## STATE OF NORTH CAROLINA

DEPARTMENT OF ENVIRONMEN T AND NATURAL RESOURCES DIVISION OF AIR QUALITY

REPORT OF PROCEEDINGS OF PUBLIC HEARINGS

ON PROPOSED AMENDM ENTS TO RULES 15A NCAC 02D .0530, PREVENTION OF SIGNIFICANT DETERIORATION and 15A NCAC 002D .0531, SOU RCES IN NONATTAINMENT AREAS

APRIL 27, 2010 CHARLOTTE, NC

APRIL 29, 2010 RALEIGH, NC



## ENVIRONMENTAL MANAGEMENT COMMISSION

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### CONTENTS

CHAPTER I Summaries and Recommendations I-1

Background and Summary I-1

Comments and Responses Thereto I-1

Conclusion I-1

Hearing Officers Recommendation I-1

CHAPTER II Regulations Proposed for Adoption II-1

CHAPTER III Report of Proceedings III-1

Introduction III-1

Designation of Hearing Officer III-2

Public Notice III-3

Transcript III-6

CHAPTER IV Exhibits IV- 1

Proposed Regulations With Amendments as Presented at the Hearing IV-2 Hearing Officer Comments at Hearing IV-9

CHAPTER V Written Comments During Comment Period V-1

CHAPTER VI Attachments VI-1

CHAPTER VII Documentation VII-1

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### I-1

CHAPTER I

Summaries and Recommendations

Proposed amendments to Rules 15A NCAC 02D .0530 and .0531.

BACKGROUND AND SUMMARY

Rule 15A NCAC 02D .0530, Prevention of Significant Deterioration , is proposed for amendment, to clarify that installation of Best Available Control Techno logy (BACT) applies to all new natural gas-fired electri cal utility generating units for which cost recovery is sought

under the Clean Smokestacks Act.

Rule 15A NCAC 02D .0531, Sources in Nonattainment Areas , is proposed for amendment to remove pollutant specific referenc es that require sources to con tinue measures after an area’s redesignation to attainment and replace descript ion of nonattainment areas with reference to 40

CFR 81.334 that identifies nonattai nment areas. The rule is also amended to clarify that new natural gas-fired electrical utili ty generating units in nonattainment areas for which cost recovery is sought pursuant to G.S. 62-133.6 shall inst all lowest achievable emission rate (LAER) technology for nitrogen oxides and sulfur dioxide. Finally, obsole te language is removed in Paragraph (n) of 02D .0531, and the subsequent paragraph lettering is revised accordingly.

PUBLIC COMMENTS AND RESPONSES THERETO

No comments received du ring the comment period.

CONCLUSION

No one commented on the rules that were published in the North Carolina Register and taken to public hearing. Therefore, no rule changes will be made to the proposed rule amendments as a result of the hearings.

HEARING OFFICER'S RECOMMENDATION

The Hearing Officer recommends that the proposed amendments as presented in Chapter II of this hearing report be adopted by the Environmental Management Commission.

### I-2

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15A NCAC 02D .0530 is proposed for amendment as follows: 1

2

15A NCAC 02D .0530 PREVENTION OF SIGNIFICANT DETERIORATION 3 (a) The purpose of the Rule is to implement a program for the prevention of significant deterioration of air quality as 4 required by 40 CFR 51.166. 5 (b) For the purposes of this Rule the definitions cont ained in 40 CFR 51.166(b) and 40 CFR 51.301 shall apply except 6

the definition of "baseline actual emissions." 7 (1) "Baseline actual emissions" means the rate of emi ssions, in tons per year, of a regulated new source 8 review (NSR) pollutant, as determ ined in accordance with Parts (A) through (C) of this Subparagraph: 9 (A) For an existing emissions unit, baseline actual emissions means the average rate, in tons per 10 year, at which the emissions unit actually emitted the pollutant during any consecutive 24- 11 month period selected by the owner or operator within the 5-year period immediately 12 preceding the date that a complete permit application is received by the Division for a permit 13 required under this Rule. The Director shall a llow a different time period, not to exceed 10 14 years immediately preceding the date that a co mplete permit application is received by the 15 Division, if the owner or operator demonstrat es that it is more representative of normal 16 source operation. For the purpose of determining baseline actual emissions, the following 17 shall apply: 18 (i) The average rate shall include fugitive emissions to the extent quantifiable, and 19

emissions associated with star tups, shutdowns, and malfunctions. 20 (ii) The average rate shall be adjusted downward to exclude any non-compliant 21 emissions that occurred while the source was operating above any emission 22 limitation that was legally enforceable during the consecutive 24-month period. 23 (iii) For an existing emission unit (other than an electric utility steam generating unit), 24 the average rate shall be adjusted downward to exclude any emissions that would 25 have exceeded an emission limitation with which the major stationary source must 26 currently comply. However, if the State has taken credit in an attainment 27 demonstration or maintenance plan consistent with the requirements of 40 CFR 28 51.165(a)(3)(ii)(G) for an emission limitation that is part of a maximum achievable 29 control technology standard that the Administrator proposed or promulgated under 30 part 63 of the Code of Federal Regulations, the baseline actual emissions shall be 31 adjusted to account for such emission reductions. 32 (iv) For an electric utility steam generating unit, the average rate shall be adjusted 33 downward to reflect any emissions re ductions under G. S. 143-215.107D and for 34 which cost recovery is sought pursuant to G. S. 62-133.6. 35 (v) For a regulated NSR pollutant, when a project involves multiple emissions units, 36 only one consecutive 24-month period shall be used to determine the baseline actual 37 emissions for all the emissions units being changed. A different consecutive 24- 38 month period for each regulated NSR polluta nt can be used for each regulated NSR 39 pollutant. 40 (vi) The average rate shall not be based on any consecutive 24-month period for which 41 there is inadequate information for determ ining annual emissions, in tons per year, 42 and for adjusting this amount if required by Subparts (ii) and (iii) of this Part. 43 (B) For a new emissions unit, the baseline actua l emissions for purposes of determining the 44

em issions increase that will result from the initial construction and operation of such unit 45 shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to emit. 46 (C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 47 emissions shall be calculated for existing emissions units in accordance with the procedures 48 contained in Part (A) of this Subparagraph, and for a new emissions unit in accordance with 49 the procedures contained in Part (B) of this Subparagraph. 50 (2) In the definition of "net emissions incr ease," the reasonable period specified in 40 CFR 51 51.166(b)(3)(ii) shall be seven years. 52 (3) The limitation specified in 40 CFR 51.166(b)(15)(ii) shall not apply. 53 (c) All areas of the State shall be classified as Class II except that the following areas are Class I: 54 (1) Great Smoky Mountains National Park; 55II-2

(2) Joyce Kilmer Slickrock National Wilderness Area; 1 (3) Linville Gorge National Wilderness Area; 2 (4) Shining Rock National Wilderness Area; 3 (5) Swanquarter National Wilderness Area. 4 (d) Redesignations of areas to Class I or II may be submitted as state proposals to the Administrator of the 5 Environmental Protection Agency (EPA), if the requirement s of 40 CFR 51.166(g)(2) are met. Areas may be proposed to 6 be redesignated as Class III, if the requirements of 40 CF R 51.166(g)(3) are met. Redesignations may not, however, be 7 proposed which would violate the restrictions of 40 CFR 51. 166(e). Lands within the boundaries of Indian Reservations 8 may be redesignated only by the appropriate Indian Governing Body. 9 (e) In areas designated as Class I, II, or III, increases in pollutant concentrati on over the baseline concentration shall be 10 limited to the values set forth in 40 CFR 51.166(c). However, concentration of the pollutant shall not exceed standards 11 set forth in 40 CFR 51.166(d). 12 (f) Concentrations attributable to the conditions descri bed in 40 CFR 51.166(f)(1) shall be excluded in determining 13 compliance with a maximum allowable increase. However, th e exclusions referred to in 40 CFR 51.166(f)(1)(i) or (ii) 14 shall be limited to five years as described in 40 CFR 51.166(f)(2). 15 (g) Major stationary sources and major modifications sha ll comply with the requirements contained in 40 CFR 51.166(i) 16 and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition provisions allowed by 40 CFR 52.21 17 (i)(11)(i) and (ii) and (m)(1)(vii) and (viii) are hereby adopt ed under this Rule. The minimum requirements described in 18 the portions of 40 CFR 51.166 referenced in this Paragraph ar e hereby adopted as the requirements to be used under this 19 Rule, except as otherwise provided in this Rule. Wherever the language of the portions of 40 CFR 51.166 referenced in 20 this Paragraph speaks of the "plan," the requirements describe d therein shall apply to the source to which they pertain, 21 except as otherwise provided in this Rule. Whenever the portions of 40 CFR 51.166 referenced in this Paragraph provide 22 that the State plan may exempt or not apply certain re quirements in certain circumstances, those exemptions and 23 provisions of nonapplicability are also hereby adopted under this Rule. However, this provision shall not be interpreted 24 so as to limit information that may be requested from the owner or operator by the Director as specified in 40 CFR 25 51.166(n)(2). 26 (h) New natural gas-fired electrical utility generating units fo r which cost recovery is sought pursuant to G. S. 62-133.6 27 shall install best available control technology for NO X and SO 2

. SO 2 , regardless of applicability of the rest of this rule. 28 (i) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If th e emissions level calculated in accordance with Paragraph 29 (w)(6) of this Section is equal to or greater than 80 percent of the PAL [plant wide applicability limit] level, the Director 30 shall renew the PAL at the same level." 40 CFR 51.166( w)(10)(iv)(b) is not incorporated by reference. 31 (j) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator 32 of the sources to which this Rule applies shall apply fo r and receive a permit as required in 15A NCAC 02Q .0300 or 33

