UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901

OFFICE OF THE 

## APR 1 2 20ta
REGIONAL ADMINISTRATOR



### Mary D. Nichols, Chairman California Air Resources Board 1001 I Street, P.O. Box 2815 Sacramento, CA 95812
Re: Request for Attorney General's Interpretation ofSenate Bill 700 (Stats. 2003, ch. 479)

Dear Chairman Nichols:

I am writing to request a legal interpretation from the California Attorney General ofa State law known as Senate Bill 700 (Stats. 2003, ch. 479) ("SB 700") as it applies to New Source Review (NSR) permitting rules (Rules 2020 and 2201), adopted by the SanJoaquin Valley UnifiedAirPollution Control District ("District") on December 19,2002, and approved into the California State Implementation Plan (SIP) byEPA on May 17, 2004 (69 Fed. Reg. 27,837). On January 29, 2010, EPAproposed to approve recent revisions to the District's NSR rules. 75 Fed. Reg. 4,745. In the same notice, EPA proposed pursuant to section 1l0(k)(6) ofthe Clean Air Act to correct an error we believed we had made in ourMay 2004 final action approving the December 2002 version ofthe District's NSR rules.
We indicated in ourproposederrorcorrection that ourMay 2004 approval ofDistrict Rules 2020 and 2201, which did not on their face exempt any agricultural sources from permitting orexempt any agricultural sources from the emission offsets requirement, was inconsistent with and contrary to SB 700's limitedpermitting exemption for minor sources of agricultural emissions and exemption from the offsets requirement for all minor agricultural
sources (until emissions reductions from such sources are creditable). In short, ourproposed
errorcorrection was premised on the conclusion that, at the time ofEPA'sMay 2004 approval action, the District did not have the authority under state law (specifically, SB 700) to implement the NSR rules, as adopted in December 2002, to require permits for minor agricultural sources with actual emissions (excluding fugitive dust) less than 50% ofthe major source threshold and to require emission offsets for minor agricultural sources in a manner similarto otherminor
sources. In response to ourJanuary 29, 2010, proposed errorcorrection, we received comments from Earthjustice and the Centeron Race, Poverty & the Environment (CRP&E). The comments criticizedEPA'sJanuary 29, 2010, proposederror correction for relying on an interpretation of certain perceived limitations on the District's authority in SB 700 without seeking California's

Printed on Recycled Paperinterpretation ofthat law. In light ofthose comments, EPA is deferring taking final action on the
error correction portion ofourJanuary 29, 2010 proposal until after we have received input from the State ofCalifornia on the properinterpretation ofcertain provisions ofSB 700.
The preamble to ourproposed errorcorrection on January 29, 2010, provides an extensive factual background. In summary, in 2001, EPA finalized a limited disapproval of Rules 2020 and 2201 because, among otherreasons, Rule 2020, byreferring to California law, exempted major agricultural sources from NSR permitting. 66 Fed. Reg. 37,587, July 29,2001. In response, the DistrictrevisedRule 2020 to omit any reference to the California State law exemption for agricultural sources. In September 2003, the Governor ofCalifornia signed SB 700, which we understood as eliminating the exemption for major agricultural sources. As set forth in greater detail in the January 29, 2010, preamble, we laterrecognized that SB 700 also established under State law a limited exemption for minor agricultural sources that are less than 50% ofthe major source threshold and an exemption from the emission offsets requirement for minor agricultural sources until emissions reductions from such sources are creditable. CaliforniaHealth & Safety Code (CH&SC) sections 42301.16 and 42301.18(c). SenateBill 700 also contained aprovision which EPA, in ourJanuary 29,2010, errorcorrection characterized as requiring the District to make certain findings before itcould subject minor agricultural sources to new source review offsetrequirements. CH&SC section 42301.16(c).
The comments submittedbyEarthjustice and CRP&E, however, point to provisions of SB 700, such as CH&SC sections 39011.5(b) and (c), that couldbe interpreted as authorizingthe District to implement the December 2002 version ofthe District NSR rules without limitation as to the permitting threshold orthe offsets limitation for minor agricultural sources otherwise applicable under CH&SC sections 42301.16(c) and 42301.18(c), respectively. In light ofthe comments we received on ourproposed errorcorrection, I am requesting your assistance in obtaining the State's legal interpretation. Specifically, what was the District's legal authority, effective January 1, 2004, to require NSR permits for agricultural sources with actual emissions under 50% ofthe major source threshold without undertaking the procedures and making the findings set forth in CH&SC section 42301.16(c), and to require emission offsets for minor agricultural sources regardless of the creditability ofemissions reductions from such sources in light ofCH&SC section 39011.5 and the December 2002 version ofthe District NSR rules?
Thank you in advance for assisting us in obtaining California's interpretation oflegal authority on this matter. If you have questions, please contact Nina Spiegelman in the Office of Regional Counsel at 415-972-3899 orDeborah Jordan, AirDivision Director, at 415-947-8715. Sincerely,

Jared Blumenfeld Regional AdministratorEnclosures: EPAJanuary 29, 2010 ProposedRule District Rule 2020, amendedDecember 19,2002 District Rule 2201, amendedDecember 19, 2002 Earthjustice March 1,2010Letter CRP&EMarch 1,2010Letter ARB May 30, 2007 Letter ARB December 18,2006Letter

cc: Mary Hackenbracht, SeniorAssistant Attorney General, Natural Resources Section, Office ofthe California Attorney General James N. Goldstene, Executive Officer, AirResources Board Ellen M. Peter, ChiefCounsel, AirResources Board