could find that requirements do apply, or may need to be imposed, but that a permit is not necessary to impose or enforce these requirements. The requirement to obtain a permit would impose a burden on the source (or group of sources) that is significantly more burdensome than the burden faced by other similar sources that are required to obtain permits. Similar, in this case, could mean that the magnitude and types of emissions are the same, the types of equipment used are the same, and/or certain business aspects (such as whether the source meets the criteria to be considered a "small business") are the same. Once the "similar" sources are identified, in order to make the finding, the district board would have to compare the resources needed for the sources to obtain a permit, and show that the burden is significantly greater for the agricultural source(s). c) Sources whose actual emissions are less than 50% of the major source threshold: The bill directs air districts to exempt from permits those agricultural sources that are below the "50%" threshold (see Appendi x C for thresholds), unless the district board makes certain findings. For this provision, the bill specifies that "actual" emission s be the basis for applicability, and that "fugitive dust" be excluded from applicability calculations (for more detail on this, see the explanations in Section III (b), above). 1) How existing agricultural sources are affected: A source that can show, using historical data and/or an analysis of reasonably foreseeable operating scenarios that its emissions will not exceed the "50%" threshold does not need to apply for a permit, as long as its potential to emit does not reach the threshold for "major source" (see Section I (c)). The exemption only applies for as long as the actual emissions and potential emissions remain below their respective thresholds, however (actual : "50%", and potential : major source). It is important to note that even if the actual emissions remain below the "50%" threshold, the sources potential to emit (i.e., capacity) may exceed "major source" thresholds. Some districts have existing regulatory frameworks to address this discrepancy, but if the district does not, then a Title V permit would be required and a local permit would not. Once physical or operational changes result in actual emissions above the "50%" threshold, the source must apply for a local permit, and local NSR may apply to the changes. The changes may also cause the potential to emit to exceed "major source" thresholds, in which case Title V permits would be required and federal NSR may apply to the changes as well. 2) How new agricultural sources are affected: As explained in Section III(b), above, it is more difficult to establish "actual" emission levels for a new source, and in some cases this means that "actual" and "potential" are the same. Any new source that demonstrates its emissions are below the applicable thresholds will not be required to obtain permits. Again, because the local "50%" threshold is based on actual emissions, and the federal "major source" threshold is based on potential to emit, they function separately and it is possible to be exempt from one but not exempt from the other. 3) How existing prohibitory rules may apply: A more complete discussion of prohibitory rules is provided in Section III (b) (4), above. The important consideration for sources exempt from permits is that some prohibitory rules apply even if permits are not required. In fact, unless the rule states otherwise, it generally applies regardless of whether the source is also required to obtain a permit. Local districts are working to identify prohibitory rules that will now apply to agricultural sources. It is important that lists of these rules be made available to the agricultural community, but sources should also check with their local district to make sure they know what their requirements are. 4) The findings a district board must make to permit smaller sources: After reviewing local air quality problems, and the nature and contribution of agricultural sources to those problems, a district may determine that it needs to permit some of the agricultural sources that are below the "50%" threshold. Before it can do this, the district board must make certain findings in a public hearing. Although the bill does not specifically require the threshold change to be incorporated in a rule, for practical reasons permitting thresholds are generally incorporated into the permitting rule. The bill does specify that all of the following findings be made, however: The source is not subject to other permit requirements for large Confined Animal Facilities as specified in other provisions of the bill (see Sections I (a) and V). This means that district board may set lower permitting thresholds for agricultural sources

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### that do not involve confined animals (such as field and tree crops); it may also set lower thresholds for CAF operations that are not defined as "large" by the state Air Resources Board (again, see Section V). The permit is necessary to impose or enforce reductions of air pollutants that cause or contribute to a violation of a state or federal ambient air quality standard. To make this finding, the district board would have to show that a permit is necessary to enforce the emission reduction requirements of existing rules, or that a permit is necessary to help the district develop or enforce new emission reduction requirements. In either case, the emission reduction requirements must address emissions that cause or contribute to a violation of state or federal ambient air quality standard. The requirement to obtain a permit would not impose a burden that is significantly larger than the burden placed on other similar sources that are required to obtain permits. Similar, in this case, could mean that the magnitude and types of emissions are the same, the types of equipment used are the same, and/or certain business aspects (such as whether the source meets the criteria to be considered a "small business") are the same. Once the "similar" sources are identified, in order to make the finding, the district board would have to compare the resources needed for the sources to obtain a permit, and show that the burden is not significantly greater for the agricultural source(s). d) Sources whose emissions are de minimis: The bill allows districts to exempt from permits and other requirements of the bill any agricultural sources whose emissions of nitrogen oxides, volatile orgranic compounds, and particulates are each less than one ton per year. The bill does not specify th e basis for evaluating the emissions. In order to be consistent with other exemption criteria, the districts believe this determin ation should be based on actual emissions. The bill also does not specify that the exemption be included in a regulation, but it does require a public hearing to make the finding that emissions are de minimis. For practical reasons, a district choosing to allow this exemption is likely to implement it through the applicable permitting rule. e) Sources that implement all listed mitigations: The bill allows districts to adopt a rule that exempts from permits and other requirements any source that mitigates its emissio ns from all of the types of activities and equipment listed in the bill. This list includes: Removing all internal combustion engines used in the production of crops or the raising of fowl or animals (except an engine tha t is used to propel implements of husbandry) at the source, and replacing them with engines that meet or exceed the most stringent standards adopted by the state board and the U.S. EPA. Reducing or mitigating emissions from all agricultural activities, including (but not limited to) tilling, discing, cultivation, the raising of livestock and fowl, and similar activities, to a level that the district determines does not cause or contribute to a violati on of a state or federal ambient air quality standard, a toxic air contaminant standard, or other air limitation. Reducing or mitigating all emissions from any farm equipment, underground petroleum fuel tanks, or other similar equipment used in agricultural activities to a level that the district determines does not cause or contribute to a violation of a state or fed eral ambient air quality standard, a toxic air contaminant standard, or other air limitation. The bill specifically states that this exemption must be adopted as a program, which means it is a regulatory action. Because th e bill also states that nothing in the bill can relieve a source of the requirement to obtain federal permits, this exemption does not apply to federal NSR or to Title V. f) Summary and Timing: The primary considerations for most sources to determine their permitting requirements will be how their emissions (actual and potential) compare to permitting thresholds (local and federal). The schematic below shows how SB 700 sets forth basic permittin g requirements. This does not include the exemptions for de minimis or fully mitigated emissions. It also does not include the per mit requirements that apply specifically to Confined Animal Facilities. Most importantly, it does not reflect the discretion distric ts have to set other thresholds under SB 700 as well as under federal and state statutes, except by marking with an asterisk (see * in char t below) the circumstances where that is possible. It is also important to remember that thresholds will vary from district to dis trict based on the attainment status of the district, and NSR thresholds are different. As stated previously, the bill does not specify timing for general permitting; while there are no deadlines, there is also no gr ace period. In cases where local rules need to be amended, or new rules adopted in order to implement the general permitting requirements of SB 700, the district should move expeditiously with the necessary rule adoption.

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### Within the framework of applicable local rules, new sources and modifications to existing sources need permits before constructi on. Existing sources that require Title V permits have one year to submit their application and the district has a maxim um of three years to process all applications submitted, under the federal Title V program. Air Districts intend to expedite the ir review to the degree feasible, however districts may adopt rules to require Title V applications sooner, so they can begin pro cessing them in a timely manner. For existing sources that do not need federal permits, the district may adopt a schedule fo r them to apply under a loss-of-exemption status which can shield them from enforcement action for failure to have a permit. I f no loss- of-exemption schedule is adopted, existing sources should file applications as soon as they can, to minimize the pot ential for enforcement. Districts will process permit applications according to their local rules and procedures.