.0500. 34 (k) When a particular source or modification becomes a major stationary source or major modification solely by virtue of 35 a relaxation in any enforceable limitation which was establis hed after August 7, 1980, on the capacity of the source or 36 modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to 37 the source or modification as though construction had not yet begun on the source or modification. 38 (l) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by 39 reference except that the term "Administrator" is replaced with "Director". 40 (m) Volatile organic compounds exempted from coverage in 40 CFR 51.100(s) shall also be exempted when calculating 41 source applicability and control requirements under this Rule. 42 (n) The degree of emission limitation required for control of any air pollutant under this Rule shall not be affected in any 43 manner by: 44 (1) that amount of a stack height, not in existence before December 31, 1970, that exceeds good 45 engineering practice; or 46 (2) any other dispersion technique not implemented before then. 47 (o) A substitution or modification of a model as provided for in 40 CFR 51.166(l) shall be subject to public comment 48 procedures in accordance with the requirements of 40 CFR 51.102. 49 (p) Permits may be issued on the basis of innovative c ontrol technology as set forth in 40 CFR 51.166(s)(1) if the 50 requirements of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 CFR 51.166(s)(3), and with the 51 allowance set forth in 40 CFR 51.166(s)(4). 52 (q) If a source to which this Rule applies impacts an area designated Class I by requirements of 40 CFR 51.166(e), 53 notice to EPA will be provided as set forth in 40 CF R 51.166(p)(1). If the Federa l Land Manager presents a 54 demonstration described in 40 CFR 51.166(p)(3) during the public comment period or public hearing to the Director and 55II-3

if the Director concurs with this demonstration, the permit application shall be denied. Permits may be issued on the basis 1 that the requirements for variances as set forth in 40 CFR 51. 166(p)(4), (p)(5) and (p)(7), or (p)(6) and (p)(7) have been 2

satisfied. 3 (r) A permit application subject to this Rule shall be processed in accordance with the procedures and requirements of 40 4 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be notified if the application is complete as 5

to initial information submitted. Commencement of construc tion before full prevention of significant deterioration 6 approval is obtained constitutes a violation of this Rule. 7 (s) Approval of an application with regard to the requirement s of this Rule shall not relieve the owner or operator of the 8 responsibility to comply fully with applicable provisions of othe r rules of this Subchapter or Subchapter 02Q of this Title 9 and any other requirements under local, state, or federal law. 10 (t) When a source or modification subject to this Rule may affect the visibility of a Class I area named in Paragraph (c) 11 of this Rule, the following procedures shall apply: 12 (1) The Director shall provide written notification to all affected Federal Land Ma nagers within 30 days of 13 receiving the permit application or within 30 days of receiving advance notification of an application. 14 The notification shall be at least 30 days prior to the publication of notice for public comment on the 15 application. The notification shall include a copy of all information relevant to the permit application 16 including an analysis provided by the source of the potential impact of the proposed source on 17 visibility. 18 (2) The Director shall consider any analysis con cerning visibility impairment performed by the Federal 19 Land Manager if the analysis is received within 30 da ys of notification. If the Director finds that the 20 analysis of the Federal Land Manager fails to demons trate to his satisfaction that an adverse impact on 21 visibility will result in the Class I area, the Director shall provide in the noti ce of public hearing on the 22 application, an explanation of his decision or no tice as to where the explanation can be obtained. 23 (3) The Director may require monitoring of visibility in or around any Class I area by the proposed new 24 source or modification when the visibility impact analysis indicates possible visibility impairment. 25 (u) If the owner or operator of a source is using projected actual emissions to avoid applicability of prevention of 26 significant deterioration requirements, the owner or operato r shall notify the Director of the modification before 27 beginning actual construction. The notification shall include: 28 (1) a description of the project, 29 (2) identification of sources whose emissi ons could be affected by the project, 30 (3) the calculated projected actual emissions and an explanation of how the projected actual emissions 31 were calculated, including identification of em issions excluded by 40 CFR 51.166(b)(40)(ii)(c), 32 (4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions were 33 calculated, and 34 (5) any netting calculations if applicable. 35 If upon reviewing the notification, the Director finds that th e project will cause a prevention of significant deterioration 36 evaluation, then the Director shall notify the owner or opera tor of his findings. The owner or operator shall not make the 37

m odification until it has received a permit issued pursuant to this Rule. If a permit revision is not required pursuant to this 38 rule, the owner or operator shall maintain records of annual em issions in tons per year, on a calendar year basis related to 39 the modifications for 10 years following resumption of regul ar operations after the change if the project involves 40 increasing the emissions unit's design capacity or its poten tial to emit the regulated NSR pollutant; otherwise these 41 records shall be maintained for five years following resumption of regular operations after the change. The owner or 42 operator shall submit a report to the director within 60 days af ter the end of each year during which these records must be 43 generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) through (c). The owner or operator shall 44

make the information documented and maintained under this Pa ragraph available to the Director or the general public 45 pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 46 (v) The reference to the Code of Fede ral Regulations (CFR) in this Rule are incorporated by reference unless a specific 47

reference states otherwise. The version of the Code of Federal Regulations incorporated in this Rule is that as of June 13, 48

2007. 2007 except those provisions noticed as stayed in 69 FR 40274, and does not include any subsequent amendments 49

or editions to the referenced material. 50

51 History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143-215.107(a)(5); 143-215.107(a)(7); 143- 52 215.108(b); 150B-21.6; 53 Eff. June 1, 1981; 54 Amended Eff. December 1, 1992; August 1, 1991; 55II-4

Temporary Amendment Eff. March 8, 1994, for a period of 180 days or until the permanent rule is 1 effective, whichever is sooner; 2 Amended Eff. ______; May 1, 2008; July 28, 2006; July 1, 1997; February 1, 1995; July 1, 1994. 3

4 15A NCAC 02D .0531 is proposed for amendment with changes as follows: 5

6

15A NCAC 02D .0531 SOURCES IN NONATTAINMENT AREAS 7 (a) For the purpose of this Rule the definitions contained in 40 CFR 51.165(a)(1) and 40 CFR 51.301 shall apply except 8

the definition of "baseline actual emissions." 9 (1) "Baseline actual emissions" means the rate of emi ssions, in tons per year, of a regulated new source 10 review (NSR) pollutant, as determ ined in accordance with Parts (A) through (C) of this Subparagraph: 11 (A) For an existing emissions unit, baseline actual emissions means the average rate, in tons per 12 year, at which the emissions unit actually emitted the pollutant during any consecutive 24- 13 month period selected by the owner or operator within the 5-year period immediately 14 preceding the date that a complete permit application is received by the Division for a permit 15 required under this Rule. The Director shall a llow a different time period, not to exceed 10 16 years immediately preceding the date that a co mplete permit application is received by the 17 Division, if the owner or operator demonstrat es that it is more representative of normal 18 source operation. For the purpose of determining baseline actual emissions, the following 19 shall apply: 20 (i) The average rate shall include fugitive emissions to the extent quantifiable, and 21

emissions associated with star tups, shutdowns, and malfunctions. 22 (ii) The average rate shall be adjusted downward to exclude any non-compliant 23 emissions that occurred while the source was operating above any emission 24 limitation that was legally enforceable during the consecutive 24-month period. 25 (iii) For an existing emission unit (other than an electric utility steam generating unit), 26 the average rate shall be adjusted downward to exclude any emissions that would 27 have exceeded an emission limitation with which the major stationary source must 28 currently comply. However, if the State has taken credit in an attainment 29 demonstration or maintenance plan consistent with the requirements of 40 CFR 30 51.165(a)(3)(ii)(G) for an emission limitation that is part of a maximum achievable 31 control technology standard that the Administrator proposed or promulgated under 32 part 63 of the Code of Federal Regulations, the baseline actual emissions shall be 33 adjusted to account for such emission reductions. 34 (iv) For an electric utility steam generating unit, the average rate shall be adjusted 35 downward to reflect any emissions re ductions under G.S. 143-215.107D and for 36 which cost recovery is sought pursuant to G.S. 62-133.6. 37 (v) For a regulated NSR pollutant, when a project involves multiple emissions units, 38 only one consecutive 24-month period shall be used to determine the baseline actual 39 emissions for all the emissions units being changed. A different consecutive 24- 40 month period for each regulated NSR pollutant. 41 (vi) The average rate shall not be based on any consecutive 24-month period for which 42 there is inadequate information for determ ining annual emissions, in tons per year, 43 and for adjusting this amount if required by Subparts (ii) and (iii) of this Part. 44 (B) For a new emissions unit, the baseline actua l emissions for purposes of determining the 45 emissions increase that will result from the initial construction and operation of such unit 46 shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to emit. 47 (C) For a plantwide applicability limit (PAL) for a stationary source, the baseline actual 48 emissions shall be calculated for existing emissions units in accordance with the procedures 49 contained in Part (A) of this Subparagraph, and for a new emissions unit in accordance with 50 the procedures contained in Part (B) of this Subparagraph. 51 (2) In the definition of "net emissions incr ease," the reasonable period specified in 40 CFR 52 51.165(a)(1)(vi)(C)(1) shall be seven years. 53II-5

(b) Redesignation to Attainment. If any county or part of a county to which this Rule applies is later designated in 40 1

CFR 81.334 as attainment for ozone or carbon monoxide , all sources in that county subject to this Rule before the 2 redesignation date shall continue to comply with this Rule. 3 (c) Applicability. 40 CFR 51.165(a)(2) is incorporated by re ference. This Rule applies to areas designated as 4 nonattainment in 40 CFR 81.334, including any subsequent amendments or editions. the following areas: 5 (1) Ozone Nonattainment Areas, to major stationary sources and major modifications of sources of 6 volatile organic compounds or nitrogen oxides for which construction commences after the area in 7 which the source is located is designated according to Part (A ) or (B) of this Subparagraph: 8 (A) areas designated in 40 CFR 81.334 as nonattainment for ozone, or 9 (B) any of the following areas and in that area onl y when the Director notices in the North 10 Carolina Register that the area is in violation of the ambient air quality standard for ozone: 11 (i) Charlotte/Gastonia, consisting of Meck lenburg and Gaston Counties; with the 12 exception allowed under Paragraph (l) of this Rule; 13 (ii) Greensboro/Winston

- Salem/High Point, consisting of Davidson, Forsyth, and 14

Guilford Coun ties and that part of Davie County bounded by the Yadkin River, 15 Dutchmans Creek, North Carolina Highway 801, Fulton Creek and back to Yadkin 16 River; or 17 (iii) Raleigh/Durham, consisting of Durham and Wake Counties and Dutchville 18 Township in Granville County. 19 Violations of the ambient air quality standard for ozone shall be determined according to 40 20

