NSCAPCD: PSD and SIP Amendments 2014 Staff Report page 1 of 9 Northern Sonoma County
Air Pollution Control District

Amendments to Prevention of Significant Deterioration Program
And Amendments to State Implementation Plan

Executive Summary

Staff of the Northern Sonoma County Air Pollution Control District (District) is proposing a series of actions in response to findings and requests from the U.S. Environmental Protection Agency (EPA) . These actions will amend the District’s rules that imp lement the federal program for review of significant new and modified sources of air pollution known as the Prevention of Significant Deterioration Program, or PSD. The proposed changes will incorporate specific definitions, requirements, and procedures c onsistent with EPA’s most recent standards for this program, and will allow EPA to approve the program as part of the State Implementation Plan (SIP), continuing these rules as federally enforceable. Failure to approve changes to the District’s PSD progra m will result in formal disapproval of the program, the imposition of permitting by EPA, and potential sanctions. To make its PSD program consistent with current federal requirements, the District is proposing to change the following rules:

a. Regulation 1, Rule 130

– Definitions
b. Regulation 1, Rule 200

– Permitting Requirements

c. Regulation 1, Rule 220

– New Source Review
d. Regulation 1, Rule 230

– Action on Applications.

District Staff is also proposing to amend the SIP by withdraw ing certain District rules from the

SIP (or from submittal for incorporation into the SIP , as applicable to the current status of the specific rule ). These rules no longer meet EPA’s criteria for inclusion in the SIP and they do not need to be federally enforceable to achieve their purpose, but will remain in effect as local rules enforceable by the District. The District is proposing to withdraw the following rules from the

SIP at EPA’s request.

a. Regulation 1, Rule 160

– Ambient Air Quality Standards
b. Regulation 1, Rule 455

– Geoth ermal Emission Standards

c. Regulation 1, Rule 494

– Rule to Limit Potential to Emit
d. Regulation 1, Rule 500

– Enforcement

In addition to withdrawing Rule 160 (Ambient Air Quality Standards) from the SIP, District Staff is proposing to replace the outdated table with references to the federal and state ambient
standards. A non

- regulatory informational table will be provided f or informational purposes.NSCAPCD: PSD and SIP Amendments 2014 Staff Report page 2 of 9

District Staff does not anticipate any environmental or cost impacts associated with these changes. The PSD program changes codify existing practice, and the amendments to the SIP only change whether the rules are enforceable b y EPA. Because the rules will remain in effect and enforceable by the District, Staff anticipates no environmental

, cost or socio

- economic impacts will result from the proposed action.

In preparing this proposal, District staff held a workshop and met w ith affected sources

, and staff of the California Air Resources Board (ARB) and EPA Region IX. Notice of the proposed actions was published in the Santa Rosa Press Democrat and posted on the District’s website 30 days in advance of the hearing.

Backgrou nd

The State Implementation Plan, or SIP, is a compendium of air pollution regulations that apply throughout the state. The SIP contains rules that address basic regulatory infrastructure, attainment of the National Ambient Air Quality Standards, and tra nsport of air pollution across state and/or national boundaries. In order to be included in the SIP

, rules must meet certain legal and regulatory standards, and once incorporated they are federally enforceable.

The District has existing basic regulatory infrastructure rules that are approved in the SIP . Some
of these rule s implement the federal PSD program

. Under the PSD program new sources (and modifications to existing sourc es) that are “significant” as defined, are evaluated to ensure that they emplo y the best available control technology and will not degrade ambient air quality or have adverse impacts on protected natural areas. EPA revises its standards for the PSD program periodically and the District is required to incorporate the changes or lose federal approval of the program.

In 2002, EPA approved a series of amendments referred to as “New Source Review (NSR) Reform” and these amendments affected the PSD program. The NSR Reform amendments relaxed certain requirements with the expectation that they would result in more voluntary emission reduction projects on the part of industrial sources that would otherwise have been subject to review under the PSD program. In response, the Ca lifornia Legislature enacted the “Protect California Act of 2003” through Senate Bill 288, authored by Byron Sher. This Act prohibits local air districts from amend ing any rules in the SIP that implement review of new and modified sources in such a way as to make them less stringent. Because of this legislative prohibition, the District has not implemented NSR Reform in its PSD program.

