United States Environmental Protection Agency, Regi on IX

Air Division

Technical Support Document

for

the EPA's Notice of Proposed Rulemaking

for the

California State Implementation Plan

Mendocino County Air Pollution Control District

Rule 1-130 – Definitions Rule 1-200 – Permit Requirements

Rule 1-220 – New Source Review Standards Rule 1-230 – Action on Applications

Laura Yannayon

Reviewed by Gerardo Rios

December 6, 2016

## Table of Contents

1. Introduction ......................................

................................................... ................................. 1

2. Submittal Information .............................

................................................... .......................... 2

2.1. Submittal Agency ..................................

................................................... ........................ 2

2.2. Air Quality In Mendocino County ...................

................................................... ............. 2

2.3. Description of SIP Revision Submittal .............

................................................... ............ 2

2.4. Completeness Determination ........................

................................................... ................ 2

3. Rule Summaries ....................................

................................................... ............................ 3

3.1. Current SIP Approved Rules ........................

................................................... ................. 3

3.2. Submitted Rules for SIP Approval ..................

................................................... .............. 3

3.3. Rule Revisions.....................................

................................................... .......................... 4

4. Permit Program Evaluations ........................

................................................... ..................... 5

4.1. General Permit Requirements for Minor and Major NSR ............................................... 6

4.2. Permit Requirements for Major Sources in Attainment Areas ...................................... 10

4.3. New Source Review Reforms .........................

................................................... ............ 19

5. Clean Air Act Sections 110(l) and 193 .............

................................................... .............. 23

5.1. Section 110(l) ....................................

................................................... .......................... 23

5.2. Section 193 .......................................

................................................... ........................... 24

6. EPA’s Proposed Action .............................

................................................... ..................... 24

6.1. Rule Deficiencies .................................

................................................... ....................... 24

6.2. Recommendations for Rule Improvement ..............

................................................... .... 24

7. Notes .............................................

................................................... .................................. 251 

## 1. I NTRODUCTION

This technical support document (TSD) focuses on th e preconstruction permitting requirements for stationary sources, also called New Source Revi ew or “NSR”, in title I of the Clean Air Act (CAA or the Act) and the Environmental Protection A gency’s (EPA) implementing regulations addressing the State Implementation Plan (SIP) requ irements for state NSR programs at title 40 of the Code of Federal Regulations (CFR) part 51, s ubpart I. This TSD will address the requirements for two of the three main components o f the federal NSR program – Prevention of Significant Deterioration (PSD) and “minor source” or “general” NSR. It discusses the EPA’s findings on whether the rules and regulations relat ed to NSR that have been submitted by the Mendocino County Air Quality Management District fo r approval into the California SIP meet federal NSR requirements. The TSD also discusses th e EPA’s findings under Sections 110(l) and

193 of the Act relevant to this action.

The main components of the federal PSD and minor NS R program are briefly summarized as

follows:

PSD Program Part C of title I of the Act, and the implementing regulations at 40 CFR 51.166, contain the requirements for states to establish preconstructio n permitting programs for the prevention of significant deterioration of air quality (PSD) in a reas designated as attainment or unclassifiable for the national ambient air quality standards (NAA QS). The PSD program requirements under part C apply to major stationary sources and major modifications, as those terms are defined in 40 CFR 51.166, at stationary sources located within attainment or unclassifiable areas. The PSD requirements apply to all regulated NSR pollutants as defined in 40 CFR 51.166, except those pollutants for which an area has been designated as nonattainment.

Minor NSR or General NSR Program Requirements Section 110(a)(2)(C) of the Act requires that each SIP include a program to provide for “regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that nat ional ambient air quality standards are achieved, including a permit program as required in parts C and D” of title I of the Act. Thus, in addition to the permit programs required in parts C and D of title I of the Act, which apply to new major stationary sources and major modification s, each SIP must include a program regulating stationary sources with emissions below the major source thresholds. These general preconstruction requirements are commonly referred to as the “minor” or “general” NSR program requirements and are implemented through th e EPA’s regulations at 40 CFR 51.160 through 51.164. These more general program requirem ents are the only federal requirements that apply to these “minor” stationary sources and non-m ajor modifications. These requirements also apply to major sources and major modifications, in addition to the more detailed requirements in parts C and D of the Act and their implementing reg ulations at 40 CFR 51.166 and 51.165, respectively.2 

## 2. S UBMITTAL 

## I NFORMATION



### 2.1. S UBMITTAL 

### A GENCY

The Mendocino County Air Quality Management Distric t (“MCAQMD” or “the District”) is the air pollution control agency for Mendocino County.



### 2.2. A IR 

### Q UALITY 

### I N 

### M ENDOCINO 

### C OUNTY

Mendocino County is designated attainment or unclas sifiable for all NAAQS. (See 40 CFR 81.305) Therefore, the PSD permit program requireme nts apply to new major stationary sources and major modifications at existing major stationar y sources that emit these pollutants, as well as certain other pollutants, which are also regulated under the CAA. (See 40 CFR 51.166(b)(23)(i))



### 2.3. D ESCRIPTION OF 

### SIP R EVISION 

### S UBMITTAL

MCAQMD adopted revised permit program related rules to comply with the new federal PSD requirements applicable to PM 2.5 and the general NSR program requirements. These ru les were amended on the dates listed below in Table 1, and s ubmitted to the EPA via the California Air Resources Board (CARB) on the submittal dates indic ated in the table. CARB is the governor’s designee for submitting official revisions of the C alifornia State Implementation Plan (SIP) to

the EPA.

Table 1 –Submitted Rules

Rule # Rule Title Amended Submitted

1-130 Definitions 9/20/16 11/15/16 1-200 Permit Requirements 9/20/16 11/15/16

1-220 New Source Review Standards (Including PSD Evaluations) 9/20/16 11/15/16

1-230 Action on Applications 9/20/16 11/15/16



### 2.4. C OMPLETENESS 

### D ETERMINATION

With respect to procedures, CAA sections 110(a) and 110(l) require that revisions to a SIP be adopted by the state after reasonable notice and pu blic hearing. The EPA has promulgated specific procedural requirements for SIP revisions in 40 CFR part 51, Subpart F. These requirements include publication of notices by prom inent advertisement in the relevant geographic area, a public hearing on the proposed r evisions, a public comment period of at least 30 days, and an opportunity for a public hearing. B ased on our review of the public process documentation included in the November 15, 2016 sub mittal, we find that MCAQMD has provided sufficient evidence of public notice and o pportunity for comment and public hearings prior to adoption and submittal of these rules to t he EPA. On December 5, 2016, we determined that CARB’s SIP submittal package conformed to the completeness criteria in 40 CFR part 51, appendix V, and was determined to be complete.3 

## 3. R ULE 

## S UMMARIES



### 3.1. C URRENT 

### SIP A PPROVED 

### R ULES

The components of MCAQMD’s current SIP-approved PSD and general NSR program is contained in the rules listed in Table 2, which wer e SIP-approved on the dates listed. These rules contain both general and specific permit program re quirements.

Table 2 –SIP Approved Rules

Rule # Rule Title SIP Approval

Date Federal

Register

Citation

1-130 Definitions 5/6/11 76 FR 26192 1-200 Permit Requirements 4/12/89 54 FR 14650

1-220 New Source Review Standards 7/31/85 50 FR 309 42 1-230 Action on Applications 7/31/85 50 FR 30942

The EPA promulgated two rules to implement the new PM 2.5 NAAQS, known as the NSR PM 2.5 Implementation Rule (73 FR 28321, May 16, 2008) and the PM 2.5 PSD Increments – Significant Impact Levels (SILs) – Significant Monitoring Conce ntration (SMC) Rule (75 FR 64864, October 20, 2010). In Sierra Club v. EPA , the Court issued a mandate vacating the portion o f the rule establishing the PM 2.5 SILs and SMC on March 19, 2013, as of which date t he PM 2.5 SILs and SMC in 40 CFR 52.21 were no longer in effect. T he EPA codified this vacature by issuing a final rule removing the vacated elements on Decembe r 9, 2013. (78 FR 73698) On August 24, 2016, the EPA promulgated an additional rule entitl ed Fine Particulate Matter National Ambient Air Quality Standards: State Implementation Plan Re quirements. (81 FR 58010) In response to these new program requirements, MCAQMD has submitte d the revised rules listed in Table 1.