CFR 50.9. 21 (2) Carbon Monoxide Nonattainment Areas. This Rule applies to major stationary sources and major 22

modifications of sources of carbon monoxide located i n areas designated in 40 CFR 81.334 as 23

nonattainment for carbon monoxide and for which construction commences after the area in which the 24

source is located is listed in 40 CFR 81.334 as nonattainment for carbon monoxide. 25 (d) This Rule is not applicable to: 26 (1) complex sources of air pollution regulated only under Section .0800 of this Subchapter and not under 27 any other rule in this Subchapter; 28 (2) emission of pollutants at the new major stationary source or major modification located in the 29 nonattainment area that are pollutants other than the pollutant or pollutants for which the area is 30 nonattainment. (A major stationary source or majo r modification that is major for volatile organic 31 compounds or nitrogen oxides is also major for ozone.); 32 (3) emission of pollutants for which the source or modification is not major; 33 (4) a new source or modification that qualifies for exemption under the provision of 40 CFR 51.165(a)(4); 34

or 35 (5) emission of compounds listed under 40 CFR 51.100(s) as having been determined to have negligible 36 photochemical reactivity except carbon monoxide. 37 (e) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator 38 of the source shall apply for and receive a perm it as required in 15A NCAC 02Q .0300 or .0500. 39 (f) To issue a permit to a source to which this Rule applie s, the Director shall determine that the source meets the 40 following requirements: 41 (1) The new major stationary source or major modification will emit the nonattainment pollutant at a rate 42 no more than the lowest achievable emission rate; 43 (2) The owner or operator of the proposed new ma jor stationary source or major modification has 44 demonstrated that all major stationary sources in the State that are owned or operated by this person 45 (or any entity controlling, controlled by, or under co mmon control with this person) are subject to 46 emission limitations and are in compliance, or on a schedule for compliance that is federally 47 enforceable or contained in a court decree, with all applicable emission limitations and standards of 48 this Subchapter that EPA has authority to a pprove as elements of the North Carolina State 49 Implementation Plan for Air Quality; 50 (3) The owner or operator of the proposed new major stationary source or major modification will obtain 51 sufficient emission reductions of the nonattainment pollutant from other sources in the nonattainment 52 area so that the emissions from the new major source and associated new minor sources will be less 53 than the emissions reductions by a ratio of at l east 1.00 to 1.15 for volatile organic compounds and 54 nitrogen oxides and by a ratio of less than one to one for carbon monoxide. The baseline for this 55II-6

emission offset shall be the actual emissions of the source from which offset credit is obtained. 1 Emission reductions shall not include any reduc tions resulting from compliance (or scheduled 2 compliance) with applicable rules in effect be fore the application. The difference between the 3 emissions from the new major source and associated new minor sources of carbon monoxide and the 4 emission reductions shall be sufficient to represent reasonable further progress toward attaining the 5

National Ambient Air Quality Standards. The emissions reduction credits shall also conform to the 6 provisions of 40 CFR 51.165(a)(3)(ii)(A) through (G) and (J); and 7 (4) The North Carolina State Implementation Plan for Air Quality is being carried out for the 8 nonattainment area in which the proposed source is located. 9 (g) New natural gas-fired electrical utility generating units fo r which cost recovery is sought pursuant to G. S. 62-133.6 10 shall install lowest achievable emission rate technology for NO X and SO 2

. SO 2 , regardless of the applicability of the rest 11

of this Rule. 12 (h) 40 CFR 51.165(f) is incorporated by reference except th at 40 CFR 51.165(f)(10)(iv)(A) is changed to read: "If the 13 emissions level calculated in accordance with Paragraph (f)(6) of th is Section is equal to or greater than 80 percent of the 14 PAL level, the Director shall renew the PAL at the same level." 40 CFR 51.165(f)(10)(iv)(B) is not incorporated by 15

reference. 16 (i) When a particular source or modification becomes a major stationary source or major modification solely by virtue of 17 a relaxation in any enforceable limitation established after August 7, 1980, on the capacity of the source or modification 18 to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to the source or 19 modification as though construction had not yet begun on the source or modification. 20 (j) To issue a permit to a source of a nonattainment pollutant , the Director shall determine, in addition to the other 21 requirements of this Rule, that an analysis (produced by the permit applicant) of alternative sites, sizes, production 22 processes, and environmental control techniques for the source demonstrates that the benefits of the source significantly 23 outweigh the environmental and social costs imposed as a result of its location, construction, or modification. 24 (k) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by 25 reference except that the term "Administrator" is replaced with "Director". 26 (l) Approval of an application regarding the requirements of this Rule shall not relieve the owner or operator of the 27 responsibility to comply fully with applicable provisions of other rules of this Chapter and any other requirements under 28 local, state, or federal law. 29 (m) When a source or modification subject to this Rule may affect the visibility of a Class I area named in Paragraph (c) 30 of Rule .0530 of this Section, the following procedures shall be followed: 31 (1) The owner or operator of the source shall provide an analysis of the impairment to visibility that would 32 occur because of the source or modification and general commercial, indus trial and other growth 33 associated with the source or modification; 34 (2) The Director shall provide written notification to all affected Federal Land Ma nagers within 30 days of 35 receiving the permit application or within 30 days of receiving advance notification of an application. 36 The notification shall be at least 30 days before the publication of the notice for public comment on the 37 application. The notification shall include a copy of all information relevant to the permit application 38 including an analysis provided by the source of the potential impact of the proposed source on 39 visibility; 40 (3) The Director shall consider any analysis con cerning visibility impairment performed by the Federal 41 Land Manager if the analysis is received within 30 days of notification. If the Director finds that the 42 analysis of the Federal Land Manager fails to demons trate to his satisfaction that an adverse impact on 43 visibility will result in the Class I area, the Director shall provide in the notice of public hearing on the 44 application, an explanation of his decision or notice where the explanation can be obtained; 45 (4) The Director shall issue permits only to those sources whose emissions will be consistent with making 46 reasonable progress toward the national goal of preventing any future, and rem edying any existing, 47 impairment of visibility in mandatory Class I areas when the impairment results from manmade air 48 pollution. In making the decision to issue a permit, the Director shall consider the cost of compliance, 49 the time necessary for compliance, the energy and nonair quality environmental impacts of 50 compliance, and the useful life of the source; and 51 (5) The Director may require monitoring of visibility in or around any Class I area by the proposed new 52 source or modification when the visibility impact analysis indicates possible visibility impairment. 53 The requirements of this Paragraph shall not apply to nonprofit health or nonprofit educational institutions. 54II-7

(n) Paragraphs (f) and (j) of this Rule shall not apply to a new major stationary source or a major modification of a 1 source of volatile organic compounds or nitrogen oxides for which construction commences after the area in which the 2 source is located has been designat ed according to Part (c)(1)(B) of this Rule and before the area is designated in 40 CFR 3 81.334 as nonattainment for ozone if the owner or operator of the source demonstrates, using the Urban Airshed Model 4 (UAM), that the new source or modification will not contribute to or cause a violation. The model used shall be that 5 maintained by the Division. The Division shall run the mode l only after the permit application has been submitted. The 6 permit application shall be incomplete until the modeling analysis is c ompleted. The owner or operator of the source shall 7 apply such degree of control and obtain such offsets necessary to demonstrate the new source or modified source will not 8

cause or contribute to a violation. 9 (o) (n) If the owner or operator of a source is using projected actual emissions to avoid applicability of nonattainment 10 new source review, the owner or operator shall notify th e director of the modification before beginning actual 11

construction. The notification shall include: 12 (1) a description of the project, 13 (2) identification of sources whose emissi ons could be affected by the project, 14 (3) the calculated projected actual emissions and an explanation of how the projected actual emissions 15 were calculated, including identification of em issions excluded by 40 CFR 51.165(a)(1)(xxviii)(B)(3), 16 (4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions were 17 calculated, and 18 (5) any netting calculations if applicable. 19 If upon reviewing the notification, the Director finds that the project will cause a nonattainment new source review 20 evaluation, then the Director shall notify the owner or opera tor of his findings. The owner or operator shall not make the 21 modification until it has received a permit issued pursuant to this Rule. If a permit revision is not required pursuant to this 22 Rule, the owner or operator shall maintain records of annual em issions in tons per year on a calendar year basis related to 23 the modifications for 10 years following resumption of regul ar operations after the change if the project involves 24 increasing the emissions unit's design capacity or its poten tial to emit the regulated NSR pollutant; otherwise these 25 records shall be maintained for five years following resumption of regular operations after the change. The owner or 26 operator shall submit a report to the director within 60 days af ter the end of each year during which these records must be 27 generated. The report shall contain the items listed in 40 CFR 51.165(a)(6)(v)(A) through (C). The owner or operator 28

shall make the information documented and maintained under th is Paragraph available to the Director or the general 29 public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). 30 (p) (o) The reference to the Code of Federal Regulations (C FR) in this Rule are incorporated by reference unless a 31 specific reference states otherwise. The Except for 40 CFR 81.334, the version of the Code of Federal Regulations 32 incorporated in this Rule is that as of June 13, 2007 except those provisions noticed as stay ed in 69 FR 40274, and does 33 not include any subsequent amendments or editions to the referenced material. 2007. 34

35 History Note: Authority G.S. 143-215.3(a)(1); 143-215.107(a)(5); 143-215.108(b); 36 Eff. June 1, 1981; 37 Amended Eff. December 1, 1993; December 1, 1992; 38 Temporary Amendment Eff. March 8, 1994 for a pe riod of 180 days or until the permanent rule is 39 effective, whichever is sooner; 40 Amended Eff. _______; May 1, 2008; May 1, 2005; July 1, 1998; July 1, 1996; July 1, 1995; July 1, 41

1994. 42

43II-8

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### CHAPTER III

REPORT OF PROCEEDINGS

Introduction

The Department of Environmental and Natural Resources, Division of Air Quality, held two public hearings on April 27, 2010, at 6:00 P.M. at Mecklenburg Government Center, Room CH14, 600 E. 4 th 

### Street, Charlotte, NC 28202 and on Ap ril 29, 2010, at 6:00 P.M., at DENR – Division of Air Quality A nnex Training Room (AQ 526) 2728 Capital Blvd., Raleigh, NC

27604.

