June 28, 2011

Air Pollution Control Board

800 South Victoria Avenue Ventura, CA 93009

SUBJECT: PUBLIC HEARING REGARDING ADOPTION OF PROPO SED NEW RULE

26.13, NEW SOURCE REVIEW - PREVENTION OF SIGNIFICAN T DETERIORATION, AND REPEAL OF RULE 26.10, NEW SOURCE REVIEW

- PREVENTION OF SIGNIFICANT DETERIORATION

RECOMMENDED ACTIONS:

1. Approve and Adopt the proposed CEQA Notice of Ex emption for the adoption of new Rule 26.12 and the repeal of existing Rule 26.10 (A ttachment 1).

2. Approve and Adopt statutorily-required findings for new Rule 26.13 and the repeal of Rule 26.10. (Attachment 2)

3. Adopt new Rule 26.13 and repeal Rule 26.10 (Atta chments 3 and 4).

3. Direct the Clerk of the Board to forward two cer tified minute orders, and an affidavit of publication of the public hearing notice, for all p roposed actions to the Air Pollution Control District within twenty days.

4. Direct Air Pollution Control Officer or his desi gnee to file a CEQA Notice of Exemption pursuant to CEQA Guidelines Section 15062.

STATEMENT OF MATTER FOR BOARD CONSIDERATION:

Background

Prevention of Significant Deterioration (PSD) is a federal pre-construction permitting program for facilities located in areas that either comply with federal ambient air quality standards for particular air pollutants (classified as attainment ) or are unclassifiable for any criteria air pollutant. PSD applies to new major stationary sou rces and existing major stationary sources where a significant modification to those stationar y sources will occur. In Ventura County, the Environmental Protection Agency (EPA) Region IX adm inisters the PSD permitting program instead of the Ventura County APCD. At this time, no stationary source facility in Ventura County requires a PSD permit.

The recent addition of greenhouse gases (GHG) to th e list of federally-regulated air pollutants via the Clean Air Act (CAA) makes GHG emissions subject to PSD permitting requirements. ToAir Pollution Control Board

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prevent an overwhelming influx of PSD permit applic ations to EPA, EPA has encouraged local air pollution control regulators to take responsibi lity for processing any PSD permit applications within their jurisdiction. The most straightforwar d way for an air pollution control district to take PSD permitting responsibility is to adopt a ru le that incorporates the federal CAA PSD requirements by reference. To that end, EPA staff, ARB staff, and the California Air Pollution Control Officers Association Engineering Managers C ommittee cooperatively developed a model

rule.

Ventura County Air District staff proposes adoption of a PSD rule based on this model rule. Certain changes have been made to accommodate speci fic situations in Ventura County. In addition, existing PSD Rule 26.10, which requires a source operator to obtain a PSD permit from EPA, is proposed for repeal.

Proposed Rule Revisions

New Rule 26.13, Section A, Purpose, establishes the context of the rule with respect to new source review. Ventura County is "non-attainment" for the federal NAAQS for ozone but is "attainment" for all other air pollutants. A list of applicable attainment pollutants appears in the Staff Report, Table 1, page 2.

Section B specifies that Rule 26.13 shall apply to stationary sources subject to federal regulation (40 CFR Part 52.21). Section C incorporates by ref erence federal PSD permitting regulations (40 CFR Part 52.21). In Section C, Subsections 1, 2 an d 3, exclusions and amendments to the federal PSD regulations are specified. These chang es are detailed in Staff Report Appendix A and Appendix B.

Section D specifies that a facility owner or operat or must obtain the required PSD permits prior to construction of applicable projects. The Distri ct shall issue the permit and the applicant shall pay the fees specified in Rule 42. Section E speci fies that the public notice requirements in Rule 26.7, New Source Review – Notification, shall apply . Rule 26.7 requires a published public notice in both a newspaper of general circulation a nd the District newsletter and provides a 30 day public comment period before a final decision. EPA and the California Air Resources Board

are also notified.

