BOARD: Paul C. Aughrry,I11 Chairman Edwin H. Cooper, 111 Vice Chairman BOARD: Henry C.Scorr

M. David Mitchell, MD

Steven G. lsner Secretary C. Earl Hunter, Commissioner Promotingandprotecting the health ofthe public and the environment

April 12,201

### 1 Glenn A. McCall
Coleman F. Buckhouse, MD

Ms. Shirley Rivera (AIR-3) U.S. EPA Region 9 75 Hawthorne Street San Francisco, CA 94105-3901

Attention: Docket ID No. EPA-R09-OAR-2009-0438

Re: Announcement ofPublic Hearing and Request for Public Comment on Proposed Action and Supplemental Statement ofBasis Related to a Clean Air Act Prevention of Significant Deterioration Permit for the Emission of Air Pollutants Permit Application No. SJ08-01, and Supplemental Statement of Basis: PSD Permit Application forAvenal Energy Project, March 2011.

Ms. Rivera:

Thank you for the opportunity to provide comments on the notice entitledAnnouncement of Public Hearing and Request for Public Comment on Proposed Action and Supplemental Statement of Basis Related toa CleanAirAct Prevention ofSignzjkantDeterioration Permit for the Emission of Air Pollutants Permit Application No. SJ 08-01' ("Public Notice") and the Supplemental Statement of Basis: PSD Permit Application for Avenal Energy Project, March 201 

### 1 ("Supplemental Statement of

### as is").^ The South Carolina Department of Health and Environmental Control ("DHEC") is the public health agency for the State of South Carolina, and
we are committed to promoting and protecting the health ofthe public and the environment for the State of South Carolina. Further, DHEC is the air quality permitting authority for the State of South Carolina, and DHEC has a State Implementation Plan ("SIP) approved Prevention of Significant Deterioration ("PSD) air quality permitting program. U.S. Environmental Protection Agency ("EPA") permitting decisions affect our permitting decisions, and we appreciate the opportunity to comment on this nationally significant permitting decision.

DHEC is not objecting to the issuance of the PSD permit to Avenal Power Center, LLC ("APC"). DHEC is concerned that the EPA's policy reversal will have national implications, and this matter should be fully addressed through general rulemaking. We are also requesting clarification
on the EPA's justification in the Supplemental Statement of Basis.

I Document No.EPA-R09-OAR-2009-0438-0093, in Docket No.EPA-R09-OAR-2009-0438, Available at http://www.regulations.gov/#!documentDetaiI;D=EPA-R09-OAR-2009-0438-0093 (last visited April 1, 201 1).

Document No.EPA-R09-OAR-2009-0438-0088, in Docket No.EPA-R09-OAR-2009-0438, Available at http://www.regulations.gov/#!documentDetail;D=EPA-R09-OAR-2009-0438-0088 (lastvisited April 1, 201 1).

SOUTHCAROLINA DEPARTMENT OFHEALTH AND ENVIRONMENTAL CONTROL 2600Bull Street Columbia, SC29201 Phone:(803) 898-3432 www.scdhec.govMs. Rivera April 12,2011 Page 2 of 5



### BACKGROUND

The EPA is the permitting authority for PSD air quality permits in the San Joaquin Valley Air Pollution Control District of California ("District"). Under this authority,the EPA Region 9 office in San Francisco issued a draft permit to APC on June 16,2009,for the construction oftwo natural-gas fired 

### 180

### MW combustion turbine generators, a heat recovery steam generator, and a 300 MW steam turbine generator, and associated equipment, in Avenal, California. The EPA draft PSD permit addresses nitrogen dioxide ("NO2"), particulate matter with a diameter of less than 10micrometers ("PM,o"), sulfur dioxide ("SO2"), lead, and carbon monoxide.

