1

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

Placer County Air Pollution Control District

Rule 502 New Source Review 

Laura Yannayon

May 6, 2011

Reviewed by

Gerardo Rios
Table of Contents

Section Page

Introduction 1

NSR Program SIP Revision Submittals 1

Background 4

Rule Summary 3

Rule Evaluation 6

General New Source Review (NSR) Requirements

New Source Review Reforms 

California Clean Air Act – New Source Review Program

NSR Reform Program Requirements

Impacts of Federal NSR Reforms on California NSR Permitting Programs

Section 110(l) of the Act 31

Section 193 of the Act 61

Recommendations 67

Attachments 74
1

Introduction

Part C of title I of the Clean Air Act (CAA or Act) contains the provisions for the Prevention of 

Significant Deterioration (PSD) of air quality in areas designated as “attainment” or 

“unclassifiable” for the national ambient air quality standards (NAAQS). Part D of title I of the 

Act contains the requirements for areas designated “nonattainment” for any of the NAAQS. 

Both parts C and D of the Act require pre-construction permit programs for certain new or 

modified stationary sources of pollutants. The requirements under part C, referred to as “PSD 

New Source Review” (PSD) apply to certain new or modified sources that would be located 

within attainment areas, and apply to all regulated pollutants, except those pollutants for which 

an area has been designated as “nonattainment.” The requirements under part D, referred to as 

“Nonattainment NSR,” (NSR) apply to certain new or modified sources of nonattainment 

pollutants in nonattainment areas. Collectively, the pre-construction permit requirements related 

to PSD and Nonattainment NSR are commonly referred to simply as “NSR.” Both of these 

programs apply to “major” stationary sources and “major modifications” as those terms are 

defined in 40 CFR Part 51, Subpart I. In addition to the regulation of major stationary sources, 

states are also required to adopt a program to provide for the regulation of the construction and 

modification of minor stationary sources and minor modifications at major sources, to assure that 

the NAAQS are achieved and/or maintained. These pre-construction requirements are 

commonly referred to as “minor NSR.” (See 40 CFR 51.160-164)

NSR Program SIP Revision Submittals

Rule 502 –New Source Review (NSR) was adopted by the Placer County Air Pollution Control 

District (PCAPCD or District) on February 11, 2010 and submitted to EPA via the California Air 

Resources Board (ARB) by a letter dated July 20, 2010. ARB is the governor’s designee for 

submitting official revisions of the California State Implementation Plan (SIP) to EPA. There is 

not a current version of this specific rule in the SIP, but there are older rules in the approved SIP 

for certain air basin portions of the District, which will be replaced in the SIP by new Rule 502. 

See the Background section of this document for further discussion of the air basins located 

within the PCAPCD. 

Background

The current SIP contains old NSR rules which only apply to specific air basins within the 

District. PCAPCD consists of portions of three separate air basins: Sacramento Valley (SVAB), 

Mountain Counties (MAB) and Lake Tahoe (LTAB). The District has decided to simplify its 

regulatory program by writing a single set of rules which apply to the entire District, and where 

necessary, includes specific provisions for each air basin within these rules. Upon approval into 

the SIP, Rule 502 – New Source Review will replace Rule 508 – New Source Review, which has 

been SIP approved for the LTAB and MCAB. (See 47 FR 27065 (6/23/82) and 46 FR 27115 

(5/18/81)) 
2

In 2002, EPA promulgated changes to the NSR regulations for both the approval and 

promulgation of implementation plans and requirements for preparation, adoption, and submittal 

of implementation plans governing the NSR programs mandated by parts C and D of title I of the 

Act. These changes to the major NSR program, commonly referred to as “NSR Reform,” 

obligate states to develop and submit to EPA new NSR regulations for nonattainment areas, as 

well as attainment areas for states that elect to implement the PSD program. In response to NSR 

Reform and EPA’s reclassification of the Placer County portion of the Sacramento Metro Air 

Basin to a severe ozone nonattainment area (See 75 FR 24409, May 5, 2010), PCAPCD has 

submitted Rule 502 to fulfill these program requirements. This TSD contains EPA’s evaluation 

of new Rule 502 –New Source Review.

