UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105 22 May 1996 Ira Domsky Arizona Department

of Environmental Quality 3033 North Central Avenue Phoenix, AZ 85012 Dear Ira: This letter
is in response

to your request for guidance from EPA on acceptable levels of a minor source permitting program. The lack of an adequate minor source permitting program remains an outstanding issue related to the Arizona Department

of Environmental Quality’s (ADEQ) New Source Review (NSR) regulations submitted

as part of the Arizona State Implementation Plan (SIP). ADEQ has committed

to correcting other deficiencies identified
by EPA in the State’s NSR and Title V programs

in aletter dated March 12, 1996. EPA now believes that the changes identified

in the committal letter will satisfy all our concerns with ADEQ’s NSR rules, except for the State’s minor source trigger levels for NSR permitting. Below wehave attached

adetailed discussion
of the minor source NSR permitting requirements under the Clean Air Act and implementing regulations.

It is clear that both of our agencies would like for EPA to approve the State’s NSR rules as part of the applicable SIP promptly and efficiently. You have indicated that the development

of aminor source permitting program acceptable

to EPA may take some time, and you encouraged EPA to begin the process of approving the major source provisions into the applicable SIP without delay. Because minor source permitting provisions represent
an integral aspect of an approvable .NSR program, weare reluctant
to delink the minor and major source provisions into two separate regulatory actions.
In the alternative,
we explored the possibility that our agencies engage in parallel rulemaking, contingent upon receipt of a general commitment from the State to develop

a minor source permitting program (or equivalent) consistent with the enclosed guidance. This framework would provide ADEQ additional time to develop an acceptable program, while letting EPA begin formal rulemaking

to approve ADEQ’s NSR provisions for inclusion
in the applicable SIP. ADEQ’s minor source program would need to be in effect by the time EPA took final action onthe NSR SIP submittal. If you have any questions
or would like to discuss these matters
in further detail, please contact meat (415) 744-1254,

orthe following members
of my staff: Jessica Gaylord

at (415) 744-1290,

orSteve Ringer
at (415) 744-1260.

Sincerely, Chief, New Source Section Enclosures cc:
Jo Crumbaker, Mancopa County ESD Richard Grimaldi, Pima County DEQ Donald Gabrielson, Pinal County AQCDRegion

9 Discussion Paper Minor Source Permitting Requirements Section R18-2-302(B)

of ADEQ’s submitted rules requires preconstruction permits only for thosesourceswith potential emissions that areabove the significance levels.
In addition, sections R18-2-317(A)(4)and R18-2-319(A)(7) exemptmost non-major modifications

atboth major and minor sourcesfrom the requirement

toobtain

a preconstruction permit. EPA has indicated that ADEQ should require preconstructionreview arid permitting for somesubset of sourcesand modifications with potential emissions less than the significance levels. ADEQ indicated that specific guidance from EPA regarding minor NSR thresholds and requirements would be necessarybefore the State could make anyrevisions

toits rules. EPAis providing thefollowing summary
of statutoryand regulatory requirements,

aswell as preamble language and related caselawtomeetthat request.Asanalternative, ADEQ could develop

asource registration programfor smaller facilitiesthat would achieve the sameenvironmental benefit
asatraditional permitting program,and also meetthe specified requirements. Section

1 l0(a)(2)(C)

ofthe Clean Air Act requires that each SIP must“include

a program
to providefor... regulation
ofthe modification and construction

of any stationary sourcewithin the areascoverhd bytheplan...” [emphasis added].
In40 CFR §51.160(e) EPA provides for Statesto exempt certain sourcesfromregulation based onthe typeand size ofthe facility.
Inthis section, however, EPA requires that “[t]he planmustdiscuss the basis for determining which facilities will be subject
toreview.”

