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BAAQMD Updates to NSR and Title V Permitting Rules

Regulation 2, Rules 1, 2, 4 & 6 

RESPONSES TO COMMENTS FROM EPA REGION IX STAFF ON 

SECOND DRAFT OF PROPOSED AMENDMENTS

October 11, 2012

Over the past year, Staff of the Bay Area Air Quality Management District have been developing 

amendments to the District’s New Source Review (NSR) and Title V permitting programs. These 

Proposed Amendments will update the District’s NSR and Title V programs to address recent regulatory 

developments. The Proposed Amendments will revise certain provisions in District Regulation 2, Rules 

1, 2, 4, and 6 in which the NSR and Title V programs are set forth. 

Staff of EPA Region IX have generously agreed to review drafts of the Proposed Amendments that Air 

District Staff have developed and to offer comments and suggestions on them. The District will 

eventually be submitting the Proposed Amendments (through the Air Resources Board) to EPA for 

approval, and EPA will be statutorily required at that time to review them for consistency with Clean Air 

Act (CAA) requirements in order to approve them as part of California’s CAA State Implementation Plan 

(SIP). In advance of that formal review, EPA Region IX Staff have reviewed drafts of the Proposed 

Amendments to identify potential areas where the Proposed Amendments need to be revised to ensure 

that they meet all Clean Air Act requirements and to otherwise offer suggestions on improving them. 

District Staff greatly appreciate the time and effort that EPA Region IX Staff have put into doing so. 

District Staff have carefully reviewed EPA Region IX Staff’s comments in developing the final version of 

the Proposed Amendments and have made a number of changes as a result of them. EPA Region IX 

Staff’s comments identified several areas where the District’s drafts needed to be revised to satisfy the 

CAA, and they resulted in a greatly improved proposal. 

This document explains District Staff’s evaluation of EPA Region IX Staff’s comments on the Second Draft

of the Proposed Amendments, which the District published on May 25, 2012. These comments were 

provided in a letter from Gerardo Rios dated July 26, 2012.1 The comments received are summarized 

below, along with District Staff’s responses to each one. Per the organization in the comment letter, the 

responses address (i) Regulation 2, Rule 1; (ii) Regulation 2, Rule 2; and (iii) the definitions used in the 

District’s NSR rules.

I. REGULATION 2, RULE 1

Comment I.1.a.: EPA Region IX Staff commented that the District should provide an analysis of any new 

or revised exemptions in Regulation 2, Rule 1 that will be provided through the Proposed Amendments

 

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EPA Region IX Staff’s comment letter is available on the District’s website for this rule development project at 

www.baaqmd.gov/Divisions/Engineering/Proposed-Reg-2-Changes.aspx. 
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(and also any previous revisions that EPA has not yet approved into the SIP). EPA Region IX Staff 

requested this analysis in connection with Section 110(l) of the Clean Air Act, which provides that EPA 

may not approve a SIP revision “if the revision would interfere with any applicable requirement 

concerning attainment and reasonable further progress . . . or any other applicable requirement of [the 

Act].” EPA Region IX Staff stated that “[s]ince new exemptions typically mean fewer sources are subject 

to permit and emission control requirements, the analysis must show how exempting these new sources 

will not interfere with any applicable requirement concerning attainment and reasonable further 

progress, or any other applicable requirement of the Act (See section 110(l) of the Act).” 

Response: Air District Staff have prepared a Section 110(l) analysis of all new and revised exemptions 

that have been added to Regulation 2, Rule 1 since the last SIP-approved version. District Staff 

published this analysis in connection with the final version of the Proposed Amendments on September 

26, 2012. A copy of the analysis is enclosed with these Responses, and it is also available on the 

District’s website at

www.baaqmd.gov/~/media/Files/Engineering/Proposed%20Reg%202%20Changes/Public%20Hearing/C

AA%20Section%20110%20Analysis%20of%20Reg%202%20Rule%201%20Exemption%20Provisions.ashx?

la=en. As explained in that document, there is nothing in any of the new or modified exemptions in 

Regulation 2, Rule 1 that would prevent approval of the District’s NSR rule as set forth in the Proposed 

Amendments under CAA Section 110(l).

Comment I.1.b.: EPA Region IX Staff commented on the provision in Section 2-1-502 stating that the 

burden of proof for establishing that a source qualifies for an exemption from District permitting lies 

with the person asserting the exemption. EPA Region IX Staff noted that the provision states that such 

person must provide “substantial credible evidence” to support the applicability of the exemption, and 

suggested that the provision should be “clarified” to state that credible evidence means “various types 

of records, such as purchase or usage records, or other documentation.” EPA Region IX Staff also 

suggested alternatively that the District should add specific language that “records must be maintained 

to provide credible evidence of the applicability and compliance with a stated exemption.” EPA Region 

IX Staff stated that providing this additional language would help “ensure these exempted sources are 

aware of the need to maintain appropriate documentation that can serve as ‘substantial creditable [sic] 

evidence’ . . . .” 

Response: District Staff disagree that there is any significant potential that the owner/operator of an 

exempt source could be unaware of the need to maintain appropriate documentation or other evidence 

to support its claim for an exemption based on the current language in Section 2-1-502. The current 

language clearly indicates that the source must be prepared at any time to provide such evidence upon 

request by the APCO. This language is sufficient to put the owner/operator of an exempt source on 

notice that it must be prepared to present its evidence upon request – and thus, that it must maintain 

such evidence so that it can do so when requested. Being prepared to present evidence supporting the 

claim for exemption necessarily means maintaining the evidence such that it is ready to present upon 

request. Similarly, there is no need to “clarify” what is meant by the concept of “credible evidence”, 

which is intended to be a broad term that encompasses any information or evidence that can support 

the applicability of the exemption. The current language expresses the concept with sufficient clarity to 
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convey to regulated entities what is required, and there is no need to define this term further. EPA has 

taken this same position in other contexts, such as with the agency’s “Credible Evidence Rule” in which 

EPA concluded that it did not need to further define the term “credible evidence”.

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 Moreover, even if 

the term “credible evidence” did need to be defined more specifically, using open-ended terms such as

“other documentation” and “appropriate documentation” would be of little use in doing so. The fact 

that EPA Region IX Staff have recommended such open-ended terms implicitly recognizes the fact that it 

would be inappropriate to be overly prescriptive in specifying that kinds of evidence must be provided 

to support the applicability of an exemption. The more appropriate approach is simply to specify that 

evidence must be provided to establish the existence of the exemption, and then leave it to be 

demonstrated on a case-by-case basis in each individual situation where this provision may be 

implicated whether the source’s evidence adequately supports the exemption or not. For all of these 

reasons, District Staff disagree that the language in Section 2-1-502 regarding providing credible 

evidence to support claims for exemptions needs to be revised. 

Comment I.2.a.: EPA Region IX Staff commented on the District’s “modification” test in Section 2-1-234, 

which establishes the applicability of NSR requirements for “modified” sources. District Staff have 

discussed this issue in a number of contexts in the past, including most importantly in Section IV.E.2.b. 

of the May 25 Background Discussion document (pp. 59-63), in which District Staff sought EPA’s input on 

the issue. EPA Region IX Staff responded that EPA will no longer be able to approve the District’s current 

SIP-approved “modification” test based on increases in a source’s “potential to emit” (PTE) air 

pollutants. Although EPA has approved such applicability tests in the past, EPA Region IX Staff stated 

that EPA will now require to the District to ensure that there will be no case in which a change at a 

source that constitutes a “major modification” as defined under 40 C.F.R. Section 51.165 or 51.166 –

which are based on increases in actual historical emissions and not PTE – could escape NSR permitting 

under the District’s “modification” definition. EPA Region IX Staff further stated that the placeholder 

language that District Staff circulated in the Second Draft of the proposed amendments regarding this 

issue would be acceptable for meeting this requirement (subject to additional comments addressed 

below). 

Response: District Staff understand EPA Region IX Staff’s position on this issue and have accordingly 

included the placeholder language from the Second Draft in the final version of the proposed 

amendments. This language will establish a “federal backstop” provision in Section 2-1-234 so that in 

the unlikely event that a change at a source could constitute a “major modification” under 40 C.F.R. 

Section 51.165 or 51.166 but not be a modification under the District’s current test, the change will be 

brought within the definition of “modification” and NSR permitting requirements will apply. District 

 

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See 62 Fed. Reg. 8314, 8322 (Feb. 24, 1997). In adopting that rule, EPA made clear that it did not agree with

comments similar to those of EPA Region IX Staff here stating that the rule is “deficient for not providing an 

express regulatory definition of the term ‘credible evidence’ ”. EPA disagreed and concluded that it would not be 

appropriate to provide a specific regulatory definition if this term, noting that Congress itself found it appropriate 

to use the term “credible evidence” in the Clean Air Act without needing to provide a specific statutory definition. 

See also Clean Air Implementation Project v. EPA, 150 F.3d 1200, 1202 (D.C. Cir. 1998) (dismissing challenges to the 

credible evidence rule on jurisdictional grounds, and noting that “Nothing in the rule itself defines or limits the 

possible kinds of evidence encompassed within the phrase ‘credible evidence.’ ”).
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Staff appreciate EPA Region IX’s feedback on this issue and acknowledgement that this language will be 

approvable under Sections 51.165 and 51.166. 

District Staff remain concerned, however, that EPA Region IX is requiring the Bay Area Air District to 

revise its PTE-based “modification” definition, but is not requiring other California air district that also 

define “modification” based on increases in PTE to revise their definitions. If EPA Region IX believes that 

the District should no longer be allowed to define “modification” as a change that results in an increase

in PTE, then it should not allow the other California air districts that define “modification” as a change 

that results in an increase in PTE to continue to use such a definition either. District Staff will continue 

to work with EPA Region IX Staff to ensure consistency in NSR implementation across all California air 

districts. 

Comment I.2.b.: As noted above, EPA Region IX Staff stated that the “federal backstop” language that 

the District circulated with the second draft of the Proposed Amendments will satisfy EPA’s 

requirements under 40 C.F.R. Sections 51.165 and 51.166. This “federal backstop” provision 

incorporates by reference the federal “major modification” definitions in those C.F.R. provisions. EPA 

Region IX Staff stated that to ensure that it is clear that all applicable provisions of the federal test must 

be used in applying this definition – and in particular the “NSR Reform” applicability provisions in 

Sections 51.165(a)(2)(A) through (F) and 51.166(a)(7)(i) through (vi) – the District should include specific 

reference to these provisions in the language in Section 2-1-234. 

Response: As EPA has made clear in other contexts, there is no requirement that California air districts 

must use the “NSR Reform” applicability provisions in 40 C.F.R. Sections 51.165(a)(2)(A) through (F) and 

51.166(a)(7)(i) through (vi) for their NSR programs.3EPA Region IX Staff’s comment is therefore 

incorrect that the District’s “modification” test must specify that these federal provisions have to be 

used. District Staff have concluded that these provisions are an appropriate policy choice for the 

“federal backstop” test, however, and therefore drafted the “federal backstop” provision to be 

implemented using the federal applicability requirements – including the NSR Reform elements. The 

use of the federal applicability requirements was inherent in the language used in the second draft, 

which incorporated by reference the federal “major modification” definition under 40 C.F.R. Sections 

51.165 and 51.166. This federal definition is implemented using the federal applicability provisions 

referred to in EPA Region IX Staff’s comment, and so defining the District’s “federal backstop” test based 

on the federal definition incorporates by reference the federal applicability methodologies used to 

implement the federal definition. That said, District Staff agree that it would be a good idea to state 

explicitly how this incorporation-by-reference principle works in the language of the “federal backstop” 

provision to guide readers in their interpretation of the provision. To do so, the final version of the 

Proposed Amendments adds additional language that explicitly cites the applicability provisions in 

 

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EPA reached this conclusion with respect to the NSR program of the Sacramento Metropolitan Air Quality 

Management District (SMAQMD). As EPA stated after reviewing SMAQMD’s NSR regulations for consistency with 

EPA’s NSR Reform provisions, “it is acceptable for SMAQMD to not incorporate the NSR Reform provisions into 

their SIP approved NSR programs . . . .” SMAQMD Technical Support Document, infra note 14, at p. 17. The same 

rationale underlying EPA’s conclusions regarding SMAQMD’s NSR programs also applies to the District’s NSR 

programs. See also Staff Report for the Proposed Amendments, pp. 103-105, for further discussion. 
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Sections 51.165(a)(2) and 51.166(a)(7) that EPA Region IX Staff referenced in this comment. As such, the 

language in the Proposed Amendments includes the appropriate citations for the federal applicability 

provisions, as requested by EPA Region IX Staff. This additional language also states explicitly that all 

provisions of the federal regulations that are applicable to the “major modification” definition –

including the federal definitions of terms used in the “major modification” provision and the monitoring, 

recordkeeping and reporting requirements for the NSR Reform applicability provisions – are to be 

followed in applying the “federal backstop” test. This language will make it clear to all readers how the 

incorporation-by-reference of the federal “major modification” test is to be applied. 

Comment I.2.c.: EPA Region IX Staff noted that the “modification” definition in Section 2-1-234 in the 

second draft of the Proposed Amendments referred to increases in “daily or annual” emissions. EPA 

Region IX Staff stated that the District should explain how daily emissions increases would constitute a 

“major modification” under the “federal backstop” provision, which is based on increases in annual 

emissions. 

Response: The language referencing “daily or annual” emissions increases relates to the District’s 

existing modification test, which is based on increases in PTE. This language reflects the fact that an 

increase in either daily PTE (i.e., the maximum amount the source can emit in a day) or annual PTE (i.e., 

the maximum amount the source can emit in a year) will constitute a “modification” under the District’s 

existing test. To avoid any potential for confusion with the “federal backstop” provision, in the final 

version of the Proposed Amendments the “daily or annual” language has been moved from the general 

introductory language in Section 2-1-234 that is applicable to both tests into the PTE-increase test in 

subsection 2-1-234.1. 

Comment I.3.: EPA Region IX Staff commented on the provision in proposed Section 2-1-603 for allowing 

alternative PM measurement methodologies when Methods 201/201A are not appropriate. EPA Region 

IX Staff asked that the use of such alternative measurement methodologies should be made subject to 

approval by EPA, not just by the District.

Response: District Staff have no objection to providing EPA an opportunity to review and approve of 

alternative measurement methodologies for PM emissions. The final version of the proposed 

amendments has added the requirement to obtain EPA approval as well as District approval. To ensure 

that this requirement can be implemented smoothly, District Staff ask that EPA Region IX Staff identify 

the appropriate contact person(s) who will handle review and approval of alternative measurement 

methodologies.

II. REGULATION 2, RULE 2

Comment II.1.a: EPA Region IX Staff made a comment regarding the provision in 40 C.F.R. Section 

51.165(a)(3)(ii)(J) describing how the amount of offsets required for a source under CAA Section 

173(a)(1)(A) must be determined. That provision states that the amount of offsets required must be 

based on the difference between source’s “allowable emissions” (i.e., its potential to emit) and its 

“actual emissions” baseline. EPA Region IX Staff suggested that the District’s NSR rule does not do that. 
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They stated that the District’s rule “allows a PTE to PTE test for determining the amount of offsets for a 

Fully Offset Source . . . ,” referring to the fact that once a source has provided offsets for the full amount 

of its potential to emit (PTE), then it needs to provide additional offsets for future modifications only to 

the extent that such modifications will result in a further increase in the source’s PTE. EPA Region IX 

Staff stated that such a rule would be allowable in situations where offsets have been provided within 

the past 5 years (i.e., “within the contemporaneous period as defined by your rules”), but not for 

periods beyond 5 years after the offsets have been provided. The comment suggested that 40 C.F.R. 

Section 51.165(a)(3)(ii)(J) establishes a 5-year time limit for relying on such offsets, and that if a source is 

modified after 5 years it must provide offsets all over again for the full amount of its maximum potential 

emissions (above its actual emissions baseline level). 

Response: The amount of offsets required under the District’s NSR rule is calculated based on the 

difference between the source’s “allowable emissions” (i.e., its potential to emit) and its “actual 

emissions” baseline, as required by CAA Section 173(a)(1)(A) and 40 C.F.R. Section 51.165(a)(3)(ii)(J). 

This requirement is in Sections 2-2-302 and 2-2-303, which require the entire amount of a facility’s 

“cumulative increase” to be offset. The facility’s “cumulative increase” is determined according to the 

provisions in Sections 2-2-606 through 2-2-608, and it is the difference between (i) the facility’s actual 

emissions baseline based on its past operations and (ii) its maximum potential future emissions. (The 

“cumulative increase” determination procedures are also described further in Section IV.B.3.g.iv. of the 

Staff Report, pp. 106-112, which describe in more detail how the calculations work.) Under those 

provisions, the first time a facility is modified under the offsets requirements and has to provide offsets

for its emissions increase, the amount of offsets required is the difference between its actual emissions

before the modification and its full maximum potential to emit after the modification. Thereafter, for 

any subsequent modifications, additional offsets are required for any further increases in the facility’s

potential to emit resulting from the modification. This calculation mechanism ensures that offsets will 

be provided for the facility’s full “cumulative increase” – that is, the difference between the facility’s 

actual emissions baseline and its maximum potential to emit. Offsetting the facility’s full “cumulative 

increase” in this manner satisfies the requirements of CAA Section 173(a)(1)(A) and 40 C.F.R. Section 

51.165(a)(3)(ii)(J). 

Under this “cumulative increase” methodology, once the facility has already provided offsets for its full 

potential to emit, it needs to provide further offsets for additional modifications only to the extent that 

such modifications will further increase its potential to emit – i.e., only to the extent that there will be 

additional “cumulative increase” resulting from the modification. The first part of EPA Region IX Staff’s 

comment appears to object to this situation, stating that “the revised draft rule allows a PTE to PTE test” 

in certain situations.4 But this is not a “PTE to PTE test” as EPA Region IX Staff seem to interpret it. To 

 

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Although this comment relates to the procedures used “to determine the amount of offsets required” for new 

and modified sources and how they comply with the offset obligation requirements under 40 C.F.R. 

51.165(a)(3)(ii)(J), the comment provided a regulatory citation to Section 2-2-606.2 in the Second Draft, which 

contained the calculation procedures for determining the amount of emissions reductions that can be credited 

when an existing source is shut down or otherwise curtails operations. That is a separate issue and is not the 

subject of 40 C.F.R. Section 51.165(a)(3)(ii)(J), although many of the same principles of ensuring “no net increase” 

in emissions overall and remaining consistent with “Reasonable Further Progress” toward attainment are 
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the contrary, as explained above and in the Staff Report, it is a “cumulative increase” test based on the 

difference between the facility’s actual emissions baseline and its maximum potential emissions – that 

is, an “actual-to-potential” test as required by the Clean Air Act. The fact that once offsets have been 

provided for the facility’s “cumulative increase”, additional offsets are required only for further 

increases in “cumulative increase” (i.e., further increases in PTE) simply recognizes that once an 

emissions increase is offset by emission reductions elsewhere, those same emissions do not need to be 

offset a second time by additional reductions. The requirement to offset the full “cumulative increase” 

satisfies CAA Section 173(a)(1)(A) and 40 C.F.R. Section 51.165(a)(3)(ii)(J), and once those offsets have 

been provided NSR is satisfied without having to offset the emissions again later on.

Requiring additional reductions to offset emissions that have already been offset would constitute 

“double-counting” of those emissions, and there is nothing in CAA Section 173(a)(1)(A) or in 40 C.F.R. 

Section 51.165(a)(3)(ii)(J) that requires such “double-counting”. Section 173(a)(1)(A) requires that 

offsets need to be provided such that “total allowable emissions” from the proposed source and all 

other sources in the region will be sufficiently less than emissions from existing sources so as to ensure 

that “Reasonable Further Progress” will be achieved. It does not require that once offsets have been 

provided for such emissions consistent with “Reasonable Further Progress”, additional offsets need to 

be provided again for the same emissions. Section 51.165(a)(3)(ii)(J) further fleshes out this “reasonable 

further progress” requirement by stating that the total tonnage of emissions “that must be offset in 

accordance with section 173 of the Act” is based on the difference between “allowable emissions” (PTE) 

and “actual emissions”. That is, Section 51.165(a)(3)(ii)(J) provides that when establishing the amount 

of offsets required for a source, it is the full amount of the source’s PTE (over its actual emissions 

baseline) that must be offset – and not any other measure of emissions such as projected actual 

emissions.

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 Section 51.165(a)(3)(ii)(J) does not require (either expressly or impliedly) that the same 

emissions to be offset a second time in order to ensure that the Clean Air Act’s “Reasonable Further 

 

implicated. The District’s rules for calculating the amount of emission reductions that can be credited from 

shutdowns of existing sources are consistent with all of these principles and satisfy all of the requirements of CAA 

Section 173 and 40 C.F.R. Section 51.165. (See generally discussion of offsets and emission reduction credits in 

Staff Report, Section IV.B.1.c.i.-ii. (pp. 60-67) and Section IV.B.3.g.iii. (pp. 105-106).) 

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The regulatory history of Section 51.165(a)(3)(ii)(J) provides further evidence of how this provision works. 

Subsection (a)(3)(ii)(J) was added to Section 51.165 as part of EPA’s “NSR Reform” regulations in 2002, in which 

EPA revised the way in which emissions increases are measured for purposes of determining whether NSR 

requirements are triggered. (See 67 Fed. Reg. 80,186, 80,196 (Dec. 31, 2002).) EPA wanted to make clear that the 

revised NSR Reform methodologies were to be used for NSR applicability purposes only, and that once NSR was 

triggered, the existing pre-NSR Reform calculation methodologies (e.g., measuring increases based on PTE instead 

of projected actual emissions) are still used for applying NSR requirements such as offsets. As EPA explained in the 

NSR Reform rulemaking, the NSR Reform changes are used for determining applicability, but once NSR is triggered, 

“any determination of the amount of emissions offset that must be obtained by a major modification subject to 

the nonattainment NSR requirements under § 51.165(a) should be based on calculations using the existing 

definitions of ‘actual emissions’ and ‘allowable emissions’.” (67 Fed. Reg. at 80,196; see also generally discussions 

in Sections II.A. and II.C.8.) Subsection (a)(3)(ii)(J) was added to clarify that the amount of offsets was to be based 

on the pre-existing actual-to-potential test, not on the actual-to-projected-actual methodology that was adopted 

for NSR applicability purposes in the NSR Reform rule. It was never intended to require “double-counting” of a 

facility’s emissions for offset purposes, and it should not be interpreted that way. 
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Progress” mandate is fully implemented. Thus, fundamentally, what these rules require is that the full 

amount of a source’s PTE must be offset, over its actual emissions baseline, such that Reasonable 

Further Progress will be ensured – and the District’s requirement that a facility offset its full “cumulative 

increase” does exactly that. What they do not require is “double counting” of emissions increase and 

the provision of additional offsets where a facility has already fully offset its full PTE. 

Indeed, the second part of EPA Region IX Staff’s comment recognizes that this interpretation is the 

correct one. EPA Region IX Staff actually endorse the District’s “cumulative increase” approach as 

consistent with CAA Section 173(a)(1)(A) and 40 C.F.R. Section 51.165(a)(3)(ii)(J), describing it as 

“appropriate and reasonable”. District Staff agree with this part of the comment, and take it as 

evidence that EPA Region IX staff understand that it does not make any practical or policy sense – and is 

not required under the CAA’s NSR requirements – to require additional offsets a second time for 

emissions increase that have already been offset consistent with Reasonable Further Progress. 

The one caveat is that EPA Region IX Staff would like the District to establish a 5-year limitation on the

facility’s ability to rely on offsets that were previously provided. That is, EPA Region IX Staff would not 

engage in “double-counting” of emissions increases in the “cumulative increase” determination for the 

first 5 years after offsets are provided; in that situation, they would require additional offsets for future 

modifications only where the modification results in a further increase in PTE. Beyond 5 years, however, 

EPA Region IX Staff would throw out this methodology and require additional offsets even where there 

is no further increase in PTE. That is, after 5 years (the “contemporaneous” period defined in the 

District’s rule), EPA Region IX Staff would have the District require offsets again for the same emissions

potential that the facility offset earlier. The amount of additional offsets that they would require would 

be the difference between the PTE and the facility’s actual emissions at the time of the modification, 

even if that PTE has already been offset.

District Staff disagree that starting to require double-counting of emissions increase for offset purposes 

after 5 years (or any other time limit) is appropriate or required under CAA Section 173 and 40 C.F.R. 

