Draft Technical Support Document for EPA's Notice of Proposed Rulemaking for the Hawaii State Implementation Plan: Minor New Source Review Program

Prepared by: Geoffrey L. Glass

Reviewed by: Gerardo Rios

Air Division, Permits Office United States Environmental Protection Agency, Region IX San Francisco, California March 19, 2012Acronyms and Abbreviations:

CAA Federal Clean Air Act CO Carbon monoxide EPA United States Environmental Protection Agency HDOH Hawaii State Department of Health NAAQS National Ambient Air Quality Standards NO x Reactive oxides of nitrogen NSR New Source Review PM 10 Particulate matter with an aerodynami c diameter less than 10 micrometers PM 2.5 Particulate matter with an aerodynami c diameter less than 2.5 micrometers PSD Prevention of Significant Deterioration SIP State Implementation Plan SO 2 Sulfur dioxideHawaii Department of Health (HDOH)

Submitted Rules (Revised November 14, 2003 and submitted on December 14, 2011)

Subchapter 1: General Requirements Rule 11-60.1-1 Definitions * Rule 11-60.1-2 Prohibi tion of air pollution * Rule 11-60.1-3 General conditions for considering applications Rule 11-60.1-5 Permit conditions Rule 11-60.1-7 Transfer of permit Rule 11-60.1-12 Air quality models Rule 11-60.1-19 Penalties and remedies

Subchapter 5: Covered Sources Rule 11-60.1-81 Definitions Rule 11-60.1-82 Applicability Rule 11-60.1-83 Initial covere d source permit application Rule 11-60.1-84 Duty to supplement or correct permit applications Rule 11-60.1-91 Temporary covered source permits Rule 11-60.1-92 Covered source general permits Rule 11-60.1-93 Federally-enforceable permit terms and conditions Rule 11-60.1-99 Public participation Rule 11-60.1-103 Applications for minor modifications Rule 11-60.1-104 Applications fo r significant modifications

* Note: Rules 11-60.1-1 and 11-60.1-2 were previ ously reviewed by EPA and signed by the Regional Administrator on February 1, 2012 for in clusion in the Hawaii State Implementation Plan (publication in the Fe deral Register pending.Introduction

The rules listed above, which were submitte d by HDOH as revisions to their State Implementation Plan (SIP) constitute their mi nor new source review (NSR) permitting program. These rules will replace the permitting provisions in Hawaii’s existing SIP which were submitted to EPA on November 9, 1982 and published in th e Federal Register on August 18, 1983 (48 FR 37402). The superseded SIP rules are listed here:

Rule 11-60-02 Permit system, applicability Rule 11-60-03 Permit system, applications Rule 11-60-04 Permit system, conditions for considering applications Rule 11-60-05 Permit system, action on application Rule 11-60-07 Permit system, cancella tion of authority to construct Rule 11-60-08 Permit system, suspension or revocation of permit to operate Rule 11-60-09 Permit system, transfer of permit to operate Rule 11-60-11 Permit system, posting of permit to operate Rule 11-60-12 Permit system, fees Rule 11-60-13 Permit system, fee schedule for a permit to operate Rule 11-60-14 Permit system, period of a permit Rule 11-60-37 Penalties and Remedies

Hawaii’s Permitting Programs

HDOH is the only Clean Air Act (CAA) permitting authority in the State of Hawaii.

Any sources that are not explicitly exempted from permit requirements because of their low potential emissions are requi red to apply for and obtain permits from HDOH prior to construction, reconstruction, or modification. Th e permit serves as both a preconstruction permit and an operating permit.

HDOH’s permitting program differentiates between covered and noncovered sources. Covered sources include all title V (part 70) major sources, all PSD major s ources, all sources subject to a standard under Section 111 of the CAA, and all sources subject to a standard pursuant to part 112 of the CAA, excluding Section 112(r), Prevention of Accidental Releases

.
Noncovered sources include all st ationary sources that have be en constructed, modified, or relocated since March 20, 1972 th at are not covered sources.