IV. Emissions control in federal nonattainment areas for PM10: The bill requires a district to adopt by regulation a set of measures to reduce emissions from agricultural sources, if the dist rict does not meet any of the federal ambient air quality standards for particulate matter. The requirement applies in areas that have been de signated as "serious" or "moderate" nonattainment by January 1, 2004. The San Joaquin Valley APCD and the South Coast AQMD were both designated "serious" as of that date. Imperial County APCD, the Mojave Desert AQMD, and Sacramento County are designated "moderate" nonattainment. The Great Basin AQMD (with Inyo, Mono, and Alpine counties) has three sub-regions that are designated "moderate" nonattainment and one sub-region that is designated "serious." The situation there is unique in that the air quality is heavily influenced by episodic wind-blown dust from dry lake beds. a) Serious PM Nonattainment Areas: The bill establishes requirements for the local district to adopt a regulatory program, including the degree of emissions mitiga tion it must contain, the schedule for program adoption, and procedural requirements to ensure that standards for agricultural engines are commensurate with engine standards for other source categories. For emissions mitigation and the adoption schedule, the bill states the following: Each district that is designated as a serious federal nonattainment area for an applicable ambient air quality standard for part iculate matter as of January 1, 2004, shall adopt, implement, and submit for inclusion in the state implementation plan, a rule or regulation requiring best available control measures (BACM) for sources for which those measures are applicable and best availab le retrofit control technology (BARCT) for sources for which that technology is applicable for agricultural practices, including, b ut not limited to, tilling, discing, cultivation, and raising of animals, and for fugitive emissions from those agricultural practices, in a manner similar to other source categories but the earliest feasible date, but not later than January 1, 2006. The rule or regula tion shall also include BACM and BARCT to reduce precursor emissions in a manner commensurate to other source categories that the district shows cause or contribute to a violation of an ambient air quality standard. Each district that is subject to this subd ivision shall comply with the following schedule with respect to the rule or regulation imposing BACM or BARCT: On or before September 1, 2004, notice and hold at least one public workshop for the purpose of accepting public testimony on th e proposed rule or regulation. On or before July 1, 2005, adopt the final rule or regulation at a noticed public hearing. On or before January 1, 2006, commence implementation of the rule or regulation. b) Moderate PM Nonattainment Areas: By the earliest feasible date, but no later than January 1, 2007, each district that is designated a moderate nonattainment area for an applicable ambient air quality standard for particulate matter as of January 1, 2004, shall adopt and implement control measu res necessary to reduce emissions from agricultural practices, including but not limited to, tilling discing, cultivation, and raisi ng of animals, and from fugitive emissions in a manner similar to other source categories from the activities by the earliest feasible date. Control measures adopted and implemented pursuant to this section shall also be implemented by the district to reduce precursor emissions in a manner commensurate to other source categories that the district shows cause or contribute to a violation of an ambient air quality standard. A district is not required to implement the above control measures if it determines in a public hearing that agricultural practi ces do not significantly cause or contribute to a violation of state or federal standards. c) Best Available Control Measures (BACM): Air pollution control programs address both traditional and non-traditional types of sources. Traditional types of sources gener ally

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### include industrial and commercial operations where the pollution is emitted from an exhaust pipe or stack, or the entire area is in some way enclosed so that emissions can be collected and treated. In other words, the emissions are generally not "fugitive", although fugitive emissions also occur at traditional sources and are subject to mitigation strategies. Non-traditional types of sources would include such agricultural activities as discing, tilling, and travel on unpaved roads, where the pollutant of conc ern is the fugitive dust emitted when the soil is disturbed. Certain activities associated with raising animals would also be considere d nontraditional. The concept of "Best Available Control Measures" or "BACM" was developed to characterize a higher standard of mitigation from non-traditional sources in areas with serious particulate nonattainment problems. The term is defined in federal regulations, and in order for a mitigation measure to be approved as "BACM" by EPA, it must meet several specific tests. Both th e San Joaquin Valley and the South Coast air districts have developed rules to implement BACM, including requirements for minimizing dust at construction sites, the planting and stabilizing of exposed soils, and enclosing storage of dry materials, as well as other mitigation strategies. These rules are also being updated under SB 700 and other requirements. d) Best Available Retrofit Control Technology (BARCT): This is term characterizes a standard of emissions control from existing, traditional sources. Under federal air pollution progr ams for traditional sources, different levels of control are expected of new sources (best available) and existing sources (reasonably available), with the understanding that there are more options available at greater cost-effectiveness when a source is being designed, than there are after it is built, especially if it was built a long time ago. California law established an intermedia te level of control that is the "best available" for "retrofit" to existing sources, recognizing that the state’s air pollution problems may demand more effective pollution control than what is usually considered "reasonably available." Local air districts have adopted many r ules to implement BARCT, including particulate control efficiency standards and limitations on exhaust pollutants such as nitrogen oxides, or technology-based requirements that dictate the use of particular control device or something that is equally effectiv e. e) Precursor Emissions: This section of the bill specifically requires that "precursor" emissions be controlled. Emissions are considered "precursor" if they react with other pollutants to form the pollutant of concern. For example, ozone is a pollutant of concern but it is rarely emit ted directly; nitrogen oxides react with many organic gases to form ozone in the presence of sunlight. So the air districts regulate the nitrogen oxides and the organic gases to reduce the formation of ozone. Nitrogen oxides also react with ammonia to form fine particles, and several size fractions of particles in the air are considered pollutants of concern, so nitrogen oxides and ammon ia are "precursor" pollutants to particulate matter. Other commonly emitted pollutants can react to form particulate matter as well, su ch as sulfur compounds and certain organic gases, and these would also be considered "precursor" pollutants for particulate matter. The local district use emissions inventory information, meteorology, and computer models to determine which pollutants need to b e reduced by how much in order for the air quality to improve. f) Procedures for Regulating Engines: The bill contains provisions designed to ensure that engines at agricultural operations are regulated in the same way that engin es are regulated when they are associated with other types of operations. The district has to evaluate certain aspects of the regul ation and ensure that these aspects are "commensurate" or "similar" to regulations for engines at other sources. The aspects to be considered include: Engine size and duration of use Degree of emissions control

Cost effectiveness of emissions control The bill also requires that the district prioritize the adoption of control measures under this section to ensure that the most cost effective measures are adopted first, unless the district finds a different order is necessary. A different order can be justifi ed if it is needed for reasons of enforceability, technological feasibility, or the willingness of the public to accept the measure, or if t he different order of adoption is needed to expeditiously attain or maintain attainment of an ambient air quality standard. V. Permits & Emissions Mitigation for large CAFs: Confined Animal Facilities, whether defined as "large" or not, are subject to the general permitting thresholds and requirements described in Section III, including permits for existing sources permits for new or modified sources. SB 700 sets out additional requireme nts for "large" Confined Animal Facilities, however, and those additional requirements are described below. Basically, the bill requires the state Air Resources Board to establish a definition for "large" CAFs. It requires districts to adopt rules that

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### require "large" CAFs to obtain permits and to implement emissions mitigation. The degree of mitigation required is based on the district’s federal classification for ozone attainment. Districts that attain the federal ozone standards may be excused from adopting thes e rules if they make a showing that agricultural sources in the district are not causing or contributing to a violation of a state or feder al ambient air quality standard. a) Defining "large" CAF: SB 700 requires ARB to review all available scientific information, including but not limited to emissions factors for CAFs, and the effect of those facilities on air quality in the basin and other relevant scientific information, and develop a definition for t he source category of "large" CAF. The definition must be adopted in a public hearing, and the hearing must occur on or before July 1, 200 5.

This means the ARB has to consider the emissions from CAFs and how those emissions affect attainment and maintenance of ambient air quality standards in air basins. An air basin is an area, usually large, where the air mixes and generally stays, al though there is transport of pollution between air basins. Air districts are grouped into air basins for the purpose of planning and implementing plans to reach attainment; there are 14 air basins in California. In considering the relationship between emissions from CAFs and air quality in the air basin, ARB may find that CAFs play a different role in the air quality problem in different air basins. The bill does not specify what basis should be used for the definition of "large" CAF. The definition of "large" could be based on tons of emissions or numbers of animals, or some other factor that the ARB determines is representative of the impact of the CAF s on air quality. The definition could, like the definition of "major source," vary between air districts, or between air basins, to reflect the differing severity of the air quality problems in the region. If this type of definition is used, the thresholds are likely to be lower in areas with more severe problems, and higher in areas where the air quality is better. On the other hand, ARB could follow the hazardous air pollutant model and choose a single definition for the entire state. If the definition established by ARB includes CAFs whose emissions are less than one half the major source threshold in the dist rict, the district may permit them only if it makes specified findings with respect to need and burden (see Section III (b) (5), above ). b) Permit Requirements and Schedule for "large" CAFs: The bill requires air districts to adopt a regulation that requires any CAF that meets the definition of "large" established by the ARB to obtain a permit from the district. The districts must adopt the regulation and submit it for inclusion into the SIP by July 1 , 2006, unless the district is designated "attainment" for the federal ozone standard. The regulation must do all of the following: ·1 Require that applications be submitted within six months of district adoption of the regulation.-Application Due Date ·2 Require the application to include the information the district determines is necessary to prepare an emissions inventory of all the air pollutants (including fugitive emissions) emitted from the CAF, and an emissions mitigation plan (see paragraph (c), below).-Application Content ·3 Provide a public comment period of at least 30 days on the draft permit, before the district takes final action.-Public Comment on Permit ·4 Require the district to take final action to approve or deny the application within six months after the district determines it is complete.-Deadline for Final Action ·5 Establish a compliance schedule for the owner or operator of the CAF to implement the mitigation plan, as approved by the district and contained in the permit, that is no longer than one year after permit approval.Plan Implementation ·6 Establish a permit review cycle that is no longer than three years, and require the district to review permit and update it t o reflect changes in the operation, or to include or remove mitigation measures based on changes in the feasibility of such measures. These updates are to the permit not the regulation and do not need to be submitted to the SIP.-Permit Review & Updating These are fairly standard rule elements. In plain language, they mean the district will adopt a regulation that specifies how mitigation requirements will be determined, and how permits will be required, submitted, reviewed, issued, and complied with. Th is process specifically provides for input by people who will be affected by the regulation, or who are interested in what it does, and it further allows people to review and comment on draft permits. Finally, the bill requires that permits be reviewed periodically a fter they have been issued, and that the mitigation measures in them be adjusted to reflect improvements in technology or procedures, or other changes that affect feasibility.