Section 51.165(a)(3)(ii)(J). Nowhere do either of those legal authorities mention anything about a 5-year 

cut-off, or any other time limit on how long offsets can be relied on before additional offsets need to be 

provided again for the same emissions. They establish a single methodology for determining the 

amount of offsets required, which does not require “double-counting” of emissions increases as 

explained above. They do not create a second methodology to be applied after 5 years have elapsed.

Furthermore, in addition to not being required legally, double-counting a facility’s emissions in this 

manner for offsets purposes would be highly problematic as a practical matter. An example helps 

illustrate this point. Take a “peaker” power plant that is used to address short-term “peaks” in 

electricity demand (e.g., on hot summer afternoons when air conditioning use is heavy). Such facilities 

are normally operated at less than their full annual maximum capacity. If such a peaker plant has

maximum annual potential emissions of 100 tons per year of a non-attainment pollutant, it would be 

required to provide 100 tons per year (or more) of offsets when it is first permitted. But as a peaker 

plant, its actual emissions may only be 10 tons per year when it is built and operated. If the facility 

undertakes a modification to install new equipment that will not increase its overall capacity or its
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maximum annual emissions of 100 tons per year, the Clean Air Act would not require any additional 

offsets to be provided. The facility’s maximum 100-ton annual emissions have already been offset by 

emission reductions obtained from other sources, and so no additional reductions would be needed to 

ensure “no net increase” region-wide and “Reasonable Further Progress” towards attainment. This is 

how the District’s current EPA-approved NSR rule would address this situation. It is also how EPA Region 

IX Staff would treat this situation under the interpretation expressed in their comment – for the first 5 

years. After 5 years, however, EPA Region IX would require the facility to provide an additional 90 tpy of 

offsets (the difference between its 10 tpy actual emissions rate at the time the modification is made and 

its 100 tpy maximum potential emissions), even though the facility has already provided offsets for the 

entire 100 tons that it could possibly emit in one year. And if the facility made subsequent modifications 

in the future after further intervals of over 5 years, it would be required to provide an additional 90 tpy 

each time it did so. The facility could end up being required to provide offsets in an amount many times 

the maximum amount of emissions it could legally emit. This would not be an appropriate or reasonable 

outcome, and would not make for sound regulatory policy.

For all of these reasons, District Staff disagree that the District’s rules requiring offsets for the full 

amount of a facility’s “cumulative increase” are inconsistent with the Clean Air Act’s offset and 

“reasonable further progress” requirements. The District’s current rules work this way, as do the NSR 

rules of other California air districts, and EPA has never had a problem in approving any of these 

programs in the past. District Staff disagree with EPA Region IX Staff’s comment that these rules must 

be changed to prevent facilities from continuing to rely on existing offsets that they have provided in the 

past after 5 years go by. There is nothing in CAA Section 173 or 40 C.F.R. Section 51.165(a)(3)(ii)(J) that 

requires “double-counting” of emissions increases for purposes of calculating offsets requirements, as 

EPA Region IX Staff seem to agree at least for an initial 5-year period; and there is nothing that purports 

to establish a different methodology requiring “double-counting” after 5 years have elapsed. Nothing in 

the plain language of these provisions requires such a rule, and to the extent that there is any ambiguity 

in that plain language, District Staff submit that EPA should not interpret them to require such a rule for 

all of the policy reasons outlined above. 

Comment II.1.b: EPA Region IX Staff commented on language in the Second Draft of Section 2-2-606 

regarding enforceable contractual provisions in a written agreement made for the benefit of the District. 

EPA Region IX Staff stated that the District should not include this language. 

Response: District Staff had originally included the referenced language based upon an earlier request 

by EPA Region IX Staff. District Staff have no objection to removing it now, and it has been deleted in 

the final version of the Proposed Amendments. 

Comment II.1.c: EPA Region IX Staff commented on the language in the District’s provisions for the 

“surplus adjustment” (also referred to by District Staff as the “RACT adjustment”) made in calculations 

for emission reductions to ensure that reductions are credited only to the extent that they are in excess 

of what is legally required. EPA Region IX Staff stated that the language about adjusting for “District 

rules and regulations” should be expanded to include “applicable federal and District rules and 

regulations”. 
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Response: The final version of the Proposed Amendments includes this additional language in the three 

places where the surplus adjustment is addressed, in Sections 2-2-603.6, 2-2-605.2, and 2-2-606.2.2. 

Any emissions reductions need to be in excess of what is required by federal regulations in order to be 

credited. 

Comment II.1.d.: EPA Region IX Staff also commented on the language in the District’s provision for 

making the surplus adjustment for purposes of determining whether a modification will be a “PSD 

Project” in proposed Section 2-2-603.6. EPA Region IX Staff inquired into the basis for this provision. 

They noted that 40 C.F.R. Section 51.166(b)(47)(ii)(c) states that the surplus adjustment does not need 

to take into account any MACT standards (unless the state has taken credit for them in an attainment 

demonstration or attainment plan). They stated that the District’s surplus adjustment should be 

consistent with this provision.

Response: The reason why the District’s NSR rule includes this provision for PSD Projects is that for all 

other situations the surplus adjustment is actually more stringent than what is required under the 

federal NSR regulations. That is, for purposes other than determining whether a modification is a “PSD 

project”, any emission reductions may need to be adjusted downwards to reflect additional emissions 

limitations beyond the minimum requirements of the federal program. For PSD purposes, however, the 

District does not make the surplus adjustment for any additional limitations beyond what is required 

under the federal program. The language referred to in EPA Region IX Staff’s comment in the second 

draft of the Proposed Amendments was somewhat confusing on this point, and EPA Region IX Staff are 

not the only ones who have been unclear on its purpose. To address any potential for confusion, the 

final version of the Proposed Amendments uses revised language that makes clear how the surplus

adjustment works for PSD Projects. For determining whether a modification is a “PSD Project,” the 

surplus adjustment must be made so credit is not granted for reductions that were required anyway 

under regulatory requirements, but it does not include any further downward adjustment beyond what 

is required under the federal program as set forth in 40 C.F.R. Section 51.166(b)(47)(i)(b) and 

(b)(47)(ii)(b) & (c). This revision will ensure that the provision is clear and that it is fully consistent with 

EPA’s NSR program requirements.

Comment II.4.a.:

6

 EPA Region IX Staff commented on the language in Section 2-2-404 regarding the 

purpose of holding a public hearing on proposed NSR permits. EPA Region IX Staff commented that the 

language should recognize the fact that the District accepts written comment at a public hearing, not 

just verbal comment. 

Response: The District accepts both written comment and verbal comment at public hearings. The 

language used in the Second Draft of the proposed amendments addressed this point in the provision 

specifying that if a public hearing is scheduled, the comment period for accepting written comments 

must be extended at least through the public hearing. District Staff have also added the language 

 

6

The numbering in this comment letter skipped numbers II.2 and II.3. For clarity, this document uses the same 

numbering as the comment letter. 
11

suggested by EPA recognizing that the purpose of the public hearing is to accept comments of all types,

both verbal and written. 

Comment II.4.b.: EPA Region IX Staff noted that under 40 C.F.R. Section 51.166(q)(2), permits 

implementing PSD requirements must be processed and a final determination made within one year of 

receipt of a complete application. EPA Region IX Staff commented that the time for final action in 

Section 2-2-404 should address this maximum time limitation. EPA Region IX Staff stated that the 

provisions for the timing of final decision on a permit implementing PSD requirements should specify 

that the final decision should be made within one year, unless a longer time period is necessary and 

consented to by the applicant.

Response: The final version of the proposed amendments specifies that for a PSD Project, the final 

decision must be made within 1 year of receipt of a complete application (unless a longer time period is 

necessary and is contented to by the applicant). 

Comment II.4.c.: EPA Region IX Staff commented that under 40 C.F.R. Section 51.166(q)(2)(iv), notice of 

proposed permits implementing PSD requirements must be provided to Indian Governing Bodies whose 

lands may be affected. The comment noted that there are two such tribes within the jurisdiction of the 

Air District, Lytton Rancheria and Federated Indians of Graton Rancheria. 

Response: The final version of the Proposed Amendments adds a provision that the notice of proposed 

issuance of a permit under Section 2-2-404 must also be sent to any Indian Governing Body whose lands 

may be affected. It also adds a definition of “Indian Governing Body” that mirrors the federal definition 

of that term in 40 C.F.R. Section 51.166. 

Comment II.5.a.: EPA Region IX Staff commented that the District should explain the basis for the 

emission thresholds used in Section 2-2-404 below which NSR permits are exempt from the rule’s public 

notice and comment requirements. EPA Region IX Staff noted that permits involving de minimis

emissions increases – i.e., increases that are not “significant” – can be exempted from NSR requirement 

under the principles set forth in Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1979). EPA Region IX 

Staff stated that the District should explain how the thresholds used for the District’s public notice and 

comment requirements are consistent with these principles. EPA Region IX Staff cited the NSR noticeand-comment requirements in 40 C.F.R. Section 51.161(a)-(d), which apply to all NSR permits, although 

they directed their comments at permits “minor new sources and minor modifications”, which District 

Staff understand to be sources and modifications with emissions below the “major source” and “major 

modification” applicability thresholds in 40 C.F.R. Sections 51.165 and 51.166. 

Response: Proposed Section 2-2-404 requires public notice and comment for all permits subject to what 

EPA refers to as “major NSR” requirements (i.e., 40 C.F.R. Sections 51.165 and 51.166), and also for all 

other non-“major” permits that will involve a “significant” increase in emissions as defined in Section 2-

2-227.2. Proposed Section 2-2-404 therefore requires public notice and comment for all NSR permits,

except those that will involve only de minimis emissions increases as EPA has defined them under the 

Alabama Power v. Costle doctrine. The Proposed Amendments will therefore satisfy 40 C.F.R. Section 

51.161. 
12

District Staff explained the basis for establishing the notice-and-comment threshold in Section 2-2-404 

using EPA’s de minimis “significance” thresholds in Section IV.B.3.c. of the Staff Report (at pp. 87-88). As 

explained there, the NSR “significance” thresholds are the levels that EPA has established as being de 

minimis for NSR purposes under in Alabama Power v. Costle. EPA has determined that emissions 

increases below these thresholds are sufficiently inconsequential in terms of their impact on compliance 

with the NAAQS that it would not be worth subjecting them to NSR permitting requirements given the 

administrative burdens that would be involved. EPA set forth the basis for these de minimis significance 

levels in detail in the rulemaking it conducted in response to the remand from the D.C. Circuit in the

Alabama Power v. Costle, explaining how these thresholds satisfy the de minimis principles articulated in 

that case.

7

 For the same reasons relied on by EPA, the Proposed Amendments use these levels as the de 

minimis thresholds below which District NSR permits will be exempt from the public notice and 

comment requirements. 

Moreover, in addition relying on the de minimis analysis that EPA promulgated to apply generally in all 

areas of the country, District Staff also conducted a further analysis specific to the San Francisco Bay 

Area to determine the extent of the emissions increases that would be exempted using EPA’s

“significance” thresholds. As explained in the Staff Report, that analysis showed that the total combined 

emissions increases from all permits issued by the District each year with net emissions increases below 

these thresholds across the entire Bay Area – i.e., the cumulative emissions increase that would be 

exempted under the thresholds – would be only 0.02% to 0.34% of the region’s total emissions 

inventory (depending on the pollutant involved and the year reviewed). This Bay Area-specific analysis 

further demonstrates that the additional burdens of providing public notice and an opportunity to 

comment for such permits would not be warranted, given the de minimis extent of the emissions 

increases involved. (Please see the Staff Report discussion for further details regarding these analyses.)

This Bay Area-specific analysis further supports the conclusion that the District’s exemption of such 

permits from the notice-and-comment requirements is consistent with the principles expressed in 

Alabama Power v. Costle.

Finally, it is also worth noting that EPA Region IX Staff have apparently accepted the use of these 

thresholds as satisfying the requirements of 40 C.F.R. Section 51.161 for NSR permits involving “major 

sources” and “major modifications”.8 EPA has accepted the use of these thresholds under Section 

 

7

See 45 Fed. Reg. 52,676 (Aug. 7, 1980), and in particular Section XI (“De Minimis Exemptions”). This rulemaking 

contemplated the levels at which emissions increases are de minimis in the context of exempting them from the air 

quality impacts analysis requirements of the PSD program. But the same rationales that EPA relied on there – that 

emissions increases below the NSR “significance” levels do not have any significant potential to cause or contribute 

to a NAAQS exceedance that the administrative burden of subjecting them to this requirement is not warranted in 

light of the NAAQS protection purposes of the NSR program – apply in the same way to other NSR requirements 

such as public notice and comment. If the emissions increase associated with a permit will have only a de minimis

impact on compliance with the NAAQS, then the benefit from soliciting public input on the effects of such 

emissions is minimal and the additional burdens of the notice-and-comment process are not warranted. 

8

40 C.F.R. Section 51.161 establishes notice-and-comment requirements that apply generally to all NSR permits. 

These are the applicable notice-and-comment requirements for what EPA calls “minor new sources and minor 

modifications”, and they are also the applicable notice-and-comment requirements for “major sources” and 

“major modifications” subject to the Non-Attainment NSR requirements in 40 C.F.R. Section 51.165. Since the 
13

51.161 in the past for such permits in approving NSR permitting programs, and EPA Region IX Staff did 

not voice any objection to continuing to do so under the Proposed Amendments – their comment was 

directed specifically at non-“major” sources and modifications. If the use of these de minimis thresholds 

is acceptable for satisfying Section 51.161 for “major sources” and “major modifications”, then by the 

same token it should be acceptable to satisfy Section 51.161 for non-“major” sources and modifications 

as well. 

Comment II.5.b.: EPA Region IX Staff commented that under 40 C.F.R. Section 51.160(f), the District’s 

NSR rules must discuss the air quality data and modeling that will be used to implement the District’s 

NSR permitting requirements. EPA Region IX Staff stated that “[t]here are several approaches the 

District can take to make this demonstration,” including (i) dispersion modeling for new and modified 

sources that will result in a “significant net increase in emissions” to demonstrate that the emissions 

increases involved will not cause or contribute to a NAAQS exceedance; and (ii) demonstrating that 

emissions increases from new and modified sources are accounted for in emissions growth projections 

demonstrating attainment of the NAAQS. 

Response: Although this comment cites 40 C.F.R. Section 51.160(f), which specifies the air quality 

models that must be used in implementing NSR, District Staff understand that EPA Region IX Staff’s 

concern is how the District’s NSR program will comply with the provisions of 40 C.F.R. Sections

51.160(a)(2) and 51.160(b)(2), which state that the SIP must set forth legally enforceable procedures 

that enable the District (i) to determine whether construction or modification of a source will interfere 

with attainment or maintenance of the NAAQS (Section 51.160(a)(2)) and (ii) to prevent construction or 

modification of the source if it will interfere with attainment or maintenance (Section 51.160(b)(2). 

District Staff understand this to be EPA Region IX Staff’s concern based on discussions with Region IX 

Staff and on the language in the comment regarding “NAAQS Compliance”, which is the subject of 

Sections 51.160(a)(2) and (b)(2), not Section 51.160(f).

District Staff explained in detail how the District’s NSR rule satisfies the requirements of 40 C.F.R. 

Sections 51.160(a)(2) and 51.160(b)(2) in Section IV.B.3.a. of the Staff Report (pp. 83-86). As explained 

there, the District’s NSR Rule contains both features that EPA Region IX Staff identified as “alternatives” 

for implementing the Section 51.160(a)(2)-(b)(2) requirements.

The primary means through which the District has always implemented the Section 51.160(a)(2)-(b)(2) 

requirements is by ensuring that all new and modified sources comply with the District’s comprehensive 

regulatory programs, which fully satisfy all Clean Air Act requirements to ensure that the Bay Area’s air 

will attain and maintain the NAAQS. The District (and its sister agencies) have made all necessary 

demonstrations required under the Clean Air Act that the Bay Area will attain and maintain the NAAQS 

through their regulatory approaches to control air pollution.9 And these attainment and maintenance 

 

same regulatory requirement applies for both categories of NSR permits, the same de minimis thresholds should 

be appropriate for both categories of NSR permits. 

9

As noted in the Staff Report discussion, for PM2.5 the District is in the process of satisfying its attainment and 

maintenance requirements by obtaining EPA review and approval of its “Clean Data Finding”, PM2.5 emissions 

inventory, and related documentation. District Staff anticipate that EPA will approve the District’s submission on 
14

obligations have been satisfied even with the fact that there will be a certain amount of emissions 

growth from new and modified sources under the District’s NSR program (both from permitted NSR 

sources and from exempt stationary sources). Compliance with the SIP – and all other elements of the 

District’s comprehensive regulatory programs – is ensured through Section 2-1-304, which prohibits the 

District from issuing a permit for any source that does not comply. And compliance with these 

requirements will ensure that any emissions increases from new and modified sources will be consistent 

with achieving attainment and maintenance. In short, it is the District’s SIP-approved regulatory 

program that ensures that all CAA attainment and maintenance requirements will be satisfied, and it is 

compliance with this SIP-approved regulatory program that ensures that new and modified sources will 

not “interfere with the attainment or maintenance of a national standard.”10 

In addition, the Proposed Amendments also include modeling requirements that will require all new and 

modified sources that will result in a significant net increase of any pollutant for which a NAAQS has 

been established to demonstrate through modeling that such emissions will not cause or contribute to a 

NAAQS exceedance. This is essentially the same type of modeling demonstration required for PSD 

permitting under 40 C.F.R. Section 51.166, but it will apply to all sources (not just to “major sources” and 

“major modifications” as defined under that Section); and it will apply to all pollutants for which a 

NAAQS has been established, not just attainment/unclassified pollutants. This requirement will be an 

independent source-specific demonstration that new and modified sources will not interfere with 

attainment or maintenance, over and above the guarantees provided through compliance with the 

District’s comprehensive regulatory program. 

This modeling requirement, which is in proposed Section 2-2-308, will apply to all NSR permits with net 

emissions increases greater than the de minimis thresholds established by EPA under the Alabama 

Power v. Costle doctrine. As discussed in connection with Comment No. II.5.a. above, and also in detail 

in the Staff Report, these thresholds are the levels at which EPA has determined that the potential for 

causing or contributing to any NAAQS exceedance is not significant enough to warrant conducting a 

modeling analysis, given the administrative burdens involved in doing so. For the same reasons that EPA 

has concluded that emissions increases below these significance thresholds are de minimis under the 

principles expressed in Alabama Power and can appropriately be excluded from NSR modeling 

requirements, District Staff have similarly concluded that they can be excluded from the modeling 

requirement in Proposed Section 2-2-308. Furthermore, in addition this de minimis justification that 

EPA has adopted generally for all areas throughout the country, District Staff also conducted an analysis 

specific to the Bay Area to determine the extent of emissions from new and modified NSR sources that 

would be exempted from modeling under these thresholds. That analysis found that the total emissions 

increases from all permits involving net emissions increases below these thresholds that the District 

 

this issue, which will complete the District’s satisfaction of all applicable requirements regarding attainment and 

maintenance.

10 As EPA has observed, “[b]y definition, any fully approved SIP has independently assured RFP and attainment.” 

(Requirements for Implementation Plans; Air Quality New Source Review, Final Rule, 54 Fed. Reg. 27,286 (June 28, 

1989).) New and modified sources that comply with the requirements of a fully approved SIP – as will be ensured 

by District regulations – will therefore by definition not interfere with RFP and attainment. 
15

issues each year throughout the entire Bay Area would amount to only 0.02% to 0.34% of the regions 

total emissions inventory. This analysis further supports the conclusion that such emissions are truly de 

minimis under the principles expressed in Alabama Power and can appropriately be exempted from the 

modeling requirement and the administrative burdens that would be involved.

Comment II.6.: EPA Region IX Staff noted that the District’s provisions for making permit application 

information available for public review and inspection reference the fact that the District is subject to 

the California Public Records Act. The provision involved (section 2-2-405 in the Proposed Amendments, 

which is substantively the same as existing Section 2-2-406 in the District’s current EPA-approved 

regulations in the California State Implementation Plan) acknowledges that in making information 

available, the District is bound as a state agency to consider trade secret claims in accordance with the 

requirements of the California Government Code. EPA Region IX Staff commented that the District 

should either (i) provide “an analysis” comparing the provisions of the California Public Records Act and 

Section 114(c) of the Clean Air Act (which sets forth requirements for EPA’s handling of public records 

and trade secret information); or (ii) add language that the APCO should follow CAA Section 114(c) in 

evaluating claims of trade secret under Regulation 2, Rule 2. 

Response: The Air District is a governmental agency of the State of California, and as a matter of law it 

is therefore subject to the requirements of the California Public Records Act as set forth in the California 

Government Code. The District cannot adopt regulations directing or authorizing the APCO (or District 

Staff acting on the APCO’s behalf) to act in any manner that is inconsistent with State Law. District Staff 

disagree that it would be appropriate to include a reference to considering the provisions applicable to 

EPA’s handing of public records under Section 114(c) of the Clean Air Act, because it could cause 

confusion among District Staff regarding whether they should follow California law or some other 

potentially inconsistent requirements. District Staff have always followed the requirements of California 

law in implementing the District’s permit programs – as they are legally bound to do – and it would not 

be appropriate to adopt language suggesting that they should do otherwise. 

That said, District Staff do not envision any circumstance in which the provisions applicable to the APCO 

for addressing trade secret information under the California Public Records Act would differ in any way 

from the procedures that apply to the EPA Administrator under Section 114(c). Section 114(c) requires 

the EPA Administrator to consider trade secret claims in the same manner that the California Public 

Records Act requires the APCO to consider trade secret claims, and there is no reason to believe that 

any trade secrets would be handled any differently under the California Public Records Act than they 

would under the CAA provisions in Section 114(c). Moreover, there is no indication that any 

requirements of the California Public Records Act could be inconsistent in any way with implementing 

the Clean Air Act’s requirements for NSR programs. California has been successfully implementing NSR 

for many years under the Clean Air Act, and the California Public Records Act has never been an 

impediment to doing so. EPA has approved California air district NSR programs throughout the state for 

decades, and has never raised any concern that the California Public Records Act – which applies to all 

air districts in the state, not just the Bay Area District – could somehow create an inconsistency that 

would undermine the air districts’ ability to properly implement NSR. If EPA Region IX Staff now feel 

that they have concerns about potential inconsistencies between the Public Records Act and any federal 
16

NSR requirements, District Staff would be happy to participate in a discussion of such concerns. The 

issue of potential conflicts between the California Public Records Act and the federal Clean Air Act would 

obviously be an issue of statewide importance, however. District Staff therefore suggest that any such 

discussion should be held at a statewide level, under the auspices of a state-wide entity such as CAPCOA 

or ARB. If EPA is going to take the position that the Public Records Act prevents California from 

implementing NSR programs under the Clean Air Act, that is an issue that will affect all of California’s air 

districts – and one that will have to be addressed by the California Legislature, which is the only body 

with the power to amend that statute. District Staff suggest that EPA Region IX Staff should carefully 

consider the ramifications of taking such a position, and that such consideration would be aided by input 

from all of the agencies that would potentially be affected.

Comment II.7.: EPA Region IX Staff pointed out that the provisions in the second draft of the Proposed 

Amendments for addressing potential visibility impacts in Class I Areas for non-attainment pollutants in 

accordance with 40 C.F.R. Section 51.307(b)(2) applied to major modifications to existing major facilities 

only, but not to new major facilities. 

Response: District Staff have corrected this oversight in the final version of the Proposed Amendments. 

Sections 2-2-307 (the Class I Areas impact analysis requirement), 2-2-401.4 (application requirements 

for projects subject to the Class I Area impact analysis requirement), and 2-2-402 (notice requirements 

for permit applications subject to the Class I Area impact analysis requirements) now reference both 

new major facilities for non-attainment pollutants as well as major modifications to existing major 

facilities for such pollutants. 

Comment II.8.: EPA Region IX Staff commented on the provision in Section 2-2-407.2 in the Proposed 

Amendments that requires the District, before issuing a permit to operate for a source, to ensure that all 

emission reductions being relied on to satisfy offsets requirements for the source are actually being 

implemented. EPA Region IX Staff pointed out that for modified sources, such emission reductions must 

be in effect by the time the modified source begins operation, except for replacement sources for which 

the reductions must take effect by the end of a “shakedown” period not to exceed 180 days. EPA 

commented that the District should revise the provisions for modified sources other than replacement 

sources in subsection 407.2.2. in the Second Draft of the proposed amendments to address this 

requirement. 

Response: District Staff have corrected this oversight in the final version of the Proposed Amendments. 

