April 12, 2011

Air Pollution Control Board

800 South Victoria Avenue Ventura, CA 93009

SUBJECT: PUBLIC HEARING REGARDING ADOPTION OF PROPO SED

AMENDMENTS TO RULES 2, 23, 33, 33.1, 35 AND 76 IN O RDER TO

IMPLEMENT UNITED STATES ENVIRONMENTAL PROTECTION AGENCY’s TITLE VGREENHOUSE GAS TAILORING RULE (40 C FR Parts 51, 52, 70 and 71, as amended); AND OTHER NON-GHG R ULE

CLARIFICATIONS

RECOMMENDED ACTIONS:

1. Adopt the proposed findings and the proposed Not ice of CEQA Exemption for amendments to Rules 2, 23, 33, 33.1, 35 and 76 (Att achments 1 and 2).

2. Adopt proposed amendments to Rules 2, 23, 33, 33 .1, 35 and 76 (Attachments 3 through 8).

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

Control District.

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

STATEMENT OF MATTER FOR BOARD CONSIDERATION:

Background

The main purpose if this rule action is to ensure t hat only large emitters of greenhouse gases (GHGs) are subject to federal Clean Air Act Title V permitting requirements. Under this proposal, the vast majority of stationary sources a nd facilities in Ventura County will continue to be exempt from Title V requirements.

Currently, District rules regulate "criteria" air p ollutants and hazardous air pollutants. Criteria pollutants include oxides of nitrogen, reactive org anic compounds, particulate matter, oxides of sulfur, and carbon monoxide. The United States Env ironmental Protection Agency (EPA) has recently taken steps to add greenhouse gases (GHGs) to the list of Clean Air Act regulated air pollutants pursuant to a recent United States Supre me Court decision and corresponding EPA interpretation of Clean Air Act regulations. On Ju ne 3, 2010, EPA promulgated a final ruleAir Pollution Control Board

April 12, 2011 Page 2

regarding the regulation of GHG emissions in order to relieve “the overwhelming permitting burdens that would, in the absence of this rule, fa ll on permitting authorities and sources.” [75 Fed. Reg. 31516 (June 3, 2010)] This is accomplish ed by tailoring the applicability criteria that determine which GHG emission sources become subject to the federal title V programs. Given this EPA Final Rule, District staff has determined that certain revisions to District Rules and Regulations are required to implement EPA's tailori ng requirements.

Currently, there are bills being introduced in the U.S. Senate that could curtail the EPA’s authority to regulate GHG emissions. S.228 Barrass o and S.231 Rockefeller are two examples of these types of bills, which would repeal or suspend EPA’s Tailoring Rule. At this time, it is not possible for staff to predict the likelihood of the se bills being enacted. Should one of these bills be enacted District staff will take appropriate act ion to comply. This action may include suspending the implementation to GHG permit activit ies. However, because EPA’s Tailoring Rule is currently in effect, staff recommends adopt ion of these amendments to our Rules and Regulations to implement this mandate and to contin ue to exempt the majority of local facilities from the requirements of Title V permitting.

Proposed Amendments – Greenhouse Gases

1) Rule 2, Definitions

Revisions include adding GHGs to the definition of "Air Contaminant" and a new definition of "Greenhouse Gases." Also, "CO 2 e" and "GHGs" are added to the list of abbreviations in Section B and a list of Global Warming Potentials (GWP) is added as Table 1.

GWP is referenced in the definition of "CO 2 Equivalent (CO 2 e)" in Rules 33.1 and 76.

2) Rule 23, Exemptions from Permit

Greenhouse gases are being added to the list of thr esholds in Subsection J.16, which addresses the permitting requirements of agricultur al operations. The implementation date for EPA’s GHG Tailoring Rule (July 1, 2011) is the date that the requirements in this

rule action take effect for all title V sources in Ventura County.

