PROPOSED AMENDMENT OF

RULE 502, NEW SOURCE REVIEW

STAFF REPORT

Executive Summary

Placer County Air Pollution Control District’s (District) New Source Review (NSR) Rule 

502 was rescinded and re-adopted on February 11, 2010, in order to obtain approval of

the United States Environmental Protection Agency (EPA) and the California Air 

Resources Board (ARB) for incorporation into the State Implementation Plan (SIP). Prior 

to adoption, staff had worked with these agencies and believed the proposed rule would 

be approvable. Upon legal review of the rule by EPA most of the rule was approved but 

some deficiencies were cited that need to be addressed before the rule can fully be 

approved into the SIP. EPA’s action was published in the Federal Register on July 27, 

2011, on page 44809. EPA prepared a Technical Support Document (TSD) which gives 

the basis for the limited approval, limited disapproval. The TSD is included as an 

attachment to this staff report.

The limited disapproval resulted from two main deficiencies:

• Using the term “legally and practically enforceable” without a definition instead 

of the EPA defined term “federally enforceable”; and

• Omission of a provision in the rule that requires a source that becomes major, or 

has a major modification, solely due to a relaxation of an enforceable limit, to 

apply the NSR requirements as though construction had not yet commenced on 

the source or modification.

The proposed amendments to Rule 502 to remove these deficiencies are:

• Add a definition of “federally enforceable” and use that term in the text of the 

rule where “practically enforceable” or “legally and practically enforceable” had 

been used; and

• Add a paragraph that addresses when a source becomes major or has a major 

modification solely due to a relaxation of an enforceable limit to apply NSR as 

though construction had not yet commenced; and

• Add definitions for the terms “commence”, “necessary preconstruction approvals 

or permits”, and “begin actual construction”, which are all used in the newly 

added paragraph noted above.

Since the final rulemaking action, EPA pointed out that in section 304.1, Potential 

Visibility Impacts, there is no guidance as to when the APCO should consult with the 

Federal Land Manager concerning a new major source or major modification that may 
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impact visibility in a Class I area. Criteria were added to this section and a definition of 

Class I Area was added to the definition section of the rule.

The Federal Register notice states that sanctions will be imposed on the District unless 

EPA approves a subsequent SIP revision that corrects the rule deficiencies within 18 

months of August 26, 2011. Since the District is not able to control EPA’s schedule, staff 

is proceeding with this amendment expeditiously in order to give EPA sufficient time to 

meet this deadline.

Discussion of Proposed Amendments

Rule 502, New Source Review, was adopted by the District Board on February 11, 2010,

and submitted to EPA via the ARB by a letter dated July 20, 2010, for a revision of the 

California State Implementation Plan. There was not a NSR version of Rule 502 in the 

SIP prior to the limited approval of this amendment (a previous Rule 508, circa 

1979/1980, dealt with NSR.). In a Federal Register announcement on August 27, 2011, 

EPA approved the bulk of Rule 502 for incorporation into the SIP, with disapproval of 

several minor items. The limited disapproval does not prevent the District from enforcing 

the rule as federally enforceable.

One of the issues is federal enforceability of Rule 502. The rule submitted for 

incorporation into the SIP used several different terms in different places when referring 

to enforceability, such as “federally enforceable”, “legally and practically enforceable”, 

“practically enforceable”, and “enforceable”. EPA has commented that by not using the 

term “federally enforceable” consistently and by not defining exactly what that means

creates a program deficiency since it does not ensure the legal enforceability that is 

required.

EPA defines “federally enforceable” in 40 CFR 51.165 as:

“xiv) Federally enforceable means all limitations and conditions which are 

enforceable by the Administrator, including those requirements developed 

pursuant to 40 CFR parts 60 and 61, requirements within any applicable State 

implementation plan, any permit requirements established pursuant to 40 CFR 

52.21 or under regulations approved pursuant to 40 CFR part 51, subpart I, 

including operating permits issued under an EPA-approved program that is 

incorporated into the State Implementation Plan and expressly requires adherence 

to any permit issued under such program.”