This TSD contains the EPA’s evaluation for the rule s listed in Table 1.



### 3.2. S UBMITTED 

### R ULES FOR 

### SIP A PPROVAL

Rule 1- 130 – Definitions

Rule 1-130 contains a list of 63 definitions used t o carry out the District’s permit program. The rule also contains a general provision section whic h states that, except for the 63 listed definitions, all definitions included in 40 CFR 52. 21(b), excluding the definition provided in subsection (b)(33) (Replacement Unit), are incorpor ated by reference into Rule 1-130.

Rule 1-200 – Permit Requirements Rule 1-200 contains the general requirements relate d to the District’s permitting program. Section (a) specifies that an Authority to Construc t (ATC) shall be obtained from the District prior to beginning construction of any source that may emit air contaminants. Section (b) details the information required to be included with all ap plications. Section (c) lists the preliminary

determinations that the Air Pollution Control Offic er (APCO) must make prior to acting on an application for an ATC. Section (d) provides a list of the types of sources and equipment that is exempted from the requirement to obtain an ATC. Fin ally, Section (e) includes the criteria an application must meet to be considered complete and the timing for the APCO to make a completeness determination.4

Rule 1-220 – New Source Review Standards (Including PSD Evaluati ons) Rule 1-220 contains the specific standards/requirem ents under which all permits, including PSD permits must be evaluated. Section (a) specifies th e information the applicant must submit for the APCO to perform the necessary emission analysis, as well as the basis for calculating emissions for new, existing and modified stationary sources. Section (b) specifies the criteria any source with an emission increase above the significant emi ssion rates, as defined in Rule 1-130, must meet prior to issuance of the ATC. These include de termining what level of control constitutes Best Available Control Technology (BACT), an air qu ality impact analysis, an analysis of stack height, and providing a public notice regarding the proposed permit action (including administrative requirements for providing such noti ce). Section (c) includes specific additional requirements for applications to construct power pl ants that will be licensed by the California Energy Commission.

Rule 1-230 – Action on Applications Rule 1-230 provides a list of administrative steps the APCO must take, including making specific determinations, prior to issuing an ATC. S ection (a) includes the general approval criteria that the APCO must ensure have been meet p rior to issuing the ATC. Section (b) provides that when the public notice is provided as required by Rule 1-220, the APCO shall also send copies of the proposed permit and preliminary decision regarding the ATC to both the CARB and the EPA, and that the permit may not be is sued for at least 30 days after the public notice is published. Sections (c) and (d) specify w hat actions the APCO must take if he intends to deny or conditionally approve the ATC, respectively . Finally, section (e) provides that the issuance of an ATC does not relive the permit holde r from complying with all other applicable regulations.



### 3.3. R ULE 

### R EVISIONS

The District’s staff report states that the main re ason for revising Rules 1-130, 1-200, 1-220 and 1-230 is to update their Prevention of Significant Deterioration Program, which was last approved by the EPA in 1985. The rule revisions inc orporate new and updated program definitions, requirements and procedures required f or a federally approved PSD program.

One editorial change in the rules is to remove all dates associated with cited provisions of the federal regulations. The provisions cited from 40 C FR 52.21 were (and are) for reference only, the provisions are not incorporated by reference, a nd therefore the dates had no meaning, but

created confusion in the rule. Thus the removal of these dates strengthens the rules by providing additional clarity.

Below, we discuss the rule revisions generally and evaluate whether the revised rules meet the applicable program requirements in Section 4 of thi s TSD.

Rule 1-130 – Definitions The submitted rule has been revised significantly b y incorporating most of the definitions contained in 40 CFR 52.21(b) by reference. These in corporated definitions apply unless a definition is provided for the same term in Rule 1- 130. The submitted rule also includes several5

new definitions to take the place of the definition s contained in 40 CFR 52.21 to ensure the rule implements a PSD program that does not include any of the NSR reform provisions adopted by the EPA in 2003. A complete evaluation of the defin itions provided in this rule is provided in Section 4.2 of this TSD, titled Permit Requirements for Major Sources in Attainment Areas, which evaluates all of the requirements of a PSD pr ogram pursuant to the requirements of 40

CFR 51.166.

Rule 1-200 – Permit Requirements The submitted rule has been updated to clarify cert ain exemptions and add a new Section (e) Procedures. The permit exemption provided in Sectio n (d)(5) has been revised to make it consistent with state law provisions contained in S B700. The language provided in the exemption provisions contained in Section (d)(8) ha s been revised to limit the scope of director’s discretion. The provisions contained in new Section (e) detail the information an applicant must provide for an application to be deemed complete an d other administrative requirements. The new language and minor edits to the rule generally provide additional clarity and enforceability and are therefore acceptable revisions.

Rule 1-220 – New Source Review Standards (Including PSD Evaluati ons) The new language, evaluation criteria and minor rev isions are clarifying in nature and are generally consistent with the requirements of 40 CF R Part 51 Subpart I. Therefore, these revisions are acceptable.

Rule 1-230 – Action on Applications The submitted rule has been updated to clarify that the assessment of air quality deterioration is cumulative in nature and adds a new Section (e) Per formance Standards in Effect. These revisions are acceptable.



## 4. P ERMIT 

## P ROGRAM 

## E VALUATIONS

For this technical support document, we reviewed th e submitted minor NSR and PSD rules for compliance with the CAA requirements for SIPs in ge neral as set forth in CAA section 110(a)(2), the requirements for stationary source p reconstruction permitting programs in 40 CFR part 51, subpart I (Review of New Sources and Modif ications), excluding section 51.165 which contains the nonattainment NSR program requirements , and the requirements related to SIP revisions in CAA sections 110(l) and 193. The EPA a lso relied on the following documents in the review of the District’s overall permitting reg ulations:

• General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990 (57 FR 13498, April 16, 1992),

• the NSR PM2.5 Implementation Rule (73 FR 28321, May 16, 2008), the PM2.5 PSD Increments – Significant Impact Levels (SILs) – Sig nificant Monitoring Concentration (SMC) Rule (75 FR 64864, October 20, 2010), and

• the Fine Particulate Matter National Ambient Air Qu ality Standards: State Implementation Plan Requirements Rule (81 FR 58010, August 24, 2016) in the review of the District’s overall permitting regulations. The EPA has condensed the approval criteria contain ed in these various materials in this TSD,6

which describes reasons for our proposed action on the SIP submittals for MCAQMD.



### 4.1. G ENERAL 

### P ERMIT 

### R EQUIREMENTS FOR 

### M INOR AND 

### M AJOR 

### NSR

We reviewed the submitted rules for compliance with the EPA regulations for permit programs found in 40 CFR 51, subpart I, excluding 40 CFR 51. 165 and 51.166, which apply only to new major sources and major modifications under parts C and D of title I of the CAA.

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 mod ification of a facility, building,

structure or installation or combination of these w ill result in (1) a violation of applicable portions of the control strategy; or (2) interferen ce with attainment or maintenance of a national standard in the state in which the propose d source (or modification) is located or in a neighboring State.

Discussion: Rule 1-200 – Permit Requirements , Section (b) specifies the application requirements, including the requirement to provide all information necessary for the District to make determinations required by Rule 1- 230 – Action on Applications , which generally satisfies the requirement to set forth th e legally enforceable procedures. In addition, Rule 1-230 Section (a)(1) specifies that the APCO may only issue an ATC if the source is in compliance with all applicable rules a nd regulations. Likewise, Section (a)(2) specifies that the APCO may only issue an ATC if th e emissions from a new or modified stationary source do not prevent attainment, interf ere with maintenance or cause a violation of an ambient air quality standard. Taken together, these provisions are acceptable to satisfy this requirement.