3) Rule 33, Part 70 Permits, General

In Section B, Applicability, GHGs are added to the requirement to obtain a Part 70 permit. Please note that since GHGs are now federa l Clean Air Act regulated air pollutants (see Rule 33.1), they are included under both the 100 ton per year mass

emission threshold in the first sentence and the 10 0,000 tons per year CO 2 e (mass X GWP) threshold in the (new) second sentence. Becau se most sources will exceed the 100 ton per year limit for GHGs, 100,000 tons per year is the practical threshold. The implementation date is July 1, 2011.

4) Rule 33.1, Part 70 Permits, DefinitionsAir Pollution Control Board

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A new definition of "CO 2 Equivalent (CO 2 e)" is proposed. Global Warming Potentials appear in Rule 2. This definition is also being ad ded to Rule 76.

Three definitions in Rule 33.1 are proposed for rev ision; "Federally-Enforceable Requirement," "Insignificant Activity," and "Regula ted Air Pollutant." These revisions either specify or allow the regulation of greenhous e gases.

5) Rule 35, Elective Emission Limits

The proposed revision adds "greenhouse gas" emissio ns to the list of information required for an elective emission limit request.

6) Rule 76, Federally Enforceable Limits on Potenti al to Emit

Rule 76 enables permit holders to voluntarily limit their emissions in a federally

enforceable manner. Because various sections of th e rule address different percentages of the "major source" thresholds, varying thresholds f or greenhouse gas emissions are being

added to the rule.

In Section A, Applicability, de minimis emission le vels are set at twenty percent (20%) of the "major source" thresholds, which, for GHGs, is 100,000 tons per year. Twenty percent of this threshold results in a 20,000 tons per year de minimis greenhouse gas

threshold. This means that a source that can limit its GHG emissions to below 20,000 tpy is exempt from recordkeeping and reporting requirem ents.

In Section B, Emission Limitations, the maximum qua ntity of emissions allowed for a federally enforceable emission limit is fifty perce nt (50%) of the "major source" thresholds. Therefore, a greenhouse gas threshold of 50,000 tons per year CO 2 e is added.

Section D, Reporting Requirements, would not apply to sources with emission levels that do not exceed twenty-five percent (25%) of the "maj or source" thresholds. Therefore, an exemption from these reporting requirements would a pply to greenhouse gas emission levels that are at or below the threshold of 24,999 tons of greenhouse gases (as CO 2 e) per

year.

In Section G, Definitions, a CO 2 Equivalent (CO 2 e) definition is proposed. Also, greenhouse gases will be added to the definitions o f "Major Source of Regulated Air Pollutants" and "Regulated Air Pollutant."

Proposed Amendments –Non-GHG Emission Issues

1) Rule 2, Definitions

To clarify certain permitting situations, definitio ns of "Portable" and "Stationary" are proposed. These definitions are similar to those t hat currently appear in VCAPCD Rule 250 – Registration Of Agricultural Engines – but ar e updated for general use.Air Pollution Control Board

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The definition of "Equipment" is being modified for clarity. The existing definition of

"Motor Vehicle." which includes a reference to Cali fornia Motor Vehicle Code, will be replaced with a specific definition based on the Ve hicle Code definition. A definition of PM2.5 is also proposed to supplement the existing d efinition of PM10.

2) Rule 23, Exemptions from Permit

Section A - Burning, Incineration and Smoke. The e xemption from permit for safety flares in Subsection A.4 is proposed for deletion. Enforcement is difficult and it is possible that safety flares are frequently used for other purposes. On July 1, 2011, all safety flares will require a permit to operate.

Section D - Vehicles, Engines. In Subsection D.7.c , portable emergency engine generators connected for future electrical service will no longer be considered po rtable and will require a Permit to Operate. Portable equ ipment brought in during an emergency will continue to be exempt from permit.

Section F - Organic Compound Emissions. The permit exemption threshold for polyester resin operations 20 gallons a month. To allow boat yards to make an occasional large repair, the exemption will be changed to 240 gallon s over a 12 month rolling total. The change will increase flexibility but not annual ROC emissions.

