## United States Environmental Protection Agency, Region **9**
**Air Division Technical Support Document** 



# EPA's Notice of Proposed Rulemaking

**Revision to the California State**  **Implementation Plan for:** 

**Feather River Air Quality Management District**

**Rule 10.10**

**– Prevention of Significant Deterioration** 



## Great Basin Unified Air Pollution Control District

**Rule 2 21** 

**– Prevention of Significant D**  **eterioration (PSD) Permit Requirements f or New**  **Major Facilities or Major Modifications in Attainment or Unclassifiable Areas**



## Butte County Air Quality Management District

**Rule 1107**

**– Prevention of Significant Deterioration (PSD) Permits** 



## Santa Barbara County Air Pollution Control District

**Rule 810** 

**– Federal Prevention of Significant Deterioration (PSD)** 



## San Luis Obispo County Air Pollution Control District

**Rule 220**

**– Federal Prevention of Significant Deterioration** 



## July **2015 Table of Contents** 

Section Page

1. Introduction 1

2. PSD Program SIP Revision Submittal 1

3. What are the General Requirements for a SIP

- Approved PSD Program? 3

4. Rule Summary 4

5. Rule Evaluation 7

6. Program Transfer and Implementation Issues 18

7. Section s 110(a), 110(l), and 193 of the Act 1 9

8. Recommendations 19

9. Attachments 19Page 1 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document 

### 1. **Introduction**

This technical support document (TSD) addresses certain preconstruction permitting requirements, also called “New Source Review” or “NSR”, in title I of the Clean Air Act (CAA or the Act) and the implementing regulations at
title 40 of the Code of Federal Regulations (CFR) part 51, subpart I. Specifically, this TSD will address those NSR requirements found in part C of title I of the Act, and the implementing regulations at 40 CFR 51.166, governing the requirement for State Implementation Plans (SIPs) to es tablish preconstruction permitting programs for the prevention of significant deterioration of air quality (PSD) in areas designated as “attainment” or “unclassifiable” for the national ambient air quality standards (NAAQS). The PSD program requirements un der part C apply to “major stationary sources” and “major modifications”, as those terms are defined in 40 CFR part 51, subpart I, at sources
that would be located within areas designated as “attainment” or “unclassifiable” . The PSD requirements apply to all “regulated NSR pollutants,” except those pollutants for which an area has been designated as “nonattainment.”

This TSD will not address p art D of title I of the Act, and the implementing regulations at 40 CFR 51.165, w hich contain the requirements for areas designated “nonattainment” for a NAAQS. The requirements under part D and its implementing regulations

, commonly referred to as “nonattainment NSR,” apply to nonattainment pollutants at major stationary sources and m ajor modifications at sources located in nonattainment areas.

T his TSD also does not address the CAA requirements governing the construction and modification of minor stationary sources and minor modifications at major sources, to assure that the NAAQS a re achieved and/or maintained. These preconstruction program requirements are commonly referred to as “minor NSR” (40 CFR

51.160

- 164).



### 2. **PSD Program SIP Revision Submittal**

Table 1 below identifies five PSD rule packages adopted by local air districts in Ca lifornia (the Districts) that were submitted by the California Air Resources Board (ARB) to Region 9 of the United States Environmental Protection Agency (EPA) as a revision to California’s SIP. The ARB is the California governor’s designee for submitting official
revisions of the California SIP to the EPA. These District s currently do not have a SIP

- approved PSD program. EPA’s approval of the ARB’s SIP submittal package s into the California SIP would transfer authority and responsibility for implementation of the PSD permitting program from the EPA to the se Districts for sources within their respective jurisdictions

.

Table 1 List of Rule Submittals Addressed in this Action

**Agency Rule**  **Date Adopted or**
**Amended Date Submitted**  **by ARB**
Feather River Air Quality Management

District Rule 10.10

– Prevention of Significant

Deterioration August 1, 2011 April 22, 2013

Great Basin Unified
Air Pollution Control

District Rule 221

– Prevention of Significant

D eterioration (PSD) Permit Requirements for New Major Facilities or Major Modifications in Attainment or
Unclassifiable Areas September 5, 2012 February 6, 2013Page 2 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document **Agency Rule**  **Date Adopted or**
**Amended Date Submitted**  **by ARB** Butte County Air Quality Management

District Rule 1107

– Prevention of Significant Deterioration (PSD) Permits June 28, 2012 February 6, 2013

Santa Barbara County
Air Pollution Control

District Rule 810

– Federal Prevention of Significant Deterioration (PSD ) June 20, 2013 February 10, 2014

San Luis Obispo County Air Pollution
Control District Rule 220

– Federal Prevention of Significant Deterioration January 22, 2014 May 13, 2014

In a letter dated December 18, 2014

, the Feather River Air Quality Management District (Feather River or FRAQMD) provide d certain clarifications and further discussion regarding Feather River Rule 10.10

– Prevention of Significant Deterioration

– and how Feather River would implement its rul e to ensure that its PSD program satisfies the requirements of 40 CFR 51.166 for SIP

- approved PSD programs. We provide a detailed discussion o f
the clarification and information Feather River provide d in Sec tions 5. 4

- 5. 5, 5. 7

, 5.9, and 6 of th is TSD

. Feather River’s SIP submittal package was determined complete on June 26, 2013

.

In letter s dated November 1 3 , 2014 and April 15, 2015 , the Great Basin Unified Air Pollution Control District (Great Basin or GBUAPCD) provide d certain clarifications and further discussion regarding Great Basin Rule 221

– Prevention of Significant D eterioration (PSD) Permit Requirements for New Major Facilities or Major Modifications
in Attainment or Unclassifiable Areas

– and how Great Basin would implement its rule t o ensure that its PSD program satisfies the requirements of 40 CFR 51.166 for PSD programs. We provide a detailed discussion o f the clarification and information Great Basin provided in Sections 5. 4, 5.7, 5.9, and 6 below . Great Basin’s SIP submittal package was determined complete on April 9, 2013

.

In letter s dated November 13, 2014 and April 8, 2015

, the Butte County Air Quality Management District (Butte or BCAQMD) provide d certain clarifications and further discussion regarding Butte Rule 1107

– Prevention of Significant Deterioration (PSD) Permits

– and how Butte would implement its rule to ensure that its PSD program satisfies the requirements of 40 CFR 51.166 for PSD programs. We provide a detailed discussion o f the clarification and information Feather River provided in Sections 5. 4, 5.7, 5.9 , and 6 below

. Butte’s SIP submittal package was determined complete on April 9, 2013

.

In a letter dated November 25, 2014 , the Santa Barbara County Air Pollution Control District (Santa Barbara or SBAPCD) provide d certain clarifications and further discussion regarding Santa Barbara Rule 810

– Federal Prevention of Significant Deterioration (PSD)

– and how Santa Barbara woul d implement its rule to ensure that its PSD program satisfies the requirements of 40 CFR 51.166 for PSD programs. We provide a detailed discussion on the clarification and information Santa Barbara provided in Sections 5. 4, 5. 9 , and 6 below

. Santa Barbara’ s SIP submittal package was determined complete on May 5, 2014

.

In a letter dated December 16, 2014 , the San Luis Obispo County Air Pollution Control District (San Luis Obispo or SLOAPCD) provide d certain clarifications and further discussion regarding Sa n Luis Obispo Rule 220

– Federal Prevention of Significant Deterioration

– and how San Luis Obispo would implement its rule to ensure that its PSD program satisfies the requirements of 40 CFR 51.166 for PSD programs. We provide a detailed discussion o f thePage 3 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document clarification and information San Luis Obispo provided in Sections 5.9 and 6 below

. San Luis Obispo’s SIP submittal package was determined complete on June 30 , 2014

.

In a letter dated June 1, 2015 , ARB requested to withdraw its request for approval into the SIP for the portion s of
the five District PSD rule s that incorporate 40 CFR 52.21(b)(49)(v) by reference. See the discussion in Section 5.9
below

.