The submitted rules constitute HDOH’s minor NSR permitting program, where minor means activities that do not trigger major NSR, such as PSD. Hawaii HDOH has submitted portions of their covered source permitting program to satisfy the requirements of the federal minor NSR

March 19, 2012 Technical Supp ort Document Page 1 of 10 HI SIP Submittal Minor NSR Rulesprogram because the rules submitted by Hawaii apply to all covered sources and the covered sources contribute the majority of stationa ry source air emissions within the state. 1 For example, according to Hawaii’s 2008 stationary source emissions inventory, covered sources emitted 94% of PM 10 , 95% of PM 2.5 , 89% of SO 2 , 97% of CO, 96% of NO x , 80% of VOC and 98% of Lead. Thus, the submitted rules would apply to all the s ources that would be s ubject to the minor NSR program in Hawaii.

HDOH also implements a delegated PSD permitt ing program based on the requirements of 40 CFR 52.21.

Rule Summaries

The following are brief descriptions of rules revi ewed by EPA staff as a part of this review. These descriptions are for informational purposes only and anyone interested in more detail is advised to read th e rules directly.

Rule # Title Brief Description 11-60.1-1 Definitions Defines terms used the air pollution control rules, including the definitions of covered and noncovered sources. 11.60.1-2 Prohibition of air pollution Requires approval in writing from the director before engaging in any activity that causes air pollution. 11-60.1-3 General conditions for considering applications Sets general criteria for approval of applications for noncovered or covered source permits. 11-60.1-5 Permit conditions Under certain circum stances, allows the director to set more stringent conditions of approval than would otherwise be required. 11-60.1-7 Transfer of permit Forbids transfer of permit s between pieces of equipment or between persons without prior approval. 11-60.1-12 Air quality models Requires dispersion modeling to be perfor med in accordance with 40 CFR part 51, appendix W unless prior approval is granted. 11-60.1-19 Penalties and remedies Incorporates penalties and remedies from Hawaii Revised Statutes 11-60.1-81 Definitions Defines terms in the covered source permit section 11-60.1-82 Applicability Requires covered sources to obtain covered source permits unless they meet one of the listed exemptions 11-60.1-83 Initial covered source permit application Sets requirements for a covered source permit application and procedures for processing the application 11-60.1-84 Duty to supplement or correct permit applications Requires applicants to correct errors or supply additional information if needed 11-60.1-91 Temporary covered source permits Sets criteria for permitting covere d sources that can operate at multiple locations 11-60.1-92 Covered source general permits Allows the director to establish general permits for similar nonmajor covered sources 11-60.1-93 Federally-enforceable permit terms and conditions Conditions in covered source permits are federally enforceable unless otherwise specified 11-60.1-99 Public participation Establishes procedures for public noticing covered source permits and accepting comments 11-60.1-103 Applications for minor modifications Establishes procedures for submitting and processing applications for minor modifications of covered source permits

1 Letter from HDOH to EPA Region 9, dated March 13, 2012, Re: Adequacy of Minor Source Review

March 19, 2012 Technical Supp ort Document Page 2 of 10 HI SIP Submittal Minor NSR RulesRule # Title Brief Description 11-60.1-104 Applications for significant modifications Establishes procedures for submitting and processing applications for significant modifications of covered source permits

Regulatory Analysis

Part A of title I of the CAA requires states to in clude in their SIPs permit programs that regulate the construction and modification of stationary sources adequate to ensure that the NAAQS are achieved. (See CAA § 110(a)(2)(C)). This is th e legal basis for the NSR permitting program.

Part C of title I of the CAA (Part C) adds additional NSR requirement s that apply to major stationary sources located in areas that are cla ssified as attainment or unclassifiable of the NAAQS. This program is known as the PSD perm itting program. Part D of title I of the CAA (Part D) adds additional NSR requirements to major stationary sources of non-attainment pollutants for sources proposing to locate within areas that are cl assified as nonattainment (i.e. nonattainment NSR). Hawaii implements the PSD program through a delegation agreement with EPA. As there are no nonattainment areas in Hawa ii, the state does not need to implement part D. This submittal only pertains to the minor source permit program, and therefore we are not evaluating the submittal under Part C of the CAA.