The rule amendment defines “federally enforceable” exactly as stated above and is 

inserted in the rule in each instance where enforceable is used.

The second deficiency in Rule 502 noted by EPA is to provide a provision pursuant to 40 

CFR 51.165(a)(5)(ii) which requires a new source review for a source or modification 
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which becomes major due to a relaxation in a federally enforceable limit. Such sources 

and modifications are subject to new source review “as though construction had not yet 

commenced”. This regulation states:

“At such time that a particular source or modification becomes a major source or 

major modification solely by virtue of a relaxation in any enforcement limitation 

which was established after (date of adoption), on the capacity of the source or 

modification otherwise to emit (list NA pollutants) or its precursor, such as a 

restriction on hours of operation, then the requirements of this rule shall apply to 

the source or modification as though construction had not yet commenced on the 

source or modification.”

The proposed rule amendment inserts a similar statement into section 102, Applicability. 

The wording was modified slightly to be more readable:

“If any source or modification becomes a major source or major modification 

solely by virtue of the relaxation of any limitation that was established after 

August 7, 1980, on the capacity of the source or modification to emit a federal 

nonattainment pollutant or its precursor such as a restriction on hours of 

operation, then the requirements of this rule shall apply to such a source or 

modification as though construction had not yet commenced on the source or 

modification.”

A number of new terms are introduced through the above statement which needs to be 

included in the definition section of the rule. “Commence” is defined by EPA in 40 CFR 

51.165 and is similarly defined in the rule:

Commence as applied to construction of a major stationary source or major 

modification means that the owner or operator has all necessary preconstruction 

approvals or permits and either has:

• Begun, or caused to begin, a continuous program of actual on-site 

construction of the source, to be completed within a reasonable time; or

• Entered into binding agreements or contractual obligations, which cannot be 

canceled or modified without substantial loss to the owner or operator, to 

undertake a program of actual construction of the source to be completed 

within a reasonable time.

The definition of commence brings in two other new terms that will require definitions; 

“Necessary preconstruction approvals or permits” and “Begin actual construction”. Both 

of these terms are defined by EPA in 40 CFR 51.165. The proposed amendment of Rule 

502 uses almost identical wording:

“207 BEGIN ACTUAL CONSTRUCTION: Initiation of physical on-site 

construction activities on an emissions unit which is of a permanent 
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nature. Such activities include, but are not limited to, installation of 

building supports and foundations, laying of underground pipework, and 

construction of permanent storage structures. With respect to a change in 

method of operation that does not involve a physical change, this term 

refers to those on-site activities, other than preparatory activities, which 

mark the start of the change in the method of operation.”

“234 NECESSARY PRECONSTRUCTION APPROVALS OR PERMITS: 

Federal air quality control laws and regulations and those air quality 

control laws and regulations which are part of the SIP.”

EPA also later commented that the definition of “Significant” contains a small error. 

“Significant” defines the emissions increase level of a modification at a major source that 

is considered a major modification. New source review for major modifications is 

performed using the federal guidelines portions of this rule. Smaller modifications are 

handled using the “state-only” or minor source portions of this rule. “Significant” is 

defined by EPA in 40 CFR 51.165 (a)(1)(x)(A), (B), and (C). The current rule defines 

“Significant” for NOx and VOC as 40 tons per year (tpy). This is correct for serious 

ozone non-attainment classification, but the District is now classified as “severe” nonattainment, so the correct significant level is 25 tpy for NOx and VOC. This value is 

corrected in this amendment.

Federal requirements (40 CFR 51.307) require that the APCO consult with the Federal 

Land Manager of a Class I area on a proposed new major source or major modification 

that may impact visibility in a Class I area. The regulations, however, don’t set any 

specific criteria as to when visibility may be impacted. The District must develop 

consistent criteria for when such a consultation is required. Language has been added to 

section 304.1 of Rule 502 to set the criteria. The proposed section reads:

“304.1 Potential Visibility Impacts: The APCO shall consult with the Federal 

Land Manager on a proposed major stationary source or major 

modification that may impact visibility in any Class 1 Area, in accordance 

with 40 CFR 51.307 if the net emissions increase from the new or 

modified source exceeds 10 tons/year of PM2.5, 15 tons/year of PM10, or 

40 tons/year of NOx; and the location of the source, relative to the closest 

boundary of a specified federal Class I area is within 20 miles.”