Subsection 407.2 now provides that for a modified source the reductions must be in effect by the time 

the modified source commences operation, with the exception of a “replacement unit” as defined in 40 

C.F.R. Section 51.165(a)(1)(xxi), in which case the reduction must be in effect within 90 days after the 

source commences operation. 

III. DEFINITIONS

Comment III.1.: EPA Region IX Staff noted that EPA’s SIP approval regulations in 40 C.F.R. Sections 

51.165(a)(1) and 51.166(b) require either: (i) that the District’s NSR rule use EPA’s definitions as set forth 
17

in Sections 51.165(a)(1) and 51.166(b); or (ii) if the District’s rule uses different definitions, that the 

applicable definitions under the District’s rule are at least as stringent as EPA’s definitions in all respects. 

In this regard, EPA Region IX Staff made two general comments regarding the District’s definitions used 

for implementing the provisions of its NSR rule in the Proposed Amendments. 

EPA Region IX Staff’s first general comment concerned provisions where the District incorporates federal 

requirements by reference (e.g., federal PSD requirements). EPA Region IX Staff stated that in such 

situation, the District’s rule must specifically define every term used in the federal requirement that is 

incorporated by reference. EPA Region IX Staff stated that the District cannot rely on the fact that, as a 

matter of law, the federal requirement being incorporated is interpreted according to the federal 

definitions that apply to it. EPA Region IX Staff stated that if the District’s rule incorporates a federal 

requirement by reference, then it must also provide a specific definition for every term used in that 

federal requirement in the District’s own rule (either directly or through further incorporation-byreference of a federal definition). 

EPA Region IX Staff’s second general comment was that the District’s NSR rule cannot rely on the 

commonly understood meaning of a term as defined in the dictionary (what the comment letter 

referred to as “the general dictionary definition”). EPA Region IX Staff stated that the District’s NSR rule 

must include a specific regulatory definition for each term listed in 40 C.F.R. Sections 51.165(a)(1) and 

51.166(b). 

Based on these comments, EPA Region IX Staff stated generally that the District must provide a specific 

regulatory definition for each term listed in 40 C.F.R. Subpart I, unless the term is not used in the 

District’s NSR rule. EPA Region IX Staff stated that such definitions must be provided either by including 

an explicit regulatory definition in the District’s NSR rule, or by incorporating the federal C.F.R. definition 

by reference. EPA stated that such definitions must be provided for each of the specific terms identified

in the subsequent Comments Nos. III.2 through III.14.

Response: District Staff have addressed each of the specific terms identified in Comments Nos. III.2 

through III.14. The reasons why the District’s NSR rule under the final version of the Proposed 

Amendments will satisfy all of EPA’s requirements in 40 C.F.R. Sections 51.165 and 51.166 are explained 

below for each specific term. The Proposed Amendments will satisfy these requirements for the specific 

reasons explained there, notwithstanding anything in this general comment. 

As a general matter, however, District Staff note that EPA Region IX Staff’s interpretation of what is 

required of the District’s regulatory definitions under the Clean Air Act and 40 C.F.R. Part 51, Subpart I is 

incorrect on these two preliminary observations. 

First, with respect to incorporation-by-reference, EPA Region IX Staff’s comment reflects a 

misunderstanding of how incorporation by reference works. Where a federal requirement is 

incorporated by reference, it is interpreted and implemented according to all associated federal 

regulatory provisions that apply to it, including definitions. This is inherent as a matter of law in the 

concept of incorporation by reference. If an agency references a requirement from some other body of 

regulation and specifies that it will implement that requirement as if it were the agency’s own, then it 
18

must implement that requirement according to all applicable provisions from the other body of 

regulation from which the requirement is drawn. This includes all of the definitions, applicability terms, 

and other related provisions set forth in the referenced regulations that direct how the incorporated 

requirement is to be implemented. With respect to the District’s incorporation of federal definitions in 

particular, if the District references a federal definition set forth in the Code of Federal Regulations and 

specifies that the District will use that definition as its own, then that federal definition applies under 

the District’s regulations. If that federal definition, in turn, specifies that that it is to be interpreted using

terms that are themselves further defined in the Code of Federal Regulations, then those further subdefinitions similarly apply under the District’s regulations through the incorporation-by-reference. This 

is how incorporation-by-reference works legally, and it is how courts routinely interpret definitions that 

are incorporated by reference from another body of regulation.11 Indeed, this is precisely the function 

of using incorporation-by-reference as a tool in crafting regulatory language: It allows an agency to 

import provisions from another, related body of regulation without having to specify each and every 

detail from that other body of regulation in the agency’s own regulations.

EPA has itself recognized how this principle works in approving other California air districts’ NSR 

regulations that have used an incorporation-by-reference approach. For example, EPA has approved of 

the CAPCOA model of incorporation-by-reference of the federal PSD requirements that simply refers to 

the relevant provisions in 40 C.F.R. Section 52.21. The definitions in Section 52.21 that these rules 

incorporate by reference rely on a number of sub-definitions outside of Section 52.21, and EPA has 

never required that these associated sub-definitions have to be specifically incorporated by reference 

themselves. For example, Section 52.21(b)(49), the definition of “subject to regulation”, relies for its 

interpretation on the federal definition of “greenhouse gas” in 40 C.F.R. § 86.1818-12(a).12 EPA did not 

require these other air districts to adopt their own specific definitions of “greenhouse gas”, because it 

recognized that the incorporation-by-reference of “subject to regulation” in Section 52.21(b)(49) brings 

 

11 For example, the federal Sentencing Guidelines have incorporated by reference the definition “aggravated 

felony” in the Immigration and Nationality Act (18 U.S.C. § 1101). The definition of “aggravated felony” in the 

Immigration and Nationality Act uses the term “crime of violence”, which is in turn defined by further 

incorporation-by-reference to the federal penal code in 18 U.S.C. § 16. The Ninth Circuit has made clear that in 

such a situation, the incorporation in the Sentencing Guidelines by reference to the Immigration and Nationality 

Act definition also incorporates the sub-definition of “crime of violence” as further defined by reference to 18 

U.S.C. § 16. See, e.g., United States v. Gomez-Leon, 545 F.3d 777, 789 and fn. 9 (9th Cir. 2008). The same principle 

applies when the District incorporates by reference a federal definition, which is defined in turn using further subdefinitions. 

12 40 C.F.R. Section 52.21 also contains additional examples of federal requirements outside of Section 52.21 that 

are incorporated simply by reference to that Section, without needing to be specifically defined in an air district’s 

NSR rule. For example, Section 52.21(b)(49)’s definition of “subject to regulation” relies for its interpretation on 

EPA’s conversion values for global warming potentials in 40 C.F.R. Part 98, subpart A, Table A-1. Similarly, the 

definition of “baseline actual emissions” in Section 52.21(b)(48)(ii)(c) includes a provision establishing how the 

“surplus adjustment” must be applied that relies on provisions of 40 C.F.R. Part 63. When an air district 

incorporates the definitions in Section 52.21 by reference, all of these other federal provisions that apply for 

implementing these federal definitions are similarly incorporated by reference – even if they are not explicitly 

spelled out in the district’s rule. EPA’s approval of other air districts’ use of this approach illustrates the principle 

of how incorporation-by-reference works. 
19

the sub-definition of “greenhouse gas” along with it – and that “subject to regulation” will be defined 

using the sub-definition in 40 C.F.R. § 86.1818-12(a) without the need for the district to adopt (or 

incorporate by reference) its own specific definition of “greenhouse gas”. EPA’s own treatment of this 

issue with respect to other California air districts belies the assertion in this comment that the District 

needs to provide further sub-definitions for terms that are used in federal definitions that it is 

incorporating by reference.

Second, the comment is also incorrect that the District cannot rely on the generally accepted dictionary 

definition of a term in implementing its regulations where no specific regulatory definition is provided

for that term. All regulations – including those of EPA itself – necessarily rely on many terms that do not 

have explicit definitions set forth in specific regulatory provisions. As a matter of law, in these cases 

where there is no specific statutory or regulatory definition provided for a term, the term is defined 

according to its generally accepted meaning as described in the dictionary.13 As long as the generally 

accepted dictionary definition is sufficiently clear and sufficiently stringent, it is completely appropriate 

to rely on such a definition and there is no need to define it further in an explicit regulatory provision. 

EPA has recognized this situation in many similar contexts. When the agency adopted its “credible 

evidence” rule, for example, it found that the generally accepted dictionary definition of the term 

“credible evidence” was sufficient, without a specific regulatory definition. The agency disagreed with 

commenters who argued that the term needed to be defined in the rule, explaining that the rule is not 

“deficient for not providing an express regulatory definition of the term ‘credible evidence’—a term 

which Congress itself inserted, without definition, into the Act.” (See 62 Fed. Reg. 8314, 8322 (Feb. 24, 

1997)). Similarly, EPA recently approved the Non-Attainment NSR rule (Rule 214) of the Sacramento 

Metropolitan Air Quality Management District (SMAQMD), which relies on what EPA called the 

“common usage definition” of the term “construction”, instead of specifying an explicit regulatory 

definition. EPA noted that 40 C.F.R. Section 51.165(a)(1) lists a definition for “construction” and that 

SMAQMD’s rule does not contain one, but it concluded that “EPA believes the common usage definition 

of this term is adequate for the purposes of determining the requirements of Rule 214.”14 EPA’s recent 

approval of SMAQMD’s use of “common usage definitions” for terms defined in 40 C.F.R. Section 

 

13 See, e.g., Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 31 (1979) (“[U]nless otherwise defined, words will be 

interpreted as taking their ordinary, contemporary, common meaning.”); Secretary of Labor v. Doyle, 675 F.3d 187, 

204 (3d Cir. 2012) (“[I]n the absence of specific statutory or regulatory guidance, [a term] should be given its 

ordinary meaning . . . .” (citation omitted); In re Luna, 406 F.3d 1199 (10th Cir. 2005) (considering dictionary 

definition of undefined term); Hull v. United States, 146 F.3d 235, 238 (4th Cir. 1998) (interpreting a term “as that 

term is readily understood” under its dictionary definition “in the absence of a statutory or regulatory definition”); 

Martin v. Commercial Sec. Co., 539 F.2d 521, 524 (5th Cir. 1976) (a word “should be accorded its ordinary meaning 

absent a specific technical meaning or legislative definition . . . .”) (citation omitted).

14 See Technical Support Document for EPA’s Notice of Proposed Rulemaking for the California State 

Implementation Plan for the Sacramento Metropolitan Air Quality Management District, Rule 214 - Federal New 

Source Review, Rule 203 - Prevention of Significant Deterioration (May 5, 2011), at p. 6. EPA partially approved 

Rule 214 and partially disapproved it; the treatment of the term “construction” as referenced above was not part 

of the partial disapproval. See Revisions to the California State Implementation Plan, Sacramento Metropolitan Air 

Quality Management District, Final Rule, 76 Fed. Reg. 43,183 (July 20, 2011). 
20

51.165(a)(1) belies Region IX staff’s suggestion that doing so is somehow inappropriate under EPA’s NSR 

approval regulations.

Notwithstanding these points, the District has addressed each of EPA Region IX Staff’s comments on 

specific terms, as outlined below.

Comment III.2.: EPA Region IX Staff commented that the District’s NSR rule must include a specific 

definition of the term “commence” that is equivalent to the definitions set forth in 40 C.F.R. Section 

51.165(a)(1)(xvi) and 40 C.F.R. Section 51.166(b)(9) (and in Section 169(2)(A) of the Clean Air Act). EPA 

Region IX Staff noted that these provisions state that, as applied to construction of a major source or 

major modification, “commence” means either commencing actual construction or obtaining all federal 

air permits and entering into contracts for the construction. EPA Region IX Staff stated that Section 165 

of the Clean Air Act requires subject facilities to obtain a PSD permit before engaging in either of these 

activities (i.e., before beginning actual construct and before getting permits and entering into contracts 

for construction). EPA Region IX further stated that Section 173(a) of the Clean Air Act requires subject 

facilities to provide sufficient offsets before engaging in either of these activities (i.e., before beginning 

actual construct and before getting permits and entering into contracts for construction). EPA Region IX 

Staff stated that the District’s NSR rule must include a specific definition of “commence” (i) to establish 

when a facility can commence construction and (ii) to ensure that offsets are provided before a facility 

commences construction (i.e., before getting permits and entering into contracts for construction and 

before beginning actual construction). 

Response: The District’s NSR rule under the Proposed Amendments does not use the term 

“commence”, either in relation to construction of new major facilities and major modifications to major 

facilities or in any other context. As EPA Region IX Staff noted in Comment III.1., 40 C.F.R. Sections 

51.165(a)(1) and 51.166(b) do not require a term to be defined if “the term is not used in the rule”. The

issue is thus moot with respect to this term. How one defines this term will not make any difference to 

how the District implements its NSR program, as the NSR rules do not use the term at all. Providing a 

definition for this term in the District’s NSR rule would simply take up space without serving any 

purpose.

Furthermore, even though the issue is moot, it is worth noting that this comment is apparently based on 

a misunderstanding of how the Clean Air Act works with regard to when a facility may commence 

construction and operation. The comment appears to be based on a belief that subject facilities must 

obtain their PSD permit under CAA Section 165, and must provide offsets under Section 173(a), before 

they can even enter into contracts to build a new or modified source. This is not the case.

The “commence” definition serves a specific and limited purpose under the NSR program. It is explicitly 

defined in the Statute to refer only to “commence” in the context of construction (not operation) for 

purposes of PSD requirements under Part C of Title I. (See CAA § 169(2)(A).) It serves to create a 

“grandfathering” exemption from PSD permitting requirements for projects that had were permitted 

and under contract as of August 7, 1977 (the effective date of the statutory PSD permit requirement in 

Section 165, which was added in the CAA Amendments of 1977), but had not actually begun 
21

construction by then. This grandfathering provision is specified in the first clause in the PSD 

requirement in Section 165(a), which establishes that the PSD requirements apply to major facilities “on 

which construction is commenced after August 7, 1977.” For facilities that “commenced” construction 

before that date – i.e., facilities that either actually began construction or had all of their federal permits 

and had entered into contracts for the construction work – the PSD requirement in Section 165 did not 

apply. For any facilities that did not “commence” construction before that date, the PSD requirement 

applies and a PSD permit must be obtained before the facility “may be constructed”. 

EPA Region IX Staff appear to have misinterpreted these provisions to mean that PSD permits must be 

obtained under Section 165 and offsets must be provided per Section 173(a)(1) before a facility can 

“commence” construction under this definition – that is, before it can even enter into binding contracts 

for the construction work. This is not correct.

With respect to offsets, the Clean Air Act is clear that offsets must be obtained “by the time the source 

is to commence operation.” (CAA § 173(a)(1)(A).) This requirement does not implicate the “commence” 

definition in Section 169(2)(A) for two reasons. First, under the plain language of Section 169, the 

definitions in that section apply only for purposes of Part C of Title I – the PSD requirements – and not 

for the offsets requirements, which are part of the Non-Attainment NSR requirements in Part D of Title I.

And second, even if the Section 169 definitions did apply to Part D requirements, the definition of 

“commence” in Section 169(2)(A) is explicitly limited to the context of “construction” of a major facility, 

not to “operation” of such facility. This definition by its own terms does not apply to any requirements 

for “operation” of a major facility, such as the offsets requirements in Section 173(a)(1). There is 

nothing in the Clean Air Act or in EPA’s NSR regulations that requires offsets to be provided before 

construction can “commence” under this definition. Indeed, EPA Region IX Staff’s comments actually 

recognize this point in Comment No. II.8, in which EPA Region IX Staff correctly state that “offsets must 

be required prior to commencing operation.”15 

With respect to obtaining a PSD permit, the Clean Air Act is clear that the PSD permit must be obtained

before a facility “may be constructed”. (CAA § 165(a).) This requirement refers to actual construction. 

There is no requirement to obtain a permit before “construction is commenced” – i.e., before permits 

are obtained and contracts are entered into as contemplated by the definition in Section 169(2)(A). As 

noted above, the language about facilities on which “construction is commenced” was used to create a 

grandfathering exemption for facilities that were permitted and under contract before August 7, 1977, 

but had not yet begun actual construction by that date. That is why Section 165(a) states that “[n]o 

major emitting facility on which construction is commenced after August 7, 1977, may be constructed 

. . .” without a PSD permit. The “on which construction is commenced” clause creates the 

grandfathering exemption by establishing that facilities that had permits and contracts before that date 

were not subject to the requirements. For facilities that are not subject to that grandfathering 

provision, the “may be constructed” language establishes the type of activity that is prohibited unless a 

PSD permit is obtained. The activity that requires the permit is simply “construction”, not 

“commencement” of construction as defined in Section 169(2)(A). 

 

15 Comment Letter at p. 9 (emphasis added). 
22

The language at issue in Section 165(a) could certainly be stated more clearly, and this may be the 

source of EPA Region IX Staff’s confusion. But EPA has unambiguously endorsed this reading of how PSD 

permitting works – that a PSD permit is not required until construction is actually begun, not at the time 

that permits are obtained and contracts are entered into under the definition of “commence” in Section 

169(2(A) – in its NSR implementation regulations. EPA’s regulations clearly establish that a state’s NSR 

program must require that “[n]o new major stationary source of major modification to which the [PSD 

requirements] apply shall begin actual construction without a permit . . . .” (40 C.F.R. § 51.166(a)(7)(iii)

(emphasis added); see also 40 C.F.R. § 52.21(a)(2)(iii) (same provision for EPA’s federal PSD program).) 

These provisions demonstrate as a matter of law the error in EPA Region IX Staff’s assertion that 

facilities must obtain a PSD permit before entering into contracts under the definition of “commence” in 

Section 169(2)(A). 

The District’s NSR rule under the Proposed Amendments will satisfy both of the NSR requirements

referenced in EPA Region IX Staff’s comment. It will require facilities subject to offsets requirements to 

ensure that the required emission reductions are in place “by the time the source is to commence 

operation,” as required by CAA Section 173(a)(1)(A); and it will require facilities subject to the PSD 

requirements to obtain a permit before they “may be constructed”, as required by CAA Section 165(a). 

The rule does not need to utilize the term “commence” as set forth in the definitions in 40 C.F.R. 

Sections 51.165(a)(1) and 51.166(b) in order to do so.

Comment III.3.: EPA Region IX Staff commented that under 40 C.F.R. Sections 51.165(a)(1) and 

51.166(b), the District’s NSR rule must include a specific definition of the term “begin actual 

construction”. EPA Region IX Staff explained that “ ‘begin actual construction’ is generally the initiation 

of physical on-site construction activities.” EPA Region IX Staff explained that it is necessary to define 

the beginning of actual construction in order to differentiate actual construction from the term 

“commence construction”, which as discussed above includes simply obtaining permits and entering 

into contracts for construction, even where actual construction is not begun. 

Response: The District’s NSR rule does not use the term “begin actual construction”. As EPA Region IX 

Staff noted in Comment III.1., 40 C.F.R. Sections 51.165(a)(1) and 51.166(b) do not require a term to be 

defined if “the term is not used in the rule”. The issue is moot with respect to this term. How one 

defines this term will not make any difference to how the District implements its NSR program, as the 

NSR rules do not use the term at all. Providing a definition for this term in the District’s NSR rule would 

simply take up space without serving any purpose.

Moreover, the District’s NSR rule has no need to differentiate between (i) commencing “actual” 

construction and (ii) commencing construction in the sense of obtaining permits and entering into 

contracts, which is the terminology used in connection with the PSD grandfathering provisions discussed 

above. EPA’s definitions need to differentiate between these two because “commencing” construction 

under the provisions of CAA Sections 165 and 169(2)(A) does not mean commencing actual 

construction. As the comment notes, EPA needs to use two different terms to differentiate between 

these two different concepts. The District’s NSR rule does not use the term “commence” in connection 

with construction in the way that the federal CAA does under Sections 165 and 169(2)(A), and so the 
23

District’s rule does not need to have a specific definition for “begin actual construction”. The District’s 

NSR rule satisfies all of EPA’s NSR requirements as set forth in the Proposed Amendments, and there is 

no need to add a definition of this term to ensure that it will be adequately implemented. 

Comment III.4.: EPA Region IX Staff commented that the District’s NSR rule must include a specific 

definition of the terms “baseline concentration”, “major source baseline date”, and “baseline area”. 

Response: These three terms are important terms used in implementing the PSD source impact analysis 

requirements in accordance with 40 C.F.R. Section 51.166(k) (for state programs) and 40 C.F.R. Section 

52.21(k) (for the federal program). Under the proposed amendments, the District’s rule will incorporate 

this requirement by reference in Section 2-2-305. This incorporation by reference in Section 2-1-305 

explicitly incorporates all of the federal requirements for such analyses that apply under Section 

52.21(k), which includes the use of the baseline concepts referenced in this comment as defined in the 

federal regulations. In addition, Section 2-2-103 also provides further authority that these definitions 

must be used, stating that where federal PSD requirements such as this are incorporated by reference, 

all applicable federal definitions must be used. This Section 2-2-103 incorporation-by-reference 

provision explicitly includes (without limitation) the federal definitions of “baseline concentration”, 

“major source baseline date”, and “baseline area”. EPA Region IX Staff agreed in Comment No. III.1. that 

it is appropriate to address such definitions through incorporation-by-reference. 

Comment III.5.: EPA Region IX Staff commented that the District’s NSR rule must include a specific 

definition of the term “subject to regulation”.

Response: This term is used in EPA’s federal PSD regulations. It is not used in the District’s NSR rule 

directly, and as EPA Region IX Staff noted in Comment III.1., 40 C.F.R. Sections 51.165(a)(1) and 

51.166(b) do not require a term to be defined if “the term is not used in the rule”. The issue is therefore 

moot with respect to this term. The term will be of course be important in terms of implementation of 

the federal PSD provisions that the District will be incorporating by reference, and where it is used in 

those federal PSD provisions it will be defined according to the C.F.R. definition that applies to those 

provisions. This incorporation by reference is set forth in the specific PSD provisions in Sections 2-2-304

through 2-2-307, which specify that these PSD requirements will be subject to all applicable federal PSD 

requirements that apply under the federal program (which includes the federal definitions); and it is also 

specified in the PSD incorporation-by-reference provision in Section 2-2-103, which specifies that for the 

PSD requirements all federal requirements including the federal definitions are incorporated by 

reference. This Section 2-2-103 incorporation-by-reference provision explicitly includes (without 

limitation) the federal definition of “subject to regulation”. 

Comment III.6: EPA Region IX Staff commented that the District must include a definition for 

“replacement unit” that is equivalent to EPA’s federal definition in 40 C.F.R. Sections 51.165(a)(1)(xxi) 

and 51.166(b)(32). EPA Region IX Staff suggested that this term is implicated in Section 2-1-232, which 

establishes that certain sources need to be permitted as new sources – i.e., as if they had never been in 

existence before and are being permitted for the first time under current regulatory standards. 
24

Response: EPA’s NSR regulations do not include a generic definition for the term “replacement”. What 

they do include is a definition for the specific term “replacement unit”, in 40 C.F.R. Sections 

51.165(a)(1)(xxi) and 51.166(b)(32). The District’s NSR rule under the Proposed Amendments 

adequately addresses this term.

As EPA recently noted in approving SMAQMD’s NSR rule, the term “replacement unit” is only used “to 

allow special treatment of such sources when determining whether a proposed project will result in a 

major medication.” EPA approved SMAQMD’s rule, even though it did not include a specific definition 

of “replacement unit”, because the rule uses a definition of “Federal Major Modification” that 

incorporates by reference the federal “major modification” test and all of the federal definitions used in 

that test, including the “replacement unit” definition.16 The District’s NSR rule under the Proposed 

Amendments incorporates the federal “major modification” test, and so it will satisfy EPA’s NSR 

requirements in the same way. The proposed amendments add Section 2-1-234.2, the “federal 

backstop” test for determining whether a change is a modification. This “federal backstop” provision 

will ensure that any change that is a “major modification” under EPA’s federal test will also be treated as 

a modification and subject to NSR requirements under the District’s rule. This “federal backstop” 

provision explicitly incorporates by reference all of the federal definitions in 40 C.F.R. Sections 

51.165(a)(1) and 51.166(b), including the definition of “replacement unit”. As with EPA’s treatment of 

SMAQMD’s rule, incorporation by reference will satisfy those sections’ requirements with respect to this 

definition.