### 3. **What are the General Requirements for**  **a SIP**

**- Approved**  **PSD Program ?** 

CAA sections 110(a)(2)(C) and 165 establish the general statutory requirements for the PSD program. As noted above, 40 CFR 51.166 sets forth EPA’s regulatory requirements for SIP

- approved PSD programs. The PSD program applies to any regulated NSR pollutant (as defined in 40 CFR 51.166), except for pollutants designated nonattainment for a NAAQS. The CAA defines “nonattainment areas” as air quality planning areas that exceed the national primary or secondary NAAQS for a given criteria pollutant (or that contribute to amb ient air quality in a nearby area that does not meet the NAAQS). In some instances the emission increases of a particular pollutant may be subject to both the PSD program and the NA

- NSR program. For example, nitrogen oxides (NO
x ) from a major stationary so urce in an area designated as attainment for the nitrogen dioxide (NO 2 ) NAAQS and nonattainment for the ozone NAAQS could be subject to both permitting programs because, in such cases, NO x would be a PSD pollutant as well as a precursor to ozone, a nonatta inment pollutant.

The applicability of PSD to a particular source must be determined in advance of construction or modification and is pollutant

- specific. The primary criterion is whether the proposed project is sufficiently large (in terms of its

emissio ns) to be a major stationary source or major modification, terms which are defined as described below.

Section 169 of the CAA specifies the emissions threshold, depending on source category, that is used to determine whether a source is a “major emitting facility” and subject to PSD. For PSD purposes, a “major stationary source” is any source belonging to a specified list of 28 source categories 1 that emits or has the potential to emit (PTE) 100 tons per year (tpy) or more of any air pollutant subject to regulation under the CAA, or belonging to any other source category that emits or has the PTE for such pollutants in amounts equal to or greater than 250 tpy. A new source with a PTE at or above the applicable “major stationary source threshold” is also su bject to PSD for any other regulated NSR pollutant emitted in “significant” amounts. These significance levels, which EPA has promulgated for criteria pollutants and certain other pollutants, represent a threshold for a de minimis contribution to air quali ty problems. When EPA has not set a significance level for a pollutant, PSD applies to an increase of the regulated pollutant in any amount (that is, in effect, the significance level is treated as zero).

PSD also applies to existing major stationary sour ces that undertake a “major modification,” which occurs when: (1) there is a physical change, or change in the method of operation, at a “major stationary source;” (2) the change results in a “significant” emissions increase of a pollutant subject to PSD r egulation (at or above the significance level that EPA has set for the pollutant); and (3) there is a “significant net emissions increase” of a pollutant subject to PSD regulation that is at or above the significance level (as defined in 40 CFR 51.166(b)(2 3)).

The PSD program also applies to certain greenhouse gas (GHG) emissions when they are “subject to regulation,” as defined in 40 CFR 51.166(b)(48). See our additional discussion below in Section 5.9 of the applicabil ity of the PSD program to GHG emission s in light of a June 23, 2014 U.S. Supreme Court decision regarding the same

s ubject

.

1 See 40 CFR 51.166(b)(1)(i) for the 28

- source category list.Page 4 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document Sources subject to PSD review must demonstrate compliance with a number of approval criteria in order to qualify for a PSD pre

- construction permit. The most s ignificant of these requirements are the application of the best available control technology (BACT) to the source and the requirement that the source demonstrate that it will not cause or contribute to a violation of the NAAQS or applicable PSD increments

.



### 4. **Rule Summar y** 

Below we provide a summary of each rule under review in this action

.

**4.1 Feather River**  **Rule 10.10**

Feather River Rule 10.10 applies to major sources and major modifications emitting pollutants designated as

attainment or unclassifiable in the FRAQMD , as well as other regulated NSR pollutants

. C onsistent with the requirements for a PSD program

, Feather River Rule 10.10 does not apply to nonattainment pollutants

. Currently,

t he District is either attainment or unclassifiable for the PM 10 , PM 2.5 , NO 2 , SO 2 , CO

, and lead NAAQS and

nonattainment for the ozone (partial area) NAAQS

.

Feather River Rule 10.10 essentially incorporates by reference the federal PSD program as codified in 40 CFR

52.21 , which is the Federal Implementation Plan (FIP) used by EPA to implement the required PSD program in
areas that do not have a SIP

- approved PSD program

. Feather River Rule 10.10 is comp osed of seven sections :

A

– Purpose

B

– Applicability

C

– Incorporation by Reference

D

– Exemption, Greenhouse Gas Air Quality Analysis

E

– Definitions

F

– Requirements

G

– Administrative Requirements

Section A i ndicates that the intent of this rule is to adopt a PSD program by incorporating the federal PSD program by reference. Section B contains a n applicability provision that establishes that the rule is applicable to any source (and source owner and operator) subject to a ny requirement in 40 CFR 52.21 as incorporated into Feather Rive r Rule 10.10

. With some minor revisions and exceptions, Section C incorporates by reference the provisions of 40

CFR 52.21 as in effect on August 1, 2011

. Section D contains an exemption from the requirements of paragraphs (k) and (m) of 40 CFR 52.21 for greenhouse gas emissions . Section E revises terms and definitions in corporated
from 40 CFR 52.21 to help Feather River administer the program. Section F lists certain key requirements

nece ssary to administer the program

. Last

, Section G includes public notice and comment procedures for issuing PSD permits.

**4.2 Great Basin Rule 221** 

Great Basin Rule 221 applies to major sources and major modifications emitting pollutants designated as
attainment or unclassifiable in the GBUAPCD , as well as other regulated NSR pollutants. Consistent with the requirements for a PSD program, Great Basin Rule 221 does not apply to nonattainment pollutants. Currently, the
District is either attainment or unclassifiable for the PM 2 .5 , NO 2 , SO 2 , CO, oz one and lead NAAQS and
nonattainment for the PM 10 NAAQS.Page 5 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document Great Basin Rule 221 essentially incorporates by reference the federal PSD program as codified in 40 CFR 52.21.

Great Basin Rule 221 is composed of four sections :

A

– Purpose

B

– Applicability

C

– Incorporation by Reference

D

– Requirements

Section A i ndicates that the intent of this rule is to adopt a PSD program by incorporating the federal PSD program by reference. Section B contains an applicability provision that establishes that the rule i s applicable to any source (and source owner and operator) subject to a ny requirement in 40 CFR 52.21 as incorporated into Great Basin
Rule 221 . With some minor revisions and exceptions, Section C incorporates by reference the provisions of 40 CFR

52.21 as in effect on July 1, 2012 and revises terms and definition s incorporated from 40 CFR 52.21 to help Great

Basin a dminister the program. Section D lists certain requirements neces sary to administer the program and includes public notice and comment procedures for issuing PSD permits.

**4.3 Butte Rule 1107** 

Butte Rule 1107 applies to major sources and major modifications emitting pollutants designated as attainment or
unclassifiable in the BCAQMD , as well as other regulated NSR pollutants. Consistent w ith the requirements for a PSD program, Butte Rule 1107 does not apply to nonattainment pollutants. Currently, the District is either

attainment or unclassifiable for the PM 10 , NO 2 , SO 2 , CO, and lead NAAQS and nonattainment for the ozone and

PM 2 .5 NAAQS.

Butte Rule 1107 essentially incorporates by reference the federal PSD program as codified in 40 CFR 52.21. Butte
Rule 1107 is composed of five sections :

1

– Purpose

2

– Applicability

3

– Incorporation by Reference

4

– Requirements

5

– Public Participation

Section 1 i ndicates that the intent of this rule is to adopt a PSD program by incorporating the federal PSD program by reference. Section 1 contains an applicability provision that establishes that the rule is applicable to any sou rce (and source owner and operator) subject to a ny requirement in 40 CFR 52.21 as incorporated into Butte Rule

1107 . With some minor revisions and exceptions, Section 3 incorporates by reference the provisions of 40 CFR

52.21 as in effect on June 28 , 2012 and revises terms and definitions incorporated from 40 CFR 52.21 to help

Butte administer the program. Section 4 lists certain requirements neces sary to administer the program

. Last

, Section 5 includes public notice and comment procedures for issuing PSD permits.