These criteria are similar to those used in the New Source Review rule of the South Coast 

Air Quality Management District, which has received EPA approval. It is unlikely that 

this consultation will ever be required in Placer County since there are currently no Class 

I areas in the County, and the only Class I area within 20 miles of County boundaries is 

the Desolation Wilderness Area in El Dorado County. Tahoe City is the only Placer 

County city within this 20 mile range. Most major sources are located in industrial areas, 
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thus it would be unlikely for a new major source to locate in Tahoe City or in the 

mountainous rural area included in the 20 mile range.

This discussion of visibility impacts on Class I areas requires that Class I areas be defined 

so there is no confusion as to what it means. The following definition is added to the 

definition section of the rule:

“CLASS I AREA: Any area listed as Class I in 40 CFR 81.405 or an area 

otherwise specified as Class I in the legislation that creates a national monument, 

a national primitive area, a national preserve, a national recreational area, a 

national wild and scenic river, a national wildlife refuge, a national lakeshore or 

seashore. The only designated Class I area within 20 miles of Placer County as 

of October 13, 2011 was Desolation Wilderness Area in El Dorado County.”

Fiscal Impact

The proposed amendment of Rule 502 should have no fiscal impact on permit applicants 

as compared with evaluations done under the current version of the rule. The addition of 

a provision which requires NSR for a source or modification which becomes major solely 

due to a relaxation in a permit condition should not have a fiscal impact because NSR 

would be required by other provisions of Rule 502.

The addition of the definition of “federally enforceable” should not have a fiscal impact 

because the rule is already enforceable.

Analysis and Findings

The following Analysis and the subsequent Findings are intended to address the 

requirements set forth in the Health and Safety Code relating to adoption of a new or 

amended District Rule, as well as other State statutes referenced herein.

Cost-Effectiveness of a Control Measure

California Health & Safety Code (H&S) Section 40703 requires a District to consider and 

make public “the cost-effectiveness of a control measure”. Since the amendment of Rule 

502 has no cost impact on the public or permit applicants, there is no cost-effectiveness 

related to this action.

Socioeconomic Impact

H&S Section 40728, in relevant part, requires the Board to consider the socioeconomic 

impact of any new rule if air quality or emission limits are significantly affected. However, 

Districts with a population of less than 500,000 persons are exempted from the 
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socioeconomic analysis. In 2010, the population of Placer County was approximately 

348,432 persons.

California Environmental Quality Act (CEQA)

Proposed amended Rule 502 is not an activity that may cause a direct or reasonably 

foreseeable indirect physical effect in the environment therefore not considered a “project”, 

as defined by Section 21065 of the California Public Resource Code and Section 

15378(b)(4)&(5) of the CEQA guidelines. A CEQA analysis is therefore not necessary.

The amendments to Rule 502 are changes to bring the current rule into compliance with the 

federal Clean Air Act. 

Findings

A. Necessity – The amendment of Rule 502 is necessary in order to obtain federal 

and state recognition the District’s New Source Review rule in the SIP.

B. Authority – California Health and Safety Code, Sections 40000, 40001, 40701, 

40702, and 40716 are provisions of law that provide the District with the 

authority to adopt this amended Rule.

C. Clarity – There is no indication, at this time, that the proposed Rule is written 

in such a manner that persons affected by the Rule cannot easily understand 

them.

D. Consistency – The regulation is in harmony with, and not in conflict with or 

contradictory to, existing statutes, court decisions, or state or federal 

regulations.

E. Non-duplication – The regulation does not impose the same requirements as an 

existing state or federal regulation.

F. Reference – All statutes, court decisions, and other provisions of law used by 

PCAPCD in interpreting this regulation is incorporated into this analysis and 

this finding by reference.

Attachment to Staff Report: Strikeout copy of Rule 502 New Source Review