The hearing considered the proposed amen dments to Rules 15A NCAC 02D .0530 and .0531.

The proposed effective date for these rules is projected to be September 1, 2010.

A public notice announcing this hear ing was mailed to each person on the official mailing list for rule-making hearings. The public notice was also published in the North Carolina Register at least 20 days before the public hearing and in the Charlotte Observer , the Wilmington Star News

, the Asheville Citizen Times , the Winston Salem Journal , and the Raleigh News and Observer at least 30 days prior to the public hearing.

### ENVIRONMENTAL MANAGEMENT COMMISSION

NORTH CAROLINA
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES Stephen T. Smith

Chairman

Charles Peterson
Vice Chairman

Beverly Eaves Perdue, Governor Dee Freeman, Secretary Yvonne C. Bailey

Donnie Brewer
Thomas F. Cecich

Stan L. Crowe John S. Curry

Marion Deerhake

Tom Ellis William L. Hall, Jr. Ernest W. Larkin

Kevin Martin
David H. Moreau Jeffrey V. Morse Darryl D. Moss

David B. Peden Dickson Phillips Ill Forrest R. Westall, Sr.



# MEMORANDUM

TO: Mr. Tom Ellis

FROM: Mr. Stephen Smith 

# TyvtAIrr)

SUBJECT: Hearing Officer Appointment

DATE: March 4, 2010

Public hearings have been scheduled for Tuesday, April 27, 2010, in Charlotte at 6:00 p.m. and Thursday, April 29, 2010, in Raleigh at 6:00 p.m. The attached public notice describes the purpose of these hearings.

I am hereby appointing you to serve as hearing officer for these hearings. Please receive all relevant public comment and report your findings and recommendations to the Environmental Management Commission. Mr. Mike Abraczinskas will provide staff support for you.

If you have any questions, please feel free to contact Joelle Burleson at (919) 733-1474 or me.

BKO/jb

Attachment

cc: Keith Overcash

Lois Thomas Hearing Record File

An Equal Opportunity Affirmative Action Employer

### Transcript

Transcripts of the April 27 and April 29, 2010 h earings have not been prepared; however, an audio recording of each proceeding will be kept on file with the Division of Air Quality for one year from the date of the final actions by the Environmental Management

Commission.

A list of those attending the hearing as follows:

Hearing Officer: Mr. Tom Ellis, member of the Environmental Management

Commission

Staff Members at both hearings: Mr. Glenn Sappie, DAQ, DENR Mr. Vladimir Zaytsev, DAQ, DENR Ms. Joelle Burleson, DAQ, DENR

Staff Member at the April 27, Charlotte hearing: Mr. Chuck Greco, Mecklenburg County Air Quality

Staff Member at the April 29, Raleigh hearing: Mr. Michael Abraczinskas, DAQ, DENR

Members of the General Public at the April 27, Charlotte hearing: Mr. Jeff Stoudt, President, Prin ting Industry of the Carolinas Mr. Andy Munn, Public Policy Director, Real Estate and Building Industry Coalition

Members of the General Public at the April 29, Raleigh hearing: Mr. James Sell, Senior Council, American Coatings AssociationIV-1



### CHAPTER IV

EXHIBITS

EXHIBIT PAGE

Proposed Regulations as Publishe d in the Public Notice and Presented at the Hearing IV-2

Hearing Officer Comments at the Public Hearing IV-9IV-2

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 Notice is hereby given in accordance with G.S. 150B-21.2 that the Environmental Management Commission intends to adopt the rules cited as 15A NCAC 02D .0961-.0968, amend the rules cited as 15A NCAC 02D .0530-.0531, .0902, .0909, .0922, .0923, .0935, .0951-.0952; 02Q .0306, and repeal the rules cited as 15A NCAC 02D .0917, .0920-.0921, .0934, .0936.

Proposed Effective Date: July 1, 2010

Public Hearing : Date: April 27, 2010

Time: 6:00 p.m.

Location: Mecklenburg Government Center, Room CH-14, 600

E. 4 th Street, Charlotte, NC 28202

Date: April 29, 2010

Time: 6:00 p.m.

Location: DENR-Division of Air Quality, Central Office, Air Quality Annex Training Room (AQ-526), 2728 Capital Blvd, Raleigh, NC 27604

Reason for Proposed Action: Hearing 1: 15A NCAC 02D .0530, Prevention of Significant Deterioration, is proposed for amendment, to clarify that installation of BACT applies to all new natural gas-fired electrical utility generating units for which cost recovery is sought under the Clean Smokestacks Act. Am endments to Rule
15A NCAC 02D .0531, Sources in Nonattainment Areas, is proposed for amendment to remove pollutant specific references that require sources to continue measures after an area's redesignation to attainment and replace description of nonattainment areas with reference to 40 CFR 81.334 that identifies nonattainment areas. Hearing 2: 15A NCAC 02D .0900, Volatile Organic Compounds, is proposed for amendment to incorporate EPA Control Techniques Guidelines concerning what types of

controls could constitute RACT for eleven source categories to comply with the requirements of Sections 172(c)(1) and 182(b)(2).

1. Amendments to 15A NCAC 02D Rules - .0909 Compliance Schedules for Sources in Nonattainment Areas; .0922, Metal Furniture Coatings; .0923, Surface Coating of Large Appliance Parts; .0935, Factory Surface Coating Of Flat Wood Paneling; .0902, Applicability; .0951, Miscellaneous Volatile Organic Compound Emissions, .0952 Petition for Alternative Controls for RACT. Also proposes amendments to 15A NCAC 02Q .0306, Permits Requiring Public Participation. 2. Adoptions of the Rules to 15A NCAC 02D Rules - .0961, Offset Lithographic Printing and Letterpress Printing; .0962, Industrial Cleaning Solvents; .0963, Fiberglass Boat Manufacturing; .0964, Miscellaneous Industrial Adhesives; .0965, Flexible Package Printing; .0966, Paper, Film and Foil Coatings; .0967, Miscellaneous Metal and Plastic Parts Coatings; .0968, Automobile and Light-Duty Truck Assembly Coatings. 3. Repeals of the current 15A NCAC 02D Rules - .0917, Automobile and Light-duty Truck Manufacturing; .0921, Fabric and Vinyl Coating; .0920, Paper Coating; .0934, Coating of Miscellaneous Metal Parts and Products; and .0936, Graphic Arts.

Procedure by which a person can object to the agency on a proposed rule: Mail a letter including your specific reasons to: Mr. Michael Abraczinskas, Division of Air Quality, 1641 Mail Service Center, Raleigh, NC 27699-1641.

Comments may be submitted to: Michael Abraczinskas, Division of Air Quality, 1641 Mail Service Center, Raleigh, NC 27699-1641, phone (919)715-3473, fax (919)715-7476, email Michael.abraczinskas@ncdenr.gov

Comment period ends: April 30, 2010

Procedure for Subjecting a Proposed Rule to Legislative

Review: If an objection is not resolved prior to the adoption of the rule, a person may also submit written objections to the Rules Review Commission after the adoption of the Rule. If the Rules Review Commission receives written and signed objections after the adoption of the Rule in accordance with G.S. 150B-21.3(b2) from 10 or more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become effective as provided in G.S. 150B-21.3(b1). The Commission will receive written objections until 5:00 p.m. on the day following the day the Commission approves the rule. The Commission will receive those objections by mail, delivery service, hand delivery, or facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a Commission staff a ttorney at 919-431-3000.

Fiscal Impact: A copy of the fisc al note can be obtained from the agency.
State

Local – 15A NCAC 02D .0530-.0531 Substantial Economic Impact ( > $3,000,000 )

None – 15A NCAC 02D, .0902, .0909, .0917, .0920- .0921, .0922, .0923, .0935, .0934, .0936, .0951-.0952, .0961- .0968; 02Q .0306 Fiscal Note posted at http://www.osbm.state.nc.us/pdf_files/DENR110609.pdf

TITLE 15A – DEPARTMENT OF ENVIRONMENT AND

NATURAL RESOURCES

CHAPTER 02 - ENVIRONMENTAL MANAGEMENT

SUBCHAPTER 02D - AI R POLLUTION CONTROL REQUIREMENTS

SECTION .0500 - EMISSION CONTROL STANDARDS

15A NCAC 02D .0530 PREVENTION OF SIGNIFICANT

DETERIORATION (a) The purpose of the Rule is to implement a program for the prevention of significant deterioration of air quality as required by 40 CFR 51.166.IV-3

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 (b) For the purposes of this Rule the definitions contained in 40 CFR 51.166(b) and 40 CFR 51.301 shall apply except the

definition of "baseline actual emissions." (1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this Subparagraph: (A) For an existing emissions unit,

baseline actual emissions means the average rate, in tons per year, at which the emissions unit actually emitted the pollutant during any consecutive 24-month period selected by the owner or operator within the 5- year period immediately preceding the date that a complete permit application is received by the Division for a permit required under

this Rule. The Director shall allow a different time period, not to exceed 10 years immediately preceding the date that a complete permit application is received by the Division, if the owner or operator

demonstrates that it is more representative of normal source operation. For the purpose of determining baseline actual emissions, the following shall apply: (i) The average rate shall include fugitive emissions to the extent quantifiable, and

emissions associated with startups, shutdowns, and

malfunctions. (ii) The average rate shall be adjusted downward to exclude any non-compliant

emissions that occurred

while the source was operating above any

emission limitation that was legally enforceable during

the consecutive 24-month period. (iii) For an existing emission unit (other than an electric utility steam generating unit), the average rate shall be adjusted downward to exclude any emissions that

would have exceeded an

emission limitation with which the major stationary source must currently comply. However, if the

State has taken credit in an

attainment demonstration or maintenance plan consistent with the requirements of 40 CFR 51.165(a)(3)(ii)(G) for an emission limitation that is part of a maximum

achievable control technology standard that the Administrator proposed or promulgated under part 63

of the Code of Federal Regulations, the baseline

actual emissions shall be adjusted to account for such

emission reductions. (iv) For an electric utility steam generating unit, the average rate shall be adjusted downward to reflect any

emissions reductions under

G. S. 143-215.107D and for which cost recovery is sought pursuant to G. S. 62-

133.6. (v) For a regulated NSR pollutant, when a project involves multiple emissions units, only one consecutive 24-month period shall be

used to determine the

baseline actual emissions for all the emissions units being changed. A different consecutive 24-month period for each regulated NSR pollutant can be used for each regulated NSR pollutant. (vi) The average rate shall not be based on any consecutive 24-month period for which there is inadequate information for determining annual emissions, in tons per year, and for adjusting this amount if required by Subparts (ii) and (iii) of this