(b) Such procedures must include means by which the State or local agency responsible for final decision-making on the application for ap proval 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 in terfere with the attainment or maintenance

of a national standard.

Discussion: Rule 1-200 – Permit Requirements , Section (a), prohibits construction and operation of any source unless an ATC has been obta ined from the District. The District may grant ATCs only after verifying the new project will comply with all applicable rules and regulations and will not interfere with attainm ent or maintenance of the NAAQS (See paragraph (a) above for summary of these requiremen ts). These provisions are acceptable to satisfy this requirement.

(c) The procedures must provide for the submission, by the owner of operator of the building, facility, structure, or installation to b e constructed or modified, of such information on (1) the nature and amounts of emissi ons to be emitted by it or emitted by associated mobile sources; (2) the location, design , construction, and operation of such7

facility, building, structure, or installation as m ay be necessary to permit the state or local agency to make the determination referred to in par agraph (a) of this section.

Discussion: Rule 1-200 – Permit Requirements , specifies the application submittal requirements for an application to be deemed comple te. Specifically, Section (e) specifies that the application must include all information n ecessary to determine compliance with all applicable requirements. This provision is acce ptable to satisfy this requirement.

(d) The procedures must provide that approval of an y construction or modification must not affect the responsibility on the owner or opera tor to comply with applicable portions of the control strategy.

Discussion: Rule 1-230 – Action on Applications , Section (e) states “The issuance of an Authority to Construct does not relieve the permit holder of the requirements to comply with all applicable rules and regulations, includin g emission limitations and other performance standards, whether or not such limitati ons and standards are explicitly stated or referenced in the permit.” This provision is acc eptable to satisfy this requirement.

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

Discussion: Rule 1-200 – Permit Requirements , Section (a), prohibits construction and operation of any source unless an ATC has been obta ined from the District. Section (d) provides a list of specific equipment and operation s which are exempted from the requirement to obtain an ATC prior to construction. Taken together, these provisions are acceptable to satisfy this requirement.

(f) The procedures must discuss the air quality dat a and the dispersion or other air quality modeling used to meet the requirements of this subp art. (1) All applications of air quality modeling involved in this subpart shall be based on the applicable models, data bases, and other requirements specified in appendix W of t his part (Guidelines on Air Quality Models). (2) Where an air quality model specified i n 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 ofa model may be made on a case-bycase basis or, where appropriate, on a generic basi s for a specific State program. Written approval of the EPA must be obtained for any modifi cation or substitution. In addition, use of a modified or substituted model must be subj ect to notice and opportunity for public comment under procedures set forth in 40 CFR 51.102.

Discussion: The submitted rules do not contain any provisions to address this requirement. We also reviewed rules already approve d into the SIP, but could not find any provisions to satisfy this requirement. Therefo re, we are identifying the absence of such a provision as a deficiency and proposing to d isapprove Rule 1-220 with respect to this requirement.8

2. 40 CFR 51.161 – Public availability of informati on

(a) The legally enforceable procedures in 40 CFR 51 .160 must also require the state or local agency to provide opportunity for public comm ent on information submitted by owners and operators. The public information must i nclude the agency’s analysis of the

effect of construction or modification on ambient a ir quality, including the agency’s proposed approval or disapproval.

Discussion: Rule 1-220 – New Source Review Standards , Subsection (b)(6) requires the District to “Make available for public inspection a t the District office, the information submitted by the applicant, the analysis of the eff ect of the source on air quality, and the preliminary decision to grant or deny the Authority to Construct.” Subsection (b)(5) requires the published notice to “...allow 30 days be ginning on the date of publication, for the public to submit written comments on the pr oposed Authority to Construct.” Taken together, these provisions are acceptable to satisfy this requirement.

(b) For the purposes of paragraph (a) of this secti on, opportunity for public comment shall include, as a minimum, (1) Availability for p ublic inspection in at least one location

in the area affected of the information submitted b y the owner or operator and of the State or local agency’s analysis of the effect on air qua lity; (2) A 30-day period for submittal of public comment; and (3) A notice by prominent adver tisement in the area affected of the location of the source information and analysis spe cified in paragraph (b)(1) of this

section.

Discussion: Rule 1-220 – New Source Review Standards , Subsection (b)(5) requires the public notice to be published by prominent advertis ement in at least one newspaper of general circulation, that the notice must state whe re the public may inspect the information required to be provided and allow 30 da ys for the public to submit written comments. This provision is acceptable to satisfy t his requirement.

The requirement to provide a public notice is trigg ered at the following thresholds: 40 tons per year (tpy) for NOx, VOC and SOx, 25 tpy fo r PM, 15 tpy for PM 10 , 10 tpy for

PM 2.5 , 100 tpy for CO and 0.55 tpy for lead. These are t he same emission rates which are defined as significant in the PSD program. (See 51. 166(b)(23)(i)) These public notice thresholds have been in place since at least 1986. The MCAQMD has continued to attain the NAAQS even as the EPA has promulgated more stri ngent NAAQS. Therefore, the EPA agrees with the District that these thresholds remain a reasonable threshold for requiring public notice of proposed permit actions.

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

Discussion: This is a discretionary component of a permit prog ram that MCAQMD’s submitted regulations do not contain. All permits s ubject to public notice requirements9

under Rule 1-220 are subject to a 30-day public com ment period. This is acceptable.

(d) A copy of the notice required by paragraph (b) of this section must also be sent to the EPA through the appropriate Regional Office, and to all other state and local air pollution control agencies having jurisdiction in the region in which such new or modified

installation will be located. The notice also must be sent to any other agency in the region having responsibility for implementing the procedur es required under this subpart. For lead, a copy of the notice is required for all poin t sources. The definition of point source for lead is given in 40 CFR 51.100(k)(2).

Discussion: Rule 1-220 – New Source Review Standards , Subsection (b)(7) requires the District to send a copy of the required notice, inc luding information submitted by the applicant, the District’s analysis and a copy of th e proposed permit to the ARB, the EPA and any other air district in the same air basin or adjoining the District. This provision is acceptable to satisfy the first part of this requir ement. The second part of this provision requires public notice for all point sources of lea d emissions, which 40 CFR 51.100(k)(2) defines as a source emitting 5 tpy or more of lead. Rule 1-220(b)(5) requires a public notice be provided for all projects with a “net emi ssion increase of any pollutant which exceeds the significant emission rates as specified in Rule 1-130(s2).” The significant rate listed for lead is 3 lbs per day or 0.55 tpy, which is significantly lower than the required 5 tpy threshold. Therefore, we find that t his provision satisfies the second part of this requirement.

3. 40 CFR 51.162 – Identification of responsible ag ency

Each plan must identify the state or local agency w hich will be responsible for meeting the requirements of this subpart in each area of th e state. 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 contro l agency in carrying out the provisions of this subpart.

Discussion: California law provides for the creation and autho rity of each air District. (See H&SC Division 26, Part 3) California law speci fically provides that “Local and regional authorities [e.g., the Districts] have the primary responsibility for control of air pollution from all sources other than vehicular sou rces.” (See CH&SC § 39002) Accordingly, the California SIP has been divided in to sections for each of the 35 state permitting authorities. Each District that adopts r ules and regulations and submits them for SIP approval is responsible for implementing an d enforcing those submitted rules. For the rules under review, all of the rules were adopt ed and submitted by the MCAQMD.

4. 40 CFR 51.163 – Administrative procedures

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

Discussion: Rule 1-200 – Permit Requirements , Section (b) requires the applicant to10

provide all of the information necessary to enable the District to deem the application complete, as specified in Section (e). This ensures the District has all of the information necessary to make the required determinations speci fied in paragraph (a) of 40 CFR 51.160. This provision satisfies this requirement.