The CAA defines “nonattainment areas” as air quality planning areas that exceed the primary or 

secondary NAAQS for the given criteria pollutant (or that contribute to ambient air quality in a 

nearby area that does not meet the NAAQS). The SVAB is currently designated as 

nonattainment for the 8 hour ozone (severe) and PM2.5 NAAQS. The MCAB is currently 

designated as nonattainment for the 8 hour ozone (severe) NAAQS. The LTAB is currently 

designated as attainment for all pollutants. Therefore Rule 502 specifically applies to VOC, 

NOx, PM2.5 and SOx emissions (VOC, NOx and SOx are included as precursors to ozone or 

PM2.5) in the SVAB, and VOC and NOx emissions in the MCAB. PCAPCD does not take any 

credit in its attainment plans for any emission reductions achieved as part of these NSR 

regulations.

Rule Summary

Rule 502 contains the substantial requirements of the NSR program and is comprised of six

sections: Section 100 – General, Section 200 – Definitions, Section 300 – Standards, Section 400 

– Application Processing, Section 500 – Additional Provisions for Power Plants, and Section 600 

– Monitoring and Records. Section 100 includes provisions that outline the purpose and 

applicability of the rule, and public notice thresholds. Section 200 contains 54 definitions, and 

clarifies which other rules may be used to provide definitions if a term is not defined within this 

section. Section 300 contains the standards that apply to projects that undergo new source 

review, including Best Available Control Technology (BACT) and emission offset requirements, 

as well as the calculation methodologies to be used to make various determinations throughout 

the rule. Section 400 contains the application processing requirements, including provisions for 

determining when an application is complete, what is required to make a preliminary decision, 

what air quality models must be used, public notice requirements, requirements for a final action, 

and other administrative provisions. Section 500 contains specific requirements for power plant 

applications and Section 600 contains recordkeeping requirements for emergency engines, and 

portable and temporary equipment. 

Rule Evaluation
3

For this Technical Support Document (TSD), we have reviewed Rule 502 to ensure it meets the 

requirements of section 110 and part D of title I of the Act and implementing regulations at 40 

CFR 51.160 through 51.165. We also relied on the following materials in our review: General 

Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990 (see 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” that was published in January 2001. EPA has condensed the approval criteria 

contained in these various materials in this TSD, which describes reasons for our proposed action 

on the Rule 502 submittal.

General Nonattainment NSR Requirements

The Act requires all States with nonattainment areas to submit a NSR program that contains the 

following nonattainment NSR provisions. To demonstrate that PCAPCD has met each

provision, EPA identifies the section(s) of Rule 502, or other rules which satisfy the listed 

requirement. Where necessary, a detailed discussion accompanies deficiencies in the rules that 

have been identified through this review. 

1. Provisions to assure that calculation of emissions offsets, as required by section 

173(a)(1)(A), are based on the same emissions baseline used in the demonstration of 

reasonable further progress.

First we note that the emissions inventories that have been prepared for the Ozone 

nonattainment plan and the demonstration of reasonable further progress (RFP) are based on 

actual emissions. An attainment plan for PM2.5 is not due until December 14, 2012. For new or 

modified major sources of VOC, NOx, SOx and PM2.5, Rule 502 Section 303.1 requires offsets 

to be provided when emission increases exceed specified thresholds. Rule 504 – Emission 

Reduction Credits (ERCs) is used to provide emission reductions that satisfy the emission 

offset requirements. Rule 504 requires ERCs to be based on “actual” emission reductions. 

Thus, the basis for the demonstration of RFP and the calculation of NSR emissions offsets is 

the same (i.e., actual emissions). 

Second, regarding the amount of offsets that is necessary to show noninterference with RFP, 

EPA presumes that so long as a new source 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 or greater than 1:1), the new source will not interfere with

RFP. Rule 502 Section 303.3 provides the ratios for federal offsets purposes, which are equal 

to or greater than 1:1 for the nonattainment pollutants. These offset ratio requirements ensure 

that the program for permitting of new or modified major sources will not interfere with RFP. 

These provisions satisfy the statutory requirement.

2. Provisions to assure, pursuant to section 173(c)(1), that any 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. 
4

Rule 502 Section 303.4.1 requires that all offsets be enforceable and Section 303.4.3 requires 

that all offsets be surrendered prior to initial startup of the new or modified source. These 

provisions satisfy the statutory requirement.

3. Provisions to assure that emissions increases from new or modified major stationary 

sources are offset by real reductions in actual emissions as required by section 

173(c)(1).

