United States Environmental Protection Agency, Region IX

Air Division

Technical Support Document

for

EPA's Notice of Proposed Rulemaking

for the

California State Implementation Plan

Imperial County Air Pollution Control District

Rule 204

– Applications

Rule 206

– Processing of Applications

Rule 207

– New and Modified Stationary Source Review

Docket No. EPA

- R09

- OAR

- 2015

- 0621

Prepared by:



### Roberto Gutierrez and Laura Yannayon

Reviewed by Gerardo Rios

November 2 8 , 2016Table of Contents

1 Introduction

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

2 Submittal Information

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

2.1 Submittal Agency Information

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

2.2 Air Quality in Imperial County

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

3 Rule Summaries

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

3.1 Current SIP Approved Rules

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

3.2 Submitted Rules for SIP Approval

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

4 Rule Evaluation

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

4.1 Nonattainment NSR Requirements

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

4.2 General NSR Requirements

................................ ................................ ........................... 11

5 New Source Review Reforms

................................ ................................ ............................... 15

5.1 NSR Reform Program Requirements

................................ ................................ ............. 17

5.2 Impacts of Federal NSR Reforms on California NSR Permitting Programs

................. 18

6 Section 110(l) of the Act

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

7 Section 193 of the Act

................................ ................................ ................................ ........... 22

8 Recommendations

................................ ................................ ................................ ................. 22

9 Notes

................................ ................................ ................................ ................................ ..... 231 

### 1 Introduction

This technical support document (TSD) focuses on the preconstruction permitting requirements for stationary sources, also called New Source Review or NSR, in title I of the Clean Air Act (CAA or the Act) and EPA’s implementing regulations a ddressing the State Implementation Plan (SIP) requirements for State NSR programs at title 40 of the Code of Federal Regulations (CFR) part 51, subpart I. This TSD will address the requirements for two of the three main components

of the federal N SR progra m (Nonattainment NSR ( NSR) and General NSR) and discuss EPA’s findings on whether the rules and regulations related to NSR that have been submitted by the Imperial County Air Pollution Control District (ICAPCD or District) for approval into the

California SIP meet federal NSR requirements. T he TSD also discusses EPA’s findings under

s ections 110(l) and 193 of the Act relevant to this action.

The three main components of the federal NSR program are briefly summarized as follows:

PSD Program

Part C of title I of the Act, and the implementing regulations at 40 CFR 51.166, contain the requirements for states to establish preconstruction permitting programs for the prevention of significant deterioration of air quality (PSD) in areas designated as attainment or u nclassifiable for the national ambient air quality standards (NAAQS). The PSD program requirements under part C apply to major stationary sources and major modifications, as those terms are defined in 40 CFR 51.166, at stationary sources located within att ainment or unclassifiable areas. The PSD requirements apply to all regulated NSR pollutants, except those pollutants for which an area has been designated as nonattainment. 1

Nonattainment NSR Program Part D of title I of the Act, and the implementing regulations at 40 CFR 51.165, contain the NSR requirements for areas designated nonattainment for a NAAQS. The requirements under part D,

referred to as nonattainment NSR or simply NSR, apply to nonattainm ent pollutants at major stationary sources and major modifications, as those terms are defined in 40 CFR part 51.165, at

sources located in nonattainment areas.

General NSR Program Requirements Section 110(a)(2)(C) of the Act requires that each SIP includ e a program to provide for

“ regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as require d in parts C and D ” of title I of the Act.

Thus, in addition to the permit programs required in parts C and D of title I of the Act, which apply to new major stationary sources and major modifications, each SIP must include a program regulating stationary sources with emissions below the major sour ce thresholds. These general preconstruction requirements are commonly referred to as the “ minor NSR program ” requirements and are implemented through EPA ’ s regulations at 40 CFR 51.160 through 51.164.

1 EPA has approved Imperial’s Rule 904

– Prevention of Significant Deterioration (PSD) Permit Program , as satisfying the CAA’s PSD program requirements. 77 FR 7331 6 (Dec. 10, 2012). Therefore, this TSD does not evaluate the submitted rules for PSD program requirements.2

These more general program requirements are the only f ederal requirements that apply to these

“ minor ” stationary sources and non

- major modifications. These requirements also apply to major sources and major modifications, in addition to the more detailed requirements in parts C and D of the Act and their impl ementing regulations at 40 CFR 51.166 and 51.165, respectively.



### 2 Submittal Information

2.1 Submittal Agency Information

Imperial County is located in the s outheast corner of California, and is bordered by Riverside County to the n orth, San Diego County to the w est, the State of Arizona to the e ast

, and the Country of Mexico to the s outh

. The ICAPCD is the air pollution control agency for all of Imperial County

.



### 2.2 Air Quality in Imperial County

Imperial County is currently designated as a moderate nonattainment area for the 2008 8

- hr

ozone, 2 and portions of the county are designated as a serious nonattainment area for the 1987

24

- hr PM 10 , as a moderate nonattainment area for the 2006 24

- hr PM 2.5 and as a moderate

nonattainment area for the 2012 annual PM 2.5 NAAQS

. 40 CFR 81.305

. In addition, Imperial County was designated nonattainment for the 1979 1

- hour ozone (moderate) and 1997 8

- hour ozone ( moderate ) NAAQS . Although EPA has revok ed these standards

, the most stringent major

source applicability threshold and o ffset ratio are required to be maintained until the District

either attains the current 2008 8

- hour ozone standard, or EPA approves a “redesignation substitute” request for the revoked standards

. 40 CFR 51.1105 (b). Based on the District’s

nonattainment designation s and classifications

, the District’s nonattainment NSR program must regulate new major sources and major modifications of (i) nitrogen oxides (NO
x ) and volatile organic compounds (VOC) as ozone precursors for a moderate area ; (ii) PM 2.5 and its precursors
, NO
x , SO 2 , VOC and ammonia

, for a moderate area ; and (iii) PM 10 and its precursors

, NO
x and

SO 2

, for a seriou s area

.

Imperial County is currently designated attainment or unclassifiable for the nitrogen dioxide (NO 2 ), carbon monoxide (CO), sulfur dioxide (SO 2 ), and lead (Pb) NAAQS

. 40 CFR 81.305

. T he PSD permit program requirements apply to new major stationary sources and major modifications at existing major stationary sources that emit these pollutants, as well as certain other pollutants , which are also regulated under the CAA. See 51.166(b)(23)(i)

. The District has

a SIP

- approved PSD program, ICAPCD Rule 904

– Prevention of Significant Deterioration

2 The EPA initially designated Imperial County as a marginal nonattainment area for the 2008 ozone NAAQS, but recently reclassified the county as a m oderate nonattainment area for that standard. 81 FR 26697 (May 4, 2016). Under our 2016 reclassification rule, we established a January 1, 2017 deadline for submittal of SIP revisions, including those for NNSR, for the newly reclassified moderate nonattain ment areas. Id , at 26704. Although the submittal deadline for newly reclassified areas for the 2008 ozone NAAQS has not yet expired, we have reviewed the amended Imperial County NSR rules for compliance with, among other things, moderate ozone nonattainmen t area requirements because Imperial County has been subject to moderate ozone nonattainment requirements since 2008 when the EPA reclassified the county as moderate nonattainment for the 1997 ozone NAAQS. 73 FR 8209 (February 13, 2008).3

(PSD) Permit Program ; 3 therefore

, we are not evaluating Rules 204, 206 or 207 for PSD program approval.