In addition, the District is also incorporating the federal definition of “replacement unit” in its provisions 

for determining when emissions reductions must be in effect for a source subject to offsets 

requirements under Section 2-2-302 and 2-2-303. Federal NSR requirements mandate that offsetting 

emission reductions must be in effect by the time a source commences operation. For sources that are 

“replacement units” and require a “shakedown” period when they begin operations, however, the 

source is deemed not to begin operations until the end of the “shakedown” period, a period not to 

exceed 180 days. The District’s NSR rule under the Proposed Amendments will allow up to 90 days for 

“replacement units” to allow for this shakedown period. This 90-day period is provided for 

“replacement units” under Sections 2-2-206 and 2-2-407.2, and in both places the federal definition in 

40 C.F.R. Section 165(a)(1)(xxi) is incorporated by reference. 

Finally, with respect to Section 2-1-232, this provision does not use the term “replacement unit”. As 

such, 40 C.F.R. Sections 51.165(a)(1)(xxi) and 51.166(b)(32) do not apply. Section 2-1-232 concerns 

certain situations where the District requires changes involving existing sources to be permitted as if 

they were entirely new sources. There is nothing in the District’s treatment of such sources that is 

inconsistent with EPA’s NSR requirements in any way, and there is no requirement that the District must 

use EPA’s specific term “replacement unit” in its treatment of such sources. There is no reason why 

Section 2-1-232 is not approvable under EPA’s NSR regulations. 

 

16 See EPA Technical Support Document, supra note 14, at p. 7.
25

Comment III.7.: In Comment No. 4.c. above, EPA Region IX Staff noted that the District’s provisions for 

public notice and comment for permits implementing PSD provisions should ensure that notice is 

provided to Indian Governing Bodies whose lands may be affected. EPA Region IX Staff commented that 

in providing for such notice, the District should include a definition of “Indian Governing Body” that is 

consistent with EPA’s definition in 40 C.F.R. Sections 51.165(a)(1) and 51.166(b)(9). 

Response: The final version of the Proposed Amendments adds a definition of “Indian Governing Body”, 

which mirrors EPA’s definition in 40 C.F.R. Section 51.166(b)(9), in Section 2-2-216. This definition will 

ensure that the notice provision is implemented consistent with EPA’s PSD requirements.17 

Comment III.8.: EPA Region IX Staff commented on the definition of “contemporaneous” in proposed 

Section 2-2-206. This definition establishes that an event is “contemporaneous” with an application for 

a permit to construct or operate a source if the event occurs (i) within 5 years before a permit 

application, or (ii) on or after the date of the permit application, but prior to initial operation of the 

source. EPA stated that the District should insert the word “and”, so that the language would also cover 

events that occur within 5 years before the date of the permit application and on or after the date of the 

permit application but prior to initial operation. EPA Region IX Staff’s comment stated that unless the 

District makes this change, the District’s definition will not be “consistent with the federal definition in 

40 C.F.R. 51.165(a)(1) and 51.166(b)(9).” 

Response: It is physically impossible for an event to occur both before the date of a permit application 

and on or after the date of a permit application. If an event occurs on or after a date certain, by 

definition it cannot also occur before that date.

Moreover, there is nothing in 40 C.F.R. Sections 51.165(a)(1) and 51.166(b)(9) that requires the District 

to specify that an event is contemporaneous if it occurs before “and/or” after the date of the 

application. EPA Region IX Staff’s comments did not identify anything in those provisions that would 

require such language, and District Staff did not find any upon their own review. Simply specifying that 

the event occurs before “or” after the date of application (and meets the other time limitations set forth 

in the definition) satisfies all requirements in 40 C.F.R. Sections 51.165 and 51.166. 

Comment III.9.: EPA Region IX Staff commented on the language in the District’s definition of “potential 

to emit” in Section 2-1-217 stating that a limitation on a source’s emissions will be counted for purposes 

of establishing a source’s potential to emit if it is “enforceable by the District or EPA.” EPA Region IX 

Staff stated that a limit that is “enforceable by the District alone is not sufficient.” EPA Region IX Staff

stated that the District should revise this definition to require that a limitation can be counted only if it is 

“enforceable by both the District and EPA” (among several other alternative suggestions).

 

17 Note also that EPA Region IX Staff’s citation to a definition in 40 C.F.R. Section 51.165(a)(1) for Non-Attainment 

NSR requirements is incorrect. EPA’s notice requirements for Indian Governing Bodies applies only for the PSD 

provisions, and not for notice for NSR permits for other purposes pursuant to 40 C.F.R. Section 51.161. There is no 

definition of “Indian Governing Body” in Section 51.165(a)(1), nor any other reference to this term in Section 

51.165.
26

Response: EPA Region IX Staff are incorrect in their understanding that a limitation on a source’s 

emissions must be enforceable by EPA in order to be credited for purposes of establishing a source’s 

potential to emit under the Clean Air Act. This principle has been clearly established by the United 

States Court of Appeals for the District of Columbia Circuit in National Mining Ass’n v. EPA, 59 F.3d 1351 

(D.C. Cir. 1995). The D.C. Circuit held in that case that EPA must allow conditions that are enforceable by 

the permitting agency under State law, but that are not part of the SIP and thus not enforceable by EPA 

in federal court, to be used in establishing a source’s potential to emit. (See id. at 1361-65.) Indeed, 

EPA Region IX Staff’s comment implicitly acknowledges this point, as it notes that a limitation does not 

necessarily need to be “federally enforceable” as long as it is “legally and practically enforceable” – i.e., 

enforceable by the District. This is precisely the language that EPA now uses in the wake of the National 

Mining case to recognize that an enforceable limitation on a source’s emissions can be credited even if it 

is not enforceable by EPA.18 

Of course, it has always been the District’s intent that if a limitation is enforceable by both the District 

and EPA – the situation contemplated by the language EPA Region IX Staff suggested – then the 

limitation is enforceable for purposes of establishing the source’s potential to emit. District Staff 

intended the language about enforceability by “the District or EPA” to cover this scenario. To avoid any 

potential for any confusion on this point, the final version of the Proposed Amendments clarifies that a 

limitation can be counted if it is enforceable “by the District or EPA (or both).” This revision will ensure 

that in the situation addressed by EPA Region IX Staff’s proposed language, where a limitation “is 

enforceable by the District and EPA”, is covered by the District’s definition. This revision will address 

EPA Region IX Staff’s comment, notwithstanding the misunderstanding surrounding the legal 

requirements for enforceability of emissions limitations used in establishing a source’s potential to emit 

in the wake of the National Mining case.

Comment III.10.: EPA Region IX Staff commented that the District must include a definition for the term 

“secondary emissions”. EPA Region IX Staff noted that EPA’s PSD regulations in 40 C.F.R. Section 

51.166(b)(18) provides a definition for this term.

Response: The final version of the Proposed Amendments does not use the term “secondary emissions”, 

and so it does not provide a definition for this term. As EPA Region IX Staff noted generally in Comment 

III.1, the District’s NSR rule does not need to include a definitions listed in in Section 51.166(b) where 

“the term is not used in the rule” (among other reasons). 

This point notwithstanding, it is worth noting the purpose of this definition in EPA’s PSD regulations in 

40 C.F.R. Section 51.166(b)(18) and pointing out that the District’s PSD provisions fully satisfy it without 

the need for an explicit definition of this term. The reason why EPA’s PSD regulations provide a 

definition for this term is because the PSD Source Impact Analysis required under 40 C.F.R. Sections 

51.166(k) and 52.21(k) must evaluate the source’s emissions as well as any “secondary emissions”. That 

is the only element of NSR permitting that addresses secondary emissions. The Proposed Amendments

will address the Source Impact Analysis requirement by incorporating EPA’s requirements under 40 

 

18 See EPA Interim Policy on Federal Enforceability Requirement for Limitations on Potential to Emit (Jan. 1996). 
27

C.F.R. Section 52.21(k) by reference, and in doing so incorporate all of the federal requirements 

applicable to such analyses including the requirement to evaluate secondary emissions. As explained 

above, this incorporation by reference incorporates all of the applicable federal regulatory provisions 

associated with the source impact analysis requirement, including the definitions. This is implicit as a 

matter of law, and it is further clear from the text in proposed Section 2-2-305, which states explicitly 

that the analysis “shall be prepared according to and shall satisfy all of the requirements applicable to 

PSD source impact analyses for federal PSD permitting under 40 C.F.R. Section 52.21(k),” which includes 

consideration of “secondary emissions” as noted above. Furthermore, to the extent that there could be 

any ambiguity on this point notwithstanding this explicit language, the final version of the Proposed 

Amendments also adds a further provision in Section 2-2-103 regarding incorporation by reference, 

which states that where federal PSD requirements are incorporated by reference, all associated 

procedures, definitions and other regulatory provisions in the Code of Federal Regulations shall be 

followed and applied, which includes the requirement to consider secondary emissions. This provision 

in Section 2-1-103 also states explicitly that all federal definitions apply, and it specifically references the 

federal definition of “secondary emissions” in 40 C.F.R. Section 52.21(b)(18) in this regard (which is 

identical to the definition in Section 51.166(b)(18) cited in the comment). Thus, there can be no dispute 

that the District’s PSD provisions explicitly require secondary emissions to be included in the PSD Source 

Impact Analysis, and that the federal definition of “secondary emissions” applies for this purpose. The 

District’s NSR rule fully satisfies all federal requirements for SIP approval with regard to secondary 

emissions, how they are addressed under the PSD requirements, and how they are defined.

Comment III.11.: EPA Region IX Staff commented that the District should include a definition of the 

term “portable”. EPA Region IX Staff stated that a specific regulatory definition should be provided in 

the rule “to provide clarity and enforceability”. 

Response: EPA’s regulations do not require that the District’s NSR rule must contain a specific regulatory 

definition for the term “portable”. Specifically, there is nothing in any of the definitional provisions in 40 

C.F.R. Sections 51.165(a)(1) or 51.166(b) setting forth a definition of this term or requiring that a state’s 

NSR program contain one. To the contrary, EPA’s NSR regulations allow states to rely on the dictionary 

definition for this word, which is what the District’s NSR rule will do under the proposed amendments. 

Indeed, EPA’s own regulations rely on the dictionary definition without needing to provide a specific 

regulatory definition. (See, e.g., 40 C.F.R. §§ 51.166(i)(1)(iii), 52.21(i)(1)(viii).) EPA’s treatment of this 

term under the agency’s own NSR regulations demonstrates that use of the dictionary definition 

provides sufficient clarity and enforceability. For all of these reasons, the District does not need to 

include a specific regulatory definition of “portable” in its NSR rule in order for the rule to be approvable 

under CAA Section 110 or 40 C.F.R. Part 51, subpart I.

Comment III.12.: EPA Region IX Staff commented that the District should include a definition of the 

term “shutdown”. EPA Region IX Staff stated that a specific regulatory definition should be provided in 

the rule “to provide clarity and enforceability”.

Response: EPA’s regulations do not require that the District’s NSR rule must contain a specific regulatory 

definition for the term “shutdown”. Specifically, there is nothing in any of the definitional provisions in 
28

40 C.F.R. Sections 51.165(a)(1) or 51.166(b) setting forth a definition of this term or requiring that a 

state’s NSR program contain one. To the contrary, EPA’s NSR regulations allow states to rely on the 

dictionary definition for this word, which is what the District’s NSR rule will do under the proposed 

amendments. Indeed, EPA’s own regulations rely on the dictionary definition without needing to 

provide a specific regulatory definition. (See, e.g., 40 C.F.R. §§ 51.165(a)(1)(xxviii), 51.165(a)(1)(xxxv), 

51.165(a)(3)(ii)(C), 51.166(b)(37), 51.166(b)(40), 51.166(b)(47), 52.21(b)(41), 52.21(b)(48), etc.) EPA’s 

treatment of this term under the agency’s own NSR regulations demonstrates that use of the dictionary 

definition provides sufficient clarity and enforceability. For all of these reasons, the District does not 

need to include a specific regulatory definition of “shutdown” in its NSR rule in order for the rule to be 

approvable under CAA Section 110 or 40 C.F.R. Part 51, subpart I.

Comment III.13.: EPA Region IX Staff stated that the District’s definition of the term “Regulated Air 

Pollutant” in District regulation 2-1-218 “is not consistent with the federal definition in 40 C.F.R. 

51.165(a)(1)(xxxvii) and 40 C.F.R. 51.166(b)(49).” EPA Region IX Staff suggested that the District should 

specify in the definition of “regulated air pollutant” that the term refers to pollutants that are subject to 

“a Federal and California Clean Air Act regulation”.

Response: Contrary to the assertions in this comment, EPA’s NSR regulations do not use the term 

“Regulated Air Pollutant” and do not include a definition of this term. The cited provisions in 40 C.F.R. 

51.165(a)(1)(xxxvii) and 40 C.F.R. 51.166(b)(49) are definitions of a different term “Regulated NSR 

Pollutant”. In the only place where the District’s regulations use this term “Regulated NSR Pollutant”, 

the District’s regulations define it explicitly by reference to the federal definition in 40 C.F.R. Section 

52.21(b)(49). This definition by reference to the Code of Federal Regulations provision by definition 

cannot be inconsistent with any federal requirements for this term. 

With respect to the District’s general definition of “Regulated Air Pollutant” in Section 2-1-218, the 

intent behind this definition was to identify pollutants for which a regulation has been adopted, not to 

inquire into the identity of the agency that adopted it or the specific legal authority under which it was 

adopted. The final version in the Proposed Amendments therefore removed the language regarding 

regulations adopted or implemented by the District, and simply refers to pollutants that are subject to a 

regulation. This revision will address EPA’s suggestion that the term be defined to include pollutants 

that are subject to “Federal and California Clean Air Act regulations.” All such pollutants will be included 

within the definition set forth in Section 2-1-218 in the final version of the Proposed Amendments. 

Comment III.14.: EPA Region IX Staff commented that the “federal backstop” provision in proposed 

Section 2-1-234.2 should incorporate the federal definitions used the applicability procedures in 40 

C.F.R. Sections 51.165(a)(2) and 51.166(a)(7), including “baseline actual emissions” and “projected 

actual emissions”. 

Response: As explained above in connection with Comment No. I.2.b., the final version of the Proposed 

Amendments is adding language that explicitly states that all applicable provisions in Sections 51.165 

and 51.166 must be followed in implementing proposed Section 2-1-234.2. This language also explicitly 

states that all of the federal definitions in 40 C.F.R. Sections 51.165(a)(1) and 51.166(b) must be 
29

followed in implementing this provision, which include the definitions of “baseline actual emissions” and 

“projected actual emissions” and all other relevant definitions. This incorporation by reference 

addresses EPA Region IX Staff’s comment regarding these terms.
1

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

CAA Section 110(l) Analysis of BAAQMD Permit Exemption Provisions in Regulation 2, Rule 1

Section 110(l) of the Clean Air Act, 42 U.S.C. § 7410, requires that when a state revises its State Implementation Plan (SIP), EPA may not approve the revision if it would interfere with any 

requirement concerning attainment and reasonable further progress, or any other applicable CAA requirement. EPA Region IX Staff have requested that the Air District prepare an analysis of 

any changes to the exemptions provided in the current EPA-approved version of Regulation 2, Rule 1 that is part of the California SIP. EPA Region IX Staff have expressed a concern that if 

additional sources for which permits are required under the current SIP are exempted, that could potentially implicate requirements related to attainment and reasonable further progress or 

other CAA requirements. This analysis responds to EPA Region IX Staff’s request, and will help EPA in reviewing the revised Regulation 2, Rule 1 for SIP approval under Section 110(l). 

This analysis compares the exemptions contained in Regulation 2, Rule 1 in the Proposed Amendments with the most recent EPA-approved regulations in the State Implementation Plan. The 

analysis includes revisions to the exemptions that will be made as part of the Proposed Amendments, and also prior revisions that have been made in earlier amendments adopted by the Board 

of Directors that have not yet been reviewed by EPA. The analysis concludes that the revisions to the District’s permitting exemptions under the Proposed Amendments (and those made in 

earlier amendments since the most recent EPA-approved version) will not interfere with any requirement concerning attainment and reasonable further progress or any other applicable CAA 

requirement. 

There are several reasons that support this conclusion. First, as a general reason that applies to all amendments, the Air District’s regulatory program as a whole – including the NSR permitting 

program – ensures that the Bay Area is consistent with all CAA requirements for attaining and maintaining the NAAQS and making reasonable further progress. The Air District, along with its 

sister agencies that help administer some applicable requirements, have satisfied all CAA requirements concerning attainment and reasonable further progress toward attainment of the 

NAAQS.1 In doing so, the Air District has taken into account the fact that there will be a certain amount of emissions growth from new and modified sources in the Bay Area, including sources 

that are exempt from permitting requirements under the exemptions provided in Regulation 2, Rule 1. Even with such growth, air quality in the Bay Area is in compliance with the NAAQS or on 

a path to achieving that goal. The Air District’s satisfaction of and compliance with all CAA requirements concerning attainment and reasonable further progress has been achieved taking into 

account that there will be growth in emissions from exempt sources, and nothing in the exemptions provided in Regulation 2, Rule 1 undermines or interferes with the District’s satisfaction of or 

compliance with any such requirement. Thus, as a general matter applicable to all of Regulation 2, Rule 1, there is nothing in any of the revised exemption provisions that would prohibit SIP 

approval under CAA Section 110(l).

2

 

Furthermore, looking at each individual revised exemption provision, there is no evidence on which to conclude that any of them will authorize any unpermitted sources in a manner that would 

interfere with any applicable requirement concerning attainment or reasonable further progress or any other CAA requirement. This exemption-by-exemption analysis is set forth in the table 

below. 

 

1 With respect to PM2.5, the Air District will be satisfying its requirements through documentation and analysis being prepared concurrently with the proposed amendments, which will be submitted for EPA review 

and approval.

2

This analysis is discussed further in Section IV.B.3.a. of the Staff Report for the proposed amendments, drawing on technical analysis in the memorandum by C. Lee entitled “Analysis of Compliance with 40 C.F.R. 

§ 51.169(a)&(b)” (August 2012). Please see that discussion for further information.
2

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

2-1-103 Sources not subject to any District 

rule. Yes No

Per the limitations in Section 2-1-319, this exemption exempts only sources with emissions of less than 

5 tpy (among other important requirements). Such sources are well below the levels at which EPA 

considers emissions to be de minimis for purposes of maintaining compliance with the NAAQS. EPA has 

established such levels in accordance with the principles addressed in Alabama Power v. Costle as being 

so low that they do not have any potential to contribute to an exceedance of any NAAQS sufficient to 

warrant being subject to NSR permitting requirements. The sources eligible for this exemption will not 

have emissions of more than 50% of even the lowest such de minimis level. Moreover, District Staff 

conducted an analysis of the annual emissions increases from all projects that are subject to permitting 

requirements with emissions below these de minimis levels, which showed that the total contribution 

from all such sources each year is only 0.02% to 0.34% of the Bay Area’s total emissions inventory 

(depending on pollutant and year evaluated). Even if the total emissions from all de minimis exempt

projects equaled this amount of emissions from de minimis permitted projects, they would not interfere 

with requirements related to attainment or reasonable further progress toward attainment. Emissions 

projections for the Bay Area do not show that increases from new sources expected in the coming years 

– including from sources exempt from District permitting requirements – will jeopardize the District’s 

attainment efforts. See also Staff Report Section IV.B.3.a. & fn. 73 (Lee memorandum) for further 

details. 

2-1-105 CARB-registered portable 

equipment Yes No

This equipment is regulated at the state level by the Air Resources Board. ARB regulation establishes 

effective emissions controls, including requirements such as BACT. ARB regulations (i.e., valid PERP 

registration) pre-empts District permitting of such equipment, and so the District does not have 

jurisdiction to require permits for this equipment. See HSC §§ 41752 – 41754. Effective ARB regulation 

will ensure that emissions from such equipment will not interfere with requirements related to 

attainment or reasonable further progress.

2-1-106 Accelerated Permitting Program Yes No

This is not a true permitting exemption. It is an exemption from the Authority to Construct 

requirement only, for situations where a source will be permitted under the Accelerated Permitting 

Program. Such sources will still be subject to NSR permitting requirements, it is just that they will 

obtain a Permit to Operate without first obtaining an Authority to Construct. Accordingly, this is not an 

exemption from the substantive NSR requirement to obtain a permit and comply with all applicable NSR 

elements. As such, it will not interfere with requirements related to attainment or reasonable further 

progress or any other applicable CAA requirement.
3

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

2-1-113.1.1 Single and multiple family 

dwellings No N/A* In current SIP, 2-1-113.1 and -113.2

2-1-113.1.2 Agricultural sources Yes No

This exemption is part of a revision to District regulations to start permitting agricultural sources. 

Under the most recent SIP-approved version of District regulations, agricultural sources were subject to 

blanket exclusion/exemption provisions under Regulations 1-110.5 (“agriculture operations”) and 2-1-

113.7 (“farming operations”). The District has revised its rules and is now requiring permits for 

agricultural operations with emissions over 50 tons per year. This provision continues to exempt 

agricultural operations below that threshold. This change is therefore a narrowing of the exemption for 

such sources, not an expansion of the exemption. As such, it is not a relaxation from the current SIP 

rules – it is actually making the permitting requirements more stringent in this regard – and it will not 

interfere with requirements related to attainment or RFP. 

2-1-113.1.3 Vehicles No N/A*

Vehicles are not stationary sources and have never been regulated under NSR. They have never been 

permitted under the District’s SIP-approved NSR program, and the District has never even had any 

jurisdiction to require permitting per HSC 42310(a)(1). Emissions from vehicle engines are excluded 

from regulation under the District’s regulations – including Regulation 2 – under current SIP-approved 

Reg. 1-110.1 (which incorporates by reference the definition of “vehicle” in the Vehicle Code). 

Specifying that they are exempt from permitting will not change their regulatory treatment under the 

District’s SIP-approved regulations. 

2-1-113.1.4 Tank vehicles No N/A* Tank vehicles (e.g., gasoline delivery trucks) are also mobile sources that the District does not regulate 

and has never regulated. See also basis for Section 2-1-113.1.3 exemption regarding vehicles.

2-1-113.2.1 Road construction No N/A* In current SIP, 2-1-113.4

2-1-113.2.2 Restaurants No N/A* In current SIP, 2-1-113.5

2-1-113.2.3 Structural changes that do not 

affect emissions No N/A* In current SIP, 2-1-113.6

2-1-113.2.4

Abatement devices used on 

equipment that is exempt from 

permitting

No N/A* In current SIP, 2-1-113.1

2-1-113.2.5

Architectural and industrial 

maintenance coating operations 

subject to Regulations 8-3 and 8-

Yes No

These maintenance operations are subject to the District’s coating regulations in Regulations 8-3 and 8-

48, and emissions from them will be controlled without permitting. Compliance with requirements

related to attainment and reasonable further progress has been satisfied accounting for emissions from 
4

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

48 coating operations in the Bay Area. Such operations will not interfere with any such requirements, 

even without being subject to NSR permitting.

2-1-113.2.6

Portable equipment used for tank 

degassing or vacuum truck control 

requirements under Reg. 8-5, 8-

40, or 8-53

Yes No

This equipment is subject to the District’s degassing requirements in Regulations 8-3 and 8-48, and 

emissions from them will be controlled without permitting. Compliance with requirements related to 

attainment and reasonable further progress has been satisfied accounting for emissions from such 

degassing operations in the Bay Area. Such operations will not interfere with any such requirements, 

even without being subject to NSR permitting.

2-1-113.2.7

PUC-regulated natural gas 

transmission and storage 

equipment

Yes No

Natural gas in essentially non-reactive and does not contribute to ozone formation and will not 

substantially contribute to ozone concentrations, and will not substantially contribute to concentrations 

of any other criteria pollutant. Thus even if there were emissions from such equipment, it would not 

interfere with requirements related to attainment or maintenance of any NAAQS. 

2-1-113.2.11 Classroom teaching laboratories Yes No

Classroom teaching laboratories are limited in scope within the Bay Area are not significant contributors 

to the region’s emissions inventory of criteria air pollutants. Emissions from miscellaneous processes 

such as these are included in the analyses and demonstrations that the Air District makes for 

compliance with applicable requirements concerning attainment and reasonable further progress. 

Allowing such classroom teaching laboratory activities without requiring an NSR permit will not 

interfere with any such requirements.

2-1-113.2.12

Laboratories <25,000 ft2/50 fume 

hoods that use Responsible 

Laboratory Management Practices

Yes No

Emissions from laboratory activities that are below the size cutoff established in this exemption and 

which use Responsible Laboratory Management Practices are limited in scope within the Bay Area are 

not significant contributors to the region’s emissions inventory of criteria air pollutants. Emissions from 

miscellaneous processes such as these are included in the analyses and demonstrations that the Air 

District makes for compliance with applicable requirements concerning attainment and reasonable 

further progress. Allowing such laboratory activities without requiring an NSR permit will not interfere 

with any such requirements.