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### c) Emissions Mitigation for "large" CAFs: The bill establishes a procedure to require emissions mitigation for "large" CAFs. Rather than establish a single rule that requ ires the same set of mitigation measures for all the facilities in the category, however, it provides for a more tailored, case-by-ca se review. Under this approach, the owner or operator reviews the operation and proposes a strategy to reduce emissions "to the extent feasible." The bill provides some benchmarks for how high the standard is, based on the air quality in the area. It also provides for a clearinghouse of information on available mitigation measures (see Section VI, below) that an owner or operator c an refer to for ideas. The bill specifies that in areas with "extreme" or "severe" ozone problems (i.e., the San Joaquin Valley, the South Coast, and t he Sacramento region), a "best available" for existing sources is the degree of mitigation required. This standard of mitigation is reviewed in Section IV (d), above. In areas with "serious" or "moderate" ozone problems (see Appendix C), the mitigation should include measures that are "reasonably available." The primary difference between the two levels is the extent to which measures have already been demonstrated in practice, and the cost of implementing the measures. No specific standard of control is requir ed in areas that attain the federal ozone standard, although it is reasonable to infer that the standard would not have to be highe r than "reasonably available" unless otherwise determined by the local district. When a proposed plan is submitted to the district, the district reviews the plan and determines if it includes the required degr ee of mitigation. In doing this, the district will consider measures listed in the clearinghouse, measures identified in other plans, the size and nature of the facility, any unique circumstances that may affect feasibility and cost, and other appropriate factors. If the plan does not seem to include the required degree of mitigation, the owner or operator will have an opportunity to provide additional data and/or mitigation, and the district may identify specific measures that need to be included. Before the final plan is appro ved as part of the CAF’s permit, there is an opportunity for the public to review and comment on the plan. If the owner or operator disagrees with the final decision of the district, an appeal can be brought before the district’s hearing board. d) Procedures to Assess Other Impacts of Rulemaking: The bill specifies procedures for the air districts to follow to evaluate and "make a good faith effort" to minimize the adverse impacts of rulemaking activities. The district has to consider: the number and type of sources affected the nature and quantity of emissions the potential for reductions in emissions the range of probable costs the availability and cost-effectiveness of alternatives the technical and practical feasibility

additional information that is submitted to the district board Before the regulation can be approved, the district’s governing board has to review the staff’s evaluation of adverse impacts an d the efforts made to minimize them, in a public hearing. e) Areas that Attain the federal Ozone Standard: The bill recognizes that areas that are designated "attainment" for the federal ozone standard face different circumstances than those that do not attain the standard. It does not require these districts to submit their rules for approval into the SIP, beca use the SIP is a compilation of rules adopted for the purpose of reaching attainment. The bill also allows areas that already attain the federal ozone standard to make a demonstration that "large" CAFs do not cause or contribute to a violation of an ambient air quality standard, and therefore it is not necessary to adopt the regulation to permi t them and mitigate their emissions. This demonstration is likely to include a review of ambient air quality data (including the nature and timing of elevated pollutant levels), and analysis of the local emissions inventory (including identification of the major contr ibutors to elevated pollutant levels). Areas that may be able to make this demonstration include areas where elevated pollutant levels a re

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### the result of overwhelming transport from other regions, mountain areas where there are no "large" CAFs, or areas where violations of ambient standards are limited to the particulate standards and are clearly caused by wintertime combustion of wood for residential heating. This is not a complete list, however, and other areas may be able to make the demonstration as well. Air districts with similar air quality and emission inventories may be able to collaborate on a demonstration to share their res ources, and the ARB has agreed to work with these districts in developing the demonstration. IV. Mitigation Clearinghouse: The bill calls for a clearinghouse of mitigation measures or strategies available for agricultural sources. It assigns the task of creating and maintaining the clearinghouse to the California Air Pollution Control Officers Association, or CAPCOA, with a deadline of Januar y 1, 2005. The bill lists several specific areas that should be included in the clearinghouse, as follows: Operations that create fugitive dust emissions, including but not limited to, discing, tilling, material handling and storage, a nd travel on unpaved roads.

Confined animal facilities. Internal combustion engines used in agricultural operations. Other equipment, operations, or activities associated with the growing of crops or the raising of fowl or animals, that emit, or cause to be emitted, any regulated air pollutant, or any precursor to any air pollutant. The clearinghouse is intended to assist in the development of the rules and plans required in the bill. It can also be used by p ermitting agencies when a new agricultural source triggers New Source Review, or by anyone running an agricultural operation who wishes to minimize air pollution in order to be a good neighbor.

APPENDIX A

TEXT OF SB700 BILL NUMBER: SB 700 CHAPTERED BILL TEXT CHAPTER 479 FILED WITH SECRETARY OF STATE SEPTEMBER 22, 2003 APPROVED BY GOVERNOR SEPTEMBER 22, 2003 PASSED THE SENATE SEPTEMBER 11, 2003 PASSED THE ASSEMBLY SEPTEMBER 10, 2003 AMENDED IN ASSEMBLY SEPTEMBER 9, 2003 AMENDED IN ASSEMBLY SEPTEMBER 4, 2003 AMENDED IN ASSEMBLY AUGUST 21, 2003 AMENDED IN ASSEMBLY JULY 14, 2003 AMENDED IN ASSEMBLY JULY 2, 2003 AMENDED IN ASSEMBLY JUNE 26, 2003 AMENDED IN SENATE MAY 13, 2003 AMENDED IN SENATE MAY 7, 2003 AMENDED IN SENATE APRIL 24, 2003 INTRODUCED BY Senators Florez and Sher FEBRUARY 21, 2003

An act to amend Section 42310 of, and to add Sections 39011.5,39023.3, 40724, 40724.5, 40724.6, 40724.7, 40731, 42301.16, 42301.17,42301.18, and 44559.9 to, the Health and Safety Code, relating to air quality.

LEGISLATIVE COUNSEL'S DIGEST SB 700, Florez. Air quality: emissions: stationary sources: agricultural operations.

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(1) Existing law authorizes the board of every air quality management district and air pollution control district to establish a permit system that requires any person that uses certain types of equipment that may cause the emission of air contaminants to obtain a permit. Exi sting law exempts vehicles and certain types of equipment from those permit requirements. This bill would eliminate that exemption for any equipment used in agricultural operations in the growing of crops or the raising of fowl or animals. To the extent that the bill would inc rease the number of permits that a district board, electing to establish a permit system prior to January 1, 2004, would be required to issue, th e bill would impose a state-mandated local program. (2) Existing law defines various terms governing the construction of air pollution control laws in the state, and authorizes the state board to revise those definitions to conform with federal law. This bill would define the terms "agricultural source of air pollution" a nd "fugitive emissions," and would prohibit, notwithstanding the existing authority, the state board from revising those definitions. (3) The existing federal Clean Air Act requires districts to adopt local programs for issuing operating permits to major station ary sources of air pollutants. The existing act defines a stationary source as any building, structure, facility, or installation that emits or may emit any air pollutant. This bill would require each district that is designated a serious federal nonattainment area for an applicable ambie nt air quality standard for particulate matter as of January 1, 2004, to adopt, implement, and submit for inclusion in the state implementation plan, a rule or regulation requiring best available control measures (BACM) and best available retrofit control technology (BARCT) for agricultu ral practices at agricultural sources of air pollution to reduce air pollutants from those sources for which that technology is applicable for ag ricultural practices by the earliest feasible date, but not later than January 1, 2006, and would require each district subject to those requirements to comply with a schedule for public hearing, adoption, and implementation of the final rule. The bill would require each district that is desi gnated a moderate federal nonattainment area or an applicable ambient air quality standard for particulate matter as of January 1, 2004, to adopt and implement control measures necessary to reduce emissions from agricultural practices by the earliest feasible date, but no later than Janu ary 1, 2007, unless the district determines that those sources do not significantly cause or contribute to a violation of state or federal st andards.The bill would require, by January 1, 2005, the state board to review all available scientific information and develop a definition of a "large confined animal facility." The bill would require, by July 1, 2006, each district that is designated as a federal nonattainment area for ozone as of January 1, 2004, to adopt, implement, and submit for inclusion in the state implementation plan, a rule or regulation that requi res the owner or operator of a large confined animal facility as that term is defined by the state board to obtain a permit to reduce, to the extent feasible, emissions of air contaminants from the facility. The bill would require the district to perform an assessment of the impacts of the rule or regulation prior to its adoption. The bill would authorize a permitholder to appeal any district determination or decision related to that permit. The bill would require a district that is designated as being in attainment for the federal ambient air quality standard for ozo ne as of January 1, 2004, to adopt the same rule or regulation required of nonattainment districts, by July 1, 2006, unless the district board ma kes a determination that large confined animal facilities will not contribute to a violation of any state or federal ambient air quali ty standard. The bill would provide the rule or regulation is not required to be submitted for inclusion into the state implementation plan. The bill would require the California Air Pollution Control Officers Association, in consultation with the state board and other interested parties, by Jan uary 1, 2005, to develop a clearinghouse of available control measures and strategies for agricultural sources of air pollution and emissions of air contaminants from agriculture operations. The additional duties for districts under the bill would impose a state-mandated local program. (4) Existing law establishes the Capital Access Loan Program for Small Businesses, administered by the California Pollution Cont rol Financing Authority, which provides loans through participating financial institutions to entities authorized to conduct business in the s tate and whose primary business location is in the state. This bill would require the authority to expand the program to include outreach to fi nancial institutions that service agricultural interests in the state for the purposes of funding air pollution control measures. (5) Under existing law, any person who violates a rule, regulation, permit, or order of a district is guilty of a misdemeanor. B ecause this bill would increase the number of people who are subject to that provision, it would expand the scope of a crime, thereby imposing a statemandated local program. (6) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated b y the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is requi red by this act for specified reasons.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. (a) The Legislature finds and declares all of the following: (1) Agricultural operations necessary for growing crops or raising animals are a significant source of directly emitted particul ates, and precursors of ozone and fine particulate matter. These emissions have a significant adverse effect on the ability of areas of th e state, including, but not limited to, the San Joaquin Valley, to achieve health-based state and federal ambient air quality standards. (2) Since 1999, the agriculture industry has reduced emissions of oxides of nitrogen (NOx) by more than 2000 tons per year, emis sions of particulate matter of 10 microns in diameter (PM 10) by more than 500 tons per year, and emissions of volatile organic compounds (VOCs)

