SACRAMENTO METROPOLITAN

October 1, 2015 Gerardo Rios Chief, Permits Office U.S. EPA, Region IX, Mail StopAIR-3 75 Hawthorne Street San Francisco, CA 94105 Subject: Clarifications for Rule 203- Prevention of Significant Deterioration Dear Mr. Rios, Larry Greene AIR POLLUTION CONTROL OFFICER

On July 20, 2011 , the Environmental Protection Agency (EPA) finalized State Implementation Plan approval of Sacramento Metropolitan Air Quality Management District (District) Rule 203 - Prevention of Significant Deterioration
. This letter is intended to clarify the District's position concerning the application ofthe PM2
.5Significant Impact Levels (Sils) and the PM2
.5Significant Monitoring Concentration (SMC) in the District's PSD program in light of the January 22, 2013, decision by the U.S

. Court Appeals for the District of Columbia (Court) in Sierra Club v. EPA, 705 F.3d 458
. Clarification Regarding PM2.5 Issues: In Sierra Club v. EPA,the Court granted a request from EPA to vacate and remand to EPA the portions of two PSD rules (40 CFR 51
.166(k)(2) and 40 CFR 52
.21 (k)(2)) addressing the Slls for PM2
.5so that EPA could voluntarily correct an error in these provisions. The Court also vacated the parts of these two PSD rules (40 CFR 51.165(i)(5)(i)(c) and 40 CFR 52.21(i)(5)(i)(c)) establishing a PM2
.5SMC, finding that EPA was precluded from using the PM2
.5 SMC to exempt permit applicants from the statutory requirement to compile and submit preconstruction monitoring data as part of a complete PSD application
. On December 9, 2013, revisions to 40 CFR 51
.166 and 52
.21 were published in the Federal Register to remove the affected provisions from the PSD regulation, effective as ofthat date1

. To implement the PSD permitting program under the Clean Air Act, the District adopted Rule 203, which incorporated 40 CFR 52
.21 by reference (with certain exceptions and revisions), as in effect on January 27, 2011, into the rule
. As a result, District Rule 203 includes the vacated provisions described above as part of the SIP revision submitted to EPA for approval. EPA therefore requested clarification from the District concerning its interpretation of Rule 203 to the extent that it incorporates by reference the provisions at 40 CFR 52.21(k)(2) and 40 CFR 52.21(i)(5)(i)(c) thatwere in effect on January 27, 2011. I am writing to clarify that the District interprets and intends to implementthe PSD program in a manner consistent with the Court's decision in Sierra Club v . EPA. EPA's subsequent revisions to its PSD regulations consistent with that decision, and certain EPA statements included in the preamble ofthe 2010 final rule that had added section 52
.21(k)(2) to the federal regulations
.

1 78 Fed. Reg
.73698

777 12th Street, 3rd Floor I Sacramento, CA 95814-1908 91 6/874-4800 I 91 6/874-4899fax www.airquality.orgClarificationsfor Rule 203 - Prevention ofSignification Deterioration October 1,2015 Page 2 

### PM2.s Slls District Rule 203 incorporates by reference the federal regulation at 40 CFR 52.21 (k)(2) that was in effecton January27, 2011, which established Sllsfor PM2.5 and read as follows: (k)(2) Significant impact levels. For purposes of PM2.5, the demonstration required in paragraph (k)(1) ofthis section is deemed to have been made ifthe emissions increase from the new stationary source alone or from the modification alone would cause, in all areas, airquality impacts lessthan the following amounts: Pollutant 

