UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX

75 Hawthorne Street San Francisco, CA 94105



## MEMO RANDUM

DATE: September 24 , 2015

TO: EPA Region 9 Rulemaking File for the BAAQMD NSR SIP Submittal

FROM: Shaheerah Kelly , EPA Region 9 , Air Division , Permits Office

SUBJECT: September 24 , 2015 Meeting between EPA Region 9 and CCEEB members regarding the EPA Proposed Limited Approval and Limited Disapproval of Regulation 2, Ru les 1 & 2

ATTENDEES

• Amy Zimpfer, EPA Region 9, Air Division

• Gerardo Rios, EPA Region 9, Air Division

• Laura Yannayon, EPA Region 9, Air Division

• Ann Lyons, EPA Region 9, Air Division

• Sheila (Ya

- Ting) Tsai, EPA Region 9, Air Division

• Shaheerah Kelly, EPA Region 9, Air Division

• Bill Quinn, California Council for Environmental and Economic Balance (CCEEB)

• Bret Eastep, Phillips 66

• Susan Gus t ofson, Valero

• Barbara McBride, Calpine

• Gordon Johnson, Shell

• Juan Li, Chevron

• Wilma Dreessen, Tesoro

• Dave Farabee, Pillsbur y (by telephone conference)

SUMMARY

CCEEB discussed the issues in the attached document.

ATTACHMENTS

• BAAQMD NSR Rules, Issues for Discussion with EPA Region 9, September 24, 2009BAAQMD NSR Rules Issues for Discussion with EPA Region 9 September 24, 2015

1. Additional Offsets for the Same Emissions for Major Non

- Attainment NSR

• The BAAQMD ’s current rule requires offsets to be provided for a facility’s PTE. It requires additional offsets to be provided only if the facility’s PTE is increased (in the amount of the PTE increase).

• It is our understanding of the proposal that EPA would direct the BAAQMD to require additional offsets based on an actual

- to

- potential calculation, even i f

there is no increase in PTE.

• What is the basis for this application of the offset requirement?

• Has EPA required other districts or states to apply offsets in this fashion?

2. Requiring PSD

- Style Modeling Analysis for Minor NSR Permits and for Non

Atta inment Pollutants

• The BAAQMD recently adopted a new modeling requirement for minor sources that will have a “significant” net emissions increase. This is a new BAAQMD Regulation 2

- 2

- 308 (entitled “NAAQS Protection Requirement”).

• New Section 2

- 2

- 308 req uires a PSD

- style modeling analysis to show that the source will not increase ambient concentrations above the NAAQS for any pollutant. It is our understanding that t he BAAQMD did this as a way to go beyond what is required for federal PSD purposes, which applies only to major sources with significant net emissions increases, and only for attainment/unclassifiable pollutants.

• We understand that EPA proposes to disapprove this provision because it is not stringent enough. EPA says this modeling requirement needs to apply to all minor sources, with no de minimis exclusion for source with less than “significant” net emissions increases

.

• Requiring a PSD

- style modeling analysis for all minor sources would be hugely problematic:o Significant time and resources involved to do a full modeling analysis for small sources, and for all pollutants for which any NAAQS has been

established.

o Requiring a determination that a source will not contribute to any ambient air quality above the NAAQS is problematic in areas with background concentrations already over the NAAQS (which the BAAQMD does not have, but many other areas of the country do).

• We would like to discuss the rationale for this decision.

3. For ERC Calculations, Requiring “Fully

- Offset” Source to Use an Actual

Emissions Baseline instead of Permit Limit

• The BAAQMD ’s current rule says that if you shut down a “fully

- offset” source (i.e., offsets were provided for the full amount of the source’s maximum permitted emissions), you can use the source’s maximum permi tted emissions as the baseline for calculating the amount of ERCs that are generated.

• The concept is that the ERCs that were provided at the time of permitting of the fully

- offset source were originally based on an actual emissions baseline

– i.e., the b aseline emissions of the source that was originally shut down to generate those ERCs. So in terms of the accounting of regional increases and decreases, the ERCs at issue reflect actual emissions that were removed from the atmosphere.

• EPA approved this a pproach in the current BAAQMD rule in 1999.

• EPA is now proposing to disapprove this provision, stating that an actual emissions baseline must be used for all purposes.

• We would like to discuss the rationale for this decision.

4. Requiring a Class I Area Visibility Impact Analysis for Sources More Than 100

km From Class I Areas

• 40 C.F.R. 51.307 (and related PSD provisions) require an analysis of visibility impacts for any major new source or modification that “may have an impact” on visibility in any Cl ass I Area. “May have an impact” is not further defined in the regulations.

• EPA has established guidance interpreting the “may have an impact” language that says that the visibility impact analysis is required for facilities within 100

km of a Class I Ar ea. But some of the guidance also hints that it may be appropriate or required to consider certain facilities beyond 100 km

– without specifying how to determine when or how such additional analyses arerequired.

• BAAQMD incorporated EPA’s 100 km “bright line” rule to implement this requirement. EPA is now proposing to disapprove this provision as inadequate to implement the “may have an impact” language in 51.307, without any explanation of why.

• This will be problematic if EPA disapproves the 100 km rul e without specifying why it is insufficient to satisfy 51.307, as we will have no idea of what alternate rule should be used instead. If EPA does specify a rule governing what the 51.307 “may have an impact” language requires (beyond 100 km), it could also be problematic depending on the scope of what EPA specifies.

• We would like to discuss the rationale for this decision.