Rule 502 Section 303.4.1 requires that all offsets be real reductions. Section 202 defines 

Actual Emission Reductions as the decrease of actual emissions, which are required to be real 

reductions. These provisions ensure that emissions increases from new or modified major 

stationary sources are offset by real reductions in actual emissions as required by section 

173(c)(1).

4. Provisions, pursuant to section 173(c)(2), to prevent emissions reductions otherwise 

required by the Act from being credited for purposes of satisfying the part D offset 

requirements.

Rule 502 Section 303.4.2 requires that all offsets for major sources and modifications be 

surplus when the reductions are surrendered to the District. Section 252 defines surplus as 

reductions that are not otherwise required by federal, state or local law and not relied upon to 

meet any SIP requirement. These provisions prevent emissions reductions otherwise required 

by the Act from being credited for purposes of satisfying the part D offset requirements as 

required by section 173(c)(2). 

5. Provisions, pursuant to section 173(a)(5), that, as a prerequisite to issuing any part D 

permit, require 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 result of its location, construction, or modification. 

Rule 502 Section 304.1 requires an applicant for a major source or major modification to 

prepare such an analysis consistent with the requirements of CAA section 173(a)(5), by 

requiring the applicant to prepare an analysis functionally equivalent to the requirements of 

Division 13 of the Public Resources Code (CEQA). This section also requires the District to 

make the necessary findings prior to issuance of an Authority to Construct. This provision 

satisfies the section 173(a)(5) requirement.

6. 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.]

Rule 502 defines Stationary Source PTE as the sum of the PTE for each emission unit which 

has been issued a Permit of Operate, Authority to Construct or for which an application has 

been submitted. SIP approved Article 2 – Application for Building Permit, Section 12 provides 
5

exemptions from permitting requirements for various types of emission units. Sections 12(a) 

and (b) provide broad exemptions for vehicles as defined by the state vehicle code and 

vehicles used to transport passengers or freight. Section 12(3) exempts all piston type internal 

combustion engines. This current SIP exemption would not meet the requirements of 

requirements of Section 302(z) of the Act, therefore the District has also submitted for SIP 

approval for Rule 501, which contains the same exemption for motor vehicles, but limits the 

exemption for internal combustion engines to those rated at 50 bhp or less. We find that the 

exclusion of these small stationary engines from the permitting program to be approvable.

7. Provisions, pursuant to 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 502 Section 304.2 requires an applicant for a major source or major modification to 

submit a certification that all existing major sources owned by the applicant in California which 

are subject to emission limitations are in compliance or on an expeditious schedule for 

compliance, with all applicable emissions limitations and standards. This provision satisfies 

the section 173(a)(3) requirement.

8. Definitions which contain language which is either identical or equivalent to that 

found in CAA Section 171, 40 CFR 51.100, and 51.165(a)(1). 

In most cases, the definitions in Section 200 are either identical or equivalent to EPA’s 

language in the CAA and/or CFR. In some instances, the definitions do not match the federal 

definitions as closely, but we have determined that they satisfy the federal criteria. These 

specific definitions are discussed below. All section references are to 40 CFR Part 51, unless 

otherwise noted. Also see Section 8.b. below for a discussion of specific definitions affected 

by implementation of the NSR Reform requirements, and see Section 8c below for a 

discussion of the deficiencies pertaining to the required definitions.

Actual Emissions 

Rule 502 defines this term as real emissions verified by source testing. In Section 206, the 

rule uses the term “Baseline Actual Emissions (BAE)” to provide the same definition as 51.165 

for the term “actual emissions.” The rule defines the term BAE as actual emissions for the 

existing emissions unit averaged over the consecutive two (2) year period immediately 

preceding the date of the application. If the last two years are unrepresentative of normal 

source operations as determined by the APCO, then any other 2 consecutive year period 

during the last five years which the APCO determines represents normal source operations 

may be used. This is the same as the section 165 definition of actual emissions and term BAE 

is used throughout the rule in place of actual emissions, therefore this substitution is 

acceptable.

Construction
6

Rule 502 does not provide a definition for this term, but EPA believes the common usage 

definition of this term is adequate for the purposes of determining the requirements of Rule 

502. 

Lowest Achievable Emission Rate (LAER)

Rule 502 does not provide a definition for this term. Instead the rule provides a definition for 

the term “Best Available Control Technology (BACT),” which incorporates the definition of 

LAER, by specifying that BACT is the most stringent of 1) applied in practice technology 

(analogous to LAER standard) or 2) the technology that is technically feasible and costeffective (BACT standard). This is an acceptable substitution.