5. 40 CFR 51.164 – Stack height procedures

Such procedures must provide that the degree of emi ssion 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 dispersion technique, except as provided in 40 CFR 51.118(b). Such proced ures must provide that before a State issues a permit to a source based on a good e ngineering practice stack height that exceeds the height allowed by 40 CFR 51.100(ii)(1) or (2), the State must notify the public of the availability of the demonstration stu dy and must provide opportunity for public hearing on it. This section does not require such procedures to restrict in any manner the actual stack height of any source.

Discussion: Rule 1-220 – New Source Review Standards , Subsection (b)(3) states that the APCO shall “Determine that the degree of emission l imitation required for control of any air pollutant is not affected in any manner by- (A) So much of the stack height of any source as exceeds good engineering practice, or (B) Any other dispersion technique.” This provision otherwise satisfies this requirement

.



### 4.2. P ERMIT 

### R EQUIREMENTS FOR 

### M AJOR 

### S OURCES IN 

### A TTAINMENT 

### A REAS

The EPA approved MCAQMD’s existing SIP-approved PSD program on July 31, 1985 (50 FR 30942). As discussed in the introduction section of this TSD, state/local PSD programs must comply with the provisions contained in 40 CFR 51.1 66. We discuss below the criteria for approval of a state/local PSD permitting program an d our evaluation of MCAQMD’s PSD program submittal in accordance with these requirem ents.

1. Provisions, pursuant to 40 CFR 51.166(a)(7), whi ch incorporate the requirements in (a)(7)(i) through (a)(7)(vi), as listed below, regarding appl icability of PSD program requirements.

a. 40 CFR 51.166(a)(7)(i) specifies that the PSD progr am must apply to the construction of any new major stationary source or any project at a n existing major stationary source in areas designated attainment or unclassifiable.

Discussion: Rule 1-200 – Permit Requirements , Section (a) requires an ATC prior to construction of any emission unit, unless specifica lly exempted from this requirement under Section (d) of Rule 1-200. Rule 1-220 Section (b) requires any new or modified source that will result in a significant net emissi ons increase (as defined in Rule 1-130 (s2)), to comply with all the listed requirements o f Section (b). This provision ensures that any project with a net emission increase above the specified significant emission thresholds, whether at a major or non-major source, trigger the key PSD program11

requirements, including BACT, an Air Quality Impact Analysis, a Visibility, Soils, and Vegetation Analysis, and an Increment analysis. Tak en together, Rules 1-200 and 1-220 require PSD program elements to be applied to all n ew sources and modifications with significant net emission increases. This is more st ringent than the regulatory requirement for these provisions to apply to new major stationa ry sources and major modifications. These provisions satisfy this requirement.

b. 40 CFR 51.166(a)(7)(ii) specifies that the PSD prog ram must apply the requirements of 40 CFR 51.166 (j) through (r) to the construction o f any new major stationary source or the major modification of any existing major statio nary source.

Discussion: We evaluate the requirements of paragraphs (j) thr ough (r), individually

below.

c. 40 CFR 51.166(a)(7)(iii) specifies that the PSD pro gram must prohibit the construction of a new major stationary source or major modification to which the requirements of paragraphs (j) through (r)(5) apply, without a perm it ensuring compliance with those requirements.

Discussion: Rule 1-230 – Action on Applications , Section (c), Denial of Application, states that the APCO shall deny an application for an ATC unless the new or modified source complies with all requirements specified in Rule 1-230. Rule 1-230 Subsection (a) sets out the requirements that must be met to ensur e compliance with requirements of 40 CFR 51.166 paragraphs (j) through (r)(5). These pro visions satisfy this requirement.

d. 40 CFR 51.166(a)(7)(iv) specifies that the PSD prog ram must use the specific provisions contained in paragraphs (a)(7)(iv)(a) through (f) t o determine emission increases, unless the State demonstrates that the submitted provision s are at least as stringent in all

respects.

Discussion: Rule 1-220 – New Source Review Standards , does not include provisions that match those found in paragraphs (a)(7)(iv)(a) through (f). However, the EPA has determined that Rule 1-220 Section (b) provides pro visions that are at least as stringent ( e.g. , all PSD program requirements, including BACT are triggered at lower emission thresholds). Therefore, we find that Rule 1-220 sat isfies this requirement.

e. 40 CFR 51.166(a)(7)(v) specifies that a PSD program must contain provisions requiring a source seeking a PAL for a regulated NSR pollutant to comply with the requirements of 40 CFR 51.166(w).

Discussion: The District’s rules do not contain any provisions pertaining to PALs. While the lack of such provisions does not provide the ad ditional flexibility the EPA intended for the PSD program, we have found that in Californ ia, due to the more stringent requirements of the California Clean Air Act, that sources would not be able to utilize these flexibilities. See Section 4.3 of this TSD, t itled New Source Review Reforms, for additional information. Therefore, we find that it is acceptable for the District’s rules to12

not contain any provisions for PALs.

2. Applicable definitions found in CAA sections 169 and 169A(g), and in 40 CFR 51.100 and 51.166(b).

Discussion: Rule 1-130 – Definitions , incorporates by reference all of the 40 CFR 52.21 (b) definitions (excluding the definition for the term “Replacement Unit” found in 52.21(b)(33)), except where a specific definition for the term is provided in the rule. To the extent the rule specifically incorporates the definitions found in 40 CFR 52.21, these definitions satisfy the regulatory requirement to include the definitions f ound in 40 CFR 51.166 into the District’s rules. We have also reviewed the specific definitio ns found in Rule 1-130 and found that in most cases, these definitions are either identical or nearly identical to the definitions in the CAA and the EPA’s implementing regulations. In some cases, however, the definitions do not track the language in the federal definitions a s closely. We explain below in more detail our proposed determinations as to whether these dif fering definitions are equivalent to the federal definitions and, therefore, adequate to mee t these requirements of a PSD program.

a. Definitions That Differ From the EPA Definitions in 40 CFR 51.166

Actual Emissions

Discussion: The definition of this term is provided in Section (a1) of Rule 1-130. The provided definition revises the definition for the term Actual Emissions currently found in 40 CFR 52.21(b)(21) to incorporate most of the d efinition of the term Actual Emissions as it existed in 40 CFR 52.21(b)(21) prio r to December 31, 2002, when the EPA revised the definition through rulemaking as pa rt of NSR Reform. The District’s revised definition does not contain any provisions for electric utility steam generating units. While this revised definition does not provi de the additional flexibility the EPA intended for the PSD program, we have found that in California, due to the more stringent requirements of the California Clean Air Act, that sources would not be able to

utilize these flexibilities. See Section 4.3 of thi s TSD, titled New Source Review Reforms, for additional information. Therefore, we find the definition provided is adequate to satisfy the requirement for this term t o be defined.

Baseline Actual Emissions

Discussion: The definition of this term is provided in Section (b1) of Rule 1-130. The provided definition revises the definition for the term Baseline Actual Emissions currently found in 40 CFR 52.21(b)(48) to the defin ition of the term Actual Emissions as it is defined in Section (a1) of Rule 1-130. While this revised definition does not provide the additional flexibility the EPA intended for the PSD program under NSR Reform, we have found that in California, due to the more stri ngent requirements of the California Clean Air Act, that sources would not be able to ut ilize these flexibilities. See Section 4.3 of this TSD, titled New Source Review Reforms, for additional information. Therefore, we find the definition provided is adequate to sati sfy the requirement for this term to be

defined.13

Baseline Concentration

Discussion: The definition of this term is provided in Section (b2) of Rule 1-130. The provided definition is essentially the same as the definition found in 40 CFR 52.21(b)(13), except it does not contain the refere nces to the definition of “actual emissions” found in 52.21(b)(21). We find this acce ptable because the District has provided its own definition for the term Actual Emi ssions, which we find to be consistent with the definition in 52.21(b)(21).

Best Available Control Technology

Discussion: The definition of this term is provided in Section (b4) of Rule 1-130. While

the definition varies somewhat from the federal def inition, it is functionally the same and fulfills the requirement for providing a definition for this term.