In addition, minor sourceprogramshave been the focus of much attention, especially

in termsofthe typeand amountof public noticerequired. EPA’s Part70 Supplemental Proposal (60FR 45530, August 31, 1995) provides moredetailed guidance onwhich modifications should be subject
toreview. We believe that this guidance may reasonably
beapplied
tonewsources
aswell. At 60FR 45548, EPA statesthat “States may exemptfrom minor NSR thosechanges that arenot environmentally significant, consistent with thede minimis exemption criteria setforth inAlabama Power’.” The significance levels may represent
an acceptable threshold for applying the requirements

of parts
CandDof Title

Iofthe Act (e.g., best available control technology and air quality impact analysis). EPA,however, does notfeel that the significance levels represent
an acceptable threshold for applying the basic preconstruction requirements that sources undergo someform of public review (s40 CFR part 51.161) andcomply enforceable emission limitations and control measures (sCAA

§1 10(a)(2)(A)). Under thede minimisstandard, only those activities which would yield trivial benefits from regulation should be exemptfrom thesebasic requirements. The approach taken in the August 1994 SIP submittals for Maricopa, Pinal, and PimaCounties (“the Counties”) represents
an acceptable application
of this de minimis standard. We thereforerecommend that ADEQ adopt

asimilar approach. For example,

it would be acceptable for ADEQ
to exemptthose activities listed as “Insignificant Activities”

atRi 8-2-101.54.

In general, however, ADEQ may exemptany activity from the basic requirements, upon making an adequate showing that regulation
of such activitieswould yield trivial ornobenefits. EPAis moreoverconcerned that state requirements limit the Counties from adopting standards that aremore stringent than ADEQ’s.

In describing the determination

ofthede minimis level, the Court stated that [d]etermination

of when mattersare truly de minimis naturally wifi turnonthe assessment
of particular Inthe Alabama Power case,the Court stated: Unless Congress hasbeen extraordinarily rigid, there is likely

abasis for an implication
ofde minimis authority

to provide exemption when the burdens of regulation yield

again of trivialornovalue. That implied authority

isnotavailable forasituation where the regulatory function does provide benefits,
inthe senseof furthering the regulatory objectives, but the agencyconcludes that the acknowledged benefits areexceeded bythe costs.circumstances,
and the agency will bear the burden of making the required showing.” Thus, established

de minimis levels for sources under the state’s jurisdiction may not represent adequate
de minimis levels in the counties either for sources locating
in nonattainment areas or as a result of other special air quality considerations. EPA therefore recommends that the county agencies be able to make their own determinations of de minimis. These determinations may well result in the adoption of thresholds that are lower than ADEQ’s. A minor source program must include,

at a minimum, the requirement
for non de minimis minor sources and modifications

to meet preconstruction requirements and undergo public review. The preconstruction requirements should include,

at a minimum, the following elements: (1) enforceable emissions limits, (2) monitoring, recordkeeping,
and reporting requirements,
and (3) inspection and enforcement provisions. The public review process should include the requirements outlined

at 40 CFR §51.161. Once acceptable
de miniuins thresholds have been established, EPA goes on to provide
in the Part 70 Supplemental Proposal additional flexibility for minor source public notice requirements. Specifically,

at 60 FR 45548, EPA stated: Since States may exempt de minimis changes from minor NSR altogether,

it follows that they may provide

a partial or full exemption from the full public process requirements

of 51.160(e), consistent with the environmental significance

of the change. At 60 FR 44549, EPA states that permitting agencies should apply “30 day public notice and comment requirements
for any... minor NSR action (including establishment

of a PAL) that would allow

a Part 70 source to net out of major NSR.” EPA goes on to state that for minor permitting actions which do not shield

a source from major NSR, “the permitting authority may match the public participation process
to the environmental significance

of the project.” EPA envisions that these more limited forms of public participation may take the form of a shorter public comment period (e.g., 15 days) or batch processing (e.g., notice all minor NSR actions for each month
at one time), and is willing
to consider other forms of limited public notice for minor sources.