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from agricultural chemicals by more than 20 percent. According to the state board, however, agricultural sources of air pollutio n still contribute twenty-six percent of the smog-forming emissions in the San Joaquin Valley. (3) In the San Joaquin Valley, a large portion of the sources of particulate emissions are areawide sources whose emissions are directly related to growth in population and the resulting vehicle miles traveled. According to the State Air Resources Board, however, a gricultural sources of air pollution account for over fifty percent of the directly emitted particulate air pollution generated in the valle y during the fall, amounting to over 170 tons per day of emissions. (4) All parties living or operating a business in an area that has been classified as being a nonattainment area with respect to the attainment of federal or state ambient air quality standards share the responsibility of reducing emissions from air pollutants. (5) The federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.) prohibits the state from adopting emission standards or limitations less stringent than those established under the federal act, including limitations on emissions from agricultural sources. (6) Division 26 (commencing with Section 39000) of the Health and Safety Code establishes numerous policies and programs to redu ce air pollutants for the protection of public health. (7) The purpose of the act adding this section is to establish a new set of programs at the state and regional levels to reduce air emissions from agricultural sources in order to protect public health and the environment. (b) It is therefore the intent of the Legislature to require the State Air Resources Board and air quality management districts and air pollution control districts in the state to regulate stationary, mobile, and area sources of agricultural air pollution. SEC. 2. Section 39011.5 is added to the Health and Safety Code, to read: 39011.5. (a) "Agricultural source of air pollution" or "agricultural source" means a source of air pollution or a group of sourc es used in the production of crops, or the raising of fowl or animals located on contiguous property under common ownership or control that meets any of the following criteria: (1) Is a confined animal facility, including, but not limited to, any structure, building, installation, barn, corral, coop, fee d storage area, milking parlor, or system for the collection, storage, treatment, and distribution of liquid and solid manure, if domestic ated animals, including, but not limited to, cattle, calves, 

### h orses, sheep, goats, swine, rabbits, chickens, turkeys, or ducks are corralled, penned, or otherwise caused to remain in restricted areas for commercial agricultural purposes and feeding is by mean s other than grazing. (2) Is an internal combustion engine used in the production of crops or the raising of fowl or animals, including, but not limit ed to, an engine subject to Article 1.5 (commencing with Section 41750) of Chapter 3 of Part 4 except an engine that is used to propel implements of husbandry, as that term is defined in Section 36000 of the Vehicle Code, as that section existed on January 1, 2003. Notwithstanding subdivision (b) of Section 39601, the state board may not revise this definition for the purposes of th is section. (3) Is a Title V source, as that term is defined in Section 39053.5, or is a source that is otherwise subject to regulation by a district pursuant to this division or the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). (b) Any district rule or regulation affecting stationary sources on agricultural operations adopted on or before January 1, 2004 , is applicable to an agriculture source. (c) Nothing in this section limits the authority of a district to regulate a source, including, but not limited to, a stationary source that is an agricultural source, over which it otherwise has jurisdiction pursuant to this division, or pursuant to the federal Clean Air Act (42 U.S. C. Sec. 7401 et seq.) or any rules or regulations adopted pursuant to that act that were in effect on or before January 1, 2003, or to exempt an agricultural source from any requirement otherwise applicable under Sections 40724 or 42301.16, based upon a finding b y the district in a public hearing that the aggregate emissions from that source do not exceed a de minimus level of more than one ton of particulate matter, nitrogen oxides or volatile organic compounds per year. SEC. 3. Section 39023.3 is added to the Health and Safety Code, to read: 39023.3. "Fugitive emissions" mean those emissions that cannot reasonably pass through a stack, chimney, vent, or other function ally equivalent opening. Notwithstanding subdivision (b) of Section 39601, the state board may not revise this definition for the pur poses of this section. SEC. 4. Section 40724 is added to the Health and Safety Code, to read:

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40724. (a) Each district that is designated as a serious federal nonattainment area for an applicable ambient air quality standa rd for particulate matter as of January 1, 2004, shall adopt, implement, and submit for inclusion in the state implementation plan, a rule or regul ation requiring best available control measures (BACM) for sources for which those measures are applicable and best available retrofit control t echnology (BARCT) to reduce air pollutants from sources for which that technology is applicable for agricultural practices, including, but not limited to, tilling, discing, cultivation, and raising of animals, and for fugitive emissions from those agricultural practices a manner sim ilar to other source categories by the earliest feasible date, but not later than January 1, 2006. The rule or regulation shall also include BACM and BARCT to

reduce precursor emissions in a manner commensurate to other source categories that the district show cause or contribute to a v iolation of an ambient air quality standard. Each district that is subject to this subdivision shall comply with the following schedule with respect to the rule or regulation imposing BACM and BARCT: (1) On or before September 1, 2004, notice and hold at least one public workshop for the purpose of accepting public testimony o n the proposed rule or regulation. (2) On or before July 1, 2005, adopt the final rule or regulation at a noticed public hearing.

(3) On or before January 1, 2006, commence implementation of the rule or regulation. (b) Nothing in this section shall delay or otherwise affect any action taken by a district to reduce emissions of air contaminan ts from agricultural sources, or any other requirements imposed on a district or a source of air pollution pursuant to the federal Clean Air Act (42 U.S. C. Sec. 7401 et seq.). (c) In adopting a rule or regulation pursuant to this section, a district shall do all of the following: (1) Ensure the size and duration of use of an internal combustion engine subject to BARCT pursuant to this section is commensura te to the size and duration of use of internal combustion engines subject to regulation by a district or the state board regulated at other stationary sources. (2) Ensure that BARCT established pursuant to this section for an internal combustion engine is similar to BARCT for other stati onary source engines subject to regulation by a district or the state board. (3) Ensure that the cost-effectiveness of BARCT for an internal combustion engine subject to this section is similar to the cost

effectiveness of BARCT for other internal combustion engines subject to regulation by a district or the state board. (4) Compare the cost-effectiveness of BARCT for an internal combustion engine subject to this section to the list of available a nd proposed control measures prepared pursuant to Section 40922. (5) Adopt control measures pursuant to this section in order of their cost-effectiveness, unless a district determines that a di fferent order of adoption is necessary due to the enforceability, public acceptability, or technological feasibility of a given control measure, or to expeditiously attain or maintain a national or state ambient air quality standard. (6) Except as otherwise provided under this section, ensure that any rule or regulation adopted pursuant to this section complie s with all applicable requirements of this division, including, but not limited to, any applicable requirements established pursuant to Sections 40703, 40727, 40728.5, and 40920.6. (7) Hold at least one public meeting that is conducted at a time and location that the district determines is convenient to the public at which the district reviews the comparison prepared pursuant to paragraph (4).

(d) Nothing in this section limits the authority of a district to regulate a source including, but not limited to, a stationary source that is an agricultural source over which it otherwise has jurisdiction pursuant to this division or the federal Clean Air Act (42 U.S.C. S ec. 7401 et seq.) or any rules or regulations adopted pursuant to that act. Nothing in this section shall delay or otherwise affect any action taken by a district to reduce emissions of air contaminants from agricultural sources, or any other requirements imposed upon a district or a source of air pollution pursuant to the federal Clean Air Act. This section may not be interpreted to delay or otherwise affect the adoption, implementa tion, or enforcement of any measure that was adopted, or included in a rulemaking calendar or air quality implementation plan that was ad opted, by the district prior to January 1, 2004.