### 3 Rule Summaries

3.1 Current SIP Approved Rules

The main components of ICAPCD’s current SIP

- approved NSR program are Rule 206

– Processing of Applications, Rule 207

– New and Modified Stationary Source Review , and Rule

209

– Implementation Plan s

. These rules contain the general and specific program requirements for minor sources emitting both attainment and nonattainment pollutants, and for major sources emitting nonattainment pollutants. EPA approved Rule 206 into the SIP on January 3, 2007 (72 FR 9) and Rules 207 and 209 on November 10, 1980 (45 FR 74480).

ICAPCD’s Governing Board adopted revisions to Rules 206 and 207 on October 22, 2013 . The California Air Resources Board (CARB) submitted revised Rule 206 to EPA on February 10, 2014, and revised Rule 207 on January 21, 20 1 4

. 4 Upon approval into the SIP, the updated versions of Rules 206 and 207 will replace current SIP Rules 206

, 207 , and 209

.

Currently, t here is no version of Rule 204

– Applications in the SIP. ICAPCD’s Governing

Board ad opted revisions to Rule 204 on September 14, 1999, which CARB submitted to EPA on May 26, 2000.

Final approval of the submitted rules will also allow EPA to delete our prior approval of Rules 206, 207 and 209 codified in 40 CFR 52.220 (c)(279)(i)(A)( 14 ) and (c)(56)(i)(A); and our disapproval of Rule 207 subparagraph C.5 codified in 40 CFR 52.233(a)(1). EPA disapproved

this subparagraph of Rule 207 in our November 10, 1980 action because it exempted some sources from the requirement to apply LAER. The su bmitted version of Rule 207 no longer contains such a provision.



### 3.2 Submitt ed Rules for SIP Approval

Rule 204

– Applications

Rule 204 contains the requirements for permit applications that are necessary under Rule 201

– Permits Required

. Under the rule, Imperial County can prescribe the information, analyses, plans or specifications re lating to a project ’ s air emissions that must be submitted so that the District

can assess the project and make the determination s necessary to issue a permit

.

Rule 206

– Processing of Applications Rule 206 is comprised of three sections: Section A

– Guidelines, Section B

– Ministerial Permits,

and Section C

– Discretionary Permits. Section A includes guidelines for processing either

ministerial or disc retionary permit applications

. Section B outlines which projects qualify under the ministerial permits program and how to process applications for ministerial permits. Section

3 77 FR 7331 6 , Dec ember 10, 2012.

4 CARB is the governor’s designee for submitting official revisions of the California SIP to EPA.4

C contains the administrative requirements for processing discretionary permits, including the timeline for approving applications and then public noticing permit action decisions, as well as the availability of documents related to the project

.

Rule 206, Section B

– Specifies that Discretionary Permits include all actions that are not Ministerial Permits. Ministerial Permits include the following types of actions; burn permits, permits for minor projects, transfer of named permittee, annual renewals, and permits to operate issued pursuant to a valid Authority to Construct permit. Mi nor projects are defined as projects

with uncontrolled emission s below 35 pounds per day of any pollutant that do not emit any toxic air contaminants or nonattainment pollutants. All other permits are considered Discretionary

Permits.

Rule 2 07

– New and Modified Stationary Source Review

Rule 207 is comprised of six sections: Section A

– General, Section B

– Definitions, Section C

– Standards, Section D

– Administrative Requirements , Section E

– Calculations, and Section F

– Air Quality Impacts Analysis. Section A includes provisions that outline the purpose and applicability of the rule, as well as specific exemptions from the rule or portions thereof

. Section

B contains 68 definitions, and clarifies which other rules may be used to defin e a term if it is n ot
defined within this section. Section C contains the standards that apply to projects undergo ing new source review, including Best Available Control Technology (BACT) and emission offset requirements. Section D contains administrative requirements, includ ing provisions for determining when an application is complete, which air quality models must be used, public notice requirements, requirements for a final action, specific requirements solely for power plant applications, and other administrative pr ovisions. Section E contains calculation provision s, including calculations of actual emission reductions for the purpose of determining offsets and calculating the potential to emit of a stationary source. Section F contains provisions for performing an a ir quality impact analysis

. This rule applies to all minor sources and all stationary

sources that met the definition of a major source for a nonattainment pollutant

.



### 4 Rule Evaluation

For this TSD, we have reviewed submitted Rule s 204, 2 06 and 20 7 to ensure they meet the requi rements of section 110 and part D of title I of the CAA and EPA’s implementing regulations at 40 CFR 51.160 through 51.16 5

. We also relied on EPA regulatory and guidance materials, including the following: General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990 (57 FR 13498, April 16, 1992), EPA’s Emission Offset Interpretive Ruling (40 CFR part 51, Appendix S), and EPA’s policy document entitled, “Improving Air Quality with Economic Incentive Programs” published in January 2001. EPA

has condensed relevant approval criteria in to this section of the TSD, which provides the basis

for our proposed action on Rule s 204, 2 06 and 20 7

.



### 4.1 Nonattainment NSR Requirements

The Act requires all s tates with non attainment areas to submit a NSR program that contains the following nonattainment NSR provisions. To demonstrate that ICAPCD has met each provision, EPA identifies the section(s) of Rule s 204, 206 or 2 07 , or other SIP approved5

rules that satisfy the listed requirement. Where necessary, we provide a detailed discussion of how the rule satisfies a specific provision

.

1. Provisions , pursuant to CAA section 173(a)(1)(A), to en sure that the emissions baseline

for offset purpose s is calculated in a manner consistent with the emissions baseline used

to demonstrate RFP

.

E missions inventor ies prepared by the District for nonattainment plan s and reasonable further progress (RFP) are based on actual emissions for stationary sources . For new or modified major sources of VOC, NO x , SO x

, PM 10 and PM 2.5 , Rule 2 07 s ection s C.2.c and C

. 2.d require offsets

when increases in actual emissions exceed the thresholds consistent with the definitions for Major Source and Major Modification

. Rule 2 07 defines ERCs as reductions of “actual emissions” and further defines actual emissions reductions as being real, quantifiable, surplus, permanent

and enforceable. Thus, the basis for the demonstration of RFP and the calculation of NSR
emissions offsets is actual emissions in both cases.

S o long as a new source or modification obtains offsets in an amount equal to or greater than the amount specified in the applicable offset ratio (or, where the statute does not specify an offset ratio, in an amount equal to or greater than 1:1), the new source or modification will not interfere

with RFP. Rule 2 07 s ection C.3.a provides the ratios for offset purposes, which are all e qual to or greater than 1:1 for the nonattainment pollutants. These offset ratio requirements ensu re that the program for permitting new or modified major sources will not interfere with RFP. These provisions satisfy the statutory requirement.

2. Provisions, pursuant to CAA section 173(a)(2 )

, to assure that all major sources and major modifications of non

- attainment pollutants comply with LAER.

Rule 207, s ection B defines Best Available Control Technology ( BACT ) as the mo re stringent of (i) the most effective emission control device, emission limit, or technique which has been achieved in practice for such class or category of source ; or (ii) any other alternative emission control device, technique, equipment, fuel or process determined to be technologically feasible

and cost

- effective

. Rule 207’s definition of BACT further states that under no circums tance will BACT be determined to be less stringent than any emission control that is required by any applicable provision of law, including the most stringent emission limitation contained in the implementation plan of any state , unless the applicant demon strates technical infeasibility. Taken together, these provisions are at least as stringent as the federal definition of LAER as defined at CAA 171(3) and 40 CFR 51. 165 (a)(1)(xiii).