**4.4 Santa Barbara Rule 810** 

Santa Barbara Rule 810 applies to major sources and major modifications emitting pollutants designated as
attainment or unclassifiable in the SBAPCD , as well as other regulated NSR pollutants. Consistent with thePage 6 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document requirements for a PSD program, Santa Barbara Rule 810 does not apply to nonattainment pollutants. Currently,
the District is either attainment or unclassifiable for all NAAQS

.

Santa Barbara Rule 810 essentially incorporates by reference the federal PSD program as codified in 40 CFR 52.21

. Santa Bar bara Rule 810 is composed of five sections :

A

– Purpose

B

– Applicability

C

– Incorporation by Reference

D

– Requirements

E

– Public Participation

Sect ion A i ndicates that the intent of this rule is to adopt a PSD program by incorporating the federal PSD program by reference. Section B contains an applicability provision that establishes that the rule is applicable to any source (and source owner and ope rator) subject to a ny requirement in 40 CFR 52.21 as incorporated into Santa Barbara
Rule 810 . With some minor revisions and exceptions, Section C incorporates by reference the provisions of 40 CFR

Part 52.21 as in effect on June 20, 2013 and revises terms and definitions in corporated from 40 CFR 52.21 to help Santa Barbara administer the program. Section D lists certain requirements neces sary to administer the program. Section E includes public notice and comment procedures for issuing PSD permits.

**4.5 San**  **Luis Obispo Rule 220**

San Luis Obispo Rule 220 applies to major sources and major modifications emitting pollutants designated as
attainment or unclassifiable in the SLOAPCD , as well as other regulated NSR pollutants. Consistent with the requirements f or a PSD program, San Luis Obispo Rule 220 does not apply to nonattainment pollutants. Currently,
the District is either attainment or unclassifiable for PM 2.5, PM 10 , NO 2 , SO 2 , CO, and lead NAAQS and
nonattainment for the ozone (partial area) NAAQS.

San Luis Obispo Rule 220 essentially incorporates by reference the federal PSD program as codified in 40 CFR

52.21

. San Luis Obispo Rule 220 is composed of five sections :

A

– Purpose

B

– Applicability

C

– Incorporation by Reference

D

– Requirements

E

– Publ ic Participation

Section A i ndicates that the intent of this rule is to adopt a PSD program by incorporating the federal PSD program by reference. Section B contains an applicability provision that establishes that the rule is applicable to any source (and source owner and operator) subject to a ny requirement in 40 CFR 52.21 as incorporated into San Luis Obispo
Rule 220 . With some minor revisions and exceptions, Section C incorporates by reference the provisions of 40 CFR

Part 52.21 as in effect on Janu ary 22, 2014 and revises terms and definitions in corporated from 40 CFR 52.21 to help San Luis Obispo administer the program. Section D lists certain requirements neces sary to administer the program. And, Section E includes public notice and comment proced ures for issuing PSD permits.Page 7 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document 

### 5. **Rule Evaluation**

We reviewed each District PSD rule described above to ensure that it meets the requirements of title I of the Act, specifically part C (sections 160 through 169B), and current implementing regulations at 40 CFR 51.166. EPA has
condensed a discussion of the approval criteria contained in these regulations in this TSD , which describes the
basis for our proposed action on the rule submittal s

.

The Act requires all states to submit a PSD program consistent with the requirements of 40 CFR 51.166. EPA’s
evaluation of the submitted PSD rule s and how they meet the requirements for a PSD program is included in the attached document, Evaluation of 40 CFR 51.166 and Feather River, Great Basin, Butte, Santa Barbara and SLO
District PSD Rules (Evaluation) (see Attachment 1 ). In general, the rules under review meet the requirements of 40

CFR 51.166 by incorporating by reference the specific provisions of 40 CFR 52.21 that are necessary to implement a state PSD program. As mentioned above, 40 CFR 52.21 contains the FIP used by EPA to implement the required PSD program in areas that do not have a SIP

- approved PSD program. EPA considers the provisions of 40 CFR 52.21 to generally be consistent with the requirements of 40 CFR 5 1.166. Therefore, only those provisions of these rules
that warrant additional review are discussed below.

**5. 1 Exclusions** 

Each District rule und er cons i d eration in this action excludes the following paragraphs from its incorporation by
reference of 40 CFR 52.21:

• (a)(1)

– Plan disapproval

• (b)(55

- 58) and (cc)

– equipment replacement program (ERP) provisions which were vacated by the United

States Circuit Court of Appeals for the District of Columbia on March 17, 2006

• (g)

– Redesignation

• (p)(6

- 8)

– Class I variances by the Governor

• (q)

– Public participation

• (s)

– Environmental impact statements

• (t)

– Disputed permits or redesignations

• (u)

– Delegation of authority

• (v)

– Innovative control technology

• (w)

– Permit re s cission

• (f), (x), (y), and (z)

– “[Reserved]”

EPA has reviewed these exclusions and, except for paragraph (q), concurs that these excluded paragraphs are not necessary to implement a state PSD program. A SIP

- approved PSD program is required to include certain pu blic participation requirements found in 40 CFR 51.166(q). Instead of incorporating the public participation requirements found in 40 CFR 52.21(q), each District rule specifie s the applicable public participation requirements. The public participation requ irements for SIP

- approved PSD programs are further discussed in

Section 5. 4 of this TSD.

In addition, Butte Rule 1107 and Santa Barbara R ule 810 exclude the following provisions from the rules’ incorporation by reference of 40 CFR 52.21 :

• (i)(1)(i

- v, ix

- x) and (i)(6

- 8)

– ExemptionsPage 8 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document These provisions are not necessary to implement a S tate PSD program

. 40 CFR 51.166 (i) makes clear that, for SIP approval purposes, a State “may” adopt these provisions into its PSD program , but States are not required to do

so

.

Finally, Great Basin Rule 221, Butte Rule 1107, and San Luis Obispo Rule 220 also exclude paragraph (k)(2) from
the rules’ incorporation by reference of 40 CFR 52.21

– the PM 2.5 significant impact levels ( SILs ) . As further
discussed in Section 5.7 of this TSD, the PM 2.5 SILs are appropriate for exclusion because the y were vacated by the

D.C

. Circuit Court of Appeals , and EPA later revised its regulations consistent with the Court’s ruling

.

**5.2 Revised Terms and Definitions** 

5 .2.1 Definitions in 40 CFR 52.21(b)

Section E of Feather Rule 10.10 revises the definitions incorporated by reference from 40 CFR 52.21(b)

, as follows:

• The definition of “potential to emit” in 40 CFR 52.21(b)(4) is revised so that the phrase “is federally
enforceable” instead read s “is federally enforceable or en forceable as a practical matter.”

• The definition of “allowable emissions” in 40 CFR 52.21(b)(16) is revised so that the language reading “unless the source is subject to federally enforceable limits which restrict the operating rate, or hours of operation, or both” instead read s “unless the source is subject to enforceable limits which restrict the operati ng rate, or hours of operation, or both.”

• Paragraph (iii) of the definition for “allowable emissions” i s revised to read : “The emissions rate specified as an enforceable permit condition, including those with a future compliance date.”

SIP

- approved PSD programs must use the definitions provided in 40 CFR 51.166(b), except that deviations are approvable if d emonstrated to be more stringent, or at least as stringent, as the definition provided. The revisions made by Feather River to the definitions described above further clarify “federally enforceable

. ” We find these

revisions to be at least as stringent as t he definitions in 40 CFR 51.166(b). The four other District PSD rules do not
contain these or analogous revisions.