Part. (B) For a new emissions unit, the baseline actual emissions for purposes of determining the emissions increase

that will result from the initial construction and operation of such unit shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to emit. (C) For a plantwide applicability limit (PAL) for a stationary source, the

baseline actual emissions shall be calculated for existing emissions units in accordance with the procedures contained in Part (A) of this Subparagraph, and for a new

emissions unit in accordance with the procedures contained in Part (B) of this Subparagraph.IV-4

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 (2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 51.166(b)(3)(ii) shall be seven years. (3) The limitation specified in 40 CFR 51.166(b)(15)(ii) shall not apply. (c) All areas of the State shall be classified as Class II except that the following areas are Class I: (1) Great Smoky Mountains National Park; (2) Joyce Kilmer Slickrock National Wilderness Area; (3) Linville Gorge National Wilderness Area; (4) Shining Rock National Wilderness Area; (5) Swanquarter National Wilderness Area. (d) Redesignations of areas to Class I or II may be submitted as state proposals to the Admini strator of the Environmental Protection Agency (EPA), if the requirements of 40 CFR 51.166(g)(2) are met. Areas may be proposed to be redesignated as Class III, if the requirements of 40 CFR 51.166(g)(3) are met. Redesignations may not, however, be proposed which would violate the restrictions of 40 CFR 51.166(e). Lands within the boundaries of Indian Reservations may be redesignated only by the appropriate Indian Governing Body. (e) In areas designated as Class I, II, or III, increases in pollutant concentration over the baseline concentration shall be limited to the values set forth in 40 CFR 51.166(c). However, concentration of the pollutant shall not exceed standards set forth in 40 CFR 51.166(d). (f) Concentrations attributable to the conditions described in 40 CFR 51.166(f)(1) shall be excluded in determining compliance

with a maximum allowable increas e. However, the exclusions referred to in 40 CFR 51.166(f)(1 )(i) or (ii) shall be limited to five years as described in 40 CFR 51.166(f)(2). (g) Major stationary sources and major modifications shall comply with the requirements contained in 40 CFR 51.166(i) and (a)(7) and by extension in 40 CFR 51.166(j) through (o) and (w). The transition provisions allowed by 40 CFR 52.21 (i)(11)(i) and (ii) and (m)(1)(v ii) and (viii) are hereby adopted under this Rule. The minimum requirements described in the portions of 40 CFR 51.166 referenced in this Paragraph are hereby adopted as the requirements to be used under this Rule, except as otherwise provided in this Rule. Wherever the language of the portions of 40 CFR 51.166 referenced in this Paragraph speaks of the "plan," the requirements described therein shall apply to the source to which they pertain, except as otherwise provided in this Rule. Whenever the portions of 40 CFR 51.166 referenced in this Paragraph provide that the State plan may exempt or not apply certain requirements in certain circumstances, those exemptions and provisions of nonapplicability are also hereby adopted under this Rule. However, this provision shall not be interpreted so as to limit information that may be requested from the owner or operator by the Director as specified in 40 CFR 51.166(n)(2). (h) New natural gas-fired elect rical utility generating units for which cost recovery is sought pursuant to G.S. 62-133.6 shall install best available control technology for NO X and SO 2

. SO 2 , regardless of applicability of the rest of this Rule. (i) 40 CFR 51.166(w)(10)(iv)(a) is changed to read: "If the

emissions level calculated in acco rdance with Paragraph (w)(6) of this Section is equal to or gr eater than 80 percent of the PAL [plant wide applicability limit] level, the Director shall renew the PAL at the same level." 40 CFR 51.166(w)(10)(iv)(b) is not incorporated by reference. (j) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator of the sources to which this Rule applies shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or .0500. (k) When a particular source or modification becomes a major stationary source or major modification solely by virtue of a relaxation in any enforceable limitation which was established after August 7, 1980, on th e capacity of the source or modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to the source or modification as though construction had not yet begun

on the source or modification. (l) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by reference except that the term "Administrat or" is replaced with "Director". (m) Volatile organic compounds exempted from coverage in 40 CFR 51.100(s) shall also be ex empted when calculating source applicability and control requirements under this Rule. (n) The degree of emission limitation required for control of any air pollutant under this Rule shall not be affected in any manner by: (1) that amount of a stack height, not in existence before December 31, 1970, that exceeds good engineering practice; or (2) any other dispersion technique not implemented before then. (o) A substitution or modification of a model as provided for in 40 CFR 51.166(l) shall be subject to public comment procedures

in accordance with the requirements of 40 CFR 51.102. (p) Permits may be issued on the basis of innovative control technology as set forth in 40 CFR 51.166(s)(1) if the requirements of 40 CFR 51.166(s)(2) have been met, subject to the condition of 40 CFR 51.166(s)(3), and with the allowance set forth in 40 CFR 51.166(s)(4). (q) If a source to which this Rule applies impacts an area designated Class I by requirements of 40 CFR 51.166(e), notice to EPA will be provided as set fo rth in 40 CFR 51.166(p)(1). If the Federal Land Manager presents a demonstration described in 40 CFR 51.166(p)(3) during the public comment period or public hearing to the Director an d if the Director concurs with this demonstration, the permit application shall be denied. Permits may be issued on the basis that the requirements for variances as set forth in 40 CFR 51.166(p)(4), (p)(5) and (p)(7), or (p)(6) and (p)(7) have been satisfied. (r) A permit application subject to this Rule shall be processed in accordance with the procedures and requirements of 40 CFR 51.166(q). Within 30 days of receipt of the application, applicants shall be notified if the application is complete as to

initial information submitted. Commencement of construction before full prevention of significant deterioration approval is

obtained constitutes a violation of this Rule. (s) Approval of an application with regard to the requirements of this Rule shall not relieve the owner or operator of the responsibility to comply fully with applicable provisions of other rules of this Subchapter or Subc hapter 02Q of this Title and any other requirements under local, state, or federal law. (t) When a source or modification subject to this Rule may affect the visibility of a Class I area named in Paragraph (c) of this Rule, the following procedures shall apply: (1) The Director shall provide written notification to all affected Federal Land Managers within 30 days of receiving the permit application orIV-5

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 within 30 days of receiving advance notification of an application. The notification shall be at least 30 days prior to the publication of notice for public comment on the application. The notification shall include a copy of all information relevant to the permit application including an analysis provided by the source of the pote ntial impact of the proposed source on visibility. (2) The Director shall consider any analysis concerning visibility impairment performed by the Federal Land Manager if the analysis is received within 30 days of notification. If the

Director finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an adverse impact on visibility will result in the Class I area, the Director shall provide in the notice of public hearing on the application, an explanation of his decision or notice as to where the explanation can be

obtained. (3) The Director may require monitoring of visibility in or around any Class I area by the proposed new source or modification when the visibility impact analysis indicates possible visibility impairment. (u) If the owner or operator of a source is using projected actual emissions to avoid applicability of prevention of significant deterioration requirements, the owner or operator shall notify the Director of the modification before beginning actual

construction. The notification shall include: (1) a description of the project, (2) identification of sources whose emissions could be affected by the project, (3) the calculated projected actual emissions and an explanation of how the projected actual emissions were calculated, including

identification of emissi ons excluded by 40 CFR 51.166(b)(40)(ii)(c), (4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions were calculated, and (5) any netting calculations if applicable. If upon reviewing the notification, the Director finds that the project will cause a prevention of significant deterioration evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make the modification until it has received a pe rmit issued pursuant to this Rule. If a permit revision is not required pursuant to this rule, the owner or operator shall maintain records of annual emissions in tons per year, on a calendar year basis related to the modifications for 10 years following resumption of regular operations after the change if the project involves increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; otherwise these records shall be maintained for five years following resumption of regular operations after the change. The owner or operator shall submit a report to the director within 60 days after the end of each year during which these records must be generated. The report shall contain the items listed in 40 CFR 51.166(r)(6)(v)(a) through (c). The owner or operator shall make the information documented and maintained under this Paragrap h available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). (v) The reference to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a specific

reference states otherwise. The version of the Code of Federal Regulations incorporated in this Rule is that as of June 13, 2007.

2007 except those provisions noticed as stayed in 69 FR 40274, and does not include any subsequent amendments or editions to

the referenced mater ial

.

Authority G.S. 143-215.3(a)(1); 143-215.107(a)(3); 143- 215.107(a)(5); 143-215.107(a)(7); 143-215.108(b); 150B-21.6.