In addition, Section C.1 requires new major stationary sources to apply BACT (which is at least as stringent as federal LAER) on a pollutant by pollutant basis for any new emission unit (C.1.a)

or any modified emission unit (C.1.b) with a potential to emit 25 pounds per day or mor e (4.56 tons per year) of any nonattainment pollutant or its listed precursors

. This threshold is significantly more stringent than the federal major source thresholds of 100 tpy for NO x and VOC as ozone precursors and PM 2.5 and its precursors, and 70 tpy for PM 10

. It is also lower than the major modification thresholds of 40 tpy for NO x , SO x and VOC, 15 tpy for PM 10 and 10 tpy for

PM 2.5

. Taken together t hese provisions satisfy the statutory requirement.6

3. Provisions, pursu ant to CAA section 173(a)(3), to assure that owners or operators of each proposed new or modified major stationary source demonstrate that all other major stationary sources under the same ownership in the state are in compliance with

the Act.

Rule 207, s ubsection C.5.c requires the owner or operator of a proposed new or modified emissions unit to demonstrate that all stationary sources owned or operate d by such person in
California

, which are subject to emission limitations

, are in compliance or on a sche dule for compliance with all applicable emission limitations and standards. This provision satisfies the requirements of section 173(a)(3).

4. Provisions, pursuant to CAA section 173(a)(5), that, as a prerequisite to issuing any part D permit, requir ing an analysis of alternative sites, sizes, production processes, and environmental control techniques for proposed sources that demonstrates that the benefits of the proposed source significantly outweigh the environmental and social costs imposed as a resul t of its location, construction or modification.

Rule 207, subsection C.5.a requires applicants to prepare an analysis that is functionally equivalent to the requirements of Division 13, Section 21000 et. seq. of the California Public
Resources Code for any source for which an analysis of alternative sites, sizes, and production processes is required under s ection 173 of the CAA. This provision satisfies the section 173(a)(5) requirement.

5

. Provisions to assure, pursuant to CAA section 173(c)(1), that a ny emissions offsets obtained in conjunction with the issuance of a permit to a new or modified source must be enforceable by the time of issuance of the permit, and in effect by the time the new or modified source commences operation.

Rule 207, s ection D .3

– Offset Conditions , paragraph “ c ” requires that such reductions be
enforceable at the time the permit is issued and requires that the emission reduction credits be in effect upon initial operation of the new or modified source

. In addition, S ection E. 2 provides requirements for calculating AERs that will be used as offsets, and S ubs ection E.2.d.1. requires
AERs to be enforceable. Th e s e provision s satisf y the statutory requirement.

6

. Provisions to assure , pursuant to CAA section 173(c)(1), that emis sion increases from new or modified major stationary sources are offset by real reductions in actual

emissions.

Rule 207, section C

. 2 requires offsets to be Actual Emission Reductions (AERs)

. S ection B, Definitions, defines AERs as reductions that are “Real, Quantifiable, Surplus, Permanent and
Enforceable.” Rule 20 7 , Section B further defines “ real " emission reductions as emission s that are actually reduced from actually occurring emissions and not artificially devised

. In addition,
S ection E.2 provides requirements for calculating AER s that will be used as offsets , and
S ubs ection E.2.d.1. requires AERs to be real. Considered collectively, these provisions assure that emission increases from new or modified major stationa ry sources are offset by real reductions in actual emissions as required by section 173(c)(1).7

7

. Provisions, pursuant to CAA section 173(c)(2), to prevent emissions reductions otherwise required by the Act from being credited for purposes of satisfying t he part D offset requirements.

Rule 207, s ection E.2 provides requirements for calculating AERs that will be used as offsets,

and S ubs ection E.2.d.1. requires AERs to be surplus. In addition, Section E.2.d.2 requires that all

AERs be in excess of any re ductions that would be required by any laws, r ules , regulations, agreements, orders or contained in an adopted District plan, SIP or California Clean Air Act attainment plan applicable to the District

. These provisions prevent emissions reductions

otherwis e required by the Act from being credited for purposes of satisfying the part D offset requirements as required by section 173(c)( 2 )

.

8

. Definition of “stationary source” that certain internal combustion engines must be subject to control under state programs (i.e., those not used for transportation purposes), but excluding the category of “nonroad engines.” [See section 302(z) of the Act.]

SIP approved Rule 201

– Permits Required , requires a permit for all emission units, unless specifically exempted pursuant to Rule 202. SIP approved Rule 202

– Exemptions , provides an exemption from permitting requirements for various types of emission units

. Section E.1.a exempts internal combustion engines with a rating of 50 brake horsepower or less

. Section E.2

e xempts various mobile sources which are classified as nonroad engines. All other engines are therefore subject to permit requirements as part of the stationary source as required by CAA section 302(z)

. Since all stationary engines, down to a reasonable de minimis exemption threshold, are required to obtain a permit from the District w e find that the se provisions satisfy the statutory requirement.

9

. Provisions, pursuant to 40 CFR 51.307(b)(2), that identif y additional requirements for any new major sou rce or major modification, proposing to locate in a nonattainment area, that may have an impact on visibility in any mandatory Class I Federal Area.

Subsection D.1.f requires the Air Pollution Control Officer to consult with the Federal Land Manager (FLM) on a proposed major stationary source or major modification that may impact visibility in any Class I Area. The subsection also requires that “an Authority to Construct permit shall address the potential to impact air quality (including visibility) of any Class 1 federal areas.” These provisions are acceptable to meet the visibility analysis requirements.

1 0

. Provisions, pursuant to 40 CFR 51.161 that require opportunity for public comment, as well as the consideration of any comments received during this period in the final permit determination. These provisions must also ensure the availability of all information relevant to the proposed permit during the comment period.

Rule 206, section C, Discretionary Permits, ensures that the requirements of 40 CF R 51.161 are

met. S ection s C.2 and C.3 require the District to provide a 30 day public notice if the potential
emissions of the new or modified stationary source exceed s 100 lbs/day (18.25 tpy) of VOC,
NO x , SO x or PM 10 including fugitive emissions, 80 lbs/day (14.6 tpy) of non

- fugitive PM 10 , or 40 lbs/day (7.3 tpy) of PM 2.5

. Thus Rule 206 requires public notice for all federal major sources and major modifications. Section C also requires that all related materials be m ade available for8

inspection at the District offices. Taken together these provisions satisfy the regulatory requirement.

1 1

. Definitions that contain language that is either identical or equivalent to that found in

40 CFR 51.165(a)(1) and 51.100.

Rule 207, S ection B

– Definitions, incorporates by reference the definitions contained in 40 CFR 51.165(a)(1) for any terms not listed in Rule 207. Thus

, the requirements of 40 CFR 51.165(a)(1)
are satisfied for the terms not listed in Rule 207. We have evaluated the approvability of the terms listed in Rule 207, section B, Definitions

, that are required by 40 CFR 51.165(a)(1). In most cases, the definitions are either identical to or equivalent to language used in 40 CFR

51 .165(a)(1)

. However, i n some instances , the definitions do not match the federal definitions as closely . Our evaluation of such definitions is provided below. Overall, the definitions provided in section B satisfy the requirements to include definitions in the NSR program that are eit her identical or equivalent to those found in 40 CFR 51.165(a)(1) and 51.100.

Federally enforceable
Rule 207 does not define or use this term. Instead the rule defines “enforceable” which is used throughout the rule. The use of the term “enforceable” and its definition ensures legal as well as practical enforceability of specified provisions throughout the rule and is therefore an acceptable

substitution.

Lowest A chievable E

mission R ate (LAER)
Rule 207 does not provide a definition for this term. Instead the rule provides a definition for the term “Best Available Control Technology (BACT)

. ” Rule 207, section B defines BACT as the more stringent of (i) the most effective emission control device, emission limit, or technique which has been achieved in practi ce for such class or category of source; or (ii) any other alternative emission control device, technique, equipment, fuel or process determined to be technologically
feasible and cost

- effective. Rule 207’s definition of BACT further states that under no

c ircumstance will BACT be determined to be less stringent than any emission control that is required by any applicable provision of law, including the most stringent emission limitation contained in the implementation plan of any state , unless the applicant demonstrates technical infeasibility. Taken together, these provisions are at least as stringent as the federal definition of
LAER as defined in 40 CFR 51.165 (a)(1)(xiii). This is an acceptable substitution.