Major Stationary Source

Discussion: The definition of this term is provided in Section (m2) of Rule 1-130. The definition found in 40 CFR 51.166(b)(iv) for this t erm has been revised to read as follows: “Any stationary source which emits, or has the potential to emit, a regulated pollutant above which exceeds the significant emiss ion rates specified in Rule 1- 130(s2).” The effect of this language is to lower t he major source thresholds of 100 or 250 tpy specified in the federal definition of the term, down to the lower significant emission rates specified in the rule. Since this de finition creates lower applicability thresholds, it ensures that at least all projects t hat would be classified as a major source under the federal definition will be subject to PSD program requirements. Therefore, we find this definition acceptable.

Major Modification

Discussion: The definition of this term is provided in Section (m1) of Rule 1-130. The definition found in 40 CFR 51.166(b)(v) for this te rm has been revised to read as: “any physical change in or change in the method of opera tion that would result in increase of a regulated pollutant which exceeds the significant e mission rates specified in Rule 1- 130(s2).” The effect of this language is to require any existing source, not just major sources, to be subject to PSD program requirements if the increase from a project exceeds the significant emission rates specified in the rul e. Since this definition subjects’ minor sources to PSD major source program requirements an d it contains the same threshold for major sources, it ensures that all projects which w ould be subject to PSD requirements under the federal definition will also be subject u nder the District’s rules. Therefore, we find this definition acceptable.

Net Emissions Increase

Discussion: The definition of this term provided in Section (n 1) of Rule 1-130. The provided definition revises the definition for the term Net Emissions Increase currently found in 40 CFR 52.21(b)(21) to make it more closel y match the definition of the term

Net Emissions Increase as it existed in 40 CFR 52.2 1(b)(21) prior to December 31, 2002, when the EPA revised the definition through rulemak ing as part of NSR Reform. The

revised definition removes all references to Baseli ne Actual Emissions and other new terms added by NSR Reform. While this revised defin ition does not provide the14

additional flexibility the EPA intended for the PSD program, we have found that in California, due to the more stringent requirements of the California Clean Air Act, that

sources would not be able to utilize these flexibil ities. See Section 4.3 of this TSD, titled New Source Review Reforms, for additional informati on. Therefore, we find the definition provided is adequate to satisfy the requ irement for this term to be defined.

Potential to Emit

Discussion: The definition of this term is provided in Section (p5) of Rule 1-130. While

the definition varies somewhat from the federal def inition, it is substantially similar and fulfills the requirement for providing a definition for this term.

Reviewing Authority

Discussion: Because Rule 1-130 – Definitions , incorporates the definitions of 40 CFR 52.21 by reference, the term “reviewing authority” in 40 CFR 51.166 is replaced with the term Administrator. Rule 1-130 provides language un der the general provisions to clarify when the term Administrator as used in the incorpor ated definitions refers to the EPA

Administrator and when it refers to the APCO. There fore, we find that this provision provides an adequate definition for the term Review ing Authority.

Significant

Discussion: The definition of this term is provided in Section (s2) of Rule 1-130. The definition provided is nearly identical to the defi nition provided in 51.166(b)(23), but it lists the Significant Emission Rates in terms of lb s per day. The rates listed in Rule 1-130 are equivalent to or more stringent than the requir ed tons per year rates. Therefore, we find this definition acceptable.

Subject to Regulation

Discussion: The definition of this term is provided in Section (s9) of Rule 1-130. The definition of the term found in 40 CFR 51.166(b)(49 ) has been changed in two ways. First it revises paragraph (ii)(a) to remove the se cond sentence, which deferred the regulations of various biogas emissions until July 21, 2014. Second, the definition deletes paragraph (v) from the incorporated by reference de finition of “Subject to Regulation”. This revision is consistent with the EPA’s August 1 9, 2015 rulemaking which also removed this provision. 1 Therefore we find the definition provided satisfie s the requirement for this term to be defined.

b. Additional terms defined in Rule 1-130

Discussion: The following terms are defined in Rule 1-130 but are not specifically defined in the EPA’s regulations in 40 CFR 51.100 o r 51.166. The EPA has reviewed these terms and believes that they strengthen the p rogram by providing clear definitions for terms used in Rules 1-200, 1-220 and 1-230. The refore, the inclusion of these defined terms is acceptable.

1 80 FR 5019915

These terms include the following: Agricultural Ope ration, Air Contaminant, Air Pollution Abatement Operation, Air Pollution Contro l Officer, Ambient Air Quality Standard, Approved Combustibles, Area Classificatio ns, Base Unit, CAAA, CAPCOA, CCAA, CFR, Combustion Contaminants, Compression Ign ition, Control Strategy, District, Dust, Emission, Episode Alert, Fumes, Geo thermal Operations, Greenhouse Gases (GHGs), Hearing Board, Impact/Baseline Area, Indirect Source, Installation, Large Grading Operation, Maximum Achievable Control Techn ology (MACT), Modeling, Modification, Operation, Orchard, Vineyard, or Citr us Grove Heater, Organic Gas, Owner, Permit, Person Or Persons, Portable Source, PPM, Precursor, Prevention of Significant Deterioration (PSD) Increment, Process Weight Per Hour, Section, Stacking, Standard Conditions, Standard Cubic Meter of Gas (S tandard Cubic Foot of Gas), Steam Generating Unit, Total Reduced Sulfur (TRS), Toxic Air Contaminant (TAC), Trade Secrets, and URBEMIS.

3. Provisions which establish the maximum allowable ambient air increments and ambient air ceilings as set forth in 40 CFR 51.166(c) and (d), for any designated attainment or

unclassifiable area.

Discussion: Rule 1-130, paragraph (p7) provides a definition f or “Prevention of Significant Deterioration Increment” which provides a table of the allowable air quality increments for all of the pollutants listed in 40 CFR 51.166(c) an d (d). This provision is acceptable to satisfy this requirement.

4. Provisions concerning the initial designation of all attainment areas as Class I, II, or III, as listed in 40 CFR 51.166(e) and (g).

Discussion: Rule 1-130, Subsection (a9) provides a definition for the term Area Classifications. This definition provides that all areas designated as Class I areas pursuant to 40 CFR 52.21(e) are Class I areas and that all othe r areas not so designated are Class II areas. This definition is sufficient to satisfy this requi rement.

5. Provisions, pursuant to 40 CFR 51.166(h), to ass ure that the degree of emission limitation required of any source for control of any air pollu tant must not be affected by so much of any source's stack height that exceeds good engineering practice.

Discussion: Rule 1-220, Subsection (b)(3) addresses this requi rement. It requires the APCO to “Determine that the degree of emission limitatio n required for control of any air pollutant is not affected in any manner by; (A) So much of th e stack height of any source as exceeds good engineering practice, or (B) Any other dispers ion technique.” This provision satisfies this requirement.

6. Provisions, pursuant to 40 CFR 51.166(i), which allow for specified exemptions from the PSD program at the State’s election.

Discussion: Rules 1-200, 1-220 and 1-230 do not contain any of the specific exemptions allowed under 40 CFR 51.166(i), but since these are optional exemptions, not including them16

is not a program deficiency. Rule 1-200 does contai n several exemptions from the requirement to obtain an ATC, but these exemptions are tailored to only apply to non-major sources, which are not subject to the requirements of 40 CFR 51.166. Therefore, the submitted rules satisfy this optional provision.

7. Provisions, pursuant to 40 CFR 51.166(j), which require BACT, determined on a case-bycase basis, for a new major source or major modific ation.

Discussion: Rule 1-220, Section (b)(1) requires BACT for all n ew or modified sources which have a significant net emission increase for the li sted pollutants, as determined by the definition of the term “significant” defined in Rul e 1-130 (s2). We note that the significant net emission increase applicability threshold is no t limited to major modifications, but applies to all projects. Therefore, these provision s satisfy the requirement to require BACT for all new major sources and major modifications.

8. Provisions, pursuant to 40 CFR 51.166(k), which address the demonstration required from a source impact analysis. This includes showing that the allowable emission increases from the project and all other applicable emissions increase s or reductions, would not cause or contribute to air pollution in violation of any NAA QS or any increment.