2-1-113.2.13 Venting residual natural gas for 

pipeline maintenance operations Yes No

Natural gas in essentially non-reactive and does not contribute to ozone formation and will not

substantially contribute to ozone concentrations, and will not substantially contribute to concentrations 

of any other criteria pollutant. Venting any residual gas that remains in pipelines when maintenance is 

performed will therefore not interfere with requirements related to attainment or maintenance of any 

NAAQS.

2-1-113.2.15 Asbestos renovation under Reg. Yes No There is no NAAQS for asbestos, so even if asbestos removal that complies with Reg. 11-2 did have any 
5

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

11-2 potential to emit some asbestos fibers, such emissions would not interfere with requirements related 

to attainment or maintenance of any NAAQS. 

2-1-113.2.16 Closed landfills <1M tons Yes No

The District exempts such landfills from NSR permitting requirements because they are not significant 

sources of emissions and are no longer active operations receiving waste. EPA has not subjected such 

landfill sources to its NSPS guidelines requirements, and the District has exempted them from its NSR 

permitting requirements for the same reason. These landfill sources are not significant emissions 

sources and have been taken into account in complying with applicable requirements related to 

attainment and reasonable further progress. 

2-1-113.2.17 Closed landfills 30+ years old Yes No

The District exempts such landfills from NSR permitting requirements because they are not significant 

sources of emissions and are no longer active operations receiving waste. EPA has not subjected such 

landfill sources to its NSPS guidelines requirements, and the District has exempted them from its NSR 

permitting requirements for the same reason. These landfill sources are not significant emissions 

sources and have been taken into account in complying with applicable requirements related to 

attainment and reasonable further progress. 

2-1-113.2.18 Construction of structure that 

does not require a permit Yes No

The District has never regulated construction activities as a regulated activity in and of itself (as 

opposed to requiring an authority to construct for permitted sources, regulating certain types of 

equipment that may be used in construction, etc.). This exemption simply codifies that practice. 

Allowing such construction activities without requiring permits will not interfere with any applicable 

requirements related to attainment and reasonable further progress. The District has satisfied all 

applicable requirements related to attainment and reasonable further progress taking construction 

activities into account regardless of whether they will be permitted or unpermitted, and allowing them 

to take place without requiring an NSR permit will not interfere with such requirements. 

2-1-113.2.19 Vacuum trucks subject to Reg. 8-

53 Yes No

The District has never regulated vacuum truck operations, and historically it has not required permits 

for such operations because there have not been any regulatory requirements applicable to them. The 

District has recently (as of April 2012) started regulating vacuum truck operations under Regulation 8, 

Rule 53. This exemption was added to specify that although such operations are regulated under 8-53, 

they will not be subject to permit requirements. The District’s rules will be more stringent as a result of 

these changes, as emissions from such operations will now be regulated. Emissions from vacuum truck 

operations will be controlled under Regulation 8-53 even without permitting. Compliance with 

requirements related to attainment and reasonable further progress has been based on accounting for 
6

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

emissions from refineries and other industrial facilities that use vacuum trucks. Vacuum truck 

operations eligible for this exemption were also specifically identified in the District’s 2010 Clean Air 

Plan, in Stationary Source Measure SSM-5. Such operations will not interfere with any such 

requirements, even without being subject to NSR permitting. 

2-1-114 Combustion equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details. 

2-1-115 Particulate sources – quarries 

mineral processing and biomass Yes No

This is a new exemption that has been added since the most recent SIP version of Reg. 2-1. This new 

exemption will not interfere with requirements related to attainment, reasonable further progress, or 

other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts only sources 

with emissions of less than 5 tpy (among other important requirements). Such sources are well below 

the levels at which EPA considers emissions to be de minimis for purposes of maintaining compliance 

with the NAAQS. EPA has established such levels in accordance with the principles addressed in 

Alabama Power v. Costle as being so low that they do not have any potential to contribute to an 
7

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. The 

sources eligible for this exemption will not have emissions of more than 50% of even the lowest such de 

minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases from all 

projects that are subject to permitting requirements with emissions below these de minimis levels, 

which showed that the total contribution from all such sources each year is only 0.02% to 0.34% of the 

Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the total 

emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-116 Furnaces ovens and kilns Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 
8

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-117 Food and agricultural equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-118 Surface preparation and cleaning 

equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 
9

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-119 Surface coating and cleaning 

equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-120 Dry cleaning equipment Yes No This exemption is in the current SIP, but it has been revised in several respects. To the extent that it is 

any less stringent than the current SIP version, it will not interfere with requirements related to 
10

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

attainment, reasonable further progress, or other CAA requirements. Per the limitations in Section 2-1-

319, this exemption exempts only sources with emissions of less than 5 tpy (among other important 

requirements). Such sources are well below the levels at which EPA considers emissions to be de 

minimis for purposes of maintaining compliance with the NAAQS. EPA has established such levels in 

accordance with the principles addressed in Alabama Power v. Costle as being so low that they do not 

have any potential to contribute to an exceedance of any NAAQS sufficient to warrant being subject to 

NSR permitting requirements. The sources eligible for this exemption will not have emissions of more 

than 50% of even the lowest such de minimis level. Moreover, District Staff conducted an analysis of 

the annual emissions increases from all projects that are subject to permitting requirements with 

emissions below these de minimis levels, which showed that the total contribution from all such 

sources each year is only 0.02% to 0.34% of the Bay Area’s total emissions inventory (depending on 

pollutant and year evaluated). Even if the total emissions from all de minimis exempt projects equaled 

this amount of emissions from de minimis permitted projects, they would not interfere with 

requirements related to attainment or reasonable further progress toward attainment. Emissions 

projections for the Bay Area do not show that increases from new sources expected in the coming years 

– including from sources exempt from District permitting requirements – will jeopardize the District’s 

attainment efforts. See also Staff Report Section IV.B.3.a. & fn. 73 (Lee memorandum) for further 

details.

2-1-121 Material working and handling 

equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 
11

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-122 Casting and molding equipment No N/A*

No substantive change to the current SIP version. The only changes are a clarification that extrusion 

molding is a type of plastic molding covered by this exemption under subsection 2-1-122.4, and that

certain mold release products are not subject to the exemption unless they involve very low amounts of 

VOC with annual facility VOC emissions under 150 lb/yr. To the extent that this exclusion for VOC mold 

release products was not already a part of the exemption, this revision makes the exemption more 

narrow and is a strengthening of the regulation, not a relaxation. Moreover, to the extent any Section 

110(l) analysis is required, 150 lb/yr is a very low emissions limit and will not interfere with 

requirements related to attainment or reasonable further progress for the same reasons provided for 

other exemptions up to 5 tons per year. 

2-1-123 Liquid storage and loading 

equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis
12

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-124 Semiconductor manufacturing Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements); and furthermore 

the language of the exemption restricts facility VOC emissions to 150 pounds per year. Such sources 

are well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-125 Printed circuit board 

manufacturing Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 
13

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

2-1-126 Testing equipment No N/A*

No substantive change to the current SIP version. The only changes are a clarification of the specific 

types of bench-scale laboratory equipment that are covered under subsection 2-1-126.2. Moreover, to 

the extent any Section 110(l) analysis is required, this exemption is subject to the same 5 tpy limitation 

addressed in connection with other exemptions. The exemption will not interfere with requirements 

related to attainment or reasonable further progress for the same reasons provided for other 

exemptions up to 5 tons per year.

2-1-127 Chemical processing equipment No N/A*

No substantive change to the current SIP version. The only change was to revise the list of the types of 

metals that are processed in electrolytic plating operations in order to make it more comprehensive. 

Moreover, to the extent any Section 110(l) analysis is required, this exemption is subject to the same 5 

tpy limitation addressed in connection with other exemptions. The exemption will not interfere with 

requirements related to attainment or reasonable further progress for the same reasons provided for 

other exemptions up to 5 tons per year. 

2-1-128 Miscellaneous equipment Yes No

This exemption is in the current SIP, but it has been revised in several respects. The new provisions that 

have been added will not interfere with requirements related to attainment, reasonable further 

progress, or other CAA requirements. Per the limitations in Section 2-1-319, this exemption exempts 

only sources with emissions of less than 5 tpy (among other important requirements). Such sources are 
14

CAA § 110(l) Analysis – Proposed Amendments to BAAQMD Regulation 2 – September 26, 2012

Exemption 

Provision Brief Description of Exemption Revision to Current SIP?

Interfere with 

requirements 

related to 

attainment or RFP?

Basis for Conclusions

well below the levels at which EPA considers emissions to be de minimis for purposes of maintaining 

compliance with the NAAQS. EPA has established such levels in accordance with the principles 

addressed in Alabama Power v. Costle as being so low that they do not have any potential to contribute 

to an exceedance of any NAAQS sufficient to warrant being subject to NSR permitting requirements. 

The sources eligible for this exemption will not have emissions of more than 50% of even the lowest 

such de minimis level. Moreover, District Staff conducted an analysis of the annual emissions increases 

from all projects that are subject to permitting requirements with emissions below these de minimis

levels, which showed that the total contribution from all such sources each year is only 0.02% to 0.34% 

of the Bay Area’s total emissions inventory (depending on pollutant and year evaluated). Even if the 

total emissions from all de minimis exempt projects equaled this amount of emissions from de minimis

permitted projects, they would not interfere with requirements related to attainment or reasonable 

further progress toward attainment. Emissions projections for the Bay Area do not show that increases 

from new sources expected in the coming years – including from sources exempt from District 

permitting requirements – will jeopardize the District’s attainment efforts. See also Staff Report Section 

IV.B.3.a. & fn. 73 (Lee memorandum) for further details.

Notes: *Section 110(l) applies to revisions to the SIP, so for exemptions where there is no revision to the District’s current SIP-approved exemption Section 110(l) is not implicated and no 

analysis of interference with requirements related to attainment or reasonable further progress is required. (Although the District’s compliance with all applicable requirements relating to 

attainment and reasonable further progress even with emissions growth from sources subject to permit exemptions would of course apply to these provisions as well, even if Section 110(l) 

were implicated.) 
1

BAAQMD Updates to NSR and Title V Permitting Rules

Regulation 2, Rules 1, 2, 4 & 6 

RESPONSES TO COMMENTS FROM EPA REGION IX STAFF ON 

SECOND DRAFT OF PROPOSED AMENDMENTS

October 11, 2012

Over the past year, Staff of the Bay Area Air Quality Management District have been developing 

amendments to the District’s New Source Review (NSR) and Title V permitting programs. These 

Proposed Amendments will update the District’s NSR and Title V programs to address recent regulatory 

developments. The Proposed Amendments will revise certain provisions in District Regulation 2, Rules 

1, 2, 4, and 6 in which the NSR and Title V programs are set forth. 

Staff of EPA Region IX have generously agreed to review drafts of the Proposed Amendments that Air 

District Staff have developed and to offer comments and suggestions on them. The District will 

eventually be submitting the Proposed Amendments (through the Air Resources Board) to EPA for 

approval, and EPA will be statutorily required at that time to review them for consistency with Clean Air 

Act (CAA) requirements in order to approve them as part of California’s CAA State Implementation Plan 

(SIP). In advance of that formal review, EPA Region IX Staff have reviewed drafts of the Proposed 

Amendments to identify potential areas where the Proposed Amendments need to be revised to ensure 

that they meet all Clean Air Act requirements and to otherwise offer suggestions on improving them. 

District Staff greatly appreciate the time and effort that EPA Region IX Staff have put into doing so. 

District Staff have carefully reviewed EPA Region IX Staff’s comments in developing the final version of 

the Proposed Amendments and have made a number of changes as a result of them. EPA Region IX 

Staff’s comments identified several areas where the District’s drafts needed to be revised to satisfy the 

CAA, and they resulted in a greatly improved proposal. 

This document explains District Staff’s evaluation of EPA Region IX Staff’s comments on the Second Draft

of the Proposed Amendments, which the District published on May 25, 2012. These comments were 

provided in a letter from Gerardo Rios dated July 26, 2012.1 The comments received are summarized 

below, along with District Staff’s responses to each one. Per the organization in the comment letter, the 

responses address (i) Regulation 2, Rule 1; (ii) Regulation 2, Rule 2; and (iii) the definitions used in the 

District’s NSR rules.

I. REGULATION 2, RULE 1

Comment I.1.a.: EPA Region IX Staff commented that the District should provide an analysis of any new 

or revised exemptions in Regulation 2, Rule 1 that will be provided through the Proposed Amendments

 

1

EPA Region IX Staff’s comment letter is available on the District’s website for this rule development project at 

www.baaqmd.gov/Divisions/Engineering/Proposed-Reg-2-Changes.aspx. 
2

(and also any previous revisions that EPA has not yet approved into the SIP). EPA Region IX Staff 

requested this analysis in connection with Section 110(l) of the Clean Air Act, which provides that EPA 

may not approve a SIP revision “if the revision would interfere with any applicable requirement 

concerning attainment and reasonable further progress . . . or any other applicable requirement of [the 

Act].” EPA Region IX Staff stated that “[s]ince new exemptions typically mean fewer sources are subject 

to permit and emission control requirements, the analysis must show how exempting these new sources 

will not interfere with any applicable requirement concerning attainment and reasonable further 

progress, or any other applicable requirement of the Act (See section 110(l) of the Act).” 

Response: Air District Staff have prepared a Section 110(l) analysis of all new and revised exemptions 

that have been added to Regulation 2, Rule 1 since the last SIP-approved version. District Staff 

published this analysis in connection with the final version of the Proposed Amendments on September 

26, 2012. A copy of the analysis is enclosed with these Responses, and it is also available on the 

District’s website at

www.baaqmd.gov/~/media/Files/Engineering/Proposed%20Reg%202%20Changes/Public%20Hearing/C

AA%20Section%20110%20Analysis%20of%20Reg%202%20Rule%201%20Exemption%20Provisions.ashx?

la=en. As explained in that document, there is nothing in any of the new or modified exemptions in 

Regulation 2, Rule 1 that would prevent approval of the District’s NSR rule as set forth in the Proposed 

Amendments under CAA Section 110(l).

Comment I.1.b.: EPA Region IX Staff commented on the provision in Section 2-1-502 stating that the 

burden of proof for establishing that a source qualifies for an exemption from District permitting lies 

with the person asserting the exemption. EPA Region IX Staff noted that the provision states that such 

person must provide “substantial credible evidence” to support the applicability of the exemption, and 

suggested that the provision should be “clarified” to state that credible evidence means “various types 

of records, such as purchase or usage records, or other documentation.” EPA Region IX Staff also 

suggested alternatively that the District should add specific language that “records must be maintained 

to provide credible evidence of the applicability and compliance with a stated exemption.” EPA Region 

IX Staff stated that providing this additional language would help “ensure these exempted sources are 

aware of the need to maintain appropriate documentation that can serve as ‘substantial creditable [sic] 

evidence’ . . . .” 

Response: District Staff disagree that there is any significant potential that the owner/operator of an 

exempt source could be unaware of the need to maintain appropriate documentation or other evidence 

to support its claim for an exemption based on the current language in Section 2-1-502. The current 

language clearly indicates that the source must be prepared at any time to provide such evidence upon 

request by the APCO. This language is sufficient to put the owner/operator of an exempt source on 

notice that it must be prepared to present its evidence upon request – and thus, that it must maintain 

such evidence so that it can do so when requested. Being prepared to present evidence supporting the 

claim for exemption necessarily means maintaining the evidence such that it is ready to present upon 

request. Similarly, there is no need to “clarify” what is meant by the concept of “credible evidence”, 

which is intended to be a broad term that encompasses any information or evidence that can support 

the applicability of the exemption. The current language expresses the concept with sufficient clarity to 
3

convey to regulated entities what is required, and there is no need to define this term further. EPA has 

taken this same position in other contexts, such as with the agency’s “Credible Evidence Rule” in which 

EPA concluded that it did not need to further define the term “credible evidence”.

2

 Moreover, even if 

the term “credible evidence” did need to be defined more specifically, using open-ended terms such as

“other documentation” and “appropriate documentation” would be of little use in doing so. The fact 

that EPA Region IX Staff have recommended such open-ended terms implicitly recognizes the fact that it 

would be inappropriate to be overly prescriptive in specifying that kinds of evidence must be provided 

to support the applicability of an exemption. The more appropriate approach is simply to specify that 

evidence must be provided to establish the existence of the exemption, and then leave it to be 

demonstrated on a case-by-case basis in each individual situation where this provision may be 

implicated whether the source’s evidence adequately supports the exemption or not. For all of these 

reasons, District Staff disagree that the language in Section 2-1-502 regarding providing credible 

evidence to support claims for exemptions needs to be revised. 

Comment I.2.a.: EPA Region IX Staff commented on the District’s “modification” test in Section 2-1-234, 

which establishes the applicability of NSR requirements for “modified” sources. District Staff have 

discussed this issue in a number of contexts in the past, including most importantly in Section IV.E.2.b. 

of the May 25 Background Discussion document (pp. 59-63), in which District Staff sought EPA’s input on 

the issue. EPA Region IX Staff responded that EPA will no longer be able to approve the District’s current 

SIP-approved “modification” test based on increases in a source’s “potential to emit” (PTE) air 

pollutants. Although EPA has approved such applicability tests in the past, EPA Region IX Staff stated 

that EPA will now require to the District to ensure that there will be no case in which a change at a 

source that constitutes a “major modification” as defined under 40 C.F.R. Section 51.165 or 51.166 –

which are based on increases in actual historical emissions and not PTE – could escape NSR permitting 

under the District’s “modification” definition. EPA Region IX Staff further stated that the placeholder 

language that District Staff circulated in the Second Draft of the proposed amendments regarding this 

issue would be acceptable for meeting this requirement (subject to additional comments addressed 

below). 

Response: District Staff understand EPA Region IX Staff’s position on this issue and have accordingly 

included the placeholder language from the Second Draft in the final version of the proposed 

amendments. This language will establish a “federal backstop” provision in Section 2-1-234 so that in 

the unlikely event that a change at a source could constitute a “major modification” under 40 C.F.R. 

Section 51.165 or 51.166 but not be a modification under the District’s current test, the change will be 

brought within the definition of “modification” and NSR permitting requirements will apply. District 

 

2

See 62 Fed. Reg. 8314, 8322 (Feb. 24, 1997). In adopting that rule, EPA made clear that it did not agree with

comments similar to those of EPA Region IX Staff here stating that the rule is “deficient for not providing an 

express regulatory definition of the term ‘credible evidence’ ”. EPA disagreed and concluded that it would not be 

appropriate to provide a specific regulatory definition if this term, noting that Congress itself found it appropriate 

to use the term “credible evidence” in the Clean Air Act without needing to provide a specific statutory definition. 

See also Clean Air Implementation Project v. EPA, 150 F.3d 1200, 1202 (D.C. Cir. 1998) (dismissing challenges to the 

credible evidence rule on jurisdictional grounds, and noting that “Nothing in the rule itself defines or limits the 

possible kinds of evidence encompassed within the phrase ‘credible evidence.’ ”).
4

Staff appreciate EPA Region IX’s feedback on this issue and acknowledgement that this language will be 

approvable under Sections 51.165 and 51.166. 

District Staff remain concerned, however, that EPA Region IX is requiring the Bay Area Air District to 

revise its PTE-based “modification” definition, but is not requiring other California air district that also 

define “modification” based on increases in PTE to revise their definitions. If EPA Region IX believes that 

the District should no longer be allowed to define “modification” as a change that results in an increase

in PTE, then it should not allow the other California air districts that define “modification” as a change 

that results in an increase in PTE to continue to use such a definition either. District Staff will continue 

to work with EPA Region IX Staff to ensure consistency in NSR implementation across all California air 

districts. 

Comment I.2.b.: As noted above, EPA Region IX Staff stated that the “federal backstop” language that 

the District circulated with the second draft of the Proposed Amendments will satisfy EPA’s 

requirements under 40 C.F.R. Sections 51.165 and 51.166. This “federal backstop” provision 

incorporates by reference the federal “major modification” definitions in those C.F.R. provisions. EPA 

Region IX Staff stated that to ensure that it is clear that all applicable provisions of the federal test must 

be used in applying this definition – and in particular the “NSR Reform” applicability provisions in 

Sections 51.165(a)(2)(A) through (F) and 51.166(a)(7)(i) through (vi) – the District should include specific 

reference to these provisions in the language in Section 2-1-234. 

Response: As EPA has made clear in other contexts, there is no requirement that California air districts 

must use the “NSR Reform” applicability provisions in 40 C.F.R. Sections 51.165(a)(2)(A) through (F) and 

51.166(a)(7)(i) through (vi) for their NSR programs.3EPA Region IX Staff’s comment is therefore 

incorrect that the District’s “modification” test must specify that these federal provisions have to be 

used. District Staff have concluded that these provisions are an appropriate policy choice for the 

“federal backstop” test, however, and therefore drafted the “federal backstop” provision to be 

implemented using the federal applicability requirements – including the NSR Reform elements. The 

use of the federal applicability requirements was inherent in the language used in the second draft, 

which incorporated by reference the federal “major modification” definition under 40 C.F.R. Sections 

51.165 and 51.166. This federal definition is implemented using the federal applicability provisions 

referred to in EPA Region IX Staff’s comment, and so defining the District’s “federal backstop” test based 

on the federal definition incorporates by reference the federal applicability methodologies used to 

implement the federal definition. That said, District Staff agree that it would be a good idea to state 

explicitly how this incorporation-by-reference principle works in the language of the “federal backstop” 

provision to guide readers in their interpretation of the provision. To do so, the final version of the 

Proposed Amendments adds additional language that explicitly cites the applicability provisions in 

 

3

EPA reached this conclusion with respect to the NSR program of the Sacramento Metropolitan Air Quality 

Management District (SMAQMD). As EPA stated after reviewing SMAQMD’s NSR regulations for consistency with 

EPA’s NSR Reform provisions, “it is acceptable for SMAQMD to not incorporate the NSR Reform provisions into 

their SIP approved NSR programs . . . .” SMAQMD Technical Support Document, infra note 14, at p. 17. The same 

rationale underlying EPA’s conclusions regarding SMAQMD’s NSR programs also applies to the District’s NSR 

programs. See also Staff Report for the Proposed Amendments, pp. 103-105, for further discussion. 
5

Sections 51.165(a)(2) and 51.166(a)(7) that EPA Region IX Staff referenced in this comment. As such, the 

language in the Proposed Amendments includes the appropriate citations for the federal applicability 

provisions, as requested by EPA Region IX Staff. This additional language also states explicitly that all 

provisions of the federal regulations that are applicable to the “major modification” definition –

including the federal definitions of terms used in the “major modification” provision and the monitoring, 

recordkeeping and reporting requirements for the NSR Reform applicability provisions – are to be 

followed in applying the “federal backstop” test. This language will make it clear to all readers how the 

incorporation-by-reference of the federal “major modification” test is to be applied. 

Comment I.2.c.: EPA Region IX Staff noted that the “modification” definition in Section 2-1-234 in the 

second draft of the Proposed Amendments referred to increases in “daily or annual” emissions. EPA 

Region IX Staff stated that the District should explain how daily emissions increases would constitute a 

“major modification” under the “federal backstop” provision, which is based on increases in annual 

emissions. 

Response: The language referencing “daily or annual” emissions increases relates to the District’s 

existing modification test, which is based on increases in PTE. This language reflects the fact that an 

increase in either daily PTE (i.e., the maximum amount the source can emit in a day) or annual PTE (i.e., 

the maximum amount the source can emit in a year) will constitute a “modification” under the District’s 

existing test. To avoid any potential for confusion with the “federal backstop” provision, in the final 

version of the Proposed Amendments the “daily or annual” language has been moved from the general 

introductory language in Section 2-1-234 that is applicable to both tests into the PTE-increase test in 

subsection 2-1-234.1. 

Comment I.3.: EPA Region IX Staff commented on the provision in proposed Section 2-1-603 for allowing 

alternative PM measurement methodologies when Methods 201/201A are not appropriate. EPA Region 

IX Staff asked that the use of such alternative measurement methodologies should be made subject to 

approval by EPA, not just by the District.

Response: District Staff have no objection to providing EPA an opportunity to review and approve of 

alternative measurement methodologies for PM emissions. The final version of the proposed 

amendments has added the requirement to obtain EPA approval as well as District approval. To ensure 

that this requirement can be implemented smoothly, District Staff ask that EPA Region IX Staff identify 

the appropriate contact person(s) who will handle review and approval of alternative measurement 

methodologies.