Regulated NSR P ollutant
Rule 207 does not pro vide a definition for this term, but does define the term “Affected Pollutants” as any pollutant for which a National or State Ambient Air Quality Standard has been

established. This definition is consistent with the federal d efinition of Regulated NSR Pollutant. The rule also specifically defines “ Nonattainment Pollutant ” as any pollutant or a precursor to such air pollutant that has been designated “nonattainment” by the US EPA or by CARB

. This is an acceptable substitution.

1 2

. Provisions, pursuant to 40 CFR 51.165(a)(1)(iv)(C), which require that fugitive emissions be included in the major source applicability determination if the source belongs to one of the source categories listed in this section. Otherwise, fugitives may be excluded from the app licability determination.9

Rule 206, section A.4.a requires that all fugitive emissions be included in assessing the emissions for a project. This requirement includes more sources than what is federally required and therefore satisfies the regulatory requ irement.

1 3

. Provisions, pursuant to 40 CFR 51.165(a)(3)(ii)(C), that limit “prior shutdown” or “prior curtailment” emission reduction credits (ERCs), i.e., ERCs that are generated by

facilities that have ceased or reduced operation s prior to the last day of the base year inventory

. These ERCs may be allowed if ( i ) such reductions are surplus, permanent, quantifiable, and federally enforceable; and ( ii ) the projected emissions inventory for the attainment demonstration explicitly includes these emission s; however, in no event may credit be given for shutdowns that occurred before August 7, 1977.

Rule 207, section C.2 requires offsets to be Actual Emission Reductions (AERs). Section B, Definitions, defines AERs as reductions that are “Real, Quantifiable , Surplus, Permanent and Enforceable.” Thus the rule satisfies the first requirement for prior shutdown or curtailment ERCs

to be used.

Rule 207, section E.2.d states that “Emission reductions achieved before the base year used in an attainment plan demo nstration for that pollutant must be included in the inventory as growth to be eligible for use.” Thus the rule satisfies the second criterion applicable to ERCs generated prior to attainment plan baselines

.

1 4

. Provisions, pursuant to 40 CFR 51.165(a)(5) (ii), which require new source review for a source or modification which becomes major due solely to a relaxation in a federally

enforceable limit taken to avoid major NSR requirements. Such sources and

modifications must be subject to NSR “as though construction had not yet

commenced.”

Rule 2 07 A.2.d includes language requiring new sources and modifications subject to NSR due solely to a relaxation in a federally

- enforceable limit to be reviewed as though construction had not yet commenc ed and comply with all applicable requirements of the rule. This provision satisfies the regulatory requirement

.

1 5

. Provisions, pursuant to 40 CFR 51.165(a)(10), which assure that the control requirements applicable to major stationary source s and major modifications of PM 10 also apply to major stationary source s and major modifications of PM 10 precursors in a

PM 10 nonattainment area.

Rule 207 Section B provides a definition for the term precursor , which lists VOC, NOx and SOx

as PM 10 precursors. This provision satisfies the regulatory requirement.

16

. Provisions, pursuant to 40 CFR 51.165(a)(13), which assure that the control requirements applicable to major stationary source s and major modifications of PM 2.5 also apply to major sta tionary source s and major modifications of PM 2.5 precursors in a

PM 2.5 nonattainment area. This section also provides that a District may exempt major stationary sources and major modifications from this requirement if the District submits10

to EPA , and EPA approves, a demonstration which meets the conditions for a nonattainment NSR precursor demonstration as set forth in 40 CFR 51.1006(a)(3).

Rule 207 Section B provides a definition for the term precursor , which lists NO x and SO x as PM 2.5 precursors. This provision satisfies the regulatory requirement for these two pollutants.

For both VOC and ammonia, the Rule 207 definition of the term precursor includes these pollutants if they “are determined to be a necessary part of the PM 2.5 control strategy in the attainment demonstration approved by the US EPA in the SIP”

. T his rule language concerning
VOC and ammonia is not consistent with EPA ’s recent PM 2. 5 implementation plan requirements,
entitled “Fine Particulate Matter National Ambient Air Quality Standard: State Implementation Plan Requirements

. ” 81 FR 58010 (August 24, 2016). This rulemaking was issued as part of

EPA’s response to the DC Circuit Court decision in Natural Resources Defense Council (NRDC)

v. EPA , 706 F.3d 428 (D. C. Cir. 2013)

. (We note that Imperial’s adoptions of the revisions to Rule 207 occurred prior to the DC Circuit’s decision.) EPA’s current definition of PM 2. 5 precu r sor include s “ VOC and ammonia in any PM 2. 5 nonattainment area.” ( See 40 CFR 51.165(a)(1)(xxxvii)(C)( 2 ))

B ecause Imperial County is classified as a moderate ozone nonattainment area, Rule 207 regulates VOC as a precursor to ozone ; t herefore, EPA also evaluated Rule 207’s requirements as they apply to VOC emissions to determine if Rule 207 adequately regulates VOC as a precursor to PM 2.5

.

Rule 207 section C.1 requires BACT (equivalent to federal LAER) for any new or modified emission unit with a PTE equal to or greater than 25 lbs per day (4.56 tpy) of any nonatta inment pollutant or its precursor. Rule 207 sections C.2.c, C.2.d and C.3.a also require any new or modified stationary source whose project emissions exceed the major source or major modification thresholds for any nonattainment pollutant, except PM 2.5 , t o offset those emissions

at a 1.2:1 ratio. The required major source threshold for a moderate PM 2.5 nonattainment area is 100 tpy for both PM 2.5 and its precursors, and the major modification threshold is 10 tpy for PM 2.5 and 40 tpy for its precursors NO x , SO x and VOC. The required offset ratio for PM 2.5 and its precursors is 1:1. All new major sources and major modifications, as defined by these thresholds, must apply LAER and provide offsets at the specified ratios.

Thus, the NSR requirements contained in Rule 207 pertaining to VOC (LAER and offset applicability thresholds

, and offset ratios) are at least as stringent as would be required if VOC was specifically listed as a PM 2.5 precursor. Therefore we find that Rule 207 satisfies the requirements o f 40 CFR 51.165(a)(13) for VOC. In the event Imperial is redesignated to
attainment for the 2008 8

- hr ozone NAAQS and the District revises Rule 207’s LAER and offset
thresholds for VOC emissions such that they do not adequately regulate VOC as a PM 2.5 precu rsor

, EPA will re

- evaluate Rule 207 with regard to VOC as a PM 2.5 precursor pursuant to 40 CFR 51.165(a)(13 )

.

Rule 207 does not specify ammonia as a PM 2.5 precursor and the District has not provided a nonattainment NSR precursor demonstration for ammonia consistent with the demonstration required in 40 CFR 51.1006(a)(3) . Therefore we find that Rule 207 is deficient in regards to meeting the requirements of 40 CFR 51.165(a)(13) for ammonia . The District may remedy this11

deficiency by either revising Rule 20 7 to include ammonia as a PM 2.5 precursor or provid ing an approvable demonstration consistent with the requirements of 40 CFR 51.1006(a)(3) for

ammonia.

1 7

. Provisions, pursuant to 40 CFR 51.307(b)(2), that identify additional requirements for

any new ma

jor source or major modification, proposing to locate in a nonattainment area, that may have an impact on visibility in any mandatory Class I Federal Area.