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SEC. 5. Section 40724.5 is added to the Health and Safety Code, to read: 40724.5. (a) By the earliest feasible date, but no later than January 1, 2007, each district that is designated a moderate feder al nonattainment area for an applicable ambient air quality standard for particulate matter as of January 1, 2004, and that is not subject to the requirements of Section 40724, shall adopt and implement control measures necessary to reduce emissions from agricultural practices, including, but not limited to, tilling, discing, cultivation, and raising of animals, and from fugitive emissions in a manner similar to other source categories from those activities by the earliest feasible date. Control measures adopted and implemented pursuan t to this section shall also be implemented by the district to reduce precursor emissions in a manner commensurate to other source categories that the district show cause or contribute to a violationof an ambient air quality standard. (b) A district is not required to adopt and implement control measures pursuant to this section if it determines in a public hea ring that agricultural practices do not significantly cause or contribute to a violation of state or federal standards. (c) In adopting a rule or regulation pursuant to this section, a district shall do all of the following: (1) Ensure the size and duration of use of an internal combustion engine subject to BARCT pursuant to this section is commensurate to the size and duration of use of internal combustion engines subject to regulation by a district or the state boa rd regulated at other stationary sources. (2) Ensure that BARCT established pursuant to this section for an internal combustion engine is similar to BARCT for other stationary source engines subject to regulation by a district or the state board. (3) Ensure that the cost-effectiveness of BARCT for an internal combustion engine subject to this section is similar to the cost

effectiveness of BARCT for other internal combustion engines subject to regulation by a district or the state board. (4) Compare the cost-effectiveness of BARCT for an internal combustion engine subject to this section to the list of available a nd proposed control measures prepared pursuant to Section 40922. (5) Adopt control measures pursuant to this section in order of their cost-effectiveness, unless a district determines that a different order of adoption is necessary due to the enforceability, public acceptability, or technological feasibility of a give n control measure, or to expeditiously attain or maintain a national or state ambient air quality standard. (6) Except as otherwise provided under this section, ensure that any rule or regulation adopted pursuant to this section complie s with all applicable requirements of this division, including, but not limited to, any applicable requirements established pursua nt to Sections 40703, 40727, 40728.5, and 40920.6. (7) Hold at least one public meeting that is conducted at a time and location that the district determines is convenient to the public at which the district reviews the comparison prepared pursuant to paragraph (4). (d) Nothing in this section limits the authority of a district to regulate a source including, but not limited to, a stationary source that is an agricultural source over which it otherwise has jurisdiction pursuant to this division or the federal Clean Air Act (42 U.S.C. S ec. 7401 et seq.) or any rules or regulations adopted pursuant to that act. Nothing in this section shall delay or otherwise affect any action taken by a district to reduce emissions of air contaminants from agricultural sources, or any other requirements imposed upon a district or a source of air pollution pursuant to the federal Clean Air Act. This section may not be interpreted to delay or otherwise affect the adoption, implementa tion, or enforcement of any measure that was adopted, or included in a rulemaking calendar or air quality implementation plan that was ad opted, by the district prior to January 1, 2004. (e) Nothing in this section shall delay or otherwise affect any action taken by a district to reduce emissions of air contaminan ts from agricultural sources, or any requirements imposed on a district or a source of air pollution pursuant to the federal Clean Air A ct (42 U.S.C. Sec. 7401 et seq.). SEC. 6. Section 40724.6 is added to the Health and Safety Code, to read: 40724.6. (a) On or before July 1, 2005, the state board shall review all available scientific information, including, but not li mited to, emissions factors for confined animal facilities, and the effect of those facilities on air quality in the basin and other relev ant scientific information, and develop a definition for the source category of a "large confined animal facility" for the purposes of this sec tion. In developing that definition, the state board shall consider the emissions of air contaminants from those sources as they may affe ct the attainment and maintenance of ambient 

### a ir quality standards. (b) Not later than July 1, 2006, each district that is designated as a federal nonattainment area for ozone as of January 1, 200 4, shall adopt, implement, and submit for inclusion in the state implementation plan, a rule or regulation that requires the owner or ope rator of

file:///C|/Documents%20and%20Settings/HP_Administrator/Desktop/test.htm (18 of 29)7/6/2006 2:47:11 PMThe following is a CAPCOA White a large confined animal facility, as defined by the state board pursuant to subdivision (a), to obtain a permit from the distric t to reduce, to the extent feasible, emissions of aircontaminants from the facility. (c) A district may require a permit for a large confined animal facility with actual emissions that are less than one-half of an y applicable emissions threshold for a major source in the district for any air contaminant, including, but not limited to, fugitive emission s in a manner similar to other source categories, if prior to imposing that requirement the district makes both of the following determ inations in a public hearing: (1) A permit is necessary to impose or enforce reductions in emissions of air pollutants that the district show cause or contrib ute to a violation of a state or federal ambient air quality standard. (2) The requirement for a source or category of sources to obtain a permit would not impose a burden on those sources that is significantly more burdensome than permits required for other similar sources of air pollution. (d) The rule or regulation adopted pursuant to subdivision (b)shall do all of the following: (1) Require the owner or operator of each large confined animal facility to submit an application for a permit within six months from the date the rule or regulation is adopted by the district that includes both of the following: (A) The information that the district determines is necessary to prepare an emissions inventory of all regulated air pollutants emitted from the operation, including, but not limited to, precursor and fugitive emissions, using emission factors approved by the state board in a public hearing. (B) An emissions mitigation plan that demonstrates that the facility will use reasonably available control technology in moderate and serious nonattainment areas, and best available retrofit control technology in severe and extreme nonattainment areas, to reduce emissions of pollutants that contribute to the nonattainment of any ambient air quality standard, and that are within the district's regulatory authority. (2) Require the district to act upon an application for permit submitted pursuant to paragraph (1) within six months of a completed application, as determined by the district. (3) Require the owner or operator to implement the plan contained in the permit approved by the district, and shall establish a reasonable period, of not more than three years, after which each permit shall be reviewed by the district and updated to reflec t changes in the operation or the feasibility of mitigation measures. The updates required by this paragraph are not required to b e submitted for inclusion into the state implementation plan. (4) Establish a reasonable compliance schedule for facilities to implement control measures within one year of the date on which the permit is approved by the district, and shall provide for 30 days public notice and comment on any draft permit. (d) Prior to adopting a rule or regulation pursuant to subdivision (b), a district shall, to the extent data are available, perform an assess ment of the impacts of the rule or regulation. The district shall consider the impacts of the rule or regulation in a public hearing, and make a good faith effort to minimize any adverse impacts. The assessment shall include all of the following: (1) The category of sources affected, including, but not limited to, the approximate number of affected sources, and the size of those sources. (2) The nature and quantity of emissions from the category, and the significance of those emissions in adversely affecting public health and the environment and in causing or contributing to the violation of a state or federal ambient air quality standard. (3) The emission reduction potential. (4) The impact on employment in, and the economy of, the region affected. (5) The range of probable costs to affected sources and businesses. (6) The availability and cost-effectiveness of alternatives. (7) The technical and practical feasibility.

file:///C|/Documents%20and%20Settings/HP_Administrator/Desktop/test.htm (19 of 29)7/6/2006 2:47:11 PMThe following is a CAPCOA White (8) Any additional information on impacts that is submitted to the district board for consideration. (e) Nothing in this section shall delay or otherwise affect any action taken by a district to reduce emissions of air contaminan ts from agricultural sources, or any other requirements imposed on a district or a source of air pollution pursuant to the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). (f) In adopting a rule or regulation pursuant to this section, a district shall comply with all applicable requirements of this division, including, but not limited to, the requirements established pursuant to Section 40703, 40727, and 40728.5. (g) A permitholder may appeal any district determination or decision required by this section pursuant to Section 42302.1, in ad dition to any other applicable remedy provided by law. (h) Nothing in this section authorizes a district to adopt a rule or regulation that is duplicative of a rule or regulation adop ted pursuant to Sections 40724 and 40724.5. (i) Nothing in this section limits the authority of a district to regulate a source including, but not limited to, a stationary source that is an agricultural source over which it otherwise has jurisdiction pursuant to this division or the federal Clean Air Act (42 U.S.C. S ec. 7401 et seq.) or any rules or regulations adopted pursuant to that act. Nothing in this section shall delay or otherwise affect any acti on taken by a district to reduce emissions of air contaminants from agricultural sources, or any other requirements imposed upon a district or a source of air pollution pursuant to the federal Clean Air Act. This section may not be interpreted to delay or otherwise affect adoption, implementation, or enforcement of any measure that was adopted, or included in a rulemaking calendar or air quality implementati on plan that was adopted, by the district prior to January 1, 2004. SEC. 7. Section 40724.7 is added to the Health and Safety Code, to read:

40724.7. (a) A district that is designated as being in attainment for the federal ambient air standard for ozone shall adopt a r ule or regulation as described in Section 40724.6 shall fulfill both of the following conditions: (1) The regulation shall be adopted not later than July 1, 2006, unless a district board makes a determination in a public heari ng, based on substantial scientific evidence in the record, that large confined animal facilities will not contribute to a violation of any state or federal ambient air quality standard. (2) The regulation may not be submitted for inclusion in the state implementation plan. (b) Nothing in this section shall delay or otherwise affect any action taken by a district to reduce emissions of air contaminan ts from agricultural sources, or any other requirements imposed on a district or a source of air pollution pursuant to the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). (c) In adopting a rule or regulation pursuant to this section, a district shall comply with all applicable requirements of this division, including, but not limited to, the requirements established pursuant to Section 40703, 40727, and 40728.5. (d) Nothing in this section authorizes a district to adopt a rule or regulation that is duplicative of a rule or regulation adop ted pursuant to Section 40724. (e) The rule or regulation adopted by a district pursuant to this section is not required to be submitted for inclusion into the state implementation plan. SEC. 8. Section 40731 is added to the Health and Safety Code, to read: 40731. In order to assist in the development of the BACM, RACM, and BARCT measures specified in Sections 40724, 40724.5, and 40724.6, and to reduce or eliminate emissions of regulated air pollutants and their precursors, the California Air Pollution Control Officers Association, in consul tation with the state board and other interested parties, shall, not later than January 1, 2005, develop a clearinghouse of available contro l measures and strategies for agricultural sources of air pollution and emissions from agricultural operations, including, but not limited to, the following sources: (a) Operations that create fugitive dust emissions, including, but not limited to, discing, tilling, material handling and stora ge, and travel on unpaved roads. (b) Confined animal facilities, including, but not limited to, any structure, building, installation, barn, corral, coop, feed s torage area, or milking parlor, including, but not limited to, a system for the collection, storage, treatment, and distribution of liq uid or solid manure from domestic animals, including, but not limited to, cattle, calves, horses, sheep, goats, swine, rabbits, chicken s, turkeys, or ducks, if those animals are corralled, penned, or otherwise caused to remain in restricted areas for commercial agricultural purposes, and feeding is by means other than grazing.