Discussion: Rule 1-220 paragraph (b)(4) requires that an Air Q uality Analysis be performed. The analysis must consider the effects of the emiss ion changes from the project on air quality and the PSD increments. Rule 1-230 paragraphs (a)(2 ) and (3) provides that the APCO may only grant the ATC after determining that the proje ct “will not prevent the attainment, interfere with the maintenance, or cause a violatio n, of any state or national ambient air quality standard” and “will not cause cumulative de terioration of existing air quality in excess of 50% of remaining available PSD increments as defined in Rule 1-130(p7).” Taken together these provisions satisfy the regulatory re quirement.

9. Provisions pursuant to 40 CFR 51.166(l) requirin g air quality modeling consistent with the applicable requirements of appendix W of 40 CFR par t 51 (“Guideline on Air Quality Models”), and provisions pursuant to 40 CFR 51.166( m) to assure that a major source or major modification will perform an air quality anal ysis, including pre-application air monitoring for any pollutant for which the net emis sions increase of the source or modification is significant, and post-construction monitoring as necessary to determine the effect the emissions may have, or are having, on ai r quality in any area.

Discussion: While Rule 1-220 (b)(4) requires the APCO to prepa re or cause to be prepared an air quality analysis that includes continuous ai r monitoring consistent with the provisions of 40 CFR 52.21(m) (which are identical to the requ irements found in 51.166(m)), the rule does not contain any requirements regarding the typ es of air quality models to be used, as required by 40 CFR 51.166(l). Therefore, we find th e submitted rules deficient in regards to meeting the requirements of 40 CFR 51.166(l).

10. Provisions, pursuant to 40 CFR 51.166(m), requi ring the submission of a pre-application analysis of ambient air quality monitoring data for each pollutant affected by the project.17

Discussion: Rule 1-220 Section (b)(4)(A) requires an applicant to submit an air quality analysis that includes continuous air monitoring, c onsistent with the requirements of 40 CFR 52.21(m). The requirements of 40 CFR 52.21(m) are i dentical to the requirements of 40 CFR 51.166(m), therefore this provision satisfies this requirement.

11. Provisions, pursuant to 40 CFR 51.166(n), requi ring the submission of all information necessary to perform any analysis or make any deter mination required under the PSD

program.

Discussion: Rule 1-220 Section (a) requires an applicant to su bmit information sufficient to make any approval determinations required by Rule 1 -230, which includes PSD compliance determinations regarding PSD increments, BACT and c ompliance with the NAAQS. This provision satisfies this requirement.

12. Provisions, pursuant to 40 CFR 51.166(o), to as sure that the owner of operator of a major source or major modification will perform additiona l impact analyses of the impairment to visibility, soils, and vegetation and the air quali ty impact projected for the area as a result of general commercial, residential, industrial and oth er growth associated with the source or

modification.

Discussion: Rule 1-220 paragraph (b)(4)(E) requires an analysi s and evaluation of the impairment to visibility, soils and vegetation and the impact projected for the area as a result of general commercial, residential, industrial and other growth associated with the source or modification. This provision satisfies this require ment.

13. Provisions to assure protection of air quality related values (including visibility) in Class I areas pursuant to 40 CFR 51.166(p) and 51.307.

Discussion: Rule 1-220 paragraph (b)(4)(D) requires an analysi s of the expected impacts on air quality related values in any Class I areas for new and modified major stationary sources. In addition, Rule 1-220 paragraph (b)(9) requires t he APCO to transmit copies of the application and notice of action to the Federal Lan d Manager (FLM) of any Class I area, and to consider any adverse impacts demonstrated by the FLM if the analysis shows that a new major source or major modification may affect visib ility in any Federal Class I area. These provisions satisfy these requirements.

14. Provisions to assure agency and public particip ation under 40 CFR sections 51.166(p)(1) and 51.166(q).

Discussion: 40 CFR 51.166(p)(1) requires the PSD reviewing aut hority to transmit to the EPA a copy of each permit application relating to a major new source or major modification and to provide notice to the EPA of every action re lated to the consideration of such permit.

Rule 1-220 (b)(9) requires the District to transmit copies of the application and notice of each action affecting the application to the EPA. This p rovision provides for the necessary18

coordination with the EPA.

Discussion: 40 CFR 51.166(q) contains several provisions perta ining to public participation. These include a timeline for determining and notify ing the source if their application is complete, taking action on the permit within one ye ar of it being deemed complete, public notice requirements, notifying the EPA and other in terested parties of the proposal and providing opportunity for a public hearing. It also requires the permit authority to consider all

of the written comments and make a final determinat ion on the proposed permit, and notify the applicant of the final decision.

Rule 1-200 Section (e) contain the provisions for d etermining if an application is complete. Paragraph (2) of this section specifies that the AP CO must notify the applicant within 30 days as to whether the application is complete. Rul e 1-240 – Permit to Operate , Section (c) specifies that the APCO must take a final permit ac tion within 180 days after determining the application complete. Rule 1-220 Paragraphs (b)(5)- (11) specify these public notice requirements. Paragraph (b)(5) requires the APCO to publish a 30-day public notice in the paper stating where the public may inspect the appl ication and draft permit and how to submit comments. It also specifies the details whic h must be included in the notice such as expected air quality impacts and the opportunity fo r a public hearing on the project. Rule 1- 220(b)(7) requires the APCO to forward copies of th e application analysis and the draft permit to the EPA, CARB and other Districts and cer tain federal land managers. Section (b)(10) requires the District to consider all comme nts and make the comments and final permit available for public inspection. Rule 1-220 requires the APCO to publish a newspaper notice within 30 days after issuing the ATC. These provisions satisfy the regulatory requirement.

15. Provisions, pursuant to 40 CFR 51.166(r), which address source obligation requirements.

Discussion: Rule 1-230 Section (e) specifies that the issuance of an Authority to Construct does not relieve the permit holder from other appli cable requirements as required by paragraph 40 CFR 51.166(r)(1), therefore this requi rement is satisfied. Paragraphs 3-5 of 51.166(r) are reserved, and thus do not contain any requirements that must be included in Rule 1-220. Paragraphs 6 and 7 of 51.166(r) contain requirements pertaining to NSR reform provisions which we have determined are not applica ble to Rule 1-220. Please see the TSD

section entitled New Source Review Reforms for a fu rther discussion of these requirements.

The submitted rules do not contain any provisions t o satisfy the requirements of 40 CFR 51.166(r)(2), regarding sources obligations which a pply if a source becomes a major source or major modification solely by virtue of a relaxat ion in any enforceable limitation on the capacity of the source to emit a pollutant. Therefo re, we are finding Mendocino’s PSD program deficient as to this provision.19



### 4.3. N EW 

### S OURCE 

### R EVIEW 

### R EFORMS

California Clean Air Act – New Source Review Progra m The air quality in California has historically been some of the worst in the nation. In light of this fact, California has always been at the forefront i n implementing strict air quality regulations to address the state’s serious air quality problems.

In 1959, the State passed its first air quality sta ndards for total suspended particulates, photochemical oxidants, sulfur dioxide, nitrogen di oxide, and carbon monoxide. These state standards were amended in 1969 by the Air Resources Board. At that time, the California ambient air quality standard for ozone was lower th an the federal standard, thus most of California was exceeding the state standard for Ozo ne. As a result, most California Air Pollution control agencies developed permitting programs that contained non-attainment new source review requirements such as Lowest Achievable Emiss ions Rate (LAER) and offsets around the same time as the adoption of the federal Clean Air Act in 1970.

In 1988, California adopted the California Clean Ai r Act of 1988 (California CAA). This legislation established new preconstruction review requirements for new and modified sources. It established uniform emission thresholds that trigge r control and offset requirements for ozone (VOC and NOx), carbon monoxide (CO), sulfur dioxide (SO 2 ) and nitrogen dioxide (NO 2 ) at levels significantly lower than the federal thresho lds in effect at the time of adoption. These

thresholds are even lower than the thresholds estab lished two years later by the federal Clean Air Act Amendments of 1990 (federal CAA).