The criteria that EPA uses to evaluate NSR pr ograms included in a SIP submittal can be found in subpart I of 40 CFR 51: Review of New Sources and Modifications . Because Hawaii’s SIP submittal is only meant to satisfy the requireme nts of minor NSR, EPA Staff compared the submitted rules with subpart I, excluding 40 CFR 51.165 and 51.166, which relate to review and permitting of new major sources and major modifications under Parts C and D.

In addition, SIP rules must be enforceable (see section 110(a) of the CAA) and must not relax existing requirements (see section 110(l)).

Below is our comparison of the federal regulatory requirements and the rules submitted by the State of Hawaii to comply with the applicable CAA requirements.

1. 40 CFR 51.160 – Legally enforceable procedures

(a) Each plan must set forth legally enforceable pr ocedures that enable the State or local agency to determine whether the construction or modi fication of a facility, building, structure or installation or combination of these will result in (1) a violation of applicable portions of the control strategy; or (2) interferen ce with attainment or maintenance of a national st andard in the state in which the proposed sour ce (or modification) is located or in a neighboring State.

The State of Hawaii submitted the following rules to comply with this requirement.

Rules 11-60.1-83(a)(11)&(12) re quire applicants for cove red source permits for new construction and modifications to existing sources to provide an assessment of the ambient air quality impact of the sour ce including a comparison with the NAAQS.

March 19, 2012 Technical Supp ort Document Page 3 of 10 HI SIP Submittal Minor NSR RulesRule 11-60.1-83(a)(4) requires applicants fo r covered source permits to provide the maximum emission rates of all regulated a nd hazardous air pollutants in such terms necessary to establish compliance consistent with the applicable requirements and standard reference test methods.

Rule 11-60.1-83(a)(7) requires appl icants for covered source perm its to cite all applicable requirements in the application and describe test methods to demonstrate compliance.

Upon review, EPA agrees that these rules sa tisfy the requirements under 40 CFR 51.160(a).

(b) Such procedures must include means by which the State or local agency responsible for final decision-making on the application for approval to construct or modify will prevent such construction or modification if (1) it will result in a violation of applicable portions of the control strategy; or (2) it will interfere with the atta inment or maintenance of a national standard.

The State of Hawaii submitted the following rule to comply with this requirement.

Rule 11-60.1-83(h) allows the director to approve a cove red source permit application only if the director determines that constructi on or operation of the s ource, or significant modification, will be in comp liance with all applicable requirements including the NAAQS.

Upon review, EPA agrees that this rule satis fies the requirements under 40 CFR 51.160(b).

(c) The procedures must provide for the submission, by the owner of operator of the building, facility, structure, or installati on to be constructed or modified, of such information on (1) the nature and amounts of emissions to be emitted by it or emitted by associated mobile sources; (2) the location, design, construction, and operation of such facility, building, structure, or installation as may be necessary to permit the St ate or local agency to make the determination referred to in paragraph (a) of this section.

The State of Hawaii submitted the following rules to comply with this requirement.

Rules 11-60.1-83(a)(2)&(4) requ ire applicants for covered source permits to submit descriptions of the nature, location, design capacity, production capacity, production rates, fuels, fuel use, raw materials, and typical operating schedules and capacities to the extent needed to determine or regulate emissions and calculations of emission rates in pounds per hour, tons per year, and other terms as needed.

Rule 11-60.1-83(a)(9) requires applicants fo r covered source pe rmits to supply all assumptions and calculations used to prepare the application.

Upon review, EPA agrees that these rules sa tisfy the requirements under 40 CFR 51.160(c).

March 19, 2012 Technical Supp ort Document Page 4 of 10 HI SIP Submittal Minor NSR Rules(d) The procedures must provide that approval of any construc tion or modification must not affect the responsibility on the owner or operato r to comply with applicable portions of the control strategy.

The State of Hawaii submitted the following rule to comply with this requirement.

Rule 11-60.1-2, which was reviewed as part of a separate SIP modification 2 , states explicitly that written approval from the direct or to engage in any act ivity that causes air pollution does not release th e person from the responsibil ity to comply with other statutes, laws, regula tions, or ordinances.

Upon review, EPA agrees that this rule satis fied the requirements under 40 CFR 51.160(d).