Major Modification 

Section 165 (a)(1)(v) defines a major modification as a physical change in or change in the 

method of operation of a major stationary source that would result in both a significant 

emission increase and a significant net emissions increase for a regulated NSR pollutant. The 

definition of “significant,” which provides specific thresholds for each pollutant, is provided in 

section 165 (a)(1)(x). Rule 502 defines the term “major modification” as a modification of a 

source that results in a significant emission increase of a pollutant for which the source is 

classified as a major source. The definition of the term “modification” in Section 229 is 

sufficiently similar to the language used to describe the physical changes or changes in the 

method of operation as the term “major modification” in section 165. The “major” aspect of the 

section 165 definition is covered by the requirement that the source must already be a major 

source for the nonattainment pollutant that has a “significant emissions increase.” We note 

that this definition does not require the project to also result in a significant net emissions 

increase, but believe this difference is acceptable because it is more stringent than the 51.165 

requirements. See also the discussion in the section entitled “NSR Reforms”. 

Major Stationary Source 

Rule 502 provides two separate definitions for this term in Sections 226 and 227, one 

applicable to sources located in the SVAB and one for sources located in the MCAB. The 

definitions are specific to the nonattainment classifications for each area, and include the 

appropriate major source thresholds for each pollutant within the definition. While not defined 

exactly the same as in section 165, these definitions appropriately limit the definition to the 

nonattainment air basins, for the applicable nonattainment pollutants, and include the 

appropriate major source emission thresholds. Therefore this definition is acceptable. 

Net Emission Increase

Rule 502 does not include this term because sources are not allowed to perform a net 

emissions increase analysis to determine whether a project will result in a major modification. 

Instead, only a significant emission increase test is used. Since Rule 502 does not use this 

test, it is not necessary to define this term.

Project

Rule 502 does not provide a definition for this term, but EPA believes the common usage 

definition of this term is adequate for the purposes of determining the requirements of Rule 

502. 
7

Regulated NSR Pollutant

Rule 502 does not provide a definition for this term, but instead uses the term “NSR Regulated 

Pollutant” and defines it as any pollutant or precursor for which the District has been 

designated nonattainment by EPA or the state of California. While the section 165 definition is 

broader, for the purposes of Rule 502 as a nonattainment NSR regulation, the rule is only 

required to apply to nonattainment pollutants, which this definition does. Therefore this 

definition is acceptable. 

Secondary Emissions

Rule 502 does not provide a definition for this term. The only place in section 165 that this 

term is used is within the definition of Potential to Emit (PTE), to clarify that secondary 

emissions are not included when calculating PTE. While Rule 502 does not provide this 

clarification by using this term, and thus does not define the term, EPA believes that since this 

definition only provides clarification, its exclusion does not raise to a disapproval issue. We do 

recommend however that Placer include this clarification the next time Rule 502 is open for 

revision. 

Temporary clean coal technology demonstration project, Clean coal technology, and 

Clean coal technology demonstration project

The above terms related to coal-fired facilities are not included in Rule 502. These terms are 

only used in section 165 within the definition of Major Modification, where it states that the 

installation of such projects does not constitute a major modification. Rule 502 does not 

include such an exclusion from its definition of the term modification, thus there is no need to 

define these terms in Rule 502. 

Volatile organic compounds (VOC)

Rule 502 provides a definition for the term “Reactive Organic Compound” which is defined the 

same as the term VOC is defined in SIP approved Rule 102 –Definitions. This definition is 

consistent with the federal definition provided in 40 CFR 51.100(s) for this term.

8b. Definitions which contain language which are not either identical or equivalent to that 

found in 51.165(a)(1), related to implementation of the NSR Reform requirements. 

This section provides a detailed discussion of specific definitions affected by the District’s 

exclusion of the NSR Reform requirements. Please see the section of this TSD entitled “New 

Source Review Reforms” for a discussion of why we believe it is acceptable to approve Rule 

502 without the following NSR Reform related terms or terms that match the section 165 

definitions for these terms: Baseline actual emissions, Begin actual construction, Electric utility 

steam generating unit, Emission unit, Net emission increase, Projected actual emissions, 

Replacement unit, Significant, Significant emissions increase, and Significant net emissions 

increase.