Under both state and federal requirements, all ozon e nonattainment areas were classified according to the severity of the ozone violations m easured for each area. Instead of a single major source threshold for all areas, the federal C AA set new major source and major modification thresholds of 100 and 40 tpy respectiv ely, for areas classified as moderate or marginal; 50 and 25 tpy respectively, for areas cla ssified as serious; 25 and 25 tpy respectively, for areas classified as severe; and 10 and 0 tpy re spectively, for areas classified as extreme. These thresholds are used to determine when a propo sed project requires the application of

LAER and emission offsets.

In comparison, the California CAA set thresholds fo r when project emissions trigger the application of the California version of Best Avail able Control Technology (BACT) and offsets. (Note that California BACT is defined in such a man ner as to be equivalent to federal LAER requirements.) The application of California BACT i s triggered for emission increases of 25 lb/day in areas classified as moderate and 10 lbs/d ay in areas classified as serious, severe or extreme. In addition, some California Districts hav e adopted even lower California BACT thresholds of two and zero lb/day. The requirement to provide offsets is triggered for all emission increases, once a facility’s emissions exceed 25 tp y in areas classified as moderate; 15 tpy in areas classified as serious; and 10 tpy in areas cl assified as severe or extreme.20 California and Federal BACT/LAER and Offset Thresho lds for 1-hr Ozone

CA Ozone Classification
(ppm) Marginal Moderate

(0.09 -

≤ 0.12) Serious

(0.13 -

≤ 0.15) Severe

(0.16 -

≤ 0.20) Extreme

(>0.20)

CA BACT 2 (tpy) [lb/day] NA 4.6 [25] 1.8 [10] 1.8 [10] 1.8 [10] CA Offset (tpy) NA 25 15 10 10

EPA Ozone Classification
(ppm) Marginal

(0.121 - <0.138) Moderate

(0.138 -

≤ 0.160) Serious

(0.160 -

≤ 0.180) Severe

(0.180 -

≤ 0.280) Extreme

(>0.28)

Federal Major Source (tpy)
(Triggers both LAER & Offsets) 100 100 50 25 10

Federal Major Mods (tpy)
(Triggers both LAER & Offsets) 40 40 25 25 0

Note: California design values are lower than feder al values for the same classification.

NSR Reform Program Requirements On December 30, 2002, the EPA published a final rul emaking action to provide additional flexibility in the permitting of modified sources s ubject to the federal major source NSR and PSD programs. The EPA’s intent was to allow existin g sources additional flexibility in the NSR/PSD permitting process that would encourage fac ilities to make process improvements or undertake energy efficiency projects that would pro vide additional environmental benefits by reducing emissions on a capacity basis. In 2005, a court vacated two key NSR Reform provisions 3 , but also upheld the three key remaining provision s. These provisions all pertain to how emission increases from proposed modifications of existing sources are calculated.

One provision allows an existing facility to set a Plantwide Applicability Limit (PAL), which in effect is a facility-wide emissions cap for a speci fic pollutant. Once the PAL is determined, a facility can make any physical modification or chan ge in the method of operation, which might otherwise trigger a major modification, without obt aining a NSR permit, as long as the plantwide

emissions remain below the PAL level. For certain t ypes of industries that need significant operational flexibility to make quick changes in re sponse to changing market conditions, the ability to make changes without having to wait for the issuance of construction permits is worth the additional work to ensure emissions from all op erations remain below the PAL and maintain the additional records needed to verify compliance with the plant-wide emission limits.

Another provision changed the allowable time frame to be used to determine baseline actual emissions. Baseline emissions are generally conside red to be the pre-project emissions from the facility or emission units proposed to be modified. Prior to implementing the NSR Reforms, the EPA required a source to use the actual emissions e mitted during the two-year period immediately preceding the application date for the new project. Sources were allowed to use a different two-year period within the five-year peri od immediately preceding the application date if they could demonstrate that the alternative two- year period was more representative of normal operations. The NSR Reforms revised the allowable t ime frame to be any 24-month period

2 California Health & Safety Code §§ 40918, 40919, 4 0920 and 40920.5

3 State of New York, et al., v. U.S. Environmental Pr otection Agency, et al., 413 F.3d 3 (D.C. Cir. 2005)21

during the 10-year period immediately preceding the application date. The EPA believes that the use of a 10-year period allows a source to look bac k to a period from a more representative business cycle, i.e., 10 years vs. five years, and that significant resources are conserved by allowing the source to choose the 24-month period u sed to establish baseline actual emissions, rather than spend time and resources determining wh at period most represents “normal operations.” While going back further in time means a source may be able to choose a period with higher average emissions, the NSR Reforms also added requirements to ensure the baseline period is adjusted for any excess emissions or any additional emission reductions required by new regulations which have become effective since t he baseline period.

The third provision upheld by the court changed how post-project emissions are determined. Prior to implementing the NSR Reforms, the EPA requ ired a source to use the worst case potential to emit (PTE) assumptions (i.e., operatin g at 100% capacity, 24 hrs/day, 7 days a week), unless the applicant agreed to practically e nforceable permit conditions to limit operation of the emission unit (i.e. fuel usage limits or lim its on hours of operation). In this “actual to potential” test, often the difference between the b aseline actual emissions and the PTE of an operation would be greater than the major modificat ion significance thresholds. As a result, many modifications were treated as major modificati ons, even when the actual emissions would decrease, not change, or the actual increase in emi ssions would not be significant. The NSR Reforms changed the post-project emission calculati on methodology to allow a source to use the highest actual emission rate projected to occur ove r the next 5 or 10 years and to subtract

emissions the emission units could have accommodate d prior to the project, that were unrelated to the project, in order to determine the emission increase from the proposed project.

It is important to note that none of these revision s changed the major modification significance thresholds for triggering control technology and of fset requirements. They only changed the calculation to determine if the major modification threshold is triggered.

Impacts of Federal NSR Reforms on California NSR Pe rmitting Programs By not adopting the NSR Reforms, the NSR program in California Districts do not include the three program elements described earlier: use of PA Ls, a 10 year look back period for baseline actual emissions and projected actual emissions. Th e use of two of these three provisions (baseline actual emissions and projected actual emi ssions) is required under 40 CFR 51.165(a)(2). The requirement to adopt a NSR progra m that allows the use of PALs is found in 40 CFR 51.165 (f). The NSCAPCD added Section 6.3 to provide sources the option of obtaining a PAL. This provision satisfies the requirement to allow the use of PALs.

Section 116 of the CAA 4 provides that nothing in the Act shall preclude th e rights of States to

4 Section 116 of the CAA: Except as otherwise provid ed in sections 119 (c), (e), and (f) (as in effect before the date

of the enactment of the Clean Air Act Amendments of 1977), 209, 211(c)(4), and 233 (preempting certain State regulation of moving sources) nothing in this Act s hall preclude or deny the right of any State or pol itical subdivision thereof to adopt or enforce (1) any sta ndard or limitation respecting emissions of air pol lutants or (2) any requirement respecting control or abatement of air pollution; except that if an emission standard or limitation is in effect under an applicable implementation plan o r under section 111 or 112, such State or political subdivision may not adopt or enforce any emission standard or l imitation which is less stringent than the standard or limitation under such plan or section.22

adopt air pollution regulations that are more strin gent than those contained in the CAA or implementing regulations. As noted above, the Calif ornia CAA of 1988 adopted lower emission thresholds for triggering emission control (BACT/LA ER) and offset requirements for new and modified sources as part of its NSR program. Consis tent with this concept, when the EPA adopted new calculation methods to implement the NS R reforms in 40 CFR 51.166 (a)(7), 5 we also stated that each plan must use the specific ap plicability provisions specified unless the State specifically demonstrates that the submitted plan p rovisions “are more stringent than or at least as stringent” in all respects as the specified para graphs. These applicability provisions specify the use of baseline actual emissions and projected actu al emissions, two of the new NSR Reform provisions, but also retain the option for a source to use the actual to potential emission test.