Subsection D.1.f requires the Air Pollution Control Officer to consult with the Federal Land Manage r (FLM) on a proposed major stationary source or major modification that may impact visibility in any Class I Area. The subsection also requires that “an Authority to Construct permit shall address the potential to impact air quality (including visibility) of any Class 1 federal areas.” These provisions are acceptable to meet the visibility analysis requirements.



### 4.2 General NSR Requirements

General NSR Requirements We reviewed the submitted rules for compliance with EPA’s regulations in 40 CFR

51 .160

- 164 , which apply to both major and minor sources.

1. 40 CFR 51.160

– Legally enforceable procedures

(a) Each plan must set forth legally enforceable procedures that enable the permit authority to determine whether the construction or modification of a facility, building, structure or installation or combination of these will result in (1) a violation of applicable portions of the control strategy; or (2) interference with attainment or maintena nce of a

national standard in the state in which the proposed source (or modification) is located or in a neighboring state

.

Rule 206 , Section A.3 requires District guidelines and procedures for processing and issuing permits to insure that no Project wil l prevent or interfere with the attainment or maintenance of applicable Ambient Air Quality Standards, and that no project will be permitted unless that APCO is satisfied that all applicable Rules, orders and regulations will be complied with. This provisi on satisf ies this requirement.

(b) Such procedures must include means by which the permit authority responsible for

final decision

- making on the application for approval to construct or modify will prevent such construction or modification if (1) it wil l result in a violation of applicable portions of the State Implementation Plan ; or (2) it will interfere with the attainment or

maintenance of a national standard.

Rule 207

, Section D.1.a prohibits issuance of a permit unless the new or modified emissions unit complies with a pplicable District rules and regulati ons . In addition, Section C.5.b.1 prohibits the emissions from a new or modified stationary source from causing or making worse a violation of an ambient air quality standar d. These provisions are acceptable to satisfy this requirement.

(c) The procedures must provide for the submission, by the owner o r operator of the12

building, facility, structure, or installation to be constructed or modified, of such information on (1) th e nature and amounts of emissions to be emitted by it; (2) the location, design, construction, and operation of such facility, building, structure, or installation as may be necessary to allow the permit authority to make necessary determination s

.

Rule 20 4

– Applications

, specifies the application requirements, including the requirement to submit all information necessary for the District to asses s and make determinations for sources that require a permit under Rule 201 . The District may request specific information , analyses, plans or specifications need ed to make all of the determinations required by paragraph (a) of 40
CFR 51. 160 , therefore this provision is acceptable to satisfy this requirement.

(d) The procedures must provide that approva l of any construction or modification must not affect the responsibility o f the owner or operator to comply with applicable portions of

the SIP

.

Rule 20 7

– New and Modified Stationary Source Review

, s ection C.5.e states “ I ssuance of an

Authorit y to Constr uct shall not relieve any Owner or Operator of the responsibility to comply fully with any applicable provision of the District portion of the California SIP and any other requirements under District, State or Federal law.” This provision is acceptable to satisfy this requirement.

(e) The procedures must identify types and sizes of facilities, buildings, structures, or

installations that will be subject to review under the permit program . The plan must discuss the basis for determining which facilities wi ll be subject to review.

Rule 20 7 , S ection A.2 discusses the applicability of the rule and Subsection A.2.a requires all new Stationary Sources and all M odifi cations of existing sources that emit or have the Potential to Emit (PTE) one or more Affected P ollutants, to comply with the requirements of Rule 207

. SIP

approved Rule 201

– Permits Required

, specifies that a permit is required for all sources except those specifically listed in Rule 202

– Exemptions . EPA approved the latest version of Rule 202

on May 9

, 2011

. In that action, EPA determined that the types and sizes of sources exempted from permit requirements were consistent with the provisions of 40 CFR 51. 160(e) in that it was not necessary to regulate the sources listed in Rule 202 in order for the District to attain or
maintain the NAAQS. Thus

, taken together, these rules satisfy the requirements of this provision.

(f) The procedures must discuss the air quality data and the dispersion or other air quality modeling used to meet the requirement s of this subpart. (1) All applications of air quality modeling involved in this subpart shall be based on the applicable models, data bases, and other requirements specified in 40 CFR part 51, A ppendix W of this part (Guidelines on Air Quality Models). (2 ) Where an air quality model specified in appendix W is inappropriate, the model may be modified or another model substituted. Such a modification or substitution of a model may be made on a case

- by

- case basis or, where appropriate, on a generic basis for a specific state program. Written approval of the EPA must be obtained for any modification or substitution. In addition, use of a modified or substituted model must be subject to notice and opportunity for public comment under procedures set forth in 40 C FR 51.102.13

Rule 207

, S ection F

, Air Quality Impact Analysis , provides the requirements for analyzing air quality data. Specifically

, Subsection F.1 allows the APCO the discretion to require applicants to provide estimates of the effects caused by the new or modified emission source using air quality modeling, consistent with the requirements of 40 CFR Part 51, Appendix W

. The rule also allows for the District to use an alternate model, if more appropriate, after allowing for public comment along with concu rrence from EPA and CARB. This language satisfies this requirement.

2. 40 CFR 51.161

– Public availability of information

(a) P rocedures which require the permit authority to provide opportunity for public comment on information submitted by owners and operators. The public information must include the agency’s analysis of the effect of construction or modification on ambient air quality, including the agency’s proposed app roval or disapproval.

Rule 206 S ection C

, Discretionary Permits

, address es this requirement. Subsection C.2 requires the District to provide notice of a preliminary decision in at least one newspaper of general circulation and inform the public on how to obtain more information and provide public comment.
Subsection C.4 specifies that the information shall be made available for public inspection at the District’s office. This includes the information provided by the applicant, the District’s analysis,

incl uding the District’s proposed permit action and a copy of the proposed permit. Section C. is acceptable to satisfy the requirement regarding the type of information to be provided.

Rule 206, S ection C ensures that the requirements of 40 CFR 51.161 are met. This section requires the District to provide a 30 day public notice for each new or modified stationary source when the facility’s emissions exceed 100 lbs/day (18.25 tpy) of VOC, NO x , SO x or PM 10 including fugitive emissions, 80 lbs/day ( 14.6 tpy) of non

- fugitive PM 10 , or 40 lbs/day (7.3 tpy) of PM 2.5

. Thus Rule 206, Section C requires public notice for all major sources and major modifications

. Rule 206, Section C also requires public notice for minor sources and minor modifications at

sp ecified thresholds that are approximately 50 percent of the PSD significant emission rates (SERs) for VOC, NO x , or SO x , 75 percent of the PSD SER for PM 2.5 and slightly less than the
PSD SER for PM 10

. S ee 40 CFR . 51.166(b)(23)(i) for PSD SER

. EPA finds the se public notice thresholds reasonable for minor sources. Section C also requires that all related materials be made available for inspection at the District offices. Taken together these provisions satisfy the regulatory requirement.

(b) O pportunity for public comment shall include, a t a minimum, (1) Availability for public inspection in at least one location in the area affected of the information submitted by the owner or operator and of the permit authority ’s analysis of the effect on air quality; (2) A 30

- day period for submittal of public comment; and (3) A notice by prominent

advertisement in the area affected

, of the location of the source information and analysis specified in paragraph 40 CFR 51 .161 (b)(1).

Rule 206 s ubs ections C.2 and C. 4 address this requirement. Subs ection C.2 requires the District to provide a 30

- day public comment period prior to issuing a permit for construction or modification. The notice requesting public comment must be published in at least one newspaper of genera l circulation and state how pertinent information can be obtained. Subs ection C.414

specifies that the information shall be made available for public inspection at the District’s office. This includes the information provided by the applicant, the District’s analysis, including the District’s proposed permit action and a copy of the proposed permit. These provisions are acceptable to satisfy this requirement.