15A NCAC 02D .0531 SOURCES IN

NONATTAINMENT AREAS (a) For the purpose of this Rule the definitions contained in 40 CFR 51.165(a)(1) and 40 CFR 51.301 shall apply except the

definition of "baseline actual emissions." (1) "Baseline actual emissions" means the rate of emissions, in tons per year, of a regulated new source review (NSR) pollutant, as determined in accordance with Parts (A) through (C) of this Subparagraph: (A) For an existing emissions unit,

baseline actual emissions means the average rate, in tons per year, at which the emissions unit actually emitted the pollutant during any consecutive 24-month period selected by the owner or operator within the 5- year period immediately preceding the date that a complete permit application is received by the Division for a permit required under

this Rule. The Director shall allow a different time period, not to exceed 10 years immediately preceding the date that a complete permit application is received by the Division, if the owner or operator

demonstrates that it is more representative of normal source operation. For the purpose of determining baseline actual emissions, the following shall apply: (i) The average rate shall include fugitive emissions to the extent quantifiable, and

emissions associated with startups, shutdowns, and

malfunctions. (ii) The average rate shall be adjusted downward to exclude any non-compliant

emissions that occurred

while the source was operating above any

emission limitation that was legally enforceable during

the consecutive 24-month period.IV-6

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 (iii) For an existing emission unit (other than an electric utility steam generating unit), the average rate shall be adjusted downward to exclude any emissions that

would have exceeded an

emission limitation with which the major stationary source must currently comply. However, if the

State has taken credit in an

attainment demonstration or maintenance plan consistent with the requirements of 40 CFR 51.165(a)(3)(ii)(G) for

an emission limitation that is part of a maximum

achievable control technology standard that the Administrator proposed or promulgated under part 63

of the Code of Federal Regulations, the baseline

actual emissions shall be adjusted to account for such

emission reductions. (iv) For an electric utility steam generating unit, the average rate shall be adjusted downward to reflect any

emissions reductions under

G.S. 143-215.107D and for which cost recovery is sought pursuant to G.S. 62-

133.6. (v) For a regulated NSR pollutant, when a project involves multiple emissions units, only one consecutive 24-month period shall be

used to determine the

baseline actual emissions for all the emissions units being changed. A different consecutive 24-month period for each regulated NSR pollutant. (vi) The average rate shall not be based on any consecutive 24-month period for which there is inadequate information for determining annual emissions, in tons per year, and for adjusting this amount if required by Subparts (ii) and (iii) of this

Part. (B) For a new emissions unit, the baseline actual emissions for purposes of determining the emissions increase

that will result from the initial construction and operation of such unit shall equal zero; and thereafter, for all other purposes, shall equal the unit's potential to emit. (C) For a plantwide applicability limit (PAL) for a stationary source, the

baseline actual emissions shall be calculated for existing emissions units in accordance with the procedures contained in Part (A) of this Subparagraph, and for a new

emissions unit in accordance with the procedures contained in Part (B) of this Subparagraph. (2) In the definition of "net emissions increase," the reasonable period specified in 40 CFR 51.165(a)(1)(vi)(C)(1) shall be seven years. (b) Redesignation to Attainment. If any county or part of a county to which this Rule applies is later designated in 40 CFR

81.334 as attainment for ozone or carbon monoxide , all sources in that county subject to this Rule before the redesignation date shall continue to comply with this Rule. (c) Applicability. 40 CFR 51.165(a)(2) is incorporated by reference. This Rule applies to areas designated as nonattainment in 40 CFR 81.334, including any subsequent

amendments or editions. the following areas: (1) Ozone Nonattainment Areas, to major stationary sources and major modifications of sources of volatile organic compounds or nitrogen oxides for which construction

commences after the ar ea in which the source is located is designated according to Part (A) or (B) of this Subparagraph: (A) areas designated in 40 CFR 81.334 as nonattainment for ozone, or (B) any of the following areas and in that area only when the Di rector notices in

the N orth Carolina Register that the

area is in violation of the ambient air quality standard for ozone: (i) Charlotte/Gastonia, consisting of Mecklenburg and Gaston Counties; with the exception allowed under Paragraph (l) of this Rule; (ii) Greensboro/Winston

Salem/High Point, consisting of Davidson, Forsyth, and

Guilford Counties and that part of Davie County bounded by the Yadkin River, Dutchmans Creek, North Carolina Highway 801, Fulton Creek and back to Yadkin River; or (iii) Raleigh/Durham, consisting

of D urham and Wake

Counties and Dutchville Township in Granville County. Violations of the ambient air quality

standard for ozone shall beIV-7

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 determined according to 40

CFR 50.9. (2) Carbon Monoxide Nonattainment Areas. This Rule applies to major stationary sou rces and major modifications of sources of carbon monoxide located in areas designated in 40

CFR 81.334 as nonattainment for carbon

monoxide and for which construction

commences after the area in which the source

is located is listed in 40 CFR 81.334 as

no nattainment for carbon monoxide. (d) This Rule is not applicable to: (1) complex sources of air pollution regulated only under Section .0800 of this Subchapter and not under any other rule in this Subchapter; (2) emission of pollutants at the new major stationary source or major modification

located in the nonattain ment area that are pollutants other than the pollutant or pollutants for which the area is nonattainment. (A major stationary source or major modification that is major for volatile organic compounds or nitrogen oxides is also major for ozone.); (3) emission of pollutants for which the source or modification is not major; (4) a new source or modifi cation that qualifies for exemption under the provision of 40 CFR 51.165(a)(4); or (5) emission of compounds listed under 40 CFR 51.100(s) as having been determined to have negligible photochemical reactivity except

carbon monoxide. (e) 15A NCAC 02Q .0102 and .0302 are not applicable to any source to which this Rule applies. The owner or operator of the source shall apply for and receive a permit as required in 15A NCAC 02Q .0300 or .0500. (f) To issue a permit to a source to which this Rule applies, the

Director shall determine that the source meets the following requirements: (1) The new major stationary source or major

modification will emit the nonattainment pollutant at a rate no more than the lowest achievable emission rate; (2) The owner or operator of the proposed new major stationary source or major modification has demonstrated that all major stationary sources in the State that are owned or operated by this person (or any entity controlling, controlled by, or under common control with this person) are subject to emission limitations and are in compliance, or on a schedule for compliance that is fede rally enforceable or

contained in a court decr ee, with all applicable

emission limitations and standards of this Subchapter that EPA has authority to approve

as elements of the North Carolina State Implementation Plan for Air Quality; (3) The owner or operator of the proposed new major stationary source or major modification

will obtain sufficient emission reductions of the nonattainment pollutant from other sources in the nonattainment area so that the emissions from the new major source and associated new

minor sources will be less than the emissions reductions by a ratio of at least 1.00 to 1.15 for volatile organic compounds and nitrogen oxides and by a ratio of less than one to one

for carbon monoxide. The baseline for this

emission offset shall be the actual emissions of

the source from which offset credit is obtained. Emission reductions shall not include any reductions resulting from compliance (or scheduled compliance) with applicable rules in effect before the app lication. The difference between the emissions from the new major

source and associated new minor sources of

carbon monoxide and the emission reductions shall be sufficient to represent reasonable further progress toward attaining the National Ambient Air Quality Standards. The

emissions reduction credits shall also conform to the provisions of 40 CFR 51.165(a)(3)(ii)(A) through (G) and (J); and (4) The North Carolina St ate Implementation Plan for Air Quality is being carried out for the nonattainment area in which the proposed

source is located. (g) New natural gas-fired elect rical utility generating units for which cost recovery is sought pursuant to G.S. 62-133.6 shall install lowest achievable emission rate technology for NO X and

SO 2

. SO 2 , regardless of the applicability of the rest of this Rule. (h) 40 CFR 51.165(f) is incorpor ated by reference except that 40 CFR 51.165(f)(10)(iv)(A) is changed to read: "If the

emissions level calculated in accord ance with Paragraph (f)(6) of this Section is equal to or gr eater than 80 percent of the PAL level, the Director shall renew the PAL at the same level." 40 CFR 51.165(f)(10)(iv)(B) is not incorporated by reference. (i) When a particular source or modification becomes a major stationary source or major modification solely by virtue of a relaxation in any enforceable limitation established after August 7, 1980, on the capacity of the source or modification to emit a pollutant, such as a restriction on hours of operation, then the provisions of this Rule shall apply to the source or modification as though construction had not yet begun on the

source or modification. (j) To issue a permit to a source of a nonattainment pollutant, the Director shall determine, in addition to the other requirements of this Rule, that an analysis (produced by the permit applicant) of alternative sites, sizes, production processes, and environmental control techniques for the source

demonstrates that the benefits of the source significantly outweigh the environmental and social costs imposed as a result of its location, construction, or modification. (k) The provisions of 40 CFR 52.21(r)(2) regarding the period of validity of approval to construct are incorporated by reference except that the term "Administrat or" is replaced with "Director". (l) Approval of an application regarding the requirements of this Rule shall not relieve the owner or operator of the responsibility to comply fully with applicable provisions of other rules of this Chapter and any other requirements under local, state, or federal

law. (m) When a source or modification subject to this Rule may affect the visibility of a Class I area named in Paragraph (c) ofIV-8

North Carolina Register * Volume 24* Issue 04 * August 17, 2009 Rule .0530 of this Section, th e following procedures shall be

followed: (1) The owner or operator of the source shall provide an analysis of the impairment to visibility that would occur because of the source or modification and general commercial, industrial and other growth associated with the source or modification; (2) The Director shall provide written notification to all affected Federal Land Managers within 30 days of receiving the permit application or within 30 days of receiving advance notification of an application. The notification shall be at least 30 days before the publication of the notice for public comment on the application. The notification shall include a copy of all information relevant to the permit application including an analysis provided by the source of the pote ntial impact of the proposed source on visibility; (3) The Director shall consider any analysis concerning visibility impairment performed by the Federal Land Manager if the analysis is received within 30 days of notification. If the

Director finds that the analysis of the Federal Land Manager fails to demonstrate to his satisfaction that an adverse impact on visibility will result in the Class I area, the Director shall provide in the notice of public hearing on the application, an explanation of his decision or notice where the explanation can be obtained; (4) The Director shall issue permits only to those

sources whose emissions will be consistent with making reasonable progress toward the national goal of preventing any future, and remedying any existing, impairment of visibility in mandatory Class I areas when the impairment results from manmade air pollution. In making the decision to issue a permit, the Director shall consider the cost of compliance, the time necessary for compliance, the energy and nonair quality environmental impacts of compliance, and the useful life of the source; and (5) The Director may require monitoring of visibility in or around any Class I area by the proposed new source or modification when the visibility impact analysis indicates possible visibility impairment. The requirements of this Paragraph shall not apply to nonprofit health or nonprofit educational institutions. (n) Paragraphs (f) and (j) of this Rule shall not apply to a new major stationary source or a major modification of a source of volatile organic compounds or nitrogen oxides for which

construction commen ces after the area in which the source is located has been designated accord ing to Part (c)(1)(B) of this Rule and before the area is designated in 40 CFR 81.334 as nonattainment for ozone if the owner or operator of the source demonstrates, using the Urba n Airshed Model (UAM), that the

new source or modification will not contribute to or cause a violation. The model used shall be that maintained by the Division. The Division shall run the model only after the permit application has been submitted. The perm it application shall be incomplete until the modeling analysis is completed. The owner or operator of the source shall apply such degree of control and obtain such offsets necessary to demonstrate the new source or

modified source will not cause or contrib ute to a violation. (o) (n) If the owner or operator of a source is using projected actual emissions to avoid applicability of nonattainment new source review, the owner or operator shall notify the director of the modification before beginning actual construction. The