Several air districts in California have argued tha t their NSR and PSD permit programs are inherently more stringent than the required federal program because the applicability thresholds for applying CA BACT and offsets are significantly lower than those in the federal CAA. In addition, for modifications, a source does not need to be a major source, as it does for federal purposes, before these lower applicability threshol ds apply to a proposed project. The districts also point out that if a District adopted the NSR R eform calculation methods, and a project using these methods was no longer classified as a major m odification, it would not be subject to Federal LAER and offsets requirements for NSR or Fe deral BACT for PSD; but the project would still have to apply CA BACT and provide offse ts in accordance with the CA CAA requirements. These lower state emission thresholds are already in almost all Districts’ portion of the California SIP, making these requirements enfor ceable under both state and federal law.

As a result, CA Districts have argued that the regu latory framework found in other states, where adopting the NSR Reforms provide additional permitt ing flexibility and environmental benefits, do not exist in California because adoption of the reform requirements would have no effect on the application of control technology or offset req uirements.

The EPA has reviewed the Districts’ claims and cons idered how the CA CAA provisions affect the effectiveness of the NSR Reforms to provide the intended regulatory relief, and we agree that the application of CA BACT and offsets at significa ntly lower thresholds means that the federal NSR Reform provisions do not provide any of the EPA ’s intended additional flexibility to proposed projects that may otherwise trigger federa l major modification requirements. If the State adopts these provisions, a new project will h ave to complete two different sets of emission calculations; and even if the federal requirements are not applicable, the source will still have to comply with the CA BACT control and offset requirem ents if they are triggered. In light of these facts, the EPA is proposing to find that it is acce ptable for MCAQMD to not incorporate the NSR Reform provisions into their SIP approved NSR a nd PSD programs, since the same level of control will be required for modified sources, with or without inclusion of these provisions in the SIP, and their program will not be any less stringe nt than the federal program.

5 The NSR reforms are also codified for nonattainment programs in 40 CFR 51.165 (a)(2). However, since MCAQMD is currently classified attainment or unclas sifiable for all NAAQS, the requirement to have a p ermit program that satisfies the requirements of 40 CFR 5 1.165 is not applicable.23 

## 5. C LEAN 

## A IR 

## A CT 

## S ECTIONS 

## 110(l) AND 

## 193

5.1. S ECTION 

### 110(l)

Section 110(l) of the Act prohibits the EPA from ap proving any revision of a SIP if the revision would interfere with any applicable requirement con cerning attainment and reasonable further progress, or any other applicable requirement of th e Act. The SIP approved version of the rules being evaluated under this TSD were approved into t he SIP on the dates listed in Table 2 above.

Based on our evaluation of the revisions made to ea ch rule, as discussed below, the rule changes are either administrative in nature or do not repre sent a relaxation of existing requirements which may affect attainment or maintenance of the NAAQS. In addition, since the District is currently designated as attainment for all the NAAQS, no rule revisions could interfere with reasonable further progress. Based on the following analysis, we conclude that full approval of Rules 1-130, 1-200 and 1-230, and limited approval/disapproval o f Rule 1-220 would overall strengthen the applicable SIP.

Rule 1-130 – Definitions

Rule 1-130 contains a list of 63 definitions used t o carry out the Districts permit program. It also provides a general provision that except for the 63 listed definitions, all definitions included in 40 CFR 52.21(b), excluding the definition provided in (b)(33) (Replacement Unit) are incorporated by reference into Rule 1-130. None of the new or revised definitions relax any applicable requirements of the rule. Also, the addi tion of several new definitions provides additional clarity and enforceability to the rules, which strengthen the SIP.

Rule 1-200 – Permit Requirements The provisions contained in Rule 1-200 are largely administrative and have no impact on air quality. The preliminary determinations listed in S ection (c) that the APCO must make prior to acting on an application for an ATC only contain mi nor editorial edits. The list of exempted sources contained in Section (d) have been made mor e stringent by limiting the existing exemption for agricultural sources to those with ac tual emissions which are less than 50% of the major source thresholds (paragraph (5)(A)) and the general exemption contained in paragraph (8), based on annual emission rates, has been made more stringent by lowering the exemption threshold by 50%.

Rule 1-220 – New Source Review Standards The provisions contained in Rule 1-220 are mostly a dministrative in nature. Section (b) is the only section that specifies applicability, control requirements, and required analysis and

determinations. While this section contains several revisions, none of the revised provisions make the rule less stringent. Instead the revisions clarify the wording in existing provisions and add new requirements such as determining the effect of stack heights on a project. The requirements in Section (c) remain unchanged.

Rule 1-230 – Action on Applications Rule 1-230 contains only minor revisions which prov ide additional clarity and a new Section (e) which specifies that the issuance of an ATC does no t relieve the permit holder of complying with all other applicable requirements. This is a streng thening of the rule.24



### 5.2. S ECTION 

### 193

Section 193 of the Act, which was added by the Clea n Air Act Amendments of 1990, includes a savings clause which provides, in pertinent part: “ No control requirement in effect, or required to be adopted by an order, settlement agreement, or pl an in effect before November 15, 1990, in any area which is a nonattainment area for any air pollutant may be modified after November 15, 1990, in any manner unless the modification insures equivalent or greater emission reductions of such air pollutant.”

The MCAQMD is currently classified as attainment or unclassifiable for all NAAQSs, therefore the provisions of Section 193 are not applicable to this action.



## 6. EPA’ S 

## P ROPOSED 

## A CTION

Pursuant to section 110(k)(3) of the Act, we recomm end full approval of Rules 1-130, 1-200 and 1-230, and limited approval and limited disapproval of Rule 1-220 Approval of these rules will replace the existing SIP rules of the same numbers. We are proposing to approve the submitted

rules based on our determination that the rules sat isfy the applicable statutory and regulatory provisions governing regulation of stationary sourc es under CAA section 110(a)(2)(C), including the permitting requirements for major stationary so urces in part C of title I of the Act. In support of this proposed action, we have concluded that our approval of the submitted rules would comply with the requirements of section 110(l) of t he Act because the amended rules will not interfere with continued attainment of the NAAQS in Mendocino County. We concurrently propose a limited disapproval for Rule 220 to corre ct the deficiencies listed below. If we finalize this action as proposed, our action will be codifie d through revisions to 40 CFR 52.220 (Identification of Plan).

In addition, on April 1, 2016 (81 FR 18766), the EP A partially disapproved California’s Infrastructure SIP Submittal with respect to Mendoc ino County AQMD for the 1997 and 2006

PM 2.5 NAAQS because it did not include requirements for a baseline date for PSD increments

for PM 2.5 . If we finalize the action proposed in this TSD, t his Infrastructure SIP deficiency will be remedied, and we will update the approved SIP fo r California accordingly.



### 6.1. R ULE 

### D EFICIENCIES

1. The requirements of 40 CFR 51.160(f) and 51.166(l) have not been meet. This deficiency may be addressed by adding the appropriate air qual ity modeling provisions to the rules. (See pages 7 and 16)

2. The requirements of 40 CFR 51.166(r)(2), regarding sources obligations has not been meet. This deficiency may be addressed by adding a new provision containing the necessary language. (See page 18)



### 6.2. R ECOMMENDATIONS FOR 

### R ULE 

### I MPROVEMENT

1. The ambient air quality standards listed in Rule 16 0 are significantly out of date. While only Rule 130 of the submitted rules refer to Rule 160 as part of the definition of the term25

Episode Alert, it is important to update the ambien t air quality standards contained in Rule 160 to ensure adequate evaluation of rule requ irements. Alternatively, the rules may be revised to simply reference State and National A mbient Air Quality Standards, without having to include the actual standards in a District rule.



## 7. N OTES

Documents cited in TSD are included in the Rulemaki ng Docket.