(c) Where the 30

- day comment period required in paragraph (b) of this section would

conflict with ex isting requirements for acting on requests for permission to construct or modify, the state may submit for approval a comment period which is consistent with such existing requirements.

This is a discretionary component of a permit program that ICAPCD ’s s ubmitted rules do not contain. All permits subject to public notice requirements under Rule 20 6 are subject to a 30

- day public comment period. This is acceptable.

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

p oint sources. The definition of point source for lead is given in 40 CFR 51.100(k)(2).

Rule 206, s ubsection C.2 requires the District to send a copy of the information submitted by the applicant, the District’s analysis and a copy of the proposed permit t o ARB, EPA and any other interested public agency or party requesting it in addition to public noticing

.

Rule 206, s ubsection C.3 lists the pollutant thresholds at which new or modified stationary

sources are exempted from the subsection C.2 public noticing requirements. New and modified sources with a potential to emit less than 100 lbs/day (18.25 tpy) of VOC, NO x , SO x or PM 10 ( including fugitive emissions ) , 80 lbs/day (14.6 tpy) of non

- fugitive PM 10 , or 40 lbs/day (7.3 tpy) of

PM 2.5 , or les s than 5 tpy of lead are exempted from the public notice requirements of subsection
C.2. Thus public notice is required for all major sources and major modifications and for certain minor sources with emissions greater than approximately fifty percent of t he PSD significant emission rates (SERs) for VOC, NO x , or SO x , seventy

- five percent of the PSD SER for PM 2.5 and slightly less than the PSD SER for PM 10 . ( S ee 40 CFR . 51.166(b)(23)(i) for PSD SER) EPA finds these public notice thresholds reasonable for min or sources

. These provisions are acceptable to satisfy this requirement.

3. 40 CFR 51.162

– Identification of responsible agency

Each plan must identify the state or local agency which will be responsible for meeting the requirements of this subpart in each area of the state . Where such responsibility rests with an agency other than an air pollution control agency, such agency will consult with the appropriate state or local air pollution control agency in carrying out the provisions of this subpart.

California law provides for the creation and authority of each air District. (See H&SC Division 26, Part 3.) California law specifically provides that “ Local and regional authorities [e.g., the Districts] have the primary responsibility for control of air pollution from all sources other than vehicular15

sources.” ( See CH&SC § 39002.) Accordingly, the California SIP has been divided into sections

for each o f the 35 state permitting authorities. Each District that adopts rules and regulations and submits them for SIP approval is responsible for implementing and enforcing those submitted

rules. For the rules under review, all of the rules were adopted and subm itted by the ICAPCD

. Therefore

, this provision has been satisfie d

.

4. 40 CFR 51.163

– Administrative procedures

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

Rule 20 4

– Application , requires applications for permits required under Rule 201 to be filed in the manner and form prescribed by the District, and requires the applicant to provide all of the information necessary to enable the District to make the determinations required by the District

Rules. This provision satisfies this requirement.

5. 40 CFR 51.164

– Stack height procedures

Such procedures must provide that the degree of emission limitation required of any source for control of any air po llutant must not be affected by so much of any source’s stack height that exceeds good engineering practice or by any other dispersion technique, except as provided in 40 CFR 51.118(b). Such procedures must provide that

before a state issues a permit to a source based on a good engineering practice stack height that exceeds the height allowed by 40 CFR 51.100(ii)(1) or (2), the state must notify the public of the availability of the demonstration study and must provide opportunity for public hearing on it. This section does not require such procedures to restrict in any manner the actual stack height of any source.

Discussion : Rule 207, s ubs ection F.1.b states that for the purposes of modeling, a stack height that exceeds those dictated by good engineering practices shall not be used. Instead, the actual height used for modeling shall be calculated according to good engineering practices as specified in 40 CFR 51.100(ii). This provision is sufficient to ensure that the air quality impacts of stationary sourc es are not underestimated due to stack heights that exceed good engineering practice or air dispersion modeling techniques that do not satisfy the criteria of set forth in CFR 51.118(b). This provision satisfies this requirement.



### 5 New Source Review Reforms

California Clean Air Act

– New Source Review Program The air quality in California has historically been some of the worst in the nation. In light of this fact, California has always been at the forefront in implementing strict air quality regulations to a ddress the state’s serious air quality problems.

In 1959, the State passed its first air quality standards for total suspended particulates, photochemical oxidants, sulfur dioxide, nitrogen dioxide, and carbon monoxide. These

state standards were amended in 1969 by the Air Resources Board. At that time, the16

California ambient air quality standard for ozone was lower than the federal standard, thus most of California was exceeding the state standard for Ozone. As a result, most California

Air Pollution con trol agencies developed permitting programs that contained non

attainment new source review requirements such as Lowest Achievable Emissions Rate (LAER) and offsets around the same time as the adoption of the federal Clean Air Act in

1970.

In 1988, California adopted the California Clean Air Act of 1988 (California CAA). This legislation established new preconstruction review requirements for new and modified sources. It established uniform emission thresholds that trigger control and offset requirem ents for ozone (VOC and NO
x ), carbon monoxide (CO), sulfur dioxide (SO 2 ) and nitrogen dioxide (NO 2 ) at levels significantly lower than the federal thresholds in effect at the time of adoption. These thresholds are even lower than the thresholds established two years later by the federal Clean Air Act Amendments of 1990 (federal CAA).

Under both state and federal requirements, all ozone nonattainment areas were classified according to the severity of the ozone violations measured for each area. Instead of a single major source threshold for all areas, the federal CAA set new major source and major modification thresholds of 100 and 40 tpy respectively, for areas classified as moderate or marginal; 50 and 25 tpy respectively, for areas classified as serious; 25 and 25 tpy respectively, for areas classified as severe; and 10 and 0 tpy respectively, for areas classified as extreme. These thresholds are used to determine when a proposed project requires the application of LAER and emission offsets.

In comparis on, the California CAA set thresholds for when project emissions trigger the application of the California version of Best Available Control Technology (BACT) and offsets. (Note that C alifornia BACT is defined in such a manner as to be equivalent to

federa l LAER requirements.) The application of C alifornia BACT is triggered for emission increases of 25 lb/day in areas classified as moderate and 10 lbs/day in areas classified as serious, severe or extreme. In addition, some California Districts have adopted even lower

C alifornia BACT thresholds of two and zero lb/day. The requirement to provide offsets is triggered for all emission increases, once a facility’s emissions exceed 25 tpy in areas classified as moderate; 15 tpy in areas classified as serious; and 10 tpy in areas classified as

severe or extreme.



### California and Federal BACT/LAER and Offset Thresholds for 1

- hr Ozone

CA Ozone Classification
(ppm) Marginal Moderate

(0.09

- ≤0.12) Serious

(0.13

- ≤0.15) Severe

(0.16

- ≤0.20) Extreme

(>0.20)

CA BACT 5 (tpy) [lb/day] NA 4.6 [25] 1.8 [10] 1.8 [10] 1.8 [10] CA Offset (tpy) NA 25 15 10 10

EPA Ozone Classification
(ppm) Marginal

(0.121

- <0.138) Moderate

(0.138

- ≤0.160) Serious

(0.160

- ≤0.180) Severe

(0.180

- ≤0.280) Extreme

(>0.28)

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

5 California Health & Safety Code §§ 40918, 40919, 40920 and 40920.517

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

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



### 5.1 NSR Reform Program Requirements

On December 30, 2002, EPA published a final rulemaking action to provide additional flexibility in the permitting of modified sources subject to the federal major source NSR and PSD programs. EPA’s intent was to allow existing sources addition al flexibility in the NSR/PSD permitting process that would encourage facilities to make process improvements or undertake energy efficiency projects that would provide additional environmental benefits by reducing emissions on a capacity basis. In 2005, a court vacated two NSR Reform provisions

, 6 but also upheld three key provisions. These provisions all pertain to how emission increases from proposed modifications of existing sources are

calculated.