file:///C|/Documents%20and%20Settings/HP_Administrator/Desktop/test.htm (20 of 29)7/6/2006 2:47:11 PMThe following is a CAPCOA White (c) Internal combustion engines used in the production of crops or the raising of animals or fowl, except an engine that is used to propel an implement of husbandry, as that term is defined in Section 36000 of the Vehicle Code, as that section existed on January 1, 2003. (d) Other equipment, operations, or activities associated with the growing of crops or the raising of fowl or animals, that emit , or cause to be emitted, any regulated air pollutant, or any precursor to any regulated air pollutant. SEC. 9. Section 42301.16 is added to the Health and Safety Code, to read: 42301.16. (a) In addition to complying with the requirements of this chapter, a permit system established by a district pursuant to Section 42300 shall ensure that any agricultural source that is required to obtain a permit pursuant to Title I (42 U.S.C. Sec. 7401 et seq.) or Title V (42 U.S.C. Sec. 7661 et seq.) of the federal Clean Air Act is required by district regulation to obtain a permi t in a manner that is consistent with the federal requirements. (b) Except as provided in subdivision (c), a district shall require an agricultural source of air pollution to obtain a permit u nless it makes all of the following findings in a public hearing: (1) The source is subject to a permit requirement pursuant to Section 40724.6. (2) A permit is not necessary to impose or enforce reductions of commissions of air pollutants that the district show cause or contribute to the violation of state or federal ambient air quality standard. (3) The requirement for the source or category of sources to obtain a permit would impose a burden on those sources that is significantly more burdensome than permits required for other similar sources of air pollution. (c) Prior to requiring a permit for an agricultural source of air pollution with actual emissions that are less than one-half of any applicable emissions threshold for a major source in the district, for any air contaminant, but excluding fugitive dust, a distr ict shall, in a public hearing, make all of the following findings: (1) The source is not subject to a permit requirement pursuant to Section 40724.6. (2) A permit is necessary to impose or enforce reductions of emission of air pollutants that the district show cause or contribu te to a violation of a state or federal ambient air quality standard. (3) The requirement for a source or category of sources to obtain a permit would not impose a burden on those sources that is significantly more burdensome than permits required for other similar sources of air pollution. SEC. 10. Section 42301.17 is added to the Health and Safety Code, to read: 42301.17. (a) A district may adopt by regulation a program under which the district does not require a permit to be obtained by an agricultural source of air pollution that the district may otherwise require to obtain a permit if the owner or operator of the source has taken the following actions to reduce emissions from the source: (1) Removed all internal combustion engines used in the production of crops or the raising of fowl or animals, except an engine that is used to propel implements of husbandry, at the source and replaced them with engines that meet or exceed the most stringent standards adopted by the state board and the United States Environmental Protection Agency for new internal combustion engines. (2) Reduced or mitigated emissions from all agricultural activities, including, but not limited to, tilling, discing, cultivatio n, the raising of livestock and fowl, and similar activities, to a level that the district determines does not cause, or contribute to, a violation of a state or federal ambient air standard, toxic air contaminant, or other air emission limitation. (3) Reduced or mitigated all emissions from any farm equipment, underground petroleum fuel tanks, or other similar equipment used in agricultural activities to a level that the district determines does not cause or contribute to a violation of a state o r federal ambient air standard, toxic air contaminant, or other air emission limitation. (4) Complied with any other conditions required by state or federal law or district rule or regulation for the source. (b) Subdivision (a) does not apply to those permits required to be issued pursuant to Title I (42 U.S.C. Sec. 7401 et seq.) or Title V (42 U.S.C. Sec. 7661 et seq.).

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SEC. 11. Section 42301.18 is added to the Health and Safety Code, to read: 42301.18. (a) Any agricultural source that existed prior to January 1, 2004, that becomes subject to a permit requirement pursua nt to a district rule or regulation that was adopted prior to that date shall be permitted as an existing source and not as a new source

. (b) Any agricultural source that is an existing source pursuant to subdivision (a) shall be permitted by the district based upon its maximum potential to emit air contaminants, to the extent that level can be determined, as of January 1, 2004. (c) A district may not require an agricultural source to obtain emissions offsets for criteria pollutants for that source if emi ssions reductions from that source would not meet the criteria for real, permanent, quantifiable, and enforceable emission reductions. SEC. 12. Section 42310 of the Health and Safety Code is amended to read: 42310. (a) A permit shall not be required for any of the following: (1) Any vehicle. (2) Any structure designed for and used exclusively as a dwelling for not more than four families. (3) An incinerator used exclusively in connection with a structure described in subdivision (b). (4) Barbecue equipment that is not used for commercial purposes. (5) (A) Repairs or maintenance not involving structural changes to any equipment for which a permit has been granted. (B) As used in this subdivision, maintenance does not include operation. (b) Nothing in this section shall affect any requirements imposed on a district or a source of air pollution, including, but not limited to, an agricultural source, pursuant to the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). SEC. 13. Section 44559.9 is added to the Health and Safety Code, to read: 44559.9. The authority shall expand the Capital Access Loan Program established by this article to include outreach to financial institutions that service agricultural interests in the state for the purpose of funding air pollution control measures. SEC. 14. The provisi ons of the act adding this section are severable. If any provision of this act or its application is held invalid, that invalidity shall not af fect other provisions or applications that can be given effect without the invalid provision or application. SEC. 15. No reimbursement is required by thi s act pursuant to Section 6 of Article XIII B of the California Constitution for certain costs that may be incurred by a local agency or school di strict because in that regard this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Art icle XIII B of the California Constitution. In addition, no reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution for certain other costs that may be incurred by a local agency or school district because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this a ct, within the meaning of Section 17556 of the Government Code.

COUNTY

DISTRICT 1-HR OZONEDESIGNATION CLASSIFICATION MAJOR SOURCE NOX/VOC THRESHOLD (TONS/YR) 50% OFTHRESHOLD (TONS/ YR) PM10DESIGNATION CLASSIFICATION MAJOR SOURCE PM10 THRESHOLD (TONS/YR) 50% OFTHRESHOLD (TONS/ YR) Alameda Bay Area AQMD N NC 100 50 U/A 100 50 Alpine Great Basin APCD U/A 100 50 U/A 100 50 Amador Amador APCD U/A 100 50 U/A 100 50 Butte Butte AQMD N Transition 100 50 U/A 100 50 Calaveras Calaveras AQMD U/A 100 50 U/A 100 50

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Colusa Colusa APCD U/A 100 50 U/A 100 50 Contra Costa Bay Area AQMD N NC 100 50 U/A 100 50 Del Norte North Coast AQMD U/A 100 50 U/A 100 50 El Dorado El Dorado AQMD N Severe 25 12.5 U/A 100 50 Fresno SJV Unified APCD N Severe 25 12.5 N Serious 70 35 Glenn Glenn APCD U/A 100 50 U/A 100 50 Humboldt North Coast AQMD U/A 100 50 U/A 100 50 Imperial Imperial APCD N Transition 100 50 N* Moderate 100 50 Inyo Great Basin APCD U/A 100 50 N* Serious 70 35 Kern SJV Unified APCD N Severe 25 12.5 N Serious 70 35 Kern Kern APCD N Serious 50 25 U/A 100 50 Kings SJV Unified APCD N Severe 25 12.5 N Serious 70 35 Lake Lake AQMD U/A 100 50 U/A 100 50 Lassen Lassen APCD U/A 100 50 U/A 100 50 Los Angeles South Coast AQMD N Extreme 10 5 N Serious 70 35 Los Angeles Antelope Valley APCD N Severe 25 12.5 U/A 100 50 Madera SJV Unified APCD N Severe 25 12.5 N Serious 70 35 Marin Bay Area AQMD N NC 100 50 U/A 100 50 Mariposa Mariposa APCD U/A 100 50 U/A 100 50 Mendocino Mendocino AQMD U/A 100 50 U/A 100 50 Merced SJV Unified APCD N Severe 25 12.5 N Serious 70 35 Modoc Modoc APCD U/A 100 50 U/A 100 50 Mono Great Basin APCD U/A 100 50 N* Moderate 100 50 Monterey Monterey Bay APCD U/A 100 50 U/A 100 50 Napa Bay Area AQMD N NC 100 50 U/A 100 50 COUNTY