8.c Definitions which EPA has determined are deficient, in that they are not either 

identical or equivalent to that found in CAA Section 171, 40 CFR 51.100, and 

51.165(a)(1). The absence of these definitions has been noted in the Federal Register 
8

notice proposing action on this submittal, as a requirement that must be added or 

addressed for full approval.

Federally enforceable

Rule 502 does not define this term. This term and the term “practically enforceable” are used 

throughout the rule to describe the type of enforceability required for permit conditions. The 

use of this term creates a program deficiency since it does not ensure the legal enforceability 

element that is required if the term “federally enforceable” is not used. To correct this 

deficiency, PCAPCD must either 1) define the term federally enforceable and use it throughout 

the rule as appropriate, or 2) use a term that ensures legal as well as practical enforceability of 

specified provisions throughout the rule.

Commence, Begin actual construction and Necessary preconstruction approvals or 

permits

Rule 502 does not define or use any of these interrelated terms. The term Commence is key 

to correctly applying the provisions of 51.165(a)(5)(ii). (See item 13) Since we identified the 

lack of this provision as a deficiency, when the District adds such a provision to correct the 

deficiency, it will also need to add definitions for each of these terms. 

9. 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, and allow for 

a public hearing upon request.

Sections 406, Publication and Public Comment, and 407, Public Inspection, ensure that the 

requirements of 40 CFR 51.161 are met. These sections require the District to provide a 30 

day public notice for each proposed permit and an opportunity to request a public hearing, and 

make available for inspection all related materials. 

10. For districts which have submitted a minor source NSR permitting program: 

provisions, pursuant to 40 CFR 51, sections 160 through 164, which contain 

substantive requirements for minor sources. These requirements include public 

notice, opportunity for–and consideration of–public comment, and the demonstration 

that a minor source will not contribute to a violation of any national standard or the 

area control strategy for attainment.

As noted above, the provisions of Sections 406 and 407 ensure the public notice provisions of 

161 are met for all sources required to provide offsets pursuant to Section 303 – Offset 

Requirements. Thus public notice requirements apply to any source with a PTE of more than 

10 tpy of VOC or NOx, 15 tpy of PM10 or PM2.5, 27.5 tpy of SOX and 99 tpy of CO. These 

thresholds are well below the major source thresholds for these pollutants. In addition, Section 

305.2 requires that all projects be evaluated to ensure they will not prevent or interfere with the 

attainment or maintenance of any applicable air quality standard, including minor source 

projects. These provisions satisfy the minor source program requirements.
9

11. Provisions, pursuant to 40 CFR 51.118(a), to assure that the degree of emission 

limitation required of any source for control of any air pollutant must not be affected 

by so much of any source's stack height that exceeds good engineering practice.

Section 403, Air Quality Models, states that “Credit shall not be given for stacks higher than 

that dictated by good engineering practice.” This provision satisfies the regulatory

requirement.

12. Provisions, pursuant to 40 CFR 51.165(a)(3)(ii)(C), which limit “prior shutdown” 

emission reduction credits (ERCs), i.e., ERCs that are generated by facilities that have 

already ceased operation. While these credits can be allowed, the regulations prohibit 

such credits in two cases: (1) if the attainment plan has been disapproved, or, (2) if an 

attainment plan or other part D required submission is delinquent.

At present, PCAPCD has submitted all plan revisions currently required under part D of title I of 

the Act, and all of these plan revisions have been found to be complete (or have been deemed 

complete by operation of law). Therefore credit for prior shutdown is allowed so long as the 

other requirements in 40 CFR 51.165(a)(3)(ii)(C) are met. Rule 504 – Emission Reduction 

Credits (ERCs) requires ERCs to be based on actual emission reductions and that such 

reductions, including those from source shutdowns, meet the basic requirements of being 

surplus, permanent, quantifiable, and federally enforceable. In addition, Section 303.8 of Rule 

502 restricts the use of emission reductions from shutdown operations in such a manner to 

ensure that the use of such reductions remains consistent with the District’s attainment plan. 

Thus, credit for prior shutdowns under Rule 502 is acceptable.

13. Provisions, pursuant to 40 CFR 51.165(a)(5)(ii), which require new source review for 

a source or modification which becomes major due to a relaxation in a federallyenforceable limit. Such sources and modifications are subject to new source review 

“as though construction had not yet commenced.” 