Discussion

A pre-construction PSD permit is required for any n ew major source or significant modification of an existing major source for any the pollutants in Staff Report Table 1 except pollutants for

which an area has been classified non-attainment. In general, a major source is a facility that emits 250 tons or more per year of an applicable po llutant, except for GHGs, for which the threshold is 100,000 tons per year of carbon dioxid e equivalent (CO 2 e). There are 28 types of industries where a major source is defined as 100 t ons per year of an applicable pollutant (see Staff Report, Appendix C), with the same exception for GHGs. None of these affected stationary source types are likely to be constructed in Ventur a County. The thresholds for majorAir Pollution Control Board

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modifications appear in Table 1. No new or existin g PSD sources are expected in Ventura County.

There are several benefits to District-level PSD pe rmit processing. The primary benefit is a shorter permit processing time. Currently, obtaini ng a PSD permit from EPA can take several years. With District responsibility for PSD permit ting, it is expected that permit processing will occur much more quickly in part because federal End angered Species Act requirements, as well as other project environmental impacts typically re viewed by EPA, are considered in the California Environmental Quality Act (CEQA) environ mental review process. In addition, any PSD permit appeals are handled locally (through the APCD Hearing Board) rather than by the Environmental Appeals Board in Washington, D.C.

However, Rule 26.13 will have a financial impact on a new or modified PSD source because the source will be required to pay the District for add itional PSD permit processing. Currently, EPA does not have a fee mechanism to defray their costs for processing PSD permit applications. The District proposes to charge for PSD permit processi ng as specified in Rule 42. Largely due to the requirement for computer modeling, actual labor hou rs required to process a PSD permit by District staff could be significantly greater than those required for a CAA Title V permit. Also, PSD permitting costs could vary considerably depend ing on the level of participation by both the public and EPA. Staff estimates that the cost of a PSD permit could range from $15,000 to $100,000 depending on these variables. District, h owever, believes that the benefit of obtaining a PSD permit in a timely manner will outweigh the c ost of permit processing.

Public Participation

A duly noticed public workshop for these proposed D istrict rule revisions was held on September 21, 2010; there were no attendees. On April 26, 20 11, the Advisory Committee recommended unanimously approval of proposed new Rule 26.13 and the repeal of Rule 26.10. No written

comments have been received at this time.

PROPOSED FINDINGS:

Health and Safety Code Sections 40703, 40727, 40727 .2, 40728.5 and 40920.6(a) direct that, prior to adopting proposed new Rule 26.13, your Boa rd adopt findings of necessity, authority, clarity, consistency, non-duplication, reference, c ost-effectiveness, incremental costeffectiveness, and socioeconomic impacts, based upo n relevant information presented at the hearing. Health and Safety Code Section 40727.2 re quires a written analysis, comparison, and consideration of existing air pollution regulations that apply to the same type of source. Therefore, if your Board decides to approve propose d new Rule 26.13, District staff recommends that your Board approve and adopt the proposed find ings that address these statutory requirements set forth in Attachment 2.

Proposed new Rule 26.13 has been determined by Dist rict staff to be exempt from the requirements of the CEQA under Section 15308 of the CEQA Guidelines, Actions by RegulatoryAir Pollution Control Board

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Agencies for Protection of the Environment. A Noti ce of Exemption with respect to this CEQA exemption is included as Attachment 1.

This proposal has been reviewed by County Counsel. If you have any questions, please contact Mike Villegas at 645-1440 or Don Price at 645-1407.

MICHAEL VILLEGAS

Air Pollution Control Officer

Attachments: 1. Proposed CEQA Notice of Exemption - Rules 26.13 , 26.10 2. Proposed Legislative Findings – Rules 26.13, 26 .10 3. Proposed New Rule 26.13 (Strikeout/Underline ve rsion, 2/2/11) 4. Proposed for repeal Rule 26.10 (Strikeout/Under line version, 3/25/11) 5. Final Staff Report (4/27/11) 6. Advisory Committee Voting Record (4/26/11)