notification shall include: (1) a description of the project, (2) identification of sources whose emissions could be affected by the project, (3) the calculated projected actual emissions and an explanation of how the projected actual emissions were calculated, including

identification of emissi ons excluded by 40 CFR 51.165(a)(1)(xxviii)(B)(3), (4) the calculated baseline actual emissions and an explanation of how the baseline actual emissions were calculated, and (5) any netting calculations if applicable. If upon reviewing the notification, the Director finds that the project will cause a nonattainment new source review evaluation, then the Director shall notify the owner or operator of his findings. The owner or operator shall not make the modification until it has received a pe rmit issued pursuant to this Rule. If a permit revision is not required pursuant to this Rule, the owner or operator shall mainta in records of annual emissions in tons per year on a calendar year basis related to the modifications for 10 years following resumption of regular operations after the change if the project involves increasing the emissions unit's design capacity or its potential to emit the regulated NSR pollutant; otherwise these records shall be maintained for five years following resumption of regular operations after the change. The owner or operator shall submit a report to the director within 60 days after the end of each year during which these records must be generated. The report shall contain the items listed in 40 CFR 51.165(a)(6)(v)(A) through (C). The owner or operator shall make the information documented and maintained under this Paragraph available to the Director or the general public pursuant to the requirements in 40 CFR 70.4(b)(3)(viii). (p) (o) The references to the Code of Federal Regulations (CFR) in this Rule are incorporated by reference unless a specific

reference states otherwise. Except for 40 CFR 81.334, the

version of the Code of Federal Re gulations incorporated in this Rule is that as of June 13, 2007 2007. those provisions noticed as stayed in 69 FR 40274, and does not include any subsequent

amendments or editions to the referenced material.

Authority G.S. 143-215.3(a)(1); 143-215.107(a)(5); 143- 215.108(b).IV-9

Hearing Officer's Suggested Hearing Comments

INTRODUCTION

[hearing officer]:

Good evening ladies and gentlemen. My name is Tom Ellis. I am a member of the Environmental

Management Commission. My role as hearing office r is to listen to all relevant comment on these

proceedings and report them to the full commission. Sitting with me is Ms. Joelle Burleson. She is

with the North Carolina Division of Air Quality (DAQ), Planning Section.

Some of the staff from the Division of Air Quality are here to assist. Ms. Burleson, please introduce

the staff present.

Ms. Burleson. (Introduce staff)

[hearing officer]:

This evening we are conducting two hearings. During the first hearing we will take comments

concerning amendments to the Prevention of Signif icant (PSD) and New Source Review (NSR) rules.

The second hearing concerns adoptions, repeals and amendments to rules in Subchapter 02D, Section

.0900 that regulate volatile organic compound (VOC) emissions. These hearings will be held according

to the North Carolina Administrative Procedures Act. The public notice for these hearings has been

advertised in the North Carolina Register and five ne wspapers in the state. Copies of the notice have

been sent to those on the official DAQ mailing list . I will enter the public notice and the proposed

amendments, repeals and adoptions into the hearin g record without reading them at this time.

Any person desiring to comment is requested to submit a written statement for inclusion into the

hearing record. Once called to spea k, please come to the podium and state your name clearly, identify

the rule or rules you are commenting on, and whom you represent.

[first hearing]:IV-10

I will now open the first hearing and take releva nt comments on rule amendments to the PSD and

NSR requirements. The PSD requirements can be found in Rule 15 A NCAC 02D .0530, Prevention

of Significant Deterioration and the NSR requirem ents can be found in Rule 15A NCAC 02D .0531,

Sources in Nonattainment Areas. Being considered are rule amendments to clarify that installation of

best available control technology (BACT) applies to all new natural gas-fired electrical utility

generating units for which cost recovery is soug ht under the Clean Smokes tacks Act and to remove

pollutant specific references that require sources to continue measures after an area’s redesignation to

attainment and replace the description of nonattai nment areas with reference to 40 CFR 81.334 that

identifies nonattainment areas.

----------------------------------------------------------------------------------------------------------------------- [hearing officer]: Optional Time Limit

Many people have requested to speak at this hearing. Due to time constraints, speakers’

presentations will be limited to ___ minutes. Speake rs are requested to submit a written statement by

the close of the comment period for inclusion into the hearing record.

----------------------------------------------------------------------------------------------------------------------- [hearing officer]:

I will now take any comments that you may have.

[SPEAKERS]

[hearing officer]:

Is there anyone else who would like to comment? If there are no more comments, then the first

hearing is closed. The first hearing record will remain open until April 30, 2010, for additional written

comments.

------------------------------------------------------------------------------------------------------------------------

[second hearing]:

I will now open the second hearing and take relevant comments to the modification of 15A NCAC

2D Section .0900, Volatile Organic Compounds. Be ing considered are rule changes to incorporate

United States Environmental Protection Agency (U SEPA) Control Techniques Guidelines (CTG) levelIV-11

of Reasonably Available Control Technology (RACT) to comply with Sections 172(c)(1) and 182(b) of

the Clean Air Act (CAA).

DAQ is required, under provisions of CAA Sectio n 172(c)(1), to revise its State Implementation

Plan (SIP) in order to include an ozone attainment demonstration that will lead to attainment of the

national ambient air quality standards (NAAQS) fo r ozone. Section 182(b)(2) of CAA provides that

States must revise their ozone SIP to include RACT for each category of VOC sources covered by any

CTG document issued after November 15, 1990, an d prior to the date of attainment. After the

USEPA revised VOC regulations several times through issuance of New Sources Performance

Standards (NSPS) and National Emissions Standards for Hazardous Air Pollutants (NESHAP)

regulations to related industries, it finally provided States with guidance concerning what types of

controls could constitute RACT for a given source category through the issuance of CTGs to comply

with the requirements of Section 182(b)(2). EPA has issued 11 CTGs since 2006. The changes in

Section .0900-Volatile Organic Compounds presente d at this hearing address recommendations made

in these 11 CTGs.

----------------------------------------------------------------------------------------------------------------------- [hearing officer]:

I will now take any comments that you may have.

[SPEAKERS]

[hearing officer]:

Is there anyone else who would like to comment? If there are no more comments, then this hearing is

closed. The hearing record will remain open unti l April 30, 2010, for additional written comments.IV-12

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### CHAPTER V

COMMENTS DURING THE COMMENT PERIOD

No comments were received for the rules in this hearing repor t during the comment period.V-2



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### VI-1

CHAPTER VI

INDEX OF ATTACHMENTS

ATTACHMENTS PAGE

1. PSD and Sources in Nonattainme nt Areas Economic Analysis VI-2

### VI-2

ECONOMIC ANALYSIS: PSD & SOUR CES IN NONATTAINMENT AREAS (490)

Contact Information

1. Division of Air Quality File Number (490)

2. Analyst: Glenn Sappie glenn.sappie@ncdenr.gov

3. Office DENR, Air Quality Planning, Rule Branch

4. Phone 919/715-3743 or 919/ 715-4398

5. Comments to Agency Contact Mike Abraczinskas Michael.Abraczinskas@ncdenr.gov

6. Title of the Amended Rule PSD & Sources in Nonattainment Areas

7. Rule Citation 15A NCAC 02D .0530 & 02D .0531

8. Brief Description of the Proposed Rule Use CFR reference to specify nonattainment areas where BACT or LAER controls apply

9. Rule Category Division 1 – Regulatory Behavior

Screening Analysis

Rule Actions General Statute Yes

or No 10. Federal Law Certification Required - Does the proposed rule purport to implement a federal law requiring a certification statement by the rule-making coordinator under? NCGS 150B-21(f)(1) No

11. Temporary Rules - Does this rule meet the criteria listed relating to temporary rules? NCGS 150B-21.1 No

12. Emergency Rules

- Does this rule meet the criteria relating to emergency rules? NCGS 150B-21.1(a) No

13. Establishes or Increases Fees - Is the agency required to complied with the requirements of G.S. 12-3.1? NCGS 150B-12-3.1 NCGS 150B-21.3(c1) No

14. State Funds - Does the proposed rule require the expenditure or distribution of funds subject to the Executive Budget Act, Article 1 of Chapter 143? NCGS 150B-21.4(a) No

15. NC DOT Analysis

- Does the proposed rule affect NC DOT environmental permitting that will result in an increased cost? NCGS 150B-21.4(a1) No

16. Local Government Unit Funds - Does the proposed rule affect the expenditures or revenues of a unit of local government? NCGS 150B-21.4(b) No

17. Substantial Economic Impa ct Analysis - Federal Rule Exemption - Does this rule meet the criterion of Federal Exemption found in? NCGS 150B-21.4(b1) No

18. Technical Change - Are only technical changes being incorporated such that public notice and rule-making hearings are not required? NCGS 150B-21.5 No

19. Repeal of Regulatory Deadwood - Is the Rule Obsolete? NCGS 150B-21.5(b) No

### VI-3

ECONOMIC ANALYSIS: PSD & SOURCES IN NONATTAINMENT AREAS

I. Executive Summary

The purpose of this analysis is to conduct an ev aluation of the costs and benefits that will be incurred by owners or operators of the affect ed facilities to comply with the proposed

amendments. Included is a review of the potential fiscal impacts on state funds that could result due to permit conditions of any st ate-owned facility, or regulatory responsibil ities the Division of Air Quality (DAQ) as the primary implementing ag ency. Potential impacts to units of local government are examined from the perspective as facility owners or th rough local air quality program expenditures due to administration responsibilities of re-adopted DAQ rules.

Under the federal Clean Air Act, a program known as “Prevention of Significant Deterioration” (PSD) which requires an analysis of new sources at facilities or significant modifications of existing sources further protects areas that at tain the National Ambient Air Quality Standard (NAAQS). The PSD program is one element of the “new source re view” (NSR) program.

The amendments in paragraph (h) to Rule 15A NCAC 02D .0530, Prevention of Significant

Deterioration , clarify that Best Availa ble Control Technology (BACT) is required for all new gas fired electrical generating units by adding the phrase “for which cost recovery is sought pursuant to G.S. 62-133.6”. This North Carolina st atute is referred to as the Clean Smokestacks Act (CSA). This change clarifies that this pa ragraph of the rule applies only to certain CSA units. The Environmental Management Commissi on (EMC) inserted this paragraph during its December 2004 meeting. It’s clear from the meet ing records that their intend was to prevent units that claimed cost recovery due to the CS A from using those emission reductions to avoid BACT under the PSD program and LAER under the nonattainment program. Given the intent of the paragraph as currently being implemented, the rule changes do not re present a change from

baseline.