Rule 502 does not contain such a provision. This omission is a deficiency. To correct this 

deficiency, the District must submit a revised version of Rule 502 for SIP approval that contains 

such a provision. In addition, the District will need to include new definitions for the terms 

“Commence,” “Begin actual construction” and “Necessary preconstruction approvals or 

permits” which are embedded within this provision. 

14. Provisions, pursuant to 40 CFR 51.307(b)(2), which identifies additional 

requirements for NSR for any new major 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.

Rule 502 does not contain such a provision. However a Federal Implementation Plan, 

pursuant to 40 CFR 52.281(d) already ensures this provision is applicable for all new and 

modified major sources. For clarity, EPA recommends that the District provide language in 

Rule 502 to identify the necessary additional requirements pursuant to 40 CFR 51.307(b)(2). 
10

15. 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 applicability determination.

The definitions of “potential to emit (PTE)” in Section 236 and “stationary source PTE” in 

Section 251 of Rule 502 state that fugitive emissions must be counted when determining the 

potential to emit of both a project and the facility, and provide no exemptions to this 

requirement. Therefore the rule requires all sources to include their fugitive emissions when 

determining major source applicability, which is more stringent that the Section 165 

requirements. This provision satisfies the statutory requirement.

16. Provisions, pursuant to section 173(a)(2), which require LAER, for a major source or 

major modification. 

Section 207 defines BACT as the most stringent of several options. Section 207.1 requires the 

most stringent emission limit or control technique which has been used for the specific type of 

equipment. This is consistent with the definition of LAER as defined in 40 CFR 51.165 

(a)(1)(xiii). Section 302 requires any new or modified stationary source with an emission 

increase and a potential to emit for the project above specified thresholds (all of which are 

below the NSR significance levels for the same pollutants) to apply BACT. These provisions 

satisfy the statutory requirement.

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 

address 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, the 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 

control agencies had developed permitting programs that contained nonattainment new source 

review requirements such as Lowest Achievable Emissions Rate (LAER) and offsets. 

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 requirements for ozone 

(VOC and NOx), carbon monoxide (CO), sulfur dioxide (SO2) and nitrogen dioxide (NO2) 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 
11

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 tons per year (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 comparison, the California CAA set thresholds for when project emissions trigger the 

application of California’s version of Best Available Control Technology (BACT) and offsets. 

(Note that CA BACT is defined in such a manner as to be equivalent to federal LAER 

requirements.) The application of CA 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 CA 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 BACT1 (tpy) [lb/day] NA 4.6 [25] 1.8 [10] 1.8 [10] 1.8 [10]

CA Offset1(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

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.

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 additional 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 key NSR Reform provisions2, but 

also upheld the three key remaining provisions. These provisions all pertain to how emission 

 

1 California Health & Safety Code §§ 40918, 40919, 40920 and 40920.5

2 The United States Court of Appeals for the District of Columbia Circuit in State of New York, et al., v. U.S. 

Environmental Protection Agency, et al., 413 F.3d 3 (D.C. Cir. 2005)
12

increases from proposed modifications of existing sources are calculated. 

One provision allows an existing facility to set a Plantwide 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 major 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, the 

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 plant-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 implementing 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 immediately 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 immediately 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 allowing 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 baseline period. 

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% capacity, 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 difference 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, not change, or the actual increase in emissions would not be significant. The NSR 

Reforms also 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 
13

calculation to determine if the major modification threshold is triggered. 

Impacts of Federal NSR Reforms on California NSR Permitting Programs

By not adopting the NSR Reforms, the NSR program in California Districts would 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 CAA3provides 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 emission 

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 51.165 (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 specified paragraphs. These applicability provisions specify 

the use of baseline actual emissions and projected 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 permit programs are inherently 

more stringent than the required federal program because the applicability thresholds to apply 

CA BACT and offsets are significantly lower than those in the federal 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 NSR Reform calculation methods, and a project using these methods 

was not classified as a major modification, it would not be subject to Federal LAER and offsets 

requirements; but the project would still have to apply CA BACT and provide offsets in 

accordance with the CA CAA requirements. These lower state 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 requirements would have no effect on 

the application of control technology or offset requirements. This claim is based on the more 

 

3 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 respecting 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.
14

aggressive CA CAA program requirements not only for new and modified sources, but existing 

sources as well. For example, whereas the federal CAA requires States to apply at least 

Reasonably Available Control Technology (RACT) for all major source categories located in a 

nonattainment area, the CA CAA requires the application of Best Available Retrofit Control 

Technology (BARCT)4 5for all source categories where it is economically feasible to do so. Thus 

even if an existing source is not proposing any physical or operational modifications, it must still 

reduce emissions periodically as part of an area’s attainment plan by applying stringent control 

technologies. The Districts contend that this requirement leaves little room for additional 

voluntary emission reduction projects and eliminates any practical benefits of obtaining a PAL. 