II. REGULATION 2, RULE 2

Comment II.1.a: EPA Region IX Staff made a comment regarding the provision in 40 C.F.R. Section 

51.165(a)(3)(ii)(J) describing how the amount of offsets required for a source under CAA Section 

173(a)(1)(A) must be determined. That provision states that the amount of offsets required must be 

based on the difference between source’s “allowable emissions” (i.e., its potential to emit) and its 

“actual emissions” baseline. EPA Region IX Staff suggested that the District’s NSR rule does not do that. 
6

They stated that the District’s rule “allows a PTE to PTE test for determining the amount of offsets for a 

Fully Offset Source . . . ,” referring to the fact that once a source has provided offsets for the full amount 

of its potential to emit (PTE), then it needs to provide additional offsets for future modifications only to 

the extent that such modifications will result in a further increase in the source’s PTE. EPA Region IX 

Staff stated that such a rule would be allowable in situations where offsets have been provided within 

the past 5 years (i.e., “within the contemporaneous period as defined by your rules”), but not for 

periods beyond 5 years after the offsets have been provided. The comment suggested that 40 C.F.R. 

Section 51.165(a)(3)(ii)(J) establishes a 5-year time limit for relying on such offsets, and that if a source is 

modified after 5 years it must provide offsets all over again for the full amount of its maximum potential 

emissions (above its actual emissions baseline level). 

Response: The amount of offsets required under the District’s NSR rule is calculated based on the 

difference between the source’s “allowable emissions” (i.e., its potential to emit) and its “actual 

emissions” baseline, as required by CAA Section 173(a)(1)(A) and 40 C.F.R. Section 51.165(a)(3)(ii)(J). 

This requirement is in Sections 2-2-302 and 2-2-303, which require the entire amount of a facility’s 

“cumulative increase” to be offset. The facility’s “cumulative increase” is determined according to the 

provisions in Sections 2-2-606 through 2-2-608, and it is the difference between (i) the facility’s actual 

emissions baseline based on its past operations and (ii) its maximum potential future emissions. (The 

“cumulative increase” determination procedures are also described further in Section IV.B.3.g.iv. of the 

Staff Report, pp. 106-112, which describe in more detail how the calculations work.) Under those 

provisions, the first time a facility is modified under the offsets requirements and has to provide offsets

for its emissions increase, the amount of offsets required is the difference between its actual emissions

before the modification and its full maximum potential to emit after the modification. Thereafter, for 

any subsequent modifications, additional offsets are required for any further increases in the facility’s

potential to emit resulting from the modification. This calculation mechanism ensures that offsets will 

be provided for the facility’s full “cumulative increase” – that is, the difference between the facility’s 

actual emissions baseline and its maximum potential to emit. Offsetting the facility’s full “cumulative 

increase” in this manner satisfies the requirements of CAA Section 173(a)(1)(A) and 40 C.F.R. Section 

51.165(a)(3)(ii)(J). 

Under this “cumulative increase” methodology, once the facility has already provided offsets for its full 

potential to emit, it needs to provide further offsets for additional modifications only to the extent that 

such modifications will further increase its potential to emit – i.e., only to the extent that there will be 

additional “cumulative increase” resulting from the modification. The first part of EPA Region IX Staff’s 

comment appears to object to this situation, stating that “the revised draft rule allows a PTE to PTE test” 

in certain situations.4 But this is not a “PTE to PTE test” as EPA Region IX Staff seem to interpret it. To 

 

4

Although this comment relates to the procedures used “to determine the amount of offsets required” for new 

and modified sources and how they comply with the offset obligation requirements under 40 C.F.R. 

51.165(a)(3)(ii)(J), the comment provided a regulatory citation to Section 2-2-606.2 in the Second Draft, which 

contained the calculation procedures for determining the amount of emissions reductions that can be credited 

when an existing source is shut down or otherwise curtails operations. That is a separate issue and is not the 

subject of 40 C.F.R. Section 51.165(a)(3)(ii)(J), although many of the same principles of ensuring “no net increase” 

in emissions overall and remaining consistent with “Reasonable Further Progress” toward attainment are 
7

the contrary, as explained above and in the Staff Report, it is a “cumulative increase” test based on the 

difference between the facility’s actual emissions baseline and its maximum potential emissions – that 

is, an “actual-to-potential” test as required by the Clean Air Act. The fact that once offsets have been 

provided for the facility’s “cumulative increase”, additional offsets are required only for further 

increases in “cumulative increase” (i.e., further increases in PTE) simply recognizes that once an 

emissions increase is offset by emission reductions elsewhere, those same emissions do not need to be 

offset a second time by additional reductions. The requirement to offset the full “cumulative increase” 

satisfies CAA Section 173(a)(1)(A) and 40 C.F.R. Section 51.165(a)(3)(ii)(J), and once those offsets have 

been provided NSR is satisfied without having to offset the emissions again later on.

Requiring additional reductions to offset emissions that have already been offset would constitute 

“double-counting” of those emissions, and there is nothing in CAA Section 173(a)(1)(A) or in 40 C.F.R. 

Section 51.165(a)(3)(ii)(J) that requires such “double-counting”. Section 173(a)(1)(A) requires that 

offsets need to be provided such that “total allowable emissions” from the proposed source and all 

other sources in the region will be sufficiently less than emissions from existing sources so as to ensure 

that “Reasonable Further Progress” will be achieved. It does not require that once offsets have been 

provided for such emissions consistent with “Reasonable Further Progress”, additional offsets need to 

be provided again for the same emissions. Section 51.165(a)(3)(ii)(J) further fleshes out this “reasonable 

further progress” requirement by stating that the total tonnage of emissions “that must be offset in 

accordance with section 173 of the Act” is based on the difference between “allowable emissions” (PTE) 

and “actual emissions”. That is, Section 51.165(a)(3)(ii)(J) provides that when establishing the amount 

of offsets required for a source, it is the full amount of the source’s PTE (over its actual emissions 

baseline) that must be offset – and not any other measure of emissions such as projected actual 

emissions.

5

 Section 51.165(a)(3)(ii)(J) does not require (either expressly or impliedly) that the same 

emissions to be offset a second time in order to ensure that the Clean Air Act’s “Reasonable Further 

 

implicated. The District’s rules for calculating the amount of emission reductions that can be credited from 

shutdowns of existing sources are consistent with all of these principles and satisfy all of the requirements of CAA 

Section 173 and 40 C.F.R. Section 51.165. (See generally discussion of offsets and emission reduction credits in 

Staff Report, Section IV.B.1.c.i.-ii. (pp. 60-67) and Section IV.B.3.g.iii. (pp. 105-106).) 

5

The regulatory history of Section 51.165(a)(3)(ii)(J) provides further evidence of how this provision works. 

Subsection (a)(3)(ii)(J) was added to Section 51.165 as part of EPA’s “NSR Reform” regulations in 2002, in which 

EPA revised the way in which emissions increases are measured for purposes of determining whether NSR 

requirements are triggered. (See 67 Fed. Reg. 80,186, 80,196 (Dec. 31, 2002).) EPA wanted to make clear that the 

revised NSR Reform methodologies were to be used for NSR applicability purposes only, and that once NSR was 

triggered, the existing pre-NSR Reform calculation methodologies (e.g., measuring increases based on PTE instead 

of projected actual emissions) are still used for applying NSR requirements such as offsets. As EPA explained in the 

NSR Reform rulemaking, the NSR Reform changes are used for determining applicability, but once NSR is triggered, 

“any determination of the amount of emissions offset that must be obtained by a major modification subject to 

the nonattainment NSR requirements under § 51.165(a) should be based on calculations using the existing 

definitions of ‘actual emissions’ and ‘allowable emissions’.” (67 Fed. Reg. at 80,196; see also generally discussions 

in Sections II.A. and II.C.8.) Subsection (a)(3)(ii)(J) was added to clarify that the amount of offsets was to be based 

on the pre-existing actual-to-potential test, not on the actual-to-projected-actual methodology that was adopted 

for NSR applicability purposes in the NSR Reform rule. It was never intended to require “double-counting” of a 

facility’s emissions for offset purposes, and it should not be interpreted that way. 
8

Progress” mandate is fully implemented. Thus, fundamentally, what these rules require is that the full 

amount of a source’s PTE must be offset, over its actual emissions baseline, such that Reasonable 

Further Progress will be ensured – and the District’s requirement that a facility offset its full “cumulative 

increase” does exactly that. What they do not require is “double counting” of emissions increase and 

the provision of additional offsets where a facility has already fully offset its full PTE. 

Indeed, the second part of EPA Region IX Staff’s comment recognizes that this interpretation is the 

correct one. EPA Region IX Staff actually endorse the District’s “cumulative increase” approach as 

consistent with CAA Section 173(a)(1)(A) and 40 C.F.R. Section 51.165(a)(3)(ii)(J), describing it as 

“appropriate and reasonable”. District Staff agree with this part of the comment, and take it as 

evidence that EPA Region IX staff understand that it does not make any practical or policy sense – and is 

not required under the CAA’s NSR requirements – to require additional offsets a second time for 

emissions increase that have already been offset consistent with Reasonable Further Progress. 

The one caveat is that EPA Region IX Staff would like the District to establish a 5-year limitation on the

facility’s ability to rely on offsets that were previously provided. That is, EPA Region IX Staff would not 

engage in “double-counting” of emissions increases in the “cumulative increase” determination for the 

first 5 years after offsets are provided; in that situation, they would require additional offsets for future 

modifications only where the modification results in a further increase in PTE. Beyond 5 years, however, 

EPA Region IX Staff would throw out this methodology and require additional offsets even where there 

is no further increase in PTE. That is, after 5 years (the “contemporaneous” period defined in the 

District’s rule), EPA Region IX Staff would have the District require offsets again for the same emissions

potential that the facility offset earlier. The amount of additional offsets that they would require would 

be the difference between the PTE and the facility’s actual emissions at the time of the modification, 

even if that PTE has already been offset.

District Staff disagree that starting to require double-counting of emissions increase for offset purposes 

after 5 years (or any other time limit) is appropriate or required under CAA Section 173 and 40 C.F.R. 

Section 51.165(a)(3)(ii)(J). Nowhere do either of those legal authorities mention anything about a 5-year 

cut-off, or any other time limit on how long offsets can be relied on before additional offsets need to be 

provided again for the same emissions. They establish a single methodology for determining the 

amount of offsets required, which does not require “double-counting” of emissions increases as 

explained above. They do not create a second methodology to be applied after 5 years have elapsed.

Furthermore, in addition to not being required legally, double-counting a facility’s emissions in this 

manner for offsets purposes would be highly problematic as a practical matter. An example helps 

illustrate this point. Take a “peaker” power plant that is used to address short-term “peaks” in 

electricity demand (e.g., on hot summer afternoons when air conditioning use is heavy). Such facilities 

are normally operated at less than their full annual maximum capacity. If such a peaker plant has

maximum annual potential emissions of 100 tons per year of a non-attainment pollutant, it would be 

required to provide 100 tons per year (or more) of offsets when it is first permitted. But as a peaker 

plant, its actual emissions may only be 10 tons per year when it is built and operated. If the facility 

undertakes a modification to install new equipment that will not increase its overall capacity or its
9

maximum annual emissions of 100 tons per year, the Clean Air Act would not require any additional 

offsets to be provided. The facility’s maximum 100-ton annual emissions have already been offset by 

emission reductions obtained from other sources, and so no additional reductions would be needed to 

ensure “no net increase” region-wide and “Reasonable Further Progress” towards attainment. This is 

how the District’s current EPA-approved NSR rule would address this situation. It is also how EPA Region 

IX Staff would treat this situation under the interpretation expressed in their comment – for the first 5 

years. After 5 years, however, EPA Region IX would require the facility to provide an additional 90 tpy of 

offsets (the difference between its 10 tpy actual emissions rate at the time the modification is made and 

its 100 tpy maximum potential emissions), even though the facility has already provided offsets for the 

entire 100 tons that it could possibly emit in one year. And if the facility made subsequent modifications 

in the future after further intervals of over 5 years, it would be required to provide an additional 90 tpy 

each time it did so. The facility could end up being required to provide offsets in an amount many times 

the maximum amount of emissions it could legally emit. This would not be an appropriate or reasonable 

outcome, and would not make for sound regulatory policy.

For all of these reasons, District Staff disagree that the District’s rules requiring offsets for the full 

amount of a facility’s “cumulative increase” are inconsistent with the Clean Air Act’s offset and 

“reasonable further progress” requirements. The District’s current rules work this way, as do the NSR 

rules of other California air districts, and EPA has never had a problem in approving any of these 

programs in the past. District Staff disagree with EPA Region IX Staff’s comment that these rules must 

be changed to prevent facilities from continuing to rely on existing offsets that they have provided in the 

past after 5 years go by. There is nothing in CAA Section 173 or 40 C.F.R. Section 51.165(a)(3)(ii)(J) that 

requires “double-counting” of emissions increases for purposes of calculating offsets requirements, as 

EPA Region IX Staff seem to agree at least for an initial 5-year period; and there is nothing that purports 

to establish a different methodology requiring “double-counting” after 5 years have elapsed. Nothing in 

the plain language of these provisions requires such a rule, and to the extent that there is any ambiguity 

in that plain language, District Staff submit that EPA should not interpret them to require such a rule for 

all of the policy reasons outlined above. 

Comment II.1.b: EPA Region IX Staff commented on language in the Second Draft of Section 2-2-606 

regarding enforceable contractual provisions in a written agreement made for the benefit of the District. 

EPA Region IX Staff stated that the District should not include this language. 

Response: District Staff had originally included the referenced language based upon an earlier request 

by EPA Region IX Staff. District Staff have no objection to removing it now, and it has been deleted in 

the final version of the Proposed Amendments. 

Comment II.1.c: EPA Region IX Staff commented on the language in the District’s provisions for the 

“surplus adjustment” (also referred to by District Staff as the “RACT adjustment”) made in calculations 

for emission reductions to ensure that reductions are credited only to the extent that they are in excess 

of what is legally required. EPA Region IX Staff stated that the language about adjusting for “District 

rules and regulations” should be expanded to include “applicable federal and District rules and 

regulations”. 
10

Response: The final version of the Proposed Amendments includes this additional language in the three 

places where the surplus adjustment is addressed, in Sections 2-2-603.6, 2-2-605.2, and 2-2-606.2.2. 

Any emissions reductions need to be in excess of what is required by federal regulations in order to be 

credited. 

Comment II.1.d.: EPA Region IX Staff also commented on the language in the District’s provision for 

making the surplus adjustment for purposes of determining whether a modification will be a “PSD 

Project” in proposed Section 2-2-603.6. EPA Region IX Staff inquired into the basis for this provision. 

They noted that 40 C.F.R. Section 51.166(b)(47)(ii)(c) states that the surplus adjustment does not need 

to take into account any MACT standards (unless the state has taken credit for them in an attainment 

demonstration or attainment plan). They stated that the District’s surplus adjustment should be 

consistent with this provision.

Response: The reason why the District’s NSR rule includes this provision for PSD Projects is that for all 

other situations the surplus adjustment is actually more stringent than what is required under the 

federal NSR regulations. That is, for purposes other than determining whether a modification is a “PSD 

project”, any emission reductions may need to be adjusted downwards to reflect additional emissions 

limitations beyond the minimum requirements of the federal program. For PSD purposes, however, the 

District does not make the surplus adjustment for any additional limitations beyond what is required 

under the federal program. The language referred to in EPA Region IX Staff’s comment in the second 

draft of the Proposed Amendments was somewhat confusing on this point, and EPA Region IX Staff are 

not the only ones who have been unclear on its purpose. To address any potential for confusion, the 

final version of the Proposed Amendments uses revised language that makes clear how the surplus

adjustment works for PSD Projects. For determining whether a modification is a “PSD Project,” the 

surplus adjustment must be made so credit is not granted for reductions that were required anyway 

under regulatory requirements, but it does not include any further downward adjustment beyond what 

is required under the federal program as set forth in 40 C.F.R. Section 51.166(b)(47)(i)(b) and 

(b)(47)(ii)(b) & (c). This revision will ensure that the provision is clear and that it is fully consistent with 

EPA’s NSR program requirements.

Comment II.4.a.:

6

 EPA Region IX Staff commented on the language in Section 2-2-404 regarding the 

purpose of holding a public hearing on proposed NSR permits. EPA Region IX Staff commented that the 

language should recognize the fact that the District accepts written comment at a public hearing, not 

just verbal comment. 

Response: The District accepts both written comment and verbal comment at public hearings. The 

language used in the Second Draft of the proposed amendments addressed this point in the provision 

specifying that if a public hearing is scheduled, the comment period for accepting written comments 

must be extended at least through the public hearing. District Staff have also added the language 

 

6

The numbering in this comment letter skipped numbers II.2 and II.3. For clarity, this document uses the same 

numbering as the comment letter. 
11

suggested by EPA recognizing that the purpose of the public hearing is to accept comments of all types,

both verbal and written. 

Comment II.4.b.: EPA Region IX Staff noted that under 40 C.F.R. Section 51.166(q)(2), permits 

implementing PSD requirements must be processed and a final determination made within one year of 

receipt of a complete application. EPA Region IX Staff commented that the time for final action in 

Section 2-2-404 should address this maximum time limitation. EPA Region IX Staff stated that the 

provisions for the timing of final decision on a permit implementing PSD requirements should specify 

that the final decision should be made within one year, unless a longer time period is necessary and 

consented to by the applicant.

Response: The final version of the proposed amendments specifies that for a PSD Project, the final 

decision must be made within 1 year of receipt of a complete application (unless a longer time period is 

necessary and is contented to by the applicant). 

Comment II.4.c.: EPA Region IX Staff commented that under 40 C.F.R. Section 51.166(q)(2)(iv), notice of 

proposed permits implementing PSD requirements must be provided to Indian Governing Bodies whose 

lands may be affected. The comment noted that there are two such tribes within the jurisdiction of the 

Air District, Lytton Rancheria and Federated Indians of Graton Rancheria. 

Response: The final version of the Proposed Amendments adds a provision that the notice of proposed 

issuance of a permit under Section 2-2-404 must also be sent to any Indian Governing Body whose lands 

may be affected. It also adds a definition of “Indian Governing Body” that mirrors the federal definition 

of that term in 40 C.F.R. Section 51.166. 

Comment II.5.a.: EPA Region IX Staff commented that the District should explain the basis for the 

emission thresholds used in Section 2-2-404 below which NSR permits are exempt from the rule’s public 

notice and comment requirements. EPA Region IX Staff noted that permits involving de minimis

emissions increases – i.e., increases that are not “significant” – can be exempted from NSR requirement 

under the principles set forth in Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir. 1979). EPA Region IX 

Staff stated that the District should explain how the thresholds used for the District’s public notice and 

comment requirements are consistent with these principles. EPA Region IX Staff cited the NSR noticeand-comment requirements in 40 C.F.R. Section 51.161(a)-(d), which apply to all NSR permits, although 

they directed their comments at permits “minor new sources and minor modifications”, which District 

Staff understand to be sources and modifications with emissions below the “major source” and “major 

modification” applicability thresholds in 40 C.F.R. Sections 51.165 and 51.166. 

Response: Proposed Section 2-2-404 requires public notice and comment for all permits subject to what 

EPA refers to as “major NSR” requirements (i.e., 40 C.F.R. Sections 51.165 and 51.166), and also for all 

other non-“major” permits that will involve a “significant” increase in emissions as defined in Section 2-

2-227.2. Proposed Section 2-2-404 therefore requires public notice and comment for all NSR permits,

except those that will involve only de minimis emissions increases as EPA has defined them under the 

Alabama Power v. Costle doctrine. The Proposed Amendments will therefore satisfy 40 C.F.R. Section 

51.161. 
12

District Staff explained the basis for establishing the notice-and-comment threshold in Section 2-2-404 

using EPA’s de minimis “significance” thresholds in Section IV.B.3.c. of the Staff Report (at pp. 87-88). As 

explained there, the NSR “significance” thresholds are the levels that EPA has established as being de 

minimis for NSR purposes under in Alabama Power v. Costle. EPA has determined that emissions 

increases below these thresholds are sufficiently inconsequential in terms of their impact on compliance 

with the NAAQS that it would not be worth subjecting them to NSR permitting requirements given the 

administrative burdens that would be involved. EPA set forth the basis for these de minimis significance 

levels in detail in the rulemaking it conducted in response to the remand from the D.C. Circuit in the

Alabama Power v. Costle, explaining how these thresholds satisfy the de minimis principles articulated in 

that case.

7

 For the same reasons relied on by EPA, the Proposed Amendments use these levels as the de 

minimis thresholds below which District NSR permits will be exempt from the public notice and 

comment requirements. 

Moreover, in addition relying on the de minimis analysis that EPA promulgated to apply generally in all 

areas of the country, District Staff also conducted a further analysis specific to the San Francisco Bay 

Area to determine the extent of the emissions increases that would be exempted using EPA’s

“significance” thresholds. As explained in the Staff Report, that analysis showed that the total combined 

emissions increases from all permits issued by the District each year with net emissions increases below 

these thresholds across the entire Bay Area – i.e., the cumulative emissions increase that would be 

exempted under the thresholds – would be only 0.02% to 0.34% of the region’s total emissions 

inventory (depending on the pollutant involved and the year reviewed). This Bay Area-specific analysis 

further demonstrates that the additional burdens of providing public notice and an opportunity to 

comment for such permits would not be warranted, given the de minimis extent of the emissions 

increases involved. (Please see the Staff Report discussion for further details regarding these analyses.)

This Bay Area-specific analysis further supports the conclusion that the District’s exemption of such 

permits from the notice-and-comment requirements is consistent with the principles expressed in 

Alabama Power v. Costle.

Finally, it is also worth noting that EPA Region IX Staff have apparently accepted the use of these 

thresholds as satisfying the requirements of 40 C.F.R. Section 51.161 for NSR permits involving “major 

sources” and “major modifications”.8 EPA has accepted the use of these thresholds under Section 

 

7

See 45 Fed. Reg. 52,676 (Aug. 7, 1980), and in particular Section XI (“De Minimis Exemptions”). This rulemaking 

contemplated the levels at which emissions increases are de minimis in the context of exempting them from the air 

quality impacts analysis requirements of the PSD program. But the same rationales that EPA relied on there – that 

emissions increases below the NSR “significance” levels do not have any significant potential to cause or contribute 

to a NAAQS exceedance that the administrative burden of subjecting them to this requirement is not warranted in 

light of the NAAQS protection purposes of the NSR program – apply in the same way to other NSR requirements 

such as public notice and comment. If the emissions increase associated with a permit will have only a de minimis

impact on compliance with the NAAQS, then the benefit from soliciting public input on the effects of such 

emissions is minimal and the additional burdens of the notice-and-comment process are not warranted. 

8

40 C.F.R. Section 51.161 establishes notice-and-comment requirements that apply generally to all NSR permits. 

These are the applicable notice-and-comment requirements for what EPA calls “minor new sources and minor 

modifications”, and they are also the applicable notice-and-comment requirements for “major sources” and 

“major modifications” subject to the Non-Attainment NSR requirements in 40 C.F.R. Section 51.165. Since the 
13

51.161 in the past for such permits in approving NSR permitting programs, and EPA Region IX Staff did 

not voice any objection to continuing to do so under the Proposed Amendments – their comment was 

directed specifically at non-“major” sources and modifications. If the use of these de minimis thresholds 

is acceptable for satisfying Section 51.161 for “major sources” and “major modifications”, then by the 

same token it should be acceptable to satisfy Section 51.161 for non-“major” sources and modifications 

as well. 

Comment II.5.b.: EPA Region IX Staff commented that under 40 C.F.R. Section 51.160(f), the District’s 

NSR rules must discuss the air quality data and modeling that will be used to implement the District’s 

NSR permitting requirements. EPA Region IX Staff stated that “[t]here are several approaches the 

District can take to make this demonstration,” including (i) dispersion modeling for new and modified 

sources that will result in a “significant net increase in emissions” to demonstrate that the emissions 

increases involved will not cause or contribute to a NAAQS exceedance; and (ii) demonstrating that 

emissions increases from new and modified sources are accounted for in emissions growth projections 

demonstrating attainment of the NAAQS. 