(e) The procedures must identify types and sizes of facilities, buildings, structures, or installations which will be subjec t to review under this section. The plan must discuss the basis for determining which facilities will be subject to review.

The State of Hawaii submitted the following rules to comply with this requirement.

Rule 11-60.1-1, which was reviewed as part of a separate SIP modification 3 , contains the definition of a covered source. Rule 11-60.1-82(a) requires a ll covered sources to obtain a covered source permit before commen cing construction, reconstruction, or modification, unless the source is exempt as provided in subsection (d), (e), and (k) of Rule 11-60.1-82.

HDOH has provided information demonstrating that emissions from sources subject to the covered source program represent between 80 and 98 percent of criteria pollutants emitted from all regulated stationary sources and therefore the covered source program provides an adequate program to ensure new an d modified sources will not interfere with continued compliance with the NAAQS. 4

In 2008, for example, HDOH reports that cove red sources, in relation to all regulated stationary sources, emitted 80 per cent of VOC, 89 percent of SO 2 , 94 percent of PM 10 , and at least 95 percent of CO, lead, NO x , and PM 2.5
. Thus, given the additional information supplemen ted by the State of Hawaii, EPA agrees that these rules satisfy the requirements under 40 CFR 51.160(e).

(f) The procedures must discuss the air quality data and the dispersion or other air quality modeling used to meet the requirements of this subpart. (1) All appli cations of air quality modeling involved in this subpart shall be based on the applicable models, data bases, and other

2 Signed by the Regional Administrator on February 1, 2012 and pending publication in the Federal Register
3 Signed by the Regional Administrator on February 1, 2012 and pending publication in the Federal Register
4 Letter from HDOH to EPA Region 9 dated March 13, 2012, Re: Adequacy of Minor Source Review

March 19, 2012 Technical Supp ort Document Page 5 of 10 HI SIP Submittal Minor NSR Rulesrequirements specified in appendix W of this part (Guidelines on Air Quality Models). (2) Where an air quality model specified in appendix W of this part (Guideline on Air Quality Models) is inappropriate, the model may be modified or another model substituted. Such a modification or substitution of a model may be made on a case-by- case basis or, where appropriate, on a generic basis for a specific State progr am. Written approval of the EPA must be obtained for any modification or substitution. In a ddition, use of a modified or subs tituted model must be subject to notice and opportunity for public comment under procedures set forth in 40 CFR 51.102.

The State of Hawaii submitted the following rule to comply with this requirement.

Rule 11-60.1-12 requires estimates of ambient concentrations to be based on the models, databases, and other requirements specifi ed in 40 CFR part 51, appendix W unless written approval is obtained from the director , in which case the director will provide for public notice and opportunity for public comment. Written approval from EPA is also required if an alternate or substitute model is used.

Upon review, EPA agrees that this rule satis fies the requirements under 40 CFR 51.160(f).

2. 40 CFR 51.161 – Public availability of information

(a) The legally enforceable procedures in 40 CFR 51.160 must also require the State or local agency to provide opportunity for public co mment on information submitted by owners and operators. The public information must include the ag ency’s analysis of the effect of construction or modification on ambient air quality, including the agency’s proposed approval or disapproval.

The State of Hawaii submitted the following rules to comply with this requirement.

Rule 11-60.1-99(a) requires th e director to provide all dr aft covered source permits except for administrative amendments and mi nor modifications for public notice, the opportunity for public comment, and the oppor tunity to request a public hearing.

The term administrative amendment is defined in Rule 11-60.1-1 and only refers to permit changes with negligible or no change in emissions.

The term minor modification is defined in Rule 11-60.1-80 a nd refers to a change in a covered source permit that: does not result in an increase in emissions above the permit limits or results in an incr ease in emissions of less than 5 tons per year of carbon monoxide or less than 2 tons per year of any other criteria pollutant provided there is no pollutant specific limit in the permit and othe rwise meets the criteria for a minor permit modification in 40 CFR 70.7(e)(2).

We asked HDOH to provide further clarifi cation regarding how minor modification determinations are performed to ensure appr opriate public noticing procedures are being followed.