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 major 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 BACT control and offset requirements if they are triggered. In light of these facts, EPA 

is proposing to find that it is acceptable for PCAPCD to not incorporate the NSR Reform 

provisions into their SIP approved NSR programs, since the same level of control will be 

required for modified sources, with or without inclusion of these provisions in the SIP, and their 

programs will not be any less stringent than the federal program. 

Section 110(l) of the Act

Section 110(l) of the Act prohibits EPA from approving any 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. In nonattainment areas we may 

approve SIP relaxations so long as they would not interfere with any applicable requirement 

concerning attainment and reasonable further progress, or any other applicable requirement of 

the Act. The requirements contained in the new rule submittal were compared with the contents 

and requirements of the existing SIP rules to evaluate compliance with the 110(l) requirements. 

Rule 502 –New Source Review

In Placer County, SIP Rule 508 – New Source Review was approved into the SIP for the Lake 

Tahoe (LTAB) and Mountain Counties Air Basins (MCAB) portions of the county (See 47 FR 

27065 (6/23/82) and 46 FR 27115 (5/18/81)). Rule 502 is a new SIP submittal for all of Placer 

County and will replace both of the SIP Rule 508 – New Source Review versions currently 

 

4 BARCT must meet the same evaluation criteria as BACT, except as it applies to existing, rather than new or 

modified sources.

5 California Health and Safety Code Section 41010(b) and California Code of Regulations Title 17, Division 3, 

Chapter 1.5, Article 6, Section 70601 
15

approved into the SIP for the LTAB and MCAB. SIP approved Rule 508 for both air basins are 

identical and contain the provisions for all major and minor source permitting actions. 

For Rule 502, the most significant differences between the two NSR programs (SIP approved 

versus the NSR SIP submittal) are the emission thresholds at which an emission unit triggers 

Best Available Control Technology (BACT)6and offset requirements. SIP approved Rule 508, 

Sections A.2. and C.1., requires a stationary source to apply BACT when emissions of any 

criteria pollutant, except carbon monoxide (CO), exceed 250 lbs/day (45.6 ton per year (tpy)). 

For CO BACT must be applied when the Air Pollution Control Officer (APCO) determines that 

the CO emissions would cause a NAAQS violation at the point of maximum ground level 

impact. New Rule 502, Section 302, requires each emission unit to apply BACT when emissions

exceed 10 lbs/day (1.8 tpy) of volatile organic compounds (VOC) or nitrogen oxides (NOx), 80 

lbs/day (14.6 tpy) of sulfur oxides (SOx), PM10, or PM2.5, 550 lb/day (100.4 tpy) for CO, and 

3.3 lb/day (0.6 tpy) of lead. These changes represent a strengthening of the SIP, since BACT 

must now be applied at a significantly lower threshold than the existing SIP rule requirements. 

In a similar manner, SIP approved Rule 508, Sections A.2. and C.3., requires emission 

increases to be offset when the facility’s emissions of any criteria pollutant, except carbon 

monoxide (CO), for which a NAAQS was exceeded within the three years prior to the 

application submittal date, exceed 250 lbs/day (45.6 ton per year (tpy)). Section C.3. also 

provides that offsets are not required if the applicant can demonstrate through modeling that the 

project will not cause a new NAAQS violation. New Rule 502, Section 303.1, requires emission

increases at new major sources to be offset when the facility’s emissions exceed 10 tpy of VOC 

or NOx, 27.5 tpy of SOx, 15 tpy of PM10 or PM2.5, and 99 tpy of CO. This change represents a 

strengthening of the SIP, since offsets must now be applied at significantly lower thresholds than 

the existing SIP rule requirements. 