This permit is the subject of litigation between the EPA and APC over failure to issue the PSD permit oneyear afterreceiving a complete permit application; the EPA deemed the APC application complete on March 19,2008.The Public Notice and the Supplemental Statement of Basis are related tothe litigation. In the Supplemental Statement of Basis, the EPA proposed to "grandfather," or exempt, the APC permit from three regulations that the EPA promulgated after it determined that the APC permit application was complete, the new one-hour NO2 National Ambient Air Quality Standard ("NAAQs"),~ the Tailoring ~ule,~ and the revised 

## so2 NAAQS.~ This grandfathering is counter to prior EPA policy 

## statement^.^

In the case of APC, the statutory requirements for sources not to cause an exceedance ofthe NAAQS and to employ the Best Available Control Technology ("BACT") are in conflict with the statutory requirement to make a decision on a PSD permit application within one year of receiving a complete application. DHEC is in no way attempting to weigh these requirements in this case. We cite the requirements for sources to meet the NAAQS and use BACT to highlight the extentto which the Supplemental Statement of Basis marks a departure from existing policy, and thus warrants a more complete explanation from the EPA. A Supplemental Statement of Basis for a single permit is not the appropriate vehicle to reverse prior policy.



### DHEC COMMENTS

DHEC is commenting on the EPA'sjustification for its decision to grandfather the APC permits from the NO2and SO2NAAQS and the Tailoring Rule. Again, DHEC is not commenting on whether ornot the EPA should issue a PSD permit to APC. As the air quality permitting authority forthe State of South Carolina, DHEC looks to EPA decisions for precedents in issuing PSD permits. Ourpermit applicants and stakeholders also look toEPA decisions in evaluating DHEC's draft PSD permits, and the proposed APC decision could make a confusing precedent.

1.APC PERMIT ISSUES HAVE NOT BEEN SHOWN TOBE UNIQUE

Primary National Ambient Air Quality Standardsfor Nitrogen Dioxide, 75 Fed. Reg. 6474 (February9, 20 10).

Prevention of Significant Deteriorationand Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31514 (June 3,2010).

Primary National Ambient Air Quality Standardsfor Sulfur Dioxide,75 Fed. Reg. 35520 (June 22, 2010). 6 See Clean Air Act § 165(a);40 CFR 52,2l(k)(l)(i)(2010);Stephen Page, Office of Air Quality Planning and Standards.Memorandum. Applicabilityofthe Federal Prevention of Significant DeteriorationPermit Requirementsto New and Revised National Ambient Air Quality Standards (April 1,20 10); Reconsiderationof InterpretationofRegulationsThat Determine PollutantsCovered by Clean Air Act Permitting Programs,75 Fed. Reg. 17004, 17018(April2,2010).Ms. Rivera April 12,2011 Page 3 of5

DHEC's primary comment is that the issues with the APC permit are not unique. State and local permitting agencies often experience the sorts ofdelays in issuing PSD permits that the EPA experienced with APC, yet the EPA has required permits from these agencies to meet the NAAQS at the time ofpermit issuance. The case-specific grandfathering decision explained in the Supplemental Statement of Basis may add confusion tothe already complex PSD permitting process.
In the Supplemental Statement of Basis, the EPA makes five arguments for why this case is fundamentally unique and thus why it should change its previous, long-standing position. DHEC notes that the EPA's reasons for why APC is unique donot establish a clear bright line.

a. PROCESS TYPE SHOULD HAVENO BEARING ON THE PROPOSAL TO GRANDFATHER NAAQS COMPLIANCE AND THE TAILORING RULE

The first reason given is that the draft permit is for well-controlled natural-gas fired combustion turbines with the BACT for NO2.The well-controlled nature of the project is a given, or the project would not have been eligible for a PSD permit. Therefore, the nature ofthe project should have no bearing on EPA's action on this permit, and citingthe nature ofthe project in partial justification ofthe proposed case-specific grandfathering action sets a bad precedent. EPA's commentsthat APC's status as a natural-gas fired electric generating facility warrants its grandfathering may undercut its past statements that it is not attempting to define natural gas as BACT. In ostensibly favoring natural gas, the EPA is providing support for natural gas as BACT.