In 2010, the District’s Board approved amendments to certain definitions in Regulation 1, Rule 130 (Definitions) that incorporated changes in the federal PSD program to address fine particle pollution. Since that time EPA has made revisions to its PSD program approval requirements that the District is required to address. Earlier this year, EPA notified District Staff t hat these program changes needed to be submitted this year, as well as changes implementing NSR Reform. After a series of negotiations, in early October EPA agreed that the District could submit a request for equivalency for the NSR Reform provisions (i.e ., provide to EPA aNSCAPCD: PSD and SIP Amendments 2014 Staff Report page 3 of 9

demonstration that the provisions of the District’s PSD program that would otherwise have been changed by NSR Reform are more stringent and will result in equivalent or better protection of air quality, public heal th, and protected natu ral areas) , and District Staff prepared the submittal package incorporating all of the other required changes but excluding NSR
Reform.

EPA will take action on the rules that implement requirements for new and modified sources
for all of the air districts in single federal rulemaking to approve and/or disapprove each district’s program. That rulemaking has proceeded on a parallel track for all districts. On October 23, 2014, EPA published a notice of intent to take action. In that notice (Federal Registe r Notice 79 FR 63350 ) EPA proposed a partial disapproval of the District’s PSD program for its failure to incorporate the most recent changes, as well as its failure to implement NSR
Reform. Once filed in the Federal Register, t here is a 30 day public comm ent period on the proposed action, after which time EPA will issue a final disapproval unless the District submits rule amendments that address the deficiencies. EPA understands that District Staff is proposing the needed changes for Board approval, and i f the Board approves the changes before EPA publishes a final disapproval, EPA will reflect the Board’s approval in its final action.

EPA’s criteria for approving rules into the SIP have changed over time. Several of the District’s rules that were previo us ly submitted for approval no longer meet the criteria for approvability. In addition, EPA has a backlog of rules submitted by air districts for inclusion in the SIP; some of the submittals have been pending for ten or twenty years. As part of a nationa l effort to reduce the backlog and remove rules that no longer meet SIP criteria, EPA approached the District with a request that the District withdraw certain submittals. Some of these rules are basic regulatory infrastructure, and others were incorporat ed to support attainment.

District Staff reviewed EPA’s request with the District’s C ounsel and determined that the specified rules and/or submittals could be withdrawn without impacting the stringency, effectiveness, or underlying authority of the District’s regulatory program. Rules that are withdrawn from the SIP, or from submittal to the SIP, will remain in effect as local regulations

e nforceable by the District , but they will no longer be enforceable by EPA.

Explanation of Proposed Action

PSD Program Amendments : District Staff is proposing changes to four District rules that implement the PSD program. These changes will incorporate in the rules definitions, review

processes and administrative procedures that Staff was already implementing as a matter of practice. The changes will not result in new requirements for permit applicants.

In al l four rules that embody the District’s PSD program, District Staff is proposing to remove and/or update dates associated with references to the federal Clean Air Act (CAA) and the specific federal regulation that sets forth the requirements for PSD progra ms: Chapter 40 of the Code of Federal Regulations Part 52.21 (40 CFR 52.21). EPA found that referencing the earlier dates caused the rules to be limited in scope based on the content of earlier versions of theNSCAPCD: PSD and SIP Amendments 2014 Staff Report page 4 of 9

CAA and the regulation. In striking these da tes, Staff is proposing to implement by reference the definitions and general context of the current versions of the CAA and 40 CFR 52.21 , except where the District’s rules specify other definitions or other provisions. Staff is proposing to expressly ex clude those definitions , provisions and context related to NSR Reform. District Staff will provide to EPA a demonstration that the provisions of its PSD program that would otherwise have been changed by NSR Reform are more stringent and will result in equ ivalent or better protection of air quality, public health, and protected natural areas. Other minor corrections are proposed in the four rules.