Response: Although this comment cites 40 C.F.R. Section 51.160(f), which specifies the air quality 

models that must be used in implementing NSR, District Staff understand that EPA Region IX Staff’s 

concern is how the District’s NSR program will comply with the provisions of 40 C.F.R. Sections

51.160(a)(2) and 51.160(b)(2), which state that the SIP must set forth legally enforceable procedures 

that enable the District (i) to determine whether construction or modification of a source will interfere 

with attainment or maintenance of the NAAQS (Section 51.160(a)(2)) and (ii) to prevent construction or 

modification of the source if it will interfere with attainment or maintenance (Section 51.160(b)(2). 

District Staff understand this to be EPA Region IX Staff’s concern based on discussions with Region IX 

Staff and on the language in the comment regarding “NAAQS Compliance”, which is the subject of 

Sections 51.160(a)(2) and (b)(2), not Section 51.160(f).

District Staff explained in detail how the District’s NSR rule satisfies the requirements of 40 C.F.R. 

Sections 51.160(a)(2) and 51.160(b)(2) in Section IV.B.3.a. of the Staff Report (pp. 83-86). As explained 

there, the District’s NSR Rule contains both features that EPA Region IX Staff identified as “alternatives” 

for implementing the Section 51.160(a)(2)-(b)(2) requirements.

The primary means through which the District has always implemented the Section 51.160(a)(2)-(b)(2) 

requirements is by ensuring that all new and modified sources comply with the District’s comprehensive 

regulatory programs, which fully satisfy all Clean Air Act requirements to ensure that the Bay Area’s air 

will attain and maintain the NAAQS. The District (and its sister agencies) have made all necessary 

demonstrations required under the Clean Air Act that the Bay Area will attain and maintain the NAAQS 

through their regulatory approaches to control air pollution.9 And these attainment and maintenance 

 

same regulatory requirement applies for both categories of NSR permits, the same de minimis thresholds should 

be appropriate for both categories of NSR permits. 

9

As noted in the Staff Report discussion, for PM2.5 the District is in the process of satisfying its attainment and 

maintenance requirements by obtaining EPA review and approval of its “Clean Data Finding”, PM2.5 emissions 

inventory, and related documentation. District Staff anticipate that EPA will approve the District’s submission on 
14

obligations have been satisfied even with the fact that there will be a certain amount of emissions 

growth from new and modified sources under the District’s NSR program (both from permitted NSR 

sources and from exempt stationary sources). Compliance with the SIP – and all other elements of the 

District’s comprehensive regulatory programs – is ensured through Section 2-1-304, which prohibits the 

District from issuing a permit for any source that does not comply. And compliance with these 

requirements will ensure that any emissions increases from new and modified sources will be consistent 

with achieving attainment and maintenance. In short, it is the District’s SIP-approved regulatory 

program that ensures that all CAA attainment and maintenance requirements will be satisfied, and it is 

compliance with this SIP-approved regulatory program that ensures that new and modified sources will 

not “interfere with the attainment or maintenance of a national standard.”10 

In addition, the Proposed Amendments also include modeling requirements that will require all new and 

modified sources that will result in a significant net increase of any pollutant for which a NAAQS has 

been established to demonstrate through modeling that such emissions will not cause or contribute to a 

NAAQS exceedance. This is essentially the same type of modeling demonstration required for PSD 

permitting under 40 C.F.R. Section 51.166, but it will apply to all sources (not just to “major sources” and 

“major modifications” as defined under that Section); and it will apply to all pollutants for which a 

NAAQS has been established, not just attainment/unclassified pollutants. This requirement will be an 

independent source-specific demonstration that new and modified sources will not interfere with 

attainment or maintenance, over and above the guarantees provided through compliance with the 

District’s comprehensive regulatory program. 

This modeling requirement, which is in proposed Section 2-2-308, will apply to all NSR permits with net 

emissions increases greater than the de minimis thresholds established by EPA under the Alabama 

Power v. Costle doctrine. As discussed in connection with Comment No. II.5.a. above, and also in detail 

in the Staff Report, these thresholds are the levels at which EPA has determined that the potential for 

causing or contributing to any NAAQS exceedance is not significant enough to warrant conducting a 

modeling analysis, given the administrative burdens involved in doing so. For the same reasons that EPA 

has concluded that emissions increases below these significance thresholds are de minimis under the 

principles expressed in Alabama Power and can appropriately be excluded from NSR modeling 

requirements, District Staff have similarly concluded that they can be excluded from the modeling 

requirement in Proposed Section 2-2-308. Furthermore, in addition this de minimis justification that 

EPA has adopted generally for all areas throughout the country, District Staff also conducted an analysis 

specific to the Bay Area to determine the extent of emissions from new and modified NSR sources that 

would be exempted from modeling under these thresholds. That analysis found that the total emissions 

increases from all permits involving net emissions increases below these thresholds that the District 

 

this issue, which will complete the District’s satisfaction of all applicable requirements regarding attainment and 

maintenance.

10 As EPA has observed, “[b]y definition, any fully approved SIP has independently assured RFP and attainment.” 

(Requirements for Implementation Plans; Air Quality New Source Review, Final Rule, 54 Fed. Reg. 27,286 (June 28, 

1989).) New and modified sources that comply with the requirements of a fully approved SIP – as will be ensured 

by District regulations – will therefore by definition not interfere with RFP and attainment. 
15

issues each year throughout the entire Bay Area would amount to only 0.02% to 0.34% of the regions 

total emissions inventory. This analysis further supports the conclusion that such emissions are truly de 

minimis under the principles expressed in Alabama Power and can appropriately be exempted from the 

modeling requirement and the administrative burdens that would be involved.

Comment II.6.: EPA Region IX Staff noted that the District’s provisions for making permit application 

information available for public review and inspection reference the fact that the District is subject to 

the California Public Records Act. The provision involved (section 2-2-405 in the Proposed Amendments, 

which is substantively the same as existing Section 2-2-406 in the District’s current EPA-approved 

regulations in the California State Implementation Plan) acknowledges that in making information 

available, the District is bound as a state agency to consider trade secret claims in accordance with the 

requirements of the California Government Code. EPA Region IX Staff commented that the District 

should either (i) provide “an analysis” comparing the provisions of the California Public Records Act and 

Section 114(c) of the Clean Air Act (which sets forth requirements for EPA’s handling of public records 

and trade secret information); or (ii) add language that the APCO should follow CAA Section 114(c) in 

evaluating claims of trade secret under Regulation 2, Rule 2. 

Response: The Air District is a governmental agency of the State of California, and as a matter of law it 

is therefore subject to the requirements of the California Public Records Act as set forth in the California 

Government Code. The District cannot adopt regulations directing or authorizing the APCO (or District 

Staff acting on the APCO’s behalf) to act in any manner that is inconsistent with State Law. District Staff 

disagree that it would be appropriate to include a reference to considering the provisions applicable to 

EPA’s handing of public records under Section 114(c) of the Clean Air Act, because it could cause 

confusion among District Staff regarding whether they should follow California law or some other 

potentially inconsistent requirements. District Staff have always followed the requirements of California 

law in implementing the District’s permit programs – as they are legally bound to do – and it would not 

be appropriate to adopt language suggesting that they should do otherwise. 

That said, District Staff do not envision any circumstance in which the provisions applicable to the APCO 

for addressing trade secret information under the California Public Records Act would differ in any way 

from the procedures that apply to the EPA Administrator under Section 114(c). Section 114(c) requires 

the EPA Administrator to consider trade secret claims in the same manner that the California Public 

Records Act requires the APCO to consider trade secret claims, and there is no reason to believe that 

any trade secrets would be handled any differently under the California Public Records Act than they 

would under the CAA provisions in Section 114(c). Moreover, there is no indication that any 

requirements of the California Public Records Act could be inconsistent in any way with implementing 

the Clean Air Act’s requirements for NSR programs. California has been successfully implementing NSR 

for many years under the Clean Air Act, and the California Public Records Act has never been an 

impediment to doing so. EPA has approved California air district NSR programs throughout the state for 

decades, and has never raised any concern that the California Public Records Act – which applies to all 

air districts in the state, not just the Bay Area District – could somehow create an inconsistency that 

would undermine the air districts’ ability to properly implement NSR. If EPA Region IX Staff now feel 

that they have concerns about potential inconsistencies between the Public Records Act and any federal 
16

NSR requirements, District Staff would be happy to participate in a discussion of such concerns. The 

issue of potential conflicts between the California Public Records Act and the federal Clean Air Act would 

obviously be an issue of statewide importance, however. District Staff therefore suggest that any such 

discussion should be held at a statewide level, under the auspices of a state-wide entity such as CAPCOA 

or ARB. If EPA is going to take the position that the Public Records Act prevents California from 

implementing NSR programs under the Clean Air Act, that is an issue that will affect all of California’s air 

districts – and one that will have to be addressed by the California Legislature, which is the only body 

with the power to amend that statute. District Staff suggest that EPA Region IX Staff should carefully 

consider the ramifications of taking such a position, and that such consideration would be aided by input 

from all of the agencies that would potentially be affected.

Comment II.7.: EPA Region IX Staff pointed out that the provisions in the second draft of the Proposed 

Amendments for addressing potential visibility impacts in Class I Areas for non-attainment pollutants in 

accordance with 40 C.F.R. Section 51.307(b)(2) applied to major modifications to existing major facilities 

only, but not to new major facilities. 

Response: District Staff have corrected this oversight in the final version of the Proposed Amendments. 

Sections 2-2-307 (the Class I Areas impact analysis requirement), 2-2-401.4 (application requirements 

for projects subject to the Class I Area impact analysis requirement), and 2-2-402 (notice requirements 

for permit applications subject to the Class I Area impact analysis requirements) now reference both 

new major facilities for non-attainment pollutants as well as major modifications to existing major 

facilities for such pollutants. 

Comment II.8.: EPA Region IX Staff commented on the provision in Section 2-2-407.2 in the Proposed 

Amendments that requires the District, before issuing a permit to operate for a source, to ensure that all 

emission reductions being relied on to satisfy offsets requirements for the source are actually being 

implemented. EPA Region IX Staff pointed out that for modified sources, such emission reductions must 

be in effect by the time the modified source begins operation, except for replacement sources for which 

the reductions must take effect by the end of a “shakedown” period not to exceed 180 days. EPA 

commented that the District should revise the provisions for modified sources other than replacement 

sources in subsection 407.2.2. in the Second Draft of the proposed amendments to address this 

requirement. 

Response: District Staff have corrected this oversight in the final version of the Proposed Amendments. 

Subsection 407.2 now provides that for a modified source the reductions must be in effect by the time 

the modified source commences operation, with the exception of a “replacement unit” as defined in 40 

C.F.R. Section 51.165(a)(1)(xxi), in which case the reduction must be in effect within 90 days after the 

source commences operation. 

III. DEFINITIONS

Comment III.1.: EPA Region IX Staff noted that EPA’s SIP approval regulations in 40 C.F.R. Sections 

51.165(a)(1) and 51.166(b) require either: (i) that the District’s NSR rule use EPA’s definitions as set forth 
17

in Sections 51.165(a)(1) and 51.166(b); or (ii) if the District’s rule uses different definitions, that the 

applicable definitions under the District’s rule are at least as stringent as EPA’s definitions in all respects. 

In this regard, EPA Region IX Staff made two general comments regarding the District’s definitions used 

for implementing the provisions of its NSR rule in the Proposed Amendments. 

EPA Region IX Staff’s first general comment concerned provisions where the District incorporates federal 

requirements by reference (e.g., federal PSD requirements). EPA Region IX Staff stated that in such 

situation, the District’s rule must specifically define every term used in the federal requirement that is 

incorporated by reference. EPA Region IX Staff stated that the District cannot rely on the fact that, as a 

matter of law, the federal requirement being incorporated is interpreted according to the federal 

definitions that apply to it. EPA Region IX Staff stated that if the District’s rule incorporates a federal 

requirement by reference, then it must also provide a specific definition for every term used in that 

federal requirement in the District’s own rule (either directly or through further incorporation-byreference of a federal definition). 

EPA Region IX Staff’s second general comment was that the District’s NSR rule cannot rely on the 

commonly understood meaning of a term as defined in the dictionary (what the comment letter 

referred to as “the general dictionary definition”). EPA Region IX Staff stated that the District’s NSR rule 

must include a specific regulatory definition for each term listed in 40 C.F.R. Sections 51.165(a)(1) and 

51.166(b). 

Based on these comments, EPA Region IX Staff stated generally that the District must provide a specific 

regulatory definition for each term listed in 40 C.F.R. Subpart I, unless the term is not used in the 

District’s NSR rule. EPA Region IX Staff stated that such definitions must be provided either by including 

an explicit regulatory definition in the District’s NSR rule, or by incorporating the federal C.F.R. definition 

by reference. EPA stated that such definitions must be provided for each of the specific terms identified

in the subsequent Comments Nos. III.2 through III.14.

Response: District Staff have addressed each of the specific terms identified in Comments Nos. III.2 

through III.14. The reasons why the District’s NSR rule under the final version of the Proposed 

Amendments will satisfy all of EPA’s requirements in 40 C.F.R. Sections 51.165 and 51.166 are explained 

below for each specific term. The Proposed Amendments will satisfy these requirements for the specific 

reasons explained there, notwithstanding anything in this general comment. 

As a general matter, however, District Staff note that EPA Region IX Staff’s interpretation of what is 

required of the District’s regulatory definitions under the Clean Air Act and 40 C.F.R. Part 51, Subpart I is 

incorrect on these two preliminary observations. 

First, with respect to incorporation-by-reference, EPA Region IX Staff’s comment reflects a 

misunderstanding of how incorporation by reference works. Where a federal requirement is 

incorporated by reference, it is interpreted and implemented according to all associated federal 

regulatory provisions that apply to it, including definitions. This is inherent as a matter of law in the 

concept of incorporation by reference. If an agency references a requirement from some other body of 

regulation and specifies that it will implement that requirement as if it were the agency’s own, then it 
18

must implement that requirement according to all applicable provisions from the other body of 

regulation from which the requirement is drawn. This includes all of the definitions, applicability terms, 

and other related provisions set forth in the referenced regulations that direct how the incorporated 

requirement is to be implemented. With respect to the District’s incorporation of federal definitions in 

particular, if the District references a federal definition set forth in the Code of Federal Regulations and 

specifies that the District will use that definition as its own, then that federal definition applies under 

the District’s regulations. If that federal definition, in turn, specifies that that it is to be interpreted using

terms that are themselves further defined in the Code of Federal Regulations, then those further subdefinitions similarly apply under the District’s regulations through the incorporation-by-reference. This 

is how incorporation-by-reference works legally, and it is how courts routinely interpret definitions that 

are incorporated by reference from another body of regulation.11 Indeed, this is precisely the function 

of using incorporation-by-reference as a tool in crafting regulatory language: It allows an agency to 

import provisions from another, related body of regulation without having to specify each and every 

detail from that other body of regulation in the agency’s own regulations.

EPA has itself recognized how this principle works in approving other California air districts’ NSR 

regulations that have used an incorporation-by-reference approach. For example, EPA has approved of 

the CAPCOA model of incorporation-by-reference of the federal PSD requirements that simply refers to 

the relevant provisions in 40 C.F.R. Section 52.21. The definitions in Section 52.21 that these rules 

incorporate by reference rely on a number of sub-definitions outside of Section 52.21, and EPA has 

never required that these associated sub-definitions have to be specifically incorporated by reference 

themselves. For example, Section 52.21(b)(49), the definition of “subject to regulation”, relies for its 

interpretation on the federal definition of “greenhouse gas” in 40 C.F.R. § 86.1818-12(a).12 EPA did not 

require these other air districts to adopt their own specific definitions of “greenhouse gas”, because it 

recognized that the incorporation-by-reference of “subject to regulation” in Section 52.21(b)(49) brings 

 

11 For example, the federal Sentencing Guidelines have incorporated by reference the definition “aggravated 

felony” in the Immigration and Nationality Act (18 U.S.C. § 1101). The definition of “aggravated felony” in the 

Immigration and Nationality Act uses the term “crime of violence”, which is in turn defined by further 

incorporation-by-reference to the federal penal code in 18 U.S.C. § 16. The Ninth Circuit has made clear that in 

such a situation, the incorporation in the Sentencing Guidelines by reference to the Immigration and Nationality 

Act definition also incorporates the sub-definition of “crime of violence” as further defined by reference to 18 

U.S.C. § 16. See, e.g., United States v. Gomez-Leon, 545 F.3d 777, 789 and fn. 9 (9th Cir. 2008). The same principle 

applies when the District incorporates by reference a federal definition, which is defined in turn using further subdefinitions. 

12 40 C.F.R. Section 52.21 also contains additional examples of federal requirements outside of Section 52.21 that 

are incorporated simply by reference to that Section, without needing to be specifically defined in an air district’s 

NSR rule. For example, Section 52.21(b)(49)’s definition of “subject to regulation” relies for its interpretation on 

EPA’s conversion values for global warming potentials in 40 C.F.R. Part 98, subpart A, Table A-1. Similarly, the 

definition of “baseline actual emissions” in Section 52.21(b)(48)(ii)(c) includes a provision establishing how the 

“surplus adjustment” must be applied that relies on provisions of 40 C.F.R. Part 63. When an air district 

incorporates the definitions in Section 52.21 by reference, all of these other federal provisions that apply for 

implementing these federal definitions are similarly incorporated by reference – even if they are not explicitly 

spelled out in the district’s rule. EPA’s approval of other air districts’ use of this approach illustrates the principle 

of how incorporation-by-reference works. 
19

the sub-definition of “greenhouse gas” along with it – and that “subject to regulation” will be defined 

using the sub-definition in 40 C.F.R. § 86.1818-12(a) without the need for the district to adopt (or 

incorporate by reference) its own specific definition of “greenhouse gas”. EPA’s own treatment of this 

issue with respect to other California air districts belies the assertion in this comment that the District 

needs to provide further sub-definitions for terms that are used in federal definitions that it is 

incorporating by reference.

Second, the comment is also incorrect that the District cannot rely on the generally accepted dictionary 

definition of a term in implementing its regulations where no specific regulatory definition is provided

for that term. All regulations – including those of EPA itself – necessarily rely on many terms that do not 

have explicit definitions set forth in specific regulatory provisions. As a matter of law, in these cases 

where there is no specific statutory or regulatory definition provided for a term, the term is defined 

according to its generally accepted meaning as described in the dictionary.13 As long as the generally 

accepted dictionary definition is sufficiently clear and sufficiently stringent, it is completely appropriate 

to rely on such a definition and there is no need to define it further in an explicit regulatory provision. 

EPA has recognized this situation in many similar contexts. When the agency adopted its “credible 

evidence” rule, for example, it found that the generally accepted dictionary definition of the term 

“credible evidence” was sufficient, without a specific regulatory definition. The agency disagreed with 

commenters who argued that the term needed to be defined in the rule, explaining that the rule is not 

“deficient for not providing an express regulatory definition of the term ‘credible evidence’—a term 

which Congress itself inserted, without definition, into the Act.” (See 62 Fed. Reg. 8314, 8322 (Feb. 24, 

1997)). Similarly, EPA recently approved the Non-Attainment NSR rule (Rule 214) of the Sacramento 

Metropolitan Air Quality Management District (SMAQMD), which relies on what EPA called the 

“common usage definition” of the term “construction”, instead of specifying an explicit regulatory 

definition. EPA noted that 40 C.F.R. Section 51.165(a)(1) lists a definition for “construction” and that 

SMAQMD’s rule does not contain one, but it concluded that “EPA believes the common usage definition 

of this term is adequate for the purposes of determining the requirements of Rule 214.”14 EPA’s recent 

approval of SMAQMD’s use of “common usage definitions” for terms defined in 40 C.F.R. Section 

 

13 See, e.g., Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 31 (1979) (“[U]nless otherwise defined, words will be 

interpreted as taking their ordinary, contemporary, common meaning.”); Secretary of Labor v. Doyle, 675 F.3d 187, 

204 (3d Cir. 2012) (“[I]n the absence of specific statutory or regulatory guidance, [a term] should be given its 

ordinary meaning . . . .” (citation omitted); In re Luna, 406 F.3d 1199 (10th Cir. 2005) (considering dictionary 

definition of undefined term); Hull v. United States, 146 F.3d 235, 238 (4th Cir. 1998) (interpreting a term “as that 

term is readily understood” under its dictionary definition “in the absence of a statutory or regulatory definition”); 

Martin v. Commercial Sec. Co., 539 F.2d 521, 524 (5th Cir. 1976) (a word “should be accorded its ordinary meaning 

absent a specific technical meaning or legislative definition . . . .”) (citation omitted).

14 See Technical Support Document for EPA’s Notice of Proposed Rulemaking for the California State 

Implementation Plan for the Sacramento Metropolitan Air Quality Management District, Rule 214 - Federal New 

Source Review, Rule 203 - Prevention of Significant Deterioration (May 5, 2011), at p. 6. EPA partially approved 

Rule 214 and partially disapproved it; the treatment of the term “construction” as referenced above was not part 

of the partial disapproval. See Revisions to the California State Implementation Plan, Sacramento Metropolitan Air 

Quality Management District, Final Rule, 76 Fed. Reg. 43,183 (July 20, 2011). 
20

51.165(a)(1) belies Region IX staff’s suggestion that doing so is somehow inappropriate under EPA’s NSR 

approval regulations.

Notwithstanding these points, the District has addressed each of EPA Region IX Staff’s comments on 

specific terms, as outlined below.

Comment III.2.: EPA Region IX Staff commented that the District’s NSR rule must include a specific 

definition of the term “commence” that is equivalent to the definitions set forth in 40 C.F.R. Section 

51.165(a)(1)(xvi) and 40 C.F.R. Section 51.166(b)(9) (and in Section 169(2)(A) of the Clean Air Act). EPA 

Region IX Staff noted that these provisions state that, as applied to construction of a major source or 

major modification, “commence” means either commencing actual construction or obtaining all federal 

air permits and entering into contracts for the construction. EPA Region IX Staff stated that Section 165 

of the Clean Air Act requires subject facilities to obtain a PSD permit before engaging in either of these 

activities (i.e., before beginning actual construct and before getting permits and entering into contracts 

for construction). EPA Region IX further stated that Section 173(a) of the Clean Air Act requires subject 

facilities to provide sufficient offsets before engaging in either of these activities (i.e., before beginning 

actual construct and before getting permits and entering into contracts for construction). EPA Region IX 

Staff stated that the District’s NSR rule must include a specific definition of “commence” (i) to establish 

when a facility can commence construction and (ii) to ensure that offsets are provided before a facility 

commences construction (i.e., before getting permits and entering into contracts for construction and 

before beginning actual construction). 

Response: The District’s NSR rule under the Proposed Amendments does not use the term 

“commence”, either in relation to construction of new major facilities and major modifications to major 

facilities or in any other context. As EPA Region IX Staff noted in Comment III.1., 40 C.F.R. Sections 

51.165(a)(1) and 51.166(b) do not require a term to be defined if “the term is not used in the rule”. The

issue is thus moot with respect to this term. How one defines this term will not make any difference to 

how the District implements its NSR program, as the NSR rules do not use the term at all. Providing a 

definition for this term in the District’s NSR rule would simply take up space without serving any 

purpose.

Furthermore, even though the issue is moot, it is worth noting that this comment is apparently based on 

a misunderstanding of how the Clean Air Act works with regard to when a facility may commence 

construction and operation. The comment appears to be based on a belief that subject facilities must 

obtain their PSD permit under CAA Section 165, and must provide offsets under Section 173(a), before 

they can even enter into contracts to build a new or modified source. This is not the case.

The “commence” definition serves a specific and limited purpose under the NSR program. It is explicitly 

defined in the Statute to refer only to “commence” in the context of construction (not operation) for 

purposes of PSD requirements under Part C of Title I. (See CAA § 169(2)(A).) It serves to create a 

“grandfathering” exemption from PSD permitting requirements for projects that had were permitted 

and under contract as of August 7, 1977 (the effective date of the statutory PSD permit requirement in 

Section 165, which was added in the CAA Amendments of 1977), but had not actually begun 
21

construction by then. This grandfathering provision is specified in the first clause in the PSD 

requirement in Section 165(a), which establishes that the PSD requirements apply to major facilities “on 

which construction is commenced after August 7, 1977.” For facilities that “commenced” construction 

before that date – i.e., facilities that either actually began construction or had all of their federal permits 

and had entered into contracts for the construction work – the PSD requirement in Section 165 did not 

apply. For any facilities that did not “commence” construction before that date, the PSD requirement 

applies and a PSD permit must be obtained before the facility “may be constructed”. 

EPA Region IX Staff appear to have misinterpreted these provisions to mean that PSD permits must be 

obtained under Section 165 and offsets must be provided per Section 173(a)(1) before a facility can 

“commence” construction under this definition – that is, before it can even enter into binding contracts 

for the construction work. This is not correct.