### Averaging Class I Class II Class Ill time area area area PM2.5 Annual 0.06 IJg/m;;s 0.03 IJg/m;;s 0.3 IJg/m;;s 24-hour 0.07 IJQ/m3 1.2J.J_g/m3 1.21Jg/m3 Paragraph (k)(1) requires that sources applying for a new PSD permit demonstrate that any allowable emission increases from the proposed source or modification, in conjunction with all other applicable emissions increases or reductions, will not cause or contribute to a violation of any NAAQS or any applicable increment (40 CFR 52.21(k)(1)). In the preamble to the 2010 final rule adding the (k)(2) provision, EPA advised that, "notwithstanding the existence of a SIL, permitting authorities should determine when it may be appropriate to conclude that even a de minimis impact will 'cause or contribute' to an air quality problem and to seek remedial action from the proposed newsource or modification2." In another passage of the preamble, EPA also observed that "the use of a SIL may not be appropriate when a substantial portion ofany NAAQS or increment is known to be consumed3."The Court's decision in Sierra Club v. EPA held that, contrary to these statements in the preamble, the text of the (k)(2) provision "does not give permitting authorities sufficient discretion to require a cumulative airquality analysis" undersuch circumstances4

. Consistent with the Court's decision in Sierra Club v. EPA, EPA's subsequent revisions to its PSD regulations under that decision, and the statements by EPA in the preamble to the 2010 final rule discussed above, the District does not interpret section 52.21 (k)(2), as incorporated by reference in District Rule 203. Consequently, section 52.21(k)(2) does not preclude the District from exercising discretion to determine that an impact below the PM2.5 SIL values in section 52.21(k)(2) will nonetheless cause or contribute to an air quality problem and to seek remedial action from the proposed new source or modification. Such discretion is necessary to ensure adherence to the requirement ofthe Clean AirAct that a PSD project not cause or contribute to aviolation ofany NAAQS or any applicable increment. Based on this interpretation, the District affirms that it will not read section 52.21(k)(2), as incorporated by reference in District Rule 203, as "safe harbor," but will exercise discretion to determine whether a particular application of the PM2.5 SIL values is appropriate when a substantial portion of the PM2.5 NAAQS or increment is known to be consumed. The District retains the discretion to require additional information from a permit applicant as needed to
2 Prevention ofSignificant Deterioration (PSD) for Particulate Matter Less than 2.5 Micrometers (PM2.5)- Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC), 75 Fed. Reg. 64,864, 64,892 (Oct. 20, 2010) 3 ld. At64,894 4 703 F.3d at464Clarificationsfor Rule 203 - Prevention of Signification Deterioration October 1, 2015 Page 3 assure that the source will not cause or contribute to a violation of any NAAQS or applicable increment pursuant to section 52.21(k)(1). The District will consider the approach outlined in EPA's Guidance for PM2.5 Permit Modeling released by EPA on May 20, 2014 for determining the appropriate application ofthe PM2.5 Sllsgoing forward. PM2.5 SMC Clean Air Act section 165(e)(2) requires PSD permit applicants to include PM2.5 monitoring data in their applications. Section 52.21 (i)(5)(i)(c) of the EPA regulations in effect in 2011 authorized air districts to apply the SMC for PM2.5 and exempt applicants from the CAA section 165(e)(2) monitoring requirements. District Rule 203 incorporated this requirement. However, consistent with the Court's decision in Sierra Club v. EPA vacating the PM2.5 SMC and EPA's subsequent revisions to its PSD regulations under that decision, the District affirms that it will not exercise this discretionary authority. Accordingly, the District will require all applicants requesting a PSD permitfrom the District, including thosethat have already applied for but have not yet received a permit, to submit ambient PM2.5 monitoring data in accordance with Clean AirAct requirements whenever proposed increases ofdirect PM2.5 emissions or any emissions of a PM2.5 precursor equal orexceed asignificant amount undersection 52.21(b)(23). In summary, the District intends to implement the PSD program consistent with the Court's decision and EPA's December 9, 2013 revisions to the affected provisions of the PSD regulations, as well as EPA's statements in the 2010 preamble to the PM2.5 Slls rule regarding the appropriate use of PM2.5 SILvalues.



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Larry Greene Air Pollution Control Officer

c. Carol Sutkus, CARB Kathrine Pittard, District Counsel BrigetteTollstrup Dave Grose