In addition, the following changes are proposed to each individual rule:

 Changes Proposed to Regulation 1, Rule 130

– Definitions . In addition to updating
referenc es to the CAA and 40 CFR 52.21, District Staff is proposing to exclude specific definitions in 40 CFR 52.21 related to NSR Reform, and add a “General Provisions” section, as requested by EPA, which provides direction for the reading of certain phrases used in the underlying federal regulation and which are incorporated by reference. These include: directions reading for “Administrator” and the phrase “paragraph (q) of this section.” Staff proposes to add definitions for “Actual Emissions” (a1) , “Allowable Emissions” (a6)

, “Area Classifications” (a6) , “Baseline Actual Emissions” (b1), “Major Modification” (m1), “Major Stationary Source” (m2) and “Subject to Regulation” (s10) with language requested by EPA , as well as “Air Pollution Control Officer” (a5) using the definition provided in the California Health and Safety Code . Staff is also proposing to
amend the definitions of “Baseline C oncentration” ( now b 2 ) and “Prevention of Significant Deterioration (PSD) Increment” (p7), with language requested by EPA, and to revise the term being defined in (n1) from “Net Increase in Emissions” to “Net Emissions Increase” as requested by EPA, and in that definition to specify that the calculation methods referenced in 40 CFR 52.21 are the methods provided before NSR Reform was enacted. Other minor corrections are also proposed.

 Changes proposed to Regulation 1, Rule 200

– Permit Requirements . In ad dition to updating reference dates , District Staff is proposing to clarify certain exemptions and add Section (e) Procedures. Clarifications are proposed for 200(d)(5)(a) to more explicitly reflect statutory exemptions for agricultural sources of air poll ution as interpreted by the Attorney General of California. Staff is also proposing language for the exemptions in (d)(5)(c) and (d)(8) that limits the scope of discretion afforded the to
the Air Pollution Control Officer in a manner consistent with feder al standards for approvability. Th e new section (e) specifies the information an applicant for a permit must provide to the District in order for the District to deem the application complete, and it requires the District to notify the applicant, in writi ng, of any information needed to complete the application, within 30 days of receipt of the application. These are procedures District Staff has followed for the last 20 years, however EPA is requiring them to be explicitly expressed in the District’s rul es. Other minor corrections are proposed.

 Changes proposed to Regulation 1, Rule 220

– New Source Review . In addition to updating reference dates and specifying that the calculation methods referenced in 40NSCAPCD: PSD and SIP Amendments 2014 Staff Report page 5 of 9

CFR 52.21 are the methods provided before NSR R eform was enacted, District Staff is proposing to:

o Amend Section (b) New Source Review Procedure by replacing terms in (b)(1) and (b)(2) with terms preferred by EPA that proscribe the same requirements.

o Amend Subsection (b)(3) separating the two elements r equired in it into two separate subsections, an amended (b)(3) and a new (b)(4). As proposed, the amended Subsection (b)(3) would require only the determination that approved stack height and good engineering practice is employed. The preparation of an

a ir quality analysis is proposed as the new Subsection (b)(4), with five specific criteria as required by EPA. These criteria have been part of the District’s PSD program implementation for the last twenty years but EPA is now requiring they be explicitly expressed in the District’s rule. The criteria are: (i) pre

- and post

project air monitoring, which is accomplished for geothermal power plant projects by participation in the Geysers Air Monitoring Program (or GAMP); (ii) assessment of the project emiss ions on allowable PSD increments; (iii) analysis of the increase above baseline concentration; (iv) analysis of any impacts on Class I Areas (for projects in Northern Sonoma, this is Point Reyes National Seashore); and assessment of any impacts on visibili ty, soils, vegetation, and impacts due to related commercial, residential, industrial, or other growth (in essence, the review done under the California Environmental Quality Act). Staff is also proposing to state, as part of the new Section (b)(4), that the APCO will ensure that the project will not result in an increase that would exceed any ambient air quality standard or allowable PSD Increment. Again, these criteria and requirements are not new; they are simply being explicitly included in the

Distri ct’s rule.

o Amend Subsections (b)(7) and (b)(9), as renumbered, to clarify the public participation procedures regarding who the District notifies of its intent to take action on a PSD permit, how the notice is given, and how comments may be provided. Thes e changes codify existing practice.

o Other minor corrections are proposed.