DISTRICT 1-HR OZONEDESIGNATION CLASSIFICATION MAJOR SOURCE NOX/VOC THRESHOLD (TONS/YR) 50% OFTHRESHOLD (TONS/ YR) PM10DESIGNATION CLASSIFICATION MAJOR SOURCE PM10 THRESHOLD (TONS/YR) 50% OFTHRESHOLD (TONS/ YR) Nevada Northern Sierra AQMD U/A 100 50 U/A 100 50 Orange South Coast AQMD N Extreme 10 5 N Serious 70 35 Placer Placer APCD N Severe 25 12.5 U/A 100 50 Plumas Northern Sierra AQMD U/A 100 50 U/A 100 50 Riverside South Coast AQMD N Extreme 10 5 N Serious 70 35 Riverside Mojave Desert AQMD N* Severe 25 12.5 N* Serious 70 35 Sacramento Sacramento Metro AQMD N Severe 25 12.5 N Moderate 100 50 San Benito Monterey Bay APCD U/A 100 50 U/A 100 50 San Bernardino South Coast AQMD N Extreme 10 5 N Serious 70 35 San Bernardino Mojave Desert AQMD N* Severe 25 12.5 N* Moderate 100 50 San Diego San Diego APCD U/A 100 50 U/A 100 50 San Francisco Bay Area AQMD N NC 100 50 U/A 100 50 San Joaquin SJV Unified APCD N Severe 25 12.5 N Serious 70 35 San Luis Obispo San Luis Obispo APCD U/A 100 50 U/A 100 50 San Mateo Bay Area AQMD N NC 100 50 U/A 100 50 Santa Barbara Santa Barbara APCD U/A 100 50 U/A 100 50 Santa Clara Bay Area AQMD N NC 100 50 U/A 100 50 Santa Cruz Monterey Bay APCD U/A 100 50 U/A 100 50 Shasta Shasta AQMD U/A 100 50 U/A 100 50 Sierra Northern Sierra AQMD U/A 100 50 U/A 100 50 Siskiyou Siskiyou APCD U/A 100 50 U/A 100 50

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Solano Bay Area AQMD N NC 100 50 U/A 100 50 Solano Yolo-Solano AQMD N Severe 25 12.5 U/A 100 50 Sonoma Bay Area AQMD N NC 100 50 U/A 100 50 Sonoma Northern Sonoma APCD U/A 100 50 U/A 100 50 Stanislaus SJV Unified APCD N Severe 100 50 N Serious 70 35 Sutter Feather River AQMD N Severe 25 12.5 U/A 100 50 Tehama Tehama APCD U/A 100 50 U/A 100 50 Trinity North Coast AQMD U/A 100 50 U/A 100 50 Tulare SJV Unified APCD N Severe 25 12.5 N Serious 70 35 Tuolumne Tuolumne APCD U/A 100 50 U/A 100 50 Ventura Ventura APCD N Severe 25 12.5 U/A 100 50 Yolo Yolo-Solano AQMD N Severe 25 12.5 U/A 100 50 Yuba Feather River AQMD N Transition 100 50 U/A 100 50 Notes: U/A = Att

APPENDIX E

GLOSSARY OF KEY TERMS

Actual Emissions – the emissions produced by a facility or operation based on its normal operating conditions. This may be derived from actual measurements or emissions testing, or historical records of activities which can be used to estimate emissions. Agricultural Source of Air Pollution – a source or a group of sources of air pollution created by or used in the production of crops, or the raising of fowl or animals located on contiguous property under common ownership or control. Under SB700, there are four categories of e missions: confined animal facilities; internal combustion engines (including portable and off-road engines); sources subject to Federal Ti tle V requirements; and sources subject to local district regulation as allowed by the Health & Safety Code. Air Pollution Control District (APCD)/Air Quality Management District (AQMD) – a governmental entity often aligned with county government with responsibilities for developing and administering air pollution control programs on a local or regional level. Some regiona l AQMD’s are specifically authorized in California statutes; other agencies not specifically identified may be unified among several adjacent counties to more effectively and efficiently administer the local air pollution programs within a common air basin. Every APCD and AQMD has a gov erning board.



### A ttainment/Nonattainment – (attainment) any area that meets the ambient air quality standards for a pollutant as determined by the Environmental Protection Agency (for national standards) and the California Air Resources Board (for state standards). Nonattain ment is designated for any area that does not meet such standards. Best Available Control Measures (BACM) – the application of methods and techniques to operations and activities not applicable for "best available control technology," which achieve the maximum degree of reduction of a pollutant subject to regulation, taking into a ccount energy, environmental, economic impacts, and other costs, as applicable to the specific activity or operation. Examples of activities to which BACM apply include generation of fugitive dust; agricultural burning; dairy ammonia. Best Available Control Technology (BACT ) – the application of pollution controls, such as production processes, methods, techniques, and systems, which achieve the maximum degree of reduction of a pollutant subject to regulation, and which (1) takes into account en ergy, environmental, economic impacts, and other costs, as applicable to a facility or operation; or (2) has been achieved in practice at other similar sources. In no event can the application of such controls result in emissions which exceed specified emissions limits. Examples of processes to which BACT apply include internal combustion and fuel dispensing. BACT applies to new facilities or operations, and to major mod ifications of existing facilities or operations.



### B est Available Retrofit Control Technology (BARCT) – similar to the definition of BACT, except that the pollution controls apply to the retrofitting of existing equipment. California Air Pollution Control Officers Association (CAPCOA) – a non-profit association of the air pollution control officers from all 35 local air quality agencies throughout California. California Air Resources Board (CARB) – the state agency with the responsibility of administering the air pollution control efforts throughout the state. This includes oversight of local air district programs and primary responsibility for the control of certain pollutio n sources, including mobile sources (not otherwise pre-empted by federal authority) and consumer products.

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California Clean Air Act (CCAA) – California legislation signed into law in 1988 which delineates, in statutes, California’s air quality goals, planning mechanisms, regulatory strategies, and standards of progress. Among other things, the CCAA requires attainment of the S tate’s ambient air quality standards at the earliest practical date. California Health & Safety Code – that portion of state law which contains the requirements for air pollution control activities in California. SB700, for example, is contained within the California Health & Safety Code. Confined Animal Facilities (CAFs) – any type of confinement for animals or fowl that restricts them to a certain area, and involves feeding the animals by any method other than grazing. This includes, but not limited to, barns, pens, corrals, and coops.

Cost Effectiveness – the cost of a particular air pollution control or control measure expressed per unit of emissions reduced; for example, "$1,000 per ton of NOx reduced." DeMinimis Emissions – a level of emissions below which is considered not to be significant or meaningful.

Emission Offsets – an amount of emissions required to be reduced from other facilities in order for a facility or operation to be granted increases in emissions as a result of federal New Source Review requirements. Generally, such offsets are gained via Emission Re duction Credits generated by other facilities. Emission Reduction Credits (ERCs) – Emission reductions from a facility which are verified to be over and above the emissions reductions required by a federal, state, or district rule, and which are demonstrated to be real, permanent, quantifiable, enforceable, and surplus. ERCs can be "sold" to facilities or operations in need of emission offsets. Environmental Protection Agency (USEPA) – the federal agency responsible for the oversight of programs to improve the environment. Simply stated, the USEPA has oversight authority over state and local air pollution control programs, assures timely progress toward at tainment of national ambient air quality standards, promulgates regulations, has enforcement authority, and carries out the directives speci fied in the Federal Clean Air Act. Federal Clean Air Act (FCAA) – the federal legislation which enables a multitude of programs and requirements to clean the air. The original FCAA was signed into law in 1963, but the key enabling provisions occurred with the reauthorization of the FCAA in 1970. Subsequ ent amendments have occurred in 1975, 1977, and most recently, 1990. The FCAA as amended in 1990 includes five key parts (or "Titles "): (1) Air Pollution Prevention and Control; (2) National Emissions Standards Act; (3) General Provisions; (4) Acid Deposition Control; and (5) Federal Permits. Fugitive Emissions – those emissions that cannot reasonably pass through a stack, chimney, vent, or other functionally equivalent opening. Examples might include dust from tilling and harvesting; or ammonia from dairy manure piles. Major Source – any stationary source or group of stationary sources within a contiguous area and under common control that emits or has the potential to emit, considering controls, in the aggregate, levels which exceed those specified by the severity of pollution in a n attainment or nonattainment area; [Note: NOx, VOC, and PM10 major source thresholds are listed by county in Appendix C]; or which emits 10 ton s or more per year of any hazardous air pollutant, or 25 tons per year or more of any combination of hazardous air pollutants. Mitigation Clearinghouse – a listing of Best Available Control Technologies, Best Available Retrofit Control Technologies, Best Available Control Measures, and Reasonably Available Control Measures as applicable to agricultural sources, including operations that create fugi tive dust (including, but not limited to, disking, tilling, material handling and storage, travel on unpaved roads); confined animal facil ities; internal combustion engines used in agricultural operations; and other equipment, operations, or activities that emit, or cause to be emi tted, any regulated air pollutant or pollutant precursor. This clearinghouse is under the responsibility of CAPCOA.

Modification – any physical change in, or change in the method of operation, of a stationary source which results in an increase in the amou nt of any pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted. National Ambient Air Quality Standards (NAAQS) – the definition of "clean air." More specifically, a standard establishes the concentration above which the pollutant is known to cause adverse health effects to sensitive groups within the population, such as children a nd the elderly, and allows for an adequate margin of safety. Health-based standards have been established for the "criteria pollutants," includi ng ozone, PM10, PM2.5, nitrogen dioxide, carbon monoxide, sulfur dioxide, and lead.