One provision allows an existing facility to set a Pla ntwide Applicability Limit (PAL), which in effect is a facility

- wide emissions cap for a specific pollutant. Once the PAL is determined, a facility can make any physical modification or change in the method of operation, which might otherwise trigger a maj or modification, without obtaining a NSR permit, as long as the plantwide emissions remain below the PAL level. For certain types of industries that need significant operational flexibility to make quick changes in response to changing market conditions, t he ability to make changes without having to wait for the issuance of construction permits is worth the additional work to ensure emissions from all operations remain below the PAL and maintain the additional records needed to verify compliance with the pl ant

- wide emission limits.

Another provision changed the allowable time frame to be used to determine baseline actual emissions. Baseline emissions are generally considered to be the pre

- project emissions from the facility or emission units proposed to be modified. Prior to implemen ting the NSR Reforms, EPA required a source to use the actual emissions emitted during the two year period immediately preceding the application date for the new project. Sources were allowed to use a different two year period within the five year period

i mmediately preceding the application date if they could demonstrate that the alternative two year period was more representative of normal operations. The NSR Reforms revised the allowable time frame to be any 24 month period during the 10 year period imme diately preceding the application date. EPA believes that the use of a 10 year period allows a source to look back to a period from a more representative business cycle, i.e., 10 years vs. five years, and that significant resources are conserved by allowin g the source to choose the 24 month period used to establish baseline actual emissions, rather than spend time and resources determining what period most represents “normal operations.” While going back further in time means a source may be able to choose a period with higher average emissions, the NSR Reforms also added requirements to ensure the baseline period is adjusted for any excess emissions or any additional emission reductions required by new regulations which have become effective since the basel ine period.

6 State of New York, et al., v. U.S. Environmental Protection Agency, et al., 413 F.3d 3 (D.C. Cir. 2005)18

The third provision upheld by the court changed how post

- project emissions are determined. Prior to implementing the NSR Reforms, EPA required a source to use the worst case potential to emit (PTE) assumptions (i.e., operating at 100% capacit y, 24 hrs/day, 7 days a week), unless the applicant agreed to practically enforceable permit conditions to limit operation of the emission unit (i.e. fuel usage limits or limits on hours of operation). In this “actual to potential” test, often the differen ce between the baseline actual emissions and the PTE of an operation would be greater than the major modification significance thresholds. As a result, many modifications were treated as major modifications, even when the actual emissions would decrease, n ot change, or the actual increase in emissions would not be significant. The NSR Reforms changed the post

- project emission calculation methodology to allow a source to use the highest actual emission rate projected to occur over the next 5 or 10 years and to subtract emissions the emission units could have accommodated prior to the project, that were unrelated to the project, in order to determine the emission increase from the proposed project.

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



### 5.2 Impacts of Federal NSR Reforms on California NSR Pe rmitting Programs

By not adopting the NSR Reforms, the NSR program s in California Districts do not include the three program elements described earlier: use of PALs, a 10 year look back period for baseline actual emissions and projected actual emissions. The use of two of these three provisions (baseline actual emissions and projected actual emissions) is required under 40 CFR 51.165(a)(2). The requirement to adopt a NSR program that allows the use of PALs is

found in 40 CFR 51.165 (f).

Section 116 of the CAA 7 provides that nothing in the Act shall preclude the rights of States to adopt air pollution regulations that are more stringent than those contained in the CAA or implementing regulations. As noted above, the California CAA of 1988 adopted lower

emis sion thresholds for triggering emission control (BACT/LAER) and offset requirements for new and modified sources as part of its NSR program. Consistent with this concept, when EPA adopted new calculation methods to implement the NSR reforms in 40 CFR

51.16 5(a)(2), we also stated that each plan must use the specific applicability provisions specified unless the State specifically demonstrates that the submitted plan provisions “are more stringent than or at least as stringent” in all respects as the specifie d paragraphs. These applicability provisions specify the use of baseline actual emissions and projected

7 Section 116 of the CAA: Except as otherwise provided in sections 119 (c), (e), and (f) (as in effect before the date of the enactment of the Clean Air Act Amendments of 1977), 209, 211(c)(4), and 233 (preempting certain State regulation of moving sources) nothing in this Act shall preclude or deny the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecti ng control or abatement of air pollution; except that if an emission standard or limitation is in effect under an applicable implementation plan or under section 111 or 112, such State or political subdivision may not adopt or enforce any emission standard or limitation which is less stringent than the standard or limitation under such plan or section.19

actual emissions, two of the new NSR Reform provisions, but also retain the option for a source to use the actual to potential emission test.

Several air districts in California have argued that their NSR and PSD permit programs are inherently more stringent than the required federal program because the applicability thresholds for applying CA BACT and offsets are significantly lower than those in the

f ederal CAA. In addition, for modifications, a source does not need to be a major source, as it does for federal purposes, before these lower applicability thresholds apply to a proposed project. The districts also point out that if a District adopted the N SR Reform calculation methods, and a project using these methods was no longer classified as a major modification, it would not be subject to Federal LAER and offsets requirements for NSR or Federal BACT for PSD; but the project would still have to apply C A BACT and provide offsets in accordance with the CA CAA requirements. These lower S tate emission thresholds are already in almost all Districts’ portion of the California SIP, making these requirements enforceable under both state and federal law.

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

EPA has reviewed the Districts’ claims and considered how the CA CAA provisions affect the effectiveness of the NSR Reforms to provide the intended regulatory relief, and we agree that the application of CA BACT and offsets at significantly lower thresholds means that the federal NSR Reform provisions do not provide any of EPA’s intended additional flexibility to proposed projects that may otherwise trigger federal maj or modification requirements. If the State adopts these provisions, a new project will have to complete two different sets of emission calculations; and even if the federal requirements are not applicable, the source will still have to comply with the CA B ACT control and offset requirements if they are triggered. In light of these facts, EPA is proposing to find that it is acceptable for ICAPCD to not incorporate the NSR Reform provisions into their SIP approved NSR program, since the same level of control will be required for modified sources, with or without inclusion of these provisions in the SIP, and their program will not be any less stringent than the federal program.



### 6 Section 110( l ) of the Act

Section 110( l ) of the Act prohibits EPA from approving an y revision of a SIP if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress, or any other applicable requirement of the Act. EPA approved

Rule s 206 and 207 into the SIP on January 3, 2007 and No vember 10, 1980 , respectively.

See 72 FR 9 and 45 FR 74480

. F or the purposes of the 110(l) evaluation, we compare the

submitted rule s with the current SIP version s

.20

With respect to the procedural requirements of CAA section 110(l), based on our review of the public process documentation included in the May 26, 2000, January 21 , 2014 and February 10, 2014 SIP submittal package s , we find that ICAPCD has provided suffici ent evidence of public notice and opportunity for comment and public hearings prior to adoption and submittal of these rules to EPA.

With respect to the substantive requirements of section 110(l), as discussed further below,

we have determined that our a pproval of submitted Rules 206 and 207 , as described in this TSD, would represent a strengthening of ICAPCD’s NSR program as compared to the

current SIP

- approved version s of Rule s 206 and 207

, and that our approval of submitted

Rules 206 and 207 would not interfere with any applicable requirement concerning

attainment and RFP

, or any other applicable requirement of the Act.

Rule 206

– Processing of Application s The provisions contained in Rule 206 are mainly administrative in nature. The revisions contained in the submitted rule will help clarify the application process and provide

additional enforceability . The revisions to Rule 206 will not interfere with any a pplicable requirement concerning attainment and reasonable further progress, or any other applicable requirement of the Act.