 Changes Proposed to Regulation 1, Rule 230

– Action on Applications . In addition to
reference dates, with the exception of NSR Reform provisions, and clarifying that the

assessment of air quality deterioration is cumulative in nature, District Staff is proposing to add Section (e) Performance Standards in Effect to specify that issuance of an Authority to Construct does not relieve the permit holder from the obligation to comply
with all applicable requirements, whether explicitly stated in the permit or not. This language is already incorporated into permits upon issuance, but EPA now requires it be explicitly stated in the District’s rule. Other minor corrections are also proposed

.

SIP Amendments : At the request of EPA, the District is proposing to withdraw the following rules from the SIP, or from submittal into the SIP, as applicable. The withdrawn rules will remain enforceable as District rules but will no longer be enforcea ble by EPA:NSCAPCD: PSD and SIP Amendments 2014 Staff Report page 6 of 9

 Regulation 1, Rule 160

– Ambient Air Quality Standards . This rule provides a summary of ambient air quality standards as set by EPA and the California Air Resources Board (ARB). It is out of date, does not meet current EPA criteria for inclusion in the SIP, and EPA has requested it be withdrawn. District Staff is proposing to withdraw the submittal of Rule 160 from the SIP. Staff is proposing to retain Rule 160 as a locally enforceable rule and to replace the table with references to t he standards themselves and maintain a separate informational (but non

- regulatory) table of ambient air quality standards.

 Regulation 1, Rule 455

– Geothermal Emission Standards . This rule limits emissions
from geothermal power production . It does not me et current EPA criteria for inclusion in the SIP and EPA has requested it be withdrawn. District Staff is proposing to withdraw the submittal of Rule 455 from the SIP and retain it as a locally enforceable
rule.

 Regulation 1, Rule 494

– Rule to Limit Potential to Emit . The rule was established to allow the District to exclude sources from the federal Operating Permits program under Title V of the CAA based on their actual operating emissions rather than their maximum potential emissions. EPA has sinc e ruled that actual emissions may be used without an underlying rule. F uture federal rulings could change the status of actual vs. potential emissions in calculating applicability , however

. In addition, some of the definitions in
Rule 494 are referenced in other District rules, and the status of sources under Rule 494 affects certain fees. For these reasons, District Staff is proposing to withdraw submittal of Rule 494 from the SIP and retain it as a locally enforceable rule.

 Regulation 1, Rule 500

– Enf orcement . This rule specifies the enforcement authority of
the District. It does not meet current EPA criteria for inclusion in the SIP and EPA has requested it be withdrawn. District Staff is proposing to withdraw submittal of Rule 500
from the SIP and retain it as a locally enforceable rule.

Impacts of Proposed Actions

Impacts of Amendments to the PSD Program : For the most part, the proposed changes clarify or codify existing practice by providing more explicit reference to, or incorporation of the underlying federal requirements. These changes are needed to meet current EPA standards for the content of an approvable program. District Staff is explicitly excluding from the proposed program amendments all elements of NSR Reform, consistent wi th the prohibitions of SB 288.

Because there will b e no change in the implementation of the District’s PSD program, staff does not anticipate any change in emissions from affected sources, in ambient levels of any regulated pollutants, nor in any associated hea lth impacts. There will be no change in the compliance obligations of affected sources, therefore no costs are anticipated as a result of these amendments, and cost effectiveness was not calculated. Because there will be no change compliance obligations or costs, nor in obligations of any source to apply for permits, or their ability to obtain such permits, District staff does not anticipate any impacts on jobs, or other

socio

- economic impacts.NSCAPCD: PSD and SIP Amendments 2014 Staff Report page 7 of 9

These actions are undertaken to comp ly with federal requirem ents. As such, t hey are consistent with federal laws and regulations . These actions also specifically consider and address the prohibitions of Section 42500 of the California Health and Safety Code, and

minimize regulatory duplication as required under H SC Section 40727 (a)

.