With respect to offsets, the Clean Air Act is clear that offsets must be obtained “by the time the source 

is to commence operation.” (CAA § 173(a)(1)(A).) This requirement does not implicate the “commence” 

definition in Section 169(2)(A) for two reasons. First, under the plain language of Section 169, the 

definitions in that section apply only for purposes of Part C of Title I – the PSD requirements – and not 

for the offsets requirements, which are part of the Non-Attainment NSR requirements in Part D of Title I.

And second, even if the Section 169 definitions did apply to Part D requirements, the definition of 

“commence” in Section 169(2)(A) is explicitly limited to the context of “construction” of a major facility, 

not to “operation” of such facility. This definition by its own terms does not apply to any requirements 

for “operation” of a major facility, such as the offsets requirements in Section 173(a)(1). There is 

nothing in the Clean Air Act or in EPA’s NSR regulations that requires offsets to be provided before 

construction can “commence” under this definition. Indeed, EPA Region IX Staff’s comments actually 

recognize this point in Comment No. II.8, in which EPA Region IX Staff correctly state that “offsets must 

be required prior to commencing operation.”15 

With respect to obtaining a PSD permit, the Clean Air Act is clear that the PSD permit must be obtained

before a facility “may be constructed”. (CAA § 165(a).) This requirement refers to actual construction. 

There is no requirement to obtain a permit before “construction is commenced” – i.e., before permits 

are obtained and contracts are entered into as contemplated by the definition in Section 169(2)(A). As 

noted above, the language about facilities on which “construction is commenced” was used to create a 

grandfathering exemption for facilities that were permitted and under contract before August 7, 1977, 

but had not yet begun actual construction by that date. That is why Section 165(a) states that “[n]o 

major emitting facility on which construction is commenced after August 7, 1977, may be constructed 

. . .” without a PSD permit. The “on which construction is commenced” clause creates the 

grandfathering exemption by establishing that facilities that had permits and contracts before that date 

were not subject to the requirements. For facilities that are not subject to that grandfathering 

provision, the “may be constructed” language establishes the type of activity that is prohibited unless a 

PSD permit is obtained. The activity that requires the permit is simply “construction”, not 

“commencement” of construction as defined in Section 169(2)(A). 

 

15 Comment Letter at p. 9 (emphasis added). 
22

The language at issue in Section 165(a) could certainly be stated more clearly, and this may be the 

source of EPA Region IX Staff’s confusion. But EPA has unambiguously endorsed this reading of how PSD 

permitting works – that a PSD permit is not required until construction is actually begun, not at the time 

that permits are obtained and contracts are entered into under the definition of “commence” in Section 

169(2(A) – in its NSR implementation regulations. EPA’s regulations clearly establish that a state’s NSR 

program must require that “[n]o new major stationary source of major modification to which the [PSD 

requirements] apply shall begin actual construction without a permit . . . .” (40 C.F.R. § 51.166(a)(7)(iii)

(emphasis added); see also 40 C.F.R. § 52.21(a)(2)(iii) (same provision for EPA’s federal PSD program).) 

These provisions demonstrate as a matter of law the error in EPA Region IX Staff’s assertion that 

facilities must obtain a PSD permit before entering into contracts under the definition of “commence” in 

Section 169(2)(A). 

The District’s NSR rule under the Proposed Amendments will satisfy both of the NSR requirements

referenced in EPA Region IX Staff’s comment. It will require facilities subject to offsets requirements to 

ensure that the required emission reductions are in place “by the time the source is to commence 

operation,” as required by CAA Section 173(a)(1)(A); and it will require facilities subject to the PSD 

requirements to obtain a permit before they “may be constructed”, as required by CAA Section 165(a). 

The rule does not need to utilize the term “commence” as set forth in the definitions in 40 C.F.R. 

Sections 51.165(a)(1) and 51.166(b) in order to do so.

Comment III.3.: EPA Region IX Staff commented that under 40 C.F.R. Sections 51.165(a)(1) and 

51.166(b), the District’s NSR rule must include a specific definition of the term “begin actual 

construction”. EPA Region IX Staff explained that “ ‘begin actual construction’ is generally the initiation 

of physical on-site construction activities.” EPA Region IX Staff explained that it is necessary to define 

the beginning of actual construction in order to differentiate actual construction from the term 

“commence construction”, which as discussed above includes simply obtaining permits and entering 

into contracts for construction, even where actual construction is not begun. 

Response: The District’s NSR rule does not use the term “begin actual construction”. As EPA Region IX 

Staff noted in Comment III.1., 40 C.F.R. Sections 51.165(a)(1) and 51.166(b) do not require a term to be 

defined if “the term is not used in the rule”. The issue is moot with respect to this term. How one 

defines this term will not make any difference to how the District implements its NSR program, as the 

NSR rules do not use the term at all. Providing a definition for this term in the District’s NSR rule would 

simply take up space without serving any purpose.

Moreover, the District’s NSR rule has no need to differentiate between (i) commencing “actual” 

construction and (ii) commencing construction in the sense of obtaining permits and entering into 

contracts, which is the terminology used in connection with the PSD grandfathering provisions discussed 

above. EPA’s definitions need to differentiate between these two because “commencing” construction 

under the provisions of CAA Sections 165 and 169(2)(A) does not mean commencing actual 

construction. As the comment notes, EPA needs to use two different terms to differentiate between 

these two different concepts. The District’s NSR rule does not use the term “commence” in connection 

with construction in the way that the federal CAA does under Sections 165 and 169(2)(A), and so the 
23

District’s rule does not need to have a specific definition for “begin actual construction”. The District’s 

NSR rule satisfies all of EPA’s NSR requirements as set forth in the Proposed Amendments, and there is 

no need to add a definition of this term to ensure that it will be adequately implemented. 

Comment III.4.: EPA Region IX Staff commented that the District’s NSR rule must include a specific 

definition of the terms “baseline concentration”, “major source baseline date”, and “baseline area”. 

Response: These three terms are important terms used in implementing the PSD source impact analysis 

requirements in accordance with 40 C.F.R. Section 51.166(k) (for state programs) and 40 C.F.R. Section 

52.21(k) (for the federal program). Under the proposed amendments, the District’s rule will incorporate 

this requirement by reference in Section 2-2-305. This incorporation by reference in Section 2-1-305 

explicitly incorporates all of the federal requirements for such analyses that apply under Section 

52.21(k), which includes the use of the baseline concepts referenced in this comment as defined in the 

federal regulations. In addition, Section 2-2-103 also provides further authority that these definitions 

must be used, stating that where federal PSD requirements such as this are incorporated by reference, 

all applicable federal definitions must be used. This Section 2-2-103 incorporation-by-reference 

provision explicitly includes (without limitation) the federal definitions of “baseline concentration”, 

“major source baseline date”, and “baseline area”. EPA Region IX Staff agreed in Comment No. III.1. that 

it is appropriate to address such definitions through incorporation-by-reference. 

Comment III.5.: EPA Region IX Staff commented that the District’s NSR rule must include a specific 

definition of the term “subject to regulation”.

Response: This term is used in EPA’s federal PSD regulations. It is not used in the District’s NSR rule 

directly, and as EPA Region IX Staff noted in Comment III.1., 40 C.F.R. Sections 51.165(a)(1) and 

51.166(b) do not require a term to be defined if “the term is not used in the rule”. The issue is therefore 

moot with respect to this term. The term will be of course be important in terms of implementation of 

the federal PSD provisions that the District will be incorporating by reference, and where it is used in 

those federal PSD provisions it will be defined according to the C.F.R. definition that applies to those 

provisions. This incorporation by reference is set forth in the specific PSD provisions in Sections 2-2-304

through 2-2-307, which specify that these PSD requirements will be subject to all applicable federal PSD 

requirements that apply under the federal program (which includes the federal definitions); and it is also 

specified in the PSD incorporation-by-reference provision in Section 2-2-103, which specifies that for the 

PSD requirements all federal requirements including the federal definitions are incorporated by 

reference. This Section 2-2-103 incorporation-by-reference provision explicitly includes (without 

limitation) the federal definition of “subject to regulation”. 

Comment III.6: EPA Region IX Staff commented that the District must include a definition for 

“replacement unit” that is equivalent to EPA’s federal definition in 40 C.F.R. Sections 51.165(a)(1)(xxi) 

and 51.166(b)(32). EPA Region IX Staff suggested that this term is implicated in Section 2-1-232, which 

establishes that certain sources need to be permitted as new sources – i.e., as if they had never been in 

existence before and are being permitted for the first time under current regulatory standards. 
24

Response: EPA’s NSR regulations do not include a generic definition for the term “replacement”. What 

they do include is a definition for the specific term “replacement unit”, in 40 C.F.R. Sections 

51.165(a)(1)(xxi) and 51.166(b)(32). The District’s NSR rule under the Proposed Amendments 

adequately addresses this term.

As EPA recently noted in approving SMAQMD’s NSR rule, the term “replacement unit” is only used “to 

allow special treatment of such sources when determining whether a proposed project will result in a 

major medication.” EPA approved SMAQMD’s rule, even though it did not include a specific definition 

of “replacement unit”, because the rule uses a definition of “Federal Major Modification” that 

incorporates by reference the federal “major modification” test and all of the federal definitions used in 

that test, including the “replacement unit” definition.16 The District’s NSR rule under the Proposed 

Amendments incorporates the federal “major modification” test, and so it will satisfy EPA’s NSR 

requirements in the same way. The proposed amendments add Section 2-1-234.2, the “federal 

backstop” test for determining whether a change is a modification. This “federal backstop” provision 

will ensure that any change that is a “major modification” under EPA’s federal test will also be treated as 

a modification and subject to NSR requirements under the District’s rule. This “federal backstop” 

provision explicitly incorporates by reference all of the federal definitions in 40 C.F.R. Sections 

51.165(a)(1) and 51.166(b), including the definition of “replacement unit”. As with EPA’s treatment of 

SMAQMD’s rule, incorporation by reference will satisfy those sections’ requirements with respect to this 

definition.

In addition, the District is also incorporating the federal definition of “replacement unit” in its provisions 

for determining when emissions reductions must be in effect for a source subject to offsets 

requirements under Section 2-2-302 and 2-2-303. Federal NSR requirements mandate that offsetting 

emission reductions must be in effect by the time a source commences operation. For sources that are 

“replacement units” and require a “shakedown” period when they begin operations, however, the 

source is deemed not to begin operations until the end of the “shakedown” period, a period not to 

exceed 180 days. The District’s NSR rule under the Proposed Amendments will allow up to 90 days for 

“replacement units” to allow for this shakedown period. This 90-day period is provided for 

“replacement units” under Sections 2-2-206 and 2-2-407.2, and in both places the federal definition in 

40 C.F.R. Section 165(a)(1)(xxi) is incorporated by reference. 

Finally, with respect to Section 2-1-232, this provision does not use the term “replacement unit”. As 

such, 40 C.F.R. Sections 51.165(a)(1)(xxi) and 51.166(b)(32) do not apply. Section 2-1-232 concerns 

certain situations where the District requires changes involving existing sources to be permitted as if 

they were entirely new sources. There is nothing in the District’s treatment of such sources that is 

inconsistent with EPA’s NSR requirements in any way, and there is no requirement that the District must 

use EPA’s specific term “replacement unit” in its treatment of such sources. There is no reason why 

Section 2-1-232 is not approvable under EPA’s NSR regulations. 

 

16 See EPA Technical Support Document, supra note 14, at p. 7.
25

Comment III.7.: In Comment No. 4.c. above, EPA Region IX Staff noted that the District’s provisions for 

public notice and comment for permits implementing PSD provisions should ensure that notice is 

provided to Indian Governing Bodies whose lands may be affected. EPA Region IX Staff commented that 

in providing for such notice, the District should include a definition of “Indian Governing Body” that is 

consistent with EPA’s definition in 40 C.F.R. Sections 51.165(a)(1) and 51.166(b)(9). 

Response: The final version of the Proposed Amendments adds a definition of “Indian Governing Body”, 

which mirrors EPA’s definition in 40 C.F.R. Section 51.166(b)(9), in Section 2-2-216. This definition will 

ensure that the notice provision is implemented consistent with EPA’s PSD requirements.17 

Comment III.8.: EPA Region IX Staff commented on the definition of “contemporaneous” in proposed 

Section 2-2-206. This definition establishes that an event is “contemporaneous” with an application for 

a permit to construct or operate a source if the event occurs (i) within 5 years before a permit 

application, or (ii) on or after the date of the permit application, but prior to initial operation of the 

source. EPA stated that the District should insert the word “and”, so that the language would also cover 

events that occur within 5 years before the date of the permit application and on or after the date of the 

permit application but prior to initial operation. EPA Region IX Staff’s comment stated that unless the 

District makes this change, the District’s definition will not be “consistent with the federal definition in 

40 C.F.R. 51.165(a)(1) and 51.166(b)(9).” 

Response: It is physically impossible for an event to occur both before the date of a permit application 

and on or after the date of a permit application. If an event occurs on or after a date certain, by 

definition it cannot also occur before that date.

Moreover, there is nothing in 40 C.F.R. Sections 51.165(a)(1) and 51.166(b)(9) that requires the District 

to specify that an event is contemporaneous if it occurs before “and/or” after the date of the 

application. EPA Region IX Staff’s comments did not identify anything in those provisions that would 

require such language, and District Staff did not find any upon their own review. Simply specifying that 

the event occurs before “or” after the date of application (and meets the other time limitations set forth 

in the definition) satisfies all requirements in 40 C.F.R. Sections 51.165 and 51.166. 

Comment III.9.: EPA Region IX Staff commented on the language in the District’s definition of “potential 

to emit” in Section 2-1-217 stating that a limitation on a source’s emissions will be counted for purposes 

of establishing a source’s potential to emit if it is “enforceable by the District or EPA.” EPA Region IX 

Staff stated that a limit that is “enforceable by the District alone is not sufficient.” EPA Region IX Staff

stated that the District should revise this definition to require that a limitation can be counted only if it is 

“enforceable by both the District and EPA” (among several other alternative suggestions).

 

17 Note also that EPA Region IX Staff’s citation to a definition in 40 C.F.R. Section 51.165(a)(1) for Non-Attainment 

NSR requirements is incorrect. EPA’s notice requirements for Indian Governing Bodies applies only for the PSD 

provisions, and not for notice for NSR permits for other purposes pursuant to 40 C.F.R. Section 51.161. There is no 

definition of “Indian Governing Body” in Section 51.165(a)(1), nor any other reference to this term in Section 

51.165.
26

Response: EPA Region IX Staff are incorrect in their understanding that a limitation on a source’s 

emissions must be enforceable by EPA in order to be credited for purposes of establishing a source’s 

potential to emit under the Clean Air Act. This principle has been clearly established by the United 

States Court of Appeals for the District of Columbia Circuit in National Mining Ass’n v. EPA, 59 F.3d 1351 

(D.C. Cir. 1995). The D.C. Circuit held in that case that EPA must allow conditions that are enforceable by 

the permitting agency under State law, but that are not part of the SIP and thus not enforceable by EPA 

in federal court, to be used in establishing a source’s potential to emit. (See id. at 1361-65.) Indeed, 

EPA Region IX Staff’s comment implicitly acknowledges this point, as it notes that a limitation does not 

necessarily need to be “federally enforceable” as long as it is “legally and practically enforceable” – i.e., 

enforceable by the District. This is precisely the language that EPA now uses in the wake of the National 

Mining case to recognize that an enforceable limitation on a source’s emissions can be credited even if it 

is not enforceable by EPA.18 

Of course, it has always been the District’s intent that if a limitation is enforceable by both the District 

and EPA – the situation contemplated by the language EPA Region IX Staff suggested – then the 

limitation is enforceable for purposes of establishing the source’s potential to emit. District Staff 

intended the language about enforceability by “the District or EPA” to cover this scenario. To avoid any 

potential for any confusion on this point, the final version of the Proposed Amendments clarifies that a 

limitation can be counted if it is enforceable “by the District or EPA (or both).” This revision will ensure 

that in the situation addressed by EPA Region IX Staff’s proposed language, where a limitation “is 

enforceable by the District and EPA”, is covered by the District’s definition. This revision will address 

EPA Region IX Staff’s comment, notwithstanding the misunderstanding surrounding the legal 

requirements for enforceability of emissions limitations used in establishing a source’s potential to emit 

in the wake of the National Mining case.

Comment III.10.: EPA Region IX Staff commented that the District must include a definition for the term 

“secondary emissions”. EPA Region IX Staff noted that EPA’s PSD regulations in 40 C.F.R. Section 

51.166(b)(18) provides a definition for this term.

Response: The final version of the Proposed Amendments does not use the term “secondary emissions”, 

and so it does not provide a definition for this term. As EPA Region IX Staff noted generally in Comment 

III.1, the District’s NSR rule does not need to include a definitions listed in in Section 51.166(b) where 

“the term is not used in the rule” (among other reasons). 

This point notwithstanding, it is worth noting the purpose of this definition in EPA’s PSD regulations in 

40 C.F.R. Section 51.166(b)(18) and pointing out that the District’s PSD provisions fully satisfy it without 

the need for an explicit definition of this term. The reason why EPA’s PSD regulations provide a 

definition for this term is because the PSD Source Impact Analysis required under 40 C.F.R. Sections 

51.166(k) and 52.21(k) must evaluate the source’s emissions as well as any “secondary emissions”. That 

is the only element of NSR permitting that addresses secondary emissions. The Proposed Amendments

will address the Source Impact Analysis requirement by incorporating EPA’s requirements under 40 

 

18 See EPA Interim Policy on Federal Enforceability Requirement for Limitations on Potential to Emit (Jan. 1996). 
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C.F.R. Section 52.21(k) by reference, and in doing so incorporate all of the federal requirements 

applicable to such analyses including the requirement to evaluate secondary emissions. As explained 

above, this incorporation by reference incorporates all of the applicable federal regulatory provisions 

associated with the source impact analysis requirement, including the definitions. This is implicit as a 

matter of law, and it is further clear from the text in proposed Section 2-2-305, which states explicitly 

that the analysis “shall be prepared according to and shall satisfy all of the requirements applicable to 

PSD source impact analyses for federal PSD permitting under 40 C.F.R. Section 52.21(k),” which includes 

consideration of “secondary emissions” as noted above. Furthermore, to the extent that there could be 

any ambiguity on this point notwithstanding this explicit language, the final version of the Proposed 

Amendments also adds a further provision in Section 2-2-103 regarding incorporation by reference, 

which states that where federal PSD requirements are incorporated by reference, all associated 

procedures, definitions and other regulatory provisions in the Code of Federal Regulations shall be 

followed and applied, which includes the requirement to consider secondary emissions. This provision 

in Section 2-1-103 also states explicitly that all federal definitions apply, and it specifically references the 

federal definition of “secondary emissions” in 40 C.F.R. Section 52.21(b)(18) in this regard (which is 

identical to the definition in Section 51.166(b)(18) cited in the comment). Thus, there can be no dispute 

that the District’s PSD provisions explicitly require secondary emissions to be included in the PSD Source 

Impact Analysis, and that the federal definition of “secondary emissions” applies for this purpose. The 

District’s NSR rule fully satisfies all federal requirements for SIP approval with regard to secondary 

emissions, how they are addressed under the PSD requirements, and how they are defined.

Comment III.11.: EPA Region IX Staff commented that the District should include a definition of the 

term “portable”. EPA Region IX Staff stated that a specific regulatory definition should be provided in 

the rule “to provide clarity and enforceability”. 

Response: EPA’s regulations do not require that the District’s NSR rule must contain a specific regulatory 

definition for the term “portable”. Specifically, there is nothing in any of the definitional provisions in 40 

C.F.R. Sections 51.165(a)(1) or 51.166(b) setting forth a definition of this term or requiring that a state’s 

NSR program contain one. To the contrary, EPA’s NSR regulations allow states to rely on the dictionary 

definition for this word, which is what the District’s NSR rule will do under the proposed amendments. 

Indeed, EPA’s own regulations rely on the dictionary definition without needing to provide a specific 

regulatory definition. (See, e.g., 40 C.F.R. §§ 51.166(i)(1)(iii), 52.21(i)(1)(viii).) EPA’s treatment of this 

term under the agency’s own NSR regulations demonstrates that use of the dictionary definition 

provides sufficient clarity and enforceability. For all of these reasons, the District does not need to 

include a specific regulatory definition of “portable” in its NSR rule in order for the rule to be approvable 

under CAA Section 110 or 40 C.F.R. Part 51, subpart I.

Comment III.12.: EPA Region IX Staff commented that the District should include a definition of the 

term “shutdown”. EPA Region IX Staff stated that a specific regulatory definition should be provided in 

the rule “to provide clarity and enforceability”.

Response: EPA’s regulations do not require that the District’s NSR rule must contain a specific regulatory 

definition for the term “shutdown”. Specifically, there is nothing in any of the definitional provisions in 
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40 C.F.R. Sections 51.165(a)(1) or 51.166(b) setting forth a definition of this term or requiring that a 

state’s NSR program contain one. To the contrary, EPA’s NSR regulations allow states to rely on the 

dictionary definition for this word, which is what the District’s NSR rule will do under the proposed 

amendments. Indeed, EPA’s own regulations rely on the dictionary definition without needing to 

provide a specific regulatory definition. (See, e.g., 40 C.F.R. §§ 51.165(a)(1)(xxviii), 51.165(a)(1)(xxxv), 

51.165(a)(3)(ii)(C), 51.166(b)(37), 51.166(b)(40), 51.166(b)(47), 52.21(b)(41), 52.21(b)(48), etc.) EPA’s 

treatment of this term under the agency’s own NSR regulations demonstrates that use of the dictionary 

definition provides sufficient clarity and enforceability. For all of these reasons, the District does not 

need to include a specific regulatory definition of “shutdown” in its NSR rule in order for the rule to be 

approvable under CAA Section 110 or 40 C.F.R. Part 51, subpart I.

Comment III.13.: EPA Region IX Staff stated that the District’s definition of the term “Regulated Air 

Pollutant” in District regulation 2-1-218 “is not consistent with the federal definition in 40 C.F.R. 

51.165(a)(1)(xxxvii) and 40 C.F.R. 51.166(b)(49).” EPA Region IX Staff suggested that the District should 

specify in the definition of “regulated air pollutant” that the term refers to pollutants that are subject to 

“a Federal and California Clean Air Act regulation”.

Response: Contrary to the assertions in this comment, EPA’s NSR regulations do not use the term 

“Regulated Air Pollutant” and do not include a definition of this term. The cited provisions in 40 C.F.R. 

51.165(a)(1)(xxxvii) and 40 C.F.R. 51.166(b)(49) are definitions of a different term “Regulated NSR 

Pollutant”. In the only place where the District’s regulations use this term “Regulated NSR Pollutant”, 

the District’s regulations define it explicitly by reference to the federal definition in 40 C.F.R. Section 

52.21(b)(49). This definition by reference to the Code of Federal Regulations provision by definition 

cannot be inconsistent with any federal requirements for this term. 

With respect to the District’s general definition of “Regulated Air Pollutant” in Section 2-1-218, the 

intent behind this definition was to identify pollutants for which a regulation has been adopted, not to 

inquire into the identity of the agency that adopted it or the specific legal authority under which it was 

adopted. The final version in the Proposed Amendments therefore removed the language regarding 

regulations adopted or implemented by the District, and simply refers to pollutants that are subject to a 

regulation. This revision will address EPA’s suggestion that the term be defined to include pollutants 

that are subject to “Federal and California Clean Air Act regulations.” All such pollutants will be included 

within the definition set forth in Section 2-1-218 in the final version of the Proposed Amendments. 

Comment III.14.: EPA Region IX Staff commented that the “federal backstop” provision in proposed 

Section 2-1-234.2 should incorporate the federal definitions used the applicability procedures in 40 

C.F.R. Sections 51.165(a)(2) and 51.166(a)(7), including “baseline actual emissions” and “projected 

actual emissions”. 

Response: As explained above in connection with Comment No. I.2.b., the final version of the Proposed 

Amendments is adding language that explicitly states that all applicable provisions in Sections 51.165 

and 51.166 must be followed in implementing proposed Section 2-1-234.2. This language also explicitly 

states that all of the federal definitions in 40 C.F.R. Sections 51.165(a)(1) and 51.166(b) must be 
29

followed in implementing this provision, which include the definitions of “baseline actual emissions” and 

“projected actual emissions” and all other relevant definitions. This incorporation by reference 

addresses EPA Region IX Staff’s comment regarding these terms.