5 .2.2 Administrator

Each of the five District rules revises the term “administrator” incorporated by reference from 40 CFR 52.21

, as follows:

• Each District rule defines t he term “administrator” to mean “Federal administrator” , “EPA administrator”, or “Environmental Protection Agency administrator” in 40 CFR 52.21(b)(17), (b)(37)(i), (b)(43), ( b ) (48)(ii)(c), (b)(50)(i), (b)(51), (l) (2), and (p)(2).

• Each District rule otherwise defines t he term “administrator” to mean “Air Pollution Control Officer (APCO)” or “Control Officer”

, as defined in other D istrict rules

.

Because 40 CFR 52.21 was written to provide a framework for EPA to adm inister the PSD program in areas that do
not have a SIP

- approved PSD program , the term “ A dministrator” as used in section 52.21 refers to the EPA

A dministrator. Upon EPA’s approval of the Districts’ PSD SIP submittal s , the Districts will be administ ering the PSDPage 9 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document program within each District, but certain authorities are retained for the EPA Adm inistrator, per 40 CFR 51.166. Therefore, the Districts’ revisions described above are intended to differentiate between those provisions that will apply to the District as the entity that will administer the PSD program and those that will continue to refer to

EPA

. We find these revisions acceptable.

Except for Great Basin Rule 221, each PSD rule refers to paragraph (b) of 40 CFR 52.21 when revising the term
“a dministrator. ” However, instances of the term “administrator” are also revised with respect to paragraphs (l) and (p) of Subs ection 52.21

. This reference to paragraph (b) of 40 CFR 52.21 appears to be a typographical error

, and we recommend that the four District s other than Great Basin ( Feather River , Butte, Santa Barbara, and San Luis Obispo) revise their rules to remove the specific reference to “ paragraph (b) ” of 40 CFR 52.21 the next time
the rule is revised.

5 .2.3 References to 40 CFR 52.21(q)

As noted above, each District PSD rule excludes from its incorporation by reference 40 CFR 52.21(q), the public participation provision that applies when EPA is the PSD permitting agency . 40 CFR 52.21(q), in turn

, directs EPA to follow the applicable proce dures of 40 CFR part 124 when EPA process es PSD permit applications

. In place of the federal public participation procedures applicable to EPA , t he District rules adopt their own generally analogous public participation procedures. However, paragraph s (l)(2) and (p)(1) of 40 CFR 52.21 , which the Districts’ rules incorporate by reference, cross

- reference 40 CFR 52.21(q) . Accordingly, the District PSD rules change the cross

- references in the incorporated 52.21 provisions from “paragraph (q) of this secti on” to “the public notice and comment provisions of [the particular PSD rule or a n other SIP

- approved rule]

, ” with the exceptions described below.

Feather River Rule 10.10 revises the cross

- reference to paragraph (q) only in 40 CFR 52.21(p)(1) as incorporated by reference

, and this revision does not refer to paragraph (l)(2) of 40 CFR 52.21

. This appears to be a minor oversight and we recommend that Feather River revise Section E.3 of Rule 10.10 accordingly the next time the
rule is revised

, to make this c r o ss

- reference clear er

. In addition, San Luis Obispo Rule 220.C.2.b appears to include a typographical error concerning this provision, as it refers to section “(1)(2)” rather than “(l)(2)” of 40 CFR 52.21 when revising this cross

- reference. W e recommend that San Luis Obispo revise Section C.2.b of Rule 220 accordingly the next time the rule is revised

, to make this cross

- reference clear er

.

In addition, Section E.3 of Feather Rule 10.10 revise s the cross

- references to paragraph (q) to refer to the public notice and comment provisions in i ts other SIP

- approved NSR rule, Rule 10.1

– New Source Review. We find this reference acceptable because Rule 10.1 contains many of the notice and comment procedures in 40 CFR 51.166(q)

, and Section G of Rule 1 0.10 already requires all PSD permits to follow the notice and comment procedures in Rule 10.10, which are generally consistent with 40 CFR 51.166(q) . See further discuss ion in Section

5.4 below. However, for greater clarity, we recommend that Feather Rive r also add to Section E.3 a reference to
the Section G.1 of Rule 10.10 the next time the rule is revised.

**5.3 Additional Requirements** 

Within the “Requirements” section in each of the District PSD rules under consideration in this action

, the Districts
have included additional rule provisions beyond th e language incorporated from 40 CFR 52.21 that the District s find necessary and appropriate to include in their PSD program s

. These provisions include:Page 10 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document • PSD permits shall be issued pursuant to each PSD rule prior to beginning actual construction of a new major stationary source, a major modification, or a plant wide applicability limitation (PAL) major modification, as defined in 40 CFR 52.21(b);

• The air pollution control officer (APCO) shall require compliance with the PSD rule prior to issuing a PSD permit; and

• Applicants shall pay the applicable fees specified.

EPA has reviewed these requirements and determined they are consistent with the requirements of 40 CFR

51.166.

**5.4 Public Participation** 

EPA’s Evaluation provides an analysis of how each District meets the requirements of 40 CFR 51.166(q) for public participation ( see Attachment 1 )

. Each PSD rule contains a section that requires the District to meet certain public participation requirements prior to issuing a PSD permit

. These requirements are generally consistent with the public participation requirements listed in 40 CFR 51.166(q)

. Only those requirements that warrant additional
discussion are d escribed below.

5 .4.1 Notifying applicants of application completeness

40 CFR 51.166(q)(1) requires: The reviewing authority shall notify all applicants within a specified time period as to the completeness of the application or any deficiency in the application or information submitted. In the event of such a deficiency, the date of receipt of the applic ation shall be the date on which the reviewing authority received all required information.

While this requirement is not in Feather River Rule 10.10 , this requirement already exists in Feather River’s SIP

approved NSR program

– in Rule 10.1, Section H.1

. 2 Rule 10.1 applies to all new and modified stationary sources subject to Feather River’s permitting requirements , which includes sources regulated under the PSD program

.

The other District PSD rules also meet this requirement.

5 .4.2 Final action within one year of a complete application

40 CFR 51.166(q)(2) requires that the reviewing authority make a final determination whether construction should be approved, approved with conditions, or disapproved within one year after receipt of a complete application. While this requirement is not found in Feather River Rule 10.10 , this requirement is already met in
the District’s SIP

- approved NSR program in Feather Rule 10.10, Section H.5.a and I.7.a . Rule 10.10 generally requires a final determination within 180 days of a complete application

. Certain requirements for power plants
allow for additional time, up to 240 days

.

The four other District PSD rules also meet this requirement.

2 EPA finalized a limited approval and limited disapproval of F eather River Rule 10.1 as amended on February 7, 2012 into
the California SIP

, effective October 24, 2013. See 78 Fed. Reg. 58460 (Sept. 24, 2013). References in th is TSD to Feather River
Rule 10.1 refer to this current SIP

- approved version of the rule.Page 11 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document 5.4.3 Notifying the public of the opportunity for a public hearing

40 CFR 51.166(q) (2) ( iii) requires that the public notification for a preliminary determination include notice of the opportunity for comment at a public hearing. And, each rule includes the requirement in 40 CFR 51.166(q)(2)(v) to provide an opportunity for a public hearing. However, it is not entirely clear in Feather River Rule 10.10, Great Basin Rule 221, Butte Rule 1107, and Santa Barbara Rule 810 that the notice to the public must mention the
opport unity to request a public hearing. E ach of these four District s confirmed that it interprets its PSD rule as requiring the public notification to include reference to the opportuni ty to request a public hearing (in order to meet the requirement in their rule to provide an opportunity for a public hearing)

. 3 We recommend that each of
these District s revise its PSD rule, for clarity, the next time the rule is open for revisions.

San Luis Obispo Rule 220 already s pecifically includes th e requirement that the public notification for a preliminary determination include notice of the opportunity for comment at a public hearing

.