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 greater 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. Soon after the Clean Air Act Amendments (CAAA) were 

 

6 Rule 502 defines BACT as the most stringent of the following two options: 1) The most effective emission 

control device, emission limit, or technique, singly or in combination, which has been required or used for the type 

of equipment comprising such an emissions unit unless the applicant demonstrates to the satisfaction of the Air 

Pollution Control Officer that such limitations required on other sources have not been demonstrated to be 

achievable in practice (Federal LAER definition), and 2) Any alternative basic equipment, fuel, process, emission 

control device or technique, singly or in combination, determined to be technologically feasible and cost-effective 

by the Air Pollution Control Officer (Federal BACT definition). Thus BACT is the defined as the most stringent of 

the two control requirements.
16

enacted (November 15, 1990), EPA published a notice providing the Agency’s interpretation of 

the effect of the 1990 CAAA, including newly enacted section 193, on a court order requiring 

EPA to promulgate FIPs for two CO nonattainment areas in Arizona. See 56 FR 826 (January 9, 

1991). In the 1991 notice, we concluded that the savings clause in section 193 constitutes an 

“anti-backsliding” provision that is intended to preserve specific, adopted measures (or preCAAA obligations to adopt such measures) with identifiable emission reductions against which 

to measure the equivalency of any proposed substitution. Under this reading of the savings 

clause, “control requirement” would not apply to NSR revisions because NSR is a program 

under which general principles of air pollution control, such as BACT or LAER, are converted 

into specific control requirements for different types of stationary source proposals on an 

individual permit-by-permit basis. In other words, NSR does not represent a control requirement 

itself but rather a program that is used to identify control requirements. 

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 

BACT or LAER for a particular source. In the context of the PCAPCD 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 two parameters 

that most closely link to relative changes in emissions reductions from new or modified 

stationary sources: control technology review and for nonattainment NSR, the requirements for 

offsets including offset thresholds.

Control Technology Requirements. As noted above in the section of this TSD entitled “Section 

110(l) of the Act,” submitted Rule 502 contains a much lower emission threshold for the 

application of BACT for each pollutant, except for CO and lead, which are attainment pollutants 

and therefore not subject to the provisions of Section 193. Therefore in this regard, new Rule 

502 satisfies the Section 193 requirements. 

Offsets requirements. As noted above in the section of this TSD entitled “Section 110(l) of the 

Act,” submitted Rule 502 requires that offsets be provided at the same or lower threshold for all 

pollutants except CO and lead, which are attainment pollutants and therefore not subject to the 

provisions of Section 193. Therefore in this regard, new Rule 502 satisfies the Section 193 

requirements. 

Conclusion. For the reasons set forth above, we can approve the submitted Rule 502 – Federal 

NSR under section 193 of the Act.

Recommendations

Pursuant to section 110(k)(3) of the Act, we recommend a limited approval / limited disapproval 

of the submitted NSR rule. We recommend limited approval based on our determination that the 

rule complies 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) and part D of title I of the Act. In support of this 
17

recommendation, we have concluded that our approval of Rule 502 (and thereby replacement of 

the existing SIP NSR Rule 508), complies with sections 110(l) and 193 of the Act because the 

new rule does not relax control technology and offset requirements and therefore would not 

interfere with the strategy for attainment of the Ozone or PM10 NAAQS in PCAPCD or the 

continued attainment of the other NAAQS in PCAPCD. We recommend limited disapproval to 

correct the deficiencies listed below. If we finalize this action as proposed, our action would be 

codified through revisions to 40 CFR 52.220 (identification of plan).

Deficiencies as listed in TSD under section entitled “General Nonattainment NSR Requirements 

(Rule 502).” 

1. Add definitions for the terms “commence,” “begin actual construction,” “federally 

enforceable” and “necessary preconstruction approvals or permits.” (See item 8c and 13)

2. Add a provision, pursuant to 40 CFR 51.165(a)(5)(ii), which requires new source review 

for a source or modification which becomes major due to a relaxation in a federallyenforceable limit. Such sources and modifications shall be subject to new source review 

“as though construction had not yet commenced.” (See item 13)

Attachments

1. PCAPCD Lake Tahoe Air Basin Rule 508, New Source Review, SIP-Approved on June 

23, 1982.

2. PCAPCD Mountain County Air Basin Rule 508, New Source Review, SIP-Approved on 

May 18, 1981.

3. PCAPCD Submitted Rule 502, New Source Review (NSR), adopted February 11, 2010.

4. EPA’s reclassification of the Placer County portion of the Sacramento Metro Air Basin, 

(75 FR 24409, May 5, 2010).