Impacts of Amendments to the SIP : With the exception of Rule 160 (Ambient Air Quality Standards), all of the rules District Staff is proposing to withdraw will remain enforceable as local rules unchanged from their current form. Wi thdrawing rules from the SIP removes their federal enforceability; however, they are being withdrawn because EPA does not believe they meet current criteria for federal enforceability, so there is no change in their enforceability as a practical matter.

Rule 160 (Ambient Air Quality Standards) currently contains only an outdated table of federal and state ambient standards. In addition to withdrawing the submittal of this rule, District Staff is proposing to replace the outdated table with references to the federal and state standards themselves, and to provide a non

- regulatory informational table of the federal and state standards. The federal and state ambient standards remain in effect whether they are properly
reflected in the District’s rules or not , but replacing the outdated table with regulatory references will minimize confusion. There will be no change in the actual ambient air quality
standards in effect.

Because there will be no change in the implementation of the rules as a result of their withdrawal from the SIP, staff does not anticipate any change in emissions from affected sources, in ambient levels of any regulated pollutants, nor in any associated health impacts. There will be no change in the compliance obligations of affected source s, therefore no costs are anticipated as a result of these amendments, and cost effectiveness was not calculated. Because there will be no change compliance obligations or costs, nor in obligations of any source to apply for permits, or their ability to o btain such permits, District staff does not anticipate any impacts on jobs, or other socio

- economic impacts.

These actions are undertaken to comply with federal requirements. As such, they are consistent with federal laws and regulations. These actions also minimize regulatory duplication as required under HSC Section 40727 (a)

.

Alternatives Analysis

Alternative #1

– Adopting the Federal Program Without Exclusions : The District could adopt the entire federal PSD program, either by reference or as a se parate, complete rule. This would violate the requirements of HSC Section 42500, et seq. In order to submit the adopted program into the SIP, the District must first provide it to ARB for review. As required by HSC Section 42500, ARB would not approve t he submittal and would withhold it from EPA. As a result, EPA would issue a final disapproval of the District’s PSD program (see Consequences below).NSCAPCD: PSD and SIP Amendments 2014 Staff Report page 8 of 9

Alternative #2

– No Amendments to the Districts PSD Program : If the District fails to submit the amendments to its PSD program that fully implement all federal requirements (or a more stringent set of requirements), EPA will issue a final disapproval of the District’s PSD program (see Consequences below).

Consequen ces of PSD Program Disapproval: If a final disapproval is issued, EPA will adopt its own Federal Implementation Plan (FIP) that will have the effect of requiring permits from EPA in addition to permits from the District for affect sources (namely, geothermal power plants and any other large industrial operations). Sanctions may also ultimately be applied although the District is given additional time to remediate the deficiencies and receive program approval.

Alternative #3

– Rescinding and Withdr awing Rules from the SIP : Instead of retaining the local enforceability of rules withdrawn from the SIP, the District could rescind them completely.

 Rescinding Rule 160 (Ambient Air Quality Standards) would not have a material effect
on the ambient stan dards in place, however it would create unnecessary inconsistencies between the District’s regulations and the regulations of the other air districts in the North Coast Air Basin; HSC 39802 (a) (2) directs districts in an air basin to maintain

consistent r ules to the extent possible.

 Rescinding Rule 455 (Geothermal Emission Standards) would remove an important element of the District’s program regulating emissions from geothermal power production and would potentially have a significant adverse impact on the environment.