b. THE EPA HAS NOT ESTABLISHED HOW THE TIMING OF THE COMPLETENESS DETERMINATION AND THE NO2NAAQS PROPOSAL IS RELEVANT

The second reason given is that the EPA issued theNO2NAAQS proposal more than a year after the completeness determination. DHEC notes that this is not an unusual circumstance. Proposed regulations come out regularly. Further, the EPA often publishes a final rule shortly after proposal; for example, the EPA will sign the final Utility MACT eight months after signing the proposal, pursuant to a consent decree. It is not uncommon for the EPA to publish a proposal and
a final rule during the time it takes for a permitting authoritytoresolve issues with a PSD permit. The relevance ofthe one-year timeframe is unclear. If a proposal cameout less than a year after the completeness determination would this grandfathering exemption apply?

c. UNFORSEEN MODELING ISSUES ARE NOT UNIQUE TOTHE APC PERMITTING PROCESS

The third reason the EPA used to propose grandfathering is that unforeseen modeling issues arose after EPA had decided not to grandfather permits. Permitting authorities experience unforeseen modeling issues with every revised NAAQS. DHEC notes that more analysis on why these modeling issues were unique may clarify this reason. Most permitting authorities experience modeling issues with PSD applications.

DHEC appreciates the March 1, 201 1,guidance memorandum for NO2modeling and the April 7, 2011,AERMOD update, but we note that the EPA published these essential tools more than a year after the publication ofthe one-hour NO2 NAAQS. Before the publication of the March 1, 201 1,memorandum, DHEC notes that compliance with this NAAQS may have been technically impossible because ofthe absence of implementation guidance. A possible cause of this problemMs. Rivera April 12,2011 Page 4 of 5

is lack ofcommunication amongst the EPA program areas. Standard setting and implementation guidance, including modeling, must be synchronized.

d. THE EPA DOES NOT EXPLAIN HOW APC MINIMIZES CARBON DIOXIDE EQUIVALENT (COze)EMISSIONS

The fourth reason given is that the NO2 modeling issues delayed permit issuance past the effective dates ofthe SO2NAAQS and the Tailoring Rule. DHEC notes that this is not a reason; it's a description ofthe chronology. Previous EPA guidance that forbids grandfathering does not make exceptions for the cause of a permit delay. This is only a valid reason ifthe NO2 grandfathering is valid. The EPA dismisses possible concern over the SO2 NAAQS by stating that APC will emit a de minimis amount of S02.The EPA, however, does not elaborate on the Tailoring Rule issues in the same way. Rather, the EPA simply notes that in considering the transition period for the Tailoring Rule, the EPA did not consider possible delays caused by NO2 implementation. It would be helpful if EPA would comment on features ofthe APC project that are consistent with the greenhouse gas BACTrequirements that would apply ifthe EPA had not exempted the permit from the Tailoring Rule.

e. THE SPECIFIC CAUSE(S) OF THE PERMIT DELAY IS NOT CLEAR

The fifth reason given was that judicial precedents allow for exceptions to laws and regulations in the case of an agency delay. The EPA notes that "where there has been a significant and prejudicial delay by the government agency reviewing an application," the government agency can make an exemption to the principle that "a decision on an application for a government license, permit, or other type of authorization must be based on the law in effect at the time of the decision ofthe reviewing agency." Again, the EPA has failed to articulate why this delay is unique. Many PSD permit applications experience a processing delay. The EPA should clarify what exactly caused the delays in this permit process. As discussed above, the administrative record is unclear on the causes of the delays, particularly in the period before the EPA issued the final NO2NAAQS. Providing additional information would help prevent the EPA's proposed action from becoming a binding precedent that runs counter to current established policy.