New Source – any stationary source, the construction or modification of which commenced after the publication or adoption of regulations prescribing a standard of performance applicable to that specific source. New Source Review (NSR) – a program to assure that new sources do not adversely contribute to an area’s ability to attain National Ambient

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Air Quality Standards. There are very strict federal requirements regarding this program. Oxides of Nitrogen – a class of pollutants which are formed primarily through combustion processes. Some oxides of nitrogen are harmful to humans; others are not. These pollutants are precursors to the formation of two of the most harmful pollutants: ozone and fine p articulate matter.

Ozone – a pollutant, comprised of three oxygen atoms, which has been shown to cause respiratory diseases in humans and affect the gro wth of crops, and for which the Environmental Protection Agency and the California Air Resources Board have set health-protective st andards. Ozone is one of the most pervasive pollutants in California, but is not directly emitted. It is formed in the atmosphere from ch emical reactions between oxides of nitrogen and hydrocarbons when exposed to sunlight.

Particulate Matter – solid or liquid particles which are small enough to be suspended in the air. Health-based standards have been set by both the Environmental Protection Agency and the California Air Resources Board for particulate matter less than 10 microns in size ( PM10 - about 1/7th the thickness of a human hair) which are inhalable into the human lungs; and for particulate matter less than 2.5 microns in size (PM2.5 – one-fourth the size of PM10) which can penetrate deeply into the lungs.

Potential to Emit – the maximum level that a facility or operation can emit based on physical and enforceable limitations. Facilities which can operate around the clock, for example, would have a potential-to-emit based on maximum operation occurring 24 hours a day, 365 d ays a year.

Precursor Emissions – emissions of pollutants which then react in the atmosphere to form other pollutants for which health-based standards have been established. Key precursors include oxides of nitrogen (forming ozone and particulate matter); volatile organic compou nds (forming ozone and particulate matter); and ammonia (forming particulate matter). Prohibitory Rule – an air pollution control rule which prohibits an activity, operation, or condition in order to prevent or limit pollutant emissions. (This type of rule contrasts with source-specific rules which generally prescribe conditions under which facilities m ay operate and be granted operating permits.) An example of a prohibitory rule is: "No person shall allow any operation which results in visibl e emissions exceeding 20% opacity." Reasonably Available Control Measures (RACM) - the application of methods and techniques to operations and activities, similar to "best available control measures," which achieve a reasonable level of control of a pollutant subject to regulation, taking into accou nt energy, environmental, economic impacts, and other costs, as applicable to the specific activity or operation. In general, RACM are of l ess stringency than BACM, but for some applications, RACM and BACM may be equivalent. Sources of Air Pollution – any sources which emit or may emit any air pollutant.

Standard of Performance – a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best emission reduction system, accounting for energy, environmental, and cost factors, and which have been a dequately demonstrated. State Implementation Plan (SIP) – documents prepared by states, in cooperation with local air districts, and subject to USEPA approval that identify the actions and programs to be undertaken to control emissions within their boundaries.

Title I – that portion of the Federal Clean Air Act which specifies conditions and requirements for air pollution prevention and contro l. This is the portion of the FCAA that contains the requirements for New Source Review and need for local permits.

Title V – that portion of the Federal Clean Air Act which specifies the conditions and requirements for federally-required permits whic h can, under prescribed circumstances, be issued and administered by state or local agencies.

Variance – an authorized allowance for a facility or operation to exceed air pollution control limits, usually for a temporary period of time. Such authorization may be granted by air pollution control agency Hearing Boards, only after making certain findings as specified in state law. An example might be additional time needed by a facility or operation, due to technical issues, to meet limits of a new rule by a s pecified date.

APPENDIX F

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Rule Actions Required of Air Districts Under SB 700 Under SB 700, air districts are required to ensure that federal permits (Title I for new/modified major sources, and Title V for existing major sources) are implemented for affected agricultural sources, consistent with federal requirements. This may require rulemaking by the district. Districts are also required to issue general permits for agricultural sources above a certain size, and to exempt sources below a certain size, unless the district Board first makes specified findings. For a detailed discussion of these requirements, see Section III of th e Implementation Paper. SB 700 also requires districts to adopt rules to regulate emissions from agricultural operations; these requirements are based o n the districts’ attainment designation for federal particulate and ozone standards, as it was on January 1, 2004. The table below divides air di stricts into four groups, based on federal attainment as of 1/1/04; rule development requirements under SB 700 are different for each group, with Group I facing the greatest requirements and shortest deadlines, and Group IV facing the smallest requirements and later deadlines.

Particulate Matter

Nonattainment

Attainment

Nonattainment Group I Group II

Attainment Group III Group IV Group I: This group includes the San Joaquin Valley, the South Coast, Sacramento County, the Mojave Desert, and Imperial County (transitional nonattainment).

Deadline Rule Action As soon as poss. 1) Amend Title V & NSR rules to include agricultural sources (if not already done). 2) a) Amend NSR and general permits rules to establish the 50% threshold for permitting & exemption; or b) develop new rule to permit agricultural sources (inc. major sources and sources above 50% of major), and exempt sources be low 50% of major. If appropriate, make findings to change 50% threshold. 3) Review existing prohibitory rules (i.e., fugitive dust, opacity limitations, fuel storage & dispensing, etc.) to determine wh ich rules do apply to agricultural sources, now that their exemption is gone, which rules should apply, and which rules, if any, need to be changed

. September 1, 2004* Notice and hold at least one public workshop to solicit public comment on a draft rule for BACM & BARCT for a gricultural sources (including precursor emissions). July 1, 2005* Adopt a regulation and submit it for inclusion in the SIP, to establish BACM and BARCT for agricultural sources (i ncluding precursor emissions), commensurate with such requirements for other source categories. July 1, 2006* 1) Commence implementation of the BACM/BARCT rule. 2a) Adopt a rule to permit & mitigate emissions from large Confined Animal Facilities;

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Deadline Rule Action As soon as poss. 1a) Amend NSR rule to include agricultural sources (if rule currently exempts them), and establish the 50% thre shold for permitting & exemption; or b) develop new rule to permit agricultural sources (inc. major sources and sources above 50% of major), and exempt sources be low 50% of major. If appropriate, make findings to change 50% threshold. 2) Review existing prohibitory rules (i.e., fugitive dust, opacity limitations, fuel storage & dispensing, etc.) to determine wh ich rules do apply to agricultural sources, now that their exemption is gone, which rules should apply, and which rules, if any, need to be changed

. July 1, 2006 Adopt a rule and submit it for inclusion in the SIP, to permit & mitigate emissions from large Confined Animal Faci lities. Note that the moderate nonattainment areas have until July 1, 2007. Group III: This group includes only the Great Basin area (Alpine, Inyo, and Mono Counties).

Deadline Rule Action As soon as poss. 1a) Amend NSR rule to include agricultural sources (if rule currently exempts them), and establish the 50% thre shold for permitting & exemption; or b) develop new rule to permit agricultural sources (inc. major sources and sources above 50% of major), and exempt sources be low 50% of major. If appropriate, make findings to change 50% threshold. 2) Review existing prohibitory rules (i.e., fugitive dust, opacity limitations, fuel storage & dispensing, etc.) to determine wh ich rules do apply to agricultural sources, now that their exemption is gone, which rules should apply, and which rules, if any, need to be changed

. July 1, 2006 a) Adopt a rule to permit & mitigate emissions from large Confined Animal Facilities; or b) Make demonstration that large CAFs do not cause or contribute to a violation of a state or federal ambient air quality sta ndard. July 1, 2007 Adopt a regulation and submit it for inclusion in the SIP, to establish BACM and BARCT for agricultural sources (in cluding precursor emissions), commensurate with such requirements for other source categories. Group IV: This group includes Amador County, Calaveras County, Colusa County, Glenn County, Lake County, Lassen County, Mariposa County Mendocino County, Modoc County, the Monterey Bay Area (Monterey, San Benito, and Santa Cruz Counties), the North Coast area (Del Norte, Humbolt, and Trinity Counties), the Northern Sierra area (Nevada, Plumas and Sierra Counties), Northern Sonoma County, San Luis Obispo County, San Diego County, Santa Barbara County, and Tuolumne County.

Deadline Rule Action As soon as poss. 1a) Amend NSR rule to include agricultural sources (if rule currently exempts them), and establish the 50% thre shold for permitting & exemption; or b) develop new rule to permit agricultural sources (inc. major sources and sources above 50% of major), and exempt sources be low 50% of major.

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If appropriate, make findings to change 50% threshold. 2) Review existing prohibitory rules (i.e., fugitive dust, opacity limitations, fuel storage & dispensing, etc.) to determine wh ich rules do apply to agricultural sources, now that their exemption is gone, which rules should apply, and which rules, if any, need to be changed

. July 1, 2006 a) Adopt a rule to permit & mitigate emissions from large Confined Animal Facilities; or b) Make demonstration that large CAFs do not cause or contribute to a violation of a state or federal ambient air quality sta ndard. Some of the districts in this group may find it to be more appropriate for their circumstances to adopt a stand-alone rule that establishes all permitting and (if applicable) mitigation requirements for agricultural operations. Some of the factors that will affect this de cision include the complexity of the district’s current program, the difficulty it faces maintaining attainment status, whether it is subject to pl anning and rule adoption requirements to attain state ambient air quality standards, and the amount of agricultural activity in the district as well as the contribution those activities make to local air quality problems.

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