**5.5 Notice to EPA** 

**– 40 CFR 51.166(p)(1)** 

40 CFR 51.166(p)(1) requires the reviewing authority to provide notice to the EPA of every action related to the consideration of a PSD permit:

Notice to EPA. The plan shall provide that the reviewing authority shall transmit to the Administrator a copy of each permit application relating to a major stationary source or major modification and provide notice to the Administrator of every action rel ated to the consideration of such permit.

For Feather River Rule 10.10, Feather River confirmed that this requirement is addressed to a certain extent by its incorporation by reference of 40 CFR 52.21(p)(2), which requires :

(2) Federal Land Manager. The Federal Land Manager and the Federal official charged with direct responsibility for management of such lands have an affirmative responsibility to protect the air quality related values (including visibility) of such lands and to consider, in consulta tion with the Administrator

, whether a proposed source or modification would have an adverse impact on such values. (emphasis added)

As discussed above in Section 5.3.2 , the reference to “Administrator” in 40 CFR 52.21(p)(2) refers to the Federal
administ rator and not the APCO. In its letter dated December 18, 2014 , the FRAQMD confirmed that in order to ensure the Federal Land Manager (FLM) can work “in consultation with the Administrator”, the District will also provide notice to the EPA of the applicatio n and preliminary determination information that is already required to be provided to the FLM by 40 CFR 52.21(p)(1). Feather River committed to providing the application transmittals and notices to EPA required by 40 CFR 51.166(p)(1), and further committed to revising Rule 10.10 , for clarity, to specifically incorporate the provisions in 40 CFR 51.166(p)(1) the next time Rule 10.10 i s open for revisions.

The other District PSD rules also meet this requirement.

3 See letters dated November 13, 2014 from Butte, November 13, 2014 from Great Basin, November 25, 2014 from Santa Barbara, December 16, 2014 from San Luis Obispo, an d December 18, 2014 from Feather River.Page 12 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document **5.6 Revisions to 40 CFR 52.21 and**  **/or 40 CFR 51.166 Following Incorporation by Reference** 

Each District PSD rule under consideration in this action incorporates the provisions of 40 CFR 52.21 as in effect on a specific date. As such, any revisions made to 40 CFR 52.21 that were not in effect on the date specified in each rule are not a part of the Districts’ respective PSD rules. We discuss below a nu mber of c hanges to the requirements in 40 CFR 52.21 that took effect after the dates on which the D istrict s adopted or revised their

PSD rule s incorporating 40 CFR 52.21 by reference

.

On July 12, 2012, revisions related to PALs for GHG emissions in 40 CF R 52.21 were published in the Federal Register and became effective on August 13, 2012 (see 77 Fed. Reg. 41051). Feather River Rule 10.10, Great Basin Rule 221, and Butte Rule 1107 do not include these revisions. However, these revisions were added only to 40 CFR 52.21 and not to 40 CFR 51.166, and thus are not required elements for SIP

- approved PSD programs. In addition, the PAL provisions are discretionary and not a required portion of the PSD program. We also consider this difference to be acceptable.

O n December 24, 2012, revisions related to condensable PM became effective in 40 CFR 51.166 and 40 CFR 52.21 (see 77 F ed. R eg. 65107 ( October 25, 2012 ) ) . These revisions corrected an error where EPA inadvertently identified particulate matter (PM) as a criteria pollutant (that is, a pollutant subject to a NAAQS) when identifying how to treat condensable PM emissions. By not including this revision, Feather River Rule 10.10, Great Basin Rule
221 and Butte Rule 1107 are potentially more stringent than the requirements of 40 CFR 51.166. However, EPA believes that since the revisions were made to correct an inadvertent technical error, the District s have the discretion to determine that PM is clearly not a criteria pollutant and to therefore implement the rul e by not considering PM to include condensable PM. Either way, the next time the rule is open for revisions and a new incorporation by reference date is used

, this discrepancy will be corrected. We consider this difference to be acceptable.

On January 15, 2013, EPA issued a final rule revising the NAAQS for PM 2.5 for the annual averaging period

, lower ing the level of the NAAQS from 15.0 to 12.0 m g/m 3

, effective March 18, 2013 (see 78 FR 3086)

. This new NAAQS is required to be implemented thro ugh the PSD permitting process a s of the NAAQS effective date . The

District s ’ incorporation by reference of the air quality analysis requirements in 40 CFR 52.21, specifically including 40 CFR 52.21(k), ensure s that the District s ’ PSD program s will require PSD sources to demonstrate compliance
with this revised NAAQS. We n ote that this EPA rulemaking action also added a provision at 40 CFR 52.21 (i)(11) that grandfathered certain sources from the requirement to demonstrate compliance with this revised NAAQS
where the source’s PSD permit application was determined complete on or before December 14, 2012 or where
the EPA first published before March 18, 2013 a public notice that a draft PSD permit had been prepared

. EPA added similar language to 40 CFR 51.166(i ) , but such language was an optional element for SIP

- approved PSD

programs

. T he District rule s that incorporate 40 CFR 52.21 by reference before March 18, 2013 do not include th is

new grandfathering provision . However, this difference does not affect our ability to approve these rules because (1) this grandfathering provision is not a required element for SIP

- approved PSD programs and (2) the provision has expired and would not be available to sources seeking permits in these D istricts

.

On April 5, 2015, revision s related to the 2008 Ozone Implementation R ule became effective in 40 CFR 51.166 and 40 CFR 52.21. (80 Fed. Reg. 12264, Mar. 6, 2015) The rule revisions added clarifying language to 40 CFR 51.166(i)(2) and 52.21(i)(2). These revisions clarify that PSD requirements are not applicable to a specific pollutant if the area is in nonattainment for any current standard. That is, a revoked NAAQ S, like the 1997 8

- hr ozone standard, do es not determine whether PSD applies to a specific pollutant. Although the Districts’ PSD rules do not yet include this clarifying language, it is not necessary for approval. Generally, States have 3 years to makePage 13 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document ch anges to their PSD programs per 40 CFR 51.166(a)(6). In addition, the revisions do not add new requirements to the PSD program, but merely add clarifying language for the existing requirements. We recommend that the

Districts adopt th ese revision s at the t ime of the next rule revision by updating each rule’s incorporation by
reference date.

In Section s 5. 7

- 5. 9 below , we discuss portion s of 40 CFR 51.166 and /or 52.21 that were vacated or changed as a result of a court decision within the timeframe s relevant to this action

.

**5.7 PM 2.5**  **Significance Impact Levels and Significant Monitoring Concentrations**

On January 22, 2013, the U.S. Court of Appeals for the District of Columbia (Court) in Sierra Club v. EPA , 705 F.3d 458, granted a request from EPA to vacate and remand to EPA the portions of two PSD rules (40 CFR 51.166(k)(2) and 40 CFR 52.21(k)(2)) addressing the SILs for PM 2.5 so that EPA could voluntarily correct an error in these provisions. The Court also vacated the parts of these two PSD rules (40 CFR 51.166(i)(5)(i)( c ) and 40 CFR 52.21(i)(5)(i)( c )) establishing a PM 2.5 significant monitoring concentration (SMC), finding that EPA was precluded from using the PM 2.5 SMC to exempt permit applicants from the statutory requirement to compile and sub mit preconstruction monitoring data as part of a complete PSD application. On December 9, 2013, revisions to 40 CFR 51.166 and 52.21 were published in the Federal Register to remove these vacated rule elements , effective as of
that date

. 7 8 F ed. R eg. 73698.

As discussed further below in Sections 5.7.1 and 5.7.2

, EPA requested clarification from the some of the Districts concerning their interpretation of their PSD rules to the extent th ose rules adopted the PM 2.5 SILs and SMC provisions in 40 CFR 52.21 that were later vacated by the Court.