Rule 2 07

– New and Modified Stationary Source Review

T he most significant differences between the current SIP

- approved version an d the

submitted version of Rule 207 are the emission thresholds at which a project triggers

LAER and offset requirements. SIP Rule 207 requires LAER for any new or modified

source with a net emission increase of 250 pounds per day (45.6 tpy) or more of any nonattainment pollutant or their precursors

. S ubmitt ed Rule 207, section s C.1.a and C.1.b

, require BACT ( which Rule 207 defines in a manner consistent with the federal definition of LAER) for any new or modified emission unit with the potential to emit 25 pounds per day (4.56 tpy) or more of any nonattainment pollutant or their precursors

. 8

The expected result of lower LAER applicability thresholds is that more equipm ent and projects will be subject to LAER ; therefore

, the new rule will reduce new emissions because significantly smaller sources (10 times smaller) will now be required to utilize

LAER . T able 1 below shows the applicable LAER thresholds for both the current SIP rule

and submitted rule

.

Table 1 Applicable LAER Thresholds for New an d Modified Sources (tpy)

VOC NO

x SO

x PM 10 PM 2.5 SIP Rule 207 45.6 45.6 45.6 45.6 45.6

Submitted Rule 207 4.6 4.6 4.6 4.6 4.6

SIP

- approved Rule 207 requires offsets for any project emitting a nonattainment pollutant at the applicable LAER thresholds. Submitted Rule 207, sections C.2.c and C.2. d

, requires

8 For PM 2.5 , this provision only applies to sources located in the PM 2.5 NA portion of Imperial County.21

offsets for emission increase s of nonattainment pollutants that result in a new major stationary source or major modification , as defined in the rule . Table 2 below shows the applicable offset threshol ds applicable to new major sources and major modifications, for

both the current SIP rule and submitted rule.

Table 2

Applicable Offset Thresholds for New Major Sources (tpy)

VOC NO
x SO
x PM 10 PM 2.5 SIP Rule 207 1 45.6 45.6 45.6 45.6 45.6

Submitted Rule 207 100 70 70 70 100

Applicable Offset Thresholds for Major Modification s (tpy)

VOC NO
x SO
x PM 10 PM 2.5 SIP Rule 207 1 45.6 45.6 45.6 45.6 45.6

Submitted Rule 207 40 40 40 15 10

1. The existing SIP rule specifically excludes nitrous oxides as an ozone precursor, but it is also a PM 10 precursor.

EPA notes that the offset applicability thresholds for new major sources are higher in

submitted Rule 207 than those set forth in SIP

- approved Rule 207 , but the offset applicability thresholds for major modification s are lower in submitted Rule 207 than those

set forth in SIP

- approved Rule 207 ( substantially lower for PM 10 and PM 2.5 )

. While it is possible that the higher offset threshold s for new major sources may result in fewer new sources obtain ing off

sets

, it is also reasonable to assume that the lower offsets thresholds for major modifications will result in more modified sources obtaining offsets. Overall

, we do not believe the change s will interfere with applicable requirements of the CAA, including requirements for attainment or reasonable further progress towards attainment of the NAAQS. The SIP is also strengthened b ecause submitted R ule 207 will regulate NO
x as an ozone precursor, whereas current SIP

- approved R ule 207 does not

.

In addition, because the ICAPCD is now designated as a nonattainment area for PM 2.5 , the

revised rule includes additional provisions for the regulation of PM 2.5 as a nonattainment pollutant, such as a definition for PM 2.5 , major source and major modificati on thresholds, and provisions to require emission offsets and application of LAER control requirements

. These new provisions also strengthen the SIP. Other changes to Rule 207 include administrative changes to improve the readability and clarity of the rul e and will n ot interfere with any applicable requirements of the CAA

.

While submitted Rule 207 contains some provisions regarding offset applicability

thresholds which are less stringent than those currently in the SIP, submitted R ule 207 also contains several provisions that stre n g t hen the SIP. In particular, submitted Rule 207 imposes significantly lower trigger for BACT (federal LAER )

, which will significant ly increase the stringency of Rule 207 as it applies to nonattainment pollutants. EPA anticipates that the benefits of this more stringent provision outweigh other provisions that

may represent potential reductions in reduce stringency. Therefore, overall, EPA has22

determined that these changes will not interfere with the area ’ s ability to attain or maintain the NAAQS and will strengthen ICAPCD’s NSR program.

Accordingly, we have concluded that the revisions summarized above for Rules 206 and

207 will not interfere with the District’s ability to maintain the NAAQS and are ther efore approvable under section 110(l).



### 7 Section 193 of the Act

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

The application of this provision of the savings clause to revisions in a SIP

- approved NSR program is not straightforward. NSR program revisions are inherently difficult to evaluate with respect to changes in emissions reductions because NSR covers all types of stationary sources and provides for application of different emissions limitations to different types of sources depending upon what is considered LAER for a particular source. In the context of

the ICAPCD NSR SIP submittal, a determination of whether the SIP submittal would provide for equivalent or greater emission reductions relative to the existing SIP NSR

program can be made by reviewing the control technology review requirements (e.g., BACT (LAE R) applicability thresholds)

.

Rule 206

– Processing of Application s The provisions contained in Rule 206 are mainly administrative in nature and contain no control requirements, therefore revisions to the rule are not subject to the requirements of

CAA s ection 193.

Rule 207

– New and Modified Stationary Source Review

As noted above in the section of this TSD entitled “Section 110(l) of the Act,” compared to

the SIP

- approved version of Rule 207, the submitted version of Rule 2 07 contains a much lower emission threshold for the application of LAER for each nonattainment pollutant.

Therefore

, in this regard, new Rule 207 satisfies the CAA s ection 193 requirements.

For the reasons set forth above, we are proposing to approve the submitted R ule 207

– New and Modified Stationary Source Review under section 193 of the Act.



### 8 Recommendations

Pursuant to section 110(k)(3) of the Act, we recommend a full approval of Rules 204 and

206 based on our determination that the rule s compl y with applicable statutory and regulatory provisions requiring regulation of stationary sources in general and requiring permit programs for major stationary sources in particular, including section 110(a)(2)(C)23

and part D of title I of the Act. In additio n, we recommend a limited approval/limited disapproval of Rule 207 based on our determination that this rule satisfies all but one applicable statutory and regulatory provisions requiring regulation of stationary sources in general and requiring permit pro grams for major stationary sources in particular, including section 110(a)(2)(C) and part D of title I of the Act. This limited disapproval pertains to the

rule ’s inconsistency with the requirements of 40 CFR 51.165(a)(13) in that the rule does not require that the control requirements applicable to major stationary sources and major

modifications of PM 2.5 also apply to major stationary sources and major modifications of

ammonia as a PM 2.5 precursor, in the PM 2.5 nonattainment area

.

In support of this recommendation, we have concluded that our approval of Rule s 204, 206

, and 20 7 complies with section s 110(l) and 193 of the Act as discussed above

. If we finalize this action as proposed, our action would be codified through revisions to 40 CFR 52. 220 ( I dentification of P lan)

.

In addition, EPA recommend s that ICAPCD review s ection C.5.d of Rule 207 and clarify if necessary. This provision states: “Except for Major Stationary Sources or Major
Modifications, P rojects which burn municipal wa ste, landfill gas or digester gas shall also

be reviewed with H&SC Section 42314.1 and 42315

. ” It is not clear whether ICAPCD

intend ed to exclude major stationary sources or major modifications from review under th is

state code

.



### 9 Notes

Documents cited in TSD are included in the Rulemaking Docket

.