 Rescinding Rule 494 (Rule to Limit Potential to Emit) would not result in any increase in emissions or change applicability of the federal Operating Permits Program. The Rule is referenced in other District rules, however, and certain fee s are based on classifications in the Rule. Rescinding it would negatively impact the District’s overall program.

 Rescinding Rule 500 (Enforcement) would create unnecessary inconsistencies between the District’s regulations and regulations of other distri cts in the North Coast Air Basin.

Alternative #4

– No Withdrawal of Rules from the SIP : The District could leave the rules in the SIP, or as active submittals to the SIP as applicable. Because EPA does not believe these rules
meet the current criteria f or incorporation into the SIP, EPA would move to disapprove them. Formal disapproval is a more complicated regulatory process that would result in the same status for those rules. By acting to withdraw the rules voluntarily, the District is saving

resour ces for both itself and EPA and avoiding any confusion or negative implications associated with a formal disapproval.

Compliance with the California Environmental Quality Act

These are regulatory actions that are largely procedural and have no anticipated impacts on the environment. The project incorporates various rulemaking actions by the District to implement federal requirements as required by EPA. Therefore, the project is ministerial and exempt from CEQA pursuant to Public Resources Code Section 21080 (b)(1) and CEQA Guidelines Section

15268

– Ministerial Projects. The project is also a regulatory action that protects the environment by ensuring consistency of the Distr ict’s permitting program with theNSCAPCD: PSD and SIP Amendments 2014 Staff Report page 9 of 9

requirements and standards set forth by EPA, enabling certain District rules that implement review of significant new and modified sources of air pollution to be part of the State Implementation Plan. In addition, this pro ject sustains the District’s ability to protect the environment in that the rules EPA requested to be removed from the State Implementation Plan maintain local enforceability; no regulations are to be relaxed through this action. Because this project invol ves the maintenance of consistency and enforceability of various rules put in place in order to protect the environment, this project is categorically exempt from CEQA pursuant to CEQA Guidelines Section 15308 as a regulatory action taken to protect the

en vironment. A Notice of Exemption will be filed upon approval by the Board of Directors of the Northern Sonoma County Air Pollution Control District.

Public Process

Staff held a workshop on the proposed actions on Thursday, October 2, 2014, at 2 p.m. at the Healdsburg City Hall. Notice of the intended actions was posted on the District’s website and published in the Santa Rosa Press Democrat on Wednes day, Octo ber 15 , 2014.

Conclusion and Staff Recommendation

The proposed actions are being undertaken at the request of EPA and in order to comply with federal requirements. They are necessary to maintain full approval of the District’s program. The proposed actions are consistent with state and federal laws and regulations. They will not result in any ad verse impacts on emissions, air quality, public health, compliance costs or cost

effectiveness, or have any other socio

- economic impacts.

Staff recommends the District’s Board take the following actions:

(1) Amend the following District rules to meet new requirements of EPA for approval as part of the State Implementation Plan (SIP):

a. Regulation 1, Rule 130

– Definitions
b. Regulation 1, Rule 200

– Permitting Requirements

c. Regulation 1, Rule 220

– New Source Review
d. Regulation 1, Rule 230

– Action on Application s; (2) Direct the Air Pollution Control Officer to submit the amended rules for inclusion in the SIP and request that EPA find the rules to be equivalent to, or more stringent than, the provisions of New Source Review Reform of 2002; (3) Direct the Air Pollution C ontrol Officer to withdraw the following rules from the SIP:

a. Regulation 1, Rule 160

– Ambient Air Quality Standards
b. Regulation 1, Rule 455

– Geothermal Emission Standards

c. Regulation 1, Rule 494

– Rule to Limit Potential to Emit
d. Regulation 1, Rule 500

– Enf orcement; (4) Direct the Air Pollution Control Officer to replace the table in Regulation 1, Rule 160 (Ambient Air Quality Standards) with regulatory references; andNSCAPCD: PSD and SIP Amendments 2014 Staff Report page 10 of 9

(5) Direct the Air Pollution Control Officer to file a notice of categorical exemption pursuant

to the California Environmental Quality Act.