5 .7.1 PM 2.5 SILs

Feather River Rule 10.10 incorporate d 40 CFR 52.21 by reference as in effect on August 1, 2011

, thus the District’s rule incorporates by reference an earlier version of 40 CFR 52.21 that contains the PM 2.5 SIL provisions that were
later vacated by the Court and removed from 40 CFR 52.21 by EPA. Accordingly, EPA requested clarification from
Feather River concerning its interpretation of Rule 10.10 to the extent that it incorporates by reference these

PM 2.5 SIL provisions

.

Feather River Rule 10.10 incorporate d by reference the federal regulation at 40 CFR 52.21(k)(2) as in effect on August 1, 2011 , which had establishe d SILs for PM 2.5 and read as follows:

(k)(2) Significant impact levels. For purposes of PM 2.5 , the demonstration required in paragraph (k)(1) of this section is deemed to have been made if the emissions increase from the new stationary source alone
or from the modificatio n alone would cause, in all areas, air quality impacts less than the following

amounts:

Pollutant Averaging time Class I area Class II area Class III area

PM 2.5 Annual 0.06 μ/m 3 0.3 μ/m 4 0.3 μ/m 5

24

- hour 0.07 μ/m 3 1.2 μ/m 5 1.2 μ/m 6

Paragraph (k)(1) requires that sources applying for a new PSD permit demonstrate that any allowable emission increases from the proposed source or modification, in conjunction with all other applicable emissions increasesPage 14 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document or reductions, will not cause or c ontribute to a violation of any NAAQS or any applicable increment. 40 CFR 52.21(k)(1).

In the preamble to the 2010 final rule adding the (k)(2) provision, EPA advised that, “notwithstanding the existence of a SIL, permitting authorities should determine when it may be appropriate to conclude that even a de minimis impact will ‘cause or contribute’ to an air quality problem and to seek remedial action from the proposed new source or modification.” Prevention of Significant Deterioration (PSD) for Particul ate Matter Less than 2.5 Micrometers ( PM 2.5 )

– Increments, Significant Impact levels (SILs) and Significant Monitoring Concentration (SMC), 75 Fed. Reg. 64,864, 64,892 (Oct. 20, 2010). In another passage of the preamble, EPA also observed that “the use
of a SIL may not be appropriate when a substantial portion of any NAAQS or increment is known to be
consumed .” Id. at 64,894. The Court’s decision in Sierra Club v. EPA held that, contrary to these statements in the preamble, the text of the (k)(2) provision “does not give permitting authorities sufficient discretion to require a cumulative air quality analysis” under such circumstances. 705 F.3d at 464.

Feather River affirmed in its letter dated December 18, 2014 that, consistent with the Court’s decision in Sierra Club v. EPA, EPA’s subsequent revisions to its PSD regulations consistent with that decision, and the statements by EPA in the preamble to the 2010 final ru le discussed above, Feather River does not interpret section 52.21(k)(2), as incorporated by reference in Feather River Rule 10.10 , to preclude the District from exercising discretion to determine when it may be appropriate to conclude that an impact below the PM 2.5 SIL values in section 52.21(k)(2) will cause or contribute to an air quality problem and to seek remedial action from the proposed new
source or modification. Feather River noted that such discretion is necessary to ensure adherence to the requi rement of the Clean Air Act that a PSD project not cause or contribute to a violation of any NAAQS or any applicable increment. Based on this interpretation, Feather River affirmed that it will not read section 52.21(k)(2), as incorporated by reference in Rule 10.10 , as an absolute “safe harbor,” but will exercise discretion to determine whether a particular application of the PM 2.5 SIL values is appropriate when a substantial portion of the PM 2.5 NAAQS or increment is known to be consumed. Feather River al so stated that it retains the discretion to require additional information from a permit applicant as needed to assure that the source will not cause or contribute to a violation of any NAAQS or applicable increment pursuant to section 52.21(k)(1). Feather River further stated that it will consider the approach outlined in EPA’s Guidance for PM 2.5 Permit Modeling released by EPA on May 20, 2014 for determining the appropriate application of the PM 2.5 SILs going forward.

The PSD rules submitted by Great Ba sin, Butte, and San Luis Obispo specifically excluded the PM 2.5 SILs from their incorporation by reference of 40 CFR 52.21

. Santa Barbara’s PSD rule incorporated by reference 40 CFR 52.21 as in
effect after the PM 2.5 SILs were vacated by the Court and no longer in effect

, and thus does not include the PM 2.5 SILs

. 4

4 The Court’s mandate vacating the rule establishing the PM 2.5 S ILs was issued on March 19, 2013, as of w hich date the PM 2.5 S ILs in 40 CFR 52.21 w ere no longer in effect. Santa Barbara’s PSD rule incorporated 40 CFR 52.21 by reference as “in effect June 20, 201 3

, ” a fter t he Court’s March 19, 2013 mandate had issued. Accordingly, Santa Barbara has confirmed that its PSD
rule does not inc orporate the PM 2.5 S ILs that were vacated by the Court. See April 6, 2015 email from Michael Goldman, SBAPCD to Lisa Beckham, EPA. As noted above, on December 9, 2013, revisions to 40 CFR 51.166 and 52.21 were published in the Federal Register to remove these vacated rul e elements, effective as of that date, consistent with the Court’s earlier vacatur. 78 Fed. Reg. 73698.Page 15 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document 5.7.2 PM 2.5 SMC

Feather River Rule 10.10 incorporate d by reference 40 CFR 52.21(i)(5)(i) as in effect on August 1, 2011 , Butte Rule 1107 incorporated by reference 40 CFR 52.21(i)(5)(i) as in effect on June 28, 2012, and Great Basin Rule 221 incorporated by reference 40 CFR 52.21(i)(5)(i) as in effect on July 1, 2012, at which times the PM 2.5 SMC in 52.21(i)(5)(i) remained in effect . The PM 2.5 SMC provided that the District’s APCO may exempt a proposed major stationary source or major modification from the requirements of paragraph (m), with respect to monitoring for a particular pollutant, if the emissions increase or net emissions increase were below the applicable SMC. In their
letters dated December 18, 2014, April 8, 2015, and April 15, 2015 , respectively

, Feather River , Butte and Great

Basin confirmed that the language of section 52.21(i)(5)(i)( c ) as incorporated into their PSD r ule s provides these

Districts with the discretion to determine whether it is appropriate to apply the SMC for PM 2.5 to exempt a permit applicant from the requirement to compile and submit preconstruction ambient monitoring data for PM 2.5 as part of a complete PSD application. Consiste nt with the Court’s decision in Sierra Club v. EPA vacating the PM 2.5 SMC,
these Districts affirmed in their letters that they will not exercise their discretionary authority to use the PM 2.5 SMC in order to exempt PSD permit applicants from the requirement in Clean Air Act section 165(e)(2) that ambient monitoring data for PM 2.5 be included in applications subject to the PSD program for PM 2.5

. Accordingly,
the APCO of each of these Districts will require all applicants requesting a PSD permit from the District to submit
ambient PM 2.5 monitoring data in accordance with Clean Air Act requirements when proposed increases of direct

PM 2.5 emissions or any emissions of a PM 2.5 precursor equal or exc eed a significant amount.

San Luis Obispo’s PSD rule specifically revised the PM 2.5 SMC to be consistent with the Court’s decision . Santa Barbara’s PSD rule incorporated by reference 40 CFR 52.21 as in effect after the PM 2.5 SMC was vacated b y the

Court and no longer in effect, and thus do es not include the PM 2.5 SMC

. 5

5.7.3 Summary of PM 2.5 SILs and SMC Issues

As discussed above, Feather River has clarified and confirmed that it intends to implement the PSD program with respect to the PM 2.5 SILs consistent with the Sierra Club v

. EPA Court’s decision

, with EPA’s December 9, 2013 revisions to the affected provisions of the PSD regulations

, and with the statements by EPA in the preamble to the
2010 final rule discussed above

. In addition, as discussed above, Feather River, Butte and Great Basin have clarified and confirmed that they intend to implement the PSD program with respect to the PM 2.5 SMC consistent
with the Sierra Club v

. EPA Court’s decision and EPA’s December 9, 2013 revisions to the affected provisions of the PSD regulations. Based on the clarifications provided by these three Districts , we find that the se Districts’ PSD SIP
submittal s that includ e the PM 2.5 SILs and /or SMC language that has been vacated by the Court are approvable and consistent with the Act and the requirements for a PSD program.