Under the federal Clean Air Act the program generally known as “nonattainment new source review” (NNSR) requires new majo r or significant modifications of existing major sources in nonattainment areas for all NAAQS pollutants. This nonattainment NSR program requires; (1)

lowest achievable emission rate s (LAER), (2) emission offsets, and (3) public involvement.

The amendments to paragraph (b) in Rule 15A NCAC 02D .0531, Sources in Nonattainment

Areas , remove pollutant specific refe rences that require sources to continue measures after an area’s redesignation to attainment. With this am endment, violations of any National Ambient Air Quality Standard (NAAQS) pollutant trigger provisions that require facilities to maintain control measures after an area rega ins attainment status.

North Carolina nonattainment areas for two NAA QS pollutants (ozone and carbon monoxide) are currently identified in paragraph (c). The amendment replaces the geographic description of

these nonattainment areas for ozone or carbon monoxide with a reference to the Code of Federal Regulation (CFR) that includes s ubsequent revisions. There is no discretion for DAQ to deviate

from the referenced 40 CFR 81.334 that iden tifies North Carolina nonattainment areas by NAAQS pollutant. This amendment removes th e pollutant specific nonattainment areas and

### VI-4

relies on the 40 CFR 81.334 reference to update th e identification of nonattainment areas for all NAAQS pollutants without the need for catch-up rule making that is out of sync with that federal

code now.

The amendments to paragraph (g) in Rule 15A NCAC 02D .0531, Sources in Nonattainment

Areas , clarify that Lowest Achievable Emission Ra te (LAER) is required on all new gas fired electrical generating units by a dding the phrase “for which cost recovery is sought pursuant to G.S. 62-133.6” (CSA). This amendment clarifies th at this rule only applie s to certain CSA units. The EMC inserted this paragraph during its Dece mber 2004 meeting. It’s clear from the meeting records that their intend was to prevent units th at claimed cost recovery due to the CSA from using those emission reductions to avoid BACT under the PS D program and LAER under the nonattainment program. Given the intent of the paragraph as currently being implemented, the rule changes do not represent a change from baseline.

Deleting of Paragraph (n) in .0531 and re-lettering remaining paragraphs removes obsolete language that is no longer needed because ther e will be no time periods between the designation

of nonattainment areas in the 40 CFR 81.334 and North Carolina’s Administrative Code when urban airshed modeling must be preformed to de termine whether an increase in emissions is associated with any new or modified source.

These amendments are not expected to impact ai r quality or result in any changes relative to a baseline of requirements already in effect on any affected facility. It also does not alter the permitting process and inspections routine from ba seline responsibilities. There can be cost consequences when an area’s status is designate d as nonattainment, but these are not directly related to the proposed rule amendments. Fo r this reason the Offi ce of State Budget and Management (OSBM) recommends their review of this economic analysis due to “significant” potential future impacts, while recognizing that current impacts estimates are not considered substantial. Therefore, the cost or cost-savings due to these rule amendments are negligible for the regulated community and the implementing agency.

II. Background and Rationale for Action

The reason for action is to amend Rule 15A NCAC 2D .0530, Prevention of Significant

Deterioration , paragraph (h) to clarify that installati on of BACT applies to all new natural gasfired electrical utility generating units for wh ich cost recovery is sought under CSA. Also, obsolete language is removed related to provision s earlier stayed by the court challenge to PSD

rules.

Amendments to paragraph (b) of Rule 15A NCAC 02D .0531, Sources in Nonattainment Areas

, remove the pollutant specific references that requir e sources to continue measures after an area is re-designated as attainment. The amendment re places the description of pollutant specific nonattainment areas in paragraph (c) with a re ference to the CFR, including subsequent revisions. The amendment to paragraph (g) propose s to clarify that all new natural gas-fired electrical utility generating units in nonattainment areas for which cost recovery is sought under CSA shall install lowest achievable emission rates (LAER) regardless of whether or not the

### VI-5

source is major. Also, an obsolete requirement to do interim urban airshed modeling in Paragraph (n) is removed, and the remain ing paragraph lettering is revised.

Currently, 15A NCAC 02D .0531 applies only to ozone and carbon monoxide nonattainment areas. No part of North Carolin a is nonattainment for carbon m onoxide. However, the areas in

North Carolina in nonattainment for ozone are no t up to date. The amendm ent would extend this rule to cover all nonattainment areas, and pr ovide automatic updates to 40 CFR 81.334 when revised. Davidson, Guilford, and Catawba Counties ar e currently classified as nonattainment for PM2.5 in the 40 CFR 81.334, but are not identified as such in the NCAC. Until this Rule is amended to cover new major sources and major modifications in all non attainment areas, the procedures in 40 CFR Part 51, Appendix S are us ed to require offsets and lowest achievable control technology (LAER). These rule changes are being proposed at the suggestion of DAQ staff to satisfy EPA requirements.

These amendments remove the description of th e nonattainment areas from the North Carolina Administrative Code and instead rely upon th e CFR to keep those pollutant specific nonattainment designations updated. For mo re information on the NSR program, go to http://www.epa.gov/nsr.

III. Implementation

These rule changes are not expected to require any changes to procedures for State and local agency programs implementing part C of the PS D permit program in 40 CFR 51.166 or part D of the nonattainment NSR permit program in 40 CFR 51.165 currently approved under North Carolina’s approved State Implementation Plan (SIP).

IV. Identification of the Affected Parties

The amendments have the potential to create two categories of interested parties: the regulated community and the implementing agency. The regul ated community consists of the owners or operators of the facilities that fall under the category of NSR permitting. The implementing agency is DAQ, which has the responsibility fo r implementing the adopted and amended rules. To determine whether a facility would be affected by this acti on, they should carefully examine the applicability criteria in parts 51 and 52 of title 40 of the Code of Federal Regulations. It is impossible to predict and estimate the aggregate economic impacts associated with an area’s

attainment status due to these BA CT or LAER determinations. The is a lot of variability in the

cost of control for different sour ce categories and uncertainty associat ed with the future status of NAAQS attainment areas, and ability to know in advance which facilities may someday submit a PSD/NSR permit application. Potent ial impacts might occur to un its of local government from their perspective as facility owners or through local air qual ity program expenditures due to administration responsibilitie s of re-adopted DAQ rules.

### VI-6

V. Establishment of the Baseline

The baseline for this analysis in based on the current PSD and NSR rules found in Rule 15A NCAC 02D .0530, Prevention of Significant Deterioration , and .0531, Sources in

Nonattainment Areas , respectively.

VI. Changes from the Baseline

These amendments are not expected to directly al ter the status of certain existing North Carolina sources that are requesting modi fication a permit for a project relative to the baseline. Our current rule description of ozone nonattainment areas is out of date when compared to the Code of Federal Regulation reference that will be adop ted. The State of North Carolina is ultimately held to 40 CFR 81.334 for NSR pollutant nonattainm ent designations regardless of what our rules contain. Therefore, it is of no marginal cost consequence to rely solely on that reference. In fact it is highly beneficial to do so because it el iminates the need to continually update the rule when nonattainment area change.

VII. Estimating the cost to Affected Parties

Both rules are proposed for amendment to clarify that all new natural ga s electrical generation units that sought cost recove ry under the CSA are subject to NSR. The DAQ has been interpreting these rule se ctions in a manner consistent with the proposed changes. These rule amendments do not alter the permitting process or in spection routine for affected facilities. These amendments also do not directly ca use changes to operations of aff ected facilities relative to the baseline. Therefore, negligible costs (or savings ) are associated with these rule amendments on the regulated community or implementing agenc y. There can be cost consequences when an area’s status is designated as nona ttainment, but these are not direc tly related to the proposed rule

amendments.

VIII. Benefits

By using a reference to 40 CFR 81.334, the de scription of nonattainment areas remains consistent with federal designations, which avoi ds confusion and eliminates frequent rule updates. Most of the remaining amendments ar e ministerial in nature , which are necessary actions on the part of DAQ to clarify these rule s. Unnecessary language was removed related to “stayed” court action that was resolved by the EPA in a June 13, 2007 rulemaking entitled “Prevention of Significant Dete rioration (PSD) and Nonattainme nt New Source Review (NSR):

Removal of Vacated Elements”.

IX. Conclusion

The rule amendments allow the nonattainment areas that are identified in the Code of Federal Regulation section to be automatically adopted by reference. The other proposed changes are

### VI-7

primarily for the purpose of clar ification of existing practice, or deletion of obsolete language and paragraph re-numbering. The marginal eff ect of these amendments on the regulated community, and units of local government or St ate implementing agencies will not result in substantial economic impacts as defined in Nort h Carolina’s Administrati ve Procedures Act in

NC § 150B-21.4 Fiscal notes on rules . The term "substantial ec onomic impact" means an aggregate financial impact on all persons affected of at least three million dollars ($3,000,000) in a 12-month period. The Office of State Budget and Management (OSBM) recommends their review of this economic analysis due to “signifi cant” potential future im pacts, while recognizing that current impacts estimates are not considered subs tantial. Therefore, th e cost or cost-savings due to these rule amendments are negligible fo r the regulated community, and the State or local government agencies implementing these rules.

### VI-8

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### VII-1

Chapter VII

The following documentation of filing and notification is incorporated as part of this hearing record and is

maintained on file:

1. ENR 101 Internal Approval Form.

2. Submission for Notice Form and material submitted to the Office of Administrative Hearings.

3. The public notice as it appears in The North Carolina Register Volume 24, Issue 17, pages 1508-1515.

4. Letters to newspapers requesting that the public notice be published.

5. Affidavits of Publication from newspaper.

6. Memorandum transmitting hearing notice and proposal to regional offices for public inspection.

7. Memorandum transmitting hearing notice and proposal to local programs.

8. Letter notifying EPA of hearing.

9. Submission of Filing Forms and material f iled with Office of Administrative Hearings.

10. Letter transmitting hearing record to EPA.

### VII-2

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