DHEC finds the administrative record inadequateto explain why the EPA did not issue the final permit before its statutory deadline ofMarch 19, 2009, or at least before the effective date ofthe one-hour NO2NAAQS on April 12,2010.The multiple public comment periods donot seem to have yielded insurmountable issues. Also, the role of consultation with the U.S. Fish and Wildlife Service ("FWS") for compliance with the Endangered SpeciesAct in the delay is unclear. Given that the FWS review started on July 10,2008,and did not end until August 2010, perhaps the FWS review could in part explain the delay. DHEC would find an elaboration ofthe causes ofthe delay helpful in understanding the EPA's many assertions ofthe singularity ofthis case.
2. IT IS UNCLEAR IF ALL FIVE CRITERIA NEED TO BE MET TO GRANDFATHER THE PROJECT

DHEC is also unclear how thereasons taken as a group would apply to other permits. Does a proposed permit need to meet all five ofthese reasons, or will meeting just three suffice? The EPA could lessen confusion in future permits if it addressed this issue clearly and create a coherent bright-line test. The EPA could also lessen confusion surroundingthis action by explicitly statingthat this is a case-specific grandfathering action and should not be used as a precedent for future permitting.Ms. 

### Rivera April 12, 201 1 

### Page 5 of5



### 3. THE EPA SHOULDADDRESS GRANDFATHERING THROUGH GENERAL RULEMAKING

The EPA should address its grandfatheringpolicy through general rulemaking or a guidance document with 

### a public comment period. The APC action contradicts long-standing 

### PSD policy, and the Supplemental Public Notice does not adequately explain how the APC permit is distinct enough to warrant the grandfathering from three major rules.

4. THE EPA SHOULD COMMITTORESOLVING MODELING ISSUES WHEN IT ISSUES A NEW OR REVISED NAAQS

DHEC also requests that the EPA commit to issuing all guidance for a new orrevised NAAQS when that NAAQS is published. The lack ofthis clear guidance led in part tothe APC delays. The EPA had issued the one-hour NO2NAAQS and required sourcesto comply with it,yet it did not provide guidance on how sources could dothat. This was a problem with the 1997PM2 NAAQS. The EPA did not issue final guidance on implementing this NAAQS until late 2010, creating unnecessary confusion for permitting authorities. With recently issued NAAQS, such as SO2,and forthcoming revisions, including PM2.S and the N02/S02 secondary NAAQS, the grandfathering issue is ofcentral importanceto the permitting process. DHEC requests that the EPA involve state and local permitting authorities as co-regulators rather thanjust stakeholders in setting NAAQS and in other rulemaking. The EPA needs to involve state and local agencies in the rulemaking pre-proposal stage, when agenda-setting decisions are being made. State and local agencies implement EPA regulations and have expertise that would improvethe outcome of rulemaking to address NAAQS implementation.

We hope the lessons learned from this permitting experience will help the EPA better understand and appreciate the struggles and complexities state and local permitting authorities endure on a daily basis with PSD permitting and NAAQS implementation. It should also affirm the strong benefits of having timely and clear guidance for future rulemakings. DHEC appreciates the opportunity to comment on this significantpermitting action. Ifyou have questions, please contact Elizabeth Basil ofmy staffat (803) 898-4126, orby email at basilej@dhec.sc.gov. Sincerely,

Bureau ofAir Quality

ec: Beverly Banister, Director, Air, Pesticides, and Toxics Management Division, EPA Region 4 Gregg Worley, Chief, Air Permits Section, EPA Region 4 Gerardo Rios, Chief, Air Permits Section, EPA Region 9 Richard Corey, Division Chief, Stationary Source Division, California Air Resources Board David Warner, Director, Permit Services, San Joaquin Valley Air Pollution Control District Rhonda Banks Thompson, Assistant Bureau Chief, Bureau ofAir Quality, S.C. DHEC