**5.8 Biomass Deferral Rule** 

On July 20, 2011, EPA finalized a rulemaking entitled “ Deferral for CO 2 Emissions From Bioenergy and Other Biogenic Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs (Biomass Deferral

5 As with the PM 2.5 S ILs, t he Court’s mandate vacating the rule establishing the PM 2.5 SMC was issued on March 19, 2013,
after which date the PM 2.5 SM C in 40 CFR 52.21 was no longer in effect. Santa Barbara’s PSD rule incorporated 40 CFR 52.21 by reference as “in effect June 20, 201 3

, ” after the Court’s March 19, 2013 mandate. Accordingly, Santa Barbara has
confirmed that its PSD rule does not inc orporate the PM 2.5 SMC that was vacated by the Court. See April 6, 2015 email from Michael Goldman, SBAPCD to Lisa Beckham, EPA.Page 16 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document Rule) ”. See 76 Fed. Reg. 43490. This rule excluded biogenic CO 2 emissions 6 until July 21, 2014 from the
dete rmination of CO 2 emissions for bioenergy and other biogenic stationary sources under the PSD and title V programs’ definition of “subject to regulation” in 40 CFR 52.21(b)(49) and 40 CFR 70.2

, respectively. The rule also allowed States the option to adopt the Biomass Deferral Rule into their SIPs and proceed accordingly. The Biomass
Def erral Rule was effective on the same date that it was published, July 20, 2011. All of the District PSD rules that are the subject of this action, other than San Luis Obispo Rule 220, adopted the Biomass Deferral Rule exclusion by incorporating by reference the language in 40 CFR 52.21(b)(49)(ii)(a).

On July 12, 2013, the U.S. Court of Appeals for the District of Columbia Circuit ( D.C. Circuit Court ) in Center for Biological Diversity v. EPA , 722 F.3d 401 (D.C. Cir. 2013), vacated EPA’s Biomass Deferral Rule. On November 13, 2013, however, the D.C. Circuit Court granted a motion to extend the deadline for rehearing petitions concerning its decision until 30 days after the Unit ed States Supreme Court’s (Supreme Court) decision in Utility Air Regulatory Group v. EPA , No. 12

- 1146, et al. After the Supreme Court issued that decision in June 2014, the D.C.

Circuit Court further extended the deadline for rehearing petitions on the Bi omass Deferral Ru le decision until after further proceedings in Coalition for Responsible Regulation v. EPA , No. 09

- 1322, as the decision in the Coalition for Responsible Regulation case was partially r eversed by the Supreme Court in its Utility Air Regulatory Group v. EPA decision. Those proceedings ended on April 10, 2015 when the D.C. Circuit Court issued an amended judgment

. Coalition for Responsible Regulation, Inc. v. EPA, No. 09

- 1322, (D.C. Cir. April 10, 2015) (Amended Judgment) . Subsequently, on May 11, 2015, interven o rs in the Center for Biological Diversity v. EPA case file d petitions for rehearing.

To ensure consistency with the D.C. Circuit Court’s decision to vacate the Biomass D eferral Rule, when adopting Rule 220, its PSD rule, San Luis Obispo revised the definition of the term “subject to regulation” at 52.21(b)(49)(ii)(a) as incorporated by reference into Rule 220 to delete the biomass deferral provision

– see Section C.2.c of Rule 220.

At this time, due to the ongoing legal proce edings, the Court has not issued a mandate to legally effectuate its decision to vacate the Biomass Deferral Rule. Nevertheless, it would be inconsistent with the express decision of the Court for a permit

- issuing authority to rely on the Biomass Deferral Rule. Any permitting decision that relies on the Biomass Deferral Rule may be difficult to defend if challenged.

The fact that the four District PSD rules incorporate by reference the Biomass Deferral Rule that was ordered vacated by the Court could pote ntially raise concerns about EPA’s approval of these rules. However, the exclusion in the Biomass Deferral Rule expired by its own terms on July 21, 2014. As the District rules in question incorporate the language in 40 CFR 52.21(b)(49)(ii)(a), the Distric t rules likewise incorporate the July 21, 2014 expiration date. Because the biomass exclusion in these District Rules does not apply after this date, our proposed approval of these rules into the SIP after the expiration of the Biomass Deferral Rule on Jul y 21, 2014 is not inconsistent with the Court’s opinion concerning the Biomass Deferral Rule.

6 E missions of CO 2 from a stationary source directly resulting from the combustion or decomposition of biologically

- based

mater ials other than fossil fuels and mineral sources of carbon ( e.g. , calcium carbonate) and biologically

- based material (nonfossilized and biodegradable organic material originating from plants, animals or micro

- organisms [including products, by

- products, residues and waste from agriculture, forestry and related industries as well as the nonfossilized and biodegradable organic fractions of industrial and municipal wastes, including gases and liquids recovered from the decomposition of non

- fossilized and bio degradable organic material ]).Page 17 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document **5.9 Supreme**  **Court Decision Related to Greenhouse Gases**

The PSD permitting requirements applied to greenhouse gases for the first time on January 2, 2011. 75 Fed. Reg. 17004 (Apr. 2, 2010). On June 3, 2010, the EPA issued a final rule, known as the Tailoring Rule, which phased in permitting requirements for GHG emissio ns from stationary sources under the CAA PSD and title V permitting programs. 75 Fed. Reg. 31514. Under its understanding of the Clean Air Act at the time, EPA believed the Tailoring Rule was necessary to avoid a sudden and unmanageable increase in the num ber of sources that would be required to obtain PSD and Title V permits under the CAA because the sources emitted greenhouse gas emissions over applicable major source and major modification thresholds. In Step 1 of the Tailoring Rule, which began on

Janua ry 2, 2011, EPA limited application of PSD requirements to sources of GHG emissions only if the sources were subject to PSD “anyway” due to their emissions of pollutants other than greenhouse gases. These sources are referred to as “anyway sources.” In Ste p 2 of the Tailoring Rule, which began on July 1, 2011, EPA applied the PSD requirements under the CAA to sources that were then

- classified as major, and, thus, required to obtain a permit, based solely on their potential GHG emissions and to modifications of otherwise major sources that required a PSD permit because they increased only GHG emissions above applicable levels in the EPA regulations.

O n June 23, 2014, the Supreme Court issued a decision in Utility Air Regulatory Group (UARG) v. Environmental Protection Agency

, 134 S. Ct. 2427, 189 L. Ed. 2d 372 (2014), holding that EPA may not treat GHGs as an air pollutant for purposes of determining whether a source is a major source (or a modification thereof) required to obtain a PSD permit. The Supreme C ourt’s decision also said that EPA could continue to require that PSD permits, otherwise required based on emissions of pollutants other than GHGs, contain limitations on GHG emissions based on the application of BACT. The Supreme Court decision effectivel y upheld PSD permitting requirements for GHG emissions under Step 1 of the Tailoring Rule for "anyway sources" and invalidated PSD permitting requirements for GHG emissions for Step 2 sources. In accordance with the Supreme Court decision, on April 10,

201 5, the U.S. Court of Appeals for the District of Columbia Circuit (the D.C. Circuit) issued an amended judgment vacating the regulations that implemented Step 2 of the Tailoring Rule, including 40 C.F.R. § 52.21(b)(49)(v), but not the regulations that impl ement Step 1 of the Tailoring Rule. Coalition for Responsible Regulation, Inc. v. EPA,

No. 09

- 1322, (D.C. Cir. April 10, 2015) (Amended Judgment).