March 19, 2012 Technical Supp ort Document Page 6 of 10 HI SIP Submittal Minor NSR RulesIn summary, all major sources use an actual to potential to emit (PTE) or projected actual test, consistent with 40 CFR 52.21. If the proj ect will result in a major modification, then a 30 day public notice, consistent with 40 CF R 52.21is required. If th e project is not a major modification, then a PTE to PTE test is us ed to determine if project will result in a “minor modification”, as defined in HAR § 11-60.1-81. If the project cannot be classified as a minor mod, then a 30 day public notice period is required.

For sources with a pollutant specific emission limit, to qualify as a minor modification, the project must not result in an emission increase above the permitted emission limit. For sources without a pollutant specific emission limit, to qualify as a minor modification, the project must not result in an emission increase above any of these specified levels, on a PTE to PTE basis:

- 500 lbs/yr of each HAP;

- 25% of each pollutant level defined in paragraph (1) in the definition of significant ;

- 5 tpy of CO; and

- 2 tpy of any regulated air pollutants

For minor sources HDOH has significant flexibility to tailor their minor source permit program and EPA finds the minor source public notice thresholds in the submitted rules to be acceptable. However, at major sour ces the public notice applicability test for projects that do not trigger PSD review shoul d be based on an actual to potential basis to determine if the project will result in an emission increase sufficiently large enough to trigger public notice requirements.

HDOH has committed to use an actual to PTE or projected actual test to determine if a project located at a major source constitutes a significant modification (i.e. is not a minor modification) and is therefor e subject to public notice re quirements. HDOH will use a “50% of each pollutant level defined in paragraph (1) in the definition of significant ” to determine if the project results in a minor modification. In addition, HDOH commits to using this methodology until they can revise their current regulations to clarify the methods to be used for determining if em ission increases at major sources result in significant revisions and ther efore require public notice. 5

Upon review, EPA agrees that these rules and pr ocedures satisfy the requirements under 40 CFR 51.161(a).

5 Letter from HDOH to EPA Region 9, dated March 13, 2012, Re: Public Noticing and Permit Modification Procedures

March 19, 2012 Technical Supp ort Document Page 7 of 10 HI SIP Submittal Minor NSR Rules(b) For the purposes of paragr aph (a) of this se ction, opportunity for public comment shall include, as a minimum, (1) Availability for public inspection in at least one location in the area affected of the information submitted by the owner or operator and of the State or local agency’s analysis of the effect on air quality; (2) A 30-day period for submittal of public comment; and (3) A notice by prominent advertisement in the area affected of the lo cation of the source information and analysis specified in paragraph (b)(1) of this section.

The State of Hawaii submitted the following rule to comply with this requirement

Rule 11-60.1-99 requires a public re view period of at least 30 da ys and availability of the required information to evaluate the depa rtment’s action, including the application (except confidential business information) a nd the department’s anal ysis. Notification of the department’s proposed action must be made in a prominent newspaper in the county affected by the proposed action, to persons on a mailing list developed by the director, and other means, as necessary.

Upon review, EPA agrees that this rule satis fies the requirements under 40 CFR 51.161(b).

(c) Where the 30-day comment period required in paragraph (b) of this section would conflict with existing requirements for act ing on requests for permission to construct or modify, the State may submit for approval a comment period which is consistent with such existing requirements.

The State of Hawaii did not identify any conf licts. Therefore the pr ovisions under 40 CFR 51.161(c) are not applicable.

(d) A copy of the notice required by paragraph (b) of this section must also be sent to the EPA through the appropriate Regional O ffice, and to all other State and local air pollution control agencies having jurisdiction in the region in wh ich such new or modified installation will be located. The notice also must be sent to any ot her agency in the region having responsibility for implementing the procedures re quired under this subpart. For lead, a copy of the notice is required for all point sources. The definition of point source for lead is given in 40 CFR 51.100(k)(2).

Because of its location in the middle of the Paci fic Ocean, there are no affected states in the vicinity of Hawaii, nor are there any ot her CAA permitting authorities in Hawaii.