Section J – Miscellaneous. In Subsection J.16, the paragraph on large confined animal facilities is being amended to specify that only ma jor sources and major modifications are affected. In addition, a definition of "large conf ined animal facility" is being added to eliminate a reference to the California Code of Reg ulations.

3) Rule 33, Part 70 Permits, General

In Rule 33, Subsection B.2, wording that is no long er relevant is proposed for deletion. The wording applies to EPA approval dates that have passed.

4) Rule 33.1, Part 70 Permits, Definitions

A reference to 40 CFR Part 63, a National Emissions Standards for Hazardous Air Pollutants regulation, is being added to the defini tion of "Title I Modification" (renumbered Section 26).

5) Rule 76, Federally Enforceable Limits on Potenti al to Emit

Rule 76, Subsection A.4.a.(1), is proposed for clar ification. The exemption, if approved by your Board, will state that a source is exempt f rom Rule 76 when the owner or operator submits an application for either a Part 7 0 permit or a federally-enforceable permit limit to avoid the need for a Part 70 applic ation at least 30 days prior to any

emission exceedance.Air Pollution Control Board

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In Subsection A.6, unnecessary language is proposed for deletion. In Subsection B.2, and again in definition of "Actual Emissions" in Subsec tion G.2, a specific hierarchy of calculation methods is being established. U.S. EPA will be the primary source of applicable methods, followed by California ARB meth ods and then methods approved by

the District.

Note also that a number of section references throu ghout Rule 76 are being amended for clarity.

Public Participation

A workshop for the proposed revisions was held on S eptember 21, 2010; no comments on the proposed rules were received. On November 2, 2010, the Advisory Committee recommended approval of the proposed revisions with a vote of 7 yes and 3 no. No written comments have

been received at this time.

PROPOSED FINDINGS:

Health and Safety Code Section 40703, 40727, 40727. 2, 40728.5 and 40920.6(a) directs that, prior to adopting the proposed revisions to Rules 2 , 23, 33, 33.1, 35 and 76, your Board adopt findings of necessity, authority, clarity, consiste ncy, nonduplication, reference, costeffectiveness, incremental cost-effectiveness, and socioeconomic impacts, based upon relevant information presented at the hearing. Health and S afety Code Section 40727.2 requires a written analysis, comparison, and consideration of existing air pollution regulations that apply to the same type of source. Therefore, if your Board appr oves the proposed revisions to Rules 2, 23, 33, 33.1, 35 and 76, it is recommended that your Bo ard also adopt the proposed findings that address these statutory requirements set forth in A ttachment 1.

The proposed revisions to Rules 2, 23, 33, 33.1, 35 and 76 have been determined by District staff to be exempt from the requirements of the CEQA unde r Section 15308 of the CEQA Guidelines, Actions by Regulatory Agencies for Protection of th e Environment. A Notice of Exemption with respect to this CEQA exemption is included as Attac hment 2.

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

MICHAEL VILLEGAS

Air Pollution Control Officer

Attachments: 1. Proposed Legislative Findings – Rules 2, 23, 33 , 33.1, 35 and 76 2. Proposed Notice of CEQA Exemption - Rules 2, 23 , 33, 33.1, 35 and 76 3. Proposed Rule 2 (Strikeout/Underline version, 1 0/5/10) 4. Proposed Rule 23 (Strikeout/Underline version, 10/14/10Air Pollution Control Board

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5. Proposed Rule 33 (Strikeout/Underline version, 9/22/10) 6. Proposed Rule 33.1 (Strikeout/Underline version , 10/5/10) 7. Proposed Rule 35 (Strikeout/Underline version, 6/10/10) 8. Proposed Rule 76 (Strikeout/Underline version, 10/5/10) 9. Final Staff Report (2/25/11) 10. Advisory Committee Voting Record (11/2/10)