In light of the Supreme Court’s UARG decision, and consistent with the D.C. Circuit’s amended judgment, each of the five Districts with PSD rules under consideration in this action requested that ARB notify EPA that ARB and the respective Districts would like to withdraw from the respective Districts’ PSD rule SIP submittals the portion of each District PSD rule that incorporates by reference 40 CFR 52.21(b)(49)(v). ARB sent a letter to EPA dated June 1, 2015 making this withdrawal request for the five District PSD submittals. These withdrawals were designed to ensure that EPA can act on the District’s SIP submittals consistent with the Supreme Court’s UARG decision concerning Step 2 of the GHG Tailoring Rule and the D.C. Circuit’s amended judgment. 7 With this withdrawal request from ARB, EPA’s action on these PSD SIP submittals will not include the provisions of 40 CFR 52.21(b)(49)(v) as incorporated by reference into the five PSD rules at the state/local leve l. This approach will ensure that EPA’s action is consistent with the Supreme Court’s UARG decision and the D.C. Circuit Court’s April 10, 2015 amended judgment.

EPA intends to revise the PSD rules at 40 CFR 52.21 and 40 CFR 51.166 as a result of the UAR G decision and the D.C. Circuit’s amended judgment. However, in the meantime, EPA and the states will need to ensure that “anyway” sources obtain PSD permits meeting the requirements of the Clean Air Act. The Clean Air Act continues to require that PSD per mits issued to “anyway sources” satisfy the BACT requirement for greenhouse gases. Based

7 See letter dated June 1, 2015 from Richard Corey, Executive Officer, California Air Resources Board.Page 18 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document on the language that remains applicable under 52.21(b)(49)(iv), EPA will continue to limit the application of BACT to greenhouse gas emissions to those circumstances w here a source emits greenhouse gases in the amount of 75,000 tons per year on a CO2e basis. The EPA’s intention is for this to serve as an interim approach until EPA can complete revisions to its PSD rules consistent with the Supreme Court decision. Each o f the five Districts has confirmed that it intends to apply 40 CFR 52.21 as incorporated by reference into each rule at the local level in a manner consistent with EPA’s interpretation of the Supreme Court’s decision and EPA guidance and policy with

respec t to application of section 52.21 while revisions to the PSD regulations are pending. 8 Although the Districts provided this information to EPA prior to the D.C. Circuit’s amended judgment, t his confirmation is consisten t with the D.C. Circuit Court’s amend ed judgment vacating the relevant rule provisions.



### 6. Program Transfer and Implementation Issues

E ach of the five District s provided information regarding its authority, personnel, and funding to carry out the PSD program within the respective District pursuant to C AA Section 110(a)(2)(E)(i), and, if applicable, the District ’s request to implement the PSD program with respect to existing PSD permits issued by EPA

. 9

Except for San Luis Obispo, e ach District has confirmed that, as part of, and concurren t with, EPA’s approval of its PSD program into the SIP, the District is requesting approval to exercise its authority to administer the PSD program with respect to the existing sources located in the District that have an existing PSD permit issued by

EPA. 10 This would include authority to conduct general administration of these existing permits, authority to process and issue any and all subsequent PSD permit actions relating to these permit s including, for example, modifications, amendments, or revisions of any nature, and authority to enforce such permits. San Luis Obispo is not requesting such authority because t here are no active sources in San Luis Obispo County with EPA

- issued PSD permit s.

Consistent with section 110(a)(2)(E)(i) of the Act, the Districts’ SIP submittal s and the discussion in their 2014
letter s make clear that each of the District s has the authority under State statute and rule to administer the PSD permit program, including but not limited to the authority to administer, process and issue any and all permit decisions, and enforce PSD permit requirements within the District. This ap plies to PSD permits that the District will issue and to existing PSD permits issued by EPA that are to be transferred upon the effective date of EPA’s approval of the each of the Districts ’ PSD SIP submittal s

.

The Districts’ SIP submittal s and 2014 lette r s also demonstrate each District has adequate personnel and funding to administer, implement and enforce the PSD program.

EPA intends to provide a copy of the existing permits to the District s prior to the effective date of the final SIP approval of their PSD rules

. Upon approval of each District’s PSD SIP submittal, EPA will assume an oversight role
of the Districts’ PSD permitting programs, as intended by the Act.

8 See letters dated November 13, 2014 from Butte, November 13, 2014 from Great Basin, November 25, 2014 from Santa
Barbar a, December 16, 2014 from San Luis Obispo, and December 18, 2014 from Feather River.

9 See letters dated November 13, 2014 from Butte, November 13, 2014 from Great Basin, November 25, 2014 from Santa Barbara, December 16, 2014 from San Luis Obispo, and Dec ember 18, 2014 from Feather River. See also each District’s SIP
Submittal for these rules as identified in Table 1.

10 See letters dated November 13, 2014 from Butte, November 13, 2014 from Great Basin, November 25, 2014 from Santa Barbara, December 16, 2014 from San Luis Obispo, and December 18, 2014 from Feather River.Page 19 of 19
Feather River, Great Basin, Butte, Santa Barbara and SLO PSD Rules Technical Support Document **7. S**  **ection s**  **110(a), 110(**  **l )** 

**, and 193**  **of the Act**

CAA section 110(a) requires, among other things, that the requirements of SIP rules be enforceable. Sources subject to these PSD rules are required to meet emission limits and other measures for the prevention of significant deterioration of air quality, w hich meets the enforceability requirement in section 110(a).

We have also evaluated these PSD SIP revision s to determine whether they would interfere with any applicable requirement concerning attainment and reasonable further progress ( RFP ) or any other applicable requirement of the Act (CAA section 110(l)) or whether they would modify, in a nonattainment area, any SIP

- approved control requirement in effect before November 15, 1990 (CAA section 193).

We find that our approval of the se SIP s ubmittal s would comply with CAA section 110(l), because the SIP, as
revised to reflect the submitted revision s , would provide for RFP and attainment of the NAAQS , and the requirements of the PSD SIP revision s are essentially equivalent to, and at least as stringent as

, th ose of the FIP codified in 40 CFR Part 52.21 and used to date by EPA to implement the required PSD program within the

District s

. As described elsewhere in this document, approval of th ese SIP submittal s would merely result in the
transfer o f authority for the PSD program from the EPA to the District s , and therefore would not result in any
substantive changes to the PSD program requirements

, other CAA requirements, or air quality.

Further, s ection 193 of the CAA does not apply to this proposed action because th ese submittal s to incorporate PSD requirements into the SIP do not address nonattainment pollutants.

**8. Recommendations** 

Pursuant to section 110(k)(3) of the Act, we recommend full approval of :

• Feather River Rule 10.10

– Prevention of Significant Deterioration

– Federal Requirements

• Great Basin Rule 221

– Prevention of Significant D eterioration (PSD) Permit Requirements for New Major Facilities or Major Modifications in Attainment o r Unclassifiable Areas

• Butte Rule 1107

– Prevention of Significant Deterioration (PSD) Permits

• Santa Barbara Rule 810

– Federal Prevention of Significant Deterioration (PSD)

• San Luis Obispo Rule 220

– Federal Prevention of Significant Deterioration

We re commend approval based on our determination that the submittal s compl y with the applicable statutory and regulatory provisions requiring regulation of major stationary sources

, in particular, part C of title I of the Act.
If we finalize this action as proposed, our action would be codified thro ugh revisions to 40 CFR 52.220

– Identification of plan and 40 CFR 52.270

– Significant deterioration of air quality

. Our determination is based, in part, on the clarifying letters provided by the Districts and di scussed herein and identified in Section 2.

**9. Attachments** 

• Attachment 1

– E valuation of 40 CFR 51.166 and Feather River, Great Basin, Butte, Santa Barbara and SLO
District PSD Rules

, EPA Region 9

, July 201 5

.