3. 40 CFR 51.162 – Identification of responsible agency

Each plan must identify the State or local agency which will be responsible for meeting the requirements of this subpart in each area of the St ate. Where such responsibility rests with an agency other than an air pollution control agency , such agency will consult with the appropriate State or local air pollution control agency in carrying out th e provisions of this subpart.

HDOH is the only CAA permitting au thority in the State of Ha waii. HDOH is not proposing to delegate this authority. Therefore this requirement under 40 CFR 51.162 is met.

March 19, 2012 Technical Supp ort Document Page 8 of 10 HI SIP Submittal Minor NSR Rules4. 40 CFR 51.163 – Admini strative procedures

The plan must include the administrative procedures, which will be followed in making the determination specified in paragraph (a) of 40 CFR 51.160.

The State of Hawaii submitted the following rule to comply with this requirement.

Rules 11-60.1-83(b)-(k) describe the procedur es for acting upon and making a decision when an application for a covered source perm it is received. This includes determination of application completeness through approval, denial, or conditional approval.

Upon review, EPA agrees that this rule sa tisfies the requirements under 40 CFR 51.163.

5. 40 CFR 51.164 – Stack height procedures

Such procedures must provide that the degree of emission limitation required of any source for control of any air pollutant must not be affected by so much of any source’s stack height that exceeds good engineering practice or by any other di spersion technique, except as provided in 40 CFR 51.118(b). Such procedures must provide that before a State issues a permit to a source based on a good engineering practice stack hei ght that exceeds the height allowed by 40 CFR 51.100(ii)(1) or (2), the State must notify the public of the availabi lity of the demonstration study and must provide opportunity for public heari ng on it. This section do es not require such procedures to restrict in any manner th e actual stack height of any source.

The State of Hawaii submitted the following rules to comply with this requirement.

Rule 11-60.1-83(a)(5) requires applicants fo r covered source permits to supply stack parameters and stack height limitations deve loped pursuant to Section 123 of the CAA.

Rule 11-60.1-12 requires estimates of ambient concentrations to be based on the guidance in 40 CFR part 51, appendix W, which includ es provisions related to good engineering practice stack height. Deviation from the m odeling procedures in appendix W, which requires written approval from the direct or and EPA, triggers a mandatory public comment period.

Upon review, EPA agrees that these rules and pr ocedures satisfy the requirements under 40 CFR 51.164.

6. Enforceability of SIP Rules

Section 110(a)(2)(A) of the CAA requires SIP rule s to be enforceable. Rule 11-60.1-19 specifies that any person who violates any provision of chapter 60 or any term or provision of a permit shall be subject to the penalties and remedies provided for in the Ha waii Revised Statutes.

Furthermore, the rule revisions do nothing to ch ange Hawaii’s existing authority or capability to continue as the State’s minor NSR permitting authority. March 19, 2012 Technical Supp ort Document Page 9 of 10 HI SIP Submittal Minor NSR RulesMarch 19, 2012 Technical Suppor t Document Page 10 of 10 HI SIP Submittal Minor NSR Rules 7. SIP Relaxation

Section 110(l) of the CAA states that the Admini strator shall not approve any SIP revision that would interfere with any applicable requirement concerning attainment or incremental progress toward attainment of the NAAQS. EPA staff ha s reviewed the rules in the SIP submittal in comparison to the existing 1983 SIP rules and there ar e not changes expected to affect Hawaii’s attainment status.

Staff Recommendation

Based on the Regulatory Analysis above, EPA staff recommends approval of HDOH’s December 14, 2011 SIP submittal. These rules will replace the cited existing SIP rules in their entirety.

References

1. Submitted Hawaii Administrative Rules Title 11, Chapter 60.1 Air Pollution Control, revised on November 14, 2003 and submitted on December 14, 2011. 2. Applicable SIP Rules revised on Novemb er 29, 1982 and approved into the SIP on August 18, 1983, 48 FR 37402. 3. 40 CFR 51, appendix I – Review of New Sources and Modifications 4. Letter from HDOH to EPA Region 9 date d March 13, 2012, Re: Adequacy of Minor Source Review 5. Letter from HDOH to EPA Region 9, date d March 13, 2012, Re: Public Noticing and Permit Modification Procedures